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: December 31, 2005
Date of reporting period: June 30, 2005
ITEM 1. REPORT TO SHAREHOLDERS
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
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JUNE 30, 2005
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SEMI-ANNUAL REPORT
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WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
Wells Fargo Advantage Asia Pacific Fund
Wells Fargo Advantage Overseas Fund
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
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Table of Contents
Letter to Shareholders .................................................... 1
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Performance Highlights
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Asia Pacific Fund ...................................................... 2
Overseas Fund .......................................................... 4
Fund Expenses ............................................................. 6
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Portfolio of Investments
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Asia Pacific Fund ...................................................... 7
Overseas Fund .......................................................... 10
Financial Statements
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Statements of Assets and Liabilities ................................... 14
Statements of Operations ............................................... 15
Statements of Changes in Net Assets .................................... 16
Financial Highlights ................................................... 18
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Notes to Financial Statements ............................................. 20
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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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LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
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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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
semi-annual report for the period ended June 30, 2005. On the following pages,
you will find a discussion of each Fund, including performance highlights, the
Fund managers' strategic outlook, and information about each Fund's portfolio.
ECONOMIC EXPANSION CONTINUES
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The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices had an impact on inflation, pushing it upward during
the reporting period. The consumer price index (CPI) rose at around a 3% rate
over the twelve months ended June 30, 2005. The core CPI, which excludes the
volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate, its principal policy tool, from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
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After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of 2005. The S&P 500 Index was
around 1200 as the year began. It ended the first half of the year at 1191.
Strong corporate earnings have helped the markets, while record prices for crude
oil and concerns of a slowdown in worldwide economic growth have capped and
often reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
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Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well for most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sector recovered and again produced
solid returns. Municipal bonds generally performed better than many taxable
sectors during most of 2005, but they lagged behind the rally in U.S. Treasuries
in May and June. Overall, by the end of the second quarter of 2005, municipal
yields were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
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The economy has shown remarkably steady growth over the reporting period -
growth that has been sufficient to bring the unemployment rate down to 5.0%, the
lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE ASIA PACIFIC FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE ASIA PACIFIC FUND (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Anthony L. T. Cragg 12/31/1993
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
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The Fund's Investor Class shares returned 2.87%(1) for the six-month
period ended June 30, 2005, outperforming its benchmark, the MSCI/AC Pacific
Index(2), which returned (1.08)% over 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.
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?
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After two strong years for the Asia economy, during which the Fund rose
over 60% in 2003 and over 20% in 2004, 2005 has so far proved a more difficult
year. In the first six months of the year, the portfolio rose a respectable but
modest 2.87%. A number of factors have constrained performance. The most
influential outside factors have been the higher price of oil, the decreased
risk appetite among global investors, and the strengthening of the U.S. dollar
in the second quarter of 2005, which reversed many currency gains from
international investing. Within Asia, factors that slowed performance over
previous periods have been the slowing gross domestic product (GDP) growth rates
and a cooling off of the Chinese economy. As a result, there have been few
bullish trends on the macro-economic level of which to take advantage. In spite
of that, the Fund outperformed its benchmark because of stock selection that
identified specific micro-economic opportunities.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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The Fund implemented a number of changes and strategies, many of a
defensive nature designed to preserve capital while still being able to take
advantage of the smaller range of opportunities available. These strategies
included taking profits on stocks that had become overheated or approached our
target price; raising the cash level in the Fund to around 10%; reducing the
total number of holdings in the portfolio; increasing the proportion of higher
yielding equities in the Fund; limiting weightings in more volatile Asian
markets, such as the Philippines, Indonesia, and Thailand, while maintaining
those in more stable markets such as Japan, Singapore, and Taiwan; and cutting
down our exposure to sectors that we believe have been prime beneficiaries of
Chinese growth, such as resources (commodity companies producing iron, ore, and
coal) and shipping.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
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Two important points should be noted about the negative influences that
have depressed Asian stock markets in the first six months of 2005. One is that
many of the influences were global in nature (such as the price of oil and the
value of the U.S. dollar) and not Asia-specific. The other is that we believe
even those that were regional in nature (such as slower export growth) are not
derailing the ongoing growth in Asia, nor are they undermining a long-term
strategy for Asian investment. We believe the Asian stock markets may continue
to outperform other regions of the world. Also, we believe that India and a
gradual economic recovery in Japan may continue to propel Asian equities in the
foreseeable future.
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. INVESTING IN FOREIGN SECURITIES PRESENTS CERTAIN
RISKS THAT MAY NOT BE PRESENT IN DOMESTIC SECURITIES, INCLUDING CURRENCY
FLUCTUATION, THE POTENTIAL FOR DIPLOMATIC AND POLITICAL INSTABILITY, REGULATORY
AND LIQUIDITY RISKS, FOREIGN TAXATION AND DIFFERENCES IN AUDITING AND OTHER
FINANCIAL STANDARDS. THESE RISKS ARE GENERALLY INTENSIFIED IN EMERGING MARKETS.
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 EMPHASIZE 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 SMALL COMPANY
SECURITIES RISK AND REGIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
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The views expressed are as of June 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 ASIA PACIFIC 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 Investor Class shares of the WELLS FARGO
ADVANTAGE ASIA PACIFIC FUND for periods prior to April 11, 2005, reflects the
performance of the Investor Class shares of the Strong Asia Pacific 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 Morgan Stanley Capital International/All Countries Pacific (MSCI/AC
Pacific) Index is a free float-adjusted market capitalization index that is
designed to measure the equity market performance in the Pacific region. The
MSCI/AC Pacific Index is currently comprised of 12 emerging and developed market
countries. You cannot invest directly in an index.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
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AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
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6-Month* 1-Year 5-Year 10-Year
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Asia Pacific Fund - Investor Class 2.87 19.37 4.85 3.66
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Benchmark
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MSCI/AC Pacific Index(2) (1.08) 10.52 (1.65) 0.07
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* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
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Beta** 1.09
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Price to Earnings Ratio (trailing 12 months) 15.60x
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Price to Book Ratio 1.84x
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Median Market Cap. ($B) $ 0.45
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Portfolio Turnover 79%
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** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
PORTFOLIO COMPOSITION(3) (AS OF JUNE 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Australia 5%
Bermuda 1%
China 3%
Hong Kong 16%
Indonesia 1%
India 4%
Japan 20%
Malaysia 7%
Philippines 3%
Singapore 21%
South Korea 4%
Taiwan 7%
Thailand 4%
United Kingdom 2%
USA 2%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
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Mitsubishi Tokyo Financial Group Incorporated 2.45%
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Guinness Peat Group plc 2.29%
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Sumitomo Realty & Development Company Limited 2.16%
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Newcrest Mining Limited 2.08%
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Kim Eng Holdings Limited 2.08%
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Pos Malaysia & Services Holdings Berhad 2.04%
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Jafco Company Limited 1.99%
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Koyo Seiko Company Limited 1.96%
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Komatsu Limited 1.95%
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Zijin Mining Group Company Limited Class H 1.87%
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GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE ASIA
PACIFIC FUND - INVESTOR CLASS MSCI/AC PACIFIC INDEX
6/30/1995 10000 10,000
7/31/1995 10526 10,676
8/31/1995 10569 10,266
9/30/1995 10482 10,355
10/31/1995 10267 9,879
11/30/1995 10202 10,275
12/31/1995 10598 10,780
1/31/1996 11248 10,853
2/29/1996 11204 10,754
3/31/1996 11324 11,047
4/30/1996 11958 11,620
5/31/1996 11725 11,144
6/30/1996 11728 11,136
7/31/1996 10899 10,576
8/31/1996 10989 10,334
9/30/1996 10955 10,626
10/31/1996 10652 10,110
11/30/1996 10966 10,390
12/31/1996 10821 9,896
1/31/1997 10844 9,219
2/28/1997 11116 9,392
3/31/1997 10685 9,037
4/30/1997 10583 9,224
5/31/1997 11105 10,015
6/30/1997 11246 10,639
7/31/1997 11109 10,437
8/31/1997 9834 9,298
9/30/1997 9630 9,223
10/31/1997 8366 8,051
11/30/1997 7797 7,568
12/31/1997 7467 7,215
1/31/1998 7364 7,568
2/28/1998 7822 7,911
3/31/1998 7695 7,511
4/30/1998 7452 7,333
5/31/1998 6737 6,776
6/30/1998 6103 6,690
7/31/1998 6068 6,597
8/31/1998 5226 5,795
9/30/1998 5434 5,817
10/31/1998 6264 6,806
11/30/1998 7002 7,178
12/31/1998 7233 7,400
1/31/1999 7279 7,459
2/28/1999 7026 7,299
3/31/1999 7775 8,212
4/30/1999 9033 8,828
5/31/1999 9171 8,371
6/30/1999 10683 9,248
7/31/1999 10925 9,824
8/31/1999 10821 9,786
9/30/1999 10717 10,065
10/31/1999 11098 10,432
11/30/1999 12701 10,991
12/31/1999 14179 11,714
1/31/2000 13654 11,302
2/29/2000 14585 11,023
3/31/2000 14275 11,729
4/30/2000 11923 10,845
5/31/2000 10431 10,225
6/30/2000 11303 10,940
7/31/2000 10610 9,919
8/31/2000 11327 10,336
9/30/2000 10121 9,663
10/31/2000 9298 9,053
11/30/2000 9202 8,727
12/31/2000 8941 8,382
1/31/2001 9279 8,608
2/28/2001 8966 8,215
3/31/2001 8025 7,744
4/30/2001 8389 8,172
5/31/2001 8339 8,157
6/30/2001 8226 7,804
7/31/2001 7737 7,311
8/31/2001 8000 7,167
9/30/2001 6834 6,365
10/31/2001 6959 6,489
11/30/2001 7674 6,798
12/31/2001 7823 6,645
1/31/2002 8241 6,398
2/28/2002 8367 6,573
3/31/2002 8658 6,955
4/30/2002 8899 7,209
5/31/2002 9228 7,491
6/30/2002 8810 7,110
7/31/2002 8241 6,662
8/31/2002 8026 6,611
9/30/2002 7241 6,212
10/31/2002 7013 6,046
11/30/2002 7317 6,297
12/31/2002 7215 6,091
1/31/2003 7074 5,965
2/28/2003 6998 5,917
3/31/2003 6832 5,724
4/30/2003 6960 5,809
5/31/2003 7674 6,130
6/30/2003 8298 6,534
7/31/2003 8782 6,821
8/31/2003 9700 7,408
9/30/2003 10325 7,737
10/31/2003 11090 8,204
11/30/2003 10847 8,025
12/31/2003 11562 8,582
1/31/2004 11922 8,803
2/29/2004 12218 8,921
3/31/2004 12853 9,617
4/30/2004 12246 9,088
5/31/2004 11755 8,825
6/30/2004 12000 9,108
7/31/2004 11587 8,727
8/31/2004 11742 8,889
9/30/2004 12181 8,924
10/31/2004 12388 9,157
11/30/2004 13460 9,741
12/31/2004 13926 10,177
1/31/2005 14389 10,063
2/28/2005 14771 10,418
3/31/2005 14144 10,105
4/30/2005 13977 9,894
5/31/2005 13991 9,911
6/30/2005 14325 10,067
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(3) Portfolio composition, portfolio holdings and Fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of portfolio composition, portfolio holdings and Fund
characteristics.
(4) The Ten Largest Equity Holdings are calculated based on the market value of
the securities divided by total market value of the Portfolio.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE ASIA PACIFIC
FUND Investor Class shares for the most recent ten years with the MSCI/AC
Pacific Index. The chart assumes a hypothetical investment of $10,000 in
Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE OVERSEAS FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE OVERSEAS FUND (the Fund) seeks long-term capital
appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC New Star Institutional Managers
Limited
FUND MANAGERS INCEPTION DATE
Mark Beale 6/30/1998
Richard Lewis
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
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The Fund's Investor Class shares returned (1.94)%(1) for the six-month
period ended June 30, 2005, underperforming its benchmark, the MSCI/EAFE
Index(2), which returned (1.17)% over 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 AND INSTITUTIONAL 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.
FROM TIME TO TIME, THE FUND'S PERFORMANCE WAS SIGNIFICANTLY ENHANCED
THROUGH INVESTMENTS IN INITIAL PUBLIC OFFERINGS (IPOs). THE EFFECT OF IPOs
PURCHASED WHEN THE FUND'S ASSET BASE WAS SMALL MAY HAVE BEEN MAGNIFIED.
INVESTORS SHOULD NOT EXPECT THAT SUCH ENHANCED RETURNS CAN BE CONSISTENTLY
ACHIEVED. PLEASE CONSIDER THIS BEFORE INVESTING.
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?
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International equity markets performed well over the six-month period, but
most of the gains were offset by losses on the major currencies relative to the
U.S. dollar. Holdings in Europe, excluding the United Kingdom (UK), performed
well. The Fund's overweighting, compared to the benchmark, in pharmaceutical and
energy stocks generated positive returns, as did its holdings in Japanese
materials and energy sectors. The Fund's overweighting in Europe (excluding the
UK) meant the weak Euro was a negative factor on Fund performance. Fewer
holdings in Australia hampered progress, as the Australian dollar was one of the
most resilient currencies over the period.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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The biggest changes to the Fund's structure were made at the industry
level. Over the six-month period, we reduced the Fund's holdings in the
materials sector with sales of stocks, such as Nippon Steel and Nippon Paper of
Japan, CVRD of Brazil, and Gold Fields of South Africa. We reduced exposure to
the industrial sector with sales of Ebara and THK in Japan, ST Microelectronics
in France, and Autoliv in Sweden. We increased our energy weightings with the
purchase of Royal Dutch Petroleum in Holland and Sinopec in China. Other sectors
that increased over the reporting period were health care and information
technology (IT). In the health care sector, we purchased AstraZeneca in the UK
and increased our existing holdings of Roche and Novartis in Switzerland. In the
IT sector, we purchased Nokia in Finland, CAP Gemini in France, and ASML in
Holland. On a regional level, the most significant change was the reduction in
our Japan weighting. We also decreased the Fund's holdings in emerging markets
and correspondingly increased its holdings in Europe and, to a lesser extent,
the UK.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
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As the pace of global economic growth decelerates, the outlook for
corporate earnings seems less assured to us. Upward revisions by analysts are
moderating, unsurprisingly, following the 2-year recovery since the bottom of
the last cycle. We hold the view that as profit upgrades become scarcer and
warnings start to reappear, investors may be willing to pay premium valuations
for more reliable, high-return-on-invested-capital companies. With this in mind,
we continue to favor companies in the health care and IT sectors, which we
believe are less vulnerable to an economic slowdown than those in the materials
and industrials sectors. At a regional level, we favor Europe (excluding the UK)
and Asia over the UK and Japan. In our opinion, profitability appears to be
holding up well in Europe (excluding the UK) and Asia, while the outlook for
earnings upgrades is less positive in the UK and Japan.
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. INVESTING IN FOREIGN SECURITIES PRESENTS CERTAIN
RISKS THAT MAY NOT BE PRESENT IN DOMESTIC SECURITIES, INCLUDING CURRENCY
FLUCTUATION, THE POTENTIAL FOR DIPLOMATIC AND POLITICAL INSTABILITY, REGULATORY
AND LIQUIDITY RISKS, FOREIGN TAXATION AND DIFFERENCES IN AUDITING, AND OTHER
FINANCIAL STANDARDS. THESE RISKS ARE GENERALLY INTENSIFIED IN EMERGING MARKETS.
INVESTMENT STRATEGIES THAT EMPHASIZE 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 SMALL COMPANY SECURITIES RISK. CONSULT
THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 OVERSEAS 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 Institutional Class shares of the WELLS FARGO
ADVANTAGE OVERSEAS FUND prior to April 11, 2005, reflects the performance of the
Institutional Class shares of the Strong Overseas Fund, its predecessor fund,
and for periods prior to December 31, 2002, reflects the performance of the
Investor Class shares of the predecessor fund.
- --------------------------------------------------------------------------------
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Life of
6-Month* 1-Year 5-Year Fund
- --------------------------------------------------------------------------------------------------------------
Overseas Fund - Institutional Class (Inception Date 12/31/02) (1.71) 11.89 (6.30) 4.66
- --------------------------------------------------------------------------------------------------------------
Overseas Fund - Investor Class (Inception Date 6/30/98) (1.94) 11.10 (6.58) 4.43
- --------------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------------
MSCI/EAFE Index(2) (1.17) 13.65 (0.55) 2.96
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ------------------------------------------------------------
Beta** 0.96
- ------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 14.49x
- ------------------------------------------------------------
Price to Book Ratio 2.50x
- ------------------------------------------------------------
Median Market Cap. ($B) $13.91
- ------------------------------------------------------------
Portfolio Turnover 98%
- ------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- -------------------------------------------------------------------
Roche Holding AG 2.72%
- -------------------------------------------------------------------
Royal Dutch Petroleum Company 2.27%
- -------------------------------------------------------------------
HSBC Holdings plc 2.16%
- -------------------------------------------------------------------
Kao Corporation 2.09%
- -------------------------------------------------------------------
Total SA 2.03%
- -------------------------------------------------------------------
Shell Transport and Trading Company plc 1.98%
- -------------------------------------------------------------------
Vodafone Group plc 1.95%
- -------------------------------------------------------------------
Unicredito Italiano SpA 1.90%
- --------------------------------------------------------------------
NTT DoCoMo Incorporated 1.85%
- -------------------------------------------------------------------
ENI SpA 1.72%
PORTFOLIO COMPOSITION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Continental Europe 52%
United Kingdom 20%
Australia 2%
Southeast Asia 5%
Emerging Markets 3%
Japan 18%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
OVERSEAS FUND - INVESTOR CLASS MSCI/EAFE INDEX
6/30/1998 10000 10000
7/31/1998 10570 10,101
8/31/1998 9290 8,849
9/30/1998 8370 8,578
10/31/1998 8200 9,472
11/30/1998 8950 9,957
12/31/1998 10460 10,350
1/31/1999 11600 10,319
2/28/1999 11080 10,073
3/31/1999 11410 10,493
4/30/1999 11420 10,918
5/31/1999 11060 10,356
6/30/1999 12240 10,760
7/31/1999 12860 11,079
8/31/1999 12800 11,120
9/30/1999 13380 11,233
10/31/1999 14370 11,654
11/30/1999 17330 12,058
12/31/1999 20530 13,141
1/31/2000 19880 12,307
2/29/2000 23430 12,638
3/31/2000 21610 13,128
4/30/2000 19310 12,438
5/31/2000 18080 12,134
6/30/2000 19040 12,609
7/31/2000 18020 12,080
8/31/2000 18520 12,185
9/30/2000 16280 11,592
10/31/2000 15170 11,318
11/30/2000 13850 10,894
12/31/2000 13660 11,281
1/31/2001 14090 11,275
2/28/2001 12770 10,429
3/31/2001 11760 9,734
4/30/2001 12720 10,410
5/31/2001 12250 10,043
6/30/2001 11980 9,632
7/31/2001 11640 9,457
8/31/2001 11360 9,217
9/30/2001 10200 8,284
10/31/2001 10410 8,496
11/30/2001 10780 8,809
12/31/2001 11044 8,861
1/31/2002 10485 8,391
2/28/2002 10434 8,449
3/31/2002 10871 8,907
4/30/2002 10861 8,965
5/31/2002 10851 9,079
6/30/2002 10485 8,718
7/31/2002 9336 7,857
8/31/2002 9305 7,839
9/30/2002 8431 6,997
10/31/2002 8654 7,373
11/30/2002 8959 7,708
12/31/2002 8837 7,449
1/31/2003 8512 7,138
2/28/2003 8410 6,974
3/31/2003 8288 6,837
4/30/2003 8959 7,507
5/31/2003 9478 7,962
6/30/2003 9590 8,155
7/31/2003 9763 8,352
8/31/2003 9966 8,554
9/30/2003 10159 8,817
10/31/2003 10607 9,366
11/30/2003 10942 9,574
12/31/2003 11680 10,322
1/31/2004 11925 10,467
2/29/2004 12192 10,709
3/31/2004 12174 10,769
4/30/2004 11754 10,526
5/31/2004 11908 10,562
6/30/2004 12194 10,793
7/31/2004 11775 10,442
8/31/2004 11887 10,488
9/30/2004 12256 10,762
10/31/2004 12573 11,129
11/30/2004 13269 11,889
12/31/2004 13816 12,411
1/31/2005 13495 12,183
2/28/2005 14095 12,710
3/31/2005 13714 12,391
4/30/2005 13351 12,100
5/31/2005 13300 12,106
6/30/2005 13548 12,267
- --------------------------------------------------------------------------------
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE OVERSEAS FUND for periods prior to April 11, 2005, reflects the
performance of the Investor Class shares of the Strong Overseas 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 Morgan Stanley Capital International/Europe, Australasia and Far East
(MSCI/EAFE) Index is an unmanaged group of securities widely regarded by
investors to be representations of the stock markets of Europe, Australasia and
the Far East. You cannot invest directly in an index.
(3) Portfolio composition, portfolio holdings and Fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of portfolio composition, portfolio holdings and Fund
characteristics.
(4) The Ten Largest Equity Holdings are calculated based on the market value of
the securities divided by total market value of the Portfolio.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE OVERSEAS
FUND Investor Class shares for the life of the Fund with the MSCI/EAFE Index.
The chart assumes a hypothetical investment of $10,000 in Investor Class shares
and reflects all operating expenses.
5
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS 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 (January 1, 2005 to June 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
1/1/2005 6/30/2005 Period(1) Ratio
Asia Pacific Fund
- ----------------------------------------------------------------------------------------------------
Asia Pacific Fund - Investor Class
Actual $ 1,000.00 $ 1,028.70 $ 8.60 1.71%
- ----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.31 $ 8.55 1.71%
Overseas Fund
- ----------------------------------------------------------------------------------------------------
Overseas Fund - Institutional Class
Actual $ 1,000.00 $ 982.90 $ 4.67 0.95%
- ----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.08 $ 4.76 0.95%
- ----------------------------------------------------------------------------------------------------
Overseas Fund - Investor Class
Actual $ 1,000.00 $ 980.60 $ 7.17 1.46%
- ----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.55 $ 7.30 1.46%
(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 -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 0.02%
BERMUDA - 0.02%
10,754 CHINA HEARTLAND FUND LIMITED+(a) $ 27,842
---------------
TOTAL INVESTMENT COMPANIES (COST $53,770) 27,842
---------------
COMMON STOCKS - 88.82%
AUSTRALIA - 4.55%
1 GREAT SOUTHERN PLANTATIONS LIMITED (LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE) 1
1,450,000 MACQUARIE CAPITAL ALLIANCE GROUP (HOLDING & OTHER INVESTMENT OFFICES)+ 2,328,882
217,900 NEWCREST MINING LIMITED (METAL MINING) 2,866,936
1,110,000 NORWOOD ABBEY LIMITED (HEALTH SERVICES)+ 286,618
2,300,000 OXIANA LIMITED (MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS)+ 1,547,792
7,030,229
---------------
BERMUDA - 1.01%
3,773,000 SURFACE MOUNT TECHNOLOGY (HOLDINGS) LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 1,561,588
---------------
CHINA - 2.75%
1,980,000 TRAVELSKY TECHNOLOGY LIMITED CLASS H (BUSINESS SERVICES) 1,676,560
11,700,000 ZIJIN MINING GROUP COMPANY LIMITED CLASS H (METAL MINING) 2,565,450
4,242,010
---------------
HONG KONG - 13.91%
3,409,000 COFCO INTERNATIONAL LIMITED (FOOD & KINDRED PRODUCTS) 1,630,718
25,700,000 DAQING PETROLEUM AND CHEMICAL GROUP LIMITED (CHEMICALS & ALLIED PRODUCTS)+(a) 1,348,746
7,844,000 EGANAGOLDPFEIL (HOLDINGS) LIMITED (MEASURING, ANALYZING & CONTROLLING INSTRUMENTS:
PHOTOGRAPHIC, MEDICAL & OPTICAL) 1,853,018
6,500,000 FIRST PACIFIC COMPANY LIMITED (MISCELLANEOUS MANUFACTURING INDUSTRIES)+ 2,311,770
213,000 GUOCO GROUP LIMITED (SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES) 2,189,593
3,083,000 INTEGRATED DISTRIBUTION SERVICES GROUP LIMITED (TRANSPORTATION SERVICES)+ 2,056,367
25,500,000 JOYCE BOUTIQUE HOLDINGS LIMITED (APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS
& SIMILAR MATERIALS)+ 2,219,914
9,200,000 PLAYMATES HOLDINGS LIMITED (MISCELLANEOUS RETAIL) 1,775,525
8,700,000 PRIME SUCCESS INTERNATIONAL GROUP LIMITED (WHOLESALE TRADE NON-DURABLE GOODS) 2,420,677
2,210,000 SHUN TAK HOLDINGS LIMITED (REAL ESTATE) 2,096,123
16,420,000 TITAN PETROCHEMICALS GROUP LIMITED (CHEMICALS & ALLIED PRODUCTS) 1,602,407
21,504,858
---------------
INDIA - 3.68%
296,800 APOLLO HOSPITALS ENTERPRISE LIMITED (HEALTH SERVICES) 2,407,969
120,000 FINANCIAL TECHNOLOGIES (INDIA) LIMITED (BUSINESS SERVICES)+ 1,340,742
184,616 THOMAS COOK (INDIA) LIMITED (TRANSPORTATION SERVICES) 1,937,628
5,686,339
---------------
INDONESIA - 1.00%
92,000,000 PT PANIN LIFE TBK (HEALTH SERVICES) 1,548,793
---------------
JAPAN - 17.44%
730 DENTSU INCORPORATED (BUSINESS SERVICES) 1,796,925
52,000 JAFCO COMPANY LIMITED (HOLDING & OTHER INVESTMENT OFFICES) 2,742,837
1,050 JAPAN WIND DEVELOPMENT COMPANY LIMITED (WHOLESALE TRADE-DURABLE GOODS) 2,045,011
348,000 KOMATSU LIMITED (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 2,688,741
202,000 KOYO SEIKO COMPANY LIMITED (TRANSPORTATION EQUIPMENT) 2,699,059
7
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
JAPAN (CONTINUED)
140,000 MITSUBISHI ESTATE COMPANY LIMITED (REAL ESTATE) $ 1,531,895
400 MITSUBISHI TOKYO FINANCIAL GROUP INCORPORATED (DEPOSITORY INSTITUTIONS) 3,371,846
325 MIZUHO FINANCIAL GROUP INCORPORATED (BANKING) 1,460,910
1,000 NTT DOCOMO INCORPORATED (COMMUNICATIONS) 1,473,349
142,400 PHOENIX ELECTRIC COMPANY LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 2,501,772
267,000 SUMITOMO REALTY & DEVELOPMENT COMPANY LIMITED (REAL ESTATE) 2,972,899
46,600 TOYOTA MOTOR CORPORATION (AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS) 1,662,958
26,948,202
---------------
MALAYSIA - 6.06%
1,666,000 COMMERCE ASSET-HOLDING BERHAD (DEPOSITORY INSTITUTIONS)(A) 2,210,997
3,171,000 HIAP TECK VENTURE BERHAD (HOLDING & OTHER INVESTMENT OFFICES) 1,082,913
4,389,500 MAH SING GROUP BERHAD (REAL ESTATE) 1,602,917
3,057,000 POS MALAYSIA & SERVICES HOLDINGS BERHAD (TRANSPORTATION SERVICES) 2,811,065
6,256,600 SAPURACREST PETROLEUM BERHAD (OIL & GAS EXTRACTION)+ 1,658,029
9,365,921
---------------
NEW ZEALAND - 0.09%
107,200 CANWEST MEDIAWORKS (NZ) LIMITED (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 138,055
---------------
PHILIPPINES - 2.29%
626,140 PHILIPPINE STOCK EXCHANGE INCORPORATED (SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES
& SERVICES)+ 1,690,113
405,755 SM INVESTMENTS CORPORATION (HOLDING & OTHER INVESTMENT OFFICES) 1,848,460
3,538,573
---------------
SINGAPORE - 19.10%
3,120,000 ALLGREEN PROPERTIES LIMITED (REAL ESTATE) 2,142,713
5,334,000 ASCOTT GROUP LIMITED (REAL ESTATE) 1,435,401
2,175,000 BIL INTERNATIONAL LIMITED (REAL ESTATE) 1,545,671
521,000 CITY DEVELOPMENTS LIMITED (REAL ESTATE) 2,311,591
160,000 DBS GROUP HOLDINGS LIMITED (DEPOSITORY INSTITUTIONS) 1,353,700
141,000 FORTUNE REAL ESTATE INVESTMENT TRUST (REAL ESTATE) 115,092
2,700,000 GOODPACK LIMITED (TRANSPORTATION SERVICES) 2,188,794
3,770,000 KIM ENG HOLDINGS LIMITED (SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES) 2,860,958
4,000,000 LMA INTERNATIONAL NV (MEASURING, ANALYZING & CONTROLLING INSTRUMENTS:
PHOTOGRAPHIC, MEDICAL & OPTICAL)+ 1,898,152
9,138,000 MULTIVISION INTELLIGENT SURVEILLANCE LIMITED (BUSINESS SERVICES)+ 1,052,232
2,960,000 OLAM INTERNATIONAL LIMITED (AGRICULTURAL SERVICES)+ 1,545,096
2,222,000 PEARL ENERGY LIMITED (OIL & GAS EXTRACTION)+ 2,267,011
3,511,000 RAFFLES EDUCATION CORPORATION LIMITED (EDUCATIONAL SERVICES) 1,561,972
2,297,000 SAN TEH LIMITED (STONE, CLAY, GLASS & CONCRETE PRODUCTS) 428,382
1,658,000 SBS TRANSIT LIMITED (TRANSPORTATION SERVICES) 2,205,872
8,879,000 SHANGHAI ASIA HOLDINGS LIMITED (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 1,283,245
970,000 SIA ENGINEERING COMPANY (BUSINESS SERVICES) 1,390,422
2,280,000 YELLOW PAGES (SINGAPORE) LIMITED (PRINTING, PUBLISHING & ALLIED INDUSTRIES)+ 1,929,313
29,515,617
---------------
8
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SOUTH KOREA - 3.43%
88,000 KENERTEC COMPANY LIMITED (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) $ 973,997
30,100 LG ELECTRONICS INCORPORATED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 1,892,469
33,100 NCSOFT CORPORATION (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT)+ 2,439,516
5,305,982
---------------
TAIWAN - 6.58%
2,750,000 GAMANIA DIGITAL ENTERTAINMENT COMPANY LIMITED (BUSINESS SERVICES)+ 1,228,092
1,432,000 GIANT MANUFACTURING COMPANY LIMITED (FABRICATED METAL PRODUCTS,
EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT) 2,305,912
1,069,000 SINYI REALTY COMPANY LIMITED (REAL ESTATE) 2,457,690
255,722 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED ADR (ELECTRONIC &
OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT)+ 2,332,184
2,603,000 TEST RITE INTERNATIONAL COMPANY LIMITED (WHOLESALE TRADE-DURABLE GOODS) 1,847,664
10,171,542
---------------
THAILAND - 3.43%
4,510,000 DYNASTY CERAMIC PUBLIC COMPANY LIMITED (FOREIGN REGISTERED) (STONE, CLAY, GLASS & CONCRETE
PRODUCTS) 1,811,639
2,935,000 HANA MICROELECTRONICS PUBLIC COMPANY LIMITED (FOREIGN REGISTERED) (ELECTRONIC & OTHER
ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 1,448,857
22,000,000 MINOR INTERNATIONAL PUBLIC COMPANY LIMITED (FOREIGN REGISTERED) (HOTELS, ROOMING HOUSES,
CAMPS & OTHER LODGE PLACES) 2,044,283
5,304,779
---------------
UNITED KINGDOM - 2.03%
2,265,725 GUINNESS PEAT GROUP PLC (MISCELLANEOUS MANUFACTURING INDUSTRIES) 3,143,068
---------------
UNITED STATES - 1.47%
80,000 MACQUARIE INFRASTRUCTURE COMPANY TRUST (BUSINESS SERVICES) 2,270,400
---------------
TOTAL COMMON STOCKS (COST $133,253,073) 137,275,956
---------------
WARRANTS - 0.15%
337,500 GOODPACK LIMITED (EXPIRES 4/13/2007)+ 73,071
2,284,500 MULTIVISION INTELLIGENT (EXPIRES 4/17/2008)+ 88,082
1,640,000 PLAYMATES HOLDINGS LIMITED (EXPIRES 5/23/2006)+ 67,533
TOTAL WARRANTS (COST $39,643) 228,686
---------------
SHORT-TERM INVESTMENTS - 9.82%
MUTUAL FUND - 9.82%
15,183,447 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 15,183,447
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $15,183,447) 15,183,447
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $148,529,933)* 98.81% $ 152,715,931
OTHER ASSETS AND LIABILITIES, NET 1.19 1,837,558
------ ---------------
TOTAL NET ASSETS 100.00% $ 154,553,489
------ ---------------
+ NON-INCOME EARNING SECURITIES.
(a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE
BOARD OF TRUSTEES.
~ 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 $15,183,447.
* 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.
9
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
OVERSEAS FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.25%
AUSTRALIA - 2.24%
100,222 BHP BILLITON LIMITED (MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS) $ 1,368,603
50,505 WOODSIDE PETROLEUM LIMITED (OIL & GAS EXTRACTION) 1,121,792
2,490,395
---------------
BELGIUM - 1.24%
49,600 FORTIS (DEPOSITORY INSTITUTIONS) 1,372,766
---------------
DENMARK - 1.64%
30,900 DANSKE BANK A/S (DEPOSITORY INSTITUTIONS) 928,147
17,630 NOVO NORDISK A/S CLASS B (CHEMICALS & ALLIED PRODUCTS) 896,069
1,824,216
---------------
FINLAND - 1.13%
75,200 NOKIA OYJ (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 1,251,262
---------------
FRANCE - 12.26%
61,100 ALCATEL SA (COMMUNICATIONS)+ 666,259
56,500 AXA (INSURANCE CARRIERS) 1,406,700
30,800 BOUYGUES SA (ENGINEERING CONSTRUCTION) 1,273,241
23,825 CAP GEMINI SA (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT)+ 753,847
15,500 LAFARGE SA (STONE, CLAY, GLASS & CONCRETE PRODUCTS) 1,408,866
2,462 PAGESJAUNES SA (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 57,532
19,350 SANOFI-SYNTHELABO SA (CHEMICALS & ALLIED PRODUCTS) 1,584,729
35,900 SODEXHO ALLIANCE SA (FOOD & KINDRED PRODUCTS) 1,109,345
9,354 TOTAL SA (PETROLEUM REFINING & RELATED INDUSTRIES) 2,188,807
20,600 VINCI SA (BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS) 1,711,944
46,500 VIVENDI UNIVERSAL SA (COMMUNICATIONS) 1,457,241
13,618,511
---------------
GERMANY - 7.25%
17,600 BAYERISCHE MOTOREN WERKE AG (AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS) 798,181
9,122 CELESIO AG (WHOLESALE TRADE-DURABLE GOODS) 715,688
77,400 DEUTSCHE TELEKOM AG (COMMUNICATIONS) 1,426,034
19,000 E.ON AG (ELECTRIC, GAS & SANITARY SERVICES) 1,686,696
10,500 FRESENIUS MEDICAL CARE AG (HEALTH SERVICES) 893,790
33,000 METRO AG (FOOD STORES) 1,634,930
5,200 SAP AG (BUSINESS SERVICES) 899,606
8,054,925
---------------
GREECE - 1.29%
32,981 ALPHA BANK AE (DEPOSITORY INSTITUTIONS) 877,394
30,518 COSMOTE MOBILE COMMUNICATIONS SA (COMMUNICATIONS) 556,940
1,434,334
---------------
HONG KONG - 3.67%
85,000 CHEUNG KONG HOLDINGS LIMITED (REAL ESTATE) 824,430
1,932,000 CHINA PETROLEUM AND CHEMICAL CORPORATION (SINOPEC) (OIL COMPANIES) 753,075
1,778,000 GUANGDONG INVESTMENT LIMITED (BUSINESS SERVICES) 517,919
84,000 SUNG HUNG KAI PROPERTIES LIMITED (REAL ESTATE) 826,183
205,000 TELEVISION BROADCASTS LIMITED (MOTION PICTURES) 1,155,898
4,077,505
---------------
10
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
OVERSEAS FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HUNGARY - 0.70%
11,600 OTP BANK GDR (DEPOSITORY INSTITUTIONS) $ 780,680
---------------
IRELAND - 0.00%
254,000 CONNEMARA GREEN MARBLE QUARRIES PLC (MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT
FUELS)+(a) 0
---------------
ISRAEL - 0.48%
17,239 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR (CHEMICALS & ALLIED PRODUCTS) 536,822
---------------
ITALY - 4.83%
72,200 ENI SPA (PETROLEUM REFINING & RELATED INDUSTRIES) 1,855,161
124,200 MEDIASET SPA (COMMUNICATIONS) 1,460,748
389,400 UNICREDITO ITALIANO SPA (DEPOSITORY INSTITUTIONS) 2,053,021
5,368,930
---------------
JAPAN - 17.63%
106,300 AEON COMPANY LIMITED (MISCELLANEOUS RETAIL) 1,616,714
103,000 AJINOMOTO COMPANY INCORPORATED (FOOD & KINDRED PRODUCTS) 1,143,148
100,000 KANEKA CORPORATION (CHEMICALS & ALLIED PRODUCTS) 1,117,324
96,000 KAO CORPORATION (CHEMICALS & ALLIED PRODUCTS) 2,255,592
3,900 KEYENCE CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT) 869,420
30,500 MURATA MANUFACTURING COMPANY LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 1,545,221
118,000 NIPPON OIL CORPORATION (OIL & GAS EXTRACTION) 798,443
158,000 NISSAN MOTOR COMPANY LIMITED (AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS) 1,561,995
1,360 NTT DOCOMO INCORPORATED (COMMUNICATIONS) 2,003,755
63,700 OMRON CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT) 1,400,127
27,000 SECOM COMPANY LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT) 1,158,422
61,000 SEINO TRANSPORTATION COMPANY LIMITED (MOTOR FREIGHT TRANSPORTATION & WAREHOUSING) 549,769
35,200 SHIMACHU COMPANY LIMITED (MISCELLANEOUS RETAIL) 884,133
58,700 SHOWA SHELL SEKIYU KK (OIL & GAS EXTRACTION) 586,886
62,000 SUZUKI MOTOR CORPORATION (TRANSPORTATION EQUIPMENT) 971,049
16,600 TAKEFUJI CORPORATION (HOLDING & OTHER INVESTMENT OFFICES) 1,117,261
19,579,259
---------------
NETHERLANDS - 7.62%
73,500 ASML HOLDING NV (SEMICONDUCTOR EQUIPMENT MANUFACTURING & RELATED)+ 1,152,606
47,000 ING GROEP NV (FINANCIAL SERVICES) 1,321,045
129,700 KONINKLIJKE AHOLD NV (FOOD STORES)+ 1,062,537
18,500 ROYAL DUTCH PETROLEUM COMPANY (PETROLEUM REFINING & RELATED INDUSTRIES) 1,200,650
37,700 ROYAL DUTCH PETROLEUM COMPANY (PETROLEUM REFINING & RELATED INDUSTRIES) 2,450,848
67,000 WOLTERS KLUWER NV (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 1,278,853
8,466,539
---------------
RUSSIA - 0.77%
25,300 MOBILE TELESYSTEMS ADR (COMMUNICATIONS) 851,345
---------------
SINGAPORE - 0.71%
308,000 SINGAPORE PRESS HOLDINGS LIMITED (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 784,220
---------------
SOUTH KOREA - 0.68%
2,320 SAMSUNG ELECTRONICS-PREFERRED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT)+ 757,195
---------------
11
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
OVERSEAS FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SPAIN - 2.99%
36,100 ACTIVIDADES DE CONSTRUCCION Y SERVICIOS SA (HEAVY CONSTRUCTION OTHER THAN BUILDING CONSTRUCTION
CONTRACTS) $ 1,008,424
60,900 BANCO BILBAO VIZCAYA ARGENTARIA SA (DEPOSITORY INSTITUTIONS) 935,720
69,500 INDRA SISTEMAS SA (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 1,372,997
3,317,141
---------------
SWEDEN - 0.77%
6,943 AUTOLIV INCORPORATED (TRANSPORTATION EQUIPMENT) 302,670
32,957 SECURITAS AB (BUSINESS SERVICES) 548,491
851,161
---------------
SWITZERLAND - 8.33%
2,340 NESTLE SA (FOOD & KINDRED PRODUCTS) 597,783
16,300 NOVARTIS AG (CHEMICALS & ALLIED PRODUCTS) 773,869
38,320 NOVARTIS AG ADR (CHEMICALS & ALLIED PRODUCTS) 1,817,901
23,300 ROCHE HOLDING AG (HEALTH SERVICES) 2,939,925
20,950 UBS AG (FINANCIAL SERVICES) 1,633,161
8,700 ZURICH FINANCIAL SERVICES AG (FINANCIAL SERVICES)+ 1,492,227
9,254,866
---------------
TAIWAN - 0.66%
80,793 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED ADR (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT
& COMPONENTS, EXCEPT COMPUTER EQUIPMENT)+ 736,828
---------------
THAILAND - 0.83%
426,000 ADVANCED INFORMATION SERVICE PUBLIC COMPANY LIMITED (FOREIGN REGISTERED) (COMMUNICATIONS) 927,768
---------------
UNITED KINGDOM - 19.53%
31,500 ASTRAZENECA PLC (CHEMICALS & ALLIED PRODUCTS) 1,298,670
126,100 AVIVA PLC (INSURANCE CARRIERS) 1,400,191
110,200 BARCLAYS PLC (DEPOSITORY INSTITUTIONS) 1,092,330
262,500 COMPASS GROUP PLC (FOOD & KINDRED PRODUCTS) 1,099,221
79,800 EMAP PLC (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 1,109,520
255,200 EMI GROUP PLC (AMUSEMENT & RECREATION SERVICES) 1,157,720
32,300 GLAXOSMITHKLINE PLC ADR (CHEMICALS & ALLIED PRODUCTS) 1,566,873
147,000 HSBC HOLDINGS PLC (DEPOSITORY INSTITUTIONS) 2,337,674
866,200 LEGAL & GENERAL GROUP PLC (INSURANCE CARRIERS) 1,778,128
5,850,000 ROLLS ROYCE GROUP PLC CLASS B (AEROSPACE, DEFENSE) 10,535
184,300 ROLLS ROYCE GROUP PLC (AEROSPACE, DEFENSE)+ 945,536
150,200 SCOTTISH & NEWCASTLE PLC (FOOD & KINDRED PRODUCTS) 1,244,086
220,500 SHELL TRANSPORT & TRADING COMPANY PLC (PETROLEUM REFINING & RELATED INDUSTRIES) 2,135,019
67,200 STANDARD CHARTERED PLC (DEPOSITORY INSTITUTIONS) 1,224,289
867,300 VODAFONE GROUP PLC (COMMUNICATIONS) 2,108,630
115,500 WPP GROUP PLC (COMMUNICATIONS) 1,183,051
21,691,473
---------------
TOTAL COMMON STOCKS (COST $103,488,398) 108,028,141
---------------
12
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
OVERSEAS FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 2.25%
MUTUAL FUND - 2.25%
2,493,652 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 2,493,652
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,493,652) 2,493,652
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $105,982,050)* 99.50% $ 110,521,793
OTHER ASSETS AND LIABILITIES, NET 0.50 557,670
------ ---------------
TOTAL NET ASSETS 100.00% $ 111,079,463
------ ===============
+ NON-INCOME EARNING SECURITIES.
(a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE
BOARD OF TRUSTEES.
~ 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 $2,493,652.
* 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.
13
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND OVERSEAS FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ................................................... $ 137,586,060 $ 108,028,141
INVESTMENTS IN AFFILIATES ........................................................ 15,183,447 2,493,652
------------------- -------------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .................................. 152,769,507 110,521,793
------------------- -------------------
FOREIGN CURRENCY, AT VALUE ....................................................... 796,872 0
RECEIVABLE FOR FUND SHARES ISSUED ................................................ 247,947 57,985
RECEIVABLE FOR INVESTMENTS SOLD .................................................. 1,865,808 454,427
RECEIVABLES FOR DIVIDENDS AND INTEREST ........................................... 209,772 400,684
------------------- -------------------
TOTAL ASSETS ........................................................................ 155,889,906 111,434,889
------------------- -------------------
LIABILITIES
FOREIGN TAXES PAYABLE ............................................................ 94,412 0
PAYABLE FOR FUND SHARES REDEEMED ................................................. 284,359 22,062
PAYABLE FOR INVESTMENTS PURCHASED ................................................ 741,305 202,237
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ............................ 177,528 86,378
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR .......................................... 32,919 23,787
UNREALIZED DEPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS .................... 716 118
ACCRUED EXPENSES AND OTHER LIABILITIES ........................................... 5,178 20,844
------------------- -------------------
TOTAL LIABILITIES ................................................................... 1,336,417 355,426
------------------- -------------------
TOTAL NET ASSETS .................................................................... $ 154,553,489 $ 111,079,463
=================== ===================
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .................................................................. $ 137,853,891 $ 108,630,786
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ....................................... 556,658 1,234,126
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................ 12,013,154 (3,322,212)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN
CURRENCIES .................................................................... 4,130,502 4,536,880
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY
CONTRACTS AND TRANSACTIONS .................................................... (716) (117)
------------------- -------------------
TOTAL NET ASSETS .................................................................... $ 154,553,489 $ 111,079,463
------------------- -------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - INSTITUTIONAL CLASS ................................................. N/A $ 6,199,018
SHARES OUTSTANDING - INSTITUTIONAL CLASS ......................................... N/A 472,336
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ............... N/A $ 13.12
NET ASSETS - INVESTOR CLASS ...................................................... $ 154,553,489 $ 104,880,445
SHARES OUTSTANDING - INVESTOR CLASS .............................................. 15,032,022 8,014,054
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS .................... $10.28 $ 13.09
------------------- -------------------
INVESTMENTS AT COST ................................................................. $ 148,529,933 $ 105,982,050
=================== ===================
FOREIGN CURRENCIES AT COST .......................................................... $ 800,755 $ 0
=================== ===================
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND OVERSEAS FUND
------------------- -------------------
FOR THE SIX MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, 2005 ENDED JUNE 30, 2005
(UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ..................................................................... $ 1,668,785 $ 2,021,186
INTEREST ......................................................................... 30,639 2,228
INCOME FROM AFFILIATED SECURITIES ................................................ 105,462 30,781
SECURITIES LENDING INCOME, NET ................................................... 33 3,680
------------------- -------------------
TOTAL INVESTMENT INCOME ............................................................. 1,804,919 2,057,875
------------------- -------------------
EXPENSES
ADVISORY FEES .................................................................... 664,899 473,071
ADMINISTRATION FEES
FUND LEVEL .................................................................... 100,453 12,335
INSTITUTIONAL CLASS ........................................................... N/A 214
INVESTOR CLASS ................................................................ 256,740 362,586
CUSTODY FEES ..................................................................... 157,555 42,782
SHAREHOLDER SERVICING FEES ....................................................... 83,711 61,035
ACCOUNTING FEES .................................................................. 6,558 7,359
AUDIT FEES ....................................................................... 26,068 21,220
LEGAL FEES ....................................................................... 2,743 2,138
REGISTRATION FEES ................................................................ 16,189 16,183
SHAREHOLDER REPORTS .............................................................. 28,109 40,417
TRUSTEES' FEES ................................................................... 6,603 6,567
OTHER FEES AND EXPENSES .......................................................... 26,115 26,375
------------------- -------------------
TOTAL EXPENSES ...................................................................... 1,375,743 1,072,282
------------------- -------------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (127,490) (248,570)
NET EXPENSES ..................................................................... 1,248,253 823,712
------------------- -------------------
NET INVESTMENT INCOME (LOSS) ........................................................ 556,666 1,234,163
------------------- -------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 13,284,104 27,501,887
------------------- -------------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 13,284,104 27,501,887
------------------- -------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (10,386,901) (30,980,828)
FUTURES TRANSACTIONS ............................................................. (716) (117)
------------------- -------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (10,387,617) (30,980,945)
------------------- -------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. 2,896,487 (3,479,058)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 3,453,153 $ (2,244,895)
=================== ===================
(1) NET OF FOREIGN WITHHOLDING TAXES OF .......................................... $ 336,830 $ 274,160
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND
------------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................................. $ 126,394,552 $ 93,041,294
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................................... 556,666 630,131
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................... 13,284,104 10,977,092
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............... (10,387,617) 6,017,106
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................... 3,453,153 17,624,329
------------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INSTITUTIONAL CLASS ............................................................ N/A N/A
INVESTOR CLASS ................................................................. (747,146) (354,601)
NET REALIZED GAIN ON SALES OF INVESTMENTS
INVESTOR CLASS ................................................................. (2,700,667) (6,204,437)
------------------- -------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................................. (3,447,813) (6,559,038)
------------------- -------------------
CAPITAL SHARES TRANSACTIONS:
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 ........................................ 62,902,468 103,960,416
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................................... 3,245,662 6,244,106
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS .................................... 8,462 65,564
COST OF SHARES REDEEMED - INVESTOR CLASS .......................................... (38,002,995) (87,982,119)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ..................................................... 28,153,597 22,287,967
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL .............................................................. 28,153,597 22,287,967
------------------- -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .............................................. 28,158,937 33,353,258
------------------- -------------------
ENDING NET ASSETS .................................................................... $ 154,553,489 $ 126,394,552
=================== ===================
SHARES ISSUED AND REDEEMED:
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 ...................................................... 6,025,179 10,785,238
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................... 311,783 644,387
SHARES REDEEMED - INVESTOR CLASS .................................................. (3,676,315) (9,422,907)
------------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -INVESTOR CLASS ........................ 2,660,647 2,006,718
------------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL
SHARE TRANSACTIONS ................................................................ 2,660,647 2,006,718
------------------- -------------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ................................ $ 556,658 $ 747,138
=================== ===================
16
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
OVERSEAS FUND
------------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................... $ 119,765,258 $ 156,128,646
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................................... 1,234,163 1,272,768
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................... 27,501,887 16,894,888
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............... (30,980,945) 1,975,143
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................... (2,244,895) 20,142,799
------------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INSTITUTIONAL CLASS ............................................................ (3) (3,408)
INVESTOR CLASS ................................................................. (9,625) (1,319,167)
NET REALIZED GAIN ON SALES OF INVESTMENTS
INVESTOR CLASS ................................................................. 0 0
------------------- -------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................................. (9,628) (1,322,575)
------------------- -------------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ................................... 6,749,949 26,720
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............................... 3 3,408
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..................................... (760,938) (32,774)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS .................................. 5,989,014 (2,646)
------------------- -------------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........................................ 12,250,922 21,761,977
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................................... 8,007 1,036,408
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS .................................... 0 0
COST OF SHARES REDEEMED - INVESTOR CLASS .......................................... (24,679,215) (77,979,351)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ....................................... (12,420,286) (55,180,966)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - TOTAL ........................................... (6,431,272) (55,183,612)
------------------- -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .............................................. (8,685,795) (36,363,388)
------------------- -------------------
ENDING NET ASSETS .................................................................... $ 111,079,463 $ 119,765,258
=================== ===================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - INSTITUTIONAL CLASS ................................................. 516,816 2,251
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS .............. 0 256
SHARES REDEEMED - INSTITUTIONAL CLASS ............................................. (57,976) (2,768)
------------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. 458,840 (261)
------------------- -------------------
SHARES SOLD - INVESTOR CLASS 930,883 1,808,766
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................... 598 78,032
SHARES REDEEMED - INVESTOR CLASS .................................................. (1,876,712) (6,600,661)
------------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ....................... (945,231) (4,713,863)
------------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ........................................................ (486,391) (4,714,124)
------------------- -------------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ................................ $ 1,234,126 $ 9,591
=================== ===================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK 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
- ------------------------------------------------------------------------------------------------------------------------
ASIA PACIFIC FUND
- ------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $ 10.22 0.03 0.26 (0.05) (0.18)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $ 8.98 0.05 1.75(4) (0.03) (0.53)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $ 5.66 0.03 3.38(5) (0.09) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... $ 6.18 0.00 (0.48) (0.04) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... $ 7.13 (0.06) (0.83) (0.06) 0.00
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000 ...... $ 7.79 0.00 (0.30) (0.36) 0.00
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... $ 9.62 (0.19) (1.24) (0.40) 0.00
OVERSEAS FUND
- ------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $ 13.35 0.04 (0.27) 0.00 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $ 11.41 0.24 1.96 (0.26) 0.00
JANUARY 1, 2003(7) TO DECEMBER 31, 2003 ....... $ 8.69 0.11(8) 2.74 (0.13) 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $ 13.35 0.15 (0.41) 0.00 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $ 11.41 0.14 1.95 (0.15) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $ 8.69 0.07(8) 2.72(4) (0.07) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... $ 10.86 (0.01) (2.16) 0.00 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... $ 13.66 0.01 (2.63) (0.18) 0.00
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000 ...... $ 15.17 (0.03) (1.48) 0.00 0.00
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... $ 14.37 (0.04) 0.84 0.00 0.00
18
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
RETURN NET ASSET -----------------------------------------------------------
OF VALUE PER NET INVESTMENT GROSS EXPENSES NET
CAPITAL SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
ASIA PACIFIC FUND
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $ 10.28 0.76% 1.88% (0.17)% 1.71%
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... 0.00 $ 10.22 0.57% 1.80% (0.06)% 1.74%
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... 0.00 $ 8.98 0.53% 1.97% (0.28)% 1.69%
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... 0.00 $ 5.66 (0.43)% 2.30% (0.33)% 1.97%
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... 0.00 $ 6.18 (0.18)% 2.35% (0.33)% 2.02%
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000 ...... 0.00 $ 7.13 (0.29)% 2.00% 0.00% 2.00%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... 0.00 $ 7.79 (0.30)% 1.68% 0.00% 1.68%
OVERSEAS FUND
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $ 13.12 2.30% 1.37% (0.42)% 0.95%
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... 0.00 $ 13.35 1.87% 0.91% (0.06)% 0.85%
JANUARY 1, 2003(7) TO DECEMBER 31, 2003 ....... 0.00 $ 11.41 1.21% 7.62% (6.71)% 0.91%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $ 13.09 2.18% 1.90% (0.44)% 1.46%
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... 0.00 $ 13.35 1.03% 1.88% (0.44)% 1.44%
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... 0.00 $ 11.41 0.77% 1.94% (0.47)% 1.47%
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... 0.00 $ 8.69 (0.12)% 2.12% (0.33)% 1.79%
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... 0.00 $ 10.86 0.13% 2.47% (0.56)% 1.91%
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000 ...... 0.00 $ 13.66 (1.28)% 1.92% 0.00% 1.92%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... 0.00 $ 15.17 (0.30)% 1.76% (0.04)% 1.72%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ----------------------------------------------------------------------------------------
ASIA PACIFIC FUND
- ----------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. 2.87% 79% $ 154,553
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... 20.45% 153% $ 126,395
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... 60.25% 286% $ 93,041
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... (7.78)% 159% $ 57,458
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... (12.50)% 166% $ 38,146
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000 ...... (3.84)% 23% $ 56,479
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... (16.22)% 182% $ 57,255
OVERSEAS FUND
- ----------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. (1.71)% 98% $ 6,199
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... 19.26% 22% $ 180
JANUARY 1, 2003(7) TO DECEMBER 31, 2003 ....... 32.77% 41% $ 157
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. (1.94)% 98% $ 104,880
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... 18.29% 22% $ 119,585
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... 32.16% 41% $ 155,972
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... (19.98)% 46% $ 84,251
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... (19.15)% 169% $ 25,254
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000 ...... (9.95)% 13% $ 40,773
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... 5.57% 117% $ 44,720
(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) INCLUDES $0.01 IN REDEMPTION FEES.
(5) INCLUDES $0.03 IN REDEMPTION FEES.
(6) IN 2000, THE FUND CHANGED ITS FISCAL YEAR END FROM OCTOBER TO DECEMBER.
(7) COMMENCEMENT OF OPERATIONS.
(8) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK 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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Asia Pacific
Fund and Overseas Fund.
In August and 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 Funds ("Acquiring Funds"), by share class, acquired substantially all
of the net assets of the following Target Funds ("Target Funds"), by share
class, through a tax-free exchange under section 368 of the Internal Revenue
Code.
Acquiring Fund Target Fund
- -------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ASIA PACIFIC FUND INVESTOR CLASS STRONG ASIA PACIFIC FUND INVESTOR CLASS
- -------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OVERSEAS FUND INSTITUTIONAL CLASS STRONG OVERSEAS FUND INSTITUTIONAL CLASS
- -------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OVERSEAS FUND INVESTOR CLASS STRONG OVERSEAS FUND INVESTOR CLASS
- -------------------------------------------------------------------------------------------------
The separate classes of shares offered by each Fund differ principally in
applicable sales charges and 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.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
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.
20
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
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.
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 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
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 June 30, 2005.
At December 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Fund Year Expires Capital Loss Carryforwards
- ------------------------------------------------------------
OVERSEAS FUND 2005 $ 241,140
2007 506,465
2008 8,454,515
2010 17,412,833
2011 4,074,882
- ------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund(s) may enter into forward foreign currency contracts to protect
against a possible loss resulting from an adverse change in the relationship
between foreign currencies and the U.S. dollar, or between foreign currencies. A
forward contract is an agreement between two counterparties for future delivery
or receipt of currency at a specified price. Risks arise from the possible
inability of counterparties to meet the terms of their contracts and from
movements in currency values. Realized gains or losses are recognized when the
transaction is completed. Contracts which have been offset but have not reached
their settlement date are included in unrealized gains and losses.
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
21
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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)
- ------------------------------------------------------------------------------------------------------------------------------------
ASIA PACIFIC FUND $0 - $499 million 1.10 Wells Capital $0 - $200 million 0.45
$500 million - $999 million 1.05 Management >$200 million 0.35
$1 billion - $2.99 billion 1.00 Incorporated
$3 billion - $4.99 billion 0.975
>$4.99 billion 0.95
- ------------------------------------------------------------------------------------------------------------------------------------
OVERSEAS FUND $0 - $499 million 0.950 New Star $0 - $250 million 0.25
$500 million - $999 million 0.900 Institutional $250 million - $500 million 0.18
$1 billion - $2.99 billion 0.850 Managers >$500 million 0.16
$3 billion - $4.99 billion 0.825 Limited
>$4.99 billion 0.800
* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
Advisory Fees
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- --------------------------------------------------------------------
ASIA PACIFIC FUND $0 - $3.99 billion 0.750
$4 billion - $5.99 billion 0.725
>$6 billion 0.700
- --------------------------------------------------------------------
OVERSEAS FUND $0 - $3.99 billion 0.750
$4 billion - $5.99 billion 0.725
>$6 billion 0.700
22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
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
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
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- --------------------------------------------------------------------------------
INVESTOR CLASS*** 0.25, 0.40
- --------------------------------------------------------------------------------
*** For the ASIA PACIFIC FUND and OVERSEAS FUND, respectively.
** 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)
-----------------
Fund Institutional Class Investor Class
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND N/A 0.30
- --------------------------------------------------------------------------------
OVERSEAS FUND 0.02 0.30
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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 January 1, 2005 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and
Other Related Expenses
Fund Institutional Class Investor Class
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND N/A $138,112
- --------------------------------------------------------------------------------
OVERSEAS FUND 4 169,512
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
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND 0.25
- --------------------------------------------------------------------------------
OVERSEAS FUND 0.10
Prior to February 28, 2005, State Street served as custodian for each of
the predecessor Strong Funds. State Street was entitled to receive certain fees,
primarily based on transactions of the Funds.
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
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS None
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.25*
23
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
*Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing
fees for the predecessor Strong Funds, if any, were encompassed by the Strong
Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Fund Investor Class
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND $83,711
- --------------------------------------------------------------------------------
OVERSEAS FUND 61,035
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 28, 2005, State Street served as fund accountant to each
of the predecessor Strong Funds. Fund accounting fees were paid by the Funds'
administrator 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 June 30, 2005 were as
follows:
Net Operating Expense Ratios
Fund Institutional Class Investor Class
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND N/A 1.65%
- --------------------------------------------------------------------------------
OVERSEAS FUND 0.95 1.46%
Prior to April 11, 2005, the Strong Funds' adviser and/or administrator
could voluntarily waive or absorb certain expenses at their discretion. Strong
Capital Management, Inc. ("SCM") and/or SISI had contractually agreed to waive
its fees and/or absorb expenses for the Strong Asia Pacific Fund Investor Class
and Strong Overseas Fund Investor Class until May 1, 2005, to keep total annual
operating expenses at no more than 2.00% and 1.50%, respectively. Pursuant to
the direction of the Strong Funds 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 the Strong Asia Pacific Fund and 0.033% for the
Strong Overseas 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
January 1, 2005 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 Institutional Class Investor Class
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND N/A $ 11,993
- --------------------------------------------------------------------------------
OVERSEAS FUND 46 144,953
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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
ASIA PACIFIC FUND $105,518,334 $121,972,070
- --------------------------------------------------------------------------------
OVERSEAS FUND 107,380,552 113,805,220
24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
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 June 30, 2005,
there were no borrowings under either agreement for the Asia Pacific Fund, while
the Overseas Fund had minimal borrowings.
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
25
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK 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 complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' Web site on a monthly, seven-day or more
delayed basis.
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 at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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).
26
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
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, 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
65 since 1996 Willeke & Daniels.
- ---------------------------------------------------------------------------------------------------------------------------------
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 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.
- ---------------------------------------------------------------------------------------------------------------------------------
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 June 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.
27
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
ASIA PACIFIC FUND AND OVERSEAS 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 Asia Pacific Fund and Overseas Fund (the "Funds"); (ii) an
investment sub-advisory agreement with Wells Capital Management Incorporated
("Wells Capital Management") for the Asia Pacific Fund; and (iii) an investment
sub-advisory agreement with New Star Institutional Managers Limited ("New Star")
for the Overseas Fund. The investment advisory agreement with Funds Management
and the investment sub-advisory agreements with Wells Capital Management and New
Star (the "Sub-Advisers") 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 the Sub-Advisers 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
- --------------------------------------------------------------------------------
Asia Pacific Fund* Asia Pacific Fund
- --------------------------------------------------------------------------------
Overseas Fund* Overseas 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 the Sub-Advisers under the Advisory Agreements.
Responses of Funds Management and the Sub-Advisers 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 the Sub-Advisers.
The Board also considered the ability of Funds Management and the
Sub-Advisers, 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 the
Sub-Adviser'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 the Sub-Advisers. 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-advisers.
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 the Sub-Advisers.
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 was better than, or not
appreciably below, the median performance of its Peer Group for most time
periods.
The Board received and considered information regarding each Fund's net
operating expense ratio and its various components,
28
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
- --------------------------------------------------------------------------------
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 Funds were lower than, or not appreciably higher than,
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 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 payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administrative services covered by the administration fee
rates. The Board also reviewed and considered the contractual investment
sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds
Management to the Sub-Advisers 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 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 relationship with the
Funds was not a material factor in determining whether to renew the agreement.
The Board did not consider a separate profitability analysis of New Star, which
is not affiliated with Funds Management. The Board considered that the
sub-advisory fees paid to New Star had been negotiated by Funds Management on an
arms length basis and that New Star's separate profitability from its
relationship with the Funds 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 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 the
Sub-Advisers 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 the
Sub-Advisers, giving effect to differences in services covered by such fee
rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS
- --------------------------------------------------------------------------------
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
and the Sub-Advisers 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 the Sub-Advisers with the Funds and
benefits potentially derived from an increase in the business of Funds
Management and the Sub-Advisers as a result of their relationship with the Funds
(such as the ability to market to shareholders other financial products offered
by Funds
29
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Management and its affiliates or the Sub-Advisers and their affiliates).
The Board also considered the policies of the Funds in achieving the best
execution of portfolio transactions, whether and to what extent soft dollar
credits are, or would be, sought and how any such credits are, or 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 the Sub-Advisers 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 the Sub-Advisers 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 the Sub-Advisers,
and met with various management representatives and portfolio managers, 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.
30
LIST OF ABBREVIATIONS
WELLS FARGO ADVANTAGE INTERNATIONAL STOCK 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
31
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- --------------------------------------------------------------------------------
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[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about WELLS FARGO This report and the financial statements
ADVANTAGE FUNDS(SM) is available free contained herein are submitted for the
upon request. To obtain literature, general information of the shareholders
please write, e-mail, or call: of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional
WELLS FARGO ADVANTAGE FUNDS purposes, distribution of the report
P.O. Box 8266 must be accompanied or preceded by a
Boston, MA 02266-8266 current prospectus. For a prospectus
containing more complete information,
E-mail: wfaf@wellsfargo.com including charges and expenses, call
Retail Investment Professionals: 1-800-222-8222. Please consider the
888-877-9275 Institutional investment objective, risks, charges and
Institutional Investment expenses of the investment carefully
Professionals: before investing. This and other
866-765-0778 information about WELLS FARGO ADVANTAGE
Web: www.wellsfargo.com/advantagefunds 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 GURANTEE o MAY LOSE VALUE
----------------------------------------------------
- --------------------------------------------------------------------------------
(C) 2005 Wells Fargo www.wellsfargo.com/advantagefunds RT51996 08-05
Advantage Funds, LLC. SINTNLD/SAR107 06-05
All rights reserved.
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 2005
- --------------------------------------------------------------------------------
Semi-Annual Report
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS(SM)
Wells Fargo Advantage Life Stage - Aggressive Portfolio(SM)
Wells Fargo Advantage Life Stage - Conservative Portfolio(SM)
Wells Fargo Advantage Life Stage - Moderate Portfolio(SM)
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
- --------------------------------------------------------------------------------
Life Stage Portfolios Overview ............................................ 2
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Life Stage - Aggressive Portfolio ...................................... 3
Life Stage - Conservative Portfolio .................................... 4
Life Stage - Moderate Portfolio ........................................ 5
Fund Expenses ............................................................. 6
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Life Stage - Aggressive Portfolio ...................................... 7
Life Stage - Conservative Portfolio .................................... 8
Life Stage - Moderate Portfolio ........................................ 9
Financial Statements
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities ................................... 10
Statements of Operations ............................................... 11
Statements of Changes in Net Assets .................................... 12
Financial Highlights ................................................... 14
- --------------------------------------------------------------------------------
Notes to Financial Statements ............................................. 16
- --------------------------------------------------------------------------------
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 LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS(SM)
semi-annual report for the period ended June 30, 2005. On the following pages,
you will find a discussion of each Portfolio, including performance highlights,
the Portfolio managers' strategic outlook, and information about the Portfolio.
ECONOMIC EXPANSION CONTINUES
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing it upward
during the reporting period. The consumer price index (CPI) rose at around a 3%
rate over the twelve months ended June 30, 2005. The core CPI, which excludes
the volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate--its principal policy tool--from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
- --------------------------------------------------------------------------------
After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of the year. The S&P 500 Index was
around 1200 as the year began. It ended the first half of 2005 at 1191. Strong
corporate earnings have helped the markets, while record prices for crude oil
and concerns of a slowdown in worldwide economic growth have capped and often
reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well during most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sectors recovered and again produced
solid returns. Municipal bonds generally performed better than most taxable
sectors during 2005, but they lagged behind the rally in U.S. Treasuries in May
and June. Overall, by the end of the second quarter of 2005, municipal yields
were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
- --------------------------------------------------------------------------------
The economy has shown remarkably steady growth over the reporting
period--growth that has been sufficient to bring the unemployment rate down to
5.0%, the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS OVERVIEW
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE LIFE STAGE - AGGRESSIVE PORTFOLIO(SM) seeks
capital appreciation with a secondary emphasis on current income.
The WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE PORTFOLIO(SM) seeks a
combination of current income and capital appreciation.
The WELLS FARGO ADVANTAGE LIFE STAGE - MODERATE PORTFOLIO(SM) seeks a
combination of capital appreciation and current income.
ADVISER PORTFOLIO MANAGERS INCEPTION DATE
Wells Fargo Funds Management, LLC Thomas C. Biwer, CFA 12/31/1998
Christian L. Chan, CFA
Andrew Owen, CFA
HOW DID THE PORTFOLIOS PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE LIFE STAGE - AGGRESSIVE PORTFOLIO Investor Class
shares returned (0.18)%(1) for the six-month period ending June 30, 2005. This
was the weakest absolute return among the three Life Stage portfolios and
resulted from the portfolio's greater exposure to stocks, which generally
underperformed bonds during the past six months.
The WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE PORTFOLIO Investor
Class shares returned 0.48%(1) for the same period, while the WELLS FARGO
ADVANTAGE LIFE STAGE - MODERATE PORTFOLIO Investor Class shares returned
0.30%(1) for the six-month period. All of the Life Stage Portfolios outperformed
their benchmark, the S&P 500 Index, which returned (0.81)% 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 PORTFOLIOS' 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 PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE PORTFOLIOS' PERFORMANCE?
- --------------------------------------------------------------------------------
During the period, stocks--both domestic and foreign--gave up modest
ground. The S&P 500 Index, widely considered a proxy for the U.S. stock market,
lost 0.81% with reinvested dividends included. Rising oil prices and rising
short-term interest rates were major headwinds for the economy and for equities,
while low bond yields and excess liquidity in the financial system were positive
influences. Foreign stocks slid a bit more than U.S. equities thanks to the
strengthening dollar, with the widely cited MSCI EAFE Index(3) losing 1.17%
during the period.
Long-term bond yields unexpectedly have declined--and their prices have
risen accordingly--in the face of the Federal Reserve's (the Fed) series of
interest rate increases. Most likely, lower long-term yields have been the
result of a generous supply of foreign savings boosting demand for U.S. bonds.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIOS' HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
In early June, we made adjustments to all three portfolios, reducing their
emphasis on growth stocks to more modest levels. Previously, the portfolios had
been more tilted toward growth stocks, a strategy that had proved premature as
value stocks continued to outpace their growth counterparts over the period.
Also in early June, we reduced the portfolios' concentrations in bonds
with very short maturities. This positioning was another detractor from
performance, in light of the unusual developments in the bond market described
earlier.
Both of these adjustments bring the portfolios into closer alignment with
the investment characteristics of their asset-class benchmarks while preserving
some strategic emphasis on the types of securities we expect to do well in
future periods, namely, growth stocks and shorter-term bonds.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Economic growth has been solid, with inflation-adjusted growth averaging
over 4% annually for the past nine quarters. We expect some slowing in economic
growth due to the lagging effects of higher oil prices and higher global
short-term interest rates. Such growth "lulls" have become characteristic of
recent economic cycles. In this environment, inflation should remain tame and
the Fed should eventually end its monetary tightening cycle, which should be
beneficial for stock and bond prices.
BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS 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. BOND VALUES
FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES
IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. INVESTMENT
STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO
INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THESE
PORTFOLIOS ARE EXPOSED TO SMALL COMPANY SECURITIES, FOREIGN INVESTMENT, AND
HIGH-YIELD BOND RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 30, 2005, and are those of the
Portfolios' 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 LIFE STAGE - AGGRESSIVE
PORTFOLIO, WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE PORTFOLIO and the
WELLS FARGO ADVANTAGE LIFE STAGE -MODERATE PORTFOLIO.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE - AGGRESSIVE PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Life
6-Month* 1-Year 5-Year of Fund
- --------------------------------------------------------------------------------------------------------
Life Stage - Aggressive Portfolio (Incept. Date 12/31/1998) (0.18) 7.07 (2.94) 3.38
- --------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 1.03
- --------------------------------------------------------------------------------------------------------
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
PORTFOLIO CHARACTERISTICS(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Portfolio Turnover 23%
- -----------------------------------------------------------------------
Net Asset Value (NAV) $10.31
- -----------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
EFFECTIVE ALLOCATION(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Bond Funds 20%
- -----------------------------------------------------------------------
Stock Funds 80%
MUTUAL FUNDS HELD(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Wells Fargo Advantage Capital Growth Fund
Institutional Class 20%
- -----------------------------------------------------------------------
Wells Fargo Advantage Common Stock Fund Class Z 20%
- -----------------------------------------------------------------------
Wells Fargo Advantage Government Securities Fund
Institutional Class 8%
- -----------------------------------------------------------------------
Wells Fargo Advantage Growth and Income Fund
Institutional Class 10%
- -----------------------------------------------------------------------
Wells Fargo Advantage Overseas Fund Institutional Class 10%
- -----------------------------------------------------------------------
Wells Fargo Advantage Short-Term Bond Fund
Institutional Class 7%
- -----------------------------------------------------------------------
Wells Fargo Advantage Ultra Short-Term Income Fund
Institutional Class 5%
- -----------------------------------------------------------------------
Wells Fargo Advantage U.S. Value Fund
Administrator Class 20%
GROWTH OF $10,000 INVESTMENT5 (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LIFE STAGE AGGRESSIVE
PORTFOLIO - INVESTOR CLASS S&P 500 Index
12/31/1998 10,000 10,000
1/31/1999 10,470 10,418
2/28/1999 10,180 10,094
3/31/1999 10,720 10,498
4/30/1999 10,960 10,905
5/31/1999 10,740 10,647
6/30/1999 11,340 11,238
7/31/1999 11,130 10,887
8/31/1999 11,050 10,834
9/30/1999 11,020 10,537
10/31/1999 11,710 11,203
11/30/1999 12,350 11,431
12/31/1999 13,777 12,104
1/31/2000 13,345 11,496
2/29/2000 14,746 11,279
3/31/2000 15,115 12,381
4/30/2000 14,293 12,009
5/31/2000 13,893 11,763
6/30/2000 14,409 12,053
7/31/2000 14,188 11,865
8/31/2000 15,304 12,601
9/30/2000 14,809 11,936
10/31/2000 14,093 11,886
11/30/2000 12,755 10,949
12/31/2000 13,052 11,003
1/31/2001 13,173 11,393
2/28/2001 11,994 10,355
3/31/2001 11,323 9,699
4/30/2001 12,017 10,453
5/31/2001 11,972 10,523
6/30/2001 11,719 10,267
7/31/2001 11,510 10,166
8/31/2001 10,882 9,530
9/30/2001 9,979 8,760
10/31/2001 10,243 8,927
11/30/2001 10,926 9,612
12/31/2001 11,045 9,696
1/31/2002 10,847 9,555
2/28/2002 10,580 9,371
3/31/2002 10,940 9,723
4/30/2002 10,591 9,134
5/31/2002 10,440 9,067
6/30/2002 9,894 8,421
7/31/2002 9,208 7,765
8/31/2002 9,254 7,816
9/30/2002 8,580 6,967
10/31/2002 8,987 7,580
11/30/2002 9,417 8,025
12/31/2002 8,997 7,554
1/31/2003 8,810 7,357
2/28/2003 8,739 7,246
3/31/2003 8,774 7,316
4/30/2003 9,301 7,919
5/31/2003 9,816 8,335
6/30/2003 9,944 8,442
7/31/2003 10,073 8,591
8/31/2003 10,307 8,758
9/30/2003 10,260 8,665
10/31/2003 10,740 9,155
11/30/2003 10,927 9,236
12/31/2003 11,345 9,720
1/31/2004 11,475 9,898
2/29/2004 11,640 10,036
3/31/2004 11,545 9,884
4/30/2004 11,225 9,729
5/31/2004 11,379 9,863
6/30/2004 11,593 10,054
7/31/2004 11,166 9,722
8/31/2004 11,142 9,761
9/30/2004 11,462 9,866
10/31/2004 11,652 10,017
11/30/2004 12,127 10,422
12/31/2004 12,435 10,777
1/31/2005 12,146 10,514
2/28/2005 12,375 10,735
3/31/2005 12,244 10,545
4/30/2005 11,955 10,345
5/31/2005 12,328 10,674
6/30/2005 12,412 10,689
(1) The Portfolios' 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 each Portfolio. Actual reductions of operating
expenses can increase total return to shareholders. Without these
reductions, each Portfolio's returns would have been lower.
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE LIFE STAGE - AGGRESSIVE PORTFOLIO for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Life Stage
Series - Aggressive Portfolio, its predecessor fund. Performance shown for the
Investor Class shares of the WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE
PORTFOLIO for periods prior to April 11, 2005, reflects the performance of the
Investor Class shares of the Strong Life Stage Series - Conservative Portfolio,
its predecessor fund. Performance shown for the Investor Class shares of the
WELLS FARGO ADVANTAGE LIFE STAGE - MODERATE PORTFOLIO for periods prior to April
11, 2005, reflects the performance of the Investor Class shares of the Strong
Life Stage Series - Moderate Portfolio, 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 S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an index.
(3) The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted
market capitalization index that is designed to measure developed market equity
performance, excluding the US & Canada. As of April 2002 the MSCI EAFE Index
consisted of the following 21 developed market country indices: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland and the United Kingdom. You cannot invest directly in an
index.
(4) Portfolio holdings and portfolio characteristics are subject to change. Cash
and cash equivalents are not reflected in the calculations of portfolio holdings
and portfolio characteristics.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE LIFE STAGE -
AGGRESSIVE PORTFOLIO Investor Class shares for the life of the Portfolio with
the S&P 500 Index. The chart assumes a hypothetical $10,000 investment in the
Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Life
6-Month* 1-Year 5-Year of Fund
- ----------------------------------------------------------------------------------------------------------
Life Stage - Conservative Portfolio (Incept. Date 12/31/1998) 0.48 5.03 0.49 3.82
- ----------------------------------------------------------------------------------------------------------
Benchmark
- ----------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 1.03
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
PORTFOLIO CHARACTERISTICS(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Portfolio Turnover 29%
- -----------------------------------------------------------------------
Net Asset Value (NAV) $9.81
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
EFFECTIVE ALLOCATION(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Bond Funds 60%
- -----------------------------------------------------------------------
Stock Funds 40%
MUTUAL FUNDS HELD(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Wells Fargo Advantage Capital Growth Fund
Institutional Class 10%
- -----------------------------------------------------------------------
Wells Fargo Advantage Common Stock Fund Class Z 10%
- -----------------------------------------------------------------------
Wells Fargo Advantage Government Securities Fund
Institutional Class 23%
- -----------------------------------------------------------------------
Wells Fargo Advantage Growth and Income Fund
Institutional Class 5%
- -----------------------------------------------------------------------
Wells Fargo Advantage Overseas Fund
Institutional Class 5%
- -----------------------------------------------------------------------
Wells Fargo Advantage Short-Term Bond Fund
Institutional Class 22%
- -----------------------------------------------------------------------
Wells Fargo Advantage Ultra Short-Term Income Fund
Institutional Class 15%
- -----------------------------------------------------------------------
Wells Fargo Advantage U.S. Value Fund Administrator 10%
Class
GROWTH OF $10,000 INVESTMENT5 (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LIFE STAGE
CONSERVATIVE PORTFOLIO - INVESTOR CLASS S&P 500 Index
12/31/1998 10,000 10,000
1/31/1999 10,260 10,418
2/28/1999 10,120 10,094
3/31/1999 10,410 10,498
4/30/1999 10,571 10,905
5/31/1999 10,480 10,647
6/30/1999 10,774 11,238
7/31/1999 10,673 10,887
8/31/1999 10,633 10,834
9/30/1999 10,660 10,537
10/31/1999 11,005 11,203
11/30/1999 11,341 11,431
12/31/1999 12,027 12,104
1/31/2000 11,839 11,496
2/29/2000 12,489 11,279
3/31/2000 12,656 12,381
4/30/2000 12,327 12,009
5/31/2000 12,168 11,763
6/30/2000 12,446 12,053
7/31/2000 12,393 11,865
8/31/2000 12,917 12,601
9/30/2000 12,755 11,936
10/31/2000 12,463 11,886
11/30/2000 11,923 10,949
12/31/2000 12,107 11,003
1/31/2001 12,231 11,393
2/28/2001 11,737 10,355
3/31/2001 11,464 9,699
4/30/2001 11,822 10,453
5/31/2001 11,846 10,523
6/30/2001 11,733 10,267
7/31/2001 11,687 10,166
8/31/2001 11,395 9,530
9/30/2001 10,884 8,760
10/31/2001 11,049 8,927
11/30/2001 11,437 9,612
12/31/2001 11,486 9,696
1/31/2002 11,332 9,555
2/28/2002 11,177 9,371
3/31/2002 11,352 9,723
4/30/2002 11,185 9,134
5/31/2002 11,125 9,067
6/30/2002 10,827 8,421
7/31/2002 10,455 7,765
8/31/2002 10,539 7,816
9/30/2002 10,217 6,967
10/31/2002 10,434 7,580
11/30/2002 10,651 8,025
12/31/2002 10,506 7,554
1/31/2003 10,396 7,357
2/28/2003 10,408 7,246
3/31/2003 10,421 7,316
4/30/2003 10,766 7,919
5/31/2003 11,135 8,335
6/30/2003 11,201 8,442
7/31/2003 11,151 8,591
8/31/2003 11,287 8,758
9/30/2003 11,379 8,665
10/31/2003 11,590 9,155
11/30/2003 11,689 9,236
12/31/2003 11,976 9,720
1/31/2004 12,089 9,898
2/29/2004 12,202 10,036
3/31/2004 12,179 9,884
4/30/2004 11,940 9,729
5/31/2004 12,028 9,863
6/30/2004 12,144 10,054
7/31/2004 11,954 9,722
8/31/2004 11,992 9,761
9/30/2004 12,169 9,866
10/31/2004 12,284 10,017
11/30/2004 12,513 10,422
12/31/2004 12,694 10,777
1/31/2005 12,565 10,514
2/28/2005 12,668 10,735
3/31/2005 12,587 10,545
4/30/2005 12,471 10,345
5/31/2005 12,678 10,674
6/30/2005 12,755 10,689
- --------------------------------------------------------------------------------
(1) The Portfolios' 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 each Portfolio. Actual reductions of operating
expenses can increase total return to shareholders. Without these
reductions, each Portfolio's returns would have been lower.
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE LIFE STAGE - AGGRESSIVE PORTFOLIO for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Life Stage
Series - Aggressive Portfolio, its predecessor fund. Performance shown for the
Investor Class shares of the WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE
PORTFOLIO for periods prior to April 11, 2005, reflects the performance of the
Investor Class shares of the Strong Life Stage Series - Conservative Portfolio,
its predecessor fund. Performance shown for the Investor Class shares of the
WELLS FARGO ADVANTAGE LIFE STAGE - MODERATE PORTFOLIO for periods prior to April
11, 2005, reflects the performance of the Investor Class shares of the Strong
Life Stage Series - Moderate Portfolio, 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 S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an index.
(3) The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted
market capitalization index that is designed to measure developed market equity
performance, excluding the US & Canada. As of April 2002 the MSCI EAFE Index
consisted of the following 21 developed market country indices: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland and the United Kingdom. You cannot invest directly in an
index.
(4) Portfolio holdings and portfolio characteristics are subject to change. Cash
and cash equivalents are not reflected in the calculations of portfolio holdings
and portfolio characteristics.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE LIFE STAGE -
CONSERVATIVE PORTFOLIO Investor Class shares for the life of the Portfolio with
the S&P 500 Index. The chart assumes a hypothetical $10,000 investment in the
Investor Class shares and reflects all operating expenses.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE - MODERATE PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Life
6-Month* 1-Year 5-Year of Fund
- --------------------------------------------------------------------------------------------------------
Life Stage - Moderate Portfolio (Incept. Date 12/31/1998) 0.30 6.14 (0.99) 3.60
- --------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 1.03
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
PORTFOLIO CHARACTERISTICS(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Portfolio Turnover 24%
- -----------------------------------------------------------------------
Net Asset Value (NAV) $10.22
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
EFFECTIVE ALLOCATION(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Bond Funds 40%
- -----------------------------------------------------------------------
Stock Funds 60%
MUTUAL FUNDS HELD(4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------------
Wells Fargo Advantage Capital Growth Fund
Institutional Class 15%
- -----------------------------------------------------------------------
Wells Fargo Advantage Common Stock Fund Class Z 15%
- -----------------------------------------------------------------------
Wells Fargo Advantage Government Securities Fund
Institutional Class 15%
- -----------------------------------------------------------------------
Wells Fargo Advantage Growth and Income Fund
Institutional Class 7%
- -----------------------------------------------------------------------
Wells Fargo Advantage Overseas Fund Institutional Fund 8%
- -----------------------------------------------------------------------
Wells Fargo Advantage Short-Term Bond Fund
Institutional Class 15%
- -----------------------------------------------------------------------
Wells Fargo Advantage Ultra Short-Term Income Fund
Institutional Class 10%
- -----------------------------------------------------------------------
Wells Fargo Advantage U.S. Value Fund Administrator 15%
Class
GROWTH OF $10,000 INVESTMENT5 (AS OF JUNE 30, 2005)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LIFE STAGE
MODERATE PORTFOLIO - INVESTOR CLASS S&P 500 Index
12/31/1998 10,000 10,000
1/31/1999 10,330 10,418
2/28/1999 10,120 10,094
3/31/1999 10,540 10,498
4/30/1999 10,610 10,905
5/31/1999 10,450 10,647
6/30/1999 10,890 11,238
7/31/1999 10,730 10,887
8/31/1999 10,670 10,834
9/30/1999 10,660 10,537
10/31/1999 11,160 11,203
11/30/1999 11,640 11,431
12/31/1999 12,665 12,104
1/31/2000 12,392 11,496
2/29/2000 13,388 11,279
3/31/2000 13,640 12,381
4/30/2000 13,105 12,009
5/31/2000 12,833 11,763
6/30/2000 13,221 12,053
7/31/2000 13,084 11,865
8/31/2000 13,881 12,601
9/30/2000 13,567 11,936
10/31/2000 13,084 11,886
11/30/2000 12,204 10,949
12/31/2000 12,443 11,003
1/31/2001 12,531 11,393
2/28/2001 11,724 10,355
3/31/2001 11,271 9,699
4/30/2001 11,790 10,453
5/31/2001 11,779 10,523
6/30/2001 11,602 10,267
7/31/2001 11,481 10,166
8/31/2001 11,016 9,530
9/30/2001 10,341 8,760
10/31/2001 10,563 8,927
11/30/2001 11,105 9,612
12/31/2001 11,173 9,696
1/31/2002 11,000 9,555
2/28/2002 10,803 9,371
3/31/2002 11,057 9,723
4/30/2002 10,814 9,134
5/31/2002 10,710 9,067
6/30/2002 10,293 8,421
7/31/2002 9,771 7,765
8/31/2002 9,840 7,816
9/30/2002 9,319 6,967
10/31/2002 9,655 7,580
11/30/2002 10,003 8,025
12/31/2002 9,690 7,554
1/31/2003 9,548 7,357
2/28/2003 9,513 7,246
3/31/2003 9,548 7,316
4/30/2003 9,998 7,919
5/31/2003 10,448 8,335
6/30/2003 10,554 8,442
7/31/2003 10,601 8,591
8/31/2003 10,791 8,758
9/30/2003 10,791 8,665
10/31/2003 11,146 9,155
11/30/2003 11,300 9,236
12/31/2003 11,646 9,720
1/31/2004 11,766 9,898
2/29/2004 11,898 10,036
3/31/2004 11,842 9,884
4/30/2004 11,565 9,729
5/31/2004 11,685 9,863
6/30/2004 11,854 10,054
7/31/2004 11,541 9,722
8/31/2004 11,541 9,761
9/30/2004 11,794 9,866
10/31/2004 11,938 10,017
11/30/2004 12,300 10,422
12/31/2004 12,543 10,777
1/31/2005 12,334 10,514
2/28/2005 12,506 10,735
3/31/2005 12,409 10,545
4/30/2005 12,200 10,345
5/31/2005 12,495 10,674
6/30/2005 12,581 10,689
(1) The Portfolios' 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 each Portfolio. Actual reductions of operating
expenses can increase total return to shareholders. Without these
reductions, each Portfolio's returns would have been lower.
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE LIFE STAGE - AGGRESSIVE PORTFOLIO for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Life Stage
Series - Aggressive Portfolio, its predecessor fund. Performance shown for the
Investor Class shares of the WELLS FARGO ADVANTAGE LIFE STAGE - CONSERVATIVE
PORTFOLIO for periods prior to April 11, 2005, reflects the performance of the
Investor Class shares of the Strong Life Stage Series - Conservative Portfolio,
its predecessor fund. Performance shown for the Investor Class shares of the
WELLS FARGO ADVANTAGE LIFE STAGE - MODERATE PORTFOLIO for periods prior to April
11, 2005, reflects the performance of the Investor Class shares of the Strong
Life Stage Series - Moderate Portfolio, 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 S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an index.
(3) The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted
market capitalization index that is designed to measure developed market equity
performance, excluding the US & Canada. As of April 2002 the MSCI EAFE Index
consisted of the following 21 developed market country indices: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland and the United Kingdom. You cannot invest directly in an
index.
(4) Portfolio holdings and portfolio characteristics are subject to change. Cash
and cash equivalents are not reflected in the calculations of portfolio holdings
and portfolio characteristics.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE LIFE STAGE -
MODERATE PORTFOLIO Investor Class shares for the life of the Portfolio with the
S&P 500 Index. The chart assumes a hypothetical $10,000 investment in the
Investor Class shares and reflects all operating expenses.
5
WELLS FARGO ADVANTAGE LIFE FUNDS FUND EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
As a shareholder of the Portfolio, 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 service shareholder
service fees; and other Portfolio expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Portfolio and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning
of the six-month period and held for the entire six-month period (January 1,
2005 to June 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 Portfolio's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Portfolio'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 Portfolio 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
1/1/05 6/30/05 Period(1) Ratio
Life Stage Portfolios
- ---------------------------------------------------------------------------------------------------------------
Life Stage - Aggressive Portfolio - Investor Class
Actual $ 1,000.00 $ 998.20 $ 0.64 0.13%
- ---------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,024.15 $ 0.65 0.13%
- ---------------------------------------------------------------------------------------------------------------
Life Stage - Conservative Portfolio - Investor Class
Actual $ 1,000.00 $ 1,004.80 $ 1.09 0.22%
- ---------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,023.70 $ 1.10 0.22%
- ---------------------------------------------------------------------------------------------------------------
Life Stage - Moderate Portfolio - Investor Class
Actual $ 1,000.00 $ 1,003.00 $ 0.99 0.20%
- ---------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,023.80 $ 1.00 0.20%
(1) EXPENSES ARE EQUAL TO THE PORTFOLIO'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 -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 98.85%
AFFILIATED BOND FUNDS - 19.85%
163,251 WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND $ 1,759,843
203,876 WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND 1,759,450
128,064 WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND 1,173,067
4,692,360
---------------
AFFILIATED STOCK FUNDS - 79.00%
292,318 WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND+ 4,674,159
205,866 WELLS FARGO ADVANTAGE COMMON STOCK FUND 4,685,521
114,751 WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND 2,315,669
178,448 WELLS FARGO ADVANTAGE OVERSEAS FUND+ 2,341,242
259,935 WELLS FARGO ADVANTAGE U.S. VALUE FUND+ 4,658,042
18,674,633
---------------
TOTAL INVESTMENT COMPANIES (COST $20,202,014) 23,366,993
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $20,202,014)* 98.85% $ 23,366,993
OTHER ASSETS AND LIABILITIES, NET 1.15 272,436
------ ---------------
TOTAL NET ASSETS 100.00% $ 23,639,429
====== ===============
+ NON-INCOME EARNING SECURITIES.
* 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 LIFE STAGE PORTFOLIOS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 98.74%
AFFILIATED BOND FUNDS - 59.45%
331,087 WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND $ 3,569,114
413,106 WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND 3,565,106
259,166 WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND 2,373,958
9,508,178
---------------
AFFILIATED STOCK FUNDS - 39.29%
98,432 WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND+ 1,573,926
69,324 WELLS FARGO ADVANTAGE COMMON STOCK FUND 1,577,811
38,498 WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND 776,891
60,090 WELLS FARGO ADVANTAGE OVERSEAS FUND+ 788,378
87,431 WELLS FARGO ADVANTAGE U.S. VALUE FUND+ 1,566,755
6,283,761
---------------
TOTAL INVESTMENT COMPANIES (COST $14,758,767) 15,791,939
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $14,758,767)* 98.74% $ 15,791,939
OTHER ASSETS AND LIABILITIES, NET 1.26 200,768
------ ---------------
TOTAL NET ASSETS 100.00% $ 15,992,707
====== ===============
+ NON-INCOME EARNING SECURITIES.
* 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.
8
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
LIFE STAGE - MODERATE PORTFOLIO
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 99.07%
AFFILIATED BOND FUNDS - 39.87%
486,728 WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND $ 5,246,931
606,751 WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND 5,236,265
380,641 WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND 3,486,667
13,969,863
---------------
AFFILIATED STOCK FUNDS - 59.20%
325,245 WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND+ 5,200,661
228,872 WELLS FARGO ADVANTAGE COMMON STOCK FUND 5,209,126
126,728 WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND 2,557,364
198,560 WELLS FARGO ADVANTAGE OVERSEAS FUND+ 2,605,108
288,390 WELLS FARGO ADVANTAGE U.S. VALUE FUND+ 5,167,944
20,740,203
---------------
TOTAL INVESTMENT COMPANIES (COST $31,489,723) 34,710,066
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $31,489,723)* 99.07% $ 34,710,066
OTHER ASSETS AND LIABILITIES, NET 0.93 325,980
------ ---------------
TOTAL NET ASSETS 100.00% $ 35,036,046
====== ===============
+ NON-INCOME EARNING SECURITIES.
* 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.
9
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
LIFE STAGE - LIFE STAGE - LIFE STAGE -
AGGRESSIVE CONSERVATIVE MODERATE
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
INVESTMENTS IN AFFILIATES .............................................. $ 23,366,993 $ 15,791,939 $ 34,710,066
--------------- --------------- ---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ....................... 23,366,993 15,791,939 34,710,066
--------------- --------------- ---------------
RECEIVABLE FOR FUND SHARES ISSUED ...................................... 15,736 1,144 20,126
RECEIVABLE FOR INVESTMENTS SOLD ........................................ 1,297,151 1,126,942 3,288,813
RECEIVABLES FOR DIVIDENDS AND INTEREST ................................. 9,198 18,735 30,412
RECEIVABLE FROM INVESTMENT ADVISOR AND AFFILIATES ...................... 0 11,740 12,974
PREPAID EXPENSES AND OTHER ASSETS ...................................... 8,241 9,498 18,334
--------------- --------------- ---------------
TOTAL ASSETS ............................................................. 24,697,319 16,959,998 38,080,725
--------------- --------------- ---------------
LIABILITIES
PAYABLE TO CUSTODIAN FOR OVERDRAFTS .................................... 1,047,151 936,764 2,988,813
PAYABLE FOR FUND SHARES REDEEMED ....................................... 214 25,944 46,973
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) .................. 4,841 0 0
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ................................ 5,684 4,583 8,893
--------------- --------------- ---------------
TOTAL LIABILITIES ........................................................ 1,057,890 967,291 3,044,679
--------------- --------------- ---------------
TOTAL NET ASSETS ......................................................... $ 23,639,429 $ 15,992,707 $ 35,036,046
=============== =============== ===============
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ........................................................ $ 27,971,457 $ 17,226,179 $ 41,254,631
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. 127,681 26,767 388,550
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS .................. (7,624,688) (2,293,411) (9,827,478)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES .................................................. 3,164,979 1,033,172 3,220,343
--------------- --------------- ---------------
TOTAL NET ASSETS ......................................................... $ 23,639,429 $ 15,992,707 $ 35,036,046
=============== =============== ===============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE (1)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - INVESTOR CLASS ............................................ $ 23,639,429 $ 15,992,707 $ 35,036,046
SHARES OUTSTANDING - INVESTOR CLASS .................................... 2,292,439 1,629,726 3,429,357
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS .......... $ 10.31 $ 9.81 $ 10.22
--------------- --------------- ---------------
INVESTMENTS AT COST ...................................................... $ 20,202,014 $ 14,758,767 $ 31,489,723
=============== =============== ===============
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
LIFE STAGE - LIFE STAGE - LIFE STAGE -
AGGRESSIVE CONSERVATIVE MODERATE
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST ............................................................... $ 1,323 $ 1,370 $ 1,784
INCOME FROM AFFILIATED SECURITIES ...................................... 142,577 214,940 429,466
--------------- --------------- ---------------
TOTAL INVESTMENT INCOME .................................................. 143,900 216,310 431,250
--------------- --------------- ---------------
EXPENSES
ADVISORY FEES .......................................................... 28,129 19,236 46,716
ADMINISTRATION FEES .................................................... 19,923 13,930 35,294
ACCOUNTING FEES ........................................................ 4,813 4,701 5,046
SHAREHOLDER SERVICING FEES ............................................. 13,069 9,200 22,143
CUSTODY FEES ........................................................... 1,070 721 1,534
SHAREHOLDER REPORTS .................................................... 8,752 0 1,926
AUDIT FEES ............................................................. 6,671 6,658 6,801
LEGAL FEES ............................................................. 525 327 873
REGISTRATION FEES ...................................................... 9,341 9,148 11,174
TRUSTEES' FEES ......................................................... 3,198 2,795 4,008
OTHER FEES AND EXPENSES ................................................ 7,590 2,112 12,820
--------------- --------------- ---------------
TOTAL EXPENSES ........................................................... 103,081 68,828 148,335
--------------- --------------- ---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ........................... (86,862) (49,438) (105,635)
NET EXPENSES ........................................................... 16,219 19,390 42,700
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) ............................................. 127,681 196,920 388,550
--------------- --------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
AFFILIATED UNDERLYING FUNDS ............................................ 1,572,708 551,875 3,348,832
--------------- --------------- ---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................................ 1,572,708 551,875 3,348,832
--------------- --------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
AFFILIATED UNDERLYING FUNDS ............................................ (1,737,974) (662,702) (3,596,961)
--------------- --------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...... (1,737,974) (662,702) (3,596,961)
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................... (165,266) (110,827) (248,129)
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......... $ (37,585) $ 86,093 $ 140,421
=============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO
--------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETs ................................................... $ 26,514,293 $ 35,393,810
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................... 127,681 296,500
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................ 1,572,708 2,897,644
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .... (1,737,974) (354,796)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........... (37,585) 2,839,348
---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................. 0 (574,859)
---------------- -------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................... 0 (574,859)
---------------- -------------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ............................. 5,580,625 11,738,709
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......................... 0 571,823
COST OF SHARES REDEEMED - INVESTOR CLASS ............................... (8,417,904) (23,454,538)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS .......................................... (2,837,279) (11,144,006)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL ................................................... (2,837,279) (11,144,006)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS ..................................... (2,874,864) (8,879,517)
---------------- -------------------
ENDING NET ASSETS ......................................................... $ 23,639,429 $ 26,514,293
================ ===================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - INVESTOR CLASS ........................................... 546,786 1,207,210
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ........ 0 56,828
SHARES REDEEMED - INVESTOR CLASS ....................................... (820,157) (2,379,681)
---------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ............................ (273,371) (1,115,643)
---------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ............................................. (273,371) (1,115,643)
---------------- -------------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ..................... $ 127,681 $ 0
================ ===================
12
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO
--------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................... $ 18,226,867 $ 33,915,292
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................... 196,920 539,933
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................ 551,875 1,770,982
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .... (662,702) (954,706)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........... 86,093 1,356,209
---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................. (170,153) (622,806)
---------------- -------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................... (170,153) (622,806)
---------------- -------------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ............................. 2,489,057 7,429,281
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......................... 168,829 618,858
COST OF SHARES REDEEMED - INVESTOR CLASS ............................... (4,807,986) (24,469,967)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS .......................................... (2,150,100) (16,421,828)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL ................................................... (2,150,100) (16,421,828)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSET ...................................... (2,234,160) (15,688,425)
---------------- -------------------
ENDING NET ASSETS ......................................................... $ 15,992,707 $ 18,226,867
================ ===================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - INVESTOR CLASS ........................................... 254,816 772,522
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ........ 17,338 64,111
SHARES REDEEMED - INVESTOR CLASS ....................................... (490,715) (2,543,459)
---------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ............................ (218,561) (1,706,826)
---------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ............................................. (218,561) (1,706,826)
---------------- -------------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ..................... $ 26,767 $ 0
================ ===================
LIFE STAGE - MODERATE PORTFOLIO
--------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETs ................................................... $ 49,742,083 $ 72,629,458
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................... 388,550 913,917
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................ 3,348,832 3,127,216
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .... (3,596,961) 112,941
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........... 140,421 4,154,074
---------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................. 0 (1,302,028)
---------------- -------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................... 0 (1,302,028)
---------------- -------------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ............................. 7,321,605 16,203,743
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......................... 0 1,301,008
COST OF SHARES REDEEMED - INVESTOR CLASS ............................... (22,168,062) (43,244,172)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS .......................................... (14,846,457) (25,739,421)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL ................................................... (14,846,457) (25,739,421)
---------------- -------------------
NET INCREASE (DECREASE) IN NET ASSET ...................................... (14,706,036) (22,887,375)
---------------- -------------------
ENDING NET ASSETS ......................................................... $ 35,036,047 $ 49,742,083
================ ===================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - INVESTOR CLASS ........................................... 727,392 1,646,817
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ........ 0 128,496
SHARES REDEEMED - INVESTOR CLASS ....................................... (2,178,623) (4,389,752)
---------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ............................ (1,451,231) (2,614,439)
---------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ............................................. (1,451,231) (2,614,439)
---------------- -------------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ..................... $ 388,550 $ 0
================ ===================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS 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
- ----------------------------------------------------------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)............ $ 10.33 0.06 (0.08) 0.00(4) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004.................... $ 9.61 0.11 0.81 (0.20) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003.................... $ 7.69 0.07 1.94 (0.09) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002.................... $ 9.50 0.08 (1.84) (0.05) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001.................... $ 11.85 0.07 (1.89) (0.07) (0.46)
JANUARY 1, 2000 TO DECEMBER 31, 2000.................... $ 13.08 0.12 (0.81) (0.52) (0.02)
LIFE STAGE - CONSERVATIVE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)............ $ 9.86 0.01 (0.16) 0.10 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004.................... $ 9.54 0.21 0.36 (0.25) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003.................... $ 8.59 0.19 1.00 (0.24) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002.................... $ 9.69 0.24 (1.06) (0.28) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001.................... $ 10.78 0.31 (0.87) (0.32) (0.21)
JANUARY 1, 2000 TO DECEMBER 31, 2000.................... $ 11.46 0.41 (0.32) (0.57) (0.20)
LIFE STAGE - MODERATE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)............ $ 10.19 0.11 (0.08) 0.00(4) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004.................... $ 9.69 0.18 0.57 (0.25) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003.................... $ 8.19 0.12 1.53 (0.15) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002.................... $ 9.64 0.16 (1.44) (0.17) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001.................... $ 11.25 0.17 (1.31) (0.18) (0.29)
JANUARY 1, 2000 TO DECEMBER 31, 2000.................... $ 12.08 0.26 (0.47) (0.53) (0.09)
14
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
NET ASSET ------------------------------------------------------
RETURN VALUE PER NET INVESTMENT GROSS EXPENSES NET
OF CAPITAL SHARE INCOME (LOSS) EXPENSES(2) WAIVED(2) EXPENSES(2)
- -----------------------------------------------------------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)....... 0.00 $10.31 1.01% 0.81% (0.68)% 0.13%
JANUARY 1, 2004 TO DECEMBER 31, 2004............... 0.00 $10.33 0.91% 0.51% (0.42)% 0.09%
JANUARY 1, 2003 TO DECEMBER 31, 2003............... 0.00 $ 9.61 0.84% 0.55% (0.32)% 0.23%
JANUARY 1, 2002 TO DECEMBER 31, 2002............... 0.00 $ 7.69 1.06% 0.56% (0.31)% 0.25%
JANUARY 1, 2001 TO DECEMBER 31, 2001............... 0.00 $ 9.50 0.74% 0.60% (0.35)% 0.25%
JANUARY 1, 2000 TO DECEMBER 31, 2000............... 0.00 $11.85 1.05% 0.60% (0.35)% 0.25%
LIFE STAGE - CONSERVATIVE PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)....... 0.00 $ 9.81 2.26% 0.79% (0.57)% 0.22%
JANUARY 1, 2004 TO DECEMBER 31, 2004............... 0.00 $ 9.86 1.98% 0.60% (0.48)% 0.12%
JANUARY 1, 2003 TO DECEMBER 31, 2003............... 0.00 $ 9.54 2.03% 0.46% (0.25)% 0.21%
JANUARY 1, 2002 TO DECEMBER 31, 2002............... 0.00 $ 8.59 2.71% 0.40% (0.15)% 0.25%
JANUARY 1, 2001 TO DECEMBER 31, 2001............... 0.00 $ 9.69 3.08% 0.43% (0.18)% 0.25%
JANUARY 1, 2000 TO DECEMBER 31, 2000............... 0.00 $10.78 3.70% 0.49% (0.24)% 0.25%
LIFE STAGE - MODERATE PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)....... 0.00 $10.22 1.79% 0.68% (0.48)% 0.20%
JANUARY 1, 2004 TO DECEMBER 31, 2004............... 0.00 $10.19 1.44% 0.45% (0.35)% 0.10%
JANUARY 1, 2003 TO DECEMBER 31, 2003............... 0.00 $ 9.69 1.41% 0.40% (0.18)% 0.22%
JANUARY 1, 2002 TO DECEMBER 31, 2002............... 0.00 $ 8.19 1.85% 0.37% (0.12)% 0.25%
JANUARY 1, 2001 TO DECEMBER 31, 2001............... 0.00 $ 9.64 1.91% 0.36% (0.11)% 0.25%
JANUARY 1, 2000 TO DECEMBER 31, 2000............... 0.00 $11.25 2.38% 0.37% (0.12)% 0.25%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(3) RATE (000'S OMITTED)
- ----------------------------------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)............ (0.18)% 23% $23,639
JANUARY 1, 2004 TO DECEMBER 31, 2004.................... 9.60% 61% $26,514
JANUARY 1, 2003 TO DECEMBER 31, 2003.................... 26.10% 30% $35,394
JANUARY 1, 2002 TO DECEMBER 31, 2002.................... (18.54)% 78% $26,997
JANUARY 1, 2001 TO DECEMBER 31, 2001.................... (15.38)% 16% $26,433
JANUARY 1, 2000 TO DECEMBER 31, 2000.................... (5.26)% 14% $25,321
LIFE STAGE - CONSERVATIVE PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)............ 0.48% 29% $15,993
JANUARY 1, 2004 TO DECEMBER 31, 2004.................... 5.99% 70% $18,227
JANUARY 1, 2003 TO DECEMBER 31, 2003.................... 13.99% 47% $33,915
JANUARY 1, 2002 TO DECEMBER 31, 2002.................... (8.53)% 64% $27,939
JANUARY 1, 2001 TO DECEMBER 31, 2001.................... (5.13)% 35% $26,835
JANUARY 1, 2000 TO DECEMBER 31, 2000.................... 0.66% 33% $17,892
LIFE STAGE - MODERATE PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)............ 0.30% 24% $35,036
JANUARY 1, 2004 TO DECEMBER 31, 2004.................... 7.71% 58% $49,742
JANUARY 1, 2003 TO DECEMBER 31, 2003.................... 20.18% 20% $72,629
JANUARY 1, 2002 TO DECEMBER 31, 2002.................... (13.27)% 63% $57,046
JANUARY 1, 2001 TO DECEMBER 31, 2001.................... (10.20)% 23% $61,845
JANUARY 1, 2000 TO DECEMBER 31, 2000.................... (1.75)% 18% $51,915
(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) THESE RATIOS DO NOT INCLUDE EXPENSES FROM THE UNDERLYING FUNDS.
(3) TOTAL RETURN CALCULATIONS 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.
(4) AMOUNT CALCULATED IS LESS THAN $0.005.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Life Stage -
Aggressive Portfolio, Life Stage - Conservative Portfolio, and Life Stage -
Moderate Portfolio. Each Portfolio is a diversified series of the Trust.
In August and 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 Portfolios ("Acquiring Portfolios"), by share class, acquired
substantially all of the net assets of the following Target Portfolios ("Target
Portfolios"), by share class, through a tax-free exchange under section 368 of
the Internal Revenue Code.
Acquiring Portfolios Target Portfolios
- --------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE -
AGGRESSIVE PORTFOLIO INVESTOR CLASS STRONG LIFE STAGE SERIES - AGGRESSIVE PORTFOLIO INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE -
CONSERVATIVE PORTFOLIO INVESTOR CLASS STRONG LIFE STAGE SERIES - CONSERVATIVE PORTFOLIO INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LIFE STAGE -
MODERATE PORTFOLIO INVESTOR CLASS STRONG LIFE STAGE SERIES - MODERATE PORTFOLIO 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.
Certain Underlying Funds of the Trust may invest a substantial portion of
their assets in an industry, sector or foreign country as is discussed in the
applicable Performance Highlights for those Underlying Funds. Such Underlying
Funds may be more affected by changes in that industry, sector or foreign
country than they would be absent the concentration of investments.
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
Portfolios and, therefore, cannot be estimated; however, based on experience,
the risk of loss from such claims is considered remote.
SECURITY VALUATION
Each Fund determines its net asset value as of the close of regular
trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern
Time) on each Fund business day. Investments in the Underlying Funds are valued
at the closing net asset value per share of each Underlying Fund on the
valuation date.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that that are higher or lower than NAVs
based on the closing price or latest quoted bid price.
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.
16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
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 and distributed to shareholders
annually, with the exception of the Life Stage Conservative Portfolio, for which
net investment income, if any, is declared and distributed quarterly.
Distributions to shareholders from net realized capital gains, if any, are
declared and distributed at least annually.
For federal income tax purposes, a Portfolio 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 Portfolio 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 June 30, 2005.
At December 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Portfolio Year Expires Capital Loss Carryforwards
- ---------------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO 2010 $ 7,698,921
2011 181,679
- ---------------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO 2010 2,309,344
2011 234,933
- ---------------------------------------------------------------------------------------
LIFE STAGE - MODERATE PORTFOLIO 2010 12,145,557
2011 261,124
- ---------------------------------------------------------------------------------------
17
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). Funds Management is responsible for
implementing the investment policies and guidelines for the Portfolios. Funds
Management does not receive any fees for its provision of investment advisory
services to the Portfolios.
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)
- --------------------------------------------------------------------------------
LIFE STAGE PORTFOLIOS $0 - $4.99 billion 0.50
$5 - $9.99 billion 0.49
>$9.99 billion 0.48
- --------------------------------------------------------------------------------
*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
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.28
- --------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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. Effective April 11,
2005, transfer agent fees are paid by Funds Management and not by the funds.
Prior to April 11, 2005, transfer agent fees were reimbursed by the
underlying funds and are not reflected in the Portfolio's Statement of
Operations or the Financial Highlights. SISI was also compensated for certain
other out-of-pocket expenses related to transfer agent services. For financial
statement presentation, these out-of-pocket expenses for the period from January
1, 2005 through April 10, 2005, as shown below, have been combined with
administration fees.
Transfer Agent Fees and
Other Related Expenses
- --------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO $124
- --------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO 235
- --------------------------------------------------------------------------------
LIFE STAGE - MODERATE PORTFOLIO 479
- --------------------------------------------------------------------------------
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 LIFE STAGE PORTFOLIOS 0.02
- --------------------------------------------------------------------------------
Prior to February 25, 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 certain fees, primarily based on transactions of
the fund.
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Portfolio is charged the following annual fees:
% of Average
Share Class Daily Net Assets**
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.25
- --------------------------------------------------------------------------------
18
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
**Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing fees
for the predecessor Strong Funds, if any, were encompassed by the Strong Funds'
12b-1 distribution and service plan fees. For the period April 11, 2005 through
June 30, 2005, shareholder servicing fees paid were as follows:
Portfolio Investor Class
- --------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO $ 13,069
- --------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO 9,200
- --------------------------------------------------------------------------------
LIFE STAGE - MODERATE PORTFOLIO 22,143
- --------------------------------------------------------------------------------
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
Portfolio. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to February 25, 2005, State Street served as fund accountant to each
of the predecessor Strong Funds. Fund accounting fees were paid by the
Portfolios' administrator and not by the Portfolios.
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 Portfolio'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 June 30, 2005 were as
follows:
Net Operating
Expense Ratios
Portfolio Investor Class
- --------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO 0.27%
- --------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO 0.22%
- --------------------------------------------------------------------------------
LIFE STAGE - MODERATE PORTFOLIO 0.26%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, SISI could voluntarily waive or absorb certain
expenses at their discretion. SCM and/or SISI had contractually agreed to waive
its fees and/or absorb expenses for Strong Life Stage Series - Aggressive
Portfolio, Strong Life Stage Series - Conservative Portfolio, and Strong Life
Stage Series - Moderate Portfolio until May 1, 2005, to keep total annual
operating expenses at no more than 1.45%, 1.25%, and 1.35%, respectively. These
contractual caps take into consideration both the expenses of the Portfolios as
well as the expenses of the underlying funds. However, effective April 11, 2005,
the Portfolios are subject to a different expense structure. From January 1,
2005 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
- --------------------------------------------------------------------------------
AGGRESSIVE PORTFOLIO
FUND LEVEL $ 295
INVESTOR CLASS 41,465
- --------------------------------------------------------------------------------
CONSERVATIVE PORTFOLIO
FUND LEVEL 244
INVESTOR CLASS 20,356
- --------------------------------------------------------------------------------
MODERATE PORTFOLIO
FUND LEVEL 525
INVESTOR CLASS 59,330
- --------------------------------------------------------------------------------
19
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
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 June 30, 2005, were as follows:
Portfolio Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------------
LIFE STAGE - AGGRESSIVE PORTFOLIO $ 5,601,510 $ 10,020,373
- --------------------------------------------------------------------------------------
LIFE STAGE - CONSERVATIVE PORTFOLIO 4,939,201 8,059,257
- --------------------------------------------------------------------------------------
LIFE STAGE - MODERATE PORTFOLIO 10,455,418 28,288,321
- --------------------------------------------------------------------------------------
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 June 30, 2005, the Life Stage - Aggressive Portfolio and the Life
Stage - Conservative Portfolio had minimal borrowings, and the Life Stage -
Moderate Portfolio had no borrowings under the agreements.
8. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 Strong 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 imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $35 million by May 2009. 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 Strong 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 LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
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 how to obtain 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 complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (www.wellsfargo.com/advantagefunds) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' Web site on a monthly, seven-day or more
delayed basis. 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 at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
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 Water Company and President
2005) of Crystal Geyser Roxane Water
Company.
- -------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, since Retired. Prior thereto, President None
71 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
65 since 1996 Willeke & Daniels.
- -------------------------------------------------------------------------------------------------------------
21
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS 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.
- -------------------------------------------------------------------------------------------------------------
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 June 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
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AGREEMENT:
LIFE STAGE - AGGRESSIVE PORTFOLIO, LIFE STAGE - CONSERVATIVE PORTFOLIO AND LIFE
STAGE - MODERATE PORTFOLIO
- --------------------------------------------------------------------------------
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, an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the Life Stage - Aggressive Portfolio, Life Stage -
Conservative Portfolio and Life Stage - Moderate Portfolio (the "Funds").
Currently, the Funds do not have investment sub-advisory agreements. The
investment advisory agreement with Funds Management is referred to as the
"Advisory Agreement."
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 the continuation of the Advisory
Agreement. The Board initially approved the Advisory Agreement 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
- --------------------------------------------------------------------------------------------
Life Stage Series - Aggressive Portfolio* Life Stage - Aggressive Portfolio
- --------------------------------------------------------------------------------------------
Life Stage Series - Conservative Portfolio* Life Stage - Conservative Portfolio
- --------------------------------------------------------------------------------------------
Life Stage Series - Moderate Portfolio* Life Stage - Moderate Portfolio
- --------------------------------------------------------------------------------------------
* 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 under the Advisory Agreement. Responses of Funds 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.
The Board also considered the ability of Funds Management based on its
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 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 program and compliance record
of Funds 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.
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.
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
23
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
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 was not
appreciably below the median performance of its Peer Group for all time periods.
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 Funds were
higher than the Funds' Peer Groups' median net operating expense ratios, but the
Board noted that this was primarily due to the fact that the net operating
expense ratios for the Funds included both fund level and underlying fund level
expenses, while the Peer Groups' median net operating expense ratios only
included fund level expenses.
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 Agreement for the Funds.
INVESTMENT ADVISORY FEE RATES
- --------------------------------------------------------------------------------
The Board reviewed and considered the contractual investment advisory fee
rates payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administrative services covered by the administration fee
rates. 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.
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.
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.
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, including other registered
investment companies and separate accounts. The Board concluded that the
Advisory Agreement Rates and the Net Advisory Rates were within a reasonable
range of the fee rates offered to others by Funds Management, giving effect to
differences in services covered by such fee rates.
24
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS
- --------------------------------------------------------------------------------
OTHER BENEFITS TO FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
as a result of their relationship with the Funds. Such benefits could include,
among others, benefits directly attributable to the relationship of Funds
Management with the Funds and benefits potentially derived from an increase in
the business of Funds 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).
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.
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 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 met with various
management representatives and portfolio managers, 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 Agreement 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
Agreement.
25
WELLS FARGO ADVANTAGE LIFE STAGE PORTFOLIOS 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 This report and the financial statements
ADVANTAGE FUNDS(SM) is available free contained herein are submitted for the
upon request. To obtain literature, general information of the shareholders
please write, e-mail, or call: of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional
WELLS FARGO ADVANTAGE FUNDS purposes, distribution of the report
P.O. Box 8266 must be accompanied or preceded by a
Boston, MA 02266-8266 current prospectus. For a prospectus
containing more complete information,
E-mail: wfaf@wellsfargo.com including charges and expenses, call
Retail Investment 1-800-222-8222. Please consider the
Professionals: 888-877-9275 investment objective, risks, charges and
Institutional Investment expenses of the investment carefully
Professionals: 866-765-0778 before investing. This and other
Web: www.wellsfargo.com/ information about WELLS FARGO ADVANTAGE
advantagefunds 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 www.wellsfargo.com/advantagefunds RT51869 08-05
Advantage Funds, LLC. SLIF/SAR114 06-05
All rights reserved.
27
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 2005
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
WELLS FARGO ADVANTAGE ENDEAVOR LARGE CAP FUND(SM)
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND(SM)
WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND
WELLS FARGO ADVANTAGE U.S. VALUE FUND
TABLE OF CONTENTS
Letter to Shareholders ..................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Endeavor Large Cap Fund ................................................. 2
Endeavor Select Fund .................................................... 4
Large Company Core Fund ................................................. 6
U.S. Value Fund ......................................................... 8
Fund Expenses .............................................................. 10
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Endeavor Large Cap Fund ................................................. 12
Endeavor Select Fund .................................................... 14
Large Company Core Fund ................................................. 16
U.S. Value Fund ......................................................... 18
Financial Statements
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities .................................... 24
Statements of Operations ................................................ 26
Statements of Changes in Net Assets ..................................... 28
Financial Highlights .................................................... 32
Notes to Financial Highlights ........................................... 38
Notes to Financial Statements .............................................. 39
- --------------------------------------------------------------------------------
Other Information .......................................................... 48
- --------------------------------------------------------------------------------
List of Abbreviations ...................................................... 53
- --------------------------------------------------------------------------------
-------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS semi-annual
report for the period ended June 30, 2005. On the following pages, you will find
a discussion of each Fund, including performance highlights, the Fund managers'
strategic outlook, and information about the Fund's portfolio.
ECONOMIC EXPANSION CONTINUES
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing it upward
during the reporting period. The consumer price index (CPI) rose at around a 3%
rate over the twelve months ended June 30, 2005. The core CPI, which excludes
the volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate--its principal policy tool--from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
- --------------------------------------------------------------------------------
After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of the year. The S&P 500 Index was
around 1200 as the year began. It ended the first half of 2005 at 1191. Strong
corporate earnings have helped the markets, while record prices for crude oil
and concerns of a slowdown in worldwide economic growth have capped and often
reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well during most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sectors recovered and again produced
solid returns. Municipal bonds generally performed better than most taxable
sectors during 2005, but they lagged behind the rally in U.S. Treasuries in May
and June. Overall, by the end of the second quarter of 2005, municipal yields
were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
- --------------------------------------------------------------------------------
The economy has shown remarkably steady growth over the reporting
period--growth that has been sufficient to bring the unemployment rate down to
5.0%, the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR LARGE CAP FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ENDEAVOR LARGE CAP FUND(SM) (the Fund) seeks
long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Thomas J. Pence, CFA 9/28/2001
Erik J. Voss, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned (0.86)%(1) (excluding sales charge) for
the six-month period ending June 30, 2005, outperforming its benchmark, the S&P
500 Index(2), which returned (0.81)% 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 ON 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. 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 Fund's strong performance, as compared to its benchmark, was due
primarily to favorable stock selection within the energy, health care, and
financial sectors. Our commitment to energy stocks was predicated on our belief
that increased capital investment is necessary in light of growing energy
demand. As such, the Fund benefited from strong performance by its holdings in
Transocean Incorporated, a provider of offshore contract drilling services, and
Valero Energy Corporation, an oil refiner.
Within the health care sector, managed care companies such as United
Health Group Incorporated and WellPoint Incorporated delivered stable returns,
as both companies enjoyed strong pricing trends and enrollment growth. Also, our
position in Alcon Incorporated, a dominant player in eye-care products, provided
particularly strong performance. The firm posted solid growth in its
pharmaceutical and surgical divisions, resulting from its increased presence in
emerging markets.
Financial holdings also aided portfolio returns, as we shied away from
companies whose future earnings were heavily dependent on consumer lending.
All state Corporation and Marshall & Ilsley Corporation produced solid
performance during the reporting period.
In general, our information technology holdings detracted from the Fund's
returns during the period, as corporations were slow to spend money on
technology initiatives. As a result, software and telecommunications holdings
such as Check Point Software Technologies Limited and Motorola Incorporated
performed poorly during the period. These lackluster results were marginally
offset by strength in specific technology positions, including Marvell
Technology Group Limited and Texas Instruments Incorporated.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We increased our weighting in health care equipment companies, such as
Medtronic Incorporated and Alcon. In addition, we established a position in
UnitedHealth Group to increase our exposure to health care service providers. We
also added to our existing energy exposure by introducing Valero Energy to the
portfolio and increasing our position in Canadian Natural Resources Limited, an
exploration and production company.
Our technology holdings decreased as we eliminated specific communications
equipment and semi-conductor holdings. Moreover, we significantly lowered our
exposure to materials companies, specifically in metals and mining, chemicals,
and packaging.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
While strong U.S. consumer spending has supported the majority of the
economic recovery thus far, we expect investors to focus on companies that will
benefit from corporate capital spending in the second half of 2005. Therefore,
within the consumer discretionary sector, we are focusing on companies with
unique niches that can generate growth even if consumer spending stagnates.
We expect corporate-profit growth to continue into the second half of
2005. Corporations continue to generate record levels of free cash flow but thus
far have been reluctant to spend this money on capital projects. We believe that
much of the capital spending cycle and inventory build-up is yet to come, but
that capital-spending projects will be very selective. In light of these market
conditions, we remain focused on firms that are well positioned to meet earnings
expectations and deliver cash flow growth.
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. 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
EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 ENDEAVOR LARGE CAP 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 and Class C shares of the WELLS
FARGO ADVANTAGE ENDEAVOR LARGE CAP 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 Endeavor Large Cap Fund, its predecessor
fund, adjusted to reflect each Class' applicable sales charge. 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 LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
----------------------------------- -----------------------------------
6-Months* 1-Year Life of Fund 6-Months* 1-Year Life of Fund
- ---------------------------------------------------------------------------------------------------------------------
Endeavor Large Cap Fund - Class A
(Incept. Date 9/28/2001) (4.94) 3.90 3.36 0.86 10.24 5.01
- ---------------------------------------------------------------------------------------------------------------------
Endeavor Large Cap Fund - Class B
(Incept. Date 9/28/2001) (4.47) 4.45 3.67 0.53 9.45 4.38
- ---------------------------------------------------------------------------------------------------------------------
Endeavor Large Cap Fund - Class C
(Incept. Date 9/28/2001) (0.47) 8.45 4.38 0.53 9.45 4.38
- ---------------------------------------------------------------------------------------------------------------------
Benchmark
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 5.45
- ---------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
Beta** 1.15
- ----------------------------------------------------------------
Price to Earnings (trailing 12 months) 26.80x
- ----------------------------------------------------------------
Price to Book Ratio 3.27x
- ----------------------------------------------------------------
Median Market Cap.($B) $19.46
- ----------------------------------------------------------------
Portfolio Turnover 138%
- ----------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Staples 6%
Consumer Discretionary 12%
Energy 11%
Financials 8%
Health Care 24%
Industrials 6%
Information Technology 27%
Materials 2%
Telecommunication Services 4%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------
WellPoint Incorporated 4.91%
- -----------------------------------------------------
General Electric Company 4.72%
- -----------------------------------------------------
Sprint Corporation 4.60%
- -----------------------------------------------------
Dell Incorporated 4.27%
- -----------------------------------------------------
CVS Corporation 3.60%
- -----------------------------------------------------
UnitedHealth Group Incorporated 3.39%
- -----------------------------------------------------
EMC Corporation 3.09%
- -----------------------------------------------------
Medtronic Incorporated 3.08%
- -----------------------------------------------------
Yahoo! Incorporated 3.06%
- -----------------------------------------------------
Alcon Incorporated 2.95%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
ENDEAVOR LARGE CAP FUND-
CLASS A S&P 500 INDEX
9/28/2001 10,000 10,000
9/30/2001 10,000 10,000
10/31/2001 10,525 10,191
11/30/2001 11,536 10,972
12/31/2001 11,514 11,068
1/31/2002 11,311 10,907
2/28/2002 10,841 10,697
3/31/2002 11,216 11,099
4/30/2002 10,301 10,426
5/31/2002 10,052 10,350
6/30/2002 9,122 9,613
7/31/2002 8,620 8,864
8/31/2002 8,646 8,922
9/30/2002 7,749 7,953
10/31/2002 8,460 8,652
11/30/2002 8,920 9,161
12/31/2002 8,303 8,623
1/31/2003 8,102 8,398
2/28/2003 8,065 8,272
3/31/2003 8,215 8,351
4/30/2003 8,822 9,039
5/31/2003 9,263 9,515
6/30/2003 9,390 9,637
7/31/2003 9,624 9,807
8/31/2003 9,863 9,997
9/30/2003 9,758 9,892
10/31/2003 10,306 10,451
11/30/2003 10,414 10,543
12/31/2003 10,774 11,095
1/31/2004 10,994 11,299
2/29/2004 11,064 11,456
3/31/2004 10,858 11,283
4/30/2004 10,732 11,106
5/31/2004 10,932 11,258
6/30/2004 11,069 11,477
7/31/2004 10,443 11,097
8/31/2004 10,391 11,142
9/30/2004 10,490 11,262
10/31/2004 10,654 11,435
11/30/2004 11,020 11,897
12/31/2004 11,452 12,302
1/31/2005 11,070 12,002
2/28/2005 11,188 12,254
3/31/2005 10,984 12,037
4/30/2005 10,775 11,809
5/31/2005 11,297 12,185
6/30/2005 11,255 12,202
- --------------------------------------------------------------------------------
(2) The S&P 500 Index consists of 500 stocks chosen for market size,
liquidity, and industry group representation. It is a market value
weighted index with each stock's weight in the Index proportionate to its
market value. You cannot invest directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of sector distribution, portfolio holdings and fund
characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE ENDEAVOR
LARGE CAP FUND Class A shares for the life of the Fund with the S&P 500
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 5.75%.
3
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND(SM) (the Fund) seeks
long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Thomas J. Pence, CFA 12/29/2000
Erik J. Voss, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.90%1 (excluding sales charge) for the
six-month period ending June 30, 2005, outperforming its benchmark, the S&P 500
Index2, which returned (0.81)% 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 ON 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. ADMINISTRATOR CLASS AND INSTITUTIONAL CLASS SHARES ARE SOLD WITHOUT A
FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. 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 Fund's strong performance was due primarily to superior stock
selection within the health care, energy, and telecommunications services
sectors. During the period, our health care holdings performed well due to our
continued focus on core growth firms. The managed care provider WellPoint
Incorporated produced consistent results, while Alcon Incorporated, a dominant
player in the eye-care industry, was a solid contributor to the Fund.
In the energy sector, we maintained our belief that the growing energy
demands of emerging markets will be met by increased spending within the oil
industry. As a result, we continued to select solid growth companies such as
Canadian Natural Resources Limited, Valero Energy Corporation, and Grant Prideco
Incorporated. Additionally, the Fund's returns were bolstered by several
telecommunications stocks, including NII Holdings Incorporated and Sprint
Corporation.
Conversely, the Fund's performance was negatively affected by specific
technology firms and by mixed results in the consumer discretionary sector. For
example, security software provider Check Point Software Technologies Limited
experienced slow sales in Western Europe during the first quarter, which
hindered its stock price. Among consumer discretionary holdings, positive
results from our positions in Royal Caribbean Cruises Limited and Marriott
International Incorporated were offset by poor performance in Harman
International Industries Incorporated, a high-quality audio systems
manufacturer. We took advantage of its low stock price to increase our exposure
to Harman, because we see several factors in place that should promote future
growth.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We added to our existing holdings in health care services, including
managed care provider WellPoint, a Blue Cross Blue Shield provider, and we
initiated a position in UnitedHealth Group Incorporated. In health care
equipment, we increased our exposure to Medtronic Incorporated, Fisher
Scientific International Incorporated, and Alcon, while establishing a new
biotechnology position in Gilead Sciences Incorporated. We also added to our
sizable weighting in the energy sector by building a position in Valero Energy,
a leading energy refiner. In addition, we increased our holdings in Grant
Prideco, an energy equipment maker, and in Williams Companies Incorporated,
which is engaged primarily in exploring, producing, and transporting natural
gas.
Our technology weighting decreased as we became more vigilant about
investing in those companies that are well positioned to capture increasing
capital spending. Finally, we eliminated a number of industrial holdings based
on deteriorating fundamentals.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We expect corporate-profit growth to continue into the second half of
2005. Although consumer spending has proven resilient, we expect to become very
selective about identifying companies that can generate growth even if broad
consumer spending slows.
In addition, we are diligently reviewing our current holdings and
potential investments to ensure that these companies can produce sustainable
growth potential despite high energy prices and rising short-term interest
rates. While growth stocks may be challenged by current market conditions, we
remain focused on firms that are well positioned to produce respectable earnings
and cash flow growth with reasonable valuations. In building the portfolio, we
remain committed to selecting from among these firms in order for the Fund to
serve its investors well in both robust and weak economic periods.
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. 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
EMPHASIZE 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 SMALL COMPANY SECURITIES, FOREIGN INVESTMENTS, AND NONDIVERSIFIED
PORTFOLIO RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 ENDEAVOR SELECT 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.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
----------------------------------- ---------------------------------
6-Months* 1-Year Life of Fund 6-Months* 1-Year Life of Fund
- --------------------------------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Class A (Incept. Date
12/29/2000) (4.91) 1.47 (1.59) 0.90 7.68 (0.29)
- --------------------------------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Class B (Incept. Date
12/29/2000) (4.41) 1.83 (1.49) 0.59 6.83 (1.02)
- --------------------------------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Class C (Incept. Date
12/29/2000) (0.41) 5.83 (1.02) 0.59 6.83 (1.02)
- --------------------------------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Administrator Class
(Incept. Date 4/11/2005) 1.01 7.80 (0.26)
- --------------------------------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Institutional Class
(Incept. Date 4/11/2005) 1.01 7.80 (0.26)
- --------------------------------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (0.64)
- --------------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
Beta** 1.16
- ----------------------------------------------------------------
Price to Earnings (trailing 12 months) 26.90x
- ----------------------------------------------------------------
Price to Book Ratio 3.45x
- ----------------------------------------------------------------
Median Market Cap. ($B) $17.88
- ----------------------------------------------------------------
Portfolio Turnover 132%
- ----------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 15%
Consumer Staples 5%
Energy 10%
Financials 2%
Health Care 27%
Industrials 5%
Information Technology 26%
Materials 2%
Telecommunication Services 8%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- -------------------------------------------------------
WellPoint Incorporated 5.76%
- ----------------------------------------------------
Royal Caribbean Cruises Limited 5.09%
- ----------------------------------------------------
General Electric Company 4.86%
- ----------------------------------------------------
Sprint Corporation 4.86%
- ----------------------------------------------------
Marvel Enterprises Incorporated 4.34%
- ----------------------------------------------------
Medtronic Incorporated 3.79%
- ----------------------------------------------------
CVS Corporation 3.53%
- ----------------------------------------------------
Oracle Corporation 3.39%
- ----------------------------------------------------
Dell Incorporated 3.39%
- ----------------------------------------------------
UnitedHealth Group Incorporated 3.38%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
ENDEAVOR SELECT FUND - ENDEAVOR SELECT FUND -
CLASS A ADMINISTRATOR CLASS S&P 500 INDEX
12/29/2000 9,425 10,000 10,000
12/31/2000 9,425 10,000 10,000
1/31/2001 10,104 10,720 10,355
2/28/2001 8,445 8,960 9,411
3/31/2001 7,549 8,010 8,815
4/30/2001 8,228 8,730 9,500
5/31/2001 8,341 8,850 9,563
6/30/2001 8,454 8,970 9,331
7/31/2001 8,002 8,490 9,239
8/31/2001 7,418 7,870 8,661
9/30/2001 6,635 7,040 7,962
10/31/2001 6,975 7,400 8,114
11/30/2001 7,493 7,950 8,736
12/31/2001 7,531 7,990 8,812
1/31/2002 7,088 7,520 8,684
2/28/2002 6,607 7,010 8,516
3/31/2002 7,191 7,630 8,837
4/30/2002 6,777 7,190 8,301
5/31/2002 6,654 7,060 8,240
6/30/2002 6,277 6,660 7,653
7/31/2002 5,740 6,090 7,057
8/31/2002 5,787 6,140 7,103
9/30/2002 5,683 6,030 6,332
10/31/2002 6,070 6,440 6,889
11/30/2002 6,202 6,580 7,294
12/31/2002 5,760 6,111 6,866
1/31/2003 5,599 5,941 6,686
2/28/2003 5,580 5,921 6,586
3/31/2003 5,694 6,041 6,649
4/30/2003 6,005 6,371 7,197
5/31/2003 6,354 6,742 7,576
6/30/2003 6,458 6,852 7,672
7/31/2003 6,864 7,283 7,808
8/31/2003 7,223 7,664 7,960
9/30/2003 7,091 7,524 7,875
10/31/2003 7,629 8,095 8,321
11/30/2003 7,639 8,105 8,394
12/31/2003 7,894 8,375 8,834
1/31/2004 8,318 8,826 8,996
2/29/2004 8,337 8,846 9,121
3/31/2004 8,252 8,756 8,983
4/30/2004 7,875 8,355 8,842
5/31/2004 8,300 8,806 8,964
6/30/2004 8,639 9,166 9,138
7/31/2004 8,016 8,505 8,835
8/31/2004 7,790 8,265 8,871
9/30/2004 8,271 8,776 8,967
10/31/2004 8,507 9,026 9,104
11/30/2004 8,970 9,517 9,472
12/31/2004 9,220 9,782 9,794
1/31/2005 8,908 9,451 9,556
2/28/2005 8,888 9,430 9,756
3/31/2005 8,849 9,389 9,584
4/30/2005 8,571 9,094 9,402
5/31/2005 9,210 9,772 9,701
6/30/2005 9,303 9,881 9,715
- --------------------------------------------------------------------------------
Performance shown for the Class A, Class B and Class C shares of the WELLS
FARGO ADVANTAGE ENDEAVOR SELECT 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 Select Fund, its predecessor fund, adjusted
to reflect each Class'applicable sales charge. Performance shown for the
Administrator Class and Institutional Class shares of the WELLS FARGO ADVANTAGE
ENDEAVOR SELECT FUND for periods prior to April 11,2005,reflects the performance
of the Class A shares of the Strong Advisor Select Fund,its predecessor fund,and
includes fees and expenses that are not applicable to and are higher than those
of the Administrator Class and Institutional Class shares. The Class A shares
annual returns are substantially similar to what the Administrator Class and
Institutional Class shares returns would be because the shares are invested in
the same portfolio of securities and the annual returns differ only to the
extent that the Classes do not have the same fees and expenses.Effective at the
close of business on April 8,2005,certain Strong Funds were reorganized into
certain WELLS FARGO ADVANTAGE FUNDS.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation.It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE ENDEAVOR
SELECT FUND Class A and Administrator Class shares for the life of the Fund with
the S&P 500 Index. The chart assumes a hypothetical investment of $10,000 in
Class A and Administrator Class shares and reflects all operating expenses and,
for Class A shares, assumes the maximum initial sales charge of 5.75%.
5
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND (the Fund) seeks total
return comprised of long-term capital appreciation and current income.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Matrix Asset Advisors, Inc.
FUND MANAGER INCEPTION DATE
David A. Katz, CFA 11/3/1997
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned (5.16)%(1) (excluding sales charge) for
the six-month period ending June 30, 2005, underperforming its benchmark, the
S&P 500 Index(2), which returned (0.81)% 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 ON 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. CLASS Z AND ADMINISTRATOR 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?
- --------------------------------------------------------------------------------
Compared with the benchmark, the Fund's performance lagged primarily
because of our emphasis on certain sectors and industries of the market that
were out of favor during the first half of the year. While the individual
companies that the Fund owned generally exhibited strong operating performance
and were leaders in their respective industries, many of our stocks
underperformed market indices.
During much of the period, investors were concerned that the economy would
slow because of high energy prices and rising interest rates. These concerns had
a substantial negative impact on many of our holdings, particularly in the
financial and information technology sectors. For example, Citigroup
Incorporated and JP Morgan Chase & Company derive a significant proportion of
revenue from activities not directly impacted by the near-term movement of
interest rates, but were adversely impacted because of concerns about the impact
of rising interest rates on overall financial performance.
With the exception of companies such as Morgan Stanley and Symbol
Technologies Incorporated that experienced short-term operating issues, and
which therefore declined substantially during the quarter, most of our
underperformance can be attributed to a focus on sectors that were out of favor
and under-representation in sectors that were in favor. On the positive side, we
had attractive performance from such stocks as technology bellwethers Intel
Corporation and Nokia Oyj, and pharmacy retailer CVS Corporation.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Our strategy is not a strategy where we seek to mirror benchmark sector
weightings. Rather, we seek to include our best investment ideas. This might
result in our being over, under or not represented in a particular sector at
various times. After taking over the Fund on January 1, 2005, we repositioned it
with an eye toward upgrading the quality of its holdings which we believe will
enable it to participate more meaningfully in the next leg of the economic
recovery. We increased exposure to sectors where we continued to find attractive
growth opportunities at reasonable valuations, including financials, health
care, and information technology.
Our focus on these sectors is based on several factors including the
cyclical prospects for the sector and the industry and the attractive price at
which many of these companies can now be purchased. Our strategy leads us to
companies we believe are strong, but are experiencing short-term problems, which
have negatively impacted stock price. We believe this opportunistic focus should
bear positive results as the year unfolds.
We also scaled back weightings in sectors we perceived to be trading above
reasonable valuation levels. Again, we are concerned that many companies within
strong performing sectors year-to-date have reached and surpassed fair value
based on fundamentals, and are increasingly vulnerable to a price correction. We
seek to take profits while stocks are still strong, before they have had a
chance to give back some or all of their gains.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We are quite optimistic for the balance of the year. We base that optimism
on the growing evidence that the U.S. economy is more resilient and capable of
sustained growth than many investors have recently assumed. We do not believe
that energy prices will continue to move much higher; rather, we believe that
most of the upside has already been captured and there is more likelihood of
downward movement over the next twelve months. We also do not believe that
interest rates will be raised to a level that will stifle economic growth.
Finally, near the end of the period, the share prices of many of our
holdings began to strengthen. We will continue to diligently apply the same
methodology of picking quality stocks with attractive growth prospects relative
to their valuations.
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. 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
EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 LARGE COMPANY CORE 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 and Class C shares of the WELLS
FARGO ADVANTAGE LARGE COMPANY CORE 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 Large Company Core Fund, its predecessor
fund, adjusted to reflect each
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 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
- -----------------------------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class A
(Incept. Date 11/03/1997) (10.62) (3.76) (2.93) 3.66 (5.16) 2.14 (1.78) 4.47
- -----------------------------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class B
(Incept. Date 9/30/2002) (10.48) (3.72) (3.10) 3.50 (5.48) 1.28 (2.65) 3.50
- -----------------------------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class C
(Incept. Date 9/30/2002) (6.49) 0.19 (2.67) 3.49 (5.49) 1.19 (2.67) 3.49
- -----------------------------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class Z
(Incept. Date 4/11/2005) (5.16) 2.14 (1.78) 4.47
- -----------------------------------------------------------------------------------------------------------------------------
Large Company Core Fund -
Administrator Class
(Incept. Date 9/30/2002) (4.98) 2.65 (1.44) 4.70
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 5.08
- -----------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
Beta** 0.83
- ----------------------------------------------------------------
Price to Earnings (trailing 12 months) 23.00x
- ----------------------------------------------------------------
Price to Book Ratio 2.91x
- ----------------------------------------------------------------
Median Market Cap. ($B) $52.45
- ----------------------------------------------------------------
Portfolio Turnover 114%
- ----------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 13%
Consumer Staples 4%
Energy 7%
Financials 30%
Health Care 15%
Industrials 8%
Information Technology 23%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
MedImmune Incorporated 4.21%
- ----------------------------------------------------------------
Microsoft Incorporated 4.01%
- ----------------------------------------------------------------
Citigroup Incorporated 3.99%
- ----------------------------------------------------------------
General Electric Company 3.94%
- ----------------------------------------------------------------
Morgan Stanley 3.92%
- ----------------------------------------------------------------
Intel Corporation 3.91%
- ----------------------------------------------------------------
American International Group Incorporated 3.85%
- ----------------------------------------------------------------
Pfizer Incorporated 3.84%
- ----------------------------------------------------------------
Nokia Oyj ADR 3.72%
- ----------------------------------------------------------------
American Power Conversion Corporation 3.66%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
WELLS FARGO ADVANTAGE LARGE COMPANY CORE
LARGE COMPANY CORE FUND - ADMINISTRATOR
FUND - CLASS A CLASS S&P 500 INDEX
11/3/1997 9,425 10,000 10,000
11/30/1997 9,482 10,060 10,463
12/31/1997 9,707 10,299 10,642
1/31/1998 9,802 10,400 10,760
2/28/1998 10,445 11,082 11,535
3/31/1998 10,807 11,466 12,126
4/30/1998 10,769 11,426 12,247
5/31/1998 10,532 11,175 12,037
6/30/1998 10,543 11,186 12,526
7/31/1998 10,191 10,813 12,393
8/31/1998 8,916 9,460 10,603
9/30/1998 9,274 9,839 11,282
10/31/1998 9,971 10,579 12,199
11/30/1998 10,582 11,228 12,938
12/31/1998 10,860 11,523 13,683
1/31/1999 11,205 11,888 14,255
2/28/1999 10,832 11,492 13,812
3/31/1999 11,127 11,806 14,365
4/30/1999 11,579 12,286 14,921
5/31/1999 11,271 11,959 14,569
6/30/1999 11,868 12,592 15,377
7/31/1999 11,627 12,337 14,897
8/31/1999 11,570 12,275 14,824
9/30/1999 11,303 11,992 14,418
10/31/1999 12,093 12,831 15,330
11/30/1999 12,489 13,251 15,641
12/31/1999 13,558 14,385 16,562
1/31/2000 13,726 14,564 15,730
2/29/2000 14,172 15,036 15,433
3/31/2000 14,697 15,593 16,941
4/30/2000 14,160 15,024 16,432
5/31/2000 13,793 14,634 16,096
6/30/2000 14,408 15,287 16,492
7/31/2000 13,861 14,706 16,235
8/31/2000 15,344 16,280 17,243
9/30/2000 14,635 15,528 16,333
10/31/2000 14,076 14,935 16,263
11/30/2000 12,640 13,411 14,982
12/31/2000 13,359 14,174 15,056
1/31/2001 13,859 14,704 15,589
2/28/2001 12,738 13,515 14,169
3/31/2001 12,006 12,738 13,272
4/30/2001 12,793 13,574 14,302
5/31/2001 12,938 13,727 14,398
6/30/2001 12,289 13,038 14,048
7/31/2001 12,155 12,897 13,910
8/31/2001 11,555 12,260 13,040
9/30/2001 10,773 11,430 11,987
10/31/2001 11,063 11,738 12,216
11/30/2001 11,588 12,295 13,152
12/31/2001 11,927 12,654 13,268
1/31/2002 11,984 12,715 13,074
2/28/2002 11,996 12,727 12,822
3/31/2002 12,452 13,212 13,304
4/30/2002 12,048 12,783 12,498
5/31/2002 11,805 12,525 12,406
6/30/2002 10,811 11,470 11,523
7/31/2002 10,290 10,918 10,625
8/31/2002 10,336 10,967 10,694
9/30/2002 9,537 10,119 9,533
10/31/2002 10,313 10,970 10,371
11/30/2002 10,707 11,401 10,981
12/31/2002 10,205 10,867 10,336
1/31/2003 9,892 10,558 10,066
2/28/2003 9,764 10,422 9,915
3/31/2003 9,922 10,593 10,010
4/30/2003 10,652 11,372 10,835
5/31/2003 11,093 11,843 11,405
6/30/2003 11,200 11,976 11,551
7/31/2003 11,513 12,310 11,755
8/31/2003 11,652 12,471 11,984
9/30/2003 11,490 12,298 11,857
10/31/2003 12,127 12,991 12,527
11/30/2003 12,162 13,028 12,637
12/31/2003 12,545 13,437 13,300
1/31/2004 12,684 13,599 13,544
2/29/2004 12,916 13,846 13,732
3/31/2004 12,752 13,684 13,525
4/30/2004 12,564 13,482 13,313
5/31/2004 12,717 13,659 13,495
6/30/2004 12,894 13,848 13,757
7/31/2004 12,351 13,281 13,302
8/31/2004 12,139 13,054 13,356
9/30/2004 12,764 13,734 13,500
10/31/2004 12,741 13,709 13,706
11/30/2004 13,602 14,641 14,261
12/31/2004 13,886 14,959 14,746
1/31/2005 13,481 14,526 14,386
2/28/2005 13,734 14,810 14,689
3/31/2005 13,393 14,446 14,429
4/30/2005 13,111 14,136 14,156
5/31/2005 13,420 14,481 14,606
6/30/2005 13,170 14,214 14,626
- --------------------------------------------------------------------------------
Class' applicable sales charge. Performance shown for the Class A shares for
periods prior to September 16, 2002, reflects the performance of the Class A
shares of the Rockhaven Fund.Performance shown for the Class B shares for
periods prior to September 30,2002, reflects the performance of the Class A
shares of the Strong Advisor Large Company Core Fund, adjusted to reflect Class
B sales charges and expenses, and for periods prior to September 16, 2002,
reflects the performance of the Class A shares of the Rockhaven Fund.Performance
shown for the Class C shares for periods prior to September 30,2002, reflects
the performance of the Class A shares of the Strong Advisor Large Company Core
Fund, adjusted to reflect Class C sales charges and expenses, and for periods
prior to September 16, 2002, reflects the performance of the Class A shares of
the Rockhaven Fund. Performance shown for the Class Z shares of the WELLS FARGO
ADVANTAGE LARGE COMPANY CORE FUND for periods prior to April 11, 2005, reflects
the performance of the Class A shares of the Strong Advisor Large Company Core
Fund, its predecessor fund, and for periods prior to September 16,2002, reflects
the performance of the Class A shares of the Rockhaven Fund and includes fees
and expenses that are not applicable to and are higher than those of the Class Z
shares.The Class A shares annual returns are substantially similar to what the
Class Z shares returns would be because the shares are invested in the same
portfolio of securities and the annual returns differ only to the extent that
the Classes do not have the same fees and expenses. Performance shown for the
Administrator Class shares of the WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND
for periods prior to April 11, 2005, reflects the performance of the Class K
shares of the Strong Advisor Large Company Core Fund, its predecessor fund, and
for periods prior to September 30, 2002, reflects the performance of the Class A
shares of the predecessor fund, and for periods prior to September 16, 2002,
reflects the performance of the Class A shares of the Rockhaven Fund. Effective
at the close of business on April 8, 2005, certain Strong Funds were reorganized
into certain WELLS FARGO ADVANTAGE FUNDS.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculation of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE LARGE
COMPANY CORE FUND Class A and Administrator Class shares for the life of the
Fund with the S&P 500 Index.The chart assumes a hypothetical investment of
$10,000 in Class A and Administrator Class shares and reflects all operating
expenses and,for Class A shares, assumes the maximum initial sales charge of
5.75%.
7
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE U.S. VALUE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE U.S. VALUE FUND (the Fund) seeks total return
with an emphasis on long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Robert J. Costomiris, CFA 12/29/1995
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned (0.81)%(1) (excluding sales charge) for
the six-month period ending June 30, 2005, matching its benchmark, the S&P 500
Index(2), which also returned (0.81)% 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 ON 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. CLASS Z AND ADMINISTRATOR 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 first half of 2005 was in many respects a continuation of 2004 for the
markets and the economy: utility stocks remained strong; Real Estate Investment
Trusts (REITS) led the financial sector as long-term interest rates fell;
information technology was the market's weakest-performing sector; value stocks
generally outperformed growth stocks, whether small-cap, mid-cap, or large-cap;
and merger and acquisition activity was also strong.
Two significant changes to the market backdrop during the period, however,
were the outperformance of large-cap stocks over small-cap stocks, and the
strengthening of the U.S. dollar.
The Fund's commitment to energy stocks was very helpful to performance
during the period. Exxon Mobil Corporation, the Fund's largest holding, and
Unocal Corporation, the beneficiary of two takeover offers at prices above where
the stock was trading, were particular standouts. The Fund also benefited from
further reducing its weighting in financial stocks, as we felt valuations in the
sector were getting stretched and the outlook for earnings growth was mediocre.
This view was rewarded during the period, as financials lagged the overall
market.
Conversely, our decision to sell utility stocks earlier this year, as they
appreciated to our value targets, proved to be premature. After maintaining a
significant and successful presence in utilities during the past two years, we
took profits as the stocks reached what we believed were their fair valuations.
Even after this move, however, utility stocks continued to perform well as
long-term interest rates continued to decline.
In health care, holding ImClone Systems Incorporated was
counterproductive, as the stock was exceptionally weak, yet we continued to like
the biotechnology company's longer-term prospects. Additionally, an
underweighted presence in the spectacularly strong hospital group hurt
performance. As in utilities, we took profits for valuation reasons but, in
hindsight, we took them too early.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We applied the proceeds from our utility and financial sales predominantly
to new opportunities in three sectors: information technology, consumer
discretionary, and consumer staples. In technology, we significantly added to
our position in VERITAS Software Corporation and purchased two new names,
Symantec Corporation and International Business Machines Corporation, as we
believed short-term negatives unfairly punished the stocks. While the Fund
remained underweighted in technology, we considered the stocks mentioned above
to be special situations worthy of our attention.
Within the consumer discretionary sector, we continued to find value in
the media industry. During the period, the market punished radio companies due
to an overemphasis - in our opinion - being placed on the usage shift from radio
to other forms of media, such as digital music players, cellular phones,
satellite radio, and the Internet. As a result, we added significantly to our
position in Viacom Incorporated as well as some pure-play radio stocks.
In consumer staples, weakness in Coca-Cola Company presented an
opportunity for us to establish a new position and to increase our position in
its sister company, Coca-Cola Enterprises Incorporated. Both stocks badly lagged
the shares of their Pepsi rivals in the past year or so, yet we thought they
were great and stable franchises trading at very reasonable valuations.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We will continue to keep our heads down and our eyes open in attempting to
seek out companies with solid assets, manageable debt, and credible management
teams. We will work to buy the stocks of these companies at attractive prices,
often when the companies are temporarily out of favor with the market. We
believe that our disciplined investment process and meticulous risk management
are well suited for the current market environment.
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 June 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 U.S.VALUE 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.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 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
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class A
(Incept. Date 11/30/2000) (6.50) 2.04 0.43 9.37 (0.81) 8.26 1.62 10.05
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class B
(Incept. Date 11/30/2000) (6.18) 2.41 0.51 9.46 (1.18) 7.41 0.90 9.46
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class C
(Incept. Date 11/30/2000) (2.19) 6.37 0.90 9.32 (1.19) 7.37 0.90 9.32
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class Z
(Incept. Date 12/29/1995) (0.80) 8.24 1.60 10.23
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Value Fund - Administrator Class
(Incept. Date 12/31/2001) (0.65) 8.65 2.05 10.48
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 8.93
- ------------------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
Beta** 0.85
- ----------------------------------------------------------------
Price to Earnings (trailing 12 months) 20.90x
- ----------------------------------------------------------------
Price to Book Ratio 2.26x
- ----------------------------------------------------------------
Median Market Cap. ($B) $14.77
- ----------------------------------------------------------------
Portfolio Turnover 42%
- ----------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30,2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 20%
Consumer Staples 13%
Energy 13%
Fianancials 17%
Health Care 11%
Industrials 8%
Information Technology 10%
Materials 2%
Telecommunication Services 5%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------------
Exxon Mobil Corporation 5.86%
- -----------------------------------------------------------------
General Electric Company 3.32%
- -----------------------------------------------------------------
Comcast Corporation Class A 2.90%
- -----------------------------------------------------------------
Bristol-Myers Squibb Company 2.46%
- -----------------------------------------------------------------
Viacom Incorporated Class B 2.32%
- -----------------------------------------------------------------
Kroger Company 2.32%
- -----------------------------------------------------------------
Del Monte Food Company 2.29%
- -----------------------------------------------------------------
Cooper Cameron Corporation 2.29%
- -----------------------------------------------------------------
Reader's Digest Association Incorporated 2.18%
- -----------------------------------------------------------------
Chiron Corporation 2.15%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30,2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
U.S. VALUE FUND - U.S. VALUE FUND -
CLASS A CLASS Z S&P 500 INDEX
12/29/1995 9,425 10,000 10,000
12/31/1995 9,425 10,000 10,000
1/31/1996 9,827 10,430 10,340
2/29/1996 10,267 10,900 10,436
3/31/1996 10,409 11,054 10,537
4/30/1996 10,547 11,204 10,692
5/31/1996 10,686 11,354 10,967
6/30/1996 10,627 11,296 11,009
7/31/1996 10,284 10,934 10,523
8/31/1996 10,574 11,246 10,745
9/30/1996 11,108 11,817 11,349
10/31/1996 11,418 12,151 11,662
11/30/1996 12,098 12,878 12,543
12/31/1996 12,031 12,810 12,295
1/31/1997 12,569 13,388 13,062
2/28/1997 12,756 13,591 13,165
3/31/1997 12,284 13,092 12,625
4/30/1997 12,899 13,752 13,378
5/31/1997 13,552 14,452 14,192
6/30/1997 14,180 15,126 14,827
7/31/1997 15,358 16,387 16,006
8/31/1997 14,600 15,583 15,110
9/30/1997 15,495 16,544 15,937
10/31/1997 15,118 16,146 15,406
11/30/1997 15,390 16,442 16,118
12/31/1997 15,741 16,822 16,395
1/31/1998 15,667 16,747 16,576
2/28/1998 16,631 17,782 17,771
3/31/1998 17,468 18,683 18,680
4/30/1998 17,623 18,854 18,868
5/31/1998 17,378 18,598 18,544
6/30/1998 18,054 19,327 19,297
7/31/1998 17,999 19,274 19,092
8/31/1998 15,325 16,417 16,334
9/30/1998 16,042 17,190 17,381
10/31/1998 17,197 18,433 18,793
11/30/1998 18,102 19,408 19,932
12/31/1998 19,237 20,632 21,080
1/31/1999 19,482 20,900 21,961
2/28/1999 19,286 20,696 21,278
3/31/1999 19,740 21,190 22,130
4/30/1999 20,314 21,812 22,987
5/31/1999 19,718 21,179 22,445
6/30/1999 20,692 22,231 23,689
7/31/1999 20,056 21,554 22,951
8/31/1999 19,410 20,867 22,837
9/30/1999 19,150 20,594 22,212
10/31/1999 20,575 22,132 23,617
11/30/1999 20,778 22,358 24,097
12/31/1999 22,053 23,736 25,515
1/31/2000 21,065 22,680 24,233
2/29/2000 20,691 22,284 23,775
3/31/2000 22,523 24,264 26,099
4/30/2000 21,863 23,560 25,314
5/31/2000 21,561 23,241 24,796
6/30/2000 21,614 23,305 25,408
7/31/2000 21,393 23,074 25,011
8/31/2000 22,580 24,363 26,564
9/30/2000 22,080 23,829 25,162
10/31/2000 22,083 23,840 25,055
11/30/2000 20,872 22,540 23,081
12/31/2000 21,592 23,323 23,194
1/31/2001 21,633 23,368 24,017
2/28/2001 20,355 22,001 21,828
3/31/2001 19,554 21,137 20,446
4/30/2001 20,778 22,460 22,034
5/31/2001 21,040 22,754 22,181
6/30/2001 20,265 21,952 21,642
7/31/2001 19,993 21,670 21,429
8/31/2001 18,989 20,595 20,089
9/30/2001 17,786 19,292 18,466
10/31/2001 17,618 19,133 18,819
11/30/2001 18,644 20,255 20,262
12/31/2001 18,964 20,590 20,440
1/31/2002 18,847 20,440 20,141
2/28/2002 18,698 20,268 19,753
3/31/2002 19,703 21,348 20,496
4/30/2002 18,794 20,353 19,254
5/31/2002 18,783 20,328 19,113
6/30/2002 17,863 19,321 17,752
7/31/2002 16,287 17,618 16,368
8/31/2002 16,402 17,730 16,475
9/30/2002 14,659 15,828 14,686
10/31/2002 15,794 17,046 15,978
11/30/2002 16,720 18,053 16,917
12/31/2002 15,865 17,120 15,924
1/31/2003 15,366 16,584 15,508
2/28/2003 14,901 16,073 15,275
3/31/2003 14,957 16,119 15,421
4/30/2003 16,330 17,604 16,692
5/31/2003 17,354 18,702 17,571
6/30/2003 17,712 19,089 17,795
7/31/2003 18,085 19,476 18,109
8/31/2003 18,505 19,926 18,462
9/30/2003 18,326 19,735 18,266
10/31/2003 19,156 20,636 19,299
11/30/2003 19,484 20,974 19,469
12/31/2003 20,700 22,295 20,489
1/31/2004 21,041 22,672 20,865
2/29/2004 21,498 23,161 21,155
3/31/2004 21,263 22,912 20,836
4/30/2004 21,063 22,698 20,509
5/31/2004 21,110 22,748 20,790
6/30/2004 21,638 23,313 21,194
7/31/2004 21,202 22,847 20,493
8/31/2004 21,532 23,200 20,575
9/30/2004 21,820 23,507 20,798
10/31/2004 22,032 23,747 21,116
11/30/2004 22,930 24,708 21,970
12/31/2004 23,616 25,440 22,717
1/31/2005 23,259 25,072 22,163
2/28/2005 23,972 25,835 22,629
3/31/2005 23,500 25,317 22,229
4/30/2005 22,958 24,736 21,808
5/31/2005 23,516 25,333 22,501
6/30/2005 23,425 25,235 22,533
- --------------------------------------------------------------------------------
Performance shown for the Class A,Class B and Class C shares of the WELLS
FARGO ADVANTAGE U.S. VALUE 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 U.S. Value Fund,its predecessor fund,adjusted to reflect each
Class'applicable sales charge. Performance shown for the Class A shares for
periods prior to November 30, 2000, reflects the performance of the Class Z
shares, adjusted to reflect Class A sales charges and expenses. Performance for
the Class B shares for periods prior to November 30, 2000, reflects the
performance of the Class Z shares, adjusted to reflect Class B sales charges and
expenses.Performance shown for the Class C shares for periods prior to November
30,2000 reflects the performance of the Class Z shares, adjusted to reflect
Class C sales charges and expenses.Performance shown for the Class Z shares of
the WELLS FARGO ADVANTAGE U.S. VALUE FUND for periods prior to April 11, 2005,
reflects the performance of the Class Z shares of the Strong Advisor U.S. Value
Fund, its predecessor fund. Performance shown for the Administrator Class shares
of the WELLS FARGO ADVANTAGE U.S. VALUE FUND for periods prior to April 11,
2005, reflects the performance of the Class K shares of the Strong Advisor
U.S. Value Fund,its predecessor fund,and for periods prior to December 31,2001,
reflects the performance of the Class Z shares of the Strong Advisor U.S. Value
Fund. Effective at the close of business on April 8, 2005, certain Strong Funds
were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
(2) The S&P 500 Index consists of 500 stocks chosen for market size,
liquidity, and industry group representation. It is a market value weighted
index with each stock's weight in the Index proportionate to its market
value.You cannot invest directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of sector distribution, portfolio holdings and fund
characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE
U.S. VALUE FUND Class A and Class Z shares for the life of the Fund with the S&P
500 Index.The chart assumes a hypothetical investment of $10,000 in Class A and
Class Z shares and reflects all operating expenses and, for Class A shares,
assumes the maximum initial sales charge of 5.75%.
9
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 six-month period and held for the entire six-month period (January 1,
2005 to June 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
1/01/2005 6/30/2005 Period(1) Expense Ratio
Endeavor Large Cap Fund
- -----------------------------------------------------------------------------------------------------------
Endeavor Large Cap Fund - Class A
Actual $ 1,000.00 $ 1,008.60 $ 7.27 1.46%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.55 $ 7.30 1.46%
- -----------------------------------------------------------------------------------------------------------
Endeavor Large Cap Fund - Class B
Actual $ 1,000.00 $ 1,005.30 $ 11.29 2.27%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.54 $ 11.33 2.27%
- -----------------------------------------------------------------------------------------------------------
Endeavor Large Cap Fund - Class C
Actual $ 1,000.00 $ 1,005.30 $ 11.29 2.27%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.54 $ 11.33 2.27%
Endeavor Select Fund
- -----------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Class A
Actual $ 1,000.00 $ 1,009.00 $ 7.07 1.42%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.75 $ 7.10 1.42%
- -----------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Class B
Actual $ 1,000.00 $ 1,005.90 $ 10.84 2.18%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.98 $ 10.89 2.18%
- -----------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Class C
Actual $ 1,000.00 $ 1,005.90 $ 11.04 2.22%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.79 $ 11.08 2.22%
- -----------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Administrator Class
Actual(2) $ 1,000.00 $ 1,050.00 $ 2.23 0.98%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91 0.98%
- -----------------------------------------------------------------------------------------------------------
Endeavor Select Fund - Institutional Class
Actual(2) $ 1,000.00 $ 1,050.00 $ 1.82 0.80%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.83 $ 4.01 0.80%
10
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses
Value Value Paid During Net Annual
1/01/2005 6/30/2005 Period(1) Expense Ratio
Large Company Core Fund
- -----------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class A
Actual $ 1,000.00 $ 948.40 $ 6.72 1.39%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.90 $ 6.95 1.39%
- -----------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class B
Actual $ 1,000.00 $ 945.20 $ 10.85 2.25%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.64 $ 11.23 2.25%
- -----------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class C
Actual $ 1,000.00 $ 945.10 $ 11.00 2.28%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.49 $ 11.38 2.28%
- -----------------------------------------------------------------------------------------------------------
Large Company Core Fund - Class Z
Actual(2) $ 1,000.00 $ 981.40 $ 3.17 1.44%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.65 $ 7.20 1.44%
- -----------------------------------------------------------------------------------------------------------
Large Company Core Fund - Administrator Class
Actual $ 1,000.00 $ 950.20 $ 4.74 0.98%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91 0.98%
U.S. Value Fund
- -----------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class A
Actual $ 1,000.00 $ 991.90 $ 6.47 1.31%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.30 $ 6.56 1.31%
- -----------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class B
Actual $ 1,000.00 $ 988.20 $ 10.30 2.09%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,014.43 $ 10.44 2.09%
- -----------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class C
Actual $ 1,000.00 $ 988.10 $ 10.45 2.12%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,014.28 $ 10.59 2.12%
- -----------------------------------------------------------------------------------------------------------
U.S. Value Fund - Class Z
Actual $ 1,000.00 $ 992.00 $ 6.62 1.34%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.15 $ 6.71 1.34%
- -----------------------------------------------------------------------------------------------------------
U.S. Value Fund - Administrator Class
Actual $ 1,000.00 $ 993.50 $ 4.75 0.96%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.03 $ 4.81 0.96%
(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 81/365 (TO REFLECT
THE PERIOD FROM APRIL 11, 2005 TO JUNE 30, 2005).
11
PORTFOLIO OF INVESTMENTS --
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 95.80%
BUSINESS SERVICES - 9.69%
42,590 CHECK POINT SOFTWARE TECHNOLOGIES LIMITED+ $ 843,282
6,800 ELECTRONIC ARTS INCORPORATED+ 384,948
28,480 JUNIPER NETWORKS INCORPORATED+ 717,127
97,820 ORACLE CORPORATION+ 1,291,224
40,440 YAHOO! INCORPORATED+ 1,401,246
4,637,827
---------------
CHEMICALS & ALLIED PRODUCTS - 6.14%
19,830 GENZYME CORPORATION+ 1,191,585
25,770 GILEAD SCIENCES INCORPORATED+ 1,133,622
19,670 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR 612,524
2,937,731
---------------
COMMUNICATIONS - 4.41%
84,060 SPRINT CORPORATION 2,109,065
---------------
DEPOSITORY INSTITUTIONS - 2.74%
15,630 MARSHALL & ILSLEY CORPORATION 694,754
12,480 WACHOVIA CORPORATION 619,008
1,313,762
---------------
ELECTRIC, GAS & SANITARY SERVICES - 2.77%
69,700 WILLIAMS COMPANIES INCORPORATED 1,324,300
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT -14.38%
13,290 BROADCOM CORPORATION CLASS A+ 471,928
62,530 GENERAL ELECTRIC COMPANY 2,166,664
8,490 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 690,746
10,050 INTERNATIONAL RECTIFIER CORPORATION+ 479,586
32,420 MARVELL TECHNOLOGY GROUP LIMITED+ 1,233,257
13,330 MOTOROLA INCORPORATED 243,406
34,180 QUALCOMM INCORPORATED 1,128,282
16,760 TEXAS INSTRUMENTS INCORPORATED 470,453
6,884,322
---------------
FOOD & KINDRED PRODUCTS - 2.19%
15,230 WM. WRIGLEY JR. COMPANY 1,048,433
---------------
GENERAL MERCHANDISE STORES - 1.78%
6,650 FEDERATED DEPARTMENT STORES INCORPORATED 487,312
6,720 TARGET CORPORATION 365,635
852,947
---------------
HOLDING & OTHER INVESTMENT OFFICES - 2.83%
12,370 ALCON INCORPORATED 1,352,660
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.00%
14,070 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 959,855
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 7.78%
49,560 DELL INCORPORATED+ 1,958,116
103,430 EMC CORPORATION+ 1,418,025
4,730 RESEARCH IN MOTION LIMITED+ 348,837
3,724,978
---------------
INSURANCE CARRIERS - 11.58%
12,030 ALLSTATE CORPORATION 718,792
5,890 CHUBB CORPORATION 504,243
7,820 PRUDENTIAL FINANCIAL INCORPORATED 513,461
29,840 UNITEDHEALTH GROUP INCORPORATED 1,555,858
32,350 WELLPOINT INCORPORATED+ 2,252,854
5,545,208
---------------
12
PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
LEATHER & LEATHER PRODUCTS - 1.15%
16,360 COACH INCORPORATED+ $ 549,205
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL
GOODS - 5.72%
8,390 BECTON DICKINSON & COMPANY 440,223
7,450 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 483,505
6,000 GUIDANT CORPORATION 403,800
27,290 MEDTRONIC INCORPORATED 1,413,349
2,740,877
---------------
METAL MINING - 1.58%
49,300 PLACER DOME INCORPORATED 758,234
---------------
MISCELLANEOUS RETAIL - 3.45%
56,740 CVS CORPORATION 1,649,432
---------------
OIL & GAS EXTRACTION - 5.96%
19,530 CANADIAN NATURAL RESOURCES LIMITED 710,502
19,920 HALLIBURTON COMPANY 952,574
22,090 TRANSOCEAN INCORPORATED+ 1,192,197
2,855,273
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 1.42%
8,610 VALERO ENERGY CORPORATION 681,137
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.99%
14,780 VIACOM INCORPORATED CLASS B 473,256
---------------
REAL ESTATE - 0.65%
3,840 ST. JOE COMPANY 313,114
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.02%
4,900 LEHMAN BROTHERS HOLDINGS INCORPORATED 486,472
---------------
TRANSPORTATION BY AIR - 1.38%
47,520 SOUTHWEST AIRLINES COMPANY 661,954
---------------
WATER TRANSPORTATION - 2.75%
27,240 ROYAL CARIBBEAN CRUISES LIMITED 1,317,326
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.44%
7,950 NIKE INCORPORATED CLASS B 688,470
---------------
TOTAL COMMON STOCKS (COST $40,155,084) 45,865,838
---------------
SHORT-TERM INVESTMENTS - 3.53%
MUTUAL FUND - 3.53%
1,687,883 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 1,687,883
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,687,883) 1,687,883
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $41,842,967)* 99.33% $ 47,553,721
OTHER ASSETS AND LIABILITIES, NET 0.67 322,427
------ ---------------
TOTAL NET ASSETS 100.00% $ 47,876,148
====== ===============
+ 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 $1,687,883.
* 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.
13
PORTFOLIO OF INVESTMENTS --
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ENDEAVOR SELECT FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.59%
BUSINESS SERVICES - 10.00%
137,500 CHECK POINT SOFTWARE TECHNOLOGIES LIMITED+ $ 2,722,500
72,800 JUNIPER NETWORKS INCORPORATED+ 1,833,104
306,500 ORACLE CORPORATION+ 4,045,800
104,640 YAHOO! INCORPORATED+ 3,625,776
12,227,180
---------------
CHEMICALS & ALLIED PRODUCTS - 6.15%
51,140 GENZYME CORPORATION+ 3,073,003
64,900 GILEAD SCIENCES INCORPORATED+ 2,854,951
50,960 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR 1,586,894
7,514,848
---------------
COMMUNICATIONS - 7.99%
62,097 NII HOLDINGS INCORPORATED+ 3,970,482
230,900 SPRINT CORPORATION 5,793,281
9,763,763
---------------
ELECTRIC, GAS & SANITARY SERVICES - 2.59%
166,300 WILLIAMS COMPANIES INCORPORATED 3,159,700
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 16.24%
33,400 BROADCOM CORPORATION CLASS A+ 1,186,034
167,380 GENERAL ELECTRIC COMPANY 5,799,717
40,520 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 3,296,707
41,600 INTERNATIONAL RECTIFIER CORPORATION+ 1,985,152
82,000 MARVELL TECHNOLOGY GROUP LIMITED+ 3,119,280
98,000 QUALCOMM INCORPORATED 3,234,980
43,800 TEXAS INSTRUMENTS INCORPORATED 1,229,466
19,851,336
---------------
FOOD & KINDRED PRODUCTS - 2.02%
35,800 WM. WRIGLEY JR. COMPANY 2,464,472
---------------
HOLDING & OTHER INVESTMENT OFFICES - 2.83%
31,600 ALCON INCORPORATED 3,455,460
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.00%
35,900 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 2,449,098
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 8.63%
102,265 DELL INCORPORATED+ 4,040,490
260,610 EMC CORPORATION+ 3,572,963
111,000 GRANT PRIDECO INCORPORATED+ 2,935,950
10,549,403
---------------
INSURANCE CARRIERS - 11.35%
27,310 ALLSTATE CORPORATION 1,631,773
15,600 CHUBB CORPORATION 1,335,516
77,300 UNITEDHEALTH GROUP INCORPORATED 4,030,422
98,700 WELLPOINT INCORPORATED+ 6,873,468
13,871,179
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 8.22%
21,900 BECTON DICKINSON & COMPANY 1,149,093
51,900 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 3,368,310
15,100 GUIDANT CORPORATION 1,016,230
87,200 MEDTRONIC INCORPORATED 4,516,088
10,049,721
---------------
METAL MINING - 2.18%
173,000 PLACER DOME INCORPORATED 2,660,740
---------------
14
PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
ENDEAVOR SELECT FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MISCELLANEOUS RETAIL - 7.69%
145,000 CVS CORPORATION $ 4,215,150
262,755 MARVEL ENTERPRISES INCORPORATED+ 5,181,529
9,396,679
---------------
OIL & GAS EXTRACTION - 3.29%
48,800 CANADIAN NATURAL RESOURCES LIMITED 1,775,344
47,000 HALLIBURTON COMPANY 2,247,540
4,022,884
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 1.44%
22,200 VALERO ENERGY CORPORATION 1,756,242
---------------
WATER TRANSPORTATION - 4.97%
125,500 ROYAL CARIBBEAN CRUISES LIMITED 6,069,180
---------------
TOTAL COMMON STOCKS (COST $102,136,099) 119,261,885
---------------
SHORT-TERM INVESTMENTS - 2.50%
MUTUAL FUND - 2.50%
3,048,352 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 3,048,352
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $3,048,352) 3,048,352
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $105,184,451)* 100.09% $ 122,310,237
OTHER ASSETS AND LIABILITIES, NET (0.09) (104,780)
------ ---------------
TOTAL NET ASSETS 100.00% $ 122,205,457
====== ===============
+ 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 $3,048,352.
* 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.
15
PORTFOLIO OF INVESTMENTS --
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.20%
APPAREL & ACCESSORY STORES - 5.10%
217,000 GAP INCORPORATED $ 4,285,750
70,500 ROSS STORES INCORPORATED 2,038,155
6,323,905
---------------
BUSINESS SERVICES - 6.61%
268,000 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+ 3,264,240
198,800 MICROSOFT CORPORATION 4,938,192
8,202,432
---------------
CHEMICALS & ALLIED PRODUCTS - 12.14%
193,900 MEDIMMUNE INCORPORATED+ 5,181,008
95,800 MERCK & COMPANY INCORPORATED 2,950,640
171,500 PFIZER INCORPORATED 4,729,970
49,500 WYETH 2,202,750
15,064,368
---------------
COMMUNICATIONS - 3.38%
140,000 COMCAST CORPORATION 4,193,000
---------------
DEPOSITORY INSTITUTIONS - 15.28%
78,000 BANK OF AMERICA CORPORATION 3,557,580
155,400 BANK OF NEW YORK COMPANY INCORPORATED 4,472,412
106,341 CITIGROUP INCORPORATED 4,916,144
44,500 FIFTH THIRD BANCORP 1,833,845
118,500 JP MORGAN CHASE & COMPANY 4,185,420
18,965,401
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 22.31%
191,000 AMERICAN POWER CONVERSION CORPORATION 4,505,690
139,800 GENERAL ELECTRIC COMPANY 4,844,070
184,700 INTEL CORPORATION 4,813,282
300,000 LUCENT TECHNOLOGIES INCORPORATED+ 873,000
275,500 NOKIA OYJ ADR 4,584,320
180,000 NOVELLUS SYSTEMS INCORPORATED+ 4,447,800
304,000 VISHAY INTERTECHNOLOGY INCORPORATED+ 3,608,480
27,676,642
---------------
FOOD & KINDRED PRODUCTS - 1.11%
29,400 GENERAL MILLS INCORPORATED 1,375,626
---------------
GENERAL MERCHANDISE STORES - 2.64%
68,000 WAL-MART STORES INCORPORATED 3,277,600
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 2.86%
360,000 SYMBOL TECHNOLOGIES INCORPORATED 3,553,200
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 1.34%
60,000 MARSH & MCLENNAN COMPANIES INCORPORATED 1,662,000
---------------
INSURANCE CARRIERS - 3.82%
81,500 AMERICAN INTERNATIONAL GROUP INCORPORATED 4,735,150
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS
- - 2.43%
14,200 BAXTER INTERNATIONAL INCORPORATED 526,820
92,000 BOSTON SCIENTIFIC CORPORATION+ 2,484,000
3,010,820
---------------
MOTION PICTURES - 4.77%
234,000 TIME WARNER INCORPORATED+ 3,910,140
80,000 WALT DISNEY COMPANY 2,014,400
5,924,540
---------------
16
PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
NON-DEPOSITORY CREDIT INSTITUTIONS - 2.55%
24,200 AMERICAN EXPRESS COMPANY $ 1,288,166
18,700 FANNIE MAE 1,092,080
12,000 FREDDIE MAC 782,760
3,163,006
---------------
OIL & GAS EXTRACTION - 1.38%
44,800 TIDEWATER INCORPORATED 1,707,776
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 5.28%
44,100 CONOCOPHILLIPS 2,535,309
51,248 EXXON MOBIL CORPORATION 2,945,223
16,500 ROYAL DUTCH PETROLEUM COMPANY 1,070,850
6,551,382
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 6.20%
52,000 MERRILL LYNCH & COMPANY INCORPORATED 2,860,520
92,000 MORGAN STANLEY 4,827,240
7,687,760
---------------
TOTAL COMMON STOCKS (COST $125,659,622) 123,074,608
---------------
SHORT-TERM INVESTMENTS - 0.67%
MUTUAL FUND - 0.67%
827,785 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 827,785
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $827,785) 827,785
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $126,487,407)* 99.87% $ 123,902,393
OTHER ASSETS AND LIABILITIES, NET 0.13 164,453
------ ---------------
TOTAL NET ASSETS 100.00% $ 124,066,846
====== ===============
+ 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 $827,785.
* 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
PORTFOLIO OF INVESTMENTS --
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.76%
APPAREL & ACCESSORY STORES - 0.01%
4,200 CHARMING SHOPPES INCORPORATED+ $ 39,186
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.01%
900 HOME DEPOT INCORPORATED 35,010
---------------
BUSINESS SERVICES - 4.64%
630 AFFILIATED COMPUTER SERVICES INCORPORATED CLASS A+ 32,193
9,000 AUTOMATIC DATA PROCESSING INCORPORATED 377,730
980 BRINK'S COMPANY 35,280
180,000 MICROSOFT CORPORATION 4,471,200
570 PORTFOLIO RECOVERY ASSOCIATES INCORPORATED+ 23,951
160,700 SYMANTEC CORPORATION+ 3,493,618
230,000 UNISYS CORPORATION+ 1,455,900
290,000 VERITAS SOFTWARE CORPORATION+ 7,076,000
16,965,872
---------------
CHEMICALS & ALLIED PRODUCTS - 9.29%
290 BASF AG ADR 19,140
200,000 BIOGEN IDEC INCORPORATED+ 6,890,000
360,000 BRISTOL-MYERS SQUIBB COMPANY 8,992,800
225,000 CHIRON CORPORATION+ 7,850,250
670 DADE BEHRING HOLDINGS INCORPORATED 43,557
40,000 DOW CHEMICAL COMPANY 1,781,200
50,631 E.I. DU PONT DE NEMOURS AND COMPANY 2,177,639
200,100 IMCLONE SYSTEMS INCORPORATED+ 6,197,097
1,480 PERRIGO COMPANY 20,631
33,972,314
---------------
COMMUNICATIONS - 13.37%
19,000 ALLTEL CORPORATION 1,183,320
47,000 AT&T CORPORATION 894,880
98,000 BELLSOUTH CORPORATION 2,603,860
9,000 CENTURYTEL INCORPORATED 311,670
230,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 7,113,900
345,000 COMCAST CORPORATION CLASS A+ 10,591,500
600,000 CUMULUS MEDIA INCORPORATED CLASS A+ 7,068,000
18,700 LIBERTY GLOBAL INCORPORATED CLASS A+ 872,729
60,000 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED+ 222,600
174,000 SBC COMMUNICATIONS INCORPORATED 4,132,500
725,000 SPANISH BROADCASTING SYSTEMS INCORPORATED+ 7,242,750
51,000 SPRINT CORPORATION 1,279,590
1,070 TELEFONAKTIEBOLAGET LM ERICSSON ADR 34,186
155,000 VERIZON COMMUNICATIONS INCORPORATED 5,355,250
48,906,735
---------------
DEPOSITORY INSTITUTIONS - 7.45%
100,000 BANK OF AMERICA CORPORATION 4,561,000
35,000 BANK OF NEW YORK COMPANY INCORPORATED 1,007,300
148,500 CITIGROUP INCORPORATED 6,865,155
8,000 COMPASS BANCSHARES INCORPORATED 360,000
75,240 JP MORGAN CHASE & COMPANY 2,657,477
41,600 KEYCORP 1,379,040
830 MARSHALL & ILSLEY CORPORATION 36,894
28,000 MELLON FINANCIAL CORPORATION 803,320
32,000 NATIONAL CITY CORPORATION 1,091,840
56,791 REGIONS FINANCIAL CORPORATION 1,924,079
1,000 TRUSTMARK CORPORATION 29,260
800 UMPQUA HOLDINGS CORPORATION 18,832
18
PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
U.S. VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
DEPOSITORY INSTITUTIONS (CONTINUED)
47,000 US BANCORP $ 1,372,400
103,224 WACHOVIA CORPORATION 5,119,910
27,226,507
---------------
EATING & DRINKING PLACES - 1.59%
48,000 ARAMARK CORPORATION CLASS B 1,267,200
164,370 MCDONALD'S CORPORATION 4,561,267
5,828,467
---------------
ELECTRIC, GAS & SANITARY SERVICES - 2.25%
51,000 DTE ENERGY COMPANY 2,385,270
25,600 KEYSPAN CORPORATION 1,041,920
14,000 PROGRESS ENERGY INCORPORATED 633,360
147,000 WASTE MANAGEMENT INCORPORATED 4,165,980
8,226,530
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 5.32%
27,900 EMERSON ELECTRIC COMPANY 1,747,377
350,000 GENERAL ELECTRIC COMPANY 12,127,500
1,630 MILLICOM INTERNATIONAL CELLULAR SA+ 29,894
2,300 MOTOROLA INCORPORATED 41,998
330,000 NOKIA OYJ ADR 5,491,200
19,437,969
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.01%
700 GEN-PROBE INCORPORATED+ 25,361
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.01%
1,400 GRIFFON CORPORATION+ 31,080
---------------
FOOD & KINDRED PRODUCTS - 9.48%
13,000 ANHEUSER-BUSCH COMPANIES INCORPORATED 594,750
500 ARCHER-DANIELS-MIDLAND COMPANY 10,690
100,000 COCA-COLA COMPANY 4,175,000
345,000 COCA-COLA ENTERPRISES INCORPORATED 7,593,450
60,000 CONAGRA FOODS INCORPORATED 1,389,600
778,000 DEL MONTE FOODS COMPANY+ 8,379,060
380 HERSHEY FOODS CORPORATION 23,598
221,900 KRAFT FOODS INCORPORATED CLASS A 7,058,639
115,000 SARA LEE CORPORATION 2,278,150
540 SCHERING AG ADR 33,313
175,000 SERONO SA ADR 2,798,250
18,000 TYSON FOODS INCORPORATED CLASS A 320,400
34,654,900
---------------
FOOD STORES - 2.60%
20,000 ALBERTSON'S INCORPORATED 413,600
445,000 KROGER COMPANY+ 8,468,350
27,000 SAFEWAY INCORPORATED 609,930
9,491,880
---------------
FURNITURE & FIXTURES - 0.11%
17,000 NEWELL RUBBERMAID INCORPORATED 405,280
---------------
GENERAL MERCHANDISE STORES - 0.50%
25,000 FEDERATED DEPARTMENT STORES INCORPORATED 1,832,000
---------------
HEALTH SERVICES - 0.00%
600 APRIA HEALTHCARE GROUP INCORPORATED+ 20,784
---------------
19
PORTFOLIO OF INVESTMENTS --
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HOLDING & OTHER INVESTMENT OFFICES - 0.56%
440 ALCON INCORPORATED $ 48,114
30,000 EQUITY OFFICE PROPERTIES TRUST 993,000
27,000 EQUITY RESIDENTIAL 994,140
2,035,254
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 5.91%
135,000 COOPER CAMERON CORPORATION+ 8,376,750
26,000 DEERE & COMPANY 1,702,740
950 DELL INCORPORATED+ 37,534
1,230 FLOWSERVE CORPORATION+ 37,220
200,000 HEWLETT-PACKARD COMPANY 4,702,000
90,000 INTERNATIONAL BUSINESS MACHINES CORPORATION 6,678,000
1,000 MANITOWOC COMPANY INCORPORATED 41,020
860 TORO COMPANY 33,205
21,608,469
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 0.57%
75,000 MARSH & MCLENNAN COMPANIES INCORPORATED 2,077,500
---------------
INSURANCE CARRIERS - 6.24%
560 AETNA INCORPORATED 46,379
65,000 AFLAC INCORPORATED 2,813,200
32,800 ALLSTATE CORPORATION 1,959,800
58,500 AMERICAN INTERNATIONAL GROUP INCORPORATED 3,398,850
780 AMERUS GROUP COMPANY 37,479
16,500 CHUBB CORPORATION 1,412,565
21,800 HARTFORD FINANCIAL SERVICES GROUP INCORPORATED 1,630,204
700 IPC HOLDINGS LIMITED 27,734
350 LANDAMERICA FINANCIAL GROUP INCORPORATED 20,780
25,000 LINCOLN NATIONAL CORPORATION 1,173,000
9,000 LOEWS CORPORATION 697,500
930 METLIFE INCORPORATED 41,794
37,000 OLD REPUBLIC INTERNATIONAL CORPORATION 935,730
25,300 PRINCIPAL FINANCIAL GROUP INCORPORATED 1,060,070
34,900 PRUDENTIAL FINANCIAL INCORPORATED 2,291,534
132,000 ST. PAUL COMPANIES INCORPORATED 5,217,960
1,100 UNITEDHEALTH GROUP INCORPORATED 57,354
22,821,933
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 2.35%
770 BECTON DICKINSON & COMPANY 40,402
255,000 BOSTON SCIENTIFIC CORPORATION+ 6,885,000
24,200 EASTMAN KODAK COMPANY 649,770
1,520 MOLECULAR DEVICES CORPORATION+ 32,877
25,000 RAYTHEON COMPANY 978,000
8,586,049
---------------
METAL MINING - 0.75%
70,000 NEWMONT MINING CORPORATION 2,732,100
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.01%
700 YANKEE CANDLE COMPANY INCORPORATED 22,470
---------------
MISCELLANEOUS RETAIL - 0.20%
16,845 BLOCKBUSTER INCORPORATED CLASS A 153,627
16,845 BLOCKBUSTER INCORPORATED CLASS B 144,530
17,000 OFFICE DEPOT INCORPORATED+ 388,280
1,100 SPECTRUM BRANDS INCORPORATED+ 36,300
722,737
---------------
20
PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
U.S. VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MOTION PICTURES - 3.18%
374,000 LIBERTY MEDIA CORPORATION CLASS A+ $ 3,811,060
325,000 TIME WARNER INCORPORATED+ 5,430,750
94,260 WALT DISNEY COMPANY 2,373,467
11,615,277
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.58%
38,000 AMERICAN EXPRESS COMPANY 2,022,740
1,400 COMPUCREDIT CORPORATION+ 47,992
510 FREDDIE MAC 33,267
1,350 MBNA CORPORATION 35,316
2,139,315
---------------
OIL & GAS EXTRACTION - 1.05%
28,000 DEVON ENERGY CORPORATION 1,419,040
4,645 KERR-MCGEE CORPORATION 354,460
45,000 PRIDE INTERNATIONAL INCORPORATED+ 1,156,500
14,000 UNOCAL CORPORATION 910,700
3,840,700
---------------
PAPER & ALLIED PRODUCTS - 0.01%
350 KIMBERLY-CLARK CORPORATION 21,906
715 OFFICEMAX INCORPORATED 21,286
43,192
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 9.26%
96,000 CHEVRONTEXACO CORPORATION 5,368,320
99,000 CONOCOPHILLIPS 5,691,510
372,780 EXXON MOBIL CORPORATION 21,423,667
20,000 ROYAL DUTCH PETROLEUM COMPANY 1,298,000
1,600 TESORO PETROLEUM CORPORATION 74,432
33,855,929
---------------
PRIMARY METAL INDUSTRIES - 0.38%
52,100 ALCOA INCORPORATED 1,361,373
1,750 COMMSCOPE INCORPORATED+ 30,468
1,391,841
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 5.02%
26,200 GANNETT COMPANY INCORPORATED 1,863,606
1,000 JOHN H. HARLAND COMPANY 38,000
482,590 READERS DIGEST ASSOCIATION INCORPORATED 7,962,735
265,000 VIACOM INCORPORATED CLASS B 8,485,300
18,349,641
---------------
RAILROAD TRANSPORTATION - 0.32%
24,800 BURLINGTON NORTHERN SANTA FE CORPORATION 1,167,584
---------------
REAL ESTATE - 0.01%
2,670 ALDERWOODS GROUP INCORPORATED+ 38,368
---------------
RETAIL, TRADE & SERVICES - 0.02%
1,800 MEN'S WEARHOUSE INCORPORATED+ 61,974
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.97%
67,000 MORGAN STANLEY 3,515,490
928 PIPER JAFFRAY COMPANIES INCORPORATED+ 28,239
3,543,729
---------------
TELEPHONE SERVICES - 0.06%
5,000 COMMONWEALTH TELEPHONE ENTERPRISES INCORPORATED 209,550
---------------
21
PORTFOLIO OF INVESTMENTS --
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
TEXTILE MILL PRODUCTS - 0.00%
915 WOLVERINE WORLD WIDE INCORPORATED $ 21,969
---------------
TOBACCO PRODUCTS - 1.59%
55,000 ALTRIA GROUP INCORPORATED 3,556,300
67,700 LOEWS CORPORATION - CAROLINA GROUP 2,255,764
5,812,064
---------------
TRANSPORTATION BY AIR - 0.26%
12,000 FEDEX CORPORATION 972,120
---------------
TRANSPORTATION EQUIPMENT - 1.64%
2,373 FORD MOTOR COMPANY 24,300
9,000 GENERAL DYNAMICS CORPORATION 985,860
16,000 ITT INDUSTRIES INCORPORATED 1,562,080
24,400 LOCKHEED MARTIN CORPORATION 1,582,828
730 NORTHROP GRUMMAN CORPORATION 40,332
450 TEXTRON INCORPORATED 34,133
34,400 UNITED TECHNOLOGIES CORPORATION 1,766,440
5,995,973
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.18%
7,839 MEDCO HEALTH SOLUTIONS INCORPORATED+ 418,289
480 NIKE INCORPORATED CLASS B 41,568
600 NU SKIN ENTERPRISES INCORPORATED CLASS A 13,980
20,000 SMURFIT-STONE CONTAINER CORPORATION+ 203,400
677,237
---------------
TOTAL COMMON STOCKS (COST $308,987,436) 357,442,850
---------------
SHORT-TERM INVESTMENTS - 2.11%
MUTUAL FUND - 2.11%
7,718,968 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 7,718,968
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $7,718,968) 7,718,968
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $316,706,404)* 99.87% $ 365,161,818
OTHER ASSETS AND LIABILITIES, NET 0.13 467,644
------ ---------------
TOTAL NET ASSETS 100.00% $ 365,629,462
====== ===============
+ 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 $7,718,968.
* 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
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS FARGO ADVANTAGE STATEMENTS OF ASSETS AND LIABILITIES --
LARGE CAP STOCK FUNDS JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ENDEAVOR
LARGE
CAP FUND
- ----------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ...................................... $ 45,865,838
INVESTMENTS IN AFFILIATES ........................................... 1,687,883
-------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ..................... 47,553,721
-------------
RECEIVABLE FOR FUND SHARES ISSUED ................................... 79,002
RECEIVABLE FOR INVESTMENTS SOLD ..................................... 1,018,911
RECEIVABLES FOR DIVIDENDS AND INTEREST .............................. 32,376
PREPAID EXPENSES AND OTHER ASSETS ................................... 678
-------------
TOTAL ASSETS ........................................................... 48,684,688
-------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED .................................... 4,716
PAYABLE FOR INVESTMENTS PURCHASED ................................... 754,100
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ............... 37,711
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ............................. 12,013
ACCRUED EXPENSES AND OTHER LIABILITIES .............................. 0
-------------
TOTAL LIABILITIES ...................................................... 808,540
-------------
TOTAL NET ASSETS ....................................................... $ 47,876,148
=============
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------
PAID-IN CAPITAL ..................................................... $ 40,251,184
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .......................... (155,876)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............... 2,070,086
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ............................................... 5,710,754
-------------
TOTAL NET ASSETS .................................................... $ 47,876,148
-------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ----------------------------------------------------------------------------------------
NET ASSETS - CLASS A ................................................ $ 46,349,184
SHARES OUTSTANDING - CLASS A ........................................ 3,950,018
NET ASSET VALUE PER SHARE - CLASS A ................................. $ 11.73
MAXIMUM OFFERING PRICE PER SHARE - CLASS A (2) ...................... $ 12.45
NET ASSETS - CLASS B ................................................ $ 1,211,365
SHARES OUTSTANDING - CLASS B ........................................ 105,592
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B .............. $ 11.47
NET ASSETS - CLASS C ................................................ $ 315,599
SHARES OUTSTANDING - CLASS C ........................................ 27,522
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C .............. $ 11.47
NET ASSETS - CLASS Z ................................................ N/A
SHARES OUTSTANDING - CLASS Z ........................................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z .............. 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 - INSTITUTIONAL CLASS .................................... N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS ............................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .. N/A
-------------
INVESTMENTS AT COST .................................................... $ 41,842,967
=============
(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.
24
STATEMENTS OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE
JUNE 30, 2005 (UNAUDITED) LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
LARGE
ENDEAVOR COMPANY U.S. VALUE
SELECT FUND CORE FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ...................................... $ 119,261,885 $ 123,074,608 $ 357,442,850
INVESTMENTS IN AFFILIATES ........................................... 3,048,352 827,785 7,718,968
------------- ------------- -------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ..................... 122,310,237 123,902,393 365,161,818
------------- ------------- -------------
RECEIVABLE FOR FUND SHARES ISSUED ................................... 476,483 26,200 171,369
RECEIVABLE FOR INVESTMENTS SOLD ..................................... 2,072,010 347,593 0
RECEIVABLES FOR DIVIDENDS AND INTEREST .............................. 76,935 103,072 603,921
PREPAID EXPENSES AND OTHER ASSETS ................................... 10,637 0 92,156
------------- ------------- -------------
TOTAL ASSETS ........................................................... 124,946,302 124,379,258 366,029,264
------------- ------------- -------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED .................................... 7,975 148,222 25,785
PAYABLE FOR INVESTMENTS PURCHASED ................................... 2,616,095 0 0
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ............... 87,935 104,647 293,637
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ............................. 28,840 36,267 80,380
ACCRUED EXPENSES AND OTHER LIABILITIES .............................. 0 23,276 0
------------- ------------- -------------
TOTAL LIABILITIES ...................................................... 2,740,845 312,412 399,802
------------- ------------- -------------
TOTAL NET ASSETS ....................................................... $ 122,205,457 $ 124,066,846 $ 365,629,462
============= ============= =============
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ..................................................... $ 104,457,563 $ 125,188,012 $ 313,814,221
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .......................... (370,317) 53,675 454,909
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............... 992,425 1,410,173 2,904,918
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ............................................... 17,125,786 (2,585,014) 48,455,414
------------- ------------- -------------
TOTAL NET ASSETS .................................................... $ 122,205,457 $ 124,066,846 $ 365,629,462
------------- ------------- -------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ................................................ $ 116,794,334 $ 41,043,259 $ 5,316,943
SHARES OUTSTANDING - CLASS A ........................................ 12,942,547 4,579,361 294,362
NET ASSET VALUE PER SHARE - CLASS A ................................. $ 9.02 $ 8.96 $ 18.06
MAXIMUM OFFERING PRICE PER SHARE - CLASS A (2) ...................... $ 9.57 $ 9.51 $ 19.16
NET ASSETS - CLASS B ................................................ $ 3,678,805 $ 7,928,448 $ 6,157,697
SHARES OUTSTANDING - CLASS B ........................................ 422,707 911,397 342,030
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B .............. $ 8.70 $ 8.70 $ 18.00
NET ASSETS - CLASS C ................................................ $ 1,476,467 $ 5,282,599 $ 3,134,607
SHARES OUTSTANDING - CLASS C ........................................ 169,757 607,875 174,823
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C .............. $ 8.70 $ 8.69 $ 17.93
NET ASSETS - CLASS Z ................................................ N/A $ 48,460,141 $ 249,844,297
SHARES OUTSTANDING - CLASS Z ........................................ N/A 5,409,127 13,734,365
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z .............. N/A $ 8.96 $ 18.19
NET ASSETS - ADMINISTRATOR CLASS .................................... $ 107,312 $ 21,352,399 $ 101,175,918
SHARES OUTSTANDING - ADMINISTRATOR CLASS ............................ 11,886 2,354,146 5,645,396
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .. $ 9.03 $ 9.07 $ 17.92
NET ASSETS - INSTITUTIONAL CLASS .................................... $ 148,539 N/A N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS ............................ 16,446 N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .. $ 9.03 N/A N/A
------------- ------------- -------------
INVESTMENTS AT COST .................................................... $ 105,184,451 $ 126,487,407 $ 316,706,404
============= ============= =============
25
WELLS FARGO ADVANTAGE STATEMENTS OF OPERATIONS --
LARGE CAP STOCK FUNDS FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ENDEAVOR
LARGE CAP
FUND
- --------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ..................................... $ 152,979
INTEREST ......................................... 3,437
INCOME FROM AFFILIATED SECURITIES ................ 13,012
SECURITIES LENDING INCOME, NET ................... 0
------------
TOTAL INVESTMENT INCOME ............................. 169,428
------------
EXPENSES
ADVISORY FEES .................................... 164,037
ADMINISTRATION FEES
FUND LEVEL .................................... 5,010
CLASS A ....................................... 79,626
CLASS B ....................................... 1,777
CLASS C ....................................... 702
CLASS Z ....................................... N/A
ADMINISTRATOR CLASS ........................... N/A
INSTITUTIONAL CLASS ........................... N/A
CUSTODY FEES ..................................... 4,683
SHAREHOLDER SERVICING FEES ....................... 25,051
ACCOUNTING FEES .................................. 7,744
DISTRIBUTION FEES (NOTE 3)
CLASS A ....................................... 28,809
CLASS B ....................................... 3,919
CLASS C ....................................... 1,407
AUDIT FEES ....................................... 10,095
LEGAL FEES ....................................... 288
REGISTRATION FEES ................................ 15,620
SHAREHOLDER REPORTS .............................. 1,382
TRUSTEES' FEES ................................... 3,752
OTHER FEES AND EXPENSES .......................... 9,306
------------
TOTAL EXPENSES ...................................... 363,208
------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .... (37,904)
NET EXPENSES .................................... 325,304
------------
NET INVESTMENT INCOME (LOSS) ........................ (155,876)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION .......................... 2,226,060
------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........... 2,226,060
------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION .......................... (1,583,073)
------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .................... (1,583,073)
============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ...................................... 642,987
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................. $ 487,111
============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............. $ 5,826
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
26
STATEMENTS OF OPERATIONS -- WELLS FARGO ADVANTAGE
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
ENDEAVOR LARGE U.S.
SELECT COMPANY VALUE
FUND CORE FUND FUND
- --------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ..................................... $ 333,928 $ 827,336 $ 3,550,965
INTEREST ......................................... 17,106 5,149 129,204
INCOME FROM AFFILIATED SECURITIES ................ 38,447 6,173 48,501
SECURITIES LENDING INCOME, NET ................... 0 0 7,743
------------ ------------ ------------
TOTAL INVESTMENT INCOME ............................. 389,481 838,658 3,736,413
------------ ------------ ------------
EXPENSES
ADVISORY FEES .................................... 392,351 404,661 1,141,731
ADMINISTRATION FEES
FUND LEVEL .................................... 12,424 14,672 39,878
CLASS A ....................................... 192,401 94,498 9,667
CLASS B ....................................... 4,706 17,068 11,962
CLASS C ....................................... 2,307 12,717 7,012
CLASS Z ....................................... N/A 51,040 647,729
ADMINISTRATOR CLASS ........................... 9 31,554 132,971
INSTITUTIONAL CLASS ........................... 4 N/A N/A
CUSTODY FEES ..................................... 7,450 6,950 17,499
SHAREHOLDER SERVICING FEES ....................... 62,108 73,361 199,341
ACCOUNTING FEES .................................. 11,305 26,726 29,597
DISTRIBUTION FEES (NOTE 3)
CLASS A ....................................... 66,483 34,995 3,600
CLASS B ....................................... 10,756 38,013 27,577
CLASS C ....................................... 5,151 28,140 15,987
AUDIT FEES ....................................... 9,917 10,089 5,794
LEGAL FEES ....................................... 1,766 1,720 7,313
REGISTRATION FEES ................................ 18,140 31,707 29,393
SHAREHOLDER REPORTS .............................. 4,981 5,573 96,608
TRUSTEES' FEES ................................... 5,651 5,284 16,214
OTHER FEES AND EXPENSES .......................... 15,804 23,164 64,642
------------ ------------ ------------
TOTAL EXPENSES ...................................... 823,714 911,932 2,504,515
------------ ------------ ------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .... (63,916) (140,922) (250,682)
NET EXPENSES .................................... 759,798 771,010 2,253,833
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ........................ (370,317) 67,648 1,482,580
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION .......................... 1,084,746 12,026,467 6,353,058
------------ ------------ ------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........... 1,084,746 12,026,467 6,353,058
------------ ------------ ------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION .......................... 1,016,520 (17,631,312) (10,500,245)
------------ ------------ ------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .................... 1,016,520 (17,631,312) (10,500,245)
============ ============ ============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ...................................... 2,101,266 (5,604,845) (4,147,187)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................. $ 1,730,949 $ (5,537,197) $ (2,664,607)
============ ============ ============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............. $ 15,993 $ 37,781 $ 55,885
27
WELLS FARGO ADVANTAGE
LARGE CAP STOCK FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................. $ 44,382,045 $ 37,750,469
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................... (155,876) (380,775)
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................. 2,226,060 5,706,012
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .. (1,583,073) 820,465
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... 487,111 6,145,702
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................... 0 0
CLASS B ........................................................... 0 0
CLASS C ........................................................... 0 0
CLASS Z ........................................................... N/A N/A
ADMINISTRATOR CLASS ............................................... N/A N/A
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ........................................................... 0 0
CLASS B ........................................................... 0 0
CLASS C ........................................................... 0 0
CLASS Z ........................................................... N/A N/A
ADMINISTRATOR CLASS ............................................... N/A N/A
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... 0 0
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A .................................. 7,549,066 13,301,218
REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 0 0
PROCEEDS FROM REDEMPTION FEES - CLASS A .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS A .................................... (4,651,097) (12,914,635)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ............................................... 2,897,969 386,583
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS B .................................. 400,133 189,456
REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 0 0
PROCEEDS FROM REDEMPTION FEES - CLASS B .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS B .................................... (140,869) (74,741)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................... 259,264 114,715
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS C .................................. 78,311 115,461
REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 0 0
PROCEEDS FROM REDEMPTION FEES - CLASS C .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS C .................................... (228,552) (130,885)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................... (150,241) (15,424)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS Z (NOTE 1) ......................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... N/A N/A
PROCEEDS FROM REDEMPTION FEES - CLASS Z (NOTE 1) ..................... N/A N/A
COST OF SHARES REDEEMED - CLASS Z (NOTE 1) ........................... N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS Z ............................................... N/A N/A
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............. N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... N/A N/A
PROCEEDS FROM REDEMPTION FEES - 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 - INSTITUTIONAL CLASS (NOTE 1) ............. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- INSTITUTIONAL CLASS .................................. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................................... 3,006,992 485,874
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ................................... 3,494,103 6,631,576
=================== =================
ENDING NET ASSETS ....................................................... $ 47,876,148 $ 44,382,045
=================== =================
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND
SHARE CLASS CONVERSIONS (NOTE 1).
(2) PROCEEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES.
(3) PROCEEDS FROM REDEMPTION FEES FOR THE YEAR ENDED DECEMBER 31, 2003 WAS
$12,110 AND WAS PAID TO THE FUND IN 2004.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
STATEMENTS OF CHANGES IN
NET ASSETS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
ENDEAVOR SELECT CAP FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................. $ 97,685,266 $ 82,256,672
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................... (370,317) (845,654)
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................. 1,084,746 14,045,066
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .. 1,016,520 372,349
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... 1,730,949 13,571,761
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................... 0 0
CLASS B ........................................................... 0 0
CLASS C ........................................................... 0 0
CLASS Z ........................................................... N/A N/A
ADMINISTRATOR CLASS ............................................... 0 N/A
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ........................................................... (2,388,978) (5,514,094)
CLASS B ........................................................... (58,783) (107,901)
CLASS C ........................................................... (28,763) (65,374)
CLASS Z ........................................................... N/A N/A
ADMINISTRATOR CLASS ............................................... 0 N/A
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (2,476,524) (5,687,369)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A .................................. 30,072,263 31,977,070
REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 2,377,558 5,498,260
PROCEEDS FROM REDEMPTION FEES - CLASS A .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS A .................................... (9,711,925) (31,618,577)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ............................................... 22,737,896 5,856,753
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS B .................................. 2,037,671 1,138,452
REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 51,482 91,274
PROCEEDS FROM REDEMPTION FEES - CLASS B .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS B .................................... (226,595) (113,933)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................... 1,862,558 1,115,793
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS C .................................. 609,165 687,954
REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 26,987 60,012
PROCEEDS FROM REDEMPTION FEES - CLASS C .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS C .................................... (226,520) (176,310)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................... 409,632 571,656
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS Z (NOTE 1) ......................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... N/A N/A
PROCEEDS FROM REDEMPTION FEES - CLASS Z (NOTE 1) ..................... N/A N/A
COST OF SHARES REDEEMED - CLASS Z (NOTE 1) ........................... N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS Z ............................................... N/A N/A
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............. 106,296 N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... 0 N/A
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ......... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............... 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- ADMINISTRATOR CLASS .................................. 106,296 N/A
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............. 149,384 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- INSTITUTIONAL CLASS .................................. 149,384 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................................... 25,265,766 7,544,202
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ................................... 24,520,191 15,428,594
=================== =================
ENDING NET ASSETS ....................................................... $ 122,205,457 $ 97,685,266
=================== =================
LARGE COMPANY CORE FUND
----------------------------------------
FOR THE
FOR THE SIX MONTHS YEAR ENDED
ENDED JUNE 30, 2005 DECEMBER 31,
(UNAUDITED)(1)(2) 2004(2)(3)
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................. $ 95,937,688 $ 116,705,259
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................... 67,648 (72,595)
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................. 12,026,467 9,067,971
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .. (17,631,312) 847,989
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... (5,537,197) 9,843,365
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................... (5,242) 0
CLASS B ........................................................... 0 0
CLASS C ........................................................... 0 0
CLASS Z ........................................................... 0 N/A
ADMINISTRATOR CLASS ............................................... (8,731) 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ........................................................... (6,732,026) (4,798,134)
CLASS B ........................................................... (1,258,840) (759,060)
CLASS C ........................................................... (887,465) (636,169)
CLASS Z ........................................................... 0 N/A
ADMINISTRATOR CLASS ............................................... (3,064,320) (2,151,242)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (11,956,624) (8,344,605)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A .................................. 2,409,599 9,883,266
REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 6,618,967 4,635,427
PROCEEDS FROM REDEMPTION FEES - CLASS A .............................. 702 12,474
COST OF SHARES REDEEMED - CLASS A .................................... (13,796,483) (27,594,187)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ............................................... (4,767,215) (13,063,020)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS B .................................. 619,280 1,903,385
REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 1,003,706 598,238
PROCEEDS FROM REDEMPTION FEES - CLASS B .............................. 126 1,571
COST OF SHARES REDEEMED - CLASS B .................................... (1,045,266) (983,260)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................... 577,846 1,519,934
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS C .................................. 69,496 3,118,877
REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 845,294 599,527
PROCEEDS FROM REDEMPTION FEES - CLASS C .............................. 92 1,296
COST OF SHARES REDEEMED - CLASS C .................................... (1,831,249) (2,595,138)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................... (916,367) 1,124,562
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS Z (NOTE 1) ......................... 54,127,820 N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... 0 N/A
PROCEEDS FROM REDEMPTION FEES - CLASS Z (NOTE 1) ..................... 747 N/A
COST OF SHARES REDEEMED - CLASS Z (NOTE 1) ........................... (4,706,844) N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS Z ............................................... 49,421,723 N/A
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............. 11,665,018 8,644,119
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... 3,073,047 2,151,242
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ......... 338 6,536
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............... (13,431,411) (22,649,704)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- ADMINISTRATOR CLASS .................................. 1,306,992 (11,847,807)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- INSTITUTIONAL CLASS .................................. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................................... 45,622,979 (22,266,331)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ................................... 28,129,158 (20,767,571)
=================== =================
ENDING NET ASSETS ....................................................... $ 124,066,846 $ 95,937,688
=================== =================
U.S. VALUE FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................. $ 360,122,601 $ 260,271,181
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................... 1,482,580 4,062,506
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................. 6,353,058 30,647,315
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .. (10,500,245) 9,863,094
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......... (2,664,607) 44,572,915
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................... (14,786) (45,784)
CLASS B ........................................................... (4,512) (19,234)
CLASS C ........................................................... (318) (9,233)
CLASS Z ........................................................... (682,364) (2,578,007)
ADMINISTRATOR CLASS ............................................... (357,607) (1,196,294)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ........................................................... (83,251) (352,093)
CLASS B ........................................................... (99,380) (435,125)
CLASS C ........................................................... (55,442) (299,189)
CLASS Z ........................................................... (3,913,997) (16,834,713)
ADMINISTRATOR CLASS ............................................... (1,467,371) (5,974,941)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................... (6,679,028) (27,744,613)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A .................................. 727,316 1,588,383
REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 93,811 379,245
PROCEEDS FROM REDEMPTION FEES - CLASS A .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS A .................................... (630,492) (1,676,157)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ............................................... 190,635 291,471
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS B .................................. 406,989 1,289,813
REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 91,135 395,211
PROCEEDS FROM REDEMPTION FEES - CLASS B .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS B .................................... (527,463) (552,807)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................... (29,339) 1,132,217
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS C .................................. 290,605 698,417
REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 47,613 278,278
PROCEEDS FROM REDEMPTION FEES - CLASS C .............................. N/A N/A
COST OF SHARES REDEEMED - CLASS C .................................... (1,400,527) (1,141,334)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................... (1,062,309) (164,639)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS Z (NOTE 1) ......................... 24,127,910 135,909,011
REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... 2,686,399 11,406,386
PROCEEDS FROM REDEMPTION FEES - CLASS Z (NOTE 1) ..................... N/A N/A
COST OF SHARES REDEEMED - CLASS Z (NOTE 1) ........................... (22,612,263) (65,884,168)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS Z ............................................... 4,202,046 81,431,229
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............. 16,933,032 22,132,402
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... 168,114 109,087
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ......... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............... (5,551,683) (21,908,649)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- ADMINISTRATOR CLASS .................................. 11,549,463 332,840
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -- INSTITUTIONAL CLASS .................................. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................................... 14,850,496 83,023,118
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ................................... 5,506,861 99,851,420
=================== =================
ENDING NET ASSETS ....................................................... $ 365,629,462 $ 360,122,601
=================== =================
29
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
--------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................. 669,361 1,297,889
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 0 0
SHARES REDEEMED - CLASS A ............................................................. (414,092) (1,234,210)
----------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................. 255,269 63,679
----------- -------------
SHARES SOLD - CLASS B ................................................................. 35,427 18,279
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 0 0
SHARES REDEEMED - CLASS B ............................................................. (13,037) (7,217)
----------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................. 22,390 11,062
----------- -------------
SHARES SOLD - CLASS C ................................................................. 7,077 11,182
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 0 0
SHARES REDEEMED - CLASS C ............................................................. (21,081) (12,797)
----------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................. (14,004) (1,615)
----------- -------------
SHARES SOLD - CLASS Z (NOTE 1) ........................................................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... N/A N/A
SHARES REDEEMED - CLASS Z (NOTE 1) .................................................... N/A N/A
----------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................. N/A N/A
----------- -------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - 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 - INSTITUTIONAL CLASS (NOTE 1) ............................................ N/A N/A
----------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ...................... N/A N/A
----------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .. 263,655 73,126
=========== =============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ (155,876) $ 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.
30
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ENDEAVOR SELECT CAP FUND
--------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................. 3,421,657 3,631,058
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 281,701 622,745
SHARES REDEEMED - CLASS A ............................................................. (1,110,122) (3,620,140)
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................. 2,593,236 633,663
------------ -------------
SHARES SOLD - CLASS B ................................................................. 240,146 129,806
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 6,309 10,663
SHARES REDEEMED - CLASS B ............................................................. (26,678) (13,648)
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................. 219,777 126,821
------------ -------------
SHARES SOLD - CLASS C ................................................................. 71,845 80,437
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 3,307 7,011
SHARES REDEEMED - CLASS C ............................................................. (27,048) (20,141)
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................. 48,104 67,307
------------ -------------
SHARES SOLD - CLASS Z (NOTE 1) ........................................................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... N/A N/A
SHARES REDEEMED - CLASS Z (NOTE 1) .................................................... N/A N/A
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................. N/A N/A
------------ -------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................................ 11,886 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... 0 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ........................................ 0 N/A
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ...................... 11,886 N/A
------------ -------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............................................ 16,446 N/A
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ...................... 16,446 N/A
------------ -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .. 2,889,449 827,791
============ =============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ (370,317) $ 0
============ =============
LARGE COMPANY CORE FUND
--------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................. 249,260 907,677
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 713,995 435,913
SHARES REDEEMED - CLASS A ............................................................. (1,410,138) (2,559,965)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................. (446,883) (1,216,375)
------------- -------------
SHARES SOLD - CLASS B ................................................................. 63,775 176,952
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 111,390 57,309
SHARES REDEEMED - CLASS B ............................................................. (112,009) (93,209)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................. 63,156 141,052
------------- -------------
SHARES SOLD - CLASS C ................................................................. 7,069 290,099
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 93,855 57,480
SHARES REDEEMED - CLASS C ............................................................. (188,373) (242,815)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................. (87,449) 104,764
------------- -------------
SHARES SOLD - CLASS Z (NOTE 1) ........................................................ 5,928,135 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... 0 N/A
SHARES REDEEMED - CLASS Z (NOTE 1) .................................................... (519,008) N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................. 5,409,127 N/A
------------- -------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................................ 1,247,258 793,687
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... 327,951 200,954
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ........................................ (1,413,284) (93,209)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ...................... 161,925 901,432
------------- -------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............................................ N/A N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ...................... N/A N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .. 5,099,876 (69,127)
============= =============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ 53,675 $ 0
============= =============
U.S. VALUE FUND
--------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................. 39,935 86,445
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................. 5,164 21,022
SHARES REDEEMED - CLASS A ............................................................. (34,597) (92,877)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................. 10,502 14,590
------------- -------------
SHARES SOLD - CLASS B ................................................................. 22,366 71,108
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................. 5,028 21,981
SHARES REDEEMED - CLASS B ............................................................. (29,157) (30,337)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................. (1,763) 62,752
------------- -------------
SHARES SOLD - CLASS C ................................................................. 16,077 38,764
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................. 2,639 15,559
SHARES REDEEMED - CLASS C ............................................................. (76,734) (62,341)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................. (58,018) (8,018)
------------- -------------
SHARES SOLD - CLASS Z (NOTE 1) ........................................................ 1,312,646 7,524,230
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................... 146,798 627,559
SHARES REDEEMED - CLASS Z (NOTE 1) .................................................... (1,227,353) (3,593,330)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................. 232,091 4,558,459
------------- -------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................................ 939,658 1,217,354
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......... 9,330 6,087
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ........................................ (301,460) (1,213,371)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ...................... 647,528 10,070
------------- -------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ............................................ N/A N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ...................... N/A N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .. 830,340 4,637,853
============= =============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ 454,909 $ 31,916
============= =============
31
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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
- -----------------------------------------------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................ $ 11.63 (0.03) 0.13 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................ $ 10.08 (0.10) 1.65 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................ $ 7.55 (0.07)(4) 2.60 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................ $ 10.59 (0.10)(4) (2.94) 0.00
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 .................. $ 10.00 (0.01) (0.86)(5) 0.00
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................ $ 11.41 (0.04) 0.10 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................ $ 9.97 (0.17) 1.61 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................ $ 7.51 (0.12)(4) 2.58 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................ $ 10.57 (0.12)(4) (2.94) 0.00
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 .................. $ 10.00 (0.04) 0.87(5) 0.00
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................ $ 11.41 (0.17) 0.23 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................ $ 9.97 (0.18) 1.62 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................ $ 7.51 (0.12)(4) 2.58 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................ $ 10.57 (0.13)(4) (2.93) 0.00
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 .................. $ 10.00 (0.04) 0.87(5) 0.00
ENDEAVOR SELECT FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................ $ 9.16 (0.03) 0.10 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................ $ 8.36 (0.09)(4) 1.47 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................ $ 6.10 (0.07)(4) 2.33 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................ $ 7.99 (0.07)(4) (1.81) 0.00
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ..................... $ 10.00 (0.01) (2.00)(5) 0.00
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................ $ 8.87 (0.02) 0.06 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................ $ 8.18 (0.15)(4) 1.42 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................ $ 6.02 (0.12)(4) 2.28 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................ $ 7.94 (0.12)(4) (1.79) 0.00
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ..................... $ 10.00 (0.09) (1.97)(5) 0.00
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................ $ 8.87 (0.03) 0.07 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................ $ 8.18 (0.16)(4) 1.43 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................ $ 6.02 (0.13)(4) 2.29 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................ $ 7.93 (0.12)(4) (1.78) 0.00
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ..................... $ 10.00 (0.10) (1.97)(5) 0.00
ADMINISTRATOR CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) .............. $ 8.60 0.00(7) 0.43 0.00
INSTITUTIONAL CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) .............. $ 8.60 0.00(7) 0.43 0.00
32
DISTRIBUTIONS ENDING
FROM NET NET ASSET
REALIZED VALUE PER
GAINS SHARE
- ----------------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
- ----------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .......................... 0.00 $ 11.73
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................................. 0.00 $ 11.63
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................................. 0.00 $ 10.08
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................................. 0.00 $ 7.55
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 ............................ (0.26) $ 10.59
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .......................... 0.00 $ 11.47
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................................. 0.00 $ 11.41
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................................. 0.00 $ 9.97
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................................. 0.00 $ 7.51
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 ............................ (0.26) $ 10.57
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .......................... 0.00 $ 11.47
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................................. 0.00 $ 11.41
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................................. 0.00 $ 9.97
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................................. 0.00 $ 7.51
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 ............................ (0.26) $ 10.57
ENDEAVOR SELECT FUND
- ----------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .......................... (0.21) $ 9.02
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................................. (0.58) $ 9.16
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................................. 0.00 $ 8.36
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................................. (0.01) $ 6.10
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ............................... 0.00 $ 7.99
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .......................... (0.21) $ 8.70
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................................. (0.58) $ 8.87
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................................. 0.00 $ 8.18
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................................. (0.01) $ 6.02
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ............................... 0.00 $ 7.94
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .......................... (0.21) $ 8.70
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................................. (0.58) $ 8.87
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................................. 0.00 $ 8.18
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................................. (0.01) $ 6.02
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ............................... 0.00 $ 7.93
ADMINISTRATOR CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ........................ 0.00 $ 9.03
INSTITUTIONAL CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ........................ 0.00 $ 9.03
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
--------------------------------------------------
NET INVESTMENT GROSS EXPENSES NET
INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ---------------------------------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................... (0.69)% 1.64% (0.18)% 1.46%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................... (0.93)% 1.69% (0.04)% 1.65%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................... (0.86)% 1.69% (0.08)% 1.61%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................... (1.18)% 2.03% (0.05)% 1.98%
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 ..................... 1.08 % 2.36% (0.01)% 2.35%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................... (1.49)% 2.45% (0.18)% 2.27%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................... (1.69)% 2.46% (0.04)% 2.42%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................... (1.34)% 2.47% (0.42)% 2.05%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................... (1.38)% 4.69% (2.45)% 2.24%
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 ..................... (1.55)% 2.75% (0.11)% 2.64%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................... (1.54)% 2.64% (0.37)% 2.27%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................... (1.72)% 2.56% (0.11)% 2.45%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................... (1.39)% 2.57% (0.45)% 2.12%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................... (1.51)% 4.18% (1.85)% 2.33%
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 ..................... (1.55)% 2.75% (0.11)% 2.64%
ENDEAVOR SELECT FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................... (0.68)% 1.54% (0.12)% 1.42%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................... (1.05)% 1.61% (0.04)% 1.57%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................... (1.01)% 1.61% (0.03)% 1.58%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................... (1.08)% 1.60% (0.01)% 1.59%
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ........................ (0.80)% 4.39% (2.70)% 1.69%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................... (1.41)% 2.31% (0.13)% 2.18%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................... (1.72)% 2.39% (0.04)% 2.35%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................... (1.79)% 2.40% (0.06)% 2.34%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................... (1.85)% 2.39% (0.03)% 2.36%
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ........................ (1.70)% 12.41% (9.96)% 2.45%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ................... (1.47)% 2.35% (0.13)% 2.22%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........................... (1.82)% 2.41% (0.04)% 2.37%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........................... (1.83)% 2.45% (0.07)% 2.38%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........................... (1.78)% 2.32% (0.04)% 2.28%
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ........................ (1.70)% 12.82% (10.36)% 2.46%
ADMINISTRATOR CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ................. 0.19% 1.29% (0.31)% 0.98%
INSTITUTIONAL CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ................. 0.69% 1.08% (0.28)% 0.80%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ------------------------------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND
- ------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................ 0.86% 138% $ 46,349
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................ 15.38% 168% $ 42,959
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................ 33.51% 234% $ 36,601
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................ (28.71)% 420% $ 28,291
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 .......................... 8.45% 54% $ 28,102
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................ 0.53% 138% $ 1,211
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................ 14.44% 168% $ 950
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................ 32.76% 234% $ 719
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................ (28.95)% 420% $ 323
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 .......................... 8.25% 54% $ 120
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................ 0.53% 138% $ 316
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................ 14.44% 168% $ 474
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................ 32.76% 234% $ 430
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................ (28.95)% 420% $ 194
SEPTEMBER 28, 2001(6) TO DECEMBER 31, 2001 .......................... 8.25% 54% $ 108
ENDEAVOR SELECT FUND
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................ 0.90% 132% $ 116,794
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................ 16.80% 169% $ 94,805
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................ 37.05% 244% $ 81,190
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................ (23.52)% 437% $ 55,762
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ............................. (20.10)% 360% $ 56,700
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................ 0.59% 132% $ 3,679
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................ 15.82% 169% $ 1,800
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................ 35.88% 244% $ 622
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................ (24.04)% 437% $ 317
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ............................. (20.60)% 360% $ 455
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................ 0.59% 132% $ 1,476
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................ 15.82% 169% $ 1,080
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................ 35.88% 244% $ 444
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................ (23.95)% 437% $ 231
JANUARY 1, 2001(6) TO DECEMBER 31, 2001 ............................. (20.70)% 360% $ 239
ADMINISTRATOR CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ...................... 5.00% 132% $ 107
INSTITUTIONAL CLASS
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ...................... 5.00% 132% $ 149
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
33
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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
- ------------------------------------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 10.97 0.01 (0.55) (0.00)(7)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 10.81 (0.01) 1.12 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 8.81 (0.00)(4)(7) 2.02 (0.01)
OCTOBER 1, 2002 TO DECEMBER 31, 2002(8) ................. $ 8.24 0.01(4) 0.57 (0.01)
OCTOBER 1, 2001 TO SEPTEMBER 30, 2002 ................... $ 9.65 0.07 (1.10) (0.05)
OCTOBER 1, 2000 TO SEPTEMBER 30, 2001 ................... $ 14.67 0.12 (3.79) (0.12)
OCTOBER 1, 1999 TO SEPTEMBER 30, 2000 ................... $ 11.72 0.14 3.26 (0.14)
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 10.73 (0.03) (0.53) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 10.69 (0.09) 1.08 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 8.79 (0.10)(4) 2.01 (0.00)(7)
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 .............. $ 8.21 (0.02)(4) 0.60 0.00
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 10.72 (0.06) (0.50) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 10.69 (0.11) 1.09 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 8.79 (0.10)(4) 2.01 0.00
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 .............. $ 8.21 (0.02)(4) 0.60 (0.00)(7)
CLASS Z
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) .......... $ 9.13 0.00(7) (0.17) 0.00
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 11.07 0.02 (0.55) (0.00)(7)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 10.84 0.06 1.12 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 8.80 0.05(4) 2.03 (0.03)
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 .............. $ 8.21 0.02(4) 0.59 (0.02)
U.S. VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 18.55 0.07 (0.22) (0.05)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 17.65 0.20 2.22 (0.18)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 13.66 0.14 4.00 (0.15)
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................... $ 17.83 0.12(4) (2.77) (0.16)
JANUARY 1, 2001 TO DECEMBER 31, 2001 .................... $ 20.65 0.05 (2.56) (0.06)
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ............. $ 19.99 0.00(7) 0.68 (0.02)
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 18.52 (0.01) (0.21) (0.01)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 17.64 0.07 2.21 (0.06)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 13.67 0.03 3.98 (0.04)
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................... $ 17.81 0.02(4) (2.78) (0.02)
JANUARY 1, 2001 TO DECEMBER 31, 2001 .................... $ 20.66 (0.00)(7) (2.60) 0.00
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) $ 19.99 (0.01) 0.69 (0.01)
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............ $ 18.44 (0.02) (0.20) (0.00)(7)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .................... $ 17.56 0.06 2.20 (0.04)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .................... $ 13.61 0.03 3.97 (0.05)
JANUARY 1, 2002 TO DECEMBER 31, 2002 .................... $ 17.82 0.02(4) (2.78) (0.09)
JANUARY 1, 2001 TO DECEMBER 31, 2001 .................... $ 20.66 (0.00)(7) (2.59) 0.00
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ............. $ 19.99 (0.01) 0.69 (0.01)
34
DISTRIBUTIONS ENDING
FROM NET NET ASSET
REALIZED VALUE PER
GAINS SHARE
- ----------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- ----------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (1.47) $ 8.96
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (0.95) $ 10.97
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... (0.01) $ 10.81
OCTOBER 1, 2002 TO DECEMBER 31, 2002(8) ................................ 0.00 $ 8.81
OCTOBER 1, 2001 TO SEPTEMBER 30, 2002 .................................. (0.33) $ 8.24
OCTOBER 1, 2000 TO SEPTEMBER 30, 2001 .................................. (1.23) $ 9.65
OCTOBER 1, 1999 TO SEPTEMBER 30, 2000 .................................. (0.31) $ 14.67
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (1.47) $ 8.70
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (0.95) $ 10.73
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... (0.01) $ 10.69
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ............................. 0.00 $ 8.79
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (1.47) $ 8.69
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (0.95) $ 10.72
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... (0.01) $ 10.69
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ............................. 0.00 $ 8.79
CLASS Z
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ......................... 0.00 $ 8.96
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (1.47) $ 9.07
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (0.95) $ 11.07
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... (0.01) $ 10.84
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ............................. 0.00 $ 8.80
U.S. VALUE FUND
- ----------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (0.29) $ 18.06
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (1.34) $ 18.55
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... 0.00 $ 17.65
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................... (1.36) $ 13.66
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................................... (0.25) $ 17.83
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ............................ 0.00 $ 20.65
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (0.29) $ 18.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (1.34) $ 18.52
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... 0.00 $ 17.64
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................... (1.36) $ 13.67
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................................... (0.25) $ 17.81
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ............................ 0.00 $ 20.66
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ........................... (0.29) $ 17.93
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................... (1.34) $ 18.44
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................... 0.00 $ 17.56
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................... (1.36) $ 13.61
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................................... (0.25) $ 17.82
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ............................ 0.00 $ 20.66
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
--------------------------------------------------
NET INVESTMENT GROSS EXPENSES NET
INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ---------------------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... 0.19% 1.63% (0.24)% 1.39%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ (0.07)% 1.61% (0.16)% 1.45%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ (0.04)% 1.69% (0.24)% 1.45%
OCTOBER 1, 2002 TO DECEMBER 31, 2002(8) ......................... 0.01% 3.05% (1.55)% 1.50%
OCTOBER 1, 2001 TO SEPTEMBER 30, 2002 ........................... 0.82% 3.74% (2.24)% 1.50%
OCTOBER 1, 2000 TO SEPTEMBER 30, 2001 ........................... 1.00% 4.72% (3.22)% 1.50%
OCTOBER 1, 1999 TO SEPTEMBER 30, 2000 ........................... 1.10% 3.90% (2.40)% 1.50%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... (0.67)% 2.40% (0.15)% 2.25%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ (0.94)% 2.40% 0.00% 2.40%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ (0.99)% 2.47% (0.07)% 2.40%
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ...................... (0.20)% 4.23% (1.73)% 2.50%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... (0.71)% 2.40% (0.12)% 2.28%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ (1.01)% 2.52% (0.11)% 2.41%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ (1.02)% 2.53% (0.12)% 2.41%
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ...................... (0.20)% 4.20% (1.70)% 2.50%
CLASS Z
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) .................. 0.08% 1.72% (0.28)% 1.44%
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... 0.57% 1.36% (0.38)% 0.98%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ 0.43% 1.33% (0.33)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ 0.54% 1.39% (0.44)% 0.95%
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ...................... 1.10% 2.91% (1.91)% 1.00%
U.S. VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... 0.78% 1.39% (0.08)% 1.31%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ 1.14% 1.41% (0.06)% 1.35%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ 0.99% 1.40% (0.02)% 1.38%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............................ 0.93% 1.30% (0.02)% 1.28%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............................ 0.07% 1.83% 0.00% 1.83%
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ..................... 0.12% 1.34% 0.00% 1.34%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... 0.00%(7) 2.17% (0.08)% 2.09%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ 0.39% 2.15% (0.05)% 2.10%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ 0.21% 2.17% (0.02)% 2.15%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............................ 0.11% 2.15% (0.02)% 2.13%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............................ (0.36)% 2.88% (0.63)% 2.25%
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) ..................... (0.49)% 2.00% 0.00% 2.00%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .................... (0.04)% 2.19% (0.07)% 2.12%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............................ 0.31% 2.23% (0.06)% 2.17%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............................ 0.18% 2.24% (0.04)% 2.20%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............................ 0.15% 2.16% (0.01)% 2.15%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............................ (0.29)% 2.37% (0.21)% 2.16%
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) (0.47)% 2.00% 0.00% 2.00%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- ---------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (5.16)% 114% $ 41,043
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 10.69% 190% $ 55,121
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 22.93% 148% $ 67,463
OCTOBER 1, 2002 TO DECEMBER 31, 2002(8) .............................. 6.99% 36% $ 8,597
OCTOBER 1, 2001 TO SEPTEMBER 30, 2002 ................................ (11.47)% 190% $ 6,155
OCTOBER 1, 2000 TO SEPTEMBER 30, 2001 ................................ (26.39)% 222% $ 4,091
OCTOBER 1, 1999 TO SEPTEMBER 30, 2000 ................................ 29.48% 143% $ 4,826
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (5.48)% 114% $ 7,928
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 9.67% 190% $ 9,103
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 21.74% 148% $ 7,559
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ........................... 7.06% 36% $ 490
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (5.49)% 114% $ 5,283
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 9.57% 190% $ 7,457
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 21.73% 148% $ 6,312
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ........................... 7.09% 36% $ 484
CLASS Z
APRIL 11, 2005(6) TO JUNE 30, 2005 (UNAUDITED) ....................... (1.86)% 114% $ 48,460
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (4.98)% 114% $ 21,352
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 11.32% 190% $ 24,257
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 23.66% 148% $ 35,372
SEPTEMBER 30, 2002(6) TO DECEMBER 31, 2002 ........................... 7.38% 36% $ 107
U.S. VALUE FUND
- ------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (0.81)% 42% $ 5,317
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 14.08% 47% $ 5,264
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 30.48% 53% $ 4,752
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................. (16.34)% 90% $ 2,524
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................................. (12.17)% 116% $ 2,622
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) .......................... 3.45% 14% $ 167
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (1.18)% 42% $ 6,158
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 13.20% 47% $ 6,369
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 29.37% 53% $ 4,958
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................. (17.01)% 90% $ 3,124
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................................. (12.60)% 116% $ 2,496
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) .......................... 3.43% 14% $ 131
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......................... (1.19)% 42% $ 3,135
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................................. 13.15% 47% $ 4,294
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................................. 29.42% 53% $ 4,230
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................................. (17.05)% 90% $ 1,426
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................................. (12.55)% 116% $ 612
NOVEMBER 1, 2000(6) TO DECEMBER 31, 2000(9) .......................... 3.42% 14% $ 103
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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
- ------------------------------------------------------------------------------------------------------------------------------
U.S. VALUE FUND (CONTINUED)
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... $ 18.68 0.07 (0.22) (0.05)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... $ 17.77 0.20 2.24 (0.19)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... $ 13.74 0.15 3.99 (0.11)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ....................... $ 17.87 0.05(4) (2.79) (0.03)
JANUARY 1, 2001 TO DECEMBER 31, 2001 ....................... $ 20.65 0.11 (2.53) (0.11)
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10)................... $ 21.63 0.03 (0.52) (0.03)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ...................... $ 20.58 0.05 1.53 (0.05)
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED)................ $ 18.40 0.11 (0.23) (0.07)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... $ 17.52 0.27 2.21 (0.26)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... $ 13.56 0.16 4.02 (0.22)
JANUARY 1, 2002(6) TO DECEMBER 31, 2002..................... $ 17.87 0.22(4) (2.81) (0.36)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING
FROM NET NET ASSET
REALIZED VALUE PER
GAINS SHARE
- -------------------------------------------------------------------------------------------
U.S. VALUE FUND (CONTINUED)
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... (0.29) $ 18.19
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... (1.34) $ 18.68
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... 0.00 $ 17.77
JANUARY 1, 2002 TO DECEMBER 31, 2002 ....................... (1.36) $ 13.74
JANUARY 1, 2001 TO DECEMBER 31, 2001 ....................... (0.25) $ 17.87
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) .................. (0.46) $ 20.65
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ....................... (0.48) $ 21.63
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... (0.29) $ 17.92
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... (1.34) $ 18.40
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... 0.00 $ 17.52
JANUARY 1, 2002(6) TO DECEMBER 31, 2002 .................... (1.36) $ 13.56
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
----------------------------------------------------
NET INVESTMENT GROSS EXPENSES NET
INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ------------------------------------------------------------------------------------------------------------------
U.S. VALUE FUND (CONTINUED)
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... 0.75% 1.47% (0.13)% 1.34%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... 1.16% 1.37% (0.05)% 1.32%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... 0.83% 1.58% (0.03)% 1.55%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ....................... 0.34% 1.91% (0.01)% 1.90%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ....................... 0.58% 1.22% 0.00% 1.22%
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) .................. 0.76% 1.06% 0.00% 1.06%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000. ...................... 0.30% 10.04% (9.00)% 1.04%
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... 1.14% 1.16% (0.20)% 0.96%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... 1.54% 1.06% (0.11)% 0.95%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... 1.32% 1.07% (0.10)% 0.97%
JANUARY 1, 2002(6) TO DECEMBER 31, 2002 .................... 1.63% 1.11% (0.14)% 0.97%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ------------------------------------------------------------------------------------------------------------------
U.S. VALUE FUND (CONTINUED)
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... (0.80)% 42% $ 249,844
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... 14.11 % 47% $ 252,256
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... 30.23 % 53% $ 158,963
JANUARY 1, 2002 TO DECEMBER 31, 2002 ....................... (16.86)% 90% $ 197,477
JANUARY 1, 2001 TO DECEMBER 31, 2001 ....................... (11.72)% 116% $ 186,423
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) .................. (2.17)% 14% $ 250,920
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ....................... 7.72 % 47% $ 252,386
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............... (0.65)% 42% $ 101,176
JANUARY 1, 2004 TO DECEMBER 31, 2004 ....................... 14.53 % 47% $ 91,940
JANUARY 1, 2003 TO DECEMBER 31, 2003 ....................... 31.03 % 53% $ 87,368
JANUARY 1, 2002(6) TO DECEMBER 31, 2002 .................... (15.98)% 90% $ 11,220
37
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS 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) Calculated based upon average shares outstanding.
(5) The amount shown may not correlate with the aggregate gains and losses of
portfolio securities due to the timing of subscriptions and redemptions of
fund shares.
(6) Commencement of operations.
(7) Amount calculated is less than $0.005 or 0.005%.
(8) In 2002, the Fund changed its fiscal year-end from September 30 to
December 31.
(9) Per share data reflects a 1.023 for 1.000 share split which occurred on
March 8, 2001.
(10) In 2000, the Fund changed its fiscal year-end from October 31 to December
31.
38
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Endeavor
Large Cap Fund, Endeavor Select Fund, Large Company Core Fund, and U.S. Value
Fund. Each Fund, except for the Endeavor Select Fund, is a diversified series of
the Trust. The Endeavor Select Fund is a non-diversified series of the Trust.
In August and 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 Funds Acquiring Fund
- --------------------------------------------------------------------------------------------------------------------------
STRONG STRONG ADVISOR LARGE WELLS FARGO ADVANTAGE LARGE
Fund VALUE FUND COMPANY CORE FUND* COMPANY CORE FUND
- --------------------------------------------------------------------------------------------------------------------------
Shares:
- --------------------------------------------------------------------------------------------------------------------------
CLASS A -- 5,114,131 5,114,131
- --------------------------------------------------------------------------------------------------------------------------
CLASS B -- 959,352 959,352
- --------------------------------------------------------------------------------------------------------------------------
CLASS C -- 680,251 680,251
- --------------------------------------------------------------------------------------------------------------------------
CLASS K -- 2,373,995 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS Z -- -- 5,862,812
- --------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 2,373,995
- --------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 5,653,825 -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Assets:
- --------------------------------------------------------------------------------------------------------------------------
CLASS A -- $ 46,701,354 $ 46,701,354
- --------------------------------------------------------------------------------------------------------------------------
CLASS B -- 8,517,465 8,517,465
- --------------------------------------------------------------------------------------------------------------------------
CLASS C -- 6,033,440 6,033,440
- --------------------------------------------------------------------------------------------------------------------------
CLASS K -- 21,929,246 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS Z -- -- 53,538,176
- --------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 21,929,246
- --------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 53,538,176 -- --
- --------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 1,141,273 272,324 1,413,597
- --------------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses (345,361) (108,708) (454,069)
- --------------------------------------------------------------------------------------------------------------------------
*Designates the accounting survivor.
39
NOTES TO FINANCIAL STATEMENTS
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
Before Reorganization After Reorganization
---------------------------------- ----------------------------
Target Funds Acquiring Fund
- --------------------------------------------------------------------------------------------------------------------------
STRONG STRATEGIC STRONG ADVISOR WELLS FARGO ADVANTAGE
Fund VALUE FUND U.S. VALUE FUND* U.S. VALUE FUND
- --------------------------------------------------------------------------------------------------------------------------
Shares:
- --------------------------------------------------------------------------------------------------------------------------
CLASS A -- 294,311 294,311
- --------------------------------------------------------------------------------------------------------------------------
CLASS B -- 346,904 346,904
- --------------------------------------------------------------------------------------------------------------------------
CLASS C -- 189,397 189,397
- --------------------------------------------------------------------------------------------------------------------------
CLASS K -- 5,097,233 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS Z -- 13,619,424 13,735,446
- --------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 5,097,233
- --------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 192,515 -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Assets:
- --------------------------------------------------------------------------------------------------------------------------
CLASS A -- $ 5,337,775 $ 5,337,775
- --------------------------------------------------------------------------------------------------------------------------
CLASS B -- 6,282,018 6,282,018
- --------------------------------------------------------------------------------------------------------------------------
CLASS C -- 3,415,518 3,415,518
- --------------------------------------------------------------------------------------------------------------------------
CLASS K -- 91,666,796 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS Z -- 248,810,236 250,929,810
- --------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- 91,666,796
- --------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 2,119,574 --
- --------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 370,013 53,778,817 54,148,830
- --------------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses -- (857,839) (857,839)
- --------------------------------------------------------------------------------------------------------------------------
*Designates the accounting survivor.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds"), by share class, acquired substantially all
of the net assets of the following Target Funds ("Target Funds"), by share
class, through a tax-free exchange under section 368 of the Internal Revenue
Code.
Acquiring Funds Target Funds
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR LARGE CAP FUND - CLASS A STRONG ADVISOR ENDEAVOR LARGE CAP FUND CLASS A
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR LARGE CAP FUND - CLASS B STRONG ADVISOR ENDEAVOR LARGE CAP FUND CLASS B
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR LARGE CAP FUND - CLASS C STRONG ADVISOR ENDEAVOR LARGE CAP FUND CLASS C
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND - CLASS A STRONG ADVISOR SELECT FUND CLASS A
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND - CLASS B STRONG ADVISOR SELECT FUND CLASS B
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND - CLASS C STRONG ADVISOR SELECT FUND CLASS C
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND - ADMINISTRATOR CLASS NEW
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENDEAVOR SELECT FUND - INSTITUTIONAL CLASS NEW
The separate classes of shares offered by each Fund differ principally in
applicable sales charges and 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.
40
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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.
Certain Funds of the Trust may invest a substantial portion of their
assets in an industry, sector or foreign country as is discussed in the
Performance Highlights for those Funds. Such Funds may be more affected by
changes in that industry, sector or foreign country than they would be absent
the concentration of investments.
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.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
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.
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.
41
NOTES TO FINANCIAL STATEMENTS
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared and distributed to shareholders
annually, with the exception of the U.S. Value Fund, for which net investment
income, if any, is declared and distributed quarterly. 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 June 30, 2005.
At December 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Capital Loss
Fund Year Expires Carryforwards
- -------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND 2010 $ 89,875
- -------------------------------------------------------------------
SECURITY LOANS
The Funds 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
Fees
Advisory Fees* (% of Average
Average Daily (% of Average Average Daily Daily Net
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Assets)
- ---------------------------------------------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management $200 - $400 million 0.300
$1 - $2.99 billion 0.650 Incorporated > $400 million 0.250
$3 - $4.99 billion 0.625
>$4.99 billion 0.600
- ---------------------------------------------------------------------------------------------------------------------------------
42
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Sub-Advisory
Fees
Advisory Fees* (% of Average
Average Daily (% of Average Average Daily Daily Net
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Assets)
- ------------------------------------------------------------------------------------------------------------------------------
ENDEAVOR SELECT FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management $200 - $400 million 0.300
$1 - $2.99 billion 0.650 Incorporated > $400 million 0.250
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND $0 - $499 million 0.750 Matrix $0 - $50 million 0.200
$500 - $999 million 0.700 Asset > $50 million 0.160
$1 - $2.99 billion 0.650 Advisors, Inc.
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------
U.S. VALUE FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management $200 - $400 million 0.300
$1 - $2.99 billion 0.650 Incorporated > $400 million 0.250
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------
* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds. Funds Management was entitled to receive an annual fee at the
following rate:
Advisory Fees
Average Daily (% of Average
Net Assets Daily Net Assets)
- ----------------------------------------------------------------------------------------------
STRONG ADVISOR ENDEAVOR LARGE CAP FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- ----------------------------------------------------------------------------------------------
STRONG ADVISOR SELECT FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- ----------------------------------------------------------------------------------------------
STRONG ADVISOR LARGE COMPANY CORE FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- ----------------------------------------------------------------------------------------------
STRONG ADVISOR U.S. VALUE FUND All asset levels 0.550
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:
Administration 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, CLASS B AND CLASS C(1) 0.28
- ----------------------------------------------------------------------------------------------
CLASS Z(1) 0.45
- ----------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS 0.10
- ----------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- ----------------------------------------------------------------------------------------------
(1) The class-level administration fee is reduced by 0.05% for the Class
A, Class B, Class C and Class Z shares of the U.S. Value Fund.
43
NOTES TO FINANCIAL STATEMENTS
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
** 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:
Share Class % of Average Daily Net Assets
- --------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C AND CLASS Z 0.30
- --------------------------------------------------------------------------------
CLASS K 0.25
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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. Effective April 11,
2005, transfer agent fees are paid by Funds Management and not by the Funds.
For financial statement presentation, transfer agent fees for the period
from January 1, 2005 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and
Other Related Expenses
- --------------------------------------------------------------------------------
STRONG ADVISOR ENDEAVOR LARGE CAP FUND
CLASS A $ 17,763
CLASS B 485
CLASS C 246
- --------------------------------------------------------------------------------
STRONG ADVISOR SELECT FUND
CLASS A 45,768
CLASS B 1,110
CLASS C 605
- --------------------------------------------------------------------------------
STRONG ADVISOR LARGE COMPANY CORE FUND
CLASS A 25,108
CLASS B 4655
CLASS C 3,590
CLASS K 10,648
- --------------------------------------------------------------------------------
STRONG ADVISOR U.S. VALUE FUND
CLASS A 2,620
CLASS B 3,491
CLASS C 2,156
CLASS K 47,782
CLASS Z 219,447
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 LARGE CAP STOCK FUNDS 0.02
- --------------------------------------------------------------------------------
Prior to March 4, 2005, State Street served as custodian for the Strong
Advisor Endeavor Large Cap Fund and Strong Advisor Select Fund. Prior to April
11, 2005, State Street served as custodian for the Strong Advisor Large Company
Core Fund and Strong Advisor U.S. Value Fund. From April 11, 2005 to April 22,
2005, State Street served as interim custodian for the Large Company Core Fund
and U.S. Value Fund. State Street was entitled to receive certain fees,
primarily based on transactions of the fund.
44
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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:
Share Class % of Average Daily Net Assets***
- ---------------------------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, CLASS Z AND ADMINISTRATOR 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 encompassed by the
Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Fund Class A Class B Class C Class Z Administrator
- ------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND $ 24,369 $ 526 $ 156 N/A N/A
- ------------------------------------------------------------------------------------------
ENDEAVOR SELECT FUND 59,692 1,681 712 N/A $ 23
- ------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 24,461 4,587 3,112 $ 28,356 12,845
- ------------------------------------------------------------------------------------------
U.S. VALUE FUND 2,965 3,434 1,748 138,315 52,879
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, Class
B and Class C shares. Under the plan, Strong Investments, Inc. was paid an
annual rate of 0.25%, 1.00% and 1.00% of the average daily net assets of the
Class A, Class B and Class C shares, respectively.
For the six months ended June 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 4, 2005, State Street served as fund accountant for the
Strong Advisor Endeavor Large Cap Fund and Strong Advisor Select Fund. Prior to
April 11, 2005, State Street served as fund accountant for the Strong Advisor
Large Company Core Fund and Strong Advisor U.S. Value Fund. Fund accounting fees
were paid by the Funds' administrator and not by the Funds. From April 11, 2005
to April 22, 2005, State Street served as interim fund accountant for Large
Company Core Fund and U.S. Value 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 June 30, 2005, were as
follows:
Net Operating Expense Ratios
Fund Class A Class B Class C Class Z Administrator Institutional
- ----------------------------------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND 1.25% 2.00% 2.00% N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
ENDEAVOR SELECT FUND 1.25% 2.00% 2.00% N/A 1.00% 0.80%
- ----------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 1.25% 2.00% 2.00% 1.42% 0.95% N/A
- ----------------------------------------------------------------------------------------------------------
U.S. VALUE FUND 1.25% 2.00% 2.00% 1.32% 0.96% N/A
Prior to April 11, 2005, the Strong Funds' interim adviser and/or
administrator could voluntarily waive or absorb certain expenses at their
discretion. Pursuant to the direction of the Strong Funds Board of Directors and
certain regulatory settlements, the predecessor adviser, Strong Capital
Management, Inc. ("SCM") had contractually agreed to waive fees and/or absorb
expenses in the amount of 0.033% for the funds from May 21, 2004 to May 21,
2005. SCM and/or SISI had contractually agreed to waive its fees and/or absorb
expenses for the Class A shares of the Strong Advisor Select Fund and Strong
Advisor U.S. Value Fund and the Class B and Class C shares of the Strong Advisor
Endeavor Large Cap Fund, Strong
45
NOTES TO FINANCIAL STATEMENTS
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
Advisor Select Fund, Strong Advisor Large Company Core Fund and Strong Advisor
U.S. Value Fund until May 1, 2005, to keep total annual operating expenses at no
more than 2.50%. SCM and/or SISI had contractually agreed to waive its fees
and/or absorb expenses for the Class A shares of the Strong Advisor Large
Company Core Fund until May 1, 2005, to keep total annual operating expenses at
no more than 1.50%. SCM and/or SISI had contractually agreed to waive its fees
and/or absorb expenses for the Class K shares of the Strong Advisor Large
Company Core Fund and Strong Advisor U.S. Value Fund until May 1, 2005, to keep
total annual operating expenses at no more than 0.99%. 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 January 1, 2005
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
Reimbused Expenses
- --------------------------------------------------------------------------------
STRONG ADVISOR ENDEAVOR LARGE CAP FUND
FUND LEVEL $4,648
CLASS A 0
CLASS B 0
CLASS C 341
- --------------------------------------------------------------------------------
STRONG ADVISOR SELECT FUND
FUND LEVEL 10,743
CLASS A 0
CLASS B 0
CLASS C 0
- --------------------------------------------------------------------------------
STRONG ADVISOR LARGE COMPANY CORE FUND
FUND LEVEL 10,046
CLASS A 24,151
CLASS B 0
CLASS C 0
CLASS K 19,195
- --------------------------------------------------------------------------------
STRONG ADVISOR U.S. VALUE FUND
FUND LEVEL 39,294
CLASS A 0
CLASS B 0
CLASS C 0
CLASS K 24,430
CLASS Z 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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
ENDEAVOR LARGE CAP FUND $ 24,512,687 $ 22,533,964
- --------------------------------------------------------------------------------
ENDEAVOR SELECT FUND 74,868,121 47,294,029
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 80,403,368 97,253,758
- --------------------------------------------------------------------------------
U.S. VALUE FUND 62,389,973 41,176,535
46
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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 June 30, 2005,
there were no borrowings by the Large Cap Stock Funds under either agreement.
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 Strong 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 imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
47
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities and information
regarding how to obtain 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 complete portfolio holdings for each Fund are publicly available on
the Funds' web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' web site on a monthly, seven-day or more
delayed basis. Each 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, each Fund's Form N-Q may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC, and at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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 None
62 Finance, 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, None
71 President of Richard M. Leach
Associates (a financial
consulting firm).
- ---------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee since 1996 Senior Counselor to the None
53 public 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
65 Willeke & Daniels.
- ---------------------------------------------------------------------------------------------------------
48
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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 None
36 Wells 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.
- ---------------------------------------------------------------------------------------------------------
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 June 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.
49
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
ENDEAVOR LARGE CAP FUND, ENDEAVOR SELECT FUND, LARGE COMPANY CORE FUND AND U.S.
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 Endeavor Large Cap Fund, Endeavor Select Fund, Large
Company Core Fund and U.S. Value Fund (the "Funds"); (ii) an investment
sub-advisory agreement with Wells Capital Management Incorporated ("Wells
Capital Management") for the Endeavor Large Cap Fund, Endeavor Select Fund and
U.S. Value Fund; and (iii) an investment sub-advisory agreement with Matrix
Asset Advisors, Inc. ("Matrix") for the Large Company Core Fund. The investment
advisory agreements with Funds Management and the investment sub-advisory
agreements with Wells Capital Management and Matrix (the "Sub-Advisers"), 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 the Sub-Advisers, 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
- --------------------------------------------------------------------------------
Advisor Endeavor Large Cap Fund* Endeavor Large Cap Fund
- --------------------------------------------------------------------------------
Advisor Select Fund* Endeavor Select Fund
- --------------------------------------------------------------------------------
Advisor Large Company Core Fund* Large Company Core Fund
Value Fund
- --------------------------------------------------------------------------------
Advisor U.S. Value Fund* U.S. Value Fund
Strategic Value 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 the Sub-Advisers under the Advisory Agreements.
Responses of Funds Management and the Sub-Advisers 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 the Sub-Advisers.
The Board also considered the ability of Funds Management and the
Sub-Advisers, 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 Funds Management's and each Sub-Adviser'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 the Sub-Advisers. 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-advisers.
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
Funds by Funds Management and the Sub-Advisers.
50
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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 was better than, or not
appreciably below, the median performance of each Fund's Peer Group for all time
periods.
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 Funds' net operating expense ratios were lower
than, or not appreciably higher than, the Funds' Peer Groups' 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 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 payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administration services covered by the administration fee
rates. The Board also reviewed and considered the contractual investment
sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds
Management to the Sub-Advisers 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 Peer Group. In addition, the Board 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 each Fund's respective 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 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 relationship
with the Endeavor Large Cap Fund, Endeavor Select Fund and U.S. Value Fund was
not a material factor in determining whether to renew the agreements. The Board
considered that the sub-advisory fees paid to Matrix had been negotiated by
Funds Management on an arms length basis and was not a material factor in
determining whether to renew the agreements.
ECONOMIES OF SCALE
- --------------------------------------------------------------------------------
The Board received and considered information regarding the potential
realization of any 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 in 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 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 the
Sub-Advisers 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 the
Sub-Advisers, giving effect to differences in services covered by such fee
rates.
51
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS
- --------------------------------------------------------------------------------
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
and the Sub-Advisers 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 the Sub-Advisers with the Funds and
benefits potentially derived from an increase in the business of Funds
Management and the Sub-Advisers 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 or the Sub-Advisers and their
affiliates).
The Board also considered the policies of the Funds in achieving 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 the Sub-Advisers 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 the Sub-Advisers 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 the Sub-Advisers,
and met with various management representatives and portfolio managers, 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
Funds was in the best interest of the Funds and their shareholders. Accordingly,
the Board unanimously approved the continuation of the Advisory Agreements.
52
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 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
53
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 www.wellsfargo.com/advantagefunds RT51959 08-05
Advantage Funds, LLC. SLCFLD/SAR120 06-05
All rights reserved.
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 2005
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND
WELLS FARGO ADVANTAGE DIVIDEND INCOME FUND
WELLS FARGO ADVANTAGE GROWTH FUND
WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND
WELLS FARGO ADVANTAGE LARGE CAP GROWTH FUND
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to Shareholders ...................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Capital Growth Fund ..................................................... 2
Dividend Income Fund .................................................... 4
Growth Fund ............................................................. 6
Growth and Income Fund .................................................. 8
Large Cap Growth Fund ................................................... 10
Fund Expenses ............................................................... 12
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Capital Growth Fund ..................................................... 14
Dividend Income Fund .................................................... 17
Growth Fund ............................................................. 21
Growth and Income Fund .................................................. 25
Large Cap Growth Fund ................................................... 27
Financial Statements
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities .................................... 30
Statements of Operations ................................................ 32
Statements of Changes in Net Assets ..................................... 34
Financial Highlights .................................................... 40
Notes to Financial Highlights ........................................... 44
Notes to Financial Statements ............................................... 45
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Other Information ........................................................... 54
- --------------------------------------------------------------------------------
List of Abbreviations ....................................................... 59
- --------------------------------------------------------------------------------
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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 LARGE CAP STOCK 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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS semi-annual
report for the period ended June 30, 2005. On the following pages, you will find
a discussion of each Fund, including performance highlights, the Fund managers'
strategic outlook, and information about the Fund's portfolio.
ECONOMIC EXPANSION CONTINUES
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing it upward
during the reporting period. The consumer price index (CPI) rose at around a 3%
rate over the twelve months ended June 30, 2005. The core CPI, which excludes
the volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate -- its principal policy tool -- from 1% to
3.25%. Additional increases in this rate are expected during the rest of 2005.
Bond yields, however, did not increase with the federal funds rate and, as a
result, mortgage rates remained unusually low and the housing sector remained
very strong.
STOCKS: SIDEWAYS PATTERN
- --------------------------------------------------------------------------------
After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of the year. The S&P 500 Index was
around 1200 as the year began. It ended the first half of 2005 at 1191. Strong
corporate earnings have helped the markets, while record prices for crude oil
and concerns of a slowdown in worldwide economic growth have capped and often
reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well during most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sectors recovered and again produced
solid returns. Municipal bonds generally performed better than most taxable
sectors during 2005, but they lagged behind the rally in U.S. Treasuries in May
and June. Overall, by the end of the second quarter of 2005, municipal yields
were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
- --------------------------------------------------------------------------------
The economy has shown remarkably steady growth over the reporting period
- -- growth that has been sufficient to bring the unemployment rate down to 5.0%,
the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Thomas J. Pence, CFA 11/3/1997
Erik J. Voss, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.84%(1) for the six-month
period ending June 30, 2005, outperforming its benchmark, the S&P 500 Index2,
which returned (0.81)% 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 ON THE FUND'S WEB SITE
- -WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADMINISTRATOR 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 Fund's performance was due primarily to favorable stock selection
within the energy, health care, and consumer staples sectors. Demand within the
oil industry continued to strengthen during the period, and we were well
positioned within this group. The Fund's performance was bolstered by its
holdings in Transocean Incorporated, a provider of offshore contract drilling
services, and Valero Energy Corporation, an oil refiner.
Within health care, managed-care companies such as UnitedHealth Group
Incorporated and WellPoint Incorporated delivered stable growth, as both
companies benefited from strong pricing and increased enrollment. Our position
in Alcon Incorporated, a dominant player in eye-care products, also offered
attractive returns. The firm posted solid growth in its pharmaceutical and
surgical divisions, resulting from its increased presence in emerging markets.
Additionally, we continued to identify growth opportunities within all sectors
including the consumer staples sector, where drug retailer CVS Corporation
provided solid results for the Fund.
In general, our information technology holdings detracted from the Fund's
returns during the period, as corporations were slow to spend on technology
initiatives. As a result, software companies, such as Check Point Software
Technologies Limited, performed poorly during the period. These lackluster
results were marginally offset by strength in specific technology positions. For
example, Marvell Technology Group Limited delivered solid results as the firm
continued to gain market share within the semi-conductor industry. Our position
in Texas Instruments Incorporated also provided strong returns as the company
continued to benefit from demand for evolving cell phone technology.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We continued to identify growth opportunities in the health care and
energy sectors. As a result, we increased our exposure in health care by adding
UnitedHealth Group to the portfolio, and we enlarged our positions in Alcon and
Medtronic Incorporated, health care equipment companies.
We selectively added to our exposure in the energy sector by investing in
Valero Energy, one of the top U.S. refining companies, and increasing our
position in Canadian Natural Resources Limited, an exploration, development, and
production company of crude and natural gas. In addition, we decreased our
technology position by eliminating specific communications equipment and
semi-conductor holdings, although we continued to invest in core growth firms.
Furthermore, we significantly decreased our exposure to materials companies,
specifically in metals and mining, chemicals, and packaging.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We expect corporate-profit growth to continue into the second half of
2005. Although consumer spending has proven resilient, we expect to become more
selective about identifying companies that can generate growth even if broad
consumer spending slows.
In addition, we are diligently reviewing our current holdings and
potential new investments to ensure that these companies can produce sustainable
growth potential despite high energy prices and rising short-term interest
rates. While growth stocks may be challenged by current market conditions, we
remain focused on firms that are well positioned to produce respectable earnings
and cash flow growth with reasonable valuations. We also remain committed to
building a portfolio with a balanced mix of core and developing growth
opportunities a strategy that we believe has served the Fund's investors well in
both robust and weak economic periods.
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. 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
EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 CAPITAL GROWTH 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.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year Life of Fund
- ---------------------------------------------------------------------------------------------------------------------
Capital Growth Fund - Administrator Class (Incept. Date 6/30/2003) 1.09 11.13 1.15 9.78
- ---------------------------------------------------------------------------------------------------------------------
Capital Growth Fund - Institutional Class (Incept. Date 4/11/2005) 1.15 11.20 1.17 9.77
- ---------------------------------------------------------------------------------------------------------------------
Capital Growth Fund - Investor Class (Incept. Date 11/03/1997) 0.84 10.56 0.95 9.63
- ---------------------------------------------------------------------------------------------------------------------
Benchmark
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 5.08
- ---------------------------------------------------------------------------------------------------------------------
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Beta** 1.15
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 26.80x
- --------------------------------------------------------------------------------
Price to Book Ratio 3.27x
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $19.46
- --------------------------------------------------------------------------------
Portfolio Turnover 121%
- --------------------------------------------------------------------------------
**A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS
1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 12%
Consumer Staples 6%
Energy 11%
Financials 8%
Health Care 24%
Industrials 6%
Information Technology 27%
Materials 2%
Telecommunication Services 4%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------
General Electric Company 4.88%
- --------------------------------------------------------------------------
WellPoint Incorporated 4.88%
- --------------------------------------------------------------------------
Sprint Corporation 4.53%
- --------------------------------------------------------------------------
Dell Incorporated 4.36%
- --------------------------------------------------------------------------
CVS Corporation 3.63%
- --------------------------------------------------------------------------
UnitedHealth Group Incorporated 3.32%
- --------------------------------------------------------------------------
EMC Corporation 3.10%
- --------------------------------------------------------------------------
Medtronic Incorporated 3.09%
- --------------------------------------------------------------------------
Yahoo! Incorporated 3.07%
- --------------------------------------------------------------------------
Alcon Incorporated 2.96%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
CAPITAL GROWTH FUND -
INVESTOR CLASS S&P 500 INDEX
11/3/1997 10,000 10,000
11/30/1997 9,940 10,463
12/31/1997 10,106 10,642
1/31/1998 10,197 10,760
2/28/1998 10,879 11,535
3/31/1998 11,158 12,126
4/30/1998 11,532 12,247
5/31/1998 11,350 12,037
6/30/1998 11,227 12,526
7/31/1998 10,954 12,393
8/31/1998 9,706 10,603
9/30/1998 9,990 11,282
10/31/1998 10,550 12,199
11/30/1998 11,162 12,938
12/31/1998 11,605 13,683
1/31/1999 12,127 14,255
2/28/1999 12,014 13,812
3/31/1999 12,781 14,365
4/30/1999 13,399 14,921
5/31/1999 13,008 14,569
6/30/1999 13,791 15,377
7/31/1999 13,709 14,897
8/31/1999 13,770 14,824
9/30/1999 13,584 14,418
10/31/1999 14,453 15,330
11/30/1999 15,323 15,641
12/31/1999 17,657 16,562
1/31/2000 17,815 15,730
2/29/2000 19,177 15,433
3/31/2000 19,689 16,941
4/30/2000 18,581 16,432
5/31/2000 17,942 16,096
6/30/2000 19,285 16,492
7/31/2000 18,635 16,235
8/31/2000 21,064 17,243
9/30/2000 20,467 16,333
10/31/2000 19,270 16,263
11/30/2000 16,855 14,982
12/31/2000 18,248 15,056
1/31/2001 18,918 15,589
2/28/2001 17,333 14,169
3/31/2001 16,557 13,272
4/30/2001 17,771 14,302
5/31/2001 17,734 14,398
6/30/2001 16,891 14,048
7/31/2001 16,620 13,910
8/31/2001 16,152 13,040
9/30/2001 15,101 11,987
10/31/2001 15,585 12,216
11/30/2001 16,243 13,152
12/31/2001 16,610 13,268
1/31/2002 16,248 13,074
2/28/2002 16,061 12,822
3/31/2002 16,664 13,304
4/30/2002 16,350 12,498
5/31/2002 15,659 12,406
6/30/2002 14,467 11,523
7/31/2002 13,961 10,625
8/31/2002 14,037 10,694
9/30/2002 13,034 9,533
10/31/2002 14,051 10,371
11/30/2002 14,560 10,981
12/31/2002 13,605 10,336
1/31/2003 13,260 10,066
2/28/2003 13,107 9,915
3/31/2003 13,461 10,010
4/30/2003 14,483 10,835
5/31/2003 15,109 11,405
6/30/2003 15,275 11,551
7/31/2003 15,683 11,755
8/31/2003 15,926 11,984
9/30/2003 15,658 11,857
10/31/2003 16,552 12,527
11/30/2003 16,667 12,637
12/31/2003 17,063 13,300
1/31/2004 17,484 13,544
2/29/2004 17,688 13,732
3/31/2004 17,561 13,525
4/30/2004 17,446 13,313
5/31/2004 17,995 13,495
6/30/2004 18,289 13,757
7/31/2004 17,459 13,302
8/31/2004 17,139 13,356
9/30/2004 18,110 13,500
10/31/2004 18,557 13,706
11/30/2004 19,489 14,261
12/31/2004 20,051 14,746
1/31/2005 19,247 14,386
2/28/2005 19,323 14,689
3/31/2005 19,172 14,429
4/30/2005 18,711 14,156
5/31/2005 19,938 14,606
6/30/2005 20,220 14,626
- --------------------------------------------------------------------------------
Performance shown for the Administrator Class shares of the WELLS FARGO
ADVANTAGE CAPITAL GROWTH FUND for periods prior to April 11, 2005, reflects the
performance of the Class K shares of the Strong Large Company Growth Fund,its
predecessor fund, and for periods prior to June 30, 2003, reflects the
performance of the Investor Class shares of the Strong Large Company Growth
Fund, and for periods prior to September 16, 2002, reflects the performance of
the Rockhaven Premier Dividend Fund. Performance shown for the Institutional
Class shares of the WELLS FARGO ADVANTAGE CAPITAL GROWTH FUND for periods prior
to April 11, 2005, reflects the performance of the Investor Class shares of the
Strong Large Company Growth Fund, its predecessor fund, and for periods prior to
September 16, 2002, reflects the performance of the Rockhaven Premier Dividend
Fund, and includes expenses that are not applicable to and are higher than those
of the Institutional Class shares. The Investor Class shares annual returns are
substantially similar to what the Institutional Class shares returns would be
because the shares are invested in the same portfolio of securities and the
annual returns differ only to the extent that the Classes do not have the same
fees and expenses. Performance shown for the Investor Class shares of the WELLS
FARGO ADVANTAGE CAPITAL GROWTH FUND for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Large
Company Growth Fund,its predecessor fund, and for periods prior to September
16, 2002, reflects the performance of the Rockhaven Premier Dividend Fund,
adjusted to reflect Investor Class expenses. The Rockhaven Premier Dividend
Fund's investment strategy emphasized investments in convertible securities.
Effective at the close of business of April 8, 2005, certain Strong Funds were
reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index, with
each stock's weight in the Index proportionate to its market value. You cannot
invest directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE CAPITAL
GROWTH FUND Investor Class shares for the life of the Fund with the S&P 500
Index. The chart assumes a hypothetical investment of $10,000 in Investor Class
shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE DIVIDEND INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE DIVIDEND INCOME FUND (the Fund) seeks
above-average dividend income and long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Jennifer C. Newell, CFA 7/1/1993
Roger D. Newell
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 3.72%(1) for the six-month
period ending June 30, 2005, outperforming its benchmark, the S&P 500 Index(2),
which returned (0.81)% 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 ON THE FUNDS' WEB SITE
- -WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
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?
- --------------------------------------------------------------------------------
During the period, electric utility, insurance, and capital goods stocks
made the strongest contributions to the Fund's overall performance relative to
the benchmark. In recent years, electric utility companies have reduced
corporate debt, divested unprofitable investments, and focused their resources
on core operations. These actions generated improved earnings, which, along with
intensifying merger speculation, fueled optimism for the group. Within capital
goods, strong demand for commercial aircraft and defense products drove up the
stock prices of the Fund's holdings in this overweighted area. Stock selection
in the insurance group and an underweighting in media and diversified financial
services also made important contributions to relative performance.
On the negative side, food and beverage stocks hurt the Fund's relative
performance largely because rising raw material costs squeezed profit margins.
The Fund had mixed results in the energy sector. Although petroleum companies
were one of the strongest contributors to the Fund's absolute performance, an
underweighting in positive-performing drilling and exploration companies hurt
relative performance. We avoid investments in drilling and exploration
companies, which typically have low or no dividend yields.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
After April 11, 2005, the Fund's portfolio weighting in the petroleum
group increased from 12% to 20%, as a large number of petroleum stocks from the
Strong Energy Fund moved into the newly established WELLS FARGO ADVANTAGE
DIVIDEND INCOME FUND. The combination also increased holdings among a broader
array of securities.
In addition, we began adding industries with attractive valuations based
on our relative yield investment strategy, which uses the dividend yield of a
stock relative to that of the market to identify investment opportunities in the
common stocks of large, U.S. listed dividend paying companies. One such area was
pharmaceuticals, which is currently out of favor but appears attractive to us on
a long-term basis. Drug companies currently face challenges in building product
pipelines, competing with generic drug makers, and managing product litigation.
However, we believe the group's long-term potential is evidenced by positive
fundamentals such as rising demand from an aging population and strong research
and development capabilities. We purchased several high quality, dividend paying
companies such as Pfizer Incorporated, Eli Lilly & Company, and Johnson &
Johnson, as well as others, resulting in a modestly higher weighting in
pharmaceutical stocks.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We will employ our relative yield investment strategy to identify
undervalued areas of the market that offer significant long-term investment
opportunities as well as an above market current dividend yield. For example, we
will continue to add to our weighting in pharmaceutical companies as
opportunities present themselves. Furthermore, although we will remain invested
in the petroleum group, we may begin to reduce positions that have appreciated
significantly and pay no or low dividends.
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. INVESTMENT STRATEGIES THAT EMPHASIZE 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 FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 DIVIDEND INCOME FUND.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year 10-Year
- -----------------------------------------------------------------------------------------------------------
Dividend Income Fund - Administrator Class 3.98 16.29 5.19 10.59
- -----------------------------------------------------------------------------------------------------------
Dividend Income Fund - Investor Class 3.72 15.82 4.89 10.43
- -----------------------------------------------------------------------------------------------------------
Benchmark
- -----------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 9.94
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Beta** 0.66
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 15.70x
- --------------------------------------------------------------------------------
Price to Book Ratio 2.50x
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $23.10
- --------------------------------------------------------------------------------
Portfolio Turnover 41%
- --------------------------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 6%
Consumer Staples 10%
Energy 19%
Financials 26%
Health Care 5%
Industrials 11%
Information Technology 6%
Materials 4%
Telecommunication Services 8%
Utilities 5%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Citigroup Incorporated 4.41%
- --------------------------------------------------------------------------------
Exxon Mobil Corporation 3.66%
- --------------------------------------------------------------------------------
ConocoPhillips 3.27%
- --------------------------------------------------------------------------------
Bank of America Corporation 2.87%
- --------------------------------------------------------------------------------
General Electric Company 2.86%
- --------------------------------------------------------------------------------
Intel Corporation 2.31%
- --------------------------------------------------------------------------------
Procter & Gamble Company 2.27%
- --------------------------------------------------------------------------------
E.I. du Pont de Nemours and Company 2.24%
- --------------------------------------------------------------------------------
Allstate Corporation 2.10%
- --------------------------------------------------------------------------------
Royal Dutch Petroleum Company 2.10%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
DIVIDEND INCOME
FUND - INVESTOR CLASS S&P 500 INDEX
6/30/1995 10,000 10,000
7/31/1995 10,170 10,331
8/31/1995 10,341 10,357
9/30/1995 10,936 10,794
10/31/1995 11,174 10,756
11/30/1995 11,374 11,227
12/31/1995 12,062 11,443
1/31/1996 12,292 11,832
2/29/1996 12,081 11,943
3/31/1996 11,973 12,058
4/30/1996 11,973 12,235
5/31/1996 12,021 12,550
6/30/1996 12,467 12,598
7/31/1996 11,823 12,042
8/31/1996 11,891 12,296
9/30/1996 12,029 12,988
10/31/1996 12,422 13,346
11/30/1996 12,914 14,353
12/31/1996 13,071 14,069
1/31/1997 13,311 14,948
2/28/1997 13,405 15,065
3/31/1997 13,037 14,447
4/30/1997 13,132 15,309
5/31/1997 13,782 16,240
6/30/1997 14,285 16,967
7/31/1997 14,581 18,317
8/31/1997 14,053 17,291
9/30/1997 14,859 18,238
10/31/1997 14,870 17,629
11/30/1997 15,998 18,445
12/31/1997 16,674 18,761
1/31/1998 16,595 18,969
2/28/1998 16,753 20,336
3/31/1998 18,220 21,376
4/30/1998 17,530 21,591
5/31/1998 17,202 21,221
6/30/1998 17,546 22,082
7/31/1998 17,170 21,848
8/31/1998 16,760 18,692
9/30/1998 18,404 19,890
10/31/1998 18,690 21,506
11/30/1998 19,160 22,809
12/31/1998 20,067 24,122
1/31/1999 19,362 25,131
2/28/1999 18,801 24,350
3/31/1999 18,663 25,324
4/30/1999 20,560 26,304
5/31/1999 20,920 25,684
6/30/1999 21,240 27,108
7/31/1999 21,180 26,263
8/31/1999 20,805 26,133
9/30/1999 20,570 25,418
10/31/1999 20,898 27,025
11/30/1999 20,594 27,575
12/31/1999 20,184 29,198
1/31/2000 20,581 27,731
2/29/2000 18,760 27,207
3/31/2000 20,911 29,867
4/30/2000 21,600 28,968
5/31/2000 22,193 28,376
6/30/2000 21,243 29,075
7/31/2000 21,548 28,621
8/31/2000 23,044 30,398
9/30/2000 24,624 28,793
10/31/2000 24,109 28,671
11/30/2000 23,970 26,412
12/31/2000 25,699 26,542
1/31/2001 24,171 27,483
2/28/2001 24,436 24,979
3/31/2001 24,488 23,397
4/30/2001 26,203 25,214
5/31/2001 26,025 25,383
6/30/2001 24,684 24,766
7/31/2001 24,298 24,522
8/31/2001 23,941 22,988
9/30/2001 23,105 21,132
10/31/2001 23,030 21,535
11/30/2001 22,447 23,187
12/31/2001 22,821 23,390
1/31/2002 22,581 23,049
2/28/2002 22,626 22,604
3/31/2002 23,537 23,454
4/30/2002 22,481 22,033
5/31/2002 22,497 21,871
6/30/2002 21,284 20,314
7/31/2002 19,720 18,731
8/31/2002 19,827 18,853
9/30/2002 17,553 16,806
10/31/2002 18,292 18,284
11/30/2002 18,831 19,359
12/31/2002 18,310 18,223
1/31/2003 17,784 17,746
2/28/2003 17,336 17,479
3/31/2003 17,494 17,647
4/30/2003 18,921 19,102
5/31/2003 19,852 20,107
6/30/2003 20,111 20,364
7/31/2003 20,313 20,723
8/31/2003 20,267 21,127
9/30/2003 20,005 20,903
10/31/2003 21,253 22,085
11/30/2003 21,440 22,279
12/31/2003 22,795 23,446
1/31/2004 22,967 23,877
2/29/2004 23,311 24,208
3/31/2004 23,063 23,843
4/30/2004 22,577 23,470
5/31/2004 22,828 23,791
6/30/2004 23,281 24,253
7/31/2004 22,919 23,451
8/31/2004 23,281 23,545
9/30/2004 23,651 23,800
10/31/2004 24,314 24,163
11/30/2004 25,529 25,141
12/31/2004 25,996 25,996
1/31/2005 26,107 25,362
2/28/2005 27,202 25,896
3/31/2005 26,791 25,438
4/30/2005 26,395 24,955
5/31/2005 26,809 25,749
6/30/2005 26,964 25,786
- --------------------------------------------------------------------------------
(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 shares of the WELLS FARGO
ADVANTAGE DIVIDEND INCOME FUND for periods prior to April 11, 2005, reflects the
performance of the Class K shares of the Strong Dividend Income Fund, its
predecessor fund, and for periods prior to December 31, 2001, reflects the
performance of the Investor Class shares of the Strong Dividend Income
Fund. Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE DIVIDEND INCOME FUND for periods prior to April 11, 2005, reflects the
performance of the Investor Class shares of the Strong Dividend Income Fund, its
predecessor fund. For periods prior to December 8, 2001, performance is based on
the Fund's previous investment strategy as a non-diversified utilities
fund. Effective at the close of business on April 8, 2005, certain Strong Funds
were reorganized into certain WELLS FARGO ADVANTAGE FUNDS.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE DIVIDEND
INCOME FUND Investor Class shares for the most recent ten years with the S&P 500
Index.The chart assumes a hypothetical investment of $10,000 in the Investor
Class shares and reflects all operating expenses.
5
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GROWTH FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE GROWTH FUND (the Fund) seeks long-term capital
appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Brandon M. Nelson, CFA 12/31/1993
Bruce C. Olson, CFA
Thomas C. Ognar, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (1.86)%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the S&P 500
Index(2), which returned (0.81)% 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 ON 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 Fund benefited from strong performance among individual stocks in a
wide variety of sectors, including energy, information technology, and health
care. This performance is a result of our discipline of finding individual
stocks that have attractive growth opportunities. In addition, the Fund also
benefited from holdings in the retail group. We dedicate most of our human
resource efforts to company specific research and we try to find these
opportunities in up, down, or sideways markets.
The Fund's negative performers generally fit into two categories. The
first was past winners whose stock price corrected during the period, including
eBay Incorporated, First Marblehead Corporation, PETCO Animal Supplies
Incorporated, and Rockwell Automation Incorporated. The second consisted of
technology stocks including TIBCO Software Incorporated, Cognos Incorporated,
and Polycom Incorporated. Sustained growth has been challenging for technology
companies in an IT environment that is still recovering from the overindulgent
spending seen at the beginning of this decade.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We made two major strategic changes to the portfolio during the reporting
period. Both of these changes were driven by our bottom-up -- stock-by-stock --
approach to stock picking and our diligent pursuit of growth companies we
believe have the potential to gain considerable market share. As such, we
de-emphasized stocks whose prospects were substantially tied to the overall
economy, resulting in a lower weighting in financials and capital goods stocks.
We also increased the Fund's exposure to secular growth stocks such as Urban
Outfitters Incorporated, P.F. Chang's China Bistro Incorporated, and NAVTEQ
Corporation.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
During the past year, the stock market has been stuck in a trading range,
as investors have been wary of rising interest rates and soaring oil prices.
However, we believe there are many reasons to be optimistic. Despite the
market's recent lackluster performance, earnings growth has been strong and
earnings expectations remain healthy. Moreover, long-term interest rates have
been flat or declining, while the U.S. economy has continued to create jobs. In
this environment, value stocks have continued to outperform growth stocks. Given
this positive backdrop, we are finding opportunities to invest in growth stocks
at attractive valuations as we are anticipating a reversal of the value stock
outperforming growth stock trend.
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. 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
EMPHASIZE 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 SMALL COMPANY SECURITIES AND FOREIGN INVESTMENTS RISK. CONSULT THE
FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 GROWTH 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 shares of the WELLS FARGO ADVANTAGE
GROWTH FUND for periods prior to April 11, 2005, reflects the performance of the
Class C shares of the Strong Growth Fund, its predecessor fund, and for periods
prior to December 26, 2002, reflects the performance of the Investor Class
shares of the Strong Growth Fund, adjusted to reflect Class C sales charges and
expenses. Performance shown for the Administrator Class shares of the WELLS
FARGO ADVANTAGE GROWTH FUND for periods prior to April 11, 2005, reflects the
performance of the Class K shares of the Strong Growth Fund, its predecessor
fund, and for periods prior to August 30, 2002, reflects the performance of the
Investor Class shares of the Strong Growth Fund. Performance shown for the
Advisor Class shares of the WELLS FARGO ADVANTAGE GROWTH FUND for periods prior
to April 11, 2005, reflects the performance of the Advisor Class shares of the
Strong Growth Fund,its predecessor fund,and for periods prior to February 24,
2000, reflects the performance of the Investor Class shares of the Strong Growth
Fund, adjusted to reflect Advisor Class expenses.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- -------------------------------------
6-Months* 1-Year 5-Year 10-Year 6-Months* 1-Year 5-Year 10-Year
- -----------------------------------------------------------------------------------------------------------------------
Growth Fund - Class C (2.95) 2.33 (10.83) 7.96 (1.95) 3.33 (10.83) 7.96
- -----------------------------------------------------------------------------------------------------------------------
Growth Fund - Administrator Class (1.68) 4.37 (9.68) 9.32
- -----------------------------------------------------------------------------------------------------------------------
Growth Fund - Advisor Class (1.82) 3.85 (10.11) 8.89
- -----------------------------------------------------------------------------------------------------------------------
Growth Fund - Institutional Class (1.65) 4.41 (9.43) 9.48
- -----------------------------------------------------------------------------------------------------------------------
Growth Fund - Investor Class (1.86) 3.83 (10.02) 9.11
- -----------------------------------------------------------------------------------------------------------------------
Benchmark
- -----------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 9.94
- -----------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Beta** 1.15
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 28.40x
- --------------------------------------------------------------------------------
Price to Book Ratio 4.21x
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $6.76
- --------------------------------------------------------------------------------
Portfolio Turnover 110%
- --------------------------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS.THE BENCHMARK BETA IS
1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 19%
Consumer Staples 3%
Energy 9%
Financials 1%
Health Care 21%
Industrials 8%
Information Technology 33%
Materials 2%
Telecommunication Services 4%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Google Incorporated Class A 2.91%
- --------------------------------------------------------------------------------
Station Casinos Incorporated 2.59%
- --------------------------------------------------------------------------------
Yahoo! Incorporated 2.49%
- --------------------------------------------------------------------------------
Alliance Data Systems Corporation 2.41%
- --------------------------------------------------------------------------------
St. Jude Medical Incorporated 2.24%
- --------------------------------------------------------------------------------
Dick's Sporting Goods Incorporated 2.20%
- --------------------------------------------------------------------------------
Hughes Supply Incorporated 2.14%
- --------------------------------------------------------------------------------
NII Holdings Incorporated 2.09%
- --------------------------------------------------------------------------------
General Electric Company 2.06%
- --------------------------------------------------------------------------------
Dell Incorporated 2.05%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
GROWTH FUND -
INVESTOR CLASS S&P 500 INDEX
6/30/1995 10,000 10,000
7/31/1995 10,939 10,331
8/31/1995 10,931 10,357
9/30/1995 11,422 10,794
10/31/1995 10,989 10,756
11/30/1995 11,538 11,227
12/31/1995 11,820 11,443
1/31/1996 11,753 11,832
2/29/1996 12,207 11,943
3/31/1996 12,596 12,058
4/30/1996 13,720 12,235
5/31/1996 14,561 12,550
6/30/1996 13,891 12,598
7/31/1996 12,492 12,042
8/31/1996 12,976 12,296
9/30/1996 14,107 12,988
10/31/1996 13,936 13,346
11/30/1996 14,450 14,353
12/31/1996 14,127 14,069
1/31/1997 15,013 14,948
2/28/1997 14,204 15,065
3/31/1997 13,162 14,447
4/30/1997 13,553 15,309
5/31/1997 14,780 16,240
6/30/1997 15,492 16,967
7/31/1997 17,016 18,317
8/31/1997 16,594 17,291
9/30/1997 17,680 18,238
10/31/1997 17,016 17,629
11/30/1997 16,789 18,445
12/31/1997 16,819 18,761
1/31/1998 16,360 18,969
2/28/1998 17,737 20,336
3/31/1998 18,628 21,376
4/30/1998 18,509 21,591
5/31/1998 17,921 21,221
6/30/1998 19,565 22,082
7/31/1998 19,106 21,848
8/31/1998 16,066 18,692
9/30/1998 17,085 19,890
10/31/1998 17,214 21,506
11/30/1998 18,564 22,809
12/31/1998 21,357 24,122
1/31/1999 22,771 25,131
2/28/1999 21,642 24,350
3/31/1999 23,571 25,324
4/30/1999 23,618 26,304
5/31/1999 22,763 25,684
6/30/1999 24,749 27,108
7/31/1999 23,922 26,263
8/31/1999 24,188 26,133
9/30/1999 24,131 25,418
10/31/1999 26,630 27,025
11/30/1999 29,632 27,575
12/31/1999 37,387 29,198
1/31/2000 36,464 27,731
2/29/2000 47,567 27,207
3/31/2000 44,474 29,867
4/30/2000 39,253 28,968
5/31/2000 37,083 28,376
6/30/2000 40,532 29,075
7/31/2000 39,903 28,621
8/31/2000 44,663 30,398
9/30/2000 43,667 28,793
10/31/2000 38,677 28,671
11/30/2000 32,973 26,412
12/31/2000 33,935 26,542
1/31/2001 32,304 27,483
2/28/2001 27,525 24,979
3/31/2001 24,627 23,397
4/30/2001 26,471 25,214
5/31/2001 26,119 25,383
6/30/2001 25,731 24,766
7/31/2001 24,639 24,522
8/31/2001 22,632 22,988
9/30/2001 19,772 21,132
10/31/2001 20,361 21,535
11/30/2001 22,017 23,187
12/31/2001 22,264 23,390
1/31/2002 21,748 23,049
2/28/2002 20,501 22,604
3/31/2002 21,534 23,454
4/30/2002 20,640 22,033
5/31/2002 20,161 21,871
6/30/2002 18,902 20,314
7/31/2002 17,227 18,731
8/31/2002 17,038 18,853
9/30/2002 16,094 16,806
10/31/2002 17,164 18,284
11/30/2002 18,096 19,359
12/31/2002 16,635 18,223
1/31/2003 16,295 17,746
2/28/2003 16,194 17,479
3/31/2003 16,509 17,647
4/30/2003 17,517 19,102
5/31/2003 18,726 20,107
6/30/2003 19,053 20,364
7/31/2003 19,846 20,723
8/31/2003 20,715 21,127
9/30/2003 20,060 20,903
10/31/2003 21,534 22,085
11/30/2003 21,886 22,279
12/31/2003 21,647 23,446
1/31/2004 22,176 23,877
2/29/2004 22,415 24,208
3/31/2004 22,113 23,843
4/30/2004 21,622 23,470
5/31/2004 22,415 23,791
6/30/2004 23,032 24,253
7/31/2004 21,332 23,451
8/31/2004 20,791 23,545
9/30/2004 21,660 23,800
10/31/2004 22,075 24,163
11/30/2004 23,435 25,141
12/31/2004 24,367 25,996
1/31/2005 23,372 25,362
2/28/2005 23,574 25,896
3/31/2005 23,209 25,438
4/30/2005 22,075 24,955
5/31/2005 23,637 25,749
6/30/2005 23,914 25,786
- --------------------------------------------------------------------------------
Performance shown for the Institutional Class shares of the WELLS FARGO
ADVANTAGE GROWTH FUND for periods prior to April 11, 2005, reflects the
performance of the Institutional Class shares of the Strong Growth Fund, its
predecessor fund, and for periods prior to February 24, 2000, reflects the
performance of the Investor Class shares of the Strong Growth Fund. Performance
shown for the Investor Class shares of the WELLS FARGO ADVANTAGE GROWTH FUND for
periods prior to April 11, 2005, reflects the performance of the Investor Class
shares of the Strong Growth 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 S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE GROWTH FUND
Investor Class shares for the most recent ten years with the S&P 500 Index. The
chart assumes a hypothetical investment of $10,000 in the Investor Class shares
and reflects all operating expenses.
7
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND (the Fund) seeks total
return, comprised of long-term capital appreciation and current income.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Matrix Asset Advisors, Inc.
FUND MANAGER INCEPTION DATE
David A. Katz, CFA 12/29/1995
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (5.54)%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the S&P 500
Index(2), which returned (0.81)% 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 ON 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?
- --------------------------------------------------------------------------------
Compared with the benchmark, the Fund's performance lagged during the
period primarily because of our emphasis on certain sectors and industries of
the market that were out of favor throughout the first half of the year. While
the individual companies that the Fund owned generally exhibited strong
operating performance and were leaders in their respective industries, many of
our stocks underperformed market indices.
During much of the period, investors were concerned that the economy would
slow because of high energy prices and rising interest rates. These concerns had
a substantial negative impact on many of our holdings, particularly in the
financial and information technology sectors. For example, Citigroup
Incorporated and JP Morgan Chase & Company derive a significant proportion of
revenue from activities not directly impacted by the near-term movement of
interest rates, but were adversely impacted because of concerns about the impact
of interest rates on financial performance.
With the exception of companies such as Morgan Stanley and Symbol
Technologies Incorporated that experienced short-term operating issues, and
which therefore declined substantially during the quarter, most of our
underperformance can be attributed to a focus on sectors that were out of favor
and to under-representation in sectors that were in favor. On the positive side,
we had attractive performance from such stocks as technology bellwethers Intel
Corporation and Nokia Oyj, and pharmacy retailer CVS Corporation.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Our strategy is not to mirror benchmark sector weightings. Rather, we seek
to include our best investment ideas. This might result in our being over, under
or not represented in a particular sector at various times. After taking over
the Fund on January 1, 2005, we repositioned it with an eye toward upgrading the
quality of its holdings which we feel will enable it to participate more
meaningfully in the next leg of the economic recovery. We increased exposure to
sectors where we continued to find what we believe are attractive growth
opportunities at reasonable valuations, including financials, health care, and
information technology.
Our focus on these sectors is based on several factors including the
cyclical prospects for the sector and the industry and the attractive price at
which many of these companies can now be purchased. Our strategy leads us to
strong companies experiencing short-term problems, which has negatively impacted
stock price. We believe this opportunistic focus should bear positive results as
the year unfolds.
We also scaled back weightings in sectors we perceived to be trading above
reasonable valuation levels. Again, we are concerned that many companies within
strong performing sectors year-to-date have reached and surpassed fair value
based on fundamentals, and are increasingly vulnerable to a price correction. We
seek to take profits while stocks are still strong, before they have had a
chance to give back some or all of their gains.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We are optimistic for the balance of the year. We base that optimism on
the growing evidence that the U.S. economy is more resilient and capable of
sustained growth than many investors have recently assumed. We do not believe
that energy prices will continue to move much higher; rather, we believe that
most of the upside has already been captured and there is more likelihood of
downward movement over the next twelve months. We also do not believe that
interest rates will be raised to a level that will stifle economic growth.
Finally, near the end of the period, the share prices of many of our
holdings began to strengthen. We will move forward and diligently apply the same
methodology of picking quality stocks with attractive growth prospects relative
to their valuations.
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. 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
EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 GROWTH AND 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.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund - Administrator Class (Incept. Date
12/31/2001) (5.37) 0.83 (6.25) 8.66
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund - Advisor Class (Incept. Date
2/29/2000) (5.54) 0.37 (6.55) 8.35
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund - Institutional Class (Incept. Date
2/29/2000) (5.19) 1.07 (5.90) 8.89
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund - Investor Class (Incept. Date
12/29/1995) (5.54) 0.38 (6.52) 8.49
- ------------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 8.93
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Beta** 0.95
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 23.85x
- --------------------------------------------------------------------------------
Price to Book Ratio 2.97x
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $46.93
- --------------------------------------------------------------------------------
Portfolio Turnover 134%
- --------------------------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 12%
Consumer Staples 4%
Energy 6%
Financials 30%
Health Care 16%
Industrials 8%
Information Technology 24%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
MedImmune Incorporated 4.44%
- ----------------------------------------------------------------
Intel Corporation 4.33%
- ----------------------------------------------------------------
Morgan Stanley 3.99%
- ----------------------------------------------------------------
Microsoft Corporation 3.99%
- ----------------------------------------------------------------
Citigroup Incorporated 3.98%
- ----------------------------------------------------------------
General Electric Company 3.87%
- ----------------------------------------------------------------
Pfizer Incorporated 3.87%
- ----------------------------------------------------------------
American International Group Incorporated 3.81%
- ----------------------------------------------------------------
Bank of America Corporation 3.78%
- ----------------------------------------------------------------
Nokia Oyj ADR 3.76%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
GROWTH AND INCOME FUND -
INVESTOR CLASS S&P 500 INDEX
12/29/1995 10,000 10,000
12/31/1995 10,000 10,000
1/31/1996 10,360 10,340
2/29/1996 10,930 10,436
3/31/1996 11,145 10,537
4/30/1996 11,426 10,692
5/31/1996 11,686 10,967
6/30/1996 11,556 11,009
7/31/1996 11,105 10,523
8/31/1996 11,446 10,745
9/30/1996 12,078 11,349
10/31/1996 12,419 11,662
11/30/1996 13,222 12,543
12/31/1996 13,191 12,295
1/31/1997 13,735 13,062
2/28/1997 13,805 13,165
3/31/1997 13,306 12,625
4/30/1997 14,021 13,378
5/31/1997 14,746 14,192
6/30/1997 15,469 14,827
7/31/1997 16,952 16,006
8/31/1997 16,165 15,110
9/30/1997 17,091 15,937
10/31/1997 16,505 15,406
11/30/1997 16,808 16,118
12/31/1997 17,199 16,395
1/31/1998 17,189 16,576
2/28/1998 18,380 17,771
3/31/1998 19,329 18,680
4/30/1998 19,593 18,868
5/31/1998 19,298 18,544
6/30/1998 20,447 19,297
7/31/1998 20,658 19,092
8/31/1998 17,388 16,334
9/30/1998 18,538 17,381
10/31/1998 19,761 18,793
11/30/1998 21,017 19,932
12/31/1998 22,866 21,080
1/31/1999 24,006 21,961
2/28/1999 23,246 21,278
3/31/1999 24,460 22,130
4/30/1999 25,008 22,987
5/31/1999 24,227 22,445
6/30/1999 25,842 23,689
7/31/1999 25,272 22,951
8/31/1999 25,156 22,837
9/30/1999 24,998 22,212
10/31/1999 26,654 23,617
11/30/1999 27,805 24,097
12/31/1999 30,237 25,515
1/31/2000 28,822 24,233
2/29/2000 30,786 23,775
3/31/2000 32,698 26,099
4/30/2000 31,008 25,314
5/31/2000 29,603 24,796
6/30/2000 30,395 25,408
7/31/2000 29,825 25,011
8/31/2000 32,402 26,564
9/30/2000 31,177 25,162
10/31/2000 29,931 25,055
11/30/2000 26,815 23,081
12/31/2000 27,137 23,194
1/31/2001 26,859 24,017
2/28/2001 23,692 21,828
3/31/2001 22,313 20,446
4/30/2001 24,067 22,034
5/31/2001 24,120 22,181
6/30/2001 23,414 21,642
7/31/2001 23,051 21,429
8/31/2001 21,403 20,089
9/30/2001 19,756 18,466
10/31/2001 20,120 18,819
11/30/2001 21,714 20,262
12/31/2001 21,692 20,440
1/31/2002 21,350 20,141
2/28/2002 21,018 19,753
3/31/2002 21,717 20,496
4/30/2002 20,455 19,254
5/31/2002 20,166 19,113
6/30/2002 18,893 17,752
7/31/2002 17,545 16,368
8/31/2002 17,534 16,475
9/30/2002 15,876 14,686
10/31/2002 17,224 15,978
11/30/2002 18,123 16,917
12/31/2002 16,957 15,924
1/31/2003 16,582 15,508
2/28/2003 16,283 15,275
3/31/2003 16,443 15,421
4/30/2003 17,664 16,692
5/31/2003 18,413 17,571
6/30/2003 18,633 17,795
7/31/2003 18,965 18,109
8/31/2003 19,308 18,462
9/30/2003 18,946 18,266
10/31/2003 20,103 19,299
11/30/2003 20,221 19,469
12/31/2003 21,101 20,489
1/31/2004 21,359 20,865
2/29/2004 21,605 21,155
3/31/2004 21,286 20,836
4/30/2004 20,814 20,509
5/31/2004 21,200 20,790
6/30/2004 21,619 21,194
7/31/2004 20,782 20,493
8/31/2004 20,814 20,575
9/30/2004 21,172 20,798
10/31/2004 21,408 21,116
11/30/2004 22,470 21,970
12/31/2004 22,975 22,717
1/31/2005 22,221 22,163
2/28/2005 22,652 22,629
3/31/2005 22,039 22,229
4/30/2005 21,573 21,808
5/31/2005 22,069 22,501
6/30/2005 21,702 22,533
- --------------------------------------------------------------------------------
Performance shown for the Administrator Class shares of the WELLS FARGO
ADVANTAGE GROWTH AND INCOME FUND for periods prior to April 11, 2005, reflects
the performance of the Class K shares of the Strong Growth and Income Fund, its
predecessor fund, and for periods prior to December 31,2001, reflects the
performance of the Investor Class shares of the Strong Growth and Income Fund.
Performance shown for the Advisor Class shares of the WELLS FARGO ADVANTAGE
GROWTH AND INCOME FUND for periods prior to April 11, 2005, reflects the
performance of the Advisor Class shares of the Strong Growth and Income Fund,
its predecessor fund, and for periods prior to February 29, 2000, reflects the
performance of the Investor Class shares of the Strong Growth and Income Fund,
adjusted to reflect Advisor Class expenses. Performance shown for the
Institutional Class shares of the WELLS FARGO ADVANTAGE GROWTH AND INCOME FUND
for periods prior to April 11, 2005, reflects the performance of the
Institutional Class shares of the Strong Growth and Income Fund, its predecessor
fund, and for periods prior to February 29, 2000, reflects the performance of
the Investor Class shares of the Strong Growth and Income Fund. Performance
shown for the Investor Class shares of the WELLS FARGO ADVANTAGE GROWTH AND
INCOME FUND for periods prior to April 11, 2005, reflects the performance of the
Investor Class shares of the Strong Growth and 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.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE GROWTH AND
INCOME FUND Investor Class shares for the life of the Fund with the S&P 500
Index. The chart assumes a hypothetical investment of $10,000 in the Investor
Class shares and reflects all operating expenses.
9
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE CAP GROWTH FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE LARGE CAP GROWTH FUND (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Brandon M. Nelson, CFA 12/30/1981
Bruce C. Olson, CFA
Thomas C. Ognar, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (1.06)%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the S&P 500
Index(2), which returned (0.81)% 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 ON 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?
- --------------------------------------------------------------------------------
The Fund's many energy-related holdings all performed very well, as oil
prices exceeded $60 per barrel for the first time. So long as energy prices
remain high, this sector should continue to put up strong numbers and grow
considerably faster than the broader market. Additional successful performers
included Google Incorporated, Gilead Sciences Incorporated, Aetna Incorporated,
HCA Incorporated, and Walgreen Company.
On the downside, both eBay Incorporated and QUALCOMM Incorporated -- which
had been top performers for the Fund in 2004 -- suffered sharp corrections on
concerns that their near-term growth rates were slowing.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We made a number of portfolio changes in accordance with our investment
discipline. These portfolio changes typically occur when we believe there is a
significant change to a company's growth prospects or management structure,
either on the upside or the downside.
Applying this approach, we pared back the Fund's exposure to financial
services stocks. We expect the rise in short-term interest rates to curtail
these companies' profit margins. Conversely, as crude oil prices continued to
rise during the period, we broadened the Fund's weightings in those companies
that we believed would benefit directly from higher oil and natural gas prices.
For example, a few of these companies include Valero Energy Corporation, CONSOL
Energy Incorporated, and Transocean Incorporated.
Another notable change in the portfolio has been the emergence of Internet
search company Google into the Fund's largest ten holdings. Google's revenue and
earnings growth outlook continues to unfold at an astonishing rate, and our
dynamic portfolio management process is designed to take advantage of these
types of opportunities on a timely basis. In addition to Google's strong
performance, other fast growth companies that added to this year's performance
are Coach Incorporated, which has expanded a once sleepy hand bag market by
making them a fashion item for every occasion; WellPoint Incorporated, which is
a leading managed care organization that is helping to control medical costs and
is benefiting from the efficiencies brought about by a consolidating industry;
and Genentech Incorporated, the biotech firm that has a key franchise in
oncology with its blockbuster drug Avastin.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
After two solid years of upside performance, the market's pause in the
first half of 2005 hasn't been a huge surprise, given that the Federal Reserve
(the Fed) continued to increase interest rates to slow the economy and control
inflation. We expect stocks to resume their upward trend once the Fed ends its
rate-tightening cycle, likely sometime later this year. The U.S. economy appears
to be growing modestly and in line with historical norms. Despite significantly
higher energy costs and localized spikes in real estate prices, inflation is
largely contained due to the forces of free trade and increased globalization.
Growth stocks -- particularly larger-capitalization growth companies --
have generally underperformed the broader market over the last five years. We
believe this trend will eventually reverse as many of these growth companies'
earnings multiples are on par with companies that have significantly lower
long-term earnings growth prospects.
Nonetheless, we will continue to focus our investments on those companies
that are generating significantly above-average revenue and earnings growth.
These companies tend to be dominant or gaining market share in their respective
industries, are managed by effective and motivated leadership, and are
benefiting from broad forces that further drive their growth and success.
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. 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
EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR
ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 LARGE CAP GROWTH FUND.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year 10-Year
- -----------------------------------------------------------------------------------------------------------
Large Cap Growth Fund - Investor Class (1.06) 4.02 (11.10) 6.45
- -----------------------------------------------------------------------------------------------------------
Benchmark
- -----------------------------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 9.94
- -----------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Beta** 1.07
- --------------------------------------------------------------------------------
Price to Earnings (trailing 12 months) 28.50x
- --------------------------------------------------------------------------------
Price to Book Ratio 4.33x
- --------------------------------------------------------------------------------
Median Market Cap. ($B) $20.31
- --------------------------------------------------------------------------------
Portfolio Turnover 93%
- --------------------------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 20%
Consumer Staples 9%
Energy 9%
Financials 5%
Health Care 23%
Industrials 8%
Information Technology 24%
Materials 2%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Target Corporation 3.09%
- --------------------------------------------------------------------------------
Dell Incorporated 3.03%
- --------------------------------------------------------------------------------
Procter & Gamble Company 2.99%
- --------------------------------------------------------------------------------
Google Incorporated Class A 2.95%
- --------------------------------------------------------------------------------
Johnson & Johnson 2.60%
- --------------------------------------------------------------------------------
General Electric Company 2.58%
- --------------------------------------------------------------------------------
Juniper Networks Incorporated 2.52%
- --------------------------------------------------------------------------------
Yahoo! Incorporated 2.51%
- --------------------------------------------------------------------------------
Marriott International Incorporated Class A 2.43%
- --------------------------------------------------------------------------------
St. Jude Medical Incorporated 2.28%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE
LARGE CAP GROWTH
FUND - INVESTOR CLASS S&P 500 INDEX
6/30/1995 10,000 10,000
7/31/1995 10,464 10,331
8/31/1995 10,434 10,357
9/30/1995 10,827 10,794
10/31/1995 10,523 10,756
11/30/1995 10,943 11,227
12/31/1995 11,153 11,443
1/31/1996 11,310 11,832
2/29/1996 11,491 11,943
3/31/1996 11,665 12,058
4/30/1996 11,834 12,235
5/31/1996 12,162 12,550
6/30/1996 11,800 12,598
7/31/1996 11,082 12,042
8/31/1996 11,303 12,296
9/30/1996 12,207 12,988
10/31/1996 12,421 13,346
11/30/1996 13,094 14,353
12/31/1996 12,723 14,069
1/31/1997 13,512 14,948
2/28/1997 13,274 15,065
3/31/1997 12,570 14,447
4/30/1997 13,048 15,309
5/31/1997 13,708 16,240
6/30/1997 14,307 16,967
7/31/1997 15,587 18,317
8/31/1997 14,870 17,291
9/30/1997 15,611 18,238
10/31/1997 15,325 17,629
11/30/1997 15,602 18,445
12/31/1997 15,798 18,761
1/31/1998 15,744 18,969
2/28/1998 16,712 20,336
3/31/1998 17,417 21,376
4/30/1998 17,561 21,591
5/31/1998 17,333 21,221
6/30/1998 18,403 22,082
7/31/1998 18,463 21,848
8/31/1998 15,945 18,692
9/30/1998 17,072 19,890
10/31/1998 17,413 21,506
11/30/1998 18,419 22,809
12/31/1998 20,861 24,122
1/31/1999 22,464 25,131
2/28/1999 21,478 24,350
3/31/1999 23,172 25,324
4/30/1999 23,614 26,304
5/31/1999 22,585 25,684
6/30/1999 24,128 27,108
7/31/1999 23,601 26,263
8/31/1999 23,589 26,133
9/30/1999 23,432 25,418
10/31/1999 25,120 27,025
11/30/1999 26,899 27,575
12/31/1999 33,324 29,198
1/31/2000 30,940 27,731
2/29/2000 37,293 27,207
3/31/2000 36,932 29,867
4/30/2000 33,402 28,968
5/31/2000 30,989 28,376
6/30/2000 33,635 29,075
7/31/2000 32,977 28,621
8/31/2000 37,109 30,398
9/30/2000 35,772 28,793
10/31/2000 32,185 28,671
11/30/2000 28,166 26,412
12/31/2000 28,857 26,542
1/31/2001 27,122 27,483
2/28/2001 22,981 24,979
3/31/2001 21,205 23,397
4/30/2001 22,574 25,214
5/31/2001 22,259 25,383
6/30/2001 21,686 24,766
7/31/2001 20,981 24,522
8/31/2001 19,387 22,988
9/30/2001 17,719 21,132
10/31/2001 17,902 21,535
11/30/2001 19,653 23,187
12/31/2001 19,545 23,390
1/31/2002 19,246 23,049
2/28/2002 18,334 22,604
3/31/2002 18,856 23,454
4/30/2002 17,678 22,033
5/31/2002 17,138 21,871
6/30/2002 15,902 20,314
7/31/2002 14,524 18,731
8/31/2002 14,466 18,853
9/30/2002 13,221 16,806
10/31/2002 14,283 18,284
11/30/2002 15,122 19,359
12/31/2002 13,702 18,223
1/31/2003 13,512 17,746
2/28/2003 13,503 17,479
3/31/2003 13,694 17,647
4/30/2003 14,599 19,102
5/31/2003 15,620 20,107
6/30/2003 15,570 20,364
7/31/2003 15,960 20,723
8/31/2003 16,308 21,127
9/30/2003 15,943 20,903
10/31/2003 16,989 22,085
11/30/2003 17,113 22,279
12/31/2003 17,379 23,446
1/31/2004 17,611 23,877
2/29/2004 17,761 24,208
3/31/2004 17,479 23,843
4/30/2004 16,997 23,470
5/31/2004 17,520 23,791
6/30/2004 17,960 24,253
7/31/2004 16,815 23,451
8/31/2004 16,690 23,545
9/30/2004 17,396 23,800
10/31/2004 17,636 24,163
11/30/2004 18,425 25,141
12/31/2004 18,881 25,996
1/31/2005 18,060 25,362
2/28/2005 18,201 25,896
3/31/2005 17,960 25,438
4/30/2005 17,528 24,955
5/31/2005 18,616 25,749
6/30/2005 18,682 25,786
- --------------------------------------------------------------------------------
(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 LARGE CAP GROWTH FUND for periods prior to April 11, 2005, reflects
the performance of the Investor Class shares of the Strong Large Cap Growth
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 S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE LARGE CAP
GROWTH FUND Investor Class shares for the most recent ten years with the S&P 500
Index. The chart assumes a hypothetical investment of $10,000 in the Investor
Class shares and reflects all operating expenses.
11
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 six-month period and held for the entire six-month period (January 1,
2005 to June 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
1/01/2005 6/30/2005 Period(1) Expense Ratio
Capital Growth Fund
- ---------------------------------------------------------------------------------------------------------
Capital Growth Fund - Administrator Class
Actual $ 1,000.00 $ 1,010.90 $ 4.59 0.92%
- ---------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.23 $ 4.61 0.92%
- ---------------------------------------------------------------------------------------------------------
Capital Growth Fund - Institutional Class
Actual(2) $ 1,000.00 $ 1,050.60 $ 1.80 0.79%
- ---------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.88 $ 3.96 0.79%
- ---------------------------------------------------------------------------------------------------------
Capital Growth Fund - Investor Class
Actual $ 1,000.00 $ 1,008.40 $ 7.17 1.44%
- ---------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.65 $ 7.20 1.44%
- ---------------------------------------------------------------------------------------------------------
Dividend Income Fund
- ---------------------------------------------------------------------------------------------------------
Dividend Income Fund - Administrator Class
Actual $ 1,000.00 $ 1,039.80 $ 4.86 0.96%
- ---------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.03 $ 4.81 0.96%
- ---------------------------------------------------------------------------------------------------------
Dividend Income Fund - Investor Class
Actual $ 1,000.00 $ 1,037.20 $ 7.02 1.39%
- ---------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.90 $ 6.95 1.39%
12
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses
Value Value Paid During Net Annual
1/01/2005 6/30/2005 Period(1) Expense Ratio
Growth Fund
- -----------------------------------------------------------------------------------------------------------
Growth Fund - Class C
Actual $ 1,000.00 $ 980.50 $ 8.64 1.76%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.07 $ 8.80 1.76%
- -----------------------------------------------------------------------------------------------------------
Growth Fund - Administrator Class
Actual $ 1,000.00 $ 983.20 $ 4.77 0.97%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.98 $ 4.86 0.97%
- -----------------------------------------------------------------------------------------------------------
Growth Fund - Advisor Class
Actual $ 1,000.00 $ 981.80 $ 6.93 1.41%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.80 $ 7.05 1.41%
- -----------------------------------------------------------------------------------------------------------
Growth Fund - Institutional Class
Actual $ 1,000.00 $ 983.50 $ 4.57 0.93%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.18 $ 4.66 0.93%
- -----------------------------------------------------------------------------------------------------------
Growth Fund - Investor Class
Actual $ 1,000.00 $ 981.40 $ 7.27 1.48%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.46 $ 7.40 1.48%
- -----------------------------------------------------------------------------------------------------------
Growth and Income Fund
- -----------------------------------------------------------------------------------------------------------
Growth and Income Fund - Administrator Class
Actual $ 1,000.00 $ 946.30 $ 4.63 0.96%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.03 $ 4.81 0.96%
- -----------------------------------------------------------------------------------------------------------
Growth and Income Fund - Advisor Class
Actual $ 1,000.00 $ 944.60 $ 6.12 1.27%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.50 $ 6.36 1.27%
- -----------------------------------------------------------------------------------------------------------
Growth and Income Fund - Institutional Class
Actual $ 1,000.00 $ 948.10 $ 2.85 0.59%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.87 $ 2.96 0.59%
- -----------------------------------------------------------------------------------------------------------
Growth and Income Fund - Investor Class
Actual $ 1,000.00 $ 944.60 $ 6.46 1.34%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.15 $ 6.71 1.34%
- -----------------------------------------------------------------------------------------------------------
Large Cap Growth Fund
- -----------------------------------------------------------------------------------------------------------
Large Cap Growth Fund - Investor Class
Actual $ 1,000.00 $ 989.40 $ 6.02 1.22%
- -----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.74 $ 6.11 1.22%
- -----------------------------------------------------------------------------------------------------------
(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 81/365 (TO REFLECT THE PERIOD FROM
APRIL 11, 2005 TO JUNE 30, 2005).
13
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 94.26%
BUSINESS SERVICES - 9.66%
189,880 CHECK POINT SOFTWARE TECHNOLOGIES LIMITED+ $ 3,759,624
30,020 ELECTRONIC ARTS INCORPORATED+ 1,699,432
132,670 JUNIPER NETWORKS INCORPORATED+ 3,340,631
459,800 ORACLE CORPORATION+ 6,069,360
183,920 YAHOO! INCORPORATED+ 6,372,828
21,241,875
---------------
CHEMICALS & ALLIED PRODUCTS - 6.06%
89,980 GENZYME CORPORATION+ 5,406,898
116,660 GILEAD SCIENCES INCORPORATED+ 5,131,873
89,640 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR 2,791,390
13,330,161
---------------
COMMUNICATIONS - 4.27%
374,500 SPRINT CORPORATION 9,396,205
---------------
DEPOSITORY INSTITUTIONS - 2.59%
67,910 MARSHALL & ILSLEY CORPORATION 3,018,600
53,920 WACHOVIA CORPORATION 2,674,432
5,693,032
---------------
ELECTRIC, GAS & SANITARY SERVICES - 2.76%
319,060 WILLIAMS COMPANIES INCORPORATED 6,062,140
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 14.26%
59,950 BROADCOM CORPORATION CLASS A+ 2,128,824
292,020 GENERAL ELECTRIC COMPANY 10,118,493
38,020 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 3,093,307
45,300 INTERNATIONAL RECTIFIER CORPORATION+ 2,161,716
146,390 MARVELL TECHNOLOGY GROUP LIMITED+ 5,568,676
59,750 MOTOROLA INCORPORATED 1,091,035
154,370 QUALCOMM INCORPORATED 5,095,754
75,730 TEXAS INSTRUMENTS INCORPORATED 2,125,741
31,383,546
---------------
FOOD & KINDRED PRODUCTS - 2.17%
69,460 WM. WRIGLEY JR. COMPANY 4,781,626
---------------
GENERAL MERCHANDISE STORES - 1.72%
29,800 FEDERATED DEPARTMENT STORES INCORPORATED 2,183,744
29,345 TARGET CORPORATION 1,596,661
3,780,405
---------------
HOLDING & OTHER INVESTMENT OFFICES - 2.78%
56,040 ALCON INCORPORATED 6,127,974
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.03%
65,360 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 4,458,859
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 7.74%
228,650 DELL INCORPORATED+ 9,033,962
468,240 EMC CORPORATION+ 6,419,570
21,420 RESEARCH IN MOTION LIMITED+ 1,579,725
17,033,257
---------------
14
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INSURANCE CARRIERS - 11.26%
53,920 ALLSTATE CORPORATION $ 3,221,720
25,750 CHUBB CORPORATION 2,204,457
35,610 PRUDENTIAL FINANCIAL INCORPORATED 2,338,153
132,100 UNITED HEALTH GROUP INCORPORATED 6,887,694
145,270 WELLPOINT INCORPORATED+ 10,116,603
24,768,627
---------------
LEATHER & LEATHER PRODUCTS - 1.09%
71,270 COACH INCORPORATED+ 2,392,534
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 5.66%
39,300 BECTON DICKINSON & COMPANY 2,062,071
33,170 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 2,152,733
27,050 GUIDANT CORPORATION 1,820,465
123,710 MEDTRONIC INCORPORATED 6,406,941
12,442,210
---------------
METAL MINING - 1.57%
224,210 PLACER DOME INCORPORATED 3,448,350
---------------
MISCELLANEOUS RETAIL - 3.42%
258,980 CVS CORPORATION 7,528,549
---------------
OIL & GAS EXTRACTION - 5.81%
87,300 CANADIAN NATURAL RESOURCES LIMITED 3,175,974
89,270 HALLIBURTON COMPANY 4,268,891
99,000 TRANSOCEAN INCORPORATED+ 5,343,030
12,787,895
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 1.43%
39,850 VALERO ENERGY CORPORATION 3,152,534
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.97%
66,850 VIACOM INCORPORATED CLASS B 2,140,537
---------------
REAL ESTATE - 0.62%
16,660 ST. JOE COMPANY 1,358,456
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.99%
22,050 LEHMAN BROTHERS HOLDINGS INCORPORATED 2,189,124
---------------
TRANSPORTATION BY AIR - 1.34%
211,340 SOUTHWEST AIRLINES COMPANY 2,943,966
---------------
WATER TRANSPORTATION - 2.66%
121,060 ROYAL CARIBBEAN CRUISES LIMITED 5,854,462
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.40%
35,460 NIKE INCORPORATED CLASS B 3,070,836
---------------
TOTAL COMMON STOCKS (COST $189,688,731) 207,367,160
---------------
15
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 4.86%
MUTUAL FUND - 4.86%
10,695,835 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 10,695,835
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $10,695,835) 10,695,835
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $200,384,566)* 99.12% $ 218,062,995
OTHER ASSETS AND LIABILITIES, NET 0.88 1,934,684
------ ---------------
TOTAL NET ASSETS 100.00% $ 219,997,679
====== ===============
+ 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 $10,695,835.
* 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.
16
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DIVIDEND INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.29%
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.40%
23,200 HOME DEPOT INCORPORATED $ 902,480
---------------
BUSINESS SERVICES - 1.94%
174,700 MICROSOFT CORPORATION 4,339,548
---------------
CHEMICALS & ALLIED PRODUCTS - 10.89%
14,400 ABBOTT LABORATORIES 705,744
18,900 AIR PRODUCTS & CHEMICALS INCORPORATED 1,139,670
35,600 BRISTOL-MYERS SQUIBB COMPANY 889,288
92,000 DOW CHEMICAL COMPANY 4,096,760
115,700 E.I. DU PONT DE NEMOURS AND COMPANY 4,976,257
12,500 ELI LILLY & COMPANY 696,375
35,100 LYONDELL CHEMICAL COMPANY 927,342
23,200 MERCK & COMPANY INCORPORATED 714,560
97,100 PFIZER INCORPORATED 2,678,018
95,300 PROCTER & GAMBLE COMPANY 5,027,075
56,000 WYETH 2,492,000
24,343,089
---------------
COMMUNICATIONS - 3.35%
100,000 BCE INCORPORATED 2,368,000
26,400 BELLSOUTH CORPORATION 701,448
32,400 SBC COMMUNICATIONS INCORPORATED 769,500
29,400 VERIZON COMMUNICATIONS INCORPORATED 1,015,770
108,000 VODAFONE GROUP PLC ADR 2,626,560
7,481,278
---------------
DEPOSITORY INSTITUTIONS - 18.41%
60,000 AMSOUTH BANCORPORATION 1,560,000
139,500 BANK OF AMERICA CORPORATION 6,362,595
35,900 BANK OF NEW YORK COMPANY INCORPORATED 1,033,202
23,000 BB&T CORPORATION 919,310
211,600 CITIGROUP INCORPORATED 9,782,268
30,000 COMMERCE BANCORP INCORPORATED 909,300
108,200 JP MORGAN CHASE & COMPANY 3,821,624
28,000 KEYCORP 928,200
30,800 MELLON FINANCIAL CORPORATION 883,652
87,000 NORTH FORK BANCORPORATION INCORPORATED 2,443,830
17,300 PNC FINANCIAL SERVICES GROUP 942,158
65,433 REGIONS FINANCIAL CORPORATION 2,216,870
27,500 STATE STREET CORPORATION 1,326,875
12,600 SUNTRUST BANKS INCORPORATED 910,224
54,600 US BANCORP 1,594,320
85,000 WACHOVIA CORPORATION 4,216,000
32,300 WASHINGTON MUTUAL INCORPORATED 1,314,287
41,164,715
---------------
EATING & DRINKING PLACES - 1.92%
154,400 MCDONALD'S CORPORATION 4,284,600
---------------
ELECTRIC, GAS & SANITARY SERVICES - 5.61%
22,800 AMEREN CORPORATION 1,260,840
71,800 CITIZENS COMMUNICATIONS COMPANY 964,992
27,200 CONSOLIDATED EDISON INCORPORATED 1,274,048
47,400 CONSTELLATION ENERGY GROUP INCORPORATED 2,734,506
15,300 DOMINION RESOURCES INCORPORATED 1,122,867
33,000 DUKE ENERGY CORPORATION 981,090
17
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DIVIDEND INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRIC, GAS & SANITARY SERVICES - CONTINUED
40,000 EXELON CORPORATION $ 2,053,200
35,800 SOUTHERN COMPANY 1,241,186
11,000 TXU CORPORATION 913,990
12,546,719
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 5.32%
6,400 EMERSON ELECTRIC COMPANY 400,832
183,400 GENERAL ELECTRIC COMPANY 6,354,810
196,900 INTEL CORPORATION 5,131,214
11,886,856
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.97%
8,600 FORTUNE BRANDS INCORPORATED 763,680
17,500 ILLINOIS TOOL WORKS INCORPORATED 1,394,400
2,158,080
---------------
FOOD & KINDRED PRODUCTS - 3.32%
43,000 ANHEUSER-BUSCH COMPANIES INCORPORATED 1,967,250
33,300 COCA-COLA COMPANY 1,390,275
32,200 CONAGRA FOODS INCORPORATED 745,752
17,400 GENERAL MILLS INCORPORATED 814,146
39,000 HJ HEINZ COMPANY 1,381,380
15,300 KELLOGG COMPANY 679,932
8,100 PEPSICO INCORPORATED 436,833
7,415,568
---------------
FORESTRY - 0.28%
9,900 WEYERHAEUSER COMPANY 630,135
---------------
FURNITURE & FIXTURES - 0.37%
24,500 ETHAN ALLEN INTERIORS INCORPORATED 820,995
---------------
GENERAL MERCHANDISE STORES - 1.41%
8,100 SEARS HOLDINGS CORPORATION+ 1,213,947
40,200 WAL-MART STORES INCORPORATED 1,937,640
3,151,587
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 4.06%
32,500 3M COMPANY 2,349,750
23,000 CATERPILLAR INCORPORATED 2,192,130
3,000 COOPER CAMERON CORPORATION+ 186,150
23,200 HEWLETT-PACKARD COMPANY 545,432
43,200 INTERNATIONAL BUSINESS MACHINES CORPORATION 3,205,440
9,400 PITNEY BOWES INCORPORATED 409,370
3,000 SMITH INTERNATIONAL INCORPORATED 191,100
9,079,372
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 0.42%
18,500 JEFFERSON-PILOT CORPORATION 932,770
---------------
INSURANCE CARRIERS - 4.43%
78,000 ALLSTATE CORPORATION 4,660,500
53,300 AMERICAN INTERNATIONAL GROUP INCORPORATED 3,096,730
5,600 CHUBB CORPORATION 479,416
14,900 LINCOLN NATIONAL CORPORATION 699,108
9,200 SAFECO CORPORATION 499,928
12,100 ST. PAUL COMPANIES INCORPORATED 478,313
9,913,995
---------------
18
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DIVIDEND INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.43%
12,500 BAXTER INTERNATIONAL INCORPORATED $ 463,750
9,400 BECTON DICKINSON & COMPANY 493,218
956,968
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.97%
33,300 JOHNSON & JOHNSON 2,164,500
---------------
MISCELLANEOUS RETAIL - 0.66%
33,000 COSTCO WHOLESALE CORPORATION 1,479,060
---------------
MOTION PICTURES - 0.26%
23,200 WALT DISNEY COMPANY 584,176
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.87%
36,500 AMERICAN EXPRESS COMPANY 1,942,895
---------------
OIL & GAS EXTRACTION - 7.07%
10,000 BJ SERVICES COMPANY 524,800
18,500 BURLINGTON RESOURCES INCORPORATED 1,021,940
6,500 ENSCO INTERNATIONAL INCORPORATED 232,375
21,000 EOG RESOURCES INCORPORATED 1,192,800
12,500 EQUITABLE RESOURCES INCORPORATED 850,000
12,000 KERR-MCGEE CORPORATION 915,720
10,000 NABORS INDUSTRIES LIMITED+ 606,200
22,000 NEWFIELD EXPLORATION COMPANY+ 877,580
10,000 NOBLE CORPORATION 615,100
11,000 NOBLE ENERGY INCORPORATED 832,150
20,000 PIONEER NATURAL RESOURCES COMPANY 841,600
10,000 ROWAN COMPANIES INCORPORATED+ 297,100
46,500 SCHLUMBERGER LIMITED 3,531,210
12,500 SPINNAKER EXPLORATION COMPANY+ 443,625
27,000 TALISMAN ENERGY INCORPORATED 1,014,390
9,300 TOTAL SA ADR 1,086,705
14,000 UNOCAL CORPORATION 910,700
15,793,995
---------------
PAPER & ALLIED PRODUCTS - 0.51%
30,400 INTERNATIONAL PAPER COMPANY 918,384
3,400 KIMBERLY-CLARK CORPORATION 212,806
1,131,190
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 13.56%
36,000 ASHLAND INCORPORATED 2,587,320
63,700 BP PLC ADR 3,973,606
22,200 CHEVRONTEXACO CORPORATION 1,241,424
126,400 CONOCOPHILLIPS 7,266,736
141,400 EXXON MOBIL CORPORATION 8,126,258
22,500 MARATHON OIL CORPORATION 1,200,825
71,700 ROYAL DUTCH PETROLEUM COMPANY 4,653,330
16,000 VALERO ENERGY CORPORATION 1,265,760
30,315,259
---------------
PRIMARY METAL INDUSTRIES - 0.95%
81,200 ALCOA INCORPORATED 2,121,756
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.32%
10,000 GANNETT COMPANY INCORPORATED 711,300
---------------
19
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DIVIDEND INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
RAILROAD TRANSPORTATION - 0.79%
23,600 BURLINGTON NORTHERN SANTA FE CORPORATION $ 1,111,088
10,100 UNION PACIFIC CORPORATION 654,480
1,765,568
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.63%
47,500 MORGAN STANLEY 2,492,325
18,500 T ROWE PRICE GROUP INCORPORATED 1,158,100
3,650,425
---------------
TOBACCO PRODUCTS - 2.52%
46,500 ALTRIA GROUP INCORPORATED 3,006,690
57,700 UST INCORPORATED 2,634,582
5,641,272
---------------
TRANSPORTATION EQUIPMENT - 5.65%
40,900 BOEING COMPANY 2,699,400
14,000 GENERAL DYNAMICS CORPORATION 1,533,560
43,200 GENERAL MOTORS CORPORATION 1,468,800
70,100 HONEYWELL INTERNATIONAL INCORPORATED 2,567,763
35,000 JOHNSON CONTROLS INCORPORATED 1,971,550
46,600 UNITED TECHNOLOGIES CORPORATION 2,392,910
12,633,983
---------------
TOTAL COMMON STOCKS (COST $182,515,954) 221,944,134
---------------
SHORT-TERM INVESTMENTS - 0.73%
MUTUAL FUND - 0.73%
1,634,354 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 1,634,354
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,634,354) 1,634,354
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $184,150,308)* 100.02% $ 223,578,488
OTHER ASSETS AND LIABILITIES, NET (0.02) (40,485)
------ ---------------
TOTAL NET ASSETS 100.00% $ 223,538,003
====== ===============
+ 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 $1,634,354.
* 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 -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.84%
AMUSEMENT & RECREATION SERVICES - 1.07%
495,000 LIFE TIME FITNESS INCORPORATED+ $ 16,240,950
---------------
APPAREL & ACCESSORY STORES - 1.60%
120,000 CARTER'S INCORPORATED+ 7,005,600
305,000 URBAN OUTFITTERS INCORPORATED+ 17,290,450
24,296,050
---------------
BUSINESS SERVICES - 20.41%
900,000 ALLIANCE DATA SYSTEMS CORPORATION+ 36,504,000
316,350 ASSET ACCEPTANCE CAPITAL CORPORATION+ 8,196,628
310,000 CERNER CORPORATION+ 21,070,700
255,000 CHECKFREE CORPORATION+ 8,685,300
450,000 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION+ 21,208,500
305,000 COGNOS INCORPORATED+ 10,412,700
225,000 EBAY INCORPORATED+ 7,427,250
150,000 GOOGLE INCORPORATED CLASS A+ 44,122,500
1,025,000 JUNIPER NETWORKS INCORPORATED+ 25,809,500
100,000 MERCURY INTERACTIVE CORPORATION+ 3,836,000
800,000 MICROSOFT CORPORATION 19,872,000
325,000 NAVTEQ CORPORATION+ 12,083,500
895,000 ORACLE CORPORATION+ 11,814,000
450,000 SATYAM COMPUTER SERVICES LIMITED 11,700,000
400,000 TIBCO SOFTWARE INCORPORATED+ 2,616,000
925,000 VERISIGN INCORPORATED+ 26,603,000
1,090,000 YAHOO! INCORPORATED+ 37,768,500
309,730,078
---------------
CHEMICALS & ALLIED PRODUCTS - 7.71%
210,000 AMGEN INCORPORATED+ 12,696,600
150,000 GENZYME CORPORATION+ 9,013,500
355,000 GILEAD SCIENCES INCORPORATED+ 15,616,450
170,000 MGI PHARMA INCORPORATED+ 3,699,200
145,000 MONSANTO COMPANY 9,116,150
240,000 PFIZER INCORPORATED 6,619,200
300,000 PRAXAIR INCORPORATED 13,980,000
550,000 PROCTER & GAMBLE COMPANY 29,012,500
160,000 ROHM & HAAS COMPANY 7,414,400
315,000 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR 9,809,100
116,977,100
---------------
COAL MINING - 1.68%
475,000 CONSOL ENERGY INCORPORATED 25,450,500
---------------
COMMUNICATIONS - 3.98%
135,000 AMERICA MOVIL SA DE CV ADR SERIES L 8,047,350
750,000 INPHONIC INCORPORATED+ 11,535,000
35,000 J2 GLOBAL COMMUNICATIONS INCORPORATED+ 1,205,400
313,840 NEUSTAR INCORPORATED CLASS A+ 8,034,304
495,000 NII HOLDINGS INCORPORATED+ 31,650,300
60,472,354
---------------
DEPOSITORY INSTITUTIONS - 0.12%
50,000 INVESTORS FINANCIAL SERVICES CORPORATION 1,891,000
---------------
21
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
EATING & DRINKING PLACES - 1.77%
160,000 P.F. CHANG'S CHINA BISTRO INCORPORATED+ $ 9,436,800
100,000 RED ROBIN GOURMET BURGERS INCORPORATED+ 6,198,000
322,358 TEXAS ROADHOUSE INCORPORATED CLASS A+ 11,201,941
26,836,741
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 11.36%
450,000 ALTERA CORPORATION+ 8,919,000
200,000 ANALOG DEVICES INCORPORATED 7,462,000
75,000 BROADCOM CORPORATION CLASS A+ 2,663,250
725,000 CISCO SYSTEMS INCORPORATED+ 13,854,750
550,000 COMVERSE TECHNOLOGY INCORPORATED+ 13,007,500
345,000 FLEXTRONICS INTERNATIONAL LIMITED 4,557,450
900,000 GENERAL ELECTRIC COMPANY 31,185,000
515,000 MARVELL TECHNOLOGY GROUP LIMITED+ 19,590,600
200,000 MAXIM INTEGRATED PRODUCTS INCORPORATED 7,642,000
890,000 MICROCHIP TECHNOLOGY INCORPORATED 26,361,800
215,000 NATIONAL SEMICONDUCTOR CORPORATION 4,736,450
80,000 NETWORK APPLIANCE INCORPORATED+ 2,261,600
840,000 NOKIA OYJ ADR 13,977,600
175,000 QUALCOMM INCORPORATED 5,776,750
310,000 TESSERA TECHNOLOGIES INCORPORATED+ 10,357,100
172,352,850
---------------
FOOD & KINDRED PRODUCTS - 0.50%
140,000 PEPSICO INCORPORATED 7,550,200
---------------
FOOD STORES - 0.54%
70,000 WHOLE FOODS MARKET INCORPORATED 8,281,000
---------------
FURNITURE & FIXTURES - 0.60%
50,000 KINETIC CONCEPTS INCORPORATED+ 3,000,000
275,000 TEMPUR-PEDIC INTERNATIONAL+ 6,099,500
9,099,500
---------------
GENERAL MERCHANDISE STORES - 1.67%
465,000 TARGET CORPORATION 25,300,650
---------------
HEALTH SERVICES - 6.44%
325,000 CAREMARK RX INCORPORATED+ 14,469,000
375,000 COMMUNITY HEALTH SYSTEMS+ 14,171,250
325,000 COVANCE INCORPORATED+ 14,582,750
380,000 SIERRA HEALTH SERVICES INCORPORATED+ 27,154,800
500,000 TRIAD HOSPITALS INCORPORATED+ 27,320,000
97,697,800
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 5.21%
275,000 BOYD GAMING CORPORATION 14,060,750
380,000 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 25,923,600
590,000 STATION CASINOS INCORPORATED 39,176,000
79,160,350
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 8.49%
105,000 APPLE COMPUTER INCORPORATED+ 3,865,050
785,000 DELL INCORPORATED+ 31,015,350
1,525,000 EMC CORPORATION+ 20,907,750
400,000 GRANT PRIDECO INCORPORATED+ 10,580,000
600,000 JOY GLOBAL INCORPORATED 20,154,000
215,000 PENTAIR INCORPORATED 9,204,150
22
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - CONTINUED
380,000 SMITH INTERNATIONAL INCORPORATED $ 24,206,000
575,000 XYRATEX LIMITED+ 8,918,250
128,850,550
---------------
INSURANCE CARRIERS - 3.54%
325,000 AETNA INCORPORATED 26,916,500
250,000 CENTENE CORPORATION+ 8,395,000
280,000 PRUDENTIAL FINANCIAL INCORPORATED 18,384,800
53,696,300
---------------
LEATHER & LEATHER PRODUCTS - 0.64%
290,000 COACH INCORPORATED+ 9,735,300
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 6.46%
160,000 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 10,384,000
225,000 HAEMONETICS CORPORATION+ 9,144,000
105,000 INAMED CORPORATION+ 7,031,850
125,000 RESMED INCORPORATED+ 8,248,750
170,000 RESPIRONICS INCORPORATED+ 6,138,700
65,000 ROCKWELL AUTOMATION INCORPORATED 3,166,150
800,000 SIRF TECHNOLOGY HOLDINGS INCORPORATED+ 14,144,000
780,000 ST. JUDE MEDICAL INCORPORATED+ 34,015,800
75,000 ZIMMER HOLDINGS INCORPORATED+ 5,712,750
97,986,000
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.75%
175,000 JOHNSON & JOHNSON 11,375,000
---------------
MISCELLANEOUS RETAIL - 5.23%
260,000 CVS CORPORATION 7,558,200
865,000 DICK'S SPORTING GOODS INCORPORATED+ 33,380,350
290,000 MICHAELS STORES INCORPORATED 11,997,300
460,000 PETCO ANIMAL SUPPLIES INCORPORATED+ 13,487,200
425,000 PETSMART INCORPORATED 12,898,750
79,321,800
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.25%
110,000 FIRST MARBLEHEAD CORPORATION+ 3,856,600
---------------
OIL & GAS EXTRACTION - 4.72%
350,000 ENSCO INTERNATIONAL INCORPORATED 12,512,500
50,000 NABORS INDUSTRIES LIMITED+ 3,031,000
90,000 NOBLE CORPORATION 5,535,900
400,000 PATTERSON-UTI ENERGY INCORPORATED 11,132,000
660,000 ULTRA PETROLEUM CORPORATION+ 20,037,600
570,000 XTO ENERGY INCORPORATED 19,374,300
71,623,300
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.11%
100,000 CORNING INCORPORATED+ 1,662,000
---------------
TRANSPORTATION EQUIPMENT - 1.15%
155,000 BOEING COMPANY 10,230,000
140,000 UNITED TECHNOLOGIES CORPORATION 7,189,000
17,419,000
---------------
WATER TRANSPORTATION - 1.44%
400,000 CARNIVAL CORPORATION 21,820,000
---------------
23
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
WHOLESALE TRADE-DURABLE GOODS - 2.40%
1,155,000 HUGHES SUPPLY INCORPORATED $ 32,455,500
325,000 PSS WORLD MEDICAL INCORPORATED+ 4,046,250
36,501,750
---------------
TOTAL COMMON STOCKS (COST $1,261,482,371) 1,515,184,723
---------------
SHORT-TERM INVESTMENTS - 0.41%
MUTUAL FUND - 0.41%
6,249,954 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 6,249,954
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $6,249,954) 6,249,954
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,267,732,325)* 100.25% $ 1,521,434,677
OTHER ASSETS AND LIABILITIES, NET (0.25) (3,771,900)
------ ---------------
TOTAL NET ASSETS 100.00% $ 1,517,662,777
====== ===============
+ 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 $6,249,954.
* 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.
24
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.30%
APPAREL & ACCESSORY STORES - 5.00%
756,000 GAP INCORPORATED $ 14,931,000
247,900 ROSS STORES INCORPORATED 7,166,789
22,097,789
---------------
BUSINESS SERVICES - 6.54%
935,900 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+ 11,399,262
704,800 MICROSOFT CORPORATION 17,507,232
28,906,494
---------------
CHEMICALS & ALLIED PRODUCTS - 12.57%
730,000 MEDIMMUNE INCORPORATED+ 19,505,600
337,200 MERCK & COMPANY INCORPORATED 10,385,760
615,600 PFIZER INCORPORATED 16,978,248
196,600 WYETH 8,748,700
55,618,308
---------------
COMMUNICATIONS - 3.28%
484,400 COMCAST CORPORATION 14,507,780
---------------
DEPOSITORY INSTITUTIONS - 15.89%
364,000 BANK OF AMERICA CORPORATION 16,602,040
539,700 BANK OF NEW YORK COMPANY INCORPORATED 15,532,566
378,200 CITIGROUP INCORPORATED 17,484,186
165,000 FIFTH THIRD BANCORP 6,799,650
392,824 JP MORGAN CHASE & COMPANY 13,874,544
70,292,986
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 23.78%
646,000 AMERICAN POWER CONVERSION CORPORATION 15,239,140
491,000 GENERAL ELECTRIC COMPANY 17,013,150
730,000 INTEL CORPORATION 19,023,800
2,928,800 LUCENT TECHNOLOGIES INCORPORATED+ 8,522,808
993,800 NOKIA OYJ ADR 16,536,832
635,400 NOVELLUS SYSTEMS INCORPORATED+ 15,700,734
1,109,600 VISHAY INTERTECHNOLOGY INCORPORATED+ 13,170,952
105,207,416
---------------
FOOD & KINDRED PRODUCTS - 0.54%
51,000 GENERAL MILLS INCORPORATED 2,386,290
---------------
GENERAL MERCHANDISE STORES - 2.67%
245,400 WAL-MART STORES INCORPORATED 11,828,280
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 2.66%
1,190,000 SYMBOL TECHNOLOGIES INCORPORATED 11,745,300
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 0.66%
105,000 MARSH & MCLENNAN COMPANIES INCORPORATED 2,908,500
---------------
INSURANCE CARRIERS - 3.78%
287,800 AMERICAN INTERNATIONAL GROUP INCORPORATED 16,721,180
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 2.75%
64,100 BAXTER INTERNATIONAL INCORPORATED 2,378,110
362,900 BOSTON SCIENTIFIC CORPORATION+ 9,798,300
12,176,410
---------------
MISCELLANEOUS RETAIL - 0.95%
144,600 CVS CORPORATION 4,203,522
---------------
25
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MOTION PICTURES - 3.48%
500,000 LIBERTY MEDIA CORPORATION CLASS A+ $ 5,095,000
616,000 TIME WARNER INCORPORATED+ 10,293,360
15,388,360
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 2.50%
100,000 AMERICAN EXPRESS COMPANY 5,323,000
37,400 FANNIE MAE 2,184,160
54,500 FREDDIE MAC 3,555,035
11,062,195
---------------
OIL & GAS EXTRACTION - 1.22%
141,200 TIDEWATER INCORPORATED 5,382,544
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 4.79%
165,500 CHEVRONTEXACO CORPORATION 9,254,760
2,000 CONOCOPHILLIPS 114,980
205,400 EXXON MOBIL CORPORATION 11,804,338
21,174,078
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 6.24%
1,100 GOLDMAN SACHS GROUP INCORPORATED 112,222
500 LEHMAN BROTHERS HOLDINGS INCORPORATED 49,640
180,800 MERRILL LYNCH & COMPANY INCORPORATED 9,945,808
333,700 MORGAN STANLEY 17,509,239
27,616,909
---------------
TOTAL COMMON STOCKS (COST $433,839,545) 439,224,341
---------------
WARRANTS - 0.00%
7,551 LUCENT TECHNOLOGIES INCORPORATED (EXPIRE ON 12/10/2007)+ 5,814
TOTAL WARRANTS (COST $0) 5,814
---------------
SHORT-TERM INVESTMENTS - 0.63%
MUTUAL FUND - 0.63%
2,785,814 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 2,785,814
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,785,814) 2,785,814
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $436,625,359)* 99.93% $ 442,015,969
OTHER ASSETS AND LIABILITIES, NET 0.07 318,866
------ ---------------
TOTAL NET ASSETS 100.00% $ 442,334,835
====== ===============
+ 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 $2,785,814.
* 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.
26
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.84%
APPAREL & ACCESSORY STORES - 0.61%
50,000 KOHL'S CORPORATION+ $ 2,795,500
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 2.66%
180,000 HOME DEPOT INCORPORATED 7,002,000
90,000 LOWE'S COMPANIES INCORPORATED 5,239,800
12,241,800
---------------
BUSINESS SERVICES - 11.69%
50,000 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION+ 2,356,500
125,000 EBAY INCORPORATED+ 4,126,250
45,000 GOOGLE INCORPORATED CLASS A+ 13,236,750
450,000 JUNIPER NETWORKS INCORPORATED+ 11,331,000
40,000 NAVTEQ CORPORATION+ 1,487,200
335,000 ORACLE CORPORATION+ 4,422,000
190,000 VERISIGN INCORPORATED+ 5,464,400
325,000 YAHOO! INCORPORATED+ 11,261,250
53,685,350
---------------
CHEMICALS & ALLIED PRODUCTS - 15.02%
155,000 ABBOTT LABORATORIES 7,596,550
110,000 AMGEN INCORPORATED+ 6,650,600
55,000 GENENTECH INCORPORATED+ 4,415,400
105,000 GENZYME CORPORATION+ 6,309,450
145,000 GILEAD SCIENCES INCORPORATED+ 6,378,550
70,000 MONSANTO COMPANY 4,400,900
240,000 PFIZER INCORPORATED 6,619,200
150,000 PRAXAIR INCORPORATED 6,990,000
255,000 PROCTER & GAMBLE COMPANY 13,451,250
25,000 SEPRACOR INCORPORATED+ 1,500,250
150,000 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR 4,671,000
68,983,150
---------------
COAL MINING - 1.05%
90,000 CONSOL ENERGY INCORPORATED 4,822,200
---------------
COMMUNICATIONS - 0.95%
130,000 XM SATELLITE RADIO HOLDINGS INCORPORATED+ 4,375,800
---------------
EDUCATIONAL SERVICES - 0.68%
40,000 APOLLO GROUP INCORPORATED CLASS A+ 3,128,800
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 10.07%
215,000 ALTERA CORPORATION+ 4,261,300
110,000 ANALOG DEVICES INCORPORATED 4,104,100
250,000 CISCO SYSTEMS INCORPORATED+ 4,777,500
335,000 GENERAL ELECTRIC COMPANY 11,607,750
205,000 MARVELL TECHNOLOGY GROUP LIMITED+ 7,798,200
140,000 MICROCHIP TECHNOLOGY INCORPORATED 4,146,800
175,000 NETWORK APPLIANCE INCORPORATED+ 4,947,250
140,000 QUALCOMM INCORPORATED 4,621,400
46,264,300
---------------
FOOD & KINDRED PRODUCTS - 2.05%
175,000 PEPSICO INCORPORATED 9,437,750
---------------
FOOD STORES - 1.93%
80,000 STARBUCKS CORPORATION+ 4,132,800
40,000 WHOLE FOODS MARKET INCORPORATED 4,732,000
8,864,800
---------------
27
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
GENERAL MERCHANDISE STORES - 3.53%
115,000 DOLLAR GENERAL CORPORATION $ 2,341,400
255,000 TARGET CORPORATION 13,874,550
16,215,950
---------------
HEALTH SERVICES - 1.11%
90,000 HCA INCORPORATED 5,100,300
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.00%
110,000 BED BATH & BEYOND INCORPORATED+ 4,595,800
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 4.53%
160,000 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 10,915,200
85,000 STATION CASINOS INCORPORATED 5,644,000
90,000 WYNN RESORTS LIMITED+ 4,254,300
20,813,500
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 7.63%
55,000 AMERICAN STANDARD COMPANIES INCORPORATED 2,305,600
60,000 CATERPILLAR INCORPORATED 5,718,600
345,000 DELL INCORPORATED+ 13,630,950
605,000 EMC CORPORATION+ 8,294,550
80,000 SMITH INTERNATIONAL INCORPORATED 5,096,000
35,045,700
---------------
INSURANCE CARRIERS - 4.03%
90,000 AETNA INCORPORATED 7,453,800
110,000 PRUDENTIAL FINANCIAL INCORPORATED 7,222,600
55,000 WELLPOINT INCORPORATED+ 3,830,200
18,506,600
---------------
LEATHER & LEATHER PRODUCTS - 1.17%
160,000 COACH INCORPORATED+ 5,371,200
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 5.96%
25,000 GUIDANT CORPORATION 1,682,500
145,000 MEDTRONIC INCORPORATED 7,509,550
30,000 ROCKWELL AUTOMATION INCORPORATED 1,461,300
235,000 ST. JUDE MEDICAL INCORPORATED+ 10,248,350
85,000 ZIMMER HOLDINGS INCORPORATED+ 6,474,450
27,376,150
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.55%
180,000 JOHNSON & JOHNSON 11,700,000
---------------
MISCELLANEOUS RETAIL - 3.41%
145,000 CVS CORPORATION 4,215,150
225,000 STAPLES INCORPORATED 4,797,000
145,000 WALGREEN COMPANY 6,668,550
15,680,700
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 1.38%
125,000 SLM CORPORATION 6,350,000
---------------
OIL & GAS EXTRACTION - 5.48%
35,000 APACHE CORPORATION 2,261,000
85,000 NOBLE CORPORATION 5,228,350
30,000 OCCIDENTAL PETROLEUM CORPORATION 2,307,900
80,000 TRANSOCEAN INCORPORATED+ 4,317,600
230,000 ULTRA PETROLEUM CORPORATION+ 6,982,800
120,000 XTO ENERGY INCORPORATED 4,078,800
25,176,450
---------------
28
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PETROLEUM REFINING & RELATED INDUSTRIES - 1.54%
75,000 EXXON MOBIL CORPORATION $ 4,310,250
35,000 VALERO ENERGY CORPORATION 2,768,850
7,079,100
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.64%
25,000 GOLDMAN SACHS GROUP INCORPORATED 2,550,500
50,000 LEHMAN BROTHERS HOLDINGS INCORPORATED 4,964,000
7,514,500
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.33%
90,000 CORNING INCORPORATED+ 1,495,800
---------------
TRANSPORTATION EQUIPMENT - 3.14%
125,000 BOEING COMPANY 8,250,000
120,000 UNITED TECHNOLOGIES CORPORATION 6,162,000
14,412,000
---------------
WATER TRANSPORTATION - 1.19%
100,000 CARNIVAL CORPORATION 5,455,000
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.51%
155,000 MCKESSON CORPORATION 6,942,450
---------------
TOTAL COMMON STOCKS (COST $372,099,754) 449,430,650
---------------
SHORT-TERM INVESTMENTS - 2.53%
MUTUAL FUND - 2.53%
11,628,580 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 11,628,580
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $11,628,580) 11,628,580
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $383,728,334)* 100.37% $ 461,059,230
OTHER ASSETS AND LIABILITIES, NET (0.37) (1,716,160)
------ ---------------
TOTAL NET ASSETS 100.00% $ 459,343,070
====== ===============
+ 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 $11,628,580.
* 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 LARGE CAP STOCK FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CAPITAL
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................................... $ 207,367,160
INVESTMENTS IN AFFILIATES .................................................................................... 10,695,835
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .............................................................. 218,062,995
---------------
RECEIVABLE FOR FUND SHARES ISSUED ............................................................................ 1,086,477
RECEIVABLE FOR INVESTMENTS SOLD .............................................................................. 4,530,423
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................................................... 155,708
---------------
TOTAL ASSETS .................................................................................................... 223,835,603
---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ............................................................................. 123,385
PAYABLE FOR INVESTMENTS PURCHASED ............................................................................ 3,459,706
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ........................................................ 185,025
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................................................... 40,352
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................................................... 29,456
---------------
TOTAL LIABILITIES ............................................................................................... 3,837,924
---------------
TOTAL NET ASSETS ................................................................................................ $ 219,997,679
===============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................................. $ 200,619,235
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................................... (424,298)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................................ 2,124,313
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......................................................... 17,678,429
---------------
TOTAL NET ASSETS ................................................................................................ $ 219,997,679
---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
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 ............................................................................. $ 32,316,477
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..................................................................... 2,022,168
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........................................... $ 15.98
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 ............................................................................. $ 22,661,275
SHARES OUTSTANDING - INSTITUTIONAL CLASS ..................................................................... 1,417,329
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ........................................... $ 15.99
NET ASSETS - INVESTOR CLASS .................................................................................. $ 165,019,927
SHARES OUTSTANDING - INVESTOR CLASS .......................................................................... 10,430,874
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ................................................ $ 15.82
---------------
INVESTMENTS AT COST ............................................................................................. $ 200,384,566
===============
30
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DIVIDEND
INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................................... $ 221,944,134
INVESTMENTS IN AFFILIATES .................................................................................... 1,634,354
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .............................................................. 223,578,488
---------------
RECEIVABLE FOR FUND SHARES ISSUED ............................................................................ 63,371
RECEIVABLE FOR INVESTMENTS SOLD .............................................................................. 0
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................................................... 362,369
---------------
TOTAL ASSETS .................................................................................................... 224,004,228
---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ............................................................................. 162,639
PAYABLE FOR INVESTMENTS PURCHASED ............................................................................ 0
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ........................................................ 187,373
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................................................... 46,593
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................................................... 69,620
---------------
TOTAL LIABILITIES ............................................................................................... 466,225
---------------
TOTAL NET ASSETS ................................................................................................ $ 223,538,003
===============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................................. $ 183,412,601
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................................... 23,674
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................................ 673,548
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......................................................... 39,428,180
---------------
TOTAL NET ASSETS ................................................................................................ $ 223,538,003
---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
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 ............................................................................. $ 4,769,475
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..................................................................... 297,314
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........................................... $ 16.04
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 .................................................................................. $ 218,768,528
SHARES OUTSTANDING - INVESTOR CLASS .......................................................................... 13,460,211
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ................................................ $ 16.25
---------------
INVESTMENTS AT COST ............................................................................................. $ 184,150,308
===============
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................................... $ 1,515,184,723
INVESTMENTS IN AFFILIATES .................................................................................... 6,249,954
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .............................................................. 1,521,434,677
---------------
RECEIVABLE FOR FUND SHARES ISSUED ............................................................................ 144,866
RECEIVABLE FOR INVESTMENTS SOLD .............................................................................. 25,727,505
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................................................... 360,092
---------------
TOTAL ASSETS .................................................................................................... 1,547,667,140
---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ............................................................................. 267,452
PAYABLE FOR INVESTMENTS PURCHASED ............................................................................ 27,925,375
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ........................................................ 1,415,991
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................................................... 245,575
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................................................... 149,970
---------------
TOTAL LIABILITIES ............................................................................................... 30,004,363
---------------
TOTAL NET ASSETS ................................................................................................ $ 1,517,662,777
===============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................................. $ 1,833,464,843
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................................... (6,226,535)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................................ (563,277,883)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......................................................... 253,702,352
---------------
TOTAL NET ASSETS ................................................................................................ $ 1,517,662,777
---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS C ......................................................................................... $ 137,135
SHARES OUTSTANDING - CLASS C ................................................................................. 7,362
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ....................................................... $ 18.63
NET ASSETS - ADMINISTRATOR CLASS ............................................................................. $ 59,979,592
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..................................................................... 3,099,317
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........................................... $ 19.35
NET ASSETS - ADVISOR CLASS ................................................................................... $ 9,315,190
SHARES OUTSTANDING - ADVISOR CLASS ........................................................................... 493,762
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS ................................................. $ 18.87
NET ASSETS - INSTITUTIONAL CLASS ............................................................................. $ 301,769,417
SHARES OUTSTANDING - INSTITUTIONAL CLASS ..................................................................... 15,347,654
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ........................................... $ 19.66
NET ASSETS - INVESTOR CLASS .................................................................................. $ 1,146,461,443
SHARES OUTSTANDING - INVESTOR CLASS .......................................................................... 60,379,304
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ................................................ $ 18.99
---------------
INVESTMENTS AT COST ............................................................................................. $ 1,267,732,325
===============
GROWTH AND
INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................................... $ 439,230,155
INVESTMENTS IN AFFILIATES .................................................................................... 2,785,814
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .............................................................. 442,015,969
---------------
RECEIVABLE FOR FUND SHARES ISSUED ............................................................................ 9,433
RECEIVABLE FOR INVESTMENTS SOLD .............................................................................. 597,183
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................................................... 359,038
---------------
TOTAL ASSETS .................................................................................................... 442,981,623
---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ............................................................................. 105,291
PAYABLE FOR INVESTMENTS PURCHASED ............................................................................ 0
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ........................................................ 377,130
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................................................... 86,931
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................................................... 77,436
---------------
TOTAL LIABILITIES ............................................................................................... 646,788
---------------
TOTAL NET ASSETS ................................................................................................ $ 442,334,835
===============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................................. $ 506,163,532
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................................... 16,640
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................................ (69,235,947)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......................................................... 5,390,610
---------------
TOTAL NET ASSETS ................................................................................................ $ 442,334,835
---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
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 ............................................................................. $ 8,193,660
SHARES OUTSTANDING - ADMINISTRATOR CLASS ..................................................................... 410,799
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ........................................... $ 19.95
NET ASSETS - ADVISOR CLASS ................................................................................... $ 4,885,213
SHARES OUTSTANDING - ADVISOR CLASS ........................................................................... 244,464
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS ................................................. $ 19.98
NET ASSETS - INSTITUTIONAL CLASS ............................................................................. $ 29,361,864
SHARES OUTSTANDING - INSTITUTIONAL CLASS ..................................................................... 1,455,240
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ........................................... $ 20.18
NET ASSETS - INVESTOR CLASS .................................................................................. $ 399,894,098
SHARES OUTSTANDING - INVESTOR CLASS .......................................................................... 19,900,087
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ................................................ $ 20.10
---------------
INVESTMENTS AT COST ............................................................................................. $ 436,625,359
===============
LARGE CAP
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................................... $ 449,430,650
INVESTMENTS IN AFFILIATES .................................................................................... 11,628,580
---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .............................................................. 461,059,230
---------------
RECEIVABLE FOR FUND SHARES ISSUED ............................................................................ 5,686
RECEIVABLE FOR INVESTMENTS SOLD .............................................................................. 5,430,169
RECEIVABLES FOR DIVIDENDS AND INTEREST ....................................................................... 172,006
---------------
TOTAL ASSETS .................................................................................................... 466,667,091
---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ............................................................................. 127,223
PAYABLE FOR INVESTMENTS PURCHASED ............................................................................ 6,707,032
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ........................................................ 333,592
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ...................................................................... 97,465
ACCRUED EXPENSES AND OTHER LIABILITIES ....................................................................... 58,709
---------------
TOTAL LIABILITIES ............................................................................................... 7,324,021
---------------
TOTAL NET ASSETS ................................................................................................ $ 459,343,070
===============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................................. $ 837,533,687
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................................... (1,110,170)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................................ (454,411,343)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS
AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......................................................... 77,330,896
---------------
TOTAL NET ASSETS ................................................................................................ $ 459,343,070
---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
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 .................................................................................. $ 459,343,070
SHARES OUTSTANDING - INVESTOR CLASS .......................................................................... 20,406,447
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ................................................ $ 22.51
---------------
INVESTMENTS AT COST ............................................................................................. $ 383,728,334
===============
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
31
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CAPITAL
GROWTH FUND
- ----------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ............................................................. $ 540,579
INTEREST ................................................................. 17,272
INCOME FROM AFFILIATED SECURITIES ........................................ 54,940
SECURITIES LENDING INCOME, NET ........................................... 0
--------------
TOTAL INVESTMENT INCOME ..................................................... 612,791
--------------
EXPENSES
ADVISORY FEES ............................................................ 562,882
ADMINISTRATION FEES
FUND LEVEL ............................................................ 20,581
CLASS C ............................................................... N/A
ADMINISTRATOR CLASS ................................................... 12,791
ADVISOR CLASS ......................................................... N/A
INSTITUTIONAL CLASS ................................................... 1,422
INVESTOR CLASS ........................................................ 353,957
CUSTODY FEES ............................................................. 12,842
SHAREHOLDER SERVICING FEES ............................................... 98,462
ACCOUNTING FEES .......................................................... 24,731
DISTRIBUTION FEES (NOTE 3)
CLASS C ............................................................... N/A
ADVISOR CLASS ......................................................... N/A
INVESTOR CLASS ........................................................ 80,059
AUDIT FEES ............................................................... 10,726
LEGAL FEES ............................................................... 2,504
REGISTRATION FEES ........................................................ 18,682
SHAREHOLDER REPORTS ...................................................... 11,537
TRUSTEES' FEES ........................................................... 6,183
OTHER FEES AND EXPENSES .................................................. 15,463
--------------
TOTAL EXPENSES .............................................................. 1,232,822
--------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ............................. (195,733)
NET EXPENSES ............................................................. 1,037,089
--------------
NET INVESTMENT INCOME (LOSS) ................................................ (424,298)
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .......... 2,625,598
--------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................................... 2,625,598
--------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .......... 2,816,837
--------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... 2,816,837
==============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ...................... 5,442,435
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............. $ 5,018,137
==============
(1) NET OF FOREIGN WITHHOLDING TAXES ........................................ $ 20,316
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DIVIDEND GROWTH AND
INCOME FUND GROWTH FUND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ............................................................. $ 2,130,300 $ 3,377,739 $ 3,966,403
INTEREST ................................................................. 22,566 68,726 41,820
INCOME FROM AFFILIATED SECURITIES ........................................ 14,986 73,380 18,416
SECURITIES LENDING INCOME, NET ........................................... 0 9,301 3,421
-------------- -------------- --------------
TOTAL INVESTMENT INCOME ..................................................... 2,167,852 3,529,146 4,030,060
-------------- -------------- --------------
EXPENSES
ADVISORY FEES ............................................................ 621,126 5,264,979 1,514,452
ADMINISTRATION FEES
FUND LEVEL ............................................................ 24,615 166,177 51,008
CLASS C ............................................................... N/A 376 N/A
ADMINISTRATOR CLASS ................................................... 6,449 84,360 25,061
ADVISOR CLASS ......................................................... N/A 13,038 10,141
INSTITUTIONAL CLASS ................................................... N/A 84,085 6,528
INVESTOR CLASS ........................................................ 378,812 2,983,290 1,180,818
CUSTODY FEES ............................................................. 8,737 75,662 23,003
SHAREHOLDER SERVICING FEES ............................................... 123,075 666,868 241,239
ACCOUNTING FEES .......................................................... 23,964 44,334 29,680
DISTRIBUTION FEES (NOTE 3)
CLASS C ............................................................... N/A 807 N/A
ADVISOR CLASS ......................................................... N/A 4,018 3,907
INVESTOR CLASS ........................................................ N/A N/A N/A
AUDIT FEES ............................................................... 9,592 2,621 7,665
LEGAL FEES ............................................................... 2,731 28,169 9,381
REGISTRATION FEES ........................................................ 22,214 46,236 29,392
SHAREHOLDER REPORTS ...................................................... 30,585 290,706 77,074
TRUSTEES' FEES ........................................................... 6,819 61,153 22,253
OTHER FEES AND EXPENSES .................................................. 23,033 288,782 112,443
-------------- -------------- --------------
TOTAL EXPENSES .............................................................. 1,281,752 10,105,661 3,344,045
-------------- -------------- --------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ............................. (105,864) (349,980) (301,772)
NET EXPENSES ............................................................. 1,175,888 9,755,681 3,042,273
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) ................................................ 991,964 (6,226,535) 987,787
-------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .......... 11,007,157 131,232,050 77,717,308
-------------- -------------- --------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................................... 11,007,157 131,232,050 77,717,308
-------------- -------------- --------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .......... (7,072,649) (150,943,195) (106,743,138)
-------------- -------------- --------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... (7,072,649) (150,943,195) (106,743,138)
============== ============== ==============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ...................... 3,934,508 (19,711,145) (29,025,830)
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............. $ 4,926,472 $ (25,937,680) $ (28,038,043)
============== ============== ==============
(1) NET OF FOREIGN WITHHOLDING TAXES ........................................ $ 33,429 $ 12,380 $ 72,543
LARGE CAP
GROWTH FUND
- ----------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ............................................................. $ 1,630,241
INTEREST ................................................................. 26,112
INCOME FROM AFFILIATED SECURITIES ........................................ 82,894
SECURITIES LENDING INCOME, NET ........................................... 2,625
--------------
TOTAL INVESTMENT INCOME ..................................................... 1,741,872
--------------
EXPENSES
ADVISORY FEES ............................................................ 1,494,169
ADMINISTRATION FEES
FUND LEVEL ............................................................ 399,397
CLASS C ............................................................... N/A
ADMINISTRATOR CLASS ................................................... N/A
ADVISOR CLASS ......................................................... N/A
INSTITUTIONAL CLASS ................................................... N/A
INVESTOR CLASS ........................................................ 826,456
CUSTODY FEES ............................................................. 26,626
SHAREHOLDER SERVICING FEES ............................................... 253,639
ACCOUNTING FEES .......................................................... 10,891
DISTRIBUTION FEES (NOTE 3)
CLASS C ............................................................... N/A
ADVISOR CLASS ......................................................... N/A
INVESTOR CLASS ........................................................ N/A
AUDIT FEES ............................................................... 7,708
LEGAL FEES ............................................................... 8,523
REGISTRATION FEES ........................................................ 11,081
SHAREHOLDER REPORTS ...................................................... 70,783
TRUSTEES' FEES ........................................................... 22,684
OTHER FEES AND EXPENSES .................................................. 97,749
--------------
TOTAL EXPENSES .............................................................. 3,229,706
--------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ............................. (377,664)
NET EXPENSES ............................................................. 2,852,042
--------------
NET INVESTMENT INCOME (LOSS) ................................................ (1,110,170)
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .......... 23,409,584
--------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................................... 23,409,584
--------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .......... (29,184,117)
--------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... (29,184,117)
==============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ...................... (5,774,533)
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............. $ (6,884,703)
==============
(1) NET OF FOREIGN WITHHOLDING TAXES ........................................ $ 4,196
33
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
CAPITAL GROWTH FUND
------------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1)(2) DECEMBER 31, 2004(2)
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................................................... $ 104,349,714 $ 71,774,589
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................................................. (424,298) (415,580)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...................................... 2,625,598 9,100,980
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .......... 2,816,837 4,515,399
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................... 5,018,137 13,200,799
------------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
ADMINISTRATOR CLASS ........................................................ 0 0
ADVISOR CLASS .............................................................. N/A N/A
INSTITUTIONAL CLASS ........................................................ 0 N/A
INVESTOR CLASS ............................................................. 0 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
ADMINISTRATOR CLASS ........................................................ (7,322) 0
INVESTOR CLASS ............................................................. (93,393) 0
------------------- -------------------
TOTAL DISTRIBUTIONS ............................................................... (100,715) 0
------------------- -------------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - 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 (NOTE 1) ..................... 28,944,284 3,776,093
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................. 7,322 0
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ................. 2,800 2,450
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ....................... (2,361,151) (463,462)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ........................................... 26,593,255 3,315,081
------------------- -------------------
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 (NOTE 1) ..................... 31,299,961 N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ................. 0 N/A
PROCEEDS FROM REDEMPTION FEES - INSTITUTIONAL CLASS (NOTE 1) ................. 1,805 N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ....................... (9,058,143) N/A
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS ........................................... 22,243,623 N/A
------------------- -------------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ................................... 101,824,046 58,344,944
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ............................... 88,402 0
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS ............................... 30,170 63,114
COST OF SHARES REDEEMED - INVESTOR CLASS ..................................... (40,048,953) (42,348,813)
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ................................................ 61,893,665 16,059,245
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 110,730,543 19,374,326
=================== ===================
NET INCREASE (DECREASE) IN NET ASSETS ............................................. 115,647,965 32,575,125
=================== ===================
ENDING NET ASSETS ................................................................. $ 219,997,679 $ 104,349,714
=================== ===================
34
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DIVIDEND INCOME FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ........................................................... $ 127,097,342 $ 145,811,208
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................................................... 991,964 1,788,748
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................ 11,007,157 12,637,848
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ (7,072,649) 1,841,225
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... 4,926,472 16,267,821
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
ADMINISTRATOR CLASS .......................................................... (34,493) (79,420)
ADVISOR CLASS ................................................................ N/A N/A
INSTITUTIONAL CLASS .......................................................... N/A N/A
INVESTOR CLASS ............................................................... (943,730) (1,721,391)
NET REALIZED GAIN ON SALES OF INVESTMENTS
ADMINISTRATOR CLASS .......................................................... (178,313) 0
INVESTOR CLASS ............................................................... (5,146,749) 0
------------------- -----------------
TOTAL DISTRIBUTIONS ................................................................. (6,303,285) (1,800,811)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - 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 (NOTE 1) ....................... 521,458 957,685
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................... 212,808 73,969
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ................... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ......................... (278,314) (2,218,124)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ................................................................. 455,952 (1,186,470)
------------------- -----------------
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 (NOTE 1) ....................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ................... N/A N/A
PROCEEDS FROM REDEMPTION FEES - INSTITUTIONAL CLASS (NOTE 1) ................... N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ......................... 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 ..................................... 120,849,946 12,663,221
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................................. 5,710,081 1,610,726
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS ................................. N/A N/A
COST OF SHARES REDEEMED - INVESTOR CLASS ....................................... (29,198,505) (46,268,353)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INVESTOR CLASS ...................................................................... 97,361,522 (31,994,406)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ..... 97,817,474 (33,180,876)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ............................................... 96,440,661 (18,713,866)
=================== =================
ENDING NET ASSETS ................................................................... $ 223,538,003 $ 127,097,342
=================== =================
GROWTH FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ........................................................... $ 1,514,223,522 $ 1,742,914,779
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................................................... (6,226,535) (9,945,582)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................ 131,232,050 261,988,145
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ (150,943,195) (70,439,528)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... (25,937,680) 181,603,035
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
ADMINISTRATOR CLASS .......................................................... 0 0
ADVISOR CLASS ................................................................ 0 0
INSTITUTIONAL CLASS .......................................................... 0 0
INVESTOR CLASS ............................................................... 0 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
ADMINISTRATOR CLASS .......................................................... 0 0
INVESTOR CLASS ............................................................... 0 0
------------------- -----------------
TOTAL DISTRIBUTIONS ................................................................. 0 0
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS C ............................................ 10,117 7,895
COST OF SHARES REDEEMED - CLASS C .............................................. (174,179) (240,608)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS C ............................................................................. (164,062) (232,713)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ....................... 3,445,443 29,280,184
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................... 0 0
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ................... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ......................... (8,882,608) (27,039,383)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ................................................................. (5,437,165) 2,240,801
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ...................................... 5,121,758 1,130,060
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .................................. 0 0
COST OF SHARES REDEEMED - ADVISOR CLASS ........................................ (2,132,103) (4,859,149)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADVISOR CLASS ....................................................................... 2,989,655 (3,729,089)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ....................... 22,044,681 50,957,625
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ................... 0 0
PROCEEDS FROM REDEMPTION FEES - INSTITUTIONAL CLASS (NOTE 1) ................... N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ......................... (10,918,672) (102,489,398)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS ................................................................. 11,126,009 (51,531,773)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ..................................... 159,919,391 95,253,378
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................................. 0 0
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS ................................. N/A N/A
COST OF SHARES REDEEMED - INVESTOR CLASS ....................................... (139,056,893) (452,294,896)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INVESTOR CLASS ...................................................................... 20,862,498 (357,041,518)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ..... 29,376,935 (410,294,292)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ............................................... 3,439,255 (228,691,257)
=================== =================
ENDING NET ASSETS ................................................................... $ 1,517,662,777 $ 1,514,223,522
=================== =================
GROWTH AND INCOME FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ........................................................... $ 528,010,810 $ 754,988,255
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................................................... 987,787 2,850,246
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................ 77,717,308 109,886,748
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ (106,743,138) (67,387,548)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... (28,038,043) 45,349,446
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
ADMINISTRATOR CLASS .......................................................... (62,951) (188,984)
ADVISOR CLASS ................................................................ (14,248) (27,166)
INSTITUTIONAL CLASS .......................................................... (156,308) (468,186)
INVESTOR CLASS ............................................................... (994,650) (2,205,122)
NET REALIZED GAIN ON SALES OF INVESTMENTS
ADMINISTRATOR CLASS .......................................................... 0 0
INVESTOR CLASS ............................................................... 0 0
------------------- -----------------
TOTAL DISTRIBUTIONS ................................................................. (1,228,157) (2,889,458)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - 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 (NOTE 1) ....................... 1,533,220 16,023,072
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................... 62,952 86,153
PROCEEDS FROM REDEMPTION FEES - ADMINISTRATOR CLASS (NOTE 1) ................... N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ......................... (12,337,836) (27,378,853)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ................................................................. (10,741,664) (11,269,628)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ...................................... 587,922 884,899
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .................................. 14,232 27,101
COST OF SHARES REDEEMED - ADVISOR CLASS ........................................ (1,454,999) (3,971,072)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADVISOR CLASS ....................................................................... (852,845) (3,059,072)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ....................... 8,222,816 10,067,845
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ................... 156,307 409,578
PROCEEDS FROM REDEMPTION FEES - INSTITUTIONAL CLASS (NOTE 1) ................... N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ......................... (13,844,454) (60,154,178)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS ................................................................. (5,465,331) (49,676,755)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ..................................... 32,627,971 56,766,975
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................................. 975,742 2,160,572
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS ................................. N/A N/A
COST OF SHARES REDEEMED - INVESTOR CLASS ....................................... (72,953,648) (264,359,525)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INVESTOR CLASS ...................................................................... (39,349,935) (205,431,978)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ..... (56,409,775) (269,437,433)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ............................................... (85,675,975) (226,977,445)
=================== =================
ENDING NET ASSETS ................................................................... $ 442,334,835 $ 528,010,810
=================== =================
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND
SHARE CLASS CONVERSIONS (NOTE 1).
(2) PROCEEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
CAPITAL GROWTH FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - 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 (NOTE 1) . .................................... 1,865,464 265,582
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS
(NOTE 1) . .................................................................... 492 0
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................. (153,135) (32,837)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ................. 1,712,821 232,745
------------------- -----------------
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 (NOTE 1) ...................................... 1,980,434 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ... 0 N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................. (563,105) N/A
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. 1,417,329 N/A
------------------- -----------------
SHARES SOLD - INVESTOR CLASS .................................................... 6,695,689 4,080,224
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................. 5,989 0
SHARES REDEEMED - INVESTOR CLASS ................................................ (2,605,114) (3,042,497)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ....................... 4,096,564 1,037,727
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS .................................................................... 7,226,714 1,270,472
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................ $ (424,298) $ 0
=================== =================
36
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DIVIDEND INCOME FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - 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 (NOTE 1) ...................................... 32,120 65,076
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ... 13,235 4,880
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................. (17,024) (152,136)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................. 28,331 (82,180)
------------------- -----------------
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 (NOTE 1) ...................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ... N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................. N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. N/A N/A
------------------- -----------------
SHARES SOLD - INVESTOR CLASS .................................................... 7,409,707 842,428
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................. 350,552 104,861
SHARES REDEEMED - INVESTOR CLASS ................................................ (1,794,685) (3,114,265)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ....................... 5,965,574 (2,166,976)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ..................................................................... 5,993,905 (2,249,156)
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ 23,674 $ 9,933
=================== =================
GROWTH FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS C ........................................................... 562 459
SHARES REDEEMED - CLASS C ....................................................... (9,739) (13,972)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .............................. (9,177) (13,513)
------------------- -----------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ...................................... 183,269 1,658,492
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ... 0 0
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................. (471,913) (1,483,358)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................. (288,644) 175,134
------------------- -----------------
SHARES SOLD - ADVISOR CLASS ..................................................... 280,336 64,602
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .................. 0 0
SHARES REDEEMED - ADVISOR CLASS ................................................. (117,250) (277,909)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ........................ 163,086 (213,307)
------------------- -----------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ...................................... 1,155,630 2,807,792
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ... 0 0
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................. (562,216) (5,693,537)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. 593,414 (2,885,745)
------------------- -----------------
SHARES SOLD - INVESTOR CLASS .................................................... 8,645,109 5,403,825
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................. 0 0
SHARES REDEEMED - INVESTOR CLASS ................................................ (7,477,738) (25,653,429)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ....................... 1,167,371 (20,249,604)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS .................................................................... 1,626,050 (23,187,035)
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ (6,226,535) $ 0
=================== =================
GROWTH AND INCOME FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - 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 (NOTE 1) ...................................... 75,171 812,188
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ... 3,106 4,251
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................. (604,230) (1,393,806)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................. (525,953) (577,367)
------------------- -----------------
SHARES SOLD - ADVISOR CLASS ..................................................... 28,957 44,541
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .................. 702 1,314
SHARES REDEEMED - ADVISOR CLASS ................................................. (71,224) (200,817)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ........................ (41,565) (154,962)
------------------- -----------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ...................................... 398,640 507,260
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ... 7,635 20,235
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................. (673,350) (3,043,024)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. (267,075) (2,515,529)
------------------- -----------------
SHARES SOLD - INVESTOR CLASS .................................................... 1,591,935 2,839,780
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................. 47,849 103,138
SHARES REDEEMED - INVESTOR CLASS ................................................ (3,545,526) (13,312,831)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ....................... (1,905,742) (10,369,913)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS .................................................................... (2,740,335) (13,617,771)
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ 16,640 $ 257,010
=================== =================
(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.
37
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................................. $ 518,430,674 $ 644,131,444
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................................... (1,110,170) (1,690,933)
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................................. 23,409,584 73,815,081
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................. (29,184,117) (28,242,259)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......................... (6,884,703) 43,881,889
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
ADMINISTRATOR CLASS ............................................................... N/A N/A
ADVISOR CLASS ..................................................................... N/A N/A
INSTITUTIONAL CLASS ............................................................... N/A N/A
INVESTOR CLASS .................................................................... 0 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
ADMINISTRATOR CLASS ............................................................... N/A N/A
INVESTOR CLASS .................................................................... 0 0
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................................... 0 0
-------------- --------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - 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 (NOTE 1) ............................. N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ......................... N/A N/A
PROCEEDS FROM REDEMPTION FEES - 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 (NOTE 1) ............................. N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ......................... N/A N/A
PROCEEDS FROM REDEMPTION FEES - INSTITUTIONAL CLASS (NOTE 1) ......................... N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ............................... 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 ........................................... 9,761,802 23,281,058
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ....................................... 43,542 0
PROCEEDS FROM REDEMPTION FEES - INVESTOR CLASS ....................................... 1,907 N/A
COST OF SHARES REDEEMED - INVESTOR CLASS ............................................. (62,010,152) (192,863,717)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS
- INVESTOR CLASS ..................................................................... (52,202,901) (169,582,659)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ......... (52,202,901) (169,582,659)
============== ==============
NET INCREASE (DECREASE) IN NET ASSETS ................................................... (59,087,604) (125,700,770)
============== ==============
ENDING NET ASSETS ....................................................................... $ 459,343,070 $ 518,430,674
============== ==============
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - 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 (NOTE 1) ........................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - 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 (NOTE 1) ........................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ........ N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE1) ........................................ N/A N/A
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ..................... N/A N/A
-------------- --------------
SHARES SOLD - INVESTOR CLASS ......................................................... 448,454 1,096,912
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ...................... 1,999 0
SHARES REDEEMED - INVESTOR CLASS ..................................................... (2,836,435) (9,063,690)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS .......................... (2,385,982) (7,966,778)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING B FROM CAPITAL SHARE
TRANSACTIONS ......................................................................... (2,385,982) (7,966,778)
============== ==============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................ $ (1,110,170) $ 0
============== ==============
39
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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
- ---------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $15.82 (0.00)(4)(5) 0.17 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $13.40 (0.01) 2.43(6) 0.00
JUNE 30, 2003(7) TO DECEMBER 31, 2003 ......... $11.96 (0.00)(4) 1.44(8) 0.00
INSTITUTIONAL CLASS
APRIL 11, 2005(7) TO JUNE 30, 2005
(UNAUDITED) ................................... $15.21 0.01(5) 0.77 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $15.70 (0.05)(5) 0.18 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $13.36 (0.06) 2.40 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 $10.66 (0.04) 2.75(6) (0.01)
OCTOBER 1, 2002 TO DECEMBER 31, 2002(9) ....... $10.25 (0.00)(4) 0.45 (0.04)
OCTOBER 31, 2001 TO SEPTEMBER 30, 2002 ........ $12.17 0.31 (1.93) (0.27)
OCTOBER 31, 2000 TO SEPTEMBER 30, 2001 ........ $19.15 0.32 (5.09) (0.32)
OCTOBER 31, 1999 TO SEPTEMBER 30, 2000 ........ $13.12 0.29 6.26 (0.27)
DIVIDEND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $16.17 0.13 0.51 (0.12)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $14.39 0.27 1.79 (0.28)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $11.71 0.19 2.71 (0.22)
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 ....... $15.19 0.25 (3.13) (0.35)
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $16.38 0.09 0.52 (0.09)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $14.57 0.22 1.81 (0.22)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $11.85 0.16 2.72 (0.16)
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... $15.19 0.15 (3.09) (0.15)
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... $17.49 0.35 (2.30) (0.35)
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ..... $17.31 0.07 1.01 (0.08)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 .......... $17.18 0.37 1.88 (0.36)
GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $19.00 (0.12)(5) (0.25) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $17.03 (0.30)(5) 2.27 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $13.21 (0.32)(5) 4.14 0.00
DECEMBER 26, 2002(7) TO DECEMBER 31, 2002 ..... $13.44 0.00(4)(5) (0.23) 0.00
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $19.68 (0.04)(5) (0.29) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $17.38 (0.03)(5) 2.33 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $13.29 (0.08)(5) 4.17 0.00
AUGUST 30, 2002(7) TO DECEMBER 31, 2002 ....... $13.53 (0.01)(5) (0.23) 0.00
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $19.22 (0.08)(5) (0.27) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $17.09 (0.15)(5) 2.28 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $13.14 (0.16)(5) 4.11 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... $17.58 (0.17)(5) (4.27) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... $26.96 (0.15) (9.16) 0.00
FEBRUARY 24, 2000(7) TO DECEMBER 31, 2000 ..... $43.74 (0.02) (11.53) 0.00
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .. $19.99 (0.04)(5) (0.29) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .......... $17.65 (0.03)(5) 2.37 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .......... $13.48 (0.07)(5) 4.24 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 .......... $17.91 (0.08)(5) (4.35) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 .......... $27.17 (0.02) (9.17) 0.00
FEBRUARY 24, 2000(7) TO DECEMBER 31, 2000 ..... $43.74 (0.01) (11.33) 0.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
40
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET ------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (0.01) $15.98 (0.01)% 1.30% (0.38)% 0.92%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $15.82 (0.08)% 1.32% (0.38)% 0.94%
JUNE 30, 2003(7) TO DECEMBER 31, 2003 ........... 0.00 $13.40 (0.03)% 2.13% (1.19)% 0.94%
INSTITUTIONAL CLASS
APRIL 11, 2005(7) TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $15.99 0.31% 0.98% (0.19)% 0.79%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (0.01) $15.82 (0.64)% 1.70% (0.26)% 1.44%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $15.70 (0.55)% 1.77% (0.33)% 1.44%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $13.36 (0.45)% 1.75% (0.29)% 1.46%
OCTOBER 1, 2002 TO DECEMBER 31, 2002(9) ......... 0.00 $10.66 0.25% 1.92% (0.62)% 1.30%
OCTOBER 31, 2001 TO SEPTEMBER 30, 2002 .......... (0.03) $10.25 2.27% 1.67% (0.17)% 1.50%
OCTOBER 31, 2000 TO SEPTEMBER 30, 2001 .......... (1.89) $12.17 2.20% 1.64% (0.14)% 1.50%
OCTOBER 31, 1999 TO SEPTEMBER 30, 2000 .......... (0.25) $19.15 1.80% 1.58% (0.08)% 1.50%
DIVIDEND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (0.65) $16.04 1.54% 1.24% (0.28)% 0.96%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $16.17 1.75% 1.36% (0.41)% 0.95%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $14.39 1.62% 1.40% (0.40)% 1.00%
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 ......... (0.25) $11.71 1.64% 2.10% (1.10)% 1.00%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (0.65) $16.25 1.15% 1.52% (0.13)% 1.39%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $16.38 1.40% 1.40% (0.04)% 1.36%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $14.57 1.24% 1.40% 0.00% 1.40%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (0.25) $11.85 1.05% 1.40% 0.00% 1.40%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ 0.00 $15.19 2.13% 1.10% 0.00% 1.10%
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ....... (0.82) $17.49 2.52% 1.00% 0.00% 1.00%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ (1.76) $17.31 2.28% 1.00% 0.00% 1.00%
GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $18.63 (1.30)% 1.92% (0.16)% 1.76%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $19.00 (1.74)% 3.35% (0.93)% 2.42%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $17.03 (2.02)% 4.31% (1.84)% 2.47%
DECEMBER 26, 2002(7) TO DECEMBER 31, 2002 ....... 0.00 $13.21 0.00% 2.34% (0.01)% 2.33%
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $19.35 (0.48)% 1.20% (0.23)% 0.97%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $19.68 (0.19)% 1.31% (0.36)% 0.95%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $17.38 (0.52)% 1.24% (0.27)% 0.97%
AUGUST 30, 2002(7) TO DECEMBER 31, 2002 ......... 0.00 $13.29 (0.69)% 1.26% (0.27)% 0.99%
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $18.87 (0.44)% 1.45% (0.04)% 1.41%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $19.22 (0.86)% 1.59% (0.05)% 1.54%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $17.09 (1.10)% 1.57% (0.02)% 1.55%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ 0.00 $13.14 (1.16)% 1.56% 0.00% 1.56%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (0.07) $17.58 (1.03)% 1.65% 0.00% 1.65%
FEBRUARY 24, 2000(7) TO DECEMBER 31, 2000 ....... (5.23) $26.96 (0.91)% 2.00% (0.08)% 1.92%
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $19.66 (0.99)% 0.97% (0.04)% 0.93%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $19.99 (0.17)% 0.93% (0.04)% 0.89%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $17.65 (0.45)% 0.92% (0.02)% 0.90%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ 0.00 $13.48 (0.51)% 0.92% 0.00% 0.92%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (0.07) $17.91 (0.32)% 0.91% (0.01)% 0.90%
FEBRUARY 24, 2000(7) TO DECEMBER 31, 2000 ....... (5.23) $27.17 (0.09)% 0.84% 0.00% 0.84%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ------------------------------------------------------------------------------------------
CAPITAL GROWTH FUND
- ------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 1.09% 121% $ 32,316
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 18.06% 239% $ 4,895
JUNE 30, 2003(7) TO DECEMBER 31, 2003 ........... 12.04% 229% $ 1,026
INSTITUTIONAL CLASS
APRIL 11, 2005(7) TO JUNE 30, 2005 (UNAUDITED) .. 5.06% 121% $ 22,661
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.84% 121% $165,020
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 17.51% 239% $ 99,455
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 25.41% 229% $ 70,748
OCTOBER 1, 2002 TO DECEMBER 31, 2002(9) ......... 4.38% 72% $ 21,375
OCTOBER 31, 2001 TO SEPTEMBER 30, 2002 .......... (13.69)% 311% $ 18,221
OCTOBER 31, 2000 TO SEPTEMBER 30, 2001 .......... (26.22)% 285% $ 33,163
OCTOBER 31, 1999 TO SEPTEMBER 30, 2000 .......... 50.67% 181% $ 36,964
DIVIDEND INCOME FUND
- ------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 3.98% 41% $ 4,769
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 14.49% 49% $ 4,351
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 24.99% 92% $ 5,054
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 ......... (19.42)% 114% $ 559
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 3.72% 41% $218,769
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 14.04% 49% $122,747
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 24.50% 92% $140,758
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (19.77)% 114% $151,165
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (11.20)% 77% $234,428
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ....... 6.60% 7% $297,887
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............ 15.36% 107% $260,282
GROWTH FUND
- ----------------------------------------------------------------------------------------
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (1.95)% 110% $ 137
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 11.57% 92% $ 314
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 28.92% 139% $ 512
DECEMBER 26, 2002(7) TO DECEMBER 31, 2002 ....... (1.71)% 249% $ 98
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (1.68)% 110% $ 59,980
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 13.23% 92% $ 66,658
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 30.78% 139% $ 55,851
AUGUST 30, 2002(7) TO DECEMBER 31, 2002 ......... (1.77)% 249% $ 13,106
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (1.82)% 110% $ 9,315
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 12.46% 92% $ 6,357
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 30.06% 139% $ 9,294
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (25.26)% 249% $ 9,764
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (34.54)% 400% $ 14,292
FEBRUARY 24, 2000(7) TO DECEMBER 31, 2000 ....... (26.21)% 366% $ 4,175
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (1.65)% 110% $301,769
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 13.26% 92% $294,892
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 30.93% 139% $311,312
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (24.73)% 249% $195,054
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (33.84)% 400% $ 72,846
FEBRUARY 24, 2000(7) TO DECEMBER 31, 2000 ....... (25.72)% 366% $ 17,844
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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
- -----------------------------------------------------------------------------------------------------------------------
GROWTH FUND (CONTINUED)
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .............. $19.35 (0.09)(5) (0.27) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ...................... $17.19 (0.13)(5) 2.29 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ...................... $13.21 (0.16)(5) 4.14 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ...................... $17.68 (0.18)(5) (4.29) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ...................... $27.05 (0.15) (9.15) 0.00
JANUARY 1, 2000 TO DECEMBER 31, 2000 ...................... $35.66 (0.17) (3.21) 0.00
GROWTH AND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .............. $21.17 (0.05) (1.09) (0.08)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ...................... $19.52 0.19 1.63 (0.17)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ...................... $15.75 0.11(5) 3.79 (0.13)
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 ................... $20.28 0.11 (4.46) (0.18)
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .............. $21.21 0.03 (1.21) (0.05)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ...................... $19.57 0.08 1.65 (0.09)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ...................... $15.77 0.05(5) 3.80 (0.05)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ...................... $20.20 0.04 (4.41) (0.06)
JANUARY 1, 2001 TO DECEMBER 31, 2001 ...................... $25.32 (0.04) (5.08) 0.00
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................. $28.29 (0.00)(4) (2.65) 0.00
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 .................. $29.15 (0.05) (0.81) 0.00
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .............. $21.41 0.11 (1.22) (0.12)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ...................... $19.72 0.26 1.62 (0.19)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ...................... $15.92 0.16(4) 3.83 (0.19)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ...................... $20.49 0.15 (4.49) (0.23)
JANUARY 1, 2001 TO DECEMBER 31, 2001 ...................... $25.46 0.08 (5.05) 0.00
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................. $28.41 (0.00)(5) (2.63) 0.00
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 .................. $29.15 0.01 (0.75) 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .............. $21.33 0.04 (1.22) (0.05)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ...................... $19.68 0.09 1.66 (0.10)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ...................... $15.85 0.04(5) 3.83 (0.04)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ...................... $20.28 0.02 (4.45) (0.00)(4)
JANUARY 1, 2001 TO DECEMBER 31, 2001 ...................... $25.37 (0.02) (5.07) 0.00
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................. $28.34 (0.00)(4) (2.65) 0.00
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ...................... $25.26 (0.09) 3.19 0.00
LARGE CAP GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .............. $22.75 (0.05) (0.19) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ...................... $20.94 (0.07) 1.88 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ...................... $16.51 (0.10) 4.53 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ...................... $23.55 (0.08) (6.96) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ...................... $34.77 (0.02) (11.20) (0.00)(4)
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................. $45.49 0.01 (4.81) 0.00
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ...................... $41.52 (0.16) 12.01 0.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING
FROM NET NET ASSET
REALIZED VALUE PER
GAINS SHARE
- --------------------------------------------------------------------------------------
GROWTH FUND (CONTINUED)
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.00 $18.99
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.00 $19.35
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... (0.00) $17.19
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.00 $13.21
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (0.07) $17.68
JANUARY 1, 2000 TO DECEMBER 31, 2000 ..................... (5.23) $27.05
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.00 $19.95
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.00 $21.17
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.00 $19.52
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 .................. 0.00 $15.75
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.00 $19.98
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.00 $21.21
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.00 $19.57
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (0.00) $15.77
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... 0.00 $20.20
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (0.32) $25.32
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 ................. 0.00 $28.29
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.00 $20.18
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.00 $21.41
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.00 $19.72
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.00 $15.92
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... 0.00 $20.49
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (0.32) $25.46
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 ................. 0.00 $28.41
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.00 $20.10
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.00 $21.33
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.00 $19.68
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.00 $15.85
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... 0.00 $20.28
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (0.32) $25.37
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ..................... (0.02) $28.34
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.00 $22.51
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.00 $22.75
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.00 $20.94
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.00 $16.51
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... 0.00 $23.55
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (5.92) $34.77
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ..................... (7.88) $45.49
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
-------------------------------------------------
NET INVESTMENT GROSS EXPENSES NET
INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------
GROWTH FUND (CONTINUED)
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (0.91)% 1.52% (0.04)% 1.48%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... (0.77)% 1.52% (0.04)% 1.48%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... (1.08)% 1.54% (0.01)% 1.53%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (1.18)% 1.59% (0.01)% 1.58%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (0.71)% 1.37% 0.00% 1.37%
JANUARY 1, 2000 TO DECEMBER 31, 2000 ..................... (0.55)% 1.20% 0.00% 1.20%
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.77% 1.14% (0.18)% 0.96%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.77% 1.09% (0.15)% 0.94%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.65% 1.06% (0.08)% 0.98%
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 .................. 0.68% 1.07% (0.09)% 0.98%
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 1.07% 1.39% (0.12)% 1.27%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.36% 1.44% (0.06)% 1.38%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.29% 1.35% (0.01)% 1.34%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.24% 1.27% (0.01)% 1.26%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (0.28)% 1.53% 0.00% 1.53%
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (0.24)% 1.28% 0.00% 1.28%
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 ................. (0.74)% 1.31% 0.00% 1.31%
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.35% 0.73% (0.14)% 0.59%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.93% 0.76% (0.05)% 0.71%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.95% 0.69% (0.01)% 0.68%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.87% 0.66% (0.01)% 0.65%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... 0.58% 0.65% (0.01)% 0.64%
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ 0.14% 0.61% 0.00% 0.61%
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 ................. 0.07% 0.64% 0.00% 0.64%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. 0.43% 1.46% (0.12)% 1.34%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 0.40% 1.40% (0.05)% 1.35%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 0.25% 1.40% (0.02)% 1.38%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 0.08% 1.43% (0.01)% 1.42%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (0.09)% 1.30% 0.00% 1.30%
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (0.01)% 1.07% 0.00% 1.07%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ..................... (0.35)% 1.09% 0.00% 1.09%
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (0.47)% 1.38% (0.16)% 1.22%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... (0.30)% 1.24% (0.04)% 1.20%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... (0.48)% 1.27% (0.02)% 1.25%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (0.37)% 1.24% (0.01)% 1.23%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (0.09)% 1.11% 0.00% 1.11%
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ 0.15% 0.99% 0.00% 0.99%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ..................... (0.36)% 0.96% 0.00% 0.96%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- -----------------------------------------------------------------------------------------------------
GROWTH FUND (CONTINUED)
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (1.86)% 110% $1,146,461
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 12.57% 92% $1,146,002
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 30.13% 139% $1,365,946
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (25.28)% 249% $1,256,292
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (34.39)% 400% $2,021,795
JANUARY 1, 2000 TO DECEMBER 31, 2000 ..................... (9.23)% 366% $3,411,250
GROWTH AND INCOME FUND
- -----------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (5.37)% 134% $ 8,194
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 9.35% 136% $ 19,836
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 24.90% 199% $ 29,557
JANUARY 1, 2002(7) TO DECEMBER 31, 2002 .................. (21.47)% 188% $ 19,280
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (5.54)% 134% $ 4,885
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 8.85% 136% $ 6,068
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 24.42% 199% $ 8,631
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (21.67)% 188% $ 10,347
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (20.22)% 172% $ 13,823
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (9.35)% 23% $ 4,704
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 ................. (2.95)% 122% $ 455
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (5.19)% 134% $ 29,362
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 9.59% 136% $ 36,879
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 25.26% 199% $ 83,589
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... 21.22% 188% $ 67,014
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... 19.52% 172% $ 46,577
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ 9.24% 23% $ 31,394
FEBRUARY 29, 2000(7) TO OCTOBER 31, 2000 ................. 2.54% 122% $ 772
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (5.54)% 134% $ 399,894
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 8.88% 136% $ 465,228
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 24.44% 199% $ 633,211
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (21.83)% 188% $ 582,081
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (20.06)% 172% $ 886,066
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (9.33)% 23% $1,109,155
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ..................... 12.29% 122% $1,227,987
LARGE CAP GROWTH FUND
- -----------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ............. (1.06)% 93% $ 459,343
JANUARY 1, 2004 TO DECEMBER 31, 2004 ..................... 8.64% 89% $ 518,431
JANUARY 1, 2003 TO DECEMBER 31, 2003 ..................... 26.83% 253% $ 644,131
JANUARY 1, 2002 TO DECEMBER 31, 2002 ..................... (29.89)% 443% $ 588,894
JANUARY 1, 2001 TO DECEMBER 31, 2001 ..................... (32.27)% 469% $ 976,336
NOVEMBER 1, 2000 TO DECEMBER 31, 2000(10) ................ (10.34)% 69% $1,574,382
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ..................... 28.12% 455% $1,769,430
43
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS 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) Amount calculated is less than $0.005.
(5) Calculated based upon average shares outstanding.
(6) Includes redemption fee of $0.01.
(7) Commencement of operations.
(8) Includes redemption fee of $0.02.
(9) In 2002, the Fund changed its fiscal year-end from September 30 to
December 31.
(10) In 2000, the Fund changed its fiscal year-end from October 31 to
December 31.
44
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Capital
Growth Fund, Dividend Income Fund, Growth Fund, Growth and Income Fund, and
Large Cap Growth Fund. Each Fund is a diversified series of the Trust.
In August and 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 Funds Acquiring Fund
- ----------------------------------------------------------------------------------------------------------------------
STRONG STRONG LARGE WELLS FARGO ADVANTAGE
Fund ENDEAVOR FUND COMPANY GROWTH FUND* CAPITAL GROWTH FUND
- ----------------------------------------------------------------------------------------------------------------------
Shares:
- ----------------------------------------------------------------------------------------------------------------------
CLASS K -- 727,721 --
- ----------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 727,721
- ----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- -- New
- ----------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 1,733,529 8,690,855 9,863,351
- ----------------------------------------------------------------------------------------------------------------------
Net Assets:
- ----------------------------------------------------------------------------------------------------------------------
CLASS K -- $ 11,069,451 --
- ----------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- $ 11,069,451
- ----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- -- New
- ----------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 17,672,409 130,992,523 148,664,932
- ----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 1,928,352 9,526,106 11,454,458
- ----------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses (1,374,426) (1,215,735) (2,590,161)
- ----------------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
Before Reorganization After Reorganization
-------------------------------------------------- --------------------
Target Funds Acquiring Fund
- --------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO
STRONG DOW 30 STRONG STRONG DIVIDEND ADVANTAGE DIVIDEND
Fund VALUE FUND ENERGY FUND INCOME FUND* INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
Shares:
- --------------------------------------------------------------------------------------------------------------------------------
CLASS K -- -- 286,445 --
- --------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- -- 286,445
- --------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 4,704,772 1,532,397 8,235,704 13,539,523
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets:
- --------------------------------------------------------------------------------------------------------------------------------
CLASS K -- -- $ 4,588,568 --
- --------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- -- $ 4,588,568
- --------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 59,913,489 $ 26,154,607 133,645,472 219,713,568
- --------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 9,468,337 6,143,950 25,479,707 41,091,994
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses (12,707,218) (939,498) (1,189,161) (14,835,877)
- --------------------------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
45
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Before Reorganization After Reorganization
----------------------------------- --------------------
Target Funds Acquiring Fund
- ---------------------------------------------------------------------------------------------------------------------
STRONG STRONG WELLS FARGO
Fund GROWTH 20 FUND GROWTH FUND* ADVANTAGE GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------------
Shares:
- ---------------------------------------------------------------------------------------------------------------------
CLASS C -- 8,913 8,913
- ---------------------------------------------------------------------------------------------------------------------
CLASS K -- 3,148,440 --
- ---------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 3,148,440
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS 276,560 304,662 521,601
- ---------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- 15,437,417 15,437,417
- ---------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 9,119,381 55,831,771 62,900,684
- ---------------------------------------------------------------------------------------------------------------------
Net Assets:
- ---------------------------------------------------------------------------------------------------------------------
CLASS C -- $ 161,112 $ 161,112
- ---------------------------------------------------------------------------------------------------------------------
CLASS K -- 58,984,412 --
- ---------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 58,984,412
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS $ 3,965,045 5,568,405 9,533,450
- ---------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- 293,773,318 293,773,318
- ---------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 130,085,630 1,027,443,947 1,157,529,577
- ---------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 26,139,087 203,437,808 229,576,895
- ---------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses (345,354,611) (589,297,736) (934,652,347)
- ---------------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
Before Reorganization After Reorganization
------------------------------------- ----------------------
Target Funds Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------------
STRONG LARGE CAP STRONG GROWTH AND WELLS FARGO ADVANTAGE
Fund CORE FUND INCOME FUND* GROWTH AND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------
Shares:
- -----------------------------------------------------------------------------------------------------------------------
CLASS K -- 885,134 --
- -----------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 885,134
- -----------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS -- 261,334 261,334
- -----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- 1,176,605 1,176,605
- -----------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 407,243 20,545,788 20,757,917
- -----------------------------------------------------------------------------------------------------------------------
Net Assets:
- -----------------------------------------------------------------------------------------------------------------------
CLASS K -- $ 17,963,974 --
- -----------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- $ 17,963,974
- -----------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS -- 5,313,912 5,313,912
- -----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS -- 24,153,285 24,153,285
- -----------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 4,337,752 420,133,930 424,471,682
- -----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) 180,135 18,045,998 18,226,133
- -----------------------------------------------------------------------------------------------------------------------
Accumulated net realized losses (441,738) (74,137,179) (74,578,917)
- -----------------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
46
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Effective at the close of business on April 8, 2005, the following
Acquiring Fund ("Acquiring Fund"), by share class, acquired substantially all of
the net assets of the following Target Fund ("Target Fund"), by share class,
through a tax-free exchange under section 368 of the Internal Revenue Code.
Acquiring Fund Target Fund
- ------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE CAP GROWTH FUND INVESTOR CLASS STRONG LARGE CAP GROWTH FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------
The separate classes of shares offered by each Fund differ principally in
applicable sales charges and 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.
Certain Funds of the Trust may invest a substantial portion of their
assets in an industry, sector or foreign country as is discussed in the
Performance Highlights for those Funds. Such Funds may be more affected by
changes in that industry, sector or foreign country than they would be absent
the concentration of investments.
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.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
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.
47
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 and distributed to shareholders
annually, with the exception of the Dividend Income Fund and the Growth and
Income Fund, for which net investment income, if any, is declared and
distributed quarterly. 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 June 30, 2005.
At December 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Year Capital Loss
Fund Expires Carryforwards
- ------------------------------------------------------
DIVIDEND INCOME FUND 2011 $ 3,850,257
- ------------------------------------------------------
GROWTH FUND 2009 386,854,731
2010 289,195,915
- ------------------------------------------------------
GROWTH AND INCOME FUND 2008 43,975,442
2010 96,050,822
- ------------------------------------------------------
LARGE CAP GROWTH FUND 2008 270,735,204
2010 203,828,512
At December 31, 2004, current year deferred post-October capital losses,
which will be treated as realized for tax purposes on the first day of the
succeeding year, were:
Deferred Post-October
Fund Capital Loss
- ------------------------------------------------------
DIVIDEND INCOME FUND $ 12,270
- ------------------------------------------------------
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
48
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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:
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)
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH FUND $0 - $499 million 0.750 Wells Capital $0 - 200 million 0.350
$500 - $999 million 0.700 Management $200 - 400 million 0.300
$1 - $2.99 billion 0.650 Incorporated >$400 million 0.250
$3 - $4.99 billion 0.625
>$4.99 billion 0.600
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDEND INCOME FUND $0 - $499 million 0.750 Wells Capital $0 - 200 million 0.350
$500 - $999 million 0.700 Management $200 - 400 million 0.300
$1 - $2.99 billion 0.650 Incorporated >$400 million 0.250
$3 - $4.99 billion 0.625
>$4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------
GROWTH FUND $0 - $499 million 0.750 Wells Capital $0 - 200 million 0.350
$500 - $999 million 0.700 Management $200 - 400 million 0.300
$1 - $2.99 billion 0.650 Incorporated >$400 million 0.250
$3 - $4.99 billion 0.625
>$4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME FUND $0 - $499 million 0.750 Matrix $0 - 50 million 0.200
$500 - $999 million 0.700 Asset >$50 million 0.160
$1 - $2.99 billion 0.650 Advisors,
$3 - $4.99 billion 0.625 Inc.
>$4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH FUND $0 - $499 million 0.750 Wells Capital $0 - 200 million 0.350
$500 - $999 million 0.700 Management $200 - 400 million 0.300
$1 - $2.99 billion 0.650 Incorporated >$400 million 0.250
$3 - $4.99 billion 0.625
>$4.99 billion 0.600
- -------------------------------------------------------------------------------------------------------------------------------
* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds. Funds Management was entitled to receive an annual fee at the
following rate:
49
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Advisory Fees (% of
Fund Average Daily Net Assets Average Daily Net Assets)
- ---------------------------------------------------------------------------------------------
STRONG LARGE COMPANY GROWTH FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
>$6 billion 0.700
- ---------------------------------------------------------------------------------------------
STRONG DIVIDEND INCOME FUND $0 - $4 billion 0.700
$4 billion - $6 billion 0.675
>$6 billion 0.650
- ---------------------------------------------------------------------------------------------
STRONG GROWTH FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
>$6 billion 0.700
- ---------------------------------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND All asset levels 0.550
- ---------------------------------------------------------------------------------------------
STRONG LARGE CAP GROWTH FUND $0 - $35 million 0.600
>$35 million 0.550
- ---------------------------------------------------------------------------------------------
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:
Administration Fees**
(% of Average
Average Daily 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 CLASS 0.10
- -----------------------------------------------------------------------------------------------
ADVISOR CLASS(1) 0.28
- -----------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- -----------------------------------------------------------------------------------------------
INVESTOR CLASS(1)(2)(3) 0.45
- -----------------------------------------------------------------------------------------------
(1) The class-level administration fee is reduced by 0.05% for the Advisor
Class and Investor Class shares of the Growth and Income Fund.
(2) The class-level administration fee is reduced by 0.08% for the
Investor Class shares of the Dividend Income Fund.
(3) The class-level administration fee is reduced by 0.05% for the
Investor Class shares of the Large Cap Growth 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, ADVISOR CLASS AND INVESTOR CLASS 0.30%
- ------------------------------------------------------------------
CLASS K 0.25%
- ------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02%
- ------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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. Effective April 11,
2005, transfer agent fees are paid by Funds Management and not by the Funds.
50
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
For financial statement presentation, transfer agent fees for the period
from January 1, 2005 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees
and Other Related Expenses
- -------------------------------------------------------------------
STRONG LARGE COMPANY GROWTH FUND
CLASS K $ 3,792
INVESTOR CLASS 100,166
- -------------------------------------------------------------------
STRONG DIVIDEND INCOME FUND
CLASS K 2,319
INVESTOR CLASS 95,539
- -------------------------------------------------------------------
STRONG GROWTH FUND
CLASS C 117
CLASS K 28,991
ADVISOR CLASS 2,556
INSTITUTIONAL CLASS 15,728
INVESTOR CLASS 972,096
- -------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND
CLASS K 8,801
ADVISOR CLASS 2,809
INSTITUTIONAL CLASS 231
INVESTOR CLASS 453,047
- -------------------------------------------------------------------
STRONG LARGE CAP GROWTH FUND
INVESTOR CLASS 371,727
- -------------------------------------------------------------------
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 LARGE CAP STOCK FUNDS 0.02
- ---------------------------------------------------------------
Prior to March 4, 2005, State Street served as custodian for the Strong
Large Cap Growth Fund. Prior to April 11, 2005, State Street served as custodian
for the Strong Large Company Growth Fund, Strong Dividend Income Fund, Strong
Growth Fund and Strong Growth and Income Fund. From April 11, 2005 to April 22,
2005, State Street served as interim custodian for the Capital Growth Fund,
Dividend Income Fund, Growth Fund and Growth and Income Fund. State Street was
entitled to receive certain fees, primarily based on transactions of the fund.
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:
Share Class % of Average 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 encompassed by the
Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Fund Class C Administrator Advisor Investor
- ----------------------------------------------------------------------------
CAPITAL GROWTH FUND N/A $ 10,840 N/A $ 87,622
- ----------------------------------------------------------------------------
DIVIDEND INCOME FUND N/A 2,606 N/A 120,469
- ----------------------------------------------------------------------------
GROWTH FUND $77 32,571 $ 5,055 629,165
- ----------------------------------------------------------------------------
GROWTH AND INCOME FUND N/A 8,864 2,874 229,501
- ----------------------------------------------------------------------------
LARGE CAP GROWTH FUND N/A N/A N/A 253,639
- ----------------------------------------------------------------------------
51
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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. 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 Investor Class shares. Under the plan, Strong Investments,
Inc. was paid an annual rate of 1.00%, 0.25% and 0.25% of the average daily net
assets of the Class C shares of Strong Growth Fund, Advisor Class shares of
Strong Growth Fund and Strong Growth and Income Fund, and Investor Class shares
of Strong Large Company Growth Fund, respectively.
For the six months ended June 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 4, 2005, State Street served as fund accountant for the
Strong Large Cap Growth Fund. Prior to April 11, 2005, State Street served as
fund accountant for the Strong Large Company Growth Fund, Strong Dividend Income
Fund, Strong Growth Fund and Strong Growth and Income Fund. Fund accounting fees
were paid by the Funds' administrator and not by the Funds. From April 11, 2005
to April 22, 2005, State Street served as interim fund accountant for Capital
Growth Fund, Dividend Income Fund, Growth Fund and Growth and Income 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 June 30, 2005 were as
follows:
Net Operating Expense Ratios
Fund Class C Administrator Advisor Institutional Investor
- -----------------------------------------------------------------------------------------
CAPITAL GROWTH FUND N/A 0.94% N/A 0.80% 1.42%
- -----------------------------------------------------------------------------------------
DIVIDEND INCOME FUND N/A 0.96% N/A N/A 1.37%
- -----------------------------------------------------------------------------------------
GROWTH FUND 2.05% 0.96% 1.30% 0.85% 1.47%
- -----------------------------------------------------------------------------------------
GROWTH AND INCOME FUND N/A 0.96% 1.14% 0.66% 1.31%
- -----------------------------------------------------------------------------------------
LARGE CAP GROWTH FUND N/A N/A N/A N/A 1.19%
- -----------------------------------------------------------------------------------------
Prior to April 11, 2005, the Strong Funds' interim adviser and/or
administrator could voluntarily waive or absorb certain expenses at their
discretion. Pursuant to the direction of the Strong Funds Board of Directors and
certain regulatory settlements, the predecessor adviser, Strong Capital
Management, Inc. ("SCM"), had contractually agreed to waive fees and/or absorb
expenses in the amount of 0.033% for the Large Cap Stock Funds from May 21, 2004
to May 21, 2005. SCM and/or SISI had contractually agreed to waive its fees
and/or absorb expenses until May 1, 2005, to keep total annual operating
expenses of the Class C shares of the Strong Growth Fund at no more than 2.50%;
Class K shares of the Strong Large Company Growth Fund, Strong Dividend Income
Fund, Strong Growth Fund and Strong Growth and Income Fund at no more than
0.99%; and Investor Class shares of the Strong Large Company Growth Fund at no
more than 1.50%. 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 January 1, 2005 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
STRONG LARGE COMPANY GROWTH FUND
FUND LEVEL $ 13,076
CLASS K 6,244
INVESTOR CLASS 81,235
- --------------------------------------------------------------------------------
STRONG DIVIDEND INCOME FUND
FUND LEVEL 14,241
CLASS K 2,388
INVESTOR CLASS 0
52
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
STRONG GROWTH FUND
FUND LEVEL $ 153,877
CLASS C 0
CLASS K 38,583
ADVISOR CLASS 0
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND
FUND LEVEL 54,086
CLASS K 3,699
ADVISOR CLASS 0
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
STRONG LARGE CAP GROWTH FUND
FUND LEVEL 51,176
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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- -----------------------------------------------------------------------------------
CAPITAL GROWTH FUND $ 156,489,178 $ 70,763,337
- -----------------------------------------------------------------------------------
DIVIDEND INCOME FUND 46,883,787 33,685,583
- -----------------------------------------------------------------------------------
GROWTH FUND 899,353,173 1,009,260,149
- -----------------------------------------------------------------------------------
GROWTH AND INCOME FUND 345,351,982 408,768,314
- -----------------------------------------------------------------------------------
LARGE CAP GROWTH FUND 207,607,450 267,375,854
- -----------------------------------------------------------------------------------
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 June 30, 2005,
there were no borrowings by the Large Cap Stock Funds under either agreement.
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 Strong 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 imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
53
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities and information
regarding how to obtain 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 complete portfolio holdings for each Fund are publicly available on
the Funds' Web site
(WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day or more delayed
basis. In addition, top ten holdings information for each Fund are publicly
available on the Funds' Web site on a monthly, seven-day or more delayed basis.
Each 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, each
Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC, and at regional offices in New York City, at 233 Broadway, and
in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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 None
62 Finance, 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, None
71 President of Richard M.
Leach Associates (a
financial consulting firm).
- ------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the None
53 public 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 None
65 of Willeke & Daniels.
- ------------------------------------------------------------------------------------------------------------
54
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------------------------------------
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 June 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.
55
WELLS FARGO ADVANTAGE LARGE CAP STOCK FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
CAPITAL GROWTH FUND, DIVIDEND INCOME FUND, GROWTH FUND, GROWTH AND INCOME FUND
AND LARGE CAP GROWTH 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 Capital Growth Fund, Dividend Income Fund, Growth Fund,
Growth and Income Fund and Large Cap Growth Fund (the "Funds"); (ii) an
investment sub-advisory agreement with Wells Capital Management Incorporated
("Wells Capital Management") for the Capital Growth Fund, Dividend Income Fund,
Growth Fund and Large Cap Growth Fund; and (iii) an investment sub-advisory
agreement with Matrix Asset Advisors, Inc. ("Matrix") for the Growth and Income
Fund. The investment advisory agreement with Funds Management and the investment
sub-advisory agreements with Wells Capital Management and Matrix (the
"Sub-Advisers") 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 the Sub-Advisers 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
- --------------------------------------------------------------------------------
Large Company Growth* Capital Growth Fund
Endeavor Fund
- --------------------------------------------------------------------------------
Dividend Income Fund* Dividend Income Fund
Energy Fund
Dow Value 30 Fund
- --------------------------------------------------------------------------------
Growth Fund* Growth Fund
Growth 20 Fund
- --------------------------------------------------------------------------------
Growth and Income Fund* Growth and Income Fund
Large Cap Core Fund
- --------------------------------------------------------------------------------
Large Cap Growth Fund* Large Cap Growth 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 the Sub-Advisers under the Advisory Agreements.
Responses of Funds Management and the Sub-Advisers 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 the Sub-Advisers.
The Board also considered the ability of Funds Management and the
Sub-Advisers, 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 the
Sub-Adviser'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 the Sub-Advisers. 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-advisers.
56
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 the Sub-Advisers.
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 were better than, or not
appreciably below, the median performance of its Peer Group for all time
periods.
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 Funds' net operating expense ratios were lower
than, or not appreciably higher than, each Fund's Peer Group's median net
operating expense ratio.
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 payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administrative services covered by the administration fee
rates. The Board also reviewed and considered the contractual investment
sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds
Management to the Sub-Advisers 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 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 relationship with the
Capital Growth Fund, Dividend Income Fund, Growth Fund and Large Cap Growth Fund
was not a material factor in determining whether to renew the agreement. The
Board did not consider profitability information with respect to Matrix, which
is not affiliated with Funds Management. The Board considered that the
sub-advisory fees paid to Matrix had been negotiated by Funds Management on an
arms length basis and that Matrix's separate profitability from its relationship
with the Growth and Income Fund was not a material factor in determining whether
to renew the agreement.
57
WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 the
Sub-Advisers 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 the
Sub-Advisers, giving effect to differences in services covered by such fee
rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS
- --------------------------------------------------------------------------------
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
(or the Sub-Advisers and their affiliates) 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 the Sub-Advisers with
the Funds and benefits potentially derived from an increase in the business of
Funds Management and the Sub-Advisers 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 (or the Sub-Advisers and their
affiliates)).
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 the Sub-Advisers 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 the Sub-Advisers 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 the Sub-Advisers,
and met with various management representatives and portfolio managers, 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.
58
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE LARGE CAP STOCK 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 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
59
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[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about WELLS FARGO This report and the financial
ADVANTAGE FUNDS(SM) is available statements contained herein are
free upon request. To obtain submitted for the general information
literature, please write, e-mail, of the shareholders of the WELLS FARGO
or call: ADVANTAGE FUNDS. If this report is
used for promotional purposes,
WELLS FARGO ADVANTAGE FUNDS distribution of the report must be
P.O. Box 8266 accompanied or preceded by a current
Boston, MA 02266-8266 prospectus. For a prospectus
containing more complete information,
E-mail: wfaf@wellsfargo.com including charges and expenses, call
Retail Investment Professionals: 1-800-222-8222. Please consider the
888-877-9275 investment objective, risks, charges
Institutional Investment and expenses of the investment
Professionals:866-765-0778 carefully before investing. This and
Web: www.wellsfargo.com/advantage other information about WELLS FARGO
funds 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 | www.wellsfargo.com/advantagefunds | RT51954 08-05
Advantage Funds, LLC. | | SLCNLD/SAR121 06-05
All rights reserved. |
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 2005
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
Wells Fargo Advantage Common Stock Fund
Wells Fargo Advantage Small Cap Value Fund
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Common Stock Fund ...................................................... 2
Small Cap Value Fund ................................................... 4
Fund Expenses ............................................................. 6
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Common Stock Fund ...................................................... 8
Small Cap Value Fund ................................................... 12
Financial Statements
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities ................................... 20
Statements of Operations ............................................... 21
Statements of Changes in Net Assets .................................... 22
Financial Highlights ................................................... 24
Notes to Financial Highlights ............................................. 26
- --------------------------------------------------------------------------------
Notes to Financial Statements ............................................. 27
- --------------------------------------------------------------------------------
Other Information ......................................................... 34
- --------------------------------------------------------------------------------
List of Abbreviations ..................................................... 39
- --------------------------------------------------------------------------------
-------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
semi-annual report for the period ended June 30, 2005. On the following pages,
you will find a discussion of each Fund, including performance highlights, the
Fund managers' strategic outlook, and information about the Fund's portfolio.
ECONOMIC EXPASION CONTINUES
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing it upward
during the reporting period. The consumer price index (CPI) rose at around a 3%
rate over the twelve months ended June 30, 2005. The core CPI, which excludes
the volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate--its principal policy tool--from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
- --------------------------------------------------------------------------------
After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of the year. The S&P 500 Index was
around 1200 as the year began. It ended the first half of 2005 at 1191. Strong
corporate earnings have helped the markets, while record prices for crude oil
and concerns of a slowdown in worldwide economic growth have capped and often
reversed rallies. In the U.S. the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well during most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sectors recovered and again produced
solid returns. Municipal bonds generally performed better than most taxable
sectors during 2005, but, they lagged behind the rally in U.S. Treasuries in May
and June. Overall, by the end of the second quarter of 2005, municipal yields
were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
- --------------------------------------------------------------------------------
The economy has shown remarkably steady growth over the reporting
period--growth that has been sufficient to bring the unemployment rate down to
5.0%, the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE COMMON STOCK FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE COMMON STOCK FUND (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Richard T. Weiss 12/29/1989
Ann M. Miletti
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 2.16%(1) (excluding sales charge) for
the six-month period ending June 30, 2005, underperforming its benchmark, the
Russell Midcap(R) Index(2), which returned 3.92% 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 ON 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. 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.
FROM TIME TO TIME, THE FUND'S PERFORMANCE WAS SIGNIFICANTLY ENHANCED
THROUGH INVESTMENTS IN INITIAL PUBLIC OFFERINGS (IPOs). THE EFFECT OF IPOs
PURCHASED WHEN THE FUND'S ASSET BASE WAS SMALL MAY HAVE BEEN MAGNIFIED.
INVESTORS SHOULD NOT EXPECT THAT SUCH ENHANCED RETURNS CAN BE CONSISTENTLY
ACHIEVED. PLEASE CONSIDER THIS BEFORE INVESTING.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Fund's energy sector weighting was more than twice that of its
broad-based benchmark, which helped performance, as the benchmark's energy
stocks collectively rose by more than 24%, by far the strongest sector return
during the first six months of the year. In addition to being helped by this
overweighting, the Fund's energy holdings did better as a group, assisting
performance. The second strongest group in the index was the consumer retail and
restaurant industry. Here, too, performance was helped by an overweighted
position as well as positive stock selection. On the negative side, the market's
weakest sector was information technology, another area where the Fund was
overweighted compared to the benchmark. This overweighting detracted from
performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The Fund stuck to its methodology of buying stocks that are selling at a
discount to their intrinsic private market value and selling stocks that
approach their private market value. This discipline allows us to be patient
with stocks that are seemingly out of favor with the market, which is becoming
the exception as investors become more focused on the short term. Our
stock-by-stock approach led us to increase holdings in the energy, consumer
retail, and information technology sectors, to decrease holdings in the
financial sector, and to a lesser extent, the cyclical and health care sectors.
These sector weightings were fairly consistent throughout the period.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Investors continue to weigh several factors, including inflation, interest
rates, record-high energy prices, and the threat of terrorism. Perhaps because
of these factors, valuations today are unusually compressed. In particular, the
market is giving companies with high growth rates little credit for their
superior profitability. Because the Fund's private value approach allows it to
opportunistically look for attractively valued stocks in both the growth and
value areas, we are currently looking to take advantage of this valuation
compression by buying stocks with what we believe are favorable long-term growth
outlooks.
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. INVESTMENT STRATEGIES THAT EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT
THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 COMMON STOCK FUND.
2
PERFORMANCE HIGHLIGHTS
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- -------------------------------------
6-Months* 1-Year 5-Year 10-Year 6-Months* 1-Year 5-Year 10-Year
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Fund - Class A (3.73) 3.38 2.53 10.93 2.16 9.69 3.74 11.59
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Fund - Class B (3.24) 3.89 2.68 11.13 1.76 8.89 3.04 11.13
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Fund - Class C 0.81 7.89 3.04 10.96 1.81 8.89 3.04 10.96
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Fund - Class Z 2.22 9.92 4.01 11.93
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------------------------
Russell Midcap(R) Index(2) 3.92 17.12 7.34 12.90
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------
Beta** 1.16
- --------------------------------------------------------------
Price to Earnings (trailing 12 months) 25.90x
- --------------------------------------------------------------
Price to Book Ratio 2.54x
- --------------------------------------------------------------
Median Market Cap. ($B) $ 4.48
- --------------------------------------------------------------
Portfolio Turnover 14%
- --------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 12%
Consumer Staples 6%
Energy 11%
Financials 8%
Health Care 24%
Industrials 6%
Information Technology 27%
Materials 2%
Telecommunication Services 5%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- -------------------------------------------------------------
Noble Corporation 2.94%
- -------------------------------------------------------------
Cablevision Systems Corporation Class A 2.93%
- -------------------------------------------------------------
Burlington Resources Incorporated 2.22%
- -------------------------------------------------------------
EOG Resources Incorporated 2.20%
- -------------------------------------------------------------
Apache Corporation 2.12%
- -------------------------------------------------------------
Smith International Incorporated 2.12%
- -------------------------------------------------------------
Advance Auto Parts Incorporated 1.88%
- -------------------------------------------------------------
Kroger Company 1.67%
- -------------------------------------------------------------
City National Corporation 1.69%
- -------------------------------------------------------------
RenaissanceRe Holdings Limited 1.66%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
COMMON STOCK FUND - COMMON STOCK FUND - RUSSELL MIDCAP(R)
CLASS A CLASS Z INDEX
------- ------- -----
6/30/1995 9,425 10,000 10,000
7/31/1995 9,904 10,512 10,486
8/31/1995 10,038 10,656 10,646
9/30/1995 10,219 10,852 10,887
10/31/1995 9,938 10,557 10,643
11/30/1995 10,349 10,997 11,173
12/31/1995 10,631 11,300 11,238
1/31/1996 10,811 11,495 11,475
2/29/1996 11,119 11,826 11,744
3/31/1996 11,375 12,102 11,914
4/30/1996 11,685 12,435 12,252
5/31/1996 11,821 12,583 12,437
6/30/1996 11,463 12,206 12,250
7/31/1996 10,856 11,563 11,492
8/31/1996 11,394 12,140 12,039
9/30/1996 11,777 12,552 12,633
10/31/1996 11,936 12,725 12,735
11/30/1996 12,719 13,564 13,511
12/31/1996 12,761 13,613 13,373
1/31/1997 13,211 14,097 13,873
2/28/1997 13,220 14,111 13,852
3/31/1997 12,736 13,599 13,263
4/30/1997 13,074 13,964 13,593
5/31/1997 14,219 15,191 14,585
6/30/1997 14,640 15,646 15,062
7/31/1997 15,519 16,590 16,319
8/31/1997 15,843 16,941 16,142
9/30/1997 16,566 17,720 17,063
10/31/1997 15,582 16,672 16,399
11/30/1997 15,461 16,548 16,789
12/31/1997 15,768 16,882 17,252
1/31/1998 15,688 16,802 16,927
2/28/1998 16,839 18,039 18,250
3/31/1998 17,560 18,817 19,116
4/30/1998 17,788 19,067 19,164
5/31/1998 17,023 18,253 18,571
6/30/1998 17,041 18,277 18,828
7/31/1998 16,103 17,277 17,930
8/31/1998 13,416 14,399 15,062
9/30/1998 14,208 15,254 16,037
10/31/1998 15,488 16,632 17,130
11/30/1998 15,941 17,124 17,941
12/31/1998 16,748 17,996 18,993
1/31/1999 17,117 18,398 18,961
2/28/1999 16,380 17,612 18,330
3/31/1999 17,264 18,568 18,904
4/30/1999 18,867 20,297 20,301
5/31/1999 18,992 20,439 20,243
6/30/1999 20,017 21,547 20,957
7/31/1999 19,706 21,219 20,381
8/31/1999 18,942 20,403 19,853
9/30/1999 18,714 20,164 19,156
10/31/1999 20,025 21,583 20,063
11/30/1999 21,467 23,143 20,640
12/31/1999 23,422 25,258 22,456
1/31/2000 22,467 24,236 21,713
2/29/2000 23,593 25,459 23,382
3/31/2000 25,053 27,042 24,721
4/30/2000 23,616 25,499 23,551
5/31/2000 23,869 25,779 22,927
6/30/2000 23,481 25,369 23,605
7/31/2000 22,964 24,818 23,341
8/31/2000 24,801 26,811 25,578
9/30/2000 24,219 26,190 25,213
10/31/2000 23,286 25,188 24,824
11/30/2000 21,584 23,355 22,590
12/31/2000 23,046 24,955 24,309
1/31/2001 24,540 26,564 24,700
2/28/2001 22,954 24,856 23,197
3/31/2001 21,813 23,643 21,758
4/30/2001 23,345 25,301 23,618
5/31/2001 23,620 25,623 24,058
6/30/2001 23,082 25,054 23,832
7/31/2001 22,659 24,596 23,150
8/31/2001 21,447 23,284 22,260
9/30/2001 18,438 20,028 19,575
10/31/2001 19,697 21,390 20,351
11/30/2001 21,550 23,420 22,056
12/31/2001 22,587 24,530 22,942
1/31/2002 22,129 24,047 22,805
2/28/2002 21,544 23,427 22,563
3/31/2002 23,160 25,188 23,916
4/30/2002 22,243 24,196 23,452
5/31/2002 21,693 23,600 23,187
6/30/2002 19,734 21,467 21,632
7/31/2002 17,786 19,359 19,521
8/31/2002 18,015 19,607 19,628
9/30/2002 16,181 17,610 17,817
10/31/2002 17,545 19,099 18,718
11/30/2002 19,585 21,318 20,017
12/31/2002 18,187 19,805 19,228
1/31/2003 17,935 19,533 18,840
2/28/2003 17,854 19,446 18,590
3/31/2003 17,992 19,595 18,774
4/30/2003 19,264 20,984 20,137
5/31/2003 20,948 22,819 21,980
6/30/2003 21,224 23,129 22,202
7/31/2003 21,934 23,910 22,934
8/31/2003 22,805 24,853 23,930
9/30/2003 22,209 24,208 23,630
10/31/2003 23,607 25,758 25,434
11/30/2003 24,088 26,279 26,148
12/31/2003 25,189 27,470 26,931
1/31/2004 25,601 27,929 27,714
2/29/2004 26,186 28,573 28,310
3/31/2004 25,899 28,263 28,316
4/30/2004 25,040 27,333 27,277
5/31/2004 25,166 27,470 27,953
6/30/2004 25,727 28,090 28,727
7/31/2004 24,008 26,217 27,471
8/31/2004 23,722 25,907 27,590
9/30/2004 24,765 27,060 28,485
10/31/2004 25,372 27,718 29,271
11/30/2004 26,770 29,256 31,054
12/31/2004 27,624 30,205 32,376
1/31/2005 26,859 29,378 31,575
2/28/2005 27,710 30,312 32,550
3/31/2005 27,643 30,253 32,294
4/30/2005 26,325 28,801 31,265
5/31/2005 27,567 30,171 32,763
6/30/2005 28,220 30,877 33,644
- --------------------------------------------------------------------------------
(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 COMMON STOCK 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 Common Stock Fund, its predecessor fund. Performance shown for
the Class A shares for periods prior to November 30, 2000, reflects the
performance of the Class Z shares, adjusted to reflect Class A sales charges and
expenses. Performance shown for Class B shares for periods prior to November 30,
2000, reflects the performance of the Class Z shares, adjusted to reflect Class
B sales charges and expenses. Performance shown for Class C shares for periods
prior to November 30, 2000, reflects the performance of the Class Z shares,
adjusted to reflect Class C sales charges and expenses. Performance shown for
the Class Z shares of the WELLS FARGO ADVANTAGE COMMON STOCK FUND for periods
prior to April 11, 2005, reflects the performance of the Class Z shares of the
Strong Advisor Common Stock Fund, its predecessor fund. Effective at the close
of business April 8, 2005, certain Strong Funds were reorganized into certain
WELLS FARGO ADVANTAGE FUNDS.
(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) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings, and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE COMMON STOCK
FUND Class A and Class Z shares for the most recent ten years with the Russell
Midcap(R) Index. The chart assumes a hypothetical investment of $10,000 in Class
A and Class Z shares and reflects all operating expenses and, for Class A
shares, assumes the maximum initial sales charge of 5.75%.
3
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP VALUE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SMALL CAP VALUE FUND (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
I. Charles Rinaldi 12/31/1997
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.46%(1) (excluding sales charge) for
the six-month period ending June 30, 2005, outperforming its benchmark, the
Russell 2000(R) Index(2), which returned (1.25)% 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 ON 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. 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.
FROM TIME TO TIME, THE FUND'S PERFORMANCE WAS SIGNIFICANTLY ENHANCED
THROUGH INVESTMENTS IN INITIAL PUBLIC OFFERINGS (IPOS). THE EFFECT OF IPOS
PURCHASED WHEN THE FUND'S ASSET BASE WAS SMALL MAY HAVE BEEN MAGNIFIED.
INVESTORS SHOULD NOT EXPECT THAT SUCH ENHANCED RETURNS CAN BE CONSISTENTLY
ACHIEVED. PLEASE CONSIDER THIS BEFORE INVESTING.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Our bottom-up investment philosophy, which emphasizes individual stock
selection and close attention to our companies' basic business prospects,
contributed to the Fund's performance. Areas where stock selection was
particularly beneficial included the Fund's holdings in the energy and health
care sectors. Within these areas stocks such as Range Resources, an independent
oil and gas company, and Beverly Enterprises, a health care company providing
services through the operation of nursing facilities, assisted living centers,
hospice locations and outpatient clinics, contributed positively to performance
during the first half of the year. On the negative side, stocks such as Graftech
International and Steel Dynamics detracted from performance during this period.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We increased the Fund's exposure to the information technology sector, and
we trimmed some holdings in the energy and materials sectors. With regard to the
energy and materials sectors, several of our stocks appreciated significantly,
and became sell candidates based on valuation. Our added exposure to the
information technology sector was a result of our bottom-up stock selection
approach. However, many holdings in the energy and materials sectors continued
to perform well, with the result that price appreciation kept our sector
weightings close to where they had been.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We are optimistic of the small-cap value asset class for several reasons.
Valuations continue to be attractive relative to those of many other asset
classes. Additionally, demand for small-cap value stocks continues to be strong,
as investors become increasingly aware of their performance potential. Moreover,
we are comfortable with the Fund's current holdings and sector weightings, and
we believe it is well positioned for the balance of 2005.
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. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR
FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO
THE BROADER MARKET). THIS FUND IS EXPOSED FOREIGN INVESTMENTS RISK. CONSULT THE
FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 SMALL CAP VALUE FUND.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
---------------------------------- ----------------------------------
Life of Life of
6-Months* 1-Year 5-Year Fund 6-Months* 1-Year 5-Year Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class A (Incept. Date 11/30/2000) (5.31) 7.21 15.01 16.63 0.46 13.74 16.38 17.55
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class B (Incept. Date 11/30/2000) (4.88) 7.88 15.34 16.84 0.12 12.88 15.57 16.84
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class C (Incept. Date 11/30/2000) (0.88) 11.94 15.61 16.88 0.12 12.94 15.61 16.88
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class Z (Incept. Date 12/31/1997) 0.60 13.96 16.59 17.81
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------------------------
Russell 2000(R) Index(2) (1.25) 9.45 5.71 6.53
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------
Beta** 1.06
- --------------------------------------------------------------
Price to Earnings (trailing 12 months) 28.30x
- --------------------------------------------------------------
Price to Book Ratio 2.07x
- --------------------------------------------------------------
Median Market Cap. ($B) $ 0.77
- --------------------------------------------------------------
Portfolio Turnover 18%
- --------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 12%
Consumer Staples 6%
Energy 11%
Financials 8%
Health Care 24%
Industrials 6%
Information Technology 27%
Materials 2%
Telecommunication Services 5%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------
Range Resources Corporation 5.79%
- --------------------------------------------------------------
Chicago Bridge & Iron Company NV 3.34%
- --------------------------------------------------------------
Global Industries Limited 2.98%
- --------------------------------------------------------------
Forest Oil Corporation 2.96%
- --------------------------------------------------------------
Glamis Gold Limited 2.37%
- --------------------------------------------------------------
Beverly Enterprises Incorporated 2.20%
- --------------------------------------------------------------
UNOVA Incorporated 2.15%
- --------------------------------------------------------------
IPSCO Incorporated 1.78%
- --------------------------------------------------------------
Apex Silver Mines Limited 1.69%
- --------------------------------------------------------------
United States Steel Corporation 1.60%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
SMALL CAP VALUE SMALL CAP VALUE RUSSELL 2000(R)
FUND - CLASS A FUND - CLASS Z INDEX
-------------- -------------- -----
12/31/1997 9,425 10,000 10,000
1/31/1998 9,903 10,510 9,842
2/28/1998 10,692 11,350 10,570
3/31/1998 11,707 12,430 11,006
4/30/1998 12,241 13,000 11,067
5/31/1998 11,616 12,340 10,471
6/30/1998 11,039 11,730 10,493
7/31/1998 9,841 10,460 9,643
8/31/1998 7,731 8,220 7,771
9/30/1998 8,322 8,850 8,379
10/31/1998 8,865 9,430 8,721
11/30/1998 9,408 10,010 9,178
12/31/1998 9,970 10,610 9,745
1/31/1999 10,174 10,830 9,875
2/28/1999 9,298 9,900 9,075
3/31/1999 9,127 9,720 9,217
4/30/1999 10,486 11,170 10,043
5/31/1999 10,830 11,540 10,189
6/30/1999 11,475 12,230 10,650
7/31/1999 11,697 12,470 10,358
8/31/1999 11,516 12,280 9,975
9/30/1999 11,682 12,460 9,977
10/31/1999 11,023 11,760 10,017
11/30/1999 11,704 12,490 10,615
12/31/1999 12,732 13,590 11,817
1/31/2000 13,675 14,600 11,627
2/29/2000 15,020 16,040 13,547
3/31/2000 15,513 16,570 12,654
4/30/2000 14,947 15,970 11,893
5/31/2000 14,775 15,790 11,200
6/30/2000 14,837 15,860 12,176
7/31/2000 14,244 15,230 11,784
8/31/2000 15,717 16,810 12,683
9/30/2000 15,162 16,220 12,310
10/31/2000 14,971 16,020 11,761
11/30/2000 14,351 15,360 10,554
12/31/2000 16,042 17,170 11,460
1/31/2001 17,172 18,390 12,057
2/28/2001 17,284 18,520 11,266
3/31/2001 17,527 18,770 10,714
4/30/2001 18,826 20,180 11,553
5/31/2001 19,966 21,400 11,837
6/30/2001 19,713 21,140 12,245
7/31/2001 18,873 20,240 11,583
8/31/2001 18,443 19,780 11,208
9/30/2001 16,219 17,400 9,700
10/31/2001 17,069 18,310 10,267
11/30/2001 17,593 18,880 11,062
12/31/2001 18,881 20,259 11,745
1/31/2002 18,619 19,989 11,623
2/28/2002 18,909 20,289 11,304
3/31/2002 20,950 22,484 12,213
4/30/2002 21,474 23,045 12,324
5/31/2002 21,287 22,844 11,777
6/30/2002 20,342 21,842 11,193
7/31/2002 17,440 18,726 9,502
8/31/2002 17,917 19,237 9,478
9/30/2002 16,803 18,035 8,797
10/31/2002 16,812 18,045 9,079
11/30/2002 17,786 19,097 9,890
12/31/2002 17,711 19,017 9,339
1/31/2003 17,271 18,546 9,081
2/28/2003 16,812 18,065 8,806
3/31/2003 16,522 17,744 8,920
4/30/2003 17,861 19,187 9,765
5/31/2003 20,005 21,492 10,813
6/30/2003 20,229 21,742 11,009
7/31/2003 21,240 22,834 11,698
8/31/2003 22,073 23,726 12,234
9/30/2003 21,802 23,445 12,008
10/31/2003 23,506 25,279 13,017
11/30/2003 24,694 26,561 13,479
12/31/2003 26,298 28,278 13,752
1/31/2004 26,644 28,658 14,350
2/29/2004 27,556 29,644 14,478
3/31/2004 27,858 29,968 14,613
4/30/2004 26,064 28,047 13,868
5/31/2004 26,481 28,504 14,089
6/30/2004 27,848 29,978 14,682
7/31/2004 26,946 29,002 13,694
8/31/2004 26,413 28,432 13,623
9/30/2004 28,246 30,404 14,263
10/31/2004 28,052 30,207 14,544
11/30/2004 31,127 33,518 15,805
12/31/2004 31,529 33,959 16,273
1/31/2005 30,741 33,116 15,594
2/28/2005 32,663 35,206 15,858
3/31/2005 31,436 33,882 15,404
4/30/2005 29,345 31,635 14,522
5/31/2005 30,247 32,611 15,472
6/30/2005 31,676 34,162 16,069
(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 SMALL CAP VALUE 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 Small Cap Value Fund, its predecessor fund.
Performance shown for the Class A shares for periods prior to November 30, 2000,
reflects the performance of the Class Z shares, adjusted to reflect Class A
sales charges and expenses. Performance shown for Class B shares of the Fund for
periods prior to November 30, 2000, reflects the performance of the Class Z
shares, adjusted to reflect Class B sales charges and expenses. Performance
shown for Class C shares of the Fund for periods prior to November 30, 2000,
reflects the performance of the Class Z shares, adjusted to reflect Class C
sales charges and expenses. Performance shown for the Class Z shares of the
WELLS FARGO ADVANTAGE SMALL CAP VALUE FUND for periods prior to April 11, 2005,
reflects the performance of the Class Z shares of the Strong Advisor Small Cap
Value Fund, its predecessor fund. Effective at the close of business April 8,
2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE
FUNDS.
(2) The Russell 2000(R) Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index, which represents approximately 8% of the
total market capitalization of the Russell 3000 Index. You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE SMALL CAP
VALUE FUND Class A and Class Z shares for the life of the Fund with the Russell
2000(R) 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 5.75%.
5
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 six-month period and held for the entire six-month period (January 1,
2005 to June 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 Value Account Value Expenses Paid Net Annual
Common Stock Fund 1/1/2005 6/30/2005 During Period (1) Expense Ratio
- ----------------------------------------------------------------------------------------------------
Common Stock Fund - Class A
Actual $1,000.00 $1,021.60 $ 7.37 1.47%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,017.50 $ 7.35 1.47%
- ----------------------------------------------------------------------------------------------------
Common Stock Fund - Class B
Actual $1,000.00 $1,017.60 $ 11.11 2.22%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,013.79 $ 11.08 2.22%
- ----------------------------------------------------------------------------------------------------
Common Stock Fund - Class C
Actual $1,000.00 $1,018.10 $ 11.21 2.24%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,013.69 $ 11.18 2.24%
- ----------------------------------------------------------------------------------------------------
Common Stock Fund - Class Z
Actual $1,000.00 $1,022.20 $ 6.62 1.32%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,018.25 $ 6.61 1.32%
6
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Value Account Value Expenses Paid Net Annual
Small Cap Value Fund 1/1/2005 6/30/2005 During Period (1) Expense Ratio
- ----------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class A
Actual $1,000.00 $1,004.60 $ 7.46 1.50%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,017.36 $ 7.50 1.50%
- ----------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class B
Actual $1,000.00 $1,000.90 $ 11.31 2.28%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,013.49 $ 11.38 2.28%
- ----------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class C
Actual $1,000.00 $1,001.20 $ 11.26 2.27%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,013.54 $ 11.33 2.27%
- ----------------------------------------------------------------------------------------------------
Small Cap Value Fund - Class Z
Actual $1,000.00 $1,006.00 $ 6.62 1.33%
- ----------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,018.20 $ 6.66 1.33%
(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).
7
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCK FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 91.20%
AMUSEMENT & RECREATION SERVICES - 0.96%
405,000 INTERNATIONAL GAME TECHNOLOGY $ 11,400,750
---------------
APPAREL & ACCESSORY STORES - 3.77%
540,000 ANN TAYLOR STORES CORPORATION+ 13,111,200
308,000 KOHL'S CORPORATION+ 17,220,280
677,000 LIMITED BRANDS 14,501,340
44,832,820
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 2.62%
325,000 COLUMBIA SPORTSWEAR COMPANY+ 16,051,750
485,000 JONES APPAREL GROUP INCORPORATED 15,054,400
31,106,150
---------------
APPLICATIONS SOFTWARE - 1.12%
615,000 CITRIX SYSTEMS INCORPORATED+ 13,320,900
---------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 1.74%
320,000 ADVANCE AUTO PARTS INCORPORATED+ 20,656,000
---------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 1.22%
395,000 RYDER SYSTEM INCORPORATED 14,457,000
---------------
BUSINESS SERVICES - 5.18%
280,000 AFFILIATED COMPUTER SERVICES INCORPORATED CLASS A+ 14,308,000
500,000 ASK JEEVES INCORPORATED+ 15,095,000
285,000 BUSINESS OBJECTS SA ADR+ 7,495,500
420,000 COGNOS INCORPORATED+ 14,338,800
1,010,000 MENTOR GRAPHICS CORPORATION+ 10,352,500
61,589,800
---------------
CHEMICALS & ALLIED PRODUCTS - 5.23%
715,000 HUNTSMAN CORPORATION+ 14,493,050
460,000 INTERNATIONAL FLAVORS & FRAGRANCES INCORPORATED 16,661,200
590,000 MEDIMMUNE INCORPORATED+ 15,764,800
272,000 SIGMA-ALDRICH CORPORATION 15,242,880
62, 161,930
---------------
COMMUNICATIONS - 7.10%
1,000,000 CABLEVISION SYSTEMS CORPORATION CLASS A+ 32,200,000
470,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 14,537,100
1,031,000 DIRECTV GROUP INCORPORATED+ 15,980,500
690,000 SPRINT CORPORATION 17,312,100
157,000 VNU NV 4,370,049
84,399,749
---------------
DEPOSITORY INSTITUTIONS - 3.99%
258,000 CITY NATIONAL CORPORATION 18,501,180
360,000 FIFTH THIRD BANCORP 14,835,600
315,000 MARSHALL & ILSLEY CORPORATION 14,001,750
47,338,530
---------------
8
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
COMMON STOCK FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
EATING & DRINKING PLACES - 0.95%
250,000 OUTBACK STEAKHOUSE INCORPORATED $ 11,310,000
---------------
ELECTRIC, GAS & SANITARY SERVICES - 1.36%
450,000 REPUBLIC SERVICES INCORPORATED 16,204,500
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 7.00%
780,000 ADVANCED MICRO DEVICES INCORPORATED+ 13,525,200
345,000 AMPHENOL CORPORATION CLASS A 13,858,650
945,000 ENERSYS+ 12,880,350
1,110,000 FAIRCHILD SEMICONDUCTOR INTERNATIONAL INCORPORATED+ 16,372,500
990,000 NOKIA OYJ ADR 16,473,600
385,000 SILICON LABORATORIES INCORPORATED+ 10,090,850
83,201,150
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 4.57%
2,290,000 BEARINGPOINT INCORPORATED+ 16,785,700
175,000 CELGENE CORPORATION+ 7,134,750
290,000 JACOBS ENGINEERING GROUP INCORPORATED+ 16,315,400
300,000 PHARMACEUTICAL PRODUCT DEVELOPMENT INCORPORATED+ 14,058,000
54,293,850
---------------
FOOD STORES - 1.55%
965,000 KROGER COMPANY+ 18,363,950
---------------
HEALTH SERVICES - 1.17%
785,000 VALEANT PHARMACEUTICALS INTERNATIONAL 13,839,550
---------------
HOLDING & OTHER INVESTMENT OFFICES - 1.44%
750,000 TELEWEST GLOBAL INCORPORATED+ 17,085,000
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 6.02%
193,000 CARLISLE COMPANIES INCORPORATED 13,245,590
405,000 DOVER CORPORATION 14,733,900
260,000 SANDISK CORPORATION+ 6,169,800
805,000 SEAGATE TECHNOLOGY 14,127,750
365,000 SMITH INTERNATIONAL INCORPORATED 23,250,500
71,527,540
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 1.20%
525,000 ARTHUR J. GALLAGHER & COMPANY 14,243,250
---------------
INSURANCE CARRIERS - 5.68%
550,000 GENWORTH FINANCIAL INCORPORATED 16,626,500
290,000 MBIA INCORPORATED 17,199,900
370,000 RENAISSANCERE HOLDINGS LIMITED 18,218,800
390,000 ST. PAUL COMPANIES INCORPORATED 15,416,700
67,461,900
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 2.28%
340,000 RESPIRONICS INCORPORATED+ 12,277,400
550,000 THERMO ELECTRON CORPORATION+ 14,778,500
27,055,900
---------------
9
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCK FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
METAL MINING - 1.19%
920,000 PLACER DOME INCORPORATED $ 14,149,600
---------------
MISCELLANEOUS RETAIL - 1.45%
540,000 SPORTS AUTHORITY INCORPORATED+ 17,172,000
---------------
MOTION PICTURES - 2.90%
1,750,000 LIBERTY MEDIA CORPORATION CLASS A+ 17,832,500
1,030,000 NEWS CORPORATION CLASS A 16,665,400
34,497,900
---------------
OIL & GAS EXTRACTION - 10.29%
360,000 APACHE CORPORATION 23,256,000
442,000 BURLINGTON RESOURCES INCORPORATED 24,416,080
425,000 EOG RESOURCES INCORPORATED 24,140,000
300,000 NABORS INDUSTRIES LIMITED+ 18,186,000
525,000 NOBLE CORPORATION 32,292,750
122,290,830
---------------
PAPER & ALLIED PRODUCTS - 1.07%
590,000 PACTIV CORPORATION+ 12,732,200
---------------
PRIMARY METAL INDUSTRIES - 1.43%
650,000 ALCOA INCORPORATED 16,984,500
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.28%
430,000 DOW JONES & COMPANY INCORPORATED 15,243,500
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.32%
285,000 MERRILL LYNCH & COMPANY INCORPORATED 15,677,850
---------------
TRANSPORTATION BY AIR - 1.28%
1,145,000 CONTINENTAL AIRLINES INCORPORATED CLASS B+ 15,205,600
---------------
TRANSPORTATION EQUIPMENT - 0.79%
215,000 AUTOLIV INCORPORATED 9,417,000
---------------
WHOLESALE TRADE-DURABLE GOODS - 2.05%
383,000 OMNICARE INCORPORATED 16,250,690
220,000 TECH DATA CORPORATION+ 8,054,200
24,304,890
---------------
Total Common Stocks (Cost $797,881,661) 1,083,526,089
---------------
INVESTMENT COMPANIES - 1.19%
STOCK FUNDS - 1.19%
85,000 BIOTECH HOLDRS TRUST 14,220,500
---------------
Total Investment Companies (Cost $8,221,540) 14,220,500
---------------
SHORT-TERM INVESTMENTS - 7.28%
MUTUAL FUND - 7.28%
86,497,406 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 86,497,406
---------------
Total Short-Term Investments (Cost $86,497,406) 86,497,406
---------------
10
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
COMMON STOCK FUND
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
TOTAL INVESTMENTS IN SECURITIES
(COST $892,600,607)* 99.67% $ 1,184,243,995
OTHER ASSETS AND LIABILITIES, NET 0.33 3,868,876
------ ---------------
TOTAL NET ASSETS 100.00% $ 1,188,112,871
------ ---------------
+ 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.
* 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 $86,497,406.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 93.80%
APPAREL & ACCESSORY STORES - 0.71%
18,625 DSW INCORPORATED+ $ 464,694
315,500 PAYLESS SHOESOURCE INCORPORATED+ 6,057,600
491,800 TOO INCORPORATED+ 11,493,366
18,015,660
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.02%
10,500 GUESS? INCORPORATED+ 174,090
29,600 GYMBOREE CORPORATION+ 404,336
578,426
---------------
BUSINESS SERVICES - 5.45%
872,800 ABM INDUSTRIES INCORPORATED 17,019,600
2,106,750 EARTHLINK INCORPORATED+ 18,244,455
429,065 HEALTHCARE SERVICES GROUP 8,615,625
1,109,400 IDX SYSTEMS CORPORATION+ 33,437,316
1,163,900 JDA SOFTWARE GROUP INCORPORATED+ 13,245,182
2,097,253 KFORCE INCORPORATED+ 17,742,760
1,644,615 MPS GROUP INCORPORATED+ 15,492,273
958,000 TIER TECHNOLOGIES INCORPORATED CLASS B+ 8,075,940
563,750 VIGNETTE CORPORATION+ 6,342,188
138,215,339
---------------
CHEMICALS & ALLIED PRODUCTS - 4.21%
207,100 ANDRX CORPORATION+ 4,206,201
2,423,630 CALGON CARBON CORPORATION 21,449,125
46,400 HB FULLER COMPANY 1,580,384
1,102,800 OM GROUP INCORPORATED+ 27,228,132
2,047,800 ORASURE TECHNOLOGIES INCORPORATED+ 20,457,522
3,594,900 POLYONE CORPORATION+ 23,798,238
412,940 PRESTIGE BRANDS HOLDINGS INCORPORATED+ 8,052,330
106,771,932
---------------
COMMUNICATIONS - 1.43%
3,618,700 CINCINNATI BELL INCORPORATED+ 15,560,410
180,582 ECTEL LIMITED+ 677,183
2,666,400 LIGHTBRIDGE INCORPORATED+ 16,665,000
1,825,000 NET2PHONE INCORPORATED+ 3,303,250
36,205,843
---------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 4.66%
3,468,700 CHICAGO BRIDGE & IRON COMPANY NV 79,294,482
1,575,300 LAYNE CHRISTENSEN COMPANY+ 31,293,334
1,623,639 MATRIX SERVICE COMPANY+ 7,436,267
118,024,083
---------------
DEPOSITORY INSTITUTIONS - 0.57%
650,300 COLONIAL BANCGROUP INCORPORATED 14,345,618
---------------
12
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRIC, GAS & SANITARY SERVICES - 0.11%
140,500 EL PASO CORPORATION $ 1,618,560
60,000 TECO ENERGY INCORPORATED 1,134,600
2,753,160
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 4.27%
169,400 ADC TELECOMMUNICATIONS INCORPORATED+ 3,687,844
404,300 C-COR INCORPORATED+ 2,769,455
1,502,840 CELESTICA INCORPORATED+ 20,138,056
400,000 ECI TELECOM LIMITED+ 3,320,000
1,039,163 EVANS & SUTHERLAND COMPUTER CORPORATION+ 5,247,773
5,123,330 GRAFTECH INTERNATIONAL LIMITED+ 22,030,319
893,400 NORTEL NETWORKS CORPORATION+ 2,331,774
957,950 OSI SYSTEMS INCORPORATED+ 15,126,030
314,400 QLOGIC CORPORATION+ 9,705,528
804,000 RICHARDSON ELECTRONICS LIMITED 5,869,200
1,999,547 STATS CHIPPAC LIMITED ADR+ 14,236,775
1,098,120 TRIQUINT SEMICONDUCTOR INCORPORATED+ 3,656,740
108,119,494
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.37%
374,145 CDI CORPORATION 8,201,258
852,400 CV THERAPEUTICS INCORPORATED+ 19,110,808
1,986,800 DISCOVERY PARTNERS INTERNATIONAL+ 5,682,248
67,000 WATSON WYATT & COMPANY HOLDINGS 1,717,210
34,711,524
---------------
FOOD & KINDRED PRODUCTS - 1.35%
3,124,335 DEL MONTE FOODS COMPANY+ 33,649,088
40,000 HERCULES INCORPORATED+ 566,000
34,215,088
---------------
GENERAL MERCHANDISE STORES - 0.60%
557,535 FOOT LOCKER INCORPORATED 15,176,103
---------------
HEALTH SERVICES - 4.12%
4,104,100 BEVERLY ENTERPRISES INCORPORATED 52,286,234
580,185 CROSS COUNTRY HEALTHCARE INCORPORATED+ 9,863,145
1,202,005 GENTIVA HEALTH SERVICES INCORPORATED+ 21,467,809
525,700 MANOR CARE INCORPORATED 20,886,061
104,503,249
---------------
HOLDING & OTHER INVESTMENT OFFICES - 0.78%
889,400 AMERICAN FINANCIAL REALTY TRUST 13,678,972
625,000 GOVERNMENT PROPERTIES TRUST INCORPORATED 6,075,000
19,753,972
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.11%
521,600 EMPIRE RESORTS INCORPORATED+ 2,112,480
37,700 GREAT WOLF RESORTS INCORPORATED+ 770,588
2,883,068
---------------
13
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 4.06%
1,723,403 CIRRUS LOGIC INCORPORATED+ $ 9,151,270
2,984,335 CRAY INCORPORATED+ 3,700,575
340,500 KULICKE & SOFFA INDUSTRIES INCORPORATED+ 2,693,355
346,800 ROBBINS & MYERS INCORPORATED 7,459,668
216,400 SMITH INTERNATIONAL INCORPORATED 13,784,680
1,918,700 UNOVA INCORPORATED+ 51,094,981
391,800 YORK INTERNATIONAL CORPORATION 14,888,400
102,772,929
---------------
INSURANCE CARRIERS - 3.82%
876,075 ARGONAUT GROUP INCORPORATED+ 20,228,572
282,000 DONEGAL GROUP INCORPORATED CLASS A 5,628,720
94,600 EMC INSURANCE GROUP INCORPORATED 1,710,368
416,910 ENDURANCE SPECIALTY HOLDINGS LIMITED 15,767,536
500,090 MERCURY GENERAL CORPORATION 27,264,907
511,800 MONTPELIER RE HOLDINGS LIMITED 17,698,044
59,500 NYMAGIC INCORPORATED 1,389,325
259,000 PXRE GROUP LIMITED 6,531,980
63,200 SEABRIGHT INSURANCE HOLDINGS INCORPORATED+ 722,376
96,941,828
---------------
JUSTICE, PUBLIC ORDER & SAFETY - 1.00%
1,011,010 GEO GROUP INCORPORATED+ 25,325,801
---------------
LEATHER & LEATHER PRODUCTS - 0.06%
146,349 BAKERS FOOTWEAR GROUP INCORPORATED+ 1,602,522
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL
GOODS - 3.07%
1,037,829 ALLIED HEALTHCARE PRODUCTS INCORPORATED 5,095,740
850,900 APPLERA CORPORATION-APPLIED BIOSYSTEMS GROUP 16,737,203
334,300 ARMOR HOLDINGS INCORPORATED+ 13,241,623
196,270 COHERENT INCORPORATED+ 7,067,683
1,820,025 CREDENCE SYSTEMS CORPORATION+ 16,471,226
1,877,090 INPUT OUTPUT INCORPORATED+ 11,788,125
528,330 NEWPORT CORPORATION+ 7,322,654
77,724,254
---------------
METAL MINING - 10.41%
2,930,280 APEX SILVER MINES LIMITED+ 40,262,047
1,103,300 ELDORADO GOLD CORPORATION+ 2,926,645
3,273,100 GLAMIS GOLD LIMITED+%% 56,330,051
2,183,800 GOLDCORP INCORPORATED 34,460,364
2,883,400 HARMONY GOLD MINING COMPANY LIMITED ADR 24,681,904
966,200 IPSCO INCORPORATED 42,222,940
1,607,510 MERIDIAN GOLD INCORPORATED+ 28,935,180
2,417,400 RANDGOLD RESOURCES LIMITED ADR+ 33,988,644
263,807,775
---------------
14
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS - 0.25%
1,472,300 QUADRA MINING LIMITED $ 6,308,827
---------------
MISCELLANEOUS RETAIL - 0.42%
591,522 BARBEQUES GALORE LIMITED ADR 2,596,782
572,800 SHARPER IMAGE CORPORATION 7,291,744
38,400 STAMPS.COM INCORPORATED+ 720,000
10,608,526
---------------
MISCELLANEOUS SERVICES - 0.23%
240,000 TOREADOR RESOURCES CORPORATION+ 5,829,600
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING - 0.49%
936,900 COVENANT TRANSPORT INCORPORATED CLASS A+ 12,367,080
---------------
OIL & GAS EXTRACTION - 27.29%
387,100 BJ SERVICES COMPANY 20,315,008
1,672,600 FOREST OIL CORPORATION+ 70,249,200
8,344,690 GLOBAL INDUSTRIES LIMITED+ 70,929,865
2,185,900 GREY WOLF INCORPORATED+ 16,197,519
514,480 HELMERICH & PAYNE INCORPORATED 24,139,402
3,057,400 KEY ENERGY SERVICES INCORPORATED+ 36,994,540
1,669,970 MCMORAN EXPLORATION COMPANY+ 32,581,115
479,560 NEWFIELD EXPLORATION COMPANY+ 19,129,648
4,500,000 NEWPARK RESOURCES INCORPORATED+ 33,750,000
470,900 NOBLE ENERGY INCORPORATED 35,623,585
679,360 OCEANEERING INTERNATIONAL INCORPORATED+ 26,257,264
54,000 PARAMOUNT RESOURCES LIMITED CLASS A+ 792,458
1,425,500 PARKER DRILLING COMPANY+ 9,992,755
193,300 PETROHAWK ENERGY CORPORATION+ 2,087,640
1,557,000 PETROHAWK ENERGY CORPORATION 16,815,600
1,078,200 PETROQUEST ENERGY INCORPORATED+ 7,083,774
623,500 PIONEER NATURAL RESOURCES COMPANY 26,236,880
1,145,099 PRIDE INTERNATIONAL INCORPORATED+ 29,429,044
5,114,250 RANGE RESOURCES CORPORATION 137,573,325
618,300 REMINGTON OIL & GAS CORPORATION+ 22,073,310
309,000 STONE ENERGY CORPORATION+ 15,110,100
419,300 TRANSOCEAN INCORPORATED+ 22,629,621
50,100 TRILOGY ENERGY TRUST 732,363
1,033,700 WILLBROS GROUP INCORPORATED+ 14,802,584
691,526,600
---------------
PAPER & ALLIED PRODUCTS - 1.25%
472,280 CHESAPEAKE CORPORATION 9,889,543
1,817,700 WAUSAU PAPER CORPORATION 21,776,046
31,665,589
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 0.08%
60,000 HEADWATERS INCORPORATED+ 2,062,800
---------------
15
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PRIMARY METAL INDUSTRIES - 4.45%
474,350 CARPENTER TECHNOLOGY CORPORATION $ 24,571,330
635,000 ENCORE WIRE CORPORATION+ 7,359,650
446,585 ROANOKE ELECTRIC STEEL CORPORATION 7,377,584
1,122,400 STEEL DYNAMICS INCORPORATED 29,463,000
1,107,300 UNITED STATES STEEL CORPORATION 38,057,901
965,745 WEBCO INDUSTRIES INCORPORATED+ 6,035,906
112,865,371
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.16%
475,500 R.H. DONNELLEY CORPORATION+ 29,471,490
---------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 2.55%
965,100 CONSTAR INTERNATIONAL INCORPORATED+ 3,609,474
3,095,170 INTERTAPE POLYMER GROUP INCORPORATED+ 31,539,782
93,000 INTERTAPE POLYMER GROUP INCORPORATED# 948,825
2,607,500 ROYAL GROUP TECHNOLOGIES LIMITED+ 28,552,125
64,650,206
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.19%
738,535 US CONCRETE INCORPORATED+ 4,778,321
---------------
TRANSPORTATION BY AIR - 2.24%
827,050 EGL INCORPORATED+ 16,805,656
756,900 LAN AIRLINES SA ADR+ 26,453,655
120,774 PETROLEUM HELICOPTERS INCORPORATED+ 2,931,185
453,657 PETROLEUM HELICOPTERS INCORPORATED (NON-VOTING)+ 10,679,086
56,869,582
---------------
TRANSPORTATION EQUIPMENT - 0.64%
1,587,710 FLEETWOOD ENTERPRISES INCORPORATED+ 16,115,257
---------------
WHOLESALE TRADE-DURABLE GOODS - 0.38%
1,343,100 COVALENT GROUP INCORPORATED+ 3,210,009
148,700 OMNICARE INCORPORATED 6,309,341
9,519,350
---------------
Total Common Stocks (Cost $1,689,256,892) 2,377,086,267
---------------
SHORT-TERM INVESTMENTS - 6.71%
MUTUAL FUND - 6.71%
169,931,100 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 169,931,100
---------------
Total Short-Term Investments (Cost $169,931,100) 169,931,100
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,859,187,992)* 100.51% $ 2,547,017,367
OTHER ASSETS AND LIABILITIES, NET (0.51) (12,950,852)
------ ---------------
Total Net Assets 100.00% $ 2,534,066,515
------ ---------------
+ NON-INCOME EARNING SECURITIES.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
# SECURITY TRADES IN FOREIGN CURRENCY AND IS CONVERTED TO U.S. DOLLARS DAILY
USING CURRENT EXCHANGE RATES.
~ 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 $169,931,100.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
16
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
STRIKE EXPIRATION
SHARES PRICE DATE VALUE
WRITTEN OPTIONS - (0.49%)
(150) APPLERA CORPORATION CALL+ $ 20.00 09/17/2005 $ (11,250)
(100) APPLIED BIOSYSTEMS GROUP CALL+ 22.50 09/17/2005 (1,500)
(100) ARMOR HOLDINGS INCORPORATED CALL+ 40.00 08/20/2005 (16,500)
(100) ARMOR HOLDINGS INCORPORATED CALL+ 40.00 11/19/2005 (31,000)
(150) BJ SERVICES COMPANY CALL+ 50.00 07/16/2005 (54,000)
(600) BJ SERVICES COMPANY CALL+ 55.00 08/20/2005 (108,000)
(200) BJ SERVICES COMPANY CALL+ 50.00 10/22/2005 (108,000)
(400) BJ SERVICES COMPANY CALL+ 55.00 10/22/2005 (118,000)
(250) BJ SERVICES COMPANY CALL+ 60.00 10/22/2005 (28,750)
(500) BJ SERVICES COMPANY CALL+ 50.00 07/16/2005 (180,000)
(100) BJ SERVICES COMPANY CALL+ 60.00 10/22/2005 (11,500)
(1,450) CARPENTER TECHNOLOGY CORPORATION CALL+ 55.00 09/17/2005 (355,250)
(1,450) CARPENTER TECHNOLOGY CORPORATION CALL+ 60.00 09/17/2005 (145,000)
(500) CARPENTER TECHNOLOGY CORPORATION CALL+ 65.00 12/17/2005 (70,000)
(150) CARPENTER TECHNOLOGY CORPORATION CALL+ 55.00 07/16/2005 (6,000)
(50) CARPENTER TECHNOLOGY CORPORATION CALL+ 65.00 09/17/2005 (1,500)
(200) CHESAPEAKE CORPORATION CALL+ 20.00 08/20/2005 (28,000)
(500) CHESAPEAKE CORPORATION CALL+ 22.50 08/20/2005 (15,000)
(200) CHICAGO BRIDGE & IRON COMPANY CALL+ 22.50 07/16/2005 (12,000)
(100) CHICAGO BRIDGE & IRON COMPANY CALL+ 22.50 10/22/2005 (16,500)
(150) CHICAGO BRIDGE & IRON COMPANY CALL+ 25.00 07/16/2005 (1,500)
(200) CHICAGO BRIDGE & IRON COMPANY CALL+ 22.50 07/16/2005 (12,000)
(500) CHICAGO BRIDGE & IRON COMPANY CALL+ 25.00 10/22/2005 (32,500)
(500) CHICAGO BRIDGE & IRON COMPANY CALL+ 22.50 10/22/2005 (82,500)
(100) COHERENT INCORPORATED CALL+ 35.00 08/20/2005 (20,000)
(700) COHERENT INCORPORATED CALL+ 35.00 08/20/2005 (140,000)
(450) CV THERAPEUTICS INCORPORATED CALL+ 22.50 07/16/2005 (24,750)
(100) CV THERAPEUTICS INCORPORATED CALL+ 20.00 10/22/2005 (37,000)
(1,200) CV THERAPEUTICS INCORPORATED CALL+ 25.00 10/22/2005 (174,000)
(1,150) CV THERAPEUTICS INCORPORATED CALL+ 30.00 10/22/2005 (46,000)
(150) CV THERAPEUTICS INCORPORATED CALL+ 30.00 07/16/2005 (750)
(200) EGL INCORPORATED CALL+ 17.50 08/20/2005 (60,000)
(100) ENDURANCE SPECIALTY HOLDINGS LIMITED CALL+ 35.00 07/16/2005 (27,000)
(150) FOREST OIL CORPORATION CALL+ 35.00 08/20/2005 (108,000)
(450) FOREST OIL CORPORATION CALL+ 40.00 08/20/2005 (144,000)
(200) FOREST OIL CORPORATION CALL+ 45.00 08/20/2005 (17,000)
(1,100) FOREST OIL CORPORATION CALL+ 40.00 08/20/2005 (352,000)
(850) FOREST OIL CORPORATION CALL+ 45.00 08/20/2005 (72,250)
(100) GOLDCORP INCORPORATED CALL+ 15.00 07/16/2005 (8,500)
(105) GUESS INCORPORATED CALL+ 15.00 09/17/2005 (22,575)
(364) H.B. FULLER COMPANY CALL+ 30.00 08/20/2005 (72,800)
(100) H.B. FULLER COMPANY CALL+ 25.00 08/20/2005 (68,000)
(600) HEADWATERS INCORPORATED CALL+ 30.00 11/19/2005 (324,000)
(850) HELMERICH & PAYNE INCORPORATED CALL+ 45.00 09/17/2005 (314,500)
(200) HELMERICH & PAYNE INCORPORATED CALL+ 40.00 12/17/2005 (164,000)
(400) HELMERICH & PAYNE INCORPORATED CALL+ 45.00 12/17/2005 (196,000)
(500) HELMERICH & PAYNE INCORPORATED CALL+ 50.00 12/17/2005 (112,500)
17
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
STRIKE EXPIRATION
SHARES PRICE DATE VALUE
WRITTEN OPTIONS (CONTINUED)
(100) IDX SYSTEMS CORPORATION CALL+ $ 30.00 07/19/2005 $ (7,000)
(1,200) IDX SYSTEMS CORPORATION CALL+ 30.00 08/20/2005 (180,000)
(500) IDX SYSTEMS CORPORATION CALL+ 30.00 11/19/2005 (127,500)
(450) IDX SYSTEMS CORPORATION CALL+ 35.00 11/19/2005 (33,750)
(100) IPSCO INCORPORATED CALL+ 45.00 07/16/2005 (9,000)
(100) IPSCO INCORPORATED CALL+ 50.00 07/16/2005 (1,000)
(900) IPSCO INCORPORATED CALL+ 45.00 09/17/2005 (270,000)
(1,150) IPSCO INCORPORATED CALL+ 50.00 09/17/2005 (109,250)
(800) IPSCO INCORPORATED CALL+ 55.00 09/17/2005 (32,000)
(480) IPSCO INCORPORATED CALL+ 50.00 12/17/2005 (108,000)
(295) IPSCO INCORPORATED CALL+ 55.00 12/17/2005 (35,400)
(280) IPSCO INCORPORATED CALL+ 60.00 12/17/2005 (16,800)
(50) IPSCO INCORPORATED CALL+ 50.00 12/17/2005 (1,500)
(300) JDA SOFTWARE GROUP INCORPORATED CALL+ 12.50 07/16/2005 (1,500)
(100) MANOR CARE INCORPORATED CALL+ 35.00 08/20/2005 (48,000)
(250) MANOR CARE INCORPORATED CALL+ 40.00 11/19/2005 (53,750)
(100) MANOR CARE INCORPORATED CALL+ 35.00 08/20/2005 (48,000)
(300) McMORAN EXPLORATION COMPANY CALL+ 20.00 08/20/2005 (28,500)
(150) McMORAN EXPLORATION COMPANY CALL+ 17.50 08/20/2005 (34,500)
(400) NEWFIELD EXPLORATION COMPANY CALL+ 37.50 07/16/2005 (100,000)
(100) NEWFIELD EXPLORATION COMPANY CALL+ 40.00 08/20/2005 (16,500)
(1,060) NEWFIELD EXPLORATION COMPANY CALL+ 40.00 09/17/2005 (227,900)
(1,000) NEWFIELD EXPLORATION COMPANY CALL+ 37.50 09/17/2005 (370,000)
(300) NEWFIELD EXPLORATION COMPANY CALL+ 40.00 12/17/2005 (99,000)
(250) NEWFIELD EXPLORATION COMPANY CALL+ 45.00 12/17/2005 (37,500)
(200) NEWFIELD EXPLORATION COMPANY CALL+ 35.00 09/17/2005 (110,000)
(50) NOBLE ENERGY INCORPORATED CALL+ 75.00 07/16/2005 (11,000)
(950) NOBLE ENERGY INCORPORATED CALL+ 70.00 08/20/2005 (399,000)
(200) NOBLE ENERGY INCORPORATED CALL+ 75.00 08/20/2005 (70,000)
(350) NOBLE ENERGY INCORPORATED CALL+ 70.00 11/19/2005 (304,500)
(550) NOBLE ENERGY INCORPORATED CALL+ 75.00 11/19/2005 (308,000)
(1,050) NOBLE ENERGY INCORPORATED CALL+ 70.00 08/20/2005 (441,000)
(100) NOBLE ENERGY INCORPORATED CALL+ 75.00 08/20/2005 (35,000)
(450) OCEANEERING INTERNATIONAL INCORPORATED CALL+ 35.00 07/21/2005 (157,500)
(450) OCEANEERING INTERNATIONAL INCORPORATED CALL+ 40.00 07/16/2005 (9,000)
(200) OMNICARE INCORPORATED CALL+ 40.00 09/17/2005 (76,000)
(400) OMNICARE INCORPORATED CALL+ 37.50 09/17/2005 (260,000)
(100) OMNICARE INCORPORATED CALL+ 42.50 09/17/2005 (22,000)
(500) ORASURE TECHNOLOGIES INCORPORATED CALL+ 10.00 10/22/2005 (50,000)
(150) OSI SYSTEMS INCORPORATED CALL+ 20.00 07/16/2005 (1,500)
(100) OSI SYSTEMS INCORPORATED CALL+ 17.50 07/21/2005 (500)
(200) PETROQUEST ENERGY INCORPORATED CALL+ 7.50 07/16/2005 (2,000)
(150) PIONEER NATURAL RESOURCES COMPANY CALL+ 45.00 09/17/2005 (67,500)
(350) PIONEER NATURAL RESOURCES COMPANY CALL+ 40.00 09/17/2005 (115,500)
(75) PIONEER NATURAL RESOURCES COMPANY CALL+ 45.00 09/17/2005 (6,750)
(350) PRIDE INTERNATIONAL INCORPORATED CALL+ 25.00 07/16/2005 (385)
(350) R.H. DONNELLEY CORPORATION CALL+ 60.00 08/20/2005 (99,750)
18
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
STRIKE EXPIRATION
SHARES PRICE DATE VALUE
WRITTEN OPTIONS (CONTINUED)
(100) R.H. DONNELLEY CORPORATION CALL+ $ 60.00 11/19/2005 $ (45,000)
(550) R.H. DONNELLEY CORPORATION CALL+ 65.00 11/19/2005 (115,500)
(400) RANDGOLD RESOURCES LIMITED CALL+ 15.00 09/17/2005 (26,000)
(200) RANGE RESOURCES CORPORATION CALL+ 25.00 09/17/2005 (55,000)
(150) RANGE RESOURCES CORPORATION CALL+ 25.00 12/17/2005 (55,500)
(1,000) RANGE RESOURCES CORPORATION CALL+ 25.00 09/17/2005 (275,000)
(1,000) RANGE RESOURCES INCORPORATED CALL+ 30.00 12/17/2005 (155,000)
(50) SHARPER IMAGE CORPORATION CALL+ 15.00 08/20/2005 (750)
(500) SMITH INTERNATIONAL INCORPORATED CALL+ 60.00 07/16/2005 (210,000)
(200) SMITH INTERNATIONAL INCORPORATED CALL+ 65.00 08/20/2005 (44,000)
(250) SMITH INTERNATIONAL INCORPORATED CALL+ 60.00 10/22/2005 (160,000)
(600) SMITH INTERNATIONAL INCORPORATED CALL+ 65.00 10/22/2005 (216,000)
(384) STAMPS.COM INCORPORATED CALL+ 17.50 11/19/2005 (115,200)
(350) STEEL DYNAMICS INCORPORATED CALL+ 30.00 11/19/2005 (61,250)
(100) STONE ENERGY CORPORATION CALL+ 50.00 07/16/2005 (5,500)
(200) STONE ENERGY CORPORATION CALL+ 50.00 08/20/2005 (33,000)
(100) STONE ENERGY CORPORATION CALL+ 50.00 12/17/2005 (38,000)
(200) STONE ENERGY CORPORATION CALL+ 50.00 09/17/2005 (45,000)
(200) STONE ENERGY CORPORATION CALL+ 55.00 09/17/2005 (14,000)
(100) STONE ENERGY CORPORATION CALLL+ 55.00 09/17/2005 (7,000)
(150) TOREADOR RESOURCES CORPORATION CALL+ 22.50 09/17/2005 (136,500)
(400) TOREADOR RESOURCES CORPORATION CALL+ 20.00 09/17/2005 (204,000)
(1,350) TOREADOR RESOURCES CORPORATION CALL+ 17.50 09/17/2005 (945,000)
(300) TOREADOR RESOURCES CORPORATION CALL+ 22.50 09/17/2005 (105,000)
(200) TOREADOR RESOURCES CORPORATION CALL+ 22.50 12/17/2005 (92,000)
(50) TRANSOCEAN INCORPORATED CALL+ 55.00 07/16/2005 (5,500)
(100) TRANSOCEAN INCORPORATED CALL+ 60.00 11/19/2005 (31,000)
(50) TRANSOCEAN INCORPORATED CALL+ 50.00 08/20/2005 (28,000)
(400) TRANSOCEAN INCORPORATED CALL+ 55.00 08/20/2005 (112,000)
(100) UNITED STATES STEEL CORPORATION CALL+ 40.00 07/16/2005 (1,000)
(50) UNITED STATES STEEL CORPORATION CALL+ 35.00 08/20/2005 (9,000)
(200) UNITED STATES STEEL CORPORATION CALL+ 40.00 08/20/2005 (13,000)
(450) UNITED STATES STEEL CORPORATION CALL+ 40.00 10/22/2005 (58,500)
(100) UNOVA INCORPORATED CALL+ 20.00 09/17/2005 (75,000)
(200) UNOVA INCORPORATED CALL+ 25.00 09/17/2005 (37,000)
(250) UNOVA INCORPORATED CALL+ 25.00 09/17/2005 (46,250)
(200) UNOVA INCORPORATED CALL+ 22.50 09/17/2005 (106,000)
(400) YORK INTERNATIONAL CORPORATION CALL+ 40.00 08/20/2005 (30,000)
(150) YORK INTERNATIONAL CORPORATION CALL+ 40.00 11/19/2005 (24,000)
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED $(12,955,926)) (12,327,560)
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL
COMMON CAP VALUE
STOCK FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ............................................................ $ 1,097,746,589 $ 2,377,086,267
INVESTMENTS IN AFFILIATES ................................................................. 86,497,406 169,931,100
--------------- ---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........................................... 1,184,243,995 2,547,017,367
--------------- ---------------
RECEIVABLE FOR FUND SHARES ISSUED ......................................................... 212,186 248,487
RECEIVABLE FOR INVESTMENTS SOLD ........................................................... 8,363,468 15,234,364
RECEIVABLES FOR DIVIDENDS AND INTEREST .................................................... 1,061,310 1,111,749
--------------- ---------------
TOTAL ASSETS ................................................................................. 1,193,880,959 2,563,611,967
--------------- ---------------
LIABILITIES
OPTIONS WRITTEN, AT VALUE ................................................................. 0 12,327,560
PAYABLE FOR FUND SHARES REDEEMED .......................................................... 157,591 612,261
PAYABLE FOR INVESTMENTS PURCHASED ......................................................... 3,155,983 13,268,639
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ..................................... 1,003,778 2,632,709
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ................................................... 282,210 629,508
PAYABLE FOR INTEREST RATE SWAPS/SPREAD LOCKS .............................................. 993,377 0
UNREALIZED DEPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ............................. 5,376 0
ACCRUED EXPENSES AND OTHER LIABILITIES .................................................... 169,773 74,775
--------------- ---------------
TOTAL LIABILITIES ............................................................................ 5,768,088 29,545,452
--------------- ---------------
TOTAL NET ASSETS ............................................................................. $ 1,188,112,871 $ 2,534,066,515
--------------- ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ........................................................................... $ 815,655,832 $ 1,793,467,425
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................................................ (2,702,987) (7,827,822)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... 84,523,243 59,968,340
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES
AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ............ 291,635,536 687,830,206
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY
CONTRACTS AND TRANSACTIONS ............................................................. (5,376) 0
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND
SHORT SALES ............................................................................ (993,377) 628,366
--------------- ---------------
TOTAL NET ASSETS ............................................................................. $ 1,188,112,871 $ 2,534,066,515
--------------- ---------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ...................................................................... $ 65,759,845 $ 574,764,927
SHARES OUTSTANDING - CLASS A .............................................................. 2,923,915 19,940,163
NET ASSET VALUE PER SHARE - CLASS A ....................................................... $ 22.49 $ 28.82
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2) ............................................. $ 23.86 $ 30.58
NET ASSETS - CLASS B ...................................................................... $ 35,939,395 $ 129,671,818
SHARES OUTSTANDING - CLASS B .............................................................. 1,653,966 4,674,675
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B .................................... $ 21.73 $ 27.74
NET ASSETS - CLASS C ...................................................................... $ 21,383,404 $ 142,277,242
SHARES OUTSTANDING - CLASS C .............................................................. 984,282 5,117,852
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C .................................... $ 21.72 $ 27.80
NET ASSETS - CLASS Z ...................................................................... $ 1,065,030,227 $ 1,687,352,528
SHARES OUTSTANDING - CLASS Z .............................................................. 46,786,114 58,050,780
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z .................................... $ 22.76 $ 29.07
--------------- ---------------
INVESTMENTS AT COST .......................................................................... $ 892,600,607 $ 1,859,187,992
--------------- ---------------
PREMIUMS RECEIVED ON WRITTEN OPTIONS ......................................................... $ 0 $ 12,955,926
--------------- ---------------
(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.
20
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
COMMON SMALL CAP
STOCK FUND VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) .............................................................................. $ 4,544,198 $ 7,374,315
INTEREST .................................................................................. 298,431 1,355,930
INCOME FROM AFFILIATED SECURITIES ......................................................... 662,059 733,080
SECURITIES LENDING INCOME, NET ............................................................ 15,140 0
--------------- ---------------
TOTAL INVESTMENT INCOME ...................................................................... 5,519,828 9,463,325
--------------- ---------------
EXPENSES
ADVISORY FEES ............................................................................. 4,407,040 9,197,926
ADMINISTRATION FEES
FUND LEVEL ............................................................................. 130,266 270,102
CLASS A ................................................................................ 131,027 1,115,810
CLASS B ................................................................................ 70,220 258,978
CLASS C ................................................................................ 45,454 289,392
CLASS Z ................................................................................ 2,547,406 3,751,814
CUSTODY FEES .............................................................................. 67,962 145,221
SHAREHOLDER SERVICING FEES ................................................................ 651,331 1,454,071
ACCOUNTING FEES ........................................................................... 24,979 55,014
DISTRIBUTION FEES (NOTE 3)
CLASS A ................................................................................ 48,025 405,481
CLASS B ................................................................................ 159,645 577,738
CLASS C ................................................................................ 103,818 650,175
AUDIT FEES ................................................................................ 9,089 7,526
LEGAL FEES ................................................................................ 24,536 46,770
REGISTRATION FEES ......................................................................... 30,086 46,303
SHAREHOLDER REPORTS ....................................................................... 111,509 208,718
TRUSTEES' FEES ............................................................................ 52,471 93,810
OTHER FEES AND EXPENSES ................................................................... 282,601 411,506
--------------- ---------------
TOTAL EXPENSES ............................................................................... 8,897,465 18,986,355
--------------- ---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .............................................. (674,650) (1,695,208)
NET EXPENSES .............................................................................. 8,222,815 17,291,147
--------------- ---------------
NET INVESTMENT INCOME (LOSS) ................................................................. (2,702,987) (7,827,822)
--------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ........................... 94,464,569 90,776,295
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ...................................... (258,144) 7,877,504
--------------- ---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .................................................... 94,206,425 98,653,799
--------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ........................... (66,419,889) (81,965,637)
FORWARD FOREIGN CURRENCY CONTRACTS ........................................................ (5,376) 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ...................................... (1,045,271) 1,264,657
--------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .......................... (67,470,536) (80,700,980)
--------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ....................................... 26,735,889 17,952,819
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .............................. $ 24,032,902 $ 10,124,997
--------------- ---------------
(1) NET OF FOREIGN WITHOLDING TAXES OF ....................................................... $ 188,946 $ 448,192
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
COMMON STOCK FUND
--------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................................. $ 1,300,130,911 $ 1,590,977,622
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................................... (2,702,987) (6,211,139)
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................................. 94,206,425 215,035,135
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................. (67,470,536) (86,198,405)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......................... 24,032,902 122,625,591
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................................... (1,190,316) 0
CLASS B ........................................................................... (651,534) 0
CLASS C ........................................................................... (423,145) 0
CLASS Z ........................................................................... (18,513,766) 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ........................................................................... 0 (5,223,691)
CLASS B ........................................................................... 0 (2,710,458)
CLASS C ........................................................................... 0 (1,934,229)
CLASS Z ........................................................................... 0 (81,830,081)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................................... (20,778,761) (91,698,459)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A .................................................. 4,645,210 18,351,436
REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................................. 1,172,783 5,133,631
COST OF SHARES REDEEMED - CLASS A .................................................... (13,761,776) (32,357,772)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS A .............................................................................. (7,943,783) (8,872,705)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS B .................................................. 400,285 1,929,309
REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................................. 552,819 2,298,727
COST OF SHARES REDEEMED - CLASS B .................................................... (2,853,288) (5,546,942)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS B .............................................................................. (1,900,184) (1,318,906)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS C .................................................. 373,017 4,049,548
REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................................. 330,607 1,501,280
COST OF SHARES REDEEMED - CLASS C .................................................... (5,582,600) (13,428,469)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS C .............................................................................. (4,878,976) (7,877,641)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS Z (NOTE 1) ......................................... 41,294,929 114,300,846
REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................................... 17,958,474 77,961,481
COST OF SHARES REDEEMED - CLASS Z (NOTE 1) ........................................... (159,802,641) (495,966,918)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS Z .............................................................................. (100,549,238) (303,704,591)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ......... (115,272,181) (321,773,843)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ................................................... (112,018,040) (290,846,711)
=================== =================
ENDING NET ASSETS ....................................................................... $ 1,188,112,871 $ 1,300,130,911
------------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................ 211,610 829,082
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................. 53,405 236,355
SHARES REDEEMED - CLASS A ............................................................ (627,020) (1,468,160)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A ................................. (362,005) (402,723)
------------------- -----------------
SHARES SOLD - CLASS B ................................................................ 18,699 89,606
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................. 26,003 109,048
SHARES REDEEMED - CLASS B ............................................................ (134,629) (258,192)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B ................................. (89,927) (59,538)
------------------- -----------------
SHARES SOLD - CLASS C ................................................................ 17,500 187,445
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................. 15,551 71,218
SHARES REDEEMED - CLASS C ............................................................ (262,324) (625,270)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................................. (229,273) (366,607)
------------------- -----------------
SHARES SOLD - CLASS Z (NOTE 1) ....................................................... 1,858,530 5,128,434
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) .................... 808,212 3,551,776
SHARES REDEEMED - CLASS Z (NOTE 1) ................................................... (7,187,588) (22,238,478)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z ................................. (4,520,846) (13,558,268)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................................................... (5,202,051) (14,387,136)
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................ $ (2,702,987) $ 0
=================== =================
22
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
--------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED)(1) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................................. $ 2,251,537,570 $ 2,125,768,614
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ......................................................... (7,827,822) (19,810,930)
NET REALIZED GAIN (LOSS) ON INVESTMENTS .............................................. 98,653,799 270,316,100
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................. (80,700,980) 120,358,183
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ......................... 10,124,997 370,863,353
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................................... (10,397,421) 0
CLASS B ........................................................................... (2,427,253) 0
CLASS C ........................................................................... (2,724,859) 0
CLASS Z ........................................................................... (25,204,337) 0
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ........................................................................... 0 (65,935,104)
CLASS B ........................................................................... 0 (15,208,320)
CLASS C ........................................................................... 0 (17,605,354)
CLASS Z ........................................................................... 0 (142,846,550)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ..................................................... (40,753,870) (241,595,328)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A .................................................. 39,446,726 111,965,665
REINVESTMENT OF DISTRIBUTIONS - CLASS A .............................................. 10,086,931 63,761,770
COST OF SHARES REDEEMED - CLASS A .................................................... (64,346,100) (287,141,565)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS A .............................................................................. (14,812,443) (111,414,130)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS B .................................................. 1,060,717 3,500,020
REINVESTMENT OF DISTRIBUTIONS - CLASS B .............................................. 2,217,289 13,852,760
COST OF SHARES REDEEMED - CLASS B .................................................... (7,953,509) (13,748,747)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS B .............................................................................. (4,675,503) 3,604,033
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS C .................................................. 1,985,495 7,497,546
REINVESTMENT OF DISTRIBUTIONS - CLASS C .............................................. 2,318,721 14,891,930
COST OF SHARES REDEEMED - CLASS C .................................................... (16,407,487) (32,663,862)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS C .............................................................................. (12,103,271) (10,274,386)
------------------- -----------------
PROCEEDS FROM SHARES SOLD - CLASS Z (NOTE 1) ......................................... 475,739,434 586,760,998
REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) ..................................... 24,892,237 140,802,162
COST OF SHARES REDEEMED - CLASS Z (NOTE 1) ........................................... (155,882,636) (612,977,746)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
CLASS Z .............................................................................. 344,749,035 114,585,414
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ......... 313,157,818 (3,499,069)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ................................................... 282,528,945 125,768,956
=================== =================
ENDING NET ASSETS ....................................................................... $ 2,534,066,515 $ 2,251,537,570
------------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................ 1,384,368 3,946,949
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -CLASS A .............................. 346,233 2,293,078
SHARES REDEEMED - CLASS A ............................................................ (2,287,361) (10,327,642)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A ................................. (556,760) (4,087,615)
------------------- -----------------
SHARES SOLD - CLASS B ................................................................ 38,778 127,051
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................. 78,926 514,591
SHARES REDEEMED - CLASS B ............................................................ (292,415) (501,970)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B ................................. (174,711) 139,672
------------------- -----------------
SHARES SOLD - CLASS C ................................................................ 71,412 273,175
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................. 82,360 552,197
SHARES REDEEMED - CLASS C ............................................................ (600,880) (1,184,664)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................................. (447,108) (359,292)
------------------- -----------------
SHARES SOLD - CLASS Z (NOTE 1) ....................................................... 16,486,658 20,439,069
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z (NOTE 1) .................... 847,655 5,026,696
SHARES REDEEMED - CLASS Z (NOTE 1) ................................................... (5,509,475) (21,628,099)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z ................................. 11,824,838 3,837,666
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................................................... 10,646,259 (469,569)
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................ $ (7,827,822) $ 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.
23
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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
- ----------------------------------------------------------------------------------------------------------
COMMON STOCK FUND
- ----------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 22.40 (0.01) 0.48 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 21.98 (0.14) 2.21 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 15.87 (0.10) 6.21 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 19.71 (0.08) (3.76) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 20.15 (0.04) (0.36) 0.00
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... $ 18.90 0.00(4) 1.28 (0.03)
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 21.74 0.32 0.05 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 21.53 (0.29) 2.15 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 15.67 (0.24) 6.10 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 19.62 (0.22) (3.73) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 20.16 (0.09) (0.41) 0.00
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... $ 18.90 (0.01) 1.28 (0.01)
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 21.73 0.48 (0.11) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 21.53 (0.30) 2.15 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 15.68 (0.25) 6.10 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 19.62 (0.22) (3.72) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 20.16 (0.09) (0.41) 0.00
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... $ 18.90 (0.01) 1.28 (0.01)
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 22.65 (0.08) 0.57 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 22.15 (0.08) 2.23 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 15.97 (0.09) 6.27 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 19.78 (0.05) (3.76) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 20.16 (0.02) (0.32) 0.00
JANUARY 1, 2000 TO DECEMBER 31, 2000 ........... $ 25.21 0.04 (0.59) (0.04)
SMALL CAP VALUE FUND
- ----------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 29.19 (0.08) (0.43) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 27.40 (0.27)(5) 5.51 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 18.92 (0.12)(5) 9.26 (0.01)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 20.17 0.03(5) (1.28) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 17.17 (0.14)(5) 3.18 0.00
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... $ 15.36 0.00(4) 1.81 0.00
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 28.21 0.28 (0.89) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 26.79 (0.47)(5) 5.34 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 18.66 (0.29)(5) 9.08 (0.01)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 20.05 (0.14)(5) (1.25) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 17.16 (0.25)(5) 3.18 0.00
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... $ 15.36 (0.01) 1.81 0.00
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 28.27 0.31 (0.92) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 26.83 (0.47)(5) 5.36 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 18.68 (0.28)(5) 9.09 (0.01)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 20.07 (0.13)(5) (1.26) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 17.17 (0.24)(5) 3.18 0.00
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... $ 15.36 (0.01) 1.82 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... $ 29.40 (0.19) (0.28) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... $ 27.53 (0.22)(5) 5.54 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... $ 18.98 (0.09)(5) 9.30 (0.01)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... $ 20.22 0.04(5) (1.28) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... $ 17.17 (0.08) 3.17 0.00
JANUARY 1, 2000 TO DECEMBER 31, 2000 ........... $ 13.59 0.00(4) 3.58 0.00
24
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET ------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... (0.38) $ 22.49 (0.55)% 1.51% (0.04)% 1.47%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (1.65) 22.40 (0.62)% 1.58% (0.04)% 1.54%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 0.00 21.98 (0.62)% 1.55% (0.01)% 1.54%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 15.87 (0.50)% 1.55% 0.00% 1.55%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) 19.71 (0.51)% 1.65% (0.01)% 1.64%
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... 0.00 20.15 (0.22)% 1.57% 0.00% 1.57%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... (0.38) $ 21.73 (1.30)% 2.26% (0.04)% 2.22%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (1.65) 21.74 (1.36)% 2.32% (0.04)% 2.28%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 0.00 21.53 (1.41)% 2.35% (0.01)% 2.34%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 15.67 (1.31)% 2.36% 0.00% 2.36%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) 19.62 (1.12)% 2.55% (0.29)% 2.26%
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... 0.00 20.16 (0.61)% 2.00% (0.01)% 1.99%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... (0.38) $ 21.72 (1.32)% 2.27% (0.03)% 2.24%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (1.65) 21.73 (1.38)% 2.35% (0.04)% 2.31%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 0.00 21.53 (1.41)% 2.35% (0.01)% 2.34%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 15.68 (1.31)% 2.37% (0.01)% 2.36%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) 19.62 (1.09)% 2.39% (0.16)% 2.23%
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... 0.00 20.16 (0.62)% 2.00% 0.00% 2.00%
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... (0.38) $ 22.76 (0.40)% 1.44% (0.12)% 1.32%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (1.65) $ 22.65 (0.38)% 1.34% (0.04)% 1.30%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 0.00 $ 22.15 (0.42)% 1.36% (0.01)% 1.35%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 $ 15.97 (0.28)% 1.34% (0.01)% 1.33%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) $ 19.78 (0.10)% 1.29% 0.00% 1.29%
JANUARY 1, 2000 TO DECEMBER 31, 2000 ........... (4.46) $ 20.16 0.22% 1.18% 0.00% 1.18%
SMALL CAP VALUE FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.14 $ 28.82 (0.68)% 1.53% (0.03)% 1.50%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (3.45) $ 29.19 (0.96)% 1.57% (0.04)% 1.53%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... (0.65) $ 27.40 (0.55)% 1.56% (0.02)% 1.54%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 $ 18.92 0.14% 1.58% (0.01)% 1.57%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) $ 20.17 (0.73)% 1.60% (0.01)% 1.59%
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... 0.00 $ 17.17 (0.81)% 1.64% 0.00% 1.64%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.14 $ 27.74 (1.46)% 2.31% (0.03)% 2.28%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (3.45) $ 28.21 (1.71)% 2.33% (0.05)% 2.28%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... (0.65) $ 26.79 (1.37)% 2.36% (0.01)% 2.35%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 $ 18.66 (0.69)% 2.41% (0.01)% 2.40%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) $ 20.05 (1.40)% 2.50% (0.23)% 2.27%
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... 0.00 $ 17.16 (0.77)% 2.00% (0.20)% 1.80%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.14 $ 27.80 (1.45)% 2.30% (0.03)% 2.27%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (3.45) $ 28.27 (1.71)% 2.34% (0.05)% 2.29%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... (0.65) $ 26.83 (1.32)% 2.34% (0.02)% 2.32%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 $ 18.68 (0.64)% 2.38% (0.01)% 2.37%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) $ 20.07 (1.38)% 2.39% (0.15)% 2.24%
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... 0.00 $ 17.17 (0.74)% 2.00% (0.18)% 1.82%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.14 $ 29.07 (0.52)% 1.54% (0.21)% 1.33%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... (3.45) $ 29.40 (0.79)% 1.40% (0.04)% 1.36%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... (0.65) $ 27.53 (0.41)% 1.42% (0.02)% 1.40%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 $ 18.98 0.21% 1.49% (0.01)% 1.48%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (0.04) $ 20.22 (0.48)% 1.41% 0.00% 1.41%
JANUARY 1, 2000 TO DECEMBER 31, 2000 ........... 0.00 $ 17.17 0.01% 1.35% 0.00% 1.35%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ----------------------------------------------------------------------------------------------
COMMON STOCK FUND
- ----------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 2.16% 14% $ 65,760
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 9.67% 42% $ 73,612
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 38.50% 42% $ 81,068
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (19.48)% 65% $ 46,402
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (1.99)% 89% $ 27,617
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... 6.78% 95% $ 251
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 1.76% 14% $ 35,939
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 8.89% 42% $ 37,908
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 37.40% 42% $ 38,830
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (20.13)% 65% $ 24,208
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (2.48)% 89% $ 15,635
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... 6.76% 95% $ 159
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 1.81% 14% $ 21,383
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 8.84% 42% $ 26,375
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 37.31% 42% $ 34,025
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (20.08)% 65% $ 23,137
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (2.48)% 89% $ 14,603
NOVEMBER 30, 2000(6)(7) TO DECEMBER 31, 2000 ... 6.76% 95% $ 120
CLASS Z
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 2.22% 14% $ 1,065,030
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 9.96% 42% $ 1,162,236
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 38.70% 42% $ 1,437,055
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (19.26)% 65% $ 1,362,540
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (1.70)% 89% $ 1,702,628
JANUARY 1, 2000 TO DECEMBER 31, 2000 ........... (1.20)% 95% $ 1,719,018
SMALL CAP VALUE FUND
- ----------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.46% 18% $ 574,765
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 19.89% 34% $ 598,226
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 48.49% 30% $ 673,580
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (6.20)% 28% $ 334,669
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... 17.70% 42% $ 169,000
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... 11.78% 60% $ 1,178
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.09% 18% $ 129,672
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 18.95% 34% $ 136,825
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 47.28% 30% $ 126,152
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (6.93)% 28% $ 75,782
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... 17.07% 42% $ 40,446
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... 11.72% 60% $ 182
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.12% 18% $ 142,277
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 19.00% 34% $ 157,329
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 47.34% 30% $ 158,942
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (6.93)% 28% $ 98,122
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... 17.12% 42% $ 38,248
NOVEMBER 30, 2000(6) TO DECEMBER 31, 2000 ...... 11.78% 60% $ 138
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.60% 18% $ 1,687,353
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 20.09% 34% $ 1,359,158
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 48.70% 30% $ 1,167,094
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (6.13)% 28% $ 658,718
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... 17.99% 42% $ 541,384
JANUARY 1, 2000 TO DECEMBER 31, 2000 ........... 26.34% 60% $ 248,985
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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) Amount calculated is less than $0.005.
(5) Calculated based upon average shares outstanding.
(6) Commencement of operations.
(7) Per share data reflects a 1.233 for 1.00 share split which occurred on
March 8, 2001.
26
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Common Stock
Fund and Small Cap Value Fund. Each Fund is a diversified series of the Trust.
In August and 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 Funds Acquiring Fund
- --------------------------------------------------------------------------------------------------------------
STRONG MULTI CAP STRONG ADVISOR WELLS FARGO ADVANTAGE
Fund VALUE FUND SMALL CAP VALUE FUND* SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 3,363,000 -- --
- --------------------------------------------------------------------------------------------------------------
CLASS A -- 20,608,712 20,608,712
- --------------------------------------------------------------------------------------------------------------
CLASS B -- 4,814,191 4,814,191
- --------------------------------------------------------------------------------------------------------------
CLASS C -- 5,379,694 5,379,694
- --------------------------------------------------------------------------------------------------------------
CLASS Z -- 50,490,877 57,882,562
Net Asset:
- --------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $214,569,309 -- --
- --------------------------------------------------------------------------------------------------------------
CLASS A -- $ 593,375,054 $ 593,375,054
- --------------------------------------------------------------------------------------------------------------
CLASS B -- 133,618,121 133,618,121
- --------------------------------------------------------------------------------------------------------------
CLASS C -- 149,639,652 149,639,652
- --------------------------------------------------------------------------------------------------------------
CLASS Z -- 1,465,672,826 1,680,242,135
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (deprecation) 30,953,675 734,339,679 765,293,353
- --------------------------------------------------------------------------------------------------------------
Accumulated net realized losses (103,484,799) (21,857,714) (125,342,513)
- --------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds"), by share class, acquired substantially all
of the net assets of the following Target Funds ("Target Funds"), by share
class, through a tax-free exchange under section 368 of the Internal Revenue
Code.
Acquiring Fund Target Fund
- --------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE COMMON STOCK FUND - CLASS A STRONG ADVISOR COMMON STOCK FUND CLASS A
- --------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE COMMON STOCK FUND - CLASS B STRONG ADVISOR COMMON STOCK FUND CLASS B
- --------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE COMMON STOCK FUND - CLASS C STRONG ADVISOR COMMON STOCK FUND CLASS C
- --------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE COMMON STOCK FUND - CLASS Z STRONG ADVISOR COMMON STOCK FUND CLASS Z
The separate classes of shares offered by each Fund differ principally in
applicable sales charges and 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.
27
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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.
Certain Funds of the Trust may invest a substantial portion of their
assets in an industry, sector or foreign country as is discussed in the
Performance Highlights for those Funds. Such Funds may be more affected by
changes in that industry, sector or foreign country than they would be absent
the concentration of investments.
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.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
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.
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 and distributed to shareholders
annually. Distributions to shareholders from net realized capital gains, if any,
are declared and distributed at least annually.
28
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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 June 30, 2005.
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.
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 June 30, 2005, the following Fund had open swap contracts.
Swap Notional Interest Rate/ Interest Rate/ Maturity Net Unrealized
Fund Counter Party Principal Index Received Index Paid Date Gain/(Loss)
- --------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK Lehman Brothers $8,744,518 Notional Amount Market Value 30-Dec-05 $(993,377)
Finance x (6 Month USD Libor Appreciation
less 35 bps) plus Market Value on Customized
Depreciation on Customized Stock Index*
Stock Index*
- --------------------------------------------------------------------------------------------------------------------------------
*Customized Stock Index consists of the following basket of common stocks
valued as of June 30, 2005: Apache Corporation, Anadarko Petroleum Corporation,
EOG Resources Incorporated, El Paso Corporation, Noble Energy Incorporated,
Newfield Exploration Company, Pogo Producing Company, and XTO Energy
Incorporated.
WRITTEN OPTIONS
An option is a right to buy or sell a particular security at a specified
price within a limited period of time. The writer of the option, in return for a
premium received from the seller, has the obligation to sell (in the case of a
call option) or buy (in the case of a put option) the underlying security of the
contract. The premium received in cash from writing options is recorded as an
asset with an equal liability that is adjusted to reflect the option's value.
The premium received from writing options which expire is recorded as realized
gains. The premium received from writing options which are exercised or closed
is offset against the proceeds or amount paid on the closing transaction to
determine the realized gain or loss. If a put option is exercised, the premium
reduces the cost basis of the security or currency purchased. Options are valued
based on their quoted daily settlement prices.
29
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Risks could arise from entering into written options transactions from the
potential inability of counterparties to meet the terms of their contracts, the
potential inability to enter into a closing transaction because of an illiquid
secondary market, and from unexpected movements in interest or exchange rates or
securities values.
Written options transactions during the six months ended June 30, 2005,
were as follows:
Common Stock Fund Small Cap Value Fund
Premiums Premiums
Contracts Received Contracts Received
- ----------------------------------------------------------------------------------------------
Call Options Written
OPTIONS AT BEGINNING OF PERIOD 1,200 $ 252,144 214 $ 63,609
OPTIONS WRITTEN 0 0 488 114,300
OPTIONS TERMINATED IN CLOSING TRANSACTIONS (450) (99,398) (429) (118,009)
OPTIONS EXPIRED 0 0 (110) (28,038)
OPTIONS EXERCISED (750) (152,746) (70) (10,574)
OPTIONS AT END OF PERIOD 0 $ 0 93 $ 21,288
- ----------------------------------------------------------------------------------------------
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)
- -----------------------------------------------------------------------------------------------------------------------
COMMON STOCK FUND $0 - $499 million 0.750 Wells Capital $0 - 200 million 0.350
$500 - $999 million 0.700 Management > $200 million 0.300
$1 - $2.99 billion 0.650 Incorporated
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE FUND $0 - $499 million 0.900 Wells Capital $0 - 200 million 0.350
$500 - $999 million 0.850 Management > $200 million 0.300
$1 - $2.99 billion 0.800 Incorporated
$3 - $4.99 billion 0.775
> $4.99 billion 0.750
* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds. Funds Management was entitled to receive an annual fee at the
following rate:
Advisory Fees
Average Daily (% of Average
Fund Net Assets Daily Net Assets)
- ------------------------------------------------------------------------
COMMON STOCK FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- ------------------------------------------------------------------------
SMALL CAP VALUE FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
30
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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, CLASS B, AND 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:
% of Average
Share Class Daily Net Assets
- --------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, AND CLASS Z 0.30
- --------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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. Effective April 11,
2005, transfer agent fees are paid by Funds Management and not by the 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
- --------------------------------------------------------------------------------
COMMON STOCK FUND
CLASS A $ 32,520
CLASS B 18,004
CLASS C 11,651
CLASS Z 587,071
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
CLASS A 282,203
CLASS B 70,249
CLASS C 77,277
CLASS Z 1,092,286
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 SMALL AND MID CAP VALUE FUNDS 0.02
- --------------------------------------------------------------------------------
Prior to March 4, 2005, State Street served as custodian for the Common
Stock Fund. Prior to April 11, 2005, State Street served as custodian for the
Small Cap Value Fund. From April 11, 2005 to April 22, 2005, State Street served
as interim custodian for the Small Cap Value Fund. State Street was entitled to
receive certain fees, primarily based on transactions of the fund.
31
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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, AND CLASS Z 0.25
- --------------------------------------------------------------------------------
***Effective April 11, 2005. Prior to April 11, 2005, shareholder
servicing fees for the predecessor Strong Funds, if any, were encompassed by the
Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Fund Class A Class B Class C Class Z
- --------------------------------------------------------------------------------
COMMON STOCK FUND $ 13,576 $ 7,408 $ 4,469 $ 219,679
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND 112,967 25,558 28,073 296,133
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 Fund's Class
A, Class B, and Class C shares. Under the plan, Strong Investments, Inc. was
paid an annual rate of 0.25% of the average daily net assets of Class A shares
and 1.00% of the average daily net assets of Class B and Class C shares of the
Funds.
For the six months ended June 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 4, 2005, State Street served as fund accountant to the
Common Stock Fund. Prior to April 11, 2005, State Street served as fund
accountant for the Small Cap Value Fund. Fund accounting fees were paid by the
Funds' administrator and not by the Funds. From April 11, 2005 to April 22,
2005, State Street served as interim fund accountant for the Small Cap Value
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 June 30, 2005, were as
follows:
Net Operating Expense Ratios
Fund Class A Class B Class C Class Z
- --------------------------------------------------------------------------------
COMMON STOCK FUND 1.31% 2.06% 2.06% 1.29%
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND 1.44% 2.19% 2.19% 1.36%
Prior to April 11, 2005, the Strong Funds' interim adviser and/or
administrator could voluntarily waive or absorb certain expenses at their
discretion. Pursuant to the direction of the Strong Funds Board of Directors and
certain regulatory settlements, the predecessor adviser, Strong Capital
Management, Inc. ("SCM"), had contractually agreed to waive fees and/or absorb
expenses in the amount of 0.033% for the Common Stock Fund and the Small Cap
Value Fund from May 21, 2004 to May 21, 2005. SCM and/or SISI had contractually
agreed to waive its fees and/or absorb expenses for Class B shares of the Common
Stock Fund until May 1, 2005, to keep total annual operating expenses at no more
than 2.50%. 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 January 1, 2005 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:
32
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
COMMON STOCK FUND
FUND LEVEL $ 133,744
CLASS A 0
CLASS B 0
CLASS C 0
CLASS Z 0
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
FUND LEVEL 244,712
CLASS A 0
CLASS B 0
CLASS C 0
CLASS Z 426,644
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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
COMMON STOCK FUND $ 225,765,906 $ 386,374,600
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND 436,951,031 400,323,138
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 June 30, 2005, there were no borrowings by the Small and Mid Cap
Stock Funds under either agreement.
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 Strong 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 imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
33
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities and information
regarding how to obtain 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/advantage
funds, or visiting the SEC Web site at www.sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (www.wellsfargo.com/advantagefunds) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' Web site on a monthly, seven-day or more
delayed basis. Each 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, each Fund's Form N-Q may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC, and at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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, since 2005) None
62 since 1998 Chairman, CEO, and Co-
Founder of Crystal Geyser
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 pub-
lic policy organization).
- --------------------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, Principal in the law firm of None
65 since 1996 Willeke & Daniels.
- --------------------------------------------------------------------------------------------------------------------------
34
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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, 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 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.
- --------------------------------------------------------------------------------------------------------------------------
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 June 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.
35
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
COMMON STOCK FUND AND SMALL 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 Common Stock Fund and Small Cap Value 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
- --------------------------------------------------------------------------------
Advisor Common Stock Fund* Common Stock Fund
- --------------------------------------------------------------------------------
Advisor Small Cap Value Fund* Small Cap Value Fund
- --------------------------------------------------------------------------------
Multi Cap Value 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.
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 of the Small Cap Value Fund was above the
median performance of its Peer Group for all time periods. The Board noted that
the performance of the Common Stock Fund was below the median performance of its
Peer Group for all time periods and
36
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
required further review. Upon further review, the Board noted that the Fund's
Peer Group includes funds that invest exclusively in either small cap or mid cap
stocks, and that this difference between the Fund and those in its Peer Group
was a reason for the Fund's relative underperformance. The Board also asked for
a further report on both the Common Stock Fund's and Small Cap Value Fund's
performance.
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 Common Stock Fund's net operating expense
ratios were lower than, or not appreciably higher than, the Fund's Peer Group's
median net operating expense ratios. The Board also noted that the net operating
expense ratios for certain share classes of the Small Cap Value Fund were higher
than its 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 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 payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administrative services covered by the administration fee
rates. 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 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 relationship
with the Funds 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 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.
37
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
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 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 managers, 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.
38
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 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
39
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WELLS ADVANTAGE
FARGO FUNDS
More information about WELLS FARGO This report and the financial statements
ADVANTAGE FUNDS(SM) is available free contained herein are submitted for the
upon request. To obtain literature, general information of the shareholders
please write, e-mail, or call: of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional
WELLS FARGO ADVANTAGE FUNDS purposes, distribution of the report must
P.O. Box 8266 be accompanied or preceded by a current
Boston, MA 02266-8266 prospectus. For a prospectus containing
more complete information, including
E-mail: wfaf@wellsfargo.com charges and expenses, call 1-800-222-
Retail Investment Professionals: 8222. Please consider the investment
888-877-9275 objective, risks, charges and expenses
Institutional Investment of the investment carefully before
Professionals: 866-765-0778 investing. This and other information
Web:www.wellsfargo.com/advantagefunds 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
-----------------------------------------------------
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(C) 2005 Wells Fargo www.wellsfargo.com/advantagefunds RT51960 08-05
Advantage Funds, LLC. SMCFLD/SAR122 06-05
All rights reserved.
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
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JUNE 30, 2005
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SEMI-ANNUAL REPORT
[PHOTO OMITTED]
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WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
Wells Fargo Advantage Discovery Fund(SM)
Wells Fargo Advantage Enterprise Fund(SM)
Wells Fargo Advantage Mid Cap Disciplined Fund
Wells Fargo Advantage Opportunity Fund(SM)
Wells Fargo Advantage Small Cap Disciplined Fund
Wells Fargo Advantage Small/Mid Cap Value Fund
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
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TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
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Performance Highlights
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Discovery Fund ......................................................... 2
Enterprise Fund ........................................................ 4
Mid Cap Disciplined Fund ............................................... 6
Opportunity Fund ....................................................... 8
Small Cap Disciplined Fund ............................................. 10
Small/Mid Cap Value Fund ............................................... 12
Fund Expenses ............................................................. 14
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Portfolio of Investments
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Discovery Fund ......................................................... 16
Enterprise Fund ........................................................ 20
Mid Cap Disciplined Fund ............................................... 23
Opportunity Fund ....................................................... 26
Small Cap Disciplined Fund ............................................. 30
Small/Mid Cap Value Fund ............................................... 34
Financial Statements
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Statements of Assets and Liabilities ................................... 40
Statements of Operations ............................................... 42
Statements of Changes in Net Assets .................................... 44
Financial Highlights ................................................... 48
Notes to Financial Highlights ............................................. 52
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Notes to Financial Statements ............................................. 53
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Other Information ......................................................... 63
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List of Abbreviations ..................................................... 68
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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 SMALL AND MID CAP STOCK 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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
semi-annual report for the period ended June 30, 2005. On the following pages,
you will find a discussion of each Fund, including performance highlights, the
Fund managers' strategic outlook, and information about the Fund's portfolio.
ECONOMIC EXPANSION CONTINUES
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The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing it upward
during the reporting period. The consumer price index (CPI) rose at around a 3%
rate over the twelve months ended June 30, 2005. The core CPI, which excludes
the volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate--its principal policy tool--from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
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After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of the year. The S&P 500 Index was
around 1200 as the year began. It ended the first half of 2005 at 1191. Strong
corporate earnings have helped the markets, while record prices for crude oil
and concerns of a slowdown in worldwide economic growth have capped and often
reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
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Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well during most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sectors recovered and again produced
solid returns. Municipal bonds generally performed better than most taxable
sectors during 2005, but they lagged behind the rally in U.S. Treasuries in May
and June. Overall, by the end of the second quarter of 2005, municipal yields
were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
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The economy has shown remarkably steady growth over the reporting
period--growth that has been sufficient to bring the unemployment rate down to
5.0%, the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE DISCOVERY FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE DISCOVERY FUND(SM) (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
James M. Leach, CFA 12/31/1987
Thomas J. Pence, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (1.20)%(1) for the six-month
period ending June 30, 2005, slightly outperforming its benchmark, the Russell
2000(R) Index(2), which returned (1.25)% 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 ON THE FUNDS' WEB SITE
- -WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
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?
- --------------------------------------------------------------------------------
The Fund's performance was hampered by its exposure to
smaller-capitalization companies, which noticeably underperformed
mid-capitalization companies during the period. In addition, disappointments
within the technology and health care sectors detracted from the strong
performance generated by the Fund's energy holdings.
While we were diligent in attempting to identify technology companies that
provide high-priority products for corporate customers, corporations were slow
to spend money on such products. This was especially evident within the software
industry, where several of the Fund's holdings suffered from lackluster
performance. Firms such as Tibco Software, a developer of business integration
software, and Cognos, a developer of business intelligence software, were
negatively affected by reduced spending for information technology.
In the health care sector, we eliminated several positions when we
identified deteriorating fundamentals. Specifically, we sold Elan, a specialty
pharmaceutical company, after the firm disclosed a voluntary suspension in the
marketing of Tysabri(R), a drug used to treat multiple sclerosis and which faced
safety questions.
The weakness of these sectors was partially offset by strong returns from
our energy and telecommunications holdings. Within energy, Canadian Natural
Resources, an exploration, development and production company of crude oil and
natural gas, was a solid performer as the firm consistently grew its natural gas
production to meet rising demand. In oil services, Noble Corp. and Grant Prideco
positively contributed to portfolio gains. In telecommunications, the Fund
benefited from its position in NII Holdings, a provider of wireless services in
Latin America that experienced strong subscriber growth and successfully
increased its market share in Mexico. Similarly, Nextel Partners, which provides
wireless service in less-populated areas of the United States, also experienced
continued subscriber growth strength, which led to positive stock performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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We continued to identify opportunities across a variety of sectors. As
such, we increased our positions in a number of specialty retailers with unique
growth profiles, such as PETsMART and Williams-Sonoma. In addition, we added
various leisure stocks such as Great Wolf Resorts and Hilton Hotels, as well as
added to our position in Harrah's Entertainment. Within health care, we
considerably increased our exposure to equipment companies Fisher Scientific and
American Medical Systems Holdings. Likewise, we added to our holdings in health
care service companies by initiating a new position in PacifiCare Health
Systems. Finally, we reduced our technology exposure by selling a variety of
computer hardware and semiconductor firms.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Key concerns for the second half of the year continue to be slowing
economic momentum, the effects of high oil prices, and increases in short-term
rates. As a result, we believe investors will be very sensitive regarding their
expectations for economic growth. Despite these concerns, we expect corporate
profits to continue to rise. Earnings growth should be more moderate than in
2004, but we are encouraged that we will continue to identify long-term growth
opportunities for the Fund.
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. 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 EMPHASIZE 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 FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 DISCOVERY FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
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AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
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6-Months* 1-Year 5-Year 10-Year
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Discovery Fund - Administrator (1.10) 8.47 6.22 8.24
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Discovery Fund - Investor (1.20) 8.37 6.19 8.23
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Benchmark
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Russell 2000(R) Index(2) (1.25) 9.45 5.71 9.90
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ---------------------------------------------------------------
Beta** 1.42
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Price to Earnings (trailing 12 months) 32.80x
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Price to Book Ratio 3.86x
- ---------------------------------------------------------------
Median Market Cap. ($B) $ 2.88
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Portfolio Turnover 62%
- ---------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 24%
Energy 11%
Financials 4%
Health Care 21%
Industrials 7%
Information Technology 23%
Materials 2%
Telecommunication Services 8%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- ---------------------------------------------------------------
NII Holdings Incorporated 3.16%
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Marvel Enterprises Incorporated 2.43%
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Fisher Scientific International Incorporated 2.42%
- ---------------------------------------------------------------
Marvell Technology Group Limited 2.22%
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Royal Caribbean Cruises Limited 2.22%
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Digene Corporation 2.13%
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Gencorp Incorporated 2.07%
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American Tower Corporation 2.06%
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Precision Castparts Corporation 2.05%
- ---------------------------------------------------------------
Chesapeake Energy Corporation 2.04%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
DISCOVERY FUND - INVESTOR
CLASS RUSSELL 2000(R) INDEX
6/30/1995 10000 10,000
7/31/1995 10810 10,576
8/31/1995 10935 10,795
9/30/1995 11204 10,988
10/31/1995 10985 10,497
11/30/1995 11723 10,938
12/31/1995 11558 11,226
1/31/1996 11606 11,214
2/29/1996 11149 11,564
3/31/1996 11214 11,799
4/30/1996 11760 12,430
5/31/1996 12122 12,920
6/30/1996 11336 12,390
7/31/1996 10342 11,307
8/31/1996 10660 11,964
9/30/1996 11232 12,431
10/31/1996 11199 12,240
11/30/1996 11770 12,744
12/31/1996 11730 13,078
1/31/1997 11992 13,340
2/28/1997 11327 13,016
3/31/1997 10540 12,402
4/30/1997 10,641 12,437
5/31/1997 11,811 13,820
6/30/1997 12,200 14,412
7/31/1997 13,202 15,083
8/31/1997 13,316 15,428
9/30/1997 14,204 16,557
10/31/1997 13,491 15,830
11/30/1997 13,457 15,728
12/31/1997 13,002 16,003
1/31/1998 12,880 15,750
2/28/1998 13,844 16,915
3/31/1998 14,478 17,613
4/30/1998 14,379 17,710
5/31/1998 13,721 16,756
6/30/1998 14,012 16,791
7/31/1998 13,362 15,432
8/31/1998 11,182 12,436
9/30/1998 11,572 13,409
10/31/1998 12,230 13,956
11/30/1998 12,842 14,687
12/31/1998 13,918 15,596
1/31/1999 14,018 15,803
2/28/1999 12,739 14,523
3/31/1999 12,530 14,750
4/30/1999 12,971 16,071
5/31/1999 13,057 16,306
6/30/1999 13,222 17,043
7/31/1999 12,570 16,576
8/31/1999 11,792 15,962
9/30/1999 11,650 15,966
10/31/1999 11,619 16,030
11/30/1999 12,609 16,988
12/31/1999 14,653 18,911
1/31/2000 14,048 18,607
2/29/2000 16,249 21,680
3/31/2000 16,335 20,250
4/30/2000 15,541 19,032
5/31/2000 15,722 17,922
6/30/2000 16,327 19,485
7/31/2000 16,665 18,858
8/31/2000 17,113 20,297
9/30/2000 16,233 19,700
10/31/2000 15,455 18,821
11/30/2000 14,173 16,889
12/31/2000 15,234 18,339
1/31/2001 16,275 19,294
2/28/2001 15,169 18,028
3/31/2001 14,807 17,146
4/30/2001 16,275 18,488
5/31/2001 16,201 18,942
6/30/2001 16,722 19,596
7/31/2001 15,783 18,535
8/31/2001 15058 17,937
9/30/2001 13561 15,522
10/31/2001 14435 16,431
11/30/2001 15216 17,703
12/31/2001 15870 18,795
1/31/2002 15794 18,600
2/28/2002 15512 18,090
3/31/2002 16538 19,544
4/30/2002 16064 19,722
5/31/2002 15986 18,847
6/30/2002 15135 17,912
7/31/2002 14072 15,206
8/31/2002 14062 15,168
9/30/2002 13259 14,078
10/31/2002 14004 14,530
11/30/2002 14700 15,827
12/31/2002 13946 14,945
1/31/2003 13549 14,532
2/28/2003 13530 14,093
3/31/2003 13704 14,274
4/30/2003 14623 15,627
5/31/2003 15648 17,304
6/30/2003 15706 17,618
7/31/2003 16847 18,720
8/31/2003 17959 19,578
9/30/2003 17340 19,217
10/31/2003 18830 20,831
11/30/2003 19110 21,570
12/31/2003 19293 22,008
1/31/2004 20016 22,964
2/29/2004 20446 23,170
3/31/2004 20212 23,385
4/30/2004 19410 22,193
5/31/2004 19801 22,546
6/30/2004 20349 23,496
7/31/2004 18745 21,914
8/31/2004 18061 21,801
9/30/2004 19420 22,825
10/31/2004 20144 23,274
11/30/2004 21681 25,293
12/31/2004 22319 26,041
1/31/2005 21386 24,955
2/28/2005 21438 25,378
3/31/2005 20930 24,651
4/30/2005 19568 23,239
5/31/2005 21311 24,760
6/30/2005 22051 25,715
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(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 shares of the WELLS FARGO
ADVANTAGE DISCOVERY FUND for periods prior to April 11, 2005 reflects the
performance of the Investor Class shares of the Strong Discovery Fund, its
predecessor fund, 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
returns would be because the shares are invested in the same portfolio of
securities and the annual returns differ only to the extent that the classes do
not have the same expenses. Performance shown for the Investor Class shares of
the WELLS FARGO ADVANTAGE DISCOVERY FUND for periods prior to April 11, 2005
reflects the performance of the Investor Class shares of the Strong Discovery
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 Russell 2000(R) Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index, which represents approximately 8% of the
total market capitalization of the Russell 3000 Index. You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE DISCOVERY
FUND Investor Class shares for the most recent ten years with the Russell
2000(R) Index. The chart assumes a hypothetical investment of $10,000 in
Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENTERPRISE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ENTERPRISE FUND(SM) (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management
Incorporated
FUND MANAGERS INCEPTION DATE
Thomas J. Pence, CFA 9/30/1998
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.04%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the Russell
Midcap(R) Index(2), which returned 3.92% 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 ON 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?
- --------------------------------------------------------------------------------
The Fund rebounded solidly after returns fell sharply during the first
part of the year. Specifically, strong performance by the Fund's holdings in
telecommunications, energy, and financials was offset by the weakness of certain
technology holdings and by disappointments in specific consumer discretionary
stocks.
Among the Fund's telecom holdings, NII Holdings and Crown Castle
International both provided excellent returns for the Fund. In the energy
sector, the long-term mismatch between supply and growing demand has favored
both energy producers and service companies that manufacture equipment.
Specifically, the Fund's position in Chesapeake Energy benefited from increased
production. Additionally, the Fund enjoyed positive performance from Transocean,
ENSCO International, and Pride International.
Within technology, our software holdings were the most notable detractors
from Fund performance. Investors grew concerned about corporate spending for
information technology initiatives, which resulted in poor performance among
certain technology stocks. The Fund held positions in several companies that
disappointed investors' short-term expectations. For example, Tibco Software,
one of our top-contributing holdings during the fourth quarter of 2004, pulled
back in early 2005 as a result of slowing sales in Europe.
Another short-term disappointment came from the consumer discretionary
sector. The Fund's long-term position in Harman International, a high-quality
audio systems manufacturer, experienced considerable weakness. However, we took
advantage of its low stock price to increase our position. We expect Harman's
growth rate to meet or exceed expectations in the long run as the firm ramps up
production as a result of significant design contracts.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We increased our exposure to the health care and consumer discretionary
sectors. Specifically, we started positions in PacifiCare Health Systems and
Advanced Medical Optics, while increasing our position in Fisher Scientific.
Within the consumer discretionary sector, we selectively increased our holdings
in Royal Caribbean, Marriott, and Harrah's based on solid growth fundamentals.
On the other hand, we reduced our exposure to technology holdings. This
resulted from the sale of Internet service firms as these holdings approached
valuation targets. Finally, we sold a number of industrial holdings based on
slowing growth in company fundamentals.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Key concerns for the second half of the year continue to be slowing
economic momentum, the effects of high oil prices, and increases in short-term
interest rates. As a result, we believe investors will be very sensitive
regarding their expectations for economic growth. Despite these concerns, we
expect corporate-profit growth to continue into the second half of 2005 at a
slower pace than 2004. Corporations continue to generate record levels of free
cash flow but thus far have been reluctant to spend this money on capital
projects. We believe that most of the capital spending cycle and inventory
build-up is yet to come, but that capital spending projects will be very
selective. In light of these market conditions, we believe that our investment
process of "surrounding the company" (i.e. deeply investigating each company
through financial statement analysis, conversations with management, channel
checks of suppliers, customers and competitors) will continue to identify
long-term growth opportunities for the Fund.
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. 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 EMPHASIZE 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 FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 ENTERPRISE FUND.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year Life of Fund
- -----------------------------------------------------------------------------------------------------------
Enterprise Fund - Administrator (Incept. Date 8/30/2002) 0.28 9.56 (7.93) 15.67
- -----------------------------------------------------------------------------------------------------------
Enterprise Fund - Advisor (Incept. Date 2/24/2000) 0.12 9.14 (8.18) 15.35
- -----------------------------------------------------------------------------------------------------------
Enterprise Fund - Institutional (Incept. Date 6/30/2003) 0.40 9.81 (7.95) 15.65
- -----------------------------------------------------------------------------------------------------------
Enterprise Fund - Investor (Incept. Date 9/30/1998) 0.04 8.85 (8.27) 15.35
- -----------------------------------------------------------------------------------------------------------
Benchmark
- -----------------------------------------------------------------------------------------------------------
Russell Midcap(R) Index(2) 3.92 17.12 7.34 11.60
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
Beta** 1.50
- ----------------------------------------------------------------
Price to Earnings (trailing 12 months) 31.00x
- ----------------------------------------------------------------
Price to Book Ratio 3.55x
- ----------------------------------------------------------------
Median Market Cap. ($B) $4.85
- ----------------------------------------------------------------
Portfolio Turnover 64%
- ----------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 21%
Consumer Staples 3%
Energy 9%
Financials 5%
Health Care 21%
Industrials 7%
Information Technology 24%
Materials 3%
Telecommunication Services 7%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- ---------------------------------------------------------------
Royal Caribbean Cruises Limited 3.70%
- ---------------------------------------------------------------
NII Holdings Incorporated 3.18%
- ---------------------------------------------------------------
Marriott International Incorporated Class A 2.62%
- ---------------------------------------------------------------
Marvel Enterprises Incorporated 2.50%
- ---------------------------------------------------------------
Fisher Scientific International Incorporated 2.39%
- ---------------------------------------------------------------
WellPoint Incorporated 2.37%
- ---------------------------------------------------------------
Cogent Incorporated 2.27%
- ---------------------------------------------------------------
Marvell Technology Group Limited 2.23%
- ---------------------------------------------------------------
Williams Companies Incorporated 2.21%
- ---------------------------------------------------------------
Check Point Software Technologies Limited 2.06%
- ---------------------------------------------------------------
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
ENTERPRISE FUND - INVESTOR CLASS RUSSELL MIDCAP(R) INDEX
9/30/1998 10,000 10,000
10/31/1998 11,170 10,682
11/30/1998 12,620 11,188
12/31/1998 14,743 11,844
1/31/1999 17,004 11,823
2/28/1999 15,553 11,430
3/31/1999 17,255 11,788
4/30/1999 18,593 12,659
5/31/1999 18,177 12,623
6/30/1999 20,732 13,068
7/31/1999 21,077 12,709
8/31/1999 22,972 12,380
9/30/1999 24,777 11,945
10/31/1999 28,305 12,511
11/30/1999 33,860 12,871
12/31/1999 42,436 14,003
1/31/2000 43,280 13,540
2/29/2000 54,743 14,580
3/31/2000 48,127 15,415
4/30/2000 40,882 14,686
5/31/2000 33,360 14,297
6/30/2000 40,378 14,720
7/31/2000 38,001 14,555
8/31/2000 44,114 15,950
9/30/2000 39,360 15,722
10/31/2000 33,309 15,479
11/30/2000 26,764 14,086
12/31/2000 29,801 15,158
1/31/2001 30,988 15,402
2/28/2001 26,439 14,465
3/31/2001 23,435 13,567
4/30/2001 25,715 14,728
5/31/2001 25,557 15,002
6/30/2001 25,694 14,861
7/31/2001 24,360 14,436
8/31/2001 22742 13,881
9/30/2001 19916 12,207
10/31/2001 21292 12,690
11/30/2001 22784 13,753
12/31/2001 23257 14,306
1/31/2002 22574 14,220
2/28/2002 20883 14,070
3/31/2002 22794 14,913
4/30/2002 21818 14,624
5/31/2002 21103 14,459
6/30/2002 19843 13,489
7/31/2002 17395 12,173
8/31/2002 17143 12,240
9/30/2002 16639 11,110
10/31/2002 17511 11,672
11/30/2002 18015 12,482
12/31/2002 16702 11,990
1/31/2003 16219 11,748
2/28/2003 16250 11,592
3/31/2003 16513 11,707
4/30/2003 17815 12,557
5/31/2003 19307 13,706
6/30/2003 19265 13,845
7/31/2003 20389 14,301
8/31/2003 21807 14,922
9/30/2003 21051 14,735
10/31/2003 22700 15,860
11/30/2003 22879 16,305
12/31/2003 22879 16,794
1/31/2004 24034 17,282
2/29/2004 24276 17,654
3/31/2004 23918 17,657
4/30/2004 22752 17,009
5/31/2004 23383 17,431
6/30/2004 24087 17,913
7/31/2004 22133 17,130
8/31/2004 21355 17,204
9/30/2004 22731 17,763
10/31/2004 23677 18,253
11/30/2004 25221 19,365
12/31/2004 26208 20,189
1/31/2005 25284 19,689
2/28/2005 25326 20,297
3/31/2005 24979 20,138
4/30/2005 23551 19,496
5/31/2005 25463 20,430
6/30/2005 26218 20,980
- --------------------------------------------------------------------------------
(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 shares of the WELLS FARGO
ADVANTAGE ENTERPRISE FUND for periods prior to April 11, 2005 reflects the
performance of the Class K shares of the Strong Enterprise Fund, its predecessor
fund, and for periods prior to August 30, 2002 reflects the performance of the
Investor Class shares of the Strong Enterprise Fund. Performance shown for the
Advisor Class shares of the WELLS FARGO ADVANTAGE ENTERPRISE FUND for periods
prior to April 11, 2005 reflects the performance of the Advisor Class shares of
the Strong Enterprise Fund, its predecessor fund, and for periods prior to
February 24, 2000 reflects the performance of the Investor Class shares of the
Strong Enterprise Fund adjusted to reflect Advisor Class expenses. Performance
shown for the Institutional Class shares of the WELLS FARGO ADVANTAGE ENTERPRISE
FUND for periods prior to April 11, 2005 reflects the performance of the
Institutional Class shares of the Strong Enterprise Fund, its predecessor fund,
and for periods prior to June 30, 2003 reflects the performance of the Investor
Class shares of the Strong Enterprise Fund. Performance shown for the Investor
Class shares of the WELLS FARGO ADVANTAGE ENTERPRISE FUND for periods prior to
April 11, 2005 reflects the performance of the Investor Class shares of the
Strong Enterprise 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 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) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE ENTERPRISE
FUND Investor Class shares for the life of the Fund with the Russell Midcap(R)
Index. The chart assumes a hypothetical investment of $10,000 in Investor Class
shares and reflects all operating expenses.
5
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND (the Fund) seeks
long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management
Incorporated
FUND MANAGER INCEPTION DATE
Robert J. Costomiris, CFA 12/31/1998
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.99%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the Russell
Midcap(R) Index(2), which returned 3.92% 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. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADMINISTRATOR 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.
FROM TIME TO TIME, THE FUND'S PERFORMANCE WAS SIGNIFICANTLY ENHANCED
THROUGH INVESTMENTS IN INITIAL PUBLIC OFFERINGS (IPOS). THE EFFECT OF IPOS
PURCHASED WHEN THE FUND'S ASSET BASE WAS SMALL MAY HAVE BEEN MAGNIFIED.
INVESTORS SHOULD NOT EXPECT THAT SUCH ENHANCED RETURNS CAN BE CONSISTENTLY
ACHIEVED. PLEASE CONSIDER THIS BEFORE INVESTING.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The first half of 2005 was in many respects a continuation of 2004 for the
markets and the economy: utility stocks remained strong; Real Estate Investment
Trusts (REITS) led the financial sector as long-term interest rates fell;
information technology was the market's weakest-performing sector; value stocks
generally outperformed growth stocks, whether small-cap, mid-cap, or large-cap;
mid-cap stocks tended to outperform their small- and large-cap counterparts,
partially because of a higher concentration of utility stocks; and merger and
acquisition activity was also strong.
Two significant changes to the market backdrop during the period, however,
were the outperformance of large-cap stocks over small-cap stocks, and the
strengthening of the U.S. dollar.
The Fund's commitment to energy stocks was very helpful to performance
during the period. The Fund also benefited from further reducing its weighting
in financial stocks, as we felt valuations in the sector were getting stretched
and the outlook for earnings growth was mediocre. This view was rewarded during
the period, as financials lagged the overall market.
Conversely, our decision to sell utility stocks earlier this year, as they
appreciated to our value targets, proved to be premature. After maintaining a
significant and successful presence in utilities during the past two years, we
took profits as the stocks reached what we believed were their fair valuations.
Even after this move, however, utility stocks continued to perform well as
long-term interest rates continued to decline.
In health care, holding Imclone Systems was counterproductive, as the
stock was exceptionally weak, yet we continued to like the biotechnology
company's longer-term prospects. Additionally, an underweighted presence
compared to the benchmark in the spectacularly strong hospital group hurt
performance. As in utilities, we took profits for valuation reasons but, in
hindsight, too early.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We applied the proceeds from our utility and financial sales predominantly
to new opportunities in three sectors: consumer discretionary, materials, and
consumer staples. Within the consumer discretionary sector, we continued to find
value in the media industry. During the period the market punished radio
companies such as Cumulus Media, Clear Channel Communications, and Spanish
Broadcasting System due to an overemphasis--in our opinion--being placed on the
usage shift from radio to other forms of media, such as digital music players,
cellular phones, satellite radio, and the Internet. Several large-scale stock
buybacks in the sector supported our thesis, yet other investors remained
unconvinced.
Within materials, we opportunistically increased the Fund's overweighted
position in gold mining stocks. Energy and many other natural resources areas
have significantly outperformed gold since late 2003, providing what we think is
exceptional relative value in gold stocks. During the period, we added to our
existing gold positions while initiating a position in Glamis Gold.
Within consumer staples, weakness in Coca-Cola Enterprises (CCE),
Coca-Cola's bottler, presented an excellent opportunity to increase our position
in this sector. Coca-Cola and CCE have lagged the Pepsi companies badly over the
last year or so, yet we believe are clearly great and stable franchises trading
at very reasonable valuations.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We will continue to keep our heads down and our eyes open in attempting to
seek out companies with solid assets, manageable debt, and credible management
teams. We will work to buy the stocks of these companies at attractive prices,
often when the companies are temporarily out of favor with the market. We
believe that our disciplined investment process and meticulous risk management
are well suited for the current market environment.
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. 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 EMPHASIZE 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 FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 MID CAP DISCIPLINED FUND.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year Life of Fund
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Disciplined Fund - Administrator (Incept. Date 4/11/2005) 0.99 10.53 13.70 17.40
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Disciplined Fund - Institutional (Incept. Date 4/11/2005) 1.08 10.63 13.72 17.41
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Disciplined Fund - Investor (Incept. Date 12/31/1998) 0.99 10.53 13.70 17.40
- --------------------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------------------
Russell Midcap(R) Index(2) 3.92 17.12 7.34 9.19
- --------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------
Beta** 0.82
- ----------------------------------------------------------------
Price to Earnings (trailing 12 months) 38.80x
- ----------------------------------------------------------------
Price to Book Ratio 2.11x
- ----------------------------------------------------------------
Median Market Cap. ($B) $ 5.59
- ----------------------------------------------------------------
Portfolio Turnover 37%
- ----------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 25%
Consumer Staples 20%
Energy 9%
Financials 12%
Health Care 13%
Industrials 3%
Information Technology 5%
Materials 13%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------------------
Reader's Digest Association Incorporated 6.75%
- ----------------------------------------------------------------------
Kroger Company 5.70%
- ----------------------------------------------------------------------
Cooper Cameron Corporation 5.65%
- ----------------------------------------------------------------------
Del Monte Foods Company 5.35%
- ----------------------------------------------------------------------
Chiron Corporation 4.82%
- ----------------------------------------------------------------------
Coca-Cola Enterprises Incorporated 4.50%
- ----------------------------------------------------------------------
Clear Channel Communications Incorporated 4.17%
- ----------------------------------------------------------------------
Barrick Gold Corporation 4.17%
- ----------------------------------------------------------------------
Spanish Broadcasting System Incorporated 4.11%
- ----------------------------------------------------------------------
Cumulus Media Incorporated Class A 3.59%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE MID
CAP DISCIPLINED FUND -
INVESTOR CLASS RUSSELL MIDCAP(R) INDEX
12/31/1998 10,000 10,000
1/31/1999 10,470 9,983
2/28/1999 10,140 9,651
3/31/1999 11,740 9,953
4/30/1999 12,640 10,688
5/31/1999 12,640 10,658
6/30/1999 12,880 11,034
7/31/1999 12,660 10,731
8/31/1999 11,670 10,453
9/30/1999 11,420 10,085
10/31/1999 11,640 10,563
11/30/1999 12,210 10,867
12/31/1999 13,520 11,823
1/31/2000 13,360 11,432
2/29/2000 14,210 12,311
3/31/2000 15,580 13,016
4/30/2000 15,110 12,400
5/31/2000 14,840 12,071
6/30/2000 14,920 12,428
7/31/2000 14,870 12,289
8/31/2000 15,610 13,467
9/30/2000 15,200 13,275
10/31/2000 15,770 13,070
11/30/2000 15,080 11,893
12/31/2000 16,603 12,799
1/31/2001 16,956 13,005
2/28/2001 15,692 12,213
3/31/2001 14,878 11,455
4/30/2001 16,238 12,435
5/31/2001 17,074 12,667
6/30/2001 17,245 12,548
7/31/2001 17,406 12,188
8/31/2001 17395 11,720
9/30/2001 15060 10,306
10/31/2001 15617 10,715
11/30/2001 17213 11,612
12/31/2001 18663 12,079
1/31/2002 18674 12,007
2/28/2002 18588 11,879
3/31/2002 20099 12,592
4/30/2002 19328 12,347
5/31/2002 19060 12,208
6/30/2002 18213 11,389
7/31/2002 16092 10,278
8/31/2002 16413 10,334
9/30/2002 15128 9,381
10/31/2002 15781 9,855
11/30/2002 16896 10,539
12/31/2002 16465 10,124
1/31/2003 16243 9,919
2/28/2003 15390 9,788
3/31/2003 15511 9,884
4/30/2003 16809 10,602
5/31/2003 18583 11,573
6/30/2003 18882 11,690
7/31/2003 19858 12,075
8/31/2003 20712 12,599
9/30/2003 20578 12,441
10/31/2003 21277 13,391
11/30/2003 21920 13,767
12/31/2003 23160 14,179
1/31/2004 23839 14,591
2/29/2004 24691 14,905
3/31/2004 24941 14,909
4/30/2004 24977 14,361
5/31/2004 25038 14,718
6/30/2004 25645 15,125
7/31/2004 25147 14,463
8/31/2004 25402 14,526
9/30/2004 25912 14,998
10/31/2004 26009 15,411
11/30/2004 26992 16,350
12/31/2004 28066 17,046
1/31/2005 27602 16,624
2/28/2005 28179 17,138
3/31/2005 27661 17,003
4/30/2005 26648 16,461
5/31/2005 27737 17,250
6/30/2005 28345 17,714
(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 shares of the WELLS FARGO
ADVANTAGE MID CAP DISCIPLINED FUND for periods prior to April 11, 2005 reflects
the performance of the Investor Class shares of the Strong Mid Cap Disciplined
Fund, its predecessor fund, 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 returns would be because the shares are invested in the same portfolio of
securities and the annual returns differ only to the extent that the classes do
not have the same expenses. Performance shown for the Institutional Class shares
of the WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND for periods prior to April
11, 2005 reflects the performance of the Investor Class shares of the Strong Mid
Cap Disciplined Fund, its predecessor fund, and includes expenses that are not
applicable to and are higher than those of the Institutional Class. The Investor
Class shares annual returns are substantially similar to what the Institutional
Class shares returns would be because the shares are invested in the same
portfolio of securities and the annual returns differ only to the extent that
the classes do not have the same expenses. Performance for the Investor Class
shares of the WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND for periods prior
to April 11, 2005 reflects the performance of the Investor Class shares of the
Strong Mid Cap Disciplined 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 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) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE MID CAP
DISCIPLINED FUND Investor Class shares for the life of the Fund with the Russell
Midcap(R) Index. The chart assumes a hypothetical investment of $10,000 in
Investor Class shares and reflects all operating expenses.
7
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OPPORTUNITY FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE OPPORTUNITY FUND(SM) (the Fund) seeks long-term
capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Richard T. Weiss 12/31/1985
Ann M. Miletti
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.60%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the Russell
Midcap(R) Index(2), which returned 3.92% 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 ON THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADMINISTRATOR CLASS, 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.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Fund's energy sector weighting was almost twice that of its benchmark,
which helped our performance, as the benchmark's energy stocks collectively rose
by more than 32%, by far the strongest sector return during the first six months
of the year. In addition to benefiting from this overweighting, the Fund's
energy holdings did better as a group than their counterparts in the index. The
second-strongest group in the index was the consumer retail and restaurant
industry. Here, too, performance was helped by an overweighted position compared
to the benchmark. On the negative side, stock selection hurt the Fund's
performance in the cyclical and technology areas, two of the weakest and most
volatile sectors during the period.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The Fund stuck to its methodology of buying stocks that are selling at a
discount to their intrinsic private market value and selling stocks that
approach their private market value. This discipline allows us to be patient
with stocks that are out of favor with the market, which is becoming the
exception as investors become more focused on the short term. Our stock-by-stock
approach led us to increase our holdings in the energy and consumer sectors, and
decrease our holdings in the financial sector. To a lesser extent, we also
reduced holdings in the cyclical and health care sectors. These sector
weightings were fairly consistent throughout the period.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Investors continue to take several factors into consideration, including
inflation, interest rates, record-high energy prices and the threat of
terrorism, when making their investment decisions. Perhaps because of these
factors, the distribution of valuations across all stocks are tighter than they
have been historically (i.e., the range of valuations between high
price-to-earnings stocks and low price-to-earnings stocks is narrower than it
was a few years ago). In particular, the market is giving companies with high
growth rates little credit for their superior profitability. The Fund's private
market value approach (purchasing stocks at the price we would be willing to pay
if we were acquiring the whole company) allows it to opportunistically look for
attractively valued stocks in both the growth and value areas. We look for
companies whose current stock valuations are between 50% and 60% of their
private market value.
We are currently looking to take advantage of this valuation compression
by buying stocks with what we believe are favorable long-term growth outlooks.
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. INVESTMENT STRATEGIES THAT EMPHASIZE 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 FOREIGN INVESTMENTS RISK. CONSULT
THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 OPPORTUNITY FUND.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1)(%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year 5-Year 10-Year
- --------------------------------------------------------------------------------
Opportunity Fund - Administrator 0.71 9.66 3.28 11.94
- --------------------------------------------------------------------------------
Opportunity Fund - Advisor 0.55 9.25 2.93 11.57
- --------------------------------------------------------------------------------
Opportunity Fund - Investor 0.60 9.42 3.15 11.87
- --------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------
Russell Midcap (R) Index(2) 3.92 17.12 7.34 12.90
- --------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Beta** 1.15
- -------------------------------------------------------
Price to Earnings (trailing 12 months) 22.80x
- -------------------------------------------------------
Price to Book Ratio 2.34x
- -------------------------------------------------------
Median Market Cap. ($B) $ 8.35
- -------------------------------------------------------
Portfolio Turnover 18%
- -------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 28%
Consumer Staples 4%
Energy 14%
Financials 10%
Health Care 8%
Industrials 10%
Information Technology 16%
Materials 5%
Telecommunication Services 3%
Utilities 2%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
Weatherford International Limited 2.94%
- ------------------------------------------------------------
GlobalSantaFe Corporation 2.60%
- ------------------------------------------------------------
Nordstrom Incorporated 2.40%
- ------------------------------------------------------------
Apache Corporation 2.25%
- ------------------------------------------------------------
Cablevision Systems Corporation 2.13%
- ------------------------------------------------------------
Praxair Incorporated 2.10%
- ------------------------------------------------------------
Ameritrade Holding Corporation 1.94%
- ------------------------------------------------------------
Molex Incorporated Class A 1.73%
- ------------------------------------------------------------
AutoNation Incorporated 1.73%
- ------------------------------------------------------------
XL Capital Limited Class A 1.72%
GROWTH OF $10,000 INVESTMENT5 (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
OPPORTUNITY FUND-INVESTOR
CLASS RUSSELL MIDCAP(R) INDEX
6/30/1995 10000 10,000
7/31/1995 10383 10,486
8/31/1995 10482 10,646
9/30/1995 10666 10,887
10/31/1995 10439 10,643
11/30/1995 10873 11,173
12/31/1995 11125 11,238
1/31/1996 11319 11,475
2/29/1996 11632 11,744
3/31/1996 11697 11,914
4/30/1996 12160 12,252
5/31/1996 12234 12,437
6/30/1996 11970 12,250
7/31/1996 11259 11,492
8/31/1996 11672 12,039
9/30/1996 12064 12,633
10/31/1996 12268 12,735
11/30/1996 13132 13,511
12/31/1996 13143 13,373
1/31/1997 13296 13,873
2/28/1997 13199 13,852
3/31/1997 12889 13,263
4/30/1997 13,243 13,593
5/31/1997 14,147 14,585
6/30/1997 14,404 15,062
7/31/1997 15,618 16,319
8/31/1997 15,679 16,142
9/30/1997 16,543 17,063
10/31/1997 15,984 16,399
11/30/1997 16,010 16,789
12/31/1997 16,224 17,252
1/31/1998 16,177 16,927
2/28/1998 17,482 18,250
3/31/1998 18,515 19,116
4/30/1998 18,912 19,164
5/31/1998 18,288 18,571
6/30/1998 18,560 18,828
7/31/1998 17,953 17,930
8/31/1998 14,921 15,062
9/30/1998 15,947 16,037
10/31/1998 17,383 17,130
11/30/1998 17,927 17,941
12/31/1998 18,737 18,993
1/31/1999 19,227 18,961
2/28/1999 18,621 18,330
3/31/1999 19,311 18,904
4/30/1999 21,038 20,301
5/31/1999 21,253 20,243
6/30/1999 22,279 20,957
7/31/1999 22,379 20,381
8/31/1999 21,503 19,853
9/30/1999 21,313 19,156
10/31/1999 22,574 20,063
11/30/1999 23,370 20,640
12/31/1999 24,994 22,456
1/31/2000 24,244 21,713
2/29/2000 24,440 23,382
3/31/2000 26,962 24,721
4/30/2000 26,565 23,551
5/31/2000 26,917 22,927
6/30/2000 26,285 23,605
7/31/2000 26,000 23,341
8/31/2000 27,667 25,578
9/30/2000 26,666 25,213
10/31/2000 26,934 24,824
11/30/2000 25,251 22,590
12/31/2000 27,137 24,309
1/31/2001 28,623 24,700
2/28/2001 27,028 23,197
3/31/2001 25,695 21,758
4/30/2001 27,566 23,618
5/31/2001 27,739 24,058
6/30/2001 27,041 23,832
7/31/2001 26,669 23,150
8/31/2001 25073 22,260
9/30/2001 21607 19,575
10/31/2001 22856 20,351
11/30/2001 24875 22,056
12/31/2001 25834 22,942
1/31/2002 25446 22,805
2/28/2002 24841 22,563
3/31/2002 26077 23,916
4/30/2002 24716 23,452
5/31/2002 24512 23,187
6/30/2002 21750 21,632
7/31/2002 19311 19,521
8/31/2002 19383 19,628
9/30/2002 17286 17,817
10/31/2002 18318 18,718
11/30/2002 20304 20,017
12/31/2002 18871 19,228
1/31/2003 18377 18,840
2/28/2003 18266 18,590
3/31/2003 18055 18,774
4/30/2003 19679 20,137
5/31/2003 21711 21,980
6/30/2003 21921 22,202
7/31/2003 22638 22,934
8/31/2003 23677 23,930
9/30/2003 23204 23,630
10/31/2003 24505 25,434
11/30/2003 24966 26,148
12/31/2003 25939 26,931
1/31/2004 26965 27,714
2/29/2004 27431 28,310
3/31/2004 27228 28,316
4/30/2004 26853 27,277
5/31/2004 27366 27,953
6/30/2004 28049 28,727
7/31/2004 27076 27,471
8/31/2004 26590 27,590
9/30/2004 27635 28,485
10/31/2004 28109 29,271
11/30/2004 29614 31,054
12/31/2004 30509 32,376
1/31/2005 29647 31,575
2/28/2005 29989 32,550
3/31/2005 29595 32,294
4/30/2005 28556 31,265
5/31/2005 30035 32,763
6/30/2005 30693 33,644
- --------------------------------------------------------------------------------
(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 shares of the WELLS FARGO
ADVANTAGE OPPORTUNITY FUND for periods prior to April 11, 2005 reflects the
performance of the Class K shares of the Strong Opportunity Fund, its
predecessor fund, and for periods prior to August 30, 2002 reflects the
performance of the Investor Class shares of the Strong Opportunity Fund.
Performance shown for the Advisor Class shares of the WELLS FARGO ADVANTAGE
OPPORTUNITY FUND for periods prior to April 11, 2005 reflects the performance of
the Advisor Class shares of the Strong Opportunity Fund, its predecessor fund,
and for periods prior to February 24, 2000 reflects the performance of the
Investor Class shares of the Strong Opportunity Fund adjusted to reflect Advisor
Class expenses. Performance shown for the Investor Class shares of the WELLS
FARGO ADVANTAGE OPPORTUNITY FUND for periods prior to April 11, 2005 reflects
the performance of the Investor Class shares of the Strong Opportunity 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 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) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE OPPORTUNITY
FUND Investor Class shares for the most recent ten years with the Russell Midcap
(R) Index. The chart assumes a hypothetical investment of $10,000 in Investor
Class shares and reflects all operating expenses.
9
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP DISCIPLINED FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SMALL CAP DISCIPLINED FUND (the Fund) seeks
long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Robert J. Costomiris, CFA 3/28/2002
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (1.98)%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the Russell 2000(R)
Index(2), which returned (1.25)% 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. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADMINISTRATOR 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 first half of 2005 was in many respects a continuation of 2004 for the
markets and the economy: utility stocks remained strong as long-term interest
rates fell; information technology was the market's weakest-performing sector;
value stocks generally outperformed growth stocks, whether small-cap, mid-cap,
or large-cap; and merger and acquisition activity was also strong.
Two significant changes to the market backdrop during the period, however,
were the outperformance of large-cap stocks over small-cap stocks, and the
strengthening of the U.S. dollar.
The Fund benefited from its underweighting in information technology
stocks, as the sector continued to encounter difficulty during the period.
Conversely, our decision to sell utility stocks earlier this year, as they
appreciated to our value targets, proved to be premature. After maintaining a
significant and successful presence in utilities during the past two years, we
took profits as the stocks reached what we believed were their fair valuations.
Even after this move, however, utility stocks continued to perform well as
long-term interest rates continued to decline.
The Fund was also hurt by our decision to sell energy stocks, which
continued to rally despite their rich valuations. Positions we liquidated after
they had appreciated considerably included Kerr-McGee and National Oilwell
Varco. We thought the valuations of small-cap energy stocks were particularly
high, even compared with energy stocks in other capitalization groups.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We applied the proceeds from our utility and energy sales predominantly to
new opportunities in three sectors: consumer discretionary, materials, and
health care. Within the consumer discretionary sector, we continued to find
value in the media industry. During the period the market punished radio
companies such as Cumulus Media and Spanish Broadcasting System due to an
overemphasis--in our opinion--being placed on the usage shift from radio to
other forms of media, such as digital music players, cellular phones, satellite
radio, and the Internet. Several large-scale stock buybacks in the sector
supported our thesis, yet other investors remained unconvinced.
Within materials, we purchased gold mining stocks over the period. Energy
and many other natural resources groups have significantly outperformed gold
since late 2003, providing what we think is exceptional relative value in gold
stocks.
The first half of 2005 allowed us to increase our already significant
weighting in the fast growing health care sector. Specifically, we established
positions in Imclone Systems, a biotechnology company focused on cancer
therapies, and Zoll Medical, an external defibrillator company. We also added
significantly to our position in VIVUS, a pharmaceutical company focused on
sexual dysfunction therapies. All three companies suffered short-term setbacks
that drove their stock prices lower prior to our purchases.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We will continue to keep our heads down and our eyes open in attempting to
seek out companies with solid assets, manageable debt, and credible management
teams. We will work to buy the stocks of these companies at attractive prices,
often when the companies are temporarily out of favor with the market. We
believe that our disciplined investment process and meticulous risk management
are well suited for the current market environment.
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. 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 EMPHASIZE 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 FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 SMALL CAP DISCIPLINED FUND.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Months* 1-Year Life of Fund
- --------------------------------------------------------------------------------------------------------------
Small Cap Disciplined Fund - Administrator (Incept. Date 4/11/2005) (1.98) 7.07 20.70
- --------------------------------------------------------------------------------------------------------------
Small Cap Disciplined Fund - Institutional (Incept. Date 4/11/2005) (1.86) 7.20 20.75
- --------------------------------------------------------------------------------------------------------------
Small Cap Disciplined Fund - Investor (Incept. Date 3/28/2002) (1.98) 7.07 20.70
- --------------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------------
Russell 2000(R) Index (2) (1.25) 9.45 8.81
- --------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- ----------------------------------------------------------
Beta** 1.02
- ----------------------------------------------------------
Price to Earnings (trailing 12 months) 36.60x
- ----------------------------------------------------------
Price to Book Ratio 1.62x
- ----------------------------------------------------------
Median Market Cap. ($B) $ 0.34
- ----------------------------------------------------------
Portfolio Turnover 36%
- ----------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 28%
Consumer Staples 11%
Financials 14%
Health Care 21%
Industrials 10%
Information Technology 7%
Materials 9%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- --------------------------------------------------------
Reader's Digest Association Incorporated 4.94%
- --------------------------------------------------------
Vital Signs Incorporated 3.62%
- --------------------------------------------------------
Glamis Gold Limited 3.54%
- --------------------------------------------------------
Scottish Re Group Limited 3.50%
- --------------------------------------------------------
VIVUS Incorporated 3.49%
- --------------------------------------------------------
Del Monte Foods Company 3.42%
- --------------------------------------------------------
AGCO Corporation 3.39%
- --------------------------------------------------------
Gold Fields Limited ADR 3.39%
- --------------------------------------------------------
Scottish Re Group Limited Preferred 3.37%
- --------------------------------------------------------
E.piphany Incorporated 3.22%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
SMALL CAP DISCIPLINED FUND -
INVESTOR CLASS RUSSELL 2000(R) INDEX
3/31/2002 10000 10,000
4/30/2002 9980 10,091
5/31/2002 9650 9,643
6/30/2002 9570 9,165
7/31/2002 8510 7,781
8/31/2002 8640 7,761
9/30/2002 8120 7,203
10/31/2002 8470 7,434
11/30/2002 9230 8,098
12/31/2002 9120 7,647
1/31/2003 8720 7,435
2/28/2003 8380 7,211
3/31/2003 8430 7,304
4/30/2003 9520 7,996
5/31/2003 10980 8,854
6/30/2003 11350 9,014
7/31/2003 12240 9,578
8/31/2003 12550 10,018
9/30/2003 12710 9,833
10/31/2003 13440 10,658
11/30/2003 13850 11,037
12/31/2003 14823 11,261
1/31/2004 15452 11,750
2/29/2004 15771 11,855
3/31/2004 16297 11,966
4/30/2004 16503 11,356
5/31/2004 16828 11,536
6/30/2004 17240 12,022
7/31/2004 16633 11,213
8/31/2004 16102 11,155
9/30/2004 16655 11,679
10/31/2004 16525 11,909
11/30/2004 18237 12,941
12/31/2004 18831 13,325
1/31/2005 18616 12,769
2/28/2005 19203 12,985
3/31/2005 18549 12,613
4/30/2005 17270 11,891
5/31/2005 17738 12,669
6/30/2005 18457 13,158
- --------------------------------------------------------------------------------
(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 shares of the WELLS FARGO
ADVANTAGE SMALL CAP DISCIPLINED FUND for periods prior to April 11, 2005
reflects the performance of the Investor Class shares of the Strong Small
Company Value Fund, its predecessor fund, 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 returns would be because the shares are invested in
the same portfolio of securities and the annual returns differ only to the
extent that the classes do not have the same expenses. Performance shown for the
Institutional Class shares of the WELLS FARGO ADVANTAGE SMALL CAP DISCIPLINED
FUND for periods prior to April 11, 2005 reflects the performance of the
Investor Class shares of the Strong Small Company Value Fund, its predecessor
fund, and includes expenses that are not applicable to and are higher than those
of the Institutional Class. The Investor Class shares annual returns are
substantially similar to what the Institutional Class shares returns would be
because the shares are invested in the same portfolio of securities and the
annual returns differ only to the extent that the classes do not have the same
expenses. Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE SMALL CAP DISCIPLINED FUND for periods prior to April 11, 2005
reflects the performance of the Investor Class shares of the Strong Small
Company Value 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 Russell 2000(R) Index measures the performance of the 2000 smallest
companies in the Russell 3000 Index, which represents approximately 8% of the
total market capitalization of the Russell 3000 Index. You cannot invest
directly in an index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE SMALL CAP
DISCIPLINED FUND Investor Class shares for the life of the Fund with the Russell
2000(R) Index. The chart assumes a hypothetical investment of $10,000 in
Investor Class shares and reflects all operating expenses.
11
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL/MID CAP VALUE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SMALL/MID CAP VALUE FUND (the Fund) seeks
long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
I. Charles Rinaldi 3/28/2002
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned (0.23)%(1) for the six-month
period ending June 30, 2005, underperforming its benchmark, the Russell Midcap
(R) Index(2), which returned 3.92% 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 ON THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
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?
- --------------------------------------------------------------------------------
One reason for the Fund's underperformance was its holdings in the
materials sector. Within the materials sector, stocks such as Graftech
International and Apex Silver Mines contributed negatively during the period.
The other area that detracted significantly from performance was the technology
sector. Within the technology sector, companies such as Cray Inc. and Sun
Microsystems were significant negative contributors. On the other hand, the
fund's broad range of energy stocks contributed positively to performance during
the period. Companies such as Range Resources and Canadian Natural Resources
reinforced this point.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We increased the Fund's exposure to the technology sector, and we trimmed
some holdings in the energy and materials sectors. With regard to the energy and
materials sectors, several of our stocks appreciated significantly, and became
sell candidates based on valuation. Our added exposure to the technology sector
was a result of our bottom-up stock selection process. However, the remaining
holdings in the energy sectors continued to perform well, with the result that
price appreciation kept our weighting relatively consistent throughout the
period.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Overall, we have a positive outlook on the small/mid-cap value asset class
for several reasons. Valuations continue to be attractive relative to those of
many other asset classes. Additionally, demand for small/mid-cap value stocks
continues to be strong, as investors become increasingly aware of their
performance potential. Moreover, we are comfortable with the Fund's current
holdings and sector weightings, and we believe the portfolio is well positioned
for the balance of 2005.
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. 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 EMPHASIZE 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 FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 SMALL/MID CAP VALUE FUND.
12
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------
Small/Mid Cap Value Fund - Administrator (Incept. Date 4/11/2005) (0.08) 1.39 11.67
- ------------------------------------------------------------------------------------------------------------
Small/Mid Cap Value Fund - Investor (Incept. Date 3/28/2002) (0.23) 11.23 11.61
- ------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------
Russell Midcap(R) Index(2) 3.92 17.12 11.07
- ------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
- -------------------------------------------------------
Beta** 1.24
- -------------------------------------------------------
Price to Earnings (trailing 12 months) 33.90x
- -------------------------------------------------------
Price to Book Ratio 2.02x
- -------------------------------------------------------
Median Market Cap. ($B) $0.69
- -------------------------------------------------------
Portfolio Turnover 72%
- -------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION (3) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 7%
Consumer Staples 2%
Energy 26%
Financials 8%
Health Care 9%
Industrials 11%
Information Technology 19%
Materials 17%
Telecommunication Services 1%
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------
Global Industries Limited 3.72%
- -----------------------------------------------------------
Range Resources Corporation 3.17%
- -----------------------------------------------------------
Covalent Group Incorporated 2.47%
- -----------------------------------------------------------
Trilogy Energy Trust 2.16%
- -----------------------------------------------------------
Sun Microsystems Incorporated 2.15%
- -----------------------------------------------------------
Apex Silver Mines Limited 1.81%
- -----------------------------------------------------------
Key Energy Services Incorporated 1.77%
- -----------------------------------------------------------
Chicago Bridge & Iron Company NV 1.54%
- -----------------------------------------------------------
UNOVA Incorporated 1.52%
- -----------------------------------------------------------
CV Therapeutics Incorporated 1.50%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
SMALL/MID CAP VALUE FUND -
INVESTOR CLASS RUSSELL MIDCAP INDEX
3/31/2002 10000 10,000
4/30/2002 9810 9,806
5/31/2002 9660 9,695
6/30/2002 8930 9,045
7/31/2002 7640 8,163
8/31/2002 7830 8,207
9/30/2002 7020 7,450
10/31/2002 7160 7,827
11/30/2002 7680 8,370
12/31/2002 7580 8,040
1/31/2003 7470 7,878
2/28/2003 7360 7,773
3/31/2003 7280 7,850
4/30/2003 7870 8,420
5/31/2003 8920 9,191
6/30/2003 9060 9,284
7/31/2003 9600 9,590
8/31/2003 10020 10,006
9/30/2003 9960 9,881
10/31/2003 10660 10,635
11/30/2003 11090 10,933
12/31/2003 12010 11,261
1/31/2004 12320 11,588
2/29/2004 12770 11,838
3/31/2004 13020 11,840
4/30/2004 12240 11,405
5/31/2004 12400 11,688
6/30/2004 12860 12,012
7/31/2004 12110 11,487
8/31/2004 11710 11,536
9/30/2004 12640 11,911
10/31/2004 12550 12,239
11/30/2004 14000 12,985
12/31/2004 14337 13,538
1/31/2005 13881 13,203
2/28/2005 14679 13,610
3/31/2005 14038 13,503
4/30/2005 12953 13,073
5/31/2005 13421 13,699
6/30/2005 14304 14,068
- --------------------------------------------------------------------------------
(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 shares of the WELLS FARGO
ADVANTAGE SMALL/MID CAP VALUE FUND for periods prior to April 11, 2005 reflects
the performance of the Investor Class shares of the Strong Small/Mid Cap Value
Fund, its predecessor fund, 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 returns would be because the shares are invested in the same portfolio of
securities and the annual returns differ only to the extent that the classes do
not have the same expenses. Performance shown for the Investor Class shares of
the WELLS FARGO ADVANTAGE SMALL/MID CAP VALUE FUND for periods prior to April
11, 2005 reflects the performance of the Investor Class shares of the Strong
Small/Mid Cap Value Fund, its predecessor fund.
(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) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(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) The chart compares the performance of the WELLS FARGO ADVANTAGE SMALL/MID
CAP VALUE FUND Investor Class shares for the life of the Fund with the Russell
Midcap(R) Index. The chart assumes a hypothetical investment of $10,000 in
Investor Class shares and reflects all operating expenses.
13
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 six-month period and held for the entire six-month period (January 1,
2005 to June 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 Expenses
Account Value Account Value Paid During Net Annual
Discovery Fund 1/1/2005 6/30/2005 Period(1) Expense Ratio
- --------------------------------------------------------------------------------------------------------------------------
Discovery Fund - Administrator Class
Actual(2) $ 1,000.00 $ 1,057.40 $ 2.49 1.09%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.39 $ 5.46 1.09%
- --------------------------------------------------------------------------------------------------------------------------
Discovery Fund - Investor Class
Actual $ 1,000.00 $ 988.00 $ 6.90 1.40%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.85 $ 7.00 1.40%
Enterprise Fund
- --------------------------------------------------------------------------------------------------------------------------
Enterprise Fund - Administrator Class
Actual $ 1,000.00 $ 1,002.80 $ 5.81 1.17%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.99 $ 5.86 1.17%
- --------------------------------------------------------------------------------------------------------------------------
Enterprise Fund - Advisor Class
Actual $ 1,000.00 $ 1,001.20 $ 7.39 1.49%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.41 $ 7.45 1.49%
- --------------------------------------------------------------------------------------------------------------------------
Enterprise Fund - Institutional Class
Actual $ 1,000.00 $ 1,004.00 $ 4.37 0.88%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.43 $ 4.41 0.88%
- --------------------------------------------------------------------------------------------------------------------------
Enterprise Fund - Investor Class
Actual $ 1,000.00 $ 1,000.40 $ 8.43 1.70%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.36 $ 8.50 1.70%
Mid Cap Disciplined Fund
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Disciplined Fund - Administrator Class
Actual(2) $ 1,000.00 $ 1,024.70 $ 2.34 1.04%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.64 $ 5.21 1.04%
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Disciplined Fund - Institutional Class
Actual(2) $ 1,000.00 $ 1,025.60 $ 2.00 0.89%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.38 $ 4.46 0.89%
14
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Beginning Ending Expenses
Account Value Account Value Paid During Net Annual
1/1/2005 6/30/2005 Period(1) Expense Ratio
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Disciplined Fund - Investor Class
Actual $ 1,000.00 $ 1,009.90 $ 6.73 1.35%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.10 $ 6.76 1.35%
Opportunity Fund
- --------------------------------------------------------------------------------------------------------------------------
Opportunity Fund - Administrator Class Actual $ 1,000.00 $ 1,007.10 $ 5.52 1.11%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.29 $ 5.56 1.11%
- --------------------------------------------------------------------------------------------------------------------------
Opportunity Fund - Advisor Class Actual $ 1,000.00 $ 1,005.50 $ 7.26 1.46%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.55 $ 7.30 1.46%
- --------------------------------------------------------------------------------------------------------------------------
Opportunity Fund - Investor Class Actual $ 1,000.00 $ 1,006.00 $ 6.76 1.36%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.05 $ 6.80 1.36%
Small Cap Disciplined Fund
- --------------------------------------------------------------------------------------------------------------------------
Small Cap Disciplined Fund - Administrator Class
Actual(2) $ 1,000.00 $ 1,010.60 $ 2.59 1.16%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.04 $ 5.81 1.16%
- --------------------------------------------------------------------------------------------------------------------------
Small Cap Disciplined Fund - Institutional Class
Actual(2) $ 1,000.00 $ 1,011.90 $ 2.19 0.98%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91 0.98%
- --------------------------------------------------------------------------------------------------------------------------
Small Cap Disciplined Fund - Investor Class Actual $ 1,000.00 $ 980.20 $ 8.00 1.63%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.71 $ 8.15 1.63%
Small/Mid Cap Value Fund
- --------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap Value Fund - Administrator Class
Actual(2) $ 1,000.00 $ 1,018.90 $ 2.67 1.19%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.89 $ 5.96 1.19%
- --------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap Value Fund - Investor Class Actual $ 1,000.00 $ 997.70 $ 8.97 1.81%
- --------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.82 $ 9.05 1.81%
(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 SIX-MONTH PERIOD DIVIDED BY 365 (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 81/365 (TO REFLECT THE
PERIOD FROM APRIL 11, 2005 TO JUNE 30, 2005).
15
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 98.60%
AMUSEMENT & RECREATION SERVICES - 2.38%
36,200 HARRAH'S ENTERTAINMENT INCORPORATED $ 2,608,934
64,400 LIFE TIME FITNESS INCORPORATED+ 2,112,964
4,721,898
---------------
APPAREL & ACCESSORY STORES - 1.37%
39,500 ABERCROMBIE & FITCH COMPANY CLASS A 2,713,650
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.22%
16,150 VOLCOM INCORPORATED+ 432,335
---------------
BUSINESS SERVICES - 13.87%
199,700 CHECK POINT SOFTWARE TECHNOLOGIES LIMITED+ 3,954,060
131,800 COGENT INCORPORATED+ 3,762,890
54,400 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION+ 2,563,872
88,000 COGNOS INCORPORATED+ 3,004,320
57,900 F5 NETWORKS INCORPORATED+ 2,734,906
51,400 LABOR READY INCORPORATED+ 1,198,134
32,699 MACROMEDIA INCORPORATED+ 1,249,756
98,100 MONSTER WORLDWIDE INCORPORATED+ 2,813,508
874,548 OPENTV CORPORATION CLASS A+ 2,396,262
356,876 TIBCO SOFTWARE INCORPORATED+ 2,333,969
50,100 VERISIGN INCORPORATED+ 1,440,876
27,452,553
---------------
CHEMICALS & ALLIED PRODUCTS - 3.48%
150,123 DIGENE CORPORATION+ 4,155,405
20,300 GENZYME CORPORATION+ 1,219,827
115,900 INTERMUNE INCORPORATED+ 1,511,336
6,886,568
---------------
COMMUNICATIONS - 8.83%
191,300 AMERICAN TOWER CORPORATION CLASS A+ 4,021,126
76,700 EQUINIX INCORPORATED+ 3,324,178
32,100 LEAP WIRELESS INTERNATIONAL INCORPORATED+ 890,775
122,300 NEXTEL PARTNERS INCORPORATED CLASS A+ 3,078,291
96,602 NII HOLDINGS INCORPORATED+ 6,176,732
17,491,102
---------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 0.54%
121,400 QUANTA SERVICES INCORPORATED 1,068,320
---------------
ELECTRIC, GAS & SANITARY SERVICES - 1.82%
189,400 WILLIAMS COMPANIES INCORPORATED 3,598,600
---------------
16
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 8.94%
52,800 CREE INCORPORATED+ $ 1,344,816
39,670 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 3,227,551
47,600 INTERNATIONAL RECTIFIER CORPORATION+ 2,271,472
114,200 MARVELL TECHNOLOGY GROUP LIMITED+ 4,344,168
95,300 NETWORK APPLIANCE INCORPORATED+ 2,694,131
114,200 TESSERA TECHNOLOGIES INCORPORATED+ 3,815,422
17,697,560
---------------
FURNITURE & FIXTURES - 0.78%
71,900 SELECT COMFORT CORPORATION+ 1,540,817
---------------
HEALTH SERVICES - 5.15%
84,490 COMMUNITY HEALTH SYSTEMS+ 3,192,877
33,700 COVANCE INCORPORATED+ 1,512,119
78,900 LABONE INCORPORATED+ 3,141,009
48,200 PSYCHIATRIC SOLUTIONS INCORPORATED+ 2,347,822
10,193,827
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.36%
68,000 WILLIAMS-SONOMA INCORPORATED+ 2,690,760
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.91%
129,225 GREAT WOLF RESORTS INCORPORATED+ 2,641,359
131,150 HILTON HOTELS CORPORATION 3,127,928
5,769,287
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 2.26%
68,600 GRANT PRIDECO INCORPORATED+ 1,814,470
77,900 NETGEAR INCORPORATED+ 1,448,940
45,400 UNOVA INCORPORATED+ 1,209,002
4,472,412
---------------
INSURANCE CARRIERS - 1.99%
55,100 PACIFICARE HEALTH SYSTEMS INCORPORATED+ 3,936,895
---------------
LEATHER & LEATHER PRODUCTS - 1.42%
83,700 COACH INCORPORATED+ 2,809,809
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 10.40%
77,700 ADVANCED MEDICAL OPTICS INCORPORATED+ 3,088,575
156,400 AMERICAN MEDICAL SYSTEMS HOLDINGS INCORPORATED+ 3,229,660
44,130 DENTSPLY INTERNATIONAL INCORPORATED 2,383,020
141,550 EV3 INCORPORATED+ 1,967,545
72,800 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 4,724,720
35,900 HAEMONETICS CORPORATION+ 1,458,976
58,900 MENTOR CORPORATION 2,443,172
28,000 METTLER-TOLEDO INTERNATIONAL INCORPORATED+ 1,304,240
20,599,908
---------------
17
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
METAL MINING - 1.61%
70,700 GOLDCORP INCORPORATED $ 1,115,646
139,500 PAN AMERICAN SILVER CORPORATION+ 2,063,205
3,178,851
---------------
MISCELLANEOUS RETAIL - 6.07%
240,964 MARVEL ENTERPRISES INCORPORATED+ 4,751,810
36,000 MICHAELS STORES INCORPORATED 1,489,320
97,139 PETSMART INCORPORATED 2,948,169
121,256 PRICELINE.COM INCORPORATED+ 2,828,902
12,018,201
---------------
MOTION PICTURES - 0.69%
132,970 LIONS GATE ENTERTAINMENT CORPORATION+ 1,364,272
---------------
OIL & GAS EXTRACTION - 7.70%
99,500 CANADIAN NATURAL RESOURCES LIMITED 3,619,810
174,600 CHESAPEAKE ENERGY CORPORATION 3,980,880
64,500 EDGE PETROLEUM CORPORATION+ 1,007,490
48,880 GOODRICH PETROLEUM CORPORATION+ 1,005,950
34,000 NOBLE CORPORATION 2,091,340
19,300 NOBLE ENERGY INCORPORATED 1,460,045
136,750 PIONEER DRILLING COMPANY+ 2,086,805
15,252,320
---------------
PAPER & ALLIED PRODUCTS - 0.82%
75,600 PACTIV CORPORATION+ 1,631,448
---------------
PRIMARY METAL INDUSTRIES - 2.03%
51,500 PRECISION CASTPARTS CORPORATION 4,011,850
---------------
REAL ESTATE - 1.27%
30,900 ST. JOE COMPANY 2,519,586
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 2.32%
190,100 AMERITRADE HOLDING CORPORATION+ 3,533,959
16,800 T ROWE PRICE GROUP INCORPORATED 1,051,680
4,585,639
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.55%
13,800 CARBO CERAMICS INCORPORATED 1,089,648
---------------
THEATERS & ENTERTAINMENT - 1.50%
157,600 REGAL ENTERTAINMENT GROUP CLASS A 2,975,488
---------------
TRANSPORTATION BY AIR - 0.75%
111,400 CONTINENTAL AIRLINES INCORPORATED CLASS B+ 1,479,392
---------------
TRANSPORTATION EQUIPMENT - 3.38%
60,300 AUTOLIV INCORPORATED 2,641,140
209,900 GENCORP INCORPORATED+ 4,042,674
6,683,814
---------------
18
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
WATER TRANSPORTATION - 2.19%
89,800 ROYAL CARIBBEAN CRUISES LIMITED $ 4,342,728
---------------
TOTAL COMMON STOCKS (COST $163,717,804) 195,209,538
---------------
SHORT-TERM INVESTMENTS - 0.87%
MUTUAL FUND - 0.87%
1,716,927 WELLS FARGO ADVANTAGE MONEY MARKET TRUST+~++ 1,716,927
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,716,927) 1,716,927
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $165,434,731)* 99.47% $ 196,926,465
OTHER ASSETS AND LIABILITIES, NET 0.53 1,041,511
------ ---------------
TOTAL NET ASSETS 100.00% $ 197,967,976
------ ---------------
+ 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 $1,716,927.
* 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.
19
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ENTERPRISE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.30%
AMUSEMENT & RECREATION SERVICES - 1.33%
46,700 HARRAH'S ENTERTAINMENT INCORPORATED $ 3,365,669
---------------
APPAREL & ACCESSORY STORES - 1.31%
47,900 ABERCROMBIE & FITCH COMPANY CLASS A 3,290,730
---------------
BUSINESS SERVICES - 13.41%
257,615 CHECK POINT SOFTWARE TECHNOLOGIES LIMITED+ 5,100,777
196,900 COGENT INCORPORATED+ 5,621,495
69,200 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION+ 3,261,396
114,900 COGNOS INCORPORATED+ 3,922,686
61,300 F5 NETWORKS INCORPORATED+ 2,895,506
178,090 JUNIPER NETWORKS INCORPORATED+ 4,484,306
42,143 MACROMEDIA INCORPORATED+ 1,610,705
126,100 MONSTER WORLDWIDE INCORPORATED+ 3,616,548
501,396 TIBCO SOFTWARE INCORPORATED+ 3,279,130
33,792,549
---------------
CHEMICALS & ALLIED PRODUCTS - 3.99%
87,249 DIGENE CORPORATION+ 2,415,052
67,455 GENZYME CORPORATION+ 4,053,371
81,700 GILEAD SCIENCES INCORPORATED+ 3,593,983
10,062,406
---------------
COMMUNICATIONS - 7.90%
202,700 AMERICAN TOWER CORPORATION CLASS A+ 4,260,754
94,900 EQUINIX INCORPORATED+ 4,112,966
145,960 NEXTEL PARTNERS INCORPORATED CLASS A+ 3,673,814
122,980 NII HOLDINGS INCORPORATED+ 7,863,341
19,910,875
---------------
DEPOSITORY INSTITUTIONS - 2.00%
113,700 MARSHALL & ILSLEY CORPORATION 5,053,965
---------------
ELECTRIC, GAS & SANITARY SERVICES - 2.17%
287,700 WILLIAMS COMPANIES INCORPORATED 5,466,300
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 10.27%
107,700 BROADCOM CORPORATION CLASS A+ 3,824,427
46,400 CREE INCORPORATED+ 1,181,808
51,090 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 4,156,682
60,400 INTERNATIONAL RECTIFIER CORPORATION+ 2,882,288
145,000 MARVELL TECHNOLOGY GROUP LIMITED+ 5,515,800
141,000 NETWORK APPLIANCE INCORPORATED+ 3,986,070
129,900 TESSERA TECHNOLOGIES INCORPORATED+ 4,339,959
25,887,034
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.09%
51,800 QUEST DIAGNOSTICS INCORPORATED 2,759,386
---------------
FOOD & KINDRED PRODUCTS - 1.22%
44,500 WM. WRIGLEY JR. COMPANY 3,063,380
---------------
20
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
ENTERPRISE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HEALTH SERVICES - 2.83%
65,850 COMMUNITY HEALTH SYSTEMS+ $ 2,488,472
43,100 COVANCE INCORPORATED+ 1,933,897
34,600 MANOR CARE INCORPORATED 1,374,658
27,300 PSYCHIATRIC SOLUTIONS INCORPORATED+ 1,329,783
7,126,810
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.38%
88,200 WILLIAMS-SONOMA INCORPORATED+ 3,490,074
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.57%
94,800 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 6,467,256
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.66%
88,200 GRANT PRIDECO INCORPORATED+ 2,332,890
25,040 RESEARCH IN MOTION LIMITED+ 1,846,700
4,179,590
---------------
INSURANCE CARRIERS - 4.33%
70,700 PACIFICARE HEALTH SYSTEMS INCORPORATED+ 5,051,515
84,010 WELLPOINT INCORPORATED+ 5,850,456
10,901,971
---------------
LEATHER & LEATHER PRODUCTS - 1.43%
107,740 COACH INCORPORATED+ 3,616,832
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 9.36%
85,400 ADVANCED MEDICAL OPTICS INCORPORATED+ 3,394,650
202,700 AMERICAN MEDICAL SYSTEMS HOLDINGS INCORPORATED+ 4,185,755
56,870 DENTSPLY INTERNATIONAL INCORPORATED 3,070,980
91,170 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 5,916,933
31,700 GUIDANT CORPORATION 2,133,410
75,300 MENTOR CORPORATION 3,123,444
37,900 METTLER-TOLEDO INTERNATIONAL INCORPORATED+ 1,765,382
23,590,554
---------------
MEMBERSHIP ORGANIZATIONS - 0.10%
9,300 TREEHOUSE FOODS INCORPORATED+ 265,143
---------------
METAL MINING - 1.63%
133,800 PAN AMERICAN SILVER CORPORATION+ 1,978,902
138,690 PLACER DOME INCORPORATED 2,133,052
4,111,954
---------------
MISCELLANEOUS RETAIL - 6.76%
313,757 MARVEL ENTERPRISES INCORPORATED+ 6,187,288
44,600 MICHAELS STORES INCORPORATED 1,845,102
124,062 PETsMART INCORPORATED 3,765,282
149,510 PRICELINE.COM INCORPORATED+ 3,488,068
53,200 SPECTRUM BRANDS INCORPORATED+ 1,755,600
17,041,340
---------------
21
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ENTERPRISE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
OIL & GAS EXTRACTION - 5.32%
121,100 CANADIAN NATURAL RESOURCES LIMITED $ 4,405,618
145,410 CHESAPEAKE ENERGY CORPORATION 3,315,348
26,300 PRIDE INTERNATIONAL INCORPORATED+ 675,910
92,700 TRANSOCEAN INCORPORATED+ 5,003,019
13,399,895
---------------
PAPER & ALLIED PRODUCTS - 1.09%
127,600 PACTIV CORPORATION+ 2,753,608
---------------
PRIMARY METAL INDUSTRIES - 1.99%
64,300 PRECISION CASTPARTS CORPORATION 5,008,970
---------------
REAL ESTATE - 1.34%
41,300 ST. JOE COMPANY 3,367,602
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.58%
214,400 AMERITRADE HOLDING CORPORATION+ 3,985,696
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.56%
17,800 CARBO CERAMICS INCORPORATED 1,405,488
---------------
TRANSPORTATION BY AIR - 3.05%
353,700 CONTINENTAL AIRLINES INCORPORATED CLASS B+ 4,697,136
215,000 SOUTHWEST AIRLINES COMPANY 2,994,950
7,692,086
---------------
TRANSPORTATION EQUIPMENT - 1.35%
77,500 AUTOLIV INCORPORATED 3,394,500
---------------
WATER TRANSPORTATION - 3.63%
189,200 ROYAL CARIBBEAN CRUISES LIMITED 9,149,712
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.65%
46,500 DEAN FOODS COMPANY+ 1,638,660
---------------
TOTAL COMMON STOCKS (COST $210,336,145) 245,240,035
---------------
SHORT-TERM INVESTMENTS - 1.83%
MUTUAL FUND - 1.83%
4,599,765 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 4,599,765
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $4,599,765) 4,599,765
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $214,935,910)* 99.13% $ 249,839,800
OTHER ASSETS AND LIABILITIES, NET 0.87 2,194,049
------ ---------------
TOTAL NET ASSETS 100.00% $ 252,033,849
------ ---------------
+ 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 $4,599,765.
* 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 -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 81.32%
AMUSEMENT & RECREATION SERVICES - 1.47%
771,100 WORLD WRESTLING ENTERTAINMENT INCORPORATED $ 8,805,962
---------------
BUSINESS SERVICES - 3.61%
470,000 COMPUTER ASSOCIATES INTERNATIONAL INCORPORATED 12,915,600
405,800 UNISYS CORPORATION+ 2,568,714
250,000 VERITAS SOFTWARE CORPORATION+ 6,100,000
21,584,314
---------------
CHEMICALS & ALLIED PRODUCTS - 7.52%
150,000 BIOGEN IDEC INCORPORATED+ 5,167,500
675,000 CHIRON CORPORATION+ 23,550,750
520,000 IMCLONE SYSTEMS INCORPORATED+ 16,104,400
5,000 PROTEIN DESIGN LABS INCORPORATED+ 101,050
44,923,700
---------------
COMMUNICATIONS - 12.85%
670,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 20,723,100
1,490,000 CUMULUS MEDIA INCORPORATED CLASS A+ 17,552,200
1,658 EMMIS COMMUNICATIONS CORPORATION CLASS A+ 29,297
650,000 IAC/INTERACTIVECORP+ 15,632,500
220,000 RADIO ONE INCORPORATED CLASS D+ 2,809,400
2,010,000 SPANISH BROADCASTING SYSTEM INCORPORATED+ 20,079,900
76,826,397
---------------
DEPOSITORY INSTITUTIONS - 1.43%
452,800 FIRST FINANCIAL BANCORP 8,557,920
---------------
ELECTRIC, GAS & SANITARY SERVICES - 0.72%
5,000 CENTERPOINT ENERGY INCORPORATED 66,050
1,000 DTE ENERGY COMPANY 46,770
2,000 KEYSPAN CORPORATION 81,400
2,000 NISOURCE INCORPORATED 49,460
144,000 WASTE MANAGEMENT INCORPORATED 4,080,960
4,324,640
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.05%
25,000 BEARINGPOINT INCORPORATED+ 183,250
10,000 SERVICEMASTER COMPANY 133,900
317,150
---------------
FOOD & KINDRED PRODUCTS - 11.41%
5,000 CAMPBELL SOUP COMPANY 153,850
1,000,000 COCA-COLA ENTERPRISES INCORPORATED 22,010,000
408,000 CONAGRA FOODS INCORPORATED 9,449,280
2,429,000 DEL MONTE FOODS COMPANY+ 26,160,330
425,000 SARA LEE CORPORATION 8,419,250
61,000 SMITHFIELD FOODS INCORPORATED+ 1,663,470
20,000 TYSON FOODS INCORPORATED CLASS A 356,000
68,212,180
---------------
23
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
FOOD STORES - 4.67%
1,465,000 KROGER COMPANY+ $ 27,878,950
---------------
FURNITURE & FIXTURES - 0.84%
210,000 NEWELL RUBBERMAID INCORPORATED 5,006,400
---------------
HEALTH SERVICES - 0.02%
2,000 TRIAD HOSPITALS INCORPORATED+ 109,280
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 7.46%
5,000 AGCO CORPORATION+ 95,600
445,000 COOPER CAMERON CORPORATION+ 27,612,250
355,000 NATIONAL-OILWELL INCORPORATED+ 16,876,700
44,584,550
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 0.01%
3,500 USI HOLDINGS CORPORATION+ 45,080
---------------
INSURANCE CARRIERS - 8.02%
2,000 CONSECO INCORPORATED+ 43,640
25,000 LOEWS CORPORATION 1,937,500
673,100 OHIO CASUALTY CORPORATION 16,275,558
57,000 OLD REPUBLIC INTERNATIONAL CORPORATION 1,441,530
10,000 SAFECO CORPORATION 543,400
670,000 SCOTTISH RE GROUP LIMITED 16,240,800
290,000 ST. PAUL COMPANIES INCORPORATED 11,463,700
47,946,128
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 3.55%
311,000 BOSTON SCIENTIFIC CORPORATION+ 8,397,000
5,000 MILLIPORE CORPORATION+ 283,650
319,600 RAYTHEON COMPANY 12,502,752
21,183,402
---------------
METAL MINING - 10.75%
275,000 ANGLOGOLD ASHANTI LIMITED ADR 9,825,750
815,000 BARRICK GOLD CORPORATION 20,399,450
520,000 GLAMIS GOLD LIMITED+%% 8,949,200
920,000 GOLD FIELDS LIMITED ADR 10,442,000
680,000 GOLDCORP INCORPORATED 10,730,400
100,000 NEWMONT MINING CORPORATION 3,903,000
64,249,800
---------------
OIL & GAS EXTRACTION - 0.21%
25,000 DEVON ENERGY CORPORATION 1,267,000
---------------
PAPER & ALLIED PRODUCTS - 0.02%
5,000 MEADWESTVACO CORPORATION 140,200
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 5.52%
900 PLAYBOY ENTERPRISES INCORPORATED CLASS B (NON-VOTING)+ 11,646
2,000,000 READER'S DIGEST ASSOCIATION INCORPORATED 33,000,000
33,011,646
---------------
24
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
WHOLESALE TRADE-DURABLE GOODS - 1.19%
570,000 PSS WORLD MEDICAL INCORPORATED+ $ 7,096,500
---------------
TOTAL COMMON STOCKS (COST $440,358,377) 486,071,199
---------------
PREFERRED STOCKS - 0.47%
100,000 SCOTTISH RE GROUP LIMITED 2,820,000
TOTAL PREFERRED STOCKS (COST $2,500,000) 2,820,000
---------------
SHORT-TERM INVESTMENTS - 17.18%
MUTUAL FUND - 17.18%
102,679,690 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 102,679,690
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $102,679,690) 102,679,690
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $545,538,067)* 98.97% $ 591,570,889
OTHER ASSETS AND LIABILITIES, NET 1.03 6,170,717
------ ---------------
TOTAL NET ASSETS 100.00% $ 597,741,606
------ ---------------
+ NON-INCOME EARNING SECURITIES.
%% 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 $102,679,690.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 87.81%
APPAREL & ACCESSORY STORES - 3.42%
1,435,000 GAP INCORPORATED $ 28,341,250
765,000 NORDSTROM INCORPORATED 51,997,050
80,338,300
---------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 1.60%
1,825,000 AUTONATION INCORPORATED+ 37,449,000
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 1.23%
495,000 LOWE'S COMPANIES INCORPORATED 28,818,900
---------------
BUSINESS SERVICES - 10.57%
2,240,000 CADENCE DESIGN SYSTEMS INCORPORATED+ 30,598,400
2,015,000 CNET NETWORKS INCORPORATED+ 23,656,100
625,000 COMPUTER SCIENCES CORPORATION+ 27,312,500
625,000 DST SYSTEMS INCORPORATED+ 29,250,000
1,130,000 IMS HEALTH INCORPORATED 27,990,100
2,730,000 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+ 33,251,400
2,520,000 RED HAT INCORPORATED+ 33,012,000
6,500,000 SUN MICROSYSTEMS INCORPORATED+ 24,245,000
2,962,000 UNISYS CORPORATION+ 18,749,460
248,064,960
---------------
CHEMICALS & ALLIED PRODUCTS - 3.95%
456,000 MEDICIS PHARMACEUTICAL CORPORATION CLASS A 14,468,880
980,000 PRAXAIR INCORPORATED 45,668,000
1,610,000 PROTEIN DESIGN LABS INCORPORATED+ 32,538,100
92,674,980
---------------
COMMUNICATIONS - 8.76%
1,435,000 CABLEVISION SYSTEMS CORPORATION NEW YORK GROUP CLASS A+ 46,207,000
1,145,000 COMCAST CORPORATION 34,292,750
2,009,000 DIRECTV GROUP INCORPORATED+ 31,139,500
1,150,000 IAC/INTERACTIVECORP+ 27,657,500
1,355,000 SPRINT CORPORATION 33,996,950
644,000 UNITED STATES CELLULAR CORPORATION+ 32,161,360
205,455,060
---------------
DEPOSITORY INSTITUTIONS - 1.41%
1,155,000 MELLON FINANCIAL CORPORATION 33,136,950
---------------
ELECTRIC, GAS & SANITARY SERVICES - 2.80%
1,355,000 NISOURCE INCORPORATED 33,509,150
1,140,000 WASTE MANAGEMENT INCORPORATED 32,307,600
65,816,750
---------------
26
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 4.97%
2,180,000 CELESTICA INCORPORATED+ $ 29,212,000
1,600,000 MOLEX INCORPORATED CLASS A 37,568,000
3,610,000 SANMINA-SCI CORPORATION+ 19,746,700
2,545,000 VISHAY INTERTECHNOLOGY INCORPORATED+ 30,209,150
116,735,850
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.28%
1,325,000 ACCENTURE LIMITED CLASS A+ 30,037,750
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.00%
295,000 ILLINOIS TOOL WORKS INCORPORATED 23,505,600
---------------
FOOD & KINDRED PRODUCTS - 1.29%
1,375,000 COCA-COLA ENTERPRISES INCORPORATED 30,263,750
---------------
FOOD STORES - 1.17%
1,220,000 SAFEWAY INCORPORATED 27,559,800
---------------
FORESTRY - 1.27%
470,000 WEYERHAEUSER COMPANY 29,915,500
---------------
GENERAL MERCHANDISE STORES - 3.01%
660,000 TARGET CORPORATION 35,910,600
1,430,000 TJX COMPANIES INCORPORATED 34,820,500
70,731,100
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 4.54%
660,000 AMERICAN STANDARD COMPANIES INCORPORATED 27,667,200
520,000 EATON CORPORATION 31,148,000
1,140,000 PALL CORPORATION 34,610,400
550,000 SANDISK CORPORATION+ 13,051,500
106,477,100
---------------
INSURANCE CARRIERS - 5.06%
795,000 ACE LIMITED 35,655,750
500,000 AFLAC INCORPORATED 21,640,000
370,000 MGIC INVESTMENT CORPORATION 24,131,400
500,000 XL CAPITAL LIMITED CLASS A 37,210,000
118,637,150
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 3.38%
185,000 BAUSCH & LOMB INCORPORATED 15,355,000
527,000 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 34,202,300
800,000 WATERS CORPORATION+ 29,736,000
79,293,300
---------------
METAL MINING - 1.30%
1,215,000 BARRICK GOLD CORPORATION 30,411,450
---------------
MISCELLANEOUS RETAIL - 2.69%
1,300,000 DOLLAR TREE STORES INCORPORATED+ 31,200,000
1,495,000 STAPLES INCORPORATED 31,873,400
63,073,400
---------------
27
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MOTION PICTURES - 1.34%
3,088,000 LIBERTY MEDIA CORPORATION CLASS A+ $ 31,466,720
---------------
OIL & GAS EXTRACTION - 10.32%
755,000 APACHE CORPORATION 48,773,000
725,000 DEVON ENERGY CORPORATION 36,743,000
1,015,000 ENSCO INTERNATIONAL INCORPORATED 36,286,250
1,385,000 GLOBALSANTAFE CORPORATION 56,508,000
1,100,000 WEATHERFORD INTERNATIONAL LIMITED+ 63,778,000
242,088,250
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 1.29%
525,000 CONOCOPHILLIPS 30,182,250
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 2.36%
605,000 EW SCRIPPS COMPANY CLASS A 29,524,000
735,000 TRIBUNE COMPANY 25,857,300
55,381,300
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.79%
2,265,000 AMERITRADE HOLDING CORPORATION+ 42,106,350
---------------
TEXTILE MILL PRODUCTS - 1.20%
340,000 MOHAWK INDUSTRIES INCORPORATED+ 28,050,000
---------------
TRANSPORTATION BY AIR - 0.81%
4,150,000 NORTHWEST AIRLINES CORPORATION+ 18,924,000
---------------
TRANSPORTATION EQUIPMENT - 1.32%
440,000 MAGNA INTERNATIONAL INCORPORATED CLASS A 30,949,600
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.37%
910,000 DEAN FOODS COMPANY+ 32,068,400
---------------
WHOLESALE TRADE-DURABLE GOODS - 1.31%
560,000 W.W. GRAINGER INCORPORATED 30,682,400
---------------
TOTAL COMMON STOCKS (COST $1,548,881,127) 2,060,295,920
---------------
INVESTMENT COMPANIES - 3.77%
STOCK FUNDS - 3.77%
140,000 BIOTECH HOLDRS TRUST 23,422,000
600,000 ISHARES S&P SMALLCAP 600 INDEX FUND 32,976,000
255,000 MIDCAP SPDR TRUST SERIES 1 31,931,100
88,329,100
---------------
TOTAL INVESTMENT COMPANIES (COST $74,459,828) 88,329,100
---------------
EXPIRATION
CONTRACTS STRIKE PRICE DATE
OPTIONS - 0.05%
4,850 AMERITRADE HOLDING CORPORATION PUT+ $ 17.50 8/20/2005 145,500
520 PHARMACEUTICAL INDEX CALL+ 300.00 7/21/2005 1,055,600
TOTAL OPTIONS (PREMIUMS RECEIVED $1,948,473) 1,201,100
---------------
28
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
RIGHTS - 0.00%
566,000 SEAGATE TECHNOLOGY RIGHTS $ 0
TOTAL RIGHTS (COST $0) 0
--------------
PRINCIPAL INTEREST RATE MATURITY DATE
US TREASURY SECURITIES - 0.70%
US TREASURY BILLS - 0.70%
$14,400,000 US TREASURY BILL+^ 2.83% 07/21/2005 14,379,234
1,200,000 US TREASURY BILL+^ 2.84 07/21/2005 1,198,274
60,000 US TREASURY BILL+^ 2.82 07/28/2005 59,878
830,000 US TREASURY BILL+^ 2.91 09/01/2005 825,732
16,463,118
--------------
TOTAL US TREASURY SECURITIES (COST $16,461,180) 16,463,118
--------------
SHORT-TERM INVESTMENTS - 7.14%
SHARES
MUTUAL FUND - 7.14%
167,477,227 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 167,477,227
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $167,477,227) 167,477,227
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,809,227,835)* 99.47% $2,333,766,465
OTHER ASSETS AND LIABILITIES, NET 0.53 12,437,420
------ ==============
TOTAL NET ASSETS 100.00% $2,346,203,885
------ --------------
+ NON-INCOME EARNING SECURITIES.
^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO
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 $167,477,227.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
CONTRACTS STRIKE PRICE EXPIRATION DATE VALUE
WRITTEN OPTIONS - (0.03%)
(4,850) AMERITRADE HOLDING CORPORATION CALL+ $ 17.50 8/20/2005 $ (679,000)
(520) PHARMACEUTICAL INDEX PUT+ 300.00 7/16/2005 (5,200)
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED $(766,862)) (684,200)
--------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
29
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 81.82%
AMUSEMENT & RECREATION SERVICES - 1.77%
246,500 WORLD WRESTLING ENTERTAINMENT INCORPORATED $ 2,815,030
--------------
APPAREL & ACCESSORY STORES - 0.53%
58,000 SYMS CORPORATION+ 852,020
--------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.16%
22,700 RUSSELL CORPORATION 464,215
100,000 TOMMY HILFIGER CORPORATION+ 1,376,000
1,840,215
--------------
BUSINESS SERVICES - 7.98%
155,000 CIBER INCORPORATED+ 1,236,900
1,251,000 E.PIPHANY INCORPORATED+ 4,353,480
286,417 EMBARCADERO TECHNOLOGIES INCORPORATED+ 1,606,799
254,800 ESPEED INCORPORATED CLASS A+ 2,270,268
80,000 MIDWAY GAMES INCORPORATED+ 876,800
130,000 NDCHEALTH CORPORATION 2,336,100
4,000 S1 CORPORATION+ 18,840
12,699,187
--------------
CHEMICALS & ALLIED PRODUCTS - 3.10%
700 CAMBREX CORPORATION 13,335
7,000 GUILFORD PHARMACEUTICALS INCORPORATED+ 15,890
138,000 IMCLONE SYSTEMS INCORPORATED+ 4,273,860
2,000 LUBRIZOL CORPORATION 84,020
325,900 XOMA LIMITED+ 550,771
4,937,876
--------------
COMMUNICATIONS - 6.77%
360,000 CUMULUS MEDIA INCORPORATED CLASS A+ 4,240,800
24,038 EMMIS COMMUNICATIONS CORPORATION CLASS A+ 424,752
375,000 REGENT COMMUNICATIONS INCORPORATED+ 2,201,250
391,200 SPANISH BROADCASTING SYSTEM INCORPORATED+ 3,908,088
10,774,890
--------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 1.30%
285,000 COMFORT SYSTEMS USA INCORPORATED+ 1,875,300
9,800 LAYNE CHRISTENSEN COMPANY+ 194,677
2,069,977
--------------
DEPOSITORY INSTITUTIONS - 3.01%
7,900 ACE CASH EXPRESS INCORPORATED+ 201,924
3,800 CITIZENS FIRST BANCORP INCORPORATED 78,470
1,300 FIRST COMMONWEALTH FINANCIAL CORPORATION 17,810
200,000 FIRST FINANCIAL BANCORP 3,780,000
16,000 FIRST INDIANA CORPORATION 474,720
3,800 NBT BANCORP INCORPORATED 89,832
600 PEOPLES BANCORP INCORPORATED 16,050
2,200 UMB FINANCIAL CORPORATION 125,466
4,784,272
--------------
30
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
EATING & DRINKING PLACES - 1.49%
239,200 BUCA INCORPORATED+ $ 1,248,624
107,000 RUBIO'S RESTAURANTS INCORPORATED+ 1,118,150
2,366,774
--------------
ELECTRIC, GAS & SANITARY SERVICES - 1.36%
49,000 CASELLA WASTE SYSTEMS INCORPORATED CLASS A+ 588,000
12,000 CENTERPOINT ENERGY INCORPORATED 158,520
44,800 CLEAN HARBORS INCORPORATED+ 971,264
9,600 IDACORP INCORPORATED 294,048
5,800 OTTER TAIL CORPORATION 158,514
2,170,346
--------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 1.15%
180,000 FUELCELL ENERGY INCORPORATED+ 1,837,800
--------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.88%
350,000 DIVERSA CORPORATION+ 1,823,500
118,000 TRIMERIS INCORPORATED+ 1,177,640
3,001,140
--------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.50%
31,000 VALMONT INDUSTRIES INCORPORATED 799,800
--------------
FOOD & KINDRED PRODUCTS - 4.96%
125,000 CAL-MAINE FOODS INCORPORATED 756,250
430,000 DEL MONTE FOODS COMPANY+ 4,631,100
175,000 GALAXY NUTRITIONAL FOODS INCORPORATED+ 364,000
2,000 HERCULES INCORPORATED+ 28,300
177,300 MONTEREY GOURMET FOODS INCORPORATED+ 553,176
30,500 TASTY BAKING COMPANY 248,575
696,400 VERMONT PURE HOLDINGS LIMITED+ 1,309,232
7,890,633
--------------
FOOD STORES - 1.37%
190,000 WILD OATS MARKETS INCORPORATED+ 2,175,500
--------------
HEALTH SERVICES - 0.98%
135,000 HOOPER HOLMES INCORPORATED 560,250
234,200 RADIOLOGIX INCORPORATED+ 995,350
1,555,600
--------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 1.69%
230,600 MTR GAMING GROUP INCORPORATED+ 2,684,184
--------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 4.23%
240,000 AGCO CORPORATION+ 4,588,800
185,000 INFOCUS CORPORATION+ 765,900
13,600 PLANAR SYSTEMS INCORPORATED+ 99,960
49,800 ROBBINS & MYERS INCORPORATED 1,071,198
6,000 TENNANT COMPANY 212,460
6,738,318
--------------
31
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INSURANCE AGENTS, BROKERS & SERVICE - 1.86%
191,200 CRAWFORD & COMPANY CLASS A (NON-VOTING) $ 1,275,304
131,000 USI HOLDINGS CORPORATION+ 1,687,280
2,962,584
--------------
INSURANCE CARRIERS - 5.63%
175,000 OHIO CASUALTY CORPORATION 4,231,500
195,000 SCOTTISH RE GROUP LIMITED 4,726,800
8,958,300
--------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 8.14%
4,900 HERLEY INDUSTRIES INCORPORATED+ 89,376
444,700 ORTHOLOGIC CORPORATION+ 1,720,989
113,000 VITAL SIGNS INCORPORATED 4,895,160
1,279,400 VIVUS INCORPORATED+ 4,714,589
60,000 ZOLL MEDICAL CORPORATION+ 1,527,000
12,947,114
--------------
MEMBERSHIP ORGANIZATIONS - 2.48%
656,000 ALLIANCE ONE INTERNATIONAL 3,942,560
--------------
METAL MINING - 6.98%
278,000 GLAMIS GOLD LIMITED+%% 4,784,380
404,000 GOLD FIELDS LIMITED ADR 4,585,400
110,000 GOLDCORP INCORPORATED 1,735,800
11,105,580
--------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.62%
115,000 LYDALL INCORPORATED+ 991,300
--------------
MISCELLANEOUS RETAIL - 1.08%
195,000 ACTION PERFORMANCE COMPANIES INCORPORATED 1,719,900
--------------
MOTION PICTURES - 1.67%
400,000 NEW FRONTIER MEDIA INCORPORATED+ 2,660,000
--------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.09%
3,600 FINANCIAL FEDERAL CORPORATION 139,104
--------------
PAPER & ALLIED PRODUCTS - 0.28%
55,300 BUCKEYE TECHNOLOGIES INCORPORATED+ 440,741
--------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 6.31%
260,000 PLAYBOY ENTERPRISES INCORPORATED CLASS B (NON-VOTING)+ 3,364,400
405,000 READER'S DIGEST ASSOCIATION INCORPORATED 6,682,500
10,046,900
--------------
RETAIL, TRADE & SERVICES - 0.15%
17,000 STRIDE RITE CORPORATION 234,430
--------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.40%
102,700 BIOSCRIP INCORPORATED+ 616,200
500 GREEN MOUNTAIN COFFEE ROASTERS INCORPORATED+ 16,965
633,165
--------------
32
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
WHOLESALE TRADE-DURABLE GOODS - 0.90%
115,000 PSS WORLD MEDICAL INCORPORATED+ $ 1,431,750
--------------
TOTAL COMMON STOCKS (COST $126,214,758) 130,206,990
--------------
PREFERRED STOCKS - 2.99%
7,000 SCOTTISH RE GROUP LIMITED 197,400
188,000 SCOTTISH RE GROUP LIMITED+/- 4,557,120
TOTAL PREFERRED STOCKS (COST $4,890,000) 4,754,520
--------------
SHORT-TERM INVESTMENTS - 16.85%
MUTUAL FUND - 16.85%
26,819,587 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 26,819,587
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $26,819,587) 26,819,587
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $157,924,345)* 101.66% $ 161,781,097
OTHER ASSETS AND LIABILITIES, NET (1.66) (2,645,690)
------ --------------
TOTAL NET ASSETS 100.00% $ 159,135,407
------ --------------
+ NON-INCOME EARNING SECURITIES.
+ VARIABLE RATE INVESTMENTS.
%% 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 $26,819,587.
* 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.
33
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 98.52%
APPAREL & ACCESSORY STORES - 0.02%
160 DSW INCORPORATED+ $ 3,992
-------------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.15%
2,470 GYMBOREE CORPORATION+ 33,740
-------------------
BUSINESS SERVICES - 9.77%
47,375 3COM CORPORATION+ 172,445
11,920 ABM INDUSTRIES INCORPORATED 232,440
3,280 DST SYSTEMS INCORPORATED+ 153,504
22,080 EMBARCADERO TECHNOLOGIES INCORPORATED+ 123,869
6,895 IMS HEALTH INCORPORATED 170,789
21,460 KFORCE INCORPORATED+ 181,551
20,100 MOBIUS MANAGEMENT SYSTEMS INCORPORATED+ 132,660
6,025 MONEYGRAM INTERNATIONAL INCORPORATED 115,198
130,520 SUN MICROSYSTEMS INCORPORATED+ 486,840
23,912 VIGNETTE CORPORATION+ 269,010
20,970 WEBMD CORPORATION+ 215,362
2,253,668
-------------------
CHEMICALS & ALLIED PRODUCTS - 2.29%
10,350 ORASURE TECHNOLOGIES INCORPORATED+ 103,396
22,855 POLYONE CORPORATION+ 151,300
5,230 RPM INTERNATIONAL INCORPORATED 95,500
17,510 WELLMAN INCORPORATED 178,427
528,623
-------------------
COMMUNICATIONS - 2.25%
40,840 CINCINNATI BELL INCORPORATED+ 175,612
48,980 COASTAL CONTACTS INCORPORATED 61,964
5,865 ECTEL LIMITED+ 21,994
41,400 LIGHTBRIDGE INCORPORATED+ 258,750
518,320
-------------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 2.01%
15,285 CHICAGO BRIDGE & IRON COMPANY NV 349,415
24,785 MATRIX SERVICE COMPANY+ 113,515
462,930
-------------------
DEPOSITORY INSTITUTIONS - 1.31%
3,440 COMMUNITY BANCORP+ 106,709
18,220 PACIFIC PREMIER BANCORP INCORPORATED+ 195,136
301,845
-------------------
EATING & DRINKING PLACES - 0.57%
3,700 CALIFORNIA PIZZA KITCHEN INCORPORATED+ 100,899
920 DARDEN RESTAURANTS INCORPORATED 30,342
131,241
-------------------
ELECTRIC, GAS & SANITARY SERVICES - 0.51%
10,180 EL PASO CORPORATION 117,274
-------------------
34
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 9.51%
23,390 C-COR INCORPORATED+ $ 160,221
10,630 CATAPULT COMMUNICATIONS CORPORATION+ 181,348
18,875 CELESTICA INCORPORATED+ 252,925
13,050 ECI TELECOM LIMITED+ 108,315
17,600 EVANS & SUTHERLAND COMPUTER CORPORATION+ 88,880
66,215 GRAFTECH INTERNATIONAL LIMITED+ 284,724
34,350 KEMET CORPORATION+ 216,405
22,950 MCDATA CORPORATION+ 85,374
96,950 MRV COMMUNICATIONS INCORPORATED+ 210,382
98,835 NORTEL NETWORKS CORPORATION+ 257,959
8,670 OSI SYSTEMS INCORPORATED+ 136,899
12,845 RICHARDSON ELECTRONICS LIMITED 93,769
28,890 SILICON STORAGE TECHNOLOGY INCORPORATED+ 116,427
2,193,628
-------------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.97%
15,110 CV THERAPEUTICS INCORPORATED+ 338,766
4,485 WATSON WYATT & COMPANY HOLDINGS 114,951
453,717
-------------------
FOOD & KINDRED PRODUCTS - 2.36%
15,390 DEL MONTE FOODS COMPANY+ 165,750
6,480 HERCULES INCORPORATED+ 91,692
1,540 MOLSON COORS BREWING COMPANY 95,480
4,215 SANDERSON FARMS INCORPORATED 191,530
544,452
-------------------
FURNITURE & FIXTURES - 0.26%
4,055 LA-Z-BOY INCORPORATED 59,081
-------------------
HEALTH SERVICES - 0.82%
14,850 BEVERLY ENTERPRISES INCORPORATED 189,189
-------------------
HOLDING & OTHER INVESTMENT OFFICES - 1.04%
8,665 AFFORDABLE RESIDENTIAL COMMUNITIES 115,678
8,065 AMERICAN FINANCIAL REALTY TRUST 124,040
239,718
-------------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 1.57%
31,540 EMPIRE RESORTS INCORPORATED+ 127,737
5,645 GREAT WOLF RESORTS INCORPORATED+ 115,384
4,570 ISLE OF CAPRI CASINOS INCORPORATED+ 119,734
362,855
-------------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 2.09%
63,615 CRAY INCORPORATED+ 78,883
7,365 KULICKE & SOFFA INDUSTRIES INCORPORATED+ 58,257
12,915 UNOVA INCORPORATED+ 343,926
481,066
-------------------
35
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INSURANCE CARRIERS - 4.32%
8,080 EMC INSURANCE GROUP INCORPORATED $ 146,087
3,120 ENDURANCE SPECIALTY HOLDINGS LIMITED 117,998
3,290 MERCURY GENERAL CORPORATION 179,371
8,035 NYMAGIC INCORPORATED 187,617
5,760 PXRE GROUP LIMITED 145,267
19,295 SEABRIGHT INSURANCE HOLDINGS INCORPORATED+ 220,542
996,882
-------------------
JUSTICE, PUBLIC ORDER & SAFETY - 0.51%
4,655 GEO GROUP INCORPORATED+ 116,608
-------------------
LEATHER & LEATHER PRODUCTS - 0.88%
18,635 BAKERS FOOTWEAR GROUP INCORPORATED+ 204,053
-------------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 3.17%
36,893 ALLIED HEALTHCARE PRODUCTS INCORPORATED 181,145
15,885 CREDENCE SYSTEMS CORPORATION+ 143,759
19,715 INPUT OUTPUT INCORPORATED+ 123,810
13,733 LAKELAND INDUSTRIES INCORPORATED+ 187,998
11,705 SYNOVIS LIFE TECHNOLOGIES INCORPORATED+ 93,406
730,118
-------------------
MEMBERSHIP ORGANIZATIONS - 0.04%
675 ADA-ES INCORPORATED+ 10,193
-------------------
METAL MINING - 9.82%
29,860 APEX SILVER MINES LIMITED+ 410,276
16,120 GLAMIS GOLD LIMITED+%% 277,425
11,710 GOLDCORP INCORPORATED 184,784
19,500 HARMONY GOLD MINING COMPANY LIMITED ADR 166,920
6,430 INCO LIMITED 242,732
3,255 IPSCO INCORPORATED 142,244
6,500 MERIDIAN GOLD INCORPORATED+ 117,000
6,745 NEWMONT MINING CORPORATION 263,257
21,015 RANDGOLD RESOURCES LIMITED ADR+ 295,471
18,750 SOUTHWESTERN RESOURCES CORPORATION 163,137
2,263,246
-------------------
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS - 0.40%
21,570 QUADRA MINING LIMITED 92,428
-------------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING - 0.88%
8,125 COVENANT TRANSPORT INCORPORATED CLASS A+ 107,250
4,910 WERNER ENTERPRISES INCORPORATED 96,432
203,682
-------------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.83%
8,925 FIRST CASH FINANCIAL SERVICES INCORPORATED+ 190,727
-------------------
OIL & GAS EXTRACTION - 24.22%
6,680 CANADIAN NATURAL RESOURCES LIMITED 243,018
4,365 CNOOC LIMITED ADR 258,932
3,190 ENERGY PARTNERS LIMITED+ 83,610
5,640 FOREST OIL CORPORATION+ 236,880
36
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
OIL & GAS EXTRACTION (CONTINUED)
99,170 GLOBAL INDUSTRIES LIMITED+ $ 842,945
13,685 GREY WOLF INCORPORATED+ 101,406
1,645 HELMERICH & PAYNE INCORPORATED 77,183
33,190 KEY ENERGY SERVICES INCORPORATED+ 401,599
15,155 MCMORAN EXPLORATION COMPANY+ 295,674
37,865 NEWPARK RESOURCES INCORPORATED+ 283,988
1,190 NOBLE ENERGY INCORPORATED 90,024
18,180 PARAMOUNT RESOURCES LIMITED CLASS A+ 266,794
4,330 PARKER DRILLING COMPANY+ 30,353
15,475 PETROHAWK ENERGY CORPORATION+ 167,130
24,850 PETROQUEST ENERGY INCORPORATED+ 163,265
4,550 PIONEER NATURAL RESOURCES COMPANY 191,464
3,740 PRIDE INTERNATIONAL INCORPORATED+ 96,118
26,650 RANGE RESOURCES CORPORATION 716,885
109,020 SEITEL INCORPORATED+ 159,169
1,770 STONE ENERGY CORPORATION+ 86,553
2,030 TRANSOCEAN INCORPORATED+ 109,559
33,405 TRILOGY ENERGY TRUST 488,315
13,525 WILLBROS GROUP INCORPORATED+ 193,678
5,584,542
-------------------
PAPER & ALLIED PRODUCTS - 0.66%
12,740 WAUSAU PAPER CORPORATION 152,625
-------------------
PETROLEUM REFINING & RELATED INDUSTRIES - 0.62%
2,000 ASHLAND INCORPORATED 143,740
-------------------
PRIMARY METAL INDUSTRIES - 1.35%
9,760 ENCORE WIRE CORPORATION+ 113,118
5,505 ROANOKE ELECTRIC STEEL CORPORATION 90,943
3,100 UNITED STATES STEEL CORPORATION 106,547
310,608
-------------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.42%
2,120 EW SCRIPPS COMPANY CLASS A 103,456
13,300 JOURNAL COMMUNICATIONS INCORPORATED CLASS A 223,440
326,896
-------------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 3.37%
5,650 AEP INDUSTRIES INCORPORATED+ 104,299
42,810 CONSTAR INTERNATIONAL INCORPORATED+ 160,109
20,205 INTERTAPE POLYMER GROUP INCORPORATED+ 205,889
28,090 ROYAL GROUP TECHNOLOGIES LIMITED+ 307,586
777,883
-------------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.74%
15,025 MARKETAXCESS HOLDINGS INCORPORATED+ 169,783
-------------------
TRANSPORTATION BY AIR - 1.69%
14,295 AIRTRAN HOLDINGS INCORPORATED+ 131,943
1,930 PETROLEUM HELICOPTERS INCORPORATED+ 46,841
8,915 PETROLEUM HELICOPTERS INCORPORATED (NON-VOTING)+ 209,859
388,643
-------------------
37
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUN
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
TRANSPORTATION EQUIPMENT - 0.36%
1,270 SEQUA CORPORATION+ $ 84,036
-------------------
TRANSPORTATION SERVICES - 0.52%
10,000 RAILAMERICA INCORPORATED+ 119,000
-------------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.51%
2,675 ALLSCRIPTS HEALTHCARE SOLUTIONS INCORPORATED+ 44,432
5,355 ENDO PHARMACEUTICALS HOLDINGS INCORPORATED+ 140,729
13,130 SOURCE INTERLINK COMPANIES INCORPORATED+ 162,418
347,579
-------------------
WHOLESALE TRADE-DURABLE GOODS - 2.71%
233,765 COVALENT GROUP INCORPORATED+ 558,698
13,370 US HOME SYSTEMS INCORPORATED+ 66,984
625,682
-------------------
TOTAL COMMON STOCKS (COST $20,228,450) 22,714,293
-------------------
SHORT-TERM INVESTMENTS - 0.97%
MUTUAL FUND - 0.97
224,834 WELLS FARGO ADVANTAGE MONEY MARKET TRUST+~++ 224,834
-------------------
TOTAL SHORT-TERM INVESTMENTS (COST $224,834) 224,834
-------------------
TOTAL INVESTMENTS IN SECURITIES
(COST $20,453,284)* 99.49% $ 22,939,127
OTHER ASSETS AND LIABILITIES, NET 0.51 117,353
------ -------------------
TOTAL NET ASSETS 100.00% $ 23,056,480
------ -------------------
+ NON-INCOME EARNING SECURITIES.
%% 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 $224,834.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
CONTRACTS STRIKE PRICE EXPIRATION DATE VALUE
WRITTEN OPTIONS - (0.10%)
(5) California Pizza Kitchen Incorporated Call+ $ 25.00 07/16/2005 $ (1,100)
(25) CV Therapeutics Incorporated Call+ 25.00 10/22/2005 (3,625)
(5) EW Scripps Company Class A Call+ 50.00 09/17/2005 (500)
(10) Forest Oil Corporation Call+ 40.00 08/20/2005 (3,200)
(20) Great Wolf Resorts Incorporated Call+ 20.00 10/22/2005 (4,200)
(5) Helmerich & Payne Incorporated Call+ 50.00 12/17/2005 (1,125)
(8) IPSCO Incorporated Call+ 55.00 09/17/2005 (320)
(5) Noble Energy Incorporated Call+ 75.00 08/20/2005 (1,750)
(5) Noble Energy Incorporated Call+ 70.00 11/19/2005 (4,350)
(5) UNOVA Incorporated Call+ 22.50 09/17/2005 (2,650)
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED $(21,288)) (22,820)
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
THIS PAGE IS INTENTIONALLY LEFT BLANK--
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DISCOVERY ENTERPRISE
FUND FUND
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE................................................................ $195,209,538 $245,240,035
INVESTMENTS IN AFFILIATES..................................................................... 1,716,927 4,599,765
------------ ------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW)............................................... 196,926,465 249,839,800
------------ ------------
CASH.......................................................................................... 0 267,935
RECEIVABLE FOR FUND SHARES ISSUED............................................................. 58,106 104,422
RECEIVABLE FOR INVESTMENTS SOLD............................................................... 1,288,335 2,742,542
RECEIVABLES FOR DIVIDENDS AND INTEREST........................................................ 53,829 56,288
PREPAID EXPENSES AND OTHER ASSETS............................................................. 0 0
------------ ------------
TOTAL ASSETS..................................................................................... 198,326,735 253,010,987
------------ ------------
LIABILITIES
OPTIONS WRITTEN, AT VALUE..................................................................... 0 0
PAYABLE FOR FUND SHARES REDEEMED.............................................................. 10,041 58,457
PAYABLE FOR INVESTMENTS PURCHASED............................................................. 134,293 637,653
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3)......................................... 167,525 216,568
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR....................................................... 43,845 51,178
ACCRUED EXPENSES AND OTHER LIABILITIES........................................................ 3,055 13,282
------------ ------------
TOTAL LIABILITIES................................................................................ 358,759 977,138
------------ ------------
TOTAL NET ASSETS................................................................................. $197,967,976 $252,033,849
------------ ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................. $162,937,709 $495,704,660
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS).................................................... (875,653) (1,505,541)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS......................................... 4,414,186 (277,069,160)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION
OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES................................. 31,491,734 34,903,890
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES....... 0 0
------------ ------------
TOTAL NET ASSETS................................................................................. $197,967,976 $252,033,849
------------ ------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - ADMINISTRATOR CLASS.............................................................. $ 1,313,962 $ 3,794,190
SHARES OUTSTANDING - ADMINISTRATOR CLASS...................................................... 64,822 149,174
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS............................ $ 20.27 $ 25.43
NET ASSETS - ADVISOR CLASS.................................................................... N/A $ 1,282,253
SHARES OUTSTANDING - ADVISOR CLASS............................................................ N/A 51,145
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS.................................. N/A $ 25.07
NET ASSETS - INSTITUTIONAL CLASS.............................................................. N/A $ 13,105,964
SHARES OUTSTANDING - INSTITUTIONAL CLASS...................................................... N/A 515,892
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS............................ N/A $ 25.40
NET ASSETS - INVESTOR CLASS................................................................... $196,654,014 $233,851,442
SHARES OUTSTANDING - INVESTOR CLASS........................................................... 9,712,473 9,370,910
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS................................. $ 20.25 $ 24.96
------------ ------------
INVESTMENTS AT COST.............................................................................. $165,434,731 $214,935,910
------------ ------------
PREMIUMS RECEIVED ON WRITTEN OPTIONS............................................................. $ 0 $ 0
------------ ------------
40
STATEMENTS OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
MID CAP
DISCIPLINED OPPORTUNITY
FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE................................................................ $ 488,891,199 $2,166,289,238
INVESTMENTS IN AFFILIATES..................................................................... 102,679,690 167,477,227
------------- --------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW)............................................... 591,570,889 2,333,766,465
-------------- -------------
CASH.......................................................................................... 0 0
RECEIVABLE FOR FUND SHARES ISSUED............................................................. 523,356 245,922
RECEIVABLE FOR INVESTMENTS SOLD............................................................... 6,031,605 15,925,159
RECEIVABLES FOR DIVIDENDS AND INTEREST........................................................ 688,447 1,376,236
PREPAID EXPENSES AND OTHER ASSETS............................................................. 0 0
------------- --------------
TOTAL ASSETS..................................................................................... 598,814,297 2,351,313,782
------------- --------------
LIABILITIES
OPTIONS WRITTEN, AT VALUE..................................................................... 0 684,200
PAYABLE FOR FUND SHARES REDEEMED.............................................................. 431,024 680,553
PAYABLE FOR INVESTMENTS PURCHASED............................................................. 0 976,702
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3)......................................... 507,436 2,074,602
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR....................................................... 124,180 485,819
ACCRUED EXPENSES AND OTHER LIABILITIES........................................................ 10,051 208,021
------------- --------------
TOTAL LIABILITIES................................................................................ 1,072,691 5,109,897
------------- --------------
TOTAL NET ASSETS................................................................................. $ 597,741,606 $2,346,203,885
------------- --------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................. $ 489,471,979 $1,712,439,374
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS).................................................... 94,687 (5,109,492)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS......................................... 62,142,118 114,252,711
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION
OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES................................... 46,032,822 524,538,630
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES....... 0 82,662
------------- --------------
TOTAL NET ASSETS................................................................................. $ 597,741,606 $2,346,203,885
------------- --------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - ADMINISTRATOR CLASS.............................................................. $ 31,238 $ 66,850
SHARES OUTSTANDING - ADMINISTRATOR CLASS...................................................... 1,396 1,423
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS............................ $ 22.38 $ 46.98
NET ASSETS - ADVISOR CLASS.................................................................... N/A $ 126,789,890
SHARES OUTSTANDING - ADVISOR CLASS............................................................ N/A 2,758,941
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS.................................. N/A $ 45.96
NET ASSETS - INSTITUTIONAL CLASS.............................................................. $ 1,232,345 N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS...................................................... 55,017 N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS............................ $ 22.40 N/A
NET ASSETS - INVESTOR CLASS................................................................... $ 596,478,023 $2,219,347,145
SHARES OUTSTANDING - INVESTOR CLASS........................................................... 26,657,018 47,544,898
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS................................. $ 22.38 $ 46.68
------------- --------------
INVESTMENTS AT COST.............................................................................. $ 545,538,067 $1,809,227,835
------------- --------------
PREMIUMS RECEIVED ON WRITTEN OPTIONS............................................................. $ 0 $ 766,862
------------- --------------
SMALL CAP SMALL/MID
DISCIPLINED CAP VALUE
FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE................................................................ $ 134,961,510 $ 22,714,293
INVESTMENTS IN AFFILIATES..................................................................... 26,819,587 224,834
------------- --------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW)............................................... 161,781,097 22,939,127
------------- --------------
CASH.......................................................................................... 0 0
RECEIVABLE FOR FUND SHARES ISSUED............................................................. 697,627 0
RECEIVABLE FOR INVESTMENTS SOLD............................................................... 1,780,325 477,034
RECEIVABLES FOR DIVIDENDS AND INTEREST........................................................ 141,086 10,358
PREPAID EXPENSES AND OTHER ASSETS............................................................. 0 7,915
------------- --------------
TOTAL ASSETS..................................................................................... 164,400,135 23,434,434
------------- --------------
LIABILITIES
OPTIONS WRITTEN, AT VALUE..................................................................... 0 22,820
PAYABLE FOR FUND SHARES REDEEMED.............................................................. 121,277 0
PAYABLE FOR INVESTMENTS PURCHASED............................................................. 4,935,608 329,134
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3)......................................... 165,789 19,956
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR....................................................... 33,199 6,044
ACCRUED EXPENSES AND OTHER LIABILITIES........................................................ 8,855 0
------------- --------------
TOTAL LIABILITIES................................................................................ 5,264,728 377,954
------------- --------------
TOTAL NET ASSETS................................................................................. $ 159,135,407 $ 23,056,480
------------- --------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL .............................................................................. $ 144,558,582 $ 20,233,979
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS).................................................... (372,768) (123,336)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS......................................... 11,092,841 461,505
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION
OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES................................. 3,856,752 2,485,864
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES....... 0 (1,532)
------------- --------------
TOTAL NET ASSETS................................................................................. $ 159,135,407 $ 23,056,480
------------- --------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - ADMINISTRATOR CLASS.............................................................. $ 113,866 $ 10,187
SHARES OUTSTANDING - ADMINISTRATOR CLASS...................................................... 7,044 756
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS............................ $ 16.16 $ 13.47
NET ASSETS - ADVISOR CLASS.................................................................... N/A N/A
SHARES OUTSTANDING - ADVISOR CLASS............................................................ N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS.................................. N/A N/A
NET ASSETS - INSTITUTIONAL CLASS.............................................................. $ 10,114 N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS...................................................... 625 N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS............................ $ 16.18 N/A
NET ASSETS - INVESTOR CLASS................................................................... $ 159,011,427 $ 23,046,293
SHARES OUTSTANDING - INVESTOR CLASS........................................................... 9,842,750 1,713,367
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS................................. $ 16.16 $ 13.45
------------- --------------
INVESTMENTS AT COST.............................................................................. $ 157,924,345 $ 20,453,284
------------- --------------
PREMIUMS RECEIVED ON WRITTEN OPTIONS............................................................. $ 0 $ 21,288
------------- --------------
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
DISCOVERY FUND ENTERPRISE FUND
- -----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ........................................................ $ 289,206 $ 495,404
INTEREST ............................................................ 29,158 16,483
INCOME FROM AFFILIATED SECURITIES ................................... 63,766 46,949
SECURITIES LENDING INCOME, NET ...................................... 9,305 14,183
-------------- ---------------
TOTAL INVESTMENT INCOME ............................................... 391,435 573,019
-------------- ---------------
EXPENSES
ADVISORY FEES ....................................................... 678,609 945,157
ADMINISTRATION FEES
FUND LEVEL ........................................................ 20,205 27,100
ADMINISTRATOR CLASS ............................................... 139 10,603
ADVISOR CLASS ..................................................... N/A 2,587
INSTITUTIONAL CLASS ............................................... N/A 2,780
INVESTOR CLASS .................................................... 449,733 802,230
CUSTODY FEES ........................................................ 13,127 16,957
SHAREHOLDER SERVICING FEES .......................................... 101,700 129,258
ACCOUNTING FEES ..................................................... 8,621 11,908
DISTRIBUTION FEES (NOTE 3) ..........................................
ADMINISTRATOR CLASS ............................................... 0 0
ADVISOR CLASS ..................................................... N/A 970
INSTITUTIONAL CLASS ............................................... N/A 0
INVESTOR CLASS .................................................... 0 0
AUDIT FEES .......................................................... 11,192 10,770
LEGAL FEES .......................................................... 3,910 5,019
REGISTRATION FEES ................................................... 14,254 26,520
SHAREHOLDER REPORTS ................................................. 28,451 71,178
TRUSTEES' FEES ...................................................... 9,430 11,624
OTHER FEES AND EXPENSES ............................................. 35,378 55,758
-------------- ---------------
TOTAL EXPENSES ........................................................ 1,374,749 2,130,419
-------------- ---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ........................ (107,661) (51,859)
NET EXPENSES ........................................................ 1,267,088 2,078,560
-------------- ---------------
NET INVESTMENT INCOME (LOSS) .......................................... (875,653) (1,505,541)
-------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... 4,731,374 16,006,549
FUTURES TRANSACTIONS ................................................ 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ................ 0 0
-------------- ---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ............................. 4,731,374 16,006,549
-------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... (5,731,771) (15,631,707)
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ................ 0 0
-------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... (5,731,771) (15,631,707)
-------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ (1,000,397) 374,842
-------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... $ (1,876,050) $ (1,130,699)
============== ===============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............................. $ 1,919 $ 3,541
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
MID CAP SMALL CAP
DISCIPLINED OPPORTUNITY DISCIPLINED SMALL/MID CAP
FUND FUND FUND VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ..................................................... $ 3,886,361 $ 8,622,736 $ 652,585 $ 57,692
INTEREST ......................................................... 220,505 1,290,217 64,950 1,304
INCOME FROM AFFILIATED SECURITIES ................................ 270,708 1,047,099 94,738 3,261
SECURITIES LENDING INCOME, NET ................................... 11,688 16,770 0 0
------------- ------------- ------------- -------------
TOTAL INVESTMENT INCOME ........................................... 4,389,262 10,976,822 812,273 62,257
------------- ------------- ------------- -------------
EXPENSES
ADVISORY FEES .................................................... 2,387,849 8,466,062 592,494 84,043
ADMINISTRATION FEES
FUND LEVEL ..................................................... 66,539 256,149 16,181 2,418
ADMINISTRATOR CLASS ............................................ 101 1,486 14 2
ADVISOR CLASS .................................................. N/A 242,896 N/A N/A
INSTITUTIONAL CLASS ............................................ 26 N/A 2 N/A
INVESTOR CLASS ................................................. 1,589,673 5,502,144 358,760 49,232
CUSTODY FEES ..................................................... 33,662 115,704 8,947 14,138
SHAREHOLDER SERVICING FEES ....................................... 332,612 1,280,747 80,899 12,090
ACCOUNTING FEES .................................................. 15,801 34,887 9,181 6,095
DISTRIBUTION FEES (NOTE 3)
ADMINISTRATOR CLASS ............................................ 0 0 0 0
ADVISOR CLASS .................................................. N/A 89,399 N/A N/A
INSTITUTIONAL CLASS ............................................ 0 N/A 0 N/A
INVESTOR CLASS ................................................. 0 0 100,413 13,506
AUDIT FEES ....................................................... 9,564 6,778 11,359 8,618
LEGAL FEES ....................................................... 13,169 43,652 2,528 229
REGISTRATION FEES ................................................ 37,916 27,929 14,714 8,320
SHAREHOLDER REPORTS .............................................. 96,213 302,928 29,746 3,851
TRUSTEES' FEES ................................................... 30,349 101,959 7,005 2,865
OTHER FEES AND EXPENSES .......................................... 82,822 509,199 15,736 3,963
------------- ------------- ------------- -------------
TOTAL EXPENSES .................................................... 4,696,296 16,981,919 1,247,979 209,370
------------- ------------- ------------- -------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................... (401,834) (895,605) (62,938) (23,777)
NET EXPENSES ..................................................... 4,294,462 16,086,314 1,185,041 185,593
------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) ...................................... 94,800 (5,109,492) (372,768) (123,336)
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .. 72,254,760 138,632,414 11,358,694 744,932
FUTURES TRANSACTIONS ............................................. 781,510 1,306,634 (254,009) 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............. (7,337,303) 1,327,928 0 6,671
------------- ------------- ------------- -------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .......................... 65,698,967 141,266,976 11,104,685 751,603
------------- ------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .. (63,885,254) (126,238,846) (12,988,796) (659,172)
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............. 1,182,897 (1,101,549) 0 (8,051)
------------- ------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS ...................................... (62,702,357) (127,340,395) (12,988,796) (667,223)
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............. 2,996,610 13,926,581 (1,884,111) 84,380
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .... $ 3,091,410 $ 8,817,089 $ (2,256,879) $ (38,956)
============= ============= ============= =============
(1) NET OF FOREIGN WITHHOLDING TAXES OF .......................... $ 66,580 $ 71,250 $ 9,653 $ 2,795
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
DISCOVERY FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................... $ 191,180,972 $ 166,793,260
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................ (875,653) (1,907,900)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................. 4,731,374 18,988,695
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..... (5,731,771) 7,877,318
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............ (1,876,050) 24,958,113
------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INVESTOR CLASS ....................................................... 0 0
NET REALIZED GAIN ON SALE OF INVESTMENTS
INVESTOR CLASS ....................................................... (8,542,961) (10,141,139)
------------------ -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................ (8,542,961) (10,141,139)
================== =================
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ................ 1,243,334 N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............ 0 N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................. 0 N/A
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ...................................... 1,243,334 N/A
================== =================
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ............................... 0 N/A
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ........................... 0 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 (NOTE 1) ................ N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............ N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................. 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 .............................. 33,480,124 56,324,478
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......................... 8,341,864 9,873,900
COST OF SHARES REDEEMED - INVESTOR CLASS ................................ (25,859,307) (56,627,640)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ........................................... 15,962,681 9,570,738
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL .................................................... 17,206,015 9,570,738
================== =================
NET INCREASE (DECREASE) IN NET ASSETS ...................................... 6,787,004 24,387,712
================== =================
ENDING NET ASSETS .......................................................... $ 197,967,976 $ 191,180,972
================== =================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .............................. 64,822 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS
(NOTE 1) ............................................................. 0 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .......................... 0 N/A
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........ 64,822 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 (NOTE 1) .............................. N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS
(NOTE 1) ............................................................. N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .......................... N/A N/A
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ........ N/A N/A
------------------ -----------------
SHARES SOLD - INVESTOR CLASS ............................................ 1,701,642 2,749,369
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......... 435,379 486,928
SHARES REDEEMED - INVESTOR CLASS ........................................ (1,303,597) (2,809,343)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ............. 833,424 426,954
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL
SHARE TRANSACTIONS ................................................... 898,246 426,954
================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............... $ (875,653) $ 0
================== =================
44
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
ENTERPRISE FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................... $ 281,365,889 $ 287,228,307
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................ (1,505,541) (4,035,287)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................. 16,006,549 38,766,267
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..... (15,631,707) 3,909,386
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............ (1,130,699) 38,640,366
------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INVESTOR CLASS ....................................................... 0 0
NET REALIZED GAIN ON SALE OF INVESTMENTS
INVESTOR CLASS ....................................................... 0 0
------------------ -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................ 0 0
================== =================
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ................ 305,180 5,305,094
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............ 0 0
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................. (8,627,081) (29,866,227)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ...................................... (8,321,901) (24,561,133)
================== =================
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ............................... 221,886 313,237
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ........................... 0 0
COST OF SHARES REDEEMED - ADVISOR CLASS ................................. (450,026) (673,372)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS ............................................ (228,140) (360,135)
================== =================
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ................ 6,680,603 5,292,766
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............ 0 0
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................. (988,919) (1,119,418)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS ...................................... 5,691,684 4,173,348
================== =================
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .............................. 11,029,649 58,477,939
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......................... 0 0
COST OF SHARES REDEEMED - INVESTOR CLASS ................................ (36,372,633) (82,232,803)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ........................................... (25,342,984) (23,754,864)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL .................................................... (28,201,341) (44,502,784)
================== =================
NET INCREASE (DECREASE) IN NET ASSETS ...................................... (29,332,040) (5,862,418)
================== =================
ENDING NET ASSETS .......................................................... $ 252,033,849 $ 281,365,889
================== =================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .............................. 12,470 231,322
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS
(NOTE 1) ............................................................. 0 0
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .......................... (356,108) (1,294,725)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........ (343,638) (1,063,403)
------------------ -----------------
SHARES SOLD - ADVISOR CLASS ............................................. 8,996 13,653
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .......... 0 0
SHARES REDEEMED - ADVISOR CLASS ......................................... (18,926) (30,106)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS .............. (9,930) (16,453)
------------------ -----------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) .............................. 275,064 234,398
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS
(NOTE 1) ............................................................. 0 0
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .......................... (40,833) (49,394)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ........ 234,231 185,004
------------------ -----------------
SHARES SOLD - INVESTOR CLASS ............................................ 464,012 2,647,620
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......... 0 0
SHARES REDEEMED - INVESTOR CLASS ........................................ (1,521,125) (3,660,631)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ............. (1,057,113) (1,013,011)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL
SHARE TRANSACTIONS ...................................................... (1,176,450) (1,907,863)
================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............... $ (1,505,541) $ 0
================== =================
MID CAP DISCIPLINED FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................... $ 676,333,048 $ 314,763,531
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................ 94,800 $ 1,854,020
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................. 65,698,967 23,007,589
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..... (62,702,357) 76,539,894
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............ 3,091,410 101,401,503
------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INVESTOR CLASS ....................................................... (52,169) (1,458,467)
NET REALIZED GAIN ON SALE OF INVESTMENTS
INVESTOR CLASS ....................................................... (5,372,165) (41,300,232)
------------------ -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................ (5,424,334) (42,758,699)
================== =================
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ................ 1,147,574 N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............ 0 N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................. (1,150,000) N/A
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS -
ADMINISTRATOR CLASS ..................................................... (2,426) 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 (NOTE 1) ................ 2,381,295 N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............ 0 N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................. (1,150,000) N/A
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - INSTITUTIONAL CLASS ................................ 1,231,295 N/A
================== =================
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .............................. 146,608,652 639,726,544
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......................... 5,217,857 41,489,150
COST OF SHARES REDEEMED - INVESTOR CLASS ................................ (229,313,896) (378,288,981)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ........................................... (77,487,387) 302,926,713
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL .................................................... (76,258,518) 302,926,713
================== =================
NET INCREASE (DECREASE) IN NET ASSETS ...................................... (78,591,442) 361,569,517
================== =================
ENDING NET ASSETS .......................................................... $ 597,741,606 $ 676,333,048
================== =================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .............................. 54,245 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS
(NOTE 1) ............................................................. 0 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .......................... (52,849) N/A
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........ 1,396 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 (NOTE 1) .............................. 107,866 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS
(NOTE 1) ............................................................. 0 N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .......................... (52,849) N/A
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ........ 55,017 N/A
------------------ -----------------
SHARES SOLD - INVESTOR CLASS ............................................ 6,679,157 30,446,159
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......... 239,791 1,994,256
SHARES REDEEMED - INVESTOR CLASS ........................................ (10,536,233) (17,803,172)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ............. (3,617,285) 14,637,243
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL
SHARE TRANSACTIONS ................................................... (3,560,872) 14,637,243
================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............... $ 94,687 $ 52,056
================== =================
OPPORTUNITY FUND
---------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................... $ 2,528,271,914 $ 2,850,097,048
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................ (5,109,492) (14,583,343)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................. 141,266,976 428,808,957
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..... (127,340,395) 2,877,097
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............ 8,817,089 417,102,711
------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INVESTOR CLASS ....................................................... 0 0
NET REALIZED GAIN ON SALE OF INVESTMENTS ................................ 0
INVESTOR CLASS ....................................................... 0 0
------------------ -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................ 0 0
================== =================
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ................ 1,208,161 1,580,103
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ............ 0 0
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................. (2,485,425) (561,170)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ...................................... (1,277,264) 1,018,933
================== =================
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ............................... 15,716,662 24,631,677
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ........................... 0 0
COST OF SHARES REDEEMED - ADVISOR CLASS ................................. (26,723,044) (49,440,738)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS ............................................ (11,006,382) (24,809,061)
================== =================
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) ................ N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ............ N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................. 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 .............................. 85,839,883 256,753,792
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......................... 0 0
COST OF SHARES REDEEMED - INVESTOR CLASS ................................ (264,441,355) (971,891,509)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ........................................... (178,601,472) (715,137,717)
------------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL .................................................... (190,885,118) (738,927,845)
================== =================
NET INCREASE (DECREASE) IN NET ASSETS ...................................... (182,068,029) (321,825,134)
================== =================
ENDING NET ASSETS .......................................................... $ 2,346,203,885 $ 2,528,271,914
================== =================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .............................. 25,670 37,908
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS
(NOTE 1) ............................................................. 0 0
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .......................... (52,906) (12,904)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........ (27,236) 25,004
------------------ -----------------
SHARES SOLD - ADVISOR CLASS ............................................. 352,960 594,636
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .......... 0 0
SHARES REDEEMED - ADVISOR CLASS ......................................... (600,877) (1,196,366)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS .............. (247,917) (601,730)
------------------ -----------------
SHARES SOLD - INSTITUTIONAL CLASS (NOTE 1) .............................. N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS
(NOTE 1) ............................................................. N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .......................... N/A N/A
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ........ N/A N/A
------------------ -----------------
SHARES SOLD - INVESTOR CLASS ............................................ 1,901,535 6,141,602
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ......... 0 0
SHARES REDEEMED - INVESTOR CLASS ........................................ (5,848,839) (23,338,250)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ............. (3,947,304) (17,196,648)
------------------ -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL
SHARE TRANSACTIONS ...................................................... (4,222,457) (17,773,374)
================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............... (5,109,492) $ 0
================== =================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
45
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................................. $ 135,287,080 $ 39,549,267
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................................... (372,768) (459,654)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................... 11,104,685 7,214,544
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............... (12,988,796) 11,553,280
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................... (2,256,879) 18,308,170
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INVESTOR CLASS .................................................................. 0 0
NET REALIZED GAIN ON SALE OF INVESTMENTS
INVESTOR CLASS .................................................................. (1,938,460) (5,610,060)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................................. (1,938,460) (5,610,060)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARE SOLD - ADMINISTRATOR CLASS (NOTE 1) ........................... 109,285 N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ...................... 0 N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............................ 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ............................................................... 109,285 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 (NOTE 1) .......................... 10,000 N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ...................... 0 N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ............................ 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INSTITUTIONAL CLASS ............................................................... 10,000 N/A
------------------- -----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........................................ 76,618,464 149,171,231
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................................... 1,884,620 5,471,977
COST OF SHARES REDEEMED - INVESTOR CLASS .......................................... (50,578,703) (71,603,505)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ..................................................... 27,924,381 83,039,703
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - TOTAL ................................................ 28,043,666 83,039,703
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS ................................................ 23,848,327 95,737,813
------------------- -----------------
ENDING NET ASSETS .................................................................... $ 159,135,407 $ 135,287,080
------------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ........................................ 7,044 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ..... 0 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................... 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................. 7,044 N/A
------------------- -----------------
SHARES SOLD - ADVISOR CLASS ....................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .................... 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 (NOTE 1) ........................................ 625 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ..... 0 N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................... 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. 625 N/A
------------------- -----------------
SHARES SOLD - INVESTOR CLASS ...................................................... 4,786,667 9,610,777
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................... 114,916 344,921
SHARES REDEEMED - INVESTOR CLASS .................................................. (3,158,893) (4,699,304)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING- INVESTOR CLASS ........................ 1,742,690 5,256,394
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL
SHARE TRANSACTIONS ................................................................ 1,750,359 5,256,394
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ (372,768) $ 0
=================== =================
46
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................................. $ 17,677,763 $ 8,725,077
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................................... (123,336) (166,803)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................................... 751,603 1,185,390
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............... (667,223) 1,412,425
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................... (38,956) 2,431,012
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
INVESTOR CLASS .................................................................. 0 0
NET REALIZED GAIN ON SALE OF INVESTMENTS
INVESTOR CLASS .................................................................. (556,275) (575,996)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................................. (556,275) (575,996)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .......................... 10,000 N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ...................... 0 N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............................ 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ............................................................... 10,000 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 (NOTE 1) .......................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ...................... N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) ............................ 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 ........................................ 8,895,860 14,750,414
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................................... 512,694 520,046
COST OF SHARES REDEEMED - INVESTOR CLASS .......................................... (3,444,606) (8,172,790)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS...................................................... 5,963,948 7,097,670
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - TOTAL .................................................. 5,973,948 7,097,670
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS ................................................ 5,378,717 8,952,686
------------------- -----------------
ENDING NET ASSETS .................................................................... $ 23,056,480 $ 17,677,763
------------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ........................................ 756 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ..... 0 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................................... 0 N/A
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................. 756 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 (NOTE 1) ........................................ N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS (NOTE 1) ..... N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS (NOTE 1) .................................... N/A N/A
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................. N/A N/A
------------------- -----------------
SHARES SOLD - INVESTOR CLASS ...................................................... 659,019 1,163,624
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ................... 38,290 39,517
SHARES REDEEMED - INVESTOR CLASS .................................................. (261,786) (651,576)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING- INVESTOR CLASS ........................ 435,523 551,565
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ......................................... 436,279 551,565
=================== =================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ (123,336) $ 0
=================== =================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
47
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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
- -------------------------------------------------------------------------------------------------------------
DISCOVERY FUND
- -------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. $19.17 (0.01) 1.11 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... $21.53 (0.09) (0.22) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ $19.73 (0.21) 3.22 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ $14.42 (0.12) 5.64 (0.00)(5)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ $16.84 (0.06) (1.91) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ $16.39 (0.08) 0.76 0.00
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ $18.64 0.06 0.51 (0.04)
ENTERPRISE FUND
- -------------------------------------------------------------------------------------------------------------
ADMINSTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... $25.36 (0.08)(6) 0.15 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ $21.98 (0.19)(6) 3.57 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ $15.94 (0.10) 6.14 0.00
AUGUST 30, 2002(4) TO DECEMBER 31, 2002 ......... $16.32 (0.04)(6) (0.34) 0.00
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... $25.04 (0.12)(6) 0.15 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ $21.79 (0.27)(6) 3.52 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ $15.86 (0.23) 6.16 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ $22.04 (0.24)(6) (5.94) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ $28.31 (0.21) (6.06) 0.00
FEBRUARY 24, 2000(4) TO DECEMBER 31, 2000 ....... $51.32 (0.03) (22.43) 0.00
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... $25.30 (0.05)(6) 0.15 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ $21.87 (0.11)(6) 3.54 0.00
JUNE 30, 2003(4) TO DECEMBER 31, 2003 ........... $18.34 (0.06) 3.59 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... $24.95 (0.15)(6) 0.16 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ $21.78 (0.34)(6) 3.51 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ $15.90 (0.30) 6.18 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ $22.14 (0.28)(6) (5.96) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ $28.37 (0.31) (5.92) 0.00
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ $41.24 (0.28) (12.04) 0.00
MID CAP DISCIPLINED FUND
- -------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. $21.84 0.02(6) 0.52 0.00
INSTITUTIONAL CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. $21.84 0.07(6) 0.49 0.00
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... $22.34 0.00(5)(6) 0.22 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ $20.13 0.06 4.00 (0.05)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ $14.85 0.02 5.99 (0.02)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ $17.42 0.01 (2.06) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ $15.50 (0.02) 1.94 0.00
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ $13.52 (0.00)(5) 3.00 (0.06)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
48
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -----------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
DISCOVERY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $ 20.27 (0.62)% 1.23% (0.14)% 1.09%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (0.97) $ 20.25 (0.97)% 1.52% (0.12)% 1.40%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ (1.21) $ 21.53 (1.11)% 1.44% (0.04)% 1.40%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ (0.21) $ 19.73 (0.67)% 1.47% (0.04)% 1.43%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (0.45) $ 14.42 (0.38)% 1.50% (0.04)% 1.46%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (0.23) $ 16.84 (0.46)% 1.49% (0.01)% 1.48%
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ (2.78) $ 16.39 0.34% 1.46% 0.00% 1.46%
ENTERPRISE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINSTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $ 25.43 (0.70)% 1.18% (0.01)% 1.17%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $ 25.36 (0.83)% 1.34% (0.20)% 1.14%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $ 21.98 (0.82)% 1.30% (0.14)% 1.16%
AUGUST 30, 2002(4) TO DECEMBER 31, 2002 ......... 0.00 $ 15.94 (0.63)% 1.32% (0.18)% 1.14%
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $ 25.07 (1.03)% 1.53% (0.04)% 1.49%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $ 25.04 (1.22)% 1.60% (0.05)% 1.55%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $ 21.79 (1.14)% 1.53% (0.03)% 1.50%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ 0.00 $ 15.86 (1.33)% 1.82% (0.02)% 1.80%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ 0.00 $ 22.04 (1.60)% 2.09% (0.01)% 2.08%
FEBRUARY 24, 2000(4) TO DECEMBER 31, 2000 ....... (0.55) $ 28.31 (1.19)% 2.00% (0.09)% 1.91%
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $ 25.40 (0.42)% 0.95% (0.07)% 0.88%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $ 25.30 (0.47)% 0.88% (0.05)% 0.83%
JUNE 30, 2003(4) TO DECEMBER 31, 2003 ........... 0.00 $ 21.87 (0.67)% 1.18% (0.21)% 0.97%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.00 $ 24.96 (1.24)% 1.74% (0.04)% 1.70%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 0.00 $ 24.95 (1.51)% 1.89% (0.04)% 1.85%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 0.00 $ 21.78 (1.44)% 1.96% (0.16)% 1.80%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ 0.00 $ 15.90 (1.51)% 2.02% (0.06)% 1.96%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ 0.00 $ 22.14 (1.22)% 1.76% 0.00% 1.76%
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ (0.55) $ 28.37 (0.67)% 1.37% 0.00% 1.37%
MID CAP DISCIPLINED FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $ 22.38 0.33% 1.17% (0.13)% 1.04%
INSTITUTIONAL CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. 0.00 $ 22.40 1.48% 1.01% (0.12)% 0.89%
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (0.18) $ 22.38 0.03% 1.47% (0.12)% 1.35%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ (1.80) $ 22.34 0.36% 1.35% (0.05)% 1.30%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ (0.71) $ 20.13 0.13% 1.49% (0.04)% 1.45%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (0.52) $ 14.85 0.09% 1.48% (0.01)% 1.47%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (0.00)(5)$ 17.42 (0.22)% 1.53% (0.01)% 1.52%
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ (0.96) $ 15.50 (0.09)% 1.86% 0.00% 1.86%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ------------------------------------------------------------------------------------------
DISCOVERY FUND
- ------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. 5.74% 62% $ 1,314
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... (1.20)% 62% $ 196,654
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 15.69% 171% $ 191,181
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 38.34% 302% $ 166,793
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (12.12)% 420% $ 133,361
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ 4.17% 502% $ 158,266
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ 3.97% 482% $ 165,409
ENTERPRISE FUND
- -------------------------------------------------------------------------------------------
ADMINSTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.28% 64% $ 3,794
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 15.38% 184% $ 12,499
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 37.89% 261% $ 34,204
AUGUST 30, 2002(4) TO DECEMBER 31, 2002 ......... (2.33)% 377% $ 3,930
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.12% 64% $ 1,282
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 14.92% 184% $ 1,529
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 37.39% 261% $ 1,690
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (28.04)% 377% $ 1,244
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (22.15)% 630% $ 1,328
FEBRUARY 24, 2000(4) TO DECEMBER 31, 2000 ....... (43.68)% 474% $ 225
INSTITUTIONAL CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.40% 64% $ 13,106
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 15.68% 184% $ 7,126
JUNE 30, 2003(4) TO DECEMBER 31, 2003 ........... 19.25% 261% $ 2,114
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.04% 64% $ 233,851
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 14.55% 184% $ 260,212
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 36.98% 261% $ 249,221
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (28.18)% 377% $ 224,182
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ (21.96)% 630% $ 372,075
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ (29.77)% 474% $ 574,764
MID CAP DISCIPLINED FUND
- -------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. 2.47% 37% $ 31
INSTITUTIONAL CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) .. 2.56% 37% $ 1,232
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) .... 0.99% 37% $ 596,478
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............ 21.18% 62% $ 676,333
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............ 40.66% 252% $ 314,764
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............ (11.78)% 431% $ 155,411
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............ 12.41% 648% $ 92,412
JANUARY 1, 2000 TO DECEMBER 31, 2000 ............ 22.80% 301% $ 18,494
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
49
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS 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
- ------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... $ 46.65 (0.05)(6) 0.38 0.00 0.00 $ 46.98
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. $ 39.58 (0.14) 7.21 0.00 0.00 $ 46.65
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. $ 28.73 (0.06)(6) 10.91 0.00 0.00 $ 39.58
AUGUST 30(4), 2002 TO DECEMBER 31, 2002. ............. $ 29.48 0.02 (0.77) 0.00 0.00 $ 28.73
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... $ 45.71 (0.12)(6) 0.37 0.00 0.00 $ 45.96
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. $ 38.94 (0.34) 7.11 0.00 0.00 $ 45.71
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. $ 28.37 (0.19)(6) 10.76 0.00 0.00 $ 38.94
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................. $ 38.92 (0.11) (10.44) 0.00 0.00 $ 28.37
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................. $ 42.10 (0.06)(6) (2.08) (0.09) (0.95) $ 38.92
FEBRUARY 24, 2000(4) TO DECEMBER 31, 2000 ............ $ 43.16 0.03 4.83 (0.28) (5.64) $ 42.10
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... $ 46.40 (0.10)(6) 0.38 0.00 0.00 $ 46.68
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. $ 39.45 (0.26) 7.21 0.00 0.00 $ 46.40
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. $ 28.70 (0.14)(6) 10.89 0.00 0.00 $ 39.45
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................. $ 39.29 (0.08) (10.51) 0.00 0.00 $ 28.70
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................. $ 42.35 0.07 (2.11) (0.07) (0.95) $ 39.29
JANUARY 1, 2000 TO DECEMBER 31, 2000 ................. $ 44.69 0.17 3.30 (0.17) (5.64) $ 42.35
SMALL CAP DISCIPLINED FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) ....... $ 15.99 0.00(5) 0.17 0.00 0.00 $ 16.16
INSTITUTIONAL CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) ....... $ 15.99 0.01 0.18 0.00 0.00 $ 16.18
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... $ 16.70 (0.04) (0.29) 0.00 (0.21) $ 16.16
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. $ 13.91 (0.06) 3.75 0.00 (0.90) $ 16.70
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. $ 9.12 (0.05) 5.71 0.00 (0.87) $ 13.91
MARCH 28, 2002(4) TO DECEMBER 31, 2002 ............... $ 10.00 (0.05) (0.83) 0.00 0.00 $ 9.12
SMALL/MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) ....... $ 13.22 (0.01) 0.26 0.00 0.00 $ 13.47
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... $ 13.83 (0.07) 0.04 0.00 (0.35) $ 13.45
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. $ 12.01 (0.13) 2.43 0.00 (0.48) $ 13.83
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. $ 7.58 (0.03) 4.46 0.00 0.00 $ 12.01
MARCH 28, 2002(4) TO DECEMBER 31, 2002 ............... $ 10.00 (0.04) (2.38) 0.00 0.00 $ 7.58
50
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
-------------------------------------------
NET NET ASSETS
INVESTMENT PORTFOLIO AT END OF
INCOME GROSS EXPENSES NET TOTAL TURNOVER PERIOD (000'S
(LOSS) EXPENSES WAIVED EXPENSES RETURN(2) RATE(3) OMITTED)
- ------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... (0.23)% 1.22% (0.11)% 1.11% 0.71% 18% $ 67
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. (0.35)% 1.27% (0.12)% 1.15% 17.86% 42% $ 1,337
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. (0.20)% 1.55% (0.36)% 1.19% 37.77% 60% $ 145
AUGUST 30(4), 2002 TO DECEMBER 31, 2002. ............. 0.21% 1.22% (0.06)% 1.16% (2.54)% 71% $ 634
ADVISOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... (0.53)% 1.50% (0.04)% 1.46% 0.55% 18% $ 126,790
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. (0.76)% 1.60% (0.04)% 1.56% 17.39% 42% $ 137,439
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. (0.58)% 1.56% (0.01)% 1.55% 37.26% 60% $ 140,500
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................. (0.38)% 1.58% (0.01)% 1.57% (27.11)% 71% $ 103,924
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................. (0.28)% 1.66% 0.00% 1.66% (5.08)% 88% $ 89,132
FEBRUARY 24, 2000(4) TO DECEMBER 31, 2000 ............ 0.10% 1.58% 0.00% 1.58% 12.10% 87% $ 2,551
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... (0.43)% 1.44% (0.08)% 1.36% 0.60% 18% $ 2,219,347
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. (0.55)% 1.39% (0.04)% 1.35% 17.62% 42% $ 2,389,496
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. (0.43)% 1.42% (0.02)% 1.40% 37.46% 60% $ 2,709,452
JANUARY 1, 2002 TO DECEMBER 31, 2002 ................. (0.23)% 1.41% (0.01)% 1.40% (26.95)% 71% $ 2,506,990
JANUARY 1, 2001 TO DECEMBER 31, 2001 ................. 0.19% 1.29% 0.00% 1.29% (4.80)% 88% $ 3,664,068
JANUARY 1, 2000 TO DECEMBER 31, 2000 ................. 0.47% 1.20% 0.00% 1.20% 8.57% 87% $ 3,337,173
SMALL CAP DISCIPLINED FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) ....... 0.15% 1.39% (0.23)% 1.16% 1.06% 36% $ 114
INSTITUTIONAL CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) ....... 0.18% 1.10% (0.12)% 0.98% 1.19% 36% $ 10
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... (0.51)% 1.72% (0.09)% 1.63% (1.98)% 36% $ 159,011
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. (0.55) 1.65% (0.06)% 1.59% 27.04% 41% $ 135,287
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. (0.89) 1.89% (0.18)% 1.71% 62.53% 156% $ 39,549
MARCH 28, 2002(4) TO DECEMBER 31, 2002 ............... (0.98) 2.55% (0.60)% 1.95% (8.80)% 201% $ 7,871
SMALL/MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED) ....... (0.33)% 1.65% (0.46)% 1.19% 1.89% 72% $ 10
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ......... (1.20)% 2.04% (0.23)% 1.81% (0.23)% 72% $ 23,046
JANUARY 1, 2004 TO DECEMBER 31, 2004 ................. (1.30)% 2.06% (0.30)% 1.76% 19.37% 133% $ 17,678
JANUARY 1, 2003 TO DECEMBER 31, 2003 ................. (0.55)% 2.86% (1.06)% 1.80% 58.44% 132% $ 8,725
MARCH 28, 2002(4) TO DECEMBER 31, 2002 ............... (0.74)% 3.56% (1.64)% 1.92% (24.20)% 108% $ 2,509
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
51
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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) Calculated based upon average shares outstanding.
52
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Discovery
Fund, Enterprise Fund, Mid Cap Disciplined Fund, Opportunity Fund, Small Cap
Disciplined Fund, and Small/Mid Cap Value Fund. Each Fund is a diversified
series of the Trust.
In August and 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 Funds ("Acquiring Funds"), by share class, acquired substantially all
of the net assets of the following Target Funds ("Target Funds"), by share
class, through a tax-free exchange under section 368 of the Internal Revenue
Code.
Acquiring Funds Target Funds
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE DISCOVERY FUND - ADMINISTRATOR CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE DISCOVERY FUND - INVESTOR CLASS STRONG DISCOVERY FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENTERPRISE FUND - ADMINISTRATOR CLASS STRONG ENTERPRISE FUND CLASS K
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENTERPRISE FUND - ADVISOR CLASS STRONG ENTERPRISE FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENTERPRISE FUND - INSTITUTIONAL CLASS STRONG ENTERPRISE FUND INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ENTERPRISE FUND - INVESTOR CLASS STRONG ENTERPRISE FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND - ADMINISTRATOR CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND - INSTITUTIONAL CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MID CAP DISCIPLINED FUND - INVESTOR CLASS STRONG MID CAP DISCIPLINED FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OPPORTUNITY FUND - ADMINISTRATOR CLASS STRONG OPPORTUNITY FUND CLASS K
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OPPORTUNITY FUND - ADVISOR CLASS STRONG OPPORTUNITY FUND ADVISOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OPPORTUNITY FUND - INVESTOR CLASS STRONG OPPORTUNITY FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP DISCIPLINED FUND - ADMINISTRATOR CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP DISCIPLINED FUND - INSTITUTIONAL CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP DISCIPLINED FUND - INVESTOR CLASS STRONG SMALL COMPANY VALUE FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL/MID CAP VALUE FUND - ADMINISTRATOR CLASS NEW
- ------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL/MID CAP VALUE FUND - INVESTOR CLASS STRONG SMALL/MID CAP VALUE FUND INVESTOR CLASS
- ------------------------------------------------------------------------------------------------------------------------------
The separate classes of shares offered by each Fund differ principally in
applicable sales charges and 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.
Certain Funds of the Trust may invest a substantial portion of their
assets in an industry, sector or foreign country as is discussed in the
Performance Highlights for those Funds. Such Funds may be more affected by
changes in that industry, sector or foreign country than they would be absent
the concentration of investments.
53
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
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.
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 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.
54
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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 June 30, 2005.
At December 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Capital Loss
Fund Year Expires Carryforwards
- ------------------------------------------------------------------------------------------
ENTERPRISE FUND 2008 $ 30,684,684
2009 196,951,468
2010 64,764,000
- ------------------------------------------------------------------------------------------
OPPORTUNITY FUND 2011 14,397,132
At December 31, 2004, current year deferred post-October capital losses,
which will be treated as realized for tax purposes on the first day of the
succeeding year, were:
Deferred Post-October
Fund Capital Loss
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND $1,875,307
- --------------------------------------------------------------------------------
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 June 30, 2005, there were no open futures contracts.
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.
55
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
WRITTEN OPTIONS
An option is a right to buy or sell a particular security at a specified
price within a limited period of time. The writer of the option, in return for a
premium received from the seller, has the obligation to sell (in the case of a
call option) or buy (in the case of a put option) the underlying security of the
contract. The premium received in cash from writing options is recorded as an
asset with an equal liability that is adjusted to reflect the option's value.
The premium received from writing options which expire is recorded as realized
gains. The premium received from writing options which are exercised or closed
is offset against the proceeds or amount paid on the closing transaction to
determine the realized gain or loss. If a put option is exercised, the premium
reduces the cost basis of the security or currency purchased. Options are valued
based on their quoted daily settlement prices.
Risks could arise from entering into written options transactions from the
potential inability of counterparties to meet the terms of their contracts, the
potential inability to enter into a closing transaction because of an illiquid
secondary market, and from unexpected movements in interest or exchange rates or
securities values.
Written options transactions during the for the six months ended June 30,
2005, were as follows:
Mid Cap Disciplined Fund
Contracts Premiums Received
- ----------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN
- ----------------------------------------------------------------------------------------------
OPTIONS AT BEGINNING OF PERIOD 1,737 $ 6,338,313
- ----------------------------------------------------------------------------------------------
OPTIONS WRITTEN 11,849 15,400,320
- ----------------------------------------------------------------------------------------------
OPTIONS TERMINATED IN CLOSING TRANSACTIONS (13,586) (21,738,633)
- ----------------------------------------------------------------------------------------------
OPTIONS EXPIRED 0 0
- ----------------------------------------------------------------------------------------------
OPTIONS EXERCISED 0 0
- ----------------------------------------------------------------------------------------------
OPTIONS AT END OF PERIOD 0 $ 0
- ----------------------------------------------------------------------------------------------
Opportunity Fund
Contracts Premiums Received
- ----------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN
- ----------------------------------------------------------------------------------------------
OPTIONS AT BEGINNING OF PERIOD 73 $ 54,968
- ----------------------------------------------------------------------------------------------
OPTIONS WRITTEN 4,850 664,422
- ----------------------------------------------------------------------------------------------
OPTIONS TERMINATED IN CLOSING TRANSACTIONS 0 0
- ----------------------------------------------------------------------------------------------
OPTIONS EXPIRED 0 0
- ----------------------------------------------------------------------------------------------
OPTIONS EXERCISED (73) (54,968)
- ----------------------------------------------------------------------------------------------
OPTIONS AT END OF PERIOD 4,850 $ 664,422
- ----------------------------------------------------------------------------------------------
Opportunity Fund
Contracts Premiums Received
- ----------------------------------------------------------------------------------------------
PUT OPTIONS WRITTEN
- ----------------------------------------------------------------------------------------------
OPTIONS AT BEGINNING OF PERIOD 480 $ 478,560
- ----------------------------------------------------------------------------------------------
OPTIONS WRITTEN 1,040 460,871
- ----------------------------------------------------------------------------------------------
OPTIONS TERMINATED IN CLOSING TRANSACTIONS (1,000) (836,991)
- ----------------------------------------------------------------------------------------------
OPTIONS EXPIRED 0 0
- ----------------------------------------------------------------------------------------------
OPTIONS EXERCISED 0 0
- ----------------------------------------------------------------------------------------------
OPTIONS AT END OF PERIOD 520 $ 102,440
- ----------------------------------------------------------------------------------------------
56
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
Small/Mid Cap Value Fund
Contracts Premiums Received
- ----------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN
- ----------------------------------------------------------------------------------------------
OPTIONS AT BEGINNING OF PERIOD 214 $ 63,609
- ----------------------------------------------------------------------------------------------
OPTIONS WRITTEN 488 114,300
- ----------------------------------------------------------------------------------------------
OPTIONS TERMINATED IN CLOSING TRANSACTIONS (429) (118,009)
- ----------------------------------------------------------------------------------------------
OPTIONS EXPIRED (110) (28,038)
- ----------------------------------------------------------------------------------------------
OPTIONS EXERCISED (70) (10,574)
- ----------------------------------------------------------------------------------------------
OPTIONS AT END OF PERIOD 93 $ 21,288
- ----------------------------------------------------------------------------------------------
Open written call and put option contracts as of June 30, 2005 are
disclosed in the Portfolio of Investments.
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.
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 Fee Sub-Advisory Fee
Average Daily (% of Average Average Daily (% of Average
Fund Net Assets Daily Net Assets)* Sub-Adviser Net Assets Daily Net Assets)
- ------------------------------------------------------------------------------------------------------------------------------------
DISCOVERY FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management > $200 million 0.300
$1 - $2.99 billion 0.650 Incorporated
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management > $200 million 0.300
$1 - $2.99 billion 0.650 Incorporated
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management > $200 million 0.300
$1 - $2.99 billion 0.650 Incorporated
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
- ------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND $0 - $499 million 0.750 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.700 Management > $200 million 0.300
$1 - $2.99 billion 0.650 Incorporated
$3 - $4.99 billion 0.625
> $4.99 billion 0.600
57
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Advisory Fee Sub-Advisory Fee
Average Daily (% of Average Average Daily (% of Average
Fund Net Assets Daily Net Assets)* Sub-Adviser Net Assets Daily Net Assets)
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND $0 - $499 million 0.900 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.850 Management > $200 million 0.300
$1 - $2.99 billion 0.800 Incorporated
$3 - $4.99 billion 0.775
> $4.99 billion 0.750
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND $0 - $499 million 0.900 Wells Capital $0 - $200 million 0.350
$500 - $999 million 0.850 Management > $200 million 0.300
$1 - $2.99 billion 0.800 Incorporated
$3 - $4.99 billion 0.775
> $4.99 billion 0.750
* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds. Funds Management was entitled to receive an annual fee at the
following rate:
Advisory Fees
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------
DISCOVERY FUND ALL ASSET LEVELS 0.750
- --------------------------------------------------------------------------------
ENTERPRISE FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- --------------------------------------------------------------------------------
OPPORTUNITY FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- --------------------------------------------------------------------------------
SMALL COMPANY VALUE FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND $0 - $4 billion 0.750
$4 billion - $6 billion 0.725
> $6 billion 0.700
58
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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:
Administration 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
- --------------------------------------------------------------------------------
ADVISOR CLASS 0.28
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- --------------------------------------------------------------------------------
INVESTOR CLASS 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:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------
ALL SMALL AND MID CAP STOCK FUNDS
(EXCEPT FOR DISCOVERY FUND)
- --------------------------------------------------------------------------------
CLASS K 0.25
- --------------------------------------------------------------------------------
ADVISOR CLASS 0.30
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.30
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.25
- --------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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. Effective April 11,
2005, transfer agent fees are paid by Funds Management and not by the Funds.
For financial statement presentation, transfer agent fees for the period
from January 1, 2005 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees
and Other
Related Expenses
- --------------------------------------------------------------------------------
DISCOVERY FUND
INVESTOR CLASS $ 142,657
- --------------------------------------------------------------------------------
ENTERPRISE FUND
CLASS K 2,848
ADVISOR CLASS 663
INSTITUTIONAL CLASS 322
INVESTOR CLASS 375,731
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND
INVESTOR CLASS 431,093
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
CLASS K 590
ADVISOR CLASS 58,514
INVESTOR CLASS 1,441,770
- --------------------------------------------------------------------------------
SMALL COMPANY VALUE FUND
INVESTOR CLASS 92,709
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
INVESTOR CLASS 11,272
59
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 SMALL AND MID CAP STOCK FUNDS 0.02
- --------------------------------------------------------------------------------
Prior to February 28, 2005, State Street served as custodian for the
Strong Small Company Value Fund and Strong Small/Mid Cap Value Fund. Prior to
March 7, 2005, State Street served as custodian for the Strong Discovery Fund,
Strong Enterprise Fund, Strong Mid Cap Disciplined Fund and Strong Opportunity
Fund. State Street was entitled to receive certain fees, primarily based on
transactions of the Fund.
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***
- --------------------------------------------------------------------------------
ADMINISTRATOR CLASS, ADVISOR CLASS AND INVESTOR CLASS 0.25
- --------------------------------------------------------------------------------
*** Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing
fees for the predecessor Strong Funds, if any, were encompassed by the Strong
Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Fund Administrator Advisor Investor
- --------------------------------------------------------------------------------
DISCOVERY FUND $ 347 N/A $ 101,354
- --------------------------------------------------------------------------------
ENTERPRISE FUND 2,295 $ 678 126,285
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND 251 N/A 332,361
- --------------------------------------------------------------------------------
OPPORTUNITY FUND 433 68,842 1,211,471
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND 35 N/A 80,864
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND 5 N/A 12,085
- --------------------------------------------------------------------------------
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 Advisor Class
and certain Investor Class shares. Under the plan, Strong Investments, Inc. was
paid an annual rate of 0.25% of the average daily net assets of the Advisor
Class shares of the Enterprise Fund and Opportunity Fund and 0.25% of the
average daily net assets of the Investor Class shares of the Small Company Value
Fund and Small/Mid Cap Value Fund.
For the six months ended June 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 February 28, 2005, State Street served as fund accountant to the
Strong Small Company Value Fund and Strong Small/Mid Cap Value Fund. Prior to
March 7, 2005, State Street served as fund accountant for the Strong Discovery
Fund, Strong Enterprise Fund, Strong Mid Cap Disciplined Fund and Strong
Opportunity Fund. Fund accounting fees were paid by the funds' administrator
through April 10, 2005, and not by the funds.
60
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 June 30, 2005 were as
follows:
Net Operating Expense Ratios
Fund Administrator Advisor Institutional Investor
- ---------------------------------------------------------------------------------------
DISCOVERY FUND 1.15% N/A N/A 1.38%
- ---------------------------------------------------------------------------------------
ENTERPRISE FUND 1.15% 1.40% 0.90% 1.57%
- ---------------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND 1.15% N/A 0.90% 1.31%
- ---------------------------------------------------------------------------------------
OPPORTUNITY FUND 1.04% 1.29% N/A 1.35%
- ---------------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND 1.20% N/A 1.00% 1.61%
- ---------------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND 1.20% N/A N/A 1.62%
Prior to April 11, 2005, the Strong Funds' interim adviser and/or
administrator could voluntarily waive or absorb certain expenses at their
discretion. Pursuant to the direction of the Strong Funds Board of Directors and
certain regulatory settlements, the predecessor adviser, Strong Capital
management, Inc. ("SCM"), had contractually agreed to waive fees and/or absorb
expenses in the amount of 0.033% for Discovery Fund, Enterpriese Fund, Mid Cap
Disciplined Fund, Opportunity Fund, Small Company Value Fund and Small/Mid Cap
Value 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 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 January 1, 2005 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
- --------------------------------------------------------------------------------
DISCOVERY FUND
FUND LEVEL $ 19,643
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
ENTERPRISE FUND
FUND LEVEL 28,488
CLASS K 0
ADVISOR CLASS 0
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND
FUND LEVEL 431,093
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
FUND LEVEL 262,351
CLASS K 0
ADVISOR CLASS 215
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
SMALL COMPANY VALUE FUND
FUND LEVEL 16,429
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND
FUND LEVEL 2,098
INVESTOR CLASS 2,576
61
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
DISCOVERY FUND $ 122,576,846 $ 110,545,657
- --------------------------------------------------------------------------------
ENTERPRISE FUND 160,101,217 189,986,488
- --------------------------------------------------------------------------------
MID CAP DISCIPLINED FUND 222,964,089 398,160,314
- --------------------------------------------------------------------------------
OPPORTUNITY FUND 397,839,137 467,949,295
- --------------------------------------------------------------------------------
SMALL CAP DISCIPLINED FUND 75,498,934 47,928,677
- --------------------------------------------------------------------------------
SMALL/MID CAP VALUE FUND 21,816,766 14,647,274
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. Discovery
Fund, Enterprise Fund, Mid Cap Disciplined Fund, Opportunity Fund and Small Cap
Disciplined Fund had no borrowings under either agreement during the period.
Small/Mid Cap Value Fund had minimual borrowings under the LOC during the
period.
6. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 Strong 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 Strong Fund complex (excluding money market funds and very
short-term income funds) totaling $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
62
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities and information
regarding how to obtain 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 complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (www.wellsfargo.com/advantagefunds) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' Web site on a monthly, seven-day or more
delayed basis. Each 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, each Fund's Form N-Q may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC, and at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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 Founder of Crystal Geyser
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 pub-
lic policy organization).
- ---------------------------------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, since 1996 Principal in the law firm of None
65 Willeke & Daniels.
- ---------------------------------------------------------------------------------------------------------------------------------
63
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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, 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 Senior Vice President of Wells None
36 2003 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.
- ---------------------------------------------------------------------------------------------------------------------------------
C. David Messman Secretary, since Vice President and Managing None
45 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 June 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.
64
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
DISCOVERY FUND, ENTERPRISE FUND, MID CAP DISCIPLINED FUND, OPPORTUNITY FUND,
SMALL CAP DISCIPLINED FUND AND SMALL/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 Discovery Fund, Enterprise Fund, Mid Cap Disciplined Fund,
Opportunity Fund, Small Cap Disciplined Fund and Small/Mid Cap Value 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
--------------------------------------------------------------------------
Discovery Fund* Discovery Fund
--------------------------------------------------------------------------
Enterprise Fund* Enterprise Fund
--------------------------------------------------------------------------
Mid Cap Disciplined Fund* Mid Cap Disciplined Fund
--------------------------------------------------------------------------
Opportunity Fund* Opportunity Fund
--------------------------------------------------------------------------
Small Company Value Fund* Small Cap Disciplined Fund
--------------------------------------------------------------------------
Small/Mid Cap Value Fund* Small/Mid Cap Value 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.
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.
65
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
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 for each Fund were better than the
median performance of its Peer Group for most time periods. The Board noted that
the Enterprise Fund's five-year performance was lower than the median
performance of its Peer Group, but that there had recently been a portfolio
manager change for this Fund.
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 Funds', except for the Opportunity Fund, Small
Cap Disciplined Fund and Small/Mid Cap Value Fund, net operating expense ratios
were lower than, or not appreciably higher than, the Funds' Peer Groups' median
net operating expense ratios. The Board noted that the net operating expense
ratios for certain classes of the Opportunity Fund, Small Cap Disciplined Fund
and Small/Mid Cap Value Fund were higher than their Peer Groups' 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 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 payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Funds'
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administrative services covered by the administration fee
rates. 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 Funds was not a material factor in determining whether to renew the
agreement.
66
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK FUNDS
- --------------------------------------------------------------------------------
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 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 managers, 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.
67
WELLS FARGO ADVANTAGE SMALL AND MID CAP STOCK 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 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
68
THIS PAGE IS INTENTIONALLY LEFT BLANK --
THIS PAGE IS INTENTIONALLY LEFT BLANK --
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about WELLS FARGO This report and the financial statements
ADVANTAGE FUNDS(SM) is available free contained herein are submitted for the
upon request. To obtain literature, general information ofthe shareholders
please write, e-mail, or call: of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional
WELLS FARGO ADVANTAGE FUNDS purposes, distribution of the report
P.O. Box 8266 must beaccompanied or preceded by a
Boston, MA 02266-8266 current prospectus. For a prospectus
containing more complete information,
E-mail: wfaf@wellsfargo.com including charges and expenses, call
Retail Investment 1-800-222-8222. Please consider the
Professionals: 888-877-9275 investment objective, risks, charges and
Institutional Investment expenses of the investment carefully
Professionals: 866-765-0778 before investing. This and other
Web: www.wellsfargo.com/ information about WELLS FARGO ADVANTAGE
advantagefunds FUNDS can be found in the current
prospectus. Read the prospectus
carefully before you invest or send
money.
Wells Fargo Funds Management, LLC, a
whollyowned subsidiary of Wells Fargo &
Company, provides investment advisory
and administrative services for the
WELLS FARGO ADVANTAGE FUNDS. Other
affiliates of Wells Fargo & Company
provide subadvisory 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 www.wellsfargo.com/advantagefunds RT51955 08-05
Advantage Funds, LLC. SMCNLD/SAR123 06-05
All rights reserved.
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 2005
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to Shareholders..................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
International Core Fund................................................. 2
Fund Expenses.............................................................. 4
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
International Core Fund................................................. 5
Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities..................................... 9
Statement of Operations................................................. 10
Statements of Changes in Net Assets..................................... 11
Financial Highlights.................................................... 12
- --------------------------------------------------------------------------------
Notes to Financial Statements.............................................. 14
- --------------------------------------------------------------------------------
Other Information ......................................................... 19
- --------------------------------------------------------------------------------
List of Abbreviations...................................................... 23
- --------------------------------------------------------------------------------
-------------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE INTERNATIONAL CORE 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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
semi-annual report for the period ended June 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.
ECONOMIC EXPANSION CONTINUES
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The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices had an impact on inflation, pushing it upward during
the reporting period. The consumer price index (CPI) rose at around a 3% rate
over the twelve months ended June 30, 2005. The core CPI, which excludes the
volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate, its principal policy tool, from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
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After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of 2005. The S&P 500 Index was
around 1200 as the year began. It ended the first half of the year at 1191.
Strong corporate earnings have helped the markets, while record prices for crude
oil and concerns of a slowdown in worldwide economic growth have capped and
often reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
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Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well for most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sector recovered and again produced
solid returns. Municipal bonds generally performed better than many taxable
sectors during most of 2005, but they lagged behind the rally in U.S. Treasuries
in May and June. Overall, by the end of the second quarter of 2005, municipal
yields were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
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The economy has shown remarkably steady growth over the reporting
period--growth that has been sufficient to bring the unemployment rate down to
5.0%, the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND (the Fund) seeks
long-term capital appreciation.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC New Star Institutional Managers Limited
FUND MANAGERS INCEPTION DATE
Mark Beale 09/28/2001
Richard Lewis
HOW DID THE PORTFOLIO PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
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The Fund's Class A shares returned (1.29%)(1) for the six-month period
ended June 30, 2005, excluding sales charge, underperforming its benchmark, the
MSCI/EAFE Index(2), which returned (1.17%), 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 CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME
PERIOD. ADMINISTRATOR 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?
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International equity markets performed well over the six-month period, but
most of the gains were offset by losses on the major currencies relative to the
U.S. dollar. The Fund's holdings in Europe, excluding the United Kingdom (UK),
performed well. The Fund's overweighting, compared to the benchmark, in
pharmaceutical and energy stocks generated positive returns, as did its holdings
in the Japanese materials and energy sectors. The Fund's investments in Europe
(excluding the UK) meant the weak Euro was a negative factor impacting the
Fund's performance. The Fund's fewer holdings in Australia hampered progress, as
the Australian dollar was one of the most resilient currencies over the period.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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The biggest changes to the Fund's structure were made at the industry
level. Over the six-month period, we reduced our holdings in the materials
sector with the sale of stocks that included Nippon Steel and Nippon Paper of
Japan, CVRD of Brazil, and Cemex of Mexico. We reduced our exposure to the
industrials sector with sales of Ebara and THK in Japan, Siemens in Germany, and
Autoliv in Sweden. Health care and information technology (IT) were sectors that
we added to over the reporting period. In health care, we purchased AstraZeneca
in the UK and increased existing holdings of Roche and Novartis in Switzerland.
In IT, we purchased Nokia in Finland, CAP Gemini in France, and ASML in Holland.
The biggest change at a regional level was the reduction in our Japan weighting.
We also lowered weightings in emerging markets and increased our holdings in
Europe and, to a lesser extent, the UK.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
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As the pace of global economic growth decelerates, the outlook for
corporate earnings seems less assured to us. Upward revisions by analysts are
moderating, unsurprisingly, following the 2 1/2-year recovery since the bottom
of the last cycle. We hold the view that as profit upgrades become scarcer and
warnings start to reappear, investors may be willing to pay premium valuations
for more reliable, high-return-on-invested-capital companies. With this in mind,
we continue to favor companies in the health care and IT sectors, which we
believe are less vulnerable to an economic slowdown than those in the materials
and industrials sectors. At a regional level, we favor Europe (excluding the UK)
and Asia over the UK and Japan. In our opinion, profitability appears to be
holding up well in Europe (excluding the UK) and Asia, while the outlook for
earnings is less positive to us.
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. INVESTING IN FOREIGN SECURITIES PRESENTS CERTAIN
RISKS THAT MAY NOT BE PRESENT IN DOMESTIC SECURITIES, INCLUDING CURRENCY
FLUCTUATION, THE POTENTIAL FOR DIPLOMATIC AND POLITICAL INSTABILITY, REGULATORY
AND LIQUIDITY RISKS, FOREIGN TAXATION AND DIFFERENCES IN AUDITING AND OTHER
FINANCIAL STANDARDS. THESE RISKS ARE GENERALLY INTENSIFIED IN EMERGING MARKETS.
INVESTMENT STRATEGIES THAT EMPHASIZE 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 SMALL COMPANY SECURITIES RISK AND
FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
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The views expressed are as of June 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 INTERNATIONAL CORE 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 and Class C shares of the WELLS
FARGO ADVANTAGE INTERNATIONAL CORE 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 International Core Fund, its predecessor
fund, adjusted to reflect each class' sales charges. 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 INTERNATIONAL CORE FUND
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AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
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Including Sales Charge Excluding Sales Charge
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Life of Life of
6-Month* 1-Year Fund 6-Month* 1-Year Fund
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International Core Fund - Class A (Inception Date 9/28/2001) (6.95) 5.69 7.02 (1.29) 12.10 8.72
- ------------------------------------------------------------------------------------------------------------------------------------
International Core Fund - Class B (Inception Date 9/28/2001) (6.52) 6.87 8.00 (1.52) 11.87 8.64
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International Core Fund - Class C (Inception Date 9/28/2001) (2.45) 10.88 8.65 (1.45) 11.88 8.65
- ------------------------------------------------------------------------------------------------------------------------------------
International Core Fund - Administrator Class
(Inception Date 4/11/2005) (1.22) 11.50 8.02
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Benchmark
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MSCI/EAFE Index(2) (1.17) 13.65 11.04
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005)
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Beta** 0.94
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Price to Earnings Ratio (trailing 12 months) 14.71x
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Price to Book Ratio 2.50x
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Median Market Cap ($B) $14.04
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Portfolio Turnover 28%
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** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA
IS 1.00 BY DEFINITION.
TEN LARGEST EQUITY HOLDINGS(3),(4) (AS OF JUNE 30, 2005)
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Roche Holding AG 2.52%
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HSBC Holdings plc 2.45%
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Novartis AG ADR 2.44%
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AstraZeneca plc 2.07%
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NTT DoCoMo Incorporated 1.92%
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Kao Corporation 1.86%
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GlaxoSmithKline plc ADR 1.84%
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Total SA ADR 1.83%
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Aeon Company Limited 1.80%
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Unicredito Italiano SpA 1.75%
PORTFOLIO COMPOSITION(3) (AS OF JUNE 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Continental Europe 51%
United Kingdom 20%
Australia 2%
Japan 18%
Southeast Asia 6%
Emerging Markets 3%
GROWTH OF $10,000 INVESTMENT(5) (AS OF JUNE 30, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
INTERNATIONAL INTERNATIONAL
CORE FUND - CLASS A CORE FUND - ADMINISTRATOR CLASS MSCI/EAFE INDEX
------------------- ------------------------------- ---------------
9/28/2001 9,425 10,000 10,000
9/30/2001 9,425 10,000 10,000
10/31/2001 9,227 9,790 10,256
11/30/2001 9,566 10,150 10,634
12/31/2001 9,811 10,410 10,697
1/31/2002 9,331 9,900 10,129
2/28/2002 9,331 9,900 10,200
3/31/2002 9,793 10,390 10,752
4/30/2002 9,793 10,390 10,823
5/31/2002 9,821 10,420 10,960
6/30/2002 9,538 10,120 10,524
7/31/2002 8,699 9,230 9,485
8/31/2002 8,728 9,260 9,464
9/30/2002 8,030 8,520 8,447
10/31/2002 8,190 8,690 8,901
11/30/2002 8,492 9,010 9,305
12/31/2002 8,332 8,840 8,992
1/31/2003 8,040 8,521 8,617
2/28/2003 7,926 8,393 8,419
3/31/2003 7,870 8,324 8,254
4/30/2003 8,492 8,973 9,063
5/31/2003 8,973 9,471 9,612
6/30/2003 9,067 9,560 9,844
7/31/2003 9,161 9,650 10,083
8/31/2003 9,331 9,818 10,326
9/30/2003 9,529 10,016 10,644
10/31/2003 9,962 10,460 11,307
11/30/2003 10,264 10,766 11,558
12/31/2003 10,946 11,470 12,461
1/31/2004 11,185 11,708 12,636
2/29/2004 11,452 11,976 12,928
3/31/2004 11,448 11,959 13,001
4/30/2004 11,066 11,548 12,707
5/31/2004 11,248 11,725 12,750
6/30/2004 11,506 11,982 13,029
7/31/2004 11,133 11,581 12,606
8/31/2004 11,257 11,698 12,661
9/30/2004 11,601 12,044 12,992
10/31/2004 11,898 12,338 13,435
11/30/2004 12,528 12,979 14,352
12/31/2004 13,067 13,524 14,982
1/31/2005 12,809 13,257 14,708
2/28/2005 13,385 13,853 15,343
3/31/2005 13,028 13,483 14,958
4/30/2005 12,729 13,184 14,607
5/31/2005 12,699 13,143 14,614
6/30/2005 12,898 13,359 14,808
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Performance shown for the Administrator Class shares of the WELLS FARGO
ADVANTAGE INTERNATIONAL CORE FUND prior to April 11, 2005, reflects the
performance of the Class A shares of the Strong Advisor International Core Fund,
its predecessor fund, and includes fees and expenses that are not applicable to
and are higher than those of the Administrator Class shares.
(2) The Morgan Stanley Capital International/Europe, Australasia and Far East
(MSCI/EAFE) Index is an unmanaged group of securities widely regarded by
investors to be representations of the stock markets of Europe, Australasia and
the Far East. You cannot invest directly in an index.
(3) Portfolio composition, portfolio holdings and Fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of portfolio composition, portfolio holdings and Fund
characteristics.
(4) The Ten Largest Equity Holdings are calculated based on the market value of
the securities divided by total market value of the Portfolio.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND Class A and Administrator Class shares for the life of
the Fund with the MSCI/EAFE Index. The chart assumes a hypothetical investment
of $10,000 in Class A 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 INTERNATIONAL CORE FUND FUND EXPENSES
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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 (January 1, 2005 to June 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
1/1/2005 6/30/2005 Period(1) Ratio
International Core Fund
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International Core Fund - Class A
Actual $ 1,000.00 $ 987.10 $ 2.76 0.56%
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Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,022.02 $ 2.81 0.56%
- ------------------------------------------------------------------------------------------------------------------------
International Core Fund - Class B
Actual $ 1,000.00 $ 984.80 $ 4.58 0.93%
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Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.18 $ 4.66 0.93%
- ------------------------------------------------------------------------------------------------------------------------
International Core Fund - Class C
Actual $ 1,000.00 $ 985.50 $ 4.14 0.84%
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Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.63 $ 4.21 0.84%
- ------------------------------------------------------------------------------------------------------------------------
International Core Fund - Administrator Class
Actual(2) $ 1,000.00 $ 980.30 $ 2.97 1.35%
- ------------------------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,008.10 $ 3.01 1.35%
(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 81/365 (TO REFLECT
THE PERIOD FROM APRIL 11, 2005 TO JUNE 30, 2005).
4
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
JUNE 30, 2005 (UNAUDITED)
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INTERNATIONAL CORE FUND
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SHARES SECURITY NAME VALUE
COMMON STOCKS - 94.06%
AUSTRALIA - 1.66%
1,800 BHP BILLITON LIMITED (MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS) $ 24,580
902 WOODSIDE PETROLEUM LIMITED (OIL & GAS EXTRACTION) 20,035
44,615
---------------
BELGIUM - 1.51%
1,470 FORTIS (DEPOSITORY INSTITUTIONS) 40,685
---------------
DENMARK - 1.77%
900 DANSKE BANK A/S (DEPOSITORY INSTITUTIONS) 27,033
405 NOVO NORDISK A/S CLASS B (CHEMICALS & ALLIED PRODUCTS) 20,585
47,618
---------------
FINLAND - 1.31%
2,110 NOKIA OYJ (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 35,109
---------------
FRANCE - 11.66%
1,400 ALCATEL SA (COMMUNICATIONS)+ 15,266
1,350 AXA (INSURANCE CARRIERS) 33,611
700 BOUYGUES SA (ENGINEERING CONSTRUCTION) 28,937
906 CAP GEMINI SA (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT)+ 28,667
300 LAFARGE SA (STONE, CLAY, GLASS & CONCRETE PRODUCTS) 27,268
43 PAGESJAUNES SA (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 1,005
450 SANOFI-SYNTHELABO SA (CHEMICALS & ALLIED PRODUCTS) 36,854
900 SODEXHO ALLIANCE SA (FOOD & KINDRED PRODUCTS) 27,811
397 TOTAL SA ADR (OIL & GAS EXTRACTION) 46,390
400 VINCI SA (BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS) 33,242
1,100 VIVENDI UNIVERSAL SA (COMMUNICATIONS) 34,472
313,523
---------------
GERMANY - 7.56%
500 BAYERISCHE MOTOREN WERKE AG (AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS) 22,676
300 CELESIO AG (WHOLESALE TRADE-DURABLE GOODS) 23,537
1,800 DEUTSCHE TELEKOM AG (COMMUNICATIONS) 33,164
400 E.ON AG (ELECTRIC, GAS & SANITARY SERVICES) 35,509
325 FRESENIUS MEDICAL CARE AG (HEALTH SERVICES) 27,665
700 METRO AG (FOOD STORES) 34,680
150 SAP AG (BUSINESS SERVICES) 25,950
203,181
---------------
GREECE - 2.00%
1,001 ALPHA BANK AE (DEPOSITORY INSTITUTIONS) 26,635
1,480 COSMOTE MOBILE COMMUNICATIONS SA (COMMUNICATIONS) 27,010
53,645
---------------
HONG KONG - 4.39%
2,000 CHEUNG KONG HOLDINGS LIMITED (REAL ESTATE) 19,398
5,000 CHINA MOBILE (HONG KONG) LIMITED (COMMUNICATIONS) 18,528
40,000 CHINA PETROLEUM AND CHEMICAL CORPORATION (SINOPEC) (OIL COMPANIES) 15,592
62,000 GUANGDONG INVESTMENT LIMITED (BUSINESS SERVICES) 18,060
5
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED)
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INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HONG KONG - (CONTINUED)
3,000 SUNG HUNG KAI PROPERTIES LIMITED (REAL ESTATE) $ 29,506
3,000 TELEVISION BROADCASTS LIMITED (MOTION PICTURES) 16,916
118,000
---------------
HUNGARY - 0.75%
300 OTP BANK GDR (DEPOSITORY INSTITUTIONS) 20,190
---------------
ISRAEL - 0.62%
538 TEVA PHARMACEUTICAL INDUSTRIES LIMITED ADR (CHEMICALS & ALLIED PRODUCTS) 16,753
---------------
ITALY - 4.11%
1,300 ENI SPA (PETROLEUM REFINING & RELATED INDUSTRIES) 33,403
2,800 MEDIASET SPA (COMMUNICATIONS) 32,932
8,400 UNICREDITO ITALIANO SPA (DEPOSITORY INSTITUTIONS) 44,287
110,622
---------------
JAPAN - 16.89%
3,000 AEON COMPANY LIMITED (MISCELLANEOUS RETAIL) 45,627
3,000 AJINOMOTO COMPANY INCORPORATED (FOOD & KINDRED PRODUCTS) 33,296
2,000 KANEKA CORPORATION (CHEMICALS & ALLIED PRODUCTS) 22,346
2,000 KAO CORPORATION (CHEMICALS & ALLIED PRODUCTS) 46,991
100 KEYENCE CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT) 22,293
700 MURATA MANUFACTURING COMPANY LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 35,464
3,000 NIPPON OIL CORPORATION (OIL & GAS EXTRACTION) 20,299
3,800 NISSAN MOTOR COMPANY LIMITED (AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS) 37,567
33 NTT DOCOMO INCORPORATED (COMMUNICATIONS) 48,621
1,800 OMRON CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 39,564
500 SECOM COMPANY LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 21,452
1,000 SEINO TRANSPORTATION COMPANY LIMITED (MOTOR FREIGHT TRANSPORTATION & WAREHOUSING) 9,013
100 SHIMACHU COMPANY LIMITED (MISCELLANEOUS RETAIL) 2,512
1,200 SHOWA SHELL SEKIYU KK (OIL & GAS EXTRACTION) 11,998
1,500 SUZUKI MOTOR CORPORATION (TRANSPORTATION EQUIPMENT) 23,493
500 TAKEFUJI CORPORATION (HOLDING & OTHER INVESTMENT OFFICES) 33,652
454,188
---------------
NETHERLANDS - 6.19%
1,400 ASML HOLDING NV (SEMICONDUCTOR EQUIPMENT MANUFACTURING & RELATED)+ 21,954
1,525 ING GROEP NV (FINANCIAL SERVICES) 42,864
2,500 KONINKLIJKE AHOLD NV (FOOD STORES)+ 20,481
400 ROYAL DUTCH PETROLEUM COMPANY (PETROLEUM REFINING & RELATED INDUSTRIES) 25,960
377 ROYAL DUTCH PETROLEUM COMPANY (PETROLEUM REFINING & RELATED INDUSTRIES) 24,508
1,600 WOLTERS KLUWER NV (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 30,540
166,307
---------------
RUSSIA - 0.91%
730 MOBILE TELESYSTEMS ADR (COMMUNICATIONS) 24,565
---------------
SINGAPORE - 0.88%
1,000 GREAT EASTERN HOLDINGS LIMITED (HOLDING & OTHER INVESTMENT OFFICES) 8,473
6,000 SINGAPORE PRESS HOLDINGS LIMITED (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 15,277
23,750
---------------
6
PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SOUTH KOREA - 0.61%
50 SAMSUNG ELECTRONICS-PREFERRED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) $ 16,319
---------------
SPAIN - 3.17%
800 ACTIVIDADES DE CONSTRUCCION Y SERVICIOS SA (HEAVY CONSTRUCTION OTHER THAN BUILDING
CONSTRUCTION CONTRACTS) 22,348
1,760 BANCO BILBAO VIZCAYA ARGENTARIA SA (DEPOSITORY INSTITUTIONS) 27,042
1,300 INDRA SISTEMAS SA (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 25,682
208 TELEFONICA SA ADR (COMMUNICATIONS) 10,171
85,243
---------------
SWEDEN - 1.06%
121 AUTOLIV INCORPORATED (TRANSPORTATION EQUIPMENT) 5,275
1,400 SECURITAS AB (BUSINESS SERVICES) 23,299
28,574
---------------
SWITZERLAND - 7.04%
45 NESTLE SA (FOOD & KINDRED PRODUCTS) 11,496
1,300 NOVARTIS AG ADR (CHEMICALS & ALLIED PRODUCTS) 61,672
506 ROCHE HOLDING AG (HEALTH SERVICES) 63,845
320 UBS AG (FINANCIAL SERVICES) 24,946
160 ZURICH FINANCIAL SERVICES AG (FINANCIAL SERVICES)+ 27,443
189,402
---------------
TAIWAN - 0.36%
1,049 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED ADR (ELECTRONIC & OTHER
ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT)+ 9,566
---------------
THAILAND - 0.65%
8,000 ADVANCED INFORMATION SERVICE PUBLIC COMPANY LIMITED (FOREIGN REGISTERED) (COMMUNICATIONS) 17,423
---------------
UNITED KINGDOM - 18.96%
1,270 ASTRAZENECA PLC (CHEMICALS & ALLIED PRODUCTS) 52,359
3,068 AVIVA PLC (INSURANCE CARRIERS) 34,066
3,100 BARCLAYS PLC (DEPOSITORY INSTITUTIONS) 30,728
5,100 COMPASS GROUP PLC (FOOD & KINDRED PRODUCTS) 21,356
2,000 EMAP PLC (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 27,808
5,100 EMI GROUP PLC (AMUSEMENT & RECREATION SERVICES) 23,136
960 GLAXOSMITHKLINE PLC ADR (CHEMICALS & ALLIED PRODUCTS) 46,570
3,900 HSBC HOLDINGS PLC (DEPOSITORY INSTITUTIONS) 62,020
11,100 LEGAL & GENERAL GROUP PLC (INSURANCE CARRIERS) 22,786
150,000 ROLLS ROYCE GROUP PLC CLASS B (AEROSPACE, DEFENSE) 270
4,977 ROLLS ROYCE GROUP PLC (AEROSPACE, DEFENSE)+ 25,534
3,000 SCOTTISH & NEWCASTLE PLC (FOOD & KINDRED PRODUCTS) 24,849
4,000 SHELL TRANSPORT & TRADING COMPANY PLC (PETROLEUM REFINING & RELATED INDUSTRIES) 38,731
1,300 STANDARD CHARTERED PLC (DEPOSITORY INSTITUTIONS) 23,684
17,800 VODAFONE GROUP PLC (COMMUNICATIONS) 43,276
3,172 WPP GROUP PLC (COMMUNICATIONS) 32,490
509,663
---------------
TOTAL COMMON STOCKS (COST $2,443,906) 2,528,941
---------------
7
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND PORTFOLIO OF INVESTMENTS --
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 6.82%
MUTUAL FUND - 6.82%
183,467 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 183,467
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $183,467) 183,467
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $2,627,373)* 100.88% $ 2,712,408
OTHER ASSETS AND LIABILITIES, NET (0.88) (23,747)
------- ---------------
TOTAL NET ASSETS 100.00% $ 2,688,661
======= ===============
+ 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 $183,467.
* 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.
8
STATEMENT OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE
JUNE 30, 2005 (UNAUDITED) INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
INTERNATIONAL
CORE FUND
- -----------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE .................................................... $ 2,528,941
INVESTMENTS IN AFFILIATES ......................................................... 183,467
-------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .................................. 2,712,408
-------------
RECEIVABLE FOR FUND SHARES ISSUED ................................................. 22,283
RECEIVABLE FOR INVESTMENTS SOLD ................................................... 4,589
RECEIVABLES FOR DIVIDENDS AND INTEREST ............................................ 9,622
RECEIVABLE FROM INVESTMENT ADVISOR AND AFFILIATES ................................. 5,605
-------------
TOTAL ASSETS ........................................................................ 2,754,507
-------------
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED ................................................. 61,203
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ........................................... 2,965
UNREALIZED DEPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ..................... 147
ACCRUED EXPENSES AND OTHER LIABILITIES ............................................ 1,531
-------------
TOTAL LIABILITIES ................................................................... 65,846
-------------
TOTAL NET ASSETS .................................................................... $ 2,688,661
-------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ................................................................... $ 2,190,255
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................................ 33,796
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. 379,782
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES .............................................................. 84,975
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN
CURRENCY CONTRACTS AND TRANSACTIONS ............................................. (147)
-------------
TOTAL NET ASSETS .................................................................... $ 2,688,661
=============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A .............................................................. $ 944,914
SHARES OUTSTANDING - CLASS A ...................................................... 72,897
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS A ............................ $ 12.96
MAXIMUM OFFERING PRICE PER SHARE - CLASS A(2) ..................................... $ 13.75
NET ASSETS - CLASS B .............................................................. $ 1,488,680
SHARES OUTSTANDING - CLASS B ...................................................... 115,266
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ............................ $ 12.92
NET ASSETS - CLASS C .............................................................. $ 245,265
SHARES OUTSTANDING - CLASS C ...................................................... 19,016
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............................ $ 12.90
NET ASSETS - ADMINISTRATOR CLASS .................................................. $ 9,802
SHARES OUTSTANDING - ADMINISTRATOR CLASS .......................................... 756
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ................ $ 12.97
-------------
INVESTMENTS AT COST ................................................................. $ 2,627,373
=============
(1) THE FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/94.25 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
WELLS FARGO ADVANTAGE STATEMENT OF OPERATIONS --
INTERNATIONAL CORE FUND FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
-----------------------
(UNAUDITED) FOR THE
SIX MONTHS ENDED
JUNE 30, 2005
- ----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ................................................................ $ 41,345
INTEREST .................................................................... 174
INCOME FROM AFFILIATED SECURITIES ........................................... 1,272
SECURITIES LENDING INCOME, NET .............................................. 17
-------------
TOTAL INVESTMENT INCOME ........................................................ 42,808
-------------
EXPENSES
ADVISORY FEES ............................................................... 9,388
ADMINISTRATION FEES
FUND LEVEL ............................................................... 256
CLASS A .................................................................. 1,372
CLASS B .................................................................. 2,514
CLASS C .................................................................. 421
ADMINISTRATOR CLASS ...................................................... 2
CUSTODY FEES ................................................................ 15,497
SHAREHOLDER SERVICING FEES .................................................. 1,280
ACCOUNTING FEES ............................................................. 8,487
DISTRIBUTION FEES (NOTE 3)
CLASS A .................................................................. 486
CLASS B .................................................................. 5,767
CLASS C .................................................................. 964
AUDIT FEES .................................................................. 10,833
REGISTRATION FEES ........................................................... 15,523
SHAREHOLDER REPORTS ......................................................... 1,652
TRUSTEES' FEES .............................................................. 2,251
OTHER FEES AND EXPENSES ..................................................... 875
-------------
TOTAL EXPENSES ................................................................. 77,568
-------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ................................ (68,556)
NET EXPENSES ................................................................ 9,012
-------------
NET INVESTMENT INCOME (LOSS) ................................................... 33,796
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ............. 387,843
-------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ...................................... 387,843
-------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ............. (457,463)
FORWARD FOREIGN CURRENCY CONTRACTS .......................................... (147)
-------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ (457,610)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ......................... (69,767)
-------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ $ (35,971)
=============
(1)NET OF FOREIGN WITHHOLDING TAXES OF ...................................... $ 5,660
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
------------------------------------
(UNAUDITED)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2005 DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................... $ 2,291,804 $ 1,494,524
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 33,796 40,964
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 387,843 80,873
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (457,610) 215,485
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ (35,971) 337,322
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A .............................................................................. (198) (14,167)
CLASS B .............................................................................. (349) (22,728)
CLASS C .............................................................................. (53) (5,869)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A .............................................................................. (1,508) (14,424)
CLASS B .............................................................................. (2,651) (23,470)
CLASS C .............................................................................. (403) (6,083)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (5,162) (86,741)
------------- -------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 510,667 162,808
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 1,551 26,258
COST OF SHARES REDEEMED - CLASS A ....................................................... (313,058) (104,660)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. 199,160 84,406
------------- -------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 476,230 358,381
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 2,303 35,883
COST OF SHARES REDEEMED - CLASS B ....................................................... (184,863) (32,276)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. 293,670 361,988
------------- -------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 101,536 91,773
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 327 10,119
COST OF SHARES REDEEMED - CLASS C ....................................................... (166,703) (1,587)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ............. (64,840) 100,305
------------- -------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 10,100 N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (100) N/A
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS . 10,000 N/A
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ 437,990 546,699
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... 396,857 797,280
------------- -------------
ENDING NET ASSETS .......................................................................... $ 2,688,661 $ 2,291,804
============= =============
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 39,213 13,169
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 117 2,027
SHARES REDEEMED - CLASS A ............................................................... (23,937) (8,684)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... 15,393 6,512
------------- -------------
SHARES SOLD - CLASS B ................................................................... 36,679 29,318
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 174 2,774
SHARES REDEEMED - CLASS B ............................................................... (14,317) (2,840)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... 22,536 29,252
------------- -------------
SHARES SOLD - CLASS C ................................................................... 7,808 7,509
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 25 783
SHARES REDEEMED - CLASS C ............................................................... (12,988) (134)
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... (5,155) 8,158
------------- -------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 764 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (8) N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ 756 N/A
------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 33,530 43,922
------------- -------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ...................................... $ 33,796 $ 600
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTION
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- -------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- -------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... $ 13.16 0.14 (0.31) 0.00 (0.03)
JANUARY 1, 2004 TO DECEMBER 31, 2004............ $ 11.47 0.28(5) 1.93 (0.25) (0.27)
JANUARY 1, 2003 TO DECEMBER 31, 2003............ $ 8.84 0.18(5) 2.59 (0.14) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002............ $ 10.41 (0.06)(5) (1.51) 0.00 0.00
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... $ 10.00 (0.03) 0.44 0.00 0.00
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... $ 13.13 0.17 (0.35) 0.00 (0.03)
JANUARY 1, 2004 TO DECEMBER 31, 2004............ $ 11.45 0.28(5) 1.92 (0.25) (0.27)
JANUARY 1, 2003 TO DECEMBER 31, 2003............ $ 8.82 0.20(5) 2.58 (0.15) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002............ $ 10.40 (0.08)(5) (1.50) 0.00 0.00
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... $ 10.00 (0.04) 0.44 0.00 0.00
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... $ 13.12 0.17 (0.36) 0.00 (0.03)
JANUARY 1, 2004 TO DECEMBER 31, 2004............ $ 11.43 0.28(5) 1.93 (0.25) (0.27)
JANUARY 1, 2003 TO DECEMBER 31, 2003............ $ 8.82 0.21(5) 2.57 (0.17) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002............ $ 10.40 (0.06)(5) (1.52) 0.00 0.00
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... $ 10.00 (0.04) 0.44 0.00 0.00
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED).. $ 13.23 0.10 (0.36) 0.00 0.00
12
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INTERNATIONAL CORE 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
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... 0.00 $ 12.96 3.18% 6.29% (5.73)% 0.56%
JANUARY 1, 2004 TO DECEMBER 31, 2004............ 0.00 $ 13.16 2.33% 4.78% (4.77)% 0.01%
JANUARY 1, 2003 TO DECEMBER 31, 2003............ 0.00 $ 11.47 1.78% 7.65% (7.64)% 0.01%
JANUARY 1, 2002 TO DECEMBER 31, 2002............ 0.00 $ 8.84 (0.58)% 52.39% (50.18)% 2.21%
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... 0.00 $ 10.41 (1.12)% 2.23% 0.00% 2.23%
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... 0.00 $ 12.92 2.96% 7.29% (6.36)% 0.93%
JANUARY 1, 2004 TO DECEMBER 31, 2004............ 0.00 $ 13.13 2.32% 5.52% (5.52)% 0.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003............ 0.00 $ 11.45 2.01% 8.58% (8.58)% 0.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002............ 0.00 $ 8.82 (0.83)% 52.04% (49.66)% 2.38%
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... 0.00 $ 10.40 (1.60)% 2.98% (0.28)% 2.70%
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... 0.00 $ 12.90 2.88% 7.01% (6.17)% 0.84%
JANUARY 1, 2004 TO DECEMBER 31, 2004............ 0.00 $ 13.12 2.31% 5.51% (5.51)% 0.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003............ 0.00 $ 11.43 2.15% 8.36% (8.35)% 0.01%
JANUARY 1, 2002 TO DECEMBER 31, 2002............ 0.00 $ 8.82 (0.68)% 52.54% (50.13)% 2.41%
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... 0.00 $ 10.40 (1.60)% 2.98% (0.28)% 2.70%
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED).. 0.00 $ 12.97 3.64% 5.97% (4.62)% 1.35%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(3) (000'S OMITTED)
- ---------------------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- ---------------------------------------------------------------------------------------------
CLASS A
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... (1.29)% 28% $ 945
JANUARY 1, 2004 TO DECEMBER 31, 2004............ 19.38% 28% $ 757
JANUARY 1, 2003 TO DECEMBER 31, 2003............ 31.38% 88% $ 585
JANUARY 1, 2002 TO DECEMBER 31, 2002............ (15.08)% 47% $ 161
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... 4.10% 4% $ 104
CLASS B
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... (1.52)% 28% $ 1,489
JANUARY 1, 2004 TO DECEMBER 31, 2004............ 19.32% 28% $ 1,218
JANUARY 1, 2003 TO DECEMBER 31, 2003............ 31.58% 88% $ 727
JANUARY 1, 2002 TO DECEMBER 31, 2002............ (15.19)% 47% $ 289
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... 4.00% 4% $ 104
CLASS C
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED).... (1.45)% 28% $ 245
JANUARY 1, 2004 TO DECEMBER 31, 2004............ 19.44% 28% $ 317
JANUARY 1, 2003 TO DECEMBER 31, 2003............ 31.52% 88% $ 183
JANUARY 1, 2002 TO DECEMBER 31, 2002............ (15.19)% 47% $ 150
SEPTEMBER 28, 2001(4) TO DECEMBER 31, 2001...... 4.00% 4% $ 104
ADMINISTRATOR CLASS
APRIL 11, 2005(4) TO JUNE 30, 2005 (UNAUDITED).. (1.97)% 28% $ 10
(1) DURING EACH PERIOD, VARIOUS FEES AND EXPENSES WERE WAIVED AND REIMBURSED.
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.
(5) CALCULATED BASED ON AVERAGE SHARES OUTSTANDING.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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1. ORGANIZATION
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Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the International
Core Fund.
In August and 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 Funds ("Acquiring Funds"), by share class, acquired substantially all
of the net assets of the following Target Funds ("Target Funds"), by share
class, through a tax-free exchange under section 368 of the Internal Revenue
Code.
Acquiring Fund Target Fund
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WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND CLASS A STRONG ADVISOR INTERNATIONAL CORE FUND CLASS A
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WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND CLASS B STRONG ADVISOR INTERNATIONAL CORE FUND CLASS B
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WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND CLASS C STRONG ADVISOR INTERNATIONAL CORE FUND CLASS C
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WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND ADMINISTRATOR CLASS NEW
The separate classes of shares offered by each Fund differ principally in
applicable sales charges and 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
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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.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
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.
14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND
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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.
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 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
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 June 30, 2005.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund(s) may enter into forward foreign currency contracts to protect
against a possible loss resulting from an adverse change in the relationship
between foreign currencies and the U.S. dollar, or between foreign currencies. A
forward contract is an agreement between two counterparties for future delivery
or receipt of currency at a specified price. Risks arise from the possible
inability of counterparties to meet the terms of their contracts and from
movements in currency values. Realized gains or losses are recognized when the
transaction is completed. Contracts which have been offset but have not reached
their settlement date are included in unrealized gains and losses.
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
15
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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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
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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)
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INTERNATIONAL CORE FUND $0 - $499 million 0.950 New Star $0 - $400 million 0.25
$500 million - $999 million 0.900 Institutional $400 million - $800 million 0.18
$1 billion - $2.99 billion 0.850 Managers >$800 million 0.16
$3 billion - $4.99 billion 0.825 Limited
>$4.99 billion 0.800
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* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
Advisory Fees
(% of Average
Daily
Fund Average Daily Net Assets Net Assets)
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INTERNATIONAL CORE FUND $0 - $3.99 billion 0.750
$4 billion - $5.99 billion 0.725
>$6 billion 0.700
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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)
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FUND LEVEL $0 - $4.99 billion 0.05
$5 billion - $9.99 billion 0.04
> $9.99 billion 0.03
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CLASS A 0.23
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CLASS B 0.23
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CLASS C 0.23
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ADMINISTRATOR CLASS 0.10
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** 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:
16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND
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Admin Fees
(% of Average
Daily Net Assets)
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CLASS A 0.30
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CLASS B 0.30
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CLASS C 0.30
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The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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 January 1, 2005 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and Other Related Expenses
Fund Class A Class B Class C
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INTERNATIONAL CORE FUND $426 $769 $129
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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:
% of Average
Fund Daily Net Assets
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INTERNATIONAL CORE FUND 0.10
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Prior to February 28, 2005, State Street served as custodian for each of
the predecessor Strong Funds. State Street was entitled to receive certain fees,
primarily based on transactions of the fund.
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
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ALL CLASSES 0.25*
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* Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing
fees for the predecessor Strong Funds, if any, were encompassed by the Strong
Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Administrator
Fund Class A Class B Class C Class
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INTERNATIONAL CORE FUND $394 $766 $115 $5
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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 June 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 February 28, 2005, State Street served as fund accountant to each
of the predecessor Strong Funds. Fund accounting fees were paid by the Funds'
administrator and not by the Funds.
17
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
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 June 30, 2005 were as
follows:
Net Operating Expense Ratios
Administrator
Fund Class A Class B Class C Class
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INTERNATIONAL CORE FUND 1.50% 2.25% 2.25% 1.25%
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Prior to April 11, 2005, the Strong Funds' adviser and/or administrator
could voluntarily waive or absorb certain expenses at their discretion. Strong
Capital Management, Inc. ("SCM") and/or SISI had contractually agreed to waive
its fees and/or absorb expenses for Class A, B, and C shares of the
International Core Fund until May 1, 2005, to keep total annual operating
expenses at no more than 2.50% for the Class A, B, and C shares. 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 January 1, 2005 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 Class A Class B Class C
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INTERNATIONAL CORE FUND $12,854 $27,273 $4,524
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4. INVESTMENT PORTFOLIO TRANSACTIONS
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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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
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INTERNATIONAL CORE FUND $3,014,833 $600,200
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5. BANK BORROWINGS
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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 June 30, 2005,
the International Core Fund had no borrowings under either agreement.
6. LEGAL AND REGULATORY MATTERS
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In 2004, the predecessor Strong 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 Strong 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 $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
18
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND
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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 complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' Web site on a monthly, seven-day or more
delayed basis. 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 at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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**
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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.
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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).
- ------------------------------------------------------------------------------------------------------------------------------------
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
65 Willeke & Daniels.
19
WELLS FARGO ADVANTAGE INTERNATIONAL CORE 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, 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.
- ------------------------------------------------------------------------------------------------------------------------------------
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 June 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.
20
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
- --------------------------------------------------------------------------------
INTERNATIONAL CORE 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 agreement. 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 International Core Fund (the "Fund"); and (ii) an
investment sub-advisory agreement with New Star Institutional Managers Limited
("New Star") for the Fund. The investment advisory agreement with Funds
Management and the investment sub-advisory agreement with New Star are
collectively referred to as the "Advisory Agreements."
More specifically, at meetings 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 New Star, and the continuation of the Advisory
Agreements. The Board initially approved the Advisory Agreement for the Fund at
a meeting held August 9-10, 2004 in connection with its approval of the
reorganization of the Strong Advisor International Core Fund (the accounting
survivor) into the Wells Fargo Advantage International Core 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 New Star under the Advisory Agreements. Responses of Funds
Management and New Star 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 New Star.
The Board also considered the ability of Funds Management and New Star,
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 New Star'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 New Star. 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 New Star.
FUND PERFORMANCE AND EXPENSES
- --------------------------------------------------------------------------------
The Board considered the performance results of 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 the Fund's 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 for 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.
21
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
- --------------------------------------------------------------------------------
The Board reviewed and considered the contractual investment advisory fee
rates payable by the Fund to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administration services covered by the administration fee
rates. The Board also reviewed and considered the contractual investment
sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds
Management to New Star 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 Fund were lower than, or not appreciably higher than, the median
rates of the Fund's 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 their 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. 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 considered that the sub-advisory fees paid to New Star
had been negotiated by Funds Management on an arms length basis and was not a
material factor in determining whether to review the agreements.
ECONOMIES OF SCALE
- --------------------------------------------------------------------------------
The Board received and considered information regarding the potential
realization of any future 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 potential economies
of scale will be shared reasonably with Fund shareholders, including
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 New Star
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 New Star,
giving effect to differences in services covered by such fee rates.
OTHER BENEFITS TO FUNDS MANAGEMENT AND NEW STAR
- --------------------------------------------------------------------------------
The Board received and considered information regarding potential
"fall-out" or ancillary benefits received by Funds Management and its affiliates
and New Star 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 New Star with the Fund and benefits potentially derived
from an increase in the business of Funds Management and New Star 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 New
Star and its affiliates).
The Board also considered the policies of the Fund in achieving 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 New Star 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 Funds' 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 New Star 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 New Star, and met with
various management representatives and portfolio managers, 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.
22
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE
INTERNATIONAL CORE 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 Stock Benchmark Shares
XLCA -- XL Capital Assurance
23
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[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 o NO BANK GUARANTEE o MAY LOSE VALUE
-------------------------------------------------------
- --------------------------------------------------------------------------------
(c) 2005 Wells Fargo www.wellsfargo.com/advantagefunds RT51995 08-05
Advantage Funds, LLC. SINTLD/SAR108 06-05
All rights reserved.
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 2005
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BALANCED FUND
WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to Shareholders ................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Balanced Fund ......................................................... 2
Fund Expenses ............................................................ 4
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Balanced Fund ......................................................... 5
Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities ................................... 13
Statement of Operations ............................................... 14
Statements of Changes in Net Assets ................................... 15
Financial Highlights .................................................. 16
- --------------------------------------------------------------------------------
Notes to Financial Statements ............................................ 18
- --------------------------------------------------------------------------------
Other Information ........................................................ 23
- --------------------------------------------------------------------------------
List of Abbreviations .................................................... 28
- --------------------------------------------------------------------------------
-------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
-------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE BALANCED 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 at 1-800-222-8222, or speak with your investment
professional.
Following is your WELLS FARGO ADVANTAGE BALANCED FUND semi-annual report
for the period ended June 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.
ECONOMIC EXPANSION CONTINUES
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains solid, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for the first half of 2005. This is impressive, if not surprising,
given the record high energy prices reported during the period. The price of
crude oil rose to a new record level during the second quarter of 2005, creating
fears of a possible slowdown in consumer spending. However, low interest rates
and a consequent extended boom in the housing sector helped to offset the
negative effects of high oil and gas prices. Steady growth in employment and
household incomes helped bring spending back to relatively healthy levels. Solid
growth in capital spending by businesses, fueled by strong cash flow and low
borrowing costs, also contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing it upward
during the reporting period. The consumer price index (CPI) rose at around a 3%
rate over the twelve months ended June 30, 2005. The core CPI, which excludes
the volatile food and energy components, was up only around 2% this past year, a
good record this far into an economic expansion. With core inflation generally
contained, the Federal Reserve (the Fed) was able to stay with a strategy of
raising interest rates at a "measured pace." Since June of last year, the Fed
has raised the federal funds rate, its principal policy tool, from 1% to 3.25%.
Additional increases in this rate are expected during the rest of 2005. Bond
yields, however, did not increase with the federal funds rate and, as a result,
mortgage rates remained unusually low and the housing sector remained very
strong.
STOCKS: SIDEWAYS PATTERN
- --------------------------------------------------------------------------------
After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change over the first half of 2005. The S&P 500 Index was
around 1200 as the year began. It ended the first half of the year at 1191.
Strong corporate earnings have helped the markets, while record prices for crude
oil and concerns of a slowdown in worldwide economic growth have capped and
often reversed rallies. In the U.S., the fundamentals of solid earnings and low
inflation have helped the equity markets improve over time.
BONDS: UNPRECEDENTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the period. Exceptional demand for U.S. Treasury
securities from foreign investors and the tame core inflation data are two
factors thought to be keeping bond yields low. The flattening in the yield curve
has been one of the main elements contributing to good returns from bonds during
most of the reporting period.
The high yield and investment grade segments of the corporate bond market
continued to perform well for most of the period. During April and May 2005,
however, downgrades of General Motors and Ford bonds caused those markets to
underperform. In June 2005, the corporate sector recovered and again produced
solid returns. Municipal bonds generally performed better than most taxable
sectors during 2005, but they lagged behind the rally in U.S. Treasuries in May
and June. Overall, by the end of the second quarter of 2005, municipal yields
were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD: MORE OF THE SAME?
- --------------------------------------------------------------------------------
The economy has shown remarkably steady growth over the reporting
period--growth that has been sufficient to bring the unemployment rate down to
5.0%, the lowest rate since 2001. 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 that
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.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE BALANCED FUND PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BALANCED FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE BALANCED FUND (the Fund) seeks a combination of
capital appreciation and current income.
ADVISER SUB-ADVISER
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Gary J. Dunn, CFA 12/30/1981
W. Frank Koster
David L. Roberts, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned (0.11)%(1), for the six-month period ended June 30,
2005, outperforming the S&P 500 Index(2) which returned (0.81)%, but
underperforming the Lehman Brothers Aggregate Bond Index(3), which returned
2.51%, 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. 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?
- --------------------------------------------------------------------------------
The Fund's performance during the reporting period was impacted by its
portfolio's roughly 60% allocation to equities. As equities underperformed bonds
during that time, the portfolio experienced a slight decline of (0.11)%. On the
equity side, there was positive performance from the Fund's utilities, energy,
consumer discretionary, and health care holdings, while weaker performance came
from the Fund's telecommunication services, industrials, consumer staples, and
technology holdings. On the fixed-income side, the Fund benefited from the
flattening yield curve, as well as overweighted positions in the corporate and
mortgage sectors.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
On the equity side, adjustments were made to specific sector weightings.
In general, exposure was increased in the consumer staples sector as valuation
levels became more attractive, adding quality companies such as Kimberly Clark,
PepsiCo, and Sara Lee. We also added to the financial sector with Citigroup, St.
Paul Travelers, and Wachovia. The health care weighting was also increased with
emphasis shifting to larger cap stocks with, what we believe, more predictable
earnings growth, such as Abbott Labs, Eli Lilly, Pfizer, and Medtronic. Primary
reductions were concentrated in the industrials and technology sectors.
On the bond side, the strategy continued to be maintaining shorter
maturities and diversification in response to negative news from General Motors
and Ford.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe that the economy is still growing at a reasonable pace and that
the Federal Reserve could potentially continue to raise interest rates for at
least the next few meetings. The equity portion of the Fund expects to continue
to emphasize companies with consistent earnings and cash flow generation. The
fixed-income portion of the Fund expects to remain overweighted in corporate
bonds and mortgage-backed securities. We will continue to seek to trade
opportunistically around these sectors.
BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS 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. BOND VALUES
FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES
IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THIS FUND IS
EXPOSED TO FOREIGN INVESTMENTS RISK AND HIGH YIELD BOND RISK. CONSULT THE FUND'S
PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of June 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 BALANCED FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
- ----------------------------------------------------------------------------------------
Balanced Fund - Investor Class (0.11) 5.17 (1.88) 6.16
- ----------------------------------------------------------------------------------------
Benchmarks
- ----------------------------------------------------------------------------------------
S&P 500 Index(2) (0.81) 6.32 (2.37) 9.94
- ----------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(3) 2.51 6.80 7.40 6.83
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
TEN LARGEST HOLDINGS(4,5) (AS OF JUNE 30, 2005)
- -----------------------------------------------------------
General Electric Company 2.81%
- -----------------------------------------------------------
Exxon Mobil Corporation 2.23%
- -----------------------------------------------------------
Microsoft Corporation 1.94%
- -----------------------------------------------------------
Bank Of America Corporation 1.81%
- -----------------------------------------------------------
Citigroup Incorporated 1.76%
- -----------------------------------------------------------
Proctor & Gamble Company 1.72%
- -----------------------------------------------------------
U.S. Treasury Note, 10.38%, 11/15/2012 1.58%
- -----------------------------------------------------------
FNMA #73944 1.43%
- -----------------------------------------------------------
JP Morgan Chase & Company 1.42%
- -----------------------------------------------------------
Nokia Oyj ADR 1.42%
SECTOR DISTRIBUTION(5) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 11%
Consumer Staples 9%
Energy 8%
Financial Services 21%
Health Care 14%
Industrials 11%
Information Technology 17%
Materials 3%
Telecommunications 2%
Utilities 4%
FUND CHARACTERISTICS(5) (AS OF JUNE 30, 2005)
- -------------------------------------------------------------
Beta** 0.56
- -------------------------------------------------------------
Average Coupon of Bond Portfolio 5.70%
- -------------------------------------------------------------
Average Maturity of Bond Portfolio 14.41 years
- -------------------------------------------------------------
Average Duration of Bond Portfolio 3.11 years
- -------------------------------------------------------------
Average Credit Quality of Bond Portfolio Aa1
- -------------------------------------------------------------
Portfolio Turnover 69%
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
GROWTH OF $10,000 INVESTMENT(6) (AS OF JUNE 30, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LEHMAN BROTHERS
BALANCED FUND INVESTOR CLASS S&P 500 INDEX AGGREGATE BOND INDEX
---------------------------- --------------- --------------------
6/30/1995 10000 10000 10000
7/31/1995 10392 10331 9978
8/31/1995 10418 10357 10099
9/30/1995 10604 10794 10197
10/31/1995 10578 10756 10329
11/30/1995 10864 11227 10484
12/31/1995 11042 11444 10631
1/31/1996 11031 11833 10701
2/29/1996 11087 11943 10515
3/31/1996 11138 12057 10441
4/30/1996 11421 12235 10383
5/31/1996 11483 12549 10362
6/30/1996 11356 12597 10501
7/31/1996 10957 12040 10529
8/31/1996 11242 12294 10511
9/30/1996 11596 12985 10694
10/31/1996 11578 13343 10932
11/30/1996 12096 14351 11119
12/31/1996 12196 14067 11015
1/31/1997 12441 14946 11049
2/28/1997 12473 15062 11077
3/31/1997 12130 14445 10954
4/30/1997 12308 15306 11118
5/31/1997 12802 16236 11224
6/30/1997 13110 16964 11358
7/31/1997 13891 18312 11664
8/31/1997 13539 17287 11565
9/30/1997 14159 18232 11735
10/31/1997 13818 17623 11905
11/30/1997 13985 18439 11960
12/31/1997 14229 18756 12081
1/31/1998 14293 18963 12235
2/28/1998 15011 20330 12226
3/31/1998 15595 21371 12267
4/30/1998 15696 21589 12331
5/31/1998 15588 21218 12448
6/30/1998 16224 22079 12554
7/31/1998 16362 21845 12580
8/31/1998 14359 18688 12785
9/30/1998 14893 19886 13085
10/31/1998 15441 21503 13015
11/30/1998 16303 22806 13089
12/31/1998 17266 24120 13129
1/31/1999 17825 25128 13222
2/28/1999 17435 24346 12990
3/31/1999 18054 25320 13062
4/30/1999 18415 26300 13104
5/31/1999 17936 25680 12988
6/30/1999 18583 27105 12947
7/31/1999 18217 26259 12892
8/31/1999 17972 26129 12886
9/30/1999 17890 25412 13036
10/31/1999 18724 27021 13084
11/30/1999 19039 27570 13082
12/31/1999 19943 29193 13020
1/31/2000 19241 27728 12977
2/29/2000 19787 27204 13134
3/31/2000 20764 29864 13307
4/30/2000 20159 28965 13268
5/31/2000 19624 28372 13262
6/30/2000 19989 29072 13538
7/31/2000 19759 28619 13661
8/31/2000 20607 30396 13859
9/30/2000 20191 28791 13946
10/31/2000 19784 28670 14038
11/30/2000 18426 26411 14269
12/31/2000 18675 26540 14534
1/31/2001 19052 27483 14772
2/28/2001 17803 24979 14901
3/31/2001 17067 23398 14975
4/30/2001 17662 25213 14912
5/31/2001 17731 25382 15002
6/30/2001 17388 24766 15059
7/31/2001 17275 24523 15396
8/31/2001 16598 22990 15573
9/30/2001 15759 21135 15755
10/31/2001 15969 21539 16085
11/30/2001 16696 23191 15863
12/31/2001 16616 23395 15761
1/31/2002 16439 23053 15889
2/28/2002 16254 22608 16043
3/31/2002 16487 23458 15777
4/30/2002 15981 22037 16083
5/31/2002 15856 21876 16220
6/30/2002 15178 20318 16359
7/31/2002 14579 18735 16557
8/31/2002 14632 18857 16837
9/30/2002 13897 16809 17110
10/31/2002 14554 18287 17031
11/30/2002 15013 19362 17026
12/31/2002 14514 18226 17378
1/31/2003 14252 17750 17394
2/28/2003 14153 17484 17634
3/31/2003 14247 17652 17620
4/30/2003 15017 19106 17766
5/31/2003 15570 20111 18096
6/30/2003 15689 20368 18060
7/31/2003 15716 20727 17453
8/31/2003 15925 21131 17569
9/30/2003 15849 20907 18034
10/31/2003 16423 22088 17865
11/30/2003 16505 22283 17908
12/31/2003 17034 23450 18090
1/31/2004 17207 23882 18236
2/29/2004 17390 24214 18433
3/31/2004 17278 23848 18572
4/30/2004 16893 23474 18089
5/31/2004 17058 23795 18016
6/30/2004 17288 24257 18119
7/31/2004 16902 23454 18298
8/31/2004 17012 23548 18648
9/30/2004 17205 23802 18698
10/31/2004 17427 24166 18855
11/30/2004 17952 25145 18705
12/31/2004 18202 26000 18877
1/31/2005 17896 25366 18996
2/28/2005 18183 25898 18883
3/31/2005 17969 25440 18787
4/30/2005 17820 24957 19041
5/31/2005 18136 25750 19246
6/30/2005 18182 25786 19352
- --------------------------------------------------------------------------------
(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 BALANCED FUND for periods prior to April 11, 2005, reflects the
performance of the Investor Class shares of the Strong Balanced 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 S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market-weighted index with each
stock's weight in the index proportionate to its market value. You cannot invest
directly in an index.
(3) The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers
Government/Corporate Index and the Lehman Brothers Mortgage-Backed Securities
Index and includes Treasury issues, agency issues, corporate bond issues and
mortgage-backed securities. You cannot invest directly in an index.
(4) The Ten Largest Holdings are calculated based on the market value of the
securities divided by total market value of the Portfolio.
(5) Sector distribution, portfolio holdings and Fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and Fund characteristics.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE BALANCED
FUND Investor Class shares for the most recent ten years with the S&P 500 Index
and the Lehman Brothers Aggregate Bond Index. The chart assumes a hypothetical
$10,000 investment in Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE BALANCED 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 (January 1, 2005 to June 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
Balanced Fund 1/1/05 6/30/05 Period(1) Ratio
- --------------------------------------------------------------------------------------------------
Balanced Fund - Investor Class
Actual $1,000.00 $ 998.90 $6.44 1.30%
- --------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $ 1,018.35 $6.51 1.30%
(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 -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
AGENCY NOTES - INTEREST BEARING - 2.01%
$ 1,360,000 FNMA 5.50% 02/15/2006 $ 1,374,729
945,000 FNMA 5.25 06/15/2006 957,988
575,000 FNMA 2.88 05/19/2008 559,199
TOTAL AGENCY NOTES - INTEREST BEARING (COST $2,901,743) 2,891,916
---------------
AGENCY SECURITIES - 5.01%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.77%
2,999 FHLMC #170151 10.50 01/01/2016 3,420
13,192 FHLMC #254325 10.25 03/01/2015 14,298
260,926 FHLMC #G11487 8.00 03/01/2016 278,523
797,451 FHLMC #G18005 5.00 08/01/2019 806,830
1,103,071
---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.17%
417,320 FNMA #725638 5.00 12/01/2018 422,322
1,410,283 FNMA #735613 6.00 02/01/2035 1,447,674
2,021,492 FNMA #73944 6.96 01/01/2007 2,076,270
600,145 FNMA #821116 6.00 05/01/2035 615,487
1,425,000 FNMA TBA%% 5.50 07/01/2035 1,444,149
6,005,902
---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.07%
95,418 GNMA #780434 7.50 12/15/2007 97,115
---------------
TOTAL AGENCY SECURITIES (COST $7,159,653) 7,206,088
---------------
ASSET-BACKED SECURITIES - 3.71%
1,380,637 COMMUNITY PROGRAM LOAN TRUST SERIES 1987-A CLASS A4 4.50 10/01/2018 1,379,505
247,353 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.46 05/15/2028 247,529
674,602 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.51 02/15/2034 676,729
417,289 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.52 12/15/2033 418,344
1,314,817 FORD CREDIT AUTO OWNER TRUST SERIES 2005-A CLASS A2 3.08 07/15/2007 1,311,420
406,978 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2004-3 CLASS AF1+/- 3.53 11/25/2034 407,019
345,261 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.79 12/25/2034 345,261
560,000 USAA AUTO OWNER TRUST SERIES 2004-3 CLASS A2 2.79 06/15/2007 557,998
TOTAL ASSET-BACKED SECURITIES (COST $5,346,955) 5,343,805
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 7.97%
405,887 ASSET SECURITIZATION CORPORATION SERIES 1995-MD4 CLASS A1 7.10 08/13/2029 411,876
603,796 BANC OF AMERICA ALTERNATIVE LOAN TRUST SERIES 2004-8 CLASS 2CB1 6.00 09/25/2034 618,627
687,689 BANC OF AMERICA ALTERNATIVE LOAN TRUST SERIES 2005-5 CLASS 5A1 6.00 06/25/2035 707,759
493,061 CITIGROUP MORTGAGE LOAN TRUST INCORPORATED SERIES 2004-HYB4
CLASS AA+/- 3.64 12/25/2034 493,061
866,758 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2004-30CB CLASS 3A1 5.00 02/25/2020 872,948
1,495,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES
2005-C1 CLASS A3 4.81 02/15/2038 1,524,457
375,074 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-57 CLASS 2A1+/- 4.31 07/25/2043 388,550
435,641 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-59 CLASS 2A1+/- 4.45 10/25/2043 449,695
481,691 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 521,764
26,305 FNMA SERIES G92-61 CLASS FJ+/- 3.62 10/25/2022 26,216
710,000 FNMA WHOLE LOAN SERIES 2003-W8 CLASS 1A3 4.75 12/25/2042 705,922
1,185,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2005-C1
CLASS A5+/- 4.77 06/10/2048 1,204,165
5
WELLS FARGO ADVANTAGE BALANCED FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 1,155,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2005-LDP1 CLASS A4+/- 5.04% 03/15/2046 $ 1,196,043
573,371 JP MORGAN MORTGAGE TRUST 5.36 09/25/2010 577,851
455,981 JP MORGAN MORTGAGE TRUST SERIES 2005-A2 CLASS 3A+/- 4.93 04/25/2035 457,166
408,577 JP MORGAN MORTGAGE TRUST SERIES 2005-A3 CLASS 7CA1+/- 5.17 06/25/2035 413,439
450,593 MSAT SERIES 2005-RR4 CLASS A1++ 4.38 08/22/2036 451,314
325,000 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2005-AP2 CLASS A1+/- 3.45 07/25/2035 325,000
122,162 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 121,845
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $11,374,894) 11,467,698
---------------
SHARES
COMMON STOCKS - 65.03%
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 1.09%
40,300 HOME DEPOT INCORPORATED 1,567,670
---------------
BUSINESS SERVICES - 3.25%
22,500 AUTOMATIC DATA PROCESSING INCORPORATED 944,325
113,000 MICROSOFT CORPORATION 2,806,920
21,600 SAP AG 935,280
4,686,525
---------------
CHEMICALS & ALLIED PRODUCTS - 7.64%
24,000 ABBOTT LABORATORIES 1,176,240
15,000 AIR PRODUCTS & CHEMICALS INCORPORATED 904,500
13,900 AMGEN INCORPORATED+ 840,394
18,000 DU PONT (E.I.) DE NEMOURS & COMPANY 774,180
20,000 ELI LILLY & COMPANY 1,114,200
65,000 PFIZER INCORPORATED 1,792,700
47,200 PROCTER & GAMBLE COMPANY 2,489,800
20,000 ROHM & HAAS COMPANY 926,800
22,000 WYETH 979,000
10,997,814
---------------
COMMUNICATIONS - 1.51%
8,800 ALLTEL CORPORATION 548,064
35,000 SBC COMMUNICATIONS INCORPORATED 831,250
23,000 VERIZON COMMUNICATIONS INCORPORATED 794,650
2,173,964
---------------
DEPOSITORY INSTITUTIONS - 7.08%
57,500 BANK OF AMERICA CORPORATION 2,622,575
55,000 CITIGROUP INCORPORATED 2,542,650
25,000 FIFTH THIRD BANCORP 1,030,250
58,416 JP MORGAN CHASE & COMPANY 2,063,253
34,900 US BANCORP 1,019,080
18,500 WACHOVIA CORPORATION 917,600
10,195,408
---------------
EATING & DRINKING PLACES - 0.58%
30,000 MCDONALD'S CORPORATION 832,500
---------------
6
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRIC, GAS & SANITARY SERVICES - 2.81%
14,000 DOMINION RESOURCES INCORPORATED $ 1,027,460
20,000 DUKE ENERGY CORPORATION 594,600
13,600 ENTERGY CORPORATION 1,027,480
27,300 EXELON CORPORATION 1,401,309
4,050,849
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 8.75%
90,000 CISCO SYSTEMS INCORPORATED+ 1,719,900
14,000 EMERSON ELECTRIC COMPANY 876,820
117,400 GENERAL ELECTRIC COMPANY 4,067,910
62,100 INTEL CORPORATION 1,618,326
55,000 MOTOROLA INCORPORATED 1,004,300
123,400 NOKIA OYJ ADR 2,053,376
45,000 TEXAS INSTRUMENTS INCORPORATED 1,263,150
12,603,782
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.72%
19,400 QUEST DIAGNOSTICS INCORPORATED 1,033,438
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.42%
23,000 FORTUNE BRANDS INCORPORATED 2,042,400
---------------
FOOD & KINDRED PRODUCTS - 1.76%
33,000 PEPSICO INCORPORATED 1,779,690
38,000 SARA LEE CORPORATION 752,780
2,532,470
---------------
FURNITURE & FIXTURES - 0.32%
14,300 MASCO CORPORATION 454,168
---------------
GENERAL MERCHANDISE STORES - 2.96%
34,000 MAY DEPARTMENT STORES COMPANY 1,365,440
27,600 TARGET CORPORATION 1,501,716
29,000 WAL-MART STORES INCORPORATED 1,397,800
4,264,956
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 3.06%
12,000 3M COMPANY 867,600
17,100 DELL INCORPORATED+ 675,621
62,000 HEWLETT-PACKARD COMPANY 1,457,620
18,900 INTERNATIONAL BUSINESS MACHINES CORPORATION 1,402,380
4,403,221
---------------
INSURANCE CARRIERS - 5.45%
17,700 ALLSTATE CORPORATION 1,057,575
27,000 AMERICAN INTERNATIONAL GROUP INCORPORATED 1,568,700
35,000 METLIFE INCORPORATED 1,572,900
45,000 ST. PAUL COMPANIES INCORPORATED 1,778,850
35,800 UNITEDHEALTH GROUP INCORPORATED 1,866,612
7,844,637
---------------
7
WELLS FARGO ADVANTAGE BALANCED FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL
GOODS - 1.62%
28,000 BAXTER INTERNATIONAL INCORPORATED $ 1,038,800
25,000 MEDTRONIC INCORPORATED 1,294,750
2,333,550
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 1.59%
28,500 JOHNSON & JOHNSON 1,852,500
15,000 TYCO INTERNATIONAL LIMITED 438,000
2,290,500
---------------
MOTION PICTURES - 1.31%
60,000 TIME WARNER INCORPORATED+ 1,002,600
35,000 WALT DISNEY COMPANY 881,300
1,883,900
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING - 0.63%
13,100 UNITED PARCEL SERVICE INCORPORATED CLASS B 905,996
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.68%
18,400 AMERICAN EXPRESS COMPANY 979,432
---------------
OIL & GAS EXTRACTION - 1.22%
9,700 ANADARKO PETROLEUM CORPORATION 796,855
20,000 HALLIBURTON COMPANY 956,400
1,753,255
---------------
PAPER & ALLIED PRODUCTS - 0.61%
14,000 KIMBERLY-CLARK CORPORATION 876,260
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 4.01%
20,000 CHEVRONTEXACO CORPORATION 1,118,400
24,900 CONOCOPHILLIPS 1,431,501
56,100 EXXONMOBIL CORPORATION 3,224,067
5,773,968
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.57%
18,400 MCGRAW-HILL COMPANIES INCORPORATED 814,200
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.51%
12,700 GOLDMAN SACHS GROUP INCORPORATED 1,295,654
16,700 MORGAN STANLEY 876,249
2,171,903
---------------
TOBACCO PRODUCTS - 0.67%
15,000 ALTRIA GROUP INCORPORATED 969,900
---------------
TRANSPORTATION EQUIPMENT - 2.21%
5,800 GENERAL DYNAMICS CORPORATION 635,332
39,300 HONEYWELL INTERNATIONAL INCORPORATED 1,439,559
21,600 UNITED TECHNOLOGIES CORPORATION 1,109,160
3,184,051
---------------
TOTAL COMMON STOCKS (COST $86,061,171) 93,620,717
---------------
8
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CORPORATE BONDS & NOTES - 11.12%
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.20%
$ 295,000 KB HOME 5.75% 02/01/2014 $ 292,374
---------------
BUSINESS SERVICES - 0.29%
100,000 CENDANT CORPORATION 6.25 03/15/2010 106,494
300,000 NATIONAL RURAL UTILITIES SERIES MTNC 6.50 03/01/2007 311,299
417,793
---------------
COMMUNICATIONS - 1.22%
150,000 CITIZENS COMMUNICATIONS COMPANY 9.25 05/15/2011 167,437
250,000 COMCAST CORPORATION 5.85 01/15/2010 264,388
515,000 COX COMMUNICATIONS INCORPORATED 4.63 01/15/2010 513,640
150,000 MOTOROLA INCORPORATED 7.63 11/15/2010 171,634
135,000 QWEST CORPORATION++ 7.63 06/15/2015 137,869
200,000 SBC COMMUNICATIONS 5.10 09/15/2014 204,492
300,000 VERIZON GLOBAL FUNDING CORPORATION 4.38 06/01/2013 296,654
1,756,114
---------------
DEPOSITORY INSTITUTIONS - 0.50%
250,000 M&T BANK CORPORATION+/-++ 3.85 04/01/2013 247,036
450,000 PNC FUNDING CORPORATION 6.13 02/15/2009 477,907
724,943
---------------
EATING & DRINKING PLACES - 0.22%
255,000 YUM! BRANDS INCORPORATED 8.88 04/15/2011 308,964
---------------
ELECTRIC, GAS & SANITARY SERVICES - 1.19%
190,000 CAROLINA POWER & LIGHT COMPANY 6.50 07/15/2012 209,733
150,000 FIRSTENERGY CORPORATION SERIES B 6.45 11/15/2011 163,894
110,000 FLORIDA POWER & LIGHT COMPANY 6.88 12/01/2005 111,380
345,000 MIDAMERICAN ENERGY HOLDINGS 7.23 09/15/2005 347,137
305,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 309,000
175,000 PUBLIC SERVICE COMPANY OF COLORADO 7.88 10/01/2012 211,548
365,000 SOUTHWESTERN ELECTRIC POWER 4.90 07/01/2015 365,169
1,717,861
---------------
FOOD & KINDRED PRODUCTS - 0.22%
305,000 KRAFT FOODS INCORPORATED 5.25 10/01/2013 317,381
---------------
FOOD STORES - 0.22%
100,000 KROGER COMPANY 6.75 04/15/2012 110,731
200,000 SAFEWAY INCORPORATED 4.80 07/16/2007 201,494
312,225
---------------
HOLDING & OTHER INVESTMENT OFFICES - 2.70%
510,000 CITIGROUP GLOBAL MARKETS 5.88 03/15/2006 516,952
945,679 CORE INVESTMENT GRADE TRUST 4.64 11/30/2007 953,065
250,000 CREDIT SUISSE FIRST BOSTON USA INCORPORATED 6.50 01/15/2012 277,848
275,000 GOLDMAN SACHS GROUP INCORPORATED 5.15 01/15/2014 281,807
300,000 JP MORGAN CHASE & COMPANY 6.63 03/15/2012 333,979
545,000 JP MORGAN CHASE & COMPANY 5.13 09/15/2014 557,508
9
WELLS FARGO ADVANTAGE BALANCED FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
HOLDING & OTHER INVESTMENT OFFICES (CONTINUED)
$ 200,000 MERRILL LYNCH & COMPANY SERIES MTNB 4.00% 11/15/2007 $ 199,655
500,000 MORGAN STANLEY 5.80 04/01/2007 513,941
250,000 PRINCIPAL LIFE GLOBAL SERIES MTN++ 3.63 04/30/2008 246,404
3,881,159
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.17%
3,700,000 ALADDIN GAMING/CAPITAL CORPORATION SERIES B^^ 13.50 03/01/2010 18,500
220,000 HARRAH'S OPERATING COMPANY INCORPORATED 5.50 07/01/2010 227,050
245,550
---------------
INSURANCE CARRIERS - 0.12%
170,000 METLIFE INCORPORATED 5.00 06/15/2015 172,528
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 1.78%
195,000 AMERICAN GENERAL FINANCE CORPORATION 4.88 05/15/2010 196,891
210,000 CAPITAL ONE BANK 6.50 06/13/2013 231,049
160,000 FORD MOTOR CREDIT COMPANY 7.60 08/01/2005 160,359
250,000 FORD MOTOR CREDIT COMPANY 6.50 01/25/2007 251,794
435,000 FORD MOTOR CREDIT COMPANY 5.70 01/15/2010 401,218
530,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 2.75 09/25/2006 522,332
250,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 6.50 12/10/2007 263,472
370,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.88 09/15/2011 341,543
190,000 HSBC FINANCE CORPORATION 4.75 04/15/2010 192,697
2,561,355
---------------
OIL & GAS EXTRACTION - 0.27%
200,000 DEVON FINANCING CORPORATION 6.88 09/30/2011 223,793
150,000 PEMEX PROJECT FUNDING MASTER TRUST 7.38 12/15/2014 168,225
392,018
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 0.14%
175,000 VALERO ENERGY CORPORATION 6.88 04/15/2012 195,335
---------------
PIPELINES, EXCEPT NATURAL GAS - 0.19%
100,000 CENTERPOINT ENERGY RESOURCES CORPORATION SERIES B 7.88 04/01/2013 118,783
150,000 PLAINS ALL AMERICAN PIPELINE LIMITED PARTNERSHIP 5.63 12/15/2013 155,342
274,125
---------------
RAILROAD TRANSPORTATION - 0.40%
250,000 NORFOLK SOUTHERN CORPORATION 6.00 04/30/2008 260,830
305,000 UNION PACIFIC CORPORATION 5.75 10/15/2007 315,105
575,935
---------------
REAL ESTATE - 0.55%
350,000 EOP OPERATING LIMITED PARTNERSHIP 6.75 02/15/2012 385,279
400,000 HIGHWOODS REALTY LIMITED PARTNERSHIP 7.00 12/01/2006 411,954
797,233
---------------
10
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TRANSPORTATION EQUIPMENT - 0.47%
$ 100,000 DAIMLERCHRYSLER NORTH AMERICA HOLDING 4.05% 06/04/2008 $ 98,468
200,000 DAIMLERCHRYSLER NORTH AMERICA HOLDING 7.75 01/18/2011 225,760
185,000 FORD MOTOR COMPANY 7.45 07/16/2031 154,441
200,000 TEXAS EASTERN TRANSMISSION LIMITED PARTNERSHIP 5.25 07/15/2007 203,144
681,813
---------------
TRANSPORTATION SERVICES - 0.27%
245,000 FEDEX CORPORATION 2.65 04/01/2007 238,616
150,000 TRAVELERS PROPERTY CASUALTY CORPORATION 5.00 03/15/2013 151,814
390,430
---------------
TOTAL CORPORATE BONDS & NOTES (COST $16,750,046) 16,015,136
---------------
FOREIGN CORPORATE BONDS@ - 1.82%
250,000 AMERICA MOVIL SA DE CV 5.50 03/01/2014 249,980
285,000 ENCANA CORPORATION 4.60 08/15/2009 287,407
350,000 FRANCE TELECOM 8.00 03/01/2011 406,166
265,000 GRUPO TELEVISA SA++ 6.63 03/18/2025 267,650
200,000 HUTCHISON WHAMPOA INTERNATIONAL LIMITED++ 6.25 01/24/2014 214,997
310,000 KFW 3.50 03/14/2008 306,778
200,000 NORMANDY FINANCE LIMITED++ 7.63 07/15/2008 218,424
265,000 PREFERRED TERM SECURITIES XV+/-++ 5.00 09/26/2034 265,663
280,000 TELECOM ITALIA CAPITAL SA++ 4.95 09/30/2014 277,241
120,000 TYCO INTERNATIONAL GROUP SA 6.00 11/15/2013 130,499
TOTAL FOREIGN CORPORATE BONDS (COST $2,552,799) 2,624,805
---------------
FOREIGN GOVERNMENT BONDS@ - 0.82%
500,000 EUROPEAN INVESTMENT BANK 4.63 03/01/2007 506,444
300,000 REPUBLIC OF ITALY 3.63 09/14/2007 298,155
325,000 UNITED MEXICAN STATES 7.50 01/14/2012 368,550
TOTAL FOREIGN GOVERNMENT BONDS (COST $1,174,536) 1,173,149
---------------
US TREASURY SECURITIES - 3.10%
US TREASURY BONDS - 0.59%
575,000 US TREASURY BOND 8.50 02/15/2020 843,364
---------------
US TREASURY NOTES - 2.51%
656,000 US TREASURY NOTE 3.63 06/15/2010 653,130
1,985,000 US TREASURY NOTE 10.38 11/15/2012 2,283,137
670,000 US TREASURY NOTE 4.13 05/15/2015 679,788
3,616,055
---------------
TOTAL US TREASURY SECURITIES (COST $4,481,941) 4,459,419
---------------
11
WELLS FARGO ADVANTAGE BALANCED FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME INTEREST RATE MATURITY DATE VALUE
SHORT-TERM INVESTMENTS - 0.38%
MUTUAL FUND - 0.35%
508,251 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~# $ 508,251
---------------
PRINCIPAL
US TREASURY BILLS - 0.03%
$50,000 US TREASURY BILL^** 2.88% 08/25/2005 49,780
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $558,031) 558,031
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $138,361,769)* 100.97% $ 145,360,764
OTHER ASSETS AND LIABILITIES, NET (0.97) (1,399,438)
------ ---------------
TOTAL NET ASSETS 100.00% $ 143,961,326
====== ===============
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
+/- VARIABLE RATE INVESTMENTS.
++ 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.
+ NON-INCOME EARNING SECURITIES.
^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
OR PRINCIPAL PAYMENTS.
@ FOREIGN BOND PRINCIPAL IS DENOMINATED IN US DOLLARS EXCEPT AS INDICATED
PARENTHETICALLY.
^ 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 $508,251.
* 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
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BALANCED FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ................................................................................ $ 144,852,513
INVESTMENTS IN AFFILIATES ..................................................................................... 508,251
-------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................................................... 145,360,764
-------------
VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS .............................................................. 1,015
RECEIVABLE FOR FUND SHARES ISSUED ............................................................................. 664
RECEIVABLE FOR INVESTMENTS SOLD ............................................................................... 209,976
RECEIVABLES FOR DIVIDENDS AND INTEREST ........................................................................ 595,592
-------------
TOTAL ASSETS ..................................................................................................... 146,168,011
-------------
LIABILITIES
FOREIGN TAXES PAYABLE ......................................................................................... 8,096
PAYABLE FOR FUND SHARES REDEEMED .............................................................................. 11,990
PAYABLE FOR INVESTMENTS PURCHASED ............................................................................. 2,024,384
DIVIDENDS PAYABLE ............................................................................................. 9
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ......................................................... 88,490
PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ....................................................................... 31,455
ACCRUED EXPENSES AND OTHER LIABILITIES ........................................................................ 42,261
-------------
TOTAL LIABILITIES ................................................................................................ 2,206,685
-------------
TOTAL NET ASSETS ................................................................................................. $ 143,961,326
-------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................................................................................... $ 147,987,131
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................................................... 28,213
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ......................................................... (11,056,273)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF
ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ................................................... 6,998,995
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ......................................................... 3,260
-------------
TOTAL NET ASSETS ................................................................................................. $ 143,961,326
-------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - INVESTOR CLASS ................................................................................... $ 143,961,326
SHARES OUTSTANDING - INVESTOR CLASS ........................................................................... 7,397,962
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ................................................. $ 19.46
-------------
INVESTMENTS AT COST .............................................................................................. $ 138,361,769
-------------
(1) THE FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
WELLS FARGO ADVANTAGE BALANCED FUND
STATEMENT OF OPERATIONS --
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
BALANCED FUND
-------------------
FOR THE SIX MONTHS
ENDED JUNE 30, 2005
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ............................................................................................ $ 907,622
INTEREST ................................................................................................ 1,152,207
INCOME FROM AFFILIATED SECURITIES ....................................................................... 14,703
SECURITIES LENDING INCOME, NET .......................................................................... 5,487
-------------------
TOTAL INVESTMENT INCOME .................................................................................... 2,080,019
-------------------
EXPENSES
ADVISORY FEES ........................................................................................... 440,521
ADMINISTRATION FEES ..................................................................................... 418,124
CUSTODY FEES ............................................................................................ 6,304
SHAREHOLDER SERVICING FEES .............................................................................. 80,605
ACCOUNTING FEES ......................................................................................... 6,496
AUDIT FEES .............................................................................................. 10,910
LEGAL FEES .............................................................................................. 2,926
REGISTRATION FEES ....................................................................................... 10,836
SHAREHOLDER REPORTS ..................................................................................... 31,181
TRUSTEES' FEES .......................................................................................... 8,208
OTHER FEES AND EXPENSES ................................................................................. 29,849
-------------------
TOTAL EXPENSES ............................................................................................. 1,045,960
-------------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ............................................................ (95,478)
NET EXPENSES ............................................................................................ 950,482
-------------------
NET INVESTMENT INCOME (LOSS) ............................................................................... 1,129,537
-------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ......................................... 7,685,341
FUTURES TRANSACTIONS .................................................................................... 13,548
-------------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .................................................................. 7,698,889
-------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ......................................... (9,038,224)
FUTURES TRANSACTIONS .................................................................................... (1,953)
-------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ........................................ (9,040,177)
-------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ..................................................... (1,341,288)
-------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................................ $ (211,751)
===================
(1) NET OF FOREIGN WITHHOLDING TAXES OF ................................................................. $ 26,107
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BALANCED FUND
----------------------------------------
FOR THE SIX MONTHS FOR THE
ENDED JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ............................................................... $ 154,974,006 $ 208,955,025
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ....................................................... 1,129,537 2,085,502
NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................ 7,698,889 13,171,857
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................ (9,040,177) (4,483,036)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....................... (211,751) 10,774,323
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .............................................................. (1,101,324) (2,151,090)
------------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................................................... (1,101,324) (2,151,090)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ......................................... 4,695,856 26,599,270
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ..................................... 1,060,849 2,073,183
COST OF SHARES REDEEMED - INVESTOR CLASS ........................................... (15,456,310) (91,276,705)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
INVESTOR CLASS ..................................................................... (9,699,605) (62,604,252)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS
- TOTAL ............................................................................ (9,699,605) (62,604,252)
------------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS ................................................. (11,012,680) (53,981,019)
------------------- -----------------
ENDING NET ASSETS $ 143,961,326 $ 154,974,006
=================== =================
SHARES ISSUED AND REDEEMED:
SHARES SOLD - INVESTOR CLASS ....................................................... 241,089 1,407,580
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 54,782 108,957
SHARES REDEEMED - INVESTOR CLASS ................................................... (794,441) (4,840,528)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ........................ (498,570) (3,323,991)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ....................................................................... (498,570) (3,323,991)
------------------- -----------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .......................... $ 28,213 $ 0
=================== =================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
WELLS FARGO ADVANTAGE BALANCED 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
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ....... $ 19.63 0.15 (0.17) (0.15) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 18.62 0.25 1.02 (0.26) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 16.06 0.19 2.58 (0.21) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 18.84 0.40 (2.77) (0.41) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 21.83 0.58 (2.99) (0.58) 0.00
NOVEMBER 1, 2000(3) TO DECEMBER 31, 2000 ........... $ 24.77 0.12 (1.53) (0.20) (1.33)
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ............... $ 24.92 0.82 0.61 (0.83) (0.75)
16
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
NET ASSET --------------------------------------------------
RETURN OF VALUE PER NET INVESTMENT GROSS EXPENSES NET
CAPITAL SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- ------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... 0.00 $ 19.46 1.54% 1.43% (0.13)% 1.30%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 0.00 $ 19.63 1.25% 1.31% (0.04)% 1.27%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 0.00 $ 18.62 1.09% 1.31% (0.05)% 1.26%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... 0.00 $ 16.06 2.31% 1.30% (0.01)% 1.29%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... 0.00 $ 18.84 2.88% 1.19% 0.00% 1.19%
NOVEMBER 1, 2000(3) TO DECEMBER 31, 2000 ....... 0.00 $ 21.83 3.31% 1.07% 0.00% 1.07%
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ........... 0.00 $ 24.77 3.21% 1.06% 0.00% 1.06%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE (000'S OMITTED)
- --------------------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------------------
INVESTOR CLASS
JANUARY 1, 2005 TO JUNE 30, 2005 (UNAUDITED) ... (0.11)% 69% $ 143,961
JANUARY 1, 2004 TO DECEMBER 31, 2004 ........... 6.86% 148% $ 154,974
JANUARY 1, 2003 TO DECEMBER 31, 2003 ........... 17.36% 205% $ 208,955
JANUARY 1, 2002 TO DECEMBER 31, 2002 ........... (12.65)% 226% $ 218,015
JANUARY 1, 2001 TO DECEMBER 31, 2001 ........... (11.03)% 234% $ 300,022
NOVEMBER 1, 2000(3) TO DECEMBER 31, 2000 ....... (5.60)% 45% $ 346,693
NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ........... 5.66% 151% $ 371,535
(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) IN 2000, THE FUND CHANGED ITS FISCAL YEAR-END FROM OCTOBER TO DECEMBER.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
WELLS FARGO ADVANTAGE BALANCED 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 management
investment company. The Trust commenced operations on November 8, 1999, and at
June 30, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Balanced
Fund. The Fund is a diversified series of the Trust.
In August and 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"), by share class, acquired substantially all of
the net assets of the following Target Fund ("Target Fund"), by share class,
through a tax-free exchange under section 368 of the Internal Revenue Code.
Acquiring Fund Target Fund
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE
BALANCED FUND INVESTOR CLASS STRONG BALANCED 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
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.
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
quarterly. 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.
18
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
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 June 30, 2005.
At December 31, 2004, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Capital Loss
Fund Year Expires Carryforwards
- --------------------------------------------------------------------------------
BALANCED FUND 2010 $ 17,848,948
- --------------------------------------------------------------------------------
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 June 30, 2005, the Fund(s) held the following futures contracts:
Net Unrealized
Notional Appreciation
Fund Contracts Type Expiration Date Amount (Depreciation)
- ------------------------------------------------------------------------------------------------
BALANCED FUND 5 Long US 10 Year Note September 2005 $ 564,063 $ 3,260
- ------------------------------------------------------------------------------------------------
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.
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.
19
WELLS FARGO ADVANTAGE BALANCED FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 Fee* Fees (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -----------------------------------------------------------------------------------------------------------------------
BALANCED FUND $0 - $499 million 0.650 Wells Capital $0 - $1 billion 0.25
$500 million - $999 million 0.600 Management >$1 billion 0.20
$1 billion - $2.99 billion 0.550 Incorporated
$3 billion - $4.99 billion 0.525
>$4.99 billion 0.500
- -----------------------------------------------------------------------------------------------------------------------
* Effective April 11, 2005. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
Advisory Fees
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- ------------------------------------------------------------------------------------------------------
BALANCED FUND $0 - $35 million 0.60
>$35 million 0.55
- ------------------------------------------------------------------------------------------------------
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)
- ------------------------------------------------------------------------------------------------------
BALANCED FUND $0 - $4.99 billion 0.50
$5 billion - $9.99 billion 0.49
>$9.99 billion 0.48
- ------------------------------------------------------------------------------------------------------
** 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 rate:
Admin Fees
(% of Average
Fund Daily Net Assets)
- --------------------------------------------------------------------------------
BALANCED FUND 0.30
- --------------------------------------------------------------------------------
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("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 January 1, 2005 though April 10, 2005, as shown below, have been combined
with administration fees.
Transfer Agent Fees and
Fund Other Related Expenses
- --------------------------------------------------------------------------------
BALANCED FUND $ 133,556
- --------------------------------------------------------------------------------
20
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE BALANCED 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 rate:
% of Average
Fund Daily Net Assets
- --------------------------------------------------------------------------------
BALANCED FUND 0.02
- --------------------------------------------------------------------------------
Prior to March 21, 2005, State Street served as custodian for each of the
predecessor Strong Funds. State Street was entitled to receive certain fees,
primarily based on transactions of the fund.
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
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.25***
- --------------------------------------------------------------------------------
***Effective April 11, 2005. Prior to April 11, 2005, shareholder
servicing fees for the predecessor Strong Funds, if any, were encompassed by the
Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005
through June 30, 2005, shareholder servicing fees paid were as follows:
Fund Investor Class
- --------------------------------------------------------------------------------
BALANCED FUND $ 80,605
- --------------------------------------------------------------------------------
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 to each of
the predecessor Strong Funds. Fund accounting fees were paid by the Funds'
administrator 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). The net
operating expense ratio in effect from April 11, 2005 through June 30, 2005 is
as follows:
Net Operating
Fund Expense Ratio
- --------------------------------------------------------------------------------
BALANCED FUND 1.25%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the Strong Funds' adviser and/or administrator
could voluntarily waive or absorb certain expenses at their discretion. Pursuant
to the direction of the Strong Funds Board of Directors and certain regulatory
settlements, Strong Capital Management, Inc. ("SCM") had contractually agreed to
waive fees and/or absorb expenses in the amount of 0.033% for the Strong
Balanced Fund from May 21, 2004 to May 21, 2005. However, effective April 11,
2005, the Fund is 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 January 1, 2005 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
Fund Reimbursed Expenses
- --------------------------------------------------------------------------------
BALANCED FUND $ 16,319
- --------------------------------------------------------------------------------
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 June 30, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- -----------------------------------------------------------------------------------------------------
BALANCED FUND $ 102,097,739 $ 105,337,949
- -----------------------------------------------------------------------------------------------------
21
WELLS FARGO ADVANTAGE BALANCED FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 June 30, 2005,
the Balanced Fund had no borrowings under either agreement.
6. LEGAL AND REGULATORY MATTERS
- ------------------------------------------------------------------------------
In 2004, the predecessor Strong 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 Strong 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 $35 million by May 2009. 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 Strong Funds relating to these matters is continuing, neither the
current adviser nor the successor funds is a party to any such suit.
22
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
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 complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day or
more delayed basis. In addition, top ten holdings information for each Fund are
publicly available on the Funds' Web site on a monthly, seven-day or more
delayed basis. 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 at regional offices in New York City, at
233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900.
Information about the Public Reference Room may be obtained by calling
1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "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 Nominating 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).
23
WELLS FARGO ADVANTAGE BALANCED 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, 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
65 since 1996 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 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 from 2000 to 2001.
Director of Shareholder Services
at BISYS Fund Services from 1999
to 2000.
- ------------------------------------------------------------------------------------------------------------------------------
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 June 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.
24
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE BALANCED FUND
- --------------------------------------------------------------------------------
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY
AGREEMENTS:
BALANCED 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 Balanced 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 Balanced Fund
(the accounting survivor) into the Wells Fargo Advantage Balanced 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 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 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.
25
WELLS FARGO ADVANTAGE BALANCED FUND OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
- --------------------------------------------------------------------------------
The Board reviewed and considered the contractual investment advisory fee
rates payable by the Funds to Funds Management for investment advisory services,
both on a stand-alone basis and on a combined basis with the Fund's
administration fee rates (the "Advisory Agreement Rates"). The Board took into
account the separate administrative services covered by the administration fee
rates. 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 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.
26
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE BALANCED 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 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 managers, 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.
27
WELLS FARGO ADVANTAGE BALANCED 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
28
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[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about WELLS FARGO This report and the financial
ADVANTAGE FUNDS(SM) is available free statements contained herein are
upon request. To obtain literature, submitted for the general information
please write, e-mail, or call: of the shareholders of the WELLS FARGO
ADVANTAGE FUNDS. If this report is
WELLS FARGO ADVANTAGE FUNDS used for promotional purposes,
P.O. Box 8266 distribution of the report must be
Boston, MA 02266-8266 accompanied or preceded by a current
prospectus. For a prospectus
E-mail: wfaf@wellsfargo.com containing more complete information,
Retail Investment including charges and expenses, call
Professionals: 888-877-9275 1-800-222-8222. Please consider the
Institutional Investment investment objective, risks, charges
Professionals: 866-765-0778 and expenses of the investment
Web: www.wellsfargo.com/advantagefunds 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 www.wellsfargo.com/advantagefunds RT51997 08-05
Advantage Funds, LLC. SAAF/SAR109 06-05
All rights reserved.
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: August 18, 2005