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: June 30, 2005
Date of reporting period: December 31, 2005
ITEM 1. REPORT TO SHAREHOLDERS
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
[GRAPHIC OMITTED]
DECEMBER 31, 2005
Semi-Annual Report
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
Wells Fargo Advantage California Limited-Term Tax-Free Fund
Wells Fargo Advantage California Tax-Free Fund
Wells Fargo Advantage Colorado Tax-Free Fund
Wells Fargo Advantage Minnesota Tax-Free Fund
Wells Fargo Advantage National Limited-Term Tax-Free Fund
Wells Fargo Advantage National Tax-Free Fund
Wells Fargo Advantage Nebraska Tax-Free Fund
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Table of Contents
Letter to Shareholders................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
California Limited-Term Tax-Free Fund................................. 2
California Tax-Free Fund.............................................. 4
Colorado Tax-Free Fund................................................ 6
Minnesota Tax-Free Fund............................................... 8
National Limited-Term Tax-Free Fund................................... 10
National Tax-Free Fund................................................ 12
Nebraska Tax-Free Fund................................................ 14
Fund Expenses............................................................ 16
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
California Limited-Term Tax-Free Fund................................. 19
California Tax-Free Fund.............................................. 22
Colorado Tax-Free Fund................................................ 29
Minnesota Tax-Free Fund............................................... 32
National Limited-Term Tax-Free Fund................................... 37
National Tax-Free Fund................................................ 44
Nebraska Tax-Free Fund................................................ 52
Financial Statements
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities.................................. 54
Statements of Operations.............................................. 56
Statements of Changes in Net Assets................................... 58
Financial Highlights.................................................. 66
Notes to Financial Highlights............................................ 72
- --------------------------------------------------------------------------------
Notes to Financial Statements............................................ 73
- --------------------------------------------------------------------------------
Other Information (Unaudited)............................................ 78
- --------------------------------------------------------------------------------
List of Abbreviations.................................................... 80
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
- --------------------------------------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
Enclosed is your WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDSSM
Semi-Annual report for the period ended December 31, 2005. On the following
pages, you will find a discussion of the seven Funds, including the portfolio
managers' performance highlights, information about the holdings, and the
portfolio managers' strategic outlooks.
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains strong, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at
3.5% for the full year 2005. This is surprisingly strong growth, given the
record high energy prices reported during the six-month period. The price of
crude oil rose to a new record level during the third quarter and closed the
year at $61.06 a barrel, creating fears of a possible slowdown in consumer
spending.
Low interest rates and a consequent extended boom in the housing sector
helped to offset the negative effects of high oil and gas prices in the first
half of the year. 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 since the end of June.
Rising energy prices did have an impact on inflation, pushing the
inflation rate upward toward the end of 2005. The consumer price index (CPI)
rose approximately 3.0% during the six months that ended December 31, 2005. The
core CPI, which excludes the volatile food and energy components, was up only
around 2.2% by end of year. With core inflation generally contained, the Federal
Reserve (the Fed) continued its strategy of raising interest rates at a
"measured pace" for the year. Since July 1, 2005, the Fed has incrementally
raised the federal funds rate--its principal policy tool--from 3.25% to 4.25%.
Long term bond yields did not increase with the federal funds rate, which
allowed mortgage rates to remain unusually low.
STOCKS: MODERATE GAINS FOR THE YEAR
- --------------------------------------------------------------------------------
Stock prices showed little net change since mid-year. The S&P 500 Index
was 1194 on July 1, 2005 and it ended the year at 1248. Strong corporate
earnings helped the markets during the six-month period, while record prices for
crude oil and concerns of a slowdown in worldwide economic growth capped and
often reversed rallies. In the United States, the fundamentals of strong
earnings and low inflation kept the equity markets steady.
BONDS: MUTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds increased as the federal
funds rate was raised during period. Yields, however, still remain relatively
low, due primarily to record demand for U.S. Treasury securities from foreign
investors and the tame core inflation data.
The high yield segment of the corporate bond market continued to perform
well during the last six months. Municipal bonds generally performed better than
bonds in most taxable sectors since July. Overall, by the end of 2005, municipal
yields were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD
- --------------------------------------------------------------------------------
We may see some slowing in the economy in 2006 due to lingering effects
from higher energy prices and higher short-term interest rates. Inflation will
likely stay in check and it is expected that the Fed may pull back on its
monetary tightening policy.
We believe successful investing includes a balanced approach of owning a
diversified portfolio while keeping a long-term perspective. While
diversification may not prevent losses in a downturn, it may help reduce them
and keep you on track to reach your financial goals. To help you reach your
diversification goals, we offer funds across every key category, each guided by
skillful, independent money managers--our subadvisors--chosen for their focused
attention to a particular investment style. We believe that our insistence on
seeking outstanding money managers who share our dedication to achieving
consistent, long-term results, offers our investors a firmer footing to navigate
changing market conditions and move forward to their financial destinations.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also want to visit our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CALIFORNIA LIMITED-TERM TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE CALIFORNIA LIMITED-TERM TAX-FREE FUND (the Fund)
seeks a high level of current income exempt from federal income tax and
California individual income tax, while preserving capital.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Stephen Galiani 11/18/1992
Julio C. Bonilla
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.28%(1) for the six-month period ended
December 31, 2005, excluding sales charge, underperforming its benchmark, the
Lehman Brothers 3-Year Municipal Bond Index(2), which returned 0.42% for the
same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 3.00%. 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.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
During the second half of 2005, the Federal Reserve (the Fed) continued
its policy of incrementally increasing the Federal funds rate, ending the year
at 4.25%. This strategy also caused other short-term interest rates to rise. For
example, in the municipal market, interest rates on bonds with one- and two-year
maturities rose by about 0.60%, while rates in the 5-year, 10-year, and 15-year
maturities increased by approximately 0.40%, 0.30%, and 0.20%, respectively. As
a result of this flattening of the yield curve, bonds in the 4- to 12-year
maturity range turned in the lowest returns, while shorter and longer maturities
posted better returns.
Because the Fund was spanned the short to intermediate parts of the yield
curve, with the heaviest concentration in the four- to six-year range, it was
vulnerable and it underperformed the index that targets the two- to four-year
range. The Fund's best performing holdings were ultra-short, floating-rate
liquidity positions, which were the big beneficiaries of increases in short-term
rates.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
No major strategic programs or changes to the Fund were initiated, but we
did continue to reduce the Fund's duration gradually, which remained longer than
that of the index at the end of the year. The focus of the reduction in duration
was to increase the Fund's exposure to the four- to six-year maturity range
while maintaining its liquidity position between 15% and 20% of the portfolio.
At the margin, we also increased the Fund's holdings in prerefunded and escrowed
bonds. When prerefunding occurs, the outstanding debt is refinanced, and the
proceeds are invested in Treasury securities, often boosting both the credit
quality and the value of the security. Prerefunded and escrowed securities
represented the Fund's highest-quality positions and constituted approximately
15% of the portfolio at period-end.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
At the close of 2005, the Fund's duration was 17% longer than that of its
index. However, the index targeted the two- to four-year range, and, in
contrast, 20% of the Fund's holdings matured in less than a year and over 40%
are concentrated in the four- to six-year maturity range. The remaining
positions are spread out along the short-to-intermediate portion of the yield
curve.
We anticipate that the Fed will continue to raise short-term rates during
the first half of 2006, bringing the Federal funds rate to 4.75% or higher. Over
the near term, we expect the Fed's demonstrated determination to maintain a
preemptive anti-inflation policy to enable intermediate-term rates to remain in
the broad trading range that has defined the market for over a year.
In this environment, we anticipate reducing the Fund's duration closer to
that of its benchmark. To do this, we will continue to add exposure to the four-
to six-year maturity range while reducing holdings with maturities beyond six
years. We also will seek to maintain the liquidity position at 20% or greater.
While this portfolio restructuring will be somewhat difficult to attain, we
believe it should position the Fund to continue to perform well in the current
market environment and may also benefit from rising short-term rates while at
the same time preparing for the possibility of a change in the secular trend. We
will also continue to seek relative value trading opportunities to add to the
Fund's return potential.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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
MUNICIPAL SECURITIES RISK, HIGH YIELD BOND RISK, AND STATE OF CALIFORNIA RISK.
CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER
RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 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 CALIFORNIA LIMITED-TERM
TAX-FREE FUND.
(1) The Fund's Advisor has committed through October 31, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance for Class A shares of the Fund prior to November 8, 1999,
reflects performance of the Class A shares of the Stagecoach California Tax-Free
Income Fund, its predecessor fund. Performance for Class C shares of the Fund
prior to August 30, 2002, reflects performance of the Class A shares adjusted to
reflect Class C sales charges and expenses.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- --------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
WELLS FARGO ADVANTAGE CALIFORNIA
LIMITED-TERM TAX-FREE FUND -
Class A (Incept. Date 11/18/1992) (2.75) (1.68) 2.66 3.44 0.28 1.37 3.29 3.76
WELLS FARGO ADVANTAGE CALIFORNIA
LIMITED-TERM TAX-FREE FUND -
Class C (Incept. Date 08/30/2002) (1.10) (0.38) 2.44 2.89 (0.10) 0.62 2.44 2.89
WELLS FARGO ADVANTAGE CALIFORNIA
LIMITED-TERM TAX-FREE FUND -
Administrator Class (Incept. Date 09/06/1996) 0.39 1.63 3.52 3.91
Benchmark
Lehman Brothers 3-Year Municipal Bond Index(2) 0.42 0.87 3.70 4.18
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31,2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA
Weighted Average Coupon 4.40%
Weighted Average Maturity 4.22 years
Estimated Average Duration 3.07 years
Portfolio Turnover 43%
Net Asset Value (NAV) (Class A, C,
Administrator) $10.46, $10.45, $10.29
30-Day SEC Yield(5) (Class A, C, Administrator) 2.78%, 2.12%, 3.12%
Distribution Rate(6) (Class A, C, Administrator) 2.65%, 1.98%, 2.98%
30-Day Taxable Equivalent Yield(7)
(Class A, C, Administrator) 4.72%, 3.60%, 5.29%
Alternative Minimum Tax (AMT)(8) 17.73%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE CA
CALIFORNIA LIMITED-TERM LIMITED-TERM TAX-FREE LEHMAN BROTHERS 3-YEAR
TAX-FREE FUND CLASS A ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
---------------------- ------------------------ ------------------------
12/31/1995 9700 10000 $10,000
1/31/1996 9778 10081 $10,078
2/29/1996 9769 10071 $10,080
3/31/1996 9706 10006 $10,056
4/30/1996 9709 10009 $10,068
5/31/1996 9706 10006 $10,077
6/30/1996 9755 10056 $10,137
7/31/1996 9824 10127 $10,194
8/31/1996 9831 10135 $10,208
9/30/1996 9895 10202 $10,271
10/31/1996 9972 10273 $10,342
11/30/1996 10081 10397 $10,439
12/31/1996 10073 10389 $10,444
1/31/1997 10118 10425 $10,489
2/28/1997 10167 10477 $10,540
3/31/1997 10090 10406 $10,486
4/30/1997 10132 10440 $10,531
5/31/1997 10225 10547 $10,617
6/30/1997 10285 10610 $10,679
7/31/1997 10427 10749 $10,806
8/31/1997 10402 10722 $10,785
9/30/1997 10464 10787 $10,862
10/31/1997 10500 10824 $10,910
11/30/1997 10520 10846 $10,942
12/31/1997 10589 10918 $11,016
1/31/1998 10685 11019 $11,089
2/28/1998 10695 11030 $11,112
3/31/1998 10687 11021 $11,130
4/30/1998 10659 10991 $11,115
5/31/1998 10754 11091 $11,218
6/30/1998 10787 11125 $11,255
7/31/1998 10833 11173 $11,296
8/31/1998 10979 11326 $11,406
9/30/1998 11106 11448 $11,478
10/31/1998 11121 11475 $11,534
11/30/1998 11153 11509 $11,562
12/31/1998 11167 11521 $11,590
1/31/1999 11277 11637 $11,694
2/28/1999 11245 11603 $11,707
3/31/1999 11270 11640 $11,718
4/30/1999 11274 11633 $11,754
5/31/1999 11232 11588 $11,737
6/30/1999 11093 11454 $11,667
7/31/1999 11161 11514 $11,724
8/31/1999 11141 11493 $11,739
9/30/1999 11186 11552 $11,783
10/31/1999 11155 11521 $11,784
11/30/1999 11212 11569 $11,836
12/31/1999 11171 11538 $11,817
1/31/2000 11207 11576 $11,838
2/29/2000 11254 11626 $11,876
3/31/2000 11340 11717 $11,937
4/30/2000 11313 11690 $11,938
5/31/2000 11334 11713 $11,951
6/30/2000 11500 11888 $12,102
7/31/2000 11589 11982 $12,199
8/31/2000 11712 12112 $12,293
9/30/2000 11685 12084 $12,296
10/31/2000 11740 12143 $12,365
11/30/2000 11794 12201 $12,415
12/31/2000 11931 12346 $12,554
1/31/2001 12075 12486 $12,744
2/28/2001 12098 12511 $12,793
3/31/2001 12135 12563 $12,883
4/30/2001 12031 12454 $12,864
5/31/2001 12123 12553 $12,982
6/30/2001 12191 12625 $13,040
7/31/2001 12295 12736 $13,146
8/31/2001 12435 12884 $13,283
9/30/2001 12442 12880 $13,349
10/31/2001 12532 12988 $13,435
11/30/2001 12466 12907 $13,394
12/31/2001 12433 12886 $13,381
1/31/2002 12575 13024 $13,551
2/28/2002 12676 13132 $13,653
3/31/2002 12443 12900 $13,449
4/30/2002 12631 13099 $13,647
5/31/2002 12734 13196 $13,726
6/30/2002 12801 13280 $13,844
7/31/2002 12903 13390 $13,952
8/31/2002 13018 13499 $14,041
9/30/2002 13192 13684 $14,151
10/31/2002 12987 13481 $14,074
11/30/2002 13000 13498 $14,078
12/31/2002 13188 13685 $14,280
1/31/2003 13153 13651 $14,325
2/28/2003 13264 13771 $14,418
3/31/2003 13240 13762 $14,401
4/30/2003 13301 13816 $14,440
5/31/2003 13437 13963 $14,551
6/30/2003 13408 13935 $14,528
7/31/2003 13177 13708 $14,397
8/31/2003 13249 13774 $14,470
9/30/2003 13458 13998 $14,688
10/31/2003 13419 13959 $14,618
11/30/2003 13467 14014 $14,632
12/31/2003 13496 14046 $14,663
1/31/2004 13547 14102 $14,713
2/29/2004 13659 14225 $14,839
3/31/2004 13609 14174 $14,799
4/30/2004 13417 13988 $14,649
5/31/2004 13394 13953 $14,592
6/30/2004 13422 13985 $14,617
7/31/2004 13528 14100 $14,726
8/31/2004 13699 14286 $14,882
9/30/2004 13743 14335 $14,898
10/31/2004 13799 14398 $14,940
11/30/2004 13712 14308 $14,868
12/31/2004 13836 14442 $14,926
1/31/2005 13852 14476 $14,905
2/28/2005 13813 14424 $14,860
3/31/2005 13751 14362 $14,811
4/30/2005 13871 14492 $14,887
5/31/2005 13928 14556 $14,914
6/30/2005 13986 14621 $14,991
7/31/2005 13923 14557 $14,955
8/31/2005 13993 14648 $15,005
9/30/2005 13968 14624 $15,012
10/31/2005 13932 14588 $14,990
11/30/2005 13948 14608 $15,003
12/31/2005 14025 14678 $15,056
CREDIT QUALITY(3),(4) (AS OF DECEMBER 31,2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 46%
AA 5%
A 12%
BBB 19%
SPI 11%
Cash 4%
Unrated 3%
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31,2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 24%
2-5 Years 58%
6-10 Years 16%
11-20 Years 2%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE CALIFORNIA LIMITED-TERM
TAX-FREE FUND - Administrator Class was named the Wells Fargo California
Limited-Term Tax-Free Fund - Institutional Class. Performance for Administrator
Class shares of the Fund prior to November 8, 1999, reflects performance of the
Institutional Class shares of the Stagecoach California Tax-Free Income Fund,
its predecessor fund, and prior to September 6, 1996, reflects performance of
the Class A shares of the predecessor fund.
(2) Lehman Brothers 3-Year Municipal Bond Index is the 3-year (2-4) component of
the Lehman Brothers Municipal Bond Index. The Lehman Brothers Municipal Bond
Index is a rules-based, market-value-weighted index engineered for the long-term
tax-exempt bond market. To be included in the index, bonds must have a minimum
credit rating of Baa. They must have an outstanding par value of at least $5
million and be issued as part of a transaction of at least $50 million. The
bonds must have a dated-date after December 31, 1990 and must be at least one
year from their maturity date. Remarketed issues, taxable municipal bonds, bonds
with floating rates, and derivatives, are excluded from the benchmark. You
cannot invest directly in an Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service. Standard & Poor's is a trademark of
McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or
promoted by these rating agencies and these rating agencies make no
representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and California income tax rate of 41.05%.
Any capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE CALIFORNIA
LIMITED-TERM TAX-FREE FUND Class A and Administrator Class shares for the most
recent ten years with the Lehman Brothers 3-Year Municipal Bond Index. The chart
assumes a hypothetical $10,000 investment in Class A and Administrator Class
shares and reflects all operating expenses and, for Class A shares, assumes the
maximum initial sales charge of 3.00%.
3
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CALIFORNIA TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE CALIFORNIA TAX-FREE FUND (the Fund) seeks to
provide investors with a high level of current income exempt from federal income
tax and California individual income tax while preserving capital, by investing
in medium- to long-term investment-grade municipal securities.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Stephen Galiani 10/06/1988
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.76%(1) for the six-month period ended
December 31, 2005, excluding sales charges, outperforming its benchmark, the
Lehman Brothers Municipal Bond Index(2), which returned 0.60% during the same
period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED.
CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE 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.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
During the second half of 2005, the Federal Reserve (the Fed) continued
its policy of incrementally increasing the federal funds rate, ending the year
at 4.25%. This strategy also caused other short-term interest rates to rise. For
example, in the municipal market, interest rates on bonds with one- and two-year
maturities rose by about 0.60%, while rates in the 5-year, 10-year, and 15-year
maturities increased by approximately 0.40%, 0.30%, and 0.20%, respectively.
Rates on long-term bonds increased by only 0.10% to 0.15%. As a result of this
flattening of the yield curve, bonds in the 4- to 12-year maturity range turned
in the lowest returns, while shorter and longer maturities posted better
returns.
The Fund's modified duration was longer than that of its index for the
entire six months. Moreover, relative to the index, the Fund was underweighted
in the 4- to 12-year maturity range and overweighted in both the liquidity
sector and the longer maturity range, which enabled the Fund to outperform its
index. The Fund's best performing individual holdings were two higher-coupon,
lower investment-grade bonds that were prerefunded during the period. A number
of the Fund's lower investment-grade, higher-yielding securities also produced
superior returns.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
No major strategic programs or substantial changes to the portfolio were
initiated. The Fund's modified duration remained between 10% and 15% longer than
that of its index, and the Fund's liquidity position was generally maintained at
about 4%. We continued to increase the Fund's holdings of prerefunded and
escrowed bonds; these highest-quality positions now represent over 16% of the
portfolio. Other trades were executed to realize relative value opportunities or
to add to incremental yield. Notable among the relative value trades were the
purchases of noncallable zero-coupon bonds when their yield spreads widened and
their sale when spreads narrowed.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
At the close of 2005, the Fund's duration was 13% longer than that of its
index. The Fund continues to be overweighted in the longer maturity range,
especially in the 12- to 17-year portion of the yield curve, and underweighted
in the 4- to 12-year maturity range.
We anticipate that the Fed will continue to raise short-term rates during
the first half of 2006, bringing the Federal funds rate to 4.75% or higher. Over
the near term, we expect the Fed's demonstrated determination to maintain a
preemptive anti-inflation policy to enable intermediate-term rates to remain in
the broad trading range that has defined the market for over a year.
In this environment, we seek to gradually reduce the Fund's modified
duration to more closely match that of its benchmark index. To do this, we will
selectively liquidate higher-duration bonds and replace them with lower-duration
instruments or with floating rate liquidity positions. The latter should
continue to benefit from increases in the Federal funds rate. We will seek to
maintain the Fund's liquidity position at about 5% or greater.
We believe that this structure may enable the Fund to continue to perform
well in the current market environment and may also benefit from rising
short-term rates while at the same time preparing for the possibility of
interest rates moving in new durations. We will also continue to seek relative
value trading opportunities to add to the Fund's return.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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
MUNICIPAL SECURITIES RISK, HIGH YIELD BOND RISK, AND STATE OF CALIFORNIA RISK.
CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER
RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 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 CALIFORNIA TAX-FREE FUND.
(1) The Fund's advisor has committed through October 31, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE CALIFORNIA TAX-FREE
FUND was named the Wells Fargo California Tax-Free Fund. Performance for Class
A, Class B, and Class C shares of the Fund prior to November 8, 1999, reflects
performance of the applicable share class of the Stagecoach California Tax-Free
Bond Fund, its predecessor fund. Performance for Class A shares prior to
December 15, 1997, reflects performance of Class A shares of the Overland
Express California Tax-Free Bond Fund. Performance for the Class B shares prior
to December 12, 1997, reflects performance of Class D shares of the Overland
Fund. Performance for Class C shares of the Fund prior to December 12,1997,
reflects performance of the Class D shares of the Overland Fund. Performance for
Class B and Class C shares prior to July 1,1993, reflects performance of the
Class A shares of the Overland Fund adjusted to reflect Class B and Class C
sales charges and expenses, respectively.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- --------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
WELLS FARGO ADVANTAGE CALIFORNIA
TAX-FREE FUND - Class A
(Incept. Date 10/06/1988) (3.75) (0.10) 4.18 4.99 0.76 4.58 5.13 5.47
WELLS FARGO ADVANTAGE CALIFORNIA
TAX-FREE FUND - Class B
(Incept. Date 12/15/1997) (4.67) (1.25) 3.98 4.66 0.33 3.75 4.32 4.66
WELLS FARGO ADVANTAGE CALIFORNIA
TAX-FREE FUND - Class C
(Incept. Date 07/01/1993) (0.58) 2.76 4.32 4.67 0.42 3.76 4.32 4.67
WELLS FARGO ADVANTAGE CALIFORNIA
TAX-FREE FUND - Administrator Class (Incept. Date 12/15/1997) 0.89 4.93 5.38 5.62
Benchmark
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.59 5.71
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA
Weighted Average Coupon 4.19%
Weighted Average Maturity 15.49 years
Estimated Average Duration 5.96 years
Portfolio Turnover 21%
Net Asset Value (NAV)
(Class A, B, C, Administrator) $11.24, $11.46, $11.47, $11.27
30-Day SEC Yield(5)
(Class A, B, C, Administrator) 4.08%, 3.51%, 3.51%, 4.53%
Distribution Rate(6) (Class A, B, C,
Administrator ) 4.13%, 3.57%, 3.57%, 4.57%
30-Day Taxable Equivalent Yield(7)
(Class A, B, C, Administrator) 6.92%, 5.95%, 5.95%, 7.68%
Alternative Minimum Tax (AMT)(8) 7.50%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
CALIFORNIA TAX-FREE CALIFORNIA TAX-FREE LEHMAN BROTHERS
FUND CLASS A FUND ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
---------------------- ------------------------ ------------------------
12/31/1995 9551 10000 10,000
1/31/1996 9600 10051 10,076
2/29/1996 9514 9961 10,007
3/31/1996 9368 9808 9,879
4/30/1996 9327 9765 9,852
5/31/1996 9334 9773 9,848
6/30/1996 9443 9887 9,955
7/31/1996 9547 9996 10,045
8/31/1996 9554 10004 10,043
9/30/1996 9701 10157 10,183
10/31/1996 9806 10267 10,298
11/30/1996 9995 10466 10,487
12/31/1996 9936 10403 10,443
1/31/1997 9953 10422 10,463
2/28/1997 10050 10522 10,559
3/31/1997 9908 10374 10,418
4/30/1997 9997 10467 10,506
5/31/1997 10147 10625 10,665
6/30/1997 10236 10717 10,779
7/31/1997 10570 11067 11,077
8/31/1997 10448 10939 10,973
9/30/1997 10566 11063 11,104
10/31/1997 10631 11131 11,175
11/30/1997 10680 11182 11,241
12/31/1997 10827 11337 11,405
1/31/1998 10967 11484 11,522
2/28/1998 10967 11475 11,526
3/31/1998 10961 11479 11,536
4/30/1998 10916 11432 11,484
5/31/1998 11095 11610 11,666
6/30/1998 11136 11654 11,711
7/31/1998 11153 11682 11,740
8/31/1998 11340 11878 11,922
9/30/1998 11519 12066 12,071
10/31/1998 11514 12061 12,071
11/30/1998 11555 12104 12,114
12/31/1998 11564 12115 12,144
1/31/1999 11709 12256 12,289
2/28/1999 11646 12202 12,234
3/31/1999 11690 12238 12,252
4/30/1999 11694 12254 12,282
5/31/1999 11592 12147 12,211
6/30/1999 11397 11944 12,035
7/31/1999 11433 11983 12,078
8/31/1999 11300 11844 11,982
9/30/1999 11312 11847 11,987
10/31/1999 11149 11678 11,857
11/30/1999 11278 11825 11,983
12/31/1999 11142 11685 11,893
1/31/2000 11083 11625 11,841
2/29/2000 11277 11819 11,978
3/31/2000 11562 12130 12,239
4/30/2000 11458 12012 12,167
5/31/2000 11410 11975 12,104
6/30/2000 11751 12322 12,424
7/31/2000 11942 12524 12,597
8/31/2000 12200 12807 12,791
9/30/2000 12127 12722 12,725
10/31/2000 12211 12823 12,863
11/30/2000 12316 12935 12,961
12/31/2000 12668 13294 13,281
1/31/2001 12720 13362 13,413
2/28/2001 12767 13413 13,456
3/31/2001 12842 13482 13,577
4/30/2001 12656 13289 13,430
5/31/2001 12798 13451 13,575
6/30/2001 12870 13530 13,666
7/31/2001 13071 13742 13,868
8/31/2001 13365 14052 14,097
9/30/2001 13323 14010 14,049
10/31/2001 13456 14152 14,216
11/30/2001 13356 14037 14,097
12/31/2001 13200 13888 13,963
1/31/2002 13372 14071 14,205
2/28/2002 13504 14211 14,375
3/31/2002 13213 13908 14,093
4/30/2002 13421 14129 14,368
5/31/2002 13523 14226 14,456
6/30/2002 13600 14321 14,609
7/31/2002 13741 14471 14,797
8/31/2002 13931 14673 14,975
9/30/2002 14265 15027 15,303
10/31/2002 13956 14704 15,049
11/30/2002 13938 14675 14,986
12/31/2002 14195 14962 15,302
1/31/2003 14124 14877 15,264
2/28/2003 14310 15075 15,477
3/31/2003 14313 15082 15,487
4/30/2003 14453 15232 15,589
5/31/2003 14745 15556 15,954
6/30/2003 14657 15453 15,885
7/31/2003 14127 14898 15,329
8/31/2003 14243 15024 15,444
9/30/2003 14628 15432 15,898
10/31/2003 14569 15373 15,819
11/30/2003 14752 15570 15,983
12/31/2003 14839 15664 16,116
1/31/2004 14894 15726 16,208
2/29/2004 15169 16018 16,452
3/31/2004 15093 15941 16,395
4/30/2004 14684 15514 16,006
5/31/2004 14648 15479 15,949
6/30/2004 14717 15555 16,006
7/31/2004 14934 15788 16,217
8/31/2004 15246 16120 16,542
9/30/2004 15356 16239 16,629
10/31/2004 15494 16388 16,772
11/30/2004 15358 16249 16,635
12/31/2004 15559 16463 16,838
1/31/2005 15754 16673 16,994
2/28/2005 15710 16630 16,938
3/31/2005 15602 16519 16,832
4/30/2005 15894 16831 17,098
5/31/2005 16049 16999 17,219
6/30/2005 16148 17121 17,326
7/31/2005 16094 17053 17,248
8/31/2005 16279 17252 17,422
9/30/2005 16108 17076 17,305
10/31/2005 16024 16991 17,200
11/30/2005 16109 17084 17,282
12/31/2005 16271 17274 17,431
CREDIT QUALITY(3),(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 56%
AA 7%
A 13%
BBB 15%
SPI 2%
Cash 1%
Unrated 6
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 6%
2-5 Years 8%
6-10 Years 13%
11-20 Years 43%
21+ Years 30%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE CALIFORNIA TAX-FREE
FUND - Administrator Class was named the Wells Fargo California Tax-Free Fund -
Institutional Class. Performance for Administrator Class shares of the Fund
prior to November 8, 1999, reflects performance of the Institutional Class
shares of the Stagecoach California Tax-Free Bond Fund, its predecessor fund,
and prior to December 15, 1997, reflects performance of the Class A shares of
the Overland Express California Tax-Free Bond Fund, adjusted for Institutional
Class expenses.
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of Baa. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
Index.
(3) Fund characteristics, credit quality, and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service. Standard & Poor's is a trademark of
McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or
promoted by these rating agencies and these rating agencies make no
representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and California income tax rate of 41.05%.
Any capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE CALIFORNIA
TAX-FREE FUND Class A and Administrator Class shares for the most recent ten
years with the Lehman Brothers Municipal Bond Index. The chart assumes a
hypothetical $10,000 investment in Class A and Administrator Class shares and
reflects all operating expenses and, for Class A shares, assumes the maximum
initial sales charge of 4.50%.
5
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE COLORADO TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE COLORADO TAX-FREE FUND (the Fund) seeks a high
level of current income exempt from federal income tax and Colorado individual
income tax consistent with the preservation of capital.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Arthur C. Evans 06/01/1993
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.53%(1) during the six-month period
ended December 31, 2005, excluding sales charges, underperforming its benchmark,
the Lehman Brothers Municipal Bond Index(2) which returned 0.60% 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 4.50%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. 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.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
During the second half of 2005, and for the year in general, returns in
the municipal market were influenced mostly by yield-curve exposure and
allocations to the higher-yielding sectors, such as tobacco and health care. The
municipal yield curve continued to flatten during the six-month period, with the
difference between 30-year yields and 1-year yields ending the year an
additional 0.45% lower, at 1.19%. This flattening of the yield curve detracted
most from the performance of credits with five- to ten-year maturities, in which
the Fund was heavily weighted. Total returns during the second half of 2005 for
a few select maturities within the benchmark illustrate this point: 3-year,
0.77%; 5-year, 0.20%; 10-year, 0.21%; and 30-year, 1.21%.
The Fund's holdings of revenue bonds backed by single-family mortgages
were the top performers for the period. These issues, which included the
Colorado Housing & Finance Authority 6.70%, maturing on August 1, 2017, returned
in excess of 4.00% for the period. True to its historical tendency, the
single-family mortgage sector resisted the negative price pressures of a rising
interest rate environment. Several positions in the health care sector,
particularly those at the low end of the investment-grade spectrum, also
performed well due to narrowing credit spreads. One example was the Fund's
holdings in Colorado Health Facilities Authority Revenue Bonds (Parkview Medical
Center), which returned 2.79% and matures on September 1, 2020.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We marginally increased the Fund's exposure to bonds in the 20- to 30-year
maturity range. Additionally, we purchased one zero-coupon bond: E-470 Public
Highway Authority, due September 1, 2020. By gradually shifting some of the
Fund's intermediate exposure into longer maturities, we hoped to align the
Fund's positioning more closely with that of its benchmark in preparation for
the possible end to the Federal Reserve's cycle of interest rate increases.
Increasing this allocation to longer-dated bonds with higher yields helped boost
the Fund's performance. Additionally, we selectively increased the Fund's
holdings of credits with lower investment-grade quality ratings, adding several
BBB, A, and nonrated issues, such as Adonea Metropolitan District Colorado
4.375%, due December 1, 2015. Although credit spreads were approaching narrow
levels, we liked these bonds because they were inexpensive on a relative value
basis and provided the Fund with higher income streams.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Economic data is leading us to expect a strong start in 2006. However, we
believe that strength is likely to rotate from housing and consumer spending to
more of a manufacturing and business-led investment cycle. That said, the
continuing impact of higher oil prices on the economy and signs that higher
interest rates have begun to slow the housing market prompt us to temper our
optimism with a dose of caution. We continue to maintain a neutral to slightly
defensive duration stance relative to the Fund's benchmark while trying to
capture trading opportunities. Additionally, we will look to adjust the Fund's
maturity distribution away from concentration at the short- and long-term ends
to one that is more evenly distributed across short-, intermediate-, and
long-term maturities once we feel that the majority of curve flattening is
behind the municipal market.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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 MUNICIPAL SECURITIES
RISK, HIGH YIELD BOND RISK, AND STATE OF COLORADO RISK. CONSULT THE FUND'S
PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 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 COLORADO TAX-FREE FUND.
(1) The Fund's advisor has committed through October 31, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE COLORADO TAX-FREE FUND
was named the Wells Fargo Colorado Tax-Free Fund. Performance for Class A and
Class B shares of the Fund prior to November 8,1998, reflects performance of the
applicable share class of the Norwest Advantage Colorado Tax-Free Fund, its
predecessor fund. Performance for Class B shares prior to August 2, 1993,
reflects performance of the Class A shares adjusted for Class B sales charges
and expenses.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- --------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
WELLS FARGO ADVANTAGE COLORADO
TAX-FREE FUND - Class A
(Incept. Date 06/01/1993) (3.99) (1.62) 4.40 5.05 0.53 3.01 5.37 5.54
WELLS FARGO ADVANTAGE COLORADO
TAX-FREE FUND - Class B
(Incept. Date 08/02/1993) (4.85) (2.76) 4.24 4.75 0.15 2.24 4.58 4.75
WELLS FARGO ADVANTAGE COLORADO
TAX-FREE FUND - Administrator
Class (Incept. Date 08/23/1993) 0.66 3.27 5.54 5.62
Benchmark
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.59 5.71
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA+
Weighted Average Coupon 5.51%
Weighted Average Maturity 12.22 years
Estimated Average Duration 5.01 years
Portfolio Turnover 11%
Net Asset Value (NAV)
(Class A, B, Administrator) $10.77, $10.78, $10.77
30-Day SEC Yield(5) (Class A, B, Administrator) 3.92%, 3.36%, 4.36%
Distribution Rate(6) (Class A, B, Administrator) 4.04%, 3.48%, 4.47%
30-Day Taxable Equivalent Yield(7)
(Class A, B, Administrator) 6.32%, 5.42%, 7.03%
Alternative Minimum Tax (AMT)(8) 11.94%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
COLORADO TAX-FREE COLORADO TAX-FREE LEHMAN BROTHERS YEAR
FUND CLASS A FUND ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
---------------------- ------------------------ ------------------------
12/31/1995 9,550 10000 10,000
1/31/1996 9,619 10072 10,076
2/29/1996 9,546 10006 10,007
3/31/1996 9,429 9883 9,879
4/30/1996 9,378 9829 9,852
5/31/1996 9,407 9850 9,848
6/30/1996 9,524 9972 9,955
7/31/1996 9,635 10089 10,045
8/31/1996 9,617 10070 10,043
9/30/1996 9,774 10235 10,183
10/31/1996 9,888 10354 10,298
11/30/1996 10,020 10492 10,487
12/31/1996 10,016 10488 10,443
1/31/1997 10,072 10546 10,463
2/28/1997 10,141 10619 10,559
3/31/1997 10,005 10476 10,418
4/30/1997 10,098 10574 10,506
5/31/1997 10,253 10736 10,665
6/30/1997 10,357 10845 10,779
7/31/1997 10,694 11198 11,077
8/31/1997 10,527 11023 10,973
9/30/1997 10,673 11186 11,104
10/31/1997 10,780 11287 11,175
11/30/1997 10,845 11367 11,241
12/31/1997 11,047 11567 11,405
1/31/1998 11,146 11682 11,522
2/28/1998 11,146 11671 11,526
3/31/1998 11,150 11676 11,536
4/30/1998 11,049 11581 11,484
5/31/1998 11,274 11806 11,666
6/30/1998 11,319 11852 11,711
7/31/1998 11,334 11868 11,740
8/31/1998 11,529 12073 11,922
9/30/1998 11,702 12254 12,071
10/31/1998 11,607 12154 12,071
11/30/1998 11,694 12245 12,114
12/31/1998 11,725 12277 12,144
1/31/1999 11,848 12406 12,289
2/28/1999 11,748 12301 12,234
3/31/1999 11,740 12294 12,252
4/30/1999 11,776 12342 12,282
5/31/1999 11,702 12253 12,211
6/30/1999 11,471 12012 12,035
7/31/1999 11,486 12028 12,078
8/31/1999 11,346 11881 11,982
9/30/1999 11,261 11791 11,987
10/31/1999 11,109 11632 11,857
11/30/1999 11,226 11755 11,983
12/31/1999 11,082 11616 11,893
1/31/2000 10,963 11480 11,841
2/29/2000 11,174 11701 11,978
3/31/2000 11,446 11998 12,239
4/30/2000 11,371 11907 12,167
5/31/2000 11,249 11779 12,104
6/30/2000 11,570 12128 12,424
7/31/2000 11,766 12332 12,597
8/31/2000 11,997 12562 12,791
9/30/2000 11,907 12481 12,725
10/31/2000 12,057 12625 12,863
11/30/2000 12,160 12733 12,961
12/31/2000 12,605 13199 13,281
1/31/2001 12,689 13300 13,413
2/28/2001 12,769 13371 13,456
3/31/2001 12,876 13483 13,577
4/30/2001 12,647 13243 13,430
5/31/2001 12,776 13391 13,575
6/30/2001 12,906 13527 13,666
7/31/2001 13,160 13780 13,868
8/31/2001 13,439 14073 14,097
9/30/2001 13,367 14011 14,049
10/31/2001 13,524 14161 14,216
11/30/2001 13,401 14033 14,097
12/31/2001 13,282 13908 13,963
1/31/2002 13,469 14104 14,205
2/28/2002 13,637 14280 14,375
3/31/2002 13,374 14018 14,093
4/30/2002 13,610 14265 14,368
5/31/2002 13,692 14351 14,456
6/30/2002 13,852 14519 14,609
7/31/2002 14,146 14826 14,797
8/31/2002 14,335 15011 14,975
9/30/2002 14,683 15375 15,303
10/31/2002 14,385 15063 15,049
11/30/2002 14,320 14997 14,986
12/31/2002 14,643 15340 15,302
1/31/2003 14,567 15263 15,264
2/28/2003 14,764 15473 15,477
3/31/2003 14,753 15464 15,487
4/30/2003 14,860 15579 15,589
5/31/2003 15,170 15908 15,954
6/30/2003 15,047 15782 15,885
7/31/2003 14,569 15284 15,329
8/31/2003 14,720 15446 15,444
9/30/2003 15,093 15840 15,898
10/31/2003 15,025 15772 15,819
11/30/2003 15,190 15949 15,983
12/31/2003 15,316 16084 16,116
1/31/2004 15,357 16130 16,208
2/29/2004 15,590 16379 16,452
3/31/2004 15,476 16263 16,395
4/30/2004 15,105 15891 16,006
5/31/2004 15,089 15863 15,949
6/30/2004 15,187 15968 16,006
7/31/2004 15,401 16197 16,217
8/31/2004 15,686 16500 16,542
9/30/2004 15,755 16576 16,629
10/31/2004 15,854 16684 16,772
11/30/2004 15,705 16531 16,635
12/31/2004 15,893 16732 16,838
1/31/2005 16,008 16857 16,994
2/28/2005 15,943 16791 16,938
3/31/2005 15,838 16684 16,832
4/30/2005 16,070 16932 17,098
5/31/2005 16,186 17058 17,219
6/30/2005 16,286 17166 17,326
7/31/2005 16,224 17105 17,248
8/31/2005 16,385 17278 17,422
9/30/2005 16,276 17166 17,305
10/31/2005 16,167 17056 17,200
11/30/2005 16,223 17118 17,282
12/31/2005 16,372 17279 17,431
CREDIT QUALITY(3),(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 51%
AA 14%
A 16%
BBB 9%
B 1%
SPI 1%
Cash 1%
Unrated 7%
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 7%
2-5 Years 21%
6-10 Years 9%
11-20 Years 52%
21+ Years 11%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE COLORADO TAX-FREE FUND
- - Administrator Class was named the Wells Fargo Colorado Tax-Free Fund -
Institutional Class. Performance for Administrator Class shares of the Fund
prior to November 8, 1999, reflects performance of the Institutional Class
shares of the Norwest Advantage Colorado Tax-Free Fund, its predecessor fund.
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of Baa. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service. Standard & Poor's is a trademark of
McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or
promoted by these rating agencies and these rating agencies make no
representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT).The Fund's taxable equivalent
yield is based on the combined federal and Colorado income tax rate of 38.01%.
Any capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE COLORADO
TAX-FREE FUND Class A and Administrator Class shares for the most recent 10
years with the Lehman Brothers Municipal Bond Index.The chart assumes a
hypothetical $10,000 investment in Class A and Administrator Class shares and
reflects all operating expenses and, for Class A shares, assumes the maximum
initial sales charge of 4.50%.
7
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MINNESOTA TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MINNESOTA TAX-FREE FUND (the Fund) seeks a high
level of current income exempt from federal income tax and Minnesota individual
income tax, without assuming undue risk.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Duane A. McAllister, CFA 01/12/1988
Adrian Van Poppel
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.49%(1) for the six-month period ended
December 31, 2005, excluding sales charges, underperforming its benchmark, the
Lehman Brothers Municipal Bond Index(2), which returned 0.60% 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 4.50%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE 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 Fund's below-market duration had a positive impact on performance, as
yields trended higher during the period. Yields on securities with short- and
intermediate-term maturities rose the most, leading to a significantly flatter
yield curve. However, our curve allocation proved to be more of a mixed bag,
with a net negative result.
On the positive side, a few of the Fund's holdings benefited from
refunding. When refunding occurs, the outstanding debt is refinanced, and the
proceeds are invested in Treasury securities, often boosting both the credit
quality and the value of the security. Offsetting this, however, was the fact
that approximately 70% of the Fund's maturities were seven years or shorter.
This overweighting among short and intermediate maturities, and the accompanying
underweighting in longer maturities, were the wrong allocations since relative
performance favored longer maturities.
In contrast, our overweighting in lower-quality issues aided performance.
Credit spreads among bonds of low investment grade and below investment grade
quality have been narrowing for several quarters. The health care sector of the
market, which at the end of the period represented more than 20% of the Fund's
assets, was among the best-performing of all sectors. Demand for yield and solid
credit fundamentals continued to support investors' interest in health-care
issues.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Although the Fund carried an overweighting in lower-quality credits at the
beginning of the period, we added modestly to this exposure, as we continued to
find attractive values. For example, the Glencoe, MN Regional Health Services
Project came to market with an issue that refunded two Glencoe bonds held by the
Fund. Those holdings were upgraded from "BBB" to "AAA" as a result of being
refunded. In addition, we purchased bonds from the new issue with a 5.0% coupon
maturing in 2025 and 2035. This purchase allowed us to maintain our exposure to
the credit while also extending the Fund's average maturity.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Going forward, we expect that the extent to which the Federal Reserve (the
Fed) tightens monetary policy will be much more dependent upon economic data
than it has been thus far. If the housing market continues to cool and consumer
spending slows, we believe a pause or end to Fed interventions may not be far
off. However, the predictive power of the current flat yield curve could be
tested. Normally, when the curve flattens, it signals a slowing economy and
fading fears of inflation. In that environment, bond investors have often been
rewarded for extending maturities in anticipation of falling yields. This time,
however, the flattening curve has occurred with yields in all maturities at
relatively low absolute levels. Since yields on long maturities have not risen
to the extent they have in past tightening cycles, we believe that maintaining
the current cautious duration posture is the prudent approach.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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 HIGH YIELD BOND RISK,
MUNICIPAL SECURITIES RISK, AND STATE OF MINNESOTA RISK. CONSULT THE FUND'S
PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 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 MINNESOTA TAX-FREE FUND.
(11) The Fund's advisor 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.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE MINNESOTA TAX-FREE FUND
was named the Wells Fargo Minnesota Tax-Free Fund. Performance for Class C
shares of the Fund prior to April 11, 2005, reflects the performance of the
Class A shares of the Fund, and prior to November 8, 1999, reflects the
performance of the applicable share class of the Norwest Advantage Minnesota
Tax-Free Fund, its predecessor fund.
Prior to April 11, 2005, WELLS FARGO ADVANTAGE MINNESOTA TAX-FREE FUND was
named the Wells Fargo Minnesota Tax-Free Fund. Performance for Class Z shares of
the Fund prior to April 11, 2005, reflects the performance of the Class A shares
of the 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. Prior to November 8, 1999, reflects the performance of the applicable
share class of the Norwest Advantage Minnesota Tax-Free Fund, its predecessor
fund.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- --------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
WELLS FARGO ADVANTAGE MINNESOTA
TAX-FREE FUND - Class A
(Incept. 01/12/1988) (4.03) (1.76) 4.19 4.57 0.49 2.87 5.16 5.05
WELLS FARGO ADVANTAGE MINNESOTA
TAX-FREE FUND - Class B
(Incept. 08/06/1993) (4.89) (2.90) 4.03 4.27 0.11 2.10 4.37 4.27
WELLS FARGO ADVANTAGE MINNESOTA
TAX-FREE FUND - Class C
(Incept. 04/11/2005) (0.90) 1.08 4.37 4.27 0.10 2.08 4.37 4.27
WELLS FARGO ADVANTAGE MINNESOTA
TAX-FREE FUND - Class Z
(Incept. 04/11/2005) 0.53 2.90 5.16 5.06
WELLS FARGO ADVANTAGE MINNESOTA TAX-FREE FUND -
Administrator Class (Incept. 08/02/1993) 0.70 3.12 5.30 5.14
Benchmark
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.59 5.71
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA
Weighted Average Coupon 5.18%
Weighted Average Maturity 12.04 years
Estimated Average Duration 4.83 years
Portfolio Turnover 9%
Net Asset Value (NAV)
(Class A, B, C, Z, Administrator) $10.94, $10.94, $10.94, $10.94, $10.94
30-Day SEC Yield(5)
(Class A, B, C, Z, Administrator) 3.73%, 3.16%, 3.17%, 4.01%, 4.16%
Distribution Rate(6)
(Class A, B, C, Z, Administrator) 3.93%, 3.37 %, 3.35%, 4.22%, 4.37%,
30-Day Taxable Equivalent Yield(7)
(Class A, B, C, Z, Administrator) 6.23%, 5.28%, 5.29%, 6.69%, 6.94%
Alternative Minimum Tax (AMT)(8) 0.75%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
MINNESOTA TAX-FREE MINNESOTA TAX-FREE LEHMAN BROTHERS
FUND CLASS A ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
---------------------- ------------------------ ------------------------
12/31/1995 9550 10000 10,000
1/31/1996 9607 10060 10,076
2/29/1996 9521 9978 10,007
3/31/1996 9382 9824 9,879
4/30/1996 9350 9790 9,852
5/31/1996 9348 9789 9,848
6/30/1996 9467 9913 9,955
7/31/1996 9545 9994 10,045
8/31/1996 9517 9965 10,043
9/30/1996 9674 10129 10,183
10/31/1996 9780 10241 10,298
11/30/1996 9953 10421 10,487
12/31/1996 9911 10378 10,443
1/31/1997 9909 10376 10,463
2/28/1997 9986 10456 10,559
3/31/1997 9848 10312 10,418
4/30/1997 9956 10425 10,506
5/31/1997 10094 10570 10,665
6/30/1997 10193 10673 10,779
7/31/1997 10504 10999 11,077
8/31/1997 10365 10863 10,973
9/30/1997 10503 10998 11,104
10/31/1997 10586 11084 11,175
11/30/1997 10648 11149 11,241
12/31/1997 10819 11328 11,405
1/31/1998 10932 11447 11,522
2/28/1998 10933 11448 11,526
3/31/1998 10937 11452 11,536
4/30/1998 10860 11372 11,484
5/31/1998 11075 11597 11,666
6/30/1998 11118 11642 11,711
7/31/1998 11132 11657 11,740
8/31/1998 11329 11873 11,922
9/30/1998 11493 12035 12,071
10/31/1998 11416 11953 12,071
11/30/1998 11469 12009 12,114
12/31/1998 11492 12034 12,144
1/31/1999 11599 12145 12,289
2/28/1999 11546 12090 12,234
3/31/1999 11550 12094 12,252
4/30/1999 11583 12129 12,282
5/31/1999 11513 12056 12,211
6/30/1999 11326 11860 12,035
7/31/1999 11319 11853 12,078
8/31/1999 11134 11659 11,982
9/30/1999 11031 11551 11,987
10/31/1999 10834 11344 11,857
11/30/1999 10934 11450 11,983
12/31/1999 10810 11320 11,893
1/31/2000 10719 11223 11,841
2/29/2000 10939 11454 11,978
3/31/2000 11229 11758 12,239
4/30/2000 11135 11659 12,167
5/31/2000 11042 11562 12,104
6/30/2000 11324 11858 12,424
7/31/2000 11497 12039 12,597
8/31/2000 11671 12221 12,791
9/30/2000 11609 12156 12,725
10/31/2000 11739 12292 12,863
11/30/2000 11823 12380 12,961
12/31/2000 12159 12744 13,281
1/31/2001 12213 12788 13,413
2/28/2001 12295 12874 13,456
3/31/2001 12394 12977 13,577
4/30/2001 12248 12825 13,430
5/31/2001 12394 12978 13,575
6/30/2001 12493 13081 13,666
7/31/2001 12698 13296 13,868
8/31/2001 12904 13512 14,097
9/30/2001 12837 13442 14,049
10/31/2001 12984 13596 14,216
11/30/2001 12869 13475 14,097
12/31/2001 12802 13405 13,963
1/31/2002 12948 13558 14,205
2/28/2002 13116 13733 14,375
3/31/2002 12891 13498 14,093
4/30/2002 13112 13730 14,368
5/31/2002 13190 13811 14,456
6/30/2002 13315 13942 14,609
7/31/2002 13491 14126 14,797
8/31/2002 13642 14285 14,975
9/30/2002 13916 14584 15,303
10/31/2002 13695 14340 15,049
11/30/2002 13619 14263 14,986
12/31/2002 13943 14593 15,302
1/31/2003 13893 14556 15,264
2/28/2003 14114 14790 15,477
3/31/2003 14124 14805 15,487
4/30/2003 14261 14937 15,589
5/31/2003 14577 15272 15,954
6/30/2003 14445 15151 15,885
7/31/2003 13918 14601 15,329
8/31/2003 14070 14764 15,444
9/30/2003 14467 15184 15,898
10/31/2003 14374 15089 15,819
11/30/2003 14527 15252 15,983
12/31/2003 14642 15376 16,116
1/31/2004 14691 15431 16,208
2/29/2004 14934 15690 16,452
3/31/2004 14852 15593 16,395
4/30/2004 14503 15243 16,006
5/31/2004 14472 15214 15,949
6/30/2004 14534 15281 16,006
7/31/2004 14704 15464 16,217
8/31/2004 14981 15759 16,542
9/30/2004 15044 15828 16,629
10/31/2004 15148 15927 16,772
11/30/2004 15008 15796 16,635
12/31/2004 15200 16002 16,838
1/31/2005 15320 16132 16,994
2/28/2005 15242 16053 16,938
3/31/2005 15115 15922 16,832
4/30/2005 15331 16154 17,098
5/31/2005 15454 16286 17,219
6/30/2005 15560 16387 17,326
7/31/2005 15488 16329 17,248
8/31/2005 15654 16507 17,422
9/30/2005 15551 16402 17,305
10/31/2005 15449 16298 17,200
11/30/2005 15502 16357 17,282
12/31/2005 15636 16502 17,431
CREDIT QUALITY(3),(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 45%
AA 21%
A 11%
BBB 12%
Cash 1%
Unrated 10%
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
21+ Years 14%
0-1 Years 5%
2-5 Years 24%
6-10 Years 10%
11-20 Years 47%
- --------------------------------------------------------------------------------
Prior to April 11, 2005,the WELLS FARGO ADVANTAGE MINNESOTA TAX-FREE FUND
- - Administrator Class was named the Wells Fargo Minnesota Tax-Free Fund -
Institutional Class. Performance for Administrator Class shares of the Fund
prior to November 8, 1999, reflects the performance of the Institutional Class
shares of the Norwest Advantage Minnesota Tax-Free Fund, its predecessor fund.
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of Baa. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
Index.
(3) Fund characteristics, credit quality, and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and Minnesota income tax rate of 40.10%.
Any capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE MINNESOTA
TAX-FREE FUND Class A and Administrator Class shares for the most recent ten
years with the Lehman Brothers Municipal Bond Index. The chart assumes a
hypothetical $10,000 investment in Class A and Administrator Class shares and
reflects all operating expenses and, for Class A shares, assumes the maximum
initial sales charge of 4.50%.
9
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE NATIONAL LIMITED-TERM TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE NATIONAL LIMITED-TERM TAX-FREE FUND (the Fund)
seeks current income exempt from federal income taxes.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Arthur C. Evans 10/01/1996
Duane A. McAllister, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.50%(1), excluding sales charges, for
the six-month period ended December 31, 2005, outperforming its benchmark, the
Lehman Brothers 3-Year Municipal Bond Index(2), which returned 0.42% 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 3.00%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 3.00%. 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.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The municipal yield curve continued to flatten during the six-month
period, with the difference between 30-year yields and 1-year yields ending the
year an additional 0.45% lower, at 1.19%. This flattening of the yield curve
detracted mostly from the performance of credits with five- to ten-year
maturities. Total returns during the second half of 2005 for a few select
maturities within the benchmark illustrate this point: 3-year, 0.77%; 5-year,
0.20%; 10-year, 0.21%; and 30-year, 1.21%.
The Fund's holdings of revenue bonds backed by health care issuers and
student loans were the top performers for the period. These issues, which
included the South Carolina Jobs and Economic Development Authority (Palmetto
Health) 5.25%, due August 1, 2011, returned almost 2% for the period, benefiting
from narrowing credit spreads. Other sectors that performed well included
tobacco revenue bonds and single-family housing bonds.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Interest rates were volatile and we executed some trades to take advantage
of this volatility. We adopted a bias to extend duration when the market
appeared oversold and again to shorten duration during overbought conditions. In
general, we maintained a maturity profile in the Fund versus the benchmark that
deemphasized the Fund's two- to five-year maturity holdings in favor of cash
equivalents and longer-dated securities. This positioning helped cushion the
Fund somewhat from the negative impact of the flattening yield curve.
In spite of a generally less than compelling environment for credit
spreads, we did add several interesting, lower investment-grade bonds. One
example was Aurora Colorado Multifamily Revenue Housing Bonds (Woodridge
Project) 4.25%, due December 20, 2040. These nonrated bonds are secured by
Municipal Bond Investors Assurance Corporation-guaranteed investment contract,
which represents a AAA-rated enhancement. The bonds are also structured to have
a three-year effective maturity. Other purchases included tobacco revenue bonds,
hospital revenue bonds, and single-family housing bonds. Although the market
overall reflected increasingly narrow spreads and rich valuations, we liked
these bonds because they appeared cheap on a relative value basis and provided
the Fund with higher income streams.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Economic data is leading us to expect a strong start in 2006. However, we
believe that strength is likely to rotate from housing and consumer spending to
more of a manufacturing and business-led investment cycle. That said, the
continuing impact of higher oil prices on the economy and signs that higher
interest rates have begun to slow the housing market prompt us to temper our
optimism with a dose of caution. We continue to maintain a neutral to slightly
defensive duration stance relative to the Fund's benchmark while trying to
capture trading opportunities. Additionally, we will look to adjust the Fund's
maturity distribution away from concentration at the short- and long-term ends
to one that is more evenly distributed across short-, intermediate-, and
long-term maturities once we feel that the majority of curve flattening is
behind the municipal market.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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 MUNICIPAL SECURITIES
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 December 31, 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 NATIONAL LIMITED-TERM
TAX-FREE FUND.
(1) The Fund's advisor has committed through October 31, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE NATIONAL LIMITED-TERM
TAX-FREE FUND was named the Wells Fargo National Limited-Term Tax- Free Fund.
Performance for Class A, Class B and Class C shares of the Fund prior to January
30, 2004 reflects the performance of the Administrator Class shares of the Fund
adjusted to reflect applicable sales charges and expenses, and prior to November
8,1999,reflects performance of the Institutional Class shares of the Norwest
Advantage Limited Term Tax-Free Fund, its predecessor fund, adjusted to reflect
applicable sales charges and expenses.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- --------------------------------------
Life of Life of
6-Month* 1-Year 5-Year Fund 6-Month* 1-Year 5-Year Fund
WELLS FARGO ADVANTAGE NATIONAL
LIMITED-TERM TAX-FREE
FUND - Class A (Incept. 01/30/2004) (2.52) (2.21) 3.08 4.09 0.50 0.81 3.71 4.43
WELLS FARGO ADVANTAGE NATIONAL
LIMITED-TERM TAX-FREE
FUND - Class B (Incept. 01/30/2004) (2.88) (2.94) 2.93 3.65 0.12 0.06 2.93 3.65
WELLS FARGO ADVANTAGE NATIONAL
LIMITED-TERM TAX-FREE
FUND - Class C (Incept. 01/30/2004) (0.98) (0.95) 2.90 3.63 0.02 0.05 2.90 3.63
WELLS FARGO ADVANTAGE NATIONAL
LIMITED-TERM TAX-FREE
FUND - Administrator Class (Incept. 10/1/1996) 0.53 0.97 3.94 4.68
Benchmark
Lehman Brothers 3-Year Municipal Bond Index(2) 0.42 0.87 3.70 4.22
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA+
Weighted Average Coupon 5.26%
Weighted Average Maturity 3.44 years
Estimated Average Duration 2.46 years
Portfolio Turnover 20%
Net Asset Value (NAV)
(Class A, B, C, Administrator) $10.71, $10.70, $10.69, $10.70
30-Day SEC Yield(5)
(Class A, B, C, Administrator) 3.11%, 2.48%, 2.48%, 3.48%
Distribution Rate(6)
(Class A, B, C, Administrator) 2.86%, 2.20 %, 2.20%, 3.19%
30-Day Taxable Equivalent Yield(7)
(Class A, B, C, Administrator) 4.78%, 3.82%, 3.82%, 5.35%
Alternative Minimum Tax (AMT)(8) 10.74%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
NATIONAL LIMITED-TERM NATIONAL LIMITED-TERM LEHMAN BROTHERS 3-YEAR
TAX-FREE FUND CLASS A TAX-FREE - ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
---------------------- ------------------------------ ------------------------
9/30/1996 9700 10000 $10,000
10/31/1996 10073 10387 $10,070
11/30/1996 10216 10537 $10,164
12/31/1996 10193 10515 $10,169
1/31/1997 10230 10555 $10,213
2/28/1997 10292 10621 $10,263
3/31/1997 10237 10566 $10,210
4/30/1997 10283 10616 $10,253
5/31/1997 10361 10699 $10,337
6/30/1997 10437 10780 $10,398
7/31/1997 10626 10977 $10,521
8/31/1997 10554 10905 $10,501
9/30/1997 10641 10998 $10,576
10/31/1997 10710 11071 $10,623
11/30/1997 10737 11101 $10,653
12/31/1997 10837 11207 $10,726
1/31/1998 10906 11281 $10,797
2/28/1998 10910 11287 $10,819
3/31/1998 10949 11330 $10,837
4/30/1998 10904 11285 $10,822
5/31/1998 11026 11414 $10,922
6/30/1998 11064 11455 $10,959
7/31/1998 11093 11488 $10,998
8/31/1998 11216 11619 $11,105
9/30/1998 11307 11715 $11,176
10/31/1998 11325 11736 $11,230
11/30/1998 11342 11756 $11,257
12/31/1998 11381 11799 $11,284
1/31/1999 11473 11896 $11,386
2/28/1999 11453 11879 $11,399
3/31/1999 11448 11875 $11,409
4/30/1999 11473 11904 $11,444
5/31/1999 11435 11867 $11,428
6/30/1999 11309 11739 $11,359
7/31/1999 11370 11805 $11,416
8/31/1999 11344 11780 $11,430
9/30/1999 11350 11789 $11,473
10/31/1999 11325 11765 $11,474
11/30/1999 11387 11832 $11,524
12/31/1999 11362 11808 $11,506
1/31/2000 11337 11785 $11,526
2/29/2000 11388 11841 $11,563
3/31/2000 11464 11922 $11,623
4/30/2000 11450 11909 $11,624
5/31/2000 11436 11898 $11,636
6/30/2000 11579 12049 $11,783
7/31/2000 11701 12179 $11,878
8/31/2000 11801 12285 $11,969
9/30/2000 11796 12283 $11,972
10/31/2000 11862 12354 $12,039
11/30/2000 11903 12399 $12,088
12/31/2000 12073 12579 $12,223
1/31/2001 12209 12723 $12,409
2/28/2001 12248 12767 $12,457
3/31/2001 12338 12863 $12,544
4/30/2001 12285 12810 $12,526
5/31/2001 12397 12930 $12,640
6/30/2001 12461 12999 $12,697
7/31/2001 12586 13132 $12,800
8/31/2001 12723 13278 $12,933
9/30/2001 12775 13335 $12,998
10/31/2001 12852 13419 $13,081
11/30/2001 12759 13324 $13,041
12/31/2001 12703 13269 $13,028
1/31/2002 12853 13427 $13,194
2/28/2002 12986 13570 $13,293
3/31/2002 12735 13310 $13,095
4/30/2002 12994 13583 $13,287
5/31/2002 13058 13654 $13,364
6/30/2002 13196 13800 $13,479
7/31/2002 13333 13947 $13,584
8/31/2002 13446 14068 $13,671
9/30/2002 13632 14265 $13,779
10/31/2002 13472 14100 $13,704
11/30/2002 13446 14077 $13,707
12/31/2002 13708 14354 $13,904
1/31/2003 13693 14342 $13,948
2/28/2003 13850 14508 $14,038
3/31/2003 13821 14481 $14,021
4/30/2003 13891 14557 $14,060
5/31/2003 14100 14779 $14,168
6/30/2003 14066 14747 $14,146
7/31/2003 13768 14437 $14,018
8/31/2003 13862 14540 $14,089
9/30/2003 14135 14828 $14,301
10/31/2003 14088 14783 $14,233
11/30/2003 14142 14842 $14,246
12/31/2003 14156 14860 $14,277
1/31/2004 14222 14933 $14,326
2/29/2004 14374 15085 $14,448
3/31/2004 14298 15021 $14,409
4/30/2004 14102 14806 $14,264
5/31/2004 14037 14740 $14,207
6/30/2004 14049 14756 $14,232
7/31/2004 14142 14857 $14,338
8/31/2004 14313 15026 $14,490
9/30/2004 14330 15061 $14,506
10/31/2004 14374 15110 $14,546
11/30/2004 14287 15022 $14,476
12/31/2004 14371 15113 $14,533
1/31/2005 14350 15080 $14,513
2/28/2005 14312 15043 $14,469
3/31/2005 14251 14983 $14,421
4/30/2005 14323 15075 $14,495
5/31/2005 14357 15114 $14,521
6/30/2005 14416 15179 $14,596
7/31/2005 14409 15176 $14,561
8/31/2005 14444 15201 $14,609
9/30/2005 14437 15196 $14,617
10/31/2005 14404 15179 $14,595
11/30/2005 14424 15204 $14,608
12/31/2005 14487 15259 $14,659
CREDIT QUALITY(3),(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 57%
AA 14%
A 11%
BBB 8%
B 1%
SPI 3%
Cash 1%
Unrated 5%
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 21%
2-5 Years 71%
6-10 Years 7%
11-12 Years 1%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE NATIONAL LIMITED-TERM
TAX-FREE FUND - Administrator Class was named the Wells Fargo National
Limited-Term Tax-Free Fund - Institutional Class. Performance for the
Administrator Class shares prior to November 8, 1999, reflects performance of
the Institutional Class shares of the Norwest Advantage Limited Term Tax-Free
Fund, its predecessor fund.
(2) Lehman Brothers 3-Year Municipal Bond Index is the 3-year (2-4) component of
the Lehman Brothers Municipal Bond Index. The Lehman Brothers Municipal Bond
Index is a rules-based, market-value-weighted index engineered for the long-term
tax-exempt bond market. To be included in the index, bonds must have a minimum
credit rating of Baa. They must have an outstanding par value of at least $5
million and be issued as part of a transaction of at least $50 million. The
bonds must have a dated-date after December 31, 1990 and must be at least one
year from their maturity date. Remarketed issues, taxable municipal bonds, bonds
with floating rates, and derivatives, are excluded from the benchmark. You
cannot invest directly in an Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal income tax rate of 35%. Any capital gains
distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE NATIONAL
LIMITED-TERM TAX-FREE FUND Class A and Administrator Class shares for the life
of the Fund with the Lehman Brothers 3-Year Municipal Bond Index. The chart
assumes a hypothetical $10,000 investment in Class A and Administrator Class
shares and reflect all operating expenses and for Class A, assumes the maximum
initial sales charge of 3.00%.
11
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE NATIONAL TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE NATIONAL TAX-FREE FUND (the Fund) seeks current
income exempt from federal income tax.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Arthur C. Evans 08/01/1989
Stephen Galiani
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.47%(1) during the six-month period
ended December 31, 2005, excluding sales charges, underperforming its benchmark,
the Lehman Brothers Municipal Bond Index(2), which returned 0.60% 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 4.50%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE
INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE 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.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The municipal yield curve continued to flatten during the six-month
period, with the difference between 30-year yields and 1-year yields ending the
year an additional 0.45% lower, at 1.19%. This flattening of the yield curve
detracted mostly from the performance of credits with five- to ten-year
maturities. While the Fund had limited exposure in 3- to 7-year maturities
relative to the benchmark, an overweighted position in 10- to 15-year maturities
detracted from performance. Total returns during the second half of 2005 for a
few select maturities within the benchmark illustrate this point: 3-year, 0.77%;
5-year, 0.20%; 10-year, 0.21%; and 30-year, 1.21%.
The Fund's holdings of revenue bonds backed by both single-family
mortgages and multifamily housing projects were the top performers for the
period. These issues, which included the Maricopa County Arizona Industrial
Development Authority Gran Victoria 10%, maturing on May 1, 2031, returned
almost 5.00% for the period. True to its historical tendency, the housing bond
sector resisted the negative price pressures of a rising interest rate
environment. Several positions in the health care sector that carried lower
investment-grade credit quality ratings also performed well, as credit spreads
for the group continued to narrow. One example that also had the added benefit
of being prerefunded during the period was Illinois Health Facilities Authority
Revenue Bonds (OSF Healthcare) 6.25%, due on November 15, 2029.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We marginally increased the Fund's exposure to bonds in the 20- to 30-year
maturity range and purchased several issues of zero-coupon bonds. One example
was New Jersey Environmental Infrastructure Trust 4.375%, due September 1, 2025.
By gradually shifting some of the Fund's intermediate exposure into longer
maturities and zero-coupon bonds, we hoped to align the Fund's positioning more
closely with that of its benchmark in preparation for the possible end to the
Federal Reserve's (the Fed) cycle of interest rate hikes. Increasing this
allocation to longer-dated bonds with higher yields helped boost the Fund's
performance. Additionally, we selectively increased the Fund's holdings of
credits with lower investment-grade quality ratings, adding several BBB, A, and
nonrated issues, such as Ohio County West Virginia Community Tax Increment
Revenue 5.625%, due June 1, 2034. We also added several positions of tobacco
revenue bonds with shorter maturities. Although credit spreads were approaching
narrow levels, we liked these bonds because they were attractive on a relative
value basis and provided the Fund with higher income streams.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Economic data is leading us to expect a strong start in 2006. However, we
believe that strength is likely to rotate from housing and consumer spending to
more of a manufacturing and business-led investment cycle. That said, the
continuing impact of higher oil prices on the economy and signs that higher
interest rates have begun to slow the housing market prompt us to temper our
optimism with a dose of caution. We continue to maintain a neutral duration
stance relative to the Fund's benchmark while trying to capture trading
opportunities. Additionally, we will look to adjust the Fund's maturity
distribution away from concentration at the short- and long-term ends to one
that is more evenly distributed across short-, intermediate-, and long-term
maturities once we feel that the majority of curve flattening is behind the
municipal market.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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 MUNICIPAL SECURITIES
AND HIGH YIELD BOND RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 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 NATIONAL TAX-FREE FUND.
(1) The Fund's advisor has committed through October 31,2006,to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE NATIONAL TAX-FREE FUND
was named the Wells Fargo National Tax-Free Fund. Performance for the Class A
and Class B shares of the Fund prior to November 8, 1999 reflects performance of
the Class A and Class B shares of the Norwest Advantage Tax-Free Income Fund,
its predecessor fund. Performance for Class C shares prior to November 8, 1999,
reflects performance of the Class B shares adjusted for Class C sales charges
and expenses.
12
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------- --------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
WELLS FARGO ADVANTAGE NATIONAL
TAX-FREE FUND - Class A
(Incept. 08/01/1989) (4.05) (0.64) 4.19 4.88 0.47 4.05 5.15 5.37
WELLS FARGO ADVANTAGE NATIONAL
TAX-FREE FUND - Class B
(Incept. 08/06/1993) (4.91) (1.73) 4.03 4.58 0.09 3.27 4.37 4.58
WELLS FARGO ADVANTAGE NATIONAL
TAX-FREE FUND - Class C
(Incept. 11/08/1999) (1.00) 2.27 4.35 4.57 0.00 3.27 4.35 4.57
WELLS FARGO ADVANTAGE NATIONAL
TAX-FREE FUND - Administrator
Class (Incept. 08/02/1993) 0.59 4.30 5.38 5.51
Benchmark
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.59 5.71
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA+
Weighted Average Coupon 5.25%
Weighted Average Maturity 12.47 years
Estimated Average Duration 6.10 years
Portfolio Turnover 34%
Net Asset Value (NAV)
(Class A, B, C, Administrator) $10.44, $10.44, $10.43, $10.44
30-Day SEC Yield(5)
(Class A, B, C, Administrator) 3.75%, 3.18%, 3.18%, 4.17%
Distribution Rate(6)
(Class A, B, C, Administrator) 3.95%, 3.39 %, 3.39%, 4.38%
30-Day Taxable Equivalent Yield(7)
(Class A, B, C, Administrator) 5.77%, 4.89%, 4.89%, 6.42%
Alternative Minimum Tax (AMT)(8) 17.64%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE WELLS FARGO ADVANTAGE
NATIONAL TAX-FREE NATIONAL TAX-FREE LEHMAN BROTHERS
FUND CLASS A FUND ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
---------------------- -------------------------- ------------------------
12/31/1995 9550 10000 $10,000
1/31/1996 9631 10095 $10,076
2/29/1996 9560 10011 $10,007
3/31/1996 9435 9880 $9,879
4/30/1996 9413 9866 $9,852
5/31/1996 9422 9866 $9,848
6/30/1996 9501 9959 $9,955
7/31/1996 9623 10087 $10,045
8/31/1996 9603 10055 $10,043
9/30/1996 9731 10200 $10,183
10/31/1996 9864 10339 $10,298
11/30/1996 10027 10500 $10,487
12/31/1996 10003 10474 $10,443
1/31/1997 10020 10502 $10,463
2/28/1997 10111 10587 $10,559
3/31/1997 9963 10432 $10,418
4/30/1997 10069 10543 $10,506
5/31/1997 10217 10709 $10,665
6/30/1997 10322 10819 $10,779
7/31/1997 10643 11155 $11,077
8/31/1997 10514 11010 $10,973
9/30/1997 10651 11164 $11,104
10/31/1997 10729 11234 $11,175
11/30/1997 10815 11336 $11,241
12/31/1997 11029 11549 $11,405
1/31/1998 11119 11654 $11,522
2/28/1998 11109 11643 $11,526
3/31/1998 11125 11660 $11,536
4/30/1998 11022 11553 $11,484
5/31/1998 11272 11803 $11,666
6/30/1998 11318 11852 $11,711
7/31/1998 11334 11868 $11,740
8/31/1998 11544 12099 $11,922
9/30/1998 11720 12283 $12,071
10/31/1998 11657 12218 $12,071
11/30/1998 11735 12288 $12,114
12/31/1998 11739 12304 $12,144
1/31/1999 11863 12422 $12,289
2/28/1999 11785 12340 $12,234
3/31/1999 11778 12344 $12,252
4/30/1999 11824 12393 $12,282
5/31/1999 11727 12280 $12,211
6/30/1999 11529 12072 $12,035
7/31/1999 11523 12067 $12,078
8/31/1999 11360 11908 $11,982
9/30/1999 11297 11841 $11,987
10/31/1999 11121 11657 $11,857
11/30/1999 11253 11785 $11,983
12/31/1999 11108 11635 $11,893
1/31/2000 10963 11497 $11,841
2/29/2000 11151 11684 $11,978
3/31/2000 11450 12011 $12,239
4/30/2000 11386 11934 $12,167
5/31/2000 11286 11843 $12,104
6/30/2000 11587 12161 $12,424
7/31/2000 11808 12383 $12,597
8/31/2000 11995 12593 $12,791
9/30/2000 11903 12499 $12,725
10/31/2000 12031 12623 $12,863
11/30/2000 12120 12731 $12,961
12/31/2000 12529 13163 $13,281
1/31/2001 12611 13238 $13,413
2/28/2001 12662 13294 $13,456
3/31/2001 12755 13407 $13,577
4/30/2001 12602 13235 $13,430
5/31/2001 12721 13375 $13,575
6/30/2001 12850 13499 $13,666
7/31/2001 13069 13733 $13,868
8/31/2001 13301 13979 $14,097
9/30/2001 13266 13944 $14,049
10/31/2001 13399 14099 $14,216
11/30/2001 13261 13957 $14,097
12/31/2001 13114 13791 $13,963
1/31/2002 13276 13964 $14,205
2/28/2002 13419 14130 $14,375
3/31/2002 13192 13894 $14,093
4/30/2002 13379 14080 $14,368
5/31/2002 13476 14184 $14,456
6/30/2002 13611 14342 $14,609
7/31/2002 13813 14557 $14,797
8/31/2002 13963 14718 $14,975
9/30/2002 14231 15002 $15,303
10/31/2002 13979 14726 $15,049
11/30/2002 13911 14657 $14,986
12/31/2002 14170 14947 $15,302
1/31/2003 14077 14838 $15,264
2/28/2003 14292 15067 $15,477
3/31/2003 14266 15043 $15,487
4/30/2003 14375 15161 $15,589
5/31/2003 14651 15455 $15,954
6/30/2003 14591 15395 $15,885
7/31/2003 14158 14942 $15,329
8/31/2003 14267 15060 $15,444
9/30/2003 14613 15428 $15,898
10/31/2003 14531 15345 $15,819
11/30/2003 14682 15508 $15,983
12/31/2003 14793 15643 $16,116
1/31/2004 14874 15717 $16,208
2/29/2004 15150 16011 $16,452
3/31/2004 15073 15949 $16,395
4/30/2004 14652 15492 $16,006
5/31/2004 14634 15491 $15,949
6/30/2004 14702 15551 $16,006
7/31/2004 14903 15767 $16,217
8/31/2004 15194 16078 $16,542
9/30/2004 15335 16231 $16,629
10/31/2004 15433 16353 $16,772
11/30/2004 15280 16179 $16,635
12/31/2004 15483 16397 $16,838
1/31/2005 15613 16538 $16,994
2/28/2005 15560 16502 $16,938
3/31/2005 15438 16360 $16,832
4/30/2005 15687 16627 $17,098
5/31/2005 15834 16786 $17,219
6/30/2005 16034 17001 $17,326
7/31/2005 15938 16904 $17,248
8/31/2005 16116 17096 $17,422
9/30/2005 16004 16980 $17,305
10/31/2005 15861 16832 $17,200
11/30/2005 15930 16908 $17,282
12/31/2005 16109 17103 $17,431
CREDIT QUALITY(3),(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 50%
AA 17%
A 6%
BBB 7%
BB 1%
SPI 3%
Cash 2%
Unrated 14%
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 11%
2-5 Years 10%
6-10 Years 12%
11-20 Years 56%
21+ Years 11%
- --------------------------------------------------------------------------------
Prior to April 11,2005,the WELLS FARGO ADVANTAGE NATIONAL TAX-FREE FUND -
Administrator Class was named the Wells Fargo National Tax-Free Fund -
Institutional Class. Performance for the Institutional Class shares prior to
November 8, 1999, reflects performance of the Institutional Class shares of the
Norwest Advantage Tax-Free Income Fund, its predecessor fund.
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of Baa. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
Index.
(3) Fund characteristics, credit quality, and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal income tax rate of 35%. Any capital gains
distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE NATIONAL
TAX-FREE FUND Class A and Administrator Class shares for the most recent ten
years with the Lehman Brothers Municipal Bond Index. The chart assumes a
hypothetical $10,000 investment in Class A and Administrator Class shares and
reflects all operating expenses and, for Class A shares, assumes the maximum
initial sales charge of 4.50%.
13
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE NEBRASKA TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE NEBRASKA TAX-FREE FUND (the Fund) seeks current
income exempt from federal income tax and Nebraska individual income tax.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Arthur C. Evans 08/31/1989
Duane A. McAllister, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 0.25%(1) for the six-month period ended December 31,
2005, underperforming its benchmark, the Lehman Brothers Municipal Bond
Index(2), which returned 0.60% during the period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADMINISTRATOR CLASS 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 second half of 2005, and for the year in general, returns in
the municipal market were influenced mostly by yield-curve exposure and
allocations to the higher-yielding sectors, such as tobacco and health care. The
municipal yield curve continued to flatten during the six-month period, with the
difference between 30-year yields and 1-year yields ending the year an
additional 0.45% lower, at 1.19%. This flattening of the yield curve detracted
mostly from the performance of credits with five- to ten-year maturities, where
the Fund was heavily weighted. Total returns during the second half of 2005 for
a few select maturities within the benchmark illustrate this point: 3-year,
0.77%; 5-year, 0.20%; 10-year, 0.21%; and 30-year, 1.21%.
The Fund's holdings of revenue bonds backed by single-family mortgages
were the top performers for the period. These issues, which included the
Nebraska Investment Finance Authority Single Family Housing 5.95%, maturing on
September 1, 2031, returned close to 2.00% for the period. True to its
historical tendency, this mortgage sector resisted the negative price pressures
of a rising interest rate environment. Several longer-dated positions with
discount coupons also performed well, as this maturity range was the
top-performing part of the yield curve. One example was Douglas County Nebraska
School District (Millard) 4.5%, maturing on June 15, 2025.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We marginally increased the Fund's exposure to bonds in the 20- to 30-year
maturity range, such as the Douglas County Nebraska Hospital Authority 4.35%,
due September 1, 2025. Increasing our allocation to longer-dated bonds with
higher yields helped boost the Fund's performance. Additionally, we selectively
increased the Fund's holdings of lower investment-grade credits by adding one
nonrated issue, O'Neill Nebraska Revenue 6.25%, due September 1, 2012. Although
the market overall reflected increasingly narrow spreads and rich valuations, we
liked these bonds because we believed they were attractive on a relative value
basis.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Economic data is leading us to expect a strong start in 2006. However, we
believe that strength is likely to rotate from housing and consumer spending to
more of a manufacturing and business-led investment cycle. That said, the
continuing impact of higher oil prices on the economy and signs that higher
interest rates have begun to slow the housing market prompt us to temper our
optimism with a dose of caution. We continue to maintain a defensive duration
stance relative to the Fund's benchmark while trying to capture trading
opportunities. Additionally, we will look to adjust the Fund's maturity
distribution away from concentration at the short- and long-term ends to one
that is more evenly distributed across short-, intermediate-, and long-term
maturities once we feel that the majority of curve flattening is behind the
municipal market.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL
ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES.
IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS MAY
LOSE PRINCIPAL VALUE. 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 MUNICIPAL SECURITIES
RISK AND STATE OF NEBRASKA RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 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 NEBRASKA TAX-FREE FUND.
(1) The Fund's advisor has committed through October 31, 2006, 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.
14
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
------------------------------------------
WELLS FARGO ADVANTAGE NEBRASKA TAX-FREE
FUND - Administrator Class (Incept. 09/29/1997) 0.25 2.22 4.44 4.47
Benchmark
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.59 5.71
*RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA+
Weighted Average Coupon 5.27%
Weighted Average Maturity 11.24 years
Estimated Average Duration 4.57 years
Portfolio Turnover 9%
Net Asset Value (NAV) (Administrator) $9.82
30-Day SEC Yield(5) (Administrator) 3.88%
Distribution Rate(6) (Administrator) 3.98%
30-Day Taxable Equivalent Yield(7) (Administrator) 6.41%
Alternative Minimum Tax (AMT)(8) 5.33%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
NEBRASKA TAX-FREE LEHMAN BROTHERS
FUND ADMINISTRATOR CLASS MUNICIPAL BOND INDEX
-------------------------- ------------------------
12/31/1995 10000 $10,000
1/31/1996 10092 $10,076
2/29/1996 10081 $10,007
3/31/1996 9984 $9,879
4/30/1996 9954 $9,852
5/31/1996 9952 $9,848
6/30/1996 10008 $9,955
7/31/1996 10083 $10,045
8/31/1996 10100 $10,043
9/30/1996 10167 $10,183
10/31/1996 10233 $10,298
11/30/1996 10377 $10,487
12/31/1996 10336 $10,443
1/31/1997 10383 $10,463
2/28/1997 10460 $10,559
3/31/1997 10369 $10,418
4/30/1997 10387 $10,506
5/31/1997 10495 $10,665
6/30/1997 10593 $10,779
7/31/1997 10761 $11,077
8/31/1997 10698 $10,973
9/30/1997 10800 $11,104
10/31/1997 10838 $11,175
11/30/1997 10875 $11,241
12/31/1997 11003 $11,405
1/31/1998 11086 $11,522
2/28/1998 11089 $11,526
3/31/1998 11085 $11,536
4/30/1998 11036 $11,484
5/31/1998 11175 $11,666
6/30/1998 11191 $11,711
7/31/1998 11219 $11,740
8/31/1998 11371 $11,922
9/30/1998 11477 $12,071
10/31/1998 11483 $12,071
11/30/1998 11510 $12,114
12/31/1998 11550 $12,144
1/31/1999 11659 $12,289
2/28/1999 11604 $12,234
3/31/1999 11599 $12,252
4/30/1999 11628 $12,282
5/31/1999 11566 $12,211
6/30/1999 11420 $12,035
7/31/1999 11473 $12,078
8/31/1999 11432 $11,982
9/30/1999 11425 $11,987
10/31/1999 11349 $11,857
11/30/1999 11448 $11,983
12/31/1999 11396 $11,893
1/31/2000 11331 $11,841
2/29/2000 11455 $11,978
3/31/2000 11631 $12,239
4/30/2000 11565 $12,167
5/31/2000 11511 $12,104
6/30/2000 11783 $12,424
7/31/2000 11923 $12,597
8/31/2000 12053 $12,791
9/30/2000 11988 $12,725
10/31/2000 12106 $12,863
11/30/2000 12176 $12,961
12/31/2000 12464 $13,281
1/31/2001 12561 $13,413
2/28/2001 12615 $13,456
3/31/2001 12700 $13,577
4/30/2001 12581 $13,430
5/31/2001 12690 $13,575
6/30/2001 12772 $13,666
7/31/2001 12920 $13,868
8/31/2001 13080 $14,097
9/30/2001 13048 $14,049
10/31/2001 13173 $14,216
11/30/2001 13065 $14,097
12/31/2001 12978 $13,963
1/31/2002 13144 $14,205
2/28/2002 13279 $14,375
3/31/2002 13066 $14,093
4/30/2002 13296 $14,368
5/31/2002 13383 $14,456
6/30/2002 13496 $14,609
7/31/2002 13678 $14,797
8/31/2002 13833 $14,975
9/30/2002 14133 $15,303
10/31/2002 13873 $15,049
11/30/2002 13799 $14,986
12/31/2002 14143 $15,302
1/31/2003 14056 $15,264
2/28/2003 14251 $15,477
3/31/2003 14271 $15,487
4/30/2003 14359 $15,589
5/31/2003 14671 $15,954
6/30/2003 14564 $15,885
7/31/2003 14054 $15,329
8/31/2003 14200 $15,444
9/30/2003 14577 $15,898
10/31/2003 14481 $15,819
11/30/2003 14639 $15,983
12/31/2003 14738 $16,116
1/31/2004 14757 $16,208
2/29/2004 15018 $16,452
3/31/2004 14893 $16,395
4/30/2004 14549 $16,006
5/31/2004 14553 $15,949
6/30/2004 14615 $16,006
7/31/2004 14750 $16,217
8/31/2004 15002 $16,542
9/30/2004 15035 $16,629
10/31/2004 15142 $16,772
11/30/2004 14968 $16,635
12/31/2004 15150 $16,838
1/31/2005 15276 $16,994
2/28/2005 15185 $16,938
3/31/2005 15054 $16,832
4/30/2005 15271 $17,098
5/31/2005 15368 $17,219
6/30/2005 15448 $17,326
7/31/2005 15375 $17,248
8/31/2005 15501 $17,422
9/30/2005 15394 $17,305
10/31/2005 15304 $17,200
11/30/2005 15369 $17,282
12/31/2005 15486 $17,431
CREDIT QUALITY(3), (4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 49%
AA 39%
A 6%
Cash 1%
Unrated 5%
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Years 4%
2-5 Years 14%
6-10 Years 28%
11-20 Years 51%
21+ Years 3%
- --------------------------------------------------------------------------------
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE NEBRASKA TAX-FREE FUND
- - Administrator Class was named the Wells Fargo Nebraska Tax-Free Fund -
Institutional Class. Performance for the Administrator Class shares prior to
September 8, 2000, reflects the performance of the Institutional class of the
Great Plains Tax-Free Bond Fund, its predecessor fund, and prior to September
29, 1997, reflects performance of an unregistered predecessor common trust fund.
The common trust fund was not subject to certain requirements and restrictions
imposed by the Investment Company Act of 1940, which, if applicable, may have
adversely affected performance.
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market. To be included in the
index, bonds must have a minimum credit rating of Baa. They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark. You cannot invest directly in an
Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT). The Fund's taxable equivalent
yield is based on the combined federal and Nebraska income tax rate of 39.45%.
Any capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE NEBRASKA
TAX-FREE FUND Administrator Class shares for the most recent ten years with the
Lehman Brothers Municipal Bond Index. The chart assumes a hypothetical $10,000
investment in Administrator Class shares and reflects all operating expenses.
15
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FUND EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service fees;
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period (July 1, 2005 to December 31,
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
Wells Fargo Advantage California Limited-Term Tax-Free Fund 07/01/2005 12/31/2005 the Period(1) Ratio
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage California Limited-Term Tax-Free Fund - Class A
Actual $ 1,000.00 $ 1,002.80 $ 4.34 0.85%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.87 $ 4.38 0.85%
Wells Fargo Advantage California Limited-Term Tax-Free Fund - Class C
Actual $ 1,000.00 $ 999.00 $ 8.11 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.09 $ 8.19 1.60%
Wells Fargo Advantage California Limited-Term Tax-Free Fund -
Administrator Class Actual $ 1,000.00 $ 1,003.90 $ 3.08 0.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.13 $ 3.11 0.60%
Wells Fargo Advantage California Tax-Free Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage California Tax-Free Fund - Class A
Actual $ 1,000.00 $ 1,007.60 $ 4.05 0.80%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.17 $ 4.08 0.80%
Wells Fargo Advantage California Tax-Free Fund - Class B
Actual $ 1,000.00 $ 1,003.30 $ 7.83 1.55%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.39 $ 7.88 1.55%
Wells Fargo Advantage California Tax-Free Fund - Class C
Actual $ 1,000.00 $ 1,004.20 $ 7.83 1.55%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.39 $ 7.88 1.55%
Wells Fargo Advantage California Tax-Free Fund - Administrator Class
Actual $ 1,000.00 $ 1,008.90 $ 2.78 0.55%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.43 $ 2.80 0.55%
16
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
Wells Fargo Advantage Colorado Tax-Free Fund 07/01/2005 12/31/2005 the Period(1) Ratio
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Colorado Tax-Free Fund - Class A
Actual $ 1,000.00 $ 1,005.30 $ 4.30 0.85%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.92 $ 4.33 0.85%
Wells Fargo Advantage Colorado Tax-Free Fund - Class B
Actual $ 1,000.00 $ 1,001.50 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage Colorado Tax-Free Fund - Administrator Class
Actual $ 1,000.00 $ 1,006.60 $ 3.03 0.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.18 $ 3.06 0.60%
Wells Fargo Advantage Minnesota Tax-Free Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Minnesota Tax-Free Fund - Class A
Actual $ 1,000.00 $ 1,004.90 $ 4.30 0.85%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.92 $ 4.33 0.85%
Wells Fargo Advantage Minnesota Tax-Free Fund - Class B
Actual $ 1,000.00 $ 1,001.10 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage Minnesota Tax-Free Fund - Class C
Actual $ 1,000.00 $ 1,001.00 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage Minnesota Tax-Free Fund - Administrator Class
Actual $ 1,000.00 $ 1,007.00 $ 3.04 0.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.18 $ 3.06 0.60%
Wells Fargo Advantage Minnesota Tax-Free Fund - Class Z
Actual $ 1,000.00 $ 1,005.30 $ 3.89 0.78%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.32 $ 3.92 0.78%
Wells Fargo Advantage National Limited-Term Tax-Free Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage National Limited-Term Tax-Free Fund - Class A
Actual $ 1,000.00 $ 1,005.00 $ 4.30 0.85%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.92 $ 4.33 0.85%
Wells Fargo Advantage National Limited-Term Tax-Free Fund - Class B
Actual $ 1,000.00 $ 1,001.20 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage National Limited-Term Tax-Free Fund - Class C
Actual $ 1,000.00 $ 1,000.20 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage National Limited-Term Tax-Free Fund -
Administrator Class Actual $ 1,000.00 $ 1,005.30 $ 3.03 0.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.18 $ 3.06 0.60%
17
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FUND EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
Wells Fargo Advantage National Tax-Free Fund 07/01/2005 12/31/2005 the Period(1) Ratio
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage National Tax-Free Fund - Class A
Actual $ 1,000.00 $ 1,004.70 $ 4.30 0.85%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.92 $ 4.33 0.85%
Wells Fargo Advantage National Tax-Free Fund - Class B
Actual $ 1,000.00 $ 1,000.90 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage National Tax-Free Fund - Class C
Actual $ 1,000.00 $ 1,000.00 $ 8.07 1.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
Wells Fargo Advantage National Tax-Free Fund - Administrator Class
Actual $ 1,000.00 $ 1,005.90 $ 3.03 0.60%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.18 $ 3.06 0.60%
Wells Fargo Advantage Nebraska Tax-Free Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Nebraska Tax-Free Fund - Administrator Class
Actual $ 1,000.00 $ 1,002.50 $ 3.79 0.75%
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.42 $ 3.82 0.75%
- --------------------------------------------------------------------------------
(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).
18
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 95.33%
CALIFORNIA - 93.01%
$ 1,100,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS EPISCOPAL HOMES
FOUNDATION PROJECT (HEALTHCARE FACILITIES REVENUE) 5.00% 07/01/2007 $ 1,115,730
1,105,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS EPISCOPAL HOMES
FOUNDATION PROJECT (HEALTHCARE FACILITIES REVENUE) 5.00 07/01/2008 1,128,559
840,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS SAN DIEGO CA
HOSPITAL ASSOCIATION SERIES C 4.00 03/01/2008 845,435
325,000 BAY AREA CA GOVERNMENT ASSOCIATION SAN FRANCISCO EXTENSION
CAPITAL GRANT SERIES A 4.88 06/15/2009 325,445
1,000,000 BAY AREA GOVERNMENT ASSOCIATION CA (STATE & LOCAL GOVERNMENTS,
AMBAC INSURED) 5.00 06/15/2006 1,008,890
600,000 CALIFORNIA CASA COLINA PROJECT (HEALTHCARE FACILITIES REVENUE) 5.50 04/01/2013 638,898
1,000,000 CALIFORNIA CATHOLIC HEALTHCARE WEST SERIES H (HEALTHCARE
FACILITIES REVENUE)+/- 4.45 07/01/2026 1,026,250
490,000 CALIFORNIA CATHOLIC WEST SERIES A (HEALTHCARE FACILITIES REVENUE) 5.00 07/01/2006 494,317
360,000 CALIFORNIA CATHOLIC WEST SERIES A (HEALTHCARE FACILITIES REVENUE) 5.00 07/01/2006 362,794
2,190,000 CALIFORNIA HOME MORTGAGE (HOUSING REVENUE) 3.20 02/01/2010 2,171,473
1,000,000 CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY SOLID WASTE
DISPOSAL WASTE MANAGEMENT PROJECT SERIES A (POLLUTION CONTROL
REVENUE)+/- 5.13 07/01/2031 1,042,520
480,000 CALIFORNIA POOLED COLLEGE & UNIVERSITY PROJECT SERIES B (COLLEGE
& UNIVERSITY REVENUE) 4.50 04/01/2006 481,190
1,000,000 CALIFORNIA PRESBYTERIAN HOSPITAL (HEALTHCARE FACILITIES REVENUE,
MBIA INSURED) 5.50 05/01/2007 1,029,710
1,000,000 CALIFORNIA STATE (GENERAL OBLIGATION - SCHOOL DISTRICTS, MBIA
INSURED) 5.25 12/01/2025 1,080,920
1,000,000 CALIFORNIA STATE (OTHER REVENUE) 4.50 06/30/2006 1,006,280
1,000,000 CALIFORNIA STATE (OTHER REVENUE, XL CAPITAL ASSURANCE COMPANY
INSURED) 5.75 10/01/2010 1,096,980
950,000 CALIFORNIA STATE CONSUMER POWER & CONSERVATIVE FINANCING
AUTHORITY SERIES A (OTHER REVENUE) 5.00 03/01/2010 1,009,071
1,500,000 CALIFORNIA STATE DAILY KINDERGARTEN UNIVERSITY SERIES A3
(PROPERTY TAX REVENUE,
CITIBANK NA LOC)+/- SS. 3.75 05/01/2034 1,500,000
1,000,000 CALIFORNIA STATE PUBLIC WORKS BOARD DEPARTMENT GENERAL SERVICES
BUTTERFIELD STATE A (LEASE REVENUE) 4.00 06/01/2011 1,013,510
1,250,000 CALIFORNIA STATE PUBLIC WORKS BOARD DEPARTMENT OF CORRECTIONS
SERIES C (LEASE REVENUE) 5.25 11/01/2008 1,303,937
100,000 CALIFORNIA STATE PUBLIC WORKS BOARD OF TRUSTEES CALIFORNIA STATE
UNIVERSITY SERIES A (LEASE REVENUE) 5.50 10/01/2010 108,113
1,000,000 CALIFORNIA STATE PUBLIC WORKS BOARD PUTTERS SERIES 962 (LEASE
REVENUE, MBIA INSURED)+/- SS. 3.54 05/01/2013 1,000,000
3,040,000 CALIFORNIA STATE SERIES 27 (GENERAL OBLIGATION - STATES,
TERRITORIES, MBIA INSURED)^ 3.77 09/01/2011 2,459,451
780,000 CALIFORNIA STATE SERIES 997 (GENERAL OBLIGATION - STATES,
TERRITORIES, AMBAC INSURED)+/- SS. 3.54 09/01/2012 780,000
745,000 CALIFORNIA STATE UNIVERSITY FRESNO ASSOCIATION INCORPORATED
AUXILIARY ORGANIZATION EVENT CENTER (COLLEGE & UNIVERSITY REVENUE) 5.00 07/01/2010 791,816
1,000,000 CALIFORNIA STATEWIDE CDA+/- SS. 4.45 05/15/2029 1,000,000
1,880,000 CALIFORNIA STATEWIDE CDA CERTIFICATES OF PARTICIPATION (LEASE
REVENUE, JP MORGAN CHASE BANK LOC)+/- SS. 3.70 12/01/2018 1,880,000
1,000,000 CALIFORNIA STATEWIDE CDA DISPOSAL REPUBLIC SERVICES SERIES A
(SOLID WASTE REVENUE) 4.95 12/01/2012 1,042,770
1,000,000 CALIFORNIA STATEWIDE CDA IRVINE APARTMENT COMMUNITIES SERIES A3
(HOUSING REVENUE)+/- 5.10 05/15/2025 1,035,370
500,000 CALIFORNIA STATEWIDE CDA KAISER PERMANENTE SERIES E (HEALTHCARE
FACILITIES REVENUE)+/- 4.70 11/01/2036 513,230
3,000,000 CALIFORNIA STATEWIDE CDA KAISER PERMANENTE SERIES I (HEALTHCARE
FACILITIES REVENUE)+/- 3.45 04/01/2035 2,909,940
925,000 CALIFORNIA STATEWIDE CDA QUAIL RIDGE APARTMENTS SERIES E1
(HOUSING REVENUE) 4.25 07/01/2012 916,231
1,390,000 CALIFORNIA STATEWIDE CDA SHERMAN OAKS PROJECT SERIES A (OTHER
REVENUE, AMBAC INSURED) 5.50 08/01/2011 1,499,379
505,000 CALIFORNIA UNIVERSITY OF THE PACIFIC (COLLEGE & UNIVERSITY
REVENUE) 4.10 11/01/2010 513,671
300,000 CALIFORNIA VETERANS BONDS SERIES A (PROPERTY TAX REVENUE) 9.00 04/01/2009 349,983
19
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 1,000,000 CENTRAL VALLEY CA FINANCING AUTHORITY CARSON ICE GENERAL PROJECT
(ELECTRIC REVENUE, MBIA INSURED) 5.25% 07/01/2010 $ 1,054,450
1,200,000 CONTRA COSTA CA SERIES K (WATER REVENUE, FIRST SECURITY BANK LOC) 5.00 10/01/2009 1,272,264
1,000,000 CONTRA COSTA COUNTY CA MERRITHEW MEMORIAL HOSPITAL PROJECT (LEASE
REVENUE, MBIA INSURED) 5.25 11/01/2010 1,052,280
1,000,000 CSUCI CA RENTAL HOUSING (COLLEGE & UNIVERSITY REVENUE, CITIBANK NA
LOC)+/-SS. 3.15 08/01/2031 991,350
235,000 DALY CITY CA HOUSING DEVELOPMENT FINANCE AGENCY FRANCISCAN
ACQUISITION PROJECT SERIES A (HOUSING REVENUE) 5.00 12/15/2010 244,078
400,000 DEL MAR CA RACE TRACK AUTHORITY (SPORTS FACILITIES REVENUE) 4.00 08/15/2006 401,188
250,000 DEL MAR CA RACE TRACK AUTHORITY (SPORTS FACILITIES REVENUE) 5.00 08/15/2007 255,585
300,000 DEL MAR CA RACE TRACK AUTHORITY (SPORTS FACILITIES REVENUE) 5.00 08/15/2008 310,191
1,000,000 FOOTHILL CA EASTERN TRANSPORTATION CORRIDOR AGENCY CAPITAL
APPRECIATION SENIOR LIEN SERIES A 7.05 01/01/2010 1,137,530
240,000 FREMONT CA ELECTION OF 2002 SERIES A (PROPERTY TAX REVENUE, MBIA
INSURED) 6.75 08/01/2010 273,703
1,945,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATE TOBACCO SETTLEMENT
REVENUE SERIES 2003-A-1 5.00 06/01/2021 1,958,109
300,000 HAWTHORNE CA 2004 SERIES B (PROPERTY TAX REVENUE, MBIA INSURED)^ 4.28 08/01/2015 199,959
300,000 HAWTHORNE CA 2004 SERIES B (PROPERTY TAX REVENUE, MBIA INSURED)^ 4.37 08/01/2016 189,873
3,550,000 INLAND EMPIRE CA SOLID WASTE FINANCING AUTHORITY LANDFILL IMPORTANT
PROJECT SERIES B (LEASE REVENUE, FIRST SECURITY BANK LOC) 6.25 08/01/2011 3,822,569
3,000,000 LODI CA ELECTRIC SYSTEMS REVENUE CTFS PARTICIPATION CAP
APPRECIATION - SERIES B (ELECTRIC REVENUE, MBIA INSURED)^ 3.50 01/15/2024 1,098,930
500,000 LAKE ELSINORE CA SCHOOL FINANCING AUTHORITY HORSETHIEF CANYON
(SPECIAL TAX REVENUE) 5.35 09/01/2010 526,445
500,000 LOMA LINDA CAMEDICARE CENTER A (HOSPITAL REVENUE) 4.00 12/01/2011 500,355
230,000 LOS ANGELES CA (ELECTRIC REVENUE, MBIA INSURED) 4.75 08/15/2011 230,278
1,880,000 LOS ANGELES CA SERIES A (SEWER REVENUE, MBIA INSURED) 4.00 06/01/2010 1,931,568
1,005,000 LOS ANGELES QUINTA CA FINANCE AUTHORITY LOC AGENCY ROCS RR II R
412X (TAX INCREMENTAL REVENUE, AMBAC INSURED)+/-SS. 3.55 09/01/2034 1,005,000
925,000 MODESTO CA SERIES A (POWER REVENUE, MBIA INSURED) 6.00 10/01/2015 962,472
1,000,000 NAPA VALLEJO CA WASTE MANAGEMENT AUTHORITY SOLID WASTE TRANSFER
FACILITY (SOLID WASTE REVENUE) 5.10 02/15/2011 1,021,490
1,500,000 NEW HAVEN CA USD (PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 12.00 08/01/2013 2,306,265
1,400,000 NORTHERN CA TRANSMISSION CALIFORNIA-OREGON TRANSMISSION PROJECT
SERIES A (POWER REVENUE, MBIA INSURED) 7.00 05/01/2013 1,656,340
590,000 ONTARIO CA RDFA ONTARIO REDEVELOPMENT PROJECT #1 (TAX INCREMENTAL
REVENUE, MBIA INSURED) 6.90 08/01/2010 674,694
1,250,000 ORANGE COUNTY CA LADERA RANCH SERIES A (SPECIAL TAX REVENUE) 6.70 08/15/2029 1,415,762
1,000,000 ORANGE COUNTY CA SERIES A (LEASE REVENUE, MBIA INSURED) 5.60 07/01/2009 1,031,660
1,965,000 OXNARD CALIFORNIA FINANCING AUTHORITY SOLID WASTE (SEWER REVENUE,
AMBAC INSURED) 5.00 05/01/2011 2,070,737
100,000 PLEASANT VALLEY SCHOOL DISTRICT VENTURA COUNTY CA TIERRA LINDA
SCHOOL (LEASE REVENUE, MBIA INSURED) 5.10 08/01/2006 100,179
825,000 RIALTO CA RDA MERGED PROJECT AREA SERIES A (TAX INCREMENTAL
REVENUE) 4.50 09/01/2012 840,667
985,000 SALINAS VALLEY CA SOLID WASTE AUTHORITY (SOLID WASTE REVENUE, AMBAC
INSURED) 5.00 08/01/2012 1,039,924
1,110,000 SAN DIEGO CA USD ELECTION 1998 SERIES D (GENERAL OBLIGATION -
SCHOOL DISTRICTS, FGIC INSURED) 5.25 07/01/2022 1,213,341
615,000 SAN FRANCISCO CA AIRPORT IMPROVEMENT UNITED AIRLINES INCORPORATED
PROJECT (AIRPORT REVENUE) 8.00 07/01/2013 706,309
20
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 270,000 SAN JACINTO CA COMMUNITY FACILITIES DISTRICT #2 SERIES A (SPECIAL
TAX REVENUE) 3.85% 09/01/2009 $ 268,045
1,000,000 STATE SCHOOL FUNDING OARS-OAKLAND UNIVERSITY SCHOOL DISTRICT-
SERIES C (ECONOMIC DEVELOPMENT REVENUE, FGIC INSURED)+/-SS. 3.36 08/15/2023 1,000,000
520,000 STOCKTON CA PUBLIC FINANCING (OTHER REVENUE, RADIAN INSURED) 3.50 09/02/2010 514,587
1,310,000 SUNNYVALE CA (SOLID WASTE REVENUE, AMBAC INSURED) 5.00 10/01/2010 1,380,321
285,000 SWEETWATER CA HIGH SCHOOL DISTRICT PFA SPECIAL TAX SERIES B
(SPECIAL TAX REVENUE) 3.50 09/01/2007 285,390
395,000 SWEETWATER CA HIGH SCHOOL DISTRICT PFA SPECIAL TAX SERIES B
(SPECIAL TAX REVENUE) 3.50 09/01/2008 395,115
645,000 SWEETWATER CA HIGH SCHOOL DISTRICT PFA SPECIAL TAX SERIES B
(SPECIAL TAX REVENUE) 3.63 09/01/2013 625,521
415,000 TRINITY COUNTY CA PUBLIC UTILITIES DISTRICT DISTRIBUTION
FACILITIES (LEASE REVENUE, AMBAC INSURED) 5.00 04/01/2012 441,390
245,000 WHITTIER CA PUBLIC FINANCING AUTHORITY GREENLEAF AVE WHITTIER
REDEVELOPMENT SERIES A (LEASE REVENUE) 5.00 11/01/2012 256,914
75,144,691
-------------
PUERTO RICO - 2.32%
1,000,000 PUERTO RICO COMMONWEALTH INFRASTRUCTURE FINANCING AUTHORITY
(SPECIAL TAX REVENUE, AMBAC INSURED)+/-SS. 3.54 01/01/2023 1,000,000
805,000 PUERTO RICO COMMONWEALTH PUBLIC IMPROVEMENTS (PROPERTY TAX
REVENUE, MBIA INSURED) 5.75 07/01/2020 877,402
1,877,402
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $76,732,584) 77,022,093
-------------
SHARES
SHORT-TERM INVESTMENTS - 3.73%
3,011,222 WELLS FARGO CALIFORNIA TAX FREE MONEY MARKET TRUST~++ 01/03/2006 3,011,222
TOTAL SHORT-TERM INVESTMENTS (COST $3,011,222) 3,011,222
TOTAL INVESTMENTS IN SECURITIES
(COST $79,743,806)* 99.06% $ 80,033,315
OTHER ASSETS AND LIABILITIES, NET 0.94 757,847
------ -------------
TOTAL NET ASSETS 100.00% $ 80,791,162
====== =============
+/- VARIABLE RATE INVESTMENTS.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
^ ZERO 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 $3,011,222.
* 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.
21
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 2.77%
64,600 BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INCORPORATED $ 989,026
314,300 MUNIYIELD CALIFORNIA FUND INCORPORATED 4,123,616
414,378 MUNIYIELD CALIFORNIA INSURED FUND INCORPORATED 6,045,775
10,000 PUTNAM CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST 130,400
157,740 VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST 2,342,439
13,631,256
-------------
TOTAL INVESTMENT COMPANIES (COST $12,730,264) 13,631,256
-------------
PRINCIPAL INTEREST RATE MATURITY DATE
MUNICIPAL BONDS & NOTES - 95.65%
CALIFORNIA -94.80%
$ 4,000,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS CHANNING HOUSE
(NURSING HOME REVENUE) 5.50% 02/15/2029 $ 4,151,400
2,180,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS SCHOOL OF
MECHANIC ARTS (EDUCATIONAL FACILITIES REVENUE) 5.30 10/01/2032 2,274,961
1,500,000 ABC USD CAPITAL APPRECIATION SERIES B (PROPERTY TAX REVENUE,
FGIC INSURED)^ 4.46 08/01/2018 861,390
2,000,000 ACALANES CALIFORNIA UNION HIGH SCHOOL DISTRICT (FIRST SECURITY
BANK LOC) 5.25 08/01/2025 2,179,080
1,500,000 ANAHEIM CA PFA PUBLIC IMPROVEMENTS PROJECT SERIES C (LEASE
REVENUE, FIRST SECURITY BANK LOC)^ 4.57 09/01/2022 699,405
4,345,000 AZTEC CA SHOPS LIMITED SAN DIEGO STATE UNIVERSITY (COLLEGE &
UNIVERSITY REVENUE) 5.88 09/01/2020 4,619,647
10,000,000 BAKERSFIELD CA CTFS PARTNERSHIP SERIES B (LEASE REVENUE)^ 4.46 04/15/2021 5,010,900
3,190,000 BELMONT CA COMMUNITY FACILITIES SPECIAL TAX DISTRICT # 2000-1
LIBRARY PROJECT SERIES A (TAX INCREMENTAL REVENUE, AMBAC INSURED) 5.75 08/01/2030 3,854,668
5,000,000 BERKELEY CA USD ELECTION 2000 (PROPERTY TAX REVENUE, FIRST
SECURITY BANK LOC) 5.00 08/01/2027 5,201,600
2,000,000 BRENTWOOD CA INFRASTRUCTURE FINANCING AUTHORITY (LEASE REVENUE,
FIRST SECURITY BANK LOC) 4.75 09/02/2024 2,047,000
1,195,000 BUTTE MT GLENN COMMUNITY COLLEGE SERIES A (PROPERTY TAX REVENUE,
MBIA INSURED) 5.50 08/01/2019 1,324,622
1,500,000 CABRILLO CA USD SERIES A (PROPERTY TAX REVENUE, AMBAC INSURED)^ 4.60 08/01/2021 738,315
4,000,000 CALIFORNIA ADVENTIST HEALTH SYSTEMS SERIES A (HEALTHCARE
FACILITIES REVENUE) 5.00 03/01/2028 4,042,960
3,000,000 CALIFORNIA CASA COLINA PROJECT (HEALTHCARE FACILITIES REVENUE) 6.00 04/01/2022 3,215,640
5,100,000 CALIFORNIA HOME MORTGAGE SERIES G (HOUSING REVENUE, FIRST SECURITY
BANK LOC)SS.+/- 3.35 08/01/2031 5,100,000
5,000,000 CALIFORNIA INFRASTRUCTURE & ECONOMIC DEVELOPMENT BANK (LEASE
REVENUE, MBIA INSURED) 5.50 06/01/2025 5,480,550
5,000,000 CALIFORNIA INFRASTRUCTURE & ECONOMIC DEVELOPMENT BANK J DAVID
GLADSTONE INSTITUTE PROJECT (HEALTHCARE FACILITIES REVENUE) 5.25 10/01/2034 5,152,500
1,275,000 CALIFORNIA INFRASTRUCTURE & ECONOMIC DEVELOPMENT BANK SCRIPPS
RESEARCH INSTITUTE SERIES A (HEALTHCARE FACILITIES REVENUE) 5.75 07/01/2030 1,341,683
2,000,000 CALIFORNIA INSURED DE LAS COMPANAS SERIES A (HEALTHCARE FACILITIES
REVENUE, AMBAC INSURED) 5.75 07/01/2015 2,043,840
370,000 CALIFORNIA MULTI UNIT RENTAL HOUSING SERIES B-II (HOUSING REVENUE) 6.70 08/01/2015 370,796
1,500,000 CALIFORNIA POOLED COLLEGE & UNIVERSITY PROJECT SERIES B (COLLEGE
& UNIVERSITY REVENUE) 5.13 04/01/2017 1,536,825
1,000,000 CALIFORNIA POOLED COLLEGE & UNIVERSITY PROJECT SERIES B (COLLEGE
& UNIVERSITY REVENUE) 5.25 04/01/2024 1,019,200
2,000,000 CALIFORNIA POOLED COLLEGE & UNIVERSITY PROJECT SERIES B (COLLEGE
& UNIVERSITY REVENUE) 6.75 06/01/2030 2,159,820
165,000 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY MORTGAGE BACKED
SECURITIES PROGRAM SERIES B (HOUSING REVENUE, GNMA INSURED) 6.25 12/01/2031 166,348
220,000 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY MORTGAGE BACKED
SECURITIES PROGRAM SERIES B5 (HOUSING REVENUE, GNMA INSURED)+/- 6.35 12/01/2029 221,888
1,000,000 CALIFORNIA SAINT FRANCIS MEMORIAL HOSPITAL SERIES C (HEALTHCARE
FACILITIES REVENUE) 5.88 11/01/2023 1,195,780
22
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 210,000 CALIFORNIA SMALL FACILITY LOAN SERIES A (HEALTHCARE FACILITIES
REVENUE, CALIFORNIA MORTGAGE INSURED) 6.75% 03/01/2020 $ 210,517
1,090,000 CALIFORNIA SPECIAL DISTRICT ASSOCIATION FINANCE CORPORATION
PROGRAM SERIES MM (LEASE REVENUE) 5.50 06/01/2021 1,118,198
450,000 CALIFORNIA STATE (GENERAL OBLIGATION - STATES, TERRITORIES,
AMBAC INSURED) 5.25 12/01/2024 480,722
1,000,000 CALIFORNIA STATE (OTHER REVENUE) 4.50 06/30/2006 1,006,280
4,550,000 CALIFORNIA STATE (OTHER REVENUE, AMBAC INSURED) 5.25 12/01/2024 4,918,186
3,000,000 CALIFORNIA STATE DEPARTMENT OF VETERAN AFFAIRS SERIES A (OTHER
REVENUE, AMBAC INSURED) 5.30 12/01/2021 3,169,230
5,000,000 CALIFORNIA STATE DEPARTMENT OF WATER RESOURCES SERIES J-2
(WATER REVENUE) 6.00 12/01/2007 5,256,850
3,325,000 CALIFORNIA STATE DEPARTMENT VETERAN AFFAIRS HOME PURCHASE
SERIES A (OTHER REVENUE) 4.80 12/01/2027 3,389,272
1,000,000 CALIFORNIA STATE DEPARTMENT WATER RESERVE POWER SUPPLY SERIES
C-13 (UTILITIES
REVENUE, FIRST SECURITY BANK LOC)SS.+/- 3.45 05/01/2022 1,000,000
3,500,000 CALIFORNIA STATE UNIVERSITY FRESNO ASSOCIATION INCORPORATED
SENIOR AUXILIARY ORGANIZATION EVENT CENTER (COLLEGE &
UNIVERSITY REVENUE) 6.00 07/01/2022 3,991,260
6,000,000 CALIFORNIA STATEWIDE CDA CATHOLIC HEALTHCARE WEST (HEALTHCARE
FACILITIES REVENUE) 6.50 07/01/2020 6,846,360
2,800,000 CALIFORNIA STATEWIDE CDA CEDARS SINAI MEDICAL CENTER
(HEALTHCARE FACILITIES REVENUE) 6.50 08/01/2012 3,044,720
2,000,000 CALIFORNIA STATEWIDE CDA CERTIFICATE RETIREMENT HOUSING
FOUNDATIONSS.+/- 4.30 12/01/2028 2,000,000
1,410,000 CALIFORNIA STATEWIDE CDA CERTIFICATES OF PARTICIPATION (LEASE
REVENUE, JP MORGAN CHASE BANK LOC)SS.+/- 3.70 12/01/2018 1,410,000
2,000,000 CALIFORNIA STATEWIDE CDA CHILDRENS HOSPITAL LOS ANGELES
(HEALTHCARE FACILITIES REVENUE, MBIA INSURED) 5.25 08/15/2029 2,114,700
2,000,000 CALIFORNIA STATEWIDE CDA CHILDRENS HOSPITAL LOS ANGELES
(HEALTHCARE FACILITIES REVENUE, MBIA INSURED) 5.25 08/15/2029 2,114,700
2,010,000 CALIFORNIA STATEWIDE CDA PIONEER PARK PROJECT SERIES T
(HOUSING REVENUE, GNMA INSURED) 6.10 12/20/2035 2,121,173
4,210,000 CALIFORNIA STATEWIDE CDA SERIES B (WATER & WASTEWATER
AUTHORITY REVENUE, FIRST SECURITY BANK LOC) 5.25 10/01/2027 4,490,218
5,000,000 CALIFORNIA STATEWIDE CDA THE INTERNEXT GROUP (HEALTHCARE
FACILITIES REVENUE) 5.38 04/01/2017 5,114,950
6,000,000 CALIFORNIA SUTTER HEALTH SERIES A (HEALTHCARE FACILITIES
REVENUE) 6.25 08/15/2031 6,681,720
2,750,000 CALIFORNIA SUTTER HEALTH SERIES C (HEALTHCARE FACILITIES
REVENUE, FIRST SECURITY BANK LOC) 5.13 08/15/2022 2,871,027
2,000,000 CALIFORNIA THE EPISCOPAL HOME (HEALTHCARE FACILITIES REVENUE,
CALIFORNIA MORTGAGE INSURED) 5.25 02/01/2021 2,097,440
1,000,000 CAMPBELL CA UNION HIGH SCHOOL DISTRICT ELECTION OF 1999
(PROPERTY TAX REVENUE, FGIC INSURED) 5.00 08/01/2032 1,040,790
180,000 CAPITOL AREA DEVELOPMENT AUTHORITY SERIES A (LEASE REVENUE,
MBIA INSURED) 6.50 04/01/2012 180,479
1,080,000 CARSON CA RDA SERIES A (TAX INCREMENTAL REVENUE, MBIA INSURED) 5.25 10/01/2019 1,181,304
1,140,000 CARSON CA RDA SERIES A (TAX INCREMENTAL REVENUE, MBIA INSURED) 5.25 10/01/2020 1,246,932
5,000,000 CENTER USD CAPITAL APPRECIATION SERIES C (PROPERTY TAX
REVENUE, MBIA INSURED)^ 4.60 09/01/2021 2,451,750
2,645,000 CENTRAL VALLEY CA SCHOOL DISTRICT FINANCING AUTHORITY GENERAL
OBLIGATION PROGRAM SERIES A (EDUCATIONAL FACILITIES REVENUE,
MBIA INSURED) 6.45 02/01/2018 3,163,129
1,000,000 CHICO CALIFORNIA REDEVELOPMENT AGENCY TAX ALLOCATION CHICO
AMENDED & MERGED REDEVELOPMENT (TAX ALLOCATION REVENUE, AMBAC
INSURED) 5.00 04/01/2032 1,039,390
3,000,000 CHICO PUBLIC FINANCING AUTHORITY REDEVELOPMENT PROJECT AREA
(TAX INCREMENTAL REVENUE, MBIA INSURED) 5.13 04/01/2021 3,176,400
1,800,000 CHINO BASIN CA REGIONAL FINANCING AUTHORITY MUNICIPAL WATER
DISTRICT SEWER SYSTEM PROJECT (SEWER REVENUE, AMBAC INSURED) 6.00 08/01/2016 1,822,140
1,000,000 CHULA VISTA CA INDUSTRIAL DEVELOPMENT REVENUE 5.00 12/01/2027 1,015,230
23
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 5,000,000 CONTRA COSTA CA HOME MANAGEMENT FINANCING AUTHORITY (OTHER
REVENUE, MBIA INSURED)^ 6.40% 09/01/2017 $ 2,398,600
2,755,000 CONTRA COSTA CA TRANSPORTATION AUTHORITY SERIES A (SALES TAX
REVENUE) 6.50 03/01/2009 2,940,356
270,000 CONTRA COSTA COUNTY CA (HOUSING REVENUE, GNMA INSURED) 7.75 05/01/2022 355,771
885,000 CONTRA COSTA COUNTY CA PFA PLEASANT HILL (TAX ALLOCATION
REVENUE) 5.25 08/01/2028 953,526
4,615,000 CONTRA COSTA COUNTY CA PFA PLEASANT HILL (TAX ALLOCATION
REVENUE) 5.25 08/01/2028 4,701,947
1,035,000 DALY CITY CA HOUSING DEVELOPMENT FINANCE AGENCY FRANCISCAN
ACQUISITION PROJECT SERIES A (HOUSING REVENUE) 5.65 12/15/2019 1,108,206
1,095,000 DINUBA CA UNIFORM SCHOOL DISTRICT FINANCING PROJECT (LEASE
REVENUE, AMBAC INSURED) 4.50 02/01/2024 1,096,434
4,000,000 DUARTE CA RDA CAPITAL APPRECIATION SUB MERGED REDEVELOPMENT
PROJECT (TAX INCREMENTAL REVENUE)^ 5.48 12/01/2016 2,216,880
5,250,000 DUARTE CA SERIES A (HEALTHCARE FACILITIES REVENUE) 5.25 04/01/2024 5,353,267
2,000,000 DUARTE CA SERIES A (HEALTHCARE FACILITIES REVENUE, ACA INSURED) 5.25 04/01/2019 2,066,680
3,300,000 EAST PALO ALTO CA UNIVERSITY CIRCLE GATEWAY 101 CORRIDOR
PROJECT (TAX INCREMENTAL REVENUE) 6.63 10/01/2029 3,509,979
3,000,000 EAST SIDE CA UNION HIGH SCHOOL DISTRICT SANTA CLARA COUNTY
CAPITAL APPRECIATION ELECTION 2002 SERIES E (GENERAL OBLIGATION
- SCHOOL DISTRICTS, XL CAPITAL ASSURANCE COMPANY INSURED)^ 4.96 08/01/2023 1,267,410
4,430,000 EAST SIDE CA UNION HIGH SCHOOL DISTRICT SANTA CLARA COUNTY
CAPITAL APPRECIATION SERIES A (PROPERTY TAX REVENUE, MBIA
INSURED)^ 4.70 09/01/2018 2,366,683
5,185,000 EAST SIDE CA UNION HIGH SCHOOL DISTRICT SANTA CLARA COUNTY
CAPITAL APPRECIATION SERIES A (PROPERTY TAX REVENUE, MBIA
INSURED)^ 4.46 09/01/2019 2,650,365
5,420,000 EAST SIDE CA UNION HIGH SCHOOL DISTRICT SANTA CLARA COUNTY
CAPITAL APPRECIATION SERIES A (PROPERTY TAX REVENUE, MBIA
INSURED)^ 4.60 09/01/2020 2,583,551
2,500,000 EL MONTE CA DEPARTMENT OF PUBLIC SERVICES FACILITIES PROJECT
PHASE II (LEASE REVENUE, AMBAC INSURED) 5.25 01/01/2034 2,603,600
500,000 EMERYVILLE CA PFA ASSESSMENT DISTRIBUTION REFINANCING (SPECIAL
FACILITIES REVENUE) 5.75 09/02/2014 510,400
1,750,000 EMERYVILLE CA PFA ASSESSMENT DISTRIBUTION REFINANCING (SPECIAL
FACILITIES REVENUE) 5.90 09/02/2021 1,785,683
2,125,000 ESCONDIDO CA JOINT POWERS FINANCING AUTHORITY CENTER FOR THE
ARTS (LEASE REVENUE, AMBAC INSURED) 6.00 09/01/2018 2,149,480
2,000,000 ESCONDIDO CA JOINT POWERS FINANCING AUTHORITY CIVIC CENTER
PROJECT SERIES B (LEASE REVENUE, AMBAC INSURED) 6.13 09/01/2011 2,177,140
1,595,000 FOLSOM CA CORDOVA DISTRICT #2 CAPITAL APPRECIATION SERIES A
(PROPERTY TAX REVENUE, MBIA INSURED)^ 4.52 10/01/2019 862,815
1,285,000 FONTANA CA RDA JURUPA HILLS REDEVELOPMENT PROJECT SERIES A (TAX
INCREMENTAL REVENUE) 5.50 10/01/2017 1,349,687
5,040,000 FONTANA CA RDA JURUPA HILLS REDEVELOPMENT PROJECT SERIES A (TAX
INCREMENTAL REVENUE) 5.50 10/01/2027 5,226,430
4,785,000 FONTANA CA RDA JURUPA HILLS REDEVELOPMENT PROJECT SERIES A (TAX
INCREMENTAL REVENUE) 5.60 10/01/2027 5,024,968
3,000,000 FONTANA CA USD SERIES C (PROPERTY TAX REVENUE, FGIC INSURED) 6.15 05/01/2020 3,174,000
1,000,000 FRESNO CA STREET IMPROVEMENT PROJECT (LEASE REVENUE) 6.63 12/01/2011 1,012,350
8,760,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATE TOBACCO
SETTLEMENT REVENUE SERIES 2003-A-1 5.00 06/01/2021 8,819,042
2,420,000 GOLDEN WEST CA SCHOOLS CAPITAL APPRECIATION SERIES A (OTHER
REVENUE, MBIA INSURED)^ 4.26 08/01/2015 1,616,028
2,500,000 HAWAIIAN GARDENS CA RDA (TAX INCREMENTAL REVENUE) 6.00 12/01/2013 2,707,225
4,500,000 HAWTHORNE CA SCHOOL DISTRICT (LEASE REVENUE, FIRST SECURITY
BANK LOC) 6.00 11/01/2025 4,990,410
1,360,000 INDUSTRY CA PUBLIC FACILITIES AUTHORITY (OTHER REVENUE, AMBAC
INSURED) 4.88 07/01/2023 1,409,382
24
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 1,240,000 INDUSTRY CA PUBLIC FACILITIES AUTHORITY (OTHER REVENUE, AMBAC
INSURED) 4.63% 07/01/2025 $ 1,267,838
3,750,000 INDUSTRY CA URBAN DEVELOPMENT AGENCY CIVIC RECREATION
INDIVIDUAL SERIES 1 (TAX INCREMENTAL REVENUE, MBIA INSURED) 5.00 05/01/2017 3,875,362
1,555,000 INGLEWOOD CA RDA MERGED REDEVELOPMENT PROJECT SERIES A (TAX
INCREMENTAL REVENUE, AMBAC INSURED) 5.25 05/01/2017 1,717,684
255,000 JAMUL-DULZURA SD UNION SCHOOL DISTRICT SERIES C (PROPERTY TAX
REVENUE) 6.40 08/01/2016 255,566
2,000,000 KERN HIGH SCHOOL DISTRICT SERIES D (PROPERTY TAX REVENUE, MBIA
INSURED) 5.60 08/01/2012 2,025,520
4,000,000 LAKE ELSINORE CA PFA SERIES A (TAX INCREMENTAL REVENUE) 5.50 09/01/2030 4,097,120
3,010,000 LAKE ELSINORE CA SCHOOL FINANCING AUTHORITY HORSETHIEF CANYON
(SPECIAL TAX REVENUE) 5.63 09/01/2016 3,146,714
2,965,000 LANCASTER CA SCHOOL DISTRICT CAPITAL APPRECIATION ELECTION OF
1999 (GENERAL OBLIGATION - SCHOOL DISTRICTS, MBIA INSURED)^ 4.70 08/01/2024 1,249,925
3,000,000 LONG BEACH CA FINANCING AUTHORITY (LEASE REVENUE, AMBAC INSURED) 6.00 11/01/2008 3,217,170
1,500,000 LONG BEACH CA FINANCING AUTHORITY (LEASE REVENUE, AMBAC INSURED) 6.00 11/01/2017 1,736,040
2,900,000 LOS ALTOS CA SCHOOL DISTRICT CAPITAL APPRECIATION ELECTION OF
1998 SERIES B (PROPERTY TAX REVENUE, MBIA INSURED)^ 4.75 08/01/2021 1,304,130
4,745,000 LOS ANGELES CA HARBOR DEPARTMENT SERIES B (AIRPORT REVENUE) 5.38 11/01/2015 4,856,413
2,720,000 LOS ANGELES CA HARBOR DEPARTMENT SERIES B (AIRPORT REVENUE) 5.38 11/01/2023 2,781,771
2,200,000 LOS ANGELES CA USD MULTIPLE PROPERTY PROJECTS SERIES A (LEASE
REVENUE, FIRST SECURITY BANK LOC) 5.50 10/01/2010 2,280,344
6,000,000 LOS ANGELES CA WASTEWATER SYSTEMS REVENUE SERIES A (WATER &
SEWER REVENUE, MBIA INSURED) 5.00 06/01/2030 6,303,300
3,475,000 LOS ANGELES CA WATER & POWER REVENUE (WATER REVENUE, FIRST
SECURITY BANK LOC) 5.00 07/01/2025 3,674,222
1,025,000 LOS ANGELES COUNTY CA CAPITAL APPRECIATION (LEASE REVENUE,
AMBAC INSURED)^ 4.62 09/01/2020 524,493
2,700,000 LOS ANGELES COUNTY CA CAPITAL ASSET LEASING CORPORATION SERIES
B (LEASE REVENUE, AMBAC INSURED) 6.00 12/01/2014 3,155,058
2,000,000 LOS ANGELES COUNTY CA CAPITAL ASSET LEASING CORPORATION SERIES
B (LEASE REVENUE, AMBAC INSURED) 6.00 12/01/2015 2,345,380
5,000,000 MANTECA CA UNIFIED SCHOOL DISTRICT (PROPERTY TAX REVENUE, FIRST
SECURITY BANK LOC) 5.00 08/01/2027 5,462,700
2,235,000 MERCED CA UNION HIGH SCHOOL DISTRICT CAPITAL APPRECIATION
SERIES A (PROPERTY TAX REVENUE, FGIC INSURED)^ 4.49 08/01/2018 1,278,733
805,000 MERCED COUNTY CA (LEASE REVENUE, FIRST SECURITY BANK LOC) 6.00 10/01/2012 807,777
4,375,000 MONROVIA CA RDA CENTRAL REDEVELOPMENT PROJECT AREA 1 (TAX
INCREMENTAL REVENUE, AMBAC INSURED) 5.00 05/01/2021 4,593,750
1,260,000 MOUNTAIN VIEW CA LOS ALTOS UNION HIGH SCHOOL DISTRICT SERIES D
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC)^ 4.51 08/01/2019 687,418
1,080,000 NAPA VALLEJO CA WASTE MANAGEMENT AUTHORITY SOLID WASTE TRANSFER
FACILITY (SOLID WASTE REVENUE) 5.50 02/15/2013 1,111,363
1,900,000 NORCO CA REDEVELOPMENT AGENCY (TAX INCREMENTAL REVENUE, AMBAC
INSURED) 5.00 03/01/2026 1,979,325
5,000,000 NORTHERN CA TRANSMISSION CALIFORNIA-OREGON TRANSMISSION PROJECT
SERIES A (POWER
REVENUE, MBIA INSURED) 7.00 05/01/2013 5,915,500
1,305,000 OCEANSIDE CA CDA DOWNTOWN REDEVELOPMENT PROJECT (TAX ALLOCATION
REVENUE, XL
CAPITAL ASSURANCE COMPANY INSURED) 4.50 09/01/2020 1,320,830
1,500,000 ONTARIO CA REDEVELOPMENT FINANCING AUTHORITY ONTARIO
REDEVELOPMENT PROJECT #1 (SPECIAL TAX REVENUE, MBIA INSURED) 6.00 08/01/2015 1,517,925
2,160,000 ORCHARD CA SCHOOL DISTRICT CAPITAL APPRECIATION ELECTION OF
2000 SERIES A (PROPERTY TAX REVENUE, FGIC INSURED)^ 4.73 08/01/2024 906,271
11,000,000 PALM SPRINGS CA CERTIFICATE (HOSPITAL REVENUE)^ 4.57 04/15/2021 5,511,990
1,000,000 PARAMOUNT CA USD CAPITAL APPRECIATION SERIES A (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC)^ 4.61 09/01/2021 489,600
25
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 1,825,000 PASADENA CA OLD PASADENA PARKING FACILITIES PROJECT (LEASE
REVENUE) 6.25% 01/01/2018 $ 2,092,545
2,045,000 PERRIS CA PFA SERIES A (TAX INCREMENTAL REVENUE) 5.75 10/01/2031 2,166,657
1,030,000 PERRIS CA PFA SERIES A (TAX INCREMENTAL REVENUE, MBIA INSURED) 5.25 10/01/2020 1,118,673
5,500,000 PICO RIVERA CA WATER AUTHORITY SERIES A (WATER REVENUE) 6.25 12/01/2032 5,870,700
2,000,000 PICO RIVERA CA WATER AUTHORITY SERIES A (WATER REVENUE, MBIA
INSURED) 5.50 05/01/2019 2,270,480
2,515,000 PLACENTIA CA RDA SERIES A (TAX INCREMENTAL REVENUE) 5.85 08/01/2032 2,687,403
2,680,000 PONOMA CA USD SERIES A (PROPERTY TAX REVENUE, MBIA INSURED) 6.55 08/01/2029 3,501,393
2,000,000 PORT OF OAKLAND CA SERIES L (HARBOR DEPARTMENT REVENUE, FGIC
INSURED) 5.50 11/01/2020 2,153,000
5,000,000 PORT OF OAKLAND CA SERIES L (HARBOR DEPARTMENT REVENUE, FGIC
INSURED) 5.00 11/01/2021 5,172,200
3,600,000 PORT OF REDWOOD CITY CA (HARBOR DEPARTMENT REVENUE) 5.13 06/01/2030 3,494,916
1,000,000 REDLANDS CA RDA REDEVELOPMENT PROJECT AREA SERIES A (TAX
REVENUE, AMBAC INSURED) 4.63 08/01/2022 1,015,630
1,345,000 RIALTO CA RDA MERGED PROJECT AREA SERIES A (TAX INCREMENTAL
REVENUE) 4.88 09/01/2018 1,365,955
1,000,000 RIALTO CA RDA MERGED PROJECT AREA SERIES A (TAX INCREMENTAL
REVENUE) 5.00 09/01/2021 1,022,110
1,100,000 RICHMOND CA JOINT POWERS FINANCING AUTHORITY SERIES A (LEASE
REVENUE) 5.25 05/15/2013 1,121,659
1,425,000 RIO HONDO CALIFORNIA COMMUNITY COLLEGE DISTRICT (PROPERTY TAX
REVENUE, FGIC INSURED)^ 4.28 08/01/2015 949,805
8,595,000 RIVERSIDE COUNTY CA ASSET LEASING CORPORATION RIVERSIDE COUNTY
HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE, MBIA INSURED)^ 4.88 06/01/2026 3,211,264
1,310,000 RIVERSIDE COUNTY CA PFA REDEVELOPMENT PROJECTS SERIES A (TAX
ALLOCATION REVENUE) 5.50 10/01/2022 1,356,649
2,410,000 RIVERSIDE COUNTY CA PFA REDEVELOPMENT PROJECT 2005 SERIES A
(TAX REVENUE) 5.50 10/01/2022 2,497,290
840,000 RIVERSIDE COUNTY CA PFA REDEVELOPMENT PROJECT 2005 SERIES A
(TAX REVENUE) 5.50 10/01/2022 856,447
3,990,000 ROCKLIN CA RDA ROCKLIN REDEVELOPMENT PROJECT SERIES A (TAX
INCREMENTAL REVENUE) 5.50 09/01/2031 4,136,912
5,000 SACRAMENTO CA FINANCING AUTHORITY (OTHER REVENUE) 6.70 11/01/2011 5,013
2,500,000 SACRAMENTO CA MUD SERIES A (ELECTRIC REVENUE, MBIA INSURED) 6.25 08/15/2010 2,749,950
300,000 SACRAMENTO CA MUD SERIES C (ELECTRIC REVENUE, FGIC INSURED) 5.75 11/15/2008 300,642
935,000 SACRAMENTO CA MUD SERIES F (ELECTRIC REVENUE) 5.38 12/01/2013 996,411
2,870,000 SACRAMENTO COUNTY CA HOUSING AUTHORITY VERANDAS APARTMENTS
PROJECT SERIES H (HOUSING REVENUE, FNMA INSURED) 5.70 03/01/2034 2,981,528
2,085,000 SACRAMENTO COUNTY CA SANITATION DISTRICT FINANCING AUTHORITY
(SEWER REVENUE) 4.75 12/01/2023 2,114,857
3,910,000 SAN DIEGO CA RDA CENTRE (TAX INCREMENTAL REVENUE, FIRST
SECURITY BANK LOC)^ 4.69 09/01/2023 1,724,193
1,060,000 SAN DIEGO CA RDA CENTRE CITY SUB PARKING SERIES B (PARKING
FACILITIES REVENUE) 5.30 09/01/2020 1,101,340
3,200,000 SAN DIEGO COUNTY CA BURNHAM INSTITUTE PROJECT (LEASE REVENUE) 6.25 09/01/2029 3,370,016
4,500,000 SAN DIEGO COUNTY CA REGIONAL TRANSPORTATION COMMISSION SERIES
A (SALES TAX REVENUE) 6.00 04/01/2008 4,676,625
1,530,000 SAN DIEGO COUNTY CA CTFS PARTN REF-EDGEMOOR PROJECT AND REGL
SYSTEM (LEASE REVENUE, AMBAC INSURED) 5.00 02/01/2027 1,596,922
2,390,000 SAN FRANCISCO CA CITY & COUNTY AIRPORT COMMISSION SECOND
SERIES 15A (AIRPORT REVENUE, FIRST SECURITY BANK LOC) 5.00 05/01/2017 2,451,805
2,500,000 SAN FRANCISCO CA CITY & COUNTY AIRPORT COMMISSION SECOND
SERIES 27-B (AIRPORT REVENUE, FGIC INSURED) 5.00 05/01/2019 2,634,450
4,000,000 SAN JOAQUIN HILLS CA TRANSPORTATION CORRIDOR AGENCY TOLL ROAD
(TOLL ROAD REVENUE) 7.55 01/01/2008 4,415,000
5,510,000 SAN JOAQUIN HILLS CA TRANSPORTATION CORRIDOR AGENCY TOLL ROAD
(TOLL ROAD REVENUE)^ 4.39 01/01/2019 3,132,766
5,055,000 SAN JOAQUIN HILLS CA TRANSPORTATION CORRIDOR AGENCY TOLL ROAD
(TOLL ROAD REVENUE)^ 4.60 01/01/2023 2,332,882
6,000,000 SAN JOAQUIN HILLS CA TRANSPORTATION CORRIDOR AGENCY TOLL ROAD
(TOLL ROAD REVENUE)^ 4.63 01/01/2024 2,631,960
5,000,000 SAN JOAQUIN HILLS CA TRANSPORTATION CORRIDOR AGENCY TOLL ROAD
(TOLL ROAD REVENUE)^ 4.63 01/01/2025 2,095,200
3,300,000 SAN JOSE CA CAPITAL ACCUMULATOR (HOUSING REVENUE, GEMIC
INSURED)^ 4.35 04/01/2016 2,123,814
3,300,000 SAN JOSE CA EL PARADOR APARTMENTS PROJECT SERIES A (HOUSING
REVENUE) 6.20 01/01/2041 3,467,937
1,205,000 SAN JOSE CA USD (LEASE REVENUE, FIRST SECURITY BANK LOC)^ 4.61 01/01/2021 608,176
26
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 5,020,000 SAN MARCOS CA SERIES A (GENERAL OBLIGATION - STATES,
TERRITORIES) 6.25% 09/02/2022 $ 6,055,425
1,300,000 SAN MARCOS CA PUBLIC FACILITIES (STATE & LOCAL GOVERNMENTS)^ 4.39 01/01/2019 739,128
1,310,000 SAN MARCOS CA PUBLIC FACILITIES AUTHORITY (STATE & LOCAL
GOVERNMENTS)^ 4.11 01/01/2015 908,249
4,475,000 SAN MARCOS CA PUBLIC FACILITIES AUTHORITY PROJ AREAS # 2 & 3
FING PJ-C (TAX ALLOCATION REVENUE, AMBAC INSURED) 5.00 08/01/2028 4,661,652
1,000,000 SAN MATEO CA RDA (TAX INCREMENTAL REVENUE) 5.40 08/01/2018 1,052,140
3,135,000 SAN SEDRO CA SCHOOL DISTRICT CAPITAL APPRECIATION SERIES D
(PROPERTY TAX REVENUE, FGIC INSURED)^ 4.60 08/01/2022 1,462,572
3,000,000 SANTA ANA CA FINANCING AUTHORITY INNER CITY COMMUTER SERIES C
(LEASE REVENUE) 5.60 09/01/2019 3,142,950
3,000,000 SANTA CLARA COUNTY CA HOUSING AUTHORITY BLOSSOM RIVER
APARTMENTS SERIES A (HOUSING REVENUE) 6.50 09/01/2039 2,915,910
1,000,000 SANTA MONICA CA COMMUNITY COLLEGE DISTRICT CAPITAL
APPRECIATION 2002 ELECTION SERIES C (OTHER REVENUE, MBIA
INSURED)^ 4.33 08/01/2015 663,340
1,750,000 SIMI VALLEY CA USD CAPITAL IMPROVEMENT PROJECTS (LEASE
REVENUE, AMBAC INSURED) 5.25 08/01/2022 1,970,098
1,050,000 SONOMA COUNTY CA JUNIOR COLLEGE DISTRICT CAPITAL
APPRECIATION-REF (PROPERTY TAX REVENUE, FIRST SECURITY BANK
LOC)^ 4.00 08/01/2013 777,682
1,000,000 SONOMA VALLEY CA USD (PROPERTY TAX REVENUE, FIRST SECURITY
BANK LOC) 6.00 07/15/2021 1,024,610
1,765,000 SOUTH GATE CA PFA SOUTH GATE REDEVELOPMENT PROJECT #1 (TAX
INCREMENTAL REVENUE, XL CAPITAL ASSURANCE COMPANY INSURED) 5.25 09/01/2019 1,904,912
1,270,000 SOUTHERN CA PUBLIC POWER AUTHORITY (ELECTRIC REVENUE) 6.75 07/01/2011 1,448,372
5,000 STOCKTON CA MORTGAGE BACKED SECURITIES PROGRAM SERIES A
(HOUSING REVENUE, GNMA INSURED) 7.50 02/01/2023 5,014
5,690,000 SULPHUR SPRINGS CA UNION SCHOOL DISTRICT INTEREST ACCRUAL
SERIES A (PROPERTY TAX
REVENUE, MBIA INSURED)^ 3.98 09/01/2013 4,204,853
5,575,000 UNION CITY CA COMMUNITY RDA SERIES A (SPECIAL FACILITIES
REVENUE, AMBAC INSURED) 5.38 10/01/2034 5,944,344
3,235,000 UNIVERSITY OF CALIFORNIA LIMITED PROJECT SERIES A (COLLEGE &
UNIVERSITY REVENUE, MBIA INSURED) 4.75 05/15/2026 3,295,300
6,000,000 UNIVERSITY OF CALIFORNIA REVS SERIES F (COLLEGE & UNIVERSITY
REVENUE, FIRST SECURITY BANK LOC) 4.75 05/15/2026 6,141,300
3,275,000 VALLEJO CA WATER IMPROVEMENT PROJECT SERIES A (WATER REVENUE,
FIRST SECURITY BANK LOC) 5.70 05/01/2016 3,367,715
1,595,000 VERNON CA MALBURG GENERATING STATION PROJECT (ELECTRIC REVENUE) 5.50 04/01/2021 1,676,170
2,500,000 VISTA CA COMMUNITY DEVELOPMENT COMMISSION VISTA REDEVELOPMENT
PROJECT AREA (TAX INCREMENTAL REVENUE) 5.88 09/01/2037 2,621,375
1,135,000 WALNUT VALLEY CA USD SERIES C (PROPERTY TAX REVENUE, FGIC
INSURED) 5.75 08/01/2015 1,137,497
800,000 WESTMINSTER CA RDA ROSE GARDENS APARTMENT PROJECT SERIES A
(HOUSING REVENUE) 6.50 08/01/2010 803,080
2,395,000 WINDSOR CA JOINT POWERS FINANCING AUTHORITY WINDSOR CIVIC
CENTER SERIES A (LEASE REVENUE, FIRST SECURITY BANK LOC) 5.38 10/01/2018 2,616,178
1,600,000 YORBA LINDA CA RDA CAPITAL APPRECIATION REDEVELOPMENT SERIES A
(SPECIAL TAX REVENUE, MBIA INSURED)^ 4.77 09/01/2019 840,112
467,114,565
-------------
PUERTO RICO - 0.85%
3,800,000 CHILDRENS TRUST FUND PUERTO RICO 6.00 07/01/2010 4,189,272
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $440,996,664) 471,303,837
=============
27
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 0.88%
$ 4,352,058 WELLS FARGO CALIFORNIA TAX FREE MONEY MARKET TRUST~++ $ 4,352,058
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $4,352,058) 4,352,058
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $458,078,986)* 99.30% $ 489,287,151
OTHER ASSETS AND LIABILITIES, NET 0.70 3,466,905
------ -------------
TOTAL NET ASSETS 100.00% $ 492,754,056
====== =============
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
+/- VARIABLE RATE INVESTMENTS.
~ 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 $4,352,058.
* 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.
28
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
COLORADO TAX-FREE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 2.92%
8,248 BLACKROCK STRATEGIC MUNICIPAL TRUST $ 141,371
50,096 DREYFUS MUNICIPAL INCOME INCORPORATED 445,854
27,791 DREYFUS STRATEGIC MUNICIPAL BOND FUND INCORPORATED 225,385
17,748 MUNICIPAL ADVANTAGE FUND INCORPORATED 221,495
15,692 NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 229,103
25,652 NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND INCORPORATED 370,415
18,339 NUVEEN PREMIUM INCOME MUNICIPAL FUND 256,563
15,188 SALOMON BROTHERS MUNICIPAL PARTNERS FUND INCORPORATED 206,557
12,543 SELIGMAN SELECT MUNICIPAL FUND INCORPORATED 125,305
7,778 VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST 115,814
8,528 VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II 113,678
12,032 VAN KAMPEN TRUST FOR INVESTMENT GRADE MUNICIPALS 174,103
TOTAL INVESTMENT COMPANIES (COST $2,277,546) 2,625,643
-------------
PRINCIPAL INTEREST RATE MATURITY DATE
MUNICIPAL BONDS & NOTES - 95.48%
COLORADO - 95.48%
$ 1,250,000 ADAMS & WELD COUNTIES CO SCHOOL DISTRICT #27J BRIGHTON
(PROPERTY TAX REVENUE, MBIA INSURED) 5.50% 12/01/2019 1,363,737
1,000,000 ADONEA METROPOLITAN DISTRICT #2 CO REVENUE (OTHER REVENUE) 4.38 12/01/2015 988,710
500,000 ARAPAHOE COUNTY CO CENTENNIAL 25 METROPOLITAN DISTRICT
(PROPERTY TAX REVENUE) 6.38 12/01/2016 509,875
1,000,000 AURORA CO MULTIFAMILY REVENUE+/- 4.25 12/20/2040 1,000,580
1,000,000 BOULDER CO (WATER REVENUE) 5.60 12/01/2017 1,083,770
1,235,000 BOULDER COUNTY CO UNIVERSITY CORPORATION FOR ATMOSPHERIC
PROJECT (OTHER REVENUE, MBIA INSURED) 5.50 09/01/2020 1,339,802
1,250,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY (OTHER
REVENUE) 5.25 06/01/2021 1,303,750
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY (PRIVATE
SCHOOL REVENUE) 7.13 12/15/2030 1,097,790
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY ACADEMY
CHARTER SCHOOL PROJECT (PRIVATE SCHOOL REVENUE) 6.25 12/15/2012 1,079,450
3,750,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY ALEXANDER
DAWSON SCHOOL PROJECT (PRIVATE SCHOOL REVENUE) 5.30 02/15/2029 3,872,962
1,040,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER
SCHOOL COLLEGIATE PROJECT
(EDUCATIONAL FACILITIES REVENUE, XL CAPITAL ASSURANCE COMPANY
INSURED) 5.00 06/15/2019 1,100,975
500,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER
SCHOOL CORE KNOWLEDGE PROJECT (LEASE REVENUE) 7.00 11/01/2029 561,515
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER
SCHOOL UNIVERSITY LAB SCHOOL PROJECT (PRIVATE SCHOOL REVENUE) 5.75 06/01/2016 1,101,860
1,295,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY EXCEL
ACADEMY CHARTER SCHOOL
PROJECT (GENERAL OBLIGATION - BOND BANK, XL CAPITAL ASSURANCE
COMPANY INSURED) 5.50 12/01/2025 1,429,279
100,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY JOHNSON &
WALES UNIVERSITY PROJECT SERIES A (COLLEGE AND UNIVERSITY
REVENUE, XL CAPITAL ASSURANCE COMPANY INSURED) 5.00 04/01/2023 103,936
1,445,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY PARKER
CORE CHARTER (EDUCATIONAL FACILITIES REVENUE, XL CAPITAL
ASSURANCE COMPANY INSURED) 5.00 11/01/2024 1,503,522
1,500,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY PINNACLE
CHARTER SCHOOL PROJECT (LEASE REVENUE) 6.00 12/01/2021 1,682,445
600,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY
RENAISSANCE SCHOOL PROJECT (LEASE REVENUE) 6.75 06/01/2029 548,802
1,165,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES CHARTER SCHOOL
COLLEGIATE PROJECT (EDUCATIONAL FACILITIES REVENUE, XL CAPITAL
ASSURANCE COMPANY INSURED) 5.25 06/15/2024 1,249,591
29
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
COLORADO TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLORADO (CONTINUED)
$ 500,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES CHARTER SCHOOL
MONTESSORI EVERGREEN PROJECT (OTHER REVENUE) 6.50% 12/01/2035 $ 501,775
1,040,000 COLORADO EXEMPLA INCORPORATED SERIES A (HEALTHCARE FACILITIES
REVENUE) 5.50 01/01/2023 1,096,774
1,705,000 COLORADO HOUSING & FINANCE AUTHORITY (HOUSING REVENUE) 4.80 05/01/2030 1,711,649
2,060,000 COLORADO HOUSING & FINANCE AUTHORITY DRIVERS SERIES 120
(HOUSING REVENUE)+/- 8.99 04/01/2011 2,176,884
440,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES A2 (HOUSING
REVENUE) 6.50 08/01/2031 451,119
190,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES A3 (HOUSING
REVENUE) 6.50 05/01/2016 193,553
910,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES A3 (HOUSING
REVENUE) 5.25 05/01/2032 922,695
630,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES B2 (HOUSING
REVENUE) 6.10 08/01/2023 664,738
1,845,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES B3 (HOUSING
REVENUE)+/- 6.70 08/01/2017 1,895,110
465,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES B3 (HOUSING
REVENUE) 6.55 08/01/2033 482,214
535,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES C3 (HOUSING
REVENUE, FHA INSURED) 6.38 08/01/2033 547,819
80,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES D2 (HOUSING
REVENUE, GENERAL OBLIGATION OF AUTHORITY) 7.10 06/01/2014 80,997
605,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES E3 (HOUSING
REVENUE) 6.60 08/01/2017 627,809
800,000 COLORADO HOUSING & FINANCE AUTHORITY WINRIDGE APARTMENTS
(HOUSING REVENUE, FNMA INSURED)+/-SS. 3.59 02/15/2028 800,000
1,320,000 COLORADO MOUNTAIN JUNIOR COLLEGE DISTRICT STUDENT HOUSING
FACILITIES (COLLEGE & UNIVERSITY REVENUE, MBIA INSURED) 5.00 06/01/2023 1,397,418
415,000 COLORADO NATIONAL JEWISH MEDICAL & RESEARCH CENTER (HEALTHCARE
FACILITIES REVENUE) 5.00 01/01/2008 420,279
2,000,000 COLORADO PARKVIEW MEDICAL CENTER PROJECT (HEALTHCARE
FACILITIES REVENUE) 6.50 09/01/2020 2,214,900
1,250,000 COLORADO SISTERS CHARITY HEALTHCARE SERIES A (HEALTHCARE
FACILITIES REVENUE, AMBAC INSURED) 6.25 05/15/2011 1,414,100
1,000,000 COLORADO SPRINGS CO COLORADO COLLEGE PROJECT (COLLEGE &
UNIVERSITY REVENUE) 4.38 06/01/2026 979,720
1,500,000 COLORADO STATE CERTIFICATE PARTNERSHIP (LEASE REVENUE, MBIA
INSURED) 5.00 11/01/2030 1,567,485
500,000 COLORADO STEAMBOAT SPRINGS HEALTH PROJECT (HEALTHCARE
FACILITIES REVENUE) 5.75 09/15/2022 511,320
945,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY CLEAN WATER
(WATER REVENUE) 5.13 09/01/2018 989,245
55,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY CLEAN WATER
(WATER REVENUE) 5.13 09/01/2018 57,285
970,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY CLEAN WATER
(WATER REVENUE) 5.00 09/01/2019 1,012,341
1,410,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY CLEAN WATER
SERIES A (WATER REVENUE) 4.50 09/01/2024 1,423,141
30,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY CLEAN WATER
SERIES B (OTHER REVENUE) 5.00 09/01/2019 31,128
1,000,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY DRINKING
WATER SERIES A (WATER REVENUE) 5.50 09/01/2022 1,155,960
1,810,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY SERIES A
(WATER REVENUE) 4.88 09/01/2017 1,901,260
1,000,000 COLORADO WATER RESERVE POWER DEVELOPMENT AUTHORITY SERIES A
(WATER REVENUE) 5.00 09/01/2019 1,044,520
1,000,000 DENVER CITY & COUNTY CO HELEN G BONFILS FOUNDATION PROJECT
SERIES B (RECREATIONAL FACILITIES REVENUE) 5.13 12/01/2017 1,026,740
1,000,000 DENVER CITY & COUNTY CO SERIES C (AIRPORT REVENUE, MBIA
INSURED) 5.60 11/15/2010 1,027,690
1,000,000 DENVER CO CONVENTION CENTER HOTEL & AUTHORITY SR SERVICE A
(PARKING FACILITIES REVENUE, XL CAPITAL ASSURANCE COMPANY
INSURED) 5.00 12/01/2018 1,059,750
1,475,000 DOUGLAS COUNTY CO PARKER HILLTOP PROJECT (HOUSING REVENUE, FHA
INSURED) 5.35 08/01/2018 1,524,884
1,000,000 DOUGLAS COUNTY CO SCHOOL DISTRICT #1 DOUGLAS & ELBERT COUNTIES
(PROPERTY TAX REVENUE, FGIC INSURED) 5.75 12/15/2022 1,133,870
1,250,000 DOVE VALLEY METROPOLITAN DISTRICT CO ARAPAHOE COUNTY (PROPERTY
TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 11/01/2020 1,336,062
2,500,000 E-470 PUBLIC HIGHWAY AUTHORITY CO CAPITAL APPRECIATION SERVICE
B (OTHER REVENUE, MBIA INSURED)^ 4.62 09/01/2020 1,279,250
30
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
COLORADO TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLORADO (CONTINUED)
$ 2,500,000 EL PASO COUNTY TX SCHOOL DISTRICT #11 COLORADO SPRINGS CO
(PROPERTY TAX REVENUE, STATE AID WITHHOLDING) 7.10% 12/01/2017 $ 3,192,750
1,500,000 ENGLEWOOD CO MARKS APARTMENTS PROJECT GUARANTEE AGREEMENT
(HOUSING REVENUE) 6.65 12/01/2026 1,544,820
1,000,000 FORT COLLINS CO SERIES A (LEASE REVENUE, AMBAC INSURED) 5.38 06/01/2025 1,088,490
1,200,000 GARFIELD COUNTY CO BUILDING CORPORATION (LEASE REVENUE, AMBAC
INSURED) 5.75 12/01/2019 1,304,376
1,395,000 GARFIELD COUNTY CO SCHOOL DISTRICT #RE002 (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC) 5.25 12/01/2021 1,502,066
1,165,000 GREEN VALLEY CO METROPOLITAN DISTRICT (PROPERTY TAX REVENUE,
AMBAC INSURED) 5.75 12/01/2019 1,257,979
785,000 HIGH PLAINS CO METROPOLITAN DISTRICT (OTHER REVENUE) 4.38 12/01/2015 783,289
525,000 HIGHLANDS RANCH METROPOLITANDISTRICT #2 COLORADO (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC) 6.50 06/15/2011 601,088
475,000 HIGHLANDS RANCH METROPOLITANDISTRICT #2 COLORADO (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC) 6.50 06/15/2011 543,813
1,990,000 JEFFERSON COUNTY CO CERTIFICATES OF PARTICIPATION (LEASE
REVENUE, MBIA INSURED) 4.50 12/01/2020 2,030,994
3,000,000 JEFFERSON COUNTY CO SCHOOL DISTRICT #R001 (PROPERTY TAX
REVENUE, MBIA INSURED) 6.50 12/15/2011 3,465,030
500,000 LA JUNTA CO ARK VALLEY REGIONAL MEDICAL CENTER PROJECT
(HEALTHCARE FACILITIES REVENUE) 6.00 04/01/2019 523,805
1,000,000 MESA STATE COLLEGE CO AUXILIARY FACILITIES ENTERPRISE (COLLEGE
& UNIVERSITY REVENUE, XL CAPITAL ASSURANCE COMPANY INSURED) 5.00 05/15/2020 1,061,420
2,000,000 METEX CO METROPOLITAN DISTRICT SERIES A (PROPERTY TAX REVENUE,
MBIA INSURED) 5.80 12/01/2016 2,109,140
790,000 NORTHERN METROPOLITAN DISTRICT ADAMS COUNTY CO (OTHER REVENUE) 6.50 12/01/2016 797,537
250,000 PUEBLO CO PUBLIC PARKING LEASE PURCHASE & SUBLEASE (LEASE
REVENUE) 6.90 07/01/2015 253,463
1,055,000 REGIONAL TRANSUNION DISTRICT COLORADO CTFS PARTNERSHIP SERIES
A (LEASE REVENUE, AMBAC INSURED) 5.00 06/01/2021 1,116,696
600,000 SUMMIT COUNTY CO KEYSTONE RESORTS MANAGEMENT PROJECT (OTHER
REVENUE) 7.38 09/01/2010 690,168
500,000 TODD CREEK FARMS CO METROPOLITAN DISTRICT #1 WATER &
WASTEWATER (WATER REVENUE) 6.13 12/01/2019 496,965
1,730,000 UNIVERSITY OF NORTHERN COLORADO AUXILIARY FACILITIES SYSTEM
(COLLEGE & UNIVERSITY REVENUE, AMBAC INSURED) 5.50 06/01/2019 1,873,642
85,821,366
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $81,725,946) 85,821,366
-------------
SHARES
SHORT-TERM INVESTMENTS - 1.13%
1,014,000 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 1,014,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,014,000) 1,014,000
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $85,017,492)* 99.53% $ 89,461,009
OTHER ASSETS AND LIABILITIES, NET 0.47 426,887
====== -------------
TOTAL NET ASSETS 100.00% $ 89,887,896
====== =============
+/- VARIABLE RATE INVESTMENTS.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
^ ZERO 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 $1,014,000.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
31
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 98.40%
MINNESOTA - 98.37%
$ 2,845,000 ANOKA-HENNEPIN MN INDEPENDENT SCHOOL DISTRICT #11 SERIES A
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.00% 02/01/2018 $ 3,000,109
650,000 AUSTIN MN HOUSING & RDA COURTYARD RESIDENCE PROJECT SERIES A
(HOUSING REVENUE) 7.15 01/01/2020 696,969
1,500,000 AUSTIN MN HOUSING & RDA COURTYARD RESIDENCE PROJECT SERIES A
(HOUSING REVENUE) 7.25 01/01/2032 1,604,820
1,055,000 BEMIDJI MN FIRST MORTGAGE NORTH COUNTRY HEALTH (HEALTHCARE
FACILITIES REVENUE) 5.63 09/01/2021 1,085,701
3,000,000 BLOOMINGTON MN INDEPENDENT SCHOOL DISTRICT #271 SERIES B
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.00 02/01/2016 3,143,070
3,000,000 BLOOMINGTON MN INDEPENDENT SCHOOL DISTRICT #271 SERIES B
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.00 02/01/2019 3,139,590
3,000,000 BRECKENRIDGE MN CATHOLIC HEALTH INITIATIVES SERIES A
(HEALTHCARE FACILITIES REVENUE 5.00 05/01/2030 3,111,570
200,000 BUFFALO MN HOUSING & RDA PUBLIC FACILITY BUFFALO WILD MARSH
GOLF COURSE (LEASE REVENUE) 4.38 05/01/2024 191,348
1,000,000 CHASKA MN GENERATING FACILITIES SERIES A (ELECTRIC REVENUE) 5.25 10/01/2025 1,059,420
750,000 CHASKA MN INDEPENDENT SCHOOL DISTRICT #112 SERIES A (PROPERTY
TAX REVENUE, FIRST SECURITY BANK LOC) 5.70 02/01/2017 801,608
945,000 CHASKA MN SERIES A (ELECTRIC REVENUE) 5.63 10/01/2014 1,030,872
995,000 CHASKA MN SERIES A (ELECTRIC REVENUE) 5.70 10/01/2015 1,088,649
1,000,000 CUYUNA RANGE MN HOSPITAL DISTRICT SERIES A (HEALTHCARE
FACILITIES REVENUE) 6.00 06/01/2019 1,025,970
695,000 DULUTH MN ECONOMIC DEVELOPMENT AUTHORITY BENEDICTINE HEALTH
SYSTEM ST MARYS (HEALTH FACILITIES FINANCING AUTHORITY REVENUE) 5.25 02/15/2021 725,302
155,000 EAST GRAND FORKS MN (ELECTRIC REVENUE) 5.90 02/01/2015 160,380
255,000 EAST GRAND FORKS MN (ELECTRIC REVENUE) 6.00 02/01/2018 262,693
300,000 EAST GRAND FORKS MN (ELECTRIC REVENUE) 6.10 02/01/2021 307,659
1,000,000 ELK RIVER MN INDEPENDENT SCHOOL DISTRICT #728 SERIES A
(PROPERTY TAX REVENUE, MBIA INSURED) 5.00 02/01/2018 1,054,520
580,000 FERGUS FALLS MN HOUSING & RDA LAKE REGION HEALTHCARE
(HEALTHCARE FACILITIES REVENUE) 5.10 09/01/2014 607,202
605,000 FERGUS FALLS MN HOUSING & RDA LAKE REGION HEALTHCARE
(HEALTHCARE FACILITIES REVENUE) 5.20 09/01/2015 634,385
560,000 FERGUS FALLS MN HOUSING & RDA LAKE REGION HEALTHCARE
(HEALTHCARE FACILITIES REVENUE) 5.30 09/01/2016 589,551
1,150,000 GLENCOE MN GLENCOE REGIONAL HEALTH SERVICES PROJECT
(HEALTHCARE FACILITIES REVENUE) 5.00 04/01/2025 1,156,682
1,000,000 GLENCOE MN GLENCOE REGIONAL HEALTH SERVICES PROJECT
(HEALTHCARE FACILITIES REVENUE) 5.00 04/01/2031 997,080
700,000 GLENCOE MN GLENCOE REGIONAL HEALTH SERVICES PROJECT (LEASE
REVENUE) 7.20 04/01/2016 812,245
600,000 GLENCOE MN GLENCOE REGIONAL HEALTH SERVICES PROJECT (LEASE
REVENUE) 7.40 04/01/2021 701,850
585,000 GLENCOE MN GLENCOE REGIONAL HEALTH SERVICES PROJECT (LEASE
REVENUE) 7.50 04/01/2031 687,053
1,075,000 HIBBING MN DULUTH CLINIC LIMITED (HEALTHCARE FACILITIES
REVENUE, FIRST SECURITY BANK LOC) 5.50 11/01/2013 1,197,786
2,785,000 ITASCA COUNTY MN INDEPENDENT SCHOOL DISTRICT #318 (PROPERTY
TAX REVENUE, FIRST
SECURITY BANK LOC) 5.00 02/01/2017 2,954,105
1,735,000 LAKE SUPERIOR MN INDEPENDENT SCHOOL DISTRICT #381 SERIES A
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 04/01/2019 1,852,199
1,080,000 LINO LAKES MN ECONOMIC DEVELOPMENT AUTHORITY SERIES A (LEASE
REVENUE) 5.25 02/01/2016 1,080,713
500,000 LINO LAKES MN ECONOMIC DEVELOPMENT AUTHORITY SERIES A (LEASE
REVENUE) 5.35 02/01/2019 500,330
100,000 MARSHALL MN WEINER MEMORIAL MEDICAL CENTER PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE) 6.00 11/01/2028 108,911
1,000,000 METROPOLITAN COUNCIL MINNEAPOLIS-ST PAUL METROPOLITAN AREA MN
SERIES G (LEASE REVENUE) 4.50 06/01/2025 1,007,640
500,000 MINNEAPOLIS & ST PAUL MN HOUSING & RDA HEALTHPARTNERS
OBLIGATION GROUP PROJECT (HEALTHCARE FACILITIES REVENUE) 5.25 12/01/2016 529,580
32
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MINNESOTA (CONTINUED)
$ 500,000 MINNEAPOLIS & ST PAUL MN HOUSING & RDA HEALTHPARTNERS
OBLIGATION GROUP PROJECT (HEALTHCARE FACILITIES REVENUE) 5.63% 12/01/2022 $ 534,700
600,000 MINNEAPOLIS & ST PAUL MN HOUSING & RDA HEALTHPARTNERS
OBLIGATION GROUP PROJECT (HEALTHCARE FACILITIES REVENUE) 5.88 12/01/2029 644,916
4,660,000 MINNEAPOLIS & ST PAUL MN METROPOLITAN AIRPORTS COMMISSION
SUBSERIES C (AIRPORT REVENUE, FGIC INSURED) 5.25 01/01/2021 4,941,231
1,000,000 MINNEAPOLIS MN ALLINA HEALTH SYSTEMS SERIES A (HEALTHCARE
FACILITIES REVENUE) 6.00 11/15/2023 1,098,330
3,700,000 MINNEAPOLIS MN HEALTHCARE SYSTEMS FAIRVIEW HEALTH SERVICES
(HEALTHCARE FACILITIES REVENUE, AMBAC INSURED) 5.00 11/15/2030 3,857,990
500,000 MINNEAPOLIS MN REF-ST ANTHONY FALLS PROJECT (TAX INCREMENTAL
REVENUE) 5.65 02/01/2027 504,230
10,000 MINNEAPOLIS MN SAINT MARYS HOSPITAL & REHABILITATION 10.00 06/01/2013 12,374
1,415,000 MINNEAPOLIS MN TAX INCREMENT REVENUE (TAX REVENUE) 5.50 02/01/2022 1,421,339
1,210,000 MINNESOTA AGRICULTURAL & ECONOMIC DEVELOPMENT BOARD
EVANGELICAL LUTHERAN PROJECT (HEALTHCARE FACILITIES REVENUE) 6.00 02/01/2022 1,312,172
2,025,000 MINNESOTA AGRICULTURAL & ECONOMIC DEVELOPMENT BOARD HEALTH
CARE SYSTEM SERIES A (HEALTHCARE FACILITIES REVENUE) 5.88 11/15/2010 2,205,022
1,935,000 MINNESOTA AGRICULTURE & ECONOMIC DEVELOPMENT BOARD HEALTH CARE
SYSTEM SERIES A (ECONOMIC DEVELOPMENT REVENUE) 6.38 11/15/2022 2,189,762
4,265,000 MINNESOTA AGRICULTURE & ECONOMIC DEVELOPMENT BOARD HEALTH CARE
SYSTEM SERIES A (ECONOMIC DEVELOPMENT REVENUE, MBIA INSURED) 5.50 11/15/2017 4,517,531
1,095,000 MINNESOTA AGRICULTURE & ECONOMIC DEVELOPMENT BOARD HEALTH CARE
SYSTEM SERIES A (ECONOMIC DEVELOPMENT REVENUE, MBIA INSURED) 5.50 11/15/2017 1,154,962
1,000,000 MINNESOTA IRON RANGE RESOURCE & REHABILITATION GIANTS RIDGE
RECREATION AREA (RECREATIONAL FACILITIES REVENUE) 7.25 11/01/2016 1,056,530
2,000,000 MINNESOTA STATE COLLEGE AT SAINT BENEDICT SERIES 4T (COLLEGE &
UNIVERSITY REVENUE) 5.35 03/01/2020 2,017,760
40,000 MINNESOTA STATE HIGHER EDUCATION FACILITIES HAMLINE UNIVERSITY
SERIES 4-1 5.65 10/01/2006 40,673
10,000 MINNESOTA STATE HIGHER EDUCATION FACILITIES HAMLINE UNIVERSITY
SERIES 4-1 5.65 10/01/2007 10,141
250,000 MINNESOTA STATE HOUSING FINANCING AGENCY (HOUSING REVENUE,
GENERAL OBLIGATION OF AGENCY) 4.20 07/01/2015 252,710
600,000 MINNESOTA STATE NORTHWESTERN COLLEGE SERIES 4Z (COLLEGE &
UNIVERSITY REVENUE) 5.20 10/01/2013 607,566
895,000 MINNESOTA STATE SAINT MARYS UNIVERSITY SERIES 5E (COLLEGE &
UNIVERSITY REVENUE) 6.75 03/01/2019 968,945
705,000 MINNESOTA STATE SERIES A (HOUSING REVENUE, GENERAL OBLIGATION
OF AGENCY) 5.85 07/01/2020 716,393
955,000 MINNESOTA STATE SERIES A (HOUSING REVENUE, MBIA INSURED) 5.35 07/01/2017 981,100
1,050,000 MINNESOTA STATE SERIES D2 (HOUSING REVENUE, AMBAC INSURED) 5.80 07/01/2021 1,054,400
5,000 MINNESOTA STATE SERIES E (HOUSING REVENUE, GENERAL OBLIGATION
OF AGENCY) 5.90 07/01/2025 5,055
895,000 MINNESOTA STATE SERIES M (HOUSING REVENUE, GENERAL OBLIGATION
OF AGENCY)+/- 5.88 01/01/2017 902,822
1,100,000 MINNETONKA MN INDEPENDENT SCHOOL DISTRICT #276 SERIES B
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.65 02/01/2010 1,148,884
1,650,000 MINNETONKA MN INDEPENDENT SCHOOL DISTRICT #276 SERIES B
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.75 02/01/2022 1,726,609
1,065,000 MONTGOMERY MN INDEPENDENT SCHOOL DISTRICT #394 SERIES B
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 02/01/2025 1,131,722
505,000 MONTICELLO MN BIG LAKE COMMUNITY HOSPITAL DISTRICT SERIES A
(HEALTHCARE FACILITIES REVENUE) 5.20 12/01/2009 515,605
725,000 MONTICELLO MN BIG LAKE COMMUNITY HOSPITAL DISTRICT SERIES A
(HEALTHCARE FACILITIES REVENUE) 5.40 12/01/2011 739,413
825,000 MONTICELLO MN BIG LAKE COMMUNITY HOSPITAL DISTRICT SERIES A
(HEALTHCARE FACILITIES REVENUE) 5.45 12/01/2012 839,264
33
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MINNESOTA (CONTINUED)
$ 850,000 MONTICELLO MN BIG LAKE COMMUNITY HOSPITAL DISTRICT SERIES A
(HEALTHCARE FACILITIES REVENUE, RADIAN INSURED) 5.75% 12/01/2019 $ 905,021
500,000 MONTICELLO MN BIG LAKE COMMUNITY HOSPITAL DISTRICT SERIES A
(HOUSING REVENUE) 5.30 12/01/2010 510,280
1,135,000 MOORHEAD MN (HOUSING REVENUE, FHA INSURED) 7.10 08/01/2011 1,256,229
250,000 MOOSE LAKE MN COMMUNITY HOSPITAL DISTRICT HEALTH FACILITIES
CROSSOVER SERIES A (HEALTH FACILITIES FINANCING AUTHORITY
REVENUE) 5.00 12/01/2022 253,253
750,000 MOOSE LAKE MN COMMUNITY HOSPITAL HEALTH FACILITIES CROSSOVER
SERIES A (HEALTH FACILITIES FINANCING AUTHORITY REVENUE) 5.10 12/01/2024 760,995
1,430,000 MOUNDS VIEW MN INDEPENDENT SCHOOL DISTRICT #621 SERIES A
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.38 02/01/2017 1,535,277
2,040,000 MOUNDS VIEW MN INDEPENDENT SCHOOL DISTRICT #621 SERIES A
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.38 02/01/2019 2,190,185
560,000 MOUNTAIN IRON MN HOUSING & RDA NORTHEAST SERVICES COOP PROJECT
SERIES A (LEASE REVENUE) 6.25 10/01/2019 581,112
1,000,000 NEW HOPE MN MASONIC HOME NORTH RIDGE (HEALTHCARE FACILITIES
REVENUE) 5.90 03/01/2019 1,036,700
2,000,000 NORTHERN MN MUNICIPAL POWER AGENCY (ELECTRIC REVENUE, FIRST
SECURITY BANK LOC) 5.40 01/01/2015 2,137,420
1,000,000 NORTHERN MN MUNICIPAL POWER AGENCY (ELECTRIC REVENUE, FIRST
SECURITY BANK LOC) 5.30 01/01/2021 1,051,190
360,000 OSSEO MN ECONOMIC DEVELOPMENT AUTHORITY SERIES B (LEASE
REVENUE) 5.90 02/01/2018 382,190
455,000 OSSEO MN ECONOMIC DEVELOPMENT AUTHORITY SERIES B (LEASE
REVENUE) 6.00 02/01/2022 481,913
1,475,000 PINE COUNTY MN HOUSING & REDEVELOPMENT AUTHORITY PUBLIC
PROJECT REVENUE (LEASE REVENUE) 5.00 02/01/2028 1,507,774
1,890,000 RAMSEY MN CAPITAL IMPROVEMENT PLAN SERIES A (PROPERTY TAX
REVENUE) 5.00 02/01/2017 2,010,034
300,000 ROBBINSDALE MN ECONOMIC DEVELOPMENT AUTHORITY HOUSING PROJECT
SERIES A (HOUSING REVENUE) 6.63 01/01/2019 312,108
2,805,000 ROBBINSDALE MN INDEPENDENT SCHOOL DISTRICT #281 (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC) 5.00 02/01/2019 2,975,320
1,000,000 ROBBINSDALE MN INDEPENDENT SCHOOL DISTRICT #281 (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC) 5.00 02/01/2020 1,052,410
1,195,000 ROBBINSDALE MN INDEPENDENT SCHOOL DISTRICT #281 (PROPERTY TAX
REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.60 02/01/2018 1,268,230
2,900,000 ROBBINSDALE MN INDEPENDENT SCHOOL DISTRICT #281 (PROPERTY TAX
REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.63 02/01/2020 3,079,829
2,285,000 ROCHESTER MN MAYO FOUNDATION MAYO MEDICAL CENTER SERIES I
(HEALTHCARE FACILITIES REVENUE) 5.80 11/15/2007 2,385,609
1,650,000 ROCHESTER MN MAYO FOUNDATION MAYO MEDICAL CENTER SERIES I
(HEALTHCARE FACILITIES REVENUE) 5.90 11/15/2009 1,791,075
2,000,000 ROCHESTER MN MAYO FOUNDATION MAYO MEDICAL CENTER SERIES I
(HEALTHCARE FACILITIES REVENUE) 5.90 11/15/2010 2,204,460
2,000,000 ROSEMOUNT MN INDEPENDENT SCHOOL DISTRICT #196 SERIES A
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED)^ 3.49 04/01/2009 1,787,120
2,000,000 ROSEMOUNT MN INDEPENDENT SCHOOL DISTRICT #196 SERIES A
(PROPERTY TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED)^ 3.70 04/01/2011 1,649,660
1,335,000 SAINT CLOUD MN SAINT CLOUD HOSPITAL OBLIGATION GROUP SERIES A
(HEALTHCARE FACILITIES REVENUE, FIRST SECURITY BANK LOC) 5.75 05/01/2010 1,452,947
1,750,000 SAINT CLOUD MN SAINT CLOUD HOSPITAL OBLIGATION GROUP SERIES A
(HEALTHCARE FACILITIES REVENUE, FIRST SECURITY BANK LOC) 5.38 05/01/2011 1,886,167
4,875,000 SAINT CLOUD MN SAINT CLOUD HOSPITAL OBLIGATION GROUP SERIES A
(HEALTHCARE FACILITIES REVENUE, FIRST SECURITY BANK LOC) 5.75 05/01/2026 5,283,281
2,025,000 SAINT LOUIS PARK MN INDEPENDENT SCHOOL DISTRICT #283 (PROPERTY
TAX REVENUE, SCHOOL DISTRICT CREDIT PROGRAM INSURED) 5.45 02/01/2013 2,136,274
34
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MINNESOTA (CONTINUED)
$ 1,050,000 SAINT MICHAEL MN INDEPENDENT SCHOOL DISTRICT #885 (PROPERTY
TAX REVENUE, FIRST SECURITY BANK LOC) 5.00% 02/01/2018 $ 1,113,756
2,000,000 SAINT MICHAEL MN INDEPENDENT SCHOOL DISTRICT #885 (PROPERTY
TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 02/01/2019 2,121,440
225,000 SAINT PAUL MN HOUSING & RDA GILLETTE CHILDRENS SPECIALTY
(HOUSING REVENUE) 5.00 02/01/2012 232,252
200,000 SAINT PAUL MN HOUSING & RDA GILLETTE CHILDRENS SPECIALTY
(HOUSING REVENUE) 5.00 02/01/2013 205,758
225,000 SAINT PAUL MN HOUSING & RDA GILLETTE CHILDRENS SPECIALTY
(HOUSING REVENUE) 5.00 02/01/2014 229,793
200,000 SAINT PAUL MN HOUSING & RDA GILLETTE CHILDRENS SPECIALTY
(HOUSING REVENUE) 5.00 02/01/2015 203,352
500,000 SAINT PAUL MN HOUSING & RDA REGIONS HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE) 5.20 05/15/2013 512,755
1,700,000 SAINT PAUL MN HOUSING & RDA REGIONS HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE) 5.25 05/15/2018 1,733,711
3,000,000 SAINT PAUL MN HOUSING & RDA REGIONS HOSPITAL PROJECT
(HEALTHCARE FACILITIES REVENUE) 5.30 05/15/2028 3,045,480
2,500,000 SAINT PAUL MN HOUSING & RDA ST PAUL ACADEMY & SUMMIT SCHOOL
PROJECT (PRIVATE SCHOOL REVENUE) 5.50 10/01/2024 2,601,900
215,000 SAINT PAUL MN INDEPENDENT SCHOOL DISTRICT #625 SERIES B (LEASE
REVENUE) 6.10 02/01/2006 215,492
230,000 SAINT PAUL MN INDEPENDENT SCHOOL DISTRICT #625 SERIES B (LEASE
REVENUE) 6.20 02/01/2007 230,520
245,000 SAINT PAUL MN INDEPENDENT SCHOOL DISTRICT #625 SERIES B (LEASE
REVENUE) 6.25 02/01/2008 245,564
260,000 SAINT PAUL MN INDEPENDENT SCHOOL DISTRICT #625 SERIES B (LEASE
REVENUE) 6.30 02/01/2009 260,640
10,000 SAINT PAUL MN PORT AUTHORITY (AIRPORT REVENUE) 7.10 07/01/2008 10,908
20,000 SAINT PAUL MN PORT AUTHORITY OFFICE BUILDING (LEASE REVENUE) 5.25 12/01/2027 21,298
1,000,000 SHAKOPEE MN ST FRANCIS REGIONAL MEDICAL CENTER (HEALTHCARE
FACILITIES REVENUE) 5.25 09/01/2034 1,027,110
975,000 SOUTHERN MN MUNICIPAL POWER AGENCY SERIES A (ELECTRIC REVENUE,
AMBAC INSURED) 5.00 01/01/2009 1,021,449
5,000,000 SOUTHERN MN MUNICIPAL POWER AGENCY SERIES A (ELECTRIC REVENUE,
MBIA INSURED)^ 4.44 01/01/2020 2,703,400
120,000 STEELE COUNTY MN ELDERLY HOUSING PROJECT (HEALTHCARE
FACILITIES REVENUE) 6.63 06/01/2020 129,066
145,000 STEELE COUNTY MN HEALTH CARE FACILITES CROSSOVER SERIES B
(HOSPITAL REVENUE) 4.50 06/01/2017 144,713
545,000 STEELE COUNTY MN HEALTH CARE FACILITIES CROSSOVER SERIES B
(HOSPITAL REVENUE) 4.70 06/01/2023 541,517
1,000,000 TODD MORRISON CASS & WADENA COUNTIES MN UNITED HOSPITAL
DISTRICT HEALTH CARE FACILITY LAKEWOOD (PROPERTY TAX REVENUE) 5.13 12/01/2024 1,032,840
1,050,000 TODD MORRISON CASS & WADENA COUNTIES MN UNITED HOSPITAL
DISTRICT HEALTH CARE FACILITY LAKEWOOD (PROPERTY TAX REVENUE) 5.25 12/01/2026 1,090,866
1,000,000 UNIVERSITY OF MINNESOTA SERIES A (COLLEGE & UNIVERSITY
REVENUE, GENERAL OBLIGATION OF UNIVERSITY) 5.75 07/01/2011 1,109,090
2,795,000 UNIVERSITY OF MINNESOTA SERIES A (COLLEGE & UNIVERSITY
REVENUE, GENERAL OBLIGATION OF UNIVERSITY) 5.75 07/01/2017 3,262,128
7,285,000 UNIVERSITY OF MINNESOTA SERIES A (COLLEGE & UNIVERSITY
REVENUE, GENERAL OBLIGATION OF UNIVERSITY) 5.50 07/01/2021 8,309,417
400,000 VIRGINIA MN HOUSING & RDA (LEASE REVENUE) 5.13 10/01/2020 412,516
2,085,000 VIRGINIA MN HOUSING & RDA HEALTHCARE FACILITY (LEASE REVENUE) 5.25 10/01/2025 2,147,404
25,000 WASHINGTON COUNTY MN HOUSING & RDA BRIAR POND SERIES A
(HOUSING REVENUE, GNMA INSURED) 5.55 08/20/2028 25,712
240,000 WESTERN MINNESOTA MUNICIPAL POWER AGENCY (ELECTRIC PLANT
REVENUE, MBIA INSURED) 9.75 01/01/2016 348,679
2,610,000 WESTERN MINNESOTA MUNICIPAL POWER AGENCY SERIES A (ELECTRIC
REVENUE) 6.38 01/01/2016 2,928,133
163,100,435
-------------
35
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PUERTO RICO - 0.03%
$ 20,000 PUERTO RICO ELECTRIC POWER AUTHORITY (ELECTRIC PLANT REVENUE,
MBIA INSURED) 5.00% 07/01/2016 $ 21,872
25,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES II (ELECTRIC PLANT
REVENUE, XL CAPITAL ASSURANCE COMPANY INSURED) 5.25 07/01/2022 26,958
5,000 PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY SERIES B (TOLL
ROAD REVENUE, MBIA INSURED) 5.25 07/01/2010 5,383
54,213
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $153,411,621) 163,154,648
-------------
SHARES
SHORT-TERM INVESTMENTS - 0.47%
786,000 WELLS FARGO MINNESOTA TAX FREE TRUST~++ 786,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $786,000) 786,000
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $154,197,621)* 98.87% $ 163,940,648
OTHER ASSETS AND LIABILITIES, NET 1.13 1,869,291
------ -------------
TOTAL NET ASSETS 100.00% $ 165,809,939
====== =============
+/- VARIABLE RATE INVESTMENTS.
^ ZERO 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 $786,000.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 96.86%
ALASKA - 0.67%
$ 710,000 ALASKA ENERGY AUTHORITY (ELECTRIC REVENUE, FIRST SECURITY BANK
LOC) 7.00% 07/01/2009 $ 759,870
-------------
ARIZONA - 2.43%
1,350,000 MARICOPA COUNTY AZ SCHOOL DISTRICT #6 WASHINGTON ELEMENTARY
SERIES B (PROPERTY TAX REVENUE) 7.10 07/01/2008 1,467,828
1,225,000 SCOTTSDALE AZ INDUSTRIAL DEVELOPMENT AUTHORITY SCOTTSDALE
MEMORIAL HOSPITALS SERIES A (HOSPITAL REVENUE, AMBAC INSURED) 6.00 09/01/2012 1,295,499
2,763,327
-------------
ARKANSAS - 0.61%
710,000 ARKANSAS STATE DEVELOPMENT FINANCIAL AUTHORITY PUBLIC HEALTH
LABORATORY (HEALTHCARE FACILITIES REVENUE, AMBAC INSURED) 3.90 12/01/2024 694,501
-------------
CALIFORNIA - 0.48%
500,000 SANTA CLARA CA RDA BAYSHORE NORTH PROJECT (TAX REVENUE, AMBAC
INSURED) 7.00 07/01/2010 545,965
-------------
COLORADO - 9.65%
1,500,000 AURORA CO MULTIFAMILY REVENUE (MULTI-FAMILY HOUSING REVENUE,
MBIA INSURED)+/- 4.25 12/20/2040 1,500,870
1,000,000 COLORADO CATHOLIC HEALTH INITIATIVES SERIES A (HEALTHCARE
FACILITIES REVENUE) 5.50 12/01/2008 1,056,200
160,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER
SCHOOL RENAISSANCE SCHOOL PROJECT (LEASE REVENUE) 5.85 06/01/2008 155,821
1,125,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY PINNACLE
CHARTER SCHOOL PROJECT (LEASE REVENUE) 5.25 12/01/2011 1,190,295
130,000 COLORADO EVANGELICAL LUTHERAN (HEALTHCARE FACILITIES REVENUE) 6.00 12/01/2006 132,872
455,000 COLORADO EVANGELICAL LUTHERAN (HEALTHCARE FACILITIES REVENUE) 6.25 12/01/2010 502,470
410,000 COLORADO HOSPITAL STEAMBOAT SPRINGS HEALTH (HEALTHCARE
FACILITIES REVENUE) 5.30 09/15/2009 416,330
100,000 COLORADO HOUSING & FINANCE AUTHORITY WINRIDGE APARTMENTS
(HOUSING REVENUE, FNMA INSURED)SS.+/- 3.59 02/15/2028 100,000
1,000,000 COLORADO STUDENT OBLIGATION AUTHORITY STUDENT LOAN SERIES II-B
(HIGHER EDUCATION FACILITIES AUTHORITY REVENUE, GUARANTEED
STUDENT LOANS) 6.20 12/01/2008 1,011,920
770,000 DENVER CITY & COUNTY CO (HOUSING REVENUE) 7.00 08/01/2010 839,439
1,350,000 DENVER CITY & COUNTY CO SERIES A (AIRPORT REVENUE, AMBAC
INSURED) 4.90 11/15/2008 1,394,307
405,000 HIGHLANDS RANCH METRO DISTRICT #2 COLORADO PREREFUNDED
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 6.50 06/15/2009 445,824
370,000 HIGHLANDS RANCH METRO DISTRICT #2 COLORADO UNREFUNDED BALANCE
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 6.50 06/15/2009 407,144
620,000 MESA COUNTY CO HILLTOP COMMUNITY RESOURCES SERIES A
(HEALTHCARE FACILITIES REVENUE, RADIAN INSURED) 5.00 12/01/2008 643,188
650,000 MESA COUNTY CO HILLTOP COMMUNITY RESOURCES SERIES A
(HEALTHCARE FACILITIES REVENUE, RADIAN INSURED) 5.50 12/01/2009 690,670
460,000 MESA COUNTY CO HILLTOP COMMUNITY RESOURCES SERIES A
(HEALTHCARE FACILITIES REVENUE, RADIAN INSURED) 5.50 12/01/2010 494,068
10,981,418
-------------
DISTRICT OF COLUMBIA - 0.28%
300,000 DISTRICT OF COLUMBIA SERIES B-1 (PROPERTY TAX REVENUE, AMBAC
INSURED) 5.50 06/01/2008 314,811
-------------
37
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA - 4.37%
$ 845,000 BOYNTON BEACH FL (WATER REVENUE, FGIC INSURED) 5.00% 11/01/2012 $ 889,514
110,000 BRADFORD COUNTY FL SANTE FE HEALTHCARE FACILITIES PROJECT
(HEALTHCARE FACILITIES REVENUE) 6.00 11/15/2009 115,745
1,475,000 BROWARD COUNTY FL SERIES B (WATER REVENUE, AMBAC INSURED) 5.00 10/01/2008 1,539,207
1,000,000 FLORIDA SERIES 3 (HOUSING REVENUE) 5.00 01/01/2036 1,037,200
845,000 HILLSBOROUGH COUNTY FL (SEWER REVENUE) 6.20 12/01/2008 876,899
500,000 MIAMI FL DADE COUNTY SCHOOL BOARD SERIES A (LEASE REVENUE,
MBIA INSURED) 5.00 08/01/2027 517,975
4,976,540
-------------
GEORGIA - 0.09%
95,000 GEORGIA MUNICIPAL ELECTRIC AUTHORITY SERIES V (ELECTRIC
REVENUE, GENERAL OBLIGATION OF PARTICIPANTS) 6.40 01/01/2007 97,881
-------------
HAWAII - 0.91%
1,000,000 HAWAII STATE HOUSING & COMMUNITY DEVELOPMENT CORPORATION
SERIES A (SINGLE FAMILY HOUSING REVENUE, FNMA INSURED) 5.00 07/01/2036 1,033,520
-------------
ILLINOIS - 9.34%
1,050,000 AURORA IL (TAX ALLOCATION REVENUE) 5.00 12/30/2010 1,062,495
1,580,000 BERWYN IL (PROPERTY TAX REVENUE, AMBAC INSURED) 5.00 11/15/2010 1,649,488
1,000,000 CHICAGO IL BOARD EDUCATION (PROPERTY TAX REVENUE, AMBAC
INSURED)SS.+/- 3.56 12/01/2021 1,000,000
700,000 CHICAGO IL METROPOLITAN WATER RECLAMATION DISTRICT GREATER
CHICAGO CAPITAL IMPROVEMENT (PROPERTY TAX REVENUE) 6.90 01/01/2007 713,314
835,000 ILLINOIS LUTHERAN GENERAL HEALTH SYSTEMS SERIES A (HEALTHCARE
FACILITIES REVENUE, FIRST SECURITY BANK LOC) 6.13 04/01/2012 900,556
500,000 ILLINOIS METHODIST MEDICAL CENTER (HEALTH FACILITIES FINANCING
AUTHORITY REVENUE, MBIA INSURED) 5.50 11/15/2010 530,430
3,000,000 ILLINOIS STATE SERIES Q (SALES TAX REVENUE) 6.00 06/15/2009 3,158,820
800,000 NORTH CHICAGO IL (PROPERTY TAX REVENUE, FGIC INSURED) 5.75 01/01/2010 866,376
500,000 SOUTHERN ILLINOIS UNIVERSITY HOUSING & AUXILIARY FACILITIES
SYSTEM (COLLEGE & UNIVERSITY REVENUE, MBIA INSURED)^ 3.31 04/01/2006 495,825
250,000 SPRINGFIELD IL WATER (WATER & WASTEWATER AUTHORITY REVENUE) 5.00 03/01/2008 256,823
10,634,127
-------------
INDIANA - 4.44%
1,065,000 DECATUR TOWNSHIP-MARION COUNTY IN METROPOLITAN SCHOOL DISTRICT
SCHOOL BUILDING CORPORATION FIRST MORTGAGE (LEASE REVENUE) 5.20 09/15/2008 1,094,021
1,980,000 INDIANA SERIES A (HEALTHCARE FACILITIES REVENUE, MBIA INSURED) 5.50 11/01/2007 2,054,983
1,000,000 INDIANA STATE COMMON SCHOOL FUND ADVISORY PURCHASE SERIES A
(OTHER REVENUE, MBIA INSURED) 5.00 02/01/2007 1,017,820
850,000 INDIANA STATE DEPAUL UNIVERSITY PROJECT (COLLEGE & UNIVERSITY
REVENUE) 5.00 07/01/2012 890,035
5,056,859
-------------
KANSAS - 2.31%
1,500,000 SEDGWICK & SHAWNEE COUNTIES KS MORTGAGE BACKED SECURITIES
PROGRAM SERIES A-5 (HOUSING REVENUE, GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION) 5.60 12/01/2028 1,604,805
1,000,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION SALES
TAX SECOND LIEN AREA B 4.75 12/01/2016 1,026,240
2,631,045
-------------
38
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
LOUISIANA - 3.23%
$ 1,600,000 JEFFERSON LA PARISH HOME MORTGAGE AUTHORITY SERIES A (SINGLE 5.55% 06/01/2036 $ 1,683,184
FAMILY HOUSING REVENUE, GNMA INSURED)
1,900,000 SHREVEPORT LA SERIES A (PROPERTY TAX REVENUE, FGIC INSURED) 5.63 05/01/2008 1,991,770
3,674,954
-------------
MAINE - 0.88%
1,000,000 MAINE STATE HOUSING AUTHORITY MORTGAGE PURCHASE PROGRAM SERIES
F-2 (STATE AGENCY HOUSING REVENUE) 4.05 11/15/2010 997,200
-------------
MARYLAND - 0.94%
1,000,000 MONTGOMERY COUNTY MD HOUSING OPPORTUNITIES SERIES D (HOUSING
REVENUE) 5.75 07/01/2029 1,071,140
-------------
MASSACHUSETTS - 2.92%
615,000 MASSACHUSETTS DEVELOPMENT FINANCE AGENCY DEVENS ELECTRIC
SYSTEMS (ELECTRIC REVENUE) +5.13 12/01/2011 640,006
1,000,000 MASSACHUSETTS STATE FEDERAL HIGHWAY SERIES A (FUEL SALES TAX
REVENUE) 5.25 06/15/2011 1,054,950
500,000 MASSACHUSETTS STATE SERIES A (OTHER REVENUE) 5.25 01/01/2009 526,045
1,000,000 MASSACHUSETTS STATE SERIES A (PROPERTY TAX REVENUE) 6.00 02/01/2010 1,106,400
3,327,401
-------------
MICHIGAN - 3.89%
2,000,000 DETROIT MI COBO HALL (TAX REVENUE, MBIA INSURED) 5.00 09/30/2008 2,083,240
1,000,000 DETROIT MI DISTRIBUTABLE STATE AID (PROPERTY TAX REVENUE,
AMBAC INSURED) 5.25 05/01/2008 1,040,410
305,000 LAKEVIEW MI COMMUNITY SCHOOL (PROPERTY TAX REVENUE, FGIC
INSURED) 6.50 05/01/2006 308,261
250,000 MICHIGAN STATE HOSPITAL FINANCE AUTHORITY ASCENSION HEALTH
CREDIT SERIES A (HEALTHCARE FACILITIES REVENUE, MBIA INSURED) 5.50 11/15/2007 259,610
300,000 MICHIGAN STATE HOSPITAL FINANCE AUTHORITY CHARITY OBLIGATION
GROUP SERIES A (HOSPITAL REVENUE) 5.13 11/01/2029 317,037
415,000 MICHIGAN STATE HOSPITAL FINANCE AUTHORITY OSF HEALTHCARE
SYSTEMS (HEALTHCARE FACILITIES REVENUE) 5.25 11/15/2006 421,258
4,429,816
-------------
MINNESOTA - 3.24%
500,000 ARDEN HILLS MN HOUSING & HEALTHCARE FACILITIES PRESBYTERIAN
HOMES SERIES A UNITED STATES BANK INSURED (HEALTHCARE
FACILITIES REVENUE, US BANK NA LOC)SS.+/- 3.80 09/01/2029 500,000
100,000 CHASKA MN INDEPENDENT SCHOOL DISTRICT #112 SCHOOL DISTRICT
CREDIT PROGRAM SERIES B (PROPERTY TAX REVENUE, SCHOOL DISTRICT
CREDIT PROGRAM INSURED) 6.00 02/01/2014 100,229
405,000 MINNEAPOLIS MN ALLINA HEALTH SYSTEMS SERIES A (HEALTHCARE
FACILITIES REVENUE) 5.00 11/15/2008 419,005
225,000 MINNESOTA AGRICULTURAL & ECONOMIC DEVELOPMENT BOARD
EVANGELICAL LUTHERAN PROJECT (HEALTHCARE FACILITIES REVENUE) 5.00 02/01/2006 225,236
230,000 MINNESOTA AGRICULTURAL & ECONOMIC DEVELOPMENT BOARD
EVANGELICAL LUTHERAN PROJECT (HEALTHCARE FACILITIES REVENUE) 5.00 02/01/2007 232,788
250,000 MINNESOTA AGRICULTURAL & ECONOMIC DEVELOPMENT BOARD
EVANGELICAL LUTHERAN PROJECT (HEALTHCARE FACILITIES REVENUE) 5.00 02/01/2008 255,157
365,000 MINNESOTA STATE STATE SCHOLASTICAL SERIES 5J (COLLEGE &
UNIVERSITY REVENUE) 4.88 12/01/2007 372,099
1,000,000 ROCHESTER MN MAYO FOUNDATION MAYO MEDICAL CENTER SERIES I
(HEALTHCARE FACILITIES REVENUE) 5.80 11/15/2007 1,044,030
485,000 WESTERN MINNESOTA MUNICIPAL POWER AGENCY SERIES A (ELECTRIC
REVENUE) 6.38 01/01/2016 544,117
3,692,661
-------------
39
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MISSOURI - 0.92%
$ 1,000,000 MISSOURI STATE BOARD OF PUBLIC BUILDINGS SPECIAL OBLIGATION
SERIES A (RECREATIONAL FACILITIES REVENUE) 5.25% 10/15/2008 $ 1,051,490
-------------
MONTANA - 0.69%
750,000 MONTANA STATE BOARD OF HOUSING SERIES A (HOUSING REVENUE) 5.60 12/01/2035 788,903
-------------
NEBRASKA - 0.55%
600,000 NEBRASKA PUBLIC POWER DISTRICT SERIES A (POWER REVENUE) 5.00 01/01/2009 627,012
-------------
NEVADA - 1.04%
645,000 SPARKS NV RDA SERIES A (TAX INCREMENTAL REVENUE, RADIAN
INSURED) 5.10 01/15/2008 663,228
500,000 WASHOE COUNTY NV AIRPORT AUTHORITY (AIRPORT REVENUE, FGIC
INSURED) 5.25 07/01/2008 520,550
1,183,778
-------------
NEW JERSEY - 1.09%
225,000 NEW JERSEY STATE HIGHWAY AUTHORITY GARDEN STATE PARKWAY
GENERAL (TOLL ROAD REVENUE) 6.20 01/01/2010 242,516
1,000,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 4.38 06/01/2019 1,001,850
1,244,366
-------------
NEW YORK - 3.09%
40,000 NEW YORK NY SERIES D (PROPERTY TAX REVENUE, FGIC INSURED) 5.25 08/01/2006 40,464
160,000 NEW YORK NY SERIES D (PROPERTY TAX REVENUE, FGIC INSURED) 5.25 08/01/2006 161,872
500,000 NEW YORK STATE DORMITORY AUTHORITY STATE PERSONAL INCOME TAX
SERIES A (TAX REVENUE) 5.00 03/15/2008 517,150
1,000,000 NEW YORK STATE THRUWAY AUTHORITY LOCAL HIGHWAY & BRIDGES
(OTHER REVENUE) 5.25 04/01/2010 1,041,370
1,635,000 TRIBOROUGH BRIDGE & TUNNEL AUTHORITY NY CONVENTION CENTER
PROJECT SERIES E (OTHER REVENUE, MBIA INSURED) 7.25 01/01/2010 1,753,946
3,514,802
-------------
NORTH DAKOTA -0.92%
1,000,000 NORTH DAKOTA BUILDING AUTHORITY SERIES A (LEASE REVENUE, FGIC
INSURED) 5.25 06/01/2008 1,041,950
-------------
OHIO - 3.24%
90,000 AKRON OH AKRON MUNICIPAL BASEBALL STADIUM PROJECT (LEASE
REVENUE) 6.50 12/01/2007 94,255
1,000,000 FRANKLIN COUNTY OH AMERICAN CHEMICAL SOCIETY PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE) 5.13 10/01/2008 1,041,170
1,000,000 LUCAS COUNTY OH PROMEDICAL HEALTHCARE OBLIGATION (HEALTHCARE
FACILITIES REVENUE, MBIA INSURED) 6.00 11/15/2007 1,042,360
560,000 OHIO STATE INFRASTRUCTURE IMPROVEMENT SERIES B (PROPERTY TAX
REVENUE) 5.00 03/01/2008 579,751
900,000 OHIO STATE WATER DEVELOPMENT AUTHORITY (WATER REVENUE, AMBAC
INSURED) 5.00 06/01/2008 935,127
3,692,663
-------------
OREGON - 1.00%
555,000 COLUMBIA OR UTILITY DISTRICT ELECTRIC SYSTEMS SERIES A
(UTILITIES REVENUE, MBIA INSURED) 5.50 12/01/2009 593,484
535,000 GRANTS PASS OR URBAN RENEWAL AGENCY PARKWAY REDEVELOPMENT AREA
(TAX INCREMENTAL REVENUE) 5.00 08/01/2008 545,507
1,138,991
-------------
40
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PENNSYLVANIA - 0.82%
$ 895,000 MCKEAN COUNTY PA HOSPITAL AUTHORITY BRADFORD HOSPITAL PROJECT
(HOSPITAL REVENUE, ACA INSURED) 5.00% 10/01/2011 $ 933,986
-------------
PUERTO RICO - 0.46%
500,000 CHILDRENS TRUST FUND PUERTO RICO (SPECIAL TAX REVENUE) 5.75 07/01/2020 528,315
-------------
RHODE ISLAND -1.23%
320,000 WOONSOCKET RI HOUSING AUTHORITY CAPITAL FUNDS HOUSING (HOUSING
REVENUE) 4.50 09/01/2006 322,643
335,000 WOONSOCKET RI HOUSING AUTHORITY CAPITAL FUNDS HOUSING (HOUSING
REVENUE) 4.50 09/01/2007 341,536
350,000 WOONSOCKET RI HOUSING AUTHORITY CAPITAL FUNDS HOUSING (HOUSING
REVENUE) 4.50 09/01/2008 360,209
365,000 WOONSOCKET RI HOUSING AUTHORITY CAPITAL FUNDS HOUSING (HOUSING
REVENUE) 4.50 09/01/2009 378,049
1,402,437
-------------
SOUTH CAROLINA- 2.74%
1,000,000 SOUTH CAROLINA HOUSING FINANCE AND DEVELOPMENT AUTHORITY
MORTGAGE SERIES A2 (SINGLE FAMILY HOUSING REVENUE, FIRST
SECURITY BANK LOC) 4.70 07/01/2020 1,003,150
2,000,000 SOUTH CAROLINA JOBS & ECONOMIC DEVELOPMENT AUTHORITY PALMETTO
HEALTH SERIES C (HEALTHCARE FACILITIES REVENUE) 5.25 08/01/2011 2,112,800
3,115,950
-------------
SOUTH DAKOTA -3.26%
1,220,000 HEARTLAND SD CONSUMERS POWER DISTRICT (ELECTRIC REVENUE, FIRST
SECURITY BANK LOC) 6.00 01/01/2009 1,268,434
830,000 LOWER BRULE SIOUX TRIBE SD SERIES B (OTHER REVENUE) 5.15 05/01/2014 823,285
1,000,000 RAPID CITY SD AREA SCHOOL DISTRICT #51-4 CAPITAL OUTLAY
CERTIFICATIONS (PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 01/01/2009 1,032,980
575,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY
(HEALTHCARE FACILITIES REVENUE, ACA INSURED) 5.20 04/01/2008 592,440
3,717,139
-------------
TENNESSEE - 3.11%
2,285,000 JACKSON TN (WATER & WASTEWATER AUTHORITY REVENUE) 6.30 07/01/2011 2,441,043
1,020,000 KNOX COUNTY TN HEALTH EDUCATION & HOUSING FACILITIES BOARD
EAST TENNESSEE HOSPITAL SERIES B (HOSPITAL REVENUE) 4.50 07/01/2012 1,018,011
75,000 TENNESSEE STATE SERIES A (OTHER REVENUE) 5.00 05/01/2007 76,699
3,535,753
-------------
TEXAS - 12.27%
195,000 DENISON HOUSING AUTHORITY MANNING PARK PLAZA (HOUSING REVENUE,
HUD INSURED) 5.00 10/01/2009 198,627
400,000 GULF COAST TX IDA MOBIL OIL CORPORATION PROJECT GUARANTEE
AGREEMENT (INDUSTRIAL
DEVELOPMENT REVENUE) 4.95 07/01/2007 409,600
240,000 HARLANDALE TX INDEPENDENT SCHOOL DISTRICT (LEASE REVENUE) 5.20 10/15/2006 243,211
2,330,000 HARRIS COUNTY TX HOUSTON SPORTS AUTHORITY SENIOR LIEN SERIES A
(SPECIAL TAX REVENUE, MBIA INSURED) 5.25 11/15/2007 2,410,362
465,000 HOUSTON TX (AIRPORT REVENUE) 6.25 07/01/2012 507,129
1,120,000 HOUSTON TX HOUSING FINANCE CORPORATION SERIES A (SINGLE FAMILY
MORTGAGE REVENUE, GNMA INSURED)+/- 6.75 06/01/2033 1,194,704
41
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TEXAS (CONTINUED)
$ 1,380,000 LOWER COLORADO RIVER AUTHORITY TX TRANSMISSION SERVICES
CORPORATION PROJECT SERIES C (OTHER REVENUE) 5.00% 05/15/2006 $ 1,388,460
625,000 LUFKIN TX HEALTH FACILITIES DEVELOPMENT CORPORATION MEMORIAL
HEALTH SYSTEMS OF EAST TEXAS (HEALTH FACILITIES FINANCING
AUTHORITY REVENUE) 5.00 02/15/2008 646,350
140,000 LUFKIN TX HEALTH FACILITIES DEVELOPMENT CORPORATION MEMORIAL
HEALTH SYSTEMS OF EAST TEXAS (HEALTHCARE FACILITIES REVENUE) 6.50 02/15/2006 140,540
480,000 LYFORD TX CONSOLIDATED SCHOOL DISTRICT (LEASE REVENUE) 5.00 08/15/2007 486,854
1,575,000 MIDLAND COUNTY TX HOSPITAL DISTRICT CAPITAL APPRECIATION
(HEALTHCARE FACILITIES REVENUE, AMBAC INSURED)^ 5.32 06/01/2007 1,461,915
3,000,000 SAM RAYBURN TX MUNICIPAL POWER AGENCY (ELECTRIC REVENUE, MBIA
INSURED) 6.00 09/01/2010 3,275,040
1,025,000 TEXAS DEPARTMENT OF HOUSING & COMMUNITY AFFAIRS ASMARA PROJECT
SERIES A (HOUSING REVENUE) 6.40 01/01/2027 1,075,922
500,000 TEXAS STATE AFFORDABLE HOUSING CORPORATION (STATE AGENCY
HOUSING REVENUE, GNMA INSURED) 5.50 09/01/2038 527,630
13,966,344
-------------
VIRGINIA - 0.44%
500,000 AMELIA COUNTY VA IDASS.+/- 4.05 04/01/2027 499,655
-------------
WASHINGTON - 7.61%
1,000,000 COWLITZ COUNTY WA PUBLIC UTILITY DISTRICT #1 DISTRIBUTION
SYSTEMS (ELECTRIC REVENUE, AMBAC INSURED) 5.25 09/01/2009 1,059,260
950,000 PORT ANACORTES WA SERIES A (AIRPORT REVENUE) 5.13 09/01/2009 974,339
1,345,000 SKAGIT COUNTY WA PUBLIC HOSPITAL DISTRICT (HEALTHCARE
FACILITIES REVENUE, GENERAL OBLIGATION OF DISTRICT) 4.75 12/01/2007 1,362,794
1,495,000 SNOHOMISH COUNTY WA SCHOOL DISTRICT #004 LAKE STEVENS PUTTERS
SERIES 906 (PROPERTY TAX REVENUE, FGIC INSURED)SS.+/- 3.55 06/01/2013 1,495,000
695,000 TACOMA WA DEPARTMENT OF PUBLIC UTILITY & LIGHT DIVISION
(ELECTRIC REVENUE) 4.20 01/01/2008 707,566
555,000 TACOMA WA DEPARTMENT OF PUBLIC UTILITY & LIGHT DIVISION
(ELECTRIC REVENUE) 4.20 07/01/2008 567,038
800,000 WASHINGTON STATE GOOD SAMARITAN HOSPITAL (HEALTHCARE FACILITIES
REVENUE, RADIAN INSURED) 5.00 10/01/2008 828,000
395,000 WASHINGTON STATE PUBLIC POWER SUPPLY SYSTEM NUCLEAR PROJECT #1
SERIES B (ELECTRIC REVENUE) 7.25 07/01/2009 423,148
1,155,000 WASHINGTON STATE SERIES A & AT6 (TAX REVENUE) 6.25 02/01/2011 1,251,200
8,668,345
-------------
WEST VIRGINIA - 0.79%
200,000 KANAWHA COUNTY WV (HOUSING REVENUE, FGIC INSURED) 7.38 09/01/2011 237,188
615,000 WEST VIRGINIA WATER DEVELOPMENT AUTHORITY SEWER SYSTEMS LOAN
PROGRAM (SEWER REVENUE) 7.10 11/01/2009 661,353
898,541
-------------
42
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN - 0.91%
$ 1,000,000 WISCONSIN STATE PETROLEUM INSPECTION FEE SERIES I (SPECIAL TAX
REVENUE, FIRST SECURITY BANK LOC) 5.00% 07/01/2008 $ 1,039,050
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $110,319,937) 110,272,506
-------------
SHARES
SHORT-TERM INVESTMENTS - 0.96%
1,091,000 WELLS FARGO NATIONAL TAX-FREE MONEY MARKET TRUST~++ 1,091,000
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,091,000) 1,091,000
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $111,410,937)* 97.82% $ 111,363,506
OTHER ASSETS AND LIABILITIES, NET 2.18 2,482,740
------ -------------
TOTAL NET ASSETS 100.00% $ 113,846,246
====== =============
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
+/- VARIABLE RATE INVESTMENTS.
^ ZERO 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 $1,091,000.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INVESTMENT COMPANIES - 5.65%
60,485 BLACKROCK STRATEGIC MUNICIPAL TRUST $ 1,036,713
380,000 DREYFUS MUNICIPAL INCOME INCORPORATED 3,382,000
91,802 DREYFUS STRATEGIC MUNICIPAL BOND FUND INCORPORATED 744,514
103,352 MUNICIPAL ADVANTAGE FUND INCORPORATED 1,289,833
115,082 NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 1,680,197
204,862 NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND INCORPORATED 2,958,207
116,037 NUVEEN PREMIUM INCOME MUNICIPAL FUND 1,623,358
30,612 SALOMON BROTHERS MUNICIPAL PARTNERS FUND INCORPORATED 416,323
91,984 SELIGMAN SELECT MUNICIPAL FUND INCORPORATED 918,920
57,005 VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST 848,805
45,072 VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II 600,810
91,637 VAN KAMPEN TRUST FOR INVESTMENT GRADE MUNICIPALS 1,325,987
TOTAL INVESTMENT COMPANIES (COST $14,563,804) 16,825,667
-------------
PRINCIPAL INTEREST RATE MATURITY DATE
MUNICIPAL BONDS & NOTES - 90.49%
ALABAMA - 1.46%
$ 1,815,000 ALABAMA STATE BOARD OF EDUCATION JOHN C CALHOUN COMMUNITY 5.25% 05/01/2023 1,965,101
COLLEGE SERIES A (COLLEGE & UNIVERSITY REVENUE, FGIC INSURED)
2,500,000 MONTGOMERY AL BMC SPECIAL CARE FACILITIES FINANCING AUTHORITY
BAPTIST HEALTH SERIES A2 (SPECIAL FACILITIES REVENUE, MBIA
INSURED) 4.48 11/15/2019 2,371,925
4,337,026
-------------
ALASKA - 0.94%
1,615,000 ANCHORAGE AK SERIES C (RECREATIONAL FACILITIES REVENUE, MBIA
INSURED) 5.00 12/01/2017 1,734,106
1,000,000 ANCHORAGE AK ELECTRIC SENIOR LIEN SERIES A (ELECTRIC REVENUE,
MBIA INSURED) 5.00 12/01/2021 1,064,320
2,798,426
-------------
ARIZONA - 2.67%
1,000,000 ARIZONA POWER AUTHORITY CROSSOVER SPECIAL OBLIGATION HOOVER
SERIES A (OTHER REVENUE) 5.25 10/01/2014 1,103,130
500,000 CHANDLER AZ (FUEL SALES TAX REVENUE) 6.00 07/01/2011 560,745
630,000 GLENDALE AZ IDA MIDWESTERN SERIES A (COLLEGE & UNIVERSITY
REVENUE, CONNIE LEE INSURANCE COMPANY INSURED) 6.00 05/15/2026 648,295
200,000 MARICOPA COUNTY AZ ELEMENTARY SCHOOL DISTRICT #68 ALHAMBRA
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.50 07/01/2013 223,120
2,000,000 MARICOPA COUNTY AZ IDA CATHOLIC HEALTHCARE WEST PROJECT SERIES
A (HEALTHCARE FACILITIES REVENUE) 5.00 07/01/2016 2,046,320
810,000 MARICOPA COUNTY AZ IDA GRAND VICTORIA HOUSING LLC PROJECT
SERIES B (HOUSING REVENUE) 10.00 05/01/2031 815,403
750,000 MARICOPA COUNTY AZ IDA WISPERING PALMS APARTMENTS SERIES A
(HOUSING REVENUE, MBIA INSURED) 5.85 07/01/2019 765,952
215,000 NAVAJO COUNTY AZ MUNICIPAL PROPERTY CORPORATION (LEASE
REVENUE, ACA INSURED) 5.63 07/01/2010 230,364
250,000 PHOENIX AZ IDA CAPITAL MALL LLC PROJECT (LEASE REVENUE, AMBAC
INSURED) 5.38 09/15/2022 270,060
55,000 PHOENIX AZ IDA STATEWIDE SERIES C (HOUSING REVENUE, GNMA
INSURED) 5.30 04/01/2020 55,451
300,000 SCOTTSDALE AZ PRESERVATION AUTHORITY (SALES TAX REVENUE) 5.25 07/01/2017 321,264
500,000 TUCSON AZ SERIES 1994C (FUEL SALES TAX REVENUE, FGIC INSURED) 7.00 07/01/2012 594,590
275,000 UNIVERSITY OF ARIZONA SYSTEMS SERIES A (COLLEGE & UNIVERSITY
REVENUE) 6.00 06/01/2010 303,306
7,938,000
-------------
44
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ARKANSAS - 0.68%
$ 2,000,000 CABOT AR SALES & USE TAX (SALES TAX REVENUE) 4.60% 12/01/2025 $ 2,025,060
-------------
CALIFORNIA - 7.34%
2,500,000 ACCESS TO LOANS FOR LEARNING STUDENT LOAN CORPORATION STUDENT
LOAN PROGRAM SERIES D-2 (COLLEGE & UNIVERSITY REVENUE,
GUARANTEED STUDENT LOANS) 7.85 07/01/2025 2,585,825
1,000,000 CALIFORNIA STATEWIDE CDA)SS.+/- 4.45 05/15/2029 1,000,000
2,000,000 LOS ANGELES COUNTY CA METROPOLITAN TRANSPORTATION AUTHORITY
SERIES B (SALES TAX REVENUE, MBIA INSURED) 4.50 07/01/2021 2,035,700
6,900,000 METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA WATERWORKS
SERIES A6 (WATER REVENUE)+/- 7.29 08/10/2018 9,079,848
1,020,000 NAPA VALLEJO CA WASTE MANAGEMENT AUTHORITY SOLID WASTE
TRANSFER FACILITY (SOLID WASTE REVENUE) 5.30 02/15/2012 1,044,837
760,000 PICO RIVERA CA WATER AUTHORITY SERIES A (WATER REVENUE) 5.75 12/01/2012 801,595
205,000 SAN FRANCISCO CA AIRPORT IMPROVEMENT UNITED AIRLINES
INCORPORATED PROJECT (AIRPORT REVENUE) 8.00 07/01/2013 235,436
4,975,000 STUDENT EDUCATION LOAN MARKETING CORPORATION CALIFORNIA SERIES
IV D1 (HIGHER EDUCATION FACILITIES AUTHORITY REVENUE,
GUARANTEED STUDENT LOANS) 5.88 01/01/2018 5,046,541
21,829,782
-------------
COLORADO - 6.06%
1,245,000 ADAMS COUNTY CO MORTGAGE-PLATTE VALLEY MEDICAL CENTER (OTHER
REVENUE, MBIA INSURED) 5.00 02/01/2011 1,321,804
1,750,000 ARAPAHOE COUNTY CO (WATER REVENUE) 6.25 12/01/2020 1,810,218
200,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER
SCHOOL CORE KNOWLEDGE PROJECT (LEASE REVENUE) 7.00 11/01/2029 224,606
500,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES CHARTER SCHOOL
MONTESSORI EVERGREEN PROJECT 6.50 12/01/2035 501,775
70,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES A2 (HOUSING
REVENUE) 7.15 11/01/2014 70,637
585,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES B2 (HOUSING
REVENUE) 7.10 04/01/2017 593,746
835,000 COLORADO HOUSING & FINANCE AUTHORITY SERIES D2 (SINGLE FAMILY
HOUSING REVENUE) 6.90 04/01/2029 861,511
1,140,000 COLORADO HOUSING & FINANCE AUTHORITY SINGLE FAMILY PROGRAM
SERIES A2 (SINGLE FAMILY HOUSING REVENUE, MBIA INSURED) 6.50 08/01/2031 1,168,808
1,975,000 COLORADO HOUSING & FINANCE AUTHORITY SINGLE FAMILY PROGRAM
SERIES B3 (HOUSING REVENUE, FIRST SECURITY BANK LOC) 6.70 08/01/2017 2,028,641
1,800,000 COLORADO STEAMBOAT SPRINGS HEALTH PROJECT (HEALTHCARE
FACILITIES REVENUE) 5.70 09/15/2023 1,853,802
500,000 DENVER CITY & COUNTY CO THE BOSTON LOFTS PROJECT SERIES A
(HOUSING REVENUE, FHA INSURED) 5.75 10/01/2027 513,850
2,500,000 E-470 PUBLIC HIGHWAY AUTHORITY CO CAPITAL APPRECIATION SERVICE
B (OTHER REVENUE, MBIA INSURED)^ 4.62 09/01/2020 1,279,250
3,245,000 LITTLETON CO BUILDING CORPORATION CERTIFICATIONS PARTNERS
(LEASE REVENUE) 5.13 12/01/2018 3,459,754
795,000 NORTHERN METROPOLITAN DISTRICT ADAMS COUNTY CO (OTHER REVENUE) 6.50 12/01/2016 802,584
1,000,000 REGIONAL TRANSUNION DISTRICT COLORADO CTFS PARTNERSHIP SERIES
A (LEASE REVENUE, AMBAC INSURED) 5.00 06/01/2021 1,058,480
420,000 SUMMIT COUNTY CO KEYSTONE RESORTS MANAGEMENT PROJECT (OTHER
REVENUE) 7.38 09/01/2010 483,118
18,032,584
-------------
DISTRICT OF COLUMBIA - 0.85%
3,850,000 DISTRICT OF COLUMBIA CAPITAL APPRECIATION MANDARIN ORIENTAL
(TAX INCREMENTAL REVENUE, FIRST SECURITY BANK LOC)^ 4.53 07/01/2015 2,516,475
-------------
FLORIDA - 2.33%
505,000 BOYNTON BEACH FL CLIPPER COVE APARTMENTS (HOUSING REVENUE) 6.45 01/01/2027 515,140
2,000,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT
HOUSING FUNDING (HEALTHCARE FACILITIES REVENUE LOC)SS.+/- 4.44 12/01/2028 2,000,000
45
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA (CONTINUED)
$ 500,000 FLORIDA GLEN OAKS APARTMENTS PROJECT (HOUSING REVENUE, FNMA
INSURED) 5.90% 02/01/2030 $ 516,370
1,000,000 PALM BEACH COUNTY FL G STAR SCHOOL OF ARTS SERIES A 6.75 05/15/2035 1,008,180
2,875,000 PALM BEACH COUNTY SERIES A (HOUSING REVENUE, GNMA INSURED) 4.85 04/01/2032 2,883,424
6,923,114
-------------
GEORGIA - 0.18%
500,000 FULTON COUNTY GA CONCORDE PLACE APARTMENTS PROJECT SERIES C
(HOUSING REVENUE) 6.90 07/01/2008 539,205
-------------
GUAM - 0.02%
60,000 GUAM HOUSING CORPORATION GUARANTEED MORTGAGE BACKED SECURITIES
SERIES A (HOUSING REVENUE, FHLMC INSURED) 5.75 09/01/2031 66,922
-------------
HAWAII - 0.73%
2,000,000 HAWAII STATE DEPARTMENT OF BUDGET & FINANCE ELECTRIC COMPANY
SERIES A (GENERAL OBLIGATION - STATES, TERRITORIES, FGIC
INSURED) 4.80 01/01/2025 2,005,800
165,000 HAWAII STATE HOUSING FINANCE & DEVELOPMENT CORPORATION SERIES
A (HOUSING REVENUE, FNMA INSURED) 5.75 07/01/2030 166,304
2,172,104
-------------
IDAHO - 0.28%
75,000 AMMON ID URBAN RENEWAL AGENCY TAX INCREMENTAL SERIES B (TAX
INCREMENTAL REVENUE) 6.00 08/01/2014 76,102
325,000 IDAHO HOUSING & FINANCE ASSOCIATION SERIES H2 (HOUSING
REVENUE, FHA INSURED) 6.15 01/01/2028 335,075
230,000 IDAHO HOUSING AGENCY SERIES C-2 (HOUSING REVENUE) 6.35 07/01/2015 232,525
150,000 IDAHO IHC HOSPITALS INCORPORATED (HEALTHCARE FACILITIES
REVENUE)+/- 6.65 02/15/2021 192,473
836,175
-------------
ILLINOIS - 10.00%
1,995,000 CHICAGO IL BOARD EDUCATION (PROPERTY TAX REVENUE, AMBAC
INSURED)SS.+/- 3.56 12/01/2021 1,995,000
500,000 CHICAGO IL BRYNE MAWR BELLE PROJECT (HOUSING REVENUE, GNMA
INSURED) 6.13 06/01/2039 521,980
2,250,000 CHICAGO IL HOUSING AUTHORITY (HOUSING REVENUE) 5.38 07/01/2019 2,396,453
2,495,000 CHICAGO IL SERIES B (AIRPORT REVENUE, FIRST SECURITY BANK LOC) 5.38 01/01/2017 2,670,972
1,000,000 GRUNDY COUNTY IL SCHOOL DISTRICT #054 MORRIS (GENERAL
OBLIGATION - SCHOOL DISTRICTS) 8.50 12/01/2019 1,248,800
228,765 ILLINOIS DEVELOPMENT FINANCE AUTHORITY BALANCE COMMUNITY
REHABILITATION SERIES A 7.88 07/01/2020 199,254
170,000 ILLINOIS HOUSING DEVELOPMENT AUTHORITY & URBAN DEVELOPMENT
(HOUSING REVENUE, HUD INSURED) 7.00 07/01/2017 172,212
4,000,000 ILLINOIS OSF HEALTHCARE SYSTEM (HEALTHCARE FACILITIES REVENUE) 6.25 11/15/2029 4,437,840
4,000,000 ILLINOIS STATE (COLLEGE & UNIVERSITY REVENUE, FGIC INSURED) 5.75 07/01/2012 4,277,040
500,000 JACKSON & WILLIAMSON COUNTIES IL COMMUNITY HIGH SCHOOL
DISTRICT #165 (PROPERTY TAX REVENUE, AMBAC INSURED) 6.25 12/01/2015 548,455
7,350,000 REGIONAL TRANSPORTATION AUTHORITY SERIES D (SALES TAX REVENUE,
FGIC INSURED) 7.75 06/01/2019 9,693,547
1,000,000 ROCKFORD IL FAUST LAMARK APARTMENTS PROJECT SERIES A HOUSING &
URBAN DEVELOPMENT (HOUSING REVENUE, MBIA INSURED) 6.75 01/01/2018 1,052,140
1,250,000 SOUTHWESTERN IL DEVELOPMENT AUTHORITY CAPITAL APPRECIATION
LOCAL GOVERNMENT
PROGRAM ALTON (ECONOMIC DEVELOPMENT REVENUE, FIRST SECURITY
BANK LOC)^ 4.72 11/01/2023 543,925
29,757,618
-------------
INDIANA - 6.83%
1,000,000 CARMEL IN REDEVELOPMENT AUTHORITY LEASING PERFORMING ARTS
CENTER (OTHER REVENUE) 5.00 02/01/2029 1,034,400
1,500,000 COLUMBUS IN RENOVATION SCHOOL BUILDING CORPORATION PUTTERS
SERIES 1079 (OTHER REVENUE, MBIA INSURED)SS.+/- 3.55 07/15/2013 1,500,000
1,400,000 EVANSVILLE-VANDERBURGH COUNTY IN BUILDING AUTHORITY (LEASE
REVENUE, MBIA INSURED) 5.00 08/01/2012 1,504,160
2,000,000 FRANKLIN TOWNSHIP IN SCHOOL BUILDING CORPORATION MARION COUNTY
FIRST MORTGAGE (LEASE REVENUE, MBIA INSURED) 5.00 07/15/2026 2,094,240
46
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
INDIANA (CONTINUED)
$ 1,015,000 HAMILTON IN CUMBERLAND CAMPUS SCHOOL BUILDING CORPORATION
SERIES A (GENERAL OBLIGATION - SCHOOL DISTRICTS, FIRST
SECURITY BANK LOC) 5.00% 07/15/2018 $ 1,074,814
2,515,000 INDIANA ASCENSION HEALTH SERIES F (HEALTHCARE FACILITIES
REVENUE) 5.50 11/15/2018 2,710,063
1,195,000 INDIANA STATE FINANCIAL AUTHORITY REVENUE (OTHER REVENUE) 5.00 02/01/2029 1,252,850
25,000 INDIANA TOLL FINANCE AUTHORITY (LEASE REVENUE) 6.00 07/01/2013 25,275
290,000 INDIANAPOLIS IN LOCAL PUBLIC IMPROVEMENT SERIES B (OTHER
REVENUE) 6.00 01/10/2020 341,777
2,740,000 KNOX COUNTY IN HOLDING CORPORATION FIRST MORTGAGE (OTHER
REVENUE, FIRST SECURITY BANK LOC) 5.00 01/15/2023 2,881,329
2,320,000 LOGANSPORT IN HIGH SCHOOL BUILDING CORPORATION FIRST MORTGAGE
(LEASE REVENUE,
MBIA INSURED) 5.00 07/15/2021 2,457,135
1,610,000 MICHIGAN CITY IN INDEPENDENT SCHOOL BUILDING CORPORATION
(LEASE REVENUE,
MBIA INSURED) 5.00 07/01/2012 1,727,095
1,625,000 SAINT JOSEPH COUNTY IN JAIL BUILDING CORPORATION FIRST
MORTGAGE (OTHER REVENUE,
AMBAC INSURED) 5.00 01/15/2018 1,731,438
20,334,576
-------------
IOWA - 0.67%
1,815,000 IOWA FINANCE AUTHORITY SERIES D (SINGLE FAMILY HOUSING
REVENUE, GNMA INSURED) 4.00 07/01/2013 1,786,686
215,000 IOWA FINANCE AUTHORITY SERIES F (HOUSING REVENUE, GNMA INSURED) 5.70 01/01/2027 216,649
2,003,335
-------------
KANSAS - 0.27%
790,000 SEDGWICK & SHAWNEE COUNTIES KS SERIES A2 (HOUSING REVENUE,
GNMA INSURED)+/- 6.70 06/01/2029 807,443
-------------
LOUISIANA - 0.60%
1,755,000 JEFFERSON LA PARISH HOME MORTGAGE AUTHORITY SERIES A (HOUSING
REVENUE, GNMA INSURED) 5.13 06/01/2026 1,789,696
-------------
MASSACHUSETTS - 1.26%
200,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY
MELROSE WAKEFIELD HOSPITAL
SERIES B (HEALTHCARE FACILITIES REVENUE, GENERAL OBLIGATION OF
HOSPITAL) 5.88 07/01/2018 211,288
2,500,000 MASSACHUSETTS STATE COLLEGE BUILDING AUTHORITY SERIES (COLLEGE
& UNIVERSITY REVENUE, COMMONWEALTH OF MASSACHUETTS) 7.50 05/01/2014 3,087,975
90,000 MASSACHUSETTS STATE WATER POLLUTION ABATEMENT MWRA PROGRAM
SERIES A (WATER REVENUE) 6.00 08/01/2023 98,291
310,000 MASSACHUSETTS STATE WATER POLLUTION ABATEMENT MWRA PROGRAM
SERIES A (WATER REVENUE) 6.00 08/01/2023 337,757
3,735,311
-------------
MICHIGAN - 3.91%
1,150,000 DETROIT MI CAPITAL IMPORTS SERIES A-2 (PROPERTY TAX REVENUE,
AMBAC INSURED) 5.00 04/01/2025 1,203,234
1,000,000 DETROIT MI CAPITAL IMPROVEMENT SERIES A-2 (PROPERTY TAX
REVENUE, AMBAC INSURED) 5.00 04/01/2021 1,056,850
1,750,000 DETROIT MI DOWNTOWN DEVELOPMENT AUTHORITY DEVELOPMENT AREA #1
PROJECT SERIES A (TAX INCREMENTAL REVENUE, MBIA INSURED) 4.75 07/01/2025 1,762,302
3,000,000 MICHIGAN STATE HOSPITAL FINANCE AUTHORITY OAKWOOD OBLIGATED
GROUP (HOSPITAL REVENUE) 5.50 11/01/2017 3,229,920
1,160,000 MICHIGAN STRATEGIC FUND UNITED WASTE SYSTEMS PROJECT
(INDUSTRIAL DEVELOPMENT REVENUE) 5.20 04/01/2010 1,209,950
2,760,000 WAYLAND MI UNION SCHOOL DISTRICT (PROPERTY TAX REVENUE, FGIC
INSURED) 8.00 05/01/2010 3,176,539
11,638,795
-------------
MINNESOTA - 0.85%
500,000 ARDEN HILLS MN HOUSING AND HEALTHCARE FACILITIE PRESBYTERIAN
HOMES SERIES A UNITED STATES BANK INSURED (HEALTHCARE
FACILITIES REVENUE, US BANK NA LOC)SS.+/- 3.80 09/01/2029 500,000
500,000 AUSTIN MN HOUSING & RDA COURTYARD RESIDENCE PROJECT SERIES A
(HOUSING REVENUE) 7.25 01/01/2032 534,940
1,500,000 OWATONNA MN HOUSING SECOND CENTURY PROJECT SERIES A (HOUSING
REVENUE)SS.+/- 3.58 01/01/2030 1,500,000
2,534,940
-------------
47
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MISSISSIPPI - 0.40%
$ 1,160,000 MISSISSIPPI DEVELOPMENT SPECIAL OBLIGATION ADAMS COUNTY
PROMISSORY NOTES PROJECT (INDUSTRIAL DEVELOPMENT REVENUE) 5.00% 07/01/2014 $ 1,196,215
-------------
MONTANA - 0.53%
1,495,000 MONTANA FACILITY FINANCE AUTHORITY HOSPITAL FACILITIES ST
PETERS HOSPITAL PROJECT (HOSPITAL REVENUE) 5.25 06/01/2016 1,589,828
-------------
NEBRASKA - 0.05%
150,000 LINCOLN-LANCASTER COUNTY NE PUBLIC BUILDING COMMISSION TAX
SUPPORTED LEASE RENTAL (LEASE REVENUE, GENERAL OBLIGATION OF
COMMUNITY) 6.00 10/15/2026 156,123
-------------
NEVADA - 0.10%
275,000 NEVADA HOUSING DIVISION MULTI UNIT HOUSING SARATOGA PALMS
(HOUSING REVENUE, FNMA INSURED) 6.25 10/01/2016 281,201
-------------
NEW HAMPSHIRE -0.94%
5,110,000 MANCHESTER NH HOUSING & RDA CAPITAL APPRECIATION SERIES B
(RECREATIONAL FACILITIES REVENUE, RADIAN INSURED)^ 5.07 01/01/2018 2,801,762
-------------
NEW JERSEY - 1.6 7%
1,500,000 MIDDLESEX COUNTY NJ HELDRICH CENTER HOTEL SERIES B (TAX
REVENUE) 6.13 01/01/2025 1,491,510
3,500,000 NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE TRUST SERIES A (OTHER
REVENUE) 4.38 09/01/2025 3,476,060
4,967,570
-------------
NEW MEXICO - 3.0 1%
3,040,000 BERNALILLO COUNTY NM (OTHER REVENUE) 5.20 04/01/2021 3,401,547
1,475,000 BERNALILLO COUNTY NM (OTHER REVENUE) 5.25 04/01/2027 1,675,512
1,780,000 FARMINTON NM PUBLIC SERVICE SAN JUAN PROJECT SERIES BSS.+/- 2.10 04/01/2033 1,770,121
2,000,000 UNIVERSITY OF NEW MEXICO FSA (NURSING HOME REVENUE, FIRST
SECURITY BANK LOC) 5.00 07/01/2018 2,111,940
8,959,120
-------------
NEW YORK - 0.35%
1,000,000 NEW YORK STATE DORMITORY AUTHORITY NURSING HOME MENORAH CAMPUS
(HEALTHCARE FACILITIES REVENUE, FHA INSURED) 6.10 02/01/2037 1,045,890
-------------
NORTH CAROLINA- 2.47%
4,000,000 NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY SERIES B
(ELECTRIC REVENUE) 5.70 01/01/2017 4,225,640
3,000,000 NORTH CAROLINA INFRASTRUCTURE FINANCIAL CORPORATION
CERTIFICATED PARTNERSHIP CAPITAL
IMPROVEMENTS SERIES A (LEASE REVENUE) 5.00 02/01/2025 3,126,660
7,352,300
-------------
NORTH DAKOTA -0.95%
2,700,000 NORTH DAKOTA STATE FACILITIES IMPT SERIES A (LEASE REVENUE,
MBIA INSURED) 4.25 12/01/2020 2,699,919
65,000 NORTH DAKOTA STATE HOME MORTGAGE FINANCING PROGRAM SERIES C
(HOUSING REVENUE) 5.95 07/01/2017 65,591
70,000 NORTH DAKOTA STATE HOME MORTGAGE FINANCING PROGRAM SERIES C
(HOUSING REVENUE) 6.10 07/01/2028 70,671
2,836,181
-------------
OHIO - 1.34%
1,000,000 HILLIARD OH (PROPERTY TAX REVENUE, MBIA INSURED) 5.00 12/01/2024 1,061,820
250,000 JOHNSTOWN OH MORTGAGE (SEWER REVENUE) 6.00 12/01/2017 260,750
500,000 OAK HILLS OH LOCAL SCHOOL DISTRICT SERIES A (PROPERTY TAX
REVENUE) 5.70 12/01/2025 527,205
2,000,000 OHIO STATE MENTAL HEALTH CAP FACILITIES SERIES II A (GENERAL
OBLIGATION - STATES, TERRITORIES, MBIA INSURED) 5.00 08/01/2018 2,139,720
3,989,495
-------------
48
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OKLAHOMA - 0.61%
$ 1,655,000 OKLAHOMA INDUSTRIES AUTHORITY HEALTH SYSTEM INTEGRIS BAPTIST
(HEALTHCARE FACILITIES REVENUE, AMBAC INSURED) 6.00% 08/15/2010 $ 1,820,533
-------------
OREGON - 2.76%
1,000,000 CHEMEKETA OR COMMUNITY COLLEGE DISTRICT SERIES B (PROPERTY TAX
REVENUE, FIRST SECURITY BANK LOC) 5.60 06/01/2014 1,019,490
500,000 LANE COUNTY OR SCHOOL DISTRICT #52 BETHEL SCHOOL BOARD
(PROPERTY TAX REVENUE, SCHOOL BOARD GUARANTY) 5.63 06/15/2010 544,660
1,000,000 OREGON STATE BOARD OF HIGHER EDUCATION SERIES D (PROPERTY TAX
REVENUE 5.75 08/01/2029 1,083,760
1,000,000 OREGON STATE DEPARTMENT OF ADMINISTRATIVE SERVICES SERIES A
(LEASE REVENUE, AMBAC INSURED) 6.25 05/01/2010 1,120,570
1,460,000 OREGON STATE HEALTH HOUSING EDUCATIONAL & CULTURAL FACILITIES
AUTHORITY ASPEN FOUNDATION II SERIES A (HEALTHCARE FACILITIES
REVENUE) 6.13 04/15/2029 1,266,127
1,720,000 OREGON STATE HEALTH HOUSING EDUCATIONAL & CULTURAL FACILITIES
AUTHORITY SERIES A (HEALTHCARE FACILITIES REVENUE, GNMA
INSURED)+/- 6.85 06/20/2042 1,875,282
705,000 OREGON STATE HOUSING & COMMUNITY SERVICES DEPARTMENT SERIES M
(HOUSING REVENUE) 6.20 07/01/2028 732,516
189,000 PORTLAND OR SERIES A (OTHER REVENUE) 4.88 06/01/2018 194,797
375,000 WESTERN LANE OR HOSPITAL DISTRICT SISTERS OF SAINT JOSEPH
PEACE PROJECT 5.63 08/01/2007 379,417
8,216,619
-------------
PENNSYLVANIA - 1.59%
1,615,000 CARBON COUNTY PA IDA PANTHER CREEK PARTNERS PROJECT (OTHER
REVENUE) 6.65 05/01/2010 1,732,927
2,000,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY COLVER
PROJECT SERIES F 4.63 12/01/2018 2,029,200
955,000 PENNSYLVANIA STATE SERIES 59A (HOUSING REVENUE, GENERAL
OBLIGATION OF AGENCY) 5.80 10/01/2029 981,635
4,743,762
-------------
PUERTO RICO - 0.26%
300,000 CHILDRENS TRUST FUND PUERTO RICO (OTHER REVENUE) 6.00 07/01/2010 330,732
305,000 CHILDRENS TRUST FUND PUERTO RICO (SPECIAL TAX REVENUE) 5.75 07/01/2010 322,272
10,000 PUERTO RICO AQUEDUCT & SEWER AUTHORITY 10.25 07/01/2009 11,290
115,000 PUERTO RICO HOUSING FINANCE CORPORATION SERIES A1 (HOUSING
REVENUE, FHA INSURED) 7.50 04/01/2022 116,980
781,274
-------------
SOUTH CAROLINA - 2.54%
2,000,000 GREENVILLE COUNTY SC SCHOOL DISTRICT INSTALLMENT PURCHASE
BUILDING EQUITY SOONER (OTHER REVENUE) 5.50 12/01/2016 2,207,680
1,035,000 GREENWOOD COUNTY SC HOSPITAL SELF REGULATING HEALTHCARE SERIES
A (HEALTH FACILITIES FINANCING AUTHORITY REVENUE, FIRST
SECURITY BANK LOC) 5.00 10/01/2015 1,103,703
3,000,000 MEDICAL UNIVERSITY OF SOUTH CAROLINA HOSPITAL AUTHORITY
INSURED MEETING SERIES A (HOSPITAL REVENUE, MBIA INSURED) 5.25 02/15/2020 3,232,560
1,000,000 UNIVERSITY OF SOUTH CAROLINA (COLLEGE & UNIVERSITY REVENUE,
MBIA INSURED) 5.75 06/01/2026 1,020,110
7,564,053
-------------
SOUTH DAKOTA - 0.48%
1,440,000 LOWER BRULE SIOUX TRIBE SD SERIES B 5.60 05/01/2020 1,427,573
-------------
TENNESSEE - 0.79%
750,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD
METHODIST (HEALTHCARE FACILITIES REVENUE) 6.50 09/01/2021 875,475
1,250,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD
METHODIST (HEALTHCARE FACILITIES REVENUE) 6.50 09/01/2021 1,459,125
2,334,600
-------------
49
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TEXAS - 12.16%
$ 1,500,000 AMARILLO TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE,
PERMANENT SCHOOL FUND GUARANTEED) 5.00% 02/01/2023 $ 1,569,975
1,000,000 ARLINGTON TX SPECIAL OBLIGATION DALLAS COWBOYS SERIES A 5.00 08/15/2034 1,060,750
2,600,000 BEXAR COUNTY TX REVENUE PROJECT 5.75 08/15/2022 2,766,478
325,000 CARROLL TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE,
PERMANENT SCHOOL FUND GUARANTEED)+/- 6.75 08/15/2020 414,447
1,750,000 CROWLEY TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE,
PERMANENT SCHOOL FUND GUARANTEED) 5.00 08/01/2017 1,879,202
1,475,000 DENTON COUNTY TX UTILITY SYSTEM (UTILITIES REVENUE, FIRST
SECURITY BANK LOC) 4.25 12/01/2022 1,441,857
2,145,000 DESOTO TX HOUSING FINANCE CORPORATION WINDSOR FOUNDATION
PROJECT SERIES A (HOUSING REVENUE) 7.00 02/01/2025 2,194,249
55,000 GALVESTON TX PROPERTY FINANCE AUTHORITY SERIES A (HOUSING
REVENUE) 8.50 09/01/2011 55,165
1,400,000 GARZA COUNTY TX PUBLIC FACILITIES CORPORATION (LEASE REVENUE) 5.50 10/01/2019 1,472,338
3,000,000 GOOSE CREEK TX CONSOLIDATED INDEPENDENT SCHOOL DISTRICT
SCHOOLHOUSE (PROPERTY TAX REVENUE, PERMANENT SCHOOL FUND
GUARANTEED) 4.50 02/15/2022 3,022,200
1,300,000 GRAPE CREEK-PULLIAM TX INDEPENDENT SCHOOL DISTRICT (LEASE
REVENUE) 7.25 05/15/2006 1,343,979
1,500,000 HOUSTON TX PUTTERS SERIES 1070 (UTILITIES REVENUE, FIRST
SECURITY BANK LOC)SS.+/- 3.55 05/15/2013 1,500,000
1,000,000 LA PORTE TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE,
PERMANENT SCHOOL FUND GUARANTEED) 4.25 02/15/2019 998,960
1,530,000 LAREDO TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE,
PERMANENT SCHOOL FUND GUARANTEED) 5.00 08/01/2020 1,608,214
2,085,000 LONGVIEW TX WATER & SEWER (WATER & SEWER REVENUE, MBIA INSURED) 5.25 03/01/2022 2,255,011
900,000 LUFKIN TX HEALTH FACILITIES DEVELOPMENT CORPORATION MEMORIAL
HEALTH SYSTEMS OF EAST TEXAS (HEALTH FACILITIES FINANCING
AUTHORITY REVENUE) 5.00 02/15/2008 930,744
1,825,000 LUFKIN TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE,
PERMANENT SCHOOL FUND GUARANTEED) 5.00 08/15/2016 1,955,706
1,655,000 MONTGOMERY COUNTY TX POROUS MEDIA LIMITED PROJECT (GENERAL
OBLIGATION - STATES, TERRITORIES, FIRST SECURITY BANK LOC) 5.00 03/01/2016 1,781,558
2,035,000 SAN ANTONIO TX (AIRPORT REVENUE, FIRST SECURITY BANK LOC) 5.25 07/01/2025 2,134,308
200,000 SOCORRO TX INDEPENDENT SCHOOL DISTRICT PERMANENT SCHOOL FUND
GUARANTEED (PROPERTY TAX REVENUE, PERMANENT SCHOOL FUND
GUARANTEED) 5.75 02/15/2021 200,602
160,000 TEXARKANA TX HEALTH FACILITIES DEVELOPMENT CORPORATION WADLEY
REGIONAL MEDICAL CENTER SERIES B (HEALTHCARE FACILITIES
REVENUE, MBIA INSURED) 6.00 10/01/2017 185,922
2,395,000 TEXAS HOUSING AUTHORITY STUDENT SERIES B (COLLEGE & UNIVERSITY
REVENUE) 6.75 01/01/2033 2,058,766
3,250,000 TEXAS VETERANS HOUSING ASSISTANCE PROGRAM FUND II SERIES A
(HOUSING REVENUE) 5.65 12/01/2017 3,365,667
36,196,098
-------------
UTAH - 2.65%
500,000 PROVO CITY UT HOUSING AUTHORITY LOOKOUT POINTE APARTMENTS
(HOUSING REVENUE, GNMA INSURED) 5.80 07/20/2022 517,630
3,270,000 SALT LAKE COUNTY UT HOUSING AUTHORITY BRIDGESIDE (HOUSING
REVENUE, FHA INSURED) 6.38 11/01/2033 3,364,078
2,500,000 UTAH STATE BUILDING OWNERSHIP AUTHORITY STATE FACILITIES
SERIES B (LEASE REVENUE) 5.25 05/15/2024 2,674,225
250,000 UTAH STATE BUILDING OWNERSHIP AUTHORITY STATE FACILITIES
SERIES C (LEASE REVENUE, FIRST SECURITY BANK LOC) 5.50 05/15/2019 285,470
120,000 WEBER COUNTY UT MUNICIPAL BUILDING AUTHORITY (LEASE REVENUE,
MBIA INSURED) 5.75 12/15/2019 126,749
880,000 WEBER COUNTY UT MUNICIPAL BUILDING AUTHORITY (LEASE REVENUE,
MBIA INSURED) 5.75 12/15/2019 925,557
7,893,709
-------------
50
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WASHINGTON - 5.25%
$ 500,000 CLARK COUNTY WA SCHOOL DISTRICT #98 (PROPERTY TAX REVENUE,
MBIA INSURED) 6.15% 12/01/2015 $ 560,035
2,000,000 DOUGLAS COUNTY WA PUBLIC UTILITY DISTRICT #1 WELLS
HYDROELECTRIC SERIES A (GENERAL OBLIGATION - SCHOOL DISTRICTS,
FGIC INSURED) 4.50 09/01/2030 1,905,340
2,000,000 ENERGY NORTHWEST WA WIND PROJECT (ELECTRIC REVENUE, MBIA
INSURED) 4.50 07/01/2018 2,049,720
1,000,000 SEATTLE WA MUNICIPAL LIGHT & POWER (ELECTRIC REVENUE, FIRST
SECURITY BANK LOC) 4.50 08/01/2019 1,017,790
500,000 SEATTLE WA SERIES B (WATER REVENUE, FGIC INSURED) 6.00 07/01/2029 547,380
3,000,000 SPOKANE COUNTY WA SCHOOL DISTRICT #81 (PROPERTY TAX REVENUE,
MBIA INSURED) 4.60 12/01/2024 2,685,450
2,980,000 TOBACCO SETTLEMENT AUTHORITY WASHINGTON ASSET BACKED 6.50 06/01/2026 3,215,808
1,590,000 YAKIMA & BENTON COUNTIES WA SCHOOL DISTRICT #116-200 GRANDVIEW
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.25 12/01/2016 1,751,639
1,710,000 YAKIMA & BENTON COUNTIES WA SCHOOL DISTRICT #116-200 GRANDVIEW
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.25 12/01/2017 1,879,427
15,612,589
-------------
WEST VIRGINIA - 0.35%
1,000,000 OHIO COUNTY WV FORT HENRY CENTER FINANCING DISTRICT SERIES A
(TAX INCREMENTAL REVENUE) 5.63 06/01/2034 1,030,380
-------------
WISCONSIN - 1.14%
3,030,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION WI ASSET
BACKED (EXCISE TAX REVENUE) 6.00 06/01/2017 3,184,318
215,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES A
(HOUSING REVENUE, GENERAL OBLIGATION OF AUTHORITY) 6.00 09/01/2015 215,651
3,399,969
-------------
WYOMING - 0.17%
500,000 JACKSON WY NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION LOWER VALLEY POWER & LIGHT SERIES B (FUEL SALES
TAX REVENUE) 5.88 05/01/2026 513,680
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $258,683,457) 269,327,111
-------------
SHARES
SHORT-TERM INVESTMENTS - 2.46%
7,321,800 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 7,321,800
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $7,321,800) 7,321,800
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $280,569,061)* 98.60% $ 293,474,578
OTHER ASSETS AND LIABILITIES, NET 1.40 4,153,162
------ -------------
TOTAL NET ASSETS 100.00% $ 297,627,740
====== =============
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
+/- 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.
^ ZERO 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 $7,321,800.
* 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.
51
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 97.70%
COLORADO - 0.78%
$ 300,000 COLORADO STEAMBOAT SPRINGS HEALTH PROJECT (HEALTHCARE
FACILITIES REVENUE) 5.70% 09/15/2023 $ 308,967
-------------
NEBRASKA - 96.86%
1,140,000 DODGE COUNTY NE SCHOOL DISTRICT #1 FREMONT (GENERAL OBLIGATION
- SCHOOL DISTRICTS, FIRST SECURITY BANK LOC) 5.00 12/15/2019 1,215,377
1,560,000 DOUGLAS COUNTY NE HOSPITAL AUTHORITY #002 GIRLS & BOYS TOWN
PROJECT (HOSPITAL REVENUE) 4.35 09/01/2025 1,491,095
1,000,000 DOUGLAS COUNTY NE OMAHAS HENRY DOORLY ZOO PROJECT
(RECREATIONAL FACILITIES REVENUE) 5.88 09/01/2014 1,083,470
1,500,000 DOUGLAS COUNTY NE SCHOOL DISTRICT #1 SERIES B (PROPERTY TAX
REVENUE) 5.00 12/15/2018 1,587,195
400,000 DOUGLAS COUNTY NE SCHOOL DISTRICT #17 MILLARD SERVICE A
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 4.50 06/15/2025 400,452
1,000,000 GRAND ISLAND NE (ELECTRIC REVENUE, MBIA INSURED) 5.13 08/15/2016 1,066,140
1,500,000 HALL COUNTY NE SCHOOL DISTRICT #2 GRAND IS PUBLIC SCHOOLS
(PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 12/15/2023 1,595,550
2,520,000 LANCASTER COUNTY NE HOSPITAL AUTHORITY #1 BRYAN MEDICAL CENTER
PROJECT SERIES A (HEALTHCARE FACILITIES REVENUE, AMBAC INSURED) 5.50 06/01/2020 2,699,903
1,000,000 LANCASTER COUNTY NE HOSPITAL AUTHORITY #1 BRYAN MEMORIAL
HOSPITAL PROJECT SERIES A (HEALTHCARE FACILITIES REVENUE, MBIA
INSURED) 5.10 06/01/2010 1,041,130
1,750,000 LANCASTER COUNTY NE SCHOOL DISTRICT #1 LINCOLN PUBLIC SCHOOLS
(PROPERTY TAX REVENUE) 5.25 01/15/2022 1,877,907
1,500,000 LINCOLN NE (ELECTRIC REVENUE) 5.00 09/01/2018 1,585,470
1,000,000 LINCOLN NE (SEWER REVENUE, MBIA INSURED) 5.00 06/15/2017 1,069,240
1,100,000 LINCOLN NE (WATER REVENUE) 5.00 08/15/2017 1,171,984
1,250,000 LINCOLN NE SERIES A (PARKING FACILITIES REVENUE) 5.38 08/15/2014 1,324,062
1,000,000 LINCOLN NE TAX SUPPORTED ANTELOPE VALLEY PROJECT (OTHER
REVENUE) 5.00 09/15/2016 1,068,640
745,000 LINCOLN-LANCASTER COUNTY NE PUBLIC BUILDING COMMISSION TAX
SUPPORTED LEASE RENTAL (LEASE REVENUE, GENERAL OBLIGATION OF
COMMUNITY) 5.80 10/15/2018 774,264
1,000,000 MADISON COUNTY NE HOSPITAL AUTHORITY #1 FAITH REGIONAL HEALTH
SERVICES PROJECT (HEALTHCARE FACILITIES REVENUE, RADIAN
INSURED) 5.50 07/01/2021 1,056,940
750,000 MUNICIPAL ENERGY AGENCY OF NEBRASKA POWER SUPPLY SYSTEMS
SERIES A (POWER REVENUE, FIRST SECURITY BANK LOC) 5.25 04/01/2019 810,428
575,000 NEBRASKA EDUCATIONAL FINANCE AUTHORITY (COLLEGE & UNIVERSITY
REVENUE, RADIAN INSURED) 5.00 04/01/2016 596,827
1,250,000 NEBRASKA EDUCATIONAL TELECOMMUNICATIONS COMMISSION DTV PROJECT
(LEASE REVENUE) 6.00 02/01/2010 1,354,325
1,000,000 NEBRASKA INVESTMENT FINANCE AUTHORITY CHILDRENS HEALTHCARE
SERVICES (HEALTHCARE FACILITIES REVENUE, AMBAC INSURED) 5.00 08/15/2011 1,048,580
210,000 NEBRASKA INVESTMENT FINANCE AUTHORITY SERIES C (HOUSING
REVENUE, GNMA INSURED) 5.65 03/01/2028 214,666
145,000 NEBRASKA INVESTMENT FINANCE AUTHORITY SERIES C (OTHER REVENUE) 6.30 09/01/2020 145,523
370,000 NEBRASKA INVESTMENT FINANCE AUTHORITY SERIES E (HOUSING
REVENUE, GNMA INSURED) 5.90 09/01/2024 385,684
755,000 NEBRASKA INVESTMENT FINANCE AUTHORITY SERIES E (HOUSING
REVENUE, GNMA INSURED) 5.95 09/01/2031 783,018
810,000 NEBRASKA PUBLIC POWER DISTRICT SERIES A (ELECTRIC REVENUE,
MBIA INSURED) 5.25 01/01/2012 848,596
210,000 NEBRASKA PUBLIC POWER DISTRICT SERIES A (ELECTRIC REVENUE,
MBIA INSURED) 5.25 01/01/2012 219,257
400,000 O'NEILL NE REVENUE ST ANTHONYS PROJECT 6.25 09/01/2012 417,588
500,000 OMAHA NE (PROPERTY TAX REVENUE) 5.25 12/01/2012 518,540
1,000,000 OMAHA NE (TAX REVENUE) 5.00 10/15/2022 1,060,510
1,000,000 OMAHA NE AIRPORT AUTHORITY FACILITIES (AIRPORT REVENUE, FIRST
SECURITY BANK LOC) 5.50 01/01/2012 1,082,950
2,000,000 OMAHA NE AIRPORT AUTHORITY FACILITIES (AIRPORT REVENUE, FIRST
SECURITY BANK LOC) 5.50 01/01/2014 2,159,260
1,000,000 OMAHA NE DOWNTOWN NORTHEAST REDEVELOPMENT PROJECT (SPECIAL TAX
REVENUE) 6.00 11/01/2014 1,068,620
1,000,000 OMAHA NE PUBLIC POWER DISTRICT SERIES A (ELECTRIC REVENUE) 5.40 02/01/2006 1,001,860
52
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEBRASKA (CONTINUED)
$ 865,000 OMAHA NE RIVERFRONT REDEVELOPMENT PROJECT SERIES A (SALES TAX
REVENUE) 5.50% 02/01/2017 $ 947,625
415,000 OMAHA NE SERIES A (PROPERTY TAX REVENUE) 6.50 12/01/2014 500,129
1,000,000 UNIVERSITY OF NEBRASKA FACILITIES CORPORATION DEFERRED
MAINTENANCE PROJECT (COLLEGE & UNIVERSITY REVENUE) 5.25 07/15/2011 1,041,640
38,314,445
-------------
NEVADA - 0.06%
25,000 NEVADA HOUSING DIVISION SERIES A1 (HOUSING REVENUE) 5.60 10/01/2007 25,589
-------------
TOTAL MUNICIPAL BONDS & NOTES (COST $37,078,718) 38,649,001
-------------
SHARES
SHORT-TERM INVESTMENTS - 1.24%
489,988 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 489,988
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $489,988) 489,988
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $37,568,706)* 98.94% $ 39,138,989
OTHER ASSETS AND LIABILITIES, NET 1.06 418,796
------ -------------
TOTAL NET ASSETS 100.00% $ 39,557,785
====== =============
~ 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 $489,988.
* 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.
53
WELLS FARGO ADVANTAGE MUNICIPAL STATEMENTS OF ASSETS AND LIABILITIES --
INCOME FUNDS DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA
LIMITED-TERM CALIFORNIA
TAX-FREE FUND TAX-FREE FUND
- ---------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ....................................... $ 77,022,093 $ 484,935,093
INVESTMENTS IN AFFILIATES ............................................ 3,011,222 4,352,058
---------------- ----------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .................... 80,033,315 489,287,151
---------------- ----------------
CASH ................................................................. 51,045 51,544
RECEIVABLE FOR FUND SHARES ISSUED .................................... 19,834 97,160
RECEIVABLES FOR DIVIDENDS AND INTEREST ............................... 1,059,769 5,819,662
---------------- ----------------
TOTAL ASSETS ........................................................... 81,163,963 495,255,517
---------------- ----------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ..................................... 89,943 182,722
DIVIDENDS PAYABLE .................................................... 195,816 1,857,666
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ................ 31,772 221,020
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT .............. 28,590 175,952
ACCRUED EXPENSES AND OTHER LIABILITIES ............................... 26,680 64,101
---------------- ----------------
TOTAL LIABILITIES ...................................................... 372,801 2,501,461
---------------- ----------------
TOTAL NET ASSETS ....................................................... $ 80,791,162 $ 492,754,056
================ ================
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ...................................................... $ 80,413,865 $ 461,888,104
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................... 103,879 61
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ................ (16,091) (342,274)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ................................................ 289,509 31,208,165
---------------- ----------------
TOTAL NET ASSETS ....................................................... $ 80,791,162 $ 492,754,056
================ ================
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ................................................. $ 46,192,310 $ 362,982,317
SHARES OUTSTANDING - CLASS A ......................................... 4,417,891 32,279,492
NET ASSET VALUE PER SHARE - CLASS A .................................. $ 10.46 $ 11.24
MAXIMUM OFFERING PRICE PER SHARE - CLASS A ........................... $ 10.78(2) $ 11.77(3)
NET ASSETS - CLASS B ................................................. N/A $ 59,156,687
SHARES OUTSTANDING - CLASS B ......................................... N/A 5,160,518
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ............... N/A $ 11.46
NET ASSETS - CLASS C ................................................. $ 8,833,604 $ 30,038,358
SHARES OUTSTANDING - CLASS C ......................................... 845,062 2,619,721
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............... $ 10.45 $ 11.47
NET ASSETS - CLASS Z ................................................. N/A N/A
SHARES OUTSTANDING - CLASS Z ......................................... N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ............... N/A N/A
NET ASSETS - ADMINISTRATOR CLASS ..................................... $ 25,765,248 $ 40,576,694
SHARES OUTSTANDING - ADMINISTRATOR CLASS ............................. 2,503,257 3,601,811
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ... $ 10.29 $ 11.27
---------------- ----------------
INVESTMENTS AT COST .................................................... $ 79,743,806 $ 458,078,986
================ ================
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED.
(3) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.50 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
54
STATEMENTS OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE MUNICIPAL
DECEMBER 31, 2005 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL
COLORADO MINNESOTA LIMITED-TERM
TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ....................................... $ 88,447,009 $ 163,154,648 $ 110,272,506
INVESTMENTS IN AFFILIATES ............................................ 1,014,000 786,000 1,091,000
--------------- --------------- ---------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .................... 89,461,009 163,940,648 111,363,506
--------------- --------------- ---------------
CASH ................................................................. 51,610 51,980 51,267
RECEIVABLE FOR FUND SHARES ISSUED .................................... 38,664 10,291 1,360,000
RECEIVABLES FOR DIVIDENDS AND INTEREST ............................... 836,375 2,575,495 1,492,770
--------------- --------------- ---------------
TOTAL ASSETS ........................................................... 90,387,658 166,578,414 114,267,543
--------------- --------------- ---------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ..................................... 63,612 1,997 6,002
DIVIDENDS PAYABLE .................................................... 343,929 639,207 327,078
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ................ 34,051 53,944 25,071
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT .............. 30,056 48,485 30,682
ACCRUED EXPENSES AND OTHER LIABILITIES ............................... 28,114 24,842 32,464
--------------- --------------- ---------------
TOTAL LIABILITIES ...................................................... 499,762 768,475 421,297
--------------- --------------- ---------------
TOTAL NET ASSETS ....................................................... $ 89,887,896 $ 165,809,939 $ 113,846,246
=============== =============== ===============
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ...................................................... $ 85,549,218 $ 156,014,924 $ 114,648,632
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................... 113,117 305,118 (58,061)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ................ (217,956) (253,130) (696,894)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ................................................ 4,443,517 9,743,027 (47,431)
--------------- --------------- ---------------
TOTAL NET ASSETS ....................................................... $ 89,887,896 $ 165,809,939 $ 113,846,246
=============== =============== ===============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ................................................. $ 45,699,303 $ 35,556,489 $ 2,586,460
SHARES OUTSTANDING - CLASS A ......................................... 4,244,281 3,250,736 241,592
NET ASSET VALUE PER SHARE - CLASS A .................................. $ 10.77 $ 10.94 $ 10.71
MAXIMUM OFFERING PRICE PER SHARE - CLASS A ........................... $ 11.28(3) $ 11.46(3) $ 11.04(2)
NET ASSETS - CLASS B ................................................. $ 8,813,246 $ 10,084,193 $ 785,924
SHARES OUTSTANDING - CLASS B ......................................... 817,375 921,951 73,477
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ............... $ 10.78 $ 10.94 $ 10.70
NET ASSETS - CLASS C ................................................. N/A $ 486,961 $ 1,404,564
SHARES OUTSTANDING - CLASS C ......................................... N/A 44,526 131,412
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............... N/A $ 10.94 $ 10.69
NET ASSETS - CLASS Z ................................................. N/A $ 4,420,817 N/A
SHARES OUTSTANDING - CLASS Z ......................................... N/A 404,174 N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ............... N/A $ 10.94 N/A
NET ASSETS - ADMINISTRATOR CLASS ..................................... $ 35,375,347 $ 115,261,479 $ 109,069,298
SHARES OUTSTANDING - ADMINISTRATOR CLASS ............................. 3,285,036 10,539,818 10,191,072
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ... $ 10.77 $ 10.94 $ 10.70
--------------- --------------- ---------------
INVESTMENTS AT COST .................................................... $ 85,017,492 $ 154,197,621 $ 111,410,937
=============== =============== ===============
NATIONAL NEBRASKA
TAX-FREE FUND TAX-FREE FUND
- ---------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ....................................... $ 286,152,778 $ 38,649,001
INVESTMENTS IN AFFILIATES ............................................ 7,321,800 489,988
---------------- ----------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) .................... 293,474,578 39,138,989
---------------- ----------------
CASH ................................................................. 51,572 51,013
RECEIVABLE FOR FUND SHARES ISSUED .................................... 1,768,800 0
RECEIVABLES FOR DIVIDENDS AND INTEREST ............................... 3,908,768 589,861
---------------- ----------------
TOTAL ASSETS ........................................................... 299,203,718 39,779,863
---------------- ----------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ..................................... 239,516 0
DIVIDENDS PAYABLE .................................................... 1,115,273 142,749
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ................ 110,536 15,930
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT .............. 90,290 16,359
ACCRUED EXPENSES AND OTHER LIABILITIES ............................... 20,363 47,040
---------------- ----------------
TOTAL LIABILITIES ...................................................... 1,575,978 222,078
---------------- ----------------
TOTAL NET ASSETS ....................................................... $ 297,627,740 $ 39,557,785
================ ================
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ...................................................... $ 295,024,342 $ 37,966,668
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................... 696,555 11,804
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ................ (10,998,674) 9,030
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ................................................ 12,905,517 1,570,283
---------------- ----------------
TOTAL NET ASSETS ....................................................... $ 297,627,740 $ 39,557,785
================ ================
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A ................................................. $ 103,092,893 N/A
SHARES OUTSTANDING - CLASS A ......................................... 9,877,558 N/A
NET ASSET VALUE PER SHARE - CLASS A .................................. $ 10.44 N/A
MAXIMUM OFFERING PRICE PER SHARE - CLASS A ........................... $ 10.93(3) N/A
NET ASSETS - CLASS B ................................................. $ 21,129,259 N/A
SHARES OUTSTANDING - CLASS B ......................................... 2,024,086 N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ............... $ 10.44 N/A
NET ASSETS - CLASS C ................................................. $ 7,924,105 N/A
SHARES OUTSTANDING - CLASS C ......................................... 759,416 N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............... $ 10.43 N/A
NET ASSETS - CLASS Z ................................................. N/A N/A
SHARES OUTSTANDING - CLASS Z ......................................... N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ............... N/A N/A
NET ASSETS - ADMINISTRATOR CLASS ..................................... $ 165,481,483 $ 39,557,785
SHARES OUTSTANDING - ADMINISTRATOR CLASS ............................. 15,852,993 4,027,855
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ... $ 10.44 $ 9.82
---------------- ----------------
INVESTMENTS AT COST .................................................... $ 280,569,061 $ 37,568,706
================ ================
55
WELLS FARGO ADVANTAGE MUNICIPAL STATEMENTS OF OPERATIONS -- FOR THE SIX
INCOME FUNDS MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
CALIFORNIA
LIMITED-TERM CALIFORNIA
TAX-FREE FUND TAX-FREE FUND
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS ........................................................... $ 0 $ 429,600
INTEREST ............................................................ 1,471,803 12,356,468
INCOME FROM AFFILIATED SECURITIES ................................... 33,459 55,868
---------------- ----------------
TOTAL INVESTMENT INCOME ................................................ 1,505,262 12,841,936
---------------- ----------------
EXPENSES
ADVISORY FEES ....................................................... 170,657 1,014,949
ADMINISTRATION FEES
FUND LEVEL ........................................................ 21,332 126,905
CLASS A ........................................................... 70,921 524,379
CLASS B ........................................................... N/A 88,189
CLASS C ........................................................... 13,638 44,225
CLASS Z ........................................................... N/A N/A
ADMINISTRATOR CLASS ............................................... 12,465 19,241
CUSTODY FEES ........................................................ 8,533 50,762
SHAREHOLDER SERVICING FEES .......................................... 106,660 634,524
ACCOUNTING FEES ..................................................... 12,196 22,120
DISTRIBUTION FEES (NOTE 3)
CLASS B ........................................................... N/A 236,222
CLASS C ........................................................... 36,530 118,461
PROFESSIONAL FEES ................................................... 9,244 15,881
REGISTRATION FEES ................................................... 3,644 11,272
SHAREHOLDER REPORTS ................................................. 4,412 24,943
TRUSTEES' FEES ...................................................... 4,183 4,183
OTHER FEES AND EXPENSES ............................................. 2,635 5,222
---------------- ----------------
TOTAL EXPENSES ......................................................... 477,050 2,941,478
---------------- ----------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ........................ (108,636) (603,646)
NET EXPENSES ........................................................ 368,414 2,337,832
---------------- ----------------
NET INVESTMENT INCOME (LOSS) ........................................... 1,136,848 10,504,104
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... 1,585 1,405,253
FUTURES TRANSACTIONS ................................................ 0 0
---------------- ----------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .............................. 1,585 1,405,253
---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... (916,111) (8,439,329)
---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .... (916,111) (8,439,329)
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................. (914,526) (7,034,076)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ $ 222,322 $ 3,470,028
================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
STATEMENTS OF OPERATIONS -- FOR THE SIX WELLS FARGO ADVANTAGE MUNICIPAL
MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL
COLORADO MINNESOTA LIMITED TERM
TAX-FREE FUND TAX-FREE FUND TAX-FREE FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS ........................................................... $ 80,193 $ 0 $ 0
INTEREST ............................................................ 2,271,070 4,368,068 2,209,567
INCOME FROM AFFILIATED SECURITIES ................................... 22,321 17,858 52,040
--------------- --------------- ---------------
TOTAL INVESTMENT INCOME ................................................ 2,373,584 4,385,926 2,261,607
--------------- --------------- ---------------
EXPENSES
ADVISORY FEES ....................................................... 188,406 355,463 245,895
ADMINISTRATION FEES
FUND LEVEL ........................................................ 23,551 44,433 30,737
CLASS A ........................................................... 68,682 52,902 5,263
CLASS B ........................................................... 12,770 15,081 1,090
CLASS C ........................................................... N/A 553 1,810
CLASS Z ........................................................... N/A 10,550 N/A
ADMINISTRATOR CLASS ............................................... 18,012 62,044 58,559
CUSTODY FEES ........................................................ 9,420 17,773 12,295
SHAREHOLDER SERVICING FEES .......................................... 117,754 222,165 153,684
ACCOUNTING FEES ..................................................... 12,405 20,483 22,254
DISTRIBUTION FEES (NOTE 3)
CLASS B ........................................................... 34,204 40,395 2,919
CLASS C ........................................................... N/A 1,482 4,848
PROFESSIONAL FEES ................................................... 9,929 13,215 10,453
REGISTRATION FEES ................................................... 4,419 8,839 24,440
SHAREHOLDER REPORTS ................................................. 4,568 6,657 6,062
TRUSTEES' FEES ...................................................... 4,183 4,183 4,183
OTHER FEES AND EXPENSES ............................................. 2,336 2,965 2,158
--------------- --------------- ---------------
TOTAL EXPENSES ......................................................... 510,639 879,183 586,650
--------------- --------------- ---------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ........................ (121,101) (238,934) (202,752)
NET EXPENSES ........................................................ 389,538 640,249 383,898
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) ........................................... 1,984,046 3,745,677 1,877,709
--------------- --------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... 148,638 553,079 (19,359)
FUTURES TRANSACTIONS ................................................ 0 (5,284) 0
--------------- --------------- ---------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .............................. 148,638 547,795 (19,359)
--------------- --------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... (1,629,607) (3,353,802) (1,212,426)
--------------- --------------- ---------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .... (1,629,607) (3,353,802) (1,212,426)
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................. (1,480,969) (2,806,007) (1,231,785)
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ $ 503,077 $ 939,670 $ 645,924
=============== =============== ===============
NATIONAL NEBRASKA
TAX-FREE FUND TAX-FREE FUND
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS ........................................................... $ 512,631 $ 0
INTEREST ............................................................ 7,211,152 920,910
INCOME FROM AFFILIATED SECURITIES ................................... 111,274 30,883
---------------- ----------------
TOTAL INVESTMENT INCOME ................................................ 7,835,057 951,793
---------------- ----------------
EXPENSES
ADVISORY FEES ....................................................... 625,709 82,700
ADMINISTRATION FEES
FUND LEVEL ........................................................ 78,213 31,013
CLASS A ........................................................... 145,566 N/A
CLASS B ........................................................... 32,228 N/A
CLASS C ........................................................... 11,756 N/A
CLASS Z ........................................................... N/A N/A
ADMINISTRATOR CLASS ............................................... 88,731 N/A
CUSTODY FEES ........................................................ 31,285 4,135
SHAREHOLDER SERVICING FEES .......................................... 391,068 51,688
ACCOUNTING FEES ..................................................... 17,543 11,163
DISTRIBUTION FEES (NOTE 3)
CLASS B ........................................................... 86,323 N/A
CLASS C ........................................................... 31,490 N/A
PROFESSIONAL FEES ................................................... 14,004 0
REGISTRATION FEES ................................................... 28,073 0
SHAREHOLDER REPORTS ................................................. 2,779 0
TRUSTEES' FEES ...................................................... 4,183 0
OTHER FEES AND EXPENSES ............................................. 3,229 0
---------------- ----------------
TOTAL EXPENSES ......................................................... 1,592,180 180,699
---------------- ----------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ........................ (366,563) (25,634)
NET EXPENSES ........................................................ 1,225,617 155,065
---------------- ----------------
NET INVESTMENT INCOME (LOSS) ........................................... 6,609,440 796,728
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... 988,621 59,771
FUTURES TRANSACTIONS ................................................ 0 0
---------------- ----------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .............................. 988,621 59,771
---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ..... (6,358,367) (734,399)
---------------- ----------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .... (6,358,367) (734,399)
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................. (5,369,746) (674,628)
---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ $ 1,239,694 $ 122,100
================ ================
57
WELLS FARGO ADVANTAGE MUNICIPAL STATEMENTS OF CHANGES IN NET ASSETS
INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-
TERM TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 80,008,181 $ 90,178,810
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 1,136,848 2,365,412
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 1,585 471,530
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (916,111) 759,259
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 222,322 3,596,201
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... (650,064) (1,527,603)
CLASS B ............................................................................... N/A N/A
CLASS C ............................................................................... (88,495) (206,916)
CLASS Z ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (351,473) (574,541)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... (151,480) (130,582)
CLASS B ............................................................................... N/A N/A
CLASS C ............................................................................... (29,160) (25,511)
CLASS Z ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (75,596) (42,624)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (1,346,268) (2,507,777)
--------------- ---------------
Capital shares transactions:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 675,805 10,792,749
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 506,029 1,245,610
COST OF SHARES REDEEMED - CLASS A ....................................................... (6,348,342) (24,031,434)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. (5,166,508) (11,993,075)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS B ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 528,487 2,334,522
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 79,197 180,710
COST OF SHARES REDEEMED - CLASS C ....................................................... (1,917,030) (3,911,678)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. (1,309,346) (1,396,446)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS Z ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS Z ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 13,222,118 19,206,291
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 60,833 152,668
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (4,900,170) (17,228,491)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ..................................................................... 8,382,781 2,130,468
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ 1,906,927 (11,259,053)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... 782,981 (10,170,629)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 80,791,162 $ 80,008,181
--------------- ---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE MUNICIPAL
INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 511,644,586 $ 519,995,158
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 10,504,104 21,727,084
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 1,405,253 4,838,980
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (8,439,329) 21,083,023
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 3,470,028 47,649,087
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... (7,984,531) (16,004,753)
CLASS B ............................................................................... (1,100,754) (2,749,237)
CLASS C ............................................................................... (552,031) (1,156,447)
CLASS Z ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (866,790) (1,816,647)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... (3,574,811) (1,795,465)
CLASS B ............................................................................... (581,303) (382,347)
CLASS C ............................................................................... (295,719) (160,891)
CLASS Z ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (386,841) (171,649)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (15,342,780) (24,237,436)
--------------- ---------------
Capital shares transactions:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 19,765,337 44,764,305
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 6,899,055 11,326,588
COST OF SHARES REDEEMED - CLASS A ....................................................... (26,548,164) (58,693,335)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. 116,228 (2,602,442)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 999,620 1,597,340
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 1,105,906 2,228,916
COST OF SHARES REDEEMED - CLASS B ....................................................... (7,648,590) (33,086,608)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. (5,543,064) (29,260,352)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 2,733,349 2,667,215
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 526,348 877,834
COST OF SHARES REDEEMED - CLASS C ....................................................... (4,381,094) (7,225,204)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. (1,121,397) (3,680,155)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS Z ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS Z ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 7,637,630 17,369,614
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 293,147 340,864
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (8,400,322) (13,929,752)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ..................................................................... (469,545) 3,780,726
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (7,017,778) (31,762,223)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (18,890,530) (8,350,572)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 492,754,056 $ 511,644,586
--------------- ---------------
COLORADO TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 95,809,849 $ 102,988,017
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 1,984,046 4,431,381
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 148,638 890,039
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (1,629,607) 1,889,769
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 503,077 7,211,189
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... (1,020,750) (2,287,656)
CLASS B ............................................................................... (155,624) (347,314)
CLASS C ............................................................................... N/A N/A
CLASS Z ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (794,079) (1,770,111)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... 0 0
CLASS B ............................................................................... 0 0
CLASS C ............................................................................... N/A N/A
CLASS Z ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... 0 0
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (1,970,453) (4,405,081)
--------------- ---------------
Capital shares transactions:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 3,303,374 9,927,299
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 504,192 1,505,995
COST OF SHARES REDEEMED - CLASS A ....................................................... (7,745,015) (13,562,899)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. (3,937,449) (2,129,605)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 54,847 197,023
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 80,756 226,109
COST OF SHARES REDEEMED - CLASS B ....................................................... (275,952) (2,288,329)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. (140,349) (1,865,197)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS C ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS Z ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS Z ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 2,109,918 6,960,802
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 75,771 167,141
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (2,562,468) (13,117,417)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ..................................................................... (376,779) (5,989,474)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (4,454,577) (9,984,276)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (5,921,953) (7,178,168)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 89,887,896 $ 95,809,849
--------------- ---------------
MINNESOTA TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 182,570,382 $ 195,936,756
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 3,745,677 7,877,204
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 547,795 277,285
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (3,353,802) 4,970,874
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 939,670 13,125,363
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... (772,103) (1,552,530)
CLASS B ............................................................................... (179,746) (418,129)
CLASS C ............................................................................... (6,538) (2,912)
CLASS Z ............................................................................... (97,450) (41,637)
ADMINISTRATOR CLASS ................................................................... (2,687,843) (5,728,708)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... (118,498) (191,836)
CLASS B ............................................................................... (33,535) (63,307)
CLASS C ............................................................................... (1,485) 0
CLASS Z ............................................................................... (15,111) 0
ADMINISTRATOR CLASS ................................................................... (381,656) (647,417)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (4,293,965) (8,646,476)
--------------- ---------------
Capital shares transactions:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 1,318,290 7,830,137
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 570,495 1,328,079
COST OF SHARES REDEEMED - CLASS A ....................................................... (3,449,301) (9,631,824)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. (1,560,516) (473,608)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 24,144 377,689
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 129,082 339,794
COST OF SHARES REDEEMED - CLASS B ....................................................... (852,072) (5,116,377)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. (698,846) (4,398,894)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 190,336 413,734
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 5,381 2,418
COST OF SHARES REDEEMED - CLASS C ....................................................... (90,983) (47,764)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. 104,734 368,388
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS Z ..................................................... 791,629 4,746,395
REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................................. 79,703 35,765
COST OF SHARES REDEEMED - CLASS Z ....................................................... (872,858) (368,292)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z .. (1,526) 4,413,868
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 2,574,792 13,386,065
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 521,139 1,058,554
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (14,345,925) (32,199,634)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS ..................................................................... (11,249,994) (17,755,015)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (13,406,148) (17,845,261)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (16,760,443) (13,366,374)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 165,809,939 $ 182,570,382
--------------- ---------------
59
WELLS FARGO ADVANTAGE MUNICIPAL STATEMENTS OF CHANGES IN NET ASSETS
INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-
TERM TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 64,429 1,016,711
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 48,240 117,618
SHARES REDEEMED - CLASS A ............................................................... (605,432) (2,269,636)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... (492,763) (1,135,307)
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ N/A N/A
SHARES REDEEMED - CLASS B ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... N/A N/A
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... 50,238 220,196
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 7,556 17,070
SHARES REDEEMED - CLASS C ............................................................... (182,549) (369,533)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... (124,755) (132,267)
--------------- ---------------
SHARES SOLD - CLASS Z ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................ N/A N/A
SHARES REDEEMED - CLASS Z ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................... N/A N/A
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 1,274,470 1,841,357
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 5,892 14,653
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (474,910) (1,656,762)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ 805,452 199,248
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 187,934 (1,068,326)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 103,879 $ 57,063
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE MUNICIPAL
INCOME FUNDS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 1,736,393 3,944,858
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 611,371 997,827
SHARES REDEEMED - CLASS A ............................................................... (2,342,154) (5,172,059)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... 5,610 (229,374)
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... 86,200 138,571
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 96,169 192,733
SHARES REDEEMED - CLASS B ............................................................... (659,727) (2,867,546)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... (477,358) (2,536,242)
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... 236,235 230,004
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 45,784 75,863
SHARES REDEEMED - CLASS C ............................................................... (379,554) (625,820)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... (97,535) (319,953)
--------------- ---------------
SHARES SOLD - CLASS Z ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................ N/A N/A
SHARES REDEEMED - CLASS Z ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................... N/A N/A
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 674,201 1,527,379
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 26,013 29,967
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (732,809) (1,224,647)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ (32,595) 332,699
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (601,878) (2,752,870)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 61 $ 63
=============== ===============
COLORADO TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 306,157 914,101
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 46,639 138,479
SHARES REDEEMED - CLASS A ............................................................... (718,053) (1,249,076)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... (365,257) (196,496)
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... 5,026 18,093
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 7,464 20,769
SHARES REDEEMED - CLASS B ............................................................... (25,632) (210,272)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... (13,142) (171,410)
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ N/A N/A
SHARES REDEEMED - CLASS C ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... N/A N/A
--------------- ---------------
SHARES SOLD - CLASS Z ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................ N/A N/A
SHARES REDEEMED - CLASS Z ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................... N/A N/A
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 195,799 640,375
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 7,011 15,368
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (237,034) (1,209,044)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ (34,224) (553,301)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (412,623) (921,207)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 113,117 $ 99,524
=============== ===============
MINNESOTA TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 119,712 705,613
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 51,905 119,673
SHARES REDEEMED - CLASS A ............................................................... (314,495) (871,044)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... (142,878) (45,758)
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... 2,176 33,972
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 11,749 30,614
SHARES REDEEMED - CLASS B ............................................................... (77,584) (461,219)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... (63,659) (396,633)
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... 17,291 39,024
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 491 218
SHARES REDEEMED - CLASS C ............................................................... (8,197) (4,301)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... 9,585 34,941
--------------- ---------------
SHARES SOLD - CLASS Z ................................................................... 71,802 434,759
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS Z ................................ 7,251 3,219
SHARES REDEEMED - CLASS Z ............................................................... (79,598) (33,259)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS Z .................................... (545) 404,719
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 234,583 1,205,863
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 47,572 95,353
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (1,304,193) (2,906,013)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ (1,022,038) (1,604,797)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (1,219,535) (1,607,528)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 305,118 $ 303,121
=============== ===============
61
WELLS FARGO ADVANTAGE MUNICIPAL STATEMENTS OF CHANGES IN NET ASSETS
INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM
TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 126,941,459 $ 172,278,233
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 1,877,709 4,341,528
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. (19,359) (46,000)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (1,212,426) 309,507
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 645,924 4,605,035
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... (53,145) (59,045)
CLASS B ............................................................................... (8,109) (13,498)
CLASS C ............................................................................... (13,401) (12,939)
ADMINISTRATOR CLASS ................................................................... (1,799,495) (4,250,281)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... 0 0
CLASS B ............................................................................... 0 0
CLASS C ............................................................................... 0 0
ADMINISTRATOR CLASS ................................................................... 0 0
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (1,874,150) (4,335,763)
--------------- ---------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 445,127 3,429,708
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 40,736 51,655
COST OF SHARES REDEEMED - CLASS A ....................................................... (1,836,506) (645,864)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. (1,350,643) 2,835,499
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 28,512 159,024
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 5,802 12,302
COST OF SHARES REDEEMED - CLASS B ....................................................... 0 (38,763)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. 34,314 132,563
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 497,986 852,917
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 10,603 12,874
COST OF SHARES REDEEMED - CLASS C ....................................................... (51,090) (59,154)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. 457,499 806,637
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 10,948,800 28,516,735
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 211,574 596,342
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (22,168,531) (78,493,822)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .................................................................... (11,008,157) (49,380,745)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (11,866,987) (45,606,046)
=============== ===============
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (13,095,213) (45,336,774)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 113,846,246 $ 126,941,459
--------------- ---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE MUNICIPAL
INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 317,157,730 $ 328,238,217
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 6,609,440 14,240,835
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 988,621 840,519
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (6,358,367) 12,986,123
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 1,239,694 28,067,477
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... (2,149,538) (4,424,015)
CLASS B ............................................................................... (389,438) (1,009,085)
CLASS C ............................................................................... (142,292) (325,139)
ADMINISTRATOR CLASS ................................................................... (3,888,529) (8,391,779)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... 0 0
CLASS B ............................................................................... 0 0
CLASS C ............................................................................... 0 0
ADMINISTRATOR CLASS ................................................................... 0 0
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (6,569,797) (14,150,018)
--------------- ---------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... 9,895,688 13,568,001
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. 1,092,999 2,694,733
COST OF SHARES REDEEMED - CLASS A ....................................................... (8,030,862) (22,315,794)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. 2,957,825 (6,053,060)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... 343,968 671,827
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. 196,466 616,598
COST OF SHARES REDEEMED - CLASS B ....................................................... (3,504,910) (9,468,856)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. (2,964,476) (8,180,431)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... 185,948 331,201
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. 68,562 203,943
COST OF SHARES REDEEMED - CLASS C ....................................................... (687,996) (2,266,394)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. (433,486) (1,731,250)
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 11,845,143 31,786,743
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 470,850 777,043
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (26,075,743) (41,596,991)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .................................................................... (13,759,750) (9,033,205)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (14,199,887) (24,997,946)
=============== ===============
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (19,529,990) (11,080,487)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 297,627,740 $ 317,157,730
--------------- ---------------
NEBRASKA TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................................. $ 41,962,876 $ 46,252,818
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ............................................................ 796,728 1,715,037
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 59,771 233,923
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (734,399) 533,140
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 122,100 2,482,100
--------------- ---------------
Distributions to shareholders from:
NET INVESTMENT INCOME
CLASS A ............................................................................... N/A N/A
CLASS B ............................................................................... N/A N/A
CLASS C ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (795,471) (1,711,776)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS A ............................................................................... N/A N/A
CLASS B ............................................................................... N/A N/A
CLASS C ............................................................................... N/A N/A
ADMINISTRATOR CLASS ................................................................... (208,134) (651,076)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ........................................................ (1,003,605) (2,362,852)
--------------- ---------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS A ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS B ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS B ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - CLASS C ..................................................... N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................................. N/A N/A
COST OF SHARES REDEEMED - CLASS C ....................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .. N/A N/A
--------------- ---------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ......................................... 343,000 603,275
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ..................................... 26,382 79,153
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................... (1,892,968) (5,091,618)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS -
ADMINISTRATOR CLASS .................................................................... (1,523,586) (4,409,190)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (1,523,586) (4,409,190)
=============== ===============
NET INCREASE (DECREASE) IN NET ASSETS ...................................................... (2,405,091) (4,289,942)
=============== ===============
ENDING NET ASSETS .......................................................................... $ 39,557,785 $ 41,962,876
--------------- ---------------
63
WELLS FARGO ADVANTAGE MUNICIPAL STATEMENTS OF CHANGES IN NET ASSETS
INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL LIMITED-TERM
TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 41,484 316,357
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 3,793 4,760
SHARES REDEEMED - CLASS A ............................................................... (171,613) (59,311)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... (126,336) 261,806
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... 2,667 14,531
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 541 1,134
SHARES REDEEMED - CLASS B ............................................................... 0 (3,548)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... 3,208 12,117
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... 46,287 78,085
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 990 1,188
SHARES REDEEMED - CLASS C ............................................................... (4,784) (5,489)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... 42,493 73,784
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 1,020,228 2,616,486
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 19,704 54,891
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (2,065,959) (7,218,315)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ (1,026,027) (4,546,938)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (1,106,662) (4,199,231)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ (58,061) $ (61,620)
=============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE MUNICIPAL
INCOME FUNDS
- --------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... 946,732 1,298,985
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ 104,498 257,874
SHARES REDEEMED - CLASS A ............................................................... (769,076) (2,142,610)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... 282,154 (585,751)
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... 32,682 64,462
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ 18,775 59,015
SHARES REDEEMED - CLASS B ............................................................... (334,867) (906,983)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... (283,410) (783,506)
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... 17,724 31,800
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ 6,554 19,527
SHARES REDEEMED - CLASS C ............................................................... (65,894) (217,694)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... (41,616) (166,367)
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 1,130,437 3,035,296
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 44,980 74,314
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (2,506,604) (3,981,034)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ (1,331,187) (871,424)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (1,374,059) (2,407,048)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 696,555 $ 656,912
=============== ===============
NEBRASKA TAX-FREE FUND
------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
DECEMBER 31, 2005 YEAR ENDED
(UNAUDITED) JUNE 30, 2005
- ---------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A ................................ N/A N/A
SHARES REDEEMED - CLASS A ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .................................... N/A N/A
--------------- ---------------
SHARES SOLD - CLASS B ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B ................................ N/A N/A
SHARES REDEEMED - CLASS B ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .................................... N/A N/A
--------------- ---------------
SHARES SOLD - CLASS C ................................................................... N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................................ N/A N/A
SHARES REDEEMED - CLASS C ............................................................... N/A N/A
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .................................... N/A N/A
--------------- ---------------
SHARES SOLD - ADMINISTRATOR CLASS ....................................................... 34,484 60,067
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .................... 2,684 7,867
SHARES REDEEMED - ADMINISTRATOR CLASS ................................................... (190,798) (504,496)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ........................ (153,630) (436,562)
--------------- ---------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (153,630) (436,562)
=============== ===============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 11,804 $ 10,547
=============== ===============
65
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- ------------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.60 0.14 (0.11) (0.14)
JULY 1, 2004 TO JUNE 30, 2005................... $10.46 0.28 0.15 (0.27)
JULY 1, 2003 TO JUNE 30, 2004................... $10.74 0.23 (0.22) (0.23)
JULY 1, 2002 TO JUNE 30, 2003................... $10.50 0.25 0.24 (0.25)
JULY 1, 2001 TO JUNE 30, 2002 .................. $10.33 0.31 0.20 (0.31)
JULY 1, 2000 TO JUNE 30, 2001................... $10.14 0.41 0.19 (0.41)
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.59 0.10 (0.11) (0.10)
JULY 1, 2004 TO JUNE 30, 2005................... $10.46 0.20 0.14 (0.19)
JULY 1, 2003 TO JUNE 30, 2004................... $10.74 0.15 (0.22) (0.15)
AUGUST 30, 2002(3) TO JUNE 30, 2003............. $10.63 0.13 0.11 (0.13)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.43 0.15 (0.11) (0.15)
JULY 1, 2004 TO JUNE 30, 2005................... $10.29 0.31 0.15 (0.30)
JULY 1, 2003 TO JUNE 30, 2004................... $10.57 0.26 (0.22) (0.26)
JULY 1, 2002 TO JUNE 30, 2003................... $10.34 0.27 0.23 (0.27)
JULY 1, 2001 TO JUNE 30, 2002................... $10.17 0.32 0.20 (0.32)
JULY 1, 2000 TO JUNE 30, 2001 .................. $ 9.98 0.42 0.19 (0.42)
CALIFORNIA TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.51 0.24 (0.16) (0.24)
JULY 1, 2004 TO JUNE 30, 2005................... $11.01 0.49 0.56 (0.49)
JULY 1, 2003 TO JUNE 30, 2004................... $11.57 0.50 (0.46) (0.50)
JULY 1, 2002 TO JUNE 30, 2003................... $11.29 0.51 0.33 (0.53)
JULY 1, 2001 TO JUNE 30, 2002................... $11.24 0.55 0.10 (0.54)
JULY 1, 2000 TO JUNE 30, 2001................... $10.77 0.54 0.47 (0.54)
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.74 0.20 (0.17) (0.20)
JULY 1, 2004 TO JUNE 30, 2005................... $11.22 0.40 0.58 (0.40)
JULY 1, 2003 TO JUNE 30, 2004................... $11.79 0.41 (0.46) (0.41)
JULY 1, 2002 TO JUNE 30, 2003................... $11.51 0.42 0.33 (0.44)
JULY 1, 2001 TO JUNE 30, 2002................... $11.46 0.48 0.09 (0.46)
JULY 1, 2000 TO JUNE 30, 2001................... $10.97 0.46 0.49 (0.46)
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.74 0.20 (0.16) (0.20)
JULY 1, 2004 TO JUNE 30, 2005................... $11.22 0.40 0.58 (0.40)
JULY 1, 2003 TO JUNE 30, 2004................... $11.79 0.41 (0.46) (0.41)
JULY 1, 2002 TO JUNE 30, 2003................... $11.51 0.43 0.32 (0.44)
JULY 1, 2001 TO JUNE 30, 2002................... $11.46 0.47 0.10 (0.46)
JULY 1, 2000 TO JUNE 30, 2001................... $10.97 0.46 0.49 (0.46)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.54 0.26 (0.16) (0.26)
JULY 1, 2004 TO JUNE 30, 2005................... $11.03 0.52 0.57 (0.52)
JULY 1, 2003 TO JUNE 30, 2004................... $11.59 0.53 (0.46) (0.53)
JULY 1, 2002 TO JUNE 30, 2003................... $11.32 0.53 0.32 (0.55)
JULY 1, 2001 TO JUNE 30, 2002................... $11.27 0.57 0.10 (0.56)
JULY 1, 2000 TO JUNE 30, 2001................... $10.79 0.56 0.48 (0.56)
COLORADO TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.94 0.23 (0.17) (0.23)
JULY 1, 2004 TO JUNE 30, 2005................... $10.64 0.46 0.30 (0.46)
JULY 1, 2003 TO JUNE 30, 2004................... $11.01 0.47 (0.37) (0.47)
JULY 1, 2002 TO JUNE 30, 2003................... $10.61 0.50 0.40 (0.50)
JULY 1, 2001 TO JUNE 30, 2002................... $10.39 0.53 0.22 (0.53)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.83 0.55 0.56 (0.55)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.03) $10.46 2.68% 1.08% (0.23)% 0.85%
JULY 1, 2004 TO JUNE 30, 2005................... (0.02) $10.60 2.63% 1.08% (0.23)% 0.85%
JULY 1, 2003 TO JUNE 30, 2004................... (0.06) $10.46 2.13% 1.05% (0.20)% 0.85%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $10.74 2.35% 0.99% (0.18)% 0.81%
JULY 1, 2001 TO JUNE 30, 2002 .................. (0.03) $10.50 2.97% 1.24% (0.49)% 0.75%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.33 3.90% 1.12% (0.37)% 0.75%
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.03) $10.45 1.93% 1.83% (0.23)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... (0.02) $10.59 1.88% 1.83% (0.23)% 1.60%
JULY 1, 2003 TO JUNE 30, 2004................... (0.06) $10.46 1.41% 1.80% (0.20)% 1.60%
AUGUST 30, 2002(3) TO JUNE 30, 2003............. 0.00 $10.74 1.39% 1.79% (0.19)% 1.60%
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.03) $10.29 2.93% 0.90% (0.30)% 0.60%
JULY 1, 2004 TO JUNE 30, 2005................... (0.02) $10.43 2.93% 0.79% (0.19)% 0.60%
JULY 1, 2003 TO JUNE 30, 2004................... (0.06) $10.29 2.40% 0.73% (0.13)% 0.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $10.57 2.49% 0.72% (0.12)% 0.60%
JULY 1, 2001 TO JUNE 30, 2002................... (0.03) $10.34 3.12% 0.85% (0.25)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001 .................. 0.00 $10.17 4.12% 0.76% (0.16)% 0.60%
CALIFORNIA TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.11) $11.24 4.26% 1.03% (0.23)% 0.80%
JULY 1, 2004 TO JUNE 30, 2005................... (0.06) $11.51 4.36% 1.05% (0.25)% 0.80%
JULY 1, 2003 TO JUNE 30, 2004................... (0.10) $11.01 4.46% 1.03% (0.23)% 0.80%
JULY 1, 2002 TO JUNE 30, 2003................... (0.03) $11.57 4.60% 0.95% (0.16)% 0.79%
JULY 1, 2001 TO JUNE 30, 2002................... (0.06) $11.29 4.86% 0.90% (0.13)% 0.77%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $11.24 4.82% 0.90% (0.13)% 0.77%
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.11) $11.46 3.49% 1.78% (0.23)% 1.55%
JULY 1, 2004 TO JUNE 30, 2005................... (0.06) $11.74 3.52% 1.79% (0.24)% 1.55%
JULY 1, 2003 TO JUNE 30, 2004................... (0.11) $11.22 3.60% 1.77% (0.22)% 1.55%
JULY 1, 2002 TO JUNE 30, 2003................... (0.03) $11.79 3.81% 1.71% (0.17)% 1.54%
JULY 1, 2001 TO JUNE 30, 2002................... (0.06) $11.51 3.95% 1.66% (0.14)% 1.52%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $11.46 4.06% 1.63% (0.12)% 1.51%
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.11) $11.47 3.50% 1.78% (0.23)% 1.55%
JULY 1, 2004 TO JUNE 30, 2005................... (0.06) $11.74 3.52% 1.79% (0.24)% 1.55%
JULY 1, 2003 TO JUNE 30, 2004................... (0.11) $11.22 3.60% 1.77% (0.22)% 1.55%
JULY 1, 2002 TO JUNE 30, 2003................... (0.03) $11.79 3.80% 1.68% (0.14)% 1.54%
JULY 1, 2001 TO JUNE 30, 2002................... (0.06) $11.51 3.94% 1.64% (0.12)% 1.52%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $11.46 4.04% 1.62% (0.10)% 1.52%
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.11) $11.27 4.50% 0.85% (0.30)% 0.55%
JULY 1, 2004 TO JUNE 30, 2005................... (0.06) $11.54 4.60% 0.75% (0.20)% 0.55%
JULY 1, 2003 TO JUNE 30, 2004................... (0.10) $11.03 4.69% 0.70% (0.15)% 0.55%
JULY 1, 2002 TO JUNE 30, 2003................... (0.03) $11.59 4.82% 0.65% (0.08)% 0.57%
JULY 1, 2001 TO JUNE 30, 2002................... (0.06) $11.32 4.88% 0.62% (0.02)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $11.27 4.99% 0.60% 0.00% 0.60%
COLORADO TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.77 4.19% 1.08% (0.23)% 0.85%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.94 4.24% 1.07% (0.22)% 0.85%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.64 4.37% 1.06% (0.21)% 0.85%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.01 4.60% 0.99% (0.22)% 0.77%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.61 5.01% 0.96% (0.36)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.39 5.36% 0.96% (0.36)% 0.60%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(5) (000'S OMITTED)
- -----------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.28% 43% $ 46,192
JULY 1, 2004 TO JUNE 30, 2005................... 4.20% 111% $ 52,029
JULY 1, 2003 TO JUNE 30, 2004................... 0.11% 48% $ 63,231
JULY 1, 2002 TO JUNE 30, 2003................... 4.74% 64% $ 99,568
JULY 1, 2001 TO JUNE 30, 2002 .................. 5.00% 34% $ 70,142
JULY 1, 2000 TO JUNE 30, 2001................... 6.01% 49% $ 46,157
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.10)% 43% $ 8,834
JULY 1, 2004 TO JUNE 30, 2005................... 3.33% 111% $ 10,273
JULY 1, 2003 TO JUNE 30, 2004................... (0.64)% 48% $ 11,523
AUGUST 30, 2002(3) TO JUNE 30, 2003............. 2.26% 64% $ 11,301
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.39% 43% $ 25,765
JULY 1, 2004 TO JUNE 30, 2005................... 4.54% 111% $ 17,707
JULY 1, 2003 TO JUNE 30, 2004................... 0.36% 48% $ 15,425
JULY 1, 2002 TO JUNE 30, 2003................... 4.93% 64% $ 39,338
JULY 1, 2001 TO JUNE 30, 2002................... 5.19% 34% $ 12,224
JULY 1, 2000 TO JUNE 30, 2001 .................. 6.20% 49% $ 4,937
CALIFORNIA TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.76% 21% $362,982
JULY 1, 2004 TO JUNE 30, 2005................... 9.72% 30% $371,633
JULY 1, 2003 TO JUNE 30, 2004................... 0.41% 41% $357,779
JULY 1, 2002 TO JUNE 30, 2003................... 7.77% 34% $398,186
JULY 1, 2001 TO JUNE 30, 2002................... 5.67% 31% $386,927
JULY 1, 2000 TO JUNE 30, 2001................... 9.53% 52% $379,359
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.33% 21% $ 59,157
JULY 1, 2004 TO JUNE 30, 2005................... 8.90% 30% $ 66,182
JULY 1, 2003 TO JUNE 30, 2004................... (0.43)% 41% $ 91,719
JULY 1, 2002 TO JUNE 30, 2003................... 6.87% 34% $140,419
JULY 1, 2001 TO JUNE 30, 2002................... 4.88% 31% $146,487
JULY 1, 2000 TO JUNE 30, 2001................... 8.81% 52% $137,484
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.42% 21% $ 30,038
JULY 1, 2004 TO JUNE 30, 2005................... 8.89% 30% $ 31,904
JULY 1, 2003 TO JUNE 30, 2004................... (0.43)% 41% $ 34,089
JULY 1, 2002 TO JUNE 30, 2003................... 6.87% 34% $ 46,666
JULY 1, 2001 TO JUNE 30, 2002................... 4.87% 31% $ 46,013
JULY 1, 2000 TO JUNE 30, 2001................... 8.81% 52% $ 29,468
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.89% 21% $ 40,577
JULY 1, 2004 TO JUNE 30, 2005................... 10.07% 30% $ 41,926
JULY 1, 2003 TO JUNE 30, 2004................... 0.66% 41% $ 36,408
JULY 1, 2002 TO JUNE 30, 2003................... 7.90% 34% $ 38,681
JULY 1, 2001 TO JUNE 30, 2002................... 5.85% 31% $ 42,913
JULY 1, 2000 TO JUNE 30, 2001................... 9.80% 52% $ 47,211
COLORADO TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.53% 11% $ 45,699
JULY 1, 2004 TO JUNE 30, 2005................... 7.24% 33% $ 50,410
JULY 1, 2003 TO JUNE 30, 2004................... 0.93% 31% $ 51,120
JULY 1, 2002 TO JUNE 30, 2003................... 8.62% 37% $ 59,877
JULY 1, 2001 TO JUNE 30, 2002................... 7.34% 28% $ 58,152
JULY 1, 2000 TO JUNE 30, 2001................... 11.54% 37% $ 48,274
67
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- ------------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND (CONTINUED)
- ------------------------------------------------------------------------------------------------------------
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.95 0.19 (0.17) (0.19)
JULY 1, 2004 TO JUNE 30, 2005................... $10.65 0.38 0.30 (0.38)
JULY 1, 2003 TO JUNE 30, 2004................... $11.02 0.39 (0.37) (0.39)
JULY 1, 2002 TO JUNE 30, 2003................... $10.63 0.42 0.39 (0.42)
JULY 1, 2001 TO JUNE 30, 2002................... $10.41 0.45 0.22 (0.45)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.85 0.48 0.56 (0.48)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.94 0.24 (0.17) (0.24)
JULY 1, 2004 TO JUNE 30, 2005................... $10.64 0.49 0.30 (0.49)
JULY 1, 2003 TO JUNE 30, 2004................... $11.01 0.50 (0.37) (0.50)
JULY 1, 2002 TO JUNE 30, 2003................... $10.62 0.52 0.39 (0.52)
JULY 1, 2001 TO JUNE 30, 2002................... $10.40 0.53 0.22 (0.53)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.84 0.55 0.56 (0.55)
MINNESOTA TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.15 0.23 (0.17) (0.23)
JULY 1, 2004 TO JUNE 30, 2005................... $10.89 0.45 0.30 (0.44)
JULY 1, 2003 TO JUNE 30, 2004................... $11.27 0.46 (0.39) (0.45)
JULY 1, 2002 TO JUNE 30, 2003................... $10.84 0.47 0.43 (0.47)
JULY 1, 2001 TO JUNE 30, 2002................... $10.67 0.52 0.17 (0.52)
JULY 1, 2000 TO JUNE 30, 2001................... $10.18 0.54 0.49 (0.54)
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.15 0.19 (0.17) (0.19)
JULY 1, 2004 TO JUNE 30, 2005................... $10.89 0.38 0.29 (0.36)
JULY 1, 2003 TO JUNE 30, 2004................... $11.27 0.37 (0.39) (0.36)
JULY 1, 2002 TO JUNE 30, 2003................... $10.84 0.39 0.43 (0.39)
JULY 1, 2001 TO JUNE 30, 2002................... $10.67 0.44 0.17 (0.44)
JULY 1, 2000 TO JUNE 30, 2001................... $10.18 0.46 0.49 (0.46)
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.15 0.18 (0.17) (0.18)
APRIL 8, 2005(3) TO JUNE 30, 2005............... $10.97 0.08 0.18 (0.08)
CLASS Z
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.15 0.24 (0.18) (0.23)
APRIL 8, 2005(3) TO JUNE 30, 2005............... $10.97 0.10 0.18 (0.10)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $11.14 0.24 (0.16) (0.24)
JULY 1, 2004 TO JUNE 30, 2005................... $10.89 0.48 0.29 (0.47)
JULY 1, 2003 TO JUNE 30, 2004................... $11.27 0.49 (0.39) (0.48)
JULY 1, 2002 TO JUNE 30, 2003................... $10.84 0.49 0.43 (0.49)
JULY 1, 2001 TO JUNE 30, 2002................... $10.67 0.52 0.17 (0.52)
JULY 1, 2000 TO JUNE 30, 2001................... $10.18 0.54 0.49 (0.54)
NATIONAL LIMITED-TERM TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.81 0.15 (0.10) (0.15)
JULY 1, 2004 TO JUNE 30, 2005................... $10.81 0.28 (0.00) (0.28)
JANUARY 30, 2004(3) TO JUNE 30, 2004............ $11.03 0.10 (0.22) (0.10)
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.80 0.11 (0.10) (0.11)
JULY 1, 2004 TO JUNE 30, 2005................... $10.80 0.20 (0.00) (0.20)
JANUARY 30, 2004(3) TO JUNE 30, 2004............ $11.03 0.07 (0.23) (0.07)
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.80 0.11 (0.11) (0.11)
JULY 1, 2004 TO JUNE 30, 2005................... $10.79 0.20 0.01 (0.20)
JANUARY 30, 2004(3) TO JUNE 30, 2004............ $11.03 0.06 (0.24) (0.06)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET ------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.78 3.44% 1.83% (0.23)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.95 3.49% 1.82% (0.22)% 1.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.65 3.62% 1.81% (0.21)% 1.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.02 3.83% 1.76% (0.24)% 1.52%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.63 4.25% 1.77% (0.42)% 1.35%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.41 4.58% 1.77% (0.42)% 1.35%
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.77 4.44% 0.90% (0.30)% 0.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.94 4.49% 0.77% (0.17)% 0.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.64 4.62% 0.73% (0.13)% 0.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.01 4.76% 0.71% (0.11)% 0.60%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.62 5.01% 0.70% (0.10)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.40 5.38% 0.67% (0.07)% 0.60%
MINNESOTA TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.04) $10.94 4.09% 1.06% (0.21)% 0.85%
JULY 1, 2004 TO JUNE 30, 2005................... (0.05) $11.15 4.06% 1.06% (0.21)% 0.85%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.89 4.11% 1.04% (0.19)% 0.85%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.27 4.27% 0.98% (0.21)% 0.77%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.84 4.81% 1.03% (0.43)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.67 5.11% 1.10% (0.50)% 0.60%
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.04) $10.94 3.34% 1.81% (0.21)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... (0.05) $11.15 3.31% 1.81% (0.21)% 1.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.89 3.36% 1.79% (0.19)% 1.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.27 3.51% 1.71% (0.19)% 1.52%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.84 4.05% 1.75% (0.40)% 1.35%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.67 4.36% 1.81% (0.46)% 1.35%
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.04) $10.94 3.31% 1.81% (0.21)% 1.60%
APRIL 8, 2005(3) TO JUNE 30, 2005............... 0.00 $11.15 3.36% 1.82% (0.22)% 1.60%
CLASS Z
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.04) $10.94 4.16% 1.24% (0.46)% 0.78%
APRIL 8, 2005(3) TO JUNE 30, 2005............... 0.00 $11.15 4.17% 1.24% (0.46)% 0.78%
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.04) $10.94 4.33% 0.88% (0.28)% 0.60%
JULY 1, 2004 TO JUNE 30, 2005................... (0.05) $11.14 4.31% 0.76% (0.16)% 0.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.89 4.35% 0.71% (0.11)% 0.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.27 4.43% 0.65% (0.05)% 0.60%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.84 4.78% 0.65% (0.05)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.67 5.11% 0.73% (0.13)% 0.60%
NATIONAL LIMITED-TERM TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.71 2.83% 1.11% (0.26)% 0.85%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.81 2.61% 1.14% (0.29)% 0.85%
JANUARY 30, 2004(3) TO JUNE 30, 2004............ 0.00 $10.81 2.15% 1.05% (0.20)% 0.85%
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.70 2.09% 1.86% (0.26)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.80 1.85% 1.88 % (0.28)% 1.60%
JANUARY 30, 2004(3) TO JUNE 30, 2004............ 0.00 $10.80 1.52% 1.82% (0.22)% 1.60%
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.69 2.08% 1.86% (0.26)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.80 1.89% 1.89 % (0.29)% 1.60%
JANUARY 30, 2004(3) TO JUNE 30, 2004............ 0.00 $10.79 1.36% 1.79% (0.19)% 1.60%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(5) (000'S OMITTED)
- -----------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND (CONTINUED)
- -----------------------------------------------------------------------------------------------------
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.15% 11% $ 8,813
JULY 1, 2004 TO JUNE 30, 2005................... 6.43% 33% $ 9,095
JULY 1, 2003 TO JUNE 30, 2004................... 0.17% 31% $ 10,672
JULY 1, 2002 TO JUNE 30, 2003................... 7.70% 37% $ 14,368
JULY 1, 2001 TO JUNE 30, 2002................... 6.53% 28% $ 12,540
JULY 1, 2000 TO JUNE 30, 2001................... 10.69% 37% $ 10,177
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.66% 11% $ 35,375
JULY 1, 2004 TO JUNE 30, 2005................... 7.50% 33% $ 36,304
JULY 1, 2003 TO JUNE 30, 2004................... 1.18% 31% $ 41,196
JULY 1, 2002 TO JUNE 30, 2003................... 8.70% 37% $ 51,730
JULY 1, 2001 TO JUNE 30, 2002................... 7.33% 28% $ 50,630
JULY 1, 2000 TO JUNE 30, 2001................... 11.54% 37% $ 47,538
MINNESOTA TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.49% 9% $ 35,556
JULY 1, 2004 TO JUNE 30, 2005................... 7.06% 18% $ 37,829
JULY 1, 2003 TO JUNE 30, 2004................... 0.61% 12% $ 37,468
JULY 1, 2002 TO JUNE 30, 2003................... 8.49% 23% $ 41,485
JULY 1, 2001 TO JUNE 30, 2002................... 6.58% 28% $ 40,585
JULY 1, 2000 TO JUNE 30, 2001................... 10.32% 18% $ 34,424
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.11% 9% $ 10,084
JULY 1, 2004 TO JUNE 30, 2005................... 6.27% 18% $ 10,987
JULY 1, 2003 TO JUNE 30, 2004................... (0.14)% 12% $ 15,059
JULY 1, 2002 TO JUNE 30, 2003................... 7.68% 23% $ 22,012
JULY 1, 2001 TO JUNE 30, 2002................... 5.79% 28% $ 20,310
JULY 1, 2000 TO JUNE 30, 2001................... 9.50% 18% $ 19,491
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.10% 9% $ 487
APRIL 8, 2005(3) TO JUNE 30, 2005............... 2.38% 18% $ 389
CLASS Z
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.53% 9% $ 4,421
APRIL 8, 2005(3) TO JUNE 30, 2005............... 2.57% 18% $ 4,511
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.70% 9% $115,261
JULY 1, 2004 TO JUNE 30, 2005................... 7.23% 18% $128,854
JULY 1, 2003 TO JUNE 30, 2004................... 0.86% 12% $143,410
JULY 1, 2002 TO JUNE 30, 2003................... 8.67% 23% $185,450
JULY 1, 2001 TO JUNE 30, 2002................... 6.58% 28% $193,327
JULY 1, 2000 TO JUNE 30, 2001................... 10.32% 18% $ 24,860
NATIONAL LIMITED-TERM TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.50% 20% $ 2,586
JULY 1, 2004 TO JUNE 30, 2005................... 2.61% 26% $ 3,978
JANUARY 30, 2004(3) TO JUNE 30, 2004............ (1.20)% 24% $ 1,147
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.12% 20% $ 786
JULY 1, 2004 TO JUNE 30, 2005................... 1.85% 26% $ 759
JANUARY 30, 2004(3) TO JUNE 30, 2004............ (1.57)% 24% $ 628
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.02% 20% $ 1,405
JULY 1, 2004 TO JUNE 30, 2005................... 1.95 % 26% $ 960
JANUARY 30, 2004(3) TO JUNE 30, 2004............ (1.69)% 24% $ 163
69
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- ------------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND (CONTINUED)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.81 0.17 (0.11) (0.17)
JULY 1, 2004 TO JUNE 30, 2005................... $10.81 0.31 0.00 (0.31)
JULY 1, 2003 TO JUNE 30, 2004................... $11.09 0.29 (0.28) (0.29)
JULY 1, 2002 TO JUNE 30, 2003................... $10.73 0.37 0.36 (0.37)
JULY 1, 2001 TO JUNE 30, 2002................... $10.52 0.43 0.21 (0.43)
JULY 1, 2000 TO JUNE 30, 2001................... $10.19 0.46 0.33 (0.46)
NATIONAL TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.61 0.22 (0.17) (0.22)
JULY 1, 2004 TO JUNE 30, 2005................... $10.16 0.45 0.45 (0.45)
JULY 1, 2003 TO JUNE 30, 2004................... $10.53 0.45 (0.37) (0.45)
JULY 1, 2002 TO JUNE 30, 2003................... $10.29 0.50 0.23 (0.49)
JULY 1, 2001 TO JUNE 30, 2002................... $10.21 0.52 0.08 (0.52)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.72 0.54 0.49 (0.54)
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.61 0.19 (0.18) (0.18)
JULY 1, 2004 TO JUNE 30, 2005................... $10.16 0.39 0.44 (0.38)
JULY 1, 2003 TO JUNE 30, 2004................... $10.53 0.38 (0.38) (0.37)
JULY 1, 2002 TO JUNE 30, 2003................... $10.29 0.42 0.23 (0.41)
JULY 1, 2001 TO JUNE 30, 2002................... $10.21 0.45 0.08 (0.45)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.72 0.46 0.49 (0.46)
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.61 0.18 (0.18) (0.18)
JULY 1, 2004 TO JUNE 30, 2005................... $10.16 0.39 0.44 (0.38)
JULY 1, 2003 TO JUNE 30, 2004................... $10.53 0.38 (0.38) (0.37)
JULY 1, 2002 TO JUNE 30, 2003................... $10.29 0.42 0.23 (0.41)
JULY 1, 2001 TO JUNE 30, 2002................... $10.21 0.45 0.08 (0.45)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.73 0.46 0.48 (0.46)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.61 0.23 (0.17) (0.23)
JULY 1, 2004 TO JUNE 30, 2005................... $10.16 0.48 0.45 (0.48)
JULY 1, 2003 TO JUNE 30, 2004................... $10.53 0.47 (0.36) (0.48)
JULY 1, 2002 TO JUNE 30, 2003................... $10.30 0.52 0.22 (0.51)
JULY 1, 2001 TO JUNE 30, 2002................... $10.22 0.55 0.08 (0.55)
JULY 1, 2000 TO JUNE 30, 2001................... $ 9.73 0.56 0.49 (0.56)
NEBRASKA TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... $10.04 0.19 (0.17) (0.19)
JULY 1, 2004 TO JUNE 30, 2005................... $10.02 0.39 0.17 (0.39)
JULY 1, 2003 TO JUNE 30, 2004................... $10.44 0.39 (0.35) (0.39)
JULY 1, 2002 TO JUNE 30, 2003................... $10.16 0.42 0.37 (0.42)
JULY 1, 2001 TO JUNE 30, 2002................... $10.06 0.43 0.13 (0.43)
SEPTEMBER 1, 2000 TO JUNE 30, 2001(4)........... $ 9.85 0.36 0.21 (0.36)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
70
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET ------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND (CONTINUED)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.70 3.08% 0.93% (0.33)% 0.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.81 2.82% 0.83% (0.23)% 0.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.81 2.60% 0.71% (0.11)% 0.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $11.09 3.29% 0.71% (0.11)% 0.60%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.73 3.98% 0.76% (0.16)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.52 4.39% 0.71% (0.11)% 0.60%
NATIONAL TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.44 4.16% 1.04% (0.19)% 0.85%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.61 4.38% 1.04% (0.19)% 0.85%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.16 4.35% 1.03% (0.18)% 0.85%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $10.53 4.74% 0.95% (0.12)% 0.83%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.29 5.09% 0.93% (0.13)% 0.80%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.21 5.33% 0.96% (0.16)% 0.80%
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.44 3.41% 1.79% (0.19)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.61 3.62% 1.79% (0.19)% 1.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.16 3.61% 1.78% (0.18)% 1.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $10.53 3.98% 1.70% (0.12)% 1.58%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.29 4.34% 1.69% (0.14)% 1.55%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.21 4.56% 1.72% (0.17)% 1.55%
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.43 3.41% 1.80% (0.20)% 1.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.61 3.63% 1.79% (0.19)% 1.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.16 3.62% 1.78% (0.18)% 1.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $10.53 3.95% 1.71% (0.13)% 1.58%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.29 4.32% 1.68% (0.13)% 1.55%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.21 4.55% 1.73% (0.18)% 1.55%
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00 $10.44 4.41% 0.86% (0.26)% 0.60%
JULY 1, 2004 TO JUNE 30, 2005................... 0.00 $10.61 4.62% 0.74% (0.14)% 0.60%
JULY 1, 2003 TO JUNE 30, 2004................... 0.00 $10.16 4.60% 0.70% (0.10)% 0.60%
JULY 1, 2002 TO JUNE 30, 2003................... 0.00 $10.53 4.97% 0.67% (0.07)% 0.60%
JULY 1, 2001 TO JUNE 30, 2002................... 0.00 $10.30 5.30% 0.63% (0.03)% 0.60%
JULY 1, 2000 TO JUNE 30, 2001................... 0.00 $10.22 5.53% 0.61% (0.01)% 0.60%
NEBRASKA TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... (0.05) $ 9.82 3.85% 0.87% (0.12)% 0.75%
JULY 1, 2004 TO JUNE 30, 2005................... (0.15) $10.04 3.88% 0.84% (0.07)% 0.77%
JULY 1, 2003 TO JUNE 30, 2004................... (0.07) $10.02 3.83% 0.87% (0.04)% 0.83%
JULY 1, 2002 TO JUNE 30, 2003................... (0.09) $10.44 4.06% 0.87% (0.05)% 0.82%
JULY 1, 2001 TO JUNE 30, 2002................... (0.03) $10.16 4.27% 0.89% (0.06)% 0.83%
SEPTEMBER 1, 2000 TO JUNE 30, 2001(4)........... 0.00 $10.06 4.40% 0.91% (0.09)% 0.82%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE(5) (000'S OMITTED)
- -----------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND (CONTINUED)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.53% 20% $109,069
JULY 1, 2004 TO JUNE 30, 2005................... 2.87% 26% $121,244
JULY 1, 2003 TO JUNE 30, 2004................... 0.06% 24% $170,340
JULY 1, 2002 TO JUNE 30, 2003................... 6.86% 40% $152,835
JULY 1, 2001 TO JUNE 30, 2002................... 6.16% 45% $ 85,371
JULY 1, 2000 TO JUNE 30, 2001................... 7.89% 57% $ 62,111
NATIONAL TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.47% 34% $103,093
JULY 1, 2004 TO JUNE 30, 2005................... 9.06% 59% $101,814
JULY 1, 2003 TO JUNE 30, 2004................... 0.76% 63% $103,469
JULY 1, 2002 TO JUNE 30, 2003................... 7.20% 37% $113,616
JULY 1, 2001 TO JUNE 30, 2002................... 5.92% 39% $120,439
JULY 1, 2000 TO JUNE 30, 2001................... 10.90% 27% $ 77,273
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.09% 34% $ 21,129
JULY 1, 2004 TO JUNE 30, 2005................... 8.24% 59% $ 24,488
JULY 1, 2003 TO JUNE 30, 2004................... 0.01% 63% $ 31,420
JULY 1, 2002 TO JUNE 30, 2003................... 6.40% 37% $ 48,540
JULY 1, 2001 TO JUNE 30, 2002................... 5.13% 39% $ 51,754
JULY 1, 2000 TO JUNE 30, 2001................... 10.07% 27% $ 28,271
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.00% 34% $ 7,924
JULY 1, 2004 TO JUNE 30, 2005................... 8.25% 59% $ 8,497
JULY 1, 2003 TO JUNE 30, 2004................... 0.02% 63% $ 9,829
JULY 1, 2002 TO JUNE 30, 2003................... 6.40% 37% $ 15,161
JULY 1, 2001 TO JUNE 30, 2002................... 5.13% 39% $ 11,343
JULY 1, 2000 TO JUNE 30, 2001................... 9.96% 27% $ 9,319
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.59% 34% $165,481
JULY 1, 2004 TO JUNE 30, 2005................... 9.33% 59% $182,359
JULY 1, 2003 TO JUNE 30, 2004................... 1.01% 63% $183,520
JULY 1, 2002 TO JUNE 30, 2003................... 7.34% 37% $260,989
JULY 1, 2001 TO JUNE 30, 2002................... 6.24% 39% $294,132
JULY 1, 2000 TO JUNE 30, 2001................... 11.01% 27% $300,187
NEBRASKA TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED)... 0.25% 9% $ 39,558
JULY 1, 2004 TO JUNE 30, 2005................... 5.70% 14% $ 41,963
JULY 1, 2003 TO JUNE 30, 2004................... 0.35% 9% $ 46,253
JULY 1, 2002 TO JUNE 30, 2003................... 7.91% 19% $ 64,760
JULY 1, 2001 TO JUNE 30, 2002................... 5.67% 31% $ 66,453
SEPTEMBER 1, 2000 TO JUNE 30, 2001(4)........... 5.97% 45% $ 64,929
71
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) During each period, various fees and expenses were waived and reimbursed,
as indicated. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements (Note
3).
(2) Total return calculations would have been lower had certain expenses not
been waived or reimbursed during the periods shown. Returns for periods
less than one year are not annualized.
(3) Commencement of operations.
(4) The Fund changed its fiscal year-end from August 31 to June 30.
(5) Calculated on the basis of the Fund as a whole without distinguish between
the classes of shares issued. Portfolio turnover rates presented for
periods of less than one year are not annualized.
72
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL
INCOME FUNDS
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Trust commenced operations on November 8, 1999, and at
December 31, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the California
Limited-Term Tax-Free Fund, California Tax-Free Fund, Colorado Tax-Free Fund,
Minnesota Tax-Free Fund, National Limited-Term Tax-Free Fund, National Tax-Free
Fund, and Nebraska Tax-Free Fund.
Each Fund, except the National Limited-Term Tax-Free Fund and National
Tax-Free Fund, is a non-diversified series of the Trust. The National
Limited-Term Tax-Free Fund and National Tax-Free Fund are 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 Fund Target Fund
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG MINNESOTA TAX-FREE
MINNESOTA TAX-FREE FUND CLASS C FUND CLASS C
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MINNESOTA STRONG MINNESOTA TAX-FREE
TAX-FREE FUND CLASS Z 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.
Certain fixed income securities with maturities exceeding 60 days are
valued by using a pricing service approved by the Trust's Board of Trustees. The
service uses market prices as quoted by an independent pricing service or by
dealers in these securities when, in the service's judgment, these prices are
readily available and are representative of the securities' market values. For
some securities, such prices are not readily available. These securities will
generally be fair valued using methods which may include consideration of yields
or prices of securities of comparable quality, coupon rate, maturity and type of
issue, indications as to values from dealers in securities, trading
characteristics, and general market conditions.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
Investments which are not valued using any of the methods discussed above
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Debt obligations may be placed on non-accrual status and related
investment income may be reduced by ceasing current accruals and writing off
interest receivables when the collection of all or a portion of income has
become doubtful based on
73
WELLS FARGO ADVANTAGE MUNICIPAL NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
INCOME FUNDS
- --------------------------------------------------------------------------------
consistently applied procedures. A debt obligation is removed from non-accrual
status when the issuer resumes interest payments or when collectibility of
interest is reasonably assured.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of substantially all of its investment
company taxable income and any net realized capital gains (after reduction for
capital loss carryforwards) sufficient to relieve it from all, or substantially
all, federal income taxes. Accordingly, no provision for federal income taxes
was required at December 31, 2005.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
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 Fee*
Advisory Fee (% of Average
Average Daily (% of Average Average Daily Daily Net
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Assets)
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
TAX-FREE FUND $500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
$500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
$500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
$500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
TAX-FREE FUND $500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
74
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE MUNICIPAL
(UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
Sub-Advisory Fee*
Advisory Fee (% of Average
Average Daily (% of Average Average Daily Daily Net
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Assets)
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
$500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
- ------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.150
$500 million - $999 million 0.35 Management $400 million - $800 million 0.125
$1 billion - $2.99 billion 0.30 Incorporated > $800 million 0.100
$3 billion - $4.99 billion 0.275
> $4.99 billion 0.25
* At the April 2005 meeting, the Board of the Trust reapproved the
sub-advisory agreements among Funds Trust, Funds Management and the
respective sub-advisers, including the compensation payable to each
sub-adviser for providing investment advisory services to certain of the
Wells Fargo Advantage Funds. At the Novermber 2005 meeting, the Board of the
Trust approved changes to certain sub-advisory fee rates. As a result,
effective January 1, 2006, the investment sub-adviser(s) will be entitled to
be paid a monthly fee at the following rates:
Sub-Advisory Fees
Average Daily (% of Average
Fund Sub-Adviser Net Assets Daily Net Assets)
- ---------------------------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND Wells Capital $0 - $100 million 0.150
Management Incorporated $100 - $300 million 0.100
> $300 million 0.050
- ---------------------------------------------------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND Wells Capital $0 - $100 million 0.200
Management Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- ---------------------------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND Wells Capital $0 - $100 million 0.200
Management Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- ---------------------------------------------------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND Wells Capital $0 - $100 million 0.200
Management Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- ---------------------------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND Wells Capital $0 - $100 million 0.150
Management Incorporated $100 - $300 million 0.100
> $300 million 0.050
- ---------------------------------------------------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND Wells Capital $0 - $100 million 0.200
Management Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- ---------------------------------------------------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND Wells Capital $0 - $100 million 0.200
Management Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- ---------------------------------------------------------------------------------------------------------------------------
75
WELLS FARGO ADVANTAGE MUNICIPAL NOTES TO FINANCIAL STATEMENTS
INCOME FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
% 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
- --------------------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C 0.28
- --------------------------------------------------------------------------------------------
CLASS Z 0.45
- --------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS* 0.10
* Prior to April 11, 2005, the class level fee was 0.20%.
The Trust has entered into an agreement with Boston Financial Data
Services, Inc. ("BFDS"). BFDS is entitled to receive fees from the administrator
for its services as transfer agent.
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rate:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------
ALL FUNDS 0.02
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged up to the following annual fees:
% of Average
Daily Net Assets
CLASS A, CLASS B, CLASS C, CLASS Z, ADMINISTRATOR CLASS 0.25
For the six months ended December 31, 2005, shareholder servicing fees
paid were as follows:
Fund Class A Class B Class C Class Z Administrator
- ---------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND $ 63,322 N/A $12,176 N/A $ 31,162
- ---------------------------------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND 468,195 $78,741 39,487 N/A 48,101
- ---------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND 61,323 11,402 N/A N/A 45,029
- ---------------------------------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND 47,234 13,465 494 $5,861 155,111
- ---------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND 4,698 973 1,616 N/A 146,397
- ---------------------------------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND 129,969 28,774 10,497 N/A 221,828
- ---------------------------------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND N/A N/A N/A N/A 51,688
- ---------------------------------------------------------------------------------------------------------
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.
For the period ended December 31, 2005, distribution fees incurred are
disclosed on the Statements 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.
76
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE MUNICIPAL
(UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement
of Operations, for the six months ended December 31, 2005, were waived by Funds
Management, 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 during the period were as
follows:
Net Operating Expense Ratios (%)
Fund Class A Class B Class C Class Z Administrator
- ---------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND 0.85 N/A 1.60 N/A 0.60
- ---------------------------------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND 0.80 1.55 1.55 N/A 0.55
- ---------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND 0.85 1.60 N/A N/A 0.60
- ---------------------------------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND 0.85 1.60 1.60 0.78* 0.60
- ---------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND 0.85 1.60 1.60 N/A 0.60
- ---------------------------------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND 0.85 1.60 1.60 N/A 0.60
- ---------------------------------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND N/A N/A N/A N/A 0.75
- ---------------------------------------------------------------------------------------------------------
* Effective November 1, 2005, the net expense cap changed from 0.78% to
0.75%. However, the net expense reported is the actual expense that occurred
during the six-month period ended December 31, 2005.
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 December 31, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- ---------------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND $ 36,182,417 $ 34,584,590
- ---------------------------------------------------------------------------------------------------------
CALIFORNIA TAX-FREE FUND 101,367,968 110,758,558
- ---------------------------------------------------------------------------------------------------------
COLORADO TAX-FREE FUND 10,164,365 14,016,003
- ---------------------------------------------------------------------------------------------------------
MINNESOTA TAX-FREE FUND 15,935,191 30,674,463
- ---------------------------------------------------------------------------------------------------------
NATIONAL LIMITED-TERM TAX-FREE FUND 23,812,183 37,254,840
- ---------------------------------------------------------------------------------------------------------
NATIONAL TAX-FREE FUND 102,894,993 119,832,045
- ---------------------------------------------------------------------------------------------------------
NEBRASKA TAX-FREE FUND 3,515,515 3,906,635
- ---------------------------------------------------------------------------------------------------------
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to
0.1% per annum of the credit line. For the six months ended December 31, 2005,
the Municipal Income Funds had no borrowings under the 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 ("NAYAG"), to settle market-timing investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portions 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 Strong Fund complex (excluding money market funds and very
short-term income funds) totaling at least $35 million by May 2009. Fund
Management 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.
77
WELLS FARGO ADVANTAGE MUNICIPAL INCOME 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, 2005 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 is
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 139 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.
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
63 since 1987 Wake Forest University,
Calloway School of Business
and Accountancy.
- -------------------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, Chairman, CEO, and Co- None
63 since 1998 Founder of Crystal Geyser
(Chairman since Water Company and President
2005) of Crystal Geyser Roxane Water
Company.
- -------------------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, Retired. Prior thereto, President None
72 since 1987 of Richard M. Leach Associates
(a financial consulting firm).
- -------------------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, Senior Counselor to the public None
54 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.
78
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
INTERESTED TRUSTEES**
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE*** PAST FIVE YEARS OTHER DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, Private Investor/Real Estate None
61 since 1987 Developer; Chairman of White Point
Capital, LLC.
- -------------------------------------------------------------------------------------------------------------------
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 Wells None
46 2003 Fargo Bank, N.A. and 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
37 2003 Fargo Bank, N.A. and 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 Senior None
45 2000 Counsel of Wells Fargo Bank, N.A.
and 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 or by visiting the Fund's Web site at
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
** As of December 31, 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.
**** Effective January 1, 2006, Olivia Mitchell joined the Board of Trustees as
a non-interested Trustee.
***** Effective February 8, 2006, A. Erdem Cimen replaced Stacie D. DeAngelo as
the Treasurer of the Funds.
79
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS LIST OF ABBREVIATIONS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depository 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 Depository 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
80
THIS PAGE IS INTENTIONALLY LEFT BLANK --
THIS PAGE IS INTENTIONALLY LEFT BLANK --
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about Wells Fargo Advantage FundsSM is available free upon
request. To obtain literature, please write, e-mail, visit the Funds' Web site,
or call:
Wells Fargo Advantage Funds
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Web site: www.wellsfargo.com/advantagefunds
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals: 866-765-0778
This report and the financial statements contained herein are submitted for the
general information of the shareholders of 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
or visit the Funds' Web site at www.wellsfargo.com/advantagefunds. 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 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) 2006 Wells Fargo Advantage Funds, LLC. All rights reserved.
www.wellsfargo.com/advantagefunds RT55155 02-06
SMILD/SAR105 12-05
[LOGO] WELLS
FARGO
ADVANTAGES
FUNDS
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
DECEMBER 31, 2005
Semi-Annual Report
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
Wells Fargo Advantage Intermediate Tax-Free Fund
Wells Fargo Advantage Municipal Bond Fund
Wells Fargo Advantage Short-Term Municipal Bond Fund
Wells Fargo Advantage Ultra Short-Term Municipal Income Fund
Wells Fargo Advantage Wisconsin Tax-Free Fund
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
- --------------------------------------------------------------------------------
Performance Highlights
- --------------------------------------------------------------------------------
Intermediate Tax-Free Fund ............................................. 2
Municipal Bond Fund .................................................... 4
Short-Term Municipal Bond Fund ......................................... 6
Ultra Short-Term Municipal Income Fund ................................. 8
Wisconsin Tax-Free Fund ................................................ 10
Fund Expenses ............................................................. 12
- --------------------------------------------------------------------------------
Portfolio of Investments
- --------------------------------------------------------------------------------
Intermediate Tax-Free Fund ............................................. 14
Municipal Bond Fund .................................................... 21
Short-Term Municipal Bond Fund ......................................... 30
Ultra Short-Term Municipal Income Fund ................................. 42
Wisconsin Tax-Free Fund ................................................ 50
Financial Statements
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities ................................... 56
Statements of Operations ............................................... 58
Statements of Changes in Net Assets .................................... 60
Financial Highlights ................................................... 68
Notes to Financial Highlights ............................................. 72
- --------------------------------------------------------------------------------
Notes to Financial Statements ............................................. 73
- --------------------------------------------------------------------------------
Other Information (Unaudited) ............................................. 83
- --------------------------------------------------------------------------------
List of Abbreviations ..................................................... 85
- --------------------------------------------------------------------------------
--------------------------------------------------
NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
--------------------------------------------------
THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DEAR VALUED SHAREHOLDER,
Enclosed is your WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS(SM)
Semi-Annual report for the period ended December 31, 2005. On the following
pages, you will find a discussion of the five Funds, including the portfolio
managers' performance highlights, information about the holdings, and the
portfolio managers' strategic outlooks.
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
The expansion of the U.S. economy remains strong, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at
3.5% for the full year 2005. This is surprisingly strong growth, given the
record high energy prices reported during the six-month period. The price of
crude oil rose to a new record level during the third quarter and closed the
year at $61.06 a barrel, creating fears of a possible slowdown in consumer
spending.
Low interest rates and a consequent extended boom in the housing sector
helped to offset the negative effects of high oil and gas prices in the first
half of the year. 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 since the end of June.
Rising energy prices did have an impact on inflation, pushing the
inflation rate upward toward the end of 2005. The consumer price index (CPI)
rose approximately 3.0% during the six months that ended December 31, 2005. The
core CPI, which excludes the volatile food and energy components, was up only
around 2.2% by end of year. With core inflation generally contained, the Federal
Reserve (the Fed) continued its strategy of raising interest rates at a
"measured pace" for the year. Since July 1, 2005, the Fed has incrementally
raised the federal funds rate -- its principal policy tool -- from 3.25% to
4.25%. Long term bond yields did not increase with the federal funds rate, which
allowed mortgage rates to remain unusually low.
STOCKS: MODERATE GAINS FOR THE YEAR
- --------------------------------------------------------------------------------
Stock prices showed little net change since mid-year. The S&P 500 Index
was 1194 on July 1, 2005 and it ended the year at 1248. Strong corporate
earnings helped the markets during the six-month period, while record prices for
crude oil and concerns of a slowdown in worldwide economic growth capped and
often reversed rallies. In the United States, the fundamentals of strong
earnings and low inflation kept the equity markets steady.
BONDS: MUTED PERFORMANCE
- --------------------------------------------------------------------------------
Yields on most U.S. Treasury notes and bonds increased as the federal
funds rate was raised during period. Yields, however, still remain relatively
low, due primarily to record demand for U.S. Treasury securities from foreign
investors and the tame core inflation data.
The high yield segment of the corporate bond market continued to perform
well during the last six months. Municipal bonds generally performed better than
bonds in most taxable sectors since July. Overall, by the end of 2005, municipal
yields were very attractive relative to yields on comparable U.S. Treasuries.
LOOKING AHEAD
- --------------------------------------------------------------------------------
We may see some slowing in the economy in 2006 due to lingering effects
from higher energy prices and higher short-term interest rates. Inflation will
likely stay in check and it is expected that the Fed may pull back on its
monetary tightening policy.
We believe successful investing includes a balanced approach of owning a
diversified portfolio while keeping a long-term perspective. While
diversification may not prevent losses in a downturn, it may help reduce them
and keep you on track to reach your financial goals. To help you reach your
diversification goals, we offer funds across every key category, each guided by
skillful, independent money managers -- our subadvisors -- chosen for their
focused attention to a particular investment style. We believe that our
insistence on seeking outstanding money managers who share our dedication to
achieving consistent, long-term results, offers our investors a firmer footing
to navigate changing market conditions and move forward to their financial
destinations.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also want to visit our Web site at www.wellsfargo.com/advantagefunds.
Sincerely,
/S/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND (the Fund) seeks
current income exempt from federal income tax.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 07/31/2001
Duane A. McAllister, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.70%(1) for the six-month
period ending December 31, 2005, outperforming its benchmark, the Lehman
Brothers 7-Year Municipal Bond Index(2), which returned 0.11% during the same
period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE
- -WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT
IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Fund's below-benchmark duration helped performance as yields trended
higher. Short-term and intermediate-term municipal bonds saw the largest
increase in yields, leading to a significantly flatter yield curve by period
end. The Fund's allocation to shorter-maturity bonds was also a benefit, as it
was underweight in the two-to-four year maturity range. We owned an
above-average allocation to cash equivalents and longer-intermediate bonds,
which worked well as the yield curve flattened.
In addition, a few of our holdings were refunded during the period,
boosting their prices and adding to performance. The Fund's relative performance
also benefited from its overweighting in zero-coupon bonds with an average
maturity of approximately 15 years.
Our exposure to lower-quality issues also contributed to performance, as
yield spreads generally continued to tighten relative to higher-rated bonds.
While maintaining the portfolio's overall AA average credit quality, we did
adjust the weightings within the investment grade credit categories to take
advantage of changing valuations. For example, we reduced our allocation to
A-rated issues, as certain credits within that rating category became
overvalued. At the same time, our allocation to the BBB category rose, as we
continued to find relatively attractive spreads on specific issues. The general
trend for tighter credit spreads may be nearing an end and security selection is
becoming more critical when selecting lower-tier credits.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We added modestly to our preexisting overweight in tobacco-backed bonds.
Among our best performers in this sector were securities issued by the Golden
State Tobacco Securitization Corporation Series A, offering a 7.875% coupon,
maturing in 2042. Although these bonds' maturity dates were distant,
anticipation that the securities may be refunded to the call date in 2013 led to
their strong performance.
One recent management approach has been to seek to add higher-quality
bonds with some cash-flow variability as a substitute for lower-quality bonds.
This strategy accomplished two goals. First, it enabled us to upgrade the
overall credit quality of the portfolio. Second, the portfolio maintained a
higher level of income. Along these lines, we purchased bonds issued by the
Minneapolis/St. Paul Minnesota Housing Authority. These bonds paid interest of
5.10% and will mature in 2027. Based on a range of prepayment speeds, however,
we believe the bond has a projected average life of approximately five years.
The bonds are also guaranteed by the Government National Mortgage Association
(GNMA), garnering a "AAA" rating.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
If the housing market continues to cool and consumer spending slows, a
pause or end to Federal Open Market Committee interventions may not be far off.
However, the predictive power of the currently flat yield curve could be tested.
Typically, however, the flatter curve occurs at higher rate levels across the
curve on long and short maturities alike. In such an environment, bond investors
have often been rewarded for extending average maturities in anticipation of
falling yields. This time, however, since yields on long maturities have risen
only modestly relative to short yields, there is less incentive to lengthen our
cautious duration posture.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN
INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND
INVESTORS MAY LOSE PRINCIPAL VALUE. 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 HIGH YIELD BOND RISK AND MUNICIPAL SECURITIES RISK. CONSULT THE
FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security, market sector or the markets
generally, or the WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND.
The Fund's Advisor has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Investor Class shares of the WELLS FARGO
ADVANTAGE INTERMEDIATE TAX-FREE FUND for periods prior to April 11, 2005,
reflects the performance of the Investor Class shares of the Strong Intermediate
Municipal Bond Fund, its predecessor fund.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERMEDIATE TAX-FREE FUND - Investor Class (Incept. Date
07/31/2001) 0.70 3.00 6.17
- ------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------
Lehman Brothers 7-Year Municipal Bond Index(2) 0.11 1.72 4.75
- ------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.79%
- --------------------------------------------------------------------------------
Weighted Average Life 6.02 years
- --------------------------------------------------------------------------------
Estimated Average Duration 4.96 years
- --------------------------------------------------------------------------------
Portfolio Turnover 51%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Inv Class) $10.69
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Inv Class) 3.62%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Inv Class) 3.51%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7) (Inv Class) 5.57%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 0.00%
CREDIT QUALITY(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 41%
AA 22%
A 15%
BBB 19%
BB 2%
Cash 1%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LEHMAN BROTHERS
INTERMEDIATE TAX-FREE FUND- 7-YEAR MUNICIPAL
INVESTOR CLASS BOND INDEX
7/31/2001 10000 10,000
8/31/2001 10217 10,151
9/30/2001 10231 10,148
10/31/2001 10360 10,250
11/30/2001 10318 10,136
12/31/2001 10264 10,053
1/31/2002 10437 10,243
2/28/2002 10561 10,378
3/31/2002 10478 10,150
4/30/2002 10625 10,400
5/31/2002 10760 10,460
6/30/2002 10880 10,584
7/31/2002 10999 10,714
8/31/2002 11113 10,848
9/30/2002 11286 11,062
10/31/2002 11095 10,893
11/30/2002 11091 10,848
12/31/2002 11279 11,094
1/31/2003 11276 11,064
2/28/2003 11426 11,227
3/31/2003 11440 11,222
4/30/2003 11509 11,297
5/31/2003 11796 11,574
6/30/2003 11808 11,520
7/31/2003 11505 11,128
8/31/2003 11585 11,229
9/30/2003 11871 11,583
10/31/2003 11854 11,519
11/30/2003 11966 11,604
12/31/2003 12056 11,698
1/31/2004 12159 11,763
2/29/2004 12325 11,953
3/31/2004 12284 11,851
4/30/2004 12086 11,560
5/31/2004 12065 11,537
6/30/2004 12102 11,577
7/31/2004 12230 11,702
8/31/2004 12451 11,938
9/30/2004 12499 11,968
10/31/2004 12617 12,053
11/30/2004 12528 11,940
12/31/2004 12650 12,067
1/31/2005 12720 12,115
2/28/2005 12684 12,045
3/31/2005 12636 11,945
4/30/2005 12789 12,156
5/31/2005 12859 12,209
6/30/2005 12939 12,262
7/31/2005 12877 12,165
8/31/2005 12995 12,283
9/30/2005 12945 12,209
10/31/2005 12874 12,130
11/30/2005 12922 12,195
12/31/2005 13029 12,272
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
0-1 Year 7%
2-5 Years 22%
6-10 Years 40%
11-20 Years 23%
21+ Years 8%
- --------------------------------------------------------------------------------
(2) Lehman Brothers 7-Year Municipal Bond Index is the 7-year (6-8) component of
the Municipal Bond Index.The Lehman Brothers Municipal Bond Index is a
rules-based,market-value-weighted index engineered for the long-term tax-exempt
bond market.To be included in the Index,bonds must have a minimum credit rating
of Baa.They must have an outstanding par value of at least $5 million and be
issued as part of a transaction of at least $50 million.The bonds must have a
dated-date after December 31, 1990 and must be at least one year from their
maturity date. Remarketed issues, taxable municipal bonds, bonds with floating
rates, and derivatives, are excluded from the benchmark.You cannot invest
directly in an Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal,state and/or local
income taxes or the alternative minimum tax (AMT).The Fund's taxable equivalent
yield is based on the combined federal income tax rate of 35.00%. Any capital
gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE INTERMEDIATE
TAX-FREE FUND Investor Class shares for the life of the fund with the Lehman
Brothers 7-Year Municipal Bond Index.The chart assumes a hypothetical $10,000
investment in Investor Class shares and reflects all operating expenses.
3
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND (the Fund) seeks current
income exempt from federal income tax.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 10/23/1986
Duane A. McAllister, CFA
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.41%(1) for the six-month
period ending December 31, 2005, outperforming its benchmark, the Lehman
Brothers Municipal Bond Index(2), which returned 0.60% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED.
CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS
B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C
SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. 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. CURRENTLY
CLASSES A,B,C AND ADMINISTRATOR SHARES ARE CLOSED TO NEW INVESTORS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Fund's below-benchmark duration helped performance as yields inched
higher during the period. Short-term and intermediate-term municipal bonds saw
the largest increase in yields, leading to a significantly flatter yield curve
by period end. The Fund's allocation to shorter-maturity bonds also was a
benefit, as we were underweight within the two to four year maturity range and
instead held an above-average allocation to cash equivalents, which positively
contributed to results. Offsetting this positive performance, however, was our
underweighting of longer bonds, whose higher yields offset their modest price
declines.
The Fund's exposure to lower-quality issues also contributed to
performance, as yield spreads generally continued to tighten relative to
higher-rated bonds. As mentioned in our last report, we have been working to
slowly upgrade the portfolio's credit quality. However, we continue to maintain
above-average exposure to lower-rated bonds.
Tobacco-backed revenue bonds, another area of overweight exposure for the
Fund, were the municipal market's best-performing sector during the period. In
addition, some of the sector's outstanding higher-coupon deals were refunded,
helping performance. Other sectors that worked well for the Fund were health
care, housing, and education.
In addition, a few of our holdings were refunded during the period,
boosting their prices and adding to performance. The Fund's relative performance
also benefited from our overweighting in zero-coupon bonds with an average
maturity of approximately 15 years.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We added modestly to the Fund's existing overweight in tobacco-backed
bonds and to our holdings in single and multi-family housing bonds during the
period. We found particular value among seasoned single-family deals. One
example is a bond issue from the Oklahoma Housing Finance Agency paying interest
of 6.55% and maturing in 2029. Even with an aggressive prepayment schedule this
bond is attractive. In stable or rising rate environments, these securities
typically perform well as prepayments slow and above-average coupon income
boosts their performance.
In the multi-family housing sector, we added some credit-enhanced new
issues, including bonds issued by the East Point Georgia Housing Authority for
the Laurel Ridge Washington Road Apartments Project. These bonds, which offer
coupon income of 5% and mature in 2032, have a credit guarantee from the Federal
National Mortgage Association (FNMA), giving them the highest credit rating of
AAA. In addition, the limited involvement in the market of traditional
multi-family housing bond buyers in recent months created an opportunity for us
to add higher-quality bonds at historically attractive valuations.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
If the housing market continues to cool and consumer spending slows, we
believe a pause or end to the Fed's interest rate hikes may not be far off.
However, the predictive power of the currently flat yield curve could be tested.
Normally, when the curve flattens, it signals a slowing economy and fading fears
of inflation. In that environment, bond investors have often been rewarded for
extending maturities in anticipation of falling yields. This time, however,
since yields on long maturities have not risen to the extent they have in past
tightening cycles, maintaining the current cautious duration posture is likely
the more prudent approach.
We also remain cautious about lower-quality bonds, given the potential for
higher interest rates. Although we continue to be overweight to lower-rated
credits, we are prepared to upgrade the portfolio's credit quality further if
spreads widen meaningfully from current levels.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN
INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND
INVESTORS MAY LOSE PRINCIPAL VALUE. 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 HIGH YIELD BOND RISK AND MUNICIPAL SECURITIES RISK. CONSULT THE
FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005, and are those of the Fund's
managers. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security,market sector or the markets
generally, or the WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND.
(1) The Fund's Advisor 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 MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
------------------------------------ ------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
- -------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND -
Class A (Incept. Date 04/11/2005) (3.15) 0.21 5.61 4.47 1.39 4.94 6.59 4.95
- -------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND -
Class B (Incept. Date 04/11/2005) (3.99) (0.84) 5.52 4.19 1.01 4.16 5.84 4.19
- -------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND -
Class C (Incept. Date 04/11/2005) 0.01 3.16 5.84 4.19 1.01 4.16 5.84 4.19
- -------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND - Administrator Class (Incept. Date
04/11/2005) 1.58 5.23 6.66 5.04
- -------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND - Investor Class (Incept. Date
10/23/1986) 1.41 5.01 6.62 5.01
- -------------------------------------------------------------------------------------------------------------------------
Benchmark
- -------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.59 5.71
- -------------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.61%
- --------------------------------------------------------------------------------
Weighted Average Life 7.51 years
- --------------------------------------------------------------------------------
Estimated Average Duration 6.27 years
- --------------------------------------------------------------------------------
Portfolio Turnover 71%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class A, B, C, Admin, Inv)
$9.53, $9.53, $9.53,$9.53, $9.53
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Class A, B, C, Admin, Inv)
3.64%, 3.07%, 3.07%, 4.18%, 3.86%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Class A, B, C, Admin, Inv)
4.13%, 3.58%, 3.58%, 4.69%, 4.37%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7) (Class A, B, C,
Admin, Inv)
5.60%, 4.72%, 4.72%, 6.43%, 5.94%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 14.26%
CREDIT QUALITY(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 39%
AA 13%
A 8%
BBB 24%
BB 13%
B 1%
SPI 1%
Cash 1%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND - LEHMAN BROTHERS
MUNICIPAL BOND FUND - CLASS A INVESTOR CLASS MUNICIPAL BOND INDEX
12/31/1995 9550 10,000 10000
1/31/1996 9592 10,076 10045
2/29/1996 9445 10,008 9892
3/31/1996 9281 9,880 9720
4/30/1996 9226 9,852 9664
5/31/1996 9243 9,848 9682
6/30/1996 9306 9,955 9749
7/31/1996 9350 10,045 9795
8/31/1996 9343 10,043 9789
9/30/1996 9474 10,183 9927
10/31/1996 9601 10,299 10061
11/30/1996 9782 10,487 10251
12/31/1996 9774 10,443 10244
1/31/1997 9789 10,463 10260
2/28/1997 9884 10,559 10360
3/31/1997 9766 10,418 10238
4/30/1997 9854 10,505 10330
5/31/1997 10020 10,663 10505
6/30/1997 10193 10,777 10687
7/31/1997 10520 11,075 11031
8/31/1997 10435 10,971 10943
9/30/1997 10577 11,102 11092
10/31/1997 10670 11,173 11191
11/30/1997 10756 11,239 11282
12/31/1997 10948 11,403 11484
1/31/1998 11073 11,520 11616
2/28/1998 11094 11,524 11638
3/31/1998 11106 11,534 11652
4/30/1998 11085 11,482 11631
5/31/1998 11235 11,664 11789
6/30/1998 11282 11,710 11840
7/31/1998 11323 11,739 11883
8/31/1998 11483 11,920 12052
9/30/1998 11600 12,069 12175
10/31/1998 11570 12,069 12145
11/30/1998 11616 12,111 12194
12/31/1998 11670 12,142 12252
1/31/1999 11785 12,286 12374
2/28/1999 11759 12,232 12347
3/31/1999 11785 12,249 12375
4/30/1999 11837 12,280 12431
5/31/1999 11752 12,209 12343
6/30/1999 11538 12,033 12119
7/31/1999 11554 12,077 12137
8/31/1999 11362 11,980 11935
9/30/1999 11313 11,985 11885
10/31/1999 11035 11,855 11594
11/30/1999 11121 11,981 11684
12/31/1999 10905 11,892 11458
1/31/2000 10632 11,840 11173
2/29/2000 10766 11,978 11315
3/31/2000 11042 12,239 11605
4/30/2000 10988 12,167 11549
5/31/2000 10889 12,104 11446
6/30/2000 11094 12,425 11662
7/31/2000 11142 12,597 11714
8/31/2000 11254 12,792 11833
9/30/2000 11213 12,725 11791
10/31/2000 11094 12,864 11666
11/30/2000 11076 12,961 11648
12/31/2000 11257 13,281 11839
1/31/2001 11434 13,413 12026
2/28/2001 11438 13,456 12031
3/31/2001 11527 13,576 12125
4/30/2001 11453 13,429 12048
5/31/2001 11552 13,574 12154
6/30/2001 11650 13,664 12257
7/31/2001 11785 13,867 12399
8/31/2001 11937 14,095 12559
9/30/2001 11893 14,048 12513
10/31/2001 12044 14,215 12671
11/30/2001 11928 14,096 12549
12/31/2001 11781 13,962 12395
1/31/2002 11948 14,204 12571
2/28/2002 12072 14,376 12701
3/31/2002 11883 14,094 12502
4/30/2002 12036 14,369 12663
5/31/2002 12110 14,457 12742
6/30/2002 12232 14,609 12870
7/31/2002 12428 14,797 13076
8/31/2002 12498 14,975 13150
9/30/2002 12620 15,303 13278
10/31/2002 12337 15,050 12980
11/30/2002 12326 14,987 12969
12/31/2002 12542 15,303 13196
1/31/2003 12478 15,264 13128
2/28/2003 12649 15,478 13308
3/31/2003 12620 15,487 13278
4/30/2003 12752 15,589 13417
5/31/2003 13049 15,954 13729
6/30/2003 13050 15,887 13730
7/31/2003 12735 15,331 13399
8/31/2003 12815 15,445 13484
9/30/2003 13141 15,899 13826
10/31/2003 13141 15,819 13827
11/30/2003 13306 15,984 14000
12/31/2003 13384 16,116 14083
1/31/2004 13461 16,209 14164
2/29/2004 13716 16,453 14433
3/31/2004 13680 16,395 14395
4/30/2004 13435 16,007 14138
5/31/2004 13455 15,949 14160
6/30/2004 13524 16,007 14233
7/31/2004 13764 16,218 14485
8/31/2004 14017 16,543 14752
9/30/2004 14486 16,630 15246
10/31/2004 14651 16,774 15419
11/30/2004 14563 16,635 15327
12/31/2004 14758 16,838 15533
1/31/2005 14917 16,996 15700
2/28/2005 14902 16,939 15685
3/31/2005 14860 16,832 15642
4/30/2005 15037 17,098 15832
5/31/2005 15141 17,220 15943
6/30/2005 15275 17,326 16084
7/31/2005 15281 17,249 16074
8/31/2005 15462 17,423 16283
9/30/2005 15371 17,306 16187
10/31/2005 15281 17,200 16093
11/30/2005 15349 17,283 16149
12/31/2005 15487 17,432 16311
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Year 9%
2-5 Years 13%
6-10 Years 23%
11-20 Years 35%
21+ Years 20%
- --------------------------------------------------------------------------------
Performance shown for the Class A, Class B, Class C, Administrator Class,
and Investor Class shares of the WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND for
periods prior to April 11, 2005, reflects the performance of the Investor Class
shares of the Strong Municipal Bond Fund, its predecessor fund, adjusted for the
Class A, Class B, and Class C shares to reflect the fees and expenses of each
Class. Performance shown for the Administrator Class shares reflects the
performance of the predecessor fund's Investor Class shares,and includes
expenses that are not applicable to and are higher than those of the
Administrator Class.The Investor Class shares annual returns are substantially
similar to what the Administrator Class shares would be because the shares are
invested in the same portfolio of securities and the annual returns differ only
to the extent the classes do not have the same expenses.
(2) Lehman Brothers Municipal Bond Index is a rules-based,market-value-weighted
index engineered for the long-term tax-exempt bond market.To be included in the
Index, bonds must have a minimum credit rating of Baa.They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million. The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark.You cannot invest directly in an
Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies").Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal,less expenses,calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the
Fund.The distribution rate is calculated by annualizing the Fund's most recent
income dividend and dividing that figure by the applicable current public
offering price.
(7) A portion of the Fund's income may be subject to federal, state and/or local
income taxes or the alternative minimum tax (AMT).The Fund's taxable equivalent
yield is based on the combined federal income tax rate of 35.00%. Any capital
gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE MUNICIPAL
BOND FUND Class A and Investor Class shares for the most recent ten years with
the Lehman Brothers Municipal Bond Index.The chart assumes a hypothetical
$10,000 investment in Class A and Investor Class shares and reflects all
operating expenses and,for Class A shares, assumes the maximum initial sales
charge of 4.50%.
5
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND (the Fund) seeks
current income exempt from federal income tax consistent with capital
preservation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 12/31/1991
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.24%(1) for the six-month
period ending December 31, 2005, outperforming its benchmark, the Lehman
Brothers 3-Year Municipal Bond Index(2), which returned 0.42% during the same
period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED.
CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%.
PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE PERIOD
SHOWN. INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR
CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT
IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Federal Open Market Committee (the Fed) raised the federal funds
interest rate four times for a total of 100 basis points (1.00%). These
increases caused short-term market interest rates to move higher while
longer-term interest rates
lagged behind. This flattening of the yield curve may suggest that
investors believed that the Fed's rate increases would slow economic activity
while keeping core inflation at its current manageable level.
Municipalities continued to benefit from the relatively strong national
economy. Higher tax receipts have enabled many states and municipalities to
address their budgetary problems, which, in turn, also helped the performance of
lower-quality bonds. Specifically, health care,
corporate-backed municipal bonds -- especially tobacco-backed issues --
and airport bonds were some of the best performers in the municipal marketplace.
Within the higher-quality parts of the municipal marketplace, housing bonds did
very well.
Fortunately, the Fund was positioned to benefit from almost all of these
trends. The Fund's duration was lower than that of the benchmark, which helped
performance as interest rates rose. We also had more floating-rate bonds in our
portfolio, which saw their coupon rates increase in line with higher short-term
interest rates. Finally, the Fund was overweight in lower-quality bonds, and we
also added to the Fund's exposure to the housing sector earlier in the period.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The Fund's overall structure remained relatively stable and we decided to
postpone increasing duration because the economy remained relatively strong as
the Fed continued to increase short-term rates. We also raised the overall
credit quality of the Fund by reducing our exposure to lower rated
corporate-backed and health care bonds while adding to our exposure in
tobacco-backed bonds. Although tobacco-backed bonds performed well during the
period, we continue to believe the sector offers the potential for further
appreciation.
One portfolio management strategy we used during the period was to add
higher-quality bonds with some cash-flow variability as a substitute for
lower-quality bonds. By implementing this strategy we were able to accomplish
two goals. First, it enabled us to upgrade the overall credit quality of the
portfolio. Second, the portfolio can maintain a higher level of income. Simply
speaking, we are substituting cash-flow variability for credit risk, a
worthwhile approach given our view that we are in the late stages of the current
credit cycle and believe interest rates are likely to remain in a narrow range.
Along these lines, we purchased Wyandotte County/Kansas City, Kansas Sales
Tax Bonds. The bonds have final maturity dates of 2012 and 2013, although the
principal is paid down from excess sales taxes. The projected average life on
the bonds is 2.5 to 3.5 years. The bonds are also backed by a letter of credit
from Citibank and are rated AA+.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the economy will continue to grow in the 3-3.5% annualized
range over the next few quarters and that the Fed will lean toward slightly
higher interest rates. The Fund continues to seek its conservative level of
interest-rate risk along with its overweight position to lower-quality bonds as
we look to gradually improve the Fund's overall credit quality.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN
INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND
INVESTORS MAY LOSE PRINCIPAL VALUE. 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 HIGH YIELD BOND RISK AND MUNICIPAL SECURITIES RISK. CONSULT THE
FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security,market sector or the markets
generally, or the WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
Including Sales Charge Excluding Sales Charge
------------------------------------ ------------------------------------
6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND -
Class C (Incept. Date 01/31/03) (0.23) 0.68 2.81 3.13 0.77 1.68 2.81 3.13
- ------------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND -
Investor Class (Incept. Date 12/31/91) 1.24 2.67 4.03 4.36
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers 3-Year Municipal Bond Index(2) 0.42 0.87 3.70 3.70
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.40%
- --------------------------------------------------------------------------------
Weighted Average Life 2.07 years
- --------------------------------------------------------------------------------
Estimated Average Duration 1.66 years
- --------------------------------------------------------------------------------
Portfolio Turnover 74%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class C, Inv) $9.78, $9.79
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Class C, Inv) 2.66%, 3.55%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Class C, Inv) 2.61%, 3.50%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield7 (Class C, Inv) 4.09%, 5.46%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 23.67%
CREDIT QUALITY(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA 34%
AA 13%
A 19%
BBB 25%
BB 5%
B 1%
SPI 2%
Cash 1%
GROWTH OF $10,0000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
SHORT-TERM MUNICIPAL BOND LEHMAN BROTHERS 3-YEAR
FUND - INVESTOR CLASS MUNICIPAL BOND INDEX
12/31/1995 10000 10,000
1/31/1996 10060 10,078
2/29/1996 10050 10,080
3/31/1996 10046 10,056
4/30/1996 10060 10,068
5/31/1996 10082 10,077
6/30/1996 10140 10,137
7/31/1996 10193 10,193
8/31/1996 10240 10,208
9/30/1996 10301 10,270
10/31/1996 10377 10,342
11/30/1996 10464 10,439
12/31/1996 10487 10,444
1/31/1997 10545 10,489
2/28/1997 10606 10,540
3/31/1997 10572 10,486
4/30/1997 10638 10,531
5/31/1997 10718 10,617
6/30/1997 10793 10,679
7/31/1997 10937 10,806
8/31/1997 10928 10,785
9/30/1997 11011 10,862
10/31/1997 11058 10,910
11/30/1997 11110 10,942
12/31/1997 11214 11,016
1/31/1998 11284 11,089
2/28/1998 11315 11,112
3/31/1998 11350 11,130
4/30/1998 11362 11,115
5/31/1998 11443 11,218
6/30/1998 11490 11,255
7/31/1998 11541 11,296
8/31/1998 11620 11,406
9/30/1998 11713 11,478
10/31/1998 11739 11,534
11/30/1998 11772 11,562
12/31/1998 11837 11,590
1/31/1999 11926 11,694
2/28/1999 11957 11,707
3/31/1999 11993 11,718
4/30/1999 12041 11,754
5/31/1999 12025 11,737
6/30/1999 11900 11,667
7/31/1999 11948 11,724
8/31/1999 11944 11,739
9/30/1999 11966 11,783
10/31/1999 11940 11,784
11/30/1999 11998 11,836
12/31/1999 11975 11,817
1/31/2000 11945 11,838
2/29/2000 12003 11,876
3/31/2000 12105 11,937
4/30/2000 12111 11,938
5/31/2000 12098 11,951
6/30/2000 12213 12,102
7/31/2000 12285 12,199
8/31/2000 12376 12,293
9/30/2000 12415 12,296
10/31/2000 12452 12,365
11/30/2000 12475 12,415
12/31/2000 12579 12,554
1/31/2001 12679 12,744
2/28/2001 12700 12,793
3/31/2001 12780 12,883
4/30/2001 12789 12,864
5/31/2001 12880 12,982
6/30/2001 12944 13,040
7/31/2001 13044 13,146
8/31/2001 13161 13,283
9/30/2001 13161 13,349
10/31/2001 13247 13,435
11/30/2001 13253 13,394
12/31/2001 13230 13,381
1/31/2002 13344 13,551
2/28/2002 13442 13,653
3/31/2002 13351 13,449
4/30/2002 13482 13,647
5/31/2002 13519 13,726
6/30/2002 13617 13,844
7/31/2002 13690 13,952
8/31/2002 13766 14,041
9/30/2002 13836 14,151
10/31/2002 13713 14,074
11/30/2002 13773 14,078
12/31/2002 13902 14,280
1/31/2003 13948 14,325
2/28/2003 14033 14,418
3/31/2003 14032 14,401
4/30/2003 14089 14,440
5/31/2003 14232 14,551
6/30/2003 14286 14,528
7/31/2003 14197 14,397
8/31/2003 14253 14,470
9/30/2003 14362 14,688
10/31/2003 14373 14,618
11/30/2003 14437 14,632
12/31/2003 14461 14,663
1/31/2004 14499 14,713
2/29/2004 14563 14,839
3/31/2004 14570 14,799
4/30/2004 14520 14,649
5/31/2004 14483 14,592
6/30/2004 14538 14,617
7/31/2004 14639 14,725
8/31/2004 14752 14,880
9/30/2004 14789 14,897
10/31/2004 14858 14,938
11/30/2004 14849 14,867
12/31/2004 14925 14,925
1/31/2005 14944 14,905
2/28/2005 14979 14,861
3/31/2005 14986 14,812
4/30/2005 15023 14,888
5/31/2005 15065 14,915
6/30/2005 15136 14,992
7/31/2005 15162 14,956
8/31/2005 15202 15,006
9/30/2005 15226 15,013
10/31/2005 15221 14,991
11/30/2005 15262 15,004
12/31/2005 15323 15,057
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Year 60%
2-5 Years 36%
6-10 Years 3%
10+ Years 1%
- --------------------------------------------------------------------------------
(1) The Fund's Advisor has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class C and Investor Class shares of the WELLS
FARGO ADVANTAGE SHORT-TERM MUNICIPAL BOND FUND for periods prior to April
11,2005,reflects the performance of the Class C and Investor Class shares,
respectively, of the Strong Short-Term Municipal Bond Fund, its predecessor
fund. Performance shown for the Class C shares of the Fund for periods prior to
January 31, 2003, reflects the performance of the predecessor fund's Investor
Class shares adjusted to reflect the contingent deferred sales charge and the
different expenses of the Class C shares.
(2) Lehman Brothers 3-Year Municipal Bond Index is the 3-year (2-4) component of
the Lehman Brothers Municipal Bond index.The Lehman Brothers Municipal Bond
Index is a rules-based, market-value-weighted index engineered for the long-term
tax-exempt bond market. To be included in the Index, bonds must have a minimum
credit rating of Baa.They must have an outstanding par value of at least $5
million and be issued as part of a transaction of at least $50 million.The bonds
must have a dated-date after December 31, 1990 and must be at least one year
from their maturity date. Remarketed issues, taxable municipal bonds, bonds with
floating rates, and derivatives, are excluded from the benchmark.You cannot
invest directly in an Index.
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal,state and/or local
income taxes or the alternative minimum tax (AMT).The Fund's taxable equivalent
yield is based on the combined federal income tax rate of 35.00%. Any capital
gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT-TERM
MUNICIPAL BOND FUND Investor Class shares for the most recent ten years with the
Lehman Brothers 3-Year Municipal Bond Index.The chart assumes a hypothetical
$10,000 investment in Investor Class shares and reflects all operating expenses.
7
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND (the
Fund) seeks current income exempt from federal income tax consistent with
capital preservation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 11/30/1995
Wendy Casetta
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 1.46%(1) for the six-month
period ending December 31, 2005, outperforming its benchmark, the Lehman
Brothers 1-Year Municipal Bond Index(2), which returned 0.77% during the same
period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE
- -WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
ADVISOR CLASS, INSTITUTIONAL CLASS AND INVESTOR CLASS SHARES ARE SOLD
WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES
AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S
CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Federal Open Market Committee (the Fed) raised the federal funds
target rate four times for a total of 100 basis points (1.00%). These increases
caused short-term market interest rates to move higher while longer-term rates
lagged behind. This flattening of the yield curve indicated that investors
believed that the Fed's rate increases would slow economic activity while
keeping core inflation at its current manageable level.
Municipalities continued to benefit from the relatively strong national
economy. Higher tax receipts have enabled many states and municipalities to
address their budgetary problems, which in turn also helped the performance of
lower-quality bonds. Specifically, health care, corporate-backed municipal bonds
- -- especially tobacco-backed issues -- and airport bonds were some of the best
performers in the municipal marketplace. Within the higher-quality parts of the
municipal marketplace, housing bonds did very well.
Fortunately, the Fund was positioned to benefit from almost all of these
trends. The Fund's duration was lower than that of the benchmark, which helped
performance as rates increased. We also had more floating-rate bonds in our
portfolio, which saw their coupon rates increase in line with higher short-term
interest rates. Finally, the Fund was overweight in lower-quality bonds, and we
also added to the Fund's exposure to the housing sector earlier in the period.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The Fund's overall structure remained relatively stable and we decided to
postpone increasing duration because the economy remained relatively strong as
the Fed continued to increase short-term rates. We also raised the overall
credit quality of the Fund by reducing our exposure to lower rated
corporated-backed and health care bonds while adding to our exposure in
tobacco-backed bonds. Although tobacco-backed bonds performed well during the
period, we continue to believe the sector offers the potential for further
appreciation.
One portfolio management strategy we used during the period was to add
higher-quality bonds with some cash-flow variability as a substitute for
lower-quality bonds. By implementing this strategy we were able to accomplish
two goals. First, it enabled us to upgrade the overall credit quality of the
portfolio. Second, the portfolio can maintain a higher level of income. Simply
speaking, we are substituting cash-flow variability for credit risk, a
worthwhile approach given our view that we are in the late stages of the current
credit cycle and believe interest rates are likely to remain in a narrow range.
Along these lines, we purchased bonds issued by Maryland State Community
Development Administration. The bonds are rated Aa2 by Moody's Investors Service
and have a 2023 final maturity; however, the principal is paid down by mortgage
prepayments, bringing the securities' projected average life to 12 to 18 months.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the economy will continue to grow in the 3-3.5% annualized
range over the next few quarters and that the Fed will lean toward slightly
higher interest rates. The Fund continues to seek its conservative level of
interest-rate risk along with its overweight position to lower-quality bonds as
we look to gradually improve the Fund's overall credit quality.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN
INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND
INVESTORS MAY LOSE PRINCIPAL VALUE. 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 HIGH YIELD BOND RISK AND MUNICIPAL SECURITIES RISK. CONSULT THE
FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security,market sector or the markets
generally, or the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND.
(1) The Fund's Advisor 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 MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- ----------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND -
Advisor Class (Incept. Date 10/02/2000) 1.64 2.20 1.86 2.87
- ----------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND -
Institutional Class (Incept. Date 07/31/2000) 1.63 2.69 2.54 3.48
- ----------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND -
Investor Class (Incept. Date 11/30/1995) 1.46 2.12 2.19 3.24
- ----------------------------------------------------------------------------------------------------------
Benchmark
- ----------------------------------------------------------------------------------------------------------
Lehman Brothers 1-Year Municipal Bond Index(2) 0.77 1.49 2.76 3.58
- ----------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(2) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) A
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.23%
- --------------------------------------------------------------------------------
Weighted Average Life 0.66 years
- --------------------------------------------------------------------------------
Estimated Average Duration 0.61 years
- --------------------------------------------------------------------------------
Portfolio Turnover 82%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Adv, Inst, Inv
Class) $4.78, $4.77, $4.77
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Adv, Inst, Inv Class) 3.19%, 3.55%, 3.20%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Adv, Inst, Inv Class) 3.15%, 3.50%, 3.15%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7)
(Adv, Inst, Inv Class) 4.91%, 5.46%, 4.92%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 19.86%
CREDIT QUALITY(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
SPI 2%
B 1%
Cash 1%
BB 3%
AAA 24%
AA 18%
BBB 29%
A 22%
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE ULTRA
SHORT-TERM MUNICIPAL INCOME LEHMAN BROTHERS 1-YEAR
FUND - INVESTOR CLASS MUNICIPAL BOND INDEX
12/31/1995 10000 10,000
1/31/1996 10032 10,057
2/29/1996 10055 10,082
3/31/1996 10052 10,088
4/30/1996 10086 10,112
5/31/1996 10138 10,138
6/30/1996 10184 10,187
7/31/1996 10248 10,230
8/31/1996 10294 10,250
9/30/1996 10355 10,296
10/31/1996 10399 10,349
11/30/1996 10443 10,412
12/31/1996 10487 10,434
1/31/1997 10533 10,494
2/28/1997 10572 10,528
3/31/1997 10591 10,523
4/30/1997 10612 10,565
5/31/1997 10678 10,618
6/30/1997 10739 10,660
7/31/1997 10801 10,726
8/31/1997 10820 10,740
9/30/1997 10879 10,795
10/31/1997 10922 10,836
11/30/1997 10959 10,869
12/31/1997 11023 10,918
1/31/1998 11086 10,976
2/28/1998 11100 11,014
3/31/1998 11140 11,045
4/30/1998 11159 11,059
5/31/1998 11224 11,116
6/30/1998 11263 11,157
7/31/1998 11306 11,195
8/31/1998 11365 11,262
9/30/1998 11404 11,317
10/31/1998 11446 11,370
11/30/1998 11483 11,404
12/31/1998 11527 11,436
1/31/1999 11562 11,500
2/28/1999 11596 11,541
3/31/1999 11634 11,551
4/30/1999 11676 11,577
5/31/1999 11692 11,600
6/30/1999 11709 11,590
7/31/1999 11752 11,631
8/31/1999 11769 11,659
9/30/1999 11787 11,699
10/31/1999 11806 11,724
11/30/1999 11848 11,760
12/31/1999 11872 11,770
1/31/2000 11866 11,815
2/29/2000 11909 11,850
3/31/2000 11957 11,902
4/30/2000 11975 11,931
5/31/2000 11976 11,950
6/30/2000 12050 12,048
7/31/2000 12119 12,114
8/31/2000 12166 12,177
9/30/2000 12190 12,204
10/31/2000 12263 12,261
11/30/2000 12287 12,307
12/31/2000 12339 12,399
1/31/2001 12384 12,546
2/28/2001 12426 12,588
3/31/2001 12473 12,653
4/30/2001 12518 12,676
5/31/2001 12564 12,766
6/30/2001 12607 12,817
7/31/2001 12647 12,873
8/31/2001 12663 12,951
9/30/2001 12721 13,014
10/31/2001 12757 13,071
11/30/2001 12717 13,083
12/31/2001 12727 13,115
1/31/2002 12762 13,223
2/28/2002 12795 13,269
3/31/2002 12775 13,177
4/30/2002 12808 13,277
5/31/2002 12845 13,335
6/30/2002 12902 13,400
7/31/2002 12937 13,450
8/31/2002 12975 13,495
9/30/2002 13031 13,525
10/31/2002 13010 13,506
11/30/2002 13045 13,534
12/31/2002 13077 13,621
1/31/2003 13111 13,653
2/28/2003 13167 13,687
3/31/2003 13170 13,686
4/30/2003 13199 13,702
5/31/2003 13257 13,746
6/30/2003 13280 13,764
7/31/2003 13277 13,759
8/31/2003 13303 13,777
9/30/2003 13297 13,841
10/31/2003 13320 13,826
11/30/2003 13343 13,839
12/31/2003 13366 13,855
1/31/2004 13392 13,883
2/29/2004 13384 13,933
3/31/2004 13351 13,935
4/30/2004 13375 13,901
5/31/2004 13370 13,880
6/30/2004 13395 13,892
7/31/2004 13420 13,947
8/31/2004 13471 14,006
9/30/2004 13467 13,998
10/31/2004 13494 13,998
11/30/2004 13407 13,980
12/31/2004 13465 14,001
1/31/2005 13494 14,012
2/28/2005 13492 14,010
3/31/2005 13518 14,000
4/30/2005 13462 14,027
5/31/2005 13522 14,044
6/30/2005 13553 14,102
7/31/2005 13585 14,111
8/31/2005 13617 14,134
9/30/2005 13676 14,159
10/31/2005 13680 14,164
11/30/2005 13714 14,174
12/31/2005 13750 14,211
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Year 95%
2-5 Years 5%
- --------------------------------------------------------------------------------
Performance shown for the Advisor Class, Institutional Class and Investor
Class shares of the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM MUNICIPAL INCOME FUND
prior to April 11, 2005, reflects the performance of the Advisor Class,
Institutional Class and Investor Class shares, respectively, of the Strong Ultra
Short-Term Municipal Income Fund, its predecessor fund. Performance shown for
the Advisor Class shares of the Fund for periods prior to October 2, 2000,
reflects the performance of the predecessor fund's Investor Class shares,
adjusted to reflect expenses of the Advisor Class. Performance shown for the
Institutional Class shares of the Fund for periods prior to July 31, 2000,
reflects the performance of the predecessor fund's Investor Class Shares and has
not been restated for the lower expense ratio of the Institutional Class shares.
(2) Lehman Brothers 1-Year Municipal Bond Index is the 1-year (1-2) component of
the Municipal Bond index.The Lehman Brothers Municipal Bond Index is a
rules-based,market-value-weighted index engineered for the long-term tax-exempt
bond market.To be included in the index,bonds must have a minimum credit rating
of Baa.They must have an outstanding par value of at least $5 million and be
issued as part of a transaction of at least $50 million.The bonds must have a
dated-date after December 31, 1990 and must be at least one year from their
maturity date. Remarketed issues, taxable municipal bonds, bonds with floating
rates, and derivatives, are excluded from the benchmark.You cannot invest
directly in an Index.
(3) Fund characteristics, credit quality and maturity distribution subject to
change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal,state and/or local
income taxes or the alternative minimum tax (AMT).The Fund's taxable equivalent
yield is based on the combined federal income tax rate of 35.00%. Any capital
gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE ULTRA
SHORT-TERM MUNICIPAL INCOME FUND Investor Class shares for the life of the Fund
with the Lehman Brothers 1-Year Municipal Bond Index.The chart assumes a
hypothetical $10,000 investment in Investor Class shares and reflects all
operating expenses.
9
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND (the Fund) seeks a high
level of current income exempt from federal income tax and Wisconsin individual
income tax, without assuming undue risk.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Lyle J. Fitterer, CFA, CPA 04/06/2001
HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund's Investor Class shares returned 0.55%(1) for the six-month
period ending December 31, 2005, underperforming its benchmark, the Lehman
Brothers Municipal Bond Index(2), which returned 0.60% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE
WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE -
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%.
PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE
CORRESPONDING TIME PERIOD. INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END
SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY
TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
At the beginning of the period, about 29% of the Fund's assets were
invested in Puerto Rico issued bonds, which are exempt from Federal income tax
and Wisconsin individual income tax. Because of our analyst's negative views on
Puerto Rico's credit quality and belief that a downgrade was possible, the
majority of our Puerto Rico exposure was in insured or pre-refunded bonds. While
these bonds lost ground during the period and were a drag on performance, they
behaved better than the uninsured Puerto Rico bonds.
The poor performance of our Puerto Rico holdings was offset by our
favorable overweight in zero-coupon, lower-quality, and tobacco-backed bonds,
all of which gained in value during the six month reporting period. Zero-coupon
bonds tend to perform well when the yield curve flattens. We began increasing
our exposure to this sector starting in late 2004 and carried the position into
2005. As yield spreads narrowed in the second half of 2005, however, we reduced
our exposure to the sector, locking in relative gains. Similarly, we continued
to reduce our exposure to some lower-quality credits as well because continued
demand caused their yield advantage relative to higher-quality bonds to decline
substantially. For example, we sold non-rated bonds issued by the U.S. Virgin
Islands Public Finance Authority.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We continued to sell some lower-quality and non-rated bonds because we
believed that the decreasing amount of extra yield offered by these securities
no longer compensated us for their added risk. In place of these holdings, we
mostly added bonds with credit ratings of AA or better. We also added more
Wisconsin-issued bonds exempt from both federal and state income taxes
(double-exempt). At period end, the Fund's exposure to Wisconsin bonds stood at
about 66% of assets, up from about 59% to begin the period. During the second
half of 2005, we saw several double-exempt Wisconsin bond issues come to market
- -- a welcome relief from the first half of the year, when we saw very few new
issues.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
At period end, market interest rates were at the low end of their recent
range, reflecting the expectation that the Federal Reserve may be reluctant to
raise rates for now. Therefore, we are maintaining a conservative level of
interest-rate risk in the Fund.
Our view of the Puerto Rico bonds in the Fund has become somewhat more
favorable. The territory's legislative assembly and governor are working
together to implement a comprehensive fiscal and tax reform plan, which, if
passed, could help address Puerto Rico's financial problems.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN
INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND
INVESTORS MAY LOSE PRINCIPAL VALUE. 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 HIGH YIELD BOND RISK, MUNICIPAL SECURITIES RISK AND STATE OF
WISCONSIN RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005, and are those of the Fund's
manager. The views are subject to change at any time in response to changing
circumstances in the market and are not intended to predict or guarantee the
future performance of any individual security,market sector or the markets
generally, or the WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND.
(1) The Fund's Advisor has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Class C and Investor Class shares of the WELLS
FARGO ADVANTAGE WISCONSIN TAX-FREE FUND for the periods prior to April
11,2005,reflects the performance of the Class C and Investor Class shares of the
Strong Wisconsin Tax-Free Fund, its predecessor fund. Performance shown for the
Class C shares of the Fund for the period prior to December 26,2002,reflects the
performance of the predecessor fund's Investor Class shares adjusted to reflect
contingent deferred sales charge and the different expenses of the Class C
shares.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Including Sales Charge Excluding Sales Charge
-------------------------------- -------------------------------
6-Month* 1-Year Life of Fund 6-Month* 1-Year Life of Fund
- --------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX FREE FUND -
Class C (Incept. Date 12/26/2002) (0.82) 1.51 4.68 0.18 2.51 4.68
- --------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX FREE FUND -
Investor Class (Incept. Date 04/06/2001) 0.55 3.37 5.95
- --------------------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index(2) 0.60 3.51 5.40
- --------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Average Credit Quality(4) AA
- --------------------------------------------------------------------------------
Weighted Average Coupon 4.62%
- --------------------------------------------------------------------------------
Weighted Average Life 6.66 years
- --------------------------------------------------------------------------------
Estimated Average Duration 5.71 years
- --------------------------------------------------------------------------------
Portfolio Turnover 63%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) (Class C, Inv.) $10.54, $10.54
- --------------------------------------------------------------------------------
30-Day SEC Yield(5) (Class C, Inv.) 2.83%, 3.57%
- --------------------------------------------------------------------------------
Distribution Rate(6) (Class C, Inv.) 2.87%, 3.61%
- --------------------------------------------------------------------------------
30-Day Taxable Equivalent Yield(7) (Class C, Inv.) 4.67%, 5.89%
- --------------------------------------------------------------------------------
Alternative Minimum Tax (AMT)(8) 4.86%
- --------------------------------------------------------------------------------
CREDIT QUALITY(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
AAA (47%)
AA (9%)
A (20%)
BBB (18%)
BB (2%)
SPI (2%)
Cash (2%)
GROWTH OF $10,000 INVESTMENT(9) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
WISCONSIN TAX-FREE FUND - LEHMAN BROTHERS
INVESTOR CLASS MUNICIPAL BOND INDEX
4/6/2001 10000 10,000
4/30/2001 9975 9,892
5/31/2001 10127 9,998
6/30/2001 10219 10,065
7/31/2001 10359 10,214
8/31/2001 10515 10,382
9/30/2001 10500 10,348
10/31/2001 10636 10,471
11/30/2001 10568 10,383
12/31/2001 10494 10,284
1/31/2002 10647 10,463
2/28/2002 10778 10,589
3/31/2002 10592 10,381
4/30/2002 10834 10,584
5/31/2002 10902 10,648
6/30/2002 11016 10,761
7/31/2002 11176 10,899
8/31/2002 11304 11,031
9/30/2002 11532 11,272
10/31/2002 11360 11,085
11/30/2002 11316 11,039
12/31/2002 11542 11,272
1/31/2003 11521 11,244
2/28/2003 11679 11,401
3/31/2003 11728 11,408
4/30/2003 11824 11,483
5/31/2003 12094 11,752
6/30/2003 12053 11,702
7/31/2003 11639 11,292
8/31/2003 11713 11,377
9/30/2003 12028 11,711
10/31/2003 11980 11,652
11/30/2003 12097 11,774
12/31/2003 12192 11,871
1/31/2004 12245 11,939
2/29/2004 12385 12,119
3/31/2004 12348 12,077
4/30/2004 12119 11,791
5/31/2004 12089 11,748
6/30/2004 12130 11,791
7/31/2004 12278 11,946
8/31/2004 12482 12,185
9/30/2004 12548 12,250
10/31/2004 12662 12,355
11/30/2004 12575 12,253
12/31/2004 12718 12,403
1/31/2005 12820 12,519
2/28/2005 12776 12,477
3/31/2005 12736 12,398
4/30/2005 12911 12,594
5/31/2005 12988 12,684
6/30/2005 13075 12,762
7/31/2005 13016 12,705
8/31/2005 13141 12,833
9/30/2005 13044 12,747
10/31/2005 12985 12,670
11/30/2005 13036 12,730
12/31/2005 13147 12,840
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Year 13%
2-5 Years 12%
6-10 Years 17%
11-20 Years 50%
21+ Years 8%
- --------------------------------------------------------------------------------
(2) Lehman Brothers Municipal Bond Index is a rules-based, market-value-weighted
index engineered for the long-term tax-exempt bond market.To be included in the
Index, bonds must have a minimum credit rating of Baa.They must have an
outstanding par value of at least $5 million and be issued as part of a
transaction of at least $50 million.The bonds must have a dated-date after
December 31, 1990 and must be at least one year from their maturity date.
Remarketed issues, taxable municipal bonds, bonds with floating rates, and
derivatives, are excluded from the benchmark.You cannot invest directly in an
Index
(3) Fund characteristics, credit quality and maturity distribution are subject
to change.
(4) The average credit rating is compiled from ratings from Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(5) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses, calculated on a
30-day month-end basis.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) A portion of the Fund's income may be subject to federal,state and/or local
income taxes or the alternative minimum tax (AMT).The Fund's taxable equivalent
yield is based on the combined federal and Wisconsin income tax rate of 39.39%.
Any capital gains distributions may be taxable.
(8) The value of the securities subject to the AMT is represented as a
percentage of net assets.
(9) The chart compares the performance of the WELLS FARGO ADVANTAGE WISCONSIN
TAX-FREE FUND Investor Class shares for the life of the Fund with the Lehman
Brothers Municipal Bond Index.The chart assumes a hypothetical $10,000
investment in Investor Class shares and reflects all operating expenses.
11
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FUND EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service fees;
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period (July 1, 2005 to December 31,
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
07/01/2005 12/31/2005 Period(1) Ratio
Wells Fargo Advantage Intermediate Tax-Free Fund
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Intermediate Tax-Free Fund - Investor Class
Actual $ 1,000.00 $ 1,007.00 $ 3.79 0.75%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.42 $ 3.82 0.75%
Wells Fargo Advantage Municipal Bond Fund
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Municipal Bond Fund - Class A
Actual $ 1,000.00 $ 1,013.90 $ 4.31 0.85%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.92 $ 4.33 0.85%
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Municipal Bond Fund - Class B
Actual $ 1,000.00 $ 1,010.10 $ 8.11 1.60%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Municipal Bond Fund - Class C
Actual $ 1,000.00 $ 1,010.10 $ 8.11 1.60%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.14 $ 8.13 1.60%
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Municipal Bond Fund - Administrator Class
Actual $ 1,000.00 $ 1,015.80 $ 2.44 0.48%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.79 $ 2.45 0.48%
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Municipal Bond Fund - Investor Class
Actual $ 1,000.00 $ 1,014.10 $ 4.06 0.80%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.17 $ 4.08 0.80%
Wells Fargo Advantage Short-Term Municipal Bond Fund
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Short-Term Municipal Bond Fund - Class C
Actual $ 1,000.00 $ 1,007.70 $ 8.05 1.59%
- -----------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.19 $ 8.08 1.59%
12
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
07/01/2005 12/31/2005 Period(1) Ratio
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Short-Term Municipal Bond Fund -
Investor Class
Actual $ 1,000.00 $ 1,014.20 $ 3.35 0.66%
- -----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.88 $ 3.36 0.66%
Wells Fargo Advantage Ultra Short-Term Municipal Income Fund
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Ultra Short-Term Municipal Income Fund -
Advisor Class
Actual $ 1,000.00 $ 1,016.40 $ 3.96 0.78%
- -----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.27 $ 3.97 0.78%
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Ultra Short-Term Municipal Income Fund -
Institutional Class
Actual $ 1,000.00 $ 1,016.30 $ 1.88 0.37%
- -----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,023.34 $ 1.89 0.37%
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Ultra Short-Term Municipal Income Fund -
Investor Class
Actual $ 1,000.00 $ 1,014.60 $ 3.66 0.72%
- -----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.58 $ 3.67 0.72%
Wells Fargo Advantage Wisconsin Tax-Free Fund
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Wisconsin Tax-Free Fund - Class C
Actual $ 1,000.00 $ 1,001.80 $ 7.52 1.49%
- -----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,017.69 $ 7.58 1.49%
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Wisconsin Tax-Free Fund - Investor Class
Actual $ 1,000.00 $ 1,005.50 $ 3.79 0.75%
- -----------------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.42 $ 3.82 0.75%
(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).
13
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 98.10%
ALABAMA - 2.11%
$ 300,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST MEDICAL
CENTER HEALTH SYSTEM SERIES A1 4.35% 11/15/2028 $ 300,117
835,000 JEFFERSON COUNTY AL SERIES A 5.25 01/01/2011 892,832
500,000 MONTGOMERY AL BMC SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
HEALTH SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.11 11/15/2012 481,750
1,674,699
----------
ALASKA - 0.58%
350,000 ALASKA ENERGY AUTHORITY BRADLEY LAKE FOURTH (ELECTRIC REVENUE LOC) SERIES 6.00 07/01/2015 403,690
55,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 4.80 06/01/2011 55,468
459,158
----------
ARIZONA - 0.51%
375,000 VERRADO AZ COMMUNITY FACILITIES DISTRICT NUMBER 1 6.00 07/15/2013 405,645
----------
ARKANSAS - 1.27%
1,000,000 CABOT AR SALES AND USE TAX 4.60 12/01/2025 1,012,530
----------
CALIFORNIA - 3.79%
265,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS O'CONNER WOODS
OBLIGATION GROUP (HEALTHCARE FACILITIES REVENUE LOC) 5.40 11/01/2009 271,122
125,000 CALIFORNIA STATE 5.00 03/01/2010 134,133
750,000 CALIFORNIA STATEWIDE CDA ESKATON PROPERTIES INCORPORATED SS.+/- 4.35 05/15/2029 750,000
150,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES A 7.88 06/01/2042 180,996
290,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B 5.50 06/01/2019 298,932
300,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CALIFORNIA TOBACCO
SETTLEMENT REVENUE SERIES 2003-A1 6.75 06/01/2039 337,134
500,000 PALO VERDE CA COMMUNITY COLLEGE DISTRICT SCHOOL FACILITIES IMPT
DISTRICT NUBER 2004-1 6.00 08/01/2025 569,555
350,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE 5.50 03/01/2008 353,286
100,000 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY 6.75 07/01/2013 117,178
3,012,336
----------
COLORADO - 3.25%
1,000,000 ADAMS COUNTY CO REFUNDING BOND PUBLIC SERVICE COLORADO
PROJECT SERIES A 4.38 09/01/2017 1,015,890
1,000,000 ADONEA METROPOLITAN DISTRICT #2 COLORADO REVENUE 4.38 12/01/2015 9 88,710
245,000 NORTHWEST PARKWAY CO PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION
CONVERTIBLE (TOLL ROAD REVENUE LOC) 3.79 06/15/2012 201,951
450,000 NORTHWEST PARKWAY CO PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION
CONVERTIBLE (TOLL ROAD REVENUE LOC) 4.07 06/15/2016 381,888
2,588,439
----------
DISTRICT OF COLUMBIA - 0.44%
350,000 DISTRICT COLUMBIA CAPITAL APPRECIATION - MANDARIN ORIENTAL
(TAX ALLOCATION REVENUE, FIRST SECURITY BANK LOC)^ 4.84 07/01/2020 174,926
160,000 DISTRICT COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION 6.75 05/15/2040 173,718
348,644
----------
14
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA - 5.27%
$ 800,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING FUNDING
(HEALTHCARE FACILITIES REVENUE LOC)SS.+/- 4.44% 12/01/2028 $ 800,000
500,000 BROWARD COUNTY FL WHEELABRATOR SERIES A 4.50 12/01/2011 512,675
500,000 CAPITAL PROJECTS FINANCE AUTHORITY CAPITAL PROJECTS
(COLLEGE & UNIVERSITY REVENUE LOC) 5.50 10/01/2014 538,675
1,000,000 GULF BREEZE FL MIAMI BEACH LOCAL GOVERNMENT SERIES B (OTHER REVENUE LOC)+/- 4.75 12/01/2015 1,049,970
500,000 GULF BREEZE FL REVENUE FGIC INSURED
(GENERAL OBLIGATION - STATES, TERRITORIES LOC)+/- 5.50 12/01/2015 540,160
665,000 ST. LUCIE COUNTY FL (UTILITIES REVENUE LOC) 5.50 10/01/2016 751,437
4,192,917
---------
GEORGIA -1.11%
255,000 COBB-MARIETTA GA COLISEUM & EXHIBIT HALL AUTHORITY (OTHER REVENUE LOC) 5.50 10/01/2018 286,740
10,000 GEORGIA MUNICIPAL ELECTRIC AUTHORITY POWER REVENUE SERIES Y MBIA INSURED
(ELECTRIC REVENUE LOC) 6.50 01/01/2017 11,886
490,000 GEORGIA MUNICIPAL ELECTRIC AUTHORITY POWER REVENUE SERIES Y MBIA INSURED
(ELECTRIC REVENUE LOC) 6.50 01/01/2017 582,100
880,726
---------
ILLINOIS - 6.02%
340,000 AURORA IL SERIES B 4.90 12/30/2011 342,370
1,000,000 CHICAGO IL GAS SUPPLY REVENUE PEOPLES GAS LIGHT & COKE SERIES B SS.+/- 4.75 03/01/2030 1,029,290
550,000 CHICAGO IL HOUSING AUTHORITY 5.38 07/01/2013 594,885
355,000 GRUNDY COUNTY IL SCHOOL DISTRICT #054 MORRIS 8.75 12/01/2016 440,946
500,000 ILLINOIS CONDELL MEDICAL CENTER 5.13 05/15/2010 515,440
400,000 ILLINOIS FINANCE AUTHORITY CHICAGO CHARTER SCHOOL FOUNDATION PROJECT 5.25 12/01/2012 405,772
SERIES A
330,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS FACILITIES 5.70 07/01/2012 342,042
SERIES A
200,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS FACILITIES 5.50 07/01/2012 206,690
SERIES A
900,000 ILLINOIS LOCAL GOVERNMENT PG METROPOLIS PROJECT 5.00 12/01/2024 906,462
4,783,897
---------
IOWA - 1.19%
165,000 DES MOINES IA HOSPITAL REVENUE REFUNDED IOWA HEALTH SYSTEMS AMBAC INSURED
(HEALTH FACILITIES FINANCING AUTHORITY REVENUE LOC) 5.25 08/15/2015 168,567
560,000 TOBACCO SETTLEMENT AUTHORITY IOWA ASSET BACKED SERIES B 5.60 06/01/2035 616,678
145,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B 5.50 06/01/2012 158,969
944,214
---------
KANSAS - 1.99%
160,000 KANSAS DEVELOPMENT FINANCE AUTHORITY HEALTH FACILITIES HARTFORD
(HEALTHCARE FACILITIES REVENUE LOC) 6.13 04/01/2012 177,653
620,000 MANHATTAN KS TRANSPORTATION DEVELOPMENT DISTRICT 4.15 08/01/2015 632,406
750,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION SALES TAX
SECOND LIEN AREA B 4.75 12/01/2016 769,680
1,579,739
---------
15
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
KENTUCKY - 2.28%
$ 1,000,000 KENTUCKY ECONOMIC DEVELOPMENT CATHOLIC HEALTH INITIATIVES SERIES A 5.75% 12/01/2015 $ 1,081,010
725,000 KENTUCKY ECONOMIC DEVELOPMENT FINANCIAL AUTHORITY CHRISTIAN CARE
COMMUNITIES PROJECTS 4.35 11/20/2015 731,358
1,812,368
-----------
LOUISIANA - 1.19%
500,000 JEFFERSON PARISH LA HOSPITAL SERVICE DISTRICT NO 001 WEST JEFFERSON
MEDICAL CENTER SERIES A (HEALTHCARE FACILITIES REVENUE, FIRST SECURITY
BANK LOC) 5.25 01/01/2013 522,390
160,000 NEW ORLEANS LA SEWER SERVICE 5.50 06/01/2020 168,973
250,000 ORLEANS PARISH LA LAW ENFORCEMENT DISTRICT 4.75 05/01/2008 253,630
944,993
-----------
MASSACHUSETTS - 1.55%
1,125,000 MASSACHUSETTS STATE DEVELOPMENT FINANCE AGENCY SERIES A 5.63 01/01/2016 1,231,200
-----------
MICHIGAN - 2.00%
1,000,000 MICHIGAN STATE TRUNK LINE (FUEL SALES TAX REVENUE, FIRST SECURITY BANK 5.00 11/01/2015 1,087,990
LOC)
510,000 SUMMIT ACADEMY NORTH MICHIGAN PUBLIC SCHOOL ACADEMY 5.00 11/01/2015 504,507
1,592,497
-----------
MINNESOTA - 1.73%
1,000,000 MINNEAPOLIS & ST. PAUL MN HOUSING FINANCE BOARD SERIES A3 5.10 04/01/2027 1,050,820
260,000 MINNEAPOLIS MN ST. MARY'S HOSPITAL & REHABILITATION 10.00 06/01/2013 321,714
1,372,534
-----------
MISSISSIPPI - 1.78%
280,000 MISSISSIPPI DEVELOPMENT BANK SPECIAL OBLIGATION GULFPORT WATER & SEWER
SYSTEMS PROJECT FSA INSURED (GENERAL OBLIGATION - BOND BANK LOC) 5.25 07/01/2011 300,563
500,000 MISSISSIPPI DEVELOPMENT BANK SPECIAL OBLIGATION MISSISSIPPI LIMITED
OBLIGATION HOSPITAL IMPROVEMENTS 5.88 07/01/2022 554,440
510,000 MISSISSIPPI DEVELOPMENT BANK SPECIAL OBLIGATION NATCHEZ MISSISSIPPI
CONVENTION CENTER PROJECT 5.70 07/01/2015 562,877
1,417,880
-----------
MISSOURI - 3.78%
250,000 BRENTWOOD MO BRENTWOOD SQUARE PROJECT 4.13 05/01/2011 249,300
850,000 BRENTWOOD MO BRENTWOOD SQUARE PROJECT 4.50 05/01/2022 843,081
100,000 CAPE GIRARDEAU COUNTY MO IDA SOUTHEAST HOSPITAL ASSOCIATION 3.63 06/01/2007 99,698
295,000 CHESTERFIELD MO REFUNDING & IMPROVEMENTS CHESTERFIELD VALLEY PROJECT 4.50 04/15/2016 294,971
500,000 LAKE OF THE OZARKS MO COMMUNITY BRIDGE CORPORATION 5.25 12/01/2014 504,070
1,000,000 ST. CHARLES COUNTY MO IDA HOUSING VANDERBILT APARTMENTS +/- 5.00 02/01/2029 1,013,490
3,004,610
-----------
NEBRASKA - 0.87%
665,000 O'NEILL NE REVENUE ST. ANTHONYS PROJECT 6.25 09/01/2012 694,240
-----------
16
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW HAMPSHIRE - 1.47%
$ 1,085,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY
CAPITAL APPRECIATION SERIES B (OTHER REVENUE LOC)^ 5.66% 01/01/2025 $ 375,670
750,000 NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY SOUTH
NEW HAMPSHIRE MEDICAL CENTER 5.00 10/01/2014 795,780
1,171,450
-----------
NEW JERSEY - 2.81%
250,000 BAYONNE NJ BID ANTICIPATION NOTES 5.00 10/27/2006 251,320
500,000 BAYONNE NJ TAX ANTICIPATION NOTES SERIES A 5.00 10/13/2006 502,490
1,000,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY REVENUE CIGARETTE TAX 5.00 06/15/2012 1,067,190
390,000 NEWARK NJ (PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC) 5.00 10/01/2015 415,225
2,236,225
-----------
NEW YORK - 10.07%
100,000 NASSAU COUNTY NY IDA 6.88 07/01/2010 105,602
800,000 NEW YORK NY IDA NEW YORK INSTITUTION OF TECHNOLOGY PROJECT
(COLLEGE AND UNIVERSITY REVENUE LOC) 5.25 03/01/2018 866,936
500,000 NEW YORK NY SERIES B 5.75 08/01/2015 551,390
400,000 NEW YORK NY TRANSITIONAL FINANCE AUTHORITY FUTURE TAX +/- 5.25 02/01/2029 427,152
1,000,000 NEW YORK STATE DORMITORY AUTHORITY AIDS LONG TERM HEALTH CARE 5.00 11/01/2011 1,054,840
FACILITIES
645,000 NEW YORK STATE DORMITORY AUTHORITY CITY UNIVERSITY SYSTEM SERIES C 7.50 07/01/2010 704,250
500,000 NEW YORK STATE DORMITORY AUTHORITY HOSPITAL SERIES A (HEALTHCARE
FACILITIES REVENUE LOC) 6.00 08/15/2015 557,975
575,000 NEW YORK STATE DORMITORY AUTHORITY SERIES B SS.+/- 5.25 11/15/2023 616,066
500,000 NEW YORK STATE URBAN DEVELOPMENT CORPORATION SERIES C 4.00 01/01/2020 502,930
100,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES B
(OTHER REVENUE LOC) 4.00 06/01/2012 102,099
500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES B
(OTHER REVENUE LOC) 5.25 06/01/2013 522,005
110,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1 5.00 06/01/2011 110,834
1,500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1 5.50 06/01/2015 1,607,205
250,000 TRIBOROUGH NY BRIDGE & TUNNEL AUTHORITY SERIES Y
(TOLL ROAD REVENUE LOC) 5.50 01/01/2017 280,955
8,010,239
-----------
NORTH CAROLINA - 0.12%
95,000 NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1
CATAWBA ELECTRIC REVENUE 7.25 01/01/2007 98,519
-----------
NORTH DAKOTA - 1.04%
400,000 BURLEIGH COUNTY ND HEALTHCARE REVENUE MEDCENTER ONE
INCORPORATED MBIA INSURED
(HEALTH FACILITIES FINANCING AUTHORITY REVENUE LOC) 5.25 05/01/2013 419,616
350,000 MERCER COUNTY ND ANTELOPE VALLEY STATION (ELECTRIC REVENUE LOC) 7.20 06/30/2013 411,103
830,719
-----------
OHIO - 0.83%
410,000 LAKEWOOD OH LAKEWOOD HOSPITAL ASSOCIATION 5.50 02/15/2012 441,619
195,000 OHIO STATE HIGHER EDUCATIONAL FACILITY COMMISSION CAPITAL
APPRECIATION SERIES D 6.25 07/01/2010 217,505
659,124
-----------
17
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OKLAHOMA - 4.55%
$ 1,000,000 COMANCHE COUNTY OK 5.25% 07/01/2015 $ 1,075,080
350,000 HINTON OK HINTON PUBLIC SCHOOLS PROJECT 4.15 09/01/2011 347,592
340,000 HINTON OK HINTON PUBLIC SCHOOLS PROJECT 4.38 09/01/2013 338,341
250,000 JENKS OK (PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC)%% 5.00 02/01/2025 275,722
100,000 JENKS OK (PROPERTY TAX REVENUE, FIRST SECURITY BANK LOC)%% 5.00 02/01/2026 110,491
40,000 OKLAHOMA DEVELOPMENT FINANCE AUTHORITY COMANCHE COUNTY HOSPITAL
PROJECT SERIES B 5.35 07/01/2008 41,212
1,250,000 TULSA OK INDUSTRIAL AUTHORITY UNIVERSITY OF TULSA SERIES A
(COLLEGE & UNIVERSITY REVENUE LOC) 6.00 10/01/2016 1,429,150
3,617,588
------------
OREGON - 1.26%
400,000 KLAMATH FALLS OR INTER COMMUNITY MERLE WEST MEDICAL CENTER PROJECT 5.50 09/01/2011 421,368
550,000 KLAMATH FALLS OR INTER COMMUNITY MERLE WEST MEDICAL CENTER PROJECT 5.60 09/01/2012 584,485
1,005,853
------------
PENNSYLVANIA - 4.12%
500,000 ALLEGHENY COUNTY PA RDA PITTSBURGH MILLS PROJECT 5.10 07/01/2014 515,300
350,000 CHESTER COUNTY PA RENAISSANCE ACADEMY PROJECT SERIES A 5.63 10/01/2015 352,174
965,000 DELAWARE VALLEY PA REGIONAL FINANCIAL AUTHORITY SERIES A
(OTHER REVENUE LOC) SS.+/- 3.89 07/01/2027 982,717
600,000 PENNSYLVANIA CONVENTION CENTER AUTHORITY SERIES A
(OTHER REVENUE LOC) 6.70 09/01/2016 710,586
650,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY ALLEGHENY
DELAWARE VALLEY SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.70 11/15/2011 711,874
3,272,651
------------
PUERTO RICO - 0.82%
615,000 PUERTO RICO HOUSING FINANCE AUTHORITY CAPITAL FUNDING PROGRAM 5.00 12/01/2015 654,354
------------
SOUTH CAROLINA - 2.37%
250,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.60 01/01/2032 28,028
1,750,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.24 01/01/2037 142,940
2,000,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.20 01/01/2038 153,020
500,000 GREENVILLE SC HOSPITAL SYSTEM BOARD SERIES A (HEALTHCARE FACILITIES 5.25 05/01/2014 542,910
REVENUE LOC)
250,000 RICHLAND COUNTY SC INTERNATIONAL PAPER COMPANY PROJECTS SERIES A 4.25 10/01/2007 251,497
700,000 SOUTH CAROLINA EDUCATIONAL FACILITIES AUTHORITY BENEDICT COLLEGE
(COLLEGE & UNIVERSITY REVENUE LOC) 5.75 07/01/2017 768,082
1,886,477
------------
SOUTH DAKOTA - 1.46%
600,000 HEARTLAND SD CONSUMERS POWER DISTRICT (ELECTRIC REVENUE LOC) 6.00 01/01/2012 667,536
500,000 LOWER BRULE SIOUX TRIBE SOUTH DAKOTA SERIES B 5.25 05/01/2015 496,325
1,163,861
------------
TENNESSEE - 1.30%
1,000,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD FLOAT
BAPTIST MEMORIAL HEALTHCARE SS.+/- 5.00 09/01/2020 1,030,890
------------
18
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TEXAS - 7.98%
$ 2,500,000 ARLINGTON TX SPECIAL OBLIGATION DALLAS COWBOYS SERIES A 5.00% 08/15/2034 $ 2,651,875
1,335,000 BEXAR COUNTY TX REVENUE PROJECT 5.75 08/15/2022 1,420,480
715,000 DENTON COUNTY TX (GENERAL OBLIGATION - BOND BANK LOC) 5.00 07/15/2016 770,884
1,000,000 GARZA COUNTY TX PUBIC FACILITIES CORPORATION 5.25 10/01/2014 1,039,380
250,000 MIDTOWN TX RDA (TAX REVENUE LOC) 5.00 01/01/2009 258,868
195,000 SAM RAYBURN TX MUNICIPAL POWER AGENCY (OTHER REVENUE LOC) 5.00 10/01/2009 203,447
6,344,934
-----------
VIRGIN ISLANDS - 0.99%
750,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SENIOR LIEN LOAN NOTES 5.50 10/01/2014 790,545
-----------
VIRGINIA - 3.05%
45,000 DINWIDDIE COUNTY VA IDA SCHOOL FACILITIES PROJECT A 5.30 02/01/2008 46,297
305,000 DINWIDDIE COUNTY VA IDA SCHOOL FACILITIES PROJECT A 5.55 02/01/2012 315,025
800,000 GREATER RICHMOND VA CONVENTION CENTER AUTHORITY CONVENTION CENTER
EXPANSION PROJECT 5.50 06/15/2010 858,400
1,050,000 SUFFOLK VA REDEVELOPMENT & HOUSING AUTHORITY WINDSOR AT POTOMAC
PROJECT+/- 4.85 07/01/2031 1,098,710
100,000 VIRGINIA HOUSING DEVELOPMENT AUTHORITY SERIES D SUBSERIES D1
(HOUSING REVENUE LOC) 4.50 07/01/2010 104,006
2,422,438
-----------
WASHINGTON - 4.14%
600,000 CHELAN COUNTY WA PUBLIC UTILITY DISTRICT #1 WACHELAN HYDRO SERIES A
(ELECTRIC REVENUE LOC)^ 4.64 06/01/2018 339,258
310,000 GRANT COUNTY WA PUBLIC UTILITY DISTRICT #2 SERIES G (ELECTRIC
REVENUE LOC) 5.25 01/01/2012 337,568
400,000 SNOHOMISH COUNTY WA PUBLIC HOSPITAL DISTRICT #3 SERIES A 6.00 06/01/2010 409,980
300,000 SPOKANE WA SERIES B 5.40 01/01/2010 309,981
200,000 TOBACCO SETTLEMENT AUTHORITY OF WASHINGTON 5.50 06/01/2012 208,544
720,000 TOBACCO SETTLEMENT AUTHORITY WASHINGTON ASSET BACKED 6.50 06/01/2026 776,974
100,000 VANCOUVER WA (WATER REVENUE LOC) 4.90 06/01/2010 102,254
75,000 WASHINGTON STATE HOUSING FINANCE COMMISSION CRISTA MINISTRIES
PROJECT A 5.35 07/01/2014 76,301
610,000 WASHINGTON STATE SERIES B 6.40 06/01/2017 728,023
3,288,883
-----------
WISCONSIN - 7.01%
415,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.00 06/01/2008 421,881
435,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.00 06/01/2009 443,600
1,085,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION WISCONSIN ASSET 6.00 06/01/2017 1,140,259
BACKED
500,000 MILWAUKEE WI REDEVELOPMENT AUTHORITY REVENUE SCIENCE EDUCATION
CONSORTIUM PROJECT SERIES A 5.75 08/01/2035 501,965
70,000 ST. CROIX FALLS WI CDA 3.95 12/01/2008 70,253
70,000 ST. CROIX FALLS WI CDA 4.20 12/01/2009 70,787
75,000 ST. CROIX FALLS WI CDA 4.40 12/01/2010 76,477
500,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A 4.25 10/01/2017 500,370
890,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BELL TOWER 4.75 07/01/2015 907,738
RESIDENCE PROJECT
230,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY DIVINE SAVIOR
HEALTHCARE (HEALTHCARE FACILITIES REVENUE LOC) 4.70 05/01/2008 234,952
19
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 124,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD
CLINIC SERIES B 6.25% 02/15/2010 $ 133,412
200,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.00 05/01/2013 200,584
175,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.00 11/01/2013 175,133
200,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.10 05/01/2014 200,834
250,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.10 11/01/2014 250,540
250,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.15 05/01/2015 249,682
5,578,467
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $77,554,594) 78,016,483
------------
SHARES
SHORT-TERM INVESTMENTS - 1.11%
MUTUAL FUND - 1.11%
885,208 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 885,208
------------
TOTAL SHORT-TERM INVESTMENTS (COST $885,208) 885,208
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $78,439,802)* 99.21% $ 78,901,691
OTHER ASSETS AND LIABILITIES, NET 0.79 625,473
------ ------------
TOTAL NET ASSETS 100.00% $ 79,527,164
====== ============
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
+/- 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 $885,208.
* 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 -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 96.76%
ALABAMA - 1.08%
$ 1,865,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTER HEALTH SYSTEM SERIES A1 4.35% 11/15/2028 $ 1,865,727
1,150,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTERS HEALTH SYSTEM SERIES A2 4.35 11/15/2028 1,150,449
1,000,000 JEFFERSON COUNTY AL SERIES A 5.25 01/01/2015 1,077,780
4,093,956
-----------
ALASKA - 0.52%
210,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 5.60 06/01/2009 218,115
770,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 5.70 06/01/2011 802,871
915,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 6.20 06/01/2022 956,166
1,977,152
-----------
ARIZONA - 2.54%
25,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A 5.30 11/15/2008 25,547
30,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A 5.50 11/15/2010 31,005
290,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A 5.38 02/15/2018 291,992
140,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A 6.13 11/15/2022 144,532
75,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A 5.88 02/15/2027 77,751
100,000 ARIZONA HEALTH FACILITIES AUTHORITY PHOENIX CHILDREN'S HOSPITAL SERIES A 6.25 11/15/2029 103,493
1,250,000 MARICOPA COUNTY AZ IDA SAMARITAN HEALTH SERVICES SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 7.00 12/01/2016 1,538,462
1,650,000 MARICOPA COUNTY AZ INDUSTRIAL DEVELOPMENT AUTHORITY SUB CHRISTIAN CARE
APARMENTS SERIES B 6.50 01/01/2036 1,652,904
3,425,000 VERRADO AZ COMMUNITY FACILITIES DISTRICT NUMBER 1 6.00 07/15/2013 3,704,891
2,025,000 YAVAPAI COUNTY AZ IDA 5.45 06/01/2033 2,061,166
9,631,743
-----------
ARKANSAS - 0.89%
3,345,000 CABOT AR SALES & USE TAX 4.60 12/01/2025 3,386,913
-----------
CALIFORNIA - 5.71%
490,000 CATHEDRAL CITY CA IMPROVEMENT BUILDING ACT 1915 LIMITED OBLIGATION COVE
IMPROVEMENT DISTRICT 04-02 4.75 09/02/2018 487,202
1,445,000 FOOTHILL CA EASTERN TRANSPORTATION CORRIDOR AGENCY CAPITAL APPRECIATION
SENIOR LIEN SERIES A 7.05 01/01/2010 1,643,731
5,000,000 FOOTHILL CA EASTERN TRANSPORTATION CORRIDOR AGENCY CAPITAL APPRECIATION
SENIOR LIEN SERIES A^ 4.39 01/01/2019 2,842,800
305,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES 2003 A1 6.63 06/01/2040 336,982
235,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES A3+/- 7.88 06/01/2042 283,561
4,000,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CA SERIES B 5.63 06/01/2038 4,479,800
1,000,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CA TOBACCO SETTLEMENT
ENHANCED ASSET BACKED SERIES B 5.50 06/01/2033 1,111,920
1,305,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATION CA TOBACCO SETTLEMENT
REVENUE SERIES 2003 A1 6.75 06/01/2039 1,466,533
2,090,000 LOS ANGELES CA HFA PEPPERMILL I & II 5.13 04/01/2028 2,115,958
1,000,000 MADERA COUNTY CA VALLEY CHILDREN'S HOSPITAL (HEALTHCARE FACILITIES
REVENUE LOC) 6.50 03/15/2015 1,170,840
1,800,000 PORT HUENEME CA REDEVELOPMENT AGENCY CENTRAL COMMUNITY PROJECT
(TAX INCREMENTAL REVENUE LOC) 5.50 05/01/2014 2,018,142
21
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA (CONTINUED)
$ 1,000,000 ROSEVILLE CA JOINT UNION HIGH SCHOOL DISTRICT SERIES B (PROPERTY TAX
REVENUE LOC)^ 4.28% 08/01/2015 $ 666,530
3,000,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE 5.50 03/01/2008 3,028,170
21,652,169
------------
COLORADO - 3.58%
3,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY BROMLEY EAST
PROJECT SERIES A 7.25 09/15/2030 3,493,290
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY COLORADO
LUTHERAN HIGH SCHOOL ASSOCIATION PROJECT SERIES A 7.63 06/01/2034 1,060,360
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY DENVER ARTS
SCHOOL PROJECT 8.00 05/01/2034 1,068,970
1,000,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY HERITAGE
CHRISTIAN SCHOOL SERIES A 7.50 06/01/2034 1,107,700
1,810,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES CHARTER SCHOOL MONTESSORI
EVERGREEN PROJECT 6.50 12/01/2035 1,816,425
5,000,000 E-470 PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION SENIOR LIEN
SERIES B (TOLL ROAD REVENUE LOC)^ 4.42 09/01/2016 3,137,400
2,240,000 NORTHWEST PARKWAY CO PUBLIC HIGHWAY AUTHORITY CAPITAL APPRECIATION
CONVERTIBLE (TOLL ROAD REVENUE LOC) 4.07 06/15/2016 1,900,954
13,585,099
------------
CONNECTICUT - 0.46%
1,500,000 CONNECTICUT TRANSPORTATION INFRASTRUCTURE SERIES B 6.50 10/01/2012 1,750,290
------------
DISTRICT OF COLUMBIA - 1.13%
1,000,000 DISTRICT OF COLUMBIA CAPITAL APPRECIATION - MANDARIN ORIENTAL (TAX
ALLOCATION REVENUE, FIRST SECURITY BANK LOC)^ 4.84 07/01/2020 499,790
1,285,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION 6.50 05/15/2033 1,473,638
1,710,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION 6.75 05/15/2040 1,856,615
270,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION 5.38 05/15/2010 279,599
175,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION 5.70 05/15/2012 184,336
4,293,978
------------
FLORIDA - 2.56%
1,000,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING
FUNDING (HEALTHCARE FACILITIES REVENUE LOC)SS.+/- 4.44 12/01/2028 1,000,000
420,000 BROWARD COUNTY FL WHEELABRATOR SERIES A 4.50 06/01/2011 430,710
315,000 GULF BREEZE FL MIAMI BEACH LOCAL GOVERNMENT SERIES B (OTHER REVENUE
LOC)+/- 4.75 12/01/2015 330,740
1,400,000 MADISON COUNTY FL FIRST MORTGAGE TWIB OAKS PROJECT SERIES A 6.00 07/01/2025 1,384,306
1,835,000 MIAMI BEACH FL HEALTH FACILITIES AUTHORITY MOUNT SINAI MEDICAL CENTER 6.00 11/15/2007 1,891,775
1,500,000 MIAMI FL DADE COUNTY HOUSING FINANCING AUTHORITY SERIES A1 5.30 10/01/2036 1,568,940
1,455,000 PALM BEACH COUNTY FL G STAR SCHOOL OF ARTS SERIES A 6.75 05/15/2035 1,466,902
430,000 PINELLAS COUNTY FL HFA MULTI COUNTY PROGRAM SUBSERIES A4 5.50 03/01/2036 429,768
1,235,000 PINELLAS COUNTY FL HOUSING FINANCING AUTHORITY JAMES PARK
APARTMENTS+/- 4.63 02/01/2036 1,216,364
9,719,505
------------
GEORGIA - 11.08%
4,930,000 ATLANTA GA RAPID TRANSIT AUTHORITY SERIES P (SALES TAX REVENUE LOC) 6.25 07/01/2020 5,861,721
3,000,000 ATLANTA GA SERIES A (AIRPORT REVENUE LOC) 5.50 01/01/2010 3,258,960
3,070,000 ATLANTA GA SERIES C (AIRPORT REVENUE LOC) 6.25 01/01/2014 3,358,887
170,000 ATLANTA URBAN RESIDENTIAL FINANCE AUTHORITY EVERGREEN VILLAGE ESTATES
PROJECT SERIES A 5.88 05/01/2007 166,886
1,675,000 ATLANTA URBAN RESIDENTIAL FINANCE AUTHORITY EVERGREEN VILLAGE ESTATES
PROJECT SERIES A 6.38 05/01/2017 1,497,299
2,965,000 ATLANTA URBAN RESIDENTIAL FINANCE AUTHORITY EVERGREEN VILLAGE ESTATES
PROJECT SERIES A 6.50 05/01/2027 2,512,927
2,995,000 COLQUITT COUNTY GA DEVELOPMENT AUTHORITY SERIES A^ 4.63 12/01/2021 1,445,237
22
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
GEORGIA (CONTINUED)
$ 4,595,000 COLQUITT COUNTY GA DEVELOPMENT AUTHORITY SUBSERIES C
(HEALTHCARE FACILITIES REVENUE LOC)^ 4.63% 12/01/2021 $ 2,217,317
6,435,000 EAST POINT GA HOUSING AUTHORITY BOND LAUREL RIDGE WASHINGTON ROAD
APARTMENTS+/- 5.00 10/01/2032 6,478,951
5,000 GEORGIA MUNICIPAL ELECTRIC AUTHORITY POWER REVENUE SERIES Y MBIA
INSURED (ELECTRIC REVENUE LOC) 6.50 01/01/2017 5,943
450,000 GEORGIA MUNICIPAL ELECTRIC AUTHORITY POWER REVENUE SERIES Y MBIA
INSURED (ELECTRIC REVENUE LOC) 6.50 01/01/2017 534,582
4,300,000 GEORGIA STATE SERIES B 6.25 03/01/2011 4,868,417
1,000,000 GEORGIA STATE SERIES E 6.75 12/01/2012 1,191,720
2,000,000 MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA PROJECT ONE SUBSERIES A
(UTILITIES REVENUE LOC) 5.25 01/01/2014 2,198,500
1,060,000 THOMASVILLE GA HOUSING AUTHORITY HOUSING WOOD VY APARTMENTS PROJECT
SERIES A+/- 5.10 12/01/2035 1,080,288
11,000,000 WASHINGTON GA WILKES PAYROLL DEVELOPMENT AUTHORITY SUBSERIES C
(HEALTHCARE FACILITIES REVENUE LOC)^ 4.63 12/01/2021 5,308,050
41,985,685
------------
ILLINOIS - 3.99%
2,740,000 AURORA IL SERIES B 5.85 12/30/2013 2,765,235
1,000,000 BOLINGBROOK IL SPECIAL SERVICE AREA #1 - FOREST CITY PROJECT 5.77 03/01/2027 918,080
500,000 CHICAGO IL HOUSING AUTHORITY 5.38 07/01/2013 540,805
455,000 GRUNDY COUNTY IL SCHOOL DISTRICT #054 MORRIS 8.75 12/01/2017 567,749
545,000 GRUNDY COUNTY IL SCHOOL DISTRICT #054 MORRIS 8.70 12/01/2018 682,591
570,000 GRUNDY COUNTY IL SCHOOL DISTRICT #054 MORRIS 8.50 12/01/2019 711,816
1,670,000 ILLINOIS FINANCE AUTHORITY ADVENTIST HEALTH SYSTEM SUNBELT OBLIGATED
GROUP 5.50 11/15/2029 1,803,316
390,000 ILLINOIS FINANCE AUTHORITY CHICAGO CHARTER SCHOOL FOUNDATION PROJECT
SERIES A 5.25 12/01/2012 395,628
2,330,000 ILLINOIS FINANCE AUTHORITY CHICAGO CHARTER SCHOOL FOUNDATION PROJECT
SERIES A 6.13 12/01/2022 2,473,248
450,000 ILLINOIS HEALTH FACILITIES AUTHORITY CONDELL MEDICAL CENTER 7.00 05/15/2022 497,331
1,290,000 ILLINOIS HOUSING DEVELOPMENT AUTHORITY MFHR (HOUSING REVENUE LOC) 5.00 07/01/2025 1,294,244
535,000 WILL COUNTY IL COMMUNITY SCHOOL DISTRICT #161 SUMMIT HILL^ 4.19 01/01/2015 368,321
500,000 WILL COUNTY IL COMMUNITY SCHOOL DISTRICT #161 SUMMIT HILL^ 4.29 01/01/2015 341,200
1,750,000 YORKVILLE IL UNITED CITY SPECIAL SVCAREA #2004-107 RAINTREE VILLAGE
II PROJECT 6.25 03/01/2035 1,760,990
15,120,554
------------
INDIANA - 0.26%
1,000,000 INDIANAPOLIS IN CAMBRIDGE STATION APARTMENTS II 4.85 01/01/2021 1,004,090
------------
KANSAS - 1.72%
470,000 KANSAS DEVELOPMENT FINANCE AUTHORITY HEALTH FACILITIES HARTFORD
(HEALTHCARE FACILITIES REVENUE LOC) 6.13 04/01/2012 521,855
965,000 SEDGWICK & SHAWNEE COUNTIES KS MORTGAGE BACKED SECURITIES SERIES A5
(HOUSING REVENUE LOC)+/- 5.70 12/01/2036 1,030,842
1,035,000 SEDGWICK & SHAWNEE COUNTIES KS SINGLE FAMILY REVENUE GOVERNMENT
NATIONAL MARTGAGE ASSOCIATION (SINGLE FAMILY HOUSING REVENUE LOC)+/- 6.50 12/01/2022 1,064,259
3,800,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION
SALES TAX SECOND LIEN AREA B 4.75 12/01/2016 3,899,712
6,516,668
------------
KENTUCKY - 0.50%
1,745,000 KENTUCKY ECONOMIC DEVELOPMENT FINNANCING AUTHORITY CHRISTIAN CARE
COMMUNITIES PROJECTS 5.38 11/20/2035 1,878,126
------------
23
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
LOUISIANA - 2.73%
$ 6,550,000 CLAIBORNE PARISH LA LAW ENFORCEMENT DISTRICT CLAIBORNE CORRECTIONAL
FACILITIES PROJECT 6.25% 03/01/2019 $ 6,767,198
1,000,000 JEFFERSON PARISH LA HOSPITAL SERVICE DISTRICT NUMBER 2
(HEALTHCARE FACILITIES REVENUE, FIRST SECURITY BANK LOC) 5.00 07/01/2018 1,030,820
1,000,000 LOUISIANA PUBLIC FACILITIES AUTHORITY - FRANCISCAN MISSIONARIES
SERIES B SS.+/- 3.75 07/01/2030 1,000,000
1,150,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES A 5.00 09/01/2007 1,155,336
405,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES C 5.00 09/01/2007 406,879
10,360,233
------------
MARYLAND - 0.28%
1,000,000 MARYLAND STATE INDUSTRIAL DEVELOPMENT FINANCING AUTHORITY OUR LADY OF
GOOD COUNSEL 6.00 05/01/2035 1,043,460
------------
MASSACHUSETTS - 2.86%
3,000,000 COMMONWEALTH OF MASSACHUSETTS CONSUMER LOAN SERIES B 5.25 06/01/2010 3,220,410
3,385,000 MASSACHUSETTS BAY TRANSPORTATION AUTHORITY GENERAL TRANSPORTATION
SYSTEM SERIES A (TRANSPORTATION REVENUE LOC) 7.00 03/01/2014 4,054,722
3,000,000 MASSACHUSETTS STATE WATER POLLUTION ABATEMENT MWRA PROGRAM
SUBSERIES A 6.00 08/01/2017 3,557,400
10,832,532
------------
MICHIGAN - 1.16%
1,500,000 CHARYL STOCKWELL ACADEMY MI CERTIFICATE PARTICIPATION 5.90 10/01/2035 1,515,150
1,350,000 DICKINSON COUNTY MI (HEALTHCARE FACILITIES REVENUE LOC) 5.50 11/01/2013 1,429,907
1,500,000 SUMMIT ACADEMY NORTH MI PUBLIC SCHOOL ACADEMY 5.50 11/01/2035 1,440,480
4,385,537
------------
MINNESOTA - 0.60%
700,000 ST. PAUL MN PORT AUTHORITY LEASE REVENUE 5.00 05/01/2010 706,958
1,500,000 WOODBURY MN MATH SCIENCE ACADEMY PROJECT SERIES A 7.50 12/01/2031 1,560,090
2,267,048
------------
MISSOURI - 3.09%
900,000 CAPE GIRARDEAU COUNTY MO BUILDING CORPORATION REORGANIZED SCHOOL
DISTRICT R02 JACKSON R2 SCHOOL DISTRICT HIGH SCHOOL PROJECT 4.35 03/01/2020 905,697
1,260,000 DESLOGE MO US HIGHWAY 67 STATE STREET REDEVELOPMENT PROJECT 5.20 04/15/2020 1,265,431
3,500,000 LAKE OF THE OZARKS MO COMMUNITY BRIDGE CORPORATION 5.25 12/01/2014 3,528,490
2,000,000 MISSOURI STATE ENVIRONMENTAL IMPROVEMENT & ENERGY RESOURCES AUTHORITY
REVOLVING FUND PROGRAM SERIES B 5.50 07/01/2016 2,261,640
3,700,000 ST. CHARLES COUNTY MO IDA HOUSING VANDERBILT APARTMENTS+/- 5.00 02/01/2029 3,749,913
11,711,171
------------
NEW HAMPSHIRE - 2.00%
5,140,000 MANCHESTER NH HOUSING & RDA SERIES B^ 5.02 01/01/2017 2,978,835
430,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.57 01/01/2019 210,489
1,200,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.66 01/01/2025 415,488
1,465,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.69 01/01/2026 476,916
2,040,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.72 01/01/2027 624,036
24
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW HAMPSHIRE (CONTINUED)
$ 2,195,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY CAPITAL APPRECIATION
SERIES B (OTHER REVENUE LOC)^ 5.72% 01/01/2028 $ 634,618
1,135,000 NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY SOUTH NEW
HAMPSHIRE MEDICAL CENTER 5.00 10/01/2014 1,204,281
1,000,000 NEW HAMPSHIRE HEALTH & FACILITIES AUTHORITY SOUTH NEW HAMPSHIRE
MEDICAL CENTER-A 5.00 10/01/2018 1,045,350
7,590,013
------------
NEW JERSEY - 3.11%
750,000 BAYONNE NJ BID ANTICIPATION NOTES 5.00 10/27/2006 753,960
1,000,000 BAYONNE NJ TAX ANTICIPATION NOTES SERIES A 5.00 10/13/2006 1,004,980
2,000,000 MIDDLESEX COUNTY NJ IMPROVEMENT AUTHORITY HELDRICH CENTER HOTEL
SUBSERIES B 6.25 01/01/2037 1,989,140
1,000,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CIGARETTE TAX 5.75 06/15/2029 1,057,550
2,000,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CIGARETTE TAX 5.75 06/15/2034 2,105,200
1,475,000 NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY CAPITAL HEALTH
SYSTEM OBLIGATED GROUP 5.13 07/01/2012 1,517,318
1,000,000 NEW JERSEY TRANSPORTATION TRUST FUND AUTHORITY TRANSPORTATION SYSTEM
SERIES B (TRANSPORTATION REVENUE LOC) 6.00 12/15/2011 1,129,030
275,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 5.50 06/01/2011 285,541
1,455,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 4.38 06/01/2019 1,457,692
410,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 7.00 06/01/2041 467,371
11,767,782
------------
NEW YORK - 10.96%
1,000,000 NASSAU COUNTY NY COMB SEWER DISTRICTS SERIES G (PROPERTY TAX REVENUE
LOC) 5.45 01/15/2015 1,120,940
260,000 NASSAU COUNTY NY IDA 6.88 07/01/2010 274,565
2,000,000 NEW YORK NY IDA NEW YORK INSTITUTION OF TECHNOLOGY PROJECT
(COLLEGE & UNIVERSITY REVENUE LOC) 5.25 03/01/2018 2,167,340
1,230,000 NEW YORK NY IDA SPECIAL NEEDS POOLED SERIES A1 6.88 07/01/2010 1,264,514
2,025,000 NEW YORK NY MUNICIPAL WATER FINANCE AUTHORITY PREREFUNDED SERIES B 6.00 06/15/2010 2,257,956
1,500,000 NEW YORK NY SERIES B 5.75 08/01/2015 1,654,170
1,000,000 NEW YORK NY SERIES C 5.50 09/15/2019 1,085,470
3,005,000 NEW YORK NY SERIES O 5.00 06/01/2022 3,168,803
350,000 NEW YORK NY TRANSITIONAL FINANCE AUTHORITY FUTURE TAX+/- 5.25 02/01/2029 373,758
1,000,000 NEW YORK NY TRANSITIONAL FINANCE AUTHORITY FUTURE TAX SECURED
SERIES C 5.88 11/01/2017 1,107,720
1,000,000 NEW YORK STATE DORMITORY AUTHORITY AIDS LONG TERM HEALTH CARE
FACILITIES 5.00 11/01/2014 1,054,900
1,000,000 NEW YORK STATE DORMITORY AUTHORITY CITY UNIVERSITY SYSTEM SERIES A
(OTHER REVENUE LOC) 5.63 07/01/2016 1,125,360
2,800,000 NEW YORK STATE DORMITORY AUTHORITY MENTAL HEALTH SERVICES FACILITIES
IMPROVEMENT SERIES B 6.00 08/15/2016 3,227,196
1,000,000 NEW YORK STATE DORMITORY AUTHORITY STATE UNIVERSITY ACTIVITIES OF
DAILY LIVING FACILITIES SERIES C (LEASE REVENUE LOC) 5.75 05/15/2016 1,150,940
2,500,000 NEW YORK STATE DORMITORY AUTHORITY STATE UNIVERSITY EDUCATIONAL
FACILITIES SERIES A 5.50 05/15/2019 2,818,200
5,350,000 NEW YORK STATE LOCAL GOVERNMENT ASSISTANCE CORPORATION SERIES E
(SALES TAX REVENUE LOC) 6.00 04/01/2014 6,178,768
200,000 NEW YORK STATE URBAN DEVELOPMENT CORPORATION SERIES C 4.00 01/01/2020 201,172
3,500,000 NIAGRA COUNTY NY INDUSTRIAL DEVELOPMENT AGENCY - SERIES A+/- 5.45 11/15/2026 3,682,280
1,710,000 SCHENECTADY NY BOARD ANTICIPATION NOTES 5.25 05/26/2006 1,706,580
25
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW YORK (CONTINUED)
$ 1,000,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1 5.25% 06/01/2014 $ 1,053,270
3,500,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES C1 5.50 06/01/2015 3,750,145
1,000,000 TOMPKINS COUNTY NY IDA CIVIC FACILITIES CORNELL UNIVERSITY LAKE
(LEASE REVENUE LOC) 5.63 07/01/2010 1,100,320
41,524,367
------------
NORTH CAROLINA - 1.04%
2,000,000 NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY SERIES F 5.50 01/01/2016 2,150,060
1,750,000 NORTH CAROLINA MEDICAL CARE COMMISSION ARC PROJECTS SERIES A 5.80 10/01/2034 1,807,733
3,957,793
------------
NORTH DAKOTA - 0.40%
1,515,000 THREE AFFILIATED TRIBES OF THE FORT BERTHOLD RESERVATION ND
(RECREATIONAL FACILITIES REVENUE) 6.30 11/15/2010 1,513,349
------------
OHIO - 2.22%
3,800,000 MEDINA COUNTY OH CAMELOT PLACE LIMITED SERIES A 8.38 10/01/2023 3,830,096
2,500,000 MIAMI COUNTY OH UPPER VALLEY MEDICAL CENTER SERIES A 6.25 05/15/2016 2,567,650
2,010,000 MONTGOMERY COUNTY OH CHEVY CHASE APARTMENTS 4.95 11/01/2035 2,025,437
8,423,183
------------
OKLAHOMA - 0.65%
700,000 HINTON OK HINTON PUBLIC SCHOOLS PROJECT 4.38 09/01/2013 696,584
820,000 OKLAHOMA HOUSING FINANCE AGENCY SINGLE FAMILY REVENUE BOND 6.80 09/01/2026 843,001
885,000 OKLAHOMA HOUSING FUNDING AGENCY SINGLE FAMILY REVENUE BOND 6.55 03/01/2029 913,240
2,452,825
------------
OREGON - 0.48%
875,000 KLAMATH FALLS OR INTER COMMUNITY MERLE WEST MEDICAL CENTER PROJECT 5.80 09/01/2014 936,276
825,000 KLAMATH FALLS OR INTER COMMUNITY MERLE WEST MEDICAL CENTER PROJECT 5.90 09/01/2015 885,935
1,822,211
------------
OTHER - 0.53%
1,000,000 GMAC MUNICIPAL MORTGAGE TRUST++ 5.30 10/31/2039 1,020,740
1,000,000 GMAC MUNICIPAL MORTGAGE TRUST++ 4.80 10/31/2040 991,050
2,011,790
------------
PENNSYLVANIA - 3.57%
2,235,000 ALLEGHENY COUNTY PA IDA PROPEL SCHOOLS HOMESTEAD PROJECT SERIES A 7.50 12/15/2029 2,317,360
1,125,000 ALLEGHENY COUNTY PA RDA PITTSBURGH MILLS PROJECT 5.10 07/01/2014 1,159,425
1,520,000 CHESTER COUNTY PA RENAISSANCE ACADEMY PROJECT SERIES A 5.63 10/01/2015 1,529,439
2,000,000 DELAWARE COUNTY PA INDUSTRIAL DEVELOPMENT AUTHORITY WATER FACILITIES
AQUA PA INCORPORATED PROJECT SERIES C 5.00 02/01/2035 2,047,600
925,000 DELAWARE VALLEY PA REGIONAL FINANCIAL AUTHORITY LOCAL GOVERNMENT
SERIES C 7.75 07/01/2027 1,310,568
500,000 LEHIGH COUNTY PA GENERAL PURPOSE AUTHORITY KIDSPEACE OBLIGATED GROUP 5.80 11/01/2012 490,030
1,500,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY COLVER PROJECT
SERIES F 4.63 12/01/2018 1,521,900
1,880,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY ALLEGHENY
DELAWARE VALLEY SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.70 11/15/2011 2,058,957
26
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PENNSYLVANIA (CONTINUED)
$ 2,000,000 PITTSBURGH PA REDEVELOPMENT AGENCY LOS MEDANOS COMMUNITY DEVELOPMENT
PROJECT (PROPERTY TAX REVENUE LOC)^ 4.58% 08/01/2019 $ 1,081,040
13,516,319
------------
PUERTO RICO - 2.82%
1,000,000 COMMONWEALTH OF PUERTO RICO (FUEL SALES TAX REVENUE LOC) 5.65 07/01/2015 1,140,360
400,000 PUERTO RICO HFA CAPITAL FEDERAL PROGRAM (HOUSING REVENUE LOC) 5.00 12/01/2017 424,176
1,500,000 PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY SERIES B (TOLL ROAD
REVENUE LOC) 5.75 07/01/2019 1,647,705
5,000,000 PUERTO RICO HOUSING FINANCE AUTHORITY CAPITAL FUNDING PROGRAM 5.00 12/01/2015 5,319,950
1,015,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY 5.00 02/01/2010 1,048,119
1,000,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES A 5.50 10/01/2017 1,090,240
10,670,550
------------
SOUTH CAROLINA - 3.21%
1,000,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.67 01/01/2015 465,750
5,000,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.70 01/01/2027 835,950
400,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.70 01/01/2028 61,416
10,350,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.60 01/01/2032 1,160,339
2,500,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.20 01/01/2038 191,275
3,060,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B
(TOLL ROAD REVENUE LOC)^ 8.68 01/01/2014 1,550,257
1,650,000 GREENVILLE COUNTY SC SCHOOL DISTRICT INSTALLMENT BUILDING EQUITY 6.00 12/01/2012 1,888,210
1,350,000 GREENVILLE COUNTY SC SCHOOL DISTRICT INSTALLMENT BUILDING EQUITY 6.00 12/01/2021 1,519,398
1,000,000 SOUTH CAROLINA EDUCATIONAL FACILITIES AUTHORITY BENEDICT COLLEGE
(COLLEGE & UNIVERSITY REVENUE LOC) 5.75 07/01/2017 1,097,260
2,400,000 SOUTH CAROLINA STATE PORTS AUTHORITY 7.80 07/01/2009 2,508,408
900,000 YORK SC BOWATER INCORPORATED PROJECT 7.63 03/01/2006 904,410
12,182,673
------------
SOUTH DAKOTA - 3.08%
5,400,000 GRANT COUNTY SD OTTER TAIL POWER COMPANY PROJECT SS.+/- 3.91 12/01/2012 5,400,000
2,000,000 LOWER BRULE SIOUX TRIBE SD SERIES B REFUNDING BOND 5.50 05/01/2019 1,977,520
555,000 SISSETON-WAHPETON SD SIOUX TRIBE LAKE TRAVERSE RESERVATION 7.00 11/01/2013 589,809
1,290,000 SISSETON-WAHPETON SD SIOUX TRIBE LAKE TRAVERSE RESERVATION 7.00 11/01/2023 1,365,710
275,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A 4.75 04/01/2010 280,335
285,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A 5.00 04/01/2011 293,462
300,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A 5.25 04/01/2012 312,705
320,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM ANGUS INCORPORATED PROJECT SERIES A 5.25 04/01/2013 333,482
420,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM MCELEEG PROJECT SERIES B 5.00 04/01/2014 428,219
685,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN
PROGRAM MIDSTATES PRINT SERIES A 5.50 04/01/2018 709,290
11,690,532
------------
27
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TENNESSEE - 0.67%
$ 2,500,000 MEMPHIS TN HEALTH EDUCATIONAL & HOUSING FACILITY BOARD
PRESCOTT PLACE APARTMENTS PROJECT+/- 5.13% 05/01/2038 $ 2,535,950
------------
TEXAS - 4.90%
1,500,000 ARLINGTON TX SPECIAL OBLIGATION DALLAS COWBOYS SERIES A 5.00 08/15/2034 1,591,125
1,080,000 BRAZOS RIVER AUTHORITY TX TXU ELECTRIC COMPANY PROJECT SERIES C+/- 5.75 05/01/2036 1,138,687
1,220,000 BRAZOS TX RIVER AUTHORITY 5.65 04/01/2023 1,312,000
1,750,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY
SERIES A SS.+/- 5.40 04/01/2030 1,762,320
1,200,000 GARZA COUNTY TX PUBLIC FACILITIES CORPORATION 5.25 10/01/2016 1,243,320
1,465,000 GARZA COUNTY TX PUBLIC FACILITIES CORPORATION 5.25 10/01/2017 1,515,323
595,000 GARZA COUNTY TX PUBLIC FACILITIES CORPORATION 5.50 10/01/2018 627,267
3,000,000 LA JOYA TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC) 5.50 02/15/2025 3,233,250
1,350,000 LOWER COLORADO RIVER AUTHORITY TX SAMSUNG AUSTIN SEMICONDUCTOR 6.95 04/01/2030 1,511,690
500,000 RED RIVER TX HOECHST CELANESE CORPORATION PROJECT 5.20 05/01/2007 501,315
1,055,000 SAN ANTONIO TX SUB LIEN PASSENGER FACILITY 5.75 07/01/2017 1,145,962
1,000,000 TEXAS WATER DEVELOPMENT BOARD STATE REVOLVING FUND SENIOR LIEN
SERIES A 4.75 07/15/2020 1,014,700
1,735,000 TRAVIS COUNTY TX LIMITED TAX 5.50 03/01/2016 1,959,110
18,556,069
------------
UTAH - 0.09%
322,000 EAGLE MOUNTAIN UT 5.90 12/15/2007 322,167
WASHINGTON - 0.84%
1,200,000 OKANOGAN COUNTY WA IRRIGATION DISTRICT 4.75 12/01/2013 1,230,924
1,215,000 TOBACCO SETTLEMENT AUTHORITY WASHINGTON ASSET BACKED 6.50 06/01/2026 1,311,143
615,000 WASHINGTON STATE HOUSING FINANCE COMMISSION CRISTA MINISTRIES
PROJECT A 5.35 07/01/2014 625,670
3,167,737
------------
WEST VIRGINIA - 0.33%
215,000 OHIO COUNTY WV FORT HENRY CENTER FINANCING DISTRICT SERIES A 5.00 06/01/2015 221,871
1,000,000 OHIO COUNTY WV FORT HENRY CENTER FINANCING DISTRICT SERIES A 5.63 06/01/2034 1,030,380
1,252,251
------------
WISCONSIN - 9.12%
8,080,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION WISCONSIN
ASSET BACKED 6.00 06/01/2017 8,491,514
540,000 CUDATY WI COMMUNITY DEVELOPMENT AUTHORITY 4.55 06/01/2019 548,894
445,000 GREEN BAY WI HOUSING AUTHORITY HOUSING REVENUE UNIVERSITY VILLAGE
HOUSING INCORPORATED 5.00 04/01/2016 475,910
2,000,000 MILWAUKEE WI REDEVELOPMENT AUTHORITY REVENUE SCIENCE EDUCATION
CONSORTIUM PROJECT SERIES A 5.75 08/01/2035 2,007,860
520,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT 5.35 12/01/2010 530,020
390,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT 5.50 12/01/2011 398,405
2,800,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2016 3,167,248
4,000,000 WAUKESHA COUNTY WI HOUSING AUTHORITY THE ARBORETUM PROJECT+/- 5.00 12/01/2027 4,042,040
1,125,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A 4.50 10/01/2019 1,138,230
1,600,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A 5.25 10/01/2020 1,736,528
645,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A 4.70 10/01/2021 658,629
205,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY AGNESIAN
HEALTHCARE INCORPORATED 5.10 07/01/2008 211,576
500,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BLOOD CENTER
SOUTHEASTERN PROJECT 5.75 06/01/2034 530,390
866,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD
CLINIC SERIES B 6.25 02/15/2010 931,729
28
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 1,650,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.70% 11/01/2025 $ 1,658,580
7,985,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.90 11/01/2035 8,032,032
34,559,585
------------
TOTAL MUNICIPAL BONDS & NOTES (COST $351,796,675) 366,713,055
------------
SHORT-TERM INVESTMENTS - 2.54%
COMMERCIAL PAPER - 1.45%
4,000,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.40 01/24/2006 4,000,000
1,500,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.55 01/26/2006 1,500,000
5,500,000
------------
SHARES
MUTUAL FUND - 1.09%
4,128,067 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 4,128,067
------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,628,067) 9,628,067
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $361,424,741)* 99.30% $376,341,122
OTHER ASSETS AND LIABILITIES, NET 0.70 2,657,309
------ ------------
TOTAL NET ASSETS 100.00% $378,998,431
------
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
+/- VARIABLE RATE INVESTMENTS.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
~ 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 $4,128,067.
* 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 MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 97.90%
ALABAMA - 1.60%
$ 75,000 ALABAMA 21ST CENTURY AUTHORITY 5.00% 12/01/2007 $ 76,439
330,000 BIRMINGHAM AL BAPTIST MEDICAL CENTERS SPECIAL CARE FACILITIES FINANCING
AUTHORITY BAPTIST HEALTH SYSTEM SERIES Css.+/- 4.35 11/15/2016 331,518
1,700,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTER HEALTH SYSTEM SERIES A1 4.35 11/15/2028 1,700,663
4,925,000 BIRMINGHAM AL SPECIAL CARE FACILITIES FINANCING AUTHORITY BAPTIST
MEDICAL CENTERS HEALTH SYSTEM SERIES A2 4.35 11/15/2028 4,926,921
2,465,000 JEFFERSON COUNTY AL 5.00 01/01/2008 2,534,464
1,000,000 MOBILE AL 6.20 02/15/2007 1,030,900
10,600,905
-----------
ALASKA - 0.72%
460,000 ALASKA INDUSTRIAL DEVELOPMENT & EXPORT AUTHORITY (UTILITIES REVENUE LOC) 6.00 01/01/2015 492,301
255,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 4.50 06/01/2008 256,326
1,300,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 5.60 06/01/2009 1,350,232
1,675,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 5.60 06/01/2010 1,750,074
900,000 NORTHERN TOBACCO SECURITIZATION CORPORATION AK 6.20 06/01/2022 940,491
4,789,424
-----------
ARIZONA - 2.52%
2,150,000 ARIZONA EDUCATIONAL LOAN MARKETING CORPORATION JUNIOR SUBORDINATE SERIES 6.30 12/01/2008 2,211,490
135,000 COOLIDGE AZ UNIVERSITY SCHOOL DISTRICT 21 3.65 04/01/2008 133,585
100,000 COOLIDGE AZ UNIVERSITY SCHOOL DISTRICT 21 3.75 10/01/2008 98,888
350,000 COOLIDGE AZ UNIVERSITY SCHOOL DISTRICT 21 3.95 04/01/2009 347,032
160,000 COOLIDGE AZ UNIVERSITY SCHOOL DISTRICT 21 4.00 10/01/2009 158,618
315,000 COOLIDGE AZ UNIVERSITY SCHOOL DISTRICT 21 4.10 04/01/2010 312,738
600,000 COOLIDGE AZ UNIVERSITY SCHOOL DISTRICT 21 4.15 10/01/2010 595,752
1,215,000 MARICOPA COUNTY AZ IDA CITIZENS UTILITY COMPANY PROJECTss.+/- 4.75 08/01/2020 1,215,340
630,000 PHOENIX AZ INDUSTRIAL DEVELOPMENT AUTHORITY 4.45 12/15/2008 635,613
1,265,000 SANTA CRUZ COUNTY AZ IDAss.+/- 4.75 08/01/2020 1,259,978
2,390,000 TUCSON & PIMA COUNTY AZ INDUSTRIAL DEVELOPMENT AUTHORITIES SINGLE FAMILY
MORTGAGE REVENUE SERIES 1A (SINGLE FAMILY MORTGAGE REVENUE LOC)+/- 5.50 01/01/2035 2,429,746
1,060,000 WATSON ROAD COMMUNITY FACILITIES DISTRICT ARIZONA 4.50 07/01/2007 1,060,223
605,000 WATSON ROAD COMMUNITY FACILITIES DISTRICT ARIZONA 4.60 07/01/2008 605,097
3,335,200 WHITE MOUNTAIN AZ APACHE TRIBE FORT APACHE INDIAN RESERVATION FORT
APACHE TIMBER EQUIPMENT LEASE 6.25 03/04/2012 3,453,866
2,105,000 YAVAPAI COUNTY AZ IDA 5.45 06/01/2033 2,142,595
16,660,561
-----------
ARKANSAS - 0.45%
420,000 GARLAND COUNTY AR FACILITIES BOARD 3.50 10/01/2006 419,148
500,000 GARLAND COUNTY AR FACILITIES BOARD 4.20 10/01/2009 497,230
495,000 GARLAND COUNTY AR FACILITIES BOARD 4.30 10/01/2010 491,401
575,000 GARLAND COUNTY AR FACILITIES BOARD 4.40 10/01/2011 569,497
505,000 GARLAND COUNTY AR FACILITIES BOARD 4.50 10/01/2012 499,470
510,000 GARLAND COUNTY AR FACILITIES BOARD HOT SPRINGS VILLAGE 3.75 10/01/2007 508,353
2,985,099
-----------
30
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
CALIFORNIA - 3.48%
$ 350,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS CA ARCHSTONE REDWOOD
SERIES Ass.+/- 5.30% 10/01/2008 $ 362,856
500,000 ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS SAN DIEGO CA HOSPITAL
ASSOCIATION SERIES C 4.00 03/01/2008 503,235
500,000 AGUA CALIENTE BAND OF CAHUILLA INDIANS CA 4.00 07/01/2006 501,655
1,775,000 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY SERIES A (HOUSING
REVENUE LOC)+/- 6.63 06/01/2033 1,794,010
250,000 CALIFORNIA STATE DWR SERIES A 5.50 05/01/2007 256,878
4,500,000 CALIFORNIA STATEWIDE CDA CERTIFICATE RETIREMENT HOUSING FOUNDATIONss.+/- 4.30 12/01/2028 4,500,000
675,000 CALIFORNIA STATEWIDE CDA IRVINE APARTMENT COMMUNITIES SERIES A4ss.+/- 5.25 05/15/2025 697,963
750,000 GOLDEN STATE CA TOBACCO SECURITIZATION CORPORATION SERIES B 5.50 06/01/2019 773,100
1,476,876 PASADENA CA 4.50 12/19/2006 1,477,674
133,300 PASADENA CA 5.27 12/19/2006 133,300
10,000,000 SAN FRANCISCO CA CITY & COUNTY AIRPORTS COMMUNITY INTERNATIONAL
AIRPORT REVENUE SECOND SERIES 31A XLCA INSURED (AIRPORT REVENUE LOC)ss.+/- 2.80 05/01/2025 10,000,000
320,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE 5.00 03/01/2006 320,211
1,650,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE 5.50 03/01/2008 1,665,493
22,986,375
-----------
COLORADO - 4.12%
1,565,000 ADONEA METROPOLITAN DISTRICT # 2 COLORADO REVENUE 4.38 12/01/2015 1,547,331
12,750,000 AURORA COLORADO MULTIFAMILY REVENUE+/- 4.25 12/20/2040 12,757,395
1,155,000 BEACON POINT CO 4.38 12/01/2015 1,152,482
460,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY CHARTER SCHOOL
DENVER ARTS SCHOOL PROJECT 7.00 05/01/2011 476,661
1,585,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY DENVER ACADEMY
SERIES A 5.00 05/01/2008 1,593,464
1,270,000 COLORADO EDUCATIONAL & CULTURAL FACILITIES AUTHORITY
LUTHERAN HIGH SCHOOL ASSOCIATION PROJECT A 7.00 06/01/2012 1,299,464
20,000 COLORADO HEALTH FACILITIES AUTHORITY STEAMBOAT SPRINGS HEALTH PROJECT 4.90 09/15/2007 20,034
1,490,000 COLORADO HFA SERIES A2 6.60 05/01/2028 1,502,903
1,875,000 EL PASO COUNTY CO SINGLE FAMILY MORTGAGE REVENUE
(SINGLE FAMILY MORTGAGE REVENUE LOC)+/- 6.20 11/01/2032 1,910,081
835,000 GARFIELD COUNTY CO VALLEY VIEW HOSPITAL ASSOCIATION PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 4.00 05/15/2009 842,457
1,000,000 HIGH PLAINS CO METROPOLITAN DISTRICT 4.38 12/01/2015 997,820
300,000 HIGHLANDS COUNTY RANCH METROPOLITAN DISTRICT # 3 SERIES A
(PROPERTY TAX REVENUE LOC) 5.00 12/01/2006 303,792
2,585,000 SAND CREEK METROPOLITAN DISTRICT COLORADO 6.63 12/01/2017 2,815,013
27,218,897
-----------
CONNECTICUT - 0.37%
1,020,000 CONNECTICUT STATE HEALTH & EDUCATIONAL FACILITY AUTHORITY NEW
OPPORTUNITIES FOR WATERBURY SERIES A (LEASE REVENUE LOC) 6.75 07/01/2013 1,050,549
500,000 MASHANTUCKET CT WESTERN PEQUOT TRIBE SERIES A++ 6.40 09/01/2011 517,900
850,000 MOHEGAN TRIBE CT 5.50 01/01/2006 850,051
2,418,500
-----------
31
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
DISTRICT OF COLUMBIA - 1.63%
$7,400,000 DISTRICT OF COLUMBIAss.+/- 3.10% 06/01/2019 $ 7,400,000
2,710,000 DISTRICT OF COLUMBIA HFA ARTHUR CAPPER SERIES II PROJECT 3.90 01/01/2009 2,695,583
645,000 DISTRICT OF COLUMBIA TOBACCO SETTLEMENT FINANCING CORPORATION 5.38 05/15/2010 667,929
10,763,512
-----------
FLORIDA - 6.18%
2,750,000 BREVARD COUNTY FL HEALTH FACILITIES AUTHORITY RETIREMENT HOUSING
FUNDING (HEALTHCARE FACILITIES REVENUE LOC)ss.+/- 4.44 12/01/2028 2,750,000
218,000 BREVARD COUNTY FL HFA SERIES B (HOUSING REVENUE LOC) 6.50 09/01/2022 218,743
1,280,000 BROWARD COUNTY FL WHEELABRATOR SERIES A 5.00 12/01/2007 1,316,672
1,950,000 BROWARD COUNTY FL WHEELABRATOR SERIES A 5.38 12/01/2009 2,061,345
4,000,000 BROWARD COUNTY FL WHEELABRATOR SERIES A 5.38 12/01/2010 4,199,520
3,375,000 BROWARD COUNTY FL WHEELABRATOR SERIES A 4.50 12/01/2011 3,460,556
1,280,000 DUVAL COUNTY FL HFA LINDSAY TERRACE APARTMENTS PROJECT (HOUSING
REVENUE LOC) 5.00 01/01/2012 1,331,763
1,350,000 ESCAMBIA COUNTY FL HFA MULTICOUNTY SERIES A2 (HOUSING REVENUE LOC) 6.95 04/01/2024 1,377,729
4,155,000 FLORIDA HFA MFHR ANDOVER PROJECT 6.35 05/01/2026 4,326,352
2,485,000 FLORIDA STATE BOARD OF EDUCATION PUBLIC EDUCATION 6.20 05/01/2006 2,490,815
2,000,000 HIGHLAND COUNTY FL HEALTH FACILITIESss.+/- 5.00 11/15/2029 2,076,340
970,000 HILLSBOROUGH COUNTY FL IDA HEALTH FACILITIES PROJECT UNIVERSITY
COMMUNITY HOSPITAL SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.90 08/15/2007 972,241
2,500,000 HILLSBOROUGH COUNTY FL IDA MFHR OAKS AT RIVERVIEW PROJECT SERIES B 2.13 01/01/2007 2,450,175
1,600,000 HILLSBOROUGH COUNTY FL IDA TAMPA ELECTRIC COMPANY 4.25 11/01/2020 1,612,608
455,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGING
SOLUTIONS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.63 10/01/2008 449,872
605,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGING
SOLUTIONS PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.80 10/01/2009 596,857
300,000 MANATEE COUNTY FL HFA SINGLE FAMILY SUBSERIES 2 (HOUSING REVENUE LOC) 6.50 11/01/2023 302,349
595,000 NORTH BROWARD FL HOSPITAL DISTRICT 4.70 01/15/2006 595,196
2,000,000 PINELLAS COUNTY FL HOUSING FINANCING AUTHORITY 5.20 03/01/2036 2,080,740
1,483,000 TAX EXEMPT MUNICIPAL INFRASTRUCTURE TRUST CTFS FL SERIES 2004 C CLASS A 4.05 11/01/2008 1,455,313
745,000 VOLUSIA COUNTY FL EDFA EMBRY RIDDLE AERONAUTICAL
(COLLEGE & UNIVERSITY REVENUE LOC) 2.50 10/15/2006 737,625
4,000,000 VOLUSIA COUNTY FL IDA ACA INSURED (HEALTHCARE FACILITIES REVENUE LOC)ss.+/- 4.30 12/01/2028 4,000,000
40,862,811
-----------
GEORGIA - 2.67%
3,975,000 ATLANTA GA^ 5.78 01/01/2010 3,164,180
1,000,000 ATLANTA GA SERIES A (WATER REVENUE LOC) 5.50 11/01/2011 1,091,460
2,762,620 DALTON GA SCHOOL DISTRICT EQUIPMENT LEASE PURCHASE 4.20 08/01/2013 2,769,664
1,023,391 DALTON GA SCHOOL DISTRICT LEASE NUMBER 996-021203 SERIES B 4.20 08/01/2013 1,026,000
150,000 DE KALB COUNTY GA KINGS BRIDGE SERIES A 8.00 07/01/2006 152,312
2,100,000 FULTON COUNTY GA HOUSING AUTHORITY ORCHARD SPRINGS APARTMENTSss.+/- 3.50 12/01/2037 2,100,000
875,879 GAINESVILLE GA SCHOOL DISTRICT EQUIPMENT LEASE PURCHASE 4.20 03/01/2013 876,238
521,496 PUTNAM COUNTY GA SCHOOL DISTRICT EQUIPMENT LEASE PURCHASE 4.20 03/01/2013 521,595
5,950,000 ROCKDALE COUNTY GA HOSPITAL AUTHORITY ROCKDALE MEDICAL CENTER
INCORPORATED (HOSPITAL REVENUE LOC)ss.+/- 3.50 10/01/2033 5,950,000
17,651,449
-----------
32
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
IDAHO - 0.30%
$2,000,000 POST FALLS ID LOCAL IMPROVEMENT DISTRICT # 2004-1 3.25% 01/15/2007 $ 1,987,600
-----------
ILLINOIS - 3.86%
435,000 ALTON IL ST. ANTHONY'S HEALTH CENTER 5.50 09/01/2006 435,305
3,890,000 AURORA IL SERIES B 4.90 12/30/2011 3,917,113
940,000 AURORA IL TAX INCREMENTAL REVENUE 5.00 12/30/2008 950,425
990,000 AURORA IL TAX INCREMENTAL REVENUE 5.00 12/30/2009 1,002,880
5,910,000 CHICAGO IL TRANSIT AUTHORITY SERIES B DOUGLAS BRANCH RECONSTRUCTION 4.25 06/01/2008 5,914,492
1,000,000 ILLINOIS FINANCE AUTHORITY CITIZENS UTILITY COMPANY PROJECTss.+/- 4.80 08/01/2025 1,000,280
175,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS SERIES A 4.90 07/01/2007 175,301
510,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS SERIES A 5.38 07/01/2009 517,874
200,000 ILLINOIS FINANCE AUTHORITY COMMUNITY REHABILITATION PROVIDERS SERIES A 5.50 07/01/2012 206,690
315,000 ILLINOIS FINANCE AUTHORITY PRIMARY HEALTH CARE CENTERS 4.63 07/01/2008 315,406
100,000 ILLINOIS FINANCE AUTHORITY SECTION 8 GALESBURG TOWERS SERIES A (HOUSING
REVENUE LOC) 5.80 03/01/2006 100,095
1,500,000 ILLINOIS FINANCIAL AUTHORITY REVENUE RESURRECTION HEATH CARE PROJECTss.+/- 3.75 05/15/2015 1,482,555
630,000 ILLINOIS HEALTH FACILITIES AUTHORITY ADVOCATE HEALTH CARE SERIES A 5.30 08/15/2007 647,231
5,500,000 ILLINOIS HEALTH FACILITIES AUTHORITY HOSPITAL SISTERS SERVICES
INCORPORATED SERIES A (HEALTHCARE FACILITIES REVENUE LOC)ss.+/- 4.00 12/01/2022 5,521,505
725,000 ILLINOIS HEALTH FACILITIES AUTHORITY MEMORIAL MEDICAL CENTER SYSTEMS
PROJECT (HEALTHCARE FACILITIES REVENUE LOC) 5.25 10/01/2009 755,573
500,000 ILLINOIS HOUSING DEVELOPMENT AUTHORITY (HOUSING REVENUE, FIRST SECURITY
BANK LOC) 4.38 07/01/2015 500,000
1,625,000 SALEM IL AMERICANA BUILDING PRODUCTSss.+/- 4.31 04/01/2017 1,625,000
395,000 UPPER ILLINOIS RIVER VALLEY DEVELOPMENT AUTHORITY MORRIS HOSPITAL 6.05 12/01/2011 431,075
25,498,800
-----------
INDIANA - 0.61%
3,000,000 ROCKPORT IN INDIANA MICHIGAN POWER COMPANY PROJECT SERIES C+/- 2.63 04/01/2025 2,963,610
1,045,000 SHELBY COUNTY IN JAIL BUILDING CORPORATION 5.40 07/15/2008 1,067,697
4,031,307
-----------
IOWA - 2.59%
750,000 CEDAR RAPIDS IA COTTAGE GROVE SERIES Bss.+/- 4.55 07/01/2028 745,950
2,350,000 CORALVILLE IA SERIES K 5.00 06/01/2007 2,388,376
2,280,000 SHELDON IA REVENUE SIOUX VALLEY HOSPITALS & HEALTH SYSTEMSss.+/- 3.81 11/01/2015 2,280,000
305,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA ASSET BACKED SERIES B 5.50 06/01/2013 334,384
2,335,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA ASSET BACKED SERIES B 5.60 06/01/2035 2,571,325
1,080,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B 5.50 06/01/2011 1,175,191
150,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B 5.50 06/01/2012 164,451
6,590,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B 5.30 06/01/2025 7,160,694
250,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA SERIES B (EXCISE TAX REVENUE LOC) 5.50 06/01/2014 274,085
17,094,456
-----------
KANSAS - 1.84%
1,035,000 MANHATTAN KS TRANSPORTATION DEVELOPMENT DISTRICT 4.15 08/01/2015 1,055,710
4,950,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION
SALES TAX SECOND LIEN AREA B 4.75 12/01/2016 5,079,888
3,500,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION
SALES TAX SECOND LIEN AREA B (OTHER REVENUE, CITIBANK NA LOC) 3.75 12/01/2012 3,507,910
33
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
KANSAS (CONTINUED)
$ 2,500,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION
SALES TAX SECOND LIEN AREA B (OTHER REVENUE, CITIBANK NA LOC) 3.85% 12/01/2013 $ 2,503,825
12,147,333
-----------
KENTUCKY - 0.72%
1,650,000 ASHLAND KY PCR 5.70 11/01/2009 1,777,941
2,750,000 KENTUCKY ECONOMIC DEVELOPMENT CATHOLIC HEALTH INITIATIVES SERIES A 5.75 12/01/2015 2,972,777
4,750,718
-----------
LOUISIANA - 2.32%
1,285,000 JEFFERSON PARISH LA HOME MORTGAGE AUTHORITY (HOUSING REVENUE LOC) 7.55 12/01/2026 1,317,767
655,000 LOUISIANA HOUSING FINANCE AGENCY 7.80 12/01/2026 686,178
1,000,000 LOUISIANA OFFSHORE TERMINAL AUTHORITY LOOP LOC PROJECTss.+/- 3.65 10/01/2021 990,050
3,000,000 LOUISIANA PUBLIC FACILITIES AUTHORITY (HOSPITAL REVENUE)ss.+/- 3.95 07/01/2030 3,000,000
3,000,000 LOUISIANA PUBLIC FACILITIES AUTHORITY WILLIS-KNIGHTON SERIES 1997ss.+/- 3.30 09/01/2027 3,000,000
1,939,000 NEW ORLEANS LA HOME MORTGAGE AUTHORITY SPECIAL OBLIGATIONS 6.25 01/15/2011 2,143,952
570,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT 5.00 09/01/2007 572,645
270,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES A 5.00 09/01/2007 271,253
900,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES D 5.00 09/01/2007 904,176
2,415,000 VILLAGE OF EPPS LA 7.25 06/01/2009 2,462,600
15,348,621
-----------
MASSACHUSETTS - 1.59%
315,000 MASSACHUSETTS DEVELOPMENT FINANCE AGENCY DEVELOPMENTAL DISABILITIES 6.25 06/01/2008 320,550
INCORPORATED
3,000,000 MASSACHUSETTS EDUCATIONAL FUNDING AUTHORITY SERIES Dss.+/- 3.45 01/01/2038 3,000,000
2,750,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY CARITAS CHRISTI
OBLIGATION GROUP SERIES A 5.25 07/01/2006 2,764,905
775,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY EYE & EAR
INFIRMARY SERIES B (HEALTHCARE FACILITIES REVENUE LOC) 5.25 07/01/2009 808,829
500,000 MASSACHUSETTS INDUSTRIAL FINANCE AGENCY OGDEN SERIES A+/- 4.95 12/01/2006 504,660
3,100,000 WORCESTER MA REGIONAL TRANSPORTATION AUTHORITY REVENUE ANTICIPATION NOTES 4.00 06/30/2006 3,102,666
10,501,610
-----------
MICHIGAN - 1.68%
6,500,000 MICHIGAN STATE CERTIFICATES PARTICIPATION SERIES A+/- 5.00 09/01/2031 6,857,825
3,000,000 MICHIGAN STRATEGIC LIMITED OBLIGATION WASTE MANAGEMENTss.+/- 3.15 12/01/2013 2,998,140
450,000 SUMMIT ACADEMY NORTH MICHIGAN PUBLIC SCHOOL ACADEMY 4.75 11/01/2011 444,559
800,000 SUMMIT ACADEMY NORTH MICHIGAN PUBLIC SCHOOL ACADEMY 5.00 11/01/2015 791,384
11,091,908
-----------
MINNESOTA - 1.15%
3,270,000 CANBY MN COMMUNITY HOSPITAL DISTRICT NUMBER 1 SIOUX VALLEY HOSPITALS & 3.81 11/01/2026 3,270,000
HEALTHss.+/-
1,155,000 MINNESOTA STATE HOUSING FINANCE AGENCY SERIES A 5.35 02/01/2008 1,172,833
1,250,000 MINNEAPOLIS & ST PAUL MN HOUSING FINANCE BOARD SERIES A3 5.10 04/01/2027 1,313,525
470,000 MINNESOTA DULUTH APARTMENT LEASE REVENUE SERIES 95C (AIRPORT REVENUE LOC) 6.25 08/01/2014 471,015
1,274,015 MINNESOTA STATE 3.50 06/30/2007 1,268,856
95,000 MINNESOTA STATE HIGHER EDUCATION FACILITIES HAMLINE UNIVERSITY SERIES 4-1 5.65 10/01/2006 96,598
30,000 MINNESOTA STATE HIGHER EDUCATION FACILITIES HAMLINE UNIVERSITY SERIES 4-1 5.65 10/01/2007 30,422
7,623,249
-----------
34
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MISSISSIPPI - 1.05%
$7,000,000 BILOXI MS HOUSING AUTHORITY BAYVIEW PLACE ESTATES (HOUSING REVENUE,
GIC-RABOBANK NEDERLAND LOC) 3.40% 08/01/2007 $ 6,939,100
-----------
MISSOURI - 2.45%
2,430,000 CHESTERFIELD MO REFUNDING & IMPROVEMENTS CHESTERFIELD VALLEY PROJECT 4.50 04/15/2016 2,429,757
135,000 ELLISVILLE MO IDA GAMBRILL GARDENS PROJECT 5.20 06/01/2006 135,644
7,000,000 HAZELWOOD MO IDA BOTTOM ROAD DEVELOPMENT PROJECT 3.88 08/01/2018 6,911,660
375,000 I-470 & 350 TRANSPORTATION DEVELOPMENT DISTRICT MO 5.20 05/01/2006 375,810
2,000,000 LAKE OF THE OZARKS MO COMMUNITY BRIDGE CORPORATION 5.25 12/01/2014 2,016,280
2,000,000 MISSOURI HIGHER EDUCATION LOAN AUTHORITY SERIES Bss.+/- 3.40 05/01/2039 2,000,000
800,000 MISSOURI STATE ENVIRONMENTAL IMPROVEMENT & ENERGY RESOURCES AUTHORITY
AMERICAN CYANAMID COMPANY 5.80 09/01/2009 849,400
170,000 MISSOURI STATE HOUSING DEVELOPMENT COMMUNITY SINGLE FAMILY SERIES B2 6.40 03/01/2029 177,504
265,000 MISSOURI STATE HOUSING DEVELOPMENT COMMUNITY SINGLE FAMILY SERIES D2 6.30 03/01/2029 276,297
630,000 NEVADA MO NEVADA REGIONAL MEDICAL CENTER 6.00 10/01/2007 641,800
400,000 SPRINGFIELD MO LAND CLEARANCE REDEVELOPMENT AUTHORITY UNIVERSITY PLAZA
PROJECT 6.30 10/01/2006 405,600
16,219,752
-----------
MONTANA - 0.34%
1,260,000 BILLINGS MT 2.96 03/01/2006 1,257,404
1,000,000 BILLINGS MT 3.38 03/01/2007 991,070
2,248,474
-----------
NEBRASKA - 0.16%
1,000,000 O'NEILL NE REVENUE ST. ANTHONYS PROJECT 6.25 09/01/2012 1,043,970
-----------
NEVADA - 0.55%
605,000 CLARK COUNTY NV IMPROVEMENT DISTRICT 108 & 124 SERIES B 4.10 02/01/2008 602,701
500,000 WASHOE COUNTY NV 5.00 06/01/2009 525,490
2,500,000 WASHOE COUNTY NV+/- 5.00 03/01/2036 2,530,675
3,658,866
-----------
NEW HAMPSHIRE - 0.69%
1,140,000 MANCHESTER NH HOUSING & REDEVELOPMENT AUTHORITY SERIES A (OTHER REVENUE
LOC) 5.80 01/01/2009 1,194,230
490,000 NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY NEW HAMPSHIRE
MEDICAL CENTER SERIES A 3.00 10/01/2006 488,755
1,420,000 NEW HAMPSHIRE HEALTH & EDUCATION FACILITIES AUTHORITY NEW HAMPSHIRE
MEDICAL CENTER SERIES A 4.00 10/01/2007 1,427,697
1,445,000 NEW HAMPSHIRE STATE HOUSING FINANCE AUTHORITY+/- 6.30 07/01/2031 1,482,483
4,593,165
-----------
NEW JERSEY - 3.80%
2,000,000 BAYONNE NJ BID ANTICIPATION NOTES 5.00 10/27/2006 2,010,560
1,500,000 BAYONNE NJ PARKING AUTHORITY PARKING PROJECT (PARKING FACILITIES REVENUE
LOC) 5.00 03/15/2007 1,508,340
1,500,000 BAYONNE NJ TAX ANTICIPATION NOTES SERIES A 5.00 10/13/2006 1,507,470
2,750,000 CAMDEN NJ BOND ANTICIPATION NOTES SERIES B 4.25 09/06/2006 2,760,863
1,490,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY CIGARETTE TAX REVENUE 5.63 06/15/2017 1,529,694
1,095,000 NEW JERSEY HFFA JERSEY CITY MEDICAL CENTER (HEALTHCARE FACILITIES REVENUE
LOC) 4.80 08/01/2021 1,104,395
4,885,000 NEW JERSEY HFFA ST. JOSEPH'S HOSPITAL & MEDICAL CENTER SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.60 07/01/2007 5,015,869
35
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW JERSEY (CONTINUED)
$ 165,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 5.00% 06/01/2009 $ 168,000
6,030,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 4.38 06/01/2019 6,041,155
3,491,000 WEEHAWKEN TOWNSHIP NJ TAX ANTICIPATION NOTES 4.50 10/12/2006 3,508,350
25,154,696
-----------
NEW MEXICO - 1.70%
755,000 ALBUQUERQUE NM MCT INDUSTRIES INCORPORATED PROJECT 3.75 04/01/2010 760,859
6,650,000 FARMINTON NM PUBLIC SERVICE SAN JUAN PROJECT SERIES B+/- 2.10 04/01/2033 6,613,093
1,000,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY 4.05 07/01/2026 996,530
780,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY SFMR SERIES A2 (HOUSING REVENUE
LOC) 7.10 09/01/2030 795,842
1,460,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY SFMR SERIES D2 (HOUSING REVENUE
LOC) 6.75 09/01/2029 1,515,801
515,000 NEW MEXICO MORTGAGE FINANCE AUTHORITY SFMR SERIES F2 (HOUSING REVENUE
LOC) 6.80 03/01/2031 534,307
11,216,432
-----------
NEW YORK - 4.57%
6,500,000 MONROE COUNTY NY REVENUE ANTICIPATION NOTES 4.00 04/17/2006 6,504,875
615,000 NASSAU COUNTY NY IDA NORTH SHORE HEALTH SYSTEMS PROJECTS C 5.63 11/01/2010 653,647
200,000 NASSAU COUNTY NY IDA SPECIAL NEEDS SERIES B1 6.50 07/01/2006 201,762
435,000 NEW YORK NY IDA POLYTECHNIC UNIVERSITY PROGRAM 5.13 11/01/2006 435,552
620,000 NEW YORK NY IDA SPECIAL NEEDS FACILITIES PROGRAM A1 6.50 07/01/2006 620,434
5,215,000 NEW YORK NY IDA TERMINAL ONE GROUP ASSOCIATION PROJECT 5.00 01/01/2009 5,365,661
2,780,000 NEW YORK NY IDA TERMINAL ONE GROUP ASSOCIATION PROJECT 5.00 01/01/2010 2,870,461
220,000 NEW YORK NY SERIES A 6.13 08/01/2006 223,670
700,000 NEW YORK NY SERIES B 8.25 06/01/2006 714,140
1,000,000 NEW YORK STATE DORMITORY AUTHORITY AIDS LONG TERM HEALTH CARE FACILITIES 5.00 11/01/2011 1,054,840
7,865,000 NEW YORK STATE DORMITORY AUTHORITY CITY UNIVERSITY SYSTEM SERIES C 7.50 07/01/2010 8,587,479
1,500,000 NIAGRA COUNTY NY INDUSTRIAL DEVELOPMENT AGENCY - SERIES A+/- 5.45 11/15/2026 1,578,120
105,000 SUFFOLK COUNTY NY 6.50 07/01/2006 105,925
165,000 SUFFOLK COUNTY NY IDA SPECIAL NEEDS POOLED SERIES C-1 6.88 07/01/2010 174,243
70,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1 5.00 06/01/2010 70,230
1,000,000 UTICA NY IDA (COLLEGE & UNIVERSITY REVENUE, CITIZENS BANK LOC)+/- 4.50 10/01/2034 1,024,740
30,185,779
-----------
NORTH CAROLINA - 1.41%
4,500,000 FAYETTEVILLE NC (OTHER REVENUE, FIRST SECURITY BANK LOC) 3.55 01/15/2008 4,495,500
790,000 NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY SERIES B (UTILITIES
REVENUE LOC) 6.00 01/01/2006 790,055
1,600,000 NORTH CAROLINA EASTERN MUNICIPAL POWER AGENCY SERIES D 6.00 01/01/2009 1,644,336
2,145,000 NORTH CAROLINA HOUSING FINANCE AGENCY 6.25 03/01/2028 2,263,254
115,000 NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 CATAWBA ELECTRIC REVENUE 7.25 01/01/2007 119,260
9,312,405
-----------
OHIO - 1.89%
630,000 COUNTY OF ATHENS OH O'BLENESS SERIES A 5.00 11/15/2008 641,523
1,330,000 FRANKLIN COUNTY OH CAPITOL SOUTH COMMUNITY URBAN 4.85 06/01/2006 1,335,014
6,000,000 GALLIPOLIS OH BOND ANTICIPATION NOTES 4.25 06/29/2006 6,021,300
700,000 LAKEWOOD OH LAKEWOOD HOSPITAL ASSOCIATION 5.50 02/15/2008 725,620
3,000,000 LORAIN OH SERIES B 4.50 10/04/2006 3,008,790
36
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OHIO (CONTINUED)
$ 265,000 MEDINA COUNTY OH CAMELOT PLACE LIMITED SERIES A 8.10% 10/01/2013 $ 266,484
500,000 MONTGOMERY COUNTY OH KETTERING MEDICAL CENTER 6.00 04/01/2008 523,920
12,522,651
-----------
OKLAHOMA - 1.87%
2,000,000 CACHE OK EDUCATIONAL GACS AUTHORITY EDUCATIONAL FACILITIES 3.90 09/01/2010 1,990,620
305,000 CITIZEN POTAWATOMI NATION OK SERIES A 4.15 09/01/2006 303,140
1,000,000 KINGFISHER OK SPECIAL PROJECTS AUTHORITY KINGFISHER PUBLIC SCHOOLS PROJECT 4.10 09/01/2009 996,350
2,005,000 OKARCHE OK ECONOMIC DEVELOPMENT AUTHORITY CHICKASHA PUBLIC SCHOOLS PROJECT 4.50 09/01/2008 2,057,491
1,265,000 OKLAHOMA COUNTY OK HOME FINANCE AUTHORITY 5.95 10/01/2035 1,314,335
2,270,000 OKLAHOMA COUNTY OK HOME FINANCE AUTHORITY SINGLE FAMILY REVENUE 6.60 10/01/2035 2,394,396
975,000 OKLAHOMA DEVELOPMENT FINANCE AUTHORITY COMANCHE COUNTY HOSPITAL PROJECT 5.35 07/01/2008 1,004,533
SERIES B
1,325,000 OKLAHOMA STATE 6.25 08/15/2015 1,446,635
875,000 TULSA COUNTY OK HFA+/- 7.10 08/01/2030 886,987
12,394,487
-----------
OREGON - 1.51%
10,000,000 MEDFORD OR HOSPITAL FACILITIES AUTHORITY ROGUE VALLEY MANOR PROJECT
(HEALTHCARE FACILITIES REVENUE LOC) ss.+/- 3.25 08/15/2032 10,000,000
-----------
OTHER - 0.90%
2,000,000 GMAC MUNICIPAL MORTGAGE TRUST++ 4.15 10/31/2039 1,978,100
4,000,000 MMA FINANCIAL CDD SENIOR SECURITIZATION TRUST BEACON LAKES PASSTHRU CTFS
C+/- 3.38 11/01/2008 3,967,520
5,945,620
-----------
PENNSYLVANIA - 6.50%
3,125,000 ALLEGHENY COUNTY PA 5.75 01/01/2011 3,351,719
950,000 ALLEGHENY COUNTY PA ss.+/- 3.60 09/15/2028 950,000
2,270,000 ALLEGHENY COUNTY PA AIRPORT AUTHORITY 5.75 01/01/2012 2,434,098
2,550,000 ALLENTOWN PA SACRED HEART HOSPITAL 4.75 07/01/2008 2,533,986
1,580,000 CHESTER COUNTY PA RENAISSANCE ACADEMY PROJECT SERIES A 5.25 10/01/2010 1,588,437
3,750,000 DELAWARE RIVER PORT AUTHORITY PA & NJ (TOLL ROAD REVENUE LOC) 5.45 01/01/2012 3,831,600
7,000,000 DELAWARE VALLEY PA REGIONAL FINANCIAL AUTHORITY SERIES A (OTHER REVENUE
LOC) ss.+/- 5.44 07/01/2027 7,128,520
660,000 GROVE CITY PA AREA HOSPITAL AUTHORITY UNITED COMMUNITY HOSPITAL PROJECT 4.75 07/01/2006 660,548
500,000 LEHIGH COUNTY PA GENERAL PURPOSE AUTHORITY KIDSPEACE OBLIGATED GROUP 5.80 11/01/2012 490,030
1,000,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY EXEMPT FACILITIES
REVENUE ss.+/- 4.35 06/01/2028 995,530
2,823,077 PENNSYLVANIA HFA SINGLE FAMILY MORTGAGE REVENUE+/- 3.56 06/01/2008 2,823,077
4,000,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY UNIVERSITY OF
PENNSYLVANIA HEALTH SERVICES SERIES A 5.60 01/01/2006 4,040,240
750,000 PENNSYLVANIA STATE HIGHER EDUCATIONAL FACILITIES AUTHORITY
UNIVERSITY OF PENNSYLVANIA SERIES B 5.60 01/01/2010 757,545
1,470,000 PHILADELPHIA PA HOSPITALS & HIGHER EDUCATION FACILITIES AUTHORITY JEANES
HEALTH SYSTEMS PROJECT 6.60 07/01/2010 1,581,764
5,630,000 PHILADELPHIA PA HOSPITALS & HIGHER EDUCATION FACILITIES AUTHORITY
JEFFERSON HEALTH SYSTEMS SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 5.25 05/15/2010 5,856,495
850,000 SUSQUEHANNA PA AREA REGIONAL AIRPORT AUTHORITY AERO HARRISBURG LLC PROJECT 5.25 01/01/2009 845,257
3,175,000 WASHINGTON COUNTY PA IDA CHILDREN'S HOME PITTSBURGH PROJECT 4.00 06/15/2008 3,119,215
42,988,061
-----------
37
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PUERTO RICO - 3.96%
$ 105,000 CHILDREN'S TRUST FUND PUERTO RICO 4.00% 05/15/2010 $ 104,704
3,425,000 CHILDREN'S TRUST FUND PUERTO RICOss. 5.75 07/01/2010 3,618,958
5,000,000 PUERTO RICO HOUSING FINANCE AUTHORITY CAPITAL FUNDING PROGRAM 5.00 12/01/2015 5,319,950
355,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL CENTRAL
FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY 4.50 12/01/2006 357,417
300,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL CENTRAL
FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY 5.00 02/01/2007 303,615
925,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL CENTRAL
FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY 5.00 02/01/2008 944,231
390,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL CENTRAL
FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY 5.00 12/01/2008 401,751
8,470,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES B+/- 4.16 10/01/2040 8,470,000
6,600,000 PUERTO RICO MUNICIPAL FINANCE AGENY SERIES A 5.00 08/01/2006 6,658,542
26,179,168
-----------
SOUTH CAROLINA - 2.10%
1,500,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.70 01/01/2027 250,785
2,835,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.70 01/01/2028 435,286
18,250,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.24 01/01/2037 1,490,660
14,500,000 CONNECTOR 2000 ASSOCIATION INCORPORATED CAPITAL APPRECIATION SERIES B^ 8.20 01/01/2038 1,109,395
355,000 GREENVILLE COUNTY SC DONALDSON INDUSTRIAL AIR PARK PROJECT A 5.50 04/01/2011 357,961
3,655,000 JASPER COUNTY SC REVENUE ANTICIPATION NOTES 4.00 11/15/2006 3,655,548
235,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO HEALTH ALLIANCE
SERIES A 4.50 08/01/2006 236,119
760,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO HEALTH ALLIANCE
SERIES A 5.00 08/01/2008 780,292
1,000,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY PALMETTO HEALTH SERIES C 4.75 08/01/2007 1,014,230
1,205,000 SOUTH CAROLINA STATE PORTS AUTHORITY 7.70 07/01/2006 1,212,423
2,255,000 SOUTH CAROLINA STATE PORTS AUTHORITY 7.80 07/01/2009 2,356,858
1,000,000 YORK SC BOWATER INCORPORATED PROJECT 7.63 03/01/2006 1,004,900
13,904,457
-----------
SOUTH DAKOTA - 3.61%
5,000,000 GRANT COUNTY SD OTTER TAIL POWER COMPANY PROJECTss.+/- 3.91 12/01/2012 5,000,000
225,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY ANGUS INCORPORATED 4.25 04/01/2008 225,756
PROJECT A
260,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY ANGUS INCORPORATED 4.50 04/01/2009 262,805
PROJECT A
665,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY MCFLEEG PROJECT B 4.38 04/01/2011 665,273
4,345,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTHss.+/- 3.81 11/01/2025 4,345,000
10,015,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTHss.+/- 3.81 11/01/2027 10,015,000
3,260,000 SOUTH DAKOTA STATE BUILDING AUTHORITY SERIES A (LEASE REVENUE LOC) 5.35 12/01/2012 3,380,490
23,894,324
-----------
TENNESSEE - 2.28%
335,000 CITIZENS TN GAS UTILITY DISTRICT (UTILITIES REVENUE LOC) 5.15 01/01/2009 335,000
1,200,000 METROPOLITAN GOVERNMENT NASHVILLE & DAVIDSON COUNTY TN INDUSTRIAL
DEVELOPMENT BOARD EASTER SEAL PROJECTss.+/- 2.75 08/01/2019 1,200,000
13,150,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD FLOAT
BAPTIST MEMORIAL HEALTHCARE+/- 5.00 09/01/2020 13,556,203
15,091,203
-----------
38
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TEXAS - 7.57%
$10,540,000 BEXAR COUNTY TX REVENUE PROJECT 5.75% 08/15/2022 $11,214,876
405,000 BRAZOS RIVER AUTHORITY TX WATER SUPPLY SYSTEM SERIES A 4.25 02/15/2009 411,857
425,000 BRAZOS RIVER AUTHORITY TX WATER SUPPLY SYSTEM SERIES A 4.25 02/15/2010 432,629
440,000 BRAZOS RIVER AUTHORITY TX WATER SUPPLY SYSTEM SERIES A 4.25 02/15/2011 446,807
2,750,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES Ass.+/- 5.40 04/01/2030 2,769,360
1,440,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY SERIES Ass.+/- 5.05 06/01/2030 1,449,101
200,000 DECATUR TX HOSPITAL AUTHORITY WISE REGIONAL HEALTH SYSTEMS SERIES A 3.63 09/01/2006 198,422
1,220,000 GARZA COUNTY TX PUBLIC FACILITIES CORPORATION 5.00 10/01/2011 1,253,648
970,000 GATEWAY TX PUBLIC FACILITY CORPORATION STONEGATE VILLAS APARTMENTS
PROJECT(HOUSING REVENUE LOC) 3.88 01/01/2010 983,299
245,000 HIDALGO COUNTY TX HEALTH SERVICES CORPORATION MISSION HOSPITAL 4.00 02/15/2006 245,024
INCORPORATED PROJECT
2,505,841 LANCASTER TX HOUSING FINANCE CORPORATION MFHR PLEASANT CREEK CORNERS
PROJECT 3.60 06/15/2006 2,499,576
313,334 LANCASTER TX HOUSING FINANCE CORPORATION MFHR PLEASANT CREEK CORNERS
PROJECT 3.98 06/15/2006 312,550
3,150,000 MATAGORDA COUNTY TXss.+/- 4.55 11/01/2029 3,172,932
800,000 METRO TX HEALTH FACILITIES DEVELOPMENT CORPORATION WILSON N. JONES
MEMORIAL HOSPITAL PROJECT 6.38 01/01/2007 807,744
5,165,000 MUNIMAE TRUST SERIES 2001-9 CLASS A 4.40 08/24/2009 5,165,000
2,155,000 ODESSA TX HOUSING AUTHORITY SECTION 8 ASSISTANCE PROJECT SERIES B
(HOUSING REVENUE LOC) 6.38 10/01/2011 2,090,824
100,000 SAN ANGELO TX INDEPENDENT SCHOOL DISTRICT (PROPERTY TAX REVENUE LOC)^ 3.46 02/15/2006 99,568
2,000,000 SAN ANTONIO TX HOTEL OCCUPANCY SERIES B+/- 5.00 08/15/2034 2,072,900
4,335,000 TEXAS STATE DEPARTMENT HOUSING & COMMUNITY AFFAIRS
(OTHER REVENUE, FIRST SECURITY BANK LOC) 4.25 09/01/2026 4,347,095
555,000 TEXAS STATE DEPARTMENT HOUSING AND COMMUNITY AFFAIRS
PEBBLE BROOK APARTMENTS PROJECT 4.95 12/01/2008 563,192
7,075,000 TEXAS WATER DEVELOPMENT 5.70 07/15/2013 7,169,097
2,355,000 TRINITY RIVER TX AUTHORITY ELECTRIC COMPANY PROJECT SERIES A ss.+/- 5.00 05/01/2027 2,378,997
50,084,498
-----------
UTAH - 0.24%
1,579,460 DAVIS COUNTY UT SCHOOL DISTRICT 4.55 09/07/2008 1,564,029
-----------
VERMONT - 0.05%
345,000 VERMONT EDUCATIONAL & HEALTH BUILDINGS FINANCE COPLEY MANOR PROJECT 5.65 04/01/2009 328,592
-----------
VIRGIN ISLANDS - 1.30%
1,750,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SENIOR LIEN LOAN NOTES 5.50 10/01/2014 1,844,605
3,315,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES C (OTHER REVENUE LOC) 5.50 10/01/2006 3,369,333
1,500,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES D 6.00 10/01/2006 1,529,325
1,750,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SERIES D 6.00 10/01/2007 1,825,827
8,569,090
-----------
VIRGINIA - 0.41%
1,000,000 AMELIA COUNTY VA IDAss.+/- 4.05 04/01/2027 999,310
1,700,000 HOPEWELL VA PUBLIC IMPROVEMENTS SERIES A 5.00 07/15/2009 1,732,300
2,731,610
-----------
39
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WASHINGTON - 1.84%
$3,090,000 CLARK COUNTY WA INDUSTRIAL REVENUE CAMAS POWER BOILER LIMITED PROJECT 3.38% 08/01/2007 $ 3,081,997
SERIES A+/-
590,000 QUINCY WA 4.50 11/01/2008 595,864
575,000 QUINCY WA 4.75 11/01/2009 586,207
205,000 SNOHOMISH COUNTY WA PUBLIC HOSPITAL DISTRICT NUMBER 3 SERIES A 6.00 06/01/2010 210,115
200,000 TOBACCO SETTLEMENT AUTHORITY OF WASHINGTON 5.25 06/01/2009 205,526
805,000 WALLA WALLA WA HOUSING AUTHORITY WILBUR MANOR PROJECT (HOUSING REVENUE 6.25 12/01/2011 796,741
LOC)
4,750,000 WASHINGTON STATE HEALTH (HEALTHCARE FACILITIES REVENUE LOC)ss.+/- 3.19 01/01/2029 4,750,000
1,940,000 YAKIMA WA HOUSING AUTHORITY KLICKITAT VALLEY HOSPITAL PROJECT ss.+/- 4.50 10/01/2023 1,940,000
12,166,450
-----------
WEST VIRGINIA - 0.50%
310,000 OHIO COUNTY WV BUILDING COMMISSION MEDICAL CENTER 7.00 10/01/2010 336,220
3,000,000 PUTNAM COUNTY WV APPALACHIAN POWER COMPANY PROJECT E ss.+/- 2.80 05/01/2019 2,963,730
3,299,950
-----------
WISCONSIN - 3.66%
425,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.00 06/01/2008 432,047
1,090,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.00 06/01/2009 1,111,549
225,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.75 06/01/2011 237,058
6,290,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION WISCONSIN ASSET BACKED 6.00 06/01/2017 6,610,350
500,000 FRANKLIN WI SOLID WASTE DISPOSAL REVENUEss.+/- 3.63 04/01/2016 499,435
570,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT 4.85 12/01/2007 574,309
605,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT 5.05 12/01/2008 614,002
650,000 OSHKOSH WI DON EVANS INCORPORATED PROJECT 5.20 12/01/2009 659,952
2,200,000 RICHLAND SCHOOL DISTRICT WISCONSIN 3.50 10/26/2006 2,200,858
20,000 STEVENS POINT WI CDA SECTION 8 6.50 09/01/2009 21,966
1,050,000 VILLAGE OF RANDOLPH WI PROMISSORY NOTES 4.38 09/01/2006 1,051,648
300,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BEAVER DAM
COMMUNITIES HOSPITALS INCORPORATED CLASS A 4.25 08/15/2008 295,344
200,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BEAVER DAM
COMMUNITIES HOSPITALS INCORPORATED CLASS A 4.50 08/15/2009 197,304
1,855,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY BELLIN
MEMORIAL HOSPITAL INCORPORATED 5.00 02/15/2009 1,861,548
175,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY
DIVINE SAVIOR HEALTHCARE SERIES A (HEALTHCARE FACILITIES REVENUE LOC) 4.45 05/01/2007 176,864
25,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY
DIVINE SAVIOR HOSPITAL INCORPORATED PROJECT 4.80 06/01/2006 25,048
30,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY LUTHERAN HOME FOR THE 7.00 09/01/2025 30,016
AGING
200,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD CLINIC 4.50 02/15/2006 200,142
SERIES B
350,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY MARSHFIELD CLINIC 5.75 02/15/2007 356,654
SERIES B
1,500,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY THREE PILLARS 5.00 08/15/2010 1,567,920
COMMUNITIES
100,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY TOMAH MEMORIAL
HOSPITAL
INCORPORATED PROJECT 3.88 07/01/2006 99,933
130,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY TOMAH MEMORIAL
HOSPITAL
INCORPORATED PROJECT 4.13 07/01/2007 129,737
40
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$2,685,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES REVENUE
(HEALTHCARE FACILITIES REVENUE LOC) 5.00% 08/15/2009 $ 2,797,206
2,445,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES F 5.20 07/01/2018 2,457,910
24,208,800
-----------
WYOMING - 0.59%
2,855,000 GILLETTE WY BLACK HILLS POWER & LIGHT COMPANY PROJECT SERIES Ass.+/- 3.93 06/01/2024 2,855,000
1,050,000 TETON COUNTY WY HOSPITAL DISTRICT REVENUE ST. JOHN'S MEDICAL CENTER 5.25 12/01/2007 1,058,431
3,913,431
-----------
TOTAL MUNICIPAL BONDS & NOTES (COST $648,101,423) 647,372,195
-----------
SHORT-TERM INVESTMENTS - 1.78%
COMMERCIAL PAPER - 1.63%
6,500,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.40 01/24/2006 6,500,000
4,250,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.55 01/26/2006 4,250,000
10,750,000
-----------
SHARES
MUTUAL FUND - 0.15%
1,020,670 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 1,020,670
------------
TOTAL SHORT-TERM INVESTMENTS (COST $11,770,670) 11,770,670
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $659,872,093)* 99.68% $659,142,865
OTHER ASSETS AND LIABILITIES, NET 0.32 2,142,991
------------
TOTAL NET ASSETS 100.00% $661,285,856
-------------
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
ss. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
+/- 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.
~ 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 $1,020,670.
* 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.
41
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 97.18%
ALABAMA - 2.78%
$ 1,000,000 ALABAMA 21ST CENTURY AUTHORITY 5.25% 12/01/2006 $ 1,012,040
16,835,000 BIRMINGHAM AL BAPTIST MEDICAL CENTERS SPECIAL CARE FACILITIES FINANCING
AUTHORITY BAPTIST HEALTH SYSTEM SERIES C+/-SS. 4.35 11/15/2016 16,912,441
440,000 SHELBY COUNTY AL BOARD OF EDUCATION 2.40 05/15/2006 437,558
18,362,039
---------------
ARIZONA - 0.62%
1,825,000 MOHAVE COUNTY AZ IDA CITIZENS UTILITY COMPANY PROJECT+/- 4.75 08/01/2020 1,825,511
1,250,000 PASCUA YAQUI TRIBE AZ GOVERNMENT FACILITIES 5.20 01/01/2006 1,250,050
1,000,000 SANTA CRUZ COUNTY AZ IDA+/-SS. 4.75 08/01/2020 996,030
4,071,591
---------------
ARKANSAS - 1.29%
2,000,000 ARKANSAS DEVELOPMENT FINANCE AUTHORITY WASTE MANAGEMENT+/-SS. 3.65 08/01/2021 1,997,300
4,465,000 ARKANSAS STATE STUDENT LOAN AUTHORITY REVENUE SUB-STUDENT LOAN-SERIES
B GSL INSURED
(HIGHER EDUCATION FACILITIES AUTHORITY REVENUE LOC) 5.35 06/01/2009 4,566,177
1,615,000 LITTLE ROCK AR (AIRPORT REVENUE LOC) 3.50 11/01/2008 1,620,313
360,000 NORTHWEST AR REGIONAL AIRPORT AUTHORITY (AIRPORT REVENUE LOC) 4.00 02/01/2006 360,112
8,543,902
---------------
CALIFORNIA - 5.53%
650,000 BAY AREA CA GOVERNMENT ASSOCIATION SAN FRANCISCO EXTENSION CAPITAL
GRANT SERIES A 4.88 06/15/2009 650,890
815,000 CALIFORNIA HFA HOME MORTGAGE SERIES F (HOUSING REVENUE LOC) 4.70 08/01/2016 817,461
6,800,000 CALIFORNIA STATEWIDE CDA+/-SS. 4.45 05/15/2029 6,800,000
1,950,000 CALIFORNIA STATEWIDE CDA CERTIFICATE RETIREMENT HOUSING FOUNDATION+/-SS. 4.30 12/01/2028 1,950,000
8,500,000 CALIFORNIA STATEWIDE CDA ESKATON PROPERTIES INCORPORATED+/-SS. 4.35 05/15/2029 8,500,000
8,350,000 CALIFORNIA STATEWIDE CDA ESKATON PROPERTIES INCORPORATED
(HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 4.35 05/15/2029 8,350,000
4,865,000 GOLDEN STATE TOBACCO SECURITIZATION CORPORATE
TOBACCO SETTLEMENT REVENUE SERIES 2003 A1 5.00 06/01/2021 4,897,790
902,557 PASADENA CA 4.25 12/19/2006 897,927
800,000 SAN FRANCISCO CA CITY & COUNTY AIRPORTS COMMUNITY INTERNATIONAL AIRPORT
REVENUE SECOND SERIES 31A XLCA INSURED (AIRPORT REVENUE LOC)+/-SS. 2.80 05/01/2025 800,000
1,280,000 SANTA ROSA CA RANCHERIA TACHI YOKUT TRIBE ENTERPRISE 5.00 03/01/2006 1,280,845
1,590,000 TOBACCO SECURITIZATION AUTHORITY OF SOUTHERN CALIFORNIA SERIES A 5.00 06/01/2007 1,606,202
36,551,115
---------------
COLORADO - 2.22%
205,341 ARAPAHOE COUNTY CO IDK PARTNERS I TRUST SERIES A CLASS A
(HOUSING REVENUE LOC) 5.25 11/01/2019 206,047
12,750,000 AURORA COLORADO MULTIFAMILY REVENUE+/- 4.25 12/20/2040 12,757,395
1,665,000 COLORADO HFA SERIES A2 6.60 05/01/2028 1,679,419
14,642,861
---------------
CONNECTICUT - 0.39%
2,525,000 MASHANTUCKET WESTERN PEQUOT TRIBE CT SERIES A++ 6.50 09/01/2006 2,569,465
---------------
42
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FLORIDA - 1.02%
$ 345,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGE SOLUTIONS
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.25% 10/01/2006 $ 343,365
250,000 JACKSONVILLE FL ECONOMIC DEVELOPMENT COMMISSION MET PACKAGE SOLUTIONS
PROJECT (INDUSTRIAL DEVELOPMENT REVENUE LOC) 3.50 10/01/2007 247,977
6,150,000 VOLUSIA COUNTY FL IDA ACA INSURED
(HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 4.30 12/01/2028 6,150,000
6,741,342
---------------
GEORGIA - 3.30%
1,810,000 BARTOW COUNTY GA DEVELOPMENT AUTHORITY GEORGIA POWER COMPANY BOWEN
FIRST SERIES+/-SS. 3.50 06/01/2023 1,810,000
11,000,000 FULTON COUNTY GA HOUSING AUTHORITY ORCHARD SPRINGS APARTMENTS+/-SS. 3.50 12/01/2037 11,000,000
9,000,000 ROCKDALE COUNTY GA HOSPITAL AUTHORITY ROCKDALE MEDICAL CENTER
INCORPORATED (HOSPITAL REVENUE LOC)+/-SS. 3.50 10/01/2033 9,000,000
21,810,000
---------------
IDAHO - 0.17%
1,145,000 POST FALLS ID LOCAL IMPROVEMENT DISTRICT NUMBER 2004-1 3.25 01/15/2007 1,137,901
---------------
ILLINOIS - 5.03%
11,000,000 AURORA IL COVEY FOX VALLEY APARTMENTS PROJECT+/- 5.30 11/01/2027 11,096,580
860,000 AURORA IL TAX INCREMENTAL REVENUE 5.00 12/30/2006 863,827
900,000 AURORA IL TAX INCREMENTAL REVENUE 5.00 12/30/2007 908,343
645,000 CHICAGO IL O'HARE INTERNATIONAL AIRPORT SENIOR LIEN SERIES A
(AIRPORT REVENUE LOC) 4.90 01/01/2006 645,032
1,000,000 CHICAGO IL TRANSIT AUTHORITY SERIES B DOUGLAS BRANCH
RECONSTRUCTION 4.25 06/01/2008 1,000,760
300,000 COLES-CLARK COUNTIES IL COMMUNITY COLLEGE DISTRICT #517
LAKE LAND COMMUNITY COLLEGE 3.55 12/01/2006 298,206
3,330,000 EUREKA IL EUREKA COLLEGE PROJECT SERIES B 7.00 01/01/2019 3,353,543
1,285,000 GREATER PEORIA IL AIRPORT AUTHORITY 5.80 12/01/2006 1,302,579
175,000 ILLINOIS FINANCE AUTHORITY CITIZENS UTILITY COMPANY PROJECT+/- 4.80 08/01/2025 175,049
12,000,000 ILLINOIS HEALTH FACILITIES AUTHORITY HOSPITAL SISTERS SERVICES
INCORPORATED SERIES A
(HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 4.00 12/01/2022 12,046,920
1,000,000 LAKES REGION SANITATION DISTRICT ILLINOIS DEBT CERTIFICATES 4.13 12/01/2010 1,004,100
545,000 NORTHERN COOK COUNTY IL SOLID WASTE AGENCY PREREFUNDED SERIES A
(OTHER REVENUE LOC) 5.15 05/01/2006 547,785
33,242,724
---------------
INDIANA - 5.18%
8,080,000 ANDERSON IN CROSS LAKES APARTMENTS SERIES A+/- 5.63 07/01/2033 8,077,980
3,880,000 INDIANA STATE DEVELOPMENT FINANCE AUTHORITY SOUTHERN INDIANA
GAS & ELECTRIC+/- 4.75 03/01/2025 3,886,130
5,000,000 INDIANA STATE DEVELOPMENT FINANCING AUTHORITY REPUBLIC SERVICES
INCORPORATED 3.90 11/01/2035 5,000,000
PROJECT+/-SS.
9,365,000 INDIANAPOLIS IN COVERED BRIDGE SERIES A+/-SS. 5.50 04/01/2030 9,364,532
5,000,000 LAKE CENTRAL SCHOOL CORPORATION INDIANA TAX ANTICIPATION 4.50 06/30/2006 5,019,350
2,950,000 ROCKPORT IN INDIANA MICHIGAN POWER COMPANY PROJECT SERIES C+/- 2.63 04/01/2025 2,914,217
34,262,209
---------------
IOWA - 0.60%
4,000,000 ANKENY IA SERIES A 3.50 06/01/2007 3,988,680
---------------
43
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
KANSAS - 2.43%
$ 900,000 KANSAS STATE INDEPENDENT COLLEGE FINANCIAL AUTHORITY REVENUE-BAKER
UNIVERSITY 4.50% 05/01/2006 $ 901,170
1,500,000 KANSAS STATE INDEPENDENT COLLEGE FINANCIAL AUTHORITY
REVENUE-BENEDICTINE 5.00 05/01/2006 1,501,575
500,000 KANSAS STATE INDEPENDENT COLLEGE FINANCIAL AUTHORITY REVENUE-BETHEL
COLLEGE 5.00 05/01/2006 500,525
300,000 KANSAS STATE INDEPENDENT COLLEGE FINANCIAL AUTHORITY REVENUE-CHRISTIAN 5.00 05/01/2006 300,315
1,600,000 KANSAS STATE INDEPENDENT COLLEGE FINANCIAL AUTHORITY REVENUE-OTTAWA
UNIVERSITY 5.00 05/01/2006 1,601,680
800,000 KANSAS STATE INDEPENDENT COLLEGE FINANCIAL AUTHORITY
REVENUE-SOUTHWESTERN 5.00 05/01/2006 800,840
8,010,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION SALES TAX
SECOND LIEN AREA B (OTHER REVENUE, CITIBANK NA LOC) 3.75 12/01/2012 8,028,102
2,390,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT SPECIAL OBLIGATION SALES TAX
SECOND LIEN AREA B (OTHER REVENUE, CITIBANK NA LOC) 3.85 12/01/2013 2,393,657
16,027,864
---------------
KENTUCKY - 1.41%
135,000 COVINGTON KY ALLEN & ALLEN+/-SS. 4.25 09/01/2016 134,433
3,300,000 KENTUCKY ECONOMIC DEVELOPMENT FINANCE AUTHORITY RETIREMENT HOUSING
FOUNDATION (HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 4.40 12/01/2028 3,300,000
5,900,000 NEWPORT KY BOND ANTICIPATION NOTES 3.55 12/01/2006 5,896,283
9,330,716
---------------
LOUISIANA - 4.25%
9,470,000 CALCASIEU PARISH LA MEMORIAL HOSPITAL SERVICE DISTRICT LAKE CHARLES
MEMORIAL HOSPITAL PROJECT (HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 3.25 12/01/2018 9,470,000
2,525,000 LOUISIANA PUBLIC FACILITIES AUTHORITY - FRANCISCAN MISSIONARIES SERIES
B+/-SS. 3.75 07/01/2030 2,525,000
9,350,000 LOUISIANA PUBLIC FACILITIES AUTHORITY WILLIS-KNIGHTON SERIES 1997+/-SS. 3.30 09/01/2027 9,350,000
6,075,000 ORLEANS PARISH LA SCHOOL BOARD MUNICIPAL LEASE 4.57 08/20/2007 6,039,219
180,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT 5.00 09/01/2007 180,835
505,000 PLAQUEMINES LA PORT HARBOR & TERMINAL DISTRICT SERIES D 5.00 09/01/2007 507,343
28,072,397
---------------
MARYLAND - 0.33%
2,160,000 MARYLAND CDA DEPARTMENT OF HOUSING & COMMUNITY DEVELOPMENT PROGRAM 4.40 04/01/2023 2,163,326
---------------
MASSACHUSETTS - 4.86%
2,700,000 BERKSHIRE REGIONAL TRANSPORTATION AUTHORITY MASSACHUSETTS ANTICIPATION
NOTES 4.50 09/15/2006 2,709,099
7,600,000 MASSACHUSETTS EDUCATIONAL FUNDING AUTHORITY SERIES D+/-SS. 3.45 01/01/2038 7,600,000
3,650,000 MASSACHUSETTS HEALTH & EDUCATIONAL FACILITIES AUTHORITY CARITAS CHRISTI
OBLIGATION
GROUP SERIES A 5.25 07/01/2006 3,669,783
500,000 MASSACHUSETTS INDUSTRIAL FINANCE AGENCY OGDEN SERIES A+/- 4.95 12/01/2006 504,660
7,800,000 PIONEER VALLEY MA TRANSPORTATION AUTHORITY ANTICIPATION NOTES 4.00 08/03/2006 7,817,316
2,800,000 SOUTHEASTERN REGIONAL TRANSPORTATION AUTHORITY MASSACHUSETTES
ANTICIPATION NOTES 4.00 09/08/2006 2,804,592
7,000,000 WORCESTER MA REGIONAL TRANSPORTATION AUTHORITY REVENUE ANTICIPATION
NOTES 4.00 06/30/2006 7,006,020
32,111,470
---------------
MICHIGAN - 1.02%
825,000 GRAND RAPIDS MI CHARTER TOWNSHIP PORTER HILLS OBLIGATION GROUP PROJECT
(HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 3.35 07/01/2033 825,000
5,910,449 SUBURBAN MI MOBILITY AUTHORITY 4.90 08/15/2007 5,929,658
6,754,658
---------------
44
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MINNESOTA - 0.06%
$ 400,000 MINNEAPOLIS & ST. PAUL MN METROPOLITAN COMMUNITY AIRPORT SERIES B 5.00% 01/01/2006 $ 400,020
MISSISSIPPI - 4.34%
2,350,000 ADAMS COUNTY MS INTERNATIONAL PAPER COMPANY PROJECT SERIES A 5.63 11/15/2006 2,353,408
2,000,000 BILOXI MS HOUSING AUTHORITY BAYVIEW PLACE ESTATES
(HOUSING REVENUE, GIC-RABOBANK NEDERLAND LOC) 3.40 08/01/2007 1,982,600
1,685,000 MISSISSIPPI BUSINESS FINANCE CORPORATION MISSISSIPPI POWER COMPANY
PROJECT+/-SS. 3.45 09/01/2028 1,685,000
12,000,000 MISSISSIPPI HOSPITAL EQUIPMENT & FACILITIES AUTHORITY BAPTIST MEMORIAL
HEALTH 3.00 09/01/2018 11,977,560
SERIES B2+/-SS.
4,500,000 MISSISSIPPI HOSPITAL EQUIPMENT & FACILITIES AUTHORITY BAPTIST MEMORIAL
HEALTH 3.50 09/01/2022 4,491,225
SERIES B2+/-SS.
6,200,000 MISSISSIPPI REGIONAL HOUSING AUTHORITY NUMBER 8 MAGNOLIA PARK
APARTMENTS+/-SS. 2.15 03/01/2030 6,200,682
28,690,475
---------------
MISSOURI - 5.32%
3,365,000 HAZELWOOD MO IDA BOTTOM ROAD DEVELOPMENT PROJECT 3.00 08/01/2013 3,359,750
5,200,000 HAZELWOOD MO IDA BOTTOM ROAD DEVELOPMENT PROJECT 3.88 08/01/2018 5,134,376
4,000,000 MISSOURI HIGHER EDUCATION LOAN AUTHORITY SERIES B+/-SS. 3.40 05/01/2039 4,000,000
3,100,000 MISSOURI HIGHER EDUCATION LOAN AUTHORITY SUB LIEN
(COLLEGE & UNIVERSITY REVENUE LOC) 6.50 02/15/2006 3,108,432
3,500,000 MISSOURI STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY REVENUE
PRIVATE EDUCATION -
REVENUE ANTICIPATION NOTES 4.75 04/25/2006 3,503,885
6,027,626 MISSOURI STATE HEALTH & EDUCATIONAL FACILITIES AUTHORITY
LEASE-SUBLEASE PURCHASE 3.09 07/15/2008 6,038,054
2,000,000 MISSOURI STATE HEALTH & EDUCATIONAL FACILITIES MERCY HEALTH SYSTEMS
SERIES B+/-SS. 3.05 06/01/2031 2,000,000
1,000,000 MISSOURI STATE HOUSING DEVELOPMENT COMMUNITY MORTGAGE REVENUE SINGLE
FAMILY HOMEOWNER LOAN SERIES A-1 GNMA FNMA INSURED
(HOUSING REVENUE LOC) 7.50 03/01/2031 1,029,400
2,460,000 MISSOURI STATE HOUSING DEVELOPMENT COMMUNITY MORTGAGE REVENUE SINGLE
FAMILY HOMEOWNER LOAN SERIES C-1 GNMA FNMA INSURED
(HOUSING REVENUE LOC) 7.15 03/01/2032 2,563,886
1,115,000 MISSOURI STATE HOUSING DEVELOPMENT COMMUNITY SERIES C1 4.80 03/01/2019 1,121,779
2,490,000 RICHMOND HEIGHTS MO BOARD ANTICIPATION NOTES MANHASSETT VILLAGE PROJECT 3.35 10/01/2006 2,476,330
850,000 ST. CHARLES SCHOOL DISTRICT MO CAPITAL APPRECIATION SERIES A
(PROPERTY TAX REVENUE LOC)^ 3.62 03/01/2006 844,815
35,180,707
---------------
NEBRASKA - 0.19%
1,235,000 OMAHA NE TRIBE PUBLIC IMPROVEMENTS AUTHORITY 7.50 06/01/2009 1,238,421
---------------
NEW HAMPSHIRE - 0.95%
2,000,000 NEW HAMPSHIRE HEALTH & EDUCATIONAL FACILITIES SERIES B 4.00 04/26/2006 2,001,100
1,600,000 NEW HAMPSHIRE HEALTH & EDUCATIONAL FACILITIES SERIES G 4.00 04/26/2006 1,600,880
2,645,000 NEW HAMPSHIRE HEALTH & EDUCATIONAL FACILITIES SERIES H 4.00 04/26/2006 2,646,455
6,248,435
---------------
NEW JERSEY - 5.55%
6,500,000 BAYONNE NJ BOND ANTICIPATION NOTES 4.50 06/29/2006 6,514,625
6,000,000 CAMDEN NJ BOND ANTICIPATION NOTES SERIES B 4.25 09/06/2006 6,023,700
800,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY NEW JERSEY NATURAL GAS
COMPANY SERIES A+/-SS. 3.20 08/01/2030 800,000
8,255,000 TOBACCO SETTLEMENT FINANCING CORPORATION NEW JERSEY 4.38 06/01/2019 8,270,272
6,500,000 WEEHAWKEN TOWNSHIP NJ TAX ANTICIPATION NOTES 4.50 10/12/2006 6,532,305
8,550,000 WILDWOOD NJ BOARD ANTICIPATION NOTES 3.75 05/12/2006 8,539,825
36,680,727
---------------
45
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
NEW MEXICO - 4.00%
$ 3,045,000 ALAMOGORDO NM GERALD CHAMPION MEMORIAL HOSPITAL PROJECT 5.00% 01/01/2008 $ 3,120,151
4,800,000 FARMINGTON NM PUBLIC SERVICE SAN JUAN PROJECT SERIES A+/- 2.10 04/01/2033 4,774,560
1,900,000 FARMINGTON NM PUBLIC SERVICE SAN JUAN PROJECT SERIES B+/- 2.10 04/01/2033 1,889,455
16,635,000 PUEBLO OF SANDIA NM+/-SS. 5.51 03/01/2015 16,635,000
26,419,166
---------------
NEW YORK - 2.37%
5,875,000 MONROE COUNTY NY REVENUE ANTICIPATION NOTES 4.00 04/17/2006 5,879,406
1,825,000 MONROE NY NEWPOWER CORPORATION 3.30 01/01/2009 1,780,014
1,000,000 NEW YORK CONVENTION CENTER OPERATING CORPORATION YALE BUILDING
ACQUISITION PROJECT 5.25 06/01/2008 1,025,900
1,000,000 NEW YORK NY CITY INDUSTRIAL DEVELOPMENT AGENCY TERMINAL ONE
GROUP ASSOCIATION PROJECT 5.00 01/01/2008 1,024,290
2,000,000 NEW YORK NY CITY INDUSTRIAL DEVELOPMENT AGENCY TERMINAL ONE
GROUP ASSOCIATION PROJECT 5.00 01/01/2007 2,026,940
1,000,000 NEW YORK NY IDA POLYTECHNIC UNIVERSITY PROGRAM 5.13 11/01/2006 1,001,270
1,570,000 NEW YORK STATE ENVIRONMENTAL FACILITIES CORPORATION WASTE MANAGEMENT
PROJECT SERIES A+/- 2.90 05/01/2012 1,565,149
1,035,000 SYRACUSE NY BOARD ANTICIPATION NOTES AIRPORT SERIES A 3.75 04/13/2006 1,035,093
290,000 TOBACCO SETTLEMENT FINANCING AUTHORITY NEW YORK SERIES A1 5.00 06/01/2010 290,951
15,629,013
---------------
NORTH CAROLINA - 0.91%
6,000,000 FAYETTEVILLE NC PUBLIC WORKS (OTHER REVENUE, FIRST SECURITY BANK LOC) 3.38 01/15/2007 5,993,400
---------------
NORTH DAKOTA - 0.81%
3,675,000 NORTH DAKOTA STATE HFA HOME FINANCE PROGRAM SERIES A 4.60 01/01/2023 3,685,290
445,000 NORTH DAKOTA STATE HFA HOUSING FINANCE HOME MORTGAGE FINANCE SERIES A 4.60 01/01/2023 447,354
1,215,000 NORTH DAKOTA STATE HFA HOUSING FINANCE PROGRAM SERIES D 5.40 07/01/2029 1,227,259
5,359,903
---------------
OHIO - 2.45%
2,550,000 BLUE ASH OH TAX INCREMENT BOND ANTICIPATION NOTES 4.00 12/14/2006 2,557,854
900,000 CUYAHOGA COUNTY OH CLEVELAND CLINIC SUBSERIES A2+/-SS. 3.05 01/01/2031 900,000
5,000,000 CUYAHOGA OH METROPOLIS 3.60 12/01/2006 5,008,600
6,000,000 GALLIPOLIS OH BOND ANTICIPATION NOTES 4.25 06/29/2006 6,021,300
900,000 GATEWAY OH ECONOMIC DEVELOPMENT CORPORATION SERIES B+/- 3.49 09/15/2014 900,000
825,000 LAKEWOOD OH LAKEWOOD HOSPITAL ASSOCIATION 5.00 02/15/2006 826,551
16,214,305
---------------
OKLAHOMA - 1.53%
765,000 ELLIS COUNTY OK INDUSTRIAL AUTHORITY WB JOHNSTON GRAIN SHATTUCK PROJECT 5.00 08/01/2008 765,773
425,000 ELLIS COUNTY OK INDUSTRIAL AUTHORITY WB JOHNSTON GRAIN SHATTUCK PROJECT 7.00 08/01/2013 451,877
1,900,000 OKLAHOMA COUNTY OK HOME FINANCE AUTHORITY SINGLE FAMILY REVENUE 6.60 10/01/2035 2,004,120
1,425,000 OKLAHOMA HOUSING FINANCE AGENCY SINGLE FAMILY REVENUE MORTGAGE
HOMEOWNER LOAN PROGRAM SERIES D-2 GNMA/FNMA INSURED
(HOUSING REVENUE LOC) 7.10 09/01/2028 1,466,581
5,410,000 TULSA OK INDUSTRIAL AUTHORITY ST. JOHNS PHYSICIANS+/-SS. 1.90 11/01/2014 5,405,293
10,093,644
---------------
46
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
OREGON - 1.39%
$ 6,000,000 OREGON ECONOMIC DEVELOPMENT REVENUE TOYO TANSO USA SERIES CXLVII+/-SS. 5.92% 02/01/2012 $ 6,000,000
1,500,000 PORT OF PORTLAND OR UNION PACIFIC RAILROAD COMPANY PROJECT+/-SS. 3.20 12/01/2006 1,502,790
1,680,000 WESTERN LANE OR HOSPITAL DISTRICT SISTERS OF ST. JOSEPH PEACE PROJECT 5.63 08/01/2007 1,699,790
9,202,580
---------------
OTHER - 0.75%
5,000,000 MMA FINANCIAL CDD SENIOR SECURITIZATION TRUST BEACON LAKES PASSTHRU
CTFS C+/- 3.38 11/01/2008 4,959,400
---------------
PENNSYLVANIA - 5.91%
3,475,000 ALLEGHENY COUNTY PA+/-SS. 3.60 09/15/2028 3,475,000
5,850,000 ALLEGHENY COUNTY PA+/-SS. 3.60 09/01/2032 5,850,000
1,130,000 ALLENTOWN PA SACRED HEART HOSPITAL 5.00 05/15/2006 1,133,040
650,000 ALLENTOWN PA SACRED HEART HOSPITAL 5.00 11/15/2006 653,529
1,730,000 ALLENTOWN PA SACRED HEART HOSPITAL 5.00 11/15/2007 1,740,068
10,200,000 CARBON-LEHIGH PA INTER UNIT # 21 REVENUE 3.75 06/30/2006 10,186,332
535,000 LEBANON COUNTY PA HEALTH FACILITIES AUTHORITY GOOD SAMARITAN HOSPITAL
PROJECT 3.50 11/15/2007 531,512
8,669,231 PENNSYLVANIA HFA SINGLE FAMILY MORTGAGE REVENUE+/- 4.03 06/01/2008 8,669,231
2,500,000 PITTSBURGH PA URBAN REDEVELOPMENT AUTHORITY LOU MASON JR REPLACEMENT+/- 5.00 12/01/2010 2,529,950
1,500,000 SAYRE PA HEALTH CARE FACILITIES AUTHORITY GUTHRIE HEALTH SERIES A 5.50 12/01/2006 1,526,415
2,825,000 WASHINGTON COUNTY PA IDA CHILDREN'S HOME PITTSBURGH PROJECT 4.00 06/15/2008 2,775,365
39,070,442
---------------
PUERTO RICO - 3.40%
15,680,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES B+/- 4.16 10/01/2040 15,680,000
6,750,000 PUERTO RICO MUNICIPAL FINANCE AGENY SERIES A 5.00 08/01/2006 6,809,873
22,489,873
---------------
RHODE ISLAND - 0.30%
2,000,000 RHODE ISLAND INDUSTRIAL FACILITIES CORPORATION WASTE MANAGEMENT
INCORPORATED PROJECT SERIES A+/-SS. 2.78 04/01/2016 1,994,460
---------------
SOUTH CAROLINA - 1.55%
5,000,000 JASPER COUNTY SC REVENUE ANTICIPATION NOTES 4.00 11/15/2006 5,000,750
2,250,000 SOUTH CAROLINA HOUSING FINANCE & DEVELOPMENT AUTHORITY SERIES B2
(HOUSING REVENUE, FIRST SECURITY BANK LOC) 5.13 07/01/2008 2,261,183
2,000,000 SOUTH CAROLINA JOBS ECONOMIC DEVELOPMENT AUTHORITY WASTE
MANAGEMENT SOUTH CAROLINA INCORPORATED PROJECT+/- 3.30 11/01/2016 1,971,320
1,000,000 YORK SC BOWATER INCORPORATED PROJECT 7.63 03/01/2006 1,004,900
10,238,153
---------------
SOUTH DAKOTA - 0.67%
235,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN PROGRAM
ANGUS INCORPORATED PROJECT SERIES A 3.25 04/01/2006 234,594
245,000 SOUTH DAKOTA ECONOMIC DEVELOPMENT FINANCE AUTHORITY POOLED LOAN PROGRAM
ANGUS INCORPORATED PROJECT SERIES A 3.75 04/01/2007 244,277
3,975,000 SOUTH DAKOTA HEALTH & EDUCATIONAL FACILITIES AUTHORITY SIOUX VALLEY
HOSPITALS & HEALTH SERIES B+/-SS. 3.81 11/01/2020 3,975,000
4,453,871
---------------
47
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
TENNESSEE - 1.75%
$ 1,000,000 JACKSON TN REFUNDING & IMPROVEMENTS 5.30% 04/01/2006 $ 1,004,680
750,000 METRO GOVERNMENT NASHVILLE & DAVIDSON COUNTY TN RIVER RETREAT SERIES
A+/- 5.70 11/01/2026 759,225
1,000,000 METROPOLITAN GOVERNMENT NASHVILLE & DAVIDSON COUNTY TN INDUSTRIAL
DEVELOPMENT BOARD EASTER SEAL PROJECT+/-SS. 3.10 08/01/2019 1,000,000
7,000,000 SHELBY COUNTY TN HEALTH EDUCATIONAL & HOUSING FACILITIES BOARD FLOAT
BAPTIST MEMORIAL HEALTHCARE+/- 5.00 09/01/2020 7,216,230
1,605,000 SULLIVAN COUNTY TN HEALTH EDUCATIONAL AND HOUSING FACILITIES BOARD
REVENUE - WELLMONT HEALTH SYSTEM SERIES PJ 4.50 09/01/2006 1,609,077
11,589,212
---------------
TEXAS - 4.97%
1,000,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY
SERIES A+/-SS. 5.40 04/01/2030 1,007,040
4,335,000 BRAZOS TX RIVER AUTHORITY TEXAS UTILITIES ELECTRIC COMPANY
SERIES A+/-SS. 5.05 06/01/2030 4,362,397
5,080,000 LUFKIN TX HEALTH FACILITIES DEVELOPMENT CORPORATION HEALTHCARE REVENUE
MEMORIAL HEALTH SYSTEM OF EAST TEXAS PROJECT 6.88 02/15/2026 5,202,073
3,000,000 MATAGORDA COUNTY TX+/- 4.55 11/01/2029 3,021,840
2,000,000 SAN ANTONIO TX HOTEL OCCUPANCY SERIES B+/- 5.00 08/15/2034 2,072,900
4,145,000 TEXARKANA TX HOUSING FINANCE CORPORATION TANGLEWOOD TERRACE APARTMENTS
SERIES A+/-SS. 1.00 06/01/2029 2,383,375
3,125,000 TEXAS DEPARTMENT OF HOUSING & COMMUNITY AFFAIRS SERIES E
(HOUSING REVENUE LOC) 6.00 09/01/2016 3,201,375
1,500,000 TEXAS STATE DEPARTMENT HOUSING & COMMUNITY AFFAIRS (OTHER REVENUE,
FIRST SECURITY BANK LOC) 4.25 09/01/2026 1,504,185
3,690,000 TEXAS WATER DEVELOPMENT BOARD REVENUE STATE REVOLVING SERIES A 5.60 07/15/2012 3,737,232
6,000,000 WALLER COUNTY TX INDUSTRIAL DEVELOPMENT CORPORATION MCKESSON WATER
PRODUCTS PROJECT+/-SS. 3.93 10/30/2026 6,000,000
360,053 WILMER-HUTCHINS INDEPENDENT SCHOOL DISTRICT TX 5.00 09/30/2006 360,053
32,852,470
---------------
UTAH - 0.89%
1,446,000 EAGLE MOUNTAIN UT SPECIAL IMPROVEMENT DISTRICT NUMBER 98-3 5.50 12/15/2008 1,446,419
1,200,000 SALT LAKE CITY UT REDEVELOPMENT AGENCY NEIGHBORHOOD
REDEVELOPMENT TAX INCREMENT SERIES A 5.25 10/01/2007 1,228,344
650,000 UTAH HFA SINGLE FAMILY MORTGAGE (HOUSING REVENUE LOC) 6.00 01/01/2031 654,778
2,500,000 UTAH STATE BOARD REGENTS STUDENT LOAN REVENUE SERIES N AMBAC GSL
INSURED (HIGHER EDUCATION FACILITIES AUTHORITY REVENUE LOC) 5.90 11/01/2007 2,545,175
5,874,716
---------------
VERMONT - 0.04%
280,000 VERMONT HFA HOUSING SERIES 16A (HOUSING REVENUE LOC) 4.00 05/01/2006 280,353
---------------
VIRGINIA - 1.05%
3,000,000 CHESAPEAKE VA POLLUTION CONTROL VIRGINIA PROJECT+/- 5.25 02/01/2008 3,019,350
2,400,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGINIA ASSET BACKED 4.00 06/01/2013 2,393,832
1,500,000 WINCHESTER VA INDUSTRIAL DEVELOPMENT AUTHORITY WINCHESTER MEDICAL
CENTER INCORPORATED+/- 5.25 01/01/2006 1,500,075
6,913,257
---------------
48
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WASHINGTON - 0.92%
$ 2,655,000 CHELAN COUNTY WA PUBLIC UTILITIES DISTRICT NUMBER 1
DIVISION I -SERIES A+/- 4.85% 07/01/2032 $ 2,694,559
1,500,000 SEATTLE WA (TAX REVENUE, DEXIA CREDIT LOCAL DE FRANCE LOC)+/-SS. 3.10 01/15/2026 1,495,935
750,000 WASHINGTON PUBLIC POWER SUPPLY SYSTEM PROJECT NUMBER 3 CAPITAL
APPRECIATION SERIES A (ELECTRIC REVENUE)^ 3.36 07/01/2006 737,543
1,175,000 YAKIMA WA HOUSING AUTHORITY KLICKITAT VALLEY HOSPITAL PROJECT+/-SS. 4.50 10/01/2023 1,175,000
6,103,037
---------------
WEST VIRGINIA - 1.57%
10,500,000 PUTNAM COUNTY WV APPALACHIAN POWER COMPANY PROJECT E+/- 2.80 05/01/2019 10,373,055
---------------
WISCONSIN - 1.11%
680,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.50 06/01/2006 683,590
600,000 BADGER TOBACCO ASSET SECURITIZATION CORPORATION 5.25 06/01/2007 608,160
1,575,000 FRANKLIN WI SOLID WASTE DISPOSAL REVENUE+/-SS. 3.63 04/01/2016 1,573,220
4,275,000 MILWAUKEE WI AIR WISCONSIN AIRLINES CORPORATION PROJECT+/-SS. 2.50 11/01/2033 4,250,761
100,000 MILWAUKEE WI RDA UNIVERSITY WISCONSIN KENILWORTH PROJECT+/-SS. 3.53 09/01/2040 100,000
135,000 WAUKESHA COUNTY WI HOUSING AUTHORITY STEEPLE VIEW INCORPORATED
PROJECT+/-SS. 3.43 12/01/2034 135,000
7,350,731
---------------
TOTAL MUNICIPAL BONDS & NOTES (COST $645,497,111) 642,278,086
---------------
SHORT-TERM INVESTMENTS - 2.00%
COMMERCIAL PAPER - 1.51%
5,000,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.40 01/24/2006 5,000,000
5,000,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.55 01/26/2006 5,000,000
10,000,000
---------------
SHARES
MUTUAL FUND - 0.49%
3,233,196 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~++ 3,233,196
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $13,233,196) 13,233,196
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $658,730,307)* 99.18% $ 655,511,282
OTHER ASSETS AND LIABILITIES, NET 0.82 5,442,701
------ ---------------
TOTAL NET ASSETS 100.00% $ 660,953,983
====== ===============
+/- VARIABLE RATE INVESTMENTS.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
^ ZERO 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 $3,233,196.
* 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.
49
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
MUNICIPAL BONDS & NOTES - 97.47%
GUAM - 0.06%
$ 5,000 GUAM POWER AUTHORITY SERIES A (ELECTRIC REVENUE LOC) 5.25% 10/01/2013 $ 5,358
20,000 TERRITORY OF GUAM INFRASTRUCTURE IMPROVEMENT SERIES A
(SALES TAX REVENUE LOC) 5.50 11/01/2008 21,156
10,000 TERRITORY OF GUAM SERIES A 5.20 11/15/2008 9,988
36,502
---------------
PUERTO RICO - 28.81%
250,000 CHILDREN'S TRUST FUND PUERTO RICO 5.00 05/15/2009 258,048
480,000 CHILDREN'S TRUST FUND PUERTO RICO 6.00 07/01/2010 529,171
5,000 COMMONWEALTH OF PUERTO RICO^ 3.40 07/01/2006 4,916
100,000 COMMONWEALTH OF PUERTO RICO PUBLIC IMPROVEMENT 5.25 07/01/2011 106,526
200,000 COMMONWEALTH OF PUERTO RICO PUBLIC IMPROVEMENT SERIES A
(FUEL SALES TAX REVENUE LOC) 5.50 07/01/2016 226,716
365,000 PUERTO RICO AQUEDUCT & SEWER AUTHORITY 0.25 07/01/2009 412,081
25,000 PUERTO RICO AQUEDUCT & SEWER AUTHORITY
(WATER & WASTEWATER AUTHORITY REVENUE LOC) 6.25 07/01/2012 28,826
1,000,000 PUERTO RICO COMMONWEALTH 6.50 07/01/2014 1,189,810
500,000 PUERTO RICO COMMONWEALTH INFRASTRUCTURE FINANCING AUTHORITY SPECIAL
REVENUE BONDS REF- SERIES C AMBAC (SPECIAL TAX REVENUE LOC) 5.50 07/01/2015 565,990
1,000,000 PUERTO RICO COMMONWEALTH PUBLIC IMPROVEMENTS SERIES A 5.25 07/01/2019 1,086,340
355,000 PUERTO RICO ELECTRIC POWER AUTHORITY CAPITAL APPRECIATION SERIES O^ 4.29 07/01/2017 217,864
2,000,000 PUERTO RICO ELECTRIC POWER AUTHORITY POWER REVENUE SERIES QQ 5.50 07/01/2018 2,284,420
770,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES HH (ELECTRIC REVENUE LOC) 5.25 07/01/2029 821,321
405,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES II 5.25 07/01/2022 436,720
100,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES KK (ELECTRIC REVENUE LOC) 5.00 07/01/2011 106,881
600,000 PUERTO RICO HFA CAPITAL FEDERAL PROGRAM (HOUSING REVENUE LOC) 5.00 12/01/2017 636,264
200,000 PUERTO RICO HIGHWAY & TRANSPORTATION AUTHORITY SERIES A
(FUEL SALES TAX REVENUE LOC) 5.50 07/01/2013 223,814
1,000,000 PUERTO RICO HFA CAPITAL FUNDING PROGRAM 5.00 12/01/2015 1,063,990
50,000 PUERTO RICO INDUSTRIAL MEDICAL & ENVIRONMENTAL POLLUTION CONTROL
FACILITIES FINANCING AUTHORITY PEPSICO INCORPORATED PROJECT+/- 6.25 11/15/2013 52,135
405,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ
UNIVERSITY SYSTEM PROJECT 5.00 12/01/2009 419,292
430,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY ANA G. MENDEZ UNIVERSITY SYSTEM
PROJECT 5.00 12/01/2010 447,204
25,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY FHA INSURED DR PILA HOSPITAL
PROJECT A 6.50 11/15/2020 27,948
65,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY FHA INSURED DR PILA HOSPITAL
PROJECT A (HEALTHCARE FACILITIES REVENUE LOC) 5.88 08/01/2012 66,098
215,000 PUERTO RICO INDUSTRIAL TOURIST EDUCATIONAL MEDICAL & ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY FHA INSURED DR PILA HOSPITAL
PROJECT A (HEALTHCARE FACILITIES REVENUE LOC) 5.50 07/01/2017 224,740
2,250,000 PUERTO RICO INFRASTRUCTURE FINANCING AUTHORITY SERIES B+/- 4.16 10/01/2040 2,250,000
265,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION 4.00 06/01/2006 264,584
270,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION 4.15 12/01/2006 269,357
275,000 PUERTO RICO MEDICAL SERVICES ADMINISTRATION 4.25 06/01/2007 274,040
500,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES A (OTHER REVENUE LOC) 5.25 08/01/2021 539,460
300,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES A
(PROPERTY TAX REVENUE LOC) 5.75 08/01/2013 326,613
20,000 PUERTO RICO MUNICIPAL FINANCE AGENCY SERIES B (OTHER REVENUE LOC) 5.00 07/01/2008 20,783
50
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PUERTO RICO (CONTINUED)
$ 1,000,000 PUERTO RICO PUBLIC BUILDINGS AUTHORITY SERIES C 5.75% 07/01/2017 $ 1,158,080
500,000 PUERTO RICO PUBLIC BUILDINGS AUTHORITY SERIES L 5.50 07/01/2021 576,610
25,000 PUERTO RICO PUBLIC BUILDINGS AUTHORITY SERIES M (LEASE REVENUE LOC) 5.60 07/01/2008 26,168
17,142,810
---------------
VIRGIN ISLANDS - 3.09%
500,000 TOBACCO SETTLEMENT FINANCING CORPORATION VIRGIN ISLANDS 4.75 05/15/2011 455,725
45,000 UNIVERSITY OF THE VIRGIN ISLANDS SERIES A
(COLLEGE & UNIVERSITY REVENUE LOC) 5.30 12/01/2008 47,084
150,000 UNIVERSITY OF THE VIRGIN ISLANDS SERIES A
(COLLEGE & UNIVERSITY REVENUE LOC) 5.85 12/01/2014 161,081
150,000 VIRGIN ISLANDS PFA SENIOR LIEN SERIES A 5.20 10/01/2009 156,903
200,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY REVENUE GROSS RECEIPTS
TAXES LOAN NOTE SERIES A (TAX REVENUE LOC) 6.13 10/01/2029 219,554
500,000 VIRGIN ISLANDS PUBLIC FINANCE AUTHORITY SENIOR LIEN LOAN NOTES 5.50 10/01/2014 527,030
250,000 VIRGIN ISLANDS SENIOR LIEN NOTES SERIES A 5.00 10/01/2014 267,722
1,835,099
---------------
WISCONSIN - 65.51%
20,000 ASHWAUBENON WI CDA ARENA PROJECT 4.80 06/01/2016 21,034
100,000 ASHWAUBENON WI CDA ARENA PROJECT 5.05 06/01/2019 106,847
790,000 ASHWAUBENON WI CDA ARENA PROJECT 5.10 06/01/2020 841,966
185,000 ASHWAUBENON WI CDA ARENA PROJECT SERIES A 5.80 06/01/2009 199,380
75,000 BARABOO WI CDA 4.00 03/01/2006 75,081
65,000 BARABOO WI CDA 4.50 03/01/2008 66,262
95,000 BARABOO WI CDA 4.70 03/01/2010 98,598
80,000 BARABOO WI CDA 4.80 03/01/2011 83,638
800,000 BELOIT WI CDA SERIES A 5.50 03/01/2020 845,712
495,000 BRISTOL WI CDA 6.13 03/01/2012 497,322
80,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE
HOUSING INCORPORATED PROJECT SERIES B 5.25 04/01/2011 81,647
50,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE
HOUSING INCORPORATED PROJECT SERIES B 4.20 04/01/2012 50,716
100,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE
HOUSING INCORPORATED PROJECT SERIES B 4.50 04/01/2014 102,033
105,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE
HOUSING INCORPORATED PROJECT SERIES B 5.40 04/01/2017 107,679
50,000 BROWN COUNTY WI HOUSING AUTHORITY UNIVERSITY VILLAGE
HOUSING INCORPORATED PROJECT SERIES B 5.13 04/01/2021 51,870
175,000 CUDAHY WI CDA 4.70 06/01/2009 182,551
25,000 CUDAHY WI CDA 5.00 06/01/2014 26,127
50,000 CUDAHY WI CDA 4.40 06/01/2006 50,254
1,000,000 CUDATY WI CDA 4.55 06/01/2019 1,016,470
600,000 FRANKLIN WI CDA SERIES B 4.80 04/01/2009 605,004
40,000 FRANKLIN WI CDA SERIES B 5.00 04/01/2011 40,430
35,000 GERMANTOWN WISCONSIN IDR QUARTERS-BANNER WELDER INCORPORATED PROJECT+/- 5.13 02/01/2011 35,015
500,000 GLENDALE WI CDA COMMUNITY DEVELOPMENT BAYSHORE PUBLIC PARKING A 4.75 10/01/2020 514,400
45,000 GLENDALE WI CDA COMMUNITY DEVELOPMENT TAX INCREMENT 6 5.00 10/01/2019 46,657
100,000 GRANT COUNTY WI HOUSING AUTHORITY ORCHARD MANOR 4.90 07/01/2010 102,611
51
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 60,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT
LAMBEAU FIELD RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.15% 02/01/2008 $ 61,091
5,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT LAMBEAU FIELD
RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.35 02/01/2010 5,191
10,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT LAMBEAU FIELD
RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.45 02/01/2011 10,477
175,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT LAMBEAU FIELD
RENOVATION PROJECT A (SALES TAX REVENUE LOC) 4.75 02/01/2014 183,666
140,000 GREEN BAY BROWN COUNTY WI PROFESSIONAL FOOTBALL STADIUM DISTRICT LAMBEAU FIELD
RENOVATION PROJECT A (SALES TAX REVENUE LOC) 5.00 02/01/2019 147,633
20,000 GREEN BAY WI HOUSING AUTHORITY FHA INSURED MORAINE LIMITED SERIES A
(HOUSING REVENUE LOC) 6.15 12/01/2030 20,948
1,000,000 GREEN BAY WI HOUSING AUTHORITY HOUSING REVENUE
UNIVERSITY VILLAGE HOUSING INCORPORATED 5.00 04/01/2016 1,069,460
10,000 GREEN BAY WI RDA BELLIN MEMORIAL HOSPITAL SERIES A 5.50 02/15/2021 10,464
100,000 GREEN BAY WI RDA PINE STREET PARKING RAMP PROJECT 5.15 04/01/2013 105,700
1,500,000 GREEN BAY WI REDEVELOPMENT AUTHORITY CONVENTION CENTER PROJECT SERIES A 5.25 06/01/2024 1,574,475
20,000 GREEN BAY WI REDEVELOPMENT AUTHORITY BELLIN MEMORIAL HOSPITAL SERIES A 5.00 02/15/2013 20,820
500,000 GREENFIELD WI CDA HOUSING REVENUE LAYTON TERRACE PROJECT+/- 4.75 09/01/2033 497,085
245,000 JOHNSON CREEK WI CDA 4.65 12/01/2012 255,530
10,000 JOHNSON CREEK WI CDA 5.00 12/01/2016 10,488
200,000 KENOSHA WI GNMA COLLATERALIZED VILLA CIERA SERIES A (HOUSING REVENUE LOC) 6.00 11/20/2041 208,046
180,000 LIBERTY LAKE WI HOUSING PROJECT GNMA COLLATERALIZED WOODLAND PARK
(HOUSING REVENUE LOC) 5.40 02/20/2043 185,083
40,000 MADISON WI CDA REDEVELOPMENT MERITER RETIREMENT SERVICES 5.90 12/01/2008 40,049
1,000,000 MILWAUKEE WI HOUSING AUTHORITY VETERANS HOUSING PROJECT 5.10 07/01/2022 1,061,260
2,000,000 MILWAUKEE WI RDA MILWAUKEE PUBLIC SCHOOLS 5.13 08/01/2022 2,112,800
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B 5.05 07/01/2019 490,257
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B 5.15 07/01/2020 492,132
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B 5.20 07/01/2021 493,133
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B 5.30 07/01/2022 495,615
470,000 MILWAUKEE WI RDA MILWAUKEE SCHOOL ENGINEERING PROJECT SERIES B 5.35 07/01/2023 496,301
100,000 MILWAUKEE WI RDA SCHOOL ENGINEERING PROJECT SERIES A
(COLLEGE & UNIVERSITY REVENUE LOC) 4.20 10/01/2010 102,703
95,000 MILWAUKEE WI RDA SUMMERFEST PROJECT 4.20 08/01/2011 97,641
900,000 MILWAUKEE WI RDA UNIVERSITY WISCONSIN KENILWORTH PROJECTS S.+/- 3.53 09/01/2040 900,000
40,000 MILWAUKEE WI RDA YMCA METROPOLITAN MILWAUKEE INCORPORATED PROJECT 5.00 12/01/2018 40,418
100,000 MILWAUKEE WI RDA YMCA METROPOLITAN MILWAUKEE INCORPORATED PROJECT
(OTHER REVENUE, MARSHALL & ISLEY BANK LOC) 4.20 12/01/2007 101,050
125,000 MILWAUKEE WI RDA YMCA METROPOLITAN MILWAUKEE INCORPORATED PROJECT
(OTHER REVENUE, MARSHALL & ISLEY BANK LOC) 4.30 12/01/2008 126,315
35,000 MILWAUKEE WI RDA YWCA GREATER MILWAUKEE SERIES A 4.70 06/01/2009 35,368
500,000 MILWAUKEE WI RDA REVENUE SCIENCE EDUCATION CONSORTIUM PROJECT SERIES A 5.75 08/01/2035 501,965
1,000,000 MILWAUKEE WI RDA MILWAUKEE PUBLIC SCHOOLS CONGRESS SERIES A 4.60 08/01/2022 1,017,650
1,000,000 NEENAH WI CDA SERIES A 5.13 12/01/2023 1,063,140
70,000 NEW BERLIN WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING APPLE GLEN SERIES
A^ 6.01 05/01/2006 68,614
65,000 NEW BERLIN WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING APPLE GLEN SERIES
A^ 6.01 11/01/2006 61,860
52
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 45,000 OAKFIELD WI CDA 4.20% 12/01/2006 $ 45,324
50,000 OAKFIELD WI CDA 4.40 12/01/2008 51,005
350,000 OAKFIELD WI CDA 5.40 12/01/2021 368,091
100,000 OCONTO FALLS WI CDA 4.15 06/01/2007 101,213
150,000 OCONTO FALLS WI CDA 4.15 06/01/2008 152,844
150,000 OCONTO FALLS WI CDA 4.05 06/01/2009 153,202
135,000 OCONTO FALLS WI CDA 4.60 06/01/2014 138,812
175,000 OCONTO FALLS WI CDA 4.65 06/01/2015 179,903
200,000 OCONTO FALLS WI CDA 4.90 06/01/2018 208,080
210,000 ONALASKA WI CDA 5.30 06/01/2015 215,239
200,000 OSCEOLA WI RDA 4.65 12/01/2010 206,604
325,000 OSCEOLA WI RDA 4.75 12/01/2011 337,308
350,000 OSCEOLA WI RDA 5.15 12/01/2015 366,023
430,000 OSCEOLA WI RDA 5.38 12/01/2020 450,713
50,000 OSHKOSH WI ELDERLY HOUSING AUTHORITY FHA VILLA ST. THERESA A
(HOUSING REVENUE LOC) 5.90 06/01/2024 51,115
10,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT
(SALES TAX REVENUE LOC)+/- 5.65 03/13/2007 10,376
50,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT CAPITAL APPRECIATION
(LEASE REVENUE LOC)^ 4.29 12/15/2016 31,406
15,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN SERIES B
(SALES TAX REVENUE LOC) 5.00 12/15/2006 15,246
250,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN SERIES B
(SALES TAX REVENUE LOC) 5.50 12/15/2009 269,112
1,545,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN SERIES B
(SALES TAX REVENUE LOC) 5.50 12/15/2015 1,706,020
1,635,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT JUNIOR LIEN SERIES B
(SALES TAX REVENUE LOC) 5.50 12/15/2016 1,794,102
70,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2015 78,996
280,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2018 320,006
195,000 SOUTHEAST WISCONSIN PROFESSIONAL BASEBALL PARK DISTRICT SERIES A
(SALES TAX REVENUE LOC) 5.50 12/15/2021 225,496
35,000 ST. CROIX FALLS WI CDA 3.65 12/01/2007 34,973
20,000 ST. CROIX FALLS WI CDA 4.00 12/01/2007 20,252
135,000 ST. CROIX FALLS WI CDA 4.13 12/01/2008 137,782
120,000 ST. CROIX FALLS WI CDA 4.40 12/01/2011 125,106
80,000 ST. CROIX FALLS WI CDA 4.50 12/01/2011 81,774
160,000 ST. CROIX FALLS WI CDA 4.50 12/01/2012 167,299
90,000 ST. CROIX FALLS WI CDA 4.85 12/01/2014 93,107
50,000 STURTEVANT WI CDA 3.55 12/01/2009 50,005
75,000 STURTEVANT WI CDA 4.60 12/01/2010 76,735
110,000 STURTEVANT WI CDA 4.80 12/01/2012 112,532
300,000 STURTEVANT WI CDA 4.40 12/01/2015 306,450
25,000 SUN PRAIRIE WI CDA SERIES B 5.00 02/01/2012 26,276
95,000 SUN PRAIRIE WI CDA SERIES B 5.10 02/01/2013 99,913
105,000 SUN PRAIRIE WI CDA SERIES B 5.20 02/01/2014 110,622
750,000 VERONA WI CDA 5.38 12/01/2022 790,440
53
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
WISCONSIN (CONTINUED)
$ 50,000 WATERFORD WI CDA 5.35% 10/01/2014 $ 53,630
95,000 WATERFORD WI CDA 5.80 10/01/2023 103,746
240,000 WATERTOWN WI CDA SERIES A 5.00 05/01/2018 245,530
50,000 WATERTOWN WI CDA SERIES B 4.25 05/01/2008 50,791
500,000 WAUKESHA COUNTY WI HOUSING AUTHORITY BROOKFIELD WOODS PROJECT+/-SS. 4.80 03/01/2034 500,400
590,000 WAUKESHA COUNTY WI HOUSING AUTHORITY THE ARBORETUM PROJECT+/- 5.00 12/01/2027 596,201
410,000 WAUKESHA WI RDA GNMA COLLATERALIZED AVALON SQUARE PROJECT SERIES A
(HEALTHCARE FACILITIES REVENUE LOC) 5.00 06/20/2021 430,176
10,000 WAUKESHA WI RDA SENIOR HOUSING PRESBYTERIAN HOMES PROJECT 7.25 06/01/2020 10,721
100,000 WAUKESHA WI RDA SENIOR HOUSING PRESBYTERIAN HOMES PROJECT 7.50 06/01/2035 106,597
100,000 WAUWATOSA WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING HAWTHORNE SERIES
A^ 5.51 11/01/2006 95,557
105,000 WAUWATOSA WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING HAWTHORNE SERIES
A^ 5.66 05/01/2007 97,455
100,000 WAUWATOSA WI HOUSING AUTHORITY CAPITAL APPRECIATION HOUSING HAWTHORNE SERIES
A^ 5.66 11/01/2007 90,260
45,000 WAUWATOSA WI RDA (LEASE REVENUE LOC) 5.65 12/01/2016 47,042
85,000 WEST ALLIS WI CDA MFHR VETERANS PARK PROJECT+/- 4.00 11/01/2009 84,999
65,000 WEST ALLIS WI CDA MFHR VETERANS PARK PROJECT+/- 4.30 11/01/2010 65,510
220,000 WESTON WI CDA 4.25 10/01/2013 226,591
720,000 WESTON WI CDA COMMUNITY DEVELOPMENT SERIES A 5.25 10/01/2020 781,438
3,360,000 WISCONSIN CENTER DISTRICT CAPITAL APPRECIATION BONDS (TAX REVENUE LOC)^ 4.80 12/15/2030 1,028,496
220,000 WISCONSIN CENTER DISTRICT CAPITAL APPRECIATION SENIOR DEDICATED SERIES A
(TAX REVENUE LOC)^ 4.60 12/15/2021 106,469
25,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2013 27,455
210,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2015 232,147
465,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2016 517,508
240,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2018 269,328
105,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED (TAX REVENUE LOC) 5.25 12/15/2019 118,332
80,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED SERIES 1998A
(OTHER REVENUE, FIRST SECURITY BANK LOC) 5.25 12/15/2027 89,590
40,000 WISCONSIN CENTER DISTRICT JUNIOR DEDICATED SERIES B 5.70 12/15/2006 41,305
65,000 WISCONSIN DELLS CDA SERIES A 4.65 09/01/2014 66,921
70,000 WISCONSIN DELLS CDA SERIES A 4.80 09/01/2015 72,370
75,000 WISCONSIN DELLS CDA SERIES A 4.90 09/01/2016 77,716
80,000 WISCONSIN DELLS CDA SERIES A 5.00 09/01/2017 83,072
155,000 WISCONSIN HFA REVENUE (HOUSING REVENUE LOC) 6.10 12/01/2017 171,807
1,000,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.70 11/01/2025 1,005,200
1,750,000 WISCONSIN HOUSING & ECONOMIC DEVELOPMENT AUTHORITY SERIES E 4.90 11/01/2035 1,760,307
38,977,901
----------
TOTAL MUNICIPAL BONDS & NOTES (COST $56,851,748) 57,992,312
----------
54
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
SHORT-TERM INVESTMENTS - 1.60%
COMMERCIAL PAPER - 1.60%
$ 950,000 GOVERNMENT DEVELOPMENT BANK PUERTO RICO 3.55% 01/26/2006 $ 950,000
TOTAL SHORT-TERM INVESTMENTS (COST $950,000) 950,000
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $57,801,748)* 99.07% $58,942,312
OTHER ASSETS AND LIABILITIES, NET 0.93 553,008
------ -----------
TOTAL NET ASSETS 100.00% $59,495,320
====== ===========
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
+/- VARIABLE RATE INVESTMENTS.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
* 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.
55
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE
FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE .......................................................................... $ 78,016,483
INVESTMENTS IN AFFILIATES ............................................................................... 885,208
-------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ......................................................... 78,901,691
-------------
CASH .................................................................................................... 0
VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS ........................................................ 9,453
RECEIVABLE FOR FUND SHARES ISSUED ....................................................................... 303,390
RECEIVABLE FOR INVESTMENTS SOLD ......................................................................... 0
RECEIVABLES FOR DIVIDENDS AND INTEREST .................................................................. 988,480
-------------
TOTAL ASSETS ............................................................................................... 80,203,014
-------------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED ........................................................................ 16,540
PAYABLE FOR INVESTMENTS PURCHASED ....................................................................... 353,748
DIVIDENDS PAYABLE ....................................................................................... 248,478
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ................................................... 31,146
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT ................................................. 21,150
PAYABLE FOR INTEREST RATE SWAPS/SPREAD LOCKS ............................................................ 0
ACCRUED EXPENSES AND OTHER LIABILITIES .................................................................. 4,788
-------------
TOTAL LIABILITIES .......................................................................................... 675,850
-------------
TOTAL NET ASSETS ........................................................................................... $ 79,527,164
=============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ......................................................................................... $ 79,089,722
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .............................................................. (1,000)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................... (9,697)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF
ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES .............................................. 461,889
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ................................................... (13,750)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ................. 0
-------------
TOTAL NET ASSETS ........................................................................................... $ 79,527,164
-------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A .................................................................................... N/A
SHARES OUTSTANDING - CLASS A ............................................................................ N/A
NET ASSET VALUE PER SHARE - CLASS A ..................................................................... N/A
MAXIMUM OFFERING PRICE PER SHARE - CLASS A .............................................................. N/A
NET ASSETS - CLASS B .................................................................................... N/A
SHARES OUTSTANDING - CLASS B ............................................................................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B .................................................. N/A
NET ASSETS - CLASS C .................................................................................... N/A
SHARES OUTSTANDING - CLASS C ............................................................................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C .................................................. N/A
NET ASSETS - ADMINISTRATOR CLASS ........................................................................ N/A
SHARES OUTSTANDING - ADMINISTRATOR CLASS ................................................................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ...................................... N/A
NET ASSETS - ADVISOR CLASS .............................................................................. N/A
SHARES OUTSTANDING - ADVISOR CLASS ...................................................................... N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS ............................................ N/A
NET ASSETS - INSTITUTIONAL CLASS ........................................................................ N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS ................................................................ N/A
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ...................................... N/A
NET ASSETS - INVESTOR CLASS ............................................................................. $ 79,527,164
SHARES OUTSTANDING - INVESTOR CLASS ..................................................................... 7,437,999
NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ........................................... $ 10.69
-------------
INVESTMENTS AT COST ........................................................................................ $ 78,439,802
=============
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.50 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
STATEMENTS OF ASSETS AND LIABILITIES --DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL SHORT-TERM MUNICIPAL ULTRA SHORT-TERM WISCONSIN TAX-FREE
BOND FUND BOND FUND MUNICIPAL INCOME FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE ................ $372,213,055 $658,122,195 $652,278,086 $58,942,312
INVESTMENTS IN AFFILIATES ..................... 4,128,067 1,020,670 3,233,196 0
------------ ------------ ------------ -----------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST
BELOW) ........................................ 376,341,122 659,142,865 655,511,282 58,942,312
------------ ------------ ------------ -----------
CASH .......................................... 0 0 0 49,244
VARIATION MARGIN RECEIVABLE ON FUTURES
CONTRACTS ................................... 49,219 19,219 5,859 13,594
RECEIVABLE FOR FUND SHARES ISSUED ............. 24,171 1,108,927 481,357 67,162
RECEIVABLE FOR INVESTMENTS SOLD ............... 2,095,813 392,804 1,486,720 0
RECEIVABLES FOR DIVIDENDS AND INTEREST ........ 4,377,056 7,180,853 6,337,304 695,320
------------ ------------ ------------ -----------
TOTAL ASSETS ..................................... 382,887,381 667,844,668 663,822,522 59,767,632
------------ ------------ ------------ -----------
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED .............. 61,348 1,114,015 370,163 15,115
PAYABLE FOR INVESTMENTS PURCHASED ............. 2,062,714 2,804,438 0 22,502
DIVIDENDS PAYABLE ............................. 1,475,800 2,091,867 1,945,505 189,096
PAYABLE TO INVESTMENT ADVISOR AND
AFFILIATES (NOTE 3) ......................... 185,365 289,410 296,288 18,770
PAYABLE TO THE TRUSTEES AND SHAREHOLDER
SERVICING AGENT ............................. 103,588 157,301 116,656 18,612
PAYABLE FOR INTEREST RATE SWAPS/SPREAD
LOCKS ....................................... 0 11,716 27,337 0
ACCRUED EXPENSES AND OTHER LIABILITIES ........ 135 90,065 112,590 8,217
------------ ------------ ------------ -----------
TOTAL LIABILITIES ................................ 3,888,950 6,558,812 2,868,539 272,312
------------ ------------ ------------ -----------
TOTAL NET ASSETS ................................. $378,998,431 $661,285,856 $660,953,983 $59,495,320
============ ============ ============ ===========
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................... $378,485,740 $675,161,007 $740,322,615 $58,258,187
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .... (1) 7,439 17,359 47
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON
INVESTMENTS ................................. (14,253,031) (13,083,853) (76,151,809) 129,919
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENTS, FOREIGN CURRENCIES AND
TRANSLATION OF ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES ........... 14,916,381 (729,228) (3,219,025) 1,140,564
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF FUTURES .................................. (150,658) (57,793) 12,180 (33,397)
NET UNREALIZED APPRECIATION (DEPRECIATION)
OF OPTIONS, SWAP AGREEMENTS, AND SHORT
SALES ....................................... 0 (11,716) (27,337) 0
------------ ------------ ------------ -----------
TOTAL NET ASSETS ................................. $378,998,431 $661,285,856 $660,953,983 $59,495,320
------------ ------------ ------------ -----------
COMPUTATION OF NET ASSET VALUE AND OFFERING
PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A .......................... $134,408,580 N/A N/A N/A
SHARES OUTSTANDING - CLASS A .................. 14,101,727 N/A N/A N/A
NET ASSET VALUE PER SHARE - CLASS A ........... $ 9.53 N/A N/A N/A
MAXIMUM OFFERING PRICE PER SHARE - CLASS A .... $ 9.98(2) N/A N/A N/A
NET ASSETS - CLASS B .......................... $ 20,688,091 N/A N/A N/A
SHARES OUTSTANDING - CLASS B .................. 2,171,275 N/A N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B ............................. $ 9.53 N/A N/A N/A
NET ASSETS - CLASS C .......................... $ 1,996,490 $ 5,808,574 N/A $ 3,006,889
SHARES OUTSTANDING - CLASS C .................. 209,531 593,919 N/A 285,215
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS C ............................. $ 9.53 $ 9.78 N/A $ 10.54
NET ASSETS - ADMINISTRATOR CLASS .............. $ 16,961,840 N/A N/A N/A
SHARES OUTSTANDING - ADMINISTRATOR CLASS ...... 1,780,181 N/A N/A N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - ADMINISTRATOR CLASS ................. $ 9.53 N/A N/A N/A
NET ASSETS - ADVISOR CLASS .................... N/A N/A $ 16,107,610 N/A
SHARES OUTSTANDING - ADVISOR CLASS ............ N/A N/A 3,373,218 N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - ADVISOR CLASS ....................... N/A N/A $ 4.78 N/A
NET ASSETS - INSTITUTIONAL CLASS .............. N/A N/A $166,171,645 N/A
SHARES OUTSTANDING - INSTITUTIONAL CLASS ...... N/A N/A 34,806,218 N/A
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - INSTITUTIONAL CLASS ................. N/A N/A $ 4.77 N/A
NET ASSETS - INVESTOR CLASS ................... $204,943,430 $655,477,282 $478,674,728 $56,488,431
SHARES OUTSTANDING - INVESTOR CLASS ........... 21,509,158 66,955,103 100,246,862 5,358,000
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - INVESTOR CLASS ...................... $ 9.53 $ 9.79 $ 4.77 $ 10.54
------------ ------------ ------------ -----------
INVESTMENTS AT COST .............................. $361,424,741 $659,872,093 $658,730,307 $57,801,748
============ ============ ============ ===========
57
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE
FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST ................................................................................................ $ 1,542,689
INCOME FROM AFFILIATED SECURITIES ....................................................................... 46,930
-----------
TOTAL INVESTMENT INCOME .................................................................................... 1,589,619
-----------
EXPENSES
ADVISORY FEES ........................................................................................... 157,665
ADMINISTRATION FEES
FUND LEVEL ............................................................................................ 197,082
CLASS A ............................................................................................... N/A
CLASS B ............................................................................................... N/A
CLASS C ............................................................................................... N/A
ADMINISTRATOR CLASS ................................................................................... N/A
ADVISOR CLASS ......................................................................................... N/A
INSTITUTIONAL CLASS ................................................................................... N/A
INVESTOR CLASS ........................................................................................ N/A
CUSTODY FEES ............................................................................................ 7,883
SHAREHOLDER SERVICING FEES .............................................................................. 98,541
ACCOUNTING FEES ......................................................................................... 12,594
DISTRIBUTION FEES (NOTE 3)
CLASS B ............................................................................................... N/A
CLASS C ............................................................................................... N/A
PROFESSIONAL FEES ....................................................................................... 14,013
REGISTRATION FEES ....................................................................................... 11,536
SHAREHOLDER REPORTS ..................................................................................... 1,897
TRUSTEES' FEES .......................................................................................... 4,183
OTHER FEES AND EXPENSES ................................................................................. 3,536
-----------
TOTAL EXPENSES ............................................................................................. 508,930
-----------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ............................................................ (213,308)
NET EXPENSES ............................................................................................ 295,622
-----------
NET INVESTMENT INCOME (LOSS) ............................................................................... 1,293,997
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
- -----------------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ......................................... 18,878
FUTURES TRANSACTIONS .................................................................................... 97,882
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .................................................... 0
-----------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS .................................................................. 116,760
-----------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- -----------------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ......................................... (794,836)
FUTURES TRANSACTIONS .................................................................................... 2,742
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .................................................... 0
-----------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ........................................ (792,094)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ..................................................... (675,334)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................................ 618,663
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
STATEMENTS OF OPERATIONS --
FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL SHORT-TERM MUNICIPAL ULTRA SHORT-TERM WISCONSIN TAX-FREE
BOND FUND BOND FUND MUNICIPAL INCOME FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST ......................................... $ 9,668,364 $13,080,901 $12,444,598 $ 1,299,720
INCOME FROM AFFILIATED SECURITIES ................ 139,473 226,458 183,963 127
----------- ----------- ----------- -----------
TOTAL INVESTMENT INCOME ............................. 9,807,837 13,307,359 12,628,561 1,299,847
----------- ----------- ----------- -----------
EXPENSES
ADVISORY FEES .................................... 777,781 1,317,951 1,358,236 120,067
ADMINISTRATION FEES
FUND LEVEL ..................................... 97,223 170,079 175,834 15,008
CLASS A ........................................ 196,366 N/A N/A N/A
CLASS B ........................................ 30,685 N/A N/A N/A
CLASS C ........................................ 2,874 8,225 N/A 4,116
ADMINISTRATOR CLASS ............................ 8,821 N/A N/A N/A
ADVISOR CLASS .................................. N/A N/A 25,151 N/A
INSTITUTIONAL CLASS ............................ N/A N/A 62,505 N/A
INVESTOR CLASS ................................. 465,785 1,346,329 1,190,495 128,461
CUSTODY FEES ..................................... 38,889 68,032 70,334 6,003
SHAREHOLDER SERVICING FEES ....................... 486,113 850,396 683,842 75,042
ACCOUNTING FEES .................................. 33,148 34,606 39,953 15,104
DISTRIBUTION FEES (NOTE 3)
CLASS B ........................................ 82,191 N/A N/A N/A
CLASS C ........................................ 7,697 26,821 N/A 11,024
PROFESSIONAL FEES ................................ 13,305 16,876 39,865 14,346
REGISTRATION FEES ................................ 41,471 51,336 20,605 15,719
SHAREHOLDER REPORTS .............................. 10,528 8,723 8,584 2,219
TRUSTEES' FEES ................................... 4,183 4,183 4,183 4,183
OTHER FEES AND EXPENSES .......................... 7,989 16,927 17,855 3,561
----------- ----------- ----------- -----------
TOTAL EXPENSES ...................................... 2,305,049 3,920,484 3,697,442 414,853
----------- ----------- ----------- -----------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..... (644,041) (1,635,643) (1,429,253) (178,802)
NET EXPENSES ..................................... 1,661,008 2,284,841 2,268,189 236,051
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ........................ 8,146,829 11,022,518 10,360,372 1,063,796
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
- -----------------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION ........................... 4,800,074 (354,436) 10,447 198,632
FUTURES TRANSACTIONS ............................. 400,431 427,505 123,413 75,902
OPTIONS, SWAP AGREEMENTS AND SHORT SALE
TRANSACTIONS ................................... 0 (7,440) (17,359) 0
----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........... 5,200,505 65,629 116,501 274,534
----------- ----------- ----------- -----------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
- -----------------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN
CURRENCY TRANSLATION ........................... (8,232,772) (3,000,996) (14,262) (942,393)
FUTURES TRANSACTIONS ............................. 94,079 (14,364) 10,051 (36,749)
OPTIONS, SWAP AGREEMENTS AND SHORT SALE
TRANSACTIONS ................................... 0 3,137 7,321 0
----------- ----------- ----------- -----------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .................... (8,138,693) (3,012,223) 3,110 (979,142)
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ...................................... (2,938,188) (2,946,594) 119,611 (704,608)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .................................. 5,208,641 8,075,924 10,479,983 359,188
=========== =========== =========== ===========
59
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 PERIOD ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................. $ 71,869,518 $ 41,936,160 $ 50,889,570
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................... 1,293,997 1,313,687 1,460,085
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................... 116,760 1,696 980,438
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS ..................................................... (792,094) 304,814 27,973
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...... 618,663 1,620,197 2,468,496
----------------- ------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................ N/A N/A N/A
CLASS B ........................................................ N/A N/A N/A
CLASS C ........................................................ N/A N/A N/A
ADMINISTRATOR CLASS ............................................ N/A N/A N/A
ADVISOR CLASS .................................................. N/A N/A N/A
INSTITUTIONAL CLASS ............................................ N/A N/A N/A
INVESTOR CLASS ................................................. (1,294,997) (1,313,687) (1,460,085)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ........................................................ N/A N/A N/A
INVESTOR CLASS ................................................. (124,133) (989,146) (189,998)
----------------- ------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................. (1,419,130) (2,302,833) (1,650,083)
----------------- ------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A (NOTE 1) ...................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS A (NOTE 1) .................. N/A N/A N/A
COST OF SHARES REDEEMED - CLASS A (NOTE 1) ........................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - CLASS A ...................................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B (NOTE 1) ...................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS B (NOTE 1) .................. N/A N/A N/A
COST OF SHARES REDEEMED - CLASS B ................................. N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - CLASS B ...................................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C (NOTE 1) ...................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C (NOTE 1) .................. N/A N/A N/A
COST OF SHARES REDEEMED - CLASS C (NOTE 1) ........................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - CLASS C ...................................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .......... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ...... N/A N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - ADMINISTRATOR CLASS .......................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ......................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... N/A N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ........................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - ADVISOR CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... N/A N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - INSTITUTIONAL CLASS .......................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........................ 23,702,053 45,150,430 20,110,367
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 1,031,019 2,064,384 1,288,342
COST OF SHARES REDEEMED - INVESTOR CLASS .......................... (16,274,959) (16,598,820) (31,170,532)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - INVESTOR CLASS ............................... 8,458,113 30,615,994 (9,771,823)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS ................................................ 8,458,113 30,615,994 (9,771,823)
================= ============= ================
NET INCREASE (DECREASE) IN NET ASSETS ................................ 7,657,646 29,933,358 (8,953,410)
================= ============= ================
ENDING NET ASSETS .................................................... $ 79,527,164 $ 71,869,518 $ 41,936,160
================= ============= ================
(1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND
SHARE CLASS CONVERSIONS (NOTE 1).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
-------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005(1) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................. $ 385,942,540 $ 185,717,499 $ 209,152,456
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................... 8,146,829 7,321,505 8,886,421
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................... 5,200,505 225,875 6,653,844
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .. (8,138,693) 5,788,237 4,818,132
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...... 5,208,641 13,335,617 20,358,397
----------------- ------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................ (2,940,254) (1,414,872) N/A
CLASS B ........................................................ (377,240) (192,035) N/A
CLASS C ........................................................ (35,377) (16,377) N/A
ADMINISTRATOR CLASS ............................................ (402,423) (194,302) N/A
ADVISOR CLASS .................................................. N/A N/A N/A
INSTITUTIONAL CLASS ............................................ N/A N/A N/A
INVESTOR CLASS ................................................. (4,391,536) (5,510,253) (8,646,383)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ........................................................ 0 0 N/A
INVESTOR CLASS ................................................. 0 0 0
----------------- ------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................. (8,146,830) (7,327,839) (8,646,383)
----------------- ------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A (NOTE 1) ...................... 1,773,679 143,520,248 N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS A (NOTE 1) .................. 1,816,753 1,067,039 N/A
COST OF SHARES REDEEMED - CLASS A (NOTE 1) ........................ (9,985,930) (5,253,812) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ............................................ (6,395,498) 139,333,475 N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B (NOTE 1) ...................... 110,037 24,029,831 N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS B (NOTE 1) .................. 239,034 147,689 N/A
COST OF SHARES REDEEMED - CLASS B ................................. (2,170,893) 1,913,580) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................ (1,821,822) 22,263,940 N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C (NOTE 1) ...................... 120,141 1,998,718 N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C (NOTE 1) .................. 13,614 7,171 N/A
COST OF SHARES REDEEMED - CLASS C (NOTE 1) ........................ (88,581) (75,058) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................ 45,174 1,930,831 N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .......... 162,776 18,102,663 N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ...... 259,127 153,083 N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............ (1,144,453) (755,399) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ................................ (722,550) 17,500,347 N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ......................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... N/A N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ........................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS ...................................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... N/A N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........................ 27,365,409 38,100,349 33,068,570
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 2,824,417 4,914,422 6,941,940
COST OF SHARES REDEEMED - INVESTOR CLASS .......................... (25,301,050) (29,826,101) (75,157,481)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ..................................... 4,888,776 13,188,670 (35,146,971)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ...................................................... (4,005,920) 194,217,263 (35,146,971)
================= ============= ================
NET INCREASE (DECREASE) IN NET ASSETS ................................ (6,944,109) 200,225,041 (23,434,957)
================= ============= ================
ENDING NET ASSETS .................................................... $ 378,998,431 $ 385,942,540 $ 185,717,499
================= ============= ================
SHORT-TERM MUNICIPAL BOND FUND
-------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 PERIOD ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................................. $ 665,631,344 $ 491,431,831 $ 647,193,229
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................................... 11,022,518 11,453,376 15,948,281
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........................... 65,629 (1,812,299) 4,341,410
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS (3,012,223) 1,849,826 (4,000,667)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...... 8,075,924 11,490,903 16,289,024
----------------- ------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ........................................................ N/A N/A N/A
CLASS B ........................................................ N/A N/A N/A
CLASS C ........................................................ (82,816) (103,386) (86,856)
ADMINISTRATOR CLASS ............................................ N/A N/A N/A
ADVISOR CLASS .................................................. N/A N/A N/A
INSTITUTIONAL CLASS ............................................ N/A N/A N/A
INVESTOR CLASS ................................................. (10,932,263) (11,358,036) (15,820,021)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ........................................................ 0 (3,105) 0
INVESTOR CLASS ................................................. 0 (203,063) 0
----------------- ------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................. (11,015,079) (11,667,590) (15,906,877)
----------------- ------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A (NOTE 1) ...................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS A (NOTE 1) .................. N/A N/A N/A
COST OF SHARES REDEEMED - CLASS A (NOTE 1) ........................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ............................................ N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B (NOTE 1) ...................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS B (NOTE 1) .................. N/A N/A N/A
COST OF SHARES REDEEMED - CLASS B ................................. N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ............................................ N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C (NOTE 1) ...................... 1,539,466 1,745,736 4,888,466
REINVESTMENT OF DISTRIBUTIONS - CLASS C (NOTE 1) .................. 8,725 13,264 14,624
COST OF SHARES REDEEMED - CLASS C (NOTE 1) ........................ (3,934,486) (503,786) (811,705)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ............................................ (2,386,295) 1,255,214 4,091,385
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .......... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ...... N/A N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) ............ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ......................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... N/A N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ........................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS ...................................... N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... N/A N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........................ 134,411,056 326,137,861 180,544,333
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 6,723,862 9,968,691 12,329,519
COST OF SHARES REDEEMED - INVESTOR CLASS .......................... (140,154,956) (162,985,566) (353,108,782)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ..................................... 979,962 173,120,986 (160,234,930)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ...................................................... (1,406,333) 174,376,200 (156,143,545)
================= ============= ================
NET INCREASE (DECREASE) IN NET ASSETS ................................ (4,345,488) 174,199,513 (155,761,398)
================= ============= ================
ENDING NET ASSETS .................................................... $ 661,285,856 $ 665,631,344 $ 491,431,831
================= ============= ================
61
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
-------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A (NOTE 1) .................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A
(NOTE 1) ........................................................ N/A N/A N/A
SHARES REDEEMED - CLASS A (NOTE 1) ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .............. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS B (NOTE 1) .................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B
(NOTE 1) ........................................................ N/A N/A N/A
SHARES REDEEMED - CLASS B (NOTE 1) ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .............. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS C (NOTE 1) .................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C
(NOTE 1) ........................................................ N/A N/A N/A
SHARES REDEEMED - CLASS C (NOTE 1) ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .............. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ........................ N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
ADMINISTRATOR CLASS ............................................... N/A N/A N/A
----------------- ------------- ----------------
SHARES-SOLD - ADVISOR CLASS ....................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS .... N/A N/A N/A
SHARES REDEEMED - ADVISOR CLASS ................................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ........ N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ................................. N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
INSTITUTIONAL CLASS ............................................. N/A N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS ............................. N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
INSTITUTIONAL CLASS ............................................... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INVESTOR CLASS ...................................... 2,211,552 4,194,532 1,842,637
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
INVESTOR CLASS .................................................. 96,356 192,054 118,832
SHARES REDEEMED - INVESTOR CLASS .................................. (1,519,834) (1,542,201) (2,875,997)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR
CLASS ............................................................. 788,074 2,844,385 (914,528)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ........................................ 788,074 2,844,385 (914,528)
================= ============= ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......... $ (1,000) $ 0 $ 0
================= ============= ================
(1) SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND SHARE CLASS
CONVERSIONS (NOTE 1).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
-------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005(1) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A (NOTE 1) .................................... 186,246 15,204,041 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A
(NOTE 1) ........................................................ 190,282 111,618 N/A
SHARES REDEEMED - CLASS A (NOTE 1) ................................ (1,046,333) (544,127) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .............. (669,805) 14,771,532 N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS B (NOTE 1) .................................... 11,514 2,546,815 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B
(NOTE 1) ........................................................ 25,047 15,451 N/A
SHARES REDEEMED - CLASS B (NOTE 1) ................................ (227,559) (199,993) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .............. (190,998) 2,362,273 N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS C (NOTE 1) .................................... 12,538 211,843 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C
(NOTE 1) ........................................................ 1,426 751 N/A
SHARES REDEEMED - CLASS C (NOTE 1) ................................ (9,220) (7,807) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .............. 4,744 204,787 N/A
----------------- ------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ........................ 17,168 1,918,638 N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
ADMINISTRATOR CLASS (NOTE 1) .................................... 27,150 16,014 N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................... (120,285) (78,504) N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
ADMINISTRATOR CLASS ............................................... (75,967) 1,856,148 N/A
----------------- ------------- ----------------
SHARES-SOLD - ADVISOR CLASS ....................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR
CLASS ........................................................... N/A N/A N/A
SHARES REDEEMED - ADVISOR CLASS ................................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR
CLASS ............................................................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ................................. N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
INSTITUTIONAL CLASS ............................................. N/A N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS ............................. N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
INSTITUTIONAL CLASS ............................................... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INVESTOR CLASS ...................................... 2,866,388 4,010,664 3,647,332
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
INVESTOR CLASS .................................................. 295,962 517,614 770,158
SHARES REDEEMED - INVESTOR CLASS .................................. (2,651,902) (3,137,417) (8,348,482)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR
CLASS ............................................................. 510,448 1,390,861 (3,930,992)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ........................................ (421,578) 20,585,601 (3,930,992)
================= ============= ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......... $ (1) $ 0 $ 0
================= ============= ================
SHORT-TERM MUNICIPAL BOND FUND
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A (NOTE 1) .................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS A
(NOTE 1) ........................................................ N/A N/A N/A
SHARES REDEEMED - CLASS A (NOTE 1) ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A .............. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS B (NOTE 1) .................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS B
(NOTE 1) ........................................................ N/A N/A N/A
SHARES REDEEMED - CLASS B (NOTE 1) ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B .............. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS C (NOTE 1) .................................... 157,242 177,865 499,022
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C
(NOTE 1) ........................................................ 891 1,351 1,492
SHARES REDEEMED - CLASS C (NOTE 1) ................................ (401,755) (51,306) (82,897)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C .............. (243,622) 127,910 417,617
----------------- ------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ........................ N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS (NOTE 1) .................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
ADMINISTRATOR CLASS ............................................... N/A N/A N/A
----------------- ------------- ----------------
SHARES-SOLD - ADVISOR CLASS ....................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR
CLASS ........................................................... N/A N/A N/A
SHARES REDEEMED - ADVISOR CLASS ................................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR
CLASS ............................................................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS ................................. N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
INSTITUTIONAL CLASS ............................................. N/A N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS ............................. N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
INSTITUTIONAL CLASS ............................................... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INVESTOR CLASS ...................................... 13,706,443 33,234,323 18,382,476
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS -
INVESTOR CLASS .................................................. 685,982 1,014,228 1,256,394
SHARES REDEEMED - INVESTOR CLASS .................................. (14,292,272) (16,593,553) (35,958,466)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR
CLASS ............................................................. 100,153 17,654,998 (16,319,596)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ........................................ (143,469) 17,782,908 (15,901,979)
================= ============= ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......... $ 7,439 $ 0 $ 0
================= ============= ================
63
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM
MUNICIPAL INCOME FUND
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................. $ 720,520,820 $ 1,210,601,847 $ 2,048,130,859
OPERATIONS:
NET INVESTMENT INCOME (LOSS) .......................................... 10,360,372 15,742,696 32,001,829
NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................... 116,501 (25,704,853) 610,471
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... 3,110 12,278,763 (12,696,177)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......... 10,479,983 2,316,606 19,916,123
----------------- --------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ............................................................ N/A N/A N/A
CLASS B ............................................................ N/A N/A N/A
CLASS C ............................................................ N/A N/A N/A
ADMINISTRATOR CLASS ................................................ N/A N/A N/A
ADVISOR CLASS ...................................................... (252,319) (424,774) (859,393)
INSTITUTIONAL CLASS ................................................ (2,518,697) (3,672,762) (9,053,087)
INVESTOR CLASS ..................................................... (7,571,997) (11,636,284) (22,051,052)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ............................................................ N/A N/A N/A
INVESTOR CLASS ..................................................... 0 0 0
----------------- --------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................................... (10,343,013) (15,733,820) (31,963,532)
----------------- --------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ................................... N/A N/A N/A
COST OF SHARES REDEEMED - CLASS A ..................................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS - CLASS A .......................................... N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B ................................... N/A N/A N/A
COST OF SHARES REDEEMED - CLASS B ..................................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ................................................ N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C ................................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................... N/A N/A N/A
COST OF SHARES REDEEMED - CLASS C ..................................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ................................................ N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................... N/A N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ......................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS .................................... N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ............................. 2,277,202 3,306,623 30,807,808
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ......................... 202,472 480,489 876,357
COST OF SHARES REDEEMED - ADVISOR CLASS ............................... (5,916,361) (23,436,358) (61,187,608)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS ........................................... (3,436,687) (19,649,246) (29,503,443)
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................... 82,773,919 62,020,702 207,187,383
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................... 1,748,207 4,054,517 8,894,453
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ......................... (63,241,835) (207,821,707) (500,840,530)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS .................................... 21,280,291 (141,746,488) (284,758,694)
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ............................ 111,599,559 167,581,924 566,058,985
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ........................ 5,445,750 11,877,983 20,055,808
COST OF SHARES REDEEMED - INVESTOR CLASS .............................. (194,592,720) (494,727,985) (1,097,334,259)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS .......................................... (77,547,411) (315,268,078) (511,219,466)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS .......................................................... (59,703,807) (476,663,812) (825,481,603)
================= =============== ================
NET INCREASE (DECREASE) IN NET ASSETS .................................... (59,566,837) (490,081,027) (837,529,012)
================= =============== ================
ENDING NET ASSETS ........................................................ $ 660,953,983 $ 720,520,820 $ 1,210,601,847
================= =============== ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .................................................. $ 56,230,849 $ 50,489,182 $ 70,197,973
OPERATIONS:
NET INVESTMENT INCOME (LOSS) .......................................... 1,063,796 1,328,914 2,254,020
NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................... 274,534 12,052 776,143
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... (979,142) 303,821 (75,581)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......... 359,188 1,644,787 2,954,582
----------------- --------------- ----------------
DISTRIBUTIONS TO SHAREOLDERS FROM:
NET INVESTMENT INCOME
CLASS A ............................................................ N/A N/A N/A
CLASS B ............................................................ N/A N/A N/A
CLASS C ............................................................ (41,607) (46,424) (75,049)
ADMINISTRATOR CLASS ................................................ N/A N/A N/A
ADVISOR CLASS ...................................................... N/A N/A N/A
INSTITUTIONAL CLASS ................................................ N/A N/A N/A
INVESTOR CLASS ..................................................... (1,022,187) (1,282,490) (2,178,972)
NET REALIZED GAIN ON SALES OF INVESTMENTS
CLASS C ............................................................ (7,397) (35,233) (11,364)
INVESTOR CLASS ..................................................... (139,667) (732,293) (262,140)
----------------- --------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................................... (1,210,858) (2,096,440) (2,527,525)
----------------- --------------- ----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A ................................... N/A N/A N/A
COST OF SHARES REDEEMED - CLASS A ..................................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A ................................................ N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS B ................................... N/A N/A N/A
COST OF SHARES REDEEMED - CLASS B ..................................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B ................................................ N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - CLASS C ................................... 844,888 341,727 122,115
REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................... 41,067 80,740 75,131
COST OF SHARES REDEEMED - CLASS C ..................................... (421,836) (198,915) (541,756)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C ................................................ 464,119 223,552 (344,510)
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................... N/A N/A N/A
COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ......................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADMINISTRATOR CLASS .................................... N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ............................. N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ......................... N/A N/A N/A
COST OF SHARES REDEEMED - ADVISOR CLASS ............................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - ADVISOR CLASS .......................................... N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................... N/A N/A N/A
REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................... N/A N/A N/A
COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ......................... N/A N/A N/A
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS .................................... N/A N/A N/A
----------------- --------------- ----------------
PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ............................ 11,386,252 17,285,512 14,623,995
REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ........................ 847,161 1,889,879 2,176,655
COST OF SHARES REDEEMED - INVESTOR CLASS .............................. (8,581,391) (13,205,623) (36,591,988)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INVESTOR CLASS ......................................... 3,652,022 5,969,768 (19,791,338)
----------------- --------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS ........................................................... 4,116,141 6,193,320 (20,135,848)
================= =============== ================
NET INCREASE (DECREASE) IN NET ASSETS .................................... 3,264,471 5,741,667 (19,708,791)
================= =============== ================
ENDING NET ASSETS ........................................................ $ 59,495,320 $ 56,230,849 $ 50,489,182
================= =============== ================
65
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM
MUNICIPAL INCOME FUND
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................ N/A N/A N/A
SHARES REDEEMED - CLASS A ............................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A ................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS B ................................................ N/A N/A N/A
SHARES REDEEMED - CLASS B ............................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B ................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS C ................................................ N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ............. N/A N/A N/A
SHARES REDEEMED - CLASS C ............................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS ................................... N/A N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ..... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - ADVISOR CLASS .......................................... 477,194 689,606 6,340,604
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ....... 42,413 100,297 180,648
SHARES REDEEMED - ADVISOR CLASS ...................................... (1,239,896) (4,894,028) (12,599,184)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ........... (720,289) (4,104,125) (6,077,932)
----------------- ------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS. ................................... 17,338,835 12,948,484 42,671,557
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS . 366,343 846,463 1,833,356
SHARES REDEEMED - INSTITUTIONAL CLASS ................................ (13,246,079) (43,400,757) (103,146,865)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ..... 4,459,099 (29,605,810) (58,641,952)
----------------- ------------- ----------------
SHARES SOLD - INVESTOR CLASS ......................................... 23,374,852 34,997,558 116,681,323
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ...... 1,141,181 2,479,411 4,134,818
SHARES REDEEMED - INVESTOR CLASS ..................................... (40,771,841) (103,330,570) (226,110,703)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS .......... (16,255,808) (65,853,601) (105,294,562)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS .......................................... (12,516,998) (99,563,536) (170,014,446)
================= ============= ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............ $ 17,359 $ 0 $ 0
================= ============= ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE FOR THE
DECEMBER 31, 2005 YEAR ENDED YEAR ENDED
(UNAUDITED) JUNE 30, 2005 OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD - CLASS A ................................................ N/A N/A N/A
SHARES REDEEMED - CLASS A ............................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS A ................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS B ................................................ N/A N/A N/A
SHARES REDEEMED - CLASS B ............................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS B ................. N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - CLASS C ................................................ 79,944 32,171 11,389
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ............. 3,890 7,598 7,032
SHARES REDEEMED - CLASS C ............................................ (40,110) (18,678) (50,936)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................. 43,724 21,091 (32,515)
----------------- ------------- ----------------
SHARES SOLD - ADMINISTRATOR CLASS ................................... N/A N/A N/A
SHARES REDEEMED - ADMINISTRATOR CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ..... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - ADVISOR CLASS .......................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ....... N/A N/A N/A
SHARES REDEEMED - ADVISOR CLASS ...................................... N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ........... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INSTITUTIONAL CLASS. ................................... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS . N/A N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS ................................ N/A N/A N/A
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ..... N/A N/A N/A
----------------- ------------- ----------------
SHARES SOLD - INVESTOR CLASS ......................................... 1,075,899 1,624,544 1,365,743
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ...... 80,182 177,810 203,625
SHARES REDEEMED - INVESTOR CLASS ..................................... (813,717) (1,241,946) (3,427,293)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS .......... 342,364 560,408 (1,857,925)
----------------- ------------- ----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS .......................................... 386,088 581,499 (1,890,440)
================= ============= ================
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............ $ 47 $ 45 $ 0
================= ============= ================
67
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $10.81 0.18 (0.10) (0.18)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................. $11.02 0.24 0.03 (0.24)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................. $10.78 0.39 0.29 (0.39)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................. $10.48 0.41 0.30 (0.41)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................. $10.25 0.45 0.26 (0.45)
JULY 31, 2001(5) TO OCTOBER 31, 2001 ................................. $10.00 0.11 0.25 (0.11)
MUNICIPAL BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.60 0.20 (0.07) (0.20)
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ................................ $ 9.43 0.09 0.17 (0.09)
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.60 0.17 (0.07) (0.17)
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ................................ $ 9.43 0.08 0.17 (0.08)
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.60 0.17 (0.07) (0.17)
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ................................ $ 9.43 0.08 0.17 (0.08)
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.60 0.22 (0.07) (0.22)
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ................................ $ 9.43 0.10 0.17 (0.10)
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.60 0.20 (0.07) (0.20)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................. $ 9.47 0.27 0.13 (0.27)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................. $ 8.89 0.42 0.58 (0.42)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................. $ 8.73 0.39 0.17 (0.40)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................. $ 8.89 0.37 (0.16) (0.37)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ................................. $ 8.58 0.41 0.31 (0.41)
SHORT-TERM MUNICIPAL BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.82 0.12 (0.04) (0.12)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................. $ 9.84 0.13 (0.02) (0.13)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................. $ 9.83 0.19 0.01 (0.19)
JANUARY 31, 2003(5) TO OCTOBER 31, 2003 .............................. $ 9.79 0.16 0.04 (0.16)
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 9.83 0.16 (0.04) (0.16)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................. $ 9.85 0.20 (0.02) (0.20)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................. $ 9.83 0.31 0.02 (0.31)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................. $ 9.72 0.35 0.11 (0.35)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................. $ 9.78 0.40 (0.06) (0.40)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ................................. $ 9.62 0.44 0.16 (0.44)
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ........................ $ 4.77 0.07 0.01 (0.07)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................. $ 4.83 0.07 (0.06) (0.07)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................. $ 4.87 0.08 (0.04) (0.08)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................. $ 4.88 0.10 (0.01) (0.10)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................. $ 4.94 0.14 (0.06) (0.14)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 $ 4.94 0.18 (0.00)(6) (0.18)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET -----------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... (0.02) $10.69 3.28% 1.29% (0.54)% 0.75%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............. (0.24) $10.81 3.32% 1.21% (0.62)% 0.59%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. (0.05) $11.02 3.60% 1.15% (0.66)% 0.49%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. 0.00 $10.78 3.76% 1.16% (0.73)% 0.43%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. (0.03) $10.48 4.20% 1.43% (1.36)% 0.07%
JULY 31, 2001(5) TO OCTOBER 31, 2001 ............. 0.00 $10.25 4.30% 4.51% (4.50)% 0.01%
MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.53 4.19% 1.06% (0.21)% 0.85%
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ............ 0.00 $ 9.60 4.48% 1.08% (0.23)% 0.85%
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.53 3.44% 1.81% (0.21)% 1.60%
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ............ 0.00 $ 9.60 3.74% 1.83% (0.23)% 1.60%
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.53 3.45% 1.81% (0.21)% 1.60%
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ............ 0.00 $ 9.60 3.73% 1.83% (0.23)% 1.60%
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.53 4.56% 0.88% (0.40)% 0.48%
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ............ 0.00 $ 9.60 4.87% 0.90% (0.44)% 0.46%
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.53 4.24% 1.23% (0.43)% 0.80%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............. 0.00 $ 9.60 4.32% 0.98% (0.18)% 0.80%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. 0.00 $ 9.47 4.72% 0.84% (0.03)% 0.81%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. 0.00 $ 8.89 4.40% 0.81% 0.00% 0.81%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. 0.00 $ 8.73 4.23% 1.08% 0.00% 1.08%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............. 0.00 $ 8.89 4.80% 0.95% (0.03)% 0.92%
SHORT-TERM MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.78 2.32% 1.73% (0.14)% 1.59%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............. 0.00(6) $ 9.82 1.98% 1.78% (0.05)% 1.73%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. 0.00 $ 9.84 1.96% 1.82% (0.03)% 1.79%
JANUARY 31, 2003(5) TO OCTOBER 31, 2003 .......... 0.00 $ 9.83 2.05% 1.91% (0.03)% 1.88%
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 9.79 3.25% 1.15% (0.49)% 0.66%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............. 0.00(6) $ 9.83 3.07% 0.87% (0.21)% 0.66%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. 0.00 $ 9.85 3.12% 0.69% (0.03)% 0.66%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. 0.00 $ 9.83 3.57% 0.64% 0.00% 0.64%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. 0.00 $ 9.72 4.07% 0.61% 0.00% 0.61%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............. 0.00 $ 9.78 4.54% 0.62% 0.00% 0.62%
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .... 0.00 $ 4.78 2.81% 1.02% (0.24)% 0.78%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............. 0.00 $ 4.77 2.23% 1.14% (0.10)% 1.04%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............. 0.00 $ 4.83 1.72% 1.17% (0.05)% 1.12%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............. 0.00 $ 4.87 1.90% 1.11% 0.00% 1.11%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............. 0.00 $ 4.88 2.71% 1.11% 0.00% 1.11%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............. 0.00 $ 4.94 3.15% 1.11% (0.01)% 1.10%
Portfolio Net Assets at
Total Turnover End of Period
Return(2) Rate(3) (000's Omitted)
- ------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------
INVESTOR CLASS ............................................. 0.70% 51% $ 79,527
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 2.56% 57% $ 71,870
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 6.44% 95% $ 41,936
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 6.84% 190% $ 50,890
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 7.10% 225% $ 33,654
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... 3.60% 115% $ 2,005
JULY 31, 2001(5) TO OCTOBER 31, 2001
MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------
CLASS A
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.39% 71% $ 134,409
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ...................... 2.82% 68% $ 141,868
CLASS B
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.01% 71% $ 20,688
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ...................... 2.65% 68% $ 22,680
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.01% 71% $ 1,996
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ...................... 2.65% 68% $ 1,966
ADMINISTRATOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.58% 71% $ 16,962
APRIL 11, 2005(5) TO JUNE 30, 2005(4) ...................... 2.90% 68% $ 17,821
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.41% 71% $ 204,943
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 4.31% 68% $ 201,608
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 11.52% 100% $ 185,717
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 6.52% 121% $ 209,152
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... 2.44% 95% $ 243,289
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....................... 8.62% 118% $ 261,010
SHORT-TERM MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 0.77% 74% $ 5,809
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 1.16% 75% $ 8,228
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 2.08% 69% $ 6,982
JANUARY 31, 2003(5) TO OCTOBER 31, 2003 .................... 2.10% 84% $ 2,869
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.24% 74% $ 655,477
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 1.87% 75% $ 657,403
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 3.37% 69% $ 484,450
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 4.82% 84% $ 644,324
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... 3.52% 68% $ 592,996
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....................... 6.38% 74% $ 504,661
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
ADVISOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.64% 82% $ 16,108
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 0.27% 47% $ 19,540
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 0.90% 72% $ 39,623
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 1.96% 128% $ 69,527
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... 1.57% 76% $ 28,006
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....................... 3.74% 71% $ 8,218
69
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT
SHARE (LOSS) INVESTMENTS INCOME
- -------------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND (CONTINUED)
INSTITUTIONAL CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ....................... $ 4.77 0.08 0.00 (0.08)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................ $ 4.83 0.09 (0.06) (0.09)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................ $ 4.87 0.12 (0.04) (0.12)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................ $ 4.87 0.13 0.01 (0.14)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................ $ 4.94 0.17 (0.07) (0.17)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ................................ $ 4.95 0.22 (0.01) (0.22)
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ....................... $ 4.77 0.07 0.00 (0.07)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................ $ 4.83 0.08 (0.06) (0.08)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................ $ 4.87 0.10 (0.04) (0.10)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................ $ 4.88 0.12 0.00 (0.13)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................ $ 4.94 0.15 (0.06) (0.15)
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ................................ $ 4.95 0.21 (0.01) (0.21)
WISCONSIN TAX-FREE FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ....................... $10.70 0.15 (0.13) (0.15)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................ $10.80 0.21 0.06 (0.21)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................ $10.69 0.32 0.16 (0.32)
DECEMBER 26, 2002(5) TO OCTOBER 31, 2003 ............................ $10.60 0.26 0.09 (0.26)
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ....................... $10.70 0.19 (0.13) (0.19)
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ................................ $10.80 0.28 0.06 (0.28)
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ................................ $10.69 0.44 0.16 (0.44)
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ................................ $10.56 0.44 0.13 (0.44)
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ................................ $10.36 0.48 0.21 (0.48)
APRIL 6, 2001(5) TO OCTOBER 31, 2001 ................................ $10.00 0.27 0.36 (0.27)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
70
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
FROM NET NET ASSET ------------------------------------------------
REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET
GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND (CONTINUED)
INSTITUTIONAL CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ...... 0.00 $ 4.77 3.23% 0.57% (0.20)% 0.37%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............... 0.00 $ 4.77 2.86% 0.47% (0.06)% 0.41%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... 0.00 $ 4.83 2.45% 0.40% (0.02)% 0.38%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............... 0.00 $ 4.87 2.69% 0.37% 0.00% 0.37%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............... 0.00 $ 4.87 3.45% 0.36% 0.00% 0.36%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............... 0.00 $ 4.94 4.46% 0.34% 0.00% 0.34%
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ...... 0.00 $ 4.77 2.87% 1.19% (0.47)% 0.72%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............... 0.00 $ 4.77 2.53% 0.90% (0.14)% 0.76%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... 0.00 $ 4.83 2.11% 0.75% (0.02)% 0.73%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............... 0.00 $ 4.87 2.39% 0.70% 0.00% 0.70%
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ............... 0.00 $ 4.88 3.12% 0.69% 0.00% 0.69%
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ............... 0.00 $ 4.94 4.15% 0.66% 0.00% 0.66%
WISCONSIN TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ...... (0.03) $10.54 2.83% 1.93% (0.44)% 1.49%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............... (0.16) $10.70 2.97% 2.07% (0.58)% 1.49%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... (0.05) $10.80 3.00% 2.10% (0.60)% 1.50%
DECEMBER 26, 2002(5) TO OCTOBER 31, 2003 ........... 0.00 $10.69 2.71% 2.08% (0.58)% 1.50%
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) ...... (0.03) $10.54 3.58% 1.35% (0.60)% 0.75%
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ............... (0.16) $10.70 3.96% 1.22% (0.71)% 0.51%
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ............... (0.05) $10.80 4.09% 1.17% (0.77)% 0.40%
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ............... 0.00 $10.69 4.08% 1.13% (0.82)% 0.31%
MBER 1, 2002 TO OCTOBER 31, 2003 ................... (0.01) $10.56 4.54% 1.14% (0.09)% 0.05%
APRIL 6, 2001(5) TO OCTOBER 31, 2001 ............... 0.00 $10.36 4.71% 1.88% (1.88)% 0.00%
Portfolio Net Assets at
Total Turnover End of Period
Return(2) Rate(3) (000's Omitted)
- ------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND (CONTINUED)
INSTITUTIONAL CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.63% 82% $ 166,172
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 0.67% 47% $ 144,860
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 1.65% 72% $ 289,641
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 2.94% 128% $ 577,522
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... 2.13% 76% $ 360,335
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....................... 4.36% 71% $ 425,300
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 1.46% 82% $ 478,675
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 0.44% 47% $ 556,121
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 1.30% 72% $ 881,337
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 2.38% 128% $ 1,401,082
NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....................... 1.99% 76% $ 1,256,332
NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....................... 4.03% 71% $ 1,274,877
WISCONSIN TAX-FREE FUND
- ------------------------------------------------------------------------------------------------------
CLASS C
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 0.18% 63% $ 3,007
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 2.60% 24% $ 2,583
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 4.54% 17% $ 2,380
DECEMBER 26, 2002(5) TO OCTOBER 31, 2003 ................... 3.28% 54% $ 2,704
INVESTOR CLASS
JULY 1, 2005 TO DECEMBER 31, 2005 (UNAUDITED) .............. 0.55% 63% $ 56,488
NOVEMBER 1, 2004 TO JUNE 30, 2005(4) ....................... 3.26% 24% $ 53,648
NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....................... 5.69% 17% $ 48,109
NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....................... 5.45% 54% $ 67,494
MBER 1, 2002 TO OCTOBER 31, 2003 ........................... 6.80% 95% $ 65,477
APRIL 6, 2001(5) TO OCTOBER 31, 2001 ....................... 6.36% 54% $ 27,790
71
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) During each period, various fees and expenses were waived and reimbursed
as The ratio of Gross Expenses to indicated. 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. Portfolio turnover rates presented
for periods of less than one year are not annualized.
(4) In 2005, the Fund changed its fiscal year end.
(5) Commencement of operations.
(6) Amount calculated is less than $0.005. 72
72
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Trust commenced operations on November 8, 1999, and at
December 21, 2005 was comprised of 108 separate series (each, a "Fund",
collectively, the "Funds"). These financial statements present the Intermediate
Tax-Free Fund, Municipal Bond Fund, Short-Term Municipal Bond Fund, Ultra
Short-Term Municipal Income Fund, and Wisconsin Tax-Free Fund. Each Fund is a
diversified series of the Trust.
In 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 ADVISOR STRONG MUNICIPAL WELLS FARGO ADVANTAGE
Fund MUNICIPAL BOND FUND BOND FUND* MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------
Shares:
- -----------------------------------------------------------------------------------------------------------------
CLASS A 17,359,479 -- 15,075,673
- -----------------------------------------------------------------------------------------------------------------
CLASS B 2,939,303 -- 2,538,733
- -----------------------------------------------------------------------------------------------------------------
CLASS C 244,140 -- 211,801
- -----------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 1,914,770
- -----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 2,212,401 -- --
- -----------------------------------------------------------------------------------------------------------------
INVESTOR CLASS -- 20,630,262 20,630,262
- -----------------------------------------------------------------------------------------------------------------
Net Asset:
- -----------------------------------------------------------------------------------------------------------------
CLASS A $ 142,237,416 -- $142,237,416
- -----------------------------------------------------------------------------------------------------------------
CLASS B 23,952,688 -- 23,952,688
- -----------------------------------------------------------------------------------------------------------------
CLASS C 1,998,317 -- 1,998,317
- -----------------------------------------------------------------------------------------------------------------
ADMINISTRATOR CLASS -- -- 18,065,655
- -----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS(1) 18,065,655 -- --
- -----------------------------------------------------------------------------------------------------------------
INVESTOR CLASS -- $ 194,644,390 194,644,390
- -----------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) $ 15,977,592 $ 14,379 $ 15,991,971
- -----------------------------------------------------------------------------------------------------------------
Accumulated net realized losses -- $ (19,085,401) $(19,085,401)
- -----------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
(1) Effective at the close of business on April 8, 2005, the Institutional
Class of the Strong Advisor Municipal Bond Fund merged into the
Administrator Class of the WELLS FARGO ADVANTAGE MUNICIPAL BOND FUND.
Before Reorganization After Reorganization
--------------------------------------------- ---------------------
Target Funds Acquiring Fund
- -----------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE
STRONG SHORT-TERM HIGH STRONG SHORT-TERM SHORT-TERM
Fund YIELD MUNICIPAL BOND FUND MUNICIPAL BOND FUND* MUNICIPAL BOND FUND
- -----------------------------------------------------------------------------------------------------------------
Shares:
- -----------------------------------------------------------------------------------------------------------------
CLASS C -- 816,728 816,728
- -----------------------------------------------------------------------------------------------------------------
INVESTOR CLASS 14,793,422 54,049,649 68,311,827
- -----------------------------------------------------------------------------------------------------------------
Net Asset:
- -----------------------------------------------------------------------------------------------------------------
CLASS C -- $ 7,995,461 $ 7,995,461
- -----------------------------------------------------------------------------------------------------------------
INVESTOR CLASS $ 139,729,863 529,536,943 669,266,806
- -----------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) $ 546,423 $ (781,435) $ (235,012)
- -----------------------------------------------------------------------------------------------------------------
Accumulated net realized losses $ (11,388,274) $ (2,018,191) $(13,406,465)
- -----------------------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
73
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds"), 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 INTERMEDIATE TAX-FREE FUND - INVESTOR CLASS STRONG INTERMEDIATE MUNICIPAL BOND FUND INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG ULTRA SHORT-TERM
ULTRA SHORT-TERM MUNICIPAL INCOME FUND - ADVISOR CLASS MUNICIPAL INCOME FUND ADVISOR CLASS
- --------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG ULTRA SHORT-TERM
ULTRA SHORT-TERM MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS MUNICIPAL INCOME FUND INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE STRONG ULTRA SHORT-TERM
ULTRA SHORT-TERM MUNICIPAL INCOME FUND - INVESTOR CLASS MUNICIPAL INCOME FUND INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND - CLASS C STRONG WISCONSIN TAX-FREE FUND CLASS C
- --------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE WISCONSIN TAX-FREE FUND - INVESTOR CLASS STRONG WISCONSIN TAX-FREE FUND INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------------------------
The separate classes of shares offered by each Fund differ principally in
applicable sales charges 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.
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.
74
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Debt obligations may be placed on non-accrual status and related
investment income may be reduced by ceasing current accruals and writing off
interest receivables when the collection of all or a portion of income has
become doubtful based on consistently applied procedures. A debt obligation is
removed from non-accrual status when the issuer resumes interest payments or
when collectibility of interest is reasonably assured.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of the ex-dividend date. Dividend income from foreign securities is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared daily and distributed to
shareholders monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
For federal income tax purposes, a Fund may designate as capital gains
dividends 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 December 31, 2005.
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 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
December 31, 2005, the following Fund(s) held futures contracts:
Net Unrealized
Notional Appreciation
Fund Contracts Type Expiration Date Amount (Depreciation)
- -------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND Short 55 US 10 YR Note Mar 06 March, 2006 $ 6,003,593 $(13,750)
- -------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Short 90 US 10 YR Note Mar 06 March, 2006 9,784,694 (61,869)
- -------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Short 135 US Long Bond Mar 06 March, 2006 15,326,455 (88,789)
- -------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND Short 50 US 2 YR Note Mar 06 March, 2006 10,261,115 1,740
- -------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND Short 180 US 5 YR Note Mar 06 March, 2006 19,125,638 (16,237)
- -------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND Short 40 US 10 YR Note Mar 06 March, 2006 4,332,954 (43,296)
- -------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL
INCOME FUND Short 75 US 2 YR Note Mar 06 March, 2006 15,401,242 12,180
- -------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND Short 50 US 10 YR Note Mar 06 March, 2006 5,455,099 (15,214)
- -------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND Short 20 US Long Bond Mar 06 March, 2006 2,265,540 (18,183)
- -------------------------------------------------------------------------------------------------------------------
75
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
WHEN-ISSUED TRANSACTIONS
Each Fund may purchase securities on a forward commitment or 'when-issued'
basis. A Fund records a when-issued transaction on the trade date and will
segregate with the custodian qualifying assets having a value sufficient to make
payment for the securities purchased. Securities purchased on a when-issued
basis are marked-to-market daily and the Fund begins earning interest on the
settlement date. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
SWAP CONTRACTS
The Funds may enter into various hedging transactions, such as swap
agreements 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. 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 December 31, 2005 the following Funds had open swap contracts:
Credit
Swap Counter Notional Annual Protection Maturity Net Unrealized
Fund Party Principal Premium Paid Purchased Date Gain/(Loss)
- ---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL JP Morgan Chase
BOND FUND Credit Protection* $2,000,000 0.48% $2,000,000 December 20, 2006 $ (7,811)
- ---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL JP Morgan Chase
BOND FUND Credit Protection* $1,000,000 0.48% $1,000,000 December 20, 2006 (3,905)
- ---------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM JP Morgan Chase
MUNICIPAL INCOME FUND Credit Protection* $7,000,000 0.48% $7,000,000 December 20, 2006 (27,337)
- ---------------------------------------------------------------------------------------------------------------------------
* PROTECTION AGAINST CREDIT RATING DECLINE OF AMERICAN ELECTRIC POWER
COMPANY, INC.
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related to sub-advisory services are borne directly by the
adviser and do not increase the overall fees paid by a Fund to the adviser.
Funds Management and the investment sub-adviser(s) are entitled to be paid a
monthly fee at the following annual rates:
Sub-Advisory
Advisory Fees* Fees** (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- -------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND $ 0 - $499 million 0.40 Wells Capital $0 - $400 million 0.200
$500 - $999 million 0.35 Management $400 - $800 million 0.175
$1 - $2.99 billion 0.30 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.25
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND $ 0 - $499 million 0.40 Wells Capital $0 - $400 million 0.200
$500 - $999 million 0.35 Management $400 - $800 million 0.175
$1 - $2.99 billion 0.30 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.25
- -------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL $ 0 - $499 million 0.40 Wells Capital $0 - $400 million 0.200
BOND FUND $500 - $999 million 0.35 Management $400 - $800 million 0.175
$1 - $2.99 billion 0.30 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.25
- -------------------------------------------------------------------------------------------------------------------------
76
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
Sub-Advisory
Advisory Fees* Fees** (% of
Average Daily (% of Average Average Daily Average Daily
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets)
- --------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.200
MUNICIPAL INCOME FUND $500 - $999 million 0.35 Management $400 - $800 million 0.175
$1 - $2.99 billion 0.30 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.25
- --------------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND $0 - $499 million 0.40 Wells Capital $0 - $400 million 0.200
$500 - $999 million 0.35 Management $400 - $800 million 0.175
$1 - $2.99 billion 0.30 Incorporated > $800 million 0.150
$3 - $4.99 billion 0.275
> $4.99 billion 0.25
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to each of the
predecessor Strong Funds. From January 1, 2005 through April 10, 2005,
Funds Management served as interim investment adviser to each of the
predecessor Strong Funds. Both SCM and Funds Management, for their
respective periods of time during the reporting period, were entitled to
receive an annual fee at the following rate:
Advisory Fees
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- -------------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND $0 - $4 billion 0.370
$4 billion - $6 billion 0.345
> $6 billion 0.320
- -------------------------------------------------------------------------------------
MUNICIPAL BOND FUND $0 - $4 billion 0.350
$4 billion - $6 billion 0.325
> $6 billion 0.300
- -------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND $0 - $4 billion 0.250
$4 billion - $6 billion 0.225
> $6 billion 0.200
- -------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND $0 - $4 billion 0.300
$4 billion - $6 billion 0.275
> $6 billion 0.250
- -------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND $0 - $4 billion 0.370
$4 billion - $6 billion 0.345
> $6 billion 0.320
- -------------------------------------------------------------------------------------
77
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
At the April 2005 meeting, the Board of the Trust reapproved the
sub-advisory agreements among Funds Trust, Funds Management and the respective
sub-advisers, including the compensation payable to each sub-adviser for
providing investment advisory services to certain of the Wells Fargo Advantage
Funds. At the November 2005 meeting, the Board of the Trust approved changes to
certain sub-advisory fee rates. As a result, effective January 1, 2006, the
investment sub-adviser(s) will be entitled to be paid a monthly fee at the
following rates:
Sub-Advisory Fees
Average Daily (% of Average
Fund Sub-Adviser Net Assets Daily Net Assets)
- --------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND Wells Capital Management $0 - $100 million 0.200
Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- --------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND Wells Capital Management $0 - $100 million 0.200
Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- --------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND Wells Capital Management $0 - $100 million 0.150
Incorporated $100 - $300 million 0.100
> $300 million 0.050
- --------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPA Wells Capital Management $0 - $100 million 0.150
INCOME FUND Incorporated $100 - $300 million 0.100
> $300 million 0.050
- --------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND Wells Capital Management $0 - $100 million 0.200
Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
- --------------------------------------------------------------------------------------------------------
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 0.28
- -----------------------------------------------------------------------------------
CLASS B 0.28
- -----------------------------------------------------------------------------------
CLASS C 0.28
- -----------------------------------------------------------------------------------
ADMINISTRATOR CLASS 0.10
- -----------------------------------------------------------------------------------
ADVISOR CLASS 0.28
Administration Fees**
(% of Average
Daily Net Assets)
- -----------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.08
- -----------------------------------------------------------------------------------
INVESTOR CLASS 0.45
- -----------------------------------------------------------------------------------
Short-Term Municipal Bond Fund:
- -----------------------------------------------------------------------------------
CLASS C 0.23
- -----------------------------------------------------------------------------------
INVESTOR CLASS 0.40
- -----------------------------------------------------------------------------------
78
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------
CLASS C 0.28
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.28
- --------------------------------------------------------------------------------
Ultra Short-Term Municipal Income Fund:
- --------------------------------------------------------------------------------
ADVISOR CLASS 0.33
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.02
- --------------------------------------------------------------------------------
INVESTOR CLASS 0.33
The Trust has entered into an agreement with Boston Financial Data
Services, 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
- --------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND
INVESTOR CLASS $ 17,268
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
INVESTOR CLASS 81,697
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
CLASS C 6,228
INVESTOR CLASS 138,967
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
ADVISOR CLASS 25,431
INSTITUTIONAL CLASS 14,513
INVESTOR CLASS 150,440
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
CLASS C 1,973
INVESTOR CLASS 13,396
- --------------------------------------------------------------------------------
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
% of Average
Daily Net Assets
- --------------------------------------------------------------------------------
ALL MUNICIPAL INCOME FUNDS 0.02
- --------------------------------------------------------------------------------
Prior to March 21, 2005, State Street Bank and Trust Co. ("State Street")
served as custodian for the Strong Intermediate Municipal Bond Fund. Prior to
March 28, 2005, State Street served as custodian for the Strong Ultra Short-Term
Municipal Income Fund and Strong Wisconsin Tax-Free Fund. Prior to April 11,
2005, State Street served as custodian for the Strong Municipal Bond Fund and
Strong Short-Term Municipal Bond Fund. From April 11, 2005 to April 22, 2005,
State Street served as interim custodian for the Municipal Bond Fund and
Short-Term Municipal Bond Fund. State Street was entitled to receive certain
fees, primarily based on transactions of the Fund.
79
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING FEES
The Trust has entered into contracts with one or more shareholder
servicing agents, whereby each Fund is charged the following annual fees:
% of Average
Share Class Daily Net Assets***
- ------------------------------------------------------------------------------------------------------
CLASS A, CLASS B, CLASS C, ADMINISTRATOR CLASS, ADVISOR CLASS, INVESTOR CLASS 0.25
- ------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS 0.00
***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 six months ended December 31, 2005, shareholder servicing fees
paid were as follows:
Fund Class A Class B Class C Administrator Advisor Investor
- --------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND N/A N/A N/A N/A N/A $ 98,541
- --------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND $175,327 $27,397 $ 2,566 $22,054 N/A 258,769
- --------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND N/A N/A 8,940 N/A N/A 841,456
- --------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND N/A N/A N/A N/A $22,456 661,386
- --------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND N/A N/A 3,675 N/A N/A 71,367
- --------------------------------------------------------------------------------------------------------------
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan (the "Plan") for Class B and
Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940
Act. Effective April 11, 2005, distribution fees are charged to the Class B and
Class C shares and paid to Wells Fargo Funds Distributor, LLC at an annual rate
of 0.75% of average daily net assets.
Prior to April 11, 2005, the predecessor Strong Funds adopted a 12b-1
distribution and service plan under the 1940 Act on behalf of the Class C,
Advisor Class and certain Investor Class shares. Under the plan, Strong
Investments, Inc. was paid an annual rate of 1.00% of the average daily net
assets of the Class C shares of the Short-Term Municipal Bond Fund and Wisconsin
Tax-Free Fund, 0.25% of the average daily net assets of the Advisor Class shares
of the Ultra Short-Term Municipal Income Fund and 0.25% of the average daily net
assets of the Investor Class shares of the Intermediate Municipal Bond Fund and
Wisconsin Tax-Free Fund.
For the period ended December 31, 2005, distribution fees incurred are
disclosed on the Statement of Operations.
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset based fee and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services.
Prior to March 21, 2005, State Street served as fund accountant for the
Strong Intermediate Municipal Bond Fund. Prior to March 28, 2005, State Street
served as fund accountant for the Strong Ultra Short-Term Municipal Income Fund
and Strong Wisconsin Tax-Free Fund. Prior to April 25, 2005, State Street served
as fund accountant for the Strong Municipal Bond Fund and Strong Short-Term
Municipal Bond Fund. Fund accounting fees were paid by the funds' administrator
through April 10, 2005, and not by the funds.
From April 11, 2005 to April 22, 2005, State Street served as interim fund
accountant for the Municipal Bond Fund and Short-Term Municipal Bond Fund and
was entitled to receive an annual asset based fee, a fixed fund accounting base
fee, multiple class fee and certain out-of-pocket expenses.
WAIVED FEES AND REIMBURSED EXPENSES
Effective April 11, 2005, Funds Management waived fees or reimbursed
expenses proportionately from all classes, first from advisory fees, and then
from any class specific expenses, if applicable. The Fund's adviser has
committed to waive fees and/or reimburse expenses to the extent necessary to
maintain a certain net operating expense ratio for the Fund(s). Net operating
expense ratios in effect from July 1, 2005 through December 31, 2005 were as
follows:
Net Operating Expense Ratios
Fund Class A Class B Class C Administrator Advisor Institutional Investor
- ----------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND N/A N/A N/A N/A N/A N/A 0.75%
- ----------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND 0.85% 1.60% 1.60% 0.48% N/A N/A 0.80%
- ----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND N/A N/A 1.59%** N/A N/A N/A 0.66%
- ----------------------------------------------------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND N/A N/A N/A N/A 0.78%* 0.37% 0.72%
- ----------------------------------------------------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND N/A N/A 1.49% N/A N/A N/A 0.75%
- ----------------------------------------------------------------------------------------------------------------------------
80
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
* Effective November 1, 2005, the net expense cap changed from 0.80% to
0.72%. However, the net expense reported is the actual expense that occurred
during the six-month period ended December 31, 2005.
** Effective November 1, 2005, the net expense cap changed from 1.60% to
1.55%. However, the net expense reported is the actual expense that occured
during the six-month period ended December 31, 2005.
Prior to April 11, 2005, the predecessor adviser, Funds Management, and/or
the 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, SCM had contractually agreed to waive fees
and/or absorb expenses in the amount of 0.010% for Intermediate Municipal Bond
Fund, Short-Term Municipal Bond Fund, Ultra Short-Term Municipal Income Fund,
and Wisconsin Tax-Free Fund and 0.033% for Municipal Bond Fund from May 21, 2004
to May 21, 2005. However, effective April 11, 2005, the Funds are subject to a
different expense structure. SCM and/or SISI had contractually agreed to waive
its fees and/or absorb expenses for Investor Class shares of the Wisconsin
Tax-Free Fund until March 1, 2006, to keep total annual operating expenses at no
more than 0.75%. SISI also allocated to each fund certain charges or credits
resulting from transfer agency banking activities based on each Class' level of
subscription and redemption activity. Transfer Agency Banking Credits allocated
by SISI, if any, served to reduce the transfer agency expenses incurred by the
Funds. From November 1, 2004 through April 10, 2005, the expense offsets that
are included in the waived fees and reimbursed expenses amount on the Statement
of Operations are as follows:
Waived Fees and
Reimbursed Expenses
- --------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND
FUND LEVEL $ 5,333
INVESTOR CLASS 158,163
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND
FUND LEVEL 36,732
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND
FUND LEVEL 39,762
CLASS C 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND
FUND LEVEL 72,964
ADVISOR CLASS 6,962
INSTITUTIONAL CLASS 0
INVESTOR CLASS 0
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND
FUND LEVEL 17,936
CLASS C 6,014
INVESTOR CLASS 148,662
- --------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the period
ended December 31, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND $ 46,957,699 $ 37,511,557
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND 260,879,484 265,178,569
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL BOND FUND 482,000,403 478,373,373
- --------------------------------------------------------------------------------
ULTRA SHORT-TERM MUNICIPAL INCOME FUND 553,843,921 633,242,754
- --------------------------------------------------------------------------------
WISCONSIN TAX-FREE FUND 40,594,278 36,175,274
- --------------------------------------------------------------------------------
81
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
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. For the period ended December 31, 2005, there
were no borrowings by the Municipal Income Funds under the 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 Strong Fund complex (excluding money market funds and very
short-term income funds) totaling at least $35 million by May 2009. Fund
Management 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.
82
OTHER INFORMATION (UNAUDITED)
WELLS FARGO ADVANTAGE MUNICIPAL INCOME 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 139 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.
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
63 Wake Forest University,
Calloway School of Business
and Accountancy.
- -----------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, since 1998 Chairman, CEO, and Co- None
63 (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
72 of Richard M. Leach Associates
(a financial consulting firm).
- -----------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None
54 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.
- -----------------------------------------------------------------------------------------------------
83
WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
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
61 Developer; Chairman of White
Point Capital, LLC.
- -----------------------------------------------------------------------------------------------------
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. and
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
37 Fargo Bank, N.A. and 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, since 2000 Vice President and Managing None
45 Senior Counsel of Wells Fargo
Bank, N.A. and 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 or by visiting the Funds' Web site at
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
** As of December 31, 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.
**** Effective January 1, 2006, Olivia Mitchell joined the Board of Trustees as
a non-interested Trustee.
***** Effective February 8, 2006, A. Erdem Cimen replaced Stacie D. DeAngelo as
the Treasurer of the Funds.
84
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE MUNICIPAL INCOME FUNDS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
85
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, visit the Funds' Web site,
or call:
WELLS FARGO ADVANTAGE FUNDS
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Web site: www.wellsfargo.com/advantagefunds
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals: 866-765-0778
This report and the financial statements contained herein are submitted for the
general information of the shareholders of 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
or visit the Funds' Web site at www.wellsfargo.com/advantagefunds. 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 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) 2006 Wells Fargo Advantage Funds, LLC. All rights reserved.
www.wellsfargo.com/advantagefunds
RT55156 02-06
SMUNL/SAR106 12-05
ITEM 2. CODE OF ETHICS
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a)(i) The President and Treasurer have concluded that the Wells Fargo Funds
Trust (the "Trust") disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances
that material information relating to the Trust is made known to them by the
appropriate persons based on their evaluation of these controls and procedures
as of a date within 90 days of the filing of this report.
(a)(ii) There were no significant changes in the Trust's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the evaluation referenced in (a)(i) above.
ITEM 10. EXHIBITS
(a) Not applicable.
(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant.
Wells Fargo Funds Trust
By: /s/ Karla M. Rabusch
Karla M. Rabusch
President
By: /s/ A. Erdem Cimen
A. Erdem Cimen
Treasurer
Date: February 21, 2006