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 Fund Trust
(Exact name of registrant as specified in charter)
525 Market St., San Francisco, CA 94105
(Address of principal executive offices) (Zip code)
C. David Messman
Wells Fargo Funds Management, LLC
525 Market St., San Francisco, CA 94105
(Name and address of agent for service)
Registrant's telephone number, including area code: 800-643-9691
Date of fiscal year end: December 31, 2009
Date of reporting period: June 30, 2009
ITEM 1. REPORT TO SHAREHOLDERS
===============================
(WELLS FARGO LOGO)
(REDUCE CLUTTER. SAVE TREES. LOGO)
Sign up for electronic delivery of prospectuses and shareholder reports at
www.wellsfargo.com/advantagedelivery
(GRAPHIC)
Semi-Annual Report
June 30, 2009
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES(SM)
- Series G
REDUCE CLUTTER. SAVE TREES.
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WWW.WELLSFARGO.COM/ADVANTAGEDELIVERY
Contents
PERFORMANCE HIGHLIGHTS
CoreBuilder Shares - Series G ............................................ 2
FUND EXPENSES ............................................................ 4
PORTFOLIO OF INVESTMENTS
CoreBuilder Shares - Series G ............................................ 5
FINANCIAL STATEMENTS
Statement of Assets and Liabilities ...................................... 7
Statement of Operations .................................................. 8
Statements of Changes in Net Assets ...................................... 9
Financial Highlights ..................................................... 10
NOTES TO FINANCIAL STATEMENTS ............................................ 12
OTHER INFORMATION ........................................................ 17
LIST OF ABBREVIATIONS .................................................... 22
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
2 Wells Fargo Managed Account CoreBuilder Shares
Performance Highlights
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES - SERIES G
INVESTMENT OBJECTIVE
THE WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES - SERIES G FUND (the Fund)
seeks total return, consisting of current income and capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGER
Michael J. Bray, CFA
FUND INCEPTION
April 15, 2008
PORTFOLIO ALLOCATION (1)
(AS OF JUNE 30, 2009)
(PIE CHART)
Asset Backed Securities (2%)
Cash Equivalents (10%)
Collateralized Mortgage Securities (16%)
Corporate Bonds (4%)
Federal Agencies (44%)
Municipal Bonds (2%)
U.S. Treasury Bonds (8%)
U.S. Treasury Notes (14%)
- ----------
(1.) Portfolio allocation is subject to change and is calculated based on the
total investments of the Fund, excluding cash and cash equivalents.
Wells Fargo Managed Account CoreBuilder Shares 3
Performance Highlights
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES - SERIES G (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF JUNE 30, 2009)
6-Months* 1 Year Life of Fund
--------- ------ ------------
CoreBuilder Shares - Series G 3.62 9.40 7.58
Barclays Capital U.S. Securitized Index(2) 3.64 7.06 5.56
* Returns for periods of less than one year are not annualized.
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 BY CALLING 800-368-0627.
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 use of derivatives may reduce returns and/or increase
volatility. Securities issued by U.S. Government agencies or
government-sponsored entities may not be guaranteed by the U.S. Treasury. Active
trading results in increased turnover and trading expenses and may generate
higher short-term capital gains. Certain investment strategies tend to increase
the total risk of an investment (relative to the broader market). This Fund is
exposed to mortgage- and asset-backed securities risk. Consult the Fund's
prospectus for additional information on these and other risks. The U.S.
Government guarantee applies to certain of the underlying securities and not to
shares of the Fund.
CoreBuilder Shares are a series of investment options within the separately
managed accounts advised or subadvised by Wells Fargo Funds Management, LLC. The
shares are fee-waived mutual funds that enable certain separately managed
account investors to achieve greater diversification than smaller managed
accounts might otherwise achieve.
- ----------
(2.) The Barclays Capital U.S. Securitized Index is an unmanaged composite of
asset-backed securities, collateralized mortgage-backed securities
(ERISA-eligible) and fixed rate mortgage- backed securities. You cannot
invest directly in an Index.
4 Wells Fargo Managed Account CoreBuilder Shares
Fund Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, redemption fees (if
any) and exchange fees (if any); and (2) ongoing costs, including management
fees; distribution (12b-1) and/or shareholder service fees; and other Fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
six-month period and held for the entire six-month period, from January 1, 2009
to June 30, 2009.
ACTUAL EXPENSES
The "Actual" line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the "Actual" line under the heading entitled "Expenses Paid During Period"
for your applicable class of shares to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the
"Hypothetical" line of the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would have
been higher.
Beginning Ending Expenses
Account Value Account Value Paid During Net Annual
COREBUILDER SHARES - SERIES G 01-01-2009 06-30-2009 the Period Expense Ratio
- ----------------------------- ------------- ------------- ----------- -------------
Actual $1,000.00 $1,036.20 $0.00 0.00%
Hypothetical (5% return before expenses) $1,000.00 $1,024.79 $0.00 0.00%
Wells Fargo Managed Account CoreBuilder Shares 5
Portfolio of Investments--June 30, 2009 (Unaudited)
COREBUILDER SHARES - SERIES G
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ------------ ---------------------------------------------------------- ------------- ------------- -------------
AGENCY SECURITIES: 84.83%
FEDERAL HOME LOAN MORTGAGE CORPORATION: 5.07%
$ 153,171 FHLMC #A77459 7.50% 05/01/2038 $ 164,774
168,736 FHLMC #F60001 4.50 01/01/2024 172,532
502,762 FHLMC #H09174 5.50 03/01/2038 517,761
855,067
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 77.95%
220,000 FNMA%% 4.00 07/01/2039 213,434
2,265,000 FNMA%% 5.00 07/01/2038 2,306,053
2,480,000 FNMA%% 5.50 07/01/2023 2,594,700
2,870,000 FNMA%% 5.50 07/01/2039 2,962,380
2,255,000 FNMA%% 6.00 07/01/2038 2,356,475
800,000 FNMA%% 6.50 07/01/2038 852,000
105,988 FNMA #256986 7.00 11/01/2037 114,615
246,830 FNMA #257307 6.00 08/01/2038 258,276
323,523 FNMA #888707 7.50 10/01/2037 351,293
108,722 FNMA #934370 5.50 08/01/2038 112,384
311,929 FNMA #941312 6.50 07/01/2037 332,649
146,623 FNMA #976190 7.50 05/01/2038 159,193
210,566 FNMA #987853 5.50 08/01/2038 217,658
279,555 FNMA #995591 7.00 03/01/2039 299,705
13,130,815
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION: 1.81%
3,646,979 GNMA SERIES 2002-53 CLASS IO+/-(c) 0.99 04/16/2042 86,182
44,879 GNMA SERIES 2005-90 CLASS A 3.76 09/16/2028 45,722
165,000 GNMA SERIES 2007-75 CLASS B 5.05 03/16/2036 172,356
304,260
-------------
TOTAL AGENCY SECURITIES (COST $14,164,769) 14,290,142
-------------
ASSET BACKED SECURITIES: 3.45%
100,000 CAPITAL AUTO RECEIVABLES ASSET TRUST SERIES 2007-4 CLASS
A3B+/- 1.02 12/15/2011 99,146
165,000 CHASE ISSUANCE TRUST SERIES 2009-A3 CLASS A3 2.40 06/17/2013 165,183
90,000 DISCOVER CARD MASTER TRUST SERIES 2008-A3 CLASS A3 5.10 10/15/2013 93,377
70,000 DISCOVER CARD MASTER TRUST SERIES 2008-A4 CLASS A4 5.65 12/15/2015 72,772
59,387 USAA AUTO OWNER TRUST SERIES 2005-3 CLASS A4 4.63 05/15/2012 60,349
88,624 USAA AUTO OWNER TRUST SERIES 2007-2 CLASS A3 4.90 02/15/2012 90,242
TOTAL ASSET BACKED SECURITIES (COST $574,578) 581,069
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS: 13.51%
90,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES SERIES
2007-T28 CLASS AAB 5.75 09/11/2042 80,703
74,847 CHASE MORTGAGE FINANCE CORPORATION SERIES 2005-A1 CLASS
2A2+/- 5.24 12/25/2035 66,673
100,000 COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES SERIES
2004-LB4A CLASS A4 4.58 10/15/2037 86,765
126,492 FHLMC SERIES T-42 CLASS A5 7.50 02/25/2042 135,425
89,853 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-57 CLASS
2A1+/- 5.24 07/25/2043 86,394
85,273 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-59 CLASS
2A1+/- 5.15 10/25/2043 81,675
74,907 FNMA SERIES 2005-W4 CLASS 3A+/- 5.11 06/25/2035 77,281
133,267 FNMA WHOLE LOAN SERIES 2004-W11 CLASS 1A3 7.00 05/25/2044 145,927
130,722 FNMA WHOLE LOAN SERIES 2004-W15 CLASS 1A3 7.00 08/25/2044 141,894
419,517 GNMA SERIES 2006-3 CLASS A 4.21 01/16/2028 428,997
103,417 GNMA SERIES 2007-12 CLASS A 3.96 06/16/2031 105,725
65,640 GNMA SERIES 2007-69 CLASS TA+/- 4.83 06/16/2031 67,747
4,219,28 GNMA SERIES 2008-22 CLASS XM+/-(c) 1.08 02/16/2049 208,290
6 Wells Fargo Managed Account CoreBuilder Shares
Portfolio of Investments--June 30, 2009 (Unaudited)
COREBUILDER SHARES - SERIES G
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ------------ ---------------------------------------------------------- ------------- ------------- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
$ 89,906 GNMA SERIES 2008-39 CLASS A 4.50% 02/16/2023 $ 92,054
135,000 GNMA SERIES 2008-86 CLASS D 5.46 06/16/2040 140,542
110,000 LEHMAN BROTHERS-UBS COMMERCIAL MORTGAGE TRUST SERIES
2003-C8 CLASS A3 4.83 11/15/2027 105,866
40,000 MORGAN STANLEY CAPITAL I SERIES 2004-T15 CLASS A4+/- 5.27 06/13/2041 36,086
200,000 TIAA REAL ESTATE CDO LIMITED SERIES 2007-C4 CLASS A3+/- 6.10 08/15/2039 187,125
-------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $2,245,739) 2,275,169
-------------
US TREASURY SECURITIES: 10.98%
US TREASURY NOTES: 10.98%
1,020,000 US TREASURY NOTE 1.50 10/31/2010 1,031,316
840,000 US TREASURY NOTE 1.88 02/28/2014 818,278
-------------
1,849,594
-------------
TOTAL US TREASURY SECURITIES (COST $1,853,690) 1,849,594
-------------
SHARES YIELD
- ------------ -------------
SHORT-TERM INVESTMENTS: 54.25%
MUTUAL FUNDS: 53.95%
9,088,079 Wells Fargo Advantage Money Market Trust~+++ 0.42% 9,088,079
-------------
PRINCIPAL INTEREST RATE MATURITY DATE
- ------------ ------------- -------------
US TREASURY BILLS: 0.30%
$ 50,000 US TREASURY BILL### 0.20 09/24/2009 49,979
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,138,056) 9,138,058
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $27,976,832)* 167.02% $ 28,134,032
OTHER ASSETS AND LIABILITIES, NET (67.02) (11,289,437)
------ -------------
TOTAL NET ASSETS 100.00% $ 16,844,595
------ -------------
- ----------
%% Securities issued on a when-issued (TBA) basis. (See Note 2)
+/- Variable rate investments.
(c) Interest-only securities entitle holders to receive only the interest
payments on the underlying mortgages. The principal amount shown is the
notional amount of the underlying mortgages. Interest rate disclosed
represents the coupon rate.
~ This Wells Fargo Advantage Fund invests cash balances that it retains for
liquidity purposes in a Wells Fargo Advantage Money Market Fund. The Wells
Fargo Advantage Money Market Fund does not pay an investment advisory fee.
+++ Short-term security of an affiliate of the Fund with a cost of $9,088,079.
## Zero coupon bond. Interest rate presented is yield to maturity.
# Security pledged as collateral for futures transactions. (See Note 2)
* Cost for federal income tax purposes is $27,976,832 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 215,917
Gross unrealized depreciation (58,717)
---------
Net unrealized appreciation (depreciation) $ 157,200
The accompanying notes are an integral part of these financial statements.
Wells Fargo Managed Account CoreBuilder Shares 7
Statement of Assets and Liabilities--June 30, 2009 (Unaudited)
CoreBuilder
Shares - Series G
-----------------
ASSETS
Investments
In securities, at value ....................................... $19,045,953
In affiliates ................................................. 9,088,079
-----------
Total investments at value (see cost below) ...................... 28,134,032
-----------
Variation margin receivable on futures contracts ................. 108
Receivables for dividends and interest ........................... 41,826
-----------
Total assets ........................................................ 28,175,966
-----------
LIABILITIES
Payable for Fund shares redeemed ................................. 13,596
Payable for investments purchased ................................ 11,253,155
Dividends payable ................................................ 64,620
-----------
Total liabilities ................................................... 11,331,371
-----------
TOTAL NET ASSETS .................................................... $16,844,595
===========
NET ASSETS CONSIST OF
Paid-in capital .................................................. $16,461,948
Undistributed/overdistributed net investment income (loss) ....... (99,018)
Undistributed net realized gain (loss) on investments ............ 323,261
Net unrealized appreciation (depreciation) of investments ........ 157,200
Net unrealized appreciation (depreciation) of futures ............ 1,204
-----------
TOTAL NET ASSETS .................................................... $16,844,595
===========
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
Net assets ....................................................... $16,844,595
Shares outstanding ............................................... 1,636,042
Net asset value per share ........................................ $ 10.30
-----------
Investments at cost ................................................. $27,976,832
-----------
- ----------
(1.) The Fund has an unlimited number of authorized shares.
The accompanying notes are an integral part of these financial statements.
8 Wells Fargo Managed Account CoreBuilder Shares
Statement of Operations--For the Six Months Ended June 30, 2009 (Unaudited)
CoreBuilder
Shares - Series G
-----------------
INVESTMENT INCOME
Interest ........................................................... $161,643
Income from affiliated securities .................................. 20,625
--------
Total investment income ............................................... 182,268
--------
Net investment income (loss) .......................................... 182,268
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) FROM
Securities ......................................................... 248,696
Futures transactions ............................................... (15,842)
--------
Net realized gain and loss from investments ........................... 232,854
--------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Securities ......................................................... 88,615
Futures transactions ............................................... 14,889
--------
Net change in unrealized appreciation (depreciation) of investments ... 103,504
--------
Net realized and unrealized gain (loss) on investments ................ 336,358
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... $518,626
========
The accompanying notes are an integral part of these financial statements.
Wells Fargo Managed Account CoreBuilder Shares 9
Statements of Changes in Net Assets
For the
Six Months Ended For the
June 30, 2009 Period Ended
(Unaudited) December 31, 2008*
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS
Beginning net assets ........................................ $10,195,866 $ 0
OPERATIONS
Net investment income (loss) ................................ 182,268 247,378
Net realized gain (loss) on investments ..................... 232,854 224,114
Net change in unrealized appreciation (depreciation) of
investments .............................................. 103,504 54,900
----------- -----------
Net increase (decrease) in net assets resulting
from operations ............................................. 518,626 526,392
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income ....................................... (285,205) (362,066)
Net realized gain on sales of investments ................... 0 (15,100)
----------- -----------
Total distributions to shareholders ............................ (285,205) (377,166)
----------- -----------
CAPITAL SHARES TRANSACTIONS
Proceeds from shares sold ................................... 7,369,638 10,046,640
Cost of shares redeemed ..................................... (954,330) 0
----------- -----------
Net increase (decrease) in net assets resulting from capital
share transactions - Total .................................. 6,415,308 10,046,640
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS .......................... 6,648,729 10,195,866
=========== ===========
ENDING NET ASSETS .............................................. $16,844,595 $10,195,866
=========== ===========
SHARES ISSUED AND REDEEMED
Shares sold ................................................. 724,504 1,004,650
Shares redeemed ............................................. (93,112) 0
----------- -----------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS .................................. 631,392 1,004,650
=========== ===========
ENDING BALANCE OF UNDISTRIBUTED/OVERDISTRIBUTED
NET INVESTMENT INCOME (LOSS) ................................ $ (99,018) $ 3,919
=========== ===========
* Period from the inception of the Fund on April 15, 2008 through December
31, 2008.
The accompanying notes are an integral part of these financial statements.
10 Wells Fargo Managed Account CoreBuilder Shares
Financial Highlights
Beginning Net Realized Distributions
Net Asset Net and Unrealized from Net
Value Per Investment Gain (Loss) Investment
Share Income (Loss) on Investments Income
--------- ------------- -------------- -------------
COREBUILDER SHARES - SERIES G
January 1, 2009 to June 30, 2009
(Unaudited) .................... $10.15 0.15 0.21 (0.21)
April 15, 2008(3) to December 31,
2008 ........................... $10.00 0.25 0.28 (0.36)
- ----------
(1.) Total return calculations do not include any sales charges. Returns for
periods of less than one year are not annualized.
(2.) Portfolio turnover rates presented for periods of less than one year are
not annualized.
(3.) Commencement of operations.
(4.) Portfolio turnover ratio excluding TBAs is 10%.
(5.) Portfolio turnover ratio excluding TBAs is 16%.
The accompanying notes are an integral part of these financial statements.
Wells Fargo Managed Account CoreBuilder Shares 11
Financial Highlights
Net Investment
Ending Income (Loss)
Distributions Distributions Net Asset Ratio to Average Portfolio Net Assets at
from Net in Excess of Value Per Net Assets Total Turnover End of Period
Realized Gains Realized Gains Share (Annualized) Return(1) Rate(2) (000s) omitted
- -------------- -------------- --------- ---------------- --------- --------- --------------
0.00 0.00 $10.30 2.58% 3.62% 355%(5) $16,845
(0.02) 0.00 $10.15 3.48% 5.41% 495%(4) $10,196
12 Wells Fargo Managed Account CoreBuilder Shares
Notes to Financial Statements
1. ORGANIZATION
Wells Fargo Funds Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company. The Trust commenced operations on November 8, 1999 and at June 30, 2009
was comprised of 99 separate series (each, a "Fund", collectively, the "Funds").
These financial statements present the CoreBuilder Shares - Series G.
CoreBuilder Shares - Series G has been developed as an investment option within
the separately managed accounts advised or subadvised by Wells Fargo Funds
Management, LLC. CoreBuilder Shares - Series G is a special purpose fund that is
used in combination with selected individual securities to effectively model
institutional-level investment strategies. CoreBuilder Shares - Series G enables
certain separately managed account investors to achieve greater diversification
than small managed accounts might otherwise achieve.
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 U.S. Generally Accepted Accounting Principles ("GAAP").
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. Management has considered the circumstances under which the Fund
should recognize or make disclosures regarding events or transactions occurring
subsequent to the balance sheet date through August 20, 2009 which represents
the date the financial statements are issued. Adjustments or additional
disclosures, if any, have been included in these financial statements.
Under the Trust's organizational documents, their officers and directors are
indemnified against certain liabilities that may arise out of performance of
their duties to the Trust. Additionally, in the normal course of business, the
Trust may enter into contracts with service providers that contain a variety of
indemnification clauses. The Trust's maximum exposure under these arrangements
is dependent on future claims that may be made against the Fund and, therefore,
cannot be estimated; however, based on experience, the risk of loss from such
claims is considered remote.
SECURITY VALUATION
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 of sufficient credit quality with original maturities of 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 fair
value.
Investments in open-end mutual funds are valued at net asset value. Investments
which are not valued using any of the methods discussed above, are valued at
their fair value, as determined by procedures established in good faith and
approved by the Board of Trustees.
The valuation techniques used by the Fund to measure fair value are consistent
with the market approach, income approach and/or cost approach, where
applicable, for each security type.
Wells Fargo Managed Account CoreBuilder Shares 13
Notes to Financial Statements
FAIR VALUATION MEASUREMENTS
In accordance with Statement of Financial Accounting Standards No. 157, Fair
Value Measurements ("FAS 157"), fair value is defined as the price that a Fund
would receive upon selling an investment in a timely transaction to an
independent buyer in the principal or most advantageous market of the
investment. FAS 157 established a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and to
establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk. Inputs may be
observable or unobservable. Observable inputs are inputs that reflect the
assumptions market participants would use in pricing the asset or liability
developed based on market data obtained from sources independent of the
reporting entity. Unobservable inputs are inputs that reflect the reporting
entity's own assumptions regarding the assumptions market participants would use
in pricing the asset or liability, based on the best information available in
the circumstances. The three-tier hierarchy of inputs is summarized in the three
broad Levels listed below.
- - Level 1 - quoted prices in active markets for identical investments
- - Level 2 - other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayment speeds, credit risk, etc.)
- - Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of June 30, 2009 in valuing the
Fund's investments in securities:
Significant Other Significant Total Fair
Quoted Prices Observable Inputs Unobservable Inputs Value as of
INVESTMENT IN SECURITITES* (Level 1) (Level 2) (Level 3) 06/30/2009
- -------------------------- ------------- ----------------- ------------------- -----------
COREBUILDER SHARES - SERIES G
Asset-backed securities $ 0 $ 581,069 $0 $ 581,069
Collaterized Mortgage Obligations 0 2,275,169 0 2,275,169
Mortgage-backed securities 0 14,290,142 0 14,290,142
Debt securities issued by U.S. Treasury and
U.S. government agencies 0 1,849,594 0 1,849,594
Short-term investments 9,088,079 49,979 0 9,138,058
TOTAL $9,088,079 $19,045,953 $0 $28,134,032
* Further details on the major security types listed above can be found in
the Portfolio of Investments.
The following is a summary of the inputs used as of June 30, 2009 in valuing the
Fund's investments in other financial instruments:*
Significant Other Significant Total Unrealized
Quoted Prices Observable Inputs Unobservable Inputs Appreciation/
FUND (Level 1) (Level 2) (Level 3) (Depreciation)
- ---- ------------- ----------------- ------------------- ----------------
COREBUILDER SHARES - SERIES G $1,204 $0 $0 $1,204
* Other financial instruments may include: futures, options, forwards, and
swaps.
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 using the effective interest method.
14 Wells Fargo Managed Account CoreBuilder Shares
Notes to Financial Statements
Debt obligations may be placed on non-accrual status and related investment
income may be reduced by 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.
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
distributions the earnings and profits distributed to shareholders on the
redemption of fund shares during the year.
Distributions are based on amounts calculated in accordance with the applicable
federal income tax regulations, which may differ from GAAP. The timing and
character of distributions made during the period from net investment income or
net realized gains may also differ from their ultimate characterization for
federal income tax purposes. To the extent that these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment. Temporary differences do not require
reclassifications.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes. It is
the policy of the Fund to continue to qualify as a regulated investment company
by complying with the provisions applicable to regulated investment companies,
as defined under Subchapter M of the Internal Revenue Code (the "Code"), and to
make distributions of substantially all of its investment company taxable income
and any net realized capital gains (after reduction for capital loss
carryforwards) sufficient to relieve it from all, or substantially all, federal
income taxes. Accordingly, no provision for federal income taxes was required at
June 30, 2009.
Management has analyzed the Fund's tax positions taken on federal income tax
returns for all open tax years and has concluded that as of June 30, 2009, no
provision for income tax would be required in the Fund's financial statements.
The Fund's federal and state income and federal excise tax returns for tax years
for which the applicable statutes of limitations have not expired (open tax
year: December 31, 2008) are subject to examination by the Internal Revenue
Service and state departments of revenue.
The Fund had deferred post-October capital losses occurring subsequent to
December 31, 2008. For tax purposes, such losses were treated as having occurred
on January 1, 2009. As of December 31, 2008, deferred post-October capital loss
was as follows:
Deferred
Post-October
FUND Capital Loss
- ---- ------------
COREBUILDER SHARES - SERIES G $32,138
FUTURES CONTRACTS
The Fund is subject to interest rate risk in the normal course of pursuing its
investment objectives. The Fund may purchase futures contracts to gain exposure
to market changes, which may be more efficient or cost effective than actually
buying the securities. A futures contract is an agreement between parties to buy
or sell a security at a set price on a future date. Upon entering into such a
contract, a Fund is required to pledge to the broker an amount of cash, U.S.
Government obligations or other high-quality debt securities equal to the
minimum "initial margin" requirements of the exchange on which the futures
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in the value
of the contract. Such receipts or payments are known as "variation margin" and
are recorded by the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed. Pursuant to regulations and/or published positions of the Securities
and Exchange Commission (the "SEC") for long futures positions, the Fund is
required to segregate highly liquid securities as permitted by the SEC in
connection with futures transactions in an amount generally equal to the entire
value of the underlying contracts. Risks of entering into futures contracts
include the possibility that there may be an illiquid market and
Wells Fargo Managed Account CoreBuilder Shares 15
Notes to Financial Statements
that a change in the value of the contract may not correlate with changes in the
value of the underlying securities. With futures contracts, there is minimal
counterparty risk to the Funds since futures are exchange traded and the
exchange's clearinghouse, as counterparty to all exchange traded futures,
guarantees the futures against default. At June 30, 2009, the Fund held
following futures contract:
Notional Net Unrealized
Contract Appreciation
FUND Contracts Type Expiration Date Amount (Depreciation)
- ---- --------- -------------- --------------- ---------- --------------
COREBUILDER SHARES - SERIES G 11 Long US 5 Year Note September 2009 $1,262,959 $(1,052)
5 Short US 2 Year Note September 2009 1,083,350 2,256
The average notional amount of futures contracts in the table above is
representative of the volume of futures activity during the six-month period
ended June 30, 2009.
The fair value, realized gains or losses and change in unrealized gains or
losses on derivative instruments are reflected in the appropriate financial
statements.
MORTGAGE DOLLAR ROLL TRANSACTIONS
The Fund may engage in mortgage dollar roll transactions with respect to
mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar
roll transaction, a Fund sells a mortgage-backed security to a financial
institution, such as a bank or broker-dealer and simultaneously agrees to
repurchase a substantially similar security from the institution at a later date
at an agreed upon price. The mortgage-backed securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. During the roll period, a Fund foregoes principal and interest paid
on the securities. A Fund is compensated by the difference between the current
sales price and the forward price for the future purchase as well as by the
earnings on the cash proceeds of the initial sale. Mortgage dollar rolls may be
renewed without physical delivery of the securities subject to the contract. The
Fund accounts for the dollar roll transactions as purchases and sales.
WHEN-ISSUED TRANSACTIONS
The Fund may purchase securities on a forward commitment or "when-issued" basis.
A Fund records a when-issued transaction on the trade date and will segregate
with the custodian qualifying assets having a value sufficient to make payment
for the securities purchased. Securities purchased on a when-issued basis are
marked-to-market daily and the Fund begins earning interest on the settlement
date. Losses may arise due to changes in the market value of the underlying
securities or if the counterparty does not perform under the contract.
3. EXPENSES
Generally, no ordinary operating fees or expenses are charged to the Fund. Funds
Management has contractually committed to absorb and pay all ordinary operating
expenses of the Fund, except portfolio transactions or other investment-related
costs (e.g. commissions), interest, taxes, leverage expenses and other expenses
not incurred in the ordinary course of the Fund's business. This commitment has
an indefinite term.
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) and U.S.
Government obligations for the six-month period ended June 30, 2009, were as
follows:
Fund Purchases at Cost Sales Proceeds
- ---- ----------------- --------------
COREBUILDER SHARES - SERIES G $63,477,149 $56,580,324
16 Wells Fargo Managed Account CoreBuilder Shares
Notes to Financial Statements
5. CONCENTRATION OF OWNERSHIP
From time to time, the Fund may have a concentration of one or more its
shareholders that hold a significant percentage of the Fund's shares
outstanding. Investment and/or voting activities of these shareholders with
respect their holdings in Fund shares could have a material impact on the Fund.
At June 30, 2009, there were two shareholders who held 99.71% of the outstanding
shares of the Fund and 61.12% held by affiliates of Wells Fargo & Company.
Shareholder % of ownership
- ----------- --------------
Wells Capital Management Incorporated 61.12%
Citigroup Global Markets Incorporated 38.59%
Wells Fargo Managed Account CoreBuilder Shares 17
Other Information
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities 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.
Information regarding how the Funds voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
without charge on the Funds' Web site at www.wellsfargo.com/advantagefunds or by
visiting the SEC Web site at www.sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for each Fund, except money market funds, are
publicly available on the Funds' Web site (www.wellsfargo.com/advantagefunds) on
a monthly, 30-day or more delayed basis, and for money market funds, on a
monthly, seven-day 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") and Officers of the
Trust. This table should be read in conjunction with the Prospectus and the
Statement of Additional Information(1) of each Fund. Each of the Trustees and
Officers listed below acts in identical capacities for each of the 134 funds
comprising the Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust
(collectively the "Fund Complex"). All of the 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
Name and Age Length of Service(2) Principal Occupations During Past Five Years Other Directorships
- ------------ --------------------- ------------------------------------------------------------ -------------------
Peter G. Gordon Trustee, since 1998; Co-Founder, Chairman, President and CEO of Crystal Geyser None
66 Chairman, since 2005 Water Company.
(Lead Trustee since
2001)
Isaiah Harris, Jr. Trustee, since 2009 Retired. Prior thereto, President and CEO of BellSouth CIGNA Corporation;
56 Advertising and Publishing Corp. from 2005 to 2007, Deluxe Corporation
President and CEO of BellSouth Enterprises from 2004 to
2005 and President of BellSouth Consumer Services from 2000
to 2003. Currently a member of the Iowa State University
Foundation Board of Governors and a member of the Advisory
Board of Iowa State University School of Business.
Judith M. Johnson Trustee, since 2008 Retired. Prior thereto, Chief Executive Officer and Chief None
60 Investment Officer of Minneapolis Employees Retirement Fund
from 1996 to 2008. Ms. Johnson is a certified public
accountant and a certified managerial accountant.
David F. Larcker Trustee, since 2009 James Irvin Miller Professor of Accounting at the Graduate None
58 School of Business, Stanford University. Director of
Corporate Governance Research Program and Co-Director of
The Rock Center for Corporate Governance since 2006. From
2005 to 2008, Professor of Accounting at the Graduate
School of Business, Stanford University. Prior thereto,
Ernst & Young Professor of Accounting at The Wharton
School, University of Pennsylvania from 1985 to 2005.
18 Wells Fargo Managed Account CoreBuilder Shares
Other Information
Position Held and
Name and Age Length of Service(2) Principal Occupations During Past Five Years Other Directorships
- ------------ --------------------- ------------------------------------------------------------ -------------------
Olivia S. Mitchell Trustee, since 2006 Professor of Insurance and Risk Management, Wharton School, None
56 University of Pennsylvania. Director of the Boettner Center
on Pensions and Retirement Research. Research associate and
board member, Penn Aging Research Center. Research
associate, National Bureau of Economic Research.
Timothy J. Penny Trustee, since 1996 President and CEO of Southern Minnesota Initiative None
57 Foundation, a non-profit organization since 2007 and Senior
Fellow at the Humphrey Institute Policy Forum at the
University of Minnesota since 1995. Member of the Board of
Trustees of NorthStar Education Finance, Inc., a non-profit
organization, since 2007.
Donald C. Willeke Trustee, since 1996 Principal of the law firm of Willeke & Daniels. General None
69 Counsel of the Minneapolis Employees Retirement Fund from
1984 to present.
OFFICERS
Position Held and
Name and Age Length of Service(2) Principal Occupations During Past Five Years Other Directorships
- ------------ --------------------- ------------------------------------------------------------ -------------------
Karla M. Rabusch President, since 2003 Executive Vice President of Wells Fargo Bank, N.A. and None
50 President of Wells Fargo Funds Management, LLC since 2003.
Senior Vice President and Chief Administrative Officer of
Wells Fargo Funds Management, LLC from 2001 to 2003.
C. David Messman Secretary, since 2000; Senior Vice President and Secretary of Wells Fargo None
48 Chief Legal Officer, Funds Management, LLC since 2001. Managing Counsel of Wells
since 2003 Fargo Bank, N.A. since 2000.
David Berardi(3) Treasurer and Vice President of Evergreen Investment Management Company, None
34 Assistant Treasurer, LLC since 2008. Assistant Vice President of Evergreen
since 2009 Investment Services, Inc. from 2004 to 2008. Manager of Fund
Reporting and Control for Evergreen Investment Management
Company, LLC since 2004.
Jeremy DePalma(3) Treasurer and Senior Vice President of Evergreen Investment Management None
35 Assistant Treasurer, Company, LLC since 2008. Vice President, Evergreen
since 2009 Investment Services, Inc. from 2004 to 2007. Assistant Vice
President, Evergreen Investment Services, Inc. from 2000 to
2004 and the head of the Fund Reporting and Control Team
within Fund Administration since 2005.
Debra Ann Early Chief Compliance Chief Compliance Officer of Wells Fargo Funds Management, None
45 Officer, LLC since 2007. Chief Compliance Officer of Parnassus
since 2007 Investments from 2005 to 2007. Chief Financial Officer of
Parnassus Investments from 2004 to 2007. Senior Audit
Manager of PricewaterhouseCoopers LLP from 1998 to 2004.
- ----------
1. 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.
2. Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
3. Effective June 1, 2009.
Wells Fargo Managed Account CoreBuilder Shares 19
Other Information
BOARD CONSIDERATION OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS:
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES(SM) - SERIES M AND WELLS FARGO
MANAGED ACCOUNT COREBUILDER SHARES(SM) - SERIES G
The Board of Trustees (the "Board") of Wells Fargo Funds Trust (the "Trust"),
all of the members of which have no direct or indirect interest in the
investment advisory and sub-advisory agreements and are not "interested persons"
of the Trust, as defined in the Investment Company of 1940 (the "1940 Act") (the
"Independent Trustees"), are required to annually review and consider the
continuation of the investment advisory and sub-advisory agreements. During the
six months covered by this report, the Board reviewed and re-approved: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the CoreBuilder Shares(SM) - Series M and CoreBuilder
Shares(SM) - Series G (the "Funds") and (ii) an investment sub-advisory
agreement with Wells Capital Management Incorporated ("Wells Capital
Management") for the Funds. The investment advisory agreement with Funds
Management and the investment sub-advisory agreement with Wells Capital
Management are collectively referred to as the "Advisory Agreements."
More specifically, at a meeting held on March 27, 2009, the Board considered the
factors and reached the conclusions described below relating to the selection of
Funds Management and Wells Capital Management and the continuation of the
Advisory Agreements. Prior to the March 27, 2009, meeting, the Trustees
conferred extensively among themselves and with representatives of Funds
Management about these matters. The Board has met regularly throughout the year
and received information that was useful to them in considering the continuation
of the Advisory Agreements. The Independent Trustees were assisted in their
evaluation of the Advisory Agreements by independent legal counsel, from whom
they received separate legal advice and with whom they met separately from Funds
Management.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various information regarding the nature,
extent and quality of services provided to the Funds by Funds Management and
Wells Capital Management under the Advisory Agreements. The Board also received
and considered information provided in response to a detailed set of requests
submitted by the Independent Trustees' independent legal counsel. The Board
received and considered, among other things, information about the background
and experience of senior management of Funds Management, and the qualifications,
backgrounds, tenures and responsibilities of the portfolio managers primarily
responsible for day-to-day portfolio management of the Funds.
The Board evaluated the ability of Funds Management and Wells Capital
Management, based on their respective resources, reputations and other
attributes, to attract and retain qualified investment professionals, including
research, advisory and supervisory personnel. The Board further considered the
compliance programs and compliance records of Funds Management and Wells Capital
Management. In addition, the Board took into account the administrative services
provided to the Funds by Funds Management and its affiliates.
In considering these matters, the Board considered not only the specific
information presented in connection with the meeting, but also the knowledge
gained over the course of interacting over time with Funds Management and Wells
Capital Management about various topics, including Funds Management's oversight
of service providers. Based on the above factors, together with those referenced
below, the Board concluded that it was generally satisfied with the nature,
extent and quality of the investment advisory services provided to the Funds by
Funds Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
The Board noted that the Funds had less than one year of operational history as
of December 31, 2008. The Board recognized the short operational history of the
Funds and indicated its intent to continue to monitor each Fund's performance
trends.
The Board received and considered information regarding the "zero fee and
expense" structure of each Fund. Specifically, the Board noted that each Fund's
gross operating expense ratio and each of its various components, including
advisory fees, administration fees, custody fees, Rule 12b-1 fees, and other
fees, were zero. The Board noted Fund Management's representations that the
Funds are special purpose mutual funds for use exclusively within Funds
Management's separately managed account ("SMA") advisory business and, as such,
Funds Management would assume and pay or reimburse all of the ordinary operating
expenses of the Funds under an Expense Assumption Agreement.
20 Wells Fargo Managed Account CoreBuilder Shares
Other Information
The Board noted that Funds Management is paid a negotiated fee by each SMA
sponsor and that the fee level would be identical for all sponsors of SMAs that
invest in CoreBuilder Shares(SM) - Series M, and identical for all sponsors of
SMAs that invest in CoreBuilder Shares(SM) - Series G. The Board also considered
comparisons of the zero fee and expense structure of the Funds to zero fee and
expense structures for peer funds offered exclusively within similar SMAs. The
Board noted that the zero fee and expense structures of the peer funds were
similar to that of the Funds, except that one peer fund's adviser was entitled
to fees, but waived all fees, leaving a net expense ratio of zero.
Based on the above-referenced considerations and other factors, the Board
concluded that the overall performance history of Wells Capital Management and
the expense structure of the Funds supported the re-approval of the Advisory
Agreements for the Funds.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered that the contractual investment advisory fee
rate payable by the Funds to Funds Management for investment advisory services
(the "Advisory Agreement Rate") was zero, and also reviewed and considered that
each Fund's other fees would normally be zero, because of Funds Management's
commitment to assume and pay or reimburse all of the ordinary operating expenses
of the Funds under an Expense Assumption Agreement. The Board also reviewed and
considered the contractual investment sub-advisory fee rate payable by Funds
Management to Wells Capital Management for investment sub-advisory services (the
"Sub-Advisory Agreement Rate"), and that such fees are paid from the fees Funds
Management receives from SMA sponsors and not by the Fund.
The Board noted that the Advisory Agreement Rate was consistent with the zero
fee and expense structures of peer funds and concluded that it was reasonable.
In addition, the Board also concluded that the Sub-Advisory Agreement Rates were
reasonable in relation to the services provided.
PROFITABILITY
The Board received and considered a profitability analysis of Funds Management,
as well as an analysis of the profitability to all Wells Fargo business
providing services to each Fund and the Fund complex as a whole. The Board also
considered related information provided by Funds Management in a separate
presentation on financial matters made at the February 2009 Board meeting. The
Board concluded that, in light of the costs of providing investment management
and other services to the Funds, the profits and other ancillary benefits that
Funds Management and its affiliates received with regard to providing these
services to each Fund and the Fund complex as a whole were not unreasonable. The
Board did not consider separate profitability information with respect to Wells
Capital Management, as its profitability from its relationship with the Funds
was not a material factor in determining whether to renew the investment
sub-advisory agreement. The Board noted that the profitability of Wells Capital
Management, which is affiliated with Funds Management, was included in the
profitability analysis provided by Funds Management.
ECONOMIES OF SCALE
The Board received and considered general information regarding economies of
scale with respect to the management of the Funds, including whether the Funds
have appropriately benefited from any economies of scale and the potential for
future realization of economies of scale. The Board acknowledged the inherent
limitations of any analysis of an investment adviser's economies of scale and of
any attempt to correlate breakpoints with such economies, stemming largely from
the Board's understanding that economies of scale are realized, if at all, by an
investment adviser across a variety of products and services, not just with
respect to a single fund. The Board concluded that any actual or potential
economies of scale are, or will be, shared reasonably with Fund shareholders,
most particularly through Advisory Agreement Rate breakpoints and waivers/caps
and/or expense reimbursements applicable to the Funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature and extent
of services and fee rates offered by Funds Management to other similarly
situated series of the Trust, and those offered by Wells Capital Management to
other clients. The Board concluded that the Advisory Agreement Rates, the
Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable
range of the fee rates offered to others by Funds Management and the Wells
Capital Management, giving effect to differences in services covered by such fee
rates.
Wells Fargo Managed Account CoreBuilder Shares 21
Other Information
OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS
The Board received and considered information regarding potential "fall-out" or
ancillary benefits received by Funds Management and its affiliates and Wells
Capital Management as a result of their relationship with the Funds. Such
benefits could include, among others, benefits directly attributable to the
relationship of Funds Management and Wells Capital Management with the Funds and
benefits potentially derived from an increase in Funds Management's and Wells
Capital Management's business as a result of their relationship with the Funds
(such as the ability to market to shareholders other financial products offered
by Funds Management and its affiliates, including Wells Capital Management).
The Board also considered the effectiveness of the policies of the Funds in
achieving the best execution of portfolio transactions, whether and to what
extent soft dollar credits are sought and how any such credits are utilized, any
benefits that may be realized by using an affiliated broker and the controls
applicable to brokerage allocation procedures. The Board also reviewed Funds
Management's and Wells Capital Management's methods for allocating portfolio
investment opportunities among the Funds and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Funds, including
the principal channels through which the Funds' shares are offered and sold. The
Board noted that the Funds are part of one of the few fund families that have
both direct-to-fund and intermediary distribution channels.
As discussed above, the Board reviews detailed materials received from Funds
Management and Wells Capital Management annually as part of the re-approval
process under Section 15(c) of the 1940 Act. The Board also reviews and assesses
the quality of the services that the Funds receive throughout the year. In this
regard, the Board has reviewed reports of Funds Management at each of its
quarterly meetings, which include, among other things, a portfolio review and
fund performance reports. In addition, the Board confers with portfolio managers
at various times throughout the year.
After considering the above-described factors and based on its deliberations and
its evaluation of the information described above, the Board concluded that
approval of the continuation of the Advisory Agreements for each Fund was in the
best interest of the Fund and its shareholders. Accordingly, the Board
unanimously approved the continuation of the Advisory Agreements for an
additional one-year period.
22 Wells Fargo Managed Account CoreBuilder Shares
List of Abbreviations
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDO -- Collateralized Debt Obligation
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CIFG -- CDC (Caisse des Depots et Consignations) IXIS Financial Guarantee
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
ECFA -- Educational & Cultural Facilities Authority
EDFA -- Economic Development Finance Authority
ETET -- Eagle Tax-Exempt Trust
ETF -- Exchange-Traded Fund
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHAG -- Federal Housing Agency
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Farm Service Agency
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HCFR -- Healthcare Facilities Revenue
HEFA -- Health & Educational Facilities Authority
HEFAR -- Higher Education Facilities Authority Revenue
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
HUD -- Housing & Urban Development
IDA -- Industrial Development Authority
IDAG -- Industrial Development Agency
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Company
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MMD -- Municipal Market Data
MTN -- Medium Term Note
MUD -- Municipal Utility District
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PFFA -- Public Facilities Financing Authority
plc -- Public Limited Company
PSFG -- Public School Fund Guaranty
R&D -- Research & Development
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
REITS -- Real Estate Investment Trusts
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
SPDR -- Standard & Poor's Depositary Receipts
STIT -- Short-Term Investment Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
XLCA -- XL Capital Assurance
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FOR MORE INFORMATION
More information on the Fund is available free upon request, including the
following documents:
Prospectus
The prospectus contains information about the CoreBuilder Shares - Series G
designed to provide investors with important information to assist them in
making investment decisions. The Prospectus should be read in conjunction with
the Statement of Additional Information and the Form ADV of the separately
managed account in which you are investing.
Statement of Additional Information (SAI)
Supplements the disclosures made by this Prospectus. The SAI, which has been
filed with the SEC, is incorporated by reference into this Prospectus and
therefore is legally part of this Prospectus.
Annual/Semi-Annual Reports
Provide financial and other important information, including a discussion of the
market conditions and investment strategies that significantly affected Fund
performance over the reporting period.
To obtain copies of the above documents or for more information about WELLS
FARGO COREBUILDER SHARES contact us:
By telephone:
800-368-0627
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
You may also contact the financial intermediary, broker-dealer or bank, through
whom you purchased Fund shares.
From the SEC:
Visit the SEC's Public Reference Room in Washington, DC (phone 1-800-SEC-0330 or
1-202-551-8090) or the SEC's Internet site at www.sec.gov.
To obtain information for a fee, write or email:
SEC's Public Reference Section
100"F"Street, NE
Washington, DC 20549-0102
publicinfo@sec.gov
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Printed on Recycled paper
(C) 2009 Wells Fargo Funds Management, LLC. All rights reserved. 117066 08-09
SCBG/SAR129 06-09
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Semi-Annual Report
June 30, 2009
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES(SM)
- SERIES M
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Contents
PERFORMANCE HIGHLIGHTS
CoreBuilder Shares - Series M ............................................. 2
FUND EXPENSES ............................................................. 4
PORTFOLIO OF INVESTMENTS
CoreBuilder Shares - Series M ............................................. 5
FINANCIAL STATEMENTS
Statement of Assets and Liabilities ....................................... 8
Statement of Operations ................................................... 9
Statements of Changes in Net Assets ....................................... 10
Financial Highlights ...................................................... 12
NOTES TO FINANCIAL STATEMENTS ............................................. 14
OTHER INFORMATION ......................................................... 17
LIST OF ABBREVIATIONS ..................................................... 22
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
2 Wells Fargo Managed Account CoreBuilder Shares
Performance Highlights
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES - SERIES M
INVESTMENT OBJECTIVE
THE WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES - SERIES M FUND (the Fund)
seeks total return, consisting of current income and capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Lyle J. Fitterer, CFA, CPA
Robert J. Miller
FUND INCEPTION
April 15, 2008
CREDIT QUALITY(1)
(AS OF JUNE 30, 2009)
(PIE CHART)
Unrated (20%)
AAA (9%)
AA (20%)
A (28%)
BBB (20%)
BB/Ba (3%)
EFFECTIVE MATURITY DISTRIBUTION(1)
(AS OF JUNE 30, 2009)
(PIE CHART)
0-1 Year (4%)
1-3 Years (4%)
3-5 Years (10%)
5-10 Years (31%)
10-20 Years (29%)
20 + Years (22%)
- ----------
(1.) The ratings indicated are from Standard & Poor's and/or Moody's Investors
Service. Credit quality and effective maturity distribution are subject to
change and are calculated based on the total investments of the Fund,
excluding cash and cash equivalents.
Wells Fargo Managed Account CoreBuilder Shares 3
Performance Highlights
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES - SERIES M (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF JUNE 30, 2009)
Excluding Sales Charge
---------------------------------
6-Months* 1 Year Life of Fund
--------- ------ ------------
Corebuilder Shares - Series M 12.98 5.95 5.35
Barclays Capital Municipal Bond Index(2) 6.42 3.77 2.19
* Returns for periods of less than one year are not annualized.
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 by calling 800-368-0627.
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 use of derivatives may reduce returns and/or increase
volatility. Active trading results in increased turnover and trading expenses,
and may generate higher short-term capital gains. Certain investment strategies
tend to increase the total risk of an investment (relative to the broader
market).This fund is exposed to high-yield securities risk. Consult the Fund's
prospectus for additional information on these and other risks. A portion of the
Fund's income may be subject to federal, state, and/or local income taxes or the
alternative minimum tax (AMT). Any capital gains distributions may be taxable.
CoreBuilder Shares are a series of investment options within the separately
managed accounts advised or subadvised by Wells Fargo Funds Management, LLC. The
shares are fee-waived mutual funds that enable certain separately managed
account investors to achieve greater diversification than smaller managed
accounts might otherwise achieve.
- ----------
(2.) Barclays Capital Municipal Bond Index is an unmanaged index composed of
long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot
invest directly in an Index.
4 Wells Fargo Managed Account CoreBuilder Shares
Fund Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, redemption fees (if
any) and exchange fees (if any); and (2) ongoing costs, including management
fees; distribution (12b-1) and/or shareholder service fees; and other Fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
six-month period and held for the entire six-month period, from January 1, 2009
to June 30, 2009.
ACTUAL EXPENSES
The "Actual" line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the "Actual" line under the heading entitled "Expenses Paid During Period"
for your applicable class of shares to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the
"Hypothetical" line of the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would have
been higher.
Beginning Ending Expenses
Account Value Account Value Paid During Net Annual
COREBUILDER SHARES - SERIES M 01-01-2009 06-30-2009 the Period Expense Ratio
- ----------------------------- ------------- ------------- ----------- -------------
Actual $1,000.00 $1,129.80 $0.00 0.00%
Hypothetical (5% return before expenses) $1,000.00 $1,024.79 $0.00 0.00%
Wells Fargo Managed Account CoreBuilder Shares 5
Portfolio of Investments--June 30, 2009 (Unaudited)
COREBUILDER SHARES - SERIES M
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
- --------- ------------- -------- ---------- ----------
MUNICIPAL BONDS & NOTES: 98.79%
ALABAMA: 0.33%
$ 25,000 COUNTY OF JEFFERSON AL SEWER REVENUE SERIES C-5
(SEWER REVENUE, XLCA COMPANY INSURED)+/-ss(n) 0.95% 02/01/2040 $ 8,500
25,000 COUNTY OF JEFFERSON AL WATERS SUBSERIES B-1-C (SEWER REVENUE, FGIC
INSURED)+/-ss(n) 0.95 02/01/2042 8,500
17,000
----------
ARIZONA: 3.81%
100,000 ARIZONA SCHOOL FACILITIES BOARD REVENUE STATE SCHOOL TRUST
(OTHER REVENUE, AMBAC INSURED) 5.00 07/01/2016 101,653
100,000 VERRADO AZ COMMUNITY FACILITIES DISTRICT #1 (OTHER REVENUE) 4.85 07/15/2014 92,691
194,344
----------
CALIFORNIA: 11.00%
400,000 ALAMEDA CORRIDOR TRANSPORTATION AUTHORITY SUB LIEN SERIES A
(TRANSPORTATION REVENUE, AMBAC INSURED)## 5.81 10/01/2018 235,396
125,000 CALIFORNIA STATEWIDE CDA KAISER PERMANENTE SERIES B (HOSPITAL REVENUE, BHAC
CREDIT)+/-ss 1.59 04/01/2036 73,906
175,000 PETALUMA CITY CA JOINT UNION HIGH SCHOOL DISTRICT CAPITAL APPRECIATION
(PROPERTY TAX REVENUE)## 5.27 08/01/2018 109,048
140,000 SAN DIEGO COUNTY CA CERTIFICATES PARTNERSHIP (LEASE REVENUE, AMBAC INSURED) 5.63 09/01/2012 142,750
561,100
----------
COLORADO: 17.32%
100,000 AURARIA HIGHER EDUCATION CENTER LAND ACQUISITION PROJECT (LEASE REVENUE) 6.00 05/01/2023 102,529
200,000 COLORADO ECFA CHARTER SCHOOL-AMERICAN ACADEMY PROJECT (LEASE REVENUE) 7.13 12/01/2033 207,016
200,000 COLORADO HEALTH FACILITIES AUTHORITY CATHOLIC HEALTH INITIATIVES-A (HCFR) 5.50 03/01/2032 203,354
245,000 DENVER CO HEALTH & HOSPITAL AUTHORITY SERIES B (HCFR)+/-ss 1.95 12/01/2033 120,356
250,000 E-470 CO PUBLIC HIGHWAY AUTHORITY SERIES D2 (OTHER REVENUE, MBIA INSURED)+/-ss 5.00 09/01/2039 250,468
883,723
----------
GEORGIA: 3.24%
50,000 ATLANTA DEVELOPMENT AUTHORITY SERIES A (IDR, AMBAC INSURED) 5.00 01/01/2027 42,321
135,000 MAIN STREET NATURAL GAS INCORPORATED SERIES A (UTILITIES REVENUE) 5.00 03/15/2022 122,745
165,066
----------
GUAM: 1.90%
100,000 GUAM SECTION 30 SERIES A (OTHER REVENUE) 5.38 12/01/2024 97,029
----------
IDAHO: 6.00%
100,000 BOISE-KUNA IRRIGATION DISTRICT (ELECTRIC REVENUE) 7.38 06/01/2040 108,571
250,000 IDAHO HOUSING & FINANCE ASSOCIATION LIBERTY CHARTER SCHOOL SERIES-A (OTHER
REVENUE) 6.00 06/01/2038 197,420
305,991
----------
ILLINOIS: 2.07%
150,000 LAKE COUNTY IL COMMUNITY HIGH SCHOOL DISTRICT # 117
CAPITAL APPRECIATION SERIES B (PROPERTY TAX REVENUE, FGIC INSURED)## 4.80 12/01/2016 105,507
----------
KANSAS: 1.37%
75,000 WYANDOTTE COUNTY KS UNITED GOVERNMENT REFERENDUM
SALES TAX SECOND LIEN AREA B (SALES TAX REVENUE) 5.00 12/01/2020 70,155
----------
6 Wells Fargo Managed Account CoreBuilder Shares
Portfolio of Investments--June 30, 2009 (Unaudited)
COREBUILDER SHARES - SERIES M
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
- --------- ------------- -------- ---------- ----------
LOUISIANA: 8.00%
$ 240,000 CITY OF NEW ORLEANS LA (SEWER REVENUE, FGIC INSURED) 5.38% 06/01/2014 $ 226,078
140,000 CLAIBORNE PARISH LA LAW ENFORCEMENT DISTRICT CLAIBORNE
CORRECTIONAL FACILITIES PROJECT (MISCELLANEOUS REVENUE) 6.25 03/01/2019 115,265
100,000 LOUISIANA PUBLIC FACILITIES AUTHORITY BLACK AND GOLD FACILITIES PROJECT
SERIES A (COLLEGE & UNIVERSITY REVENUE, CIFG INSURED) 4.50 07/01/2038 66,613
407,956
----------
MASSACHUSETTS: 2.02%
100,000 MASSACHUSETTS DEVELOPMENT FINANCE AGENCY SABIS INTERNATIONAL CHARTER
SERIES A (OTHER REVENUE) 8.00 04/15/2039 103,307
----------
MISSOURI: 4.92%
240,000 ST. LOUIS MO LAMBERT ST. LOUIS INTERNATIONAL SERIES B (AIRPORT REVENUE, FGIC
INSURED) 6.00 07/01/2013 251,042
----------
NEW JERSEY: 5.76%
245,000 NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (CIGARETTE TAX REVENUE) 5.75 06/15/2029 193,751
100,000 NEW JERSEY STATE HIGHER EDUCATION ASSISTANCE AUTHORITY SERIES A
(COLLEGE & UNIVERSITY REVENUE) 5.63 06/01/2030 100,032
293,783
----------
PENNSYLVANIA: 7.97%
240,000 ALLEGHENY COUNTY PA AIRPORT AUTHORITY PITTSBURGH INTERNATIONAL AIRPORT
(AIRPORT REVENUE, FGIC INSURED) 6.13 01/01/2016 242,671
165,000 CHESTER COUNTY PA RENAISSANCE ACADEMY PROJECT SERIES A (PRIVATE SCHOOL REVENUE) 5.25 10/01/2010 164,002
406,673
----------
PUERTO RICO: 2.66%
60,000 PUERTO RICO ELECTRIC POWER AUTHORITY SERIES UU (OTHER REVENUE,
FIRST SECURITY BANK LOC)+/-ss 1.33 07/01/2029 33,013
100,000 PUERTO RICO SALES TAX FINANCING CORPORATION FIRST SUB-SERIES A (SALES TAX
REVENUE) 6.38 08/01/2039 102,724
135,737
----------
SOUTH CAROLINA: 4.76%
240,000 TOWN OF NEWBERRY SC NEWBERRY COUNTY SCHOOL DISTRICT PROJECT (LEASE REVENUE) 5.25 12/01/2017 242,594
----------
TENNESSEE: 4.50%
100,000 ELIZABETHTON TN HEALTH & EDUCATIONAL FACILITIES BOARD HOSPITAL FIRST MORTGAGES
SERIES B (HCFR, MBIA INSURED) 7.00 07/01/2020 113,704
100,000 ELIZABETHTON TN HEALTH & EDUCATIONAL FACILITIES PREFUNDED
(EDUCATIONAL FACILITIES REVENUE, MBIA INSURED)ss 7.75 07/01/2029 115,654
229,358
----------
TEXAS: 8.13%
80,000 GARZA COUNTY TX PUBLIC FACILITY CORPORATION (LEASE REVENUE) 4.75 10/01/2010 80,858
250,000 LA VERNIA TX HIGHER EDUCATION FINANCE CORPORATION SERIES A
(EDUCATIONAL FACILITIES REVENUE) 6.25 02/15/2017 234,690
100,000 VARNER CREEK TX UTILITY DISTRICT (PROPERTY TAX REVENUE) 5.00 08/15/2018 98,970
414,518
----------
UTAH: 3.03%
200,000 SPANISH FORK CITY UT AMERICAN LEADERSHIP ACADEMY (EDUCATIONAL FACILITIES REVENUE)++ 5.55 11/15/2021 154,450
----------
TOTAL MUNICIPAL BONDS & NOTES (COST $5,216,923) 5,039,333
----------
Wells Fargo Managed Account CoreBuilder Shares 7
Portfolio of Investments--June 30, 2009 (Unaudited)
COREBUILDER SHARES - SERIES M
SHARES SECURITY NAME YIELD VALUE
- --------- ------------- -------- ----------
SHORT-TERM INVESTMENTS: 0.50%
25,626 WELLS FARGO ADVANTAGE NATIONAL TAX-FREE MONEY MARKET TRUST~+++ 0.22% $ 25,626
----------
TOTAL SHORT-TERM INVESTMENTS (COST $25,626) 25,626
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $5,242,549)* 99.29% $5,064,959
OTHER ASSETS AND LIABILITIES, NET 0.71 36,344
------ ----------
TOTAL NET ASSETS 100.00% $5,101,303
------ ----------
- ----------
## 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.
(n) Auction to set interest rate on security failed at period end due to
insufficient investor interest; failed auction does not itself cause a
default.
++ 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 Wells
Fargo Advantage Money Market Fund does not pay an investment advisory fee.
+++ Short-term security of an affiliate of the Fund with a cost of $25,626.
* Cost for federal income tax purposes is $5,242,566 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 67,379
Gross unrealized depreciation (244,986)
---------
Net unrealized appreciation (depreciation) $(177,607)
The accompanying notes are an integral part of these financial statements.
8 Wells Fargo Managed Account CoreBuilder Shares
Statement of Assets and Liabilities--June 30, 2009 (Unaudited)
CoreBuilder
Shares - Series M
-----------------
ASSETS
Investments
In securities, at value ...................................... $5,039,333
In affiliates ................................................ 25,626
----------
Total investments at value (see cost below) .................. 5,064,959
----------
Receivable for investments sold .............................. 186,194
Receivables for dividends and interest ....................... 66,437
----------
Total assets .................................................... 5,317,590
----------
LIABILITIES
Payable for investments purchased ............................ 192,606
Dividends payable ............................................ 23,681
----------
Total liabilities ............................................... 216,287
----------
TOTAL NET ASSETS ................................................ $5,101,303
==========
NET ASSETS CONSIST OF
Paid-in capital .............................................. $5,115,488
Undistributed/overdistributed net investment income (loss) ... 24
Undistributed net realized gain (loss) on investments ........ 163,381
Net unrealized appreciation (depreciation) of investments .... (177,590)
----------
TOTAL NET ASSETS ................................................ $5,101,303
==========
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
Net assets ................................................... $5,101,303
Shares outstanding ........................................... 512,030
Net asset value per share .................................... $ 9.96
----------
Investments at cost $5,242,549
----------
- ----------
(1.) The Fund has an unlimited number of authorized shares.
The accompanying notes are an integral part of these financial statements.
Wells Fargo Managed Account CoreBuilder Shares 9
Statement of Operations--For the Six Month Period Ended June 30, 2009
(Unaudited)
CoreBuilder
Shares - Series M
-----------------
INVESTMENT INCOME
Interest ............................................. $142,855
Income from affiliated securities .................... 371
--------
Total investment income ................................. 143,226
--------
Net investment income (loss) ............................ 143,226
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) FROM
Securities ........................................... 166,329
--------
Net realized gain and loss from investments ............. 166,329
--------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Securities ........................................... 295,099
--------
Net change in unrealized appreciation (depreciation)
of investments ....................................... 295,099
--------
Net realized and unrealized gain (loss) on investments .. 461,428
NET INCREASE (DECREASE) IN NET ASSETS RESULTING --------
FROM OPERATIONS ...................................... $604,654
========
The accompanying notes are an integral part of these financial statements.
10 Wells Fargo Managed Account CoreBuilder Shares
Statements of Changes in Net Assets
For the
Period Ended For the
June 30, 2009 Period Ended
(Unaudited) December 31, 2008*
------------- ------------------
INCREASE (DECREASE) IN NET ASSETS
Beginning net assets ................................................. $4,639,871 $ 0
OPERATIONS
Net investment income (loss) ......................................... 143,226 184,739
Net realized gain (loss) on investments .............................. 166,329 6,100
Net change in unrealized appreciation (depreciation) of investments .. 295,099 (472,689)
---------- ----------
Net increase (decrease) in net assets resulting from operations ......... 604,654 (281,850)
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income ................................................ (143,222) (184,740)
Net realized gain on sales of investments ............................ 0 (9,027)
---------- ----------
Total distributions to shareholders ..................................... (143,222) (193,767)
---------- ----------
CAPITAL SHARES TRANSACTIONS
Proceeds from shares sold ............................................ 0 5,115,488
---------- ----------
Net increase (decrease) in net assets resulting from capital
share transactions - Total ........................................... 0 5,115,488
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ................................... 461,432 4,639,871
========== ==========
ENDING NET ASSETS ....................................................... $5,101,303 $4,639,871
========== ==========
SHARES ISSUED AND REDEEMED
Shares sold .......................................................... 0 512,030
---------- ----------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM
CAPITAL SHARE TRANSACTIONS ........................................... 0 512,030
========== ==========
ENDING BALANCE OF UNDISTRIBUTED/OVERDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ........................................................ $ 24 $ 20
========== ==========
* Period from the inception of the Fund on April 15, 2008 through December
31, 2008.
The accompanying notes are an integral part of these financial statements.
THIS PAGE IS INTENTIONALLY LEFT BLANK.
12 Wells Fargo Managed Account CoreBuilder Shares
Financial Highlights
Beginning Net Realized Distributions
Net Asset Net and Unrealized from Net Distributions
Value Per Investment Gain (Loss) Investment from Net
Share Income (Loss) on Investments Income Realized Gains
--------- ------------- -------------- ------------- --------------
COREBUILDER SHARES - SERIES M
January 1, 2009 to June 30, 2009 (Unaudited) ...... $ 9.06 0.28 0.90 (0.28) 0.00
April 15, 2008(3) to December 31, 2008 ............ $10.00 0.37 (0.92) (0.37) (0.02)
- ----------
(1.) Total return calculations do not include any sales charges. Returns for
periods of less than one year are not annualized.
(2.) Portfolio turnover rates presented for periods of less than one year are
not annualized.
(3.) Commencement of operations.
The accompanying notes are an integral part of these financial statements.
Wells Fargo Managed Account CoreBuilder Shares 13
Financial Highlights
Net Investment
Ending Income (Loss)
Distributions Net Asset Ratio to Average Portfolio Net Assets at
in Excess of Value Per Net Assets Total Turnover End of Period
Realized Gains Share (Annualized) Return(1) Rate(2) (000s) omitted
- -------------- --------- ---------------- --------- --------- --------------
0.00 $9.96 5.91% 12.98% 91% $5,101
0.00 $9.06 5.29% (5.74)% 150% $4,640
14 Wells Fargo Managed Account CoreBuilder Shares
Notes to Financial Statements
1. ORGANIZATION
Wells Fargo Funds Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company. The Trust commenced operations on November 8, 1999 and at June 30, 2009
was comprised of 99 separate series (each, a "Fund", collectively, the "Funds").
These financial statements present the CoreBuilder Shares - Series M.
CoreBuilder Shares - Series M has been developed as an investment option within
the separately managed accounts advised or subadvised by Wells Fargo Funds
Management, LLC. CoreBuilder Shares - Series M is a special purpose fund that is
used in combination with selected individual securities to effectively model
institutional-level investment strategies. CoreBuilder Shares - Series M enables
certain separately managed account investors to achieve greater diversification
than small managed accounts might otherwise achieve.
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 U.S. Generally Accepted Accounting Principles ("GAAP").
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. Management has considered the circumstances under which the Fund
should recognize or make disclosures regarding events or transactions occurring
subsequent to the balance sheet date through August 20, 2009 which represents
the date the financial statements are issued. Adjustments or additional
disclosures, if any, have been included in these financial statements.
Under the Trust's organizational documents, their officers and directors are
indemnified against certain liabilities that may arise out of performance of
their duties to the Trust. Additionally, in the normal course of business, the
Trust may enter into contracts with service providers that contain a variety of
indemnification clauses. The Trust's maximum exposure under these arrangements
is dependent on future claims that may be made against the Fund and, therefore,
cannot be estimated; however, based on experience, the risk of loss from such
claims is considered remote.
SECURITY VALUATION
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 of sufficient credit quality with original maturities of 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 fair
value.
Investments in open-end mutual funds are valued at net asset value. Investments
which are not valued using any of the methods discussed above, are valued at
their fair value, as determined by procedures established in good faith and
approved by the Board of Trustees.
The valuation techniques used by the Fund to measure fair value are consistent
with the market approach, income approach and/or cost approach, where
applicable, for each security type.
FAIR VALUATION MEASUREMENTS
In accordance with Statement of Financial Accounting Standards No. 157, Fair
Value Measurements ("FAS 157"), fair value is defined as the price that a Fund
would receive upon selling an investment in a timely transaction to an
independent buyer in the principal or most advantageous market of the
investment. FAS 157 established a three-tier hierarchy to
Wells Fargo Managed Account CoreBuilder Shares 15
Notes to Financial Statements
maximize the use of observable market data and minimize the use of unobservable
inputs and to establish classification of fair value measurements for disclosure
purposes. Inputs refer broadly to the assumptions that market participants would
use in pricing the asset or liability, including assumptions about risk. Inputs
may be observable or unobservable. Observable inputs are inputs that reflect the
assumptions market participants would use in pricing the asset or liability
developed based on market data obtained from sources independent of the
reporting entity. Unobservable inputs are inputs that reflect the reporting
entity's own assumptions regarding the assumptions market participants would use
in pricing the asset or liability, based on the best information available in
the circumstances. The three-tier hierarchy of inputs is summarized in the three
broad Levels listed below.
- - Level 1 - quoted prices in active markets for identical investments
- - Level 2 - other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayment speeds, credit risk, etc.)
- - Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of June 30, 2009 in valuing the
Fund's investments in securities:
Significant
Significant Other Unobservable Total Fair
Quoted Prices Observable Inputs Inputs Value as of
Investment in Securitites* (Level 1) (Level 2) (Level 3) 06/30/2009
- -------------------------- ------------- ----------------- ------------ -----------
COREBUILDER SHARES - SERIES M
Debt securities issued by
states in the U.S. and its
political subdivisions $ 0 $5,039,333 $0 $5,039,333
Short-term investments 25,626 0 0 25,626
TOTAL $25,626 $5,039,333 $0 $5,064,959
* Further details on the major security types listed above can be found in
the Portfolio of Investments.
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 using the effective interest method.
Debt obligations may be placed on non-accrual status and related investment
income may be reduced by 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.
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
distributions the earnings and profits distributed to shareholders on the
redemption of fund shares during the year.
Distributions are based on amounts calculated in accordance with the applicable
federal income tax regulations, which may differ from GAAP. The timing and
character of distributions made during the period from net investment income or
net realized gains may also differ from their ultimate characterization for
federal income tax purposes. To the extent that these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment. Temporary differences do not require
reclassifications.
16 Wells Fargo Managed Account CoreBuilder Shares
Notes to Financial Statements
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes. It is
the policy of the Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under Subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of substantially all of its investment
company taxable income and any net realized capital gains (after reduction for
capital loss carryforwards) sufficient to relieve it from all, or substantially
all, federal income taxes. Accordingly, no provision for federal income taxes
was required at June 30, 2009.
Management has analyzed the Fund's tax positions taken on federal income tax
returns for all open tax years and has concluded that as of June 30, 2009, no
provision for income tax would be required in the Fund's financial statements.
The Fund's federal and state income and federal excise tax returns for tax years
for which the applicable statutes of limitations have not expired (open tax
year: December 31, 2008) are subject to examination by the Internal Revenue
Service and state departments of revenue.
The Fund had deferred post-October capital losses occurring subsequent to
December 31, 2008. For tax purposes, such losses were treated as having occurred
on January 1, 2009. As of December 31, 2008, deferred post-October capital loss
was as follows:
Deferred Post-October
FUND Capital Loss
- ---- ---------------------
COREBUILDER SHARES - SERIES M $2,763
WHEN-ISSUED TRANSACTIONS
The Fund may purchase securities on a forward commitment or "when-issued" basis.
A Fund records a when-issued transaction on the trade date and will segregate
with the custodian qualifying assets having a value sufficient to make payment
for the securities purchased. Securities purchased on a when-issued basis are
marked-to-market daily and the fund begins earning interest on the settlement
date. Losses may arise due to changes in the market value of the underlying
securities or if the counterparty does not perform under the contract.
3. EXPENSES
Generally, no ordinary operating fees or expenses are charged to the Fund. Funds
Management has contractually committed to absorb and pay all ordinary operating
expenses of the Fund, except portfolio transactions or other investment-related
costs (e.g. commissions), fees payable for services provided by the Fund's
securities lending agent (if any), interest, taxes, leverage expenses and other
expenses not incurred in the ordinary course of the Fund's business. This
commitment has an indefinite term.
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 June 30, 2009, were as follows:
FUND Purchases at Cost Sales Proceeds
- ---- ----------------- --------------
COREBUILDER SHARES - SERIES M $4,459,810 $4,264,033
5. CONCENTRATION OF OWNERSHIP
From time to time, the Fund may have a concentration of one or more its
shareholders that hold a significant percentage of the Fund's shares
outstanding. Investment and/or voting activities of these shareholders with
respect their holdings in Fund shares could have a material impact on the Fund.
At June 30, 2009, there was one shareholder, an affiliate of Wells Fargo &
Company, who held 97.65% of the outstanding shares of the Fund.
Wells Fargo Managed Account CoreBuilder Shares 17
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 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.
Information regarding how the Funds voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
without charge on the Funds' Web site at www.wellsfargo.com/advantagefunds or by
visiting the SEC Web site at www.sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for each Fund, except money market funds, are
publicly available on the Funds' Web site (www.wellsfargo.com/advantagefunds) on
a monthly, 30-day or more delayed basis, and for money market funds, on a
monthly, seven-day 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") and Officers of the
Trust. This table should be read in conjunction with the Prospectus and the
Statement of Additional Information(1) of each Fund. Each of the Trustees and
Officers listed below acts in identical capacities for each of the 134 funds
comprising the Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust
(collectively the "Fund Complex"). All of the 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
Name and Age Length of Service(2) Principal Occupations During Past Five Years Other Directorships
- ------------------ ---------------------- ----------------------------------------------------------- -------------------
Peter G. Gordon Trustee, since 1998; Co-Founder, Chairman, President and CEO of Crystal Geyser None
66 Chairman, since 2005 Water Company.
(Lead Trustee since
2001)
Isaiah Harris, Jr. Trustee, since 2009 Retired. Prior thereto, President and CEO of BellSouth CIGNA Corporation;
56 Advertising and Publishing Corp. from 2005 to 2007, Deluxe Corporation
President and CEO of BellSouth Enterprises from 2004 to
2005 and President of BellSouth Consumer Services from 2000
to 2003. Currently a member of the Iowa State University
Foundation Board of Governors and a member of the Advisory
Board of Iowa State University School of Business.
Judith M. Johnson Trustee, since 2008 Retired. Prior thereto, Chief Executive Officer and Chief None
60 Investment Officer of Minneapolis Employees Retirement Fund
from 1996 to 2008. Ms. Johnson is a certified public
accountant and a certified managerial accountant.
David F. Larcker Trustee, since 2009 James Irvin Miller Professor of Accounting at the Graduate None
58 School of Business, Stanford University. Director of
Corporate Governance Research Program and Co-Director of
The Rock Center for Corporate Governance since 2006. From
2005 to 2008, Professor of Accounting at the Graduate
School of Business, Stanford University. Prior thereto,
Ernst & Young Professor of Accounting at The Wharton
School, University of Pennsylvania from 1985 to 2005.
18 Wells Fargo Managed Account CoreBuilder Shares
Other Information (Unaudited)
Position Held and
Name and Age Length of Service(2) Principal Occupations During Past Five Years Other Directorships
- ------------------ ---------------------- ----------------------------------------------------------- -------------------
Olivia S. Mitchell Trustee, since 2006 Professor of Insurance and Risk Management, Wharton School, None
56 University of Pennsylvania. Director of the Boettner Center
on Pensions and Retirement Research. Research associate and
board member, Penn Aging Research Center. Research
associate, National Bureau of Economic Research.
Timothy J. Penny Trustee, since 1996 President and CEO of Southern Minnesota Initiative None
57 Foundation, a non-profit organization since 2007 and Senior
Fellow at the Humphrey Institute Policy Forum at the
University of Minnesota since 1995. Member of the Board of
Trustees of NorthStar Education Finance, Inc., a non-profit
organization, since 2007.
Donald C. Willeke Trustee, since 1996 Principal of the law firm of Willeke & Daniels. General None
69 Counsel of the Minneapolis Employees Retirement Fund from
1984 to present.
OFFICERS
Position Held and
Name and Age Length of Service(2) Principal Occupations During Past Five Years Other Directorships
- ------------------ ---------------------- ----------------------------------------------------------- -------------------
Karla M. Rabusch President, since 2003 Executive Vice President of Wells Fargo Bank, N.A. and None
50 President of Wells Fargo Funds Management, LLC since 2003.
Senior Vice President and Chief Administrative Officer of
Wells Fargo Funds Management, LLC from 2001 to 2003.
C. David Messman Secretary, since 2000; Senior Vice President and Secretary of Wells Fargo Funds None
48 Chief Legal Officer, Management, LLC since 2001. Managing Counsel of Wells Fargo
since 2003 Bank, N.A. since 2000.
David Berardi(3) Treasurer and Vice President of Evergreen Investment Management Company, None
34 Assistant Treasurer, LLC since 2008. Assistant Vice President of Evergreen
since 2009 Investment Services, Inc. from 2004 to 2008. Manager of
Fund Reporting and Control for Evergreen Investment
Management Company, LLC since 2004.
Jeremy DePalma(3) Treasurer and Senior Vice President of Evergreen Investment Management None
35 Assistant Treasurer, Company, LLC since 2008. Vice President, Evergreen
since 2009 Investment Services, Inc. from 2004 to 2007. Assistant Vice
President, Evergreen Investment Services, Inc. from 2000 to
2004 and the head of the Fund Reporting and Control Team
within Fund Administration since 2005.
Debra Ann Early Chief Compliance Chief Compliance Officer of Wells Fargo Funds Management, None
45 Officer, since 2007 LLC since 2007. Chief Compliance Officer of Parnassus
Investments from 2005 to 2007. Chief Financial Officer of
Parnassus Investments from 2004 to 2007. Senior Audit
Manager of PricewaterhouseCoopers LLP from 1998 to 2004.
- ----------
(1.) 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.
(2.) Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
(3.) Effective June 1, 2009.
Wells Fargo Managed Account CoreBuilder Shares 19
Other Information (Unaudited)
BOARD CONSIDERATION OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS:
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES(SM) - SERIES M AND
WELLS FARGO MANAGED ACCOUNT COREBUILDER SHARES(SM) - SERIES G
The Board of Trustees (the "Board") of Wells Fargo Funds Trust (the "Trust"),
all of the members of which have no direct or indirect interest in the
investment advisory and sub-advisory agreements and are not "interested persons"
of the Trust, as defined in the Investment Company of 1940 (the "1940 Act") (the
"Independent Trustees"), are required to annually review and consider the
continuation of the investment advisory and sub-advisory agreements. During the
six months covered by this report, the Board reviewed and re-approved: (i) an
investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds
Management") for the CoreBuilder Shares(SM) - Series M and CoreBuilder
Shares(SM) - Series G (the "Funds") and (ii) an investment sub-advisory
agreement with Wells Capital Management Incorporated ("Wells Capital
Management") for the Funds. The investment advisory agreement with Funds
Management and the investment sub-advisory agreement with Wells Capital
Management are collectively referred to as the "Advisory Agreements."
More specifically, at a meeting held on March 27, 2009, the Board considered the
factors and reached the conclusions described below relating to the selection of
Funds Management and Wells Capital Management and the continuation of the
Advisory Agreements. Prior to the March 27, 2009, meeting, the Trustees
conferred extensively among themselves and with representatives of Funds
Management about these matters. The Board has met regularly throughout the year
and received information that was useful to them in considering the continuation
of the Advisory Agreements. The Independent Trustees were assisted in their
evaluation of the Advisory Agreements by independent legal counsel, from whom
they received separate legal advice and with whom they met separately from Funds
Management.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various information regarding the nature,
extent and quality of services provided to the Funds by Funds Management and
Wells Capital Management under the Advisory Agreements. The Board also received
and considered information provided in response to a detailed set of requests
submitted by the Independent Trustees' independent legal counsel. The Board
received and considered, among other things, information about the background
and experience of senior management of Funds Management, and the qualifications,
backgrounds, tenures and responsibilities of the portfolio managers primarily
responsible for day-to-day portfolio management of the Funds.
The Board evaluated the ability of Funds Management and Wells Capital
Management, based on their respective resources, reputations and other
attributes, to attract and retain qualified investment professionals, including
research, advisory and supervisory personnel. The Board further considered the
compliance programs and compliance records of Funds Management and Wells Capital
Management. In addition, the Board took into account the administrative services
provided to the Funds by Funds Management and its affiliates.
In considering these matters, the Board considered not only the specific
information presented in connection with the meeting, but also the knowledge
gained over the course of interacting over time with Funds Management and Wells
Capital Management about various topics, including Funds Management's oversight
of service providers. Based on the above factors, together with those referenced
below, the Board concluded that it was generally satisfied with the nature,
extent and quality of the investment advisory services provided to the Funds by
Funds Management and Wells Capital Management.
FUND PERFORMANCE AND EXPENSES
The Board noted that the Funds had less than one year of operational history as
of December 31, 2008. The Board recognized the short operational history of the
Funds and indicated its intent to continue to monitor each Fund's performance
trends.
The Board received and considered information regarding the "zero fee and
expense" structure of each Fund. Specifically, the Board noted that each Fund's
gross operating expense ratio and each of its various components, including
advisory fees, administration fees, custody fees, Rule 12b-1 fees, and other
fees, were zero. The Board noted Fund Management's representations that the
Funds are special purpose mutual funds for use exclusively within Funds
Management's separately managed account ("SMA") advisory business and, as such,
Funds Management would assume and pay or reimburse all of the ordinary operating
expenses of the Funds under an Expense Assumption Agreement.
20 Wells Fargo Managed Account CoreBuilder Shares
Other Information (Unaudited)
The Board noted that Funds Management is paid a negotiated fee by each SMA
sponsor and that the fee level would be identical for all sponsors of SMAs that
invest in CoreBuilder Shares(SM) - Series M, and identical for all sponsors of
SMAs that invest in CoreBuilder Shares(SM) - Series G. The Board also considered
comparisons of the zero fee and expense structure of the Funds to zero fee and
expense structures for peer funds offered exclusively within similar SMAs. The
Board noted that the zero fee and expense structures of the peer funds were
similar to that of the Funds, except that one peer fund's adviser was entitled
to fees, but waived all fees, leaving a net expense ratio of zero.
Based on the above-referenced considerations and other factors, the Board
concluded that the overall performance history of Wells Capital Management and
the expense structure of the Funds supported the re-approval of the Advisory
Agreements for the Funds.
INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES
The Board reviewed and considered that the contractual investment advisory fee
rate payable by the Funds to Funds Management for investment advisory services
(the "Advisory Agreement Rate") was zero, and also reviewed and considered that
each Fund's other fees would normally be zero, because of Funds Management's
commitment to assume and pay or reimburse all of the ordinary operating expenses
of the Funds under an Expense Assumption Agreement. The Board also reviewed and
considered the contractual investment sub-advisory fee rate payable by Funds
Management to Wells Capital Management for investment sub-advisory services (the
"Sub-Advisory Agreement Rate"), and that such fees are paid from the fees Funds
Management receives from SMA sponsors and not by the Fund.
The Board noted that the Advisory Agreement Rate was consistent with the zero
fee and expense structures of peer funds and concluded that it was reasonable.
In addition, the Board also concluded that the Sub-Advisory Agreement Rates were
reasonable in relation to the services provided.
PROFITABILITY
The Board received and considered a profitability analysis of Funds Management,
as well as an analysis of the profitability to all Wells Fargo business
providing services to each Fund and the Fund complex as a whole. The Board also
considered related information provided by Funds Management in a separate
presentation on financial matters made at the February 2009 Board meeting. The
Board concluded that, in light of the costs of providing investment management
and other services to the Funds, the profits and other ancillary benefits that
Funds Management and its affiliates received with regard to providing these
services to each Fund and the Fund complex as a whole were not unreasonable. The
Board did not consider separate profitability information with respect to Wells
Capital Management, as its profitability from its relationship with the Funds
was not a material factor in determining whether to renew the investment
sub-advisory agreement. The Board noted that the profitability of Wells Capital
Management, which is affiliated with Funds Management, was included in the
profitability analysis provided by Funds Management.
ECONOMIES OF SCALE
The Board received and considered general information regarding economies of
scale with respect to the management of the Funds, including whether the Funds
have appropriately benefited from any economies of scale and the potential for
future realization of economies of scale. The Board acknowledged the inherent
limitations of any analysis of an investment adviser's economies of scale and of
any attempt to correlate breakpoints with such economies, stemming largely from
the Board's understanding that economies of scale are realized, if at all, by an
investment adviser across a variety of products and services, not just with
respect to a single fund. The Board concluded that any actual or potential
economies of scale are, or will be, shared reasonably with Fund shareholders,
most particularly through Advisory Agreement Rate breakpoints and waivers/caps
and/or expense reimbursements applicable to the Funds.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature and extent
of services and fee rates offered by Funds Management to other similarly
situated series of the Trust, and those offered by Wells Capital Management to
other clients. The Board concluded that the Advisory Agreement Rates, the
Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable
range of the fee rates offered to others by Funds Management and the Wells
Capital Management, giving effect to differences in services covered by such fee
rates.
Wells Fargo Managed Account CoreBuilder Shares 21
Other Information (Unaudited)
OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS
The Board received and considered information regarding potential "fall-out" or
ancillary benefits received by Funds Management and its affiliates and Wells
Capital Management as a result of their relationship with the Funds. Such
benefits could include, among others, benefits directly attributable to the
relationship of Funds Management and Wells Capital Management with the Funds and
benefits potentially derived from an increase in Funds Management's and Wells
Capital Management's business as a result of their relationship with the Funds
(such as the ability to market to shareholders other financial products offered
by Funds Management and its affiliates, including Wells Capital Management).
The Board also considered the effectiveness of the policies of the Funds in
achieving the best execution of portfolio transactions, whether and to what
extent soft dollar credits are sought and how any such credits are utilized, any
benefits that may be realized by using an affiliated broker and the controls
applicable to brokerage allocation procedures. The Board also reviewed Funds
Management's and Wells Capital Management's methods for allocating portfolio
investment opportunities among the Funds and other clients.
OTHER FACTORS AND BROADER REVIEW
The Board also considered the markets for distribution of the Funds, including
the principal channels through which the Funds' shares are offered and sold. The
Board noted that the Funds are part of one of the few fund families that have
both direct-to-fund and intermediary distribution channels.
As discussed above, the Board reviews detailed materials received from Funds
Management and Wells Capital Management annually as part of the re-approval
process under Section 15(c) of the 1940 Act. The Board also reviews and assesses
the quality of the services that the Funds receive throughout the year. In this
regard, the Board has reviewed reports of Funds Management at each of its
quarterly meetings, which include, among other things, a portfolio review and
fund performance reports. In addition, the Board confers with portfolio managers
at various times throughout the year.
After considering the above-described factors and based on its deliberations and
its evaluation of the information described above, the Board concluded that
approval of the continuation of the Advisory Agreements for each Fund was in the
best interest of the Fund and its shareholders. Accordingly, the Board
unanimously approved the continuation of the Advisory Agreements for an
additional one-year period.
22 Wells Fargo Managed Account CoreBuilder Shares
List of Abbreviations
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDO -- Collateralized Debt Obligation
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CIFG -- CDC (Caisse des Depots et Consignations) IXIS Financial Guarantee
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
ECFA -- Educational & Cultural Facilities Authority
EDFA -- Economic Development Finance Authority
ETET -- Eagle Tax-Exempt Trust
ETF -- Exchange Traded Fund
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHAG -- Federal Housing Agency
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Farm Service Agency
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HCFR -- Healthcare Facilities Revenue
HEFA -- Health & Educational Facilities Authority
HEFAR -- Higher Education Facilities Authority Revenue
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
HUD -- Housing & Urban Development
IDA -- Industrial Development Authority
IDAG -- Industrial Development Agency
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Company
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MMD -- Municipal Market Data
MTN -- Medium Term Note
MUD -- Municipal Utility District
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PFFA -- Public Facilities Financing Authority
plc -- Public Limited Company
PSFG -- Public School Fund Guaranty
R&D -- Research & Development
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
REITS -- Real Estate Investment Trusts
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
SPDR -- Standard & Poor's Depositary Receipts
STIT -- Short-Term Investment Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
XLCA -- XL Capital Assurance
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Sign up for electronic delivery of prospectuses and shareholder
reports at www.wellsfargo.com/advantagedelivery
(WELLS FARGO LOGO)
FOR MORE INFORMATION
More information on the Fund is available free upon request, including the
following documents:
Statement of Additional Information (SAI)
Supplements the disclosures made by this Prospectus. The SAI, which has been
filed with the SEC, is incorporated by reference into this Prospectus and
therefore is legally part of this Prospectus.
Annual/Semi-Annual Reports
Provide financial and other important information, including a discussion of the
market conditions and investment strategies that significantly affected Fund
performance over the reporting period.
To obtain copies of the above documents or for more information about WELLS
FARGO COREBUILDER SHARES contact us:
By telephone:
800-368-0627
NOT FDIC - NO BANK GUARANTEE - MAY LOSE VALUE
You may also contact the financial intermediary, broker-dealer or bank, through
whom you purchased Fund shares.
From the SEC:
Visit the SEC's Public Reference Room in Washington, DC (phone 1-800-SEC-0330 or
1-202-551-8090) or the SEC's Internet site at www.sec.gov.
To obtain information for a fee, write or email:
SEC's Public Reference Section
100"F"Street, NE
Washington, DC 20549-0102
publicinfo@sec.gov
(GRAPHIC)
Printed on Recycled paper
(C) 2009 Wells Fargo Funds Management, LLC. All rights reserved. 117067 08-09
SCBM/SAR130 06-09
ITEM 2. CODE OF ETHICS
=======================
Not required in this filing
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
=========================================
Not required in this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
==============================================
Not required in this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
===============================================
Not required in this filing.
ITEM 6. SCHEDULE OF INVESTMENTS
===============================
The Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
===============================================================
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
=============================================================================
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMEENT
INVESTMENT COMPANY AND AFFILIATED PURCHASES
===================================================================
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
============================================================
The Governance Committee (the "Committee") of the Board of Trustees of the
registrant (the "Trust") has adopted procedures by which a shareholder of any
series of the Trust may submit properly a nominee recommendation for the
Committee's consideration.
The shareholder must submit any such recommendation (a "Shareholder
Recommendation") in writing to the Trust, to the attention of the Trust's
Secretary, at the address of the principal executive offices of the Trust.
The Shareholder Recommendation must be delivered to, or mailed and received at,
the principal executive offices of the Trust not less than forty-five (45)
calendar days nor more than seventy-five (75) calendar days prior to the date of
the Committee meeting at which the nominee would be considered.
The Shareholder Recommendation must include: (i) a statement in writing setting
forth (A) the name, age, date of birth, business address, residence address and
nationality of the person recommended by the shareholder (the "candidate"); (B)
the series (and, if applicable, class) and number of all shares of the Trust
owned of record or beneficially by the candidate, as reported to such
shareholder by the candidate; (C) any other information regarding the candidate
called for with respect to director nominees by paragraphs (a), (d), (e) and (f)
of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101
(Schedule 14A) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), adopted by the Securities and Exchange Commission (or the
corresponding provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency applicable to the
Trust); (D) any other information regarding the candidate that would be required
to be disclosed if the candidate were a nominee in a proxy statement or other
filing required to be made in connection with solicitation of proxies for
election of directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder; and (E) whether the recommending
shareholder believes that the candidate is or will be an "interested person" of
the Trust (as defined in the Investment Company Act of 1940, as amended) and, if
not an "interested person," information regarding the candidate that will be
sufficient for the Trust to make such determination; (ii) the written and signed
consent of the candidate to be named as a nominee and to serve as a Trustee if
elected; (iii) the recommending shareholder's name as it appears on the Trust's
books; (iv) the series (and, if applicable, class) and number of all shares of
the Trust owned beneficially and of record by the recommending shareholder; and
(v) a description of all arrangements or understandings between the recommending
shareholder and the candidate and any other person or persons (including their
names) pursuant to which the recommendation is being made by the recommending
shareholder. In addition, the Committee may require the
candidate to interview in person and furnish such other information as it may
reasonably require or deem necessary to determine the eligibility of such
candidate to serve as a Trustee of the Trust.
ITEM 11. CONTROLS AND PROCEDURES
=================================
(a) 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.
(b) There were no changes in the Trust's internal controls over financial
reporting (as defined in rule 30a-3(d) udner the Investment Company Act) that
occurred during the second quarter of the period covered by this report that has
materially affected or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
=================
(a)(1) Not required in this filing.
(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) is filed and 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, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Wells Fargo Funds Trust
By: /s/ Karla M. Rabusch
Karla M. Rabusch
President
Date: August 20, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.
By: /s/ Karla M. Rabusch
Karla M. Rabusch
President
Date: August 20, 2009
By: /s/ David S. Berardi
David S. Berardi
Treasurer
Date: August 20, 2009