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Wells Fargo Funds Trust – ‘N-CSR’ for 5/31/05

On:  Wednesday, 8/3/05, at 1:48pm ET   ·   Effective:  8/3/05   ·   For:  5/31/05   ·   Accession #:  935069-5-2082   ·   File #:  811-09253

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/03/05  Wells Fargo Funds Trust           N-CSR       5/31/05    4:1.3M                                   Bowne - BGM/FA

Certified Annual Shareholder Report of a Management Investment Company   —   Form N-CSR
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSR       Certified Annual Shareholder Report of a             533±  2.76M 
                          Management Investment Company                          
 4: EX-99.906   Miscellaneous Exhibit                                  2      7K 
 3: EX-99.CERT  Miscellaneous Exhibit                                  4     18K 
 2: EX-99.CODE ETH  Miscellaneous Exhibit                              9     26K 


N-CSR   —   Certified Annual Shareholder Report of a Management Investment Company
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
"Item 1. Report to Shareholders
2Table of Contents
25Diversified Bond Fund
"High Yield Bond Fund
"Income Plus Fund
26Intermediate Government Income Fund
27Stable Income Fund
"Strategic Income Fund
"Total Return Bond Fund
28Ultra-Short Duration Bond Fund
50Short Duration Government Bond Fund
76Statements of Assets and Liabilities
82Inflation-Protected Bond Fund
95Notes to Financial Highlights
113Report of Independent Registered Public Accounting Firm
115Managed Fixed Income Portfolio
125Stable Income Portfolio
132Strategic Value Bond Portfolio
140Tactical Maturity Bond Portfolio
180Corporate Bond Fund
187Government Securities Fund
195High Income Fund
200Short-Term Bond Fund
210Short-Term High Yield Bond Fund
214Ultra Short-Term Income Fund
269WealthBuilder Conservative Allocation Portfolio
271WealthBuilder Equity Portfolio
275WealthBuilder Growth Balanced Portfolio
279WealthBuilder Tactical Equity Portfolio
283WealthBuilder Growth Allocation Portfolio
285WealthBuilder Moderate Balanced Portfolio
313Item 2. Code of Ethics
"Item 3. Audit Committee Financial Expert
"Item 4. Principal Accountant Fees and Services
315Items 5-6. [. Reserved]
"Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
"Item 9. Controls and Procedures
"Item 10. Exhibits
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-09253 Wells Fargo Funds Trust (Exact name of registrant as specified in charter) 525 Market St., San Francisco, CA 94105 (Address of principal executive offices) (Zip code) C. David Messman Wells Fargo Funds Management, LLC 525 Market St., San Francisco, CA 94105 (Name and address of agent for service) Registrant's telephone number, including area code: 800-643-9691 Date of fiscal year end: May 31, 2005 Date of reporting period: May 31, 2005 ITEM 1. REPORT TO SHAREHOLDERS
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WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- TABLE OF CONTENTS LETTER TO SHAREHOLDERS.................................................... 1 -------------------------------------------------------------------------------- PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- Diversified Bond Fund................................................. 2 High Yield Bond Fund ................................................. 4 Income Plus Fund ..................................................... 6 Inflation-Protected Bond Fund ........................................ 8 Intermediate Government Income Fund .................................. 10 Short Duration Government Bond Fund................................... 12 Stable Income Fund ................................................... 14 Strategic Income Fund ................................................ 16 Total Return Bond Fund................................................ 18 Ultra-Short Duration Bond Fund ....................................... 20 FUND EXPENSES............................................................. 22 -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Diversified Bond Fund................................................. 26 High Yield Bond Fund ................................................. 27 Income Plus Fund ..................................................... 37 Inflation-Protected Bond Fund ........................................ 42 Intermediate Government Income Fund .................................. 43 Short Duration Government Bond Fund................................... 47 Stable Income Fund ................................................... 51 Strategic Income Fund ................................................ 52 Total Return Bond Fund................................................ 57 Ultra-Short Duration Bond Fund ....................................... 67 FINANCIAL STATEMENTS -------------------------------------------------------------------------------- Statements of Assets and Liabilities.................................. 72 Statements of Operations.............................................. 74 Statements of Changes in Net Assets................................... 78 Financial Highlights.................................................. 84 NOTES TO FINANCIAL STATEMENTS............................................. 93 -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM................... 110 -------------------------------------------------------------------------------- OTHER INFORMATION (UNAUDITED)............................................. 111 -------------------------------------------------------------------------------- MASTER PORTFOLIOS -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Managed Fixed Income Portfolio ....................................... 112 Stable Income Portfolio .............................................. 121 Strategic Value Bond Portfolio ....................................... 129 Tactical Maturity Bond Portfolio ..................................... 137 -------------------------------------------------------------------------------- FINANCIAL STATEMENTS Statements of Assets and Liabilities.................................. 140 Statements of Operations.............................................. 141 Statements of Changes in Net Assets................................... 142 Financial Highlights.................................................. 144 NOTES TO FINANCIAL STATEMENTS............................................. 146 -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM................... 150 -------------------------------------------------------------------------------- OTHER INFORMATION (UNAUDITED)............................................. 151 -------------------------------------------------------------------------------- LIST OF ABBREVIATIONS..................................................... 157 -------------------------------------------------------------------------------- ------------------------------------------------- NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE -------------------------------------------------
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SHAREHOLDER LETTER WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- DEAR VALUED SHAREHOLDER, I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now have access to an expanded array of mutual funds, giving you the flexibility to invest in a family of funds covering nearly every asset class and investment style. To learn more about our funds and the talented team of money managers behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. You can also call one of our investment service representatives now available 24 hours a day, 7 days a week, or speak with your investment professional. Following is your WELLS FARGO ADVANTAGE INCOME FUNDS annual report for the period ended May 31, 2005. On the following pages, you will find a discussion of the Funds, including performance highlights, the Fund managers' strategic outlook, and information about the Funds' portfolios. THE ECONOMY: CONTINUED EXPANSION -------------------------------------------------------------------------------- The cyclical expansion of the U.S. economy remains solid. Real gross domestic product (GDP), the most comprehensive measure of economic activity, grew at a 4.4% rate in 2004 and at a 3.8% rate in the first quarter of 2005, in spite of record high energy prices during the period. The price of crude oil shot upward in the summer of 2004, then declined somewhat in the final months of the year, but climbed to new record levels starting in the spring of 2005. Low interest rates and a strong housing sector helped offset the negative effects of high oil and gas prices. Solid growth in capital spending by businesses, fueled by strong cash flow and low borrowing costs, also contributed to economic growth. Rising energy prices pushed inflation upward during the reporting period. The consumer price index (CPI) rose at a 2.8% rate over the twelve months ended May 31, slightly slower than the 3.1% rate for the prior twelve months. The core CPI, which excludes the volatile food and energy components, was up only 2.2% this past year, versus 1.7% in the previous twelve months. With core inflation generally contained, The Federal Reserve (the Fed) was able to stay with a strategy of raising interest rates at a "measured pace." From late June 2004 through March 2005, the Fed raised the federal funds rate--its principal policy tool--from 1% to 3%. Additional increases in this rate are expected during the rest of 2005. Bond yields, however, did not increase with the federal funds rate and, as a result, mortgage rates remained unusually low and the housing sector remained very strong. BONDS: UNPRECEDENTED PERFORMANCE -------------------------------------------------------------------------------- Yields on most U.S. Treasury notes and bonds have declined as the federal funds rate has increased. Exceptional demand for U.S. Treasury securities from foreign investors and the tame core inflation data are two factors thought to be keeping bond yields low. The cyclical flattening in the yield curve has been one of the main elements contributing to good returns from bonds during most of the past twelve months. The high yield and investment grade segments of the corporate bond market continued to perform well during most of the period. In April and May 2005, however, downgrades of General Motors and Ford bonds caused those markets to underperform. Municipal bonds generally performed better than most taxable sectors in 2004 and most of 2005. However, they lagged behind U.S. Treasuries in May 2005. As a result, at the end of the period, municipal yields were very attractive relative to yields on comparable U.S. Treasuries. LOOKING AHEAD: LONG-TERM GROWTH? -------------------------------------------------------------------------------- We believe that the economy's first-quarter 2005 slowdown represents a temporary soft patch more than a sustained decline. As stock and bond investors seek to determine where inflation, interest rates, and corporate earnings are headed, we may see more unpredictable moves in the markets. Uncertainty and risk will always be a part of investing. We believe that one important thing you can do to manage risk is to own a broadly diversified portfolio with stocks, bonds, and cash that can help you weather unexpected market shifts. While diversification may not prevent losses in a downturn, it may help reduce them and keep you on track to reach your financial goals. Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your confidence in us. Through each market cycle, we are committed to helping you meet your financial needs. If you have any questions about your investment, please contact your investment professional, or call us at 1-800-222-8222. You may also visit our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. Sincerely, Sincerely, /s/ Karla M. Rabusch Karla M. Rabusch President WELLS FARGO ADVANTAGE FUNDS 1
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE DIVERSIFIED BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE DIVERSIFIED BOND FUND (the Fund) seeks total return by diversifying its investments among different fixed-income investment styles. ADVISER INCEPTION DATE Wells Fargo Funds Management, LLC 12/31/1982 FUND MANAGERS Thomas C. Biwer, CFA Christian L. Chan, CFA Andrew Owen, CFA HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned 5.24%(1) for the 12-month period ended May 31, 2005, underperforming the Lehman Brothers Aggregate Bond Index(2), which returned 6.82% during the same period. The Fund invests in three different fixed-income investment styles: strategic value bond, managed fixed-income, and tactical maturity bond. Each style represents an approach to selecting investments or a type of investment for the Fund's portfolio. This multi-style approach seeks to help reduce price and return volatility in an effort to generate more consistent returns. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. ADMINISTRATOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- In recent months, economic growth has moderated due to higher energy prices and higher interest rates. The Federal Open Market Committee raised its target federal funds rate by 0.25% in each of its last eight meetings to 3.00% by the end of the reporting period. As a result, the yield curve continued to flatten over the last year. The main detractor to the Fund's performance was the short duration of one of its underlying portfolios - the Tactical Maturity Bond Portfolio. The Portfolio shortened its duration significantly to protect principal as bond prices fell in the spring of 2004, and then it was unable to keep pace when prices rallied as the new fiscal year began. The Fund's other two portfolios, the Strategic Value Bond Portfolio and Managed Fixed Income Portfolio, outperformed their respective benchmarks due to conservative positioning and positive excess returns from mortgage and other asset-backed securities. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The Fund continues to emphasize higher income-producing securities, such as high quality mortgages and other asset-backed securities. There were no significant changes in the Fund's portfolio construction during the period. The majority of the Fund's purchases were centered on compelling relative-value opportunities, mostly in the mortgage sector, and very selective high-yield opportunities. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- The Fund expects to continue to emphasize higher income producing securities, strategically diversified across all sectors of the fixed-income market. As risk premiums increase, we may opportunistically add corporate and mortgage-backed securities. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND IS EXPOSED TO FOREIGN OBLIGATIONS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE DIVERSIFIED BOND FUND. (1) The Fund's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund.Actual reductions of operating expenses can increase total return to shareholders.Without these reductions,the Fund's returns would have been lower.The Fund is a gateway blended Fund that invests all of its assets in two or more master portfolios of the Master Trust in varying proportions. References to the investment activities of the Fund are intended to refer to the investment activities of the master portfolios in which it invests. Performance shown for the Administrator Class (formerly named Institutional Class) shares of the WELLS FARGO ADVANTAGE DIVERSIFIED BOND FUND for periods prior to November 8,1999,reflects performance of the Institutional Class shares of the Norwest Advantage Diversified Bond Fund,its predecessor fund.Prior to April 11,2005, the WELLS FARGO ADVANTAGE DIVERSIFIED BOND FUND was named the Wells Fargo Diversified Bond Fund. (2) The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers Government/Credit Index and the Mortgage-Backed Securities Index and includes U.S.Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities.You cannot invest directly in an index. 2
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Download Table] Excluding Sales Charge --------------------------------------- 6-Month* 1-Year 5-Year 10-Year Diversified Bond Fund - Administrator Class 2.65 5.24 6.06 6.01 Benchmark Lehman Brothers Aggregate Bond Index(2) 2.90 6.82 7.73 6.85 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 56% -------------------------------------------------------------------------------- Average Credit Quality(4) Aa+ -------------------------------------------------------------------------------- Weighted Average Coupon 5.11% -------------------------------------------------------------------------------- Estimated Weighted Average Maturity 7.18 Years -------------------------------------------------------------------------------- Estimated Average Duration 4.36 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) $25.82 -------------------------------------------------------------------------------- Distribution Rate(5) 3.30% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) 3.78% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 5% Collateralized Mortgage Securities 7% U.S. Treasury Bonds 18% U.S. Government Agencies 43% Corporate Bonds 22% Municipal Bonds 2% Variable/Floating Rate Bonds 1% Cash Equivalents 2% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] DIVERSIFIED BOND FUND - LEHMAN BROTHERS ADMINISTRATOR AGGREGATE BOND CLASS INDEX ------------- --------------- 5/31/1995 10000 10,000 6/30/1995 10097 10,073 7/31/1995 10104 10,051 8/31/1995 10186 10,172 9/30/1995 10275 10,271 10/31/1995 10383 10,405 11/30/1995 10483 10,560 12/31/1995 10574 10,709 1/31/1996 10637 10,780 2/29/1996 10498 10,592 3/31/1996 10426 10,519 4/30/1996 10382 10,460 5/31/1996 10406 10,438 6/30/1996 10506 10,579 7/31/1996 10530 10,608 8/31/1996 10522 10,590 9/30/1996 10665 10,774 10/31/1996 10853 11,013 11/30/1996 11021 11,202 12/31/1996 10937 11,098 1/31/1997 10950 11,131 2/28/1997 10954 11,159 3/31/1997 10825 11,035 4/30/1997 10967 11,201 5/31/1997 11053 11,307 6/30/1997 11174 11,441 7/31/1997 11554 11,749 8/31/1997 11360 11,649 9/30/1997 11571 11,821 10/31/1997 11826 11,992 11/30/1997 11900 12,048 12/31/1997 12055 12,169 1/31/1998 12248 12,325 2/28/1998 12203 12,316 3/31/1998 12226 12,358 4/30/1998 12276 12,423 5/31/1998 12423 12,540 6/30/1998 12584 12,647 7/31/1998 12570 12,674 8/31/1998 12924 12,880 9/30/1998 13250 13,182 10/31/1998 13085 13,112 11/30/1998 13145 13,186 12/31/1998 13152 13,226 1/31/1999 13231 13,320 2/28/1999 12919 13,088 3/31/1999 12984 13,160 4/30/1999 13023 13,202 5/31/1999 12939 13,086 6/30/1999 12904 13,045 7/31/1999 12889 12,989 8/31/1999 12875 12,983 9/30/1999 12979 13,133 10/31/1999 12994 13,182 11/30/1999 13008 13,181 12/31/1999 12996 13,117 1/31/2000 13012 13,074 2/29/2000 13250 13,232 3/31/2000 13536 13,407 4/30/2000 13425 13,368 5/31/2000 13356 13,362 6/30/2000 13637 13,640 7/31/2000 13785 13,764 8/31/2000 14007 13,964 9/30/2000 14007 14,052 10/31/2000 14118 14,145 11/30/2000 14401 14,377 12/31/2000 14716 14,644 1/31/2001 14846 14,884 2/28/2001 15002 15,014 3/31/2001 15008 15,089 4/30/2001 14846 15,025 5/31/2001 14924 15,116 6/30/2001 14977 15,173 7/31/2001 15257 15,513 8/31/2001 15421 15,691 9/30/2001 15510 15,875 10/31/2001 15832 16,207 11/30/2001 15523 15,983 12/31/2001 15466 15,881 1/31/2002 15576 16,009 2/28/2002 15722 16,165 3/31/2002 15392 15,896 4/30/2002 15641 16,205 5/31/2002 15737 16,342 6/30/2002 15830 16,484 7/31/2002 15985 16,683 8/31/2002 16138 16,964 9/30/2002 16337 17,239 10/31/2002 16204 17,161 11/30/2002 16166 17,156 12/31/2002 16414 17,510 1/31/2003 16423 17,525 2/28/2003 16624 17,768 3/31/2003 16553 17,754 4/30/2003 16678 17,901 5/31/2003 17013 18,234 6/30/2003 16962 18,197 7/31/2003 16596 17,586 8/31/2003 16650 17,702 9/30/2003 16970 18,171 10/31/2003 16887 18,002 11/30/2003 16937 18,045 12/31/2003 17060 18,229 1/31/2004 17175 18,375 2/29/2004 17340 18,574 3/31/2004 17472 18,714 4/30/2004 17090 18,227 5/31/2004 17029 18,154 6/30/2004 17083 18,258 7/31/2004 17204 18,438 8/31/2004 17422 18,790 9/30/2004 17465 18,841 10/31/2004 17558 18,999 11/30/2004 17459 18,847 12/31/2004 17593 19,021 1/31/2005 17699 19,141 2/28/2005 17600 19,028 3/31/2005 17546 18,931 4/30/2005 17747 19,186 5/31/2005 17921 19,394 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) This chart represents the composite of the portfolio allocations of the master portfolios in which the Fund invests. Portfolio holdings are subject to change. See Notes to Financial Statements for a discussion of the master portfolios. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE DIVERSIFIED BOND FUND Administrator Class shares for the most recent ten years with the Lehman Brothers Aggregate Bond Index.The chart assumes a hypothetical $10,000 investment in Administrator Class shares and reflects all operating expenses. 3
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE HIGH YIELD BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE HIGH YIELD BOND FUND (the Fund) seeks total return with a high level of current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Sutter Advisors LLC FUND MANAGERS INCEPTION DATE Philip Susser 11/29/2002 Roger Wittlin HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 6.99%(1) for the 12-month period ended May 31, 2005, excluding sales charges. The Fund underperformed its benchmark, the Merrill Lynch High Yield Master II Index(2), which returned 10.13% over the same period. Aside from a short pause in January 2005, the high yield market experienced steady gains from June 2004 to February 2005. Then in March 2005, the period of steady gains ended and a weakness persisted until a sharp rebound occurred in the last two weeks of May, which helped recapture some of the losses experienced by the portfolio. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The Fund's strategy has been to invest in more floating-rate paper, including loans, as a cushion to rising interest rates; to lower risk by selling low quality issues; and to take on less duration risk by buying shorter-duration bonds. This strategy detracted from performance during the first half of the reporting period. The best performing bonds during the period were those of high-quality issues with long maturities. Our strategy is one of bottom-up, fundamental credit analysis. That discipline often leads to an underweighting in the largest issuers compared to the Fund's benchmark and can cause underperformance in concentrated high-yield markets. When the bond market turned in March 2005, however, the Fund performed better than the market due to its limited exposure to large benchmark names and the slightly lower risk profile through its exposure to loans and fewer lower quality issues. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The Fund began buying more "defensive" issues, such as loans, higher-quality issues, and short-duration issues, to cushion the impact of high oil prices and interest rate increases. This shift began in early 2005 and has resulted in a portfolio with a slightly shorter duration than the market average. In addition, the Fund increased its exposure to the telecommunications sector, as we believe that continued convergence in the telecommunications industry is a positive trend. Other changes to the Fund's portfolio included selling triple-C rated issues, moving up in the capital structure, where possible, and buying shorter-duration issues. The most important addition to the portfolio was loans that provide floating-rate returns and less risk. These loans have performed well above the market average since their inclusion. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe that high-yield bonds may be poised to deliver potential positive total returns over the next 12 months and may outperform most other fixed-income asset classes. We believe that risk-adjusted return on loans is attractive in both high-yield bonds and the broader fixed-income market. But we may reduce our exposure to these loans as the high-yield market continues to offer more attractive opportunities. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND IS EXPOSED TO HIGH YIELD SECURITIES RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE HIGH YIELD BOND FUND. (1) The Fund's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund.Actual reductions of operating expenses can increase total return to shareholders.Without these reductions,the Fund's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE HIGH YIELD BOND was named the Wells Fargo High Yield Bond Fund. (2) The Merrill Lynch High Yield Master II Index is an unmanaged index of below investment-grade domestic and Yankee high-yield bonds (dollar-denominated bonds issued in the U.S.by foreign banks and corporations), including deferred-interest bonds and payment-in-kind securities.Issues included in the index have maturities of one year or more and have a credit rating of BB/Ba or lower, but are not in default. You cannot invest directly in an index. 4
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ------------------------------- ---------------------------------- 6-Month* 1-Year Life of Fund 6-Month* 1-Year Life of Fund High Yield Bond Fund - Class A (Incept. Date 11/29/2002) (4.89) 2.18 6.71 (0.41) 6.99 8.70 High Yield Bond Fund - Class B (Incept. Date 11/29/2002) (5.78) 1.20 6.83 (0.78) 6.20 7.91 High Yield Bond Fund - Class C (Incept. Date 11/29/2002) (1.78) 5.20 7.93 (0.78) 6.20 7.93 Benchmark Merrill Lynch High Yield Master II Index(2) 0.74 10.13 15.40 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 81% -------------------------------------------------------------------------------- Average Credit Quality(4) B2 -------------------------------------------------------------------------------- Weighted Average Coupon 8.07% -------------------------------------------------------------------------------- Estimated Weighted Average Maturity 5.80 years -------------------------------------------------------------------------------- Estimated Average Duration 4.50 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C) $10.21, $10.21, $10.22 -------------------------------------------------------------------------------- Distribution Rate(5) (Class A, B, C) 7.88%, 7.51%, 7.50% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Class A, B, C) 7.29%, 6.89%, 6.89% PORTFOLIO ALLOCATION(3) (as of May 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Corporate Bonds 79% Cash Equivalent 12% Real Estate Investment 5% Repurchase Agreement 4% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] HIGH YIELD BOND FUND - MERRILL LYNCH HIGH YIELD CLASS A MASTER II INDEX ---------------------- ------------------------ 11/29/2002 9550 10,000 11/30/2002 9550 10,005 12/31/2002 9520 10,151 1/31/2003 9530 10,456 2/28/2003 9553 10,596 3/31/2003 9610 10,876 4/30/2003 10022 11,508 5/31/2003 10065 11,638 6/30/2003 10312 11,966 7/31/2003 10207 11,803 8/31/2003 10290 11,948 9/30/2003 10541 12,278 10/31/2003 10640 12,532 11/30/2003 10723 12,700 12/31/2003 10941 13,008 1/31/2004 11045 13,214 2/29/2004 11073 13,197 3/31/2004 11147 13,291 4/30/2004 11136 13,203 5/31/2004 10996 12,996 6/30/2004 11103 13,184 7/31/2004 11224 13,360 8/31/2004 11359 13,605 9/30/2004 11483 13,795 10/31/2004 11654 14,055 11/30/2004 11813 14,207 12/31/2004 11953 14,422 1/31/2005 11945 14,407 2/28/2005 12031 14,613 3/31/2005 11797 14,214 4/30/2005 11649 14,058 5/31/2005 11765 14,312 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE HIGH YIELD BOND FUND Class A shares for the life of the Fund with the Merrill Lynch High Yield Master II Index.The chart assumes a hypothetical $10,000 investment in Class A shares and reflects all operating expenses and assumes the maximum initial sales charge of 4.50%. 5
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE INCOME PLUS FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE INCOME PLUS FUND (the Fund) seeks to maximize income while maintaining prospects for capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE W. Frank Koster 7/13/1998 Thomas M. Price, CFA HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 7.27%(1) for the 12-month period ended May 31, 2005, excluding sales charges, outperforming the Lehman Brothers Aggregate Bond Index(2), which returned 6.82%, and underperforming the Lehman Brothers Universal Index(3), which returned 7.37%, for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE AT - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The Fund's performance during the period was positively impacted by the flattening of the yield curve (short-term rates rise while long-term rates decline) and a general tightening of credit spreads. Our increased allocations to longer maturities in the Fund helped performance as the curve flattened. The Fund's allocation to investment-grade corporate and high-yield bonds increased performance as credit performed well during the 12-month period. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- As corporate bonds performed well during the year, we reduced our allocation to that sector. A more defensive approach was taken in early 2005, where we selectively added to positions that continued to offer good relative value. The Fund's allocation to U.S. Treasuries increased as relative value in the credit sector become scarcer. Duration of the Fund moved from short to neutral relative to its benchmark during the period. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Though we believe that economic growth and employment conditions may continue to improve, inflation is our primary concern. We believe that the Federal Reserve will continue to increase the federal funds target rate. Consequently, we anticipate a defensive posture in the Fund's duration and expect to position the Fund in anticipation of a continued flattening of the interest rate curve. We believe that demand for corporate bonds will remain at reasonably healthy levels given the strength in the economy and a search for greater income in the current low-rate environment. However, we are closely monitoring a few factors that we believe could potentially affect the market. On the high-yield side, our biggest concern is that with General Motors and Ford being downgraded to junk status, this could negatively impact the high-yield market. Additionally, hedge fund investors have been an important source of demand for high-yield securities. If demand from this group were to deteriorate significantly, high-yield prices would weaken. Accordingly, we intend to reduce the high-yield holdings in the Fund. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN A HIGHER THAN AVERAGE PORTFOLIO TURNOVER RATIO AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THE FUND IS EXPOSED TO HIGH-YIELD SECURITIES RISK AND FOREIGN OBLIGATIONS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers.The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE INCOME PLUS FUND. (1) The Fund's Adviser waives its advisory fee for the portion of the Fund's assets that is invested in the High Yield Bond Fund and waives additional fees and/or reimburses additional expenses to the extent necessary to ensure that there will be no increase in the Fund's net operating expense ratio.The Fund's Adviser also has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders.Without these reductions, the Fund's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE INCOME PLUS FUND was named the Wells Fargo Income Plus Fund. Performance shown for Class A, Class B and Class C shares of the WELLS FARGO ADVANTAGE INCOME PLUS FUND prior to November 8, 1999, reflects performance of the Class A, Class B, and Class C shares of the Stagecoach Strategic Income Fund, its predecessor fund. Effective at the close of business on November 5, 1999, the Stagecoach Funds were reorganized into the WELLS FARGO FUNDS(R). (2) The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers Government/Credit Index and the Lehman Brothers Mortgage-Backed Securities Index and includes U.S.Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities.You cannot invest directly in an index. 6
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ------------------------------------------- ----------------------------------------- 6-Month* 1-Year 5-Year Life of Fund 6-Month* 1-Year 5-Year Life of Fund Income Plus Fund - Class A (Incept. Date 7/13/1998) (2.83) 2.45 6.31 4.06 1.72 7.27 7.30 4.76 Income Plus Fund - Class B (Incept. Date 7/13/1998) (3.75) 1.47 6.17 3.98 1.25 6.47 6.48 3.98 Income Plus Fund - Class C (Incept. Date 7/13/1998) 0.34 5.47 6.48 3.98 1.34 6.47 6.48 3.98 Benchmarks Lehman Brothers Aggregate Bond Index(2) 2.90 6.82 7.73 6.37 Lehman Brothers Universal Index(3) 2.83 7.37 7.93 6.46 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 132% -------------------------------------------------------------------------------- Average Credit Quality(5) Baa3 -------------------------------------------------------------------------------- Weighted Average Coupon 5.13% -------------------------------------------------------------------------------- Estimated Weighted Average Maturity 14.63 Years -------------------------------------------------------------------------------- Estimated Average Duration 4.06 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C) $10.99, $10.99, $10.99 -------------------------------------------------------------------------------- Distribution Rate(6) (Class A, B, C) 4.75%, 4.23%, 4.23% -------------------------------------------------------------------------------- 30-Day SEC Yield(7) (Class A, B, C) 3.48%, 2.89%, 2.90% PORTFOLIO ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 5% Collateralized Mortgage Securities 4% U.S. Treasury Notes 19% U.S. Treasury Bonds 4% Foreign Government Bonds 9% Corporate Bonds 38% Real Estate Investment Trusts 1% Cash Equivalents 20% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO LEHMAN BROTHERS INCOME PLUS FUND - CLASS A AGGREGATE BOND INDEX -------------------------- -------------------- 7/13/1998 9,549 10,000 7/31/1998 9,512 9,973 8/31/1998 9,382 10,135 9/30/1998 9,709 10,373 10/31/1998 9,637 10,318 11/30/1998 9,844 10,376 12/31/1998 9,883 10,408 1/31/1999 9,945 10,482 2/28/1999 9,764 10,299 3/31/1999 9,810 10,356 4/30/1999 9,976 10,389 5/31/1999 9,855 10,298 6/30/1999 9,790 10,265 7/31/1999 9,717 10,221 8/31/1999 9,594 10,216 9/30/1999 9,649 10,335 10/31/1999 9,502 10,373 11/30/1999 9,519 10,372 12/31/1999 9,539 10,322 1/31/2000 9,415 10,288 2/29/2000 9,482 10,413 3/31/2000 9,444 10,550 4/30/2000 9,387 10,520 5/31/2000 9,246 10,515 6/30/2000 9,435 10,734 7/31/2000 9,567 10,831 8/31/2000 9,627 10,988 9/30/2000 9,651 11,058 10/31/2000 9,546 11,130 11/30/2000 9,600 11,313 12/31/2000 9,803 11,523 1/31/2001 10,066 11,712 2/28/2001 10,149 11,814 3/31/2001 10,136 11,873 4/30/2001 10,103 11,824 5/31/2001 10,176 11,894 6/30/2001 10,181 11,940 7/31/2001 10,368 12,207 8/31/2001 10,490 12,347 9/30/2001 10,399 12,492 10/31/2001 10,677 12,753 11/30/2001 10,653 12,577 12/31/2001 10,564 12,497 1/31/2002 10,624 12,598 2/28/2002 10,643 12,720 3/31/2002 10,598 12,509 4/30/2002 10,750 12,752 5/31/2002 10,835 12,860 6/30/2002 10,768 12,971 7/31/2002 10,711 13,128 8/31/2002 10,910 13,349 9/30/2002 11,028 13,566 10/31/2002 10,975 13,504 11/30/2002 11,150 13,500 12/31/2002 11,339 13,779 1/31/2003 11,401 13,791 2/28/2003 11,563 13,982 3/31/2003 11,635 13,971 4/30/2003 11,867 14,086 5/31/2003 12,084 14,348 6/30/2003 12,119 14,319 7/31/2003 11,786 13,838 8/31/2003 11,858 13,930 9/30/2003 12,113 14,299 10/31/2003 12,095 14,166 11/30/2003 12,128 14,200 12/31/2003 12,292 14,344 1/31/2004 12,381 14,460 2/29/2004 12,488 14,616 3/31/2004 12,589 14,726 4/30/2004 12,395 14,343 5/31/2004 12,258 14,286 6/30/2004 12,342 14,367 7/31/2004 12,465 14,509 8/31/2004 12,684 14,786 9/30/2004 12,767 14,826 10/31/2004 12,910 14,951 11/30/2004 12,927 14,831 12/31/2004 13,098 14,968 1/31/2005 13,129 15,062 2/28/2005 13,131 14,973 3/31/2005 12,984 14,897 4/30/2005 13,034 15,098 5/31/2005 13,149 15,261 -------------------------------------------------------------------------------- (3) The Lehman Brothers Universal Index is an unmanaged market-value-weighted performance benchmark for the U.S. dollar-denominated bond market, which includes investment grade, high yield, and emerging market debt securities with maturities of one year or more.You cannot invest directly in an index. (4) Portfolio holdings and characteristics are subject to change. (5) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (6) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (7) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE INCOME PLUS FUND Class A shares for the life of the Fund with the Lehman Brothers Aggregate Bond Index and Lehman Brothers Universal Index.The chart assumes a hypothetical $10,000 investment in Class A shares and reflects all operating expenses and assumes the maximum initial sales charge of 4.50%. 7
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE INFLATION-PROTECTED BOND FUND IINVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE INFLATION-PROTECTED BOND FUND (the Fund) seeks to provide total return while providing protection against inflation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE W. Frank Koster 2/28/2003 Jay N. Mueller, CFA HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 8.12%(1) for the 12-month period ended May 31, 2005, excluding sales charges. The Fund underperformed its benchmark, the Lehman Brothers U.S. Treasury Inflation Note Index(2), which returned 8.92% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. ADMINISTRATOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- In the first half of the reporting period, a contributing factor to the Fund's performance was moving from our modest short-duration position to a neutral-duration position in July 2004, before bond yields declined and prices increased. Real yield continued to fall (i.e., prices increased) across the treasury inflation protected securities (TIPS) curve from July 2004 through the end of May 2005. As oil prices moved toward $60 per barrel around November 2004, investors rushed into the TIPS market to purchase inflation protection and long-term TIPS, making such TIPS the biggest beneficiaries. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The biggest changes in the Fund's holdings occurred in July 2004. Most non-TIPS issues, such as commercial mortgage-backed securities (CMBS), were sold from the Fund's portfolio because we believed that inflation would increase throughout the year and that the CMBS sector would continue to underperform relative to the TIPS sector. From July 2004 through May 2005, the Fund's portfolio was primarily comprised of a broad distribution of TIPS across the real yield curve. As short-end TIPS (maturing in 2007 and 2008) continued to outperform U.S. Treasuries during the second quarter of 2005, we underweighted the Fund's portfolio on the short-end of the yield curve and overweighted the portfolio on the intermediate- to long-end of the yield curve compared to the Fund's benchmark. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe that the economic climate may remain reasonably strong in coming months with potential for above-trend growth of gross domestic product and solid employment conditions. Our biggest concern is the persistence of inflationary pressures, which may not be isolated to energy and other commodity prices. These conditions may prompt the Federal Reserve to continue to raise short-term interest rates in the coming months. Against this backdrop, we expect to continue with strategies that may potentially benefit from a flatter yield curve, though a further significant increase in oil prices could temporarily tilt the market in favor of shorter maturity issues within the inflation-protected sector of the bond market. In addition, the current low level of interest rates may incline us to lean in a defensive direction with respect to overall portfolio duration. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THE FUND IS EXPOSED TO RISK ASSOCIATED WITH INVESTMENT IN INFLATION-PROTECTED DEBT SECURITIES. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers.The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE INFLATION-PROTECTED BOND FUND. (1) The Fund's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders.Without these reductions,the Fund's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE INFLATION-PROTECTED BOND FUND was named the Wells Fargo Inflation-Protected Bond Fund. On April 11, 2005, the Institutional Class shares became the Administrator Class shares. (2) The Lehman Brothers U.S.Treasury Inflation Note Index is an index of inflation-indexed linked U.S. Treasury securities.You cannot invest directly in an index. 8
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ------------------------------- ------------------------------- 6-Month* 1-Year Life of Fund 6-Month* 1-Year Life of Fund Inflation-protected Bond Fund - Class A (Incept. Date 2/28/2003) (0.89) 3.26 3.50 3.78 8.12 5.63 Inflation-protected Bond Fund - Class B (Incept. Date 2/28/2003) (1.79) 2.13 3.46 3.21 7.13 4.72 Inflation-protected Bond Fund - Class C (Incept. Date 2/28/2003) 2.20 6.12 4.76 3.20 7.12 4.76 Inflation-protected Bond Fund - Administrator Class (Incept. Date 2/28/2003) 3.82 8.30 5.81 Benchmark Lehman Brothers U.S. Treasury Inflation Note Index(2) 4.06 8.92 6.42 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 425% -------------------------------------------------------------------------------- Average Credit Quality(4) Aaa -------------------------------------------------------------------------------- Weighted Average Coupon 2.47% -------------------------------------------------------------------------------- Estimated Weighted Average Maturity 10.00 Years -------------------------------------------------------------------------------- Estimated Average Duration 8.62 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C, Administrator) $10.45, $10.42, $10.43, $10.43 -------------------------------------------------------------------------------- Distribution Rate(5) (Class A, B, C, Administrator) 3.81%, 3.26%, 3.25%, 4.25% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Class A, B, C, Administrator) 3.80%, 3.25%, 3.24%, 4.23% PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Corporate Bonds 1% U.S. Treasury Bonds 27% U.S. Treasury Notes 67% U.S. Government Agencies 2% Cash Equivalents 3% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] INFLATION-PROTECTED INFLATION-PROTECTED LEHMAN BROTHERS U.S. BOND FUND - BOND FUND - TREASURY INFLATION CLASS A ADMINISTRATOR CLASS NOTES INDEX ------------------- ------------------- -------------------- 2/28/2003 9,550 10,000 10,000 3/31/2003 9,442 9,879 9,838 4/30/2003 9,402 9,849 9,812 5/31/2003 9,831 10,290 10,278 6/30/2003 9,737 10,204 10,173 7/31/2003 9,284 9,721 9,703 8/31/2003 9,443 9,891 9,876 9/30/2003 9,749 10,213 10,203 10/31/2003 9,782 10,251 10,259 11/30/2003 9,785 10,255 10,266 12/31/2003 9,876 10,353 10,370 1/31/2004 9,976 10,461 10,490 2/29/2004 10,202 10,700 10,732 3/31/2004 10,340 10,847 10,904 4/30/2004 9,831 10,315 10,374 5/31/2004 9,993 10,487 10,560 6/30/2004 9,997 10,493 10,566 7/31/2004 10,083 10,586 10,664 8/31/2004 10,342 10,860 10,950 9/30/2004 10,359 10,880 10,972 10/31/2004 10,459 10,988 11,081 11/30/2004 10,411 10,939 11,055 12/31/2004 10,597 11,138 11,248 1/31/2005 10,588 11,130 11,248 2/28/2005 10,543 11,085 11,201 3/31/2005 10,539 11,084 11,211 4/30/2005 10,727 11,273 11,425 5/31/2005 10,805 11,357 11,504 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Services (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE INFLATION-PROTECTED BOND FUND Class A and Administrator Class shares for the life of the Fund with the Lehman Brothers U.S. Treasury Inflation Notes Index. The chart assumes a hypothetical $10,000 investment in Class A shares and Administrator Class shares, reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 4.50%. 9
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND (the Fund) seeks current income, consistent with safety of principal. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGER INCEPTION DATE William Stevens 12/31/1982 HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 4.25%(1) for the 12-month period ended May 31, 2005, excluding sales charges. The Fund outperformed its benchmark, the Lehman Brothers Intermediate U.S. Government Index(2), which returned 4.06% for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. ADMINISTRATOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- During the first half of the reporting period, the Fund's performance was positively impacted by the strong demand for and rising prices of high-quality assets (i.e., government securities such as mortgage-backed securities). We believe that low interest-rate volatility provided a favorable backdrop for the mortgage sector, which is one of the factors that helped to drive prices higher. In the final six months of the reporting period, long-term bond yields declined by more than 0.50% while short-term bond yields rose by more than 0.50%. Therefore, bond funds that held a larger concentration of long-term bonds generally outperformed those that did not have such exposure. We owned some longer-term bonds, which benefited the Fund's performance relative to intermediate-term bonds that comprised the majority of the Fund's portfolio. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The change in managers of the Fund is resulting in some subtle changes in the portfolio. We are reducing yield slightly, seeking to improve the performance characteristics of the Fund, and intend to be more active in the collateralized mortgage obligation (CMO) market. We reduced the Fund's mortgage holdings overall during the period. We continued to invest in mortgage securities in an effort to outperform the benchmark, which can be described as a laddered portfolio of intermediate U.S. Treasury and Agency securities. This strategy may perform better in periods of low volatility and worse in periods of high volatility. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- The economy paused in the early part of the second quarter of 2005 resulting in yields below 4% in 10-year U.S. Treasury securities. We believe that the pause in economic growth may be temporary and if economic growth picks up again, yields may potentially rise. We are in the shorter end of our duration range because of this belief. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN A HIGHER THAN AVERAGE PORTFOLIO TURNOVER RATIO AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THE U.S. GOVERNMENT GUARANTEE APPLIES TO THE UNDERLYING SECURITIES AND NOT TO SHARES OF THE FUND. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's manager.The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND. (1) The Fund's adviser has committed through September 30,2006,to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance shown for the Class A and Class B shares of the WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND for periods prior to November 8, 1999, reflects performance of the Class A and Class B shares of the Norwest Advantage Intermediate Government Income Fund (the accounting survivor of a merger of the Norwest Fund and the Stagecoach U.S. Government Income and U.S. Government Allocation Funds at the close of business November 5, 1999), its predecessor fund. Effective at the close of business on November 5, 1999, the Norwest Advantage Funds and Stagecoach Funds were reorganized into the WELLS FARGO FUNDS(R). Performance shown for the Class A shares of the Fund prior to May 2, 1996, reflects the performance of the Institutional Class shares of the Fund adjusted to reflect Class A shares sales charges and expenses. Performance shown for the Class B shares of the Fund prior to May 17, 1996, reflects the performance of the Institutional Class shares of the Fund adjusted to reflect Class B sales charges and expenses.Performance shown for the Class C shares of the Fund for periods prior to November 8, 1999, reflects performance of the Class B shares of the predecessor fund adjusted for Class C sales charges and expenses. Prior to April 11,2005,the WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND was named the Wells Fargo Intermediate Government Income Fund and the Administrator Class was named the Institutional Class. (2) The Lehman Brothers Intermediate U.S.Government Index is an unmanaged index composed of U.S.Government securities with maturities in the one- to ten-year range, including securities issued by the U.S.Treasury and U.S. Government agencies.You cannot invest directly in an index. 10
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge -------------------------------------- -------------------------------------- 6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year Intermediate Government Income Fund - Class A (2.70) (0.44) 5.00 5.09 1.89 4.25 5.97 5.58 Intermediate Government Income Fund - Class B (3.50) (1.63) 4.84 4.78 1.50 3.37 5.17 4.78 Intermediate Government Income Fund - Class C 0.50 2.47 5.17 4.78 1.50 3.47 5.17 4.78 Intermediate Government Income Fund - Administrator Class 2.11 4.53 6.26 5.73 Benchmark Lehman Brothers Intermediate U.S. Government Index(2) 1.84 4.06 6.45 6.03 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 277% -------------------------------------------------------------------------------- Average Credit Quality(4) Aaa -------------------------------------------------------------------------------- Weighted Average Coupon 4.58% -------------------------------------------------------------------------------- Estimated Weighted Average Life 3.97 Years -------------------------------------------------------------------------------- Estimated Average Duration 3.12 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C, Administrator) $10.96, $10.94, $10.92, $10.96 -------------------------------------------------------------------------------- Distribution Rate(5) (Class A, B, C, Administrator) 3.57%, 3.02%, 3.04%, 3.97% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Class A, B, C, Administrator) 3.21%, 2.61%, 2.61%, 3.61% PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 1% Collateralized Mortgage Securities 3% U.S. Treasury Bonds 2% U.S. Treasury Notes 24% U.S. Government Agencies 60% Corporate Bonds 2% Cash Equivalents 8% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] INTERMEDIATE INTERMEDIATE GOVERNMENT GOVERNMENT LEHMAN BROTHERS INCOME FUND - INCOME FUND - INTERMEDIATE CLASS A ADMINISTOR CLASS U.S. GOVERNMENT INDEX ------------- ---------------- --------------------- 5/31/1995 9,550 10,000 10,000 6/30/1995 9,618 10,071 10,064 7/31/1995 9,588 10,040 10,069 8/31/1995 9,661 10,116 10,152 9/30/1995 9,718 10,176 10,220 10/31/1995 9,818 10,280 10,332 11/30/1995 9,941 10,410 10,458 12/31/1995 10,045 10,518 10,561 1/31/1996 10,125 10,602 10,650 2/29/1996 9,998 10,469 10,537 3/31/1996 9,931 10,399 10,489 4/30/1996 9,896 10,363 10,459 5/31/1996 9,876 10,342 10,453 6/30/1996 9,963 10,442 10,559 7/31/1996 9,994 10,465 10,592 8/31/1996 9,972 10,441 10,604 9/30/1996 10,119 10,596 10,741 10/31/1996 10,311 10,806 10,917 11/30/1996 10,476 10,970 11,049 12/31/1996 10,360 10,848 10,990 1/31/1997 10,402 10,891 11,032 2/28/1997 10,397 10,897 11,050 3/31/1997 10,289 10,774 10,987 4/30/1997 10,424 10,915 11,111 5/31/1997 10,506 11,000 11,197 6/30/1997 10,606 11,116 11,293 7/31/1997 10,899 11,412 11,502 8/31/1997 10,788 11,296 11,458 9/30/1997 10,953 11,469 11,582 10/31/1997 11,125 11,649 11,717 11/30/1997 11,160 11,685 11,743 12/31/1997 11,263 11,804 11,838 1/31/1998 11,448 11,987 11,993 2/28/1998 11,397 11,944 11,980 3/31/1998 11,425 11,962 12,018 4/30/1998 11,468 12,018 12,075 5/31/1998 11,576 12,121 12,158 6/30/1998 11,673 12,222 12,240 7/31/1998 11,694 12,244 12,287 8/31/1998 11,959 12,522 12,519 9/30/1998 12,363 12,956 12,811 10/31/1998 12,308 12,898 12,833 11/30/1998 12,287 12,865 12,793 12/31/1998 12,350 12,931 12,843 1/31/1999 12,396 12,979 12,900 2/28/1999 12,116 12,698 12,723 3/31/1999 12,198 12,772 12,808 4/30/1999 12,226 12,801 12,842 5/31/1999 12,063 12,642 12,764 6/30/1999 12,016 12,593 12,782 7/31/1999 11,982 12,557 12,784 8/31/1999 11,977 12,540 12,802 9/30/1999 12,121 12,691 12,912 10/31/1999 12,149 12,709 12,937 11/30/1999 12,145 12,716 12,946 12/31/1999 12,077 12,645 12,906 1/31/2000 12,015 12,583 12,862 2/29/2000 12,159 12,736 12,969 3/31/2000 12,332 12,921 13,117 4/30/2000 12,299 12,889 13,112 5/31/2000 12,295 12,888 13,147 6/30/2000 12,518 13,125 13,356 7/31/2000 12,616 13,230 13,444 8/31/2000 12,792 13,419 13,594 9/30/2000 12,844 13,476 13,713 10/31/2000 12,944 13,584 13,807 11/30/2000 13,175 13,829 14,010 12/31/2000 13,407 14,090 14,257 1/31/2001 13,531 14,223 14,446 2/28/2001 13,667 14,369 14,579 3/31/2001 13,725 14,421 14,684 4/30/2001 13,605 14,297 14,637 5/31/2001 13,640 14,338 14,697 6/30/2001 13,692 14,396 14,744 7/31/2001 13,990 14,726 15,020 8/31/2001 14,161 14,895 15,154 9/30/2001 14,410 15,161 15,477 10/31/2001 14,729 15,513 15,718 11/30/2001 14,430 15,190 15,531 12/31/2001 14,291 15,061 15,456 1/31/2002 14,386 15,163 15,523 2/28/2002 14,538 15,314 15,650 3/31/2002 14,239 15,001 15,414 4/30/2002 14,528 15,324 15,702 5/31/2002 14,641 15,433 15,812 6/30/2002 14,809 15,612 16,010 7/31/2002 15,062 15,894 16,311 8/31/2002 15,303 16,135 16,498 9/30/2002 15,564 16,413 16,781 10/31/2002 15,492 16,352 16,770 11/30/2002 15,388 16,248 16,637 12/31/2002 15,671 16,552 16,944 1/31/2003 15,636 16,509 16,907 2/28/2003 15,831 16,722 17,098 3/31/2003 15,779 16,671 17,101 4/30/2003 15,842 16,744 17,150 5/31/2003 16,097 17,006 17,419 6/30/2003 16,055 16,965 17,391 7/31/2003 15,553 16,452 16,968 8/31/2003 15,617 16,523 16,999 9/30/2003 15,945 16,859 17,368 10/31/2003 15,805 16,714 17,198 11/30/2003 15,814 16,727 17,199 12/31/2003 15,923 16,862 17,333 1/31/2004 16,004 16,936 17,427 2/29/2004 16,144 17,088 17,593 3/31/2004 16,231 17,183 17,716 4/30/2004 15,856 16,790 17,319 5/31/2004 15,759 16,705 17,263 6/30/2004 15,824 16,762 17,307 7/31/2004 15,902 16,864 17,431 8/31/2004 16,126 17,105 17,689 9/30/2004 16,149 17,119 17,696 10/31/2004 16,249 17,229 17,804 11/30/2004 16,125 17,100 17,639 12/31/2004 16,223 17,210 17,734 1/31/2005 16,254 17,261 17,757 2/28/2005 16,172 17,177 17,659 3/31/2005 16,138 17,129 17,615 4/30/2005 16,317 17,323 17,821 5/31/2005 16,429 17,461 17,964 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Services (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND Class A and Administrator Class shares for the most recent ten years with the Lehman Brothers Intermediate U.S. Government Index.The chart assumes a hypothetical $10,000 investment in Class A and Administrator Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 4.50%. 11
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND (the Fund) seeks current income consistent with capital preservation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Marie Chandoha 12/18/1992 Thomas O'Connor, CFA William Stevens HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 1.79%(1) for the 12-month period ended May 31, 2005, excluding sales charges. The Fund underperformed the Lehman Brothers 1-3 Year Government Bond Index(2), which returned 1.88%, and underperformed the Lehman Brothers Intermediate U.S. Government Index(3), which returned 4.06%, for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 3.00%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 3.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. ADMINISTRATOR CLASS AND INSTITUTIONAL CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Yield curve and mortgage sector positioning provided modest boosts to portfolio returns. Opportunities to trade dislocations between pass-throughs and collateralized mortgage obligations (CMOs) versus U.S. Treasuries also added to performance. A detractor from performance was our management of the Fund's portfolio risk while short-term interest rates approached new lows in October 2004 and then rose almost 1.00% by mid-April 2005. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We ended the period with the majority of our positions in conservative, well-structured CMO bonds and U.S. Treasuries. We reduced our positions in Agencies as we found better potential opportunities in the short-term CMO, asset-backed, and commercial mortgage-backed securities (CMBS) sectors. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Interest rates currently appear low and the markets could be vulnerable to an upward swing in rates. On the other hand, they could possibly drift lower, creating another refinancing wave in mortgage securities. Given these potential backdrops, we remain focused on conservative mortgage instruments. In particular, short well-structured planned amortization class (PAC) bonds and high quality asset-backed securities look attractive to us relative to short-term U.S. Treasuries, and we believe could potentially perform well whether rates move up or down. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN A HIGHER THAN AVERAGE PORTFOLIO TURNOVER RATIO AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THE U.S. GOVERNMENT GUARANTEE APPLIES TO THE UNDERLYING SECURITIES AND NOT TO SHARES OF THE FUND. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers.The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND. (1) The Fund's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund.Actual reductions of operating expenses can increase total return to shareholders.Without these reductions,the Fund's returns would have been lower. Performance shown for the Class A, Class B, Class C, Administrator (formerly named Institutional Class), and Institutional Class shares of the WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND for periods prior to June 9, 2003, reflects performance of the Class A, Class B, Class C and Class R shares, respectively, of the Montgomery Short Duration Government Bond Fund (the accounting survivor of a merger of the Montgomery Short Duration Government Bond Fund and the Wells Fargo Montgomery Short Duration Government Bond Fund), its predecessor fund, adjusted to reflect applicable sales charges. Effective at the close of business on June 6, 2003, certain of the Montgomery Funds were reorganized into certain of the WELLS FARGO FUNDS(R). Performance shown for the Class A shares of the Fund prior to March 11, 1996, reflects the performance of the predecessor fund's Class R shares, adjusted to reflect the Class's fees and expenses.Performance shown for Class B and Class C shares of the Fund prior to November 30,2002,reflects the performance of the predecessor fund's Class R shares, adjusted to reflect each Class's fees and expenses. Performance shown for the Administrator Class shares of the Fund prior to June 9, 2003, reflects the performance of the predecessor fund's Class R shares. Because of its recent inception date, performance shown for Institutional Class shares reflects the performance of the Fund's Administrator Class shares and includes expenses that are not applicable to and are higher than those of the Institutional Class shares. The Administrator Class shares'returns are substantially similar to what the Institutional Class shares would be because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the share classes do not have the same expenses. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND was named the Wells Fargo Montgomery Short Duration Government Bond Fund. (2) The Lehman Brothers 1-3 Year Government Index is composed of publicly issued,non-convertible domestic debt of the U.S.Government and its agencies.The Index also includes corporate debt guaranteed by the U.S. Government. Only notes and bonds with maturities between one year and 2.9 years are included in the Index. You cannot invest directly in an index. 12
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ----------------------------------- ----------------------------------- 6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year Short Duration Government Bond Fund - Class A (2.22) (1.26) 3.98 4.75 0.81 1.79 4.61 5.07 Short Duration Government Bond Fund - Class B (2.57) (1.87) 4.05 4.80 0.43 1.13 4.05 4.80 Short Duration Government Bond Fund - Class C (0.47) 0.13 4.06 4.80 0.53 1.13 4.06 4.80 Short Duration Government Bond Fund - Administrator Class 1.03 2.16 4.93 5.37 Short Duration Government Bond Fund - Institutional Class 1.04 2.17 4.93 5.37 Benchmarks Lehman Brothers 1-3 Year Government Bond Index(2) 0.96 1.88 4.88 5.25 Lehman Brothers Intermediate U.S. Government Index(3) 1.84 4.06 6.45 6.03 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 272% -------------------------------------------------------------------------------- Average Credit Quality(5) Aaa -------------------------------------------------------------------------------- Weighted Average Coupon 4.58% -------------------------------------------------------------------------------- Estimated Weighted Average Life 2.03 Years -------------------------------------------------------------------------------- Estimated Average Duration 1.86 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C, Institutional, Administrator) $10.01, $10.02, $10.03, $10.03, $10.03 CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Distribution Rate(6) (Class A, B, C, Institutional, Administrator) 3.14%, 2.49%, 2.49%, 3.66%, 3.48% -------------------------------------------------------------------------------- 30-Day SEC Yield(7) (Class A, B, C, Institutional, Administrator) 2.95%, 2.29%, 2.29%, 3.44%, 3.29% PORTFOLIO ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Collateralized Mortgage Securities 1% U.S. Government Agencies 78% U.S. Treasury Notes 13% Asset-Backed Securities 5% Repurchase Agreement 3% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] [Enlarge/Download Table] SHORT DURATION SHORT DURATION LEHMAN BROTHERS LEHMAN BROTHERS GOVERNMENT BOND GOVERNMENT BOND FUND - 1-3 YEAR GOVERNMENT INTERMEDIATE U.S. FUND - CLASS A ADMINISTRATOR CLASS BOND INDEX GOVERNMENT INDEX --------------- ---------------------- ------------------- ----------------- 5/31/1995 9700 10000 10,000 10000 6/30/1995 9759 10063 10,054 10,064 7/31/1995 9779 10086 10,094 10,069 8/31/1995 9847 10158 10,154 10,152 9/30/1995 9914 10229 10,204 10,220 10/31/1995 9983 10302 10,288 10,332 11/30/1995 10090 10416 10,376 10,458 12/31/1995 10177 10507 10,454 10,561 1/31/1996 10253 10588 10,543 10,650 2/29/1996 10205 10541 10,502 10,537 3/31/1996 10186 10539 10,494 10,489 4/30/1996 10181 10537 10,504 10,459 5/31/1996 10188 10546 10,528 10,453 6/30/1996 10277 10641 10,604 10,559 7/31/1996 10317 10683 10,645 10,592 8/31/1996 10347 10715 10,684 10,604 9/30/1996 10452 10812 10,782 10,741 10/31/1996 10591 10952 10,903 10,917 11/30/1996 10698 11060 10,984 11,049 12/31/1996 10683 11048 10,985 10,990 1/31/1997 10723 11102 11,038 11,032 2/28/1997 10750 11121 11,065 11,050 3/31/1997 10714 11097 11,056 10,987 4/30/1997 10818 11196 11,146 11,111 5/31/1997 10881 11274 11,224 11,197 6/30/1997 10965 11364 11,301 11,293 7/31/1997 11092 11510 11,425 11,502 8/31/1997 11099 11507 11,437 11,458 9/30/1997 11159 11607 11,523 11,582 10/31/1997 11243 11708 11,609 11,717 11/30/1997 11282 11740 11,638 11,743 12/31/1997 11343 11817 11,716 11,838 1/31/1998 11511 11945 11,828 11,993 2/28/1998 11519 11954 11,839 11,980 3/31/1998 11564 12003 11,884 12,018 4/30/1998 11621 12064 11,942 12,075 5/31/1998 11701 12150 12,006 12,158 6/30/1998 11769 12223 12,068 12,240 7/31/1998 11820 12290 12,124 12,287 8/31/1998 11975 12453 12,272 12,519 9/30/1998 12139 12615 12,437 12,811 10/31/1998 12164 12655 12,497 12,833 11/30/1998 12127 12632 12,485 12,793 12/31/1998 12191 12689 12,532 12,843 1/31/1999 12231 12733 12,580 12,900 2/28/1999 12184 12687 12,524 12,723 3/31/1999 12260 12768 12,609 12,808 4/30/1999 12298 12824 12,648 12,842 5/31/1999 12241 12767 12,639 12,764 6/30/1999 12295 12813 12,676 12,782 7/31/1999 12325 12847 12,716 12,784 8/31/1999 12318 12855 12,751 12,802 9/30/1999 12412 12942 12,834 12,912 10/31/1999 12444 12992 12,869 12,937 11/30/1999 12466 13017 12,894 12,946 12/31/1999 12473 13015 12,905 12,906 1/31/2000 12457 13000 12,902 12,862 2/29/2000 12526 13075 12,990 12,969 3/31/2000 12612 13167 13,068 13,117 4/30/2000 12646 13206 13,101 13,112 5/31/2000 12695 13261 13,149 13,147 6/30/2000 12810 13396 13,292 13,356 7/31/2000 12886 13479 13,377 13,444 8/31/2000 12988 13588 13,479 13,594 9/30/2000 13103 13711 13,584 13,713 10/31/2000 13165 13766 13,658 13,807 11/30/2000 13295 13904 13,790 14,010 12/31/2000 13450 14070 13,959 14,257 1/31/2001 13605 14249 14,144 14,446 2/28/2001 13690 14340 14,235 14,579 3/31/2001 13790 14448 14,350 14,684 4/30/2001 13834 14483 14,392 14,637 5/31/2001 13908 14577 14,471 14,697 6/30/2001 13953 14614 14,523 14,744 7/31/2001 14108 14779 14,693 15,020 8/31/2001 14195 14888 14,786 15,154 9/30/2001 14419 15125 15,034 15,477 10/31/2001 14572 15289 15,184 15,718 11/30/2001 14486 15201 15,142 15,531 12/31/2001 14466 15169 15,151 15,456 1/31/2002 14533 15258 15,187 15,523 2/28/2002 14615 15346 15,263 15,650 3/31/2002 14514 15228 15,154 15,414 4/30/2002 14680 15406 15,338 15,702 5/31/2002 14744 15491 15,398 15,812 6/30/2002 14853 15609 15,535 16,010 7/31/2002 15029 15781 15,723 16,311 8/31/2002 15089 15863 15,787 16,498 9/30/2002 15234 16005 15,914 16,781 10/31/2002 15248 16039 15,953 16,770 11/30/2002 15190 15982 15,908 16,637 12/31/2002 15333 16122 16,061 16,944 1/31/2003 15355 16150 16,064 16,907 2/28/2003 15455 16262 16,137 17,098 3/31/2003 15466 16280 16,169 17,101 4/30/2003 15495 16316 16,202 17,150 5/31/2003 15562 16393 16,268 17,419 6/30/2003 15550 16401 16,293 17,391 7/31/2003 15361 16207 16,188 16,968 8/31/2003 15426 16264 16,195 16,999 9/30/2003 15596 16446 16,358 17,368 10/31/2003 15542 16410 16,291 17,198 11/30/2003 15523 16394 16,288 17,199 12/31/2003 15627 16492 16,384 17,333 1/31/2004 15681 16553 16,423 17,427 2/29/2004 15753 16648 16,509 17,593 3/31/2004 15826 16713 16,563 17,716 4/30/2004 15647 16545 16,396 17,319 5/31/2004 15626 16510 16,376 17,263 6/30/2004 15618 16522 16,378 17,307 7/31/2004 15705 16602 16,443 17,431 8/31/2004 15820 16728 16,563 17,689 9/30/2004 15811 16723 16,550 17,696 10/31/2004 15865 16784 16,606 17,804 11/30/2004 15778 16695 16,525 17,639 12/31/2004 15809 16731 16,560 17,734 1/31/2005 15803 16728 16,557 17,757 2/28/2005 15780 16707 16,522 17,659 3/31/2005 15757 16703 16,517 17,615 4/30/2005 15831 16783 16,614 17,821 5/31/2005 15906 16868 16,682 17,964 -------------------------------------------------------------------------------- (3) Lehman Brothers Intermediate U.S. Government Index is an unmanaged index composed of U.S. Government securities with maturities in the one- to ten-year range, including securities issued by the U.S.Treasury and U.S. Government agencies.You cannot invest directly in an index. (4) Portfolio holdings and characteristics are subject to change. (5) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Services (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (6) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (7) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND Class A and Administrator Class shares for the most recent ten years with the Lehman Brothers 1-3 Year Government Bond Index and the Lehman Brothers Intermediate Government Index.The chart assumes a hypothetical $10,000 investment in Class A shares and Administrator Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 3.00%. 13
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE STABLE INCOME FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE STABLE INCOME FUND (the Fund) seeks stability of principal while providing lower volatility total return. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Galliard Capital Management, Inc. FUND MANAGERS INCEPTION DATE Ajay Mirza, CFA 11/11/1994 Richard Merriam, CFA HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 1.87%(1) for the 12-month period ended May 31, 2005, excluding sales charges. The Fund outperformed its benchmark, the Lehman Brothers Short Treasury 9-12 Months Index(2), which returned 1.67% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 2.00%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.50%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. ADMINISTRATOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The Federal Open Market Committee raised the federal funds rate by 0.25% in each of its last eight meetings to 3.00%. As a result, the yield curve continued to flatten over the last year, which helped our floating-rate position in the Fund. During the period, the yield on the three-month U.S. Treasury bill rose 1.87% to yield 2.94%, while the yield on the two-year U.S. Treasury note rose by 0.98%, yielding 3.57%. Once again, this benefited the Fund because of the significant portion of floating-rate securities it holds. Floating-rate securities can take advantage of interest rate increases and, in the recent rising rate environment, they provided higher income and contributed to performance during the period. Agencies, mortgage-backed securities, and asset-backed securities all had positive excess returns versus the benchmark over the past year, which also helped performance. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The Fund continues to emphasize higher income producing securities, strategically diversified across all sectors of the fixed-income market. The only change in portfolio construction over the period was due to redemptions, which were met by reducing our allocations in securitized products, such as asset-backed securities and mortgages. This had no impact on the Fund's strategy or investment style. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Recent performance has been dominated by market expectations for the Federal Reserve to continue to increase interest rates in the upcoming quarters. As such, short-term interest rates may continue to move higher over the upcoming months, which would potentially benefit our floating-rate structure. We believe that risk premiums will remain relatively range bound over the next 12 months, but may prove volatile within that range. We believe that the corporate market is less compelling given the spread tightening that has occurred, so we will look to manage our exposure selectively. London interbank offered rate (LIBOR) based floaters within the mortgage- and asset-backed markets appear more compelling at the present time and we may increase our allocation to this product. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND IS EXPOSED TO FOREIGN OBLIGATIONS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers.The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE STABLE INCOME FUND. (1) The Fund's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund.Actual reductions of operating expenses can increase total return to shareholders.Without these reductions,the Fund's returns would have been lower. The Fund is a gateway feeder Fund that invests all of its assets in a single master portfolio of the Master Trust with a substantially similar investment objective and substantially similar investment strategies. References to the investment activities of the Fund are intended to refer to the investment activities of the master portfolio in which it invests. Performance shown for Class A, Class B and Administrator (formerly named Institutional) Class shares of the WELLS FARGO ADVANTAGE STABLE INCOME FUND for periods prior to November 8, 1999, reflects performance of the Class A, Class B and Institutional Class shares of the Norwest Advantage Stable Income Fund, its predecessor fund.Effective at the close of business November 5, 1999, the Norwest Advantage Funds were reorganized into the WELLS FARGO FUNDS(R). Performance shown for Class A shares for periods prior to May 2, 1996, reflects performance of the Institutional Class shares of the Norwest Fund adjusted for Class A sales charges and expenses. Performance shown for Class B shares for periods prior to May 17, 1996, reflects performance of the Institutional Class shares of the Norwest Fund adjusted for Class B sales charges and expenses. Performance shown for Class C shares for periods prior to June 30, 2003, reflects the performance of the Class A shares of the Fund, adjusted to reflect the Class C sales charges and expenses. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE STABLE INCOME FUND was named the Wells Fargo Stable Income Fund. (2) The Lehman Brothers Short Treasury 9-12 Months Index is an unmanaged index of short-term U.S.Treasuries maturing in 9 to 12 months, including bills, notes and bonds. U.S.Treasuries are backed by the full faith and credit of the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.The Fund invests in a wide range of securities,including those that are not reflected in the Lehman Brothers Short Treasury 9-12 Months Index or backed by the full faith and credit of the U.S. Government.You cannot invest directly in an index. 14
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ----------------------------------- ------------------------------------ 6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year Stable Income Fund - Class A (0.94) (0.17) 2.92 4.18 1.09 1.87 3.34 4.39 Stable Income Fund - Class B (0.79) (0.50) 2.56 3.59 0.71 1.00 2.56 3.59 Stable Income Fund - Class C (0.29) 0.10 2.55 3.48 0.71 1.10 2.55 3.48 Stable Income Fund - Administrator Class 1.22 2.14 3.59 4.52 Benchmark Lehman Brothers Short Treasury 9-12 Months Index(2) 1.11 1.67 3.43 4.56 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 43% -------------------------------------------------------------------------------- Average Credit Quality(4) Aa+ -------------------------------------------------------------------------------- Weighted Average Coupon 3.83% -------------------------------------------------------------------------------- Estimated Weighted Average Maturity 2.50 Years -------------------------------------------------------------------------------- Estimated Average Duration 0.90 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C, Administrator Class) $10.38, $10.37, $10.35, $10.38 -------------------------------------------------------------------------------- Distribution Rate(5) (Class A, B, C, Administrator Class) 0.83%, 0.13%, 0.13%, 1.09% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Class A, B, C, Administrator Class) 2.46%, 1.76%, 1.76%, 2.76% PORTFOLIO ALLOCATION(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 12% Collateralized Mortgage Securities 27% U.S. Treasury Notes 6% U.S. Government Agencies 26% Corporate Bonds 19% Municipal Bonds 3% Variable/Floating Rate Bonds 3% Cash Equivalents 4% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] LEHMAN BROTHERS STABLE INCOME FUND - STABLE INCOME FUND - SHORT TREASURY CLASS A ADMINISTRATOR CLASS 9-12 MONTHS INDEX -------------------- -------------------- ----------------- 5/31/1995 9800 10000 10,000 6/30/1995 9856 10057 10,058 7/31/1995 9894 10096 10,109 8/31/1995 9950 10153 10,159 9/30/1995 9997 10201 10,205 10/31/1995 10053 10258 10,264 11/30/1995 10128 10335 10,323 12/31/1995 10193 10401 10,386 1/31/1996 10262 10471 10,451 2/29/1996 10262 10471 10,470 3/31/1996 10291 10501 10,504 4/30/1996 10317 10528 10,542 5/31/1996 10351 10563 10,584 6/30/1996 10410 10623 10,642 7/31/1996 10465 10678 10,685 8/31/1996 10501 10716 10,738 9/30/1996 10580 10796 10,808 10/31/1996 10659 10877 10,886 11/30/1996 10719 10937 10,942 12/31/1996 10749 10969 10,982 1/31/1997 10790 11011 11,035 2/28/1997 10829 11050 11,077 3/31/1997 10846 11068 11,106 4/30/1997 10940 11163 11,174 5/31/1997 10998 11222 11,240 6/30/1997 11057 11283 11,305 7/31/1997 11177 11406 11,380 8/31/1997 11185 11413 11,419 9/30/1997 11272 11502 11,485 10/31/1997 11353 11585 11,548 11/30/1997 11381 11602 11,588 12/31/1997 11444 11678 11,648 1/31/1998 11528 11764 11,725 2/28/1998 11568 11804 11,758 3/31/1998 11603 11841 11,814 4/30/1998 11658 11896 11,870 5/31/1998 11699 11926 11,925 6/30/1998 11753 11993 11,982 7/31/1998 11811 12053 12,039 8/31/1998 11909 12152 12,128 9/30/1998 12009 12254 12,227 10/31/1998 12039 12285 12,290 11/30/1998 12060 12306 12,307 12/31/1998 12115 12351 12,356 1/31/1999 12139 12387 12,404 2/28/1999 12138 12387 12,420 3/31/1999 12209 12459 12,492 4/30/1999 12255 12505 12,537 5/31/1999 12254 12516 12,573 6/30/1999 12293 12544 12,621 7/31/1999 12335 12588 12,677 8/31/1999 12364 12617 12,718 9/30/1999 12432 12686 12,787 10/31/1999 12453 12708 12,831 11/30/1999 12478 12734 12,864 12/31/1999 12531 12792 12,900 1/31/2000 12524 12799 12,945 2/29/2000 12592 12859 13,011 3/31/2000 12657 12929 13,075 4/30/2000 12707 12981 13,139 5/31/2000 12778 13046 13,197 6/30/2000 12894 13168 13,298 7/31/2000 12941 13231 13,370 8/31/2000 13022 13304 13,413 9/30/2000 13108 13394 13,492 10/31/2000 13172 13462 13,554 11/30/2000 13257 13552 13,643 12/31/2000 13386 13686 13,772 1/31/2001 13509 13828 13,923 2/28/2001 13608 13918 13,983 3/31/2001 13696 14012 14,079 4/30/2001 13724 14056 14,144 5/31/2001 13798 14122 14,225 6/30/2001 13847 14174 14,267 7/31/2001 13950 14297 14,357 8/31/2001 14017 14354 14,397 9/30/2001 14100 14456 14,529 10/31/2001 14156 14501 14,616 11/30/2001 14101 14449 14,641 12/31/2001 14125 14490 14,676 1/31/2002 14150 14504 14,691 2/28/2002 14174 14531 14,725 3/31/2002 14135 14508 14,702 4/30/2002 14235 14614 14,791 5/31/2002 14285 14669 14,822 6/30/2002 14344 14730 14,894 7/31/2002 14406 14780 14,946 8/31/2002 14404 14791 14,964 9/30/2002 14465 14850 15,023 10/31/2002 14474 14863 15,052 11/30/2002 14475 14865 15,057 12/31/2002 14554 14959 15,112 1/31/2003 14578 14969 15,124 2/28/2003 14645 15053 15,144 3/31/2003 14651 15064 15,169 4/30/2003 14690 15096 15,185 5/31/2003 14714 15127 15,201 6/30/2003 14723 15139 15,231 7/31/2003 14648 15064 15,225 8/31/2003 14677 15097 15,240 9/30/2003 14739 15179 15,285 10/31/2003 14727 15156 15,279 11/30/2003 14728 15160 15,281 12/31/2003 14773 15211 15,327 1/31/2004 14800 15242 15,347 2/29/2004 14842 15289 15,375 3/31/2004 14858 15310 15,393 4/30/2004 14793 15245 15,364 5/31/2004 14780 15235 15,363 6/30/2004 14793 15252 15,363 7/31/2004 14823 15287 15,394 8/31/2004 14863 15331 15,435 9/30/2004 14889 15362 15,434 10/31/2004 14905 15381 15,459 11/30/2004 14894 15373 15,448 12/31/2004 14931 15401 15,471 1/31/2005 14944 15433 15,488 2/28/2005 14942 15434 15,494 3/31/2005 14958 15454 15,522 4/30/2005 15001 15502 15,573 5/31/2005 15056 15561 15,621 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Services (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) The Fund invests exclusively in a Wells Fargo Advantage Master Portfolio.This chart represents the portfolio allocations of the master portfolio in which it invests. Portfolio holdings are subject to change. See Notes to the Financial Statements for a discussion of the master portfolio. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE STABLE INCOME FUND Class A and Administrator Class shares for the most recent ten years with the Lehman Brothers Short Treasury 9-12 Months Index. The chart assumes a hypothetical $10,000 investment in Class A shares and Administrator Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 2.00%. 15
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND (the Fund) seeks current income while maintaining prospects for capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGER INCEPTION DATE Thomas M. Price, CFA 11/30/2000 HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 1.79%(1) for the seven-month period ended May 31, 2005, excluding sales charges, underperforming the Lehman Brothers U.S. High Yield Index(2), which returned 1.85%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE AT WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Spreads relative to U.S. Treasuries narrowed to record levels in early March 2005, but overall, ended up wider for the period. Benchmark returns were limited as wider spreads let to price declines, offsetting much of the benefit of the interest income. Our individual bond selections and the performance of our small equity allocation kept performance close to the benchmark, despite our more aggressive positioning in a period of declining prices. The rally in the high-yield market through early March 2005 was due to solid economic growth, good corporate earnings, and low default rates, leading to strong demand from institutional investors looking for higher yields. Then prices corrected when General Motors (GM) announced weaker-than-expected February 2005 sales in early March, followed by lower earnings. GM debt was subsequently downgraded to high-yield status in May 2005. The lower bond prices for GM carried over to the rest of the high-yield market. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- During the period, we became concerned with the trend toward slower economic growth, particularly during a time of high commodity prices and rising short-term interest rates. Accordingly, we reduced our exposure to some holdings that are sensitive to this trend. We also increased the Fund's weighting in floating-rate securities to approximately 9% to help protect against higher rates. This exposure hindered performance until the market weakened at the end of the period. We also sold several equity positions after prices reached our target levels, which trimmed our equity exposure to 2.5%. Compared to the benchmark, we continued to maintain the Fund's overweighting in several cyclical industries, including chemicals, metals, and other industrials, to potentially benefit from current economic growth and higher commodity prices. Conversely, we underweighted our exposure to the automotive, airline, technology, and utility industries. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe that demand for high-yield bonds will remain at reasonably healthy levels. However, we are closely monitoring a few factors that we believe could affect the market. Our biggest concern is that with GM and Ford being downgraded to junk status, there could be additional selling over the next several months, which we believe would likely spill over to other high-yield holdings. Additionally, further rate hikes from the Federal Reserve (the Fed) could lead to weaker economic conditions. Finally, hedge fund investors have been an important source of demand for high-yield securities. If demand from this group were to deteriorate significantly, high-yield prices could weaken. We expect to continue our recent path of allocating a portion of the portfolio to floating-rate securities to potentially benefit from continued Fed tightening. Additionally, we anticipate repositioning the portfolio in industries that we believe may potentially outperform in current market conditions and we are searching for equities that meet our valuation criteria. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN A HIGHER THAN AVERAGE PORTFOLIO TURNOVER RATIO AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THE FUND IS EXPOSED TO HIGH YIELD SECURITIES RISK AND FOREIGN OBLIGATIONS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's manager. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance shown for the Class A, Class B and Class C shares of the Wells Fargo Advantage Strategic Income Fund for periods prior to April 11, 2005, reflects the performance of the Class A,Class B and Class C shares,respectively,of the Strong Advisor Strategic Income Fund,its predecessor fund. Effective at the close of business on April 8, 2005, certain of the Strong Funds were reorganized into certain of the WELLS FARGO ADVANTAGE FUNDS(R). Prior to April 11, 2005, the WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND was named the Strong Strategic Income Fund. (2) The Lehman Brothers U.S. High-Yield Index is an unmanaged, U.S. dollar-denominated, nonconvertible, non-investment grade debt index. The index consists of domestic and corporate bonds rated Ba and below with a minimum outstanding amount of $150 million.You cannot invest directly in an index. 16
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ----------------------------------- ----------------------------------- 6-Month* 1-Year Life of Fund 6-Month* 1-Year Life of Fund Strategic Income Fund - Class A (Incept. Date 11/30/2000) (4.38) 4.08 9.17 0.13 8.99 10.29 Strategic Income Fund - Class B (Incept. Date 11/30/2000) (5.40) 2.81 8.65 (0.40) 7.81 8.98 Strategic Income Fund - Class C (Incept. Date 11/30/2000) (1.43) 6.77 8.94 (0.43) 7.77 8.94 Benchmark Lehman Brothers U.S. High Yield Index(2) 0.64 10.28 9.49 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 76% -------------------------------------------------------------------------------- Average Credit Quality(4) B3 -------------------------------------------------------------------------------- Weighted Average Coupon 7.56% -------------------------------------------------------------------------------- Estimated Weighted Average Maturity 9.00 Years -------------------------------------------------------------------------------- Estimated Average Duration 3.63 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C) $10.23, $10.23, $10.21 -------------------------------------------------------------------------------- Distribution Rate(5) (Class A, B, C) 5.88%, 5.41%, 5.42% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Class A, B, C) 6.14%, 5.70%, 5.70% PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Corporate Bonds 88% Common Stocks 3% Cash Equivalents 9% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] STRATEGIC LEHMAN BROTHERS INCOME FUND - CLASS A U.S. HIGH YIELD INDEX --------------------- --------------------- 11/30/2000 9550 10,000 12/31/2000 10049 10,193 1/31/2001 11374 10,957 2/28/2001 11436 11,103 3/31/2001 10938 10,841 4/30/2001 10855 10,706 5/31/2001 11094 10,899 6/30/2001 10696 10,593 7/31/2001 10739 10,749 8/31/2001 11021 10,876 9/30/2001 10040 10,145 10/31/2001 10127 10,396 11/30/2001 10645 10,775 12/31/2001 10749 10,731 1/31/2002 10853 10,806 2/28/2002 10544 10,655 3/31/2002 10839 10,912 4/30/2002 10823 11,082 5/31/2002 10657 11,025 6/30/2002 9960 10,212 7/31/2002 9450 9,766 8/31/2002 9557 10,044 9/30/2002 9465 9,912 10/31/2002 9281 9,826 11/30/2002 10009 10,434 12/31/2002 10060 10,580 1/31/2003 10236 10,933 2/28/2003 10392 11,067 3/31/2003 10758 11,386 4/30/2003 11456 12,061 5/31/2003 11540 12,186 6/30/2003 12063 12,536 7/31/2003 12108 12,398 8/31/2003 12179 12,541 9/30/2003 12612 12,884 10/31/2003 12935 13,144 11/30/2003 13071 13,343 12/31/2003 13418 13,645 1/31/2004 13860 13,906 2/29/2004 13769 13,871 3/31/2004 13866 13,965 4/30/2004 13834 13,870 5/31/2004 13615 13,635 6/30/2004 13755 13,831 7/31/2004 13920 14,019 8/31/2004 14106 14,294 9/30/2004 14320 14,501 10/31/2004 14578 14,763 11/30/2004 14819 14,941 12/31/2004 15023 15,164 1/31/2005 15035 15,144 2/28/2005 15289 15,367 3/31/2005 14896 14,920 4/30/2005 14660 14,775 5/31/2005 14838 15,037 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Services (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE STRATEGIC INCOME FUND Class A shares for the life of the Fund with the Lehman Brothers U.S. High Yield Index.The chart assumes a hypothetical $10,000 investment in Class A shares and reflects all operating expenses and assumes the maximum initial sales charge of 4.50%. 17
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND (the Fund) seeks total return consisting of income and capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Marie Chandoha 6/30/1997 Thomas O'Connor, CFA William Stevens HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 6.19%(1), excluding sales charges, for the 12-month period ended May 31, 2005, underperforming its benchmark, the Lehman Brothers Aggregate Bond Index(2), which returned 6.82% for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 4.50%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 5.00%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. ADMINISTRATOR CLASS, INSTITUTIONAL CLASS AND CLASS Z SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- During the first half of the reporting period, corporate bonds were the strong contributors to the performance of the Fund, due to our holdings of companies that were de-leveraging or improving and not investing in the airline and auto parts sectors. In the mortgage sector, relative-value trades between collateralized mortgage obligations (CMOs), planned amortization class (PAC) bonds, and pass-throughs added to performance as we found many dislocations between the sectors. Late in 2004 and early in 2005, our overweighting, compared to the benchmark, in commercial mortgage-backed securities (CMBS) added to performance, as we took advantage of dislocations between CMBS, mortgages, and high credit-quality corporates, and the sector outperformed U.S. Treasuries. Detractors from Fund performance during the first half of the reporting period included General Motors, Telecom Italia, and Liberty Media. While our mortgage balloon pools contributed to performance early in the year, they detracted later in 2004. During the second half of the reporting period, several corporate holdings were, again, strong contributors to performance, in particular Cox and Time Warner. Our positioning in Russia bonds also benefited performance as Russia rallied on higher oil prices and its long-awaited upgrade to investment-grade paper by Standard & Poors rating agency. Our overweighting in 15-year Freddie Mac mortgage pools contributed to performance as the sector outperformed 30-year mortgage pools, which make up most of the mortgage component of the benchmark. A detractor from Fund performance in the second half of the reporting period was our overweighting in the corporate sector, specifically holdings in JC Penney, Liberty, and Limited. Being underweighted in the 15-year, 4.5% mortgage sector also detracted from performance. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- During the period, we kept the Fund's portfolio close to its benchmark in terms of duration and yield curve. We found opportunities in CMOs and specific mortgage pools, yet our overall positioning in mortgages was more conservative than the benchmark. We had larger investments in the corporate sector during most of the period, but reduced our corporate holdings as volatility and event risk rose in the sector in the second quarter of 2005. Our portfolio turnover was higher than average during the year as we found opportunities to add performance versus our benchmark through our relative value approach. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe that long-term interest rates are currently low and could be vulnerable to an increase. On the other hand, if long-term interest rates drift lower, mortgage securities could be more vulnerable to another refinancing wave. While we think another refinancing wave may be more muted than prior ones, we believe that mortgage valuations are high. Given that potential backdrop, we are continuing to hold our mortgage positioning close to the benchmark, with a focus on more conservative mortgage instruments. In the corporate sector, we are rotating out of some higher-quality issues and into issues that have underperformed recently, like finance companies AIG and MBNA, and select utilities and real estate investment trusts (REITs). While we have limited interest rate, yield curve, and sector exposures versus the benchmark, we expect to continue to find dislocations on a security-specific level and seek to take advantage of them. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN A HIGHER THAN AVERAGE PORTFOLIO TURNOVER RATIO AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THE FUND IS EXPOSED TO FOREIGN OBLIGATIONS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance shown for the Class A, Class B, Class C, Z, Administrator (formerly named Institutional Class), and Institutional Class (formerly named Select Class) shares of the WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND for periods prior to June 9, 2003, reflects the performance of the Class A, Class B, Class C, and Class R shares, respectively, of the Montgomery Total Return Bond Fund (the accounting survivor of a merger of the Montgomery Total Return Bond Fund and the WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND), its predecessor fund, adjusted to reflect applicable sales charges. Effective at the close of business on June 6, 2003, certain Montgomery Funds were reorganized into certain of the WELLS FARGO FUNDS(R). Performance for the Class A, Class B and Class C shares of the Fund for periods prior to October 31, 2001, reflects the performance of the predecessor fund's Class R shares, adjusted to reflect each Class's fees and 18
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ----------------------------------------- ---------------------------------------- 6-Month* 1-Year 5-Year Life of Fund 6-Month* 1-Year 5-Year Life of Fund Total Return Bond Fund - Class A (Incept. Date 10/31/2001) (2.00) 1.41 6.78 6.27 2.61 6.19 7.76 6.89 Total Return Bond Fund - Class B (Incept. Date 10/31/2001) (2.77) 0.39 6.82 6.54 2.23 5.39 7.12 6.54 Total Return Bond Fund - Class C (Incept. Date 10/31/2001) 1.24 4.52 7.04 6.44 2.24 5.52 7.04 6.44 Total Return Bond Fund - Class Z (Incept. Date 4/08/2005) 2.62 6.24 7.60 6.77 Total Return Bond Fund - Administrator Class (Incept. Date 6/30/1997) 2.77 6.53 7.88 7.04 Total Return Bond Fund - Institutional Class (Incept. Date 10/31/2001) 2.83 6.74 8.03 7.13 Benchmark Lehman Brothers Aggregate Bond Index(2) 2.90 6.82 7.73 6.89 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 767% -------------------------------------------------------------------------------- Average Credit Quality(4) Aa -------------------------------------------------------------------------------- Weighted Average Coupon 5.09% -------------------------------------------------------------------------------- Estimated Weighted Average Life 6.26 Years -------------------------------------------------------------------------------- Estimated Average Duration 4.18 Years CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C, Z, Administrator, Institutional) $12.62, $12.63, $12.57, $12.41, $12.41, $12.40 Distribution Rate(5) (Class A, B, C, Z, Administrator, Institutional) 3.40%, 2.81%, 2.83%, 3.58%, 3.83%, 4.11% 30-Day SEC Yield(6) (Class A, B, C, Z, Administrator, Institutional) 3.34%, 2.76%, 2.75%, 3.45%, 3.70%, 3.98% PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] U.S. Government Agencies 52% Corporate Bonds 16% Repurchase Agreements 1% U.S. Treasury Bonds 5% U.S. Treasury Notes 12% Asset-Backed Securities 7% Collateralized Mortgage Securities 7% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] TOTAL RETURN TOTAL RETURN LEHMAN BROTHERS BOND FUND - BOND FUND - AGGREGATE CLASS A ADMINISTRATOR CLASS BOND INDEX ------------ ------------------- --------------- 6/30/1997 9,550 10,000 10,000 7/31/1997 9,812 10,276 10,270 8/31/1997 9,715 10,176 10,182 9/30/1997 9,864 10,333 10,332 10/31/1997 10,015 10,493 10,482 11/30/1997 10,061 10,543 10,530 12/31/1997 10,135 10,622 10,636 1/31/1998 10,272 10,768 10,773 2/28/1998 10,258 10,755 10,765 3/31/1998 10,299 10,800 10,802 4/30/1998 10,331 10,835 10,858 5/31/1998 10,449 10,960 10,961 6/30/1998 10,549 11,067 11,054 7/31/1998 10,564 11,085 11,078 8/31/1998 10,768 11,300 11,258 9/30/1998 10,997 11,543 11,521 10/31/1998 10,910 11,453 11,461 11/30/1998 10,934 11,480 11,526 12/31/1998 10,997 11,549 11,560 1/31/1999 11,070 11,626 11,643 2/28/1999 10,880 11,428 11,440 3/31/1999 10,965 11,520 11,503 4/30/1999 10,985 11,543 11,539 5/31/1999 10,894 11,449 11,438 6/30/1999 10,866 11,421 11,402 7/31/1999 10,840 11,395 11,353 8/31/1999 10,839 11,396 11,348 9/30/1999 10,943 11,508 11,479 10/31/1999 10,962 11,529 11,522 11/30/1999 10,960 11,529 11,521 12/31/1999 10,911 11,480 11,465 1/31/2000 10,912 11,482 11,428 2/29/2000 11,047 11,627 11,566 3/31/2000 11,187 11,775 11,718 4/30/2000 11,161 11,750 11,685 5/31/2000 11,141 11,730 11,679 6/30/2000 11,384 11,988 11,922 7/31/2000 11,485 12,097 12,031 8/31/2000 11,636 12,258 12,205 9/30/2000 11,754 12,384 12,282 10/31/2000 11,785 12,418 12,363 11/30/2000 11,968 12,614 12,566 12/31/2000 12,204 12,864 12,800 1/31/2001 12,377 13,048 13,010 2/28/2001 12,482 13,161 13,123 3/31/2001 12,561 13,247 13,188 4/30/2001 12,490 13,173 13,133 5/31/2001 12,570 13,261 13,212 6/30/2001 12,619 13,314 13,262 7/31/2001 12,912 13,626 13,559 8/31/2001 13,043 13,765 13,715 9/30/2001 13,226 13,961 13,876 10/31/2001 13,491 14,243 14,166 11/30/2001 13,270 14,066 13,970 12/31/2001 13,347 13,984 13,881 1/31/2002 13,425 14,116 13,993 2/28/2002 13,565 14,255 14,129 3/31/2002 13,315 13,991 13,894 4/30/2002 13,563 14,258 14,164 5/31/2002 13,669 14,371 14,284 6/30/2002 13,755 14,463 14,408 7/31/2002 13,950 14,661 14,582 8/31/2002 14,178 14,908 14,828 9/30/2002 14,424 15,173 15,068 10/31/2002 14,340 15,086 14,999 11/30/2002 14,358 15,109 14,995 12/31/2002 14,656 15,411 15,305 1/31/2003 14,683 15,420 15,318 2/28/2003 14,899 15,650 15,530 3/31/2003 14,866 15,630 15,518 4/30/2003 15,003 15,781 15,646 5/31/2003 15,315 16,106 15,937 6/30/2003 15,262 16,055 15,905 7/31/2003 14,735 15,521 15,371 8/31/2003 14,863 15,662 15,472 9/30/2003 15,265 16,083 15,882 10/31/2003 15,119 15,929 15,735 11/30/2003 15,144 15,959 15,773 12/31/2003 15,297 16,126 15,933 1/31/2004 15,412 16,253 16,061 2/29/2004 15,574 16,429 16,235 3/31/2004 15,697 16,550 16,357 4/30/2004 15,315 16,157 15,932 5/31/2004 15,247 16,087 15,868 6/30/2004 15,314 16,162 15,958 7/31/2004 15,470 16,332 16,116 8/31/2004 15,751 16,637 16,424 9/30/2004 15,794 16,673 16,468 10/31/2004 15,912 16,816 16,607 11/30/2004 15,778 16,675 16,474 12/31/2004 15,907 16,817 16,625 1/31/2005 16,003 16,923 16,730 2/28/2005 15,920 16,837 16,631 3/31/2005 15,815 16,727 16,547 4/30/2005 16,014 16,944 16,770 5/31/2005 16,191 17,137 16,951 -------------------------------------------------------------------------------- Institutional Class shares of the Fund for periods prior to October 31, 2001, reflects the performance of the predecessor fund's Class R shares, and includes expenses that are not applicable to the Institutional Class shares. Performance shown for the Administrator Class shares of the Fund for periods prior to June 9, 2003, reflects the performance of the predecessor fund's Class R shares. Because of its recent inception, performance shown for Class Z shares reflects the performance of the Fund's Administrator Class shares and includes expenses that are not applicable to and are lower than those of the Class Z shares. The Administrator Class shares' returns are substantially similar to what the Class Z shares would be because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent that the Classes do not have the same expenses. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND was named the Wells Fargo Montgomery Total Return Bond Fund. (2) The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers Government/Corporate Index and the Mortgage-Backed Securities Index and includes U.S.Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities.You cannot invest directly in an index. (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a registered trademark of McGraw-Hill, Inc., and has been licensed.The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND Class A and Administrator Class shares for the life of the Fund with the Lehman Brothers Aggregate Bond Index.The chart assumes a hypothetical $10,000 investment in Class A and Administrator Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum, initial sales charge of 4.50%. 19
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND (the Fund) seeks current income consistent with capital preservation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Jay N. Mueller, CFA 3/31/1994 Thomas M. Price, CFA HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Class A shares returned 1.05%(1) for the seven-month period ended May 31, 2005, excluding sales charges. The Fund outperformed the Citigroup 1-Year Treasury Benchmark-on-the-Run Index(2), which returned 0.86%, and the Lehman Brothers Short Treasury 9-12 Month Index(3), which returned 1.04%, for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE ON THE FUNDS' WEB SITE AT - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS A SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 2.00%. FOR CLASS B SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.50%. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. CLASS Z SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Short-term interest rates are generally driven by expectations of Federal Reserve (the Fed) monetary policy, and this period has been no exception. During the period, overnight rates gradually rose 1.25%, causing market-based yields in the short-maturity range to rise in reaction to this rate increase. Intermediate-term yields increased less than shorter maturity yields, and long-term U.S. Treasury yields declined substantially during this period. Since the Fund concentrates its holdings in securities with relatively short maturities, the adverse movement at the front end of the yield curve created a difficult environment for the Fund. Therefore, we pursued a defensive approach, attempting to limit the impact of higher short-term rates by staying at the shorter end of our duration range, which ultimately helped the Fund outperform. Detracting from returns were specific holdings in the corporate sector, such as the short-term obligations of U.S. automakers Ford and General Motors. Concern over recent financial results and loss of market share in North America exerted downward pressure on the outstanding debt of these two automakers. While we are aware of these challenges facing the automakers, we see the generous yields presently offered by their short-term securities to be attractive on a risk-adjusted basis. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- In addition to a defensive strategy with respect to rates, we maintained the Fund's substantial commitments to the mortgage-backed and corporate bond sectors. Both categories generated incremental returns relative to U.S. government notes of comparable duration. In implementing our strategy of maintaining a relatively short-duration posture, we emphasized floating-rate securities, which typically exhibit less price sensitivity to rising rates than comparable fixed-rate bonds. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe that the U.S. economy will grow at or above its long-term trend rate in coming quarters. This should permit a potential gradual improvement in employment conditions, which, in turn, may support incomes, consumption, and corporate profits. A source of concern, in contrast, is the persistent upward creep seen in most measures of inflation. Commodity prices, particularly energy costs, have risen most dramatically. But even indices that exclude energy and food prices, so-called `core' inflation, have ticked higher. Wages and benefit expenses are also rising, producing the most significant jump in unit labor costs since 2001. Such a backdrop makes it likely that the Fed may continue to increase overnight rate targets. In view of this potential occurrence, we expect to continue to lean in the direction of a defensive duration stance for the Fund. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND IS EXPOSED TO HIGH-YIELD SECURITIES RISK AND FOREIGN OBLIGATIONS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31,2005,and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance shown for the Class A,Class B,Class C and Class Z shares of the WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND for periods prior to April 11,2005, reflects the performance of the Class A,Class B,Class C and Class Z shares,respectively,of the Strong Advisor Short Duration Bond Fund,its predecessor fund. Effective at the close of business on April 8,2005,certain of the Strong Funds were reorganized into certain of the WELLS FARGO ADVANTAGE FUNDS.Performance shown for periods prior to November 30, 2000, for the Class A, Class B and Class C shares reflects the performance of the Class Z shares of the predecessor fund, adjusted to reflect the respective share classes sales charges and expenses. (2) The Citigroup 1-Year Treasury Benchmark-on-the-Run Index is an unmanaged index generally representative of the average return on the one-year U.S. Treasury bills.You cannot invest directly in an index. 20
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ------------------------------------ ---------------------------------- 6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year Ultra-short Duration Bond Fund - Class A (0.90) (0.28) 2.59 4.68 1.12 1.75 3.01 4.89 Ultra-short Duration Bond Fund - Class B (0.80) (0.61) 2.07 4.13 0.70 0.89 2.07 4.13 Ultra-short Duration Bond Fund - Class C (0.30) (0.10) 2.11 3.97 0.70 0.90 2.11 3.97 Ultra-short Duration Bond Fund - Class Z 1.17 1.79 3.01 4.89 Benchmarks Citigroup 1-Year Treasury Benchmark-on-the-Run Index(2) 1.04 1.49 3.64 4.61 Lehman Brothers Short Treasury 9-12 Month Index(3) 1.11 1.67 3.43 4.56 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 9% -------------------------------------------------------------------------------- Average Credit Quality(5) A1 -------------------------------------------------------------------------------- Weighted Average Coupon 5.23% -------------------------------------------------------------------------------- Estimated Weighted Average Life 1.55 Years -------------------------------------------------------------------------------- Estimated Average Duration 0.39 Years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class A, B, C, Z) $9.64, $9.62, $9.64, $9.61 -------------------------------------------------------------------------------- Distribution Rate(6) (Class A, B, C, Z) 3.25%, 2.57%, 2.57%, 3.15% -------------------------------------------------------------------------------- 30-Day SEC Yield(7) (Class A, B, C, Z) 2.73%, 2.04%, 2.05%, 2.62% PORTFOLIO ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Collateralized Mortgage Securities 18% U.S. Government Agencies 25% Cash Equivalents 7% Asset-Backed Securities 25% Corporate Bonds 25% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] [Enlarge/Download Table] CITIGROUP 1-YEAR TREASURY LEHMAN BROTHERS ULTRA-SHORT DURATION ULTRA-SHORT DURATION BENCHMARK-ON-THE-RUN SHORT TREASURY BOND FUND - CLASS A BOND FUND - CLASS Z INDEX 9-12 MONTH INDEX -------------------- -------------------- ------------------------- ---------------- 5/31/1995 9800 10000 10,000 10,000 6/30/1995 9839 10040 10,058 10,058 7/31/1995 9935 10138 10,108 10,109 8/31/1995 10021 10225 10,157 10,159 9/30/1995 10078 10283 10,202 10,205 10/31/1995 10165 10373 10,259 10,264 11/30/1995 10243 10452 10,321 10,323 12/31/1995 10348 10559 10,381 10,386 1/31/1996 10487 10701 10,448 10,451 2/29/1996 10470 10683 10,461 10,470 3/31/1996 10544 10760 10,494 10,504 4/30/1996 10677 10895 10,530 10,542 5/31/1996 10718 10936 10,573 10,584 6/30/1996 10795 11015 10,631 10,642 7/31/1996 10863 11085 10,672 10,685 8/31/1996 10940 11163 10,724 10,738 9/30/1996 11092 11318 10,796 10,808 10/31/1996 11225 11454 10,878 10,886 11/30/1996 11350 11582 10,934 10,942 12/31/1996 11384 11617 10,971 10,982 1/31/1997 11501 11736 11,025 11,035 2/28/1997 11544 11779 11,065 11,077 3/31/1997 11536 11772 11,095 11,106 4/30/1997 11667 11905 11,162 11,174 5/31/1997 11753 11993 11,233 11,240 6/30/1997 11877 12119 11,299 11,305 7/31/1997 11955 12199 11,381 11,380 8/31/1997 12000 12245 11,421 11,419 9/30/1997 12141 12389 11,483 11,485 10/31/1997 11986 12230 11,547 11,548 11/30/1997 12012 12258 11,586 11,588 12/31/1997 12144 12392 11,641 11,648 1/31/1998 12136 12384 11,719 11,725 2/28/1998 12243 12493 11,750 11,758 3/31/1998 12328 12579 11,809 11,814 4/30/1998 12370 12622 11,863 11,870 5/31/1998 12397 12650 11,915 11,925 6/30/1998 12422 12675 11,971 11,982 7/31/1998 12556 12812 12,030 12,039 8/31/1998 12345 12597 12,127 12,128 9/30/1998 12413 12666 12,222 12,227 10/31/1998 12440 12694 12,287 12,290 11/30/1998 12564 12821 12,289 12,307 12/31/1998 12639 12897 12,327 12,356 1/31/1999 12680 12938 12,375 12,404 2/28/1999 12698 12957 12,388 12,420 3/31/1999 12808 13069 12,465 12,492 4/30/1999 12956 13220 12,511 12,537 5/31/1999 12977 13242 12,546 12,573 6/30/1999 13060 13326 12,605 12,621 7/31/1999 13112 13380 12,661 12,677 8/31/1999 13114 13382 12,698 12,718 9/30/1999 13187 13456 12,763 12,787 10/31/1999 13270 13541 12,797 12,831 11/30/1999 13343 13615 12,823 12,864 12/31/1999 13369 13642 12,852 12,900 1/31/2000 13386 13659 12,884 12,945 2/29/2000 13446 13721 12,948 13,011 3/31/2000 13506 13782 13,008 13,075 4/30/2000 13563 13839 13,083 13,139 5/31/2000 13619 13896 13,131 13,197 6/30/2000 13727 14007 13,234 13,298 7/31/2000 13814 14096 13,312 13,370 8/31/2000 13886 14169 13,393 13,413 9/30/2000 13987 14272 13,472 13,492 10/31/2000 14044 14330 13,538 13,554 11/30/2000 14060 14347 13,631 13,643 12/31/2000 14236 14528 13,765 13,772 1/31/2001 14431 14713 13,922 13,923 2/28/2001 14510 14807 13,993 13,983 3/31/2001 14565 14863 14,094 14,079 4/30/2001 14602 14902 14,158 14,144 5/31/2001 14708 15002 14,240 14,225 6/30/2001 14673 14967 14,278 14,267 7/31/2001 14832 15134 14,379 14,357 8/31/2001 14962 15250 14,442 14,397 9/30/2001 14960 15258 14,590 14,529 10/31/2001 15031 15310 14,683 14,616 11/30/2001 15002 15279 14,709 14,641 12/31/2001 14966 15256 14,738 14,676 1/31/2002 14935 15222 14,748 14,691 2/28/2002 14952 15239 14,794 14,725 3/31/2002 14867 15151 14,766 14,702 4/30/2002 14950 15236 14,866 14,791 5/31/2002 15004 15290 14,903 14,822 6/30/2002 15020 15305 14,983 14,894 7/31/2002 14956 15239 15,046 14,946 8/31/2002 15009 15293 15,059 14,964 9/30/2002 15060 15344 15,127 15,023 10/31/2002 15053 15333 15,162 15,052 11/30/2002 15114 15407 15,162 15,057 12/31/2002 15159 15452 15,224 15,112 1/31/2003 15207 15498 15,236 15,124 2/28/2003 15282 15575 15,261 15,144 3/31/2003 15311 15604 15,291 15,169 4/30/2003 15383 15664 15,309 15,185 5/31/2003 15408 15693 15,326 15,201 6/30/2003 15413 15713 15,356 15,231 7/31/2003 15339 15637 15,347 15,225 8/31/2003 15373 15654 15,362 15,240 9/30/2003 15434 15718 15,404 15,285 10/31/2003 15422 15735 15,399 15,279 11/30/2003 15441 15738 15,399 15,281 12/31/2003 15486 15801 15,448 15,327 1/31/2004 15519 15817 15,466 15,347 2/29/2004 15566 15866 15,495 15,375 3/31/2004 15598 15898 15,514 15,393 4/30/2004 15540 15853 15,472 15,364 5/31/2004 15522 15834 15,468 15,363 6/30/2004 15524 15835 15,464 15,363 7/31/2004 15544 15855 15,498 15,394 8/31/2004 15610 15904 15,543 15,435 9/30/2004 15628 15941 15,538 15,434 10/31/2004 15630 15931 15,565 15,459 11/30/2004 15619 15932 15,538 15,448 12/31/2004 15643 15955 15,563 15,471 1/31/2005 15697 15991 15,574 15,488 2/28/2005 15719 16010 15,573 15,494 3/31/2005 15710 15998 15,596 15,522 4/30/2005 15734 16059 15,651 15,573 5/31/2005 15795 16119 15,699 15,621 -------------------------------------------------------------------------------- (3) The Lehman Brothers Short Treasury 9-12 Month Index includes aged U.S.Treasury bills,notes and bonds with a remaining maturity from 1 up to (but not including) 12 months. It excludes zero coupon strips.You cannot invest directly in an index. (4) Portfolio holdings and characteristics are subject to change. (5) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (6) The distribution rate is based on the actual distributions made by the Fund.The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (7) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal,less expenses,and the maximum offering price, calculated on a 30-day month-end basis. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE ULTRA-SHORT DURATION BOND FUND Class A shares and Class Z shares for the most recent ten years with the Citigroup 1-Year Treasury Benchmark-on-the-Run Index and the Lehman Brothers Short Treasury 9-12 Month Index.The chart assumes a hypothetical investment of $10,000 in Class A shares and Class Z shares and reflects all operating expenses and,for Class A shares,assumes the maximum initial sales charge of 2.00%. 21
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WELLS FARGO ADVANTAGE INCOME FUNDS FUND EXPENSES (UNAUDITED) -------------------------------------------------------------------------------- As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, redemption fees (if any) and exchange fees (if any); and (2) ongoing costs, including management fees; distribution (12b-1) and/or shareholder service fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire six-month period (December 1, 2004 to May 31, 2005). ACTUAL EXPENSES The "Actual" line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Actual" line under the heading entitled "Expenses Paid During Period" for your applicable class of shares to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The "Hypothetical" line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the "Hypothetical" line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of wning different funds. In addition, if these transactional costs were included, your costs would have been higher. [Enlarge/Download Table] Beginning Ending Account Account Expenses Value Value Paid During Net Annual 12/01/2004 5/31/2005 Period(1) Expense Ratio Diversified Bond Fund ------------------------------------------------------------------------------------------------------------------------ Diversified Bond Fund - Administrator Class Actual $ 1,000.00 $ 1,026.50 $ 3.54 0.70% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.44 $ 3.53 0.70% High Yield Bond Fund ------------------------------------------------------------------------------------------------------------------------ High Yield Bond Fund - Class A Actual $ 1,000.00 $ 995.90 $ 5.72 1.15% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.20 $ 5.79 1.15% ------------------------------------------------------------------------------------------------------------------------ High Yield Bond Fund - Class B Actual $ 1,000.00 $ 992.20 $ 9.44 1.90% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.46 $ 9.55 1.90% ------------------------------------------------------------------------------------------------------------------------ High Yield Bond Fund - Class C Actual $ 1,000.00 $ 992.20 $ 9.44 1.90% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.46 $ 9.55 1.90% Income Plus Fund ------------------------------------------------------------------------------------------------------------------------ Income Plus Fund - Class A Actual $ 1,000.00 $ 1,017.20 $ 2.92 0.58% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.04 $ 2.92 0.58% ------------------------------------------------------------------------------------------------------------------------ Income Plus Fund - Class B Actual $ 1,000.00 $ 1,012.50 $ 6.62 1.32% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.35 $ 6.64 1.32% ------------------------------------------------------------------------------------------------------------------------ Income Plus Fund - Class C Actual $ 1,000.00 $ 1,013.40 $ 6.63 1.32% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.35 $ 6.64 1.32% 22
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FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] Beginning Ending Account Account Expenses Value Value Paid During Net Annual 12/01/2004 5/31/2005 Period(1) Expense Ratio Inflation Protected Bond Fund ------------------------------------------------------------------------------------------------------------------------ Inflation Protected Bond Fund - Class A Actual $ 1,000.00 $ 1,037.80 $ 4.32 0.85% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.69 $ 4.28 0.85% ------------------------------------------------------------------------------------------------------------------------ Inflation Protected Bond Fund - Class B Actual $ 1,000.00 $ 1,032.10 $ 8.11 1.60% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.95 $ 8.05 1.60% ------------------------------------------------------------------------------------------------------------------------ Inflation Protected Bond Fund - Class C Actual $ 1,000.00 $ 1,032.00 $ 8.11 1.60% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.95 $ 8.05 1.60% ------------------------------------------------------------------------------------------------------------------------ Inflation Protected Bond Fund - Administrator Class Actual $ 1,000.00 $ 1,038.20 $ 3.10 0.61% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.89 $ 3.07 0.61% Intermediate Government Income Fund ------------------------------------------------------------------------------------------------------------------------ Intermediate Government Income Fund - Class A Actual $ 1,000.00 $ 1,018.90 $ 4.78 0.95% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.19 $ 4.78 0.95% ------------------------------------------------------------------------------------------------------------------------ Intermediate Government Income Fund - Class B Actual $ 1,000.00 $ 1,015.00 $ 8.54 1.70% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.45 $ 8.55 1.70% ------------------------------------------------------------------------------------------------------------------------ Intermediate Government Income Fund - Class C Actual $ 1,000.00 $ 1,015.00 $ 8.54 1.70% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.45 $ 8.55 1.70% ------------------------------------------------------------------------------------------------------------------------ Intermediate Government Income Fund - Administrator Class Actual $ 1,000.00 $ 1,021.10 $ 3.53 0.70% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.44 $ 3.53 0.70% Short Duration Bond Fund ------------------------------------------------------------------------------------------------------------------------ Short Duration Bond Fund - Class A Actual $ 1,000.00 $ 1,008.10 $ 4.31 0.86% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.64 $ 4.33 0.86% ------------------------------------------------------------------------------------------------------------------------ Short Duration Bond Fund - Class B Actual $ 1,000.00 $ 1,004.30 $ 8.05 1.61% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.90 $ 8.10 1.61% ------------------------------------------------------------------------------------------------------------------------ Short Duration Bond Fund - Class C Actual $ 1,000.00 $ 1,005.30 $ 8.00 1.60% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.95 $ 8.05 1.60% ------------------------------------------------------------------------------------------------------------------------ Short Duration Bond Fund - Administrator Class Actual $ 1,000.00 $ 1,010.30 $ 3.01 0.60% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.94 $ 3.02 0.60% ------------------------------------------------------------------------------------------------------------------------ Short Duration Bond Fund - Institutional Class Actual(2) $ 1,000.00 $ 1,010.40 $ 0.60 0.43% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.79 $ 2.17 0.43% 23
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[Enlarge/Download Table] WELLS FARGO ADVANTAGE INCOME FUNDS FUND EXPENSES (UNAUDITED) -------------------------------------------------------------------------------- Beginning Ending Account Account Expenses Value Value Paid During Net Annual 12/01/2004 5/31/2005 Period(1) Expense Ratio Stable Income Fund ------------------------------------------------------------------------------------------------------------------------ Stable Income Fund - Class A Actual $ 1,000.00 $ 1,010.90 $ 4.51 0.90% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.44 $ 4.53 0.90% ------------------------------------------------------------------------------------------------------------------------ Stable Income Fund - Class B Actual $ 1,000.00 $ 1,007.10 $ 8.26 1.65% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.70 $ 8.30 1.65% ------------------------------------------------------------------------------------------------------------------------ Stable Income Fund - Class C Actual $ 1,000.00 $ 1,007.10 $ 8.26 1.65% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.70 $ 8.30 1.65% ------------------------------------------------------------------------------------------------------------------------ Stable Income Fund - Administrator Class Actual $ 1,000.00 $ 1,012.20 $ 3.26 0.65% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.69 $ 3.28 0.65% Strategic Income Fund ------------------------------------------------------------------------------------------------------------------------ Strategic Income Fund - Class A Actual $ 1,000.00 $ 1,001.30 $ 5.44 1.09% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.50 $ 5.49 1.09% ------------------------------------------------------------------------------------------------------------------------ Strategic Income Fund - Class B Actual $ 1,000.00 $ 996.00 $ 10.75 2.16% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,014.16 $ 10.85 2.16% ------------------------------------------------------------------------------------------------------------------------ Strategic Income Fund - Class C Actual $ 1,000.00 $ 995.70 $ 10.10 2.03% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,014.81 $ 10.20 2.03% Total Return Bond Fund ------------------------------------------------------------------------------------------------------------------------ Total Return Bond Fund - Class A Actual $ 1,000.00 $ 1,026.10 $ 4.55 0.90% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.44 $ 4.53 0.90% ------------------------------------------------------------------------------------------------------------------------ Total Return Bond Fund - Class B Actual $ 1,000.00 $ 1,022.30 $ 8.32 1.65% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.70 $ 8.30 1.65% ------------------------------------------------------------------------------------------------------------------------ Total Return Bond Fund - Class C Actual $ 1,000.00 $ 1,022.40 $ 8.32 1.65% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.70 $ 8.30 1.65% ------------------------------------------------------------------------------------------------------------------------ Total Return Bond Fund - Class Z Actual $ 1,000.00 $ 1,026.20 $ 4.80 0.95% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.19 $ 4.78 0.95% ------------------------------------------------------------------------------------------------------------------------ Total Return Bond Fund - Administrator Class Actual $ 1,000.00 $ 1,027.70 $ 3.54 0.70% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.44 $ 3.53 0.70% ------------------------------------------------------------------------------------------------------------------------ Total Return Bond Fund - Institutional Class Actual $ 1,000.00 $ 1,028.30 $ 2.12 0.42% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.84 $ 2.12 0.42% 24
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FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] Beginning Ending Account Account Expenses Value Value Paid During Net Annual 12/01/2004 5/31/2005 Period(1) Expense Ratio Ultra-Short Duration Bond Fund ------------------------------------------------------------------------------------------------------------------------ Ultra-Short Duration Bond Fund - Class A Actual $ 1,000.00 $ 1,011.20 $ 5.16 1.03% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.80 $ 5.19 1.03% ------------------------------------------------------------------------------------------------------------------------ Ultra-Short Duration Bond Fund - Class B Actual $ 1,000.00 $ 1,007.00 $ 9.36 1.87% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.61 $ 9.40 1.87% ------------------------------------------------------------------------------------------------------------------------ Ultra-Short Duration Bond Fund - Class C Actual $ 1,000.00 $ 1,007.00 $ 9.46 1.89% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,015.51 $ 9.50 1.89% ------------------------------------------------------------------------------------------------------------------------ Ultra-Short Duration Bond Fund - Class Z Actual $ 1,000.00 $ 1,011.70 $ 4.76 0.95% ------------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.19 $ 4.78 0.95% (1) Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half year period). (2) This class commenced operations on April 11, 2005. Actual expenses shown for this class are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by 51/365 (to reflect the period from April 11, 2005 to May 31, 2005). 25
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- DIVERSIFIED BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] FACE/SHARE AMOUNT SECURITY NAME VALUE INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS - 101.41% N/A WELLS FARGO ADVANTAGE MANAGED FIXED INCOME PORTFOLIO $ 67,574,904 N/A WELLS FARGO ADVANTAGE STRATEGIC VALUE BOND PORTFOLIO 22,578,468 N/A WELLS FARGO ADVANTAGE TACTICAL MATURITY BOND PORTFOLIO 45,002,767 TOTAL INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS (COST $129,429,501) 135,156,139 ------------- TOTAL INVESTMENTS IN SECURITIES (COST $129,429,501)* 101.41% $ 135,156,139 OTHER ASSETS AND LIABILITIES, NET (1.41) (1,879,578) ------ ------------- TOTAL NET ASSETS 100.00% $ 133,276,561 ====== ============= * COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR FINANCIAL REPORTING PURPOSES. THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 26
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE CORPORATE BONDS & NOTES - 82.03% AGRICULTURAL SERVICES - 0.30% $ 725,000 HINES NURSERIES INCORPORATED 10.25% 10/01/2011 $ 746,750 -------------- AMUSEMENT & RECREATION SERVICES - 2.47% 375,000 BOOTH CREEK SKI HOLDINGS 12.50 03/15/2007 375,000 250,000 GOLFSMITH INTERNATIONAL INCORPORATED 8.38 10/15/2009 215,000 220,000 HERBST GAMING INCORPORATED<< 7.00 11/15/2014 219,450 775,000 MOHEGAN TRIBAL GAMING++ 6.13 02/15/2013 774,031 1,170,000 PARK PLACE ENTERTAINMENT CORPORATION 7.88 03/15/2010 1,292,850 75,000 PARK PLACE ENTERTAINMENT CORPORATION 7.00 04/15/2013 81,938 880,000 PENN NATIONAL GAMING INCORPORATED 6.88 12/01/2011 897,600 100,000 RIVER ROCK ENTERTAINMENT AUTHORITY 9.75 11/01/2011 109,625 500,000 SPEEDWAY MOTORSPORTS INCORPORATED 6.75 06/01/2013 512,500 800,000 TOWN SPORTS INTERNATIONAL 9.63 04/15/2011 820,000 850,000 WARNER MUSIC GROUP 7.38 04/15/2014 845,750 6,143,744 -------------- APPAREL & ACCESSORY STORES - 1.13% 1,000,000 GAP INCORPORATED 10.30 12/15/2008 1,153,056 200,000 LOEHMANNS CAPITAL CORPORATION+/-++ 11.39 10/01/2011 204,000 400,000 LOEHMANNS CAPITAL CORPORATION++ 12.00 10/01/2011 416,000 1,000,000 PAYLESS SHOESOURCE INCORPORATED<< 8.25 08/01/2013 1,037,500 2,810,556 -------------- APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.55% 1,100,000 LEVI STRAUSS & COMPANY 12.25 12/15/2012 1,193,500 175,000 PHILLIPS VAN-HEUSEN 7.25 02/15/2011 180,250 1,373,750 -------------- AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 0.90% 700,000 ASBURY AUTOMOTIVE GROUP INCORPORATED 9.00 06/15/2012 714,000 465,000 GROUP 1 AUTOMOTIVE INCORPORATED 8.25 08/15/2013 467,325 15,000 NEFF CORPORATION 10.25 06/01/2008 15,000 1,075,000 SONIC AUTOMOTIVE INCORPORATED SERIES B<< 8.63 08/15/2013 1,054,844 2,251,169 -------------- AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.54% 85,000 FEDERAL-MOGUL CORPORATION^^ 7.88 07/01/2010 19,550 400,000 MERITOR AUTOMOTIVE INCORPORATED 6.80 02/15/2009 387,000 950,000 UNITED RENTALS NORTH AMERICA INCORPORATED 6.50 02/15/2012 934,562 1,341,112 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.51% 725,000 BEAZER HOMES USA INCORPORATED 8.38 04/15/2012 772,125 260,000 MERITAGE HOMES CORPORATION++ 6.25 03/15/2015 243,100 245,000 WCI COMMUNITIES INCORPORATED 9.13 05/01/2012 254,800 1,270,025 -------------- BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.50% 330,000 GOODMAN GLOBAL HOLDINGS+/-++ 5.76 06/15/2012 315,150 743,000 SUBURBAN PROPANE PARTNERS++ 6.88 12/15/2013 698,420 27
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS (CONTINUED) $ 250,000 SUBURBAN PROPANE PARTNERS 6.88% 12/15/2013 $ 235,000 1,248,570 -------------- BUSINESS SERVICES - 5.66% 100,000 ADVANSTAR COMMUNICATIONS SERIES B<< 12.00 02/15/2011 105,250 650,000 AFFINITY GROUP INCORPORATED 9.00 02/15/2012 653,250 300,000 COUCHE-TARD US FINANCE 7.50 12/15/2013 312,000 1,751,000 H&E EQUIPMENT FINANCE 12.50 06/15/2013 1,873,570 340,000 IAAI FINANCE CORPORATION++ 11.00 04/01/2013 349,070 1,250,000 NATIONSRENT COMPANIES INCORPORATED++ 9.50 05/01/2015 1,231,250 650,000 NATIONSRENT INCORPORATED 9.50 10/15/2010 697,125 1,000,000 OAKHILL SECURITY FUND II SERIES B1-A++ 8.57 10/15/2006 1,016,200 3,078,000 SITEL CORPORATION 9.25 03/15/2006 3,047,220 450,000 SUNSTATE EQUIPMENT COMPANY LLC++ 10.50 04/01/2013 452,250 750,000 TERPHANE HOLDING CORPORATION++ 12.50 06/15/2009 761,250 850,000 VERTIS INCORPORATED 9.75 04/01/2009 884,000 1,765,000 VERTIS INCORPORATED++ 13.50 12/07/2009 1,341,400 65,000 VERTIS INCORPORATED SERIES B 10.88 06/15/2009 63,375 1,000,000 VIRGIN RIVER CASINO CORPORATION++ 9.00 01/15/2012 1,030,000 250,000 WILLIAMS SCOTSMAN INCORPORATED 10.00 08/15/2008 270,000 14,087,210 -------------- CHEMICALS & ALLIED PRODUCTS - 0.52% 500,000 MILLENNIUM AMERICA INCORPORATED 7.00 11/15/2006 510,000 350,000 NALCO COMPANY 8.88 11/15/2013 365,750 435,000 PQ CORPORATION++<< 7.50 02/15/2013 419,775 1,295,525 -------------- COAL MINING - 0.23% 555,000 JAMES RIVER COAL COMPANY 9.38 06/01/2012 560,550 -------------- COMMUNICATIONS - 12.18% 393,000 ADVANSTAR COMMUNICATIONS INCORPORATED+/- 10.77 08/15/2008 414,615 885,000 ADVANSTAR COMMUNICATIONS INCORPORATED 10.75 08/15/2010 946,950 140,000 AMERICAN MEDIA OPERATIONS INCORPORATED<< 8.88 01/15/2011 142,800 880,000 CCO HOLDINGS LLC/CAPITAL CORPORATION+++/- 6.62 12/15/2010 866,800 3,825,000 CHARTER COMMUNICATION OPT LLC CAPITAL++ 8.00 04/30/2012 3,825,000 1,105,000 CHARTER COMMUNICATIONS HOLDINGS LLC CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORPORATION<< 8.25 04/01/2007 1,066,325 625,000 CINCINNATI BELL INCORPORATED++ 7.00 02/15/2015 598,437 1,800,000 CITIZENS COMMUNICATIONS COMPANY 9.25 05/15/2011 1,993,500 500,000 CONSOLIDATED COMMUNICATION HOLDINGS++ 9.75 04/01/2012 505,000 550,000 CSC HOLDINGS INCORPORATED 7.88 12/15/2007 574,062 125,000 CSC HOLDINGS INCORPORATED++ 6.75 04/15/2012 127,188 800,000 DOBSON CELLULAR SYSTEMS+/-++ 7.96 11/01/2011 818,000 775,000 DOBSON CELLULAR SYSTEMS++ 8.38 11/01/2011 794,375 2,500,000 DOBSON CELLULAR SYSTEMS++ 9.88 11/01/2012 2,562,500 650,000 EMMIS OPERATING COMPANY 6.88 05/15/2012 641,063 475,000 FISHER COMMUNICATIONS INCORPORATED 8.63 09/15/2014 505,281 2,600,000 HAWAIIAN TELCOM COMMUNICATIONS INCORPORATED+/-++ 8.71 05/01/2013 2,632,500 900,000 HAWAIIAN TELCOM COMMUNICATIONS INCORPORATED++ 12.50 05/01/2015 936,000 28
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS (CONTINUED) $ 160,000 INTELSAT BERMUDA LIMITED+/-++ 7.81% 01/15/2012 $ 162,400 700,000 LODGENET ENTERTAINMENT CORPORATION 9.50 06/15/2013 752,500 500,000 MCI INCORPORATED<< 6.91 05/01/2007 508,125 275,000 NEXSTAR FINANCE INCORPORATED<< 7.00 01/15/2014 252,313 250,000 NEXTEL COMMUNICATIONS INCORPORATED 6.88 10/31/2013 265,625 1,168,000 PANAMSAT CORPORATION 9.00 08/15/2014 1,270,200 100,000 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED++ 7.25 02/15/2011 96,750 1,800,000 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED++ 7.50 02/15/2014 1,737,000 250,000 QWEST CORPORATION++ 9.13 03/15/2012 271,250 680,000 RURAL CELLULAR CORPORATION 9.88 02/01/2010 671,500 400,000 RURAL CELLULAR CORPORATION 8.25 03/15/2012 409,000 105,000 SINCLAIR BROADCAST GROUP INCORPORATED 8.75 12/15/2011 111,300 870,000 SINCLAIR BROADCAST GROUP INCORPORATED 8.00 03/15/2012 902,625 235,000 UBIQUITEL OPERATING COMPANY 9.88 03/01/2011 253,800 2,800,000 VALOR TELECOM ENTERPRISE++ 7.75 02/15/2015 2,723,000 30,337,784 -------------- DEPOSITORY INSTITUTIONS - 1.22% 1,290,000 CAPITAL ONE FINANCIAL CORPORATION 7.25 05/01/2006 1,327,077 1,650,000 CHEVY CHASE BANK FSB 6.88 12/01/2013 1,707,750 3,034,827 -------------- EATING & DRINKING PLACES - 5.58% 3,495,000 BUFFETS INCORPORATED<< 11.25 07/15/2010 3,460,050 620,000 CARROLS CORPORATION++ 9.00 01/15/2013 629,300 2,495,000 EL POLLO LOCO INCORPORATED 9.25 12/15/2009 2,507,475 1,000,000 FRIENDLY ICE CREAM CORPORATION<< 8.38 06/15/2012 940,000 175,000 NE RESTAURANT COMPANY INCORPORATED 10.75 07/15/2008 164,500 2,500,000 O'CHARLEYS INCORPORATED 9.00 11/01/2013 2,637,500 715,000 PERKINS FAMILY RESTAURANTS LIMITED PARTNERSHIP SERIES B 10.13 12/15/2007 722,150 925,000 PIERRE FOODS INCORPORATED 9.88 07/15/2012 931,937 1,850,000 REAL MEX RESTAURANTS INCORPORATED++ 10.50 04/01/2010 1,910,125 13,903,037 -------------- ELECTRIC, GAS & SANITARY SERVICES - 1.55% 500,000 ALLIED WASTE NORTH AMERICA<< 6.50 11/15/2010 488,750 550,000 ALLIED WASTE NORTH AMERICA 6.38 04/15/2011 525,250 2,810,000 ALLIED WASTE NORTH AMERICA++ 7.25 03/15/2015 2,711,650 150,000 FERRELLGAS PARTNERS LIMITED PARTNERSHIP 6.75 05/01/2014 139,500 3,865,150 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 0.58% 1,470,000 COMMUNICATIONS AND POWER INDUSTRIAL 8.00 02/01/2012 1,440,600 -------------- ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.87% 800,000 CORNELL COMPANIES INCORPORATED 10.75 07/01/2012 808,000 2,481,000 FOSTER WHEELER LLC SERIES A 10.36 09/15/2011 2,549,227 1,155,000 URS CORPORATION 11.50 09/15/2009 1,299,375 4,656,602 -------------- 29
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.23% $ 180,000 MUELLER GROUP INCORPORATED+/- 7.49% 11/01/2011 $ 183,600 400,000 VALMONT INDUSTRIES INCORPORATED<< 6.88 05/01/2014 400,000 583,600 -------------- FOOD & KINDRED PRODUCTS - 2.31% 440,000 B&G FOODS HOLDING CORPORATION 8.00 10/01/2011 455,400 425,000 DEAN FOODS COMPANY 6.63 05/15/2009 438,281 1,090,000 DOANE PET CARE COMPANY 9.75 05/15/2007 1,062,750 76,000 DOLE FOODS COMPANY INCORPORATED 8.63 05/01/2009 80,560 500,000 DOLE FOODS COMPANY INCORPORATED 7.25 06/15/2010 507,500 965,000 MRS. FIELDS FAMOUS BRANDS LLC<< 11.50 03/15/2011 916,750 130,000 REDDY ICE GROUP INCORPORATED 8.88 08/01/2011 145,418 3,075,000 WINN-DIXIE++<< 8.18 09/01/2024 2,152,500 5,759,159 -------------- FOOD STORES - 0.77% 250,000 DOANE PET CARE COMPANY 10.75 03/01/2010 264,375 221,000 DOMINO'S INCORPORATED 8.25 07/01/2011 232,050 800,000 STATER BROTHERS HOLDINGS<< 8.13 06/15/2012 778,000 650,000 UNO RESTAURANT HOLDINGS CORPORATION++ 10.00 02/15/2011 637,000 1,911,425 -------------- GENERAL MERCHANDISE STORES - 0.79% 1,460,000 ALH FINANCE LLC/ALH FINANCE CORPORATION<< 8.50 01/15/2013 1,365,100 600,000 JEAN COUTU GROUP INCORPORATED<< 7.63 08/01/2012 612,000 1,977,100 -------------- HEALTH SERVICES - 1.75% 355,000 AMR HOLDINGS COMPANY/EMCARE HOLDINGS COMPANY++ 10.00 02/15/2015 370,975 350,000 HEALTHSOUTH CORPORATION<< 6.88 06/15/2005 350,000 649,000 KINETIC CONCEPTS INCORPORATED 7.38 05/15/2013 668,470 1,050,000 MAGELLAN HEALTH SERVICES INCORPORATED SERIES A 9.38 11/15/2008 1,115,625 1,600,000 TEAM HEALTH INCORPORATED 9.00 04/01/2012 1,636,000 225,000 UNIVERSAL HOSPITAL SERVICES INCORPORATED 10.13 11/01/2011 227,250 4,368,320 -------------- HOLDING & OTHER INVESTMENT OFFICES - 4.71% 810,000 ALAMOSA DELAWARE INCORPORATED 8.50 01/31/2012 844,425 3,250,000 BF SAUL REIT 7.50 03/01/2014 3,363,750 2,000,000 FELCOR LODGING LIMITED PARTNERSHIP+/- 6.87 06/01/2011 2,055,000 1,735,000 PCA FINANCE CORPORATION 11.88 08/01/2009 1,388,000 1,155,000 PENHALL INTERNATIONAL CORPORATION 12.00 08/01/2006 1,143,450 2,875,000 SHERIDAN ACQUISITION CORPORATION 10.25 08/15/2011 2,946,875 11,741,500 -------------- HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.55% 935,000 LEVITZ HOME FURNISHINGS++ 12.50 11/01/2011 701,250 555,000 MOVIE GALLERY INCORPORATED++<< 11.00 05/01/2012 573,038 100,000 NORCRAFT FINANCE CORPORATION 9.00 11/01/2011 100,500 1,374,788 -------------- 30
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 3.83% $ 1,350,000 AZTAR CORPORATION 9.00% 08/15/2011 $ 1,461,375 676,000 HMH PROPERTIES INCORPORATED SERIES B 7.88 08/01/2008 687,830 500,000 LA QUINTA PROPERTIES 7.27 02/26/2007 516,250 300,000 MANDALAY RESORT GROUP 6.50 07/31/2009 305,250 325,000 MANDALAY RESORT GROUP 6.38 12/15/2011 326,625 350,000 MERISTAR HOSPITALITY CORPORATION 9.13 01/15/2011 357,875 1,450,000 MGM MIRAGE INCORPORATED 6.00 10/01/2009 1,448,187 25,000 MGM MIRAGE INCORPORATED 6.75 09/01/2012 25,563 1,800,000 STATION CASINOS INCORPORATED<< 6.00 04/01/2012 1,804,500 680,000 STATION CASINOS INCORPORATED<< 6.50 02/01/2014 688,500 989,910 TRUMP ENTERTAINMENT RESORTS HOLDINGS 8.50 06/01/2015 962,687 1,000,000 WYNN LAS VEGAS LLC CORPORATION++ 6.63 12/01/2014 960,000 9,544,642 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.92% 1,200,000 COLUMBUS MCKINNON CORPORATION NY 10.00 08/01/2010 1,284,000 1,725,000 FEDDERS NORTH AMERICA INCORPORATED 9.88 03/01/2014 1,017,750 2,301,750 -------------- JUSTICE, PUBLIC ORDER & SAFETY - 0.17% 430,000 CORRECTIONS CORPORATION OF AMERICA++ 6.25 03/15/2013 416,025 -------------- MACHINERY - 0.84% 400,000 JLG INDUSTRIES INCORPORATED 8.25 05/01/2008 420,000 1,605,000 JLG INDUSTRIES INCORPORATED<< 8.38 06/15/2012 1,661,175 2,081,175 -------------- MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.65% 375,000 HANGER ORTHOPEDIC GROUP<< 10.38 02/15/2009 350,625 1,250,000 ITRON INCORPORATED 7.75 05/15/2012 1,271,875 1,622,500 -------------- METAL MINING - 0.78% 365,000 NEENAH PAPER INCORPORATED++ 7.38 11/15/2014 353,594 1,440,000 USEC INCORPORATED 6.63 01/20/2006 1,432,800 200,000 WISE METALS GROUP LLC<< 10.25 05/15/2012 165,000 1,951,394 -------------- MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.97% 1,075,000 AFFINIA GROUP INCORPORATED++ 9.00 11/30/2014 881,500 2,465,000 BOMBARDIER INCORPORATED++ 6.75 05/01/2012 2,267,800 500,000 IMCO RECYCLING INCORPORATED 10.38 10/15/2010 555,000 685,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 739,800 2,260,000 OWENS-ILLINOIS INCORPORATED<< 7.50 05/15/2010 2,384,300 605,000 VISTEON CORPORATION<< 8.25 08/01/2010 559,625 7,388,025 -------------- MISCELLANEOUS RETAIL - 2.41% 660,000 AMERIGAS PARTNERS LP++ 7.25 05/20/2015 663,300 1,360,000 BLOCKBUSTER INCORPORATED++ 9.00 09/01/2012 1,278,400 2,300,000 DENNY'S CORPORATION/DENNY'S HOLDINGS INCORPORATED<< 10.00 10/01/2012 2,317,250 1,000,000 DILLARD'S INCORPORATED AR<< 7.38 06/01/2006 1,022,500 31
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE MISCELLANEOUS RETAIL (CONTINUED) $ 675,000 PEP BOYS-MANNY MOE & JACK SERIES MTNB 6.92% 07/07/2006 $ 675,844 35,000 REMINGTON ARMS COMPANY INCORPORATED<< 10.50 02/01/2011 33,425 5,990,719 -------------- MOTION PICTURES - 1.52% 1,350,000 CINEMARK INCORPORATED^ 9.75 03/15/2014 948,375 462,000 MARQUEE INCORPORATED+/-++ 7.52 08/15/2010 482,790 881,000 MARQUEE INCORPORATED++ 8.63 08/15/2012 920,645 1,410,000 MUZAK FINANCE CORPORATION LLC<< 10.00 02/15/2009 1,128,000 927,000 MUZAK FINANCE CORPORATION LLC (SUBORDINATED BOND)+/- 13.00 03/15/2010 317,498 3,797,308 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 2.24% 2,510,000 FORD MOTOR CREDIT COMPANY<< 7.25 10/25/2011 2,371,468 800,000 GENERAL MOTORS ACCEPTANCE CORPORATION<< 6.75 12/01/2014 678,543 2,310,000 H&E EQUIPMENT/FINANCE 11.13 06/15/2012 2,523,675 5,573,686 -------------- NONCLASSIFIABLE ESTABLISHMENTS - 0.32% 733,000 INTERLINE BRANDS INCORPORATED 11.50 05/15/2011 806,300 -------------- OIL & GAS EXTRACTION - 0.31% 255,000 CHESAPEAKE ENERGY CORPORATION++ 6.63 01/15/2016 263,606 20,000 DELTA PETROLEUM CORPORATION++ 7.00 04/01/2015 18,400 515,000 MARKWEST ENERGY++ 6.88 11/01/2014 491,825 773,831 -------------- PAPER & ALLIED PRODUCTS - 2.57% 725,000 ABITIBI-CONSOLIDATED INCORPORATED 6.95 04/01/2008 708,687 500,000 ABITIBI-CONSOLIDATED INCORPORATED 8.55 08/01/2010 506,250 1,000,000 BUCKEYE TECHNOLOGIES INCORPORATED 8.00 10/15/2010 950,000 1,050,000 CELLU TISSUE HOLDINGS 9.75 03/15/2010 1,057,875 600,000 CONSOLIDATED CONTAINER COMPANY^ 9.00 06/15/2009 468,000 350,000 DONOHUE FOREST PRODUCTS 7.63 05/15/2007 350,000 400,000 GRAHAM PACKAGING COMPANY++ 8.50 10/15/2012 402,000 985,000 GRAHAM PACKAGING COMPANY++ 9.88 10/15/2014 977,613 580,000 NEWPAGE CORPORATION++ 10.00 05/01/2012 566,950 415,000 TERPHANE HOLDING CORPORATION++ 12.50 06/15/2009 421,225 6,408,600 -------------- PERSONAL SERVICES - 1.70% 270,000 CHURCH & DWIGHT COMPANY INCORPORATED++ 6.00 12/15/2012 270,000 2,627,000 COINMACH CORPORATION 9.00 02/01/2010 2,692,675 350,000 SERVICE CORPORATION INTERNATIONAL 6.88 10/01/2007 367,500 910,000 SERVICE CORPORATION INTERNATIONAL 6.75 04/01/2016 900,900 4,231,075 -------------- PETROLEUM REFINING & RELATED INDUSTRIES - 0.35% 850,000 EL PASO CGP COMPANY<< 6.50 05/15/2006 854,250 17,000 GIANT INDUSTRIES INCORPORATED 11.00 05/15/2012 19,125 873,375 -------------- 32
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE PIPELINES, EXCEPT NATURAL GAS - 0.27% $ 220,000 HOLLY ENERGY PARTNERS LIMITED PARTNERSHIP++ 6.25% 03/01/2015 $ 210,100 450,000 TRANSMONTAIGNE INCORPORATED 9.13 06/01/2010 459,000 669,100 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 5.57% 545,000 AMERICAN COMMERCIAL LINES FINANCE++ 9.50 02/15/2015 562,712 765,000 AMERICAN GREETINGS CORPORATION 6.10 08/01/2028 782,212 935,000 AMERICAN MEDIA OPERATIONS SERIES B 10.25 05/01/2009 963,050 350,000 CADMUS COMMUNICATIONS CORPORATION 8.38 06/15/2014 355,687 911,000 DEX MEDIA WEST LLC/DEX MEDIA FINANCE COMPANY SERIES B 9.88 08/15/2013 1,040,818 2,225,000 HOUGHTON MIFFLIN COMPANY<< 9.88 02/01/2013 2,325,125 725,000 HOUGHTON MIFFLIN COMPANY^<< 11.49 10/15/2013 496,625 1,470,000 MAIL WELL I CORPORATION 9.63 03/15/2012 1,576,575 650,000 MEDIANEWS GROUP INCORPORATED 6.88 10/01/2013 630,500 198,592 MERRILL CORPORATION SERIES A+/- 12.00 05/01/2009 210,508 959,024 MERRILL CORPORATION SERIES B+/- 12.00 05/01/2009 1,016,565 2,304,000 PRIMEDIA INCORPORATED<< 7.63 04/01/2008 2,321,280 525,000 PRIMEDIA INCORPORATED 8.88 05/15/2011 551,250 825,000 PRIMEDIA INCORPORATED 8.00 05/15/2013 827,063 220,000 RIDDELL BELL HOLDINGS++ 8.38 10/01/2012 220,000 13,879,970 -------------- REAL ESTATE - 2.34% 1,315,000 FELCOR SUITES LIMITED PARTNERSHIP 7.63 10/01/2007 1,365,956 400,000 HOST MARRIOTT LIMITED PARTNERSHIP 7.13 11/01/2013 412,000 1,615,000 HOST MARRIOTT LIMITED PARTNERSHIP SERIES I 9.50 01/15/2007 1,719,975 405,000 HOST MARRIOTT LIMITED PARTNERSHIP SERIES M 7.00 08/15/2012 416,138 1,925,000 THORNBURG MORTGAGE INCORPORATED 8.00 05/15/2013 1,915,375 5,829,444 -------------- RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.83% 705,000 AEP INDUSTRIES INCORPORATED++ 7.88 03/15/2013 704,100 380,000 COOPER STANDARD AUTOMOTIVE++ 7.00 12/15/2012 354,350 1,000,000 GEO SUB CORPORATION 11.00 05/15/2012 1,005,000 2,063,450 -------------- TEXTILE MILL PRODUCTS - 0.53% 500,000 COLLINS & AIKMAN FLOOR COVER SERIES B 9.75 02/15/2010 525,000 725,000 INVISTA++ 9.25 05/01/2012 787,531 1,312,531 -------------- TOBACCO PRODUCTS - 0.31% 350,000 RJ REYNOLDS TOBACCO HOLDINGS INCORPORATED<< 7.25 06/01/2012 350,875 400,000 RJ REYNOLDS TOBACCO HOLDINGS INCORPORATED SERIES B 7.75 05/15/2006 408,500 759,375 -------------- TRANSPORTATION BY AIR - 0.33% 1,175,000 EVERGREEN INTERNATIONAL AVIATION INCORPORATED<< 12.00 05/15/2010 816,625 -------------- TRANSPORTATION EQUIPMENT - 1.98% 250,000 DELCO REMY INTERNATIONAL INCORPORATED 8.63 12/15/2007 241,250 100,000 DELCO REMY INTERNATIONAL INCORPORATED+/-<< 7.14 04/15/2009 99,500 33
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE TRANSPORTATION EQUIPMENT (CONTINUED) $ 1,365,000 DELPHI CORPORATION<< 6.55% 06/15/2006 $ 1,313,813 985,000 EAGLE-PICHER INDUSTRIES INCORPORATED^^<< 9.75 09/01/2013 659,950 660,000 FEDERAL-MOGUL CORPORATION^^ 8.80 04/15/2007 151,800 735,000 FEDERAL-MOGUL CORPORATION^^<< 7.50 01/15/2009 169,050 755,000 GENERAL MOTORS ACCEPTANCE CORPORATION<< 6.13 09/15/2006 752,364 200,000 GENERAL MOTORS ACCEPTANCE CORPORATION<< 5.13 05/09/2008 185,611 835,000 GREENBRIER COMPANIES INCORPORATED++ 8.38 05/15/2015 837,088 194,000 LAZYDAYS RV CENTER INCORPORATED 11.75 05/15/2012 198,850 293,000 TRW AUTOMOTIVE INCORPORATED 9.38 02/15/2013 316,440 4,925,716 -------------- TRANSPORTATION SERVICES - 0.03% 70,000 TRAILER BRIDGE INCORPORATED++ 9.25 11/15/2011 70,088 -------------- WATER TRANSPORTATION - 0.20% 500,000 OMI CORPORATION 7.63 12/01/2013 495,000 -------------- WHOLESALE TRADE-DURABLE GOODS - 0.66% 650,000 DURA OPERATING CORPORATION SERIES B<< 8.63 04/15/2012 585,000 295,000 OWENS & MINOR INCORPORATED 8.50 07/15/2011 314,913 900,000 VISTEON CORPORATION<< 7.00 03/10/2014 751,500 1,651,413 -------------- TOTAL CORPORATE BONDS & NOTES (COST $204,959,766) 204,315,970 -------------- FOREIGN CORPORATE BONDS - 1.88% 690,000 BRITISH SKY BROADCASTING GROUP PLC 8.20 07/15/2009 778,475 832,000 CROWN CORK & SEAL FINANCE PLC<< 7.00 12/15/2006 852,800 1,050,000 BOMBARDIER RECREATIONAL PRODUCTS INCORPORATED 8.38 12/15/2013 1,102,500 1,105,000 INTELSAT LIMITED 5.25 11/01/2008 1,002,787 875,000 MAAX CORPORATION 9.75 06/15/2012 789,688 140,000 ROGERS WIRELESS INCORPORATED<< 7.25 12/15/2012 149,800 TOTAL FOREIGN CORPORATE BONDS (COST $4,758,152) 4,676,020 -------------- TERM LOANS - 11.89% 1,822,279 24 HOUR FITNESS TERM LOAN B+++/- 6.25 07/01/2009 1,822,279 1,287,000 ALLIANCE LAUNDRY TERM LOAN+/-++ 5.12 01/25/2012 1,296,652 825,000 ARROW GROUP INDUSTRIES INCORPORATED TERM LOAN A+++/- 9.75 04/01/2010 825,000 550,000 ARROW GROUP INDUSTRIES INCORPORATED TERM LOAN B+++/- 14.25 10/01/2010 550,000 910,112 CARROLS CORPORATION TERM LOAN B+++/- 5.63 12/31/2010 910,868 1,771,688 CHARTER COMMUNICATIONS OPERATING LLC TERM LOAN B+++/- 6.44 04/07/2011 1,756,186 547,250 COLLINS & AIKMAN TRANCHE B-1 TERM LOAN+++/- 7.94 08/31/2011 500,734 377,150 CONSOLIDATED CONTAINER TERM LOAN+/-++ 6.68 12/15/2008 380,921 324,188 DEL LABORATORIES TERM LOAN B+/-++ 5.28 07/26/2011 321,756 1,500,000 DENNY'S CORPORATION 2ND LIEN TERM LOAN+/-++ 8.20 08/26/2010 1,538,745 870,625 DOANE PET CARE TERM LOAN+/-++ 7.41 11/03/2009 885,861 647,400 EL PASO CORPORATION TERM LOAN B+/-++ 5.88 11/22/2009 649,426 255,000 ESCANABA TIMBER LIMITED LIABILITY CORPORATION TERM LOAN+/-++ 5.92 05/02/2008 256,913 34
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE TERM LOANS (CONTINUED) $ 1,271,875 FIDELITY NATIONAL INFORMATION SOLUTIONS TRANCHE B TERM LOAN+++/- 4.84% 03/08/2013 $ 1,261,865 765,000 GOODYEAR TIRE AND RUBBER 2ND LIEN TERM LOAN+++/- 5.89 04/30/2010 760,028 1,250,000 GRAND VEHICLE WORKS 2ND LIEN TERM LOAN+/-++ 8.56 07/23/2011 1,100,000 145,000 HEALTHSOUTH SYNTHETIC LETTER OF CREDIT+++/- 2.87 03/17/2010 145,544 540,000 HEALTHSOUTH TERM LOAN+++/- 5.52 06/14/2007 538,920 418,950 INTELSAT TERM LOAN B+++/- 4.63 07/27/2011 423,487 1,000,000 JUNO LIGHTING INCORPORATED 2ND LIEN TERM LOAN+/-++ 8.35 05/21/2011 1,010,000 1,250,000 KERR-MCGEE CORPORATION TERM LOAN B+/-++ 5.79 05/19/2011 1,262,500 543,108 LEVI STRAUSS & COMPANY BANK DEBT+/-++ 10.10 09/29/2009 567,319 1,100,000 MAIDENFORM INCORPORATED 2ND LIEN TERM LOAN+/-++ 10.21 05/11/2011 1,108,250 1,275,000 NEW PAGE TERM LOAN+++/- 6.17 05/02/2011 1,278,188 1,850,000 PIEDMONT HAWTHORNE 2ND LIEN TERM LOAN+++/- 8.40 08/27/2011 1,905,500 140,000 RAYOVAC CORPORATION TERM LOAN B+++/- 5.14 02/07/2012 141,750 548,625 REGENCY GAS SERVICES 1ST LIEN TERM LOAN+++/- 5.73 06/01/2010 551,368 550,000 REGENCY GAS SERVICES 2ND LIEN TERM LOAN+++/- 8.78 12/01/2010 550,000 1,640,000 TOWER AUTOMOTIVE DIP TERM LOAN+++/- 6.19 02/25/2007 1,638,639 880,000 TROUT COAL 1ST LIEN TERM LOAN+++/- 5.96 03/17/2011 874,130 220,000 TROUT COAL 2ND LIEN TERM LOAN+++/- 8.50 03/17/2012 221,925 297,744 UNITED RENTALS 1ST LIEN TERM LOAN B+++/- 5.35 02/14/2011 301,374 417,200 VALOR TELECOMMUNICATIONS TERM LOAN B+++/- 5.07 02/14/2012 419,808 1,336,500 WASTE SERVICES INCORPORATED TRANCHE B+++/- 7.68 04/30/2011 1,346,524 510,000 WHITE BIRCH 1ST LIEN TERM LOAN+++/- 6.38 04/08/2012 510,000 TOTAL TERM LOANS (COST $29,653,968) 29,612,460 -------------- SHARES COMMON STOCKS - 0.10% HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.10% 21,176 TRUMP ENTERTAINMENT RESORTS HOLDINGS 253,265 -------------- TOTAL COMMON STOCKS (COST $306,429) 253,265 -------------- PREFERRED STOCKS - 0.80% 30,000 FIRST REPUBLIC BANK PREFERRED CAPITAL CORPORATION II(Y) 749,064 600 LEVITZ HOME FURNISHINGS(Y)++ 234,000 0 PAXSON COMMUNICATIONS CORPORATION(Y) 1,151 640 PORT TOWNSEND PAPER CORPORATION SERIES UNIT(Y) 620,800 15,050 REGENCY CENTERS CORPORATION(Y) 386,033 TOTAL PREFERRED STOCKS (COST $2,347,193) 1,991,048 -------------- COLLATERAL FOR SECURITIES LENDING - 15.55% COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.48% 1,184,991 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 1,184,991 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 15.07% $ 1,000,000 ATOMIUM FUNDING CORPORATION 3.11 07/11/2005 996,580 1,900,000 BLUE RIDGE ASSET FUNDING CORPORATION 3.05 06/01/2005 1,900,000 1,150,000 CONCORD MINUTEMEN CAPITAL COMPANY 3.07 06/08/2005 1,150,000 35
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 1,000,000 CORPORATE ASSET SECURITIZATION AUSTRALIA 3.04% 06/17/2005 $ 998,660 1,000,000 CREDIT SUISSE BANK NY 3.11 05/04/2006 1,000,000 25,000,000 DEUTSCHE BANK REPURCHASE AGREEMENT (MATURITY VALUE $25,002,132) 3.07 06/01/2005 25,000,000 1,500,000 KLIO II FUNDING CORPORATION 3.06 06/24/2005 1,497,105 1,000,000 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 999,820 1,000,000 LIQUID FUNDING LIMITED 3.06 12/19/2005 1,000,000 1,000,000 MORGAN STANLEY 3.14 01/13/2006 1,000,000 1,000,000 NEPTUNE FUNDING CORPORATION 3.04 06/06/2005 999,580 1,000,000 RANGER FUNDING CORPORATION 3.03 06/17/2005 998,660 37,540,405 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $38,725,395) 38,725,396 -------------- SHORT-TERM INVESTMENTS - 4.01% REPURCHASE AGREEMENTS - 4.01% 6,011,000 GOLDMAN SACHS & COMPANY - 102% COLLATERALIZED BY US GOVERNMENT SECURITIES (MATURITY VALUE $6,011,484) 2.90 06/01/2005 6,011,000 3,979,000 MORGAN STANLEY GROUP - 102% COLLATERALIZED BY US GOVERNMENT SECURITIES (MATURITY VALUE $3,979,325) 2.94 06/01/2005 3,979,000 9,990,000 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $9,990,000) 9,990,000 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $290,740,903)* 116.26% $ 289,564,189 OTHER ASSETS AND LIABILITIES, NET (16.26) (40,493,322) ------ -------------- TOTAL NET ASSETS 100.00% $ 249,070,867 ====== ============== ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. +/- VARIABLE RATE INVESTMENTS. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) ^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST OR PRINCIPAL PAYMENTS. ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. (Y) PAYMENT-IN-KIND (PIK) SECURITIES ARE SECURITIES IN WHICH THE ISSUER MAY MAKE INTEREST OR DIVIDEND PAYMENTS IN CASH OR ADDITIONAL SECURITIES. THESE ADDITIONAL SECURITIES GENERALLY HAVE THE SAME TERMS AS THE ORIGINAL HOLDINGS. * COST FOR FEDERAL INCOME TAX PURPOSES IS $290,808,197 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 5,284,821 GROSS UNREALIZED DEPRECIATION (6,528,829) ----------- NET UNREALIZED APPRECIATION (DEPRECIATION) $(1,244,008) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 36
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY SECURITIES - 0.02% FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.01% $ 4,293 FHLMC #C00922 8.00% 02/01/2030 $ 4,637 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.01% 7,379 GNMA #516121 7.50 12/15/2029 7,918 -------------- TOTAL AGENCY SECURITIES (COST $11,630) 12,555 -------------- ASSET-BACKED SECURITIES - 4.59% 411,566 ACCREDITED MORTGAGE LOAN TRUST SERIES 2005-1 CLASS A2A+/- 3.19 04/25/2035 411,616 292,938 CARRINGTON MORTGAGE LOAN TRUST SERIES 2005-NC1 CLASS A1A+/- 3.22 01/25/2035 292,956 285,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2005-C1 CLASS C1 5.50 03/24/2017 295,816 180,000 CNH EQUIPMENT TRUST SERIES 2005-A CLASS A3 4.02 04/15/2009 180,183 165,000 HYUNDAI AUTO RECEIVABLES TRUST SERIES 2004-A CLASS A3 2.97 05/15/2009 162,915 360,000 JOHN DEERE OWNER TRUST SERIES 2004-A CLASS A4 3.02 03/15/2011 352,651 615,000 ONYX ACCEPTANCE AUTO TRUST SERIES 2004-A CLASS A4 2.94 12/15/2010 604,979 375,000 WFS FINANCIAL OWNER TRUST SERIES 2005-2 CLASS A3 4.17 12/17/2009 376,468 500,000 WHOLE AUTO LOAN TRUST++ 5.60 03/15/2011 504,170 TOTAL ASSET-BACKED SECURITIES (COST $3,184,381) 3,181,754 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 4.31% 6,936,357 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2004-4 CLASS XP+/-(C) 0.76 07/10/2042 222,342 205,000 CAPITAL ONE AUTO FINANCE TRUST SERIES 2005-A CLASS A3 4.30 07/15/2009 205,594 290,000 CITIGROUP COMMERCIAL MORTGAGE TRUST SERIES 2004-C2 CLASS A3 4.38 10/15/2041 287,917 3,581,262 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 1998-C2 CLASS AX+/-(C) 0.90 11/11/2030 103,636 315,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 1999-C4 CLASS A2 7.39 12/15/2031 351,981 359,021 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 1997-C1 CLASS A3 6.87 07/15/2029 375,715 350,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION SERIES 2005-GG3 CLASS A2+/- 4.31 08/10/2042 349,946 3,329,970 MACH ONE TRUST COMMERCIAL MORTGAGE BACKED SERIES 2004-1 CLASS X+/-++(C) 1.63 05/28/2040 217,447 2,928,084 MORGAN STANLEY CAPITAL I SERIES 2004-RR2 CLASS X+/-++(C) 1.50 10/28/2033 130,885 436,152 RESIDENTIAL ACCREDITED LOANS INCORPORATED SERIES 2005-QA2 CLASS A1I+/- 4.96 02/25/2035 440,343 269,356 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 2000-C2 CLASS A2 7.46 07/18/2033 298,274 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $3,024,764) 2,984,080 -------------- CORPORATE BONDS & NOTES - 36.24% BROADCAST, RADIO & TV - 0.19% 130,000 GRUPO TELEVISA SA++ 6.63 03/18/2025 130,000 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.79% 280,000 D.R. HORTON INCORPORATED 5.63 09/15/2014 275,390 130,000 MDC HOLDINGS INCORPORATED 5.50 05/15/2013 132,326 145,000 PULTE HOMES INCORPORATED 5.20 02/15/2015 142,160 549,876 -------------- CHEMICALS & ALLIED PRODUCTS - 0.10% 70,000 ABBOTT LABORATORIES 5.63 07/01/2006 71,096 COMMUNICATIONS - 4.36% 120,000 AT&T WIRELESS SERVICES INCORPORATED 7.88 03/01/2011 139,261 165,000 BRITISH TELECOMMUNICATIONS PLC 8.38 12/15/2010 195,006 345,000 COMCAST CABLE COMMUNICATIONS HOLDINGS INCORPORATED 8.38 03/15/2013 422,620 37
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS (CONTINUED) $ 265,000 COX COMMUNICATIONS INCORPORATED 7.13% 10/01/2012 $ 295,488 145,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.75 06/15/2030 197,102 350,000 SPRINT CAPITAL CORPORATION 6.90 05/01/2019 398,065 345,000 TELECOM ITALIA CAPITAL SA 5.25 11/15/2013 349,310 295,000 TIME WARNER ENTERTAINMENT COMPANY LP 8.38 07/15/2033 390,726 165,000 VERIZON GLOBAL FUNDING CORPORATION 7.75 12/01/2030 210,525 300,000 VERIZON NEW ENGLAND INCORPORATED 6.50 09/15/2011 326,914 85,000 VODAFONE GROUP PLC 7.75 02/15/2010 96,952 3,021,969 -------------- DEPOSITORY INSTITUTIONS - 3.92% 365,000 BANK OF AMERICA CORPORATION 7.80 09/15/2016 454,285 810,000 CITIGROUP INCORPORATED 5.00 09/15/2014 825,836 135,000 HSBC HOLDINGS PLC 7.50 07/15/2009 151,234 140,000 JP MORGAN CHASE & COMPANY 5.25 05/30/2007 143,184 270,000 NATIONAL CITY BANK SERIES BKNT 6.20 12/15/2011 296,094 505,000 NATIONAL WESTMINSTER BANK PLC 7.38 10/01/2009 567,304 275,000 WASHINGTON MUTUAL BANK FA 5.13 01/15/2015 278,696 2,716,633 -------------- ELECTRIC, GAS & SANITARY SERVICES - 2.01% 155,000 AMEREN CORPORATION 4.26 05/15/2007 154,754 135,000 AMERICAN ELECTRIC POWER SERIES C 5.38 03/15/2010 139,536 160,000 CAROLINA POWER & LIGHT COMPANY 5.15 04/01/2015 164,892 165,000 DOMINION RESOURCES INCORPORATED SERIES A+/- 3.66 11/15/2006 163,871 155,000 DOMINION RESOURCES INCORPORATED SERIES E 6.75 12/15/2032 175,193 375,000 FPL GROUP CAPITAL INCORPORATED 4.09 02/16/2007 375,046 205,000 MIDAMERICAN ENERGY HOLDINGS 5.88 10/01/2012 217,088 1,390,380 -------------- FINANCIAL SERVICES - 0.71% 505,000 NATIONWIDE BUILDING SOCIETY++ 2.63 01/30/2007 494,267 -------------- FOOD & KINDRED PRODUCTS - 0.86% 260,000 CIA BRASILEIRA DE BEBIDAS 10.50 12/15/2011 317,850 185,000 CIA BRASILEIRA DE BEBIDAS 8.75 09/15/2013 213,213 60,000 GENERAL MILLS INCORPORATED 5.13 02/15/2007 61,084 592,147 -------------- GENERAL MERCHANDISE STORES - 0.30% 197,365 CVS CORPORATION++ 5.30 01/11/2027 204,194 -------------- HEALTH SERVICES - 0.41% 45,000 HUMANA INCORPORATED 6.30 08/01/2018 48,512 235,000 WELLPOINT INCORPORATED++ 5.00 12/15/2014 238,737 287,249 -------------- HOLDING & OTHER INVESTMENT OFFICES - 1.70% 105,000 ERP OPERATING LIMITED PARTNERSHIP 5.25 09/15/2014 106,746 560,000 JP MORGAN CHASE & COMPANY 6.63 03/15/2012 623,609 260,000 JP MORGAN CHASE & COMPANY 5.13 09/15/2014 264,828 175,000 SIMON PROPERTY GROUP LIMITED PARTNERSHIP 6.38 11/15/2007 182,977 1,178,160 -------------- 38
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE INSURANCE CARRIERS - 3.44% $ 210,000 AETNA INCORPORATED 7.88% 03/01/2011 $ 245,246 120,000 ASSURED GUARANTY US HOLDINGS INCORPORATED 7.00 06/01/2034 141,619 470,000 GE GLOBAL INSURANCE 7.75 06/15/2030 542,142 135,000 METLIFE INCORPORATED 5.38 12/15/2012 141,335 355,000 ODYSSEY RE HOLDINGS 7.65 11/01/2013 382,055 180,000 OHIO CASUALTY CORPORATION 7.30 06/15/2014 195,994 305,000 PRINCIPAL LIFE INCORPORATED FUNDING 3.20 04/01/2009 294,193 235,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 236,311 210,000 PRUDENTIAL FINANCIAL INCORPORATED SERIES MTN 3.75 05/01/2008 207,796 2,386,691 -------------- MISCELLANEOUS - 4.62% 3,018,719 TRAINS HY-2004-1+/-++ 8.21 08/01/2015 3,199,843 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 4.79% 220,000 AMERICAN GENERAL FINANCE CORPORATION SERIES MTNH 2.75 06/15/2008 209,294 145,000 AMERICAN GENERAL FINANCE CORPORATION SERIES MTNH 4.00 03/15/2011 139,714 90,000 CIT GROUP INCORPORATED SERIES MTN 4.75 12/15/2010 90,883 200,000 COUNTRYWIDE HOME LOANS INCORPORATED 3.25 05/21/2008 193,874 735,000 FORD MOTOR CREDIT COMPANY 7.00 10/01/2013 684,633 825,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTN 4.75 09/15/2014 834,469 900,000 HOUSEHOLD FINANCE CORPORATION 8.00 07/15/2010 1,039,333 125,000 INTERNATIONAL LEASE FINANCE CORPORATION 5.00 04/15/2010 126,617 3,318,817 -------------- OIL & GAS EXTRACTION - 0.83% 235,000 CONOCOPHILLIPS 8.75 05/25/2010 280,366 265,000 PEMEX PROJECT FUNDING MASTER TRUST 7.38 12/15/2014 296,932 577,298 -------------- OIL, GAS TRANSMISSION - 0.46% 320,000 SEMPRA ENERGY 4.62 05/17/2007 321,088 -------------- PETROLEUM REFINING & RELATED INDUSTRIES - 0.16% 95,000 KEYSPAN CORPORATION 7.63 11/15/2010 109,685 -------------- RAILROAD TRANSPORTATION - 0.79% 150,000 BURLINGTON NORTHERN SANTA FE CORPORATION 4.88 01/15/2015 151,652 110,000 CANADIAN NATIONAL RAILWAY COMPANY 6.38 10/15/2011 121,583 190,000 UNION PACIFIC CORPORATION 5.38 05/01/2014 197,256 80,000 UNION PACIFIC CORPORATION 4.88 01/15/2015 80,023 550,514 -------------- REAL ESTATE - 0.45% 55,000 DUKE REALTY LIMITED PARTNERSHIP 5.40 08/15/2014 56,778 185,000 LIBERTY PROPERTY LIMITED PARTNERSHIP 5.13 03/02/2015 184,446 65,000 SIMON PROPERTY GROUP LIMITED PARTNERSHIP 6.35 08/28/2012 70,647 311,871 -------------- REITS - 0.27% 75,000 CAMDEN PROPERTY TRUST 4.38 01/15/2010 73,779 115,000 GABLES REALTY LIMITED PARTNERSHIP 5.00 03/15/2010 114,291 188,070 -------------- 39
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 3.94% $ 730,000 CREDIT SUISSE FIRST BOSTON USA INCORPORATED 4.70% 06/01/2009 $ 739,261 315,000 GOLDMAN SACHS CAPITAL INCORPORATED 6.35 02/15/2034 337,116 260,000 GOLDMAN SACHS GROUP INCORPORATED 6.60 01/15/2012 287,582 247,000 JEFFERIES GROUP INCORPORATED 7.75 03/15/2012 283,476 330,000 MERRILL LYNCH & COMPANY 5.00 01/15/2015 336,133 755,000 MORGAN STANLEY 4.75 04/01/2014 743,366 2,726,934 -------------- TRANSPORTATION EQUIPMENT - 0.95% 205,000 DAIMLERCHRYSLER NA HOLDING CORPORATION+/- 3.20 03/07/2007 203,759 350,000 GENERAL MOTORS ACCEPTANCE CORPORATION 8.00 11/01/2031 292,783 115,000 NORTHROP GRUMMAN CORPORATION 4.08 11/16/2006 114,856 44,000 RAYTHEON COMPANY 6.75 08/15/2007 46,318 657,716 -------------- WATER TRANSPORTATION - 0.19% 130,000 UNITED UTILITIES 5.38 02/01/2019 130,854 -------------- TOTAL CORPORATE BONDS & NOTES (COST $24,884,663) 25,115,352 -------------- FOREIGN GOVERNMENT BONDS@ - 8.50% 1,650,000 DEUTSCHE BUNDESREPUBLIK (EURO) 4.50 01/04/2013 2,231,823 310,000 MALAYSIA GOVERNMENT INTERNATIONAL BOND 8.75 06/01/2009 359,606 1,750,000 NEW ZEALAND GOVERNMENT SERIES 1111 (NZD) 6.00 11/15/2011 1,249,676 335,000 REPUBLIC OF SOUTH AFRICA 6.50 06/02/2014 371,012 600,000 UNITED KINGDOM GILT BOND (BRITISH POUND) 5.00 03/07/2008 1,112,387 100,000 UNITED MEXICAN STATES 6.63 03/03/2015 109,400 430,000 UNITED MEXICAN STATES SERIES MTNA 6.75 09/27/2034 454,295 TOTAL FOREIGN GOVERNMENT BONDS (COST $5,138,733) 5,888,199 -------------- US TREASURY SECURITIES - 21.73% US TREASURY BONDS - 4.03% 250,000 US TREASURY BOND 6.00 02/15/2026 303,701 2,150,000 US TREASURY BOND 5.38 02/15/2031 2,489,969 2,793,670 -------------- US TREASURY NOTES - 17.70% 8,000,000 US TREASURY NOTE 6.88 05/15/2006 8,259,688 250,000 US TREASURY NOTE 3.00 11/15/2007 246,494 750,000 US TREASURY NOTE 3.50 12/15/2009 742,354 1,970,000 US TREASURY NOTE 4.00 04/15/2010 1,990,315 110,000 US TREASURY NOTE 4.25 08/15/2013 112,466 917,000 US TREASURY NOTE 4.00 02/15/2015 914,851 12,266,168 -------------- TOTAL US TREASURY SECURITIES (COST $14,838,576) 15,059,838 -------------- 40
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- SHARES SECURITY NAME VALUE SHORT-TERM INVESTMENTS - 19.48% 13,497,863 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 13,497,863 -------------- Total Short-Term Investments (Cost $13,497,863) 13,497,863 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $64,580,610)* 94.87% $ 65,739,641 OTHER ASSETS AND LIABILITIES, NET 5.13 3,551,841 ------ -------------- Total Net Assets 100.00% $ 69,291,482 ====== ============== +/- VARIABLE RATE INVESTMENTS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. (C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES. INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED TIMING OF FUTURE CASH FLOWS. @ FOREIGN BOND PRINCIPAL IS DENOMINATED IN US DOLLARS EXCEPT AS INDICATED PARENTHETICALLY. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $13,497,863. * COST FOR FEDERAL INCOME TAX PURPOSES IS $64,844,475 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $1,268,494 GROSS UNREALIZED DEPRECIATION (373,328) ---------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 895,166 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INFLATION-PROTECTED BOND FUND --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOREIGN CORPORATE BONDS - 0.98% $ 1,050,000 PREFERRED TERM SECURITIES XIV CLASS A-2+/-++ 3.63% 06/24/2034 $ 1,055,775 Total Foreign Corporate Bonds (Cost $1,050,000) 1,055,775 -------------- AGENCY SECURITIES - 1.85% FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.85% 2,000,000 FNMA+/- 4.15 02/17/2009 1,997,580 -------------- Total Agency Securities (Cost $2,000,000) 1,997,580 -------------- US TREASURY SECURITIES - 93.98% US TREASURY BONDS - 26.73% 1,750,000 US TREASURY BOND - INFLATION PROTECTED& 2.38 01/15/2025 1,969,222 12,230,000 US TREASURY BOND - INFLATION PROTECTED& 3.63 04/15/2028 19,663,091 4,325,000 US TREASURY BOND - INFLATION PROTECTED& 3.88 04/15/2029 7,157,999 28,790,312 -------------- US TREASURY NOTES - 67.25% 1,210,000 US TREASURY NOTE - INFLATION PROTECTED& 3.38 01/15/2007 1,535,798 8,500,000 US TREASURY NOTE - INFLATION PROTECTED& 3.63 01/15/2008 10,841,707 5,300,000 US TREASURY NOTE - INFLATION PROTECTED& 4.25 01/15/2010 6,907,684 14,300,000 US TREASURY NOTE - INFLATION PROTECTED& 0.88 04/15/2010 14,304,658 5,000,000 US TREASURY NOTE - INFLATION PROTECTED& 3.50 01/15/2011 6,203,215 6,820,000 US TREASURY NOTE - INFLATION PROTECTED& 2.00 01/15/2014 7,381,162 24,940,000 US TREASURY NOTE - INFLATION PROTECTED& 1.63 01/15/2015 25,260,989 72,435,213 -------------- Total Us Treasury Securities (Cost $100,555,645) 101,225,525 -------------- SHORT-TERM INVESTMENTS - 2.99% 3,217,902 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 3,217,902 -------------- Total Short-term Investments (Cost $3,217,902) 3,217,902 -------------- Total Investments in Securities (Cost $106,823,547)* 99.80% $ 107,496,782 OTHER ASSETS AND LIABILITIES, NET 0.20 218,416 ------ -------------- Total Net Assets 100.00% $ 107,715,198 ====== ============== ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. +/- VARIABLE RATE INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $3,217,902. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. & U.S. TREASURY INFLATION-PROTECTION SECURITIES (TIPS) ARE SECURITIES IN WHICH THE PRINCIPAL AMOUNT IS ADJUSTED FOR INFLATION AND THE SEMI-ANNUAL INTEREST PAYMENTS EQUAL A FIXED PERCENTAGE OF THE INFLATION-ADJUSTED PRINCIPAL AMOUNT. * COST FOR FEDERAL INCOME TAX PURPOSES IS $106,823,547 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $919,190 GROSS UNREALIZED DEPRECIATION (245,955) -------- NET UNREALIZED APPRECIATION (DEPRECIATION) $673,235 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 42
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE GOVERNMENT INCOME FUND --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES - 0.79% $ 4,587,784 CARRINGTON MORTGAGE LOAN TRUST SERIES 2005-NC1 CLASS A1A+/- 3.22% 01/25/2035 $ 4,588,077 Total Asset-Backed Securities (Cost $4,587,352) 4,588,077 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 2.91% 5,700,000 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 1999-CG2 CLASS A1B 7.30 06/10/2032 6,307,553 4,750,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 1999-C4 CLASS A2 7.39 12/15/2031 5,307,657 5,026,297 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 1997-C1 CLASS A3 6.87 07/15/2029 5,260,012 Total Collateralized Mortgage Obligations (Cost $17,411,910) 16,875,222 -------------- CORPORATE BONDS & NOTES - 0.25% HOLDING & OTHER INVESTMENT OFFICES - 0.25% 1,500,000 PREFERRED TERM SECURITIES XIII+++/- 3.76 03/24/2034 1,434,375 -------------- Total Corporate Bonds & Notes (COST $1,500,000) 1,434,375 -------------- FOREIGN CORPORATE BONDS - 1.27% 7,350,000 PREFERRED TERM SECURITIES XIV CLASS A-2+++/- 3.63 06/24/2034 7,390,425 Total Foreign Corporate Bonds (Cost $7,350,000) 7,390,425 -------------- AGENCY SECURITIES - 61.06% FEDERAL HOME LOAN BANK - 2.62% 7,495,000 FHLB<< 4.13 04/18/2008 7,547,607 7,500,000 FHLB SERIES 2807<< 4.88 02/15/2007 7,630,665 15,178,272 -------------- FEDERAL HOME LOAN MORTGAGE CORPORATION - 22.50% 21,000,000 FHLMC<< 4.00 09/22/2009 20,819,400 4,542,672 FHLMC #A11433 5.00 08/01/2033 4,543,382 8,942,921 FHLMC #A23680 5.00 06/01/2034 8,939,217 6,126,192 FHLMC #B13066<< 4.00 03/01/2014 6,079,253 1,814,321 FHLMC #B13579 5.00 04/01/2019 1,836,317 1,633,075 FHLMC #B13580 5.00 04/01/2019 1,652,874 3,557,709 FHLMC #B15194 5.00 06/01/2019 3,600,842 11,289,445 FHLMC #B16055 5.50 09/01/2019 11,600,737 4,292,550 FHLMC #B16884 5.00 10/01/2019 4,344,591 9,871,917 FHLMC #B17855 5.00 02/01/2020 9,992,848 1,624,664 FHLMC #C01345 7.00 04/01/2032 1,712,996 319,165 FHLMC #C31808 7.50 10/01/2029 342,663 1,729,129 FHLMC #C59553 7.50 11/01/2031 1,854,769 2,406,678 FHLMC #C65576 7.50 04/01/2032 2,579,621 7,949,272 FHLMC #C90837<< 5.50 06/01/2024 8,122,341 57,116 FHLMC #E00228 6.50 07/01/2008 59,230 3,683,502 FHLMC #E00659<< 6.00 04/01/2014 3,820,869 5,062,053 FHLMC #E96459 5.00 05/01/2018 5,124,891 144,682 FHLMC #G00683 8.50 12/01/2025 158,230 11,254,000 FHLMC SERIES 2861 CLASS QC 5.50 01/15/2029 11,596,753 13,527,000 FHLMC SERIES 2861 CLASS QD 5.50 12/15/2031 13,968,229 7,519,000 FHLMC SERIES 2867 CLASS LE 5.50 02/15/2030 7,721,402 130,471,455 -------------- 43
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE GOVERNMENT INCOME FUND --------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION - 35.94% $ 10,000,000 FNMA<< 3.10% 04/04/2007 $ 9,874,260 8,000,000 FNMA<< 3.13 12/15/2007 7,852,848 3,055,000 FNMA<< 3.25 01/15/2008 3,013,538 5,600,000 FNMA 5.75 02/15/2008 5,864,292 5,000,000 FNMA<< 6.00 05/15/2011 5,481,795 6,000,000 FNMA<< 5.38 11/15/2011 6,397,662 51,726 FNMA #190705 6.50 03/01/2009 53,584 209,549 FNMA #252260 6.00 02/01/2014 217,374 227,817 FNMA #253266 8.00 05/01/2030 245,606 1,185,408 FNMA #253951 7.50 09/01/2031 1,269,154 1,149,788 FNMA #254218 7.00 02/01/2032 1,214,502 494,040 FNMA #254223 7.50 02/01/2032 528,943 3,481,959 FNMA #254372<< 6.00 07/01/2017 3,609,736 3,342,895 FNMA #254480<< 7.00 10/01/2032 3,530,152 3,957,394 FNMA #254688<< 5.50 03/01/2023 4,041,699 1,842,903 FNMA #254805<< 5.00 06/01/2013 1,881,193 5,790,069 FNMA #254831<< 5.00 08/01/2023 5,833,349 4,791,821 FNMA #313689<< 6.96 08/01/2007 5,016,841 14,161,866 FNMA #313864 6.69 12/01/2007 14,784,426 11,322,574 FNMA #357464 4.50 12/01/2018 11,295,581 255,962 FNMA #417768 6.50 03/01/2028 266,844 412,609 FNMA #545026 6.50 06/01/2016 430,669 117,921 FNMA #545814 6.50 08/01/2032 122,685 19,391,919 FNMA #555710 4.50 08/01/2018 19,345,689 1,117,037 FNMA #584829 6.00 05/01/2016 1,158,018 1,514,218 FNMA #607067 6.00 11/01/2016 1,569,770 3,305,593 FNMA #672952<< 5.50 12/01/2017 3,397,574 3,371,408 FNMA #699853<< 5.50 04/01/2018 3,464,444 499,425 FNMA #70765 9.00 03/01/2021 547,204 10,901,130 FNMA #758787<< 5.00 12/01/2018 11,035,526 17,480,000 FNMA GRANTOR TRUST SERIES 2001-T11 CLASS B 5.50 09/25/2011 18,644,327 15,275,044 FNMA GRANTOR TRUST SERIES 2002-T11 CLASS B 5.34 04/25/2012 16,170,936 15,000,000 FNMA GRANTOR TRUST SERIES 2003-T1 CLASS B 4.49 11/25/2012 15,124,256 25,000,000 FNMA SERIES 2005-12 CLASS EA<< 4.50 09/25/2014 25,120,585 208,405,062 -------------- Total Agency Securities (Cost $351,847,588) 354,054,789 -------------- US TREASURY SECURITIES - 25.78% US TREASURY BONDS - 1.70% 3,000,000 US TREASURY BOND<< 12.00 08/15/2013 3,748,008 5,000,000 US TREASURY BOND<< 6.00 02/15/2026 6,074,025 9,822,033 -------------- US TREASURY NOTES - 24.08% 3,500,000 US TREASURY NOTE<< 2.25 04/30/2006 3,464,181 14,000,000 US TREASURY NOTE<< 2.00 05/15/2006 13,818,980 44
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE GOVERNMENT INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE US TREASURY NOTES (CONTINUED) $ 5,250,000 US TREASURY NOTE<< 6.50% 10/15/2006 $ 5,457,947 12,700,000 US TREASURY NOTE<< 3.13 05/15/2007 12,590,856 3,000,000 US TREASURY NOTE<< 6.63 05/15/2007 3,170,976 19,500,000 US TREASURY NOTE<< 3.00 11/15/2007 19,226,552 26,000,000 US TREASURY NOTE<< 3.38 02/15/2008 25,822,264 28,800,000 US TREASURY NOTE<< 3.63 01/15/2010 28,660,493 27,500,000 US TREASURY NOTE<< 4.00 02/15/2015 27,435,540 139,647,789 -------------- Total Us Treasury Securities (Cost $148,174,169) 149,468,822 -------------- COLLATERAL FOR SECURITIES LENDING - 45.30% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.86% 3,179,997 EVERGREEN MONEY MARKET FUND 3,179,997 1,812,813 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 1,812,813 4,992,810 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 44.44% $ 7,649,992 APRECO LLC 3.10 07/06/2005 7,627,119 6,842,993 ATLANTIC ASSET SECURITIZATION CORPORATION 3.04 06/13/2005 6,836,082 7,561,992 ATOMIUM FUNDING CORPORATION 3.14 07/14/2005 7,534,164 11,999,988 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 11,999,988 999,999 BEAR, STEARNS & COMPANY REPURCHASE AGREEMENT (MATURITY VALUE $1,000,085) 3.08 06/01/2005 999,999 6,360,994 BELFORD US CAPITAL COMPANY 3.08 06/21/2005 6,360,930 1,907,998 BETA FINANCE INCORPORATED 3.13 06/02/2006 1,908,361 11,999,988 BLUE SPICE LLC 3.06 06/01/2005 11,999,988 2,229,998 BNP PARIBAS CANADA 3.21 09/13/2005 2,208,857 3,179,997 CC USA INCORPORATED 3.21 07/05/2005 3,180,506 2,999,997 CEDAR SPRINGS CAPITAL COMPANY LLC 3.07 06/17/2005 2,995,977 4,947,995 CEDAR SPRINGS CAPITAL COMPANY LLC 3.04 06/27/2005 4,937,208 3,999,996 CEDAR SPRINGS CAPITAL COMPANY LLC 3.22 08/11/2005 3,974,676 10,999,989 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 10,981,509 4,999,995 CREDIT SUISSE BANK NY 3.11 05/04/2006 4,999,995 1,907,998 DEUTSCHE BANK NEW YORK 3.22 11/10/2005 1,901,435 899,999 DNB NOR BANK ASA 3.05 06/15/2005 898,946 999,999 DNB NOR BANK ASA 3.34 09/30/2005 988,769 599,999 EDISON ASSET SECURITIZATION LLC 3.27 09/12/2005 594,371 500,000 FAIRWAY FINANCE CORPORATION 3.24 09/12/2005 495,309 899,999 FIVE FINANCE INCORPORATED 3.08 07/05/2005 897,380 2,272,998 GEORGE STREET FINANCE LLC 3.06 06/02/2005 2,272,816 9,999,990 GEORGE STREET FINANCE LLC 3.04 06/10/2005 9,992,490 6,999,993 IRISH LIFE & PERMANENT PLC 3.05 07/08/2005 6,977,803 2,543,997 K2 USA LLC 3.12 07/24/2006 2,544,328 11,999,988 KLIO FUNDING CORPORATION 3.06 06/27/2005 11,973,828 11,999,988 KLIO FUNDING CORPORATION 3.07 06/29/2005 11,971,788 3,179,997 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.26 12/23/2005 3,182,064 9,999,990 LEXINGTON PARKER CAPITAL CORPORATION 3.05 06/06/2005 9,995,790 45
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE GOVERNMENT INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 2,976,997 LEXINGTON PARKER CAPITAL CORPORATION 3.22% 08/08/2005 $ 2,958,956 584,999 LIBERTY STREET FUNDING CORPORATION 3.12 07/06/2005 583,250 4,451,996 LIQUID FUNDING LIMITED 3.07 06/01/2005 4,451,996 7,499,993 MORGAN STANLEY 3.14 01/13/2006 7,499,993 1,999,998 MORGAN STANLEY 3.14 02/03/2006 1,999,998 2,543,997 MORGAN STANLEY 3.09 08/13/2010 2,544,023 6,360,994 NATEXIS BANQUE NEW YORK 3.16 06/09/2005 6,360,039 2,999,997 NEPTUNE FUNDING CORPORATION 3.07 06/01/2005 2,999,997 5,522,994 NEPTUNE FUNDING CORPORATION 3.03 06/13/2005 5,517,416 4,409,996 NEPTUNE FUNDING CORPORATION 3.10 07/11/2005 4,394,913 2,579,997 NIEUW AMSTERDAM RECEIVABLES CORPORATION 3.05 06/22/2005 2,575,457 6,360,994 RACERS TRUST 3.09 05/20/2005 6,362,075 1,899,998 SCALDIS CAPITAL LIMITED 3.28 09/21/2005 1,880,618 6,360,994 SECURITY LIFE OF DENVER 3.19 06/03/2005 6,360,994 4,999,995 SEDNA FINANCE INCORPORATED 3.22 08/15/2005 4,966,545 9,999,990 SOCIETE GENERALE 3.04 06/30/2005 9,999,990 7,999,992 SOLITAIRE FUNDING LLC 3.14 07/21/2005 7,965,192 3,499,997 SPINTAB (SWEDMORTGAGE) AB 3.06 06/30/2005 3,491,492 6,360,994 TANGO FINANCE CORPORATION 3.12 10/25/2006 6,360,930 11,999,988 TOTAL CAPITAL S.A. 3.07 06/01/2005 11,999,988 3,179,997 TRAVELERS INSURANCE COMPANY 3.17 02/10/2006 3,179,934 257,686,272 -------------- Total Collateral for Securities Lending (Cost $262,679,082) 262,679,082 -------------- SHORT-TERM INVESTMENTS - 7.53% MUTUAL FUND - 7.49% 43,425,275 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 43,425,275 -------------- US TREASURY BILLS - 0.04% 220,000 US TREASURY BILL^oo 2.69 06/09/2005 219,873 -------------- Total Short-Term Investments (Cost $43,645,144) 43,645,148 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $837,195,244)* 144.89% $ 840,136,940 OTHER ASSETS AND LIABILITIES, NET (44.89) (260,277,672) ------- -------------- Total Net Assets 100.00% $ 579,859,268 ======= ============== ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. +/- VARIABLE RATE INVESTMENTS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $43,425,275. oo SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. * COST FOR FEDERAL INCOME TAX PURPOSES IS $839,541,530 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $4,543,787 GROSS UNREALIZED DEPRECIATION (3,948,377) ---------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 595,410 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 46
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT DURATION GOVERNMENT BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY NOTES - INTEREST BEARING - 2.66% $ 3,420,000 FHLB<< 3.13% 11/15/2006 $ 3,390,547 3,120,000 FHLB 3.63 01/15/2008 3,104,263 4,850,000 FHLB SERIES 7Y07 3.50 11/15/2007 4,815,657 4,335,000 FNMA 2.88 04/26/2007 4,260,212 Total Agency Notes - Interest Bearing (Cost $15,633,626) 15,570,679 -------------- AGENCY SECURITIES - 69.78% FEDERAL HOME LOAN MORTGAGE CORPORATION - 33.01% 2,982,723 FHLMC SERIES 1594 CLASS H 6.00 10/15/2008 3,034,383 33,927 FHLMC SERIES 1662 CLASS C 6.25 06/15/2008 33,885 3,368,229 FHLMC SERIES 2509 CLASS TU 5.50 10/15/2009 3,453,438 8,101,563 FHLMC SERIES 2687 CLASS PW 5.50 07/15/2009 8,342,469 25,119,000 FHLMC SERIES 2695 CLASS GU 3.50 11/15/2022 24,763,569 43,696,724 FHLMC SERIES 2705 CLASS LA<< 4.50 02/15/2023 44,017,379 26,625,800 FHLMC SERIES 2707 CLASS ON 4.00 07/15/2014 26,534,511 64,464,221 FHLMC SERIES 2727 CLASS PW<< 3.57 06/15/2029 63,574,589 18,918,457 FHLMC SERIES 2841 CLASS Y 5.50 07/15/2027 19,339,048 193,093,271 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 36.77% 21,549,000 FNMA<< 3.25 07/12/2006 21,446,276 36,039,000 FNMA 2.20 12/04/2006 35,226,104 10,500,000 FNMA<< 5.00 01/15/2007 10,700,487 52,245,000 FNMA<< 3.10 04/04/2007 51,588,071 8,960,000 FNMA<< 3.13 12/15/2007 8,795,190 2,544,039 FNMA #254688<< 5.50 03/01/2023 2,598,235 6,201,825 FNMA #380662 6.19 08/01/2008 6,491,239 1,661,102 FNMA #672952<< 5.50 12/01/2017 1,707,324 1,135,490 FNMA #699853 5.50 04/01/2018 1,166,825 10,950,000 FNMA SERIES 1993-188 CLASS K 6.00 10/25/2008 11,271,761 2,499,305 FNMA SERIES 1993-240 CLASS PC 6.25 07/25/2013 2,527,466 4,561,510 FNMA SERIES 2002-70 CLASS QU 5.50 05/25/2010 4,674,050 11,000,000 FNMA SERIES 2005-12 CLASS EA 4.50 09/25/2014 11,053,058 45,783,400 FNMA SERIES 2005-51 CLASS KC 4.50 01/25/2025 45,879,545 215,125,631 -------------- Total Agency Securities (Cost $410,064,690) 408,218,902 -------------- ASSET-BACKED SECURITIES - 4.89% 1,676,633 BMW VEHICLE OWNER TRUST SERIES 2003-A CLASS A3 1.94 02/25/2007 1,670,327 2,000,000 CHASE MANHATTAN AUTO OWNER TRUST SERIES 2004-A CLASS A3 2.08 05/15/2008 1,974,165 4,015,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2000-A1 CLASS A1<< 6.90 10/15/2007 4,063,451 183,668 FORD CREDIT AUTO OWNER TRUST SERIES 2003-A CLASS A3A 2.20 07/17/2006 183,373 5,875,000 FORD CREDIT AUTO OWNER TRUST SERIES 2005-B CLASS A3 4.17 01/15/2009 5,891,226 1,162,277 HONDA AUTO RECEIVABLES OWNER TRUST SERIES 2003-1 CLASS A3 1.92 11/20/2006 1,158,889 4,700,000 NATIONAL CITY AUTO RECEIVABLES TRUST SERIES 2004-A CLASS A3 2.11 07/15/2008 4,636,512 2,000,000 ONYX ACCEPTANCE AUTO TRUST SERIES 2004-A CLASS A3 2.19 03/17/2008 1,986,284 874,380 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2004-2 CLASS AF1+/- 3.29 07/25/2034 874,642 605,710 TOYOTA AUTO RECEIVABLES OWNER TRUST SERIES 2002-C CLASS A3 2.65 11/15/2006 604,956 47
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT DURATION GOVERNMENT BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES (CONTINUED) $ 900,000 VOLKSWAGEN AUTO LOAN ENHANCED TRUST SERIES 2003-1 CLASS A4 1.93% 01/20/2010 $ 875,923 4,700,000 WORLD OMNI AUTO RECEIVABLES TRUST SERIES 2003-B CLASS A3 2.20 01/15/2008 4,657,233 Total Asset-Backed Securities (Cost $28,882,625) 28,576,981 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 11.34% 326,289 CHASE FUNDING MORTGAGE LOAN SERIES 2001-3 CLASS 2A1+/- 3.34 10/25/2031 326,455 1,800,000 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 1999-CG2 CLASS A1B 7.30 06/10/2032 1,991,859 17,866,474 FHLMC SERIES 2542 CLASS YL 4.50 07/15/2016 17,896,828 19,614,000 FHLMC SERIES 2836 CLASS DG 5.00 06/15/2016 19,834,267 1,400,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 1999-C4 CLASS A2 7.39 12/15/2031 1,564,362 14,799,534 FNMA SERIES 2003-120 CLASS GU 4.50 12/25/2013 14,898,144 7,942,601 FNMA SERIES 2003-22 CLASS ML 4.50 03/25/2013 7,973,509 1,795,106 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 1997-C1 CLASS A3 6.87 07/15/2029 1,878,576 Total Collateralized Mortgage Obligations (Cost $66,413,467) 66,364,000 -------------- US TREASURY SECURITIES - 13.39% US TREASURY NOTES - 13.39% 10,655,000 US TREASURY NOTE<< 2.50 10/31/2006 10,504,743 206,000 US TREASURY NOTE<< 3.63 04/30/2007 206,097 24,613,000 US TREASURY NOTE 3.50 05/31/2007 24,566,851 8,400,000 US TREASURY NOTE<< 2.75 08/15/2007 8,248,078 15,250,000 US TREASURY NOTE<< 3.00 11/15/2007 15,036,149 19,935,000 US TREASURY NOTE<< 3.38 02/15/2008 19,798,724 78,360,642 -------------- Total US Treasury Securities (Cost $78,315,867) 78,360,642 -------------- REPURCHASE AGREEMENTS - 3.53% 7,592,000 COUNTRYWIDE SECURITIES - 102% COLLATERALIZED BY US GOVERNMENT SECURITIES (MATURITY VALUE $7,592,652) 3.09 06/01/2005 7,592,000 13,050,000 GREENWICH CAPITAL MARKETS INCORPORATED - 102% COLLATERALIZED BY US GOVERNMENT SECURITIES (MATURITY VALUE $13,051,124) 3.10 06/01/2005 13,050,000 Total Repurchase Agreements (Cost $20,642,000) 20,642,000 -------------- COLLATERAL FOR SECURITIES LENDING - 45.80% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.49% 561,000 EVERGREEN MONEY MARKET FUND 561,000 2,287,224 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,287,224 2,848,224 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 45.31% $ 5,000,000 ALLIANCE & LEICESTER PLC 3.29 09/19/2005 4,949,900 5,000,000 AMERICAN GENERAL FINANCE 3.09 06/15/2006 5,000,250 935,000 AMSTEL FUNDING CORPORATION 3.12 07/15/2005 931,484 5,000,000 ATLANTIC ASSET SECURITIZATION CORPORATION 3.07 06/22/2005 4,991,200 9,707,000 ATLANTIS ONE FUNDING CORPORATION 3.32 10/17/2005 9,582,750 48
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT DURATION GOVERNMENT BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 14,000,000 BANCO BILBAO VIZCAYA ARGENTARIA 3.07% 06/01/2005 $ 14,000,000 8,000,000 BEAR, STEARNS & COMPANY REPURCHASE AGREEMENT, (MATURITY VALUE $8,000,684) 3.08 06/01/2005 8,000,000 1,122,000 BELFORD US CAPITAL COMPANY 3.08 06/21/2005 1,121,989 336,000 BETA FINANCE INCORPORATED 3.13 06/02/2006 336,064 14,000,000 BLUE SPICE LLC 3.06 06/01/2005 14,000,000 561,000 CC USA INCORPORATED 3.21 07/05/2005 561,090 12,000,000 CEDAR SPRINGS CAPITAL COMPANY LLC 3.13 07/14/2005 11,955,840 2,000,000 CEDAR SPRINGS CAPITAL COMPANY LLC 3.21 08/02/2005 1,988,940 5,000,000 CONCORD MINUTEMEN CAPITAL COMPANY 3.07 06/08/2005 5,000,000 14,000,000 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 13,976,480 10,000,000 CREDIT SUISSE BANK NY 3.11 05/04/2006 10,000,000 336,000 DEUTSCHE BANK NEW YORK 3.22 11/10/2005 334,844 750,000 EIFFEL FUNDING LLC 3.07 06/28/2005 748,305 2,500,000 EUREKA SECURITIZATION INCORPORATED 3.00 06/06/2005 2,498,950 10,000,000 FIVE FINANCE INCORPORATED 3.05 06/15/2005 9,988,300 13,000,000 GEORGE STREET FINANCE LLC 3.06 06/02/2005 12,998,960 7,000,000 IRISH LIFE & PERMANENT PLC 3.05 07/08/2005 6,977,810 449,000 K2 USA LLC 3.12 07/24/2006 449,058 14,000,000 KLIO FUNDING CORPORATION 3.06 06/27/2005 13,969,480 8,365,000 LEGACY CAPITAL CORPORATION LLC 3.23 08/23/2005 8,303,099 4,000,000 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.12 08/16/2005 4,000,000 561,000 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.26 12/23/2005 561,365 10,000,000 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 9,998,200 785,000 LIQUID FUNDING LIMITED 3.07 06/01/2005 785,000 3,000,000 LIQUID FUNDING LIMITED 3.06 12/19/2005 3,000,000 10,000,000 MORGAN STANLEY 3.14 02/03/2006 10,000,000 449,000 MORGAN STANLEY 3.09 08/13/2010 449,004 1,122,000 NATEXIS BANQUE NEW YORK 3.16 06/09/2005 1,121,832 5,000,000 NEPTUNE FUNDING CORPORATION 3.07 06/01/2005 5,000,000 7,000,000 NEPTUNE FUNDING CORPORATION 3.10 07/11/2005 6,976,060 1,122,000 RACERS TRUST 3.09 05/20/2005 1,122,191 1,010,000 SCALDIS CAPITAL LIMITED 3.18 08/08/2005 1,003,879 1,122,000 SECURITY LIFE OF DENVER 3.19 06/03/2005 1,122,000 4,994,000 SEDNA FINANCE INCORPORATED 3.09 07/11/2005 4,976,921 2,000,000 SEDNA FINANCE INCORPORATED 3.12 07/18/2005 1,991,820 5,000,000 SEDNA FINANCE INCORPORATED 3.22 08/15/2005 4,966,550 10,000,000 SOCIETE GENERALE 3.04 06/30/2005 10,000,000 4,000,000 SOLITAIRE FUNDING LLC 3.14 07/21/2005 3,982,600 5,700,000 SVENSKA HANDELSBANKEN 3.12 07/20/2005 5,675,718 1,122,000 TANGO FINANCE CORPORATION 3.12 10/25/2006 1,121,989 14,000,000 TOTAL CAPITAL S.A. 3.07 06/01/2005 14,000,000 10,007,000 TRANSAMERICA ASSET FUNDING CORPORATION 3.07 06/01/2005 10,007,000 561,000 TRAVELERS INSURANCE COMPANY 3.17 02/10/2006 560,989 265,087,911 -------------- Total Collateral for Securities Lending (Cost $267,936,135) 267,936,135 -------------- 49
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT DURATION GOVERNMENT BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL VALUE TOTAL INVESTMENTS IN SECURITIES (COST $887,888,410)* 151.39% $ 885,669,339 OTHER ASSETS AND LIABILITIES, NET (51.39) (300,637,841) ------ -------------- TOTAL NET ASSETS 100.00% $ 585,031,498 ====== ============== +/- VARIABLE RATE INVESTMENTS. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) * COST FOR FEDERAL INCOME TAX PURPOSES IS $888,466,501 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 529,318 GROSS UNREALIZED DEPRECIATION (3,326,481) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $ (2,797,163) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 50
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- FACE/SHARE AMOUNT SECURITY NAME VALUE INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS - 100.30% N/A WELLS FARGO ADVANTAGE STABLE INCOME PORTFOLIO $ 469,157,086 TOTAL INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS (COST $468,223,320) 469,157,086 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $468,223,320)* 100.30% $ 469,157,086 OTHER ASSETS AND LIABILITIES, NET (0.30) (1,421,507) ------ -------------- TOTAL NET ASSETS 100.00% $ 467,735,579 ====== ============== * COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR FINANCIAL REPORTING PURPOSES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 51
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE CORPORATE BONDS & NOTES - 79.91% AEROSPACE, DEFENSE - 0.79% $ 200,000 ARMOR HOLDINGS INCORPORATED 8.25% 08/15/2013 $ 214,476 -------------- AMUSEMENT & RECREATION SERVICES - 0.47% 125,000 TOWN SPORTS INTERNATIONAL 9.63 04/15/2011 128,125 -------------- APPAREL & ACCESSORY STORES - 1.46% 360,000 FOOT LOCKER INCORPORATED 8.50 01/15/2022 396,900 -------------- APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.44% 356,000 WILLIAM CARTER COMPANY SERIES B 10.88 08/15/2011 389,820 -------------- AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.67% 185,000 UNITED RENTALS NORTH AMERICA INCORPORATED 7.75 11/15/2013 183,150 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 2.61% 200,000 DR HORTON INCORPORATED 6.88 05/01/2013 214,049 250,000 ERICO INTERNATIONAL CORPORATION 8.88 03/01/2012 255,565 140,000 K HOVNANIAN ENTERPRISES INCORPORATED 6.25 01/15/2015 137,200 100,000 KB HOME 6.25 06/15/2015 100,322 707,136 -------------- BUSINESS SERVICES - 5.24% 110,000 IMCO RECYCLING ESCROW INCORPORATED++ 9.00 11/15/2014 114,950 200,000 NATIONAL WINE & SPIRITS INCORPORATED 10.13 01/15/2009 202,000 305,000 NATIONSRENT INCORPORATED 9.50 10/15/2010 327,112 160,000 RAINBOW NATIONAL SERVICES LLC++ 10.38 09/01/2014 182,400 300,000 RENT-WAY INCORPORATED 11.88 06/15/2010 329,250 119,000 WATERFORD GAMING LLC++ 8.63 09/15/2012 126,735 130,000 WILLIAMS SCOTSMAN INCORPORATED 10.00 08/15/2008 140,400 1,422,847 -------------- CHEMICALS & ALLIED PRODUCTS - 5.92% 180,000 EQUISTAR CHEMICALS LP/EQUISTAR FUNDING CORPORATION 10.13 09/01/2008 195,300 160,000 HUNTSMAN INTERNATIONAL LLC++ 7.38 01/01/2015 158,800 135,000 IMC GLOBAL INCORPORATED 10.88 08/01/2013 157,275 420,000 JOHNSONDIVERSEY HOLDINGS INCORPORATED^ 11.12 05/15/2013 298,200 175,000 LYONDELL CHEMICAL COMPANY 10.50 06/01/2013 199,719 200,000 OM GROUP INCORPORATED 9.25 12/15/2011 198,000 200,000 POLYONE CORPORATION 10.63 05/15/2010 216,500 170,000 RESOLUTION PERFORMANCE PRODUCTS INCORPORATED 13.50 11/15/2010 183,600 1,607,394 -------------- COAL MINING - 1.68% 300,000 ARCH WESTERN FINANCE LLC 6.75 07/01/2013 306,000 145,000 FOUNDATION PA COAL COMPANY 7.25 08/01/2014 149,350 455,350 -------------- COMMUNICATIONS - 15.74% 95,000 AIRGATE PCS INCORPORATED+/-++ 6.89 10/15/2011 96,900 170,000 AT&T CORPORATION 9.75 11/15/2031 215,900 300,000 CCO HOLDINGS LLC/CAPITAL CORPORATION+++/- 7.14 12/15/2010 295,500 145,000 CENTENNIAL COMMUNICATIONS CORPORATION CELLULAR OPERATING COMPANY LLC PUERTO RICO OPERATIONS 8.13 02/01/2014 150,075 52
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS - 15.74% (CONTINUED) $ 175,000 CHARTER COMMUNICATIONS HOLDINGS II LLC/CAPITAL CORPORATION 10.25% 09/15/2010 $ 177,625 245,000 CHARTER COMMUNICATIONS HOLDINGS LLC/CAPITAL CORPORATION+/- 9.92 04/01/2011 178,237 210,000 CINCINNATI BELL INCORPORATED++ 8.38 01/15/2014 207,900 440,000 CSC HOLDINGS INCORPORATED SERIES B 7.63 04/01/2011 466,400 210,000 DOBSON CELLULAR SYSTEMS++ 9.88 11/01/2012 215,250 165,000 HORIZON PCS INCORPORATED++ 11.38 07/15/2012 180,675 170,000 INTELSAT BERMUDA LIMITED+++/- 7.81 01/15/2012 172,550 40,000 IWO ESCROW COMPANY+++/- 6.89 01/15/2012 39,800 100,000 IWO ESCROW COMPANY++^ 10.75 01/15/2015 63,500 200,000 MCI INCORPORATED 8.74 05/01/2014 224,000 90,000 NEWPAGE CORPORATION+++/- 9.46 05/01/2012 88,200 107,000 PANAMSAT CORPORATION 9.00 08/15/2014 116,363 375,000 PAXSON COMMUNICATIONS CORPORATION^ 14.89 01/15/2009 346,875 300,000 QWEST COMMUNICATIONS INTERNATIONAL+++/- 6.77 02/15/2009 296,250 300,000 QWEST CORPORATION++ 7.88 09/01/2011 311,250 250,000 QWEST SERVICES CORPORATION++ 14.50 12/15/2014 295,625 135,000 VERTIS INCORPORATED SERIES B 10.88 06/15/2009 131,625 4,270,500 -------------- DEPOSITORY INSTITUTIONS - 0.81% 210,000 DOLLAR FINANCIAL GROUP INCORPORATED 9.75 11/15/2011 220,500 -------------- EATING & DRINKING PLACES - 1.08% 290,000 CARROLS CORPORATION++ 9.00 01/15/2013 294,350 -------------- ELECTRIC, GAS & SANITARY SERVICES - 7.17% 150,000 ALLIED WASTE NORTH AMERICA 7.88 04/15/2013 152,250 250,000 CLEAN HARBORS INCORPORATED++ 11.25 07/15/2012 275,000 260,000 EL PASO NATURAL GAS COMPANY SERIES A 7.63 08/01/2010 274,327 300,000 INERGY LP/INERGY FINANCE CORPORATION++ 6.88 12/15/2014 280,500 120,000 NEVADA POWER COMPANY++ 5.88 01/15/2015 118,200 160,000 NORTHWESTERN CORPORATION++ 5.88 11/01/2014 161,600 180,000 NRG ENERGY INCORPORATED++ 8.00 12/15/2013 189,900 175,000 SIERRA PACIFIC RESOURCES 8.63 03/15/2014 189,437 45,000 TECO ENERGY INCORPORATED++ 6.75 05/01/2015 46,013 270,000 TXU CORPORATION++ 5.55 11/15/2014 259,331 1,946,558 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 1.48% 142,000 GRAFTECH INTERNATIONAL LIMITED++ 1.63 01/15/2024 89,992 230,000 LUCENT TECHNOLOGIES INCORPORATED 6.45 03/15/2029 198,950 120,000 MAGNACHIP SEMICONDUCTOR/MAGNACHIP SEMICONDUCTOR FINANCE COMPANY+++/- 6.26 12/15/2011 111,600 400,542 -------------- ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.51% 130,000 US ONCOLOGY INCORPORATED 9.00 08/15/2012 139,100 -------------- FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.92% 120,000 MUELLER GROUP INCORPORATED+/- 7.96 11/01/2011 122,400 120,000 MUELLER GROUP INCORPORATED 10.00 05/01/2012 126,000 248,400 -------------- 53
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOOD STORES - 1.83% $ 300,000 AMERICAN SEAFOODS GROUP LLC 10.13% 04/15/2010 $ 321,750 165,000 DOANE PET CARE COMPANY 10.75 03/01/2010 174,487 496,237 -------------- GENERAL MERCHANDISE STORES - 2.21% 170,000 ALH FINANCE LLC/ALH FINANCE CORPORATION 8.50 01/15/2013 158,950 200,000 JC PENNEY COMPANY INCORPORATED 8.00 03/01/2010 220,000 195,000 JC PENNEY COMPANY INCORPORATED 7.95 04/01/2017 219,863 598,813 -------------- HEALTH SERVICES - 3.21% 140,000 DAVITA INCORPORATED++ 6.63 03/15/2013 141,400 135,000 HCA INCORPORATED 5.75 03/15/2014 132,204 150,000 HEALTHSOUTH CORPORATION 7.63 06/01/2012 144,000 245,000 SELECT MEDICAL CORPORATION++ 7.63 02/01/2015 241,937 195,000 VANGUARD HEALTH HOLDINGS 9.00 10/01/2014 210,600 870,141 -------------- HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.67% 163,000 TEMPUR-PEDIC 10.25 08/15/2010 180,930 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.02% 600,000 ALADDIN GAMING/CAPITAL CORPORATION SERIES B^^ 13.50 03/01/2010 3,000 250,000 CHUMASH CASINO & RESORT ENTERPRISE++ 9.00 07/15/2010 270,000 320,000 HOLLYWOOD CASINO SHREVEPORT/SHREVEPORT CAPITAL CORPORATION^^ 13.00 08/01/2006 262,000 15,000 HOLLYWOOD CASINO SHREVEPORT/SHREVEPORT CAPITAL CORPORATION^^ 13.00 08/01/2006 12,281 547,281 -------------- JUSTICE, PUBLIC ORDER & SAFETY - 0.57% 150,000 CORRECTIONS CORPORATION OF AMERICA 7.50 05/01/2011 153,938 -------------- MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.95% 250,000 XEROX CAPITAL TRUST I 8.00 02/01/2027 258,750 -------------- MISCELLANEOUS MANUFACTURING INDUSTRIES - 1.00% 250,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 270,000 -------------- MISCELLANEOUS RETAIL - 1.56% 240,000 DENNY'S CORPORATION/DENNY'S HOLDINGS INCORPORATED 10.00 10/01/2012 241,800 163,000 JAFRA COSMETICS INTERNATIONAL INCORPORATED/DISTRIBUIDORA COMERICAL JAFRA SA DE CV 10.75 05/15/2011 181,745 423,545 -------------- OIL & GAS EXTRACTION - 2.49% 130,000 FOREST OIL CORPORATION 8.00 12/15/2011 142,350 200,000 HILCORP ENERGY I LP/HILCORP FINANCE COMPANY++ 10.50 09/01/2010 220,000 165,000 PARKER DRILLING COMPANY+/- 7.66 09/01/2010 171,600 130,000 PRIDE INTERNATIONAL INCORPORATED 7.38 07/15/2014 142,675 676,625 -------------- PAPER & ALLIED PRODUCTS - 2.16% 160,000 APPLETON PAPERS INCORPORATED 8.13 06/15/2011 157,200 105,000 BOISE CASCADE LLC+++/- 6.02 10/15/2012 105,000 155,000 GEORGIA-PACIFIC CORPORATION 8.88 02/01/2010 175,925 150,000 GRAHAM PACKAGING COMPANY++ 9.88 10/15/2014 148,875 587,000 -------------- 54
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE PRIMARY METAL INDUSTRIES - 1.30% $ 195,000 GENERAL CABLE CORPORATION 9.50% 11/15/2010 $ 207,675 145,000 SUPERIOR ESSEX COMMUNICATIONS LLC/ESSEX GROUP INCORPORATED 9.00 04/15/2012 145,725 353,400 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 7.10% 160,000 AMERICAN COMMERCIAL LINES FINANCE++ 9.50 02/15/2015 165,200 180,000 DEX MEDIA INCORPORATED 8.00 11/15/2013 191,250 140,000 HOUGHTON MIFFLIN COMPANY 7.20 03/15/2011 142,800 200,000 HOUGHTON MIFFLIN COMPANY^ 11.49 10/15/2013 137,000 240,000 PRIMEDIA INCORPORATED+/- 8.64 05/15/2010 252,000 207,000 READER'S DIGEST ASSOCIATION INCORPORATED 6.50 03/01/2011 204,930 175,000 RIDDELL BELL HOLDINGS++ 8.38 10/01/2012 175,000 200,000 UCAR FINANCE INCORPORATED 10.25 02/15/2012 207,000 130,000 VENOCO INCORPORATED++ 8.75 12/15/2011 126,750 340,000 VISANT CORPORATION 7.63 10/01/2012 325,550 1,927,480 -------------- REAL ESTATE - 0.30% 72,000 CB RICHARD ELLIS SERVICES INCORPORATED 9.75 05/15/2010 80,370 -------------- STONE, CLAY, GLASS & CONCRETE PRODUCTS - 1.03% 275,000 BWAY CORPORATION 10.00 10/15/2010 280,500 -------------- TEXTILE MILL PRODUCTS - 1.19% 200,000 INTERFACE INCORPORATED 9.50 02/01/2014 200,000 120,000 PERRY ELLIS INTERNATIONAL INCORPORATED SERIES B 8.88 09/15/2013 122,400 322,400 -------------- TOBACCO PRODUCTS - 1.25% 325,000 COMMONWEALTH BRANDS INCORPORATED++ 10.63 09/01/2008 340,438 -------------- TRANSPORTATION EQUIPMENT - 0.56% 160,000 NAVISTAR INTERNATIONAL CORPORATION++ 6.25 03/01/2012 152,000 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.52% 130,000 AMERISOURCEBERGEN CORPORATION 7.25 11/15/2012 142,025 -------------- TOTAL CORPORATE BONDS & NOTES (COST $21,688,746) 21,687,021 -------------- FOREIGN CORPORATE BONDS - 5.07% 165,000 CP SHIPS LIMITED 10.38 07/15/2012 184,800 270,000 INTELSAT BERMUDA LIMITED++ 8.63 01/15/2015 277,087 100,000 IPSCO INCORPORATED 8.75 06/01/2013 111,000 170,000 NOVELIS INCORPORATED++ 7.25 02/15/2015 166,600 340,000 ROGERS CABLE INCORPORATED 6.75 03/15/2015 340,000 285,000 ROGERS WIRELESS INCORPORATED+/- 6.14 12/15/2010 297,113 TOTAL FOREIGN CORPORATE BONDS (COST $1,369,807) 1,376,600 -------------- TERM LOANS - 2.12% 460,000 GOODYEAR TIRE & RUBBER COMPANY TERM LOAN B+++/- 5.89 04/08/2010 457,010 113,750 REVLON CONSUMER PRODUCTS CORPORATION TERM LOAN+++/- 9.20 07/31/2010 116,950 TOTAL TERM LOANS (COST $573,750) 573,960 -------------- 55
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- SHARES SECURITY NAME VALUE COMMON STOCKS - 3.27% APPAREL & ACCESSORY STORES - 0.38% 2,200 CARTER'S INCORPORATED+ $ 102,630 -------------- COMMUNICATIONS - 0.71% 22,200 SPANISH BROADCASTING SYSTEMS INCORPORATED+ 192,030 -------------- HOLDING & OTHER INVESTMENT OFFICES - 0.42% 1,306 WILLIAMS HOLDINGS OF DELAWARE++ 114,764 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 1.07% 5,000 AZTAR CORPORATION+ 159,700 12,700 MTR GAMING GROUP INCORPORATED+ 130,302 290,002 -------------- OIL & GAS EXTRACTION - 0.69% 9,200 CHESAPEAKE ENERGY CORPORATION 188,324 -------------- TOTAL COMMON STOCKS (COST $727,528) 887,750 -------------- PREFERRED STOCKS - 0.00% 350 ADELPHIA COMMUNICATIONS CORPORATION+ 1,050 TOTAL PREFERRED STOCKS (COST $32,550) 1,050 -------------- SHORT-TERM INVESTMENTS - 9.18% 2,490,960 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 2,490,960 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $2,490,960) 2,490,960 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $26,883,341)* 99.55% $ 27,017,341 OTHER ASSETS AND LIABILITIES, NET 0.45 120,896 ------ -------------- TOTAL NET ASSETS 100.00% $ 27,138,237 ====== ============== ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. +/- VARIABLE RATE INVESTMENTS. ^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST OR PRINCIPAL PAYMENTS. + NON-INCOME EARNING SECURITIES. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,490,960. * COST FOR FEDERAL INCOME TAX PURPOSES IS $26,885,227 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 789,629 GROSS UNREALIZED DEPRECIATION (657,515) ---------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 132,114 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 56
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES - 7.20% $ 1,549,000 AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST SERIES 2004-3 CLASS A 4.35% 12/15/2011 $ 1,564,315 260,000 AMERICREDIT AUTOMOBILE RECEIVABLES TRUST SERIES 2002-C CLASS A4 3.55 02/12/2009 259,287 1,220,000 AMERIQUEST MORTGAGE SECURITIES INCORPORATED SERIES 2004-R12 CLASS A3+/- 3.37 01/25/2035 1,224,325 2,171,000 ASSET BACKED FUNDING CERTIFICATES SERIES 2005-WF1 CLASS A2E+/- 3.27 01/25/2035 2,170,959 610,353 ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC SERIES 2003-1 CLASS A1 2.89 07/20/2011 595,583 2,454,000 CAPITAL AUTO RECEIVABLES ASSET TRUST SERIES 2004-1 CLASS A3 2.00 11/15/2007 2,418,278 1,329,000 CAPITAL AUTO RECEIVABLES ASSET TRUST SERIES 2004-2 CLASS A2 3.35 02/15/2008 1,316,573 4,120,000 CAPITAL ONE MASTER TRUST SERIES 2001-3A CLASS A 5.45 03/16/2009 4,185,376 3,202,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2005-A2 CLASS A2 4.05 02/15/2011 3,204,434 2,046,000 CARRINGTON MORTGAGE LOAN TRUST SERIES 2005-OPT2 CLASS A1B+/- 3.24 05/25/2035 2,045,110 2,077,000 CHASE ISSUANCE TRUST SERIES 2005-A4 CLASS A4 4.23 01/15/2013 2,078,947 2,030,000 CHASE MANHATTAN AUTO OWNER TRUST SERIES 2004-A CLASS A3 2.08 05/15/2008 2,003,778 750,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2000-A1 CLASS A1<< 6.90 10/15/2007 759,051 2,500,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2001-A6 CLASS A6 5.65 06/16/2008 2,546,192 3,000,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2003-A10 CLASS A10 4.75 12/10/2015 3,066,293 950,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2003-A3 CLASS A3 3.10 03/10/2010 927,683 2,482,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2003-A6 CLASS A6 2.90 05/17/2010 2,405,497 1,999,393 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.29 10/25/2022 2,000,214 1,393,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2004-B CLASS A3 3.18 09/08/2008 1,382,381 4,618,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-B CLASS A2 3.75 12/08/2007 4,616,153 1,386,000 DETROIT EDISON SECURITIZATION FUNDING LLC SERIES 2001-1 CLASS A4 6.19 03/01/2013 1,502,008 1,629,000 DISCOVER CARD MASTER TRUST I SERIES 2004-2 CLASS A1+/- 3.11 05/15/2010 1,626,323 1,700,000 FORD CREDIT AUTO OWNER TRUST SERIES 2005-A CLASS A2 3.08 07/15/2007 1,696,207 1,915,000 FORD CREDIT AUTO OWNER TRUST SERIES 2005-A CLASS A3 3.48 11/15/2008 1,903,225 2,843,000 FORD CREDIT AUTO OWNER TRUST SERIES 2005-B CLASS A3 4.17 01/15/2009 2,850,852 1,385,000 MASSACHUSETTS RRB SPECIAL PURPOSE TRUST SERIES 2005-1 CLASS A2 3.78 09/15/2010 1,379,056 3,260,000 MBNA CREDIT CARD MASTER NOTE TRUST SERIES 2001-A1 CLASS A1 5.75 10/15/2008 3,320,589 2,716,000 MBNA CREDIT CARD MASTER NOTE TRUST SERIES 2005-A1 CLASS A1 4.20 09/15/2010 2,733,179 2,265,000 METRIS MASTER TRUST SERIES 1999-2 CLASS A+/- 3.61 01/20/2010 2,265,200 1,115,000 NATIONAL CITY AUTO RECEIVABLES TRUST SERIES 2004-A CLASS A3 2.11 07/15/2008 1,099,938 1,456,000 NISSAN AUTO RECEIVABLES OWNER TRUST SERIES 2005-B CLASS A2 3.75 09/17/2007 1,456,000 2,079,000 NOVASTAR HOME EQUITY LOAN SERIES 2005-2 CLASS A2B+/- 3.24 05/25/2035 2,079,000 1,742,000 PECO ENERGY TRANSITION TRUST SERIES 1999-A CLASS A6 6.05 03/01/2009 1,783,214 815,881 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RS3 CLASS A2+/- 3.45 04/25/2033 818,651 1,992,000 SLM STUDENT LOAN TRUST SERIES 2003-4 CLASS A5B++ 3.39 03/15/2033 1,933,216 2,595,000 SLM STUDENT LOAN TRUST SERIES 2004-1 CLASS A2+/- 3.30 07/25/2018 2,604,665 2,304,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2005-1 CLASS A4+++/- 3.32 02/25/2035 2,307,363 2,080,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2005-5 CLASS A2+/- 3.18 06/25/2035 2,080,000 2,195,000 USAA AUTO OWNER TRUST SERIES 2004-3 CLASS A2 2.79 06/15/2007 2,186,743 1,197,000 USAA AUTO OWNER TRUST SERIES 2004-3 CLASS A3 3.16 02/17/2009 1,184,339 1,115,000 WORLD OMNI AUTO RECEIVABLES TRUST SERIES 2003-B CLASS A3 2.20 01/15/2008 1,104,854 TOTAL ASSET-BACKED SECURITIES (COST $80,794,165) 80,685,051 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 7.21% 1,604,000 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2004-1 CLASS A4 4.76 11/10/2039 1,614,977 2,685,000 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2005-1 CLASS A5+/- 4.98 11/10/2042 2,795,563 533,000 CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES 2000-2 CLASS A2 7.63 07/15/2032 610,492 1,357,000 CITIGROUP COMMERCIAL MORTGAGE TRUST SERIES 2004-C1 CLASS A3+/- 5.25 04/15/2040 1,409,767 57
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 797,000 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1999-1 CLASS E+/- 7.23% 05/15/2032 $ 864,617 1,298,000 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2000-C1 CLASS A2 7.42 08/15/2033 1,450,800 1,600,000 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2005-LP5 CLASS ASB 4.87 05/10/2043 1,626,850 3,642,000 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2005-J4 CLASS 2A1B+/- 3.21 05/25/2034 3,642,000 3,071,000 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 1999-CG2 CLASS A1B 7.30 06/10/2032 3,398,333 2,420,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 1999-C4 CLASS A2 7.39 12/15/2031 2,704,111 4,969,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGES SERIES 2000-C2 CLASS A2 7.20 10/15/2032 5,601,294 1,609,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2003-C2 CLASS A4 5.15 07/10/2037 1,671,713 2,462,885 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 1997-C1 CLASS A3 6.87 07/15/2029 2,577,406 941,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2002-C2 CLASS A3 5.71 10/15/2038 1,006,211 1,651,387 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2004-C1 CLASS A1 3.12 03/10/2038 1,620,952 618,519 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2004-C2 CLASS A1 3.90 08/10/2038 614,876 2,112,000 GOVERNMENT NATIONAL MORTGAGE ASSOCIATION SERIES 2003-66 CLASS WU 3.75 03/20/2026 2,088,576 544,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION SERIES 2004-GG1 CLASS A3 4.34 06/10/2036 545,201 2,051,000 GS MORTGAGE SECURITIES CORPORATION SERIES 1998-GLII CLASS A2 6.56 04/13/2031 2,171,546 594,000 HELLER FINANCIAL COMMERCIAL MORTGAGE ASSET SERIES 1999-PH1 CLASS C+/- 7.07 05/15/2031 648,686 1,454,403 IMPAC CMB TRUST SERIES 2005-1 CLASS 1A1+/- 3.35 04/25/2035 1,454,687 2,908,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES 2004-CB9 CLASS A4+/- 5.38 06/12/2041 3,082,752 874,608 LB COMMERCIAL CONDUIT MORTGAGE TRUST SERIES 1999-C2 CLASS A1 7.11 10/15/2032 905,237 397,000 LB COMMERCIAL CONDUIT MORTGAGE TRUST SERIES 1999-C2 CLASS B 7.43 10/15/2032 444,454 1,596,000 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2000-C4 CLASS A2 7.37 08/15/2026 1,801,752 1,701,000 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2003-C5 CLASS A4+/- 4.69 07/15/2032 1,710,409 2,745,000 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2003-C7 CLASS A4+/- 4.93 09/15/2035 2,808,580 200,000 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2004-C7 CLASS A6+/- 4.79 10/15/2029 201,447 2,066,000 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2005-C2 CLASS AAB 5.01 04/15/2030 2,126,645 2,370,000 MERRILL LYNCH MORTGAGE TRUST++ 4.10 11/15/2010 2,373,703 505,000 MERRILL LYNCH MORTGAGE TRUST SERIES 2003-KEY1 CLASS A3 4.89 11/12/2035 515,087 1,000,000 MORGAN STANLEY CAPITAL I SERIES 2004-HQ4 CLASS A2 3.92 04/14/2040 992,712 3,985,000 PNC MORTGAGE ACCEPTANCE CORPORATION SERIES 2000-C2 CLASS A2 7.30 10/12/2033 4,464,353 3,097,590 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 2000-C2 CLASS A2 7.46 07/18/2033 3,430,152 614,000 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 2002-KEY2 CLASS A3 4.87 03/18/2036 624,717 269,965 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-2 CLASS A+/- 3.61 02/25/2028 269,965 2,906,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C6 CLASS A4 5.13 08/15/2035 3,001,022 3,221,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12 CLASS A2 5.00 07/15/2041 3,309,504 1,886,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C16 CLASS APB 4.69 10/15/2041 1,903,743 4,185,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C17 CLASS A4+/- 5.08 03/15/2042 4,325,221 2,083,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C18 CLASS APB 4.81 04/15/2042 2,117,779 212,876 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 212,618 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $80,504,320) 80,740,510 -------------- CORPORATE BONDS & NOTES - 16.07% BUSINESS SERVICES - 0.56% 5,925,000 HOUSEHOLD FINANCE CORPORATION 5.88 02/01/2009 6,222,749 -------------- CHEMICALS & ALLIED PRODUCTS - 0.24% 520,000 ALBEMARLE CORPORATION 5.10 02/01/2015 514,492 1,050,000 LUBRIZOL CORPORATION 5.50 10/01/2014 1,077,651 58
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE CHEMICALS & ALLIED PRODUCTS (CONTINUED) $ 1,025,000 WYETH<< 5.50% 02/01/2014 $ 1,074,545 2,666,688 -------------- COMMUNICATIONS - 2.81% 1,040,000 AMERICA MOVIL SA DE CV 6.38 03/01/2035 1,012,188 1,210,000 AOL TIME WARNER INCORPORATED 7.70 05/01/2032 1,527,655 1,850,000 AT&T CORPORATION 9.75 11/15/2031 2,349,500 2,560,000 BELLSOUTH CORPORATION 5.20 09/15/2014 2,630,769 1,755,000 COMCAST CABLE COMMUNICATIONS HOLDINGS INCORPORATED<< 8.38 03/15/2013 2,149,849 2,165,000 COMCAST CORPORATION<< 5.85 01/15/2010 2,286,142 2,605,000 COX COMMUNICATIONS INCORPORATED 7.13 10/01/2012 2,904,703 725,000 SBC COMMUNICATIONS INCORPORATED 6.45 06/15/2034 803,155 3,440,000 SPRINT CAPITAL CORPORATION 6.00 01/15/2007 3,536,272 1,365,000 SPRINT CAPITAL CORPORATION 8.75 03/15/2032 1,876,575 3,670,000 TELECOM ITALIA CAPITAL SA 5.25 11/15/2013 3,715,846 840,000 TIME WARNER ENTERTAINMENT COMPANY LP 8.38 07/15/2033 1,112,577 4,915,000 VERIZON GLOBAL FUNDING CORPORATION 6.88 06/15/2012 5,556,383 31,461,614 -------------- DEPOSITORY INSTITUTIONS - 1.85% 2,885,000 BAC CAPITAL TRUST VI 5.63 03/08/2035 2,954,367 2,260,000 CITIGROUP INCORPORATED 5.00 09/15/2014 2,304,185 2,245,000 PNC FUNDING CORPORATION 5.25 11/15/2015 2,313,156 1,085,000 ROYAL BANK OF SCOTLAND GROUP 5.00 11/12/2013 1,114,849 125,000 US BANCORP SERIES MTNN 4.75 06/30/2005 125,123 3,390,000 WACHOVIA BANK NATIONAL<< 4.88 02/01/2015 3,438,928 1,520,000 WASHINGTON MUTUAL BANK FA 5.13 01/15/2015 1,540,430 4,402,000 WASHINGTON MUTUAL INCORPORATED<< 4.00 01/15/2009 4,345,976 2,410,000 ZIONS BANCORPORATION 6.00 09/15/2015 2,610,592 20,747,606 -------------- ELECTRIC UTILITIES - 0.12% 1,250,000 PROGRESS ENERGY INCORPORATED 6.85 04/15/2012 1,377,115 -------------- ELECTRIC, GAS & SANITARY SERVICES - 1.49% 3,121,000 AMERICAN ELECTRIC POWER SERIES C 5.38 03/15/2010 3,225,869 1,840,000 CENTERPOINT ENERGY SERIES B 6.85 06/01/2015 2,043,088 2,795,000 DUKE ENERGY CORPORATION<< 6.25 01/15/2012 3,046,036 840,000 FIRSTENERGY CORPORATION SERIES C 7.38 11/15/2031 1,018,180 2,067,000 PACIFIC GAS & ELECTRIC COMPANY 6.05 03/01/2034 2,272,443 800,000 PSEG POWER LLC 8.63 04/15/2031 1,105,264 1,750,000 PUBLIC SERVICE COMPANY OF COLORADO 7.88 10/01/2012 2,108,256 1,645,000 SOUTHERN CALIFORNIA EDISON COMPANY 6.00 01/15/2034 1,832,591 16,651,727 -------------- FINANCIAL SERVICES - 0.50% 2,794,000 CAPITAL ONE FINANCIAL CORPORATION 8.75 02/01/2007 2,986,725 2,385,000 CITIGROUP INCORPORATED 6.50 01/18/2011 2,631,258 5,617,983 -------------- 59
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOOD & KINDRED PRODUCTS - 0.24% $ 1,240,000 KRAFT FOODS INCORPORATED 5.63% 11/01/2011 $ 1,310,752 1,210,000 KRAFT FOODS INCORPORATED 6.50 11/01/2031 1,399,836 2,710,588 -------------- FOOD STORES - 0.13% 520,000 ALBERTSON'S INCORPORATED 8.00 05/01/2031 606,134 725,000 DELHAIZE AMERICA INCORPORATED 9.00 04/15/2031 872,446 1,478,580 -------------- FORESTRY - 0.05% 525,000 WEYERHAEUSER COMPANY<< 7.38 03/15/2032 612,877 -------------- HOLDING & OTHER INVESTMENT OFFICES - 0.59% 1,425,000 GOLDMAN SACHS GROUP INCORPORATED<< 5.13 01/15/2015 1,449,393 1,615,000 JP MORGAN CHASE & COMPANY 5.13 09/15/2014 1,644,989 3,540,000 MERRILL LYNCH & COMPANY<< 4.25 02/08/2010 3,520,516 6,614,898 -------------- INSURANCE CARRIERS - 0.19% 1,580,000 AMERICAN INTERNATIONAL GROUP INCORPORATED 4.25 05/15/2013 1,519,889 610,000 GENWORTH FINANCIAL INCORPORATED 5.75 06/15/2014 652,779 2,172,668 -------------- MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS - 0.11% 1,250,000 NEWMONT MINING CORPORATION 5.88 04/01/2035 1,255,397 -------------- MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.28% 2,820,000 TYCO INTERNATIONAL GROUP SA 6.38 10/15/2011 3,094,183 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 1.87% 2,395,000 AMERICAN GENERAL FINANCE CORPORATION 3.88 10/01/2009 2,328,888 1,245,000 CAPITAL ONE FINANCIAL 5.50 06/01/2015 1,255,429 2,555,000 FORD MOTOR CREDIT COMPANY 4.95 01/15/2008 2,422,000 2,775,000 FORD MOTOR CREDIT COMPANY<< 5.70 01/15/2010 2,524,548 855,000 FORD MOTOR CREDIT COMPANY<< 7.00 10/01/2013 796,409 974,000 GENERAL ELECTRIC CAPITAL CORPORATION<< 3.75 12/15/2009 953,941 3,975,000 GENERAL ELECTRIC CAPITAL CORPORATION<< 4.88 03/04/2015 4,045,727 1,100,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 5.88 02/15/2012 1,186,587 90,000 HSBC FINANCE CORPORATION 6.50 01/24/2006 91,578 1,480,000 HSBC FINANCE CORPORATION<< 4.75 04/15/2010 1,496,139 1,040,000 JP MORGAN CHASE CAPITAL XV 5.88 03/15/2035 1,054,300 1,245,000 MBNA CORPORATION 6.13 03/01/2013 1,326,291 1,447,000 SLM CORPORATION SERIES MTNA 5.00 10/01/2013 1,474,192 20,956,029 -------------- OIL & GAS EXTRACTION - 0.63% 1,105,000 CONOCOPHILLIPS 5.90 10/15/2032 1,218,890 1,840,000 PEMEX PROJECT FUNDING MASTER TRUST 7.38 12/15/2014 2,061,720 1,949,000 VALERO LOGISTICS 6.05 03/15/2013 2,039,794 1,745,000 XTO ENERGY INCORPORATED<< 4.90 02/01/2014 1,719,494 7,039,898 -------------- 60
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE PAPER & ALLIED PRODUCTS - 0.10% $ 710,000 INTERNATIONAL PAPER COMPANY 6.75% 09/01/2011 $ 778,654 400,000 KIMBERLY-CLARK CORPORATION++ 4.50 07/30/2005 400,624 1,179,278 -------------- PETROLEUM REFINING & RELATED INDUSTRIES - 0.71% 1,820,000 ALBERTA ENERGY COMPANY LIMITED 7.38 11/01/2031 2,263,476 1,080,000 AMERADA HESS CORPORATION 7.13 03/15/2033 1,238,337 1,695,000 ENTERPRISE PRODUCTS OPERATIONS 4.95 06/01/2010 1,699,449 1,620,000 ENTERPRISE PRODUCTS OPERATIONS SERIES B 5.60 10/15/2014 1,655,404 875,000 VALERO ENERGY CORPORATION 7.50 04/15/2032 1,044,979 7,901,645 -------------- PIPELINES, EXCEPT NATURAL GAS - 0.35% 2,085,000 DUKE CAPITAL LLC 7.50 10/01/2009 2,319,900 1,055,000 KINDER MORGAN ENERGY PARTNERS 5.13 11/15/2014 1,060,070 585,000 KINDER MORGAN ENERGY PARTNERS 5.80 03/15/2035 585,767 3,965,737 -------------- RAILROAD TRANSPORTATION - 0.52% 2,160,000 CANADIAN NATIONAL RAILWAY COMPANY 7.38 10/15/2031 2,797,357 2,455,000 NORFOLK SOUTHERN CORPORATION 7.05 05/01/2037 3,008,259 5,805,616 -------------- REAL ESTATE - 0.30% 3,327,000 EOP OPERATING LP 4.65 10/01/2010 3,310,751 -------------- REITS - 0.40% 2,725,000 ISTAR FINANCIAL INCORPORATED<< 5.38 04/15/2010 2,748,497 1,040,000 NATIONWIDE HEALTH PROPERTIES INCORPORATED 6.00 05/20/2015 1,030,012 725,000 SIMON PROPERTY GROUP LP 5.63 08/15/2014 751,607 4,530,116 -------------- SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.14% 1,205,000 GOLDMAN SACHS CAPITAL INCORPORATED<< 6.35 02/15/2034 1,289,604 4,731,000 JP MORGAN CHASE & COMPANY 6.75 02/01/2011 5,242,417 2,335,000 LAZARD LLC++ 7.13 05/15/2015 2,345,594 3,740,000 MORGAN STANLEY<< 5.30 03/01/2013 3,860,106 12,737,721 -------------- TRANSPORTATION BY AIR - 0.24% 1,865,000 LOCKHEED MARTIN CORPORATION 8.50 12/01/2029 2,655,189 -------------- TRANSPORTATION EQUIPMENT - 0.65% 2,805,000 BOEING COMPANY 5.13 02/15/2013 2,920,544 1,110,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 6.50 11/15/2013 1,175,717 1,055,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 8.50 01/18/2031 1,293,458 1,110,000 UNITED TECHNOLOGIES CORPORATION 4.88 05/01/2015 1,128,647 760,000 UNITED TECHNOLOGIES CORPORATION 5.40 05/01/2035 781,820 7,300,186 -------------- TOTAL CORPORATE BONDS & NOTES (COST $177,159,449) 180,066,839 -------------- FOREIGN CORPORATE BONDS - 0.70% 300,000 AMOCO ARGENTINA OIL COMPANY 6.63 09/15/2005 302,755 1,565,000 BT GROUP PLC 8.88 12/15/2030 2,178,710 61
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOREIGN CORPORATE BONDS (CONTINUED) $ 2,770,000 FRANCE TELECOM 7.95% 03/01/2006 $ 2,843,098 2,150,000 FRANCE TELECOM 8.00 03/01/2011 2,501,097 TOTAL FOREIGN CORPORATE BONDS (COST $7,770,641) 7,825,660 -------------- FOREIGN GOVERNMENT BONDS - 0.90% 1,220,000 CANADIAN NATIONAL RAILWAY COMPANY 6.90 07/15/2028 1,475,143 1,940,000 CANADIAN NATIONAL RESOURCES 4.90 12/01/2014 1,942,037 2,075,000 CIT GROUP COMPANY OF CANADA++ 4.65 07/01/2010 2,081,005 1,715,000 MEXICO GOVERNMENT INTERNATIONAL BOND SERIES MTN 6.38 01/16/2013 1,835,050 1,530,000 RUSSIAN FEDERATION+++/- 5.00 03/31/2030 1,681,087 1,005,000 UNITED MEXICAN STATES SERIES MTNA 6.75 09/27/2034 1,061,783 TOTAL FOREIGN GOVERNMENT BONDS (COST $9,838,491) 10,076,105 -------------- AGENCY SECURITIES - 56.64% FEDERAL HOME LOAN MORTGAGE CORPORATION - 35.53% 10,100,000 FHLMC<< 4.25 07/15/2009 10,222,564 21,701,000 FHLMC<< 6.63 09/15/2009 23,941,107 11,225,000 FHLMC<< 5.00 07/15/2014 11,815,570 4,526,345 FHLMC #B10747<< 5.50 11/01/2018 4,651,061 6,835,665 FHLMC #B16483<< 5.50 09/01/2019 7,024,150 3,710,452 FHLMC #B18247 5.00 04/01/2020 3,755,905 1,373,000 FHLMC #B19318 5.00 05/01/2020 1,389,819 1,178,000 FHLMC #B19338 5.00 05/01/2020 1,192,431 1,441,000 FHLMC #B19339 5.00 05/01/2020 1,458,652 883,000 FHLMC #B19376 5.00 06/01/2020 893,817 3,594,461 FHLMC #C90732<< 5.50 11/01/2023 3,674,798 2,485,747 FHLMC #C90766<< 5.50 12/01/2023 2,541,303 4,822,236 FHLMC #C90780<< 5.50 01/01/2024 4,930,013 6,015,651 FHLMC #C90798<< 5.50 02/01/2024 6,146,621 38,800,658 FHLMC #C90837<< 5.50 06/01/2024 39,645,410 607,301 FHLMC #C90854 5.50 09/01/2024 620,522 294,214 FHLMC #C90859 5.50 10/01/2024 300,620 1,135,390 FHLMC #C90888<< 5.50 03/01/2025 1,160,172 2,299,858 FHLMC #D96325 5.50 10/01/2023 2,351,260 3,406,641 FHLMC #E01279<< 5.50 01/01/2018 3,501,404 6,200,613 FHLMC #G11511<< 5.50 11/01/2018 6,373,096 7,689,026 FHLMC #G11658<< 5.50 01/01/2020 7,901,041 2,030,873 FHLMC #M80925 5.00 06/01/2011 2,056,219 4,614,322 FHLMC #M80927<< 5.00 07/01/2011 4,671,910 5,901,752 FHLMC #M80928<< 5.00 08/01/2011 5,975,408 7,088,686 FHLMC #M80936<< 5.00 09/01/2011 7,177,155 1,552,043 FHLMC SERIES 2544 CLASS ML 5.00 04/15/2012 1,569,752 8,241,000 FHLMC SERIES 2631 CLASS MT 3.50 01/15/2022 8,137,519 15,686,000 FHLMC SERIES 2645 CLASS MK<< 3.50 07/15/2022 15,458,166 2,224,233 FHLMC SERIES 2682 CLASS WK 3.00 01/15/2021 2,193,615 3,207,085 FHLMC SERIES 2692 CLASS YB 3.50 05/15/2016 3,177,374 400,260 FHLMC SERIES 2727 CLASS PW 3.57 06/15/2029 394,737 378,110 FHLMC SERIES 2731 CLASS PK 3.50 05/15/2026 372,492 62
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED) $ 3,060,344 FHLMC SERIES 2736 CLASS DB<< 3.30% 11/15/2026 $ 2,989,157 7,688,000 FHLMC SERIES 2808 CLASS PG 5.50 04/15/2033 7,861,314 17,903,000 FHLMC SERIES 2825 CLASS PM<< 5.50 03/15/2030 18,261,792 4,296,000 FHLMC SERIES 2825 CLASS QM 5.50 03/15/2030 4,389,423 8,951,920 FHLMC SERIES 2825 CLASS QN<< 5.50 09/15/2032 9,144,226 442,000 FHLMC SERIES 2833 CLASS JD 5.50 09/15/2029 452,954 15,858,560 FHLMC SERIES 2841 CLASS Y 5.50 07/15/2027 16,198,032 5,674,000 FHLMC SERIES 2950 CLASS LG 5.50 10/15/2033 5,797,546 15,438,876 FHLMC SERIES 2957 CLASS KJ<< 4.50 10/15/2024 15,482,187 4,983,000 FHLMC SERIES 2958 CLASS MD 5.50 01/15/2031 5,136,902 3,641,256 FHLMC SERIES 2960 CLASS EH 4.50 05/15/2024 3,652,458 1,839,000 FHLMC SERIES 2961 CLASS PW 5.50 10/15/2030 1,933,154 6,380,198 FHLMC SERIES 2963 CLASS WL 4.50 07/15/2025 6,398,169 137,239 FHLMC SERIES 2965 CLASS GB 4.50 11/15/2014 138,124 2,607,000 FHLMC SERIES 2966 CLASS XC 5.50 01/15/2031 2,715,231 3,025,000 FHLMC SERIES 2968 CLASS PD 5.50 01/15/2031 3,206,957 4,911,000 FHLMC SERIES 2971 CLASS KR 5.50 08/15/2031 5,027,253 15,723,000 FHLMC SERIES 2971 CLASS PE 4.50 03/15/2026 15,777,662 3,059,000 FHLMC SERIES 2972 CLASS UD 5.50 08/15/2034 3,133,802 7,447,000 FHLMC SERIES 2972 CLASS UG 5.50 08/15/2034 7,659,846 6,689,000 FHLMC SERIES 2972 CLASS WK 4.50 04/15/2029 6,697,361 21,773,000 FHLMC SERIES 2975 CLASS OA 5.50 06/15/2026 22,286,708 12,628,000 FHLMC SERIES 2975 CLASS OE 5.50 10/15/2031 12,929,395 13,064,000 FHLMC SERIES 2975 CLASS PB 5.50 02/15/2024 13,359,981 4,087,000 FHLMC SERIES 2975 CLASS PJ 5.50 02/15/2029 4,187,259 4,465,000 FHLMC SERIES 2982 CLASS LC 4.50 01/15/2025 4,477,176 2,066,000 FHLMC TBA%% 5.50 06/01/2025 2,112,175 398,081,927 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 21.11% 12,784,000 FNMA<< 2.20 12/04/2006 12,495,644 10,755,000 FNMA<< 5.00 01/15/2007 10,960,356 16,276,000 FNMA<< 3.10 04/04/2007 16,071,346 8,094,000 FNMA<< 6.00 05/15/2011 8,873,930 8,883,000 FNMA<< 6.13 03/15/2012 9,880,374 9,723,963 FNMA #254631<< 5.00 02/01/2018 9,848,995 3,144,694 FNMA #254918<< 4.50 09/01/2033 3,070,424 705,070 FNMA #255389 5.00 08/01/2011 712,631 315,139 FNMA #255440 5.00 09/01/2011 318,519 5,932,023 FNMA #672965<< 5.00 01/01/2018 6,008,298 7,757,946 FNMA #672966<< 5.00 01/01/2018 7,857,699 2,072,536 FNMA #725564 4.53 04/01/2009 2,099,819 4,296,465 FNMA #734830<< 4.50 08/01/2033 4,194,993 5,610,000 FNMA #760762<< 4.89 04/01/2012 5,745,314 2,829,554 FNMA SERIES 2003-113 CLASS PN 3.50 02/25/2013 2,807,271 9,797,271 FNMA SERIES 2003-63 CLASS QP 3.50 10/25/2031 9,339,590 13,856,994 FNMA SERIES 2003-76 CLASS DE<< 4.00 09/25/2031 13,488,195 3,301,000 FNMA SERIES 2003-92 CLASS KQ 3.50 06/25/2023 3,246,789 63
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED) $ 454,000 FNMA SERIES 2003-92 CLASS NM 3.50% 04/25/2013 $ 447,785 5,494,000 FNMA SERIES 2005-45 CLASS BA 4.50 11/25/2014 5,514,424 20,811,000 FNMA SERIES 2005-51 CLASS KC 4.50 01/25/2025 20,854,703 10,972,000 FNMA SERIES 2005-51 CLASS NB 5.50 08/25/2028 11,292,084 9,206,000 FNMA SERIES 2005-51 CLASS NC 5.50 12/25/2030 9,479,761 368,000 FNMA TBA%% 5.00 06/01/2018 372,140 32,846,000 FNMA TBA%% 5.50 06/01/2032 33,287,384 7,000,000 FNMA TBA%% 5.00 07/01/2033 6,973,750 20,014,000 FNMA TBA%% 5.50 07/01/2033 20,245,402 980,000 FNMA TBA%% 5.00 06/01/2034 979,081 236,466,701 -------------- TOTAL AGENCY SECURITIES (COST $631,790,733) 634,548,628 -------------- US TREASURY SECURITIES - 17.40% US TREASURY BONDS - 4.92% 16,091,000 US TREASURY BOND<< 6.25 08/15/2023 19,824,611 14,777,000 US TREASURY BOND<< 6.00 02/15/2026 17,951,173 13,040,000 US TREASURY BOND<< 6.25 05/15/2030 16,683,559 564,000 US TREASURY BOND<< 5.38 02/15/2031 653,182 55,112,525 -------------- US TREASURY NOTES - 12.48% 9,700,000 US TREASURY NOTE<< 2.88 11/30/2006 9,606,026 2,919,000 US TREASURY NOTE<< 3.63 04/30/2007 2,920,369 32,350,000 US TREASURY NOTE 3.50 05/31/2007 32,289,344 10,675,000 US TREASURY NOTE<< 2.75 08/15/2007 10,481,932 3,395,000 US TREASURY NOTE<< 3.00 11/15/2007 3,347,392 10,323,000 US TREASURY NOTE<< 3.38 02/15/2008 10,252,432 8,587,000 US TREASURY NOTE<< 3.75 05/15/2008 8,611,147 5,200,000 US TREASURY NOTE<< 5.63 05/15/2008 5,486,405 15,415,000 US TREASURY NOTE<< 3.50 12/15/2009 15,257,844 685,000 US TREASURY NOTE<< 4.00 04/15/2010 692,064 3,342,000 US TREASURY NOTE<< 3.88 05/15/2010 3,360,277 410,000 US TREASURY NOTE<< 4.75 05/15/2014 433,287 6,546,000 US TREASURY NOTE<< 4.25 08/15/2014 6,670,014 11,367,000 US TREASURY NOTE<< 4.25 11/15/2014 11,572,120 53,000 US TREASURY NOTE<< 4.00 02/15/2015 52,876 18,548,000 US TREASURY NOTE<< 4.13 05/15/2015 18,727,693 139,761,222 -------------- TOTAL US TREASURY SECURITIES (COST $191,696,873) 194,873,747 -------------- COLLATERAL FOR SECURITIES LENDING - 46.84% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.35% 2,658,997 EVERGREEN MONEY MARKET FUND 2,658,997 1,252,610 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 1,252,610 3,911,607 -------------- 64
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS - 45.66% $ 1,324,999 ALPINE SECURITIZATION CORPORATION 3.04% 07/01/2005 $ 1,321,660 23,999,976 AMERICAN EXPRESS CENTURION 3.05 07/12/2005 23,999,256 13,999,986 AMERICAN GENERAL FINANCE 3.09 06/15/2006 14,000,686 706,999 AMSTEL FUNDING CORPORATION 3.13 07/15/2005 704,341 13,999,986 APRECO LLC 3.04 06/27/2005 13,969,466 3,664,996 APRECO LLC 3.20 08/10/2005 3,642,127 1,599,998 AQUINAS FUNDING LLC 2.99 06/20/2005 1,597,454 9,999,990 ATLANTIC ASSET SECURITIZATION CORPORATION 3.07 06/22/2005 9,982,390 9,999,990 ATLANTIS ONE FUNDING CORPORATION 3.32 10/17/2005 9,871,990 5,029,995 ATOMIUM FUNDING CORPORATION 3.05 06/14/2005 5,024,512 7,999,992 ATOMIUM FUNDING CORPORATION 3.11 07/08/2005 7,974,632 7,543,992 ATOMIUM FUNDING CORPORATION 3.21 08/04/2005 7,500,916 24,999,975 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 24,999,975 12,999,987 BEAR STEARNS & COMPANY REPURCHASE AGREEMENT (MATURITY VALUE $13,001,084) 3.08 06/01/2005 12,999,987 5,316,995 BELFORD US CAPITAL COMPANY 3.08 06/21/2005 5,316,941 1,594,998 BETA FINANCE INCORPORATED 3.13 06/02/2006 1,595,301 24,999,975 BLUE SPICE LLC 3.06 06/01/2005 24,999,975 2,658,997 CC USA INCORPORATED 3.21 07/05/2005 2,659,423 5,876,994 CEDAR SPRINGS CAPITAL COMPANY LLC 3.06 06/13/2005 5,871,058 9,283,991 CEDAR SPRINGS CAPITAL COMPANY LLC 3.08 07/14/2005 9,249,826 2,999,997 CEDAR SPRINGS CAPITAL COMPANY LLC 3.21 08/02/2005 2,983,407 4,999,995 CEDAR SPRINGS CAPITAL COMPANY LLC 3.25 08/22/2005 4,963,445 8,999,991 CONCORD MINUTEMEN CAPITAL COMPANY 3.07 06/08/2005 8,999,991 19,999,980 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.05 06/15/2005 19,976,580 5,999,994 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 5,989,914 9,999,990 CREDIT SUISSE BANK NY 3.11 05/04/2006 9,999,990 3,999,996 CROWN POINT CAPITAL COMPANY LLC 3.10 07/11/2005 3,986,316 441,000 CROWN POINT CAPITAL COMPANY LLC 3.14 07/12/2005 439,452 1,594,998 DEUTSCHE BANK NEW YORK 3.22 11/10/2005 1,589,512 12,999,987 FIVE FINANCE INCORPORATED 3.05 06/15/2005 12,984,777 12,999,987 GEORGE STREET FINANCE LLC 3.06 06/02/2005 12,998,947 12,997,987 GEORGE STREET FINANCE LLC 3.04 06/10/2005 12,988,239 674,999 GOVCO INCORPORATED 3.44 10/17/2005 666,359 14,999,985 IRISH LIFE & PERMANENT PLC 3.05 07/08/2005 14,952,435 2,125,998 K2 USA LLC 3.12 07/24/2006 2,126,274 788,999 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED 3.30 09/12/2005 781,598 7,999,992 KLIO II FUNDING CORPORATION 3.04 06/06/2005 7,996,632 11,283,989 KLIO II FUNDING CORPORATION 3.05 06/20/2005 11,266,047 2,658,997 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.26 12/23/2005 2,660,726 3,999,996 LEXINGTON PARKER CAPITAL CORPORATION 3.21 08/08/2005 3,975,756 14,999,985 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 14,997,285 3,721,996 LIQUID FUNDING LIMITED 3.07 06/01/2005 3,721,996 19,999,980 LIQUID FUNDING LIMITED 3.06 06/09/2005 19,986,580 2,999,997 LIQUID FUNDING LIMITED 3.06 12/19/2005 2,999,997 10,999,989 MORGAN STANLEY 3.14 01/13/2006 10,999,989 7,999,992 MORGAN STANLEY 3.14 02/03/2006 7,999,992 65
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 2,126,998 Morgan Stanley 3.09% 08/13/2010 $ 2,127,019 5,316,995 NATEXIS BANQUE NEW YORK 3.16 06/09/2005 5,316,197 7,999,992 NEPTUNE FUNDING CORPORATION 3.07 06/01/2005 7,999,992 6,999,993 NEPTUNE FUNDING CORPORATION 3.10 07/11/2005 6,976,053 1,021,999 NIEUW AMSTERDAM RECEIVABLES CORPORATION 3.06 06/07/2005 1,021,488 5,316,995 RACERS TRUST 3.09 05/20/2005 5,317,899 500,000 SCALDIS CAPITAL LIMITED 3.26 09/09/2005 495,444 571,999 SCALDIS CAPITAL LIMITED 3.32 09/30/2005 565,576 5,316,995 SECURITY LIFE OF DENVER 3.19 06/03/2005 5,316,995 11,869,988 SEDNA FINANCE INCORPORATED 3.12 07/18/2005 11,821,440 8,999,991 SEDNA FINANCE INCORPORATED 3.22 08/15/2005 8,939,781 4,029,996 SHEFFIELD RECEIVABLES CORPORATION 3.08 07/13/2005 4,015,528 9,999,990 SOCIETE GENERALE 3.04 06/30/2005 9,999,990 1,433,999 SWEDBANK (FORENINGS SPARBANKEN) 3.04 06/29/2005 1,430,629 5,316,995 TANGO FINANCE CORPORATION 3.12 10/25/2006 5,316,942 24,999,975 TOTAL CAPITAL S.A. 3.07 06/01/2005 24,999,975 9,999,990 TRANSAMERICA ASSET FUNDING CORPORATION I 3.07 06/22/2005 9,982,390 2,658,997 TRAVELERS INSURANCE COMPANY 3.17 02/10/2006 2,658,944 6,999,993 WHITE PINE FINANCE LLC 3.27 09/15/2005 6,932,373 511,548,808 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $515,460,415) 515,460,415 -------------- REPURCHASE AGREEMENTS - 0.70% 7,851,000 COUNTRYWIDE SECURITIES - 102% COLLATERALIZED BY US GOVERNMENT SECURITIES (MATURITY VALUE $7,851,674) 3.09 06/01/2005 7,851,000 TOTAL REPURCHASE AGREEMENTS (COST $7,851,000) 7,851,000 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $1,702,865,969)* 152.84% $1,712,127,955 OTHER ASSETS AND LIABILITIES, NET (52.84) (591,883,872) ------ -------------- TOTAL NET ASSETS 100.00% $1,120,244,083 ====== ============== ++ 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. %% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2) +/- VARIABLE RATE INVESTMENTS. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) * COST FOR FEDERAL INCOME TAX PURPOSES IS $1,704,168,209 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 10,616,235 GROSS UNREALIZED DEPRECIATION (2,656,489) ------------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 7,959,746 SCHEDULE OF SECURITIES SOLD SHORT - MAY 31, 2004 - (0.42%) $ (4,678,000) FNMA TBA%% 5.00% 07/01/2005 $ (4,721,856) TOTAL SHORT SALES (TOTAL PROCEEDS $(4,706,994)) (4,721,856) -------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 66
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] ULTRA-SHORT DURATION BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY NOTES- INTEREST BEARING - 0.30% $ 130,000 FHLB 3.38% 10/05/2007 $ 128,945 TOTAL AGENCY NOTES - INTEREST BEARING (COST $129,965) 128,945 -------------- ASSET-BACKED SECURITIES - 24.82% 1,000,000 AAMES MORTGAGE TRUST SERIES 2003-1 CLASS M1+/- 3.77 10/25/2033 1,010,762 500,000 ACCREDITED MORTGAGE LOAN TRUST SERIES 2004-3 CLASS 1A2+/- 3.44 10/25/2034 494,825 500,000 BANK ONE ISSUANCE TRUST SERIES 2004-B1 CLASS B1+/- 3.41 03/15/2012 502,917 6,199,988 BEAR STEARNS ASSET BACKED SECURITIES INCORPORATED SERIES 2003-ABF1 CLASS AIO(C) 4.00 03/25/2006 147,560 999,981 CDC MORTGAGE CAPITAL TRUST SERIES 2003-HE4 CLASS M1+/- 3.74 03/25/2034 1,003,874 1,000,000 CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2003-5 CLASS 2M1+/- 3.69 05/25/2033 1,004,699 318,882 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.29 10/25/2022 319,013 260,211 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.30 05/15/2028 260,412 252,490 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.38 02/15/2034 253,305 442,100 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.39 12/15/2033 443,239 500,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-A CLASS M1 3.17 09/08/2007 498,545 1,420,159 DUKE FUNDING LIMITED SERIES 2000-1A CLASS A+/-++ 3.73 11/10/2030 1,420,159 277,528 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 CLASS 3A3+/- 2.47 09/25/2033 277,629 500,000 FLEET COMMERCIAL LOAN MASTER LLC SERIES 2000-1A CLASS B2+/-++ 3.38 11/16/2007 500,000 225,204 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2004-3 CLASS AF1+/- 3.31 11/25/2034 225,230 95,356 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RZ5 CLASS A2 3.18 03/25/2027 95,107 72,650 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2001-KS1 CLASS AII+/- 3.33 03/25/2032 72,717 1,000,000 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2003-KS8 CLASS MII1+/- 3.72 10/25/2033 999,981 1,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC3 CLASS M1+/- 4.04 04/25/2033 1,006,267 124,654 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.57 12/25/2034 124,654 TOTAL ASSET-BACKED SECURITIES (COST $10,618,780) 10,660,895 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 27.44% 229,885 ABN AMRO MORTGAGE CORPORATION SERIES 2002-1A CLASS 1A1+/- 5.85 06/25/2032 229,786 81,237 BANK OF AMERICA MORTGAGE SECURITIES SERIES 2002-K CLASS 3A1+/- 6.66 10/20/2032 82,670 4,594,209 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2004-J9 CLASS 1AIO+/-(C) 1.40 03/25/2007 52,174 101,423 COUNTRYWIDE HOME LOAN MORTGAGE PASS-THROUGH TRUST SERIES 2001-HYB1 CLASS 2A1+/- 4.89 06/19/2031 102,977 103,376 COUNTRYWIDE HOME LOAN MORTGAGE PASS-THROUGH TRUST SERIES 2004-30 CLASS 3A1+/- 4.66 09/25/2034 106,587 285,056 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CF1 CLASS A1A 7.45 06/10/2033 291,987 179,342 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1990-2 CLASS A+/- 4.09 01/25/2022 178,856 159,842 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1991-3 CLASS A1+/- 3.94 02/20/2021 158,845 726 FHLMC SERIES 161 CLASS F 9.50 06/15/2006 726 816,392 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 899,835 663,518 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 719,223 404,975 FNMA SERIES 1990-77 CLASS D 9.00 06/25/2020 438,044 530,928 FNMA WHOLE LOAN SERIES 2002-W4 CLASS A6+/- 4.31 05/25/2042 544,077 176,143 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 174,453 418,659 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1+/- 5.34 06/25/2033 427,256 233,360 FNMA WHOLE LOAN SERIES 2003-W3 CLASS 1A4+/- 4.24 08/25/2042 239,797 778,096 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.19 08/25/2042 794,327 529,702 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2000-C2 CLASS A1 7.27 08/16/2033 553,790 351,240 GSMPS MORTGAGE LOAN TRUST SERIES 1998-1 CLASS A++ 8.00 09/19/2027 378,668 405,117 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.49 06/25/2034 407,068 316,909 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 2A1+/-++ 4.22 06/25/2034 325,519 67
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] ULTRA-SHORT DURATION BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 468,070 GSR MORTGAGE LOAN TRUST SERIES 2004-1 CLASS 2A2+/- 5.22% 04/25/2032 $ 471,552 135,938 HOUSING SECURITIES INCORPORATED SERIES 1992-8 CLASS C+/- 3.52 06/25/2024 133,403 2,399,964 IMPAC CMB TRUST SERIES 2003-4 CLASS 3AIO(C) 6.00 09/25/2005 35,279 12,332,420 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR8 CLASS AX1+/-(C) 0.80 11/25/2034 143,056 174,746 MASTER ADJUSTABLE RATE MORTGAGES TRUST SERIES 2002-3 CLASS 4A1+/- 6.16 10/25/2032 175,492 977,045 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B3+/-++ 4.49 09/10/2035 994,082 365,141 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 1990-2 CLASS A+/- 4.31 11/25/2020 364,277 596,648 SEQUOIA MORTGAGE TRUST SERIES 8 CLASS 3A+/- 4.07 08/20/2032 605,479 335,147 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF2 CLASS A+/-++ 8.56 07/15/2027 346,453 10,000,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2002-C2 CLASS IO3+/-(C)++ 1.37 11/15/2034 335,509 74,216 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR10 CLASS A6+/- 4.82 10/25/2032 74,816 116,809 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR15 CLASS A5+/- 4.38 12/25/2032 116,522 255,451 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 255,142 268,000 WASHINGTON MUTUAL INCORPORATED SERIES 2003-AR7 CLASS A5+/- 3.07 08/25/2033 263,903 360,976 WILSHIRE FUNDING CORPORATION SERIES 1998-WFC2 CLASS M1+/- 5.24 12/28/2037 361,427 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $11,727,396) 11,783,057 -------------- CORPORATE BONDS & NOTES - 21.89% AMUSEMENT & RECREATION SERVICES - 0.38% 155,000 CAESARS ENTERTAINMENT INCORPORATED 8.50 11/15/2006 163,137 -------------- AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.42% 180,000 JOHNSON CONTROLS INCORPORATED 5.00 11/15/2006 181,752 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.18% 75,000 SCHULER HOMES INCORPORATED 9.38 07/15/2009 78,914 -------------- BUSINESS SERVICES - 0.40% 165,000 CENDANT CORPORATION 6.88 08/15/2006 170,168 -------------- COMMUNICATIONS - 4.92% 110,000 ALLTEL CORPORATION 4.66 05/17/2007 110,940 180,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 183,600 430,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 6.00 11/01/2006 437,067 150,000 COX COMMUNICATIONS INCORPORATED 7.75 08/15/2006 155,681 210,000 LENFEST COMMUNICATIONS INCORPORATED 8.38 11/01/2005 213,858 45,000 LIBERTY MEDIA CORPORATION+/- 4.51 09/17/2006 45,220 235,000 TCI COMMUNICATIONS INCORPORATED 7.25 08/01/2005 236,231 210,000 TELECORP PCS INCORPORATED 10.63 07/15/2010 222,714 260,000 UNIVISION COMMUNICATIONS INCORPORATED 2.88 10/15/2006 255,369 245,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 249,856 2,110,536 -------------- DEPOSITORY INSTITUTIONS - 2.29% 600,000 BANK OF AMERICA CORPORATION 5.25 02/01/2007 612,565 350,000 BANK ONE NA 6.25 02/15/2008 369,298 981,863 -------------- ELECTRIC, GAS & SANITARY SERVICES - 2.63% 200,000 CONECTIV INCORPORATED SERIES B 5.30 06/01/2005 200,000 200,000 ENTERGY GULF STATES INCORPORATED+/- 3.31 12/01/2009 200,452 50,000 FPL GROUP CAPITAL INCORPORATED 3.25 04/11/2006 49,770 68
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] ULTRA-SHORT DURATION BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ELECTRIC, GAS & SANITARY SERVICES (CONTINUED) $ 149,705 MIDLAND FUNDING II SERIES A 11.75% 07/23/2005 $ 151,081 225,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 228,827 83,000 SOUTHERN CALIFORNIA EDISON COMPANY 8.00 02/15/2007 88,298 200,000 WESTAR ENERGY INCORPORATED 7.88 05/01/2007 212,980 1,131,408 -------------- FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.29% 120,000 BALL CORPORATION 7.75 08/01/2006 124,200 -------------- FOOD & KINDRED PRODUCTS - 0.74% 165,000 CONAGRA FOODS INCORPORATED 9.88 11/15/2005 169,018 150,000 NABISCO INCORPORATED 6.85 06/15/2005 150,157 319,175 -------------- HOLDING & OTHER INVESTMENT OFFICES - 1.21% 505,000 COUNTRYWIDE HOME LOANS INCORPORATED SERIES MTNK 5.63 05/15/2007 518,083 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.59% 250,000 HARRAH'S OPERATING COMPANY INCORPORATED 7.88 12/15/2005 254,375 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.58% 250,000 JOHN DEERE CAPITAL CORPORATION 3.88 03/07/2007 249,342 -------------- INSURANCE CARRIERS - 1.65% 500,000 PROTECTIVE LIFE US FUNDING TRUST++ 5.88 08/15/2006 508,870 200,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 201,116 709,986 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 3.38% 260,000 CAPITAL ONE BANK SERIES BANK NOTE 8.25 06/15/2005 260,404 300,000 FORD MOTOR CREDIT COMPANY 6.50 01/25/2007 300,487 355,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 5.38 03/15/2007 363,533 120,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.75 01/15/2006 120,757 185,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 4.10 07/16/2007 173,956 225,000 HSBC FINANCE CORPORATION 8.88 02/15/2006 232,532 1,451,669 -------------- PIPELINES, EXCEPT NATURAL GAS - 0.41% 175,000 CENTERPOINT ENERGY RESOURCES CORPORATION SERIES B 8.13 07/15/2005 175,997 -------------- TOBACCO PRODUCTS - 0.32% 135,000 ALTRIA GROUP INCORPORATED 6.38 02/01/2006 136,970 -------------- TRANSPORTATION EQUIPMENT - 1.09% 175,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 7.75 06/15/2005 175,233 295,000 DAIMLERCHRYSLER NA HOLDING CORPORATION+/- 3.20 03/07/2007 293,214 468,447 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.41% 175,000 BERGEN BRUNSWIG CORPORATION 7.25 06/01/2005 175,000 -------------- TOTAL CORPORATE BONDS & NOTES (COST $9,424,483) 9,401,022 -------------- FOREIGN CORPORATE BONDS - 3.35% 175,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.25 06/15/2005 175,284 320,000 FRANCE TELECOM 7.45 03/01/2006 328,444 285,000 PREFERRED TERM SECURITIES XV+/-++ 4.07 09/26/2034 285,713 69
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] ULTRA-SHORT DURATION BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOREIGN CORPORATE BONDS (CONTINUED) $ 400,000 REGIONAL DIVERSIFIED FUNDING+/-++ 4.45% 01/25/2036 $ 401,240 235,000 TELUS CORPORATION 7.50 06/01/2007 249,235 TOTAL FOREIGN CORPORATE BONDS (COST $1,442,485) 1,439,916 -------------- MUNICIPAL BONDS & NOTES - 1.18% NEW JERSEY - 0.48% 205,000 BAYONNE NJ REDEVELOPMENT AGENCY SERIES B (OTHER REVENUE LOC) 5.43 04/13/2007 205,830 -------------- OHIO - 0.70% 300,000 OHIO STATE WATER DEVELOPMENT AUTHORITY OHIO EDISON COMPANY SERIES B (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-@ 3.35 06/01/2033 300,465 -------------- TOTAL MUNICIPAL BONDS & NOTES (COST $505,000) 506,295 -------------- AGENCY SECURITIES - 14.11% FEDERAL HOME LOAN MORTGAGE CORPORATION - 7.46% 79,218 FHLMC #1B0145+/- 6.03 10/01/2031 81,074 390,371 FHLMC #555514 9.00 10/01/2019 436,599 580,694 FHLMC #555519 9.00 12/01/2016 633,403 146,980 FHLMC #786823+/- 6.02 07/01/2029 154,629 191,210 FHLMC #788792+/- 6.15 01/01/2029 199,886 139,690 FHLMC #789272+/- 5.66 04/01/2032 145,149 174,227 FHLMC #789483+/- 5.68 06/01/2032 181,133 12,658 FHLMC #865456+/- 5.44 07/01/2010 12,735 104,935 FHLMC #A01734 9.00 08/01/2018 114,364 312 FHLMC #B00589 10.00 06/01/2005 313 506,543 FHLMC #G10747 7.50 10/01/2012 542,410 318,755 FHLMC #G11209 7.50 12/01/2011 337,190 345,278 FHLMC #G11391 7.50 06/01/2012 365,575 3,204,460 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.84% 444,865 FNMA #100254 8.00 12/15/2024 480,604 375,322 FNMA #100255 8.33 07/15/2020 417,587 439,289 FNMA #100259 7.50 12/15/2009 456,435 34,840 FNMA #149167 10.50 08/01/2020 40,296 68,951 FNMA #365418+/- 3.90 01/01/2023 70,017 68,218 FNMA #372179 11.00 04/01/2012 74,397 202,048 FNMA #545460+/- 5.82 11/01/2031 208,634 326,232 FNMA #675491+/- 5.35 04/01/2033 330,947 2,078,917 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.81% 317,525 GNMA #781540 7.00 05/15/2013 333,654 414,674 GNMA #781614 7.00 06/15/2033 443,810 777,464 -------------- TOTAL AGENCY SECURITIES (COST $5,806,040) 6,060,841 -------------- 70
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] ULTRA-SHORT DURATION BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE SHORT-TERM INVESTMENTS - 6.29% US TREASURY BILLS - 0.12% $ 50,000 US TREASURY BILL^00 2.82% 07/28/2005 $ 49,784 -------------- SHARES MUTUAL FUND - 6.17% 2,647,550 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 2,647,551 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $2,697,327) 2,697,335 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $42,351,476)* 99.38% $ 42,678,305 OTHER ASSETS AND LIABILITIES, NET 0.62 265,975 ------ -------------- TOTAL NET ASSETS 100.00% $ 42,944,280 ====== ============== +/- VARIABLE RATE INVESTMENTS. (C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES. INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED TIMING OF FUTURE CASH FLOWS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. @ THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE EFFECTIVE MATURITY. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,647,551. ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. 00 SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. * COST FOR FEDERAL INCOME TAX PURPOSES IS $42,351,476 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 495,404 GROSS UNREALIZED DEPRECIATION (168,575) --------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 326,829 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 71
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] DIVERSIFIED HIGH YIELD BOND FUND BOND FUND ---------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .............................................. $ 0 $ 250,838,793 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS ................................. 135,156,139 0 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 0 38,725,396 INVESTMENTS IN AFFILIATES ................................................... 0 0 ------------- ------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........................... 135,156,139 289,564,189 ------------- ------------- CASH ........................................................................ 0 36,047 VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS ............................ 0 0 RECEIVABLE FOR FUND SHARES ISSUED ........................................... 57,003 54,114 RECEIVABLE FOR INVESTMENTS SOLD ............................................. 0 2,956,870 RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 0 4,763,883 UNREALIZED APPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ............... 0 0 PREPAID EXPENSES AND OTHER ASSETS ........................................... 0 0 ------------- ------------- TOTAL ASSETS .................................................................. 135,213,142 297,375,103 ------------- ------------- LIABILITIES SECURITIES SOLD SHORT, AT FAIR VALUE (PROCEEDS OF $4,706,994) ............... 0 0 PAYABLE TO CUSTODIAN FOR OVERDRAFTS ......................................... 0 0 PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 0 0 PAYABLE FOR FUND SHARES REDEEMED ............................................ 1,799,078 6,788,675 PAYABLE FOR INVESTMENTS PURCHASED ........................................... 0 2,000,456 DIVIDENDS PAYABLE ........................................................... 0 489,745 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 11,461 188,858 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ..................................... 38,471 87,283 PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 0 38,725,396 ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 87,571 23,823 ------------- ------------- TOTAL LIABILITIES ............................................................. 1,936,581 48,304,236 ------------- ------------- TOTAL NET ASSETS .............................................................. $ 133,276,561 $ 249,070,867 ============= ============= NET ASSETS CONSIST OF: ---------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ............................................................. $ 127,469,537 $ 250,517,583 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 91,435 (15,153) UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (11,049) (254,849) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 5,726,638 (1,176,714) NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY CONTRACTS AND TRANSACTIONS ................................................ 0 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... 0 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ........................................................... 0 0 ------------- ------------- TOTAL NET ASSETS .............................................................. $ 133,276,561 $ 249,070,867 ------------- ------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) ---------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS A ........................................................ N/A $ 201,996,941 SHARES OUTSTANDING - CLASS A ................................................ N/A 19,781,629 NET ASSET VALUE PER SHARE - CLASS A ......................................... N/A $ 10.21 MAXIMUM OFFERING PRICE PER SHARE - CLASS A .................................. N/A $ 10.69(2) NET ASSETS - CLASS B ........................................................ N/A $ 26,501,249 SHARES OUTSTANDING - CLASS B ................................................ N/A 2,595,638 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ...................... N/A $ 10.21 NET ASSETS - CLASS C ........................................................ N/A $ 20,572,677 SHARES OUTSTANDING - CLASS C ................................................ N/A 2,013,665 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ...................... N/A $ 10.22 NET ASSETS - CLASS Z ........................................................ N/A N/A SHARES OUTSTANDING - CLASS Z ................................................ N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ...................... N/A N/A NET ASSETS - ADMINISTRATOR CLASS ............................................ $ 133,276,561 N/A SHARES OUTSTANDING - ADMINISTRATOR CLASS .................................... 5,161,893 N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .......... $ 25.82 N/A NET ASSETS - INSTITUTIONAL CLASS ............................................ N/A N/A SHARES OUTSTANDING - INSTITUTIONAL CLASS .................................... N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .......... N/A N/A ------------- ------------- INVESTMENTS AT COST ........................................................... $ 129,429,501 $ 290,740,903 ============= ============= SECURITIES ON LOAN, AT MARKET VALUE ........................................... $ 0 $ 37,774,514 ============= ============= INFLATION- INCOME PROTECTED PLUS FUND BOND FUND ---------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .............................................. $ 52,241,778 $ 104,278,880 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS ................................. 0 0 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 0 0 INVESTMENTS IN AFFILIATES ................................................... 13,497,863 3,217,902 ------------- ------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........................... 65,739,641 107,496,782 ------------- ------------- CASH ........................................................................ 0 0 VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS ............................ 0 0 RECEIVABLE FOR FUND SHARES ISSUED ........................................... 47,004 252,008 RECEIVABLE FOR INVESTMENTS SOLD ............................................. 2,885,908 702,213 RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 693,442 684,828 UNREALIZED APPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ............... 147,818 0 PREPAID EXPENSES AND OTHER ASSETS ........................................... 0 0 ------------- ------------- TOTAL ASSETS .................................................................. 69,513,813 109,135,831 ------------- ------------- LIABILITIES SECURITIES SOLD SHORT, AT FAIR VALUE (PROCEEDS OF $4,706,994) ............... 0 0 PAYABLE TO CUSTODIAN FOR OVERDRAFTS ......................................... 0 0 PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 0 0 PAYABLE FOR FUND SHARES REDEEMED ............................................ 135,741 115,468 PAYABLE FOR INVESTMENTS PURCHASED ........................................... 0 1,157,196 DIVIDENDS PAYABLE ........................................................... 0 55,778 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 31,353 29,763 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ..................................... 33,876 41,854 PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 0 0 ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 21,361 20,574 ------------- ------------- TOTAL LIABILITIES ............................................................. 222,331 1,420,633 ------------- ------------- TOTAL NET ASSETS .............................................................. $ 69,291,482 $ 107,715,198 ============= ============= NET ASSETS CONSIST OF: ---------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ............................................................. $ 75,962,135 $ 103,926,749 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. (227,922) 1,000,294 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (7,747,241) 2,114,920 NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 1,156,692 673,235 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY CONTRACTS AND TRANSACTIONS ................................................ 147,818 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... 0 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ........................................................... 0 0 ------------- ------------- TOTAL NET ASSETS .............................................................. $ 69,291,482 $ 107,715,198 ------------- ------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) ---------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS A ........................................................ $ 42,675,737 $ 28,436,879 SHARES OUTSTANDING - CLASS A ................................................ 3,882,303 2,721,488 NET ASSET VALUE PER SHARE - CLASS A ......................................... $ 10.99 $ 10.45 MAXIMUM OFFERING PRICE PER SHARE - CLASS A .................................. $ 11.51(2) $ 10.94(2) NET ASSETS - CLASS B ........................................................ $ 20,164,889 $ 12,167,518 SHARES OUTSTANDING - CLASS B ................................................ 1,834,086 1,167,502 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ...................... $ 10.99 $ 10.42 NET ASSETS - CLASS C ........................................................ $ 6,450,856 $ 13,873,450 SHARES OUTSTANDING - CLASS C ................................................ 586,813 1,330,464 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ...................... $ 10.99 $ 10.43 NET ASSETS - CLASS Z ........................................................ N/A N/A SHARES OUTSTANDING - CLASS Z ................................................ N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ...................... N/A N/A NET ASSETS - ADMINISTRATOR CLASS ............................................ N/A $ 53,237,351 SHARES OUTSTANDING - ADMINISTRATOR CLASS .................................... N/A 5,106,448 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .......... N/A $ 10.43 NET ASSETS - INSTITUTIONAL CLASS ............................................ N/A N/A SHARES OUTSTANDING - INSTITUTIONAL CLASS .................................... N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .......... N/A N/A ------------- ------------- INVESTMENTS AT COST ........................................................... $ 64,580,610 $ 106,823,547 ============= ============= SECURITIES ON LOAN, AT MARKET VALUE ........................................... $ 0 $ 0 ============= ============= (1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES. (2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.50 OF NET ASSET VALUE. ON INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED. (3) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/97.00 OF NET ASSET VALUE. ON INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED. (4) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/98.00 OF NET ASSET VALUE. ON INVESTMENTS OF $50,000 OR MORE, THE OFFERING PRICE IS REDUCED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 72
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STATEMENTS OF ASSETS AND LIABILITIES -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE SHORT DURATION GOVERNMENT GOVERNMENT INCOME FUND BOND FUND ---------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .............................................. $ 534,032,583 $ 617,733,204 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS ................................. 0 0 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 262,679,082 267,936,135 INVESTMENTS IN AFFILIATES ................................................... 43,425,275 0 ------------- ------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........................... 840,136,940 885,669,339 ------------- ------------- CASH ........................................................................ 0 121,898 VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS ............................ 83,125 0 RECEIVABLE FOR FUND SHARES ISSUED ........................................... 720,290 774,741 RECEIVABLE FOR INVESTMENTS SOLD ............................................. 1,476 112,019,988 RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 3,332,270 2,968,111 UNREALIZED APPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ............... 0 0 PREPAID EXPENSES AND OTHER ASSETS ........................................... 0 0 ------------- ------------- TOTAL ASSETS .................................................................. 844,274,101 1,001,554,077 ------------- ------------- LIABILITIES SECURITIES SOLD SHORT, AT FAIR VALUE (PROCEEDS OF $4,706,994) ............... 0 0 PAYABLE TO CUSTODIAN FOR OVERDRAFTS ......................................... 219,779 0 PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 0 0 PAYABLE FOR FUND SHARES REDEEMED ............................................ 1,040,825 2,393,079 PAYABLE FOR INVESTMENTS PURCHASED ........................................... 0 145,388,470 DIVIDENDS PAYABLE ........................................................... 126 389,346 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 252,324 116,997 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ..................................... 152,994 158,079 PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 262,679,082 267,936,135 ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 69,703 140,473 ------------- ------------- TOTAL LIABILITIES ............................................................. 264,414,833 416,522,579 ------------- ------------- TOTAL NET ASSETS .............................................................. $ 579,859,268 $ 585,031,498 ============= ============= NET ASSETS CONSIST OF: ---------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ............................................................. $ 625,577,731 $ 602,533,613 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. (1,301,964) (38,948) UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (47,458,277) (15,244,096) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 2,941,696 (2,219,071) NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY CONTRACTS AND TRANSACTIONS ................................................ 0 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... 100,082 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ........................................................... 0 0 ------------- ------------- TOTAL NET ASSETS .............................................................. $ 579,859,268 $ 585,031,498 ------------- ------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) ---------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS A ........................................................ $ 142,570,216 $ 94,059,154 SHARES OUTSTANDING - CLASS A ................................................ 13,004,709 9,393,336 NET ASSET VALUE PER SHARE - CLASS A ......................................... $ 10.96 $ 10.01 MAXIMUM OFFERING PRICE PER SHARE - CLASS A .................................. $ 11.48(2) $ 10.32(3) NET ASSETS - CLASS B ........................................................ $ 30,235,922 $ 27,078,133 SHARES OUTSTANDING - CLASS B ................................................ 2,762,550 2,702,422 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ...................... $ 10.94 $ 10.02 NET ASSETS - CLASS C ........................................................ $ 12,859,569 $ 19,553,304 SHARES OUTSTANDING - CLASS C ................................................ 1,177,415 1,949,893 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ...................... $ 10.92 $ 10.03 NET ASSETS - CLASS Z ........................................................ N/A N/A SHARES OUTSTANDING - CLASS Z ................................................ N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ...................... N/A N/A NET ASSETS - ADMINISTRATOR CLASS ............................................ $ 394,193,561 $ 444,330,820 SHARES OUTSTANDING - ADMINISTRATOR CLASS .................................... 35,977,610 44,320,586 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .......... $ 10.96 $ 10.03 NET ASSETS - INSTITUTIONAL CLASS ............................................ N/A $ 10,087 SHARES OUTSTANDING - INSTITUTIONAL CLASS .................................... N/A 1,006 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .......... N/A $ 10.03 ------------- ------------- INVESTMENTS AT COST ........................................................... $ 837,195,244 $ 887,888,410 ============= ============= SECURITIES ON LOAN, AT MARKET VALUE ........................................... $ 258,307,703 $ 261,217,453 ============= ============= STABLE STRATEGIC INCOME INCOME TOTAL RETURN FUND FUND BOND FUND --------------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .............................................. $ 0 $ 24,526,381 $1,196,667,540 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS ................................. 469,157,086 0 0 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 0 0 515,460,415 INVESTMENTS IN AFFILIATES ................................................... 0 2,490,960 0 ------------- ------------- -------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........................... 469,157,086 27,017,341 1,712,127,955 ------------- ------------- -------------- CASH ........................................................................ 0 0 264,649 VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS ............................ 0 0 0 RECEIVABLE FOR FUND SHARES ISSUED ........................................... 618,279 18,556 1,502,478 RECEIVABLE FOR INVESTMENTS SOLD ............................................. 0 45,868 520,782,448 RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 0 472,563 8,016,268 UNREALIZED APPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ............... 0 0 0 PREPAID EXPENSES AND OTHER ASSETS ........................................... 0 1,200 0 ------------- ------------- -------------- TOTAL ASSETS .................................................................. 469,775,365 27,555,528 2,242,693,798 ------------- ------------- -------------- LIABILITIES SECURITIES SOLD SHORT, AT FAIR VALUE (PROCEEDS OF $4,706,994) ............... 0 0 4,721,856 PAYABLE TO CUSTODIAN FOR OVERDRAFTS ......................................... 0 35,455 0 PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 0 0 0 PAYABLE FOR FUND SHARES REDEEMED ............................................ 1,865,936 153,011 1,507,745 PAYABLE FOR INVESTMENTS PURCHASED ........................................... 0 196,717 599,450,149 DIVIDENDS PAYABLE ........................................................... 15 6,142 620,801 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 15,251 9,996 407,175 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ..................................... 118,470 15,970 211,241 PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 0 0 515,460,415 ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 40,114 0 70,333 ------------- ------------- -------------- TOTAL LIABILITIES ............................................................. 2,039,786 417,291 1,122,449,715 ------------- ------------- -------------- TOTAL NET ASSETS .............................................................. $ 467,735,579 $ 27,138,237 $1,120,244,083 ============= ============= ============== NET ASSETS CONSIST OF: --------------------------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ............................................................. $ 468,838,957 $ 26,543,272 $1,134,087,678 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 488,990 (2,013) 89,342 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (2,526,134) 462,978 (23,180,061) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 933,766 134,000 9,261,986 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY CONTRACTS AND TRANSACTIONS ................................................ 0 0 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... 0 0 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ........................................................... 0 0 (14,862) ------------- ------------- -------------- TOTAL NET ASSETS .............................................................. $ 467,735,579 $ 27,138,237 $1,120,244,083 ------------- ------------- -------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS A ........................................................ $ 83,406,324 $ 13,253,834 $ 84,187,767 SHARES OUTSTANDING - CLASS A ................................................ 8,034,667 1,295,744 6,670,300 NET ASSET VALUE PER SHARE - CLASS A ......................................... $ 10.38 $ 10.23 $ 12.62 MAXIMUM OFFERING PRICE PER SHARE - CLASS A .................................. $ 10.59(4) $ 10.71(2) $ 13.21(2) NET ASSETS - CLASS B ........................................................ $ 20,969,916 $ 10,061,922 $ 27,680,979 SHARES OUTSTANDING - CLASS B ................................................ 2,023,067 983,416 2,191,136 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ...................... $ 10.37 $ 10.23 $ 12.63 NET ASSETS - CLASS C ........................................................ $ 7,137,101 $ 3,822,481 $ 9,822,583 SHARES OUTSTANDING - CLASS C ................................................ 689,592 374,206 781,701 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ...................... $ 10.35 $ 10.21 $ 12.57 NET ASSETS - CLASS Z ........................................................ N/A N/A $ 29,203,600 SHARES OUTSTANDING - CLASS Z ................................................ N/A N/A 2,353,296 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ...................... N/A N/A $ 12.41 NET ASSETS - ADMINISTRATOR CLASS ............................................ $ 356,222,238 N/A $ 720,934,857 SHARES OUTSTANDING - ADMINISTRATOR CLASS .................................... 34,324,264 N/A 58,095,844 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .......... $ 10.38 N/A $ 12.41 NET ASSETS - INSTITUTIONAL CLASS ............................................ N/A N/A $ 248,414,297 SHARES OUTSTANDING - INSTITUTIONAL CLASS .................................... N/A N/A 20,027,190 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .......... N/A N/A $ 12.40 ------------- ------------- -------------- INVESTMENTS AT COST ........................................................... $ 468,223,320 $ 26,883,341 $1,702,865,969 ============= ============= ============== SECURITIES ON LOAN, AT MARKET VALUE ........................................... $ 0 $ 0 $ 506,758,112 ============= ============= ============== ULTRA-SHORT DURATION BOND FUND --------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .............................................. $ 40,030,754 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS ................................. 0 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 0 INVESTMENTS IN AFFILIATES ................................................... 2,647,551 ------------ TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ........................... 42,678,305 ------------ CASH ........................................................................ 0 VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS ............................ 0 RECEIVABLE FOR FUND SHARES ISSUED ........................................... 15,267 RECEIVABLE FOR INVESTMENTS SOLD ............................................. 49,251 RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 362,395 UNREALIZED APPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS ............... 0 PREPAID EXPENSES AND OTHER ASSETS ........................................... 0 ------------ TOTAL ASSETS .................................................................. 43,105,218 ------------ LIABILITIES SECURITIES SOLD SHORT, AT FAIR VALUE (PROCEEDS OF $4,706,994) ............... 0 PAYABLE TO CUSTODIAN FOR OVERDRAFTS ......................................... 0 PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 7,156 PAYABLE FOR FUND SHARES REDEEMED ............................................ 103,206 PAYABLE FOR INVESTMENTS PURCHASED ........................................... 0 DIVIDENDS PAYABLE ........................................................... 6,180 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 9,643 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ..................................... 19,845 PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 0 ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 14,908 ------------ TOTAL LIABILITIES ............................................................. 160,938 ------------ TOTAL NET ASSETS .............................................................. $ 42,944,280 ============ NET ASSETS CONSIST OF: --------------------------------------------------------------------------------------------- PAID-IN CAPITAL ............................................................. $ 50,925,240 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 0 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (8,305,415) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 326,829 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD FOREIGN CURRENCY CONTRACTS AND TRANSACTIONS ................................................ 0 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... (2,374) NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS, AND SHORT SALES ........................................................... 0 ------------ TOTAL NET ASSETS .............................................................. $ 42,944,280 ------------ COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) --------------------------------------------------------------------------------------------- NET ASSETS - CLASS A ........................................................ $ 14,948,288 SHARES OUTSTANDING - CLASS A ................................................ 1,550,432 NET ASSET VALUE PER SHARE - CLASS A ......................................... $ 9.64 MAXIMUM OFFERING PRICE PER SHARE - CLASS A .................................. $ 9.84(4) NET ASSETS - CLASS B ........................................................ $ 8,562,345 SHARES OUTSTANDING - CLASS B ................................................ 890,006 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS B ...................... $ 9.62 NET ASSETS - CLASS C ........................................................ $ 6,473,056 SHARES OUTSTANDING - CLASS C ................................................ 671,470 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ...................... $ 9.64 NET ASSETS - CLASS Z ........................................................ $ 12,960,591 SHARES OUTSTANDING - CLASS Z ................................................ 1,349,159 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS Z ...................... $ 9.61 NET ASSETS - ADMINISTRATOR CLASS ............................................ N/A SHARES OUTSTANDING - ADMINISTRATOR CLASS .................................... N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS .......... N/A NET ASSETS - INSTITUTIONAL CLASS ............................................ N/A SHARES OUTSTANDING - INSTITUTIONAL CLASS .................................... N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS .......... N/A ------------ INVESTMENTS AT COST ........................................................... $ 42,351,476 ============ SECURITIES ON LOAN, AT MARKET VALUE ........................................... $ 0 ============ 73
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] INFLATION- DIVERSIFIED HIGH YIELD INCOME PROTECTED BOND FUND BOND FUND PLUS FUND BOND FUND -------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ......................................................... $ 0 $ 390,334 $ 209,128 $ 0 DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............. 266,762 0 0 0 INTEREST .......................................................... 14 24,563,366 2,193,601 3,980,606 INTEREST INCOME ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ....... 6,545,399 0 0 0 INCOME FROM AFFILIATED SECURITIES ................................. 0 0 1,984,313 30,775 SECURITIES LENDING INCOME, NET .................................... 0 233,295 6,244 14,512 EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .............. (788,575) 0 0 0 WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............... 206,396 0 0 0 ----------- ------------ ----------- ----------- TOTAL INVESTMENT INCOME ............................................. 6,229,996 25,186,995 4,393,286 4,025,893 ----------- ------------ ----------- ----------- EXPENSES ADVISORY FEES ..................................................... 402,442 1,689,600 404,830 397,987 ADMINISTRATION FEES FUND LEVEL ...................................................... 80,488 151,283 36,231 43,557 CLASS A ......................................................... N/A 699,875 106,784 73,753 CLASS B ......................................................... N/A 78,795 76,855 32,375 CLASS C ......................................................... N/A 68,515 19,253 35,894 CLASS Z ......................................................... N/A N/A N/A N/A ADMINISTRATOR CLASS ............................................. 302,956 N/A N/A 65,749 INSTITUTIONAL CLASS ............................................. 0 N/A N/A 0 CUSTODY FEES ...................................................... 0 60,513 14,492 17,423 SHAREHOLDER SERVICING FEES ........................................ 47,496 756,416 181,153 144,388 ACCOUNTING FEES ................................................... 28,984 36,869 24,032 27,815 DISTRIBUTION FEES (NOTE 3) CLASS A ......................................................... N/A 0 0 0 CLASS B ......................................................... N/A 211,060 205,860 86,718 CLASS C ......................................................... N/A 183,522 51,571 96,144 AUDIT FEES ........................................................ 8,099 21,999 16,699 17,002 LEGAL FEES ........................................................ 99 4,318 2,000 9,001 REGISTRATION FEES ................................................. 99 132,604 1,000 35,000 SHAREHOLDER REPORTS ............................................... 99 39,106 10,399 56,998 TRUSTEES' FEES .................................................... 6,789 6,789 6,789 6,800 OTHER FEES AND EXPENSES ........................................... 6,990 8,690 3,419 1,902 ----------- ------------ ----------- ----------- TOTAL EXPENSES ...................................................... 884,541 4,149,954 1,161,367 1,148,506 ----------- ------------ ----------- ----------- LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ...................... (339,654) (275,466) (489,718) (304,080) NET EXPENSES ...................................................... 544,887 3,874,488 671,649 844,426 ----------- ------------ ----------- ----------- NET INVESTMENT INCOME (LOSS) ........................................ 5,685,109 21,312,507 3,721,637 3,181,467 ----------- ------------ ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -------------------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ... 0 2,609,765 177,896 2,303,707 FORWARD FOREIGN CURRENCY CONTRACTS ................................ 0 0 (530,653) 0 FUTURES TRANSACTIONS .............................................. 0 0 (57,629) 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .............. 0 0 (144,477) 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 753,062 0 0 0 FUTURES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .. 39,432 0 0 0 OPTIONS, SWAP AGREEMENT AND SHORT SALE TRANSACTIONS ALLOCATED FROM MASTER PORTFOLIOS ............................................... 19,182 0 0 0 ----------- ------------ ----------- ----------- NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................... 811,676 2,609,765 (554,863) 2,303,706 ----------- ------------ ----------- ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ... 0 (3,455,964) 1,539,249 918,054 FORWARD FOREIGN CURRENCY CONTRACTS ................................ 0 0 230,389 0 FUTURES TRANSACTIONS .............................................. 0 0 13,594 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .............. 0 0 (47,917) 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 1,776,690 0 0 0 FORWARDS, FUTURES, OPTIONS, SWAPS AND SHORT SALES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .................................... 32,805 0 0 0 ----------- ------------ ----------- ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS . 1,809,495 (3,455,964) 1,735,315 918,054 =========== ============ =========== ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. 2,621,171 (846,199) 1,180,452 3,221,760 ----------- ------------ ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 8,306,280 $ 20,466,308 $ 4,902,089 $ 6,403,227 =========== ============ =========== ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 74
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STATEMENTS OF OPERATIONS -- WELLS FARGO ADVANTAGE INCOME FUNDS FOR THE YEAR ENDED MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE SHORT DURATION STABLE GOVERNMENT GOVERNMENT INCOME INCOME FUND BOND FUND FUND ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ......................................................... $ 0 $ 0 $ 0 DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............. 0 0 453,829 INTEREST .......................................................... 25,469,599 14,737,408 65 INTEREST INCOME ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ....... 0 0 14,579,457 INCOME FROM AFFILIATED SECURITIES ................................. 240,246 0 0 SECURITIES LENDING INCOME, NET .................................... 273,676 175,772 0 EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .............. 0 0 (3,018,214) WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............... 0 0 737,699 ----------- ------------ ----------- TOTAL INVESTMENT INCOME ............................................. 25,983,521 14,913,180 12,752,836 ----------- ------------ ----------- EXPENSES ADVISORY FEES ..................................................... 2,779,753 2,088,653 0 ADMINISTRATION FEES FUND LEVEL ...................................................... 307,726 228,509 313,360 CLASS A ......................................................... 453,606 151,618 350,033 CLASS B ......................................................... 108,143 34,712 79,025 CLASS C ......................................................... 46,644 73,465 26,721 CLASS Z ......................................................... N/A N/A N/A ADMINISTRATOR CLASS ............................................. 741,327 666,112 878,036 INSTITUTIONAL CLASS ............................................. 0 1 0 CUSTODY FEES ...................................................... 123,090 91,404 0 SHAREHOLDER SERVICING FEES ........................................ 680,733 387,846 531,569 ACCOUNTING FEES ................................................... 54,266 64,020 55,059 DISTRIBUTION FEES (NOTE 3) CLASS A ......................................................... 0 0 0 CLASS B ......................................................... 289,668 92,978 211,674 CLASS C ......................................................... 124,940 196,780 71,575 AUDIT FEES ........................................................ 23,039 23,999 8,001 LEGAL FEES ........................................................ 12,600 14,501 18,998 REGISTRATION FEES ................................................. 1,000 800,000 134,999 SHAREHOLDER REPORTS ............................................... 1,000 110,000 91,998 TRUSTEES' FEES .................................................... 6,782 6,789 6,800 OTHER FEES AND EXPENSES ........................................... 19,429 13,611 22,915 ----------- ------------ ----------- TOTAL EXPENSES ...................................................... 5,773,746 5,044,998 2,800,763 ----------- ------------ ----------- LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ...................... (505,134) (1,766,087) (339,484) NET EXPENSES ...................................................... 5,268,612 3,278,911 2,461,279 ----------- ------------ ----------- NET INVESTMENT INCOME (LOSS) ........................................ 20,714,909 11,634,269 10,291,557 ----------- ------------ ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ... (1,191,749) (3,661,229) 0 FORWARD FOREIGN CURRENCY CONTRACTS ................................ 0 0 0 FUTURES TRANSACTIONS .............................................. (676,499) 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .............. 0 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 0 0 (482,672) FUTURES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .. 0 0 (36,246) OPTIONS, SWAP AGREEMENT AND SHORT SALE TRANSACTIONS ALLOCATED FROM MASTER PORTFOLIOS ............................................... 0 0 (640,859) ----------- ------------ ----------- NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................... (1,868,248) (3,661,229) (1,159,777) ----------- ------------ ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ... 7,169,228 1,019,288 0 FORWARD FOREIGN CURRENCY CONTRACTS ................................ 0 0 0 FUTURES TRANSACTIONS .............................................. 362,113 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .............. 0 17,437 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 0 0 3,106,677 FORWARDS, FUTURES, OPTIONS, SWAPS AND SHORT SALES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .................................... 0 0 (249,270) ----------- ------------ ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS . 7,531,341 1,036,725 2,857,407 =========== ============ =========== NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. 5,663,093 (2,624,504) 1,697,630 ----------- ------------ ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $26,378,002 $ 9,009,765 $11,989,187 =========== ============ =========== STRATEGIC INCOME FUND --------------------------------- FOR THE FOR THE PERIOD ENDED YEAR ENDED TOTAL RETURN MAY 31, 2005 OCTOBER 31, 2004 BOND FUND ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ......................................................... $ 3,124 $ 45,865 $ 0 DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............. 0 0 0 INTEREST .......................................................... 1,176,598 2,099,362 22,956,741 INTEREST INCOME ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ....... 0 0 0 INCOME FROM AFFILIATED SECURITIES ................................. 11,819 0 0 SECURITIES LENDING INCOME, NET .................................... 0 0 243,623 EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .............. 0 0 0 WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............... 0 0 0 ----------- ------------ ----------- TOTAL INVESTMENT INCOME ............................................. 1,191,541 2,145,227 23,200,364 ----------- ------------ ----------- EXPENSES ADVISORY FEES ..................................................... 86,216 132,787 2,408,346 ADMINISTRATION FEES FUND LEVEL ...................................................... 1,931 0 271,318 CLASS A ......................................................... 34,645 57,420 149,079 CLASS B ......................................................... 26,229 45,347 29,951 CLASS C ......................................................... 10,411 26,251 18,265 CLASS Z ......................................................... N/A N/A 18,437 ADMINISTRATOR CLASS ............................................. N/A N/A 607,043 INSTITUTIONAL CLASS ............................................. N/A N/A 108,606 CUSTODY FEES ...................................................... 3,544 5,217 106,609 SHAREHOLDER SERVICING FEES ........................................ 9,654 0 813,655 ACCOUNTING FEES ................................................... 4,730 0 74,176 DISTRIBUTION FEES (NOTE 3) CLASS A ......................................................... 15,605 29,714 0 CLASS B ......................................................... 57,804 93,216 80,225 CLASS C ......................................................... 24,753 53,504 48,923 AUDIT FEES ........................................................ 14,470 13,516 19,998 LEGAL FEES ........................................................ 1,199 6,946 6,001 REGISTRATION FEES ................................................. 24,708 40,853 188,001 SHAREHOLDER REPORTS ............................................... 4,139 10,585 68,000 TRUSTEES' FEES .................................................... 2,992 1,823 6,800 OTHER FEES AND EXPENSES ........................................... 4,193 3,264 31,224 ----------- ------------ ----------- TOTAL EXPENSES ...................................................... 327,223 520,443 5,054,657 ----------- ------------ ----------- LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ...................... (51,177) (54,007) (1,297,449) NET EXPENSES ...................................................... 276,046 466,436 3,757,208 ----------- ------------ ----------- NET INVESTMENT INCOME (LOSS) ........................................ 915,495 1,678,791 19,443,156 ----------- ------------ ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ... 859,069 1,458,166 4,035,385 FORWARD FOREIGN CURRENCY CONTRACTS ................................ 0 0 0 FUTURES TRANSACTIONS .............................................. 0 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .............. 0 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 0 0 0 FUTURES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .. 0 0 0 OPTIONS, SWAP AGREEMENT AND SHORT SALE TRANSACTIONS ALLOCATED FROM MASTER PORTFOLIOS ............................................... 0 0 0 ----------- ------------ ----------- NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................... 859,069 1,458,166 4,035,385 ----------- ------------ ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ... (1,373,580) (121,717) 12,219,273 FORWARD FOREIGN CURRENCY CONTRACTS ................................ 0 0 0 FUTURES TRANSACTIONS .............................................. 0 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS .............. 0 0 (524) SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 0 0 0 FORWARDS, FUTURES, OPTIONS, SWAPS AND SHORT SALES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .................................... 0 0 0 ----------- ------------ ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS . (1,373,580) (121,767) 12,218,749 =========== ============ =========== NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. (514,511) 1,336,449 16,254,134 ----------- ------------ ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 400,984 $ 3,015,240 $35,697,290 =========== ============ =========== 75
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] ULTRA-SHORT DURATION BOND FUND ---------------------------------- FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS .................................................................... $ 0 $ 0 DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ........................ 0 0 INTEREST ..................................................................... 999,100 1,875,614 INTEREST INCOME ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .................. 0 0 INCOME FROM AFFILIATED SECURITIES ............................................ 5,742 0 SECURITIES LENDING INCOME, NET ............................................... 0 0 INCOME ON SWAP CONTRACTS ..................................................... 0 0 EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ......................... 0 0 WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......................... 0 0 ------------ --------------- TOTAL INVESTMENT INCOME ........................................................ 1,004,842 1,875,614 ------------ --------------- EXPENSES ADVISORY FEES ................................................................ 109,226 249,203 ADMINISTRATION FEES FUND LEVEL ................................................................. 3,030 0 CLASS A .................................................................... 41,340 107,559 CLASS B .................................................................... 23,901 57,581 CLASS C .................................................................... 20,164 63,821 CLASS Z .................................................................... 39,990 104,992 ADMINISTRATOR CLASS ........................................................ N/A NA INSTITUTIONAL CLASS ........................................................ N/A NA CUSTODY FEES ................................................................. 4,243 15,326 SHAREHOLDER SERVICING FEES ................................................... 15,149 0 ACCOUNTING FEES .............................................................. 5,710 0 DISTRIBUTION FEES (NOTE 3) CLASS A .................................................................... 18,962 55,522 CLASS B .................................................................... 51,741 117,048 CLASS C .................................................................... 43,255 130,389 AUDIT FEES ................................................................... 8,941 15,340 LEGAL FEES ................................................................... 2,399 16,966 REGISTRATION FEES ............................................................ 32,553 60,359 SHAREHOLDER REPORTS .......................................................... 4,405 36,212 TRUSTEES' FEES ............................................................... 4,117 3,757 OTHER FEES AND EXPENSES ...................................................... 8,819 6,079 ------------ --------------- TOTAL EXPENSES ................................................................. 437,945 1,040,154 ------------ --------------- LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ................................. (64,827) (82,137) NET EXPENSES ................................................................. 373,118 958,017 ------------ --------------- NET INVESTMENT INCOME (LOSS) ................................................... 631,724 917,597 ------------ --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS --------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .............. 17,703 510,198 FORWARD FOREIGN CURRENCY CONTRACTS ........................................... 0 0 FUTURES TRANSACTIONS ......................................................... 26,237 (185,632) OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ......................... 0 (10,920) SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......... 0 0 FUTURES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............. 0 0 OPTIONS, SWAP AGREEMENT AND SHORT SALE TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ............................................... 0 0 ------------ --------------- NET REALIZED GAIN (LOSS) FROM INVESTMENTS ...................................... 43,940 313,646 ------------ --------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .............. (258,879) (596,696) FORWARD FOREIGN CURRENCY CONTRACTS ........................................... 0 0 FUTURES TRANSACTIONS ......................................................... 18,413 62,971 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ......................... 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......... 0 0 FORWARDS, FUTURES, OPTIONS, SWAPS AND SHORT SALES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS 0 0 ------------ --------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ (240,466) (533,725) ============ =============== NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ......................... (196,526) (220,079) ------------ --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ $ 435,198 $ 697,518 ============ =============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 76
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] DIVERSIFIED BOND FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................................................... $ 191,874,766 $ 372,821,909 OPERATIONS: NET INVESTMENT INCOME (LOSS) .......................................................... 5,685,109 10,078,696 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................... 811,676 936,877 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................... 1,809,495 (10,863,111) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 8,306,280 152,462 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS A ............................................................................ N/A N/A CLASS B ............................................................................ N/A N/A CLASS C ............................................................................ N/A N/A ADMINISTRATOR CLASS ................................................................ (5,714,187) (10,376,704) INSTITUTIONAL CLASS ................................................................ N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ............................................................................ N/A N/A CLASS B ............................................................................ N/A N/A CLASS C ............................................................................ N/A N/A ADMINISTRATOR CLASS ................................................................ (905,647) (380,319) INSTITUTIONAL CLASS ................................................................ N/A N/A RETURN OF CAPITAL CLASS A ............................................................................ N/A N/A CLASS B ............................................................................ N/A N/A CLASS C ............................................................................ N/A N/A ADMINISTRATOR CLASS ................................................................ 0 0 ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS ....................................................... (6,619,834) (10,757,023) ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ................................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................................... N/A N/A COST OF SHARES REDEEMED - CLASS A ..................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A N/A N/A ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ................................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................................... N/A N/A COST OF SHARES REDEEMED - CLASS B ..................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B N/A N/A ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ................................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................... N/A N/A COST OF SHARES REDEEMED - CLASS C ..................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C N/A N/A ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................................... 38,695,507 35,968,410 REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ................................... 4,194,117 6,249,017 COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ......................................... (103,174,275) (212,560,009) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ................................................................... (60,284,651) (170,342,582) ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................... N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ................................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS .......... (60,284,651) (170,342,582) ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .................................................... (58,598,205) (180,947,143) ============= ============= ENDING NET ASSETS ........................................................................ $ 133,276,561 $ 191,874,766 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ 91,435 $ 105,312 ============= ============= 78
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH YIELD BOND FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................................................... $ 296,980,945 $ 143,950,776 OPERATIONS: NET INVESTMENT INCOME (LOSS) .......................................................... 21,312,507 17,326,159 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................... 2,609,765 3,382,435 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................... (3,455,964) (1,367,356) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 20,466,308 19,341,238 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS A ............................................................................ (18,181,955) (14,172,073) CLASS B ............................................................................ (1,842,219) (1,422,169) CLASS C ............................................................................ (1,601,192) (1,436,764) ADMINISTRATOR CLASS ................................................................ N/A N/A INSTITUTIONAL CLASS ................................................................ N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ............................................................................ (4,874,578) (454,530) CLASS B ............................................................................ (519,343) (50,887) CLASS C ............................................................................ (451,030) (51,638) ADMINISTRATOR CLASS ................................................................ N/A N/A INSTITUTIONAL CLASS ................................................................ N/A N/A RETURN OF CAPITAL CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ N/A N/A ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS ....................................................... (27,470,317) (17,588,061) ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ................................................... 49,410,937 146,368,462 REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................................... 14,982,380 9,044,140 COST OF SHARES REDEEMED - CLASS A ..................................................... (100,056,293) (33,557,978) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A (35,662,976) 121,854,624 ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ................................................... 4,428,740 18,271,675 REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................................... 1,560,577 929,810 COST OF SHARES REDEEMED - CLASS B ..................................................... (6,073,809) (3,629,579) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B (84,492) 15,571,906 ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ................................................... 3,208,814 17,112,255 REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................... 1,338,720 886,613 COST OF SHARES REDEEMED - CLASS C ..................................................... (9,706,135) (4,148,406) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (5,158,601) 13,850,462 ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ................................... N/A N/A COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ................................................................... N/A N/A ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................... N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ...................................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS .......... (40,906,069) 151,276,992 ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .................................................... (47,910,078) 153,030,169 ============= ============= ENDING NET ASSETS ........................................................................ $ 249,070,867 $ 296,980,945 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ (15,153) $ 344,837 ============= ============= INCOME PLUS FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................................................... $ 75,339,146 $ 79,276,615 OPERATIONS: NET INVESTMENT INCOME (LOSS) .......................................................... 3,721,637 3,499,141 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................... (554,863) 1,731,212 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................... 1,735,315 (4,374,701) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 4,902,089 855,652 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS A ............................................................................ (2,169,259) (1,462,497) CLASS B ............................................................................ (1,312,445) (2,169,378) CLASS C ............................................................................ (332,150) (475,953) ADMINISTRATOR CLASS ................................................................ N/A N/A INSTITUTIONAL CLASS ................................................................ N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ N/A N/A INSTITUTIONAL CLASS ................................................................ N/A N/A RETURN OF CAPITAL CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ N/A N/A ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS ....................................................... (3,813,854) (4,107,828) ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ................................................... 22,103,328 17,065,567 REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................................... 1,395,102 924,440 COST OF SHARES REDEEMED - CLASS A ..................................................... (10,098,891) (8,895,406) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A 13,399,539 9,094,601 ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ................................................... 1,637,744 4,724,678 REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................................... 801,629 1,369,040 COST OF SHARES REDEEMED - CLASS B ..................................................... (21,360,523) (13,286,544) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B (18,921,150) (7,192,826) ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ................................................... 1,395,277 2,642,644 REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................... 243,086 320,964 COST OF SHARES REDEEMED - CLASS C ..................................................... (3,252,651) (5,550,676) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (1,614,288) (2,587,068) ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ................................... N/A N/A COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ................................................................... N/A N/A ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................... N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ................................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS .......... (7,135,899) (685,293) ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .................................................... (6,047,664) (3,937,469) ============= ============= ENDING NET ASSETS ........................................................................ $ 69,291,482 $ 75,339,146 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ (227,922) $ (83,738) ============= ============= INFLATION-PROTECTED BOND FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................................................... $ 69,326,545 $ 21,798,201 OPERATIONS: NET INVESTMENT INCOME (LOSS) .......................................................... 3,181,467 1,273,569 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................... 2,303,706 305,288 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................... 918,054 (598,019) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 6,403,227 980,838 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS A ............................................................................ (791,380) (253,483) CLASS B ............................................................................ (287,085) (112,872) CLASS C ............................................................................ (314,809) (123,833) ADMINISTRATOR CLASS ................................................................ (1,205,791) (373,753) INSTITUTIONAL CLASS ................................................................ N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ............................................................................ (156,430) (39,803) CLASS B ............................................................................ (67,881) (27,353) CLASS C ............................................................................ (74,465) (30,596) ADMINISTRATOR CLASS ................................................................ (195,298) (52,642) INSTITUTIONAL CLASS ................................................................ N/A N/A RETURN OF CAPITAL CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ N/A N/A ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS ....................................................... (3,093,139) (1,014,335) ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ................................................... 75,166,164 21,097,027 REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................................... 864,026 252,999 COST OF SHARES REDEEMED - CLASS A ..................................................... (68,711,633) (6,283,312) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A 7,318,557 15,066,714 ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ................................................... 3,547,042 6,945,320 REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................................... 273,385 114,385 COST OF SHARES REDEEMED - CLASS B ..................................................... (2,738,062) (1,439,317) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B 1,082,365 5,620,388 ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ................................................... 4,679,213 10,142,766 REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................... 304,929 130,912 COST OF SHARES REDEEMED - CLASS C ..................................................... (3,410,518) (2,856,862) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C 1,573,624 7,416,816 ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................................... 30,672,396 22,898,156 REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ................................... 1,154,906 355,986 COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ......................................... (6,723,283) (3,796,219) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ................................................................... 25,104,019 19,457,923 ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................... N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ................................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS .......... 35,078,565 47,561,841 ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .................................................... 38,388,653 47,528,344 ============= ============= ENDING NET ASSETS ........................................................................ $ 107,715,198 $ 69,326,545 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ 1,000,294 $ 417,894 ============= ============= 79
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] INTERMEDIATE GOVERNMENT INCOME FUND ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................................................... $ 659,708,066 $ 783,348,783 OPERATIONS: NET INVESTMENT INCOME (LOSS) .......................................................... 20,714,909 22,036,904 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................... (1,868,248) 7,696,277 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................... 7,531,341 (44,891,160) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 26,378,002 (15,157,979) ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM:- NET INVESTMENT INCOME CLASS A ............................................................................ (6,307,745) (8,700,444) CLASS B ............................................................................ (1,225,179) (2,448,890) CLASS C ............................................................................ (526,903) (1,125,650) ADMINISTRATOR CLASS ................................................................ (16,956,645) (21,482,665) INSTITUTIONAL CLASS ................................................................ N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ 0 0 INSTITUTIONAL CLASS ................................................................ N/A N/A RETURN OF CAPITAL CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ N/A N/A ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS ....................................................... (25,016,472) (33,757,649) ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ................................................... 18,417,077 58,682,082 REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................................... 4,730,432 6,375,654 COST OF SHARES REDEEMED - CLASS A ..................................................... (74,540,014) (55,329,924) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A (51,392,505) 9,727,812 ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ................................................... 1,075,260 3,913,573 REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................................... 887,124 1,825,216 COST OF SHARES REDEEMED - CLASS B ..................................................... (19,681,601) (34,475,012) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B (17,719,217) (28,736,223) ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ................................................... 296,399 5,675,581 REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................... 378,500 822,920 COST OF SHARES REDEEMED - CLASS C ..................................................... (9,383,535) (17,144,957) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (8,708,636) (10,646,456) ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................................... 122,273,306 100,369,065 REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ................................... 4,573,995 4,405,354 COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................ (130,237,271) (149,844,641) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ................................................................... (3,389,970) (45,070,222) ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................... N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ...................................................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS .......... (81,210,328) (74,725,089) ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .................................................... (79,848,798) (123,640,717) ============= ============= ENDING NET ASSETS ........................................................................ $ 579,859,268 $ 659,708,066 ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ (1,301,964) $ (3,038,670) ============= ============= 80
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT DURATION GOVERNMENT BOND FUND ----------------------------------------------- FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED PERIOD ENDED JUNE 30, MAY 31, 2005 MAY 31, 2004 2003(1) ----------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ...................................................... $ 523,389,686 $ 611,387,559 $ 455,681,826 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................. 11,634,269 10,149,813 17,393,116 NET REALIZED GAIN (LOSS) ON INVESTMENTS ...................................... (3,661,229) (1,193,389) 10,980,750 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .......... 1,036,725 (6,244,640) (827,730) ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................. 9,009,765 2,711,784 27,546,136 ------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM:- NET INVESTMENT INCOME CLASS A ................................................................... (1,624,709) (886,308) (609,609) CLASS B ................................................................... (281,961) (85,063) (28,868) CLASS C ................................................................... (572,750) (356,312) (135,789) ADMINISTRATOR CLASS ....................................................... (11,765,845) (8,579,134) (20,621,000) INSTITUTIONAL CLASS ....................................................... (51) N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ................................................................... 0 (162,033) (79,795) CLASS B ................................................................... 0 (28,636) (2,235) CLASS C ................................................................... 0 (118,085) (8,846) ADMINISTRATOR CLASS ....................................................... 0 (1,343,870) (4,226,650) INSTITUTIONAL CLASS ....................................................... 0 N/A N/A RETURN OF CAPITAL CLASS A ................................................................... 0 0 0 CLASS B ................................................................... 0 0 0 CLASS C ................................................................... 0 0 0 ADMINISTRATOR CLASS ....................................................... 0 0 0 ------------- ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS .............................................. (14,245,316) (11,559,441) (25,712,792) ------------- ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A .......................................... 83,255,392 44,883,353 63,177,154 REINVESTMENT OF DISTRIBUTIONS - CLASS A ...................................... 1,226,553 814,806 87,903 COST OF SHARES REDEEMED - CLASS A ............................................ (39,054,651) (53,316,492) (13,439,561) ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A 45,427,294 (7,618,333) 49,825,496 ------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B .......................................... 21,722,632 6,693,888 5,879,687 REINVESTMENT OF DISTRIBUTIONS - CLASS B ...................................... 227,608 98,248 6,061 COST OF SHARES REDEEMED - CLASS B ............................................ (3,760,413) (2,514,346) (304,219) ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B 18,189,827 4,277,790 5,581,529 ------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C .......................................... 2,045,754 17,222,671 35,308,682 REINVESTMENT OF DISTRIBUTIONS - CLASS C ...................................... 476,309 390,349 30,673 COST OF SHARES REDEEMED - CLASS C ............................................ (17,095,502) (15,477,538) (2,484,161) ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (14,573,439) 2,135,482 32,855,194 ------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS .............................. 222,157,158 173,824,854 460,909,306 REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS .......................... 10,109,832 9,145,514 1,204,831 COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ............................... (214,443,360) (260,915,523) (396,503,967) ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS .......................................................... 17,823,630 (77,945,155) 65,610,170 ------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS .............................. 10,000 N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS .......................... 51 N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ................................ 0 N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ............................................................. 10,051 N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS . 66,877,363 (79,150,216) 153,872,389 ============= ============= ============= NET INCREASE (DECREASE) IN NET ASSETS ........................................... 61,641,812 (87,997,873) 155,705,733 ============= ============= ============= ENDING NET ASSETS ............................................................... $ 585,031,498 $ 523,389,686 $ 611,387,559 ============= ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................... $ (38,948) $ 193,610 $ (49,386) ============= ============= ============= STABLE INCOME FUND(2) ----------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ---------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ............................................................... $ 784,495,062 $ 715,064,976 OPERATIONS: NET INVESTMENT INCOME (LOSS) .......................................................... 10,291,557 14,716,683 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................................... (1,159,777) (1,879,851) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................... 2,857,407 (6,426,135) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .......................... 11,989,187 6,410,697 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM:- NET INVESTMENT INCOME CLASS A ............................................................................ (1,626,454) (2,648,080) CLASS B ............................................................................ (160,285) (289,271) CLASS C ............................................................................ (54,451) (56,255) ADMINISTRATOR CLASS ................................................................ (7,371,544) (10,702,969) INSTITUTIONAL CLASS ................................................................ N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A ............................................................................ 0 0 CLASS B ............................................................................ 0 0 CLASS C ............................................................................ 0 0 ADMINISTRATOR CLASS ................................................................ 0 0 INSTITUTIONAL CLASS ................................................................ N/A N/A RETURN OF CAPITAL CLASS A ............................................................................ 0 (193,596) CLASS B ............................................................................ 0 (43,311) CLASS C ............................................................................ 0 (9,825) ADMINISTRATOR CLASS ................................................................ 0 (667,499) ------------- ------------- TOTAL DISTRIBUTION TO SHAREHOLDERS ....................................................... (9,212,734) (14,610,806) ------------- ------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ................................................... 101,726,465 135,070,784 REINVESTMENT OF DISTRIBUTIONS - CLASS A ............................................... 1,360,412 2,307,477 COST OF SHARES REDEEMED - CLASS A ..................................................... (186,738,587) (144,366,278) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A (83,651,710) (6,988,017) ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ................................................... 2,480,224 9,488,597 REINVESTMENT OF DISTRIBUTIONS - CLASS B ............................................... 143,199 298,579 COST OF SHARES REDEEMED - CLASS B ..................................................... (17,339,189) (21,832,554) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B (14,715,766) (12,045,378) ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ................................................... 1,701,703 17,481,617 REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................................... 49,550 59,225 COST OF SHARES REDEEMED - CLASS C ..................................................... (6,883,774) (5,245,872) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C (5,132,521) 12,294,970 ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ....................................... 207,316,379 643,439,339 REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ................................... 4,290,088 5,957,306 COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ........................................ (427,642,406) (565,028,025) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ................................................................... (216,035,939) 84,368,620 ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ....................................... N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................................... N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ......................................... N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ............................................. N/A N/A ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS .......... (319,535,936) 77,630,195 ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .................................................... (316,759,483) 69,430,086 ============= ============= ENDING NET ASSETS ........................................................................ $ 467,735,579 $ 784,495,062 ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................. $ 488,990 $ 0 ============= ============= 81
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC INCOME FUND ------------------------------------------------- FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED PERIOD ENDED OCTOBER OCTOBER MAY 31, 2005 31, 2004 31, 2003 ----------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 28,696,705 $ 25,528,315 $ 16,939,847 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 915,495 1,678,792 1,452,014 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... 859,069 1,458,165 587,267 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... (1,373,580) (121,717) 4,449,480 ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 400,984 3,015,240 6,488,761 ------------- ------------- ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS A .................................................................. (489,066) (826,616) (651,595) CLASS B .................................................................. (304,693) (543,945) (406,123) CLASS C .................................................................. (131,969) (311,074) (372,313) CLASS Z .................................................................. N/A N/A N/A ADMINISTRATOR CLASS ...................................................... N/A N/A N/A INSTITUTIONAL CLASS ...................................................... N/A N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A .................................................................. 0 0 0 CLASS B .................................................................. 0 0 0 CLASS C .................................................................. 0 0 0 ADMINISTRATOR CLASS ...................................................... N/A N/A N/A INSTITUTIONAL CLASS ...................................................... N/A N/A N/A RETURN OF CAPITAL CLASS A .................................................................. 0 0 0 CLASS B .................................................................. 0 0 0 CLASS C .................................................................. 0 0 0 ADMINISTRATOR CLASS ...................................................... N/A N/A N/A ------------- ------------- ------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............................................ (925,728) (1,681,635) (1,430,031) ------------- ------------- ------------ CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS A ......................................... 3,960,827 4,817,413 4,907,690 REINVESTMENT OF DISTRIBUTIONS - CLASS A ..................................... 516,555 754,775 601,225 COST OF SHARES REDEEMED - CLASS A ........................................... (4,762,116) (3,304,856) (4,383,733) ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A ................................................................ (284,734) 2,267,332 1,125,182 ------------- ------------- ------------ PROCEEDS FROM SHARES SOLD - CLASS B ......................................... 924,054 2,326,689 3,203,609 REINVESTMENT OF DISTRIBUTIONS - CLASS B ..................................... 250,179 363,231 253,451 COST OF SHARES REDEEMED - CLASS B ........................................... (978,845) (1,660,133) (732,646) ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B ................................................................ 195,388 1,029,787 2,724,414 ------------- ------------- ------------ PROCEEDS FROM SHARES SOLD - CLASS C ......................................... 201,815 631,108 2,159,703 REINVESTMENT OF DISTRIBUTIONS - CLASS C ..................................... 128,063 235,456 250,257 COST OF SHARES REDEEMED - CLASS C ........................................... (1,274,256) (2,328,898) (2,729,818) ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ................................................................ (944,378) (1,462,334) (319,858) ------------- ------------- ------------ PROCEEDS FROM SHARES SOLD - CLASS Z ......................................... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS Z ..................................... N/A N/A N/A COST OF SHARES REDEEMED - CLASS Z ........................................... N/A N/A N/A ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z ................................................................ N/A N/A N/A ------------- ------------- ------------ PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ............................. N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ......................... N/A N/A N/A COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ............................... N/A N/A N/A ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ....................................................... N/A N/A N/A ------------- ------------- ------------ PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ............................. N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ......................... N/A N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ............................... N/A N/A N/A ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ....................................................... N/A N/A N/A ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (1,033,724) 1,834,785 3,529,738 ============= ============= ============ NET INCREASE (DECREASE) IN NET ASSETS .......................................... (1,558,468) 3,168,390 8,588,468 ============= ============= ============ ENDING NET ASSETS .............................................................. $ 27,138,237 $ 28,696,705 $ 25,528,315 ============= ============= ============ ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................... $ (2,013) $ 1,256 $ 4,100 ============= ============= ============ (1) "PROCEEDS FROM SHARES SOLD" INCLUDE AMOUNTS RELATED TO FUND MERGERS AND SHARE CLASS CONVERSIONS. SEE NOTE 1. (2) THE FUND'S CLASS C COMMENCED OPERATIONS ON JUNE 30, 2003. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 82
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] TOTAL RETURN BOND FUND ------------------------------------------------ FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED PERIOD ENDED JUNE 30, MAY 31, 2005 MAY 31, 2004 2003(1) ----------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 312,834,242 $ 153,249,760 $ 39,272,699 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 19,443,156 7,036,745 3,484,173 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... 4,035,385 (2,138,426) 3,395,382 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... 12,218,749 (4,569,471) 1,017,040 --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 35,697,290 328,848 7,896,595 --------------- ------------- ------------- Distributions to shareholders from: NET INVESTMENT INCOME CLASS A .................................................................. (1,814,906) (777,373) (28,294) CLASS B .................................................................. (286,985) (134,637) (19,898) CLASS C .................................................................. (174,748) (127,004) (27,708) CLASS Z .................................................................. (146,176) N/A N/A ADMINISTRATOR CLASS ...................................................... (13,063,580) (4,370,060) (2,479,910) INSTITUTIONAL CLASS ...................................................... (4,603,653) (1,618,335) (1,307,588) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A .................................................................. (86,029) (312,169) (6,424) CLASS B .................................................................. (16,638) (66,633) (8,086) CLASS C .................................................................. (12,709) (64,837) (11,188) ADMINISTRATOR CLASS ...................................................... (769,437) (1,345,720) (287,266) INSTITUTIONAL CLASS ...................................................... (247,798) (514,514) (126,747) RETURN OF CAPITAL CLASS A .................................................................. 0 0 0 CLASS B .................................................................. 0 0 0 CLASS C .................................................................. 0 0 0 ADMINISTRATOR CLASS ...................................................... 0 0 0 --------------- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............................................ (21,222,659) (9,331,282) (4,044,569) --------------- ------------- ------------- Capital shares transactions: PROCEEDS FROM SHARES SOLD - CLASS A ......................................... 110,647,919 49,441,043 3,874,071 REINVESTMENT OF DISTRIBUTIONS - CLASS A ..................................... 1,305,848 1,035,368 4,319 COST OF SHARES REDEEMED - CLASS A ........................................... (76,848,263) (6,400,857) (1,320,871) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS CLASS A ..................................................................... 35,105,504 44,075,554 2,557,519 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ......................................... 22,594,808 5,660,397 3,819,338 REINVESTMENT OF DISTRIBUTIONS - CLASS B ..................................... 252,614 166,495 3,774 COST OF SHARES REDEEMED - CLASS B ........................................... (3,016,981) (1,444,324) (69,142) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B ................................................................ 19,830,441 4,382,568 3,753,970 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ......................................... 5,615,023 5,165,683 4,599,188 REINVESTMENT OF DISTRIBUTIONS - CLASS C ..................................... 166,732 173,260 7,024 COST OF SHARES REDEEMED - CLASS C ........................................... (2,369,488) (3,294,510) (250,846) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ................................................................ 3,412,267 2,044,433 4,355,366 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS Z ......................................... 28,813,968 N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS Z ..................................... 142,589 N/A N/A COST OF SHARES REDEEMED - CLASS Z ........................................... (1,785,819) N/A N/A --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z ................................................................ 27,170,738 N/A N/A --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ............................. 928,820,960 227,021,213 75,703,969 REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ......................... 12,104,332 5,282,170 266,138 COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ............................... (428,858,336) (115,759,964) (26,107,607) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ADMINISTRATOR CLASS ......................................................... 512,066,956 116,543,419 49,862,500 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ............................. 220,670,592 9,490,823 55,173,407 REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ......................... 4,684,190 2,132,180 134,838 COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ............................... (30,005,478) (10,082,061) (5,463,025) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS INSTITUTIONAL CLASS ......................................................... 195,349,304 1,540,942 49,845,220 --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS 792,935,210 168,586,916 110,374,575 =============== ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .......................................... 807,409,841 159,584,482 113,977,061 =============== ============= ============= ENDING NET ASSETS .............................................................. $ 1,120,244,083 $ 312,834,242 $ 153,249,760 =============== ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................... $ 89,342 $ 7,781 $ (1,555) =============== ============= ============= ULTRA-SHORT DURATION BOND FUND ------------------------------------------------ FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED PERIOD ENDED OCTOBER OCTOBER MAY 31, 2005 31, 2004 31, 2003 ----------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 55,046,784 $ 88,469,686 $ 74,789,937 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 631,724 917,598 1,303,707 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... 43,940 313,645 9,135 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... (240,466) (533,725) 436,742 --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 435,198 697,518 1,749,584 --------------- ------------- ------------- Distributions to shareholders from: NET INVESTMENT INCOME CLASS A .................................................................. (294,998) (569,578) (860,903) CLASS B .................................................................. (120,644) (198,266) (325,175) CLASS C .................................................................. (100,308) (221,764) (287,003) CLASS Z .................................................................. (251,097) (503,941) (962,993) ADMINISTRATOR CLASS ...................................................... N/A N/A N/A INSTITUTIONAL CLASS ...................................................... N/A N/A N/A NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS A .................................................................. 0 0 0 CLASS B .................................................................. 0 0 0 CLASS C .................................................................. 0 0 0 ADMINISTRATOR CLASS ...................................................... N/A N/A N/A INSTITUTIONAL CLASS ...................................................... N/A N/A N/A RETURN OF CAPITAL CLASS A .................................................................. 0 0 0 CLASS B .................................................................. 0 0 0 CLASS C .................................................................. 0 0 0 ADMINISTRATOR CLASS ...................................................... N/A N/A N/A --------------- ------------- ------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............................................ (767,047) (1,493,549) (2,436,074) --------------- ------------- ------------- Capital shares transactions: PROCEEDS FROM SHARES SOLD - CLASS A ......................................... 1,891,497 4,679,036 30,922,138 REINVESTMENT OF DISTRIBUTIONS - CLASS A ..................................... 322,590 569,114 772,222 COST OF SHARES REDEEMED - CLASS A ........................................... (6,015,277) (17,610,055) (22,186,511) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS A ................................................................ (3,801,190) (12,361,905) 9,507,849 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS B ......................................... 376,412 1,575,350 8,454,707 REINVESTMENT OF DISTRIBUTIONS - CLASS B ..................................... 108,613 152,697 244,107 COST OF SHARES REDEEMED - CLASS B ........................................... (2,107,175) (5,156,873) (8,191,446) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS B ................................................................ (1,622,150) (3,428,826) 507,368 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS C ......................................... 667,554 2,833,230 13,465,870 REINVESTMENT OF DISTRIBUTIONS - CLASS C ..................................... 82,165 148,031 170,533 COST OF SHARES REDEEMED - CLASS C ........................................... (4,254,535) (8,927,040) (6,317,024) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ................................................................ (3,504,816) (5,945,779) 7,319,379 --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - CLASS Z ......................................... 498,156 1,960,209 15,049,268 REINVESTMENT OF DISTRIBUTIONS - CLASS Z ..................................... 271,761 512,982 874,220 COST OF SHARES REDEEMED - CLASS Z ........................................... (3,612,416) (13,363,552) (18,891,845) --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS Z ................................................................ (2,842,499) (10,890,361) (2,968,357) --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS ............................. N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS ......................... N/A N/A N/A COST OF SHARES REDEEMED - ADMINISTRATOR CLASS ............................... N/A N/A N/A --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ....................................................... N/A N/A N/A --------------- ------------- ------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ............................. N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ......................... N/A N/A N/A COST OF SHARES REEDEMED - INSTITUTIONAL CLASS ............................... N/A N/A N/A --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ......................................................... N/A N/A N/A --------------- ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (11,770,655) (32,626,871) 14,366,239 =============== ============= ============= NET INCREASE (DECREASE) IN NET ASSETS .......................................... (12,102,504) (33,422,902) 13,679,749 =============== ============= ============= ENDING NET ASSETS .............................................................. $ 42,944,280 $ 55,046,784 $ 88,469,686 =============== ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................... $ 0 $ 5,464 $ 879 =============== ============= ============= 83
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED SHARE (LOSS) INVESTMENTS INCOME GAINS ---------------------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND ---------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 25.58 0.92 0.39 (0.92) (0.15) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 26.57 0.96 (0.93) (0.98) (0.04) JUNE 1, 2002 TO MAY 31, 2003 ............... $ 25.63 1.06 0.97 (1.05) (0.04) JUNE 1, 2001 TO MAY 31, 2002 ............... $ 25.68 1.21 0.16 (1.20) (0.22) JUNE 1, 2000 TO MAY 31, 2001 ............... $ 25.22 1.43 1.44 (2.41) 0.00 HIGH YIELD BOND FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.45 0.76 (0.04) (0.77) (0.19) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.28 0.75 0.18 (0.74) (0.02) NOVEMBER 29, 2002(4) TO MAY 31, 2003 ...... $ 10.00 0.26 0.27 (0.25) 0.00 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.45 0.68 (0.04) (0.69) (0.19) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.28 0.67 0.18 (0.66) (0.02) NOVEMBER 29, 2002(4) TO MAY 31, 2003 ...... $ 10.00 0.22 0.28 (0.22) 0.00 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.46 0.68 (0.04) (0.69) (0.19) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.29 0.67 0.18 (0.66) (0.02) NOVEMBER 29, 2002(4) TO MAY 31, 2003 ...... $ 10.00 0.22 0.29 (0.22) 0.00 INCOME PLUS FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.84 0.57 0.20 (0.62) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.31 0.55 (0.39) (0.63) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 10.81 0.59 0.61 (0.70) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 10.80 0.66 0.02 (0.67) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.60 0.72 0.31 (0.83) 0.00 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.84 0.46 0.23 (0.54) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.31 0.45 (0.37) (0.55) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 10.82 0.50 0.60 (0.61) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 10.80 0.58 0.03 (0.59) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.61 0.65 0.29 (0.75) 0.00 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.84 0.51 0.18 (0.54) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.31 0.44 (0.36) (0.55) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 10.82 0.52 0.58 (0.61) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 10.80 0.58 0.03 (0.59) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.61 0.65 0.29 (0.75) 0.00 INFLATION PROTECTED BOND FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.04 0.37 0.43 (0.33) (0.06) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.14 0.29 (0.13) (0.23) (0.03) FEBRUARY 28, 2003(4) TO MAY 31, 2003 ...... $ 10.00 0.15 0.14 (0.15) 0.00 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.03 0.31 0.40 (0.26) (0.06) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.13 0.20 (0.12) (0.15) (0.03) FEBRUARY 28, 2003(4) TO MAY 31, 2003. $ 10.00 0.13 0.13 (0.13) 0.00 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.04 0.31 0.40 (0.26) (0.06) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.13 0.21 (0.12) (0.15) (0.03) FEBRUARY 28, 2003(4) TO MAY 31, 2003 ...... $ 10.00 0.13 0.13 (0.13) 0.00 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.03 0.39 0.43 (0.36) (0.06) JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.13 0.30 (0.12) (0.25) (0.03) FEBRUARY 28, 2003(4) TO MAY 31, 2003 ...... $ 10.00 0.16 0.13 (0.16) 0.00 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 84
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ENDING NET ASSET RETURN OF VALUE PER CAPITAL SHARE ---------------------------------------------------------------------- DIVERSIFIED BOND FUND ---------------------------------------------------------------------- ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 25.82 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 25.58 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 26.57 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 25.63 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 25.68 HIGH YIELD BOND FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.21 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.45 NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 0.00 $ 10.28 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.21 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.45 NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 0.00 $ 10.28 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.22 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.46 NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 0.00 $ 10.29 INCOME PLUS FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.99 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.84 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.31 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 10.81 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 10.80 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.99 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.84 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.31 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 10.82 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 10.80 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.99 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.84 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.31 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 10.82 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 10.80 INFLATION PROTECTED BOND FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.45 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.04 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 0.00 $ 10.14 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.42 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.03 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 0.00 $ 10.13 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.43 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.04 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 0.00 $ 10.13 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.43 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.03 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 0.00 $ 10.13 [Enlarge/Download Table] RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) -------------------------------------------------------------------- NET INVESTMENT GROSS EXPENSES NET INCOME (LOSS) EXPENSES WAIVED EXPENSES ------------------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND ------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 3.53% 0.91%(5)(12) (0.21)%(5) 0.70%(5) JUNE 1, 2003 TO MAY 31, 2004 ............... 3.65% 0.86%(5) (0.16)%(5) 0.70%(5) JUNE 1, 2002 TO MAY 31, 2003 ............... 4.08% 0.89%(5) (0.19)%(5) 0.70%(5) JUNE 1, 2001 TO MAY 31, 2002 ............... 4.74% 0.87%(5) (0.17)%(5) 0.70%(5) JUNE 1, 2000 TO MAY 31, 2001 ............... 5.75% 0.83%(5) (0.13)%(5) 0.70%(5) HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 7.17% 1.24% (0.09)% 1.15% JUNE 1, 2003 TO MAY 31, 2004 ............... 7.08% 1.24% (0.09)% 1.15% NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 5.86% 1.32% (0.17)% 1.15% CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 6.44% 1.99% (0.09)% 1.90% JUNE 1, 2003 TO MAY 31, 2004 ............... 6.35% 1.99% (0.09)% 1.90% NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 6.49% 2.13% (0.23)% 1.90% CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 6.43% 1.99% (0.09)% 1.90% JUNE 1, 2003 TO MAY 31, 2004 ............... 6.34% 1.99% (0.09)% 1.90% NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 6.53% 2.15% (0.25)% 1.90% INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 5.48% 1.25% (0.67)% 0.58% JUNE 1, 2003 TO MAY 31, 2004 ............... 4.92% 1.31% (0.63)% 0.68% JUNE 1, 2002 TO MAY 31, 2003 ............... 5.42% 1.32% (0.32)% 1.00% JUNE 1, 2001 TO MAY 31, 2002 ............... 6.05% 1.47% (0.37)% 1.10% JUNE 1, 2000 TO MAY 31, 2001 ............... 6.97% 1.44% (0.34)% 1.10% CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 4.76% 2.00% (0.68)% 1.32% JUNE 1, 2003 TO MAY 31, 2004 ............... 4.13% 2.05% (0.60)% 1.45% JUNE 1, 2002 TO MAY 31, 2003 ............... 4.68% 2.12% (0.37)% 1.75% JUNE 1, 2001 TO MAY 31, 2002 ............... 5.29% 2.32% (0.47)% 1.85% JUNE 1, 2000 TO MAY 31, 2001 ............... 6.26% 2.21% (0.36)% 1.85% CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 4.74% 2.00% (0.68)% 1.32% JUNE 1, 2003 TO MAY 31, 2004 ............... 4.12% 2.05% (0.59)% 1.46% JUNE 1, 2002 TO MAY 31, 2003 ............... 4.63% 2.07% (0.32)% 1.75% JUNE 1, 2001 TO MAY 31, 2002 ............... 5.31% 2.34% (0.49)% 1.85% JUNE 1, 2000 TO MAY 31, 2001 ............... 6.26% 2.27% (0.42)% 1.85% INFLATION PROTECTED BOND FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 3.63% 1.23% (0.37)% 0.86% JUNE 1, 2003 TO MAY 31, 2004 ............... 3.18% 1.44% (0.54)% 0.90% FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 8.55% 1.82% (0.92)% 0.90% CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 2.99% 1.99% (0.39)% 1.60% JUNE 1, 2003 TO MAY 31, 2004 ............... 2.14% 2.19% (0.54)% 1.65% FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 7.33% 2.72% (1.07)% 1.65% CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 3.00% 1.99% (0.39)% 1.60% JUNE 1, 2003 TO MAY 31, 2004 ............... 2.22% 2.19% (0.54)% 1.65% FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 7.81% 2.65% (1.00)% 1.65% ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 4.11% 0.93% (0.33)% 0.60% JUNE 1, 2003 TO MAY 31, 2004 ............... 3.40% 1.12% (0.47)% 0.65% FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 7.70% 1.85% (1.20)% 0.65% PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE(11) (000'S OMITTED) ----------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND ----------------------------------------------------------------------------------------- ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 5.24% 56%(6) $ 133,277 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.09% 115%(6) $ 191,875 JUNE 1, 2002 TO MAY 31, 2003 ............... 8.11% 67%(6) $ 372,822 JUNE 1, 2001 TO MAY 31, 2002 ............... 5.44% 93%(6) $ 336,184 JUNE 1, 2000 TO MAY 31, 2001 ............... 11.74% 113%(6) $ 269,121 HIGH YIELD BOND FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 6.99% 81% $ 201,997 JUNE 1, 2003 TO MAY 31, 2004 ............... 9.24% 39% $ 243,511 NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 5.40% 29% $ 120,168 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 6.20% 81% $ 26,501 JUNE 1, 2003 TO MAY 31, 2004 ............... 8.43% 39% $ 27,248 NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 5.05% 29% $ 11,563 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 6.20% 81% $ 20,573 JUNE 1, 2003 TO MAY 31, 2004 ............... 8.42% 39% $ 26,221 NOVEMBER 29, 2002(4) TO MAY 31, 2003 ....... 5.12% 29% $ 12,220 INCOME PLUS FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 7.27% 132% $ 42,676 JUNE 1, 2003 TO MAY 31, 2004 ............... 1.43% 185% $ 28,898 JUNE 1, 2002 TO MAY 31, 2003 ............... 11.53% 130% $ 20,815 JUNE 1, 2001 TO MAY 31, 2002 ............... 6.48% 63% $ 20,188 JUNE 1, 2000 TO MAY 31, 2001 ............... 10.06% 63% $ 12,468 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 6.47% 132% $ 20,165 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.68% 185% $ 38,486 JUNE 1, 2002 TO MAY 31, 2003 ............... 10.60% 130% $ 47,516 JUNE 1, 2001 TO MAY 31, 2002 ............... 5.78% 63% $ 46,760 JUNE 1, 2000 TO MAY 31, 2001 ............... 9.14% 63% $ 34,203 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 6.47% 132% $ 6,451 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.68% 185% $ 7,955 JUNE 1, 2002 TO MAY 31, 2003 ............... 10.60% 130% $ 10,945 JUNE 1, 2001 TO MAY 31, 2002 ............... 5.78% 63% $ 7,328 JUNE 1, 2000 TO MAY 31, 2001 ............... 9.14% 63% $ 3,253 INFLATION PROTECTED BOND FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 8.12% 425% $ 28,437 JUNE 1, 2003 TO MAY 31, 2004 ............... 1.65% 155% $ 20,087 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 2.94% 115% $ 5,136 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 7.13% 425% $ 12,168 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.89% 155% $ 10,645 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 2.65% 115% $ 5,034 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 7.12% 425% $ 13,873 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.99% 155% $ 11,813 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 2.65% 115% $ 4,441 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 8.30% 425% $ 53,237 JUNE 1, 2003 TO MAY 31, 2004 ............... 1.91% 155% $ 26,780 FEBRUARY 28, 2003(4) TO MAY 31, 2003 ....... 2.90% 115% $ 7,188 85
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED SHARE (LOSS) INVESTMENTS INCOME GAINS ---------------------------------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.94 0.34 0.12 (0.44) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.70 0.36 (0.60) (0.52) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 11.19 0.41 0.68 (0.58) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 11.02 0.51 0.28 (0.62) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.56 0.66 0.47 (0.67) 0.00 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.93 0.12 0.24 (0.35) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.68 0.08 (0.40) (0.43) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 11.18 0.33 0.67 (0.50) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 11.01 0.43 0.28 (0.54) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.55 0.58 0.47 (0.59) 0.00 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.90 0.15 0.22 (0.35) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.66 0.12 (0.45) (0.43) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 11.17 0.39 0.61 (0.51) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 11.01 0.46 0.24 (0.54) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.55 0.58 0.47 (0.59) 0.00 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.94 0.39 0.10 (0.47) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 11.69 0.33 (0.53) (0.55) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 11.19 0.44 0.68 (0.62) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 11.02 0.54 0.28 (0.65) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.56 0.69 0.47 (0.70) 0.00 SHORT DURATION GOVERNMENT BOND FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.13 0.27 (0.09) (0.30) 0.00 JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 10.28 0.17 (0.12) (0.17) (0.03) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 10.24 0.41 0.10 (0.39) (0.08) JULY 1, 2001 TO JUNE 30, 2002 .............. $ 10.19 0.43 0.22 (0.47) (0.13) JULY 1, 2000 TO JUNE 30, 2001(8) ........... $ 9.88 0.55 0.31 (0.55) 0.00 JULY 1, 1999 TO JUNE 30, 2000 .............. $ 10.03 0.56 (0.15) (0.56) 0.00 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.13 0.19 (0.08) (0.22) 0.00 JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 10.29 0.11 (0.14) (0.10) (0.03) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 10.25 0.28 0.10 (0.26) (0.08) JULY 1, 2001(4) TO JUNE 30, 2002 ........... $ 10.22 0.00 0.03 0.00 0.00 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.14 0.14 (0.03) (0.22) 0.00 JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 10.30 0.11 (0.14) (0.10) (0.03) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 10.25 0.27 0.11 (0.25) (0.08) JULY 1, 2001(4) TO JUNE 30, 2002 ........... $ 10.22 0.00 0.03 0.00 0.00 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.14 0.29 (0.07) (0.33) 0.00 JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 10.30 0.20 (0.13) (0.20) (0.03) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 10.26 0.43 0.12 (0.43) (0.08) JULY 1, 2001 TO JUNE 30, 2002 .............. $ 10.20 0.46 0.22 (0.49) (0.13) JULY 1, 2000 TO JUNE 30, 2001(8) ........... $ 9.90 0.58 0.30 (0.58) 0.00 JULY 1, 1999 TO JUNE 30, 2000 .............. $ 10.04 0.58 (0.14) (0.58) 0.00 INSTITUTIONAL CLASS APRIL 8, 2005(4) TO MAY 31, 2005 ........... $ 10.00 0.05 0.03 (0.05) 0.00 STABLE INCOME FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.33 0.16 0.03 (0.14) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.44 0.16 (0.10) (0.16) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 10.38 0.25 0.06 (0.25) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 10.36 0.34 0.02 (0.34) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.15 0.57 0.22 (0.58) 0.00 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 86
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ENDING NET ASSET RETURN OF VALUE PER CAPITAL SHARE ---------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.96 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.94 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.70 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 11.19 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 11.02 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.94 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.93 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.68 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 11.18 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 11.01 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.92 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.90 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.66 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 11.17 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 11.01 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.96 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.00 $ 10.94 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00 $ 11.69 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 11.19 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 11.02 SHORT DURATION GOVERNMENT BOND FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.01 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 10.13 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 10.28 JULY 1, 2001 TO JUNE 30, 2002 .............. 0.00 $ 10.24 JULY 1, 2000 TO JUNE 30, 2001(8) ........... 0.00 $ 10.19 JULY 1, 1999 TO JUNE 30, 2000 .............. 0.00 $ 9.88 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.02 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 10.13 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 10.29 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00 $ 10.25 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.03 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 10.14 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 10.30 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00 $ 10.25 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.03 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 10.14 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 10.30 JULY 1, 2001 TO JUNE 30, 2002 .............. 0.00 $ 10.26 JULY 1, 2000 TO JUNE 30, 2001(8) ........... 0.00 $ 10.20 JULY 1, 1999 TO JUNE 30, 2000 .............. 0.00 $ 9.90 INSTITUTIONAL CLASS APRIL 8, 2005(4) TO MAY 31, 2005 ........... 0.00 $ 10.03 STABLE INCOME FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.38 JUNE 1, 2003 TO MAY 31, 2004 ............... (0.01) $ 10.33 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00(7) $ 10.44 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 10.38 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 10.36 [Enlarge/Download Table] RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) -------------------------------------------------------------------- NET INVESTMENT GROSS EXPENSES NET INCOME (LOSS) EXPENSES WAIVED EXPENSES ------------------------------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 3.25% 1.05% (0.10)% 0.95% JUNE 1, 2003 TO MAY 31, 2004 ............... 2.98% 1.12% (0.17)% 0.95% JUNE 1, 2002 TO MAY 31, 2003 ............... 3.57% 1.13% (0.18)% 0.95% JUNE 1, 2001 TO MAY 31, 2002 ............... 4.57% 1.16% (0.20)% 0.96% JUNE 1, 2000 TO MAY 31, 2001 ............... 6.06% 1.22% (0.26)% 0.96% CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 2.50% 1.82% (0.12)% 1.70% JUNE 1, 2003 TO MAY 31, 2004 ............... 2.22% 1.87% (0.17)% 1.70% JUNE 1, 2002 TO MAY 31, 2003 ............... 2.72% 1.86% (0.16)% 1.70% JUNE 1, 2001 TO MAY 31, 2002 ............... 3.81% 1.82% (0.11)% 1.71% JUNE 1, 2000 TO MAY 31, 2001 ............... 5.30% 1.84% (0.13)% 1.71% CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 2.50% 1.82% (0.12)% 1.70% JUNE 1, 2003 TO MAY 31, 2004 ............... 2.23% 1.87% (0.17)% 1.70% JUNE 1, 2002 TO MAY 31, 2003 ............... 2.68% 1.79% (0.09)% 1.70% JUNE 1, 2001 TO MAY 31, 2002 ............... 3.79% 1.78% (0.07)% 1.71% JUNE 1, 2000 TO MAY 31, 2001 ............... 5.28% 1.85% (0.14)% 1.71% ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 3.53% 0.76% (0.06)% 0.70% JUNE 1, 2003 TO MAY 31, 2004 ............... 3.23% 0.80% (0.10)% 0.70% JUNE 1, 2002 TO MAY 31, 2003 ............... 3.74% 0.77% (0.08)% 0.69% JUNE 1, 2001 TO MAY 31, 2002 ............... 4.85% 0.71% (0.03)% 0.68% JUNE 1, 2000 TO MAY 31, 2001 ............... 6.34% 0.74% (0.06)% 0.68% SHORT DURATION GOVERNMENT BOND FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 2.44% 1.28% (0.42)% 0.86% JULY 1, 2003(3) TO MAY 31, 2004 ............ 1.83% 1.14% (0.24)% 0.90% JULY 1, 2002 TO JUNE 30, 2003 .............. 3.51% 1.51% (0.45)% 1.06%(10) JULY 1, 2001 TO JUNE 30, 2002 .............. 4.16% 1.78% (0.66)% 1.12% JULY 1, 2000 TO JUNE 30, 2001(8) ........... 5.43% 2.70% (0.79)% 1.91% JULY 1, 1999 TO JUNE 30, 2000 .............. 5.60% 1.86% (0.50)% 1.36% CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 1.74% 2.02% (0.41)% 1.61% JULY 1, 2003(3) TO MAY 31, 2004 ............ 1.12% 1.89% (0.24)% 1.65% JULY 1, 2002 TO JUNE 30, 2003 .............. 2.75% 2.26% (0.46)% 1.80%(10) JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00% 0.45% (0.45)% 0.00% CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 1.59% 2.04% (0.42)% 1.62% JULY 1, 2003(3) TO MAY 31, 2004 ............ 1.10% 1.89% (0.24)% 1.65% JULY 1, 2002 TO JUNE 30, 2003 .............. 2.73% 2.27% (0.46)% 1.81%(10) JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00% 0.45% (0.45)% 0.00% ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 2.66% 0.98% (0.38)% 0.60% JULY 1, 2003(3) TO MAY 31, 2004 ............ 2.13% 0.81% (0.21)% 0.60% JULY 1, 2002 TO JUNE 30, 2003 .............. 3.75% 1.16% (0.40)% 0.76%(10) JULY 1, 2001 TO JUNE 30, 2002 .............. 4.38% 1.53% (0.66)% 0.87% JULY 1, 2000 TO JUNE 30, 2001(8) ........... 5.70% 2.46% (0.78)% 1.68% JULY 1, 1999 TO JUNE 30, 2000 .............. 5.84% 1.61% (0.50)% 1.11% INSTITUTIONAL CLASS APRIL 8, 2005(4) TO MAY 31, 2005 ........... 3.35% 0.76% (0.33)% 0.43% STABLE INCOME FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 1.48% 1.00%(5) (0.10)%(5) 0.90%(5) JUNE 1, 2003 TO MAY 31, 2004 ............... 1.52% 0.99%(5) (0.09)%(5) 0.90%(5) JUNE 1, 2002 TO MAY 31, 2003 ............... 2.32% 1.04%(5) (0.22)%(5) 0.82%(5) JUNE 1, 2001 TO MAY 31, 2002 ............... 3.02% 1.04%(5) (0.14)%(5) 0.90%(5) JUNE 1, 2000 TO MAY 31, 2001 ............... 5.44% 1.09%(5) (0.19)%(5) 0.90%(5) [Enlarge/Download Table] PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE (000'S OMITTED) ----------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 4.25% 277% $ 142,570 JUNE 1, 2003 TO MAY 31, 2004 ............... (2.10)% 178% $ 192,976 JUNE 1, 2002 TO MAY 31, 2003 ............... 9.95% 139% $ 196,203 JUNE 1, 2001 TO MAY 31, 2002 ............... 7.34% 102% $ 195,062 JUNE 1, 2000 TO MAY 31, 2001 ............... 10.94% 57% $ 185,638 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 3.37% 277% $ 30,236 JUNE 1, 2003 TO MAY 31, 2004 ............... (2.76)% 178% $ 47,821 JUNE 1, 2002 TO MAY 31, 2003 ............... 9.08% 139% $ 80,989 JUNE 1, 2001 TO MAY 31, 2002 ............... 6.55% 102% $ 67,256 JUNE 1, 2000 TO MAY 31, 2001 ............... 10.12% 57% $ 61,482 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 3.47% 277% $ 12,860 JUNE 1, 2003 TO MAY 31, 2004 ............... (2.85)% 178% $ 21,520 JUNE 1, 2002 TO MAY 31, 2003 ............... 9.11% 139% $ 34,133 JUNE 1, 2001 TO MAY 31, 2002 ............... 6.48% 102% $ 18,078 JUNE 1, 2000 TO MAY 31, 2001 ............... 10.16% 57% $ 8,386 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 4.53% 277% $ 394,194 JUNE 1, 2003 TO MAY 31, 2004 ............... (1.77)% 178% $ 397,390 JUNE 1, 2002 TO MAY 31, 2003 ............... 10.20% 139% $ 472,024 JUNE 1, 2001 TO MAY 31, 2002 ............... 7.63% 102% $ 442,037 JUNE 1, 2000 TO MAY 31, 2001 ............... 11.25% 57% $ 413,846 SHORT DURATION GOVERNMENT BOND FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 1.79% 272% $ 94,059 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.49% 615% $ 47,304 JULY 1, 2002 TO JUNE 30, 2003 .............. 4.69% 331% $ 55,807 JULY 1, 2001 TO JUNE 30, 2002 .............. 6.45% 400% $ 6,034 JULY 1, 2000 TO JUNE 30, 2001(8) ........... 8.93% 245% $ 4,550 JULY 1, 1999 TO JUNE 30, 2000 .............. 4.18% 188% $ 4,087 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 1.13% 272% $ 27,078 JULY 1, 2003(3) TO MAY 31, 2004 ............ (0.30)% 615% $ 9,734 JULY 1, 2002 TO JUNE 30, 2003 .............. 3.76% 331% $ 5,576 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.29% 400% $ 0(9) CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 1.13% 272% $ 19,553 JULY 1, 2003(3) TO MAY 31, 2004 ............ (0.30)% 615% $ 34,410 JULY 1, 2002 TO JUNE 30, 2003 .............. 3.79% 331% $ 32,818 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.29% 400% $ 0(9) ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 2.16% 272% $ 444,331 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.67% 615% $ 431,942 JULY 1, 2002 TO JUNE 30, 2003 .............. 5.08% 331% $ 517,187 JULY 1, 2001 TO JUNE 30, 2002 .............. 6.80% 400% $ 449,648 JULY 1, 2000 TO JUNE 30, 2001(8) ........... 9.09% 245% $ 267,444 JULY 1, 1999 TO JUNE 30, 2000 .............. 4.55% 188% $ 171,879 INSTITUTIONAL CLASS APRIL 8, 2005(4) TO MAY 31, 2005 ........... 0.91% 272% $ 10 STABLE INCOME FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 1.87% 43%(6) $ 83,406 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.45% 92%(6) $ 166,484 JUNE 1, 2002 TO MAY 31, 2003 ............... 3.01% 45%(6) $ 175,249 JUNE 1, 2001 TO MAY 31, 2002 ............... 3.53% 81%(6) $ 79,555 JUNE 1, 2000 TO MAY 31, 2001 ............... 7.98% 37%(6) $ 19,054 87
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED SHARE (LOSS) INVESTMENTS INCOME GAINS ---------------------------------------------------------------------------------------------------------------------- STABLE INCOME FUND (CONTINUED) ---------------------------------------------------------------------------------------------------------------------- CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.32 0.08 0.03 (0.06) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.43 0.08 (0.10) (0.08) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 10.37 0.17 0.06 (0.17) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 10.35 0.28 0.01 (0.27) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.14 0.49 0.23 (0.51) 0.00 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.30 0.07 0.04 (0.06) 0.00 JUNE 30, 2003(4) TO MAY 31, 2004 ........... $ 10.00 0.06 0.33 (0.08) 0.00 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 10.33 0.20 0.02 (0.17) 0.00 JUNE 1, 2003 TO MAY 31, 2004 ............... $ 10.44 0.18 (0.10) (0.18) 0.00 JUNE 1, 2002 TO MAY 31, 2003 ............... $ 10.39 0.26 0.06 (0.27) 0.00 JUNE 1, 2001 TO MAY 31, 2002 ............... $ 10.36 0.37 0.03 (0.37) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ............... $ 10.15 0.60 0.21 (0.60) 0.00 STRATEGIC INCOME FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 10.41 0.37 (0.18) (0.37) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.90 0.71 0.51 (0.71) 0.00 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 7.67 0.70 2.22 (0.69) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 9.53 0.96 (1.64) (0.97) (0.21) NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... $ 10.00 1.14 (0.47) (1.14) 0.00 CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 10.42 0.30 (0.19) (0.30) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.90 0.59 0.52 (0.59) 0.00 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 7.68 0.59 2.21 (0.58) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 9.53 0.84 (1.63) (0.85) (0.21) NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... $ 10.00 1.02 (0.47) (1.02) 0.00 CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 10.40 0.31 (0.19) (0.31) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.89 0.59 0.51 (0.59) (0.00) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 7.66 0.59 2.22 (0.58) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 9.52 0.84 (1.63) (0.86) (0.21) NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... $ 10.00 1.02 (0.48) (1.02) 0.00 TOTAL RETURN BOND FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... $ 12.32 0.42 0.34 (0.43) (0.03) JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 12.79 0.34 (0.35) (0.34) (0.12) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 12.17 0.63 0.69 (0.62) (0.08) JULY 1, 2001(4) TO JUNE 30, 2002 ........... $ 12.45 0.32 (0.06) (0.32) (0.22) CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... $ 12.33 0.32 0.34 (0.33) (0.03) JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 12.80 0.25 (0.35) (0.25) (0.12) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 12.18 0.56 0.69 (0.55) (0.08) JULY 1, 2001(4) TO JUNE 30, 2002 ........... $ 12.45 0.23 (0.05) (0.23) (0.22) CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... $ 12.26 0.32 0.35 (0.33) (0.03) JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 12.73 0.25 (0.35) (0.25) (0.12) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 12.12 0.57 0.67 (0.55) (0.08) JULY 1, 2001(4) TO JUNE 30, 2002 ........... $ 12.45 0.25 (0.11) (0.25) (0.22) CLASS Z APRIL 8, 2005(4) TO MAY 31, 2005 ........... $ 12.19 0.06 0.22 (0.06) 0.00 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 12.11 0.44 0.34 (0.45) (0.03) JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 12.57 0.36 (0.34) (0.36) (0.12) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 11.97 0.64 0.68 (0.64) (0.08) JULY 1, 2001 TO JUNE 30, 2002 .............. $ 11.85 0.43 0.36 (0.45) (0.22) JULY 1, 2000 TO JUNE 30, 2001 .............. $ 11.33 0.70 0.52 (0.70) 0.00 JULY 1, 1999 TO JUNE 30, 2000 .............. $ 11.66 0.77 (0.20) (0.75) (0.15) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 88
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ENDING NET ASSET RETURN OF VALUE PER CAPITAL SHARE ---------------------------------------------------------------------- STABLE INCOME FUND (CONTINUED) CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.37 JUNE 1, 2003 TO MAY 31, 2004 ............... (0.01) $ 10.32 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00(7) $ 10.43 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 10.37 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 10.35 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.35 JUNE 30, 2003(4) TO MAY 31, 2004 ........... (0.01) $ 10.30 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 10.38 JUNE 1, 2003 TO MAY 31, 2004 ............... (0.01) $ 10.33 JUNE 1, 2002 TO MAY 31, 2003 ............... 0.00(7) $ 10.44 JUNE 1, 2001 TO MAY 31, 2002 ............... 0.00 $ 10.39 JUNE 1, 2000 TO MAY 31, 2001 ............... 0.00 $ 10.36 STRATEGIC INCOME FUND ---------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 10.23 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 10.41 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.90 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 7.67 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 0.00 $ 9.53 CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 10.23 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 10.42 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.90 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 7.68 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 0.00 $ 9.53 CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 10.21 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 10.40 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.89 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 7.66 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 0.00 $ 9.52 TOTAL RETURN BOND FUND ---------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 12.62 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 12.32 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 12.79 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00 $ 12.17 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 12.63 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 12.33 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 12.80 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00 $ 12.18 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 12.57 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 12.26 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 12.73 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00 $ 12.12 CLASS Z APRIL 8, 2005(4) TO MAY 31, 2005 ........... 0.00 $ 12.41 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 12.41 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 12.11 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 12.57 JULY 1, 2001 TO JUNE 30, 2002 .............. 0.00 $ 11.97 JULY 1, 2000 TO JUNE 30, 2001 .............. 0.00 $ 11.85 JULY 1, 1999 TO JUNE 30, 2000 .............. 0.00 $ 11.33 [Enlarge/Download Table] RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) -------------------------------------------------------------------- NET INVESTMENT GROSS EXPENSES NET INCOME (LOSS) EXPENSES WAIVED EXPENSES ------------------------------------------------------------------------------------------------------------------- STABLE INCOME FUND (CONTINUED) ------------------------------------------------------------------------------------------------------------------- CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 0.75% 1.75%(5) (0.10)%(5)(12) 1.65%(5) JUNE 1, 2003 TO MAY 31, 2004 ............... 0.81% 1.75%(5) (0.10)%(5) 1.65%(5) JUNE 1, 2002 TO MAY 31, 2003 ............... 1.51% 1.81%(5) (0.18)%(5) 1.63%(5) JUNE 1, 2001 TO MAY 31, 2002 ............... 2.41% 1.87%(5) (0.21)%(5) 1.65%(5) JUNE 1, 2000 TO MAY 31, 2001 ............... 4.65% 2.00%(5) (0.35)%(5) 1.65%(5) CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 0.74% 1.75%(5) (0.10)%(5)(12) 1.65%(5) JUNE 30, 2003(4) TO MAY 31, 2004 ........... 0.54% 1.73%(5) (0.08)%(5) 1.65%(5) ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 1.76% 0.68%(5) (0.03)%(5)(12) 0.65%(5) JUNE 1, 2003 TO MAY 31, 2004 ............... 1.74% 0.66%(5) (0.03)%(5) 0.63%(5) JUNE 1, 2002 TO MAY 31, 2003 ............... 2.51% 0.77%(5) (0.12)%(5) 0.65%(5) JUNE 1, 2001 TO MAY 31, 2002 ............... 3.50% 0.80%(5) (0.15)%(5) 0.65%(5) JUNE 1, 2000 TO MAY 31, 2001 ............... 5.78% 0.78%(5) (0.13)%(5) 0.65%(5) STRATEGIC INCOME FUND ------------------------------------------------------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 5.97% 1.57% (0.48)% 1.09% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 6.95% 1.52% (0.40)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 7.77% 1.58% (0.45)% 1.13% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 10.56% 1.59% (0.51)% 1.08% NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 12.11% 3.94% (2.81)% 1.13% CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 4.90% 2.31% (0.14)% 2.17% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 5.82% 2.30% (0.04)% 2.26% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 6.44% 2.36% (0.00)% 2.36% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 9.05% 2.40% (0.00)% 2.40% NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 10.86% 4.04% (1.65)% 2.39% CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 4.99% 2.20% (0.13)% 2.07% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 5.81% 2.34% (0.03)% 2.31% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 6.57% 2.38% (0.00)% 2.38% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 9.02% 2.38% (0.01)% 2.37% NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 10.89% 4.10% (1.70)% 2.40% TOTAL RETURN BOND FUND ------------------------------------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 3.30% 1.12% (0.22)% 0.90% JULY 1, 2003(3) TO MAY 31, 2004 ............ 3.07% 1.16% (0.26)% 0.90% JULY 1, 2002 TO JUNE 30, 2003 .............. 3.78% 1.61% (0.63)% 0.97%(10) JULY 1, 2001(4) TO JUNE 30, 2002 ........... 5.78% 1.95% (0.99)% 0.96% CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 2.57% 1.86% (0.21)% 1.65% JULY 1, 2003(3) TO MAY 31, 2004 ............ 2.19% 1.91% (0.26)% 1.65% JULY 1, 2002 TO JUNE 30, 2003 .............. 2.81% 2.31% (0.60)% 1.71%(10) JULY 1, 2001(4) TO JUNE 30, 2002 ........... 4.93% 1.94% (1.11)% 0.83% CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 2.57% 1.87% (0.22)% 1.65% JULY 1, 2003(3) TO MAY 31, 2004 ............ 2.20% 1.91% (0.26)% 1.65% JULY 1, 2002 TO JUNE 30, 2003 .............. 2.88% 2.32% (0.61)% 1.71%(10) JULY 1, 2001(4) TO JUNE 30, 2002 ........... 5.14% 1.93% (0.98)% 0.95% CLASS Z APRIL 8, 2005(4) TO MAY 31, 2005 ........... 3.42% 1.23% (0.28)% 0.95% ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 3.58% 0.94% (0.24)% 0.70% JULY 1, 2003(3) TO MAY 31, 2004 ............ 3.25% 0.99% (0.29)% 0.70% JULY 1, 2002 TO JUNE 30, 2003 .............. 4.56% 1.19% (0.59)% 0.60%(10) JULY 1, 2001 TO JUNE 30, 2002 .............. 5.38% 1.42% (0.71)% 0.71% JULY 1, 2000 TO JUNE 30, 2001 .............. 6.02% 1.59% (0.64)% 0.95% JULY 1, 1999 TO JUNE 30, 2000 .............. 6.78% 1.13% (0.33)% 0.80% PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE(11) (000'S OMITTED) ----------------------------------------------------------------------------------------- STABLE INCOME FUND (CONTINUED) CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 1.00% 43%(6) $ 20,970 JUNE 1, 2003 TO MAY 31, 2004 ............... (0.29)% 92%(6) $ 35,552 JUNE 1, 2002 TO MAY 31, 2003 ............... 2.24% 45%(6) $ 48,045 JUNE 1, 2001 TO MAY 31, 2002 ............... 2.79% 81%(6) $ 20,318 JUNE 1, 2000 TO MAY 31, 2001 ............... 7.22% 37%(6) $ 7,598 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 1.10% 43%(6) $ 7,137 JUNE 30, 2003(4) TO MAY 31, 2004 ........... (0.29)% 92%(6) $ 12,225 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 2.14% 43%(6) $ 356,223 JUNE 1, 2003 TO MAY 31, 2004 ............... 0.71% 92%(6) $ 570,234 JUNE 1, 2002 TO MAY 31, 2003 ............... 3.13% 45%(6) $ 491,771 JUNE 1, 2001 TO MAY 31, 2002 ............... 3.87% 81%(6) $ 304,256 JUNE 1, 2000 TO MAY 31, 2001 ............... 8.25% 37%(6) $ 200,917 STRATEGIC INCOME FUND ----------------------------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.79% 76% $ 13,254 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 12.70% 141% $ 13,786 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 39.38% 155% $ 10,917 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... (8.35)% 235% $ 7,699 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 6.04% 424% $ 5,619 CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.05% 76% $ 10,062 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 11.55% 141% $ 10,076 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 37.55% 155% $ 8,573 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... (9.44)% 235% $ 4,313 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 4.87% 424% $ 2,377 CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.11% 76% $ 3,822 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 11.40% 141% $ 4,834 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 37.73% 155% $ 6,038 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... (9.56)% 235% $ 4,928 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 4.77% 424% $ 2,312 TOTAL RETURN BOND FUND ----------------------------------------------------------------------------------------- CLASS A JUNE 1, 2004 TO MAY 31, 2005 ............... 6.19% 767% $ 84,188 JULY 1, 2003(3) TO MAY 31, 2004 ............ (0.09)% 918% $ 45,670 JULY 1, 2002 TO JUNE 30, 2003 .............. 10.95% 544% $ .2,691 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 2.21% 193% $ ...117 CLASS B JUNE 1, 2004 TO MAY 31, 2005 ............... 5.39% 767% $ 27,681 JULY 1, 2003(3) TO MAY 31, 2004 ............ (0.79)% 918% $ 8,031 JULY 1, 2002 TO JUNE 30, 2003 .............. 9.85% 544% $ 3,868 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 1.52% 193% $ 87 CLASS C JUNE 1, 2004 TO MAY 31, 2005 ............... 5.52% 767% $ 9,823 JULY 1, 2003(3) TO MAY 31, 2004 ............ (0.79)% 918% $ 6,248 JULY 1, 2002 TO JUNE 30, 2003 .............. 9.78% 544% $ 4,425 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 1.12% 193% $ 27 CLASS Z APRIL 8, 2005(4) TO MAY 31, 2005 ........... 2.31% 767% $ 29,204 ADMINISTRATOR CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 6.53% 767% $ 720,935 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.20% 918% $ 202,187 JULY 1, 2002 TO JUNE 30, 2003 .............. 11.01% 544% $ 91,244 JULY 1, 2001 TO JUNE 30, 2002 .............. 8.81% 193% $ 38,841 JULY 1, 2000 TO JUNE 30, 2001 .............. 11.06% 449% $ 31,788 JULY 1, 1999 TO JUNE 30, 2000 .............. 4.96% 176% $ 28,112 89
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED SHARE (LOSS) INVESTMENTS INCOME GAINS ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND (CONTINUED) INSTITUTIONAL CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... $ 12.11 0.48 0.33 (0.49) (0.03) JULY 1, 2003(3) TO MAY 31, 2004 ............ $ 12.58 0.39 (0.35) (0.39) (0.12) JULY 1, 2002 TO JUNE 30, 2003 .............. $ 11.97 0.73 0.66 (0.70) (0.08) JULY 1, 2001(4) TO JUNE 30, 2002 ........... $ 12.45 0.47 (0.25) (0.48) (0.22) ULTRA-SHORT DURATION BOND FUND ---------------------------------------------------------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 9.71 0.14 (0.04) (0.17) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.83 0.15 (0.02) (0.25) 0.00 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 9.90 0.18 0.06 (0.31) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 10.24 0.35 (0.34) (0.35) 0.00 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... $ 10.10 0.52 0.16 (0.54) 0.00 CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 9.68 0.09 (0.03) (0.12) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.81 0.07 (0.03) (0.17) 0.00 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 9.88 0.09 0.06 (0.22) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 10.22 0.26 (0.34) (0.26) 0.00 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... $ 10.10 0.44 0.14 (0.46) 0.00 CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 9.70 0.09 (0.03) (0.12) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.83 0.06 (0.02) (0.17) 0.00 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 9.90 0.10 0.05 (0.22) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 10.23 0.26 (0.32) (0.27) 0.00 NOVEMBER 30, 2000(4)TO OCTOBER 31, 2001 .... $ 10.10 0.44 0.15 (0.46) 0.00 CLASS Z NOVEMBER 1, 2004 TO MAY 31, 2005 ........... $ 9.67 0.14 (0.03) (0.17) 0.00 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... $ 9.80 0.15 (0.03) (0.25) 0.00 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... $ 9.86 0.18 0.08 (0.32) 0.00 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... $ 10.19 0.35 (0.34) (0.34) 0.00 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....... $ 10.14 0.54 0.14 (0.63) 0.00 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ....... $ 10.21 0.56 0.02 (0.65) 0.00 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 90
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ENDING NET ASSET RETURN OF VALUE PER CAPITAL SHARE ---------------------------------------------------------------------- TOTAL RETURN BOND FUND (CONTINUED) INSTITUTIONAL CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 0.00 $ 12.40 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.00 $ 12.11 JULY 1, 2002 TO JUNE 30, 2003 .............. 0.00 $ 12.58 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 0.00 $ 11.97 ULTRA-SHORT DURATION BOND FUND ---------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 9.64 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 9.71 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.83 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 9.90 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 0.00 $ 10.24 CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 9.62 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 9.68 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.81 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 9.88 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 0.00 $ 10.22 CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 9.64 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 9.70 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.83 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 9.90 NOVEMBER 30, 2000(4)TO OCTOBER 31, 2001 .... 0.00 $ 10.23 CLASS Z NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.00 $ 9.61 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.00 $ 9.67 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.00 $ 9.80 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.00 $ 9.86 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....... 0.00 $ 10.19 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ....... 0.00 $ 10.14 [Enlarge/Download Table] RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) -------------------------------------------------------------------- NET INVESTMENT GROSS EXPENSES NET INCOME (LOSS) EXPENSES WAIVED EXPENSES ------------------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND (CONTINUED) INSTITUTIONAL CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 3.87% 0.68% (0.26)% 0.42% JULY 1, 2003(3) TO MAY 31, 2004 ............ 3.49% 0.74% (0.32)% 0.42% JULY 1, 2002 TO JUNE 30, 2003 .............. 4.66% 0.99% (0.57)% 0.42%(10) JULY 1, 2001(4) TO JUNE 30, 2002 ........... 5.99% 1.71% (1.24)% 0.47% ULTRA-SHORT DURATION BOND FUND ------------------------------------------------------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 2.54% 1.36% (0.31)% 1.05% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 1.71% 1.32% (0.20)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 1.76% 1.25% (0.12)% 1.13% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 3.49% 1.25% (0.13)% 1.12% NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 4.59% 1.52% (0.40)% 1.12% CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.70% 2.07% (0.18)% 1.89% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.83% 2.11% (0.12)% 1.99% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.93% 2.05% (0.05)% 2.00% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 2.47% 2.04% (0.04)% 2.00% NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 3.60% 2.40% (0.21)% 2.19% CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.72% 2.14% (0.24)% 1.90% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.84% 2.10% (0.11)% 1.99% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 0.87% 2.04% (0.04)% 2.00% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 2.54% 2.03% (0.03)% 2.00% NOVEMBER 30, 2000(4)TO OCTOBER 31, 2001 .... 3.60% 2.26% (0.21)% 2.05% CLASS Z NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 2.59% 1.15% (0.16)% 0.99% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 1.69% 1.16% (0.04)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 1.87% 1.08% (0.01)% 1.07% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 3.55% 1.16% (0.01)% 1.15% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....... 5.30% 1.24% (0.00)% 1.24% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ....... 5.60% 1.15% (0.00)% 1.15% PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE(11) (000'S OMITTED) ----------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND (CONTINUED) INSTITUTIONAL CLASS JUNE 1, 2004 TO MAY 31, 2005 ............... 6.74% 767% $ 248,414 JULY 1, 2003(3) TO MAY 31, 2004 ............ 0.38% 918% $ 50,699 JULY 1, 2002 TO JUNE 30, 2003 .............. 11.05% 544% $ 51,022 JULY 1, 2001(4) TO JUNE 30, 2002 ........... 1.90% 193% $ 202 ULTRA-SHORT DURATION BOND FUND ----------------------------------------------------------------------------------------- CLASS A NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.05% 9% $ 14,948 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 1.35% 28% $ 18,865 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 2.45% 90% $ 31,490 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.15% 204% $ 22,230 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 6.90% 221% $ 9,522 CLASS B NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.66% 9% $ 8,562 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.37% 28% $ 10,249 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 1.56% 90% $ 13,820 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... (0.74)% 204% $ 13,419 NOVEMBER 30, 2000(4) TO OCTOBER 31, 2001 ... 5.82% 221% $ 3,869 CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 0.67% 9% $ 6,473 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 0.37% 28% $ 10,034 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 1.56% 90% $ 16,138 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... (0.63)% 204% $ 8,947 NOVEMBER 30, 2000(4)TO OCTOBER 31, 2001 .... 5.90% 221% $ 3,346 CLASS Z NOVEMBER 1, 2004 TO MAY 31, 2005 ........... 1.18% 9% $ 12,961 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ....... 1.25% 28% $ 15,898 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ....... 2.62% 90% $ 27,021 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ....... 0.15% 204% $ 30,194 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ....... 6.84% 221% $ 47,219 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ....... 5.83% 59% $ 51,144 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 91
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- NOTES TO FINANCIAL HIGHLIGHTS (1) During each period, various fees and expenses were waived and reimbursed, as indicated. The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements (Note 3). (2) Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. (3) The Fund changed its fiscal year-end from June 30 to May 31. (4) Commencement of operations. (5) Includes net expenses allocated from the Portfolio(s) in which the Fund invests. (6) Portfolio turnover rate represents the activity from the Fund's investment in a Master portfolio. (7) Return of capital was less than $0.01 per share. (8) Per share numbers have been calculated using the average share method, which more appropriately represents the per share data for the period, because the use of undistributed income method did not accord with results of operations. (9) Amounts represent less than $1,000. (10) Includes interest expense. (11) Calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. (12) Gross expense ratios excluding waivers allocated from the Portfolio(s) in which the Fund invests are as follows: Fund Gross Expense Ratio DIVERSIFIED BOND FUND ADMINISTRATOR CLASS 1.04% STABLE INCOME FUND CLASS A 1.12% CLASS B 1.87% CLASS C 1.87% ADMINISTRATOR CLASS 0.80% 92
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- 1. ORGANIZATION -------------------------------------------------------------------------------- Wells Fargo Funds Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. The Trust commenced operations on November 8, 1999, and at May 31, 2005 was comprised of 108 separate series (each, a "Fund", collectively, the "Funds"). These financial statements present the Diversified Bond Fund, High Yield Bond Fund, Income Plus Fund, Inflation-Protected Bond Fund, Intermediate Government Income Fund, Short Duration Government Bond Fund, Strategic Income Fund, Stable Income Fund, Total Return Bond Fund, and Ultra-Short Duration Bond Fund. In August and September 2004, the Board of Trustees of the Trust and the Boards of Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of Reorganization providing for the reorganization of certain Strong Funds into certain Funds of the Trust. Effective at the close of business on April 8, 2005, the following Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets of the following Target Funds ("Target Funds") through a tax-free exchange under section 368 of the Internal Revenue Code. The following is a summary of shares outstanding and net assets immediately before and after the reorganization: [Enlarge/Download Table] Before Reorganization After Reorganization ----------------------------------------- ----------------------------- Target Fund Acquiring Fund* Wells Fargo Limited- Wells Fargo Montgomery Term Government Short Duration Wells Fargo Advantage Fund Income Fund Government Bond Fund Short Duration Bond Fund ----------------------------------------------------------------------------------------------------------------------- Shares: ----------------------------------------------------------------------------------------------------------------------- CLASS A 5,109,856 4,443,585 9,526,621 ----------------------------------------------------------------------------------------------------------------------- CLASS B 1,902,816 952,418 2,843,954 ----------------------------------------------------------------------------------------------------------------------- CLASS C 0 2,165,218 2,165,218 ----------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS 0 0 44,588,299 ----------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS(1) 9,020,949 35,798,856 0 ----------------------------------------------------------------------------------------------------------------------- Net Assets: CLASS A 50,717,203 44,336,925 95,054,128 ----------------------------------------------------------------------------------------------------------------------- CLASS B 18,885,585 9,509,219 28,394,804 ----------------------------------------------------------------------------------------------------------------------- CLASS C 0 21,635,010 21,635,010 ----------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS 0 0 445,424,201 ----------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS(1) 87,803,989 357,620,212 0 ----------------------------------------------------------------------------------------------------------------------- UNREALIZED APPRECIATION (DEPRECIATION) (710,644) (4,122,096) (4,832,740) ----------------------------------------------------------------------------------------------------------------------- ACCUMULATED NET REALIZED LOSSES (2,120,074) (3,376,361) (5,496,435) * DESIGNATES THE ACCOUNTING SURVIVOR. (1) EFFECTIVE AT THE CLOSE OF BUSINESS ON APRIL 8, 2005, INSTITUTIONAL CLASS OF WELLS FARGO MONTGOMERY SHORT DURATION GOVERNMENT BOND FUND AND INSTITUTIONAL CLASS OF WELLS FARGO LIMITED-TERM GOVERNMENT INCOME FUND MERGED INTO ADMINISTRATOR CLASS OF WELLS FARGO ADVANTAGE SHORT DURATION BOND FUND. 93
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- [Enlarge/Download Table] Before After Reorganization Reorganization -------------- -------------- Target Fund Target Fund Target Fund Acquiring Fund* Wells Fargo Fund Strong Advisor Strong Wells Fargo Montgomery Wells Fargo Bond Fund Corporate Income Fund Total Return Advantage Total Income Fund Bond Fund Return Bond Fund Shares: ---------------------------------------------------------------------------------------------------------------------------------- CLASS A 1,305,465 0 1,992,136 4,031,232 6,666,474 ---------------------------------------------------------------------------------------------------------------------------------- CLASS B 898,996 0 1,142,040 618,910 2,257,632 ---------------------------------------------------------------------------------------------------------------------------------- CLASS C 386,051 0 0 451,168 785,714 ---------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS(1) 9,407,133 0 27,159,629 32,688,880 19,686,059 ---------------------------------------------------------------------------------------------------------------------------------- CLASS K 3,005,443 0 0 0 0 ---------------------------------------------------------------------------------------------------------------------------------- INVESTOR CLASS 0 2,183,766 0 0 0 ---------------------------------------------------------------------------------------------------------------------------------- CLASS Z(3) 708,572 0 0 0 2,396,048 ---------------------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS(2) 0 0 0 0 56,221,860 ---------------------------------------------------------------------------------------------------------------------------------- SELECT CLASS 0 0 0 11,436,073 0 ---------------------------------------------------------------------------------------------------------------------------------- Net Assets: ---------------------------------------------------------------------------------------------------------------------------------- CLASS A 13,965,906 0 18,715,471 49,993,960 82,675,337 ---------------------------------------------------------------------------------------------------------------------------------- CLASS B 9,623,556 0 10,718,544 7,682,760 28,024,860 ---------------------------------------------------------------------------------------------------------------------------------- CLASS C 4,130,633 0 0 5,570,594 9,701,227 ---------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS(1) 100,550,862 0 254,810,247 398,590,144 239,933,762 ---------------------------------------------------------------------------------------------------------------------------------- CLASS K 32,137,915 0 0 0 0 ---------------------------------------------------------------------------------------------------------------------------------- INVESTOR CLASS 0 21,635,076 0 0 0 ---------------------------------------------------------------------------------------------------------------------------------- CLASS Z(3) 7,581,009 0 0 0 29,216,085 ---------------------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS(2) 0 0 0 0 685,538,306 ---------------------------------------------------------------------------------------------------------------------------------- SELECT CLASS 139,382,900 0 ---------------------------------------------------------------------------------------------------------------------------------- UNREALIZED APPRECIATION (DEPRECIATION) (657,167) (122,536) (1,535,409) (5,110,365) (7,425,477) ---------------------------------------------------------------------------------------------------------------------------------- ACCUMULATED NET REALIZED LOSSES 3,765,790 (23,531) (58,554) 1,181,098 4,864,803 * DESIGNATES THE ACCOUNTING SURVIVOR. (1) EFFECTIVE AT THE CLOSE OF BUSINESS ON APRIL 8, 2005, INSTITUTIONAL CLASS OF STRONG ADVISOR BOND FUND AND SELECT CLASS OF WELLS FARGO MONTGOMERY TOTAL RETURN BOND FUND MERGED INTO INSTITUTIONAL CLASS OF WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND. (2) EFFECTIVE AT THE CLOSE OF BUSINESS ON APRIL 8, 2005, INSTITUTIONAL CLASS OF WELLS FARGO MONTGOMERY TOTAL RETURN BOND FUND , INSTITUTIONAL CLASS OF WELLS FARGO INCOME FUND AND CLASS K OF STRONG ADVISOR BOND FUND MERGED INTO ADMINISTRATOR CLASS OF WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND. (3) EFFECTIVE AT THE CLOSE OF BUSINESS ON APRIL 8, 2005, CLASS Z OF STRONG ADVISOR BOND FUND AND INVESTOR CLASS OF STRONG CORPORATE INCOME FUND MERGED INTO CLASS Z OF WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND. The separate classes of shares offered by each Fund differ principally in applicable sales charges, distribution, shareholder servicing and administration fees. Shareholders of each class bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of a Fund and earn income from the portfolio, pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends are determined separately for each class based on income and expenses allocable to each class. Realized gains and losses are allocated to each class pro rata based upon the net assets of each class on the date realized. No class has preferential dividend rights. Differences in per share dividend rates generally result from the relative weightings of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution, shareholder servicing and administration fees. The Diversified Bond Fund, and Stable Income Fund each seek to achieve its investment objective by investing all investable assets in one or more separate diversified portfolios (each, a "Master Portfolio", collectively, the "Master Portfolios") of Wells Fargo Master Trust, a registered open-end management investment company. Each Master Portfolio directly acquires portfolio 94
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- securities, and a Fund investing in a Master Portfolio acquires an indirect interest in those securities. Each Fund accounts for its investment in the Master Portfolios as partnership investments and records daily its share of the Master Portfolio's income, expenses, and realized and unrealized gains and losses. The financial statements of the Master Portfolios are in this report and should be read in conjunction with each Fund's financial statements. The ownership percentages of each Master Portfolio by Diversified Bond Fund and Stable Income Funds are as follows: Diversified Bond Fund Stable Income Fund -------------------------------------------------------------------------------- MANAGED FIXED INCOME PORTFOLIO 10% N/A -------------------------------------------------------------------------------- STABLE INCOME PORTFOLIO N/A 71% -------------------------------------------------------------------------------- STRATEGIC VALUE BOND PORTFOLIO 10% N/A -------------------------------------------------------------------------------- TACTICAL MATURITY BOND PORTFOLIO 10% N/A -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES -------------------------------------------------------------------------------- The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America ("GAAP") for investment companies. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. SECURITY VALUATION Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on The NASDAQ Stock Market, Inc. are valued at the NASDAQ Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. In the absence of any sale of such securities, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, the valuations are based on the latest quoted bid prices. Prior to April 1, 2005, the predecessor Strong Funds valuations were based on the mean of the bid and asked prices. Certain fixed income securities with maturities exceeding 60 days are valued by using a pricing service approved by the Trust's Board of Trustees. The service uses market prices as quoted by an independent pricing service or by dealers in these securities when, in the service's judgment, these prices are readily available and are representative of the securities' market values. For some securities, such prices are not readily available. These securities will generally be fair valued using methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, indications as to values from dealers in securities, trading characteristics and general market conditions. Debt securities maturing in 60 days or less generally are valued at amortized cost. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value. Investments in the Master Portfolios are valued daily based upon each fund's proportionate share of each Master Portfolio's net assets, which are also valued daily. Securities held in the Master Portfolios are valued as discussed in the Notes to Financial Statements of the Master Portfolios, which are included elsewhere in this report. Investments which are not valued using any of the methods discussed above are valued at their fair value as determined by procedures approved by the Board of Trustees. SECURITY TRANSACTIONS AND INCOME RECOGNITION Securities transactions are recorded on a trade date basis. Realized gains or losses are reported on the basis of identified cost of securities delivered. Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. Debt obligations may be placed on non-accrual status and related investment income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of income has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured. Dividend income is recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed of the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured. FOREIGN CURRENCY TRANSLATION The accounting records are maintained in U.S. dollars. Assets, including investment securities, and liabilities denominated in foreign currency are translated into U.S. dollars at the prevailing rates of exchange at the date of valuation. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or 95
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities, at fiscal period-end, resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities at fiscal period-end are not separately presented. Such changes are recorded with net realized and unrealized gain from investments. Gains and losses from certain foreign currency transactions are treated as ordinary income for U.S. federal income tax purposes. DISTRIBUTIONS TO SHAREHOLDERS Net investment income, if any, is declared and distributed to shareholders monthly, with the exception of the High Yield Bond, Inflation-Protected Bond, Short Duration Government Bond, Strategic Income, Total Return Bond and Ultra-Short Duration Bond Funds, for which net investment income, if any, is declared daily and distributed monthly. Distributions to shareholders from net realized capital gains, if any, are declared and distributed at least annually. Distributions are based on amounts calculated in accordance with the applicable federal income tax regulations, which may differ from GAAP. The timing and character of distributions made during the period from net investment income or net realized gains may also differ from their ultimate characterization for federal income tax purposes. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment. Temporary differences do not require reclassifications. At May 31, 2005, as a result of permanent book-to-tax differences, the following reclassification adjustments were made on the Statement of Assets and Liabilities: [Enlarge/Download Table] Undistributed Net Undistributed Net Fund Investment Income Realized Gain/Loss Paid-in Capital --------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND $ 15,201 $ 30,460 $ (45,661) --------------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND (47,131) 47,129 2 --------------------------------------------------------------------------------------------------------- INCOME PLUS FUND (51,967) 210,675 (158,708) --------------------------------------------------------------------------------------------------------- INFLATION-PROTECTED BOND FUND (2) 0 2 --------------------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 6,038,269 (4,434,645) (1,603,624) --------------------------------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT BOND FUND 2,378,489 (10,358,493) 7,980,004 --------------------------------------------------------------------------------------------------------- STABLE INCOME FUND (589,833) 703,210 (113,377) --------------------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND 8,220 (8,220) 0 --------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 728,453 (23,833,018) 23,104,565 --------------------------------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND 129,859 (129,859) 0 If the principal value of an inflation-protected debt security is adjusted downward due to deflation, amounts previously distributed in the taxable year may be characterized in some circumstances as return of capital. Estimates of inflation may be used in the determination of monthly income dividend rates. FEDERAL INCOME TAXES Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund of the Trust to continue to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under subchapter M of the Internal Revenue Code (the "Code"), and to make distributions of substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required at May 31, 2005. At May 31, 2005, estimated net capital loss carryforwards, which are available to offset future net realized capital gains, were: [Enlarge/Download Table] Fund Year Expires Capital Loss Carryforwards --------------------------------------------------------------------------------------- INCOME PLUS FUND 2008 $ 1,519,396 2009 3,794,875 2010 1,439,682 2011 484,626 2013 210,712 --------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 2006 44,683 2007 8,798,825 2008 17,842,488 2012 8,757,525 2013 4,919,342 96
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] Fund Year Expires Capital Loss Carryforwards --------------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT BOND FUND 2006 2,716,954 2007 1,422,016 2008 471,758 2012 3,043,490 2013 3,149,457 --------------------------------------------------------------------------------------- STABLE INCOME FUND 2006 95,212 2007 106,433 2008 185,398 2009 88,159 2011 623,902 2012 688,353 2013 327,691 --------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 2006 6,002,613 2007 12,367,877 2008 1,017,826 2012 1,476,555 2013 1,289,153 --------------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND 2006 3,548,671 2008 240,514 2010 3,205,247 2011 1,042,242 2012 203,609 The capital loss carryforwards may include capital losses acquired from a merger as discussed in Note 1. The yearly utilization of any acquired capital loss is limited by the Code. At May 31, 2005, current year deferred post-October capital losses, which will be treated as realized for tax purposes on the first day of the succeeding year, were: Fund Deferred Post-October Capital Loss -------------------------------------------------------------------------------- HIGH YIELD BOND FUND $ 229,291 -------------------------------------------------------------------------------- INCOME PLUS FUND 114,197 -------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 6,326,042 -------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT BOND FUND 4,346,517 -------------------------------------------------------------------------------- STABLE INCOME FUND 653,084 -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 506,243 -------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND 67,506 -------------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY CONTRACTS The Fund(s) may enter into forward foreign currency contracts to protect against a possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar, or between foreign currencies. A forward contract is an agreement between two counterparties for future delivery or receipt of currency at a specified price. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in currency values. Realized gains or losses are recognized when the transaction is completed. Contracts which have been offset but have not reached their settlement date are included in unrealized gains and losses. As of May 31, 2005, outstanding forward contracts were as follows: [Enlarge/Download Table] Currency Currency Net Unrealized Amount to be Type Of Settlement Amount to be Appreciaition/ Fund Delivered Currency Date Received (Depreciation) ---------------------------------------------------------------------------------------------------------------------- INCOME PLUS FUND 1,832,000 Euro 6/17/2005 $ 2,345,052 $ 81,848 ---------------------------------------------------------------------------------------------------------------------- INCOME PLUS FUND 616,000 British Pound 6/17/2005 1,150,010 28,256 ---------------------------------------------------------------------------------------------------------------------- INCOME PLUS FUND 1,775,000 New Zealand Dollar 6/17/2005 1,289,005 37,714 ---------------------------------------------------------------------------------------------------------------------- 97
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- FUTURES CONTRACTS The Fund(s) may purchase futures contracts to gain exposure to market changes, which may be more efficient or cost effective than actually buying the securities. A futures contract is an agreement between parties to buy or sell a security at a set price on a future date. Upon entering into such a contract, a Fund is required to pledge to the broker an amount of cash, U.S. Government obligations or other high-quality debt securities equal to the minimum "initial margin" requirements of the exchange on which the futures contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as "variation margin" and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Pursuant to regulations and/or published positions of the Securities and Exchange Commission (the "SEC") for long futures positions, the Fund is required to segregate highly liquid securities as permitted by the SEC in connection with futures transactions in an amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. At May 31, 2005, the following Fund(s) held futures contracts: [Enlarge/Download Table] Net Unrealized Expiration Notional Appreciation Fund Contracts Type Date Amount (Depreciation) --------------------------------------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 190 Long US 10 Year Note September, 2005 $21,420,386 $100,082 --------------------------------------------------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND 16 Short US 2 Year Note September, 2005 3,321,182 (2,318) 13 Short US 5 Year Note September, 2005 1,413,898 (56) INVESTMENTS SOLD SHORT Certain Funds may engage in short-selling to the extent permitted by the Fund's investment policies in attempting to increase investment return. In a short sale transaction, the Fund borrows a security which it then delivers to settle a sale. The Fund is obligated to replace the security borrowed by purchasing the security at current market value at a future date. The Fund will incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund realizes a gain if the price of the security declines between those dates. Until the Fund replaces the borrowed security, it will maintain daily, a segregated account with a broker and /or custodian, of cash and /or other liquid securities sufficient to cover its short position. Securities sold short at May 31, 2005, if any, and their related market values and proceeds are set forth in the Schedule of Investments Sold Short. MORTGAGE DOLLAR ROLL TRANSACTIONS The Fund(s) may engage in mortgage dollar roll transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar roll transaction, a Fund sells a mortgage-backed security to a financial institution, such as a bank or broker-dealer and simultaneously agrees to repurchase a substantially similar security from the institution at a later date at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories. 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 Funds account for mortgage dollar roll transactions as purchases and sales. REPURCHASE AGREEMENTS The Fund(s) may invest in repurchase agreements and may participate in pooled repurchase agreement transactions with other funds advised by Wells Fargo Funds Management, LLC. The repurchase agreements must be fully collateralized based on values that are marked to market daily. The collateral may be held by an agent bank under a tri-party agreement. It is the custodian's responsibility to value collateral daily and to take action to obtain additional collateral as necessary to maintain market value equal to or greater than the resale price. The repurchase agreements are collateralized by instruments such as U.S. Treasury, federal agency, or high-grade corporate obligations. There could be potential loss to a Fund in the event that such Fund is delayed or prevented from exercising its rights to dispose of the collateral, including the risk of a possible decline in the value of the underlying obligations during the period in which a Fund seeks to assert its rights. SECURITY LOANS The Fund(s) may loan securities in return for securities and cash collateral, which is invested in various short-term fixed income securities. A Fund may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Fund also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest when the transaction is entered into. If the collateral falls to 100%, it will be brought back to 102%. Gain or loss in the market price of the securities loaned that may occur during the term of the loan are reflected in the value of the Fund. The risks from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund. Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending agent for the Funds and receives for its services 40% of the revenues earned on the securities 98
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- lending activities and incurs all expenses. The value of the securities on loan and the value of the related collateral at May 31, 2005 are shown on the Statement of Assets and Liabilities. WHEN-ISSUED TRANSACTIONS Each Fund may purchase securities on a forward commitment or 'when-issued' basis. A Fund records a when-issued transaction on the trade date and will segregate with the custodian qualifying assets having a value sufficient to make payment for the securities purchased. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract. SWAP CONTRACTS The Funds may enter into various hedging transactions, such as interest rate swaps to preserve a return or spread on a particular investment or portion of its portfolio, to create synthetic adjustable-rate mortgage securities or for other purposes. Swaps involve the exchange of commitments to make or receive payments, e.g., an exchange of floating-rate payments for fixed rate payments. The Funds record as an increase or decrease to realized gain/loss, the amount due or owed by the Funds at termination or settlement. Swaps are valued based on prices quoted by independent brokers. These valuations represent the net present value of all future cash settlement amounts based on implied forward interest rates or index values. As of May 31, 2005, the Funds were not directly engaged in interest rate swap contracts. However, the Diversified Bond Fund and Stable Income Fund participated indirectly through their investment in affiliated Master Portfolios. 3. EXPENSES -------------------------------------------------------------------------------- ADVISORY FEES The Trust has entered into an advisory contract with Wells Fargo Funds Management, LLC ("Funds Management"). The adviser is responsible for implementing investment policies and guidelines and for supervising the sub-adviser, who is responsible for day-to-day portfolio management. Pursuant to the contract, Funds Management is entitled to receive an advisory fee for its services as adviser. Funds Management may retain the services of certain investment sub-advisers to provide daily portfolio management. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by a Fund to the adviser. Funds Management and the investment sub-adviser(s) are entitled to be paid a monthly fee at the following annual rates: [Enlarge/Download Table] Sub-Advisory Fees Advisory Fees* (% of Average Average Daily (% of Average Average Daily Daily Net Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Assets) ---------------------------------------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND $0 - 499 million 0.550 Sutter Advisors LLC $0 - 50 million 0.500 $500 - 999 million 0.500 $50 - 100 million 0.400 $1 - $2.99 billion 0.450 > $100 million 0.300 $3 - 4.99 billion 0.425 >$4.99 billion 0.400 ---------------------------------------------------------------------------------------------------------------------------------- INCOME PLUS FUND $0 - $499 million 0.550 Wells Capital Management $0 - 400 million 0.200 $500 - $999 million 0.500 Incorporated $400 - 800 million 0.175 $1 - $2.99 billion 0.450 > $800 million 0.150 $3 - $4.99 billion 0.425 > $4.99 billion 0.400 ---------------------------------------------------------------------------------------------------------------------------------- INFLATION PROTECTED $0 - $499 million 0.450 Wells Capital Management $0 - 400 million 0.150 BOND FUND $500 - $999 million 0.400 Incorporated $400 - 800 million 0.125 $1 - $2.99 billion 0.350 > $800 million 0.100 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 ---------------------------------------------------------------------------------------------------------------------------------- INTERMEDIATE $0 - $499 million 0.450 Wells Capital Management $0 - 400 million 0.150 GOVERNMENT $500 - $999 million 0.400 Incorporated $400 - 800 million 0.125 INCOME FUND $1 - $2.99 billion 0.350 > $800 million 0.100 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 ---------------------------------------------------------------------------------------------------------------------------------- SHORT $0 - $499 million 0.450 Wells Capital Management $0 - 400 million 0.150 DURATION $500 - $999 million 0.400 Incorporated $400 - 800 million 0.125 GOVERNMENT $1 - $2.99 billion 0.350 > $800 million 0.100 BOND FUND $3 - $4.99 billion 0.325 > $4.99 billion 0.300 ---------------------------------------------------------------------------------------------------------------------------------- STRATEGIC $0 - $499 million 0.450 Wells Capital Management $0 - 400 million 0.200 INCOME $500 - $999 million 0.400 Incorporated $400 - 800 million 0.175 FUND** $1 - $2.99 billion 0.350 > $800 million 0.150 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 99
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- [Enlarge/Download Table] Sub-Advisory Fees Advisory Fees* (% of Average Average Daily (% of Average Average Daily Daily Net Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Assets) ---------------------------------------------------------------------------------------------------------------------------------- TOTAL $0 - $499 million 0.450 Wells Capital Management $0 - 400 million 0.150 RETURN BOND $500 - $999 million 0.400 Incorporated $400 - 800 million 0.125 FUND $1 - $2.99 billion 0.350 > $800 million 0.100 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 ---------------------------------------------------------------------------------------------------------------------------------- ULTRA-SHORT $0 - $499 million 0.450 Wells Capital Management $0 - 400 million 0.200 DURATION BOND $500 - $999 million 0.400 Incorporated $400 - 800 million 0.175 FUND** $1 - $2.99 billion 0.350 > $800 million 0.150 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 * Effective August 2, 2004. Prior to August 2, 2004, Funds Management was entitled to be paid a monthly advisory fee at the following annual rates: Advisory Fee Fund (% Of Average Daily Net Assets) -------------------------------------------------------------------------------- HIGH YIELD BOND FUND 0.60 -------------------------------------------------------------------------------- INCOME PLUS FUND 0.60 -------------------------------------------------------------------------------- INFLATION-PROTECTED BOND FUND 0.50 -------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 0.50 -------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT BOND FUND 0.50 -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 0.50 ** Effective April 11, 2005. Prior to January 1, 2005, Strong Capital Management, Inc. ("SCM") served as investment adviser to each of the predecessor Strong Funds. From January 1, 2005 through April 10, 2005, Funds Management served as interim investment adviser to each of the predecessor Strong Funds. Both SCM and Funds Management, for their respective periods of time during the reporting period, were entitled to receive an annual fee at the following rates: [Enlarge/Download Table] Advisory Fees Average Daily (% of Average Fund Net Assets Daily Net Assets) -------------------------------------------------------------------------------------- STRATEGIC INCOME FUND $0 - 4 billion 0.500 $4 billion - $6 billion 0.475 >$6 billion 0.450 -------------------------------------------------------------------------------------- ULTRA-SHORT DURATION $0 - 4 billion 0.375 BOND FUND $4 billion - $6 billion 0.350 >$6 billion 0.450 For each Fund that is invested in multiple Master Portfolios, Funds Management is entitled to receive an investment advisory fee of 0.25% of each Fund's average daily net assets for providing advisory services, including the determination of the asset allocations of each Fund's investments in the various Master Portfolios. For each Fund that invests all of its assets in single Master Portfolios, Funds Management does not currently receive investment advisory fees. Funds Management acts as adviser to the Master Portfolios, and is entitled to receive fees from the Master Portfolios for those services. Each Fund that invests its assets in one or more of the Master Portfolios may withdraw its investments from its corresponding Master Portfolio(s) at any time if the Board of Trustees determines that it is in the best interest of the Fund to do so. Upon such redemption and subsequent direct investment in a portfolio of securities, Funds Management (and the corresponding sub-adviser, if any) may receive an investment advisory fee for the direct management of those assets. 100
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ADMINISTRATION AND TRANSFER AGENT FEES The Trust has entered into an Administration Agreement with Funds Management. Under this Agreement, for providing administrative services, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers, Funds Management is entitled to receive the following annual fees: Admin Fees**** Average Daily (% of Average Net Assets Daily Net Assets) ----------------------------------------------------------------------------- FUND LEVEL* $0 - 4.99 billion 0.05 $5 - 9.99 billion 0.04 > 9.99 billion 0.03 ----------------------------------------------------------------------------- CLASS A 0.28 ----------------------------------------------------------------------------- CLASS B 0.28 ----------------------------------------------------------------------------- CLASS C 0.28 ----------------------------------------------------------------------------- CLASS Z 0.45 ----------------------------------------------------------------------------- ADMINISTRATOR CLASS** 0.10 ----------------------------------------------------------------------------- INSTITUTIONAL CLASS*** 0.08 ----------------------------------------------------------------------------- * Effective August 2, 2004. Prior to August 2, 2004, Funds Management was entitled to be paid a fund level administration fee of 0.05% of average daily net assets. ** Prior to April 11, 2005, the class level fee was 0.20%. *** Prior to April 11, 2005, the class level fee was 0.10% **** For the Strategic Income Fund and Ultra-Short Duration Bond Fund, these rates are effective April 11, 2005. Prior to April 11, 2005, Strong Investor Services, Inc. ("SISI") served as administrator to each of the predecessor Strong Funds and was entitled to receive an annual fee at the following rates: Admin Fees (% of Average Daily Net Assets) -------------------------------------------------------------------------------- CLASS A, B, C AND Z 0.28 -------------------------------------------------------------------------------- The Trust has entered into an agreement with Boston Financial Data Services, Inc. ("BFDS") as the transfer agent for the Trust. For the Strategic Income Fund and Ultra-Short Duration Fund, the agreement with BFDS was entered into on March 14, 2005. Prior to March 14, 2005, SISI served as transfer agent to each of the predecessor Strong Funds. BFDS is entitled to receive fees from the administrator for its services as transfer agent. For the predecessor Strong Funds transfer agent fees were paid by the Funds themselves prior to April 11, 2005. For financial statement presentation, transfer agent fees for the period November 1, 2004 through April 11, 2005, as shown below have been combined with administration fees. [Enlarge/Download Table] Transfer Agent Fees and Other Related Expenses Fund Class A Class B Class C Class Z ------------------------------------------------------------------------------------------------------------------ STRATEGIC INCOME FUND $ 11,964 $ 9,028 $ 3,094 N/A ------------------------------------------------------------------------------------------------------------------ ULTRA-SHORT DURATION BOND FUND 14,154 8,556 7,432 13,989 CUSTODY FEES The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"), whereby WFB is responsible for providing custody services. Pursuant to the contract, WFB is entitled to certain transaction charges plus a monthly fee for custody services at the following annual rates: % Of Average Daily Net Assets -------------------------------------------------------------------------------- ALL INCOME FUNDS 0.02 -------------------------------------------------------------------------------- Prior to March 27, 2005, State Street served as custodian for the Strong Advisor Strategic Income Fund. Prior to March 21, 2005, State Street served as custodian for the Strong Advisor Short Duration Bond Fund. State Street was entitled to receive a fee that was substantially transaction-based. WFB does not receive a custodial fee for any Fund that invests its assets solely in one or more Master Portfolios or other investment companies. 101
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- SHAREHOLDER SERVICING FEES The Trust has entered into contracts with one or more shareholder servicing agents, whereby each Fund is charged the following annual fees: Share Class % of Average Daily Net Assets* -------------------------------------------------------------------------------- CLASS A, CLASS B, CLASS C, CLASS Z, ADMINISTRATOR CLASS 0.25 -------------------------------------------------------------------------------- INSTITUTIONAL CLASS 0.00 * For the Strategic Income Fund and Ultra-Short Duration Bond Fund, these rates are effective April 11, 2005. Prior to April 11, 2005, shareholder servicing fees for the predecessor Strong Funds, if any, were included in the Strong Funds' 12b-1 distribution and service plan. For the Diversified Bond Fund, these rates are effective April 11, 2005. Prior to April 11, 2005, this fund did not charge shareholder servicing fees. For the year ended May 31, 2005, shareholder servicing fees paid were as follows: [Enlarge/Download Table] Administrator Institutional Fund Class A Class B Class C Class Z Class Class ----------------------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND N/A N/A N/A N/A $47,496 N/A ----------------------------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND 624,889 70,353 61,174 N/A N/A N/A ----------------------------------------------------------------------------------------------------------------------- INCOME PLUS FUND 95,343 68,620 17,190 N/A N/A N/A ----------------------------------------------------------------------------------------------------------------------- INFLATION-PROTECTED BOND FUND 65,851 28,906 32,048 N/A 17,583 N/A ----------------------------------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 405,005 96,556 41,647 N/A 137,525 N/A ----------------------------------------------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT ----------------------------------------------------------------------------------------------------------------------- BOND FUND 135,373 30,993 65,593 N/A 155,887 0 ----------------------------------------------------------------------------------------------------------------------- STABLE INCOME FUND 312,529 70,558 23,858 N/A 124,624 N/A ----------------------------------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND** 4,646 3,628 1,380 N/A N/A N/A ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 133,106 26,742 16,308 10,243 627,256 0 ----------------------------------------------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND** 5,311 3,060 2,217 4,561 N/A N/A ** Total shareholder servicing fees shown are for the period April 11, 2005 through May 31, 2005. DISTRIBUTION FEES The Trust has adopted a Distribution Plan (the "Plan") for Class B and Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940 Act. Effective April 11, 2005, distribution fees are charged to the Class B and Class C shares and paid to Wells Fargo Funds Distributor, LLC at an annual rate of 0.75% of average daily net assets. Prior to April 11, 2005, distribution fees for the Wells Fargo Funds were paid to Stephens Inc. at the same annual rate. Prior to April 11, 2005, the predecessor Strong Funds adopted a 12b-1 distribution and service plan under the 1940 Act on behalf of the Class A, B, and C shares. Under the plan, Strong Investments, Inc. was paid an annual rate of 0.25%, 1.00%, and 1.00%, respectively, of the average daily net assets of Class A, B, and C shares. For the year ended May 31, 2005, distribution fees paid are disclosed on the Statement of Operations. OTHER FEES PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is entitled to receive an annual asset based fee, and an annual fixed fee from each Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. Prior to March 27, 2005, State Street served as fund accountant for the Strong Advisor Strategic Income Fund. Prior to March 21, 2005, State Street served as fund accountant for the Strong Advisor Ultra-Short Duration Bond Fund. Fund accounting fees were paid by the Funds' administrator through April 10, 2005, and not by the Funds. WAIVED FEES AND REIMBURSED EXPENSES All amounts shown as waived fees or reimbursed expenses in the Statement of Operations, for the year ended May 31, 2005, were waived by Funds Management proportionately from all classes, first from advisory fees, and then from any Class specific expenses, if any. Net operating expense ratios during the period were as follows: 102
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] Net Operating Expense Ratios Administrator Institutional Fund Class A Class B Class C Class Z Class Class ----------------------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND N/A N/A N/A N/A 0.70% N/A ----------------------------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND 1.15% 1.90% 1.90% N/A N/A N/A ----------------------------------------------------------------------------------------------------------------------- INCOME PLUS FUND 1.00% 1.75% 1.75% N/A N/A N/A ----------------------------------------------------------------------------------------------------------------------- INFLATION-PROTECTED BOND FUND 0.85% 1.60% 1.60% N/A 0.60% N/A ----------------------------------------------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 0.95% 1.70% 1.70% N/A 0.70% N/A ----------------------------------------------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT BOND FUND 0.85% 1.60% 1.60% N/A 0.60% 0.42% ----------------------------------------------------------------------------------------------------------------------- STABLE INCOME FUND 0.90% 1.65% 1.65% N/A 0.65% N/A ----------------------------------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND* 1.10% 1.85% 1.85% N/A N/A N/A ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 0.90% 1.65% 1.65% 0.95% 0.70% 0.42% ----------------------------------------------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND* 0.80% 1.55% 1.55% 0.97% N/A N/A * The rates for these funds were in effect from April 11, 2005 through May 31, 2005. Prior to April 11, 2005, the predecessor Strong Funds' adviser and/or administrator could voluntarily waive or absorb certain expenses at their discretion. Pursuant to the direction of the Strong Funds Board of Directors and certain regulatory settlements, SCM had contractually agreed to waive fees and/or absorb expenses in the amount of 0.033% for the Strong Advisor Bond Fund and Strong Advisor Strategic Income Fund from May 21, 2004 to May 21, 2005. However, effective April 11, 2005, the Funds are subject to a different expense structure. SISI also allocated to each Fund certain charges or credits resulting from transfer agency banking activities based on each class' level subscription and redemption activity. Transfer Agency Banking Credits allocated by SISI, if any, served to reduce the transfer agency expenses incurred by the Funds. From November 1, 2004 through April 10, 2005, the expense offsets that are included in the waived fees and reimbursed expenses amount on the Statement of Operations are as follows: [Enlarge/Download Table] Waived Fees and Reimbursed Expenses Fund Fund Level Class A Class B Class C --------------------------------------------------------------------------------------------- STRATEGIC INCOME FUND $ 5,413 $ 27,804 $ 0 $ 0 --------------------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND 8,388 15,186 1,037 4,532 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 year ended May 31, 2005, were as follows: Fund Purchases at Cost Sales Proceeds -------------------------------------------------------------------------------- DIVERSIFIED BOND FUND** $ 81,655,913 $ 69,815,334 -------------------------------------------------------------------------------- HIGH YIELD BOND FUND 232,168,015 270, 644,132 -------------------------------------------------------------------------------- INCOME PLUS FUND 88,848,750 111,441,518 -------------------------------------------------------------------------------- INFLATION-PROTECTED BOND FUND 396,345,919 362,603,515 -------------------------------------------------------------------------------- INTERMEDIATE GOVERNMENT INCOME FUND 1,656,141,994 1,711,400,767 -------------------------------------------------------------------------------- SHORT DURATION GOVERNMENT BOND FUND 1,215,788,425 1,199,483,287 -------------------------------------------------------------------------------- STABLE INCOME FUND** 244,391,720 383,980,325 -------------------------------------------------------------------------------- STRATEGIC INCOME FUND*** 19,858,360 19,805,934 -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 4,473,093,682 4,054,184,753 -------------------------------------------------------------------------------- ULTRA-SHORT DURATION BOND FUND*** 4,178,619 8,506,145 ** These Funds seek to achieve their investment objective by investing some or all of their investable assets in one or more Master Portfolios. Purchases and sales related to these investments have been calculated by aggregating the results of multiplying such Fund's ownership percentage of the respective Master Portfolio by the corresponding Master Portfolio's purchases and sales. *** Total purchases and sales shown are for the period November 1, 2004 through May 31, 2005. 103
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 5. BANK BORROWINGS -------------------------------------------------------------------------------- Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the money market funds) share in a revolving Credit Agreement with The Bank of New York, whereby the Funds are permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. The agreement permits borrowings of up to $150 million, collectively. Interest is charged to each Fund based on its borrowing at a rate equal to the Federal Funds Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to 0.1% per annum of the credit line. For the year ended May 31, 2005, there were no borrowings under the agreement. Prior to April 11, 2005, the predecessor Strong Funds had established a line of credit agreement ("LOC") with certain financial institutions to be used for temporary or emergency purposes. Combined borrowings among all participating Strong Funds were subject to a $200 million cap on the total LOC. For an individual fund, borrowings under the LOC were limited to either the lesser of 15% of the market value of the fund's total assets or any explicit borrowing limits in the fund's registration statement. The principal amount of each borrowing under the LOC was due not more than 45 days after the date of the borrowing. Borrowings under the LOC accrued interest based on prevailing market rates as defined in the LOC. A commitment fee of 0.09% per annum was incurred on the unused portion of the LOC and was allocated to all participating Strong Funds based on their net assets. For the period November 1, 2004 through April 10, 2005, there were no borrowings under the agreement. 6. DISTRIBUTION TO SHAREHOLDERS -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended May 31, 2005 and May 31, 2004 was as follows: [Enlarge/Download Table] Long-Term Dividends Paid Return Ordinary Income Capital Gain on Redemption of Capital Total Fund 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 ------------------------------------------------------------------------------------------------------------------------------------ DIVERSIFIED BOND FUND $ 5,903,915 $10,376,704 $ 715,919 $380,319 $ 0 $ 0 $ 0 $ 0 $ 6,619,834 $ 10,757,023 ------------------------------------------------------------------------------------------------------------------------------------ HIGH YIELD BOND FUND 23,863,333 17,588,061 3,606,984 0 0 13,000 0 0 27,470,317 17,601,061 ------------------------------------------------------------------------------------------------------------------------------------ INCOME PLUS FUND 3,813,855 4,107,828 0 0 0 0 0 0 3,813,855 4,107,828 ------------------------------------------------------------------------------------------------------------------------------------ INFLATION- PROTECTED BOND FUND 3,030,149 1,014,335 62,990 0 0 0 0 0 3,093,139 1,014,335 ------------------------------------------------------------------------------------------------------------------------------------ INTERMEDIATE GOVERNMENT INCOME FUND 25,016,472 33,757,649 0 0 0 0 0 0 25,016,472 33,757,649 ------------------------------------------------------------------------------------------------------------------------------------ SHORT DURATION GOVERNMENT BOND FUND 14,245,316 11,385,678 0 173,763 0 0 0 0 14,245,316 11,559,441 ------------------------------------------------------------------------------------------------------------------------------------ STABLE INCOME FUND 9,212,733 13,696,576 0 0 0 0 0 914,229 9,212,733 14,610,805 ------------------------------------------------------------------------------------------------------------------------------------ STRATEGIC INCOME FUND 925,728 1,606,741 0 0 0 0 0 0 925,728 1,606,741 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN BOND FUND 21,222,659 8,993,099 0 338,184 0 0 0 0 21,222,659 9,331,283 ------------------------------------------------------------------------------------------------------------------------------------ ULTRA-SHORT DURATION BOND FUND 767,048 1,493,550 0 0 0 0 0 0 767,048 1,493,550 104
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- As of May 31, 2005, the components of distributable earnings on a tax basis are shown in the table below. The difference between book basis and tax basis appreciation is attributable to primarily to the tax deferral of losses on wash sales and cost basis adjustments related to premium amortization (only for funds that have elected not to amortize premium for tax purposes). [Enlarge/Download Table] Unrealized Undistributed Undistributed Appreciation Capital Loss Fund Ordinary Income Long-Term Gain (Depreciation) Carryforward* Total ------------------------------------------------------------------------------------------------------------------------------ DIVERSIFIED BOND FUND $ 118,928 $334,702 $ 5,353,394 $ 0 $ 5,807,024 ------------------------------------------------------------------------------------------------------------------------------ HIGH YIELD BOND FUND 474,592 41,736 (1,244,008) (229,291) (956,971) ------------------------------------------------------------------------------------------------------------------------------ INCOME PLUS FUND 0 0 892,827 (7,563,480) (6,670,653) ------------------------------------------------------------------------------------------------------------------------------ INFLATION-PROTECTED BOND FUND 2,562,368 608,624 673,235 0 3,844,227 ------------------------------------------------------------------------------------------------------------------------------ INTERMEDIATE GOVERNMENT INCOME FUND 461,342 0 509,224 (46,688,905) (45,718,339) ------------------------------------------------------------------------------------------------------------------------------ SHORT DURATION GOVERNMENT BOND FUND 834,586 0 (2,797,163) (15,150,192) (17,112,769) ------------------------------------------------------------------------------------------------------------------------------ STABLE INCOME FUND 488,990 0 1,175,864 (2,768,232) (1,103,378) ------------------------------------------------------------------------------------------------------------------------------ STRATEGIC INCOME FUND 17,372 451,620 132,115 0 601,107 ------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN BOND FUND 1,492,588 0 7,944,884 (22,660,267) (13,222,795) ------------------------------------------------------------------------------------------------------------------------------ ULTRA-SHORT DURATION BOND FUND 6,180 0 326,829 (8,307,789) (7,974,780) * This amount includes any post-October loss, which will reverse on the first day of the following fiscal year. 7. LEGAL AND REGULATORY MATTERS -------------------------------------------------------------------------------- In 2004, the predecessor funds' investment adviser and affiliates (collectively, "Strong") entered into agreements with certain regulators, including the Securities and Exchange Commission and the New York Attorney General ("NYAG"), to settle market-timing investigations. In the settlements, Strong agreed to pay investor restoration and civil penalties. Although some portion of these payments is likely to be distributed to predecessor fund shareholders, no determination has yet been made as to the distribution of these amounts, and the successor funds are not expected to receive any portion of these payments. The NYAG settlement also imposed fee reductions across the predecessor fund complex (excluding money market funds and very short-term income funds) totaling at least $7 million a year for five years or $35 million by May 2009. The current Funds' adviser has agreed to honor these fee reductions for the benefit of shareholders across the successor funds. Although civil litigation against Strong and certain predecessor funds relating to these matters is continuing, neither the current adviser nor the successor funds is a party to any such suit. 105
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 8. CAPITAL SHARE TRANSACTIONS -------------------------------------------------------------------------------- As of May 31, 2005, the Trust has authorized an unlimited number of shares of beneficial interest without par value. Transactions in capital shares for each Fund are disclosed below: FOR THE YEAR ENDED MAY 31, 2005FOR THE YEAR ENDED MAY 31, 2004 [Enlarge/Download Table] FOR THE YEAR ENDED MAY 31, 2004 ------------------------------------------------------------------------------------------------------------------------------- NET INCREASE SHARES ISSUED ON (DECREASE) SHARES REINVESTMENT SHARES IN SHARES FUND NAME SOLD OF DISTRIBUTIONS REDEEMED OUTSTANDING ------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND ------------------------------------------------------------------------------------------------------------------------------- Administrator Class(3) ........................... 1,499,423 163,003 (4,001,463) (2,339,037) HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 4,649,806 1,416,570 (9,578,181) (3,511,805) Class B .......................................... 418,551 147,547 (577,479) (11,381) Class C .......................................... 302,587 126,362 (922,320) (493,371) INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 2,002,705 126,396 (912,619) 1,216,482 Class B .......................................... 148,306 72,659 (1,936,524) (1,715,559) Class C .......................................... 125,914 22,031 (294,907) (146,962) INFLATION-PROTECTED BOND FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 7,249,535 83,847 (6,611,810) 721,572 Class B .......................................... 346,269 26,578 (266,582) 106,265 Class C .......................................... 456,711 29,618 (332,719) 153,610 Administrator Class(3) ........................... 2,980,509 112,164 (655,200) 2,437,473 INTERMEDIATE GOVERNMENT INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 1,675,538 431,005 (6,734,883) (4,628,340) Class B .......................................... 98,274 80,918 (1,793,849) (1,614,657) Class C .......................................... 26,970 34,596 (858,033) (796,467) Administrator Class(3) ........................... 11,083,025 417,147 (11,850,838) (350,666) SHORT DURATION GOVERNMENT BOND FUND(1) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 8,470,876 121,786 (3,870,700) 4,721,962 Class B .......................................... 2,093,155 22,604 (373,925) 1,741,834 Class C .......................................... 201,968 47,168 (1,692,409) (1,443,273) Administrator Class(3) ........................... 31,946,440 1,002,109 (21,230,385) 11,718,164 Institutional Class(5) ........................... 1,001 5 0 1,006 STABLE INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 9,822,891 131,422 (18,032,821) (8,078,508) Class B .......................................... 240,053 13,851 (1,677,263) (1,423,359) Class C .......................................... 164,865 4,800 (666,853) (497,188) Administrator Class(3) ........................... 20,032,532 414,451 (41,316,112) (20,869,129) STRATEGIC INCOME FUND(2) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 376,770 49,485 (454,401) (28,146) Class B .......................................... 87,422 24,014 (95,464) 15,972 Class C .......................................... 19,203 12,291 (122,183) (90,689) 106
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] FOR THE YEAR ENDED MAY 31, 2004 ------------------------------------------------------------------------------------------------------------------------------- SHARES ISSUED ON NET INCREASE SHARES REINVESTMENT SHARES (DECREASE) IN SOLD OF DISTRIBUTIONS REDEEMED SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED BOND FUND ------------------------------------------------------------------------------------------------------------------------------- Administrator Class(3) ........................... 1,375,109 239,778 (8,144,934) (6,530,047) HIGH YIELD BOND FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 13,913,827 855,604 (3,163,600) 11,605,831 Class B .......................................... 1,738,299 87,911 (344,165) 1,482,045 Class C .......................................... 1,627,723 83,797 (392,341) 1,319,179 INCOME PLUS FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 1,542,815 83,520 (801,460) 824,875 Class B .......................................... 424,107 123,513 (1,198,761) (651,141) Class C .......................................... 237,333 28,954 (500,290) (234,003) INFLATION-PROTECTED BOND FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 2,096,804 25,380 (628,805) 1,493,379 Class B .......................................... 696,736 11,530 (144,119) 564,147 Class C .......................................... 1,012,703 13,188 (287,500) 738,391 Administrator Class(3) ........................... 2,300,337 35,746 (376,585) 1,959,498 INTERMEDIATE GOVERNMENT INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 5,194,648 565,427 (4,896,494) 863,581 Class B .......................................... 343,535 161,793 (3,062,719) (2,557,391) Class C .......................................... 497,968 73,087 (1,525,484) (954,429) Administrator Class(3) ........................... 8,855,931 390,526 (13,279,647) (4,033,190) SHORT DURATION GOVERNMENT BOND FUND(1) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 4,386,067 79,824 (5,220,872) (754,981) Class B .......................................... 655,424 9,616 (246,234) 418,806 Class C .......................................... 1,682,052 38,174 (1,513,332) 206,894 Administrator Class(3) ........................... 16,987,415 894,825 (25,505,412) (7,623,172) Institutional Class(5) ........................... N/A N/A N/A N/A STABLE INCOME FUND ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 13,003,668 222,302 (13,896,308) (670,338) Class B .......................................... 915,441 28,795 (2,105,770) (1,161,534) Class C .......................................... 1,686,865 5,725 (505,810) 1,186,780 Administrator Class(3) ........................... 61,954,738 573,919 (54,432,515) 8,096,142 STRATEGIC INCOME FUND(2) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 472,766 74,328 (326,035) 221,059 Class B .......................................... 229,656 35,755 (163,763) 101,648 Class C .......................................... 61,929 23,230 (231,014) (145,855) 107
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 8. CAPITAL SHARE TRANSACTIONS (CONTINUED) -------------------------------------------------------------------------------- [Enlarge/Download Table] FOR THE YEAR ENDED MAY 31, 2005 ------------------------------------------------------------------------------------------------------------------------------- NET INCREASE SHARES ISSUED ON (DECREASE) SHARES REINVESTMENT SHARES IN SHARES FUND NAME SOLD OF DISTRIBUTIONS REDEEMED OUTSTANDING ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND(1) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 8,954,344 104,189 (6,095,643) 2,962,890 Class B .......................................... 1,760,336 20,105 (240,590) 1,539,851 Class C .......................................... 449,465 13,346 (190,526) 272,285 Class Z .......................................... 2,486,928 11,528 (145,160) 2,353,296 Administrator Class(3) ........................... 75,030,073 981,150 (34,610,638) 41,400,585 Institutional Class(4) ........................... 17,899,527 379,637 (2,437,420) 15,841,744 ULTRA-SHORT DURATION BOND FUND(2) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 195,959 33,383 (622,596) (393,254) Class B .......................................... 39,067 11,266 (218,614) (168,281) Class C .......................................... 69,149 8,604 (440,246) (362,493) Class Z .......................................... 51,821 28,222 (375,125) (295,082) (1) "Shares sold" include amounts related to Fund mergers and share class conversions. (See Note 1). (2) For the Wells Fargo Advantage Strategic Income and the Wells Fargo Advantage Ultra-Short Duration Funds, prior period information presented is from November 1, 2003 to October 31, 2004. (3 )Effective at the close of business on April 8, 2005, Institutional Class shares were converted into Administrator Class shares. (4) Effective at the close of business on April 8, 2005, Select Class shares were converted into Institutional Class shares. (5) The inception date for this class is April 11, 2005. 108
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[Enlarge/Download Table] FOR THE YEAR ENDED MAY 31, 2004 ------------------------------------------------------------------------------------------------------------------------------- SHARES ISSUED ON NET INCREASE SHARES REINVESTMENT SHARES (DECREASE) IN FUND NAME SOLD OF DISTRIBUTIONS REDEEMED SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN BOND FUND(1) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 3,924,569 82,626 (510,147) 3,497,048 Class B .......................................... 450,978 13,281 (115,144) 349,115 Class C .......................................... 413,245 13,893 (265,292) 161,846 Class Z .......................................... N/A N/A N/A N/A Administrator Class(3) ........................... 18,408,985 428,995 (9,398,898) 9,439,082 Institutional Class(4) ........................... 772,636 173,141 (817,263) 128,514 ULTRA-SHORT DURATION BOND FUND(2) ------------------------------------------------------------------------------------------------------------------------------- Class A .......................................... 478,644 58,113 (1,796,414) (1,259,657) Class B .......................................... 161,517 15,633 (527,802) (350,652) Class C .......................................... 288,769 15,123 (911,753) (607,861) Class Z .......................................... 200,502 52,560 (1,367,405) (1,114,343) 109
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WELLS FARGO ADVANTAGE INCOME FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO FUNDS TRUST: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the Diversified Bond Fund, High Yield Bond Fund, Income Plus Fund, Inflation-Protected Bond Fund, Intermediate Government Income Fund, Short Duration Government Bond Fund, Total Return Bond Fund, and Stable Income Fund, eight of the funds constituting the Wells Fargo Funds Trust, as of May 31, 2005, and the related statements of operations, the statements of changes in net assets and the financial highlights for the periods presented. We have also audited the accompanying statements of assets and liabilities, including the portfolios of investments of the Strategic Income Fund and Ultra-Short Duration Bond Fund, two of the funds constituting the Wells Fargo Funds Trust, as of May 31, 2005, and the related statements of operations, the statements of changes in net assets and the financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of operations and changes in net assets and the financial highlights of the Strategic Income Fund and Ultra-Short Duration Bond Fund for the years or periods ended October 31, 2004 and prior, and the financial highlights of the Short Duration Government Bond Fund and Total Return Bond Fund for the years or periods ended June 30, 2002 and prior, were audited by other auditors. Those auditors expressed unqualified opinions on those financial statements and financial highlights in their reports dated December 6, 2004 and August 16, 2002, respectively. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2005, by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned funds of Wells Fargo Funds Trust as of May 31, 2005, the results of their operations, changes in their net assets, and their financial highlights for the periods indicated in the paragraph above, in conformity with U.S. generally accepted accounting principles. [KPMG LLP LOGO] Philadelphia, Pennsylvania July 22, 2005 110
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- TAX INFORMATION (UNAUDITED) For the year ended May 31, 2005, the following Funds designate the amounts listed below as long-term capital gain distributions, pursuant to Section 852(b)(3) of the Internal Revenue Code: -------------------------------------------------------------------------------- DIVERSIFIED BOND FUND $ 715,919 -------------------------------------------------------------------------------- HIGH YIELD BOND FUND 3,606,984 -------------------------------------------------------------------------------- INFLATION-PROTECTED BOND FUND 62,990 -------------------------------------------------------------------------------- For California income tax purposes, the Inflation-Protected Bond Fund designates 100% of the distributions paid from net investment income during the year as California exempt-interest dividends under Section 17145 of the California Revenue & Taxation Code. 111 THIS PAGE IS INTENTIONALLY LEFT BLANK --
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES - 5.74% $ 1,938,355 BANKAMERICA MANUFACTURED HOUSING CONTRACT SERIES 1997-1 CLASS A8 6.73% 06/10/2023 $ 1,961,291 1,520,000 BRAZOS STUDENT LOAN FINANCE CORPORATION SERIES 1995-B CLASS A4+/- 3.35 12/01/2025 1,519,991 1,297,217 BRAZOS STUDENT LOAN FINANCE CORPORATION SERIES 1997-A CLASS A2+/- 3.13 12/01/2021 1,293,974 5,000,000 CHASE FUNDING MORTGAGE LOAN SERIES 2002-1 CLASS 1A5+/- 6.60 02/25/2032 5,206,149 453,781 CONTIMORTGAGE HOME EQUITY LOAN TRUST SERIES 1997-4 CLASS A7 6.63 09/15/2016 455,432 2,740,877 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2004-SD4 CLASS A1+/-++ 3.47 12/30/2034 2,780,263 1,700,000 CROWN CASTLE TOWERS LLC++ 4.64 06/15/2035 1,700,000 87,984 GE CAPITAL MORTGAGE SERVICES INCORPORATED SERIES 1997-HE2 CLASS A7 7.12 06/25/2027 87,786 2,368,431 GREEN TREE FINANCIAL CORPORATION SERIES 1997-7 CLASS A8 6.86 07/15/2029 2,488,641 2,494,521 GREEN TREE HOME EQUITY LOAN TRUST SERIES 1999-C CLASS M2 8.36 07/15/2030 2,564,557 2,213,143 GSAMP TRUST SERIES 2005-SEA1 CLASSA+/-++ 3.43 04/25/2035 2,213,143 2,500,000 KEYCORP STUDENT LOAN TRUST+/- 3.59 11/25/2036 2,514,700 2,145,000 MELLON BANK PREMIUM FINANCE LOAN MASTER SERIES 2004-1 CLASS A+/- 2.65 06/15/2009 2,151,532 63,993 PASS-THROUGH AMORTIZING CREDIT CARD TRUSTS SERIES 2002-1A CLASS A2FL+/-++ 4.44 06/18/2012 63,991 5,518,000 RENTAL CAR FINANCE CORPORATION SERIES 1997-1 CLASS B3++ 6.70 09/25/2007 5,522,361 4,457,332 RESIDENTIAL FUNDING MORTGAGE SECURITIES II SERIES 2002-HI3 CLASS A6 5.98 08/25/2019 4,500,444 1,919,695 WACHOVIA ASSET SECURITIZATION INCORPORATED SERIES 2004-HE1 CLASS A+/- 3.31 06/25/2034 1,921,757 TOTAL ASSET-BACKED SECURITIES (COST $38,682,184) 38,946,012 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 10.50% 2,821,899 COUNTRYWIDE HOME LOANS++ 6.50 11/25/2034 2,930,808 5,784,234 COUNTRYWIDE HOME LOANS+/-++ 3.38 03/25/2035 5,787,399 3,444,171 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION 2004-AR5 CLASS 10A1+/- 5.03 05/01/2034 3,465,585 28,697 FANNIE MAE SERIES 1988-5 CLASS Z 9.20 03/25/2018 30,462 19,900,241 FANNIE MAE SERIES 2005-29 CLASS WQ<< 5.50 04/25/2035 20,457,193 8,500,000 FANNIE MAE WHOLE LOAN SERIES 2002-W4 CLASS A4 6.25 05/25/2042 8,761,044 5,424,377 FANNIE MAE WHOLE LOAN SERIES 2004-W11 CLASS 1A3 7.00 05/25/2044 5,755,528 3,041,442 FANNIE MAE WHOLE LOAN SERIES 2004-W8 CLASS 3A 7.50 06/25/2044 3,249,107 156,651 LF ROTHSCHILD MORTGAGE TRUST SERIES 2 CLASS Z 9.95 08/01/2017 165,155 2,078,481 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 1997-C1 CLASS A3 7.12 06/18/2029 2,143,517 2,287,545 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS A4 6.65 11/10/2030 2,325,331 727,524 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS D 7.56 11/10/2030 780,748 4,932,679 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2004-R2 CLASS A1+/-++ 6.50 10/25/2034 5,091,557 759,256 RESIDENTIAL FUNDING SECURITIES CORPORATION SERIES 2003-RP1 CLASS A1+/-++ 3.59 11/25/2034 762,317 4,545,860 SEQUOIA MORTGAGE TRUST SERIES 10 CLASS 1A+/- 3.49 10/20/2027 4,549,533 4,962,639 WASHINGTON MUTUAL MORTGAGE 2005-AR6 20450425+/- 3.26 04/25/2045 4,962,639 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $70,977,037) 71,217,923 -------------- CORPORATE BONDS & NOTES - 26.08% AMUSEMENT & RECREATION SERVICES - 0.23% 1,480,000 PEARSON DOLLAR FINANCIAL PLC++ 5.70 06/01/2014 1,542,768 -------------- BUSINESS SERVICES - 1.16% 1,770,000 CENDANT CORPORATION<< 7.38 01/15/2013 2,007,148 1,650,000 FISERV INCORPORATED 4.00 04/15/2008 1,627,862 1,750,000 NCR CORPORATION++ 7.13 06/15/2009 1,900,890 2,120,000 THOMPSON CORPORATION 6.20 01/05/2012 2,318,880 7,854,870 -------------- 112
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE CHEMICALS & ALLIED PRODUCTS - 1.49% $ 2,000,000 BRISTOL MYERS SQUIBB 5.75% 10/01/2011 2,134,678 1,400,000 HOSPIRA INCORPORATED 1,400,000 HOSPIRA INCORPORATED 4.95 06/15/2009 1,425,562 1,900,000 OLIN CORPORATION 9.13 12/15/2011 2,330,983 2,450,000 RPM INTERNATIONAL INCORPORATED 7.00 06/15/2005 2,450,757 1,600,000 WYETH 6.95 03/15/2011 1,791,157 10,133,137 -------------- COMMUNICATIONS - 1.17% 1,425,000 COX COMMUNICATIONS INCORPORATED 7.88 08/15/2009 1,591,456 1,495,000 QWEST CORPORATION 5.63 11/15/2008 1,457,625 2,310,000 SPRINT CAPITAL CORPORATION 6.00 01/15/2007 2,374,648 2,250,000 TIME WARNER INCORPORATED 6.88 05/01/2012 2,530,732 7,954,461 -------------- CONSUMER SERVICES - 0.32% 1,955,000 NIELSEN MEDIA 7.60 06/15/2009 2,142,275 -------------- DEPOSITORY INSTITUTIONS - 5.67% 3,300,000 ASSOCIATED BANCORP 6.75 08/15/2011 3,703,633 3,000,000 BANK ONE CAPITAL IV+/- 4.41 09/01/2030 3,007,473 5,000,000 BANKAMERICA CAPITAL III+/- 3.71 01/15/2027 4,848,975 2,000,000 CHASE CAPITAL VI+/- 3.84 08/01/2028 1,893,076 3,000,000 CITY NATIONAL BANK 6.75 09/01/2011 3,369,546 1,750,000 COLONIAL BANK 9.38 06/01/2011 2,084,414 750,000 CORESTATES CAPITAL TRUST II+/-++ 3.79 01/15/2027 735,913 3,200,000 DEPOSIT GUARANTY CORPORATION 7.25 05/01/2006 3,296,330 3,000,000 FIRSTAR BANK NA 7.13 12/01/2009 3,354,672 1,500,000 GREAT BAY BANCORP SR NT-C++ 5.13 04/15/2010 1,516,178 2,000,000 MANUFACTURERS & TRADERS TRUST COMPANY 8.00 10/01/2010 2,351,890 2,000,000 MANUFACTURERS & TRADERS TRUST COMPANY 8.00 10/01/2010 2,351,890 2,150,000 TCF FINANCIAL BANK 5.00 06/15/2014 2,162,193 1,425,000 US BANK NATIONAL ASSOCIATION SERIES BKNT 6.38 08/01/2011 1,571,410 2,000,000 WACHOVIA BANK NA CHARLOTTE SERIES BKNT 7.80 08/18/2010 2,322,140 38,442,258 -------------- EDUCATIONAL SERVICES - 0.60% 3,750,000 STANFORD UNIVERSITY SERIES MTNA 6.16 04/30/2011 4,107,487 -------------- ELECTRIC, GAS & SANITARY SERVICES - 0.59% 2,000,000 DUKE ENERGY FIELD SERVICES LLC 7.88 08/16/2010 2,294,534 1,134,146 NIAGARA MOHAWK POWER CORPORATION SERIES F 7.63 10/01/2005 1,148,998 500,000 PEOPLES ENERGY CORPORATION 6.90 01/15/2011 564,067 4,007,599 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 0.60% 1,400,000 SOLECTRON CORPORATION SERIES B<< 7.38 03/01/2006 1,421,000 2,500,000 THOMAS & BETTS CORPORATION SERIES MTN 6.63 05/07/2008 2,621,177 4,042,177 -------------- 113
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOOD & KINDRED PRODUCTS - 1.16% $ 2,000,000 CONAGRA FOODS INCORPORATED 7.88% 09/15/2010 $ 2,303,030 965,000 GENERAL MILLS INCORPORATED 6.00 02/15/2012 1,046,204 2,500,000 KELLOGG COMPANY 6.60 04/01/2011 2,762,933 1,600,000 KRAFT FOODS INCORPORATED 6.25 06/01/2012 1,750,302 7,862,469 -------------- FORESTRY - 0.30% 2,000,000 WEYERHAEUSER COMPANY 6.00 08/01/2006 2,032,774 -------------- HEALTH SERVICES - 0.65% 2,800,000 AMERICAN ASSOCIATION OF RETIRED PERSONS++ 7.50 05/01/2031 3,568,748 850,000 HEALTHSOUTH CORPORATION 7.63 06/01/2012 816,000 4,384,748 -------------- HOLDING & OTHER INVESTMENT OFFICES - 0.84% 1,920,000 BASELL AMERICA FINANCE++ 7.60 03/15/2007 1,901,879 1,750,000 NATIONAL CITY BANK OF COLUMBUS SERIES 4 7.25 07/15/2010 1,988,317 250,000 NATIONAL CITY BANK OF KENTUCKY SERIES BANK NOTE 6.30 02/15/2011 275,461 1,395,000 PRINCIPAL LIFE GLOBAL FUNDING I++ 6.25 02/15/2012 1,539,123 5,704,780 -------------- HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.17% 1,125,000 STEELCASE INCORPORATED 6.38 11/15/2006 1,145,099 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.03% 170,000 MARRIOTT INTERNATIONAL INCORPORATED SERIES B 6.88 11/15/2005 172,375 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.09% 600,000 APPLIED MATERIALS INCORPORATED SERIES MTNA 6.70 09/06/2005 604,744 -------------- INSURANCE AGENTS, BROKERS & SERVICE - 0.66% 2,000,000 ALLSTATE FINANCIAL GLOBAL FUNDING++ 6.50 06/14/2011 2,218,580 2,000,000 NLV FINANCIAL CORPORATION++ 7.50 08/15/2033 2,295,666 4,514,246 -------------- INSURANCE CARRIERS - 4.89% 1,500,000 AMERUS GROUP COMPANY 6.95 06/15/2005 1,501,341 2,000,000 BLUE CROSS & BLUE SHIELD OF FLORIDA++ 8.25 11/15/2011 2,319,182 2,800,000 JOHN HANCOCK GLOBAL FUNDING II++ 7.90 07/02/2010 3,255,213 750,000 LINCOLN NATIONAL CORPORATION 6.20 12/15/2011 820,050 2,200,000 MARKEL CORPORATION 7.20 08/15/2007 2,325,354 2,450,000 MINNESOTA LIFE INSURANCE COMPANY++ 8.25 09/15/2025 3,268,204 2,900,000 NEW YORK LIFE GLOBAL FUNDING++ 5.38 09/15/2013 3,063,020 1,650,000 PROTECTIVE LIFE US FUNDING TRUST++ 5.88 08/15/2006 1,679,273 1,500,000 PROVIDENT COMPANIES INCORPORATED 6.38 07/15/2005 1,506,426 2,450,000 PRUDENTIAL INSURANCE COMPANY OF AMERICA++ 7.65 07/01/2007 2,620,013 2,100,000 REINSURANCE GROUP OF AMERICA++ 7.25 04/01/2006 2,143,506 2,000,000 RELIASTAR FINANCIAL CORPORATION 8.00 10/30/2006 2,105,762 1,385,000 SAFECO CORPORATION 4.88 02/01/2010 1,413,125 3,000,000 UNITRIN INCORPORATED 5.75 07/01/2007 3,081,456 2,050,000 WR BERKLEY CORPORATION 5.13 09/30/2010 2,073,481 33,175,406 -------------- 114
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.70% $ 2,500,000 GENERAL ELECTRIC COMPANY 5.00% 02/01/2013 $ 2,570,268 2,000,000 HONEYWELL INTERNATIONAL INCORPORATED 6.13 11/01/2011 2,183,024 4,753,292 -------------- NATIONAL SECURITY & INTERNATIONAL AFFAIRS - 0.34% 2,000,000 GOODRICH CORPORATION 7.63 12/15/2012 2,342,144 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 0.85% 1,925,000 ATHENA NEUROSCIENCES FINANCE LLC<< 7.25 02/21/2008 1,809,500 2,500,000 FORD MOTOR CREDIT COMPANY 7.38 10/28/2009 2,418,285 1,600,000 GENERAL MOTORS ACCEPTANCE CORPORATION<< 7.75 01/19/2010 1,509,851 5,737,636 -------------- OIL & GAS EXTRACTION - 0.27% 1,750,000 MARATHON OIL CORPORATION CONSOLIDATED 6.85 03/01/2008 1,862,550 -------------- PAPER & ALLIED PRODUCTS - 0.28% 1,750,000 INTERNATIONAL PAPER COMPANY 6.75 09/01/2011 1,919,218 -------------- PETROLEUM REFINING & RELATED INDUSTRIES - 0.22% 1,520,000 EL PASO CGP COMPANY<< 6.50 05/15/2006 1,527,600 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.55% 1,710,000 AMERICAN GREETINGS CORPORATION 6.10 08/01/2028 1,748,475 1,750,000 VIACOM INCORPORATED 7.70 07/30/2010 1,954,654 3,703,129 -------------- REAL ESTATE - 0.41% 1,300,000 HOUSING URBAN DEVELOPMENT SERIES 04-A 5.08 08/01/2013 1,354,080 1,250,000 SHURGARD STORAGE CENTERS 7.75 02/22/2011 1,420,565 2,774,645 -------------- SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.80% 2,600,000 GOLDMAN SACHS GROUP INCORPORATED+/-<< 3.49 07/23/2009 2,610,930 2,500,000 MORGAN STANLEY 6.75 04/15/2011 2,794,238 5,405,168 -------------- TRANSPORTATION BY AIR - 0.81% 1,618,775 CONTINENTAL AIRLINES INCORPORATED SERIES 972A 7.15 06/30/2007 1,469,605 429,004 CONTINENTAL AIRLINES INCORPORATED SERIES 974C<< 6.80 07/02/2007 362,324 521,473 DELTA AIR LINES INCORPORATED<< 7.78 01/02/2012 216,431 2,529,345 FEDEX CORPORATION SERIES 97-B 7.52 01/15/2018 2,768,121 827,503 NORTHWEST AIRLINES INCORPORATED SERIES 991A<< 6.81 02/01/2020 705,612 5,522,093 -------------- TRANSPORTATION EQUIPMENT - 0.23% 1,500,000 NAVISTAR INTERNATIONAL CORPORATION SERIES B 9.38 06/01/2006 1,560,000 -------------- TOTAL CORPORATE BONDS & NOTES (COST $171,109,329) 176,931,058 -------------- 115
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE MUNICIPAL BONDS & NOTES - 3.52% $ 2,300,000 BRIDGEPORT COUNTY GO TAXABLE PENSION BONDS FGIC INSURED 7.33% 01/15/2007 $ 2,418,818 3,035,000 CITY OF MINNEAPOLIS MN SERIES A 6.00 02/01/2026 3,181,408 3,805,000 HUDSON COUNTY NJ IMPROVEMENT AUTHORITY FACILITIES LEASING REVENUE 7.40 12/01/2025 4,882,310 3,850,000 INDIANA BOND BANK REVENUE 4.73 01/15/2014 3,914,719 890,000 LA CROSSE WI SERIES B 5.00 12/01/2009 911,440 940,000 LA CROSSE WI SERIES B 5.20 12/01/2010 968,933 2,210,000 LOYOLA UNIVERSITY ILLINOIS 4.80 07/01/2013 2,196,762 2,000,000 MINNEAPOLIS & ST PAUL MN METROPOLITAN AIRPORTS COMMISSION SERIES 15 6.05 01/01/2012 2,197,540 1,015,000 STATE OF ILLINOIS 4.95 06/01/2023 1,029,535 1,000,000 STATE OF TEXAS 7.15 12/01/2009 1,113,150 1,000,000 STRATFORD CT 6.28 02/15/2009 1,071,960 23,886,575 -------------- TOTAL MUNICIPAL BONDS & NOTES (COST $22,157,131) 23,886,575 -------------- AGENCY SECURITIES - 40.02% FEDERAL HOME LOAN MORTGAGE CORPORATION - 12.73% 7,384,381 FHLMC #1G-0157+/-<< 4.51 03/01/2035 7,382,055 33,640 FHLMC #410425+/- 3.74 09/01/2026 34,955 36,451 FHLMC #410464+/- 4.13 11/01/2026 37,502 238,708 FHLMC #606279+/- 3.36 02/01/2015 238,430 75,713 FHLMC #846367+/- 4.47 04/01/2029 77,643 1,738,606 FHLMC #90248<< 6.00 06/01/2017 1,802,536 311,659 FHLMC #A15838 5.50 12/01/2033 316,689 3,751,742 FHLMC #A16678<< 5.50 12/01/2033 3,812,286 1,668,078 FHLMC #E90573<< 6.00 07/01/2017 1,729,415 5,702,345 FHLMC SERIES 1675 CLASS KZ<< 6.50 02/15/2024 6,062,337 5,930,000 FHLMC SERIES 2358 CLASS PD<< 6.00 09/15/2016 6,144,630 12,500,000 FHLMC SERIES 2363 CLASS PF<< 6.00 09/15/2016 12,931,175 16,300,000 FHLMC SERIES 2416 CLASS PE<< 6.00 10/15/2021 16,853,491 1,888,636 FHLMC SERIES 2439 CLASS LG<< 6.00 09/15/2030 1,923,234 3,493,806 FHLMC SERIES T-20 CLASS A6+/- 7.49 09/25/2029 3,549,684 18,220,075 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-42 CLASS A4Z 6.50 02/25/2042 18,880,553 4,252,886 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-58 CLASS 4A 7.50 09/25/2043 4,573,184 86,349,799 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 22.19% 28,828 FNMA #342042+/- 4.49 06/01/2025 29,547 52,233 FNMA #344689+/- 4.26 11/01/2025 53,420 58,394 FNMA #344692+/- 3.95 10/01/2025 59,571 52,715 FNMA #347712+/- 3.50 06/01/2026 54,674 2,388,456 FNMA #375462<< 6.61 11/01/2007 2,488,712 4,550,950 FNMA #380581<< 6.18 08/01/2008 4,761,429 3,831,576 FNMA #383017<< 6.49 01/01/2008 3,996,670 3,292,503 FNMA #386890 3.99 04/01/2011 3,234,755 6,154,570 FNMA #555326<< 5.50 04/01/2033 6,243,522 711,919 FNMA #557072+/-<< 3.42 06/01/2040 729,940 1,665,278 FNMA #656566<< 5.50 04/01/2018 1,711,176 116
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED) $ 3,648,825 FNMA #678939<< 5.50% 02/01/2018 $ 3,749,394 10,487,885 FNMA #725232<< 5.00 03/01/2034 10,498,669 4,159,501 FNMA #731996+/-<< 4.04 09/01/2033 4,135,952 1,316,217 FNMA #73272<< 6.48 12/01/2005 1,316,255 3,995,567 FNMA #739757+/-<< 4.07 08/01/2033 3,969,340 8,171,778 FNMA #741305<< 5.00 09/01/2018 8,271,882 4,731,799 FNMA #741458+/-<< 4.51 10/01/2033 4,754,212 5,777,397 FNMA #763644<< 5.50 01/01/2034 5,860,898 7,922,007 FNMA #765178<< 5.00 01/01/2019 8,019,051 2,135,564 FNMA #765769<< 5.00 02/01/2019 2,161,725 8,708,671 FNMA #789463+/-<< 4.42 06/01/2034 8,708,334 7,164,120 FNMA #801908 5.00 11/01/2019 7,251,881 908,047 FNMA GRANTOR TRUST SERIES 2002-T4 CLASS A2 7.00 12/25/2041 955,557 5,339,419 FNMA GRANTOR TRUST SERIES 2004-T2 6.00 11/25/2034 5,476,596 3,902,316 FNMA GRANTOR TRUST SERIES 2004-T3 CLASS A1 6.00 02/25/2044 4,008,669 1,559,651 FNMA SERIES 1998-M6 CLASS A2 6.32 08/15/2008 1,640,980 5,000,000 FNMA SERIES 2001-M1 CLASS B 6.12 05/25/2013 5,358,064 2,467,800 FNMA SERIES 2002-90 CLASS A2 6.50 11/25/2042 2,560,342 4,596,480 FNMA SERIES 2003-86 CLASS PT<< 4.50 09/25/2018 4,613,279 16,080,548 FNMA SERIES 2003-92 CLASS HP<< 4.50 09/25/2018 16,132,276 5,541,842 FNMA SERIES 2003-97 CLASS CA<< 5.00 10/25/2018 5,640,095 2,020,200 FNMA SERIES 2003-W4 3A 7.00 10/25/2042 2,122,800 10,000,000 FNMA TBA%% 5.00 07/15/2035 9,962,500 150,532,167 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 4.76% 48,159 GNMA #473917<< 7.00 04/15/2028 51,040 328,435 GNMA #531436 7.00 06/15/2042 382,321 6,851 GNMA #531965 7.72 12/15/2041 7,912 238,376 GNMA #533858 7.35 06/15/2042 272,304 857,983 GNMA #780626<< 7.00 08/15/2027 909,328 26,500,000 GNMA SERIES 2003-38 CLASS JC+/-<< 7.04 08/16/2042 30,697,997 32,320,902 -------------- STUDENT LOAN MARKETING ASSOCIATION - 0.34% 2,300,000 SLMA SERIES 1999-3 CLASS CTFS+/- 3.10 01/26/2015 2,309,118 -------------- TOTAL AGENCY SECURITIES (COST $269,090,023) 271,511,986 -------------- SHARES PRIVATE INVESTMENT PARTNERSHIPS - 0.23% 2,500,000 TOLL ROAD INVESTMENT PARTNERSHIP II LP++^ 1,554,910 -------------- TOTAL PRIVATE INVESTMENT PARTNERSHIPS (COST $1,346,808) 1,554,910 -------------- 117
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE US TREASURY SECURITIES - 13.21% US TREASURY BONDS - 13.06% $ 1,000,000 US TREASURY BOND<< 7.50% 11/15/2016 $ 1,302,930 5,250,000 US TREASURY BOND<< 8.00 11/15/2021 7,497,861 14,250,000 US TREASURY BOND<< 7.25 08/15/2022 19,204,098 16,550,000 US TREASURY BOND<< 6.25 08/15/2023 20,390,113 4,310,000 US TREASURY BOND<< 6.75 08/15/2026 5,691,558 1,730,000 US TREASURY BOND<< 6.13 08/15/2029 2,170,069 13,250,000 US TREASURY BOND<< 5.38 02/15/2031 15,345,156 2,325,000 US TREASURY BOND - INFLATION PROTECTED<<& 3.38 04/15/2032 3,446,124 7,000,000 US TREASURY BOND - INFLATION PROTECTED<<& 2.38 01/15/2025 7,876,889 8,500,000 US TREASURY STRIP PRINCIPAL<<^ 4.53 02/15/2015 5,710,793 88,635,591 -------------- US TREASURY NOTES - 0.15% 1,000,000 US TREASURY NOTE<< 4.13 05/15/2015 1,009,688 -------------- TOTAL US TREASURY SECURITIES (COST $81,904,592) 89,645,279 -------------- COLLATERAL FOR SECURITIES LENDING - 45.24% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.81% 2,640,997 EVERGREEN MONEY MARKET FUND 2,640,997 2,876,674 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,876,674 5,517,671 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 44.43% 4,999,995 ALLIANCE & LEICESTER PLC 3.29 09/19/2005 4,949,895 9,999,990 APRECO LLC 3.10 07/06/2005 9,970,090 3,516,996 ATLANTIC ASSET SECURITIZATION CORPORATION 3.05 06/02/2005 3,516,715 10,705,989 ATLANTIC ASSET SECURITIZATION CORPORATION 3.06 06/20/2005 10,688,967 1,199,999 ATLANTIS ONE FUNDING CORPORATION 3.23 08/18/2005 1,191,659 14,999,985 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 14,999,985 4,999,995 BEAR STEARNS & COMPANY REPURCHASE AGREEMENT (MATURITY VALUE $5,000,423) 3.08 06/01/2005 4,999,995 5,280,995 BELFORD US CAPITAL COMPANY 3.08 06/21/2005 5,280,942 1,583,998 BETA FINANCE INCORPORATED 3.13 06/02/2006 1,584,299 14,999,985 BLUE SPICE LLC 3.06 06/01/2005 14,999,985 2,640,997 CC USA INCORPORATED 3.21 07/05/2005 2,641,420 2,122,998 CEDAR SPRINGS CAPITAL COMPANY LLC 3.07 06/17/2005 2,120,153 3,762,996 CEDAR SPRINGS CAPITAL COMPANY LLC 3.08 06/28/2005 3,754,492 743,999 CEDAR SPRINGS CAPITAL COMPANY LLC 3.14 07/11/2005 741,455 2,999,997 CEDAR SPRINGS CAPITAL COMPANY LLC 3.14 07/14/2005 2,988,957 3,999,996 CEDAR SPRINGS CAPITAL COMPANY LLC 3.21 08/02/2005 3,977,876 999,999 CEDAR SPRINGS CAPITAL COMPANY LLC 3.22 08/11/2005 993,669 1,499,999 CONCORD MINUTEMAN CAPITAL COMPANY SERIES A 3.27 09/08/2005 1,486,469 4,999,995 CONCORD MINUTEMEN CAPITAL COMPANY 3.07 06/08/2005 4,999,995 11,099,989 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.05 06/15/2005 11,087,002 2,999,997 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 2,994,957 118
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 599,999 DANSKE CORPORATION 3.06% 06/30/2005 $ 598,541 1,599,998 DANSKE CORPORATION 3.10 07/15/2005 1,593,982 1,583,998 DEUTSCHE BANK NEW YORK 3.22 11/10/2005 1,578,549 899,999 DEXIA DELAWARE LLC 3.22 08/24/2005 893,258 799,999 FAIRWAY FINANCE CORPORATION 3.30 09/12/2005 792,495 1,924,998 FIVE FINANCE INCORPORATED 3.05 06/13/2005 1,923,054 4,999,995 FIVE FINANCE INCORPORATED 3.05 06/15/2005 4,994,145 9,999,990 GEORGE STREET FINANCE LLC 3.04 06/10/2005 9,992,490 5,999,994 IRISH LIFE & PERMANENT PLC 3.05 07/08/2005 5,980,974 410,000 JUPITER SECURITIZATION CORPORATION 3.16 07/25/2005 408,077 4,592,995 K2 USA LLC 3.22 08/26/2005 4,557,767 2,112,998 K2 USA LLC 3.12 07/24/2006 2,113,273 14,999,985 KLIO FUNDING CORPORATION 3.06 06/27/2005 14,967,285 14,999,985 KLIO FUNDING CORPORATION 3.07 06/29/2005 14,964,735 3,318,997 LEGACY CAPITAL CORPORATION LLC 3.35 10/19/2005 3,275,883 2,640,997 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.26 12/23/2005 2,642,714 591,999 LEXINGTON PARKER CAPITAL CORPORATION 3.16 07/25/2005 589,223 4,999,995 LEXINGTON PARKER CAPITAL CORPORATION 3.26 09/01/2005 4,958,095 4,999,995 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 4,999,095 3,696,996 LIQUID FUNDING LIMITED 3.07 06/01/2005 3,696,996 4,999,995 LIQUID FUNDING LIMITED 3.06 06/10/2005 4,996,245 5,999,994 MORGAN STANLEY 3.14 01/13/2006 5,999,994 4,999,995 MORGAN STANLEY 3.14 02/03/2006 4,999,995 2,111,998 MORGAN STANLEY 3.09 08/13/2010 2,112,019 5,280,995 NATEXIS BANQUE NEW YORK 3.16 06/09/2005 5,280,203 3,418,997 NEPTUNE FUNDING CORPORATION 3.03 06/13/2005 3,415,543 2,999,997 NEPTUNE FUNDING CORPORATION 3.09 06/24/2005 2,994,207 3,999,996 NEPTUNE FUNDING CORPORATION 3.10 07/05/2005 3,988,356 776,999 NIEUW AMSTERDAM RECEIVABLES CORPORATION 3.05 06/20/2005 775,764 5,280,995 RACERS TRUST 3.09 05/20/2005 5,281,892 1,999,998 SCALDIS CAPITAL LIMITED 3.23 09/09/2005 1,981,778 5,280,995 SECURITY LIFE OF DENVER 3.19 06/03/2005 5,280,995 2,999,997 SEDNA FINANCE INCORPORATED 3.12 07/18/2005 2,987,727 4,999,995 SEDNA FINANCE INCORPORATED 3.22 08/15/2005 4,966,545 9,999,990 SOCIETE GENERALE 3.04 06/30/2005 9,999,990 5,280,995 TANGO FINANCE CORPORATION 3.12 10/25/2006 5,280,942 14,999,985 TOTAL CAPITAL S.A. 3.07 06/01/2005 14,999,985 4,999,995 TRANSAMERICA ASSET FUNDING CORPORATION I 3.07 06/22/2005 4,991,195 2,640,997 TRAVELERS INSURANCE COMPANY 3.17 02/10/2006 2,640,945 6,481,994 TULIP FUNDING CORPORATION 3.05 06/30/2005 6,466,242 4,620,995 WHITE PINE FINANCE LLC 3.18 07/27/2005 4,598,491 1,906,998 YORKTOWN CAPITAL LLC 3.06 06/01/2005 1,906,998 301,435,659 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $306,953,330) 306,953,330 -------------- 119
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- SHARES SECURITY NAME VALUE SHORT-TERM INVESTMENTS - 2.31% 15,710,296 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 15,710,296 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $15,710,296) 15,710,296 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $977,930,730)* 146.85% $ 996,357,369 OTHER ASSETS AND LIABILITIES, NET (46.85) (317,864,129) ------ -------------- TOTAL NET ASSETS 100.00% $ 678,493,240 ====== ============== +/- VARIABLE RATE INVESTMENTS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) %% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2) ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. & U.S. TREASURY INFLATION-PROTECTION SECURITIES (TIPS) ARE SECURITIES IN WHICH THE PRINCIPAL AMOUNT IS ADJUSTED FOR INFLATION AND THE SEMI-ANNUAL INTEREST PAYMENTS EQUAL A FIXED PERCENTAGE OF THE INFLATION-ADJUSTED PRINCIPAL AMOUNT. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $15,710,296. * COST FOR FEDERAL INCOME TAX PURPOSES IS $977,930,730 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $22,776,507 GROSS UNREALIZED DEPRECIATION (4,349,868) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $18,426,639 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 120
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES - 13.94% $ 108,109 ASSET BACKED SECURITIES CORPORATION HOME EQUITY SERIES 2001-HE2 CLASS A1+/- 3.35% 06/15/2031 $ 109,025 2,000,000 BANK ONE ISSUANCE TRUST SERIES 2002-C2+/- 4.08 05/15/2008 2,004,334 3,000,000 BANK ONE ISSUANCE TRUST SERIES 2003-B3+/- 3.41 05/16/2011 3,016,060 1,676,677 BANKAMERICA MANUFACTURED HOUSING CONTRACT SERIES 1997-1 CLASS A8 6.73 06/10/2023 1,696,517 6,955,000 BRAZOS STUDENT LOAN FINANCE CORPORATION SERIES 1995-A CLASS A3+/- 3.53 06/01/2025 6,954,958 516,101 CHASE FUNDING LOAN ACQUISITION TRUST SERIES 2001-FF1A2+/- 3.33 04/25/2031 516,258 400,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2001-B2 CLASS B2+/- 2.93 12/10/2008 402,020 844,780 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2003-BC1 CLASS A1+/- 3.49 03/25/2033 845,818 355,108 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2003-SD1 CLASS A1+/-++ 3.78 12/25/2032 355,551 900,987 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2003-SD2 CLASS A1+/-++ 3.59 09/25/2032 908,258 976,105 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2003-SD3 CLASS A1+/-++ 3.51 01/25/2033 981,580 3,151,377 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2004-SD2 CLASS A1+/-++ 3.46 11/25/2033 3,157,286 331,874 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2000-B CLASS A2+/- 3.32 08/15/2026 331,871 1,955,764 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2001-A CLASS A+/- 3.33 04/15/2027 1,957,316 1,815,556 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-D CLASS A+/- 3.33 08/15/2028 1,817,246 1,536,269 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-G+/- 3.46 12/15/2028 1,545,260 617,961 EQCC HOME EQUITY LOAN TRUST SERIES 1998-4 CLASS A1F+/- 3.53 01/15/2029 619,128 4,995,496 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 CLASS 3A3+/- 2.47 09/25/2033 4,997,322 995,714 FHABS 2004 HE-1+/- 3.30 01/25/2024 996,025 3,849,073 FHABS SERIES 2004-HE3 CLASS A+/- 3.38 10/25/2034 3,862,092 1,214,535 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-35 CLASS A+/- 3.23 09/25/2031 1,214,928 2,219,059 FIFTH THIRD HOME EQUITY LOAN TRUST SERIES 2003-1 CLASS A+/- 3.34 09/20/2023 2,222,426 494,344 FIFTH THIRD MORTGAGE LOAN TRUST SERIES 2002-FTB1 CLASS 4A1+/- 6.03 11/19/2032 495,163 1,640,872 FIRST PLUS HOME LOAN TRUST SERIES 1997-3 CLASS A8 7.55 11/10/2023 1,638,903 5,213,677 FLEET HOME EQUITY LOAN TRUST SERIES 2003-1 CLASS A+/- 3.34 01/20/2033 5,219,666 1,401,962 GMAC MORTGAGE CORPORATION LOAN TRUST SERIES 1999-2 CL A3+/- 3.45 11/25/2029 1,402,084 2,103,273 GMAC MORTGAGE CORPORATION LOAN TRUST SERIES 2001-HE3 CLASS A2+/- 3.37 03/25/2027 2,108,687 1,500,000 GOLDEN SECURITIES CORPORATION SERIES 2003-A CLASS A1+/-++ 3.38 12/02/2013 1,500,480 1,500,000 HONDA AUTO RECEIVABLES OWNER TRUST 2005-2 CLASS A3 3.93 01/15/2009 1,499,259 1,536,498 HOUSEHOLD HOME EQUITY LOAN TRUST SERIES 2002-2, CLASS A+/- 3.39 04/20/2032 1,538,520 2,711,457 KEYCORP STUDENT LOAN TRUST SERIES 2003-A CLASS 2A1+/- 3.31 10/25/2025 2,708,916 611,993 LEHMAN BROTHERS+/- 3.31 12/25/2033 612,445 2,206,753 MELLON RESIDENTIAL FUNDING CORPORATION SERIES 2001-TBC1 CLASS A1+/- 3.30 11/15/2031 2,206,969 5,365,195 MSDWCC HELOC TRUST SERIES 2003-1A CLASS A+/- 3.36 11/25/2015 5,385,990 135,195 NELLIE MAE INCORPORATED SERIES 1996-1 CLASS A2+/- 3.35 12/15/2018 135,221 1,200,326 OPTION ONE MORTGAGE LOAN TRUST SERIES 2003-1 CLASS A2+/- 3.51 02/25/2033 1,203,998 60,793 PASS-THROUGH AMORTIZING CREDIT CARD TRUSTS SERIES 2002-1A CLASS A2FL+/-++ 4.44 06/18/2012 60,791 47,993 PASS-THROUGH AMORTIZING CREDIT CARD TRUSTS SERIES 2002-A1 CLASS A1FL+/-++ 3.84 06/18/2012 47,991 1,569,193 RESIDENTIAL ASSET SECURITIES 04-RP1 A2A+/-++ 2.23 11/25/2042 1,572,211 2,414,184 SEQUOIA MORTGAGE TRUST SERIES 2003-2 CLASS A1+/- 3.42 06/20/2033 2,414,296 2,733,924 SEQUOIA MORTGAGE TRUST SERIES 5 CLASS A+/- 3.44 10/19/2026 2,737,318 2,000,000 STRUCTURED ASSET REPACKAGED TRUST+/-++ 3.53 03/21/2006 2,003,966 2,731,301 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2003-9A CLASS 2A1+/- 3.83 03/25/2033 2,714,898 645,245 WACHOVIA ASSET SECURITIZATION INCORPORATED SERIES 2002-HE2 A+/- 3.52 12/25/2032 648,840 4,454,092 WACHOVIA ASSET SECURITIZATION INCORPORATED SERIES 2003-HE2 AII1+/- 3.35 07/02/2018 4,465,988 3,263,481 WACHOVIA ASSET SECURITIZATION INCORPORATED SERIES 2004-HE1 CLASS A+/- 3.31 06/25/2034 3,266,986 4,521,375 WASHINGTON MUTUAL SERIES 2003-AR1 CLASS A6+/- 4.50 03/25/2033 4,523,928 TOTAL ASSET-BACKED SECURITIES (COST $91,797,750) 92,624,793 -------------- 121
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS - 22.54% $ 271,055 BANK OF AMERICA MORTGAGE SECURITIES SERIES 2002-G CLASS 2A1+/- 5.10% 07/20/2032 $ 273,643 2,207,701 BANK OF AMERICA MORTGAGE SECURITIES SERIES 2003-A CLASS 2A2+/- 4.57 02/25/2033 2,216,215 6,025,000 CHESAPEAKE FUNDING LLC SERIES 2003-2 A1+/- 3.29 11/07/2008 6,026,307 5,000,000 COUNTRYWIDE ALTERNATIVE LOAN TRUST 2005-24 CLASS 2A1B+/- 3.81 07/20/2035 5,046,547 7,409,643 COUNTRYWIDE HOME LOANS SERIES 2004-25 CLASS 1A3+/- 3.38 04/25/2025 7,425,882 7,345,447 COUNTRYWIDE HOME LOANS SERIES 2004-29 CLASS 2A1+/- 3.42 12/29/2034 7,362,662 6,240,266 COUNTRYWIDE HOME LOANS SERIES 2004-R1 CLASS 1AF+/-++ 3.49 11/25/2034 6,238,319 825,584 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2002- AR17 CLASS 2A1+/- 4.40 12/19/2039 834,675 1,574,478 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2003-AR2 CLASS 2A1+/- 4.90 02/25/2033 1,565,611 2,750,000 FIFTH THIRD AUTO TRUST SERIES 2004-A CLASS A4 3.70 10/20/2011 2,728,571 962,339 GREENPOINT HOME EQUITY LOAN TRUST SERIES 2004-1A+/- 3.25 07/25/2029 963,419 11,940,290 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.49 10/25/2034 11,997,795 7,042,593 HARBORVIEW MORTGAGE LOAN TRUST SERIES 2004-11 CLASS 3A2A+/- 3.32 01/19/2035 7,118,371 6,077,328 MLCC MORTGAGE INVESTORS INCORPORATED+/- 3.52 03/25/2028 6,087,487 2,794,930 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 2003-A2 CLASS 2A2+/- 4.21 02/25/2033 2,796,385 8,289,409 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1995-B CLASS A+/- 3.49 10/15/2020 8,307,982 753,784 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1996-C CLASS A+/- 3.47 09/15/2021 755,069 1,564,778 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1997-B CLASS A+/- 3.63 03/16/2026 1,567,903 6,318,369 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1999-A CLASS A+/- 3.47 03/15/2025 6,347,544 5,437,141 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 2003-B CLASS A1+/- 3.43 04/25/2028 5,470,961 4,543,359 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 2004-A A1+/- 3.32 04/25/2029 4,542,994 5,292,464 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2003-HYB1 CLASS A3+/- 4.60 03/25/2033 5,346,840 2,592,898 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS A1V+/- 3.44 11/10/2030 2,600,842 1,958,710 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS A4 6.65 11/10/2030 1,991,065 513,546 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS D 7.56 11/10/2030 551,116 419,228 PROVIDIAN HOME EQUITY LOAN TRUST SERIES 1999-1 A+/- 3.38 06/25/2025 420,119 2,039,602 RESIDENTIAL FUNDING MORTGAGE SECURITIES INCORPORATED SERIES 2003- HS1 AII+/- 3.38 12/25/2032 2,041,955 4,003,797 RESIDENTIAL FUNDING MORTGAGE SECURITIES SERIES 2004-HS3 CLASS A+/- 3.36 09/25/2029 4,008,802 1,391,970 RESIDENTIAL FUNDING SECURITIES CORPORATION SERIES 2003-RP1 CLASS A1+/-++ 3.59 05/05/2033 1,397,582 5,273,823 SASC 04-NP2 A1+/-++ 3.44 11/30/2034 5,273,823 1,334,357 SASC SERIES 2003-39EX+/- 3.54 08/25/2033 1,335,969 7,576,434 SEQUOIA MORTGAGE TRUST SERIES 10 CLASS 1A+/- 3.49 10/20/2027 7,582,554 8,556,997 SEQUOIA MORTGAGE TRUST SERIES 2003-8 A1+/- 3.41 12/20/2033 8,553,222 3,189,186 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2004-S3 CLASS A+/- 3.34 10/25/2034 3,196,299 9,762,992 WASHINGTON MUTUAL SERIES 2005-AR1 A-1A+/- 3.38 01/25/2035 9,761,757 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $148,349,095) 149,736,287 -------------- CORPORATE BONDS & NOTES - 22.53% APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.45% 2,984,000 REEBOK INTERNATIONAL LIMITED 6.75 09/15/2005 3,003,333 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.54% 3,550,000 MASCO CORPORATION+/-++ 3.21 03/09/2007 3,558,055 -------------- CHEMICALS & ALLIED PRODUCTS - 0.72% 1,000,000 ELI LILLY & COMPANY+/- 3.34 08/24/2007 1,000,423 3,775,000 RPM INTERNATIONAL INCORPORATED 7.00 06/15/2005 3,776,166 4,776,589 -------------- 122
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS - 0.76% $ 3,080,000 COX RADIO INCORPORATED 6.63% 02/15/2006 $ 3,130,919 1,825,000 TIME WARNER COMPANIES INCORPORATED 8.11 08/15/2006 1,905,993 5,036,912 -------------- DEPOSITORY INSTITUTIONS - 3.94% 2,000,000 ASSOCIATED BANK NA+/- 3.33 02/01/2008 1,999,740 2,100,000 BANK OF AMERICA CORPORATION SERIES MTN1+/- 3.55 08/26/2005 2,101,436 2,225,000 BB&T CORPORATION+/- 6.38 06/30/2005 2,230,523 2,900,000 DEPOSIT GUARANTY CORPORATION 7.25 05/01/2006 2,987,299 3,497,000 FIFTH THIRD BANK MICHIGAN+/- 7.75 08/15/2010 3,518,283 2,500,000 NATIONAL CITY BANK+/- 3.14 02/07/2008 2,499,950 5,000,000 NEBHELP INCORPORATED SERIES A-2+/- 3.24 12/01/2017 5,000,000 2,700,000 STATE STREET CAPITAL TRUST II+/- 3.29 02/15/2008 2,706,164 425,000 WACHOVIA CORPORATION 6.88 09/15/2005 428,930 2,710,000 WASHINGTON MUTUAL BANK FA SERIES MTN+/- 3.51 07/25/2006 2,720,585 26,192,910 -------------- ELECTRIC, GAS & SANITARY SERVICES - 1.31% 4,000,000 DUKE ENERGY CORPORATION+/- 3.41 12/08/2005 4,001,740 3,765,000 DUKE ENERGY FIELD SERVICES LLC 7.50 08/16/2005 3,793,512 884,635 NIAGARA MOHAWK POWER CORPORATION SERIES F 7.63 10/01/2005 896,219 8,691,471 -------------- FINANCIAL SERVICES - 0.38% 2,500,000 AMERICAN HONDA FINANCE CORPORATION SERIES MTN+/-++ 3.30 07/11/2006 2,504,770 -------------- FOOD & KINDRED PRODUCTS - 0.49% 1,555,000 GENERAL MILLS INCORPORATED 6.45 10/15/2006 1,603,645 1,600,000 RUBBERMAID INCORPORATED 6.60 11/15/2006 1,654,971 3,258,616 -------------- FOOD STORES - 0.68% 4,500,000 SAFEWAY INCORPORATED+/- 3.21 11/01/2005 4,503,713 -------------- FORESTRY - 0.25% 1,653,000 WEYERHAEUSER COMPANY 6.13 03/15/2007 1,688,763 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.38% 2,500,000 MARRIOTT INTERNATIONAL INCORPORATED SERIES B 6.88 11/15/2005 2,534,923 -------------- INSURANCE AGENTS, BROKERS & SERVICE - 0.60% 4,000,000 NATIONWIDE LIFE GLOBAL FIND+/-++ 3.36 05/15/2007 4,003,584 -------------- INSURANCE CARRIERS - 1.71% 1,900,000 AMERUS GROUP COMPANY 6.95 06/15/2005 1,901,699 2,840,000 HARTFORD LIFE GLOBAL FUND+/- 3.18 09/15/2009 2,828,606 3,000,000 PROVIDENT COMPANIES INCORPORATED 6.38 07/15/2005 3,012,852 3,500,000 UNITRIN INCORPORATED 5.75 07/01/2007 3,595,032 11,338,189 -------------- METAL MINING - 0.32% 2,000,000 ALCAN ALUMINUM 6.25 11/01/2008 2,109,798 -------------- 123
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE NON-DEPOSITORY CREDIT INSTITUTIONS - 5.83% $ 3,575,000 AMERICAN EXPRESS CENTURION+/- 3.18% 07/19/2007 $ 3,578,983 2,000,000 AMERICAN GENERAL FINANCE SERIES MTNH+/- 3.22 04/05/2007 1,995,308 3,142,000 EQUIFAX INCORPORATED 6.30 07/01/2005 3,149,443 4,180,000 GOLDMAN SACHS GROUP INCORPORATED+/- 2.75 01/09/2007 4,184,861 2,000,000 JOHN HANCOCK GLOBAL FUNDING II+/-++ 3.29 04/03/2009 2,000,090 2,325,000 KEYCORP+/- 3.36 07/23/2007 2,327,099 696,000 LEHMAN BROTHERS HOLDINGS CORPORATION SERIES EMTN+/- 3.59 09/28/2005 697,144 2,565,000 MARSHALL AND ILSLEY BANK+/- 3.15 10/02/2006 2,501,106 3,380,000 MORGAN STANLEY DEAN WITTER & COMPANY CORPORATION FLOATING RATE+/- 3.44 11/24/2006 3,385,117 1,675,707 MORGAN STANLEY DEAN WITTER & COMPANY CORPORATION HELOC TRUST SERIES 2003-2 A+/- 3.35 04/25/2016 1,678,118 4,677,116 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2003-3 A+/- 3.59 12/25/2033 4,699,379 1,861,149 RESIDENTIAL FUNDING MORTGAGE SECURITIES SERIES 2002-HS3 2A+/- 3.43 08/25/2032 1,863,623 1,671,981 SOVEREIGN BANKCORP++ 10.20 06/30/2005 1,676,545 2,000,000 US TRUST COMPANY NEW YORK+/- 3.27 03/13/2006 2,002,200 3,000,000 VOLKSWAGEN CREDIT INCORPORATED+/-++ 3.40 07/21/2005 2,999,610 38,738,626 -------------- OIL & GAS EXTRACTION - 0.93% 3,172,000 COLUMBIA ENERGY GROUP 6.80 11/28/2005 3,216,082 2,970,000 HALLIBURTON COMPANY+/- 4.65 10/17/2005 2,984,728 6,200,810 -------------- PAPER & ALLIED PRODUCTS - 0.34% 2,285,000 AVERY DENNISON CORPORATION+/- 3.46 08/10/2007 2,286,115 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.08% 525,000 DONNELLEY & SONS SERIES MTNC 6.66 07/06/2005 526,119 -------------- REAL ESTATE - 1.43% 4,000,000 DUKE REALTY CORPORATION+/- 3.31 12/22/2006 4,001,816 1,800,000 JDN REALTY CORPORATION 6.95 08/01/2007 1,885,728 3,588,256 MELLON RESIDENTIAL FUNDING CORPORATION SERIES 1999-TBC3 CLASS A2+/- 3.48 10/20/2029 3,619,909 9,507,453 -------------- SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.30% 2,000,000 MERRILL LYNCH & COMPANY INCORPORATED SERIES MTN+/- 3.68 05/22/2006 2,007,256 -------------- STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.30% 2,000,000 LAFARGE NORTH AMERICA CORPORATION 6.38 07/15/2005 2,005,376 -------------- TRANSPORTATION EQUIPMENT - 0.79% 3,800,000 DAIMLERCHRYSLER NA HOLDING CORPORATION SERIES MTND+/- 3.89 09/26/2005 3,805,981 1,500,000 FORD MOTOR CREDIT COMPANY+/-<< 3.92 09/28/2007 1,436,315 5,242,296 -------------- TOTAL CORPORATE BONDS & NOTES (COST $149,470,454) 149,715,677 -------------- FUNDING AGREEMENT - 0.38% 2,500,000 MONUMENTAL LIFE INSURANCE COMPANY+/-++ 3.09 10/20/2006 2,500,000 TOTAL FUNDING AGREEMENT (COST $2,500,000) 2,500,000 -------------- 124
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE LOAN PARTICIPATION - 1.49% $ 4,000,000 TIMES SQUARE DEVELOPMENT BANK LOAN+/-++ 3.32% 01/23/2007 $ 4,000,000 3,544,077 UNITED STATES DEPARTMENT OF AGRICULTURE - PVT+/-++ 1.99 06/25/2016 3,544,077 1,507,853 UNITED STATES DEPARTMENT OF AGRICULTURE - PVT SBA GP SERIES D#66++ 5.37 09/08/2019 1,507,853 875,922 UNITED STATES DEPARTMENT OF AGRICULTURE LOAN+/-++ 2.13 10/15/2020 878,112 TOTAL LOAN PARTICIPATION (COST $9,868,500) 9,930,042 -------------- MUNICIPAL BONDS & NOTES - 3.14% 4,700,000 COLORADO STUDENT OBLIGATION BOND AUTHORITY STUDENT LOAN REVENUE+/- 2.63 12/01/2032 4,700,000 1,925,000 HARRISBURG PA REDEVELOPMENT AUTHORITY+/-SS. 3.74 11/15/2030 1,917,185 385,000 HUDSON COUNTY NJ (GENERAL OBLIGATION - STATES, TERRITORIES LOC) +/- 6.09 09/01/2005 387,514 1,340,000 INDIANA BOARD BANK REVENUE 3.40 01/15/2007 1,340,000 170,000 INDIANA BOARD BANK REVENUE 3.53 07/15/2007 168,084 635,000 MINNESOTA STATE MUNICIPAL POWER AGENCY ELECTRIC REVENUE 3.35 10/01/2005 632,758 2,825,000 MUSKEGON COUNTY MI 4.00 06/01/2006 2,830,198 1,900,000 OREGON STATE TAXABLE ALTERNATE ENERGY PROJECT SERIES D 4.00 04/01/2006 1,901,767 2,000,000 PENNSYLVANIA STATE HIGHER EDUCATION ASSISTANCE AGENCY STUDENT LOAN REVENUE SUB SERIES E+/-SS. 3.29 11/01/2028 2,000,000 5,000,000 SOUTH CAROLINA STUDENT LOAN CORPORATION EDUCATIONAL LOAN REVENUE SERIES A-4+/- 3.28 06/01/2043 5,000,000 TOTAL MUNICIPAL BONDS & NOTES (COST $20,897,540) 20,877,506 -------------- AGENCY SECURITIES - 27.02% FEDERAL AGENCY & GOVERNMENT - 0.40% 16,178 SBA #500276+/- 7.13 05/25/2007 16,498 191,220 SBA #500957+/- 5.50 07/25/2014 200,430 119,668 SBA #501224+/- 4.00 06/25/2015 122,030 24,122 SBA #502966+/- 6.48 05/25/2015 25,671 174,239 SBA #503405+/- 5.63 05/25/2016 186,330 729,344 SBA #503611+/- 5.38 12/25/2021 776,984 25,484 SBA #503653+/- 6.13 01/25/2010 26,376 405,538 SBA #503658+/- 6.63 09/25/2010 425,194 193,146 SBA #503664+/- 5.73 01/25/2013 202,232 673,710 SBA SERIES 10-C 7.88 05/01/2010 712,431 2,694,176 -------------- FEDERAL HOME LOAN MORTGAGE CORPORATION - 9.59% 45,783 FHLMC #410220+/- 4.03 10/01/2025 47,071 81,550 FHLMC #611084+/- 3.57 06/01/2030 83,832 414,324 FHLMC #786614+/- 4.59 08/01/2025 422,469 201,607 FHLMC #845151+/- 3.30 06/01/2022 210,267 25,238 FHLMC #846367+/- 3.93 04/01/2029 25,881 2,044,072 FHLMC #E90573<< 6.00 07/01/2017 2,119,235 3,637,007 FHLMC #G90030<< 7.50 07/17/2017 3,842,801 9,288,638 FHLMC GOLD 5.00 05/15/2020 9,415,075 15,000,000 FHLMC GOLD<< 5.50 05/15/2020 15,431,296 301,887 FHLMC SERIES 1192 CLASS I 7.50 01/15/2007 301,509 361,075 FHLMC SERIES 31 CLASS A7+/- 3.22 05/25/2031 361,063 7,715,515 FHLMC SERIES T-55 1A2 7.00 03/25/2043 8,066,492 4,240,313 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-54 CLASS 3A 7.00 02/25/2043 4,486,779 5,203,217 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-54 CLASS 4A+/- 4.15 02/25/2043 5,485,613 125
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED) $ 5,929,601 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-57 CLASS 1A2 7.00% 07/25/2043 $ 6,261,285 6,645,135 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-58 CLASS 4A 7.50 09/25/2043 7,145,600 63,706,268 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 16.51% 4,934,636 FNMA<< 5.00 05/25/2020 5,005,547 221,271 FNMA #155506+/- 3.41 04/01/2022 225,470 636,600 FNMA #190815+/- 3.86 07/01/2017 619,749 71,161 FNMA #220706+/- 3.36 06/01/2023 73,669 406,077 FNMA #253482 8.50 10/01/2030 439,121 125,151 FNMA #318464+/- 3.48 04/01/2025 128,054 277,286 FNMA #321051+/- 4.07 08/01/2025 284,952 62,852 FNMA #331866+/- 4.55 12/01/2025 64,247 3,221,071 FNMA #384459 5.29 11/01/2008 3,303,858 15,000,000 FNMA #460900<< 3.92 01/01/2008 4,957,269 48,968 FNMA #46698+/- 3.78 12/01/2015 49,305 26,990 FNMA #519047+/- 4.34 09/01/2029 27,959 3,243,863 FNMA #545927<< 6.50 12/01/2015 3,386,233 3,865,109 FNMA #631367<< 5.50 02/01/2017 3,971,639 4,967,616 FNMA #686043+/-<< 4.42 07/01/2033 5,027,326 5,248,690 FNMA #693015+/- 4.05 06/01/2033 5,249,961 2,232,833 FNMA #732003+/- 4.48 09/01/2033 2,234,755 4,241,092 FNMA #734329+/-<< 4.26 06/01/2033 4,242,604 7,991,135 FNMA #739757+/-<< 4.07 08/01/2033 7,938,681 7,703,256 FNMA #741447+/-<< 4.01 10/01/2033 7,651,689 6,730,041 FNMA #741454+/-<< 4.11 10/01/2033 6,690,653 6,156,803 FNMA #750805+/-<< 4.79 11/25/2033 6,193,296 13,063,006 FNMA #789463+/- 4.42 06/01/2034 13,062,502 1,373,574 FNMA GRANTOR TRUST SERIES 2002-T12 CLASS A3 7.50 05/25/2042 1,448,636 1,383,147 FNMA GRANTOR TRUST SERIES 2002-T13 CLASS A1+/- 3.12 08/25/2032 1,383,123 2,361,347 FNMA GRANTOR TRUST SERIES 2003-T4 CLASS 1A+/- 3.13 09/26/2033 2,362,030 271,731 FNMA SERIES 1991-146 CLASS Z 8.00 10/25/2006 277,212 243,019 FNMA SERIES 2001-W1 CLASS AV1+/- 3.33 08/25/2031 243,037 2,049,384 FNMA SERIES 2002-90 CLASS A2 6.50 11/25/2042 2,126,236 3,591,466 FNMA SERIES 2003-W4 3A 7.00 10/25/2042 3,773,866 3,875,222 FNMA SERIES 2004-W2 2A2 7.00 02/25/2044 4,107,301 1,556,720 FNMA WHOLE LOAN SERIES 2002-W10 CLASS A6 7.50 08/25/2042 1,672,015 1,443,364 FNMA WHOLE LOAN SERIES 2002-W12 CLASS AV1+/- 3.27 02/25/2033 1,444,299 109,666,294 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.07% 422,751 GNMA #780533 7.00 07/15/2008 445,947 -------------- STUDENT LOAN MARKETING ASSOCIATION - 0.45% 3,000,000 SLMA SERIES 1999-3 CLASS CTFS+/- 3.10 01/26/2015 3,011,893 -------------- TOTAL AGENCY SECURITIES (COST $179,523,141) 179,524,578 -------------- 126
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE US TREASURY SECURITIES - 6.23% US TREASURY NOTES - 6.23% $ 11,005,000 US TREASURY NOTE<<00 3.00% 02/15/2008 $ 10,828,315 1,750,000 US TREASURY NOTE<< 5.50 02/15/2008 1,834,696 29,000,000 US TREASURY NOTE<< 3.38 12/15/2008 28,699,792 41,362,803 -------------- TOTAL US TREASURY SECURITIES (COST $41,947,952) 41,362,803 -------------- COLLATERAL FOR SECURITIES LENDING - 19.34% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.68% 2,199,998 EVERGREEN MONEY MARKET FUND 2,199,998 2,329,886 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,329,886 4,529,884 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 18.66% 1,072,999 ATOMIUM FUNDING CORPORATION 3.06 06/15/2005 1,071,743 5,999,994 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 5,999,994 23,999,976 BEAR STEARNS & COMPANY REPURCHASE AGREEMENT (MATURITY VALUE $24,002,029) 3.08 06/01/2005 23,999,976 4,399,995 BELFORD US CAPITAL COMPANY 3.08 06/21/2005 4,399,952 1,319,999 BETA FINANCE INCORPORATED 3.13 06/02/2006 1,320,249 5,999,994 BLUE SPICE LLC 3.06 06/01/2005 5,999,994 2,199,998 CC USA INCORPORATED 3.21 07/05/2005 2,200,350 1,508,998 CEDAR SPRINGS CAPITAL COMPANY LLC 3.02 06/03/2005 1,508,742 671,999 CEDAR SPRINGS CAPITAL COMPANY LLC 3.07 06/07/2005 671,663 700,999 CEDAR SPRINGS CAPITAL COMPANY LLC 3.07 06/09/2005 700,530 999,999 CEDAR SPRINGS CAPITAL COMPANY LLC 3.21 08/02/2005 994,469 4,999,995 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 4,991,595 799,999 DANSKE CORPORATION 3.09 06/20/2005 798,727 1,319,999 DEUTSCHE BANK NEW YORK 3.22 11/10/2005 1,315,458 799,999 HBOS TREASURY SERVICES PLC 3.07 06/22/2005 798,591 785,999 JUPITER SECURITIZATION CORPORATION 3.06 06/15/2005 785,079 1,759,998 K2 USA LLC 3.12 07/24/2006 1,760,227 5,999,994 KLIO FUNDING CORPORATION 3.06 06/27/2005 5,986,914 2,199,998 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.26 12/23/2005 2,201,428 5,051,995 LEXINGTON PARKER CAPITAL CORPORATION 3.05 06/06/2005 5,049,873 3,079,997 LIQUID FUNDING LIMITED 3.07 06/01/2005 3,079,997 1,759,998 MORGAN STANLEY 3.09 08/13/2010 1,760,016 4,399,996 NATEXIS BANQUE NEW YORK 3.16 06/09/2005 4,399,336 999,999 NEPTUNE FUNDING CORPORATION 3.07 06/01/2005 999,999 3,480,997 NEPTUNE FUNDING CORPORATION 3.07 07/01/2005 3,472,224 4,399,996 RACERS TRUST 3.09 05/20/2005 4,400,744 749,999 SCALDIS CAPITAL LIMITED 3.19 08/09/2005 745,387 4,399,996 SECURITY LIFE OF DENVER 3.19 06/03/2005 4,399,996 3,999,996 SEDNA FINANCE INCORPORATED 3.09 07/11/2005 3,986,316 4,999,995 SOCIETE GENERALE 3.04 06/30/2005 4,999,995 127
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 2,999,997 SOLITAIRE FUNDING LLC 3.14% 07/21/2005 $ 2,986,947 599,999 SPINTAB (SWEDMORTGAGE) AB 3.26 09/01/2005 594,971 4,399,996 TANGO FINANCE CORPORATION 3.12 10/25/2006 4,399,952 5,999,994 TOTAL CAPITAL S.A. 3.07 06/01/2005 5,999,994 2,199,998 TRAVELERS INSURANCE COMPANY 3.17 02/10/2006 2,199,954 2,999,997 WHITE PINE FINANCE LLC 3.27 09/15/2005 2,971,016 123,952,398 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $128,482,282) 128,482,282 -------------- SHORT-TERM INVESTMENTS - 2.54% 16,861,178 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 16,861,178 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $16,861,178) 16,861,178 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $789,697,892)* 119.15% $ 791,615,146 OTHER ASSETS AND LIABILITIES, NET (19.15) (127,257,389) ------ -------------- TOTAL NET ASSETS 100.00% $ 664,357,757 ====== ============== +/- VARIABLE RATE INVESTMENTS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE EFFECTIVE MATURITY. 00 SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $16,861,178. * COST FOR FEDERAL INCOME TAX PURPOSES IS $789,699,089 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 4,887,565 GROSS UNREALIZED DEPRECIATION (2,971,508) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $ 1,916,057 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 128
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES - 5.12% $ 646,118 BANKAMERICA MANUFACTURED HOUSING CONTRACT SERIES 1997-1 CLASS A8 6.73% 06/10/2023 $ 653,764 930,000 BRAZOS STUDENT LOAN FINANCE CORPORATION SERIES 1995-A CLASS A3+/- 3.31 06/01/2025 929,994 1,000,000 CHASE FUNDING MORTGAGE LOAN SERIES 2002-1 CLASS 1A5+/- 6.60 02/25/2032 1,041,230 806,140 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2004-SD4 CLASS A1+/-++ 3.47 09/30/2034 817,724 610,000 CROWN CASTLE TOWERS LLC++ 4.64 06/15/2035 610,000 759,621 EQCC HOME EQUITY LOAN TRUST SERIES 1999-2 CLASS A6F 6.69 07/25/2030 773,615 518,063 GREEN TREE FINANCIAL CORPORATION SERIES 1997-7 CLASS A8 6.86 07/15/2029 544,357 997,808 GREEN TREE HOME EQUITY LOAN TRUST SERIES 1999-C CLASS M2 8.36 07/15/2030 1,025,823 663,943 GSAMP TRUST SERIES 2005-SEA1 CLASSA+/-++ 3.43 04/25/2035 663,943 1,300,000 KEYCORP STUDENT LOAN TRUST+/- 3.59 11/25/2036 1,307,644 1,000,000 MELLON BANK PREMIUM FINANCE LOAN MASTER SERIES 2004-1 CLASS A+/- 2.65 06/15/2009 1,003,045 22,398 PASS-THROUGH AMORTIZING CREDIT CARD TRUSTS SERIES 2002-1A CLASS A2FL+/-++ 4.44 06/18/2012 22,397 1,226,000 RENTAL CAR FINANCE CORPORATION SERIES 1997-1 CLASS B3++ 6.70 09/25/2007 1,226,969 990,518 RESIDENTIAL FUNDING MORTGAGE SECURITIES II SERIES 2002-HI3 CLASS A6 5.98 08/25/2019 1,000,099 TOTAL ASSET-BACKED SECURITIES (COST $11,519,618) 11,620,604 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 7.28% 862,966 COUNTRYWIDE HOME LOANS++ 6.50 11/25/2034 896,272 2,410,098 COUNTRYWIDE HOME LOANS+/-++ 3.38 03/25/2035 2,411,416 1,137,226 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION 2004-AR5 CLASS 10A1+/- 5.03 05/01/2034 1,144,297 2,985,036 FANNIE MAE SERIES 2005-29 CLASS WQ 5.50 04/25/2035 3,068,579 1,350,000 FANNIE MAE WHOLE LOAN SERIES 2002-W4 CLASS A4 6.25 05/25/2042 1,391,460 1,162,367 FANNIE MAE WHOLE LOAN SERIES 2004-W11 CLASS 1A3 7.00 05/25/2044 1,233,327 368,660 FANNIE MAE WHOLE LOAN SERIES 2004-W8 CLASS 3A 7.50 06/25/2044 393,831 2,817,037 HARBORVIEW MORTGAGE LOAN TRUST SERIES 2004-11 CLASS 3A2A+/- 3.32 01/19/2035 2,847,348 1,072,936 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 1997-C1 CLASS A3 7.12 06/18/2029 1,106,509 713,047 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS A1V+/- 3.44 11/10/2030 715,232 256,773 NATIONSLINK FUNDING CORPORATION SERIES 1999-SL CLASS D 7.56 11/10/2030 275,558 774,969 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2004-R2 CLASS A1+/-++ 6.50 10/25/2034 799,930 253,085 RESIDENTIAL FUNDING SECURITIES CORPORATION SERIES 2003-RP1 CLASS A1+/-++ 3.52 11/25/2034 254,106 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $16,479,725) 16,537,865 -------------- CORPORATE BONDS & NOTES - 36.48% AEROSPACE, DEFENSE - 0.28% 600,000 ARMOR HOLDINGS INCORPORATED 8.25 08/15/2013 643,429 -------------- AMUSEMENT & RECREATION SERVICES - 0.13% 290,000 K2 INCORPORATED 7.38 07/01/2014 301,600 -------------- APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.48% 675,000 PHILLIPS-VAN HEUSEN 7.75 11/15/2023 695,250 375,000 RUSSELL CORPORATION 9.25 05/01/2010 394,688 1,089,938 -------------- BUSINESS SERVICES - 1.08% 250,000 AFFINITY GROUP INCORPORATED 9.00 02/15/2012 251,250 600,000 CENDANT CORPORATION 7.38 01/15/2013 680,389 500,000 FISERV INCORPORATED 4.00 04/15/2008 493,292 375,000 IRON MOUNTAIN INCORPORATED 8.63 04/01/2013 382,500 600,000 NCR CORPORATION 7.13 06/15/2009 651,734 2,459,165 -------------- 129
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE CHEMICALS & ALLIED PRODUCTS - 2.99% $ 225,000 AIRGAS INCORPORATED 9.13% 10/01/2011 $ 243,000 500,000 AIRGAS INCORPORATED SERIES MTN 7.75 09/15/2006 516,250 650,000 BRISTOL MYERS SQUIBB 5.75 10/01/2011 693,770 375,000 IMC GLOBAL INCORPORATED 10.88 06/01/2008 418,125 325,000 IMC GLOBAL INCORPORATED SERIES B 11.25 06/01/2011 359,125 475,000 JOHNSONDIVERSEY INCORPORATED SERIES B 9.63 05/15/2012 477,375 900,000 LYONDELL CHEMICAL COMPANY SERIES A 9.63 05/01/2007 957,375 400,000 OLIN CORPORATION 9.13 12/15/2011 490,733 850,000 RPM INTERNATIONAL INCORPORATED 7.00 06/15/2005 850,263 800,000 SENSIENT TECHNOLOGIES 6.50 04/01/2009 831,850 400,000 WITCO COMPANY 7.75 04/01/2023 400,000 500,000 WYETH 6.95 03/15/2011 559,736 6,797,602 -------------- COMMUNICATIONS - 1.65% 575,000 CANWEST MEDIA INCORPORATED 10.63 05/15/2011 627,469 475,000 COX COMMUNICATIONS INCORPORATED 7.88 08/15/2009 530,485 500,000 L3 COMMUNICATIONS CORPORATION 7.63 06/15/2012 530,000 375,000 PANAMSAT CORPORATION 6.38 01/15/2008 378,750 275,000 SINCLAIR BROADCAST GROUP INCORPORATED 8.75 12/15/2011 291,500 700,000 SPRINT CAPITAL CORPORATION 6.00 01/15/2007 719,590 600,000 TIME WARNER INCORPORATED 6.88 05/01/2012 674,862 3,752,656 -------------- CONSUMER SERVICES - 0.24% 500,000 NIELSEN MEDIA 7.60 06/15/2009 547,897 -------------- DEPOSITORY INSTITUTIONS - 6.23% 1,100,000 ASSOCIATED BANCORP 6.75 08/15/2011 1,234,544 1,050,000 BANK ONE CAPITAL IV+/- 4.41 09/01/2030 1,052,616 1,839,000 BANKAMERICA CAPITAL III+/- 3.71 01/15/2027 1,783,453 1,000,000 CITY NATIONAL BANK 6.75 09/01/2011 1,123,182 625,000 COLONIAL BANK 9.38 06/01/2011 744,434 1,226,000 DEPOSIT GUARANTY CORPORATION 7.25 05/01/2006 1,262,906 1,226,000 FARMERS EXCHANGE CAPITAL++ 7.20 07/15/2048 1,312,059 500,000 FIRST CITIZENS BANCORP++ 6.80 04/01/2015 500,000 250,000 FIRSTAR BANK NA 7.13 12/01/2009 279,556 500,000 GREAT BAY BANCORP SR NT-C++ 5.13 04/15/2010 505,393 800,000 HAVEN CAPITAL TRUST I 10.46 02/01/2027 905,532 665,000 MANUFACTURERS & TRADERS TRUST COMPANY 8.00 10/01/2010 782,003 650,000 NATIONAL CAPITAL COMMERCE INCORPORATED+/- 4.08 04/01/2027 642,609 450,000 NTC CAPITAL TRUST SERIES A+/- 3.66 01/15/2027 429,454 725,000 TCF FINANCIAL BANK 5.00 06/15/2014 729,111 750,000 WACHOVIA BANK NA CHARLOTTE SERIES BKNT 7.80 08/18/2010 870,803 14,157,655 -------------- EDUCATIONAL SERVICES - 1.98% 2,235,000 MASSACHUSETTS INSTITUTE OF TECHNOLOGY 7.25 11/02/2049 3,137,480 1,250,000 STANFORD UNIVERSITY SERIES MTNA 6.16 04/30/2011 1,369,162 4,506,642 -------------- 130
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ELECTRIC, GAS & SANITARY SERVICES - 0.42% $ 500,000 DUKE ENERGY FIELD SERVICES LLC 7.88% 08/16/2010 $ 573,633 380,000 SEMCO ENERGY INCORPORATED 7.13 05/15/2008 385,777 959,410 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 0.76% 350,000 FLEXTRONICS INTERNATIONAL 6.25 11/15/2014 348,250 500,000 RAYOVAC CORPORATION++ 7.38 02/01/2015 487,500 850,000 THOMAS & BETTS CORPORATION SERIES MTN 6.63 05/07/2008 891,200 1,726,950 -------------- ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.41% 860,000 US ONCOLOGY INCORPORATED 9.00 08/15/2012 920,200 -------------- FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.23% 525,000 VALMONT INDUSTRIES INCORPORATED 6.88 05/01/2014 525,000 -------------- FOOD & KINDRED PRODUCTS - 1.41% 650,000 CONAGRA FOODS INCORPORATED 7.88 09/15/2010 748,485 375,000 CONSTELLATION BRANDS INCORPORATED SERIES B 8.00 02/15/2008 397,500 485,000 CORN PRODUCTS INTERNATIONAL INCORPORATED 8.25 07/15/2007 521,775 745,000 COTT BEVERAGES USA INCORPORATED 8.00 12/15/2011 789,700 322,000 GENERAL MILLS INCORPORATED 6.00 02/15/2012 349,096 375,000 LAND O' LAKES INCORPORATED 9.00 12/15/2010 403,125 3,209,681 -------------- FORESTRY - 0.49% 500,000 TEMBEC INDUSTRIES 8.63 06/30/2009 405,000 700,000 WEYERHAEUSER COMPANY 6.00 08/01/2006 711,471 1,116,471 -------------- GENERAL MERCHANDISE STORES - 0.38% 375,000 JEAN COUTU GROUP INCORPORATED 7.63 08/01/2012 382,500 475,000 RITE AID CORPORATION 9.50 02/15/2011 489,250 871,750 -------------- HEALTH SERVICES - 0.92% 850,000 AMERICAN ASSOCIATION OF RETIRED PERSONS++ 7.50 05/01/2031 1,083,370 600,000 HEALTHSOUTH CORPORATION 7.63 06/01/2012 576,000 400,000 NDC HEALTH CORPORATION 10.50 12/01/2012 425,000 2,084,370 -------------- HOLDING & OTHER INVESTMENT OFFICES - 0.62% 500,000 NATIONAL CITY BANK OF COLUMBUS SERIES 4 7.25 07/15/2010 568,090 750,000 PRINCIPAL LIFE GLOBAL FUNDING I++ 6.25 02/15/2012 827,486 1,395,576 -------------- HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.23% 500,000 STEELCASE INCORPORATED 6.38 11/15/2006 508,933 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.72% 500,000 AMERICAN STANDARD INCORPORATED 8.25 06/01/2009 565,903 400,000 BRIGGS & STRATTON CORPORATION 8.88 03/15/2011 456,000 625,000 UNISYS CORPORATION 6.88 03/15/2010 612,500 1,634,403 -------------- 131
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE INSURANCE AGENTS, BROKERS & SERVICE - 0.34% $ 670,000 NLV FINANCIAL CORPORATION++ 7.50% 08/15/2033 $ 769,048 -------------- INSURANCE CARRIERS - 4.07% 500,000 AMERUS GROUP COMPANY 6.95 06/15/2005 500,447 675,000 BLUE CROSS & BLUE SHIELD OF FLORIDA++ 8.25 11/15/2011 782,724 400,000 JOHN HANCOCK GLOBAL FUNDING II++ 7.90 07/02/2010 465,030 807,000 MARKEL CORPORATION 7.20 08/15/2007 852,982 2,000,000 MINNESOTA LIFE INSURANCE COMPANY++ 8.25 09/15/2025 2,667,922 1,073,000 PRUDENTIAL INSURANCE COMPANY OF AMERICA++ 7.65 07/01/2007 1,147,459 682,000 REINSURANCE GROUP OF AMERICA++ 7.25 04/01/2006 696,129 750,000 RELIASTAR FINANCIAL CORPORATION 8.00 10/30/2006 789,661 700,000 UNITRIN INCORPORATED 5.75 07/01/2007 719,006 625,000 WR BERKLEY CORPORATION 5.13 09/30/2010 632,159 9,253,519 -------------- MACHINERY - 0.32% 600,000 JLG INDUSTRIES INCORPORATED 8.25 05/01/2008 630,000 100,000 JLG INDUSTRIES INCORPORATED 8.38 06/15/2012 103,500 733,500 -------------- MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.32% 650,000 PERKINELMER INCORPORATED 8.88 01/15/2013 716,625 -------------- MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.95% 275,000 CENTRAL GARDEN & PET COMPANY 9.13 02/01/2013 292,875 800,000 GENERAL ELECTRIC COMPANY 5.00 02/01/2013 822,486 585,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 631,800 375,000 OWENS-BROCKWAY 8.88 02/15/2009 398,437 2,145,598 -------------- MISCELLANEOUS RETAIL - 0.22% 510,000 REMINGTON ARMS COMPANY INCORPORATED 10.50 02/01/2011 487,050 -------------- NATIONAL SECURITY & INTERNATIONAL AFFAIRS - 0.31% 600,000 GOODRICH CORPORATION 7.63 12/15/2012 702,643 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 0.97% 650,000 ATHENA NEUROSCIENCES FINANCE LLC 7.25 02/21/2008 611,000 1,000,000 FORD MOTOR CREDIT COMPANY 7.38 10/28/2009 967,314 500,000 GENERAL MOTORS ACCEPTANCE CORPORATION 7.75 01/19/2010 471,829 200,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 5.11 12/01/2014 162,357 2,212,500 -------------- OIL & GAS EXTRACTION - 1.39% 910,000 HALLIBURTON COMPANY+/- 4.16 10/17/2005 914,513 500,000 MARATHON OIL CORPORATION CONSOLIDATED 6.85 03/01/2008 532,157 275,000 PARKER DRILLING COMPANY 9.63 10/01/2013 309,375 170,000 PARKER DRILLING COMPANY SERIES B 10.13 11/15/2009 178,712 525,000 PIONEER NATURAL RESOURCES COMPANY 6.50 01/15/2008 542,009 300,000 STONE ENERGY CORPORATION 6.75 12/15/2014 285,000 375,000 SWIFT ENERGY COMPANY 9.38 05/01/2012 401,250 3,163,016 -------------- 132
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE PAPER & ALLIED PRODUCTS - 0.49% $ 531,000 ABITIBI CONSOLIDATED INCORPORATED 6.95% 12/15/2006 $ 533,655 600,000 SOLO CUP COMPANY 8.50 02/15/2014 576,000 1,109,655 -------------- PERSONAL SERVICES - 0.40% 355,000 ALDERWOODS GROUP INCORPORATED++ 7.75 09/15/2012 370,975 35,000 SERVICE CORPORATION INTERNATIONAL 6.00 12/15/2005 35,131 500,000 SERVICE CORPORATION INTERNATIONAL 6.50 03/15/2008 511,250 917,356 -------------- PETROLEUM REFINING & RELATED INDUSTRIES - 0.32% 480,000 CITGO PETROLEUM CORPORATION 6.00 10/15/2011 470,400 250,000 POGO PRODUCING COMPANY++ 6.63 03/15/2015 253,125 723,525 -------------- PRIMARY METAL INDUSTRIES - 0.54% 125,000 CENTURY ALUMINUM COMPANY 7.50 08/15/2014 122,500 500,000 ISPAT INLAND ULC+/- 9.85 04/01/2010 532,500 250,000 NOVELIS INCORPORATED++ 7.25 02/15/2015 245,000 273,000 UNITED STATES STEEL LLC 10.75 08/01/2008 308,490 1,208,490 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.76% 525,000 AMERICAN GREETINGS CORPORATION 6.10 08/01/2028 536,813 500,000 HOUGHTON MIFFLIN COMPANY 8.25 02/01/2011 520,000 600,000 VIACOM INCORPORATED 7.70 07/30/2010 670,167 1,726,980 -------------- RECREATION - 0.09% 200,000 AMF BOWLING WORLDWIDE INCORPORATED 10.00 03/01/2010 201,000 -------------- SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.81% 1,000,000 GOLDMAN SACHS GROUP INCORPORATED+/- 3.49 07/23/2009 1,004,204 750,000 MORGAN STANLEY 6.75 04/15/2011 838,271 1,842,475 -------------- STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.25% 500,000 TEXAS INDUSTRIES INCORPORATED 10.25 06/15/2011 567,500 -------------- TRANSPORTATION BY AIR - 0.84% 315,575 CONTINENTAL AIRLINES INCORPORATED SERIES 974C 6.80 07/02/2007 266,525 370,000 DELTA AIR LINES INCORPORATED++ 9.50 11/18/2008 308,950 223,489 DELTA AIR LINES INCORPORATED 7.78 01/02/2012 92,756 30,000 DELTA AIR LINES INCORPORATED SERIES 00-1 7.78 11/18/2005 23,995 843,114 FEDEX CORPORATION SERIES 97-B 7.52 01/15/2018 922,706 354,171 NORTHWEST AIRLINES INCORPORATED SERIES 991A 6.81 02/01/2020 302,002 1,916,934 -------------- TRANSPORTATION EQUIPMENT - 0.85% 475,000 ALLIANT TECHSYSTEMS INCORPORATED 8.50 05/15/2011 499,344 550,000 DELCO REMY INTERNATIONAL INCORPORATED+/- 7.14 04/15/2009 547,250 860,000 NAVISTAR INTERNATIONAL 7.50 06/15/2011 875,050 1,921,644 -------------- 133
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE TRANSPORTATION SERVICES - 0.17% $ 53,000 TEEKAY SHIPPING CORPORATION 8.32% 02/01/2008 $ 53,066 300,000 TEEKAY SHIPPING CORPORATION 8.88 07/15/2011 339,000 392,066 -------------- WATER TRANSPORTATION - 0.19% 400,000 OVERSEAS SHIPHOLDING GROUP 8.25 03/15/2013 428,000 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.09% 200,000 AVIALL INCORPORATED 7.63 07/01/2011 208,500 -------------- WHOLESALE TRADE-DURABLE GOODS - 0.14% 300,000 ROUNDY'S INCORPORATED 8.88 06/15/2012 309,000 -------------- TOTAL CORPORATE BONDS & NOTES (COST $79,730,228) 82,865,952 -------------- MUNICIPAL BONDS & NOTES - 1.28% 1,225,000 HUDSON COUNTY NJ IMPROVEMENT AUTHORITY FACILITIES LEASING REVENUE 7.40 12/01/2025 1,571,834 1,310,000 INDIANA BOND BANK REVENUE 4.73 01/15/2014 1,332,021 TOTAL MUNICIPAL BONDS & NOTES (COST $2,565,438) 2,903,855 -------------- AGENCY SECURITIES - 35.25% FEDERAL HOME LOAN MORTGAGE CORPORATION - 15.76% 1,969,168 FHLMC #1G-0157+/- 4.51 03/01/2035 1,968,548 1,234,715 FHLMC #A15838 5.50 12/01/2033 1,254,640 2,618,931 FHLMC SERIES 1675 CLASS KZ 6.50 02/15/2024 2,784,266 5,000,000 FHLMC SERIES 2358 CLASS PD 6.00 09/15/2016 5,180,970 7,500,000 FHLMC SERIES 2363 CLASS PF 6.00 09/15/2016 7,758,705 6,500,000 FHLMC SERIES 2416 CLASS PE 6.00 10/15/2021 6,720,717 1,416,477 FHLMC SERIES 2439 CLASS LG 6.00 09/15/2030 1,442,425 1,226,595 FHLMC SERIES T-20 CLASS A6+/- 7.49 09/25/2029 1,246,212 6,073,359 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-42 CLASS A4Z 6.50 02/25/2042 6,293,518 1,063,222 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-58 CLASS 4A 7.50 09/25/2043 1,143,296 35,793,297 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 15.66% 1,394,411 FNMA #380581 6.18 08/01/2008 1,458,902 957,894 FNMA #383017 6.49 01/01/2008 999,168 1,474,255 FNMA #386890 3.99 04/01/2011 1,448,398 1,923,303 FNMA #555326 5.50 04/01/2033 1,951,101 730,319 FNMA #678939 5.50 02/01/2018 750,449 695,554 FNMA #701350 5.50 04/01/2018 714,725 3,816,861 FNMA #725232 5.00 03/01/2034 3,820,785 959,395 FNMA #731996+/- 4.09 09/01/2033 953,963 832,410 FNMA #739757+/- 4.07 08/01/2033 826,946 1,167,397 FNMA #741305 5.00 09/01/2018 1,181,697 1,433,969 FNMA #741458+/- 4.51 10/01/2033 1,440,761 2,376,602 FNMA #765178 5.00 01/01/2019 2,405,715 1,741,734 FNMA #789463+/- 4.42 06/01/2034 1,741,667 134
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED) $ 1,910,432 FNMA #801908 5.00% 11/01/2019 $ 1,933,835 302,682 FNMA GRANTOR TRUST SERIES 2002-T4 CLASS A2 7.00 12/25/2041 318,519 3,192,804 FNMA GRANTOR TRUST SERIES 2004-T3 CLASS A1 6.00 02/25/2044 3,279,820 683,128 FNMA SERIES 2002-90 CLASS A2 6.50 11/25/2042 708,745 5,513,331 FNMA SERIES 2003-92 CLASS HP 4.50 09/25/2018 5,531,066 2,770,921 FNMA SERIES 2003-97 CLASS CA 5.00 10/25/2018 2,820,047 1,221,551 FNMA WHOLE LOAN 7.00 12/25/2033 1,290,174 35,576,483 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.52% 240,156 GNMA #345066 6.50 10/15/2023 252,976 196,010 GNMA #346960 6.50 12/15/2023 206,473 164,451 GNMA #354692 6.50 11/15/2023 173,230 255,168 GNMA #361398 6.50 01/15/2024 268,631 304,383 GNMA #366641 6.50 11/15/2023 320,631 80,686 GNMA #473918 7.00 04/15/2028 85,636 148,479 GNMA #525459 7.25 07/15/2006 149,052 93,838 GNMA #531436 7.00 06/15/2042 109,234 2,056 GNMA #531965 7.72 12/15/2041 2,374 59,593 GNMA #533858 7.35 08/15/2042 68,075 5,500,000 GNMA SERIES 2003-38 CLASS JC+/- 7.04 04/16/2024 6,371,282 8,007,594 -------------- STUDENT LOAN MARKETING ASSOCIATION - 0.31% 700,000 SLMA SERIES 1999-3 CLASS CTFS+/- 3.10 01/26/2015 702,775 -------------- TOTAL AGENCY SECURITIES (COST $79,061,699) 80,080,149 -------------- SHARES PRIVATE INVESTMENT PARTNERSHIPS - 0.02% 349 PPM AMERICA CBO II LIMITED PARTNERSHIP 54,989 TOTAL PRIVATE INVESTMENT PARTNERSHIPS (COST $386,265) 54,989 -------------- PRINCIPAL TERM LOANS - 0.42% 934,615 NOVELIS INCORPORATED TERM LOAN B 4.52 01/07/2012 946,298 TOTAL TERM LOANS (COST $942,772) 946,298 -------------- US TREASURY SECURITIES - 12.37% US TREASURY BONDS - 12.37% 1,400,000 US TREASURY BOND 7.25 05/15/2016 1,782,648 7,150,000 US TREASURY BOND 7.25 08/15/2022 9,635,740 6,315,000 US TREASURY BOND 6.25 08/15/2023 7,780,276 4,950,000 US TREASURY BOND 5.38 02/15/2031 5,732,719 400,000 US TREASURY BOND - INFLATION PROTECTED& 3.38 04/15/2032 592,881 2,300,000 US TREASURY BOND - INFLATION PROTECTED& 2.38 01/15/2025 2,588,121 28,112,385 -------------- TOTAL US TREASURY SECURITIES (COST $26,240,597) 28,112,385 -------------- 135
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] STRATEGIC VALUE BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- SHARES SECURITY NAME VALUE SHORT-TERM INVESTMENTS - 2.07% 4,692,508 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 4,692,508 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $4,692,508) 4,692,508 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $221,618,850)* 100.29% $ 227,814,605 OTHER ASSETS AND LIABILITIES, NET (0.29) (654,801) ------ -------------- 100.00% TOTAL NET ASSETS ====== $ 227,159,804 ============== +/- VARIABLE RATE INVESTMENTS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. & U.S. TREASURY INFLATION-PROTECTION SECURITIES (TIPS) ARE SECURITIES IN WHICH THE PRINCIPAL AMOUNT IS ADJUSTED FOR INFLATION AND THE SEMI-ANNUAL INTEREST PAYMENTS EQUAL A FIXED PERCENTAGE OF THE INFLATION-ADJUSTED PRINCIPAL AMOUNT. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $4,692,508. * COST FOR FEDERAL INCOME TAX PURPOSES IS $221,318,948 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 8,144,351 GROSS UNREALIZED DEPRECIATION (1,648,694) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $ 6,495,657 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 136
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TACTICAL MATURITY BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY NOTES - INTEREST BEARING - 50.65% $ 27,500,000 FFCB<< 2.09% 01/30/2006 $ 27,241,142 33,550,000 FHLB 1.52 07/14/2005 33,475,787 32,000,000 FHLB<< 1.55 07/14/2005 31,930,336 33,000,000 FHLB<< 2.25 01/30/2006 32,723,691 27,000,000 FHLB+/- 3.31 03/30/2007 27,008,438 21,000,000 FHLMC 2.50 11/30/2005 20,901,720 30,000,000 FHLMC 2.20 12/01/2005 29,814,030 26,000,000 FHLMC<< 2.15 01/30/2006 25,765,402 TOTAL AGENCY NOTES - INTEREST BEARING (COST $230,003,667) 228,860,546 -------------- ASSET-BACKED SECURITIES - 4.35% 19,650,000 HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I SERIES 2000-1 CLASS A+/- 3.23 08/15/2008 19,664,195 TOTAL ASSET-BACKED SECURITIES (COST $19,451,466) 19,664,195 -------------- CORPORATE BONDS & NOTES - 12.92% INSURANCE AGENTS, BROKERS & SERVICE - 3.77% 17,000,000 ALLSTATE LIFE GLOBAL FUNDING<<+/- 2.53 09/22/2006 17,004,335 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 9.15% 20,400,000 FEDERAL AGRICULTURAL MORTGAGE CORPORATION+/- 3.28 03/30/2007 20,369,502 21,000,000 FEDERAL AGRICULTURAL MORTGAGE CORPORATION+/- 3.31 04/20/2007 20,985,909 41,355,411 -------------- TOTAL CORPORATE BONDS & NOTES (COST $58,400,000) 58,359,746 -------------- US TREASURY SECURITIES - 28.90% US TREASURY BONDS - 28.90% 17,400,000 US TREASURY BOND<< 6.00 02/15/2026 21,137,607 10,000,000 US TREASURY BOND<< 6.63 02/15/2027 13,076,560 24,000,000 US TREASURY BOND<< 5.25 02/15/2029 26,961,552 15,925,000 US TREASURY BOND<< 6.25 05/15/2030 20,374,668 42,325,000 US TREASURY BOND<< 5.38 02/15/2031 49,017,641 130,568,028 -------------- TOTAL US TREASURY SECURITIES (COST $127,429,635) 130,568,028 -------------- COLLATERAL FOR SECURITIES LENDING - 48.71% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 1.04% 1,714,000 EVERGREEN MONEY MARKET FUND 1,714,000 3,000,447 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 3,000,447 4,714,447 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 47.67% 5,000,000 ALLIANCE & LEICESTER PLC 3.29 09/19/2005 4,949,900 10,000,000 AMERICAN GENERAL FINANCE 3.09 06/15/2006 10,000,500 4,200,000 ANZ NATIONAL (INTERNATIONAL) LIMITED 3.11 07/08/2005 4,186,686 4,355,000 ATLANTIC ASSET SECURITIZATION CORPORATION 3.07 06/22/2005 4,347,335 1,800,000 ATLANTIS ONE FUNDING CORPORATION 3.27 09/19/2005 1,781,964 2,000,000 ATOMIUM FUNDING CORPORATION 3.11 07/08/2005 1,993,660 137
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TACTICAL MATURITY BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 10,000,000 BANCO BILBAO VIZCAYA ARGENTARIA 3.07% 06/01/2005 $ 10,000,000 800,000 BANK ONE CORPORATION 7.57 08/01/2005 805,680 15,000,000 BEAR STEARNS & COMPANY REPURCHASE AGREEMENT (MATURITY VALUE $15,001,283) 3.08 06/01/2005 15,000,000 3,429,000 BELFORD US CAPITAL COMPANY 3.08 06/21/2005 3,428,966 1,029,000 BETA FINANCE INCORPORATED 3.13 06/02/2006 1,029,196 10,000,000 BLUE SPICE LLC 3.06 06/01/2005 10,000,000 1,714,000 CC USA INCORPORATED 3.21 07/05/2005 1,714,274 4,000,000 CEDAR SPRINGS CAPITAL COMPANY LLC 3.08 07/14/2005 3,985,280 1,566,000 CEDAR SPRINGS CAPITAL COMPANY LLC 3.22 08/11/2005 1,556,087 1,660,000 CONCORD MINUTEMAN CAPITAL COMPANY SERIES A 3.35 10/19/2005 1,638,437 10,000,000 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 9,983,200 1,029,000 DEUTSCHE BANK NEW YORK 3.22 11/10/2005 1,025,460 750,000 EDISON ASSET SECURITIZATION LLC 3.27 08/26/2005 744,247 6,570,000 EUREKA SECURITIZATION INCORPORATED 3.11 07/07/2005 6,549,764 5,506,000 GEORGE STREET FINANCE LLC 3.05 06/14/2005 5,499,998 8,000,000 IRISH LIFE & PERMANENT PLC 3.05 07/08/2005 7,974,640 1,300,000 K2 USA LLC 3.29 09/28/2005 1,285,908 1,372,000 K2 USA LLC 3.12 07/24/2006 1,372,178 10,000,000 KLIO FUNDING CORPORATION 3.06 06/27/2005 9,978,200 4,000,000 KLIO FUNDING CORPORATION 3.07 06/29/2005 3,990,600 4,000,000 KLIO II FUNDING CORPORATION 3.04 06/06/2005 3,998,320 5,000,000 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.12 08/16/2005 5,000,000 1,714,000 LEHMAN BROTHERS HOLDINGS INCORPORATED 3.26 12/23/2005 1,715,114 3,136,000 LIBERTY STREET FUNDING CORPORATION 3.05 06/15/2005 3,132,331 2,400,000 LIQUID FUNDING LIMITED 3.07 06/01/2005 2,400,000 9,000,000 MORGAN STANLEY 3.14 01/13/2006 9,000,000 1,372,000 MORGAN STANLEY 3.09 08/13/2010 1,372,014 3,429,000 NATEXIS BANQUE NEW YORK 3.16 06/09/2005 3,428,486 6,000,000 NEPTUNE FUNDING CORPORATION 3.07 06/01/2005 6,000,000 1,500,000 NEPTUNE FUNDING CORPORATION 3.04 06/06/2005 1,499,370 1,031,000 NEPTUNE FUNDING CORPORATION 3.07 07/01/2005 1,028,402 3,429,000 RACERS TRUST 3.09 05/20/2005 3,429,583 3,429,000 SECURITY LIFE OF DENVER 3.19 06/03/2005 3,429,000 4,000,000 SEDNA FINANCE INCORPORATED 3.09 07/11/2005 3,986,320 3,000,000 SEDNA FINANCE INCORPORATED 3.12 07/18/2005 2,987,730 10,000,000 SOCIETE GENERALE 3.04 06/30/2005 10,000,000 3,429,000 TANGO FINANCE CORPORATION 3.12 10/25/2006 3,428,966 10,000,000 TOTAL CAPITAL S.A. 3.07 06/01/2005 10,000,000 10,000,000 TRANSAMERICA ASSET FUNDING CORPORATION I 3.07 06/22/2005 9,982,400 1,714,000 TRAVELERS INSURANCE COMPANY 3.17 02/10/2006 1,713,966 382,000 TULIP FUNDING CORPORATION 3.48 11/15/2005 375,991 2,700,000 UBS FINANCE (DELAWARE) LLC 3.26 09/06/2005 2,676,132 215,406,285 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $220,120,732) 220,120,732 -------------- 138
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] TACTICAL MATURITY BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------- SHARES SECURITY NAME VALUE SHORT-TERM INVESTMENTS - 2.49% 11,259,743 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 11,259,743 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $11,259,743) 11,259,743 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $666,665,243)* 148.02% $ 668,832,990 OTHER ASSETS AND LIABILITIES, NET (48.02) (216,976,922) ------ -------------- TOTAL NET ASSETS 100.00% $ 451,856,068 ====== ============== << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) +/- VARIABLE RATE INVESTMENTS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $11,259,743. * COST FOR FEDERAL INCOME TAX PURPOSES IS $666,684,018 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 3,364,890 GROSS UNREALIZED DEPRECIATION (1,215,918) ----------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 2,148,972 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 139
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED STRATEGIC TACTICAL FIXED STABLE VALUE MATURITY INCOME INCOME BOND BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE ............................ $ 673,693,743 $ 646,271,686 $ 223,122,097 $ 437,452,515 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................. 306,953,330 128,482,282 0 220,120,732 INVESTMENTS IN AFFILIATES ................................. 15,710,296 16,861,178 4,692,508 11,259,743 -------------- -------------- -------------- -------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ......... 996,357,369 791,615,146 227,814,605 668,832,990 -------------- -------------- -------------- -------------- CASH ...................................................... 116,250 203,000 51,250 0 VARIATION MARGIN RECEIVABLE ON FUTURES CONTRACTS .......... 99,531 42,281 40,469 0 RECEIVABLE FOR INVESTMENTS SOLD ........................... 10,130,004 3,398 30,832 0 RECEIVABLES FOR DIVIDENDS AND INTEREST .................... 6,296,238 3,308,044 2,441,384 3,295,341 RECEIVABLE FOR INTEREST RATE SWAPS/SPREAD LOCKS ........... 0 26,163 21,014 0 -------------- -------------- -------------- -------------- TOTAL ASSETS ................................................ 1,012,999,392 795,198,032 230,399,554 672,128,331 -------------- -------------- -------------- -------------- LIABILITIES PAYABLE FOR FUND SHARES REDEEMED .......................... 2,343 0 0 0 PAYABLE FOR INVESTMENTS PURCHASED ......................... 27,405,061 2,123,537 3,116,137 0 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ..... 113,213 188,244 77,827 131,178 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ................... 0 655 1,542 719 PAYABLE FOR SECURITIES LOANED (NOTE 2) .................... 306,953,330 128,482,282 0 220,120,732 ACCRUED EXPENSES AND OTHER LIABILITIES .................... 32,205 45,557 44,244 19,634 -------------- -------------- -------------- -------------- TOTAL LIABILITIES ........................................... 334,506,152 130,840,275 3,239,750 220,272,263 -------------- -------------- -------------- -------------- TOTAL NET ASSETS ............................................ $ 678,493,240 $ 664,357,757 $ 227,159,804 $ 451,856,068 ============== ============== ============== ============== INVESTMENTS AT COST ......................................... $ 977,930,730 $ 789,697,892 $ 221,618,850 $ 666,665,243 ============== ============== ============== ============== SECURITIES ON LOAN, AT MARKET VALUE ......................... $ 301,452,411 $ 126,042,635 $ 0 $ 217,757,938 ============== ============== ============== ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 140
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STATEMENTS OF OPERATIONS -- WELLS FARGO ADVANTAGE MASTER PORTFOLIOS FOR THE YEAR ENDED MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED STRATEGIC TACTICAL FIXED STABLE VALUE MATURITY INCOME INCOME BOND BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME INTEREST .................................................. $ 33,738,669 $ 19,338,056 $ 12,480,084 $ 9,187,693 INCOME FROM AFFILIATED SECURITIES ......................... 255,766 242,038 84,060 1,399,172 SECURITIES LENDING INCOME, NET ............................ 158,020 138,432 35,583 143,352 -------------- -------------- -------------- -------------- TOTAL INVESTMENT INCOME ..................................... 34,152,455 19,718,526 12,599,727 10,730,217 -------------- -------------- -------------- -------------- EXPENSES ADVISORY FEES ............................................. 3,025,223 3,623,418 1,035,044 2,093,283 CUSTODY FEES .............................................. 135,144 162,916 45,150 91,277 AUDIT FEES ................................................ 19,998 20,998 19,998 19,998 LEGAL FEES ................................................ 11,538 18,998 99 7,501 SHAREHOLDER REPORTS ....................................... 68,010 64,350 99 15,002 TRUSTEES' FEES ............................................ 6,789 6,789 6,789 6,789 OTHER FEES AND EXPENSES ................................... 15,044 24,653 5,401 9,010 -------------- -------------- -------------- -------------- TOTAL EXPENSES .............................................. 3,281,746 3,922,122 1,112,580 2,242,860 -------------- -------------- -------------- -------------- LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) .............. (897,108) (956,895) (68,907) (727,047) NET EXPENSES .............................................. 2,384,638 2,965,227 1,043,673 1,515,813 -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) ................................ 31,767,817 16,753,299 11,556,054 9,214,404 -------------- -------------- -------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ----------------------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION 448,213 (670,794) 1,506,460 (2,055,095) FUTURES TRANSACTIONS ...................................... 42,837 (49,787 22,362 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ...... 0 (828,968 141,527 0 -------------- -------------- -------------- -------------- NET REALIZED GAIN (LOSS) FROM INVESTMENTS ................... 491,050 (1,549,549 1,670,349 (2,055,095) -------------- -------------- -------------- -------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION 13,463,504 3,150,790 3,148,294 4,215,939 FUTURES TRANSACTIONS ...................................... 92,113 (307,712) 35,150 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ...... 0 871,764 76,438 0 -------------- -------------- -------------- -------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS 13,555,617 3,714,842 3,259,882 4,215,939 ============== ============== ============== ============== NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ...... 14,046,667 2,165,293 4,930,231 2,160,844 -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................................. $ 45,814,484 $ 18,918,592 $ 16,486,285 $ 11,375,248 ============== ============== ============== ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 141
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] MANAGED FIXED INCOME PORTFOLIO ---------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 --------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 673,965,279 $ 621,957,173 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 31,767,817 33,681,048 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... 491,050 7,348,354 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... 13,555,617 (30,219,453) -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 45,814,484 10,809,949 -------------- --------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS --------------------------------------------------------------------------------------------------------------------- CONTRIBUTIONS ............................................................... 147,339,080 267,642,488 WITHDRAWALS ................................................................. (188,625,603) (226,444,331) -------------- --------------- NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS ... (41,286,523) 41,198,157 -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS .......................................... 4,527,961 52,008,106 -------------- --------------- ENDING NET ASSETS .............................................................. $ 678,493,240 $ 673,965,279 ============== =============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 142
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- [Enlarge/Download Table] STABLE INCOME PORTFOLIO ---------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 --------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 965,744,432 $ 856,897,134 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 16,753,299 21,316,986 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... (1,549,549) (1,803,560) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... 3,714,842 (8,237,345) -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 18,918,592 11,276,081 -------------- --------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS --------------------------------------------------------------------------------------------------------------------- CONTRIBUTIONS ............................................................... 108,044,764 552,472,567 WITHDRAWALS ................................................................. (428,350,031) (454,901,350) -------------- --------------- NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS ... (320,305,267) 97,571,217 -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS .......................................... (301,386,675) 108,847,298 -------------- --------------- ENDING NET ASSETS .............................................................. $ 664,357,757 $ 965,744,432 ============== =============== STRATEGIC VALUE BOND PORTFOLIO ---------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 --------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 255,094,172 $ 206,698,989 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 11,556,054 11,545,295 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... 1,670,349 2,939,083 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... 3,259,882 (7,442,280) -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 16,486,285 7,042,098 -------------- --------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS --------------------------------------------------------------------------------------------------------------------- CONTRIBUTIONS ............................................................... 47,384,121 86,876,790 WITHDRAWALS ................................................................. (61,804,774) (75,523,705) -------------- --------------- NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS ... (14,420,653) 11,353,085 -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS .......................................... 2,065,632 18,395,183 -------------- --------------- ENDING NET ASSETS .............................................................. $ 277,159,804 $ 225,094,172 ============== =============== TACTICAL MATURITY BOND PORTFOLIO ---------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 --------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................... $ 462,694,813 $ 420,782,713 OPERATIONS: NET INVESTMENT INCOME (LOSS) ................................................ 9,214,404 8,012,816 NET REALIZED GAIN (LOSS) ON INVESTMENTS ..................................... (2,055,095) (10,076,510) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ......... 4,215,939 (7,796,219) -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ 11,375,248 (9,859,913) -------------- --------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS --------------------------------------------------------------------------------------------------------------------- CONTRIBUTIONS ............................................................... 105,392,359 194,294,721 WITHDRAWALS ................................................................. (127,606,352) (142,522,708) -------------- --------------- NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS ... (22,213,993) 51,772,013 -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS .......................................... (10,838,745) 41,912,100 -------------- --------------- ENDING NET ASSETS .............................................................. $ 451,856,068 $ 462,694,813 ============== =============== 143
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) ---------------------------------------------------------- PORTFOLIO NET INVESTMENT GROSS EXPENSES NET TOTAL TURNOVER INCOME (LOSS) EXPENSES WAIVED EXPENSES RETURN(2) RATE --------------------------------------------------------------------------------------------------------------------------------- MANAGED FIXED INCOME PORTFOLIO --------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ............ 4.70% 0.49% (0.14)% 0.35% 7.02% 53% JUNE 1, 2003 TO MAY 31, 2004 ............ 5.10% 0.53% (0.28)% 0.25% 1.45% 50% JUNE 1, 2002 TO MAY 31, 2003 ............ 5.49% 0.54% (0.19)% 0.35% 11.36% 44% JUNE 1, 2001 TO MAY 31, 2002 ............ 5.87% 0.54% (0.19)% 0.35% 8.37% 65% JUNE 1, 2000 TO MAY 31, 2001 ............ 6.34% 0.54% (0.19)% 0.35% 13.55% 121% STABLE INCOME PORTFOLIO --------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ............ 2.06% 0.48% (0.12)% 0.36% 2.47% 43% JUNE 1, 2003 TO MAY 31, 2004 ............ 2.00% 0.52% (0.13)% 0.39% 0.88% 92% JUNE 1, 2002 TO MAY 31, 2003 ............ 2.63% 0.54% 0.00% 0.54% 3.32% 45% JUNE 1, 2001 TO MAY 31, 2002 ............ 3.62% 0.55% 0.00% 0.55% 3.99% 81% JUNE 1, 2000 TO MAY 31, 2001 ............ 5.89% 0.55% 0.00% 0.55% 8.34% 37% STRATEGIC VALUE BOND PORTFOLIO --------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ............ 5.12% 0.49% (0.03)% 0.46% 7.61% 45% JUNE 1, 2003 TO MAY 31, 2004 ............ 5.24% 0.54% (0.10)% 0.44% 3.06% 48% JUNE 1, 2002 TO MAY 31, 2003 ............ 5.81% 0.57% (0.02)% 0.55% 11.60% 41% JUNE 1, 2001 TO MAY 31, 2002 ............ 5.80% 0.60% (0.04)% 0.56% 8.30% 75% JUNE 1, 2000 TO MAY 31, 2001 ............ 6.31% 0.57% (0.02)% 0.55% 12.01% 149% TACTICAL MATURITY BOND PORTFOLIO --------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ............ 2.02% 0.49% (0.16)% 0.33% 2.53% 68% JUNE 1, 2003 TO MAY 31, 2004 ............ 1.77% 0.53% (0.22)% 0.31% (2.28)% 248% JUNE 1, 2002 TO MAY 31, 2003 ............ 2.05% 0.54% (0.18)% 0.36% 2.84% 115% JUNE 1, 2001 TO MAY 31, 2002 ............ 3.45% 0.55% (0.19)% 0.36% 0.70% 145% JUNE 1, 2000 TO MAY 31, 2001 ............ 5.58% 0.55% (0.19)% 0.36% 10.06% 83% THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 144
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NOTES TO FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL HIGHLIGHTS (1) During each period, various fees and expenses were waived and reimbursed as indicated. The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements (Note 3). (2) Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods of less than one year are not annualized. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 145
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 1. ORGANIZATION -------------------------------------------------------------------------------- Wells Fargo Master Trust (the "Trust") is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). As of May 31, 2005, the Trust has 18 separate investment portfolios. These financial statements present the Managed Fixed Income Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio, and Tactical Maturity Bond Portfolio (each, a "Fund" and collectively, the "Funds"). Interests in the Funds are sold without any sales charge in private placement transactions to qualified investors, including open-end management investment companies. 2. SIGNIFICANT ACCOUNTING POLICIES -------------------------------------------------------------------------------- The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America ("GAAP") for investment companies. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Trust may enter into contracts that provide certain indemnifications. The Trust's maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. SECURITY VALUATION Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on The NASDAQ Stock Market, Inc. are valued at the NASDAQ Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. In the absence of any sale of such securities, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, the valuations are based on the latest quoted bid prices. Certain fixed income securities with maturities exceeding 60 days are valued by using a pricing service approved by the Trust's Board of Trustees. The service uses market prices as quoted by an independent pricing service or by dealers in these securities when, in the service's judgment, these prices are readily available and are representative of the securities' market values. For some securities, such prices are not readily available. These securities will generally be fair valued using methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, indications as to values from dealers in securities, trading characteristics and general market conditions. Debt securities maturing in 60 days or less generally are valued at amortized cost. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value. Investments which are not valued using any of the methods discussed above, are valued at their fair value as determined by procedures approved by the Board of Trustees. SECURITY TRANSACTIONS AND INCOME RECOGNITION Securities transactions are recorded on a trade date basis. Realized gains or losses are reported on the basis of identified cost of securities delivered. Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. FEDERAL INCOME TAXES Each Fund of the Trust is treated as a separate entity for federal income tax purposes. The Funds of the Trust are not required to pay federal income taxes on their net investment income and net capital gain as they are treated as partnerships for federal income tax purposes. All interest, dividends, gains and losses of a Fund are deemed to have been "passed through" to the interestholders in proportion to their holdings of the Fund regardless of whether such interest, dividends, or gains have been distributed by the Fund. FUTURES CONTRACTS The Funds 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 146
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. At May 31, 2005, the following Funds held futures contracts: [Enlarge/Download Table] Notional Net Unrealized Expiration Contract Appreciation Portfolio Contracts Type Date Amount (Depreciation) -------------------------------------------------------------------------------------------------------------------- MANAGED FIXED INCOME PORTFOLIO 40 Long U.S. 10 Year Notes September 2005 $ 4,519,957 $ 10,668 -------------------------------------------------------------------------------------------------------------------- 75 Long U.S. Long Bond September 2005 8,726,367 81,445 -------------------------------------------------------------------------------------------------------------------- STABLE INCOME PORTFOLIO 25 Long 90 Day Euros March 2006 6,047,813 (44,375) -------------------------------------------------------------------------------------------------------------------- 35 Long 90 Day Euros March 2007 8,399,563 (10,937) -------------------------------------------------------------------------------------------------------------------- 25 Long 90 Day Euros June 2005 6,087,500 (51,250) -------------------------------------------------------------------------------------------------------------------- 25 Long 90 Day Euros June 2006 6,036,563 (36,875) -------------------------------------------------------------------------------------------------------------------- 35 Long 90 Day Euros June 2007 8,391,688 (5,250) -------------------------------------------------------------------------------------------------------------------- 25 Long 90 Day Euros September 2005 6,075,000 (58,437) -------------------------------------------------------------------------------------------------------------------- 25 Long 90 Day Euros September 2006 6,027,813 (31,563) -------------------------------------------------------------------------------------------------------------------- 35 Long 90 Day Euros September 2007 8,384,588 100 -------------------------------------------------------------------------------------------------------------------- 25 Long 90 Day Euros December 2005 6,060,000 (52,500) -------------------------------------------------------------------------------------------------------------------- 35 Long 90 Day Euros December 2006 8,406,563 (16,625) -------------------------------------------------------------------------------------------------------------------- STRATEGIC VALUE BOND PORTFOLIO 30 Long U.S. 10-Year Notes September 2005 3,389,968 8,001 -------------------------------------------------------------------------------------------------------------------- 25 Long U.S. Long Bond September 2005 2,908,789 27,149 SWAP CONTRACTS The Funds may enter into various hedging transactions, such as interest rate swaps to preserve a return or spread on a particular investment or portion of its portfolio, to create synthetic adjustable-rate mortgage securities or for other purposes. Swaps involve the exchange of commitments to make or receive payments, e.g., an exchange of floating-rate payments for fixed rate payments. The Funds record as an increase or decrease to realized gain/loss, the amount due or owed by the Funds at termination or settlement. Swaps are valued based on prices quoted by independent brokers. These valuations represent the net present value of all future cash settlement amounts based on implied forward interest rates or index values. As of May 31, 2005, the following Funds had open swap contracts: [Enlarge/Download Table] Net Swap Counter Notional Interest Rate/ Interest Rate/ Maturity Unrealized Portfolio Party Principal Index Received Index Paid Date Gain/(Loss) ------------------------------------------------------------------------------------------------------------------------------ STABLE INCOME Lehman Brothers $22,500,000 USD Libor BBA 5.08% 15-Oct-05 $(154,197) PORTFOLIO Lehman Brothers 15,000,000 USD Libor BBA 3.92% 25-Jul-07 180,360 ------------------------------------------------------------------------------------------------------------------------------ STRATEGIC VALUE Lehman Brothers BOND PORTFOLIO Lehman Brothers 2,000,000 U.S. High Yield USD Libor BBA 1-Feb-06 21,014 Index MORTGAGE DOLLAR ROLL TRANSACTIONS The Funds may engage in mortgage dollar roll transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar roll transaction, a Fund sells a mortgage-backed security to a financial institution, such as a bank or broker-dealer and simultaneously agrees to repurchase a substantially similar security from the institution at a later date at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories. 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 Funds account for the dollar roll transactions as purchases and sales. 147
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS The Funds may invest in repurchase agreements and may participate in pooled repurchase agreement transactions with other funds advised by Wells Fargo Funds Management, LLC. The repurchase agreements must be fully collateralized based on values that are marked to market daily. The collateral may be held by an agent bank under a tri-party agreement. It is the custodian's responsibility to value collateral daily and to take action to obtain additional collateral as necessary to maintain market value equal to or greater than the resale price. The repurchase agreements are collateralized by instruments such as U.S. Treasury, federal agency, or high-grade corporate obligations. There could be potential loss to a Fund in the event that such Fund is delayed or prevented from exercising its rights to dispose of the collateral, including the risk of a possible decline in the value of the underlying obligations during the period in which a Fund seeks to assert its rights. SECURITY LOANS The Funds may loan securities in return for securities, irrevocable letters of credit or cash collateral, which is invested in various short-term fixed income securities. A Fund may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Fund also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest when the transaction is entered into. If the collateral falls to 100%, it will be brought back to 102%. Gain or loss in the market price of the securities loaned that may occur during the term of the loan are reflected in the value of the Fund. The risks from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund. Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending agent for the Funds and receives for its services 35% of the revenues earned on the securities lending activities and incurs all expenses. The value of the securities on loan and the value of the related collateral at May 31, 2005 are shown on the Statement of Assets and Liabilities. WHEN-ISSUED TRANSACTIONS Each Fund may purchase securities on a forward commitment or `when-issued' basis. A Fund records a when-issued transaction on the trade date and will segregate with the custodian qualifying assets having a value sufficient to make payment for the securities purchased. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract. 3. EXPENSES -------------------------------------------------------------------------------- ADVISORY FEES The Trust has entered into an advisory contract with Wells Fargo Funds Management, LLC ("Funds Management"). The adviser is responsible for implementing investment policies and guidelines and for supervising the sub-adviser, who is responsible for day-to-day portfolio management. Pursuant to the contract, Funds Management is entitled to receive an advisory fee for its services as adviser. Funds Management may retain the services of certain investment sub-advisers to provide daily portfolio management. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by a Fund to the adviser. Funds Management and the investment sub-adviser(s) are entitled to be paid a monthly fee at the following annual rates: [Enlarge/Download Table] Sub-Advisory Advisory Fees* Fees (% of Average Daily (% of Average Average Daily Average Daily Portfolio Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets) ----------------------------------------------------------------------------------------------------------------------------------- MANAGED FIXED $0 - $499 million 0.450 Galliard $0 - $500 million 0.10 INCOME PORTFOLIO $500 million - $999 million 0.400 Capital $500 million - $1.5 billion 0.05 $1 billion - $2.99 billion 0.350 Management > $1.5 billion 0.03 $3 billion - $4.99 billion 0.325 > $4.99 billion 0.300 ----------------------------------------------------------------------------------------------------------------------------------- STABLE INCOME $0 - $499 million 0.450 Galliard $0 - $500 million 0.10 PORTFOLIO $500 million - $999 million 0.400 Capital $500 million - $1.5 billion 0.05 $1 billion - $2.99 billion 0.350 Management > $1.5 billion 0.03 $3 billion - $4.99 billion 0.325 > $4.99 billion 0.300 148
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[Enlarge/Download Table] Sub-Advisory Advisory Fees* Fees (% of Average Daily (% of Average Average Daily Average Daily Portfolio Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets) ------------------------------------------------------------------------------------------------------------------------------------ STRATEGIC VALUE $0 - $499 million 0.450 Galliard $0 - $500 million 0.10 BOND PORTFOLIO $500 million - $999 million 0.400 Capital $500 million - $1.5 billion 0.05 $1 billion - $2.99 billion 0.350 Management > $1.5 billion 0.03 $3 billion - $4.99 billion 0.325 > $4.99 billion 0.300 ------------------------------------------------------------------------------------------------------------------------------------ TACTICAL MATURITY $0 - $499 million 0.450 Peregrine $0 - $10 million 0.40 BOND PORTFOLIO $500 million - $999 million 0.400 Capital $10 million - $25 million 0.30 $1 billion - $2.99 billion 0.350 Manage- $25 million - $300 million 0.20 $3 billion - $4.99 billion 0.325 ment > $300 million 0.10 > $4.99 billion 0.300 * Effective August 2, 2004. Prior to August 2, 2004, Funds Management was entitled to be paid a monthly advisory fee at a rate of 0.50% of average daily net assets. ADMINISTRATION AND TRANSFER AGENT FEES Currently, there are no administration or transfer agency fees charged to the Master Trust. CUSTODY FEES The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"), whereby WFB is responsible for providing custody services. Pursuant to the contract, WFB is entitled to certain transaction charges plus a monthly fee for custody services at the following annual rates: (% of Average Portfolio Daily Net Assets) ---------------------------------------------------------------------------- ALL PORTFOLIOS 0.02 ---------------------------------------------------------------------------- OTHER FEES PFPC Inc. ("PFPC") serves as fund accountant for the Trust. PFPC currently does not receive a fee for its services, but is entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. WAIVED FEES AND REIMBURSED EXPENSES All amounts shown as waived fees or reimbursed expenses on the Statement of Operations, for the year ended May 31, 2005, were waived by Funds Management, first from advisory fees, and then any remaining amount consecutively from administration, custody and shareholder servicing fees collected, if any. 4. INVESTMENT PORTFOLIO TRANSACTIONS -------------------------------------------------------------------------------- Purchases and sales of investments, exclusive of short-term securities (securities with maturities of one year or less at purchase date) for the year ended May 31, 2005, were as follows: Portfolio Purchases at Cost Sales Proceeds -------------------------------------------------------------------------------- MANAGED FIXED INCOME PORTFOLIO $ 357,807,757 $ 348,585,104 -------------------------------------------------------------------------------- STABLE INCOME PORTFOLIO 346,071,130 543,735,708 -------------------------------------------------------------------------------- STRATEGIC VALUE BOND PORTFOLIO 99,912,540 97,792,461 -------------------------------------------------------------------------------- TACTICAL MATURITY BOND PORTFOLIO 362,321,357 254,776,920 5. SUBSEQUENT EVENTS -------------------------------------------------------------------------------- Effective on July 11, 2005, the Managed Fixed Income Portfolio acquired the assets and liabilities of the Strategic Value Bond Portfolio. 149
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO MASTER TRUST: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the Managed Fixed Income Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio, and Tactical Maturity Bond Portfolio, four of the portfolios constituting the Wells Fargo Master Trust (collectively the "Portfolios"), as of May 31, 2005, and the related statements of operations for the year then ended, statements of changes in net assets and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Portfolios' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2005, by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned Portfolios of Wells Fargo Master Trust as of May 31, 2005, the results of their operations for the year then ended, changes in their net assets and the financial highlights for the periods presented, in conformity with U.S. generally accepted accounting standards. [KPMG LOGO] Philadelphia, Pennsylvania July 22, 2005 150
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- PROXY VOTING INFORMATION A description of the policies and procedures that the Fund(s) uses to determine how to vote proxies relating to portfolio securities and information regarding the results of such voting during the most recent 12-month period ended June 30, is available without charge, upon request, by calling 1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS, or visiting the SEC Web site at WWW.SEC.GOV. PORTFOLIO HOLDINGS INFORMATION The Fund(s) files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available without charge by visiting the SEC Web site at WWW.SEC.GOV. In addition, the Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and 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 Master Trust (the "Trust"). This table supplements, and should be read in conjunction with, the Prospectus and the Statement of Additional Information* of each Fund. Each of the Trustees listed below acts in identical capacities for each of the 138 funds comprising the Trust, Wells Fargo Funds Trust and Wells Fargo Variable Trust (collectively the "Fund Complex"). All of the non-interested Trustees are also members of the Audit and Governance Committees of each Trust in the Fund Complex. The address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees. INTERESTED TRUSTEE** [Enlarge/Download Table] ---------------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ---------------------------------------------------------------------------------------------------------------------------- J. Tucker Morse Trustee, Private Investor/Real Estate None 60 since 1987 Developer; Chairman of White Point Capital, LLC. ---------------------------------------------------------------------------------------------------------------------------- NON-INTERESTED TRUSTEES ---------------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ---------------------------------------------------------------------------------------------------------------------------- Thomas S. Goho Trustee, Associate Professor of Finance, None 62 since 1987 Wake Forest University, Calloway School of Business and Accountancy. ---------------------------------------------------------------------------------------------------------------------------- Peter G. Gordon Trustee, Chairman, CEO, and Co- None 62 since 1998 Founder of Crystal Geyser (Chairman, since 2005) Water Company and President of Crystal Geyser Roxane Water Company. ---------------------------------------------------------------------------------------------------------------------------- Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None 71 of Richard M. Leach Associates (a financial consulting firm). ---------------------------------------------------------------------------------------------------------------------------- Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None 53 relations firm of Himle-Horner and Senior Fellow at the Humphrey Institute, Minneapolis, Minnesota (a public policy organization). ---------------------------------------------------------------------------------------------------------------------------- Donald C. Willeke Trustee, since 1996 Principal in the law firm of None 64 Willeke & Daniels. ---------------------------------------------------------------------------------------------------------------------------- 151
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WELLS FARGO ADVANTAGE MASTER PORTFOLI OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- OFFICERS [Enlarge/Download Table] ---------------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS ---------------------------------------------------------------------------------------------------------------------------- Karla M. President, Executive Vice President of None Rabusch since 2003 Wells Fargo Bank, N.A. 46 President of Wells Fargo Funds Management, LLC. Senior Vice President and Chief Administrative Officer of Wells Fargo Funds Management, LLC from 2001 to 2003. Vice President of Wells Fargo Bank, N.A. from 1997 to 2000. ---------------------------------------------------------------------------------------------------------------------------- Stacie D Treasurer, Senior Vice President of Wells None DeAngelo since 2003 Fargo Bank, N.A. Senior Vice 36 President of Operations for Wells Fargo Funds Management, LLC. Prior thereto, Operations Manager at Scudder Weisel Capital, LLC from 2000 to 2001, Director of Shareholder Services at BISYS Fund Services from 1999 to 2000. ---------------------------------------------------------------------------------------------------------------------------- C. David Messman Secretary, Vice President and Managing None 45 since 2000 Senior Counsel of Wells Fargo Bank, N.A. Senior Vice President and Secretary of Wells Fargo Funds Management, LLC. Vice President and Senior Counsel of Wells Fargo Bank, N.A. from 1996 to 2003. ---------------------------------------------------------------------------------------------------------------------------- * The Statement of Additional Information includes additional information about the Funds' Trustees and is available, without charge, upon request, by calling 1-800-222-8222. ** As of May 31, 2005, one of the six Trustees is considered an "interested person" of the Trusts as defined in the Investment Company Act of 1940. The interested Trustee, J. Tucker Morse, is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, which is not itself affiliated with Wells Fargo Funds Management, LLC. Robert C. Brown was an interested Trustee prior to his retirement on April 5, 2005. *** Length of service dates reflects a Trustee's commencement of service with the Trust's predecessor entities. 152
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS: DIVERSIFIED BOND FUND, HIGH YIELD BOND FUND, INCOME PLUS FUND, INFLATION-PROTECTED BOND FUND, INTERMEDIATE GOVERNMENT INCOME FUND, SHORT DURATION GOVERNMENT BOND FUND, STABLE INCOME FUND, STRATEGIC INCOME FUND, TOTAL RETURN BOND FUND, ULTRA-SHORT DURATION BOND FUND, MANAGED FIXED INCOME PORTFOLIO, STABLE INCOME PORTFOLIO, STRATEGIC VALUE BOND PORTFOLIO AND TACTICAL MATURITY BOND PORTFOLIO -------------------------------------------------------------------------------- Section 15(c) of the Investment Company Act of 1940 (the "1940 Act") contemplates that the Boards of Trustees (each, a "Board" and collectively, the "Boards") of Wells Fargo Funds Trust and Wells Fargo Master Trust (each, a "Trust" and collectively, the "Trusts"), including a majority of the Trustees who have no direct or indirect interest in the investment advisory and sub-advisory agreements and are not "interested persons" of each Trust, as defined in the 1940 Act (the "Independent Trustees"), will annually review and consider the continuation of the investment advisory and sub-advisory agreements. In this regard, the Boards reviewed and re-approved, during the most recent six months covered by this report: (i) an investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds Management") for the Diversified Bond Fund, High Yield Bond Fund, Income Plus Fund, Inflation-Protected Bond Fund, Intermediate Government Income Fund, Short Duration Government Bond Fund, Stable Income Fund, Strategic Income Fund, Total Return Bond Fund, Ultra-Short Duration Bond Fund, Managed Fixed Income Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio and Tactical Maturity Bond Portfolio; (ii) an investment sub-advisory agreement with Wells Capital Management Incorporated ("Wells Capital Management") for the Income Plus Fund, Inflation-Protected Bond Fund, Intermediate Government Income Fund, Short Duration Government Bond Fund, Strategic Income Fund, Total Return Bond Fund and Ultra-Short Duration Bond Fund; (iii) an investment sub-advisory agreement with Galliard Capital Management, Inc. ("Galliard") for the Managed Fixed Income Portfolio, Stable Income Fund, Stable Income Portfolio and Strategic Value Bond Portfolio; (iv) an investment sub-advisory agreement with Peregrine Capital Management, Inc. ("Peregrine") for the Tactical Maturity Bond Portfolio; and (v) an investment sub-advisory agreement with Sutter Advisors LLC ("Sutter") for the High Yield Bond Fund. The investment advisory agreements with Funds Management and the investment sub-advisory agreements with Wells Capital Management, Galliard, Peregrine and Sutter (the "Sub-Advisers"), are collectively referred to as the "Advisory Agreements." The funds and portfolios identified above are collectively referred to as the "Funds." More specifically, at meetings held on April 4, 2005, the Boards, including the Independent Trustees advised by their independent legal counsel, considered the factors and reached the conclusions described below relating to the selection of Funds Management and the Sub-Advisers, and the continuation of the Advisory Agreements. Because the Diversified Bond Fund is a gateway blended fund that invests all of its assets in the Managed Fixed Income Portfolio, Strategic Value Bond Portfolio and Tactical Maturity Bond Portfolio and the Stable Income Fund is a gateway feeder fund that invests all of its assets in the Stable Income Portfolio, which has a substantially similar investment objective and substantially similar investment strategies as the Stable Income Fund, information provided to the Boards regarding the Diversified Bond Fund and Stable Income Fund is also applicable to the Managed Fixed Income Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio and Tactical Maturity Bond Portfolio, as relevant. The Wells Fargo Funds Trust Board initially approved the Advisory Agreements for the Strategic Income Fund and Ultra-Short Duration Bond Fund at a meeting held August 9-10, 2004 in connection with its approval of the reorganization of the Strong Advisor Strategic Income Fund (the accounting survivor) into the Wells Fargo Advantage Strategic Income Fund and the Strong Advisor Short Duration Bond Fund (the accounting survivor) into the Wells Fargo Ultra-Short Duration Bond Fund (the "Reorganization"). The Reorganization was effective at the close of business on April 8, 2005. These Funds commenced operations on April 11, 2005. Accordingly, references to these Funds refer to either the predecessor funds or the Funds as the context requires. Similarly, references to the various fee rates refer to either the rates of the predecessor funds or those of these Funds as the context requires. NATURE, EXTENT AND QUALITY OF SERVICES -------------------------------------------------------------------------------- The Boards received and considered various data and information regarding the nature, extent and quality of services provided to the Funds (and that would be provided to the Strategic Income Fund and Ultra-Short Duration Bond Fund) by Funds Management and the Sub-Advisers under the Advisory Agreements. Responses of Funds Management and the Sub-Advisers to a detailed set of requests submitted by the Independent Trustees' independent legal counsel on behalf of such Trustees were provided to the Boards. The Boards reviewed and considered the data and information, which included, among other things, information about the background and experience of the senior management and the expertise of the investment personnel of Funds Management and the Sub-Advisers. 153
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- The Boards also considered the ability of Funds Management and the Sub-Advisers, based on their respective resources, reputations and other attributes, to attract and retain highly qualified investment professionals, including research, advisory, and supervisory personnel. In this connection, the Boards considered information regarding Funds Management's and each Sub-Adviser's compensation for its personnel involved in the management of the Funds (or that would be involved in the management of the Strategic Income Fund and Ultra-Short Duration Bond Fund). In addition, the Boards considered the effects of certain personnel changes in light of the acquisition of certain of the asset management arrangements of Strong Capital Management, Inc. ("Strong") by Wells Fargo & Company. The Boards further considered the compliance programs and compliance records of Funds Management and the Sub-Advisers. In addition, the Boards took into account the administrative services provided to the Funds (and those anticipated to be provided to the Strategic Income Fund and Ultra-Short Duration Bond Fund) by Funds Management and its affiliates. In considering these matters, the Boards considered not only the specific information presented in connection with the meetings, but also the knowledge gained over the course of interacting with Funds Management, including with respect to Funds Management's oversight of service providers, such as the investment sub-advisers. Based on the above factors, together with those referenced below, each of the Boards concluded that it was generally satisfied with the nature, extent and quality of the investment advisory services provided to the Funds by Funds Management and the Sub-Advisers. FUND PERFORMANCE AND EXPENSES -------------------------------------------------------------------------------- The Boards considered the performance results for each of the Funds over various time periods. They also considered these results in comparison to the median performance results of the group of funds that was determined to be the most similar to a given Fund (the "Peer Group") and to the median performance of a broader universe of relevant funds (the "Universe"), as well as to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment company data, determined the Peer Group and Universe for each Fund. The Boards were provided with a description of the methodology used by Lipper to select the mutual funds in each Fund's Peer Group and Universe. The Boards noted that the performance of each Fund, except for the Diversified Bond Fund, Income Plus Fund and Ultra-Short Duration Bond Fund, was better than, or not appreciably below, the median performance of each Fund's Peer Group for most time periods. The Wells Fargo Funds Trust Board noted that the Diversified Bond Fund's, Income Plus Fund's and Ultra-Short Duration Bond Fund's performance was lower than the median performance of each Fund's Peer Group for all time periods and required further review. Upon further review, the Board noted for the Ultra-Short Duration Bond Fund that the Fund's underperformance was explained, in part, by some credit issues experienced when the Fund was managed by certain Strong portfolio managers. In addition, the Board noted that there had been a portfolio manager change for the Ultra- Short Duration Bond Fund during the past year. The Board also asked for a further report on the Income Plus Fund's and Diversified Bond Fund's performance. The Boards received and considered information regarding each Fund's net operating expense ratio and its various components, including contractual advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. They also considered comparisons of these fees to the expense information for each Fund's Peer Group and Universe, which comparative data was provided by Lipper. The Boards noted that the net operating expense ratio of each Fund, except for the Inflation-Protected Bond Fund, Total Return Bond Fund and Ultra-Short Duration Bond Fund, was lower than, or not appreciably higher than, each Fund's Peer Group's median net operating expense ratio. The Board noted that the net operating expense ratios for certain classes of the Inflation-Protected Bond Fund, Total Return Bond Fund and Ultra-Short Duration Bond Fund were higher than their Peer Group's median net operating expense ratios, but the Board further noted that the Advisory Agreement Rates (as defined below) were within a reasonable range of the median rates of each Fund's Peer Group. Management also discussed the Lipper data and rankings, and other relevant information, for the Funds. Based on the above-referenced considerations and other factors, the Boards concluded that the overall performance and expense results supported the re-approval of the Advisory Agreements for the Funds. INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES -------------------------------------------------------------------------------- The Boards reviewed and considered the contractual investment advisory fee rates payable by the Funds to Funds Management for investment advisory services, both on a stand-alone basis and on a combined basis with the Funds' administration fee rates (the "Advisory Agreement Rates"). The Boards took into account the separate administration services covered by the administration fee rates. The Boards also reviewed and considered the contractual investment sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds Management to the Sub-Advisers for investment sub-advisory services. In addition, the Boards reviewed and considered the existing fee waiver/cap arrangements applicable to the 154
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- Advisory Agreement Rates and considered the Advisory Agreement Rates after taking the waivers/caps into account (the "Net Advisory Rates"). The Boards received and considered information comparing the Advisory Agreement Rates and Net Advisory Rates with those of the other funds in the Peer Groups. The Boards noted that the Advisory Agreement Rates and the Net Advisory Rates for the Funds were lower than, or not appreciably higher than, the median rates of each Fund's Peer Group. In addition, the Boards concluded that the combined investment advisory/administration fee rates for the Funds (before and after waivers/caps and/or expense reimbursements) were each reasonable in relation to each Fund's respective Peer Group, and reasonable in relation to the services provided. The Boards also reviewed and considered the Sub-Advisory Agreement Rates and concluded that the Sub-Advisory Agreement Rates were fair and equitable, based on their consideration of the factors described above. PROFITABILITY -------------------------------------------------------------------------------- The Boards received and considered a detailed profitability analysis of Funds Management based on the Advisory Agreement Rates and the Net Advisory Rates, as well as on other relationships between the Funds, as applicable, and Funds Management and its affiliates. Because the Strategic Income Fund and Ultra-Short Duration Bond Fund had not yet commenced operations, the Board of Wells Fargo Funds Trust did not consider the historical profitability with regard to Funds Management's arrangements with these Funds. The Boards concluded that, in light of the costs of providing investment management and other services to the Funds, the profits and other ancillary benefits that Funds Management and its affiliates received with regard to providing these services to the Funds were not unreasonable. The Board of Wells Fargo Funds Trust did not consider a separate profitability analysis of Wells Capital Management and Sutter, as their separate profitability from their relationship with the Funds was not a material factor in determining whether to renew the agreement. The Board of Wells Fargo Master Trust did not consider a separate profitability analysis of Galliard and Peregrine, which are not affiliated with Funds Management. The Board considered that the sub-advisory fees paid to Galliard and Peregrine had been negotiated by Funds Management on an arms length basis and that Galliard's and Peregrine's separate profitability from their relationship with the Funds was not a material factor in determining whether to renew the agreements. ECONOMIES OF SCALE -------------------------------------------------------------------------------- The Boards received and considered information regarding whether there have been economies of scale with respect to the management of the Funds, whether the Funds have appropriately benefited from any economies of scale, and whether there is potential for realization of further economies of scale. The Boards acknowledged the inherent limitations of any analysis of an investment adviser's economies of scale and of any attempt to correlate breakpoints with such economies, stemming largely from the Boards' understanding that economies of scale are realized, if at all, by an investment adviser across a variety of products and services, not just in respect to a single fund. The Boards concluded that any actual or potential economies of scale are, or would be, shared reasonably with Fund shareholders/interestholders, including most particularly through Advisory Agreement Rate breakpoints, which are applicable to the Funds. INFORMATION ABOUT SERVICES TO OTHER CLIENTS -------------------------------------------------------------------------------- The Board also received and considered information about the nature, extent and quality of services and fee rates offered by Funds Management to other similarly situated series within the Trusts, and those offered by the Sub-Advisers to other clients, including other registered investment companies and separate accounts. The Board concluded that the Advisory Agreement Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable range of the fee rates offered to others by Funds Management and the Sub-Advisers, giving effect to differences in services covered by such fee rates. OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS -------------------------------------------------------------------------------- The Boards received and considered information regarding potential "fall-out" or ancillary benefits received by Funds Management and its affiliates and the Sub-Advisers as a result of their relationship with the Funds. Such benefits could include, among others, benefits directly attributable to relationship of Funds Management and the Sub-Advisers with the Funds and benefits potentially derived from an increase in the business of Funds Management and the Sub-Advisers as a result of their relationship with the Funds (such as the ability to market to shareholders/interestholders other financial products offered by Funds Management and its affiliates or the Sub-Advisers and their affiliates). The Boards also considered the policies of the Funds in achieving the best execution of portfolio transactions, whether and to what extent soft dollar credits are, or would be, sought and how any such credits are, or would be, utilized, potential benefits that may be realized by using an affiliated broker, and 155
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WELLS FARGO ADVANTAGE MASTER PORTFOLIOS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- the controls applicable to brokerage allocation procedures. The Boards also took note of the policies of the Sub-Advisers regarding the allocation of portfolio investment opportunities among the Funds and other clients. OTHER FACTORS AND BROADER REVIEW -------------------------------------------------------------------------------- The Boards also considered the markets for distribution of the Funds, including the principal channels through which the Funds' shares/interests are offered and sold. The Boards noted that the Funds are now part of one of the few fund families that have both direct-to-fund and intermediary distribution. As discussed above, the Boards reviewed detailed materials received from Funds Management and the Sub-Advisers annually as part of the re-approval process under Section 15(c) of the 1940 Act. The Boards also regularly review and assess the quality of the services that the Funds receive throughout the year. In this regard, the Boards review reports of Funds Management and the Sub-Advisers at least quarterly, which include, among other things, a detailed portfolio review, and detailed fund performance reports. In addition, the Boards meet with the portfolio managers of the Funds at various times throughout the year. After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Boards concluded that approval of the continuation of the Advisory Agreements for the Funds was in the best interest of the Funds and their shareholders/interestholders. Accordingly, the Boards unanimously approved the continuation of the Advisory Agreements. 156
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LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE MASTER PORTFOLIOS -------------------------------------------------------------------------------- The following is a list of common abbreviations for terms and entities which may have appeared in this report. ABAG -- Association of Bay Area Governments ADR -- American Depositary Receipt AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax ARM -- Adjustable Rate Mortgages BART -- Bay Area Rapid Transit CDA -- Community Development Authority CDSC -- Contingent Deferred Sales Charge CGIC -- Capital Guaranty Insurance Company CGY -- Capital Guaranty Corporation CMT -- Constant Maturity Treasury COFI -- Cost of Funds Index Connie Lee -- Connie Lee Insurance Company COP -- Certificate of Participation CP -- Commercial Paper CTF -- Common Trust Fund DW&P -- Department of Water & Power DWR -- Department of Water Resources EDFA -- Education Finance Authority FFCB -- Federal Farm Credit Bank FGIC -- Financial Guaranty Insurance Corporation FHA -- Federal Housing Authority FHLB -- Federal Home Loan Bank FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association FRN -- Floating Rate Notes FSA -- Financial Security Assurance, Inc GDR -- Global Depositary Receipt GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority HFFA -- Health Facilities Financing Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue LIBOR -- London Interbank Offered Rate LLC -- Limited Liability Corporation LOC -- Letter of Credit LP -- Limited Partnership MBIA -- Municipal Bond Insurance Association MFHR -- Multi-Family Housing Revenue MUD -- Municipal Utility District MTN -- Medium Term Note PCFA -- Pollution Control Finance Authority PCR -- Pollution Control Revenue PFA -- Public Finance Authority PLC -- Private Placement PSFG -- Public School Fund Guaranty RAW -- Revenue Anticipation Warrants RDA -- Redevelopment Authority RDFA -- Redevelopment Finance Authority R&D -- Research & Development SFHR -- Single Family Housing Revenue SFMR -- Single Family Mortgage Revenue SLMA -- Student Loan Marketing Association STEERS -- Structured Enhanced Return Trust TBA -- To Be Announced TRAN -- Tax Revenue Anticipation Notes USD -- Unified School District V/R -- Variable Rate WEBS -- World Equity Benchmark Shares XLCA -- XL Capital Assurance
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WELLS ADVANTAGE FARGO FUNDS More information about WELLS FARGO ADVANTAGE FUNDS(SM) is available free upon request. To obtain literature, please write, e-mail, or call: WELLS FARGO ADVANTAGE FUNDS P.O. Box 8266 Boston, MA 02266-8266 E-mail: wfaf@wellsfargo.com Retail Investment Professionals: 888-877-9275 Institutional Investment Professionals: 866-765-0778 Web: www.wellsfargo.com/advantagefunds This report and the financial statements contained herein are submitted for the general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. For a prospectus containing more complete information, including charges and expenses, call 1-800-222-8222. Please consider the investment objective, risks, charges and expenses of the investment carefully before investing. This and other information about WELLS FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the prospectus carefully before you invest or send money. Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for the WELLS FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds. The Funds are distributed by WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells Fargo & Company. ------------------------------------------------------- NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE ------------------------------------------------------- [Enlarge/Download Table] -------------------------------------------------------------------------------------------------------------------------- (c) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | RT51599 07-05 AILD/AR103 05-05
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[LOGO] WELLS ADVANTAGE FARGO FUNDS MAY 31, 2005 ANNUAL REPORT WELLS FARGO ADVANTAGE INCOME FUNDS Wells Fargo Advantage Corporate Bond Fund Wells Fargo Advantage Government Securities Fund Wells Fargo Advantage High Income Fund Wells Fargo Advantage Short-Term Bond Fund Wells Fargo Advantage Short-Term High Yield Bond Fund Wells Fargo Advantage Ultra Short-Term Income Fund
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WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- PLEASE NOTE THAT THIS REPORT COVERS A SEVEN-MONTH PERIOD OF TIME, THE MAJORITY OF WHICH REPRESENTS A TIME PRIOR TO THE APRIL 11, 2005, REORGANIZATION WITH THE STRONG FUNDS. STRONG CAPITAL MANAGEMENT, INC. PROVIDED INVESTMENT MANAGEMENT SERVICES TO THESE FUNDS FROM THE BEGINNING OF THE REPORTING PERIOD THROUGH DECEMBER 31, 2004, AFTER WHICH TIME WELLS FARGO FUNDS MANAGEMENT, LLC TOOK OVER MANAGEMENT RESPONSIBILITIES THROUGH THE END OF THE REPORTING PERIOD. TABLE OF CONTENTS Letter to Shareholders .................................................... 1 -------------------------------------------------------------------------------- Performance Highlights -------------------------------------------------------------------------------- Corporate Bond Fund ................................................... 2 Government Securities Fund ............................................ 4 High Income Fund ...................................................... 6 Short-Term Bond Fund .................................................. 8 Short-Term High Yield Bond Fund ....................................... 10 Ultra Short-Term Income Fund .......................................... 12 Fund Expenses ............................................................. 14 -------------------------------------------------------------------------------- Portfolio of Investments -------------------------------------------------------------------------------- Corporate Bond Fund ................................................... 16 Government Securities Fund ............................................ 23 High Income Fund ...................................................... 31 Short-Term Bond Fund .................................................. 36 Short-Term High Yield Bond Fund ....................................... 46 Ultra Short-Term Income Fund .......................................... 50 Financial Statements -------------------------------------------------------------------------------- Statement of Assets and Liabilities ................................... 60 Statements of Operations .............................................. 62 Statements of Changes in Net Assets ................................... 66 Financial Highlights .................................................. 74 Notes to Financial Highlights ............................................. 80 -------------------------------------------------------------------------------- Notes to Financial Statements ............................................. 81 -------------------------------------------------------------------------------- Report of Independent Registered Public Accounting Firm ................... 92 -------------------------------------------------------------------------------- Other Information ......................................................... 93 -------------------------------------------------------------------------------- List of Abbreviations ..................................................... 98 -------------------------------------------------------------------------------- ------------------------------------------------- NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE -------------------------------------------------
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LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- DEAR VALUED SHAREHOLDER, I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now have access to an expanded array of mutual funds, giving you the flexibility to invest in a family of funds covering nearly every asset class and investment style. To learn more about our funds and the talented team of money managers behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. You can also call one of our investment service representatives now available 24 hours a day, 7 days a week, or speak with your investment professional. The following is your WELLS FARGO ADVANTAGE INCOME FUNDS annual report for the period ended May 31, 2005. On the following pages, you will find a discussion of the Funds, including performance highlights, the Fund managers' strategic outlook, and information about the Funds' portfolios. THE ECONOMY: CONTINUED EXPANSION -------------------------------------------------------------------------------- The cyclical expansion of the U.S. economy remains solid. Real gross domestic product (GDP), the most comprehensive measure of economic activity, grew at a 4.4% rate in 2004 and at a 3.8% rate in the first quarter of 2005, in spite of record high energy prices during the period. The price of crude oil shot upward in the summer of 2004, then declined somewhat in the final months of the year, but climbed to new record levels starting in the spring of 2005. Low interest rates and a strong housing sector helped offset the negative effects of high oil and gas prices. Solid growth in capital spending, fueled by strong cash flow and low borrowing costs, also contributed to economic growth. Rising energy prices pushed inflation upward during the reporting period. The consumer price index (CPI) rose at a 2.8% rate over the twelve months ended May 31, slightly slower than the 3.1% rate for the prior twelve months. The core CPI, which excludes the volatile food and energy components, was up only 2.2% this past year, versus 1.7% in the previous twelve months. With core inflation generally contained, The Federal Reserve (the Fed) was able to stay with a strategy of raising interest rates at a "measured pace." From late June 2004 through March 2005, the Fed raised the federal funds rate--its principal policy tool--from 1% to 3%. Additional increases in this rate are expected during the rest of 2005. Bond yields, however, did not increase with the federal funds rate and, as a result, mortgage rates remained unusually low and the housing sector remained very strong. BONDS: UNPRECEDENTED PERFORMANCE -------------------------------------------------------------------------------- Yields on most U.S. Treasury notes and bonds have declined as the federal funds rate has increased. Exceptional demand for U.S. Treasury securities from foreign investors and the tame core inflation data are two factors thought to be keeping bond yields low. The cyclical flattening in the yield curve has been one of the main elements contributing to good returns from bonds during most of the past twelve months. The high yield and investment grade segments of the corporate bond market continued to perform well during most of the period. In April and May 2005, however, downgrades of General Motors and Ford bonds caused those markets to underperform. In June, the corporate sectors recovered and again produced good returns. Municipal bonds generally performed better than most taxable sectors in 2004 and most of 2005. However, they lagged behind U.S. Treasuries in May. As a result, at the end of the period, municipal yields were very attractive relative to yields on comparable U.S. Treasuries. LOOKING AHEAD: LONG-TERM GROWTH? -------------------------------------------------------------------------------- We believe that the economy's first-quarter 2005 slowdown represents a temporary soft patch more than a sustained decline. As stock and bond investors seek to determine where inflation, interest rates, and corporate earnings are headed, we may see more unpredictable moves in the markets. Uncertainty and risk will always be a part of investing. We believe that one important thing you can do to manage risk is to own a broadly diversified portfolio with stocks, bonds, and cash that can help you weather unexpected market shifts. While diversification may not prevent losses in a downturn, it may help reduce them and keep you on track to reach your financial goals. Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your confidence in us. Through each market cycle, we are committed to helping you meet your financial needs. If you have any questions about your investment, please contact your investment professional, or call us at 1-800-222-8222. You may also visit our enhanced Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. Sincerely, /s/ Karla M. Rabusch Karla M. Rabusch President WELLS FARGO ADVANTAGE FUNDS 1
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE CORPORATE BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE CORPORATE BOND FUND (the Fund) seeks current income while maintaining prospects for capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE D. James Newton II, CFA, CPA 12/12/1985 Janet S. Rilling, CFA, CPA HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Investor Class shares returned 1.95%(1) for the seven-month period ended May 31, 2005, underperforming the Lehman Brothers U.S. Aggregate Bond Index(2), which returned 2.08%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The first half of the period was good for corporate bonds as many companies continued to improve their balance sheets and the strength of the economy fostered solid corporate earnings. Strong demand for corporate bonds also helped the sector's performance. However, as 2005 unfolded, the pace of shareholder-friendly activity picked up. This activity, which included share repurchases, stock buybacks, and leveraged buyouts, was increasingly harmful to the interests of bondholders. In addition, investors' concern about the credit quality of the U.S. auto industry grew as their operating performance remained below expectations. These two events led to some softness in the market during March and April 2005. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- Four important management factors regularly affect the performance of the Corporate Bond Fund: duration, yield curve positioning, industry weightings, and security selection. During the period, yield curve positioning, industry weightings, and security selection had the most significant influence on the Fund's performance. Our yield curve positioning had a positive impact on the Fund's performance. During the period, we employed a curve flattener strategy, meaning that we were underweight shorter maturity securities, as compared to the benchmark, and overweight securities with longer maturities. This strategy proved successful as the Federal Reserve Board's rate hikes caused short rates to rise and long rates to fall. Our holdings in both the cable and the telecommunication sectors also benefited the portfolio. Our cable bonds improved as a result of their solid operating results and strong cash flow generation. Consolidation in the wireless telecommunication caused our holdings in the sector to outperform the benchmark. Our holdings in the supermarket sector, on the other hand, had a negative impact on performance. We held a greater position in supermarket bonds because we believed companies such as Safeway, Kroger, and Albertson's were going to maintain solid credit quality in order to effectively compete with Wal-Mart. During the period, however, bond investors became increasingly concerned about the potential for leveraged buyouts (LBO's) in the sector. Fears about increasing leverage also negatively impacted some of our other holdings including J.C. Penney and Fidelity National Financial, Inc. Of final note, the Fund also invested in fixed-income derivative securities--primarily exchange-traded U.S. Treasury futures contracts and exchange-traded Eurodollar futures contracts--to help manage the portfolio's duration. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- The outlook for the corporate bond market is generally mixed. Corporate management teams are increasingly using leverage to help benefit shareholders, a trend we are monitoring closely. The condition of auto companies, primarily General Motors and Ford, is another headwind as the companies' credit ratings migrate to the below investment-grade category. On a positive note, we expect corporate earnings and cash flow to remain strong if the economy remains supportive. We believe the modest supply of new corporate bonds is another positive factor for the corporate bond market. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE CORPORATE BOND FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. These operating expense reductions can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. 2
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Download Table] Excluding Sales Charge ---------------------------------- 6-Month* 1-Year 5-Year 10-Year ------- ------ ------ ------- Corporate Bond Fund - Advisor Class 2.61 8.09 6.81 6.66 Corporate Bond Fund - Institutional Class 2.84 8.65 7.41 7.11 Corporate Bond Fund - Investor Class 2.62 8.25 6.95 6.85 Benchmark Lehman Brothers U.S. Aggregate Bond Index(2) 2.90 6.82 7.73 6.85 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 85% -------------------------------------------------------------------------------- Average Credit Quality(4) Baa1 -------------------------------------------------------------------------------- Weighted Average Coupon 6.61% -------------------------------------------------------------------------------- Estimated Weighted Average Life 11.83 years -------------------------------------------------------------------------------- Estimated Average Duration 6.45 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Adv, Inst, Inv Class) $10.58, $10.57, $10.59 -------------------------------------------------------------------------------- Distribution Rate(5) (Adv, Inst, Inv Class) 4.67%, 5.06%, 4.63% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Adv, Inst, Inv Class) 4.58%, 4.98%, 4.55% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Corporate Bonds 87% Foreign Government Bonds 3% Municipal Bonds 1% U.S. Treasury Bonds 3% U.S. Treasury Notes 4% Cash Management 2% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE LEHMAN BROTHERS CORPORATE BOND FUND - U.S. AGGREGATE INVESTOR CLASS BOND INDEX --------------------- --------------- 5/31/1995 10000 10,000 6/30/1995 10109 10,073 7/31/1995 10101 10,051 8/31/1995 10279 10,172 9/30/1995 10406 10,271 10/31/1995 10584 10,405 11/30/1995 10751 10,560 12/31/1995 11033 10,709 1/31/1996 11107 10,780 2/29/1996 10856 10,592 3/31/1996 10778 10,519 4/30/1996 10709 10,460 5/31/1996 10693 10,438 6/30/1996 10808 10,579 7/31/1996 10890 10,608 8/31/1996 10913 10,590 9/30/1996 11136 10,774 10/31/1996 11429 11,013 11/30/1996 11713 11,202 12/31/1996 11643 11,098 1/31/1997 11742 11,131 2/28/1997 11844 11,159 3/31/1997 11640 11,035 4/30/1997 11797 11,201 5/31/1997 11965 11,307 6/30/1997 12157 11,441 7/31/1997 12605 11,749 8/31/1997 12468 11,649 9/30/1997 12663 11,821 10/31/1997 12744 11,992 11/30/1997 12842 12,048 12/31/1997 13027 12,169 1/31/1998 13228 12,325 2/28/1998 13221 12,316 3/31/1998 13266 12,358 4/30/1998 13338 12,423 5/31/1998 13554 12,540 6/30/1998 13686 12,647 7/31/1998 13679 12,674 8/31/1998 13672 12,880 9/30/1998 13908 13,182 10/31/1998 13616 13,112 11/30/1998 13846 13,186 12/31/1998 13971 13,226 1/31/1999 14161 13,320 2/28/1999 13866 13,088 3/31/1999 14028 13,160 4/30/1999 14117 13,202 5/31/1999 13895 13,086 6/30/1999 13814 13,045 7/31/1999 13814 12,989 8/31/1999 13724 12,983 9/30/1999 13860 13,133 10/31/1999 13913 13,182 11/30/1999 13948 13,181 12/31/1999 13939 13,117 1/31/2000 13937 13,074 2/29/2000 14098 13,232 3/31/2000 14168 13,407 4/30/2000 14027 13,368 5/31/2000 13864 13,362 6/30/2000 14353 13,640 7/31/2000 14541 13,764 8/31/2000 14725 13,964 9/30/2000 14747 14,052 10/31/2000 14710 14,145 11/30/2000 14755 14,377 12/31/2000 15038 14,644 1/31/2001 15542 14,884 2/28/2001 15697 15,014 3/31/2001 15791 15,089 4/30/2001 15778 15,025 5/31/2001 15928 15,116 6/30/2001 15904 15,173 7/31/2001 16383 15,513 8/31/2001 16468 15,691 9/30/2001 16086 15,875 10/31/2001 16342 16,207 11/30/2001 16205 15,983 12/31/2001 16066 15,881 1/31/2002 15967 16,009 2/28/2002 15908 16,165 3/31/2002 15581 15,896 4/30/2002 15606 16,205 5/31/2002 15703 16,342 6/30/2002 15424 16,484 7/31/2002 14924 16,683 8/31/2002 15360 16,964 9/30/2002 15557 17,239 10/31/2002 15409 17,161 11/30/2002 15759 17,156 12/31/2002 16289 17,510 1/31/2003 16365 17,525 2/28/2003 16760 17,768 3/31/2003 16879 17,754 4/30/2003 17280 17,901 5/31/2003 17868 18,234 6/30/2003 17854 18,197 7/31/2003 17041 17,586 8/31/2003 17222 17,702 9/30/2003 17882 18,171 10/31/2003 17720 18,002 11/30/2003 17861 18,045 12/31/2003 18159 18,229 1/31/2004 18370 18,375 2/29/2004 18557 18,574 3/31/2004 18718 18,714 4/30/2004 18098 18,227 5/31/2004 17922 18,154 6/30/2004 18011 18,258 7/31/2004 18262 18,438 8/31/2004 18684 18,790 9/30/2004 18807 18,841 10/31/2004 19029 18,999 11/30/2004 18905 18,847 12/31/2004 19216 19,021 1/31/2005 19392 19,141 2/28/2005 19314 19,028 3/31/2005 18973 18,931 4/30/2005 19142 19,186 5/31/2005 19401 19,394 -------------------------------------------------------------------------------- Performance shown for the Advisor Class, Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE CORPORATE BOND FUND for periods prior to April 11, 2005, reflects the performance of the Advisor Class, Institutional Class and Investor Class shares, respectively, of the Strong Corporate Bond Fund, its predecessor fund. Effective at the close of business on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Advisor Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect expenses of the Advisor Class. Performance shown for the Institutional Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares, and has not been adjusted for the lower expenses of the Institutional Class. (2) Lehman Brothers U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. You cannot invest directly in an index. (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE CORPORATE BOND FUND Investor Class for the most recent ten years with the Lehman Brothers U.S. Aggregate Bond Index. The chart assumes a hypothetical investment of $10,000 in the Investor Class shares and reflects all operating expenses. 3
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND (the Fund) seeks current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE W. Frank Koster 10/29/1986 Jay N. Mueller, CFA HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Investor Class shares returned 1.87%(1) for the seven-month period ended May 31, 2005, underperforming its broad-based benchmark, the Lehman Brothers Intermediate U.S. Government Bond Index(2), which returned 2.28%, and underperforming the Lehman Brothers U.S. Aggregate Bond Index(3), which returned 2.08%, for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR CLASS C SHARES, THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE IS 1.00%. PERFORMANCE INCLUDING SALES CHARGE ASSUMES THE SALES CHARGE FOR THE CORRESPONDING TIME PERIOD. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. ADMINISTRATOR CLASS, ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The most pronounced feature of the market for U.S. Government securities over the period was the divergence between short-term and long-term interest rates. Following the lead of the Federal Reserve's Open Market Committee, three-month U.S. Treasury bill rates rose from less than 2% to nearly 3% during the period. Yields on two-year U.S. Treasury notes climbed by more than 1%. In contrast, the market yield on the longest outstanding U.S. Treasury Bond, due in 2031, actually declined by more than 1%. Performing between the two extremes were five-year notes, which yielded about 3.74% at the end of the period versus about 3.80% a year ago. We believe that the Fund was well positioned for this period of "yield curve flattening." Significant holdings in the 2023, 2026 and 2031 U.S. Treasuries allowed us to participate in the gains at the long end of the curve. A lower portfolio duration than that of our broad-based benchmark index gave the Fund a degree of relief from the value erosion experienced in intermediate- and short-term bonds. Detracting from performance was our underweighting in the debt of U.S. government-sponsored entities (generically known as "agencies") such as Fannie Mae and Freddie Mac. We were concerned about the potential for unfavorable legislative and regulatory events for the agencies, as well as the stress potentially placed on their balance sheets due to a significant rise in short-term interest rates. Though Fannie Mae and Freddie Mac drew some negative headlines over the last year, their debt securities actually performed well. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- In addition to the yield curve and average duration positions noted above, we pursued incremental return through sector allocation decisions and individual issue selection. Relative to benchmark, we maintained a larger weighting in mortgage-backed securities (MBS) throughout the period, which was rewarded through a narrowing of option-adjusted spread (OAS) for the mortgage market as a whole. (OAS is a method of calculating the yield premium expected to be earned by an investor in MBS, adjusted for the estimated value of the homeowner's right to prepay a portion or all of the outstanding principal on a mortgage.) Issue selection decisions had their primary impact in the MBS sector, where the trade-off between extra yield and unwanted prepayment risk must be evaluated on a security-by-security basis. We found several opportunities in floating-rate MBS that were in line with our views on the shape of the yield curve and overall direction of interest rates. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe the economic climate will remain reasonably strong in coming months with potential growth of gross domestic product and employment. Our biggest concern is the persistence of inflationary pressures, which may not be isolated to energy and other commodity prices. Against this backdrop, we believe that the Federal Reserve Board may continue to increase the overnight rate target. Unless inflation figures become substantially worse, we believe the tightening of monetary policy should lead to more flattening in the yield curve. We expect our strategies for the Fund to continue on the same path with shorter-than-benchmark duration holdings and a modest overweight in longer maturity bonds relative to the broad-based index. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE U.S. GOVERNMENT GUARANTEE APPLIES TO CERTAIN OF THE UNDERLYING SECURITIES AND NOT TO SHARES OF THE FUND. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. These operating expense reductions can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. 4
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ----------------------------------- ---------------------------------- 6-Month* 1-Year 5-Year 10-Year 6-Month* 1-Year 5-Year 10-Year ------- ------ ------ ------- ------- ------ ------ ------- Government Securities Fund - Class C 0.95 3.72 6.15 5.32 1.95 4.72 6.15 5.32 Government Securities Fund - Administrator Class 2.72 6.27 7.54 6.59 Government Securities Fund - Advisor Class 2.58 5.80 7.12 6.20 Government Securities Fund - Institutional Class 2.85 6.50 7.80 6.75 Government Securities Fund - Investor Class 2.60 5.89 7.29 6.45 Benchmarks Lehman Brothers Intermediate U.S. Government Bond Index(2) 1.84 4.06 6.45 6.03 Lehman Brothers U.S. Aggregate Bond Index(3) 2.90 6.82 7.73 6.85 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 139% -------------------------------------------------------------------------------- Average Credit Quality(5) Aa1 -------------------------------------------------------------------------------- Weighted Average Coupon 6.43% -------------------------------------------------------------------------------- Estimated Weighted Average Life 4.14 years -------------------------------------------------------------------------------- Estimated Average Duration 3.47 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Class C, Admin, Adv, Inst, Inv) $10.77, $10.77, $10.77, $10.77, $10.77 -------------------------------------------------------------------------------- Distribution Rate(6) (Class C, Admin, Adv, Inst, Inv) 3.24%, 4.24%, 3.98%, 4.45%, 3.88% -------------------------------------------------------------------------------- 30-Day SEC Yield(7) (Class C, Admin, Adv, Inst, Inv) 2.64%, 3.58%, 3.38%, 3.85%, 3.28% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 3% Cash Management 6% Collateralized Mortgage Securities 21% Corporate Bonds 1% FHLB 1% FHLMC 12% FNMA 36% GNMA 2% Municipal Bonds 2% U.S. Treasury Bonds 13% U.S. Treasury Notes 3% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE LEHMAN BROTHERS LEHMAN BROTHERS GOVERNMENT SECURITIES U.S. AGGREGATE INTERMEDIATE U.S. FUND - INVESTOR CLASS BOND INDEX GOVERNMENT BOND INDEX --------------------- --------------- --------------------- 5/31/1995 10,000 10,000 10,000 6/30/1995 10,081 10,073 10,064 7/31/1995 10,060 10,051 10,069 8/31/1995 10,201 10,172 10,152 9/30/1995 10,304 10,271 10,220 10/31/1995 10,437 10,405 10,332 11/30/1995 10,595 10,560 10,458 12/31/1995 10,766 10,709 10,561 1/31/1996 10,815 10,780 10,650 2/29/1996 10,593 10,592 10,537 3/31/1996 10,531 10,519 10,489 4/30/1996 10,461 10,460 10,459 5/31/1996 10,406 10,438 10,453 6/30/1996 10,486 10,579 10,559 7/31/1996 10,528 10,608 10,592 8/31/1996 10,524 10,590 10,604 9/30/1996 10,684 10,774 10,741 10/31/1996 10,917 11,013 10,917 11/30/1996 11,139 11,202 11,049 12/31/1996 11,069 11,098 10,990 1/31/1997 11,121 11,131 11,032 2/28/1997 11,166 11,159 11,050 3/31/1997 11,051 11,035 10,987 4/30/1997 11,167 11,201 11,111 5/31/1997 11,257 11,307 11,197 6/30/1997 11,390 11,441 11,293 7/31/1997 11,708 11,749 11,502 8/31/1997 11,613 11,649 11,458 9/30/1997 11,778 11,821 11,582 10/31/1997 11,905 11,992 11,717 11/30/1997 11,957 12,048 11,743 12/31/1997 12,071 12,169 11,838 1/31/1998 12,235 12,325 11,993 2/28/1998 12,222 12,316 11,980 3/31/1998 12,250 12,358 12,018 4/30/1998 12,315 12,423 12,075 5/31/1998 12,430 12,540 12,158 6/30/1998 12,543 12,647 12,240 7/31/1998 12,560 12,674 12,287 8/31/1998 12,788 12,880 12,519 9/30/1998 13,065 13,182 12,811 10/31/1998 12,982 13,112 12,833 11/30/1998 13,016 13,186 12,793 12/31/1998 13,053 13,226 12,843 1/31/1999 13,139 13,320 12,900 2/28/1999 12,900 13,088 12,723 3/31/1999 12,983 13,160 12,808 4/30/1999 13,015 13,202 12,842 5/31/1999 12,908 13,086 12,764 6/30/1999 12,881 13,045 12,782 7/31/1999 12,853 12,989 12,784 8/31/1999 12,827 12,983 12,802 9/30/1999 12,954 13,133 12,912 10/31/1999 12,975 13,182 12,937 11/30/1999 12,958 13,181 12,946 12/31/1999 12,911 13,117 12,906 1/31/2000 12,892 13,074 12,862 2/29/2000 13,036 13,232 12,969 3/31/2000 13,196 13,407 13,117 4/30/2000 13,165 13,368 13,112 5/31/2000 13,141 13,362 13,147 6/30/2000 13,392 13,640 13,356 7/31/2000 13,505 13,764 13,444 8/31/2000 13,678 13,964 13,594 9/30/2000 13,768 14,052 13,713 10/31/2000 13,882 14,145 13,807 11/30/2000 14,112 14,377 14,010 12/31/2000 14,373 14,644 14,257 1/31/2001 14,588 14,884 14,446 2/28/2001 14,719 15,014 14,579 3/31/2001 14,805 15,089 14,684 4/30/2001 14,717 15,025 14,637 5/31/2001 14,794 15,116 14,697 6/30/2001 14,846 15,173 14,744 7/31/2001 15,172 15,513 15,020 8/31/2001 15,352 15,691 15,154 9/30/2001 15,589 15,875 15,477 10/31/2001 15,948 16,207 15,718 11/30/2001 15,717 15,983 15,531 12/31/2001 15,631 15,881 15,456 1/31/2002 15,719 16,009 15,523 2/28/2002 15,865 16,165 15,650 3/31/2002 15,560 15,896 15,414 4/30/2002 15,913 16,205 15,702 5/31/2002 16,039 16,342 15,812 6/30/2002 16,215 16,484 16,010 7/31/2002 16,540 16,683 16,311 8/31/2002 16,809 16,964 16,498 9/30/2002 17,128 17,239 16,781 10/31/2002 17,059 17,161 16,770 11/30/2002 16,943 17,156 16,637 12/31/2002 17,265 17,510 16,944 1/31/2003 17,268 17,525 16,907 2/28/2003 17,495 17,768 17,098 3/31/2003 17,475 17,754 17,101 4/30/2003 17,566 17,901 17,150 5/31/2003 17,912 18,234 17,419 6/30/2003 17,829 18,197 17,391 7/31/2003 17,228 17,586 16,968 8/31/2003 17,322 17,702 16,999 9/30/2003 17,776 18,171 17,368 10/31/2003 17,568 18,002 17,198 11/30/2003 17,580 18,045 17,199 12/31/2003 17,748 18,229 17,333 1/31/2004 17,891 18,375 17,427 2/29/2004 18,099 18,574 17,593 3/31/2004 18,233 18,714 17,716 4/30/2004 17,713 18,227 17,319 5/31/2004 17,642 18,154 17,263 6/30/2004 17,726 18,258 17,307 7/31/2004 17,862 18,438 17,431 8/31/2004 18,177 18,790 17,689 9/30/2004 18,245 18,841 17,696 10/31/2004 18,337 18,999 17,804 11/30/2004 18,207 18,847 17,639 12/31/2004 18,334 19,021 17,734 1/31/2005 18,437 19,141 17,757 2/28/2005 18,341 19,028 17,658 3/31/2005 18,297 18,931 17,613 4/30/2005 18,533 19,186 17,819 5/31/2005 18,681 19,394 17,961 -------------------------------------------------------------------------------- Performance shown for the Class C, Administrator Class, Advisor Class, Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND for periods prior to April 11, 2005, reflects the performance of the Class C, Investor Class, Advisor Class, Institutional Class and Investor Class shares, respectively, of the Strong Government Securities Fund, its predecessor fund. Effective at the close of business on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Class C shares of the Fund for periods prior to December 26, 2002, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect the Class C shares sales charges and expenses. Performance shown for the Administrator Class shares reflects the performance of the predecessor fund's Investor Class shares, and has not been adjusted for the lower expenses of the Administrator Class. The Investor Class shares annual returns are substantially similar to what the Administrator Class shares would be because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent the Classes do not have the same expenses. Performance shown for the Advisor Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect the expenses of the Advisor Class. Performance shown for the Institutional Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares, and has not been adjusted for the lower expenses of the Institutional Class. (2) The Lehman Brothers Intermediate U.S. Government Bond Index is an unmanaged index composed of U.S. Government securities with maturities in the one- to ten-year range, including securities issued by the U.S. Treasury and U.S. Government agencies. You cannot invest directly in an index. (3) Lehman Brothers U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. You cannot invest directly in an index. (4) Portfolio holdings and characteristics are subject to change. (5) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (6) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (7) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND Investor Class shares for the most recent ten years with the Lehman Brothers Intermediate U.S. Government Bond Index and the Lehman Brothers U.S. Aggregate Bond Index. The chart assumes a hypothetical investment of $10,000 in the Investor Class shares and reflects all operating expenses. 5
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE HIGH INCOME FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE HIGH INCOME FUND (the Fund) seeks total return with a high level of current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGER INCEPTION DATE Thomas M. Price, CFA 12/28/1995 HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Investor Class shares returned 1.35%(1) for the seven-month period ended May 31, 2005, underperforming its benchmark, the Lehman Brothers U.S. High-Yield Index(2), which returned 1.85%. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. ADVISOR CLASS, INSTITUTIONAL CLASS AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Yield spreads relative to U.S. Treasuries narrowed to record levels by early March 2005, but overall, ended up wider for the period. The Lehman Brothers U.S. High-Yield Index return was limited as wider spreads led to price declines, offsetting much of the benefit of the interest income. Our expectation was for higher interest rates, but the 10-year U.S. Treasury yield was virtually flat during the period. We had lowered the Fund's sensitivity to rate changes by purchasing shorter-maturity holdings, which generated lower interest income than the benchmark. The rally in the high-yield market through early March 2005 was due to solid economic growth, good corporate earnings, and low default rates leading to strong demand from institutional investors looking for higher yields. We believed that the high-yield bond market was becoming overvalued, but were unsure of the catalyst that would drive the market lower in the near-term. The catalyst was General Motors (GM), which announced weaker than expected February 2005 sales in early March, followed by lower earnings guidance for all of 2005. This was followed by a downgrade of its debt to high-yield status in May 2005. The lower bond prices for GM carried over to the rest of the high-yield market. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- During the period, we were concerned with the recent trend toward slower economic growth, particularly with high commodity prices and rising short-term interest rates. Accordingly, we have been slowly increasing the Fund's credit quality to higher-quality BB-rated bonds. We also increased the Fund's weighting in floating-rate securities to approximately 15% to help protect against higher rates. This exposure hindered performance until the market weakened at the end of the period. From an industry standpoint, we continued to maintain the Fund's larger weighting in several cyclical industries--including chemicals, metals, and other industrials--to potentially benefit from current economic growth and higher commodity prices. Conversely, we decreased our position in the automotive, airline, technology, and utility industries. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe demand for high-yield bonds will remain at reasonably healthy levels. However, we are closely monitoring a few factors that we believe could affect the market. Our biggest concern is that with GM and Ford being downgraded to non-investment grade status, there could be additional selling over the next several months, which could spillover to other high yield holdings. Additionally, further rate hikes from the Federal Reserve (the Fed) could lead to weaker economic conditions. Finally, hedge fund investors have been an important source of demand for high-yield securities. If demand from this group were to deteriorate significantly, high-yield prices would be expected to weaken. We expect to continue on our recent path of allocating a portion of the portfolio to floating-rate securities seeking to benefit from continued Fed tightening. Additionally, we anticipate repositioning the portfolio into higher-quality securities and into industries that we believe may outperform in the current market conditions. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Fund's manager. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE HIGH INCOME FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. These operating expense reductions can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. 6
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Excluding Sales Charge ------------------------------------------- 6-Month* 1-Year 5-Year Life of Fund ------- ------ ------ ------------ High Income Fund - Advisor Class (Incept. Date 2/29/2000) 0.11 8.65 3.36 6.93 High Income Fund - Institutional Class (Incept. Date 7/31/2001) 0.42 9.62 4.10 7.47 High Income Fund - Investor Class (Incept. Date 12/28/1995) 0.29 8.74 3.61 7.20 Benchmark Lehman Brothers U.S. High-Yield Index(2) 0.64 10.28 7.48 6.56 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 52% -------------------------------------------------------------------------------- Average Credit Quality(4) B2 -------------------------------------------------------------------------------- Weighted Average Coupon 7.76% -------------------------------------------------------------------------------- Estimated Weighted Average Life 4.87 years -------------------------------------------------------------------------------- Estimated Average Duration 3.60 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Adv, Inst, Inv Class) $7.63, $7.69, $7.66 -------------------------------------------------------------------------------- Distribution Rate(5) (Adv, Inst, Inv Class) 6.87%, 7.32%, 6.91% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Adv, Inst, Inv Class) 6.90%, 7.38%, 6.95% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Cash Equivalents 8% Cash Management 4% Corporate Bonds 88% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE LEHMAN BROTHERS HIGH INCOME FUND - U.S. HIGH- YIELD INVESTOR CLASS INDEX --------------------- ---------------- 12/28/1995 10000 10,000 12/31/1995 10031 10,005 1/31/1996 10444 10,181 2/29/1996 10767 10,189 3/31/1996 10850 10,182 4/30/1996 11001 10,205 5/31/1996 11271 10,266 6/30/1996 11425 10,351 7/31/1996 11496 10,399 8/31/1996 11681 10,512 9/30/1996 12076 10,765 10/31/1996 12166 10,848 11/30/1996 12447 11,062 12/31/1996 12723 11,141 1/31/1997 12944 11,250 2/28/1997 13216 11,436 3/31/1997 12917 11,265 4/30/1997 13049 11,384 5/31/1997 13379 11,628 6/30/1997 13605 11,789 7/31/1997 13954 12,113 8/31/1997 14018 12,085 9/30/1997 14358 12,325 10/31/1997 14274 12,336 11/30/1997 14482 12,453 12/31/1997 14754 12,563 1/31/1998 15100 12,789 2/28/1998 15202 12,864 3/31/1998 15406 12,985 4/30/1998 15471 13,036 5/31/1998 15577 13,081 6/30/1998 15648 13,128 7/31/1998 15812 13,203 8/31/1998 14779 12,474 9/30/1998 14816 12,531 10/31/1998 14399 12,274 11/30/1998 15258 12,783 12/31/1998 15206 12,797 1/31/1999 15569 12,987 2/28/1999 15485 12,911 3/31/1999 15757 13,034 4/30/1999 16104 13,286 5/31/1999 15855 13,107 6/30/1999 15876 13,079 7/31/1999 15890 13,131 8/31/1999 15833 12,986 9/30/1999 15734 12,893 10/31/1999 15804 12,807 11/30/1999 16068 12,958 12/31/1999 16394 13,103 1/31/2000 16429 13,047 2/29/2000 16637 13,072 3/31/2000 16158 12,797 4/30/2000 16238 12,818 5/31/2000 16125 12,686 6/30/2000 16510 12,945 7/31/2000 16548 13,043 8/31/2000 16738 13,133 9/30/2000 16631 13,018 10/31/2000 16110 12,601 11/30/2000 14733 12,102 12/31/2000 15234 12,336 1/31/2001 16812 13,260 2/28/2001 16856 13,436 3/31/2001 16247 13,120 4/30/2001 16068 12,957 5/31/2001 16137 13,190 6/30/2001 15431 12,820 7/31/2001 15521 13,009 8/31/2001 15589 13,162 9/30/2001 14225 12,277 10/31/2001 14491 12,581 11/30/2001 15144 13,040 12/31/2001 15126 12,987 1/31/2002 15330 13,077 2/28/2002 14998 12,895 3/31/2002 15163 13,205 4/30/2002 15151 13,411 5/31/2002 14849 13,342 6/30/2002 13807 12,358 7/31/2002 13206 11,818 8/31/2002 13307 12,155 9/30/2002 13188 11,996 10/31/2002 13166 11,891 11/30/2002 13986 12,628 12/31/2002 14119 12,804 1/31/2003 14406 13,230 2/28/2003 14679 13,394 3/31/2003 15055 13,779 4/30/2003 15735 14,596 5/31/2003 15768 14,747 6/30/2003 16237 15,171 7/31/2003 16073 15,005 8/31/2003 16238 15,177 9/30/2003 16643 15,592 10/31/2003 16925 15,907 11/30/2003 17185 16,148 12/31/2003 17616 16,514 1/31/2004 17879 16,829 2/29/2004 17809 16,786 3/31/2004 17945 16,900 4/30/2004 17961 16,785 5/31/2004 17710 16,501 6/30/2004 17910 16,738 7/31/2004 18188 16,965 8/31/2004 18433 17,298 9/30/2004 18677 17,549 10/31/2004 19001 17,866 11/30/2004 19201 18,082 12/31/2004 19417 18,351 1/31/2005 19445 18,327 2/28/2005 19690 18,597 3/31/2005 19208 18,056 4/30/2005 19020 17,880 5/31/2005 19258 18,198 -------------------------------------------------------------------------------- Performance shown for the Advisor Class, Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE HIGH INCOME FUND for periods prior to April 11, 2005, reflects the performance of the Advisor Class, Institutional Class and Investor Class shares, respectively, of the Strong High-Yield Bond Fund, its predecessor fund. Effective at the close of business on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Advisor Class shares of the Fund for periods prior to February 29, 2000, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect expenses of the Advisor Class. Performance shown for the Institutional Class shares of the Fund for periods prior to July 31, 2001, reflects the performance of the predecessor fund's Investor Class shares and has not been adjusted for the lower expenses of the Institutional Class. (2) Lehman Brothers U.S. High-Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeroes, step-up coupon structures, and 144-As are also included. You cannot invest directly in an index. (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE HIGH INCOME FUND Investor Class for the life of the Fund with the Lehman Brothers U.S. High-Yield Index. The chart assumes a hypothetical investment of $10,000 in the Investor Class shares and reflects all operating expenses. 7
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND (the Fund) seeks current income consistent with capital preservation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Thomas M. Price, CFA 8/31/1987 Jay N. Mueller, CFA HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Investor Class shares returned 0.53%(1) for the seven-month period ended May 31, 2005, outperforming its benchmark, the Lehman Brothers U.S. 1-3 Year Government/Credit Index(2), which returned 0.48% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Over the period, the difference between the performance of short-term and long term-bonds was substantial. Influenced by the steady overnight rate hikes from the Federal Reserve's Open Market Committee, yields on two-year U.S. Treasury notes climbed by over 1% to 3.57%. Defying the trend toward tighter monetary policy, the market yield on the longest outstanding U.S. Treasury bond, due in 2031, declined by more than 1%. Because the Fund's holdings are typically in the 1-3 year maturity range, the rise in short-term rates was a constant drag on Fund performance. Anticipating this, we managed the Fund's duration toward the lower end of its typical range in order to help diminish the effect of rising rates. The Fund commonly invests most of its assets in mortgage-backed securities and corporate debt issues, leading to a heavier-than-benchmark weighting in both sectors. For the period, both sectors generated positive excess returns, adding to net performance. Detracting from performance were certain holdings in the Fund's short-term corporate bond positions, such as automakers Ford and General Motors, who came under scrutiny over recent financial results and loss of market share in North America. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- In addition to the duration and sector strategies described above, we believe the Fund was positioned to take advantage of a flattening yield curve. Though the Fund is designed to focus in short-term issues, we were able to add relative value through exposure to the five-year segment of the maturity spectrum. The five-year U.S. Treasury yield actually declined slightly over the period, leading to incremental duration-adjusted performance. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We remain optimistic on the general health of the U.S. economy. We believe that gross domestic product growth and employment conditions may continue to improve at a gradual pace. An area of concern in our outlook is the possibility of further increases in inflation pressure. While still low on an absolute basis, price inflation has been ticking up at both the wholesale and retail level. Energy and other industrial commodities have seen the greatest price jumps, but reports in recent months have begun to indicate that inflation may be spreading beyond raw commodities. Mindful of this, the Federal Reserve may continue to increase the overnight rate target. Consequently, we anticipate a continuation of a defensive posture with respect to the Fund's duration. On the positive side, while the process of shifting to a higher level of short-term rates may have a negative impact in the short run, in the long run it may potentially improve the expected rate of return for fixed-income investing. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. These operating expense reductions can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance for the Advisor Class, Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND for periods prior to April 11, 2005, reflects the performance of the Advisor Class, Institutional Class and Investor Class shares, respectively, of the Strong Short-Term Bond Fund, (the accounting survivor of a merger of the Strong Short-Term Bond Fund and Strong Short-Term Income Fund with the WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND), its predecessor fund. Effective at the close of business on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Advisor Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect expenses of the Advisor Class. Performance shown for the Institutional Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares and has not been adjusted for the lower expenses of the Institutional Class. 8
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Excluding Sales Charge --------------------------------------- 6-Month* 1-Year 5-Year 10-Year ------- ------ ------ ------- Short-Term Bond Fund - Advisor Class 0.72 2.07 3.21 4.46 Short-Term Bond Fund - Institutional Class 0.97 2.63 3.89 4.99 Short-Term Bond Fund - Investor Class 0.80 2.23 3.45 4.73 Benchmark Lehman Brothers U.S. 1-3 Year Government/Credit Index(2) 0.98 2.03 5.18 5.43 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 14% -------------------------------------------------------------------------------- Average Credit Quality(4) A1 -------------------------------------------------------------------------------- Weighted Average Coupon 5.44% -------------------------------------------------------------------------------- Estimated Weighted Average Life 2.35 years -------------------------------------------------------------------------------- Estimated Average Duration 1.26 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Adv, Inst, Inv Class) $8.62, $8.63, $8.62 -------------------------------------------------------------------------------- Distribution Rate(5) (Adv, Inst, Inv Class) 3.82%, 4.19%, 3.77% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Adv, Inst, Inv Class) 3.66%, 4.03%, 3.61% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 14% Cash Management 2% Collateralized Mortgage Securities 23% Corporate Bonds 47% FHLMC 3% FNMA 6% GNMA 2% Municipal Bonds 2% U.S. Treasury Notes 1% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE LEHMAN BROTHERS SHORT-TERM BOND FUND U.S. 1-3 YEAR - INVESTOR CLASS GOVERNMENT/CREDIT INDEX --------------------- ----------------------- 5/31/1995 10000 10,000 6/30/1995 10071 10,054 7/31/1995 10117 10,095 8/31/1995 10186 10,156 9/30/1995 10267 10,206 10/31/1995 10369 10,291 11/30/1995 10439 10,379 12/31/1995 10565 10,458 1/31/1996 10674 10,547 2/29/1996 10638 10,507 3/31/1996 10603 10,500 4/30/1996 10659 10,510 5/31/1996 10694 10,534 6/30/1996 10731 10,612 7/31/1996 10813 10,653 8/31/1996 10904 10,692 9/30/1996 10997 10,790 10/31/1996 11102 10,912 11/30/1996 11204 10,994 12/31/1996 11278 10,995 1/31/1997 11361 11,049 2/28/1997 11447 11,076 3/31/1997 11421 11,067 4/30/1997 11510 11,158 5/31/1997 11603 11,236 6/30/1997 11682 11,314 7/31/1997 11829 11,440 8/31/1997 11874 11,451 9/30/1997 11940 11,539 10/31/1997 11945 11,622 11/30/1997 12008 11,651 12/31/1997 12086 11,728 1/31/1998 12186 11,841 2/28/1998 12235 11,853 3/31/1998 12282 11,899 4/30/1998 12347 11,958 5/31/1998 12431 12,023 6/30/1998 12486 12,085 7/31/1998 12557 12,142 8/31/1998 12516 12,281 9/30/1998 12561 12,446 10/31/1998 12505 12,500 11/30/1998 12610 12,498 12/31/1998 12678 12,546 1/31/1999 12751 12,600 2/28/1999 12746 12,547 3/31/1999 12862 12,636 4/30/1999 12944 12,679 5/31/1999 12949 12,669 6/30/1999 12964 12,706 7/31/1999 12982 12,743 8/31/1999 12977 12,776 9/30/1999 13065 12,862 10/31/1999 13107 12,900 11/30/1999 13161 12,929 12/31/1999 13216 12,942 1/31/2000 13227 12,942 2/29/2000 13310 13,031 3/31/2000 13355 13,106 4/30/2000 13378 13,131 5/31/2000 13393 13,178 6/30/2000 13564 13,323 7/31/2000 13648 13,413 8/31/2000 13780 13,519 9/30/2000 13864 13,630 10/31/2000 13914 13,692 11/30/2000 14021 13,819 12/31/2000 14170 13,986 1/31/2001 14384 14,185 2/28/2001 14508 14,285 3/31/2001 14648 14,401 4/30/2001 14696 14,447 5/31/2001 14798 14,536 6/30/2001 14825 14,591 7/31/2001 15002 14,775 8/31/2001 15031 14,876 9/30/2001 14845 15,097 10/31/2001 14904 15,248 11/30/2001 14884 15,207 12/31/2001 14808 15,215 1/31/2002 14654 15,259 2/28/2002 14585 15,325 3/31/2002 14524 15,225 4/30/2002 14568 15,395 5/31/2002 14650 15,477 6/30/2002 14643 15,601 7/31/2002 14537 15,755 8/31/2002 14614 15,840 9/30/2002 14733 15,978 10/31/2002 14672 15,999 11/30/2002 14693 15,999 12/31/2002 14899 16,172 1/31/2003 14921 16,192 2/28/2003 15038 16,281 3/31/2003 15085 16,316 4/30/2003 15168 16,379 5/31/2003 15287 16,472 6/30/2003 15332 16,508 7/31/2003 15157 16,400 8/31/2003 15171 16,407 9/30/2003 15371 16,588 10/31/2003 15317 16,521 11/30/2003 15345 16,522 12/31/2003 15461 16,627 1/31/2004 15541 16,672 2/29/2004 15637 16,766 3/31/2004 15735 16,825 4/30/2004 15552 16,652 5/31/2004 15521 16,629 6/30/2004 15546 16,634 7/31/2004 15592 16,704 8/31/2004 15724 16,834 9/30/2004 15752 16,826 10/31/2004 15783 16,885 11/30/2004 15743 16,802 12/31/2004 15793 16,842 1/31/2005 15785 16,839 2/28/2005 15780 16,807 3/31/2005 15760 16,794 4/30/2005 15817 16,891 5/31/2005 15868 16,964 -------------------------------------------------------------------------------- (2) The Lehman Brothers U.S. 1-3 Year Government/Credit Index is the Government/Credit Index which includes securities in the Government and Credit indices. The Government Index includes treasuries (i.e., public obligations of the U.S. Treasury that have remaining maturities of more than one year) and agencies (i.e., publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government). The Credit Index includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements. You cannot invest directly in an index. (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT-TERM BOND FUND Investor Class for the most recent ten years with the Lehman Brothers U.S. 1-3 Year Government/Credit Index. The chart assumes a hypothetical investment of $10,000 in the Investor Class shares and reflects all operating expenses. 9
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND (the Fund) seeks total return with a high level of current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGER INCEPTION DATE Thomas M. Price, CFA 6/30/1997 HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Investor Class shares returned 0.63%(1) for the seven-month period ended May 31, 2005, underperforming the Fund's broad-based benchmark, the Merrill Lynch High Yield BB 1-5 Year Index(2), which returned 1.16% for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. ADVISOR CLASS AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. THE FUND HAS A REDEMPTION FEE OF 2.00% DEDUCTED FROM THE NET PROCEEDS OF SHARES REDEEMED OR EXCHANGED WITHIN 30 DAYS AFTER PURCHASE. PERFORMANCE DATA DOES NOT REFLECT THE DEDUCTION OF THIS FEE, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Yield spreads relative to U.S. Treasuries for the high yield market narrowed to record levels in early March 2005, but overall, ended up wider for the period. Returns for shorter-maturity high yield bonds were limited as the Federal Reserve (the Fed) increased the federal funds target rate from 1.75% to 3.00%, which caused the 2-year U.S. Treasury yield to increase from 2.55% to 3.57%. Prices, which move inversely to yields, fell accordingly, offsetting some of the coupon income generated by the portfolio. Returns relative to the benchmark were also limited by conservative positioning. The rally in the high-yield market through early March 2005 was due to solid economic growth, good corporate earnings, and low default rates leading to strong demand from institutional investors looking for higher yields. Although we believed that the high-yield bond market was becoming overvalued, prices fell when General Motors (GM) announced weaker than expected February 2005 sales in early March. This was followed by a downgrade of its debt to non-investment grade status in May 2005. The lower bond prices for GM carried over to the rest of the high-yield market. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?. -------------------------------------------------------------------------------- Our investments fall into three categories. The first is short-maturity bonds that we expect to be repaid on the maturity date. The second is high-coupon bonds that we believe are likely to be refinanced, similar to a homeowner refinancing a higher-rate mortgage. The third category consists of floating-rate term loans. We have invested almost a quarter of the portfolio in floating-rate term loans. These loans are typically secured by the assets of the issuing company, which can provide greater protection in weaker credit conditions. More importantly in the current environment, the interest rate typically resets quarterly, so the Fund has the potential to earn greater income as interest rates increase in the short end of the market. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe demand for high-yield bonds will remain at reasonably healthy levels. However, we are closely monitoring a few factors that we believe could affect the market. Our biggest concern is that with GM and Ford being downgraded to non-investment grade status, there could be additional selling over the next several months, which would likely spillover to other high yield holdings. Additionally, further rate hikes from the Fed could lead to weaker economic conditions. Finally, hedge fund investors have been an important source of demand for high-yield securities. If demand from this group were to deteriorate significantly, high-yield prices would be expected to weaken. We expect to continue on our recent path of allocating a portion of the portfolio to floating-rate securities seeking to benefit from continued Fed tightening. Additionally, we anticipate repositioning the portfolio into higher-quality securities and into industries that we believe may outperform in the current market conditions. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND INTERNATIONAL RISK. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Fund's manager. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND. 10
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Excluding Sales Charge ------------------------------------------- 6-Month* 1-Year 5-Year Life of Fund ------- ------ ------ ------------ Short-Term High Yield Bond Fund - Advisor Class (Incept. Date 2/29/2000) 0.47 3.47 3.26 4.74 Short-Term High Yield Bond Fund - Investor Class (Incept. Date 6/30/1997) 0.63 3.63 3.47 4.99 Benchmark Merrill Lynch High Yield BB 1-5 Year Index(2) 1.10 6.00 7.17 5.78 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 31% -------------------------------------------------------------------------------- Average Credit Quality(4) Ba3 -------------------------------------------------------------------------------- Weighted Average Coupon 6.68% -------------------------------------------------------------------------------- Estimated Weighted Average Life 1.59 years -------------------------------------------------------------------------------- Estimated Average Duration 1.49 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Adv, Inv Class) $8.51, $8.52 -------------------------------------------------------------------------------- Distribution Rate(5) (Adv, Inv Class) 4.73%, 4.97% -------------------------------------------------------------------------------- 30-Day SEC Yield(6) (Adv, Inv Class) 5.13%, 5.37% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Cash Equivalents 24% Cash Management 1% Corporate Bonds 75% GROWTH OF $10,000 INVESTMENT(7) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD MERRILL LYNCH HIGH YIELD BOND FUND - INVESTOR CLASS BB 1-5 YEAR INDEX -------------------------- ------------------------ 6/30/1997 10000 10,000 7/31/1997 10266 10,162 8/31/1997 10368 10,175 9/30/1997 10530 10,290 10/31/1997 10487 10,362 11/30/1997 10642 10,405 12/31/1997 10777 10,484 1/31/1998 10912 10,576 2/28/1998 11024 10,599 3/31/1998 11096 10,659 4/30/1998 11169 10,720 5/31/1998 11251 10,806 6/30/1998 11324 10,863 7/31/1998 11449 10,923 8/31/1998 11255 10,821 9/30/1998 11387 10,918 10/31/1998 11293 10,797 11/30/1998 11578 10,947 12/31/1998 11679 11,050 1/31/1999 11792 11,012 2/28/1999 11857 11,007 3/31/1999 11945 11,130 4/30/1999 12093 11,235 5/31/1999 12065 11,211 6/30/1999 12074 11,240 7/31/1999 12131 11,264 8/31/1999 12134 11,252 9/30/1999 12218 11,284 10/31/1999 12254 11,253 11/30/1999 12368 11,268 12/31/1999 12300 11,336 1/31/2000 12331 11,327 2/29/2000 12392 11,319 3/31/2000 12356 11,265 4/30/2000 12384 11,154 5/31/2000 12395 11,037 6/30/2000 12571 11,285 7/31/2000 12668 11,370 8/31/2000 12783 11,424 9/30/2000 12826 11,520 10/31/2000 12856 11,200 11/30/2000 12715 11,248 12/31/2000 12919 11,397 1/31/2001 13322 11,878 2/28/2001 13450 12,054 3/31/2001 13406 12,227 4/30/2001 13402 12,343 5/31/2001 13479 12,589 6/30/2001 13164 12,610 7/31/2001 13255 12,786 8/31/2001 13307 13,005 9/30/2001 12717 12,608 10/31/2001 12645 12,849 11/30/2001 12779 13,130 12/31/2001 12865 13,149 1/31/2002 12997 13,080 2/28/2002 12910 13,138 3/31/2002 12929 13,320 4/30/2002 12770 13,539 5/31/2002 12736 13,594 6/30/2002 12478 12,362 7/31/2002 12399 11,992 8/31/2002 12447 12,184 9/30/2002 12532 12,166 10/31/2002 12593 12,145 11/30/2002 12736 12,548 12/31/2002 12848 12,687 1/31/2003 12992 12,874 2/28/2003 13068 13,000 3/31/2003 13223 13,124 4/30/2003 13438 13,492 5/31/2003 13513 13,607 6/30/2003 13616 13,814 7/31/2003 13554 13,701 8/31/2003 13644 13,823 9/30/2003 13808 14,081 10/31/2003 13900 14,276 11/30/2003 13975 14,412 12/31/2003 14071 14,588 1/31/2004 14119 14,714 2/29/2004 14189 14,804 3/31/2004 14295 14,954 4/30/2004 14268 14,828 5/31/2004 14184 14,718 6/30/2004 14272 14,825 7/31/2004 14358 14,988 8/31/2004 14457 15,181 9/30/2004 14521 15,295 10/31/2004 14606 15,421 11/30/2004 14607 15,431 12/31/2004 14698 15,534 1/31/2005 14684 15,539 2/28/2005 14749 15,611 3/31/2005 14633 15,393 4/30/2005 14603 15,433 5/31/2005 14699 15,601 -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. These operating expense reductions can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance shown for the Advisor Class and Investor Class shares of the WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND for periods prior to April 11, 2005, reflects the performance of the Advisor Class and Investor Class shares, respectively, of the Strong Short-Term High Yield Bond Fund, its predecessor fund. Effective at the close of business on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Advisor Class shares of the Fund for periods prior to February 29, 2000, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect expenses of the Advisor Class. (2) Merrill Lynch High Yield BB 1-5 Year Index is an unmanaged index that generally tracks the performance of BB rated U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market with maturities of one to five years. You cannot invest directly in an index. (3) Portfolio holdings and characteristics are subject to change. (4) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (5) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (6) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (7) The chart compares the performance of the WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND Investor Class for the life of the Fund with the Merrill Lynch High Yield BB 1-5 Year Index. The chart assumes a hypothetical investment of $10,000 in the Investor Class shares and reflects all operating expenses. 11
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WELLS FARGO ADVANTAGE INCOME FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND (the Fund) seeks current income consistent with capital preservation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Thomas M. Price, CFA 11/25/1988 Jay N. Mueller, CFA HOW DID THE FUND PERFORM OVER THE SEVEN-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund's Investor Class shares returned 1.51%(1) for the seven-month period ended May 31, 2005, outperforming the Lehman Brothers U.S. Short Treasury 9-12 Month Index(2), which returned 1.04%, and outperforming the Citigroup 1-Year Treasury Benchmark-on-the-Run Index(3), which returned 0.86%, for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE FUNDS' WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. ADMINISTRATOR CLASS, ADVISOR CLASS, INSTITUTIONAL CLASS, AND INVESTOR CLASS SHARES ARE SOLD WITHOUT A FRONT-END SALES CHARGE OR CONTINGENT DEFERRED SALES CHARGE. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE FUND AND ARE DESCRIBED IN THE FUND'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Over the period, the Federal Reserve's Open Market Committee raised the overnight rate target four times for a cumulative 1.0% increase. Yields on short-maturity securities rose in reaction to these increases, depressing market prices. Surprisingly, intermediate-term rates were virtually unchanged, while long-term U.S. Treasury yields declined substantially over the period, leading to a much flatter yield curve. The majority of the Fund's assets are invested in corporate bonds and mortgage-backed securities (MBS). Both of these market sectors performed well for the period, though both came under some pressure in the latter months of the period. Our general preference for corporate and MBS securities in this Fund derives from the yield premium typically offered over similar duration U.S. Treasury obligations. This preference was rewarded over the period. Detracting from performance were specific holdings in the corporate sector, such as the short-term obligations of U.S. automakers Ford and General Motors, whose recent financial performance and loss of market share in North America prompted price weakness in even the very short maturity issues. We believe that the generous yields presently offered by their short-term securities are attractive on a risk-adjusted basis. The Fund's modest commitment to high yield securities also added incremental return. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- Anticipating the rise in short-term interest rates, we positioned the Fund to have a relatively low effective duration (sensitivity to changes in market yields), which helped from a performance standpoint. The Fund's substantial allocation to the mortgage-backed sector generated income above that available from U.S. Treasury and agency sectors. Likewise our smaller but still significant allocation to corporate debt was a source of incremental income. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We believe that the economy may continue to grow, represented by gross domestic product growth, improving employment conditions, and continued profit growth for American businesses over the balance of 2005. An area of concern is the small but steady upturn seen in most measures of inflation. While a portion of the rise in prices has originated in raw commodities, particularly oil, there are indications of a broadening price pressure into general goods and services. Wage gains and benefit expenses are also rising, leading to the largest year-over-year jump in unit labor costs since 2001. With growth firm and inflation threatening to reemerge, we believe that the Fed may continue to increase the overnight rate target. This inclines us to stay with a defensive duration posture. BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THIS FUND IS EXPOSED TO HIGH YIELD BOND RISK AND INTERNATIONAL RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND. (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. These operating expense reductions can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Performance shown for the Administrator Class, Advisor Class, Institutional Class and Investor Class shares of the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND for periods prior to April 11, 2005, reflects the performance of the Investor Class, Advisor Class, Institutional Class and Investor Class shares, respectively, of the Strong Ultra Short-Term Income Fund, its predecessor fund. Effective at the close of business on April 8, 2005, certain Strong Funds were reorganized into certain WELLS FARGO ADVANTAGE FUNDS. Performance shown for the Administrator Class shares reflects the performance of the predecessor fund's Investor Class shares, and includes expenses that are not applicable to and are higher than those of the Administrator Class shares. The Investor Class shares annual returns are substantially similar to what the Administrator Class shares would be because the shares are invested in the same portfolio of securities and the annual returns differ only to the extent the Classes do not have the same expenses. Performance shown for the Advisor Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares, adjusted to reflect the expenses of the Advisor Class. Performance shown for the Institutional Class shares of the Fund for periods prior to August 31, 1999, reflects the performance of the predecessor fund's Investor Class shares and has not been adjusted for the lower expenses of the Institutional Class. 12
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Excluding Sales Charge --------------------------------------- 6-Month* 1-Year 5-Year 10-Year ------- ------ ------ ------- Ultra Short-Term Income Fund - Administrator Class 1.51 2.50 3.19 4.57 Ultra Short-Term Income Fund - Advisor Class 1.51 2.25 2.72 4.12 Ultra Short-Term Income Fund - Institutional Class 1.80 2.91 3.47 4.73 Ultra Short-Term Income Fund - Investor Class 1.47 2.34 2.98 4.46 Benchmarks Lehman Brothers U.S. Short Treasury 9-12 Month Index(2) 1.11 1.67 3.43 4.56 Citigroup 1-Year Treasury Benchmark-on-the-Run Index(3) 1.04 1.49 3.64 4.61 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 17% -------------------------------------------------------------------------------- Average Credit Quality(5) A1 -------------------------------------------------------------------------------- Weighted Average Coupon 5.11% -------------------------------------------------------------------------------- Estimated Weighted Average Life 2.74 years -------------------------------------------------------------------------------- Estimated Average Duration 0.35 years -------------------------------------------------------------------------------- Net Asset Value (NAV) (Admin, Adv, Inst, Inv Class) $9.16, $9.17, $9.17, $9.17 -------------------------------------------------------------------------------- Distribution Rate(6) (Admin, Adv, Inst, Inv Class) 3.67%, 3.99%, 4.44%, 3.95% -------------------------------------------------------------------------------- 30-Day SEC Yield(7) (Admin, Adv, Inst, Inv Class) 3.62%, 3.48%, 3.93%, 3.44% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asset-Backed Securities 22% Cash Management 5% Collateralized Mortgage Securities 30% Corporate Bonds 31% FHLB 1% FHLMC 3% FNMA 5% GNMA 2% Municipal Bonds 1% GROWTH OF $10,000 INVESTMENT(8) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE CITIGROUP 1-YEAR LEHMAN BROTHERS ULTRA SHORT-TERM INCOME TREASURY BENCHMARK- U.S. SHORT TREASURY FUND - INVESTOR CLASS ON-THE-RUN INDEX 9-12 MONTH INDEX ----------------------- ------------------- ------------------- 5/31/1995 10000 10,000 10,000 6/30/1995 10069 10,058 10,058 7/31/1995 10136 10,108 10,109 8/31/1995 10203 10,157 10,159 9/30/1995 10262 10,202 10,205 10/31/1995 10326 10,259 10,264 11/30/1995 10361 10,321 10,323 12/31/1995 10430 10,381 10,386 1/31/1996 10495 10,448 10,451 2/29/1996 10530 10,461 10,470 3/31/1996 10573 10,494 10,504 4/30/1996 10613 10,530 10,542 5/31/1996 10666 10,573 10,584 6/30/1996 10713 10,631 10,642 7/31/1996 10769 10,672 10,685 8/31/1996 10839 10,724 10,738 9/30/1996 10914 10,796 10,808 10/31/1996 10981 10,878 10,886 11/30/1996 11045 10,934 10,942 12/31/1996 11126 10,971 10,982 1/31/1997 11197 11,025 11,035 2/28/1997 11261 11,065 11,077 3/31/1997 11282 11,095 11,106 4/30/1997 11339 11,162 11,174 5/31/1997 11422 11,233 11,240 6/30/1997 11491 11,299 11,305 7/31/1997 11564 11,381 11,380 8/31/1997 11636 11,421 11,419 9/30/1997 11693 11,483 11,485 10/31/1997 11733 11,547 11,548 11/30/1997 11788 11,586 11,588 12/31/1997 11850 11,641 11,648 1/31/1998 11911 11,719 11,725 2/28/1998 11966 11,750 11,758 3/31/1998 12025 11,809 11,814 4/30/1998 12070 11,863 11,870 5/31/1998 12155 11,915 11,925 6/30/1998 12216 11,971 11,982 7/31/1998 12281 12,030 12,039 8/31/1998 12263 12,127 12,128 9/30/1998 12332 12,222 12,227 10/31/1998 12310 12,287 12,290 11/30/1998 12371 12,289 12,307 12/31/1998 12412 12,327 12,356 1/31/1999 12467 12,375 12,404 2/28/1999 12521 12,388 12,420 3/31/1999 12595 12,465 12,492 4/30/1999 12672 12,511 12,537 5/31/1999 12717 12,546 12,573 6/30/1999 12740 12,605 12,621 7/31/1999 12787 12,661 12,677 8/31/1999 12806 12,698 12,718 9/30/1999 12887 12,763 12,787 10/31/1999 12911 12,797 12,831 11/30/1999 12987 12,823 12,864 12/31/1999 13067 12,852 12,900 1/31/2000 13117 12,884 12,945 2/29/2000 13177 12,948 13,011 3/31/2000 13242 13,008 13,075 4/30/2000 13291 13,083 13,139 5/31/2000 13361 13,131 13,197 6/30/2000 13470 13,234 13,298 7/31/2000 13551 13,312 13,370 8/31/2000 13639 13,393 13,413 9/30/2000 13748 13,472 13,492 10/31/2000 13780 13,538 13,554 11/30/2000 13867 13,631 13,643 12/31/2000 13952 13,765 13,772 1/31/2001 14056 13,922 13,923 2/28/2001 14157 13,993 13,983 3/31/2001 14242 14,094 14,079 4/30/2001 14312 14,158 14,144 5/31/2001 14409 14,240 14,225 6/30/2001 14463 14,278 14,267 7/31/2001 14569 14,379 14,357 8/31/2001 14639 14,442 14,397 9/30/2001 14458 14,590 14,529 10/31/2001 14533 14,683 14,616 11/30/2001 14580 14,709 14,641 12/31/2001 14547 14,738 14,676 1/31/2002 14467 14,748 14,691 2/28/2002 14445 14,794 14,725 3/31/2002 14441 14,766 14,702 4/30/2002 14495 14,866 14,791 5/31/2002 14550 14,903 14,822 6/30/2002 14523 14,983 14,894 7/31/2002 14497 15,046 14,946 8/31/2002 14523 15,059 14,964 9/30/2002 14560 15,127 15,023 10/31/2002 14581 15,162 15,052 11/30/2002 14601 15,162 15,057 12/31/2002 14668 15,224 15,112 1/31/2003 14704 15,236 15,124 2/28/2003 14779 15,261 15,144 3/31/2003 14791 15,291 15,169 4/30/2003 14851 15,309 15,185 5/31/2003 14896 15,326 15,201 6/30/2003 14919 15,356 15,231 7/31/2003 14911 15,347 15,225 8/31/2003 14920 15,362 15,240 9/30/2003 14976 15,404 15,285 10/31/2003 14985 15,399 15,279 11/30/2003 15007 15,399 15,281 12/31/2003 15000 15,448 15,327 1/31/2004 15041 15,466 15,347 2/29/2004 15094 15,495 15,375 3/31/2004 15147 15,514 15,393 4/30/2004 15119 15,472 15,364 5/31/2004 15120 15,468 15,363 6/30/2004 15122 15,464 15,363 7/31/2004 15160 15,498 15,394 8/31/2004 15196 15,543 15,435 9/30/2004 15235 15,538 15,434 10/31/2004 15242 15,565 15,459 11/30/2004 15250 15,538 15,448 12/31/2004 15294 15,563 15,471 1/31/2005 15335 15,574 15,488 2/28/2005 15361 15,573 15,494 3/31/2005 15372 15,596 15,522 4/30/2005 15405 15,651 15,573 5/31/2005 15473 15,699 15,621 -------------------------------------------------------------------------------- (2) Lehman Brothers U.S. Short Treasury 9-12 Month Index includes aged U.S. Treasury bills, notes and bonds with a remaining maturity from 1 up to (but not including) 12 months. It excludes zero coupon strips. You cannot invest directly in an index. (3) Citigroup 1-Year Treasury Benchmark-on-the-Run Index is the return of the newly issued (on-the-run) one year treasuries each month (auctioned monthly). It is determined by taking the 1-year T-bill at the beginning of each month and calculating its return. This process is repeated each month with the new 1-year T-Bill. You cannot invest directly in an index. (4) Portfolio holdings and characteristics are subject to change. (5) The average credit quality is compiled from ratings from Standard & Poor's and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund. (6) The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund's most recent income dividend and dividing that figure by the applicable current public offering price. (7) SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis. (8) The chart compares the performance of the WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND Investor Class shares for the most recent ten years with the Lehman Brothers U.S. Short Treasury 9-12 Month Index and the Citigroup 1-Year Treasury Benchmark-on-the-Run Index. The chart assumes a hypothetical investment of $10,000 in the Investor Class shares and reflects all operating expenses. 13
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WELLS FARGO ADVANTAGE INCOME FUNDS FUND EXPENSES (UNAUDITED) -------------------------------------------------------------------------------- As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, redemption fees (if any) and exchange fees (if any); and (2) ongoing costs, including management fees; distribution (12b-1) and/or shareholder service fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire six-month period (December 1, 2004 to May 31, 2005). ACTUAL EXPENSES The "Actual" line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Actual" line under the heading entitled "Expenses Paid During Period" for your applicable class of shares to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The "Hypothetical" line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the "Hypothetical" line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. [Enlarge/Download Table] Beginning Ending Account Account Expenses Net Annual Value Value Paid During Expense 12/1/2004 5/31/2005 The Period(1) Ratio Corporate Bond Fund ----------------------------------------------------------------------------------------------------- Corporate Bond Fund - Advisor Class Actual $1,000.00 $1,026.10 $ 5.35 1.06% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.65 $ 5.34 1.06% ----------------------------------------------------------------------------------------------------- Corporate Bond Fund - Institutional Class Actual $1,000.00 $1,028.40 $ 3.08 0.61% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,021.89 $ 3.07 0.61% ----------------------------------------------------------------------------------------------------- Corporate Bond Fund - Investor Class Actual $1,000.00 $1,026.20 $ 5.25 1.04% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.75 $ 5.24 1.04% Government Securities Fund ----------------------------------------------------------------------------------------------------- Government Securities Fund - Class C Actual $1,000.00 $1,019.50 $ 11.53 2.29% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,013.51 $ 11.50 2.29% ----------------------------------------------------------------------------------------------------- Government Securities Fund - Administrator Class Actual (2) $1,000.00 $1,021.20 $ 0.95 0.67% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,021.59 $ 3.38 0.67% ----------------------------------------------------------------------------------------------------- Government Securities Fund - Advisor Class Actual $1,000.00 $1,025.80 $ 5.35 1.06% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.65 $ 5.34 1.06% ----------------------------------------------------------------------------------------------------- Government Securities Fund - Institutional Class Actual $1,000.00 $1,028.50 $ 2.68 0.53% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,022.29 $ 2.67 0.53% ----------------------------------------------------------------------------------------------------- Government Securities Fund - Investor Class Actual $1,000.00 $1,026.00 $ 5.15 1.02% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.85 $ 5.14 1.02% 14
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FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] Beginning Ending Account Account Expenses Net Annual Value Value Paid During Expense 12/1/2004 5/31/2005 the Period(1) Ratio High Income Fund ----------------------------------------------------------------------------------------------------- High Income Fund - Advisor Class Actual $1,000.00 $1,001.10 $ 5.24 1.05% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.70 $ 5.29 1.05% ----------------------------------------------------------------------------------------------------- High Income Fund - Institutional Class Actual $1,000.00 $1,004.20 $ 2.25 0.45% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,022.69 $ 2.27 0.45% ----------------------------------------------------------------------------------------------------- High Income Fund - Investor Class Actual $1,000.00 $1,002.90 $ 4.69 0.94% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,020.24 $ 4.73 0.94% Short-Term Bond Fund ----------------------------------------------------------------------------------------------------- Short-Term Bond Fund - Advisor Class Actual $1,000.00 $1,007.20 $ 5.10 1.02% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.85 $ 5.14 1.02% ----------------------------------------------------------------------------------------------------- Short-Term Bond Fund - Institutional Class Actual $1,000.00 $1,009.70 $ 2.66 0.53% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,022.29 $ 2.67 0.53% ----------------------------------------------------------------------------------------------------- Short-Term Bond Fund - Investor Class Actual $1,000.00 $1,008.00 $ 4.41 0.88% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,020.54 $ 4.43 0.88% Short-Term High Yield Bond Fund ----------------------------------------------------------------------------------------------------- Short-Term High Yield Bond Fund - Advisor Class Actual $1,000.00 $1,004.70 $ 5.45 1.09% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.50 $ 5.49 1.09% ----------------------------------------------------------------------------------------------------- Short-Term High Yield Bond Fund - Investor Class Actual $1,000.00 $1,006.30 $ 5.05 1.01% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.90 $ 5.09 1.01% Ultra Short-Term Income Fund ----------------------------------------------------------------------------------------------------- Ultra Short-Term Income Fund - Administrator Class Actual (2) $1,000.00 $1,005.30 $ 0.84 0.60% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,021.94 $ 3.02 0.60% ----------------------------------------------------------------------------------------------------- Ultra Short-Term Income Fund - Advisor Class Actual $1,000.00 $1,015.10 $ 5.12 1.02% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,019.85 $ 5.14 1.02% ----------------------------------------------------------------------------------------------------- Ultra Short-Term Income Fund - Institutional Class Actual $1,000.00 $1,018.00 $ 2.11 0.42% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,022.84 $ 2.12 0.42% ----------------------------------------------------------------------------------------------------- Ultra Short-Term Income Fund - Investor Class Actual $1,000.00 $1,014.70 $ 4.37 0.87% ----------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,020.59 $ 4.38 0.87% (1) EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT SIX-MONTH PERIOD DIVIDED BY 365 (TO REFLECT THE SIX-MONTH PERIOD). (2) THIS CLASS COMMENCED OPERATIONS ON APRIL 11, 2005. ACTUAL EXPENSES SHOWN FOR THIS CLASS ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 51/365 (TO REFLECT THE PERIOD FROM APRIL 11, 2005 TO MAY 31, 2005). 15
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY SECURITIES - 0.01% FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.00% $ 1,627 FHLMC #170027 14.75% 03/01/2010 $ 1,841 4,690 FHLMC #170065 14.00 09/01/2012 5,432 7,273 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.00% 2,506 GNMA #45265 15.00 08/15/2011 2,900 1,555 GNMA #53809 15.00 02/15/2012 1,807 2,337 GNMA #54340 15.00 05/15/2012 2,715 7,422 -------------- SMALL BUSINESS ADMINISTRATION - 0.01% 368,910 SBA #40013(I)(C) 3.30 09/30/2017 9,223 -------------- TOTAL AGENCY SECURITIES (Cost $599,148) 23,918 -------------- CORPORATE BONDS & NOTES - 75.17% APPAREL & ACCESSORY STORES - 0.56% 2,230,000 MAY DEPARTMENT STORES COMPANY 6.70 07/15/2034 2,459,913 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 1.06% 2,075,000 DR HORTON INCORPORATED 6.88 05/01/2013 2,220,756 2,435,000 KB HOME 5.75 02/01/2014 2,390,257 4,611,013 -------------- BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.69% 2,805,000 AMERICAN STANDARD INCORPORATED 7.38 02/01/2008 2,995,905 -------------- BUSINESS SERVICES - 1.68% 3,087,000 BEAVER VALLEY II FUNDING CORPORATION 8.63 06/01/2007 3,219,556 2,829,000 CENDANT CORPORATION 6.25 03/15/2010 2,996,024 995,000 SB TREASURY COMPANY LLC+++/- 9.40 12/31/2049 1,110,848 7,326,428 -------------- CHEMICALS & ALLIED PRODUCTS - 0.49% 2,070,000 LUBRIZOL CORPORATION 5.50 10/01/2014 2,124,511 -------------- COMMUNICATIONS - 16.45% 2,230,000 AT&T CORPORATION 9.75 11/15/2031 2,832,100 2,175,000 CINGULAR WIRELESS SERVICES 8.13 05/01/2012 2,602,179 4,960,000 CINGULAR WIRELESS SERVICES 8.75 03/01/2031 6,888,641 1,690,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 1,723,800 1,995,000 COMCAST CABLE COMMUNICATIONS 6.88 06/15/2009 2,170,785 2,430,000 COX COMMUNICATIONS INCORPORATED++ 4.63 01/15/2010 2,415,384 1,888,000 COX COMMUNICATIONS INCORPORATED 6.75 03/15/2011 2,049,649 4,115,000 HISTORIC TW INCORPORATED 6.63 05/15/2029 4,575,909 2,750,000 NEWS AMERICA HOLDINGS 8.25 08/10/2018 3,396,646 11,245,000 SPRINT CAPITAL CORPORATION 6.88 11/15/2028 12,756,688 11,655,000 TCI COMMUNICATIONS INCORPORATED 7.88 08/01/2013 13,865,243 6,800,000 TIME WARNER ENTERTAINMENT COMPANY LP 10.15 05/01/2012 8,840,401 16
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS (CONTINUED) $ 2,395,000 TIME WARNER ENTERTAINMENT COMPANY LP 8.38% 07/15/2033 $ 3,172,170 2,160,000 VERIZON FLORIDA INCORPORATED SERIES F 6.13 01/15/2013 2,297,313 2,010,000 WALT DISNEY COMPANY SERIES MTNB 5.88 12/15/2017 2,167,341 71,754,249 -------------- DEPOSITORY INSTITUTIONS - 1.54% 1,695,000 M&T BANK CORPORATION+++/- 3.85 04/01/2013 1,672,909 2,605,000 WASHINGTON MUTUAL CAPITAL I 8.38 06/01/2027 2,867,602 2,000,000 ZIONS BANCORPORATION 6.00 09/15/2015 2,166,466 6,706,977 -------------- EATING & DRINKING PLACES - 0.65% 2,355,000 YUM! BRANDS INCORPORATED 8.88 04/15/2011 2,850,299 -------------- ELECTRIC, GAS & SANITARY SERVICES - 10.03% 2,250,000 CAROLINA POWER & LIGHT COMPANY 5.15 04/01/2015 2,318,801 1,125,000 CENTERPOINT ENERGY HOUSTON ELECTRIC LLC SERIES J2 5.70 03/15/2013 1,195,579 3,720,000 CILCORP INCORPORATED 8.70 10/15/2009 4,316,361 3,145,000 COLUMBUS SOUTHERN POWER COMPANY SERIES C 5.50 03/01/2013 3,305,257 1,300,000 CONSUMERS ENERGY COMPANY 5.50 08/15/2016 1,348,794 3,660,000 CONSUMERS ENERGY COMPANY SERIES B 5.38 04/15/2013 3,794,860 1,655,000 FPL ENERGY NATIONAL WIND++ 6.13 03/25/2019 1,622,264 1,360,000 INDIANA MICHIGAN POWER COMPANY SERIES F 5.05 11/15/2014 1,372,583 3,485,000 IPALCO ENTERPRISES INCORPORATED 8.38 11/14/2008 3,781,225 955,000 IPALCO ENTERPRISES INCORPORATED 8.63 11/14/2011 1,069,600 2,385,000 MONONGAHELA POWER COMPANY 6.70 06/15/2014 2,666,475 2,065,000 NEVADA POWER COMPANY++ 5.88 01/15/2015 2,034,025 1,150,000 PACIFIC GAS & ELECTRIC COMPANY 3.60 03/01/2009 1,120,320 1,740,000 PACIFIC GAS & ELECTRIC COMPANY 6.05 03/01/2034 1,912,942 770,000 POTOMAC EDISON COMPANY++ 5.35 11/15/2014 790,895 2,160,000 PUGET SOUND ENERGY INCORPORATED 5.48 06/01/2035 2,181,012 505,000 SOUTHERN CALIFORNIA EDISON COMPANY 8.00 02/15/2007 537,233 4,630,000 SOUTHERN CALIFORNIA EDISON COMPANY 4.65 04/01/2015 4,609,503 3,490,000 WESTAR ENERGY INCORPORATED 6.00 07/01/2014 3,793,494 43,771,223 -------------- FOOD & KINDREDPRODUCTS - 3.22% 2,975,000 GENERAL MILLS INCORPORATED 5.13 02/15/2007 3,028,755 5,720,000 KRAFT FOODS INCORPORATED<< 5.25 10/01/2013 5,922,391 1,790,000 SMITHFIELD FOODS INCORPORATED 7.00 08/01/2011 1,875,025 3,100,000 TYSON FOODS INCORPORATED 7.25 10/01/2006 3,221,601 14,047,772 -------------- FOOD STORES - 1.98% 1,560,000 ALBERTSON'S INCORPORATED 7.45 08/01/2029 1,712,830 1,680,000 DELHAIZE AMERICA INCORPORATED 9.00 04/15/2031 2,021,668 1,520,000 KROGER COMPANY SERIES B 7.70 06/01/2029 1,828,759 17
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOOD STORES (COTNINUED) $ 1,840,000 SAFEWAY INCORPORATED 4.80% 07/16/2007 $ 1,851,879 1,085,000 SAFEWAY INCORPORATED<< 7.25 02/01/2031 1,236,388 8,651,524 -------------- FORESTRY - 1.56% 598,000 WEYERHAEUSER COMPANY 6.13 03/15/2007 610,938 4,023,000 WEYERHAEUSER COMPANY 5.95 11/01/2008 4,159,126 1,860,000 WEYERHAEUSER COMPANY 6.75 03/15/2012 2,043,701 6,813,765 -------------- GENERAL MERCHANDISE STORES - 0.56% 2,230,000 JC PENNEY COMPANY INCORPORATED 8.00 03/01/2010 2,453,000 -------------- HEALTH SERVICES - 0.47% 1,755,000 WASTE MANAGEMENT INCORPORATED 7.10 08/01/2026 2,052,959 -------------- HOLDING & OTHER INVESTMENT OFFICES - 2.56% 2,230,000 FARMERS EXCHANGE CAPITAL++ 7.05 07/15/2028 2,361,401 2,210,000 FUND AMERICAN COMPANIES INCORPORATED 5.88 05/15/2013 2,291,763 3,305,000 JP MORGAN CHASE & COMPANY 5.13 09/15/2014 3,366,371 3,075,000 OMX TIMBER++ 5.42 01/29/2020 3,164,759 11,184,294 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.45% 1,935,000 HARRAH'S OPERATING COMPANY INCORPORATED 5.50 07/01/2010 1,973,268 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.62% 2,750,000 COMPUTER ASSOCIATES INTERNATIONAL INCORPORATED++ 4.75 12/01/2009 2,717,187 -------------- INSURANCE CARRIERS - 0.67% 2,750,000 FIDELITY NATIONAL FINANCIAL INCORPORATED 7.30 08/15/2011 2,897,130 -------------- METAL MINING - 0.37% 1,350,000 PHELPS DODGE CORPORATION 8.75 06/01/2011 1,626,488 -------------- NON-DEPOSITORYCREDIT INSTITUTIONS - 4.24% 1,670,000 AMERICAN GENERAL FINANCE CORPORATION 4.88 05/15/2010 1,682,804 2,250,000 CAPITAL ONE BANK 5.00 06/15/2009 2,283,102 2,880,000 CAPITAL ONE BANK 6.50 06/13/2013 3,130,497 2,250,000 COUNTRYWIDE HOME LOANS INCORPORATED SERIES MTNL 4.00 03/22/2011 2,167,643 2,780,000 FORD MOTOR CREDIT COMPANY 7.38 10/28/2009 2,689,133 2,625,000 GENERAL MOTORS ACCEPTANCE CORPORATION<< 6.88 08/28/2012 2,259,592 1,645,000 HSBC FINANCE CORPORATION 4.75 04/15/2010 1,662,939 2,525,000 MBNA CORPORATION SERIES MTN 5.63 11/30/2007 2,598,437 18,474,147 -------------- OIL & GAS EXTRACTION - 2.80% 4,040,000 DEVON FINANCING CORPORATION ULC 7.88 09/30/2031 5,183,647 2,160,000 PEMEX PROJECT FUNDING MASTER TRUST++ 8.85 09/15/2007 2,363,040 1,385,000 PEMEX PROJECT FUNDING MASTER TRUST 8.63 02/01/2022 1,679,313 18
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE OIL & GAS EXTRACTION (CONTINUED) $ 1,445,000 TALISMAN ENERGY INCORPORATED 5.13% 05/15/2015 $ 1,466,229 1,405,000 XTO ENERGY INCORPORATED 6.25 04/15/2013 1,517,394 12,209,623 -------------- PAPER & ALLIED PRODUCTS - 0.84% 3,355,000 INTERNATIONAL PAPER COMPANY 6.75 09/01/2011 3,679,415 -------------- PETROLEUM REFINING & RELATED INDUSTRIES - 3.14% 3,375,000 AMERADA HESS CORPORATION 7.13 03/15/2033 3,869,802 1,345,000 CONOCO INCORPORATED 6.95 04/15/2029 1,660,330 2,680,000 ENTERPRISE PRODUCTS OPERATIONS SERIES B 5.60 10/15/2014 2,738,569 1,385,000 OCCIDENTAL PETROLEUM CORPORATION 8.45 02/15/2029 1,945,814 3,165,000 VALERO ENERGY CORPORATION 6.88 04/15/2012 3,495,692 13,710,207 -------------- PIPELINES, EXCEPT NATURAL GAS - 4.27% 3,065,000 CENTERPOINT ENERGY RESOURCES CORPORATION 7.75 02/15/2011 3,510,421 2,235,000 ENERGY TRANSFER PARTNERS LP++ 5.95 02/01/2015 2,237,995 1,725,000 KINDER MORGAN ENERGY PARTNERS 5.13 11/15/2014 1,733,290 1,565,000 KINDER MORGAN INCORPORATED 6.50 09/01/2012 1,713,163 4,425,000 KN CAPITAL TRUST I SERIES B 8.56 04/15/2027 4,921,127 2,155,000 PLAINS ALL AMERICAN PIPELINE LP 5.63 12/15/2013 2,226,423 1,910,000 TEXAS EASTERN TRANSMISSION LP 7.00 07/15/2032 2,295,759 18,638,178 -------------- RAILROAD TRANSPORTATION - 3.04% 1,240,000 BURLINGTON NORTHERN SANTA FE CORPORATION 8.13 04/15/2020 1,624,421 148,000 NORFOLK SOUTHERN CORPORATION 7.80 05/15/2027 193,357 3,842,000 NORFOLK SOUTHERN CORPORATION 5.64 05/17/2029 3,949,426 4,480,000 UNION PACIFIC CORPORATION 5.75 10/15/2007 4,626,729 2,590,000 UNION PACIFIC CORPORATION 6.50 04/15/2012 2,855,939 13,249,872 -------------- REAL ESTATE - 4.26% 5,455,000 EOP OPERATING LP 6.75 02/15/2012 6,005,688 2,785,000 EQUITY ONE INCORPORATED 3.88 04/15/2009 2,692,574 2,075,000 ERP OPERATING LP 6.95 03/02/2011 2,309,469 2,660,000 HRPT PROPERTIES TRUST 5.75 02/15/2014 2,759,000 4,280,000 LIBERTY PROPERTY LP 7.25 03/15/2011 4,802,896 18,569,627 -------------- RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.43% 1,840,000 BEMIS COMPANY INCORPORATED++(I) 4.88 04/01/2012 1,878,553 -------------- TOBACCO PRODUCTS - 1.47% 2,480,000 ALTRIA GROUP INCORPORATED 7.65 07/01/2008 2,703,183 3,340,000 UST INCORPORATED 6.63 07/15/2012 3,709,203 6,412,386 -------------- 19
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE TRANSPORTATION BY AIR - 2.42% $ 2,414,000 GOODRICH CORPORATION 6.45% 12/15/2007 $ 2,538,505 1,300,000 LOCKHEED MARTIN CORPORATION 8.50 12/01/2029 1,850,802 2,555,000 NORTHROP GRUMMAN CORPORATION 7.75 03/01/2016 3,172,503 2,437,000 RAYTHEON COMPANY 7.20 08/15/2027 3,003,802 10,565,612 -------------- TRANSPORTATION EQUIPMENT - 2.19% 3,575,000 DAIMLERCHRYSLER NA HOLDING CORPORATION<< 6.50 11/15/2013 3,786,658 2,235,000 DAIMLERCHRYSLER NA HOLDING CORPORATION<< 8.50 01/18/2031 2,740,170 3,640,000 FORD MOTOR COMPANY<< 7.45 07/16/2031 3,044,027 9,570,855 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.46% 2,010,000 HUGHES SUPPLY INCORPORATED++ 5.50 10/15/2014 2,008,398 -------------- TOTAL CORPORATE BONDS & NOTES (COST $312,488,631) 327,984,778 -------------- FOREIGN CORPORATE BONDS - 11.12% 2,270,000 AMERICA MOVIL SA DE CV 5.50 03/01/2014 2,272,910 2,230,000 BT GROUP PLC 8.88 12/15/2030 3,104,488 6,400,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV<< 8.75 06/15/2030 8,699,674 1,920,000 ENCANA CORPORATION 6.50 08/15/2034 2,182,906 2,185,000 FRANCE TELECOM SA 8.75 03/01/2031 3,038,347 2,180,000 GRUPO TELEVISA SA++ 6.63 03/18/2025 2,180,000 2,460,000 HUTCHISON WHAMPOA INTERNATIONAL LIMITED++ 6.25 01/24/2014 2,647,349 3,355,000 ROGERS WIRELESS INCORPORATED<< 6.38 03/01/2014 3,338,225 3,865,000 SHAW COMMUNICATIONS INCORPORATED 7.20 12/15/2011 4,116,225 2,590,000 TELECOM ITALIA CAPITAL SA++ 4.00 01/15/2010 2,514,071 3,235,000 TELECOM ITALIA CAPITAL SA++ 4.95 09/30/2014 3,192,981 2,710,000 TYCO INTERNATIONAL GROUP SA<< 6.00 11/15/2013 2,931,683 2,595,000 UFJ FINANCE ARUBA AEC 6.75 07/15/2013 2,885,606 4,750,000 WESTERN POWER DISTRIBUTION HOLDINGS LIMITED++ 7.38 12/15/2028 5,438,028 TOTAL FOREIGN CORPORATE BONDS (COST $45,409,955) 48,542,493 -------------- FOREIGN GOVERNMENT BONDS - 2.94% 4,580,000 UNITED MEXICAN STATES 7.50 01/14/2012 5,205,170 2,870,000 UNITED MEXICAN STATES SERIES MTN 8.30 08/15/2031 3,544,450 3,845,000 UNITED MEXICAN STATES SERIES MTNA<< 6.75 09/27/2034 4,062,242 TOTAL FOREIGN GOVERNMENT BONDS (COST $11,376,120) 12,811,862 -------------- MUNICIPAL BONDS & NOTES - 0.41% 1,767,414 TOBACCO SETTLEMENT FINANCING CORPORATION LA (OTHER REVENUE LOC) 6.36 05/15/2025 1,780,953 -------------- TOTAL MUNICIPAL BONDS & NOTES (COST $1,735,917) 1,780,953 -------------- 20
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE US TREASURY SECURITIES - 7.33% US TREASURY BILLS - 0.10% $ 30,000 US TREASURY BILL^@ 2.73% 06/30/2005 $ 29,935 175,000 US TREASURY BILL^@ 2.70 07/14/2005 174,459 220,000 US TREASURY BILL^@ 2.82 07/28/2005 219,052 423,446 -------------- US TREASURY BONDS - 2.93% 1,545,000 US TREASURY BOND<< 8.50 02/15/2020 2,250,511 1,235,000 US TREASURY BOND<< 6.25 05/15/2030 1,580,076 7,730,000 US TREASURY BOND<< 5.38 02/15/2031 8,952,306 12,782,893 -------------- US TREASURY NOTES - 4.30% 370,000 US TREASURY NOTE<< 3.00 11/15/2007 364,811 4,885,000 US TREASURY NOTE<< 4.00 04/15/2010 4,935,374 3,805,000 US TREASURY NOTE<< 3.88 05/15/2010 3,825,810 5,575,000 US TREASURY NOTE<< 4.00 02/15/2015 5,561,932 4,055,000 US TREASURY NOTE<< 4.13 05/15/2015 4,094,285 18,782,212 -------------- TOTAL US TREASURY SECURITIES (COST $31,590,238) 31,988,551 -------------- COLLATERAL FOR SECURITIES LENDING - 13.13% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.60% 2,627,910 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,627,910 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 12.53% $ 18,000,000 BANC OF AMERICA SECURITIES REPURCHASE AGREEMENT (MATURITY VALUE $18,001,555) 3.11 06/01/2005 18,000,000 2,700,000 BLUE RIDGE ASSET FUNDING CORPORATION 3.05 06/01/2005 2,700,000 1,000,000 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.04 06/17/2005 998,660 28,000,000 DEUTSCHE BANK REPURCHASE AGREEMENT (MATURITY VALUE $28,002,388) 3.07 06/01/2005 28,000,000 2,000,000 KLIO II FUNDING CORPORATION 3.06 06/24/2005 1,996,140 2,000,000 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 1,999,640 1,000,000 RANGER FUNDING CORPORATION 3.03 06/17/2005 998,660 54,693,100 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $57,321,010) 57,321,010 -------------- SHARES SHORT-TERM INVESTMENTS - 1.95% 8,496,805 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 8,496,805 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $8,496,805) 8,496,805 -------------- 21
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------------------------------------------------------------------------------------------------------- VALUE TOTAL INVESTMENTS IN SECURITIES (COST $469,017,824)* 112.06% $ 488,950,370 OTHER ASSETS AND LIABILITIES, NET (12.06) (52,612,531) ------ -------------- TOTAL NET ASSETS 100.00% $ 436,337,839 ====== ============== ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. +/- VARIABLE RATE INVESTMENTS. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) (i) ILLIQUID SECURITY. (c) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES. INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED TIMING OF FUTURE CASH FLOWS. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. @ SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $8,496,805. * COST FOR FEDERAL INCOME TAX PURPOSES IS $469,226,314 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 22,813,457 GROSS UNREALIZED DEPRECIATION (3,089,402) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $ 19,724,056 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 22
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY NOTES - INTEREST BEARING - 10.74% $ 13,000,000 FHLB<< 4.13% 03/24/2008 $ 13,007,410 35,000,000 FHLMC<< 3.88 06/15/2008 35,030,135 17,080,000 FHLMC<< 6.88 09/15/2010 19,339,872 11,200,000 FHLMC<< 5.63 03/15/2011 12,079,110 15,000,000 FHLMC<< 4.75 05/06/2013 14,833,035 28,885,000 FNMA<< 5.25 06/15/2006 29,343,665 11,175,000 FNMA<< 6.63 09/15/2009 12,312,179 5,000,000 FNMA<< 6.63 11/15/2030 6,376,090 TOTAL AGENCY NOTES - INTEREST BEARING (COST $142,378,774) 142,321,496 -------------- AGENCY SECURITIES - 47.71% FEDERAL HOME LOAN MORTGAGE CORPORATION - 7.73% 83,592 FHLMC #160053 8.00 07/01/2008 87,189 43 FHLMC #170046 14.50 03/01/2011 49 185 FHLMC #170053 14.75 08/01/2011 211 6,069 FHLMC #170053++ 15.00 08/01/2011 6,931 403 FHLMC #170069 14.00 11/01/2012 468 129,348 FHLMC #170215 8.00 02/01/2017 139,451 139,334 FHLMC #170235 10.50 08/01/2019 160,190 1,358 FHLMC #181072 14.50 12/01/2011 1,548 135,569 FHLMC #181626 8.50 07/01/2007 140,229 51,900 FHLMC #182079 8.00 02/01/2010 55,012 45,271 FHLMC #182104 8.00 12/01/2010 47,985 99,430 FHLMC #1B0123+/- 6.14 09/01/2031 101,329 115,782 FHLMC #1B0128+/- 6.16 09/01/2031 117,762 2,944,877 FHLMC #1B0129+/- 6.09 09/01/2031 3,003,107 6,549 FHLMC #260694 8.00 04/01/2009 6,628 305,597 FHLMC #272877 8.00 08/01/2009 318,747 225,889 FHLMC #279063 9.00 08/01/2009 236,781 227,480 FHLMC #552435 10.50 08/01/2020 264,757 5,107 FHLMC #555108 7.25 07/01/2008 5,182 110,799 FHLMC #555158 8.50 05/01/2016 111,528 1,260,414 FHLMC #555503 9.00 04/01/2021 1,360,386 563,854 FHLMC #555515 8.50 10/01/2013 583,240 1,737,866 FHLMC #611023+/- 4.09 10/01/2026 1,790,990 375,363 FHLMC #786210+/- 6.29 01/01/2026 376,822 6,068,640 FHLMC #786823+/- 6.02 07/01/2029 6,384,433 2,255,550 FHLMC #789483+/- 5.68 06/01/2032 2,344,953 370,909 FHLMC #865496+/- 5.49 05/01/2026 377,266 253,111 FHLMC #884009 10.50 05/01/2020 295,916 89,194 FHLMC #A01434 9.00 06/01/2016 95,055 502,445 FHLMC #A01562 9.00 11/01/2018 541,343 500,340 FHLMC #A01607 8.50 06/01/2011 518,315 310,405 FHLMC #A01620 9.00 04/01/2017 334,436 413,842 FHLMC #A01860 8.50 06/01/2017 429,104 2,509 FHLMC #B00523 10.00 10/01/2005 2,521 3,679,672 FHLMC #E79794 7.00 10/01/2014 3,861,764 23
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED) $ 649,845 FHLMC #G00319 9.50% 04/01/2025 $ 726,975 754,323 FHLMC #G01236 10.00 10/01/2021 838,348 5,044 FHLMC #G10444 9.50 04/01/2007 4,963 159,318 FHLMC #G10783 8.50 06/01/2012 169,307 1,840,193 FHLMC #G11136 6.50 05/01/2011 1,913,807 1,054,986 FHLMC #G11200<< 8.00 01/01/2012 1,123,098 15,384,450 FHLMC #G11209 7.50 12/01/2011 16,274,205 5,893,228 FHLMC #G11345<< 7.50 12/01/2011 6,225,717 8,908,586 FHLMC #G11368 7.50 12/01/2012 9,428,405 18,688,426 FHLMC #G18005<< 5.00 08/01/2019 18,914,997 2,847,212 FHLMC #G80106 10.00 08/17/2022 3,283,391 4,818,500 FHLMC #G80116<< 10.00 02/17/2025 5,440,546 5,946,716 FHLMC #G80193 9.50 09/17/2022 6,591,206 1,198,558 FHLMC #G90023 7.00 11/17/2013 1,257,036 70,933 FHLMC #N70012 10.50 08/01/2020 81,899 5,887,482 FHLMC #W20001 7.26 06/01/2006 6,073,527 102,449,055 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 38.10% 521,245 FNMA #100042 11.00 10/15/2020 584,441 713,065 FNMA #100285 9.50 12/15/2020 803,645 961,760 FNMA #103102+/- 3.61 03/01/2018 971,851 174,988 FNMA #109031 6.70 08/01/2005 175,021 1,203 FNMA #1376 15.50 10/01/2012 1,396 715,737 FNMA #190180 9.00 07/01/2021 784,461 387,437 FNMA #303548 8.50 02/01/2012 401,172 1,377,798 FNMA #313419 8.50 12/01/2026 1,521,022 539,615 FNMA #323013 9.00 10/01/2021 601,374 2,107,890 FNMA #323284 8.50 05/01/2017 2,283,816 10,785,883 FNMA #323756<< 6.20 05/01/2009 11,346,666 35,165,253 FNMA #323785<< 6.22 12/01/2008 36,971,001 2,181,839 FNMA #323859 5.00 07/01/2006 2,189,330 199 FNMA #3260 13.25 04/01/2012 214 669 FNMA #3318 14.50 01/01/2012 690 61,280 FNMA #364215 7.50 07/01/2015 63,446 43,961 FNMA #364217 7.00 09/01/2015 45,408 4,639,723 FNMA #368034<< 8.00 11/01/2026 5,101,139 138,122 FNMA #381149 5.60 11/01/2005 138,400 8,071,251 FNMA #398800 8.00 06/01/2012 8,618,356 691,250 FNMA #398805 8.50 11/01/2011 737,237 445,638 FNMA #426843 11.00 02/01/2019 501,442 533,227 FNMA #439935 8.00 04/01/2017 573,959 2,243,771 FNMA #457277+/- 7.13 10/01/2027 2,310,488 732,487 FNMA #458018 12.00 07/15/2014 864,619 1,306,112 FNMA #487758 8.50 05/01/2026 1,440,743 526,733 FNMA #487759 9.50 07/01/2028 588,202 587,768 FNMA #516051 9.50 01/01/2021 651,590 127,061 FNMA #52 8.50 07/01/2010 129,922 24
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED) $ 758,857 FNMA #535537 9.00% 07/01/2028 $ 831,455 2,551,571 FNMA #535573 8.00 11/01/2013 2,712,001 1,092,473 FNMA #535752 10.00 12/01/2020 1,256,692 2,323,295 FNMA #538435+/- 4.52 07/01/2026 2,387,577 238,547 FNMA #545016 9.00 11/01/2012 247,840 529,467 FNMA #545117+/- 6.67 12/01/2040 548,022 3,937,994 FNMA #545187+/- 5.94 09/01/2031 4,025,944 1,394,060 FNMA #545208+/- 5.80 09/01/2031 1,442,949 3,333,799 FNMA #545460<<+/- 5.82 11/01/2031 3,442,467 4,138,494 FNMA #54844+/- 3.77 09/01/2027 4,235,549 3,137,545 FNMA #555161 6.00 12/01/2013 3,254,050 15,014,088 FNMA #555569<< 6.00 05/01/2016 15,574,779 115,111 FNMA #62895 8.75 01/01/2010 121,310 3,083,005 FNMA #635726+/- 5.47 04/01/2032 3,155,429 1,383,420 FNMA #646643<<+/- 5.90 06/01/2032 1,410,846 3,331,268 FNMA #66414+/- 4.58 09/01/2028 3,379,505 9,147,672 FNMA #675479+/- 5.07 01/01/2033 9,383,922 4,893,484 FNMA #675491+/- 5.56 04/01/2033 4,964,210 677,766 FNMA #695514 8.50 10/01/2026 735,117 1,565,790 FNMA #695519 8.50 11/01/2026 1,750,856 2,239,254 FNMA #724438 8.50 06/01/2027 2,448,352 8,525,482 FNMA #724658+/- 4.83 07/01/2033 9,041,706 40,815,017 FNMA #725249<< 5.00 03/01/2034 40,856,984 18,728,227 FNMA #725440<< 4.67 04/01/2014 18,994,846 10,012,405 FNMA #725638<< 5.00 12/01/2018 10,135,845 77,218,246 FNMA #735062<< 5.50 08/01/2033 78,383,518 25,190,689 FNMA #735613 6.00 02/01/2035 25,749,607 109,000,000 FNMA TBA%% 4.50 06/01/2020 108,489,008 34,150,000 FNMA TBA%% 5.00 06/01/2020 34,534,187 30,855,000 FNMA TBA%% 5.00 06/01/2035 30,826,058 504,721,682 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.84% 9,516 GNMA #126600 13.00 11/15/2014 11,057 6,964 GNMA #201 14.00 09/20/2014 8,015 7,075 GNMA #45629 13.00 02/15/2011 8,189 4,023 GNMA #46558 13.00 03/15/2011 4,539 1,939 GNMA #52207 15.00 06/15/2012 2,252 12,540 GNMA #52538 15.00 07/15/2012 14,569 64 GNMA #56900 15.00 07/15/2012 73 3,455 GNMA #57979 13.50 10/15/2012 3,940 22,150 GNMA #780051 9.00 12/15/2009 22,222 1,014,524 GNMA #780104<< 9.50 10/20/2019 1,119,556 545,231 GNMA #780110<< 12.50 04/15/2019 635,277 25,607 GNMA #780182 9.00 01/15/2008 25,904 3,514,535 GNMA #780288<< 8.00 12/15/2023 3,860,838 75,224 GNMA #780416 9.00 12/15/2006 75,467 1,421,431 GNMA #780763<< 7.50 12/15/2010 1,480,782 25
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED) $ 2,832,731 GNMA #780867<< 8.35% 04/15/2020 $ 3,110,561 1,660,377 GNMA #780980<< 8.40 05/15/2020 1,851,619 1,337,256 GNMA #8678<<+/- 3.75 08/20/2020 1,359,237 802,129 GNMA #8714+/- 4.13 11/20/2020 817,872 4,596 GNMA #95643 15.00 09/15/2012 5,326 10,000,000 GNMA TBA%% 3.96 06/16/2012 9,923,437 24,340,732 -------------- SMALL BUSINESS ADMINISTRATION - 0.04% 5,258,738 SBA #440019(C)(I) 2.02 02/28/2018 217,711 6,838,980 SBA SERIES 1992-6 CLASS A(C)(I) 2.39 10/15/2017 283,134 500,845 -------------- TOTAL AGENCY SECURITIES (COST $627,358,949) 632,012,314 -------------- ASSET-BACKED SECURITIES - 3.16% 4,908,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2003-A7 CLASS A7 4.15 07/07/2017 4,808,875 1,367,362 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES 15 CLASS A6+/- 3.33 11/25/2028 1,367,994 299,857 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES 2 CLASS A 7.00 01/25/2021 301,260 5,466,633 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES 23 CLASS A+/- 3.23 05/25/2030 5,466,971 3,218,847 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-35 CLASS A+/- 3.23 09/25/2031 3,219,887 30,025,000 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-53 CLASS S+/-(C) 6.50 06/25/2005 30 1,405,491 FNMA GRANTOR TRUST SERIES 2002-T5 CLASS A1+/- 3.14 05/25/2032 1,407,196 3,408,226 FNMA GRANTOR TRUST SERIES 2003-T2 CLASS A1+/- 3.37 03/25/2033 3,409,054 21,876,381 FNMA GRANTOR TRUST SERIES 2004-T6 CLASS 1AV1+/- 3.17 01/25/2035 21,902,421 TOTAL ASSET-BACKED SECURITIES (COST $41,758,615) 41,883,688 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 24.54% 10,684,277 BANC OF AMERICA ALTERNATIVE LOAN TRUST SERIES 2004-8 CLASS 2CB1 6.00 09/25/2034 10,968,151 14,657,000 BANK OF AMERICA ALTERNATIVE LOAN TRUST SERIES 2005-5 CLASS 5A1++ 6.00 06/25/2020 14,954,720 5,550,599 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES J8 CLASS 4A1 6.00 02/25/2017 5,707,895 551,552 FEDERAL AGRICULTURAL MORTGAGE CORPORATION SERIES 1001 CLASS 1+/-(I) 7.02 01/25/2008 551,552 426,559 FEDERAL AGRICULTURAL MORTGAGE CORPORATION SERIES 1002 CLASS 1+/-(I) 6.71 07/25/2008 426,559 2,254,223 FHA INSURED PROJECT LOAN #956++ 2.93 11/01/2012 2,209,139 2,483,623 FHLMC SERIES 1582 CLASS A+/- 5.00 09/15/2008 2,509,985 165,238 FHLMC SERIES 16 CLASS D 10.00 10/15/2019 165,152 12,897,721 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-55 CLASS 1A1B 6.50 03/25/2043 13,250,058 5,325,052 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-55 CLASS 2A1+/- 4.48 03/25/2043 5,417,921 16,118,341 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-57 CLASS 2A1+/- 4.10 07/25/2043 16,624,256 5,250,232 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 5,786,857 5,335,428 FNMA GRANTOR TRUST SERIES 2000-T6 CLASS A2 9.50 06/25/2030 5,839,278 10,995,208 FNMA GRANTOR TRUST SERIES 2001-T10 CLASS A3 9.50 12/25/2041 12,141,652 2,852,143 FNMA GRANTOR TRUST SERIES 2001-T12 CLASS A3 9.50 08/25/2041 3,150,558 6,727,331 FNMA GRANTOR TRUST SERIES 2001-T8 CLASS A3+/- 4.98 07/25/2041 6,831,935 6,879,317 FNMA GRANTOR TRUST SERIES 2002-T12 CLASS A5+/- 4.56 10/25/2041 7,135,331 413,737 FNMA INTEREST STRIP SERIES 161 CLASS 2(C) 8.50 07/25/2022 93,120 1,191,670 FNMA INTEREST STRIP SERIES 265 CLASS 2 9.00 03/01/2024 1,269,286 321,664 FNMA INTEREST STRIP SERIES B CLASS 1 6.00 05/01/2009 326,019 298,131 FNMA INTEREST STRIP SERIES C CLASS 1 6.00 05/01/2009 302,326 26
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 565,435 FNMA INTEREST STRIP SERIES K CLASS 1 6.00% 11/01/2008 $ 569,901 516,112 FNMA SERIES 1988-2 CLASS Z 10.10 02/25/2018 572,227 222,846 FNMA SERIES 1988-7 CLASS Z 9.25 04/25/2018 240,503 1,232,948 FNMA SERIES 1989-10 CLASS Z 9.50 03/25/2019 1,353,488 1,060,912 FNMA SERIES 1989-100 CLASS Z 8.75 12/25/2019 1,145,683 2,236,893 FNMA SERIES 1989-12 CLASS Y 10.00 03/25/2019 2,501,898 1,508,640 FNMA SERIES 1989-22 CLASS G 10.00 05/25/2019 1,675,477 360,347 FNMA SERIES 1989-63 CLASS Z 9.40 10/25/2019 389,322 553,396 FNMA SERIES 1989-98 CLASS E 9.20 12/25/2019 598,796 691,760 FNMA SERIES 1990-144 CLASS W 9.50 12/25/2020 761,583 656,737 FNMA SERIES 1990-75 CLASS Z 9.50 07/25/2020 724,647 287,082 FNMA SERIES 1990-84 CLASS Y 9.00 07/25/2020 311,520 1,331,254 FNMA SERIES 1990-96 CLASS Z 9.67 08/25/2020 1,472,812 500,219 FNMA SERIES 1991-5 CLASS Z 8.75 01/25/2021 541,846 1,854,799 FNMA SERIES 1991-85 CLASS Z 8.00 06/25/2021 1,944,723 1,275,851 FNMA SERIES 1992-45 CLASS Z 8.00 04/25/2022 1,324,530 8,440,000 FNMA SERIES 2003-W18 CLASS 1A5 4.61 08/25/2043 8,391,787 816,342 FNMA SERIES G-8 CLASS E 9.00 04/25/2021 891,917 2,444,908 FNMA SERIES G92-30 CLASS Z 7.00 06/25/2022 2,534,186 1,038,464 FNMA WHOLE LOAN SERIES 1999-W6 CLASS A+/- 9.41 09/25/2028 1,169,734 9,687,890 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 9,594,924 2,903,157 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1<<+/- 5.34 06/25/2033 2,962,773 16,679,449 FNMA WHOLE LOAN SERIES 2003-W3 CLASS 1A4+/- 4.43 08/25/2042 17,139,529 5,276,404 FNMA WHOLE LOAN SERIES 2003-W5 CLASS A+/- 3.20 04/25/2033 5,294,089 12,968,272 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.39 08/25/2042 13,238,780 12,479,952 FNMA WHOLE LOAN SERIES 2003-W6 CLASS PT4+/- 9.86 10/25/2042 13,911,923 5,000,000 FNMA WHOLE LOAN SERIES 2003-W8 CLASS 1A3 4.75 12/25/2042 4,975,847 6,558,904 FNMA WHOLE LOAN SERIES 2003-W8 CLASS PT1+/- 9.87 12/25/2042 7,191,187 1,939,729 FNMA WHOLE LOAN SERIES 2003-W9 CLASS A+/- 3.21 06/25/2033 1,939,308 12,995,800 FNMA WHOLE LOAN SERIES 2004-W15 CLASS 1A3 7.00 08/25/2044 13,798,699 20,000,000 GNMA SERIES 2004-100 CLASS B 4.60 02/16/2043 19,980,058 12,404,000 GNMA SERIES 2004-103 CLASS C+/- 4.70 12/16/2027 12,464,052 239,503,548 GNMA SERIES 2005-23 CLASS IO+/-(C) 1.00 06/17/2045 15,205,649 157,721,500 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION SERIES 2002-C1 CLASS XPB+/-(C)++ 1.76 01/11/2035 6,926,718 12,000,000 JP MORGAN MORTGAGE TRUST SERIES 2005-A3 CLASS 7CA1+/- 5.17 06/25/2035 12,139,200 11,686,535 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2004-R2 CLASS A1+/-++ 6.50 10/25/2034 12,062,951 125,500,000 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 2001-C2 CLASS X2+/-(C) 0.80 11/13/2011 3,699,263 51,175 USGI FHA INSURED PROJECT LOAN++ 3.03 11/01/2006 51,175 1,636,193 VENDEE MORTGAGE TRUST SERIES 1995-1 CLASS 4+/- 8.89 02/15/2025 1,776,480 2,628,931 VENDEE MORTGAGE TRUST SERIES 1995-2C CLASS 3A 8.79 06/15/2025 2,907,722 90,957,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2002-C2 CLASS IO3 +/-(C)++ 1.37 11/15/2034 3,051,689 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $321,878,719) 325,090,346 -------------- CORPORATE BONDS & NOTES - 0.75% APPAREL & ACCESSORY STORES - 0.00% 172 SEARS ROEBUCK ACCEPTANCE 6.70 04/15/2012 179 -------------- 27
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.75% $ 9,700,000 GENERAL ELECTRIC COMPANY 5.00% 02/01/2013 $ 9,972,638 -------------- TOTAL CORPORATE BONDS & Notes (Cost $9,664,864) 9,972,817 -------------- MUNICIPAL BONDS & NOTES - 2.10% 3,100,000 ARKANSAS DEVELOPMENT FINANCE AUTHORITY (HOUSING REVENUE LOC) 9.75 11/15/2014 3,625,202 4,360,000 COLORADO HEALTH FACILITIES AUTHORITY (OTHER REVENUE LOC)^ 5.43 07/15/2024 1,790,085 10,000,000 DAWSON RIDGE METROPOLITAN DISTRICT NO 1 CO (PROPERTY TAX REVENUE LOC)^ 5.46 10/01/2022 4,485,000 2,260,000 KANAWHA MERCER NICHOLAS COUNTIES WV (HOUSING REVENUE LOC)^ 3.94 02/01/2014 1,432,885 5,405,000 RETAMA DEVELOPMENT CORPORATION TX (OTHER REVENUE LOC) 10.00 12/15/2020 8,402,613 10,000,000 SAVANNAH GA ECONOMIC DEVELOPMENT AUTHORITY (HEALTHCARE FACILITIES REVENUE LOC)^ 5.64 12/01/2021 4,683,800 2,000,000 TAMPA FL SOLID WASTE SYSTEM (OTHER REVENUE LOC) 4.30 10/01/2007 2,054,920 1,350,000 WISCONSIN HEALTH & EDUCATIONAL FACILITIES AUTHORITY (HEALTHCARE FACILITIES REVENUE LOC)+/-SS. 4.00 12/01/2022 1,366,524 -------------- TOTAL MUNICIPAL BONDS & NOTES (COST $26,096,792) 27,841,029 -------------- US TREASURY SECURITIES - 18.49% US TREASURY BILLS - 0.02% 50,000 US TREASURY BILL^@ 2.82 07/28/2005 49,785 205,000 US TREASURY BILL^@ 2.81 08/18/2005 203,743 253,528 -------------- US TREASURY BONDS - 14.52% 20,000,000 US TREASURY BOND<< 12.75 11/15/2010 20,841,400 28,595,000 US TREASURY BOND<< 12.00 08/15/2013 35,724,763 19,050,000 US TREASURY BOND<< 9.25 02/15/2016 27,478,139 34,105,000 US TREASURY BOND<< 7.25 05/15/2016 43,426,578 11,385,000 US TREASURY BOND<< 8.50 02/15/2020 16,583,858 14,925,000 US TREASURY BOND<< 6.25 08/15/2023 18,388,063 15,000,000 US TREASURY BOND<< 6.00 02/15/2026 18,222,075 9,125,000 US TREASURY BOND<< 6.25 05/15/2030 11,674,653 192,339,529 -------------- US TREASURY NOTES - 3.95% 9,800,000 US TREASURY NOTE 3.50 05/31/2007 9,781,625 23,610,000 US TREASURY NOTE<< 4.00 04/15/2010 23,853,466 11,570,000 US TREASURY NOTE<< 10.38 11/15/2012 13,371,935 5,305,000 US TREASURY NOTE<< 4.00 02/15/2015 5,292,565 52,299,591 -------------- TOTAL US TREASURY SECURITIES (COST $241,524,208) 244,892,648 -------------- COLLATERAL FOR SECURITIES LENDING - 50.73% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.14% 1,856,435 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 1,856,435 -------------- 28
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS - 50.59% $ 5,999,994 ALLIANCE & LEICESTER PLC 3.29% 09/19/2005 $ 5,939,874 699,999 AMERICAN EXPRESS CREDIT CORPORATION SERIES MTNB 3.17 08/11/2005 700,146 9,999,990 AMSTERDAM FUNDING CORPORATION 3.04 06/15/2005 9,988,290 17,499,983 APRECO LLC 3.22 08/15/2005 17,382,908 24,999,975 ATLANTIC ASSET SECURITIZATION CORPORATION 3.07 06/22/2005 24,955,975 7,999,992 ATLANTIC ASSET SECURITIZATION CORPORATION 3.06 06/29/2005 7,981,192 11,999,988 ATOMIUM FUNDING CORPORATION 3.05 06/21/2005 11,979,828 32,999,967 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 32,999,967 17,199,983 BEAR STEARNS COMPANY INCORPORATED SERIES MTNB 3.29 06/19/2006 17,249,519 6,249,994 BETA FINANCE INCORPORATED 3.23 08/22/2005 6,204,306 32,999,967 BLUE SPICE LLC 3.06 06/01/2005 32,999,967 1,524,998 CBA (DELAWARE) FINANCE INCORPORATED 3.08 07/08/2005 1,520,164 6,999,993 CEDAR SPRINGS CAPITAL COMPANY LLC 3.06 06/13/2005 6,992,923 4,977,995 CEDAR SPRINGS CAPITAL COMPANY LLC 3.05 06/15/2005 4,972,171 4,999,995 CEDAR SPRINGS CAPITAL COMPANY LLC 3.24 08/11/2005 4,968,345 5,041,995 CEDAR SPRINGS CAPITAL COMPANY LLC 3.25 08/15/2005 5,008,264 6,199,994 CHARTA LLC 3.06 06/30/2005 6,184,928 9,999,990 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.05 06/15/2005 9,988,290 1,999,998 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/21/2005 1,996,638 12,999,987 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/22/2005 12,977,107 7,599,992 CREDIT SUISSE FIRST BOSTON SERIES YCD 3.11 12/29/2005 7,599,992 9,999,990 CREDIT SUISSE FIRST BOSTON SERIES YCD1 3.29 11/21/2005 9,999,990 4,299,996 DANSKE CORPORATION 3.05 06/30/2005 4,289,547 63,999,936 DEUTSCHE BANK REPURCHASE AGREEMENT (MATURITY VALUE $64,005,394) 3.07 06/01/2005 63,999,936 1,299,999 DEXIA DELAWARE LLC 3.11 07/05/2005 1,296,216 24,999,975 DEXIA DELAWARE LLC 3.25 08/22/2005 24,817,225 3,749,996 DNB NOR BANK ASA 3.04 06/15/2005 3,745,609 7,499,993 DNB NOR BANK ASA 3.36 09/30/2005 7,415,768 2,758,997 DORADA FINANCE INCORPORATED 3.04 06/15/2005 2,755,769 2,999,997 DORADA FINANCE INCORPORATED 3.26 08/19/2005 2,978,877 2,149,998 FIFTH THIRD BANK SERIES BKNT 3.07 07/26/2005 2,150,234 2,499,998 FIVE FINANCE INCORPORATED 3.06 06/22/2005 2,495,598 500,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 3.41 09/23/2005 500,404 6,499,994 GENERAL ELECTRIC COMPANY 3.21 10/24/2005 6,501,163 11,999,988 GEORGE STREET FINANCE LLC 3.04 06/02/2005 11,999,028 3,164,997 GEORGE STREET FINANCE LLC 3.05 06/14/2005 3,161,547 5,999,994 GEORGE STREET FINANCE LLC 3.05 06/20/2005 5,990,454 3,170,997 GEORGE STREET FINANCE LLC 3.08 06/28/2005 3,163,830 3,999,996 HBOS TREASURY SERVICES PLC SERIES MTN 3.20 01/26/2006 4,002,156 17,999,982 KLIO FUNDING CORPORATION 3.05 06/20/2005 17,971,362 14,999,985 KLIO FUNDING CORPORATION 3.06 06/27/2005 14,967,285 10,999,989 KLIO FUNDING CORPORATION 3.07 06/29/2005 10,974,139 17,105,983 KLIO II FUNDING CORPORATION 3.07 06/24/2005 17,072,968 4,177,996 KLIO II FUNDING CORPORATION 3.19 08/02/2005 4,154,892 16,605,983 LEXINGTON PARKER CAPITAL CORPORATION 3.05 06/06/2005 16,599,009 19,999,980 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 19,996,380 29
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 2,999,997 LIBERTY STREET FUNDING CORPORATION 3.05% 06/13/2005 $ 2,996,967 7,871,992 LIQUID FUNDING LIMITED 3.06 06/09/2005 7,866,718 4,999,995 LIQUID FUNDING LIMITED 3.30 08/31/2005 4,958,545 22,860,977 NIEUW AMSTERDAM RECEIVABLES CORPORATION 3.09 06/01/2005 22,860,977 9,999,990 NIEUW AMSTERDAM RECEIVABLES CORPORATION 3.05 06/22/2005 9,982,390 2,068,998 NIEUW AMSTERDAM RECEIVABLES CORPORATION 3.05 06/27/2005 2,064,488 4,799,995 RABOBANK USA FINANCIAL CORPORATION 3.27 08/08/2005 4,770,907 1,299,999 RANGER FUNDING CORPORATION 3.07 06/02/2005 1,299,895 9,999,990 SEDNA FINANCE INCORPORATED 3.22 08/15/2005 9,933,090 9,999,990 SOCIETE GENERALE 3.04 06/30/2005 9,999,990 999,999 SWEDBANK (FORENINGS SPARBANKEN) 3.26 09/22/2005 989,699 32,999,967 TOTAL CAPITAL S.A. 3.07 06/01/2005 32,999,967 32,999,967 TRANSAMERICA ASSET FUNDING CORPORATION 3.07 06/01/2005 32,999,967 29,999,970 TULIP FUNDING CORPORATION 3.05 06/30/2005 29,927,070 2,913,997 UBS FINANCE (DELAWARE) LLC 3.06 06/27/2005 2,907,645 670,148,495 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $672,004,930) 672,004,930 -------------- SHARES SHORT-TERM INVESTMENTS - 7.10% 94,026,902 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 94,026,902 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $94,026,902) 94,026,902 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $2,176,692,753)* 165.32% $2,190,046,170 OTHER ASSETS AND LIABILITIES, NET (65.32) (865,297,343) ------ -------------- TOTAL NET ASSETS 100.00% $1,324,748,827 ====== ============== << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) +/- VARIABLE RATE INVESTMENTS. (C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES. INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED TIMING OF FUTURE CASH FLOWS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. (I) ILLIQUID SECURITY. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE EFFECTIVE MATURITY. %% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2) @ SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $94,026,902. * COST FOR FEDERAL INCOME TAX PURPOSES IS $2,177,848,902 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 22,856,976 GROSS UNREALIZED DEPRECIATION (10,659,707) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $ 12,197,269 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 30
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- HIGH INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES - 0.00% $ 4,154,632 AIRCRAFT LEASE PORTFOLIO SECURITIZATION LIMITED SERIES 1996-1 CLASS DX^^(I) 12.75% 06/15/2006 $ 4 TOTAL ASSET-BACKED SECURITIES (COST $4,181,928) 4 -------------- CORPORATE BONDS & NOTES - 80.50% AMUSEMENT & RECREATION SERVICES - 0.86% 2,240,000 TOWN SPORTS INTERNATIONAL 9.63 04/15/2011 2,296,000 -------------- APPAREL & ACCESSORY STORES - 1.33% 3,225,000 FOOT LOCKER INCORPORATED 8.50 01/15/2022 3,555,562 -------------- APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.18% 2,890,000 WILLIAM CARTER COMPANY SERIES B 10.88 08/15/2011 3,164,550 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 2.69% 1,940,000 DR HORTON INCORPORATED 6.88 05/01/2013 2,076,273 1,775,000 ERICO INTERNATIONAL CORPORATION 8.88 03/01/2012 1,814,510 1,505,000 K HOVNANIAN ENTERPRISES INCORPORATED 6.25 01/15/2015 1,474,900 1,820,000 KB HOME 6.25 06/15/2015 1,825,860 7,191,543 -------------- BUSINESS SERVICES - 4.27% 1,345,000 IMCO RECYCLING ESCROW INCORPORATED++ 9.00 11/15/2014 1,405,525 2,100,000 NATIONAL WINE & SPIRITS INCORPORATED 10.13 01/15/2009 2,121,000 2,230,000 NATIONSRENT INCORPORATED 9.50 10/15/2010 2,391,675 810,000 RAINBOW NATIONAL SERVICES LLC(I)++ 10.38 09/01/2014 923,400 2,451,000 WATERFORD GAMING LLC++ 8.63 09/15/2012 2,610,315 1,810,000 WILLIAMS SCOTSMAN INCORPORATED 10.00 08/15/2008 1,954,800 11,406,715 -------------- CHEMICALS & ALLIED PRODUCTS - 5.52% 2,055,000 EQUISTAR CHEMICALS LP/EQUISTAR FUNDING CORPORATION 10.63 05/01/2011 2,265,637 1,775,000 HUNTSMAN INTERNATIONAL LLC++ 7.38 01/01/2015 1,761,687 1,825,000 IMC GLOBAL INCORPORATED 10.88 08/01/2013 2,126,125 2,070,000 JOHNSONDIVERSEY INCORPORATED SERIES B 9.63 05/15/2012 2,080,350 1,285,000 NALCO COMPANY 8.88 11/15/2013 1,342,825 1,515,000 OM GROUP INCORPORATED 9.25 12/15/2011 1,499,850 1,635,000 POLYONE CORPORATION 10.63 05/15/2010 1,769,888 1,765,000 RESOLUTION PERFORMANCE PRODUCTS INCORPORATED 13.50 11/15/2010 1,906,200 14,752,562 -------------- COAL MINING - 1.13% 2,970,000 ARCH WESTERN FINANCE LLC 6.75 07/01/2013 3,029,400 -------------- COMMUNICATIONS - 14.39% 1,370,000 AIRGATE PCS INCORPORATED+/- 6.89 10/15/2011 1,397,400 1,765,000 AT&T CORPORATION 9.75 11/15/2031 2,241,550 4,830,000 CCO HOLDINGS LLC/CAPITAL CORPORATION+++/- 7.14 12/15/2010 4,757,550 1,615,000 CENTENNIAL COMMUNICATIONS CORPORATION CELLULAR OPERATING COMPANY LLC PUERTO RICO OPERATIONS 8.13 02/01/2014 1,671,525 1,740,000 CHARTER COMMUNICATIONS HOLDINGS II LLC/CAPITAL CORPORATION 10.25 09/15/2010 1,766,100 31
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- HIGH INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS (CONTINUED) $ 1,755,000 CINCINNATI BELL INCORPORATED++ 8.38% 01/15/2014 $ 1,737,450 2,845,000 CSC HOLDINGS INCORPORATED SERIES B 7.63 04/01/2011 3,015,700 2,210,000 DOBSON CELLULAR SYSTEMS++ 9.88 11/01/2012 2,265,250 1,770,000 HORIZON PCS INCORPORATED++ 11.38 07/15/2012 1,938,150 445,000 IWO ESCROW COMPANY+++/- 6.32 01/15/2012 442,775 1,110,000 IWO ESCROW COMPANY++^ 10.75 01/15/2015 704,850 1,350,000 MCI INCORPORATED 8.74 05/01/2014 1,512,000 875,000 NEWPAGE CORPORATION+++/- 9.43 05/01/2012 857,500 2,535,000 PAXSON COMMUNICATIONS CORPORATION^ 14.89 01/15/2009 2,344,875 2,925,000 QWEST COMMUNICATIONS INTERNATIONAL+++/- 6.77 02/15/2009 2,888,437 1,500,000 QWEST CORPORATION++ 7.88 09/01/2011 1,556,250 2,075,000 QWEST SERVICES CORPORATION++ 14.00 12/15/2010 2,365,500 1,600,000 QWEST SERVICES CORPORATION++ 14.50 12/15/2014 1,892,000 1,790,000 RURAL CELLULAR CORPORATION 8.25 03/15/2012 1,830,275 1,310,000 VERTIS INCORPORATED SERIES B 10.88 06/15/2009 1,277,250 38,462,387 -------------- DEPOSITORY INSTITUTIONS - 0.36% 925,000 Dollar Financial Group Incorporated 9.75 11/15/2011 971,250 -------------- ELECTRIC, GAS & SANITARY SERVICES - 9.81% 1,430,000 ALLIED WASTE NORTH AMERICA SERIES B 8.88 04/01/2008 1,494,350 1,820,000 CLEAN HARBORS INCORPORATED++ 11.25 07/15/2012 2,002,000 1,840,000 EL PASO NATURAL GAS COMPANY SERIES A 7.63 08/01/2010 1,941,393 1,770,000 INERGY LP/INERGY FINANCE CORPORATION++ 6.88 12/15/2014 1,654,950 1,840,000 MIDWEST GENERATION LLC 8.75 05/01/2034 2,051,600 980,000 MISSION ENERGY HOLDING COMPANY 13.50 07/15/2008 1,156,400 1,335,000 NEVADA POWER COMPANY++ 5.88 01/15/2015 1,314,975 1,775,000 NORTHWESTERN CORPORATION++ 5.88 11/01/2014 1,792,750 1,750,000 NRG ENERGY INCORPORATED++ 8.00 12/15/2013 1,846,250 3,000,000 SIERRA PACIFIC POWER COMPANY SERIES A 8.00 06/01/2008 3,202,500 1,780,000 SIERRA PACIFIC RESOURCES 8.63 03/15/2014 1,926,850 2,650,000 SOUTHERN NATURAL GAS COMPANY 8.88 03/15/2010 2,886,409 435,000 TECO ENERGY INCORPORATED++ 6.75 05/01/2015 444,787 2,625,000 TXU CORPORATION++ 5.55 11/15/2014 2,521,271 26,236,485 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 1.01% 1,705,000 LUCENT TECHNOLOGIES INCORPORATED 6.45 03/15/2029 1,474,825 1,330,000 MAGNACHIP SEMICONDUCTOR/MAGNACHIP SEMICONDUCTOR FINANCE COMPANY+++/- 6.26 12/15/2011 1,236,900 2,711,725 -------------- ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.73% 1,815,000 US ONCOLOGY INCORPORATED 9.00 08/15/2012 1,942,050 -------------- FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.70% 1,830,000 MUELLER GROUP INCORPORATED+/- 7.49 11/01/2011 1,866,600 -------------- 32
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- HIGH INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOOD & KINDRED PRODUCTS - 1.63% $ 1,830,000 AEARO COMPANY I 8.25% 04/15/2012 $ 1,775,100 2,320,000 REDDY ICE GROUP INCORPORATED 8.88 08/01/2011 2,595,152 4,370,252 -------------- FOOD STORES - 1.20% 1,765,000 AMERICAN SEAFOODS GROUP LLC 10.13 04/15/2010 1,892,962 1,250,000 DOANE PET CARE COMPANY 10.75 03/01/2010 1,321,875 3,214,837 -------------- GENERAL MERCHANDISE STORES - 1.88% 1,765,000 ALH FINANCE LLC/ALH FINANCE CORPORATION 8.50 01/15/2013 1,650,275 2,985,000 JC PENNEY COMPANY INCORPORATED 7.95 04/01/2017 3,365,588 5,015,863 -------------- HEALTH SERVICES - 3.68% 440,000 DAVITA INCORPORATED++ 6.63 03/15/2013 444,400 440,000 DAVITA INCORPORATED++ 7.25 03/15/2015 442,200 2,065,000 FRESENIUS MEDICAL CARE CAPITAL TRUST II 7.88 02/01/2008 2,163,087 1,925,000 HCA INCORPORATED 5.75 03/15/2014 1,885,126 1,700,000 HEALTHSOUTH CORPORATION 7.63 06/01/2012 1,632,000 1,660,000 SELECT MEDICAL CORPORATION++ 7.63 02/01/2015 1,639,250 1,500,000 VANGUARD HEALTH HOLDINGS 9.00 10/01/2014 1,620,000 9,826,063 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.99% 13,915,000 ALADDIN GAMING/CAPITAL CORPORATION SERIES B^^ 13.50 03/01/2010 69,575 1,645,000 CHUMASH CASINO & RESORT ENTERPRISE++ 9.00 07/15/2010 1,776,600 2,430,000 HOLLYWOOD CASINO SHREVEPORT/SHREVEPORT CAPITAL CORPORATION^^ 13.00 08/01/2006 1,989,562 1,970,000 MGM MIRAGE INCORPORATED 6.00 10/01/2009 1,967,538 2,110,000 TURNING STONE CASINO RESORT ENTERPRISE++ 9.13 12/15/2010 2,194,400 7,997,675 -------------- JUSTICE, PUBLIC ORDER & SAFETY - 0.37% 970,000 CORRECTIONS CORPORATION OF AMERICA 7.50 05/01/2011 995,463 -------------- MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.84% 2,170,000 XEROX CAPITAL TRUST I 8.00 02/01/2027 2,245,950 -------------- MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.76% 4,850,000 GENTEK INCORPORATED^^ 11.00 08/01/2009 0 1,885,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 2,035,800 2,035,800 -------------- MISCELLANEOUS RETAIL - 0.68% 1,805,000 DENNY'S CORPORATION/DENNY'S HOLDINGS INCORPORATED 10.00 10/01/2012 1,818,538 -------------- OIL & GAS EXTRACTION - 4.04% 1,815,000 FOREST OIL CORPORATION 8.00 12/15/2011 1,987,425 2,230,000 HILCORP ENERGY I LP/HILCORP FINANCE COMPANY++ 10.50 09/01/2010 2,453,000 2,265,000 PARKER DRILLING COMPANY+/- 7.66 09/01/2010 2,355,600 1,865,000 PREMCOR REFINING GROUP INCORPORATED 7.75 02/01/2012 2,014,200 33
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- HIGH INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE OIL & GAS EXTRACTION (CONTINUED) $ 1,815,000 PRIDE INTERNATIONAL INCORPORATED 7.38% 07/15/2014 $ 1,991,963 10,802,188 -------------- PAPER & ALLIED PRODUCTS - 3.50% 2,275,000 APPLETON PAPERS INCORPORATED 8.13 06/15/2011 2,235,188 1,350,000 BOISE CASCADE LLC+++/- 5.54 10/15/2012 1,350,000 3,410,000 GEORGIA-PACIFIC CORPORATION 8.88 02/01/2010 3,870,350 1,765,000 PLAYTEX PRODUCTS INCORPORATED 8.00 03/01/2011 1,888,550 9,344,088 -------------- PRIMARY METAL INDUSTRIES - 1.48% 2,000,000 GENERAL CABLE CORPORATION 9.50 11/15/2010 2,130,000 1,815,000 SUPERIOR ESSEX COMMUNICATIONS LLC/ESSEX GROUP INCORPORATED 9.00 04/15/2012 1,824,075 3,954,075 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 7.03% 1,770,000 AMERICAN COMMERCIAL LINES FINANCE++ 9.50 02/15/2015 1,827,525 2,000,000 DEX MEDIA INCORPORATED 8.00 11/15/2013 2,125,000 1,055,000 HOUGHTON MIFFLIN COMPANY 7.20 03/15/2011 1,076,100 3,000,000 HOUGHTON MIFFLIN COMPANY^ 11.49 10/15/2013 2,055,000 1,690,000 PRIMEDIA INCORPORATED+/- 8.64 05/15/2010 1,774,500 2,379,000 READER'S DIGEST ASSOCIATION INCORPORATED 6.50 03/01/2011 2,355,210 2,260,000 RIDDELL BELL HOLDINGS++ 8.38 10/01/2012 2,260,000 1,900,000 UCAR FINANCE INCORPORATED 10.25 02/15/2012 1,966,500 1,315,000 VENOCO INCORPORATED++ 8.75 12/15/2011 1,282,125 2,160,000 VISANT CORPORATION 7.63 10/01/2012 2,068,200 18,790,160 -------------- REAL ESTATE - 0.77% 1,843,000 CB RICHARD ELLIS SERVICES INCORPORATED 9.75 05/15/2010 2,057,249 -------------- STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.78% 2,040,000 BWAY CORPORATION 10.00 10/15/2010 2,080,800 -------------- TEXTILE MILL PRODUCTS - 1.84% 2,775,000 INTERFACE INCORPORATED 9.50 02/01/2014 2,775,000 2,095,000 PERRY ELLIS INTERNATIONAL INCORPORATED SERIES B 8.88 09/15/2013 2,136,900 4,911,900 -------------- TOBACCO PRODUCTS - 0.83% 2,130,000 COMMONWEALTH BRANDS INCORPORATED++ 10.63 09/01/2008 2,231,175 -------------- TRANSPORTATION EQUIPMENT - 1.48% 1,775,000 NAVISTAR INTERNATIONAL CORPORATION++ 6.25 03/01/2012 1,686,250 2,110,000 REXNORD CORPORATION 10.13 12/15/2012 2,257,700 3,943,950 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.74% 1,815,000 AMERISOURCEBERGEN CORPORATION 7.25 11/15/2012 1,982,888 -------------- TOTAL CORPORATE BONDS & NOTES (COST $219,964,917) 215,205,743 -------------- 34
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- HIGH INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FOREIGN CORPORATE BONDS - 7.77% $ 2,420,000 CP SHIPS LIMITED 10.38% 07/15/2012 $ 2,710,400 2,490,000 CROWN EUROPEAN HOLDINGS SA 9.50 03/01/2011 2,726,550 2,920,000 INTELSAT BERMUDA LIMITED++ 8.63 01/15/2015 2,996,650 2,700,000 IPSCO INCORPORATED 8.75 06/01/2013 2,997,000 1,463,000 ISPAT INLAND ULC 9.75 04/01/2014 1,704,395 1,765,000 NOVELIS INCORPORATED++ 7.25 02/15/2015 1,729,700 3,270,000 ROGERS CABLE INCORPORATED 6.75 03/15/2015 3,270,000 1,630,000 ROGERS WIRELESS INCORPORATED+/- 6.14 12/15/2010 1,699,275 890,000 ROGERS WIRELESS INCORPORATED 7.50 03/15/2015 950,075 TOTAL FOREIGN CORPORATE BONDS (COST $19,828,108) 20,784,045 -------------- TERM LOANS - 7.90% 2,480,000 EL PASO CORPORATION TERM LOAN B+++/- 5.88 11/22/2009 2,487,763 3,230,000 GOODYEAR TIRE & RUBBER COMPANY TERM LOAN B+++/- 5.89 04/08/2010 3,209,005 2,000,000 GRAHAM PACKAGING COMPANY TERM LOAN C+++/- 7.31 03/15/2012 2,021,500 1,929,647 INVISTA TERM LOAN B+++/- 5.31 04/30/2011 1,944,119 1,000,000 KERR-MCGEE CORPORATION TERM LOAN B+++/- 5.79 05/19/2011 1,010,000 2,962,500 LEVI STRAUSS & COMPANY TERM LOAN+++/- 10.10 08/01/2006 3,094,568 876,908 MIDWEST GENERATION LLC TERM LOAN+++/- 5.32 04/05/2011 881,845 1,980,000 NORTHWEST AIRLINES CORPORATION TRANCHE B+++/- 9.83 11/03/2010 1,885,950 2,879,774 REGAL CINEMAS CORPORATION TERM LOAN B+++/- 5.09 10/19/2010 2,895,066 1,636,250 REVLON CONSUMER PRODUCTS CORPORATION TERM LOAN+++/- 9.20 07/31/2010 1,682,278 TOTAL TERM LOANS (COST $21,104,361) 21,112,094 -------------- SHARES SHORT-TERM INVESTMENTS - 3.63% 9,697,086 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 9,697,086 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $9,697,086) 9,697,086 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $274,776,400)* 99.80% $ 266,798,972 OTHER ASSETS AND LIABILITIES, NET 0.20 528,776 ------ -------------- TOTAL NET ASSETS 100.00% $ 267,327,748 ====== ============== ^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST OR PRINCIPAL PAYMENTS. (I) ILLIQUID SECURITY. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. +/- VARIABLE RATE INVESTMENTS. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $9,697,086. * COST FOR FEDERAL INCOME TAX PURPOSES IS $274,776,400 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 8,033,977 GROSS UNREALIZED DEPRECIATION (16,011,405) ------------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ (7,977,428) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY NOTES - INTEREST BEARING - 2.82% $ 270,000 FHLB 2.00% 07/10/2006 $ 265,098 200,000 FHLB 3.38 10/05/2007 198,377 1,000,000 FHLB<< 4.13 03/24/2008 1,000,570 4,700,000 FHLMC<< 4.38 07/30/2009 4,694,007 2,000,000 FHLMC SERIES MTN 2.75 10/06/2006 1,975,070 500,000 FNMA 2.00 01/15/2006 495,382 500,000 FNMA 2.15 04/13/2006 493,806 750,000 FNMA<< 3.13 12/15/2007 736,204 645,000 FNMA 3.50 01/28/2008 638,366 500,000 FNMA 3.25 08/15/2008 489,883 5,000,000 FNMA SERIES 1<< 3.00 11/09/2006 4,947,510 TOTAL AGENCY NOTES - INTEREST BEARING (COST $16,066,672) 15,934,273 -------------- AGENCY SECURITIES - 8.18% FEDERAL HOME LOAN MORTGAGE CORPORATION - 2.29% 7,811 FHLMC #160089 10.75 09/01/2009 8,455 24,378 FHLMC #170151 10.50 01/01/2016 27,819 6,665 FHLMC #183254 9.50 03/01/2011 7,199 14,571 FHLMC #185784 10.75 11/01/2010 15,612 74,572 FHLMC #1B0123+/- 6.14 09/01/2031 75,997 92,626 FHLMC #1B0128+/- 6.16 09/01/2031 94,210 62,295 FHLMC #255531 10.25 07/01/2009 66,313 19,440 FHLMC #257384 10.75 09/01/2010 21,075 25,384 FHLMC #259511 11.25 11/01/2009 27,939 5,119 FHLMC #360016 10.50 11/01/2017 5,929 3,847 FHLMC #360056 10.50 02/01/2019 4,478 4,125 FHLMC #360057 10.50 03/01/2019 4,728 3,775 FHLMC #360059 10.50 04/01/2019 4,402 2,282 FHLMC #360061 10.50 05/01/2019 2,655 45,001 FHLMC #360063 10.50 06/01/2019 52,239 7,380 FHLMC #360065 10.50 07/01/2019 8,600 1,341,932 FHLMC #555316<< 9.00 06/01/2019 1,457,243 963,612 FHLMC #555408<< 10.50 08/01/2018 1,115,739 959,559 FHLMC #555500<< 8.50 09/01/2017 1,037,749 941,903 FHLMC #555514<< 9.00 10/01/2019 1,053,444 146,980 FHLMC #786823+/- 6.01 07/01/2029 154,629 1,117,521 FHLMC #789272<<+/- 5.67 04/01/2032 1,161,190 670,407 FHLMC #865496+/- 5.49 05/01/2026 681,897 948,970 FHLMC #A01734<< 9.00 08/01/2018 1,034,247 1,668,236 FHLMC #G01126<< 9.50 12/01/2022 1,839,483 354,580 FHLMC #G10747 7.50 10/01/2012 379,687 1,797,384 FHLMC #G11150<< 7.50 12/01/2011 1,882,479 126,541 FHLMC #G11345<< 7.50 12/01/2011 133,681 172,639 FHLMC #G11391<< 7.50 06/01/2012 182,787 365,730 FHLMC #G90023 7.00 11/17/2013 383,575 12,925,480 -------------- 36
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.12% $ 8,340 FNMA #100001 9.00% 02/15/2020 $ 9,309 3,355,248 FNMA #100042<< 11.00 10/15/2020 3,762,044 915,868 FNMA #100202<< 9.50 02/15/2011 983,742 269,573 FNMA #100255 8.33 07/15/2020 299,930 1,273,448 FNMA #190075 8.50 02/01/2023 1,371,669 567,207 FNMA #302507 9.00 11/01/2024 625,080 149,987 FNMA #313617 8.00 09/01/2023 161,826 1,930,832 FNMA #323582<< 8.00 04/01/2017 2,082,239 334,394 FNMA #392645 8.00 12/01/2013 345,770 911,120 FNMA #426828 8.00 09/01/2019 990,643 565,663 FNMA #426832 8.50 07/01/2018 617,601 2,244,580 FNMA #545131<< 8.00 03/01/2013 2,363,560 500,918 FNMA #545157<< 8.50 11/01/2012 528,662 1,111,266 FNMA #545460<<+/- 5.81 11/01/2031 1,147,489 3,135,932 FNMA #598559<< 6.50 08/01/2031 3,288,643 532,381 FNMA #70801 12.00 03/01/2017 606,827 4,010,398 FNMA #712107<< 6.00 03/01/2033 4,131,647 23,316,681 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.76% 9,515 GNMA #296662 9.75 09/15/2005 9,648 4,164 GNMA #296675 9.75 09/15/2005 4,222 13,319 GNMA #299736 9.75 11/15/2005 13,505 7,056 GNMA #299747 9.75 11/15/2005 7,155 189,132 GNMA #780029 9.00 11/15/2024 207,667 3,809,435 GNMA #780110<< 12.50 04/15/2019 4,438,570 113,603 GNMA #780134 8.50 05/15/2010 116,879 615,688 GNMA #780267<< 9.00 11/15/2017 678,526 269,964 GNMA #780288<< 8.00 12/15/2023 296,565 122,603 GNMA #780333 8.00 12/15/2008 126,654 396,762 GNMA #780434 7.50 12/15/2007 404,337 3,178,194 GNMA #781311<< 7.50 02/15/2013 3,330,601 254,020 GNMA #781540<< 7.00 05/15/2013 266,923 27,144 GNMA #927 10.00 02/20/2018 30,986 9,932,238 -------------- SMALL BUSINESS ADMINISTRATION - 0.01% 2,370,024 SBA #0191(C)(I) 3.11 07/30/2018 67,309 -------------- TOTAL AGENCY SECURITIES (COST $45,461,655) 46,241,708 -------------- ASSET-BACKED SECURITIES - 13.65% 5,000,000 AAMES MORTGAGE TRUST SERIES 2003-1 CLASS M1+/- 3.77 10/25/2033 5,053,812 6,500,000 ACCREDITED MORTGAGE LOAN TRUST SERIES 2004-3 CLASS 1A2+/- 3.44 10/25/2034 6,432,719 3,900,000 BANK ONE ISSUANCE TRUST SERIES 2004-B1 CLASS B1+/- 3.41 03/15/2012 3,922,748 4,262,492 BEAR STEARNS ASSET BACKED SECURITIES INCORPORATED SERIES 2003-ABF1 CLASS AIO(C) 4.00 03/25/2006 101,447 500,000 CAPITAL ONE PRIME AUTO RECEIVABLES TRUST SERIES 2004-3 CLASS A2 3.04 07/15/2007 498,216 499,991 CDC MORTGAGE CAPITAL TRUST SERIES 2003-HE4 CLASS M1+/- 3.74 03/25/2034 501,937 37
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES (CONTINUED) $ 2,500,000 CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2003-5 CLASS 2M1+/- 3.69% 05/25/2033 $ 2,511,748 9,545,537 CONTIMORTGAGE HOME EQUITY TRUST SERIES 1996-2 CLASS IO+/-(C)(I) 0.54 07/15/2027 5,727 2,638,122 CONTIMORTGAGE NET INTEREST MARGIN NOTES SERIES 1997-A CLASS A(I) 7.23 07/16/2028 791 2,997,494 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.29 10/25/2022 2,998,726 3,004,358 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.33 05/15/2028 3,006,681 1,673,649 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.38 02/15/2034 1,679,052 5,119,938 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.39 12/15/2033 5,133,135 500,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-A CLASS M1 3.17 09/08/2007 498,545 59,572,916 EASTMAN HILL FUNDING LIMITED SERIES 1A CLASS A2(C)(I) 0.83 09/29/2031 1,656,127 6,105,606 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 CLASS 3A3+/- 2.47 09/25/2033 6,107,839 3,500,000 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-53 CLASS S+/-(C) 6.50 06/25/2005 4 3,500,000 FLEET COMMERCIAL LOAN MASTER LLC SERIES 2000-1A CLASS B2+/-++ 3.85 11/16/2007 3,500,000 6,550,000 GREEN TREE HOME IMPROVEMENT LOAN TRUST SERIES 1998-E CLASS AV1 7.27 06/15/2028 6,597,236 2,223,272 GSAA TRUST SERIES 2004-7 CLASS AV1+/- 3.27 06/25/2034 2,223,157 3,000,000 HOME EQUITY ASSET TRUST SERIES 2003-6 CLASS M1+/- 3.79 02/25/2034 3,017,395 4,584,092 RAILCAR LEASING L.L.C. SERIES 1 CLASS A1++ 6.75 07/15/2006 4,663,260 205,901 RENAISSANCE HOME EQUITY LOAN TRUST SERIES 2004-3 CLASS AF1+/- 3.31 11/25/2034 205,924 8,503,937 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RZ2 CLASS AIO(C) 5.75 09/25/2005 141,165 1,695,217 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RZ5 CLASS A2 3.18 03/25/2027 1,690,794 819,180 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2001-KS1 CLASS AII+/- 3.33 03/25/2032 819,933 500,000 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2003-KS8 CLASS MII1+/- 3.72 10/25/2033 499,990 4,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC10 CLASS M1+/- 3.84 10/25/2033 4,014,947 4,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC3 CLASS M1+/- 4.04 04/25/2033 4,025,069 1,620,498 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.57 12/25/2034 1,620,498 4,000,000 WILLIAM STREET FUNDING CORPORATION CLASS 2005-1 CLASS A+/-++ 3.43 01/23/2011 4,000,000 TOTAL ASSET-BACKED SECURITIES (COST $80,417,120) 77,128,622 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 23.24% 7,777,617 ASSET SECURITIZATION CORPORATION SERIES 1995-MD4 CLASS A1 7.10 08/13/2029 7,898,368 37,000,000 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2001-PB1 CLASS XP+/-(C)++ 1.53 05/11/2035 2,710,598 731,129 BANK OF AMERICA MORTGAGE SECURITIES SERIES 2002-K CLASS 3A1+/- 6.66 10/20/2032 744,032 3,213,121 CITIGROUP MORTGAGE LOAN TRUST INCORPORATED SERIES 2004-HYB4 CLASS AA+/- 3.42 12/25/2034 3,213,121 469,203 COLLATERALIZED MORTGAGE OBLIGATION TRUST SERIES 47 CLASS E^ 0.23 09/01/2018 466,378 716,501 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES J8 CLASS 4A1 6.00 02/25/2017 736,806 1,969,639 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST SERIES 2001-HYB1 CLASS 2A1+/- 4.99 06/19/2031 1,999,815 1,162,976 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST SERIES 2004-30 CLASS 3A1+/- 4.83 09/25/2034 1,199,109 1,006,168 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 1997-C2 CLASS A2 6.52 01/17/2035 1,018,673 43,014,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2001-CK6 CLASS ACP+/-(C) 0.93 08/15/2036 1,300,068 3,328,535 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CF1 CLASS A1A 7.45 06/10/2033 3,409,462 1,068,409 DREXEL BURNHAM LAMBERT CMO TRUST SERIES T CLASS 4 8.45 09/20/2019 1,071,690 488,825 FHLMC SERIES 2198 CLASS SC+/- 9.00 06/15/2028 524,150 124,206 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-57 CLASS 2A1+/- 4.31 07/25/2043 128,105 4,759,351 FHLMC STRUCTURED PASS THROUGH SECURITIES SERIES T-59 CLASS 2A1+/- 4.45 10/25/2043 4,889,760 2,122,618 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-42 CLASS A6 9.50 02/25/2042 2,339,571 411,683 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 446,245 3,271,304 FNMA GRANTOR TRUST SERIES 2002-T12 CLASS A4 9.50 05/25/2042 3,607,679 1,025,964 FNMA SERIES 1989-29 CLASS Z 10.00 06/25/2019 1,125,983 772,173 FNMA SERIES 1989-63 CLASS Z 9.40 10/25/2019 834,261 38
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 793,501 FNMA SERIES 1993-M1 CLASS N(C)(I) 0.84% 04/25/2020 $ 238 1,144,831 FNMA SERIES G95-2 CLASS IO+/-(C)(I) 10.00 05/25/2020 303,262 15,684 FNMA STRIP SERIES 107 CLASS 1^ 3.95 10/25/2006 15,477 2,289,865 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 2,267,891 1,718,560 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1<<+/- 5.34 06/25/2033 1,753,850 6,224,771 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.39 08/25/2042 6,354,614 567,930 FNMA WHOLE LOAN SERIES 2003-W6 CLASS PT4+/- 9.86 10/25/2042 633,096 5,000,000 FNMA WHOLE LOAN SERIES 2003-W8 CLASS 1A3 4.75 12/25/2042 4,975,847 100,000,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2001-1 CLASS X2+/-(C)++ 0.95 05/15/2033 2,606,460 75,000,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2001-2 CLASS X2+/-(C)++ 1.01 08/11/2033 2,583,330 5,561,874 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2000-C2 CLASS A1 7.27 08/16/2033 5,814,792 67,720,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2001-C2 CLASS X2+/-(C)++ 0.69 04/15/2034 1,579,366 209,464 GMBS CERTIFICATES SERIES 1990-1 CLASS Z 9.25 01/28/2020 208,892 702,340 GOLDEN NATIONAL MORTGAGE ASSET BACKED CERTIFICATES SERIES 1998-GN1 CLASS M2(I) 8.02 02/25/2027 700,369 6,000,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION SERIES 2002-C1 CLASS XPB+/-(C)++ 1.76 01/11/2035 263,504 6,000,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION SERIES 2004-GG1 CLASS A2 3.84 06/10/2036 5,965,259 1,527,129 GSMPS MORTGAGE LOAN TRUST SERIES 1998-1 CLASS A++ 8.00 09/19/2027 1,646,382 5,364,601 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.49 06/25/2034 5,390,437 3,921,224 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 2A1+/-++ 4.22 06/25/2034 4,027,750 1,872,279 GSR MORTGAGE LOAN TRUST SERIES 2004-1 CLASS 2A2+/- 5.22 04/25/2032 1,886,210 21,704,476 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR14 CLASS AX1+/-(C) 0.80 01/25/2035 253,942 148,639,900 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR8 CLASS AX1+/-(C) 0.80 11/25/2034 1,724,223 125,000,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES 2001-CIB2 CLASS X2+/-(C)++ 1.00 04/15/2035 3,585,813 4,424,563 JP MORGAN MORTGAGE TRUST SERIES 2005-A2 CLASS 3A+/- 4.93 04/25/2035 4,439,164 4,000,000 JP MORGAN MORTGAGE TRUST SERIES 2005-A3 CLASS 7CA1+/- 5.17 06/25/2035 4,046,400 87,373 MASTER ADJUSTABLE RATE MORTGAGES TRUST SERIES 2002-3 CLASS 4A1+/- 6.16 10/25/2032 87,746 75,199,681 MORGAN STANLEY CAPITAL I SERIES 1999-WF1 CLASS X+/-(C)++ 0.79 11/15/2031 1,941,129 3,485,812 NOMURA ASSET ACCEPTANCE CORPORATION++ 3.25 02/25/2035 3,485,812 2,400,024 NOMURA ASSET ACCEPTANCE CORPORATION SERIES 2003-A3 CLASS AIO+/-(C) 5.15 03/25/2006 72,277 6,350,795 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B3+/-++ 4.49 09/10/2035 6,461,535 1,693,552 RURAL HOUSING TRUST 1987-1 7.33 04/01/2026 1,693,261 252,111 SALOMON BROTHERS MORTGAGE SECURITIES VI SERIES 1987-3 CLASS A^ 5.30 10/23/2017 231,265 5,404,242 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF2 CLASS A+/-++ 8.56 07/15/2027 5,586,547 871,142 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2002-8A CLASS 3A+/- 5.66 05/25/2032 877,527 12,984,899 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2004-4XS CLASS AIO+/-(C) 5.00 01/25/2006 229,202 21,642 STRUCTURED MORTGAGE ASSET RESIDENTIAL TRUST SERIES 1992-5B CLASS BO(I)^ 1.80 06/25/2023 20,260 185,114 USGI FHA PROJECT LOAN++ 7.44 11/24/2019 185,281 1,543,688 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR10 CLASS A6+/- 4.82 10/25/2032 1,556,176 1,534,874 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR15 CLASS A5+/- 4.38 12/25/2032 1,531,099 170,301 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 170,095 3,028,000 WASHINGTON MUTUAL INCORPORATED SERIES 2003-AR7 CLASS A5+/- 3.07 08/25/2033 2,981,706 675,833 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M2+/-(I) 6.17 08/25/2032 674,130 675,833 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M3+/-(I) 6.17 08/25/2032 674,112 216,586 WILSHIRE FUNDING CORPORATION SERIES 1998-WFC2 CLASS M1+/-(I) 5.33 12/28/2037 216,856 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $129,040,990) 131,366,458 -------------- 39
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE CORPORATE BONDS & NOTES - 42.70% AMUSEMENT & RECREATION SERVICES - 0.88% $ 2,000,000 CAESARS ENTERTAINMENT INCORPORATED 7.88% 12/15/2005 $ 2,035,000 1,209,095 DISNEY CUSTOM REPACKAGED++(I) 7.20 01/10/2007 1,249,164 1,700,000 SAN MANUEL ENTERTAINMENT AUTHORITY SERIES 04-B+/-++ 3.71 12/01/2010 1,700,000 4,984,164 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.31% 1,637,000 RYLAND GROUP INCORPORATED 9.75 09/01/2010 1,758,176 -------------- BUSINESS SERVICES - 0.91% 2,101,000 BEAVER VALLEY II FUNDING CORPORATION 8.63 06/01/2007 2,191,217 2,845,000 CENDANT CORPORATION 6.25 01/15/2008 2,962,339 5,153,556 -------------- COMMUNICATIONS - 8.09% 2,485,000 AMFM INCORPORATED 8.00 11/01/2008 2,659,094 2,500,000 AT&T CORPORATION SERIES MTNA 8.35 05/15/2025 2,587,500 460,000 CINGULAR WIRELESS SERVICES 7.35 03/01/2006 471,671 2,500,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 2,550,000 1,800,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 6.00 11/01/2006 1,829,581 515,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 4.63 01/15/2008 506,853 3,230,000 COX COMMUNICATIONS INCORPORATED 7.75 08/15/2006 3,352,330 3,000,000 GTE HAWAIIAN TELEPHONE COMPANY SERIES A 7.00 02/01/2006 3,000,000 500,000 HISTORIC TW INCORPORATED 7.48 01/15/2008 538,432 3,425,000 LENFEST COMMUNICATIONS INCORPORATED 10.50 06/15/2006 3,629,829 2,350,000 SBC COMMUNICATIONS INCORPORATED 4.13 09/15/2009 2,324,620 3,500,000 SPRINT CAPITAL CORPORATION 6.13 11/15/2008 3,694,302 2,899,000 TCI COMMUNICATIONS INCORPORATED 6.88 02/15/2006 2,956,125 5,100,000 TIME WARNER ENTERTAINMENT COMPANY LP 7.25 09/01/2008 5,534,846 2,910,000 UNIVISION COMMUNICATIONS INCORPORATED 2.88 10/15/2006 2,858,170 6,935,000 VERIZON GLOBAL FUNDING CORPORATION 4.00 01/15/2008 6,897,655 300,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 305,946 45,696,954 -------------- DEPOSITORY INSTITUTIONS - 4.98% 6,800,000 BANK OF AMERICA CORPORATION 5.25 02/01/2007 6,942,399 10,550,000 BANK ONE NA 6.25 02/15/2008 11,131,695 500,000 FIRST BANK NATIONAL ASSOCIATION 6.50 02/01/2008 528,929 5,000,000 HUNTINGTON CAPITAL TRUST I+/- 3.89 02/01/2027 4,609,460 5,000,000 STAR BANC CAPITAL TRUST I+/- 3.78 06/15/2027 4,931,345 28,143,828 -------------- ELECTRIC, GAS & SANITARY SERVICES - 3.98% 2,000,000 AMEREN CORPORATION 4.26 05/15/2007 1,996,820 5,785,000 DOMINION RESOURCES INCORPORATED SERIES B 7.63 07/15/2005 5,813,242 2,485,000 KANSAS GAS & ELECTRIC COMPANY 6.50 08/01/2005 2,494,664 2,409,052 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 2,431,184 2,525,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 2,567,953 40
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ELECTRIC, GAS & SANITARY SERVICES (CONTINUED) $ 818,000 SOUTHERN CALIFORNIA EDISON COMPANY 8.00% 02/15/2007 $ 870,211 3,920,000 WASTE MANAGEMENT INCORPORATED 6.50 11/15/2008 4,175,290 2,000,000 WESTAR ENERGY INCORPORATED 7.88 05/01/2007 2,129,800 22,479,164 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 0.38% 2,000,000 AMETEK INCORPORATED 7.20 07/15/2008 2,148,502 -------------- FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.22% 1,200,000 BALL CORPORATION 7.75 08/01/2006 1,242,000 -------------- FOOD & KINDRED PRODUCTS - 1.59% 4,700,000 GENERAL MILLS INCORPORATED 3.88 11/30/2007 4,666,395 4,300,000 NABISCO INCORPORATED 6.85 06/15/2005 4,304,502 8,970,897 -------------- FOOD STORES - 1.70% 2,750,000 KROGER COMPANY 7.63 09/15/2006 2,857,624 4,000,000 SAFEWAY INCORPORATED 6.15 03/01/2006 4,051,852 2,500,000 YUM! BRANDS INCORPORATED 7.65 05/15/2008 2,720,900 9,630,376 -------------- FORESTRY - 0.08% 460,000 WEYERHAEUSER COMPANY 6.00 08/01/2006 467,538 -------------- GENERAL MERCHANDISE STORES - 2.17% 1,004,801 WAL-MART CUSTOM REPACKAGED ASSET VEHICLE(I)++ 7.35 07/17/2006 1,026,645 11,500,000 WAL-MART STORES INCORPORATED 3.38 10/01/2008 11,254,993 12,281,638 -------------- HEALTH SERVICES - 0.85% 2,000,000 FRESENIUS MEDICAL CARE CAPITAL TRUST II 7.88 02/01/2008 2,095,000 2,650,000 HCA INCORPORATED 7.13 06/01/2006 2,708,663 4,803,663 -------------- HOLDING & OTHER INVESTMENT OFFICES - 2.80% 1,000,000 CORE INVESTMENT GRADE TRUST 4.73 11/30/2007 1,000,650 4,810,000 COUNTRYWIDE HOME LOANS INCORPORATED SERIES MTNK 5.63 05/15/2007 4,934,613 5,000,000 PRINCIPAL LIFE GLOBAL FUNDING I++ 5.13 06/28/2007 5,088,315 5,000,000 PRINCIPAL LIFE GLOBAL FUNDING I++ 2.80 06/26/2008 4,821,315 15,844,893 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.86% 2,750,000 HARRAH'S OPERATING COMPANY INCORPORATED 7.88 12/15/2005 2,798,125 2,000,000 MIRAGE RESORTS INCORPORATED 6.75 02/01/2008 2,055,000 4,853,125 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.57% 3,200,000 JOHN DEERE CAPITAL CORPORATION 3.88 03/07/2007 3,191,574 -------------- 41
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE INSURANCE CARRIERS - 2.08% $ 7,000,000 PROTECTIVE LIFE US FUNDING TRUST++ 5.88% 08/15/2006 $ 7,124,187 1,800,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 1,810,044 2,750,000 WELLPOINT HEALTH NETWORKS 6.38 06/15/2006 2,810,615 11,744,846 -------------- MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.43% 2,300,000 BAUSCH & LOMB INCORPORATED 6.95 11/15/2007 2,426,038 -------------- MOTION PICTURES - 0.09% 460,000 NEWS AMERICA INCORPORATED 6.63 01/09/2008 486,541 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 3.25% 100,000 FORD MOTOR CREDIT COMPANY<< 5.70 01/15/2010 90,975 12,250,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTN 3.50 05/01/2008 12,046,466 15,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 5.38 03/15/2007 15,360 750,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 6.50 12/10/2007 792,360 3,000,000 GENERAL MOTORS ACCEPTANCE CORPORATION<< 7.75 01/19/2010 2,830,971 2,500,000 HSBC FINANCE CORPORATION 8.88 02/15/2006 2,583,690 18,359,822 -------------- OIL & GAS EXTRACTION - 0.15% 764,000 PORT ARTHUR FINANCE CORPORATION 12.50 01/15/2009 863,320 -------------- PAPER & ALLIED PRODUCTS - 0.36% 2,000,000 GEORGIA-PACIFIC CORPORATION 7.50 05/15/2006 2,055,000 -------------- PIPELINES, EXCEPT NATURAL GAS - 0.32% 1,800,000 PLAINS ALL AMERICAN PIPELINE LP PAA FINANCE CORPORATION 4.75 08/15/2009 1,803,276 -------------- PRIMARY METAL INDUSTRIES - 0.20% 1,000,000 UNITED STATES STEEL LLC 10.75 08/01/2008 1,130,000 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.36% 2,000,000 MEDIA GENERAL INCORPORATED 6.95 09/01/2006 2,052,606 -------------- RAILROAD TRANSPORTATION - 1.26% 3,500,000 BURLINGTON NORTHERN SANTA FE CORPORATION 6.38 12/15/2005 3,546,144 460,000 CSX CORPORATION 6.25 10/15/2008 486,845 2,980,000 UNION PACIFIC CORPORATION 5.75 10/15/2007 3,077,601 7,110,590 -------------- REAL ESTATE - 0.74% 2,000,000 EOP OPERATING LP 6.75 02/15/2008 2,116,494 2,000,000 HIGHWOODS REALTY LP 7.00 12/01/2006 2,064,434 4,180,928 -------------- SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.10% 540,000 JP MORGAN CHASE & COMPANY 4.00 02/01/2008 537,770 -------------- TOBACCO PRODUCTS - 0.37% 2,000,000 ALTRIA GROUP INCORPORATED 7.20 02/01/2007 2,090,848 -------------- 42
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE TRANSPORTATION EQUIPMENT - 1.68% $ 5,800,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 4.75% 01/15/2008 $ 5,800,064 3,125,000 RAYTHEON COMPANY 6.75 08/15/2007 3,289,587 400,000 TEXAS EASTERN TRANSMISSION LP 5.25 07/15/2007 407,165 9,496,816 -------------- WATER TRANSPORTATION - 0.50% 2,850,000 HERTZ CORPORATION 4.70 10/02/2006 2,837,343 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.44% 2,500,000 BERGEN BRUNSWIG CORPORATION 7.25 06/01/2005 2,500,000 -------------- TOTAL CORPORATE BONDS & NOTES (COST $242,301,821) 241,325,792 -------------- FOREIGN CORPORATE BONDS - 3.99% 250,000 AMOCO ARGENTINA OIL COMPANY 6.63 09/15/2005 252,296 3,450,000 BRITISH SKY BROADCASTING GROUP PLC 8.20 07/15/2009 3,892,376 250,000 CHEVRON TEXACO CAPITAL COMPANY 3.50 09/17/2007 247,984 2,500,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.50 06/15/2010 2,913,697 2,700,000 ENCANA CORPORATION 4.60 08/15/2009 2,714,888 250,000 FRANCE TELECOM 7.45 03/01/2006 256,597 5,360,000 KFW 3.50 03/14/2008 5,307,113 3,170,000 PREFERRED TERM SECURITIES XV+/-++ 4.62 09/26/2034 3,177,925 600,000 REGIONAL DIVERSIFIED FUNDING+/-++ 4.45 01/25/2036 601,860 3,000,000 TELUS CORPORATION 7.50 06/01/2007 3,181,728 TOTAL FOREIGN CORPORATE BONDS (COST $22,538,462) 22,546,464 -------------- MUNICIPAL BONDS & NOTES - 1.75% 5,250,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (HOUSING REVENUE LOC)+/-SS. 4.70 05/15/2029 5,250,000 3,015,000 CSUCI FINANCING AUTHORITY OF CALIFORNIA (COLLEGE AND UNIVERSITY REVENUE LOC)+/-SS. 3.79 08/01/2044 2,985,303 750,000 SANTA CRUZ COUNTY AZ IDA (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-SS. 4.75 08/01/2020 747,045 915,000 TOBACCO SETTLEMENT AUTHORITY OF IOWA (EXCISE TAX REVENUE LOC) 6.79 06/01/2010 911,532 -------------- TOTAL MUNICIPAL BONDS & NOTES (COST $9,932,162) 9,893,880 -------------- US TREASURY SECURITIES - 1.10% US TREASURY BILLS - 0.01% 53,000 US TREASURY BILL^@ 2.77 06/02/2005 52,997 -------------- US TREASURY NOTES - 1.09% 3,000,000 US TREASURY NOTE<< 1.88 01/31/2006 2,972,343 3,000,000 US TREASURY NOTE<< 3.00 02/15/2008 2,951,835 250,000 US TREASURY NOTE<< 2.63 05/15/2008 242,949 6,167,127 -------------- TOTAL US TREASURY SECURITIES (COST $6,238,367) 6,220,124 -------------- COLLATERAL FOR SECURITIES LENDING - 12.48% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.50% 2,851,322 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,851,322 -------------- 43
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS - 11.98% $ 1,999,998 ALLIANCE & LEICESTER PLC 3.29% 09/19/2005 $ 1,979,958 924,999 ANZ (DELAWARE) INCORPORATED 3.08 06/03/2005 924,842 1,999,998 ATLANTIC ASSET SECURITIZATION CORPORATION 3.07 06/22/2005 1,996,478 1,593,998 ATOMIUM FUNDING CORPORATION 3.06 06/22/2005 1,591,193 500,000 ATOMIUM FUNDING CORPORATION 3.14 07/14/2005 498,159 2,999,997 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 2,999,997 1,199,999 BANK OF IRELAND 3.07 06/03/2005 1,199,795 250,000 BEAR STEARNS COMPANY INCORPORATED SERIES MTNB 3.21 01/17/2006 250,095 2,999,997 BLUE SPICE LLC 3.06 06/01/2005 2,999,997 300,000 BNP PARIBAS CANADA 3.23 08/31/2005 297,513 1,799,998 CEDAR SPRINGS CAPITAL COMPANY LLC 3.22 08/11/2005 1,788,604 1,999,998 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/22/2005 1,996,478 26,999,973 DEUTSCHE BANK REPURCHASE AGREEMENT (MATURITY VALUE $27,002,275) 3.07 06/01/2005 26,999,973 1,599,998 DEXIA DELAWARE LLC 3.27 09/19/2005 1,583,966 250,000 FOUNTAIN SQUARE COMMERCIAL FUNDING CORPORATION 3.08 06/29/2005 249,412 1,999,998 GEORGE STREET FINANCE LLC 3.05 06/20/2005 1,996,818 1,999,998 KLIO FUNDING CORPORATION 3.05 06/20/2005 1,996,818 999,999 KLIO FUNDING CORPORATION 3.06 06/27/2005 997,819 2,999,997 KLIO FUNDING CORPORATION 3.07 06/29/2005 2,992,947 1,999,998 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 1,999,638 1,999,998 LIBERTY STREET FUNDING CORPORATION 3.26 08/15/2005 1,986,618 2,383,998 PERRY GLOBAL FUNDING LIMITED 3.23 08/11/2005 2,368,907 2,999,997 TOTAL CAPITAL S.A. 3.07 06/01/2005 2,999,997 2,999,997 TRANSAMERICA ASSET FUNDING CORPORATION 3.07 06/01/2005 2,999,997 67,696,019 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $70,547,341) 70,547,341 -------------- SHARES SHORT-TERM INVESTMENTS - 2.26% 12,785,550 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 12,785,550 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $12,785,550) 12,785,550 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $635,330,147)* 112.17% $ 633,990,212 OTHER ASSETS AND LIABILITIES, NET (12.17) (68,808,455) ------ -------------- TOTAL NET ASSETS 100.00% $ 565,181,757 ====== ============== 44
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM BOND FUND -------------------------------------------------------------------------------- << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) +/- VARIABLE RATE INVESTMENTS. (C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES. INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED TIMING OF FUTURE CASH FLOWS. (I) ILLIQUID SECURITY. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE EFFECTIVE MATURITY. @ SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $12,785,550. * COST FOR FEDERAL INCOME TAX PURPOSES IS $635,339,174 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 8,681,883 GROSS UNREALIZED DEPRECIATION (10,030,847) -------------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ (1,348,964) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS - 0.29% $ 474,134 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 1994-5 CLASS B2+/-(I) 4.00% 04/25/2024 $ 476,503 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $455,378) 476,503 -------------- CORPORATE BONDS & NOTES - 67.38% APPAREL & ACCESSORY STORES - 1.38% 2,000,000 GAP INCORPORATED 9.80 12/15/2008 2,306,112 -------------- APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.57% 2,402,000 WILLIAM CARTER COMPANY SERIES B 10.88 08/15/2011 2,630,190 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 3.06% 1,740,000 DR HORTON INCORPORATED 7.50 12/01/2007 1,844,090 1,400,000 RYLAND GROUP INCORPORATED 9.75 09/01/2010 1,503,632 1,750,000 STANDARD-PACIFIC CORPORATION 6.50 10/01/2008 1,776,250 5,123,972 -------------- BUSINESS SERVICES - 0.49% 725,000 BRICKMAN GROUP LIMITED SERIES B 11.75 12/15/2009 819,250 -------------- CHEMICALS & ALLIED PRODUCTS - 4.01% 1,915,000 FMC CORPORATION SERIES MTNA 7.00 05/15/2008 1,972,450 2,415,000 IMC GLOBAL INCORPORATED 10.88 06/01/2008 2,692,725 1,900,000 MILLENNIUM AMERICA INCORPORATED 9.25 06/15/2008 2,047,250 6,712,425 -------------- COMMUNICATIONS - 10.39% 2,500,000 AT&T CORPORATION SERIES MTNA 8.35 05/15/2025 2,587,500 2,495,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 2,544,900 1,915,000 CSC HOLDINGS INCORPORATED 7.88 12/15/2007 1,998,781 2,970,000 LENFEST COMMUNICATIONS INCORPORATED 10.50 06/15/2006 3,147,618 1,000,000 MCI INCORPORATED 6.91 05/01/2007 1,016,250 2,000,000 NEXTMEDIA OPERATING INCORPORATED 10.75 07/01/2011 2,180,000 1,915,000 PANAMSAT CORPORATION 6.38 01/15/2008 1,934,150 2,000,000 PAXSON COMMUNICATION CORPORATION+/-++ 5.89 01/15/2010 2,000,000 17,409,199 -------------- ELECTRIC, GAS & SANITARY SERVICES - 5.78% 1,475,000 ALLIED WASTE NORTH AMERICA SERIES B 8.88 04/01/2008 1,541,375 2,000,000 CMS ENERGY CORPORATION 7.50 01/15/2009 2,075,000 1,724,193 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 1,740,033 2,490,000 SIERRA PACIFIC POWER COMPANY SERIES A 8.00 06/01/2008 2,658,075 1,615,000 TXU ENERGY COMPANY LLC 6.13 03/15/2008 1,672,205 9,686,688 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 3.13% 3,500,000 AMETEK INCORPORATED 7.20 07/15/2008 3,759,878 1,435,000 FREESCALE SEMICONDUCTOR INCORPORATED+/- 5.89 07/15/2009 1,485,225 5,245,103 -------------- 46
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.18% $ 1,915,000 BALL CORPORATION 7.75% 08/01/2006 $ 1,982,025 -------------- FOOD & KINDRED PRODUCTS - 0.91% 1,440,000 CONSTELLATION BRANDS INCORPORATED SERIES B 8.00 02/15/2008 1,526,400 -------------- HEALTH SERVICES - 4.50% 2,000,000 ALLIANCE IMAGING INCORPORATED 10.38 04/15/2011 2,190,000 3,160,000 FRESENIUS MEDICAL CARE CAPITAL TRUST II 7.88 02/01/2008 3,310,100 1,915,000 MAGELLAN HEALTH SERVICES INCORPORATED SERIES A 9.38 11/15/2008 2,034,687 7,534,787 -------------- HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.32% 2,000,000 TEMPUR-PEDIC 10.25 08/15/2010 2,220,000 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 4.74% 2,185,000 AMERISTAR CASINOS INCORPORATED 10.75 02/15/2009 2,387,112 2,000,000 CHUMASH CASINO & RESORT ENTERPRISE++ 9.00 07/15/2010 2,160,000 2,500,000 HANOVER EQUIPMENT TRUST SERIES B 8.75 09/01/2011 2,593,750 779,000 HMH PROPERTIES INCORPORATED SERIES B 7.88 08/01/2008 792,633 7,933,495 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.18% 1,885,000 AGCO CORPORATION 9.50 05/01/2008 1,979,250 -------------- MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 1.45% 2,300,000 BAUSCH & LOMB INCORPORATED 6.95 11/15/2007 2,426,038 -------------- MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.97% 1,500,000 JACUZZI BRANDS INCORPORATED 9.63 07/01/2010 1,620,000 -------------- MISCELLANEOUS RETAIL - 2.44% 1,828,000 MICHAELS STORES INCORPORATED 9.25 07/01/2009 1,919,400 2,000,000 RITE AID CORPORATION 12.50 09/15/2006 2,160,000 4,079,400 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 0.57% 1,000,000 FORD MOTOR CREDIT COMPANY 4.95 01/15/2008 947,945 -------------- OIL & GAS EXTRACTION - 1.95% 2,895,560 PORT ARTHUR FINANCE CORPORATION 12.50 01/15/2009 3,271,983 -------------- PAPER & ALLIED PRODUCTS - 2.39% 2,675,000 GEORGIA-PACIFIC CORPORATION 7.50 05/15/2006 2,748,563 1,220,000 SMURFIT-STONE CONTAINER ENTERPRISES INCORPORATED 9.25 02/01/2008 1,259,650 4,008,213 -------------- PERSONAL SERVICES - 1.09% 1,775,000 SERVICE CORPORATION INTERNATIONAL US 7.20 06/01/2006 1,823,813 -------------- PIPELINES, EXCEPT NATURAL GAS - 1.26% 2,105,000 PLAINS ALL AMERICAN PIPELINE LP PAA FINANCE CORPORATION 4.75 08/15/2009 2,108,831 -------------- 47
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE PRIMARY METAL INDUSTRIES - 2.28% $ 2,000,000 EARLE M JORGENSEN COMPANY 9.75% 06/01/2012 $ 2,120,000 1,500,000 UNITED STATES STEEL LLC 10.75 08/01/2008 1,695,000 3,815,000 -------------- PRINTING, PUBLISHING & ALLIED INDUSTRIES - 3.99% 2,000,000 DEX MEDIA EAST LLC/DEX MEDIA EAST FINANCE COMPANY 9.88 11/15/2009 2,215,000 2,000,000 HUNTSMAN ADVANCED MATERIALS LLC+/-++ 10.89 07/15/2008 2,105,000 1,310,000 PRIMEDIA INCORPORATED 7.63 04/01/2008 1,319,825 1,000,000 UCAR FINANCE INCORPORATED 10.25 02/15/2012 1,035,000 6,674,825 -------------- TRANSPORTATION EQUIPMENT - 3.64% 2,075,000 ARVINMERITOR INCORPORATED 6.63 06/15/2007 2,059,438 1,500,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 4.13 03/20/2007 1,434,300 2,580,000 ITT CORPORATION 6.75 11/15/2005 2,602,575 6,096,313 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 1.71% 2,635,000 AMERISOURCEBERGEN CORPORATION 8.13 09/01/2008 2,858,975 -------------- TOTAL CORPORATE BONDS & NOTES (COST $113,093,323) 112,840,232 -------------- FOREIGN CORPORATE BONDS - 6.40% 2,550,000 BRITISH SKY BROADCASTING GROUP PLC 8.20 07/15/2009 2,876,974 1,000,000 CP SHIPS LIMITED 10.38 07/15/2012 1,120,000 2,490,000 CROWN CORK & SEAL FINANCE PLC 7.00 12/15/2006 2,552,250 2,030,000 NOVA CHEMICALS CORPORATION SERIES MTN 7.40 04/01/2009 2,088,362 2,000,000 ROGERS WIRELESS INCORPORATED+/- 6.14 12/15/2010 2,085,000 TOTAL FOREIGN CORPORATE BONDS (COST $10,744,566) 10,722,586 -------------- TERM LOANS - 23.60% 808,409 ACCURIDE INTERNATIONAL INCORPORATED TERM LOAN+/-++ 5.31 01/06/2012 806,897 2,000,000 CHARTER COMMUNICATIONS TERM LOAN+/-++ 6.19 04/27/2010 1,982,500 1,836,066 CONSOLIDATED COMMUNICATIONS ACQUISITION TEXAS INCORPORATED TERM LOAN+/-++ 5.35 03/18/2010 1,854,426 1,544,283 DEX MEDIA WEST LLC TERM LOAN B+/-++ 4.77 09/10/2010 1,551,448 3,000,000 DIRECTV TERM LOAN+/-++ 4.59 04/08/2013 3,003,120 2,310,000 GOODYEAR TIRE & RUBBER COMPANY TERM LOAN B+/-++ 5.89 04/08/2010 2,294,985 997,500 GRAHAM PACKAGING COMPANY LP TERM LOAN+/-++ 5.64 09/15/2011 1,006,228 1,447,235 INVISTA TERM LOAN B+/-++ 5.31 04/30/2011 1,458,090 1,000,000 KERR-MCGEE CORPORATION TERM LOAN B+/-++ 5.79 05/19/2011 1,010,000 2,970,000 LIFEPOINT INCORPORATED TERM LOAN B+/-++ 4.72 04/15/2012 2,970,921 876,908 MIDWEST GENERATION LLC TERM LOAN+/-++ 5.32 04/05/2011 881,845 1,887,244 MUELLER GROUP INCORPORATED TERM LOAN+/-++ 5.89 03/24/2011 1,903,757 2,497,069 NALCO COMPANY TERM LOAN B+/-++ 5.03 11/01/2010 2,520,867 2,000,000 NEW PAGE CORPORATION TERM LOAN B+/-++ 8.00 04/07/2011 2,005,000 496,869 NEW SKIES SATELLITES TERM LOAN+/-++ 5.69 05/04/2011 498,981 992,500 NORTEK HOLDINGS INCORPORATED TERM LOAN+/-++ 5.59 07/28/2011 1,000,877 935,000 POLYPORE INTERNATIONAL INCORPORATED TERM LOAN+/-++ 5.35 05/14/2010 943,181 3,575,000 QWEST TERM LOAN A+/-++ 7.39 06/30/2007 3,667,342 48
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE TERM LOANS - 23.60% $ 2,399,812 REGAL CINEMAS CORPORATION TERM LOAN B+/-++ 5.09% 10/19/2010 $ 2,412,555 1,000,000 SPECTRUM BRANDS INCORPORATED TERM LOAN+/-++ 4.75 02/07/2012 1,012,500 2,939,901 TRIAD HOSPITALS INCORPORATED TERM LOAN B+/-++ 5.36 01/04/2008 2,966,684 776,000 VISANT CORPORATION TERM LOAN B+/-++ 5.19 09/30/2011 780,850 990,000 WARNER MUSIC GROUP TERM LOAN+/-++ 5.45 03/18/2010 990,416 TOTAL TERM LOANS (COST $39,267,106) 39,523,470 -------------- SHORT-TERM INVESTMENTS - 1.31% 2,200,015 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 2,200,015 -------------- SHARES TOTAL SHORT-TERM INVESTMENTS (COST $2,200,015) 2,200,015 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $165,760,388)* 98.98% $ 165,762,806 OTHER ASSETS AND LIABILITIES, NET 1.02 1,705,027 ------ -------------- TOTAL NET ASSETS 100.00% $ 167,467,833 ====== ============== +/- VARIABLE RATE INVESTMENTS. (I) ILLIQUID SECURITY. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,200,015. * COST FOR FEDERAL INCOME TAX PURPOSES IS $165,760,388 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 1,219,690 GROSS UNREALIZED DEPRECIATION (1,217,272) ----------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 2,418 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE AGENCY NOTES - INTEREST BEARING - 0.45% $ 5,000,000 FHLB<< 4.13% 03/24/2008 $ 5,002,850 TOTAL AGENCY NOTES - INTEREST BEARING (COST $4,974,907) 5,002,850 -------------- AGENCY SECURITIES - 9.68% FEDERAL HOME LOAN MORTGAGE CORPORATION - 2.77% 449,230 FHLMC #1B0128+/- 6.16 09/01/2031 456,914 91,380 FHLMC #1B0145+/- 6.03 10/01/2031 93,521 638,366 FHLMC #555243 9.00 11/01/2016 693,220 1,399,488 FHLMC #555427 9.50 09/01/2020 1,602,866 611,148 FHLMC #555490 9.50 12/01/2016 663,681 4,127,238 FHLMC #555519<< 9.00 12/01/2016 4,501,860 1,194,289 FHLMC #788792+/- 6.15 01/01/2029 1,248,484 2,514,421 FHLMC #789272<<+/- 5.66 04/01/2032 2,612,678 330,066 FHLMC #846989+/- 5.64 06/01/2031 335,815 653,972 FHLMC #846990+/- 6.14 10/01/2031 672,032 1,383,680 FHLMC #884013<< 10.50 05/01/2020 1,580,060 948,970 FHLMC #A01734<< 9.00 08/01/2018 1,034,247 363,562 FHLMC #A01849 9.50 05/01/2020 414,084 2,112,450 FHLMC #C64637<< 7.00 06/01/2031 2,230,982 2,852,619 FHLMC #G01126<< 9.50 12/01/2022 3,145,443 2,005,372 FHLMC #G11150<< 7.50 12/01/2011 2,100,314 1,603,330 FHLMC #G11200<< 8.00 01/01/2012 1,706,845 1,746,657 FHLMC #G11229<< 8.00 01/01/2013 1,858,374 1,359,444 FHLMC #G11391<< 7.50 06/01/2012 1,439,356 1,774,883 FHLMC #G40362<< 5.00 05/01/2006 1,784,814 756,575 FHLMC #G80118 10.00 11/17/2021 875,668 31,051,258 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.24% 945,193 FNMA #100001 9.00 02/15/2020 1,055,035 852,487 FNMA #100256 9.00 10/15/2021 946,448 1,233,769 FNMA #100259<< 7.50 12/15/2009 1,281,925 385,235 FNMA #190722 9.50 03/01/2021 431,089 1,042,997 FNMA #190909 9.00 06/01/2024 1,164,670 1,635,059 FNMA #252870<< 7.00 11/01/2014 1,718,199 825,851 FNMA #310010 9.50 12/01/2020 949,216 209,354 FNMA #323069 9.00 11/01/2007 209,815 25,329 FNMA #323498 9.50 12/01/2009 25,310 3,265,818 FNMA #323534<< 9.00 12/01/2016 3,612,211 2,300,303 FNMA #340181<< 7.00 12/01/2010 2,410,955 927,571 FNMA #344890<< 10.25 09/01/2021 1,069,921 502,967 FNMA #379046 9.50 03/01/2010 525,314 930,977 FNMA #392647 9.00 10/01/2013 976,736 136,080 FNMA #426817 10.00 12/01/2009 137,746 701,691 FNMA #458004 10.00 03/20/2018 787,120 209,629 FNMA #522159+/- 7.10 02/01/2030 211,957 935,581 FNMA #523850<< 10.50 10/01/2014 1,022,616 1,892,254 FNMA #535807<< 10.50 04/01/2022 2,181,451 50
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED) $ 2,779,704 FNMA #545117+/- 6.67% 12/01/2040 $ 2,877,118 2,484,068 FNMA #545131<< 8.00 03/01/2013 2,615,742 671,391 FNMA #545157<< 8.50 11/01/2012 708,576 2,821,198 FNMA #545325<< 8.50 07/01/2017 3,056,843 1,395,170 FNMA #545460<<+/- 5.82 11/01/2031 1,440,647 695,778 FNMA #591199+/- 6.07 08/01/2031 707,051 5,045,341 FNMA #598559<< 6.50 08/01/2031 5,291,035 184,704 FNMA #604060+/- 5.96 09/01/2031 190,964 1,290,365 FNMA #604689<<+/- 6.39 10/01/2031 1,326,124 1,417,190 FNMA #635070<<+/- 5.14 05/01/2032 1,452,195 1,162,073 FNMA #646643<<+/- 5.90 06/01/2032 1,185,111 1,191,709 FNMA #660508<< 7.00 05/01/2013 1,252,541 14,719,948 FNMA #724657<<+/- 5.55 07/01/2033 15,348,718 656,276 FNMA #8243 10.00 01/01/2010 709,507 58,879,906 -------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.67% 269,849 GNMA #780253 9.50 11/15/2017 297,558 1,078,755 GNMA #780267<< 9.00 11/15/2017 1,188,854 961,413 GNMA #780664<< 10.00 10/20/2017 1,093,115 3,137,882 GNMA #781310<< 8.00 01/15/2013 3,314,780 3,357,743 GNMA #781311<< 7.50 02/15/2013 3,518,761 5,106,282 GNMA #781540<< 7.00 05/15/2013 5,365,658 3,732,062 GNMA #781614<< 7.00 06/15/2033 3,994,288 18,773,014 -------------- TOTAL AGENCY SECURITIES (COST $104,262,064) 108,704,178 -------------- ASSET-BACKED SECURITIES - 22.39% 8,700,000 AAMES MORTGAGE TRUST SERIES 2003-1 CLASS M1+/- 3.77 10/25/2033 8,793,633 10,958,000 ACCREDITED MORTGAGE LOAN TRUST SERIES 2004-3 CLASS 1A2+/- 3.44 10/25/2034 10,844,574 20,193,908 AIRPLANES PASS THROUGH TRUST SERIES 1R CLASS B+/-^^(I) 3.56 03/15/2019 2,827,147 8,143,266 ASSET BACKED SECURITIES CORPORATION HOME EQUITY SERIES 2003-HE6 CLASS AIO(C) 4.00 11/25/2033 159,917 10,000,000 BANK ONE ISSUANCE TRUST SERIES 2004-B1 CLASS B1+/- 3.41 03/15/2012 10,058,329 6,300,000 CAPITAL ONE PRIME AUTO RECEIVABLES TRUST SERIES 2004-3 CLASS A2 3.04 07/15/2007 6,277,524 9,616,821 CDC MORTGAGE CAPITAL TRUST SERIES 2003-HE4 CLASS M1+/- 3.74 03/25/2034 9,654,252 7,400,000 CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2003-5 CLASS 2M1+/- 3.69 05/25/2033 7,434,774 1,110,202 CLYDESDALE CBO I LIMITED SERIES 1A CLASS A1+/-++ 3.30 03/25/2011 1,111,589 5,247,121 CONTIMORTGAGE NET INTEREST MARGIN NOTES SERIES 1997-A CLASS A(I)+ 7.23 07/16/2028 1,574 4,783,236 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2004-7 CLASS AF1+/- 3.29 10/25/2022 4,785,201 6,845,027 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2002-C CLASS A+/- 3.33 05/15/2028 6,850,319 2,629,504 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-I CLASS A+/- 3.38 02/15/2034 2,637,994 11,524,070 COUNTRYWIDE HOME EQUITY LOAN TRUST SERIES 2004-Q CLASS 2A+/- 3.39 12/15/2033 11,553,775 18,500,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2005-A CLASS M1 3.17 09/08/2007 18,446,182 17,515,289 DUKE FUNDING LIMITED SERIES 2000-1A CLASS A+/-++ 3.27 11/10/2030 17,515,289 156,279,616 EASTMAN HILL FUNDING LIMITED SERIES 1A CLASS A2(I)(C) 0.83 09/29/2031 4,344,573 1,186,733 EDUCAP INCORPORATED SERIES 1993-A CLASS A3+/-(I) 3.86 08/20/2008 1,187,433 4,843,437 EPIC TRUST SERIES 1996-1 CLASS B+/-^^(I)++ 5.12 09/25/2009 96,869 51
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE ASSET-BACKED SECURITIES (CONTINUED) $ 1,314,960 EPIC TRUST SERIES 1996-1 CLASS C+/-^^(I)++ 10.00% 09/25/2009 $ 13,149 6,771,672 EQUIFIRST MORTGAGE LOAN TRUST SERIES 2003-2 CLASS 3A3+/- 2.47 09/25/2033 6,774,148 2,365,280 FIRST FRANKLIN MORTGAGE LOAN ASSET BACKED CERTIFICATES SERIES 2000-FF1 CLASS M1+/- 3.92 09/25/2030 2,366,345 5,500,000 FLEET COMMERCIAL LOAN MASTER LLC SERIES 2000-1A CLASS B2+/-++ 3.85 11/16/2007 5,500,000 6,500,000 GREEN TREE HOME IMPROVEMENT LOAN TRUST SERIES 1998-E CLASS AV1 7.27 06/15/2028 6,546,875 8,636,526 GREEN TREE HOME IMPROVEMENT LOAN TRUST SERIES 1998-E CLASS HEM1 6.93 07/15/2028 8,730,556 952,831 GSAA TRUST SERIES 2004-7 CLASS AV1+/- 3.27 06/25/2034 952,781 12,000,000 HOME EQUITY ASSET TRUST SERIES 2003-6 CLASS M1+/- 3.79 02/25/2034 12,069,581 8,200,000 HOME EQUITY ASSET TRUST SERIES 2003-7 CLASS M1+/- 3.74 03/25/2034 8,232,023 9,500,000 MORGAN STANLEY ABS CAPITAL I SERIES 2003-NC10 CLASS M1+/- 3.77 10/25/2033 9,546,915 2,918,996 OAKWOOD MORTGAGE INVESTORS INCORPORATED SERIES 1996-C CLASS A5 7.35 04/15/2027 2,990,454 2,162,884 PROVIDENT CBO I LIMITED SERIES 1A CLASS A1+/-++ 3.76 12/09/2010 2,168,291 16,370,079 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RZ2 CLASS AIO(C) 5.75 09/25/2005 271,743 1,953,032 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RZ5 CLASS A2 3.18 03/25/2027 1,947,935 1,896,822 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2001-KS1 CLASS AII+/- 3.33 03/25/2032 1,898,565 9,125,000 RESIDENTIAL ASSET SECURITIES CORPORATION SERIES 2003-KS8 CLASS MII1+/- 3.72 10/25/2033 9,124,825 12,240,541 SOUTH STREET CBO LIMITED SERIES 2000-1 CLASS A2L+/-++ 3.97 05/30/2012 12,247,886 11,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC10 CLASS M1+/- 3.84 10/25/2033 11,041,104 15,000,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2003-BC3 CLASS M1+/- 4.04 04/25/2033 15,094,009 3,287,533 TERWIN MORTGAGE TRUST SERIES 2004-21HE CLASS 1A1+/- 3.57 12/25/2034 3,287,533 6,000,000 WILLIAM STREET FUNDING CORPORATION CLASS 2005-1 CLASS A+/-++ 3.04 01/23/2011 6,000,000 TOTAL ASSET-BACKED SECURITIES (COST $280,841,959) 251,385,666 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 30.19% 1,164,140 ASSET SECURITIZATION CORPORATION SERIES 1995-D1 CLASS A1 7.59 07/11/2027 1,213,087 6,172,602 ASSET SECURITIZATION CORPORATION SERIES 1995-MD4 CLASS A1 7.10 08/13/2029 6,268,434 37,285,294 BANC OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2001-PB1 CLASS XP+/-(C)++ 1.53 05/11/2035 2,731,498 5,016,201 BANC OF AMERICA LARGE LOAN SERIES 2003-BBA2 CLASS F+/-++ 3.99 11/15/2015 5,051,865 15,075,000 BEAR STEARNS ASSET BACKED SECURITIES INCORPORATED SERIES 2003-AC2 CLASS AIO(C) 5.00 10/25/2005 246,377 734,684 CITICORP MORTGAGE SECURITIES INCORPORATED SERIES 1992-7 CLASS A+/-(I) 4.13 03/25/2022 737,356 745,809 COLLATERALIZED MORTGAGE OBLIGATION TRUST SERIES 66 CLASS Z 8.00 09/20/2021 745,437 125,124,626 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2004-J9 CLASS 1AIO+/-(C) 1.40 03/25/2007 1,420,965 2,518,653 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES J8 CLASS 4A1 6.00 02/25/2017 2,590,028 1,580,174 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST SERIES 2001-HYB1 CLASS 2A1+/- 4.69 06/19/2031 1,604,383 2,694,227 COUNTRYWIDE HOME LOAN MORTGAGE PASS THROUGH TRUST SERIES 2004-30 CLASS 3A1+/- 4.66 09/25/2034 2,777,937 3,966,396 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 1997-C2 CLASS A2 6.52 01/17/2035 4,015,693 81,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2001-CF2 CLASS ACP+/-(C)++ 1.17 02/15/2034 2,513,122 115,383,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2001-CK1 CLASS ACP+/-(C)++ 1.03 12/16/2035 3,061,053 100,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2001-CK6 CLASS ACP+/-(C) 0.93 08/15/2036 3,022,430 90,200,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2001-CKN5 CLASS ACP+/-(C)++ 1.94 09/15/2034 5,532,300 4,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2003-TF2A CLASS E+/-++ 4.04 11/15/2014 4,017,297 3,000,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2003-TF2A CLASS F+/-++ 4.19 11/15/2014 3,016,415 9,248,392 DEUTSCHE ALT-A SECURITIES INCORPORATED ALTERNATE LOAN TRUST SERIES 2003-4XS CLASS AIO+/-(C) 3.00 11/25/2005 103,788 19,236,000 DEUTSCHE MORTGAGE SECURITIES INCORPORATED SERIES 2004-2 CLASS AIO+/-(C) 3.50 02/25/2006 246,461 7,754,104 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CF1 CLASS A1A 7.45 06/10/2033 7,942,631 965,419 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1990-2 CLASS A+/-(I) 4.09 01/25/2022 962,801 192,068 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1991-3 CLASS A1+/-(I) 3.83 02/20/2021 190,871 52
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 3,265,567 FHLMC STRUCTURED PASS-THROUGH SECURITIES SERIES T-42 CLASS A6 9.50% 02/25/2042 $ 3,599,339 2,562,486 FNMA GRANTOR TRUST SERIES 2000-T6 CLASS A2 9.50 06/25/2030 2,804,473 7,221,744 FNMA GRANTOR TRUST SERIES 2001-T10 CLASS A3 9.50 12/25/2041 7,974,738 6,268,662 FNMA GRANTOR TRUST SERIES 2001-T12 CLASS A3 9.50 08/25/2041 6,924,541 12,693,788 FNMA GRANTOR TRUST SERIES 2001-T8 CLASS A3+/- 4.74 07/25/2041 12,891,166 7,016,639 FNMA GRANTOR TRUST SERIES 2002-T1 CLASS A4 9.50 11/25/2031 7,605,717 690,834 FNMA SERIES 1988-4 CLASS Z 9.25 03/25/2018 745,045 1,024,892 FNMA SERIES 1988-5 CLASS Z 9.20 03/25/2018 1,087,936 415,497 FNMA SERIES 1988-9 CLASS Z 9.45 04/25/2018 455,267 1,223,631 FNMA SERIES 1989-30 CLASS Z<< 9.50 06/25/2019 1,339,251 302,174 FNMA SERIES 1989-49 CLASS E 9.30 08/25/2019 327,076 266,064 FNMA SERIES 1990-111 CLASS Z 8.75 09/25/2020 281,520 629,559 FNMA SERIES 1990-119 CLASS J 9.00 10/25/2020 682,615 329,393 FNMA SERIES 1990-124 CLASS Z 9.00 10/25/2020 358,870 1,450,814 FNMA SERIES 1990-21 CLASS Z<< 9.00 03/25/2020 1,598,069 759,884 FNMA SERIES 1990-27 CLASS Z 9.00 03/25/2020 826,074 421,666 FNMA SERIES 1990-30 CLASS D 9.75 03/25/2020 466,000 1,788,308 FNMA SERIES 1991-132 CLASS Z<< 8.00 10/25/2021 1,912,333 692,571 FNMA SERIES 1992-71 CLASS X 8.25 05/25/2022 742,088 3,762,644 FNMA SERIES G-22 CLASS ZT<< 8.00 12/25/2016 4,014,971 5,491,922 FNMA WHOLE LOAN SERIES 2002-W4 CLASS A6+/- 4.31 05/25/2042 5,627,938 5,284,304 FNMA WHOLE LOAN SERIES 2003-W10 CLASS 3A2A 2.20 07/25/2037 5,233,595 4,012,152 FNMA WHOLE LOAN SERIES 2003-W11 CLASS A1<<+/- 5.25 06/25/2033 4,094,541 16,340,023 FNMA WHOLE LOAN SERIES 2003-W6 CLASS 6A+/- 4.19 08/25/2042 16,680,863 140,073,600 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2001-1 CLASS X2+/-(C)++ 0.95 05/15/2033 3,650,962 181,365,889 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2001-2 CLASS X2+/-(C)++ 1.01 08/11/2033 6,247,039 6,657,828 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2000-C2 CLASS A1 7.27 08/16/2033 6,960,583 131,400,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2001-C2 CLASS X2+/-(C)++ 0.69 04/15/2034 3,064,511 5,098,397 GREENWICH CAPITAL TRUST I CLASS A+/-(I)++ 3.05 02/15/2021 5,211,072 10,801,698 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 1AF+/-++ 3.49 06/25/2034 10,853,719 9,012,898 GSMPS MORTGAGE LOAN TRUST SERIES 2004-4 CLASS 2A1+/-++ 4.22 06/25/2034 9,257,748 9,361,397 GSR MORTGAGE LOAN TRUST SERIES 2004-1 CLASS 2A2+/- 5.22 04/25/2032 9,431,049 576,858 HOUSING SECURITIES INCORPORATED SERIES 1992-8 CLASS E+/- 3.79 06/25/2024 567,080 4,080,272 IMPAC CMB TRUST SERIES 2003-4 CLASS 3AIO(C) 6.00 09/25/2005 59,980 12,800,000 IMPAC SECURED ASSETS CORPORATION SERIES 2003-3 CLASS AIO(C) 5.75 01/25/2006 325,777 13,096,516 IMPAC SECURED ASSETS CORPORATION SERIES 2004-1 CLASS AIO+/-(C) 3.50 02/25/2006 218,666 587,815,718 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR14 CLASS AX1+/-(C) 0.80 01/25/2035 6,877,444 318,879,778 INDYMAC INDEX MORTGAGE LOAN TRUST SERIES 2004-AR8 CLASS AX1+/-(C) 0.80 11/25/2034 3,699,006 248,861,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES 2001-CIB2 CLASS X2+/-(C)++ 1.00 04/15/2035 7,138,951 8,357,508 JP MORGAN MORTGAGE TRUST SERIES 2005-A2 CLASS 3A+/- 4.93 04/25/2035 8,385,088 8,000,000 JP MORGAN MORTGAGE TRUST SERIES 2005-A3 CLASS 7CA1+/- 5.17 06/25/2035 8,092,800 1,337,292 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1995-A CLASS A5+/-(I) 4.06 06/15/2020 1,343,551 3,233,443 MLCC SERIES 1996-C CLASS B+/-(I)++ 3.84 09/15/2021 2,649,483 3,487 MORGAN STANLEY MORTGAGE TRUST SERIES 35 CLASS 2+/-(I)(C) 11,073.50 04/20/2021 25,574 6,888,394 NOMURA ASSET ACCEPTANCE CORPORATION++ 3.25 02/25/2035 6,888,394 82,453 PRUDENTIAL HOME MORTGAGE SECURITIES SERIES 1988-1 CLASS A+/- 4.17 04/25/2018 82,989 53
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED) $ 81,411 PRUDENTIAL HOME MORTGAGE SECURITIES SERIES 1995-A CLASS 2B+/- 8.73% 03/28/2025 $ 81,411 182,506 RESECURITIZATION MORTGAGE TRUST SERIES 1998-B CLASS A+/-++ 3.34 04/26/2021 178,856 12,213,067 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B3+/-++ 4.31 09/10/2035 12,426,029 7,816,363 RESIDENTIAL FINANCE LP SERIES 2003-C CLASS B4+/-++ 4.51 09/10/2035 7,945,658 1,610,218 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 1990-2 CLASS A+/- 4.31 11/25/2020 1,606,409 7,347,924 SEQUOIA MORTGAGE TRUST SERIES 8 CLASS 3A+/- 4.03 08/20/2032 7,456,673 13,949,693 STRUCTURED ASSET MORTGAGE INVESTMENTS INCORPORATED SERIES 2001-4 CLASS A1 9.22 10/25/2024 15,001,405 2,383,297 STRUCTURED ASSET MORTGAGE INVESTMENTS INCORPORATED SERIES 2001-4 CLASS A2 9.65 10/25/2024 2,474,285 35,508 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1994-C1 CLASS A3+/- 3.77 08/25/2026 35,612 1,183,692 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-2 CLASS A+/- 3.61 02/25/2028 1,183,692 7,527,040 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF1 CLASS A+/-++ 8.73 04/15/2027 7,817,696 10,081,599 STRUCTURED ASSET SECURITIES CORPORATION SERIES 1998-RF2 CLASS A+/-++ 8.56 07/15/2027 10,421,689 1,369,538 STRUCTURED ASSET SECURITIES CORPORATION SERIES 2002-8A CLASS 3A+/- 5.60 05/25/2032 1,379,576 4,274,829 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR10 CLASS A6+/- 4.82 10/25/2032 4,309,410 3,551,003 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR15 CLASS A5+/- 4.38 12/25/2032 3,542,269 1,093,758 WASHINGTON MUTUAL INCORPORATED SERIES 2002-AR7 CLASS A6+/- 5.53 07/25/2032 1,092,433 6,952,000 WASHINGTON MUTUAL INCORPORATED SERIES 2003-AR7 CLASS A5+/- 3.07 08/25/2033 6,845,714 1,117,060 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M2+/-(I) 6.17 08/25/2032 1,114,245 984,789 WILSHIRE FUNDING CORPORATION SERIES 1996-3 CLASS M3+/-(I) 6.17 08/25/2032 982,280 3,775,743 WILSHIRE FUNDING CORPORATION SERIES 1998-WFC2 CLASS M1+/-(I) 5.24 12/28/2037 3,780,463 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $333,914,562) 338,993,526 -------------- CORPORATE BONDS & NOTES - 27.41% AMUSEMENT & RECREATION SERVICES - 0.89% 1,830,000 CAESARS ENTERTAINMENT INCORPORATED 7.88 12/15/2005 1,862,025 3,845,000 CAESARS ENTERTAINMENT INCORPORATED 8.50 11/15/2006 4,046,863 4,100,000 SAN MANUEL ENTERTAINMENT AUTHORITY SERIES 04-B+/-++ 3.71 12/01/2010 4,100,000 10,008,888 -------------- BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.18% 1,925,000 SCHULER HOMES INCORPORATED 9.38 07/15/2009 2,025,452 -------------- BUSINESS SERVICES - 0.42% 4,535,000 CENDANT CORPORATION 6.88 08/15/2006 4,677,050 -------------- COMMUNICATIONS - 5.40% 2,890,000 ALLTEL CORPORATION 4.66 05/17/2007 2,914,701 15,000 CITIZENS COMMUNICATIONS COMPANY 7.60 06/01/2006 15,300 11,270,000 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 6.00 11/01/2006 11,455,211 3,850,000 COX COMMUNICATIONS INCORPORATED 7.75 08/15/2006 3,995,811 2,000,000 COX COMMUNICATIONS INCORPORATED+/-++ 3.04 12/14/2007 2,010,648 3,245,000 HISTORIC TW INCORPORATED 7.75 06/15/2005 3,249,751 5,775,000 LENFEST COMMUNICATIONS INCORPORATED 8.38 11/01/2005 5,881,092 1,000,000 LENFEST COMMUNICATIONS INCORPORATED 10.50 06/15/2006 1,059,804 1,155,000 LIBERTY MEDIA CORPORATION+/- 4.51 09/17/2006 1,160,648 3,590,000 QWEST CORPORATION 6.63 09/15/2005 3,598,975 5,533,000 TCI COMMUNICATIONS INCORPORATED 7.25 08/01/2005 5,561,976 5,790,000 TELECORP PCS INCORPORATED 10.63 07/15/2010 6,140,556 54
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COMMUNICATIONS (CONTINUED) $ 7,100,000 UNIVISION COMMUNICATIONS INCORPORATED 2.88% 10/15/2006 $ 6,973,542 6,455,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 6,582,932 60,600,947 -------------- DEPOSITORY INSTITUTIONS - 4.09% 5,000,000 ALLFIRST PREFERRED CAPITAL TRUST+/- 4.16 07/15/2029 5,058,300 7,500,000 CENTRAL FIDELITY CAPITAL I SERIES A+/- 4.14 04/15/2027 7,477,237 9,500,000 FIRST MARYLAND CAPITAL I+/- 4.14 01/15/2027 9,551,253 2,000,000 HUNTINGTON CAPITAL TRUST I+/- 3.43 02/01/2027 1,843,784 12,305,000 NTC CAPITAL TRUST II SERIES B+/- 3.25 04/15/2027 11,828,071 820,000 NTC CAPITAL TRUST SERIES A+/- 3.18 01/15/2027 782,560 5,000,000 STAR BANC CAPITAL TRUST I+/- 3.78 06/15/2027 4,931,345 4,500,000 SUNTRUST CAPITAL III+/- 3.66 03/15/2028 4,419,783 45,892,333 -------------- ELECTRIC, GAS & SANITARY SERVICES - 2.94% 5,800,000 CONECTIV INCORPORATED SERIES B 5.30 06/01/2005 5,800,000 4,800,000 ENTERGY GULF STATES INCORPORATED+/- 3.31 12/01/2009 4,810,848 1,750,000 FPL GROUP CAPITAL INCORPORATED 3.25 04/11/2006 1,741,947 1,100,000 GPU INCORPORATED SERIES A 7.70 12/01/2005 1,119,735 3,980,098 MIDLAND FUNDING II SERIES A 11.75 07/23/2005 4,016,663 7,000,000 NISOURCE FINANCE CORPORATION 7.63 11/15/2005 7,119,077 2,573,000 SOUTHERN CALIFORNIA EDISON COMPANY 8.00 02/15/2007 2,737,229 5,300,000 WESTAR ENERGY INCORPORATED 7.88 05/01/2007 5,643,970 32,989,469 -------------- FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.29% 3,100,000 BALL CORPORATION 7.75 08/01/2006 3,208,500 -------------- FOOD & KINDRED PRODUCTS - 0.91% 5,235,000 CONAGRA FOODS INCORPORATED 9.88 11/15/2005 5,362,483 4,800,000 NABISCO INCORPORATED 6.85 06/15/2005 4,805,025 10,167,508 -------------- HEALTH SERVICES - 0.45% 5,000,000 HCA INCORPORATED 7.13 06/01/2006 5,110,685 -------------- HOLDING & OTHER INVESTMENT OFFICES - 1.95% 3,200,000 MARTIN LUTHER KING FOUNDATION INCORPORATED SERIES 1998+/-(I) 4.80 12/01/2028 3,200,000 13,196,006 MORGAN GUARANTY TRUST COMPANY OF NEW YORK SERIES C+/- 5.59 07/27/2005 7,917,604 10,500,000 MORGAN STANLEY 5.80 04/01/2007 10,820,523 21,938,127 -------------- HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.41% 4,500,000 HARRAH'S OPERATING COMPANY INCORPORATED 7.88 12/15/2005 4,578,750 -------------- INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.58% 6,550,000 JOHN DEERE CAPITAL CORPORATION 3.88 03/07/2007 6,532,754 -------------- 55
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE INSURANCE CARRIERS - 1.16% $ 9,000,000 HSB CAPITAL I SERIES B+/- 3.57% 07/15/2027 $ 8,972,307 4,000,000 PRUDENTIAL FINANCIAL INCORPORATED+/- 4.10 11/15/2006 4,022,320 12,994,627 -------------- MUNICIPAL - 0.14% 1,550,000 YELLOWWOOD ACRES INCORPORATED SERIES 1998+/- 4.80 12/01/2028 1,550,000 -------------- NON-DEPOSITORY CREDIT INSTITUTIONS - 4.14% 6,780,000 CAPITAL ONE BANK SERIES BANK NOTE 8.25 06/15/2005 6,790,536 6,850,000 FORD MOTOR CREDIT COMPANY<< 6.50 01/25/2007 6,861,118 19,135,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 5.38 03/15/2007 19,594,967 2,270,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.75 01/15/2006 2,284,312 4,815,000 GENERAL MOTORS ACCEPTANCE CORPORATION+/- 4.10 07/16/2007 4,527,549 6,275,000 HSBC FINANCE CORPORATION 8.88 02/15/2006 6,485,062 46,543,544 -------------- OIL & GAS EXTRACTION - 0.34% 3,700,000 PIONEER NATURAL RESOURCES COMPANY 6.50 01/15/2008 3,819,873 -------------- PIPELINES, EXCEPT NATURAL GAS - 0.43% 4,825,000 CENTERPOINT ENERGY RESOURCES CORPORATION SERIES B 8.13 07/15/2005 4,852,488 -------------- REAL ESTATE - 0.71% 3,000,000 EOP OPERATING LP 6.75 02/15/2008 3,174,741 4,600,000 HIGHWOODS REALTY LP 7.00 12/01/2006 4,748,198 7,922,939 -------------- TOBACCO PRODUCTS - 0.30% 3,378,000 ALTRIA GROUP INCORPORATED 6.38 02/01/2006 3,427,295 -------------- TRANSPORTATION BY AIR - 0.14% 1,619,000 RAYTHEON COMPANY 6.50 07/15/2005 1,624,454 -------------- TRANSPORTATION EQUIPMENT - 1.11% 4,825,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 7.75 06/15/2005 4,831,407 7,705,000 DAIMLERCHRYSLER NA HOLDING CORPORATION+/- 3.20 03/07/2007 7,658,362 12,489,769 -------------- WHOLESALE TRADE NON-DURABLE GOODS - 0.43% 4,825,000 BERGEN BRUNSWIG CORPORATION 7.25 06/01/2005 4,825,000 -------------- TOTAL CORPORATE BONDS & NOTES (COST $314,033,353) 307,780,452 -------------- FOREIGN CORPORATE BONDS - 3.95% 7,000,000 COMMONWEALTH BANK OF AUSTRALIA SERIES B+/- 3.54 06/01/2010 7,000,000 5,221,000 DEUTSCHE TELEKOM INTERNATIONAL FINANCE BV 8.25 06/15/2005 5,229,463 6,680,000 FRANCE TELECOM 7.45 03/01/2006 6,856,279 2,401,192 PREFERRED TERM SECURITIES III+/-++ 6.13 08/07/2031 2,425,204 7,245,000 PREFERRED TERM SECURITIES XV+/-++ 4.62 09/26/2034 7,263,112 9,000,000 REGIONAL DIVERSIFIED FUNDING+/-++ 4.45 01/25/2036 9,027,900 6,165,000 TELUS CORPORATION 7.50 06/01/2007 6,538,451 TOTAL FOREIGN CORPORATE BONDS (COST $44,369,778) 44,340,409 -------------- 56
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PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE MUNICIPAL BONDS & NOTES - 1.40% $ 3,075,000 BAYONNE NJ REDEVELOPMENT AGENCY SERIES B (OTHER REVENUE LOC) 5.43% 04/13/2007 $ 3,084,686 3,950,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (HOUSING REVENUE LOC)+/-SS. 4.70 05/15/2029 3,950,000 5,000,000 CITY OF CHICAGO IL (PROPERTY TAX REVENUE LOC)^ 6.45 12/01/2005 4,925,000 3,700,000 OHIO STATE WATER DEVELOPMENT AUTHORITY OHIO EDISON COMPANY SERIES B (INDUSTRIAL DEVELOPMENT REVENUE LOC)+/-SS. 3.35 06/01/2033 3,705,735 -------------- TOTAL MUNICIPAL BONDS & NOTES (COST $15,718,696) 15,665,421 -------------- US TREASURY SECURITIES - 0.04% US TREASURY BILLS - 0.04% 50,000 US TREASURY BILL^@ 2.71 06/16/2005 49,945 400,000 US TREASURY BILL^@ 2.78 08/04/2005 398,024 50,000 US TREASURY BILLS^@ 2.76 06/23/2005 49,917 497,886 -------------- TOTAL US TREASURY SECURITIES (COST $497,886) 497,886 -------------- COLLATERAL FOR SECURITIES LENDING - 10.26% SHARES COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.27% 2,987,312 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,987,312 -------------- PRINCIPAL COLLATERAL INVESTED IN OTHER ASSETS - 9.99% $ 1,999,998 ALLIANCE & LEICESTER PLC 3.29 09/19/2005 1,979,958 2,149,998 AMERICAN EXPRESS CREDIT CORPORATION 3.25 05/16/2006 2,154,255 2,034,998 ATLANTIC ASSET SECURITIZATION CORPORATION 3.04 06/09/2005 2,033,634 2,056,998 ATLANTIC ASSET SECURITIZATION CORPORATION 3.06 06/29/2005 2,052,164 495,000 ATOMIUM FUNDING CORPORATION 3.07 06/21/2005 494,168 500,000 ATOMIUM FUNDING CORPORATION 3.14 07/14/2005 498,159 4,999,995 BANCO BILBAO VIZCAYA ARGENTARIA 3.07 06/01/2005 4,999,995 1,913,998 BLUE RIDGE ASSET FUNDING CORPORATION 3.05 06/10/2005 1,912,563 4,999,995 BLUE SPICE LLC 3.06 06/01/2005 4,999,995 2,799,997 CEDAR SPRINGS CAPITAL COMPANY LLC 3.22 08/11/2005 2,782,273 3,899,996 CLIPPER RECEIVABLES CORPORATION 3.09 07/01/2005 3,890,168 2,999,997 CORPORATE ASSET SECURITIZATION AUSTRALIA LIMITED 3.06 06/22/2005 2,994,717 1,169,999 DANSKE CORPORATION 3.13 07/07/2005 1,166,395 41,999,958 DEUTSCHE BANK REPURCHASE AGREEMENT (MATURITY VALUE $42,003,540) 3.07 06/01/2005 41,999,958 1,999,998 DEXIA DELAWARE LLC 3.27 09/19/2005 1,979,958 300,000 DORADA FINANCE INCORPORATED 3.18 07/26/2005 298,566 1,999,998 GEORGE STREET FINANCE LLC 3.05 06/20/2005 1,996,818 1,899,998 HBOS TREASURY SERVICES PLC 3.25 08/03/2005 1,889,320 1,999,998 KLIO FUNDING CORPORATION 3.05 06/20/2005 1,996,818 2,999,997 KLIO FUNDING CORPORATION 3.06 06/27/2005 2,993,457 4,999,995 KLIO FUNDING CORPORATION 3.07 06/29/2005 4,988,245 1,499,999 LEGACY CAPITAL CORPORATION LLC 3.23 08/23/2005 1,488,898 1,999,998 LEHMAN BROTHERS HOLDINGS INCORPORATED SERIES MTNG 3.18 06/02/2006 2,001,598 57
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WELLS FARGO ADVANTAGE INCOME FUNDS PORTFOLIO OF INVESTMENTS -- MAY 31, 2005 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- [Enlarge/Download Table] PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED) $ 2,873,997 LEXINGTON PARKER CAPITAL CORPORATION 3.07% 06/10/2005 $ 2,871,842 2,999,997 LIBERTY LIGHT US CAPITAL SERIES MTN 3.06 05/26/2006 2,999,457 453,000 LIBERTY STREET FUNDING CORPORATION 3.12 06/15/2005 452,470 352,000 SCALDIS CAPITAL LIMITED 3.26 08/10/2005 349,803 400,000 SOCIETE GENERALE NORTH AMERICA 3.25 08/09/2005 397,540 1,523,998 SOLITAIRE FUNDING LLC 3.07 06/23/2005 1,521,179 4,999,995 TOTAL CAPITAL S.A. 3.07 06/01/2005 4,999,995 4,999,995 TRANSAMERICA ASSET FUNDING CORPORATION 3.07 06/01/2005 4,999,995 112,184,361 -------------- TOTAL COLLATERAL FOR SECURITIES LENDING (COST $115,171,673) 115,171,673 -------------- SHARES SHORT-TERM INVESTMENTS - 4.44% 49,845,670 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 49,845,670 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $49,845,670) 49,845,670 -------------- TOTAL INVESTMENTS IN SECURITIES (COST $1,263,630,548)* 110.21% $1,237,387,731 OTHER ASSETS AND LIABILITIES, NET (10.21) (114,607,945) ------ -------------- TOTAL NET ASSETS 100.00% $1,122,779,786 ====== ============== << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) +/- VARIABLE RATE INVESTMENTS. ^^ THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST OR PRINCIPAL PAYMENTS. (I) ILLIQUID SECURITY. + NON-INCOME EARNING SECURITIES. (C) INTEREST-ONLY SECURITIES ENTITLE HOLDERS TO RECEIVE ONLY THE INTEREST PAYMENTS ON THE UNDERLYING MORTGAGES. THE YIELD TO MATURITY OF AN INTEREST-ONLY IS EXTREMELY SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE UNDERLYING MORTGAGE ASSETS. A RAPID (SLOW) RATE OF PRINCIPAL REPAYMENTS MAY HAVE ADVERSE (POSITIVE) EFFECT ON YIELD TO MATURITY. THE PRINCIPAL AMOUNT SHOWN IS THE NOTIONAL AMOUNT OF THE UNDERLYING MORTGAGES. INTEREST RATE DISCLOSED REPRESENTS THE YIELD BASED UPON THE ESTIMATED TIMING OF FUTURE CASH FLOWS. ++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE EFFECTIVE MATURITY. @ SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $49,845,670. * COST FOR FEDERAL INCOME TAX PURPOSES IS $1,263,630,550 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $ 13,899,868 GROSS UNREALIZED DEPRECIATION (40,142,687) ------------ NET UNREALIZED APPRECIATION (DEPRECIATION) $(26,242,819) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 58
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENT OF ASSETS AND LIABILITIES -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE GOVERNMENT BOND FUND SECURITIES FUND -------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .................................................... $ 423,132,555 $ 1,424,014,338 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ......................................... 57,321,010 672,004,930 INVESTMENTS IN AFFILIATES ......................................................... 8,496,805 94,026,902 --------------- --------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ................................. 488,950,370 2,190,046,170 --------------- --------------- CASH .............................................................................. 0 0 RECEIVABLE FOR FUND SHARES ISSUED ................................................. 210,744 1,384,225 RECEIVABLE FOR INVESTMENTS SOLD ................................................... 7,575,333 10,911,716 RECEIVABLES FOR DIVIDENDS AND INTEREST ............................................ 6,319,845 10,183,458 --------------- --------------- TOTAL ASSETS ........................................................................ 503,056,292 2,212,525,569 --------------- --------------- LIABILITIES PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ........................... 260,562 119,844 PAYABLE FOR FUND SHARES REDEEMED .................................................. 1,304,811 5,427,892 PAYABLE FOR INVESTMENTS PURCHASED ................................................. 7,090,291 208,649,831 DIVIDENDS PAYABLE ................................................................. 175,640 183,063 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ............................. 337,851 814,479 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ........................................... 78,112 264,704 PAYABLE FOR SECURITIES LOANED (NOTE 2) ............................................ 57,321,010 672,004,930 ACCRUED EXPENSES AND OTHER LIABILITIES ............................................ 150,176 311,999 --------------- --------------- TOTAL LIABILITIES ................................................................... 66,718,453 887,776,742 --------------- --------------- TOTAL NET ASSETS .................................................................... $ 436,337,839 $ 1,324,748,827 =============== =============== NET ASSETS CONSIST OF: -------------------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ................................................................... $ 555,651,232 $ 1,305,893,356 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................................ 0 2,195 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. (139,066,287) 5,620,364 NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......... 19,932,546 13,353,417 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ............................. (179,652) (120,505) --------------- --------------- TOTAL NET ASSETS .................................................................... $ 436,337,839 $ 1,324,748,827 --------------- --------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) -------------------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS C .............................................................. N/A $ 2,256,703 SHARES OUTSTANDING - CLASS C ...................................................... N/A 209,600 NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............................ N/A $ 10.77 NET ASSETS - ADMINISTRATOR CLASS .................................................. N/A $ 60,381 SHARES OUTSTANDING - ADMINISTRATOR CLASS .......................................... N/A 5,608 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ................ N/A $ 10.77 NET ASSETS - ADVISOR CLASS ........................................................ $ 17,440,308 $ 69,266,939 SHARES OUTSTANDING - ADVISOR CLASS ................................................ 1,648,043 6,432,177 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS ...................... $ 10.58 $ 10.77 NET ASSETS - INSTITUTIONAL CLASS .................................................. $ 74,568,078 $ 90,646,903 SHARES OUTSTANDING - INSTITUTIONAL CLASS .......................................... 7,052,594 8,419,356 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ................ $ 10.57 $ 10.77 NET ASSETS - INVESTOR CLASS ...................................................... $ 344,329,453 $ 1,162,517,901 SHARES OUTSTANDING - INVESTOR CLASS .............................................. 32,529,151 107,893,373 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ..................... $ 10.59 $ 10.77 --------------- --------------- INVESTMENTS AT COST ................................................................. $ 469,017,824 $ 2,176,692,753 =============== =============== SECURITIES ON LOAN, AT MARKET VALUE ................................................. $ 56,736,450 $ 660,525,678 =============== =============== (1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 60
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STATEMENT OF ASSETS AND LIABILITIES WELLS FARGO ADVANTAGE INCOME FUNDS -- MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] HIGH INCOME SHORT-TERM FUND BOND FUND -------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .................................................... $ 257,101,886 $ 550,657,321 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ......................................... 0 70,547,341 INVESTMENTS IN AFFILIATES ......................................................... 9,697,086 12,785,550 --------------- --------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ................................. 266,798,972 633,990,212 --------------- --------------- CASH .............................................................................. 0 0 RECEIVABLE FOR FUND SHARES ISSUED ................................................. 294,822 209,105 RECEIVABLE FOR INVESTMENTS SOLD ................................................... 0 245,052 RECEIVABLES FOR DIVIDENDS AND INTEREST ............................................ 4,918,993 6,386,935 --------------- --------------- TOTAL ASSETS ........................................................................ 272,012,787 640,831,304 --------------- --------------- LIABILITIES PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ........................... 0 10,938 PAYABLE FOR FUND SHARES REDEEMED .................................................. 1,166,006 777,824 PAYABLE FOR INVESTMENTS PURCHASED ................................................. 2,802,728 3,494,938 DIVIDENDS PAYABLE ................................................................. 444,935 219,187 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ............................. 120,052 301,736 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ........................................... 57,629 110,960 PAYABLE FOR SECURITIES LOANED (NOTE 2) ............................................ 0 70,547,341 ACCRUED EXPENSES AND OTHER LIABILITIES ............................................ 93,689 186,623 --------------- --------------- TOTAL LIABILITIES ................................................................... 4,685,039 75,649,547 --------------- --------------- TOTAL NET ASSETS .................................................................... $ 267,327,748 $ 565,181,757 =============== =============== NET ASSETS CONSIST OF: -------------------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ................................................................... $ 675,234,176 $ 696,522,057 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................................ 500 0 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. (399,929,500) (129,993,121) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......... (7,977,428) (1,339,935) NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ............................. 0 (7,244) --------------- --------------- TOTAL NET ASSETS .................................................................... $ 267,327,748 $ 565,181,757 --------------- --------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) -------------------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS C .............................................................. N/A N/A SHARES OUTSTANDING - CLASS C ...................................................... N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............................ N/A N/A NET ASSETS - ADMINISTRATOR CLASS .................................................. N/A N/A SHARES OUTSTANDING - ADMINISTRATOR CLASS .......................................... N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ................ N/A N/A NET ASSETS - ADVISOR CLASS ........................................................ $ 17,681,350 $ 8,141,938 SHARES OUTSTANDING - ADVISOR CLASS ................................................ 2,317,706 944,150 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS ...................... $ 7.63 $ 8.62 NET ASSETS - INSTITUTIONAL CLASS .................................................. $ 3,108,001 $ 51,426,351 SHARES OUTSTANDING - INSTITUTIONAL CLASS .......................................... 404,038 5,958,135 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ................ $ 7.69 $ 8.63 NET ASSETS - INVESTOR CLASS ...................................................... $ 246,538,397 $ 505,613,468 SHARES OUTSTANDING - INVESTOR CLASS .............................................. 32,198,595 58,636,044 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ..................... $ 7.66 $ 8.62 --------------- --------------- INVESTMENTS AT COST ................................................................. $ 274,776,400 $ 635,330,147 =============== =============== SECURITIES ON LOAN, AT MARKET VALUE ................................................. $ 0 $ 58,561,756 =============== =============== SHORT-TERM HIGH ULTRA SHORT-TERM YIELD BOND FUND INCOME FUND -------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE .................................................... $ 163,562,791 $ 1,072,370,388 COLLATERAL FOR SECURITIES LOANED (NOTE 2) ......................................... 0 115,171,673 INVESTMENTS IN AFFILIATES ......................................................... 2,200,015 49,845,670 --------------- --------------- TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ................................. 165,762,806 1,237,387,731 --------------- --------------- CASH .............................................................................. 61 0 RECEIVABLE FOR FUND SHARES ISSUED ................................................. 257,361 1,562,593 RECEIVABLE FOR INVESTMENTS SOLD ................................................... 0 505,107 RECEIVABLES FOR DIVIDENDS AND INTEREST ............................................ 3,284,733 10,677,371 --------------- --------------- TOTAL ASSETS ........................................................................ 169,304,961 1,250,132,802 --------------- --------------- LIABILITIES PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ........................... 0 244,531 PAYABLE FOR FUND SHARES REDEEMED .................................................. 538,768 3,621,199 PAYABLE FOR INVESTMENTS PURCHASED ................................................. 1,000,000 6,906,428 DIVIDENDS PAYABLE ................................................................. 85,340 286,489 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ............................. 116,733 541,530 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ........................................... 37,476 230,598 PAYABLE FOR SECURITIES LOANED (NOTE 2) ............................................ 0 115,171,673 ACCRUED EXPENSES AND OTHER LIABILITIES ............................................ 58,811 350,568 --------------- --------------- TOTAL LIABILITIES ................................................................... 1,837,128 127,353,016 --------------- --------------- TOTAL NET ASSETS .................................................................... $ 167,467,833 $ 1,122,779,786 =============== =============== NET ASSETS CONSIST OF: -------------------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ................................................................... $ 239,548,672 $ 1,394,727,726 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ........................................ 0 84 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. (72,083,257) (245,629,170) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES ......... 2,418 (26,242,817) NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ............................. 0 (76,037) --------------- --------------- TOTAL NET ASSETS .................................................................... $ 167,467,833 $ 1,122,779,786 --------------- --------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) -------------------------------------------------------------------------------------------------------------------------- NET ASSETS - CLASS C .............................................................. N/A N/A SHARES OUTSTANDING - CLASS C ...................................................... N/A N/A NET ASSET VALUE AND OFFERING PRICE PER SHARE - CLASS C ............................ N/A N/A NET ASSETS - ADMINISTRATOR CLASS .................................................. N/A $ 160,694 SHARES OUTSTANDING - ADMINISTRATOR CLASS .......................................... N/A 17,535 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADMINISTRATOR CLASS ................ N/A $ 9.16 NET ASSETS - ADVISOR CLASS ........................................................ $ 40,296,759 $ 59,097,399 SHARES OUTSTANDING - ADVISOR CLASS ................................................ 4,732,582 6,446,094 NET ASSET VALUE AND OFFERING PRICE PER SHARE - ADVISOR CLASS ...................... $ 8.51 $ 9.17 NET ASSETS - INSTITUTIONAL CLASS .................................................. N/A $ 56,560,260 SHARES OUTSTANDING - INSTITUTIONAL CLASS .......................................... N/A 6,169,880 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INSTITUTIONAL CLASS ................ N/A $ 9.17 NET ASSETS - INVESTOR CLASS ...................................................... $ 127,171,074 $ 1,006,961,433 SHARES OUTSTANDING - INVESTOR CLASS .............................................. 14,934,600 109,789,919 NET ASSET VALUE AND OFFERING PRICE PER SHARE - INVESTOR CLASS ..................... $ 8.52 $ 9.17 --------------- --------------- INVESTMENTS AT COST ................................................................. $ 165,760,388 $ 1,263,630,548 =============== =============== SECURITIES ON LOAN, AT MARKET VALUE ................................................. $ 0 $ 110,814,392 =============== =============== 61
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF OPERATIONS -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ------------------------------ FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ........................................................................ $ 0 $ 258,780 INTEREST ......................................................................... 15,363,015 33,298,018 INCOME FROM AFFILIATED SECURITIES ................................................ 48,346 0 SECURITIES LENDING INCOME, NET ................................................... 16,114 0 ------------ ------------ TOTAL INVESTMENT INCOME ............................................................. 15,427,475 33,556,798 ------------ ------------ EXPENSES ADVISORY FEES .................................................................... 1,064,936 2,165,053 ADMINISTRATION FEES FUND LEVEL .................................................................... 30,629 N/A CLASS C ....................................................................... N/A N/A ADMINISTRATOR CLASS ........................................................... N/A N/A ADVISOR CLASS ................................................................. 48,713 112,747 INSTITUTIONAL CLASS ........................................................... 21,452 40,025 INVESTOR CLASS ................................................................ 1,200,898 2,806,185 CUSTODY FEES ..................................................................... 27,228 65,659 SHAREHOLDER SERVICING FEES ....................................................... 127,474 0 ACCOUNTING FEES .................................................................. 8,345 N/A DISTRIBUTION FEES (NOTE 3) CLASS C ....................................................................... N/A N/A ADVISOR CLASS ................................................................. 21,055 58,417 AUDIT FEES ....................................................................... 11,259 31,958 LEGAL FEES ....................................................................... 12,167 94,509 REGISTRATION FEES ................................................................ 31,862 58,134 SHAREHOLDER REPORTS .............................................................. 126,350 302,068 TRUSTEES' FEES ................................................................... 23,907 32,969 OTHER FEES AND EXPENSES .......................................................... 115,719 67,475 ------------ ------------ TOTAL EXPENSES ...................................................................... 2,871,994 5,835,199 ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (221,321) (201,657) NET EXPENSES ..................................................................... 2,650,673 5,633,542 ------------ ------------ NET INVESTMENT INCOME (LOSS) ........................................................ 12,776,802 27,923,256 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 8,612,047 14,087,526 FUTURES TRANSACTIONS ............................................................. (1,668,788) (5,621,954) OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 6,943,259 8,465,572 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (11,660,375) 3,621,145 FUTURES TRANSACTIONS ............................................................. 1,196,319 340,491 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (10,464,056) 3,961,636 ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. (3,520,797) 12,427,208 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 9,256,005 $ 40,350,464 ============ ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 62
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STATEMENTS OF OPERATIONS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] GOVERNMENT SECURITIES FUND ------------------------------ FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ........................................................................ $ 0 $ 0 INTEREST ......................................................................... 33,649,854 61,146,090 INCOME FROM AFFILIATED SECURITIES ................................................ 482,681 0 SECURITIES LENDING INCOME, NET ................................................... 36,660 0 ------------ ------------ TOTAL INVESTMENT INCOME ............................................................. 34,169,195 61,146,090 ------------ ------------ EXPENSES ADVISORY FEES .................................................................... 2,827,303 5,813,973 ADMINISTRATION FEES FUND LEVEL .................................................................... 92,614 N/A CLASS C ....................................................................... 6,483 16,931 ADMINISTRATOR CLASS ........................................................... 5 N/A ADVISOR CLASS ................................................................. 184,000 435,819 INSTITUTIONAL CLASS ........................................................... 26,489 44,268 INVESTOR CLASS ................................................................ 3,820,699 8,915,094 CUSTODY FEES ..................................................................... 75,468 170,872 SHAREHOLDER SERVICING FEES ....................................................... 431,528 0 ACCOUNTING FEES .................................................................. 17,785 N/A DISTRIBUTION FEES (NOTE 3) CLASS C ....................................................................... 14,017 34,748 ADVISOR CLASS ................................................................. 80,094 226,134 AUDIT FEES ....................................................................... 6,543 64,541 LEGAL FEES ....................................................................... 38,087 281,834 REGISTRATION FEES ................................................................ 45,879 104,601 SHAREHOLDER REPORTS .............................................................. 243,868 729,079 TRUSTEES' FEES ................................................................... 52,284 113,591 OTHER FEES AND EXPENSES .......................................................... 271,534 307,237 ------------ ------------ TOTAL EXPENSES ...................................................................... 8,234,680 17,258,722 ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (482,795) (552,737) NET EXPENSES ..................................................................... 7,751,885 16,705,985 ------------ ------------ NET INVESTMENT INCOME (LOSS) ........................................................ 26,417,310 44,440,105 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 9,840,771 36,566,282 FUTURES TRANSACTIONS ............................................................. 369,255 (3,301,206) OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. (179,422) 1,252,520 ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 10,030,604 34,517,596 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (13,770,585) (7,550,487) FUTURES TRANSACTIONS ............................................................. 1,978,050 (1,873,021) OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 1,010,635 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (11,792,535) (8,412,873) ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. (1,761,931) 26,104,723 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 24,655,379 $ 70,544,828 ============ ============ HIGH INCOME FUND ------------------------------ FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ........................................................................ $ 0 $ 200,536 INTEREST ......................................................................... 13,384,324 32,814,736 INCOME FROM AFFILIATED SECURITIES ................................................ 38,930 0 SECURITIES LENDING INCOME, NET ................................................... 0 0 ------------ ------------ TOTAL INVESTMENT INCOME ............................................................. 13,423,254 33,015,272 ------------ ------------ EXPENSES ADVISORY FEES .................................................................... 722,959 1,542,038 ADMINISTRATION FEES FUND LEVEL .................................................................... 18,983 N/A CLASS C ....................................................................... N/A N/A ADMINISTRATOR CLASS ........................................................... N/A N/A ADVISOR CLASS ................................................................. 49,351 120,295 INSTITUTIONAL CLASS ........................................................... 945 14,729 INVESTOR CLASS ................................................................ 773,335 1,817,705 CUSTODY FEES ..................................................................... 13,210 28,143 SHAREHOLDER SERVICING FEES ....................................................... 93,846 0 ACCOUNTING FEES .................................................................. 6,932 N/A DISTRIBUTION FEES (NOTE 3) CLASS C ....................................................................... N/A N/A ADVISOR CLASS ................................................................. 24,251 62,439 AUDIT FEES ....................................................................... 12,131 25,369 LEGAL FEES ....................................................................... 7,834 57,302 REGISTRATION FEES ................................................................ 27,502 55,704 SHAREHOLDER REPORTS .............................................................. 51,170 117,228 TRUSTEES' FEES ................................................................... 12,959 26,442 OTHER FEES AND EXPENSES .......................................................... 75,538 58,742 ------------ ------------ TOTAL EXPENSES ...................................................................... 1,890,946 3,926,136 ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (226,905) (137,947) NET EXPENSES ..................................................................... 1,664,041 3,788,189 ------------ ------------ NET INVESTMENT INCOME (LOSS) ........................................................ 11,759,213 29,227,083 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 6,204,774 2,764,928 FUTURES TRANSACTIONS ............................................................. 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 6,204,774 2,764,928 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (13,647,747) 16,393,932 FUTURES TRANSACTIONS ............................................................. 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ---------------------------------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (13,647,747) 16,393,932 ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. (7,442,973) 19,158,860 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 4,316,240 $ 48,385,943 ============ ============ 63
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF OPERATIONS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT-TERM BOND FUND ------------------------------ FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ........................................................................ $ 0 $ 0 INTEREST ......................................................................... 14,711,512 26,850,944 INCOME FROM AFFILIATED SECURITIES ................................................ 39,551 0 SECURITIES LENDING INCOME, NET ................................................... 3,343 0 ------------ ------------ TOTAL INVESTMENT INCOME ............................................................. 14,754,406 26,850,944 ------------ ------------ EXPENSES ADVISORY FEES .................................................................... 1,259,506 2,474,735 ADMINISTRATION FEES FUND LEVEL .................................................................... 39,878 N/A CLASS C ....................................................................... N/A N/A ADMINISTRATOR CLASS ........................................................... N/A N/A ADVISOR CLASS ................................................................. 22,311 55,844 INSTITUTIONAL CLASS ........................................................... 13,945 28,095 INVESTOR CLASS ................................................................ 1,336,484 3,028,884 CUSTODY FEES ..................................................................... 26,233 51,852 SHAREHOLDER SERVICING FEES ....................................................... 181,438 0 ACCOUNTING FEES .................................................................. 24,160 N/A DISTRIBUTION FEES (NOTE 3) CLASS C ....................................................................... N/A N/A ADVISOR CLASS ................................................................. 10,278 28,960 AUDIT FEES ....................................................................... 14,912 35,038 LEGAL FEES ....................................................................... 13,787 107,973 REGISTRATION FEES ................................................................ 30,821 65,028 SHAREHOLDER REPORTS .............................................................. 0 284,296 TRUSTEES' FEES ................................................................... 28,638 36,669 OTHER FEES AND EXPENSES .......................................................... 123,086 89,726 ------------ ------------ TOTAL EXPENSES ...................................................................... 3,125,477 6,287,100 ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (379,190) (211,784) NET EXPENSES ..................................................................... 2,746,287 6,075,316 ------------ ------------ NET INVESTMENT INCOME (LOSS) ........................................................ 12,008,119 20,775,628 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 263,539 3,988,997 FUTURES TRANSACTIONS ............................................................. 87,736 1,377,067 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 (98,280) ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 351,275 5,267,784 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (8,938,118) (5,544,384) FUTURES TRANSACTIONS ............................................................. (83,490) (137,271) OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (9,021,608) (5,681,655) ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. (8,670,333) (413,871) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 3,337,786 $ 20,361,757 ============ ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 64
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STATEMENTS OF OPERATIONS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT-TERM HIGH YIELD BOND FUND ------------------------------ FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ........................................................................ $ 0 $ 0 INTEREST ......................................................................... 6,170,010 14,465,506 INCOME FROM AFFILIATED SECURITIES ................................................ 26,507 0 SECURITIES LENDING INCOME, NET ................................................... 0 0 ------------ ------------ TOTAL INVESTMENT INCOME ............................................................. 6,196,517 14,465,506 ------------ ------------ EXPENSES ADVISORY FEES .................................................................... 470,252 956,782 ADMINISTRATION FEES FUND LEVEL .................................................................... 12,047 N/A CLASS C ....................................................................... N/A N/A ADMINISTRATOR CLASS ........................................................... N/A N/A ADVISOR CLASS ................................................................. 117,810 301,999 INSTITUTIONAL CLASS ........................................................... N/A N/A INVESTOR CLASS ................................................................ 456,554 1,064,739 CUSTODY FEES ..................................................................... 9,977 17,856 SHAREHOLDER SERVICING FEES ....................................................... 60,235 0 ACCOUNTING FEES .................................................................. 5,218 N/A DISTRIBUTION FEES (NOTE 3) CLASS C ....................................................................... N/A N/A ADVISOR CLASS ................................................................. 56,260 157,124 AUDIT FEES ....................................................................... 13,518 20,060 LEGAL FEES ....................................................................... 5,405 44,054 REGISTRATION FEES ................................................................ 26,837 51,146 SHAREHOLDER REPORTS .............................................................. 38,380 72,750 TRUSTEES' FEES ................................................................... 12,930 12,189 OTHER FEES AND EXPENSES .......................................................... 49,802 33,327 ------------ ------------ TOTAL EXPENSES ...................................................................... 1,335,225 2,732,026 ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (158,357) (117,331) NET EXPENSES ..................................................................... 1,176,868 2,614,695 ------------ ------------ NET INVESTMENT INCOME (LOSS) ........................................................ 5,019,649 11,850,811 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 762,489 4,299,441 FUTURES TRANSACTIONS ............................................................. 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 762,489 4,299,441 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (4,625,841) (3,586,270) FUTURES TRANSACTIONS ............................................................. 0 0 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (4,625,841) (3,586,270) ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. (3,863,352) 713,171 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 1,156,297 $ 12,563,982 ============ ============ ULTRA SHORT-TERM INCOME FUND ------------------------------ FOR THE FOR THE PERIOD ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS ........................................................................ $ 0 $ 0 INTEREST ......................................................................... 29,254,252 58,332,956 INCOME FROM AFFILIATED SECURITIES ................................................ 148,568 0 SECURITIES LENDING INCOME, NET ................................................... 4,513 0 ------------ ------------ TOTAL INVESTMENT INCOME ............................................................. 29,407,333 58,332,956 ------------ ------------ EXPENSES ADVISORY FEES .................................................................... 2,378,108 5,219,118 ADMINISTRATION FEES FUND LEVEL .................................................................... 79,824 N/A CLASS C ....................................................................... N/A N/A ADMINISTRATOR CLASS ........................................................... 13 N/A ADVISOR CLASS ................................................................. 193,694 554,328 INSTITUTIONAL CLASS ........................................................... 14,813 41,578 INVESTOR CLASS ................................................................ 3,267,477 7,765,793 CUSTODY FEES ..................................................................... 67,362 113,608 SHAREHOLDER SERVICING FEES ....................................................... 379,497 0 ACCOUNTING FEES .................................................................. 15,470 N/A DISTRIBUTION FEES (NOTE 3) CLASS C ....................................................................... N/A N/A ADVISOR CLASS ................................................................. 83,093 260,577 AUDIT FEES ....................................................................... 6,209 68,445 LEGAL FEES ....................................................................... 37,899 287,817 REGISTRATION FEES ................................................................ 40,360 99,322 SHAREHOLDER REPORTS .............................................................. 162,745 534,446 TRUSTEES' FEES ................................................................... 68,101 99,560 OTHER FEES AND EXPENSES .......................................................... 344,421 175,144 ------------ ------------ TOTAL EXPENSES ...................................................................... 7,139,086 15,219,736 ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ..................................... (818,645) (558,453) NET EXPENSES ..................................................................... 6,320,441 14,661,283 ------------ ------------ NET INVESTMENT INCOME (LOSS) ........................................................ 23,086,892 43,671,673 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ---------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. 1,011,325 1,106,667 FUTURES TRANSACTIONS ............................................................. 982,875 (5,240,955) OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. (358,844) (250,000) ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ........................................... 1,635,356 (4,384,288) ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: ---------------------------------------------------------------------------------------------------------------------- SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .................. (6,045,124) (10,886,708) FUTURES TRANSACTIONS ............................................................. 576,133 1,621,525 OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............................. 0 0 ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ................. (5,468,991) (9,265,183) ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............................. (3,833,635) (13,649,471) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 19,253,257 $ 30,022,202 ============ ============ 65
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND ----------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ................................................ $ 524,054,516 $ 660,888,739 $ 757,304,189 OPERATIONS: NET INVESTMENT INCOME (LOSS) ........................................ 12,776,802 27,923,256 37,210,720 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. 6,943,259 8,465,572 32,962,357 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS . (10,464,056) 3,961,636 30,548,179 --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ 9,256,005 40,350,464 100,721,256 --------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS C .......................................................... N/A N/A N/A ADMINISTRATOR CLASS .............................................. N/A N/A N/A ADVISOR CLASS .................................................... (503,984) (1,093,815) (1,553,693) INSTITUTIONAL CLASS .............................................. (2,172,605) (4,135,937) (3,269,674) INVESTOR CLASS ................................................... (10,097,266) (22,690,186) (32,314,191) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS C .......................................................... N/A N/A N/A ADVISOR CLASS .................................................... 0 0 N/A INSTITUTIONAL CLASS .............................................. 0 0 N/A INVESTOR CLASS ................................................... 0 0 N/A --------------- --------------- --------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................... (12,773,855) (27,919,938) (37,137,558) --------------- --------------- --------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS C ................................. N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................. N/A N/A N/A COST OF SHARES REDEEMED - CLASS C ................................... N/A N/A N/A --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .............................................. N/A N/A N/A --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............ N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ........ N/A N/A N/A --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS .................................. N/A N/A N/A --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ........................... 4,674,091 7,490,227 14,048,849 REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ....................... 572,158 1,116,082 1,564,604 COST OF SHARES REDEEMED - ADVISOR CLASS ............................. (8,051,629) (17,434,217) (20,199,560) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS ........................................ (2,805,380) (8,827,908) (4,586,107) --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ..................... 6,879,747 20,448,265 39,139,387 REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................. 530,206 348,885 354,100 COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ....................... (3,313,022) (28,275,056) (10,419,350) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS .................................. 4,096,931 (7,477,906) 29,074,137 --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .......................... 43,101,343 78,725,733 124,857,486 REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ...................... 10,411,391 20,297,730 28,986,002 COST OF SHARES REDEEMED - INVESTOR CLASS ............................ (139,003,112) (231,982,398) (338,330,666) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ....................................... (85,490,378) (132,958,935) (184,487,178) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........................................................ (84,198,827) (149,264,749) (159,999,148) =============== =============== =============== NET INCREASE (DECREASE) IN NET ASSETS .................................. (87,716,677) (136,834,223) (96,415,450) =============== =============== =============== ENDING NET ASSETS ...................................................... $ 436,337,839 $ 524,054,516 $ 660,888,739 =============== =============== =============== (1) PROCEEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 66
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] GOVERNMENT SECURITIES FUND ----------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ................................................ $ 1,394,056,586 $ 2,255,692,540 $ 2,571,556,973 OPERATIONS: NET INVESTMENT INCOME (LOSS) ........................................ 26,417,310 44,440,105 64,516,505 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. 10,030,604 34,517,596 53,192,950 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS . (11,792,535) (8,412,873) (41,124,648) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ 24,655,379 70,544,828 76,584,807 --------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS C .......................................................... (40,750) (84,798) (25,241) ADMINISTRATOR CLASS .............................................. (194) N/A N/A ADVISOR CLASS .................................................... (1,650,955) (3,072,932) (4,177,122) INSTITUTIONAL CLASS .............................................. (2,295,270) (3,808,490) (4,294,687) INVESTOR CLASS ................................................... (27,239,837) (51,447,055) (78,406,084) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS C .......................................................... (28,216) (58,583) 0 ADVISOR CLASS .................................................... (752,236) (2,051,055) (2,556,061) INSTITUTIONAL CLASS .............................................. (859,001) (2,160,849) (2,376,966) INVESTOR CLASS ................................................... (12,017,942) (34,247,190) (52,045,752) --------------- --------------- --------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................... (44,884,401) (96,930,952) (143,881,913) --------------- --------------- --------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS C ................................. 164,361 1,751,552 3,499,806 REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................. 61,487 109,986 18,315 COST OF SHARES REDEEMED - CLASS C ................................... (902,224) (1,764,801) (575,829) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .............................................. (676,376) 96,737 2,942,292 --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............ 60,000 N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ........ 61 N/A N/A --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS .................................. 60,061 N/A N/A --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ........................... 12,393,745 22,304,220 110,131,565 REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ....................... 2,587,292 5,128,850 6,674,922 COST OF SHARES REDEEMED - ADVISOR CLASS ............................. (20,866,824) (70,449,093) (99,800,426) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS ........................................ (5,885,787) (43,016,023) 17,006,061 --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ..................... 11,116,627 22,478,473 60,088,685 REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................. 828,600 1,417,953 2,781,991 COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ....................... (4,452,125) (59,882,417) (42,423,053) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS .................................. 7,493,102 (35,985,991) 20,447,623 --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .......................... 167,775,968 273,331,124 840,315,579 REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ...................... 40,887,115 78,778,841 115,634,365 COST OF SHARES REDEEMED - INVESTOR CLASS ............................ (258,732,820) (1,108,454,518) (1,244,913,247) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ....................................... (50,069,737) (756,344,553) (288,963,303) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........................................................ (49,078,737) (835,249,830) (248,567,327) =============== =============== =============== NET INCREASE (DECREASE) IN NET ASSETS .................................. (69,307,759) (861,635,954) (315,864,433) =============== =============== =============== ENDING NET ASSETS ...................................................... $ 1,324,748,827 $ 1,394,056,586 $ 2,255,692,540 =============== =============== =============== HIGH INCOME FUND ----------------------------------------------------- FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED PERIOD ENDED OCTOBER 31, OCTOBER 31, MAY 31, 2005(1) 2004(1) 2003(1) -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ................................................ $ 347,109,259 $ 513,408,673 $ 503,396,335 OPERATIONS: NET INVESTMENT INCOME (LOSS) ........................................ 11,759,213 29,227,083 42,375,250 NET REALIZED GAIN (LOSS) ON INVESTMENTS ............................. 6,204,774 2,764,928 (25,025,163) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS . (13,647,747) 16,393,932 113,082,188 --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ 4,316,240 48,385,943 130,432,275 --------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS C .......................................................... N/A N/A N/A ADMINISTRATOR CLASS .............................................. N/A N/A N/A ADVISOR CLASS .................................................... (813,123) (1,723,018) (1,858,090) INSTITUTIONAL CLASS .............................................. (139,921) (3,161,517) (3,298,137) INVESTOR CLASS ................................................... (10,825,666) (24,365,381) (37,232,708) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS C .......................................................... N/A N/A N/A ADVISOR CLASS .................................................... 0 0 0 INSTITUTIONAL CLASS .............................................. 0 0 0 INVESTOR CLASS ................................................... 0 0 0 --------------- --------------- --------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................................... (11,778,710) (29,249,916) (42,388,935) --------------- --------------- --------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS C ................................. N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS C ............................. N/A N/A N/A COST OF SHARES REDEEMED - CLASS C ................................... N/A N/A N/A --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C .............................................. N/A N/A N/A --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............ N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ........ N/A N/A N/A --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS .................................. N/A N/A N/A --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ........................... 2,386,463 3,790,722 16,044,879 REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ....................... 924,965 1,745,615 1,810,006 COST OF SHARES REDEEMED - ADVISOR CLASS ............................. (7,417,700) (13,951,292) (9,301,407) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS ........................................ (4,106,272) (8,414,955) 8,553,478 --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ..................... 1,329 6,724,352 9,210,298 REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ................. 350,064 3,175,687 3,232,423 COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ....................... (21,625,823) (29,148,508) (24,291,852) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS .................................. (21,274,430) (19,248,469) (11,849,131) --------------- --------------- --------------- PROCEEDS FROM SHARES SOLD - INVESTOR CLASS .......................... 18,945,724 47,287,659 136,845,823 REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS ...................... 8,951,941 18,457,910 28,852,432 COST OF SHARES REDEEMED - INVESTOR CLASS ............................ (74,836,004) (223,517,586) (240,433,604) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS ....................................... (46,938,339) (157,772,017) (74,735,349) --------------- --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........................................................ (72,319,041) (185,435,441) (78,031,002) =============== =============== =============== NET INCREASE (DECREASE) IN NET ASSETS .................................. (79,781,511) (166,299,414) 10,012,338 =============== =============== =============== ENDING NET ASSETS ...................................................... $ 267,327,748 $ 347,109,259 $ 513,408,673 =============== =============== =============== 67
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] CORPORATE BOND FUND --------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 ----------------------------------------------------------------------------------------------------------------------------------- SHARES ISSUED AND REDEEMED: SHARES SOLD - CLASS C .................................................... N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................. N/A N/A N/A SHARES REDEEMED - CLASS C ................................................ N/A N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ..................... N/A N/A N/A ------------- ------------- ------------- SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................... N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................................................................. N/A N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ......... N/A N/A N/A ------------- ------------- ------------- SHARES SOLD - ADVISOR CLASS .............................................. 440,076 711,184 1,376,333 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ........... 53,982 106,236 154,063 SHARES REDEEMED - ADVISOR CLASS .......................................... (758,385) (1,656,411) (1,978,553) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ............... (264,327) (838,991) (448,157) ------------- ------------- ------------- SHARES SOLD - INSTITUTIONAL CLASS ........................................ 647,496 1,965,184 3,796,256 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ..... 50,119 33,269 34,758 SHARES REDEEMED - INSTITUTIONAL CLASS .................................... (314,817) (2,691,685) (1,029,256) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ......... 382,798 (693,232) 2,801,758 ------------- ------------- ------------- SHARES SOLD - INVESTOR CLASS ............................................. 4,059,834 7,406,159 12,180,999 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......... 981,576 1,932,271 2,855,471 SHARES REDEEMED - INVESTOR CLASS ......................................... (13,066,585) (22,098,555) (33,310,062) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS .............. (8,025,175) (12,760,125) (18,273,592) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ....................................................... (7,906,704) (14,292,348) (15,919,991) ============= ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................ $ 0 $ 2,759 $ 9 ============= ============= ============= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 68
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] GOVERNMENT SECURITIES FUND --------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 ----------------------------------------------------------------------------------------------------------------------------------- SHARES ISSUED AND REDEEMED: SHARES SOLD - CLASS C .................................................... 15,310 160,431 314,330 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................. 5,716 10,120 1,641 SHARES REDEEMED - CLASS C ................................................ (84,076) (162,752) (51,120) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ..................... (63,050) 7,799 264,851 ------------- ------------- ------------- SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................... 5,602 N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................................................................. 6 N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ......... 5,608 N/A N/A ------------- ------------- ------------- SHARES SOLD - ADVISOR CLASS .............................................. 1,155,096 2,049,123 9,853,084 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ........... 240,414 471,234 599,836 SHARES REDEEMED - ADVISOR CLASS .......................................... (1,943,283) (6,470,140) (8,921,967) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ............... (547,773) (3,949,783) 1,530,953 ------------- ------------- ------------- SHARES SOLD - INSTITUTIONAL CLASS ........................................ 1,035,511 2,070,885 5,386,465 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ..... 77,004 130,186 249,977 SHARES REDEEMED - INSTITUTIONAL CLASS .................................... (415,057) (5,501,897) (3,818,037) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ......... 697,458 (3,300,826) 1,818,405 ------------- ------------- ------------- SHARES SOLD - INVESTOR CLASS ............................................. 15,627,839 25,056,354 75,168,372 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......... 3,798,109 7,234,657 10,385,307 SHARES REDEEMED - INVESTOR CLASS ......................................... (24,068,371) (101,610,878) (111,546,437) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS .............. (4,642,423) (69,319,867) (25,992,758) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ....................................................... (4,550,180) (76,562,677) (22,378,549) ============= ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................ $ 2,195 $ 1,298,270 $ 3,294,319 ============= ============= ============= HIGH INCOME FUND --------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 ----------------------------------------------------------------------------------------------------------------------------------- SHARES ISSUED AND REDEEMED: SHARES SOLD - CLASS C .................................................... N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ................. N/A N/A N/A SHARES REDEEMED - CLASS C ................................................ N/A N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ..................... N/A N/A N/A ------------- ------------- ------------- SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) ............................... N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) ................................................................. N/A N/A N/A ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS ......... N/A N/A N/A ------------- ------------- ------------- SHARES SOLD - ADVISOR CLASS .............................................. 304,082 493,380 2,269,737 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ........... 118,616 228,581 259,730 SHARES REDEEMED - ADVISOR CLASS .......................................... (952,614) (1,826,262) (1,311,720) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS ............... (529,916) (1,104,301) 1,217,747 ------------- ------------- ------------- SHARES SOLD - INSTITUTIONAL CLASS ........................................ 137 870,067 1,306,359 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ..... 44,498 413,474 463,826 SHARES REDEEMED - INSTITUTIONAL CLASS .................................... (2,740,716) (3,745,985) (3,657,014) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS ......... (2,696,081) (2,462,444) (1,886,829) ------------- ------------- ------------- SHARES SOLD - INVESTOR CLASS ............................................. 2,416,704 6,136,919 19,474,192 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .......... 1,144,921 2,409,240 4,157,006 SHARES REDEEMED - INVESTOR CLASS ......................................... (9,552,881) (29,173,307) (34,138,088) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS .............. (5,991,256) (20,627,148) (10,506,890) ------------- ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ....................................................... (9,217,253) (24,193,893) (11,175,972) ============= ============= ============= ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ................ $ 500 $ 0 $ 26,673 ============= ============= ============= 69
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT-TERM BOND FUND -------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005(1) OCTOBER 31, 2004 OCTOBER 31, 2003 ----------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS .............................. $ 576,286,031 $ 804,867,124 $ 998,081,235 OPERATIONS: NET INVESTMENT INCOME (LOSS) ...................... 12,008,119 20,775,628 30,173,608 NET REALIZED GAIN (LOSS) ON INVESTMENTS ........... 351,275 5,267,784 4,123,818 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (9,021,608) (5,681,655) 4,930,396 ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 3,337,786 20,361,757 39,227,822 ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS C ........................................ N/A N/A N/A ADMINISTRATOR CLASS ............................ N/A N/A N/A ADVISOR CLASS .................................. (197,961) (381,676) (423,170) INSTITUTIONAL CLASS ............................ (1,260,028) (2,304,115) (2,684,771) INVESTOR CLASS ................................. (11,121,123) (20,423,374) (32,350,233) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS C ........................................ N/A N/A N/A ADVISOR CLASS .................................. 0 0 0 INSTITUTIONAL CLASS ............................ 0 0 0 INVESTOR CLASS ................................. 0 0 0 ---------------- ---------------- ---------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................. (12,579,112) (23,109,165) (35,458,174) ---------------- ---------------- ---------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS C ............... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS C ........... N/A N/A N/A COST OF SHARES REDEEMED - CLASS C ................. N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ........................................... N/A N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ............................... N/A N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ......... 854,763 2,100,910 9,295,360 REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..... 218,462 384,070 408,591 COST OF SHARES REDEEMED - ADVISOR CLASS ........... (3,010,418) (6,409,590) (4,877,686) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS ..................................... (1,937,193) (3,924,610) 4,826,265 ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ... 3,760,436 13,404,577 21,781,868 REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS 414,664 760,227 1,303,133 COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..... (1,824,067) (31,389,278) (11,298,925) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ............................... 2,351,033 (17,224,474) 11,786,076 ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........ 90,400,531 77,287,058 115,589,558 REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .... 10,871,365 17,388,445 27,545,994 COST OF SHARES REDEEMED - INVESTOR CLASS .......... (103,548,684) (299,360,104) (356,731,652) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS .................................... (2,276,788) (204,684,601) (213,596,100) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (1,862,948) (225,833,685) (196,983,759) ================ ================ ================ NET INCREASE (DECREASE) IN NET ASSETS ................ (11,104,274) (228,581,093) (193,214,111) ================ ================ ================ ENDING NET ASSETS .................................... $ 565,181,757 $ 576,286,031 $ 804,867,124 ================ ================ ================ (1) PROCEEDS FROM SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND SHARE CLASS CONSOLIDATIONS (NOTE 1). (2) PROCEEDS FROM SHARES SOLD MAY INCLUDE REDEMPTION FEES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 70
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT-TERM HIGH YIELD BOND FUND -------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005(2) OCTOBER 31, 2004 OCTOBER 31, 2003 ----------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS .............................. $ 220,480,649 $ 341,502,804 $ 228,179,435 OPERATIONS: NET INVESTMENT INCOME (LOSS) ...................... 5,019,649 11,850,811 15,716,768 NET REALIZED GAIN (LOSS) ON INVESTMENTS ........... 762,489 4,299,441 415,503 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (4,625,841) (3,586,270) 11,680,261 ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 1,156,297 12,563,982 27,812,532 ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS C ........................................ N/A N/A N/A ADMINISTRATOR CLASS ............................ N/A N/A N/A ADVISOR CLASS .................................. (1,243,673) (2,847,087) (2,485,347) INSTITUTIONAL CLASS ............................ N/A N/A N/A INVESTOR CLASS ................................. (3,848,672) (9,017,138) (13,241,736) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS C ........................................ N/A N/A N/A ADVISOR CLASS .................................. 0 0 0 INSTITUTIONAL CLASS ............................ N/A N/A N/A INVESTOR CLASS ................................. 0 0 0 ---------------- ---------------- ---------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................. (5,092,345) (11,864,225) (15,727,083) ---------------- ---------------- ---------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS C ............... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS C ........... N/A N/A N/A COST OF SHARES REDEEMED - CLASS C ................. N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ........................................... N/A N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ............................... N/A N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ......... 6,998,333 19,010,794 61,879,808 REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..... 1,280,785 2,608,558 2,225,067 COST OF SHARES REDEEMED - ADVISOR CLASS ........... (22,596,649) (39,708,587) (20,233,330) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS ..................................... (14,317,531) (18,089,235) 43,871,545 ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS N/A N/A N/A COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ............................... N/A N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........ 21,723,170 118,852,995 253,268,840 REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .... 3,629,167 7,592,955 10,625,192 COST OF SHARES REDEEMED - INVESTOR CLASS .......... (60,111,574) (230,078,627) (206,527,657) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS .................................... (34,759,237) (103,632,677) 57,366,375 ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (49,076,768) (121,721,912) 101,237,920 ================ ================ ================ NET INCREASE (DECREASE) IN NET ASSETS ................ (53,012,816) (121,022,155) 113,323,369 ================ ================ ================ ENDING NET ASSETS .................................... $ 167,467,833 $ 220,480,649 $ 341,502,804 ================ ================ ================ [Enlarge/Download Table] ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 ---------------- ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS .............................. $ 1,425,161,780 $ 2,353,726,173 $ 2,492,817,733 OPERATIONS: NET INVESTMENT INCOME (LOSS) ...................... 23,086,892 43,671,673 66,333,261 NET REALIZED GAIN (LOSS) ON INVESTMENTS ........... 1,635,356 (4,384,288) (519,875) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... (5,468,991) (9,265,183) 1,335,866 ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 19,253,257 30,022,202 67,149,252 ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME CLASS C ........................................ N/A N/A N/A ADMINISTRATOR CLASS ............................ (454) N/A N/A ADVISOR CLASS .................................. (1,405,828) (2,864,239) (4,109,745) INSTITUTIONAL CLASS ............................ (1,299,951) (3,704,000) (9,359,907) INVESTOR CLASS ................................. (23,075,264) (45,871,440) (74,517,498) NET REALIZED GAIN ON SALES OF INVESTMENTS CLASS C ........................................ N/A N/A N/A ADVISOR CLASS .................................. 0 0 0 INSTITUTIONAL CLASS ............................ 0 0 0 INVESTOR CLASS ................................. 0 0 0 ---------------- ---------------- ---------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................. (25,781,497) (52,439,679) (87,987,150) ---------------- ---------------- ---------------- CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD - CLASS C ............... N/A N/A N/A REINVESTMENT OF DISTRIBUTIONS - CLASS C ........... N/A N/A N/A COST OF SHARES REDEEMED - CLASS C ................. N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - CLASS C ........................................... N/A N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .................................... 160,000 N/A N/A REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) .................................... 454 N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADMINISTRATOR CLASS ............................... 160,454 N/A N/A ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - ADVISOR CLASS ......... 10,355,257 48,681,081 142,879,305 REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..... 1,582,493 2,919,288 3,983,333 COST OF SHARES REDEEMED - ADVISOR CLASS ........... (40,215,172) (108,288,542) (97,898,073) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - ADVISOR CLASS ..................................... (28,277,422) (56,688,173) 48,964,565 ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - INSTITUTIONAL CLASS ... 14,664,143 47,397,968 373,825,855 REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS 896,347 2,875,589 7,874,914 COST OF SHARES REDEEMED - INSTITUTIONAL CLASS ..... (18,340,249) (202,979,335) (468,158,186) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INSTITUTIONAL CLASS ............................... (2,779,759) (152,705,778) (86,457,417) ---------------- ---------------- ---------------- PROCEEDS FROM SHARES SOLD - INVESTOR CLASS ........ 175,684,322 503,267,324 1,145,270,735 REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .... 24,058,014 43,196,049 69,379,729 COST OF SHARES REDEEMED - INVESTOR CLASS .......... (464,699,363) (1,243,216,338) (1,295,411,274) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - INVESTOR CLASS .................................... (264,957,027) (696,752,965) (80,760,810) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ............ (295,853,754) (906,146,916) (118,253,662) ================ ================ ================ NET INCREASE (DECREASE) IN NET ASSETS ................ (302,381,994) (928,564,393) (139,091,560) ================ ================ ================ ENDING NET ASSETS .................................... $ 1,122,779,786 $ 1,425,161,780 $ 2,353,726,173 ================ ================ ================ 71
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WELLS FARGO ADVANTAGE INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT-TERM BOND FUND -------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005(1) OCTOBER 31, 2004 OCTOBER 31, 2003 ---------------- ---------------- ---------------- SHARES ISSUED AND REDEEMED: SHARES SOLD - CLASS C ............................. N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ........................ N/A N/A N/A SHARES REDEEMED - CLASS C ......................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................................ N/A N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................... N/A N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - ADVISOR CLASS ....................... 98,331 238,892 1,049,668 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... 25,175 43,583 46,193 SHARES REDEEMED - ADVISOR CLASS ................... (346,643) (726,740) (551,361) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS .......................... (223,137) (444,265) 544,500 ---------------- ---------------- ---------------- SHARES SOLD - INSTITUTIONAL CLASS ................. 432,129 1,518,809 2,459,474 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... 47,835 86,060 147,215 SHARES REDEEMED - INSTITUTIONAL CLASS ............. (210,156) (3,556,896) (1,278,776) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................... 269,808 (1,952,027) 1,327,913 ---------------- ---------------- ---------------- SHARES SOLD - INVESTOR CLASS ...................... 10,475,686 8,763,819 13,067,378 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 1,253,174 1,973,530 3,115,534 SHARES REDEEMED - INVESTOR CLASS .................. (11,935,825) (33,969,098) (40,400,236) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ......................... (206,965) (23,231,749) (24,217,324) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ................................ (160,294) (25,628,041) (22,344,911) ================ ================ ================ ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ 0 $ 8,806 $ 19,382 ================ ================ ================ (1) SHARES SOLD MAY INCLUDE AMOUNTS RELATED TO FUND MERGERS AND SHARE CLASS CONSOLIDATIONS (NOTE 1). THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 72
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STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] SHORT-TERM HIGH YIELD BOND FUND -------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 ---------------- ---------------- ---------------- SHARES ISSUED AND REDEEMED: SHARES SOLD - CLASS C ............................. N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ........................ N/A N/A N/A SHARES REDEEMED - CLASS C ......................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................................ N/A N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) .................................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................... N/A N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - ADVISOR CLASS ....................... 811,577 2,193,275 7,241,271 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... 148,739 301,064 260,506 SHARES REDEEMED - ADVISOR CLASS ................... (2,619,164) (4,589,075) (2,365,609) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS .......................... (1,658,848) (2,094,736) 5,136,168 ---------------- ---------------- ---------------- SHARES SOLD - INSTITUTIONAL CLASS ................. N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... N/A N/A N/A SHARES REDEEMED - INSTITUTIONAL CLASS ............. N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................... N/A N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - INVESTOR CLASS ...................... 2,517,157 13,703,741 29,706,333 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 421,400 876,274 1,250,749 SHARES REDEEMED - INVESTOR CLASS .................. (6,980,296) (26,550,751) (24,198,134) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ......................... (4,041,739) (11,970,736) 6,758,948 ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ................................ (5,700,587) (14,065,472) 11,895,116 ================ ================ ================ ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ 0 $ 6,659 $ 0 ================ ================ ================ [Enlarge/Download Table] ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED MAY 31, 2005 OCTOBER 31, 2004 OCTOBER 31, 2003 ---------------- ---------------- ---------------- SHARES ISSUED AND REDEEMED: SHARES SOLD - CLASS C ............................. N/A N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - CLASS C ........................ N/A N/A N/A SHARES REDEEMED - CLASS C ......................... N/A N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - CLASS C ................................ N/A N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - ADMINISTRATOR CLASS (NOTE 1) .................................... 17,485 N/A N/A SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADMINISTRATOR CLASS (NOTE 1) .................................... 50 N/A N/A ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADMINISTRATOR CLASS .................... 17,535 N/A N/A ---------------- ---------------- ---------------- SHARES SOLD - ADVISOR CLASS ....................... 1,127,409 5,251,935 15,216,830 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - ADVISOR CLASS ..................... 172,337 314,398 424,240 SHARES REDEEMED - ADVISOR CLASS ................... (4,378,147) (11,660,062) (10,435,045) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - ADVISOR CLASS .......................... (3,078,401) (6,093,729) 5,206,025 ---------------- ---------------- ---------------- SHARES SOLD - INSTITUTIONAL CLASS ................. 1,597,195 5,103,244 39,798,329 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INSTITUTIONAL CLASS ............... 97,628 309,449 838,663 SHARES REDEEMED - INSTITUTIONAL CLASS ............. (1,997,259) (21,836,888) (49,877,844) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INSTITUTIONAL CLASS .................... (302,436) (16,424,195) (9,240,852) ---------------- ---------------- ---------------- SHARES SOLD - INVESTOR CLASS ...................... 19,120,946 54,187,259 121,906,304 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS - INVESTOR CLASS .................... 2,618,309 4,650,565 7,383,139 SHARES REDEEMED - INVESTOR CLASS .................. (50,572,453) (133,789,575) (137,950,481) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING - INVESTOR CLASS ......................... (28,833,198) (74,951,751) (8,661,038) ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ................................ (32,196,500) (97,469,675) (12,695,865) ================ ================ ================ ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ......................... $ 84 $ 5,447 $ (993) ================ ================ ================ 73
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT SHARE (LOSS) INVESTMENTS INCOME ---------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND ---------------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.67 0.29 (0.09) (0.29) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 10.42 0.49 0.25 (0.49) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 9.54 0.52 0.88 (0.52) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 10.80 0.63 (1.25) (0.64) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 10.42 0.74 0.38 (0.74) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.59 0.73 (0.17) (0.73) INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.65 0.31 (0.08) (0.31) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 10.41 0.55 0.24 (0.55) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 9.53 0.57 0.88 (0.57) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 10.79 0.68 (1.25) (0.69) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 10.42 0.81 0.37 (0.81) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.59 0.80 (0.17) (0.80) INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.67 0.29 (0.08) (0.29) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 10.42 0.50 0.25 (0.50) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 9.54 0.53 0.88 (0.53) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 10.80 0.65 (1.26) (0.65) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 10.43 0.76 0.37 (0.76) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.60 0.77 (0.19) (0.75) GOVERNMENT SECURITIES FUND ---------------------------------------------------------------------------------------------------------- CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.92 0.12 0.01 (0.16) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 11.05 0.15 0.20 (0.25) DECEMBER 26, 2002(5) TO OCTOBER 31, 2003 $ 11.14 0.19 (0.06) (0.22) ADMINISTRATOR CLASS APRIL 11, 2005(5) TO MAY 31, 2005(4) ... $ 10.61 0.05 0.17 (0.06) ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.93 0.20 0.00(6) (0.24) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 11.05 0.25 0.21 (0.35) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 11.35 0.25 0.07 (0.36) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 11.25 0.42 0.30 (0.46) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 10.33 0.54 0.92 (0.54) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.22 0.56 0.11 (0.56) INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.93 0.23 0.00(6) (0.27) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 11.05 0.32 0.21 (0.42) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 11.36 0.34 0.05 (0.44) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 11.26 0.48 0.31 (0.53) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 10.34 0.60 0.93 (0.61) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.22 0.64 0.12 (0.64) INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 10.93 0.20 0.00(6) (0.24) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 11.05 0.26 0.21 (0.36) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 11.36 0.28 0.05 (0.38) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 11.26 0.43 0.31 (0.48) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 10.33 0.55 0.95 (0.57) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.23 0.59 0.10 (0.59) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 74
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) FROM NET NET ASSET -------------------------------------------------- REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES ---------------------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND ---------------------------------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 10.58 4.60% 1.23% (0.16)% 1.07% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 10.67 4.70% 1.20% (0.08)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 10.42 5.10% 1.16% (0.03)% 1.13% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 9.54 6.40% 1.15% (0.03)% 1.12% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 10.80 6.72% 1.29% (0.14)% 1.15% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 10.42 6.92% 1.15% (0.05)% 1.10% INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 10.57 5.08% 0.65% (0.04)% 0.61% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 10.65 5.23% 0.60% (0.03)% 0.57% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 10.41 5.59% 0.60% (0.01)% 0.59% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 9.53 7.00% 0.59% (0.01)% 0.58% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 10.79 7.42% 0.49% (0.00)% 0.49% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 10.42 7.67% 0.44% (0.00)% 0.44% INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 10.59 4.62% 1.13% (0.09)% 1.04% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 10.67 4.78% 1.07% (0.03)% 1.04% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 10.42 5.20% 1.04% (0.01)% 1.03% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 9.54 6.60% 0.99% 0.00% 0.99% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 10.80 7.03% 0.95% 0.00% 0.95% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 10.43 7.35% 0.92% 0.00% 0.92% GOVERNMENT SECURITIES FUND ---------------------------------------------------------------------------------------------------------------------------- CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... (0.12) $ 10.77 2.14% 2.30% (0.04)% 2.26% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... (0.23) $ 10.92 1.65% 2.10% (0.04)% 2.06% DECEMBER 26, 2002(5) TO OCTOBER 31, 2003 0.00 $ 11.05 1.25% 2.17% (0.06)% 2.11% ADMINISTRATOR CLASS APRIL 11, 2005(5) TO MAY 31, 2005(4) ... 0.00 $ 10.77 3.54% 0.83% (0.16)% 0.67% ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... (0.12) $ 10.77 3.33% 1.16% (0.09)% 1.07% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... (0.23) $ 10.93 2.57% 1.18% (0.06)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... (0.26) $ 11.05 2.33% 1.12% (0.01)% 1.11% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (0.16) $ 11.35 3.68% 1.14% (0.04)% 1.10% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 11.25 4.50% 1.36% (0.22)% 1.14% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 10.33 5.52% 1.93% (0.81)% 1.12% INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... (0.12) $ 10.77 3.87% 0.58% (0.05)% 0.53% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... (0.23) $ 10.93 3.19% 0.53% (0.03)% 0.50% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... (0.26) $ 11.05 2.96% 0.48% 0.00% 0.48% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (0.16) $ 11.36 4.50% 0.46% (0.01)% 0.45% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 11.26 5.43% 0.47% 0.00% 0.47% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 10.34 6.21% 0.41% 0.00% 0.41% INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... (0.12) $ 10.77 3.37% 1.08% (0.06)% 1.02% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... (0.23) $ 10.93 2.66% 1.06% (0.03)% 1.03% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... (0.26) $ 11.05 2.55% 0.96% 0.00% 0.96% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (0.16) $ 11.36 3.85% 0.92% (0.01)% 0.91% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 11.26 5.08% 0.91% 0.00% 0.91% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 10.33 5.76% 0.89% (0.01)% 0.88% [Download Table] PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE(3) (000'S OMITTED) ------------------------------------------------------------------------------------ CORPORATE BOND FUND ------------------------------------------------------------------------------------ ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.85% 85% $ 17,440 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 7.29% 133% $ 20,396 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 14.89% 205% $ 28,663 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (5.84)% 412% $ 30,529 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 10.98% 341% $ 32,041 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 5.49% 294% $ 7,138 INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 2.21% 85% $ 74,568 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 7.78% 133% $ 71,061 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 15.51% 205% $ 76,644 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (5.35)% 412% $ 43,487 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 11.62% 341% $ 31,997 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 6.22% 294% $ 6,530 INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.95% 85% $ 344,329 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 7.39% 133% $ 432,598 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 15.00% 205% $ 555,582 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (5.71)% 412% $ 683,288 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 11.10% 341% $ 1,292,816 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 5.73% 294% $ 921,587 GOVERNMENT SECURITIES FUND ------------------------------------------------------------------------------------ CLASS C NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.24% 139% $ 2,257 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 3.20% 390% $ 2,979 DECEMBER 26, 2002(5) TO OCTOBER 31, 2003 1.18% 531% $ 2,925 ADMINISTRATOR CLASS APRIL 11, 2005(5) TO MAY 31, 2005(4) ... 2.12% 139% $ 60 ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.85% 139% $ 69,267 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 4.27% 390% $ 76,283 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 2.89% 531% $ 120,753 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 6.77% 519% $ 106,721 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 14.50% 552% $ 12,371 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 6.76% 373% $ 86 INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 2.17% 139% $ 90,647 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 4.92% 390% $ 84,366 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 3.56% 531% $ 121,767 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 7.45% 519% $ 104,607 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 15.28% 552% $ 76,172 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 7.69% 373% $ 20,547 INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.87% 139% $ 1,162,518 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 4.38% 390% $ 1,230,428 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 2.99% 531% $ 2,010,247 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 6.97% 519% $ 2,360,229 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 14.88% 552% $ 1,690,980 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 6.99% 373% $ 1,282,641 75
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT SHARE (LOSS) INVESTMENTS INCOME ----------------------------------------------------------------------------------------------------- HIGH INCOME FUND ----------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 7.84 0.30 (0.21) (0.30) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 7.49 0.53 0.35 (0.53) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 6.31 0.55 1.18 (0.55) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 7.74 0.77 (1.43) (0.77) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.67 1.01 (1.93) (1.01) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.78 0.75 (1.11) (0.75) INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 7.88 0.33 (0.19) (0.33) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 7.53 0.58 0.35 (0.58) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 6.35 0.61 1.17 (0.60) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 7.75 0.82 (1.40) (0.82) JULY 31, 2001(5) TO OCTOBER 31, 2001 ... $ 8.56 0.26 (0.81) (0.26) INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 7.86 0.31 (0.20) (0.31) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 7.51 0.54 0.35 (0.54) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 6.33 0.57 1.18 (0.57) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 7.75 0.78 (1.42) (0.78) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.68 1.03 (1.93) (1.03) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.60 1.14 (0.92) (1.14) SHORT-TERM BOND FUND ----------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 8.77 0.18 (0.14) (0.19) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 8.81 0.26 (0.01) (0.29) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 8.78 0.29 0.07 (0.33) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 9.40 0.42 (0.60) (0.44) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.34 0.58 0.06 (0.58) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 9.41 0.60 (0.07) (0.60) INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 8.78 0.20 (0.14) (0.21) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 8.82 0.31 (0.01) (0.34) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 8.79 0.34 0.08 (0.39) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 9.40 0.48 (0.59) (0.50) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.35 0.64 0.05 (0.64) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 9.42 0.67 (0.07) (0.67) INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 8.77 0.19 (0.14) (0.20) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 8.81 0.27 (0.01) (0.30) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 8.78 0.29 0.09 (0.35) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 9.39 0.44 (0.59) (0.46) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.34 0.60 0.05 (0.60) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 9.41 0.63 (0.07) (0.63) SHORT-TERM HIGH YIELD BOND FUND ----------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 8.69 0.22 (0.18) (0.22) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 8.66 0.39 0.03 (0.39) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 8.28 0.46 0.38 (0.46) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 8.93 0.60 (0.65) (0.60) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.88 0.79 (0.95) (0.79) FEBRUARY 29, 2000(5) TO OCTOBER 31, 2000 $ 10.05 0.51 (0.17) (0.51) INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 8.69 0.22 (0.17) (0.22) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 8.66 0.40 0.03 (0.40) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 8.29 0.47 0.37 (0.47) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 8.93 0.61 (0.64) (0.61) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.88 0.82 (0.95) (0.82) NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... $ 10.21 0.81 (0.33) (0.81) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 76
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) FROM NET NET ASSET -------------------------------------------------- REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES ----------------------------------------------------------------------------------------------------------------------------- HIGH INCOME FUND ----------------------------------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 7.63 6.59% 1.20% (0.14)% 1.06% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 7.84 6.90% 1.20% (0.07)% 1.13% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 7.49 7.74% 1.15% (0.04)% 1.11% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 6.31 10.45% 1.20% (0.07)% 1.13% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 7.74 11.31% 1.61% (0.48)% 1.13% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 9.67 10.72% 1.17% (0.05)% 1.12% INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 7.69 7.20% 0.51% (0.09)% 0.42% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 7.88 7.58% 0.47% (0.03)% 0.44% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 7.53 8.60% 0.45% 0.00% 0.45% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 6.35 11.03% 0.46% 0.00% 0.46% JULY 31, 2001(5) TO OCTOBER 31, 2001 ... 0.00 $ 7.75 12.93% 0.49% 0.00% 0.49% INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 7.66 6.71% 1.08% (0.13)% 0.95% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 7.86 7.06% 1.00% (0.04)% 0.96% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 7.51 8.09% 0.94% 0.00% 0.94% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 6.33 10.62% 0.97% 0.00% 0.97% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 7.75 11.48% 0.90% 0.00% 0.90% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 9.68 10.96% 0.86% 0.00% 0.86% SHORT-TERM BOND FUND ----------------------------------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 8.62 3.53% 1.18% (0.14)% 1.04% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 8.77 2.96% 1.19% (0.07)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 8.81 3.14% 1.15% (0.02)% 1.13% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 8.78 4.66% 1.16% (0.03)% 1.13% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 9.40 5.47% 1.34% (0.21)% 1.13% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 9.34 6.51% 2.00% (0.89)% 1.11% INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 8.63 4.07% 0.60% (0.07)% 0.53% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 8.78 3.56% 0.54% (0.03)% 0.51% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 8.82 3.78% 0.51% 0.00% 0.51% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 8.79 5.35% 0.48% 0.00% 0.48% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 9.40 6.57% 0.44% 0.00% 0.44% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 9.35 7.16% 0.43% 0.00% 0.43% INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 8.62 3.70% 1.01% (0.12)% 0.89% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 8.77 3.11% 0.99% (0.03)% 0.96% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 8.81 3.39% 0.94% (0.01)% 0.93% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 8.78 4.94% 0.90% 0.00% 0.90% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 9.39 6.23% 0.87% 0.00% 0.87% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 0.00 $ 9.34 6.74% 0.86% 0.00% 0.86% SHORT-TERM HIGH YIELD BOND FUND ----------------------------------------------------------------------------------------------------------------------------- ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 8.51 4.32% 1.23% (0.14)% 1.09% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 8.69 4.54% 1.20% (0.08)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 8.66 5.23% 1.16% (0.04)% 1.12% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 8.28 6.82% 1.18% (0.06)% 1.12% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 8.93 7.95% 1.30% (0.17)% 1.13% FEBRUARY 29, 2000(5) TO OCTOBER 31, 2000 0.00 $ 9.88 7.65% 1.16% (0.04)% 1.12% INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 8.52 4.41% 1.15% (0.14)% 1.01% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 8.69 4.68% 1.03% (0.04)% 0.99% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 8.66 5.48% 0.98% (0.01)% 0.97% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 8.29 7.18% 0.93% (0.01)% 0.92% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 8.93 8.45% 0.84% 0.00% 0.84% NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... (0.00)(6) $ 9.88 8.05% 0.82% 0.00% 0.82% [Download Table] PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE(3) (000'S OMITTED) ------------------------------------------------------------------------------------ HIGH INCOME FUND ------------------------------------------------------------------------------------ ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.16% 52% $ 17,681 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 12.11% 133% $ 22,315 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 28.39% 172% $ 29,587 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (9.44)% 120% $ 17,257 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... (10.28)% 114% $ 14,821 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... (3.44)% 104% $ 123 INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.77% 52% $ 3,108 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 12.85% 133% $ 24,436 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 29.11% 172% $ 41,891 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (8.38)% 120% $ 47,281 JULY 31, 2001(5) TO OCTOBER 31, 2001 ... (6.52)% 114% $ 13,626 INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.35% 52% $ 246,538 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 12.26% 133% $ 300,358 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 28.55% 172% $ 441,931 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (9.14)% 120% $ 438,858 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... (10.05)% 114% $ 846,866 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 1.94% 104% $ 716,601 SHORT-TERM BOND FUND ------------------------------------------------------------------------------------ ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.45% 14% $ 8,142 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 2.87% 37% $ 10,240 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 4.19% 97% $ 14,203 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (1.89)% 154% $ 9,369 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 6.93% 129% $ 9,657 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 5.81% 94% $ 16 INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.76% 14% $ 51,426 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 3.50% 37% $ 49,940 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 4.84% 97% $ 67,391 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (1.14)% 154% $ 55,474 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 7.57% 129% $ 71,474 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 6.60% 94% $ 24,800 INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.53% 14% $ 505,613 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 3.05% 37% $ 516,105 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 4.40% 97% $ 723,273 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (1.56)% 154% $ 933,238 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 7.11% 129% $ 1,348,372 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... 6.16% 94% $ 1,138,002 SHORT-TERM HIGH YIELD BOND FUND ------------------------------------------------------------------------------------ ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.47% 31% $ 40,297 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 4.96% 71% $ 55,553 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 10.35% 117% $ 73,487 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (0.68)% 86% $ 27,751 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... (1.92)% 73% $ 17,544 FEBRUARY 29, 2000(5) TO OCTOBER 31, 2000 3.52% 67% $ 46 INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.63% 31% $ 127,171 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 5.08% 71% $ 164,928 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 10.38% 117% $ 268,015 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (0.42)% 86% $ 200,429 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... (1.64)% 73% $ 348,277 NOVEMBER 1, 1999 TO OCTOBER 31, 2000 ... (4.91)% 67% $ 286,274 77
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WELLS FARGO ADVANTAGE INCOME FUNDS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED BEGINNING NET AND DISTRIBUTIONS NET ASSET INVESTMENT UNREALIZED FROM NET VALUE PER INCOME GAIN (LOSS) ON INVESTMENT SHARE (LOSS) INVESTMENTS INCOME --------------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND --------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS APRIL 11, 2005(5) TO MAY 31, 2005(4) ... $ 9.16 0.05 0.00(6) (0.05) ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 9.21 0.16 (0.02) (0.18) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 9.33 0.20 (0.07) (0.25) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 9.41 0.24 (0.01) (0.31) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 9.82 0.34 (0.35) (0.40) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.88 0.55 (0.05) (0.56) MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... $ 9.87 0.41 0.01 (0.41) INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 9.21 0.19 (0.02) (0.21) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 9.33 0.24 (0.04) (0.32) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 9.41 0.29 0.01 (0.38) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 9.82 0.36 (0.29) (0.48) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.87 0.62 (0.04) (0.63) MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... $ 9.87 0.46 0.00 (0.46) INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... $ 9.22 0.17 (0.03) (0.19) NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... $ 9.34 0.22 (0.06) (0.28) NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... $ 9.42 0.25 0.01 (0.34) NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... $ 9.82 0.35 (0.32) (0.43) NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... $ 9.88 0.58 (0.05) (0.59) MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... $ 9.87 0.43 0.01 (0.43) MARCH 1, 1999 TO FEBRUARY 29, 2000 ..... $ 9.95 0.59 (0.08) (0.59) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 78
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- [Enlarge/Download Table] DISTRIBUTIONS ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) FROM NET NET ASSET REALIZED VALUE PER NET INVESTMENT GROSS EXPENSES NET GAINS SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES ----------------------------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND ----------------------------------------------------------------------------------------------------------------------- ADMINISTRATOR CLASS APRIL 11, 2005(5) TO MAY 31, 2005(4) ... 0.00 $ 9.16 3.35% 0.83% (0.24)% 0.59% ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 9.17 2.98% 1.15% (0.12)% 1.03% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 9.21 2.25% 1.17% (0.05)% 1.12% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 9.33 2.37% 1.12% 0.00% 1.12% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 9.41 3.55% 1.11% (0.01)% 1.10% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 9.82 4.93% 1.16% (0.03)% 1.13% MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... 0.00 $ 9.88 6.22% 1.12% (0.01)% 1.11% INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 9.17 3.60% 0.51% (0.09)% 0.42% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 9.21 2.99% 0.41% (0.03)% 0.38% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 9.33 3.16% 0.37% 0.00% 0.37% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 9.41 4.36% 0.36% (0.01)% 0.35% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 9.82 6.09% 0.36% 0.00% 0.36% MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... 0.00 $ 9.87 6.95% 0.38% 0.00% 0.38% INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 0.00 $ 9.17 3.14% 0.99% (0.12)% 0.87% NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 0.00 $ 9.22 2.49% 0.89% (0.03)% 0.86% NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 0.00 $ 9.34 2.70% 0.85% (0.01)% 0.84% NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.00 $ 9.42 3.87% 0.82% 0.00% 0.82% NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 0.00 $ 9.82 5.75% 0.79% 0.00% 0.79% MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... 0.00 $ 9.88 6.52% 0.79% 0.00% 0.79% MARCH 1, 1999 TO FEBRUARY 29, 2000 ..... 0.00 $ 9.87 5.89% 0.76% 0.00% 0.76% [Enlarge/Download Table] PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(2) RATE(3) (000'S OMITTED) -------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------------- ADMINISTRATOR CLASS APRIL 11, 2005(5) TO MAY 31, 2005(4) ... 0.53% 17% $ 161 ADVISOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.55% 17% $ 59,097 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 1.45% 26% $ 87,760 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 2.49% 94% $ 145,769 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... (0.06)% 50% $ 97,990 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 5.12% 70% $ 81,827 MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... 4.35% 38% $ 28 INSTITUTIONAL CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.90% 17% $ 56,560 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 2.19% 26% $ 59,624 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 3.26% 94% $ 213,690 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.71% 50% $ 302,379 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 6.03% 70% $ 783,961 MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... 4.76% 38% $ 347,826 INVESTOR CLASS NOVEMBER 1, 2004 TO MAY 31, 2005(4) .... 1.51% 17% $ 1,006,961 NOVEMBER 1, 2003 TO OCTOBER 31, 2004 ... 1.71% 26% $ 1,277,777 NOVEMBER 1, 2002 TO OCTOBER 31, 2003 ... 2.77% 94% $ 1,994,266 NOVEMBER 1, 2001 TO OCTOBER 31, 2002 ... 0.33% 50% $ 2,092,448 NOVEMBER 1, 2000 TO OCTOBER 31, 2001 ... 5.47% 70% $ 2,989,665 MARCH 1, 2000(7) TO OCTOBER 31, 2000 ... 4.58% 38% $ 2,156,106 MARCH 1, 1999 TO FEBRUARY 29, 2000 ..... 5.24% 48% $ 2,207,887 79
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- NOTES TO FINANCIAL HIGHLIGHTS (1) During each period, various fees and expenses were waived and reimbursed as indicated. The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements (Note 3). (2) Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. (3) Calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. (4) In 2005, the Fund changed its fiscal year-end from October 31 to May 31. (5) Commencement of operations. (6) Amount calculated is less than $0.005. (7) In 2000, the Fund changed its fiscal year-end from February 29 to October 31. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 80
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- 1. ORGANIZATION Wells Fargo Funds Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. The Trust commenced operations on November 8, 1999, and at May 31, 2005 was comprised of 108 separate series (each, a "Fund", collectively, the "Funds"). These financial statements present the Corporate Bond Fund, Government Securities Fund, High Income Fund, Short-Term Bond Fund, Short-Term High Yield Bond Fund and Ultra Short-Term Income Fund. Each Fund is a diversified series of the Trust. In August and September 2004, the Board of Trustees of the Trust and the Boards of Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of Reorganization providing for the reorganization of certain Strong Funds into certain Funds of the Trust. Effective at the close of business on April 8, 2005, the following Acquiring Fund ("Acquiring Fund") acquired substantially all of the net assets of the following Target Funds ("Target Funds") through a tax-free exchange under section 368 of the Internal Revenue Code. The following is a summary of shares outstanding and net assets immediately before and after the reorganization: [Enlarge/Download Table] Before Reorganization After Reorganization ------------------------------------- --------------------- Target Funds Acquiring Fund ----------------------------------------------------------------------------------------------------- Fund STRONG SHORT-TERM STRONG SHORT-TERM WELLS FARGO ADVANTAGE INCOME FUND BOND FUND* SHORT-TERM BOND FUND ----------------------------------------------------------------------------------------------------- Shares: ----------------------------------------------------------------------------------------------------- ADVISOR CLASS -- 979,755 979,755 ----------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS -- 5,941,048 5,941,048 ----------------------------------------------------------------------------------------------------- INVESTOR CLASS 6,002,996 53,271,531 60,148,795 ----------------------------------------------------------------------------------------------------- Net Assets: ----------------------------------------------------------------------------------------------------- ADVISOR CLASS -- $8,432,342 $8,432,342 ----------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS -- 51,177,795 51,177,795 ----------------------------------------------------------------------------------------------------- INVESTOR CLASS $ 59,185,007 458,449,144 517,634,151 ----------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) (226,619) (1,975,269) (2,201,888) ----------------------------------------------------------------------------------------------------- Accumulated net realized losses (425,633) (151,537,312) (151,962,945) ----------------------------------------------------------------------------------------------------- * Designates the accounting survivor. Effective at the close of business on April 8, 2005, the following Acquiring Funds ("Acquiring Funds"), by share class, acquired substantially all of the net assets of the following Target Funds ("Target Funds"), by share class, through a tax-free exchange under section 368 of the Internal Revenue Code. [Enlarge/Download Table] Acquiring Funds Target Funds ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE CORPORATE BOND FUND ADVISOR CLASS STRONG CORPORATE BOND FUND ADVISOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE CORPORATE BOND FUND INSTITUTIONAL CLASS STRONG CORPORATE BOND FUND INSTITUTIONAL CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE CORPORATE BOND FUND INVESTOR CLASS STRONG CORPORATE BOND FUND INVESTOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND CLASS C STRONG GOVERNMENT SECURITIES FUND CLASS C ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND ADMINISTRATOR CLASS NEW ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND ADVISOR CLASS STRONG GOVERNMENT SECURITIES FUND ADVISOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND INSTITUTIONAL CLASS STRONG GOVERNMENT SECURITIES FUND INSTITUTIONAL CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE GOVERNMENT SECURITIES FUND INVESTOR CLASS STRONG GOVERNMENT SECURITIES FUND INVESTOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE HIGH INCOME FUND ADVISOR CLASS STRONG HIGH-YIELD BOND FUND ADVISOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE HIGH INCOME FUND INSTITUTIONAL CLASS STRONG HIGH-YIELD BOND FUND INSTITUTIONAL CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE HIGH INCOME FUND INVESTOR CLASS STRONG HIGH-YIELD BOND FUND INVESTOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND ADVISOR CLASS STRONG SHORT-TERM HIGH YIELD BOND FUND ADVISOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE SHORT-TERM HIGH YIELD BOND FUND INVESTOR CLASS STRONG SHORT-TERM HIGH YIELD BOND FUND INVESTOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND ADVISOR CLASS STRONG ULTRA SHORT-TERM INCOME FUND ADVISOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND ADMINISTRATOR CLASS NEW ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND INSTITUTIONAL CLASS STRONG ULTRA SHORT-TERM INCOME FUND INSTITUTIONAL CLASS ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE ULTRA SHORT-TERM INCOME FUND INVESTOR CLASS STRONG ULTRA SHORT-TERM INCOME FUND INVESTOR CLASS ------------------------------------------------------------------------------------------------------------------------------------ 81
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- The separate classes of shares offered by each Fund differ principally in applicable sales charges and distribution, shareholder servicing and administration fees. Shareholders of each class bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of a Fund, earn income from the portfolio, and are allocated unrealized gains and losses pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends are determined separately for each class based on income and expenses allocable to each class. Realized gains and losses are allocated to each class pro rata based upon the net assets of each class on the date realized. Differences in per share dividend rates generally result from the relative weightings of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution, shareholder servicing, and administration fees. 2. SIGNIFICANT ACCOUNTING POLICIES -------------------------------------------------------------------------------- The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America ("GAAP") for investment companies. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Trust may enter into contracts that provide certain indemnifications. The Trust's maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. SECURITY VALUATION Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on The NASDAQ Stock Market, Inc. are valued at the NASDAQ Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. In the absence of any sale of such securities, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, the valuations are based on the latest quoted bid prices. Prior to April 1, 2005, the predecessor Strong Funds valuations were based on the mean of the bid and asked prices. Certain fixed income securities with maturities exceeding 60 days are valued by using a pricing service approved by the Trust's Board of Trustees. The service uses market prices as quoted by an independent pricing service or by dealers in these securities when, in the service's judgment, these prices are readily available and are representative of the securities' market values. For some securities, such prices are not readily available. These securities will generally be fair valued using methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, indications as to values from dealers in securities, trading characteristics, and general market conditions. Debt securities maturing in 60 days or less generally are valued at amortized cost. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value. Investments which are not valued using any of the methods discussed above are valued at their fair value as determined by procedures approved by the Board of Trustees. SECURITY TRANSACTIONS AND INCOME RECOGNITION Securities transactions are recorded on a trade date basis. Realized gains or losses are reported on the basis of identified cost of securities delivered. Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. Debt obligations may be placed on non-accrual status and related investment income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of income has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured. Dividend income is recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed of the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured. FOREIGN CURRENCY TRANSLATION The accounting records are maintained in U.S. dollars. Assets, including investment securities, and liabilities denominated in foreign currency are translated into U.S. dollars at the prevailing rates of exchange at the date of valuation. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities, at fiscal period-end, resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities at fiscal period-end are not separately presented. Such changes are recorded with net realized and 82
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- unrealized gain from investments. Gains and losses from certain foreign currency transactions are treated as ordinary income for U.S. federal income tax purposes. DISTRIBUTIONS TO SHAREHOLDERS Net investment income, if any, is declared daily and distributed to shareholders monthly. Distributions to shareholders from net realized capital gains, if any, are declared and distributed at least annually. For federal income tax purposes, a Fund may designate as capital gains dividends the earnings and profits distributed to shareholders on the redemption of fund shares during the year. Distributions are based on amounts calculated in accordance with the applicable federal income tax regulations, which may differ from GAAP. The timing and character of distributions made during the period from net investment income or net realized gains may also differ from their ultimate characterization for federal income tax purposes. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment. Temporary differences do not require reclassifications. At May 31, 2005, as a result of permanent book-to-tax differences, the following reclassification adjustments were made on the Statement of Assets and Liabilities: [Enlarge/Download Table] Undistributed Net Undistributed Net Fund Investment Income (Loss) Realized Gain (Loss) Paid-in Capital -------------------------------------------------------------------------------------------------- CORPORATE BOND FUND $ (5,707) $ 5,707 $ 0 -------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 3,513,622 (3,513,622) 0 -------------------------------------------------------------------------------------------------- HIGH INCOME FUND 19,998 (19,875) (123) -------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 562,184 21,636,001 (22,198,185) -------------------------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND 66,037 (66,037) 0 -------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 2,689,244 4,592,684 (7,281,928) FEDERAL INCOME TAXES Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund of the Trust to continue to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under subchapter M of the Internal Revenue Code (the "Code"), and to make distributions of substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required at May 31, 2005. At May 31, 2005, estimated net capital loss carryforwards, which are available to offset future net realized capital gains, were: Fund Year Expires Capital Loss Carryforwards -------------------------------------------------------------------------------- CORPORATE BOND FUND 2010 $ 138,935,007 -------------------------------------------------------------------------------- HIGH INCOME FUND 2007 5,327,825 2008 9,294,748 2009 78,272,914 2010 279,017,279 2011 28,016,734 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND 2007 17,351,674 2009 109,813,638 2010 2,145,251 2011 263,758 2013 417,016 -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND 2008 1,077,364 2009 5,798,551 2010 65,207,342 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 2007 4,182,586 2008 17,640,972 2009 17,899,192 2010 171,970,363 2011 21,629,987 2012 11,899,310 -------------------------------------------------------------------------------- 83
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- At May 31, 2005, current year deferred post-October capital losses, which will be treated as realized for tax purposes on the first day of the succeeding year, were: Deferred Post-October Fund Capital Loss -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND $ 482,795 -------------------------------------------------------------------------------- The capital loss carryforwards may include capital losses acquired from a merger as discussed in Note 1. The yearly utilization of any acquired capital loss is limited by the Code. FUTURES CONTRACTS The Funds may purchase futures contracts to gain exposure to market changes, which may be more efficient or cost effective than actually buying the securities. A futures contract is an agreement between parties to buy or sell a security at a set price on a future date. Upon entering into such a contract, a Fund is required to pledge to the broker an amount of cash, U.S. Government obligations or other high-quality debt securities equal to the minimum "initial margin" requirements of the exchange on which the futures contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as "variation margin" and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Pursuant to regulations and/or published positions of the Securities and Exchange Commission (the "SEC") for long futures positions, the Fund is required to segregate highly liquid securities as permitted by the SEC in connection with futures transactions in an amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. At May 31, 2005, the following Fund(s) held futures contracts: [Enlarge/Download Table] Net Unrealized Appreciation Fund Contracts Type Expiration Date Notional Amount (Depreciation) --------------------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND 123 LONG TWO-YEAR US TREASURY NOTES SEPTEMBER 2005 $ 25,532,632 $ 16,774 --------------------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND 53 SHORT FIVE-YEAR US TREASURY NOTES SEPTEMBER 2005 5,764,353 (225) --------------------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND 178 SHORT TEN-YEAR US TREASURY NOTES SEPTEMBER 2005 20,079,869 (81,413) --------------------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND 178 SHORT US TREASURY BONDS SEPTEMBER 2005 20,789,087 (114,788) --------------------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 60 LONG FIVE-YEAR US TREASURY NOTES SEPTEMBER 2005 6,525,724 214 --------------------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 265 SHORT TWO-YEAR US TREASURY NOTES SEPTEMBER 2005 55,007,077 (38,392) --------------------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 180 SHORT TEN-YEAR US TREASURY NOTES SEPTEMBER 2005 20,305,485 (82,327) --------------------------------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 50 SHORT TWO-YEAR US TREASURY NOTES SEPTEMBER 2005 10,378,694 (7,244) --------------------------------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 511 SHORT TWO-YEAR US TREASURY NOTES SEPTEMBER 2005 106,070,250 (74,031) --------------------------------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 472 SHORT FIVE-YEAR US TREASURY NOTES SEPTEMBER 2005 51,335,369 (2,006) MORTGAGE DOLLAR ROLL TRANSACTIONS The Funds may engage in mortgage dollar roll transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar roll transaction, a Fund sells a mortgage-backed security to a financial institution, such as a bank or broker-dealer and simultaneously agrees to repurchase a substantially similar security from the institution at a later date at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories. 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 Funds account for the dollar roll transactions as purchases and sales. SECURITY LOANS The Funds may loan securities in return for securities, irrevocable letters of credit or cash collateral, which is invested in various short-term fixed income securities. A Fund may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Fund also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest when the transaction is entered into. If the collateral falls to 100%, it will be brought back to 102%. Gain or loss in the market price of the securities loaned that may occur during the term of the loan are reflected in the value of the Fund. The risks from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund. Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending agent for the Funds and receives for its services 35% of the revenues earned on the securities lending activities and incurs all expenses. The value of the securities on loan and the value of the related collateral at May 31, 2005 are shown on the Statement of Assets and Liabilities. 84
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- Prior to April 11, 2005, the predecessor Strong Funds had a securities lending agreement with State Street Bank and Trust Co. ("State Street"). The agreement required that loans be collateralized at all times by cash and cash equivalents equal to at least 102% of the market value of the aggregate loaned securities, plus accrued interest, and the collateral be marked-to-market daily. Amounts earned as interest on investments of cash collateral, net of rebates and other securities lending expenses, are included in Securities Lending Income on the Statement of Operations. SWAP CONTRACTS The Funds may enter into various hedging transactions, such as interest rate swaps to preserve a return or spread on a particular investment or portion of its portfolio, to create synthetic adjustable-rate mortgage securities or for other purposes. Swaps involve the exchange of commitments to make or receive payments, e.g., an exchange of floating-rate payments for fixed rate payments. The Funds record as an increase or decrease to realized gain/loss, the amount due or owed by the Funds at termination or settlement. Swaps are valued based on prices quoted by independent brokers. These valuations represent the net present value of all future cash settlement amounts based on implied forward interest rates or index values. At May 31, 2005, the Funds had no open swap contracts. WHEN-ISSUED TRANSACTIONS Each Fund may purchase securities on a forward commitment or `when-issued' basis. A Fund records a when-issued transaction on the trade date and will segregate with the custodian qualifying assets having a value sufficient to make payment for the securities purchased. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract. 3. EXPENSES -------------------------------------------------------------------------------- ADVISORY FEES The Trust has entered into an advisory contract with Wells Fargo Funds Management, LLC ("Funds Management"). The adviser is responsible for implementing investment policies and guidelines and for supervising the sub-adviser, who is responsible for day-to-day portfolio management. Pursuant to the contract, Funds Management is entitled to receive an advisory fee for its services as adviser. Funds Management may retain the services of certain investment sub-advisers to provide daily portfolio management. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by a Fund to the adviser. Funds Management and the investment sub-adviser are entitled to be paid a monthly fee at the following annual rates: [Enlarge/Download Table] Sub-Advisory Advisory Fees* Fees (% of Average Daily (% of Average Average Daily Average Daily Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets) --------------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND $0 - $499 million 0.450 Wells Capital $0 - $400 million 0.200 $500 - $999 million 0.400 Management $400 - $800 million 0.175 $1 - $2.99 billion 0.350 Incorporated > $800 million 0.150 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 --------------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND $0 - $499 Million 0.450 Wells Capital $0 - $400 Million 0.200 $500 - $999 million 0.400 Management $400 - $800 million 0.175 $1 - $2.99 billion 0.350 Incorporated > $800 million 0.150 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 --------------------------------------------------------------------------------------------------------------------- HIGH INCOME FUND $0 - $499 million 0.550 Wells Capital $0 - $400 million 0.200 $500 - $999 million 0.500 Management $400 - $800 million 0.175 $1 - $2.99 billion 0.450 Incorporated > $800 million 0.150 $3 - $4.99 billion 0.425 > $4.99 billion 0.400 --------------------------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND $0 - $499 million 0.450 Wells Capital $0 - $200 million 0.200 $500 - $999 million 0.400 Management $200 - $400 million 0.175 $1 - $2.99 billion 0.350 Incorporated > $400 million 0.150 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 85
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- [Enlarge/Download Table] Sub-Advisory Advisory Fees* Fees (% of Average Daily (% of Average Average Daily Average Daily Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Net Assets) --------------------------------------------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD $0 - $499 million 0.550 Wells Capital $0 - $400 million 0.200 BOND FUND $500 - $999 million 0.500 Management $400 - $800 million 0.175 $1 - $2.99 billion 0.450 Incorporated > $800 million 0.150 $3 - $4.99 billion 0.425 > $4.99 billion 0.400 --------------------------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM $0 - $499 million 0.450 Wells Capital $0 - $400 million 0.200 INCOME FUND $500 - $999 million 0.400 Management $400 - $800 million 0.175 $1 - $2.99 billion 0.350 Incorporated > $800 million 0.150 $3 - $4.99 billion 0.325 > $4.99 billion 0.300 * Effective April 11, 2005. Prior to January 1, 2005, Strong Capital Management, Inc. ("SCM") served as investment adviser to each of the predecessor Strong Funds. From January 1, 2005 through April 10, 2005, Funds Management served as interim investment adviser to each of the predecessor Strong Funds. Both SCM and Funds Management, for their respective periods of time during the reporting period, were entitled to receive an annual fee at the following rate: Advisory Fees (% of Average Fund Average Daily Net Assets Daily Net Assets) -------------------------------------------------------------------------------- CORPORATE BOND FUND $0 - $4 billion 0.375% $4 billion - $6 billion 0.350% > $6 billion 0.325% -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND $0 - $4 billion 0.350% $4 billion - $6 billion 0.325% > $6 billion 0.300% -------------------------------------------------------------------------------- HIGH INCOME FUND $0 - $4 billion 0.375% $4 billion - $6 billion 0.350% > $6 billion 0.325% -------------------------------------------------------------------------------- SHORT-TERM BOND FUND $0 - $4 billion 0.375% $4 billion - $6 billion 0.350% > $6 billion 0.325% -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND $0 - $4 billion 0.375% $4 billion - $6 billion 0.350% > $6 billion 0.325% -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND $0 - $4 billion 0.300% $4 billion - $6 billion 0.275% > $6 billion 0.250% ADMINISTRATION AND TRANSFER AGENT FEES The Trust has entered into an Administration Agreement with Funds Management. Under this Agreement, for providing administrative services, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers, Funds Management is entitled to receive the following annual fees: Administration Fees** Average Daily (% of Average Net Assets Daily Net Assets) -------------------------------------------------------------------------------- FUND LEVEL $0 - $4.99 billion 0.05 $5 - $9.99 billion 0.04 > $9.99 billion 0.03 -------------------------------------------------------------------------------- CLASS C 0.28 -------------------------------------------------------------------------------- ADMINISTRATOR CLASS 0.10 -------------------------------------------------------------------------------- ADVISOR CLASS(1),(2) 0.28 86
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- Administration Fees** Average Daily (% of Average Net Assets Daily Net Assets) -------------------------------------------------------------------------------- INSTITUTIONAL CLASS(1) 0.08 -------------------------------------------------------------------------------- INVESTOR CLASS(2) 0.45 (1) The class-level administration fee is reduced by 0.05% for the Advisor Class and Institutional Class shares of the Short-Term High Yield Bond Fund. (2) The class-level administration fee is reduced by 0.05% for the Advisor Class and Investor Class shares of the High Income Fund. ** Effective April 11, 2005. Prior to April 11, 2005, Strong Investor Services, Inc. ("SISI") served as administrator to each of the predecessor Strong Funds and was entitled to receive an annual fee at the following rates: % of Average Daily Net Assets -------------------------------------------------------------------------------- All Income Funds (except for Ultra Short-term Income Fund) -------------------------------------------------------------------------------- CLASS C, ADVISOR CLASS AND INVESTOR CLASS 0.28% -------------------------------------------------------------------------------- INSTITUTIONAL CLASS 0.02% -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- ADVISOR AND INVESTOR CLASS 0.33% -------------------------------------------------------------------------------- INSTITUTIONAL CLASS 0.02% The Trust has entered into an agreement with Boston Financial Data Services, Inc. ("BFDS"). BFDS served as the transfer agent to the predecessor Strong Funds effective March 14, 2005. Prior to March 14, 2005, SISI served as transfer agent to each of the predecessor Strong Funds. Effective April 11, 2005, transfer agent fees are paid by Funds Management and not by the Funds. For financial statement presentation, transfer agent fees for the period from November 1, 2004 though April 10, 2005, as shown below, have been combined with administration fees. Transfer Agent Fees and Other Related Expenses -------------------------------------------------------------------------------- CORPORATE BOND FUND ADVISOR CLASS $ 18,260 INSTITUTIONAL CLASS 6,717 INVESTOR CLASS 507,861 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND CLASS C 2,338 ADVISOR CLASS 67,236 INSTITUTIONAL CLASS 8,691 INVESTOR CLASS 1,630,334 -------------------------------------------------------------------------------- HIGH-YIELD BOND FUND ADVISOR CLASS 16,248 INSTITUTIONAL CLASS 289 INVESTOR CLASS 281,179 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND ADVISOR CLASS 16,248 INSTITUTIONAL CLASS 289 INVESTOR CLASS 281,179 -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND ADVISOR CLASS 41,689 INVESTOR CLASS 193,813 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND ADVISOR CLASS 59,955 INSTITUTIONAL CLASS 3,594 INVESTOR CLASS 928,288 87
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- CUSTODY FEES The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"), whereby WFB is responsible for providing custody services. Pursuant to the contract, WFB is entitled to certain transaction charges plus a monthly fee for custody services at the following annual rates: % of Average Daily Net Assets -------------------------------------------------------------------------------- ALL INCOME FUNDS 0.02 -------------------------------------------------------------------------------- Prior to March 21, 2005, State Street served as custodian for the Strong Corporate Bond Fund, Strong Government Securities Fund and Strong Ultra Short-Term Income Fund. Prior to March 28, 2005, State Street served as custodian for the Strong High-Yield Bond Fund and Strong Short-Term High Yield Bond Fund. Prior to April 11, 2005, State Street served as custodian for the Strong Short-Term Bond Fund. From April 11, 2005 to April 22, 2005, State Street served as interim custodian for the Short-Term Bond Fund. State Street was entitled to receive certain fees which were substantially transaction based. SHAREHOLDER SERVICING FEES The Trust has entered into contracts with one or more shareholder servicing agents, whereby each Fund is charged the following annual fees: % of Average Share Class Daily Net Assets*** -------------------------------------------------------------------------------- CLASS C, ADMINISTRATOR CLASS, ADVISOR CLASS AND INVESTOR CLASS 0.25 -------------------------------------------------------------------------------- INSTITUTIONAL CLASS 0.00 ***Effective April 11, 2005. Prior to April 11, 2005, shareholder servicing fees for the predecessor Strong Funds, if any, were encompassed by the Strong Funds' 12b-1 distribution and service plan. For the period April 11, 2005 through May 31, 2005, shareholder servicing fees paid were as follows: [Download Table] Fund Class C Administrator Advisor Investor ------------------------------------------------------------------------------------ CORPORATE BOND FUND N/A N/A $ 6,135 $121,339 ------------------------------------------------------------------------------------ GOVERNMENT SECURITIES FUND $788 $ 11 24,160 406,569 ------------------------------------------------------------------------------------ HIGH INCOME FUND N/A N/A 6,458 87,388 ------------------------------------------------------------------------------------ SHORT-TERM BOND FUND N/A N/A 2,895 178,543 ------------------------------------------------------------------------------------ SHORT-TERM HIGH YIELD BOND FUND N/A N/A 14,250 45,985 ------------------------------------------------------------------------------------ ULTRA SHORT-TERM INCOME FUND N/A 31 21,480 357,986 DISTRIBUTION FEES The Trust has adopted a Distribution Plan (the "Plan") for Class B and Class C shares of the applicable Funds pursuant to Rule 12b-1 under the 1940 Act. Effective April 11, 2005, distribution fees are charged to the Class B and Class C shares and paid to Wells Fargo Funds Distributor, LLC at an annual rate of 0.75% of average daily net assets. Prior to April 11, 2005, the predecessor Strong Funds adopted a 12b-1 distribution and service plan under the 1940 Act on behalf of Class C and Advisor Class shares. Under the plan, Strong Investments, Inc. was paid an annual rate of 1.00% of the average daily net assets of the Class C shares of the Government Securities Fund and 0.25% of the average daily net assets of the Advisor Class shares of each fund. For the period ended May 31, 2005, distribution fees paid are disclosed on the Statement of Operations. OTHER FEES PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is entitled to receive an annual asset based fee and an annual fixed fee from each Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. Prior to March 21, 2005, State Street served as fund accountant to Strong Corporate Bond Fund, Strong Government Securities Fund and Strong Ultra Short-Term Income Fund. Prior to March 28, 2005, State Street served as fund accountant for the Strong High-Yield Bond Fund and Strong Short-Term High Yield Bond Fund. Prior to April 11, 2005, State Street served as fund accountant for the Strong Short-Term Bond Fund. Fund accounting fees were paid by the funds' administrator through April 10, 2005, and not by the funds. From April 11, 2005 to April 22, 2005, State Street served as interim fund accountant for Short-Term Bond Fund and was entitled to receive an annual asset based fee, a fixed fund accounting base fee, multiple class fee and certain out-of-pocket expenses. WAIVED FEES AND REIMBURSED EXPENSES Effective April 11, 2005, Funds Management waived fees or reimbursed expenses proportionately from all classes, first from advisory fees, and then from any class specific expenses, if applicable. The Fund's adviser has committed to waive fees and/or 88
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund(s). Net operating expense ratios in effect from April 11, 2005 through May 31, 2005 were as follows: [Enlarge/Download Table] Net Operating Expense Ratios Fund Class C Administrator Advisor Institutional Investor ----------------------------------------------------------------------------------------------------------------- CORPORATE BOND FUND N/A N/A 1.00% 0.61% 1.03% ----------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 1.70% 0.70% 0.95% 0.48% 1.05% ----------------------------------------------------------------------------------------------------------------- HIGH INCOME FUND N/A N/A 0.91% 0.43% 0.86% ----------------------------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND N/A N/A 0.85% 0.48% 0.90% ----------------------------------------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND N/A N/A 1.10% N/A 0.86% ----------------------------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND N/A 0.60% 0.80% 0.35% 0.84% Prior to April 11, 2005, the predecessor Strong Funds' adviser ("SCM") and/or administrator ("SISI") could voluntarily waive or absorb certain expenses at their discretion. Pursuant to the direction of the Strong Funds Board of Directors and certain regulatory settlements, SCM had contractually agreed to waive fees and/or absorb expenses in the amount of 0.025% for Strong Government Securities Fund and Strong High-Yield Bond Fund and 0.033% for Strong Corporate Bond Fund, Strong Short-Term Bond Fund, Strong Short-Term High Yield Bond Fund and Strong Ultra Short-Term Income Fund from May 21, 2004 until May 21, 2005. SISI also allocated to each fund certain charges or credits resulting from transfer agency banking activities based on each Class' level of subscription and redemption activity. Transfer Agency Banking Credits allocated by SISI, if any, served to reduce the transfer agency expenses incurred by the Funds. From November 1, 2004 through April 10, 2005, the expense offsets that are included in the waived fees and reimbursed expenses amount on the Statement of Operations are as follows: Waived Fees and Reimbursed Expenses -------------------------------------------------------------------------------- CORPORATE BOND FUND FUND LEVEL $84,524 ADVISOR CLASS 11,890 INSTITUTIONAL CLASS 0 INVESTOR CLASS 0 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND FUND LEVEL 176,819 CLASS C 0 ADVISOR CLASS 21,259 INSTITUTIONAL CLASS 0 INVESTOR CLASS 0 -------------------------------------------------------------------------------- HIGH-YIELD BOND FUND FUND LEVEL 44,849 ADVISOR CLASS 7,313 INSTITUTIONAL CLASS 0 INVESTOR CLASS 0 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND FUND LEVEL 91,631 ADVISOR CLASS 3,050 INSTITUTIONAL CLASS 0 INVESTOR CLASS 0 -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND FUND LEVEL 35,935 ADVISOR CLASS 25,598 INVESTOR CLASS 0 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND FUND LEVEL 220,611 ADVISOR CLASS 17,895 INSTITUTIONAL CLASS 0 INVESTOR CLASS 0 89
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WELLS FARGO ADVANTAGE INCOME FUNDS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 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 May 31, 2005, were as follows: Fund Purchases at Cost Sales Proceeds -------------------------------------------------------------------------------- CORPORATE BOND FUND $ 384,858,673 $ 465,125,839 -------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 2,023,110,170 2,027,838,673 -------------------------------------------------------------------------------- HIGH INCOME FUND 151,741,108 200,692,276 -------------------------------------------------------------------------------- SHORT-TERM BOND FUND 81,468,905 74,898,073 -------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND 58,475,225 96,043,968 -------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 208,230,415 298,720,867 5. BANK BORROWINGS -------------------------------------------------------------------------------- Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the money market funds) share in a revolving Credit Agreement with The Bank of New York, whereby the Funds are permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. The agreement permits borrowings of up to $150 million, collectively. Interest is charged to each Fund based on its borrowing at a rate equal to the Federal Funds Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to 0.1% per annum of the credit line. Prior to April 11, 2005, the predecessor Strong Funds had established a line of credit agreement ("LOC") with certain financial institutions to be used for temporary or emergency purposes. Combined borrowings among all participating Strong Funds were subject to a $200 million cap on the total LOC. For an individual fund, borrowings under the LOC were limited to either the lesser of 15% of the market value of the fund's total assets or any explicit borrowing limits in the fund's registration statement. The principal amount of each borrowing under the LOC was due not more than 45 days after the date of the borrowings. Borrowings under the LOC accrued interest based on prevailing market rates as defined in the LOC. A commitment fee of 0.09% per annum was incurred on the unused portion of the LOC and was allocated to all participating Strong Funds based on their net assets. For the period ended May 31, 2005, there were no borrowings under the agreement for each Fund with the exception of High Income Fund, which had minimal borrowings. 6. DISTRIBUTION TO SHAREHOLDERS -------------------------------------------------------------------------------- The tax character of distributions paid during the period ended May 31, 2005, and the year ended October 31, 2004, was as follows: [Enlarge/Download Table] Long-Term Dividends Ordinary Capital Paid on Income Gain Redemptions Total Fund 2005 2005 2005 2005 --------------------------------------------------------------------------------------------- CORPORATE BOND FUND $ 12,773,855 $ 0 $ 0 $ 12,773,855 --------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 44,884,401 0 0 44,884,401 --------------------------------------------------------------------------------------------- HIGH INCOME FUND 11,778,710 0 0 11,778,710 --------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 12,579,112 0 0 12,579,112 --------------------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND 5,092,345 0 0 5,092,345 --------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 25,781,497 0 0 25,781,497 [Enlarge/Download Table] Long-Term Dividends Ordinary Capital Paid on Income Gain Redemptions Total Fund 2004 2004 2004 2004 --------------------------------------------------------------------------------------------- CORPORATE BOND FUND $ 27,919,937 $ 0 $ 0 $ 27,919,937 --------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND 86,501,231 10,429,722 0 96,930,953 --------------------------------------------------------------------------------------------- HIGH-YIELD BOND FUND 29,249,916 0 0 29,249,916 --------------------------------------------------------------------------------------------- SHORT-TERM BOND FUND 23,109,165 0 0 23,109,165 --------------------------------------------------------------------------------------------- SHORT-TERM HIGH YIELD BOND FUND 11,864,225 0 0 11,864,225 --------------------------------------------------------------------------------------------- ULTRA SHORT-TERM INCOME FUND 52,439,679 0 0 52,439,679 90
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- As of May 31, 2005, the components of distributable earnings in a tax basis are shown in the table below. The difference between book and tax basis appreciation is attributable primarily to the tax deferral of losses on wash sales. [Enlarge/Download Table] Undistributed Undistributed Undistributed Unrealized Tax-Exempt Ordinary Long-Term Appreciation Capital Loss Fund Income Income Capital Gain (Depreciation) Carryforward* Total ------------------------------------------------------------------------------------------------------------------------------------ CORPORATE BOND FUND $ 0 $ 175,640 $ 0 $ 19,621,614 ($ 138,935,007) ($ 119,137,753) ------------------------------------------------------------------------------------------------------------------------------------ GOVERNMENT SECURITIES FUND 0 3,917,278 3,044,706 12,076,550 0 19,038,534 ------------------------------------------------------------------------------------------------------------------------------------ HIGH INCOME FUND 0 445,436 0 (7,977,428) (399,929,500) (407,461,492) ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM BOND FUND 0 219,187 0 (1,348,963) (129,991,337) (131,121,113) ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM HIGH YIELD BOND FUND 0 85,340 0 2,418 (72,083,257) (71,995,499) ------------------------------------------------------------------------------------------------------------------------------------ ULTRA SHORT-TERM INCOME FUND 0 286,573 0 (26,242,819) (245,705,205) (271,661,451) * This amount includes any post-October loss, which will reverse on the first day of the following fiscal year. 7. LEGAL AND REGULATORY MATTERS -------------------------------------------------------------------------------- In 2004, the predecessor Strong Funds' investment adviser and affiliates (collectively, "Strong") entered into agreements with certain regulators, including the Securities and Exchange Commission and the New York Attorney General ("NYAG"), to settle market-timing investigations. In the settlements, Strong agreed to pay investor restoration and civil penalties. Although some portion of these payments is likely to be distributed to predecessor Strong Fund shareholders, no determination has yet been made as to the distribution of these amounts, and the successor funds are not expected to receive any portion of these payments. The NYAG settlement also imposed fee reductions across the predecessor Strong Fund complex (excluding money market funds and very short-term income funds) totaling at least $7 million a year for five years, for a total reduction of at least $35 million. The current Funds' adviser has agreed to honor these fee reductions for the benefit of shareholders across the successor funds. Although civil litigation against Strong and certain predecessor Strong Funds relating to these matters is continuing, neither the current adviser nor the successor funds is a party to any such suit. 91
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WELLS FARGO ADVANTAGE INCOME FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO FUNDS TRUST: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the Corporate Bond Fund, Government Securities Fund, High Income Fund, Short-Term Bond Fund, Short-Term High Yield Bond Fund and Ultra Short-Term Income Fund, six of the Funds constituting the Wells Fargo Funds Trust (collectively the "Funds"), as of May 31, 2005, and the related statements of operations, statements of changes in net assets and the financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of operations and changes in net assets and the financial highlights of the Corporate Bond Fund, Government Securities Fund, High Income Fund, Short-Term Bond Fund, Short-Term High Yield Bond Fund and Ultra Short-Term Income Fund for the years or period ended October 31, 2004 and prior, were audited by other auditors. Those auditors expressed unqualified opinions on those financial statements and financial highlights in their reports dated December 6, 2004. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2005, by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned funds of Wells Fargo Funds Trust as of May 31, 2005, the results of their operations, changes in their net assets, and their financial highlights for the period then ended, in conformity with U.S. generally accepted accounting principles. [KPMG LLP LOGO] Philadelphia, Pennsylvania July 22, 2005 92
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- PROXY VOTING INFORMATION A description of the policies and procedures that the Fund(s) uses to determine how to vote proxies relating to portfolio securities and information regarding the results of such voting during the most recent 12-month period ended June 30, is available without charge, upon request, by calling 1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS, or visiting the SEC Web site at WWW.SEC.GOV. PORTFOLIO HOLDINGS INFORMATION The Fund(s) files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available without charge by visiting the SEC Web site at WWW.SEC.GOV. In addition, the Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330. TAX INFORMATION (UNAUDITED) Pursuant to Section 871(k)(1)(C) of the Internal Revenue Code, the Short-Term Bond Fund designates 97.84% of the income dividends distributed between April 9, 2005, and May 31, 2005, as interest-related dividends. BOARD OF TRUSTEES The following table provides basic information about the Board of Trustees (the "Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table supplements, and should be read in conjunction with, the Prospectus and the Statement of Additional Information* of each Fund. Each of the Trustees listed below acts in identical capacities for each of the 138 funds comprising the Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the "Fund Complex"). All of the non-interested Trustees are also members of the Audit and 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. [Enlarge/Download Table] INTERESTED TRUSTEE** ------------------------------------------------------------------------------------------------------------------------------ POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------------------ J. Tucker Morse 60 Trustee, since 1987 Private Investor/Real Estate None Developer; Chairman of White Point Capital, LLC. ------------------------------------------------------------------------------------------------------------------------------ NON-INTERESTED TRUSTEES ------------------------------------------------------------------------------------------------------------------------------ POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------------------ Thomas S. Goho Trustee, since 1987 Associate Professor of Finance, None 62 Wake Forest University, Calloway School of Business and Accountancy. ------------------------------------------------------------------------------------------------------------------------------ Peter G. Gordon Trustee, since 1998 Chairman, CEO, and Co- None 62 (Chairman, since 2005) Founder of Crystal Geyser Water Company and President of Crystal Geyser Roxane Water Company. ------------------------------------------------------------------------------------------------------------------------------ Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None 71 of Richard M. Leach Associates (a financial consulting firm). ------------------------------------------------------------------------------------------------------------------------------ Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None 53 relations firm of Himle-Horner and Senior Fellow at the Humphrey Institute, Minneapolis, Minnesota (a public policy organization). ------------------------------------------------------------------------------------------------------------------------------ Donald C. Willeke Trustee, since 1996 Principal in the law firm of None 65 Willeke & Daniels. ------------------------------------------------------------------------------------------------------------------------------ 93
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WELLS FARGO ADVANTAGE INCOME FUNDS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- [Enlarge/Download Table] OFFICERS ------------------------------------------------------------------------------------------------------------------------------ POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------------------ Karla M. Rabusch President, since 2003 Executive Vice President of None 46 Wells Fargo Bank, N.A. President of Wells Fargo Funds Management, LLC. Senior Vice President and Chief Administrative Officer of Wells Fargo Funds Management, LLC from 2001 to 2003. Vice President of Wells Fargo Bank, N.A. from 1997 to 2000. ------------------------------------------------------------------------------------------------------------------------------ Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None 36 Fargo Bank, N.A. Senior Vice President of Operations for Wells Fargo Funds Management, LLC. Prior thereto, Operations Manager at Scudder Weisel Capital, LLC from 2000 to 2001. Director of Shareholder Services at BISYS Fund Services from 1999 to 2000. ------------------------------------------------------------------------------------------------------------------------------ C. David Messman Secretary, since 2000 Vice President and Managing None 45 Senior Counsel of Wells Fargo Bank, N.A. Senior Vice President and Secretary of Wells Fargo Funds Management, LLC. Vice President and Senior Counsel of Wells Fargo Bank, N.A. from 1996 to 2003. ------------------------------------------------------------------------------------------------------------------------------ * The Statement of Additional Information includes additional information about the Funds' Trustees and is available, without charge, upon request, by calling 1-800-222-8222. ** As of May 31, 2005, one of the six Trustees is considered an "interested person" of the Trusts as defined in the Investment Company Act of 1940. The interested Trustee, J. Tucker Morse, is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, which is not itself affiliated with Wells Fargo Funds Management, LLC. *** Length of service dates reflects a Trustee's commencement of service with the Trust's predecessor entities. 94
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS: CORPORATE BOND FUND, GOVERNMENT SECURITIES FUND, HIGH INCOME FUND, SHORT-TERM BOND FUND SHORT-TERM HIGH YIELD BOND FUND AND ULTRA SHORT-TERM INCOME FUND -------------------------------------------------------------------------------- Section 15(c) of the Investment Company Act of 1940 (the "1940 Act") contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust (the "Trust"), including a majority of the Trustees who have no direct or indirect interest in the investment advisory and sub-advisory agreements and are not "interested persons" of the Trust, as defined in the 1940 Act (the "Independent Trustees"), will annually review and consider the continuation of the investment advisory and sub-advisory agreements. In this regard, the Board reviewed and re-approved, during the most recent six months covered by this report: (i) an investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds Management") for the Corporate Bond Fund, Government Securities Fund, High Income Fund, Short-Term Bond Fund, Short-Term High Yield Bond Fund and Ultra Short-Term Income Fund (the "Funds"); and (ii) an investment sub-advisory agreement with Wells Capital Management Incorporated ("Wells Capital Management") for the Funds. The investment advisory agreement with Funds Management and the investment sub-advisory agreement with Wells Capital Management are collectively referred to as the "Advisory Agreements." More specifically, at a meeting held on April 4, 2005, the Board, including the Independent Trustees advised by their independent legal counsel, considered the factors and reached the conclusions described below relating to the selection of Funds Management and Wells Capital Management and the continuation of the Advisory Agreements. The Board initially approved the Advisory Agreements for the Funds at a meeting held August 9-10, 2004 in connection with its approval of the reorganization of certain of the Strong Funds into certain of the Wells Fargo Advantage Funds (the "Reorganization"), as follows: STRONG FUNDS WELLS FARGO ADVANTAGE FUNDS -------------------------------------------------------------------------------- Corporate Bond Fund* Corporate Bond Fund -------------------------------------------------------------------------------- Government Securities Fund* Government Securities Fund -------------------------------------------------------------------------------- High-Yield Bond Fund* High Income Fund -------------------------------------------------------------------------------- Short-Term Bond Fund* Short-Term Income Fund Short-Term Bond Fund -------------------------------------------------------------------------------- Short-Term High Yield Bond Fund* Short-Term High Yield Bond Fund -------------------------------------------------------------------------------- Ultra Short-Term Income Fund* Ultra Short-Term Income Fund -------------------------------------------------------------------------------- * Accounting survivor. The Reorganization was effective at the close of business on April 8, 2005. The Funds commenced operations on April 11, 2005. Accordingly, references to the Funds refer to either the predecessor funds or the Funds as the context requires. Similarly, references to the various fee rates refer to either the rates of the predecessor funds or those of the Funds as the context requires. NATURE, EXTENT AND QUALITY OF SERVICES -------------------------------------------------------------------------------- The Board received and considered various data and information regarding the nature, extent and quality of services that would be provided to the Funds by Funds Management and Wells Capital Management under the Advisory Agreements. Responses of Funds Management and Wells Capital Management to a detailed set of requests submitted by the Independent Trustees' independent legal counsel on behalf of such Trustees were provided to the Board. The Board reviewed and considered the data and information, which included, among other things, information about the background and experience of the senior management and the expertise of the investment personnel of Funds Management and Wells Capital Management. The Board also considered the ability of Funds Management and Wells Capital Management, based on their respective resources, reputations and other attributes, to attract and retain highly qualified investment professionals, including research, advisory, and supervisory personnel. In this connection, the Board considered information regarding each of Funds Management's and Wells Capital Management's compensation for its personnel that would be involved in the management of the Funds. In addition, the Board considered the effects of certain personnel changes in light of the acquisition of certain of the asset management arrangements of Strong Capital Management, Inc. ("Strong") by Wells Fargo & Company. The Board further considered the compliance programs and compliance records of Funds Management and Wells Capital Management. In addition, the Board took into account the administrative services anticipated to be provided to the Funds by Funds Management and its affiliates. In considering these matters, the Board considered not only the specific information presented in connection with the meeting, but also the knowledge gained over the course of interacting with Funds Management, including with respect to Funds Management's oversight of service providers, such as the investment sub-adviser. Based on the above factors, together with those referenced below, the Board concluded that it was 95
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WELLS FARGO ADVANTAGE INCOME FUNDS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- generally satisfied with the nature, extent and quality of the investment advisory services anticipated to be provided to each of the Funds by Funds Management and Wells Capital Management. FUND PERFORMANCE AND EXPENSES -------------------------------------------------------------------------------- The Board considered the performance results for each of the Funds over various time periods. The Board also considered these results in comparison to the median performance results of the group of funds that was determined to be the most similar to a given Fund (the "Peer Group") and to the median performance of a broader universe of relevant funds (the "Universe"), as well as to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment company data, determined the Peer Group and Universe for each Fund. The Board was provided with a description of the methodology used by Lipper to select the mutual funds in each Fund's Peer Group and Universe. The Board noted that the performance of each Fund, except for the Corporate Bond Fund, Short-Term Bond Fund and Short-Term High Yield Bond Fund, was better than, or not appreciably below, the median performance of each Fund's Peer Group for most time periods. The Board noted that the Corporate Bond Fund's, Short-Term Bond Fund's and Short-Term High Yield Bond Fund's performance was lower than the median performance of each Fund's Peer Group for most time periods and required further review. Upon further review, the Board noted for the Corporate Bond Fund and the Short-Term Bond Fund that each Fund's underperformance was explained, in part, by some credit issues experienced when the Fund was managed by certain Strong portfolio managers. In addition, the Board noted that there had been a portfolio manager change for these Funds during the past year. The Board also noted for the Short-Term High Yield Bond Fund that the Fund's Peer Group includes funds that invest in high yield bonds across a range of maturities, rather than emphasizing short-term high yield bonds, and that this difference between the Fund and those in its Peer Group also partly explained the Fund's relative underperformance. The Board received and considered information regarding each Fund's net operating expense ratio and its various components, including contractual advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The Board also considered comparisons of these fees to the expense information for each Fund's Peer Group and Universe, which comparative data was provided by Lipper. The Board noted that the net operating expense ratios of the High Income Fund and Ultra Short-Term Income Fund were lower than, or not appreciably higher than, each Fund's Peer Group's median net operating expense ratio. The Board noted that the net operating expense ratios for certain classes of the Corporate Bond Fund, Government Securities Fund, Short-Term Bond Fund and Short-Term High Yield Bond Fund were higher than their Peer Group's median net operating expense ratios, but the Board further noted that the Advisory Agreement Rates (as defined below) were within a reasonable range of the median rates of each Fund's Peer Group. Management also discussed the Lipper data and rankings, and other relevant information, for each Fund. Based on the above-referenced considerations and other factors, the Board concluded that the overall performance and expense results supported the re-approval of the Advisory Agreements for each Fund. INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES -------------------------------------------------------------------------------- The Board reviewed and considered the contractual investment advisory fee rates payable by the Funds to Funds Management for investment advisory services, both on a stand-alone basis and on a combined basis with the Funds' administration fee rates (the "Advisory Agreement Rates"). The Board took into account the separate administrative services covered by the administration fee rates. The Board also reviewed and considered the contractual investment sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds Management to Wells Capital Management for investment sub-advisory services. In addition, the Board reviewed and considered the existing fee waiver/cap arrangements applicable to the Advisory Agreement Rates and considered the Advisory Agreement Rates after taking the waivers/caps into account (the "Net Advisory Rates"). The Board received and considered information comparing the Advisory Agreement Rates and Net Advisory Rates with those of the other funds in the Peer Group. The Board noted that the respective Advisory Agreement Rates and the Net Advisory Rates for the Funds were lower than, or not appreciably higher than, the median rates of each Fund's respective Peer Group. The Board also concluded that the combined investment advisory/administration fee rates for these Funds (before and after waivers/caps and/or expense reimbursements) were each reasonable in relation to each Fund's respective Peer Group, and reasonable in relation to the services anticipated to be provided. The Board also reviewed the Sub-Advisory Agreement Rates and concluded that the Sub-Advisory Agreement Rates were fair and equitable, based on its consideration of the factors described above. 96
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE INCOME FUNDS -------------------------------------------------------------------------------- PROFITABILITY -------------------------------------------------------------------------------- Because the Funds had not yet commenced operations, the Board did not consider the historical profitability with regard to Funds Management's arrangements with the Funds. However, the Board received and considered a detailed profitability analysis of Funds Management and its affiliates based on similar advisory and other relationships between other series in the Trust and Funds Management and its affiliates. The Board concluded that, in light of the costs of providing investment management and other services to the other series, the profits and other ancillary benefits that Funds Management and its affiliates received with regard to providing these services to such series were not unreasonable. The Board did not consider a separate profitability analysis of Wells Capital Management, as its separate profitability from its relationships with the Funds was not a material factor in determining whether to renew the agreements. ECONOMIES OF SCALE -------------------------------------------------------------------------------- The Board received and considered information regarding the potential for realization of any future economies of scale. However, the Board acknowledged the inherent limitations of any analysis of an investment adviser's economies of scale and of any attempt to correlate breakpoints with such economies, stemming largely from the Board's understanding that economies of scale are realized, if at all, by an investment adviser across a variety of products and services, not just with respect to a single fund. The Board concluded that any potential economies of scale will be shared reasonably with Fund shareholders, including most particularly through Advisory Agreement Rate breakpoints, which are applicable to all of the Funds. INFORMATION ABOUT SERVICES TO OTHER CLIENTS -------------------------------------------------------------------------------- The Board also received and considered information about the nature, extent and quality of services and fee rates offered by Funds Management to other similarly situated series within the Trust, and those offered by Wells Capital Management to other clients, including other registered investment companies and separate accounts. The Board concluded that the Advisory Agreement Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable range of the fee rates offered to others by Funds Management and Wells Capital Management, giving effect to differences in services covered by such fee rates. OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT -------------------------------------------------------------------------------- The Board received and considered information regarding potential "fall-out" or ancillary benefits received by Funds Management and its affiliates (including Wells Capital Management) as a result of their relationship with the Funds. Such benefits could include, among others, benefits directly attributable to the relationship of Funds Management and Wells Capital Management with the Funds and benefits potentially derived from an increase in the business of Funds Management and Wells Capital Management as a result of their relationship with the Funds (such as the ability to market to shareholders other financial products offered by Funds Management and its affiliates (including Wells Capital Management)). The Board also considered the effectiveness of policies of the Funds in seeking the best execution of portfolio transactions, whether and to what extent soft dollar credits would be sought and how any such credits would be utilized, potential benefits that may be realized by using an affiliated broker, and the controls applicable to brokerage allocation procedures. The Board also took note of the policies of Wells Capital Management regarding the anticipated allocation of portfolio investment opportunities among the Funds and other clients. OTHER FACTORS AND BROADER REVIEW -------------------------------------------------------------------------------- The Board also considered the markets for distribution of the Funds, including the principal channels through which the Funds' shares would be offered and sold. The Board noted that the Funds are now part of one of the few fund families that have both direct-to-fund and intermediary distribution. As discussed above, the Board reviewed detailed materials received from Funds Management and Wells Capital Management in advance of the April 4, 2005 meeting as part of the re-approval process under Section 15 (c) of the 1940 Act. The Board has also reviewed detailed materials from Funds Management and Wells Capital Management, and met with various management representatives and portfolio managers, as part of its regular and special meeting cycle, and such materials and meetings were also considered as part of the re-approval process. After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Board concluded that approval of the continuation of the Advisory Agreements for each of the Funds was in the best interest of the Funds and their shareholders. Accordingly, the Board unanimously approved the continuation of the Advisory Agreements. 97
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WELLS FARGO ADVANTAGE INCOME FUNDS LIST OF ABBREVIATIONS -------------------------------------------------------------------------------- The following is a list of common abbreviations for terms and entities which may have appeared in this report. ABAG -- Association of Bay Area Governments ADR -- American Depositary Receipt AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax ARM -- Adjustable Rate Mortgages BART -- Bay Area Rapid Transit CDA -- Community Development Authority CDSC -- Contingent Deferred Sales Charge CGIC -- Capital Guaranty Insurance Company CGY -- Capital Guaranty Corporation CMT -- Constant Maturity Treasury COFI -- Cost of Funds Index Connie Lee -- Connie Lee Insurance Company COP -- Certificate of Participation CP -- Commercial Paper CTF -- Common Trust Fund DW&P -- Department of Water & Power DWR -- Department of Water Resources EDFA -- Education Finance Authority FFCB -- Federal Farm Credit Bank FGIC -- Financial Guaranty Insurance Corporation FHA -- Federal Housing Authority FHLB -- Federal Home Loan Bank FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association FRN -- Floating Rate Notes FSA -- Financial Security Assurance, Inc GDR -- Global Depositary Receipt GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority HFFA -- Health Facilities Financing Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue LIBOR -- London Interbank Offered Rate LLC -- Limited Liability Corporation LOC -- Letter of Credit LP -- Limited Partnership MBIA -- Municipal Bond Insurance Association MFHR -- Multi-Family Housing Revenue MUD -- Municipal Utility District MTN -- Medium Term Note PCFA -- Pollution Control Finance Authority PCR -- Pollution Control Revenue PFA -- Public Finance Authority PLC -- Private Placement PSFG -- Public School Fund Guaranty RAW -- Revenue Anticipation Warrants RDA -- Redevelopment Authority RDFA -- Redevelopment Finance Authority R&D -- Research & Development SFHR -- Single Family Housing Revenue SFMR -- Single Family Mortgage Revenue SLMA -- Student Loan Marketing Association STEERS -- Structured Enhanced Return Trust TBA -- To Be Announced TRAN -- Tax Revenue Anticipation Notes USD -- Unified School District V/R -- Variable Rate WEBS -- World Equity Benchmark Shares XLCA -- XL Capital Assurance 98
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[LOGO] WELLS ADVANTAGE FARGO FUNDS More information about WELLS FARGO ADVANTAGE FUNDS(SM) is available free upon request. To obtain literature, please write, e-mail, or call: WELLS FARGO ADVANTAGE FUNDS P.O. Box 8266 Boston, MA 02266-8266 E-mail: wfaf@wellsfargo.com Retail Investment Professionals: 888-877-9275 Institutional Investment Professionals: 866-765-0778 Web: www.wellsfargo.com/advantagefunds This report and the financial statements contained herein are submitted for the general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. For a prospectus containing more complete information, including charges and expenses, call 1-800-222-8222. Please consider the investment objective, risks, charges and expenses of the investment carefully before investing. This and other information about WELLS FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the prospectus carefully before you invest or send money. Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for the WELLS FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds. The Funds are distributed by WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells Fargo & Company. ------------------------------------------------------- NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE ------------------------------------------------------- [Enlarge/Download Table] -------------------------------------------------------------------------------------------------------------------------- (C) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. | www.wellsfargo.com/advantagefunds | RT51601 07-05 AINL/AR104 05-05
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[LOGO] WELLS ADVANTAGE FARGO FUNDS MAY 31, 2005 [GRAPHIC OMITTED] ANNUAL REPORT WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS(SM) Wells Fargo Advantage WealthBuilder Conservative Allocation Portfolio(SM) Wells Fargo Advantage WealthBuilder Equity Portfolio(SM) Wells Fargo Advantage WealthBuilder Growth Allocation Portfolio(SM) Wells Fargo Advantage WealthBuilder Growth Balanced Portfolio(SM) Wells Fargo Advantage WealthBuilder Moderate Balanced Portfolio(SM) Wells Fargo Advantage WealthBuilder Tactical Equity Portfolio(SM)
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- Table of Contents Letter to Shareholders .................................................... 1 -------------------------------------------------------------------------------- Performance Highlights -------------------------------------------------------------------------------- WealthBuilder Conservative Allocation Portfolio ........................ 2 WealthBuilder Equity Portfolio ......................................... 4 WealthBuilder Growth Allocation Portfolio .............................. 6 WealthBuilder Growth Balanced Portfolio ................................ 8 WealthBuilder Moderate Balanced Portfolio .............................. 10 WealthBuilder Tactical Equity Portfolio ................................ 12 Fund Expenses ............................................................. 14 -------------------------------------------------------------------------------- Portfolio of Investments -------------------------------------------------------------------------------- WealthBuilder Conservative Allocation Portfolio ........................ 15 WealthBuilder Equity Portfolio ......................................... 16 WealthBuilder Growth Allocation Portfolio .............................. 17 WealthBuilder Growth Balanced Portfolio ................................ 18 WealthBuilder Moderate Balanced Portfolio .............................. 19 WealthBuilder Tactical Equity Portfolio ................................ 20 Financial Statements -------------------------------------------------------------------------------- Statements of Assets and Liabilities ................................... 22 Statements of Operations ............................................... 24 Statements of Changes in Net Assets .................................... 26 Financial Highlights ................................................... 30 Notes to Financial Statements ............................................. 32 -------------------------------------------------------------------------------- Report of Independent Registered Public Accounting Firm ................... 38 -------------------------------------------------------------------------------- Other Information ......................................................... 39 -------------------------------------------------------------------------------- List of Abbreviations ..................................................... 44 -------------------------------------------------------------------------------- ------------------------------------------------- NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE -------------------------------------------------
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LETTER TO SHAREHOLDERS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- DEAR VALUED SHAREHOLDER, DEAR VALUED SHAREHOLDER, -------------------------------------------------------------------------------- I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now have access to an expanded array of mutual funds, giving you the flexibility to invest in a family of funds covering nearly every asset class and investment style. To learn more about our funds and the talented team of money managers behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. You can also call one of our investment service representatives now available 24 hours a day, 7 days a week, or speak with your investment professional. Following is your WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS(SM) annual report for the period ended May 31, 2005. On the following pages, you will find a discussion of the Portfolios, including performance highlights, the Portfolio managers' strategic outlook, and economic and market commentary covering the period. THE ECONOMY: CONTINUED EXPANSION -------------------------------------------------------------------------------- The cyclical expansion of the U.S. economy remains solid. Real gross domestic product (GDP), the most comprehensive measure of economic activity, grew at a 4.4% rate in 2004 and at a 3.8% rate in the first quarter of 2005, in spite of record high energy prices during the period. The price of crude oil shot upward in the summer of 2004, then declined somewhat in the final months of the year, but climbed to new record levels starting in the spring of 2005. Low interest rates and a strong housing sector helped offset the negative effects of high oil and gas prices. Solid growth in capital spending by businesses, fueled by strong cash flow and low borrowing costs, also contributed to economic growth. Rising energy prices pushed inflation upward during the reporting period. The consumer price index (CPI) rose at a 2.8% rate over the twelve months ended May 31, slightly slower than the 3.1% rate for the prior twelve months. The core CPI, which excludes the volatile food and energy components, was up only 2.2% this past year, versus 1.7% in the previous twelve months. With core inflation generally contained, The Federal Reserve (the Fed) was able to stay with a strategy of raising interest rates at a "measured pace." From late June 2004 through March 2005, the Fed raised the federal funds rate--its principal policy tool--from 1% to 3%. Additional increases in this rate are expected during the rest of 2005. Bond yields, however, did not increase with the federal funds rate and, as a result, mortgage rates remained unusually low and the housing sector remained very strong. STOCKS AND BONDS KEEPING PACE -------------------------------------------------------------------------------- Stock prices were somewhat weaker during the period, as the markets struggled with rising oil prices, the threat of higher inflation, and the uncertainty of a presidential election. Markets then rallied impressively in the fourth quarter of 2004 as oil prices fell and the election results were regarded as encouraging. Performance has been mixed thus far for 2005. Good corporate earnings have helped the markets, while record prices for crude oil and concerns of a slowdown in worldwide economic growth have capped or reversed rallies. Bonds, on the other hand, showed good returns over the reporting period. Yields on most U.S. Treasury notes and bonds declined as the Federal funds rate increased. Exceptional demand for U.S. Treasury securities from foreign investors and the tame core inflation data are two factors thought to be keeping bond yields low. LOOKING AHEAD: LONG-TERM GROWTH? -------------------------------------------------------------------------------- We believe that the economy's first-quarter 2005 slowdown represents a temporary soft patch more than a sustained decline. As stock and bond investors seek to determine where inflation, interest rates, and corporate earnings are headed, we may see more unpredictable moves in the markets. Uncertainty and risk will always be a part of investing. We believe that one important thing you can do to manage risk is to own a broadly diversified portfolio with stocks, bonds, and cash that can help you weather unexpected market shifts. While diversification may not prevent losses in a downturn, it may help reduce them and keep you on track to reach your financial goals. Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your confidence in us. Through each market cycle, we are committed to helping you meet your financial needs. If you have any questions about your investment, please contact your investment professional, or call us at 1-800-222-8222. You may also visit our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. Sincerely, /s/ Karla M. Rabusch Karla M. Rabusch President WELLS FARGO ADVANTAGE FUNDS 1
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO(SM) (the Portfolio) seeks current income with a secondary emphasis on capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen Blomster, CFA 9/30/2004 Jeffrey P. Mellas HOW DID THE PORTFOLIO PERFORM OVER THE REPORTING PERIOD? -------------------------------------------------------------------------------- Since its inception on September 30, 2004, the Portfolio returned 2.71%(1) for the eight-month period ended May 31, 2005, excluding sales charges, underperforming the S&P 500 Index(2), which returned 8.19% and the Lehman Brothers U.S. Government/Credit Index(3), which returned 2.90% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF PORTFOLIO SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE ON THE PORTFOLIO'S WEB SITE AT WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR WEALTHBUILDER PORTFOLIO SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 1.50%. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE? -------------------------------------------------------------------------------- The equity market generally outperformed the bond market during the period. Long U.S. Treasury bonds produced the highest returns as their yields dropped over 1%. Among the major equity styles, large-cap value stocks led the way in response to solid economic growth and corporate earnings that exceeded expectations. International stocks continued to benefit by the weakness in the U.S. dollar over much of the period. Small cap stocks outperformed large cap stocks until late in the period when they began to lose relative momentum due to concerns of a possible economic slowdown resulting from the ongoing increase of interest rates by the Federal Reserve Board. The Tactical Asset Allocation (TAA) Model, which seeks to enhance portfolio returns by shifting assets between stocks and bonds, maintained a 5% overweighted position in stocks since the inception of the Portfolio. With the Portfolio's stock holdings outperforming its bond holdings during the eight-month period, maintaining the 5% stock overweighting helped the Portfolio's returns, but not enough to outperform its benchmarks. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We conduct routine reviews of the mutual fund holdings in the Portfolio where we monitor a number of factors, including the investment style and process of each fund, the fund managers' experience and tenure, performance of the funds, and the funds' risk profiles. Since the inception of the Portfolio, we have made no changes to the fund holdings within the Portfolio. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- While stock prices have risen and outperformed bonds since the Portfolio's inception, we believe that the sharp decline in U.S. Treasury bond yields late in the period has made stocks even more attractive, relative to bonds, than when our TAA Model shifted toward stocks nearly three years ago. As a result, the Portfolio will remain overweighted in stocks until the relative valuation between stocks and bonds returns to its historical norm. BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. BOND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE PORTFOLIO IS EXPOSED TO CERTAIN RISKS, INCLUDING SMALL COMPANY SECURITIES RISK, FOREIGN INVESTMENT RISK, DEBT SECURITIES RISK, AND HIGH-YIELD SECURITIES RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Portfolio's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO. (1) The Portfolio's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Portfolio. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Portfolio's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO was named the WELLS FARGO WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO. 2
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ------------------------ ------------------------ Life of Life of 6-Month* Portfolio* 6-Month* Portfolio* ---------------------------------------------------------------------------------------------------------------- WealthBuilder Conservative Allocation Portfolio (Incept. date 9/30/2004) (0.71) 1.17 0.80 2.71 ---------------------------------------------------------------------------------------------------------------- Benchmarks ---------------------------------------------------------------------------------------------------------------- S&P 500 Index(2) 2.42 8.19 ---------------------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Government/Credit Index(3) 3.17 2.90 -------------------------------------------------------------------------------- * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 9% -------------------------------------------------------------------------------- Net Asset Value (NAV) $10.21 MUTUAL FUNDS AND MASTER PORTFOLIOS HELD(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Wells Fargo Advantage Short Duration Government Bond Fund 29% -------------------------------------------------------------------------------- Wells Fargo Advantage Total Return Bond Fund 20% -------------------------------------------------------------------------------- Wells Fargo Advantage Intermediate Government Income Fund 15% -------------------------------------------------------------------------------- Wells Fargo Advantage Equity Value Portfolio 6% -------------------------------------------------------------------------------- MFS High Income Fund 5% -------------------------------------------------------------------------------- Oppenheimer International Bond Fund 5% -------------------------------------------------------------------------------- Wells Fargo Advantage Large Company Growth Portfolio 5% -------------------------------------------------------------------------------- AIM Blue Chip Fund 5% -------------------------------------------------------------------------------- MFS Strategic Value Fund 3% -------------------------------------------------------------------------------- ING International Value Fund 2% -------------------------------------------------------------------------------- Fidelity Advisor Diversified International Fund 2% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Company Value Portfolio 1% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Cap Growth Fund 1% -------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund 1% EFFECTIVE ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Stock Funds (25%) Bond Funds (75%) GROWTH OF $10,000 INVESTMENT(5) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO LEHMAN BROTHERS WEALTHBUILDER CONSERVATIVE U.S. GOV'T/CREDIT ALLOCATION PORTFOLIO S&P 500 INDEX INDEX -------------------- ------------- ----- 9/30/2004 $ 9,850 $10,000 $10,000 10/31/2004 $ 9,949 $10,153 $10,087 11/30/2004 $10,037 $10,564 $ 9,975 12/31/2004 $10,145 $10,923 $10,081 1/31/2005 $10,076 $10,657 $10,151 2/28/2005 $10,106 $10,881 $10,084 3/31/2005 $ 9,997 $10,688 $10,014 4/30/2005 $ 9,966 $10,485 $10,164 5/31/2005 $10,117 $10,818 $10,291 -------------------------------------------------------------------------------- (2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks representing, among others, industrial, financial, utility, and transportation companies listed or traded on national exchanges or over-the-counter markets. You cannot invest directly in an index. (3) The Lehman Brothers U.S. Government/Credit Index is an unmanaged index that includes securities in the Lehman Brothers U.S. Government Index and the Lehman Brothers U.S. Credit Index. The Lehman Brothers U.S. Government Index is composed of U.S. Treasury securities with maturities of one year or more and publicly issued debt of U.S. Government agencies. The Lehman Brothers U.S. Credit Index is an unmanaged index composed of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be SEC-registered. You cannot invest directly in an index. (4) Portfolio holdings and characteristics are subject to change. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO for the life of the Portfolio with the S&P 500 Index and the Lehman Brothers U.S. Government/Credit Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses and assumes the maximum initial sales charge of 1.50%. 3
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO(SM) (the Portfolio) seeks long-term capital appreciation with no emphasis on income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen Blomster, CFA 10/01/1997 Jeffrey P. Mellas HOW DID THE PORTFOLIO PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Portfolio returned 8.33%(1) for the 12-month period ended May 31, 2005, excluding sales charges, outperforming its benchmark, the S&P 500 Index(2), which returned 8.23% for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF PORTFOLIO SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE PORTFOLIO'S WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR WEALTHBUILDER PORTFOLIO SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 1.50%. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE? -------------------------------------------------------------------------------- The stock market performed nearly in line with long-term average stock returns over the twelve-month period, with all major equity styles participating in positive gains. Large-cap value stocks led the way in response to solid economic growth and corporate earnings that exceeded expectations. International stocks continued to benefit from the weakness in the U.S. dollar over much of the period. Small cap stocks outperformed large cap stocks until late in the period when they began to lose relative momentum due to concerns of a possible economic slowdown resulting from the repeated interest rate increases by the Federal Reserve Board (the Fed). The Portfolio's performance benefited from the 20% diversification in each of small cap and international equity styles. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We conduct routine reviews of the mutual fund holdings in the Portfolio where we monitor a number of factors, including the investment style and process of each fund, the fund managers' experience and tenure, performance of the funds, and the funds' risk profiles. Over the past twelve months, we made no changes to the fund holdings within the Portfolio. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- While the economy continues to show solid growth, we believe we may begin to see a more challenging period over the next twelve months in response to the Fed's ongoing interest rate tightening of monetary policy. With continued equity market volatility and changes in market leadership, as we have seen over the past several years, maintaining a long-term strategic asset allocation with broad diversification could prove beneficial to the Portfolio's performance. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE PORTFOLIO IS EXPOSED TO CERTAIN RISKS, INCLUDING SMALL COMPANY SECURITIES RISK AND FOREIGN INVESTMENTS RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. DIVERSIFICATION DOES NOT ASSURE OR GUARANTEE BETTER PERFORMANCE AND CANNOT ELIMINATE THE RISK OF INVESTMENT LOSSES. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Portfolio's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO. (1) The Portfolio's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Portfolio. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Portfolio's returns would have been lower. Prior to April 11,2005,the WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO was named the WELLS FARGO WEALTHBUILDER EQUITY PORTFOLIO, and prior to October 1,2004, the Portfolio was named the WELLS FARGO WEALTHBUILDER GROWTH AND INCOME PORTFOLIO. Performance for the Portfolio prior to November 8, 1999, reflects the performance of the Norwest WealthBuilder II Growth and Income Portfolio, its predecessor Portfolio. Predecessor Portfolio information can be found in the Portfolio's prospectus, statement of additional information or annual report. Effective at the close of business November 5, 1999, the Norwest Advantage Funds were reorganized into the WELLS FARGO FUNDS(R). 4
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ------------------------------------------ ------------------------------------------ Life of Life of 6-Month* 1-Year 5-Year Portfolio 6-Month* 1-Year 5-Year Portfolio ----------------------------------------------------------------------------------------------------------------------------- WealthBuilder Equity Portfolio (Incept. date 10/01/1997) (0.81) 6.71 (3.09) 2.61 0.70 8.33 (2.80) 2.81 ----------------------------------------------------------------------------------------------------------------------------- Benchmark ----------------------------------------------------------------------------------------------------------------------------- S&P 500 Index(2) 2.42 8.23 (1.92) 4.60 ----------------------------------------------------------------------------------------------------------------------------- * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 92% -------------------------------------------------------------------------------- Net Asset Value (NAV) $11.44 MUTUAL FUNDS AND MASTER PORTFOLIOS HELD(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Wells Fargo Advantage Equity Value Portfolio 21% -------------------------------------------------------------------------------- Wells Fargo Advantage Large Company Growth Portfolio 15% -------------------------------------------------------------------------------- AIM Blue Chip Fund 15% -------------------------------------------------------------------------------- Fidelity Advisor Diversified International Fund 10% -------------------------------------------------------------------------------- ING International Value Fund 10% -------------------------------------------------------------------------------- MFS Strategic Value Fund 9% -------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund 7% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Company Value Portfolio 7% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Cap Growth Fund 6% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] International (20%) Large Company Growth (30%) Large Company Value (30%) Small Company (20%) GROWTH OF $10,000 INVESTMENT(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO WEALTHBUILDER EQUITY PORTFOLIO S&P 500 INDEX ---------------- ------------- 10/1/1997 9,850 10,000 10/31/1997 9,446 9,666 11/30/1997 9,584 10,114 12/31/1997 9,727 10,287 1/31/1998 9,835 10,401 2/28/1998 10,456 11,151 3/31/1998 10,929 11,721 4/30/1998 11,067 11,841 5/31/1998 10,811 11,637 6/30/1998 10,949 12,110 7/31/1998 10,604 11,981 8/31/1998 8,948 10,250 9/30/1998 9,293 10,907 10/31/1998 9,963 11,794 11/30/1998 10,584 12,509 12/31/1998 11,154 13,229 1/31/1999 11,480 13,782 2/28/1999 11,085 13,353 3/31/1999 11,509 13,888 4/30/1999 12,003 14,425 5/31/1999 11,795 14,085 6/30/1999 12,456 14,866 7/31/1999 12,239 14,402 8/31/1999 12,081 14,331 9/30/1999 11,884 13,938 10/31/1999 12,565 14,820 11/30/1999 13,127 15,121 12/31/1999 14,198 16,012 1/31/2000 13,760 15,208 2/29/2000 14,088 14,921 3/31/2000 15,024 16,380 4/30/2000 14,536 15,887 5/31/2000 14,038 15,561 6/30/2000 14,775 15,946 7/31/2000 14,457 15,697 8/31/2000 15,323 16,672 9/30/2000 14,715 15,791 10/31/2000 14,447 15,725 11/30/2000 13,292 14,486 12/31/2000 13,773 14,557 1/31/2001 13,899 15,074 2/28/2001 12,592 13,700 3/31/2001 11,567 12,833 4/30/2001 12,550 13,829 5/31/2001 12,581 13,922 6/30/2001 12,288 13,583 7/31/2001 12,006 13,450 8/31/2001 11,358 12,610 9/30/2001 10,207 11,592 10/31/2001 10,542 11,813 11/30/2001 11,222 12,720 12/31/2001 11,499 12,831 1/31/2002 11,200 12,644 2/28/2002 10,892 12,400 3/31/2002 11,445 12,866 4/30/2002 10,988 12,087 5/31/2002 10,775 11,997 6/30/2002 10,061 11,143 7/31/2002 8,965 10,275 8/31/2002 8,986 10,342 9/30/2002 7,996 9,219 10/31/2002 8,603 10,029 11/30/2002 9,135 10,619 12/31/2002 8,592 9,995 1/31/2003 8,283 9,734 2/28/2003 8,092 9,588 3/31/2003 8,102 9,680 4/30/2003 8,794 10,478 5/31/2003 9,359 11,029 6/30/2003 9,486 11,170 7/31/2003 9,763 11,367 8/31/2003 9,997 11,589 9/30/2003 9,859 11,466 10/31/2003 10,487 12,114 11/30/2003 10,668 12,220 12/31/2003 11,115 12,861 1/31/2004 11,360 13,097 2/29/2004 11,531 13,279 3/31/2004 11,477 13,079 4/30/2004 11,115 12,873 5/31/2004 11,243 13,050 6/30/2004 11,499 13,303 7/31/2004 10,998 12,863 8/31/2004 10,956 12,914 9/30/2004 11,222 13,054 10/31/2004 11,488 13,253 11/30/2004 12,095 13,790 12/31/2004 12,521 14,259 1/31/2005 12,137 13,911 2/28/2005 12,393 14,203 3/31/2005 12,116 13,952 4/30/2005 11,733 13,687 5/31/2005 12,180 14,122 -------------------------------------------------------------------------------- (2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks representing, among others, industrial, financial, utility, and transportation companies listed or traded on national exchanges or over-the-counter markets. You cannot invest directly in an index. (3) Portfolio holdings and characteristics are subject to change. (4) The chart compares the performance of the WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO for the life of the Portfolio with the S&P 500 Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses and assumes the maximum initial sales charge of 1.50%. 5
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO(SM) (the Portfolio) seeks capital appreciation with a secondary emphasis on current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen Blomster, CFA 9/30/2004 Jeffrey P. Mellas HOW DID THE PORTFOLIO PERFORM OVER THE REPORTING PERIOD? -------------------------------------------------------------------------------- Since its inception on September 30, 2004, the Portfolio returned 7.25%(1) for the eight-month period ended May 31, 2005, excluding sales charges, underperforming the S&P 500 Index(2), which returned 8.19% and outperforming the Lehman Brothers U.S. Government/Credit Index(3), which returned 2.90% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF PORTFOLIO SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE PORTFOLIO'S WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR WEALTHBUILDER PORTFOLIO SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 1.50%. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE? -------------------------------------------------------------------------------- The equity market generally outperformed the bond market during the period. Long U.S. Treasury bonds produced the highest returns as their yields dropped over 1%. Among the major equity styles, large-cap value stocks led the way in response to solid economic growth and corporate earnings that exceeded expectations. International stocks continued to benefit from the weakness in the U.S. dollar over much of the period. Small cap stocks outperformed large cap stocks until late in the period, when they began to lose relative momentum due to concerns of a possible economic slowdown resulting from the ongoing increase of interest rates by the Federal Reserve Board. The Tactical Asset Allocation (TAA) Model, which seeks to enhance portfolio returns by shifting assets between stocks and bonds, maintained a 15% overweighted position in stocks since the inception of the Portfolio. With the Portfolio's stock holdings outperforming its bond holdings during the eight-month period, maintaining the 15% stock overweighting contributed to the Portfolio's returns. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We conduct routine reviews of the mutual fund holdings in the Portfolio where we monitor a number of factors, including the investment style and process of each fund, the fund managers' experience and tenure, performance of the funds, and the funds' risk profiles. Since the inception of the Portfolio, we have made no changes to the fund holdings. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- While stock prices rose and outperformed bonds since the Portfolio's inception, we believe that the sharp decline in U.S. Treasury bond yields late in the period has made stocks even more attractive, relative to bonds, than when our TAA Model shifted toward stocks nearly three years ago. As a result, the Portfolio will remain overweighted in stocks until the relative valuation between stocks and bonds returns to its historical norm. BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. BOND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE PORTFOLIO IS EXPOSED TO CERTAIN RISKS, INCLUDING SMALL COMPANY SECURITIES RISK, FOREIGN INVESTMENTS RISK, AND HIGH-YIELD SECURITIES RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Portfolio's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO. (1) The Portfolio's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Portfolio. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Portfolio's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO was named the WELLS FARGO WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO. (2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks representing, among others, industrial, financial, utility, and transportation companies listed or traded on national exchanges or over-the-counter markets. You cannot invest directly in an index. (3) The Lehman Brothers U.S. Government/Credit Index is an unmanaged index that includes securities in the Lehman Brothers U.S. Government Index and the Lehman Brothers U.S. Credit Index. The Lehman Brothers U.S. Government Index is composed of U.S. Treasury securities with maturities of one year or more and publicly issued debt of U.S. Government agencies. The Lehman Brothers U.S. Credit Index is an unmanaged index composed of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be SEC-registered. You cannot invest directly in an index. 6
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ---------------------- ---------------------- Life of Life of 6-Month* Portfolio* 6-Month* Portfolio* --------------------------------------------------------------------------------------------------------------------- WealthBuilder Growth Allocation Portfolio (Incept. date 9/30/2004) (0.33) 5.65 1.18 7.25 --------------------------------------------------------------------------------------------------------------------- Benchmarks --------------------------------------------------------------------------------------------------------------------- S&P 500 Index(2) 2.42 8.19 --------------------------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Government/Credit Index(3) 3.17 2.90 --------------------------------------------------------------------------------------------------------------------- * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 28% -------------------------------------------------------------------------------- Net Asset Value (NAV) $10.70 MUTUAL FUNDS AND MASTER PORTFOLIOS HELD(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Wells Fargo Advantage Equity Value Portfolio 22% -------------------------------------------------------------------------------- Wells Fargo Advantage Large Company Growth Portfolio 16% -------------------------------------------------------------------------------- AIM Blue Chip Fund 16% -------------------------------------------------------------------------------- MFS Strategic Value Fund 9% -------------------------------------------------------------------------------- Fidelity Advisors Diversified International Fund 8% -------------------------------------------------------------------------------- ING International Value Fund 8% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Company Value Portfolio 6% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Cap Growth Fund 5% -------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund 5% -------------------------------------------------------------------------------- Wells Fargo Advantage Total Return Bond Fund 5% EFFECTIVE ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Bond Funds (5%) Stock Funds (95%) GROWTH OF $10,000 INVESTMENT(5) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO LEHMAN BROTHERS WEALTHBUILDER GROWTH U.S. GOV'T/CREDIT ALLOCATION PORTFOLIO S&P 500 INDEX INDEX -------------------- ------------- ----- 9/29/2004 $ 9,850 $10,000 $10,000 9/30/2004 $ 9,860 $10,000 $10,000 10/31/2004 $10,057 $10,153 $10,087 11/30/2004 $10,441 $10,564 $ 9,975 12/31/2004 $10,772 $10,923 $10,081 1/31/2005 $10,515 $10,657 $10,151 2/28/2005 $10,713 $10,881 $10,084 3/31/2005 $10,505 $10,688 $10,014 4/30/2005 $10,199 $10,485 $10,164 5/31/2005 $10,574 $10,818 $10,291 -------------------------------------------------------------------------------- (4) Portfolio holdings and characteristics are subject to change. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO for the life of the Portfolio with the S&P 500 Index and the Lehman Brothers U.S. Government/Credit Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses and assumes the maximum initial sales charge of 1.50%. 7
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO(SM) (the Portfolio) seeks a combination of capital appreciation and current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen Blomster, CFA 10/01/1997 Jeffrey P. Mellas HOW DID THE PORTFOLIO PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Portfolio returned 6.37%(1) for the 12-month period ended May 31, 2005, excluding sales charges, underperforming the S&P 500 Index(2), which returned 8.23% and underperforming the Lehman Brothers U.S. Government/Credit Index(3), which returned 7.00% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF PORTFOLIO SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE PORTFOLIO'S WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR WEALTHBUILDER PORTFOLIO SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 1.50%. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE? -------------------------------------------------------------------------------- Both the stock and bond markets generated positive returns over the twelve-month reporting period, nearly in line with the historical long-term average returns for each asset class. While the equity market generally outperformed the bond market during the period, long-term U.S. Treasury bonds produced the highest returns, as their yields dropped over 1%. Among the major equity styles, large-cap value stocks led the way in response to solid economic growth and corporate earnings that exceeded expectations. International stocks continued to benefit from the weakness of the U.S. dollar over much of the period. Small cap stocks outperformed large cap stocks until late in the period when they began to lose relative momentum due to concerns of a possible economic slowdown resulting from the ongoing increase of interest rates by the Federal Reserve Board. The Tactical Asset Allocation (TAA) Model, which seeks to enhance portfolio returns by shifting assets between stocks and bonds, maintained a 15% overweighted position in stocks over the entire 12-month period. With the S&P 500 Index underperforming long-term U.S. Treasury bonds during the period, maintaining the 15% TAA futures overlay shift toward stocks reduced the Portfolio's return during the period. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We conduct routine reviews of the mutual fund holdings in the Portfolio where we monitor a number of factors, including the investment style and process of each fund, the fund managers' experience and tenure, performance of the funds, and the funds' risk profiles. Over the past twelve months, we made no changes to the fund holdings within the Portfolio. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- While stock prices rose during the past 12 months, we believe that the sharp decline in U.S. Treasury bond yields has made stocks even more attractive, relative to bonds, than when our TAA Model shifted toward stocks nearly three years ago. As a result, the Portfolio will remain overweighted in stocks until the relative valuation between stocks and bonds returns to its historical norm. BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. BOND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE PORTFOLIO IS EXPOSED TO CERTAIN RISKS, INCLUDING SMALL COMPANY SECURITIES RISK, FOREIGN INVESTMENT RISK, DEBT SECURITIES RISK, AND HIGH-YIELD SECURITIES RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Portfolio's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO. (1) The Portfolio's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Portfolio. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Portfolio's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO was named the WELLS FARGO WEALTHBUILDER GROWTH BALANCED PORTFOLIO. Performance for the Portfolio prior to November 8,1999 reflects the performance of the Norwest WealthBuilder II Growth Balanced Portfolio, its predecessor portfolio. Predecessor portfolio information can be found in the Portfolio's prospectus, statement of additional information or annual report. Effective at the close of business November 5, 1999, the Norwest Advantage Funds were reorganized into the WELLS FARGO FUNDS(R). (2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks representing, among others, industrial, financial, utility, and transportation companies listed or traded on national exchanges or over-the-counter markets. You cannot invest directly in an index. (3) The Lehman Brothers U.S. Government/Credit Index is an unmanaged index that includes securities in the Lehman Brothers U.S. Government Index and the Lehman Brothers U.S. Credit Index. The Lehman Brothers U.S. Government Index is composed of U.S. Treasury securities with maturities of one year or more and publicly issued debt of U.S. Government agencies. The Lehman Brothers U.S. Credit Index is an unmanaged index composed of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be SEC-registered. You cannot invest directly in an index. 8
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge -------------------------------------- --------------------------------------- Life of Life of 6-Month* 1-Year 5-Year Portfolio 6-Month* 1-Year 5-Year Portfolio ------------------------------------------------------------------------------------------------------------------------------------ WealthBuilder Growth Balanced Portfolio (Incept. date 10/01/1997) (1.33) 4.77 0.56 4.09 0.17 6.37 0.86 4.30 ------------------------------------------------------------------------------------------------------------------------------------ Benchmarks ------------------------------------------------------------------------------------------------------------------------------------ The S&P 500 Index(2) 2.42 8.23 (1.92) 4.60 ------------------------------------------------------------------------------------------------------------------------------------ Lehman Brothers U.S. Government/Credit Index(3) 3.17 7.00 8.00 6.82 ------------------------------------------------------------------------------------------------------------------------------------ * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 98% -------------------------------------------------------------------------------- Net Asset Value (NAV) $11.76 MUTUAL FUNDS AND MASTER PORTFOLIOS HELD(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Wells Fargo Advantage Equity Value Portfolio 14% -------------------------------------------------------------------------------- Wells Fargo Advantage Intermediate Government Income Fund 13% -------------------------------------------------------------------------------- Wells Fargo Advantage Total Return Bond Fund 12% -------------------------------------------------------------------------------- AIM Blue Chip Fund 10% -------------------------------------------------------------------------------- Wells Fargo Advantage Large Company Growth Portfolio 9% -------------------------------------------------------------------------------- ING International Value Fund 7% -------------------------------------------------------------------------------- MFS Strategic Value Fund 6% -------------------------------------------------------------------------------- Fidelity Advisors Diversified International Fund 6% -------------------------------------------------------------------------------- MFS High Income Fund 5% -------------------------------------------------------------------------------- Oppenheimer International Bond Fund 5% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Company Value Portfolio 5% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Cap Growth Fund 4% -------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund 4% -------------------------------------------------------------------------------- EFFECTIVE ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Bond Funds (20%) Stock Funds (80%) GROWTH OF $10,000 INVESTMENT(5) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO LEHMAN BROTHERS WEALTHBUILDER GROWTH U.S. GOV'T/CREDIT BALANCED PORTFOLIO S&P 500 INDEX INDEX ------------------ ------------- ----- 10/1/1997 $ 9,850 $10,000 $10,000 10/31/1997 $ 9,811 9,666 10,160 11/30/1997 $ 9,820 10,114 10,214 12/31/1997 $ 9,912 10,287 10,321 1/31/1998 $ 9,971 10,401 10,466 2/28/1998 $10,386 11,151 10,445 3/31/1998 $10,702 11,721 10,477 4/30/1998 $10,811 11,841 10,530 5/31/1998 $10,673 11,637 10,643 6/30/1998 $10,762 12,110 10,751 7/31/1998 $10,554 11,981 10,760 8/31/1998 $ 9,418 10,250 10,970 9/30/1998 $ 9,714 10,907 11,284 10/31/1998 $10,356 11,794 11,204 11/30/1998 $10,910 12,509 11,271 12/31/1998 $11,419 13,229 11,299 1/31/1999 $11,668 13,782 11,379 2/28/1999 $11,310 13,353 11,108 3/31/1999 $11,608 13,888 11,164 4/30/1999 $11,956 14,425 11,191 5/31/1999 $11,767 14,085 11,076 6/30/1999 $12,175 14,866 11,041 7/31/1999 $12,026 14,402 11,011 8/31/1999 $11,896 14,331 11,002 9/30/1999 $11,797 13,938 11,101 10/31/1999 $12,235 14,820 11,130 11/30/1999 $12,593 15,121 11,124 12/31/1999 $13,070 16,012 11,056 1/31/2000 $12,824 15,208 11,053 2/29/2000 $13,070 14,921 11,191 3/31/2000 $13,582 16,380 11,353 4/30/2000 $13,295 15,887 11,298 5/31/2000 $13,029 15,561 11,288 6/30/2000 $13,500 15,946 11,518 7/31/2000 $13,387 15,697 11,640 8/31/2000 $13,858 16,672 11,804 9/30/2000 $13,561 15,791 11,849 10/31/2000 $13,428 15,725 11,923 11/30/2000 $12,947 14,486 12,127 12/31/2000 $13,346 14,557 12,366 1/31/2001 $13,500 15,074 12,574 2/28/2001 $12,708 13,700 12,703 3/31/2001 $12,048 12,833 12,762 4/30/2001 $12,840 13,829 12,666 5/31/2001 $12,862 13,922 12,739 6/30/2001 $12,653 13,583 12,800 7/31/2001 $12,543 13,450 13,119 8/31/2001 $12,147 12,610 13,287 9/30/2001 $11,288 11,592 13,410 10/31/2001 $11,563 11,813 13,750 11/30/2001 $12,202 12,720 13,524 12/31/2001 $12,399 12,831 13,418 1/31/2002 $12,141 12,644 13,516 2/28/2002 $11,905 12,400 13,631 3/31/2002 $12,343 12,866 13,354 4/30/2002 $12,085 12,087 13,613 5/31/2002 $11,950 11,997 13,739 6/30/2002 $11,466 11,143 13,855 7/31/2002 $10,511 10,275 14,022 8/31/2002 $10,511 10,342 14,337 9/30/2002 $ 9,634 9,219 14,645 10/31/2002 $10,230 10,029 14,505 11/30/2002 $10,758 10,619 14,514 12/31/2002 $10,233 9,995 14,898 1/31/2003 $ 9,972 9,734 14,898 2/28/2003 $ 9,790 9,588 15,163 3/31/2003 $ 9,836 9,680 15,143 4/30/2003 $10,516 10,478 15,305 5/31/2003 $10,981 11,029 15,740 6/30/2003 $11,117 11,170 15,677 7/31/2003 $11,424 11,367 15,020 8/31/2003 $11,628 11,589 15,119 9/30/2003 $11,469 11,466 15,598 10/31/2003 $12,070 12,114 15,401 11/30/2003 $12,241 12,220 15,442 12/31/2003 $12,715 12,861 15,594 1/31/2004 $12,921 13,097 15,736 2/29/2004 $13,048 13,279 15,928 3/31/2004 $12,990 13,079 16,075 4/30/2004 $12,703 12,873 15,581 5/31/2004 $12,795 13,050 15,502 6/30/2004 $13,025 13,303 15,565 7/31/2004 $12,589 12,863 15,730 8/31/2004 $12,566 12,914 16,064 9/30/2004 $12,784 13,054 16,120 10/31/2004 $13,013 13,253 16,260 11/30/2004 $13,587 13,790 16,080 12/31/2004 $13,946 14,259 16,250 1/31/2005 $13,610 13,911 16,364 2/28/2005 $13,853 14,203 16,256 3/31/2005 $13,575 13,952 16,142 4/30/2005 $13,228 13,687 16,384 5/31/2005 $13,598 14,122 16,589 (4) Portfolio holdings and characteristics are subject to change. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO for the life of the Portfolio with the S&P 500 Index and the Lehman Brothers U.S. Government/Credit Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses and assumes the maximum initial sales charge of 1.50%. 9
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO(SM) (the Portfolio) seeks a combination of current income and capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen Blomster, CFA 9/30/2004 Jeffrey P. Mellas HOW DID THE PORTFOLIO PERFORM OVER THE REPORTING PERIOD? -------------------------------------------------------------------------------- Since its inception on September 30, 2004, the Portfolio returned 4.41%(1) for the eight-month period ended May 31, 2005, excluding sales charges, underperforming the S&P 500 Index(2), which returned 8.19% and outperforming the Lehman Brothers U.S. Government/Credit Index(3), which returned 2.90% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF PORTFOLIO SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE PORTFOLIO'S WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR WEALTHBUILDER PORTFOLIO SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 1.50%. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE? -------------------------------------------------------------------------------- The equity markets generally outperformed the bond markets during the period. Long-term U.S. Treasury bonds produced the highest returns as their yields dropped over 1%. Among the major equity styles, large-cap value stocks led the way in response to solid economic growth and corporate earnings that exceeded expectations. International stocks continued to benefit from the weakness of the U.S. dollar over much of the period. Small cap stocks outperformed large cap stocks until late in the period, when they began to lose relative momentum due to concerns of a possible economic slowdown resulting from the ongoing increase of interest rates by the Federal Reserve Board. The Tactical Asset Allocation (TAA) Model, which seeks to enhance portfolio returns by shifting assets between stocks and bonds, maintained a 10% overweighted position in stocks since the inception of the Portfolio. With the Portfolio's stock holdings outperforming its bond holdings during the eight-month period, maintaining the 10% stock overweighting contributed to the Portfolio's return. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We conduct routine reviews of the mutual fund holdings in the Portfolio where we monitor a number of factors, including the investment style and process of each fund, the fund managers' experience and tenure, performance of the funds, and the funds' risk profiles. Since the inception of the Portfolio, we have made no changes to the fund holdings. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- While stock prices rose and outperformed bonds since the Portfolio's inception, we believe that the sharp decline in U.S. Treasury bond yields late in the period has made stocks even more attractive, relative to bonds, than when our TAA Model shifted toward stocks nearly three years ago. As a result, the Portfolio will remain overweighted in stocks until the relative valuation between stocks and bonds returns to its historical norm. BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. BOND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, CHANGES IN INTEREST RATES, AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE PORTFOLIO IS EXPOSED TO CERTAIN RISKS, INCLUDING SMALL COMPANY SECURITIES RISK, FOREIGN INVESTMENT RISK, DEBT SECURITIES RISK, AND HIGH-YIELD SECURITIES RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Portfolio's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO. (1) The Portfolio's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Portfolio. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Portfolio's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO was named the WELLS FARGO WEALTHBUILDER MODERATE BALANCED PORTFOLIO. (2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks representing, among others, industrial, financial, utility, and transportation companies listed or traded on national exchanges or over-the-counter markets. You cannot invest directly in an index. (3) The Lehman Brothers U.S. Government/Credit Index is an unmanaged index that includes securities in the Lehman Brothers U.S. Government Index and the Lehman Brothers U.S. Credit Index. The Lehman Brothers U.S. Government Index is composed of U.S. Treasury securities with maturities of one year or more and publicly issued debt of U.S. Government agencies. The Lehman Brothers U.S. Credit Index is an unmanaged index composed of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be SEC-registered. You cannot invest directly in an index. 10
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ---------------------- ---------------------- Life of Life of 6-Month* Portfolio* 6-Month* Portfolio* --------------------------------------------------------------------------------------------------------------------- WealthBuilder Moderate Balanced Portfolio (Incept. date 9/30/2004) (0.63) 2.84 0.88 4.41 --------------------------------------------------------------------------------------------------------------------- Benchmarks --------------------------------------------------------------------------------------------------------------------- S&P 500 Index(2) 2.42 8.19 --------------------------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Government/Credit Index(3) 3.17 2.90 --------------------------------------------------------------------------------------------------------------------- * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 16% -------------------------------------------------------------------------------- Net Asset Value (NAV) $10.42 MUTUAL FUNDS AND MASTER PORTFOLIOS HELD(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Wells Fargo Advantage Short Duration Government Bond Fund 19% -------------------------------------------------------------------------------- Wells Fargo Advantage Total Return Bond Fund 14% -------------------------------------------------------------------------------- Wells Fargo Advantage Equity Value Portfolio 12% -------------------------------------------------------------------------------- Wells Fargo Advantage Large Company Growth Portfolio 9% -------------------------------------------------------------------------------- AIM Blue Chip Fund 9% -------------------------------------------------------------------------------- MFS Strategic Value Fund 5% -------------------------------------------------------------------------------- MFS High Income Fund 5% -------------------------------------------------------------------------------- Wells Fargo Advantage Intermediate Government Income Fund 5% -------------------------------------------------------------------------------- Oppenheimer International Bond Fund 5% -------------------------------------------------------------------------------- ING International Value Fund 4% -------------------------------------------------------------------------------- Fidelity Advisors Diversified International Fund 4% -------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund 3% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Cap Growth Fund 3% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Company Value Portfolio 3% EFFECTIVE ALLOCATION(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Bond Funds (50%) Stock Funds (50%) GROWTH OF $10,000 INVESTMENT(5) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO LEHMAN BROTHERS WEALTHBUILDER MODERATE U.S. GOV'T/CREDIT BALANCED PORTFOLIO S&P 500 INDEX INDEX ------------------ ------------- ----- 9/30/2004 $ 9,850 $10,000 $10,000 10/31/2004 $10,017 $10,153 $10,087 11/30/2004 $10,195 $10,564 $ 9,975 12/31/2004 $10,393 $10,923 $10,081 1/31/2005 $10,235 $10,657 $10,151 2/28/2005 $10,344 $10,881 $10,084 3/31/2005 $10,186 $10,688 $10,014 4/30/2005 $10,057 $10,485 $10,164 5/31/2005 $10,284 $10,818 $10,291 -------------------------------------------------------------------------------- (4) Portfolio holdings and characteristics are subject to change. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO for the life of the Portfolio with the S&P 500 Index and the Lehman Brothers U.S. Government/Credit Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses and assumes the maximum initial sales charge of 1.50%. 11
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO(SM) (the Portfolio) seeks long-term capital appreciation with no emphasis on income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen Blomster, CFA 10/01/1997 Jeffrey P. Mellas HOW DID THE PORTFOLIO PERFORM OVER THE 12-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Portfolio returned 10.89%(1) for the 12-month period ended May 31, 2005, excluding sales charges, outperforming its benchmark, the S&P 500 Index(2), which returned 8.23% during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF PORTFOLIO SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE SHOWN WITHOUT SALES CHARGES WOULD BE LOWER IF SALES CHARGES WERE REFLECTED. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AT THE PORTFOLIO'S WEB SITE - WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. FOR WEALTHBUILDER PORTFOLIO SHARES, THE MAXIMUM FRONT-END SALES CHARGE IS 1.50%. OTHER FEES AND EXPENSES APPLY TO AN INVESTMENT IN THE PORTFOLIO AND ARE DESCRIBED IN THE PORTFOLIO'S CURRENT PROSPECTUS. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE? -------------------------------------------------------------------------------- The stock market performed nearly in line with long-term average stock returns over the twelve-month period, with all major equity styles participating in positive gains. Large-cap value stocks led the way in response to solid economic growth and corporate earnings that exceeded expectations. International stocks continued to benefit by the weakness in the U.S. dollar over much of the period. Small cap stocks outperformed large cap stocks until late in the period when they began to lose relative momentum due to concerns of a possible economic slowdown resulting from the repeated interest rate increases by the Federal Reserve Board (the Fed). The Tactical Equity Allocation (TEA) Model, which seeks to enhance portfolio returns by favoring those equity styles the Model determines could likely outperform, emphasized international, small cap, and value equity styles throughout much of the period. At the end of April 2005, the TEA Model reached the trigger to shift from small cap to large cap stocks. In order to make a change in the Portfolio's asset allocation emphasis, we need confirmation of a change in both relative momentum and fundamentals. The trend of a flattening yield curve, which began in June 2004, was fundamentally consistent with the large cap emphasis of the TEA Model late in the period and this led to the shift. With regards to the Portfolio's other styles, our measure of relative momentum continues to favor international stocks over domestic stocks and value stocks over growth stocks. Weakness in the U.S. dollar was fundamentally consistent with the international stock emphasis. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We conduct routine reviews of the mutual fund holdings in the Portfolio where we monitor a number of factors, including the investment style and process of each fund, the fund managers' experience and tenure, performance of the funds, and the funds' risk profiles. Over the past twelve months, we made no changes to the fund holdings within the Portfolio. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- At the end of the period, we emphasized international, large cap, and value equity styles, as indicated by the TEA Model. The equity allocation emphasis in the Portfolio has begun to change from one that was consistent with an economy that was in a cyclical recovery mode to one that may now be entering a more challenging period over the next twelve months in response to the Fed's continued tightening of monetary policy. As such, relative momentum and fundamentals could change, possibly triggering more changes from the TEA Model. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. THE PORTFOLIO IS EXPOSED TO CERTAIN RISKS, INCLUDING SMALL COMPANY SECURITIES RISK AND FOREIGN INVESTMENTS RISK. CONSULT THE PORTFOLIO'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The views expressed are as of May 31, 2005, and are those of the Portfolio's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO. (1) The Portfolio's Adviser has committed through September 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Portfolio. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Portfolio's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO was named the WELLS FARGO WEALTHBUILDER TACTICAL EQUITY PORTFOLIO, and prior to October 1, 2004, the Portfolio was named the WELLS FARGO WEALTHBUILDER GROWTH PORTFOLIO. Performance for the Portfolio prior to November 8, 1999, reflects the performance of the Norwest WealthBuilder II Growth Portfolio, its predecessor portfolio. Predecessor portfolio information can be found in the Portfolio's prospectus, statement of additional information or annual report. Effective at the close of business November 5, 1999, the Norwest Advantage Funds were reorganized into the WELLS FARGO FUNDS(R). (2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks representing, among others, industrial, financial, utility, and transportation companies listed or traded on national exchanges or over-the-counter markets. You cannot invest directly in an index. 12
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PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [Enlarge/Download Table] Including Sales Charge Excluding Sales Charge ---------------------------------------- --------------------------------------- Life of Life of 6-Month* 1-Year 5-Year Portfolio 6-Month* 1-Year 5-Year Portfolio ---------------------------------------------------------------------------------------------------------------------------- WealthBuilder Tactical Equity Portfolio (Incept. date 10/01/1997) (1.13) 9.23 (2.51) 3.71 0.38 10.89 (2.22) 3.91 ---------------------------------------------------------------------------------------------------------------------------- Benchmark ---------------------------------------------------------------------------------------------------------------------------- S&P 500 Index(2) 2.42 8.23 (1.92) 4.60 ---------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. CHARACTERISTICS(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Portfolio Turnover 110% -------------------------------------------------------------------------------- Net Asset Value (NAV) $13.01 MUTUAL FUNDS AND MASTER PORTFOLIOS HELD(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- Wells Fargo Advantage Equity Value Portfolio 30% -------------------------------------------------------------------------------- ING International Value Fund 25% -------------------------------------------------------------------------------- Fidelity Advisor Diversified International Fund 25% -------------------------------------------------------------------------------- MFS Strategic Value Fund 5% -------------------------------------------------------------------------------- Wells Fargo Advantage Large Company Growth Portfolio 5% -------------------------------------------------------------------------------- AIM Blue Chip Fund 4% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Company Value Portfolio 2% -------------------------------------------------------------------------------- Wells Fargo Advantage Small Cap Growth Fund 2% -------------------------------------------------------------------------------- Oppenheimer Main Street Small Cap Fund 2% -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION(3) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Small Company (5%) International (50%) Large Company Value (36%) Large Company Growth (9%) GROWTH OF $10,000 INVESTMENT(4) (AS OF MAY 31, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO WEALTHBUILDER TACTICAL EQUITY PORTFOLIO S&P 500 INDEX ---------------- ------------- 10/1/1997 $ 9,850 $10,000 10/31/1997 $ 9,623 $ 9,666 11/30/1997 $ 9,742 $10,114 12/31/1997 $ 9,826 $10,287 1/31/1998 $ 9,925 $10,401 2/28/1998 $10,506 $11,151 3/31/1998 $10,960 $11,721 4/30/1998 $11,118 $11,841 5/31/1998 $10,851 $11,637 6/30/1998 $11,108 $12,110 7/31/1998 $10,782 $11,981 8/31/1998 $ 9,107 $10,250 9/30/1998 $ 9,610 $10,907 10/31/1998 $10,329 $11,794 11/30/1998 $11,039 $12,509 12/31/1998 $11,890 $13,229 1/31/1999 $12,394 $13,782 2/28/1999 $11,969 $13,353 3/31/1999 $12,542 $13,888 4/30/1999 $12,808 $14,425 5/31/1999 $12,473 $14,085 6/30/1999 $13,282 $14,866 7/31/1999 $12,897 $14,402 8/31/1999 $12,799 $14,331 9/30/1999 $12,502 $13,938 10/31/1999 $13,312 $14,820 11/30/1999 $13,835 $15,121 12/31/1999 $15,070 $16,012 1/31/2000 $14,586 $15,208 2/29/2000 $14,922 $14,921 3/31/2000 $16,117 $16,380 4/30/2000 $15,445 $15,887 5/31/2000 $14,784 $15,561 6/30/2000 $15,623 $15,946 7/31/2000 $15,435 $15,697 8/31/2000 $16,344 $16,672 9/30/2000 $15,445 $15,791 10/31/2000 $15,198 $15,725 11/30/2000 $13,914 $14,486 12/31/2000 $14,115 $14,557 1/31/2001 $14,276 $15,074 2/28/2001 $12,599 $13,700 3/31/2001 $11,455 $12,833 4/30/2001 $12,700 $13,829 5/31/2001 $12,810 $13,922 6/30/2001 $12,669 $13,583 7/31/2001 $12,338 $13,450 8/31/2001 $11,716 $12,610 9/30/2001 $10,350 $11,592 10/31/2001 $10,752 $11,813 11/30/2001 $11,435 $12,720 12/31/2001 $11,878 $12,831 1/31/2002 $11,506 $12,644 2/28/2002 $11,143 $12,400 3/31/2002 $11,808 $12,866 4/30/2202 $11,435 $12,087 5/31/2002 $11,214 $11,997 6/30/2002 $10,550 $11,143 7/31/2002 $ 9,311 $10,275 8/31/2002 $ 9,281 $10,342 9/30/2002 $ 8,264 $ 9,219 10/31/2002 $ 8,798 $10,029 11/30/2002 $ 9,342 $10,619 12/31/2002 $ 8,858 $ 9,995 1/31/2003 $ 8,476 $ 9,734 2/28/2003 $ 8,264 $ 9,588 3/31/2003 $ 8,184 $ 9,680 4/30/2003 $ 8,909 $10,478 5/31/2003 $ 9,482 $11,029 6/30/2003 $ 9,623 $11,170 7/31/2003 $ 9,855 $11,367 8/31/2003 $10,127 $11,589 9/30/2003 $10,147 $11,466 10/31/2003 $10,821 $12,114 11/30/2003 $11,073 $12,220 12/31/2003 $11,637 $12,861 1/31/2004 $11,949 $13,097 2/29/2004 $12,190 $13,279 3/31/2004 $12,281 $13,079 4/30/2004 $11,838 $12,873 5/31/2004 $11,919 $13,050 6/30/2004 $12,251 $13,303 7/31/2004 $11,737 $12,863 8/31/2004 $11,687 $12,914 9/30/2004 $12,049 $13,054 10/31/2004 $12,412 $13,253 11/30/2004 $13,167 $13,790 12/31/2004 $13,674 $14,259 1/31/2005 $13,308 $13,911 2/28/2005 $13,704 $14,203 3/31/2005 $13,359 $13,952 4/30/2005 $12,922 $13,687 5/31/2005 $13,217 $14,122 -------------------------------------------------------------------------------- (3) Portfolio holdings and characteristics are subject to change. (4) The chart compares the performance of the WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO for the life of the Portfolio with the S&P 500 Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses and assumes the maximum initial sales charge of 1.50%. 13
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS 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 (December 1, 2004 to May 31, 2005). ACTUAL EXPENSES The "Actual" line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Actual" line under the heading entitled "Expenses Paid During Period" for your applicable class of shares to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES -------------------------------------------------------------------------------- The "Hypothetical" line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the "Hypothetical" line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. [Enlarge/Download Table] Beginning Ending Account Account Expenses Value Value Paid During Net Annual 12/01/2004 05/31/2005 Period* Expense Ratio -------------------------------------------------------------------------------------------------------------------- WealthBuilder Conservative Allocation Portfolio Actual $1,000.00 $1,007.00 $7.51 1.50% -------------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,017.45 $7.54 1.50% -------------------------------------------------------------------------------------------------------------------- WealthBuilder Equity Portfolio Actual $1,000.00 $1,007.00 $7.11 1.42% -------------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,017.85 $7.14 1.42% -------------------------------------------------------------------------------------------------------------------- WealthBuilder Growth Allocation Portfolio Actual $1,000.00 $1,012.80 $7.53 1.50% -------------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,017.45 $7.54 1.50% -------------------------------------------------------------------------------------------------------------------- WealthBuilder Growth Balanced Portfolio Actual $1,000.00 $1,000.80 $7.03 1.41% -------------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,017.90 $7.09 1.41% -------------------------------------------------------------------------------------------------------------------- WealthBuilder Moderate Balanced Portfolio Actual $1,000.00 $1,008.80 $7.51 1.50% -------------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,017.45 $7.54 1.50% -------------------------------------------------------------------------------------------------------------------- WealthBuilder Tactical Equity Portfolio Actual $1,000.00 $1,003.80 $7.09 1.42% -------------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000.00 $1,017.85 $7.14 1.42% -------------------------------------------------------------------------------------------------------------------- * EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR DIVIDED BY THE NUMBER OF DAYS IN THE FISCAL YEAR (TO REFLECT THE ONE-HALF YEAR PERIOD). 14
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MAY 31, 2005 WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO -------------------------------------------------------------------------------- [Download Table] SHARES SECURITY NAME VALUE INVESTMENT COMPANIES - 98.87% STOCK FUNDS - 12.57% 57,569 AIM BLUE CHIP FUND $ 668,956 16,854 FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND 313,645 18,629 ING INTERNATIONAL VALUE FUND 314,277 25,542 MFS STRATEGIC VALUE FUND 402,800 10,272 OPPENHEIMER MAIN STREET SMALL CAP FUND 206,766 1,906,444 ----------- AFFILIATED STOCK FUNDS - 13.45% N/A WELLS FARGO ADVANTAGE EQUITY VALUE PORTFOLIO 940,195 N/A WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH PORTFOLIO 669,773 19,052 WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND 214,144 N/A WELLS FARGO ADVANTAGE SMALL COMPANY VALUE PORTFOLIO 214,830 2,038,942 ----------- BOND FUNDS - 9.77% 194,900 MFS HIGH INCOME FUND 750,366 124,614 OPPENHEIMER INTERNATIONAL BOND FUND 731,482 1,481,848 ----------- AFFILIATED BOND FUNDS - 63.08% 201,419 WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND 2,207,547 439,862 WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND 4,411,811 237,487 WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND 2,944,837 9,564,195 ----------- TOTAL INVESTMENT COMPANIES (COST $14,896,535) 14,991,429 ----------- TOTAL INVESTMENTS IN SECURITIES (COST $14,896,535)* 98.87% $14,991,429 OTHER ASSETS AND LIABILITIES, NET 1.13 170,977 ------ ----------- TOTAL NET ASSETS 100.00% $15,162,406 ====== =========== * COST FOR FEDERAL INCOME TAX PURPOSES IS $14,900,478 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $126,547 GROSS UNREALIZED DEPRECIATION (35,596) -------- NET UNREALIZED APPRECIATION (DEPRECIATION) $ 90,951 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15
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WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS -- WEALTHBUILDER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- WEALTHBUILDER EQUITY PORTFOLIO -------------------------------------------------------------------------------- [Download Table] SHARES SECURITY NAME VALUE INVESTMENT COMPANIES - 99.35% STOCK FUNDS - 50.48% 1,517,453 AIM BLUE CHIP FUND $ 17,632,803 626,434 FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND 11,657,946 689,271 ING INTERNATIONAL VALUE FUND 11,627,997 674,339 MFS STRATEGIC VALUE FUND 10,634,319 412,700 OPPENHEIMER MAIN STREET SMALL CAP FUND 8,307,648 59,860,713 ------------ AFFILIATED STOCK FUNDS - 48.87% N/A WELLS FARGO ADVANTAGE EQUITY VALUE PORTFOLIO 24,831,077 N/A WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH PORTFOLIO 17,709,341 683,787 WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND 7,685,762 N/A WELLS FARGO ADVANTAGE SMALL COMPANY VALUE PORTFOLIO 7,719,197 57,945,377 ------------ TOTAL INVESTMENT COMPANIES (COST $109,116,216) 117,806,090 ------------ TOTAL INVESTMENTS IN SECURITIES (COST $109,116,216)* 99.35% $117,806,090 OTHER ASSETS AND LIABILITIES, NET 0.65 774,680 ------ ------------ TOTAL NET ASSETS 100.00% $118,580,770 ====== ============ * COST FOR FEDERAL INCOME TAX PURPOSES IS $109,009,938 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $8,796,151 GROSS UNREALIZED DEPRECIATION 0 ---------- NET UNREALIZED APPRECIATION (DEPRECIATION) $8,796,151 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 16
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MAY 31, 2005 WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO -------------------------------------------------------------------------------- [Download Table] SHARES SECURITY NAME VALUE INVESTMENT COMPANIES - 97.46% STOCK FUNDS - 45.43% 201,765 AIM BLUE CHIP FUND $ 2,344,509 63,768 FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND 1,186,715 70,475 ING INTERNATIONAL VALUE FUND 1,188,907 89,582 MFS STRATEGIC VALUE FUND 1,412,708 39,607 OPPENHEIMER MAIN STREET SMALL CAP FUND 797,283 6,930,122 ----------- AFFILIATED STOCK FUNDS - 47.52% N/A WELLS FARGO ADVANTAGE EQUITY VALUE PORTFOLIO 3,294,786 N/A WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH PORTFOLIO 2,346,454 71,413 WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND 802,687 N/A WELLS FARGO ADVANTAGE SMALL COMPANY VALUE PORTFOLIO 805,186 7,249,113 ----------- AFFILIATED BOND FUNDS - 4.51% 55,446 WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND 687,530 ----------- TOTAL INVESTMENT COMPANIES (COST $14,492,400) 14,866,765 ----------- TOTAL INVESTMENTS IN SECURITIES (COST $14,492,400)* 97.46% $14,866,765 OTHER ASSETS AND LIABILITIES, NET 2.54 388,027 ------ ----------- TOTAL NET ASSETS 100.00% $15,254,792 ====== =========== * COST FOR FEDERAL INCOME TAX PURPOSES IS $14,505,081 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $383,917 GROSS UNREALIZED DEPRECIATION (22,233) -------- NET UNREALIZED APPRECIATION (DEPRECIATION) $361,684 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17
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WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS -- WEALTHBUILDER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- WEALTHBUILDER GROWTH BALANCED PORTFOLIO -------------------------------------------------------------------------------- [Enlarge/Download Table] SHARES SECURITY NAME VALUE INVESTMENT COMPANIES - 98.71% BOND FUNDS - 9.86% 4,612,446 MFS HIGH INCOME FUND $ 17,757,917 2,945,396 OPPENHEIMER INTERNATIONAL BOND FUND 17,289,475 35,047,392 ------------ AFFILIATED BOND FUNDS - 24.41% 4,114,487 WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND 45,094,773 3,362,317 WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND 41,692,729 86,787,502 ------------ STOCK FUNDS - 32.40% 3,027,033 AIM BLUE CHIP FUND 35,174,118 1,108,375 FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND 20,626,855 1,423,064 ING INTERNATIONAL VALUE FUND 24,007,087 1,340,505 MFS STRATEGIC VALUE FUND 21,139,762 708,422 OPPENHEIMER MAIN STREET SMALL CAP FUND 14,260,543 115,208,365 ------------ AFFILIATED STOCK FUNDS - 32.04% N/A WELLS FARGO ADVANTAGE EQUITY VALUE PORTFOLIO 49,533,873 N/A WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH PORTFOLIO 32,196,421 1,431,897 WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND 16,094,522 N/A WELLS FARGO ADVANTAGE SMALL COMPANY VALUE PORTFOLIO 16,111,389 113,936,205 ------------ TOTAL INVESTMENT COMPANIES (COST $334,519,006) 350,979,464 ------------ PRINCIPAL INTEREST RATE MATURITY DATE SHORT-TERM INVESTMENTS - 0.98% US TREASURY BILLS - 0.98% 5,000 US TREASURY BILL^# 2.59% 08/11/2005 4,973 270,000 US TREASURY BILL^# 2.70 08/11/2005 268,514 370,000 US TREASURY BILL^# 2.84 08/11/2005 367,963 2,880,000 US TREASURY BILL^# 3.07 11/10/2005 2,841,972 3,483,422 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $3,481,674) 3,483,422 ------------ TOTAL INVESTMENTS IN SECURITIES (COST $338,000,680)* 99.69% $354,462,886 OTHER ASSETS AND LIABILITIES, NET 0.31 1,119,450 ------ ------------ TOTAL NET ASSETS 100.00% $355,582,336 ====== ============ ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. # ALL OR A PORTION OF THIS SECURITY IS SEGREGATED AS COLLATERAL FOR DERIVATIVE INVESTMENTS. (SEE NOTE 2) * COST FOR FEDERAL INCOME TAX PURPOSES IS $336,296,288 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $23,262,516 GROSS UNREALIZED DEPRECIATION (5,095,918) ----------- NET UNREALIZED APPRECIATION (DEPRECIATION) $18,166,598 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 18
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PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE MAY 31, 2005 WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- WEALTHBUILDER MODERATE BALANCED PORTFOLIO -------------------------------------------------------------------------------- [Download Table] SHARES SECURITY NAME VALUE INVESTMENT COMPANIES - 96.84% STOCK FUNDS - 24.41% 146,117 AIM BLUE CHIP FUND $ 1,697,880 42,771 FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND 795,972 47,284 ING INTERNATIONAL VALUE FUND 797,684 64,910 MFS STRATEGIC VALUE FUND 1,023,631 27,140 OPPENHEIMER MAIN STREET SMALL CAP FUND 546,326 4,861,493 ----------- AFFILIATED STOCK FUNDS - 25.87% N/A WELLS FARGO ADVANTAGE EQUITY VALUE PORTFOLIO 2,386,236 N/A WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH PORTFOLIO 1,699,411 47,578 WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND 534,773 N/A WELLS FARGO ADVANTAGE SMALL COMPANY VALUE PORTFOLIO 532,894 5,153,314 ----------- BOND FUNDS - 9.33% 243,489 MFS HIGH INCOME FUND 937,434 156,839 OPPENHEIMER INTERNATIONAL BOND FUND 920,647 1,858,081 ----------- AFFILIATED BOND FUNDS - 37.23% 84,749 WELLS FARGO ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND 928,846 369,377 WELLS FARGO ADVANTAGE SHORT DURATION GOVERNMENT BOND FUND 3,704,852 224,358 WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND 2,782,042 7,415,740 ----------- TOTAL INVESTMENT COMPANIES (COST $19,045,067) 19,288,628 ----------- TOTAL INVESTMENTS IN SECURITIES (COST $19,045,067)* 96.84% $19,288,628 OTHER ASSETS AND LIABILITIES, NET 3.16 630,415 ------ ----------- TOTAL NET ASSETS 100.00% $19,919,043 ====== =========== * COST FOR FEDERAL INCOME TAX PURPOSES IS $19,054,403 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $281,381 GROSS UNREALIZED DEPRECIATION (47,156) -------- NET UNREALIZED APPRECIATION (DEPRECIATION) $234,225 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 19
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WELLS FARGO ADVANTAGE PORTFOLIO OF INVESTMENTS -- WEALTHBUILDER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- WEALTHBUILDER TACTICAL EQUITY PORTFOLIO -------------------------------------------------------------------------------- [Download Table] SHARES SECURITY NAME VALUE INVESTMENT COMPANIES - 99.54% STOCK FUNDS - 61.62% 636,302 AIM BLUE CHIP FUND $ 7,393,834 2,196,892 FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND 40,884,163 2,426,340 ING INTERNATIONAL VALUE FUND 40,932,355 627,514 MFS STRATEGIC VALUE FUND 9,895,896 137,494 OPPENHEIMER MAIN STREET SMALL CAP FUND 2,767,761 101,874,009 ------------ AFFILIATED STOCK FUNDS - 37.92% N/A WELLS FARGO ADVANTAGE EQUITY VALUE PORTFOLIO 49,581,833 N/A WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH PORTFOLIO 7,545,842 247,732 WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND 2,784,510 N/A WELLS FARGO ADVANTAGE SMALL COMPANY VALUE PORTFOLIO 2,786,296 62,698,481 ------------ TOTAL INVESTMENT COMPANIES (COST $153,252,647) 164,572,490 ------------ TOTAL INVESTMENTS IN SECURITIES (COST $153,252,647)* 99.54% $164,572,490 OTHER ASSETS AND LIABILITIES, NET 0.46 752,423 ------ ------------ TOTAL NET ASSETS 100.00% $165,324,913 ====== ============ * COST FOR FEDERAL INCOME TAX PURPOSES IS $149,230,459 AND NET UNREALIZED APPRECIATION (DEPRECIATION) CONSISTS OF: GROSS UNREALIZED APPRECIATION $16,630,920 GROSS UNREALIZED DEPRECIATION (1,288,889) ----------- NET UNREALIZED APPRECIATION (DEPRECIATION) $15,342,031 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 20
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WELLS FARGO ADVANTAGE STATEMENTS OF ASSETS AND LIABILITIES -- WEALTHBUILDER PORTFOLIOS MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER WEALTHBUILDER CONSERVATIVE WEALTHBUILDER GROWTH ALLOCATION EQUITY ALLOCATION PORTFOLIO PORTFOLIO PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE ................................................. $ 3,388,292 $ 59,860,713 $ 6,930,122 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS .................................... 1,824,798 50,259,615 6,446,426 INVESTMENTS IN AFFILIATES ...................................................... 9,778,339 7,685,762 1,490,217 ------------ ------------ ------------ TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................... 14,991,429 117,806,090 14,866,765 ------------ ------------ ------------ CASH ........................................................................... 16,865 330,772 158,701 RECEIVABLE FOR FUND SHARES ISSUED .............................................. 247,035 1,151,933 449,463 RECEIVABLE FOR INVESTMENTS SOLD ................................................ 0 69,228 0 RECEIVABLES FOR DIVIDENDS AND INTEREST ......................................... 26,524 0 2,161 RECEIVABLE FROM INVESTMENT ADVISOR AND AFFILIATES .............................. 670 0 786 ------------ ------------ ------------ TOTAL ASSETS ..................................................................... 15,282,523 119,358,023 15,477,876 ------------ ------------ ------------ LIABILITIES PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ........................ 0 0 0 PAYABLE FOR FUND SHARES REDEEMED ............................................... 50,160 632,273 11,500 PAYABLE FOR INVESTMENTS PURCHASED .............................................. 16,865 0 158,701 DIVIDENDS PAYABLE .............................................................. 0 0 0 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) .......................... 0 44,255 0 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ........................................ 10,265 98,324 10,028 ACCRUED EXPENSES AND OTHER LIABILITIES ......................................... 42,827 2,401 42,855 ------------ ------------ ------------ TOTAL LIABILITIES ................................................................ 120,117 777,253 223,084 ------------ ------------ ------------ TOTAL NET ASSETS ................................................................. $ 15,162,406 $118,580,770 $ 15,254,792 ============ ============ ============ NET ASSETS CONSIST OF: ----------------------------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ................................................................ $ 15,119,340 $115,685,820 $ 15,078,335 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ..................................... 11,899 9,388 682 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS .......................... (63,727) (5,804,312) (198,590) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES .. 94,894 8,689,874 374,365 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES .......................... 0 0 0 ------------ ------------ ------------ TOTAL NET ASSETS ................................................................. $ 15,162,406 $118,580,770 $ 15,254,792 ------------ ------------ ------------ COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS ..................................................................... $ 15,162,406 $118,580,770 $ 15,254,792 SHARES OUTSTANDING ............................................................. 1,485,669 10,366,228 1,425,476 NET ASSET VALUE AND OFFERING PRICE PER SHARE ................................... $ 10.21 $ 11.44 $ 10.70 MAXIMUM OFFERING PRICE PER SHARE(2) ............................................ $ 10.37 $ 11.61 $ 10.86 ------------ ------------ ------------ INVESTMENTS AT COST .............................................................. $ 14,896,535 $109,116,216 $ 14,492,400 ============ ============ ============ (1) EACH PORTFOLIO HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES. (2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/98.50 OF NET ASSET VALUE. ON INVESTMENTS OF $250,000 OR MORE, THE OFFERING PRICE IS REDUCED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 22
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STATEMENTS OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE MAY 31, 2005 WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER WEALTHBUILDER MODERATE WEALTHBUILDER GROWTH BALANCED BALANCED TACTICAL EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- ASSETS INVESTMENTS: IN SECURITIES, AT MARKET VALUE ................................................. $153,739,179 $ 6,719,574 $101,874,009 INVESTMENTS IN AFFILIATED MASTER PORTFOLIOS .................................... 97,841,683 4,618,541 59,913,971 INVESTMENTS IN AFFILIATES ...................................................... 102,882,024 7,950,513 2,784,510 ------------ ------------ ------------ TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................... 354,462,886 19,288,628 164,572,490 ------------ ------------ ------------ CASH ........................................................................... 846,744 116,786 500,941 RECEIVABLE FOR FUND SHARES ISSUED .............................................. 1,812,244 672,264 786,814 RECEIVABLE FOR INVESTMENTS SOLD ................................................ 31,993 0 0 RECEIVABLES FOR DIVIDENDS AND INTEREST ......................................... 351,748 25,823 0 RECEIVABLE FROM INVESTMENT ADVISOR AND AFFILIATES .............................. 0 0 0 ------------ ------------ ------------ TOTAL ASSETS ..................................................................... 357,505,615 20,103,501 165,860,245 ------------ ------------ ------------ LIABILITIES PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ........................ 846,137 0 0 PAYABLE FOR FUND SHARES REDEEMED ............................................... 623,737 10,350 198,442 PAYABLE FOR INVESTMENTS PURCHASED .............................................. 0 116,785 100,941 DIVIDENDS PAYABLE .............................................................. 0 0 11 PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) .......................... 142,147 1,005 63,778 PAYABLE TO THE TRUSTEES AND DISTRIBUTOR ........................................ 297,273 13,646 137,819 ACCRUED EXPENSES AND OTHER LIABILITIES ......................................... 13,985 42,672 34,341 ------------ ------------ ------------ TOTAL LIABILITIES ................................................................ 1,923,279 184,458 535,332 ------------ ------------ ------------ TOTAL NET ASSETS ................................................................. $355,582,336 $ 19,919,043 $165,324,913 ============ ============ ============ NET ASSETS CONSIST OF: ----------------------------------------------------------------------------------------------------------------------------------- PAID-IN CAPITAL ................................................................ $336,203,102 $ 19,798,412 $166,659,605 UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ..................................... 365,879 40,908 11,124 UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS .......................... 3,943,459 (163,838) (12,665,659) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES .. 16,462,206 243,561 11,319,843 NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES .......................... (1,392,310) 0 0 ------------ ------------ ------------ TOTAL NET ASSETS ................................................................. $355,582,336 $ 19,919,043 $165,324,913 ------------ ------------ ------------ COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSETS ..................................................................... $355,582,336 $ 19,919,043 $165,324,913 SHARES OUTSTANDING ............................................................. 30,246,909 1,911,237 12,710,799 NET ASSET VALUE AND OFFERING PRICE PER SHARE ................................... $ 11.76 $ 10.42 $ 13.01 MAXIMUM OFFERING PRICE PER SHARE(2) ............................................ $ 11.94 $ 10.58 $ 13.21 ------------ ------------ ------------ INVESTMENTS AT COST .............................................................. $338,000,680 $ 19,045,067 $153,252,647 ============ ============ ============ 23
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WELLS FARGO ADVANTAGE STATEMENTS OF OPERATIONS -- WEALTHBUILDER PORTFOLIOS FOR THE YEAR ENDED MAY 31, 2005 -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER WEALTHBUILDER CONSERVATIVE WEALTHBUILDER GROWTH ALLOCATION EQUITY ALLOCATION PORTFOLIO(2) PORTFOLIO PORTFOLIO(2) ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS(1) ................................................................. $ 24,548 $ 427,820 $ 6,710 DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ........................ 7,470 734,914 24,003 INTEREST ..................................................................... 0 1,618 0 INCOME FROM AFFILIATED SECURITIES ............................................ 99,001 0 6,898 EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ......................... (3,624) (337,784) (11,778) WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......................... 41 10,283 143 ----------- ----------- ----------- TOTAL INVESTMENT INCOME ........................................................ 127,436 836,851 25,976 ----------- ----------- ----------- EXPENSES ADVISORY FEES ................................................................ 8,130 258,662 7,442 ADMINISTRATION FEES .......................................................... 13,415 349,887 12,279 SHAREHOLDER SERVICING FEES ................................................... 10,163 187,384 9,302 ACCOUNTING FEES .............................................................. 13,582 5,882 13,563 DISTRIBUTION FEES (NOTE 3) ................................................... 30,488 717,516 27,906 AUDIT FEES ................................................................... 5,483 7,800 5,483 LEGAL FEES ................................................................... 9,360 6,001 9,360 REGISTRATION FEES ............................................................ 4,680 16,009 4,680 SHAREHOLDER REPORTS .......................................................... 11,366 13,921 11,366 TRUSTEES' FEES ............................................................... 4,536 6,782 4,536 OTHER FEES AND EXPENSES ...................................................... 2,381 3,293 2,381 ----------- ----------- ----------- TOTAL EXPENSES ................................................................. 113,584 1,573,137 108,298 ----------- ----------- ----------- LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ................................. (52,608) (62,415) (52,485) NET EXPENSES ................................................................. 60,976 1,510,722 55,813 ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS) ................................................... 66,460 (673,871) (29,837) ----------- ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ------------------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: NON-AFFILIATED UNDERLYING FUNDS .............................................. 4,452 3,188,800 21,579 AFFILATED UNDERLYING FUNDS ................................................... (47) 265,131 1,795 FUTURES TRANSACTIONS ......................................................... 0 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......... (68,053) 1,369,827 (221,656) ----------- ----------- ----------- NET REALIZED GAIN (LOSS) FROM INVESTMENTS ...................................... (63,648) 4,823,758 (198,282) ----------- ----------- ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .............. 0 0 0 NON-AFFILIATED UNDERLYING FUNDS .............................................. (18,368) 1,961,153 6,680 AFFILIATED UNDERLYING FUNDS .................................................. 10,709 (294,746) 6,643 FUTURES TRANSACTIONS ......................................................... 0 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS .......... 102,553 2,714,329 361,042 ----------- ----------- ----------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ............ 94,894 4,380,736 374,365 =========== =========== =========== NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ......................... 31,246 9,204,494 176,083 ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ................ $ 97,706 $ 8,530,623 $ 146,246 =========== =========== =========== (1) NET OF FOREIGN WITHHOLDING TAXES OF ...................................... $ 70 $ 2,593 $ 231 (2) THIS PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER 30, 2004 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 24
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STATEMENTS OF OPERATIONS -- WELLS FARGO ADVANTAGE FOR THE YEAR ENDED MAY 31, 2005 WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER WEALTHBUILDER WEALTHBUILDER GROWTH MODERATE TACTICAL BALANCED BALANCED EQUITY PORTFOLIO PORTFOLIO(2) PORTFOLIO --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME DIVIDENDS(1) ................................................................ $ 3,143,454 $ 41,437 $ 907,965 DIVIDENDS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ....................... 1,376,527 19,080 571,622 INTEREST .................................................................... 78,829 0 5,950 INCOME FROM AFFILIATED SECURITIES ........................................... 3,169,384 75,253 0 EXPENSES ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ........................ (632,943) (9,447) (272,164) WAIVERS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ......................... 19,664 105 9,405 ------------ ------------ ------------ TOTAL INVESTMENT INCOME ....................................................... 7,154,915 126,428 1,222,778 ------------ ------------ ------------ EXPENSES ADVISORY FEES ............................................................... 753,883 10,777 320,409 ADMINISTRATION FEES ......................................................... 1,018,792 17,783 436,864 SHAREHOLDER SERVICING FEES .................................................. 544,424 13,472 238,218 ACCOUNTING FEES ............................................................. 17,112 13,652 7,323 DISTRIBUTION FEES (NOTE 3) .................................................. 2,088,049 40,416 900,133 AUDIT FEES .................................................................. 7,702 5,483 7,702 LEGAL FEES .................................................................. 99 9,360 1,000 REGISTRATION FEES ........................................................... 99 4,680 99 SHAREHOLDER REPORTS ......................................................... 40,000 11,366 29,999 TRUSTEES' FEES .............................................................. 6,789 4,536 6,789 OTHER FEES AND EXPENSES ..................................................... 5,816 2,381 3,552 ------------ ------------ ------------ TOTAL EXPENSES ................................................................ 4,482,765 133,906 1,952,088 ------------ ------------ ------------ LESS: WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ................................ (117,549) (53,074) (66,520) NET EXPENSES ................................................................ 4,365,216 80,832 1,885,568 ------------ ------------ ------------ NET INVESTMENT INCOME (LOSS) .................................................. 2,789,699 45,596 (662,790) ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS --------------------------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) FROM: NON-AFFILIATED UNDERLYING FUNDS ............................................. 9,634,039 16,748 8,113,130 AFFILATED UNDERLYING FUNDS .................................................. 599,870 1,130 561,326 FUTURES TRANSACTIONS ........................................................ (1,520,852) 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ......... 3,181,824 (181,522) 2,174,184 ------------ ------------ ------------ NET REALIZED GAIN (LOSS) FROM INVESTMENTS ..................................... 11,894,881 (163,644) 10,848,640 ------------ ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF: SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION ............. 2,365 0 0 NON-AFFILIATED UNDERLYING FUNDS ............................................. 6,288,873 (29,443) 1,033,394 AFFILIATED UNDERLYING FUNDS ................................................. (5,188,480) 11,351 (1,284,155) FUTURES TRANSACTIONS ........................................................ (2,172,881) 0 0 SECURITIES TRANSACTIONS ALLOCATED FROM AFFILIATED MASTER PORTFOLIOS ......... 4,894,101 261,653 2,644,984 ------------ ------------ ------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ........... 3,823,978 243,561 2,394,223 ============ ============ ============ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ........................ 15,718,859 79,917 13,242,863 ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............... $ 18,508,558 $ 125,513 $ 12,580,073 ============ ============ ============ (1) NET OF FOREIGN WITHHOLDING TAXES OF ..................................... $ 4,538 $ 182 $ 671 (2) THIS PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER 30, 2004 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 25
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO(1) ------------- FOR THE PERIOD ENDED MAY 31, 2005 --------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................................... $ 0 OPERATIONS: NET INVESTMENT INCOME (LOSS) ............................................................. 66,460 NET REALIZED GAIN (LOSS) ON INVESTMENTS .................................................. (63,648) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...................... 94,894 ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 97,706 ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME .................................................................... (56,677) CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD ................................................................ 15,831,165 REINVESTMENT OF DISTRIBUTIONS ............................................................ 42,696 COST OF SHARES REDEEMED .................................................................. (752,484) ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........... 15,121,377 ------------ NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 15,162,406 ------------ ENDING NET ASSETS .......................................................................... $ 15,162,406 ------------ SHARES ISSUED AND REDEEMED: SHARES SOLD .............................................................................. 1,555,637 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ........................................... 4,211 SHARES REDEEMED .......................................................................... (74,179) ------------ NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 1,485,669 ------------ ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 11,899 ============ (1) THIS PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER 30, 2004. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 26
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WELLS FARGO ADVANTAGE STATEMENTS OF CHANGES IN NET ASSETS WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER EQUITY PORTFOLIO ------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................................... $ 87,885,376 $ 46,369,872 OPERATIONS: NET INVESTMENT INCOME (LOSS) ............................................................. (673,871) (496,409) NET REALIZED GAIN (LOSS) ON INVESTMENTS .................................................. 4,823,758 (480,434) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...................... 4,380,736 11,272,181 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 8,530,623 10,295,338 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME .................................................................... 0 0 CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD ................................................................ 44,193,937 51,090,176 REINVESTMENT OF DISTRIBUTIONS ............................................................ 0 0 COST OF SHARES REDEEMED .................................................................. (22,029,166) (19,870,010) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........... 22,164,771 31,220,166 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 30,695,394 41,515,504 ------------- ------------- ENDING NET ASSETS .......................................................................... $ 118,580,770 $ 87,885,376 ------------- ------------- SHARES ISSUED AND REDEEMED: SHARES SOLD .............................................................................. 4,033,617 4,985,443 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ........................................... 0 0 SHARES REDEEMED .......................................................................... (1,991,727) (1,934,225) ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 2,041,890 3,051,218 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 9,388 $ 1,655 ============= ============= WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO(1) ------------- FOR THE PERIOD ENDED MAY 31, 2005 -------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................................... $ 0 OPERATIONS: NET INVESTMENT INCOME (LOSS) ............................................................. (29,837) NET REALIZED GAIN (LOSS) ON INVESTMENTS .................................................. (198,282) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...................... 374,365 ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 146,246 ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME .................................................................... (7,100) CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD ................................................................ 15,739,375 REINVESTMENT OF DISTRIBUTIONS ............................................................ 7,035 COST OF SHARES REDEEMED .................................................................. (630,764) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........... 15,115,646 ------------- NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 15,254,792 ------------- ENDING NET ASSETS .......................................................................... $ 15,254,792 ------------- SHARES ISSUED AND REDEEMED: SHARES SOLD .............................................................................. 1,484,046 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ........................................... 656 SHARES REDEEMED .......................................................................... (59,226) ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 1,425,476 ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 682 ============= WEALTHBUILDER GROWTH BALANCED PORTFOLIO ------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................................... $ 260,921,543 $ 162,229,208 OPERATIONS: NET INVESTMENT INCOME (LOSS) ............................................................. 2,789,699 1,547,563 NET REALIZED GAIN (LOSS) ON INVESTMENTS .................................................. 11,894,881 16,241,194 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...................... 3,823,978 10,123,848 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 18,508,558 27,912,605 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME .................................................................... (2,713,794) (2,377,932) CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD ................................................................ 132,944,558 111,030,280 REINVESTMENT OF DISTRIBUTIONS ............................................................ 2,633,504 2,307,898 COST OF SHARES REDEEMED .................................................................. (56,712,033) (40,180,516) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........... 78,866,029 73,157,662 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 94,660,793 98,692,335 ------------- ------------- ENDING NET ASSETS .......................................................................... $ 355,582,336 $ 260,921,543 ------------- ------------- SHARES ISSUED AND REDEEMED: SHARES SOLD .............................................................................. 11,555,417 10,176,336 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ........................................... 221,665 212,709 SHARES REDEEMED .......................................................................... (4,927,995) (3,744,500) ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 6,849,087 6,644,545 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 365,879 $ 304,406 ============= ============= WEALTHBUILDER MODERATE BALANCED PORTFOLIO(1) ------------- FOR THE PERIOD ENDED MAY 31, 2005 ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS ..................................................................... $ 0 OPERATIONS: NET INVESTMENT INCOME (LOSS) ............................................................. 45,596 NET REALIZED GAIN (LOSS) ON INVESTMENTS .................................................. (163,644) NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ...................... 243,561 ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ 125,513 ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME .................................................................... (8,776) CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD ................................................................ 20,471,770 REINVESTMENT OF DISTRIBUTIONS ............................................................ 8,477 COST OF SHARES REDEEMED .................................................................. (677,941) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........... 19,802,306 ------------- NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 19,919,043 ------------- ENDING NET ASSETS .......................................................................... $ 19,919,043 ------------- SHARES ISSUED AND REDEEMED: SHARES SOLD .............................................................................. 1,976,023 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ........................................... 812 SHARES REDEEMED .......................................................................... (65,598) ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 1,911,237 ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) ............................... $ 40,908 ============= 27
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- [Enlarge/Download Table] WEALTHBUILDER TACTICAL EQUITY PORTFOLIO ------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED MAY 31, 2005 MAY 31, 2004 ------------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS BEGINNING NET ASSETS .................................................................... $ 105,829,347 $ 72,450,259 OPERATIONS: NET INVESTMENT INCOME (LOSS) ............................................................ (662,790) (370,624) NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................. 10,848,640 824,676 NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ..................... 2,394,223 18,016,822 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........................... 12,580,073 18,470,874 ------------- ------------- DISTRIBUTION IN EXCESS OF NET INVESTMENT INCOME ......................................... (1,251,246) 0 CAPITAL SHARES TRANSACTIONS: PROCEEDS FROM SHARES SOLD ............................................................... 69,944,083 31,745,283 REINVESTMENT OF DISTRIBUTIONS ........................................................... 1,233,853 0 COST OF SHARES REDEEMED ................................................................. (23,011,197) (16,837,069) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS ........... 48,166,739 14,908,214 ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 59,495,566 33,379,088 ------------- ------------- ENDING NET ASSETS ......................................................................... $ 165,324,913 $ 105,829,347 ============= ============= SHARES ISSUED AND REDEEMED: SHARES SOLD ............................................................................. 5,491,358 2,764,740 SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS .......................................... 93,829 0 SHARES REDEEMED ......................................................................... (1,812,871) (1,516,776) ------------- ------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 3,772,316 1,247,964 ------------- ------------- ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME ..................................... $ 11,124 $ 2,629 ============= ============= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 28
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- [Enlarge/Download Table] NET REALIZED DISTRIBU- AND DISTRIBU- DISTRIBU- TIONS IN BEGINNING NET UNREALIZED TIONS TIONS EXCESS NET ASSET INVESTMENT GAIN (LOSS) FROM NET FROM NET OF NET VALUE PER INCOME ON INVESTMENT REALIZED INVESTMENT SHARE (LOSS) INVESTMENTS INCOME GAINS INCOME ----------------------------------------------------------------------------------------------------------------------------------- WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ............ $10.00 0.07 0.20 (0.06) 0.00 0.00 WEALTHBUILDER EQUITY PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ..................... $10.56 (0.06) 0.94 0.00 0.00 0.00 JUNE 1, 2003 TO MAY 31, 2004 ..................... $ 8.79 (0.06) 1.83 0.00 0.00 0.00 JUNE 1, 2002 TO MAY 31, 2003 ..................... $10.12 (0.08) (1.25) 0.00 0.00 0.00 JUNE 1, 2001 TO MAY 31, 2002 ..................... $12.03 (0.10) (1.62) (0.19) 0.00 0.00 JUNE 1, 2000 TO MAY 31, 2001 ..................... $14.10 (0.06) (1.33) 0.00 (0.68) 0.00 WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ............ $10.00 0.00 0.73 (0.03) 0.00 0.00 WEALTHBUILDER GROWTH BALANCED PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ..................... $11.15 0.10 0.61 (0.10) 0.00 0.00 JUNE 1, 2003 TO MAY 31, 2004 ..................... $ 9.68 0.08 1.52 (0.13) 0.00 0.00 JUNE 1, 2002 TO MAY 31, 2003 ..................... $10.63 0.08 (0.95) (0.08) 0.00 0.00 JUNE 1, 2001 TO MAY 31, 2002 ..................... $11.69 0.00 (0.83) (0.16) (0.07) 0.00 JUNE 1, 2000 TO MAY 31, 2001 ..................... $12.72 0.07 (0.20) (0.11) (0.79) 0.00 WEALTHBUILDER MODERATE BALANCED PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ............ $10.00 0.04 0.40 (0.02) 0.00 0.00 WEALTHBUILDER TACTICAL EQUITY PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 ..................... $11.84 (0.03) 1.32 0.00 0.00 (0.12) JUNE 1, 2003 TO MAY 31, 2004 ..................... $ 9.42 (0.04) 2.46 0.00 0.00 0.00 JUNE 1, 2002 TO MAY 31, 2003 ..................... $11.14 (0.08) (1.64) 0.00 0.00 0.00 JUNE 1, 2001 TO MAY 31, 2002 ..................... $12.76 (0.07) (1.52) (0.03) 0.00 0.00 JUNE 1, 2000 TO MAY 31, 2001 ..................... $14.97 (0.10) (1.87) 0.00 (0.24) 0.00 (1) DURING EACH PERIOD, VARIOUS FEES AND EXPENSES WERE WAIVED AND REIMBURSED AS INDICATED. THE RATIO OF GROSS EXPENSES TO AVERAGE NET ASSETS REFLECTS THE EXPENSE RATIO IN THE ABSENCE OF ANY WAIVERS AND REIMBURSEMENTS (NOTE 3). (2) THESE RATIOS DO NOT INCLUDE EXPENSES FROM THE UNDERLYING FUNDS. (3) TOTAL RETURN CALCULATIONS DO NOT INCLUDE ANY SALES CHARGES, AND WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN WAIVED OR REIMBURSED DURING THE PERIODS SHOWN. RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. (4) TOTAL RETURN WOULD HAVE BEEN 16.26% HAD THE PAYMENTS FROM THE ADVISOR NOT BEEN INCLUDED. (5) COMMENCEMENT OF OPERATIONS. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 30
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FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- [Enlarge/Download Table] ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1) NET ASSET ------------------------------------------------------- VALUE PER NET INVESTMENT GROSS EXPENSES NET SHARE INCOME (LOSS) EXPENSES(2) WAIVED(2) EXPENSES(2) --------------------------------------------------------------------------------------------------------------------- WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO --------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ......... $ 10.21 1.64% 2.79% (1.29)% 1.50% WEALTHBUILDER EQUITY PORTFOLIO --------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 .................. $ 11.44 (0.64)% 1.48% (0.06)% 1.42% JUNE 1, 2003 TO MAY 31, 2004 .................. $ 10.56 (0.74)% 1.24% (0.01)% 1.23% JUNE 1, 2002 TO MAY 31, 2003 .................. $ 8.79 (0.90)% 1.29% (0.04)% 1.25% JUNE 1, 2001 TO MAY 31, 2002 .................. $ 10.12 (0.83)% 1.32% (0.07)% 1.25% JUNE 1, 2000 TO MAY 31, 2001 .................. $ 12.03 (0.63)% 1.78% (0.53)% 1.25% WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO --------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ......... $ 10.70 (0.80)% 2.91% (1.41)% 1.50% WEALTHBUILDER GROWTH BALANCED PORTFOLIO --------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 .................. $ 11.76 0.90% 1.45% (0.04)% 1.41% JUNE 1, 2003 TO MAY 31, 2004 .................. $ 11.15 0.75% 1.21% 0.00% 1.21% JUNE 1, 2002 TO MAY 31, 2003 .................. $ 9.68 0.93% 1.14% 0.00% 1.14% JUNE 1, 2001 TO MAY 31, 2002 .................. $ 10.63 1.04% 1.27% (0.02)% 1.25% JUNE 1, 2000 TO MAY 31, 2001 .................. $ 11.69 1.51% 1.52% (0.27)% 1.25% WEALTHBUILDER MODERATE BALANCED PORTFOLIO --------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ......... $ 10.42 0.85% 2.48% (0.98)% 1.50% WEALTHBUILDER TACTICAL EQUITY PORTFOLIO --------------------------------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 .................. $ 13.01 (0.50)% 1.47% (0.05)% 1.42% JUNE 1, 2003 TO MAY 31, 2004 .................. $ 11.84 (0.42)% 1.23% (0.01)% 1.22% JUNE 1, 2002 TO MAY 31, 2003 .................. $ 9.42 (0.82)% 1.26% (0.01)% 1.25% JUNE 1, 2001 TO MAY 31, 2002 .................. $ 11.14 (0.69)% 1.30% (0.05)% 1.25% JUNE 1, 2000 TO MAY 31, 2001 .................. $ 12.76 (1.00)% 1.69% (0.44)% 1.25% PORTFOLIO NET ASSETS AT TOTAL TURNOVER END OF PERIOD RETURN(3) RATE (000'S OMITTED) --------------------------------------------------------------------------------------------- WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO --------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ......... 2.71% 9% $ 15,162 WEALTHBUILDER EQUITY PORTFOLIO --------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 .................. 8.33% 92% $118,581 JUNE 1, 2003 TO MAY 31, 2004 .................. 20.14% 101% $ 87,885 JUNE 1, 2002 TO MAY 31, 2003 .................. (13.14)% 30% $ 46,370 JUNE 1, 2001 TO MAY 31, 2002 .................. (14.36)% 30% $ 54,218 JUNE 1, 2000 TO MAY 31, 2001 .................. (10.38)% 14% $ 43,550 WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO --------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ......... 7.25% 28% $ 15,255 WEALTHBUILDER GROWTH BALANCED PORTFOLIO --------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 .................. 6.37% 98% $355,582 JUNE 1, 2003 TO MAY 31, 2004 .................. 16.52%(4) 96% $260,922 JUNE 1, 2002 TO MAY 31, 2003 .................. (8.10)% 48% $162,229 JUNE 1, 2001 TO MAY 31, 2002 .................. (7.09)% 28% $159,693 JUNE 1, 2000 TO MAY 31, 2001 .................. (1.28)% 29% $ 78,469 WEALTHBUILDER MODERATE BALANCED PORTFOLIO --------------------------------------------------------------------------------------------- SEPTEMBER 30, 2004(5) TO MAY 31, 2005 ......... 4.41% 16% $ 19,919 WEALTHBUILDER TACTICAL EQUITY PORTFOLIO --------------------------------------------------------------------------------------------- JUNE 1, 2004 TO MAY 31, 2005 .................. 10.89% 110% $165,325 JUNE 1, 2003 TO MAY 31, 2004 .................. 25.69% 121% $105,829 JUNE 1, 2002 TO MAY 31, 2003 .................. (15.44)% 7% $ 72,450 JUNE 1, 2001 TO MAY 31, 2002 .................. (12.46)% 73% $100,476 JUNE 1, 2000 TO MAY 31, 2001 .................. (13.35)% 49% $ 81,403 31
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS 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 series management investment company. The Trust commenced operations on November 8, 1999, and at May 31, 2005 was comprised of 108 separate series (each, a "Fund", collectively, the "Funds"). These financial statements present the WealthBuilder Conservative Allocation Portfolio, WealthBuilder Equity Portfolio (formerly named WealthBuilder Growth & Income Portfolio), WealthBuilder Growth Allocation Portfolio, WealthBuilder Growth Balanced Portfolio, WealthBuilder Moderate Balanced Portfolio, and WealthBuilder Tactical Equity Portfolio (formerly named WealthBuilder Growth Portfolio). Each Fund is a diversified series of the Trust. The Funds each seek to achieve their investment objectives by allocating their assets across asset classes of stocks, bonds and money market instruments by investing in a number of affiliated and non-affiliated funds ("Underlying Funds"). The Underlying Funds incur separate expenses in seeking to achieve their investment objectives. The financial statements and financial highlights for the Underlying Funds are presented in separate financial statements and may be obtained from Wells Fargo Investor Services or from the servicing agent of the non-affiliated funds. 2. SIGNIFICANT ACCOUNTING POLICIES -------------------------------------------------------------------------------- The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America ("GAAP") for investment companies. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Trust may enter into contracts that provide certain indemnifications. The Trust's maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. SECURITY VALUATION Each Fund determines its net asset value as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time) on each Fund business day. Investments in the Underlying Funds are valued at the closing net asset value per share of each Underlying Fund on the valuation date. The Funds' investments in the Underlying Funds structured as partnerships (the "Master Portfolios") are valued daily based upon each Fund's proportionate share of each Master Portfolio's net assets, which are also valued daily. Certain fixed income securities with maturities exceeding 60 days are valued by using a pricing service approved by the Trust's Board of Trustees. The service uses market prices as quoted by an independent pricing service or by dealers in these securities when, in the service's judgment, these prices are readily available and are representative of the securities' market values. For some securities, such prices are not readily available. These securities will generally be fair valued using methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, indications as to values from dealers in securities, trading characteristics, and general market conditions. Debt securities maturing in 60 days or less generally are valued at amortized cost. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value. 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. Each Fund records its pro rata share of the Master Portfolio's net investment income, and realized and unrealized gain and loss daily. Dividend income and realized gain distributions are recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed of the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured. Realized gain and loss distributions from underlying funds are treated as realized gains and losses. DISTRIBUTIONS TO SHAREHOLDERS Net investment income, if any, is declared and distributed to shareholders annually. Distributions to shareholders from net realized capital gains, if any, are declared and distributed at least annually. For federal income tax purposes, a Fund may designate as capital gains dividends the earnings and profits distributed to shareholders on the redemption of fund shares during the year. Distributions are based on amounts calculated in accordance with the applicable federal income tax regulations, which may differ from GAAP. The timing and character of distributions made during the period from net investment income or net realized gains may also differ from their ultimate characterization for federal income tax purposes. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment. Temporary differences do not require reclassifications. 32
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- At May 31, 2005, as a result of permanent book-to-tax differences, the following reclassification adjustments were made on the Statement of Assets and Liabilities: [Enlarge/Download Table] Undistributed Undistributed Net Investment Net Realized Portfolio Income Gain/Loss Paid-in Capital ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO $ 2,116 $ (79) $ (2,037) ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO 681,604 7,592 (689,196) ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO 37,619 (308) (37,311) ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO (14,432) 14,432 0 ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO 4,088 (194) (3,894) ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO 1,922,531 11,669 (1,934,200) FEDERAL INCOME TAXES Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund of the Trust to continue to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under subchapter M of the Internal Revenue Code (the "Code"), and to make distributions of substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required at May 31, 2005. At May 31, 2005, estimated net capital loss carryforwards, which are available to offset future net realized capital gains, were: [Enlarge/Download Table] Capital Loss Portfolio Year Expires Carryforwards --------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO 2013 $ 249 --------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO 2011 1,739,885 2012 4,161,317 --------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO 2013 552 --------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO 2013 1,085 --------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO 2010 7,019,960 2011 4,153,365 2012 5,503,398 --------------------------------------------------------------------------------------------------------- At May 31, 2005, current year deferred post-October capital losses, which will be treated as realized for tax purposes on the first day of the succeeding year, were: [Enlarge/Download Table] Deferred Post-October Portfolio Capital Loss ---------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO $ 59,369 ---------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO 184,675 ---------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO 152,899 ---------------------------------------------------------------------------------------------- FUTURES CONTRACTS The Funds 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 33
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. At May 31, 2005, the following Fund(s) held futures contracts: [Enlarge/Download Table] Notional Net Unrealized Contract Appreciation Portfolio Contracts Type Expiration Date Amount (Depreciation) ------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 5 Long S&P 500 June 2005 $ 1,439,554 $ 50,821 ------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 166 Long S&P 500 June 2005 50,692,250 (1,211,800) ------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 6 Long S&P 500 June 2005 1,771,500 16,950 ------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 454 Short US T-Bond September 2005 53,068,344 (248,281) 3. EXPENSES -------------------------------------------------------------------------------- ADVISORY FEES The Trust has entered into an advisory contract with Wells Fargo Funds Management, LLC ("Funds Management"). The adviser is responsible for implementing investment policies and guidelines and for supervising the sub-adviser, who is responsible for day-to-day portfolio management. Pursuant to the contract, Funds Management is entitled to receive an advisory fee for its services as adviser. Funds Management may retain the services of certain investment sub-advisers to provide daily portfolio management. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by a Fund to the adviser. Funds Management and the investment sub-adviser(s) are entitled to be paid a monthly fee at the following annual rates: [Enlarge/Download Table] Advisory Fee* Sub-Advisory Fee Average Daily (% of Average (% of Average Fund Net Assets Daily Net Assets) Sub-Adviser Daily Net Assets) --------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE $0 - $999 million 0.200 Wells Capital 0.05 WEALTHBUILDER CONSERVATIVE $1 billion - $4.99 billion 0.175 Management 0.05 ALLOCATION PORTFOLIO > $4.99 billion 0.150 0.05 --------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE $0 - $999 million 0.200 Wells Capital 0.05 WEALTHBUILDER EQUITY PORTFOLIO $1 billion - $4.99 billion 0.175 Management 0.05 > $4.99 billion 0.150 0.05 --------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE $0 - $999 million 0.200 Wells Capital 0.05 WEALTHBUILDER GROWTH $1 billion - $4.99 billion 0.175 Management 0.05 ALLOCATION PORTFOLIO > $4.99 billion 0.150 0.05 --------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE $0 - $999 million 0.200 Wells Capital 0.05 WEALTHBUILDER GROWTH $1 billion - $4.99 billion 0.175 Management 0.05 BALANCED PORTFOLIO > $4.99 billion 0.150 0.05 --------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE $0 - $999 million 0.200 Wells Capital 0.05 WEALTHBUILDER MODERATE $1 billion - $4.99 billion 0.175 Management 0.05 BALANCED PORTFOLIO > $4.99 billion 0.150 0.05 --------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE $0 - $999 million 0.200 Wells Capital 0.05 WEALTHBUILDER TACTICAL $1 billion - $4.99 billion 0.175 Management 0.05 EQUITY PORTFOLIO > $4.99 billion 0.150 0.05 34
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- * Effective October 1, 2004. For the period August 2, 2004 to September 30, 2004, Funds Management was entitled to receive a monthly advisory fee at the following annual rates: [Enlarge/Download Table] Advisory Fee** Average Daily (% of Average Fund Net Assets Daily Net Assets) -------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO $0 - $999 million 0.350 $1 billion - $4.99 billion 0.325 > $4.99 billion 0.300 -------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO $0 - $999 million 0.350 $1 billion - $4.99 billion 0.325 > $4.99 billion 0.300 -------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO $0 - $999 million 0.350 $1 billion - $4.99 billion 0.325 > $4.99 billion 0.300 -------------------------------------------------------------------------------------------------------------------------- ** Prior to August 2, 2004, Funds Management was entitled to receive a monthly advisory fee at the annual rate of 0.35% of average daily net assets from the WealthBuilder Equity Portfolio, WealthBuilder Growth Balanced Portfolio and the WealthBuilder Tactical Equity Portfolio. Funds Management also acts as adviser to, and is entitled to receive a fee from, each Master Portfolio or affiliated Underlying Fund. ADMINISTRATION AND TRANSFER AGENT FEES The Trust has entered into an Administration Agreement with Funds Management. Under this Agreement, for providing administrative services, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers, Funds Management is entitled to receive the following annual fees: Average Daily % Of Average Net Assets Daily Net Assets*** -------------------------------------------------------------------------------- ALL WEALTHBUILDER PORTFOLIOS $0 - $4.99 billion 0.33 $5 - $9.99 billion 0.32 > $9.99 billion 0.31 -------------------------------------------------------------------------------- *** Effective August 2, 2004. Prior to August 2, 2004, Funds Management was entitled to receive an annual fee of 0.33% of average daily net assets from the WealthBuilder Equity Portfolio, WealthBuilder Tactical Equity Portfolio, and WealthBuilder Growth Balanced Portfolio. CUSTODY FEES The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"), whereby WFB is responsible for providing custody services. WFB does not receive a custodial fee for any Fund that invests its assets solely in one or more Master Portfolios or other investment companies. DISTRIBUTION FEES The Trust has adopted a Distribution Plan ("Plan") for the Fund(s), pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are charged and paid to Wells Fargo Funds Distributor, LLC at an annual rate of up to 0.75% of average daily net assets. For the year ended May 31, 2005, distribution fees paid are disclosed on the Statement of Operations. OTHER FEES PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is entitled to receive an annual asset based fee, and an annual fixed fee from each Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. SHAREHOLDER SERVICING FEES The Trust has entered into contracts with one or more shareholder servicing agents, whereby, each Fund is charged an annual fee of 0.25% of the average daily net assets of the Fund. For the WealthBuilder Portfolios, this contract began on October 1, 2004. For the year ended May 31, 2005, shareholder servicing fees paid by the fund are disclosed on the Statement of Operations. 35
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- WAIVED FEES AND REIMBURSED EXPENSES All amounts shown as waived fees or reimbursed expenses on the Statement of Operations, for the year ended May 31, 2005, were waived by Funds Management, first from advisory fees, and then any remaining amount consecutively from administration, custody, and shareholder servicing fees collected, if any. The Fund's Adviser has committed to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund(s). Net operating expense ratios during the period were as follows: Net Operating Expense Ratio -------------------------------------------------------------------------------- ALL WEALTHBUILDER PORTFOLIOS 1.50%* -------------------------------------------------------------------------------- * THIS RATIO DOES NOT INCLUDE THE EXPENSES OF THE UNDERLYING FUNDS. 4. INVESTMENT PORTFOLIO TRANSACTIONS -------------------------------------------------------------------------------- Purchases and sales of investments, exclusive of short-term securities (securities with maturities of one year or less at purchase date) for the year ended May 31, 2005, were as follows: [Enlarge/Download Table] Fund Purchases at Cost Sales Proceeds ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO** $ 13,851,333 $ 529,544 ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO** 117,778,575 97,286,628 ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO** 10,438,148 1,585,373 ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO** 370,775,924 299,138,061 ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO** 16,347,096 1,297,872 ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO** 174,117,794 144,839,556 ** These Funds seek to achieve their investment objective by investing some or all of their investable assets in one or more Master Portfolios. Purchases and sales related to these investments have been calculated by aggregating the results of multiplying such Fund's ownership percentage of the respective Master Portfolio by the corresponding Master Portfolio's purchases and sales. Purchases and sales of the non-affiliated funds in which the Funds invest are actual aggregate purchases and sales of those funds. 5. BANK BORROWINGS -------------------------------------------------------------------------------- Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the money market funds) share in a revolving Credit Agreement with The Bank of New York, whereby the Funds are permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. The agreement permits borrowings of up to $150 million, collectively. Interest is charged to each Fund based on its borrowing at a rate equal to the Federal Funds Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to 0.1% per annum of the credit line. For the year ended May 31, 2005, there were no borrowings under the agreement. 6. DISTRIBUTION TO SHAREHOLDERS -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended May 31, 2005 and May 31, 2004 was as follows: [Enlarge/Download Table] Ordinary Income Total Fund 2005 2004 2005 2004 ------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO $ 56,677 $ 0 $ 56,677 $ 0 ------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO 7,100 0 7,100 0 ------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 2,713,794 2,377,932 2,713,794 2,377,932 ------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO 8,776 0 8,776 0 ------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO 1,251,246 0 1,251,246 0 ------------------------------------------------------------------------------------------- 36
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NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- As of May 31, 2005, the components of distributable earnings on a tax basis are shown in the table below. The difference between book basis and tax basis appreciation is attributable to tax deferral of losses on wash sales and different book and tax treatment of the exchange in share class of investments in mutual funds. [Enlarge/Download Table] Undistributed Undistributed Unrealized Ordinary Long-Term Appreciation Capital Loss Portfolio Income Gain (Depreciation) Carryforward* Total ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO $ 11,733 $ 0 $ 90,951 $ (59,618) $ 43,066 ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO 0 0 8,796,152 (5,901,202) 2,894,950 ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO 0 0 361,684 (185,227) 176,457 ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 347,398 865,132 18,166,598 0 19,379,128 ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO 40,389 0 234,226 (153,984) 120,631 ------------------------------------------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO 0 0 15,342,031 (16,676,723) (1,334,692) * This amount includes the post-October loss, which will reverse on the first day of the following fiscal year. 7. MISCELLANEOUS -------------------------------------------------------------------------------- During the fiscal year ended May 31, 2005, the WealthBuilder Tactical Equity Portfolio, the WealthBuilder Growth Balanced Portfolio, and the WealthBuilder Equity Portfolio exchanged their portfolio investments in Class A shares of proprietary and non-proprietary mutual funds for Institutional Class shares of the same funds in order to lower the underlying fund expense ratio for each Portfolio. For financial reporting purposes, this transaction was treated as a recognized sale and the gain realized for each Portfolio as a result of the exchanges was as follows: Portfolio -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO $1,508,883 -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 6,867,830 -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO 5,722,614 -------------------------------------------------------------------------------- For tax purposes, the exchanges are treated as nontaxable exchanges under Section 1036(a) of the Code. As a result, the amounts listed above are not recognized for tax purposes until the new Institutional Class shares acquired in the exchanges are subsequently sold. Accordingly, the tax cost basis of Institutional Class shares received in the exchanges which are still held as of May 31, 2005, are lower than the financial statement cost basis (to the extent of the remaining deferred tax gain on such shares). As of May 31, 2005, the deferred gain for income tax purposes was as follows: Portfolio -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER EQUITY PORTFOLIO $5,697,380 -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 4,283,097 -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER TACTICAL EQUITY PORTFOLIO 1,064,900 -------------------------------------------------------------------------------- 37
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WELLS FARGO ADVANTAGE REPORT OF INDEPENDENT REGISTERED WEALTHBUILDER PORTFOLIOS PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO FUNDS TRUST: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Wealthbuilder Conservative Allocation Portfolio, Wealthbuilder Equity Portfolio, Wealthbuilder Growth Allocation Portfolio, Wealthbuilder Growth Balanced Portfolio, Wealthbuilder Moderate Balanced Portfolio and the Wealthbuilder Tactical Equity Portfolio, six of the portfolios constituting the Wells Fargo Funds Trust (collectively the "Funds"), as of May 31, 2005, and the related statements of operations, statements of changes in net assets, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2005, by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned funds of Wells Fargo Funds Trust as of May 31, 2005, the results of their operations, changes in their net assets and their financial highlights for the periods presented, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Philadelphia, Pennsylvania July 22, 2005 38
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- TAX INFORMATION Pursuant to Section 854(b)(2) of Internal Revenue Code, the WealthBuilder Conservative Allocation Portfolio, the WealthBuilder Growth Balanced Portfolio and the WealthBuilder Moderate Balanced Portfolio designate 9.41%, 40.13% and 33.46%, respectively, of the ordinary income dividends distributed during the year as qualifying for the corporate dividend-received deduction. The following funds designate the income dividend distributed between June 1, 2004 and May 31, 2005, as qualified dividend income (QDI) as defined in section 1(h)(11) of the Internal Revenue Code, as follows: [Enlarge/Download Table] % of Qualifying Portfolio Dividend Income (QDI) --------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO 9.70% --------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER GROWTH BALANCED PORTFOLIO 41.56% --------------------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE WEALTHBUILDER MODERATE BALANCED PORTFOLIO 34.51% --------------------------------------------------------------------------------------------- PROXY VOTING INFORMATION A description of the policies and procedures that the Fund(s) uses to determine how to vote proxies relating to portfolio securities and information regarding the results of such voting during the most recent 12-month period ended June 30, is available without charge, upon request, by calling 1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS, or visiting the SEC Web site at WWW.SEC.GOV. PORTFOLIO HOLDINGS INFORMATION The Fund(s) files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available without charge by visiting the SEC Web site at WWW.SEC.GOV. In addition, the Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330. BOARD OF TRUSTEES The following table provides basic information about the Board of Trustees (the "Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table supplements, and should be read in conjunction with, the Prospectus and the Statement of Additional Information* of each Fund. Each of the Trustees listed below acts in identical capacities for each of the 138 funds comprising the Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the "Fund Complex"). All of the non-interested Trustees are also members of the Audit and Governance Committees of each Trust in the Fund Complex. The address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees. INTERESTED TRUSTEE ** [Enlarge/Download Table] ------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------- J. Tucker Morse Trustee Private Investor/Real Estate None 60 since 1987 Developer; Chairman of White Point Capital, LLC. ------------------------------------------------------------------------------------------------------------------- NON-INTERESTED TRUSTEES ------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------- Thomas S. Goho Trustee, Associate Professor of Finance, None 62 since 1987 Wake Forest University, Calloway School of Business and Accountancy. ------------------------------------------------------------------------------------------------------------------- Peter G. Gordon Trustee, Chairman, CEO, and Co- None 62 since 1998 Founder of Crystal Geyser (Chairman, since 2005) Water Company and President of Crystal Geyser Roxane Water Company. ------------------------------------------------------------------------------------------------------------------- Richard M. Leach Trustee Retired. Prior thereto, President None 71 since 1987 of Richard M. Leach Associates (a financial consulting firm). 39
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- NON-INTERESTED TRUSTEES [Enlarge/Download Table] ------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------- Timothy J. Penny Trustee Senior Counselor to the public None 53 since 1996 relations firm of Himle-Horner and Senior Fellow at the Humphrey Institute, Minneapolis, Minnesota (a pub- lic policy organization). ------------------------------------------------------------------------------------------------------------------- Donald C. Willeke Trustee Principal in the law firm of None 64 since 1996 Willeke & Daniels. ------------------------------------------------------------------------------------------------------------------- OFFICERS ------------------------------------------------------------------------------------------------------------------- POSITION HELD AND PRINCIPAL OCCUPATIONS DURING NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS ------------------------------------------------------------------------------------------------------------------- Karla M. Rabusch President, since Executive Vice President of None 46 2003 Wells Fargo Bank, N.A. President of Wells Fargo Funds Management, LLC. Senior Vice President and Chief Administrative Officer of Wells Fargo Funds Management, LLC from 2001 to 2003. Vice President of Wells Fargo Bank, N.A. from 1997 to 2000. ------------------------------------------------------------------------------------------------------------------- Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None 36 Fargo Bank, N.A. Senior Vice President of Operations for Wells Fargo Funds Management, LLC. Prior thereto, Operations Manager at Scudder Weisel Capital, LLC from 2000 to 2001, and Director of Shareholder Services at BISYS Fund Services from 1999 to 2000. ------------------------------------------------------------------------------------------------------------------- C. David Messman Secretary, since 2000 Vice President and Managing None 45 Senior Counsel of Wells Fargo Bank, N.A. Senior Vice President and Secretary of Wells Fargo Funds Management, LLC. Vice President and Senior Counsel of Wells Fargo Bank, N.A. from 1996 to 2003. ------------------------------------------------------------------------------------------------------------------- * The Statement of Additional Information includes additional information about the Funds' Trustees and is available, without charge, upon request, by calling 1-800-222-8222. ** As of May 31, 2005, one of the six Trustees is considered an "interested person" of the Trusts as defined in the Investment Company Act of 1940. The interested Trustee, J. Tucker Morse, is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, which is not itself affiliated with Wells Fargo Funds Management, LLC. Robert C. Brown was an interested Trustee prior to his retirement on April 5, 2005. *** Length of service dates reflects a Trustee's commencement of service with the Trust's predecessor entities. 40
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS: WEALTHBUILDER CONSERVATIVE ALLOCATION PORTFOLIO, WEALTHBUILDER EQUITY PORTFOLIO WEALTHBUILDER GROWTH ALLOCATION PORTFOLIO, WEALTHBUILDER GROWTH BALANCED PORTFOLIO WEALTHBUILDER MODERATE BALANCED PORTFOLIO AND WEALTHBUILDER TACTICAL EQUITY PORTFOLIO -------------------------------------------------------------------------------- Section 15(c) of the Investment Company Act of 1940 (the "1940 Act") contemplates that the Board of Trustees (the "Board") of Wells Fargo Funds Trust (the "Trust"), including a majority of the Trustees who have no direct or indirect interest in the investment advisory and sub-advisory agreements and are not "interested persons" of the Trust, as defined in the 1940 Act (the "Independent Trustees"), will annually review and consider the continuation of the investment advisory and sub-advisory agreements. In this regard, the Board reviewed and re-approved, during the most recent six months covered by this report: (i) an investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds Management") for the WealthBuilder Conservative Allocation Portfolio, WealthBuilder Equity Portfolio, WealthBuilder Growth Allocation Portfolio, WealthBuilder Growth Balanced Portfolio, WealthBuilder Moderate Balanced Portfolio and WealthBuilder Tactical Equity Portfolio (the "Funds"); and (ii) an investment sub-advisory agreement with Wells Capital Management Incorporated ("Wells Capital Management") for the Funds. The investment advisory agreement with Funds Management and the investment sub-advisory agreement with Wells Capital Management are collectively referred to as the "Advisory Agreements." More specifically, at a meeting held on April 4, 2005, the Board, including the Independent Trustees advised by their independent legal counsel, considered the factors and reached the conclusions described below relating to the selection of Funds Management and Wells Capital Management and the continuation of the Advisory Agreements. NATURE, EXTENT AND QUALITY OF SERVICES -------------------------------------------------------------------------------- The Board received and considered various data and information regarding the nature, extent and quality of services provided to the Funds by Funds Management and Wells Capital Management under the Advisory Agreements. Responses of Funds Management and Wells Capital Management to a detailed set of requests submitted by the Independent Trustees' independent legal counsel on behalf of such Trustees were provided to the Board. The Board reviewed and considered the data and information, which included, among other things, information about the background and experience of the senior management and the expertise of the investment personnel of Funds Management and Wells Capital Management. The Board considered the ability of Funds Management and Wells Capital Management, based on their respective resources, reputations and other attributes, to attract and retain highly qualified investment professionals, including research, advisory, and supervisory personnel. In this connection, the Board considered information regarding each of Funds Management's and Wells Capital Management's compensation for its personnel involved in the management of the Funds. In addition, the Board considered the effects of certain personnel changes in light of the acquisition of certain of the asset management arrangements of Strong Capital Management, Inc. by Wells Fargo & Company. The Board further considered the compliance programs and compliance records of Funds Management and Wells Capital Management. In addition, the Board took into account the administrative services provided to the Funds by Funds Management and its affiliates. In considering these matters, the Board considered not only the specific information presented in connection with the meeting, but also the knowledge gained over the course of interacting with Funds Management, including with respect to Funds Management's oversight of service providers, such as the investment sub-adviser. Based on the above factors, together with those referenced below, the Board concluded that it was generally satisfied with the nature, extent and quality of the investment advisory services provided to the Funds by Funds Management and Wells Capital Management. FUND PERFORMANCE AND EXPENSES -------------------------------------------------------------------------------- The Board considered the performance results for each of the Funds over various time periods. The Board also considered these results in comparison to the median performance results of the group of funds that was determined to be the most similar to a given Fund (the "Peer Group") and to the median performance of a broader universe of relevant funds (the "Universe"), as well as to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment company data, determined the Peer Group and Universe for each Fund. The Board was provided with a description of the methodology used by Lipper to select the mutual funds in each Fund's Peer Group and Universe. The Board noted that the performance of each Fund was better than, or not appreciably below, the median performance of its Peer Group for most time periods. The Board received and considered information regarding each Fund's net operating expense ratio and its various components, including contractual advisory fees, actual advisory fees, actual non-management 41
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- fees, Rule 12b-1 and non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The Board also considered comparisons of these fees to the expense information for each Fund's Peer Group and Universe, which comparative data was provided by Lipper. The Board noted that the net operating expense ratios of the Funds were equal to, or not appreciably higher than, the Funds' Peer Group's median net operating expense ratios. Management also discussed the Lipper data and rankings, and other relevant information, for the Funds. Based on the above-referenced considerations and other factors, the Board concluded that the overall performance and expense results supported the re-approval of the Advisory Agreements for the Funds. INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES -------------------------------------------------------------------------------- The Board reviewed and considered the contractual investment advisory fee rates both on a stand-alone basis and on a combined basis with the Funds' administration fee rates (the "Advisory Agreement Rates") payable by the Funds to Funds Management for investment advisory services. The Board also reviewed and considered the contractual investment sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds Management to Wells Capital Management for investment sub-advisory services. In addition, the Board reviewed and considered the existing fee waiver/cap arrangements applicable to the Advisory Agreement Rates and considered the Advisory Agreement Rates after taking the waivers/caps into account (the "Net Advisory Rates"). The Board received and considered information comparing the Advisory Agreement Rates and Net Advisory Rates with those of the other funds in the Peer Group. The Board noted that the Advisory Agreement Rates and the Net Advisory Rates for the Funds were lower than, or not appreciably higher than, the median rates of each Fund's respective Peer Group. In addition, the Board concluded that the combined investment advisory/administration fee rates for the Funds (before and after waivers/caps and/or expense reimbursements) were each reasonable in relation to each Fund's respective Peer Group, and reasonable in relation to the services provided. The Board also reviewed and considered the Sub-Advisory Agreement Rates and concluded that the Sub-Advisory Agreement Rates were fair and equitable, based on its consideration of the factors described above. PROFITABILITY -------------------------------------------------------------------------------- The Board received and considered a detailed profitability analysis of Funds Management based on the Advisory Agreement Rates and the Net Advisory Rates, as well as on other relationships between the Funds and Funds Management and its affiliates. 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 the Funds were not unreasonable. The Board did not consider a separate profitability analysis of Wells Capital Management, as its separate profitability from its relationships with the Funds was not a material factor in determining whether to renew the agreements. ECONOMIES OF SCALE -------------------------------------------------------------------------------- The Board received and considered general information regarding whether there have been economies of scale with respect to the management of the Funds, whether the Funds have appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The Board acknowledged the inherent limitations of any analysis of an investment adviser's economies of scale and of any attempt to correlate breakpoints with such economies, stemming largely from the Board's understanding that economies of scale are realized, if at all, by an investment adviser across a variety of products and services, not just with respect to a single fund. The Board concluded that any actual or potential economies of scale are, or will be, shared reasonably with Fund shareholders, including most particularly through Advisory Agreement Rate breakpoints, which are applicable to the Funds. INFORMATION ABOUT SERVICES TO OTHER CLIENTS -------------------------------------------------------------------------------- The Board also received and considered information about the nature, extent and quality of services and fee rates offered by Funds Management to other similarly situated series within the Trust, and those offered by Wells Capital Management to other clients, including other registered investment companies and separate accounts. The Board concluded that the Advisory Agreement Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable range of the fee rates offered to others by Funds Management and Wells Capital Management, giving effect to differences in services covered by such fee rates. 42
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OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS -------------------------------------------------------------------------------- OTHER BENEFITS TO FUNDS MANAGEMENT AND WELLS CAPITAL MANAGEMENT The Board received and considered information regarding potential "fall-out" or ancillary benefits received by Funds Management and its affiliates 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 (such as soft-dollar credits) and benefits potentially derived from an increase in the business of Funds Management and Wells Capital Management as a result of their relationship with the Funds (such as the ability to market to shareholders other financial products offered by Funds Management and its affiliates or Wells Capital Management and its affiliates). The Board also considered the effectiveness of policies of the Funds in achieving the best execution of portfolio transactions, whether and to what extent soft dollar credits are sought and how any such credits are utilized, potential benefits that may be realized by using an affiliated broker, and the controls applicable to brokerage allocation procedures. The Board also took note of the policies of Wells Capital Management regarding the allocation of portfolio investment opportunities among the Funds and other clients. OTHER FACTORS AND BROADER REVIEW -------------------------------------------------------------------------------- The Board also considered the markets for distribution of the Funds, including the principal channels through which the Funds' shares are offered and sold. The Board noted that the Funds are now part of one of the few fund families that have both direct-to-fund and intermediary distribution. As discussed above, the Board reviewed detailed materials received from Funds Management and Wells Capital Management annually as part of the re-approval process under Section 15(c) of the 1940 Act. The Board also regularly reviews and assesses the quality of the services that the Funds receive throughout the year. In this regard, the Board reviews reports of Funds Management and Wells Capital Management at least quarterly, which include, among other things, a detailed portfolio review, and detailed fund performance reports. In addition, the Board meets with the portfolio managers of the Funds at various times throughout the year. After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Board concluded that approval of the continuation of the Advisory Agreements for each of the Funds was in the best interest of the Funds and their shareholders. Accordingly, the Board unanimously approved the continuation of the Advisory Agreements. 43
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WELLS FARGO ADVANTAGE WEALTHBUILDER PORTFOLIOS LIST OF ABBREVIATIONS -------------------------------------------------------------------------------- The following is a list of common abbreviations for terms and entities which may have appeared in this report. ABAG -- Association of Bay Area Governments ADR -- American Depositary Receipts AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax ARM -- Adjustable Rate Mortgages BART -- Bay Area Rapid Transit CDA -- Community Development Authority CDSC -- Contingent Deferred Sales Charge CGIC -- Capital Guaranty Insurance Company CGY -- Capital Guaranty Corporation CMT -- Constant Maturity Treasury COFI -- Cost of Funds Index Connie Lee -- Connie Lee Insurance Company COP -- Certificate of Participation CP -- Commercial Paper CTF -- Common Trust Fund DW&P -- Department of Water & Power DWR -- Department of Water Resources EDFA -- Education Finance Authority FFCB -- Federal Farm Credit Bank FGIC -- Financial Guaranty Insurance Corporation FHA -- Federal Housing Authority FHLB -- Federal Home Loan Bank FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association FRN -- Floating Rate Notes FSA -- Financial Security Assurance, Inc GDR -- Global Depositary Receipt GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority HFFA -- Health Facilities Financing Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue LIBOR -- London Interbank Offered Rate LLC -- Limited Liability Corporation LOC -- Letter of Credit LP -- Limited Partnership MBIA -- Municipal Bond Insurance Association MFHR -- Multi-Family Housing Revenue MUD -- Municipal Utility District MTN -- Medium Term Note PCFA -- Pollution Control Finance Authority PCR -- Pollution Control Revenue PFA -- Public Finance Authority PLC -- Private Placement PSFG -- Public School Fund Guaranty RAW -- Revenue Anticipation Warrants RDA -- Redevelopment Authority RDFA -- Redevelopment Finance Authority R&D -- Research & Development SFHR -- Single Family Housing Revenue SFMR -- Single Family Mortgage Revenue SLMA -- Student Loan Marketing Association STEERS -- Structured Enhanced Return Trust TBA -- To Be Announced TRAN -- Tax Revenue Anticipation Notes USD -- Unified School District V/R -- Variable Rate WEBS -- World Equity Benchmark Shares XLCA -- XL Capital Assurance 44
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[LOGO] WELLS ADVANTAGE FARGO FUNDS More information about WELLS FARGO ADVANTAGE FUNDS(SM) is available free upon request. To obtain literature, please write, e-mail, or call: WELLS FARGO ADVANTAGE FUNDS P.O. Box 8266 Boston, MA 02266-8266 E-mail: wfaf@wellsfargo.com Retail Investment Professionals: 888-877-9275 Institutional Investment Professionals: 866-765-0778 Web: www.wellsfargo.com/advantagefunds This report and the financial statements contained herein are submitted for the general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. For a prospectus containing more complete information, including charges and expenses, call 1-800-222-8222. Please consider the investment objective, risks, charges and expenses of the investment carefully before investing. This and other information about WELLS FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the prospectus carefully before you invest or send money. Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for the WELLS FARGO ADVANTAGE Funds. Other affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds. The Funds are distributed by WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells Fargo & Company. ------------------------------------------------------- NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE ------------------------------------------------------- [Enlarge/Download Table] ---------------------------------------------------------------------------------------------------------------------------------- (C) 2005 Wells Fargo Advantage Funds, LLC. All rights reserved. www.wellsfargo.com/advantagefunds RT51603 07-05 AWBP/AR102 05-05 ITEM 2. CODE OF ETHICS As of the end of the period, May 31, 2005, Wells Fargo Funds Trust has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT The Board of Trustees of Wells Fargo Funds Trust has determined that Thomas S. Goho is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Goho is independent for purposes of Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES (a) Audit Fees - Provided below are the aggregate fees billed for the fiscal years ended May 31, 2004 and May 31, 2005 for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
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For the fiscal years ended May 31, 2004 and May 31, 2005, the Audit Fees were $891,955 and $996,170, respectively. (b) Audit-Related Fees - There were no audit-related fees incurred for the fiscal years ended May 31, 2004 and May 31, 2005 for assurance and related services by the principal accountant for the Registrant. (c) Tax Fees - Provided below are the aggregate fees billed for the fiscal years ended May 31, 2004 and May 31, 2005 for professional services rendered by the principal accountant for the Registrant for tax compliance, tax advice, and tax planning. For the fiscal years ended May 31, 2004 and May 31, 2005, the Tax Fees were $76,500 and $84,325, respectively. The incurred Tax Fees are comprised of excise tax review services. For the fiscal years ended May 31, 2004 and May 31, 2005, the Tax Fees were $124,744 and $123,859, respectively. The incurred Tax Fees are comprised of tax preparation and consulting services. (d) All Other Fees - There were no other fees incurred for the fiscal years ended May 31, 2004 and May 31, 2005. (e)(1) The Chairman of the Audit Committees is authorized to pre-approve: (1) audit services to the mutual funds of Wells Fargo Funds Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (the "Funds"); (2) non-audit tax or compliance consulting or training services provided to the Funds by the independent auditors ("Auditors") if the fees for any particular engagement are not anticipated to exceed $50,000; and (3) non-audit tax or compliance consulting or training services provided by the Auditors to a Fund's investment adviser and its controlling entities (where pre-approval is required because the engagement relates directly to the operations and financial reporting of the Fund) if the fee to the Auditors for any particular engagement is not anticipated to exceed $50,000. For any such pre-approval sought from the Chairman, Management shall prepare a brief description of the proposed services. If the Chairman approves of such service, he or she shall sign the statement prepared by Management. Such written statement shall be presented to the full Committees at their next regularly scheduled meetings. (e)(2) Not Applicable. (f) Not Applicable. (g) Provided below are the aggregate non-audit fees billed for the fiscal years ended May 31, 2004 and May 31, 2005, by the principal accountant for services rendered to the Registrant, and rendered to the Registrant's investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant. For the fiscal years ended May 31, 2004 and May 31, 2005, the Registrant incurred non-audit fees in the amount of $72,000 and $134,500, respectively. The non-audit fees consist of SAS70 control reviews of Wells Fargo Bank, N.A., the Funds' custodian. For the fiscal years ended May 31, 2004 and May 31, 2005, the Registrant's investment adviser incurred non-audit fees in the amount of $57,120 and $173,500 respectively. The non-audit fees consist of procedure reviews for pending mergers associated with fund reorganizations.
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(h) The Registrant's audit committee of the board of directors has determined that non-audit services rendered to the registrant's investment adviser, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of the Regulation S-X, does not compromise the independence of the principal accountant. ITEMS 5-6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES (a)(i) The President and Treasurer have concluded that the Wells Fargo Funds Trust (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report. (a)(ii) There were no significant changes in the Trust's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in (a)(i) above. ITEM 10. EXHIBITS (a) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as Exhibit 10a. (a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Wells Fargo Funds Trust By: /s/Karla M. Rabusch Karla M. Rabusch President Date: July 18, 2005
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Wells Fargo Funds Trust By: /s/ Stacie D. DeAngelo Stacie D. DeAngelo Treasurer Date: July 18, 2005

Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘N-CSR’ Filing    Date First  Last      Other Filings
4/30/0719176N-CSRS,  N-Q,  NSAR-A,  NSAR-A/A
9/30/06527824F-2NT,  N-CSR,  N-Q,  NSAR-B
Filed on / Effective on:8/3/05
7/22/05113304
7/18/05316317
7/11/05152497
For Period End:5/31/05131424F-2NT,  N-CSR,  N-Q,  NSAR-B
5/21/05106253
4/22/05252
4/11/057278485BPOS
4/10/05103253
4/9/05257
4/8/0519259N-PX
4/5/05155306
4/4/05156307
4/1/0598246
3/28/05252
3/27/05104105
3/21/05104252
3/14/05104251
1/1/05103250
12/31/04163N-CSRS,  N-Q,  NSAR-A
12/6/04113256497
12/1/0425280485APOS
11/1/0491253485BPOS,  DEFA14A
10/31/0478256N-CSR,  NSAR-B
10/1/04278301
9/30/04268301485BPOS,  N-CSR,  N-CSRS,  N-Q,  NSAR-A,  NSAR-B
8/2/04103301
6/1/0487305NSAR-A,  NSAR-B
5/31/046931424F-2NT,  N-CSR,  NSAR-B
5/21/04106253
11/1/0391243
10/31/0391243485BPOS,  497
7/1/038994
6/30/03179424F-2NT,  485APOS,  485BPOS,  N-CSR,  NSAR-B
6/9/031522485BPOS,  N-CSR
6/6/031521485BPOS,  497
6/1/0387297
5/31/038729724F-2NT,  N-CSR,  NSAR-B
2/28/03878824F-2NT,  497,  N-CSR,  NSAR-B,  NSAR-B/A
12/26/0216923940-17F2,  485APOS
11/29/028788
11/1/0291243485BPOS,  N-30D
10/31/0291243485BPOS,  N-30D
8/16/02113
7/1/028994485BPOS
6/30/028911324F-2NT,  N-30D,  NSAR-B
6/1/0287297
5/31/028729724F-2NT,  N-30D,  NSAR-B
11/1/0191243485BPOS
10/31/0121243
7/31/01171241485BPOS,  497,  NSAR-B
7/1/018994
6/30/01899224F-2NT,  N-30D,  N-30D/A,  NSAR-B
6/1/0187297497
5/31/018729724F-2NT,  DEF 14A,  N-30D,  NSAR-B,  PRE 14A
11/30/002394497,  N-30D,  NSAR-A
11/1/0093243485BPOS
10/31/0093243
7/1/008992
6/30/00899224F-2NT,  485BPOS,  N-30D,  NSAR-B,  UNDER
6/1/0087297497
3/1/00242243
2/29/0017124324F-2NT,  485BPOS,  N-30D,  NSAR-B
11/8/999298485BPOS
11/5/999278
11/1/9993241
8/31/99167176
7/1/998992
3/1/99242243
5/17/961317
5/2/961317
3/11/9615
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Filing Submission 0000935069-05-002082   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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