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[LOGO]
Semi-Annual Report
INCOME FUNDS
November 30, 1999
Corporate Bond Fund
Diversified Bond Fund
Income Fund
Income Plus Fund
Intermediate Government Income Fund
Limited Term Government Income Fund
Stable Income Fund
Variable Rate Government Fund
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INCOME FUNDS
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TABLE OF CONTENTS
LETTER TO SHAREHOLDER..........................................................1
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PERFORMANCE HIGHLIGHTS
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CORPORATE BOND FUND..........................................................2
DIVERSIFIED BOND FUND........................................................4
INCOME FUND..................................................................6
INCOME PLUS FUND.............................................................8
INTERMEDIATE GOVERNMENT INCOME FUND.........................................10
LIMITED TERM GOVERNMENT INCOME FUND.........................................12
STABLE INCOME FUND..........................................................14
VARIABLE RATE GOVERNMENT FUND...............................................16
PORTFOLIO OF INVESTMENTS
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CORPORATE BOND FUND.........................................................18
DIVERSIFIED BOND FUND.......................................................21
INCOME FUND.................................................................22
INCOME PLUS FUND............................................................29
INTERMEDIATE GOVERNMENT INCOME FUND.........................................33
LIMITED TERM GOVERNMENT INCOME FUND.........................................36
STABLE INCOME FUND..........................................................39
VARIABLE RATE GOVERNMENT FUND...............................................40
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES.........................................42
STATEMENTS OF OPERATIONS....................................................44
STATEMENTS OF CHANGES IN NET ASSETS.........................................48
FINANCIAL HIGHLIGHTS........................................................54
NOTES TO FINANCIAL HIGHLIGHTS.................................................58
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NOTES TO FINANCIAL STATEMENTS.................................................59
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INCOME CORES
PORTFOLIO OF INVESTMENTS
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MANAGED FIXED INCOME PORTFOLIO..............................................67
POSITIVE RETURN PORTFOLIO...................................................72
STABLE INCOME PORTFOLIO.....................................................74
STRATEGIC VALUE BOND PORTFOLIO..............................................79
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES.........................................84
STATEMENTS OF OPERATIONS....................................................85
STATEMENTS OF CHANGES IN NET ASSETS.........................................86
FINANCIAL HIGHLIGHTS........................................................88
NOTES TO FINANCIAL HIGHLIGHTS.................................................89
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NOTES TO FINANCIAL STATEMENTS.................................................90
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LIST OF ABBREVIATIONS.........................................................93
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INCOME FUNDS
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DEAR VALUED SHAREHOLDER,
Thank you for investing in the Wells Fargo Funds (formerly Stagecoach Funds
and Norwest Advantage Funds).
We're pleased to present this semi-annual report for the period ended
November 30, 1999. This report provides information about your Wells Fargo
Income Fund investment, including economic and market trends over the five- or
six-month period. To improve our reporting process, the fiscal-year end for
some of the funds included in this report has changed to May 31 from June 30.
This change does not affect the objective or performance of your fund.
Beginning in June 1999, economic expansion entered a "peaking phase," and the
financial markets started looking quite different from late 1998 and early
1999. During a peaking phase, real economic growth remains solid, but stops
accelerating. Once the pace of real economic growth peaked early in the
reporting period, stock markets around the globe stopped outpacing bonds. Even
though long-term bond returns nearly matched the return of stocks in the
period, 1999 was still a difficult year for the bond market. Both stock
markets and long-term bond yields stopped rising consistently and settled into
a trading range which has been in force since June. Corporate bond yield
spreads stopped narrowing, and with the three Federal Reserve Board interest
rate increases in 1999, leadership within the stock market reverted back
toward large cap growth stocks and away from cyclical, value and small cap
stocks during the period.
Most foreign economies are following the U.S. economic pattern. The recovery
from the Asia crisis in many of the world's economies did not become evident
until the second quarter of 1999, and while U.S. growth seemed to have peaked
during the period, many foreign economies seemed to continue accelerating,
compared to the "peaking" domestic economy.
Looking ahead, the U.S. economy could be nearing a "deceleration phase." If
economic growth truly begins to slow, bonds may begin to outpace stocks. Over
the past 12 months, the S&P 500 Index outperformed the 30-year Treasury Bond
Index by almost 40 percent, which has happened only eight other times since
1926. In seven of those episodes, bonds outpaced stocks the ensuing year. We
continue to be optimistic about bond returns, primarily because most of the
increase in yields during 1999 were based on "expectations" of higher
inflation versus the "reality" that pricing has not increased.
Whatever the market conditions, we recommend that you continually review your
investment portfolio to determine an appropriate mix of investments to meet
your ongoing financial needs. We appreciate your business and strive to offer
a variety of investment options to help you potentially achieve your financial
goals. If you have any questions about your investment or need information,
please contact us at 1-800-222-8222.
Again, thank you for choosing Wells Fargo Funds.
Sincerely,
<TABLE>
<S> <C>
[LOGO] [LOGO]
MICHAEL J. HOGAN W. RODNEY HUGHES
EXECUTIVE VICE PRESIDENT, PRESIDENT,
WELLS FARGO BANK, N.A. WELLS FARGO FUNDS
</TABLE>
1
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INCOME FUNDS PERFORMANCE HIGHLIGHTS
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CORPORATE BOND FUND
INVESTMENT OBJECTIVE
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The Corporate Bond Fund seeks a high level of current income, consistent with
reasonable risk.
ADVISOR
Wells Fargo Bank,N.A.
FUND MANAGERS
Graham Allen, FCMA
John Burgess
Jacqueline Flippin
Daniel Kokoszka, CFA
Scott Smith, CFA
INCEPTION DATE
4/1/98
PERFORMANCE HIGHLIGHTS
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The Fund's Class A shares returned (1.19)%(1) for the five-month period ended
November 30, 1999, excluding sales charges. The Fund's Class A shares
distributed $0.27 per share in dividend income and no capital gains during the
period. Please keep in mind past performance is no guarantee of future
results.
During the period, the Fund's performance lagged as interest rates moved
higher and credit spreads widened on increased supply and concerns over Y2K
disruptions. The Fund underperformed its benchmark, the Lipper Corporate Debt
Funds BBB Rated Average(2), for the period primarily due to a higher
allocation of assets to higher-yield investments and a slightly longer
duration profile.
Rising interest rates had a negative impact on the Fund. Rates rose by
approximately 80 basis points throughout this period, driven mostly by
continued strong domestic growth. Credit spreads also widened on new issue
supply concerns and fear of Y2K disruptions. At the end of the period, the
Fund held approximately 23 percent in high-yield securities, while its
benchmark held none. High-yield securites underperformed as there were
substantial cash outflows in high-yield funds driven by concerns over Y2K. The
Fund also was positioned with a slightly longer duration profile versus its
benchmark which resulted in underperformance as rates moved sharply higher.
During the period, corporate bonds were added to the Fund as spreads widened.
Yields were generous by historical standards at the end of the period and the
outlook for corporate earnings remained favorable.
STRATEGIC OUTLOOK
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The duration of the Fund will be held neutral to the benchmark as there is
potential for rates to drift higher in the first quarter of 2000.
Investment-grade corporate bonds and high-yield investments will continue to
be emphasized as spreads are wide by historical standards, and the outlook for
corporate earnings remains favorable. A bias towards lower-quality,
higher-yielding securities will be maintained into early 2000 in anticipation
of greater spread compression from this group as investors increase their risk
posture following the Y2K aftermath.
Continued strong economic growth is expected during the first quarter of
2000. The Fund will continue to seek a high level of current income by
actively managing a diversified portfolio consisting primarily of corporate
debt securities.
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(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
Investments in lower-rated, higher-yielding corporate bonds are subject to
additional risk because they tend to be more sensitive to economic conditions
and, during sustained periods of rising interest rates, may experience interest
and/or principle defaults. Investments in foreign securities entail certain
additional risks that may not be present in domestic securities, including
currency fluctuations, the potential for diplomatic and political instability,
regulatory and liquidity risks, foreign taxation and differences in auditing and
other financial standards.
(2) The Lipper Corporate Debt Funds BBB Rated Funds Average is an average of
137 funds that invest at least 65% of their assets in corporate and government
debt issues rated in the top four grades. The total return of the of the average
does not include the effect of sales charges. You cannot invest directly in a
Lipper average.
2
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PERFORMANCE HIGHLIGHTS INCOME FUNDS
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AVERAGE ANNUAL TOTAL RETURN(3) (%) (AS OF NOVEMBER 30, 1999)
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<TABLE>
<CAPTION>
Excluding Sales Charge Including Sales Charge
------------------------ -----------------------------
1-Year Since Inception 1-Year Since Inception
<S> <C> <C> <C> <C>
CORPORATE BOND FUND
CLASS A (3.30) 1.93 (7.38) (0.84)
CLASS B (3.75) 1.18 (8.28) (1.04)
CLASS C (3.86) 1.09 (4.77) 1.09
LIPPER CORPORATE DEBT FUNDS
BBB-RATED AVERAGE (1.16)
LEHMAN BROTHERS CORPORATE LONG
BOND INDEX(4) (4.86)
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
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<TABLE>
<S> <C>
PORTFOLIO TURNOVER 41%
NUMBER OF HOLDINGS 63
AVERAGE CREDIT QUALITY(5) Baa1
WEIGHTED AVERAGE COUPON 7.90
ESTIMATED WEIGHTED AVERAGE
MATURITY 14.90
ESTIMATED AVERAGE DURATION 6.02
NAV (A, B, C) 9.24, 9.24, 9.23
DISTRIBUTION RATE (A, B, C)(6) 6.58%, 6.14%, 6.13%
SEC YIELD(7) (A, B, C) 6.94%, 6.50%, 6.50%
</TABLE>
PORTFOLIO ALLOCATION(9)
(AS OF NOVEMBER 30, 1999)
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds and Notes 79%
U.S. Treasury Bonds and Notes 10%
Other 6%
Foreign Government Bonds 4%
Cash Equivalents 1%
</TABLE>
GROWTH OF $10,000 INVESTMENT(8)
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WF CORPORATE BOND FUND - A LEHMAN BROTHERS
CORPORATE LONG BOND INDEX
<S> <C> <C>
Mar-98 $9,550 $10,000
Apr-98 $9,548 $10,073
May-98 $9,649 $10,246
Jun-98 $9,739 $10,354
Jul-98 $9,767 $10,286
Aug-98 $9,767 $10,295
Sep-98 $10,102 $10,668
Oct-98 $9,989 $10,379
Nov-98 $10,167 $10,759
Dec-98 $10,219 $10,766
Jan-99 $10,313 $10,907
Feb-99 $10,078 $10,523
Mar-99 $10,182 $10,554
Apr-99 $10,207 $10,567
May-99 $10,041 $10,381
Jun-99 $9,978 $10,244
Jul-99 $9,949 $10,144
Aug-99 $9,844 $10,086
Sep-99 $9,935 $10,193
Oct-99 $9,899 $10,256
Nov-99 $9,859 $10,238
</TABLE>
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(3) Performance shown for Class A, Class B and Class C shares of the Wells
Fargo Corporate Bond Fund for periods prior to November 8, 1999, reflects
performance of the Class A, Class B and Class C shares of the Stagecoach
Corporate Bond Fund, its predecessor fund. Effective close of business November
5, 1999, the Stagecoach Funds were reorganized into the Wells Fargo Funds. For
Class A shares, the maximum front-end sales charge is 4.50%. The maximum sales
charge for Class B shares is 5.00%. The maximum sales charge for Class C shares
is 1.00%. Class B and Class C shares performance including sales charge assumes
the sales charge for the corresponding time period.
(4) The Lehman Brothers Corporate Long Bond Index is an unmanaged index
composed of all publicly issued, fixed-rate nonconvertible investment-grade
domestic corporate debt. The Index does not incur expenses and is not available
directly for investment. Had this Index incurred operating expenses, its
performance would have been lower.
(5) The average credit rating is compiled from ratings from Standards & 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) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Corporate Bond Fund
Class A shares since inception with the Lehman Brothers Corporate Long Bond
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%. The Fund is a professionally managed mutual fund.
(9) Portfolio holdings are subject to change.
3
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INCOME FUNDS PERFORMANCE HIGHLIGHTS
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DIVERSIFIED BOND FUND
INVESTMENT OBJECTIVE
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The Wells Fargo Diversified Bond Fund seeks total return by diversifying its
investments among different fixed-income investment styles.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGER
Collectively Managed
INCEPTION DATE
12/31/82
PERFORMANCE HIGHLIGHTS
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The Fund's Institutional Class shares returned 0.54%(1), for the six-month
period ended November 30, 1999. The Fund underperformed its benchmark for the
period, the Lipper Intermediate Investment Grade Debt Fund Average(2), which
returned 0.36%. The Fund's Institutional Class shares distributed $0.69 per
share in dividend income and no capital gains during the period. Please keep
in mind that past performance is no guarantee of future results.
The Diversified Bond Fund is made up of three different fixed income styles:
managed fixed income, positive return and strategic value bond. "Style" is
either an approach to selecting investments, or a type of investment that is
selected for a portfolio. This multi-style approach to investing is designed
to reduce the price and return volatility of the Fund, and to potentially
provide more consistent returns.
During the period, the positive return bond style returned 1.9%; the managed
fixed income style returned 0.22%; and the strategic value bond style returned
(0.35)%.
The six-month period continued to be a difficult time for the bond market.
Strong, persistent economic growth prompted the Federal Reserve Board to
undertake a series of interest rate increases, which triggered an unrelenting
bond market sell-off. Increasing yields caused price declines in nearly ever
sector of the bond market. In some sectors, price declines were partially
offset by coupon income, but total returns remained meager.
During the period, the Fund benefited from a substantial allocation to
discount mortgage collateral and agency debentures within the managed fixed
income style, and from discount collateral within the strategic value bond
style. Within the positive return bond style, the Fund benefited from a shift
from long U.S. Treasuries to high-quality securities. An emphasis on spread
product within the strategic value bond style, and some corporate issues,
including Levi-Strauss, within the managed fixed-income style negatively
affected the Fund's performance.
STRATEGIC OUTLOOK
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The U.S. economy remains strong. The global economy is improving at a time
when the domestic market has shown some signs of weakness. This combination of
events is a compelling argument for continued growth of the U.S. economy.
Inflation risk remains benign, as productivity gains have offset higher
energy/labor costs. Monetary policy may retain a tightening bias if inflation
appears and market valuations continue to accelerate.
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(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
(2) The Lipper Intermediate Investment Grade Debt Fund Average is an average of
funds that invest at least 65% of their assets in investment grade debt issues
(rated in the top four grades) with dollar weighted average maturities of five
to 10 years. The total return of the of the average does not include the effect
of sales charges. You cannot invest directly in a Lipper average.
4
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
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AVERAGE ANNUAL TOTAL RETURN(3) (%) (AS OF NOVEMBER 30, 1999)
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<TABLE>
<CAPTION>
Excluding Sales Charge
------------------------------------
1-Year 5-Year 10-Year
<S> <C> <C> <C>
DIVERSIFIED BOND FUND INSTITUTIONAL CLASS (1.04) 6.86 6.55
LIPPER INTERMEDIATE INVESTMENT GRADE DEBT FUNDS AVERAGE (0.52) 7.02 7.12
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE INDEX(4) 1.12 7.25 7.33
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
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<TABLE>
<S> <C>
PORTFOLIO TURNOVER 16%
NUMBER OF HOLDINGS 96
AVERAGE CREDIT QUALITY(5) AA-
WEIGHTED AVERAGE COUPON 5.58
ESTIMATED WEIGHTED AVERAGE
MATURITY 7.13
ESTIMATED AVERAGE DURATION 3.53
NAV (I) 26.25
SEC YIELD (I)(6) 6.06%
</TABLE>
PORTFOLIO ALLOCATION(8)
(AS OF NOVEMBER 30, 1999)
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Federal Agencies 34%
Fixed Rate Bonds and Notes 21%
Securities 19%
Cash Equivalents 8%
U.S. Treasury Bonds and Notes 8%
Other 7%
Government Bonds 3%
</TABLE>
GROWTH OF $10,000 INVESTMENT(7)
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO LEHMAN BROTHERS
DIVERSIFIED INTERMEDIATE GOVERNMENT/
BOND - CLASS I CORPORATE INDEX
<S> <C> <C>
11/30/1989 $10,000 $10,000
12/31/1989 $10,060 $10,027
1/31/1990 $10,020 $9,963
2/28/1990 $10,090 $10,000
3/31/1990 $10,118 $10,013
4/30/1990 $10,085 $9,978
5/31/1990 $10,243 $10,197
6/30/1990 $10,403 $10,334
7/31/1990 $10,480 $10,477
8/31/1990 $10,439 $10,434
9/30/1990 $10,537 $10,515
10/31/1990 $10,611 $10,637
11/30/1990 $10,780 $10,798
12/31/1990 $10,887 $10,946
1/31/1991 $10,986 $11,057
2/28/1991 $11,062 $11,145
3/31/1991 $11,186 $11,221
4/30/1991 $11,273 $11,344
5/31/1991 $11,331 $11,413
6/30/1991 $11,374 $11,421
7/31/1991 $11,475 $11,547
8/31/1991 $11,661 $11,768
9/30/1991 $11,815 $11,970
10/31/1991 $11,919 $12,107
11/30/1991 $12,027 $12,246
12/31/1991 $12,150 $12,545
1/31/1992 $12,150 $12,431
2/29/1992 $12,204 $12,479
3/31/1992 $12,222 $12,431
4/30/1992 $12,321 $12,540
5/31/1992 $12,483 $12,734
6/30/1992 $12,716 $12,923
7/31/1992 $12,607 $13,180
8/31/1992 $12,769 $13,312
9/30/1992 $12,955 $13,493
10/31/1992 $12,825 $13,317
11/30/1992 $12,889 $13,271
12/31/1992 $13,032 $13,445
1/31/1993 $13,080 $13,707
2/28/1993 $13,160 $13,923
3/31/1993 $13,237 $13,979
4/30/1993 $13,322 $14,091
5/31/1993 $13,319 $14,060
6/30/1993 $13,519 $14,281
7/31/1993 $13,573 $14,315
8/31/1993 $13,818 $14,543
9/30/1993 $13,900 $14,604
10/31/1993 $13,943 $14,643
11/30/1993 $13,815 $14,561
12/31/1993 $13,884 $14,628
1/31/1994 $14,034 $14,790
2/28/1994 $13,813 $14,572
3/31/1994 $13,615 $14,331
4/30/1994 $13,578 $14,234
5/31/1994 $13,529 $14,244
6/30/1994 $13,528 $14,245
7/31/1994 $13,681 $14,450
8/31/1994 $13,678 $14,495
9/30/1994 $13,604 $14,362
10/31/1994 $13,566 $14,360
11/30/1994 $13,530 $14,296
12/31/1994 $13,600 $14,346
1/31/1995 $13,746 $14,588
2/28/1995 $13,940 $14,890
3/31/1995 $14,031 $14,975
4/30/1995 $14,145 $15,159
5/31/1995 $14,495 $15,617
6/30/1995 $14,635 $15,722
7/31/1995 $14,646 $15,723
8/31/1995 $14,765 $15,866
9/30/1995 $14,894 $15,981
10/31/1995 $15,050 $16,158
11/30/1995 $15,196 $16,370
12/31/1995 $15,326 $16,541
1/31/1996 $15,419 $16,684
2/29/1996 $15,216 $16,489
3/31/1996 $15,112 $16,404
4/30/1996 $15,048 $16,347
5/31/1996 $15,083 $16,334
6/30/1996 $15,228 $16,507
7/31/1996 $15,263 $16,557
8/31/1996 $15,251 $16,570
9/30/1996 $15,460 $16,800
10/31/1996 $15,732 $17,098
11/30/1996 $15,975 $17,323
12/31/1996 $15,853 $17,212
1/31/1997 $15,872 $17,279
2/28/1997 $15,878 $17,312
3/31/1997 $15,690 $17,193
4/30/1997 $15,897 $17,394
5/31/1997 $16,022 $17,538
6/30/1997 $16,197 $17,698
7/31/1997 $16,748 $18,057
8/31/1997 $16,466 $17,967
9/30/1997 $16,773 $18,175
10/31/1997 $17,142 $18,377
11/30/1997 $17,249 $18,418
12/31/1997 $17,475 $18,565
1/31/1998 $17,754 $18,808
2/28/1998 $17,688 $18,793
3/31/1998 $17,721 $18,853
4/30/1998 $17,794 $18,947
5/31/1998 $18,008 $19,086
6/30/1998 $18,241 $19,208
7/31/1998 $18,221 $19,275
8/31/1998 $18,734 $19,578
9/30/1998 $19,207 $20,069
10/31/1998 $18,967 $20,049
11/30/1998 $19,053 $20,047
12/31/1998 $19,064 $20,127
1/31/1999 $19,179 $20,238
2/28/1999 $18,727 $19,940
3/31/1999 $18,820 $20,090
4/30/1999 $18,877 $20,152
5/31/1999 $18,755 $19,997
6/30/1999 $18,705 $20,011
7/31/1999 $18,683 $19,993
8/31/1999 $18,662 $20,009
9/30/1999 $18,813 $20,195
10/31/1999 $18,834 $20,248
11/30/1999 $18,856 $20,272
</TABLE>
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(3) Performance shown for the Institutional Class shares of the Wells Fargo
Diversified Bond Fund for periods prior to November 8, 1999 reflects performance
of the Institutional Class shares of Norwest Advantage Diversified Bond Fund,
its predecessor fund. Effective close of business November 5, 1999, the Norwest
Advantage Funds were reorganized into the Wells Fargo Funds. Performance of the
Institutional Class shares of the Fund, prior to November 11, 1994, reflects the
performance of a collective investment fund adjusted to reflect Institutional
Class expenses. Norwest Bank Minnesota, N.A. managed the collective investment
fund with an investment objective and principal investment strategy that were
substantially similar to those of the Fund. The performance for the Fund
includes performance of its predecessor collective investment fund for periods
before it became a mutual fund on November 11, 1994. The collective investment
fund's performance was adjusted to reflect the Fund's 1994 estimate of expense
ratios for the first year of operations as a mutual fund, including any
applicable sales load (without giving effect to any fee waivers or expense
reimbursements). The collective investment fund was not registered under the
Investment Company Act of 1940 ("1940 Act") nor subject to certain investment
limitations, diversification requirements, and other restrictions imposed by the
1940 Act or the Internal Revenue Code which, if applicable, may have adversely
affected the performance results.
Institutional Class shares are sold without a front-end sales charge or
contingent deferred sales charge. Other fees and expenses apply to a continued
investment in the Fund and are described in the Fund's current prospectus.
(4) Lehman Brothers Intermediate Government/Corporate Index is an index based
on all publicly issued intermediate government and corporate debt securities
with an average maturity of 4-5 years. This index represents asset types which
are subject to risk, including loss of principal. The Index does not incur
expenses and is not available directly for investment. Had this Index incurred
operating expenses, its performance would have been lower.
(5) The average credit rating is compiled from ratings from Standards & 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 formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Diversified Bond Fund
Institutional Class shares since inception with the Lehman Brothers
Intermediate/Corporate Index. The chart assumes a hypothetical $10,000
investment in Institutional Class shares and reflects all operating expenses.
The Fund is a professionally managed mutual fund.
(8) Portfolio holdings are subject to change.
5
<PAGE>
INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Wells Fargo Income Fund seeks current income and total return.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGER
Marjorie Grace, CFA
INCEPTION DATE
6/9/87
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's Class A shares returned (0.51)%(1) for the six-month period ended
November 30, 1999, excluding sales charges. Because of its long duration
strategy, the Fund underperformed its benchmark, the Lipper Corporate Debt
Funds A Rated Average(2), which returned (0.19)% during the period. The Fund's
Class A shares distributed $0.30 per share in dividend income and no capital
gains during the period. Please keep in mind past performance is no guarantee
of future results.
The six-month period was a difficult one for investors in the fixed income
markets. The 10-year Treasury note, a good proxy for the Fund, suffered a
(1.20)% total return for the period. The economy was running stronger than
expected, albeit with low inflation, causing the Federal Reserve Board to
raise short-term interest rates. Some commodity price increases, especially
oil, worried the bond market. In addition, the corporate sector was burdened
with a heavy supply of new issues as companies rushed into the markets to lock
up the relatively low rates before year-end. Any credit rating adjustments,
even minor ones, caused corporate bond spreads to widen significantly, similar
to the stock market reactions to earnings surprises.
During the period the Fund was overweighted in BBB corporate bonds compared
to its benchmark, which hurt the Fund's performance when this sector
underperformed higher-rated credits. The Fund's mortgage sector holdings
helped performance during the period. The Fund's long duration had the biggest
impact on performance during the period. Holdings in BBB-rated corporate bonds
were reduced early in the period to increase the Fund's average credit rating,
and holdings in the mortgage sector were increased.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
The corporate bond sector is still in favor, and the Fund may maintain an
overweight position in that sector in the near term. The Fund also is expected
to maintain a long duration strategy, although not as long as during 1999. The
economy appears to be continuing its strong growth. However, if inflation does
not follow, interest rates may turn and begin to decline.
- --------------------------------------------------------------------------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
(2) The Lipper Corporate Debt Funds A Rated Average is an average of funds that
invest at least 65% of their assets in corporate debt issues rated "A" or
better, or government issues. The total return of the of the average does not
include the effect of sales charges. You cannot invest directly in a Lipper
Average.
6
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(3)(%) (AS OF NOVEMBER 30, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Excluding Sales Charge Including Sales Charge
----------------------- --------------------------
1-Year 5-Year 10-Year 1-Year 5-Year 10-Year
<S> <C> <C> <C> <C> <C> <C>
INCOME FUND
CLASS A (3.01) 6.94 7.07 (7.37) 5.96 6.58
CLASS B (3.73) 6.15 6.26 (8.31) 5.83 6.26
INSTITUTIONAL CLASS (3.00) 6.95 7.06
LIPPER CORPORATE DEBT
FUNDS A-RATED AVERAGE (1.73) 7.19 7.37
LEHMAN BROTHERS AGGREGATE
INDEX(4) (0.04) 7.99 7.73
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
<TABLE>
<S> <C>
PORTFOLIO TURNOVER 66%
NUMBER OF HOLDINGS 150
AVERAGE CREDIT QUALITY(5) AA
WEIGHTED AVERAGE COUPON 7.54
ESTIMATED WEIGHTED AVERAGE
MATURITY 14.97
ESTIMATED DURATION 5.88
NAV (A, B, I) 9.13, 9.11, 9.12
DISTRIBUTION RATE(6) (A, B, I) 6.24%, 5.79%, 6.74%
SEC YIELD(7) (A, B, I) 6.29%, 5.83%, 6.80%
</TABLE>
PORTFOLIO ALLOCATION(9)
(AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Fixed Rate Bonds and Notes 44%
U.S. Treasury Bonds and Notes 25%
Federal Agencies 22%
Other 6%
Cash Equivalents 3%
</TABLE>
GROWTH OF $10,000 INVESTMENT(8)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO INCOME LEHMAN BROTHERS WELLS FARGO INCOME
FUND - CLASS A AGGREGATE INDEX FUND CLASS I
<S> <C> <C> <C>
11/30/1989 $9,550 $10,000 $10,000
12/31/1989 $9,592 $10,027 $10,044
1/31/1990 $9,620 $9,908 $10,073
2/28/1990 $9,668 $9,838 $10,124
3/31/1990 $9,724 $9,946 $10,182
4/30/1990 $9,718 $9,855 $10,175
5/31/1990 $9,881 $10,147 $10,347
6/30/1990 $10,004 $10,310 $10,475
7/31/1990 $10,140 $10,452 $10,617
8/31/1990 $10,135 $10,312 $10,613
9/30/1990 $10,149 $10,398 $10,627
10/31/1990 $10,165 $10,530 $10,644
11/30/1990 $10,334 $10,756 $10,821
12/31/1990 $10,475 $10,924 $10,968
1/31/1991 $10,609 $11,059 $11,109
2/28/1991 $10,796 $11,153 $11,305
3/31/1991 $10,908 $11,230 $11,422
4/30/1991 $11,038 $11,352 $11,558
5/31/1991 $11,104 $11,417 $11,627
6/30/1991 $11,095 $11,412 $11,617
7/31/1991 $11,251 $11,570 $11,782
8/31/1991 $11,529 $11,820 $12,072
9/30/1991 $11,783 $12,060 $12,339
10/31/1991 $11,919 $12,194 $12,481
11/30/1991 $12,065 $12,306 $12,634
12/31/1991 $12,451 $12,672 $13,038
1/31/1992 $12,313 $12,499 $12,893
2/29/1992 $12,347 $12,581 $12,929
3/31/1992 $12,293 $12,510 $12,872
4/30/1992 $12,356 $12,600 $12,938
5/31/1992 $12,612 $12,839 $13,206
6/30/1992 $12,783 $13,016 $13,385
7/31/1992 $13,156 $13,281 $13,776
8/31/1992 $13,257 $13,415 $13,882
9/30/1992 $13,496 $13,575 $14,132
10/31/1992 $13,286 $13,394 $13,911
11/30/1992 $13,266 $13,397 $13,891
12/31/1992 $13,442 $13,610 $14,075
1/31/1993 $13,681 $13,871 $14,326
2/28/1993 $13,927 $14,114 $14,583
3/31/1993 $13,971 $14,173 $14,629
4/30/1993 $14,083 $14,273 $14,746
5/31/1993 $14,058 $14,291 $14,720
6/30/1993 $14,260 $14,550 $14,932
7/31/1993 $14,316 $14,633 $14,991
8/31/1993 $14,553 $14,889 $15,219
9/30/1993 $14,579 $14,929 $15,246
10/31/1993 $14,619 $14,984 $15,288
11/30/1993 $14,579 $14,857 $15,246
12/31/1993 $14,639 $14,937 $15,309
1/31/1994 $14,771 $15,139 $15,433
2/28/1994 $14,550 $14,875 $15,216
3/31/1994 $14,269 $14,508 $14,906
4/30/1994 $13,971 $14,392 $14,610
5/31/1994 $13,836 $14,391 $14,469
6/30/1994 $13,785 $14,359 $14,415
7/31/1994 $13,966 $14,645 $14,604
8/31/1994 $13,988 $14,662 $14,627
9/30/1994 $13,750 $14,447 $14,378
10/31/1994 $13,710 $14,434 $14,336
11/30/1994 $13,524 $14,402 $14,142
12/31/1994 $13,613 $14,501 $14,235
1/31/1995 $13,826 $14,788 $14,458
2/28/1995 $14,132 $15,140 $14,777
3/31/1995 $14,221 $15,233 $14,870
4/30/1995 $14,465 $15,446 $15,126
5/31/1995 $15,011 $16,044 $15,698
6/30/1995 $15,081 $16,181 $15,754
7/31/1995 $15,016 $16,125 $15,702
8/31/1995 $15,209 $16,320 $15,904
9/30/1995 $15,356 $16,479 $16,058
10/31/1995 $15,547 $16,693 $16,258
11/30/1995 $15,744 $16,943 $16,464
12/31/1995 $15,974 $17,181 $16,705
1/31/1996 $16,053 $17,294 $16,787
2/29/1996 $15,707 $16,993 $16,425
3/31/1996 $15,575 $16,874 $16,287
4/30/1996 $15,442 $16,780 $16,147
5/31/1996 $15,399 $16,748 $16,103
6/30/1996 $15,594 $16,970 $16,307
7/31/1996 $15,631 $17,016 $16,345
8/31/1996 $15,577 $16,987 $16,289
9/30/1996 $15,831 $17,283 $16,572
10/31/1996 $16,191 $17,667 $16,931
11/30/1996 $16,468 $17,969 $17,221
12/31/1996 $16,280 $17,802 $17,024
1/31/1997 $16,301 $17,857 $17,046
2/28/1997 $16,300 $17,901 $17,063
3/31/1997 $16,071 $17,703 $16,805
4/30/1997 $16,318 $17,968 $17,063
5/31/1997 $16,445 $18,139 $17,215
6/30/1997 $16,658 $18,355 $17,419
7/31/1997 $17,285 $18,850 $18,076
8/31/1997 $17,001 $18,690 $17,778
9/30/1997 $17,325 $18,967 $18,117
10/31/1997 $17,653 $19,242 $18,460
11/30/1997 $17,745 $19,330 $18,556
12/31/1997 $17,949 $19,525 $18,770
1/31/1998 $18,228 $19,775 $19,062
2/28/1998 $18,132 $19,760 $18,961
3/31/1998 $18,173 $19,827 $19,004
4/30/1998 $18,248 $19,930 $19,083
5/31/1998 $18,495 $20,119 $19,341
6/30/1998 $18,683 $20,290 $19,538
7/31/1998 $18,684 $20,333 $19,539
8/31/1998 $19,028 $20,664 $19,899
9/30/1998 $19,564 $21,148 $20,460
10/31/1998 $19,370 $21,036 $20,258
11/30/1998 $19,503 $21,158 $20,397
12/31/1998 $19,560 $21,219 $20,456
1/31/1999 $19,694 $21,370 $20,616
2/28/1999 $19,114 $20,996 $19,989
3/31/1999 $19,253 $21,111 $20,134
4/30/1999 $19,271 $21,179 $20,174
5/31/1999 $19,014 $20,992 $19,884
6/30/1999 $18,871 $20,925 $19,734
7/31/1999 $18,812 $20,837 $19,672
8/31/1999 $18,733 $20,827 $19,590
9/30/1999 $18,896 $21,069 $19,760
10/31/1999 $18,919 $21,147 $19,806
11/30/1999 $18,917 $21,144 $19,785
</TABLE>
- --------------------------------------------------------------------------------
(3) Performance shown for Class A, Class B and Institutional Class shares of
the Wells Fargo 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 Income Fund (the accounting survivor of a merger of the
Norwest Advantage Income, Total Return Bond and Performa Strategic Value Bond
Funds), its predecessor fund. Effective close of business November 5, 1999, the
Norwest Advantage and Performa Funds were reorganized into the Wells Fargo
Funds. For Class A shares, the maximum front-end sales charge is 4.50%. The
maximum sales charge for Class B shares is 5.00%. Class B share performance
including sales charge assumes the sales charge for the corresponding period.
Institutional Class shares are sold without a front-end sales charge or
contingent deferred sales charge. Other fees and expenses apply to a continued
investment in the fund and are described in the Fund's current prospectus.
(4) The Lehman Brothers Aggregate Bond Index is composed of the Lehman
Government/Corporate Index and the Mortgage- Backed Securities Index and
includes treasury issues, agency issues, corporate bond issues and
mortgage-backed securities. The Index does not incur expenses and is not
available directly for investment. Had this Index incurred operating expenses,
its performance would have been lower.
(5) The average credit rating is compiled from ratings from Standards & 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) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Income Fund Class A
and Class I shares since inception with the Lehman Brothers Aggregate Index. The
chart assumes a hypothetical $10,000 investment in Class A and Class I shares
and, for Class A shares, reflects all operating expenses and assumes the maximum
initial sales charge of 4.50%. The Fund is a professionally managed mutual fund.
(9) Portfolio holdings are subject to change.
7
<PAGE>
INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
INCOME PLUS FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Wells Fargo Income Plus Fund seeks to maximize income while maintaining
prospects for capital appreciation.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Graham Allen, FCMA
Jacqueline Flippin
Scott Smith, CFA
John Burgess
Daniel Kokoszka, CFA
Paul Single
Allen Wisniewski, CFA
INCEPTION DATE
7/13/98
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's Class A shares returned (2.77)%(1) for the five-month period ended
November 30, 1999, excluding sales charges. The Fund underperformed its
benchmark, the Lipper Multi-Sector Income Funds Average(2) , during the period
mostly due to a higher allocation to high-yield investments and a slightly
longer duration profile. The Fund's Class A shares distributed $0.37 per share
in dividend income and no capital gains during the period. Please keep in mind
past performance is no guarantee of future results.
Rising interest rates had a negative impact on the Fund. Rates rose by
approximately 80 basis points throughout the period, driven principally by
continued strong economic growth. Credit spreads also widened on new issue
supply concerns and fears of Y2K disruptions. Emerging markets had a neutral
impact on the Fund. Brazil and Mexico continued to show modest improvement and
may be poised for out-performance in the year 2000.
The Fund's holdings in high yield securities, compared to its benchmark,
resulted in the Fund's underperformance as rates moved sharply higher.
Investment grade corporate bonds were added to the Fund as spreads widened.
Yields were wide by historical standards at the end of the period, and the
outlook for corporate earnings remains favorable.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
The duration of the Fund is expected to be held neutral to the benchmark
considering the potential for rising interest rates in the first quarter of
2000. Investment-grade corporate and high-yield securities will continue to be
emphasized as spreads are wide by historical standards. A bias toward
lower-quality corporate bonds is expected to be maintained early in the first
quarter of 2000, and investors are expected to increase their risk posture
following the aftermath of Y2K. Continued improving growth also is expected in
the emerging markets.
Continued strong growth with relatively tame inflation is expected during the
first quarter of 2000, while the latter part of 2000 could see a slowing
economy and falling interest rates. The Fund will continue to seek maximum
income while maintaining prospects for capital appreciation with a diversified
portfolio of debt securities and income-producing equity securities selected
with particular consideration for their potential to generate current income.
- --------------------------------------------------------------------------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
Investments in lower-rated, higher-yielding corporate bonds are subject to
additional risk because they tend to be more sensitive to economic conditions
and, during sustained periods of rising interest rates, may experience interest
and/or principle defaults. Investments in foreign securities entail certain
additional risks that may not be present in domestic securities, including
currency fluctuations, the potential for diplomatic and political instability,
regulatory and liquidity risks, foreign taxation and differences in auditing and
other financial standards.
(2) The Lipper Multi-Sector Income Funds Average is an average of funds which
seek current income by allocating assets among several different fixed income
securities sectors (with no more than 65% in any one sector except for defensive
purposes), including U.S. government and foreign governments, with a significant
portion of assets in securities rated below investment. You cannot invest
directly in a Lipper average.
8
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(3) (%) (AS OF NOVEMBER 30, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Excluding Sales Charge Including Sales Charge
------------------------ -----------------------------
1-Year Since Inception 1-Year Since Inception
<S> <C> <C> <C> <C>
INCOME PLUS FUND
CLASS A (3.30) (0.23) (7.64) (3.50)
CLASS B (4.02) (0.91) (8.53) (3.56)
CLASS C (4.02) (0.91) (4.92) (0.91)
LIPPER MULIT-SECTOR INCOME
FUNDS AVERAGE 1.24
LEHMAN BROTHERS AGGREGATE
INDEX(4) (0.04)
S&P 500 INDEX(5) 20.90
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
<TABLE>
<S> <C>
PORTFOLIO TURNOVER 31%
NUMBER OF HOLDINGS 83
AVERAGE CREDIT QUALITY(6) Baa3
WEIGHTED AVERAGE COUPON 8.36
ESTIMATED WEIGHTED AVERAGE
MATURITY 11.25
ESTIMATED AVERAGE DURATION 5.31
NAV (A, B, C) 11.36, 11.37, 11.37
DISTRIBUTION RATE(7) (A, B, C) 7.19%, 6.78%, 6.78%
SEC YIELD(8) (A, B, C) 8.58%, 8.19%, 8.15%
</TABLE>
PORTFOLIO ALLOCATION(10)
(AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds 69%
Federal Agencies 9%
Common and Preferred Stocks 6%
Foreign Government Bonds 6%
Cash Equivalents 5%
U.S. Treasury Bonds and Notes 5%
</TABLE>
GROWTH OF $10,000 INVESTMENT(9)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO LEHMAN BROTHERS AGGREGATE S&P 500 INDEX
INCOME PLUS FUND - BOND INDEX
CLASS A
<S> <C> <C> <C>
Jun-98 $9,550 $10,000 $10,000
Jul-98 $9,513 $10,021 $9,893
Aug-98 $9,383 $10,184 $8,462
Sep-98 $9,710 $10,423 $9,005
Oct-98 $9,638 $10,367 $9,737
Nov-98 $9,845 $10,427 $10,327
Dec-98 $9,883 $10,458 $10,922
Jan-99 $9,945 $10,532 $11,382
Feb-99 $9,764 $10,348 $11,027
Mar-99 $9,810 $10,405 $11,468
Apr-99 $9,977 $10,438 $11,911
May-99 $9,856 $10,346 $11,630
Jun-99 $9,791 $10,313 $12,263
Jul-99 $9,718 $10,270 $11,880
Aug-99 $9,595 $10,265 $11,821
Sep-99 $9,650 $10,384 $11,497
Oct-99 $9,503 $10,422 $12,225
Nov-99 $9,520 $10,421 $12,473
</TABLE>
- --------------------------------------------------------------------------------
(3) Performance shown for Class A, Class B and Class C shares of the Wells
Fargo 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 close of business November 5, 1999 the Stagecoach
Funds were reorganized into the Wells Fargo Funds. For Class A shares, the
maximum front-end sales charge is 4.50%. The maximum sales charge for Class B
shares is 5.00%. The maximum sales charge for Class C shares is 1.00%. Class B
and Class C share performance including sales charge assumes the sales charge
for the corresponding period.
(4) The Lehman Brothers Aggregate Index is composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index and includes
treasury issues, agency issues, corporate bond issues and mortgage-backed
securities. The Index does not incur expenses and is not available directly for
investment. Had this Index occurred operating expenses, its performance would
have been lower.
(5) 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.
(6) The average credit rating is compiled from ratings from Standards & 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.
(7) 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.
(8) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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.
(9) The chart compares the performance of the Wells Fargo Income Plus Fund
Class A shares since inception with the Lehman Brothers Aggregate 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%.
The Fund is a professionally managed fund.
(10) Portfolio holdings are subject to change.
9
<PAGE>
INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Wells Fargo Intermediate Government Income Fund seeks current income,
consistent with safety of principal.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGER
Marjorie Grace, CFA
INCEPTION DATE
10/27/93
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 0.68%(1) for the six-month period ended
November 30, 1999, excluding sales charges. The Fund underperformed its
benchmark, the Lipper Intermediate U.S. Government Funds Average(2), which
returned 0.30% for the period. The Fund's Class A shares distributed $0.34 per
share in dividend income and no capital gains. Please keep in mind that past
performance is no guarantee of future results.
The six-month period was a difficult one for investors in the fixed income
markets. Interest rates increased across the board, including an increase of
0.53% in the five-year Treasury note. The economy has been growing faster than
expected, albeit with low inflation, causing the Federal Reserve Board to
raise short-term interest rates. Some commodity price increases, especially
oil, worried the bond market. However, mortgage-backed securities performed
well as refinance activity slowed dramatically with the increase in mortgage
rates.
While rising interest rates hurt the Fund's performance, an overweight
positioning in the mortgage sector helped the Fund's performance, and the
Fund's holdings in the mortgage sector were increased throughout the period.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
The mortgage sector continues to be favorable, thus the Fund will continue to
be overweight in this sector going into the first quarter of 2000. Depending
on the interest rate movements, the Fund may increase its duration during
2000.
Looking ahead, the economy appears to be continuing its strong growth.
However, if inflation does not follow, interest rates may turn and decline in
2000.
- --------------------------------------------------------------------------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
(2) The Lipper Intermediate U.S. Government Funds Average is an average of
Funds that invest at least 65% of their assets in securities issues or
guaranteed by the U.S. Government, its agencies, or its instrumentalities, with
dollar-weighted average maturities of five to 10 years. The total return of the
Lipper Category average does not include the effect of sales charges. You cannot
invest directly in a Lipper Average.
(3) Performance shown for the Class A and Class B shares of the Wells Fargo
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), its predecessor fund. Effective close of business
November 5, 1999, the Norwest Advantage and Stagecoach Funds were reorganized
into the Wells Fargo Funds. 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. 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. Performance of the Institutional Class shares of the Fund, prior to
November 11, 1994, reflects the performance of a collective investment fund
adjusted to reflect Institutional Class expenses. Norwest Bank Minnesota, N.A.
managed the collective investment fund with an investment objective and
principal investment strategy that were substantially similar to those of the
Fund. The performance for the Fund includes performance of its predecessor
collective investment fund for periods before it became a mutual fund on
November 11, 1994. The collective investment fund's performance was adjusted to
reflect the Fund's 1994 estimate of expense ratios for the first year of
operations as a mutual fund, including any
10
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(3) (%) (AS OF NOVEMBER 30, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Excluding Sales Charge Including Sales Charge
----------------------- -------------------------
1-Year 5-Year 10-Year 1-Year 5-Year 10-Year
<S> <C> <C> <C> <C> <C> <C>
INTERMEDIATE GOVERNMENT
INCOME FUND
CLASS A (1.16) 6.66 6.37 (5.61) 5.68 5.88
CLASS B (1.90) 5.85 5.58 (6.56) 5.55 5.58
CLASS C (1.90) 5.85 5.58 (2.84) 5.85 5.58
INSTITUTIONAL CLASS (1.16) 6.66 6.37
LIPPER INTERMEDIATE U.S.
GOVERNMENT FUNDS
AVERAGE (0.86) 6.57 6.52
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT
INDEX(4) 1.20 7.07 7.17
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
<TABLE>
<S> <C>
PORTFOLIO TURNOVER 68%
NUMBER OF HOLDINGS 91
AVERAGE CREDIT QUALITY(5) AAA
WEIGHTED AVERAGE COUPON 7.25
ESTIMATED WEIGHTED AVERAGE
MATURITY 15.84
ESTIMATED AVERAGE DURATION 4.44
NAV (A, B, C, I) 10.77, 10.76, 10.76, 10.77
6.04%, 5.60%,
DISTRIBUTION RATE(6) (A, B, C, I) 3.88%, 6.32%
5.49%, 5.96%,
SEC YIELD(7) (A, B, C, I) 5.49%, 6.51%
</TABLE>
PORTFOLIO ALLOCATION(9)
(AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Federal Agencies 52%
U.S. Treasury Bonds and Notes 40%
Cash Equivalents 6%
Other 2%
</TABLE>
GROWTH OF $10,000 INVESTMENT(8)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO LEHMAN BROTHERS WELLS FARGO
INTERMEDIATE GOVERNMENT - INTERMEDIATE INTERMEDIATE GOVERNMENT -
CLASS A GOVERNMENT INDEX CLASS I
<S> <C> <C> <C>
11/30/1989 $9,550 $10,000 $10,000
12/31/1989 $9,581 $10,029 $10,032
1/31/1990 $9,516 $9,967 $9,964
2/28/1990 $9,543 $10,004 $9,993
3/31/1990 $9,561 $10,016 $10,011
4/30/1990 $9,516 $9,982 $9,976
5/31/1990 $9,713 $10,195 $10,171
6/30/1990 $9,825 $10,329 $10,288
7/31/1990 $9,965 $10,473 $10,434
8/31/1990 $9,919 $10,436 $10,386
9/30/1990 $9,999 $10,529 $10,470
10/31/1990 $10,126 $10,675 $10,603
11/30/1990 $10,301 $10,836 $10,786
12/31/1990 $10,423 $10,986 $10,913
1/31/1991 $10,517 $11,099 $11,013
2/28/1991 $10,579 $11,167 $11,077
3/31/1991 $10,629 $11,228 $11,130
4/30/1991 $10,740 $11,344 $11,246
5/31/1991 $10,800 $11,407 $11,309
6/30/1991 $10,774 $11,416 $11,282
7/31/1991 $10,891 $11,540 $11,404
8/31/1991 $11,111 $11,759 $11,634
9/30/1991 $11,328 $11,959 $11,861
10/31/1991 $11,437 $12,095 $11,975
11/30/1991 $11,577 $12,237 $12,122
12/31/1991 $11,882 $12,534 $12,441
1/31/1992 $11,711 $12,414 $12,262
2/29/1992 $11,739 $12,452 $12,292
3/31/1992 $11,674 $12,401 $12,224
4/30/1992 $11,779 $12,513 $12,334
5/31/1992 $11,944 $12,699 $12,507
6/30/1992 $12,116 $12,882 $12,687
7/31/1992 $12,353 $13,129 $12,935
8/31/1992 $12,498 $13,263 $13,087
9/30/1992 $12,673 $13,446 $13,270
10/31/1992 $12,498 $13,285 $13,087
11/30/1992 $12,456 $13,229 $13,043
12/31/1992 $12,594 $13,402 $13,187
1/31/1993 $12,820 $13,652 $13,424
2/28/1993 $13,038 $13,852 $13,653
3/31/1993 $13,124 $13,904 $13,742
4/30/1993 $13,236 $14,012 $13,860
5/31/1993 $13,218 $13,974 $13,841
6/30/1993 $13,408 $14,177 $14,040
7/31/1993 $13,434 $14,205 $14,067
8/31/1993 $13,650 $14,417 $14,294
9/30/1993 $13,733 $14,476 $14,380
10/31/1993 $13,773 $14,511 $14,422
11/30/1993 $13,656 $14,438 $14,299
12/31/1993 $13,722 $14,497 $14,369
1/31/1994 $13,845 $14,641 $14,497
2/28/1994 $13,565 $14,440 $14,204
3/31/1994 $13,273 $14,229 $13,898
4/30/1994 $13,040 $14,137 $13,654
5/31/1994 $12,848 $14,236 $13,454
6/30/1994 $12,777 $14,264 $13,379
7/31/1994 $12,986 $14,451 $13,598
8/31/1994 $12,943 $14,493 $13,553
9/30/1994 $12,862 $14,373 $13,468
10/31/1994 $12,861 $14,376 $13,467
11/30/1994 $12,830 $14,311 $13,436
12/31/1994 $12,877 $14,358 $13,484
1/31/1995 $13,031 $14,592 $13,646
2/28/1995 $13,309 $14,874 $13,936
3/31/1995 $13,394 $14,956 $14,026
4/30/1995 $13,556 $15,129 $14,195
5/31/1995 $13,925 $15,556 $14,582
6/30/1995 $14,025 $15,655 $14,686
7/31/1995 $13,981 $15,663 $14,640
8/31/1995 $14,087 $15,793 $14,751
9/30/1995 $14,170 $15,899 $14,838
10/31/1995 $14,316 $16,074 $14,991
11/30/1995 $14,496 $16,270 $15,180
12/31/1995 $14,647 $16,431 $15,338
1/31/1996 $14,764 $16,569 $15,460
2/29/1996 $14,578 $16,393 $15,266
3/31/1996 $14,481 $16,318 $15,164
4/30/1996 $14,430 $16,271 $15,111
5/31/1996 $14,401 $16,263 $15,080
6/30/1996 $14,527 $16,428 $15,226
7/31/1996 $14,573 $16,479 $15,260
8/31/1996 $14,540 $16,498 $15,226
9/30/1996 $14,756 $16,710 $15,451
10/31/1996 $15,035 $16,984 $15,758
11/30/1996 $15,276 $17,280 $15,996
12/31/1996 $15,106 $17,187 $15,818
1/31/1997 $15,167 $17,252 $15,882
2/28/1997 $15,161 $17,280 $15,890
3/31/1997 $15,004 $17,181 $15,711
4/30/1997 $15,200 $17,428 $15,916
5/31/1997 $15,318 $17,578 $16,040
6/30/1997 $15,465 $17,775 $16,209
7/31/1997 $15,892 $18,280 $16,641
8/31/1997 $15,730 $18,099 $16,472
9/30/1997 $15,971 $18,371 $16,724
10/31/1997 $16,222 $18,688 $16,986
11/30/1997 $16,272 $18,729 $17,039
12/31/1997 $16,423 $18,881 $17,212
1/31/1998 $16,693 $19,127 $17,479
2/28/1998 $16,618 $19,106 $17,417
3/31/1998 $16,659 $19,165 $17,444
4/30/1998 $16,722 $19,257 $17,525
5/31/1998 $16,880 $19,390 $17,675
6/30/1998 $17,021 $19,520 $17,823
7/31/1998 $17,051 $19,594 $17,854
8/31/1998 $17,438 $19,964 $18,260
9/30/1998 $18,027 $20,429 $18,892
10/31/1998 $17,947 $20,464 $18,808
11/30/1998 $17,916 $20,401 $18,760
12/31/1998 $18,008 $20,480 $18,856
1/31/1999 $18,075 $20,572 $18,926
2/28/1999 $17,667 $20,290 $18,516
3/31/1999 $17,786 $20,424 $18,624
4/30/1999 $17,828 $20,480 $18,667
5/31/1999 $17,590 $20,355 $18,435
6/30/1999 $17,521 $20,385 $18,363
7/31/1999 $17,472 $20,387 $18,311
8/31/1999 $17,464 $20,416 $18,286
9/30/1999 $17,674 $20,591 $18,506
10/31/1999 $17,715 $20,632 $18,532
11/30/1999 $17,709 $20,647 $18,543
</TABLE>
- --------------------------------------------------------------------------------
applicable sales load (without giving effect to any fee waivers or expense
reimbursements). The collective investment fund was not registered under the
Investment Company Act of 1940 ("1940 Act") nor subject to certain investment
limitations, diversification requirements, and other restrictions imposed by the
1940 Act or the Internal Revenue Code which, if applicable, may have adversely
affected the performance results. For Class A shares, the maximum front-end
sales charge is 4.50%. The maximum sales charge for Class B shares is 5.00%. The
maximum sales charge for Class C shares is 1.00%. Class B and Class C share
performance including sales charge assumes the sales charge for the
corresponding period.
Institutional Class shares are sold without a front-end sales charge or
contingent deferred sales charge. Other fees and expenses apply to a continued
investment in the fund and are described in the Fund's prospectus.
(4) Lehman Brothers Intermediate Government Index is an unmanaged index based
on all publicly issued intermediate government debt securities with an average
maturity of 4 years. This index represents asset types which are subject to
risk, including loss of principal. The Index does not incur expenses and is not
available directly for investment. Had this Index incurred operating expenses,
its performance would have been lower.
(5) The average credit rating is compiled from ratings from Standards & 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) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Intermediate
Government Income Fund Class A and Class I shares since inception with the
Lehman Brothers Intermediate Government Index. The chart assumes a hypothetical
$10,000 investment in Class A and Class I shares and, for Class A shares,
reflects all operating expenses and assumes the maximum initial sales charge of
4.50%. The Fund is a professionally managed mutual fund.
(9) Portfolio holdings are subject to change.
11
<PAGE>
INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
LIMITED TERM GOVERNMENT INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Wells Fargo Limited Term Government Income Fund seeks current income,
while preserving capital.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Paul Single
Jacqueline Flippin
INCEPTION DATE
10/27/93
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 1.12%(1) for the five-month period ended
November 30, 1999, excluding sales charges. The Fund underperformed its
benchmark, the Lipper Short-Intermediate U.S. Government Funds Average(2),
which returned 1.18% for the period. The Fund's Class A shares distributed
$0.23 per share in dividend income and no capital gains. Please keep in mind
that past performance is no guarantee of future results.
The five-month period was a difficult one for investors in the fixed-income
markets. Interest rates increased across the board, including an increase of
0.53% in the five-year Treasury note. The economy has been growing faster than
expected, albeit with low inflation, causing the Federal Reserve Board to
raise short-term interest rates. Some commodity price increases, especially
oil, worried the bond market. However, mortgage-backed securities performed
well as refinance activity slowed dramatically with the increase in mortgage
rates.
While interest rate increases hurt the Fund's performance, an overweight
positioning in the mortgage sector helped the Fund's performance. In fact, the
Fund's holdings in the mortgage sector was increased throughout the period.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
The Fund may continue to rotate out of corporate bonds and into
mortgage-backed securities. We anticipate this sector will benefit from strong
fundamentals and attractive historical valuations. The mortgage sector
continues to be favorable, thus the Fund is expected to continue to be
overweight in this sector going into the first quarter of 2000. Depending on
the interest rate movements, the Fund may increase its duration during 2000.
We anticipate continued economic growth in the year 2000, but that growth may
be accompanied by stable rates of inflation. In the event of a slight economic
slowdown, interest rates may turn and begin to decline, which in turn may
negatively affect Fund performance.
- --------------------------------------------------------------------------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
(2) The Lipper Short Intermediate U.S. Government Funds Average is an average
of funds that invests at least 65% of their assets in securities issued or
guaranteed by the U.S. government, its agencies, or its instrumentalities, with
dollar-weighted average maturities of one to five years. The total return of the
Average does not include the effect of sales charges. You cannot invest directly
in a Lipper Average.
(3) Performance shown for Class A, Class B and Institutional Class shares of
the Wells Fargo Limited Term Government Income Fund for periods prior to
November 8, 1999, reflects performance of the Class A, Class B and Institutional
Class shares of the Stagecoach Short-Intermediate U.S. Government Income Fund
(the accounting survivor of a merger of the Stagecoach Fund and the Norwest
Advantage Limited Term Government Income Fund), its predecessor fund. Effective
the close of business November 5, 1999 the Stagecoach and Norwest Advantage
Funds were reorganized into the Wells Fargo Funds. Performance shown for the
Class B shares of the fund for periods prior to June 15, 1998, reflects the
performance and expenses of the Fund's Class A shares. Performance shown for the
Institutional Class shares for periods prior to September 6, 1996, reflects
performance of the Class A shares of the predecessor fund. For Class A shares,
the maximum front-end sales charge is 4.50%. The maximum sales charge for Class
B shares is 5.00%. Class B share performance including sales charge assumes the
sales charge for the corresponding period.
12
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(3)(%) (AS OF NOVEMBER 30, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Excluding Sales Charge Including Sales Charge
------------------------- -----------------------------
Since Since
1-Year 5-Year Inception 1-Year 5-Year Inception
<S> <C> <C> <C> <C> <C> <C>
LIMITED TERM GOVERNMENT
INCOME FUND
CLASS A 0.26 6.29 4.90 (4.26) 5.32 4.11
CLASS B (0.44) 5.62 4.24 (5.18) 5.30 4.24
INSTITUTIONAL CLASS 0.36 6.34 4.94
LIPPER SHORT-INTERMEDIATE
U.S. GOVERNMENT FUNDS
AVERAGE 1.26 6.10
LEHMAN BROTHERS
INTERMEDIATE TREASURY
BOND INDEX(4) 1.08 7.05
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
<TABLE>
<S> <C>
PORTFOLIO TURNOVER 45%
NUMBER OF HOLDINGS 72
AVERAGE CREDIT QUALITY(5) Aaa
WEIGHTED AVERAGE COUPON 6.32
ESTIMATED WEIGHTED AVERAGE
MATURITY 7.06
ESTIMATED DURATION 3.02
NAV (A, B, I) 9.62, 9.62, 9.44
DISTRIBUTION RATE(6) (A, B, I) 5.36%, 4.85%, 5.90%
SEC YIELD(7) (A, B, I) 5.90%, 5.42%, 6.47%
</TABLE>
PORTFOLIO ALLOCATION(9)
(AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Federal Agencies 36%
U.S. Treasury Notes 24%
Fixed Rate Bonds and Notes 16%
Government Agency Bonds and Notes 13%
Other 7%
Cash Equivalents 4%
</TABLE>
GROWTH OF $10,000 INVESTMENT(8)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO LIMITED LEHMAN BROTHERS WELLS FARGO LIMITED
TERM GOVERNMENT INTERMEDIATE TREASURY TERM GOVERNMENT -
INCOME - CLASS A BOND INDEX CLASS I
<S> <C> <C> <C>
10/27/93 $9,550 $10,000 $10,000
10/31/93 $9,550 $9,950 $10,000
11/30/93 $9,566 $9,991 $10,015
12/31/93 $9,596 $10,090 $10,047
1/31/94 $9,656 $9,948 $10,110
2/28/94 $9,598 $9,804 $10,050
3/31/94 $9,546 $9,741 $9,995
4/30/94 $9,513 $9,748 $9,960
5/31/94 $9,540 $9,750 $9,989
6/30/94 $9,549 $9,877 $9,997
7/31/94 $9,607 $9,906 $10,058
8/31/94 $9,603 $9,824 $10,055
9/30/94 $9,484 $9,827 $9,930
10/31/94 $9,478 $9,782 $9,924
11/30/94 $9,423 $9,813 $9,866
12/31/94 $9,460 $9,973 $9,905
1/31/95 $9,609 $10,163 $10,061
2/28/95 $9,784 $10,219 $10,244
3/31/95 $9,835 $10,337 $10,297
4/30/95 $9,919 $10,629 $10,385
5/31/95 $10,142 $10,699 $10,619
6/30/95 $10,202 $10,704 $10,681
7/31/95 $10,205 $10,790 $10,684
8/31/95 $10,273 $10,862 $10,756
9/30/95 $10,333 $10,983 $10,819
10/31/95 $10,434 $11,117 $10,924
11/30/95 $10,546 $11,228 $11,041
12/31/95 $10,659 $11,325 $11,160
1/31/96 $10,751 $11,204 $11,257
2/29/96 $10,659 $11,149 $11,160
3/31/96 $10,597 $11,117 $11,095
4/30/96 $10,556 $11,111 $11,052
5/31/96 $10,531 $11,221 $11,026
6/30/96 $10,630 $11,255 $11,130
7/31/96 $10,658 $11,269 $11,159
8/31/96 $10,657 $11,414 $11,158
9/30/96 $10,802 $11,600 $11,301
10/31/96 $10,938 $11,739 $11,445
11/30/96 $11,092 $11,675 $11,609
12/31/96 $11,044 $11,719 $11,557
1/31/97 $11,114 $11,736 $11,631
2/28/97 $11,154 $11,667 $11,672
3/31/97 $11,080 $11,798 $11,593
4/30/97 $11,207 $11,890 $11,740
5/31/97 $11,280 $11,991 $11,818
6/30/97 $11,372 $12,215 $11,915
7/31/97 $11,583 $12,166 $12,128
8/31/97 $11,528 $12,299 $12,068
9/30/97 $11,644 $12,443 $12,192
10/31/97 $11,766 $12,471 $12,322
11/30/97 $11,786 $12,573 $12,344
12/31/97 $11,880 $12,742 $12,444
1/31/98 $12,041 $12,725 $12,619
2/28/98 $12,016 $12,764 $12,592
3/31/98 $12,043 $12,824 $12,619
4/30/98 $12,095 $12,912 $12,675
5/31/98 $12,186 $12,999 $12,771
6/30/98 $12,228 $13,049 $12,815
7/31/98 $12,281 $13,308 $12,871
8/31/98 $12,498 $13,628 $13,103
9/30/98 $12,816 $13,656 $13,442
10/31/98 $12,779 $13,605 $13,402
11/30/98 $12,748 $13,657 $13,368
12/31/98 $12,783 $13,717 $13,405
1/31/99 $12,855 $13,517 $13,481
2/28/99 $12,632 $13,606 $13,241
3/31/99 $12,718 $13,644 $13,333
4/30/99 $12,757 $13,557 $13,374
5/31/99 $12,632 $13,581 $13,254
6/30/99 $12,641 $13,593 $13,248
7/31/99 $12,606 $13,620 $13,225
8/31/99 $12,599 $13,727 $13,217
9/30/99 $12,749 $13,834 $13,363
10/31/99 $12,776 $13,852 $13,394
11/30/99 $12,782 $13,857 $13,416
</TABLE>
- --------------------------------------------------------------------------------
Institutional Class shares are sold without a front-end sales charge or
contingent deferred sales charge. Other fees and expenses apply to a continued
investment in the fund and are described in the Fund's current prospectus.
(4) The Lehman Brothers Intermediate Treasury Bond Index is an unmanaged index
composed of U.S. Treasury securities in the 1- to 10-year range. The Index does
not incur expenses and is not available directly for investment. Had this Index
incurred operating expenses, its performance would have been lower.
(5) The average credit rating is compiled from ratings from Standards & 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) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Limited Term Fund
Class A and Class I shares since inception with the Lehman Brothers Intermediate
Treasury Bond Index. The chart assumes a hypothetical $10,000 investment in
Class A and Class I shares and, for Class A shares, reflects all operating
expenses and assumes the maximum initial sales charge of 4.50%. The Fund is a
professionally managed mutual fund.
(9) Portfolio holdings are subject to change.
13
<PAGE>
INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
STABLE INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Wells Fargo Stable Income Fund seeks stability of principal while
providing low volatility total return.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGER
John Huber
INCEPTION DATE
11/9/94
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 2.99%(1) for the six-month period ended
November 30, 1999, excluding sales charges. The Fund outperformed its
benchmark, the Lipper Short Investment Grade Debt Average(2), which returned
1.47% during the period. The Fund's Class A shares distributed $0.04 per share
in dividend income and no capital gains during the period. Please keep in mind
that past performance is no guarantee of future results.
While the Fund benefited from its duration positioning, the Fund's yield
advantage could not overcome the general spread malaise that affected the
fixed income market during the first half of 1999. Performance was enhanced by
the Fund's opportunistic participation in the corporate sector, although
credit issues on individual holdings hurt investment results.
The Fund's yield-to-maturity and duration positioning will dominate its
performance over the long term. During the period, the fixed income market
experienced a large increase in interest rates, along with a dramatic widening
in credit spreads. While the Fund's emphasis on spread product had a negative
impact on performance, the Fund performed in line with its benchmarks during a
difficult operating environment.
Rite Aid Corporation was downgraded from Baa1 to B1 late in the period, which
negatively impacted the Fund's performance. However, that position will be
held as residual asset valuations exceed current pricing levels. Several
corporate purchases during the period, Sun Microsystems, Safeway and Daimler
Chrysler, aided the Fund's performance. Quality of earnings concerns led to a
reduction of the Fund's holdings in Tyco International during the period.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
The U.S. economy remained strong. The global economy was improving during the
period, at a time when the domestic market was showing some signs of weakness.
This combination of events is a compelling argument for continued growth of
the U.S. economy. Inflation risk remains benign, as productivity gains have
offset higher energy/labor costs. Interest rates may continue to increase if
inflation appears or market valuations continue to accelerate.
Looking ahead, the Fund will continue to focus on selection of debt
securities and sectors it believes are under-valued on a strategically
diversified basis. It's expected the taxable municipal sector and mortgage
sectors may perform well in the coming months of 2000.
- --------------------------------------------------------------------------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
(2) The Lipper Short Investment Grade Debt Funds Average is an average of funds
that invests at least 65% of their assets in securities issued or guaranteed by
the U.S. government, its agencies, or its instrumentalities, with
dollar-weighted average maturities of one to five years. The total return of the
Lipper average does not include the effect of sales charges. You cannot invest
directly in an Average.
14
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(3) (%) (AS OF NOVEMBER 30, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Excluding Sales Charge Including Sales Charge
------------------------- -----------------------------
Since Since
1-Year 5-Year Inception 1-Year 5-Year Inception
<S> <C> <C> <C> <C> <C> <C>
STABLE INCOME FUND
CLASS A 3.47 5.81 5.82 1.91 5.50 5.50
CLASS B 2.70 5.01 5.00 1.23 5.01 5.00
INSTITUTIONAL CLASS 3.48 5.82 5.82
LIPPER SHORT INVESTMENT
GRADE DEBT FUNDS
AVERAGE 3.08 5.94
MERILL LYNCH TREASURY
BILL ONE-YEAR INDEX(4) 4.18 5.88
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
<TABLE>
<S> <C>
PORTFOLIO TURNOVER 25%
NUMBER OF HOLDINGS 126
AVERAGE CREDIT QUALITY(5) AA2
WEIGHTED AVERAGE COUPON 6.45
ESTIMATED WEIGHTED AVERAGE
MATURITY 2.62
ESTIMATED AVERAGE DURATION 1.03
NAV (A, B, I) 10.18, 10.17, 10.18
DISTRIBUTION RATE(6) (A, B, I) 4.73%, 4.05%, 4.94%
SEC YIELD(7) (A, B, I) 5.38%, 4.96%, 5.90%
</TABLE>
PORTFOLIO ALLOCATION(9)
(AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Securities 35%
Fixed Rate Bonds and Notes 25%
Federal Agencies 23%
Other 7%
Variable Rate Bonds 6%
Cash Equivalents 4%
</TABLE>
GROWTH OF $10,000 INVESTMENT(8)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO MERRILL LYNCH WELLS FARGO
STABLE INCOME - ONE-YEAR TREASURY STABLE INCOME -
CLASS A BILL INDEX CLASS I
<S> <C> <C> <C>
11/11/94 $9,850 $10,000 $10,000
11/30/94 $9,880 $9,995 $10,030
12/31/94 $9,919 $10,029 $10,070
1/31/95 $9,968 $10,129 $10,120
2/28/95 $10,047 $10,218 $10,200
3/31/95 $10,126 $10,277 $10,280
4/30/95 $10,185 $10,336 $10,340
5/31/95 $10,293 $10,429 $10,450
6/30/95 $10,352 $10,488 $10,510
7/31/95 $10,392 $10,540 $10,550
8/31/95 $10,451 $10,590 $10,610
9/30/95 $10,500 $10,634 $10,660
10/31/95 $10,559 $10,698 $10,720
11/30/95 $10,638 $10,762 $10,800
12/31/95 $10,706 $10,822 $10,869
1/31/96 $10,778 $10,891 $10,942
2/29/96 $10,778 $10,904 $10,942
3/31/96 $10,809 $10,934 $10,974
4/30/96 $10,836 $10,972 $11,001
5/31/96 $10,872 $11,012 $11,038
6/30/96 $10,934 $11,070 $11,101
7/31/96 $10,991 $11,112 $11,159
8/31/96 $11,030 $11,184 $11,198
9/30/96 $11,112 $11,240 $11,281
10/31/96 $11,196 $11,323 $11,366
11/30/96 $11,258 $11,379 $11,430
12/31/96 $11,290 $11,417 $11,462
1/31/97 $11,334 $11,474 $11,506
2/28/97 $11,374 $11,515 $11,547
3/31/97 $11,392 $11,544 $11,566
4/30/97 $11,491 $11,613 $11,666
5/31/97 $11,551 $11,685 $11,727
6/30/97 $11,614 $11,754 $11,791
7/31/97 $11,740 $11,838 $11,919
8/31/97 $11,748 $11,875 $11,927
9/30/97 $11,839 $11,938 $12,019
10/31/97 $11,925 $12,004 $12,107
11/30/97 $11,954 $12,039 $12,124
12/31/97 $12,020 $12,097 $12,203
1/31/98 $12,108 $12,175 $12,293
2/28/98 $12,150 $12,205 $12,335
3/31/98 $12,187 $12,269 $12,373
4/30/98 $12,244 $12,326 $12,431
5/31/98 $12,288 $12,376 $12,463
6/30/98 $12,344 $12,435 $12,533
7/31/98 $12,406 $12,494 $12,595
8/31/98 $12,508 $12,594 $12,699
9/30/98 $12,613 $12,597 $12,805
10/31/98 $12,645 $12,763 $12,838
11/30/98 $12,667 $12,754 $12,860
12/31/98 $12,725 $12,809 $12,907
1/31/99 $12,750 $12,854 $12,944
2/28/99 $12,749 $12,861 $12,944
3/31/99 $12,823 $12,939 $13,019
4/30/99 $12,871 $12,986 $13,068
5/31/99 $12,870 $13,020 $13,079
6/30/99 $12,911 $13,075 $13,109
7/31/99 $12,956 $13,129 $13,154
8/31/99 $12,986 $13,169 $13,184
9/30/99 $13,058 $13,238 $13,257
10/31/99 $13,080 $13,270 $13,279
11/30/99 $13,106 $13,297 $13,307
</TABLE>
- --------------------------------------------------------------------------------
(3) Performance shown for Class A, Class B and Institutional Class shares of
the Wells Fargo 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 close
of business November 5, 1999, the Stagecoach Funds were reorganized into the
Wells Fargo Funds. 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. 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. For Class A shares, the maximum front-end sales charge is
1.50%. The maximum sales charge for Class B shares is 5.00%. Class B share
performance including sales charge assumes the sales charge for the
corresponding period.
Institutional Class shares are sold without a front-end sales charge or
contingent deferred sales charge. Other fees and expenses apply to a continued
investment in the Fund and are described in the Fund's current prospectus.
(4) Merrill Lynch Treasury Bill One-Year Index is the unmanaged measure of the
performance of the one-year Treasury Bill. You cannot invest directly in an
Index.
(5) The average credit rating is compiled from ratings from Standards & 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) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Stable Income Fund
Class A shares since inception with the Merrill Lynch Treasury Bill One-Year
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
1.50%. The Fund is a professionally managed mutual fund.
(9) Portfolio holdings are subject to change.
15
<PAGE>
INCOME FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
VARIABLE RATE GOVERNMENT FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The Wells Fargo Variable Rate Government Fund seeks a high level of current
income, while reducing principal volatility, by investing primarily in
adjustable rate mortgage securities.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Paul Single
Scott Smith, CFA
INCEPTION DATE
11/1/90
PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's Class A shares returned 1.47%(1) for the five-month period ended
November 30, 1999, excluding sales charges. The Fund underperformed its
benchmark, the Lipper Adjustable Rate Mortgage (ARM) Funds Average(2) , which
returned 4.09% for the period. The Fund's Class A shares distributed $0.18 per
share in dividend income and no capital gains. Please keep in mind that past
performance is no guarantee of future results.
The Fund underperformed its benchmark due to a slightly longer duration
during the period, as a result of rising interest rates and higher levels of
prepayments than expected within the portfolio. Prepayments for ARMs
frequently rise with increases in interest rates as a result of homeowners
refinancing into fixed-rate products, in order to lock into a rate before
further interest rate increases in their adjustable product occurs.
During the period, the Federal Reserve Board, prompted by continued domestic
growth, raised interest rates twice. These changes returned interest rates to
levels they had been prior to the liquidity crisis of 1998. Some commodity
prices, such as oil, did increase, but other economic measures showed that
rates of inflation growth remained tame. Rising interest rates reduced the
Fund's return during the period. The Fund had a slightly longer duration
profile than its peers.
The Fund's holdings in adjustable rate mortgages were decreased during the
period, and it was slightly underweight in this category relative to other
funds in its peer group. In the event of any slight increases of rates, this
adjustment may shelter the Fund from increased prepayments.
STRATEGIC OUTLOOK
- --------------------------------------------------------------------------------
Looking ahead, the Fund is expected to continue emphasizing "seasoned bonds,"
meaning homeowners who hold these loans have had several opportunities to
refinance and have not. These loans offer high levels of income and are less
sensitive to changes in interest rates.
Continued economic growth is expected during 2000, but that growth may not be
accompanied by stable rates of inflation. In the event of a slight economic
slowdown, interest rates may turn and begin to decline in 2000, which may have
a negative affect on Fund performance.
- --------------------------------------------------------------------------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time.
(2) The Lipper Adjustable Rate Mortgage Funds Average is an average of 30 funds
that invest at least 65% of their assets in adjustable rate mortgage securities
or other securities collaterized by or representing an interest in mortgages.
The total return of the of the average does not include the effect of sales
charges. You cannot invest directly in a Lipper average.
16
<PAGE>
PERFORMANCE HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(3) (%) (AS OF NOVEMBER 30, 1999)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Including Sales
Excluding Sales Charge Charge
--------------------------------- --------------------
Since Since
1-Year 5-Year Inception 1-Year 5-Year Inception
<S> <C> <C> <C> <C> <C> <C>
VARIABLE RATE GOVERNMENT FUND
CLASS A 2.65 4.55 4.36 (1.98) 3.58 3.83
LIPPER ADJUSTABLE RATE MORTGAGE FUNDS AVERAGE 4.72 5.77
LEHMAN BROTHERS ADJUSTABLE RATE MORTAGES
INDEX(4) 4.77 7.31
</TABLE>
CHARACTERISTICS (AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
<TABLE>
<S> <C>
PORTFOLIO TURNOVER 0%
NUMBER OF HOLDINGS 17
AVERAGE CREDIT QUALITY(5) Agy
WEIGHTED AVERAGE COUPON 6.39
ESTIMATED WEIGHTED AVERAGE
MATURITY 16.75
ESTIMATED AVERAGE DURATION 1.05
NAV (A) 8.91
DISTRIBUTION RATE(6) (A) 4.82%
SEC YIELD(7) (A) 4.66%
</TABLE>
PORTFOLIO ALLOCATION(9)
(AS OF NOVEMBER 30, 1999)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Federal Agencies 96%
Cash Equivalents 4%
</TABLE>
GROWTH OF $10,000 INVESTMENT(8)
- ----------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WELLS FARGO VARIABLE LEHMAN BROTHERS
RATE GOVERNMENT FUND - ARM'S INDEX
CLASS A
<S> <C> <C>
Inception $9,550 $10,000
Nov-90 $9,726 $10,086
Dec-90 $9,813 $10,197
Jan-91 $9,929 $10,291
Feb-91 $10,026 $10,360
Mar-91 $10,062 $10,432
Apr-91 $10,112 $10,527
May-91 $10,224 $10,587
Jun-91 $10,234 $10,635
Jul-91 $10,292 $10,719
Aug-91 $10,370 $10,847
Sep-91 $10,456 $10,947
Oct-91 $10,510 $11,057
Nov-91 $10,573 $11,163
Dec-91 $10,657 $11,309
Jan-92 $10,708 $11,381
Feb-92 $10,747 $11,409
Mar-92 $10,764 $11,364
Apr-92 $10,823 $11,487
May-92 $10,890 $11,590
Jun-92 $10,955 $11,711
Jul-92 $11,019 $11,762
Aug-92 $11,071 $11,862
Sep-92 $11,099 $11,927
Oct-92 $11,059 $11,829
Nov-92 $11,085 $11,846
Dec-92 $11,108 $11,958
Jan-93 $11,162 $12,080
Feb-93 $11,236 $12,186
Mar-93 $11,288 $12,241
Apr-93 $11,330 $12,313
May-93 $11,361 $12,343
Jun-93 $11,448 $12,472
Jul-93 $11,514 $12,530
Aug-93 $11,577 $12,605
Sep-93 $11,608 $12,607
Oct-93 $11,615 $12,612
Nov-93 $11,597 $12,578
Dec-93 $11,648 $12,673
Jan-94 $11,712 $12,758
Feb-94 $11,693 $12,717
Mar-94 $11,614 $12,616
Apr-94 $11,547 $12,549
May-94 $11,456 $12,539
Jun-94 $11,472 $12,567
Jul-94 $11,465 $12,644
Aug-94 $11,496 $12,706
Sep-94 $11,444 $12,654
Oct-94 $11,407 $12,643
Nov-94 $11,263 $12,608
Dec-94 $11,204 $12,674
Jan-95 $11,304 $12,884
Feb-95 $11,407 $13,143
Mar-95 $11,492 $13,206
Apr-95 $11,557 $13,346
May-95 $11,663 $13,562
Jun-95 $11,687 $13,618
Jul-95 $11,752 $13,667
Aug-95 $11,809 $13,676
Sep-95 $11,853 $13,773
Oct-95 $11,921 $13,859
Nov-95 $12,026 $13,977
Dec-95 $12,066 $14,083
Jan-96 $12,157 $14,181
Feb-96 $12,144 $14,213
Mar-96 $12,118 $14,238
Apr-96 $12,141 $14,257
May-96 $12,167 $14,298
Jun-96 $12,248 $14,400
Jul-96 $12,277 $14,470
Aug-96 $12,333 $14,557
Sep-96 $12,428 $14,669
Oct-96 $12,476 $14,836
Nov-96 $12,550 $14,979
Dec-96 $12,598 $15,027
Jan-97 $12,658 $15,114
Feb-97 $12,717 $15,198
Mar-97 $12,768 $15,227
Apr-97 $12,869 $15,346
May-97 $12,945 $15,441
Jun-97 $13,020 $15,543
Jul-97 $13,067 $15,677
Aug-97 $13,066 $15,718
Sep-97 $13,135 $15,847
Oct-97 $13,206 $15,951
Nov-97 $13,221 $15,956
Dec-97 $13,282 $16,064
Jan-98 $13,313 $16,172
Feb-98 $13,353 $16,208
Mar-98 $13,415 $16,316
Apr-98 $13,460 $16,386
May-98 $13,528 $16,465
Jun-98 $13,570 $16,547
Jul-98 $13,583 $16,612
Aug-98 $13,655 $16,698
Sep-98 $13,697 $16,790
Oct-98 $13,664 $16,782
Nov-98 $13,704 $16,872
Dec-98 $13,758 $16,911
Jan-99 $13,813 $17,006
Feb-99 $13,742 $17,081
Mar-99 $13,853 $17,183
Apr-99 $13,901 $17,248
May-99 $13,874 $17,273
Jun-99 $13,864 $17,298
Jul-99 $13,856 $17,337
Aug-99 $13,833 $17,350
Sep-99 $13,983 $17,512
Oct-99 $14,025 $17,598
Nov-99 $14,067 $17,677
</TABLE>
- --------------------------------------------------------------------------------
(3) Performance shown for the Class A shares of the Wells Fargo Variable Rate
Government Fund for periods prior to November 8, 1999, reflects performance of
the Class A shares of the Stagecoach Variable Rate Government Fund, its
predecessor fund. Effective close of business November 5, 1999, the Stagecoach
Funds were reorganized into the Wells Fargo Funds. Performance shown for the
Class A shares of the Fund prior to December 12, 1997, reflects performance of
the Class A shares of the Overland Express Variable Rate Government Fund, a
predecessor portfolio with the same investment objective and policies as the
Fund.
(4) Merrill Lynch Treasury Bill One-Year Index is the unmanaged measure of the
performance of the one-year Treasury Bill. You cannot invest directly in an
Index.
(5) The average credit rating is compiled from ratings from Standards & 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) The formula used to calculate the SEC yield is described in detail in the
Fund's prospectus and is designed to standardize the yield calculations so that
all mutual fund companies with the same or similar portfolios quote a uniform
yield figure for their non-money market advertisements. 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 Variable Rate
Government Fund Class A shares since inception with the Lehman Brothers
Adjustable Rate Mortgages (ARM) 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%. The Fund is a professionally managed
mutual fund.
(9) Portfolio holdings are subject to change.
17
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FOREIGN GOVERNMENTS - 4.26%
$ 100,000 PROVINCE OF QUEBEC 8.80% 04/15/03 $ 105,970
130,000 REPUBLIC OF ARGENTINA 11.00 10/09/06 124,475
115,000 REPUBLIC OF COLOMBIA 9.75 04/23/09 102,063
340,000 REPUBLIC OF POLAND 7.13 07/01/04 338,300
130,000 UNITED MEXICAN STATES 8.63 03/12/08 123,500
794,308
TOTAL FOREIGN GOVERNMENTS (COST $809,330)
-----------
CORPORATE BONDS & NOTES - 77.46%
AEROSPACE - 3.68%
605,000 LOCKHEED MARTIN CORPORATION 8.50 12/01/29 596,681
100,000 RAYTHEON CORPORATION 6.55 03/15/10 90,125
686,806
-----------
APPAREL & ACCESSORY STORES - 3.05%
100,000 DAYTON HUDSON CORPORATION 7.25 09/01/04 99,875
500,000 SAKS INCORPORATED 7.00 07/15/04 468,750
568,625
-----------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 2.62%
500,000 JONES APPAREL GROUP 7.88 06/15/06 489,375
-----------
BUSINESS SERVICES - 2.11%
400,000 CENDANT CORPORATION 7.75 12/01/03 394,500
-----------
COMMERCIAL SERVICES - 1.71%
200,000 CSC HOLDINGS INCORPORATED 9.88 05/15/06 208,000
100,000 CSC HOLDINGS INCORPORATED 10.50 05/15/16 110,500
318,500
-----------
COMMUNICATIONS - 2.95%
100,000 ADELPHIA COMMUNICATIONS CORPORATION 9.88 03/01/07 102,375
250,000 BRESNAN COMMUNICATIONS GROUP 8.00 02/01/09 250,625
100,000 CABLE & WIRELESS COMMUNICATIONS 6.75 03/06/08 100,875
100,000 CENTURY COMMUNICATIONS CORPORATION 8.88 01/15/07 97,250
551,125
-----------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 1.55%
300,000 ENSERCH CORPORATION 6.56 07/01/05 289,875
-----------
FINANCIAL SERVICES - 10.13%
100,000 ASSOCIATES CORPORATION OF NORTH AMERICA 6.73 09/30/02 99,895
300,000 CITICORP CAPITAL II 8.02 02/15/27 284,625
100,000 GENERAL MOTORS ACCEPTANCE CORPORATION 6.13 01/22/08 92,375
481,000 HOMESIDE INTERNATIONAL INCORPORATED 11.25 05/15/03 549,543
500,000 MIDAMERICAN FUNDING LLC 6.34 03/01/09 455,000
100,000 SEARS DISCOVER CREDIT CORPORATION SERIES II 9.14 03/13/12 113,825
300,000 TRANSAMERICA FINANCE CORPORATION 6.13 11/01/01 295,500
1,890,763
-----------
FOOD & KINDRED PRODUCTS - 2.46%
500,000 PEPSI BOTTLING GROUP 7.00 03/01/29 459,375
-----------
</TABLE>
18
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
HEALTH SERVICES - 0.98%
$ 200,000 TENET HEALTHCARE CORPORATION 8.13% 12/01/08 $ 183,500
-----------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES - 0.64%
125,000 SUN INTERNATIONAL HOTELS LIMITED 9.00 03/15/07 120,313
-----------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 3.30%
250,000 APPLIED POWER INCORPORATED 8.75 04/01/09 242,500
100,000 INTERNATIONAL BUSINESS MACHINES 8.38 11/01/19 111,375
300,000 TYCO INTERNATIONAL GROUP SA 6.88 01/15/29 261,375
615,250
-----------
INSURANCE CARRIERS - 2.78%
700,000 FREMONT GENERAL CORPORATION 7.88 03/17/09 518,000
-----------
MEDIA - 2.52%
200,000 NEWS AMERICA HOLDINGS INCORPORATED 6.70 05/21/04 195,000
250,000 NEWS AMERICA HOLDINGS INCORPORATED 9.25 02/01/13 275,937
470,937
-----------
MISCELLANEOUS RETAIL - 2.75%
200,000 FRONTIERVISION OPERATING PARTNERS 11.00 10/15/06 211,500
250,000 K-MART CORPORATION 8.25 01/01/22 220,938
250,000 VISTA EYECARE INCORPORATED 12.75 10/15/05 80,625
513,063
-----------
MOTION PICTURES - 4.90%
250,000 CARMIKE CINEMAS INCORPORATED 9.38 02/01/09 240,000
250,000 CINEMARK USA INCORPORATED 9.63 08/01/08 235,625
250,000 LOEWS CINEPLEX ENTERTAINMENT 8.88 08/01/08 232,500
250,000 REGAL CINEMAS INCORPORATED 9.50 06/01/08 205,313
913,438
-----------
OIL & GAS EXTRACTION - 5.11%
500,000 PENNZOIL-QUAKER STATE 7.38 04/01/29 451,875
500,000 PETROLEUM GEO SERVICES 8.15 07/15/29 501,250
953,125
-----------
PRIMARY METAL INDUSTRIES - 4.02%
400,000 KINDER MORGAN INCORPORATED 6.80 03/01/08 378,500
400,000 TRANS-CANADA PIPELINES 6.49 01/21/09 371,000
749,500
-----------
REAL ESTATE - 3.80%
250,000 D. R. HORTON INCORPORATED 8.00 02/01/09 225,625
200,000 D. R. HORTON INCORPORATED 10.00 04/15/06 201,000
300,000 ERP OPERATING LIMITED PARTNERSHIP 6.63 04/13/15 282,785
709,410
-----------
REAL ESTATE INVESTMENT TRUSTS - 5.19%
490,000 CAMDEN PROPERTIES TRUST 6.63 02/15/01 484,483
500,000 MACK-CALI REALTY L.P. 7.00 03/15/04 483,125
967,608
-----------
</TABLE>
19
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS - 4.69%
$ 400,000 TELE COMMUNICATIONS INCORPORATED 7.88% 02/15/26 $ 409,000
500,000 TELEGLOBE INCORPORATED 7.20 07/20/09 465,625
874,625
-----------
TOBACCO PRODUCTS - 2.44%
500,000 IMPERIAL TOBACCO OVERSEAS 7.13 04/01/09 455,625
-----------
TRANSPORTATION - 3.05%
300,000 CHRYSLER CORPORATION 7.45 02/01/97 286,500
300,000 UNION PACIFIC CORPORATION 6.63 02/01/08 282,375
568,875
-----------
WHOLESALE TRADE-NONDURABLE GOODS - 1.03%
200,000 MARSH SUPERMARKETS INCORPORATED 8.88 08/01/07 191,500
-----------
14,453,713
TOTAL CORPORATE BONDS & NOTES (COST $15,677,827)
-----------
U.S. GOVERNMENT AGENCY SECURITIES - 6.18%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 6.18%
1,156,281 FNMA POOL #513615 (COST $1,150,861) 7.50 09/01/29 1,154,257
-----------
U.S. TREASURY SECURITIES - 9.27%
U.S. TREASURY BONDS - 3.41%
750,000 U.S. TREASURY BONDS 5.25 02/15/29 636,683
-----------
U.S. TREASURY NOTES - 5.86%
800,000 U.S. TREASURY NOTES 6.00 08/15/09 789,872
300,000 U.S. TREASURY NOTES 6.50 05/15/05 303,798
1,093,670
-----------
1,730,353
TOTAL U.S. TREASURY SECURITIES (COST $1,742,811)
-----------
SHORT-TERM INSTRUMENTS - 1.29%
REPURCHASE AGREEMENTS - 1.29%
240,000 GOLDMAN SACHS POOLED REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY U.S. GOVERNMENT SECURITIES (COST
$240,000) 5.58 12/01/99 240,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $19,620,828)* (NOTES 1 AND 3) 98.46% $18,372,631
OTHER ASSETS AND LIABILITIES, NET 1.54 287,602
------- -----------
TOTAL NET ASSETS 100.00% $18,660,233
------- -----------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 25,287
GROSS UNREALIZED DEPRECIATION (1,273,484)
----------
NET UNREALIZED DEPRECIATION $(1,248,197)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
DIVERSIFIED BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE
AMOUNT SECURITY DESCRIPTION VALUE
<C> <S> <C> <C> <C>
N/A WELLS FARGO MANAGED FIXED INCOME PORTFOLIO $ 92,546,248
N/A WELLS FARGO POSITIVE RETURN BOND PORTFOLIO 61,629,075
N/A WELLS FARGO STRATEGIC VALUE BOND PORTFOLIO 30,922,863
185,098,186
TOTAL INVESTMENTS IN CORE PORTFOLIOS (99.30%) (COST $190,241,301)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN CORE PORTFOLIOS
(COST $190,241,301)* 99.30% $185,098,186
OTHER ASSETS AND LIABILITIES, NET 0.70 1,303,915
------ ------------
TOTAL NET ASSETS 100.00% $186,402,101
------ ------------
</TABLE>
<TABLE>
<C> <S>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 0
GROSS UNREALIZED DEPRECIATION (5,143,115)
-----------
NET UNREALIZED DEPRECIATION $(5,143,115)
</TABLE>
SEE NOTES TO SCHEDULES OF INVESTMENTS
21
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
ASSET BACKED SECURITIES - 4.04%
$ 1,161,000 AESOP FUNDING II LLC SERIES 1998-1 A+ 6.14% 05/20/06 $ 1,114,897
581,000 CHASE CREDIT CARD MASTER TRUST SERIES 1999-3A+ 6.66 01/15/07 577,709
1,355,000 CHEVY CHASE MASTER CREDIT CARD TRUST SERIES 1999 CLASS A+ 5.81 10/16/06 1,357,304
968,000 FHLMC SERIES T-20 CLASS A6 7.49 09/25/29 981,102
935,921 FIRST PLUS HOME LOAN TRUST SERIES 1996-2 A5+ 7.47 02/20/11 943,502
1,557,367 FIRST USA CONSUMER TRUST CLASS A 6.50 09/15/02 1,553,474
7,000,000 GREEN TREE FINANCIAL CORPORATION SERIES 1997-6 A7 7.14 01/15/29 6,967,590
1,097,904 GREEN TREE FINANCIAL CORPORATION SERIES 1997-7 A8 6.86 07/15/29 1,048,268
774,000 LOOP FUNDING MASTER TRUST I SERIES 1997-AER CLASS B1+ 5.86 12/26/07 768,195
774,000 OAKWOOD MORTGAGE INVESTORS INCORPORATED SERIES 1995-A CLASS
A3 7.10 09/15/20 763,745
774,000 RENTAL CAR FINANCE CORPORATION SERIES 1997-1 B3+ 6.70 09/25/07 733,123
355,669 SEQUOIA MORTGAGE TRUST SERIES 2 CLASS A1+ 5.82 10/25/24 353,977
1,355,000 VAN KAMPEN CLO-I+ 6.48 10/08/07 1,362,744
18,525,630
TOTAL ASSET BACKED SECURITIES (COST $18,895,701)
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.29%
728,626 AMBS SERIES CS-1012 1+ 7.06 07/25/02 728,170
581,000 SACO I INCORPORATED SERIES 1997-2 CLASS 1A2+ 7.00 08/25/36 578,277
1,306,447
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $1,356,998)
------------
CORPORATE BONDS & NOTES - 44.23%
AMUSEMENT & RECREATION SERVICES - 0.04%
194,000 IMAX CORPORATION 7.88 12/01/05 179,935
------------
APPAREL & ACCESSORY STORES - 0.16%
774,000 KOHLS CORPORATION 6.70 02/01/06 741,105
------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.25%
774,000 LEVI STRAUSS & COMPANY 6.80 11/01/03 638,550
541,000 TOMMY HILFIGER 6.50 06/01/03 517,331
1,155,881
------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 0.15%
774,000 PEP BOYS 6.71 11/03/04 685,958
------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 1.11%
5,000,000 HERTZ CORPORATION 7.63 08/15/07 5,100,000
------------
BUSINESS SERVICES - 2.21%
4,500,000 FIRST DATA CORPORATION 6.38 12/15/07 4,280,625
5,968,000 ORACLE CORPORATION 6.72 02/15/04 5,848,640
10,129,265
------------
CHEMICALS & ALLIED PRODUCTS - 2.57%
5,000,000 E. I. DU PONT DE NEMOURS & COMPANY 6.88 10/15/09 4,918,750
774,000 IMC GLOBAL INCORPORATED 7.63 11/01/05 761,423
6,800,000 MERCK & COMPANY INCORPORATED 6.40 03/01/28 6,111,500
11,791,673
------------
COMMUNICATIONS - 2.29%
3,000,000 AT&T CAPITAL CORPORATION 6.75 12/01/00 3,015,000
4,500,000 LCI INTERNATIONAL INCORPORATED 7.25 06/15/07 4,376,250
290,000 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED 7.50 11/01/08 286,375
</TABLE>
22
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
COMMUNICATIONS (continued)
$ 3,000,000 TELEGLOBE INCORPORATED 7.20% 07/20/09 $ 2,793,750
10,471,375
------------
DEPOSITORY INSTITUTIONS - 7.72%
3,500,000 BANK UNITED CORPORATION 8.00 03/15/09 3,290,000
4,500,000 BANKBOSTON CORPORATION 6.88 07/15/03 4,477,500
3,000,000 BANKERS TRUST NEW YORK COMPANY 7.38 05/01/08 2,973,750
774,000 DEPOSIT GUARANTY CORPORATION 7.25 05/01/06 750,780
774,000 FARMERS EXCHANGE CAPITAL 7.20 07/15/48 648,225
968,000 FIRST BANK SYSTEMS INCORPORATED 8.00 07/02/04 993,410
5,000,000 KEY BANK NA 6.50 04/15/08 4,643,750
250,000 MIDLAND BANK PLC 6.95 03/15/11 237,813
5,000,000 NATIONSBANK CORPORATION 7.80 09/15/16 4,962,500
861,000 OLD KENT FINANCIAL CORPORATION 6.63 11/15/05 831,941
5,000,000 PNC BANK CORPORATION 6.50 05/01/08 4,687,500
4,500,000 PROVIDIAN NATIONAL BANK 6.65 02/01/04 4,308,750
2,500,000 SOCIETY CORPORATION 8.13 06/15/02 2,565,625
35,371,544
------------
EATING & DRINKING PLACES - 0.04%
203,000 ARAMARK CORPORATION 6.75 08/01/04 193,611
------------
ELECTRIC, GAS & SANITARY SERVICES - 0.39%
194,000 CALPINE CORPORATION 7.63 04/15/06 184,785
147,000 NIAGARA MOHAWK POWER 7.38 07/01/03 146,816
725,000 TEXAS UTILITIES COMPANY 6.20 10/01/02 710,500
774,000 WILLIAMS COMPANIES INCORPORATED 6.13 02/15/02 754,650
1,796,751
------------
FINANCIAL SERVICES - 0.29%
774,000 GENFIANCE LUXEMBOURG SA + 6.14 05/29/04 772,452
541,000 POTOMAC CAPITAL INVESTMENT 7.05 10/02/01 534,914
1,307,366
------------
FOOD & KINDRED PRODUCTS - 1.53%
4,000,000 ANHEUSER BUSCH COMPANIES 9.00 12/01/09 4,525,000
1,500,000 FLOWERS INDUSTRIES INCORPORATED 7.15 04/15/28 1,310,625
387,000 NABISCO INCORPORATED 6.00 02/15/01 381,679
774,000 WHITMAN CORPORATION 7.29 09/15/26 776,903
6,994,206
------------
FOREIGN DEPOSITORY INSTITUTIONS - 1.26%
3,000,000 BAYERISCHE LANDESBANK NEW YORK 6.20 02/09/06 2,820,000
3,000,000 KOREA DEVELOPMENT BANK 7.13 04/22/04 2,925,000
5,745,000
------------
GENERAL MERCHANDISE STORES - 0.98%
5,000,000 SAKS INCORPORATED 7.50 12/01/10 4,493,750
------------
HEALTH SERVICES - 0.08%
387,000 TENET HEALTHCARE CORPORATION 7.88 01/15/03 374,423
------------
</TABLE>
23
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES - 0.04%
$ 194,000 HMH PROPERTIES SERIES A 7.88% 08/01/05 $ 179,935
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 4.12%
968,000 APPLIED MATERIALS INCORPORATED 7.00 09/06/05 941,380
6,861,000 DELL COMPUTER CORPORATION 7.10 04/15/28 6,389,306
4,000,000 IBM CORPORATION 8.38 11/01/19 4,455,000
6,350,000 IBM CORPORATION 7.50 06/15/13 6,540,500
581,000 TORO COMPANY 7.13 06/15/07 537,425
18,863,611
------------
INDUSTRIAL SERVICES - 0.58%
3,000,000 GRUMA SA DE CV 7.63 10/15/07 2,647,500
------------
INSURANCE CARRIERS - 2.72%
6,500,000 AMBAC INCORPORATED 9.38 08/01/11 7,572,500
1,161,000 EQUITABLE LIFE ASSURANCE SOCIETY 6.95 12/01/05 1,130,524
968,000 LINCOLN NATIONAL CORPORATION 7.25 05/15/05 959,530
968,000 REINSURANCE GROUP OF AMERICA INCORPORATED 7.25 04/01/06 899,030
968,000 RELIASTAR FINANCIAL CORPORATION 7.13 03/01/03 955,900
968,000 TERRA NOVA (U.K.) HOLDINGS 7.20 08/15/07 937,750
12,455,234
------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.25%
774,000 BAUSCH & LOMB INCORPORATED 6.75 12/15/04 747,878
387,000 MALLINCKRODT INCORPORATED 6.30 03/15/01 381,195
1,129,073
------------
NONDEPOSITORY CREDIT INSTITUTIONS - 3.66%
4,500,000 DRESDNER FUNDING TRUST I 8.15 06/30/31 4,314,375
5,000,000 GENERAL ELECTRIC CAPITAL CORPORATION 8.63 06/15/08 5,468,750
6,000,000 GENERAL ELECTRIC CAPITAL CORPORATION 8.70 02/15/03 6,322,500
677,000 PRUDENTIAL INSURANCE COMPANY 7.65 07/01/07 672,769
16,778,394
------------
OIL & GAS EXTRACTION - 0.16%
387,000 GULF CANADA RESOURCES LTD. 8.35 08/01/06 377,809
387,000 R&B FALCON CORPORATION 6.75 04/15/05 342,495
720,304
------------
PETROLEUM REFINING & RELATED INDUSTRIES - 0.87%
4,000,000 CHEVRON CORPORATION 6.63 10/01/04 3,975,000
------------
PRIMARY METAL INDUSTRIES - 0.91%
290,000 AK STEEL CORPORATION 9.13 12/15/06 295,075
194,000 CSC HOLDINGS INCORPORATED 7.25 07/15/08 183,815
4,000,000 CSC HOLDINGS INCORPORATED 7.63 07/15/18 3,690,000
4,168,890
------------
REAL ESTATE - 1.22%
194,000 GOLDEN STATE HOLDINGS 7.13 08/01/05 177,995
4,500,000 ROUSE COMPANY 8.50 01/15/03 4,533,750
</TABLE>
24
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
REAL ESTATE (continued)
$ 968,000 SUSA PARTNERSHIP LP 8.20% 06/01/17 $ 869,990
5,581,735
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 2.88%
1,161,000 CHARLES SCHWAB CORPORATION 6.88 09/02/03 1,149,390
7,000,000 GOLDMAN SACHS GROUP 7.35 10/01/09 6,938,750
5,000,000 LEHMAN BROTHERS HOLDINGS INCORPORATED 8.50 08/01/15 5,125,000
13,213,140
------------
TECHNOLOGY - 0.37%
1,819,000 MASSACHUSETTS INSTITUTE OF TECHNOLOGY 7.25 11/02/96 1,698,491
------------
TOBACCO PRODUCTS - 1.00%
5,000,000 IMPERIAL TOBACCO OVERSEAS 7.13 04/01/09 4,556,250
------------
TRANSPORTATION BY AIR - 0.77%
1,027,000 CONTINENTAL AIRLINES 6.80 07/02/07 973,083
752,000 FEDERAL EXPRESS SERIES 97-B 7.52 01/15/18 736,178
271,000 NORTHWEST AIRLINES CORPORATION 6.81 02/01/20 239,740
387,000 NORTHWEST AIRLINES CORPORATION 8.38 03/15/04 357,975
1,200,000 SOUTHWEST AIRLINES COMPANY 7.88 09/01/07 1,234,500
3,541,476
------------
TRANSPORTATION EQUIPMENT - 2.25%
5,000,000 FEDERAL-MOGUL CORPORATION 7.75 07/01/06 4,643,750
194,000 FEDERAL-MOGUL CORPORATION 7.50 07/01/04 183,572
3,000,000 FORD MOTOR COMPANY 7.45 07/16/31 2,936,250
3,000,000 FORD MOTOR COMPANY 6.38 02/01/29 2,565,000
10,328,572
------------
UTILITY-ELECTRIC - 0.08%
387,000 CALENERGY COMPANY INCORPORATED 7.23 09/15/05 381,195
------------
WATER TRANSPORTATION - 0.33%
1,161,000 ROYAL CARRIBBEAN CRUISES 7.13 09/18/02 1,152,292
88,000 TEEKAY SHIPPING CORPORATION 8.32 02/01/08 348,230
1,500,522
------------
WHOLESALE TRADE-NONDURABLE GOODS - 0.95%
4,500,000 STAPLES INCORPORATED 7.13 08/15/07 4,370,624
------------
202,621,789
TOTAL CORPORATE BONDS & NOTES (COST $214,343,702)
------------
MUNICIPAL BONDS & NOTES - 1.55%
4,000,000 DENVER CO CITY AND COUNTY SD #1 EDUCATIONAL FACILITIES RV
TAXABLE PENSION SCHOOL FACILITIES LEASE AMBAC INSURED 6.49 12/15/02 3,970,000
774,000 HUDSON COUNTY NJ IMPORT AUTHORITY FACILITIES LEASING RV FSA
INSURED 7.40 12/01/25 746,910
1,223,000 NEW YORK NY GO BONDS 6.10 08/01/01 1,210,770
405,000 WASHINGTON STATE GO BONDS STATE HOUSING TRUST FUND SERIES T 6.60 01/01/03 403,481
778,000 WESTERN MINNESOTA POWER AGENCY RV SERIES A AMBAC INSURED 6.33 01/01/02 771,193
7,102,354
TOTAL MUNICIPAL BONDS & NOTES (COST $7,268,972)
------------
U.S. GOVERNMENT AGENCY SECURITIES - 22.83%
</TABLE>
25
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION - 4.15%
$ 100,000 FHLMC 7.05% 06/08/05 $ 98,214
6,656,953 FHLMC #C26620 6.50 05/01/29 6,353,196
1,002,577 FHLMC #786702+ 5.79 06/01/29 987,539
5,898,460 FHLMC #C80461 7.00 12/01/26 5,769,402
5,949,613 FHLMC #E00732 6.50 09/01/14 5,815,747
19,024,098
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 11.29%
4,740,000 FNMA 6.25 05/15/29 4,301,550
2,844,000 FNMA 6.16 08/07/28 2,543,389
968,000 FNMA 6.00 05/15/08 919,368
4,958,865 FNMA 7.50 09/01/29 4,946,468
6,711,579 FNMA #253008 8.00 11/01/29 6,811,964
1,512 FNMA #303414 6.50 07/01/02 1,486
954,682 FNMA #380268 6.17 08/01/08 899,395
8,453,818 FNMA #398325 6.00 04/01/28 7,838,211
710,009 FNMA #408118 6.50 01/01/28 676,944
894,564 FNMA #415414 6.50 02/01/28 852,904
1,427,538 FNMA #415714 6.00 04/01/28 1,319,580
537,492 FNMA #417648 6.00 02/01/13 513,305
1,873,447 FNMA #429604 6.00 06/01/28 1,731,768
4,827,181 FNMA #449466 6.50 11/01/28 4,602,379
4,736,697 FNMA #454390 6.00 12/01/28 4,391,771
3,839,812 FNMA #455607 6.00 12/01/28 3,560,196
1,109,473 FNMA #486524 6.50 02/01/29 1,054,207
4,775,443 FNMA #492910+ 7.50 01/01/29 4,763,505
51,728,390
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 7.39%
4,999,696 GNMA 7.50 11/15/29 4,991,846
9,923,543 GNMA #434527 8.00 09/15/29 10,100,282
1,183,796 GNMA #473918+ 7.00 04/15/28 1,156,782
4,740,109 GNMA #491192 7.00 02/15/29 4,631,940
3,545,842 GNMA #780626 7.00 08/15/27 3,467,160
4,659,497 GNMA #780977 7.50 12/15/28 4,655,117
4,990,595 GNMA II+ 7.00 10/20/29 4,854,900
33,858,027
------------
104,610,515
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $107,670,046)
------------
U.S. TREASURY SECURITIES - 24.36%
U.S. TREASURY BONDS - 14.01%
4,000,000 U.S. TREASURY BONDS 11.88 11/15/03 4,773,000
3,000,000 U.S. TREASURY BONDS 5.25 02/15/29 2,544,360
3,019,000 U.S. TREASURY BONDS 6.75 08/15/26 3,103,985
6,500,000 U.S. TREASURY BONDS 8.13 08/15/21 7,629,895
12,500,000 U.S. TREASURY BONDS 8.88 08/15/17 15,388,875
7,000,000 U.S. TREASURY BONDS 7.50 11/15/16 7,624,820
13,000,000 U.S. TREASURY BONDS 10.75 08/15/05 15,712,580
</TABLE>
26
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY BONDS (continued)
$ 6,500,000 U.S. TREASURY BONDS 10.75% 05/15/03 $ 7,402,720
64,180,235
------------
U.S. TREASURY NOTES - 10.35%
5,000,000 U.S. TREASURY NOTES 6.00 08/15/09 4,934,900
11,000,000 U.S. TREASURY NOTES 7.50 05/15/02 11,361,020
1,000,000 U.S. TREASURY NOTES 7.25 08/15/04 1,042,770
4,000,000 U.S. TREASURY NOTES 7.50 02/15/05 4,223,480
4,000,000 U.S. TREASURY NOTES 7.00 07/15/06 4,155,520
5,000,000 U.S. TREASURY NOTES 9.88 11/15/15 6,573,450
13,000,000 U.S. TREASURY NOTES 8.13 08/15/19 15,142,140
47,433,280
------------
111,613,515
TOTAL U.S. TREASURY SECURITIES (COST $115,802,859)
------------
</TABLE>
27
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 2.66%
12,174,602 WELLS FARGO CASH INVESTMENT FUND+X+ $ 12,174,602
------------
12,174,602
TOTAL SHORT-TERM INSTRUMENTS (COST $12,174,602)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $477,512,880)* 99.96% $457,954,852
OTHER ASSETS AND LIABILITIES, NET 0.04 191,928
------ ------------
TOTAL NET ASSETS 100.00% $458,146,780
------ ------------
</TABLE>
<TABLE>
<C> <S>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
+X+ THIS WELLS FARGO FUND INVESTS CASH BALANCES THAT IT RETAINS
FOR LIQUIDITY PURPOSES IN A WELLS FARGO MONEY MARKET FUND.
THE FUND DOES NOT PAY ANY INVESTMENT ADVISORY FEE TO THE
WELLS FARGO MONEY MARKET FUND FOR SUCH INVESTMENTS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 148,793
GROSS UNREALIZED DEPRECIATION (19,706,821)
------------
NET UNREALIZED DEPRECIATION $(19,558,028)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INCOME PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
COMMON STOCKS - 4.24%
CHEMICALS & ALLIED PRODUCTS - 0.18%
2,000 IMPERIAL CHEMICAL INDUSTRIES
PLC ADR (UK) $ 81,750
-----------
FINANCIAL SERVICES - 0.18%
7,600 INDYMAC MORTGAGE HOLDINGS
INCORPORATED 84,075
-----------
HEALTH SERVICES - 0.98%
8,000 HEALTH CARE PROPERTY INVESTORS
INCORPORATED 207,500
12,000 MEDITRUST CORPORATION 78,750
11,700 NATIONWIDE HEALTH PROPERTIES
INCORPORATED 174,769
461,019
-----------
PRIMARY METAL INDUSTRIES - 0.17%
4,000 CORUS GROUP PLC 81,750
-----------
REAL ESTATE INVESTMENT TRUSTS - 2.67%
9,300 ARCHSTONE COMMUNITIES TRUST 186,580
9,900 ARDEN REALTY INCORPORATED 190,575
9,700 DUKE WEEKS REALTY CORPORATION 179,450
3,000 EQUITY RESIDENTIAL PROPERTIES
TRUST 120,563
7,600 HIGHWOODS PROPERTIES
INCORPORATED 167,200
10,900 KILROY REALTY CORPORATION 207,100
5,400 POST PROPERTIES INCORPORATED 205,875
1,257,343
-----------
UTILITIES - 0.06%
400 GTE CORPORATION 29,200
-----------
1,995,137
TOTAL COMMON STOCKS (COST $2,157,432)
-----------
PREFERRED STOCKS - 1.99%
CONVERTIBLES - 1.99%
22,000 DUKE CAPITAL FINANCING 477,125
5,000 ENTERPRISE CAPITAL TRUST III 100,625
5,000 PSCO CAPITAL TRUST I 111,250
3,000 TEXAS UTILITIES COMPANY 139,313
5,000 U.S. BANCORP CAPITOL II 106,250
934,563
-----------
934,563
TOTAL PREFERRED STOCKS (COST $1,085,471)
-----------
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FOREIGN GOVERNMENTS - 8.78%
$ 500,000 AMERICAN STANDARD INCORPORATED 7.13% 06/01/06 495,028
1,000,000 KAPPA BEHEER BV 10.63 07/15/09 1,052,210
465,000 REPUBLIC OF ARGENTINA 11.00 10/09/06 445,238
475,000 REPUBLIC OF BRAZIL 11.63 04/15/04 457,780
600,000 REPUBLIC OF COLOMBIA 9.75 04/23/09 532,500
170,000 REPUBLIC OF POLAND 7.13 07/01/04 169,150
440,000 REPUBLIC OF THE PHILIPPINES 8.88 04/15/08 432,850
230,000 REPUBLIC OF TURKEY 11.88 11/05/04 232,875
</TABLE>
29
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FOREIGN GOVERNMENTS (continued)
$ 335,000 UNITED MEXICAN STATES 8.63% 03/12/08 $ 318,250
4,135,881
TOTAL FOREIGN GOVERNMENTS (COST
$4,019,642)
-----------
CORPORATE BONDS & NOTES - 64.58%
APPAREL & ACCESSORY STORES - 3.56%
750,000 AMES DEPARTMENT STORES 10.00 04/15/06 7,356,875
1,000,000 SAKS INCORPORATED 7.00 07/15/04 937,500
1,674,375
-----------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 2.08%
1,000,000 JONES APPAREL GROUP 7.88 06/15/06 978,750
-----------
AUTOMOBILE & RELATED - 1.91%
1,000,000 BUDGET GROUP INCORPORATED 9.13 04/01/06 897,500
-----------
BANK & FINANCE - 1.90%
940,000 CHASE MANHATTAN CORPORATION 5.75 04/15/04 894,175
-----------
BUSINESS SERVICES - 3.43%
430,000 CENDANT CORPORATION 7.75 12/01/03 424,088
1,259,117 FEDERAL EXPRESS CORPORATION 6.85 01/15/19 1,192,384
1,616,472
-----------
COMMERCIAL SERVICES - 3.88%
500,000 CSC HOLDINGS INCORPORATED 9.88 02/15/13 520,000
500,000 CSC HOLDINGS INCORPORATED 10.50 05/15/16 552,500
750,000 KAUFMAN & BROAD HOME
CORPORATION 9.63 11/15/06 755,625
1,828,125
-----------
COMMUNICATIONS - 5.98%
500,000 ADELPHIA COMMUNICATIONS
CORPORATION 9.88 03/01/07 511,875
500,000 ADELPHIA COMMUNICATIONS
CORPORATION SERIES B 10.50 07/15/04 521,250
1,300,000 CABLE & WIRELESS
COMMUNICATIONS 6.75 03/06/08 1,311,375
500,000 CHARTER COMMUNICATION HOLDINGS
LLC 8.63 04/01/09 473,125
2,817,625
-----------
CONSUMER PRODUCTS - 0.60%
500,000 REVLON CONSUMER PRODUCTS
CORPORATION 8.63 02/01/08 283,750
-----------
FINANCIAL SERVICES - 2.31%
500,000 AMERICAN GENERAL FINANCE
CORPORATION 8.13 08/15/09 517,500
500,000 HOMESIDE INTERNATIONAL
INCORPORATED 11.25 05/15/03 571,250
1,088,750
-----------
FOOD & KINDRED PRODUCTS - 0.81%
500,000 CHIQUITA BRANDS INTERNATIONAL
INCORPORATED 10.25 11/01/06 381,250
-----------
HEALTH SERVICES - 0.97%
500,000 TENET HEALTHCARE CORPORATION 8.13 12/01/08 458,750
-----------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES - 1.02%
500,000 SUN INTERNATIONAL HOTELS
LIMITED 9.00 03/15/07 481,250
-----------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.03%
500,000 APPLIED POWER INCORPORATED 8.75% 04/01/09 485,000
-----------
</TABLE>
30
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INCOME PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
INDUSTRIALS - 3.20%
$ 500,000 COMCAST CORPORATION 9.50 01/15/08 $ 519,375
1,000,000 NEWS AMERICA HOLDINGS
INCORPORATED 8.00 10/17/16 988,750
1,508,125
-----------
INSURANCE CARRIERS - 2.91%
1,000,000 FREMONT GENERAL CORPORATION 7.88 03/17/09 740,000
750,000 WILLIS CORROON CORPORATION 9.00 02/01/09 628,125
1,368,125
-----------
MEDIA - 2.66%
1,250,000 CHANCELLOR MEDIA CORPORATION 8.00 11/01/08 1,250,000
-----------
MISCELLANEOUS RETAIL - 3.86%
250,000 FRONTIERVISION OPERATING
PARTNERS 11.00 10/15/06 264,375
125,000 HOME INTERIORS & GIFTS 10.13 06/01/08 102,813
1,000,000 K-MART CORPORATION 8.25 01/01/22 883,750
250,000 SIMMONS COMPANY 10.25 03/15/09 241,875
1,000,000 VISTA EYECARE INCORPORATED 12.75 10/15/05 322,500
1,815,313
-----------
MOTION PICTURES - 7.76%
1,000,000 CARMIKE CINEMAS INCORPORATED 9.38 02/01/09 960,000
1,000,000 CINEMARK USA INCORPORATED 9.63 08/01/08 942,500
1,000,000 LOEWS CINEPLEX ENTERTAINMENT 8.88 08/01/08 930,000
1,000,000 REGAL CINEMAS INCORPORATED 9.50 06/01/08 821,250
3,653,750
-----------
OIL & GAS EXTRACTION - 1.60%
750,000 PETROLEUM GEO SERVICES 8.15 07/15/29 751,875
-----------
PUBLISHING - 2.01%
500,000 GARDEN STATE NEWSPAPERS 8.63 07/01/11 453,750
500,000 HOLLINGER INTERNATIONAL
PUBLISHING INCORPORATED 9.25 03/15/07 490,000
943,750
-----------
REAL ESTATE - 2.61%
250,000 D. R. HORTON INCORPORATED 8.00 02/01/09 225,625
1,000,000 D. R. HORTON INCORPORATED 10.00 04/15/06 1,005,000
1,230,625
-----------
TELECOMMUNICATIONS - 3.15%
500,000 TCI COMMUNICATIONS
INCORPORATED 8.75 08/01/15 553,125
1,000,000 TELEGLOBE INCORPORATED 7.20 07/20/09 931,250
1,484,375
-----------
TOBACCO PRODUCTS - 2.32%
1,200,000 IMPERIAL TOBACCO OVERSEAS 7.13 04/01/09 1,093,500
-----------
WASTE DISPOSAL - 0.97%
500,000 ALLIED WASTE NORTH AMERICA 10.00 08/01/09 455,000
-----------
WHOLESALE TRADE-NONDURABLE GOODS - 2.05%
750,000 MARSH SUPERMARKETS
INCORPORATED 8.88% 08/01/07 718,125
</TABLE>
31
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
WHOLESALE TRADE-NONDURABLE GOODS (continued)
$ 250,000 TM GROUP HOLDINGS 11.00 05/15/08 $ 245,000
$ 963,125
-----------
30,403,335
TOTAL CORPORATE BONDS & NOTES (COST
$33,711,455)
-----------
U.S. GOVERNMENT AGENCY SECURITIES - 8.74%
322,242 FNMA POOL #512386 7.00 09/01/29 314,998
335,551 FNMA POOL #512387 7.00 09/01/29 328,008
2,025,964 FNMA POOL #513615 7.50 09/01/29 2,022,418
336,314 FNMA POOL #514262 7.00 09/01/29 328,753
1,145,227 FNMA POOL#411023 6.50 03/01/13 1,121,188
4,115,365
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $4,156,636)
-----------
U.S. TREASURY SECURITIES - 4.80%
1,500,000 U.S. TREASURY BONDS 5.25 02/15/29 1,273,365
1,000,000 U.S. TREASURY NOTES 6.00 08/15/09 987,340
2,260,705
TOTAL U.S. TREASURY SECURITIES (COST
$2,272,015)
-----------
SHORT-TERM INSTRUMENTS - 5.02%
1,015,000 GOLDMAN SACHS POOLED
REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY U.S.
GOVERNMENT SECURITIES 5.58 12/01/99 1,015,000
1,349,000 JP MORGAN SECURITIES
INCORPORATED REPURCHASE
AGREEMENT - 102%
COLLATERALIZED BY U.S.
GOVERNMENT SECURITIES 5.64 12/01/99 1,349,000
2,364,000
TOTAL SHORT-TERM INSTRUMENTS (COST
$2,364,000)
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $49,766,651)* (NOTE 1) 98.15% $46,208,986
OTHER ASSETS AND LIABILITIES, NET 1.85 873,354
------- -----------
TOTAL NET ASSETS 100.00% $47,082,340
------- -----------
* COST FOR FEDERAL INCOME TAX PURPOSES
IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 240,984
GROSS UNREALIZED DEPRECIATION (3,798,649)
----------
NET UNREALIZED APPRECIATION $(3,557,665)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 54.49%
FEDERAL HOME LOAN BANK - 3.31%
$ 7,000,000 FHLB 6.43% 12/12/11 $ 6,725,670
10,000,000 FHLB 6.00 08/15/02 9,898,400
7,000,000 FHLB 5.13 02/26/02 6,825,000
23,449,070
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 10.33%
9,993,649 FHLMC 7.50 10/01/29 9,981,157
4,000,000 FHLMC 8.06 01/27/05 4,250,000
5,000,000 FHLMC 7.10 04/10/07 5,087,900
6,656,953 FHLMC #26620 6.50 05/01/29 6,353,196
25,980,919 FHLMC #C00874 7.00 10/01/29 25,412,456
9,715,806 FHLMC #C22339 6.50 02/01/29 9,272,474
4,718,768 FHLMC #C80461 7.00 12/01/26 4,615,521
7,156,510 FHLMC #E00732 6.50 09/01/14 6,995,489
1,230,111 FHLMC #G00683 8.50 12/01/25 1,268,933
73,237,126
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 23.71%
5,000,000 FNMA 5.75 02/15/08 4,670,350
10,413,617 FNMA 7.50 09/01/29 10,387,583
10,000,000 FNMA 6.38 06/15/09 9,704,800
11,500,000 FNMA 6.00 05/15/08 10,922,240
4,000,000 FNMA 5.88 04/23/04 3,862,600
3,102,602 FNMA #0417768 6.50 03/01/28 2,958,114
6,489,575 FNMA #251615 7.50 04/01/28 6,473,351
8,244,705 FNMA #251700 6.50 05/01/13 8,061,755
8,655,768 FNMA #251759 6.00 05/01/13 8,282,445
3,462,959 FNMA #251906 7.50 07/01/28 3,454,302
7,119,606 FNMA #252703 6.50 09/01/06 7,001,634
2,284,241 FNMA #376272 7.00 02/01/12 2,272,820
5,554,699 FNMA #424815 6.50 04/01/28 5,296,017
3,636,476 FNMA #426032 7.50 06/01/28 3,627,385
9,109,846 FNMA #429182 6.50 05/01/28 8,685,601
9,155,511 FNMA #430040 6.50 06/01/28 8,729,139
8,837,713 FNMA #430194 7.00 06/01/28 8,638,864
4,831,687 FNMA #430540 7.00 06/01/28 4,722,974
4,013,891 FNMA #432484 7.00 06/01/28 3,923,579
9,127,742 FNMA #443908 6.50 11/01/28 8,702,663
10,061,180 FNMA #449466 6.50 11/01/28 9,592,631
11,557,541 FNMA #454390 6.00 12/01/28 10,715,920
4,799,764 FNMA #455607 6.00 12/01/28 4,450,246
9,550,887 FNMA #492910 7.50 01/01/29 9,527,010
3,285,334 FNMA #70765 9.00 03/01/21 3,436,229
168,100,252
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 15.06%
3,009,975 GNMA #002496 7.00 10/20/27 2,928,133
610,421 GNMA #1580 10.00% 03/20/21 654,676
</TABLE>
33
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (continued)
$ 9,606,758 GNMA #158794 7.00 09/15/28 $ 9,387,532
557,280 GNMA #1616 10.00 05/20/21 610,918
1,281,979 GNMA #2268 7.50 08/20/26 1,274,364
1,065,616 GNMA #2303 7.50 10/20/26 1,059,286
1,793,682 GNMA #306052 9.00 06/15/21 1,886,164
1,936,246 GNMA #319413 7.25 12/15/18 1,846,695
643,428 GNMA #336930 7.50 03/15/23 642,417
1,875,573 GNMA #358863 7.25 01/15/29 1,788,827
1,556,282 GNMA #362589 6.88 01/15/29 1,514,932
1,964,919 GNMA #414636 7.50 10/15/25 1,961,834
1,467,321 GNMA #430800 7.00 05/15/26 1,433,837
13,191,480 GNMA #434527 8.00 09/15/29 13,426,420
11,168,064 GNMA #445071 7.50 01/15/27 11,150,530
2,353,206 GNMA #450871 8.00 05/15/27 2,395,117
6,250,804 GNMA #467791 7.50 04/15/28 6,240,990
9,771,923 GNMA #470148 7.00 03/15/29 9,548,928
10,030,577 GNMA #486724 6.50 12/15/28 9,544,695
9,738,016 GNMA #491192 7.00 02/15/29 9,515,795
9,237,249 GNMA #780977 7.50 12/15/28 9,228,566
8,984,467 GNMA II+ 7.00 10/20/29 8,740,180
106,780,836
------------
OTHER - 0.69%
5,000,000 INTERAMERICAN DEVELOPMENT BANK 6.13 10/04/02 4,925,000
------------
STUDENT LOAN MARKETING ASSOCIATION - 0.16%
1,000,000 SLMA 9.15 12/01/04 1,106,550
------------
TENNESSEE VALLEY AUTHORITY - 1.23%
5,000,000 TVA 6.75 11/01/25 4,818,750
4,000,000 TVA 6.38 06/15/05 3,920,000
8,738,750
------------
386,337,584
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $397,613,152)
------------
U.S. TREASURY SECURITIES - 40.64%
U.S. TREASURY BILLS - 1.85%
13,251,000 U.S. TREASURY BILLS 4.98{::} 01/27/00 13,145,257
------------
U.S. TREASURY BONDS - 8.39%
1,000,000 U.S. TREASURY BONDS 5.25 02/15/29 848,120
1,500,000 U.S. TREASURY BONDS 5.25 11/15/28 1,266,045
5,000,000 U.S. TREASURY BONDS 5.50 08/15/28 4,367,200
2,400,000 U.S. TREASURY BONDS 11.63 11/15/04 2,936,328
3,800,000 U.S. TREASURY BONDS 10.75 08/15/05 4,592,908
1,400,000 U.S. TREASURY BONDS 12.00 05/15/05 1,762,684
9,500,000 U.S. TREASURY BONDS 9.13 05/15/18 12,007,620
25,000,000 U.S. TREASURY BONDS 10.38 11/15/12 30,909,250
750,000 U.S. TREASURY BONDS 8.25% 05/15/05 756,908
59,447,063
------------
</TABLE>
34
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY NOTES - 30.40%
$11,000,000 U.S. TREASURY NOTES 7.25 08/15/04 $ 11,470,470
3,300,000 U.S. TREASURY NOTES 6.88 05/15/06 3,405,963
6,100,000 U.S. TREASURY NOTES 5.88 11/15/05 6,004,352
3,300,000 U.S. TREASURY NOTES 6.50 08/15/05 3,342,900
5,700,000 U.S. TREASURY NOTES 6.50 05/15/05 5,774,271
24,300,000 U.S. TREASURY NOTES 7.50 02/15/05 25,657,641
26,500,000 U.S. TREASURY NOTES 7.88 11/15/04 28,351,290
26,000,000 U.S. TREASURY NOTES 7.00 07/15/06 27,010,880
11,000,000 U.S. TREASURY NOTES 7.50 05/15/02 11,361,020
19,500,000 U.S. TREASURY NOTES 7.50 11/15/01 20,020,650
6,000,000 U.S. TREASURY NOTES 7.88 08/15/01 6,179,040
9,000,000 U.S. TREASURY NOTES 8.00 05/15/01 9,253,260
5,000,000 U.S. TREASURY NOTES 6.13 08/15/07 4,949,450
7,000,000 U.S. TREASURY NOTES 6.63 05/15/07 7,137,340
3,100,000 U.S. TREASURY NOTES 9.38 02/15/06 3,577,524
18,000,000 U.S. TREASURY NOTES 12.38 05/15/04 22,210,200
17,000,000 U.S. TREASURY NOTES 8.13 08/15/19 19,801,260
215,507,511
------------
288,099,831
TOTAL U.S. TREASURY SECURITIES (COST $298,649,154)
------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS - 3.71%
SHARES
<C> <S> <C> <C> <C>
18,143,967 DREYFUS CASH MANAGEMENT FUND 18,143,967
391,678 DREYFUS TREASURY CASH MANAGEMENT A SERIES FUND 391,678
7,763,227 WELLS FARGO GOVERNMENT MONEY MARKET FUND+X+ 7,763,227
26,298,872
TOTAL SHORT-TERM INVESTMENTS (COST $26,298,872)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES (COST $722,561,177)* 98.84% $700,736,287
OTHER ASSETS AND LIABILITIES, NET 1.16 8,208,471
------ ------------
TOTAL NET ASSETS 100.00% $708,944,758
------ ------------
</TABLE>
<TABLE>
<C> <S>
{::} YIELD TO MATURITY.
+X+ THIS WELLS FARGO FUND INVESTS CASH BALANCES THAT IT RETAINS
FOR LIQUIDITY PURPOSES IN A WELLS FARGO MONEY MARKET FUND.
THE FUND DOES NOT PAY ANY INVESTMENT ADVISORY FEE TO THE
WELLS FARGO MONEY MARKET FUND FOR SUCH INVESTMENTS.
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 437,826
GROSS UNREALIZED DEPRECIATION (22,262,716)
------------
NET UNREALIZED DEPRECIATION $(21,824,890)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
LIMITED TERM GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
ASSET BACKED SECURITIES - 6.13%
$2,475,000 CHASE MANHATTAN RV OWNER TRUST SERIES 1997-A CLASS A10 6.37% 03/15/10 $ 2,448,641
3,000,000 CITRV TRUST+ 6.40 08/15/13 2,965,470
1,610,000 HONDA AUTO LEASE+ 6.45 09/16/02 1,606,216
2,250,000 MBNA MASTER CREDIT CARD TRUST II SERIES 1999-G CLASS B+ 6.60 12/15/06 2,202,930
2,450,000 PREMIER AUTO TRUST SERIES SERIES 1999-3 CLASS A3 6.27 04/08/03 2,435,129
11,658,386
TOTAL ASSET BACKED SECURITIES (COST $11,706,917)
------------
COLLATERALIZED MORTGAGE OBLIGATION - 0.96%
1,909,497 ENTERPRISE MORTGAGE ACCEPTANCE COMPANY 6.42 09/15/08 1,828,573
------------
1,828,573
TOTAL COLLATERALIZED MORTGAGE OBLIGATION (COST $1,919,226)
------------
CORPORATE BONDS & NOTES - 14.86%
AUTOMOTIVE REPAIR, SERVICES & PARKING - 1.41%
2,805,000 HERTZ CORPORATION 6.50 05/15/06 2,678,775
------------
BANKING & FINANCE - 4.52%
1,125,000 CITRV TRUST 6.16 06/15/13 1,099,114
2,226,000 DISCOVER CARD MASTER TRUST I 6.05 01/17/06 2,157,795
3,750,000 DISTRIBUTION FINANCIAL SERVICES TRUST 5.84 10/17/11 3,653,850
1,715,000 ONYX ACCEPTANCE AUTO TRUST 5.78 02/15/03 1,691,968
8,602,727
------------
COMMUNICATIONS - 2.09%
500,000 AT&T MOUNTAIN 6.25 05/15/01 495,000
1,000,000 NYNEX CREDIT COMPANY 6.25 06/13/02 997,500
2,500,000 WORLDCOM INCORPORATED 6.13 08/15/01 2,478,125
3,970,625
------------
DEPOSITORY INSTITUTIONS - 0.24%
200,000 BANC ONE CORPORATION 7.00 03/25/02 200,250
250,000 BANK OF AMERICA CORPORATION 8.38 03/15/02 257,813
458,063
------------
ELECTRIC SERVICES - 0.27%
500,000 PUBLIC SERVICE ELECTRIC & GAS COMPANY 9.13 07/01/05 513,125
------------
OIL & GAS EXTRACTION - 1.68%
3,275,000 CANADIAN OCCIDENTAL PETROLEUM 7.13 02/04/04 3,205,406
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.26%
500,000 NEWS AMERICA INCORPORATED 6.70 05/21/04 487,500
------------
REAL ESTATE - 1.02%
500,000 EQUITY RESIDENTIAL PROPERTIES 6.15 09/15/00 497,460
1,500,000 MACK-CALI REALTY CORPORATION 7.00 03/15/04 1,449,375
1,946,835
------------
TOBACCO PRODUCTS - 0.86%
1,800,000 IMPERIAL TOBACCO OVERSEAS 7.13 04/01/09 1,640,250
------------
TRANSPORTATION BY AIR - 1.98%
3,971,061 FEDERAL EXPRESS CORPORATION 6.84 01/15/19 3,760,595
------------
</TABLE>
36
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
LIMITED TERM GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
CORPORATE BONDS & NOTES (CONTINUED)
TRANSPORTATION EQUIPMENT - 0.53%
$1,000,000 DAIMLER CHRYSLER 6.90% 09/01/04 $ 998,750
------------
28,262,651
TOTAL CORPORATE BONDS & NOTES (COST $29,318,321)
------------
U.S. GOVERNMENT AGENCY SECURITIES - 49.82%
FEDERAL FARM CREDIT BANK - 1.01%
2,000,000 FFCB 5.75 02/09/05 1,925,320
------------
FEDERAL HOME LOAN BANK - 12.95%
3,000,000 FHLB 5.13 02/26/02 2,925,000
2,000,000 FHLB 5.88 08/15/01 1,987,500
5,000,000 FHLB 7.28 08/23/04 5,004,750
5,000,000 FHLB 6.37 04/09/01 5,009,350
8,000,000 FHLB 5.53 01/15/03 7,794,480
2,000,000 FHLB 5.13 09/15/03 1,905,520
24,626,600
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 29.08%
12,000,000 FNMA 6.50 04/29/09 11,392,680
2,000,000 FNMA 6.69 08/07/01 2,012,620
3,533 FNMA+ 7.00 04/25/23 3,657
3,000,000 FNMA 6.00 05/15/08 2,849,280
20,603,000 FNMA 5.13 02/13/04 19,508,981
5,000,000 FNMA 6.18 06/23/00 5,004,500
348,177 FNMA #190843 7.00 06/01/09 346,436
268,546 FNMA #303905 6.50 05/01/11 262,587
2,445,948 FNMA #313644 7.00 08/01/27 2,390,914
4,305,109 FNMA #401770 6.50 10/01/27 4,104,621
1,855,269 FNMA #411023 6.50 03/01/13 1,814,100
3,789,358 FNMA #454390 6.00 12/01/28 3,513,416
2,195,528 FNMA #50761 6.00 07/01/08 2,100,835
55,304,627
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.73%
102,243 GNMA #157247 9.50 05/20/16 107,802
2,025,269 GNMA #22036 8.00 07/20/25 2,046,149
723,856 GNMA #336930 7.50 03/15/23 722,719
894,814 GNMA #417389 7.00 05/15/26 874,395
1,050,561 GNMA #418261 6.50 04/15/26 999,672
1,282,656 GNMA #423779 7.00 05/15/26 1,253,386
2,034,718 GNMA #455464 7.50 08/15/27 2,031,523
2,921,405 GNMA #491192 7.00 02/15/29 2,854,738
10,890,384
------------
TENNESSEE VALLEY AUTHORITY - 1.05%
2,000,000 TVA 6.50 08/20/01 1,997,500
------------
94,744,431
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $96,463,303)
------------
</TABLE>
37
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
LIMITED TERM GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY NOTES - 23.58%
$3,000,000 U.S. TREASURY NOTES 10.75% 08/15/05 $ 3,625,980
5,000,000 U.S. TREASURY NOTES 5.50 05/31/00 4,997,050
3,500,000 U.S. TREASURY NOTES 8.50 11/15/00 3,584,525
4,000,000 U.S. TREASURY NOTES 7.00 07/15/06 4,155,520
2,000,000 U.S. TREASURY NOTES 6.25 04/30/01 2,008,420
50,000 U.S. TREASURY NOTES 6.38 03/31/01 50,269
3,000,000 U.S. TREASURY NOTES 5.63 11/30/00 2,993,249
500,000 U.S. TREASURY NOTES 6.50 08/15/05 506,500
300,000 U.S. TREASURY NOTES 7.25 08/15/04 312,831
500,000 U.S. TREASURY NOTES 5.75 08/15/03 493,890
1,000,000 U.S. TREASURY NOTES 6.00 08/15/04 994,010
1,500,000 U.S. TREASURY NOTES 5.63 12/31/02 1,481,400
3,000,000 U.S. TREASURY NOTES 6.00 08/15/00 3,005,220
2,000,000 U.S. TREASURY NOTES 6.63 05/15/07 2,039,240
3,000,000 U.S. TREASURY NOTES 6.63 04/30/02 3,040,020
1,500,000 U.S. TREASURY NOTES 6.63 03/31/02 1,518,645
6,000,000 U.S. TREASURY NOTES 6.25 01/31/02 6,027,000
4,000,000 U.S. TREASURY NOTES 6.25 02/15/03 4,016,760
44,850,529
TOTAL U.S. TREASURY SECURITIES (COST $45,781,300)
------------
SHORT-TERM INVESTMENTS - 4.11%
REPURCHASE AGREEMENTS - 2.98%
4,236,000 GOLDMAN SACHS POOLED REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY U.S GOVERNMENT SECURITIES 5.66 12/01/99 4,236,000
1,440,000 JP MORGAN SECURITIES INCORPORATED REPURCHASE AGREEMENT -
102% COLLATERALIZED BY U.S. GOVERNMENT SECURITIES 5.72 12/01/99 1,440,000
5,676,000
------------
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET FUND - 1.13%
SHARES
<C> <S> <C> <C> <C>
2,151,329 WELLS FARGO GOVERNMENT MONEY MARKET FUND+X+ 2,151,329
------------
7,827,329
TOTAL SHORT-TERM INVESTMENTS (COST $7,827,329)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES (COST $193,016,396)* 99.46% $189,171,899
OTHER ASSETS AND LIABILITIES, NET 0.54% 1,020,500
------ ------------
TOTAL NET ASSETS 100.00% $190,192,399
------ ------------
</TABLE>
<TABLE>
<C> <S>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
+X+ THIS WELLS FARGO FUND INVESTS CASH BALANCES THAT IT RETAINS
FOR LIQUIDITY PURPOSES IN A WELLS FARGO MONEY MARKET FUND.
THE FUND DOES NOT PAY ANY INVESTMENT ADVISORY FEE TO THE
WELLS FARGO MONEY MARKET FUND FOR SUCH INVESTMENTS.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 162,862
GROSS UNREALIZED DEPRECIATION (4,007,359)
-----------
NET UNREALIZED DEPRECIATION $(3,844,497)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED) INCOME FUNDS
- --------------------------------------------------------------------------------
STABLE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE/SHARE
AMOUNT SECURITY DESCRIPTION VALUE
<C> <S> <C>
N/A WELLS FARGO STABLE INCOME PORTFOLIO $192,959,401
------------
192,959,401
TOTAL INVESTMENTS IN CORE PORTFOLIOS (100.16%) (COST $195,249,331)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN CORE PORTFOLIOS
(COST $195,249,331)* 100.16% $192,959,401
OTHER ASSETS AND LIABILITIES, NET (0.16) (304,055)
------ ------------
TOTAL NET ASSETS 100.00% $192,655,346
------ ------------
</TABLE>
<TABLE>
<C> <S>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 0
GROSS UNREALIZED DEPRECIATION (2,289,930)
-----------
NET UNREALIZED DEPRECIATION $(2,289,930)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
39
<PAGE>
INCOME FUNDS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
VARIABLE RATE GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 95.63%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 23.77%
$1,155,204 FHLMC #1534 6.39% 06/15/23 $ 1,176,136
4,975,831 FHLMC #610303 6.86 04/01/18 5,036,486
2,088,420 FHLMC #840118 7.23 09/01/18 2,153,349
10,902 FHLMC #845410 (CMT) 6.92 07/01/23 11,072
4,656 FHLMC #845613 (CMT) 6.96 01/01/24 4,808
7,669,697 FHLMC #846150 (CMT) 6.93 04/01/21 7,905,770
4,919,528 FHLMC #846602 6.79 04/01/27 5,032,529
21,320,150
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 52.91%
7,000,000 FNMA 5.13 02/13/04 6,628,300
5,558,882 FNMA #136014 (COFI) 5.87 05/01/18 5,452,875
5,979,719 FNMA #57733 5.84 02/01/17 5,794,707
2,536,822 FNMA #57775 5.81 05/01/18 2,455,973
7,812,772 FNMA #66397 5.95 03/01/18 7,567,373
7,191,319 FNMA 1999-31 6.19 05/25/28 6,928,635
7,595,684 FNMA POOL #323186 6.90 09/01/25 7,843,760
4,667,867 FNMA POOL #323382 6.91 08/01/27 4,790,398
47,462,021
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 18.95%
4,223,248 GNMA II #80205 6.00 06/20/28 4,234,482
5,615,787 GNMA II #8076 6.13 11/20/22 5,700,922
6,977,952 GNMA II #8121 (CMT) 6.37 01/20/23 7,068,455
17,003,859
-----------
85,786,030
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(COST $87,459,787)
-----------
SHORT-TERM INSTRUMENTS - 3.67%
REPURCHASE AGREEMENTS - 3.67%
2,802,000 GOLDMAN SACHS POOLED
REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY U.S.
GOVERNMENT SECURITIES 5.58 12/01/99 2,802,000
493,000 JP MORGAN SECURITIES
INCORPORATED REPURCHASE
AGREEMENT - 102%
COLLATERALIZED BY U.S.
GOVERNMENT SECURITIES 5.64 12/01/99 493,000
3,295,000
TOTAL SHORT-TERM INSTRUMENTS (COST
$3,295,000)
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $90,754,787)* (NOTES 1 AND 3) 99.30% $89,081,030
OTHER ASSETS AND LIABILITIES, NET 0.70 624,822
------- -----------
TOTAL NET ASSETS 100.00% $89,705,852
------- -----------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 84,034
GROSS UNREALIZED DEPRECIATION (1,757,791)
----------
NET UNREALIZED DEPRECIATION $(1,673,757)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
40
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
41
<PAGE>
INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- NOVEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE DIVERSIFIED
BOND BOND
<S> <C> <C>
- -----------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET
VALUE (SEE COST BELOW).... $18,372,631 $185,098,186
CASH........................ 3,819 0
COLLATERAL FOR SECURITIES
LOANED.................... 1,487,097 0
RECEIVABLE FOR DIVIDENDS AND
INTEREST AND OTHER
RECEIVABLES............... 320,198 729
RECEIVABLE FOR INVESTMENTS
SOLD...................... 0 0
RECEIVABLE FOR FUND SHARES
ISSUED.................... 178,813 1,539,698
ORGANIZATION COST, NET OF
AMORTIZATION.............. 0 0
PREPAID EXPENSES............ 1,175 0
APPRECIATION OF FOREIGN
CURRENCY FORWARD
CONTRACTS................. 0 0
----------- ------------
TOTAL ASSETS.................. 20,363,733 186,638,613
----------- ------------
LIABILITIES
PAYABLE FOR INVESTMENTS
PURCHASED................. 0 0
PAYABLE FOR SECURITIES
LOANED.................... 1,487,097 0
DIVIDENDS PAYABLE........... 98,026 0
PAYABLE FOR FUND SHARES
REDEEMED.................. 77,045 169,819
PAYABLE FOR INVESTMENT
ADVISER AND AFFILIATES.... 2,482 37,262
PAYABLE TO OTHER RELATED
PARTIES................... 16,018 3,967
ACCRUED EXPENSES AND OTHER
LIABILITIES............... 22,832 25,464
----------- ------------
TOTAL LIABILITIES............. 1,703,500 236,512
----------- ------------
TOTAL NET ASSETS.............. $18,660,233 $186,402,101
----------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------
PAID-IN CAPITAL............. $20,210,657 $179,252,978
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)............. 5,621 10,002,839
UNDISTRIBUTED NET REALIZED
GAIN (LOSS) ON
INVESTMENTS............... (307,848) 2,289,399
NET UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS............... (1,248,197) (5,143,115)
NET UNREALIZED APPRECIATION
(DEPRECIATION) OF FOREIGN
CURRENCY FORWARD
CONTRACTS................. 0 0
----------- ------------
TOTAL NET ASSETS.............. $18,660,233 $186,402,101
----------- ------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
- -----------------------------------------------------------
NET ASSETS - CLASS A.......... $ 5,848,721 N/A
SHARES OUTSTANDING -
CLASS A..................... 633,208 N/A
NET ASSET VALUE PER SHARE -
CLASS A..................... $ 9.24 N/A
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A............. $ 9.68(1) N/A
NET ASSETS - CLASS B.......... $10,987,120 N/A
SHARES OUTSTANDING -
CLASS B..................... 1,189,303 N/A
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -
CLASS B..................... $ 9.24 N/A
NET ASSETS - CLASS C.......... $ 1,824,392 N/A
SHARES OUTSTANDING -
CLASS C..................... 197,555 N/A
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -
CLASS C..................... $ 9.23 N/A
NET ASSETS - INSTITUTIONAL
CLASS....................... N/A $186,402,101
SHARES OUTSTANDING -
INSTITUTIONAL CLASS......... N/A 7,100,240
NET ASSET VALUE AND OFFERING
PRICE PER SHARE............. N/A $ 26.25
----------- ------------
INVESTMENT AT COST
(NOTE 10)................... $19,620,828 $190,241,301
----------- ------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/98.5 OF NET ASSET VALUE.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES -- NOVEMBER 30, 1999 (UNAUDITED)
INCOME FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE LIMITED TERM
INCOME GOVERNMENT GOVERNMENT STABLE VARIABLE RATE
INCOME PLUS INCOME INCOME INCOME GOVERNMENT
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET
VALUE (SEE COST BELOW).... $457,954,852 $46,208,986 $700,736,287 $189,171,899 $192,959,401 $ 89,081,030
CASH........................ 0 3,603 0 5,013 0 5,990
COLLATERAL FOR SECURITIES
LOANED.................... 0 2,695,362 55,921,282 42,740,206 0 4,800,643
RECEIVABLE FOR DIVIDENDS AND
INTEREST AND OTHER
RECEIVABLES............... 7,078,095 881,618 6,291,792 2,282,125 0 559,530
RECEIVABLE FOR INVESTMENTS
SOLD...................... 0 0 0 0 0 556,270
RECEIVABLE FOR FUND SHARES
ISSUED.................... 2,606,193 56,479 3,706,672 193,919 201,052 51,042
ORGANIZATION COST, NET OF
AMORTIZATION.............. 0 0 0 0 0 0
PREPAID EXPENSES............ 6,240 994 385 0 1,484 0
APPRECIATION OF FOREIGN
CURRENCY FORWARD
CONTRACTS................. 0 30,936 0 0 0 0
------------ ----------- ------------ ------------ ------------ ------------
TOTAL ASSETS.................. 467,645,380 49,877,978 766,656,418 234,393,162 193,161,937 95,054,505
------------ ----------- ------------ ------------ ------------ ------------
LIABILITIES
PAYABLE FOR INVESTMENTS
PURCHASED................. 6,803,933 0 0 0 0 0
PAYABLE FOR SECURITIES
LOANED.................... 0 2,695,362 55,921,282 42,740,206 0 4,800,643
DIVIDENDS PAYABLE........... 1,433,098 0 0 435,788 1,020 375,501
PAYABLE FOR FUND SHARES
REDEEMED.................. 969,988 35,159 897,636 845,709 463,194 15,322
PAYABLE FOR INVESTMENT
ADVISER AND AFFILIATES.... 194,835 21,164 318,181 74,039 4,406 36,657
PAYABLE TO OTHER RELATED
PARTIES................... 24,286 30,599 192,662 18,887 12,184 7,186
ACCRUED EXPENSES AND OTHER
LIABILITIES............... 72,460 13,354 381,899 86,134 25,787 113,344
------------ ----------- ------------ ------------ ------------ ------------
TOTAL LIABILITIES............. 9,498,600 2,795,638 57,711,660 44,200,763 506,591 5,348,653
------------ ----------- ------------ ------------ ------------ ------------
TOTAL NET ASSETS.............. $458,146,780 $47,082,340 $708,944,758 $190,192,399 $192,655,346 $ 89,705,852
------------ ----------- ------------ ------------ ------------ ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL............. $498,698,265 $51,444,575 $794,802,320 $211,400,206 $201,821,245 $237,832,938
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)............. 0 170,981 899,526 71,778 205,896 0
UNDISTRIBUTED NET REALIZED
GAIN (LOSS) ON
INVESTMENTS............... (20,993,457) (1,006,487) (64,932,198) (17,435,088) (7,081,865) (146,453,329)
NET UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS............... (19,558,028) (3,557,665) (21,824,890) (3,844,497) (2,289,930) (1,673,757)
NET UNREALIZED APPRECIATION
(DEPRECIATION) OF FOREIGN
CURRENCY FORWARD
CONTRACTS................. 0 30,936 0 0 0 0
------------ ----------- ------------ ------------ ------------ ------------
TOTAL NET ASSETS.............. $458,146,780 $47,082,340 $708,944,758 $190,192,399 $192,655,346 $ 89,705,852
------------ ----------- ------------ ------------ ------------ ------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS - CLASS A.......... $ 17,334,381 $ 9,964,640 $225,175,651 $ 34,110,281 $ 9,201,727 $ 89,705,852
SHARES OUTSTANDING -
CLASS A..................... 1,899,470 876,853 20,910,549 3,546,471 904,300 10,065,640
NET ASSET VALUE PER SHARE -
CLASS A..................... $ 9.13 $ 11.36 $ 10.77 $ 9.62 $ 10.18 $ 8.91
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A............. $ 9.56(1) $ 11.90(1) $ 11.28(1) $ 10.07(1) $ 10.34(2) $ 9.33(1)
NET ASSETS - CLASS B.......... $ 10,156,480 $34,247,976 $ 58,280,057 $ 10,242,867 $ 2,578,624 N/A
SHARES OUTSTANDING -
CLASS B..................... 1,114,485 3,011,889 5,415,847 1,064,792 253,517 N/A
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -
CLASS B..................... $ 9.11 $ 11.37 $ 10.76 $ 9.62 $ 10.17 N/A
NET ASSETS - CLASS C.......... N/A $ 2,869,724 $ 4,285,233 N/A N/A N/A
SHARES OUTSTANDING -
CLASS C..................... N/A 252,365 398,292 N/A N/A N/A
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -
CLASS C..................... N/A $ 11.37 $ 10.76 N/A N/A N/A
NET ASSETS - INSTITUTIONAL
CLASS....................... $430,655,919 N/A $421,203,817 $145,839,251 $180,874,995 N/A
SHARES OUTSTANDING -
INSTITUTIONAL CLASS......... 47,236,602 N/A 39,116,293 15,452,727 17,771,715 N/A
NET ASSET VALUE AND OFFERING
PRICE PER SHARE............. $ 9.12 N/A $ 10.77 $ 9.44 $ 10.18 N/A
------------ ----------- ------------ ------------ ------------ ------------
INVESTMENT AT COST
(NOTE 10)................... $477,512,880 $49,766,651 $722,561,177 $193,016,396 $195,249,331 $ 90,754,787
------------ ----------- ------------ ------------ ------------ ------------
</TABLE>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET VALUE. ON
INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE IS REDUCED.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/98.5 OF NET ASSET VALUE.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
<PAGE>
INCOME FUNDS STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED
CORPORATE BOND BOND
---------------------------- -------------
(UNAUDITED) (UNAUDITED)
FOR THE FOR THE
FIVE MONTHS FOR THE SIX MONTHS
ENDED YEAR ENDED ENDED
NOV. 30, 1999 JUNE 30, 1999 NOV. 30, 1999
<S> <C> <C> <C>
- ----------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS.............. $ 0 $ 0 $ 0
INTEREST............... 615,130 1,095,858 5,705,648
SECURITIES LENDING
INCOME............... 0 0 16,355
NET EXPENSES FROM
PORTFOLIOS........... 0 0 (377,900)
------------- ------------- -------------
TOTAL INVESTMENT
INCOME................. 615,130 1,095,858 5,344,103
------------- ------------- -------------
EXPENSES
ADVISORY FEES.......... 39,739 76,788 227,814
ADMINISTRATION FEES.... 11,922 12,808 57,282
SHAREHOLDER SERVICING
FEES................. 19,870 38,394 0
PORTFOLIO ACCOUNTING
FEES................. 18,588 34,749 7,225
CUSTODY................ 1,366 2,565 0
TRANSFER AGENT
A SHARES............. 2,204 6,794 N/A
B SHARES............. 7,147 12,686 N/A
C SHARES............. 862 2,020 N/A
I SHARES............. N/A N/A 200,861
DISTRIBUTION FEES
A SHARES............. 415 2,427 N/A
B SHARES............. 35,709 67,963 N/A
C SHARES............. 5,953 10,821 N/A
AMORTIZATION OF
ORGANIZATION COSTS... 0 0 5,397
LEGAL AND AUDIT FEES... 2,628 57,702 5,590
REGISTRATION FEES...... 9,886 29,620 7,278
DIRECTORS' FEES........ 696 4,543 1,325
SHAREHOLDER REPORTS.... 2,570 12,786 5,803
OTHER.................. 1,394 13,036 4,285
------------- ------------- -------------
TOTAL EXPENSES........... 160,949 385,702 522,860
------------- ------------- -------------
LESS:
WAIVED FEES AND
REIMBURSED
EXPENSES............. (39,718) (163,180) (262,709)
NET EXPENSES........... 121,231 222,522 260,151
------------- ------------- -------------
NET INVESTMENT INCOME
(LOSS)................. 493,899 873,336 5,083,952
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------
NET REALIZED GAIN
(LOSS) FROM
SECURITIES........... (170,630) (93,479) 0
FOREIGN CURRENCY
TRANSACTIONS......... 0 0 0
SECURITIES TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 0 (1,247,259)
FOREIGN CURRENCY
TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 651 0
------------- ------------- -------------
NET REALIZED GAIN (LOSS)
FROM INVESTMENTS....... (170,630) (92,828) (1,247,259)
------------- ------------- -------------
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF:
SECURITIES............. (599,107) (689,154) 0
FOREIGN CURRENCY
TRANSACTIONS......... 0 0 0
FORWARD FOREIGN
CURRENCY CONTRACTS... 0 0 0
SECURITIES TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 0 (2,816,695)
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS............ (599,107) (689,154) (2,816,695)
------------- ------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS......... (769,737) (781,982) (4,063,954)
------------- ------------- -------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $ (275,838) $ 91,354 $ 1,019,998
------------- ------------- -------------
</TABLE>
(1) FOR THE PERIOD FROM JULY 13, 1998 (COMMENCEMENT OF OPERATIONS) TO JUNE 30,
1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
44
<PAGE>
STATEMENTS OF OPERATIONS INCOME FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT LIMITED TERM
INCOME INCOME PLUS INCOME GOVERNMENT INCOME
------------- ------------------------------- ------------- ----------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE FOR THE FOR THE FOR THE
SIX MONTHS FIVE MONTHS FOR THE SIX MONTHS FIVE MONTHS FOR THE
ENDED ENDED PERIOD ENDED ENDED ENDED YEAR ENDED
NOV. 30, 1999 NOV. 30, 1999 JUNE 30, 1999(1) NOV. 30, 1999 NOV. 30, 1999 JUNE 30, 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS.............. $ 0 $ 120,935 $ 339,097 $ 0 $ 0 $ 0
INTEREST............... 13,648,173 1,632,960 2,630,458 16,493,168 3,665,241 9,219,109
SECURITIES LENDING
INCOME............... 52,305 5,599 0 75,354 12,085 0
NET EXPENSES FROM
PORTFOLIOS........... 0 0 0 0 0 0
------------- ------------- ---------------- ------------ ------------- -------------
TOTAL INVESTMENT
INCOME................. 13,700,478 1,759,494 2,969,555 16,568,522 3,677,326 9,219,109
------------- ------------- ---------------- ------------ ------------- -------------
EXPENSES
ADVISORY FEES.......... 944,548 122,228 207,018 856,296 280,931 696,188
ADMINISTRATION FEES.... 203,397 30,557 32,646 260,021 84,482 112,334
SHAREHOLDER SERVICING
FEES................. 4,030 50,928 96,048 44,561 124,579 370,653
PORTFOLIO ACCOUNTING
FEES................. 40,718 25,703 49,955 45,484 35,944 89,345
CUSTODY................ 28,346 3,501 6,416 8,961 11,157 27,052
TRANSFER AGENT
A SHARES............. 16,263 3,501 12,282 49,016 18,995 63,167
B SHARES............. 10,040 16,749 37,834 13,036 5,695 12,313
C SHARES............. N/A 1,277 3,671 489 N/A N/A
I SHARES............. 384,187 N/A N/A 463,439 6,823 51,194
DISTRIBUTION FEES
A SHARES............. 0 800 4,387 0 0 0
B SHARES............. 31,087 111,636 202,679 53,043 30,980 65,964
C SHARES............. N/A 9,692 19,664 2,003 N/A N/A
AMORTIZATION OF
ORGANIZATION COSTS... 0 0 0 5,397 0 6,244
LEGAL AND AUDIT FEES... 11,824 5,732 37,185 13,584 15,823 54,380
REGISTRATION FEES...... 18,247 17,965 44,351 17,902 20,980 52,294
DIRECTORS' FEES........ 2,168 970 4,641 2,745 2,361 1,370
SHAREHOLDER REPORTS.... 17,710 10,228 18,307 31,219 18,927 34,124
OTHER.................. 25,561 1,825 8,840 24,122 1,568 3,629
------------- ------------- ---------------- ------------ ------------- -------------
TOTAL EXPENSES........... 1,738,126 413,292 785,924 1,891,318 659,245 1,640,251
------------- ------------- ---------------- ------------ ------------- -------------
LESS:
WAIVED FEES AND
REIMBURSED
EXPENSES............. (285,253) (67,999) (283,866) (168,305) (150,181) (284,939)
NET EXPENSES........... 1,452,873 345,293 502,058 1,723,013 509,064 1,355,312
------------- ------------- ---------------- ------------ ------------- -------------
NET INVESTMENT INCOME
(LOSS)................. 12,247,605 1,414,201 2,467,497 14,845,509 3,168,262 7,863,797
------------- ------------- ---------------- ------------ ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN
(LOSS) FROM
SECURITIES........... (8,904,456) (389,230) (617,257) (7,545,987) (994,373) 29,922
FOREIGN CURRENCY
TRANSACTIONS......... 0 0 1,690 0 0 0
SECURITIES TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 0 0 0 0 0
FOREIGN CURRENCY
TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 0 0 0 0 0
------------- ------------- ---------------- ------------ ------------- -------------
NET REALIZED GAIN (LOSS)
FROM INVESTMENTS....... (8,904,456) (389,230) (615,567) (7,545,987) (994,373) 29,922
------------- ------------- ---------------- ------------ ------------- -------------
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF:
SECURITIES............. (6,103,045) (2,505,028) (1,041,954) (6,513,087) (1,050,609) (3,516,889)
FOREIGN CURRENCY
TRANSACTIONS......... 0 (11,681) 998 0 0 0
FORWARD FOREIGN
CURRENCY CONTRACTS... 0 16,833 14,103 0 0 0
SECURITIES TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 0 0 0 0 0
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS............ (6,103,045) (2,499,876) (1,026,853) (6,513,087) (1,050,609) (3,516,889)
------------- ------------- ---------------- ------------ ------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS......... (15,007,501) (2,889,106) (1,642,420) (14,059,074) (2,044,982) (3,486,967)
------------- ------------- ---------------- ------------ ------------- -------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $ (2,759,896) $ (1,474,905) $ 825,077 $ 786,435 $ 1,123,280 $ 4,376,830
------------- ------------- ---------------- ------------ ------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
45
<PAGE>
INCOME FUNDS STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE RATE
STABLE INCOME GOVERNMENT
------------- ----------------------------
(UNAUDITED) (UNAUDITED)
FOR THE FOR THE
SIX MONTHS FIVE MONTHS FOR THE
ENDED ENDED YEAR ENDED
NOV. 30, 1999 NOV. 30, 1999 JUNE 30, 1999
<S> <C> <C> <C>
- ----------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS.............. $ 0 $ 0 $ 0
INTEREST............... 5,738,822 2,437,251 7,505,993
SECURITIES LENDING
INCOME............... 6,988 0 0
NET EXPENSES FROM
PORTFOLIOS........... (363,569) 0 0
------------- ------------- -------------
TOTAL INVESTMENT
INCOME................. 5,382,241 2,437,251 7,505,993
------------- ------------- -------------
EXPENSES
ADVISORY FEES.......... 0 217,589 684,217
ADMINISTRATION FEES.... 60,574 65,276 108,812
SHAREHOLDER SERVICING
FEES................. 1,869 68,333 379
PORTFOLIO ACCOUNTING
FEES................. 19,230 32,822 88,866
CUSTODY................ 0 11,018 32,854
TRANSFER AGENT
A SHARES............. 10,142 12,474 191,368
B SHARES............. 3,009 N/A N/A
C SHARES............. N/A N/A 212
I SHARES............. 201,644 N/A N/A
DISTRIBUTION FEES
A SHARES............. 0 40,462 341,729
B SHARES............. 9,683 N/A N/A
C SHARES............. N/A N/A 758
AMORTIZATION OF
ORGANIZATION COSTS... 5,397 0 N/A
LEGAL AND AUDIT FEES... 5,362 7,415 41,268
REGISTRATION FEES...... 12,840 588 2,019
DIRECTORS' FEES........ 1,394 615 1,555
SHAREHOLDER REPORTS.... 7,362 21,747 36,772
OTHER.................. 8,377 5,178 15,958
------------- ------------- -------------
TOTAL EXPENSES........... 346,883 483,517 1,546,767
------------- ------------- -------------
LESS:
WAIVED FEES AND
REIMBURSED
EXPENSES............. (69,530) (143,426) (480,389)
NET EXPENSES........... 277,353 340,091 1,066,378
------------- ------------- -------------
NET INVESTMENT INCOME
(LOSS)................. 5,104,888 2,097,160 6,439,615
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------
NET REALIZED GAIN
(LOSS) FROM
SECURITIES........... 0 (490,852) (1,468,711)
FOREIGN CURRENCY
TRANSACTIONS......... 0 0 0
SECURITIES TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... (144,323) 0 0
FOREIGN CURRENCY
TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... 0 0 0
------------- ------------- -------------
NET REALIZED GAIN (LOSS)
FROM INVESTMENTS....... (144,323) (490,852) (1,468,711)
------------- ------------- -------------
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF:
SECURITIES............. 0 (96,506) (1,882,277)
FOREIGN CURRENCY
TRANSACTIONS......... 0 0 0
FORWARD FOREIGN
CURRENCY CONTRACTS... 0 0 0
SECURITIES TRANSACTIONS
ALLOCATED FROM
PORTFOLIOS........... (1,626,478) 0 0
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS............ (1,626,478) (96,506) (1,882,277)
------------- ------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS......... (1,770,801) (587,358) (3,350,988)
------------- ------------- -------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $ 3,334,087 $ 1,509,802 $ 3,088,627
------------- ------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
46
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
47
<PAGE>
INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE BOND
-------------------------------------------
(UNAUDITED)
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED
NOV. 30, 1999 JUNE 30, 1999 JUNE 30, 1998
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS.............................. $ 18,786,765 $ 10,397,222 $ 0
OPERATIONS:
NET INVESTMENT INCOME (LOSS)...................... 493,899 873,336 97,942
NET REALIZED GAIN (LOSS) ON SALE OF INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS............... (170,630) (92,828) 14,604
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS AND TRANSLATION OF
ASSETS IN FOREIGN CURRENCY...................... (599,107) (689,154) 40,064
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF FORWARD FOREIGN CURRENCY
CONTRACTS....................................... 0 0 0
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. (275,838) 91,354 152,610
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A....................................... (168,407) (301,656) (59,155)
CLASS B....................................... (284,950) (494,210) (36,202)
CLASS C....................................... (47,436) (78,121) (2,585)
CLASS I....................................... N/A N/A N/A
NET REALIZED GAIN ON SALE OF INVESTMENTS
CLASS A....................................... 0 (17,016) 0
CLASS B....................................... 0 (34,782) 0
CLASS C....................................... 0 (4,732) 0
CLASS I....................................... N/A N/A N/A
CAPITAL SHARE TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A............. 1,155,368 4,298,862 5,486,114
REINVESTMENT OF DIVIDENDS - CLASS A............. 69,054 127,714 25,324
COST OF SHARES REDEEMED - CLASS A............... (620,136) (4,188,224) (35,386)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS A....... 604,286 238,352 5,476,052
------------ ------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS B............... 1,384,583 8,152,989 4,674,276
REINVESTMENT OF DIVIDENDS - CLASS B............... 180,085 350,463 10,428
COST OF SHARES REDEEMED - CLASS B................. (1,425,876) (1,310,668) (115,854)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS B....... 138,792 7,192,784 4,568,850
------------ ------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS C............... 207,153 2,076,396 296,460
REINVESTMENT OF DIVIDENDS - CLASS C............... 39,035 66,082 1,192
COST OF SHARES REDEEMED - CLASS C................. (339,167) (344,908) 0
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C....... (92,979) 1,797,570 297,652
------------ ------------ ------------
PROCEEDS FROM SHARES SOLD - CLASS I............... N/A N/A N/A
REINVESTMENT OF DIVIDENDS - CLASS I............... N/A N/A N/A
COST OF SHARES REDEEMED - CLASS I................. N/A N/A N/A
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS I....... N/A N/A N/A
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. (126,532) 8,389,543 10,397,222
------------ ------------ ------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------
ENDING NET ASSETS............................... $ 18,660,233 $ 18,786,765 $ 10,397,222
SHARE ISSUED AND REDEEMED:
SHARES SOLD - CLASS A........................... 121,643 427,782 549,592
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
CLASS A....................................... 7,364 12,788 2,541
SHARES REDEEMED - CLASS A....................... (65,769) (419,200) (3,533)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS A......................................... 63,238 21,370 548,600
SHARES SOLD - CLASS B........................... 146,158 814,237 468,524
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
CLASS B....................................... 19,197 35,042 1,045
SHARES REDEEMED - CLASS B....................... (151,868) (131,436) (11,597)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS B......................................... 13,487 717,845 457,972
SHARES SOLD - CLASS C........................... 22,118 206,133 29,746
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
CLASS C....................................... 4,161 6,636 119
SHARES REDEEMED - CLASS C....................... (36,079) (35,279) 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS C......................................... (9,800) 177,490 29,865
SHARES SOLD - INSTITUTIONAL CLASS............... N/A N/A N/A
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
INSTITUTIONAL CLASS........................... N/A N/A N/A
SHARES REDEEMED - INSTITUTIONAL CLASS............. N/A N/A N/A
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS I......................................... N/A N/A N/A
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME.......................................... $ 5,621 $ 5,621 $ 5,621
------------ ------------ ------------
</TABLE>
48
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS INCOME FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED BOND INCOME INCOME PLUS
--------------------------- ------------------------------------ --------------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE FOR THE FOR THE FOR THE FOR THE FROM
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED JULY 13, 1998 TO
NOV. 30, 1999 MAY 31, 1999 NOV. 30, 1999 (1) NOV. 30, 1998 (2) NOV. 30, 1999 JUNE 30, 1999
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS..... $179,133,459 $134,830,774 $ 369,928,292 $ 303,081,744 $ 51,152,364 $ 0
OPERATIONS:
NET INVESTMENT INCOME
(LOSS)................. 5,083,952 8,791,665 12,247,605 20,783,023 1,414,201 2,467,497
NET REALIZED GAIN (LOSS)
ON SALE OF INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS........... (1,247,259) 3,794,321 (8,904,456) 1,744,973 (389,230) (615,567)
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS AND
TRANSLATION OF ASSETS
IN FOREIGN CURRENCY.... (2,816,695) (7,276,006) (6,103,045) (14,614,100) (2,516,709) (1,040,956)
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
FORWARD FOREIGN
CURRENCY CONTRACTS..... 0 0 0 0 16,833 14,103
------------ ------------ ----------------- ----------------- -------------- ----------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ 1,019,998 5,309,980 (2,759,896) 7,913,896 (1,474,905) 825,077
------------ ------------ ----------------- ----------------- -------------- ----------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A.............. N/A N/A (454,636) (644,375) (296,453) (592,308)
CLASS B.............. N/A N/A (237,230) (338,080) (948,973) (1,634,801)
CLASS C.............. N/A N/A 0 0 (82,353) (157,519)
CLASS I.............. 0 (8,345,049) (11,607,880) (19,800,568) N/A N/A
NET REALIZED GAIN ON
SALE OF INVESTMENTS
CLASS A.............. N/A N/A 0 0 0 0
CLASS B.............. N/A N/A 0 0 0 0
CLASS C.............. N/A N/A N/A N/A 0 0
CLASS I.............. 0 (2,943,586) 0 0 N/A N/A
CAPITAL SHARE
TRANSACTIONS:
PROCEEDS FROM SHARES
SOLD - CLASS A....... N/A N/A 6,531,440 9,443,566 1,598,504 17,861,432
REINVESTMENT OF
DIVIDENDS -
CLASS A.............. N/A N/A 284,195 444,993 219,391 471,992
COST OF SHARES REDEEMED
- CLASS A............ N/A N/A (2,686,517) (3,311,262) (2,503,997) (6,778,268)
------------ ------------ ----------------- ----------------- -------------- ----------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS A................ N/A N/A 4,129,118 6,577,297 (686,102) 11,555,156
------------ ------------ ----------------- ----------------- -------------- ----------------
PROCEEDS FROM SHARES SOLD
- CLASS B.............. N/A N/A 4,103,136 4,176,972 2,721,445 47,027,538
REINVESTMENT OF DIVIDENDS
- CLASS B.............. N/A N/A 189,472 258,830 657,844 1,158,652
COST OF SHARES REDEEMED -
CLASS B................ N/A N/A (1,532,826) (1,281,451) (3,969,450) (10,161,143)
------------ ------------ ----------------- ----------------- -------------- ----------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS B................ N/A N/A 2,759,782 3,154,351 (590,161) 38,025,047
------------ ------------ ----------------- ----------------- -------------- ----------------
PROCEEDS FROM SHARES SOLD
- CLASS C.............. N/A N/A N/A N/A 369,535 4,318,436
REINVESTMENT OF DIVIDENDS
- CLASS C.............. N/A N/A N/A N/A 62,553 130,309
COST OF SHARES REDEEMED -
CLASS C................ N/A N/A N/A N/A (423,165) (1,317,033)
------------ ------------ ----------------- ----------------- -------------- ----------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS C................ N/A N/A N/A N/A 8,923 3,131,712
------------ ------------ ----------------- ----------------- -------------- ----------------
PROCEEDS FROM SHARES SOLD
- CLASS I.............. 32,567,539 93,461,345 128,625,256 116,593,000 N/A N/A
REINVESTMENT OF DIVIDENDS
- CLASS I.............. 0 10,514,121 1,277,097 1,404,934 N/A N/A
COST OF SHARES REDEEMED -
CLASS I................ (26,318,895) (53,694,126) (33,513,123) (48,013,907) N/A N/A
------------ ------------ ----------------- ----------------- -------------- ----------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS I................ 6,248,644 50,281,340 96,389,230 69,984,027 N/A N/A
------------ ------------ ----------------- ----------------- -------------- ----------------
INCREASE (DECREASE) IN
NET ASSETS............. 7,268,642 44,302,685 88,218,488 66,846,548 (4,070,024) 51,152,364
------------ ------------ ----------------- ----------------- -------------- ----------------
NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------------------
ENDING NET ASSETS...... $186,402,101 $179,133,459 $ 458,146,780 $ 369,928,292 $ 47,082,340 $ 51,152,364
SHARE ISSUED AND REDEEMED:
SHARES SOLD -
CLASS A.............. N/A N/A 710,305 963,101 137,772 1,437,339
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS A.............. N/A N/A 30,768 38,853 18,898 38,209
SHARES REDEEMED -
CLASS A.............. N/A N/A (290,695) (335,760) (212,161) (543,204)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS A................ N/A N/A 450,378 666,194 (55,491) 932,344
SHARES SOLD -
CLASS B.............. N/A N/A 443,876 429,256 231,853 3,788,681
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS B.............. N/A N/A 20,577 22,307 56,610 93,706
SHARES REDEEMED -
CLASS B.............. N/A N/A (166,599) (131,835) (339,032) (819,929)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS B................ N/A N/A 297,854 319,728 (50,569) 3,062,458
SHARES SOLD -
CLASS C.............. N/A N/A N/A N/A 31,066 347,631
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS C.............. N/A N/A N/A N/A 5,401 10,533
SHARES REDEEMED -
CLASS C.............. N/A N/A N/A N/A (36,231) (106,035)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS C................ N/A N/A N/A N/A 236 252,129
SHARES SOLD -
INSTITUTIONAL
CLASS................ 1,248,767 3,450,235 13,918,132 9,749,900 N/A N/A
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
INSTITUTIONAL
CLASS................ 0 394,526 138,804 126,666 N/A N/A
SHARES REDEEMED -
INSTITUTIONAL CLASS.... (1,009,375) (1,972,081) (3,629,245) (4,886,126) N/A N/A
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS I................ 239,392 1,872,680 10,427,691 4,990,440 N/A N/A
ENDING BALANCE OF
UNDISTRIBUTED NET
INVESTMENT INCOME...... $ 10,002,839 $ 4,918,887 $ 0 $ 14,155 $ 170,981 $ 84,559
------------ ------------ ----------------- ----------------- -------------- ----------------
</TABLE>
49
<PAGE>
INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
INCOME
---------------------------------
(UNAUDITED)
FOR THE FOR THE
YEAR ENDED YEAR ENDED
NOV. 30, 1999 (3) NOV. 30, 1998
<S> <C> <C>
- -------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS.............................. $ 447,437,913 $ 422,947,755
OPERATIONS:
NET INVESTMENT INCOME (LOSS)...................... 14,845,509 25,631,632
NET REALIZED GAIN (LOSS) ON SALE OF INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS............... (7,545,987) 9,601,541
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS AND TRANSLATION OF
ASSETS IN FOREIGN CURRENCY...................... (6,513,087) (17,398,354)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF FORWARD FOREIGN CURRENCY
CONTRACTS....................................... 0 0
----------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 786,435 17,834,819
----------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A....................................... (1,161,512) (989,253)
CLASS B....................................... (338,671) (436,710)
CLASS C....................................... (10,502) N/A
CLASS I....................................... (13,084,679) (24,119,784)
NET REALIZED GAIN ON SALE OF INVESTMENTS
CLASS A....................................... 0 0
CLASS B....................................... 0 0
CLASS C....................................... 0 N/A
CLASS I....................................... 0 0
CAPITAL SHARE TRANSACTIONS:
PROCEEDS FROM SHARES SOLD - CLASS A............. 215,392,834 10,419,234
REINVESTMENT OF DIVIDENDS - CLASS A............. 800,435 656,708
COST OF SHARES REDEEMED - CLASS A............... (7,266,511) (6,477,809)
----------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS A....... 208,926,758 4,598,133
----------------- --------------
PROCEEDS FROM SHARES SOLD - CLASS B............... 53,104,018 2,225,321
REINVESTMENT OF DIVIDENDS - CLASS B............... 242,100 306,880
COST OF SHARES REDEEMED - CLASS B................. (2,918,182) (2,117,425)
----------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS B....... 50,427,936 414,776
----------------- --------------
PROCEEDS FROM SHARES SOLD - CLASS C............... 4,479,510 N/A
REINVESTMENT OF DIVIDENDS - CLASS C............... 6,572 N/A
COST OF SHARES REDEEMED - CLASS C................. (160,731) N/A
----------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS C....... 4,325,351 N/A
----------------- --------------
PROCEEDS FROM SHARES SOLD - CLASS I............... 51,136,732 99,614,489
REINVESTMENT OF DIVIDENDS - CLASS I............... 1,977,381 3,149,067
COST OF SHARES REDEEMED - CLASS I................. (41,478,384) (75,575,379)
----------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS - CLASS I....... 11,635,729 27,188,177
----------------- --------------
INCREASE (DECREASE) IN NET ASSETS................. 261,506,845 24,490,158
----------------- --------------
NET ASSETS:
- -------------------------------------------------------------------------------------
ENDING NET ASSETS............................... $ 708,944,758 $ 447,437,913
SHARE ISSUED AND REDEEMED:
SHARES SOLD - CLASS A........................... 19,822,140 882,227
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
CLASS A....................................... 73,975 57,675
SHARES REDEEMED - CLASS A....................... (669,251) (532,944)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS A......................................... 19,226,864 406,958
SHARES SOLD - CLASS B........................... 4,887,937 197,858
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
CLASS B....................................... 22,373 24,843
SHARES REDEEMED - CLASS B....................... (268,312) (186,963)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS B......................................... 4,641,998 35,738
SHARES SOLD - CLASS C........................... 412,495 N/A
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
CLASS C....................................... 609 N/A
SHARES REDEEMED - CLASS C....................... (14,812) N/A
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS C......................................... 398,292 N/A
SHARES SOLD - INSTITUTIONAL CLASS............... 4,702,015 8,727,027
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS -
INSTITUTIONAL CLASS........................... 182,374 276,758
SHARES REDEEMED - INSTITUTIONAL CLASS............. (3,814,720) (6,624,019)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -
CLASS I......................................... 1,069,669 2,379,766
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME.......................................... $ 899,526 $ 520,614
----------------- --------------
</TABLE>
50
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS INCOME FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED TERM GOVERNMENT INCOME STABLE INCOME
------------------------------------------------------- ------------------------------
(UNAUDITED) (UNAUDITED)
FOR THE FOR THE FOR THE THREE FOR THE FOR THE
PERIOD ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
NOV. 30, 1999 (4) JUNE 30, 1999 (5) JUNE 30, 1998 (6) NOV. 30, 1999 NOV. 30, 1998
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS..... $ 132,387,973 $ 135,808,583 $ 81,667,790 $ 190,146,200 $ 154,592,410
OPERATIONS:
NET INVESTMENT INCOME
(LOSS)................. 3,168,262 7,863,797 1,204,587 5,104,888 9,000,111
NET REALIZED GAIN (LOSS)
ON SALE OF INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS........... (994,373) 29,922 197,277 (144,323) 77,235
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS AND
TRANSLATION OF ASSETS
IN FOREIGN CURRENCY.... (1,050,609) (3,516,889) (315,497) (1,626,478) (817,887)
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
FORWARD FOREIGN
CURRENCY CONTRACTS..... 0 0 0 0 0
----------------- ----------------- ----------------- -------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ 1,123,280 4,376,830 1,086,367 3,334,087 8,259,459
----------------- ----------------- ----------------- -------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A.............. (904,613) (2,552,631) (411,840) (234,416) (441,356)
CLASS B.............. (201,644) (435,667) (16,670)(8) (57,396) (91,337)
CLASS C.............. N/A N/A N/A N/A N/A
CLASS I.............. (2,072,397) (4,875,499) (776,077) (4,743,035) (8,493,767)
NET REALIZED GAIN ON
SALE OF INVESTMENTS
CLASS A.............. 0 0 0 0 0
CLASS B.............. 0 0 0(8) 0 0
CLASS C.............. N/A N/A N/A N/A N/A
CLASS I.............. 0 0 0 0 0
CAPITAL SHARE
TRANSACTIONS:
PROCEEDS FROM SHARES
SOLD - CLASS A....... 1,283,618 35,462,628 11,342,063 1,247,804 69,160,904
REINVESTMENT OF
DIVIDENDS -
CLASS A.............. 639,808 1,958,664 298,853 175,060 274,004
COST OF SHARES REDEEMED
- CLASS A............ (10,283,973) (31,334,933) (3,209,710) (700,220) (68,232,510)
----------------- ----------------- ----------------- -------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS A................ (8,360,547) 6,086,359 8,431,206 722,644 1,202,398
----------------- ----------------- ----------------- -------------- --------------
PROCEEDS FROM SHARES SOLD
- CLASS B.............. 1,976,777 4,909,279 7,582,398(8) 860,504 1,191,404
REINVESTMENT OF DIVIDENDS
- CLASS B.............. 164,916 374,047 5(8) 51,851 81,915
COST OF SHARES REDEEMED -
CLASS B................ (1,423,470) (2,896,538) (27,179)(8) (698,011) (738,126)
----------------- ----------------- ----------------- -------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS B................ 718,223 2,386,788 7,555,224 214,344 535,193
----------------- ----------------- ----------------- -------------- --------------
PROCEEDS FROM SHARES SOLD
- CLASS C.............. N/A N/A N/A N/A N/A
REINVESTMENT OF DIVIDENDS
- CLASS C.............. N/A N/A N/A N/A N/A
COST OF SHARES REDEEMED -
CLASS C................ N/A N/A N/A N/A N/A
----------------- ----------------- ----------------- -------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS C................ N/A N/A N/A N/A N/A
----------------- ----------------- ----------------- -------------- --------------
PROCEEDS FROM SHARES SOLD
- CLASS I.............. 82,708,246 16,076,383 43,495,528 38,949,832 104,727,907
REINVESTMENT OF DIVIDENDS
- CLASS I.............. 829,736 2,114,406 182,366 3,893,317 7,027,178
COST OF SHARES REDEEMED -
CLASS I................ (16,035,858) (26,597,579) (5,405,311) (39,570,231) (77,171,885)
----------------- ----------------- ----------------- -------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS I................ 67,502,124 (8,406,790) 38,272,583 3,272,918 34,583,200
----------------- ----------------- ----------------- -------------- --------------
INCREASE (DECREASE) IN
NET ASSETS............. 57,804,426 (3,420,610) 54,140,793 2,509,146 35,553,790
----------------- ----------------- ----------------- -------------- --------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------
ENDING NET ASSETS...... $ 190,192,399 $ 132,387,973 $ 135,808,583 $ 192,655,346 $ 190,146,200
SHARE ISSUED AND REDEEMED:
SHARES SOLD -
CLASS A.............. 132,821 3,504,267 1,131,614 121,707 6,572,253
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS A.............. 66,274 195,337 30,004 17,143 26,555
SHARES REDEEMED -
CLASS A.............. (1,064,964) (3,111,992) (321,454) (68,267) (6,595,554)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS A................ (865,869) 587,612 840,164 70,583 3,254
SHARES SOLD -
CLASS B.............. 204,540 488,761 756,223 84,096 148,486
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS B.............. 17,080 37,358 1 5,079 7,941
SHARES REDEEMED -
CLASS B.............. (147,267) (289,187) (2,717) (68,281) (100,175)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS B................ 74,353 236,932 753,507 20,894 56,252
SHARES SOLD -
CLASS C.............. N/A N/A N/A N/A N/A
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS C.............. N/A N/A N/A N/A N/A
SHARES REDEEMED -
CLASS C.............. N/A N/A N/A N/A N/A
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS C................ N/A N/A N/A N/A N/A
SHARES SOLD -
INSTITUTIONAL
CLASS................ 8,708,435 1,633,872 4,422,174 3,803,763 10,204,127
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
INSTITUTIONAL
CLASS................ 87,629 215,215 18,665 381,194 680,833
SHARES REDEEMED -
INSTITUTIONAL CLASS.... (1,696,023) (2,709,472) (552,996) (3,866,498) (7,428,994)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS I................ 7,100,041 (860,385) 3,887,843 318,459 3,455,966
ENDING BALANCE OF
UNDISTRIBUTED NET
INVESTMENT INCOME...... $ 71,778 $ 0 $ 0 $ 205,896 $ 135,855
----------------- ----------------- ----------------- -------------- --------------
<CAPTION>
VARIABLE RATE GOVERNMENT
----------------------------------------------------
(UNAUDITED)
FOR THE FOR THE FOR THE SIX
PERIOD ENDED YEAR ENDED MONTHS ENDED
NOV. 30, 1999 JUNE 30, 1999 (7) JUNE 30, 1998
<S> <C> <C> <C>
- -------------------------
INCREASE (DECREASE) IN NE
BEGINNING NET ASSETS..... $ 108,202,622 $ 169,619,917 $ 231,810,756
OPERATIONS:
NET INVESTMENT INCOME
(LOSS)................. 2,097,160 6,439,615 4,927,547
NET REALIZED GAIN (LOSS)
ON SALE OF INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS........... (490,852) (1,468,711) 12,439
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS AND
TRANSLATION OF ASSETS
IN FOREIGN CURRENCY.... (96,506) (1,882,277) (1,051,658)
NET CHANGE IN UNREALIZED
APPRECIATION
(DEPRECIATION) OF
FORWARD FOREIGN
CURRENCY CONTRACTS..... 0 0 0
-------------- ----------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ 1,509,802 3,088,627 3,888,328
-------------- ----------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
NET INVESTMENT INCOME
CLASS A.............. (2,097,160) (6,432,666) (4,809,412)
CLASS B.............. N/A N/A N/A
CLASS C.............. N/A (6,949)(9) (118,135)
CLASS I.............. N/A N/A N/A
NET REALIZED GAIN ON
SALE OF INVESTMENTS
CLASS A.............. 0 0 0
CLASS B.............. N/A N/A N/A
CLASS C.............. N/A 0(9) 0
CLASS I.............. N/A N/A N/A
CAPITAL SHARE
TRANSACTIONS:
PROCEEDS FROM SHARES
SOLD - CLASS A....... 37,913,071 93,797,081 48,964,576
REINVESTMENT OF
DIVIDENDS -
CLASS A.............. 248,904 959,349 817,437
COST OF SHARES REDEEMED
- CLASS A............ (56,071,387) (148,197,189) (111,124,094)
-------------- ----------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS A................ (17,909,412) (53,440,759) (61,342,081)
-------------- ----------------- --------------
PROCEEDS FROM SHARES SOLD
- CLASS B.............. N/A N/A N/A
REINVESTMENT OF DIVIDENDS
- CLASS B.............. N/A N/A N/A
COST OF SHARES REDEEMED -
CLASS B................ N/A N/A N/A
-------------- ----------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS B................ N/A N/A N/A
-------------- ----------------- --------------
PROCEEDS FROM SHARES SOLD
- CLASS C.............. N/A 0(9) 26,817,057
REINVESTMENT OF DIVIDENDS
- CLASS C.............. N/A 8,618(9) 60,258
COST OF SHARES REDEEMED -
CLASS C................ N/A (4,634,166)(9) (26,686,854)
-------------- ----------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS C................ N/A (4,625,548) 190,461
-------------- ----------------- --------------
PROCEEDS FROM SHARES SOLD
- CLASS I.............. N/A N/A N/A
REINVESTMENT OF DIVIDENDS
- CLASS I.............. N/A N/A N/A
COST OF SHARES REDEEMED -
CLASS I................ N/A N/A N/A
-------------- ----------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS -
CLASS I................ N/A N/A N/A
-------------- ----------------- --------------
INCREASE (DECREASE) IN
NET ASSETS............. (18,496,770) (61,417,295) (62,190,839)
-------------- ----------------- --------------
NET ASSETS:
- -------------------------
ENDING NET ASSETS...... $ 89,705,852 $ 108,202,622 $ 169,619,917
SHARE ISSUED AND REDEEMED
SHARES SOLD -
CLASS A.............. 4,251,223 10,323,043 5,306,636
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS A.............. 27,935 105,348 88,803
SHARES REDEEMED -
CLASS A.............. (6,290,923) (16,309,899) (12,066,556)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS A................ (2,011,765) (5,881,508) (6,671,117)
SHARES SOLD -
CLASS B.............. N/A N/A N/A
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS B.............. N/A N/A N/A
SHARES REDEEMED -
CLASS B.............. N/A N/A N/A
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS B................ N/A N/A N/A
SHARES SOLD -
CLASS C.............. N/A (331,880) 1,937,902
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
CLASS C.............. N/A 625 4,358
SHARES REDEEMED -
CLASS C.............. N/A (4,126) (1,928,389)
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS C................ N/A (335,381) 13,871
SHARES SOLD -
INSTITUTIONAL
CLASS................ N/A N/A N/A
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS -
INSTITUTIONAL
CLASS................ N/A N/A N/A
SHARES REDEEMED -
INSTITUTIONAL CLASS.... N/A N/A N/A
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING -
CLASS I................ N/A N/A N/A
ENDING BALANCE OF
UNDISTRIBUTED NET
INVESTMENT INCOME...... $ 0 $ 0 $ 0
-------------- ----------------- --------------
</TABLE>
51
<PAGE>
INCOME FUNDS STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(1) "Proceeds from shares sold" includes $1,168,370 for Class A, and "Shares
sold" includes 130,655 for Class A as a result of the consolidation of the
Norwest Advantage Total Return Bond Fund. "Proceeds from shares sold"
includes $2,408,469 for Class B, and "Shares sold" includes 268,839 for
Class B as a result of the consolidation of the Norwest Advantage Total
Return Bond Fund. "Proceeds from shares sold" includes $82,283,786 for
Institutional shares, and "Shares sold" includes 9,188,592 for
Institutional shares as a result of the consolidation of the Norwest
Advantage Total Return Bond Fund. "Proceeds from shares sold" includes
$8,786,406 for Institutional shares, and "Shares sold" includes 902,531
for Institutional shares as a result of the consolidation of the Norwest
Advantage Performa Strategic Value Bond Fund
(2) "Proceeds from shares sold" includes $20,822,516 for Institutional shares
as a result of the consolidation of the Founders Trust Income Fund.
(3) "Proceeds from shares sold" includes $145,943,819 for Class A, and "Shares
sold" includes 13,814,237 for Class A as a result of the consolidation of
the Stagecoach U.S. Govt. Income Fund. "Proceeds from shares sold"
includes $61,839,662 for Class A, and "Shares sold" includes 4,259,967 for
Class A as a result of the consolidation of the Stagecoach U.S. Govt.
Allocation Fund. "Proceeds from shares sold" includes $35,145,993 for
Class B, and "Shares sold" includes 3,380,274 for Class B as a result of
the consolidation of the Stagecoach U.S. Govt. Income Fund. "Proceeds from
shares sold" includes $17,089,828 for Class B, and "Shares sold" includes
1,617,587 for Class B as a result of the consolidation of the Stagecoach
U.S. Govt. Allocation Fund. "Proceeds from shares sold" includes
$4,408,810 for Class C, and "Shares sold" includes 423,795 for Class C as
a result of the consolidation of the Stagecoach U.S. Govt. Income Fund.
"Proceeds from shares sold" includes $6,920,937 for Institutional shares,
and "Shares sold" includes 453,619 for Institutional shares as a result of
the consolidation of the Stagecoach U.S. Govt. Income Fund
(4) "Proceeds from shares sold" includes $78,780,293 for Institutional shares,
and "Shares sold" includes 8,190,601 for Institutional shares as a result
of the consolidation of the Norwest Advantage Limited Term Govt. Income
Fund
(5) "Proceeds from shares sold" includes $8,897,237 for Class A shares as a
result of the consolidation of the Masterworks Short-Intermediate Term
Fund.
(6) "Proceeds from shares sold" includes $9,084,926 for Class A shares
$7,491,591 for Class B shares and $41,157,653 for Institutional Class
Shares as a result of the consolidation of the Stagecoach Intermediate
Bond Fund.
(7) "Proceeds from shares sold" includes $4,577,231 for Class A shares as a
result of the conversion of the Fund's Class C shares on July 13, 1998.
(8) This class of shares commenced operations on June 15, 1998.
(9) This class of shares ceased operations on July 13, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
52
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
53
<PAGE>
INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED
BEGINNING NET AND DIVIDENDS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
CORPORATE BOND FUND
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... $ 9.62 $ 0.27 $ (0.38) $ (0.27) $ 0
JULY 1, 1998 TO JUNE 30,
1999................... 10.03 0.62 (0.37) (0.62) (0.04)
APRIL 1, 1998(4) TO JUNE
30, 1999............... 10.00 0.17 0.03 (0.17) 0
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.62 0.24 (0.38) (0.24) 0
JULY 1, 1998 TO JUNE 30,
1999................... 10.03 0.55 (0.37) (0.55) (0.04)
APRIL 1, 1998(4) TO JUNE
30, 1999............... 10.00 0.15 (0.03) (0.15) 0
C SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.62 0.24 (0.39) (0.24) 0
JULY 1, 1998 TO JUNE 30,
1999................... 10.03 0.55 (0.37) (0.55) (0.04)
APRIL 1, 1998(4) TO JUNE
30, 1999............... 10.00 0.15 0.03 (0.15) 0
DIVERSIFIED BOND FUND
- -------------------------------------------------------------------------------------------
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 26.11 0.69 (0.55) 0 0
JUNE 1, 1998 TO MAY 31,
1999................... 27.03 1.34 (0.17) (1.43) (0.66)
JUNE 1, 1997 TO MAY 31,
1998................... 25.60 1.61 1.51 (1.66) (0.03)
JUNE 1, 1996 TO MAY 31,
1997................... 26.03 1.59 0.01 (1.69) (0.34)
NOVEMBER 1, 1995 TO MAY
31, 1996............... 27.92 1.07 (0.99) (1.67) (0.30)
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995....... 25.08 1.65 1.19 0 0
INCOME FUND
- -------------------------------------------------------------------------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9.48 0.30 (0.35) (0.30) 0
JUNE 1, 1998 TO MAY 31,
1999................... 9.79 0.59 (0.31) (0.59) 0
JUNE 1, 1997 TO MAY 31,
1998................... 9.27 0.61 0.52 (0.61) 0
JUNE 1, 1996 TO MAY 31,
1997................... 9.27 0.62 0 (0.62) 0
JUNE 1, 1995 TO MAY 31,
1996................... 9.63 0.61 (0.36) (0.61) 0
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9.46 0.26 (0.35) (0.26) 0
JUNE 1, 1998 TO MAY 31,
1999................... 9.77 0.52 (0.31) (0.52) 0
JUNE 1, 1997 TO MAY 31,
1998................... 9.26 0.54 0.51 (0.54) 0
JUNE 1, 1996 TO MAY 31,
1997................... 9.26 0.55 0 (0.55) 0
JUNE 1, 1995 TO MAY 31,
1996................... 9.61 0.54 (0.35) (0.54) 0
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9.47 0.30 (0.35) (0.30) 0
JUNE 1, 1998 TO MAY 31,
1999................... 9.78 0.59 (0.31) (0.59) 0
JUNE 1, 1997 TO MAY 31,
1998................... 9.27 0.61 0.51 (0.61) 0
JUNE 1, 1996 TO MAY 31,
1997................... 9.26 0.62 0.01 (0.62) 0
JUNE 1, 1995 TO MAY 31,
1996................... 9.62 0.61 (0.36) (0.61) 0
INCOME PLUS FUND
- -------------------------------------------------------------------------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 12.04 0.37 (0.70) (0.35) 0
JULY 13, 1998(7) TO JUNE
30, 1999............... 12.50 0.77 (0.46) (0.77) 0
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 12.05 0.33 (0.70) (0.31) 0
JULY 13, 1998(7) TO JUNE
30, 1999............... 12.50 0.68 (0.45) (0.68) 0
C SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 12.05 0.33 (0.70) (0.31) 0
JULY 13, 1998(7) TO JUNE
30, 1999............... 12.50 0.68 (0.45) (0.68) 0
INTERMEDIATE GOVERNMENT INCOME FUND
- -------------------------------------------------------------------------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 11.04 0.30 (0.23) (0.34) 0
JUNE 1, 1998 TO MAY 31,
1999................... 11.22 0.64 (0.17) (0.65) 0
JUNE 1, 1997 TO MAY 31,
1998................... 10.84 0.77 0.31 (0.70) 0
JUNE 1, 1996 TO MAY 31,
1997................... 10.89 0.73 (0.05) (0.73) 0
MAY 2, 1996(5) TO MAY 31,
1996................... 10.89 0.03 0 (0.03) 0
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 11.04 0.25 (0.23) (0.30) 0
JUNE 1, 1998 TO MAY 31,
1999................... 11.21 0.53 (0.13) (0.57) 0
JUNE 1, 1997 TO MAY 31,
1998................... 10.83 0.69 0.31 (0.62) 0
JUNE 1, 1996 TO MAY 31,
1997................... 10.89 0.64 (0.05) (0.65) 0
MAY 17, 1996(5) TO MAY
31, 1996............... 10.97 0.03 (0.08) (0.03) 0
</TABLE>
54
<PAGE>
FINANCIAL HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)
NET ASSETS ------------------------------------------ PORTFOLIO NET ASSETS AT
VALUE PER NET INVESTMENT NET GROSS TOTAL TURNOVER END OF PERIOD
SHARE INCOME (LOSS) EXPENSES EXPENSES(1) RETURN(2) RATE (000'S OMITTED)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
CORPORATE BOND FUND
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... $ 9.24 6.74% 1.00% 1.46% (1.19%) 41% $ 5,849
JULY 1, 1998 TO JUNE 30,
1999................... 9.62 6.21% 0.93% 2.10% 2.45% 115% 5,482
APRIL 1, 1998(4) TO JUNE
30, 1999............... 10.03 6.47% 0.56% 3.74% 1.98% 33% 5,503
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.24 5.99% 1.75% 2.18% (1.50%) 41% 10,987
JULY 1, 1998 TO JUNE 30,
1999................... 9.62 5.43% 1.68% 2.65% 1.68% 115% 11,311
APRIL 1, 1998(4) TO JUNE
30, 1999............... 10.03 5.47% 1.35% 4.30% 1.81% 33% 4,595
C SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.23 5.98% 1.75% 2.40% (1.61%) 41% 1,824
JULY 1, 1998 TO JUNE 30,
1999................... 9.62 5.39% 1.70% 2.94% 1.67% 115% 1,994
APRIL 1, 1998(4) TO JUNE
30, 1999............... 10.03 5.57% 1.34% 8.58% 1.78% 33% 299
DIVERSIFIED BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 26.25 5.15% 0.70% 0.99% 0.54% 16% 186,402
JUNE 1, 1998 TO MAY 31,
1999................... 26.12 5.58%(6) 0.70%(6) 1.07%(6) 4.15% 77% 179,133
JUNE 1, 1997 TO MAY 31,
1998................... 27.03 5.98%(6) 0.70%(6) 1.02%(6) 12.39% 91% 134,831
JUNE 1, 1996 TO MAY 31,
1997................... 25.60 6.19% 0.70% 0.77% 6.23% 57% 162,310
NOVEMBER 1, 1995 TO MAY
31, 1996............... 26.03 6.78% 0.70% 0.77% 0.22% 119% 167,159
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995....... 27.92 5.87% 0.67% 0.82% 11.32% 59% 171,453
INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9.13 6.44% 0.78% 1.00% (0.51%) 66% 17,334
JUNE 1, 1998 TO MAY 31,
1999................... 9.48 5.98% 0.75% 1.08% 2.81% 202% 13,731
JUNE 1, 1997 TO MAY 31,
1998................... 9.79 6.29% 0.75% 1.14% 12.47% 167% 7,661
JUNE 1, 1996 TO MAY 31,
1997................... 9.27 6.59% 0.75% 1.17% 6.79% 231% 5,142
JUNE 1, 1995 TO MAY 31,
1996................... 9.27 6.33% 0.75% 1.16% 2.58% 270% 5,521
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9.11 5.68% 1.54% 1.99% (0.89%) 66% 10,156
JUNE 1, 1998 TO MAY 31,
1999................... 9.46 5.22% 1.50% 2.13% 2.03% 202% 7,726
JUNE 1, 1997 TO MAY 31,
1998................... 9.77 5.54% 1.50% 2.19% 11.52% 167% 4,855
JUNE 1, 1996 TO MAY 31,
1997................... 9.26 5.87% 1.50% 2.25% 6.03% 231% 3,349
JUNE 1, 1995 TO MAY 31,
1996................... 9.26 5.57% 1.50% 2.27% 1.92% 270% 3,292
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9.12 6.48% 0.75% 0.89% (0.50%) 66% 430,656
JUNE 1, 1998 TO MAY 31,
1999................... 9.47 6.00% 0.75% 0.92% 2.81% 202% 348,472
JUNE 1, 1997 TO MAY 31,
1998................... 9.78 6.32% 0.75% 0.92% 12.35% 167% 290,566
JUNE 1, 1996 TO MAY 31,
1997................... 9.27 6.59% 0.75% 1.02% 6.90% 231% 258,207
JUNE 1, 1995 TO MAY 31,
1996................... 9.26 6.30% 0.75% 1.06% 2.58% 270% 271,157
INCOME PLUS FUND
- ---------------------------------------------------------------------------------------------------------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 11.36 7.56% 1.10% 1.47% (2.77%) 31% 9,965
JULY 13, 1998(7) TO JUNE
30, 1999............... 12.04 6.95% 0.66% 1.62% 2.52% 176% 11,223
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 11.37 6.79% 1.85% 2.16% (3.06%) 31% 34,248
JULY 13, 1998(7) TO JUNE
30, 1999............... 12.05 6.25% 1.50% 2.14% 1.87% 176% 36,892
C SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 11.37 6.77% 1.85% 2.45% (3.06%) 31% 2,870
JULY 13, 1998(7) TO JUNE
30, 1999............... 12.05 6.23% 1.47% 2.49% 1.87% 176% 3,037
INTERMEDIATE GOVERNMENT INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 10.77 6.15% 0.85% 1.02% 0.68% 68% 225,176
JUNE 1, 1998 TO MAY 31,
1999................... 11.04 5.76% 0.68% 0.87% 4.21% 124% 18,594
JUNE 1, 1997 TO MAY 31,
1998................... 11.22 6.35% 0.68% 0.86% 10.19% 97% 14,325
JUNE 1, 1996 TO MAY 31,
1997................... 10.84 6.58% 0.68% 0.80% 6.36% 183% 13,038
MAY 2, 1996(5) TO MAY 31,
1996................... 10.89 7.32% 0.75% 1.74% 0.26% 75% 16,562
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 10.76 5.43% 1.56% 1.80% 0.20% 68% 58,280
JUNE 1, 1998 TO MAY 31,
1999................... 11.04 5.01% 1.43% 1.91% 3.53% 124% 8,540
JUNE 1, 1997 TO MAY 31,
1998................... 11.21 5.60% 1.43% 1.85% 9.38% 97% 8,277
JUNE 1, 1996 TO MAY 31,
1997................... 10.83 5.80% 1.42% 1.85% 5.51% 183% 8,970
MAY 17, 1996(5) TO MAY
31, 1996............... 10.89 5.56% 1.35% 2.65% (0.49%) 75% 10,682
</TABLE>
55
<PAGE>
INCOME FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED
BEGINNING NET AND DIVIDENDS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
C SHARES
NOVEMBER 8, 1999(5) TO
NOVEMBER 30, 1999...... $ 10.86 0.03 (0.11) (0.02) $ 0
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 11.05 0.34 (0.28) (0.34) 0
JUNE 1, 1998 TO MAY 31,
1999................... 11.22 0.66 (0.18) (0.65) 0
JUNE 1, 1997 TO MAY 31,
1998................... 10.84 0.71 0.37 (0.70) 0
JUNE 1, 1996 TO MAY 31,
1997................... 10.89 0.72 (0.04) (0.73) 0
NOVEMBER 1, 1995 TO MAY
31, 1996............... 12.40 0.40 0.53 (1.32) (1.12)
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995 (8)... 11.11 0.93 0.36 0 0
LIMITED TERM GOVERNMENT INCOME FUND
- -------------------------------------------------------------------------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.74 0.23 (0.12) (0.23) 0
JULY 1, 1998 TO JUNE 30,
1999................... 9.97 0.57 (0.23) (0.57) 0
APRIL 1, 1998(9) TO JUNE
30, 1998............... 9.95 0.13 0.02 (0.13) 0
APRIL 1, 1997 TO MARCH
31, 1998............... 9.64 0.51 0.31 (0.51) 0
OCTOBER 1, 1996(10) TO
MARCH 31, 1997......... 9.73 0.34 (0.09) (0.34) 0
JANUARY 1, 1996(11) TO
SEPTEMBER 30, 1996..... 10.00 0.41 (0.27) (0.41) 0
JANUARY 1, 1995 TO
DECEMBER 31, 1995...... 9.39 0.55 0.61 (0.55) 0
JANUARY 1, 1994 TO
DECEMBER 31, 1994...... 9.99 0.46 (0.60) (0.46) 0
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.74 0.20 (0.12) (0.20) 0
JULY 1, 1998 TO JUNE 30,
1999................... 9.97 0.50 (0.23) (0.50) 0
JUNE 15, 1998(12) TO JUNE
30, 1998............... 10.03 0.02 (0.06) (0.02) 0
I SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 9.55 0.23 (0.11) (0.23) 0
JULY 1, 1998 TO JUNE 30,
1999................... 9.78 0.56 (0.23) (0.56) 0
APRIL 1, 1998(9) TO JUNE
30, 1998............... 9.76 0.13 0.02 (0.13) 0
APRIL 1, 1997 TO MARCH
31, 1998............... 9.45 0.51 0.31 (0.51) 0
OCTOBER 1, 1996(10) TO
MARCH 31, 1997......... 9.54 0.34 (0.09) (0.34) 0
SEPTEMBER 6, 1996(13) TO
SEPTEMBER 30, 1996..... 9.46 0.03 0.08 (0.03) 0
STABLE INCOME FUND
- -------------------------------------------------------------------------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 10.26 0.27 (0.08) (0.27) 0
JUNE 1, 1998 TO MAY 31,
1999................... 10.31 0.54 (0.06) (0.53) 0
JUNE 1, 1997 TO MAY 31,
1998................... 10.24 0.58 0.06 (0.57) 0
JUNE 1, 1996 TO MAY 31,
1997................... 10.20 0.58 0.04 (0.58) 0
MAY 2, 1996(5) TO MAY 31,
1996................... 10.22 0.02 0 (0.04) 0
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 10.26 0.23 (0.09) (0.23) 0
JUNE 1, 1998 TO MAY 31,
1999................... 10.30 0.44 (0.04) (0.44) 0
JUNE 1, 1997 TO MAY 31,
1998................... 10.24 0.51 0.04 (0.49) 0
JUNE 1, 1996 TO MAY 31,
1997................... 10.20 0.52 0.02 (0.50) 0
MAY 17, 1996(5)TO MAY 31,
1996................... 10.23 0.02 (0.01) (0.04) 0
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 10.27 0.27 (0.09) (0.27) 0
JUNE 1, 1998 TO MAY 31,
1999................... 10.30 0.52 (0.02) (0.53) 0
JUNE 1, 1997 TO MAY 31,
1998................... 10.24 0.58 0.05 (0.57) 0
JUNE 1, 1996 TO MAY 31,
1997................... 10.20 0.58 0.04 (0.58) 0
NOVEMBER 1, 1995 TO MAY
31, 1996............... 10.72 0.28 0.03 (0.77) (0.06)
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995....... 10.00 0.50 0.22 0 0
VARIABLE RATE GOVERNMENT FUND
- -------------------------------------------------------------------------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 8.96 0.18 (0.05) (0.18) 0
JULY 1, 1998 TO JUNE 30,
1999................... 9.19 0.43 (0.23) (0.43) 0
JANUARY 1, 1998(15) TO
JUNE 30, 1998.......... 9.23 0.24 (0.04) (0.24) 0
JANUARY 1, 1997 TO
DECEMBER 31, 1997...... 9.25 0.51 (0.02) (0.51) 0
JANUARY 1, 1996 TO
DECEMBER 31, 1996...... 9.35 0.5 (0.10) (0.46) 0
JANUARY 1, 1995 TO
DECEMBER 31, 1995...... 9.19 0.53 0.16 (0.53) 0
</TABLE>
56
<PAGE>
FINANCIAL HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)
NET ASSETS ------------------------------------------- PORTFOLIO
RETURN OF VALUE PER NET INVESTMENT NET GROSS TOTAL TURNOVER
CAPITAL SHARE INCOME (LOSS) EXPENSES EXPENSES(1) RETURN(2) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
C SHARES
NOVEMBER 8, 1999(5) TO
NOVEMBER 30, 1999...... $ 0 $ 10.76 5.35% 1.71% 1.90% 0.20% 68%
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 0 10.77 6.26% 0.68% 0.73% 0.58% 68%
JUNE 1, 1998 TO MAY 31,
1999................... 0 11.05 5.77% 0.68% 0.72% 4.30% 124%
JUNE 1, 1997 TO MAY 31,
1998................... 0 11.22 6.35% 0.68% 0.72% 10.19% 97%
JUNE 1, 1996 TO MAY 31,
1997................... 0 10.84 6.57% 0.68% 0.72% 6.36% 183%
NOVEMBER 1, 1995 TO MAY
31, 1996............... 0 10.89 6.71% 0.71% 1.17% 0.60% 75%
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995 (8)... 0 12.40 7.79% 0.68% 0.93% 11.58% 241%
LIMITED TERM GOVERNMENT INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 0 9.62 5.58% 0.96% 1.26% 1.12% 45%
JULY 1, 1998 TO JUNE 30,
1999................... 0 9.74 5.66% 0.96% 1.21% 3.37% 116%
APRIL 1, 1998(9) TO JUNE
30, 1998............... 0 9.97 5.36% 0.96% 1.24% 1.54% 12%
APRIL 1, 1997 TO MARCH
31, 1998............... 0 9.95 5.19% 0.78% 1.30% 8.69% 48%
OCTOBER 1, 1996(10) TO
MARCH 31, 1997......... 0 9.64 6.96% 0.71% 1.12% 2.57% 52%
JANUARY 1, 1996(11) TO
SEPTEMBER 30, 1996..... 0 9.73 5.60% 0.76% 1.21% 1.34% 389%
JANUARY 1, 1995 TO
DECEMBER 31, 1995...... 0 10.00 5.64% 0.71% 1.67% 12.67% 472%
JANUARY 1, 1994 TO
DECEMBER 31, 1994...... 0 9.39 4.75% 0.25% 2.28% (1.42)% 288%
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 0 9.62 4.86% 1.67% 1.99% 0.81% 45%
JULY 1, 1998 TO JUNE 30,
1999................... 0 9.74 4.95% 1.66% 1.99% 2.65% 116%
JUNE 15, 1998(12) TO JUNE
30, 1998............... 0 9.97 5.08% 1.66% 1.97% (0.38)% 12%
I SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 0 9.44 5.74% 0.79% 1.04% 1.27% 45%
JULY 1, 1998 TO JUNE 30,
1999................... 0 9.55 5.72% 0.91% 1.08% 3.38% 116%
APRIL 1, 1998(9) TO JUNE
30, 1998............... 0 9.78 5.44% 0.91% 1.08% 1.56% 12%
APRIL 1, 1997 TO MARCH
31, 1998............... 0 9.76 5.28% 0.69% 1.07% 8.85% 48%
OCTOBER 1, 1996(10) TO
MARCH 31, 1997......... 0 9.45 7.01% 0.65% 1.02% 2.58% 52%
SEPTEMBER 6, 1996(13) TO
SEPTEMBER 30, 1996..... 0 9.54 5.14% 0.59% 0.84% 1.08% 389%
STABLE INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 0 10.18 4.87% 0.68% 0.81% 1.83% 25%
JUNE 1, 1998 TO MAY 31,
1999................... 0 10.26 5.11%(6) 0.65%(6) 0.95%(6) 4.74% 29%(14)
JUNE 1, 1997 TO MAY 31,
1998................... 0 10.31 5.74%(6) 0.65%(6) 0.91%(6) 6.38% 37%(14)
JUNE 1, 1996 TO MAY 31,
1997................... 0 10.24 5.69% 0.65% 0.87% 6.24% 41%
MAY 2, 1996(5) TO MAY 31,
1996................... 0 10.20 5.77% 0.70% 2.22% 0.23% 110%
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 0 10.17 4.12% 1.43% 1.97% 1.35% 25%
JUNE 1, 1998 TO MAY 31,
1999................... 0 10.26 4.34%(6) 1.40%(6) 2.15%(6) 4.07% 29%(14)
JUNE 1, 1997 TO MAY 31,
1998................... 0 10.30 4.94%(6) 1.40%(6) 2.37%(6) 5.50% 37%(14)
JUNE 1, 1996 TO MAY 31,
1997................... 0 10.24 4.96% 1.39% 2.89% 5.43% 41%
MAY 17, 1996(5)TO MAY 31,
1996................... 0 10.20 5.02% 1.42% 3.07% 0.12% 110%
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 0 10.18 4.90% 0.65% 0.71% 1.74% 25%
JUNE 1, 1998 TO MAY 31,
1999................... 0 10.27 5.10%(6) 0.65%(6) 0.76%(6) 4.95% 29%(14)
JUNE 1, 1997 TO MAY 31,
1998................... 0 10.30 5.69%(6) 0.65%(6) 0.76%(6) 6.28% 37%(14)
JUNE 1, 1996 TO MAY 31,
1997................... 0 10.24 5.73% 0.65% 0.79% 6.24% 41%
NOVEMBER 1, 1995 TO MAY
31, 1996............... 0 10.20 5.74% 0.65% 0.92% 2.97% 110%
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995....... 0 10.72 5.91% 0.65% 0.98% 7.20% 116%
VARIABLE RATE GOVERNMENT FUND
- ----------------------------------------------------------------------------------------------------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 0 8.91 4.81% 0.78% 1.12% 1.47% 0%
JULY 1, 1998 TO JUNE 30,
1999................... 0 8.96 4.71% 0.78% 1.13% 2.17% 80%
JANUARY 1, 1998(15) TO
JUNE 30, 1998.......... 0 9.19 5.21% 0.78% 1.11% 2.16% 45%
JANUARY 1, 1997 TO
DECEMBER 31, 1997...... 0 9.23 5.55% 0.81% 1.09% 5.43% 92%
JANUARY 1, 1996 TO
DECEMBER 31, 1996...... (0.04) 9.25 5.36% 0.88% 0.98% 4.41% 277%
JANUARY 1, 1995 TO
DECEMBER 31, 1995...... 0 9.35 5.71% 0.84% 0.96% 7.69% 317%
<CAPTION>
NET ASSETS AT
END OF PERIOD
(000'S OMITTED)
<S> <C>
- -------------------------
C SHARES
NOVEMBER 8, 1999(5) TO
NOVEMBER 30, 1999...... $ 4,285
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 421,204
JUNE 1, 1998 TO MAY 31,
1999................... 420,305
JUNE 1, 1997 TO MAY 31,
1998................... 400,346
JUNE 1, 1996 TO MAY 31,
1997................... 371,278
NOVEMBER 1, 1995 TO MAY
31, 1996............... 399,324
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995 (8)... 50,213
LIMITED TERM GOVERNMENT I
- -------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 34,110
JULY 1, 1998 TO JUNE 30,
1999................... 42,956
APRIL 1, 1998(9) TO JUNE
30, 1998............... 38,149
APRIL 1, 1997 TO MARCH
31, 1998............... 29,694
OCTOBER 1, 1996(10) TO
MARCH 31, 1997......... 33,920
JANUARY 1, 1996(11) TO
SEPTEMBER 30, 1996..... 37,465
JANUARY 1, 1995 TO
DECEMBER 31, 1995...... 39,928
JANUARY 1, 1994 TO
DECEMBER 31, 1994...... 11,602
B SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 10,243
JULY 1, 1998 TO JUNE 30,
1999................... 9,643
JUNE 15, 1998(12) TO JUNE
30, 1998............... 7,514
I SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 145,839
JULY 1, 1998 TO JUNE 30,
1999................... 79,789
APRIL 1, 1998(9) TO JUNE
30, 1998............... 90,146
APRIL 1, 1997 TO MARCH
31, 1998............... 51,973
OCTOBER 1, 1996(10) TO
MARCH 31, 1997......... 60,150
SEPTEMBER 6, 1996(13) TO
SEPTEMBER 30, 1996..... 73,637
STABLE INCOME FUND
- -------------------------
A SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 9,202
JUNE 1, 1998 TO MAY 31,
1999................... 8,559
JUNE 1, 1997 TO MAY 31,
1998................... 8,561
JUNE 1, 1996 TO MAY 31,
1997................... 12,451
MAY 2, 1996(5) TO MAY 31,
1996................... 16,256
B SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 2,579
JUNE 1, 1998 TO MAY 31,
1999................... 2,387
JUNE 1, 1997 TO MAY 31,
1998................... 1,817
JUNE 1, 1996 TO MAY 31,
1997................... 1,056
MAY 17, 1996(5)TO MAY 31,
1996................... 867
I SHARES
JUNE 1, 1999 TO NOVEMBER
30, 1999............... 180,875
JUNE 1, 1998 TO MAY 31,
1999................... 179,201
JUNE 1, 1997 TO MAY 31,
1998................... 144,215
JUNE 1, 1996 TO MAY 31,
1997................... 111,030
NOVEMBER 1, 1995 TO MAY
31, 1996............... 83,404
NOVEMBER 11, 1994(5) TO
OCTOBER 31, 1995....... 48,087
VARIABLE RATE GOVERNMENT
- -------------------------
A SHARES
JULY 1, 1999(3) TO
NOVEMBER 30, 1999...... 89,706
JULY 1, 1998 TO JUNE 30,
1999................... 108,203
JANUARY 1, 1998(15) TO
JUNE 30, 1998.......... 164,994
JANUARY 1, 1997 TO
DECEMBER 31, 1997...... 227,353
JANUARY 1, 1996 TO
DECEMBER 31, 1996...... 393,948
JANUARY 1, 1995 TO
DECEMBER 31, 1995...... 653,897
</TABLE>
57
<PAGE>
INCOME FUNDS NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio in the absence of any waivers and reimbursements (Note 9).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
period shown.
(3) The Fund changed its fiscal year-end from June 30 to May 31.
(4) The Fund commenced operations on April 1, 1998.
(5) Commencement of operations.
(6) Includes expenses allocated from the Portfolio(s) in which the Fund
invests.
(7) The Fund commenced operations on July 13, 1998
(8) Adjusted for a five to one stock split.
(9) The Fund changed its fiscal year-end from March 31 to June 30.
(10) The Fund changed its fiscal year-end from September 30 to March 31.
(11) The Fund changed its fiscal year-end from December 31 to September 30.
(12) This class of shares commenced operations on June 15, 1998.
(13) This class of shares commenced operations on September 6, 1996.
(14) Portfolio turnover rate represents the activity from the Fund's investment
in a single Portfolio.
(15) The Fund changed its fiscal year-end from December 31 to June 30.
58
<PAGE>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
Wells Fargo Funds Trust (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on November 8,
1999, and is currently comprised of 61 separate series. These financial
statements represent the performance of the Corporate Bond, Diversified Bond,
Income, Income Plus, Intermediate Government Income, Limited Government
Income, Stable Income, and Variable Rate Government Funds (each, a "Fund",
collectively, the "Funds"), each a diversified series of the Company.
In November of 1999, the parent companies of Wells Fargo Bank, investment
advisor to the Stagecoach Family of Funds, and Norwest Investment Management,
Inc, investment advisor to the Norwest Advantage Family of Funds, merged The
Wells Fargo Funds Trust was created to succeed the assets and operations of
various Stagecoach and Norwest Advantage Funds. The predecessors to the Funds
in this annual report were as follows:
<TABLE>
<S> <C>
CORPORATE BOND FUND STAGECOACH CORPORATE BOND FUND
DIVERSIFIED BOND FUND NORWEST ADVANTAGE DIVERSIFIED BOND FUND
INCOME FUND NORWEST ADVANTAGE INCOME FUND
INCOME PLUS FUND STAGECOACH STRATEGIC INCOME FUND
INTERMEDIATE GOVERNMENT INCOME FUND NORWEST ADVANTAGE INTERMEDIATE GOVERNMENT INCOME FUND
LIMITED TERM GOVERNMENT INCOME FUND STAGECOACH SHORT-INTERMEDIATE U.S. GOVERNMENT INCOME
FUND
STABLE INCOME FUND NORWEST ADVANTAGE STABLE INCOME FUND
VARIABLE RATE GOVERNMENT FUND STAGECOACH VARIABLE RATE GOVERNMENT FUND
</TABLE>
Effective at the close of business on December 12, 1997, the Funds of
Overland Express, Inc. were consolidated into the Stagecoach Family of Funds
in a tax-free exchange for shares of designated classes of the corresponding
Stagecoach fund. Also, at the close of business on December 12, 1997, funds
structured as a "feeder" fund in a "master-feeder" structure were restructured
to invest directly in a portfolio of securities, rather than to invest in a
portfolio of securities through a "master" portfolio. Effective on September
6, 1996 the Pacifica Funds Trust was consolidated into the Stagecoach Family
of Funds in a tax-free exchange for shares of designated classes of the
corresponding Stagecoach fund.
The Corporate Bond, Income Plus, and Intermediate Government Income Funds
offers Class A, Class B, Class C Shares. In addition, the Intermediate
government Income Fund also offers Institutional Class shares. The Income,
Limited Term Government Income, and Stable Income Funds offer Class A, Class
B, and Institutional Class shares. The Diversified Bond Fund only offers
Institutional Shares and the Variable Rate Government Fund only offers Class A
shares. Prior to July 13, 1998, the Variable Rate Government Fund also offered
Class C shares. Effective at the close of business on July 12, 1998, the Class
C shares of the Variable Rate Government Fund were converted into Class A
shares of the same Fund. The separate classes of shares differ principally in
the applicable sales charges (if any), distribution fees, registration and
transfer agency fees. Shareholders of each class may also bear certain
expenses that pertain to that particular class. All shareholders bear the
common expenses of the 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 are allocated to
each class pro rata based on the net assets of each class on the date of
distribution. 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 transfer agency
fees.
The Diversified Bond and Stable Income Funds are Funds which each seek to
achieve its investment objective by investing all investable assets in one or
more separate diversified portfolios ("Portfolio") of Core Trust a registered
open-end management investment company. Each Portfolio directly acquires
portfolio securities, and a Fund investing in a Portfolio acquires an indirect
interest in those securities. The Funds account for their investment in the
Portfolios as partnership investments and record daily their share of the
Portfolio's income, expenses and realized and unrealized gain and loss. The
financial statements of the Portfolios are in this report and should be read
in conjuntion with the Funds' financial statements.
59
<PAGE>
INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies which are consistently followed
by the Company in the preparation of its financial statements are in
conformity with generally accepted accounting principles ("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 at the close of each business day.
Securities which are traded on a national or foreign securities exchange or
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market are valued 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. Securities
denominated in foreign currencies are translated into U.S. dollars using the
closing rates of exchange in effect on the day of valuation. Securities for
which quotations are not readily available are valued at fair value as
determined by policies set by the Company's Board of Trustees.
Debt securities maturing in 60 days or less are valued at amortized cost
pursuant to Rule 2a-7. 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.
Valuation of securities held in the Portfolios are discussed in the Notes to
Financial Statements of the Portfolios, which are included elsewhere in this
report.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains or
losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized under provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
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.
REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements and may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo
Bank, N.A. ("WFB"). 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 Funds' 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 held by the Funds are
collateralized by instruments such as U.S. Treasury or federal agency
obligations.
SECURITY LOANS
The Funds may loan securities in return for securities and cash collateral
which is invested in various short-term fixed income securities. The Funds 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 equal
to at least 102% of the market value of the securities loaned plus accrued
interest, if the collateral falls to 100% it will be brought back to at least
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
to the Fund 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.
60
<PAGE>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS
- --------------------------------------------------------------------------------
As of November 30, 1999 the value of securities on loan and the value of the
related collateral was as follows:
<TABLE>
<CAPTION>
Securities Collateral
<S> <C> <C>
CORPORATE BOND FUND $ 1,452,067 $ 1,487,097
INCOME PLUS FUND 2,188,901 2,695,362
INTERMEDIATE GOVERNMENT INCOME FUND 52,220,203 55,921,282
LIMITED TERM GOVERNMENT INCOME FUND 39,920,811 42,740,206
VARIABLE RATE GOVERNMENT FUND 4,535,344 4,800,643
</TABLE>
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income, if any, are declared
daily and distributed monthly, with the exception of the Income Plus,
Intermediate Government Income, and Stable Income Funds which dividends from
net investment income are declared and distributed monthly, and the
Diversified Bond Fund for which dividends from net investment income are
declared and distributed annually. 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 generally
accepted accounting principles. 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.
The differences between the income or gains distributed on a book versus tax
basis are shown as excess distributions of net investment income and net
realized gain on sales of investments in the accompanying Statements of
Changes in Net Assets. To the extent that these differences are permanent in
nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassifications.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. It
is the policy of each Fund of the Company to continue to qualify as a
regulated investment company by complying with the provisions applicable to
regulated investment companies, as defined in 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 November 30, 1999.
61
<PAGE>
INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following Funds had estimated net capital loss carryforwards, which are
available to offset future net realized capital gains:
<TABLE>
<CAPTION>
Capital Loss
Date Fund Year Expires Carryforwards
<S> <C> <C> <C>
NOVEMBER 5, 1999 INCOME FUND 2004 $ 8,539,713
2006 109,461
2007 10,845,766
JUNE 30, 1999 INCOME PLUS FUND 2007 31,798
NOVEMBER 5, 1999 INTERMEDIATE GOVERNMENT INCOME FUND 2001 208,402
2002 32,566,112
2003 7,955,237
2004 12,665,649
2005 1,603,624
2007 8,455,902
NOVEMBER 5, 1999 LIMITED TERM GOVERNMENT INCOME FUND 2000 568,368
2001 125,690
2002 6,807,249
2003 7,074,103
2004 753,400
2007 2,040,910
MAY 31, 1999 STABLE INCOME FUND 2006 6,920,052
DECEMBER 31, 1998 VARIABLE RATE GOVERNMENT FUND 2000 14,819,786
2001 2,818,401
2002 119,628,012
2003 4,546,666
2004 2,482,931
</TABLE>
DEFERRED ORGANIZATION COSTS
Certain costs incurred in connection with the organization of the Funds and
their initial registration with the Securities and Exchange Commission and
with the various states are being amortized on a straight-line basis over 60
months from the date each Fund commenced operations.
3. ADVISORY FEES
The Company has entered into separate advisory contracts on behalf of the
Funds and the Portfolios with Wells Fargo Bank ("WFB"). Pursuant to the
contracts, WFB has agreed to provide the Following Funds with daily portfolio
management, for which, WFB is entitled to be paid a monthly advisory fee at
the following annual rates:
<TABLE>
<CAPTION>
Fund % of Average Daily Net Assets
<S> <C>
CORPORATE BOND FUND 0.50
INCOME FUND 0.50
INCOME PLUS FUND 0.60
INTERMEDIATE GOVERNMENT INCOME FUND 0.50
LIMITED TERM GOVERNMENT INCOME FUND 0.40
VARIABLE RATE GOVERNMENT FUND 0.50
</TABLE>
The Diversified Bond Fund is invested in various Core Portfolios, WFB is
entitled to receive an investment advisory fee of 0.25% of the Diversified
Bond 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 Core
62
<PAGE>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS
- --------------------------------------------------------------------------------
Portfolios. The Stable Income Fund invests all of its assets in a single core
Portfolio and does not pay investment advisory fees. WFB acts as advisor to
the Core Portfolio, and is entitled to receive a fee from the Core Portfolio
for those services.
Wells Capital Management Incorporated ("WCM"), a wholly-owned subsidiary of
WFB, acts as investment sub-advisor to the Corporate Bond, Income,
Intermediate Government Income, Limited Term Government Income and Variable
Rate Government Funds. WCM is entitled to receive from WFB, as compensation
for its sub-advisory services, a monthly fee at the annual rate of 0.15% of
each Fund's average daily net assets up to $400 million, 0.125% for the next
$400 million and 0.10% of the Fund's average daily net assets in excess of
$800 million. For the Income Plus Fund, WCM is entitled to receive from WFB,
as compensation for its sub-advisory services, a monthly fee at the annual
rate of 0.20% of the Funds average daily net assets up to $400 million, 0.20%
for the next $400 million and 0.15% of the Funds average daily net assets in
excess of $800 million.
Prior to November 8, 1999, the Company had entered into separate advisory
contracts on behalf of the Funds with WFB. Pursuant to the contracts, WFB had
agreed to provide the Funds with daily portfolio management. Under the old
contracts with the Corporate Bond, Limited Term Government Income and Variable
Rate Government Funds, WFB was entitled to be paid a monthly advisory fee at
the annual rate of 0.50% of each Fund's average daily net assets. For the
Income and Intermediate Government Income Fund, WFB was entitled to be paid a
monthly advisory fee at the annual rate of 0.50% and 0.33% respectively, of
each Fund's average daily net assets. The Diversified Bond and Stable Income
Funds rates remain unchanged.
Each Fund that invests its assets in one or more of the Portfolios may
withdraw its investments from its corresponding Portfolio(s) at any time if
the Board of Trustees determines that is in the best interests of the Fund to
do so. Upon such redemption and subsequent investment in a portfolio of
securities, WFB (and the corresponding sub-advisor) may receive an investment
fee for the management of those assets. If the redeemed assets are invested in
one or more Core Portfolios, WFB (and the corresponding sub-advisor) does not
receive any compensation.
4. DISTRIBUTION FEES
The Company has adopted a Distribution Plan ("Plan") for Class B and C shares
of the Funds pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are
charged to the Class B and C shares and paid to Stephens, Inc. ("Stephens") at
a rate of 0.75% of average daily net assets. There are no distribution fees
for the Funds' Class A shares. The distribution fees paid on behalf of the
Funds for the period ended November 30, 1999 are disclosed on the Statement of
Operations.
Prior to November 8, 1999, the Plan for the Class A shares of the Corporate
Bond and Income Plus Funds provided that it may pay to Stephens, as
compensation for distribution-related services or as reimbursement for
distribution-related expenses, up to 0.05% of the average daily net assets
attributable to its Class A shares.
The Plan for Class A shares of the Limited Term U.S. Government Income Fund
provided that the Fund may defray all or part of the cost of preparing,
printing and distributing prospectuses and other promotional materials by
paying for costs incurred on an annual basis of up to 0.05% of the average
daily net assets attributable to its Class A shares.
The Plan for Class A shares of the Variable Rate Government Fund provided
that the Fund may pay to Stephens up to 0.25% of its average daily net assets
attributable to the Class A shares as compensation for distribution-related
services or as reimbursement for distribution-related expenses.
5. ADMINISTRATION
The Company has entered into administration agreements on behalf of the Funds
with WFB whereby WFB is entitled to receive monthly fees at the annual rates
of 0.15% of each Funds' average daily net assets. Prior to November 8, 1999
the Corporate Bond, Income Plus, Limited Term Government Income and Variable
Rate Government Funds were charged the same fee for the above services. The
Diversified Bond, Income, Intermediate Government Income, and Stable Income
Funds were charged monthly fees at the annual rates of 0.05% of each Funds'
average daily net assets.
6. TRANSFER AGENT
The Company has entered into a transfer agency contract on behalf of the
Funds with Boston Financial Data Services ("BFDS"). Under the transfer agency
contract, BFDS is entitled to receive, on a monthly basis,
63
<PAGE>
INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
transfer agency fees based on the number of accounts and transactions of each
Fund. WFB will provide sub-transfer agency services to the Funds. Prior to
November 8, 1999 the Corporate Bond, Income Plus, Limited Term Government
Income, and Variable Rate Government Funds were charged transfer agency fees
on a monthly basis, based on the number of accounts and transactions of each
Fund. For the Diversified Bond, Income, Intermediate Government Income, and
Stable Income Funds, Norwest served as the Trust's transfer agent. For these
services, Norwest received a fee at an annual rate of 0.25% of the average
daily net assets attributable to each class of each Fund.
Prior to July 17, 1999 the Company had entered into a contract on behalf of
the Funds with WFB, whereby WFB provided transfer agency services for the
Corporate Bond, Income Plus, Limited Term Government Income, and Variable Rate
Government Funds, which were charged at an annual rate of 0.14% of the average
daily net assets of the Funds. With the exception of the Institutional class
of the Limited Term Government Income Fund which was charged 0.06% of its
average daily net assets.
7. SHAREHOLDER SERVICING
The Company has also entered into contracts on behalf of the Funds with
numerous shareholder serving agents, whereby the Funds are charged 0.25% of
average daily net assets for Class A, Class B, and Class C for these services.
No fee is charged for Institutional Class shares. Prior to November 8, 1999
the shareholder servicing fees were charged to the Funds at the same rate
listed above, with the exception of the Variable Rate Government fund which
previously charged 0.25% for either 12b-1 fees or shareholder servicing fees,
in no case would the fund be charged both 12b-1 and shareholder servicing
fees.
The shareholder servicing fees paid on behalf of the Funds for the period
ended November 30, 1999 were as follows:
<TABLE>
<CAPTION>
Fund Class A Class B Class C
<S> <C> <C> <C>
CORPORATE BOND FUND $5,983 $11,903 $1,984
DIVERSIFIED BOND FUND N/A N/A N/A
INCOME FUND 2,422 1,608 N/A
INCOME PLUS FUND 10,486 37,212 3,230
INTERMEDIATE GOVERNMENT INCOME FUND 34,808 9,085 668
LIMITED TERM GOVERNMENT INCOME FUND 47,365 10,327 N/A
STABLE INCOME FUND 1,451 418 N/A
VARIABLE RATE GOVERNMENT 68,333 N/A N/A
</TABLE>
The shareholder servicing fees paid on behalf of the Stagecoach Funds for the
year ended June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Fund Class A Class B Class C Institutional Class
<S> <C> <C> <C> <C>
CORPORATE BOND FUND $ 12,132 $22,655 $3,607 N/A
LIMITED TERM GOVERNMENT INCOME FUND 135,357 21,988 N/A $213,308
INCOME PLUS* 21,933 67,560 6,555 N/A
VARIABLE RATE GOVT. FUND 379** N/A N/A N/A
</TABLE>
<TABLE>
<C> <S>
* REPRESENTS THE PERIOD FROM JULY 13, 1998 TO JUNE 30, 1999.
** INCLUDES EXPENSES CHARGED TO THE FUND'S CLASS C SHARES PRIOR
TO THEIR CONVERSION TO CLASS A SHARES.
</TABLE>
8. OTHER FEES AND TRANSACTIONS WITH AFFILIATES
Forum Accounting Services, LLC provides portfolio accounting services to each
Fund. For these services Forum is entitled to receive a fixed monthly per fund
fee, a basis point fee of 0.0025% of the average daly net assets of each Fund,
and will be reimbursed for all out of pocket expenses reasonably incurred in
providing these services. Prior to November 8, 1999, the Company entered into
contracts on behalf of the Corporate Bond, Income Plus, Limited Term
Government Income, and Variable Rate Government Funds with WFB, whereby WFB is
responsible for providing portfolio accounting services for the Funds.
Pursuant to the contract, WFB was entitled to a monthly base fee from each
Fund of $2,000 plus an annual fee of 0.07% of the first $50 million of each
Fund's average daily net assets, 0.045% of the next $50 million, and 0.02% of
each Fund's average daily net assets in excess of $100 million. For the
Diversified Bond, Income,
64
<PAGE>
NOTES TO FINANCIAL STATEMENTS INCOME FUNDS
- --------------------------------------------------------------------------------
Intermediate Government Income, and Stable Income Funds, portfolio accounting
services were provided by Forum Accounting Services.
The Company has entered into a contract on behalf of each Fund with Norwest
Bank Minnesota, N.A. ("Norwest"), an affiliated party, whereby Norwest is
responsible for providing custody services for the Funds. Pursuant to the
contract, Norwest is entitled to certain transaction charges plus a monthly
fee for custody services at the annual rate of 0.02% of the average daily net
assets of each Fund. Prior to November 8, 1999 the Stagecoach Funds had the
above service performed for fee at an annual rate of 0.0167% of the average
daily net assets of each Fund. Prior to November 8, 1999 the Norwest Advantage
Funds engaged Norwest as the custodian for its Funds. For its custody
services, Norwest was entitled to receive a fee at an annual rate of 0.02% for
the first $100 million of average net assets of each Fund, declining to 0.01%
of the average net assets of each Fund in excess of $200 million.
Certain officers of the Company are also officers of Stephens. As of November
30, 1999, Stephens owned 17 shares of the Corporate Bond Fund, no shares of
the Diversified Bond Fund, no shares of the Income Fund, 17 shares of the
Income Plus Fund, 3,575 shares of the Intermediate Government Income Fund,
3,681 shares of the Limited Term Government Income Fund, no shares of the
Stable Income Fund, and 16,464 shares of the Variable Rate Government Fund.
Stephens has retained $1,825,444 as sales charges from the proceeds of Class
A shares sold, $51,338 from the proceeds of Class B shares redeemed and
$59,347 from the proceeds of Class C shares redeemed by the Company for the
period ended November 30, 1999. A third party financing agent has retained
approximately $1,949,604 from the proceeds of Class B shares redeemed by the
Company for the year ended November 30, 1999. Wells Fargo Securities Inc., a
subsidiary of WFB, received $1,039,080 as sales charges from the proceeds of
Class A shares sold, $54,270 from the proceeds of Class B shares redeemed and
$0 from the proceeds of Class C shares redeemed by the Company for the period
ended November 30, 1999. Forum has retained $76,807 as sales charges from the
proceeds of Class A shares sold, $523,334 from the proceeds of Class B shares
redeemed and $2,859 from the proceeds of Class C shares redeemed by the
company for the period ended November 5, 1999. Norwest Bank Minnesota, N.A.
received $76,807 as sales charges frosm the proceeds of Class A shares sold,
$523,334 from the proceeds of Class B shares redeemed and $2,859 from the
proceeds of Class C shares redeemed by the company for the period ended
November 5, 1999.
9. WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement of
Operations, for the period ended November 30, 1999, were waived by WFB. Fee
waivers are contractual and apply for one year from the closing date of the
reorganization. After this time, the Advisor, with Board approval, may reduce
or eliminate such waivers. The following fees were waived for the period ended
November 30, 1999:
<TABLE>
<CAPTION>
Fees Waived by FAdS Fees Waived by WFB
<S> <C> <C>
CORPORATE BOND FUND $ 0 $ 39,718
DIVERSIFIED BOND FUND 244,475 18,234
INCOME FUND 280,100 5,153
INCOME PLUS FUND 0 67,999
INTERMEDIATE GOVERNMENT INCOME FUND 105,147 63,158
LIMITED TERM GOVERNMENT INCOME FUND 0 150,181
STABLE INCOME FUND 52,135 17,395
VARIABLE RATE GOVERNMENT FUND 0 143,426
</TABLE>
65
<PAGE>
INCOME FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
10. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) and U.S.
Government Securities, for each Fund for the period ended November 30, 1999,
were as follows:
<TABLE>
<CAPTION>
AGGREGATE PURCHASES AND SALES
Fund Purchases at Cost Sales Proceeds
<S> <C> <C>
CORPORATE BOND FUND $ 8,529,498 $ 7,578,128
DIVERSIFIED BOND FUND 38,788,965 31,080,617
INCOME FUND 258,888,485 245,841,367
INCOME PLUS FUND 13,963,123 14,752,267
INTERMEDIATE GOVERNMENT INCOME FUND 333,529,915 314,684,142
LIMITED TERM GOVERNMENT INCOME FUND 58,300,454 75,589,449
STABLE INCOME FUND 72,114,854 44,854,784
VARIABLE RATE GOVERNMENT 0 21,279,633
</TABLE>
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) and U.S.
Government Securities, for each Fund for the period ended June 30, 1999, were
as follows:
<TABLE>
<CAPTION>
AGGREGATE PURCHASES AND SALES
Fund Purchases at Cost Sales Proceeds
<S> <C> <C>
CORPORATE BOND FUND $ 25,653,406 $ 17,048,491
LIMITED TERM GOVERNMENT INCOME FUND 153,753,937 158,553,881
INCOME PLUS FUND 117,607,125 68,433,978
VARIABLE RATE GOVERNMENT FUND 100,853,522 143,083,071
</TABLE>
11. FUND CONSOLIDATION AND MERGER
Concurrent with the establishment of the Trust, the Board of Directors of the
Stagecoach Family of Funds and the Board of Trustees of the Norwest Advantage
Funds approved a consolidation agreement providing for the acquisition of the
assets and assumption of liabilities of certain Stagecoach and Norwest
Advantage Funds into the Wells Fargo Funds Trust. Effective on the close of
business November 5, 1999 the Stagecoach and/or Norwest Advantage Funds were
consolidated into the respective Wells Fargo Funds Trust Funds through a
tax-free exchange of shares.
66
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
ASSET BACKED SECURITIES - 10.21%
$3,500,000 CHASE CREDIT CARD MASTER TRUST SERIES 1999-3 A+ 6.66% 01/15/07 $ 3,480,176
4,000,000 CHEVY CHASE MASTER CREDIT CARD TRUST SERIES 1998 CLASS A+ 5.83 10/16/06 4,006,800
1,800,000 CONTIMORTGAGE HOME EQUITY LOAN TRUST SERIES 1997-4 6.63 09/15/16 1,734,120
2,441,000 EQCC HOME EQUITY LOAN TRUST SERIES 1996-2 A4 7.50 06/15/21 2,446,370
4,900,000 EQCC HOME EQUITY LOAN TRUST SERIES 1997-2 A9 6.81 08/15/28 4,834,340
30,121 FIRST MERCHANTS AUTO RECEIVABLES CORPORATION SERIES 1996-A
CLASS A2 6.70 07/17/00 30,126
1,000,000 GE CAPITAL MORTGAGE SERVICES INCORPORATED SERIES 1997 HE-2
CLASS A7 7.12 06/25/27 988,590
9,456,540 GREEN TREE FINANCIAL CORPORATION SERIES 1997-7 A8 6.86 07/15/29 9,029,010
1,644,523 KEYSTONE HOME IMPROVEMENT LOAN TRUST SERIES 1997-P2
CLASS IA3 6.99 04/25/14 1,628,078
2,300,000 KEYSTONE/LEHMAN TITLE I LOAN TRUST 1996-2 7.45 11/25/10 2,304,968
3,300,000 LOOP FUNDING MASTER TRUST SERIES 1997-A144 CLASS B1+ 5.86 12/26/07 3,275,250
5,518,000 RENTAL CAR FINANCE CORPORATION SERIES 1997-1 B3+ 6.70 09/25/07 5,226,580
6,500,000 VAN KAMPEN CLO-I+ 6.48 10/08/07 6,537,154
45,521,562
TOTAL ASSET BACKED SECURITIES (COST $46,401,796)
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 11.54%
2,588,786 AMBS SERIES CS-1012 1 7.06 07/25/02 2,587,168
993,510 AMERICAN HOUSING TRUST SERIES VI CLASS I-I 9.15 05/25/20 1,046,077
1,500,000 ASSET SECURITIZATION CORPORATION SERIES 1997-D4 CLASS A1C 7.42 04/14/29 1,510,575
971,745 CMC SECURITIES CORPORATION II SERIES 1993-2I A2+ 6.73 09/25/23 975,596
5,333,000 COUNTRYWIDE MORTGAGE BACKED SECURITIES INCORPORATED 6.50 01/25/24 5,114,400
5,000,000 FHLMC SERIES 2146 VB 6.00 12/15/14 4,626,500
1,499,555 FIRST PLUS HOME LOAN TRUST SERIES 1996-2 A6 7.85 08/20/13 1,506,513
207,934 FNMA SERIES 1988-5 Z 9.20 03/25/18 216,033
2,000,000 FNMA SERIES 1998-M6 CLASS A2+ 6.32 08/15/08 1,886,660
1,164,399 INDEPENDENT NATIONAL MORTGAGE CORPORATION SERIES 1994 V
CLASS M+ 8.26 12/25/24 1,198,885
907,852 L.F. ROTHSCHILD MORTGAGE TRUST SERIES 2 CLASS Z 9.95 08/01/17 963,276
290,670 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 1994-I+ 7.39 01/25/05 291,504
5,000,000 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 1997
CLASS A3 7.12 06/18/29 4,909,850
6,000,000 PRUDENTIAL HOME MORTGAGE SECURITIES SERIES 1993-57 CLASS A9 6.50 12/25/23 5,761,620
87,130 RTC SERIES 1995 1 CLASS A2C 7.50 10/25/28 86,762
1,000,000 RTC SERIES 1995 1 CLASS A2D 7.50 10/25/28 1,000,083
624,766 RTC SERIES 1995-2 A1C 7.45 05/25/29 625,191
14,578 VENDEE MORTGAGE TRUST SERIES 1992-2 CLASS 2D 7.75 12/15/14 14,554
4,222,107 VENDEE MORTGAGE TRUST SERIES 1992-2 CLASS G 7.25 02/15/19 4,101,016
3,144,143 VENDEE MORTGAGE TRUST SERIES 1995-1C CLASS 3E 8.00 07/15/18 3,185,583
5,500,000 VENDEE MORTGAGE TRUST SERIES 1996-2 CLASS 1E 6.75 05/15/20 5,374,435
3,000,000 VENDEE MORTGAGE TRUST SERIES 1997-1 CLASS 2C 7.50 09/15/17 3,014,700
1,500,000 VENDEE MORTGAGE TRUST SERIES 1997-1 CLASS 2D 7.50 01/15/19 1,488,555
51,485,536
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $52,916,909)
------------
CORPORATE BONDS & NOTES - 30.33%
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.41%
4,165,000 LEVI STRAUSS & COMPANY 6.80 11/01/03 3,436,125
3,000,000 TOMMY HILFIGER 6.50 06/01/03 2,868,750
6,304,875
------------
</TABLE>
67
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 0.60%
$3,000,000 PEP BOYS 6.71% 11/03/04 $ 2,658,750
------------
BANKS - 0.20%
885,000 UNITED MISSOURI BANCSHARES 7.30 02/24/03 901,594
------------
BUSINESS SERVICES - 1.75%
2,500,000 FIRST DATA CORPORATION 5.80 12/15/08 2,265,625
5,635,000 ORACLE CORPORATION 6.72 02/15/04 5,522,300
7,787,925
------------
COMMUNICATIONS - 0.54%
2,500,000 SPRINT CAPITAL CORPORATION 5.70 11/15/03 2,393,750
------------
DEPOSITORY INSTITUTIONS - 5.55%
5,000,000 BANKAMERICA CORPORATION+ 6.75 01/15/27 4,719,990
5,000,000 CHASE CAPITAL+ 6.83 08/01/28 4,748,545
3,400,000 CITICORP 9.50 02/01/02 3,582,750
2,175,000 CORESTATES CAPITAL CORPORATION 5.88 10/15/03 2,093,438
750,000 CORESTATES CAPITAL CORPORATION+ 6.83 01/15/27 732,711
3,200,000 DEPOSIT GUARANTY CORPORATION 7.25 05/01/06 3,104,000
200,000 FIRST BANK N.A. 6.00 10/15/03 193,250
2,500,000 FIRST BANK SYSTEMS INCORPORATED 8.00 07/02/04 2,565,625
1,300,000 FIRST BANK SYSTEMS INCORPORATED 7.63 05/01/05 1,304,875
1,750,000 OLD KENT FINANCIAL CORPORATION 6.63 11/15/05 1,690,937
24,736,121
------------
ELECTRIC, GAS & SANITARY SERVICES - 0.89%
1,000,000 EL PASO NATURAL GAS 7.75 01/15/02 1,007,500
3,000,000 TEXAS UTILITIES COMPANY 6.20 10/01/02 2,940,000
3,947,500
------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT - 0.93%
1,700,000 HYUNDAI SEMICONDUCTOR 8.25 05/15/04 1,451,375
2,709,000 PHILIPS ELECTRONICS 6.75 08/15/03 2,695,455
4,146,830
------------
FINANCIAL SERVICES - 0.67%
3,000,000 FLORIDA RESIDENTIAL PROPERTY & CASUALTY 7.25 07/01/02 3,000,000
------------
FOOD & KINDRED PRODUCTS - 0.77%
1,060,000 NABISCO INCORPORATED 6.00 02/15/01 1,045,425
2,350,000 WHITMAN CORPORATION 7.50 02/01/03 2,391,125
3,436,550
------------
GENERAL MERCHANDISE STORES - 0.67%
3,000,000 DAYTON HUDSON COMPANY 5.89 06/15/37 2,992,500
------------
HOLDING & OTHER INVESTMENT OFFICES - 0.45%
2,000,000 POTOMAC CAPITAL INVESTMENT CORPORATION 7.32 04/14/00 2,009,382
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.63%
3,000,000 APPLIED MATERIALS INCORPORATED 7.00 09/06/05 2,917,500
</TABLE>
68
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (continued)
$ 600,000 APPLIED MATERIALS INCORPORATED 6.70% 09/06/05 $ 575,250
1,500,000 TORO COMPANY 7.13 06/15/07 1,387,500
2,500,000 TYCO INTERNATIONAL LTD. 6.38 01/15/04 2,387,500
7,267,750
------------
INDUSTRIAL SERVICES - 0.55%
2,500,000 REYNOLDS & REYNOLDS 7.00 12/15/06 2,453,125
------------
INSURANCE CARRIERS - 3.11%
3,000,000 LINCOLN NATIONAL CORPORATION 7.25 05/15/05 2,973,750
5,200,000 REINSURANCE GROUP OF AMERICA INCORPORATED 7.25 04/01/06 4,829,500
4,000,000 RELIASTAR FINANCIAL CORPORATION 7.13 03/01/03 3,950,000
2,200,000 TERRA NOVA (U.K.) HOLDINGS 7.20 08/15/07 2,131,250
13,884,500
------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.38%
1,700,000 BAUSCH & LOMB INCORPORATED 6.56 08/12/26 1,689,375
------------
NONDEPOSITORY CREDIT INSTITUTIONS - 2.08%
3,600,000 CARGILL INCORPORATED 8.35 02/12/04 3,708,000
3,000,000 MELLON FINANCIAL COMPANY 9.75 06/15/01 3,123,750
2,450,000 PRUDENTIAL INSURANCE COMPANY 7.65 07/01/07 2,434,688
9,266,438
------------
OIL & GAS EXTRACTION - 0.77%
1,500,000 LUCKY GOLDSTAR-CALTEX OIL 7.88 07/01/06 1,432,500
2,000,000 R&B FALCON CORPORATION 6.75 04/15/05 1,770,000
250,000 VASTAR RESOURCES INCORPORATED 6.95 11/08/06 243,125
3,445,625
------------
PETROLEUM REFINING & RELATED INDUSTRIES - 0.63%
1,500,000 COLONIAL PIPELINE 7.13 08/15/02 1,513,125
1,305,000 PETROLIAM NASIONAL BERHAD 6.63 10/18/01 1,285,425
2,798,550
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.73%
3,325,000 SCHOLASTIC CORPORATION 7.00 12/15/03 3,258,500
------------
REAL ESTATE - 0.60%
3,000,000 SUSA PARTNERSHIP LP 8.20 06/01/17 2,696,250
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.89%
2,000,000 CHARLES SCHWAB CORPORATION 6.25 01/23/03 1,950,000
2,000,000 CHARLES SCHWAB CORPORATION 6.88 09/02/03 1,980,000
700,000 CHARLES SCHWAB CORPORATION 7.19 05/31/01 704,375
2,650,000 PAINE WEBBER GROUP INCORPORATED 6.45 12/01/03 2,553,937
1,250,000 PAINE WEBBER GROUP INCORPORATED 6.90 08/15/03 1,226,563
8,414,875
------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.51%
2,425,532 MINNESOTA MINING & MANUFACTURING 5.62 07/15/09 2,266,708
------------
TOBACCO PRODUCTS - 0.62%
$2,750,000 PHILIP MORRIS COMPANIES INCORPORATED 7.63% 05/15/02 $ 2,746,563
------------
</TABLE>
69
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
TRANSPORTATION BY AIR - 1.78%
2,212,400 CONTINENTAL AIRLINES 6.80 07/02/07 2,096,248
2,172,662 CONTINENTAL AIRLINES SERIES 972A 7.15 06/30/07 2,128,622
2,912,277 FEDERAL EXPRESS SERIES 97-B 7.52 01/15/18 2,851,003
999,155 NORTHWEST AIRLINES CORPORATION 6.81 02/01/20 883,903
7,959,776
------------
WATER TRANSPORTATION - 0.39%
1,750,000 ROYAL CARRIBBEAN CRUISES 7.13 09/18/02 1,736,875
------------
WHOLESALE TRADE-NONDURABLE GOODS - 0.23%
1,000,000 UNIVERSAL CORPORATION 9.25 02/15/01 1,023,750
------------
135,224,437
TOTAL CORPORATE BONDS & NOTES (COST $140,997,136)
------------
MUNICIPAL BONDS & NOTES - 4.92%
3,500,000 DENVER CO CITY & COUNTY SD #1 EDUCATIONAL FACILITIES RV
TAXABLE PENSION SCHOOL FACLITIES LEASE AMBAC INSURED 6.67% 12/15/04 3,464,580
3,805,000 HUDSON COUNTY NJ IMPORT AUTHORITY FACILITIES LEASING RV FSA
INSURED 7.40 12/01/25 3,723,459
7,500,000 NEW YORK STATE GO BONDS SERIES B 6.13 03/15/07 7,059,900
4,450,000 PHILADELPHIA PA IDR PENSION FUNDING RETIREMENT SYSTEM
SERIES A MBIA INSURED 5.69 04/15/07 4,053,639
3,725,000 WASHINGTON STATE GO BONDS 6.50 01/01/05 3,660,147
21,961,725
TOTAL MUNICIPAL BONDS & NOTES (COST $23,026,423)
------------
U.S. GOVERNMENT AGENCY SECURITIES - 31.37%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 2.21%
750,000 FHLMC #1832 D 6.50 06/15/08 746,438
203,698 FHLMC #410425+ 6.94 09/01/26 207,389
102,335 FHLMC #410464+ 7.36 11/01/26 104,189
834,067 FHLMC #606279+ 6.43 02/01/15 833,025
4,981,188 FHLMC #786702+ 5.78 06/01/29 4,906,470
527,446 FHLMC #846367+ 7.01 04/01/29 540,300
2,500,000 FHLMC SERIES T-20 CLASS A6 7.49 09/25/29 2,533,839
9,871,650
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 26.59%
9,000,000 FNMA 6.16 08/07/28 8,048,700
20,500,000 FNMA 6.25 05/15/29 18,603,750
12,000,000 FNMA 6.00 05/15/08 11,397,120
4,833,585 FNMA #252494 6.00 06/01/14 4,625,113
115,700 FNMA #342042+ 6.57 06/01/25 117,580
382,453 FNMA #344689+ 6.77 11/01/25 390,339
297,479 FNMA #344692+ 6.60 10/01/25 301,010
151,181 FNMA #347712+ 6.75 06/01/26 152,787
4,890,165 FNMA #375168 7.13 06/01/04 4,897,505
4,931,210 FNMA #380268 6.17 08/01/08 4,645,634
5,045,286 FNMA #408118 6.50 01/01/28 4,810,327
4,435,852 FNMA #415414 6.50 02/01/28 4,229,275
8,124,269 FNMA #415714 6.00 04/01/28 7,532,660
$4,084,284 FNMA #417648 6.00% 02/01/13 $ 3,908,129
8,591,420 FNMA #446118 6.00 12/01/28 7,965,792
2,459,084 FNMA #482516 6.00 01/01/14 2,353,024
</TABLE>
70
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
MANAGED FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (continued)
4,833,571 FNMA #483920 6.00 02/01/29 4,481,591
9,324,295 FNMA #484776 6.00 03/01/14 8,922,139
12,348,421 FNMA #486524 6.50 02/01/29 11,773,354
4,872,322 FNMA #502906 6.00 06/01/14 4,662,178
1,438,688 FNMA #73272 6.48 12/01/05 1,393,269
3,406,500 FNMA #73919 6.80 01/01/04 3,376,257
118,587,533
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.57%
525 GNMA #2218 6.50 12/15/02 500
2,580,674 GNMA #473917 7.00 04/15/28 2,521,783
29 GNMA #665 7.50 05/15/01 29
9,161,725 GNMA #780626 7.00 08/15/27 8,958,426
11,480,738
------------
139,939,921
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $146,602,300)
------------
U.S. TREASURY SECURITIES - 9.58%
U.S. TREASURY BONDS - 5.20%
22,550,000 U.S. TREASURY BONDS 6.75 08/15/26 23,184,783
------------
U.S. TREASURY NOTES - 4.38%
19,300,000 U.S. TREASURY NOTES 6.50 10/15/06 19,530,635
------------
42,715,418
TOTAL U.S. TREASURY SECURITIES (COST $45,442,402)
------------
SHORT-TERM INSTRUMENTS - 0.89%
3,981,445 LEHMAN BROTHERS INCORPORATED POOLED REPURCHASE AGREEMENT -
102% COLLATERALIZED BY U.S. GOVERNMENT SECURITIES 5.66 12/01/99 3,981,445
------------
3,981,445
TOTAL SHORT-TERM INSTRUMENTS (COST $3,981,445)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $459,368,411)* 98.84% $440,830,044
OTHER ASSETS AND LIABILITIES, NET 1.16 5,191,023
------ ------------
TOTAL NET ASSETS 100.00% $446,021,067
------ ------------
</TABLE>
<TABLE>
<C> <S>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 322,950
GROSS UNREALIZED DEPRECIATION (18,861,317)
------------
NET UNREALIZED DEPRECIATION $(18,538,367)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
71
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
POSITIVE RETURN PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
ASSET BACKED SECURITIES - 21.40%
$ 4,100,000 CAPITAL AUTOMOTIVE RECEIVABLES ASSET TRUST SERIES 1999-1
CLASS A2+ 5.58% 06/15/02 $ 4,005,126
3,808,805 CIT MARINE TRUST SERIES 1999-A CLASS A1+ 5.45 09/15/06 3,778,792
12,337,000 FIRST CHICAGO MASTER TRUST II SERIES 1997-T CLASS A+ 5.47 10/15/02 12,340,701
12,100,000 FIRST UNION MASTER CREDIT CARD TRUST SERIES 1996-1 A+ 5.58 09/15/03 12,110,890
4,600,000 FLEET CREDIT CARD MASTER TRUST SERIES 1995-A CLASS A+ 5.62 01/01/03 4,611,500
1,163,346 FORD CREDIT AUTO OWNER TRUST SERIES 1998-C CLASS A3 5.73 11/15/00 1,162,299
13,775,000 FORD MOTOR CREDIT AUTO OWNER TRUST SERIES 1998-B CLASS A3 5.85 10/15/01 13,549,228
12,125,000 HOUSEHOLD CREDIT CARD MASTER TRUST I SERIES 1995-1 CLASS A+ 5.60 12/15/02 12,126,334
63,684,870
TOTAL ASSET BACKED SECURITIES (COST $64,123,079)
------------
CORPORATE BOND & NOTES - 3.49%
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 3.49%
10,375,000 MERRILL LYNCH & COMPANY+ 5.57 09/25/00 10,375,000
------------
10,375,000
TOTAL CORPORATE BOND & NOTES (COST $10,366,700)
------------
U.S. GOVERNMENT AGENCY SECURITIES - 45.34%
FEDERAL HOME LOAN BANK - 9.04%
$14,885,000 FHLB 5.09{::} 12/08/99 14,869,222
12,050,000 FHLB 5.18{::} 12/10/99 12,033,492
$ 26,902,714
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 20.40%
7,257,000 FHLMC 5.12{::} 12/07/99 7,250,324
14,000,000 FHLMC 5.19{::} 12/03/99 13,995,660
12,427,000 FHLMC 5.53{::} 12/30/99 12,372,742
5,450,000 FHLMC 5.51{::} 12/28/99 5,427,887
12,685,000 FHLMC 5.22{::} 12/09/99 12,669,524
9,000,000 FHLMC 5.13{::} 12/07/99 8,991,720
60,707,857
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 15.90%
10,000,000 FNMA 5.25{::} 12/13/99 9,981,700
12,258,000 FNMA 5.29{::} 12/17/99 12,228,090
15,275,000 FNMA 5.03{::} 02/01/00 15,128,360
10,000,000 FNMA 6.40{::} 12/13/99 9,981,700
47,319,850
------------
134,930,421
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $134,960,925)
------------
U.S. TREASURY SECURITIES - 6.25%
U.S. TREASURY BONDS - 1.21%
3,650,000 U.S. TREASURY BONDS 6.38% 08/15/27 3,588,972
------------
U.S. TREASURY NOTES - 5.04%
15,000,000 U.S. TREASURY NOTES 5.38 01/31/00 14,999,400
------------
18,588,372
TOTAL U.S. TREASURY SECURITIES (COST $19,140,344)
------------
</TABLE>
72
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
POSITIVE RETURN PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 23.34%
$69,453,583 LEHMAN BROTHERS INC. POOLED REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY U.S. GOVERNMENT SECURITIES 5.66% 12/01/99 $ 69,453,583
------------
69,453,583
TOTAL SHORT-TERM INSTRUMENTS (COST $69,453,583)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $298,044,631)* 99.82% $297,032,246
OTHER ASSETS AND LIABILITIES, NET 0.18 525,650
------ ------------
TOTAL NET ASSETS 100.00% $297,557,896
------ ------------
</TABLE>
<TABLE>
<C> <S>
{::} YIELD TO MATURITY.
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 19,679
GROSS UNREALIZED DEPRECIATION (1,032,064)
-----------
NET UNREALIZED DEPRECIATION $(1,012,385)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
73
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
STABLE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
ASSET BACKED SECURITIES - 20.12%
$ 3,500,000 AESOP FUNDING II LLC SERIES 1997-1 A1+ 6.22% 10/20/01 $ 3,466,050
407,154 AFC HOME EQUITY LOAN TRUST SERIES 1995-2 A1+ 6.66 07/25/26 405,696
2,975,000 CAPITAL AUTO RECEIVABLES ASSET TRUST SERIES 1999-2 A4+ 6.30 05/15/04 2,951,408
3,850,000 CARCO AUTO LOAN MASTER TRUST SERIES 1999-1 A2 5.78 03/15/04 3,745,242
5,000,000 CHASE CREDIT CARD MASTER TRUST SERIES 1998-6 A+ 5.66 09/15/04 5,008,350
5,000,000 CHEVY CHASE MASTER CREDIT CARD TRUST SERIES 1998 CLASS A+ 5.83 10/16/06 5,008,500
2,500,000 DISCOVER MASTER CARD TRUST I SERIES 1997-4+ 5.47 04/16/03 2,497,925
4,000,000 DREAMWORKS FIRM TRUST+ 6.40 10/15/06 3,992,500
1,500,000 EQCC HOME EQUITY LOAN TRUST SERIES 1995-3 A4 7.10 02/15/12 1,502,145
4,126,687 EQCC HOME EQUITY LOAN TRUST SERIES 1998-4 A1F+ 5.84 01/15/29 4,141,130
10,386 FIRST MERCHANTS AUTO RECEIVABLES CORPORATION SERIES 1996-A
CLASS A2 6.70 07/17/00 10,388
350,025 FIRST MERCHANTS GRANTOR TRUST SERIES 1996-2 A 6.85 11/15/01 350,441
5,000,000 FIRST USA CREDIT CARD MASTER TRUST SERIES 1995-5 A+ 5.61 04/15/03 5,010,500
5,000,000 FIRST USA CREDIT CARD MASTER TRUST SERIES 1999-1 B+ 5.81 10/19/06 4,991,450
3,500,000 FREMONT SMALL BUSINESS LOAN MASTER TRUST SERIES C CLASS A+ 5.74 05/15/02 3,505,250
377,650 GREEN TREE FINANCIAL CORPORATION SERIES 1993-4 A3 6.25 01/15/19 377,631
139,030 GREEN TREE FINANCIAL CORPORATION SERIES 1994-1 A3 6.90 04/15/19 138,396
4,084,584 HOUSEHOLD CONSUMER LOAN TRUST SERIES 1997-1 CLASS A3+ 5.76 03/15/07 4,082,541
5,000,000 HOUSEHOLD CONSUMER LOAN TRUST SERIES 1997-2 CLASS A3+ 5.80 11/15/07 4,958,950
1,315,618 KEYSTONE HOME IMPROVEMENT LOAN TRUST SERIES 1997-P2 CLASS
IA3 6.99 04/25/14 1,302,462
750,000 LOOP FUNDING MASTER TRUST I SERIES 1997-AER CLASS B1+ 5.86 12/26/07 744,375
4,500,000 LOOP FUNDING MASTER TRUST SERIES 1997-A144 CLASS B1+ 5.86 12/26/07 4,466,250
4,000,000 PREMIER AUTO TRUST SERIES 1997-1 CLASS B 6.55 09/06/03 3,983,440
2,142,584 SEQUOIA MORTGAGE TRUST SERIES 2 CLASS A1+ 5.82 10/25/24 2,132,390
68,773,410
TOTAL ASSET BACKED SECURITIES (COST $69,015,722)
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 20.00%
2,824,130 AMBS SERIES CS-1012 1 7.06 07/25/02 2,822,365
942,307 COMMERCIAL LOAN FUNDING TRUST SERIES I CLASS A+ 5.20 08/15/05 937,595
126,363 DLJ MORTGAGE ACCEPTANCE CORPORATION SERIES 1998-STF1 CLASS
A1+ 5.66 02/08/00 126,355
5,000,000 FHLMC #2091 NA 5.50 03/15/04 4,949,650
5,000,000 FHLMC SERIES 2091 PC 6.00 06/15/16 4,875,150
3,262,056 FNMA #1994 M2 A 6.63 02/25/01 3,256,185
7,100,000 FNMA #1999-19 LA 6.50 09/25/08 7,050,158
6,200,000 FNMA #1999-19 PB 6.00 06/25/08 6,108,550
2,852,818 GMAC SERIES 1996 C1 A1+ 6.35 02/15/06 2,844,602
654,070 INDEPENDENT NATIONAL MORTGAGE CORPORATION SERIES 1994 V
CLASS M+ 8.26 12/25/24 673,442
1,519,496 INDEPENDENT NATIONAL MORTGAGE CORPORATION SERIES 1994 X
CLASS A2+ 7.90 01/25/25 1,564,986
3,499,646 INDEPENDENT NATIONAL MORTGAGE CORPORATION SERIES 1995 E
CLASS A1+ 6.61 04/25/25 3,533,120
4,353,262 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED+ 6.06 09/15/23 4,353,166
2,458,451 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED+ 6.14 06/15/18 2,478,364
236,842 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 1994-I+ 7.39 01/25/05 237,522
2,524,795 MLCC MORTGAGE INVESTORS INCORPORATED SERIES 1994 A CLASS A3+ 6.24 07/15/19 2,536,207
4,460,785 NATIONSLINK FUNDING+ 5.75 04/10/07 4,459,536
143,669 RESIDENTIAL FUNDING MORTGAGE SECURITY SERIES 1991 21 BA+ 6.68 08/25/21 142,952
16,827 RTC SERIES 1991 M6 A3+ 8.57 06/25/21 16,795
218,132 RTC SERIES 1991-6 E+ 11.58 05/25/24 217,233
$ 1,196,394 RTC SERIES 1992-18P A4+ 6.39% 04/25/28 $ 1,187,421
</TABLE>
74
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
STABLE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
4,913,724 RTC SERIES 1994-1 CLASS A5+ 6.09 09/25/29 4,924,534
892,847 RTC SERIES 1995-1 A3+ 6.52 10/25/28 904,807
2,998,813 SASCO 99-C3A+ 5.81 11/20/01 2,996,001
5,133,521 VENDEE MORTGAGE TRUST SERIES 1993-1 CLASS E 7.00 01/15/16 5,155,030
68,351,726
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $69,064,677)
------------
CORPORATE BONDS & NOTES - 28.99%
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.03%
3,400,000 V.F. CORPORATION 9.50 05/01/01 3,523,250
------------
BUSINESS SERVICES - 1.49%
3,250,000 FIRST DATA CORPORATION 6.82 09/18/01 3,262,188
1,825,000 SUN MICROSYSTEMS INCORPORATED 7.00 08/15/02 1,827,281
5,089,469
------------
CHEMICALS & ALLIED PRODUCTS - 0.89%
3,100,000 MONSANTO COMPANY 5.38 12/01/01 3,026,375
------------
COMMUNICATIONS - 0.58%
2,000,000 COX COMMUNICATIONS INCORPORATED 7.00 08/15/01 1,995,000
------------
DEPOSITORY INSTITUTIONS - 5.80%
4,000,000 BANKAMERICA CORPORATION 8.13 02/01/02 4,100,000
4,037,000 CHASE MANHATTAN CORPORATION 10.13 11/01/00 4,163,156
3,370,000 CITICORP 9.50 02/01/02 3,551,138
2,500,000 CORESTATES CAPITAL CORPORATION 9.63 02/15/01 2,581,250
2,775,000 FIRSTAR BANK MILWAUKEE 6.25 12/01/02 2,736,844
2,650,000 US BANK NA NORTH DAKOTA+ 5.47 06/20/01 2,644,514
19,776,902
------------
EATING & DRINKING PLACES - 1.15%
4,000,000 MCDONALD'S CORPORATION 6.00 06/23/02 3,930,000
------------
FOOD & KINDRED PRODUCTS - 1.58%
5,350,000 WHITMAN CORPORATION 7.50 08/15/01 5,410,188
------------
FOOD STORES - 0.98%
3,350,000 KROGER COMPANY+ 6.42 10/01/00 3,350,034
------------
HOLDING & OTHER INVESTMENT OFFICES - 1.47%
5,000,000 MAIN PLACE REAL ESTATE INVESTMENT+ 6.22 05/28/02 5,012,300
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 0.69%
2,400,000 TYCO INTERNATIONAL LIMITED 6.50 11/01/01 2,367,000
------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 0.46%
1,600,000 BAUSCH & LOMB INCORPORATED+ 6.15 08/01/01 1,578,000
------------
MISCELLANEOUS RETAIL - 0.81%
3,875,000 RITE AID CORPORATION 6.70 12/15/01 2,770,625
------------
NONDEPOSITORY CREDIT INSTITUTIONS - 5.95%
3,850,000 CATERPILLAR FINANCIAL SERVICES+ 6.51 08/01/02 3,843,879
3,900,000 FORD CAPITAL BV 9.38 05/15/01 4,036,500
3,200,000 GENERAL ELECTRIC CAPITAL CORPORATION 6.29 12/15/01 3,088,000
$ 4,000,000 MELLON FINANCIAL COMPANY 9.75% 06/15/01 $ 4,165,000
</TABLE>
75
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
STABLE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
NONDEPOSITORY CREDIT INSTITUTIONS (continued)
1,000,000 TRANSAMERICA FINANCIAL 6.36 06/26/00 1,000,000
1,500,000 TRANSAMERICA FINANCIAL 6.41 06/20/00 1,500,960
2,700,000 USAA CAPITAL CORPORATION 6.90 11/01/02 2,700,000
20,334,339
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.49%
2,750,000 MERRILL LYNCH & COMPANY INCORPORATED+ 5.70 05/30/01 2,753,437
2,375,000 PAINE WEBBER GROUP INCORPORATED+ 5.72 06/26/01 2,354,219
5,107,656
------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 1.01%
3,475,000 NEWELL COMPANY 6.18 07/11/00 3,466,313
------------
TOBACCO PRODUCTS - 0.71%
2,400,000 PHILIP MORRIS COMPANIES INCORPORATED 8.75 06/01/01 2,442,000
------------
TRANSPORTATION BY AIR - 1.22%
4,000,000 SOUTHWEST AIRLINES COMPANY 9.40 07/01/01 4,160,000
------------
TRANSPORTATION SERVICES - 1.17%
4,000,000 DAIMLER CHRYSLER NA HOLDING 6.67 09/25/01 3,995,000
------------
WHOLESALE TRADE-NONDURABLE GOODS - 0.51%
1,750,000 SAFEWAY INCORPORATED 7.00 09/15/02 1,743,438
------------
99,077,889
TOTAL CORPORATE BONDS & NOTES (COST $101,043,776)
------------
MUNICIPAL BONDS & NOTES - 6.89%
3,300,000 CONNECTICUT STATE GO BONDS TAXABLE SERIES A 5.70 01/15/01 3,262,875
2,215,000 COW CREEK BANK UMPQUA TRIBE OF INDIANS AMBAC INSURED 6.20 07/01/03 2,165,163
3,145,000 DENVER CO CITY AND COUNTY SD #1 EDUCATIONAL FACILITIES RV
TAXABLE PENSION SCHOOL FACILITIES LEASE AMBAC INSURED 6.34 12/15/00 3,140,566
2,005,000 MICHIGAN STATE GO BONDS 6.75 11/01/02 2,003,276
4,000,000 NEW YORK STATE GO BONDS SERIES C 6.13 03/01/02 3,940,000
5,000,000 NEW YORK, NY GO BONDS 6.10 08/01/01 4,950,000
2,200,000 NORTH CAROLINA STATE TAXABLE-PUBLIC IMPROVEMENT GO BONDS
SERIES B 6.70 03/01/01 2,202,750
1,870,000 WASHINGTON STATE GO BONDS STATE HOUSING TRUST FUND SERIES T 6.60 01/01/01 1,868,523
23,533,153
TOTAL MUNICIPAL BONDS & NOTES (COST $23,750,949)
------------
U.S. GOVERNMENT AGENCY SECURITIES - 18.67%
FEDERAL HOME LOAN BANK - 0.87%
3,000,000 FHLB 5.57 08/17/00 2,988,780
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 8.68%
20,000,000 FHLMC 5.00 02/15/01 19,741,560
83,565 FHLMC #410220+ 7.20 10/01/25 84,610
3,837,596 FHLMC #786614+ 6.08 08/01/25 3,732,062
5,434,023 FHLMC #786702+ 5.78 06/01/29 5,352,513
580,792 FHLMC #845151+ 6.80 06/01/22 591,681
175,815 FHLMC #846367+ 7.01 04/01/29 180,100
29,682,526
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.98%
$ 1,110,050 FNMA #155506+ 6.57% 04/01/22 $ 1,130,863
</TABLE>
76
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
STABLE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (continued)
6,002,926 FNMA #160334 6.92 03/01/01 5,994,744
2,029,384 FNMA #190815+ 5.51 07/01/17 1,968,502
322,089 FNMA #220706+ 6.61 06/01/23 326,315
180,779 FNMA #318464+ 6.75 04/01/25 183,377
508,138 FNMA #321051+ 6.97 08/01/25 517,346
154,652 FNMA #331866+ 6.54 12/01/25 158,034
3,324,659 FNMA #459495 6.00 02/01/14 3,181,266
191,953 FNMA #46698+ 5.64 12/01/15 193,512
3,359,893 FNMA #519047+ 6.00 09/01/29 3,367,244
$ 17,021,203
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.42%
4,851,027 GNMA #780533 7.00 07/15/08 4,837,347
------------
SMALL BUSINESS ADMINISTRATION - 1.93%
101,673 SBA #500025+ 8.13 12/25/10 105,741
51,680 SBA #500276+ 10.13 05/25/07 55,673
113,710 SBA #500299+ 10.13 06/25/07 122,586
80,675 SBA #500569+ 10.13 06/25/08 87,357
440,561 SBA #500664+ 8.13 03/25/04 450,075
288,395 SBA #500957+ 8.50 07/25/14 304,836
295,352 SBA #501224+ 7.00 06/25/15 301,058
39,243 SBA #501973+ 9.88 12/25/01 40,117
70,225 SBA #502083+ 8.13 11/25/04 71,753
100,979 SBA #502241+ 8.13 04/25/03 102,792
183,567 SBA #502583+ 9.47 09/25/03 189,614
75,799 SBA #502966+ 9.48 05/25/15 80,971
76,427 SBA #502974+ 8.88 01/25/10 79,828
576,159 SBA #503405+ 8.63 05/25/16 612,761
1,777,697 SBA #503611+ 8.13 12/25/21 1,868,865
1,114,745 SBA #503658+ 9.38 09/25/10 1,197,929
873,682 SBA #503664+ 8.73 01/25/13 913,369
6,585,325
------------
TENNESSEE VALLEY AUTHORITY - 0.79%
2,720,000 TVA 6.24 07/15/45 2,706,400
------------
63,821,581
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $64,513,419)
------------
U.S. TREASURY SECURITIES - 0.59%
U.S. TREASURY NOTES - 0.59%
2,000,000 U.S. TREASURY NOTES 5.64 03/31/01 2,010,760
------------
$ 2,010,760
TOTAL U.S. TREASURY SECURITIES (COST $2,018,435)
------------
</TABLE>
77
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
STABLE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 3.63%
$12,431,753 LEHMAN BROTHERS INCORPORATED POOLED REPURCHASE AGREEMENT -
102% COLLATERALIZED BY U.S. GOVERNMENT SECURITIES 5.66% 12/01/99 $ 12,431,753
------------
12,431,753
TOTAL SHORT-TERM INVESTMENTS (COST $12,431,753)
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(COST $341,838,731)* 98.89% $338,000,272
OTHER ASSETS AND LIABILITIES, NET 1.11 3,780,477
------ ------------
TOTAL NET ASSETS 100.00% $341,780,749
------ ------------
</TABLE>
<TABLE>
<C> <S>
{::} YIELD TO MATURITY.
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 205,728
GROSS UNREALIZED DEPRECIATION (4,044,187)
-----------
NET UNREALIZED DEPRECIATION $(3,838,459)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
78
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
ASSET BACKED SECURITIES - 7.77%
$1,839,000 AESOP FUNDING II LLC SERIES 1998-1 A+ 6.14% 05/20/06 $ 1,765,973
919,000 CHASE CREDIT CARD MASTER TRUST SERIES 1999-3 A+ 6.66 01/15/07 913,795
2,145,000 CHEVY CHASE MASTER CREDIT CARD TRUST SERIES 1998 CLASS A+ 5.83 10/16/06 2,148,646
1,739,058 GREEN TREE FINANCIAL CORPORATION SERIES 1997-7 A8 6.86 07/15/29 1,660,435
1,226,000 LOOP FUNDING MASTER TRUST I SERIES 1997-AER CLASS B1+ 5.86 12/26/07 1,216,805
1,226,000 RENTAL CAR FINANCE CORPORATION SERIES 1997-1 B3+ 6.70 09/25/07 1,161,252
562,581 SEQUOIA MORTGAGE TRUST SERIES 2 CLASS A1+ 5.82 10/25/24 559,905
2,145,000 VAN KAMPEN CLO-I+ 6.48 10/08/07 2,157,261
11,584,072
TOTAL ASSET BACKED SECURITIES (COST $11,801,911)
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 10.94%
1,154,128 AMBS SERIES CS-1012 1+ 7.06 07/25/02 1,153,407
1,250,000 COUNTRYWIDE MORTGAGE BACKED SECURITIES INCORPORATED 6.50 01/25/24 1,198,763
1,532,000 FHLMC SERIES T-20 CLASS A6 7.49 09/25/29 1,552,736
1,410,000 GNMA SERIES 1998-14 CLASS PD 6.00 06/20/23 1,353,953
2,452,000 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 1997-CI
CLASS A3 7.12 06/18/29 2,407,790
2,000,000 PRUDENTIAL HOME MORTGAGE SECURITIES SERIES 1993-57 CLASS A9 6.50 12/25/23 1,920,540
919,000 SACO I INCORPORATED SERIES 1997-2 CLASS 1A2+ 7.00 08/25/36 914,692
1,035,261 VENDEE MORTGAGE TRUST SERIES 1992-2 CLASS G 7.25 02/15/19 1,005,569
2,758,000 VENDEE MORTGAGE TRUST SERIES 1994-1 CLASS 2E 6.50 01/15/17 2,695,669
2,145,000 VENDEE MORTGAGE TRUST SERIES 1996-2 CLASS 1E 6.75 05/15/20 2,096,030
16,299,149
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $16,729,220)
------------
CORPORATE BONDS & NOTES - 40.09%
AMUSEMENT & RECREATION SERVICES - 0.19%
306,000 IMAX CORPORATION 7.88 12/01/05 283,815
------------
APPAREL & ACCESSORY STORES - 0.79%
1,226,000 KOHLS CORPORATION 6.70 02/01/06 1,173,895
------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.23%
1,226,000 LEVI STRAUSS & COMPANY 6.80 11/01/03 1,011,450
859,000 TOMMY HILFIGER 6.50 06/01/03 821,419
1,832,869
------------
BUSINESS SERVICES - 1.32%
1,532,000 ORACLE CORPORATION 6.72 02/15/04 1,501,360
460,000 OUTDOOR SYSTEMS INCORPORATED 8.88 06/15/07 473,800
1,975,160
------------
CHEMICALS & ALLIED PRODUCTS - 0.17%
306,000 SPECIAL DEVICES INCORPORATED 11.3 12/15/08 250,920
------------
COMMUNICATIONS - 1.78%
305,000 CHANCELLOR MEDIA GROUP 9.38 10/01/04 314,150
613,000 CHARTER COMMUNICATIONS HOLDING 8.63 04/01/09 580,050
306,000 LEVEL 3 COMMUNICATIONS INCORPORATED 9.13 05/01/08 289,170
500,000 NEXTEL COMMUNICATIONS 9.75 08/15/04 518,125
500,000 NEXTLINK COMMUNICATIONS 10.50 12/01/09 505,000
$ 460,000 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED 7.50% 11/01/08 $ 454,250
2,660,745
------------
</TABLE>
79
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
DEPOSITORY INSTITUTIONS - 5.76%
1,839,000 BANKAMERICA CORPORATION+ 6.75 01/15/27 1,736,012
1,839,000 CHASE CAPITAL+ 6.83 08/01/28 1,746,515
1,226,000 DEPOSIT GUARANTY CORPORATION 7.25 05/01/06 1,189,220
1,226,000 FARMERS EXCHANGE CAPITAL 7.20 07/15/48 1,026,775
1,532,000 FIRST BANK SYSTEMS INCORPORATED 8.00 07/02/04 1,572,215
1,364,000 OLD KENT FINANCIAL CORPORATION 6.63 11/15/05 1,317,965
$ 8,588,702
------------
EATING & DRINKING PLACES - 0.94%
322,000 ARAMARK CORPORATION 6.75 08/01/04 307,107
1,150,000 TRICON GLOBAL RESTAURANT 7.65 05/15/08 1,091,063
1,398,170
------------
ELECTRIC, GAS & SANITARY SERVICES - 1.91%
306,000 CALPINE CORPORATION 7.63 04/15/06 291,465
231,049 NIAGARA MOHAWK POWER 7.38 07/01/03 230,760
1,150,000 TEXAS UTILITIES COMPANY 6.20 10/01/02 1,127,000
1,226,000 WILLIAMS COMPANIES INCORPORATED 6.13 02/15/02 1,195,350
2,844,575
------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 0.35%
610,000 HYUNDAI SEMICONDUCTOR 8.25 05/15/04 520,787
------------
FINANCIAL SERVICES - 1.39%
1,226,000 GENFIANCE LUXEMBOURG SA+ 6.14 05/29/49 1,223,548
859,000 POTOMAC CAPITAL INVESTMENT 7.05 10/02/01 849,336
2,072,884
------------
FOOD & KINDRED PRODUCTS - 0.88%
613,000 NABISCO INCORPORATED 6.00 02/15/01 604,571
700,000 WHITMAN CORPORATION 7.29 09/15/26 702,625
1,307,196
------------
HEALTH SERVICES - 0.40%
613,000 TENET HEALTHCARE CORPORATION 7.88 01/15/03 593,078
------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES - 0.69%
306,000 HMH PROPERTIES SERIES A 7.88 08/01/05 283,815
766,000 PREMIER PARKS INCORPORATED 9.25 04/01/06 746,850
1,030,665
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.65%
1,150,000 AMERICAN STANDARD COMPANIES INCORPORATED 7.13 02/15/03 1,098,250
532,000 APPLIED MATERIALS INCORPORATED 7.00 09/06/05 517,370
919,000 TORO COMPANY 7.13 06/15/07 850,075
2,465,695
------------
INSURANCE CARRIERS - 5.19%
$1,839,000 EQUITABLE LIFE ASSURANCE SOCIETY 6.95% 12/01/05 $ 1,790,726
1,532,000 LINCOLN NATIONAL CORPORATION 7.25 05/15/05 1,518,595
1,532,000 REINSURANCE GROUP OF AMERICA INCORPORATED 7.25 04/01/06 1,422,845
1,532,000 RELIASTAR FINANCIAL CORPORATION 7.13 03/01/03 1,512,850
</TABLE>
80
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
INSURANCE CARRIERS (continued)
1,532,000 TERRA NOVA (U.K.) HOLDINGS 7.20 08/15/07 1,484,125
7,729,141
------------
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 1.20%
1,226,000 BAUSCH & LOMB INCORPORATED 6.75 12/15/04 1,184,623
613,000 MALLINCKRODT INCORPORATED 6.30 03/15/01 603,805
1,788,428
------------
MISCELLANEOUS RETAIL - 0.20%
500,000 RITE AID CORPORATION 7.13 01/15/07 302,500
------------
MOTION PICTURES - 0.34%
612,000 REGAL CINEMAS INCORPORATED 9.50 06/01/08 502,605
------------
NONDEPOSITORY CREDIT INSTITUTIONS - 0.71%
1,073,000 PRUDENTIAL INSURANCE COMPANY 7.65 07/01/07 1,066,294
------------
OIL & GAS EXTRACTION - 1.18%
613,000 GULF CANADA RESOURCES LIMITED 8.35 08/01/06 598,441
613,000 R&B FALCON CORPORATION 6.75 04/15/05 542,505
613,000 TRITON ENERGY LIMITED CORPORATION 8.75 04/15/02 615,299
1,756,245
------------
PAPER & ALLIED PRODUCTS - 0.20%
306,000 BUCKEYE TECHNOLOGIES INCORPORATED 8.50 12/15/05 296,055
------------
PRIMARY METAL INDUSTRIES - 0.51%
460,000 AK STEEL CORPORATION 9.13 12/15/06 468,050
306,000 CSC HOLDINGS INCORPORATED 7.25 07/15/08 289,935
757,985
------------
REAL ESTATE - 1.11%
306,000 GOLDEN STATE HOLDINGS 7.13 08/01/05 280,755
1,532,000 SUSA PARTNERSHIP LP 8.20 06/01/17 1,376,885
1,657,640
------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.31%
459,000 PACKAGING RESOURCES INCORPORATED 11.6 05/01/03 459,574
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.22%
1,839,000 CHARLES SCHWAB CORPORATION 6.88 09/02/03 1,820,610
------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.59%
900,000 OWENS-ILLNOIS INCORPORATED 7.85 05/15/04 875,250
------------
TECHNOLOGY - 1.80%
2,881,000 MASSACHUSETTS INSTITUTE OF TECHNOLOGY 7.25 11/02/96 2,690,134
------------
TRANSPORTATION BY AIR - 3.24%
613,000 ATLAS AIR INCORPORATED 9.25 04/15/08 577,752
1,627,883 CONTINENTAL AIRLINES 6.80 07/02/07 1,542,418
$1,189,518 FEDERAL EXPRESS SERIES 97-B 7.52% 01/15/18 $ 1,164,490
650,000 MGM GRAND INCORPORATED 6.95 02/01/05 593,938
613,000 NORTHWEST AIRLINES CORPORATION 8.38 03/15/04 567,025
</TABLE>
81
<PAGE>
INCOME PORTFOLIOS PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
TRANSPORTATION BY AIR (continued)
428,409 NORTHWEST AIRLINES CORPORATION 6.81 02/01/20 378,992
4,824,615
------------
TRANSPORTATION EQUIPMENT - 0.45%
460,000 BE AEROSPACE 8.00 03/01/08 376,050
306,000 FEDERAL-MOGUL CORPORATION 7.50 07/01/04 289,552
665,602
------------
UTILITY-ELECTRIC - 0.41%
613,000 CALENERGY COMPANY INCORPORATED 7.23 09/15/05 603,805
------------
WATER TRANSPORTATION - 1.59%
1,839,000 ROYAL CARIBBEAN CRUISES 7.13 09/18/02 1,825,208
612,000 TEEKAY SHIPPING CORPORATION 8.32 02/01/08 549,270
2,374,478
------------
WHOLESALE TRADE-NONDURABLE GOODS - 0.39%
613,000 BARRETT RESOURCES CORPORATION 7.55 02/01/07 578,519
------------
59,748,636
TOTAL CORPORATE BONDS & NOTES (COST $63,272,576)
------------
INVESTMENT IN LIMITED PARTNERSHIP - 0.70%
1,000,000 PPM AMERICA CBO II 12/15/04 1,040,800
------------
1,040,800
TOTAL INVESTMENT IN LIMITED PARTNERSHIP (COST $1,019,820)
------------
MUNICIPAL BONDS & NOTES - 3.33%
1,226,000 HUDSON COUNTY NJ IMPORT AUTHORITY FACILITIES LEASING RV FSA
INSURED 7.40 12/01/25 1,183,090
1,937,000 NEW YORK NY GO BONDS 6.10 08/01/01 1,917,630
640,000 WASHINGTON STATE GO BONDS STATE HOUSING TRUST FUND SERIES T 6.60 01/01/03 637,600
1,232,000 WESTERN MINNESOTA POWER AGENCY RV SERIES A AMBAC INSURED 6.33 01/01/02 1,221,220
4,959,540
TOTAL MUNICIPAL BONDS & NOTES (COST $5,079,355)
------------
U.S. GOVERNMENT AGENCY SECURITIES - 29.35%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.05%
1,587,640 FHLMC #786702+ 5.79 06/01/29 1,563,826
------------
1,563,826
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 18.19%
1,000,000 FNMA 6.00 05/15/08 949,760
4,506,000 FNMA 6.16 08/07/28 4,029,715
7,510,000 FNMA 6.25 05/15/29 6,815,325
1,199,069 FNMA #375168 7.13 06/01/04 1,200,868
1,510,923 FNMA #380581 6.17 08/01/08 1,423,422
1,810,220 FNMA #380268+ 6.20 05/01/05 1,745,103
1,124,640 FNMA #408118 6.50 01/01/28 1,072,266
1,415,776 FNMA #415414 6.50 02/01/28 1,349,844
2,261,190 FNMA #415714 6.00 04/01/28 2,096,530
851,165 FNMA #417648 6.00 02/01/13 814,454
$2,968,851 FNMA #421825 6.00% 06/01/28 $ 2,752,659
1,757,382 FNMA #486524 6.50 02/01/29 1,675,541
</TABLE>
82
<PAGE>
PORTFOLIO OF INVESTMENTS -- NOVEMBER 30, 1999 INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
STRATEGIC VALUE BOND PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL SECURITY DESCRIPTION INTEREST RATE MATURITY DATE VALUE
<C> <S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (continued)
1,193,248 FNMA #73919 6.80 01/01/04 1,182,655
27,108,142
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 10.11%
1,540,275 GNMA #345066 6.50 10/15/23 1,465,664
1,614,117 GNMA #346960 6.50 12/15/23 1,535,929
1,400,905 GNMA #354692 6.50 11/15/23 1,333,046
1,790,961 GNMA #361398 6.50 01/15/24 1,704,207
1,796,771 GNMA #366641 6.50 11/15/23 1,709,735
1,876,358 GNMA #473918+ 7.00 04/15/28 1,833,539
5,615,882 GNMA #780626 7.00 08/15/27 5,491,266
15,073,386
------------
43,745,354
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $45,755,803)
------------
U.S. TREASURY SECURITIES - 6.04%
U.S. TREASURY BONDS - 5.02%
7,281,000 U.S. TREASURY BONDS 6.75 08/15/26 7,485,960
------------
U.S. TREASURY NOTES - 1.02%
1,500,000 U.S. TREASURY NOTES 6.50 10/15/06 1,517,925
------------
9,003,885
TOTAL U.S. TREASURY SECURITIES (COST $9,439,841)
------------
SHORT-TERM INVESTMENTS - 0.56%
830,061 LEHMAN BROTHERS INCORPORATED POOLED REPURCHASE AGREEMENT -
102% COLLATERALIZED BY U.S. GOVERNMENT SECURITIES 5.66 12/01/99 830,061
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL SHORT-TERM INVESTMENTS (COST $830,061) $ 830,061
TOTAL INVESTMENTS IN SECURITIES (COST $153,928,587)* 98.78% $147,211,497
OTHER ASSETS AND LIABILITIES, NET 1.22 1,812,905
------ ------------
TOTAL NET ASSETS 100.00% $149,024,402
------ ------------
</TABLE>
<TABLE>
<C> <S>
+ THESE VARIABLE RATE SECURITIES ARE SUBJECT TO A DEMAND
FEATURE WHICH REDUCES THE REMAINING MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION
CONSISTS OF:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
GROSS UNREALIZED APPRECIATION $ 97,682
GROSS UNREALIZED DEPRECIATION (6,814,772)
------------
NET UNREALIZED DEPRECIATION $ (6,717,090)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
83
<PAGE>
INCOME PORTFOLIOS STATEMENT OF ASSETS AND LIABILITIES -- NOVEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED FIXED INCOME POSITIVE RETURN BOND STABLE INCOME STRATEGIC VALUE BOND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS (NOTE 2):
INVESTMENTS AT COST.................. $ 459,368,411 $ 298,044,631 $341,838,731 $ 153,928,587
NET UNREALIZED APPRECIATION
(DEPRECIATION)..................... (18,538,367) (1,012,385) (3,838,459) (6,717,090)
--------------------- ------------------- ------------ ------------------
TOTAL INVESTMENT AT VALUE.............. 440,830,044 297,032,246 338,000,272 147,211,497
--------------------- ------------------- ------------ ------------------
COLLATERAL FOR SECURITIES LOANED..... 53,628,310 19,278,760 12,268,546 12,781,015
RECEIVABLE FOR DIVIDENDS AND INTEREST
AND OTHER RECEIVABLES.............. 5,315,710 613,852 3,926,630 1,932,857
ORGANIZATION COST, NET OF
AMORTIZATION....................... 5,564 5,564 5,606 0
PREPAID EXPENSES AND OTHER ASSETS.... 0 0 0 915
--------------------- ------------------- ------------ ------------------
TOTAL ASSETS........................... 499,779,628 316,930,422 354,201,054 161,926,284
--------------------- ------------------- ------------ ------------------
LIABILITIES
PAYABLE FOR SECURITY LOANED.......... 53,628,310 19,278,760 12,268,546 12,781,015
PAYABLE TO INVESTMENT ADVISER AND
AFFILIATES......................... 121,235 80,785 132,484 114,321
PAYABLE TO OTHER RELATED PARTIES..... 2,118 2,370 2,700 0
ACCRUED EXPENSES AND OTHER
LIABILITIES........................ 6,898 10,611 16,575 6,546
--------------------- ------------------- ------------ ------------------
TOTAL LIABILITIES...................... 53,758,561 19,372,526 12,420,305 12,901,882
--------------------- ------------------- ------------ ------------------
TOTAL NET ASSETS....................... $ 446,021,067 $ 297,557,896 $341,780,749 $ 149,024,402
--------------------- ------------------- ------------ ------------------
</TABLE>
<TABLE>
<C> <S>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
84
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED) INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STABLE INCOME STRATEGIC VALUE BOND
MANAGED FIXED INCOME POSITIVE RETURN BOND (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INTEREST............................. $ 14,884,741 $ 7,771,336 $ 9,776,853 $ 7,943,064
SECURITIES LENDING................... 42,098 21,258 11,649 23,298
--------------------- ------------------- ------------- ------------------
TOTAL INVESTMENT INCOME................ 14,926,839 7,792,594 9,788,502 7,966,362
--------------------- ------------------- ------------- ------------------
EXPENSES
ADVISORY FEES........................ 815,437 543,322 537,017 580,618
ADMINISTRATION FEES.................. 96,373 64,212 71,543 53,358
CUSTODY.............................. 31,465 23,154 25,176 19,110
ACCOUNTING........................... 42,548 32,797 48,902 39,267
SHAREHOLDER REPORTS.................. 30 20 22 17
LEGAL................................ 485 223 260 140
AUDIT................................ 1,107 1,107 1,107 654
DIRECTORS' FEES...................... 660 558 576 383
PRICING.............................. 2,919 448 2,296 2,343
AMORTIZATION OF ORGANIZATION COSTS... 1,108 1,108 1,113 0
MISCELLANEOUS........................ 6,549 9,992 3,995 6,279
--------------------- ------------------- ------------- ------------------
TOTAL EXPENSES......................... 998,681 676,941 692,007 702,169
--------------------- ------------------- ------------- ------------------
LESS:
WAIVED FEES AND REIMBURSED
EXPENSES........................... (152,703) (101,748) (71,543) (53,358)
NET EXPENSES......................... 845,978 575,193 620,464 648,811
--------------------- ------------------- ------------- ------------------
NET INVESTMENT INCOME (LOSS)........... 14,080,861 7,217,401 9,168,038 7,317,551
--------------------- ------------------- ------------- ------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES........................... (2,138,406) (2,591,327) (234,834) (1,959,886)
--------------------- ------------------- ------------- ------------------
NET REALIZED GAIN (LOSS) FROM
INVESTMENTS.......................... (2,138,406) (2,591,327) (234,834) (1,959,886)
--------------------- ------------------- ------------- ------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
SECURITIES........................... (10,866,439) 966,880 (2,791,325) (4,431,836)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS........ (10,866,439) 966,880 (2,791,325) (4,431,836)
--------------------- ------------------- ------------- ------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS....................... (13,004,845) (1,624,447) (3,026,159) (6,391,722)
--------------------- ------------------- ------------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ 1,076,016 $ 5,592,954 $ 6,141,879 $ 925,829
--------------------- ------------------- ------------- ------------------
</TABLE>
<TABLE>
<C> <S>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
85
<PAGE>
INCOME PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED FIXED INCOME
---------------------------
(UNAUDITED)
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
NOV. 30, 1999 MAY 31, 1999
<S> <C> <C>
- ------------------------------------------------------
BEGINNING NET ASSETS..... $426,486,223 $335,663,187
------------ ------------
OPERATIONS:
NET INVESTMENT INCOME
(LOSS)............... 14,080,861 23,263,608
NET REALIZED GAIN
(LOSS) FROM
INVESTMENTS.......... (2,138,406) 1,034,541
NET CHANGE IN
UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS.......... (10,866,439) (12,930,678)
------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ 1,076,016 11,367,471
------------ ------------
TRANSACTIONS IN
INVESTORS' BENEFICIAL
INTERESTS
CONTRIBUTIONS.......... 49,271,615 131,264,423
WITHDRAWALS............ (30,812,787) (51,808,858)
NET INCREASE FROM
TRANSACTION IN
INVESTORS' BENEFICIAL
INTEREST............. 18,458,828 79,455,565
------------ ------------
NET INCREASE IN NET
ASSETS................. 19,534,844 90,823,036
------------ ------------
ENDING NET ASSETS........ $446,021,067 $426,486,223
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
86
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIVE RETURN BOND STABLE INCOME STRATEGIC VALUE BOND
--------------------------- --------------------------- ---------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
NOV. 30, 1999 MAY 31, 1999 NOV. 30, 1999 MAY 31, 1999 NOV. 30, 1999 MAY 31, 1999
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
BEGINNING NET ASSETS..... $284,892,223 $224,109,716 $309,264,759 $258,708,921 $242,584,514 $236,877,175
------------ ------------ ------------ ------------ ------------ ------------
OPERATIONS:
NET INVESTMENT INCOME
(LOSS)............... 7,217,401 12,948,302 9,168,038 15,540,651 7,317,551 14,567,818
NET REALIZED GAIN
(LOSS) FROM
INVESTMENTS.......... (2,591,327) 14,832,978 (234,834) 206,974 (1,959,886) 21,552
NET CHANGE IN
UNREALIZED
APPRECIATION
(DEPRECIATION) OF
INVESTMENTS.......... 966,880 (13,325,007) (2,791,325) (1,386,571) (4,431,836) (6,494,735)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ 5,592,954 14,456,273 6,141,879 14,361,054 925,829 8,094,635
------------ ------------ ------------ ------------ ------------ ------------
TRANSACTIONS IN
INVESTORS' BENEFICIAL
INTERESTS
CONTRIBUTIONS.......... 36,295,043 99,726,877 74,128,168 169,711,858 19,861,995 54,726,275
WITHDRAWALS............ (29,222,324) (53,400,643) (47,754,057) (133,517,074) (114,347,936) (57,113,571)
NET INCREASE FROM
TRANSACTION IN
INVESTORS' BENEFICIAL
INTEREST............. 7,072,719 46,326,234 26,374,111 36,194,784 (94,485,941) (2,387,296)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET
ASSETS................. 12,665,673 60,782,507 32,515,990 50,555,838 (93,560,112) 5,707,339
------------ ------------ ------------ ------------ ------------ ------------
ENDING NET ASSETS........ $297,557,896 $284,892,223 $341,780,749 $309,264,759 $149,024,402 $242,584,514
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
87
<PAGE>
INCOME PORTFOLIOS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO TO AVERAGE NET ASSETS (ANNUALIZED)
---------------------------------------------- PORTFOLIO
NET INVESTMENT NET GROSS TURNOVER
INCOME (LOSS) EXPENSES EXPENSES(1) RATE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
STABLE INCOME PORTFOLIO
JUNE 1, 1999 TO NOVEMBER 30, 1999(UNAUDITED)................ 5.56% 0.38% 0.42% 23.45%
JUNE 1, 1998 TO MAY 31, 1999................................ 5.39% 0.36% 0.41% 29.46%
JUNE 1, 1997(2) TO MAY 31, 1998............................. 5.96% 0.37% 0.43% 37.45%
MANAGED FIXED INCOME PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
JUNE 1, 1999 TO NOVEMBER 30, 1999(UNAUDITED)................ 6.36% 0.38% 0.45% 17.92%
JUNE 1, 1998 TO MAY 31, 1999................................ 6.23% 0.40% 0.45% 50.87%
JUNE 1, 1997(2) TO MAY 31, 1998............................. 6.53% 0.41% 0.46% 91.59%
POSITIVE RETURN BOND PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
JUNE 1, 1999 TO NOVEMBER 30, 1999(UNAUDITED)................ 4.89% 0.39% 0.46% 8.42%
JUNE 1, 1998 TO MAY 31, 1999................................ 5.20% 0.40% 0.45% 130.81%
JUNE 1, 1997(2) TO MAY 31, 1998............................. 5.74% 0.41% 0.47% 68.18%
STRATEGIC VALUE BOND PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
JUNE 1, 1999 TO NOVEMBER 30, 1999(UNAUDITED)................ 6.29% 0.56% 0.60% 19.30%
JUNE 1, 1998 TO MAY 31, 1999................................ 6.05% 0.56% 0.61% 48.43%
OCTOBER 1, 1997(2) TO MAY 31, 1998.......................... 6.06% 0.58% 0.62% 134.56%
</TABLE>
88
<PAGE>
FINANCIAL HIGHLIGHTS INCOME FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(1) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense in
the absence of any waivers and reimbursements, (Note 4)
(2) Commencement of operations.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
89
<PAGE>
INCOME PORTFOLIOS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Core Trust ("Core Trust") is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
Core Trust, created as the successor entity to the Norwest Core Trust,
currently has 14 separate investment portfolios. These financial statements
are related to the Managed Fixed Income, Positive Return Bond, Stable Income,
and Strategic Value Bond diversified portfolios (each a "Portfolio" and
collectively the "Portfolios").
Interests in the Portfolios 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
by the Core Trust in the preparation of its financial statements are in
conformity with generally accepted accounting principles ("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 at the close of each business day.
Securities which are traded on a national or foreign securities exchange or
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market are valued 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. Securities
denominated in foreign currencies are translated into U.S. dollars using the
closing rates of exchange in effect on the day of valuation. Securities for
which quotations are not readily available are valued at fair value as
determined by policies set by the Board of Trustees.
Debt securities maturing in 60 days or less are valued at amortized cost
pursuant to Rule 2a-7. 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 under provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
Dividend income is recognized on the ex-dividend date except for certain
dividends from foreign securities which are recorded as soon as the Portfolio
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.
REPURCHASE AGREEMENTS
Each Portfolio may invest in repurchase agreements and may participate in
pooled repurchase agreement transactions with other Portfolios advised by
Wells Fargo Bank, N.A. ("WFB"). 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
Portfolios' 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 held by
the Portfolios are collateralized by instruments such as U.S. Treasury or
federal agency obligations.
SECURITY LOANS
The Portfolios may loan securities in return for securities and cash
collateral which is invested in various short-term fixed income securities.
The Portfolios 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 Portfolio 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, if the collateral falls to 100%
it will be brought back to at least 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 Portfolio. WFB receives 40% of income on security lending
activities and
90
<PAGE>
NOTES TO FINANCIAL STATEMENTS INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
covers the expenses associated with securities lending activities. As of
November 30, 1999 the value of securities on loan and the value of the related
collateral was as follows:
<TABLE>
<CAPTION>
Securities Collateral
<S> <C> <C>
MANAGED FIXED INCOME PORTFOLIO $51,644,973 $ 53,268,310
POSITIVE RETURN BOND PORTFOLIO 18,922,078 19,278,760
STABLE INCOME BOND PORTFOLIO 11,792,494 12,268,546
STRATEGIC VALUE BOND PORTFOLIO 12,317,405 12,781,015
</TABLE>
FEDERAL INCOME TAXES
Each Portfolio is treated as a separate entity for federal income tax
purposes. The Portfolios 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, gain and loss of the
Portfolios are deemed to have been "passed through" to the interestholders in
proportion to their holdings of the Portoflios regardless of whether such
interest, dividends, or gain have been distribution by the Portfolios.
The Portfolios use the "aggregate method" (as descried in the applicable
regulation under the Internal Revenue Code) for allocation of capital gains
and losses to interestholders. On September 29, 1997 the predecessors to the
Stable Income Portfolio, Managed Fixed Income Portfolio, and Positive Return
Bond Portfolio, applied to the Internal Revenue Service for permission to use
the aggregate method for the allocation of capital gains and losses from the
sale of securities contributed by their respective interestholders on June 1,
1997. The requests were granted.
DEFERRED ORGANIZATION COSTS
Certain costs incurred in connection with the organization of the Portfolios
are being amortized on a straight-line basis over 60 months from the date each
Portfolio commenced operations.
3. ADVISORY FEES
The Investment Advisor of each Portfolio is Wells Fargo Bank ("WFB"). WFB has
retained the services of certain investment sub-advisors (Galliard Capital
Management, Inc., and Peregrine Capital Management, Inc.) for selected
Portfolios. The fees related to sub-advisory services are borne directly the
Advisor and do not increase the overall fees paid by the Portfolios to the
Advisor. Prior to November 8, 1999 the Managed Fixed Income, Positive Return
Bond, Stable Income, and Strategic Value Bond Portfolios were charged 0.35%,
0.35%, 0.30%, and 0.50%, respectively as a percentage of the average daily net
assets. These sub-advisors provided the same services to the predecessor
portfolios. The current investment advisory fees and the associated
sub-advisor and sub-advisory fees are as follows, with the fees expressed as a
percentage of the average daily net assets.
<TABLE>
<CAPTION>
Portfolio Advisory Fee Subadvisor Sub-Advisory Fee
<S> <C> <C> <C>
MANAGED FIXED INCOME
PORTFOLIO 0.50% GALLIARD CAPITAL MANAGEMENT 0-100 MILLION, 0.10%
100-200 MILLION, 0.08%
GREATER THAN 200 MILLION, 0.06%
POSITIVE RETURN BOND
PORTFOLIO 0.50% PEREGRINE CAPITAL MANAGEMENT 0-10 MILLION, 0.21%
10-25 MILLION, 0.15%
GREATER THAN 25 MILLION, 0.10%
STABLE INCOME PORTFOLIO 0.50% GALLIARD CAPITAL MANAGEMENT 0-1500 MILLION, 0.04%
1500-2000MILLION, 0.05%
2000-2500 MILLION, 0.045%
2500-3000 MILLION, 0.04%
GREATER THAN 3000 MILLION 0.03%
STRATEGIC VALUE BOND
PORTFOLIO 0.50% GALLIARD CAPITAL MANAGEMENT 0-100 MILLION, 0.13%
100-200 MILLION, 0.10%
GREATER THAN 200 MILLION, 0.08%
</TABLE>
91
<PAGE>
INCOME PORTFOLIOS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. OTHER FEES AND TRANSACTIONS WITH AFFILIATES
Currently there are no administration fees charged to the Portfolios at the
core level. Prior to November 5, 1999, Forum Administrative Services, LLC
("FAdS") was the administrator to the Core Trust and received a fee with
respect to each Portfolio at an annual rate of 0.05% of each Portfolio's
average daily net assets.
Norwest Bank Minnesota, N.A. ("Norwest") serves as the custodian for each
Portfolio and may appoint certain sub-custodians to custody those portfolios'
foreign securities and assets held in foreign countries. Norwest receives a
fee with respect to each Portfolio at an annual rate of 0.02% of each
Portfolio's average daily net assets. Prior to November 8, 1999, Norwest
received a fee with respect to each Portfolio at an annual rate of 0.02% for
the first $100 million of each Portfolio's average daily net assets, declining
to 0.01% of the average daily net assets of each Portfolio in excess of $200
million.
Certain officers of the Company are also officers of Stephens. As of November
30, 1999, Stephens owned 87 shares of the Managed Fixed Income Portfolio, 79
shares of the Positive Return Bond Portfolio, 88 share of the Stable Income
Portfolio, and 90 shares of the Strategic Value Bond Portfolio.
Forum Accounting Services, LLC provides portfolio accounting and
interestholder recordkeeping services to each Portfolio.
5. WAIVED FEES AND REIMBURSED EXPENSES
For the six months ended November 30, 1999 fees waived by the Portoflios'
service providers were as follows:
<TABLE>
<CAPTION>
Fees Waived by FAdS Fees Waived by WFB
<S> <C> <C>
MANAGED FIXED INCOME PORTFOLIO $96,373 $56,330
POSITIVE RETURN BOND PORTFOLIO 64,212 37,536
STABLE INCOME PORTFOLIO 71,543 0
STRATEGIC VALUE BOND PORTFOLIO 53,358 0
</TABLE>
6. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) and U.S.
Government Securities, for each Portfolio for the six month period ended
November 30, 1999, were as follows:
<TABLE>
<CAPTION>
AGGREGATE PURCHASES AND SALES
Portfolio Purchases at Cost Sales Proceeds
<S> <C> <C>
MANAGED FIXED INCOME PORTFOLIO $115,278,229 $77,553,471
POSITIVE RETURN BOND PORTFOLIO 23,178,958 31,705,301
STABLE INCOME PORTFOLIO 127,727,336 79,445,243
STRATEGIC VALUE BOND PORTFOLIO 48,522,267 40,588,453
</TABLE>
7. FUND CONSOLIDATION AND MERGER
Concurrent with the establishment of the Trust, the Board of Directors of the
Stagecoach Family of Funds and the Board of Trustees of the Norwest Advantage
Funds approved a consolidation agreement providing for the acquisition of the
assets and assumption of liabilities of certain Stagecoach and Norwest
Advantage Funds into the Wells Fargo Funds Trust. Effective on the close of
business November 5, 1999, the Stagecoach and/or Norwest Advantage Funds were
consolidated into the respective Wells Fargo Funds Trust Funds, some of which
invest in one or more portfolios of Core Trust, through a tax-free exchange of
shares.
92
<PAGE>
LIST OF ABBREVIATIONS INCOME FUNDS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
<TABLE>
<S> <C> <C>
ABAG -- ASSOCIATION OF BAY AREA GOVERNMENTS
ADR -- AMERICAN DEPOSITORY 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
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
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GO -- GENERAL OBLIGATION
HFA -- HOUSING FINANCE AUTHORITY
HFFA -- HEALTH FACILITIES FINANCING AUTHORITY
IDA -- INDUSTRIAL DEVELOPMENT AUTHORITY
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
SFMR -- SINGLE FAMILY MORTGAGE REVENUE
TBA -- TO BE ANNOUNCED
TRAN -- TAX REVENUE ANTICIPATION NOTES
USD -- UNIFIED SCHOOL DISTRICT
V/R -- VARIABLE RATE
WEBS -- WORLD EQUITY BENCHMARK SHARES
</TABLE>
93
<PAGE>
Wells Fargo Bank, N.A. and certain of its affiliates provide investment
advisory, sub-advisory and/or shareholder services for the Wells Fargo
Funds. The Funds are sponsored and distributed by STEPHENS INC., Member
NYSE/ SIPC. Wells Fargo Bank, N.A. and its affiliates are not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the Wells Fargo 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. Read the prospectus carefully before you invest or send
money.
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P.O. Box 8266
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