ITEM 1.
|
REPORT TO STOCKHOLDERS
|
Wells Fargo Advantage
Income Opportunities Fund
Annual Report
April 30, 2013
This closed-end fund
is no longer offered as an initial public offering and is only offered through broker/dealers on the secondary market.
A closed-end fund is not required to buy its shares back from investors upon
request.
Reduce clutter. Save
trees.
Sign up for electronic delivery of prospectuses and shareholder reports at
wellsfargo.com/advantagedelivery
Contents
The views expressed and any
forward-looking statements are as of April 30, 2013, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Funds Management, LLC. Discussions of individual securities, or the markets generally, or any Wells Fargo Advantage
Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements; the views expressed are subject to change at any time in response to changing circumstances
in the market. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.
NOT FDIC INSURED
¡
NO BANK GUARANTEE
¡
MAY LOSE VALUE
|
|
|
|
|
2
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
L
etter to shareholders (unaudited)
|
Karla M. Rabusch
President
Wells Fargo Advantage Funds
During the period, high-yield corporate bonds performed exceedingly well
compared with U.S. Treasuries, as continued monetary accommodation from the Federal Reserve (Fed) strengthened the demand for securities with higher yields.
Dear Valued Shareholder:
We are pleased to provide you with this annual report for the
Wells Fargo Advantage Income Opportunities Fund
for the 12-month period ended
April 30, 2013. During the period, high-yield corporate bonds performed exceedingly well compared with U.S. Treasuries, as continued monetary accommodation from the Federal Reserve (Fed) strengthened the demand for securities with higher yields.
Sovereign debt concerns in Europe routinely rattled the global credit markets in 2012, counteracting some burgeoning trends of economic improvement in the U.S. Nonetheless, these periods of uncertainty strengthened the resolve of the Fed to keep
U.S. monetary policy highly accommodative, which had a positive effect on the valuations of U.S. high-yield bonds. By the beginning of 2013, U.S. Treasury yields began to rise as economic optimism strengthened, leading to declines in
investment-grade bond prices. However, high-yield securities broadly continued to generate positive returns despite the rising yield environment, as demand remained strong for higher-yielding securities.
Global credit markets were roiled by the European debt crisis in 2012.
The first months of 2012 saw strengthening investor confidence in the U.S. economy despite indications of a recession in Europe. The improving
conditions in the U.S. led to greater confidence in the U.S. credit markets, which began to show some resistance to the credit problems of Europe. These leading events set the tone for the 12-month period that began in May 2012. During those early
months of 2012, the lowest-rated credit tiers of the U.S. domestic fixed-income markets generally performed the best, while the highest-quality credit tiers and U.S. Treasuries generally declined in value, as their yields began to shift higher on
expectations for a strengthening economy.
Unfortunately, the trends of improving credit confidence would not last. As Greece neared default on its sovereign debt
again in May 2012, politicians began to hint at the possibility of Greece exiting the euro. This scenario escalated to a debate over the viability of the euro, amplifying the crisis to an unprecedented level of worst-case consideration.
Consequently, global investors once again rallied to the U.S. Treasury market, driving long-term Treasury yields to some of their lowest levels on modern record.
High-yield corporate bonds rebounded convincingly in June 2012 and rallied
throughout the remainder of the period.
Throughout May 2012 and into the opening weeks of June 2012, it appeared that investors would continue to
prefer higher-quality over riskier asset classes as long as the problems in Europe persisted. U.S. bond markets began to improve in June 2012, benefiting from consistent policy commitment by the Fed to maintain highly accommodative monetary
conditions in the U.S. Meanwhile, the crisis in Europe continued to deepen into July 2012, prompting the International Monetary Fund to warn European policymakers of a significant risk of deflation. In the U.S., the second half of June 2012 and the
entire month of July 2012 saw strong performance in the high-yield and longer-maturity segments of the fixed-income markets, as U.S. credit markets tried to remain isolated from the crisis in Europe.
European markets finally followed suit in August 2012 and into September and October 2012, as the European Central Bank (ECB) calmed market fears by announcing a
program of unlimited bond-buying support and declaring to do
|
|
|
|
|
|
|
Letter to shareholders (unaudited)
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
3
|
|
whatever it takes to preserve the euro. Perhaps the most convincing statement of all for investors was Mario Draghi, the president of the ECB, declaring that the euro is
irreversible. Global credit markets responded strongly through the final months of 2012, with the lowest-rated securities performing best, adding additional pricing strength to U.S. high-yield securities.
In the opening months of 2013, U.S. Treasury yields began to once again rise higher on the optimistic expectations for a strengthening U.S. economy. However, high-yield
securities continued to rally during this time, as investors continued to seek out higher-yielding, riskier securities. On the whole, the trends from 2012 continued for high yield through the first four months of 2013, with continued rallies in the
lower-credit tiers and relatively strong performance across the high-yield asset class.
The market volatility of the past 12 months has often left many investors
questioning their resolveand their investments. Yet, it is precisely at such times that the market may present opportunitiesas well as challengesfor prudent investors. For many investors, simply building and maintaining a
well-diversified
1
investment plan focused on clear financial objectives is the best long-term strategy. Thank you for choosing to invest with
Wells Fargo Advantage Funds
. We appreciate your
confidence in us and remain committed to helping you meet your financial needs. For current information about your fund investments, contact your investment professional, visit our website at
wellsfargo
advantagefunds
.com
, or
call us directly at
1-800-222-8222
. We are available 24 hours a day, 7 days a week.
Sincerely,
Karla M. Rabusch
President
Wells Fargo Advantage Funds
On the whole, the trends from 2012 continued for high yield through the first four months of 2013, with continued rallies in the lower-credit tiers and relatively strong performance across the high-yield
asset class.
1.
|
Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.
|
|
|
|
|
|
4
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Performance highlights (unaudited)
|
Investment objective
The Fund seeks a high level of current income. Capital appreciation is a secondary objective.
Adviser
Wells Fargo Funds Management, LLC
Subadviser
Wells Capital Management Incorporated
Portfolio managers
Niklas Nordenfelt, CFA
Phillip Susser
Average annual total returns
1
(%) as of April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 year
|
|
|
5 year
|
|
|
10 year
|
|
Based on market value
|
|
|
8.90
|
|
|
|
9.87
|
|
|
|
8.12
|
|
Based on net asset value (NAV) per share
|
|
|
15.31
|
|
|
|
8.66
|
|
|
|
8.20
|
|
Figures quoted represent past performance, which is no guarantee of future results
and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sale of fund shares.
Investment return and principal value of
an investment will fluctuate so that an investors shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends
and capital gains. Performance figures of the Fund do not reflect brokerage commissions. If brokerage commissions had been reflected, performance would have been lower. To obtain performance information current to the most recent month-end, please
call 1-800-222-8222.
The Adviser has committed through February 25, 2014, to waive fees and/or reimburse expenses to the extent necessary to
limit the Funds borrowing expenses to an amount that is 0.05% lower than what the borrowing expenses would have been if the Fund had not redeemed its Auction Market Preferred Shares. The Funds gross and net expense ratios for the year
ended April 30, 2013, were 1.29% and 1.05%, respectively, which includes 0.08% of interest expense. Without this waiver and/or reimbursement, the Funds returns would have been lower.
|
|
|
Comparison of NAV vs. market value
2
|
|
|
The Fund is leveraged through a secured debt borrowing facility and also may incur leverage by issuing preferred shares in
the future. The use of leverage results in certain risks including, among others, the likelihood of greater volatility of net asset value and the market price of common shares. Derivatives involve additional risks including interest rate risk,
credit risk, the risk of improper valuation, and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track. Bond values fluctuate in response to the financial condition of individual issuers, general
market and economic conditions, and changes in interest rates. In general, when interest rates rise, bond values fall and investors may lose principal value. High-yield securities have a greater risk of default and tend to be more volatile than
higher-rated debt securities.
1.
|
Total returns based on market value are calculated assuming a purchase of common stock on the first day and a sale on the last day of the period reported. Total returns based on NAV are calculated based on the NAV at
the beginning of the period and end of period. Dividends and distributions, if any, are assumed for the purposes of these calculations to be reinvested at prices obtained under the Funds Automatic Dividend Reinvestment Plan. Total returns do
not reflect brokerage commissions. If these brokerage commissions were included, the returns would be lower.
|
2.
|
This chart does not reflect any brokerage commissions. Dividends and distributions have the effect of reducing the Funds NAV.
|
|
|
|
|
|
|
|
Performance highlights (unaudited)
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
5
|
|
MANAGERS DISCUSSION
The Funds return was 8.90% during the 12 months ended April 30, 2013, based on market value. During the same period, the Funds return
based on NAV was 15.31%.
Overview
Performance across the high-yield market was strong and relatively consistent throughout much of the year, with the major high-yield indexes producing positive returns
in every month except May 2012. This was driven by gradual improvement in the U.S. economy with slowly falling unemployment and a rebounding housing market. Relative containment of sovereign debt-driven market fears in Europe also helped strengthen
confidence in U.S. credit markets despite a continued decline in southern Europes economy. Without the fears of a disruptive European debt crisis, cascading bank failures, and sovereign debt defaults, the U.S. high-yield market was able to
focus on the improving U.S. economy benefiting from the steadfast backdrop of Federal Reserve-induced low interest rates.
|
|
|
Ten largest holdings
3
(%) as of April 30, 2013
|
Texas Competitive Electric Holdings LLC, 3.73%, 10-10-2014
|
|
3.57
|
Sprint Capital Corporation, 6.88%, 11-15-2028
|
|
2.32
|
Jabil Circuit Incorporated, 8.25%, 3-15-2018
|
|
2.27
|
Nielsen Finance LLC, 7.75%, 10-15-2018
|
|
1.80
|
Dupont Fabros Technology Incorporated, 8.50%, 12-15-2017
|
|
1.72
|
First Data Corporation, 11.25%, 3-31-2016
|
|
1.70
|
CCM Merger Incorporated, 9.13%, 5-1-2019
|
|
1.58
|
Rockies Express Pipeline LLC, 6.88%, 4-15-2040
|
|
1.58
|
Local TV Finance LLC, 9.25%, 6-15-2015
|
|
1.38
|
Sabine Pass LNG LP, 6.50%, 11-1-2020
|
|
1.37
|
|
Credit quality
5
as of April 30, 2013
|
|
|
|
Effective maturity distribution
6
as of April 30, 2013
|
|
|
Contributors to performance
The Fund benefited from accommodative monetary policy, which helped push bond prices higher and yields lower. Individual credit selection in
certain securities helped performance during the period.
Detractors
from performance
The Funds holdings were positioned more conservatively than the broader high-yield market, as measured by the Barclays U.S.
Corporate High Yield Index
4
, in recognition of risks associated with challenging global and domestic economic conditions. This positioning detracted from relative performance as riskier bonds in
the lower-rated credit tiers generally outperformed and certain individual credits detracted. The Funds holdings were focused on issuers with more stable revenue profiles in industries less exposed to cyclical volatility.
Management outlook
The portfolio strategy continued to use fundamental credit assessments, with a bottom-up process of security selection with specific attention paid to downside price
protection and the avoidance of uncompensated risk. Macroeconomic forces have been a driving influence of high-yield bond performance, with the market rising in a near-linear fashion. Yields of high-yield securities (like most fixed-income assets)
are generally in record-low territory from the continued rally. This rise in prices and decline in high-yield spreads has reduced the potential compensation for assuming more risk.
With this backdrop, the portfolio continued to maintain a lower-volatility profile. Our individual holdings are, on average, higher-priced and lower-yielding, reflecting
the preference for less risky paper. With absolute yields at these levels, we do not feel it is prudent to stretch for yield as the Funds investment philosophy has never tried to time market liquidity and extraordinary central bank policies.
3.
|
The ten largest holdings are calculated based on the value of the securities divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified.
|
4.
|
The Barclays U.S. Corporate High Yield Index is an unmanaged, U.S. dollar-denominated, nonconvertible, non-investment-grade debt index. The Index consists of domestic and corporate bonds rated Ba and below with a
minimum outstanding amount of $150 million. You cannot invest directly in an index.
|
5.
|
The ratings indicated are from Standard & Poors, Moodys Investors Service, and/or Fitch Ratings Ltd. Credit Quality Ratings: Credit quality ratings apply to underlying holdings of the Fund and not
the Fund itself. Standard & Poors rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). Ratings from A to CCC may be modified by the addition of a plus (+) or minus () sign to show relative
standing within the rating categories. Standard & Poors rates the creditworthiness of short-term notes from SP-1 (highest) to SP-3 (lowest). Moodys rates the creditworthiness of bonds, ranging from Aaa (highest) to C (lowest).
Ratings Aa to B may be modified by the addition of a number 1 (highest) to 3 (lowest) to show relative standing within the ratings categories. Moodys rates the creditworthiness of short-term U.S. tax-exempt municipal securities from
MIG 1/VMIG 1 (highest) to SG (lowest). Fitch rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). If a security was rated by all three rating agencies, the middle rating was utilized. If rated by two of three rating
agencies, the lower rating was utilized and if rated by one of the agencies that rating was utilized. Credit quality is subject to change and is calculated based on the total investments of the Fund.
|
6.
|
Percentages are subject to change and are calculated based on the total long-term investments of the Fund.
|
|
|
|
|
|
6
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Performance highlights (unaudited)
|
We view the current backdrop as highly supportive of high yield. While credit fundamentals have now begun to look less
compelling as firms continue to take on more debt and earnings growth seems to have plateaued, we believe that most corporate balance sheets are still relatively healthy, particularly given the cheap access to capital financing. Additional debt has
been cheap for issuers, so interest coverage levels are higher than average.
A muddle-along economy is a solid backdrop for high yield. The economy is strong enough
for companies to maintain their cash flow and pay back their debt, but it is weak enough (especially as it concerns employment) to encourage ultra-loose monetary policy. Despite absolute yields persisting at record lowstherefore, giving us
cause for concernreasonable spreads relative to near-term default risk make high yield a reasonable, fixed-income alternative given that many other fixed-income assets are also at or near all-time low yields.
On the other hand, there are several potential long-term imbalances in the world that could reignite systemic risks and lead to a sell-off in high yield and various
other asset classes. These include the high government debt and deficit levels in most of the developed world, a potential real estate and municipal debt bubble in China, and persistent trade and current account deficits/surpluses among various
countries throughout the world.
In addition, quantitative easing by many of the worlds central banks has pushed all fixed-income (including high-yield) yields
lower, and that, by definition, cannot last forever. These fiscal imbalances have existed for many years and may not manifest for many more years. However, if and when they do, the current period of low volatility may be short lived. Ultimately,
though, high yields relative performance will be driven by corporate fundamentals and defaults, and we believe the best way to protect the Fund from these periodic bouts of systemic fears and rebalancing will be our continued focus on a
bottom-up, fundamental approach that minimizes downside risk.
|
|
|
|
|
|
|
Portfolio of investmentsApril 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks: 0.15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary: 0.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotels, Restaurants & Leisure: 0.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trump Entertainment Resorts Incorporated (i)
|
|
|
|
|
|
|
|
|
|
|
2,149
|
|
|
$
|
2,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunication Services: 0.15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Telecommunication Services: 0.15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairpoint Communications Incorporated
|
|
|
|
|
|
|
|
|
|
|
134,376
|
|
|
|
1,093,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks (Cost
$3,109,765)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,095,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
|
|
Corporate Bonds and Notes: 111.29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary: 25.84%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Components: 2.45%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allison Transmission Incorporated 144A
|
|
|
7.13
|
%
|
|
|
5-15-2019
|
|
|
$
|
6,375,000
|
|
|
|
6,924,844
|
|
Cooper Tire & Rubber Company
|
|
|
7.63
|
|
|
|
3-15-2027
|
|
|
|
4,455,000
|
|
|
|
4,828,106
|
|
Cooper Tire & Rubber Company
|
|
|
8.00
|
|
|
|
12-15-2019
|
|
|
|
150,000
|
|
|
|
173,062
|
|
Goodyear Tire & Rubber Company
|
|
|
7.00
|
|
|
|
5-15-2022
|
|
|
|
700,000
|
|
|
|
756,875
|
|
Penske Automotive Group Incorporated 144A
|
|
|
5.75
|
|
|
|
10-1-2022
|
|
|
|
1,965,000
|
|
|
|
2,080,444
|
|
United Rentals North America Incorporated
|
|
|
5.75
|
|
|
|
7-15-2018
|
|
|
|
2,675,000
|
|
|
|
2,915,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,679,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Consumer Services: 2.45%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceridian Corporation 144A
|
|
|
11.00
|
|
|
|
3-15-2021
|
|
|
|
75,000
|
|
|
|
84,750
|
|
Service Corporation International
|
|
|
6.75
|
|
|
|
4-1-2016
|
|
|
|
1,250,000
|
|
|
|
1,396,875
|
|
Service Corporation International
|
|
|
7.00
|
|
|
|
6-15-2017
|
|
|
|
1,250,000
|
|
|
|
1,437,500
|
|
Service Corporation International
|
|
|
7.00
|
|
|
|
5-15-2019
|
|
|
|
1,125,000
|
|
|
|
1,230,469
|
|
Service Corporation International
|
|
|
7.50
|
|
|
|
4-1-2027
|
|
|
|
7,078,000
|
|
|
|
7,980,445
|
|
Service Corporation International
|
|
|
7.63
|
|
|
|
10-1-2018
|
|
|
|
1,100,000
|
|
|
|
1,307,625
|
|
Service Corporation International
|
|
|
8.00
|
|
|
|
11-15-2021
|
|
|
|
885,000
|
|
|
|
1,084,125
|
|
Sothebys 144A
|
|
|
5.25
|
|
|
|
10-1-2022
|
|
|
|
3,075,000
|
|
|
|
3,148,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,669,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotels, Restaurants & Leisure: 8.20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ameristar Casinos Incorporated
|
|
|
7.50
|
|
|
|
4-15-2021
|
|
|
|
5,502,000
|
|
|
|
6,134,730
|
|
Burger King Corporation
|
|
|
9.88
|
|
|
|
10-15-2018
|
|
|
|
1,600,000
|
|
|
|
1,822,000
|
|
CCM Merger Incorporated 144A
|
|
|
9.13
|
|
|
|
5-1-2019
|
|
|
|
10,830,000
|
|
|
|
11,398,575
|
|
CityCenter Holdings LLC
|
|
|
7.63
|
|
|
|
1-15-2016
|
|
|
|
2,050,000
|
|
|
|
2,201,187
|
|
CityCenter Holdings LLC ¥
|
|
|
10.75
|
|
|
|
1-15-2017
|
|
|
|
3,796,305
|
|
|
|
4,199,662
|
|
DineEquity Incorporated
|
|
|
9.50
|
|
|
|
10-30-2018
|
|
|
|
8,475,000
|
|
|
|
9,661,500
|
|
Greektown Superholdings Incorporated Series A
|
|
|
13.00
|
|
|
|
7-1-2015
|
|
|
|
6,812,000
|
|
|
|
7,314,385
|
|
Greektown Superholdings Incorporated Series B
|
|
|
13.00
|
|
|
|
7-1-2015
|
|
|
|
1,475,000
|
|
|
|
1,583,781
|
|
NAI Entertainment Holdings LLC 144A
|
|
|
8.25
|
|
|
|
12-15-2017
|
|
|
|
4,878,000
|
|
|
|
5,292,630
|
|
Penn National Gaming Incorporated
|
|
|
8.75
|
|
|
|
8-15-2019
|
|
|
|
1,499,000
|
|
|
|
1,693,870
|
|
Ruby Tuesday Incorporated 144A
|
|
|
7.63
|
|
|
|
5-15-2020
|
|
|
|
3,405,000
|
|
|
|
3,456,075
|
|
Scientific Games Corporation
|
|
|
9.25
|
|
|
|
6-15-2019
|
|
|
|
1,130,000
|
|
|
|
1,245,825
|
|
Speedway Motorsports Incorporated
|
|
|
6.75
|
|
|
|
2-1-2019
|
|
|
|
625,000
|
|
|
|
671,094
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
8
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Portfolio of investmentsApril 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotels, Restaurants & Leisure
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Speedway Motorsports Incorporated 144A
|
|
|
6.75
|
%
|
|
|
2-1-2019
|
|
|
$
|
355,000
|
|
|
$
|
381,181
|
|
Speedway Motorsports Incorporated
|
|
|
8.75
|
|
|
|
6-1-2016
|
|
|
|
2,075,000
|
|
|
|
2,176,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,232,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Household Durables: 0.18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Greetings Corporation
|
|
|
7.38
|
|
|
|
12-1-2021
|
|
|
|
950,000
|
|
|
|
961,875
|
|
Tempur-Pedic International Incorporated 144A
|
|
|
6.88
|
|
|
|
12-15-2020
|
|
|
|
325,000
|
|
|
|
354,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media: 10.39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cablevision Systems Corporation
|
|
|
8.63
|
|
|
|
9-15-2017
|
|
|
|
2,975,000
|
|
|
|
3,532,812
|
|
CCO Holdings LLC %%
|
|
|
5.75
|
|
|
|
1-15-2024
|
|
|
|
290,000
|
|
|
|
301,962
|
|
CCO Holdings LLC
|
|
|
6.50
|
|
|
|
4-30-2021
|
|
|
|
5,275,000
|
|
|
|
5,723,375
|
|
CCO Holdings LLC
|
|
|
7.00
|
|
|
|
1-15-2019
|
|
|
|
2,225,000
|
|
|
|
2,416,906
|
|
CCO Holdings LLC
|
|
|
7.88
|
|
|
|
4-30-2018
|
|
|
|
150,000
|
|
|
|
159,525
|
|
CCO Holdings LLC
|
|
|
8.13
|
|
|
|
4-30-2020
|
|
|
|
746,000
|
|
|
|
842,980
|
|
Cinemark USA Incorporated 144A
|
|
|
5.13
|
|
|
|
12-15-2022
|
|
|
|
950,000
|
|
|
|
983,250
|
|
Cinemark USA Incorporated
|
|
|
7.38
|
|
|
|
6-15-2021
|
|
|
|
1,525,000
|
|
|
|
1,723,250
|
|
Cinemark USA Incorporated
|
|
|
8.63
|
|
|
|
6-15-2019
|
|
|
|
4,765,000
|
|
|
|
5,265,325
|
|
CSC Holdings LLC
|
|
|
7.63
|
|
|
|
7-15-2018
|
|
|
|
1,145,000
|
|
|
|
1,345,375
|
|
CSC Holdings LLC
|
|
|
7.88
|
|
|
|
2-15-2018
|
|
|
|
1,650,000
|
|
|
|
1,938,750
|
|
CSC Holdings LLC
|
|
|
8.50
|
|
|
|
4-15-2014
|
|
|
|
200,000
|
|
|
|
212,000
|
|
DISH DBS Corporation 144A
|
|
|
4.25
|
|
|
|
4-1-2018
|
|
|
|
1,150,000
|
|
|
|
1,129,875
|
|
DISH DBS Corporation 144A
|
|
|
5.13
|
|
|
|
5-1-2020
|
|
|
|
575,000
|
|
|
|
569,250
|
|
DISH DBS Corporation
|
|
|
7.88
|
|
|
|
9-1-2019
|
|
|
|
2,260,000
|
|
|
|
2,576,400
|
|
EchoStar DBS Corporation
|
|
|
7.13
|
|
|
|
2-1-2016
|
|
|
|
1,160,000
|
|
|
|
1,281,800
|
|
EchoStar DBS Corporation
|
|
|
7.75
|
|
|
|
5-31-2015
|
|
|
|
650,000
|
|
|
|
717,437
|
|
Gray Television Incorporated
|
|
|
7.50
|
|
|
|
10-1-2020
|
|
|
|
5,830,000
|
|
|
|
6,325,550
|
|
Lamar Media Corporation
|
|
|
5.88
|
|
|
|
2-1-2022
|
|
|
|
1,785,000
|
|
|
|
1,952,344
|
|
Lamar Media Corporation
|
|
|
7.88
|
|
|
|
4-15-2018
|
|
|
|
4,090,000
|
|
|
|
4,468,325
|
|
Lamar Media Corporation Series C
|
|
|
9.75
|
|
|
|
4-1-2014
|
|
|
|
925,000
|
|
|
|
994,375
|
|
LIN Television Corporation
|
|
|
6.38
|
|
|
|
1-15-2021
|
|
|
|
500,000
|
|
|
|
500,000
|
|
LIN Television Corporation
|
|
|
8.38
|
|
|
|
4-15-2018
|
|
|
|
3,475,000
|
|
|
|
3,770,375
|
|
Local TV Finance LLC 144A ¥
|
|
|
9.25
|
|
|
|
6-15-2015
|
|
|
|
9,943,218
|
|
|
|
9,968,076
|
|
Lynx I Corporation 144A
|
|
|
5.38
|
|
|
|
4-15-2021
|
|
|
|
605,000
|
|
|
|
645,837
|
|
Lynx II Corporation 144A
|
|
|
6.38
|
|
|
|
4-15-2023
|
|
|
|
605,000
|
|
|
|
654,912
|
|
National CineMedia LLC
|
|
|
6.00
|
|
|
|
4-15-2022
|
|
|
|
3,635,000
|
|
|
|
3,962,150
|
|
National CineMedia LLC
|
|
|
7.88
|
|
|
|
7-15-2021
|
|
|
|
1,150,000
|
|
|
|
1,296,625
|
|
Nexstar Broadcasting Group Incorporated 144A
|
|
|
6.88
|
|
|
|
11-15-2020
|
|
|
|
2,285,000
|
|
|
|
2,433,525
|
|
Regal Cinemas Corporation
|
|
|
8.63
|
|
|
|
7-15-2019
|
|
|
|
6,665,000
|
|
|
|
7,398,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,090,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Retail: 2.17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABC Supply Company Incorporated 144A
|
|
|
5.63
|
|
|
|
4-15-2021
|
|
|
|
730,000
|
|
|
|
758,287
|
|
CST Brands Incorporated 144A%%
|
|
|
5.00
|
|
|
|
5-1-2023
|
|
|
|
150,000
|
|
|
|
153,937
|
|
Gap Incorporated
|
|
|
5.95
|
|
|
|
4-12-2021
|
|
|
|
1,175,000
|
|
|
|
1,384,391
|
|
Limited Brands Incorporated
|
|
|
6.63
|
|
|
|
4-1-2021
|
|
|
|
925,000
|
|
|
|
1,062,594
|
|
RadioShack Corporation
|
|
|
6.75
|
|
|
|
5-15-2019
|
|
|
|
4,278,000
|
|
|
|
3,203,152
|
|
Rent-A-Center Incorporated 144A%%
|
|
|
4.75
|
|
|
|
5-1-2021
|
|
|
|
340,000
|
|
|
|
342,550
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
Portfolio of investmentsApril 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Retail
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent-A-Center Incorporated
|
|
|
6.63
|
%
|
|
|
11-15-2020
|
|
|
$
|
2,765,000
|
|
|
$
|
3,027,675
|
|
Toys R Us Property Company I LLC
|
|
|
10.75
|
|
|
|
7-15-2017
|
|
|
|
1,341,000
|
|
|
|
1,433,194
|
|
Toys R Us Property Company II LLC
|
|
|
8.50
|
|
|
|
12-1-2017
|
|
|
|
4,025,000
|
|
|
|
4,321,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,687,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples: 1.34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food Products: 1.34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B&G Foods Incorporated
|
|
|
7.63
|
|
|
|
1-15-2018
|
|
|
|
2,663,000
|
|
|
|
2,856,068
|
|
Dole Food Company Incorporated
|
|
|
13.88
|
|
|
|
3-15-2014
|
|
|
|
3,075,000
|
|
|
|
3,288,313
|
|
Hawk Acquisition Incorporated 144A
|
|
|
4.25
|
|
|
|
10-15-2020
|
|
|
|
3,505,000
|
|
|
|
3,548,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,693,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy: 20.98%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Equipment & Services: 6.18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cleaver Brooks Incorporated 144A
|
|
|
8.75
|
|
|
|
12-15-2019
|
|
|
|
475,000
|
|
|
|
523,688
|
|
Dresser-Rand Group Incorporated
|
|
|
6.50
|
|
|
|
5-1-2021
|
|
|
|
1,825,000
|
|
|
|
1,980,125
|
|
Era Group Incorporated 144A
|
|
|
7.75
|
|
|
|
12-15-2022
|
|
|
|
2,420,000
|
|
|
|
2,510,750
|
|
Gulfmark Offshore Incorporated
|
|
|
6.38
|
|
|
|
3-15-2022
|
|
|
|
7,078,000
|
|
|
|
7,396,510
|
|
Hornbeck Offshore Services Incorporated 144A
|
|
|
5.00
|
|
|
|
3-1-2021
|
|
|
|
5,050,000
|
|
|
|
5,075,250
|
|
Hornbeck Offshore Services Incorporated
|
|
|
5.88
|
|
|
|
4-1-2020
|
|
|
|
840,000
|
|
|
|
883,050
|
|
NGPL PipeCo LLC 144A
|
|
|
7.12
|
|
|
|
12-15-2017
|
|
|
|
625,000
|
|
|
|
650,781
|
|
NGPL PipeCo LLC 144A
|
|
|
7.77
|
|
|
|
12-15-2037
|
|
|
|
6,210,000
|
|
|
|
6,225,525
|
|
NGPL PipeCo LLC 144A
|
|
|
9.63
|
|
|
|
6-1-2019
|
|
|
|
4,195,000
|
|
|
|
4,614,500
|
|
Northern Tier Energy LLC 144A
|
|
|
7.13
|
|
|
|
11-15-2020
|
|
|
|
2,190,000
|
|
|
|
2,332,350
|
|
Oil States International Incorporated 144A
|
|
|
5.13
|
|
|
|
1-15-2023
|
|
|
|
1,228,000
|
|
|
|
1,261,770
|
|
Oil States International Incorporated
|
|
|
6.50
|
|
|
|
6-1-2019
|
|
|
|
4,244,000
|
|
|
|
4,562,300
|
|
PHI Incorporated
|
|
|
8.63
|
|
|
|
10-15-2018
|
|
|
|
5,825,000
|
|
|
|
6,371,094
|
|
Pride International Incorporated
|
|
|
8.50
|
|
|
|
6-15-2019
|
|
|
|
210,000
|
|
|
|
279,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,666,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil, Gas & Consumable Fuels: 14.80%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CVR Refining LLC 144A
|
|
|
6.50
|
|
|
|
11-1-2022
|
|
|
|
2,850,000
|
|
|
|
2,935,500
|
|
Denbury Resources Incorporated
|
|
|
4.63
|
|
|
|
7-15-2023
|
|
|
|
675,000
|
|
|
|
681,750
|
|
Denbury Resources Incorporated
|
|
|
6.38
|
|
|
|
8-15-2021
|
|
|
|
700,000
|
|
|
|
780,500
|
|
Denbury Resources Incorporated
|
|
|
8.25
|
|
|
|
2-15-2020
|
|
|
|
5,965,000
|
|
|
|
6,770,275
|
|
El Paso Corporation
|
|
|
6.50
|
|
|
|
9-15-2020
|
|
|
|
1,155,000
|
|
|
|
1,304,346
|
|
El Paso Corporation
|
|
|
7.00
|
|
|
|
6-15-2017
|
|
|
|
3,183,000
|
|
|
|
3,662,350
|
|
El Paso Corporation
|
|
|
7.25
|
|
|
|
6-1-2018
|
|
|
|
3,149,000
|
|
|
|
3,681,754
|
|
El Paso Corporation
|
|
|
7.42
|
|
|
|
2-15-2037
|
|
|
|
1,820,000
|
|
|
|
1,887,413
|
|
El Paso Corporation
|
|
|
7.80
|
|
|
|
8-1-2031
|
|
|
|
3,050,000
|
|
|
|
3,454,098
|
|
Energy Transfer Equity LP
|
|
|
7.50
|
|
|
|
10-15-2020
|
|
|
|
5,950,000
|
|
|
|
6,961,500
|
|
Exterran Partners LP 144A
|
|
|
6.00
|
|
|
|
4-1-2021
|
|
|
|
2,390,000
|
|
|
|
2,437,800
|
|
Ferrellgas LP
|
|
|
9.13
|
|
|
|
10-1-2017
|
|
|
|
2,300,000
|
|
|
|
2,461,000
|
|
HollyFrontier Corporation
|
|
|
9.88
|
|
|
|
6-15-2017
|
|
|
|
4,265,000
|
|
|
|
4,512,455
|
|
Inergy Midstream LP 144A
|
|
|
6.00
|
|
|
|
12-15-2020
|
|
|
|
1,265,000
|
|
|
|
1,334,575
|
|
Kinder Morgan Energy 144A
|
|
|
6.00
|
|
|
|
1-15-2018
|
|
|
|
125,000
|
|
|
|
138,851
|
|
Overseas Shipholding Group Incorporated (s)
|
|
|
7.50
|
|
|
|
2-15-2024
|
|
|
|
605,000
|
|
|
|
484,000
|
|
Petrohawk Energy Corporation
|
|
|
7.88
|
|
|
|
6-1-2015
|
|
|
|
2,045,000
|
|
|
|
2,091,013
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
10
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Portfolio of investmentsApril 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil, Gas & Consumable Fuels
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petrohawk Energy Corporation
|
|
|
10.50
|
%
|
|
|
8-1-2014
|
|
|
$
|
1,065,000
|
|
|
$
|
1,126,237
|
|
Pioneer Natural Resources Company
|
|
|
7.50
|
|
|
|
1-15-2020
|
|
|
|
3,170,000
|
|
|
|
4,091,516
|
|
Plains Exploration & Production Company
|
|
|
8.63
|
|
|
|
10-15-2019
|
|
|
|
6,380,000
|
|
|
|
7,225,350
|
|
Rockies Express Pipeline LLC 144A
|
|
|
5.63
|
|
|
|
4-15-2020
|
|
|
|
4,435,000
|
|
|
|
4,152,269
|
|
Rockies Express Pipeline LLC 144A
|
|
|
6.00
|
|
|
|
1-15-2019
|
|
|
|
630,000
|
|
|
|
620,550
|
|
Rockies Express Pipeline LLC 144A
|
|
|
6.88
|
|
|
|
4-15-2040
|
|
|
|
12,580,000
|
|
|
|
11,384,900
|
|
Rockies Express Pipeline LLC 144A
|
|
|
7.50
|
|
|
|
7-15-2038
|
|
|
|
4,425,000
|
|
|
|
4,093,125
|
|
Sabine Pass LNG LP 144A
|
|
|
5.63
|
|
|
|
2-1-2021
|
|
|
|
1,425,000
|
|
|
|
1,474,875
|
|
Sabine Pass LNG LP 144A
|
|
|
5.63
|
|
|
|
4-15-2023
|
|
|
|
1,425,000
|
|
|
|
1,464,187
|
|
Sabine Pass LNG LP 144A
|
|
|
6.50
|
|
|
|
11-1-2020
|
|
|
|
9,260,000
|
|
|
|
9,931,350
|
|
Sabine Pass LNG LP
|
|
|
7.50
|
|
|
|
11-30-2016
|
|
|
|
8,775,000
|
|
|
|
9,915,750
|
|
Suburban Propane Partners LP
|
|
|
7.38
|
|
|
|
3-15-2020
|
|
|
|
1,475,000
|
|
|
|
1,604,062
|
|
Suburban Propane Partners LP
|
|
|
7.38
|
|
|
|
8-1-2021
|
|
|
|
805,000
|
|
|
|
895,562
|
|
Suburban Propane Partners LP
|
|
|
7.50
|
|
|
|
10-1-2018
|
|
|
|
802,000
|
|
|
|
874,180
|
|
Tesoro Corporation
|
|
|
9.75
|
|
|
|
6-1-2019
|
|
|
|
2,185,000
|
|
|
|
2,458,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,891,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials: 19.45%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banks: 1.89%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIT Group Incorporated 144A
|
|
|
4.75
|
|
|
|
2-15-2015
|
|
|
|
1,645,000
|
|
|
|
1,731,362
|
|
CIT Group Incorporated
|
|
|
5.00
|
|
|
|
5-15-2017
|
|
|
|
425,000
|
|
|
|
463,250
|
|
CIT Group Incorporated 144A
|
|
|
5.25
|
|
|
|
4-1-2014
|
|
|
|
1,205,000
|
|
|
|
1,248,681
|
|
CIT Group Incorporated
|
|
|
5.25
|
|
|
|
3-15-2018
|
|
|
|
875,000
|
|
|
|
966,875
|
|
CIT Group Incorporated 144A
|
|
|
5.50
|
|
|
|
2-15-2019
|
|
|
|
2,225,000
|
|
|
|
2,508,687
|
|
Emigrant Bancorp Incorporated 144A
|
|
|
6.25
|
|
|
|
6-15-2014
|
|
|
|
6,950,000
|
|
|
|
6,753,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,671,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Finance: 11.14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ally Financial Incorporated
|
|
|
5.50
|
|
|
|
2-15-2017
|
|
|
|
1,325,000
|
|
|
|
1,444,250
|
|
Ally Financial Incorporated
|
|
|
6.75
|
|
|
|
12-1-2014
|
|
|
|
2,344,000
|
|
|
|
2,516,870
|
|
Ally Financial Incorporated
|
|
|
7.50
|
|
|
|
12-31-2013
|
|
|
|
6,855,000
|
|
|
|
7,129,200
|
|
Ally Financial Incorporated
|
|
|
8.30
|
|
|
|
2-12-2015
|
|
|
|
8,820,000
|
|
|
|
9,801,225
|
|
American General Finance Corporation
|
|
|
5.40
|
|
|
|
12-1-2015
|
|
|
|
2,800,000
|
|
|
|
2,922,500
|
|
American General Finance Corporation
|
|
|
5.75
|
|
|
|
9-15-2016
|
|
|
|
2,325,000
|
|
|
|
2,386,030
|
|
American General Finance Corporation
|
|
|
6.50
|
|
|
|
9-15-2017
|
|
|
|
550,000
|
|
|
|
563,750
|
|
Clearwire Communications Finance Corporation 144A
|
|
|
12.00
|
|
|
|
12-1-2015
|
|
|
|
5,420,000
|
|
|
|
5,799,400
|
|
Ford Motor Credit Company LLC
|
|
|
8.00
|
|
|
|
12-15-2016
|
|
|
|
200,000
|
|
|
|
240,742
|
|
General Motors Financial Company Incorporated 144A
|
|
|
4.75
|
|
|
|
8-15-2017
|
|
|
|
475,000
|
|
|
|
501,125
|
|
General Motors Financial Company Incorporated
|
|
|
6.75
|
|
|
|
6-1-2018
|
|
|
|
2,770,000
|
|
|
|
3,164,725
|
|
Homer City Funding LLC ¥
|
|
|
9.23
|
|
|
|
10-1-2026
|
|
|
|
3,084,040
|
|
|
|
3,253,662
|
|
International Lease Finance Corporation 144A
|
|
|
6.75
|
|
|
|
9-1-2016
|
|
|
|
2,200,000
|
|
|
|
2,502,500
|
|
International Lease Finance Corporation 144A
|
|
|
7.13
|
|
|
|
9-1-2018
|
|
|
|
1,015,000
|
|
|
|
1,207,850
|
|
International Lease Finance Corporation
|
|
|
8.63
|
|
|
|
9-15-2015
|
|
|
|
1,700,000
|
|
|
|
1,938,000
|
|
JBS USA Finance Incorporated
|
|
|
11.63
|
|
|
|
5-1-2014
|
|
|
|
8,465,000
|
|
|
|
9,237,431
|
|
Level 3 Financing Incorporated
|
|
|
10.00
|
|
|
|
2-1-2018
|
|
|
|
4,555,000
|
|
|
|
5,016,193
|
|
Nielsen Finance LLC 144A
|
|
|
4.50
|
|
|
|
10-1-2020
|
|
|
|
515,000
|
|
|
|
525,944
|
|
Nielsen Finance LLC
|
|
|
7.75
|
|
|
|
10-15-2018
|
|
|
|
11,690,000
|
|
|
|
13,019,737
|
|
Springleaf Finance Corporation
|
|
|
6.90
|
|
|
|
12-15-2017
|
|
|
|
7,050,000
|
|
|
|
7,336,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,507,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
|
|
Portfolio of investmentsApril 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services: 2.24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fidelity National Information Services Incorporated
|
|
|
5.00
|
%
|
|
|
3-15-2022
|
|
|
$
|
500,000
|
|
|
$
|
551,250
|
|
HUB International Limited Company 144A
|
|
|
8.13
|
|
|
|
10-15-2018
|
|
|
|
4,895,000
|
|
|
|
5,268,244
|
|
Neuberger Berman Group LLC 144A
|
|
|
5.63
|
|
|
|
3-15-2020
|
|
|
|
900,000
|
|
|
|
956,250
|
|
Neuberger Berman Group LLC 144A
|
|
|
5.88
|
|
|
|
3-15-2022
|
|
|
|
1,125,000
|
|
|
|
1,206,563
|
|
Nuveen Investments
|
|
|
5.50
|
|
|
|
9-15-2015
|
|
|
|
6,830,000
|
|
|
|
6,881,225
|
|
Nuveen Investments 144A
|
|
|
9.13
|
|
|
|
10-15-2017
|
|
|
|
1,220,000
|
|
|
|
1,302,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,165,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance: 0.15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fidelity & Guaranty Life Holdings Incorporated 144A
|
|
|
6.38
|
|
|
|
4-1-2021
|
|
|
|
995,000
|
|
|
|
1,032,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Management & Development: 1.24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ashtead Capital Incorporated 144A
|
|
|
6.50
|
|
|
|
7-15-2022
|
|
|
|
4,970,000
|
|
|
|
5,479,425
|
|
Onex Corporation 144A
|
|
|
7.75
|
|
|
|
1-15-2021
|
|
|
|
3,395,000
|
|
|
|
3,496,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,976,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REITs: 2.79%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dupont Fabros Technology Incorporated
|
|
|
8.50
|
|
|
|
12-15-2017
|
|
|
|
11,580,000
|
|
|
|
12,448,500
|
|
Host Hotels & Resorts LP
|
|
|
9.00
|
|
|
|
5-15-2017
|
|
|
|
490,000
|
|
|
|
513,300
|
|
Omega Healthcare Investors Incorporated
|
|
|
5.88
|
|
|
|
3-15-2024
|
|
|
|
325,000
|
|
|
|
355,063
|
|
Omega Healthcare Investors Incorporated
|
|
|
6.75
|
|
|
|
10-15-2022
|
|
|
|
3,375,000
|
|
|
|
3,754,688
|
|
Sabra Health Care Incorporated
|
|
|
8.13
|
|
|
|
11-1-2018
|
|
|
|
2,850,000
|
|
|
|
3,106,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,178,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care: 5.17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care Equipment & Supplies: 0.39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hologic Incorporated
|
|
|
6.25
|
|
|
|
8-1-2020
|
|
|
|
2,590,000
|
|
|
|
2,797,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care Providers & Services: 4.37%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apria Healthcare Group Incorporated
|
|
|
11.25
|
|
|
|
11-1-2014
|
|
|
|
1,340,000
|
|
|
|
1,378,525
|
|
Aviv HealthCare Properties LP
|
|
|
7.75
|
|
|
|
2-15-2019
|
|
|
|
3,725,000
|
|
|
|
4,078,875
|
|
Centene Corporation
|
|
|
5.75
|
|
|
|
6-1-2017
|
|
|
|
1,925,000
|
|
|
|
2,071,781
|
|
Community Health Systems Incorporated
|
|
|
5.13
|
|
|
|
8-15-2018
|
|
|
|
725,000
|
|
|
|
775,750
|
|
Community Health Systems Incorporated
|
|
|
7.13
|
|
|
|
7-15-2020
|
|
|
|
1,325,000
|
|
|
|
1,480,688
|
|
DaVita HealthCare Partners Incorporated
|
|
|
5.75
|
|
|
|
8-15-2022
|
|
|
|
1,360,000
|
|
|
|
1,448,400
|
|
DaVita HealthCare Partners Incorporated
|
|
|
6.38
|
|
|
|
11-1-2018
|
|
|
|
140,000
|
|
|
|
149,625
|
|
Fresenius Medical Care Holdings Incorporated 144A
|
|
|
5.63
|
|
|
|
7-31-2019
|
|
|
|
1,800,000
|
|
|
|
2,011,500
|
|
Fresenius Medical Care Holdings Incorporated
|
|
|
6.88
|
|
|
|
7-15-2017
|
|
|
|
700,000
|
|
|
|
808,500
|
|
HCA Incorporated
|
|
|
4.75
|
|
|
|
5-1-2023
|
|
|
|
550,000
|
|
|
|
573,375
|
|
HCA Incorporated
|
|
|
5.88
|
|
|
|
3-15-2022
|
|
|
|
750,000
|
|
|
|
832,500
|
|
HCA Incorporated
|
|
|
6.50
|
|
|
|
2-15-2020
|
|
|
|
5,675,000
|
|
|
|
6,554,625
|
|
HCA Incorporated
|
|
|
7.50
|
|
|
|
11-15-2095
|
|
|
|
1,350,000
|
|
|
|
1,252,125
|
|
HCA Incorporated
|
|
|
8.50
|
|
|
|
4-15-2019
|
|
|
|
375,000
|
|
|
|
413,438
|
|
Health Management Associates Incorporated
|
|
|
6.13
|
|
|
|
4-15-2016
|
|
|
|
475,000
|
|
|
|
523,688
|
|
HealthSouth Corporation
|
|
|
5.75
|
|
|
|
11-1-2024
|
|
|
|
1,375,000
|
|
|
|
1,416,250
|
|
HealthSouth Corporation
|
|
|
7.25
|
|
|
|
10-1-2018
|
|
|
|
675,000
|
|
|
|
729,000
|
|
HealthSouth Corporation
|
|
|
7.75
|
|
|
|
9-15-2022
|
|
|
|
675,000
|
|
|
|
747,563
|
|
MPT Operating Partnership LP
|
|
|
6.38
|
|
|
|
2-15-2022
|
|
|
|
775,000
|
|
|
|
838,938
|
|
MPT Operating Partnership LP
|
|
|
6.88
|
|
|
|
5-1-2021
|
|
|
|
3,175,000
|
|
|
|
3,460,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,545,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
12
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Portfolio of investmentsApril 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals: 0.41%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mylan Incorporated 144A
|
|
|
6.00
|
%
|
|
|
11-15-2018
|
|
|
$
|
1,300,000
|
|
|
$
|
1,425,697
|
|
Mylan Incorporated 144A
|
|
|
7.63
|
|
|
|
7-15-2017
|
|
|
|
1,400,000
|
|
|
|
1,555,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,981,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials: 5.60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace & Defense: 0.37%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TransDigm Group Incorporated 144A
|
|
|
5.50
|
|
|
|
10-15-2020
|
|
|
|
510,000
|
|
|
|
544,425
|
|
TransDigm Group Incorporated
|
|
|
7.75
|
|
|
|
12-15-2018
|
|
|
|
1,939,000
|
|
|
|
2,147,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,691,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Air Freight & Logistics: 0.69%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bristow Group Incorporated
|
|
|
6.25
|
|
|
|
10-15-2022
|
|
|
|
4,555,000
|
|
|
|
4,964,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airlines: 0.58%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aviation Capital Group Corporation 144A
|
|
|
4.63
|
|
|
|
1-31-2018
|
|
|
|
325,000
|
|
|
|
339,038
|
|
Aviation Capital Group Corporation 144A
|
|
|
6.75
|
|
|
|
4-6-2021
|
|
|
|
2,190,000
|
|
|
|
2,445,420
|
|
Aviation Capital Group Corporation 144A
|
|
|
7.13
|
|
|
|
10-15-2020
|
|
|
|
1,210,000
|
|
|
|
1,390,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,174,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Services & Supplies: 2.08%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covanta Holding Corporation
|
|
|
6.38
|
|
|
|
10-1-2022
|
|
|
|
900,000
|
|
|
|
984,889
|
|
Geo Group Incorporated 144A
|
|
|
5.13
|
|
|
|
4-1-2023
|
|
|
|
3,000,000
|
|
|
|
3,108,750
|
|
Geo Group Incorporated
|
|
|
6.63
|
|
|
|
2-15-2021
|
|
|
|
605,000
|
|
|
|
670,038
|
|
Geo Group Incorporated
|
|
|
7.75
|
|
|
|
10-15-2017
|
|
|
|
3,790,000
|
|
|
|
4,036,350
|
|
Interface Incorporated
|
|
|
7.63
|
|
|
|
12-1-2018
|
|
|
|
300,000
|
|
|
|
325,875
|
|
Iron Mountain Incorporated
|
|
|
5.75
|
|
|
|
8-15-2024
|
|
|
|
475,000
|
|
|
|
489,250
|
|
Iron Mountain Incorporated
|
|
|
8.00
|
|
|
|
6-15-2020
|
|
|
|
800,000
|
|
|
|
837,000
|
|
Iron Mountain Incorporated
|
|
|
8.38
|
|
|
|
8-15-2021
|
|
|
|
4,095,000
|
|
|
|
4,576,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,028,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Machinery: 0.95%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Columbus McKinnon Corporation
|
|
|
7.88
|
|
|
|
2-1-2019
|
|
|
|
1,575,000
|
|
|
|
1,697,063
|
|
H&E Equipment Services Incorporated
|
|
|
7.00
|
|
|
|
9-1-2022
|
|
|
|
4,680,000
|
|
|
|
5,183,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,880,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services: 0.66%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affinia Group Incorporated 144A
|
|
|
10.75
|
|
|
|
8-15-2016
|
|
|
|
184,000
|
|
|
|
199,642
|
|
Interactive Data Corporation
|
|
|
10.25
|
|
|
|
8-1-2018
|
|
|
|
4,005,000
|
|
|
|
4,555,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,755,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Infrastructure: 0.27%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida East Coast Railway Corporation
|
|
|
8.13
|
|
|
|
2-1-2017
|
|
|
|
1,465,000
|
|
|
|
1,576,706
|
|
Watco Companies LLC 144A
|
|
|
6.38
|
|
|
|
4-1-2023
|
|
|
|
400,000
|
|
|
|
417,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,993,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Technology: 8.81%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Equipment: 0.98%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allbritton Communications Company
|
|
|
8.00
|
|
|
|
5-15-2018
|
|
|
|
3,274,000
|
|
|
|
3,552,290
|
|
Avaya Incorporated
|
|
|
9.75
|
|
|
|
11-1-2015
|
|
|
|
1,150,000
|
|
|
|
1,150,000
|
|
Lucent Technologies Incorporated
|
|
|
6.45
|
|
|
|
3-15-2029
|
|
|
|
3,100,000
|
|
|
|
2,418,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,120,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
|
|
Portfolio of investmentsApril 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers & Peripherals: 0.67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCR Corporation 144A
|
|
|
4.63
|
%
|
|
|
2-15-2021
|
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
NCR Corporation 144A
|
|
|
5.00
|
|
|
|
7-15-2022
|
|
|
|
4,760,000
|
|
|
|
4,819,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,859,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Equipment, Instruments & Components: 2.61%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDW Financial Corporation
|
|
|
12.54
|
|
|
|
10-12-2017
|
|
|
|
2,297,000
|
|
|
|
2,469,274
|
|
Jabil Circuit Incorporated
|
|
|
8.25
|
|
|
|
3-15-2018
|
|
|
|
13,532,000
|
|
|
|
16,373,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,842,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet Software & Services: 0.15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equinix Incorporated
|
|
|
4.88
|
|
|
|
4-1-2020
|
|
|
|
300,000
|
|
|
|
313,500
|
|
Equinix Incorporated
|
|
|
5.38
|
|
|
|
4-1-2023
|
|
|
|
300,000
|
|
|
|
314,250
|
|
Equinix Incorporated
|
|
|
7.00
|
|
|
|
7-15-2021
|
|
|
|
125,000
|
|
|
|
141,562
|
|
Verisign Incorporated 144A
|
|
|
4.63
|
|
|
|
5-1-2023
|
|
|
|
290,000
|
|
|
|
297,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,066,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT Services: 4.12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audatex North American Incorporated 144A
|
|
|
6.75
|
|
|
|
6-15-2018
|
|
|
|
1,375,000
|
|
|
|
1,479,843
|
|
CyrusOne LLC 144A
|
|
|
6.38
|
|
|
|
11-15-2022
|
|
|
|
500,000
|
|
|
|
532,500
|
|
Fidelity National Information Services Incorporated
|
|
|
7.63
|
|
|
|
7-15-2017
|
|
|
|
875,000
|
|
|
|
935,156
|
|
Fidelity National Information Services Incorporated
|
|
|
7.88
|
|
|
|
7-15-2020
|
|
|
|
3,200,000
|
|
|
|
3,608,000
|
|
First Data Corporation 144A
|
|
|
7.38
|
|
|
|
6-15-2019
|
|
|
|
1,325,000
|
|
|
|
1,440,937
|
|
First Data Corporation
|
|
|
11.25
|
|
|
|
3-31-2016
|
|
|
|
12,065,000
|
|
|
|
12,276,137
|
|
SunGard Data Systems Incorporated 144A
|
|
|
6.63
|
|
|
|
11-1-2019
|
|
|
|
2,325,000
|
|
|
|
2,473,219
|
|
SunGard Data Systems Incorporated
|
|
|
7.38
|
|
|
|
11-15-2018
|
|
|
|
5,810,000
|
|
|
|
6,274,800
|
|
SunGard Data Systems Incorporated
|
|
|
7.63
|
|
|
|
11-15-2020
|
|
|
|
650,000
|
|
|
|
718,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,738,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software: 0.28%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuance Communications Incorporated 144A
|
|
|
5.38
|
|
|
|
8-15-2020
|
|
|
|
1,975,000
|
|
|
|
2,054,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials: 2.07%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemicals: 0.34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celanese US Holdings LLC
|
|
|
5.88
|
|
|
|
6-15-2021
|
|
|
|
440,000
|
|
|
|
492,800
|
|
Tronox Finance LLC 144A
|
|
|
6.38
|
|
|
|
8-15-2020
|
|
|
|
1,955,000
|
|
|
|
1,950,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,442,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Containers & Packaging: 1.21%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ball Corporation
|
|
|
5.75
|
|
|
|
5-15-2021
|
|
|
|
400,000
|
|
|
|
436,000
|
|
Ball Corporation
|
|
|
6.75
|
|
|
|
9-15-2020
|
|
|
|
375,000
|
|
|
|
413,906
|
|
Crown Americas LLC 144A
|
|
|
4.50
|
|
|
|
1-15-2023
|
|
|
|
1,075,000
|
|
|
|
1,097,844
|
|
Crown Americas LLC
|
|
|
6.25
|
|
|
|
2-1-2021
|
|
|
|
515,000
|
|
|
|
569,075
|
|
Crown Cork & Seal Company Incorporated (i)
|
|
|
7.50
|
|
|
|
12-15-2096
|
|
|
|
1,225,000
|
|
|
|
1,197,438
|
|
Owens-Illinois Incorporated
|
|
|
7.80
|
|
|
|
5-15-2018
|
|
|
|
837,000
|
|
|
|
989,753
|
|
Sealed Air Corporation 144A
|
|
|
6.88
|
|
|
|
7-15-2033
|
|
|
|
1,715,000
|
|
|
|
1,732,150
|
|
Silgan Holdings Incorporated
|
|
|
5.00
|
|
|
|
4-1-2020
|
|
|
|
2,250,000
|
|
|
|
2,340,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,776,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metals & Mining: 0.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indalex Holdings Corporation (s)(a)(i)
|
|
|
11.50
|
|
|
|
2-1-2014
|
|
|
|
5,985,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
14
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Portfolio of investmentsApril 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paper & Forest Products: 0.52%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific LLC
|
|
|
8.88
|
%
|
|
|
5-15-2031
|
|
|
$
|
2,430,000
|
|
|
$
|
3,719,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunication Services: 15.24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Telecommunication Services: 6.67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Citizens Communications Company
|
|
|
7.88
|
|
|
|
1-15-2027
|
|
|
|
4,205,000
|
|
|
|
4,289,100
|
|
Frontier Communications Corporation
|
|
|
8.13
|
|
|
|
10-1-2018
|
|
|
|
1,980,000
|
|
|
|
2,296,800
|
|
Frontier Communications Corporation
|
|
|
8.25
|
|
|
|
4-15-2017
|
|
|
|
2,380,000
|
|
|
|
2,793,525
|
|
Frontier Communications Corporation
|
|
|
8.50
|
|
|
|
4-15-2020
|
|
|
|
1,000,000
|
|
|
|
1,150,000
|
|
GCI Incorporated
|
|
|
6.75
|
|
|
|
6-1-2021
|
|
|
|
3,865,000
|
|
|
|
3,691,075
|
|
GCI Incorporated
|
|
|
8.63
|
|
|
|
11-15-2019
|
|
|
|
8,750,000
|
|
|
|
9,318,750
|
|
Qwest Corporation
|
|
|
7.13
|
|
|
|
11-15-2043
|
|
|
|
1,810,000
|
|
|
|
1,855,250
|
|
Qwest Corporation
|
|
|
7.25
|
|
|
|
9-15-2025
|
|
|
|
2,755,000
|
|
|
|
3,203,996
|
|
Qwest Corporation
|
|
|
7.63
|
|
|
|
8-3-2021
|
|
|
|
440,000
|
|
|
|
502,165
|
|
SBA Telecommunications Incorporated 144A
|
|
|
5.63
|
|
|
|
10-1-2019
|
|
|
|
270,000
|
|
|
|
284,175
|
|
SBA Telecommunications Incorporated 144A
|
|
|
5.75
|
|
|
|
7-15-2020
|
|
|
|
2,795,000
|
|
|
|
2,976,675
|
|
SBA Telecommunications Incorporated
|
|
|
8.25
|
|
|
|
8-15-2019
|
|
|
|
93,000
|
|
|
|
102,998
|
|
Syniverse Holdings Incorporated
|
|
|
9.13
|
|
|
|
1-15-2019
|
|
|
|
8,545,000
|
|
|
|
9,463,588
|
|
Windstream Corporation
|
|
|
7.88
|
|
|
|
11-1-2017
|
|
|
|
5,380,000
|
|
|
|
6,281,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,209,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless Telecommunication Services: 8.57%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cricket Communications Incorporated
|
|
|
7.75
|
|
|
|
5-15-2016
|
|
|
|
3,355,000
|
|
|
|
3,489,200
|
|
Cricket Communications Incorporated
|
|
|
7.75
|
|
|
|
10-15-2020
|
|
|
|
3,835,000
|
|
|
|
3,902,112
|
|
Crown Castle International Corporation
|
|
|
5.25
|
|
|
|
1-15-2023
|
|
|
|
4,925,000
|
|
|
|
5,158,937
|
|
Crown Castle International Corporation
|
|
|
7.13
|
|
|
|
11-1-2019
|
|
|
|
165,000
|
|
|
|
181,088
|
|
iPCS Incorporated ¥
|
|
|
3.55
|
|
|
|
5-1-2014
|
|
|
|
2,607,559
|
|
|
|
2,610,818
|
|
MetroPCS Wireless Incorporated 144A
|
|
|
6.25
|
|
|
|
4-1-2021
|
|
|
|
290,000
|
|
|
|
311,388
|
|
MetroPCS Wireless Incorporated
|
|
|
6.63
|
|
|
|
11-15-2020
|
|
|
|
5,910,000
|
|
|
|
6,397,573
|
|
MetroPCS Wireless Incorporated 144A
|
|
|
6.63
|
|
|
|
4-1-2023
|
|
|
|
260,000
|
|
|
|
279,500
|
|
MetroPCS Wireless Incorporated
|
|
|
7.88
|
|
|
|
9-1-2018
|
|
|
|
3,015,000
|
|
|
|
3,320,269
|
|
Sprint Capital Corporation
|
|
|
6.88
|
|
|
|
11-15-2028
|
|
|
|
16,375,000
|
|
|
|
16,743,437
|
|
Sprint Capital Corporation
|
|
|
8.75
|
|
|
|
3-15-2032
|
|
|
|
6,270,000
|
|
|
|
7,414,275
|
|
Sprint Nextel Corporation 144A
|
|
|
9.00
|
|
|
|
11-15-2018
|
|
|
|
750,000
|
|
|
|
922,500
|
|
Sprint Nextel Corporation
|
|
|
11.50
|
|
|
|
11-15-2021
|
|
|
|
1,200,000
|
|
|
|
1,662,000
|
|
TW Telecommunications Holdings Incorporated
|
|
|
5.38
|
|
|
|
10-1-2022
|
|
|
|
6,525,000
|
|
|
|
6,834,938
|
|
TW Telecommunications Holdings Incorporated
|
|
|
8.00
|
|
|
|
3-1-2018
|
|
|
|
2,492,000
|
|
|
|
2,703,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,931,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities: 6.79%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Utilities: 2.89%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Future Holdings Corporation
|
|
|
10.00
|
|
|
|
12-1-2020
|
|
|
|
150,000
|
|
|
|
171,750
|
|
Energy Future Holdings Corporation 144A
|
|
|
6.88
|
|
|
|
8-15-2017
|
|
|
|
875,000
|
|
|
|
927,500
|
|
IPALCO Enterprises Incorporated
|
|
|
5.00
|
|
|
|
5-1-2018
|
|
|
|
2,050,000
|
|
|
|
2,214,000
|
|
IPALCO Enterprises Incorporated 144A
|
|
|
7.25
|
|
|
|
4-1-2016
|
|
|
|
3,783,000
|
|
|
|
4,246,418
|
|
Mirant Mid-Atlantic LLC Series C
|
|
|
10.06
|
|
|
|
12-30-2028
|
|
|
|
7,560,525
|
|
|
|
8,618,998
|
|
Otter Tail Corporation
|
|
|
9.00
|
|
|
|
12-15-2016
|
|
|
|
3,985,000
|
|
|
|
4,702,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,880,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
|
|
Portfolio of investmentsApril 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities: 0.55%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AmeriGas Finance LLC
|
|
|
6.50
|
%
|
|
|
5-20-2021
|
|
|
$
|
75,000
|
|
|
$
|
81,750
|
|
AmeriGas Finance LLC
|
|
|
6.75
|
|
|
|
5-20-2020
|
|
|
|
1,675,000
|
|
|
|
1,855,063
|
|
AmeriGas Finance LLC
|
|
|
7.00
|
|
|
|
5-20-2022
|
|
|
|
1,840,000
|
|
|
|
2,056,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,993,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Power Producers & Energy Traders: 3.35%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calpine Construction Finance Corporation 144A
|
|
|
7.25
|
|
|
|
10-15-2017
|
|
|
|
8,725,000
|
|
|
|
9,237,594
|
|
Calpine Construction Finance Corporation 144A
|
|
|
8.00
|
|
|
|
6-1-2016
|
|
|
|
2,700,000
|
|
|
|
2,821,500
|
|
NRG Energy Incorporated
|
|
|
8.50
|
|
|
|
6-15-2019
|
|
|
|
3,675,000
|
|
|
|
4,060,875
|
|
NSG Holdings LLC 144A
|
|
|
7.75
|
|
|
|
12-15-2025
|
|
|
|
3,640,000
|
|
|
|
3,913,000
|
|
Reliant Energy Incorporated
|
|
|
7.63
|
|
|
|
6-15-2014
|
|
|
|
1,020,000
|
|
|
|
1,083,750
|
|
Reliant Energy Incorporated
|
|
|
9.24
|
|
|
|
7-2-2017
|
|
|
|
2,021,662
|
|
|
|
2,223,828
|
|
Reliant Energy Incorporated
|
|
|
9.68
|
|
|
|
7-2-2026
|
|
|
|
780,000
|
|
|
|
858,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,198,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Corporate Bonds and Notes (Cost
$747,538,035)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
804,108,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
|
|
|
Shares
|
|
|
|
|
Preferred Stocks: 0.20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials: 0.20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services: 0.20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GMAC Capital Trust I ±
|
|
|
8.13
|
|
|
|
|
|
|
|
53,000
|
|
|
|
1,451,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Preferred Stocks (Cost
$1,325,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,451,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
|
|
|
|
Principal
|
|
|
|
|
Term Loans: 12.05%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advantage Sales & Marketing LLC <
|
|
|
8.25
|
|
|
|
6-17-2018
|
|
|
$
|
846,429
|
|
|
|
848,545
|
|
Alliance Laundry Systems LLC <
|
|
|
9.50
|
|
|
|
12-10-2019
|
|
|
|
2,698,846
|
|
|
|
2,769,691
|
|
Applied Systems Incorporated <
|
|
|
0.00
|
|
|
|
6-8-2017
|
|
|
|
680,000
|
|
|
|
684,250
|
|
Capital Automotive LP <
|
|
|
0.00
|
|
|
|
4-30-2020
|
|
|
|
2,450,000
|
|
|
|
2,523,500
|
|
Capital Automotive LP
|
|
|
4.25
|
|
|
|
3-27-2019
|
|
|
|
5,294,664
|
|
|
|
5,333,263
|
|
CBAC Borrower LLC <
|
|
|
0.00
|
|
|
|
4-24-2020
|
|
|
|
215,000
|
|
|
|
213,925
|
|
CCM Merger Incorporated
|
|
|
5.50
|
|
|
|
3-1-2017
|
|
|
|
4,813,419
|
|
|
|
4,861,553
|
|
Centaur LLC
|
|
|
8.75
|
|
|
|
2-20-2020
|
|
|
|
2,335,000
|
|
|
|
2,370,025
|
|
Coinmach Corporation
|
|
|
3.20
|
|
|
|
11-14-2014
|
|
|
|
6,503,845
|
|
|
|
6,487,585
|
|
Energy Transfer Equity LP
|
|
|
3.75
|
|
|
|
3-23-2017
|
|
|
|
1,462,500
|
|
|
|
1,468,189
|
|
Federal-Mogul Corporation
|
|
|
2.14
|
|
|
|
12-27-2014
|
|
|
|
2,555,990
|
|
|
|
2,421,392
|
|
Federal-Mogul Corporation
|
|
|
2.14
|
|
|
|
12-27-2015
|
|
|
|
1,693,794
|
|
|
|
1,604,599
|
|
Focus Brands Incorporated
|
|
|
10.25
|
|
|
|
8-21-2018
|
|
|
|
4,124,203
|
|
|
|
4,216,997
|
|
HHI Holdings LLC
|
|
|
5.00
|
|
|
|
10-5-2018
|
|
|
|
2,832,949
|
|
|
|
2,873,687
|
|
Level 3 Financing Incorporated
|
|
|
4.75
|
|
|
|
2-1-2016
|
|
|
|
5,210,409
|
|
|
|
5,276,633
|
|
Light Tower Fiber LLC <
|
|
|
0.00
|
|
|
|
3-29-2021
|
|
|
|
85,000
|
|
|
|
86,594
|
|
nTelos Incorporated
|
|
|
5.75
|
|
|
|
11-9-2019
|
|
|
|
1,476,375
|
|
|
|
1,446,848
|
|
Philadelphia Energy Solutions LLC <
|
|
|
0.00
|
|
|
|
3-19-2018
|
|
|
|
4,475,000
|
|
|
|
4,553,313
|
|
Springleaf Finance Corporation
|
|
|
5.50
|
|
|
|
5-10-2017
|
|
|
|
1,092,623
|
|
|
|
1,096,042
|
|
Tallgrass Energy Partners LP
|
|
|
5.71
|
|
|
|
11-13-2018
|
|
|
|
4,718,747
|
|
|
|
4,748,239
|
|
Texas Competitive Electric Holdings LLC
|
|
|
3.73
|
|
|
|
10-10-2014
|
|
|
|
34,355,889
|
|
|
|
25,795,432
|
|
Total Safety US Incorporated
|
|
|
9.25
|
|
|
|
8-21-2020
|
|
|
|
488,775
|
|
|
|
498,551
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
16
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Portfolio of investmentsApril 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term Loans
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Surgical Partners International Incorporated
|
|
|
4.75
|
%
|
|
|
4-3-2019
|
|
|
$
|
2,227,556
|
|
|
$
|
2,238,694
|
|
Washington Multifamily Laundry Systems LLC
|
|
|
5.25
|
|
|
|
2-21-2019
|
|
|
|
2,655,000
|
|
|
|
2,681,550
|
|
|
|
|
|
|
Total Term Loans (Cost $91,205,255)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,099,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yankee Corporate Bonds and Notes:
5.14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary: 0.48%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media: 0.48%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Videotron Limited
|
|
|
5.00
|
|
|
|
7-15-2022
|
|
|
|
1,745,000
|
|
|
|
1,797,350
|
|
Videotron Limited
|
|
|
6.38
|
|
|
|
12-15-2015
|
|
|
|
100,000
|
|
|
|
101,250
|
|
Videotron Limited
|
|
|
9.13
|
|
|
|
4-15-2018
|
|
|
|
1,525,000
|
|
|
|
1,605,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,503,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy: 0.28%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil, Gas & Consumable Fuels: 0.28%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Griffin Coal Mining Company Limited 144A(s)
|
|
|
9.50
|
|
|
|
12-1-2016
|
|
|
|
2,119,383
|
|
|
|
1,785,580
|
|
Griffin Coal Mining Company Limited (s)
|
|
|
9.50
|
|
|
|
12-1-2016
|
|
|
|
290,088
|
|
|
|
244,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,029,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials: 0.33%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Finance: 0.33%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind Acquisition Finance SpA 144A
|
|
|
11.75
|
|
|
|
7-15-2017
|
|
|
|
2,205,000
|
|
|
|
2,364,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Financial Services: 0.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Term Securities XII Limited (s)(i)
|
|
|
0.00
|
|
|
|
12-24-2033
|
|
|
|
1,540,000
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Technology: 0.79%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers & Peripherals: 0.79%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seagate Technology HDD Holdings
|
|
|
6.80
|
|
|
|
10-1-2016
|
|
|
|
1,275,000
|
|
|
|
1,440,750
|
|
Seagate Technology HDD Holdings
|
|
|
6.88
|
|
|
|
5-1-2020
|
|
|
|
650,000
|
|
|
|
706,063
|
|
Seagate Technology HDD Holdings
|
|
|
7.00
|
|
|
|
11-1-2021
|
|
|
|
725,000
|
|
|
|
799,313
|
|
Seagate Technology HDD Holdings
|
|
|
7.75
|
|
|
|
12-15-2018
|
|
|
|
2,500,000
|
|
|
|
2,756,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,702,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials: 0.85%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metals & Mining: 0.59%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Novelis Incorporated
|
|
|
8.38
|
|
|
|
12-15-2017
|
|
|
|
1,100,000
|
|
|
|
1,204,500
|
|
Novelis Incorporated
|
|
|
8.75
|
|
|
|
12-15-2020
|
|
|
|
2,675,000
|
|
|
|
3,036,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,240,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paper & Forest Products : 0.26%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sappi Limited 144A
|
|
|
7.50
|
|
|
|
6-15-2032
|
|
|
|
2,155,000
|
|
|
|
1,864,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunication Services: 2.41%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Telecommunication Services: 2.19%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intelsat Bermuda Limited 144A
|
|
|
7.75
|
|
|
|
6-1-2021
|
|
|
|
1,670,000
|
|
|
|
1,766,025
|
|
Intelsat Bermuda Limited 144A
|
|
|
8.13
|
|
|
|
6-1-2023
|
|
|
|
670,000
|
|
|
|
713,550
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
Portfolio of investmentsApril 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security name
|
|
Interest rate
|
|
|
Maturity date
|
|
|
Principal
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversified Telecommunication Services
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intelsat Bermuda Limited
|
|
|
11.25
|
%
|
|
|
2-4-2017
|
|
|
$
|
1,179,000
|
|
|
$
|
1,255,635
|
|
Intelsat Jackson Holdings Limited
|
|
|
7.25
|
|
|
|
4-1-2019
|
|
|
|
5,475,000
|
|
|
|
6,022,500
|
|
Intelsat Jackson Holdings Limited
|
|
|
7.50
|
|
|
|
4-1-2021
|
|
|
|
2,214,000
|
|
|
|
2,496,285
|
|
Intelsat Jackson Holdings SA
|
|
|
7.25
|
|
|
|
10-15-2020
|
|
|
|
3,225,000
|
|
|
|
3,579,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,833,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless Telecommunication Services: 0.22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telesat Canada Incorporated 144A
|
|
|
6.00
|
|
|
|
5-15-2017
|
|
|
|
1,475,000
|
|
|
|
1,570,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Yankee Corporate Bonds and Notes (Cost
$34,732,660)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,110,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
|
Short-Term Investments: 2.38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Companies: 2.38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo Advantage Cash Investment Money Market Fund, Select
Class (u)(l)##
|
|
|
0.13
|
|
|
|
|
|
|
|
17,197,569
|
|
|
|
17,197,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short-Term Investments (Cost
$17,197,569)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,197,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments in securities
|
|
|
|
|
|
|
|
|
(Cost $895,108,284) *
|
|
|
131.21
|
%
|
|
|
948,062,599
|
|
Other assets and liabilities, net
|
|
|
(31.21
|
)
|
|
|
(225,507,262
|
)
|
|
|
|
|
|
|
|
|
|
Total net assets
|
|
|
100.00
|
%
|
|
$
|
722,555,337
|
|
|
|
|
|
|
|
|
|
|
|
Non-income-earning security
|
144A
|
Security that may be resold to qualified institutional buyers under Rule 144A or security offered pursuant to Section 4(2) of the Securities Act of 1933, as amended.
|
¥
|
A payment-in-kind (PIK) security is a security in which the issuer may make interest or dividend payments in cash or additional securities. These additional securities generally have the same terms as the original
holdings.
|
%%
|
Security issued on a when-issued basis.
|
(s)
|
Security is currently in default with regards to scheduled interest and/or principal payments. The Fund has stopped accruing interest on this security.
|
(a)
|
Security is fair valued by the Management Valuation Team, and in certain instances by the Board of Trustees, in accordance with procedures approved by the Board of Trustees.
|
(i)
|
Illiquid security for which the designation as illiquid is unaudited
|
±
|
Variable rate investment. The rate shown is the rate in effect at period end.
|
<
|
All or a portion of the position represents an unfunded loan commitment.
|
(u)
|
Rate shown is the 7-day annualized yield at period end.
|
(l)
|
Investment in an affiliate
|
##
|
All or a portion of this security has been segregated for when-issued securities or unfunded loans.
|
*
|
Cost for federal income tax purposes is $900,471,643 and unrealized appreciation (depreciation) consists of:
|
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
71,278,646
|
|
|
|
Gross unrealized depreciation
|
|
|
(23,687,690
|
)
|
|
|
|
|
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
47,590,956
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
|
|
|
|
|
18
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
S
tatement of assets and liabilitiesApril 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Investments
|
|
|
|
|
In unaffiliated securities, at value (see cost below)
|
|
$
|
930,865,030
|
|
In affiliated securities, at value (see cost below)
|
|
|
17,197,569
|
|
|
|
|
|
|
Total investments, at value (see cost below)
|
|
|
948,062,599
|
|
Receivable for investments sold
|
|
|
9,083,438
|
|
Receivable for interest and dividends
|
|
|
16,207,123
|
|
Prepaid expenses and other assets
|
|
|
99,881
|
|
|
|
|
|
|
Total assets
|
|
|
973,453,041
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Dividends payable
|
|
|
4,825,486
|
|
Payable for investments purchased
|
|
|
15,285,607
|
|
Secured borrowing payable
|
|
|
230,209,098
|
|
Advisory fee payable
|
|
|
303,652
|
|
Due to other related parties
|
|
|
38,902
|
|
Accrued expenses and other liabilities
|
|
|
234,959
|
|
|
|
|
|
|
Total liabilities
|
|
|
250,897,704
|
|
|
|
|
|
|
Total net assets
|
|
$
|
722,555,337
|
|
|
|
|
|
|
|
|
NET ASSETS CONSIST OF
|
|
|
|
|
Paid-in capital
|
|
$
|
983,168,474
|
|
Overdistributed net investment income
|
|
|
(4,920,932
|
)
|
Accumulated net realized losses on investments
|
|
|
(308,646,520
|
)
|
Net unrealized gains on investments
|
|
|
52,954,315
|
|
|
|
|
|
|
Total net assets
|
|
$
|
722,555,337
|
|
|
|
|
|
|
|
|
NET ASSET VALUE PER SHARE
|
|
|
|
|
Based on $722,555,337 divided by 70,967,030 shares issued and outstanding
(100,000,000 shares authorized)
|
|
|
$10.18
|
|
|
|
|
|
|
|
|
Investments in unaffiliated securities, at cost
|
|
$
|
877,910,715
|
|
|
|
|
|
|
Investments in affiliated securities, at cost
|
|
$
|
17,197,569
|
|
|
|
|
|
|
Total investments, at cost
|
|
$
|
895,108,284
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
Statement of operationsyear ended April 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
|
|
Interest
|
|
$
|
69,577,522
|
|
Dividends
|
|
|
107,656
|
|
Income from affiliated securities
|
|
|
39,748
|
|
|
|
|
|
|
Total investment income
|
|
|
69,724,926
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Advisory fee
|
|
|
5,588,049
|
|
Administration fee
|
|
|
465,671
|
|
Custody and accounting fees
|
|
|
59,658
|
|
Professional fees
|
|
|
72,109
|
|
Shareholder report expenses
|
|
|
186,104
|
|
Trustees fees and expenses
|
|
|
14,772
|
|
Transfer agent fees
|
|
|
28,499
|
|
Interest expense
|
|
|
546,675
|
|
Secured borrowing fees
|
|
|
2,027,462
|
|
Other fees and expenses
|
|
|
41,590
|
|
|
|
|
|
|
Total expenses
|
|
|
9,030,589
|
|
Less: Fee waivers and/or expense reimbursements
|
|
|
(1,686,252
|
)
|
|
|
|
|
|
Net expenses
|
|
|
7,344,337
|
|
|
|
|
|
|
Net investment income
|
|
|
62,380,589
|
|
|
|
|
|
|
|
|
REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS
|
|
|
|
|
Net realized gains on investments
|
|
|
11,572,543
|
|
Net change in unrealized gains (losses) on investments
|
|
|
27,158,011
|
|
|
|
|
|
|
Net realized and unrealized gains (losses) on investments
|
|
|
38,730,554
|
|
|
|
|
|
|
Net increase in net assets resulting from
operations
|
|
$
|
101,111,143
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
20
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Statement of changes in net assets
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
April 30, 2013
|
|
|
Year ended
April 30, 2012
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
62,380,589
|
|
|
$
|
66,995,541
|
|
Net realized gains on investments
|
|
|
11,572,543
|
|
|
|
7,371,101
|
|
Net change in unrealized gains (losses) on investments
|
|
|
27,158,011
|
|
|
|
(33,221,928
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
101,111,143
|
|
|
|
41,144,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to shareholders
from
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(64,767,000
|
)
|
|
|
(71,940,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital share transactions
|
|
|
|
|
|
|
|
|
Net asset value of shares issued under the Automatic Dividend Reinvestment Plan
|
|
|
2,403,707
|
|
|
|
4,753,429
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in net assets
|
|
|
38,747,850
|
|
|
|
(26,042,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
683,807,487
|
|
|
|
709,849,658
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
722,555,337
|
|
|
$
|
683,807,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overdistributed net investment
income
|
|
$
|
(4,920,932
|
)
|
|
$
|
(6,076,636
|
)
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
Statement of cash flowsyear ended April 30, 2013
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
101,111,143
|
|
|
|
Adjustments to reconcile net increase in net assets from
operations to net cash provided by operating activities:
|
|
|
|
|
Purchase of investment securities
|
|
|
(541,601,720
|
)
|
Proceeds from disposition of investment securities
|
|
|
511,673,749
|
|
Amortization
|
|
|
(2,990,636
|
)
|
Proceeds from disposition of short-term investment securities, net
|
|
|
27,371,566
|
|
Decrease in dividends and interest receivable
|
|
|
976,175
|
|
Increase in receivable for investments sold
|
|
|
(6,605,868
|
)
|
Increase in prepaid expenses and other assets
|
|
|
(8,017
|
)
|
Increase in payable for investments purchased
|
|
|
12,276,478
|
|
Increase in advisory fee payable
|
|
|
1,437
|
|
Decrease in due to other related parties
|
|
|
(880
|
)
|
Decrease in accrued expenses and other liabilities
|
|
|
(78,626
|
)
|
Unrealized gains on investments
|
|
|
(27,158,011
|
)
|
Net realized gains on investments
|
|
|
(11,572,543
|
)
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
63,394,247
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Cash distributions paid
|
|
|
(63,549,296
|
)
|
Increase in secured borrowing payable
|
|
|
155,049
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(63,394,247
|
)
|
|
|
|
|
|
Net increase in cash
|
|
|
0
|
|
|
|
|
|
|
|
|
Cash:
|
|
|
|
|
Beginning of period
|
|
$
|
0
|
|
|
|
|
|
|
End of period
|
|
$
|
0
|
|
|
|
|
|
|
|
|
Supplemental cash disclosure:
|
|
|
|
|
Cash paid for interest
|
|
$
|
546,468
|
|
|
|
|
|
|
|
|
Supplemental non-cash financing
disclosure:
|
|
|
|
|
Reinvestment of dividends
|
|
$
|
2,403,707
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
22
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Financial highlights
|
(For a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended April 30
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
Net asset value,
beginning of period
|
|
$
|
9.67
|
|
|
$
|
10.11
|
|
|
$
|
9.69
|
|
|
$
|
7.37
|
|
|
$
|
12.32
|
|
Net investment income
|
|
|
0.88
|
1
|
|
|
0.95
|
1
|
|
|
1.02
|
1
|
|
|
1.06
|
1
|
|
|
1.35
|
1
|
Net realized and unrealized gains (losses) on investments
|
|
|
0.54
|
|
|
|
(0.37
|
)
|
|
|
0.42
|
|
|
|
2.41
|
|
|
|
(4.91
|
)
|
Distributions to preferred shareholders from net investment income
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
(0.00
|
)
1
,
2
|
|
|
(0.01
|
)
1
|
|
|
(0.08
|
)
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
1.42
|
|
|
|
0.58
|
|
|
|
1.44
|
|
|
|
3.46
|
|
|
|
(3.64
|
)
|
Distributions to common shareholders
from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.91
|
)
|
|
|
(1.02
|
)
|
|
|
(1.02
|
)
|
|
|
(1.08
|
)
|
|
|
(1.31
|
)
|
Tax basis return of capital
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
(0.06
|
)
1
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to common shareholders
|
|
|
(0.91
|
)
|
|
|
(1.02
|
)
|
|
|
(1.02
|
)
|
|
|
(1.14
|
)
|
|
|
(1.31
|
)
|
Net asset value, end
of period
|
|
$
|
10.18
|
|
|
$
|
9.67
|
|
|
$
|
10.11
|
|
|
$
|
9.69
|
|
|
$
|
7.37
|
|
Market value, end of
period
|
|
$
|
10.23
|
|
|
$
|
10.29
|
|
|
$
|
10.38
|
|
|
$
|
9.63
|
|
|
$
|
7.30
|
|
Total return based on
market value
3
|
|
|
8.90
|
%
|
|
|
10.03
|
%
|
|
|
19.68
|
%
|
|
|
49.84
|
%
|
|
|
(25.48
|
)%
|
Ratios to average net assets
(annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross expenses
|
|
|
1.29
|
%
|
|
|
1.35
|
%
|
|
|
1.44
|
%
|
|
|
1.79
|
%
|
|
|
3.09
|
%
|
Net expenses
|
|
|
1.05
|
%
|
|
|
1.03
|
%
|
|
|
1.09
|
%
|
|
|
1.13
|
%
|
|
|
2.30
|
%
|
Interest expense
4
|
|
|
0.08
|
%
|
|
|
0.08
|
%
|
|
|
0.11
|
%
|
|
|
0.02
|
%
|
|
|
0.79
|
%
|
Net investment income
|
|
|
8.89
|
%
|
|
|
9.89
|
%
|
|
|
10.55
|
%
5
|
|
|
11.81
|
%
5
|
|
|
14.35
|
%
5
|
Supplemental data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
27
|
%
|
|
|
25
|
%
|
|
|
42
|
%
|
|
|
108
|
%
|
|
|
88
|
%
|
Net assets of common shareholders, end of period (000s omitted)
|
|
|
$722,555
|
|
|
|
$683,807
|
|
|
|
$709,850
|
|
|
|
$676,144
|
|
|
|
$508,602
|
|
|
|
|
|
|
|
Borrowings outstanding, end of period (000s omitted)
|
|
|
$230,000
|
|
|
|
$230,000
|
|
|
|
$230,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Asset coverage per $1,000 of borrowing, end of period
|
|
|
$4,142
|
|
|
|
$3,973
|
|
|
|
$4,088
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
Liquidation value of Preferred Shares, end of period (000s omitted)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
$196,000
|
|
|
|
$196,000
|
|
Asset coverage ratio for Preferred Shares, end of period
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
394
|
%
|
|
|
315
|
%
|
1.
|
Calculated based upon average common shares outstanding
|
2.
|
Amount is less than $0.005.
|
3.
|
Total return is calculated assuming a purchase of common stock on the first day and a sale on the last day of the period reported. Dividends and distributions, if any, are assumed for purposes of these calculations to
be reinvested at prices obtained under the Funds Automatic Dividend Reinvestment Plan. Total return does not reflect brokerage commissions. Returns for periods of less than one year are not annualized
|
4.
|
Interest expense ratio relates to interest associated with borrowings and/or leverage transactions.
|
5.
|
The net investment income ratio reflects any distributions paid to preferred shareholders.
|
The accompanying notes are an integral part of these financial statements.
|
|
|
|
|
|
|
N
otes to financial statements
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
23
|
|
1. ORGANIZATION
Wells Fargo Advantage Income Opportunities Fund (the Fund) was organized as a statutory trust under the laws of the state of Delaware on December 3,
2002 and is registered as a diversified closed-end management investment company under the Investment Company Act of 1940, as amended.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant
accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require 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.
Securities valuation
All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (normally 4 p.m. Eastern Time).
Fixed income securities acquired with maturities exceeding 60 days are valued based on evaluated bid prices received from an independent pricing service which may
utilize both transaction data and market information such as yield, prices of securities of comparable quality, coupon rate, maturity, type of issue, trading characteristics and other market data. If valuations are not available from the independent
pricing service or values received are deemed not representative of market value, values will be obtained from a broker-dealer or otherwise determined based on the Funds Valuation Procedures.
Short-term securities with maturities of 60 days or less generally are valued at amortized cost which approximates fair value. 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.
Equity securities that are listed on a foreign
or domestic exchange, except for The Nasdaq Stock Market, Inc. (Nasdaq), are valued at the official closing price or, if none, the last sales price. Securities listed on Nasdaq are valued at the Nasdaq Official Closing Price
(NOCP). If no NOCP is available, securities are valued at the last sales price. If no sales price is shown on the Nasdaq, the bid price will be used. If no sale occurs on the primary exchange or market for the security that day or if no
sale occurs and no bid price is shown on Nasdaq, the prior days price will be deemed stale and fair values will be determined in accordance with the Funds Valuation Procedures.
Investments in registered open-end investment companies are valued at net asset value.
Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined by procedures established in good faith and
approved by the Board of Trustees. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation
Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Management Valuation Team of Wells Fargo Funds Management, LLC (Funds Management).
The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions
taken by the Valuation Committee or the Management Valuation Team which may include items for ratification.
Valuations of fair valued securities are compared to the
next actual sales price when available, or other appropriate market information to assess the continued appropriateness of the fair valuation methodology used. These securities are fair valued on a day-to-day basis, taking into consideration changes
to appropriate market information and any significant changes to the input factors considered in the valuation process until there is a readily available price provided on the exchange or by an independent pricing service. Valuations received from
an independent pricing service or broker quotes are periodically validated by comparisons to most recent trades and valuations provided by other independent pricing services in addition to the review of prices by the adviser and/or subadviser.
Unobservable inputs used in determining fair valuations are identified based on the type of security, taking into consideration factors utilized by market participants in valuing the investment, knowledge about the issuer and the current market
environment.
|
|
|
|
|
24
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Notes to financial statements
|
When-issued transactions
The Fund may purchase securities on a forward commitment or when-issued basis. The Fund records a when-issued transaction on the trade
date and will segregate assets in an amount at least equal in value to the Funds commitment to purchase when-issued securities. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the
settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
Term loans
The Fund may invest in term loans. The Fund begins earning
interest when the loans are funded. The loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. The Fund assumes the credit risk of the borrower and there could be potential loss to the Fund in the
event of default by the borrower.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.
Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily based on the effective interest method. To the extent debt obligations
are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. If the issuer
subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.
Dividend income is recognized on the ex-dividend date.
Distributions to shareholders
Distributions to shareholders from net
investment income and net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with federal income tax regulations, which may differ in amount or character from net investment income and
realized gains recognized for purposes of U.S. generally accepted accounting principles.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by
distributing 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.
The Funds income and federal excise tax returns and all financial records supporting those returns for the
prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Funds tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe
that there are any uncertain tax positions that require recognition of a tax liability.
Reclassifications are made to the Funds capital accounts for permanent
tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under federal income tax regulations. U.S. generally accepted accounting principles requires that certain components of net assets be
adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The primary permanent differences causing such reclassifications are due to bond
premiums, consent fees, and certain distributions paid. At April 30, 2013, as a result of permanent book-to-tax differences, the following reclassification adjustments were made on the Statement of Assets and Liabilities:
|
|
|
|
|
Paid-in capital
|
|
Overdistributed net
investment income
|
|
Accumulated net
realized losses
on investments
|
$(1,011,586)
|
|
$10,046,062
|
|
$(9,034,476)
|
|
|
|
|
|
|
|
Notes to financial statements
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
25
|
|
At April 30, 2013, net capital loss carryforwards, which are available to offset future net realized capital gains, were as
follows:
|
|
|
|
|
|
|
Pre-enactment capital
loss expiration*
|
2015
|
|
2016
|
|
2017
|
|
2018
|
$1,830,407
|
|
$15,525,027
|
|
$130,598,584
|
|
$155,329,141
|
*
|
Losses incurred in taxable years beginning before December 22, 2010.
|
3. FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework
that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Funds investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to significant unobservable inputs (Level 3). The Funds investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the
fair value measurement. The inputs are summarized into three broad levels as follows:
n
|
|
Level 1 quoted prices in active markets for identical securities
|
n
|
|
Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, use of amortized cost, etc.)
|
n
|
|
Level 3 significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
|
The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.
As of April 30, 2013, the inputs used in valuing investments in securities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in securities
|
|
Quoted prices
(Level 1)
|
|
|
Significant other
observable Inputs
(Level 2)
|
|
|
Significant
unobservable inputs
(Level 3)
|
|
|
Total
|
|
|
|
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stocks
|
|
$
|
1,093,821
|
|
|
$
|
0
|
|
|
$
|
2,149
|
|
|
$
|
1,095,970
|
|
Preferred stocks
|
|
|
1,451,670
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,451,670
|
|
|
|
|
|
|
Corporate bonds and notes
|
|
|
0
|
|
|
|
804,108,077
|
|
|
|
0
|
|
|
|
804,108,077
|
|
|
|
|
|
|
Term loans
|
|
|
0
|
|
|
|
66,767,883
|
|
|
|
20,331,214
|
|
|
|
87,099,097
|
|
|
|
|
|
|
Yankee corporate bonds and notes
|
|
|
0
|
|
|
|
37,110,216
|
|
|
|
0
|
|
|
|
37,110,216
|
|
|
|
|
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment companies
|
|
|
17,197,569
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,197,569
|
|
|
|
$
|
19,743,060
|
|
|
$
|
907,986,176
|
|
|
$
|
20,333,363
|
|
|
$
|
948,062,599
|
|
Transfers in and transfers out are recognized at the end of the reporting period. For the year ended April 30, 2013,
the Fund did not have any transfers into/out of Level 1 or Level 2.
The following is a reconciliation of assets in which significant unobservable inputs (Level
3) were used in determining fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stocks
|
|
|
Term
loans
|
|
|
Total
|
|
Balance as of April 30, 2012
|
|
$
|
9,671
|
|
|
$
|
5,611,506
|
|
|
$
|
5,621,177
|
|
Accrued discounts (premiums)
|
|
|
0
|
|
|
|
7,583
|
|
|
|
7,583
|
|
Realized gains (losses)
|
|
|
0
|
|
|
|
18,365
|
|
|
|
18,365
|
|
Change in unrealized gains (losses)
|
|
|
(7,522
|
)
|
|
|
248,074
|
|
|
|
240,552
|
|
Purchases
|
|
|
0
|
|
|
|
21,618,256
|
|
|
|
21,618,256
|
|
Sales
|
|
|
0
|
|
|
|
(7,172,570
|
)
|
|
|
(7,172,570
|
)
|
Transfers into Level 3
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Transfers out of Level 3
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Balance as of April 30, 2013
|
|
$
|
2,149
|
|
|
$
|
20,331,214
|
|
|
$
|
20,333,363
|
|
Change in unrealized gains (losses)
relating to securities still held at April 30, 2013
|
|
$
|
(7,522
|
)
|
|
$
|
350,996
|
|
|
$
|
343,474
|
|
The investments types categorized above were valued using indicative broker quotes and are therefore considered Level 3 inputs.
Quantitative unobservable inputs used by the brokers are often proprietary and not provided to the Fund and therefore the disclosure that would address these inputs is
not included above.
|
|
|
|
|
26
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Notes to financial statements
|
4. TRANSACTIONS WITH AFFILIATES AND
OTHER EXPENSES
Advisory fee
Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company (Wells Fargo), is the adviser to the Fund and is entitled to receive
a fee at an annual rate of 0.60% of the Funds average daily total assets. Total assets consist of the net assets of the Fund plus borrowings or other leverage for investment purposes to the extent excluded in calculating net assets. Funds
Management has committed through February 25, 2014 to waive fees and/or reimburse expenses to the extent necessary to limit the Funds borrowing expenses to an amount that is 0.05% lower than what the borrowing expenses would have been if
the Fund had not redeemed its Auction Market Preferred Shares (Preferred Shares). Funds Management contractually waived its advisory fee in the amount of $1,686,252 for the year ended April 30, 2013.
Funds Management has retained the services of a subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Funds
Management. Wells Capital Management Incorporated, an affiliate of Funds Management, is the subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate of 0.40% of the Funds average daily total assets.
Administration fee
Funds Management also serves as the administrator to the Fund providing the Fund with facilities, equipment and personnel. Funds Management is entitled to receive an
annual administration fee from the Fund equal to 0.05% of the Funds average daily total assets.
5. CAPITAL SHARE TRANSACTIONS
The Fund has authorized capital of 100,000,000 shares with no par value.
For the year ended April 30, 2013 and the year ended April 30, 2012, the Fund issued 241,079 and 487,572 shares, respectively.
The Fund no longer has any
Preferred Shares outstanding.
6. BORROWINGS
The Fund has borrowed $230 million through a secured debt financing agreement administered by a major financial institution (the Facility). The Facility has
a commitment amount of $230 million which expires on February 24, 2014, at which point it may be renegotiated and potentially renewed for another one-year term. At April 30, 2013, the Fund had secured borrowings outstanding in the amount
of $230,209,098 (including accrued interest and usage and commitment fees payable).
The Funds borrowings under the Facility are generally charged interest at
a rate based on the rates of the commercial paper notes issued to fund the Funds borrowings or at the London Interbank Offered Rate (LIBOR) plus 1.0%. During the year ended April 30, 2013, an effective interest rate of 0.23% was incurred
on the borrowings. Interest expense of $546,675, representing 0.08% of the Funds average daily net assets, was incurred during the year ended April 30, 2013.
The Fund has pledged all of its assets to secure the borrowings and currently pays, on a monthly basis, a usage fee at an annual rate of 0.40% of the daily average
outstanding principal amount of borrowings and commitment fee at an annual rate of 0.40% of the product of (i) the daily average outstanding principal amount of borrowings and (ii) 1.02. The secured borrowing fees on the Statement of
Operations of $2,027,462 represents the usage fee, commitment fee and structuring fees. For the year ended April 30, 2013, the Fund paid structuring fees in the amount of $134,218.
7. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the year ended April 30, 2013 were $369,885,391
and $240,661,177, respectively.
As of April 30, 2013, the Fund had unfunded term loan commitments of $8,506,075.
8. DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid was $64,767,000 and $71,940,314 of ordinary income for the years ended April 30, 2013 and April 30, 2012, respectively.
As of April 30, 2013, the components of distributable earnings on a tax basis were as follows:
|
|
|
Unrealized
gains
|
|
Capital loss
carryforward
|
$47,590,956
|
|
$(303,283,159)
|
|
|
|
|
|
|
|
Notes to financial statements
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
27
|
|
9. INDEMNIFICATION
Under the Funds organizational documents, the officers and directors are indemnified against certain liabilities that may arise out of
performance of their duties to the Fund. Additionally, in the normal course of business, the Fund may enter into contracts with service providers that contain a variety of indemnification clauses. The Funds maximum exposure under these
arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
10. NEW ACCOUNTING PRONOUNCEMENT
In December 2011, the Financial Accounting Standards Board
(FASB) issued Accounting Standard Update (ASU) No. 2011-11,
Disclosures about Offsetting Assets and Liabilities
. ASU 2011-11, which amends FASB ASC Topic 210,
Balance Sheet
, creates new disclosure
requirements which require entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement
or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently assessing the potential impact, in addition to expanded financial statement
disclosure, that may result from adopting this ASU.
11. SUBSEQUENT DISTRIBUTIONS
The Fund declared the following distributions to common shareholders:
|
|
|
|
|
|
|
Declaration date
|
|
Record date
|
|
Payable date
|
|
Per share amount
|
April 26, 2013
|
|
May 15, 2013
|
|
June 3, 2013
|
|
$0.068
|
May 22, 2013
|
|
June 17, 2013
|
|
July 1, 2013
|
|
$0.068
|
These distributions are not reflected in the accompanying financial statements.
|
|
|
|
|
28
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Report of independent registered public accounting firm
|
BOARD OF TRUSTEES AND SHAREHOLDERS OF
WELLS FARGO ADVANTAGE INCOME OPPORTUNITIES FUND:
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Wells Fargo Advantage Income
Opportunities Fund (the Fund) as of April 30, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, statement of cash flows
for the year then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds management. Our responsibility is to
express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2013, by correspondence with custodian and brokers,
or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material
respects, the financial position of the Wells Fargo Advantage Income Opportunities Fund as of April 30, 2013, the results of its operations for the year then ended, changes in its net assets for each of the years in the two-year period then ended,
its cash flows for the year then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
June 21, 2013
|
|
|
|
|
|
|
Other information (unaudited)
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
29
|
|
TAX INFORMATION
For the fiscal year ended April 30, 2013, $62,484,066 has been designated as interest-related dividends for nonresident alien shareholders pursuant to Section 871 of the
Internal Revenue Code.
PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon
request, by calling
1-800-222-8222
, visiting our website at
wellsfargoadvantagefunds.com
, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available without charge on the Funds website at
wellsfargoadvantagefunds.com
or by visiting the SEC website at sec.gov.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for the Fund are publicly available on the Funds website (
wellsfargoadvantagefunds.com
) on a monthly, 30-day or more delayed
basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available without charge by visiting the SEC website at sec.gov. In addition, the Funds
Form N-Q may be reviewed and copied at the SECs Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
|
|
|
|
|
30
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Other information (unaudited)
|
BOARD OF TRUSTEES AND OFFICERS
The following table provides basic information about the Board of Trustees (the Trustees) and Officers of the Fund. Each of the
Trustees and Officers listed below acts in identical capacities for the Wells Fargo Advantage family of funds, which consists of 131 funds
1
comprising the Wells Fargo Funds Trust, Wells Fargo
Variable Trust, Wells Fargo Master Trust, and four closed-end funds, including the Fund (collectively the Fund Complex). All of the Trustees are also Members of the Audit and Governance Committees of each Trust in the Fund Complex. The
mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. The Board of Trustees is classified into three classes of which one is elected annually. Each Trustee serves a three-year term concurrent with the
class from which the Trustee is elected. Each Officer serves an indefinite term.
Independent Trustees
|
|
|
|
|
|
|
Name and
year of birth
|
|
Position held and
length of service*
|
|
Principal occupations during past five years
|
|
Other
directorships during
past five years
|
Peter G. Gordon (Born 1942)
|
|
Trustee, since 2010; Chairman, since 2010
|
|
Co-Founder, Retired Chairman, President and CEO of Crystal Geyser Water Company. Trustee Emeritus, Colby College.
|
|
Asset Allocation Trust
|
Isaiah Harris, Jr. (Born 1952)
|
|
Trustee, since 2010
|
|
Retired. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth
Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of
Business. Advisory Board Member, Palm Coast Academy (charter school). Mr. Harris is a certified public accountant.
|
|
CIGNA Corporation; Deluxe Corporation; Asset Allocation Trust
|
Judith M. Johnson (Born 1949)
|
|
Trustee, since 2010;
Audit
Committee
Chairman, since 2010
|
|
Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms.
Johnson is an attorney, certified public accountant and a certified managerial accountant.
|
|
Asset Allocation Trust
|
Leroy Keith, Jr. (Born 1939)
|
|
Trustee, since 2003
|
|
Chairman, Bloc Global Services (development and construction). Trustee of the Evergreen Funds from 1983 to 2010. Former Managing Director,
Almanac Capital Management (commodities firm), former Partner, Stonington Partners, Inc. (private equity fund), former Director, Obagi Medical Products Co. and former Director, Lincoln Educational Services.
|
|
Trustee, Virtus Fund Complex (consisting of 48 portfolios as of 1/31/13); Asset Allocation Trust
|
David F. Larcker (Born 1950)
|
|
Trustee, since 2010
|
|
James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Morgan Stanley Director of the Center for
Leadership Development and Research and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young
Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005.
|
|
Asset Allocation Trust
|
Olivia S. Mitchell (Born 1953)
|
|
Trustee, since 2010
|
|
International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of
Whartons Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993.
|
|
Asset Allocation Trust
|
Timothy J. Penny (Born 1951)
|
|
Trustee, since 2010
|
|
President and CEO of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007 and Senior Fellow at the Humphrey
Institute Policy Forum at the University of Minnesota since 1995. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007.
|
|
Asset Allocation Trust
|
|
|
|
|
|
|
|
Other information (unaudited)
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
31
|
|
|
|
|
|
|
|
|
Name and
year of birth
|
|
Position held and
length of service*
|
|
Principal occupations during past five years
|
|
Other
directorships during
past five years
|
Michael S. Scofield (Born 1943)
|
|
Trustee, since 2003
|
|
Served on the Investment Company Institutes Board of Governors and Executive Committee from 2008-2011 as well the Governing Council of
the Independent Directors Council from 2006-2011 and the Independent Directors Council Executive Committee from 2008-2011. Chairman of the IDC from 2008-2010. Institutional Investor (Fund Directions) Trustee of Year in 2007. Trustee of the Evergreen
Funds (and its predecessors) from 1984 to 2010. Chairman of the Evergreen Funds from 2000-2010. Former Trustee of the Mentor Funds. Retired Attorney, Law Offices of Michael S. Scofield.
|
|
Asset Allocation Trust
|
Donald C. Willeke (Born 1940)
|
|
Trustee, since 2010
|
|
Principal of the law firm of Willeke & Daniels. General Counsel of the Minneapolis Employees Retirement Fund from 1984 until its
consolidation into the Minnesota Public Employees Retirement Association on June 30, 2010. Director and Vice Chair of The Tree Trust (non-profit corporation). Director of the American Chestnut Foundation (non-profit corporation).
|
|
Asset Allocation Trust
|
*
|
Length of service dates reflect the Trustees commencement of service with the Trusts predecessor entities, where applicable.
|
Officers
|
|
|
|
|
|
|
Name and
year of birth
|
|
Position held and
length of service
|
|
Principal occupations during past five years
|
|
|
Karla M. Rabusch (Born 1959)
|
|
President, since 2010
|
|
Executive Vice President of Wells Fargo Bank, N.A. and President of Wells Fargo Funds Management, LLC since 2003.
|
|
|
Jeremy DePalma
1
(Born 1974)
|
|
Treasurer, since 2012
|
|
Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC
from 2008 to 2010. Vice President, Evergreen Investment Services, Inc. from 2004 to 2007. Head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010.
|
|
|
C. David Messman (Born 1960)
|
|
Secretary, since 2010;
Chief Legal Officer, since 2010
|
|
Senior Vice President and Secretary of Wells Fargo Funds Management, LLC since 2001. Vice President and Managing Counsel of Wells Fargo Bank,
N.A. since 1996.
|
|
|
Debra Ann Early
(Born
1964)
|
|
Chief Compliance Officer, since 2010
|
|
Chief Compliance Officer of Wells Fargo Funds Management, LLC since 2007. Chief Compliance Officer of Parnassus Investments from 2005 to 2007.
Chief Financial Officer of Parnassus Investments from 2004 to 2007.
|
|
|
David Berardi
(Born
1975)
|
|
Assistant Treasurer, since 2009
|
|
Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to
2010. Assistant Vice President of Evergreen Investment Services, Inc. from 2004 to 2008. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010.
|
|
|
1.
|
Jeremy DePalma acts as Treasurer of 58 funds and Assistant Treasurer of 73 funds in the Fund Complex.
|
|
|
|
|
|
32
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Other information (unaudited)
|
BOARD CONSIDERATION OF INVESTMENT
ADVISORY AND SUBADVISORY AGREEMENTS:
Under Section 15 of the Investment Company Act of 1940 (the 1940 Act), the Board of Trustees (the
Board) of Wells Fargo Advantage Income Opportunities Fund (the Fund), all the members of which have no direct or indirect interest in the investment advisory and sub-advisory agreements and are not interested
persons of the Fund, as defined in the 1940 Act (the Independent Trustees), must determine whether to approve the continuation of the Funds investment advisory and sub-advisory agreements. In this regard, at an in-person
meeting held on March 28-29, 2013 (the Meeting), the Board reviewed: (i) an investment advisory agreement with Wells Fargo Funds Management, LLC (Funds Management) for the Fund, and (ii) an investment sub-advisory agreement
with Wells Capital Management Incorporated (the Sub-Adviser), an affiliate of Funds Management, for the Fund. The investment advisory agreement with Funds Management and the investment sub-advisory agreement with the Sub-Adviser are
collectively referred to as the Advisory Agreements.
At the Meeting, the Board considered the factors and reached the conclusions described below
relating to the selection of Funds Management and the Sub-Adviser and the continuation of the Advisory Agreements. Prior to the Meeting, the Trustees conferred extensively among themselves and with representatives of Funds Management about these
matters. The Board has adopted a team-based approach, with each team consisting of a sub-set of Trustees, to assist the Board in the discharge of its duties in reviewing performance and other matters throughout the year. The Independent Trustees
were assisted in their evaluation of the Advisory Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately.
In providing information to the Board, Funds Management and the Sub-Adviser were guided by a detailed set of requests for information submitted to them by independent
legal counsel on behalf of the Independent Trustees at the start of the Boards annual contract renewal process earlier in 2013. In considering and approving the Advisory Agreements, the Trustees considered the information they believed
relevant, including but not limited to the information discussed below. The Board considered not only the specific information presented in connection with the Meeting, but also the knowledge gained over time through interaction with Funds
Management and the Sub-Adviser about various topics. In this regard, the Board reviewed reports of Funds Management at each of its quarterly meetings, which included, among other things, portfolio reviews and performance reports. In addition, the
Board and the teams mentioned above confer with portfolio managers at various times throughout the year. The Board did not identify any particular information or consideration that was all-important or controlling, and each individual Trustee may
have attributed different weights to various factors.
After its deliberations, the Board unanimously determined that the continuation of the Advisory Agreements is
in the best interests of the Fund and its shareholders, and that the compensation payable to Funds Management and the Sub-Adviser is reasonable. The Board considered the continuation of the Advisory Agreements for the Fund as part of its
consideration of the continuation of advisory agreements for funds across the complex, but each decision was made on a fund-by-fund basis. The following summarizes a number of important, but not necessarily all, factors considered by the Board in
reaching its determination.
Nature, extent and quality of services
The Board received and considered various information regarding the nature, extent and quality of services provided to the Fund by Funds
Management and the Sub-Adviser under the Advisory Agreements. This information included, among other things, a summary of the background and experience of senior management of Funds Management, and the qualifications, background, tenure and
responsibilities of each of the portfolio managers primarily responsible for the day-to-day portfolio management of the Fund.
The Board evaluated the ability of
Funds Management and the Sub-Adviser, based on attributes such as their financial condition, resources and reputation, to attract and retain qualified investment professionals, including research, advisory and supervisory personnel. The Board
further considered the compliance programs and compliance records of Funds Management and the Sub-Adviser. In addition, the Board took into account the administrative and other services provided to the Fund by Funds Management and its affiliates and
Funds Managements oversight of the Funds various service providers.
Fund performance and expenses
The Board considered the performance results for the Fund over various time periods ended December 31, 2012. The Board also considered these results in comparison to the
performance of funds in a universe that was determined by Lipper Inc. (Lipper) to be similar to the Fund (the Universe), and in comparison to the Funds benchmark index and to other comparative data. Lipper is an
independent provider of investment company data. The Board received a description of the methodology used by Lipper to select the funds in the performance Universe. The Board noted that while the performance of the Fund was lower than the median
performance of the Universe for the one- and five-year periods under review, it was in range of the median performance of the Universe for the three-year period under review. The Board also noted that the
|
|
|
|
|
|
|
Other information (unaudited)
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
33
|
|
performance of the Fund was higher than its benchmark, the BofA Merrill Lynch High Yield Master II
Index, for the one- and three-year periods under review, although it was lower than the
benchmark for the five-year period under review.
The Board received and considered information regarding the Funds net operating expense ratio and its various
components, including actual management fees (which reflect fee waivers, if any, and include advisory and administration fees), custodian and other non-management fees, and fee waiver and expense reimbursement arrangements. The Board also considered
this ratio in comparison to the median ratio of funds in an expense group that was determined by Lipper to be similar to the Fund (the Group). The Board received a description of the methodology used by Lipper to select the funds in the
expense Group. Based on the Lipper reports, the Board noted that the net operating expense ratio of the Fund was lower than the median net operating expense ratio of the expense Group.
Based on its consideration of the factors and information it deemed relevant, including those described here, the Board concluded that the overall performance and
expense structure of the Fund supported the re-approval of the Advisory Agreements.
Investment advisory and sub-advisory fee rates
The Board reviewed and considered the contractual
investment advisory fee rate that is payable by the Fund to Funds Management for investment advisory services (the Advisory Agreement Rate), both on a stand-alone basis and on a combined basis with the Funds contractual
administration fee rate (the Management Rate). The Board also reviewed and considered the contractual investment sub-advisory fee rate that is payable by Funds Management to the Sub-Adviser for investment sub-advisory services (the
Sub-Advisory Agreement Rate).
Among other information reviewed by the Board was a comparison of the Management Rate of the Fund with that of other
funds in the expense Group at a common asset level. The Board noted that the Management Rate of the Fund was lower than the median rate for the Funds expense Group. The Board and Funds Management agreed to extend the Funds advisory fee
waiver to February 2014.
The Board also received and considered information about the portion of the total advisory fee that was retained by Funds Management after
payment of the fee to the Sub-Adviser for sub-advisory services. In assessing the reasonableness of this amount, the Board received and evaluated information concerning the nature and extent of responsibilities retained and risks assumed by Funds
Management and not delegated to or assumed by the Sub-Adviser, and about Funds Managements on-going oversight services. In recognition of the fact that the Wells Fargo enterprise provides a suite of combined advisory and sub-advisory services
to the Fund through affiliated entities, the Board ascribed limited relevance to the allocation of the total advisory fee between Funds Management and the Sub-Adviser.
Based on its consideration of the factors and information it deemed relevant, including those described here, the Board determined that the Advisory Agreement Rate and
the Sub-Advisory Agreement Rate were reasonable in light of the services covered by the Advisory Agreements.
Profitability
The Board received and considered information concerning the profitability of Funds
Management, as well as the profitability of Wells Fargo as a whole, from providing services to the Fund. The Board did not receive or consider to be necessary separate profitability information with respect to the Sub-Adviser, because, as an
affiliate of Funds Management, its profitability information was subsumed in the collective Wells Fargo profitability analysis provided by Funds Management.
Funds
Management explained the methodologies and estimates that it used in calculating the profitability from the Fund and the fund family as a whole. Among other things, the Board noted that the levels of profitability reported on a fund-by-fund basis
varied widely, depending on factors such as the size and type of fund. Based on its review, the Board did not deem the profits reported by Funds Management to be at a level that would prevent it from approving the continuation of the Advisory
Agreements.
Economies of scale
The Board considered the extent to which there may be sharing with the Fund of potential economies of scale in the provision of advisory services to the Fund. The Board
noted that, as is the case with many other closed-end funds, there are no breakpoints in the Management Rate. The Board further noted that, although the Fund would not share in any potential economies of scale through contractual breakpoints, fee
waiver and expense reimbursement arrangements can also be a means of sharing potential economies of scale with the Fund. The Board noted that it would have opportunities to revisit the Management Rate as part of future contract reviews.
|
|
|
|
|
34
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
Other information (unaudited)
|
Other benefits to Funds Management and
the Sub-Adviser
The Board received and considered information regarding potential fall-out or ancillary benefits received by Funds
Management and its affiliates, including the Sub-Adviser, as a result of their relationship with the Fund. Ancillary benefits could include, among others, benefits directly attributable to other relationships with the Fund and benefits potentially
derived from an increase in Funds Managements and the Sub-Advisers business as a result of their relationship with the Fund (such as the ability to market to shareholders other financial products and services offered by Funds Management
and its affiliates, including the Sub-Adviser, or to operate other products and services that follow investment strategies similar to those of the Fund).
Based on
its consideration of the factors and information it deemed relevant, including those described here, the Board did not find that any ancillary benefits received by Funds Management and its affiliates, including the Sub-Adviser, were unreasonable.
Conclusion
After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Board unanimously approved the
continuation of the Advisory Agreements for an additional one-year period.
|
|
|
|
|
|
|
Automatic dividend reinvestment plan
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
|
35
|
|
AUTOMATIC DIVIDEND REINVESTMENT PLAN
All common shareholders are eligible to participate in the Automatic Dividend Reinvestment Plan (the Plan). Pursuant to the Plan,
unless a common shareholder is ineligible or elects otherwise, all cash dividends and capital gains distributions are automatically reinvested by Computershare Trust Company, N.A., as agent for shareholders in administering the Plan (Plan
Agent), in additional common shares of the Fund. Whenever the Fund declares an ordinary income dividend or a capital gain dividend (collectively referred to as dividends) payable either in shares or in cash, nonparticipants in the
Plan will receive cash, and participants in the Plan will receive the equivalent in shares of common shares. The shares are acquired by the Plan Agent for the participants account, depending upon the circumstances described below, either (i)
through receipt of additional unissued but authorized common shares from the Fund (newly issued common shares) or (ii) by purchase of outstanding common shares on the open-market (open-market purchases) on the NYSE Amex or elsewhere. If,
on the payment date for any dividend or distribution, the net asset value per share of the common shares is equal to or less than the market price per common share plus estimated brokerage commissions (market premium), the Plan Agent
will invest the amount of such dividend or distribution in newly issued shares on behalf of the participant. The number of newly issued common shares to be credited to the participants account will be determined by dividing the dollar amount
of the dividend by the net asset value per share on the date the shares are issued, provided that the maximum discount from the then current market price per share on the date of issuance may not exceed 5%. If on the dividend payment date the net
asset value per share is greater than the market value or market premium (market discount), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participant in open-market purchases. There will be no
brokerage charges with respect to shares issued directly by the Fund as a result of dividends or capital gains distributions payable either in shares or in cash. However, each participant will pay a pro rata share of brokerage commissions incurred
with respect to the Plan Agents open-market purchases in connection with the reinvestment of dividends. The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. All correspondence concerning the Plan should be directed to the Plan Agent at P.O. Box 43010, Providence, Rhode Island 02940-3010 or by calling 1-800-730-6001.
|
|
|
|
|
36
|
|
Wells Fargo Advantage Income Opportunities Fund
|
|
List of abbreviations
|
The following is a list of common abbreviations for terms and entities that may have appeared in this report.
ACA
|
ACA Financial Guaranty Corporation
|
ADR
|
American depositary receipt
|
ADS
|
American depositary shares
|
AGC
|
Assured Guaranty Corporation
|
AGM
|
Assured Guaranty Municipal
|
Ambac
|
Ambac Financial Group Incorporated
|
AMT
|
Alternative minimum tax
|
BAN
|
Bond anticipation notes
|
BHAC
|
Berkshire Hathaway Assurance Corporation
|
CAB
|
Capital appreciation bond
|
CCAB
|
Convertible capital appreciation bond
|
CDA
|
Community Development Authority
|
CDO
|
Collateralized debt obligation
|
COP
|
Certificate of participation
|
DRIVER
|
Derivative inverse tax-exempt receipts
|
DW&P
|
Department of Water & Power
|
DWR
|
Department of Water Resources
|
ECFA
|
Educational & Cultural Facilities Authority
|
EDA
|
Economic Development Authority
|
EDFA
|
Economic Development Finance Authority
|
ETF
|
Exchange-traded fund
|
FDIC
|
Federal Deposit Insurance Corporation
|
FFCB
|
Federal Farm Credit Banks
|
FGIC
|
Financial Guaranty Insurance Corporation
|
FHA
|
Federal Housing Administration
|
FHLB
|
Federal Home Loan Bank
|
FHLMC
|
Federal Home Loan Mortgage Corporation
|
FICO
|
The Financing Corporation
|
FNMA
|
Federal National Mortgage Association
|
FSA
|
Farm Service Agency
|
GBP
|
Great British pound
|
GDR
|
Global depositary receipt
|
GNMA
|
Government National Mortgage Association
|
HCFR
|
Healthcare facilities revenue
|
HEFA
|
Health & Educational Facilities Authority
|
HEFAR
|
Higher education facilities authority revenue
|
HFA
|
Housing Finance Authority
|
HFFA
|
Health Facilities Financing Authority
|
HUD
|
Department of Housing and Urban Development
|
IDA
|
Industrial Development Authority
|
IDAG
|
Industrial Development Agency
|
IDR
|
Industrial development revenue
|
KRW
|
Republic of Korea won
|
LIBOR
|
London Interbank Offered Rate
|
LIQ
|
Liquidity agreement
|
LLC
|
Limited liability company
|
LLP
|
Limited liability partnership
|
MBIA
|
Municipal Bond Insurance Association
|
MFHR
|
Multifamily housing revenue
|
MSTR
|
Municipal securities trust receipts
|
MUD
|
Municipal Utility District
|
National
|
National Public Finance Guarantee Corporation
|
PCFA
|
Pollution Control Financing Authority
|
PCL
|
Public Company Limited
|
PCR
|
Pollution control revenue
|
PFA
|
Public Finance Authority
|
PFFA
|
Public Facilities Financing Authority
|
PFOTER
|
Puttable floating option tax-exempt receipts
|
plc
|
Public limited company
|
PUTTER
|
Puttable tax-exempt receipts
|
R&D
|
Research & development
|
Radian
|
Radian Asset Assurance
|
RAN
|
Revenue anticipation notes
|
RDA
|
Redevelopment Authority
|
RDFA
|
Redevelopment Finance Authority
|
REIT
|
Real estate investment trust
|
ROC
|
Reset option certificates
|
SAVRS
|
Select auction variable rate securities
|
SBA
|
Small Business Authority
|
SFHR
|
Single-family housing revenue
|
SFMR
|
Single-family mortgage revenue
|
SPA
|
Standby purchase agreement
|
SPDR
|
Standard & Poors Depositary Receipts
|
STRIPS
|
Separate trading of registered interest and principal securities
|
TAN
|
Tax anticipation notes
|
TIPS
|
Treasury inflation-protected securities
|
TRAN
|
Tax revenue anticipation notes
|
TTFA
|
Transportation Trust Fund Authority
|
TVA
|
Tennessee Valley Authority
|
Transfer Agent, Registrar, Shareholder Servicing
Agent & Dividend Disbursing Agent
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
1-800-730-6001
Website: wellsfargoadvantagefunds.com
Wells Fargo Funds Management, LLC, is a subsidiary of Wells Fargo & Company and is an affiliate of Wells Fargo & Companys broker/dealer subsidiaries. This
material is being prepared by Wells Fargo Funds Distributor, LLC. Member FINRA/SIPC, an affiliate of Wells Fargo & Company.
NOT FDIC
INSURED
¡
NO BANK GUARANTEE
¡
MAY LOSE VALUE
© 2013 Wells Fargo Funds Management, LLC. All rights reserved.
|
|
|
|
|
216824 06-13
AIO/AR156
04-13
|
ITEM 7.
|
DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
|
PROXY VOTING POLICIES AND PROCEDURES
REVISED AS OF FEBRUARY 8, 2012
1. Scope
of Policies and Procedures. These Policies and Procedures (Procedures) are used to determine how to vote proxies relating to portfolio securities held by the series of Wells Fargo Funds Trust, Wells Fargo Master Trust, Wells Fargo
Variable Trust, Asset Allocation Trust, Wells Fargo Advantage Global Dividend Opportunity Fund, Wells Fargo Advantage Income Opportunities Fund, Wells Fargo Advantage Multi-Sector Income Fund, and Wells Fargo Advantage Utilities and High Income Fund
(the Trusts) except for those series that exclusively hold non-voting securities (hereafter, all such series, and all such Trusts not having separate series, holding voting securities are referred to as the Funds).
2. Voting Philosophy. The Funds and Wells Fargo Funds Management, LLC (Funds Management) have adopted these Procedures to ensure
that proxies are voted in the best interests of Fund shareholders, without regard to any relationship that any affiliated person of the Fund (or an affiliated person of such affiliated person) may have with the issuer. Funds Management exercises its
voting responsibility, as a fiduciary, with the goal of maximizing value to shareholders consistent with governing laws and the investment policies of each Fund. While securities are not purchased to exercise control or to seek to effect corporate
change through share ownership, the Funds support sound corporate governance practices within companies in which they invest.
3.
Responsibilities
(a) Board of Trustees. The Board of Trustees of each Trust (the Board) has delegated the
responsibility for voting proxies relating to the Funds portfolio securities to Funds Management. The Board retains the authority to make or ratify any voting decisions or approve any changes to these Procedures as the Board deems appropriate.
Funds Management will provide reports to the Board regarding voting matters when and as reasonably requested by the Board. The Board shall review these Procedures as often as it deems appropriate to consider whether any revisions are warranted. On
an annual basis, the Board shall receive and review a report from Funds Management on the proxy voting process.
(b) Funds
Management Proxy Committee
|
(i)
|
Responsibilities. The Funds Management Proxy Voting Committee (the Proxy Committee) shall be responsible for overseeing the proxy voting process to ensure
its implementation in conformance with these Procedures. The Proxy Committee shall monitor Institutional Shareholder Services (ISS), the proxy voting agent for Funds Management, to determine that ISS is accurately applying the Procedures
as set forth herein. The Proxy Committee shall review the continuing appropriateness of the Procedures set forth herein, recommend revisions to the Board as necessary and provide an annual update to the Board on the proxy voting process.
|
|
(ii)
|
Voting Guidelines.
Appendix A hereto sets forth guidelines regarding how proxies will be voted on the issues specified. ISS will vote proxies
for or against as directed by the guidelines. Where the guidelines specify a case by case determination for a particular issue, ISS will forward the proxy to the Proxy Committee for a vote determination by the Proxy Committee. Finally,
with respect to issues for which a vote for or against is specified by the Procedures, the Proxy Committee shall have the authority to direct ISS to forward the proxy to the Proxy Committee for a discretionary vote by the Proxy Committee if the
Proxy Committee determines that a case-by-case review of such matter is warranted. The Proxy Committee may also consult Fund sub-advisers on certain proxy voting issues on a case-by-case basis as the Proxy Committee deems appropriate or to the
|
|
extent that a sub-adviser of a Fund makes a recommendation regarding a proxy voting issue. As a general matter, however, proxies are voted consistently on the same matter when securities of an
issuer are held by multiple Funds.
|
|
(iii)
|
Proxy Committee.
In all cases, the Proxy Committee will exercise its voting discretion in accordance with the voting philosophy of the Funds. In cases where a
proxy is forwarded by ISS to the Proxy Committee, the Proxy Committee may be assisted in its voting decision through receipt of: (i) independent research and voting recommendations provided by ISS or other independent sources; (ii) input
from the investment sub-adviser responsible for purchasing the security; and (iii) information provided by company management and shareholder groups.
|
Voting decisions made by the Proxy Committee will be reported to ISS to ensure that the vote is registered in a timely manner and included in Form N-PX reporting.
|
(iv)
|
Securities on Loan. As a general matter, securities on loan will not be recalled to facilitate proxy voting (in which case the borrower of the security shall be
entitled to vote the proxy). However, if the Proxy Committee is aware of an item in time to recall the security and has determined in good faith that the importance of the matter to be voted upon outweighs the loss in lending revenue that would
result from recalling the security (i.e., if there is a controversial upcoming merger or acquisition, or some other significant matter), the security will be recalled for voting.
|
|
(v)
|
Practical Limitations to Proxy Voting. While Funds Management uses its best efforts to vote proxies, in certain circumstances it may be impractical or impossible for
Funds Management to vote proxies (e.g., limited value or unjustifiable costs). For example, in accordance with local law or business practices, many foreign companies prevent the sales of shares that have been voted for a certain period beginning
prior to the shareholder meeting and ending on the day following the meeting (share blocking). Due to these restrictions, Funds Management must balance the benefits to its clients of voting proxies against the potentially serious
portfolio management consequences of a reduced flexibility to sell the underlying shares at the most advantageous time. As a result, Funds Management will generally not vote those proxies in the absence of an unusual, significant vote or compelling
economic importance. Additionally, Funds Management may not be able to vote proxies for certain foreign securities if Funds Management does not receive the proxy statement in time to vote the proxies due to custodial processing delays.
|
|
(vi)
|
Conflicts of Interest. Funds Management may have a conflict of interest regarding a proxy to be voted upon if, for example, Funds Management or its
affiliates have other relationships with the issuer of the proxy. In most instances, conflicts of interest are avoided through a strict and objective application of the voting guidelines attached hereto. However, when the Proxy Committee is aware of
a material conflict of interest regarding a matter that would otherwise require a vote by the Proxy Committee, the Proxy Committee shall address the material conflict by using any of the following methods: (1) instructing ISS to vote in
accordance with the recommendation ISS makes to its clients; (2) disclosing the conflict to the Board and obtaining their consent before voting; (3) submitting the matter to the Board to exercise its authority to vote on such matter;
(4) engaging an independent fiduciary who will direct the Proxy Committee on voting instructions for the proxy; (5) consulting with outside legal counsel for guidance on resolution of the conflict of interest; (6) erecting information
barriers around the person or persons making voting decisions; (7) voting in proportion to other shareholders (mirror voting); or (8) voting in other ways that are consistent with each Funds obligation to vote in the best
interests of its shareholders. Additionally, the Proxy Committee will not permit its votes to be influenced by any conflict of interest that exists
|
|
for any other affiliated person of the Fund (such as a sub-adviser or principal underwriter) or any affiliated persons of such affiliated persons and the Proxy Committee will vote all such
matters without regard to the conflict.
|
Funds Management may also have a conflict of interest regarding a proxy
to be voted on if a member of the Board has an affiliation, directly or indirectly, with a public or private company (an Identified Company). Identified Companies include a Board members employer, as well as any company of which
the Board member is a director or officer or a 5% or more shareholder. The Proxy Committee shall address such a conflict by instructing ISS to vote in accordance with the recommendation ISS makes to its clients.
|
(vii)
|
Meetings. The Proxy Committee shall convene as needed and when discretionary voting determinations need to be considered, and shall have the authority to act by vote of
a majority of the Proxy Committee members available at that time. The Proxy Committee shall also meet at least semi-annually to review the Procedures and the performance of ISS in exercising its proxy voting responsibilities.
|
|
(viii)
|
Membership. The voting members of the Proxy Committee shall be Tom Biwer, Travis Keshemberg, Patrick McGuinnis and Erik Sens. Andrew Owen shall be a non-voting member
and serve in an advisory capacity on the Proxy Committee. Changes to the membership of the Proxy Committee will be made only with Board approval. Upon departure from Funds Management, a members position on the Proxy Committee will
automatically terminate.
|
4. Disclosure of Policies and Procedures. Each Fund shall disclose in its statement of additional
information a description of the policies and procedures it uses to determine how to vote proxies relating to securities held in its portfolio. In addition, each Fund shall disclose in its semi- and annual reports that a description of its proxy
voting policies and procedures is available without charge, upon request, by calling 1-800-222-8222, on the Funds web site at www.wellsfargo.com/advantagefunds and on the Securities and Exchange Commissions website at http://www.sec.gov.
5. Disclosure of Proxy Voting Record. Each Trust shall file with the Commission an annual report on Form N-PX not later than August 31
of each year (beginning August 31, 2004), containing the Trusts proxy voting record for the most recent twelve-month period ended June 30.
Each Fund shall disclose in its statement of additional information and semi- and annual reports that information regarding how the Fund voted proxies relating to portfolio securities during the most
recent 12-month period ended June 30 is available without charge on the Funds web site at www.wellsfargo.com/advantagefunds or by accessing the Commissions web site at www.sec.gov.
Each Fund shall disclose the following information on Form N-PX for each matter relating to a portfolio security considered at any shareholder meeting
held during the period covered by the report and with respect to which the Fund was entitled to vote:
|
|
|
The name of the issuer of the portfolio security;
|
|
|
|
The exchange ticker symbol of the portfolio security;
|
|
|
|
The Council of Uniform Securities Identification Procedures (CUSIP) number for the portfolio security (unless the CUSIP is not available
through reasonably practicable means, in which case it will be omitted);
|
|
|
|
The shareholder meeting date;
|
|
|
|
A brief identification of the matter voted on;
|
|
|
|
Whether the matter was proposed by the issuer or by a security holder;
|
|
|
|
Whether the Fund cast its vote on the matter;
|
|
|
|
How the Fund cast its vote (e.g. for or against a proposal, or abstain; for or withhold regarding election of directors); and
|
|
|
|
Whether the Fund cast its vote for or against management.
|
Form N-PX shall be made available to Fund shareholders through the SEC web site.
APPENDIX A
TO
PROXY VOTING POLICIES AND PROCEDURES
Funds Management will vote proxies relating to portfolio securities held by the Trusts in accordance with the following proxy voting guidelines. To the extent the specific guidelines below do not address
a proxy voting proposal, Funds Management will vote pursuant to ISS current U.S. and International proxy voting guidelines. Proxies for securities held by the Wells Fargo Advantage Social Awareness Fund related to social and environmental
proposals will be voted pursuant to ISS current SRI Proxy Voting Guidelines. In addition, proxies related to issues not addressed by the specific guidelines below or by ISS current U.S. and International proxy voting guidelines will be
forwarded to the Proxy Committee for a vote determination by the Proxy Committee.
|
|
|
Uncontested Election of Directors or Trustees
|
|
|
|
|
THE FUNDS will generally vote for all uncontested director or trustee nominees. The Nominating Committee is in the best position to select nominees who are available and capable of
working well together to oversee management of the company. THE FUNDS will not require a performance test for directors.
|
|
FOR
|
|
|
THE FUNDS will generally vote for reasonably crafted shareholder proposals calling for directors to be elected with an affirmative majority of votes cast and/or the elimination of
the plurality standard for electing directors, unless the company has adopted formal corporate governance principles that present a meaningful alternative to the majority voting standard.
|
|
FOR
|
|
|
THE FUNDS will withhold votes for a director if the nominee fails to attend at least 75% of the board and committee meetings without a valid excuse.
|
|
WITHHOLD
|
|
|
THE FUNDS will vote against routine election of directors if any of the following apply: company fails to disclose adequate information in a timely manner, serious issues with the
finances, questionable transactions, conflicts of interest, record of abuses against minority shareholder interests, bundling of director elections, and/or egregious governance practices.
|
|
AGAINST
|
|
|
THE FUNDS will withhold votes from the entire board (except for new nominees) where the director(s) receive more than 50% withhold votes out of those cast and the issue that was the
underlying cause of the high level of withhold votes has not been addressed.
|
|
WITHHOLD
|
|
|
THE FUNDS will withhold votes from members of the Audit Committee and/or the full board if poor accounting practices, which rise to a level of serious concern, such as: fraud;
misapplication of GAAP; and material weaknesses identified in Section 404 disclosures, are identified.
|
|
WITHHOLD
|
|
|
THE FUNDS will withhold votes from members of the Audit Committee if the company receives an adverse opinion on the companys financial statements from its auditor.
|
|
|
|
|
THE FUNDS will withhold votes from members of the Audit Committee if there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement
with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.
|
|
WITHHOLD
|
|
|
THE FUNDS will withhold votes from all directors (except for new nominees) if the
|
|
WITHHOLD
|
|
|
|
company has adopted or renewed a poison pill without shareholder approval since the companys last annual meeting, does not put the pill to a vote at the current annual
meeting, and does not have a requirement or does not commit to put the pill to shareholder vote within 12 months. In addition, THE FUNDS will withhold votes on all directors at any company that responds to the majority of the shareholders voting by
putting the poison pill to a shareholder vote with a recommendation other than to eliminate the pill.
|
|
WITHHOLD
|
|
|
THE FUNDS will withhold votes from compensation committee members if they fail to submit one-time transferable stock options (TSOs) to shareholders for approval.
|
|
WITHHOLD
|
|
|
Limitation on Number of Boards a Director May Sit On
|
|
|
|
|
THE FUNDS will withhold votes from directors who sit on more than six boards.
|
|
WITHHOLD
|
|
|
THE FUNDS will withhold votes from CEO directors who sit on more than two outside boards besides their own.
|
|
WITHHOLD
|
|
|
Ratification of Auditors
|
|
|
|
|
THE FUNDS will vote against auditors and withhold votes from audit committee members if non-audit fees are greater than audit fees, audit-related fees, and permitted tax fees,
combined. THE FUNDS will follow the disclosure categories being proposed by the SEC in applying the above formula.
|
|
AGAINST/
WITHHOLD
|
|
|
With the above exception, THE FUNDS will generally vote for proposals to ratify auditors unless:
|
|
FOR
|
|
|
an auditor has a financial interest in or association with the company, and is therefore not
independent, or
|
|
AGAINST
|
|
|
there is reason to believe that the independent auditor has rendered an opinion that is neither
accurate nor indicative of the companys financial position.
|
|
AGAINST
|
|
|
THE FUNDS will vote against proposals that require auditors to attend annual meetings as auditors are regularly reviewed by the board audit committee, and such attendance is
unnecessary.
|
|
AGAINST
|
|
|
THE FUNDS will vote for shareholder proposals requesting a shareholder vote for audit firm ratification.
|
|
FOR
|
|
|
THE FUNDS will vote against shareholder proposals asking for audit firm rotation. This practice is viewed as too disruptive and too costly to implement for the benefit
achieved.
|
|
AGAINST
|
|
|
Company Name Change/Purpose
|
|
|
|
|
THE FUNDS will vote for proposals to change the company name as management and the board is best suited to determine if such change in company name is necessary.
|
|
FOR
|
|
|
However, where the name change is requested in connection with a reorganization of the company, the vote will be based on the merits of the reorganization.
|
|
CASE-BY-CASE
|
|
|
|
In addition, THE FUNDS will generally vote for proposals to amend the purpose of the company. Management is in the best position to know whether the description of what the company
does is accurate, or whether it needs to be updated by deleting, adding or revising language.
|
|
FOR
|
|
|
Employee Stock Purchase Plans/401(k) Employee Benefit Plans
|
|
|
|
|
THE FUNDS will vote for proposals to adopt, amend or increase authorized shares for employee stock purchase plans and 401(k) plans for employees as properly structured plans enable
employees to purchase common stock at a slight discount and thus own a beneficial interest in the company, provided that the total cost of the companys plan is not above the allowable cap for the company.
|
|
FOR
|
|
|
Similarly, THE FUNDS will generally vote for proposals to adopt or amend thrift and savings plans, retirement plans, pension plans and profit plans.
|
|
FOR
|
|
|
Anti-Hedging/Pledging/Speculative Investments Policy
|
|
|
|
|
THE FUNDS will consider proposals prohibiting named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding
stock in a margin account, or pledging stock as collateral for a loan on a case-by-case basis. The companys existing policies regarding responsible use of company stock will be considered.
|
|
CASE-BY-CASE
|
|
|
Approve Other Business
|
|
|
|
|
THE FUNDS will generally vote for proposals to approve other business. This transfer of authority allows the corporation to take certain ministerial steps that may arise at the
annual or special meeting.
|
|
FOR
|
|
|
However, THE FUNDS retains the discretion to vote against such proposals if adequate information is not provided in the proxy statement, or the measures are significant and no
further approval from shareholders is sought.
|
|
AGAINST
|
|
|
Independent Board of Directors/Board Committees
|
|
|
|
|
THE FUNDS will vote for proposals requiring that two-thirds of the board be independent directors. An independent board faces fewer conflicts and is best prepared to protect
stockholders interests.
|
|
FOR
|
|
|
THE FUNDS will withhold votes from insiders and affiliated outsiders on boards that are not at least majority independent.
|
|
WITHHOLD
|
|
|
THE FUNDS will withhold votes from compensation committee members where there is a pay-for-performance disconnect (for Russell 3000 companies).
|
|
WITHHOLD
|
|
|
THE FUNDS will vote for proposals requesting that the board audit, compensation and/or nominating committees be composed of independent directors, only. Committees should be
composed entirely of independent directors in order to avoid conflicts of interest.
|
|
FOR
|
|
|
THE FUNDS will withhold votes from any insiders or affiliated outsiders on audit, compensation or nominating committees. THE FUNDS will withhold votes from any insiders or
affiliated outsiders on the board if any of these key committees has not been
|
|
WITHHOLD
|
|
|
|
established.
|
|
|
|
|
THE FUNDS will vote against proposals from shareholders requesting an independent compensation consultant.
|
|
AGAINST
|
|
|
Director Fees
|
|
|
|
|
THE FUNDS will vote for proposals to set director fees.
|
|
FOR
|
|
|
Minimum Stock Requirements by Directors
|
|
|
|
|
THE FUNDS will vote against proposals requiring directors to own a minimum number of shares of company stock in order to qualify as a director, or to remain on the board. Minimum
stock ownership requirements can impose an across-the-board requirement that could prevent qualified individuals from serving as directors.
|
|
AGAINST
|
|
|
Indemnification and Liability Provisions for Directors and Officers
|
|
|
|
|
THE FUNDS will vote for proposals to allow indemnification of directors and officers, when the actions taken were on behalf of the company and no criminal violations occurred. THE
FUNDS will also vote in favor of proposals to purchase liability insurance covering liability in connection with those actions. Not allowing companies to indemnify directors and officers to the degree possible under the law would limit the ability
of the company to attract qualified individuals.
|
|
FOR
|
|
|
Alternatively, THE FUNDS will vote against indemnity proposals that are overly broad. For example, THE FUNDS will oppose proposals to indemnify directors for acts going beyond mere
carelessness, such as gross negligence, acts taken in bad faith, acts not otherwise allowed by state law or more serious violations of fiduciary obligations.
|
|
AGAINST
|
|
|
Nominee Statement in the Proxy
|
|
|
|
|
THE FUNDS will vote against proposals that require board nominees to have a statement of candidacy in the proxy, since the proxy statement already provides adequate information
pertaining to the election of directors.
|
|
AGAINST
|
|
|
Director Tenure/Retirement Age
|
|
|
|
|
THE FUNDS will vote against proposals to limit the tenure of directors as such limitations based on an arbitrary number could prevent qualified individuals from serving as
directors. However, THE FUNDS is in favor of inserting cautionary language when the average director tenure on the board exceeds 15 years for the entire board.
|
|
AGAINST
|
|
|
The Funds will vote for proposals to establish a mandatory retirement age for directors provided that such retirement age is not less than 65.
|
|
FOR
|
|
|
Board Powers/Procedures/Qualifications
|
|
|
|
|
THE FUNDS will consider on a case-by-case basis proposals to amend the corporations By-laws so that the Board of Directors shall have the power, without the assent or vote of
the shareholders, to make, alter, amend, or rescind the By-laws, fix the amount to be reserved as working capital, and fix the number of directors and what number shall constitute a quorum of the Board. In determining these issues, THE FUNDS will
rely on the proxy voting Guidelines.
|
|
CASE-BY-CASE
|
|
|
|
Adjourn Meeting to Solicit Additional Votes
|
|
|
|
|
THE FUNDS will examine proposals to adjourn the meeting to solicit additional votes on a case-by-case basis. As additional solicitation may be costly and could result in coercive
pressure on shareholders, THE FUNDS will consider the nature of the proposal and its vote recommendations for the scheduled meeting.
|
|
CASE-BY-CASE
|
|
|
THE FUNDS will vote for this item when:
|
|
|
|
|
THE FUNDS is supportive of the underlying merger proposal; the company provides a sufficient, compelling reason to support the adjournment proposal; and the authority is limited to
adjournment proposals requesting the authority to adjourn solely to solicit proxies to approve a transaction THE FUNDS supports.
|
|
FOR
|
|
|
Reimbursement of Solicitation Expenses
|
|
|
|
|
THE FUNDS will consider contested elections on a case-by-case basis, considering the following factors: long-term financial performance of the target company relative to its
industry; managements track record; background of the proxy contest; qualifications of director or trustee nominees (both slates); evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and
goals can be met; and stock ownership positions.
|
|
CASE-BY-CASE
|
|
|
Board Structure: Staggered vs. Annual Elections
|
|
|
|
|
THE FUNDS will consider the issue of classified boards on a case-by-case basis. In some cases, the division of the board into classes, elected for staggered terms, can entrench the
incumbent management and make them less responsive to shareholder concerns. On the other hand, in some cases, staggered elections may provide for the continuity of experienced directors on the Board.
|
|
CASE-BY-CASE
|
|
|
Removal of Directors
|
|
|
|
|
THE FUNDS will consider on a case-by-case basis proposals to eliminate shareholders rights to remove directors with or without cause or only with approval of two-thirds or
more of the shares entitled to vote.
|
|
CASE-BY-CASE
|
|
|
However, a requirement that a 75% or greater vote be obtained for removal of directors is abusive and will warrant a vote against the proposal.
|
|
AGAINST
|
|
|
Board Vacancies
|
|
|
|
|
THE FUNDS will vote against proposals that allow the board to fill vacancies without shareholder approval as these authorizations run contrary to basic shareholders
rights.
|
|
AGAINST
|
|
|
Alternatively, THE FUNDS will vote for proposals that permit shareholders to elect directors to fill board vacancies.
|
|
FOR
|
|
|
Cumulative Voting
|
|
|
|
|
THE FUNDS will vote on proposals to permit or eliminate cumulative voting on a case-by-case basis based upon the existence of a counter balancing governance structure and company
performance, in accordance with its proxy voting guideline philosophy.
|
|
CASE-BY-CASE
|
|
|
|
THE FUNDS will vote for against cumulative voting if the board is elected annually.
|
|
AGAINST
|
|
|
Board Size
|
|
|
|
|
THE FUNDS will vote for proposals that seek to fix the size of the board, as the ability for management to increase or decrease the size of the board in the face of a proxy contest
may be used as a takeover defense.
|
|
FOR
|
|
|
However, if the company has cumulative voting, downsizing the board may decrease a minority shareholders chances of electing a director.
|
|
|
|
|
By increasing the size of the board, management can make it more difficult for dissidents to gain control of the board. Fixing the size of the board also prevents a reduction in the
board size as a means to oust independent directors or those who cause friction within an otherwise homogenous board.
|
|
|
|
|
Shareholder Rights Plan (Poison Pills)
|
|
|
|
|
THE FUNDS will generally vote for proposals that request a company to submit its poison pill for shareholder ratification.
|
|
FOR
|
|
|
Alternatively, THE FUNDS will analyze proposals to redeem a companys poison pill, or requesting the ratification of a poison pill on a case-by-case basis.
|
|
CASE-BY-CASE
|
|
|
Poison pills are one of the most potent anti-takeover measures and are generally adopted by boards without shareholder approval. These plans harm shareholder value and entrench
management by deterring stock acquisition offers that are not favored by the board.
|
|
|
|
|
Fair Price Provisions
|
|
|
|
|
THE FUNDS will consider fair price provisions on a case-by-case basis, evaluating factors such as the vote required to approve the proposed mechanism, the vote required to approve
the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.
|
|
CASE-BY-CASE
|
|
|
THE FUNDS will vote against fair price provisions with shareholder vote requirements of 75% or more of disinterested shares.
|
|
AGAINST
|
|
|
Greenmail
|
|
|
|
|
THE FUNDS will generally vote in favor of proposals limiting the corporations authority to purchase shares of common stock (or other outstanding securities) from a holder of a
stated interest (5% or more) at a premium unless the same offer is made to all shareholders. These are known as anti-greenmail provisions. Greenmail discriminates against rank-and-file shareholders and may have an adverse effect on
corporate image.
|
|
FOR
|
|
|
If the proposal is bundled with other charter or bylaw amendments, THE FUNDS will analyze such proposals on a case-by-case basis. In addition, THE FUNDS will analyze restructurings
that involve the payment of pale greenmail on a case-by-case basis.
|
|
CASE-BY-CASE
|
|
|
Voting Rights
|
|
|
|
|
THE FUNDS will vote for proposals that seek to maintain or convert to a one-share, one-vote capital structure as such a principle ensures that management is accountable to all
the
|
|
FOR
|
|
|
|
companys owners.
|
|
|
|
|
Alternatively, THE FUNDS will vote against any proposals to cap the number of votes a shareholder is entitled to. Any measure that places a ceiling on voting may entrench management
and lessen its interest in maximizing shareholder value.
|
|
AGAINST
|
|
|
Dual Class/Multiple-Voting Stock
|
|
|
|
|
THE FUNDS will vote against proposals that authorize, amend or increase dual class or multiple-voting stock which may be used in exchanges or recapitalizations. Dual class or
multiple-voting stock carry unequal voting rights, which differ from those of the broadly traded class of common stock.
|
|
AGAINST
|
|
|
Alternatively, THE FUNDS will vote for the elimination of dual class or multiple-voting stock, which carry different rights than the common stock.
|
|
FOR
|
|
|
Confidential Voting
|
|
|
|
|
THE FUNDS will vote for proposals to adopt confidential voting.
|
|
FOR
|
|
|
Vote Tabulations
|
|
|
|
|
THE FUNDS will vote against proposals asking corporations to refrain from counting abstentions and broker non-votes in their vote tabulations and to eliminate the companys
discretion to vote unmarked proxy ballots. Vote counting procedures are determined by a number of different standards, including state law, the federal proxy rules, internal corporate policies, and mandates of the various stock
exchanges.
|
|
AGAINST
|
|
|
Equal Access to the Proxy
|
|
|
|
|
THE FUNDS will evaluate Shareholder proposals requiring companies to give shareholders access to the proxy ballot for the purpose of nominating board members, on a case-by-case
basis taking into account the ownership threshold proposed in the resolution and the proponents rationale for the proposal at the targeted company in terms of board and director conduct.
|
|
CASE-BY-CASE
|
|
|
Disclosure of Information
|
|
|
|
|
THE FUNDS will vote against shareholder proposals requesting fuller disclosure of company policies, plans, or business practices. Such proposals rarely enhance shareholder return
and in many cases would require disclosure of confidential business information.
|
|
AGAINST
|
|
|
Annual Meetings
|
|
|
|
|
THE FUNDS will vote for proposals to amend procedures or change date or location of the annual meeting. Decisions as to procedures, dates or locations of meetings are best placed
with management.
|
|
FOR
|
|
|
Alternatively, THE FUNDS will vote against proposals from shareholders calling for a change in the location or date of annual meetings as no date or location proposed will be
acceptable to all shareholders.
|
|
AGAINST
|
|
|
THE FUNDS will generally vote in favor of proposals to reduce the quorum necessary for shareholders meetings, subject to a minimum of a simple majority of the
companys
|
|
FOR
|
|
|
|
outstanding voting shares.
|
|
|
|
|
Shareholder Advisory Committees/Independent Inspectors
|
|
|
|
|
THE FUNDS will vote against proposals seeking to establish shareholder advisory committees or independent inspectors. The existence of such bodies dilutes the responsibility of the
board for managing the affairs of the corporation.
|
|
AGAINST
|
|
|
Technical Amendments to the Charter of Bylaws
|
|
|
|
|
THE FUNDS will generally vote in favor of charter and bylaw amendments proposed solely to conform to modern business practices, for simplification, or to comply with what
managements counsel interprets as applicable law.
|
|
FOR
|
|
|
However, amendments that have a material effect on shareholders rights will be considered on a case-by-case basis.
|
|
CASE-BY-CASE
|
|
|
Bundled Proposals
|
|
|
|
|
THE FUNDS will vote for bundled or conditional proxy proposals on a case-by-case basis, as THE FUNDS will examine the benefits and costs of the packaged items, and
determine if the effect of the conditioned items are in the best interests of shareholders.
|
|
CASE-BY-CASE
|
|
|
Dividends
|
|
|
|
|
THE FUNDS will vote for proposals to allocate income and set dividends.
|
|
FOR
|
|
|
THE FUNDS will also vote for proposals that authorize a dividend reinvestment program as it allows investors to receive additional stock in lieu of a cash dividend.
|
|
FOR
|
|
|
However, if a proposal for a special bonus dividend is made that specifically rewards a certain class of shareholders over another, THE FUNDS will vote against the
proposal.
|
|
AGAINST
|
|
|
THE FUNDS will also vote against proposals from shareholders requesting management to redistribute profits or restructure investments. Management is best placed to determine how to
allocate corporate earnings or set dividends.
|
|
AGAINST
|
|
|
Reduce the Par Value of the Common Stock
|
|
|
|
|
THE FUNDS will vote for proposals to reduce the par value of common stock.
|
|
FOR
|
|
|
Preferred Stock Authorization
|
|
|
|
|
THE FUNDS will generally vote for proposals to create preferred stock in cases where the company expressly states that the stock will not be used as a takeover defense or carry
superior voting rights, or where the stock may be used to consummate beneficial acquisitions, combinations or financings.
|
|
FOR
|
|
|
Alternatively, THE FUNDS will vote against proposals to authorize or issue preferred stock if the board has asked for the unlimited right to set the terms and conditions for the
stock and may issue it for anti-takeover purposes without shareholder approval (blank check
|
|
AGAINST
|
|
|
|
preferred stock).
|
|
|
|
|
In addition, THE FUNDS will vote against proposals to issue preferred stock if the shares to be used have voting rights greater than those available to other
shareholders.
|
|
AGAINST
|
|
|
THE FUNDS will vote for proposals to require shareholder approval of blank check preferred stock issues for other than general corporate purposes (white squire
placements).
|
|
FOR
|
|
|
Preemptive Rights
|
|
|
|
|
THE FUNDS will generally vote for proposals to eliminate preemptive rights. Preemptive rights are unnecessary to protect shareholder interests due to the size of most modern
companies, the number of investors and the liquidity of trading.
|
|
FOR
|
|
|
Share Repurchase Plans
|
|
|
|
|
THE FUNDS will vote for share repurchase plans, unless:
|
|
FOR
|
|
|
there is clear evidence of past abuse of the authority; or
|
|
AGAINST
|
|
|
the plan contains no safeguards against selective buy-backs.
|
|
AGAINST
|
|
|
Corporate stock repurchases are a legitimate use of corporate funds and can add to long-term shareholder returns.
|
|
|
|
|
Executive and Director Compensation Plans
|
|
|
|
|
THE FUNDS will analyze on a case-by-case basis proposals on executive or director compensation plans, with the view that viable compensation programs reward the creation of
stockholder wealth by having high payout sensitivity to increases in shareholder value. Such proposals may seek shareholder approval to adopt a new plan, or to increase shares reserved for an existing plan.
|
|
CASE-BY-CASE
|
|
|
THE FUNDS will review the potential cost and dilutive effect of the plan. After determining how much the plan will cost, ISS evaluates whether the cost is reasonable by comparing
the cost to an allowable cap. The allowable cap is industry-specific, market cap-base, and pegged to the average amount paid by companies performing in the top quartile of their peer groups. If the proposed cost is below the allowable cap, THE FUNDS
will vote for the plan. ISS will also apply a pay for performance overlay in assessing equity-based compensation plans for Russell 3000 companies.
|
|
FOR
|
|
|
If the proposed cost is above the allowable cap, THE FUNDS will vote against the plan.
|
|
|
|
|
Among the plan features that may result in a vote against the plan are:
|
|
AGAINST
|
|
|
plan administrators are given the authority to reprice or replace underwater options; repricing
guidelines will conform to changes in the NYSE and NASDAQ listing rules.
|
|
AGAINST
|
|
|
THE FUNDS will vote against equity plans that have high average three-year burn rate. (The burn rate is calculated as the total number of stock awards and stock options granted any
given year divided by the number of common shares outstanding.) THE FUNDS will define a high average three-year burn rate as the following: The companys most recent three-year burn rate exceeds one standard deviation of its four-digit GICS
peer group segmented by Russell 3000 index and non-Russell 3000 index; and the companys most recent three-year burn rate exceeds 2% of common shares outstanding. For companies that
|
|
AGAINST
|
|
|
|
grant both full value awards and stock options to their employees, THE FUNDS shall apply a premium on full value awards for the past three fiscal years.
|
|
|
|
|
Even if the equity plan fails the above burn rate, THE FUNDS will vote for the plan if the company commits in a public filing to a three-year average burn rate equal to its GICS
group burn rate mean plus one standard deviation. If the company fails to fulfill its burn rate commitment, THE FUNDS will consider withholding from the members of the compensation committee.
|
|
|
|
|
FOR
|
THE FUNDS will calculate a higher award value for awards that have Dividend Equivalent Rights (DERs) associated with them.
|
|
|
|
|
THE FUNDS will generally vote for shareholder proposals requiring performance-based stock options unless the proposal is overly restrictive or the company demonstrates that it is
using a substantial portion of performance-based awards for its top executives.
|
|
|
|
|
CASE-BY-CASE
|
THE FUNDS will vote for shareholder proposals asking the company to expense stock options, as a result of the FASB final rule on expensing stock options.
|
|
|
|
|
FOR
|
THE FUNDS will generally vote for shareholder proposals to exclude pension fund income in the calculation of earnings used in determining executive bonuses/compensation.
|
|
|
|
|
|
THE FUNDS will generally vote for TSO awards within a new equity plan if the total cost of the equity plan is less than the companys allowable cap.
|
|
FOR
|
|
|
THE FUNDS will generally vote against shareholder proposals to ban future stock option grants to executives. This may be supportable in extreme cases where a company is a serial
repricer, has a huge overhang, or has highly dilutive, broad-based (non-approved) plans and is not acting to correct the situation.
|
|
FOR
|
|
|
THE FUNDS will evaluate shareholder proposals asking companies to adopt holding periods for their executives on a case-by-case basis taking into consideration the companys
current holding period or officer share ownership requirements, as well as actual officer stock ownership in the company.
|
|
FOR
|
|
|
AGAINST
|
For certain OBRA-related proposals, THE FUNDS will vote for plan provisions that (a) place a cap on annual grants or amend administrative features, and (b) add performance
criteria to existing compensation plans to comply with the provisions of Section 162(m) of the Internal Revenue Code.
|
|
|
|
|
In addition, director compensation plans may also include stock plans that provide directors with the option of taking all or a portion of their cash compensation in the form of
stock. THE FUNDS will consider these plans based on their voting power dilution.
|
|
CASE-BY-CASE
|
|
|
THE FUNDS will generally vote for retirement plans for directors.
|
|
|
|
|
THE FUNDS will evaluate compensation proposals (Tax Havens) requesting share option schemes or amending an existing share option scheme on a case-by-case basis.
|
|
FOR
|
|
|
Stock options align management interests with those of shareholders by motivating executives to maintain stock price appreciation. Stock options, however, may harm shareholders by
diluting each owners interest. In addition, exercising options can shift the balance of voting power by increasing executive ownership.
|
|
CASE-BY-CASE
|
|
|
|
|
|
FOR
|
|
|
|
|
CASE-BY-CASE
|
|
|
Bonus Plans
|
|
|
|
|
THE FUNDS will vote for proposals to adopt annual or long-term cash or cash-and-stock bonus plans on a
case-by-case basis. These plans enable companies qualify for a tax
deduction under the provisions of Section 162(m) of the IRC. Payouts under these plans may either be in cash or stock and are usually tied to the attainment of certain financial or other performance goals. THE FUNDS will consider whether the
plan is comparable to plans adopted by companies of similar size in the companys industry and whether it is justified by the companys performance.
|
|
CASE-BY-CASE
|
|
|
Deferred Compensation Plans
|
|
|
|
|
THE FUNDS will generally vote for proposals to adopt or amend deferred compensation plans as they allow the compensation committee to tailor the plan to the needs of the executives
or board of directors, unless
|
|
FOR
|
|
|
the proposal is embedded in an executive or director compensation plan that is contrary to
guidelines
|
|
AGAINST
|
|
|
Disclosure on Executive or Director Compensation Cap or Restrict Executive or Director Compensation
|
|
|
|
|
THE FUNDS will generally vote for shareholder proposals requiring companies to report on their executive retirement benefits (deferred compensation, split-dollar life insurance,
SERPs, and pension benefits.
|
|
FOR
|
|
|
THE FUNDS will generally vote for shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote, unless the companys
executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.
|
|
FOR
|
|
|
THE FUNDS will generally vote against proposals seek to limit executive and director pay.
|
|
AGAINST
|
|
|
Tax-Gross-Up Payments
|
|
|
|
|
THE FUNDS will examine on a case-by-case basis proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives.
|
|
CASE-BY-CASE
|
|
|
Relocation Benefits
|
|
|
|
|
The FUNDS will not consider relocation benefits as a problematic pay practice in connection with management say-on-pay proposals.
|
|
|
|
|
Exchange Offers/Re-Pricing
|
|
|
|
|
The FUNDS will not vote against option exchange programs made available to executives and directors that are otherwise found acceptable.
|
|
|
|
|
Golden and Tin Parachutes
|
|
|
|
|
|
THE FUNDS will vote for proposals that seek shareholder ratification of golden or tin parachutes as shareholders should have the opportunity to approve or disapprove of these
severance agreements.
|
|
FOR
|
|
|
Alternatively, THE FUNDS will examine on a case-by-case basis proposals that seek to ratify or cancel golden or tin parachutes. Effective parachutes may encourage management to
consider takeover bids more fully and may also enhance employee morale and productivity. Among the arrangements that will be considered on their merits are:
|
|
CASE-BY-CASE
|
|
|
arrangements guaranteeing key employees continuation of base salary for
more than three years or lump sum payment of more than three times base salary plus retirement benefits;
guarantees of benefits if a key employee voluntarily terminates;
guarantees of
benefits to employees lower than very senior management; and
indemnification of liability for excise taxes.
|
|
|
|
|
By contrast, THE FUNDS will vote against proposals that would guarantee benefits in a management-led buyout.
|
|
AGAINST
|
|
|
Stakeholder Laws
|
|
|
|
|
THE FUNDS will vote against resolutions that would allow the Board to consider stakeholder interests (local communities, employees, suppliers, creditors, etc.) when faced with a
takeover offer.
|
|
AGAINST
|
|
|
Similarly, THE FUNDS will vote for proposals to opt out of stakeholder laws, which permit directors, when taking action, to weight the interests of constituencies other than
shareholders in the process of corporate decision-making. Such laws allow directors to consider nearly any factor they deem relevant in discharging their duties.
|
|
FOR
|
|
|
|
Mergers/Acquisitions and Corporate Restructurings
|
|
|
|
|
THE FUNDS will consider proposals on mergers and acquisitions on a case-by-case basis. THE FUNDS will determine if the transaction is in the best economic interests of the
shareholders. THE FUNDS will take into account the following factors:
|
|
CASE-BY-CASE
|
|
|
anticipated financial and operating benefits;
offer price (cost
versus premium);
prospects for the combined companies;
how the deal was
negotiated;
changes in corporate governance and their impact on shareholder rights.
|
|
|
|
|
In addition, THE FUNDS will also consider whether current shareholders would control a minority of the combined companys outstanding voting power, and whether a reputable
financial advisor was retained in order to ensure the protection of shareholders interests.
|
|
CASE-BY-CASE
|
|
|
On all other business transactions, i.e. corporate restructuring, spin-offs, asset sales, liquidations, and restructurings, THE FUNDS will analyze such proposals on a case-by-case
basis and utilize the majority of the above factors in determining what is in the best interests of shareholders. Specifically, for liquidations, the cost versus premium factor may not be applicable, but THE FUNDS may also review the compensation
plan for executives managing the liquidation.
|
|
CASE-BY-CASE
|
|
|
Appraisal Rights
|
|
|
|
|
THE FUNDS will vote for proposals to restore, or provide shareholders with rights of appraisal.
|
|
FOR
|
|
|
Rights of appraisal provide shareholders who are not satisfied with the terms of certain corporate transactions (such as mergers) the right to demand a judicial review in order to
determine the fair value of their shares.
|
|
|
|
|
Mutual Fund Proxies
|
|
|
|
|
THE FUNDS will vote mutual fund proxies on a case-by-case basis.
|
|
CASE-BY-CASE
|
|
|
Proposals may include, and are not limited to, the following issues:
|
|
|
|
|
eliminating the need for annual meetings of mutual fund
shareholders;
entering into or extending investment advisory agreements and management
contracts;
permitting securities lending and participation in repurchase agreements;
changing fees and
expenses; and
changing investment policies.
|
|
|
APPENDIX B
TO
PROXY VOTING POLICIES AND PROCEDURES
Members of Funds Management Proxy Voting Committee
Thomas C. Biwer, CFA
Mr. Biwer has 38 years experience in finance and investments. He
has served as an investment analyst, portfolio strategist, and corporate pension officer. He received B.S. and M.B.A. degrees from the University of Illinois and has earned the right to use the CFA designation.
Erik J. Sens, CFA
Mr. Sens has 22
years of investment industry experience. He has served as an investment analyst and portfolio manager. He received undergraduate degrees in Finance and Philosophy from the University of San Francisco and has earned the right to use the CFA
designation.
Travis L. Keshemberg, CFA
Mr. Keshemberg has 17 years experience in the investment industry. He has served as a overlay portfolio manager and investment consultant. He holds a Masters Degree from the University of Wisconsin
Milwaukee and Bachelors degree from Marquette University. He has earned the right to use the CFA, CIPM and CIMA designations.
Patrick E. McGuinnis, CFA
Mr. McGuinnis has 12 years of experience in the investment industry as an analyst. He holds B.S. and M.S. degrees in Finance from the University of
Wisconsin and has earned the right to use the CFA designation.
ITEM 8.
|
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
|
PORTFOLIO MANAGERS AS OF APRIL 30,2013
Niklas Nordenfelt, CFA
Mr. Nordenfelt has been with Wells Capital Management since 2003. He is currently a senior portfolio manager and co-manager of the Sutter High Yield
Fixed Income team at Wells Capital Management. He began his investment career in 1991.
Philip Susser
Mr. Susser is currently a senior portfolio manager and co-manager of the Sutter High Yield Fixed Income team at Wells Capital Management. He began
his investment career in 1995.
OTHER FUNDS AND ACCOUNTS MANAGED
The following table provides information about the registered investment companies and other pooled investment vehicles and accounts managed by the portfolio manager of the Fund as of the Funds most
recent period ended April 30, 2013.
Niklas Nordenfelt
|
|
|
|
|
|
|
|
|
|
|
|
|
I manage the following types of accounts:
|
|
Other Registered
Investment Companies
|
|
|
Other Pooled Investment
Vehicles
|
|
|
Other Accounts
|
|
Number of above accounts
|
|
|
3
|
|
|
|
5
|
|
|
|
31
|
|
Total assets of above accounts (millions)
|
|
$
|
1,348.1
|
|
|
$
|
571.4
|
|
|
$
|
2,344.8
|
|
performance based fee accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I manage the following types of accounts:
|
|
Other Registered
Investment Companies
|
|
|
Other Pooled Investment
Vehicles
|
|
|
Other Accounts
|
|
Number of above accounts
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
|
Total assets of above accounts (millions)
|
|
$
|
0.0
|
|
|
$
|
290.8
|
|
|
$
|
0.0
|
|
Philip Susser
|
|
|
|
|
|
|
|
|
|
|
|
|
I manage the following types of accounts:
|
|
Other Registered
Investment Companies
|
|
|
Other Pooled Investment
Vehicles
|
|
|
Other Accounts
|
|
Number of above accounts
|
|
|
3
|
|
|
|
5
|
|
|
|
31
|
|
Total assets of above accounts (millions)
|
|
$
|
1,348.1
|
|
|
$
|
571.4
|
|
|
$
|
2,344.8
|
|
performance based fee accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I manage the following types of accounts:
|
|
Other Registered
Investment Companies
|
|
|
Other Pooled Investment
Vehicles
|
|
|
Other Accounts
|
|
Number of above accounts
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
|
Total assets of above accounts (millions)
|
|
$
|
0.0
|
|
|
$
|
290.8
|
|
|
$
|
0.0
|
|
MATERIAL CONFLICTS OF INTEREST
The Portfolio Managers face inherent conflicts of interest in their day-to-day management of the Funds and other accounts because the Funds may have different investment objectives, strategies and risk
profiles than the other accounts managed by the Portfolio Managers. For instance, to the extent that the Portfolio Managers manage accounts with different investment strategies than the Funds, they may from time to time be inclined to purchase
securities, including initial public offerings, for one account but not for a Fund. Additionally, some of the accounts managed by the Portfolio Managers may have different fee structures, including performance fees, which are or have the potential
to be higher or lower, in some cases significantly higher or lower, than the fees paid by the Funds. The differences in fee structures may provide an incentive to the Portfolio Managers to allocate more favorable trades to the higher-paying
accounts.
To minimize the effects of these inherent conflicts of interest, the Sub-Advisers have adopted and implemented policies and
procedures, including brokerage and trade allocation policies and procedures, that they believe address the potential conflicts associated with managing portfolios for multiple clients and ensure that all clients are treated fairly and equitably.
Additionally, some of the Sub-Advisers minimize inherent conflicts of interest by assigning the Portfolio Managers to accounts having similar objectives. Accordingly, security block purchases are allocated to all accounts with similar objectives in
proportionate weightings. Furthermore, the Sub-Advisers have adopted a Code of Ethics under Rule 17j-1 of the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the Advisers Act) to address potential conflicts associated
with managing the Funds and any personal accounts the Portfolio Managers may maintain.
Wells Capital Management
Wells Capital Managements Portfolio Managers often provide investment management for separate accounts advised in the same or similar investment
style as that provided to mutual funds. While management of multiple accounts could potentially lead to conflicts of interest over various issues such as trade allocation, fee disparities and research acquisition, Wells Capital Management has
implemented policies and procedures for the express purpose of ensuring that clients are treated fairly and that potential conflicts of interest are minimized.
COMPENSATION
The Portfolio Managers were compensated by their employing sub-adviser from the fees
the Adviser paid the Sub-Adviser using the following compensation structure:
Wells Capital Management Compensation
. The compensation structure for Wells Capital Managements
Portfolio Managers includes a competitive fixed base salary plus variable incentives (Wells Capital Management utilizes investment management compensation surveys as confirmation). Incentive bonuses are typically tied to pretax relative investment
performance of all accounts under his or her management within acceptable risk parameters. Relative investment performance is generally evaluated for 1, 3, and 5 year performance results, with a predominant weighting on the 3- and 5- year time
periods, versus the relevant benchmarks and/or peer groups consistent with the investment style. This evaluation takes into account relative performance of the accounts to each accounts individual benchmark and/or the relative composite
performance of all accounts to one or more relevant benchmarks consistent with the overall investment style. In the case of each Fund, the benchmark(s) against which the performance of the Funds portfolio may be compared for these purposes
generally are indicated in the Performance sections of the Prospectuses.
BENEFICIAL OWNERSHIP OF THE FUND
The following table shows for each Portfolio Manager the dollar value of the Fund beneficially owned by the Portfolio Manager as of April 30, 2013:
|
|
|
|
|
Niklas Nordenfelt
|
|
none
|
|
|
Phil Susser
|
|
none
|
|
|
ITEM 9.
|
PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
|
Not applicable.
ITEM 10.
|
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrants board of trustees that have been implemented since the Registrants last
provided disclosure in response to the requirements of this Item.