Wells Fargo Income Fund Annual Report

N-CSR 1 dncsr.htm WELLS FARGO INCOME FUND ANNUAL REPORT Wells Fargo Income Fund Annual Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-09253

Wells Fargo Funds Trust

(Exact name of registrant as specified in charter)

525 Market St., San Francisco, CA 94105

(Address of principal executive offices) (Zip code)

C. David Messman

Wells Fargo Funds Management, LLC

525 Market St., San Francisco, CA 94105

(Name and address of agent for service)

Registrant’s telephone number, including area code: 800-643-9691

Date of fiscal year end: May 31, 2003

Date of reporting period: May 31, 2003

ITEM 1. REPORT TO SHAREHOLDERS

LOGO

WELLS FARGO

FUNDS

Wells Fargo Income Funds

Annual Report

Wells Fargo Diversified Bond Fund

Wells Fargo High Yield Bond Fund

Wells Fargo Income Fund

Wells Fargo Income Plus Fund

Wells Fargo Inflation-Protected Bond Fund^SM

Wells Fargo Intermediate Government Income Fund

Wells Fargo Limited Term Government Income Fund

Wells Fargo Stable Income Fund

Wells Fargo Tactical Maturity Bond Fund^SM

May 31, 2003

		INCOME FUNDS

TABLE OF CONTENTS


LETTER TO SHAREHOLDERS		1

PERFORMANCE HIGHLIGHTS

DIVERSIFIED BOND FUND		2
HIGH YIELD BOND FUND		4
INCOME FUND		6
INCOME PLUS FUND		8
INFLATION-PROTECTED BOND FUND		10
INTERMEDIATE GOVERNMENT INCOME FUND		12
LIMITED TERM GOVERNMENT INCOME FUND		14
STABLE INCOME FUND		16
TACTICAL MATURITY BOND FUND		18
PORTFOLIO OF INVESTMENTS

DIVERSIFIED BOND FUND		20
HIGH YIELD BOND FUND		21
INCOME FUND		27
INCOME PLUS FUND		37
INFLATION-PROTECTED BOND FUND		50
INTERMEDIATE GOVERNMENT INCOME FUND		51
LIMITED TERM GOVERNMENT INCOME FUND		55
STABLE INCOME FUND		58
TACTICAL MATURITY BOND FUND		59
FINANCIAL STATEMENTS

STATEMENTS OF ASSETS AND LIABILITIES		60
STATEMENTS OF OPERATIONS		62
STATEMENTS OF CHANGES IN NET ASSETS		64
FINANCIAL HIGHLIGHTS		70
NOTES TO FINANCIAL HIGHLIGHTS		74

NOTES TO FINANCIAL STATEMENTS		75

INDEPENDENT AUDITOR’S REPORT		84


MASTER PORTFOLIOS
PORTFOLIO OF INVESTMENTS

MANAGED FIXED INCOME PORTFOLIO		85
STABLE INCOME PORTFOLIO		93
STRATEGIC VALUE BOND PORTFOLIO		100
TACTICAL MATURITY BOND PORTFOLIO		108
FINANCIAL STATEMENTS

STATEMENTS OF ASSETS AND LIABILITIES		110
STATEMENTS OF OPERATIONS		111
STATEMENTS OF CHANGES IN NET ASSETS		112
FINANCIAL HIGHLIGHTS		113
NOTES TO FINANCIAL STATEMENTS		115

INDEPENDENT AUDITOR’S REPORT		119

BOARD OF TRUSTEES		120

LIST OF ABBREVIATIONS		122

NOT FDIC INSURED–NO BANK GUARANTEE–MAY LOSE VALUE

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		INCOME FUNDS

DEAR VALUED SHAREHOLDER,

We are pleased to present you with this Wells Fargo Income Funds annual report, which details each Fund’s portfolio positioning and performance for the 12-month period ended May 31, 2003.

The economy’s attempts at recovery were hindered on multiple fronts during the reporting period. The initial threat and eventual reality of war in Iraq and a related spike in oil prices, combined with weak business confidence and a drop in consumer sentiment, continued to drag down the economy, bringing interest rates to a 45-year low and creating volatility in equity markets. The economy’s disappointing recovery from war-related uncertainties was due, in part, to a vicious circle created by limited pent-up consumer demand, modest sales gains, and weak pricing power that kept a lid on business hiring and investment spending. Housing continued to pull the economy along, fueled by historically low mortgage rates that boosted affordability. While car sales levels were impressive, consumers were beginning to respond less to increasingly aggressive incentives. Other consumer spending was suppressed by job worries and by income growth that slowed to a rate of less than 1% in the last three months of the reporting period. The economy received help from the dollar’s decline in the foreign exchange market, which improved U.S. competitiveness and boosted U.S. companies’ foreign earnings as such earnings were converted to dollars.

INTEREST RATES SHAPE BOND PERFORMANCE

Bonds fared well during the reporting period. The Federal Reserve Board’s concern over the economic outlook further fueled a bond rally already being propelled by disappointing growth and deflation fears. After finishing 2002 with its second double-digit gain in three years, the Lehman Brothers Aggregate Bond Index (the Index), which consists of investment-grade, taxable bonds, got off to a strong start during the first five months of 2003. The Index’s return of more than 4% during the January-May period was more than a percentage point greater than its gain during the same period in 2002. Through the end of the reporting period, longer-term yields led the way downward, narrowing the sizable gap between them and short-term interest rates.

Two factors — historically low and declining rates — largely shaped bond performance. They encouraged investors to reach for yield in lower-quality issues, and, at the same time, spurred a move toward longer-dated securities. Investors’ preference for higher-yielding securities has allowed corporate paper to maintain its leadership role, with BBB-rated and industrial bonds posting gains toward the end of the period. Their strength came at the expense of higher-quality U.S. Treasury and agency issues. Mortgage-backed securities continued to feel the refinancing boom’s effect on prepayment risk, though relatively high yields in the sector helped to attract investors. Gains in the municipal bond sector were supported by attractive yield differences against U.S. Treasury issues.

Sluggish economic growth and declining interest rates have encouraged investors to keep a longer portfolio duration. By the end of the period, however, historically low bond yields have caused investors to turn increasingly cautious. During most future shifts away from a secular decline in interest rates, one likely constant in many fixed-income strategies is an over-weighted position in corporate securities, which should continue to benefit from relatively attractive yields and improving credit quality.

GOING FORWARD

Investors who rely on a certain level of income may have felt the effect of the decline in interest rates over the past year. We recommend that you review your investment portfolio to ensure that your current allocation reflects your income needs.

Thank you for choosing Wells Fargo Funds. We appreciate the confidence that you have placed in us. If you have any questions or need further information, please contact your investment professional, or call us at 1-800-222-8222. You may also visit our Web site at www.wellsfargofunds.com.

Sincerely,

LOGO

Karla M. Rabusch

President

Wells Fargo Funds

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

DIVERSIFIED BOND FUND

INVESTMENT OBJECTIVE

The Wells Fargo Diversified Bond Fund (the Fund) seeks total return by diversifying its investments among different fixed-income investment styles.

ADVISER

Wells Fargo Funds Management, LLC

FUND MANAGERS

Collectively Managed

INCEPTION DATE

12/31/82

PERFORMANCE HIGHLIGHTS

The Fund’s Institutional Class shares returned 8.11%¹ for the 12-month period ended May 31, 2003, underperforming the Lehman Brothers Aggregate Bond Index² (the Index), which returned 11.58% during the period. The Fund distributed $1.05 per share in dividend income and $0.04 per share in capital gains during the period.

The Diversified Bond Fund invests in three different fixed-income investment styles: strategic value bond, managed fixed-income and tactical maturity bond. Each style represents an approach to selecting investments or a type of investment selected for the Fund’s portfolio. This multi-style approach seeks to help reduce price and return volatility in an effort to generate more consistent returns.

Corporate bonds, mortgage- and other asset-backed securities, emphasized by the strategic value bond investing style, experienced positive returns during the reporting period. The higher-yield bond holdings also contributed to positive Fund performance.

Higher-yielding instruments also helped the managed fixed-income style performance during the 12-month period. The allocation of corporate, mortgage-backed and other asset-backed securities aided relative performance during the period. More specifically, our continued focus on undervalued A- to BBB-rated corporate bonds benefited Fund performance as credit spreads narrowed.

The tactical maturity bond style, on the other hand, struggled with volatility in the fixed-income markets. This style contains a mix of securities with short-term and long-term maturities, and tends to outperform when prices move in sustained trends, but lags when prices fluctuate back and forth, as they did during the 12-month period.

STRATEGIC OUTLOOK

Until economic fundamentals and earnings tangibly improve, we remain cautious on the overall market. That said, interest rates could move higher in the next 12 to 24 months if market expectations prove correct and the economy picks up. Fund performance may differentiate itself based on yield and risk management. Given our ability to reduce portfolio duration quickly, and meaningfully below that of the Index, the Fund may hold up well and outperform in a protracted move to higher yields. Opportunities may present themselves across each sub-sector of the fixed-income market over the short term and we intend to position the Fund in an effort to take advantage of those opportunities.

¹ Figures quoted represent past performance, which is no guarantee of future results and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s Adviser has committed through September 30, 2003, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund’s returns would have been lower. The Fund is a gateway blended Fund that invests all of its assets in two or more master portfolios of Master Trust in varying proportions. References to the investment activities of the Fund are intended to refer to the investment activities of the master portfolios in which it invests.

Performance shown for the Institutional Class shares of the Wells Fargo Diversified Bond Fund for periods prior to November 8, 1999, reflects performance of the Institutional Class shares of Norwest Advantage Diversified Bond Fund, its predecessor fund.

Performance of the Institutional Class shares of the Fund prior to November 11, 1994, reflects the performance of a collective investment fund adjusted to reflect Institutional Class expenses. Norwest Bank Minnesota, N.A. managed the collective investment fund with an investment objective and principal investment strategy that were substantially similar to those of the Fund. The performance for the Fund includes performance of its predecessor collective investment fund for periods before it became a mutual fund on November 11, 1994. The collective investment fund’s performance was adjusted to reflect the Fund’s 1994 estimate of expense ratios for the first year of operations as a mutual fund, including any applicable sales load (without giving effect to any fee waivers or expense reimbursements). The collective investment fund was not registered under the Investment Company Act of 1940 (“1940 Act”) nor subject to certain investment limitations, diversification requirements, and other restrictions imposed by

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Excluding Sales Charge
	1-Year	5-Year	10-Year

Wells Fargo Diversified Bond Fund	8.11	6.49	6.35

Benchmark

Lehman Brothers Aggregate Bond Index²	11.58	7.77	7.43

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		67%

Weighted Average Coupon		5.25%

Estimated Weighted Average Maturity		8.65 years

Estimated Average Duration		4.73 years

Net Asset Value (NAV)		$26.57

Distribution Rate (Class I)³		3.74%

SEC Yield⁴		2.55%

PORTFOLIO ALLOCATION⁵ (AS OF MAY 31, 2003)

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GROWTH OF $10,000 INVESTMENT⁶

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the 1940 Act or the Internal Revenue Code which, if applicable, may have adversely affected the performance results. Institutional Class shares are sold without sales charges.

² The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers Government/Credit Index and the Mortgage-Backed Securities Index and includes Treasury issues, agency issues, corporate bond issues and mortgage-backed securities. You cannot invest directly in an index.

³ The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund’s most recent income dividend and dividing that figure by the applicable current offering price.

⁴ SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses and the maximum offering price calculated on a 30-day month-end basis.

⁵ This chart represents the composite of the portfolio allocations of the master portfolios in which the Fund invests. Portfolio holdings are subject to change. See Notes to the Financial Statements for a discussion of the master portfolios.

⁶ The chart compares the performance of the Wells Fargo Diversified Bond Fund Institutional Class shares for the most recent ten years with the Lehman Brothers Aggregate Bond Index. The chart assumes a hypothetical $10,000 investment in Institutional Class shares and reflects all operating expenses.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

HIGH YIELD BOND FUND

INVESTMENT OBJECTIVE

The Wells Fargo High Yield Bond Fund seeks total return with a high level of current income.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Sutter Advisors LLC

FUND MANAGERS

Saturnino S. Fanlo

Roger Wittlin

INCEPTION DATE

11/29/02

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 5.40%¹ from its inception on November 29, 2002, until the end of the period on May 31, 2003, excluding sales charges. The Fund underperformed its benchmark, the Merrill Lynch High Yield Master II Index², which returned 16.31% over the same period. The Fund’ Class A shares distributed $0.25 per share in dividend income and no capital gains during the period.

The Fund benefited from a favorable high yield environment. Against the backdrop of a lackluster economy and uncertainties surrounding the war with Iraq, high yield bonds experienced large cash inflows as investors were drawn to the attractive yields and more promising returns relative to stocks and low-yielding U.S. Treasury bonds. Record inflows into high yield mutual funds combined with the relatively low levels of debt issuance created a powerful rally and buying pressure in the market. Yield spreads that had reached nearly 10% relative to the 10-year U.S. Treasury Note in October 2002 narrowed by nearly 4% by the end of the period.

This favorable environment helped drive up prices of virtually all of the Fund’s bond holdings. In particular, the lower-quality holdings performed the best as investors searched for higher-yielding investments, helping push the returns of C-rated bonds up more than 33% in the first five months of 2003. However, the Fund was not able to fully capture the market’s run-up due to the Fund’s recent inception. Rather than being fully invested, the Fund was in a build-up mode in which it carefully and methodically invested new inflows of cash. As a result of the large average cash balances, the Fund’s performance lagged the market and other high yield funds that were already fully invested.

STRATEGIC OUTLOOK

Ample liquidity in the bond market, refinancing and debt issues at lower rates have created a favorable environment for high yield investments. However, as the bond market normalizes, companies may again find it difficult to continually raise cash to repay their debt. Companies generating free cash flow may once again be the more valued bonds. Going forward, our focus on companies with solid fundamentals and the ability to repay debt could prove beneficial to the Fund’s performance.

For Class A shares, the maximum front-end sales charge is 4.50%. The maximum contingent-deferred sales charge (CDSC) for Class B shares is 5.00%. For Class C shares, the maximum front-end sales charge is 1.00% and the maximum CDSC is 1.00%. Performance including sales charge assumes the maximum sales charge for the period shown.

² The Merrill Lynch High Yield Master II Index is an unmanaged index of below investment-grade domestic and Yankee high-yield bonds (dollar-denominated bonds issued in the U.S. by foreign banks and corporations), including deferred-interest bonds and payment-in-kind securities. Issues included in the index have maturities of one year or more and have a credit rating of BB/Ba or lower, but are not in default. You cannot invest directly in an index.

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Including Sales Charge	Excluding Sales Charge
	Life of Fund*	Life of Fund*

Wells Fargo High Yield Bond Fund – Class A	0.65	5.40

Wells Fargo High Yield Bond Fund – Class B	0.05	5.05

Wells Fargo High Yield Bond Fund – Class C	3.08	5.12

Benchmark

Merrill Lynch High Yield Master II Index²		16.31

Returns for period of less than one year are not annualized.

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		29%

Number of Holdings		154

Average Credit Quality³		B+

Weighted Average Coupon		8.58%

Estimated Weighted Average Maturity		6.38 years

Estimated Average Duration		4.65 years

NAV (Class A, B, C)		$10.28, $10.28, $10.29

Distribution Rate⁴ (Class A, B, C)		7.04%, 6.61%, 6.54%

SEC Yield⁵ (Class A, B, C)		6.83%, 6.40%, 6.33%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2001)

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GROWTH OF $10,000 INVESTMENT ⁷

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³ The average credit quality is compiled from ratings from Standards & Poor’s and/or Moody’s Investors Service (together “rating agencies”). Standard & Poor’s is a registered trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund.

⁴ The distribution rate is based on the actual distributions made by the Fund. The distribution rate is calculated by annualizing the Fund’s most recent income dividend and dividing that figure by the applicable current public offering price.

⁵ SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses and the maximum offering price calculated on a 30-day month-end basis.

⁶ Portfolio holdings are subject to change.

⁷ The chart compares the performance of the Wells Fargo High Yield Bond Fund Class A shares for the life of the Fund with the Merrill Lynch High Yield Master II Index. The chart assumes a hypothetical $10,000 investment in Class A shares and reflects all operating expenses and assumes the maximum initial sales charge of 4.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

INCOME FUND

INVESTMENT OBJECTIVE

The Wells Fargo Income Fund (the Fund) seeks current income and total return.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Wells Capital Management Incorporated

FUND MANAGER

Robert N. Daviduk, CFA

INCEPTION DATE

6/9/87

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 10.79%¹ for the 12-month period ended May 31, 2003, excluding sales charges. The Fund underperformed its benchmark, the Lehman Brothers Aggregate Bond Index², which returned 11.58% during the period. The Fund’s Class A shares distributed $0.48 per share in dividend income and no capital gains during the period.

In general, the 12-month period experienced positive returns for fixed-income investors. Interest rates declined steadily from June through September of 2002, and then traded in a fairly wide band until mid-April of 2003 before decreasing steadily again through the end of May. The intermediate portion of the yield curve experienced the largest decrease in yield. The three-year U.S. Treasury note declined the most at 2.11%, the 30-year U.S. Treasury note declined 1.24%, and the three-month U.S. Treasury Bill declined 0.62%. These low yields had little historical precedent, with both the two-year and three-year Treasuries yielding in the 1% range, and the five-year Treasuries also closing in on a yield below 2%.

In general, the Fund’s return benefited from yields falling during the year. More specifically, an increased allocation of the Fund’s portfolio of corporate bonds over the year boosted performance. Corporate and high yield bonds performed well in the last three months of 2002 and continued to perform well in 2003. Allocations of both AA- and BBB-rated corporate securities were increased modestly during the period. The Fund’s holdings in BBB-rated corporate bonds, which led the corporate debt sector this year, helped boost the Fund’s performance.

During the course of the period, we reduced the effective duration of the Fund from 5.11 years to 4.53 years seeking to reduce interest rate risk. The change in duration for the Fund also reflected the duration of the Fund’s peer group.

STRATEGIC OUTLOOK

Although we remain cautious on the overall market, we plan to maintain a significant weight in corporate bonds, based on our belief that economic growth may improve in the second half of 2003. By the end of the reporting period, BBB-rated commercial paper appeared to offer value while spreads remained wide compared to longer-term historical values. In addition, AAA- and AA-rated commercial mortgage-backed and other asset-backed securities may provide additional yield and diversification to the Fund’s portfolio.

¹ Figures quoted represent past performance, which is no guarantee of future results and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s adviser waives its advisory fee for the portion of the Fund’s assets that is invested in the High Yield Bond Fund and waives additional fees and/or reimburses additional expenses to the extent necessary to ensure that there will be no increase in the Fund’s net operating expense ratio. The Fund’s Adviser also has committed through September 30, 2003, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund’s returns would have been lower.

Performance shown for Class A, Class B and Institutional Class shares of the Wells Fargo Income Fund for periods prior to November 8, 1999, reflects performance of the Class A, Class B and Institutional Class shares of the Norwest Advantage Income Fund (the accounting survivor of a merger of the Norwest Advantage Income, Total Return Bond and Performa Strategic Value Bond Funds at the close of business November 5, 1999), its predecessor fund. Effective at the close of business November 5, 1999, the Norwest Advantage and Performa Funds were reorganized into the Wells Fargo Funds. Performance shown for the Class B shares for periods prior to August 5, 1993, reflects performance of the Class A shares, adjusted for Class B sales charges and expenses. Performance shown for the Institutional Class shares for periods prior to August 2, 1993, reflects performance of the Class A shares, adjusted for Institutional class expenses. For Class A shares, the maximum front-end sales charge is 4.50%. The maximum contingent-deferred sales charge for Class B shares is 5.00%. Performance including sales charge assumes the maximum sales charge for the period shown. Institutional Class shares are sold without sales charges.

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Including Sales Charge			Excluding Sales Charge
	1-Year	5-Year	10-Year	1-Year	5-Year	10-Year

Wells Fargo Income Fund – Class A	5.81	5.25	5.44	10.79	6.22	5.93

Wells Fargo Income Fund – Class B	5.09	5.12	5.14	10.09	5.45	5.14

Wells Fargo Income Fund – Institutional Class				11.08	6.41	6.01

Benchmark

Lehman Brothers Aggregate Bond Index²				11.58	7.77	7.43

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		217%

Number of Holdings		294

Average Credit Quality³		Aa1

Weighted Average Coupon		3.90%

Estimated Weighted Average Maturity		3.39 years

Estimated Average Duration		4.53 years

NAV (Class A, B, I)		$9.86, $9.85, $9.85

Distribution Rate⁴ (Class A, B, I)		4.37%, 3.83%, 4.83%

SEC Yield⁵ (Class A, B, I)		2.15%, 1.51%, 2.50%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2003)

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GROWTH OF $10,000 INVESTMENT⁷

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³ The average credit quality is compiled from ratings from Standard & Poor’s and/or Moody’s Investors Service (together “rating agencies”). Standard & Poor’s is a registered trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, sold or promoted by these rating agencies and these rating agencies make no representation regarding the advisability of investing in the Fund.

⁶ Portfolio holdings are subject to change.

⁷ The chart compares the performance of the Wells Fargo Income Fund Class A and Institutional Class shares for the most recent ten years with the Lehman Brothers Aggregate Bond Index. The chart assumes a hypothetical $10,000 investment in Class A shares and Institutional Class shares, reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 4.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

INCOME PLUS FUND

INVESTMENT OBJECTIVE

The Wells Fargo Income Plus Fund (the Fund) seeks to maximize income while maintaining prospects for capital appreciation.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Wells Capital Management Incorporated

FUND MANAGER

Robert N. Daviduk, CFA

INCEPTION DATE

7/13/98

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 11.53%¹ for the 12-month period ended May 31, 2003, excluding sales charges, slightly underperforming the Lehman Brothers Aggregate Bond Index², which returned 11.58% during the period. The Fund’s Class A shares distributed $0.70 per share in dividend income and no capital gains during the period.

During the period, the Fund continued to pursue a well-diversified portfolio strategy. The Fund invested in many different types of bonds including investment-grade debt, such as U.S. Treasuries, corporate bonds and mortgage-backed securities, as well as high yield, emerging markets and non-U.S. dollar sovereign debt.

Although the Fund posted healthy gains for the reporting period, its limited exposure in some markets that performed well hindered relative performance. Emerging market debt, in which the Fund had a limited allocation, posted a return of 25% for the period. In addition, limited exposure to two other markets that performed relatively well – lower rated high-yield securities and unhedged foreign currency investments – negatively affected the Fund’s relative performance.

Three areas contributed to the Fund’s positive performance during the reporting period. The high yield segment of the portfolio provided strong positive returns for the fiscal year and outperformed investment-grade securities. This portion of the Fund’s portfolio is invested in a well-diversified selection of high yield corporate credits with an emphasis on the higher-rated BB securities. The diversified non-U.S. dollar sovereign credit portion of the Fund’s portfolio also generated positive returns during this period and was invested in highly rated investment-grade countries such as Germany, the United Kingdom and New Zealand. The investment-grade portion of the Fund’s portfolio, particularly the telecommunication and energy sectors, also provided positive returns for the period.

STRATEGIC OUTLOOK

We remain cautious on the overall market, although interest rates could move higher in the next 12 to 24 months if market expectations prove correct and the economy picks up. Fund performance typically differentiates itself based on income (yield) and risk management. Any changes in Fund sector allocations would be made incrementally and when we believe that there is an investment opportunity over the near to medium term. Going forward, we expect to continue to invest in securities in an effort to enhance yield and return. Opportunities may present themselves across each sub-sector of the fixed income market over the upcoming quarters and we will continue to actively position the Fund in an effort to take advantage of those opportunities.

¹ Figures quoted represent past performance, which is no guarantee of future results and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s adviser waives its advisory fee for the portion of the Fund’s assets that is invested in the High Yield Bond Fund and waives additional fees and/or reimburses additional expenses to the extent necessary to ensure that there will be no increase in the Fund’s net operating expense ratio. The Fund’s Adviser also has committed through September 30, 2003, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund’s returns would have been lower.

Performance shown for Class A, Class B and Class C shares of the Wells Fargo Income Plus Fund prior to November 8, 1999, reflects performance of the Class A, Class B and Class C shares of the Stagecoach Strategic Income Fund, its predecessor fund. Effective at close of business November 5, 1999, the Stagecoach Funds were reorganized into the Wells Fargo Funds. For Class A shares, the maximum front-end sales charge is 4.50%. The maximum contingent-deferred sales charge (CDSC) for Class B shares

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Including Sales Charge			Excluding Sales Charge
	1-Year	3-Year	Life of Fund	1-Year	3-Year	Life of Fund

Wells Fargo Income Plus Fund – Class A	6.51	7.67	3.95	11.53	9.33	4.94

Wells Fargo Income Plus Fund – Class B	5.60	7.63	3.84	10.60	8.49	4.16

Wells Fargo Income Plus Fund – Class C	8.50	8.12	3.94	10.60	8.49	4.16

Benchmark

Lehman Brothers Aggregate Bond Index²				11.58	10.91	7.72

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		130%

Number of Holdings		392

Average Credit Quality³		A3

Weighted Average Coupon		7.03%

Estimated Weighted Average Maturity		7.44 years

Estimated Average Duration		4.83 years

NAV (Class A, B, C)	$	11.31, $11.31, $11.31

Distribution Rate⁴ (Class A, B, C)		6.43%, 5.99%, 5.93%

SEC Yield⁵ (Class A, B, C)		3.95%, 3.39%, 3.36%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2003)

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GROWTH OF $10,000 INVESTMENT⁷

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is 5.00%. For Class C shares, the maximum front-end sales charge is 1.00% and the maximum CDSC is 1.00%. Performance including sales charge assumes the maximum sales charge for the period shown.

² The Lehman Brothers Aggregate Bond Index is composed of the Lehman Brothers Government/Credit Index and the Lehman Brothers Mortgage-Backed Securities Index and includes Treasury issues, agency issues, corporate bond issues and mortgage-backed securities. You cannot invest directly in an index.

⁶ Portfolio holdings are subject to change.

⁷ The chart compares the performance of the Wells Fargo Income Plus Fund Class A shares for the life of the Fund with the Lehman Brothers Aggregate Bond Index. The chart assumes a hypothetical $10,000 investment in Class A shares and reflects all operating expenses and assumes the maximum initial sales charge of 4.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

INFLATION-PROTECTED BOND FUND

INVESTMENT OBJECTIVE

The Wells Fargo Inflation-Protected Bond Fund (the Fund) seeks total return while providing protection against inflation.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Wells Capital Management Incorporated

FUND MANAGER

Robert N. Daviduk, CFA

INCEPTION DATE

2/28/03

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 2.94%¹ from inception on February 28, 2003, until May 31, 2003, excluding sales charges. The Fund outperformed its benchmark, the Lehman Brothers U.S. Treasury Inflation Notes Index², which returned 2.78% during the same period. The Fund’s Class A shares distributed $0.15 per share in dividend income and no capital gains during the period.

The Fund’s performance during the period was helped by a general decline in interest rates. Treasury Inflation-Protected Securities (TIPS) with longer durations performed particularly well as the TIPS curve flattened. We positioned the Fund to benefit from this flat TIPS curve.

Detracting somewhat from Fund performance was the Fund’s continual inflows of cash. This had a negative impact on performance because TIPS prices were generally moving higher and as we made purchases in an appreciating market environment. Longer-maturity TIPS performed better than shorter-maturity TIPS, with the yield on TIPS maturing in 2032, for example, declining by 0.10% and the yield on TIPS maturing in 2008 rising by 0.05%.

During the period, we added AAA-rated collateralized mortgage-backed securities to the portfolio in an attempt to increase the Fund’s yield. We expect to continue to add exposure to this sector and the asset-backed securities sector as we find suitable issues. We kept the duration neutral compared to the Fund’s benchmark, given the strong cash inflows the Fund had experienced.

STRATEGIC OUTLOOK

In July 2003, the Treasury is expected to auction new 10-year TIPS, which we intend to purchase if the pricing is attractive relative to outstanding issues. We are looking for any hints that the economy may be accelerating, which might be a signal to seek below-benchmark duration for the Fund.

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)


	Including Sales Charge		Excluding Sales Charge
	Life of Fund*		Life of Fund*

Wells Fargo Inflation-Protected Bond Fund – Class A	(1.69	)	2.94

Wells Fargo Inflation-Protected Bond Fund – Class B	(2.35	)	2.65

Wells Fargo Inflation-Protected Bond Fund – Class C	0.64		2.65

Wells Fargo Inflation-Protected Bond Fund – Institutional Class			2.90

Benchmark

Lehman Brothers U.S. Treasury Inflation Notes Index²			2.78

Returns for periods less than one year are not annualized.

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		115%

Number of Holdings		15

Average Credit Quality³		AAA

Weighted Average Coupon		2.85%

Estimated Weighted Average Maturity		10.50 years

Estimated Average Duration		4.35 years

NAV (Class A, B, C,I)		$10.14, $10.13, $10.13, $10.13

Distribution Rate (Class A, B, C, I)⁴		8.34%, 8.00%, 7.93%, 8.99%

SEC Yield (Class A, B, C, I)⁵		9.11%, 8.80%, 8.72%, 9.82%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2003)

LOGO

GROWTH OF $10,000 INVESTMENT⁷

LOGO

² The Lehman Brothers U.S. Treasury Inflation Notes Index is an index of inflation-indexed linked U.S. Treasury securities. You cannot invest directly in an index.

⁶ Portfolio holdings are subject to change.

⁷ The chart compares the performance of the Wells Fargo Inflation-Protected Bond Fund Class A and Institutional Class shares for the life of the Fund with the Lehman Brothers U.S. Treasury Inflation Notes Index. The chart assumes a hypothetical $10,000 investment in Class A shares and Institutional Class shares, reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 4.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

INTERMEDIATE GOVERNMENT INCOME FUND

INVESTMENT OBJECTIVE

The Wells Fargo Intermediate Government Income Fund (the Fund) seeks current income, consistent with safety of principal.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Wells Capital Management Incorporated

FUND MANAGER

Robert N. Daviduk, CFA

INCEPTION DATE

12/31/82

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 9.95%¹ for the 12-month period ended May 31, 2003, excluding sales charges. The Fund outperformed its benchmark, the Lehman Brothers Intermediate U.S. Government Index², which returned 9.27% for the period. The Fund’s Class A shares distributed $0.58 per share in dividend income and no capital gains during the period.

The fiscal year ending May 31, 2003 provided another positive year for returns for the Fund. Interest rates declined steadily from June through September 2002, and then traded in a fairly wide band until mid-April 2003 before dropping steadily again through the end of May. The intermediate part of the yield curve experienced the largest decrease in yield with the three-year U.S. Treasury note dropping 2.11%, while the 30-year U.S. Treasury note declined 1.24% and the three-month Treasury Bill declined 0.62%. These low yields had little historical precedent, with both the two-year and three-year Treasuries yielding in the 1% range, and the five-year Treasuries also closing in on a yield below 2%.

The five-year U.S. Treasury note, a good proxy for this Fund, decreased 2.06% in yield; the price appreciation accompanying such a yield decline provided the bulk of the performance for the Fund. The Fund’s mortgage-backed security holdings also contributed to the total return. The Fund began the period with a 29% weighting in mortgage-backed securities and increased the weighting by the middle of the period to 37%, thus benefiting from the outperformance of this sector. The Fund’s agency note holdings, which represented 23% of the portfolio during the year, also added to the total return.

STRATEGIC OUTLOOK

Going forward, the Fund expects to continue to invest primarily in U.S. Government securities. However, in addition to mortgage-backed securities, investment guidelines allow the Fund to invest up to 20% in other AAA- and AA-rated asset-backed securities. If we choose to invest in these other asset-backed securities, it may help to provide additional yield for the Fund in a continued low interest-rate environment.

Performance shown for the Class A and Class B shares of the Wells Fargo Intermediate Government Income Fund for periods prior to November 8, 1999, reflects performance of the Class A and Class B shares of the Norwest Advantage Intermediate Government Income Fund (the accounting survivor of a merger of the Norwest Fund and the Stagecoach U.S. Government Income and U.S. Government Allocation Funds at the close of business November 5, 1999), its predecessor fund. Effective at the close of business November 5, 1999, the Norwest Advantage Funds and Stagecoach Funds were reorganized into the Wells Fargo Funds. Performance shown for the Class A shares of the Fund prior to May 2, 1996, reflects the performance of the Institutional Class shares of the Fund adjusted to reflect Class A shares sales charges and expenses. Performance shown for the Class B shares of the Fund prior to May 17, 1996, reflects the performance of the Institutional Class shares of the Fund adjusted to reflect Class B sales charges and expenses. Performance shown for the Class C shares of the Fund for periods prior to November 8, 1999, reflects performance of the Class B shares of the predecessor fund adjusted for Class C sales charges and expenses. Performance of the Institutional Class shares of the Fund, prior to November 11, 1994, reflects the performance of a collective investment fund adjusted to reflect Institutional Class expenses. Wells Fargo Bank Minnesota, N.A., formerly Norwest Bank Minnesota, N.A., managed the collective investment fund with an investment objective and principal investment strategy that were substantially similar to those of the Fund. The performance of the Fund includes performance of its predecessor collective investment fund for periods before it became a mutual fund on November 11, 1994. The collective investment fund’s performance was adjusted to reflect the Fund’s 1994 estimate of expense ratios for the first year of operations as a mutual fund, including any applicable sales load (without giving effect to any fee waivers or expense reimbursements). The collective investment fund was not registered under

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Including Sales Charge			Excluding Sales Charge
	1-Year	5-Year	10-Year	1-Year	5-Year	10-Year

Wells Fargo Intermediate Government Income Fund – Class A	5.00	5.84	5.42	9.95	6.82	5.91

Wells Fargo Intermediate Government Income Fund – Class B	4.08	5.70	5.12	9.08	6.01	5.12

Wells Fargo Intermediate Government Income Fund – Class C	7.02	5.80	5.01	9.11	6.02	5.12

Wells Fargo Intermediate Government Income Fund – Institutional Class				10.20	7.01	6.00

Benchmark

Lehman Brothers Intermediate U.S. Government Index²				9.27	6.62	6.17

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		139%

Number of Holdings		100

Average Credit Quality³		AAA

Weighted Average Coupon		4.75%

Estimated Weighted Average Maturity		3.11 years

Estimated Average Duration		3.51 years

NAV (Class A, B, C, I)		$11.70, $11.68, $11.66, $11.69

Distribution Rate⁴ (Class A, B, C, I)		4.47%, 3.98%, 3.98%, 5.14%

SEC Yield⁵ (Class A, B, C, I)		2.07%, 1.43%, 1.42%, 2.42%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2003)

LOGO

GROWTH OF $10,000 INVESTMENT⁷

LOGO

the Investment Company Act of 1940 (“1940 Act”) nor subject to certain investment limitations, diversification requirements, and other restrictions imposed by the 1940 Act or the Internal Revenue Code which, if applicable, may have adversely affected the performance results. For Class A shares, the maximum front-end sales charge is 4.50%. The maximum contingent-deferred sales charge for Class B shares is 5.00%. For Class C shares, the maximum front-end sales charge is 1.00% and the maximum CDSC is 1.00%. Performance including sales charge assumes the maximum sales charge for the period shown. Institutional Class shares are sold without sales charges.

² The Lehman Brothers Intermediate U.S. Government Index is an unmanaged index composed of U.S. Government securities with maturities in the one- to ten-year range, including securities issued by the U.S. Treasury and U.S. Government agencies. You cannot invest directly in an index.

⁶ Portfolio holdings are subject to change.

⁷ The chart compares the performance of the Wells Fargo Intermediate Government Income Fund Class A and Institutional Class shares for the most recent ten years with the Lehman Brothers Intermediate U.S. Government Index. The chart assumes a hypothetical $10,000 investment in Class A and Institutional Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 4.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

LIMITED TERM GOVERNMENT INCOME FUND

INVESTMENT OBJECTIVE

The Wells Fargo Limited Term Government Income Fund (the Fund) seeks current income, while preserving capital.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Wells Capital Management Incorporated

FUND MANAGER

Robert N. Daviduk, CFA

INCEPTION DATE

10/27/93

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 7.46%¹ for the 12-month period ended May 31, 2003, excluding sales charges. The Fund underperformed its benchmark, the Lehman Brothers Intermediate U.S. Government/Credit Index², which returned 11.87% for the period. The Fund’s Class A shares distributed $ 0.36 per share in dividend income and no capital gains during the period.

The fiscal year ending May 31, 2003 provided another positive year in returns for fixed-income investors. Interest rates declined steadily from June through September of 2002, and then traded in a fairly wide band until mid-April of 2003 before declining steadily once again through the end of May. The intermediate part of the curve saw the largest decrease in yield with the three-year Treasury note declining 2.11%. As the outperforming three-year Treasury provided a good proxy for this Fund, the price appreciation that resulted from the 2.11% yield drop provided the bulk of the Fund performance.

The Fund’s mortgage-backed security holdings also added to the total return. According to the Lehman Mortgage Index, the fixed-rate mortgage market provided 0.70% in excess return over similar duration Treasuries during the time period. The Fund began the fiscal year with a 44% weighting in mortgage-backed security holdings, and increased it to nearly 50% by the middle of the period, thus benefiting from the outperformance of this sector. We ended the fiscal year at a 47% weighting in the sector. The Fund’s agency note holdings also contributed to the Fund’s total return. The Lehman Brothers Agency Index measured showed that the agency note market provided 1.14% in excess total return over similar duration Treasuries. The Fund held a 24% weighting in agency notes for most of the year.

The Fund’s benchmark index, the Lehman Brothers Intermediate U.S. Government/Credit Index, is comprised of over 40% corporate bonds, while the Limited Term Government Income Fund invests almost entirely in short-to intermediate-term U.S. Government obligations. Since corporate bonds had positive excess returns relative to government securities, this was a contributing factor to the Fund’s underperformance against the index during the period.

The duration of the Fund was shortened mid-year to around 2.31 years from 2.95 years at the beginning of the fiscal year seeking to reduce interest rate risk.

STRATEGIC OUTLOOK

Going forward, the Fund expects to continue to invest primarily in U.S. Government securities. However, in addition to mortgage-backed securities, it can now invest up to 20% in other AAA- and AA-asset-backed securities. If we choose to invest in these other asset-backed securities, it may help to provide additional yield for the Fund in a continued low interest-rate environment.

Performance shown for Class A, Class B and Institutional Class shares of the Wells Fargo Limited Term Government Income Fund for periods prior to November 8, 1999, reflects performance of the Class A, Class B and Institutional Class shares of the Stagecoach Short-Intermediate U.S. Government Income Fund (the accounting survivor of a merger of the Stagecoach Fund and the Norwest Advantage Limited Term Government Income Fund at the close of business November 5, 1999), its predecessor fund. Effective at the close of business November 5, 1999, the Stagecoach Funds and Norwest Advantage Funds were reorganized into

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)


	Including Sales Charge			Excluding Sales Charge
	1-Year	5-Year	Life of Fund	1-Year	5-Year	Life of Fund

Wells Fargo Limited Term Government Income Fund – Class A	2.65	5.07	5.25	7.46	6.04	5.76

Wells Fargo Limited Term Government Income Fund – Class B	1.64	4.94	5.04	6.64	5.27	5.04

Wells Fargo Limited Term Government Income Fund – Institutional Class				7.74	6.27	5.89

Benchmark

Lehman Brothers Intermediate U.S. Government/Credit Index²				11.87	7.80	6.88

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		155%

Number of Holdings		65

Average Credit Quality³		AAA

Weighted Average Coupon		4.63%

Estimated Weighted Average Maturity		3.01 years

Estimated Average Duration		2.31 years

NAV (Class A, B, I)		$10.41, $10.41, $10.21

Distribution Rate⁴ (Class A, B, I)		2.64%, 2.01%, 3.08%

SEC Yield⁵ (Class A, B, I)		2.08%, 1.43%, 2.42%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2003)

LOGO

GROWTH OF $10,000 INVESTMENT⁷

LOGO

the Wells Fargo Funds. Performance shown for the Class B shares of the Fund for periods prior to June 15, 1998, reflects the performance of the Fund’s Class A shares, adjusted to reflect Class B sales charges and expenses. Performance shown for the Institutional Class shares for periods prior to September 6, 1996, reflects the performance of the Class A shares of the Fund, adjusted to reflect Institutional Class expenses. For Class A shares, the maximum front-end sales charge is 4.50%. The maximum contingent-deferred sales charge for Class B shares is 5.00%. Performance including sales charge assumes the maximum sales charge for the period shown. Institutional Class shares are sold without sales charges.

² The Lehman Brothers Intermediate U.S. Government/Credit Index is an unmanaged index composed of U.S. Government securities with maturities in the one- to ten-year range, including securities issued by the U.S. Treasury and U.S. Government agencies. It also contains all publicly issued, fixed-rate non-convertible investment-grade domestic corporate debt in the one- to ten-year range. You cannot invest directly in an index.

⁵ SEC yields include the actual amount of interest earned adjusted by any gain or loss realized due to the return of principal, less expenses, calculated on a 30-day month-end basis.

⁶ Portfolio holdings are subject to change.

⁷ The chart compares the performance of the Wells Fargo Limited Term Government Income Fund Class A and Institutional Class shares for the life of the Fund with the Lehman Brothers Intermediate U.S. Government/Credit Index. The chart assumes a hypothetical $10,000 investment in Class A shares and Institutional Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 4.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

STABLE INCOME FUND

INVESTMENT OBJECTIVE

The Wells Fargo Stable Income Fund (the Fund) seeks stability of principal while providing lower volatility total return.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Galliard Capital Management, Inc.

FUND MANAGER

John Huber, CFA

INCEPTION DATE

11/11/94

PERFORMANCE HIGHLIGHTS

The Fund’s Class A shares returned 3.01%¹ for the 12-month period ended May 31, 2003, excluding sales charges. The Fund outperformed its benchmark, the Lehman Brothers Short Treasury 9-12 Months Index², which returned 2.55% during the period. The Fund’s Class A shares distributed $0.25 per share in dividend income and no capital gains during the period.

Interest rates rallied over the past 12 months as the fixed-income market faced conflicting economic and geo-political events. As a result, the Fund’s duration positioning had a positive impact on total returns. The Fund continued to benefit from its strong yield advantage versus its benchmark as income dominated total returns over the past year. In addition, non-Treasury sectors performed well as corporate, mortgage-backed and structured products all provided excess returns to investors.

The Fund’s allocation in the corporate, mortgage-backed and asset-backed market aided relative performance during the period. More specifically, the Fund’s continued focus on undervalued A- to BBB-rated corporate bonds benefited shareholders as credit spreads collapsed over the second half of the period. The structured product strategy continued to overweight higher-yielding alternatives to government agency paper while emphasizing risk control and cash flow stability. The Fund’s strategic positioning in Treasury Inflation-Protected Securities (TIPS) also provided value-added returns during this time period.

STRATEGIC OUTLOOK

We continue to overweight the non-Treasury sectors given our income-based strategy. Opportunities may present themselves across each sub-sector of the fixed-income market, and we expect to actively position the Fund seeking to take advantage of those opportunities. Specifically, we find the corporate market less compelling given the spread tightening that has occurred and will look to manage our corporate exposure selectively. Areas within the mortgage- and asset-backed market currently appear more attractive for the Fund. In addition, TIPS continue to offer a long-term opportunity for shareholders.

¹ Figures quoted represent past performance, which is no guarantee of future results and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s Adviser has committed through September 30, 2003, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund’s returns would have been lower. The Fund is a gateway feeder Fund that invests all of its assets in a single master portfolio of Master Trust with a substantially similar investment objective and substantially similar investment strategies. References to the investment activities of the Fund are intended to refer to the investment activities of the master portfolio in which it invests.

Performance shown for Class A, Class B and Institutional Class shares of the Wells Fargo Stable Income Fund for periods prior to November 8, 1999, reflects performance of the Class A, Class B and Institutional Class shares of the Norwest Advantage Stable Income Fund, its predecessor fund. Effective at the close of business November 5, 1999, the Norwest Advantage Funds were reorganized into the Wells Fargo Funds. Performance shown for Class A shares for periods prior to May 2, 1996, reflects performance of the Institutional Class shares of the Norwest Fund adjusted for Class A sales charges and expenses. Performance shown for Class B shares for periods prior to May 17, 1996, reflects performance of the Institutional Class shares of the Norwest Fund adjusted for Class B sales charges and expenses. For Class A shares, the maximum front-end sales charge is 1.50%. Effective July 1, 2003, the maximum front-end sales charge for Class A shares of the Fund will be 2.00%. The maximum contingent-deferred sales charge for Class B shares is 1.50%. Performance including sales charge assumes the maximum sales charge for the period shown. Institutional Class shares are sold without sales charges.

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Including Sales Charge			Excluding Sales Charge
	1-Year	5-Year	Life of Fund	1-Year	5-Year	Life of Fund

Wells Fargo Stable Income Fund – Class A	1.46	4.38	5.22	3.01	4.69	5.41

Wells Fargo Stable Income Fund – Class B	0.74	3.93	4.61	2.24	3.93	4.61

Wells Fargo Stable Income Fund – Institutional Class				3.13	4.87	5.50

Benchmark

Lehman Brothers Short Treasury 9-12 Months Index²				2.55	4.73	5.52

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		45%

Average Credit Quality³		AA1

Weighted Average Coupon		3.64%

Estimated Weighted Average Maturity		2.84 years

Estimated Average Duration		0.74 years

NAV (Class A, B, I)		$10.44, $10.43, $10.44

Distribution Rate⁴ (Class A, B, I)		1.90%, 1.48%, 2.41%

SEC Yield⁵ (Class A, B, I)		1.73%, 1.01%, 2.00%

PORTFOLIO ALLOCATION⁶ (AS OF MAY 31, 2003)

LOGO

GROWTH OF $10,000 INVESTMENT⁷

LOGO

² The Lehman Brothers Short Treasury 9-12 Months Index is an unmanaged index of short-term U.S. Treasuries maturing in 9 to 12 months, including bills, notes and bonds. U.S. Treasuries are backed by the full faith and credit of the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The Fund invests in a wide range of securities, including those that are not reflected in the Lehman Brothers Short Treasury 9-12 Months Index or backed by the full faith and credit of the U.S. Government. You cannot invest directly in an index.

⁶ The Fund invests exclusively in a Wells Fargo Master Portfolio. This chart represents the portfolio allocations of the master portfolio in which it invests. Portfolio holdings are subject to change. See notes to the Financial Statements for a discussion of the master portfolio.

⁷ The chart compares the performance of the Wells Fargo Stable Income Fund Class A and Institutional Class shares for the life of the Fund with the Lehman Brothers Short Treasury 9-12 Months Index. The chart assumes a hypothetical $10,000 investment in Class A shares and Institutional Class shares and reflects all operating expenses and, for Class A shares, assumes the maximum initial sales charge of 1.50%.

INCOME FUNDS		PERFORMANCE HIGHLIGHTS

TACTICAL MATURITY BOND FUND

INVESTMENT OBJECTIVE

The Wells Fargo Tactical Maturity Bond Fund (the Fund) seeks to produce a positive total return each calendar year.

ADVISER

Wells Fargo Funds Management, LLC

SUB-ADVISER

Peregrine Capital Management, Inc.

FUND MANAGERS

William Giese, CFA

Jay H. Strohmaier

INCEPTION DATE

6/1/97¹

PERFORMANCE HIGHLIGHTS

The Fund returned 2.53%¹ for the 12-month period ended May 31, 2003. The Fund underperformed its benchmark, the Lehman Brothers Aggregate Bond Index², (the Index) which returned 11.58% over the same period. The Fund distributed $0.17 per share in dividend income and no capital gains during the period.

The combination of repeated fluctuations in long-term Treasury prices and historically low short-term interest rates combined to hurt performance over the past year. The Fund is structured as a barbell of short-term and long-term maturities. Value is added by reacting to interest-rate shifts, placing greater emphasis on shorter maturities to protect principal when bond prices move down, and increasing the emphasis on longer maturities to add appreciation when prices move higher. This approach tends to help the Fund outperform when prices move in sustained trends, but lags when prices fluctuate back and forth. Additionally, fluctuating long-term bonds caused a significant portion of the portfolio to be allocated to short-term maturities during the period, and the low yields available on reserves reduced the Fund’s return.

With interest rates declining to near 50-year lows by the end of the fiscal year, virtually all bond prices rose, and returns generally improved as maturity lengthened. A “flight to safety” by investors prevailed during the first half of the fiscal year, as corporate bankruptcies, warnings of domestic terror attacks and increasing tensions in the Middle East were on investors’ minds. In that environment, government securities outperformed corporate securities. During the second half of the fiscal year, however, more positive economic and geo-political expectations led to a greater willingness by many investors to accept risk. Stocks eventually rebounded, and corporate and high yield bonds turned in the best performance.

STRATEGIC OUTLOOK

With a longer duration than its benchmark, the Fund may perform well in any extension of the most recent bond rally. On the other hand, with historically low interest rates, many investors are understandably concerned with how the Fund may react if interest rates move higher. Given our ability to reduce portfolio duration quickly and meaningfully below that of the Index, the Fund is expected to hold up well and possibly outperform the Index in a protracted move to higher yields.

¹ Figures quoted represent past performance, which is no guarantee of future results and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the redemption of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s Adviser has committed through September 30, 2003, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund’s returns would have been lower. The Fund is a gateway feeder Fund that invests all of its assets in a single master portfolio of Master Trust with a substantially similar investment objective and substantially similar investment strategies. References to the investment activities of the Fund are intended to refer to the investment activities of the master portfolio in which it invests.

Performance shown in the average annual total return table for the Institutional Class shares of the Wells Fargo Tactical Maturity Bond Fund for periods prior to November 28, 2001, reflects the performance of the Wells Fargo Tactical Maturity Bond Master Portfolio, a master portfolio in which the Fund invests, adjusted to reflect the fees and expenses of the Fund. The Wells Fargo Tactical Maturity Bond Master Portfolio, which incepted on June 1, 1997, has a substantially identical investment objective and investment strategy as the Fund.

PERFORMANCE HIGHLIGHTS		INCOME FUNDS

AVERAGE ANNUAL TOTAL RETURN¹ (%) (AS OF MAY 31, 2003)

	Excluding Sales Charge
	1-Year	5-Year	Life of Fund

Wells Fargo Tactical Maturity Bond Fund	2.53	5.35	7.18

Benchmark

Lehman Brothers Aggregate Bond Index²	11.58	7.77	8.29

CHARACTERISTICS (AS OF MAY 31, 2003)


Portfolio Turnover		115%

Weighted Average Coupon		3.49%

Estimated Weighted Average Maturity		11.79 years

Estimated Average Duration		6.31 years

Net Asset Value (NAV)		$9.84

Distribution Rate³ (Class I)		1.77%

SEC Yield⁴ (Class I)		1.98%

PORTFOLIO ALLOCATION⁵ (AS OF MAY 31, 2003)

LOGO

GROWTH OF $10,000 INVESTMENT⁶

LOGO

⁵ The Fund invests exclusively in a Wells Fargo Master Portfolio. This chart represents the composite of the portfolio allocations of the master portfolio in which the Fund invests. Portfolio holdings are subject to change. See Notes to the Financial Statements for a discussion of the master portfolio.

⁶ The chart compares the performance of the Wells Fargo Tactical Maturity Bond Fund Institutional Class shares for the life of the Fund with the Lehman Brothers Aggregate Bond Index. The chart assumes a hypothetical $10,000 investment in Institutional Class shares and reflects all operating expenses.

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

DIVERSIFIED BOND FUND

Face/Share Amount	Security Description	Value

N/A	Wells Fargo Managed Fixed Income Portfolio	$	187,719,440

N/A	Wells Fargo Strategic Value Bond Portfolio		62,715,681

N/A	Wells Fargo Tactical Maturity Bond Portfolio		124,847,303


Total Investment in Master Portfolios – (Cost $360,502,170)				375,282,424


Total Investment in Securities (Cost $360,502,170)*	100.66	%	$	375,282,424

Other Assets and Liabilities, Net	(0.66	)		(2,460,515	)

Total Net Assets	100.00	%	$	372,821,909

Cost for federal income tax purposes is substantially the same as for financial reporting purposes.

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

HIGH YIELD BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Corporate Bonds & Notes – 84.03%

Amusement And Recreation Services – 6.29%

$	865,000	AMC Entertainment Incorporated	9.50	%	02/01/2011	$	893,112

	1,600,000	Aztar Corporation	9.00		08/15/2011		1,688,000

	500,000	Cinemark USA Incorporated Series B	8.50		08/01/2008		515,000

	125,000	Hard Rock Hotel Incorporated^	8.88		06/01/2013		128,437

	2,000,000	Lin Television Corporation^	6.50		05/15/2013		2,000,000

	650,000	LNR Property Corporation	10.50		01/15/2009		693,063

	200,000	LNR Property Corporation Series B	9.38		03/15/2008		208,750

	1,150,000	Park Place Entertainment	7.88		03/15/2010		1,200,313

	75,000	Park Place Entertainment^	7.00		04/15/2013		77,438

	800,000	Speedway Motorsports Incorporated^	6.75		06/01/2013		820,000

	800,000	Town Sports International^	9.63		04/15/2011		832,000

							9,056,113


Apparel & Other Finished Products Made From Fabrics & Similar Materials – 1.58%

	2,050,000	Levi Strauss & Company	7.00		11/01/2006		1,681,000

	700,000	Levi Strauss & Company	11.63		01/15/2008		598,500

							2,279,500


Apparel And Accessory Stores – 2.41%

	500,000	Gap Incorporated	6.90		09/15/2007		537,500

	1,000,000	Gap Incorporated	10.55		12/15/2008		1,195,000

	500,000	Saks Incorporated	7.25		12/01/2004		518,750

	1,200,000	Saks Incorporated	7.50		12/01/2010		1,224,000

							3,475,250


Automotive Dealers And Gasoline Service Stations – 0.24%

	375,000	Asbury Automotive Group	9.00		06/15/2012		352,500


Automotive Repair, Services, And Parking – 1.31%

	1,200,000	United Rentals National Incorporated Series B	9.25		01/15/2009		1,122,000

	600,000	United Rentals National Incorporated Series B	10.75		04/15/2008		639,000

	120,000	Universal Compression Incorporated^	7.25		05/15/2010		122,400

							1,883,400


Automotive Repair, Services, And Parking – 0.22%

	500,000	Titan Wheel International Incorporated	8.75		04/01/2007		310,625


Building Construction-General Contractors & Operative Builders – 1.80%

	750,000	Atrium Companies Incorporated Series B	10.50		05/01/2009		796,875

	600,000	Beazer Homes USA	8.38		04/15/2012		658,500

	1,100,000	WCI Communities Incorporated	9.13		05/01/2012		1,139,875

							2,595,250


Building Materials, Hardware, Garden Supply, & Mobile Home Dealers – 0.35%

	475,000	Juno Lighting Incorporated	11.88		07/01/2009		504,688

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

HIGH YIELD BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Business Services – 0.85%

$	1,075,000	AOL Time Warner Incorporated	6.88	%	05/01/2012	$	1,220,731


Communications – 3.50%

	850,000	Alaska Communications Systems Holdings	9.38		05/15/2009		833,000

	1,050,000	DirecTV Holdings/Finance^	8.38		03/15/2013		1,162,875

	500,000	Emmis Communications Corporation Series B	8.13		03/15/2009		521,250

	400,000	Sinclair Broadcast Group	8.00		03/15/2012		423,500

	300,000	Sinclair Broadcast Group^	8.00		03/15/2012		317,625

	1,525,000	Sprint Capital Corporation	8.38		03/15/2012		1,780,330

							5,038,580


Depository Institutions – 1.60%

	1,635,000	Capital One Financial Corporation	7.25		05/01/2006		1,751,131

	500,000	JP Morgan Chase & Company	5.75		01/02/2013		546,789

							2,297,920


Eating And Drinking Places – 4.53%

	2,200,000	Buffets Incorporated	11.25		07/15/2010		2,090,000

	1,800,000	CKE Restaurants Incorporated	9.13		05/01/2009		1,692,000

	1,000,000	Denny’s Corporation	11.25		01/15/2008		752,500

	750,000	Denny’s Corporation	12.75		09/30/2007		768,750

	625,000	Dominos Incorporated Series B	10.38		01/15/2009		685,156

	565,000	Perkins Family Restaurants/Finance Series B	10.13		12/15/2007		533,925

							6,522,331


Electric, Gas, And Sanitary Services – 4.30%

	490,000	Allied Waste North America Incorporated	7.88		04/15/2013		494,900

	3,100,000	Allied Waste North America Series B	10.00		08/01/2009		3,258,875

	1,300,000	Illinois Power Corporation^	11.50		12/15/2010		1,426,750

	1,000,000	Integrated Electric Services Series B	9.38		02/01/2009		1,015,000

							6,195,525


Electronic And Other Electrical Equipment & Components, Except Computer Equipment – 0.20%

	300,000	Muzak Holdings LLC/Finance£	13.00		03/15/2010		234,000

	60,000	Wesco Distribution Incorporated Series B	9.13		06/01/2008		54,000

							288,000


Engineering, Accounting, Research Management & Related Services – 1.53%

	200,000	Foster Wheeler LLC	6.75		11/15/2005		142,000

	700,000	URS Corporation	11.50		09/15/2009		700,000

	1,500,000	URS Corporation Series B	12.25		05/01/2009		1,365,000

							2,207,000


Fabricated Metal Products, Except Machinery And Transportation Equipment – 0.40%

	565,000	Owens-Brockway Glass Container Corporation^	7.75		05/15/2011		577,713

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

HIGH YIELD BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Food And Kindred Products – 4.15%

$	500,000	Carrols Corporation	9.50	%	12/01/2008	$	482,500

	750,000	Dean Foods Company	6.63		05/15/2009		778,125

	2,105,000	Del Monte Corporation^	8.63		12/15/2012		2,233,931

	450,000	Delhaize America Incorporated	8.13		04/15/2011		495,000

	350,000	Doane Pet Care Company	9.75		05/15/2007		320,250

	1,000,000	Dole Foods Company^	7.25		06/15/2010		995,000

	650,000	Smithfield Foods Incorporated^	7.75		05/15/2013		666,250

							5,971,056


General Merchandise Stores – 1.00%

	1,400,000	Penney (JC) Company Incorporated	7.40		04/01/2037		1,442,000


Home Furniture, Furnishings, And Equipment Stores – 0.74%

	800,000	Congoleum Corporation	8.63		08/01/2008		504,000

	700,000	Fedders North America	9.38		08/15/2007		567,000

							1,071,000


Hotels, Rooming Houses, Camps, & Other Lodge Places – 3.97%

	500,000	Felcor Suites Limited Partners	7.63		10/01/2007		475,000

	1,400,000	HMH Properties Incorporated Series B	7.88		08/01/2008		1,396,500

	400,000	Host Marriot Hotel Properties Incorporated Series A	7.88		08/01/2005		408,000

	1,950,000	MGM Mirage Incorporated	8.38		02/01/2011		2,149,875

	1,210,000	Starwood Hotels Resorts^	7.88		05/01/2012		1,282,600

							5,711,975


Industrial & Commercial Machinery & Computer Equipment – 1.86%

	1,225,000	Columbus McKinnon Corporation	8.50		04/01/2008		826,875

	1,820,000	InfoUSA Incorporated	9.50		06/15/2008		1,847,300

							2,674,175


Miscellaneous Manufacturing Industries – 3.62%

	1,650,000	Bombardier Incorporated^	6.75		05/01/2012		1,534,500

	800,000	Building Materials Corporation Series B	7.75		07/15/2005		760,000

	700,000	Building Materials Corporation Series B	8.00		10/15/2007		638,750

	680,000	Grey Wolf Incorporated	8.88		07/01/2007		700,400

	750,000	Hexcel Corporation^	9.88		10/01/2008		798,750

	500,000	JLG Industries Incorporated^	8.25		05/01/2008		501,250

	300,000	US Industries Incorporated/USI American Holdings^	11.25		12/31/2005		279,000

							5,212,650


Miscellaneous Retail – 5.76%

	500,000	Dillard’s Incorporated	7.85		10/01/2012		495,000

	1,525,000	Dillard’s Department Stores	7.38		06/01/2006		1,555,500

	2,100,000	Elizabeth Arden Incorporated Series B	11.75		02/01/2011		2,310,000

	600,000	Nebraska Book Company	8.75		02/15/2008		600,000

	1,000,000	Pep Boys-Manny Moe Jack MTN Series B	6.92		07/07/2006		990,000

	240,000	Remington Arms Company^	10.50		02/01/2011		240,600

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

HIGH YIELD BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Miscellaneous Retail (continued)

$	1,800,000	Toys R Us Incorporated	7.63	%	08/01/2011	$	1,891,575

	200,000	Toys R Us Incorporated	7.88		04/15/2013		210,247

							8,292,922


Motion Pictures – 0.41%

	570,000	Muzak Finance^	10.00		02/15/2009		584,250


Non-Depository Credit Institutions – 3.25%

	410,000	Capital One Financial	8.75		02/01/2007		459,016

	1,800,000	Ford Motor Credit Company	7.25		10/25/2011		1,857,868

	1,475,000	H&E Equipment/Finance	11.13		06/15/2012		1,275,875

	1,000,000	PCA LLC/PCA Finance Corporation	11.88		08/01/2009		1,090,000

							4,682,759


Nonclassifiable Establishments – 3.32%

	750,000	Interline Brands Incorporated^	11.50		05/15/2011		768,750

	4,000,000	JP Morgan High Yield Debt Index^	8.00		06/20/2008		4,015,000

							4,783,750


Oil And Gas Extraction – 0.80%

	475,000	Nuevo Energy Company Series B	9.38		10/01/2010		505,875

	750,000	Wiser Oil Company	9.50		05/15/2007		652,500

							1,158,375


Paper And Allied Products – 6.65%

	750,000	Abitibi-Consolidated Incorporated	8.30		08/01/2005		808,006

	1,400,000	AEP Industries Incorporated	9.88		11/15/2007		1,358,000

	900,000	American Greetings	11.75		07/15/2008		1,042,875

	90,000	Consolidated Container Company	10.13		07/15/2009		54,900

	1,015,000	Fort James Corporation	6.63		09/15/2004		1,020,075

	400,000	Graham Packaging/GPC Capital Series B^	8.75		01/15/2008		394,000

	750,000	Graham Packaging/GPC Capital Series B	10.75		01/15/2009		765,000

	3,500,000	Owens-Illinois Incorporated	7.50		05/15/2010		3,325,000

	800,000	Radnor Holdings Incorporated^	11.00		03/15/2010		808,000

							9,575,856


Personal Services – 0.14%

	200,000	Service Corporation International	6.88		10/01/2007		199,000


Petroleum Refining And Related Industries – 0.64%

	645,000	Frontier Escrow Coporation^	8.00		04/15/2013		662,737

	275,000	Giant Industries	9.00		09/01/2007		253,688

							916,425


Pipelines, Except Natural Gas – 1.02%

	300,000	El Paso Energy Partners^	8.50		06/01/2010		319,500

	450,000	El Paso Energy Partners Series B	8.50		06/01/2011		479,250

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

HIGH YIELD BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Pipelines, Except Natural Gas (continued)

$	200,000	Semco Energy Incorporated^	7.75	%	05/15/2013	$	211,000

	450,000	Transmontaigne Incorporated^	9.13		06/01/2010		461,250

							1,471,000


Printing, Publishing, And Allied Industries – 7.76%

	75,000	American Media Incorporated^	8.88		01/15/2011		81,000

	2,106,000	Garden State Newspapers Series B	8.75		10/01/2009		2,153,385

	300,000	Garden State Newspapers	8.63		07/01/2011		307,500

	75,000	Houghton Mifflin Company^	9.88		02/01/2013		80,531

	750,000	Mail-Well I Corporation	9.63		03/15/2012		768,750

	198,592	Merrill Corporation Series A±	12.00		05/01/2009		89,863

	959,024	Merrill Corporation Series B±	12.00		05/01/2009		433,958

	2,265,000	Primedia Incorporated	7.63		04/01/2008		2,236,688

	150,000	Primedia Incorporated	8.88		05/15/2011		156,750

	1,000,000	Primedia Incorporated^	8.00		05/15/2013		1,005,000

	1,785,000	Sitel Corporation	9.25		03/15/2006		1,713,600

	1,750,000	Vertis Incorporated^	13.50		12/07/2009		1,636,250

	500,000	Vertis Incorporated^	9.75		04/01/2009		511,250

							11,174,525


Rubber And Miscellaneous Plastics Products – 0.15%

	205,000	Constar International	11.00		12/01/2012		217,300


Stone, Clay, Glass, And Concrete Products – 0.44%

	630,000	Texas Industries Incorporated^	10.25		06/15/2011		630,000


Textile Mill Products – 1.05%

	500,000	Collins & Aikman Floorcave Series B	9.75		02/15/2010		510,000

	1,000,000	Dan River Incorporated^	12.75		04/15/2009		1,000,000

							1,510,000


Tobacco Products – 1.47%

	1,000,000	Philip Morris – Altria Group Incorporated	7.65		07/01/2008		1,102,290

	600,000	RJ Reynolds Tobacco Holdings	7.25		06/01/2012		599,159

	400,000	RJ Reynolds Tobacco Holdings Series B	7.75		05/15/2006		410,428

							2,111,877


Transportation By Air – 0.64%

	950,000	Evergreen International Aviation^	12.00		05/15/2010		914,375


Transportation Equipment – 3.51%

	1,000,000	Advanced Accessory Systems^	10.75		06/15/2011		1,020,000

	660,000	Collins & Aikman Products	11.50		04/15/2006		435,600

	680,000	Collins & Aikman Products	10.75		12/31/2011		584,800

	1,000,000	Dana Corporation	9.00		08/15/2011		1,045,000

	40,000	Dura Operating Corporation Series B	8.63		04/15/2012		40,000

	800,000	Dura Operating Corporation Series D	9.00		05/01/2009		708,000

	210,000	Eagle-Picher Industries	9.38		03/01/2008		191,100

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

HIGH YIELD BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Transportation Equipment (continued)

$	820,000	TRW Automotive Incorporated^	11.00	%	02/15/2013	$	854,850

	160,000	TRW Automotive Incorporated^	9.38		02/15/2013		166,800

							5,046,150


Transportation Services – 0.32%

	535,000	Trico Marine Services	8.88		05/15/2012		454,750


Wholesale Trade-Durable Goods – 0.24%

	330,000	Affinity Group Holding	11.00		04/01/2007		340,725


Total Corporate Bonds & Notes (Cost $117,798,031)							120,952,021


Real Estate Investment Trust – 4.96%

	1,650,000	BF Saul REIT Series B	9.75		04/01/2008		1,650,000

	1,000,000	Felcor Lodging Limited Partners	8.50		06/01/2011		962,500

	1,515,000	Host Marriott Limited Partners Series I	9.50		01/15/2007		1,605,900

	200,000	HRPT Properties Trust	8.50		11/15/2013		203,080

	675,000	Meristar Hospitality Corporation	8.75		08/15/2007		550,125

	200,000	Meristar Hospitality Corporation	9.13		01/15/2011		185,000

	2,000,000	Thornburg Mortgage^	8.00		05/15/2013		1,990,000

Total Real Estate Investment Trust (Cost $6,874,376)							7,146,605


Shares

Preferred Stocks – 2.78%

	38,986	CBL & Associates Property Series A	9.00		07/22/2003		1,011,687

	40,000	Developers Diversified Realty Trust	8.00		03/28/2008		1,046,000

	16,000	Gables Residential Trust	7.50		05/08/2008		405,500
	40,000	Regency Centers Corporation	7.45		04/03/2008		1,040,000

	53	Paxson Communications Corporation PIK Preferred§	13.25		07/28/2003		501,138

Total Preferred Stocks (Cost $3,783,938)							4,004,325


Principal

Short-Term Investment – 7.77%

Repurchase Agreements – 7.77%

$	3,720,000	Goldman Sachs & Company – 102% Collateralized by US Government Securities	1.25		06/02/2003		3,720,000

	7,463,000	Morgan Stanley & Company Incorporated – 102% Collateralized by US Government Securities	1.22		06/02/2003		7,463,000

							11,183,000


Shares

	7,284	Wells Fargo Money Market Trust~					7,284


Total Short-Term Investment (Cost $11,190,284)							11,190,284


Total Investments in Securities (Cost $139,646,629)*	99.54	%	$	143,293,235

Other Assets and Liabilities, Net	0.46			657,541

Total Net Assets	100.00	%	$	143,950,776

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable rate securities.

This Wells Fargo Fund invests cash balances that it retains for liquidity purposes in a Wells Fargo Money Market Fund. The fund does not pay an investment advisory fee to the Wells Fargo Money Market Fund for such investments.

Debt obligation initially issued in zero coupon form which converts to coupon form at a specific rate and date. The rate shown is the rate at period end.

Pay-in-kind securities are securities in which the issuer makes interest or dividend payments in cash or additional securities.

Cost for federal income tax purposes is $139,693,538 and net unrealized appreciation consists of:

Gross Unrealized Appreciation	$	4,507,462
Gross Unrealized Depreciation		(907,765	)

Net Unrealized Appreciation	$	3,599,697

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Asset Backed Securities – 3.31%

$	260,000	Americredit Automobile Receivables Trust Series 2002-C Class A4	3.55	%	02/12/2009	$	266,839

	3,110,000	Bank One Issuance Trust Series 2002-A3 Class A3	3.59		05/17/2010		3,251,357

	3,074,614	Ford Credit Auto Owner Trust Series 2002-D Class A2B±	1.38		03/15/2005		3,074,163

	3,200,000	Ford Credit Auto Owner Trust Series 2003-A Class A3A	2.20		07/17/2006		3,240,985

	2,200,000	Providian Gateway Master Trust Series 2001-B Class A±^	1.61		04/17/2006		2,204,389

	2,400,000	Residential Asset Mortgage Products Incorporated Series 2002-Rs4 Class A13±	3.89		10/25/2027		2,477,574

Total Asset Backed Securities (Cost $14,240,471)							14,515,307


Collateralized Mortgage Obligations – 3.56%

	25,481,000	Bear Stearns Commercial Mortgage Securities Series 2003-T10 Class X2 Interest Only±^(c)	1.44		03/13/2040		1,840,531

	24,681,324	CS First Boston Mortgage Securities Corporation Series 1998-C2 Class Ax Interest Only±(c)	1.19		11/11/2030		1,038,343

	22,400,000	First Union Bank Of America Series 2001 C1 102 Interest Only±^(c)	2.00		03/15/2011		2,149,336

	36,414,999	GMAC Commercial Mortgage Securities Incorporated Series 2002-C1 Class X1 Interest Only±^(c)	0.62		11/15/2039		1,285,329

	2,000,000	JP Morgan Chase And Company Series 2002-Cib4 Class A3	6.16		05/12/2034		2,313,771

	29,380,000	Lehman Brothers-UBS Commercial Mortgage Obligation Interest Only(c)	0.29		06/01/2033		828,031

	28,871,614	Solomon Brothers Mortgage Securities Series 2002 Key2 X1 Interest Only±^(c)	1.45		03/18/2036		2,070,259

	65,188,322	Wachovia Bank Commercial Mortgage Trust Series 2002 C1 101 Interest Only±^(c)	0.39		04/15/2034		1,893,271

	40,893,000	Wachovia Bank Commercial Mortgage Trust Series 2003 C4 Xp Interest Only±^(c)	1.08		04/15/2035		2,185,346

Total Collateralized Mortgage Obligations (Cost $15,395,966)							15,604,217


Corporate Bonds & Notes – 42.78%

Agricultural Production Crops – 0.15%

	635,000	Bunge Limited Finance Corporation^	5.88		05/15/2013		653,122


Amusement And Recreation Services – 0.46%

	250,000	Boyd Gaming Corporation^	7.75		12/15/2012		256,874

	145,000	Cinemark USA Incorporated^	9.00		02/01/2013		155,875

	100,000	Herbst Gaming Incorporated^	10.75		09/01/2008		109,250

	250,000	Hollywood Entertainment	9.63		03/15/2011		266,250

	360,000	International Game Technology	8.38		05/15/2009		432,900

	250,000	Mandalay Resort Group Series B	10.25		08/01/2007		275,000

	250,000	Six Flags Incorporated	8.88		02/01/2010		238,438

	250,000	Venetian Casino/Las Vegas Sands	11.00		06/15/2010		273,438

							2,008,025


Automotive Dealers And Gasoline Service Stations – 0.06%

	250,000	Lear Corporation Series B	8.11		05/15/2009		278,750


Automotive Repair, Services, And Parking – 0.53%

	2,000,000	Hertz Corporation	7.00		07/01/2004		2,048,652

	250,000	United Rentals National Incorporated Series B	10.75		04/15/2008		266,250

							2,314,902

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Building Construction – General Contractors & Operative Builders – 0.21%

$	455,000	Centex Corporation	4.75	%	01/15/2008	$	481,411

	400,000	MDC Holdings Incorporated	7.00		12/01/2012		450,208

							931,619


Business Services – 0.97%

	3,060,000	AOL Time Warner Incorporated	6.88		05/01/2012		3,474,826

	250,000	Correction Corporation Of America	7.50		05/01/2011		255,625

	460,000	First Data Corporation	5.63		11/01/2011		512,374

							4,242,825


Chemicals And Allied Products – 1.20%

	420,000	Abbott Laboratories	5.63		07/01/2006		466,062

	800,000	Chevron Texco Capital Company	3.50		09/17/2007		836,449

	500,000	Dow Chemical	6.00		10/01/2012		546,607

	1,780,000	E I Du Pont De Nemours	6.88		10/15/2009		2,166,050

	250,000	Equistar Chemical/Funding	10.13		09/01/2008		253,750

	250,000	IMC Global Incorporated^	11.25		06/01/2011		277,500

	250,000	Lyondell Chemical Company	10.88		05/01/2009		233,750

	445,000	Wyeth	5.25		03/15/2013		475,477

							5,255,645


Communications – 4.34%

	415,000	Alltel Corporation	6.75		09/15/2005		459,291

	605,000	AT & T Corporation	7.80		11/15/2011		695,693

	1,340,000	AT & T Wireless Services Incorporated	7.88		03/01/2011		1,589,186

	695,000	BellSouth Corporation	6.00		10/15/2011		799,235

	425,000	Citizens Communications	7.00		11/01/2025		470,803

	420,000	Clear Channel Communications	7.65		09/15/2010		508,519

	1,870,000	Comcast Corporation	7.05		03/15/2033		2,108,967

	1,080,000	COX Communication Incorporated	7.75		11/01/2010		1,325,556

	250,000	CSC Holdings Incorporated Series B	7.63		04/01/2011		255,625

	1,430,000	Deutsche Telekom International Finance	8.75		06/15/2030		1,849,967

	250,000	Echostar DBS Corporation	9.38		02/01/2009		267,813

	867,693	GTE Florida Incorporated Series E	6.86		02/01/2028		992,419

	250,000	Nextel Communications	9.38		11/15/2009		268,125

	795,000	SBC Communications Incorporated	5.88		08/15/2012		904,645

	1,755,000	Sprint Capital Corporation	6.90		05/01/2019		1,752,833

	2,665,000	Verizon Global Funding Corporation	7.38		09/01/2012		3,261,014

	1,005,000	Vodafone Group PLC	7.75		02/15/2010		1,242,261

	250,000	Young Broadcasting Incorporated	10.00		03/01/2011		261,250

							19,013,202


Depository Institutions – 6.58%

	840,000	B B & T Corporation	4.75		10/01/2012		885,880

	735,000	Banc One Corporation	7.75		07/15/2025		948,264

	1,845,000	Bank Of America Corporation	7.80		09/15/2016		2,404,675

	2,000,000	Bank Of America Corporation	7.13		05/01/2006		2,274,592

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Depository Institutions (continued)

$	1,900,000	Bank One Corporation	7.63	%	08/01/2005	$	2,134,603

	425,000	Banknorth Group Incorporated	3.75		05/01/2008		435,248

	430,000	Capital One Bank	4.88		05/15/2008		434,663

	3,585,000	Citigroup Incorporated	7.25		10/01/2010		4,380,020

	1,050,000	Citigroup Incorporated	6.63		06/15/2032		1,232,266

	490,000	First Tennessee National Corporation	4.50		05/15/2013		502,736

	1,700,000	First Union Corporation	6.63		03/15/2005		1,845,576

	890,000	FleetBoston Financial Corporation	3.85		02/15/2008		928,212

	805,000	Golden West Financial Corporation	4.75		10/01/2012		849,827

	1,325,000	JP Morgan Chase & Company	5.25		05/30/2007		1,452,481

	1,100,000	Marshall & Ilsley Bank	4.13		09/04/2007		1,157,077

	1,225,000	National City Bank BKN Series T	6.20		12/15/2011		1,415,098

	1,330,000	National City Bank Of Indiana BKN Series T	4.88		07/20/2007		1,435,679

	435,000	Popular North America Incorporated	4.25		04/01/2008		455,642

	445,000	Regions Financial Corporation	6.38		05/15/2012		520,651

	1,980,000	US Bancorp MTN Series N	3.95		08/23/2007		2,093,666

	905,000	Washington Mutual Bank	6.88		06/15/2011		1,080,760

							28,867,616


Electric, Gas, And Sanitary Services – 3.01%

	400,000	Alabama Power Capital Trust	5.50		10/01/2042		422,907

	440,000	Alabama Power Company Series Q	5.50		10/15/2017		493,604

	250,000	Allied Waste North America Series B	10.00		08/01/2009		262,813

	500,000	American Electric Power Series A	6.13		05/15/2006		543,676

	670,000	Carolina Power & Light Company MTN Series D	6.65		04/01/2008		778,076

	125,000	Casella Waste Systems^	9.75		02/01/2013		131,250

	1,195,000	Cincinnati Gas & Electric Company	5.70		09/15/2012		1,327,050

	680,000	Commonwealth Edison Series 99	3.70		02/01/2008		707,332

	565,000	Consolidated Edison Company Of New York	4.88		02/01/2013		603,322

	355,000	Constellation Energy Group	7.60		04/01/2032		443,341

	385,000	Duke Energy Corporation	5.63		11/30/2012		418,708

	700,000	Florida Power & Light	4.85		02/01/2013		750,310

	225,000	Iesi Corporation	10.25		06/15/2012		235,125

	675,000	Midamerican Energy Company MTN	5.13		01/15/2013		726,706

	147,000	Niagara Mohawk Power Corporation Series E	7.38		07/01/2003		147,621

	410,000	Oncor Electric Delivery	7.00		05/01/2032		485,061

	370,000	Pepco Holdings Incorporated	7.45		08/15/2032		454,646

	435,000	Progress Energy Incorporated	7.00		10/30/2031		503,052

	1,105,000	PSEG Power	6.95		06/01/2012		1,285,441

	450,000	Republic Services Incorporated	6.63		05/15/2004		468,514

	1,000,000	Rochester Gas & Electric MTN Series 1	6.38		07/30/2003		1,006,335

	1,000,000	Scana Corporation MTN Series B	6.25		07/08/2003		1,004,763

							13,199,653

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Electronic And Other Electrical Equipment & Components, Except Computer Equipment – 1.01%

$	630,000	Boston Edison Company	4.88	%	10/15/2012	$	672,601

	1,165,000	Dominion Resources Incorporated Series E	6.75		12/15/2032		1,332,879

	250,000	Flextronics International Limited	9.88		07/01/2010		275,000

	250,000	Sanmina – Science Corporation^	10.38		01/15/2010		277,500

	675,000	Wisconsin Energy Corporation	5.50		12/01/2008		757,167

	925,000	WPS Resources Corporation	7.00		11/01/2009		1,112,727

							4,427,874


Fabricated Metal Products, Except Machinery And Transportation Equipment – 1.01%

	250,000	K & F Industries Series B	9.63		12/15/2010		268,125

	1,165,000	Lockheed Martin Corporation	8.50		12/01/2029		1,636,922

	685,000	Northrop Grumman Corporation	7.13		02/15/2011		829,945

	1,485,000	Raytheon Company	6.75		08/15/2007		1,704,358

							4,439,350


Financial Services – 0.06%

	250,000	Interline Brands Incorporated^	11.50		05/15/2011		256,250


Food And Kindred Products – 1.40%

	645,000	Coca-Cola Enterprises	6.95		11/15/2026		797,913

	1,240,000	Conagra Foods Incorporated	6.75		09/15/2011		1,468,655

	250,000	Del Monte Corporation Series B	9.25		05/15/2011		268,750

	505,000	General Mills Incorporated	5.13		02/15/2007		551,879

	250,000	Ingles Markets Incorporated	8.88		12/01/2011		252,500

	455,000	Kellogg Company Series B	6.00		04/01/2006		503,169

	360,000	Pepsi Bottling Group Incorporated Series B	7.00		03/01/2029		450,735

	774,000	Pepsiamericas Incorporated	7.29		09/15/2026		908,931

	250,000	Pilgrim’s Pride Corporation	9.63		09/15/2011		251,250

	250,000	Swift & Company^	10.13		10/01/2009		246,250

	380,000	Tyson Foods Incorporated	8.25		10/01/2011		440,833

							6,140,865


Food Stores – 0.53%

	470,000	Albertson’s Incorporated	7.45		08/01/2029		569,323

	1,435,000	Kroger Company	8.05		02/01/2010		1,761,392

							2,330,715


Forestry – 0.22%

	880,000	Weyerhaeuser Company	5.95		11/01/2008		983,026


General Merchandise Stores – 1.04%

	2,155,000	Target Corporation	5.50		04/01/2007		2,383,365

	770,000	Wal Mart Stores	6.88		08/10/2009		930,749

	905,000	Wal Mart Stores	7.55		02/15/2030		1,231,279

							4,545,393

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Health Services – 0.20%

$	120,000	Medex Incorporated^	8.88	%	05/15/2013	$	123,000

	250,000	Pacificare Health Systems	10.75		06/01/2009		273,750

	445,000	UnitedHealth Group Incorporated	4.88		04/01/2013		474,484

							871,234


Holding And Other Investment Offices – 0.30%

	415,000	Archstone-Smith Trust	8.20		07/03/2005		461,326

	425,000	Block Financial Corporation	8.50		04/15/2007		500,797

	250,000	Dura Operating Corporation Series D	9.00		05/01/2009		221,250

	145,000	HLI Operating Company Incorporated^	10.50		06/15/2010		148,625

							1,331,998


Home Furniture, Furnishings, And Equipment Stores – 0.12%

	475,000	Newell Rubbermaid Incorporated	4.63		12/15/2009		506,958


Hotels, Rooming Houses, Camps, & Other Lodge Places – 0.06%

	250,000	HMH Properties Incorporated Series B	7.88		08/01/2008		249,375


Insurance Agents, Brokers And Service – 0.58%

	715,000	Aegon NV	4.75		06/01/2013		727,500

	395,000	Allstate Corporation	6.13		12/15/2032		443,298

	520,000	Humana Incorporated	7.25		08/01/2006		574,601

	730,000	Travelers Property Casualty	6.38		03/15/2033		818,326

							2,563,725


Insurance Carriers – 1.64%

	365,000	AMBAC Financial Group Incorporated	9.38		08/01/2011		490,899

	480,000	American International Group MTN Series F	2.85		12/01/2005		490,284

	830,000	Anthem Incorporated	6.80		08/01/2012		976,316

	505,000	CNA Financial Corporation	6.75		11/15/2006		530,131

	730,000	Fidelity National Financial	5.25		03/15/2013		759,889

	420,000	Fund American Companies Incorporated	5.88		05/15/2013		438,529

	430,000	Markel Corporation	6.80		02/15/2013		473,845

	375,000	MBIA Incorporated	9.38		02/15/2011		490,759

	525,000	Metlife Incorporated	5.38		12/15/2012		573,699

	880,000	Nationwide Capital Surplus Notes^	9.88		02/15/2025		1,027,912

	425,000	Prudential Financial Incorporated Series MTN	3.75		05/01/2008		436,594

	455,000	Safeco Corporation	4.88		02/01/2010		483,823

							7,172,680


Measuring, Analyzing, & Controlling Instruments: Photographic, Medical & Optical Goods – 0.06%

	250,000	Perkinelmer Incorporated^	8.88		01/15/2013		270,000


Metal Mining – 0.16%

	415,000	BHP Billton Finance BV	4.80		04/15/2013		437,490

	250,000	Russel Metals Incorporated UNI Series T	10.00		06/01/2009		263,750

							701,240

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Mining & Quarrying Of Nonmetallic Minerals, Except Fuels – 0.06%

$	250,000	Owens-Brockway Glass Container	8.88	%	02/15/2009	$	265,000


Miscellaneous Manufacturing Industries – 0.47%

	250,000	Dresser Incorporated	9.38		04/15/2011		255,625

	1,460,000	General Electric Company	5.00		02/01/2013		1,559,300

	250,000	SPX Corporation	7.50		01/01/2013		263,125

							2,078,050


Miscellaneous Repair Services – 0.01%

	60,000	Rent-A-Center Incorporated^	7.50		05/01/2010		61,350


Miscellaneous Retail – 0.31%

	415,000	Federated Department Stores	6.63		04/01/2011		482,460

	375,000	May Department Stores Company	8.00		07/15/2012		464,636

	125,000	Remington Arms Company^	10.50		02/01/2011		125,313

	250,000	Yum! Brands Incorporated	8.88		04/15/2011		286,250

							1,358,659


Nonclassifiable Establishments – 0.05%

	200,000	Techncial Olympic USA Incorporated	9.00		07/01/2010		208,000


Non-Depository Credit Institutions – 6.17%

	715,000	American Express Credit	3.00		05/16/2008		719,259

	1,895,000	American General Finance Corporation MTN Series H	4.50		11/15/2007		2,021,747

	775,000	Caterpillar Financial Service Corporation	5.95		05/01/2005		857,895

	415,000	CIT Group Incorporated	5.50		11/30/2007		452,242

	2,110,000	Countrywide Home Loan	3.25		05/21/2008		2,131,644

	6,375,000	Ford Motor Credit Company	5.80		01/12/2009		6,282,327

	1,915,000	General Electric Capital Corporation MTN Series A	6.75		03/15/2032		2,293,429

	4,105,000	General Motors Acceptance Corporation	7.75		01/19/2010		4,493,128

	2,610,000	Household Finance Corporation	8.00		07/15/2010		3,232,114

	515,000	International Lease Finance Corporation	5.75		02/15/2007		557,708

	1,230,000	John Deere Capital Corporation	7.00		03/15/2012		1,472,865

	460,000	John Hancock Financial Services Incorporated	5.63		12/01/2008		514,063

	480,000	MBNA Corp Corporation MTN	5.63		11/30/2007		516,348

	915,000	Mellon Funding Corporation	4.88		06/15/2007		989,769

	480,000	SLM Corporation MTN	5.13		08/27/2012		517,081

							27,051,619


Oil And Gas Extraction – 2.25%

	370,000	Anadarko Petroleum Corporation	7.20		03/15/2029		458,462

	2,150,000	BP Canada Finance	3.63		01/15/2009		2,250,166

	860,000	Burlington Resources Finance Company	7.40		12/01/2031		1,104,200

	250,000	Chesapeake Energy Corporation	8.13		04/01/2011		265,000

	2,015,000	ConocoPhillips	8.75		05/25/2010		2,615,250

	580,000	Nexen Incorporated	7.88		03/15/2032		731,708

	335,000	Occidental Petroleum	8.45		02/15/2029		470,665

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Oil And Gas Extraction (continued)

$	1,050,000	Pemex Project Funding Master Trust	9.13	%	10/13/2010	$	1,282,313

	495,000	Seacor Smit Incorporated	5.88		10/01/2012		540,204

	125,000	XTO Energy Incorporated^	6.25		04/15/2013		130,314

							9,848,282


Paper And Allied Products – 0.41%

	250,000	Georgia Pacific Corporation^	9.38		02/01/2013		265,000

	470,000	International Paper Company	6.75		09/01/2011		549,871

	250,000	Stone Container Corporation	9.75		02/01/2011		271,250

	560,000	Westvaco Corporation	8.20		01/15/2030		703,599

							1,789,720


Petroleum Refining And Related Industries – 0.17%

	600,000	Keyspan Corporation	7.63		11/15/2010		745,339


Pipelines, Except Natural Gas – 0.18%

	675,000	Kinder Morgan Energy Partners	6.75		03/15/2011		790,557


Primary Metal Industries – 0.37%

	250,000	AK Steel Corporation	7.75		06/15/2012		198,750

	1,095,000	Alcoa Incorporated	5.38		01/15/2013		1,198,579

	240,000	Trimas Corporation	9.88		06/15/2012		242,400

							1,639,729


Printing, Publishing, And Allied Industries – 0.83%

	50,000	American Media Incorporated^	8.88		01/15/2011		54,000

	1,440,000	Gannett Company Incorporated	5.50		04/01/2007		1,598,436

	125,000	Houghton Mifflin Company^	9.88		02/01/2013		134,219

	250,000	Mail-Well I Incorporated	9.63		03/15/2012		256,250

	125,000	RR Donnelley Financial Corporation^	8.88		12/15/2010		136,250

	995,000	Viacom Incorporated	7.88		07/30/2030		1,340,094

	125,000	Vivendi Universal^	9.25		04/15/2010		142,031

							3,661,280


Railroad Transportation – 0.89%

	630,000	Burlington North Santa Fe	6.38		12/15/2005		699,130

	930,000	Canadian National Railways	6.38		10/15/2011		1,085,502

	360,000	CSX Corporation	8.63		05/15/2022		486,153

	225,000	TFM Sa De Cv	12.50		06/15/2012		241,875

	1,190,000	Union Pacific Corporation	6.50		04/15/2012		1,394,891

							3,907,551


Real Estate – 0.12%

	500,000	ERP Operating Limited Partnership	7.10		06/23/2004		526,804

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Security And Commodity Brokers, Dealers, Exchanges & Services – 3.4%

$	1,985,000	Bear Sterns Company Incorporated	6.50	%	05/01/2006	$	2,233,865

	1,161,000	Charles Schwab Corporation MTN Series A	6.88		09/02/2003		1,176,383

	660,000	Credit Suisse First Boston USA Incorporated	4.63		01/15/2008		704,342

	1,750,000	Goldman Sachs Group Incorporated	6.13		02/15/2033		1,884,727

	592,000	Jefferies Group Incorporated	7.75		03/15/2012		655,445

	1,240,000	Lehman Brothers Holdings Incorporated	6.63		01/18/2012		1,454,296

	835,000	Merrill Lynch & Company	6.00		02/17/2009		945,789

	2,025,000	Morgan Stanley	6.75		04/15/2011		2,384,446

	3,000,000	Prudential Funding LLC MTN^	6.60		05/15/2008		3,466,533

							14,905,826


Transportation By Air – 0.2%

	825,000	Delta Air Lines Series 2002-1	6.42		07/02/2012		872,040


Transportation Equipment – 0.62%

	760,000	Boeing Capital Corporation	6.10		03/01/2011		829,019

	1,640,000	Daimlerchrysler N.A. Holding	7.20		09/01/2009		1,902,955

							2,731,974


Transportation Services – 0.11%

	430,000	General Dynamics Corporation	3.00		05/15/2008		435,335

	60,000	Titan Corporation^	8.00		05/15/2011		61,650

							496,985


Wholesale Trade – Non-Durable Goods – 0.18%

	705,000	Unilever Capital Corporation	6.88		11/01/2005		789,563


Wholesale Trade – Durable Goods – 0.06%

	250,000	Amerisourcebergen Corporation	7.25		11/15/2012		270,000


Total Corporate Bonds & Notes (Cost $174,356,563)							187,554,370


Foreign Bonds – 8.11%@

	2,275,000	Asian Development Bank	6.75		06/11/2007		2,678,394

	350,000	Barclays Bank PLC	7.40		12/15/2009		434,792

	1,507,000	British Telecommunication PLC	8.38		12/15/2010		1,892,711

	2,475,000	Canada Government	6.38		11/30/2004		2,665,548

	460,000	Canadian Occidental Petroleum	7.13		02/04/2004		476,898

	705,000	Diageo Capital PLC	6.63		06/24/2004		744,226

	3,175,000	European Investment Bank Series DTC	4.88		09/06/2006		3,455,984

	1,655,000	France Telecommunication	9.25		03/01/2011		2,069,708

	1,210,000	HSBC Holding PLC	7.50		07/15/2009		1,476,626

	910,000	Inter-American Development Bank	4.38		09/20/2012		975,987

	2,875,000	Inter-American Development Bank Emt Series N	4.00		01/18/2005		2,997,182

	3,250,000	International Bank For Reconstruction & Development	4.00		01/10/2005		3,388,099

	370,000	Malaysia	8.75		06/01/2009		475,931

	1,030,000	National Westminster Bank	7.38		10/01/2009		1,272,411

	390,000	Peoples Republic Of China	7.30		12/15/2008		474,650

	850,000	Quebec Province	5.00		07/17/2009		941,661

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Foreign Bonds (continued)

$	405,000	Republic Of Finland	7.88	%	07/28/2004	$	436,188

	900,000	Republic Of Italy	6.88		09/27/2023		1,158,215

	1,525,000	Republic Of Italy	3.63		09/14/2007		1,607,345

	415,000	Republic Of Poland	6.25		07/03/2012		483,475

	380,000	Republic Of South Africa	9.13		05/19/2009		481,650

	3,065,000	United Mexican States Mtn	6.38		01/16/2013		3,297,940

	760,000	World Bank	7.63		01/19/2023		1,060,405

	515,000	Xl Capital (Europe) PLC	6.50		01/15/2012		594,551

Total Foreign Bonds (Cost $33,827,598)							35,540,577


US Government Agency Securities – 26.46%

Federal Home Loan Bank – 4.92%

	20,000,000	FHLB Series 303	3.75		04/15/2004		20,440,380

	1,000,000	FHLB Series Qs06	6.38		08/15/2006		1,139,228

							21,579,608


Federal Home Loan Mortgage Corporation – 6.13%

	10,805,000	FHLMC	3.25		11/15/2004		11,111,808

	3	FHLMC #C01187	7.50		05/01/2031		3

	5,373,493	FHLMC #C10444	6.00		01/01/2033		5,570,997

	2,625,549	FHLMC #C59553	7.50		11/01/2031		2,791,278

	2,914,194	FHLMC #C65086	7.50		03/01/2032		3,098,161

	4,045,495	FHLMC #C65576	7.50		04/01/2032		4,300,878

							26,873,125


Federal National Mortgage Association – 13.71%

	11,600,000	FNMA	7.00		07/15/2005		12,935,264

	2,609,672	FNMA #254190	5.50		02/01/2009		2,699,227

	3,489,948	FNMA #254218	7.00		02/01/2032		3,676,404

	3,045,633	FNMA #254688	5.50		03/01/2023		3,164,913

	83,797	FNMA #374141	7.00		03/01/2004		85,071

	1,021,396	FNMA #488341	6.50		04/01/2029		1,064,910

	751,925	FNMA #520842	8.00		11/01/2029		819,377

	1,857,043	FNMA #545026	6.50		06/01/2016		1,950,296

	3,169,999	FNMA #545814	6.50		08/01/2032		3,303,743

	1,855,999	FNMA #584829	6.00		05/01/2016		1,933,692

	4,000,000	FNMA TBA¤¤	5.00		06/15/2033		4,103,752

	9,500,000	FNMA TBA¤¤	4.50		06/15/2018		9,737,500

	4,150,000	FNMA TBA¤¤	5.50		07/15/2033		4,286,170

	10,000,000	FNMA TBA¤¤	5.00		06/15/2018		10,359,380

							60,119,699


Government National Mortgage Association – 0.82%

	71	GNMA #263286	10.00		09/15/2003		72

	2,149	GNMA #263418	9.00		01/15/2004		2,161

	155,964	GNMA #521705	7.50		11/15/2029		165,925

	3,260,110	GNMA #781123	7.00		12/15/2029		3,439,045

							3,607,203

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Student Loan Marketing Association – 0.88%

$	3,000,000	SLMA	7.30	%	08/01/2012	$	3,875,625

Total US Government Agency Securities (Cost $113,427,919)							116,055,260


Real Estate Investment Trust – 0.45%

	465,000	Camden Property Trust	5.88		11/30/2012		513,732

	385,000	HRPT Properties Trust	6.50		01/15/2013		423,432

	460,000	Regency Centers Limited Partners	7.95		01/15/2011		571,809

	420,000	Spieker Properties Limited Partners	6.75		01/15/2008		472,900

Total Real Estate Investment Trust (Cost $1,809,701)							1,981,873


US Treasury Securities – 14.70%

US Treasury Bonds – 9.11%

	5,205,000	US Treasury Bonds	6.25		08/15/2023		6,516,009

	5,215,000	US Treasury Bonds	5.38		02/15/2031		6,059,178

	20,500,000	US Treasury Bonds	10.75		08/15/2005		24,669,659

	1,750,000	US Treasury Bonds	8.88		08/15/2017		2,693,086

							39,937,932


US Treasury Notes – 5.59%

	3,500,000	US Treasury Notes	6.75		05/15/2005		3,867,500

	2,250,000	US Treasury Notes	3.38		04/30/2004		2,295,880

	2,100,000	US Treasury Notes	2.13		08/31/2004		2,125,019

	618,000	US Treasury Notes	1.88		09/30/2004		623,721

	8,740,000	US Treasury Notes	2.00		05/15/2006		8,849,250

	325,000	US Treasury Notes	2.63		05/15/2008		330,307

	6,255,000	US Treasury Notes	3.63		05/15/2013		6,398,184

							24,489,861


Total US Treasury Securities (Cost $62,964,915)							64,427,793


Shares

Short-Term Investment – 6.63%

	29,090,892	Wells Fargo Money Market Trust~					29,090,892


Total Short-Term Investments (Cost $29,090,892)							29,090,892


Total Investments in Securities (Cost $445,114,025)*	106.00	%	$	464,770,289

Other Assets and Liabilities, Net	(6.00	)		(26,287,258	)

Total Net Assets	100.00	%	$	438,483,031

Foreign bond principal is denominated in U.S. dollars except as indicated parenthetically.

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable rate securities.

¤¤	When issued securities, total cost $28,194,816. See note 2.

(c)

Interest-only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an interest-only is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. Interest rate disclosed represents the yield based upon the estimated timing of future cash flows as of May 31, 2003.

Cost for federal income tax purposes is $448,890,728 and net unrealized appreciation consists of:

Gross Unrealized Appreciation	$	16,060,837
Gross Unrealized Depreciation		(181,276	)

Net Unrealized Appreciation	$	15,879,561

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Asset Backed Securities – 0.84%

$	175,000	Bank One Issuance Trust Series 2002-A3 Class A3	3.59	%	05/17/2007	$	182,954

	320,000	Chase Funding Mortgage Series 2002-2 Class 1A2	3.43		05/25/2017		325,152

	88,622	Residential Asset Mortgage Products Incorporated Series 2002-Rs1 Class A12	4.68		07/25/2026		88,730

	65,000	Residential Asset Mortgage Products Incorporated Series 2002-Rs5 Class A13	3.72		07/25/2027		66,999

Total Asset Backed Securities (Cost $652,707)							663,835


Collateralized Mortgage Obligations – 2.35%

	4,150,000	Bear Stearns Commercial Mortgage Securities Series 2003-T10 Class X2 Interest Only±^(c)	1.44		03/13/2040		299,761

	4,016,481	CS First Boston Mortgage Securities Corporation Series 1998-C2 Class Ax Interest Only±(c)	1.19		11/11/2030		168,973

	1,960,000	First Union Bank Of America 2001 Series C1 Class 102 Interest Only±^(c)	2.00		03/15/2011		188,067

	4,234,417	GMAC Commercial Mortgage Securities Incorporated Series 2002-C1 Class X1 Interest Only±^(c)	0.62		11/15/2039		149,461

	4,783,000	Lehman Brothers-UBS Commercial Mortgage Obligation Interest Only±^(c)	0.29		06/01/2033		134,802

	5,080,413	Solomon Brothers Mortgage 2002 Key Series 2 Class X1 Interest Only±^(c)	1.45		03/18/2036		364,295

	12,473,397	Wachovia Bank Commercial Mortgage Trust 2002 Series C1 Class 101 Interest Only±^(c)	0.39		04/15/2034		362,266

	3,718,000	Wachovia Bank Commercial Mortgage Trust 2003 Series C4 Class XP Interest Only±^(c)	1.08		04/15/2035		198,691

Total Collateralized Mortgage Obligations (Cost $1,861,663)							1,866,316


Corporate Bonds & Notes – 57.59%

Agricultural Production Crops – 0.22%

	159,000	Chiquita Brands International	10.56		03/15/2009		170,924


Agricultural Production Livestock & Animal Specialized – 0.41%

	325,000	Pilgrim’s Pride Corporation	9.63		09/15/2011		326,624


Agricultural Services – 0.16%

	125,000	Bunge Limited Finance Corporation^	5.88		05/15/2013		128,566


Amusement And Recreation Services – 0.81%

	55,000	Cinemark USA Incorporated^	9.00		02/01/2013		59,124

	345,000	Herbst Gaming Incorporated Series B	10.75		09/01/2008		376,913

	105,000	Hollywood Entertainment	9.63		03/15/2011		111,825

	95,000	Six Flags Incorporated^	9.75		04/15/2013		95,238

							643,100


Apparel & Other Finished Products Made From Fabrics & Similar Materials – 0.28%

	255,000	Collins & Aikman Products	10.75		12/31/2011		219,299


Automotive Dealers And Gasoline Service Stations – 0.13%

	110,000	Asbury Automotive Group	9.00		06/15/2012		103,399


Building Construction – General Contractors & Operative Builders – 0.53%

	105,000	Beazer Homes USA	8.38		04/15/2012		115,237

	75,000	Centex Corporation	4.75		01/15/2008		79,354

	40,000	Dr Horton Incorporated	8.50		04/15/2012		44,200

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Building Construction-General Contractors & Operative Builders (continued)

$	90,000	KB Home	9.50	%	02/15/2011	$	99,000

	70,000	MDC Holdings Incorporated	7.00		12/01/2012		78,786

							416,577


Building Materials, Hardware, Garden Supply, & Mobile Home Dealers – 0.12%

	90,000	Associated Materials Incorporated	9.75		04/15/2012		97,649


Business Services – 0.95%

	155,000	American Greetings Corporation	11.75		07/15/2008		179,606

	35,000	First Data Corporation	5.63		11/01/2011		38,985

	65,000	Hanover Equipment Trust 01 Series A	8.50		09/01/2008		66,300

	55,000	Hli Operating Company Incorporated^	10.50		06/15/2010		56,375

	110,000	K & F Industries Series B	9.63		12/15/2010		117,975

	145,000	Sesi LLC	8.88		05/15/2011		153,700

	135,000	United Rentals National Incorporated^	10.75		04/15/2008		143,775

							756,716


Chemicals And Allied Products – 3.43%

	70,000	Abbott Laboratories	5.63		07/01/2006		77,677

	65,000	Airgas Incorporated	9.13		10/01/2011		71,825

	160,000	Biovail Corporation	7.88		04/01/2010		170,400

	370,000	Chevron Texaco Capital Corporation	3.50		09/17/2007		386,858

	60,000	Dow Chemical	6.00		10/01/2012		65,593

	315,000	E. I. Du Pont De Nemours	6.88		10/15/2009		383,318

	150,000	Equistar Chemical	10.13		09/01/2008		152,250

	15,000	Georgia Gulf Corporation	10.38		11/01/2007		16,050

	335,000	IMC Global Incorporated Series B	11.25		06/01/2011		371,850

	115,000	Lyondell Chemical Company Series B	9.88		05/01/2007		112,988

	275,000	MacDermid Incorporated	9.13		07/15/2011		305,250

	265,000	Millenium Ameriaca Incorporated	9.25		06/15/2008		286,200

	110,000	Om Group Incorporated	9.25		12/15/2011		95,700

	70,000	Pfizer Incorporated	5.63		02/01/2006		77,040

	95,000	Vicar Operating Incorporated	9.88		12/01/2009		104,975

	40,000	Wyeth	5.25		03/15/2013		42,739

							2,720,713


Communications – 7.45%

	50,000	Adelphia Communications Series B^^	10.50		07/15/2004		27,500

	70,000	Alltel Corporation	6.75		09/15/2005		77,471

	15,000	American Media Incorporated^	8.88		01/15/2011		16,200

	705,000	AOL Time Warner Incorporated	6.88		05/01/2012		800,573

	65,000	AT & T Corporation	7.80		11/15/2011		74,744

	170,000	AT&T Wireless Services Incorporated	7.88		03/01/2011		201,613

	300,000	Avaya Incorporated	11.13		04/01/2009		327,000

	90,000	Bellsouth Corporation	6.00		10/15/2011		103,498

	300,000	Charter Communications Holdings LLC	8.63		04/01/2009		216,000

	67,000	Citizens Communications	7.00		11/01/2025		74,221

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Communications (continued)

$	65,000	Clear Channel Communications	7.65	%	09/15/2010	$	78,699

	295,000	Comcast Corporation	7.05		03/15/2033		332,698

	130,000	Corus Entertainment Incorporated	8.75		03/01/2012		137,800

	170,000	Cox Communications Incorporated	7.75		11/01/2010		208,652

	225,000	Crown Castle International Corporation	10.75		08/01/2011		236,250

	600,000	CSC Holdings Incorporated	10.50		05/15/2016		667,500

	55,000	Entercom Radio	7.63		03/01/2014		59,400

	90,000	Entravision Communications Corporation	8.13		03/15/2009		93,150

	230,000	Gannett Company Incorporation	5.50		04/01/2007		255,306

	145,000	GTE Florida Incorporation Series E	6.86		02/01/2028		165,843

	215,000	Mediacom LLC	9.50		01/15/2013		225,750

	250,000	Nextel Communications	9.38		11/15/2009		268,125

	300,000	Rogers Wireless Communication	8.80		10/01/2007		304,500

	90,000	SBC Communications Incorporated	5.88		08/15/2012		102,413

	105,000	Sinclair Broadcast Group	8.75		12/15/2011		114,319

	180,000	Sprint Capital Corporation	6.90		05/01/2019		179,778

	300,000	Verizon Global Funding Corporation	7.38		09/01/2012		367,094

	45,000	Vivendi Universal^	9.25		04/15/2010		51,130

	123,000	Voicestream Wireless Corporation	10.38		11/15/2009		138,990

							5,906,217


Depository Institutions – 3.83%

	120,000	B B & T Corporation	4.75		10/01/2012		126,555

	225,000	Bank Of America Corporation	7.80		09/15/2016		293,253

	85,000	Bank One Corporation	7.75		07/15/2025		109,663

	335,000	Bank One Corporation	7.63		08/01/2005		376,364

	75,000	Banknorth Group	3.75		05/01/2008		76,808

	90,000	Citigroup Incorporated	6.63		06/15/2032		105,623

	100,000	First Tennessee National Corporation	4.50		05/15/2013		102,599

	155,000	First Union Corporation	6.63		03/15/2005		168,273

	50,000	FleetBoston Financial Corporation	3.85		02/15/2008		52,147

	115,000	Golden West Financial Corporation	4.75		10/01/2012		121,404

	140,000	JP Morgan Chase & Company	5.25		05/30/2007		153,470

	215,000	JP Morgan Chase & Company	5.75		01/02/2013		235,119

	160,000	Marshall & Isely Bank	4.13		09/04/2007		168,302

	170,000	National City Bank Of Indiana BKN Series T	4.88		07/20/2007		183,508

	75,000	Popular North America Incorporated	4.25		04/01/2008		78,559

	15,000	Regions Financial Corporation	6.38		05/15/2012		17,550

	235,000	US Bancorp MTN Series N	3.95		08/23/2007		248,491

	135,000	Washington Mutual Bank FA	6.88		06/15/2011		161,218

	245,000	Western Financial Bank	9.63		05/15/2012		254,800

							3,033,706


Eating And Drinking Places – 0.08%

	55,000	Yumi Brands Incorporated	8.88		04/15/2011		62,974

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Electric, Gas, And Sanitary Services – 4.31%

$	18,000	AES Corporation	8.88	%	02/15/2011	$	16,560

	85,000	Alabama Power Company Series Q	5.50		10/15/2017		95,356

	315,000	Allied Waste North America Series B	8.88		04/01/2008		334,688

	70,000	American Electric Power Company Series A	6.13		05/15/2006		76,115

	120,000	Amkor Technology Incorporated	9.25		02/15/2008		124,800

	190,000	BRL Universal Equipment	8.88		02/15/2008		204,725

	45,000	Casella Waste Systems^	9.75		02/01/2013		47,250

	80,000	Cincinnati Gas & Electric Company	5.70		09/15/2012		88,840

	110,000	Commonwealth Edison Series 9	3.70		02/01/2008		114,421

	70,000	Constellation Energy Group Incorporated	6.13		09/01/2009		79,142

	65,000	Constellation Energy Group Incorporated	7.60		04/01/2032		81,175

	180,000	Dominion Resources Incorporated	6.75		12/15/2032		205,938

	335,000	El Paso Energy Partners Series B	8.50		06/01/2011		356,775

	105,000	Florida Power & Light	4.85		02/01/2013		112,547

	135,000	Lesi Corporation	10.25		06/15/2012		141,075

	75,000	Key Energy Services Incorporated Series C	8.38		03/01/2008		80,250

	95,000	Keyspan Corporation	7.63		11/15/2010		118,012

	110,000	Midamerican Energy Company MTN	5.13		01/15/2013		118,426

	115,000	National Waterworks Incorporated^	10.50		12/01/2012		128,225

	65,000	Pepco Holdings Incorporated	7.45		08/15/2032		79,870

	70,000	Progress Energy Incorporated	7.00		10/30/2031		80,951

	170,000	PSEG Power	6.95		06/01/2012		197,760

	70,000	Republic Services Incorporated	6.63		05/15/2004		72,880

	130,000	Synagro Technologies Incorporated	9.50		04/01/2009		139,100

	200,000	Waste Management Incorporated	7.38		08/01/2010		239,594

	70,000	Wisconsin Energy Corporation	5.50		12/01/2008		78,521

							3,412,996


Electronic And Other Electrical Equipment & Components, Except Computer Equipment – 1.85%

	130,000	Calpine Corporation	8.63		08/15/2010		88,075

	250,000	Fairchild Semiconductor	10.50		02/01/2009		278,750

	170,000	General Electric Company	5.00		02/01/2013		181,562

	220,000	On Semiconductor Corporation	12.00		05/15/2008		213,400

	75,000	On-cor Electric Delivery	7.00		05/01/2032		88,731

	200,000	Sanmina – Sci Corporation^	10.38		01/15/2010		222,000

	120,000	Solectron Corporation	9.63		02/15/2009		129,000

	90,000	Stoneridge Incorporated	11.50		05/01/2012		98,100

	140,000	WPS Resources Corporation	7.00		11/01/2009		168,413

							1,468,031


Fabricated Metal Products, Except Machinery And Transportation Equipment – 0.49%

	115,000	Intermet Corporation	9.75		06/15/2009		107,525

	200,000	Lockheed Martin Corporation	8.50		12/01/2029		281,017

							388,542

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Financial Services – 0.53%

$	85,000	Capital One Bank	4.88	%	05/15/2008	$	85,921

	200,000	Countrywide Home Loan	3.25		05/21/2008		202,052

	130,000	Interline Brands Incorporated^	11.50		05/15/2011		133,250

							421,223


Food And Kindred Products – 2.05%

	270,000	Anheuser-Busch Companies Incorporated	9.00		12/01/2009		361,857

	50,000	Coca-Cola Enterprises	6.95		11/15/2026		61,854

	185,000	Conagra Foods Incorporated	6.75		09/15/2011		219,114

	150,000	Constellation Brands Incorporated	8.63		08/01/2006		160,500

	125,000	General Mills Incorporated	6.00		02/15/2012		142,710

	75,000	Kellogg Company Series B	6.00		04/01/2006		82,940

	455,000	Land O Lakes Incorporated	8.75		11/15/2011		341,250

	65,000	Pepsi Bottling Group Incorporated Series B	7.00		03/01/2029		81,383

	95,000	Swift & Company^	10.13		10/01/2009		93,575

	70,000	Tyson Foods Incorporated	8.25		10/01/2011		81,206

							1,626,389


Food Stores – 1.27%

	75,000	Albertsons Incorporated	7.45		08/01/2029		90,849

	355,000	Ingles Markets Incorporated	8.88		12/01/2011		358,550

	195,000	Kroger Company	8.05		02/01/2010		239,353

	350,000	Marsh Supermarket Incorporated Series B	8.88		08/01/2007		320,250

							1,009,002


Forestry – 0.15%

	105,000	Weyerhaeuser Corporation	5.95		11/01/2008		117,293


General Merchandise Stores – 1.08%

	70,000	Federated Department Stores	6.63		04/01/2011		81,379

	65,000	May Department Stores Company	8.00		07/15/2012		80,537

	45,000	Remington Arms Company^	10.50		02/01/2011		45,113

	300,000	Target Corporation	5.50		04/01/2007		331,791

	120,000	Wal-Mart Incorporated	7.55		02/15/2030		163,263

	130,000	Wal-Mart Incorporated	6.88		08/10/2009		157,139

							859,222


Health Services – 1.03%

	140,000	Anthem Incorporated	6.80		08/01/2012		164,680

	265,000	HCA Incorporated	8.75		09/01/2010		312,766

	40,000	Medex Incorporated^	8.88		05/15/2013		41,000

	120,000	Rotech Healthcare Incorporated	9.50		04/01/2012		118,800

	95,000	Sybron Dental Specialties	8.13		06/15/2012		98,800

	75,000	Unitedhealth Group Incorporated	4.88		04/01/2013		79,969

							816,015

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Holding And Other Investment Offices – 2.56%

$	345,000	American Achievement Corporation Series B	11.63	%	01/01/2007	$	373,031

	340,000	Athena Neuro Finance LLC	7.25		02/21/2008		273,700

	385,000	Capital One Financial	8.75		02/01/2007		431,027

	110,000	Dura Operating Corporation Series B	8.63		04/15/2012		110,000

	40,000	Felcor Lodging Limited Partners	9.50		09/15/2008		39,800

	355,000	Istar Financial Incorporated	8.75		08/15/2008		384,288

	90,000	Johnsondiversey Incorporated Series B	9.63		05/15/2012		99,900

	200,000	RFS Partnership LP	9.75		03/01/2012		203,000

	105,000	Ventas Reality LP Capital Corporation	9.00		05/01/2012		113,925

							2,028,671


Home Furniture, Furnishings, And Equipment Stores – 0.12%

	95,000	Von Hoffman Corporation	10.25		03/15/2009		97,850


Hotels, Rooming Houses, Camps, & Other Lodge Places – 1.56%

	110,000	Boyd Gaming Corporation^	7.75		12/15/2012		113,025

	200,000	Host Marriott LP Series G	9.25		10/01/2007		210,500

	100,000	Host Marriott LP Series I	9.50		01/15/2007		106,000

	260,000	Park Place Entertainment Corporation	9.38		02/15/2007		282,750

	75,000	Park Place Entertainment Corporation	8.13		05/15/2011		79,313

	250,000	Station Casinos Incorporated	8.88		12/01/2008		260,000

	50,000	Station Casinos Incorporated	9.88		07/01/2010		54,875

	120,000	Venetian Casino/Las Vegas Sands	11.00		06/15/2010		131,250

							1,237,713


Industrial & Commercial Machinery & Computer Equipment – 1.25%

	295,000	Agco Corporation	9.50		05/01/2008		319,337

	135,000	Briggs & Stratton Corporation	8.88		03/15/2011		153,900

	45,000	Cummins Incorporated^	9.50		12/01/2010		48,488

	95,000	IBM Corporation	6.50		01/15/2028		113,371

	215,000	International Game Technology	8.38		05/15/2009		258,538

	90,000	Joy Global Incorporated Series B	8.75		03/15/2012		98,325

							991,959


Insurance Agents, Brokers And Service – 0.74%

	250,000	AMBAC Financial Group Incorporated	9.38		08/01/2011		336,232

	85,000	Fund American Companies Incorporated	5.88		05/15/2013		88,750

	75,000	Prudential Financial Incorporated Series Mtn	3.75		05/01/2008		77,046

	75,000	Travelers Property Casualty	6.38		03/15/2033		84,075

							586,103


Insurance Carriers – 0.96%

	135,000	Aegon NV	4.75		06/01/2013		137,360

	75,000	Allstate Corporation	6.13		12/15/2032		84,170

	75,000	American International Group MTN Series F	2.85		12/01/2005		76,608

	75,000	Fidelity National Financial	5.25		03/15/2013		78,071

	75,000	Markel Corporation	6.80		02/15/2013		82,647

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Insurance Carriers (continued)

$	75,000	Metlife Incorporated	5.38	%	12/15/2012	$	81,957

	120,000	Nationwide CSN Trust^	9.88		02/15/2025		140,170

	75,000	Safeco Corporation	4.88		02/01/2010		79,751

							760,734


Lumber & Wood Products, Except Furniture – 0.17%

	60,000	Louisiana Pacific Corporation	8.50		08/15/2005		64,200

	65,000	Louisiana Pacific Corporation	10.88		11/15/2008		72,638

							136,838


Measuring, Analyzing, & Controlling Instruments: Photographic, Medical & Optical Goods – 0.71%

	105,000	Hanger Orthopedic Group	10.38		02/15/2009		114,450

	110,000	Perkinelmer Incorporated^	8.88		01/15/2013		118,800

	285,000	Raytheon Company	6.75		08/15/2007		327,099

							560,349


Metal Mining – 0.58%

	70,000	Alcoa Incorporated	5.38		01/15/2013		76,622

	75,000	BHP Billton Finance USA Limited	4.80		04/15/2013		79,064

	300,000	Century Aluminum Company	11.75		04/15/2008		306,000

							461,686


Mining & Quarrying Of Nonmetallic Minerals, Except Fuels – 0.28%

	200,000	Compass Minerals Group	10.00		08/15/2011		221,000


Miscellaneous Manufacturing Industries – 0.49%

	105,000	SPX Corporation	7.50		01/01/2013		110,513

	285,000	Steinway Musical Instruments	8.75		04/15/2011		279,300

							389,813


Miscellaneous Retail – 0.11%

	60,000	Amerigas Partners/Eagle Finance Series B	8.88		05/20/2011		64,500

	20,000	Rent-A-Center Incorporated^	7.50		05/01/2010		20,450

							84,950


Non-Depository Credit Institutions – 5.03%

	135,000	American Express Credit	3.00		05/16/2008		135,804

	250,000	American General Finance MTN Series H	4.50		11/15/2007		266,721

	160,000	Boeing Capital Corporation	6.10		03/01/2011		174,530

	240,000	Caterpillar Financial Service Corporation	5.95		05/01/2006		265,671

	75,000	CIT Group Incorporated	5.50		11/30/2007		81,731

	75,000	Credit Suisse First Boston USA Incorporated	4.63		01/15/2008		80,039

	650,000	Ford Motor Credit Company	5.80		01/12/2009		640,551

	280,000	General Electric Capital Corporation MTN Series A	6.88		11/15/2010		335,703

	70,000	General Electric Capital Corporation MTN Series A	6.75		03/15/2032		83,833

	420,000	General Motors Acceptance Corporation	7.75		01/19/2010		459,711

	255,000	Household Finance Corporation	8.00		07/15/2010		315,781

	75,000	International Lease Finance Corporation	5.75		02/15/2007		81,220

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Non-Depository Credit Institutions (continued)


$	205,000	John Deere Capital Corporation	7.00	%	03/15/2012	$	245,477

	185,000	Mellon Funding Corporation	4.88		06/15/2007		200,117

	100,000	Sears Discover Credit Corporation MTN Series 2	9.14		03/13/2012		114,675

	155,000	SLM Corporation MTN	5.13		08/27/2012		166,974

	250,000	Technical Olympic USA Incorporated	9.00		07/01/2010		260,000

	80,000	Toyota Motor Credit Corporation MTN	2.80		01/18/2006		82,132

							3,990,670


Oil And Gas Extraction – 1.53%

	65,000	Anadarko Petroleum Corporation	7.20		03/15/2029		80,541

	115,000	Burlington Resources Finance	7.40		12/01/2031		147,655

	60,000	Chesapeake Energy Corporation	8.13		04/01/2011		63,600

	135,000	Conocophillips	8.75		05/25/2010		175,215

	100,000	Nexen Incorporated	7.88		03/15/2032		126,157

	105,000	Pemex Project Funding Master Trust	9.13		10/13/2010		128,231

	175,000	Pioneer Natural Resource Company	9.63		04/01/2010		215,458

	110,000	Seacor Smit Incorporation	5.88		10/01/2012		120,045

	90,000	Vintage Petroleum Incorporated	8.25		05/01/2012		97,200

	45,000	XTO Energy Incorporated^	6.25		04/15/2013		46,913

	10,000	XTO Energy Incorporated	7.50		04/15/2012		11,025

							1,212,040


Paper And Allied Products – 1.42%

	210,000	Appleton Papers Incorporated Series B	12.50		12/15/2008		235,725

	85,000	Georgia-Pacific Corporation^	9.38		02/01/2013		90,100

	90,000	Graphic Packaging Corporation	8.63		02/15/2012		93,825

	65,000	International Paper Company	6.75		09/01/2011		76,046

	90,000	Plastipak Holdings Incorporated	10.75		09/01/2011		96,525

	170,000	Potlatch Corporation	10.00		07/15/2011		184,025

	220,000	Trimas Corporation	9.88		06/15/2012		222,200

	100,000	Westvaco Corporation	8.20		01/15/2030		125,643

							1,124,089


Personal Services – 0.44%

	325,000	Coinmach Corporation	9.00		02/01/2010		349,375


Petroleum Refining And Related Industries – 0.45%

	80,000	Occidental Petroleum	8.45		02/15/2029		112,398

	133,000	Pennzoil-Quaker State Company	10.00		11/01/2008		164,031

	90,000	Tesoro Petroleum Corporation	9.63		04/01/2012		81,000

							357,429


Pipelines, Except Natural Gas – 0.16%

	105,000	Kinder Morgan Energy Partners	6.75		03/15/2011		122,976


Primary Metal Industries – 0.41%

	310,000	Russel Metals Incorporated UNI Series T	10.00		06/01/2009		327,050

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Printing, Publishing, And Allied Industries – 1.29%

$	10,000	Garden State Newspaper Incorporated Series B	8.75	%	10/01/2009	$	10,224

	250,000	Garden State Newspapers Incorporated	8.63		07/01/2011		256,250

	45,000	Houghton Mifflin Company^	9.88		02/01/2013		48,319

	230,000	Mail-Well I Corporation	9.63		03/15/2012		235,750

	55,000	RR Donnelley Financial Corporation I^	8.88		12/15/2010		59,950

	130,000	Viacom Incorporated	7.75		06/01/2005		145,243

	200,000	Viacom Incorporated	7.88		07/30/2030		269,366

							1,025,102


Railroad Transportation – 1.33%

	70,000	Burlington North Santa Fe	6.38		12/15/2005		77,682

	155,000	Canadian National Railways	6.38		10/15/2011		180,917

	60,000	CSX Corporation	8.63		05/15/2022		81,025

	270,000	Kansas City Southern	9.50		10/01/2008		288,900

	220,000	TFM SA DE CV	12.50		06/15/2012		236,500

	160,000	Union Pacific Corporation	6.50		04/15/2012		187,548

							1,052,572


Real Estate – 0.98%

	65,000	Archstone-Smith Trust	8.20		07/03/2005		72,255

	75,000	Camden Property Trust	5.88		11/30/2012		82,860

	90,000	Corrections Corporation Of America	9.88		05/01/2009		99,675

	70,000	ERP Operating LP	7.10		06/23/2004		73,753

	75,000	HRPT Properties Trust	6.50		01/15/2013		82,487

	345,000	Senior Housing Trust	8.63		01/15/2012		365,700

							776,730


Rubber And Miscellaneous Plastics Products – 0.11%

	105,000	Foamex LP/Capital Corporation	10.75		04/01/2009		84,000


Security And Commodity Brokers, Dealers, Exchanges & Services – 1.15%

	320,000	Bear Sterns Company Incorporated	6.50		05/01/2006		360,119

	220,000	Goldman Sachs Group Incorporated	6.13		02/15/2033		236,938

	65,000	Jefferies Group Incorporated	7.75		03/15/2012		71,966

	205,000	Morgan Stanley	6.75		04/15/2011		241,388

							910,411


Stone, Clay, Glass, And Concrete Products – 0.01%

	10,000	Owens Illinois Incorporated	7.85		05/15/2004		10,400


Transportation By Air – 0.10%

	70,000	Petroleum Helicopters Series B	9.38		05/01/2009		77,000


Transportation Equipment – 1.21%

	165,000	Daimlerchrysler N.A. Holding	7.20		09/01/2009		191,456

	165,000	Dana Corporation	9.00		08/15/2011		172,425

	65,000	Dana Corporation	10.13		03/15/2010		70,850

	65,000	Northrop Grumman Corporation	7.13		02/15/2011		78,754

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Transportation Equipment (continued)

$	115,000	Rexnord Corporation^	10.13	%	12/15/2012	$	125,350

	305,000	Sequa Corporation Series B	8.88		04/01/2008		317,200

							956,035


Transportation Services – 0.13%

	85,000	General Dynamics Corporation	3.00		05/15/2008		86,055

	20,000	Titan Corporation^	8.00		05/15/2011		20,550

							106,605


Wholesale Trade-Durable Goods – 0.85%

	185,000	Jorgensen Earle M Company	9.75		06/01/2012		192,400

	145,000	Omnicare Incorporation Series B	8.13		03/15/2011		156,963

	295,000	Ownes & Minor Incorporated	8.50		07/15/2011		321,550

							670,913


Wholesale Trade Non-Durable Goods – 0.31%

	150,000	Amerisourcebergen Corporation	8.13		09/01/2008		162,000

	75,000	Unilever Capital Corporation	6.88		11/01/2005		83,996

							245,996


Total Corporate Bonds & Notes (Cost $43,011,818)							45,662,236


Foreign Bonds – 17.09%@

	195,000	Asian Development Bank	6.75		06/11/2007		229,577

	35,000	Barclays Bank PLC	7.40		12/15/2009		43,479

	305,000	BP Canada Finance	3.63		01/15/2009		319,210

	70,000	British Columbia Province	5.38		10/29/2008		79,300

	290,000	British Telecommunications PLC	8.38		12/15/2010		364,224

	1,650,000	Bunders Republic Deutschland	4.50		01/04/2013		2,060,559

	350,000	Canada Government	6.38		11/30/2004		376,946

	295,000	Colt Telecom Group PLC (Euro)	7.63		12/15/2009		270,629

	225,000	Deutsche Telekom International Finance (Euro)	8.75		06/15/2030		291,079

	75,000	Diageo Capital PLC	6.63		06/24/2004		79,173

	275,000	European Investment Bank Series DTC	4.88		09/06/2006		299,337

	300,000	Flextronics International Limited (Euro)	9.75		07/01/2010		370,484

	240,000	France Telecommunications	9.25		03/01/2011		300,139

	75,000	Globe Telecom	9.75		04/15/2012		80,625

	135,000	HSBC Holding Corporation	7.50		07/15/2009		164,748

	185,000	Huntsman International LLC (Euro)	10.13		07/01/2009		193,651

	80,000	Inter-American Development Bank	4.38		09/20/2012		85,801

	250,000	Inter-American Development Bank EMT Series N	4.00		01/18/2005		260,625

	280,000	International Bank For Reconstruction & Development	4.00		01/10/2005		291,898

	205,000	Intrawest Corporation	10.50		02/01/2010		219,350

	310,000	Malaysia	8.75		06/01/2009		398,753

	60,000	Manitoba Province Series EM	7.50		02/22/2010		76,210

	60,000	Methanex Corporation	8.75		08/15/2012		66,600

	155,000	National Westminster Bank	7.38		10/01/2009		191,479

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


Foreign Bonds (continued)

$	1,750,000	New Zealand Government Series 1111 (Nzd)	6.00	%	11/15/2011	$	1,055,604

	130,000	Norske Skog Canada	8.63		06/15/2011		133,250

	295,000	Ontario Province	5.50		10/01/2008		335,952

	315,000	People’s Republic Of China	7.30		12/15/2008		383,371

	170,000	Poland	7.13		07/01/2004		179,563

	295,000	Quebec Province	5.75		02/15/2009		337,945

	70,000	Republic Of Finland	7.88		07/28/2004		75,391

	105,000	Republic Of Italy	6.88		09/27/2023		135,125

	135,000	Republic Of Italy	3.63		09/14/2007		142,290

	290,000	Republic Of Poland	6.25		07/03/2012		337,850

	310,000	Republic Of South Africa	9.13		05/19/2009		392,925

	225,000	Teekay Shipping Corporation	8.88		07/15/2011		246,375

	75,000	Tembec Industries Incorporated	8.63		06/30/2009		74,250

	250,000	Tm Group Holdings	11.00		05/15/2008		257,500

	105,000	Triton Energy Limited	8.88		10/01/2007		117,823

	600,000	UK Treasury Bonds (British Pound)	5.00		03/07/2008		1,036,387

	250,000	United Mexican States	8.63		03/12/2008		300,625

	300,000	United Mexican States MTN	6.38		01/16/2013		322,800

	150,000	Vodafone Airtouch PLC	7.75		02/15/2010		185,412

	275,000	Western Oil Sands Incorporated	8.38		05/01/2012		297,000

	60,000	World Bank	7.63		01/19/2023		83,716

Total Foreign Bonds (Cost $12,583,593)							13,545,030


US Government Agency Securities – 16.22%

Federal Farm Credit Bank – 0.19%

	145,000	FFCB	2.13		08/15/2005		146,935


Federal Home Loan Bank – 0.19%

	145,000	FHLB Series 392	2.50		03/15/2006		148,081


Federal Home Loan Mortgage Corporation – 2.23%

	290,000	FHLMC	5.75		03/15/2009		336,673

	145,000	FHLMC	4.50		01/15/2013		154,694

	14,338	FHLMC #C00922	8.00		02/01/2030		15,443

	229,196	FHLMC #C01187	7.50		05/01/2031		243,650

	173,105	FHLMC #C01345	7.00		04/01/2032		181,593

	555,261	FHLMC #C01444	6.00		01/01/2033		575,670

	147,065	FHLMC #C59553	7.50		11/01/2031		156,348

	103,405	FHLMC #C61720	6.00		12/01/2031		107,206

							1,771,277



Federal National Mortgage Association – 10.03%

	110,000	FNMA	7.13		01/15/2030		147,136

	330,000	FNMA	6.00		05/15/2011		389,926

	295,000	FNMA	5.25		04/15/2007		329,521

	235,662	FNMA #254311A	6.50		05/01/2032		245,605

	447,674	FNMA #254372	6.00		07/01/2017		466,431

	196,492	FNMA #254688	5.50		03/01/2023		204,188

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Federal National Mortgage Association (continued)

$	339,261	FNMA #411023	6.50	%	03/01/2013	$	357,134

	236,747	FNMA #486852	6.50		03/01/2029		246,904

	194,990	FNMA #545026	6.50		06/01/2016		204,781

	640,340	FNMA #545814	6.50		08/01/2032		667,356

	127,913	FNMA #584829	6.00		05/01/2016		133,268

	163,784	FNMA #607067	6.00		11/01/2016		170,640

	329,181	FNMA #617707	6.00		05/01/2032		342,072

	154,974	FNMA #625185	6.50		02/01/2032		161,516

	350,000	FNMA TBA¤	5.00		06/15/2018		361,922

	595,000	FNMA TBA¤	5.00		06/15/2018		616,383

	560,000	FNMA TBA¤	4.50		06/15/2018		574,000

	465,000	FNMA TBA¤	5.00		06/15/2033		477,061

	1,510,000	FNMA TBA¤	5.50		06/15/2033		1,565,681

	280,000	FNMA TBA¤	5.50		07/15/2033		289,187

							7,950,712


Government National Mortgage Association – 2.45%

	69,085	GNMA #3041	7.50		02/20/2031		73,016

	167,437	GNMA #3108	7.00		07/20/2031		175,748

	295,207	GNMA #486958	6.50		02/15/2029		309,874

	32,429	GNMA #509956	7.00		06/15/2029		34,192

	25,292	GNMA #516121	7.50		12/15/2029		26,907

	372,908	GNMA #550871	6.50		09/15/2031		391,010

	222,704	GNMA #563382	7.00		11/15/2031		234,663

	410,000	GNMA #592752	6.00		05/15/2033		429,647

	253,735	GNMA #781123	7.00		12/15/2029		267,661

							1,942,718


Student Loan Marketing Association – 0.89%

	690,000	SLMA	3.38		07/15/2004		706,490


Tennessee Valley Authority – 0.24%

	150,000	TVA Series E	6.75		11/01/2025		190,556


Total US Government Agency Securities (Cost $12,563,602)							12,856,769


US Treasury Securities – 3.18%

US Treasury Bonds – 0.38%

	170,000	US Treasury Bonds	8.00		11/15/2021		250,963

	40,000	US Treasury Bonds	6.25		08/15/2023		50,074

							301,037


US Treasury Notes – 2.80%

	80,000	US Treasury Notes	6.50		08/15/2005		88,944

	335,000	US Treasury Notes	3.50		11/15/2006		354,550

	350,000	US Treasury Notes	3.00		02/29/2004		354,853

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INCOME PLUS FUND

Principal		Security Name	Interest Rate		Maturity Date	Value


US Treasury Notes (continued)

$	150,000	US Treasury Notes	2.00	%	05/15/2006	$	151,875

	1,240,000	US Treasury Notes	3.63		05/15/2013		1,268,385

							2,218,607


Total US Treasury Securities (Cost $2,459,539)							2,519,644


Shares

Short-Term Investment – 7.08%

	5,609,537	Wells Fargo Money Market Trust~					5,609,537


Total Short-Term Investment (Cost $5,609,537)							5,609,537


Total Investments in Securities (Cost $78,742,459)*	104.35	%	$	82,723,367

Other Assets and Liabilities, Net	(4.35	)		(3,446,752	)

Total Net Assets	100.00	%	$	79,276,615

Foreign bond principal is denominated in U.S. dollars except as indicated parenthetically.

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

This security is currently in default.

Variable rate securities.

When issued securities, total cost $3,845,241.

(c)

Cost for federal income tax purposes is $79,016,701 and net unrealized appreciation consists of:

Gross Unrealized Appreciation	$	4,275,649
Gross Unrealized Depreciation		(568,983	)

Net Unrealized Appreciation	$	3,706,666

The accompanying notes are an integral part of these financial statements.

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INFLATION-PROTECTED BOND FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Collateralized Mortgage Obligations – 1.29%

$	600,000	Bear Stearns Commercial Mortgage Securities Series 2003-T10 Class X2 Interest Only±^(c)	1.44	%	03/13/2040	$	43,339

	917,920	CS First Boston Mortgage Securities Corporation Series 1998-C2 Class Ax Interest Only±(c)	1.19		11/11/2030		38,617

	255,000	First Union Bank Of America Series 2001 C1 102 Interest Only±^(c)	2.00		03/15/2011		24,468

	1,015,865	GMAC Commercial Mortgage Securities Incorporated Series 2002-C1 Class X1 Interest Only±^(c)	0.62		11/15/2039		35,857

	1,230,000	Lehman Brothers-UBS Commercial Mortgage Obligation Interest Only±^(c)	0.29		06/01/2033		34,666

	545,215	Solomon Brothers Mortgage Securities Series 2002 Key2 Class X1 Interest Only±^(c)	1.45		03/18/2036		39,095

	1,336,435	Wachovia Bank Commercial Mortgage Trust Series 2002-C1 Class 101 Interest Only±^(c)	0.39		04/15/2034		38,814

	465,000	Wachovia Bank Commercial Mortgage Trust Series 2002-C4 Class Xp Interest Only±^(c)	1.26		04/15/2035		24,850

Total Collateralized Mortgage Obligations (Cost $279,098)							279,706


US Treasury Securities – 90.16%

US Inflation Index Bonds – 28.90%

	765,000	US Treasury Bonds – inflation protected//	3.63		04/15/2028		1,089,307

	3,550,000	US Treasury Bonds – inflation protected//	3.88		04/15/2029		5,210,792

							6,300,099


US Inflation Index Notes – 61.26%

	2,225,000	US Treasury Notes – inflation protected//	3.38		01/15/2007		2,839,045

	4,235,000	US Treasury Notes – inflation protected//	4.25		01/15/2010		5,468,296

	2,930,000	US Treasury Notes – inflation protected//	3.50		01/15/2011		3,533,162

	1,330,000	US Treasury Notes – inflation protected//	3.00		07/15/2012		1,512,425

							13,352,928


Total US Treasury Securities (Cost $19,300,435)							19,653,027

Shares

Short-Term Investment – 4.03%

	879,187	Wells Fargo Money Market Trust~					879,187

Total Short-Term Investment (Cost $879,187)							879,187


Total Investments in Securities (Cost $20,458,720)*	95.48	%	$	20,811,920

Other Assets and Liabilities, Net	4.52			986,281

Total Net Assets	100.00	%	$	21,798,201

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable rate securities.

U.S. Treasury inflation-protection securities (TIPS) are securities in which the principal amount is adjusted for inflation and the semi-annual interest payments equal a fixed percentage of the inflation-adjusted principal amount.

(c)

Cost for federal income tax purposes is substantially the same as for financial reporting purposes and net unrealized appreciation consists of:

Gross Unrealized Appreciation	$	431,268
Gross Unrealized Depreciation		(78,068	)

Net Unrealized Appreciation	$	353,200

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INTERMEDIATE GOVERNMENT INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Asset Backed Securities – 0.50%

$	3,875,000	Providian Gateway Master Trust Series B Class A±^	1.61	%	04/15/2009	$	3,882,731

Total Asset Backed Securities (Cost $3,869,414)							3,882,731


Collateralized Mortgage Obligations – 2.16%

	45,656,000	Bear Stearns Commercial Mortgage Securities Series T10 Class X2 Interest Only±^(c)	1.44		03/13/2040		3,297,801

	44,199,931	CS First Boston Mortgage Securities Corporation Series C2 Class Ax Interest Only±(c)	1.19		11/11/2030		1,859,491

	28,621,777	First Union Bank Of America Series 2001 C1 Class Io2 Interest Only±^(c)	2.00		03/15/2011		2,746,331

	63,513,825	GMAC Commercial Mortgage Securities Incorporated Series 2002-C1 Class X1 Interest Only±^(c)	0.62		11/15/2039		2,241,828

	53,021,000	Lehman Brothers-UBS Commercial Mortgage Obligation Interest Only±^(c )	0.29		06/01/2033		1,494,317

	42,888,597	Solomon Brothers Mortgage Securities Vii Series Key2 Class X1 144A Interest Only±^(c)	1.45		03/18/2036		3,075,357

	74,741,357	Wachovia Bank Commercial Mortgage Trust Series C1 Class IOI Interest Only±^(c)	0.39		04/15/2034		2,170,722

Total Collateralized Mortgage Obligations (Cost $16,820,460)							16,885,847


US Government Agency Securities – 60.13%

Federal Home Loan Bank – 11.03%

	3,000,000	FHLB MTN	6.32		06/28/2005		3,296,253

	30,000,000	FHLB Series 3WO8	5.50		08/15/2008		34,159,470

	20,000,000	FHLB Series 8K05	7.25		05/13/2005		22,272,380

	7,000,000	FHLB Series DV11	6.44		12/12/2011		8,518,993

	1,000,000	FHLB Series EY05	6.15		11/28/2005		1,111,885

	4,000,000	FHLB Series K805	6.50		11/15/2005		4,477,048

	1,000,000	FHLB Series LL05	7.32		04/21/2005		1,111,157

	10,000,000	FHLB Series TD06	6.50		11/15/2006		11,502,880

							86,450,066


Federal Home Loan Mortgage Corporation – 15.55%

	5,000,000	FHLMC	7.10		04/10/2007		5,929,455

	8,000,000	FHLMC	6.63		09/15/2009		9,689,448

	30,000,000	FHLMC	6.38		11/15/2003		30,704,340

	10,000,000	FHLMC	5.75		01/15/2012		11,667,580

	4,000,000	FHLMC	8.07		01/27/2005		4,442,616

	6,294,714	FHLMC #C01345	7.00		04/01/2032		6,603,379

	15,941,361	FHLMC #C01444	6.00		01/01/2033		16,527,290

	3,946,706	FHLMC #C22339	6.50		02/01/2029		4,108,584

	1,732,354	FHLMC #C31808	7.50		10/01/2029		1,842,641

	4,140,420	FHLMC #C59553	7.50		11/01/2031		4,401,768

	7,651,998	FHLMC #C65086	7.50		03/01/2032		8,135,053

	5,902,697	FHLMC #C65576	7.50		04/01/2032		6,275,322

	182,678	FHLMC #E00228	6.50		07/01/2008		192,462

	10,482,652	FHLMC #E00659	6.00		04/01/2014		10,904,108

	346,614	FHLMC #G00683	8.50		12/01/2025		376,755

							121,800,802

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INTERMEDIATE GOVERNMENT INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Federal National Mortgage Association – 29.27%

$	8,500,000	FNMA	7.13	%	02/15/2005	$	9,326,923

	17,000,000	FNMA	6.63		10/15/2007		20,039,430

	143,334	FNMA #190705	6.50		03/01/2009		151,601

	211,268	FNMA #250410	7.50		12/01/2025		225,849

	527,120	FNMA #252260	6.00		01/01/2014		550,453

	2,500,551	FNMA #253057	8.00		12/01/2029		2,713,055

	852,325	FNMA #253266	8.00		05/01/2030		921,973

	5,318,511	FNMA #254190	5.50		02/01/2009		5,501,025

	4,362,435	FNMA #254218	7.00		02/01/2032		4,595,505

	1,777,273	FNMA #254223	7.50		02/01/2032		1,889,480

	9,077,300	FNMA #254372	6.00		06/01/2017		9,457,617

	14,497,710	FNMA #254634	5.50		02/01/2023		15,065,505

	6,877,235	FNMA #254688	5.50		03/01/2023		7,146,578

	1,160,960	FNMA #417768	6.50		03/01/2028		1,210,766

	3,611,397	FNMA #429182	6.50		05/01/2028		3,766,327

	1,437,833	FNMA #486852	6.50		03/01/2029		1,499,516

	1,503,851	FNMA #520842	8.00		11/01/2029		1,638,754

	1,392,783	FNMA #545026	6.50		06/01/2016		1,462,722

	13,171,347	FNMA #545814	6.50		08/01/2032		13,727,050

	3,602,142	FNMA #584829	6.00		05/01/2016		3,752,931

	4,204,775	FNMA #607067	6.00		11/01/2016		4,380,790

	11,756,456	FNMA #617707	6.00		05/01/2032		12,216,860

	8,158,914	FNMA #672952	5.50		12/01/2017		8,474,144

	994,222	FNMA #70765	9.00		03/01/2021		1,109,676

	3,000,000	FNMA #254805	5.00		06/01/2013		3,133,320

	9,440,000	FNMA¤	5.00		06/15/2018		9,761,545

	16,270,000	FNMA TBA¤	4.50		06/15/2018		16,676,750

	11,800,000	FNMA TBA¤	5.00		05/14/2033		12,106,068

	15,665,000	FNMA TBA¤	5.00		06/15/2018		16,227,970

	7,500,000	FNMA TBA¤	5.50		07/15/2033		7,746,090

	31,680,000	FNMA TBA¤	5.50		06/01/2032		32,848,200

							229,324,472


Government National Mortgage Association – 4.14%

	162,044	GNMA #1580	10.00		03/20/2021		186,201

	2,966,205	GNMA #158794	7.00		09/15/2028		3,129,836

	124,138	GNMA #1616	10.00		05/20/2021		142,644

	79,555	GNMA #2025	7.00		05/20/2010		85,142

	2,291,246	GNMA #2824	7.00		10/20/2029		2,406,492

	554,734	GNMA #306052	9.00		06/15/2021		618,533

	2,679,177	GNMA #417290	7.00		03/15/2026		2,831,887

	1,454,336	GNMA #467791	7.50		04/15/2028		1,547,857

	2,052,675	GNMA #486958	6.50		02/15/2029		2,154,656

	3,630,544	GNMA #563382	7.00		11/15/2031		3,825,494

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

INTERMEDIATE GOVERNMENT INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Government National Mortgage Association (continued)

$	11,143,590	GNMA #592752	6.00	%	05/15/2033	$	11,677,594

	3,624,873	GNMA #781123	7.00		12/15/2029		3,823,829

							32,430,165


Student Loan Marketing Association – 0.14%

	1,000,000	SLMA	9.15		12/01/2004		1,115,674

Total US Government Agency Securities (Cost $452,189,803)							471,121,179


US Treasury Securities – 36.43%

US Treasury Bonds – 24.06%

	24,000,000	US Treasury Bonds	12.75		11/15/2010		30,448,128

	14,500,000	US Treasury Bonds	12.00		08/15/2013		21,305,372

	4,000,000	US Treasury Bonds	12.38		05/15/2004		4,423,592

	6,000,000	US Treasury Bonds	12.50		08/15/2014		9,336,564

	9,400,000	US Treasury Bonds	11.63		11/15/2004		10,804,492

	10,000,000	US Treasury Bonds	11.25		02/15/2015		17,310,550

	3,100,000	US Treasury Bonds	9.38		02/15/2006		3,747,125

	9,500,000	US Treasury Bonds	9.13		05/15/2018		14,990,706

	17,000,000	US Treasury Bonds	8.13		08/15/2019		25,048,446

	5,000,000	US Treasury Bonds	7.13		02/15/2023		6,839,845

	6,000,000	US Treasury Bonds	7.63		02/15/2025		8,720,628

	7,000,000	US Treasury Bonds	6.50		11/15/2026		9,097,536

	5,000,000	US Treasury Bonds	5.38		02/15/2031		5,809,375

	8,000,000	US Treasury Bonds	5.50		08/15/2028		9,241,247

	10,000,000	US Treasury Bonds	5.00		08/15/2011		11,352,730

							188,476,336


US Treasury Notes – 12.37%

	7,000,000	US Treasury Notes	5.88		02/15/2004		7,232,148

	5,000,000	US Treasury Notes	7.25		05/15/2004		5,288,085

	9,500,000	US Treasury Notes	7.50		02/15/2005		10,503,808

	30,000,000	US Treasury Notes	6.63		05/15/2007		35,347,260

	800,000	US Treasury Notes	6.13		08/15/2007		932,000

	1,000,000	US Treasury Notes	5.63		05/15/2008		1,155,977

	6,000,000	US Treasury Notes	6.00		08/15/2009		7,145,388

	15,000,000	US Treasury Notes	6.50		02/15/2010		18,389,070

	10,000,000	US Treasury Notes	4.38		05/15/2007		10,925,390

							96,919,126


Total US Treasury Securities (Cost $264,003,945)							285,395,462

Shares

Short-Term Investments – 14.09%

	110,350,103	Wells Fargo Government Money Market Fund~					110,350,103


Total Short-Term Investments (Cost $110,350,103)							110,350,103

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

INTERMEDIATE GOVERNMENT INCOME FUND

			Value

Total Investments in Securities (Cost $847,233,725)*	113.31	%	$	887,635,322

Other Assets and Liabilities, Net	(13.31	)		(104,286,539	)

Total Net Assets	100.00	%	$	783,348,783

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable rate securities.

When issued securities, total cost $94,462,641.

(c)

Cost for federal income tax purposes is $860,006,257 and net unrealized appreciation consists of:

Gross Unrealized Appreciation	$	28,089,526
Gross Unrealized Depreciation		(460,461	)

Net Unrealized Appreciation	$	27,629,065

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

LIMITED TERM GOVERNMENT INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Asset Backed Securities – 0.49%

$	1,250,000	Providian Gateway Master Trust Series 2001-B Class A±^	1.61	%	04/17/2006	$	1,252,493

Total Asset Backed Securities (Cost $1,248,218)							1,252,493


Collateralized Mortgage Obligations – 2.15%

	14,815,000	Bear Stearns Commercial Mortgage Securities Series 2003-T10 Class X2 Interest Only±^(c)	1.44		03/13/2040		1,070,110

	14,351,232	CS First Boston Mortgage Securities Corporation Series 1998-C2 Class Ax Interest Only±(c)	1.19		11/11/2030		603,756

	9,540,000	First Union Bank Of America Series 2001 C1 102 Interest Only±^(c)	2.00		03/15/2011		915,387

	21,171,097	GMAC Commercial Mortgage Securities Incorporated Series 2002-C1 Class X1 Interest Only±^(c)	0.62		11/15/2039		747,270

	17,082,000	LB-UBS Commercial Mortgage Interest Only±^(c)	0.29		06/01/2033		481,431

	13,924,792	Solomon Brothers Mortgage Securities Series Key2 Class X1 Interest Only±^(c)	1.45		03/18/2036		998,487

	24,253,818	Wachovia Bank Commercial Mortgage Trust Series C1 Class Ioi Interest Only±^(c)	0.39		04/15/2034		704,405

Total Collateralized Mortgage Obligations (Cost $5,499,275)							5,520,846


US Government Agency Securities – 65.80%

Federal Home Loan Bank – 3.54%

	9,000,000	FHLB Series NY03	6.88		08/15/2003		9,106,443


Federal Home Loan Mortgage Corporation – 13.43%

	1,500,000	FHLMC	5.13		10/15/2008		1,689,299

	3,000,000	FHLMC	6.63		09/15/2009		3,633,542

	8,500,000	FHLMC	6.88		09/15/2010		10,536,541

	2,428	FHLMC #845410±	4.60		07/01/2023		2,503

	1,438	FHLMC #845613±	4.62		01/01/2024		1,491

	1,672,827	FHLMC #C00894	6.50		12/01/2029		1,741,047

	471,585	FHLMC #C01034	8.00		08/01/2030		507,466

	2,098,238	FHLMC #C01345	7.00		04/01/2032		2,201,126

	4,477,911	FHLMC #C014444	6.00		01/01/2033		4,642,497

	1,263,032	FHLMC #C59553	7.50		11/01/2031		1,342,756

	1,913,000	FHLMC #C65086	7.50		03/01/2032		2,033,763

	2,794,585	FHLMC #C65576	7.50		04/01/2032		2,971,002

	3,140,000	FHLMC TBA¤	5.00		06/15/2018		3,246,955

							34,549,988


Federal National Mortgage Association – 44.06%

	5,000,000	FNMA	6.00		05/15/2008		5,811,520

	10,000,000	FNMA	7.00		07/15/2005		11,151,090

	5,500,000	FNMA	5.00		01/15/2007		6,071,813

	2,609,672	FNMA #254190	5.50		02/01/2009		2,699,227

	3,489,948	FNMA #254218	7.00		02/01/2032		3,676,404

	1,777,273	FNMA #254223	7.50		02/01/2032		1,889,480

	2,897,239	FNMA #254243	6.00		02/01/2009		2,994,940

	7,162,788	FNMA #254372	6.00		07/01/2017		7,462,892

	9,665,140	FNMA #254634	5.50		02/01/2023		10,043,670

	4,421,080	FNMA #254688	5.50		03/01/2023		4,594,229

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

LIMITED TERM GOVERNMENT INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

Federal National Mortgage Association (continued)

$	500,155	FNMA #313644	7.00	%	08/01/2027	$	527,894

	1,115,646	FNMA #401770	6.50		10/01/2027		1,164,236

	676,420	FNMA #486852	6.50		03/01/2029		705,439

	1,001,512	FNMA #488341	6.50		04/01/2029		1,044,178

	1,489,417	FNMA #524356	7.50		12/01/2029		1,584,218

	1,728,783	FNMA #535300	6.50		05/01/2030		1,802,433

	803,636	FNMA #545026	6.50		06/01/2016		843,991

	5,702,829	FNMA #545814	6.50		08/01/2032		5,943,433

	777,513	FNMA #584829	6.00		05/01/2016		810,060

	1,408,540	FNMA #607067	6.00		11/01/2016		1,467,503

	5,486,346	FNMA #617707	6.00		05/01/2032		5,701,201

	4,099,957	FNMA #672952	5.50		12/01/2017		4,258,364

	327,288	FNMA	7.00		07/01/2016		348,588

	3,533	FNMA Series G93-19 Class FJ±	3.00		04/25/2023		3,624

	4,800,000	FNMA TBA¤	4.50		06/15/2018		4,920,000

	4,800,000	FNMA TBA¤	5.00		06/17/2018		4,972,502

	4,500,000	FNMA TBA¤	5.00		06/15/2033		4,616,721

	13,175,000	FNMA TBA¤	5.50		06/15/2033		13,660,828

	2,500,000	FNMA TBA¤	5.50		07/15/2033		2,582,030

							113,352,508


Government National Mortgage Association – 4.77%

	58,467	GNMA #157247	9.50		05/20/2016		65,432

	508,628	GNMA #2036	8.00		07/20/2025		550,077

	1,930,475	GNMA #417290	7.00		03/15/2026		2,040,510

	198,789	GNMA #417389	7.00		05/15/2026		210,119

	1,217,311	GNMA #434661	7.50		01/15/2030		1,294,806

	808,474	GNMA #486958	6.50		02/15/2029		848,640

	1,913,145	GNMA #543703	7.00		11/15/2030		2,016,416

	5,000,000	GNMA #592752	6.00		05/15/2033		5,239,601

							12,265,601


Total US Government Agency Securities (Cost $164,411,244)							169,274,540


US Treasury Securities – 29.37%

US Treasury Bonds – 10.39%

	14,000,000	US Treasury Bonds	12.75		11/15/2010		17,761,408

	6,500,000	US Treasury Bonds	7.50		11/15/2016		8,972,028

							26,733,436


US Treasury Notes – 18.98%

	1,500,000	US Treasury Notes	7.25		08/15/2004		1,609,218

	15,000,000	US Treasury Notes	7.88		11/15/2004		16,436,130

	11,000,000	US Treasury Notes	6.63		05/15/2007		12,960,662

	8,250,000	US Treasury Notes	6.13		08/15/2007		9,611,250

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

LIMITED TERM GOVERNMENT INCOME FUND

Principal		Security Name	Interest Rate		Maturity Date	Value

US Treasury Notes (continued)

$	3,000,000	US Treasury Notes	6.50	%	02/15/2010	$	3,677,815

	4,000,000	US Treasury Notes	5.00		08/15/2011		4,541,092

							48,836,167


Total US Treasury Securities (Cost $73,222,372)							75,569,603

Shares

Short-Term Investments – 17.12%

	44,040,166	Wells Fargo Government Money Market Fund~					44,040,166


Total Short-Term Investments (Cost $44,040,166)							44,040,166


Total Investments in Securities (Cost $288,421,275)*	114.93	%	$	295,657,648

Other Assets and Liabilities, Net	(14.93	)		(38,403,348	)

Total Net Assets	100.00	%	$	257,254,300

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable rate securities.

When issued securities, total cost $33,665,466.

(c)

Cost for federal income tax purposes is substantially the same as for financial reporting purposes and net unrealized appreciation consists of:

Gross Unrealized Appreciation	$	7,344,250
Gross Unrealized Depreciation		(107,877	)

Net Unrealized Appreciation	$	7,236,373

The accompanying notes are an integral part of these financial statements.

INCOME FUNDS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STABLE INCOME FUND

Face/Share Amount	Security Description	Value

N/A	Wells Fargo Stable Income Portfolio	$	711,987,487


Total Investment in Master Portfolios – (Cost $707,484,993)				711,987,487


Total Investment in Securities (Cost $707,484,993)*	99.57	%	$	711,987,487

Other Assets and Liabilities, Net	0.43			3,077,489

Total Net Assets	100.00	%	$	715,064,976

Cost for federal income tax purposes is substantially the same as for financial reporting purposes.

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		INCOME FUNDS

TACTICAL MATURITY BOND FUND

Face/Share Amount	Security Description	Value

N/A	Wells Fargo Tactical Maturity Bond Portfolio	$	8,209,890


Total Investment in Master Portfolios – (Cost $8,123,071)				8,209,890


Total Investment in Securities (Cost $8,123,071)*	93.58	%	$	8,209,890

Other Assets and Liabilities, Net	6.42			562,903

Total Net Assets	100.00	%	$	8,772,793

Cost for federal income tax purposes is substantially the same as for financial reporting purposes.

The accompanying notes are an integral part of these financial statements.

INCOME FUNDS		STATEMENTS OF ASSETS AND LIABILITIES — MAY 31, 2003

	Diversified Bond			High Yield Bond			Income			Income Plus


ASSETS

INVESTMENTS:
In securities, at market value (see cost below)	$	375,282,424		$	143,293,235		$	464,770,289		$	82,723,368

TOTAL IN SECURITIES, AT MARKET VALUE	$	375,282,424		$	143,293,235		$	464,770,289		$	82,723,368

Cash		0			39,027			0			0
Collateral for securities loaned		0			0			166,263,829			9,571,243
Receivable for dividends and interest and other receivables		0			2,706,225			5,347,672			1,246,609
Receivable for investments sold		0			0			11,368,195			1,326,650
Receivable for Fund shares issued		527,007			3,425,585			252,355			394,029
Prepaid expenses and other assets		0			31,875			90			1,354

TOTAL ASSETS		375,809,431			149,495,947			648,002,430			95,263,253


LIABILITIES
Payable for investments purchased		0			5,109,408			40,518,513			6,066,639
Payable for foreign currency contracts		0			0			0			40,669
Payable for securities loaned		0			0			166,263,829			9,571,243
Dividends Payable		0			251,378			1,409,085			0
Payable for Fund shares redeemed		2,801,140			39,281			615,569			87,576
Payable for investment advisor and affiliates		139,032			88,961			268,447			44,028
Payable to other related parties (1)		1,481			41,284			28,071			57,003
Deferred income on mortgage dollar rolls		0			0			243,706			31,790
Accrued expenses and other liabilities		45,869			14,859			172,179			87,690

TOTAL LIABILITIES		2,987,522			5,545,171			209,519,399			15,986,638

TOTAL NET ASSETS	$	372,821,909		$	143,950,776		$	438,483,031		$	79,276,615


NET ASSETS CONSIST OF:

Paid-in capital	$	358,186,449		$	140,133,658		$	445,481,267		$	83,942,035
Undistributed net investment income (loss)		362,315			88,204			(3,755,429	)		(93,944	)
Undistributed net realized gain (loss) on investments and foreign currency transactions and futures		(507,109	)		82,308			(22,899,071	)		(8,515,372	)
Net unrealized appreciation (depreciation) of investments		14,780,254			3,646,606			19,656,264			3,980,909
Net unrealized appreciation (depreciation) of foreign currency		0			0			0			(37,013	)

TOTAL NET ASSETS	$	372,821,909		$	143,950,776		$	438,483,031		$	79,276,615


COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE


Net assets – Class A		N/A		$	120,167,993		$	41,612,067		$	20,815,470
Shares outstanding – Class A		N/A			11,687,603			4,218,354			1,840,946
Net asset value per share – Class A		N/A		$	10.28		$	9.86		$	11.31
Maximum offering price per share – Class A		N/A		$	10.76	(2)	$	10.32	(2)	$	11.84	(2)
Net Assets – Class B		N/A		$	11,563,046		$	19,311,297		$	47,515,872
Shares outstanding – Class B		N/A			1,124,974			1,959,802			4,200,786
Net asset value and offering price per share – Class B		N/A		$	10.28		$	9.85		$	11.31
Net Assets – Class C		N/A		$	12,219,737			N/A		$	10,945,273
Shares outstanding – Class C		N/A			1,187,857			N/A			967,778
Net asset value per share – Class C		N/A		$	10.29			N/A		$	11.31
Maximum offering price per share – Class C (3)		N/A		$	10.39			N/A		$	11.42
Net Assets – Institutional Class	$	372,821,909			N/A		$	377,559,667			N/A
Shares outstanding – Institutional Class		14,030,977			N/A			38,329,452			N/A
Net asset value and offering price per share – Institutional Class	$	26.57			N/A		$	9.85			N/A

INVESTMENT AT COST (NOTE 2)	$	360,502,170		$	139,646,629		$	445,114,025		$	78,742,459

SECURITIES ON LOAN, AT MARKET VALUE	$	0		$	0		$	164,876,259		$	9,612,815

(1)

Other related parties include the Funds’ trustees and distributor.

(2)

Maximum offering price is computed as 100/95.50 of net asset value. On investments of $50,000 or more, the offering price is reduced.

(3)

Maximum offering price is computed as 100/99.00 of net asset value.

(4)

Maximum offering price is computed as 100/98.50 of the net asset value. On investments of $50,000 or more, the offering price is reduced.

The accompanying notes are an integral part of these financial statements.

STATEMENTS OF ASSETS AND LIABILITIES — MAY 31, 2003		INCOME FUNDS

Inflation-Protected Bond			Intermediate Government Income			Limited Term Government Income			Stable Income			Tactical Maturity Bond





$	20,811,920		$	887,635,322		$	295,657,648		$	711,987,487		$	8,209,890

$	20,811,920		$	887,635,322		$	295,657,648		$	711,987,487		$	8,209,890

	0			0			0			0			0
	0			278,580,667			55,620,718			0			0
	194,368			6,552,713			1,819,168			0			0
	0			0			132			0			0
	1,669,902			3,012,386			304,793			5,463,206			619,381
	62,433			391			0			0			6,542

	22,738,623			1,175,781,479			353,402,459			717,450,693			8,835,813



	808,217			110,840,511			39,418,274			0			0
	0			0			0			0			0
	0			278,580,667			55,620,718			0			0
	21,622			116			346,170			29			0
	100,136			1,445,432			182,406			2,226,127			20,551
	1,456			228,859			136,983			61,140			2,625
	8,116			535,160			55,319			82,055			1,386
	0			720,570			229,261			0			0
	875			81,381			159,028			16,366			38,458

	940,422			392,432,696			96,148,159			2,385,717			63,020

$	21,798,201		$	783,348,783		$	257,254,300		$	715,064,976		$	8,772,793




$	21,286,341		$	788,609,549		$	257,275,716		$	712,206,491		$	9,054,322
	8,266			(11,879,975	)		(65,137	)		(29	)		4,888
	150,394			(33,782,388	)		(7,192,652	)		(1,643,980	)		(373,236	)
	353,200			40,401,597			7,236,373			4,502,494			86,819
	0			0			0			0			0

$	21,798,201		$	783,348,783		$	257,254,300		$	715,064,976		$	8,772,793





$	5,135,569		$	196,203,311		$	74,167,384		$	175,248,907			N/A
	506,537			16,769,468			7,123,821			16,783,513			N/A
$	10.14		$	11.70		$	10.41		$	10.44			N/A
$	10.62	(2)	$	12.25	(2)	$	10.90	(2)	$	10.60	(4)		N/A
$	5,033,670		$	80,988,657		$	42,523,967		$	48,044,730			N/A
	497,090			6,934,598			4,083,942			4,607,960			N/A
$	10.13		$	11.68		$	10.41		$	10.43			N/A
$	4,441,215		$	34,132,756			N/A			N/A			N/A
	438,463			2,928,311			N/A			N/A			N/A
$	10.13		$	11.66			N/A			N/A			N/A
$	10.23		$	11.78			N/A			N/A			N/A
$	7,187,747		$	472,024,059		$	140,562,949		$	491,771,339		$	8,772,793
	709,477			40,361,466			13,765,431			47,097,251			891,604
$	10.13		$	11.69		$	10.21		$	10.44		$	9.84

$	20,458,720		$	847,233,725		$	288,421,275		$	707,484,993		$	8,123,071

$	0		$	274,381,629		$	54,867,498		$	0		$	0

INCOME FUNDS		STATEMENTS OF OPERATIONS — FOR THE YEAR ENDED MAY 31, 2003

	Diversified Bond			High Yield Bond(2)


INVESTMENT INCOME(1)
Dividends	$	28,274		$	68,834
Interest		16,525,111			2,736,804
Securities lending income		886,720			0
Income on mortgage dollar rolls		0			0
Net Expenses from Portfolios		(1,414,335	)		0

TOTAL INVESTMENT INCOME		16,025,770			2,805,638


EXPENSES
Advisory fees		912,106			238,388
Administration fees		696,129			30,985
Custody fees		0			7,947
Shareholder servicing fees		0			99,328
Portfolio accounting fees		37,056			15,213
Transfer Agent
Class A		N/A			72,972
Class B		N/A			4,335
Class C		N/A			4,219
Institutional Class		63,710			N/A
Distribution fees
Class B		N/A			10,984
Class C		N/A			10,675
Legal and audit fees		33,237			14,135
Registration fees		51,925			22,808
Trustees’ fees		5,863			3,243
Shareholder reports		19,558			3,801
Other		8,349			2,810

TOTAL EXPENSES		1,827,933			541,843

LESS:
Waived fees and reimbursed expenses (Note 8)		(694,203	)		(67,112	)
Net expenses		1,133,730			474,731

NET INVESTMENT INCOME (LOSS)		14,892,040			2,330,907


REALIZED AND UNREALIZED GAIN ON INVESTMENTS


NET REALIZED GAIN (LOSS) FROM:
Securities		1,314,951			82,308
Financial futures transactions		(699,088	)		0
Foreign currency transactions		0			0
Securities transactions allocated from Portfolios		2,117,623			0
Financial futures transactions allocated from Portfolios		(57,856	)		0

NET REALIZED GAIN (LOSS) FROM INVESTMENTS		2,675,630			82,308


NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
Securities		0			3,646,606
Foreign currency contracts		0			0
Securities transactions allocated from Portfolios		11,180,261			0
Financial futures transactions allocated from Portfolios		(264,390	)		0

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS		10,915,871			3,646,606

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		13,591,501			3,728,914

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	28,483,541		$	6,059,821

(1)

Interest, dividend and securities lending include amounts allocated from portfolios where applicable.

(2)

The Fund commenced operations on November 29, 2002.

(3)

The Fund commenced operations on February 28, 2003.

The accompanying notes are an integral part of these financial statements.

STATEMENTS OF OPERATIONS — FOR THE YEAR ENDED MAY 31, 2003		INCOME FUNDS

Income			Income Plus			Inflation- Protected Bond(3)			Intermediate Government Income			Limited Term Government Income			Stable Income			Tactical Maturity Bond



$	783,664		$	21,195		$	1,499		$	384,088		$	367,939		$	45,436		$	75
	17,602,049			4,447,360			245,296			22,079,041			8,102,897			17,009,748			158,316
	4,959,016			312,409			0			10,777,868			1,939,170			126,496			42,961
	261,972			31,503			0			853,723			293,935			0			0
	0			0			0			0			0			(2,894,237	)		(33,211	)

	23,606,701			4,812,467			246,795			34,094,720			10,703,941			14,287,443			168,141



	2,393,558			448,390			14,347			3,821,331			1,218,528			0			0
	607,587			92,842			1,434			952,783			302,206			647,716			14,741
	95,742			14,953			575			152,714			48,741			0			0
	144,264			186,914			4,549			751,735			268,924			397,921			0
	79,169			64,983			5,313			98,590			71,175			95,012			24,171

	48,369			26,445			1,726			397,685			94,169			124,733			N/A
	35,699			87,214			2,081			143,200			45,596			44,434			N/A
	N/A			12,155			1,287			30,215			N/A			N/A			N/A
	384,817			N/A			2,100			424,666			146,064			291,119			2,244

	138,500			344,820			5,575			579,102			246,858			271,079			N/A
	N/A			64,313			3,448			194,788			N/A			N/A			N/A
	38,136			27,242			7,726			40,540			30,372			31,892			29,974
	79,391			31,233			6,438			79,331			55,749			59,904			14,360
	5,093			5,094			1,649			5,092			5,092			5,750			4,606
	33,637			3,200			1,288			38,554			9,748			16,638			2,370
	36,588			13,428			1,033			19,759			10,665			15,708			2,728

	4,120,550			1,423,226			60,569			7,730,085			2,553,887			2,001,906			95,194


	(252,459	)		(266,202	)		(29,763	)		(874,299	)		(339,247	)		(788,925	)		(78,400	)
	3,868,091			1,157,024			30,806			6,855,786			2,214,640			1,212,981			16,794

	19,738,610			3,655,443			215,989			27,238,934			8,489,301			13,074,462			151,347






	21,242,996			1,474,430			150,394			19,827,143			5,428,266			885,402			(55,136	)
	0			0			0			0			0			0			0
	0			(180,130	)		0			0			0			0			0
	0			0			0			0			0			0			0
	0			0			0			0			0			0			0

	21,242,996			1,294,300			150,394			19,827,143			5,428,266			885,402			(55,136	)



	9,128,585			2,786,218			353,200			25,160,640			3,242,803			0			0
	0			70,991			0			0			0			0			0
	0			0			0			0			0			2,307,002			79,042
	0			0			0			0			0			(42,920	)		0

	9,128,585			2,857,209			353,200			25,160,640			3,242,803			2,264,082			79,042

	30,371,581			4,151,509			503,594			44,987,783			8,671,069			3,149,484			23,906

$	50,110,191		$	7,806,952		$	719,583		$	72,226,717		$	17,160,370		$	16,223,946		$	175,253

INCOME FUNDS		STATEMENTS OF CHANGES IN NET ASSETS

	DIVERSIFIED BOND
	For the Year Ended May 31, 2003			For the Year Ended May 31, 2002

INCREASE (DECREASE) IN NET ASSETS
Beginning net assets	$	336,183,498		$	269,121,067

OPERATIONS:
Net investment income (loss)		14,892,040			14,744,519
Net realized gain (loss) on sale of investments and foreign currency transactions and futures		2,675,630			(1,560,049	)
Net change in unrealized appreciation (depreciation) of investments and translation of assets and liabilities in foreign currency and futures		10,915,871			2,730,328

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		28,483,541			15,914,798


*Distributions to shareholders:*
Net investment income
Class A		N/A			N/A
Class B		N/A			N/A
Class C		N/A			N/A
Institutional Class		(14,853,116	)		(14,534,700	)
Net realized gain on sales of investments
Class A		N/A			N/A
Class B		N/A			N/A
Class C		N/A			N/A
Institutional Class		(544,272	)		(2,627,388	)
Return of Capital
Class A		N/A			N/A
Class B		N/A			N/A
Class C		N/A			N/A
Institutional Class		0			0

*Capital shares transactions:*
Proceeds from shares sold – Class A		N/A			N/A
Reinvestment of dividends – Class A		N/A			N/A
Cost of shares redeemed – Class A		N/A			N/A

NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – CLASS A		N/A			N/A

Proceeds from shares sold – Class B		N/A			N/A
Reinvestment of dividends – Class B		N/A			N/A
Cost of shares redeemed – Class B		N/A			N/A

NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – CLASS B		N/A			N/A

Proceeds from shares sold – Class C		N/A			N/A
Reinvestment of dividends – Class C		N/A			N/A
Cost of shares redeemed – Class C		N/A			N/A

NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – CLASS C		N/A			N/A

Proceeds from shares sold – Institutional Class		152,456,725			160,569,194
Reinvestment of dividends – Institutional Class		9,691,479			12,625,689
Cost of shares redeemed – Institutional Class		(138,595,946	)		(104,885,162	)

NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – INSTITUTIONAL CLASS		23,552,258			68,309,721

NET INCREASE (DECREASE) IN NET ASSETS		36,638,411			67,062,431


NET ASSETS:

ENDING NET ASSETS	$	372,821,909		$	336,183,498


*Shares issued and redeemed:*
Shares sold – Class A		N/A			N/A
Shares issued in reinvestment of dividends – Class A		N/A			N/A
Shares redeemed – Class A		N/A			N/A

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – CLASS A		N/A			N/A

Shares sold – Class B		N/A			N/A
Shares issued in reinvestment of dividends – Class B		N/A			N/A
Shares redeemed – Class B		N/A			N/A

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – CLASS B		N/A			N/A

Shares sold – Class C		N/A			N/A
Shares issued in reinvestment of dividends – Class C		N/A			N/A
Shares redeemed – Class C		N/A			N/A

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – CLASS C		N/A			N/A

Shares sold – Institutional Class		5,867,465			6,197,124
Shares issued in reinvestment of dividends – Institutional Class		373,001			489,740
Shares redeemed – Institutional Class		(5,327,578	)		(4,047,720	)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – INSTITUTIONAL CLASS		912,888			2,639,144

ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)	$	362,315		$	317,564

The accompanying notes are an integral part of these financial statements.

STATEMENTS OF CHANGES IN NET ASSETS		INCOME FUNDS

HIGH YIELD BOND(1)			INCOME						INCOME PLUS						INFLATION-PROTECTED BOND(3)
For the Period Ended May 31, 2003			For the Year Ended May 31, 2003			For the Year Ended May 31, 2002			For the Year Ended May 31, 2003			For the Year Ended May 31, 2002(2)			For the Period Ended May 31, 2003


$	0		$	528,678,589		$	601,472,077		$	74,275,824		$	49,924,235		$	0


	2,330,907			19,738,610			31,234,771			3,655,443			2,920,411			215,989
	82,308			21,242,996			(1,697,181	)		1,294,300			(1,297,383	)		150,394
	3,646,606			9,128,585			7,452,645			2,857,209			1,575,492			353,200

	6,059,821			50,110,191			36,990,235			7,806,952			3,198,520			719,583




	(2,073,590	)		(1,983,728	)		(1,687,240	)		(1,294,783	)		(857,096	)		(50,313	)
	(86,947	)		(793,545	)		(784,186	)		(2,601,541	)		(1,920,323	)		(52,029	)
	(82,856	)		N/A			N/A			(491,322	)		(215,376	)		(33,178	)
	N/A			(22,476,283	)		(32,022,216	)		N/A			N/A			(80,472	)

	0			0			0			0			0			0
	0			0			0			0			0			0
	0			N/A			N/A			0			0			0
	N/A			0			0			N/A			N/A			0

	0			0			0			0			0			0
	0			0			0			0			0			0
	0			N/A			N/A			0			0			0
	N/A			0			0			N/A			N/A			0

	115,922,758			23,188,899			20,153,677			6,476,108			10,127,660			5,484,166
	1,577,812			874,918			790,863			760,449			479,528			35,999
	(790,353	)		(21,861,447	)		(6,849,487	)		(7,517,426	)		(2,949,641	)		(526,549	)

	116,710,217			2,202,370			14,095,053			(280,869	)		7,657,547			4,993,616

	11,463,120			5,946,826			6,600,278			9,612,388			18,230,728			5,309,389
	50,745			625,425			642,473			1,660,110			1,236,975			42,560
	(130,182	)		(4,924,908	)		(3,910,245	)		(12,581,502	)		(7,035,548	)		(443,743	)

	11,383,683			1,647,343			3,332,506			(1,309,004	)		12,432,155			4,908,206

	12,451,764			N/A			N/A			5,387,432			4,810,808			4,419,241
	47,993			N/A			N/A			352,991			131,743			28,183
	(459,309	)		N/A			N/A			(2,569,065	)		(886,389	)		(105,661	)

	12,040,448			N/A			N/A			3,171,358			4,056,162			4,341,763

	N/A			44,364,999			80,545,850			N/A			N/A			8,944,836
	N/A			3,996,700			5,170,775			N/A			N/A			73,433
	N/A			(167,263,605	)		(178,434,265	)		N/A			N/A			(1,967,244	)

	N/A			(118,901,906	)		(92,717,640	)		N/A			N/A			7,051,025

	143,950,776			(90,195,558	)		(72,793,488	)		5,000,791			24,351,589			21,798,201




$	143,950,776		$	438,483,031		$	528,678,589		$	79,276,615		$	74,275,824		$	21,798,201



	11,610,230			2,433,768			2,133,109			595,193			939,680			555,206
	155,681			91,228			83,463			70,105			44,394			3,596
	(78,308	)		(2,286,137	)		(723,361	)		(691,507	)		(271,605	)		(52,265	)

	11,687,603			238,859			1,493,211			(26,209	)		712,469			506,537

	1,132,867			623,776			697,451			882,538			1,690,861			537,241
	4,954			65,302			67,876			153,038			114,434			4,264
	(12,847	)		(516,000	)		(413,501	)		(1,157,772	)		(648,276	)		(44,415	)

	1,124,974			173,078			351,826			(122,196	)		1,157,019			497,090

	1,228,093			N/A			N/A			494,424			446,316			446,441
	4,676			N/A			N/A			32,483			12,196			2,816
	(44,912	)		N/A			N/A			(236,674	)		(82,103	)		(10,794	)

	1,187,857			N/A			N/A			290,233			376,409			438,463

	N/A			4,666,203			8,520,114			N/A			N/A			903,853
	N/A			417,660			545,958			N/A			N/A			7,366
	N/A			(17,551,110	)		(18,881,891	)		N/A			N/A			(201,742	)

	N/A			(12,467,247	)		(9,815,819	)		N/A			N/A			709,477

$	88,204		$	(3,755,429	)	$	(1,784,005	)	$	(93,944	)	$	(62,326	)	$	8,266

INCOME FUNDS		STATEMENTS OF CHANGES IN NET ASSETS

	INTERMEDIATE GOVERNMENT INCOME
	For the Year Ended May 31, 2003			For the Year Ended May 31, 2002

INCREASE (DECREASE) IN NET ASSETS
Beginning net assets	$	722,432,671		$	669,351,983

OPERATIONS:
Net investment income (loss)		27,238,934			32,755,805
Net realized gain (loss) on sale of investments and foreign currency transactions and futures		19,827,143			8,826,732
Net change in unrealized appreciation (depreciation) of investments and translation of assets and liabilities in foreign currency and futures		25,160,640			7,895,807

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		72,226,717			49,478,344


*Distributions to shareholders:*
Net investment income
Class A		(9,956,336	)		(10,665,410	)
Class B		(3,344,402	)		(3,210,397	)
Class C		(1,151,989	)		(662,547	)
Institutional Class		(24,785,676	)		(25,118,674	)
Net realized gain on sales of investments
Class A		0			0
Class B		0			0
Class C		0			0
Institutional Class		0			0
Return of Capital
Class A		0			0
Class B		0			0
Class C		0			0
Institutional Class		0			0

*Capital shares transactions:*
Proceeds from shares sold – Class A		90,727,004			72,051,233
Reinvestment of dividends – Class A		6,723,551			7,309,504
Cost of shares redeemed – Class A		(105,112,968	)		(72,790,346	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – CLASS A		(7,662,413	)		6,570,391

Proceeds from shares sold – Class B		30,307,778			22,257,103
Reinvestment of dividends – Class B		2,539,004			2,438,842
Cost of shares redeemed – Class B		(22,320,283	)		(19,755,893	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – CLASS B		10,526,499			4,940,052

Proceeds from shares sold – Class C		23,266,806			15,771,078
Reinvestment of dividends – Class C		817,502			430,415
Cost of shares redeemed – Class C		(8,999,790	)		(6,513,202	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – CLASS C		15,084,518			9,688,291

Proceeds from shares sold – Institutional Class		155,799,020			115,424,132
Reinvestment of dividends – Institutional Class		4,726,927			4,249,892
Cost of shares redeemed – Institutional Class		(150,546,753	)		(97,613,386	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS – INSTITUTIONAL CLASS		9,979,194			22,060,638

NET INCREASE (DECREASE) IN NET ASSETS		60,916,112			53,080,688


NET ASSETS:

ENDING NET ASSETS	$	783,348,783		$	722,432,671


*Shares Issued and Redeemed:*
Shares sold – Class A		7,874,532			6,412,956
Shares issued in reinvestment of dividends – Class A		584,057			652,894
Shares redeemed – Class A		(9,124,171	)		(6,475,906	)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – CLASS A		(665,582	)		589,944

Shares sold – Class B		2,636,124			1,975,670
Shares issued in reinvestment of dividends – Class B		220,798			217,974
Shares redeemed – Class B		(1,938,231	)		(1,760,006	)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – CLASS B		918,691			433,638

Shares sold – Class C		2,021,125			1,401,708
Shares issued in reinvestment of dividends – Class C		71,366			38,521
Shares redeemed – Class C		(782,751	)		(583,661	)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – CLASS C		1,309,740			856,568

Shares sold – Institutional Class		13,502,645			10,267,340
Shares issued in reinvestment of dividends – Institutional Class		410,296			379,485
Shares redeemed – Institutional Class		(13,051,794	)		(8,691,960	)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING – INSTITUTIONAL CLASS		861,147			1,954,865

ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)	$	(11,879,975	)	$	(4,575,824	)

The accompanying notes are an integral part of these financial statements.

STATEMENTS OF CHANGES IN NET ASSETS		INCOME FUNDS

LIMITED TERM GOVERNMENT INCOME						STABLE INCOME						TACTICAL MATURITY BOND
For the Year Ended May 31, 2003			For the Year Ended May 31, 2002 (4)			For the Year Ended May 31, 2003			For the Year Ended May 31, 2002			For the Year Ended May 31, 2003			For the Period Ended May 31, 2002 (5)


$	219,980,394		$	160,167,028		$	404,128,857		$	227,568,508		$	6,890,176		$	0


	8,489,301			9,021,183			13,074,462			10,609,044			151,347			141,729
	5,428,266			1,274,351			885,402			(778,849	)		(55,136	)		(318,023	)

	3,242,803			2,028,988			2,264,082			940,550			79,042			7,777

	17,160,370			12,324,522			16,223,946			10,770,745			175,253			(168,517	)




	(2,578,045	)		(2,289,206	)		(2,854,958	)		(1,791,350	)		N/A			N/A
	(862,943	)		(518,137	)		(573,771	)		(349,939	)		N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A
	(5,120,630	)		(6,201,634	)		(9,841,251	)		(8,362,640	)		(148,901	)		(139,394	)

	0			0			0			0			N/A			N/A
	0			0			0			0			N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A
	0			0			0			0			0			0

	0			0			(44,742	)		0			N/A			N/A
	0			0			(8,992	)		0			N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A
	0			0			(154,230	)		0			0			0

	64,100,924			85,958,503			168,485,145			90,332,371			N/A			N/A
	1,300,650			1,203,074			2,537,808			1,555,069			N/A			N/A
	(63,045,478	)		(51,721,309	)		(76,013,344	)		(31,152,056	)		N/A			N/A

	2,356,096			35,440,268			95,009,609			60,735,384			N/A			N/A

	30,705,436			9,855,122			37,156,621			15,923,218			N/A			N/A
	688,878			411,545			516,274			299,398			N/A			N/A
	(7,917,234	)		(3,154,218	)		(10,106,040	)		(3,502,030	)		N/A			N/A

	23,477,080			7,112,449			27,566,855			12,720,586			N/A			N/A

	N/A			N/A			N/A			N/A			N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A

	N/A			N/A			N/A			N/A			N/A			N/A

	52,683,041			57,525,849			365,926,534			232,785,910			12,351,985			14,421,121
	1,790,919			2,055,607			5,791,449			5,962,772			122,504			106,988
	(51,631,982	)		(45,636,352	)		(186,104,330	)		(135,911,119	)		(10,618,224	)		(7,330,022	)


	2,841,978			13,945,104			185,613,653			102,837,563			1,856,265			7,198,087

	37,273,906			59,813,366			310,936,119			176,560,349			1,882,617			6,890,176




$	257,254,300		$	219,980,394		$	715,064,976		$	404,128,857		$	8,772,793		$	6,890,176



	6,242,229			8,572,458			16,173,494			8,672,918			N/A			N/A
	126,483			120,216			243,822			149,933			N/A			N/A
	(6,139,796	)		(5,175,471	)		(7,296,600	)		(3,000,114	)		N/A			N/A

	228,916			3,517,203			9,120,716			5,822,737			N/A			N/A

	2,991,562			983,503			3,570,548			1,533,165			N/A			N/A
	66,899			41,105			49,667			28,898			N/A			N/A
	(769,153	)		(315,249	)		(971,133	)		(337,418	)		N/A			N/A

	2,289,308			709,359			2,649,082			1,224,645			N/A			N/A

	N/A			N/A			N/A			N/A			N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A
	N/A			N/A			N/A			N/A			N/A			N/A

	N/A			N/A			N/A			N/A			N/A			N/A

	5,230,043			5,873,817			35,118,485			22,377,480			1,266,508			1,442,412
	177,521			209,203			556,354			574,027			12,569			10,807
	(5,131,817	)		(4,656,146	)		(17,864,067	)		(13,059,973	)		(1,092,824	)		(747,868	)

	275,747			1,426,874			17,810,772			9,891,534			186,253			705,351

$	(65,137	)	$	7,180		$	(29	)	$	195,489		$	4,888		$	2,335

INCOME FUNDS		NOTES TO STATEMENTS OF CHANGES IN NET ASSETS

NOTES TO STATEMENTS OF CHANGES IN NET ASSETS


(1)		The Fund commenced operations on November 29, 2002.

(2)		“Proceeds from shares sold” included $5,645,884 for Class A, and “Shares sold” includes 526,101 for for Class A as a result of the consolidation of the Wells Fargo Corporate Bond Fund. “Proceeds from shares sold” included $11,299,183 for Class B, and “Shares sold” includes 1,052,359 for Class B as a result of the consolidation of the Wells Fargo Corporate Bond Fund. Proceeds from shares sold included $2,506,976 for Class C, and “Shares sold” includes 233,533 for Class C as a result of the consolidation of the Wells Fargo Corporate Bond Fund.

(3)		The Fund commenced operations on February 28, 2003.

(4)		“Proceeds from shares sold” includes $43,508,333 for Class A, and “shares sold” includes 4,334,441 for Class A as a result of the Wells Fargo Varibale Rate Government Fund.

(5)		The Fund commenced operations on November 28, 2001.

The accompanying notes are an integral part of these financial statements.

This page is intentionally left blank —

INCOME FUNDS		FINANCIAL HIGHLIGHTS

	Beginning Net Asset Value Per Share		Net Investment Income (Loss)	Net Realized and Unrealized Gain (Loss) on Investments		Dividends From Net Investment Income		Distributions From Net Realized Gains		Return of Capital


DIVERSIFIED BOND FUND

INSTITUTIONAL SHARES
June 1, 2002 to May 31, 2003	$	25.63	1.06	0.97		(1.05	)	(0.04	)	0
June 1, 2001 to May 31, 2002	$	25.68	1.21	0.16		(1.20	)	(0.22	)	0
June 1, 2000 to May 31, 2001	$	25.22	1.43	1.44		(2.41	)	0		0
June 1, 1999 to May 31, 2000	$	26.11	1.43	(0.63	)	(1.16	)	(0.53	)	0
June 1, 1998 to May 31, 1999	$	27.03	1.34	(0.17	)	(1.43	)	(0.66	)	0

HIGH YIELD BOND FUND


A SHARES
November 29, 2002⁽⁴⁾ to May 31, 2003	$	10.00	0.26	0.27		(0.25	)	0		0

B SHARES
November 29, 2002⁽⁴⁾ to May 31, 2003	$	10.00	0.22	0.28		(0.22	)	0		0

C SHARES
November 29, 2002⁽⁴⁾ to May 31, 2003	$	10.00	0.22	0.29		(0.22	)	0		0

INCOME FUND


A SHARES
June 1, 2002 to May 31, 2003	$	9.36	0.37	0.61		(0.48	)	0		0
June 1, 2001 to May 31, 2002	$	9.33	0.50	0.07		(0.54	)	0		0
June 1, 2000 to May 31, 2001	$	8.86	0.57	0.47		(0.57	)	0		0
June 1, 1999 to May 31, 2000	$	9.48	0.59	(0.62	)	(0.59	)	0		0
June 1, 1998 to May 31, 1999	$	9.79	0.59	(0.31	)	(0.59	)	0		0

B SHARES
June 1, 2002 to May 31, 2003	$	9.34	0.30	0.62		(0.41	)	0		0
June 1, 2001 to May 31, 2002	$	9.32	0.42	0.07		(0.47	)	0		0
June 1, 2000 to May 31, 2001	$	8.84	0.50	0.48		(0.50	)	0		0
June 1, 1999 to May 31, 2000	$	9.46	0.53	(0.62	)	(0.53	)	0		0
June 1, 1998 to May 31, 1999	$	9.77	0.52	(0.31	)	(0.52	)	0		0

INSTITUTIONAL SHARES
June 1, 2002 to May 31, 2003	$	9.35	0.37	0.64		(0.51	)	0		0
June 1, 2001 to May 31, 2002	$	9.32	0.51	0.09		(0.57	)	0		0
June 1, 2000 to May 31, 2001	$	8.85	0.60	0.47		(0.60	)	0		0
June 1, 1999 to May 31, 2000	$	9.47	0.61	(0.62	)	(0.61	)	0		0
June 1, 1998 to May 31, 1999	$	9.78	0.59	(0.31	)	(0.59	)	0		0

INCOME PLUS FUND


A SHARES
June 1, 2002 to May 31, 2003	$	10.81	0.59	0.61		(0.70	)	0		0
June 1, 2001 to May 31, 2002	$	10.80	0.66	0.02		(0.67	)	0		0
June 1, 2000 to May 31, 2001	$	10.60	0.72	0.31		(0.83	)	0		0
July 1, 1999⁽³⁾ to May 31, 2000	$	12.04	0.79	(1.44	)	(0.79	)	0		0
July 13, 1998⁽⁴⁾ to June 30, 1999	$	12.50	0.77	(0.46	)	(0.77	)	0		0

B SHARES
June 1, 2002 to May 31, 2003	$	10.82	0.50	0.60		(0.61	)	0		0
June 1, 2001 to May 31, 2002	$	10.80	0.58	0.03		(0.59	)	0		0
June 1, 2000 to May 31, 2001	$	10.61	0.65	0.29		(0.75	)	0		0
July 1, 1999⁽³⁾ to May 31, 2000	$	12.05	0.72	(1.44	)	(0.72	)	0		0
July 13, 1998⁽⁴⁾ to June 30, 1999	$	12.50	0.68	(0.45	)	(0.68	)	0		0

C SHARES
June 1, 2002 to May 31, 2003	$	10.82	0.52	0.58		(0.61	)	0		0
June 1, 2001 to May 31, 2002	$	10.80	0.58	0.03		(0.59	)	0		0
June 1, 2000 to May 31, 2001	$	10.61	0.65	0.29		(0.75	)	0		0
July 1, 1999⁽³⁾ to May 31, 2000	$	12.05	0.72	(1.44	)	(0.72	)	0		0
July 13, 1998⁽⁴⁾ to June 30, 1999	$	12.50	0.68	(0.45	)	(0.68	)	0		0

INFLATION-PROTECTED BOND FUND


A SHARES
February 28, 2003⁽⁴⁾ to May 31, 2003	$	10.00	0.15	0.14		(0.15	)	0		0

B SHARES
February 28, 2003⁽⁴⁾ to May 31, 2003	$	10.00	0.13	0.13		(0.13	)	0		0

C SHARES
February 28, 2003⁽⁴⁾ to May 31, 2003	$	10.00	0.13	0.13		(0.13	)	0		0

INSTITUTIONAL SHARES
February 28, 2003⁽⁴⁾ to May 31, 2003	$	10.00	0.16	0.13		(0.16	)	0		0

The accompanying notes are an integral part of these financial statements.

FINANCIAL HIGHLIGHTS		INCOME FUNDS

Ending Net Asset Value Per Share		Ratio to Average Net Assets (Annualized)						Total Return⁽²⁾		Portfolio Turnover Rate		Net Assets at End of Period (000’s omitted)
Ending Net Asset Value Per Share		Net Investment Income (Loss)		Net Expenses		Gross Expenses⁽¹⁾		Total Return⁽²⁾		Portfolio Turnover Rate		Net Assets at End of Period (000’s omitted)






$	26.57	4.08	%	0.70	%⁽⁵⁾	0.89	%⁽⁵⁾	8.11	%	67	%⁽⁷⁾	$	372,822
$	25.63	4.74	%	0.70	%⁽⁵⁾	0.87	%⁽⁵⁾	5.44	%	93	%⁽⁷⁾	$	336,184
$	25.68	5.75	%	0.70	%⁽⁵⁾	0.83	%⁽⁵⁾	11.74	%	113	%⁽⁷⁾	$	269,121
$	25.22	5.80	%	0.70	%⁽⁵⁾	0.92	%⁽⁵⁾	3.22	%	68	%⁽⁷⁾	$	190,283
$	26.11	5.58	%	0.70	%⁽⁵⁾	1.07	%⁽⁵⁾	4.15	%	77	%⁽⁷⁾	$	179,133





$	10.28	5.86	%	1.15	%	1.32	%	5.40	%	29	%	$	120,168


$	10.28	6.49	%	1.90	%	2.13	%	5.05	%	29	%	$	11,563


$	10.29	6.53	%	1.90	%	2.15	%	5.12	%	29	%	$	12,220





$	9.86	3.88	%	1.00	%	1.07	%	10.79	%	217	%	$	41,612
$	9.36	5.21	%	1.00	%	1.09	%	6.23	%	101	%	$	37,234
$	9.33	6.18	%	1.00	%	1.10	%	12.01	%	109	%	$	23,196
$	8.86	6.50	%	0.90	%	1.05	%	(0.23	)%	124	%	$	16,895
$	9.48	5.98	%	0.75	%	1.08	%	2.81	%	202	%	$	13,731


$	9.85	3.12	%	1.75	%	1.89	%	10.09	%	217	%	$	19,311
$	9.34	4.44	%	1.75	%	2.01	%	5.33	%	101	%	$	16,693
$	9.32	5.39	%	1.75	%	1.99	%	11.30	%	109	%	$	13,368
$	8.84	5.74	%	1.65	%	1.93	%	(1.00	)%	124	%	$	8,611
$	9.46	5.22	%	1.50	%	2.13	%	2.03	%	202	%	$	7,726


$	9.85	4.17	%	0.75	%	0.79	%	11.08	%	217	%	$	377,560
$	9.35	5.46	%	0.75	%	0.75	%	6.50	%	101	%	$	474,752
$	9.32	6.42	%	0.75	%	0.76	%	12.29	%	109	%	$	564,908
$	8.85	6.65	%	0.75	%	0.82	%	(0.10	)%	124	%	$	369,719
$	9.47	6.00	%	0.75	%	0.92	%	2.81	%	202	%	$	348,472





$	11.31	5.42	%	1.00	%	1.32	%	11.53	%	130	%	$	20,815
$	10.81	6.05	%	1.10	%	1.47	%	6.48	%	63	%	$	20,188
$	10.80	6.97	%	1.10	%	1.44	%	10.06	%	63	%	$	12,468
$	10.60	7.56	%	1.08	%	1.41	%	(5.56	)%	95	%	$	8,371
$	12.04	6.95	%	0.66	%	1.62	%	2.52	%	176	%	$	11,223


$	11.31	4.68	%	1.75	%	2.12	%	10.60	%	130	%	$	47,516
$	10.82	5.29	%	1.85	%	2.32	%	5.78	%	63	%	$	46,760
$	10.80	6.26	%	1.85	%	2.21	%	9.14	%	63	%	$	34,203
$	10.61	6.77	%	1.86	%	2.18	%	(6.19	)%	95	%	$	28,336
$	12.05	6.25	%	1.50	%	2.14	%	1.87	%	176	%	$	36,892


$	11.31	4.63	%	1.75	%	2.07	%	10.60	%	130	%	$	10,945
$	10.82	5.31	%	1.85	%	2.34	%	5.78	%	63	%	$	7,328
$	10.80	6.26	%	1.85	%	2.27	%	9.14	%	63	%	$	3,253
$	10.61	6.80	%	1.83	%	2.27	%	(6.19	)%	95	%	$	2,550
$	12.05	6.23	%	1.47	%	2.49	%	1.87	%	176	%	$	3,037





$	10.14	8.55	%	0.90	%	1.82	%	2.94	%	115	%	$	5,136


$	10.13	7.33	%	1.65	%	2.72	%	2.65	%	115	%	$	5,034


$	10.13	7.81	%	1.65	%	2.65	%	2.65	%	115	%	$	4,441


$	10.13	7.70	%	0.65	%	1.85	%	2.90	%	115	%	$	7,188

INCOME FUNDS		FINANCIAL HIGHLIGHTS


	Beginning Net Asset Value Per Share		Net Investment Income (Loss)	Net Realized and Unrealized Gain (Loss) on Investments		Dividends From Net Investment Income		Distributions From Net Realized Gains	Return of Capital


INTERMEDIATE GOVERNMENT INCOME FUND

A SHARES
June 1, 2002 to May 31, 2003	$	11.19	0.41	0.68		(0.58	)	0	0
June 1, 2001 to May 31, 2002	$	11.02	0.51	0.28		(0.62	)	0	0
June 1, 2000 to May 31, 2001	$	10.56	0.66	0.47		(0.67	)	0	0
June 1, 1999 to May 31, 2000	$	11.04	0.64	(0.44	)	(0.68	)	0	0
June 1, 1998 to May 31, 1999	$	11.22	0.64	(0.17	)	(0.65	)	0	0

B SHARES
June 1, 2002 to May 31, 2003	$	11.18	0.33	0.67		(0.50	)	0	0
June 1, 2001 to May 31, 2002	$	11.01	0.43	0.28		(0.54	)	0	0
June 1, 2000 to May 31, 2001	$	10.55	0.58	0.47		(0.59	)	0	0
June 1, 1999 to May 31, 2000	$	11.04	0.62	(0.51	)	(0.60	)	0	0
June 1, 1998 to May 31, 1999	$	11.21	0.53	(0.13	)	(0.57	)	0	0

C SHARES
June 1, 2002 to May 31, 2003	$	11.17	0.39	0.61		(0.51	)	0	0
June 1, 2001 to May 31, 2002	$	11.01	0.46	0.24		(0.54	)	0	0
June 1, 2000 to May 31, 2001	$	10.55	0.58	0.47		(0.59	)	0	0
November 8, 1999(4) to May 31, 2000	$	10.86	0.32	(0.31	)	(0.32	)	0	0

INSTITUTIONAL SHARES
June 1, 2002 to May 31, 2003	$	11.19	0.44	0.68		(0.62	)	0	0
June 1, 2001 to May 31, 2002	$	11.02	0.54	0.28		(0.65	)	0	0
June 1, 2000 to May 31, 2001	$	10.56	0.69	0.47		(0.70	)	0	0
June 1, 1999 to May 31, 2000	$	11.05	0.70	(0.50	)	(0.69	)	0	0
June 1, 1998 to May 31, 1999	$	11.22	0.66	(0.18	)	(0.65	)	0	0

LIMITED TERM GOVERNMENT INCOME FUND


A SHARES
June 1, 2002 to May 31, 2003	$	10.03	0.35	0.39		(0.36	)	0	0
June 1, 2001 to May 31, 2002	$	9.83	0.45	0.20		(0.45	)	0	0
June 1, 2000 to May 31, 2001	$	9.44	0.57	0.39		(0.57	)	0	0
July 1, 1999⁽³⁾ to May 31, 2000	$	9.74	0.50	(0.30	)	(0.50	)	0	0
July 1, 1998 to June 30, 1999	$	9.97	0.57	(0.23	)	(0.57	)	0	0
April 1, 1998⁽⁶⁾ to June 30, 1998	$	9.95	0.13	0.02		(0.13	)	0	0

B SHARES
June 1, 2002 to May 31, 2003	$	10.03	0.28	0.38		(0.28	)	0	0
June 1, 2001 to May 31, 2002	$	9.83	0.38	0.20		(0.38	)	0	0
June 1, 2000 to May 31, 2001	$	9.44	0.50	0.39		(0.50	)	0	0
July 1, 1999⁽³⁾ to May 31, 2000	$	9.74	0.43	(0.30	)	(0.43	)	0	0
July 1, 1998 to June 30, 1999	$	9.97	0.50	(0.23	)	(0.50	)	0	0
June 15, 1998⁽⁴⁾ to June 30, 1998	$	10.03	0.02	(0.06	)	(0.02	)	0	0

INSTITUTIONAL SHARES
June 1, 2002 to May 31, 2003	$	9.84	0.38	0.37		(0.38	)	0	0
June 1, 2001 to May 31, 2002	$	9.64	0.47	0.20		(0.47	)	0	0
June 1, 2000 to May 31, 2001	$	9.26	0.59	0.38		(0.59	)	0	0
July 1, 1999⁽³⁾ to May 31, 2000	$	9.55	0.51	(0.29	)	(0.51	)	0	0
July 1, 1998 to June 30, 1999	$	9.78	0.56	(0.23	)	(0.56	)	0	0
April 1, 1998⁽⁶⁾ to June 30, 1998	$	9.76	0.13	0.02		(0.13	)	0	0

STABLE INCOME FUND


A SHARES
June 1, 2002 to May 31, 2003	$	10.38	0.25	0.06		(0.25	)	0	0	⁽⁸⁾
June 1, 2001 to May 31, 2002	$	10.36	0.34	0.02		(0.34	)	0	0
June 1, 2000 to May 31, 2001	$	10.15	0.57	0.22		(0.58	)	0	0
June 1, 1999 to May 31, 2000	$	10.26	0.54	(0.11	)	(0.54	)	0	0
June 1, 1998 to May 31, 1999	$	10.31	0.54	(0.06	)	(0.53	)	0	0

B SHARES
June 1, 2002 to May 31, 2003	$	10.37	0.17	0.06		(0.17	)	0	0	⁽⁸⁾
June 1, 2001 to May 31, 2002	$	10.35	0.28	0.01		(0.27	)	0	0
June 1, 2000 to May 31, 2001	$	10.14	0.49	0.23		(0.51	)	0	0
June 1, 1999 to May 31, 2000	$	10.26	0.46	(0.12	)	(0.46	)	0	0
June 1, 1998 to May 31, 1999	$	10.30	0.44	(0.04	)	(0.44	)	0	0

INSTITUTIONAL SHARES
June 1, 2002 to May 31, 2003	$	10.39	0.26	0.06		(0.27	)	0	0	⁽⁸⁾
June 1, 2001 to May 31, 2002	$	10.36	0.37	0.03		(0.37	)	0	0
June 1, 2000 to May 31, 2001	$	10.15	0.60	0.21		(0.60	)	0	0
June 1, 1999 to May 31, 2000	$	10.27	0.55	(0.12	)	(0.55	)	0	0
June 1, 1998 to May 31, 1999	$	10.30	0.52	(0.02	)	(0.53	)	0	0

TACTICAL MATURITY BOND FUND


INSTITUTIONAL SHARES
June 1, 2002 to May 31, 2003	$	9.77	0.18	0.06		(0.17	)	0	0
November 29, 2001⁽⁴⁾ to May 31, 2002	$	10.00	0.14	(0.23	)	(0.14	)	0	0

The accompanying notes are an integral part of these financial statements.

FINANCIAL HIGHLIGHTS		INCOME FUNDS

Ending Net Asset Value Per Share		Ratio To Average Net Assets (Annualized)						Total Return⁽²⁾		Portfolio Turnover Rate		Net Assets at End of Period (000’s omitted)
Ending Net Asset Value Per Share		Net Investment Income (Loss)		Net Expenses		Gross Expenses⁽¹⁾		Total Return⁽²⁾		Portfolio Turnover Rate		Net Assets at End of Period (000’s omitted)






$	11.70	3.57	%	0.95	%	1.13	%	9.95	%	139	%	$	196,203
$	11.19	4.57	%	0.96	%	1.16	%	7.34	%	102	%	$	195,062
$	11.02	6.06	%	0.96	%	1.22	%	10.94	%	57	%	$	185,638
$	10.56	6.29	%	0.94	%	1.16	%	1.92	%	139	%	$	193,615
$	11.04	5.76	%	0.68	%	0.87	%	4.21	%	124	%	$	18,594


$	11.68	2.72	%	1.70	%	1.86	%	9.08	%	139	%	$	80,989
$	11.18	3.81	%	1.71	%	1.82	%	6.55	%	102	%	$	67,256
$	11.01	5.30	%	1.71	%	1.84	%	10.12	%	57	%	$	61,482
$	10.55	5.55	%	1.68	%	1.83	%	1.06	%	139	%	$	51,495
$	11.04	5.01	%	1.43	%	1.91	%	3.53	%	124	%	$	8,540


$	11.66	2.68	%	1.70	%	1.79	%	9.11	%	139	%	$	34,133
$	11.17	3.79	%	1.71	%	1.78	%	6.48	%	102	%	$	18,078
$	11.01	5.28	%	1.71	%	1.85	%	10.16	%	57	%	$	8,386
$	10.55	5.54	%	1.71	%	1.90	%	1.07	%	139	%	$	4,348


$	11.69	3.74	%	0.69	%	0.77	%	10.20	%	139	%	$	472,024
$	11.19	4.85	%	0.68	%	0.71	%	7.63	%	102	%	$	442,037
$	11.02	6.34	%	0.68	%	0.74	%	11.25	%	57	%	$	413,846
$	10.56	6.43	%	0.68	%	0.75	%	1.94	%	139	%	$	385,299
$	11.05	5.77	%	0.68	%	0.72	%	4.30	%	124	%	$	420,305





$	10.41	3.40	%	0.95	%	1.09	%	7.46	%	155	%	$	74,167
$	10.03	4.50	%	0.96	%	1.15	%	6.74	%	127	%	$	69,188
$	9.83	5.84	%	0.96	%	1.19	%	10.38	%	126	%	$	33,192
$	9.44	5.62	%	0.96	%	1.21	%	2.08	%	80	%	$	29,928
$	9.74	5.66	%	0.96	%	1.21	%	3.37	%	116	%	$	42,956
$	9.97	5.36	%	0.96	%	1.24	%	1.54	%	12	%	$	38,149


$	10.41	2.59	%	1.70	%	1.84	%	6.64	%	155	%	$	42,524
$	10.03	3.75	%	1.71	%	1.89	%	5.94	%	127	%	$	18,007
$	9.83	5.08	%	1.71	%	1.91	%	9.56	%	126	%	$	10,666
$	9.44	4.89	%	1.69	%	1.96	%	1.39	%	80	%	$	8,864
$	9.74	4.95	%	1.66	%	1.99	%	2.65	%	116	%	$	9,643
$	9.97	5.08	%	1.66	%	1.97	%	(0.38	)%	12	%	$	7,514


$	10.21	3.73	%	0.69	%	0.83	%	7.74	%	155	%	$	140,563
$	9.84	4.82	%	0.68	%	0.78	%	7.08	%	127	%	$	132,786
$	9.64	6.13	%	0.68	%	0.80	%	10.66	%	126	%	$	116,309
$	9.26	5.87	%	0.72	%	0.90	%	2.34	%	80	%	$	127,344
$	9.55	5.72	%	0.91	%	1.08	%	3.38	%	116	%	$	79,789
$	9.78	5.44	%	0.91	%	1.08	%	1.56	%	12	%	$	90,146





$	10.44	2.32	%	0.82	%⁽⁵⁾	1.04	%⁽⁵⁾	3.01	%	45	%⁽⁷⁾	$	175,249
$	10.38	3.02	%	0.90	%⁽⁵⁾	1.04	%⁽⁵⁾	3.53	%	81	%⁽⁷⁾	$	79,555
$	10.36	5.44	%	0.90	%⁽⁵⁾	1.09	%⁽⁵⁾	7.98	%	37	%⁽⁷⁾	$	19,054
$	10.15	5.29	%	0.79	%⁽⁵⁾	0.96	%⁽⁵⁾	4.28	%	40	%⁽⁷⁾	$	8,912
$	10.26	5.11	%	0.65	%⁽⁵⁾	0.95	%⁽⁵⁾	4.74	%	29	%⁽⁷⁾	$	8,559


$	10.43	1.51	%	1.63	%⁽⁵⁾	1.81	%⁽⁵⁾	2.24	%	45	%⁽⁷⁾	$	48,045
$	10.37	2.41	%	1.65	%⁽⁵⁾	1.87	%⁽⁵⁾	2.79	%	81	%⁽⁷⁾	$	20,318
$	10.35	4.65	%	1.65	%⁽⁵⁾	2.00	%⁽⁵⁾	7.22	%	37	%⁽⁷⁾	$	7,598
$	10.14	4.54	%	1.54	%⁽⁵⁾	1.95	%⁽⁵⁾	3.40	%	40	%⁽⁷⁾	$	2,449
$	10.26	4.34	%	1.40	%⁽⁵⁾	2.15	%⁽⁵⁾	4.07	%	29	%⁽⁷⁾	$	2,387


$	10.44	2.51	%	0.65	%⁽⁵⁾	0.77	%⁽⁵⁾	3.13	%	45	%⁽⁷⁾	$	491,771
$	10.39	3.50	%	0.65	%⁽⁵⁾	0.80	%⁽⁵⁾	3.87	%	81	%⁽⁷⁾	$	304,256
$	10.36	5.78	%	0.65	%⁽⁵⁾	0.78	%⁽⁵⁾	8.25	%	37	%⁽⁷⁾	$	200,917
$	10.15	5.44	%	0.65	%⁽⁵⁾	0.77	%⁽⁵⁾	4.32	%	40	%⁽⁷⁾	$	191,358
$	10.27	5.10	%	0.65	%⁽⁵⁾	0.76	%⁽⁵⁾	4.95	%	29	%⁽⁷⁾	$	179,201





$	9.84	1.81	%	0.60	%⁽⁵⁾	1.54	%⁽⁵⁾	2.53	%	115	%⁽⁷⁾	$	8,773
$	9.77	2.85	%	0.60	%⁽⁵⁾	1.88	%⁽⁵⁾	(0.87	)%	145	%⁽⁷⁾	$	6,890

INCOME FUNDS		FINANCIAL HIGHLIGHTS

NOTES TO FINANCIAL HIGHLIGHTS


(1)		During each period, various fees and expenses were waived and reimbursed. The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements (Note 8).

(2)		Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized.

(3)		The Fund changed its fiscal year-end from June 30 to May 31.

(4)		Commencement of operations.

(5)		Includes expenses allocated from the Portfolio(s) in which the Fund invests.

(6)		The Fund changed its fiscal year-end from March 31 to June 30.

(7)		Portfolio turnover rate represents the activity from the Fund's investment in a master portfolio.

(8)		Amount rounds to less than $0.01 per share.

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS		INCOME FUNDS

1. ORGANIZATION

Wells Fargo Funds Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. The Trust commenced operations on November 8, 1999, and is currently comprised of 67 separate series. These financial statements present the Diversified Bond, High Yield Bond, Income, Income Plus, Inflation-Protected Bond, Intermediate Government Income, Limited Term Government Income, Stable Income, and Tactical Maturity Bond Funds (each, a “Fund”, collectively, the “Funds”), each a diversified series of the Trust.

The High Yield Bond, Income Plus, Inflation-Protected Bond and Intermediate Government Income Funds offer Class A, Class B, and Class C shares. In addition, the Inflation-Protected Bond and Intermediate Government Income Funds also offer Institutional Class shares. The Income, Limited Term Government Income, and Stable Income Funds offer Class A, Class B, and Institutional Class shares. The Diversified Bond and Tactical Maturity Bond Funds only offer Institutional Class shares. The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees, shareholder servicing fees and transfer agency fees. Shareholders of each class may also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Fund and earn income from the portfolio pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends are determined separately for each class based on income and expenses allocable to each class. Realized gains and losses are allocated to each class pro rata based on the net assets of each class on the date realized. No class has preferential dividend rights. Differences in per share dividend rates generally result from the relative weightings of pro rata income and from differences in separate class expenses, including distribution, shareholder servicing and transfer agency fees.

The Diversified Bond, Stable Income and Tactical Maturity Bond Funds are Funds which each seek to achieve their investment objectives by investing all of their respective investable assets in one or more separate diversified portfolios (each a “Master Portfolio”, collectively, the “Master Portfolios”) of Wells Fargo Master Trust (“Master Trust”) a registered, open-end management investment company. Each Master Portfolio directly acquires portfolio securities, and a Fund investing in a Master Portfolio acquires an indirect interest in those securities. The Funds account for their investment in the Master Portfolios as partnership investments and record daily their share of the Master Portfolio’s income, expenses and realized and unrealized gain and loss. The financial statements of the Master Portfolios are in this report and should be read in conjunction with the Funds’ financial statements.

On May 8, 2001, the Board of Trustees of the Trust approved an Agreement and Plan of Reorganization providing for the reorganization of the Wells Fargo Variable Rate Government Fund into the Wells Fargo Limited Term Government Income Fund of the Trust. Effective at the close of business on November 16, 2001, the Wells Fargo Limited Term Government Income Fund acquired all of the net assets of the Wells Fargo Variable Rate Government Fund. The Wells Fargo Variable Rate Government Fund exchanged its 4,740,035 shares (valued at $43,508,333) for 4,334,441 shares of the Wells Fargo Limited Term Government Income Fund. The net assets of the Wells Fargo Variable Rate Government Fund included unrealized appreciation of $372,874.

On November 6, 2001, the Board of Trustees of the Trust approved an Agreement and Plan of Reorganization providing for the reorganization of the Wells Fargo Corporate Bond Fund into the Wells Fargo Income Plus Fund of the Trust. Effective at the close of business on May 17, 2002, the Wells Fargo Income Plus Fund acquired all of the net assets of the Wells Fargo Corporate Bond Fund. The Wells Fargo Corporate Bond Fund Class A exchanged its 618,695 shares (valued at $5,645,884) for 526,101 Class A shares of the Wells Fargo Income Plus Fund. The Wells Fargo Corporate Bond Fund Class B exchanged its 1,237,884 shares (valued at $11,299,183) for 1,052,359 Class B shares of the Wells Fargo Income Plus Fund. The Wells Fargo Corporate Bond Fund Class C exchanged its 274,680 shares (valued at $2,506,976) for 233,533 Class C shares of the Wells Fargo Income Plus Fund. The net assets of the Wells Fargo Corporate Bond Fund included unrealized appreciation of $233,104.

2. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies which are consistently followed by the Trust in the preparation of its financial statements are in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for investment companies.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

INCOME FUNDS		NOTES TO FINANCIAL STATEMENTS

SECURITY VALUATION

Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on the Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price (“NOCP”), and if no NOCP is available, then at the last reported sales price. In the absence of any sale of such securities, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, valuations are determined daily by a pricing service approved by the Fund’s Board of Trustees. The service uses prices that reflect fair value as quoted by an independent pricing service or by dealers in these securities when, in the service’s judgment, these prices are readily available and are representative of the securities’ market values. For some securities, such prices are not readily available. The service generally prices these securities based on methods which may include considerations of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue; indications as to values from dealers in securities, trading characteristics and general market conditions. Securities denominated in foreign currencies are translated into U.S. dollars using the closing rates of exchange in effect on the day of valuation. Securities which cannot be valued by any of these methods are valued in good faith at fair value as determined by policies set by the Fund’s Board of Trustees.

Debt securities maturing in 60 days or less are valued at amortized cost. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Securities transactions are recorded on a trade date basis. Realized gains or losses are reported on the basis of identified cost of securities delivered. Interest income is accrued daily and bond discounts are accreted and premiums are amortized.

Non-cash dividends and interest, if any, are included in investment income at the fair market value of the securities received. Debt obligations may be placed on non-accrual status and related investment income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of income has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.

Dividend income is recognized on the ex-dividend date except for certain dividends from foreign securities which are recorded as soon as the Fund is informed of the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.

REPURCHASE AGREEMENTS

Each Fund may invest in repurchase agreements and may participate in pooled repurchase agreement transactions with other funds advised by Wells Fargo Funds Management, LLC. The repurchase agreements must be fully collateralized based on values that are marked to market daily. The collateral may be held by an agent bank under a tri-party agreement. It is the Funds’ custodian’s responsibility to value collateral daily and to take action to obtain additional collateral as necessary to maintain market value equal to or greater than the resale price. The repurchase agreements held by the Funds are collateralized by instruments such as U.S. Treasury, federal agency, or high-grade corporate obligations.

FOREIGN CURRENCY FORWARD CONTRACTS

The Income Plus Fund has entered into foreign currency forward contracts to hedge exposure to fluctuations in foreign currencies. A forward contract is an agreement between two counterparties for future delivery or receipt at a specified price. Fluctuations in the value of such contracts are recorded as unrealized gain or loss; realized gain or loss includes net gain or loss on contracts that have terminated by settlement or by the Fund entering into offsetting commitments. Risks of entering into forward contracts include certain market risks and the potential inability of the counterparty to meet the terms of the contract. As of May 31, 2003, the terms of the Income Plus Fund’s outstanding forward contracts were as follows:

Fund	Currency Amount to be Delivered	Type	Settle Date	Currency Amount to be Received		Net Unrealized Appreciation/ (Depreciation)
Income Plus	815,000	Euro	07/07/03	$	922,580	$(34,908)
	632,033	British Pound	08/08/03		1,030,315	(5,176)
	1,800,000	New Zealand Dollar	08/08/03		1,030,644	(585)

NOTES TO FINANCIAL STATEMENTS		INCOME FUNDS

SECURITY LOANS

The Funds may loan securities in return for securities and cash collateral, which is invested in various short-term fixed income securities. The Funds may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Fund also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest when the transaction is entered into. If the collateral falls to 100% it will be brought back to 102%. Gain or loss in the market price of the securities loaned that may occur during the term of the loan is reflected in the value of the Fund. The risks to the Fund from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund.

As of May 31, 2003, the cash collateral of each Fund was invested as follows:

Fund Name	Repurchase Agreements		Short- Term Securities		Mid-Term Securities		Money Market Fund		Total
Income Fund	22	%	62	%	12	%	4	%	100	%
Income Plus Fund	26	%	56	%	13	%	5	%	100	%
Intermediate Government Income Fund	44	%	0	%	56	%	0	%	100	%
Limited-Term Government Income Fund	38	%	0	%	62	%	0	%	100	%

As of May 31, 2003, the value of securities on loan and the value of the related collateral was as follows:

Fund	Securities		Collateral
Income Fund	$	164,876,259	$	166,263,829
Income Plus Fund*		9,612 815		9,571,243
Intermediate Government Income Fund		274,381,629		278,580,667
Limited Term Government Income Fund		54,867,498		55,620,718

Additional collateral was received on June 3, 2003.

DISTRIBUTIONS TO SHAREHOLDERS

Dividends to shareholders from net investment income are declared and distributed monthly, with the exception of the Income and Limited Term Government Income Funds, for which dividends from net investment income are declared daily and distributed monthly. Distributions to shareholders from net realized capital gains are declared and distributed at least annually. If the principal value of an inflation-protected debt security is adjusted downward due to deflation, amounts previously distributed in the taxable year may be characterized in some circumstances as return of capital. Estimates of inflation may be used in the determination of monthly income dividend rates.

Distributions are based on amounts calculated in accordance with the applicable federal income tax regulations, which may differ from GAAP. The timing and character of distributions made during the period from net investment income or net realized gains may also differ from their ultimate characterization for federal income tax purposes. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassifications.

INCOME FUNDS		NOTES TO FINANCIAL STATEMENTS

RECLASSIFICATION OF CAPITAL ACCOUNTS

On the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, reclassification adjustments were made as follows (Increase (Decrease)):

	Undistributed Net Investment Income		Undistributed Net Realized Gain/Loss			Paid-in Capital
Diversified Bond Fund	$	5,827	$	(142,439	)	$	136,612
High Yield Bond Fund		690		0			(690	)
Income Fund		3,543,522		(3,543,522	)		0
Income Plus Fund		700,585		(849,784	)		149,199
Inflation-Protected Bond Fund		8,269		0			(8,269	)
Intermediate Government Income Fund		4,695,318		(4,695,318	)		0
Limited Term Government Income Fund		0		4,090,349			(4,090,349	)
Stable Income Fund		0		2,799,227			(2,799,227	)
Tactical Maturity Bond Fund		107		(77	)		(30	)

WHEN-ISSUED TRANSACTION

The Funds record a when-issued transaction on the trade date and will segregate with the custodian qualifying assets having a value sufficient to make payment for the securities purchased. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.

MORTGAGE DOLLAR ROLL TRANSACTION

Each Fund may engage in mortgage dollar roll transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar roll transaction, a Fund sells a mortgage- backed security to a financial institution, such as a bank or broker-dealer and simultaneously agrees to repurchase a substantially similar (i.e., same type, coupon and maturity) security from the institution at a later date at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories. During the roll period, the Fund foregoes principal and interest paid on the securities. The Fund receives compensation from the interest earned on the cash proceeds of the initial sale and in the form of a fee, which is recorded as deferred income and amortized to income over the roll period, or alternatively, a lower price for the security upon its repurchase. Mortgage dollar rolls may be renewed without physical delivery of the securities subject to the contract.

FEDERAL INCOME TAXES

Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund of the Trust to continue to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under subchapter M of the Code, and to make distributions of substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required at May 31, 2003.

NOTES TO FINANCIAL STATEMENTS		INCOME FUNDS

The following Funds had estimated net capital loss carryforwards at May 31, 2003, which are available to offset future net realized capital gains:

Fund	Year Expires	Capital Loss Carryforwards
Diversified Bond Fund	2011	$	258,571
Income Fund	2007		8,499,673
	2007		1,007,919
	2008		3,879
	2008		11,139,881
	2008		1,224,117
	2009		1,017,826
Income Plus Fund	2006		234,156
	2007		31,798
	2007		881,276
	2008		1,142,744
	2008		546,883
	2009		3,631,688
	2009		163,187
	2010		1,439,682
	2011		484,627
Intermediate Government Income Fund	2004		5,492,768
	2005		1,603,624
	2006		44,683
	2007		8,447,151
	2007		351,674
	2008		17,842,339
	2008		149
Limited Term Government Income Fund	2004		753,400
	2006		1,835,884
	2007		676,044
	2007		2,040,910
	2008		1,334,044
	2008		87,972
	2009		471,758
Stable Income Fund	2004		208,200
	2004		226,204
	2005		16,722
	2005		95,977
	2006		95,212
	2007		106,433
	2008		134,663
	2008		50,735
	2009		88,159
	2011		623,902
Tactical Maturity Bond Fund	2011		330,514

INCOME FUNDS		NOTES TO FINANCIAL STATEMENTS

At May 31, 2003, the following Fund had a Post-October capital loss, which is treated as realized for tax purposes on the first day of the following fiscal year

Tactical Maturity Bond Fund

26,098

3. ADVISORY FEES

The Trust has entered into an advisory contract on behalf of the Funds with Wells Fargo Funds Management, LLC (“Funds Management”). The Funds’ adviser is responsible for implementing the investment policies and guidelines for the Funds, and for supervising the sub-advisers who are responsible for the day-to-day portfolio management of the Funds.

Pursuant to the contract on behalf of the Funds, Funds Management has agreed to provide the following Funds with daily portfolio management for which Funds Management is entitled to be paid a monthly advisory fee at the following annual rates:

Fund		% of Average Daily Net Assets
High Yield Bond Fund		0.60
Income Fund		0.50
Income Plus Fund		0.60
Inflation-Protected Bond Fund		0.50
Intermediate Government Income Fund		0.50
Limited Term Government Income Fund		0.50

The Diversified Bond Fund is invested in various Master Portfolios. Funds Management is entitled to receive an annual investment advisory fee of 0.25% of the Diversified Bond Fund’s average daily net assets for providing advisory services, including the determination of the asset allocation of the Fund’s investments in the various Master Portfolios. Funds Management also acts as adviser to the Stable Income Fund and the Tactical Maturity Bond Fund, but does not receive an advisory fee as long as the Stable Income Fund and the Tactical Maturity Bond Fund invest all (or substantially all) of their assets in a single Master Portfolio of Master Trust. Each of these Funds may withdraw its investment from its corresponding Master Portfolio(s) at any time if the Board of Trustees determines that it is in the best interests of the Fund to do so. Upon such redemption and subsequent investment in a portfolio of securities, Funds Management (and any corresponding sub-adviser) may receive an investment advisory fee for the direct management of those assets. If the redeemed assets are invested in one or more Master Portfolios, Funds Management (and any corresponding sub-adviser) does not receive any compensation. See note 3 to the Notes to Financial Statements of the Master Portfolios elsewhere in this report for a description of these advisory agreements.

Wells Capital Management Incorporated (“Wells Capital Management”), an affiliate of Funds Management, acts as investment sub-adviser to the Income, Income Plus, Intermediate Government Income, Inflation-Protected Bond and Limited Term Government Income Funds. Wells Capital Management is entitled to receive from Funds Management, as compensation for its sub-advisory services for each Fund except the Income Plus Fund, a fee at the annual rate of 0.15% of each Fund’s average daily net assets up to $400 million, 0.125% for the next $400 million and 0.10% of the Fund’s average daily net assets in excess of $800 million. For the Income Plus Fund, Wells Capital Management is entitled to receive from Funds Management, as compensation for its sub-advisory services, a fee at the annual rate of 0.20% of the Funds average daily net assets up to $400 million, 0.175% for the next $400 million and 0.15% of the Funds average daily net assets in excess of $800 million.

Sutter Advisors LLC (“Sutter”) acts as investment sub-adviser to the High Yield Bond Fund. Sutter is entitled to receive from Funds Management, as compensation for its sub-advisory services to the High Yield Bond Fund, a fee at the annual rate of 0.50% of the first $50 million of the Fund’s average daily net assets, 0.40% of the next $50 million in net assets, and 0.30% of net assets over $100 million.

4. DISTRIBUTION FEES

The Trust has adopted a Distribution Plan for Class B and C shares of the Funds pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are charged to the Class B and C shares and paid to Stephens, Inc. (“Stephens”) at an annual rate of 0.75% of average daily net assets. There are no distribution fees for the Funds’ Class A and Institutional Class shares. The distribution fees paid on behalf of the Funds for the year ended May 31, 2003 are disclosed on the Statement of Operations.

NOTES TO FINANCIAL STATEMENTS		INCOME FUNDS

5. ADMINISTRATION AND TRANSFER AGENT FEES

Through February 28, 2003, the Trust had entered into an Administration Agreement with Funds Management on behalf of the Funds. Under the Administration Agreement, Funds Management acted as administrator to the Funds and was entitled to receive, on a monthly basis, fees at the annual rate of 0.15% of each Fund’s average daily net assets.

The Trust had also entered into an agreement with Boston Financial Data Services, Inc. (“BFDS”) as the transfer agent for the Trust. Under the agreement, BFDS was entitled to receive from the Funds a per-account fee plus transaction fees, certain out-of-pocket costs and a complex based fee.

Effective March 1, 2003, the Trust has entered into a new Administration Agreement with Funds Management on behalf of the Funds. Under this Agreement, for providing administrative services, which now includes paying the Funds’ fees and expenses for services provided by the Funds’ transfer agent and various sub-transfer agents and omnibus account servicers and record-keepers out of the fees it receives as administrator, Funds Management is entitled to receive an annual fee of 0.33% of the average daily net assets of a Fund’s Class A, Class B and Class C shares and 0.25% of the average daily net assets of a Fund’s Institutional Class shares.

6. SHAREHOLDER SERVICING FEES

The Trust has also entered into contracts on behalf of the Funds with numerous shareholder servicing agents, whereby the Funds are charged an annual rate of 0.25% of average daily net assets for Class A, Class B, and Class C shares for these services. No fee is charged for Institutional Class shares.

The shareholder servicing fees paid on behalf of the Funds for the year ended May 31, 2003 were as follows:

Fund	Class A		Class B		Class C		Institutional Class
Diversified Bond Fund		N/A		N/A		N/A	$	0
High Yield Bond Fund	$	92,423	$	3,546	$	3,359		N/A
Income Fund		98,097		46,167		N/A		0
Income Plus Fund		50,536		114,940		21,438		N/A
Inflation-Protected Bond Fund		1,541		1,858		1,150		0
Intermediate Government Income Fund		493,770		193,034		64,931		0
Limited Term Government Income Fund		186,638		82,286		N/A		0
Stable Income Fund		307,664		90,257		N/A		0
Tactical Maturity Bond Fund		N/A		N/A		N/A		0

7. OTHER FEES AND TRANSACTIONS WITH AFFILIATES

Effective the first quarter of 2003, PFPC, Inc. (“PFPC”) serves as fund accountant for all of the Funds. PFPC is entitled to receive an annual asset based fee, an annual fixed fee of $20,000 from each Fund and is entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. Prior to PFPC, Forum Accounting Services, LLC served as fund accountant for all of the Funds, except the High Yield Bond Fund and the Inflation-Protected Bond Fund. For these services, Forum was entitled to receive a fixed monthly per fund fee, a basis point fee of 0.0025% of the average daily net assets of each Fund, and was reimbursed for all out of pocket expenses reasonably incurred in providing these services.

The Trust has entered into contracts on behalf of each Fund with Wells Fargo Bank Minnesota, N.A. (“Wells Fargo Bank, MN”), whereby Wells Fargo Bank, MN is responsible for providing custody services for the Funds. Pursuant to the contract, Wells Fargo Bank, MN is entitled to certain transaction charges plus a monthly fee for custody services at the annual rate of 0.02% of the average daily net assets of each Fund. In addition, Wells Fargo Bank, MN does not receive a custodial fee for any Fund that invests its assets in one or more Master Portfolios.

8. WAIVED FEES AND REIMBURSED EXPENSES

All amounts shown as waived fees or reimbursed expenses on the Statement of Operations, for the year ended May 31, 2003, were waived by Funds Management, first, from advisory fees, and then any remaining amounts consecutively from administration, custody and shareholder servicing fees collected.

INCOME FUNDS		NOTES TO FINANCIAL STATEMENTS

9. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, exclusive of short-term securities (securities with maturities of one year or less at purchase date) for each Fund for the year ended May 31, 2003, were as follows:

Fund	Purchases at Cost		Sales Proceeds
Diversified Bond Fund*	$	371,599,644	$	242,220,577
High Yield Bond Fund		146,495,036		18,340,884
Income Fund		1,016,576,618		1,041,007,631
Income Plus Fund		92,584,399		145,391,635
Inflation-Protected Bond Fund		34,362,391		15,090,855
Intermediate Government Income Fund		1,207,667,383		1,030,240,999
Limited Term Government Income Fund		423,324,181		360,354,719
Stable Income Fund*		737,305,266		296,928,426
Tactical Maturity Bond Fund*		683,037,755		264,232,808

These Funds do not hold investment securities directly. The Funds seek to achieve their investment objective by investing all of their investable assets in one or more Portfolios. Purchases and sales for the Funds normally would be based on the purchases and sales of a Fund’s investment in a Portfolio rather than the underlying securities in that Portfolio. Since the Fund has an indirect interest in the securities held in the Portfolio, the purchases and sales disclosed are calculated by aggregating the results of multiplying the Fund’s ownership percentage of the respective Portfolio by the corresponding Portfolio’s purchase and sales.

10. DISTRIBUTION TO SHAREHOLDERS

On June 24, 2003, the Funds listed below declared dividends per share as shown in the following chart. The dividend was paid on June 25, 2003, to shareholders of record on June 23, 2003.

Fund	Class A	Class B	Class C	Class I
Diversified Bond Fund	N/A	N/A	N/A	0.080510
Income Plus Fund	0.063020	0.056020	0.056020	N/A
Intermediate Government Income Fund	0.049580	0.042590	0.042850	0.051920
Stable Income Fund	0.016140	0.011010	N/A	0.017860
Tactical Maturity Bond Fund	N/A	N/A	N/A	0.017730

On June 30, 2003, the following Funds paid dividends as follows:

Fund	Class A	Class B	Class C	Class I
High Yield Bond Fund	0.061426	0.055020	0.055008	N/A
Income Fund	0.035757	0.029693	N/A	0.037791
Inflation-Protected Bond Fund	0.023264	0.017035	0.017034	0.025349
Limited Term Government Income Fund	0.022072	0.015671	N/A	0.024320

NOTES TO FINANCIAL STATEMENTS		INCOME FUNDS

The tax character of distributions paid during the years ended 5/31/2003 and 5/31/2002 was as follows:

Fund Name	Ordinary Income				Long-Term Capital Gain				Return of Capital				Total
Fund Name	2003		2002		2003		2002		2003		2002		2003		2002
Diversified Bond Fund	$	15,003,550	$	16,768,245	$	393,838	$	393,843	$	0	$	0	$	15,397,388	$	17,162,088
High Yield Bond Fund		2,243,393		0		0		0		0		0		2,243,393		0
Income Fund		25,253,556		34,493,642		0		0		0		0		25,253,556		34,493,642
Income Plus Fund		4,387,646		2,992,795		0		0		0		0		4,387,646		2,992,795
Inflation-Protected Bond Fund		215,992		0		0		0		0		0		215,992		0
Intermediate Government Income Fund		39,238,403		39,657,028		0		0		0		0		39,238,403		39,657,028
Limited Term Government Income Fund		8,561,618		9,008,977		0		0		0		0		8,561,618		9,008,977
Stable Income Fund		13,269,980		10,503,929		0		0		207,964		0		13,477,944		10,503,929
Tactical Maturity Bond Fund		148,901		139,394		0		0		0		0		148,901		139,394

As of May 31, 2003, the components of distributable earnings on a tax basis were as follows:

Fund Name	Undistributed Ordinary Income		Undistributed Long-Term Capital Gain		Unrealized Appreciation (Depreciation)		Capital Loss Carryforwards*			Total
Diversified Bond Fund	$	362,317	$	0	$	14,780,254	$	(258,571	)	$	14,884,000
High Yield Bond Fund		468,801		0		3,599,697		0			4,068,498
Income Fund		1,424,586		0		15,879,561		(22,893,295	)		(5,589,148	)
Income Plus Fund		180,299		0		3,706,666		(8,556,041	)		(4,669,076	)
Inflation-Protected Bond Fund		180,282		0		353,200		0			533,482
Intermediate Government Income Fund		892,557		0		27,629,065		(33,782,388	)		(5,260,766	)
Limited Term Government Income Fund		281,032		0		7,236,372		(7,200,012	)		317,392
Stable Income Fund		0		0		4,502,494		(1,646,207	)		2,856,287
Tactical Maturity Bond Fund		4,888		0		86,819		(356,612	)		(264,905	)

These amounts include the Post-October loss, which will reverse on the 1st day of the following fiscal year.

The difference between book-basis and tax-basis net unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and cost basis adjustments related to premium amortization (only for funds that have elected not to amortize premium for tax purposes).

10. BANK BORROWINGS

All of the funds in the Trust and Wells Fargo Variable Trust (excluding the money market funds) share in a revolving Credit Agreement with The Bank of New York, whereby the funds are permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. The agreement permits borrowings of up to $225 million, collectively. Interest is charged to each fund based on its borrowing at a rate equal to the Federal Funds Rate plus 0.40%. In addition, the funds pay a quarterly commitment fee equal to 0.1% per annum of the credit line. No borrowings under the agreement occurred during the year ended May 31, 2003.

TAX INFORMATION [UNAUDITED]

For the year ended May 31, 2003, the Wells Fargo Diversified Bond Fund designates $393,838 as a long term capital gain distribution pursuant to section 852(b)(3) of the Code.

INCOME FUNDS		NOTES TO FINANCIAL STATEMENTS

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS

WELLS FARGO FUNDS TRUST:

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the High Yield Bond Fund, Diversified Bond Fund, Income Fund, Income Plus Fund, Intermediate Government Income Fund, Limited Term Government Income Fund, Inflation-Protected Bond Fund, Stable Income Fund, and Tactical Maturity Bond Fund, nine of the funds constituting the Wells Fargo Funds Trust (collectively the “Funds”), as of May 31, 2003, and the related statements of operations, statements of changes in net assets and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2003, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned funds of Wells Fargo Funds Trust as of May 31, 2003, the results of their operations, changes in their net assets, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America.

LOGO

San Francisco, California

July 18, 2003

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Asset Backed Securities – 11.41%

1,500,000	Asset Securitization Corporation Series 1997-D4 Class A1C	7.42	%	04/14/2029	$	1,614,985

3,500,000	Banc One Insurance Trust	1.68		04/15/2008		3,498,319

3,000,000	Bankamerica Manufactured Housing Contract Series 1997-1 Class A8	6.73		06/10/2023		3,230,882

2,725,000	Chase Credit Card Master Trust Series 2001-3 Class C±	2.13		09/15/2006		2,717,855

5,000,000	Chase Funding Mortgage Loan 02/25/32	6.60		02/25/2032		5,494,950

3,500,000	Chase Funding Mtg 04/25/32	5.83		04/25/2032		3,677,152

2,700,000	Citibank Credit Card Issuance Trust Series 2001-C3 Class C3	6.65		05/15/2008		2,965,553

1,584,738	Contimortgage Home Equity Loan Trust Series 1997-4 Class A7	6.63		09/15/2016		1,613,456

4,970,000	Countrywide Asset-Backed Certificates Series 2000-1±	1.79		03/25/2031		4,962,554

923,100	Eqcc Home Equity Loan Trust Series 1996-2 Class A4	7.50		06/15/2021		925,375

2,859,297	Eqcc Home Equity Loan Trust Series 1997-2 Class A9	6.81		08/15/2028		2,923,825

507,062	GE Capital Mortgage Services Incorporated Series 1997-He2 Class A7	7.12		06/25/2027		529,606

3,762,942	Green Tree Financial Corporation Series 1997-7 Class A8	6.86		07/15/2029		4,011,807

3,115,000	Green Tree Home Equity Loan Trust Series 1999-A Class M1	6.92		08/15/2026		3,252,690

2,500,000	Green Tree Home Equity Loan Trust Series 1999-C Class M2	8.36		07/15/2030		2,736,350

641,917	Household Consumer Loan Trust Series 1997-1 Class A1±	1.44		03/15/2007		641,816

2,053,511	Household Consumer Loan Trust Series 1997-2 Class A1±	1.49		11/15/2007		2,053,501

4,500,000	Longbeach Mortgage	6.46		05/25/2032		4,981,360

1,350,260	Pass-Through Amortizing Credit Card Trust Series 2002-1A, Class A2Fl^±	2.67		06/18/2012		1,347,979

5,518,000	Rental Car Finance Corporation Series 1997-1 Class B3^	6.70		09/25/2007		5,739,461

4,500,000	Residential Funding Mortgage Securities Series 2002-H13 Class A6	5.98		08/25/2019		4,898,453

3,666,022	Saxon Asset Securities Trust 1999-2 Class Af6	6.42		03/25/2014		3,887,664

1,299,887	Van Kampen CLO I Limited Series^±	1.58		10/08/2007		1,280,389

2,000,000	World Omni Automobile Lease Securitization Series 2001-Aa Class B^±	2.23		07/20/2007		1,988,185

Total Asset Backed Securities (Cost $68,474,385)						70,974,166


Collateralized Mortgage Obligations – 5.21%

455,853	American Housing Trust Series V1 Class 1-I	9.15		05/25/2020		461,553

982,350	Bank Of America Mortgage Securities Series 2001-C Class B1±	6.19		07/25/2031		986,801

1,345,856	Bank Of America Mortgage Security Series 2001-E Class B1±	6.19		09/25/2031		1,364,656

2,236,465	Countrywide Funding Corporation Series 1994-2 Class A11	6.50		02/25/2009		2,245,768

2,699,472	Countrywide Mortgage Backed Securities Incorporated Series 1993-E Class A6	6.50		01/25/2024		2,709,918

756,955	Housing Securities Incorporated Series 1995-B Class A1A±	4.16		11/25/2028		760,427

346,851	LF Rothschild Mortgage Trust Series 2 Class Z	9.95		08/01/2017		408,713

4,750,000	Merrill Lynch Mortgage Investors Incorporated Series 1997-C1 Class A3	7.12		06/18/2029		5,397,863

4,000,000	Nationslink Funding Corporation	6.65		11/10/2030		4,336,380

1,199,524	Nationslink Funding Corporation Series 1999-Sl Class D	7.56		11/10/2030		1,337,884

2,878,542	Prudential Home Mortgage Securities Series 1993-57 Class A9	6.50		12/25/2023		2,882,860

1,385,000	Safeco Corporation	4.88		02/01/2010		1,472,737

5,437,508	Vendee Mortgage Trust Series 1992-2 Class G	7.25		02/15/2019		5,527,988

2,495,656	Washington Mutual Series 2002-Ar4 A8±	5.56		04/26/2032		2,520,222

Total Collateralized Mortgage Obligations (Cost $31,163,721)						32,413,770


Corporate Bonds & Notes – 36.64%

Apparel & Other Finished Products Made From Fabrics & Similar Materials – 0.34%

2,100,000	Tommy Hilfiger USA Incorporated	6.50		06/01/2003		2,100,000

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Business Improvement Revenue – 0.11%

650,000	Fiserv Incorporated^	4.00	%	04/15/2008	$	673,821


Business Services – 1.82%

1,500,000	Citigroup Incorporated	6.50		01/18/2011		1,768,994

2,300,000	First Data Corporation	5.80		12/15/2008		2,634,114

1,750,000	NCR Corporation^	7.13		06/15/2009		1,925,292

2,120,000	Thompson Corporation	6.20		01/05/2012		2,444,042

2,250,000	Time Warner Companies Incorporated	7.57		02/01/2024		2,545,736

						11,318,177


Chemicals And Allied Products – 2.48%

850,000	America Home Products (Wyeth)	6.70		03/15/2011		1,006,369

1,925,000	Athena Neuro Finance LLC	7.25		02/21/2008		1,549,625

2,000,000	Bristol Myers Squibb	5.75		10/01/2011		2,245,632

1,450,000	Dial Corporation	7.00		08/15/2006		1,644,815

2,000,000	Eastman Chemical	7.00		04/15/2012		2,330,190

1,900,000	Olin Corporation	9.13		12/15/2011		2,342,795

2,450,000	RPM International Incorporated	7.00		06/15/2005		2,588,420

1,625,000	Watson Pharmaceuticals Incorporated	7.13		05/15/2008		1,718,438

						15,426,283


Communications – 0.96%

2,000,000	Cox Enterprises Incorporated^	8.00		02/15/2007		2,309,372

1,495,000	US West Communications	5.63		11/15/2008		1,442,675

1,750,000	Viacom Incorporated	7.70		07/30/2010		2,190,722

						5,942,769


Depository Institutions – 6.62%

3,300,000	Associated Bancorp	6.75		08/15/2011		3,829,482

3,000,000	Bank One Capital IV±	2.84		09/01/2030		3,037,929

5,000,000	Bankamerica Capital III±	1.94		01/15/2027		4,539,480

2,250,000	BB&T Corporation	6.50		08/01/2011		2,664,873

5,000,000	Chase Capital±	1.98		08/01/2028		4,385,580

3,000,000	City National Bank	6.75		09/01/2011		3,457,386

1,750,000	Colonial Bank	9.38		06/01/2011		2,016,091

750,000	Corestates Capital Trust II^±	2.03		01/15/2027		684,059

3,200,000	First American Corporation	7.25		05/01/2006		3,671,661

2,000,000	First Union National Bank	7.80		08/18/2010		2,506,430

3,000,000	Firstar Bank NA	7.13		12/01/2009		3,648,534

1,440,000	Fleet Capital Trust ±	2.28		12/18/2028		1,313,608

1,750,000	Old Kent Financial Corporation	6.63		11/15/2005		1,936,107

1,425,000	US Bank N.A.	6.38		08/01/2011		1,678,208

1,500,000	Washington Mutual Bank	6.88		06/15/2011		1,791,315

						41,160,743


Eating And Drinking Places – 0.22%

1,325,000	Aramark Services Incorporated	6.75		08/01/2004		1,386,856

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Educational Services – 0.69%

3,750,000	Stanford University	6.16	%	04/30/2011	$	4,294,448


Electric, Gas, And Sanitary Services – 0.59%

2,000,000	Duke Energy Field Services	7.88		08/16/2010		2,403,920

1,134,146	Niagara Mohawk Power Series F	7.63		10/01/2005		1,271,842

						3,675,762


Electronic And Other Electrical Equipment & Components, Except Computer Equipment – 1.10%

2,500,000	General Electric Company	5.00		02/01/2013		2,670,035

1,700,000	Hyundai Semiconductor^	8.25		05/15/2004		1,432,248

2,709,000	Philips Electronics	6.75		08/15/2003		2,735,795

						6,838,078


Fabricated Metal Products, Except Machinery And Transportation Equipment – 0.22%

1,250,000	Masco Corporation	6.75		03/15/2006		1,395,320


Food And Kindred Products – 0.82%

850,000	Campbell Soup Company±	1.76		10/18/2003		851,115

2,000,000	Conagra Foods Incorporated	7.88		09/15/2010		2,521,368

1,500,000	General Mills Incorporated	6.00		02/15/2012		1,712,520

						5,085,003


Health Care – 0.09%

850,000	Healthsouth Corporation^^	7.63		06/01/2012		573,750


Health Services – 0.57%

2,800,000	AARP^	7.50		05/01/2031		3,541,698


Holding And Other Investment Offices – 1.41%

3,000,000	Manufacturers & Traders Trust Company	8.00		10/01/2010		3,736,110

1,300,000	Monumental Global Funding II^	6.05		01/19/2006		1,437,238

1,750,000	National City Bank	7.25		07/15/2010		2,116,828

2,500,000	Toll Road Investment Partnership II LP^@	7.09		02/15/2015		1,468,270

						8,758,446


Hotels, Rooming Houses, Camps, & Other Lodge Places – 0.20%

170,000	Marriott International Incorporated Series B	6.88		11/15/2005		184,835

1,000,000	MGM Incorporated	6.95		02/01/2005		1,042,500

						1,227,335


Industrial & Commercial Machinery & Computer Equipment – 1.17%

3,000,000	Applied Materials Incorporated	7.00		09/06/2005		3,320,874

600,000	Applied Materials Incorporated	6.70		09/06/2005		660,231

1,700,000	Pall Corporation^	6.00		08/01/2012		1,876,127

1,400,000	Solectron Corporation Series B	7.38		03/01/2006		1,400,000

						7,257,232

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Insurance Carriers – 6.12%

2,000,000	Allstate Financial Global Funding^	6.50	%	06/14/2011	$	2,274,022

1,500,000	Amerus Group Company	6.95		06/15/2005		1,533,083

2,000,000	AON Corporation	6.90		07/01/2004		2,089,016

1,000,000	Equitable Life Assurance Society^	6.95		12/01/2005		1,118,626

2,875,000	John Hancock Global Funding III^	7.90		07/02/2010		3,577,782

2,250,000	Lincoln National Corporation	7.25		05/15/2005		2,486,059

750,000	Lincoln National Corporation	6.20		12/15/2011		852,781

2,200,000	Markel Corporation	7.20		08/15/2007		2,462,682

2,825,000	Mass Mutual Life Insurance Company^	7.63		11/15/2023		3,572,701

2,450,000	Minnesota Life Insurance Company^	8.25		09/15/2025		3,082,551

3,000,000	Pacific Mutual Life Insurance Company^	7.90		12/30/2023		3,623,058

1,650,000	Protective Life US Funding^	5.88		08/15/2006		1,829,812

2,450,000	Prudential Insurance Company^	7.65		07/01/2007		2,835,544

2,100,000	Reinsurance Group of America^	7.25		04/01/2006		2,287,240

2,000,000	Reliastar Financial Corporation	8.00		10/30/2006		2,330,290

2,000,000	Unitrin Incorporated	5.75		07/01/2007		2,139,036

						38,094,283


Measuring, Analyzing, & Controlling Instruments: Photographic, Medical & Optical Goods – 0.98%

176,000	Bausch & Lomb Incorporated	6.75		12/15/2004		181,720

1,250,000	Bausch & Lomb, Incorporated	7.13		08/01/2028		1,184,375

2,250,000	Beckman Coulter Incorporated	6.88		11/15/2011		2,596,361

2,000,000	Raytheon Company	5.50		11/15/2012		2,152,486

						6,114,942


Metal Mining – 0.20%

1,200,000	Phelps Dodge Corporation	6.38		11/01/2004		1,230,928


Non-Depository Credit Institutions – 1.85%

3,600,000	Cargill Incorporated	8.35		02/12/2011		3,747,380

2,500,000	Ford Motor Credit Company	7.38		10/28/2009		2,603,283

1,700,000	GMAC	5.85		01/14/2009		1,723,632

3,075,000	Mellon Funding Corporation	7.50		06/15/2005		3,426,491

						11,500,786


Oil & Gas Extraction – 0.51%

1,300,000	Conoco Incorporated	6.35		04/15/2009		1,521,400

1,500,000	Northern Natural Gas^	5.38		10/31/2012		1,629,650

						3,151,050


Paper And Allied Products – 0.74%

1,100,000	Fort James Corporation	6.70		11/15/2003		1,105,500

1,750,000	International Paper Company	6.75		09/01/2011		2,047,392

1,250,000	MeadWestvaco Corporation	6.85		04/01/2012		1,460,076

						4,612,968

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Personal Services – 0.55%

1,770,000	Cendant Corporation	7.38	%	01/15/2013	$	2,057,947

1,200,000	Cintas Corporation^	6.00		06/01/2012		1,379,760

						3,437,707


Petroleum Refining And Related Industries – 0.40%

1,520,000	Coastal Corporation	6.50		05/15/2006		1,377,500

1,000,000	Marathon Oil Corporation	6.13		03/15/2012		1,131,003

						2,508,503


Primary Metal Industries – 0.39%

2,000,000	Alcoa Incorporated	7.38		08/01/2010		2,443,080


Printing, Publishing, And Allied Industries – 0.63%

475,000	American Greetings Corporation	6.10		08/01/2028		478,563

3,325,000	Scholastic Corporation	7.00		12/15/2003		3,420,175

						3,898,737


Security And Commodity Brokers, Dealers, Exchanges & Services – 1.00%

2,000,000	Merrill Lynch±	1.74		05/22/2006		2,006,406

2,500,000	Morgan Stanley Dean Witter	6.75		04/15/2011		2,943,760

1,250,000	Paine Webber Group Incorporated	6.90		08/15/2003		1,263,663

						6,213,829


Special Tax Revenue – 0.26%

1,500,000	Shurgard Storage Centers	5.88		03/15/2013		1,615,386


Stone, Clay, Glass, And Concrete Products – 0.30%

1,718,128	3M Employee Stock Ownership Plan^	5.62		07/15/2009		1,877,175


Technology – 0.41%

1,750,000	Thomas And Betts Corporation	6.63		05/07/2008		1,767,500

750,000	Thomas And Betts Corporation	7.25		06/01/2013		753,750

						2,521,250


Telecommunications – 0.39%

2,310,000	Sprint Capital Corporation	6.00		01/15/2007		2,434,172


Transportation By Air – 1.24%

1,159,661	Continental Airlines Incorporated Series 01-1	7.03		06/15/2011		818,129

1,932,195	Continental Airlines Incorporated Series 972A	7.15		06/30/2007		1,584,516

1,426,002	Continental Airlines Incorporated Series 974C	6.80		07/02/2007		931,500

645,332	Delta Air Lines Incorporated	7.78		01/02/2012		487,262

2,669,011	Fedex Corporation	7.52		01/15/2018		3,020,840

883,582	Northwest Airlines Incorporated Series 991A	6.81		02/01/2020		730,183

1,000,000	United Air Lines Incorporated Series 01-1	6.83		09/01/2008		167,691

						7,740,122

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Transportation Equipment – 0.96%

1,750,000	Daimler Chrysler	7.75	%	01/18/2011	$	2,114,182

2,000,000	Honeywell International	6.13		11/01/2011		2,297,772

1,500,000	Navistar International Corporation	9.38		06/01/2006		1,545,000

						5,956,954


US Corporate – 0.30%

1,585,000	Transocean Offshore Region	6.63		04/15/2011		1,852,496


Total Corporate Bonds & Notes (Cost $213,569,533)						227,860,090


Municipal Bonds & Notes – 3.59%

2,300,000	Bridgeport CT GO Taxable Pension Bonds FGIC Insured	7.33		01/15/2007		2,682,605

3,805,000	Hudson County NJ Improvement Authority Facilities Leasing Revenue	7.40		12/01/2025		4,817,701

890,000	La Crosse WI GO Series B	5.00		12/01/2009		967,581

940,000	La Crosse WI GO Series B	5.20		12/01/2010		1,015,811

2,000,000	Minneapolis, St Paul MN Metropolitan Airports Commission Series 15	6.05		01/01/2012		2,304,820

3,035,000	Minneapolis MN GO Series A	6.00		02/01/2026		3,180,832

1,000,000	Stratford CT GO FGIC Insured	6.28		02/15/2009		1,161,680

5,000,000	Student Loan Finance Association Washington Education Ln Rev±	1.40		06/01/2038		5,000,000

1,000,000	Texas State GO	7.15		12/01/2009		1,214,530

Total Municipal Bonds & Notes (Cost $20,100,833)						22,345,560


US Government Agency Securities – 36.59%

Federal Home Loan Mortgage Corporation – 18.22%

137,540	FHLMC # 846367±	4.60		04/01/2029		142,374

5,232,000	FHLMC Corporation #2399	6.50		10/15/2025		5,282,332

77,242	FHLMC # 410425±	4.54		09/01/2026		79,444

49,271	FHLMC # 410464±	4.25		11/01/2026		50,871

402,959	FHLMC # 606279±	3.77		02/01/2015		411,102

5,008,960	FHLMC Series 1675 Class KZ	6.50		02/15/2024		5,440,837

6,480,451	FHLMC Series 2117 Class MK	6.00		02/15/2011		6,579,734

4,463,868	FHLMC Series 2146 Class VB	6.00		12/15/2014		4,618,145

3,753,634	FHLMC Series 2218 Class B	6.00		11/15/2027		3,796,262

5,930,000	FHLMC Series 2358 Class PD	6.00		09/15/2016		6,385,322

10,000,000	FHLMC Series 2360 Class PE	6.00		11/15/2013		10,274,094

12,500,000	FHLMC Series 2363 Class PF	6.00		09/15/2016		13,440,008

16,300,000	FHLMC Series 2416 Class PE	6.00		10/15/2021		17,460,964

8,000,000	FHLMC Series 2416 Class PF	6.00		08/15/2018		8,380,078

2,000,000	FHLMC Series 2439 Class LG	6.00		09/15/2030		2,086,101

15,000,000	FHLMC Series Class 2426 GJ	6.00		03/15/2032		15,894,836

5,710,527	FHLMC Series T-20 Class A6	7.49		09/25/2029		6,203,207

3,441,236	FHLMC	6.00		06/01/2017		3,571,356

3,113,039	FHLMC	6.00		07/01/2017		3,230,750

						113,327,817

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Federal National Mortgage Association – 9.88%

2,114,117	FNMA Grantor Trust	7.00	%	12/25/2041	$	2,301,745

6,090,776	FNMA	6.50		11/25/2042		6,370,740

7,500,000	FNMA	5.50		07/25/2042		7,833,825

2,621,223	FNMA	5.50		04/01/2018		2,722,512

4,931,487	FNMA	5.50		02/01/2018		5,122,050

5,000,000	FNMA M1B	6.12		05/25/2013		5,537,843

44,244	FNMA #342042±	4.35		06/01/2025		45,426

94,981	FNMA #344689±	4.03		11/01/2025		97,501

90,727	FNMA #344692±	3.97		10/01/2025		92,799

92,317	FNMA #347712±	4.63		06/01/2026		95,581

4,689,276	FNMA #375168	7.13		06/01/2004		4,818,323

2,468,223	FNMA #375462	6.61		11/01/2007		2,818,523

4,705,436	FNMA #380581	6.18		08/01/2008		5,360,173

3,914,918	FNMA #383017	6.49		01/01/2008		4,449,806

1,366,617	FNMA #73272	6.48		12/01/2005		1,484,362

3,258,812	FNMA #73919	6.80		01/01/2004		3,278,626

1,438,999	FNMA #557072±	3.26		06/01/2040		1,474,122

67,535	FNMA Series 1988-5 Z	9.20		03/25/2018		74,007

1,935,464	FNMA Series 1994-30 Class M	6.50		02/25/2024		1,951,605

2,000,000	FNMA Series 1998-M6 Class A2	6.32		08/15/2008		2,206,032

3,303,439	FNMA Series 2001-5 Class OR	6.00		01/25/2012		3,320,722

						61,456,322


Government National Mortgage Association – 8.48%

830	GNMA #525830	7.60		12/15/2041		983

34,723	GNMA #531964	7.72		11/15/2003		41,649

2,917,994	GNMA #780626	7.00		08/15/2027		3,074,836

475,804	GNMA #473917	7.00		04/15/2028		501,379

97,422	GNMA #525459	7.25		01/15/2004		114,115

461,910	GNMA #525459	7.25		01/15/2004		541,058

689,436	GNMA #531435	7.00		03/15/2004		799,585

4,919,301	GNMA Series 37 Class H	6.00		01/17/2021		5,006,887

35,000,000	GNMA Series 2003-3A Class JC	7.08		04/16/2024		42,363,672

266,409	GNMA #533857	7.35		01/15/2004		317,476

						52,761,639


Total US Government Agency Securities (Cost $214,931,332)						227,545,778

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

MANAGED FIXED INCOME PORTFOLIO

Principal	Security Name			Interest Rate		Maturity Date	Value

US Treasury Securities – 5.09%

US Treasury Bonds – 3.47%

4,750,000	US Treasury Bond – Inflation Protected**			3.38	%	04/15/2032	$	6,162,345

6,810,000	US Treasury Bonds#			6.75		08/15/2026		9,091,350

10,000,000	US Treasury Principal Strip^@			5.84		02/15/2015		6,319,770

								21,573,465


US Treasury Notes – 1.62%

2,400,000	US Treasury Note – Inflation Protected**			3.88		01/15/2009		3,084,449

3,300,000	US Treasury Note – Inflation Protected**			3.63		01/15/2008		4,215,380

2,300,000	US Treasury Note – Inflation Protected**			3.50		01/15/2011		2,772,398

								10,072,226


Total US Treasury Securities (Cost $28,349,076)								31,645,691


Shares

Short-Term Investments – 7.24%

45,033,759	Wells Fargo Cash Investment Fund~							45,033,759


Total Short-Term Investments (Cost $45,033,759)

Total Investments In Securities (Cost $621,622,640)*		105.77	%					657,818,814

Other Assets And Liabilities, Net		(5.77	)					(35,861,641	)

Total Net Assets		100.00	%				$	621,957,173

Securities pledged as collateral for futures transactions. (See note 2)

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable Rate Securities.

US Treasury inflation-protection securities (TIPS) are securities in which the principal amount is adjusted for inflation and the semi-annual interest payments equal a fixed percentage of the inflation-adjusted principal amount.

Zero coupon bond. Interest rate presented is Yield to Maturity.

This security is currently in default.

Cost for federal income tax purposes is $621,774,678 and net unrealized appreciation (depreciation) consist of:

Gross Unrealized Appreciation	$	40,175,638
Gross Unrealized Depreciation		(4,131,502	)

	$	36,044,136

The accompanying notes are an integral part of these financial statements.

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STABLE INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value


Asset Backed Securities – 29.57%

7,500,000	Ameriquest Mortgage Securities, Inc. Series 2000-2±	1.96	%	07/15/2030	$	7,526,837

2,315,626	Asset Backed Securities Corp Home Equity Series 2001-HE2 Class A1±	1.57		06/15/2031		2,316,462

8,756,923	Bank Of America Mortgage Securities	4.57		02/25/2033		9,035,775

2,000,000	Bank One Issuance Trust Series 2002-C2±	2.30		05/15/2008		2,002,256

4,000,000	Capital Automotive Receivables Asset Trust Series 2001-1, Class A5±	1.39		07/15/2006		3,999,472

6,000,000	Chase Credit Card Master Trust Series 2000-3, Class B±	1.66		01/15/2008		6,005,657

2,000,000	Chase Credit Card Master Trust Series 2001-3 Class C±	2.16		09/15/2006		1,994,756

4,054,317	Chase Funding Loan Acquisition Trust Series 2001-FF1±	1.56		04/25/2031		4,054,962

6,560,000	Chesapeake Funding LLC Series 2002-1 Class A1±	1.51		06/07/2007		6,563,806

5,000,000	Chevy Chase Master Credit Card Trust Series 1998-A, Class B±	1.71		10/16/2006		5,001,187

4,292,580	Countrywide Asset Backed Certificates Series 2003-BC1±	1.72		03/25/2033		4,300,102

4,224,005	Countrywide Asset Backed Certificates Series 2003-SD1^±	2.01		12/25/2032		4,229,285

7,500,000	Countrywide Asset-Backed Certificates Series 2000-1±	1.79		03/25/2031		7,488,764

40,447	Countrywide Asset-Backed Certificates Series 2001-1, Class AF3	6.10		08/25/2026		40,389

998,291	Countrywide Home Equity Loan Trust Series 2000-B Class A2±	1.54		08/15/2026		994,777

5,255,465	Countrywide Abcert 2001-A A±	1.55		04/15/2027		5,253,316

5,430,520	CS First Boston Mortgage Securities Corp.±	5.44		12/19/2039		5,528,948

9,384,462	CS First Boston Mortgage Securities Corp. Series 2003-AR2±	4.92		02/25/2033		9,554,556

3,250,000	Daimler Chrysler Auto Trust Series 2000-E, Class A4	6.16		01/08/2006		3,391,267

1,454,756	EQCC Home Equity Loan Trust Series 1998-4 Class A1F±	1.75		01/15/2029		1,458,454

9,273,746	FHLMC Structured Pass Through Securities Series T-54, Class 4A	5.35		02/25/2043		9,673,676

7,267,033	Fifth Third Mortgage Loan Trust Series 2002-FTB1±	5.48		11/19/2032		7,430,541

5,440,000	First Plus Home Loan Trust Series 1997-3 Class A8	7.55		11/10/2023		5,437,334

5,000,000	First USA Credit Card Master Trust Series 1999-1, Class B±	1.72		10/19/2006		5,007,307

10,000,000	Fleet 2003-1 A1±	1.57		01/20/2033		9,993,750

4,750,000	Ford Credit Auto Owners Trust Series 2000-F, Class A3	6.58		11/15/2004		4,841,685

1,238,069	Green Tree Financial Corporation Series 1993-4, Class A4	6.60		01/15/2019		1,253,325

1,500,000	Household Consumer Loan Trust Series 1997-1, Class A3±	1.66		03/15/2007		1,480,561

1,666,667	Household Consumer Loan Trust Series 1997-2, Class A3±	1.71		11/15/2007		1,626,212

5,785,350	Household Home Equity Loan Trust Series 2002-2, Class A±	1.62		04/20/2032		5,789,116

3,437,874	IMC Home Equity Loan Trust Series 1998-3, Class A6	6.40		04/20/2026		3,488,699

3,689,421	Mellon Residential Funding Corporation Series 2001-Tbc1, Class A1±	1.66		11/15/2031		3,701,378

3,543,784	MLCC 2003-A 1A±	1.64		04/25/2028		3,547,013

8,236,502	MLM I03-A2	4.21		02/25/2033		8,296,696

9,848,167	Morgan Stanley Dean Witter Capital±	4.60		03/25/2033		10,246,251

5,243,064	Nations Link Funding Corporation Series 1999-Sl Class A1V±	1.66		11/10/2030		5,254,636

3,425,000	NLFC 1999-Sl A4 99-Sl A4	6.65		11/10/2030		3,713,025

3,741,477	Oakwood Mortgage Investors Incorporated Series 2000-A, Class A2	7.77		05/15/2017		3,841,070

5,926,760	Option One Mortgage Loan Trust±	1.74		02/25/2033		5,947,543

1,012,694	Pass Through Amortizing Credit Card Trust Series 2002-A1, Class A1Fl^±	2.07		06/18/2012		1,011,319

1,282,747	Pass Through Amortizing Credit Card Trust Series 2002-1A, Class A2F6^±	2.67		06/18/2012		1,280,580

1,780,538	Residential Asset Securities Corporation Series 2001-KSL Class AI3±	5.85		02/25/2026		1,785,353

3,266,081	Residential Funding Mortgage Series 2000-HS1±	1.56		09/20/2030		3,255,703

4,441,283	RFFC 03-RP1 A±	1.75		05/05/2033		4,441,283

9,665,517	Sasco 99-C3	3.83		03/25/2033		9,931,319

1,069,880	Sequoia Mortgage Trust±	2.43		10/25/2024		1,071,742

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STABLE INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Asset Backed Securities (continued)


3,733,454	Sequoia Mortgage Trust 03-2 A-1±	1.65	%	06/20/2033	$	3,735,620

4,440,055	Sequoia Mortgage Trust Series 5±	1.67		10/19/2026		4,439,441

5,000,000	Strategic Hotel Capital Incorporated^±	1.86		02/15/2013		5,000,000

2,000,000	Structured Asset Repack TR^±	1.77		03/21/2006		1,999,646

5,000,000	Superior Wholesale Inventory Financing Trust Series 2001-A6, Class A±	1.40		01/16/2006		4,999,657

1,117,299	Toyota Auto Receivables Owner Trust Series 2001-B, Class A3±	1.39		03/15/2005		1,117,230

757,154	Vendee Mortgage Trust Series 1997-1, Class 2H	7.50		12/15/2003		765,498

5,000,000	Vendee Mortgage Trust Series 2002-3, Class B	6.00		03/15/2021		5,245,677

9,071,335	Washington Mutual Series 2003-Ar1±	4.56		03/25/2033		9,490,458

2,500,000	World Financial Network Credit Card Master Series 2001-A Class A±	1.55		06/16/2008		2,502,430

Total Asset Backed Securities (Cost $251,792,854)						253,383,803


Collateralized Mortgage Obligations – 9.31%

3,332,723	Bank Of America Mortgage Securities Series 2002-G Class 2A1±	7.08		07/20/2032		3,430,166

2,595,000	Bankamerica Manufactured Housing Contract Series 1997-1 Class A8	6.73		06/10/2023		2,794,713

1,105,766	Countrywide Home Loans±	3.35		12/25/2031		1,113,033

5,380,000	DVI Receivables Corp.±	1.86		09/12/2010		5,369,364

5,058,084	Fannie Mae Series 2002-90, Class A2	6.50		11/25/2042		5,290,580

2,643,583	GMAC Commercial Mortgage Securities Incorporated Series 1996-C1±	1.60		10/15/2028		2,636,974

5,665,555	GMAC Mortgage Corporation Loan Trust Series 2001-He 3, Class A2±	1.60		03/25/2027		5,654,483

551,946	Housing Securities Incorporated Series 1995-B Class A1A±	4.16		11/25/2028		554,478

4,805,763	Immpac CMB Trust Series 2001-4 Class A1±	1.74		12/25/2031		4,816,913

3,500,000	Mall Of America Company, LLC, Series 2000-1, Class A^±	1.61		03/12/2010		3,503,188

9,153,424	MLCC 99-A A MLCC Mortgage Investors Incorporated±	1.69		03/15/2025		9,166,449

764,545	MLCC Mortgage Investors Incorporated Series 1994-A, Class A3±	2.11		07/15/2019		769,959

1,108,164	MLCC Mortgage Investors Incorporated±	1.69		09/15/2021		1,107,624

14,722,578	MLCC Mortgage Investors Incorporated Series 1995-B Class A±	1.71		10/15/2020		14,746,036

2,518,469	MLCC Mortgage Investors Incorporated Series 97-B, Class A±	1.59		03/16/2026		2,516,636

846,723	Nations Link Funding Corporation Series 1999-Sl, Class D	7.56		11/10/2030		944,389

4,900,000	Principal Residential Mortgage Capital Series 2001-3A, Class A2^±	1.61		12/20/2006		4,900,098

3,069,221	Sasco Floating Rate Commercial Mortgage Series 2001-C8A, Class A^±	1.75		11/18/2010		3,068,637

2,367,731	Vendee Mortgage Trust Series 2001-1 Class 2B	7.00		12/15/2022		2,399,340

5,000,000	Witmer Funding LLC Series 2002-1A, Class A2^±	1.57		01/20/2007		4,996,875

Total Collateralized Mortgage Obligations (Cost $79,500,639)						79,779,935


Corporate Bonds & Notes – 22.01%

Business Services – 1.21%

2,250,000	Cendant Corporation	6.88		08/15/2006		2,501,795

1,750,000	Oracle Corporation	6.72		02/15/2004		1,815,450

6,000,000	Union Financial Services±	1.37		12/01/2032		6,017,131

						10,334,376


Chemicals And Allied Products – 0.62%

2,250,000	American Home Products Corporation	7.90		02/15/2005		2,479,849

2,720,000	Eastman Chemical	6.38		01/15/2004		2,794,547

						5,274,396

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STABLE INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value


Depository Institutions – 2.92%

1,750,000	Associated BK Green Bay 12/10/2004±	1.39	%	12/10/2004	$	1,750,807

2,100,000	Bank Of America Corporation±	1.53		08/26/2005		2,106,004

1,250,000	First Bank Systems Incorporated	7.63		05/01/2005		1,385,716

2,450,000	Keycorp±	1.53		08/30/2004		2,448,709

2,500,000	Marshall & Ilsley Corporation	6.38		07/15/2003		2,514,178

1,200,000	Mercantile Bancorp	7.05		06/15/2004		1,271,081

2,000,000	Old Kent Bank And Trust	7.75		08/15/2010		2,225,066

2,000,000	PNC Bank N.A.	7.88		04/15/2005		2,196,962

2,475,000	PNC Funding Corp±	1.69		10/29/2004		2,479,245

1,500,000	Popular N.A. Incorporated±	2.94		10/15/2003		1,505,277

2,700,000	State Street Capital Trust II±	1.79		02/15/2008		2,699,808

2,450,000	Washington Mutual Banks±	1.70		07/25/2006		2,457,171

						25,040,023


Eating And Drinking Places – 0.34%

2,810,000	Aramark Services Incorporated	6.75		08/01/2004		2,941,182


Electric, Gas, And Sanitary Services – 0.30%

2,350,000	Duke Energy Field Services	7.50		08/16/2005		2,573,626


Electronic And Other Electrical Equipment & Components, Except Computer Equipment – 0.57%

2,455,000	Dominion Resources Incorporated±	1.88		07/02/2003		2,455,452

2,000,000	General Electric Capital Corporation±	1.41		09/15/2004		2,003,160

400,000	Philips Electronics NV Koninklijke	6.75		08/15/2003		403,956

						4,862,568


Fabricated Metal Products, Except Machinery And Transportation Equipment – 0.22%

1,845,000	Masco Corporation	6.13		09/15/2003		1,867,262


Food And Kindred Products – 1.09%

1,500,000	Campbell Soup Company±	1.76		10/18/2003		1,501,968

1,685,000	Conagra Foods Incorporated±	2.02		09/10/2003		1,686,193

1,750,000	General Mills Incorporated	8.11		11/18/2004		1,900,075

2,000,000	Heinz (HJ) Company Bonds Series^±	6.49		11/15/2003		2,041,806

2,250,000	Kraft Foods Incorporated±	1.48		11/26/2004		2,241,995

						9,372,037


Forestry – 0.35%

3,000,000	Weyerhaeuser Company±	2.38		09/15/2003		3,000,390


General Merchandise Stores – 0.23%

2,000,000	Sears Roebuck Acceptance 01/07/2004±	4.23		01/07/2004		2,012,386


Holding And Other Investment Offices – 2.51%

7,500,000	Collegiate Funding Services^±	1.35		12/01/2041		7,500,000

7,500,000	Collegiate Funding Services Education Loan Trust	1.64		09/28/2020		7,500,000

2,000,000	Golden Funding Corporation^±	1.64		06/21/2004		2,004,172


2,000,000	Monumental Global Funding^±	1.48		05/28/2004		2,001,954

2,500,000	Structured Asset Repackaged Trust^±	1.58		11/28/2003		2,501,683

						21,507,809

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STABLE INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Hotels, Rooming Houses, Camps, & Other Lodge Places – 0.06%

500,000	Marriott International	6.63	%	11/15/2003	$	509,547


Industrial & Commercial Machinery & Computer Equipment – 0.39%

1,350,000	Parker-Hannifin Corporation±	2.09		10/01/2003		1,351,361

2,000,000	Smith International Incorporated^±	2.41		10/15/2003		2,001,248

						3,352,609


Insurance Agents, Brokers And Service – 1.07%

2,675,000	Allstate Financial Global^±	1.63		03/22/2005		2,675,233

3,750,000	Principal Life Global^±	1.63		05/27/2005		3,750,049

2,650,000	Protective Life US Funding Trust^	5.50		05/14/2004		2,750,692

						9,175,974


Insurance Carriers – 1.25%

1,900,000	Amerus Group Company	6.95		06/15/2005		1,941,905

1,250,000	AON Corporation	6.90		07/01/2004		1,305,635

1,000,000	Lincoln National Corporation	7.25		05/15/2005		1,104,915

1,915,000	Markel Corporation	7.25		11/01/2003		1,947,224

2,500,000	Monumental Life±	1.32		10/16/2003		2,500,213

1,850,000	Progressive Corporation	6.60		01/15/2004		1,908,149

						10,708,040


Measuring, Analyzing, & Controlling Instruments: Photographic, Medical & Optical Goods – 0.24%

2,050,000	Raytheon Company	5.70		11/01/2003		2,071,970


Miscellaneous Retail – 0.41%

3,500,000	Ek Float±	1.84		11/08/2004		3,499,437


Non-Depository Credit Institutions – 3.40%

2,000,000	American Honda Finance Corporation^±	1.64		11/15/2004		2,011,904

9,650,000	Education Funding Capital Trust±	1.35		06/01/2042		9,650,000

2,750,000	Ford Motor Credit Company±	1.51		04/28/2005		2,617,018

2,865,000	General Motors Acceptance Corporation±	3.34		03/04/2005		2,868,438

2,000,000	John Hancock Global Funding^±	1.60		09/12/2006		1,993,514

10,000,000	Morgan Stanley Dean Witter CC Heloc 03-1A	1.60		11/25/2003		10,000,000

						29,140,874


Oil And Gas – 0.17%

1,297,000	Columbia Energy Group	6.80		11/28/2005		1,424,220


Oil And Gas Extraction – 0.53%

1,000,000	Halliburton Company±	1.45		07/16/2003		997,560

3,490,000	US Marathon Oil Corporation	9.63		08/15/2003		3,541,558

						4,539,118



Primary Metal Industries – 0.21%

1,770,000	Alcoa Incorporated±	1.61		12/06/2004		1,773,744


Printing, Publishing, And Allied Industries – 0.24%

1,825,000	Time Warner Incorporated	8.11		08/15/2006		2,080,219

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STABLE INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Railroad Transportation – 0.24%

2,000,000	Norfolk Southern Corporation	7.88	%	02/15/2004	$	2,086,904


Real Estate – 0.12%

1,000,000	Susa Partnership LP	7.13		11/01/2003		1,022,129


Security And Commodity Brokers, Dealers, Exchanges & Services – 1.03%

2,000,000	Merrill Lynch and Company Incorporated±	1.68		05/22/2006		2,006,406

6,818,393	Saloman Brothers Mortgage Securities Series 1999-AQ1, Class A±	1.64		04/25/2029		6,811,349

						8,817,755


Stone, Clay, Glass, And Concrete Products – 0.08%

700,000	Newell Rubbermaid Incorporated	5.70		09/22/2003		708,673


Student Loan Marketing Association – 1.17%

10,000,000	Student Loan Consolidations^±	1.33		07/01/2042		10,000,000


Transportation By Air – 0.18%

1,500,000	Federal Express Corporation	6.63		02/12/2004		1,551,812


Transportation Equipment – 0.86%

1,500,000	Boeing Capital Corporation±	2.23		10/15/2004		1,496,901

2,800,000	Daimler Chrysler N.A. Holdings±	1.61		08/16/2004		2,791,023

3,050,000	General Dynamics Corporation±	1.56		09/01/2004		3,052,858

						7,340,782


Total Corporate Bonds & Notes ($187,340,419)						188,589,861


Municipal Bonds & Notes – 2.86%

7,000,000	Arizona Educational Loan Marketing Corp Taxable Sub Series B-1±	1.45		12/01/2037		7,000,000

4,700,000	Colorado Student Obligation Bond Csoba 2003-VIII A2±	1.55		12/01/2032		4,700,000

2,450,000	Connecticut Stated GO Bonds	6.50		12/01/2003		2,511,887

595,000	Cow Creek Bank Umpaqua Tribe of Indians Ambac Insured^	6.20		07/01/2003		597,386

1,085,000	Hudson County NJ GO Bonds Remarked	6.09		09/01/2005		1,145,445

545,000	Seattle WA GO Bonds Series B	7.10		01/15/2004		563,939

8,000,000	Student Loan Finance Association Washington Education Loan REV±	1.43		06/01/2038		8,000,000

Total Municipal Bonds & Notes ($24,360,862)						24,518,657


US Government Agency Securities – 25.83%

Federal Agency And Government – 0.48%

28,800	SBA 500276 Truckee River BA±	6.13		05/25/2007		30,053

220,527	SBA 500957 National Bank of Company±	4.50		07/25/2014		232,323

164,478	SBA 501224 The Money Store	3.00		06/25/2015		167,812

27,245	SBA 502966 Union Planters±	5.48		05/25/2015		29,114

266,293	SBA 503405 Union Planters±	4.63		05/25/2016		284,452

942,142	SBA 503611 Union Planters±	4.13		12/25/2021		999,109


33,835	SBA 503653 Union Planters±	4.88		01/25/2010		35,470

643,085	SBA 503658 Union Planters±	5.38		09/25/2010		678,347

247,356	SBA 503664 Union Planters±	4.73		01/25/2013		261,211

1,249,307	SBA	7.88		05/01/2010		1,390,567

						4,108,459

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STABLE INCOME PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Federal Home Loan Mortgage Corporation – 11.25%

30,000,000	FHLMC	1.88	%	06/15/2006	$	30,059,040

3,814,736	FHLMC	6.00		07/01/2017		3,958,978

51,905	FHLMC # 410220	4.15		10/01/2025		53,431

92,724	FHLMC # 46698±	3.52		12/01/2015		93,369

165,917	FHLMC # 611084	4.77		06/01/2030		171,516

1,159,883	FHLMC # 786614±	6.05		08/01/2025		1,210,675

6,529,068	FHLMC # W10002	6.78		11/01/2003		6,531,108

267,847	FHLMC # 845151±	4.66		06/01/2022		277,681

45,847	FHLMC # 846367±	4.60		04/01/2029		47,458

1,255,224	FHLMC Series 1192, Class I	7.50		01/15/2007		1,313,953

23,289,000	FHLMC Series 2356 Class GB	6.00		07/15/2013		23,816,498

5,161,000	FHLMC Series 2456 Class QB	5.50		04/15/2016		5,174,767

5,610,467	FHLMC Series T-35 Class A±	1.46		09/25/2031		5,611,598

7,500,000	FHLMC	4.50		03/15/2013		7,810,547

9,475,404	FHLMC Structured Pass Through Securities Series T-54, Class 3A	7.00		02/25/2043		10,268,969

						96,399,588


Federal National Mortgage Association – 13.93%

7,960,498	FNMA Grantor Trust Series 2002-T12, Class A3	7.50		05/25/2042		8,798,842

383,252	FNMA # 155506±	4.50		04/01/2022		394,829

1,127,973	FNMA # 190815±	3.52		07/01/2017		1,136,565

148,010	FNMA # 220706±	4.48		06/01/2023		152,123

1,294,158	FNMA # 253482	8.50		10/01/2030		1,393,241

133,460	FNMA # 318464±	3.75		04/01/2025		137,493

380,325	FNMA # 321051	4.45		08/01/2025		390,330

74,413	FNMA # 331866±	4.17		12/01/2025		76,604

124,548	FNMA # 519047±	4.39		09/01/2029		128,820

9,290,486	FNMA # 545927	6.50		12/01/2015		9,757,909

15,000,000	FNMA # 460900	3.92		01/01/2008		15,504,241

1,618,650	FNMA Series 1991-146 Class Z	8.00		10/25/2006		1,720,241

8,325,549	FNMA Series 2001-37, Class GA	8.00		07/25/2016		8,988,116

4,700,452	FNMA Series 2001-5 Class OR	6.00		01/25/2012		4,725,044

1,531,686	FNMA Series 2001-W1, Class AV1±	1.44		08/25/2031		1,531,296

20,000,000	FNMA Series 2002-16, Class QC	5.50		02/25/2012		20,473,840

15,000,000	FNMA Series 2002-3, Class ON	5.75		06/25/2012		15,185,906

14,545,000	FNMA Series 2002-7 Class QK	5.50		03/25/2015		14,858,449

3,427,450	FNMA Series 2002-W10	7.50		08/25/2042		3,788,405

10,000,000	FNMA	3.38		07/15/2004		10,238,990

						119,381,284


Government National Mortgage Association – 0.17%

1,374,383	GNMA # 780533	7.00		07/15/2008		1,474,455

Total US Government Agency Securities (Cost $218,354,366)						221,363,786


US Treasury Securities – 6.73%

33,150,000	US Treasury Notes – inflation protected§*	3.63		01/15/2008		42,345,403

12,000,000	US Treasury Notes – inflation protected*	3.38		01/15/2007		15,305,779

Total US Treasury Securities (Cost $55,224,981)						57,651,182

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STABLE INCOME PORTFOLIO

Shares

Security Name

Value


Short-Term Investments – 4.05%

34,730,940	Wells Fargo Cash Investment Fund~			$	34,730,940


Total Short-Term Investments ($34,730,940)					34,730,940


Total Investments In Securities (Cost $851,305,061)*		100.36	%		860,018,166

Other Assets and Liabilities, Net		(0.36	)		(3,121,032	)

Total Net Assets		100.00	%	$	856,897,134

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable Rate Securities.

Securities pledged as collateral for swaps transactions. (See note 2)

Cost for federal income tax purposes is substantially the same as for financial reporting purposes and net unrealized appreciation (depreciation) consist of:

Gross Unrealized Appreciation	$	8,713,105
Gross Unrealized Depreciation		0

	$	8,713,105

The accompanying notes are an integral part of these financial statements.

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Asset Backed Securities – 9.71%

1,839,000	Aesop Funding LLC Series 1998-1 Class A^	6.14	%	05/20/2006	$	1,974,618

1,500,000	Banc One Insurance Trust	1.68		04/15/2008		1,499,279

1,000,000	Chase Credit Card Master Trust Series 2001-3 Class C±	2.16		09/15/2006		997,378

1,000,000	Chase Funding Mortgage Loan	6.60		02/25/2032		1,098,990

1,200,000	Chase Funding Mortgage Loan	5.83		04/25/2032		1,260,738

1,000,000	Citibank Credit Card Issuance Trust Series 2001-C3 Class C3	6.65		05/15/2008		1,098,353

1,282,842	EQCC Home Equity Loan Trust Series 1999-2 Class A6F	6.69		07/25/2030		1,398,291

823,094	Green Tree Financial Corporation Series 1997-7 Class A8	6.86		07/15/2029		877,530

1,000,000	Green Tree Home Equity Loan Trust	6.92		08/15/2026		1,044,202

1,000,000	Green Tree Home Equity Loan Trust Series 1999-C Class M2	8.36		07/15/2030		1,094,540

385,150	Household Consumer Loan Trust Series 1997-1 Class A1±	1.43		03/15/2007		385,090

1,450,000	Long Beach Mortgage Loan	6.46		05/25/2032		1,605,105

472,591	Pass-Through Amortizing Credit Card Trust Series 2002-1A, Class A2F6^±	2.67		06/18/2012		471,793

1,226,000	Rental Car Finance Corporation Series 1997-1 Class B3^	6.70		09/25/2007		1,275,205

1,000,000	Residential Funding Mortgage Securities Series 2002-Hi3 Class A6	5.98		08/25/2019		1,088,545

1,466,409	Saxon Asset Securities Trust 1999-2 Class A1	6.42		03/25/2014		1,555,065

280,920	Sequoia Mortgage Trust Series 2 Class A1±	2.43		10/25/2024		281,409

433,296	Van Kampen CLO Limited Series 1A Class A1^±	1.58		10/08/2007		426,796

632,000	World Omni Automobile Lease Securitization Series 2001-Aa Class B^±	2.23		07/20/2007		628,267

Total Asset Backed Securities (Cost $19,118,966)						20,061,194


Collateralized Mortgage Obligations – 5.36%

382,025	Bank Of America Mortgage Securities Series 2001-C Class B1±	6.18		07/25/2031		383,756

504,696	Bank Of America Mortgage Security Series 2001-E Class B1±	6.18		09/25/2031		511,746

1,000,000	Bankamerica Manufactured Housing Contract Series 1997-1 Class A8	6.73		06/10/2023		1,076,961

632,728	Countrywide Mortgage Backed Securities Incorporated	6.50		01/25/2024		635,177

1,089,846	Fedex Corporation Series 97-B	7.52		01/15/2018		1,233,509

225,510	Housing Securities Incorporated Series 1995-B Class A1A±	4.16		11/25/2028		226,544

2,452,000	Merrill Lynch Mortgage Investors Incorporated Series 1997-CI Class A3	7.12		06/18/2029		2,786,434

1,441,843	Nationslink Funding Corporation Series 1999-Sl Class A1V±	1.66		11/10/2030		1,445,025

423,362	Nationslink Funding Corporation Series 1999-Sl Class D	7.56		11/10/2030		472,194

959,514	Prudential Home Mortgage Securities Series 1993-57 Class A9	6.50		12/25/2023		960,953

1,333,277	Vendee Mortgage Trust Series 1992-2 Class G	7.25		02/15/2019		1,355,463

Total Collateralized Mortgage Obligations (Cost $10,571,670)						11,087,762


Corporate Bonds & Notes – 44.92%

Administration Of Human Resource Programs – 0.44%

850,000	US Oncology Incorporated	9.63		02/01/2012		915,875


Apparel & Other Finished Products Made From Fabrics & Similar Materials – 0.80%

500,000	Phillips Van Huesen Debenture	7.75		11/15/2023		505,000

375,000	Russell Corporation	9.25		05/01/2010		405,000

734,000	Tommy Hilfiger USA Incorporated	6.50		06/01/2003		734,000

						1,644,000


Apparel And Accessory Stores – 0.25%

510,000	Remington Arms Company^	10.50		02/01/2011		511,275

100

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Business Services – 1.03%

375,000	Iron Mountain Incorporated	8.63	%	04/01/2013	$	403,125

400,000	Kansas City Southern	7.50		06/15/2009		404,000

600,000	NCR Corporation^	7.13		06/15/2009		660,100

625,000	Unisys Corporation	8.13		06/01/2006		664,063

						2,131,288


Chemicals And Allied Products – 4.28%

500,000	Airgas Incorporated	7.75		09/15/2006		520,000

225,000	Airgas Incorporated	9.13		10/01/2011		248,625

500,000	Ashland Incorporated	7.83		08/15/2005		538,049

650,000	Bristol-Myers Squibb	5.75		10/01/2011		729,830

2,965,000	Eastman Chemical	7.00		04/15/2012		3,454,507

400,000	IMC Global Incorporated Series B	11.25		06/01/2011		444,000

900,000	Lyondell Chemical Company Series A	9.63		05/01/2007		884,250

400,000	Olin Corporation	9.13		12/15/2011		493,220

850,000	RPM International Incorporated	7.00		06/15/2005		898,023

600,000	Watson Pharmaceutical Incorporated	7.13		05/15/2008		634,500

						8,845,004


Communications – 1.36%

600,000	Cox Enterprises Incorporated^	8.00		02/15/2007		692,812

375,000	Panamsat Corporation	6.38		01/15/2008		379,688

275,000	Sincorporatedlair Broadcast Group Incorporated Global Company Guaranteed	8.75		12/15/2011		299,406

600,000	Time Warner Incorporated	7.57		02/01/2024		678,863

600,000	Viacom Incorporated	7.70		07/30/2010		751,105

						2,801,873


Depository Institutions – 8.00%

1,100,000	Associated Bancorp	6.75		08/15/2011		1,276,494

1,050,000	Bank One Capital±	2.84		09/01/2030		1,063,275

1,839,000	Bankamerica Capital±	1.87		01/15/2027		1,669,621

1,489,000	Chase Capital Floating Rate±	1.94		08/01/2028		1,306,026

1,000,000	City National Bank	6.75		09/01/2011		1,152,462

625,000	Colonial Bank	9.38		06/01/2011		720,033

1,226,000	Deposit Guaranty Corporation	7.25		05/01/2006		1,406,705

1,226,000	Farmers Exchange Capital^	7.20		07/15/2048		989,657

1,250,000	First Union National Bank	7.80		08/18/2010		1,566,519

1,250,000	Firstar Bank N.A.	7.13		12/01/2009		1,520,223

600,000	Fleet Capital Trust±	2.28		12/18/2028		547,337

450,000	Northern Trust Capital±	1.81		01/15/2027		406,788

1,364,000	Old Kent Financial Corporation	6.63		11/15/2005		1,509,057

750,000	Reliastar Financial Corporation	8.00		10/30/2006		873,859

450,000	Washington Mutual Bank	6.88		06/15/2011		537,395

						16,545,451

101

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Eating And Drinking Places – 0.34%

672,000	Aramark Services Incorporated	6.75	%	08/01/2004	$	703,372


Educational Services – 2.09%

2,235,000	Massachusetts Institute of Technology	7.25		11/02/2049		2,884,482

1,250,000	Stanford University	6.16		04/30/2011		1,431,483

						4,315,965


Electric, Gas, And Sanitary Services – 0.29%

500,000	Duke Energy Field Services	7.88		08/16/2010		600,980


Electronic And Other Electrical Equipment & Components, Except Computer Equipment – 2.06%

800,000	Applied Materials Incorporated	7.00		09/06/2005		885,566

500,000	Delco Remy International Incorporation	11.00		05/01/2009		312,500

800,000	General Electric Company	5.00		02/01/2013		854,411

550,000	Hyundai Semiconductor^	8.25		05/15/2004		463,374

400,000	L3 Communications Corporation	7.63		06/15/2012		436,000

400,000	Sanmina-Science Corp.^	10.38		01/15/2010		444,000

600,000	Thomas & Betts Corporation	6.63		05/07/2008		606,000

250,000	Thomas & Betts Corporation	7.25		06/01/2013		251,250

						4,253,102


Engineering, Accounting, Research Management & Related Services – 0.28%

600,000	Massey Energy Company	6.95		03/01/2007		576,000


Fabricated Metal Products, Except Machinery And Transportation Equipment – 0.20%

375,000	Alliant Techsystems Incorporated	8.50		05/15/2011		405,938


Food And Kindred Products – 1.41%

650,000	Conagra Incorporated	7.88		09/15/2010		819,445

375,000	Constellation Brands Incorporated	8.00		02/15/2008		403,594

375,000	Corn Products International Incorporated	8.25		07/15/2007		420,000

375,000	Cott Beverages Incorporated	8.00		12/15/2011		399,375

500,000	General Mills Incorporated	6.00		02/15/2012		570,840

400,000	Land O Lakes Incorporated	8.75		11/15/2011		300,000

						2,913,253


General Merchandise Stores – 0.24%

475,000	Rite Aid Corporation^	9.50		02/15/2011		503,500


Health Services – 0.92%

850,000	AARP^	7.50		05/01/2031		1,075,158

600,000	Healthsouth Corporation^^	7.63		06/01/2012		405,000

400,000	NDChealth Corporation^	10.50		12/01/2012		420,000

						1,900,158


Holding And Other Investment Offices – 0.82%

475,000	Johnsondiversey Incorporated	9.63		05/15/2012		527,250

500,000	Monumental Global Funding^	6.05		01/19/2006		552,784

102

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Holding And Other Investment Offices (continued)

500,000	National City Bank	7.25	%	07/15/2010	$	604,808

						1,684,842


Hotels, Rooming Houses, Camps, & Other Lodge Places – 0.38%

500,000	HMH Properties Incorporated	7.88		08/01/2008		498,750

280,000	Management Grand Incorporated	6.88		02/06/2008		296,100

						794,850


Industrial & Commercial Machinery & Computer Equipment – 1.13%

500,000	American Standard Incorporated	8.25		06/01/2009		550,000

400,000	Briggs & Stratton Corporation	8.88		03/15/2011		456,000

625,000	SPX Corporation	7.50		01/01/2013		657,813

657,000	Terex Corporation	8.88		04/01/2008		679,995

						2,343,808


Insurance Carriers – 5.27%

500,000	Amerus Group Company	6.95		06/15/2005		511,028

599,000	Equitable Life Assurance Society^	6.95		12/01/2005		670,057

400,000	John Hancock Global Funding^	7.90		07/02/2010		497,778

532,000	Lincoln National Corporation	7.25		05/15/2005		587,815

807,000	Markel Corporation	7.20		08/15/2007		903,357

1,000,000	Mass Mutual Life Insurance Company^	7.63		11/15/2023		1,264,673

2,000,000	Minnesota Life Insurance Company^	8.25		09/15/2025		2,516,368

1,000,000	Pacific Mutual Life Insurance Company^	7.90		12/30/2023		1,207,686

1,073,000	Prudential Insurance Company^	7.65		07/01/2007		1,241,853

682,000	Reinsurance Group of America^	7.25		04/01/2006		742,808

700,000	Unitrin Incorporated	5.75		07/01/2007		748,663

						10,892,086


Measuring, Analyzing, & Controlling Instruments: Photographic, Medical & Optical Goods – 1.19%

225,000	Bausch & Lomb Incorporated	7.13		08/01/2028		213,188

750,000	Beckman Coulter Incorporated	6.88		11/15/2011		865,454

150,000	Cole National Group	8.88		05/15/2012		141,375

650,000	Perkinelmer Incorporated^	8.88		01/15/2013		702,000

500,000	Raytheon Company	5.50		11/15/2012		538,122

						2,460,139


Membership Organizations – 0.25%

475,000	British Sky Broadcasting Incorporated	7.30		10/15/2006		523,688


Metal Mining – 0.49%

500,000	Alcoa Incorporated	7.38		08/01/2010		610,770

400,000	Phelps Dodge Corporation	6.38		11/01/2004		410,309

						1,021,079


Miscellaneous Manufacturing Industries – 0.45%

750,000	Manufacturers & Traders Trust Company	8.00		10/01/2010		934,028

103

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Miscellaneous Retail – 0.19%

400,000	American Greetings	6.10	%	08/01/2028	$	403,000


Motion Pictures – 0.21%

375,000	Alliance Atlantis Communications	13.00		12/15/2009		427,500


Municipal – 0.75%

1,225,000	Hudson County NJ Improvement Authority Facilities Leasing Revenue	7.40		12/01/2025		1,551,034


Non-Depository Credit Institutions – 0.76%

650,000	Athena Neurosciences Finance Limited Liabilities Company	7.25		02/21/2008		523,250

1,000,000	Ford Motor Credit Company	7.38		10/28/2009		1,041,313

						1,564,563


Oil And Gas Extraction – 1.15%

375,000	Halliburton Company±	1.45		07/16/2003		374,085

400,000	Parker Drilling Company Series A	10.13		11/15/2009		429,000

300,000	Pemco Refining Group^	9.50		02/01/2013		334,500

525,000	Pioneer Natural Resource Company	6.50		01/15/2008		567,868

275,000	Pioneer Natural Resource Company	9.63		04/01/2010		338,578

325,000	Swift Energy Company	9.38		05/01/2012		342,875

						2,386,906


Paper And Allied Products – 0.86%

850,000	Abitibi Consolidated Incorporated	8.55		08/01/2010		969,119

306,000	Buckeye Technologies Incorporated	8.50		12/15/2005		298,350

500,000	Fort James Corporation	6.70		11/15/2003		502,500

						1,769,969


Personal Services – 0.61%

600,000	Cendant Corporation	7.38		01/15/2013		697,609

425,000	Service Corporation International	6.00		12/15/2005		427,125

125,000	Stewart Enterprises	10.75		07/01/2008		138,438

						1,263,172


Petroleum Refining And Related Industries – 0.59%

825,000	El Paso Production Holdings^	7.75		06/01/2013		818,813

355,000	Marathon Oil Corporation	6.13		03/15/2012		401,506

						1,220,319


Pipelines, Except Natural Gas – 0.62%

475,000	Reliant Energy Resources	8.13		07/15/2005		514,402

775,000	Shaw Group Incorporated^	10.75		03/15/2010		767,250

						1,281,652


Primary Metal Industries – 0.42%

424,000	Centuary Aluminum Company	11.75		04/15/2008		432,480

420,000	United States Steel LLC	10.75		08/01/2008		435,750

						868,230

104

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Printing, Publishing, And Allied Industries – 0.57%

575,000	Canwest Media Incorporated	10.63	%	05/15/2011	$	649,750

500,000	Houghton Mifflin Senior Notes^	8.25		02/01/2011		520,625

						1,170,375


Security And Commodity Brokers, Dealers, Exchanges & Services – 0.73%

620,000	Merrill Lynch Floating Rate±	1.68		05/22/2006		621,986

750,000	Morgan Stanley Dean Witter	6.75		04/15/2011		883,128

						1,505,114


Stone, Clay, Glass, And Concrete Products – 0.43%

375,000	Owens-Brockway Glass Container	8.88		02/15/2009		397,500

500,000	Texas Industries Incorporated^	10.25		06/15/2011		500,000

						897,500


Telecommunications – 0.36%

700,000	Sprint Capital Corporation	6.00		01/15/2007		737,628


Transportation By Air – 0.74%

1,048,967	Continental Airlines Incorporated	6.80		07/02/2007		685,212

463,864	Continental Airlines Incorporated	7.03		06/15/2011		327,252

276,571	Delta Air Lines	7.78		01/02/2012		208,827

378,173	Northwest Airlines Corporation Series 991A	6.81		02/01/2020		312,518

						1,533,809


Transportation Equipment – 1.35%

650,000	Daimlerchrysler National Holdings	7.75		01/18/2011		785,268

600,000	General Motors Acceptance Corporation	5.85		01/14/2009		608,341

500,000	JLG Industries Incorporated^	8.25		05/01/2008		501,250

860,000	Navistar International Corporation Series A	9.38		06/01/2006		885,800

						2,780,659


Water Transportation – 0.51%

400,000	Overseas Ship Holding Group Incorporated^	8.25		03/15/2013		410,000

612,000	Teekay Shipping Corporation	8.32		02/01/2008		648,720

						1,058,720


Wholesale Trade-Durable Goods – 0.10%

200,000	Advanced Medical Optics	9.25		07/15/2010		210,000


Total Corporate Bonds & Notes (Cost $87,678,703)						92,851,697


US Government Agency Securities – 33.40%

Federal Home Loan Mortgage Corporation – 20.84%

1,000,000	FHLMC FHR 2399	6.50		10/15/2025		1,009,620

2,300,479	FHLMC Series 1675 Class KZ	6.50		02/15/2024		2,498,828

1,309,051	FHLMC Series 2117 Class MK	6.00		02/15/2011		1,329,106

1,876,817	FHLMC Series 2218 Class B	6.00		11/15/2027		1,898,131

105

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

Federal Home Loan Mortgage Corporation (continued)

5,000,000	FHLMC Series 2358 Class PD	6.00	%	09/15/2016	$	5,383,914

4,088,000	FHLMC Series 2360 Class PE	6.00		11/15/2013		4,200,050

7,500,000	FHLMC Series 2363 Class PF	6.00		09/15/2016		8,064,005

6,500,000	FHLMC Series 2416 Class PE	6.00		10/15/2021		6,962,961

1,500,000	FHLMC Series 2439 Class LG	6.00		09/15/2030		1,564,575

5,000,000	FHLMC Series Class 2426 GJ	6.00		03/15/2032		5,298,279

2,004,834	FHLMC Series T-20 Class A6	7.49		09/25/2029		2,177,803

2,576,000	FHLMC Series 2416, Class PF	6.00		08/15/2018		2,698,385

						43,085,657


Federal National Mortgage Association – 6.37%

1,686,028	FNMA	6.50		11/25/2042		1,763,527

704,706	FNMA Grantor Trust	7.00		12/25/2041		767,248

1,149,810	FNMA # 375168	7.13		06/01/2004		1,181,453

1,141,515	FNMA # 73919	6.80		01/01/2004		1,148,456

1,729,694	FNMA # 380268	6.20		05/01/2005		1,831,564

1,441,746	FNMA # 380581	6.18		08/01/2008		1,642,357

978,729	FNMA # 383017	6.49		01/01/2008		1,112,452

987,049	FNMA	5.50		02/01/2018		1,025,191

995,705	FNMA	5.50		04/01/2018		1,034,181

658,058	FNMA Series 1994-30 Class M	6.50		02/25/2024		663,546

986,371	FNMA Series 2001-45 Class PB	6.00		07/25/2011		988,656

						13,158,631


Government National Mortgage Association – 6.19%

532,504	GNMA # 354692	6.50		11/15/2023		561,760

725,039	GNMA # 361398	6.50		01/15/2024		764,258

713,165	GNMA # 366641	6.50		11/15/2023		752,347

683,027	GNMA # 345066	6.50		10/15/2023		720,553

324,102	GNMA # 473918	7.00		04/15/2028		341,981

196,987	GNMA # 531435	7.00		03/15/2004		228,459

615,596	GNMA # 346960	6.50		12/15/2023		649,418

7,000,000	GNMA # 525459	7.08		04/16/2024		8,472,734

148,479	GNMA # 525459	7.25		01/15/2004		173,921

31,314	GNMA # 525459	7.25		01/15/2004		36,680

10,421	GNMA # 531964	7.72		11/15/2003		12,500

66,608	GNMA # 533857	7.35		01/15/2004		79,376

						12,793,987


Total US Government Agency Securities (Cost $64,689,438)						69,038,272


Shares

Private Investment Partnership – 0.20%

1,000,000	PPM America CBO II, LP					419,059

Total Private Investment Partnership (Cost $1,019,820)						419,059

106

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

STRATEGIC VALUE BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value
US Treasury Securities – 1.94%

US Treasury Bonds – 1.14%

1,750,000	US Treasury Bonds#	7.25	%	05/15/2016	$	2,363,594


US Treasury Notes – 0.80%

800,000	US Treasury Notes-inflation protected**	3.88		01/15/2009		1,028,150

250,000	US Treasury Notes-inflation protected**	3.50		01/15/2011		301,348

250,000	US Treasury Notes-inflation protected**	3.63		01/15/2008		319,347

						1,648,845


Total US Treasury Securities (Cost $3,552,067)						4,012,438

Shares
Short-Term Investments – 7.88%

16,290,971	Wells Fargo Cash Investment Fund ~				16,290,971


Total Short-Term Investments (Cost $16,290,971)

Total Investments In Securities (Cost $202,921,635)*		103.42	%		213,761,390

Other Assets And Liabilities, Net		(3.42	)		(7,062,401	)

Total Net Assets		100.00	%	$	206,698,989

Securities pledged as collateral for futures transactions. (See note 2)

Securities that may be resold to “Qualified institutional buyers” under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended.

Variable Rate Securities.

This Wells Fargo Fund invests cash balances that it retains for liquididty purposes in a Wells Fargo Money Market Fund. The fund does not pay an investment advisory fee to the Wells Fargo Money Market Fund for such investments.

This security is currently in default.

Cost for federal income tax purposes is $202,921,913 and net unrealized appreciation (depreciation) consist of:

Gross Unrealized Appreciation	$	13,219,447
Gross Unrealized Depreciation		(2,379,970	)

	$	10,839,477

The accompanying notes are an integral part of these financial statements.

107

MASTER PORTFOLIOS		PORTFOLIO OF INVESTMENTS — MAY 31, 2003

TACTICAL MATURITY BOND PORTFOLIO

Principal	Security Name	Interest Rate		Maturity Date	Value

US Government Agency Securities – 45.00%

Federal Home Loan Mortgage Corporation – 13.55%

30,000,000	FHLB	2.40	%	12/20/2004	$	30,016,980

27,000,000	FHLB	2.04		01/14/2005		27,024,705

						57,041,685


Federal National Mortgage Association – 17.87%

24,000,000	FNMA	2.00		05/05/2005		24,081,000

30,000,000	FNMA	2.03		04/28/2005		30,099,780

21,000,000	FRMA	2.45		12/13/2004		21,007,581

						75,188,361


Student Loan Marketing Association – 13.58%

27,000,000	SLMA	2.13		04/25/2005		27,035,694

30,000,000	SLMA	2.05		04/25/2005		30,098,280

						57,133,974


Total US Government Agency Securities (Cost $189,000,000)						189,364,020


Corporate Bonds & Notes – 8.50%

Finance Companies – 4.58%

19,250,000	General Electric Capital Corporation ±	1.43		04/22/2004		19,270,944


Retail – 3.92%

16,500,000	Wal Mart ±	1.24		02/22/2005		16,485,860


Total Corporate Bonds & Notes (Cost $35,728,147)						35,756,804


US Treasury Securities – 41.75%

46,650,000	US Treasury Bonds	5.25		02/15/2029		52,244,360

49,875,000	US Treasury Bonds	5.25		11/15/2028		55,807,382

36,400,000	US Treasury Bonds	6.13		08/15/2029		45,743,152

17,075,000	US Treasury Bonds	6.25		05/15/2030		21,890,679

Total US Treasury Securities (Cost $170,330,224)						175,685,573

108

PORTFOLIO OF INVESTMENTS — MAY 31, 2003		MASTER PORTFOLIOS

TACTICAL MATURITY BOND PORTFOLIO

Shares	Security Name			Value

Short-Term Investments – 4.16%

17,492,152	Wells Fargo Cash Investment Fund ~			$	17,492,152


Total Short-Term Investments (Cost $17,492,152)

Total Investments In Securities
(Cost $412,550,523)*		99.41	%		418,298,550

Other Assets And Liabilities, Net		0.59			2,484,163

Total Net Assets		100.00	%	$	420,782,713

Variable Rate Securities.

Cost for federal income tax purposes is $413,344,676 and net unrealized appreciation (depreciation) consist of:

Gross Unrealized Appreciation	$	4,953,874
Gross Unrealized Depreciation		0

	$	4,953,874

The accompanying notes are an integral part of these financial statements.

109

MASTER PORTFOLIOS		STATEMENT OF ASSETS AND LIABILITIES — MAY 31, 2003

	Managed Fixed Income		Stable Income		Strategic Value Bond		Tactical Maturity Bond


ASSETS

INVESTMENTS:
Investments at cost	$	621,622,640	$	851,305,061	$	202,921,635	$	412,550,523
Net unrealized appreciation (depreciation)		36,196,174		8,713,105		10,839,755		5,748,027

TOTAL INVESTMENTS AT VALUE		657,818,814		860,018,166		213,761,390		418,298,550

Cash		47,961		576,259		50,000		50,000
Cash Collateral for securities loaned		155,376,655		201,390,967		55,367,027		201,128,218
Receivables for fund shares sold		648,786		776,902		260,992		1,033,700
Receivable for investments sold		17,372		140,845		0		0
Receivable for dividends and interest		5,916,252		3,865,604		2,132,290		2,463,003
Receivable for daily variation margin		701,652		0		90,658		0
Prepaid expenses and other assets		0		0		35		0

TOTAL ASSETS		820,527,492		1,066,768,743		271,662,392		622,973,471


LIABILITIES
Payable for Fund shares redeemed		1,477,324		133,538		507,843		915,731
Payable for investment purchased		41,539,682		5,385,387		8,941,965		0
Payable for securities loaned		155,376,655		201,390,967		55,367,027		201,128,218
Payable for interest rate swaps/spread locks		0		2,554,897		0		0
Payable to investment adviser and affiliates		154,605		385,412		93,927		122,990
Payable to administrator		1,353		1,387		1,387		1,387
Accrued expenses and other liabilities		20,700		20,021		51,254		22,432

TOTAL LIABILITIES		198,570,319		209,871,609		64,963,403		202,190,758

TOTAL NET ASSETS	$	621,957,173	$	856,897,134	$	206,698,989	$	420,782,713

SECURITIES ON LOAN, AT MARKET VALUE	$	152,253,581	$	198,445,163	$	53,964,672	$	197,715,779

The accompanying notes are an integral part of these financial statements.

110

STATEMENT OF OPERATIONS — FOR THE YEAR ENDED MAY 31, 2003		MASTER PORTFOLIOS

	Managed Fixed Income			Stable Income			Strategic Value Bond			Tactical Maturity Bond


INVESTMENT INCOME
Dividends	$	65,592		$	55,650		$	24,178		$	3,848
Interest		35,127,833			21,542,789			12,636,095			8,066,402
Securities lending		445,605			159,479			344,571			1,948,612

TOTAL INVESTMENT INCOME		35,639,030			21,757,918			13,004,844			10,018,862


EXPENSES
Advisory fees		3,040,269			3,431,715			1,018,027			2,069,977
Custody		121,611			137,268			40,721			82,799
Accounting		68,991			70,874			58,945			64,175
Legal and Audit fees		33,219			33,219			33,219			33,219
Directors’ fees		4,577			4,577			4,577			4,577
Other		7,185			5,104			2,730			5,433

TOTAL EXPENSES		3,275,852			3,682,757			1,158,219			2,260,180

LESS:
Waived fees and reimbursed expenses (Note 5)		(1,141,650	)		0			(27,904	)		(769,341	)
Net expenses		2,134,202			3,682,757			1,130,315			1,490,839

NET INVESTMENT INCOME (LOSS)		33,504,828			18,075,161			11,874,529			8,528,023


NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:


NET REALIZED GAIN (LOSS) FROM
Securities		11,710,253			1,234,229			4,362,091			(1,862,497	)
Financial futures transactions		(2,024,566	)		0			(683,627	)		0

NET REALIZED GAIN (LOSS) FROM INVESTMENTS		9,685,687			1,234,229			3,678,464			(1,862,497	)


NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investments		24,136,296			4,748,672			7,462,214			5,450,992
Financial futures transactions		(380,774	)		0			(194,499	)		0
Swaps		0			(1,930,387	)		0			0

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS		23,755,522			2,818,285			7,267,715			5,450,992

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		33,441,209			4,052,514			10,946,179			3,588,495

INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	66,946,037		$	22,127,675		$	22,820,708		$	12,116,518

The accompanying notes are an integral part of these financial statements.

111

MASTER PORTFOLIOS		STATEMENTS OF CHANGES IN NET ASSETS

	MANAGED FIXED INCOME						STABLE INCOME
	For the Year Ended May 31, 2003			For the Year Ended May 31, 2002			For the Year Ended May 31, 2003			For the Year Ended May 31, 2002


Beginning net assets	$	624,427,110		$	549,442,930		$	556,147,797		$	382,480,158

OPERATIONS:
Net investment income (loss)		33,504,828			34,697,870			18,075,161			16,958,511
Net realized gain (loss) from investments sold		9,685,687			8,406,146			1,234,229			(183,837	)
Net change in unrealized appreciation (depreciation) of investments		23,755,522			4,693,388			2,818,285			689,360
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		66,946,037			47,797,404			22,127,675			17,464,034

Transactions in investors’ beneficial interests
Contributions		176,856,396			143,499,270			372,210,321			255,542,427
Withdrawals		(246,272,370	)		(116,312,494	)		(93,588,659	)		(99,338,822	)

NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS’ BENEFICIAL INTERESTS		(69,415,974	)		27,186,776			278,621,662			156,203,605

NET INCREASE (DECREASE) IN NET ASSETS		(2,469,937	)		74,984,180			300,749,337			173,667,639

ENDING NET ASSETS	$	621,957,173		$	624,427,110		$	856,897,134		$	556,147,797

	STRATEGIC VALUE BOND						TACTICAL MATURITY BOND
	For the Year Ended May 31, 2003			For the Year Ended May 31, 2002			For the Year Ended May 31, 2003			For the Year Ended May 31, 2002


Beginning net assets	$	208,534,171		$	183,482,592		$	421,808,038		$	364,754,719

OPERATIONS:
Net investment income (loss)		11,874,529			11,389,623			8,528,023			13,896,094
Net realized gain (loss) from investments sold		3,678,464			496,884			(1,862,497	)		(12,011,967	)
Net change in unrealized appreciation (depreciation) of investments		7,267,715			3,944,340			5,450,992			554,173
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		22,820,708			15,830,847			12,116,518			2,438,300

Transactions in investors’ beneficial interests
Contributions		57,528,769			48,220,861			140,946,557			135,756,153
Withdrawals		(82,184,659	)		(39,000,129	)		(154,088,400	)		(81,141,134	)

NET INCREASE (DECREASE) FROM TRANSACTIONS IN INVESTORS’ BENEFICIAL INTERESTS		(24,655,890	)		9,220,732			(13,141,843	)		54,615,019

NET INCREASE (DECREASE) IN NET ASSETS		(1,835,182	)		25,051,579			(1,025,325	)		57,053,319

ENDING NET ASSETS	$	206,698,989		$	208,534,171		$	420,782,713		$	421,808,038

The accompanying notes are an integral part of these financial statements.

112

FINANCIAL HIGHLIGHTS		MASTER PORTFOLIOS

	Ratio To Average Net Assets (Annualized)			Portfolio Turnover Rate
	Net Investment Income (Loss)	Net Expenses	Gross Expenses	Portfolio Turnover Rate


MANAGED FIXED INCOME PORTFOLIO
June 1, 2002 to May 31, 2003	5.49%	0.35%	0.54%	44%
June 1, 2001 to May 31, 2002	5.87%	0.35%	0.54%	65%
June 1, 2000 to May 31, 2001	6.34%	0.35%	0.54%	121%
June 1, 1999 to May 31, 2000	6.48%	0.36%	0.50%	65%
June 1, 1998 to May 31, 1999	6.23%	0.40%	0.45%	51%

STABLE INCOME PORTFOLIO

June 1, 2002 to May 31, 2003	2.63%	0.54%	0.54%	45%
June 1, 2001 to May 31, 2002	3.62%	0.55%	0.55%	81%
June 1, 2000 to May 31, 2001	5.89%	0.55%	0.55%	37%
June 1, 1999 to May 31, 2000	5.63%	0.47%	0.49%	40%
June 1, 1998 to May 31, 1999	5.39%	0.36%	0.41%	29%

STRATEGIC VALUE BOND PORTFOLIO

June 1, 2002 to May 31, 2003	5.81%	0.55%	0.57%	41%
June 1, 2001 to May 31, 2002	5.80%	0.56%	0.60%	75%
June 1, 2000 to May 31, 2001	6.31%	0.55%	0.57%	149%
June 1, 1999 to May 31, 2000	6.45%	0.56%	0.59%	65%
June 1, 1998 to May 31, 1999	6.05%	0.56%	0.61%	48%

TACTICAL MATURITY BOND PORTFOLIO⁽¹⁾

June 1, 2002 to May 31, 2003	2.05%	0.36%	0.54%	115%
June 1, 2001 to May 31, 2002	3.45%	0.36%	0.55%	145%
June 1, 2000 to May 31, 2001	5.58%	0.36%	0.55%	83%
June 1, 1999 to May 31, 2000	5.35%	0.37%	0.51%	74%
June 1, 1998 to May 31, 1999	5.20%	0.40%	0.45%	131%

113

MASTER PORTFOLIOS		NOTES TO FINANCIAL HIGHLIGHTS

NOTES TO FINANCIAL HIGHLIGHTS


(1)		Previously known as Positive Return Bond Portfolio. Name changed November 28, 2001.

The accompanying notes are an integral part of these financial statements.

114

NOTES TO FINANCIAL STATEMENTS		MASTER PORTFOLIOS

1. ORGANIZATION

Wells Fargo Master Trust (“Master Trust”) is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). Master Trust currently has 14 separate investment portfolios. These financial statements present the Managed Fixed Income, Stable Income, Strategic Value Bond, and Tactical Maturity Bond portfolios (each a “Portfolio” and collectively the “Portfolios”).

Interests in the Portfolios are sold without any sales charge in private placement transactions to qualified investors, including open-end management investment companies.

2. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies, which are consistently followed by the Master Trust in the preparation of its financial statements, are in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for investment companies.

SECURITY VALUATION

Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on the Nasdaq Stock Market, Inc. are valued at the Nasdaq Official Closing Price (“NOCP”), and if no NOCP is available, then at the last reported sales price. In the absence of any sale of such securities, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, valuations are determined daily by a pricing service approved by the Fund’s Board of Trustees. The service uses prices that reflect fair value as quoted by an independent pricing service or by dealers in these securities when, in the service’s judgment, these prices are readily available and are representative of the securities’ market values. For some securities, such prices are not readily available. The service generally prices these securities based on methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue; indications as to values from dealers in securities, trading characteristics and general market conditions. Securities denominated in foreign currencies are translated into U.S. dollars using the closing rates of exchange in effect on the day of valuation. Securities which cannot be valued by any of these methods are valued in good faith at fair value as determined by policies set by the Board of Trustees.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

REPURCHASE AGREEMENTS

Each Portfolio may invest in repurchase agreements and may participate in pooled repurchase agreement transactions with other Portfolios advised by Wells Fargo Funds Management, LLC. The repurchase agreements must be fully collateralized based on values that are marked to market daily. The collateral may be held by an agent bank under a tri-party agreement. It is the Portfolios’ custodian’s responsibility to value collateral daily and to take action to obtain additional collateral as necessary to maintain market value equal to or greater than the resale price. The repurchase agreements held by the Portfolios are collateralized by instruments such as U.S. Treasury, federal agency, or high-grade corporate obligations.

WHEN-ISSUED TRANSACTION

The Portfolios record a when-issued transaction on the trade date and will segregate with the custodian qualifying assets having a value sufficient to make payment for the securities purchased. Securities purchased on a when-issued basis are marked-to-market daily and the Portfolio 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.

115

MASTER PORTFOLIOS		NOTES TO FINANCIAL STATEMENTS

FUTURES CONTRACTS

Each Portfolio may purchase futures contracts to gain exposure to market changes, which may be more efficient or cost effective than actually buying the securities. A futures contract is an agreement between parties to buy or sell a security at a set price on a future date. Upon entering into such a contract, a Portfolio is required to pledge to the broker an amount of cash, U.S. Government obligations or other high-quality debt securities equal to the minimum “initial margin” requirements of the exchange on which the futures contract is traded. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin” and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Pursuant to regulations and/or published positions of the Securities and Exchange Commission (the “SEC”) for long futures positions, the Portfolio is required to segregate highly liquid securities as permitted by the SEC in connection with futures transactions in an amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. On May 31, 2003, the Managed Fixed Income and Strategic Value Bond Portfolios held the following short futures contracts:

Contracts	Portfolio	Type	Expiration Date	Notional Contract Value	Net Unrealized Appreciation (Depreciation)
250 Short	Managed Fixed Income Portfolio	5 Year Treasury Note	June 2003	$28,099,695	$(1,013,586)
100 Short	Strategic Value Bond Portfolio	5 Year Treasury Note	June 2003	11,239,875	(405,438	)

SECURITY LOANS

The Portfolios may loan securities in return for securities and cash collateral which is invested in various short-term fixed-income securities. The Portfolios may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Portfolio also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest. If the collateral falls to 100% it will be brought back to 102%.

Gain or loss in the market price of the securities loaned that may occur during the term of the loan is reflected in the value of the Portfolio. Wells Fargo Funds Management, LLC receives 40% of income on security lending activities and covers the expenses associated with securities lending activities.

As of May 31, 2003, the cash collateral of each Fund was invested as follows:

Fund Name	Repurchase Agreements		Short-Term Securities		Mid-Term Securities		Money Market Fund		Total
Managed Fixed Income Portfolio	48	%	23	%	28	%	1	%	100	%
Stable Income Portfolio	44	%	25	%	28	%	3	%	100	%
Strategic Value Bond Portfolio	40	%	30	%	29	%	1	%	100	%
Tactical Maturity Bond Portfolio	25	%	43	%	28	%	4	%	100	%

As of May 31, 2003, the value of securities on loan and the value of the related collateral were as follows:

Portfolio	Securities	Collateral
Managed Fixed Income Portfolio	152,253,581	155,376,655
Stable Income Portfolio	198,445,163	201,390,967
Strategic Value Bond Portfolio	53,964,672	55,367,027
Tactical Maturity Bond Portfolio	197,715,779	201,128,218

116

NOTES TO FINANCIAL STATEMENTS		MASTER PORTFOLIOS

MORTGAGE DOLLAR ROLL TRANSACTION

Each Portfolio may engage in mortgage dollar roll transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar roll transaction, a Portfolio sells a mortgage-backed security to a financial institution, such as a bank or broker-dealer and simultaneously agrees to repurchase a substantially similar (i.e., same type, coupon and maturity) security from the institution at a later date at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories. During the roll period, the Portfolio foregoes principal and interest paid on the securities. The Portfolio receives compensation from the interest earned on the cash proceeds of the initial sale and in the form of a fee, which is recorded as deferred income and amortized to income over the roll period, or alternatively, a lower price for the security upon its repurchase. Mortgage dollar rolls may be renewed without physical delivery of the securities subject to the contract.

INTEREST RATE SWAPS

The Portfolios may enter into various hedging transactions, such as interest rate swaps to preserve a return or spread on a particular investment or portion of its portfolio, to create synthetic adjustable-rate mortgage securities or for other purposes. Interest rate swaps involve the exchange of commitments to pay or receive interest, e.g., an exchange of floating-rate payments for fixed rate payments. The Portfolios record as an increase or decrease to interest income, the amount due or owed by the Portfolios at termination or settlement. Interest rate swaps are value based on prices quoted by independent brokers. These valuations represent the net present value of all future cash settlement amounts based on implied forward interest rates.

As of May 31, 2003, the following Portfolio was engaged in open Interest Rate Swaps. The Portfolio was exchanging a fixed interest rate stream based on the notional principal, and receiving a floating rate income stream based on that same principal.

Portfolio

Swap Counter Party

Notional Principal

Floating Rate Index

Maturity Date

Net Unrealized
Gain/(Loss)

Stable Income

Lehman Brothers

22,500,000

USD Libor BBA

October 15, 2005

(1,877,672

)

Stable Income

Lehman Brothers

15,000,000

USD Libor BBA

July 25, 2007

(677,225

)

WRITTEN OPTIONS

An option is a right to buy or sell a particular security at a specified price within a limited period of time. The buyer of the option, in return for a premium paid to the seller, has the right to buy (in the case of a call option) or sell (in the case of a put option) the underlying security of the contract. The premium received in cash from writing options is recorded as an asset with an equal liability that is adjusted to reflect the option’s value. The premium received from writing options which expire is recorded as realized gains. The premium received from writing option, which are exercised or closed is offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the security or currency purchased. Options are valued based on their quoted daily settlement prices.

Risks could arise from entering into written options transactions from the potential inability of counterparties to meet the terms of their contracts, the potential inability to enter into a closing transaction because of an illiquid secondary market, and from unexpected movements in interest or exchange rates or securities values. At May 31, 2003, the Portfolios held no written options.

FEDERAL INCOME TAXES

Each Portfolio is treated as a separate entity for federal income tax purposes. The Portfolios are not required to pay federal income taxes on their net investment income and net capital gain as they are treated as partnerships for federal income tax purposes. All interest, dividends, gain and loss of the Portfolios are deemed to have been “passed through” to the interestholders in proportion to their holdings of the Portfolios regardless of whether such interest, dividends, or gain have been distributed by the Portfolios.

The Portfolios use the “aggregate method” (as described in the applicable regulation under the Internal Revenue Code) for allocation of capital gains and losses to interestholders.

3. ADVISORY FEES

The investment adviser of each Portfolio is Wells Fargo Funds Management, LLC (“Funds Management”). The Portfolios’ adviser is responsible for implementing the investment policies and guidelines for the Portfolios, and for supervising the sub-advisers who are responsible for the day-to-day portfolio management of the Portfolios.

117

MASTER PORTFOLIOS		NOTES TO FINANCIAL STATEMENTS

Funds Management has retained the services of certain of its affiliates as investment sub-advisers (Galliard Capital Management, Inc. and Peregrine Capital Management, Inc.) on selected Portfolios. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by the Portfolios to the adviser. The current annual investment advisory fees and the associated sub-adviser and sub-advisory fees are as follows, with the fees expressed as a percentage of a Portfolio’s average daily net assets.

Portfolio	Advisory Fee	Sub-adviser	Sub-Advisory Fee
Managed Fixed Income Portfolio	0.50%	Galliard Capital Management	0-500 Million, 0.10%
			500 Million-1.5 Billion, 0.05%
			Greater than 1.5 Billion, 0.03%
Stable Income Portfolio	0.50%	Galliard Capital Management	0-500 Million, 0.10%
			500 Million-1.5 Billion, 0.05%
			Greater than 1.5 Billion, 0.03%
Strategic Value Bond Portfolio	0.50%	Galliard Capital Management	0-500 Million, 0.10%
			500 Million-1.5 Billion, 0.05%
			Greater than 1.5 Billion, 0.03%
Tactical Maturity Bond Portfolio	0.50%	Peregrine Capital Management	0-10 Million, 0.40%
			10-25 Million, 0.30%
			25-300 Million, 0.20%
			Greater than 300 Million, 0.10%

4. OTHER FEES AND TRANSACTIONS WITH AFFILIATES

Currently there are no administration fees charged to the Portfolios at the master level.

Wells Fargo Bank Minnesota, N.A. (“WFB, MN”) serves as the custodian for each Portfolio and may appoint certain sub-custodians to custody those Portfolios’ foreign securities and assets held in foreign countries. WFB, MN receives a fee with respect to each Portfolio at an annual rate of 0.02% of each Portfolio’s average daily net assets.

Effective the first quarter of 2003, PFPC Inc. (“PFPC”) serves as fund accountant for the Portfolios. PFPC currently does not receive an annual asset based fund complex fee or an annual fixed fee for its services as fund accountant to the Portfolios, but is entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. Prior to PFPC, Forum Accounting Services, LLC served as fund accountant and was entitled to receive a fixed monthly fee, a basis point fee of 0.0025% of the average daily net assets of each Portfolio, plus out-of-pocket expenses.

5. WAIVED FEES AND REIMBURSED EXPENSES

All amounts shown as waived fees or reimbursed expenses on the Statement of Operations, for the period ended May 31, 2003 were waived by Funds Management, first from advisory fees, and then any remaining amount from custody fees collected.

6. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, exclusive of short-term securities (securities with maturities of one year or less at purchase date) for each Portfolio for the year ended May 31, 2003, were as follows:

Portfolio	Purchases at Cost		Sales Proceeds
Managed Fixed Income Portfolio	$	261,857,396	$	280,412,845
Stable Income Portfolio		737,305,266		296,928,426
Strategic Value Bond Portfolio		80,023,418		84,068,321
Tactical Maturity Bond Portfolio		683,037,755		264,232,808

118

NOTES TO FINANCIAL STATEMENTS		MASTER PORTFOLIOS

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO MASTER TRUST:

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the Managed Fixed Income Portfolio, Stable Income Portfolio, Strategic Value Bond Portfolio, and Tactical Maturity Bond Portfolio, four of the portfolios constituting the Wells Fargo Master Trust (collectively the “Portfolios”), as of May 31, 2003, and the related statements of operations, statements of changes in net assets and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned funds of Wells Fargo Master Trust as of May 31, 2003, the results of their operations, changes in their net assets, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America.

LOGO

San Francisco, California

July 18, 2003

119

MASTER PORTFOLIOS		BOARD OF TRUSTEES

BOARD OF TRUSTEES

The following table provides basic information about the Board of Trustees (“Trustees”) of Wells Fargo Fund’s Trust (the “Trust”) and supplements, and should be read in conjunction with, the Prospectus and the Statement of Additional Information* of each Fund. Each of the Trustees listed below acts in identical capacities for each of the 90 funds comprising the Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the “Fund Complex”). All of the non-interested Trustees are also members of the Audit and Nominating Committees of each Trust in the Fund Complex. The address of each Trustee and Officer is 525 Market Street, 20th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees.

INTERESTED TRUSTEES**

Name and Age	Position held and length of service ***	Principal occupations during past five years	Other Directorships
Robert C. Brown 71	Trustee since 1992	Retired. Director, Federal Farm Credit Banks Funding Corporation and Farm Credit System Financial Assistance Corporation until February 1999.	None

J. Tucker Morse 58	Trustee since 1987	Private Investor/Real Estate Developer; Chairman of White Point Capital, LLC.	None


NON-INTERESTED TRUSTEES
Name and Age	Position held and length of service ***	Principal occupations during past five years	Other Directorships
Thomas S. Goho 60	Trustee since 1987	Wake Forest University, Calloway School of Business and Accountancy, Benson-Pruitt Professorship since 1999, Associate Professor of Finance 1994 - 1999.	None

Peter G. Gordon 60	Trustee since 1998 (Lead Trustee since 2001)	Chairman, CEO, and Co-Founder of Crystal Geyser Water Company and President of Crystal Geyser Roxane Water Company.	None

Richard M. Leach 69	Trustee since 1987	Retired. Prior there to, President of Richard M. Leach Associates (a financial consulting firm).	None

Timothy J. Penny 51	Trustee since 1996	Senior Counselor to the public relations firm of Himle-Horner and Senior Fellow at the Humphrey Institute, Minneapolis, Minnesota (a public policy organization).	None

Donald C. Willeke 62	Trustee since 1996	Principal in the law firm of Willeke & Daniels.	None

120

BOARD OF TRUSTEES		MASTER PORTFOLIOS

OFFICERS

Name and Age	Position held and length of service	Principal occupations during past five years	Other Directorships
Karla M. Rabusch 44	President, since 2003	Executive Vice President of Wells Fargo Bank, N.A. President of Wells Fargo Funds Management, LLC. Senior Vice President and Chief Administrative Officer of Wells Fargo Funds Management, LLC from March 2001 to March 2003. Vice President of Wells Fargo Bank, N.A. from December 1997 to May 2000.	None

Stacie D. DeAngelo 34	Treasurer, since 2003	Vice President of Wells Fargo Bank, N.A. Vice President of Operations for Wells Fargo Funds Management, LLC. Prior thereto, Operations Manager at Scudder Weisel Capital, LLC (2000 to 2001), Director of Shareholder Services at BISYS Fund Services (1999 to 2000) and Assistant Vice President of Operations with Nicholas-Applegate Capital Management (1993 to 1999).	None

C. David Messman 42	Secretary, since 2000	Vice President and Counsel of Wells Fargo Bank, N.A. since January 1996. Vice President and Secretary of Wells Fargo Funds Management, LLC since March 2001.	None

The Statement of Additional Information includes additional information about the Funds’ Trustees and is available, without charge, upon request, by calling 1-800-222-8222.

Currently, two of the seven Trustees are considered “interested persons” of the Trusts as defined in the Investment Company Act of 1940. One of the interested Trustees, Robert C. Brown, owns securities of Wells Fargo & Company, and one of the interested Trustees, J. Tucker Morse, is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, which is not itself affiliated with Wells Fargo Funds Management, LLC.

***

Length of service dates reflects a Trustee’s commencement of service with the Trust’s predecessor entities.

121

INCOME FUNDS		LIST OF ABBREVIATIONS

The following is a list of common abbreviations for terms and entities which may have appeared in this report.


ABAG		— Association of Bay Area Governments

ADR		— American Depository Receipts

AMBAC		— American Municipal Bond Assurance Corporation

AMT		— Alternative Minimum Tax

ARM		— Adjustable Rate Mortgages

BART		— Bay Area Rapid Transit

CDA		— Community Development Authority

CDSC		— Contingent Deferred Sales Charge

CGIC		— Capital Guaranty Insurance Company

CGY		— Capital Guaranty Corporation

CLO		— Collateralized Lease Obligation

CMB		— Collateralized Mortgage Backed

CMT		— Constant Maturity Treasury

COFI		— Cost of Funds Index

Connie Lee		— Connie Lee Insurance Company

COP		— Certificate of Participation

CP		— Commercial Paper

CTF		— Common Trust Fund

DW&P		— Department of Water & Power

DWR		— Department of Water Resources

EDFA		— Education Finance Authority

FGIC		— Financial Guaranty Insurance Corporation

FHA		— Federal Housing Authority

FHLB		— Federal Home Loan Bank

FHLMC		— Federal Home Loan Mortgage Corporation

FNMA		— Federal National Mortgage Association

FRN		— Floating Rate Notes

FSA		— Financial Security Assurance, Inc

GNMA		— Government National Mortgage Association

GO		— General Obligation

HFA		— Housing Finance Authority

HFFA		— Health Facilities Financing Authority

IDA		— Industrial Development Authority

LIBOR		— London Interbank Offered Rate

LLC		— Limited Liability Corporation

LOC		— Letter of Credit

LP		— Limited Partnership

MBIA		— Municipal Bond Insurance Association

MFHR		— Multi-Family Housing Revenue

MUD		— Municipal Utility District

MTN		— Medium Term Note

PCFA		— Pollution Control Finance Authority

PCR		— Pollution Control Revenue

PFA		— Public Finance Authority

PLC		— Private Placement

PSFG		— Public School Fund Guaranty

RAW		— Revenue Anticipation Warrants

RDA		— Redevelopment Authority

RDFA		— Redevelopment Finance Authority

R&D		— Research & Development

SBA		— Small Business Administration

SFMR		— Single Family Mortgage Revenue

TBA		— To Be Announced

TRAN		— Tax Revenue Anticipation Notes

USD		— Unified School District

V/R		— Variable Rate

WEBS		— World Equity Benchmark Shares

122

LOGO

More information about Wells Fargo Funds^® is available free upon request. To obtain literature, please write or call:

Wells Fargo Funds

PO Box 8266

Boston, MA 02266-8266

Wells Fargo Funds Investor Services: 1-800-222-8222 or visit our Web site at www.wellsfargofunds.com.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wells Fargo Funds. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. For a prospectus containing more complete information, including charges and expenses, call 1-800-222-8222. Read the prospectus carefully before you invest or send money.

Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for the Wells Fargo Funds. Other affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds. The Funds are distributed by Stephens Inc., Member NYSE/SIPC. Wells Fargo & Company and its affiliates are not affiliated with Stephens, Inc.

AR 012 (5/03)

ITEM 2. CODE OF ETHICS

Not applicable pursuant to SEC Release No. 34-47262 (January 27, 2003).

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable pursuant to SEC Release No. 34-47262 (January 27, 2003).

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable pursuant to SEC Release No. 34-47265 (January 28, 2003).

ITEMS 5-6. [RESERVED]

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR

CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 8. [RESERVED]

ITEM 9. CONTROLS AND PROCEDURES

(a) Not applicable pursuant to SEC Release No. 34-47262 (January 27, 2003).

(b) There were no significant changes in the Registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 10. EXHIBITS

(a) Not applicable pursuant to SEC Release No. 34-47262 (January 27, 2003).

(b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached as Exhibit 99.CERT.

(c) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) is attached as Exhibit 99.906CERT. The certifications furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WELLS FARGO FUNDS TRUST

By:		/s/ KARLA M. RABUSCH
		Karla M. Rabusch President

Date: July 28, 2003

WELLS FARGO FUNDS TRUST

By:		/s/ STACIE D. DEANGELO
		Stacie D. DeAngelo Treasurer

Date: July 28, 2003