UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-21269
Wells Fargo Advantage Income Opportunities Fund
(Exact name of registrant as specified in charter)
525 Market Street, 12th Floor, San Francisco, CA 94105
(Address of principal executive offices) (Zip code)
C. David Messman
Wells Fargo Funds Management, LLC
525 Market Street, 12th Floor, 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: April 30, 2010
Date of reporting period: July 31, 2010
ITEM 1. SCHEDULE OF INVESTMENTS
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
CORPORATE BONDS & NOTES: 114.93%
CONSUMER DISCRETIONARY: 18.06%
AUTO COMPONENTS: 1.93%
$ 4,455,000 COOPER TIRE & RUBBER COMPANY 7.63% 03/15/2027 $ 4,009,500
1,137,000 GOODYEAR TIRE & RUBBER COMPANY 9.00 07/01/2015 1,188,165
6,830,000 GOODYEAR TIRE & RUBBER COMPANY 10.50 05/15/2016 7,649,600
12,847,265
-------------
DIVERSIFIED CONSUMER SERVICES: 3.06%
4,055,000 CARRIAGE SERVICES INCORPORATED 7.88 01/15/2015 4,024,588
9,376,000 SERVICE CORPORATION INTERNATIONAL 7.50 04/01/2027 8,461,840
880,000 SERVICE CORPORATION INTERNATIONAL 8.00 11/15/2021 917,400
6,550,000 STONEMOR PARTNERS LP ++ 10.25 12/01/2017 6,943,000
20,346,828
-------------
HOTELS, RESTAURANTS & LEISURE: 3.59%
1,900,000 AMERISTAR CASINOS INCORPORATED 9.25 06/01/2014 2,028,250
1,030,000 BOYD GAMING CORPORATION 7.75 12/15/2012 1,035,150
975,000 HARRAHS ENTERTAINMENT CORPORATION 10.00 12/15/2018 820,219
2,555,000 HARRAHS ENTERTAINMENT CORPORATION 11.25 06/01/2017 2,759,400
940,000 HARRAHS ENTERTAINMENT CORPORATION++ 12.75 04/15/2018 914,150
1,685,000 INN OF THE MOUNTAIN GODS RESORT & CASINO####(i) 12.00 11/15/2049 724,550
920,000 MGM MIRAGE INCORPORATED 6.63 07/15/2015 770,500
1,645,000 MGM MIRAGE INCORPORATED 8.50 09/15/2010 1,649,113
4,335,000 MGM MIRAGE INCORPORATED++ 11.38 03/01/2018 4,096,575
125,000 NCL CORPORATION LIMITED 11.75 11/15/2016 138,906
2,880,000 PINNACLE ENTERTAINMENT INCORPORATED 7.50 06/15/2015 2,793,600
645,000 POKAGON GAMING AUTHORITY++ 10.38 06/15/2014 671,606
1,130,000 SCIENTIFIC GAMES CORPORATION++ 9.25 06/15/2019 1,197,800
385,000 SENECA GAMING CORPORATION 7.25 05/01/2012 379,225
2,090,000 SHINGLE SPRINGS TRIBAL GAMING AUTHORITY++ 9.38 06/15/2015 1,713,800
2,075,000 SPEEDWAY MOTORSPORTS INCORPORATED 8.75 06/01/2016 2,202,094
23,894,938
-------------
HOUSEHOLD DURABLES: 0.05%
125,000 LENNAR CORPORATION 12.25 06/01/2017 143,438
149,000 SEALY MATTRESS COMPANY++ 10.88 04/15/2016 166,880
310,318
-------------
INTERNET & CATALOG RETAIL: 0.30%
990,000 QVC INCORPORATED++ 7.50 10/01/2019 1,019,700
925,000 TICKETMASTER ENTERTAINMENT INCORPORATED 10.75 08/01/2016 980,500
2,000,200
-------------
MEDIA: 6.83%
2,975,000 CABLEVISION SYSTEM CORP++ 8.63 09/15/2017 3,194,406
14,756,015 CCH II CAPITAL CORPORATION 13.50 11/30/2016 17,522,768
940,000 CCO HOLDINGS LLC++ 8.13 04/30/2020 994,050
2,290,000 CHARTER COMMUNICATIONS INCORPORATED (o)(o) ++ 8.00 04/30/2012 2,415,950
11,640,000 CHARTER COMMUNICATIONS INCORPORATED (o)(o) ++ 10.88 09/15/2014 13,036,800
2,260,000 DISH DBS CORPORATION 7.88 09/01/2019 2,401,250
775,000 LIN TELEVISION CORP 8.38 04/15/2018 796,313
2,575,000 SALEM COMMUNICATIONS 9.63 12/15/2016 2,723,063
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
1
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
MEDIA (continued)
250,000 SIRIUS XM RADIO INCORPORATED++ 9.75% 09/01/2015 272,500
1,070,000 SIRIUS XM RADIO INCORPORATED++ 11.25 06/15/2013 $ 1,163,625
815,000 SIRIUS XM RADIO INCORPORATED++ 13.00 08/01/2014 922,988
3,619,000 YOUNG BROADCASTING INCORPORATED#### 8.75 01/15/2014 36
2,325,000 YOUNG BROADCASTING INCORPORATED#### 10.00 03/01/2011 23
45,443,772
-------------
MULTILINE RETAIL: 0.20%
1,270,000 SAKS INCORPORATED 9.88 10/01/2011 1,346,200
-------------
SPECIALTY RETAIL: 0.97%
6,550,000 AMERICAN ACHIEVEMENT CORPORATION 8.25 04/01/2012 6,468,125
-------------
TEXTILES, APPAREL & LUXURY GOODS: 1.13%
3,850,000 OXFORD INDUSTIRAL INCORPORATED 11.38 07/15/2015 4,312,000
3,235,000 VISANT CORPORATION 7.63 10/01/2012 3,239,044
7,551,044
-------------
CONSUMER STAPLES: 1.81%
BEVERAGES: 0.04%
250,000 COTT BEVERAGES INCORPORATED++ 8.38 11/15/2017 258,750
-------------
FOOD PRODUCTS: 1.77%
3,075,000 DOLE FOOD COMPANY INCORPORATED++ 13.88 03/15/2014 3,705,375
3,035,000 SMITHFIELD FOODS INCORPORATED 7.00 08/01/2011 3,088,113
4,465,000 SMITHFIELD FOODS INCORPORATED++ 10.00 07/15/2014 4,989,638
11,783,126
-------------
ENERGY: 14.86%
ENERGY EQUIPMENT & SERVICES: 4.69%
2,210,000 BRISTOW GROUP INCORPORATED 7.50 09/15/2017 2,198,950
4,850,000 FORBES ENERGY SERVICES LIMITED 11.00 02/15/2015 4,352,875
3,395,000 GULFMARK OFFSHORE INCORPORATED 7.75 07/15/2014 3,361,050
4,110,000 HERCULES OFFSHORE LLC++ 10.50 10/15/2017 3,678,450
5,325,000 HORNBECK OFFSHORE SERVICES INCORPORATED SERIES B 6.13 12/01/2014 4,779,188
4,695,000 HORNBECK OFFSHORE SERVICES INCORPORATED SERIES B 8.00 09/01/2017 4,395,694
205,000 OFFSHORE LOGISTICS INCORPORATED 6.13 06/15/2013 205,513
860,000 PARKER DRILLING COMPANY++ 9.13 04/01/2018 855,700
7,495,000 PHI INCORPORATED 7.13 04/15/2013 7,157,725
210,000 PRIDE INTERNATIONAL INCORPORATED 8.50 06/15/2019 234,675
31,219,820
-------------
OIL, GAS & CONSUMABLE FUELS: 10.17%
1,185,000 ALON REFINING KROTZ SPRINGS INCORPORATED 13.50 10/15/2014 1,164,263
1,280,000 ATLAS ENERGY RESOURCES LLC 12.13 08/01/2017 1,478,400
5,085,000 CHESAPEAKE ENERGY CORPORATION 9.50 02/15/2015 5,707,913
2,665,000 CONSOL ENERGY INCORPORATED++ 8.25 04/01/2020 2,864,875
955,000 EL PASO CORPORATION 12.00 12/12/2013 1,141,225
1,820,000 EL PASO CORPORATION 7.42 02/15/2037 1,662,421
1,115,000 FOREST OIL CORPORATION 8.50 02/15/2014 1,195,838
1,870,000 FOREST OIL CORPORATION 7.25 06/15/2019 1,893,375
4,265,000 HOLLY CORPORATION++ 9.88 06/15/2017 4,440,931
1,770,000 MURRAY ENERGY CORPORATION++ 10.25 10/15/2015 1,831,950
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
2
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
OIL, GAS & CONSUMABLE FUELS (continued)
1,185,000 NEWFIELD EXPLORATION COMPANY 6.88% 02/01/2020 $ 1,232,400
8,705,000 PEABODY ENERGY CORPORATION 7.88 11/01/2026 9,151,131
215,000 PENN VIRGINIA CORPORATION 10.38 06/15/2016 236,500
1,065,000 PETROHAWK ENERGY CORPORATION 10.50 08/01/2014 1,187,475
2,045,000 PETROHAWK ENERGY CORPORATION 7.88 06/01/2015 2,116,575
3,170,000 PIONEER NATURAL RESOURCE COMPANY 7.50 01/15/2020 3,412,568
6,380,000 PLAINS EXPLORATION & PRODUCTION COMPANY 8.63 10/15/2019 6,778,750
4,940,000 SABINE PASS LNG LP 7.25 11/30/2013 4,606,550
5,870,000 SANDRIDGE ENERGY INCORPORATED++ 8.75 01/15/2020 5,987,400
1,250,000 SOUTHWESTERN ENERGY COMPANY 7.50 02/01/2018 1,400,000
1,450,000 STALLION OILFIELD HOLDINGS INCORPORATED++ 10.50 02/15/2015 1,428,250
950,000 STONE ENERGY CORPORATION 8.63 02/01/2017 901,313
2,235,000 TESORO CORPORATION 7.50 07/17/2012 2,141,421
1,390,000 TESORO CORPORATION 6.50 06/01/2017 1,341,350
2,185,000 TESORO CORPORATION 9.75 06/01/2019 2,370,725
67,673,599
-------------
FINANCIALS: 25.16%
CAPITAL MARKETS: 2.11%
1,845,000 E*TRADE FINANCIAL CORPORATION 7.38 09/15/2013 1,768,894
9,741,000 E*TRADE FINANCIAL CORPORATION & 12.50 11/30/2017 10,958,625
1,320,000 PENSON WORLDWIDE INCORPORATED 12.50 05/15/2017 1,306,800
14,034,319
-------------
COMMERCIAL BANKS: 3.65%
4,375,000 CAPITALSOURCE INCORPORATED++ 12.75 07/15/2014 5,058,594
17,134,313 CIT GROUP INCORPORATED 7.00 05/01/2013 16,962,970
2,350,000 CIT GROUP INCORPORATED 7.00 05/01/2014 2,285,375
24,306,939
-------------
CONSUMER FINANCE: 13.07%
1,900,000 AMERICAN GENERAL FINANCE CORPORATION 6.90 12/15/2017 1,619,750
2,280,000 CLEARWIRE COMMUNICATIONS FINANCE CORPORATION++ 12.00 12/01/2015 2,388,300
3,140,000 CLEARWIRE COMMUNICATIONS FINANCE CORPORATION++ 12.00 12/01/2015 3,281,300
3,865,000 FORD MOTOR CREDIT COMPANY 9.88 08/10/2011 4,077,312
130,000 GMAC LLC 6.88 09/15/2011 132,600
2,344,000 GMAC LLC 6.75 12/01/2014 2,332,280
1,990,000 GMAC LLC 8.00 11/01/2031 1,942,738
1,495,000 GMAC LLC 8.00 11/01/2031 1,454,617
2,862,000 GMAC LLC 6.88 08/28/2012 2,926,395
6,855,000 GMAC LLC 7.50 12/31/2013 7,086,356
5,119,000 GMAC LLC 8.00 12/31/2018 4,946,234
2,970,000 GMAC LLC++ 8.00 03/15/2020 3,062,813
3,026,161 HOMER CITY FUNDING LLC 8.73 10/01/2026 2,753,807
2,875,000 INTERNATIONAL LEASE FINANCE CORPORATION 4.75 01/13/2012 2,774,375
4,170,000 INTERNATIONAL LEASE FINANCE CORPORATION 5.30 05/01/2012 4,044,900
865,000 INTERNATIONAL LEASE FINANCE CORPORATION 6.38 03/25/2013 839,050
1,700,000 INTERNATIONAL LEASE FINANCE CORPORATION++ 8.63 09/15/2015 1,729,750
2,050,000 INTERNATIONAL LEASE FINANCE CORPORATION SERIES MTN 5.75 06/15/2011 2,029,500
8,465,000 JBS USA FINANCE INCORPORATED 11.63 05/01/2014 9,755,913
1,700,000 LBI ESCROW CORPORATION++ 8.00 11/01/2017 1,787,080
4,555,000 LEVEL 3 FINANCING INCORPORATED++ 10.00 02/01/2018 4,150,744
105,000 NIELSEN FINANCE LLC SENIOR DISCOUNT NOTE # 0.00 08/01/2016 102,375
1,290,000 PINNACLE FOODS LLC CORPORATION++ 9.25 04/01/2015 1,333,538
10,900,000 SPRINT CAPITAL CORPORATION 6.88 11/15/2028 9,483,000
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
3
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
CONSUMER FINANCE (continued)
4,725,000 SPRINT CAPITAL CORPORATION 6.90% 05/01/2019 $ 4,506,469
6,133,000 SPRINT CAPITAL CORPORATION 8.38 03/15/2012 6,500,980
87,042,176
-------------
DIVERSIFIED FINANCIAL SERVICES: 3.04%
385,000 AAC GROUP HOLDING CORPORATION 10.25 10/01/2012 381,150
8,820,000 ALLY FINANCIAL INCORPORATED 8.30 02/12/2015 9,283,050
7,815,000 LEUCADIA NATIONAL CORPORATION 8.13 09/15/2015 8,127,600
2,450,000 SHIP FINANCE INTERNATIONAL LIMITED 8.50 12/15/2013 2,431,625
20,223,425
-------------
REAL ESTATE INVESTMENT TRUSTS: 2.68%
11,580,000 DUPONT FABROS TECHNOLOGY INCORPORATED++ 8.50 12/15/2017 12,318,225
490,000 HOST MARRIOTT CORPORATION++ 9.00 05/15/2017 537,775
3,260,000 OMEGA HEALTHCARE INVESTORS INCORPORATED 7.00 04/01/2014 3,304,825
1,560,000 VENTAS INCORPORATED 9.00 05/01/2012 1,653,432
17,814,257
-------------
THRIFTS & MORTGAGE FINANCE: 0.61%
4,020,000 PROVIDENT FUNDING ASSOCIATES, LP++ 10.25 04/15/2017 4,100,400
-------------
HEALTH CARE: 3.95%
BIOTECHNOLOGY: 0.18%
1,125,000 TALECRIS BIOTHERAPEUTICS HOLDINGS COMPANY++ 7.75 11/15/2016 1,209,375
-------------
HEALTH CARE EQUIPMENT & SUPPLIES: 0.47%
1,215,000 BIOMET INCORPORATED & 10.38 10/15/2017 1,345,613
1,585,000 BIOMET INCORPORATED 11.63 10/15/2017 1,777,181
3,122,794
-------------
HEALTH CARE PROVIDERS & SERVICES: 2.89%
2,440,000 APRIA HEALTHCARE GROUP++ 11.25 11/01/2014 2,610,800
6,745,000 HCA INCORPORATED 9.25 11/15/2016 7,284,600
3,732,000 HCA INCORPORATED & 9.63 11/15/2016 4,030,560
1,830,000 HCA INCORPORATED 7.88 02/01/2011 1,852,875
250,000 HCA INCORPORATED++ 8.50 04/15/2019 276,250
1,750,000 OMNICARE INCORPORATED 6.88 12/15/2015 1,820,000
1,295,000 PROSPECT MEDICAL HOLDING 12.75 07/15/2014 1,385,650
19,260,735
-------------
LIFE SCIENCES TOOLS & SERVICES: 0.30%
1,855,000 BIO-RAD LABORATORIES INCORPORATED 8.00 09/15/2016 1,984,850
-------------
PHARMACEUTICALS: 0.11%
650,000 MYLAN INCORPORATED 7.63 07/15/2017 690,625
-------------
INDUSTRIALS: 10.57%
AEROSPACE & DEFENSE: 3.95%
4,470,000 ALLIANT TECHSYSTEMS INCORPORATED 6.75 04/01/2016 4,458,825
800,000 DIGITALGLOBE INCORPORATED++ 10.50 05/01/2014 873,000
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
4
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
AEROSPACE & DEFENSE (continued)
1,030,000 GENCORP INCORPORATED 9.50% 08/15/2013 $ 1,045,450
1,140,000 GEOEYE INCORPORATED++ 9.63 10/01/2015 1,197,000
3,265,000 HEXCEL CORPORATION 6.75 02/01/2015 3,232,350
2,570,000 KRATOS DEFENSE & SECURITY SOLUTIONS INCORPORATED 10.00 06/01/2017 2,663,163
5,506,000 L-3 COMMUNICATIONS HOLDINGS INCORPORATED 6.38 10/15/2015 5,643,650
5,585,000 L-3 COMMUNICATIONS HOLDINGS INCORPORATED 5.88 01/15/2015 5,696,700
1,445,000 WYLE SERVICES CORPORATION++ 10.50 04/01/2018 1,473,900
26,284,038
-------------
AIRLINES: 0.03%
175,000 DELTA AIR LINES INCORPORATED++ 12.25 03/15/2015 191,844
-------------
COMMERCIAL SERVICES & SUPPLIES: 2.69%
4,385,000 CASELLA WASTE SYSTEMS INCORPORATED++ 11.00 07/15/2014 4,785,131
1,840,000 CORRECTIONS CORPORATION OF AMERICA 6.25 03/15/2013 1,867,600
1,410,000 CORRECTIONS CORPORATION OF AMERICA 7.75 06/01/2017 1,505,175
2,205,000 GEO GROUP INCORPORATED++ 7.75 10/15/2017 2,276,663
550,000 INTERFACE INCORPORATED 11.38 11/01/2013 621,500
3,520,000 IRON MOUNTAIN INCORPORATED 8.38 08/15/2021 3,740,000
3,050,000 SGS INTERNATIONAL INCORPORATED 12.00 12/15/2013 3,126,250
17,922,319
-------------
INDUSTRIAL CONGLOMERATES: 0.62%
3,985,000 OTTER TAIL CORPORATION 9.00 12/15/2016 4,154,363
-------------
MACHINERY: 1.03%
1,440,000 CLEAVER-BROOKS INCORPORATED++ 12.25 05/01/2016 1,422,000
4,589,823 COMMERCIAL VEHICLE GROUP INCORPORATED&++ 13.00 02/15/2013 4,624,247
940,000 COMMERCIAL VEHICLE GROUP INCORPORATED 8.00 07/01/2013 796,650
6,842,897
-------------
PROFESSIONAL SERVICES: 0.04%
230,000 AFFINIA GROUP INCORPORATED++ 10.75 08/15/2016 256,450
-------------
ROAD & RAIL: 2.03%
860,000 AMSTED INDUSTRIES INCORPORATED++ 8.13 03/15/2018 881,500
1,184,000 KANSAS CITY SOUTHERN 13.00 12/15/2013 1,428,200
8,285,000 KANSAS CITY SOUTHERN 8.00 06/01/2015 8,833,881
1,600,000 RAILAMERICA INCORPORATED 9.25 07/01/2017 1,732,000
205,000 SWIFT TRANSPORTATION COMPANY INCORPORATED++ 8.19 05/15/2015 190,650
490,000 SWIFT TRANSPORTATION COMPANY INCORPORATED++ 12.50 05/15/2017 482,650
13,548,881
-------------
TRANSPORTATION INFRASTRUCTURE: 0.18%
1,190,000 UNITED MARITIME GROUP++ 11.75 06/15/2015 1,181,075
-------------
INFORMATION TECHNOLOGY: 9.79%
COMMUNICATIONS EQUIPMENT: 1.99%
585,000 ECHOSTAR DBS CORPORATION 7.13 02/01/2016 601,088
3,100,000 LUCENT TECHNOLOGIES INCORPORATED 6.45 03/15/2029 2,092,500
11,732,499 LUCENT TECHNOLOGIES INCORPORATED 1.00 03/08/2015 7,675,988
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
5
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
COMMUNICATIONS EQUIPMENT (continued)
3,225,000 LUCENT TECHNOLOGIES INCORPORATED SERIES B 2.88% 06/15/2025 $ 2,858,156
13,227,732
-------------
COMPUTERS & PERIPHERALS: 0.06%
470,000 STRATUS TECHNOLOGIES INCORPORATED 12.00 03/29/2015 410,075
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS: 4.45%
5,620,000 DA-LITE SCREEN COMPANY INCORPORATED++ 12.50 04/01/2015 5,648,100
2,820,000 INTCOMEX INCORPORATED++ 13.25 12/15/2014 2,996,250
13,532,000 JABIL CIRCUIT INCORPORATED 8.25 03/15/2018 14,749,880
3,380,000 KEMET CORPORATION++ 10.50 05/01/2018 3,447,600
2,530,000 VIASYSTEM GROUP INCORPORATED++ 12.00 01/15/2015 2,754,538
29,596,368
-------------
INTERNET SOFTWARE & SERVICES: 0.91%
2,125,000 EQUINIX INCORPORATED 8.13 03/01/2018 2,215,313
3,395,000 TERREMARK WORLDWIDE INCORPORATED++ 12.00 06/15/2017 3,870,300
6,085,613
-------------
IT SERVICES: 2.07%
2,345,000 FIRST DATA CORPORATION 9.88 09/24/2015 1,887,725
6,475,080 FIRST DATA CORPORATION& 10.55 09/24/2015 4,969,624
2,835,000 IPAYMENT INCORPORATED 9.75 05/15/2014 2,597,569
1,600,000 UNISYS CORPORATION++ 12.75 10/15/2014 1,824,000
1,155,000 UNISYS CORPORATION++ 14.25 09/15/2015 1,351,350
1,065,000 UNISYS CORPORATION 12.50 01/15/2016 1,163,513
13,793,781
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT: 0.31%
2,025,000 ADVANCED MICRO DEVICES INCORPORATED 5.75 08/15/2012 2,035,125
-------------
MATERIALS: 6.64%
CHEMICALS: 1.22%
2,855,000 HUNTSMAN INTERNATIONAL LLC++ 5.50 06/30/2016 2,626,600
4,807,125 LYONDELL CHEMICAL COMPANY 11.00 05/01/2018 5,173,668
300,000 NOVA CHEMICALS CORPORATION++ 8.38 11/01/2016 307,125
8,107,393
-------------
CONSTRUCTION MATERIALS: 2.18%
1,480,000 CPG INTERNATIONAL INCORPORATED+/- 7.50 07/01/2012 1,435,600
3,415,000 CPG INTERNATIONAL INCORPORATED 10.50 07/01/2013 3,449,150
3,025,000 CPG INTERNATIONAL INCORPORATED 10.63 09/01/2014 3,267,000
3,725,000 HEADWATERS INCORPORATION 11.38 11/01/2014 3,780,875
2,565,000 TEXAS INDUSTRIES INCORPORATED 7.25 07/15/2013 2,609,888
14,542,513
-------------
CONTAINERS & PACKAGING: 0.94%
5,780,000 EXOPACK HOLDING CORPORPATION 11.25 02/01/2014 5,873,925
350,000 GRAHAM PACKAGING COMPANY INCORPORATED++ 8.25 01/01/2017 350,000
6,223,925
-------------
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
6
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
METALS & MINING: 1.42%
2,055,000 CALIFORNIA STEEL INDUSTRIES INCORPORATED 6.13% 03/15/2014 $ 1,983,075
1,185,000 EDGEN MURRAY CORPORATION++ 12.25 01/15/2015 992,438
5,725,000 FREEPORT-MCMORAN COPPER & GOLD INCORPORATED 8.38 04/01/2017 6,397,688
5,985,000 INDALEX HOLDINGS CORPORATION#### 11.50 02/01/2014 70,473
9,443,674
-------------
PAPER & FOREST PRODUCTS: 0.88%
1,175,000 CLEARWATER PAPER CORPORATION++ 10.63 06/15/2016 1,298,375
2,430,000 GEORGIA-PACIFIC CORPORATION 8.88 05/15/2031 2,721,600
1,775,000 GEORGIA-PACIFIC CORPORATION++ 7.00 01/15/2015 1,843,804
5,863,779
-------------
TELECOMMUNICATION SERVICES: 13.39%
DIVERSIFIED TELECOMMUNICATION SERVICES: 9.10%
3,660,000 CINCINNATI BELL INCORPORATED 8.25 10/15/2017 3,623,400
9,580,000 CITIZENS COMMUNICATIONS COMPANY 7.88 01/15/2027 9,268,650
5,280,000 FRONTIER COMMUNICATIONS 8.13 10/01/2018 5,596,800
345,000 GLOBAL CROSSING LIMITED++ 12.00 09/15/2015 382,950
4,455,000 NEW COMMUNICATIONS HOLDINGS++ 8.25 04/15/2017 4,755,713
4,400,000 NEW COMMUNICATIONS HOLDINGS++ 8.50 04/15/2020 4,697,000
6,770,000 NEW COMMUNICATIONS HOLDINGS++ 8.75 04/15/2022 7,260,825
3,260,000 QWEST CORPORATION 7.50 06/15/2023 3,268,150
7,340,000 QWEST CORPORATION 8.88 03/15/2012 7,936,375
440,000 QWEST CORPORATION 7.63 08/03/2021 432,300
576,000 QWEST CORPORATION 6.88 07/15/2028 512,640
485,000 SBA TELECOMMUNICATIONS INCORPORATED++ 8.25 08/15/2019 531,075
1,090,000 SBA TELECOMMUNICATIONS INCORPORATED++ 8.00 08/15/2016 1,171,750
2,755,000 U.S. WEST COMMUNICATIONS INCORPORATED 7.25 09/15/2025 2,748,113
2,015,000 U.S. WEST COMMUNICATIONS INCORPORATED 7.13 11/15/2043 1,873,950
1,055,000 WEST CORPORATION 9.50 10/15/2014 1,078,738
5,380,000 WINDSTREAM CORPORATION 7.88 11/01/2017 5,474,150
60,612,579
-------------
WIRELESS TELECOMMUNICATION SERVICES: 4.29%
1,785,000 CRICKET COMMUNICATIONS INCORPORATED 9.38 11/01/2014 1,845,244
805,000 CRICKET COMMUNICATIONS INCORPORATED 7.75 05/15/2016 833,175
165,000 CROWN CASTLE INTERNATIONAL CORPORATION 7.13 11/01/2019 171,188
4,155,000 INTELSAT LIMITED 8.50 01/15/2013 4,217,325
465,000 INTELSAT LIMITED 11.25 06/15/2016 502,200
2,607,559 IPCS INCORPORATED&+/- 3.59 05/01/2014 2,438,068
3,330,000 METROPCS WIRELESS INCORPORATED 9.25 11/01/2014 3,479,850
7,935,000 NEXTEL COMMUNICATIONS INCORPORATED SERIES D 7.38 08/01/2015 7,855,650
7,465,000 NEXTEL COMMUNICATIONS SERIES F 5.95 03/15/2014 7,185,063
28,527,763
-------------
UTILITIES: 10.70%
ELECTRIC UTILITIES: 5.90%
14,996,000 AQUILA INCORPORATED (o)(o) 11.88 07/01/2012 17,247,469
140,000 EDISON MISSION ENERGY 7.00 05/15/2017 95,200
2,935,000 EDISON MISSON ENERGY 7.20 05/15/2019 1,981,125
8,201,002 ENERGY FUTURE HOLDINGS CORPORPATION&+/- 11.25 11/01/2017 5,330,651
$ 250,000 MIRANT AMERICAS GENERATION LLC 8.50 10/01/2021 237,500
7,560,525 MIRANT MID-ATLANTIC LLC SERIES C 10.06 12/30/2028 8,193,719
5,280,000 MIRANT NORTH AMERICA LLC 7.38 12/31/2013 5,431,800
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
7
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
ELECTRIC UTILITIES (continued)
715,000 PUBLIC SERVICE COMPANY OF NEW MEXICO 7.95% 05/15/2018 $ 759,193
39,276,657
-------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS: 4.78%
2,045,000 AES CORPORATION 8.88 02/15/2011 2,096,125
4,500,000 CALPINE CORPORATION 7.25 10/15/2017 4,488,750
4,850,000 DYNEGY HOLDING INCORPORATED 7.63 10/15/2026 3,055,500
2,135,000 DYNEGY HOLDINGS INCORPORATED 6.88 04/01/2011 2,156,350
1,140,000 NRG ENERGY INCORPORATED 7.25 02/01/2014 1,168,500
1,750,000 NRG ENERGY INCORPORATED 7.38 01/15/2017 1,771,875
3,675,000 NRG ENERGY INCORPORATED 8.50 06/15/2019 3,858,750
2,617,955 RELIANT ENERGY INCORPORATED 9.24 07/02/2017 2,722,673
780,000 RELIANT ENERGY INCORPORATED 9.68 07/02/2026 813,150
1,020,000 RRI ENERGY INCORPORATED 7.63 06/15/2014 1,025,100
8,390,000 RRI ENERGY INCORPORATED 6.75 12/15/2014 8,599,750
75,000 RRI ENERGY INCORPORATED 7.88 06/15/2017 71,063
31,827,586
-------------
MULTI-UTILITIES: 0.02%
135,000 CMS ENERGY CORPORATION 8.75 06/15/2019 154,158
-------------
TOTAL CORPORATE BONDS & NOTES (COST $739,217,476) 765,044,468
-------------
YANKEE OBLIGATIONS: 4.58%
CONSUMER DISCRETIONARY: 0.02%
DIVERSIFIED CONSUMER SERVICES: 0.02%
155,000 DESARROLLADORA HOMEX SAB DE CV++ 9.50 12/11/2019 168,361
-------------
ENERGY: 1.61%
OIL, GAS & CONSUMABLE FUELS: 1.61%
1,610,000 CONNACHER OIL & GAS LIMITED++ 10.25 12/15/2015 1,630,125
360,000 CONNACHER OIL & GAS LIMITED++ 11.75 07/15/2014 396,900
1,000,000 GRIFFIN COAL MINING COMPANY LIMITED++#### 9.50 12/01/2016 600,000
7,306,000 GRIFFIN COAL MINING COMPANY LIMITED#### 9.50 12/31/2049 4,383,600
1,115,000 OPTI CANADA INCORPORATED 7.88 12/15/2014 964,475
1,065,000 OPTI CANADA INCORPORATED 8.25 12/15/2014 925,219
915,000 P2021 RIG COMPANY++ 13.50 12/15/2013 947,025
905,000 RDS ULTRA-DEEPWATER LIMITED++ 11.88 03/15/2017 886,900
10,734,244
-------------
FINANCIALS: 0.71%
CONSUMER FINANCE: 0.35%
2,205,000 WIND ACQUISITION FINANCE SA++ 11.75 07/15/2017 2,342,813
-------------
DIVERSIFIED FINANCIAL SERVICES: 0.36%
2,074,500 FMG FINANCE PROPERTY LIMITED++ 10.63 09/01/2016 2,364,930
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
8
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
----------- --------------------------------------------------------------- -------- ---------- -------------
DIVERSIFIED FINANCIAL SERVICES(continued)
1,540,000 PREFERRED TERM SECURITIES XII LIMITED+/-#### (I) 0.00% 12/24/2033 $ 462
2,365,392
-------------
INDUSTRIALS: 1.14%
ROAD & RAIL: 1.14%
6,389,000 KANSAS CITY SOUTHERN DE MEXICO 7.38 06/01/2014 6,596,643
500,000 KANSAS CITY SOUTHERN DE MEXICO++ 8.00 02/01/2018 530,000
373,000 KANSAS CITY SOUTHERN DE MEXICO 12.50 04/01/2016 448,533
7,575,176
-------------
MATERIALS: 0.83%
CHEMICALS: 0.06%
375,000 NOVA CHEMICALS CORPORATION++ 8.63 11/01/2019 389,063
-------------
METALS & MINING: 0.18%
630,000 NOVELIS INCORPORATED 7.25 02/15/2015 644,175
500,000 VEDANTA RESOURCES PLC 9.50 07/18/2018 550,950
1,195,125
-------------
PAPER & FOREST PRODUCTS: 0.59%
715,000 PE PAPER ESCROW GMBH++ 12.00 08/01/2014 804,375
1,265,000 SAPPI LIMITED++ 6.75 06/15/2012 1,263,419
2,355,000 SAPPI LIMITED++ 7.50 06/15/2032 1,895,775
3,963,569
-------------
TELECOMMUNICATION SERVICES: 0.27%
WIRELESS TELECOMMUNICATION SERVICES: 0.27%
870,000 DIGICEL GROUP LIMITED++ 12.00 04/01/2014 987,450
690,000 TELESAT CANADA INCORPORATED 11.00 11/01/2015 790,050
1,777,500
-------------
TOTAL YANKEE OBLIGATIONS (COST $28,436,215) 30,511,243
-------------
SHARES
-----------
COMMON STOCKS: 0.28%
MATERIALS: 0.28%
CHEMICALS: 0.28%
54,080 LYONDELLBASELL CLASS A+ 973,440
49,566 LYONDELLBASELL CLASS B+ 892,188
TOTAL COMMON STOCKS (COST $1,783,897) 1,865,628
-------------
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
9
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST
PRINCIPAL RATE MATURITY VALUE
----------- -------- ---------- -------------
CONVERTIBLE DEBENTURE: 0.19%
INFORMATION TECHNOLOGY: 0.19%
$ 1,290,000 NXP FUNDING LLC 9.50% 10/15/2015 $ 1,264,200
TOTAL CONVERTIBLE DEBENTURE (COST $1,180,220) 1,264,200
-------------
SHARES YIELD
----------- --------
PREFERRED STOCKS: 0.22%
FINANCIALS: 0.22%
CONSUMER FINANCE: 0.22%
1,800 ALLY FINANCIAL INCORPORATED 8.30 1,478,194
-------------
TOTAL PREFERRED STOCKS (COST $1,435,638) 1,478,194
-------------
CLOSED END MUTUAL FUNDS: 0.69%
233,732 DREYFUS HIGH YIELD STRATEGIES FUND INCORPORATED 1,014,397
99,227 EATON VANCE LIMITED DURATION INCOME TRUST 1,601,524
30,704 LMP CORPORATE LOAN FUND INCORPORATED 345,420
170,560 NEW AMERICA HIGH INCOME FUND INCORPORATED 1,662,960
TOTAL CLOSED END MUTUAL FUNDS (COST $2,481,655) 4,624,301
-------------
INTEREST
PRINCIPAL RATE
----------- --------
TERM LOANS: 7.40%
CONSUMER DISCRETIONARY: 2.97%
$ 1,875,000 CAPITAL AUTOMOTIVE## NA 12/14/2012 1,749,994
8,625,000 METALDYNE CORPORATION+/- 13.00 04/09/2014 8,754,375
955,445 TOWER AUTOMOTIVE HOLDINGS## NA 07/31/2013 759,579
2,375,000 SUGARHOUSE HSP GAMING PROPERTIES LP+/- 11.25 09/11/2014 2,281,971
-------------
5,920,000 NEWSDAY LLC+/- 10.50 07/15/2013 6,201,200
-------------
19,747,119
-------------
CONSUMER STAPLES: 0.81%
5,743,407 MERISANT COMPANY+/- 7.75 01/08/2014 5,370,085
-------------
ENERGY: 1.28%
8,606,069 SEMGROUP ENERGY PARTNERS+/- 9.50 07/20/2012 8,484,121
-------------
FINANCIALS: 1.20%
2,621,825 BLACKSTONE UTP CAPITAL LLC+/- 7.75 10/29/2014 2,628,380
2,413,916 REALOGY CORPORATION+/- 3.35 09/01/2014 2,108,555
649,900 REALOGY CORPORATION+/- 3.38 09/01/2014 567,688
5,304,623
-------------
INDUSTRIALS: 1.13%
6,622,200 SWIFT TRANSPORTATION COMPANY INCORPORATED+/- 8.25 06/05/2014 6,429,031
1,152,250 NEFF CORPORPORATION+/- 4.04 05/31/2013 1,113,846
-------------
7,542,877
-------------
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
10
PORTFOLIO OF INVESTMENTS - JULY 31, 2010 (UNAUDITED)
WELLS FARGO ADVANTAGE INCOME OPPORTUNTIES FUND (FORMERLY, EVERGREEN INCOME
ADVANTAGE FUND)
INTEREST
PRINCIPAL RATE MATURITY VALUE
----------- -------- ---------- -------------
TELECOMMUNICATION SERVICES: 0.19%
1,275,000 FAIRPOINT COMMUNICATIONS INCORPORATED## NA 04/01/2017 $ 1,287,750
-------------
UTILITIES: 0.22%
1,925,000 TXU ENERGY COMPANY LLC## NA 10/10/2014 1,490,585
-------------
TOTAL TERM LOANS (COST $47,454,804) 49,227,160
SHARES YIELD
----------- --------
SHORT-TERM INVESTMENTS: 5.71%
INVESTMENT COMPANIES: 5.71%
37,995,752 WELLS FARGO ADVANTAGE MONEY MARKET TRUST**(l)(u) 0.31% 37,995,752
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $37,995,752) 37,995,752
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $859,985,657)* 134.00% 892,010,946
OTHER ASSETS AND LIABILITIES, NET (34.00) (226,329,261)
------ -------------
TOTAL NET ASSETS 100.00% $ 665,681,685
------ -------------
# SECURITY INITIALLY ISSUED IN ZERO COUPON FORM WHICH CONVERTS TO COUPON
FORM AT A SPECIFIED RATE AND DATE. AN EFFECTIVE INTERESTRATE IS APPLIED
TO RECOGNIZE INTEREST INCOME DAILY FOR THE BOND. THIS RATE IS BASED ON
TOTAL EXPECTED INTEREST TO BE EARNED OVER THE LIFE OF THE BOND WHICH
CONSISTS OF THE AGGREGATE COUPON-INTEREST PAYMENTS AND DISCOUNT AT
ACQUISITION. THE RATE SHOWN IS THE STATED RATE AT THE CURRENT PERIOD END.
** ALL OR A PORTION OF THIS SECURITY HAS BEEN SEGREGATED FOR WHEN-ISSUED,
DELAYED DELIVERY SECURITIES AND/OR UNFUNDED LOANS.
## ALL OR A PORTION OF THE POSITION REPRESENTS AN UNFUNDED LOAN COMMITMENT.
(o)(o) THE RATE SHOWN IS THE STATED RATE AT THE CURRENT PERIOD END.
& PAYMENT-IN-KIND (PIK) SECURITIES ARE SECURITIES IN WHICH THE ISSUER MAY
MAKE INTEREST OR DIVIDEND PAYMENTS IN CASH OR ADDITIONAL SECURITIES.
THESE ADDITIONAL SECURITIES GENERALLY HAVE THE SAME TERMS AS THE ORIGINAL
HOLDINGS.
(l) INVESTMENT IN AN AFFILIATE.
+ NON-INCOME EARNING SECURITIES.
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4(2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
+/- VARIABLE RATE INVESTMENTS.
#### THIS SECURITY IS CURRENTLY IN DEFAULT WITH REGARDS TO SCHEDULED INTEREST
AND/OR PRINCIPAL PAYMENTS. THE FUND HAS STOPPED ACCRUING INTEREST ON THIS
SECURITY.
(i) ILLIQUID SECURITY.
(u) RATE SHOWN IS THE 7-DAY ANNUALIZED YIELD AT PERIOD END.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $865,344,350 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 46,970,987
GROSS UNREALIZED DEPRECIATION (20,304,391)
------------
NET UNREALIZED APPRECIATION $ 26,666,596
THE PORTFOLIO OF INVESTMENTS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES TO FINANCIAL STATEMENTS WHICH ARE INCLUDED IN THE FUND'S
AUDITED ANNUAL REPORT OR SEMI-ANNUAL REPORT. THESE REPORTS INCLUDE ADDITIONAL
INFORMATION ABOUT THE FUND'S SECURITY VALUATION POLICIES AND ABOUT CERTAIN
SECURITY TYPES INVESTED IN BY THE FUND.
11
WELLS FARGO ADVANTAGE INCOME OPPORTUNITIES FUND
NOTES TO PORTFOLIOS OF INVESTMENTS (unaudited)
The Fund's portfolio of investments as of the date on the cover of this report
has not been audited. This report is provided for the general information of the
Fund's shareholders. For more information regarding the Fund and its holdings,
please see the Fund's most recent prospectus and annual report.
SECURITIES VALUATION
Certain fixed income securities with maturities exceeding 60 days are valued by
using a pricing service approved by the Trust's Board of Trustees. This service
uses market prices as quoted by an independent pricing service or by dealers in
these securities when, in the service's judgment, these prices are readily
available and are representative of the securities' fair values. For some
securities, such prices are not readily available. These securities will
generally be fair valued using methods which may include consideration of yields
or prices of securities of comparable quality, coupon rate, maturity and type of
issue, indications as to values from dealers in securities, trading
characteristics and general market conditions.
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. ("NASDAQ") are valued at the NASDAQ Official Closing
Price ("NOCP"), and if no NOCP is available, then at the last reported sales
price. If no sales price is shown on the NASDAQ, the bid price will be used. In
the absence of any sale of securities listed on the NASDAQ, and in the case of
other securities, including U.S. Government obligations, but excluding debt
securities maturing in 60 days or less, the price will be deemed "stale" and the
valuations will be determined in accordance with the Funds' Fair Valuation
Procedures..
Investments in open-end mutual funds are valued at net asset value.
Investments which are not valued using any of the methods discussed above, are
valued at their fair value, as determined by procedures established in good
faith and approved by the Board of Trustees.
The valuation techniques used by the Fund to measure fair value are consistent
with the market approach, income approach and/or cost approach, where
applicable, for each security type.
WHEN-ISSUED TRANSACTIONS
Each Fund may purchase securities on a forward commitment or 'when-issued'
basis. A Fund records a when-issued transaction on the trade date and will
segregate assets to cover its obligation by confirming the availability of
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.
TERM LOANS
Each Fund may invest in term loans. A Fund records an investment when the
borrower withdraws money and records interest as earned. These loans pay
interest at rates which are periodically reset by reference to a base lending
rate plus a spread. The Fund assumes the credit risk of the borrower. There
could be potential loss to the Fund in the event of default by the borrower.
FAIR VALUATION MEASUREMENTS
Fair value measurements of investments are determined within a framework that
has established a fair value hierarchy based upon the various data inputs
utilized in determining the value of the Fund's investments. The three-level
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The Fund's investments are classified within the
fair value hierarchy based on the lowest level of input that is significant to
the fair value measurement. The inputs are summarized into three broad levels as
follows:
Level 1 - quoted prices in active markets for identical securities
Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.)
Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
As of July 31, 2010, the inputs used in valuing the Fund's assets, which are
carried at fair value, were as follows:
SIGNIFICANT SIGNIFICANT
OTHER UNOBSERVABLE
QUOTED PRICES OBSERVABLE INPUTS INPUTS
INVESTMENTS IN SECURITIES (LEVEL 1) (LEVEL 2) (LEVEL 3) TOTAL
-------------------------- ------------- ----------------- ------------ ------------
EQUITY SECURITIES
COMMON STOCKS $ 1,865,628 $ 0 $ 0 $ 1,865,628
PREFERRED STOCKS 0 1,478,194 0 1,478,194
CLOSED END-MUTUAL FUND SHARES 4,624,301 0 0 4,624,301
CORPORATE BOND AND NOTES 0 765,044,468 0 765,044,468
CONVERTIBLE DEBENTURES 0 1,264,200 0 1,264,200
LOANS 0 34,802,855 14,424,305 49,227,160
YANKEE BONDS 0 30,511,243 0 30,511,243
INVESTMENT COMPANIES 37,995,752 0 0 37,995,752
----------- ------------ ----------- ------------
44,485,681 833,100,960 14,424,305 892,010,946
----------- ------------ ----------- ------------
The following is a reconciliation of assets in which significant unobservable
inputs (Level 3) were used in determining fair value:
CORPORATE
BONDS AND
NOTES LOANS TOTAL
---------- ----------- -----------
Balance as of April 30, 2010 $ 817,002 $13,198,721 $14,015,723
Realized gains or losses (962,719) 0 (962,719)
Change in unrealized gains or losses 1,025,056 19,628 1,044,684
Amortization 157 0 157
Net purchases (sales) (879,496) 1,205,956 326,460
Transfers in and/or out of Level 3 0 0 0
---------- ----------- -----------
Balance as of July 31, 2010 0 14,424,305 14,424,305
---------- ----------- -----------
Change in unrealized gains or losses
included in earnings relating to
securities still held at July 31, 2010
$ 0 $ (69,193) $ (69,193)
---------- ----------- -----------
DERIVATIVE TRANSACTIONS
During the three months ended July 31, 2010, the Fund entered into credit
default contracts for speculative purposes.
As of July 31, 2010 the Fund did not have any open credit default swaps but had
an average notional balance of $1,494,396 during the three months ended July 31,
2010.
ITEM 2. CONTROLS AND PROCEDURES
(a) The President and Treasurer have concluded that the Wells Fargo Advantage
Income Opportunities Fund (the "Fund") disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) provide
reasonable assurances that material information relating to the Fund is made
known to them by the appropriate persons based on their evaluation of these
controls and procedures as of a date within 90 days of the filing of this
report.
(b) There were no changes in the Fund's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
or in other factors that occurred during the registrant's last fiscal quarter
that has materially affected or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
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 Advantage Income
Opportunities Fund
By: /s/ Karla M. Rabusch
------------------------------------
Karla M. Rabusch
President
Date: September 28, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Wells Fargo Advantage Income
Opportunities Fund
By: /s/ Karla M. Rabusch
------------------------------------
Karla M. Rabusch
President
Date: September 28, 2010
By: /s/ Kasey Phillips
------------------------------------
Kasey Phillips
Treasurer
Date: September 28, 2010