Edgar Filing: WELLS FARGO MULTI-SECTOR INCOME FUND

Form N-CSRS

LOGO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-21331

Wells Fargo Multi-Sector Income Fund

(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: 800-222-8222

Date of fiscal year end: October 31

Date of reporting period: April 30, 2016

ITEM 1.

REPORT TO STOCKHOLDERS

Semi-Annual Report

April 30, 2016

Wells Fargo Multi-Sector Income Fund (ERC)

LOGO

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Contents


Letter to shareholders			2

Performance highlights			4

Summary portfolio of investments*			7

Financial statements
Statement of assets and liabilities			18
Statement of operations			19
Statement of changes in net assets			20
Statement of cash flows			21
Financial highlights			22

Notes to financial statements			23

Other information			28

Automatic dividend reinvestment plan			31

List of abbreviations			32

A complete schedule of portfolio holdings as of the report date may be obtained, free of charge, by accessing the following website: https://www.wellsfargofunds.com/assets/edocs/regulatory/holdings/multi-sector-income-semi.pdf or by calling Wells Fargo Funds at 1-800-222-8222. This complete schedule, filed on Form N-CSRS, is also available on the SEC’s website at sec.gov.

The views expressed and any forward-looking statements are as of April 30, 2016, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Funds Management, LLC. Discussions of individual securities, or the markets generally, or any Wells Fargo Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo Funds Management, LLC and the Fund disclaim any obligation to publicly update or revise any views expressed or forward-looking statements.

NOT FDIC INSURED ¡ NO BANK GUARANTEE ¡ MAY LOSE VALUE


2		Wells Fargo Multi-Sector Income Fund		Letter to shareholders (unaudited)

LOGO

Karla M. Rabusch

President

Wells Fargo Funds

The U.S. Federal Reserve (Fed) embarked on a tightening cycle and raised the target federal funds rate to between 0.25% and 0.50% in December 2015.

Dear Valued Shareholder:

We are pleased to offer you this semi-annual report for the Wells Fargo Multi-Sector Income Fund for the six-month period that ended April 30, 2016. The period was marked by low interest rates, weakness in commodity prices, and moderate U.S. economic growth.

Accommodative monetary policies stole the headlines.

The U.S. Federal Reserve (Fed) embarked on a tightening cycle and raised the target federal funds rate to between 0.25% and 0.50% in December 2015. However, Fed Chair Janet Yellen has emphasized that the Fed expects to raise rates only gradually, depending on economic data. In addition, the Fed is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well underway.

The European Central Bank cut all three of its short-term rates during the reporting period, increased its asset-purchase program from 60 billion euros per month to 80 billion, expanded the list of eligible securities to include investment-grade nonbank debt, and created a fund-to-lend program where banks could be paid to lend money. In Japan, the Bank of Japan (BOJ) maintained an aggressive monetary program aimed at combating deflation. The BOJ set a negative deposit rate at the end of January 2016, its latest effort to encourage banks to lend rather than hold deposits.

Global economic growth was below trend, and oil prices plummeted.

Developed countries experienced subtrend growth and subdued inflation. In the U.S., however, economic growth advanced, the unemployment rate was 5.0% as of April 2016, and inflation remained below the Fed’s longer-run objective of a 2% pace. Oil prices continued to fall dramatically, reaching a secular low of $26 per barrel in February before increasing later in the reporting period.

Positive results masked intra-period volatility.

The Barclays U.S. Aggregate Bond Index,¹ a broad measure of U.S. investment-grade bonds, finished the reporting period with a return of 2.82% and masked intra-period volatility. Corporate bond spreads widened in early 2016 due to investors’ fears about falling commodity prices and a slowing Chinese economy and then retraced their path as investor worries eased. Utilities were the best-performing subsector within investment-grade corporates, while industrials outperformed financials. The energy subsector, however, lagged as Moody’s downgraded a vast array of energy names in response to lower oil prices and a change in its rating methodology. Within the securitized sector, commercial mortgage-backed securities benefited from positive investor sentiment later in the period. Spreads in mortgage-backed securities (MBS) remained narrow, supported by the Fed’s reinvesting principal payments from its holdings of agency MBS that were acquired under quantitative easing.

Meanwhile, the Barclays Global Aggregate Bond Index² posted a 6.09% return during the six-month period that ended April 30, 2016, and the Barclays U.S. Corporate High Yield Bond Index³ returned 2.37%. Emerging markets debt yields declined and prices rose, dramatically in some cases, and emerging markets currencies also appreciated. For example, certain emerging markets currencies, such as the Brazilian real, appreciated by approximately 10% during the reporting period.

The Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar–denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS. You cannot invest directly in an index.


Letter to shareholders (unaudited)		Wells Fargo Multi-Sector Income Fund			3

Since the end of the financial crisis, structural changes in the fixed-income markets have reduced trading liquidity (the degree to which assets can be bought or sold without affecting the price). New regulations and capital requirements have caused traditional liquidity suppliers (banks and broker/dealers) to be more risk averse and hold less inventory. Meanwhile, corporate debt issuance has spiked as companies finance themselves at record-low yields, bond mutual funds hold larger amounts of this new debt supply, trading volumes are lower, and large-size trades are more difficult to execute. However, fixed-income markets appeared to function well over the past year with sufficient liquidity.

Don’t let short-term uncertainty derail long-term investment goals.

Periods of uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.

Thank you for choosing to invest in Wells Fargo Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs.

Sincerely,

LOGO

Karla M. Rabusch

President

Wells Fargo Funds

Periods of uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future.

Notice to shareholders

On December 17, 2015, the Fund announced an open-market share repurchase program (the “Buyback Program”). Under the Buyback Program, the Fund may repurchase up to 10% of its outstanding shares within one year of December 17, 2015. The Fund’s Board of Trustees has delegated to Wells Fargo Funds Management, LLC, the Fund’s adviser, full discretion to administer the Buyback Program including the determination of the amount and timing of repurchases in accordance with the best interests of the Fund and subject to applicable legal limitations.

Notice to shareholders

Effective May 25, 2016, the Fund’s Board of Trustees approved a change to the investment strategy guidelines of the Fund’s high-yield sleeve. As of this date, the Fund will be allowed to hold more than 20% of its assets in securities rated CCC or lower. However, additional securities rated CCC or lower cannot be added to the Fund if, at the time of purchase, more than 20% of the sleeve’s assets are rated CCC or lower.

For further information about your Fund, contact your investment professional, visit our website at wellsfargofunds.com, or call us directly at 1-800-222-8222. We are available 24 hours a day, 7 days a week.

The Barclays Global Aggregate Bond Index measures global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. You cannot invest directly in an index.

The Barclays U.S. Corporate High Yield Bond Index is an unmanaged, U.S. dollar–denominated, nonconvertible, non-investment-grade debt index. The index consists of domestic and corporate bonds rated Ba and below with a minimum outstanding amount of $150 million. You cannot invest directly in an index.


4		Wells Fargo Multi-Sector Income Fund		Performance highlights (unaudited)

Investment objective

The Fund seeks a high level of current income consistent with limiting its overall exposure to domestic interest rate risk.

Adviser

Wells Fargo Funds Management, LLC

Subadvisers

First International Advisors, LLC

Wells Capital Management Incorporated

Portfolio managers

Ashok Bhatia, CFA^®

Christopher Y. Kauffman, CFA^®

Michael Lee

Niklas Nordenfelt, CFA^®

Tony Norris

Alex Perrin

Phillip Susser

Christopher Wightman

Peter Wilson

Noah Wise

Average annual total returns (%) as of April 30, 2016¹


	6 Months		1 Year			5 Year		10 Year
Based on market value		9.89		1.88			4.74		7.33
Based on net asset value (NAV)		3.22		(1.79	)		4.52		6.73

Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on fund distributions or the sales of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Performance figures of the Fund do not reflect brokerage commissions that a shareholder would pay on the purchase and sale of shares. If taxes and such brokerage commissions had been reflected, performance would have been lower. To obtain performance information current to the most recent month-end, please call 1-800-222-8222.

The Fund’s expense ratio for the six month ended April 30, 2016, was 1.36% which includes 0.43% of interest expense.

Comparison of NAV vs. market value²

LOGO

The Fund is leveraged through a revolving credit facility and also may incur leverage by issuing preferred shares in the future. The use of leverage results in certain risks including, among others, the likelihood of greater volatility of net asset value and the market value of common shares. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation, and the risk of non-correlation to the relevant instruments that they are designed to hedge or to closely track. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the Fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest rate changes and their impact on the Fund and its share price can be sudden and unpredictable. High-yield securities have a greater risk of default and tend to be more volatile than higher-rated debt securities. The Fund is exposed to mortgage- and asset-backed securities risk. This closed-end fund is no longer offered as an initial public offering and is only available through broker/dealers on the secondary market. A closed-end fund is not required to buy its shares back from investors upon request.

Total returns based on market value are calculated assuming a purchase of common stock on the first day and sale on the last day of the period reported. Total returns based on NAV are calculated based on the NAV at the beginning of the period and end of period. Dividends and distributions, if any, are assumed for the purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan.

²	This chart does not reflect any brokerage commissions charged on the purchase and sale of the Fund’s common stock. Dividends and distributions paid by the Fund are included in the Fund’s average annual total returns but have the effect of reducing the Fund’s NAV.


Performance highlights (unaudited)		Wells Fargo Multi-Sector Income Fund			5

MANAGERS’ DISCUSSION

The Fund’s return based on market value was 9.89% during the six-month period that ended April 30, 2016. During the same period, the Fund’s return based on net asset value was 3.22%. The ERC Blended Index³ returned 4.14% for the reporting period.


Ten largest holdings (%) as of April 30, 2016⁴
Mexico, 4.75%, 6-14-2018		1.93
Brazil, 10.00%, 1-1-2017		1.89
Sprint Capital Corporation, 6.88%, 11-15-2028		1.86
Poland, 2.50%, 7-25-2026		1.82
Indonesia, 7.88%, 4-15-2019		1.77
NGPL PipeCo LLC, 7.77%, 12-15-2037		1.74
Romania, 5.85%, 4-26-2023		1.60
Poland, 3.25%, 7-25-2025		1.58
Republic of South Africa, 8.00%, 12-21-2018		1.55
Brazil, 10.00%, 1-1-2025		1.45

Overview

While returns were positive for the reporting period, the period can be broken down into two subperiods. The prices of riskier assets fell from the beginning of the reporting period through February 2016 as investors feared falling commodity prices and weakness in China. These prices then rebounded as investors regained confidence. In the meantime, perceived safe-haven assets such as U.S. Treasury bonds performed strongly in the first, risk-averse time frame and then lagged as other assets rebounded.

U.S. investment-grade corporate bonds did well, particularly during the final two months of the period. Within the securitized-bond market, higher-quality AAA-rated and AA-rated tranches bested lower-quality A-rated and BBB-rated bonds. In general, lower-rated segments within commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (MBS) also lagged higher-rated counterparts.

The high-yield market, as measured by the BofA Merrill Lynch U.S. High Yield Master II Constrained Index,⁵ declined 9.6% for the first part of the reporting period that ended February 11, 2016, before returning 13.2% for the remainder of the period. Energy and other commodity-related issues drove this volatility. The fall in commodity prices as well as technical pressure from large investment-grade issuers being downgraded into high yield aggravated this decline. Once the downgrades were absorbed by the high-yield market and commodity prices began to stabilize or rebound, the high-yield market rebounded. Non-U.S. bonds also had positive returns despite significant volatility in prices during the reporting period. Emerging markets debt yields declined and prices rose, and emerging markets currencies also appreciated.

Contributors to performance

Sector allocation added to results. An allocation to investment-grade long-term industrial bonds helped, particularly exposure to the tobacco, metals and mining, and media/entertainment subsectors. Highly rated MBS also contributed to performance because its incremental yield was more than enough to compensate for wider spreads. While high-yield bonds had more modest returns than the BBB-rated credit tier, it still was additive to results. The Fund’s exposure to smaller and emerging markets economies added value during the period. Bond market exposure to Brazil, Indonesia, and South Africa was increased over the reporting period and performed particularly well. On the currency front, the allocation to emerging markets currencies (and a reduced position in the U.S. dollar) was beneficial.

Detractors from performance

Certain CMBS detracted from results because they only partially recovered from their sell-off in early 2016. Exposure to the oil-field services and insurance sectors hampered results in the investment-grade credit sector. Within the Fund’s allocation to high yield, its exposure to the oil-field services, cable and satellite, and technology sectors detracted from results. Issue selection within the oil-field services sector also hurt results but was offset by solid security selection in the energy exploration and production sector and the pipeline sector. The Fund’s shorter duration positioning within its non-U.S. bonds detracted from performance over the reporting period. In particular, an allocation to securities with less-than-one-year maturities in Indonesia did not perform as well as longer-dated bonds. Select corporate positions (TES Global Limited;* America Movil, S.A.B. de C.V., ADS; and Petroleos Mexicanos) also detracted from performance.

Source: Wells Fargo Funds Management, LLC. The ERC Blended Index consists of the Barclays Credit Bond Index (7.5%), the Barclays U.S. Securitized Index (7.5%), the BofA Merrill Lynch High Yield U.S. Corporates, Cash Pay Index (60%), the J.P. Morgan GBI-EM Global Diversified Composite Index (18%), and the J.P. Morgan Global Government Bond ex U.S. Index (7%). You cannot invest directly in an index.

⁴	The ten largest holdings, excluding cash and cash equivalents, are calculated based on the value of the investments divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified.

⁵

The BofA Merrill Lynch U.S. High Yield Master II Constrained Index is a market-value-weighted index of all domestic and Yankee high-yield bonds, 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 lower than BBB-/Baa3 but are not in default. The BofA Merrill Lynch U.S. High Yield Master II Constrained Index limits any individual issuer to a maximum of 2% benchmark exposure. You cannot invest directly in an index.


6		Wells Fargo Multi-Sector Income Fund		Performance highlights (unaudited)

Credit quality as of April 30, 2016⁶

Effective maturity distribution as of April 30, 2016⁷

Country allocation as of April 30, 2016⁸

Management outlook

As we look ahead, we expect global growth to be mixed, with stable growth rates in the U.S. and emerging markets alongside continued weakness in Europe and Japan. Central banks continue to add liquidity, particularly the European Central Bank, which took additional steps to ease monetary policy, and the People’s Bank of China, where declines in its balance sheet appear to be ending. Meanwhile, the U.S. Federal Reserve is expected to move gradually in raising rates in order to help protect economic growth and full employment. This expansion of central-bank liquidity should help support non-Treasury sectors.

In terms of our investment strategies, we expect U.S. mortgages and investment-grade corporate bonds will continue to provide investors with attractive coupon income. Our strategy focuses on A-rated and BBB-rated securities as compelling sources of yield, and our investment-grade credit exposure remains centered on industrials and financials, particularly the communications and insurance sectors. We believe overall credit fundamentals also remain sound due to continued economic growth. Lower energy and commodity prices are likely to be positive for the high-yield sector with the exception of energy exploration and development as well as metals and mining companies.

Outside the U.S., we continue to see value in the higher-yielding and smaller economies as opposed to bonds in either Japan or core Europe. We have increased the Fund’s exposure to the bond markets of Latin America. We expect to add emerging markets debt to the Fund, focusing on countries where central banks can remain on hold or ease as well as where we believe currencies can appreciate. Furthermore, we see more opportunities in emerging markets currencies than in the U.S. dollar.

⁶

The credit quality distribution of portfolio holdings reflected in the chart is based on ratings from Standard & Poor’s, Moody’s Investors Service, and/or Fitch Ratings Ltd. Credit quality ratings apply to the underlying holdings of the Fund and not to the Fund itself. The percentages of the Fund’s portfolio with the ratings depicted in the chart are calculated based on the total market value of fixed income securities held by the Fund. If a security was rated by all three rating agencies, the middle rating was utilized. If rated by two of three rating agencies, the lower rating was utilized, and if rated by one of the rating agencies, that rating was utilized. Standard & Poor’s rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). Ratings from A to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories. Standard & Poor’s rates the creditworthiness of short-term notes from SP-1 (highest) to SP-3 (lowest). Moody’s rates the creditworthiness of bonds, ranging from Aaa (highest) to C (lowest). Ratings Aa to B may be modified by the addition of a number 1 (highest) to 3 (lowest) to show relative standing within the ratings categories. Moody’s rates the creditworthiness of short-term U.S. tax-exempt municipal securities from MIG 1/VMIG 1 (highest) to SG (lowest). Fitch rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). Credit quality distribution is subject to change and may have changed since the date specified.

⁷	Effective maturity distribution is subject to change and is calculated based on the total long-term investments of the Fund.

⁸	Amounts are calculated based on the total long-term investments of the Fund. These amounts are subject to change and may have changed since the date specified.

*	This security was not held in the Fund at the end of the reporting period.


Summary portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			7

The Summary portfolio of investments shows the 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the total net assets as of the report date. The remaining securities held are grouped as “Other securities” in each category.


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Agency Securities: 2.49%
FHLMC		0.83-8.50	%		4-25-2020 to 7-25-2048	$	20,185,978	$	13,190,681		2.29	%
Other securities									1,273,059		0.20

Total Agency Securities (Cost $13,630,968)									14,463,740		2.49


Asset-Backed Securities: 0.10%
Other securities									606,725		0.10


Total Asset-Backed Securities (Cost $608,247)									606,725		0.10


Common Stocks: 0.07%

Energy: 0.07%

Oil, Gas & Consumable Fuels: 0.07%
Other securities									423,014		0.07


Materials: 0.00%

Chemicals: 0.00%
Other securities									744		0.00


Total Common Stocks (Cost $4,298,672)									423,758		0.07


Corporate Bonds and Notes: 72.38%

Consumer Discretionary: 12.60%

Auto Components: 0.58%
Other securities									3,400,030		0.58


Distributors: 0.16%
Other securities									904,500		0.16


Diversified Consumer Services: 0.83%
Service Corporation International		7.50			4-1-2027		2,993,000		3,516,775		0.60
Other securities									1,319,050		0.23

									4,835,825		0.83


Hotels, Restaurants & Leisure: 2.60%
CCM Merger Incorporated 144A		9.13			5-1-2019		6,270,000		6,536,475		1.13
Greektown Holdings LLC 144A		8.88			3-15-2019		7,625,000		7,891,875		1.36
Other securities									640,852		0.11

									15,069,202		2.60


Household Durables: 0.41%
Other securities									2,379,950		0.41


Internet & Catalog Retail: 0.14%
Other securities									829,298		0.14

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


8		Wells Fargo Multi-Sector Income Fund		Summary portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Leisure Products: 0.11%
Other securities								$	630,000		0.11	%


Media: 6.16%
CCO Holdings LLC		5.13-7.38	%		6-1-2020 to 5-1-2027	$	6,170,000		6,386,313		1.09
CCO Holdings LLC 144A		5.38			5-1-2025		4,150,000		4,248,563		0.73
CCOH Safari LLC 144A		5.75			2-15-2026		3,375,000		3,484,688		0.60
Gray Television Incorporated		7.50			10-1-2020		4,600,000		4,818,500		0.83
Other securities									16,847,775		2.91

									35,785,839		6.16


Multiline Retail: 0.11%
Other securities									614,853		0.11


Specialty Retail: 1.50%
Other securities									8,719,505		1.50


Consumer Staples: 1.13%

Beverages: 0.14%
Other securities									827,525		0.14


Food & Staples Retailing: 0.11%
Other securities									640,945		0.11


Food Products: 0.68%
Other securities									3,977,583		0.68


Household Products: 0.07%
Other securities									368,565		0.07


Tobacco: 0.13%
Other securities									766,411		0.13


Energy: 16.36%

Energy Equipment & Services: 5.42%
Bristow Group Incorporated		6.25			10-15-2022		4,480,000		3,673,600		0.63
Era Group Incorporated		7.75			12-15-2022		4,425,000		3,827,625		0.66
NGPL PipeCo LLC		7.12-9.63			12-15-2017 to 6-1-2019		2,495,000		2,580,655		0.45
NGPL PipeCo LLC 144A		7.77			12-15-2037		10,990,000		10,110,800		1.74
PHI Incorporated		5.25			3-15-2019		5,525,000		5,093,387		0.88
Other securities									6,177,344		1.06

									31,463,411		5.42


Oil, Gas & Consumable Fuels: 10.94%
Rockies Express Pipeline LLC 144A		5.63			4-15-2020		3,625,000		3,597,813		0.62
Rockies Express Pipeline LLC 144A		6.88			4-15-2040		5,199,000		4,575,120		0.79
Rockies Express Pipeline LLC 144A		7.50			7-15-2038		2,390,000		2,139,050		0.37
Sabine Pass Liquefaction LLC		5.63-5.75			2-1-2021 to 3-1-2025		4,645,000		4,536,901		0.78
Sabine Pass Liquefaction LLC		6.25			3-15-2022		3,550,000		3,594,375		0.62
Sabine Pass LNG LP		6.50-7.50			11-30-2016 to 11-1-2020		6,455,000		6,667,144		1.15

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


Summary portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			9


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Oil, Gas & Consumable Fuels (continued)
Other securities								$	38,429,291		6.61	%

									63,539,694		10.94


Financials: 14.61%

Banks: 0.91%
Other securities									5,282,402		0.91


Capital Markets: 1.13%
Other securities									6,532,871		1.13


Consumer Finance: 3.48%
Navient Corporation		8.00	%		3-25-2020	$	3,280,000		3,411,200		0.59
Springleaf Finance Corporation		5.75-8.25			9-15-2016 to 10-1-2023		4,870,000		4,810,019		0.82
Springleaf Finance Corporation		6.90			12-15-2017		4,550,000		4,754,750		0.82
Other securities									7,247,132		1.25

									20,223,101		3.48


Diversified Financial Services: 1.82%
Denali Borrower LLC 144A		5.63			10-15-2020		3,510,000		3,694,275		0.64
Other securities									6,885,784		1.18

									10,580,059		1.82


Insurance: 1.73%
Other securities									10,031,892		1.73


Real Estate Management & Development: 0.55%
Other securities									3,205,000		0.55


REITs: 4.99%
DuPont Fabros Technology Incorporated LP		5.63			6-15-2023		2,975,000		3,071,688		0.53
DuPont Fabros Technology Incorporated LP		5.88			9-15-2021		4,655,000		4,887,750		0.84
Iron Mountain Incorporated		5.75			8-15-2024		4,990,000		5,127,225		0.88
Iron Mountain Incorporated		6.00			10-1-2020 to 8-15-2023		3,190,000		3,380,250		0.58
Other securities									12,521,692		2.16

									28,988,605		4.99


Health Care: 7.21%

Biotechnology: 0.14%
Other securities									801,195		0.14


Health Care Equipment & Supplies: 1.06%
Other securities									6,175,732		1.06


Health Care Providers & Services: 4.12%
Select Medical Corporation		6.38			6-1-2021		6,215,000		5,896,481		1.02
Other securities									18,030,588		3.10

									23,927,069		4.12

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


10		Wells Fargo Multi-Sector Income Fund		Summary portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Health Care Technology: 0.87%
Emdeon Incorporated 144A		6.00	%		2-15-2021	$	500,000	$	503,750		0.08	%
Emdeon Incorporated		11.00			12-31-2019		4,325,000		4,573,688		0.79

									5,077,438		0.87


Life Sciences Tools & Services: 0.15%
Other securities									843,673		0.15


Pharmaceuticals: 0.87%
Other securities									5,074,613		0.87


Industrials: 4.31%

Aerospace & Defense: 0.18%
Other securities									1,034,563		0.18


Airlines: 0.36%
Other securities									2,110,137		0.36


Commercial Services & Supplies: 1.32%
Other securities									7,687,731		1.32


Construction & Engineering: 0.86%
Other securities									5,002,432		0.86


Professional Services: 0.15%
Other securities									842,433		0.15


Road & Rail: 0.11%
Other securities									652,072		0.11


Trading Companies & Distributors: 1.33%
Ashtead Capital Incorporated 144A		6.50			7-15-2022		4,100,000		4,325,500		0.75
Other securities									3,364,775		0.58

									7,690,275		1.33


Information Technology: 4.20%

Communications Equipment: 0.32%
Other securities									1,864,513		0.32


Electronic Equipment, Instruments & Components: 1.40%
Jabil Circuit Incorporated		8.25			3-15-2018		5,275,000		5,736,563		0.99
Other securities									2,376,350		0.41

									8,112,913		1.40


Internet Software & Services: 0.20%
Other securities									1,153,250		0.20


IT Services: 0.24%
Other securities									1,363,250		0.24

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


Summary portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			11


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Semiconductors & Semiconductor Equipment: 0.55%
Other securities								$	3,204,879		0.55	%


Software: 0.61%
Other securities									3,543,782		0.61


Technology Hardware, Storage & Peripherals: 0.88%
NCR Corporation		6.38	%		12-15-2023	$	3,950,000		4,108,000		0.71
Other securities									1,015,620		0.17

									5,123,620		0.88


Materials: 1.59%

Chemicals: 0.14%
Other securities									822,819		0.14


Containers & Packaging: 1.41%
Other securities									8,217,036		1.41


Metals & Mining: 0.04%
Other securities									204,125		0.04


Telecommunication Services: 7.93%

Diversified Telecommunication Services: 2.83%
Other securities									16,431,266		2.83


Wireless Telecommunication Services: 5.10%
MetroPCS Wireless Incorporated		6.63			11-15-2020		3,300,000		3,415,500		0.59
Sprint Capital Corporation		6.88			11-15-2028		14,540,000		10,795,911		1.86
Sprint Capital Corporation		8.75			3-15-2032		2,575,000		2,047,125		0.35
T-Mobile USA Incorporated		6.00-6.84			4-28-2019 to 1-15-2026		4,770,000		5,035,261		0.87
T-Mobile USA Incorporated		6.73			4-28-2022		3,490,000		3,678,390		0.63
Other securities									4,642,739		0.80

									29,614,926		5.10


Utilities: 2.44%

Electric Utilities: 0.47%
Other securities									2,719,958		0.47


Gas Utilities: 0.30%
Other securities									1,755,743		0.30


Independent Power & Renewable Electricity Producers: 1.42%
Other securities									8,235,846		1.42


Multi-Utilities: 0.25%
Other securities									1,442,991		0.25


Total Corporate Bonds and Notes (Cost $425,326,379)									420,327,346		72.38

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


12		Wells Fargo Multi-Sector Income Fund		Summary portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Foreign Corporate Bonds and Notes @: 2.64%

Consumer Discretionary: 0.06%

Auto Components: 0.02%
Other securities								$	121,524		0.02	%


Internet & Catalog Retail: 0.04%
Other securities									234,782		0.04


Consumer Staples: 0.14%

Food Products: 0.14%
Other securities									788,689		0.14


Energy: 0.27%

Energy Equipment & Services: 0.02%
Other securities									120,814		0.02


Oil, Gas & Consumable Fuels: 0.25%
Other securities									1,443,366		0.25


Financials: 1.70%

Banks: 1.61%
KfW (TRY)		5.00	%		1-16-2017		11,400,000		3,937,058		0.68
Other securities									5,405,843		0.93

									9,342,901		1.61


Diversified Financial Services: 0.09%
Other securities									546,473		0.09


Materials: 0.12%

Chemicals: 0.12%
Other securities									686,201		0.12


Telecommunication Services: 0.35%

Diversified Telecommunication Services: 0.07%
Other securities									401,031		0.07


Wireless Telecommunication Services: 0.28%
Other securities									1,620,697		0.28


Total Foreign Corporate Bonds and Notes (Cost $19,899,745)									15,306,478		2.64


Foreign Government Bonds @: 25.25%
Brazil (BRL)		10.00			1-1-2017		38,525,000		10,983,811		1.89
Brazil (BRL)		10.00			1-1-2025		32,800,000		8,410,217		1.45
Colombia (COP)		7.00			5-4-2022		18,650,000,000		6,303,136		1.09
Colombia (COP)		7.75			4-14-2021		5,250,000,000		1,877,047		0.32
Hungary (HUF)		6.75			11-24-2017		1,305,000,000		5,211,478		0.90
Indonesia (IDR)		7.88			4-15-2019		133,640,000,000		10,276,843		1.77
Indonesia (IDR)		10.00			7-15-2017		50,000,000,000		3,929,747		0.68

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


Summary portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			13


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Foreign Government Bonds @ (continued)
Malaysia (MYR)		3.66	%		10-15-2020		20,700,000	$	5,334,310		0.92	%
Malaysia (MYR)		4.18			7-15-2024		19,850,000		5,164,089		0.89
Mexico (MXN)		4.75			6-14-2018		191,800,000		11,219,820		1.93
Mexico (MXN)		10.00			12-5-2024		62,120,000		4,653,480		0.80
Mexico (MXN)		10.00			12-5-2024		14,100,000		1,056,247		0.18
Poland (PLN)		2.50			7-25-2026		42,500,000		10,568,064		1.82
Poland (PLN)		3.25			7-25-2025		34,100,000		9,168,705		1.58
Queensland Treasury (AUD)		5.75			7-22-2024		4,100,000		3,783,050		0.65
Republic of South Africa (ZAR)		7.75			2-28-2023		103,000,000		6,846,648		1.18
Republic of South Africa (ZAR)		8.00			12-21-2018		129,000,000		9,020,054		1.55
Romania (RON)		5.85			4-26-2023		31,550,000		9,311,141		1.60
State of New South Wales Australia (AUD)		5.00			8-20-2024		3,900,000		3,498,309		0.60
Thailand (THB)		3.25			6-16-2017		110,000,000		3,216,311		0.56
Thailand (THB)		3.85			12-12-2025		108,500,000		3,664,421		0.63
Turkey (TRY)		6.30			2-14-2018		7,325,000		2,502,752		0.43
Turkey (TRY)		9.00			3-8-2017		13,600,000		4,855,754		0.84
Other securities									5,774,007		0.99


Total Foreign Government Bonds (Cost $168,396,630)									146,629,441		25.25


Loans: 15.23%

Consumer Discretionary: 3.42%

Auto Components: 0.58%
Other securities									3,360,716		0.58


Distributors: 0.51%
Other securities									2,941,234		0.51


Hotels, Restaurants & Leisure: 0.12%
Other securities									733,263		0.12


Household Products: 0.03%
Other securities									164,017		0.03


Leisure Products: 0.36%
Other securities									2,078,429		0.36


Media: 1.28%
Other securities									7,421,226		1.28


Multiline Retail: 0.03%
Other securities									196,155		0.03


Specialty Retail: 0.51%
Other securities									2,954,040		0.51


Consumer Staples: 0.15%

Food Products: 0.15%
Other securities									893,762		0.15

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


14		Wells Fargo Multi-Sector Income Fund		Summary portfolio of investments—April 30, 2016 (unaudited)


Security name	Value		Percent of net assets

Energy: 0.49%

Energy Equipment & Services: 0.49%
Other securities	$	2,858,625		0.49	%


Financials: 2.12%

Capital Markets: 0.36%
Other securities		2,104,240		0.36


Consumer Finance: 0.03%
Other securities		200,750		0.03


Diversified Financial Services: 0.69%
Other securities		4,034,698		0.69


Insurance: 0.26%
Other securities		1,492,133		0.26


Real Estate Management & Development: 0.75%
Other securities		4,333,138		0.75


REITs: 0.03%
Other securities		150,782		0.03


Health Care: 1.48%

Health Care Equipment & Supplies: 0.15%
Other securities		847,846		0.15


Health Care Providers & Services: 0.75%
Other securities		4,339,412		0.75


Health Care Technology: 0.20%
Other securities		1,162,651		0.20


Pharmaceuticals: 0.38%
Other securities		2,231,790		0.38


Industrials: 1.69%

Aerospace & Defense: 0.52%
Other securities		3,005,903		0.52


Chemicals: 0.05%
Other securities		269,980		0.05


Commercial Services & Supplies: 0.68%
Other securities		3,952,176		0.68


Electrical Equipment: 0.17%
Other securities		971,107		0.17


Machinery: 0.11%
Other securities		632,648		0.11

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


Summary portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			15


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Transportation Infrastructure: 0.16%
Other securities								$	952,313		0.16	%


Information Technology: 2.65%

Internet Software & Services: 0.48%
Other securities									2,774,738		0.48


Semiconductors & Semiconductor Equipment: 0.25%
Other securities									1,450,177		0.25


Software: 0.11%
Other securities									683,485		0.11


Technology Hardware, Storage & Peripherals: 1.81%
Dell Incorporated ±		4.00	%		4-29-2020	$	8,231,686		8,228,722		1.42
Other securities									2,274,588		0.39

									10,503,310		1.81


Materials: 0.03%

Containers & Packaging: 0.03%
Other securities									168,014		0.03


Telecommunication Services: 1.74%

Diversified Telecommunication Services: 1.10%
Other securities									6,383,086		1.10


Wireless Telecommunication Services: 0.64%
Other securities									3,742,012		0.64


Utilities: 1.46%

Electric Utilities: 1.37%
Texas Competitive Electric Holdings Company LLC ±(s)		4.66			10-10-2016		20,096,983		6,697,320		1.15
Other securities									1,270,150		0.22

									7,967,470		1.37


Independent Power & Renewable Electricity Producers: 0.09%
Other securities									493,730		0.09


Total Loans (Cost $102,342,187)									88,449,056		15.23


Municipal Obligations: 0.05%

New York: 0.05%
Other securities									269,109		0.05


Total Municipal Obligations (Cost $270,000)									269,109		0.05


Non-Agency Mortgage-Backed Securities: 5.95%
Other securities									34,568,732		5.95


Total Non-Agency Mortgage-Backed Securities (Cost $34,661,152)									34,568,732		5.95

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


16		Wells Fargo Multi-Sector Income Fund		Summary portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets

Yankee Corporate Bonds and Notes: 8.03%

Consumer Discretionary: 0.50%

Media: 0.50%
Other securities								$	2,923,698		0.50	%


Consumer Staples: 0.49%

Beverages: 0.35%
Other securities									2,064,682		0.35


Tobacco: 0.14%
Other securities									792,298		0.14


Energy: 1.20%

Oil, Gas & Consumable Fuels: 1.20%
Teekay Corporation		8.50	%		1-15-2020	$	4,475,000		3,412,188		0.59
Other securities									3,555,365		0.61

									6,967,553		1.20


Financials: 0.99%

Banks: 0.79%
Other securities									4,578,249		0.79


Diversified Financial Services: 0.20%
Other securities									1,187,101		0.20


Health Care: 1.06%

Pharmaceuticals: 1.06%
Other securities									6,129,524		1.06


Industrials: 0.64%

Building Products: 0.04%
Other securities									222,600		0.04


Commercial Services & Supplies: 0.42%
Other securities									2,456,000		0.42


Machinery: 0.04%
Other securities									236,175		0.04


Road & Rail: 0.14%
Other securities									820,219		0.14


Information Technology: 0.27%

Communications Equipment: 0.14%
Other securities									794,905		0.14


Internet Software & Services: 0.13%
Other securities									765,215		0.13

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


Summary portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			17


Security name	Interest rate			Maturity date		Principal		Value			Percent of net assets

Materials: 0.99%

Containers & Packaging: 0.57%
Other securities								$	3,308,612			0.57	%


Metals & Mining: 0.42%
Other securities									2,403,339			0.42


Telecommunication Services: 1.77%

Diversified Telecommunication Services: 1.54%
Intelsat Jackson Holdings SA		5.50	%		8-1-2023	$	6,775,000		4,280,953			0.74
Other securities									4,636,362			0.80

									8,917,315			1.54


Wireless Telecommunication Services: 0.23%
Other securities									1,363,864			0.23


Utilities: 0.12%

Electric Utilities: 0.12%
Other securities									684,125			0.12


Total Yankee Corporate Bonds and Notes (Cost $55,735,817)									46,615,474			8.03


	Yield					Shares
Short-Term Investments: 4.71%

Investment Companies: 4.71%
Wells Fargo Cash Investment Money Market Fund Select Class (l)(u)##		0.43					27,383,187		27,383,187			4.71


Total Short-Term Investments (Cost $27,383,187)									27,383,187			4.71


Total investments in securities (Cost $852,552,984) *									795,043,046			136.90
Other assets and liabilities, net									(214,298,166	)		(36.90	)

Total net assets								$	580,744,880			100.00	%

144A	The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933.

@	Foreign bond principal is denominated in the local currency of the issuer.

±	Variable rate investment. The rate shown is the rate in effect at period end.

(s)	The security is currently in default with regards to scheduled interest and/or principal payments. The Fund has stopped accruing interest on the security.

(l)	The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940.

(u)	The rate represents the 7-day annualized yield at period end.

##	All or a portion of this security is segregated for when-issued securities and unfunded loans.

*	Cost for federal income tax purposes is $858,011,810 and unrealized gains (losses) consists of:


Gross unrealized gains	$	18,596,508
Gross unrealized losses		(81,565,272	)

Net unrealized losses	$	(62,968,764	)

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


18		Wells Fargo Multi-Sector Income Fund		Statement of assets and liabilities—April 30, 2016 (unaudited)




Assets
Investments
In unaffiliated securities, at value (cost $825,169,797)	$	767,659,859
In affiliated securities, at value (cost $27,383,187)		27,383,187

Total investments, at value (cost $852,552,984)		795,043,046
Cash		176,122
Foreign currency, at value (cost $463,952)		471,763
Receivable for investments sold		5,373,988
Principal paydown receivable		9,039
Receivable for interest		12,661,604
Prepaid expenses and other assets		4,222

Total assets		813,739,784


Liabilities
Dividends payable		4,063,171
Payable for investments purchased		8,139,635
Secured borrowing payable		220,167,345
Advisory fee payable		367,980
Administration fee payable		33,453
Accrued expenses and other liabilities		223,320

Total liabilities		232,994,904

Total net assets	$	580,744,880


NET ASSETS CONSIST OF
Paid-in capital	$	748,967,586
Overdistributed net investment income		(5,807,048	)
Accumulated net realized losses on investments		(105,064,485	)
Net unrealized losses on investments		(57,351,173	)

Total net assets	$	580,744,880


NET ASSET VALUE PER SHARE
Based on $580,744,880 divided by 42,018,309 shares issued and outstanding (100,000,000 shares authorized)	$	13.82

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


Statement of operations—six months ended April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			19




Investment income
Interest (net of foreign withholding taxes of $87,424)	$	26,880,766
Dividends		45,108
Income from affiliated securities		40,860

Total investment income		26,966,734


Expenses
Advisory fee		2,139,617
Administration fee		194,511
Custody and accounting fees		103,034
Professional fees		37,183
Shareholder report expenses		50,128
Trustees’ fees and expenses		8,989
Transfer agent fees		19,177
Interest expense		1,201,929
Other fees and expenses		18,559

Total expenses		3,773,127

Net investment income		23,193,607


REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) on:
Unaffiliated securities		(6,445,133	)
Forward foreign currency contract transactions		(729,490	)

Net realized losses on investments		(7,174,623	)

Net change in unrealized gains (losses) on:
Unaffiliated securities		(2,627,881	)
Forward foreign currency contract transactions		924,680

Net change in unrealized gains (losses) on investments		(1,703,201	)

Net realized and unrealized gains (losses) on investments		(8,877,824	)

Net increase in net assets resulting from operations	$	14,315,783

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


20		Wells Fargo Multi-Sector Income Fund		Statement of changes in net assets


	Six months ended April 30, 2016 (unaudited)						Year ended October 31, 2015

Operations
Net investment income				$	23,193,607				$	46,469,815
Net realized losses on investments					(7,174,623	)				(15,988,489	)
Net change in unrealized gains (losses) on investments					(1,703,201	)				(67,320,520	)

Net increase (decrease) in net assets resulting from operations					14,315,783					(36,839,194	)


Distributions to shareholders from
Net investment income					(24,389,667	)				(36,559,777	)
Tax basis return of capital					0					(12,379,627	)

Total distributions to shareholders					(24,389,667	)				(48,939,404	)


Capital share transactions		Shares						Shares
Cost of shares repurchased		(36,691	)		(407,024	)		0		0

Net increase (decrease) in net assets resulting from capital share transactions					(407,024	)				0

Total decrease in net assets					(10,480,908	)				(85,778,598	)


Net assets
Beginning of period					591,225,788					677,004,386

End of period				$	580,744,880				$	591,225,788

Overdistributed net investment income				$	(5,807,048	)			$	(4,610,988	)

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


Statement of cash flows—six months ended April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			21




Cash flows from operating activities:
Net increase in net assets resulting from operations	$	14,315,783

Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities:
Purchase of investment securities		(98,418,886	)
Proceeds from the sales of investment securities		122,499,419
Paydowns		3,519,089
Amortization		(1,690,711	)
Purchase of short-term investment securities, net		(12,811,410	)
Increase in receivable for investments sold		(490,180	)
Increase in principal paydown receivable		(1,847	)
Decrease in receivable for interest		420,643
Decrease in prepaid expenses and other assets		11,469
Decrease in payable for investments purchased		(1,800,289	)
Decrease in advisory fee payable		(27,280	)
Decrease in administration fee payable		(2,480	)
Increase in accrued expenses and other liabilities		43,103
Net realized losses on investments		7,174,623
Net change in unrealized gains (losses) on investments		1,703,201

Net cash provided by operating activities		34,444,247


Cash flows from financing activities:
Cost of shares repurchased		(407,024	)
Cash distributions paid		(24,393,215	)
Decrease in secured borrowing payable		(9,975,745	)

Net cash used in financing activities		(34,775,984	)

Net decrease in cash		(331,737	)


Cash (including foreign currency):
Beginning of period	$	979,622

End of period	$	647,885


Supplemental cash disclosure
Cash paid for interest	$	1,177,674

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


22		Wells Fargo Multi-Sector Income Fund		Financial highlights

(For a share outstanding throughout each period)


	Six months ended April 30, 2016			Year ended October 31
	(unaudited)			2015			2014			2013			2012			2011
Net asset value, beginning of period		$14.06			$16.10			$16.40			$17.01			$16.16			$16.67
Net investment income		0.55			1.10	¹		1.14	¹		1.18			1.16			1.11
Net realized and unrealized gains (losses) on investments		(0.21	)		(1.98	)		(0.24	)		(0.59	)		0.89			(0.39	)

Total from investment operations		0.34			(0.88	)		0.90			0.59			2.05			0.72
Distributions to shareholders from
Net investment income		(0.58	)		(0.87	)		(0.91	)		(1.20	)		(1.20	)		(1.23	)
Tax basis return of capital		0.00			(0.29	)		(0.29	)		0.00			0.00			0.00

Total distributions to shareholders		(0.58	)		(1.16	)		(1.20	)		(1.20	)		(1.20	)		(1.23	)
Anti-dilutive effect of shares repurchased		0.00	^1,2		0.00			0.00			0.00			0.00			0.00
Net asset value, end of period		$13.82			$14.06			$16.10			$16.40			$17.01			$16.16
Market value, end of period		$12.57			$12.02			$14.19			$14.47			$16.54			$14.97
Total return based on market value³		9.89	%		(7.34	)%		6.55	%		(5.44	)%		19.33	%		0.33	%
Ratios to average net assets (annualized)
Net expenses⁴		1.36	%		1.24	%		1.21	%		1.24	%		1.24	%		1.14	%
Net investment income⁴		8.37	%		7.33	%		6.95	%		7.04	%		7.13	%		6.75	%
Supplemental data
Portfolio turnover rate		11	%		31	%		41	%		40	%		78	%		35	%
Net assets, end of period (000s omitted)		$580,745			$591,226			$677,004			$689,573			$715,368			$679,497

Borrowings outstanding, end of period (000s omitted)		$220,000			$230,000			$230,000			$230,000			$230,000			$230,000
Asset coverage per $1,000 of borrowing, end of period		$3,640			$3,570			$3,944			$3,998			$4,110			$3,954

¹	Calculated based upon average shares outstanding

²	Amount is less than $0.005.

Total return is calculated assuming a purchase of common stock on the first day and sale on the last day of the period reported. Dividends and distributions, if any, are assumed for purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan. Total return does not reflect brokerage commissions that a shareholder would pay on the purchase and sale of shares. Returns for periods of less than one year are not annualized.

⁴	Ratios include interest expense relating to interest associated with borrowings and/or leverage transactions as follows:


Six months ended April 30, 2016 (unaudited)	0.43	%
Year ended October 31, 2015	0.24	%
Year ended October 31, 2014	0.07	%
Year ended October 31, 2013	0.07	%
Year ended October 31, 2012	0.11	%
Year ended October 31, 2011	0.09	%

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


Notes to financial statements (unaudited)		Wells Fargo Multi-Sector Income Fund			23

1. ORGANIZATION

The Wells Fargo Multi-Sector Income Fund (the “Fund”) was organized as a statutory trust under the laws of the state of Delaware on April 10, 2003 and is registered as a diversified closed-end management investment company under the Investment Company Act of 1940, as amended. As an investment company, the Fund follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies.

2. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Securities valuation

All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.

Debt securities are valued at the evaluated bid price provided by an independent pricing service or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.

Equity securities that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the principal exchange or market that day, the prior day’s price will be deemed “stale” and a fair value price will be determined in accordance with the Fund’s Valuation Procedures.

The values of securities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Management Valuation Team of Wells Fargo Funds Management, LLC (“Funds Management”).

Investments in registered open-end investment companies are valued at net asset value.

Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees of the Fund. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Management Valuation Team. The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Management Valuation Team which may include items for ratification.

Valuations of fair valued securities are compared to the next actual sales price when available, or other appropriate market values, to assess the continued appropriateness of the fair valuation methodologies used. These securities are fair valued on a day-to-day basis, taking into consideration changes to appropriate market information and any significant changes to the inputs considered in the valuation process until there is a readily available price provided on an exchange or by an independent pricing service. Valuations received from an independent pricing service or independent broker-dealer quotes are periodically validated by comparisons to most recent trades and valuations provided by other independent pricing services in addition to the review of prices by the adviser and/or subadviser. Unobservable inputs used in determining fair valuations are identified based on the type of security, taking into consideration factors utilized by market participants in valuing the investment, knowledge about the issuer and the current market environment.

Foreign currency translation

The accounting records of the Fund are maintained in U.S. dollars. The values of other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Management Valuation Team. Purchases and sales of securities, and income and expenses are converted at the rate of exchange on the respective dates of such transactions. Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized


24		Wells Fargo Multi-Sector Income Fund		Notes to financial statements (unaudited)

foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are included in with net realized and unrealized gains or losses from investments.

Forward foreign currency contracts

The Fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on forward foreign currency contract transactions. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. The Fund’s maximum risk of loss from counterparty credit risk is the unrealized gains or losses on the contracts. This risk may be mitigated if there is a master netting arrangement between the Fund and the counterparty.

When-issued transactions

The Fund may purchase securities on a forward commitment or when-issued basis. The Fund records a when-issued transaction on the trade date and will segregate assets in an amount at least equal in value to the Fund’s commitment to purchase when-issued securities. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.

Loans

The Fund may invest in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. The loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. Investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. When the Fund purchases participations, it generally has no rights to enforce compliance with terms of the loan agreement with the borrower. As a result, the Fund assumes the credit risk of both the borrower and the lender that is selling the participation. When the Fund purchases assignments from lenders, it acquires direct rights against the borrower on the loan and may enforce compliance by the borrower with the terms of the loan agreement. Loans may include fully funded term loans or unfunded loan commitments, which are contractual obligations for future funding.

Security transactions and income recognition

Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.

Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily based on the effective interest method. To the extent debt obligations are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.

Dividend income is recognized on the ex-dividend date.

Income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.

Distributions to shareholders

Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with federal income tax regulations, which may differ in amount or character from net investment income and realized gains recognized for purposes of U.S. generally accepted accounting principles.

Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company by distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required.


Notes to financial statements (unaudited)		Wells Fargo Multi-Sector Income Fund			25

The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.

Capital loss carryforwards that do not expire are required to be utilized prior to capital loss carryforwards that expire. As of October 31, 2015, capital loss carryforwards available to offset future net realized capital gains were as follows through the indicated expiration dates:


	No expiration
2018	Short-term	Long-term
$86,701,155	$4,490,558	$1,934,103

3. FAIR VALUATION MEASUREMENTS

Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the 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 significant 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, use of amortized cost, 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 investments in securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used in valuing the Fund’s assets and liabilities as of April 30, 2016:


	Quoted prices (Level 1)		Other significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Investments in:

Agency securities	$	0	$	14,463,740	$	0	$	14,463,740

Asset-backed securities		0		606,725		0		606,725

Common stocks
Energy		423,014		0		0		423,014
Materials		744		0		0		744

Corporate bonds and notes		0		420,327,346		0		420,327,346

Foreign corporate bonds and notes		0		15,306,478		0		15,306,478

Foreign government bonds		0		146,629,441		0		146,629,441

Loans		0		70,857,418		17,591,638		88,449,056

Municipal obligations		0		269,109		0		269,109

Non-agency mortgage-backed securities		0		34,568,732		0		34,568,732

Yankee corporate bonds and notes		0		45,886,193		729,281		46,615,474

Short-term investments
Investment companies		27,383,187		0		0		27,383,187
Total assets	$	27,806,945	$	748,915,182	$	18,320,919	$	795,043,046


26		Wells Fargo Multi-Sector Income Fund		Notes to financial statements (unaudited)

The Fund recognizes transfers between levels within the fair value hierarchy at the end of the reporting period. At April 30, 2016, the Fund did not have any transfers into/out of Level 1 or Level 2.

The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:


	Loans			Yankee corporate bonds and notes			Total
Balance as of October 31, 2015	$	16,654,991		$	729,281		$	17,384,272
Accrued discounts (premiums)		22,561			95,094			117,655
Realized gains (losses)		9,160			0			9,160
Change in unrealized gains (losses)		(172,922	)		(95,094	)		(268,016	)
Purchases		1,844,238			0			1,844,238
Sales		(1,390,063	)		0			(1,390,063	)
Transfers into Level 3		2,488,206			0			2,488,206
Transfers out of Level 3		(1,864,533	)		0			(1,864,533	)
Balance as of April 30, 2016	$	17,591,638		$	729,281		$	18,320,919
Change in unrealized gains (losses) relating to securities still held at April 30, 2016	$	(161,082	)	$	(95,094	)	$	(256,176	)

The investment types categorized above were valued using indicative broker quotes. These indicative broker quotes are considered Level 3 inputs. Quantitative unobservable inputs used by the brokers are often proprietary and not provided to the Fund and therefore the disclosure that would address these inputs is not included above.

4. TRANSACTIONS WITH AFFILIATES

Advisory fee

Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”) is the adviser to the Fund and is entitled to receive a fee at an annual rate of 0.55% of the Fund’s average daily total assets. Total assets consist of net assets of the Fund plus borrowings or other leverage for investment purposes to the extent excluded in calculating net assets.

Funds Management has retained the services of certain subadvisers to provide daily portfolio management to the Fund. The fees for subadvisory services are borne by Funds Management. Wells Capital Management Incorporated, an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo, is a subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate of 0.30% of the Fund’s average daily total assets. First International Advisors, LLC, an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo, is also a subadviser to the Fund and is entitled to receive a fee from Funds Management at an annual rate of 0.10% of the Fund’s average daily total assets.

Administration fee

Funds Management also serves as the administrator to the Fund, providing the Fund with a wide range of administrative services necessary to the operation of the Fund. Funds Management is entitled to receive an annual administration fee from the Fund equal to 0.05% of the Fund’s average daily total assets.

5. CAPITAL SHARE TRANSACTIONS

The Fund has authorized capital of 100,000,000 shares with no par value. For the six months ended April 30, 2016 and the year ended October 31, 2015, the Fund did not issue any shares.

On December 17, 2015, the Fund announced an open-market share repurchase program (the “Buyback Program”). Under the Buyback Program, the Fund may repurchase up to 10% of its outstanding shares within one year of December 17, 2015. The Fund’s Board of Trustees has delegated to Funds Management full discretion to administer the Buyback Program including the determination of the amount and timing of repurchases in accordance with the best interests of the Fund and subject to applicable legal limitations. During the six months ended April 30, 2016, the Fund purchased 36,691 of its shares on the open market at a total cost of $407,024 (average price per share of $11.08). The average discount of these repurchased shares was 14.06%.


Notes to financial statements (unaudited)		Wells Fargo Multi-Sector Income Fund			27

6. BORROWINGS

As of April 30, 2016, the Fund has borrowed $220 million through a revolving credit facility administered by a major financial institution (the “Facility”). The Facility has a commitment amount of $230 million with no specific contract expiration date but the Facility can be terminated upon 180 days’ notice. The Fund is charged interest at London Interbank Offered Rate (LIBOR) plus 0.70% and a commitment fee of 0.30% of the average daily unutilized amount of the commitment which may be waived if the amount drawn on the Facility is over 75% of the committed amount.

During the six months ended April 30, 2016, the Fund had average borrowings outstanding of $224,780,220 at an average rate of 1.08% and paid interest in the amount of $1,201,929, which represents 0.43% of its average daily net assets (on an annualized basis).

7. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended April 30, 2016 were $87,635,109 and $80,281,002, respectively.

As of April 30, 2016, the Fund had unfunded term loan commitments of $1,972,531.

8. DERIVATIVE TRANSACTIONS

During the six months ended April 30, 2016, the Fund entered into forward foreign currency contracts for economic hedging purposes.

As of April 30, 2016, the Fund did not have any open forward foreign currency contracts but had average contract amounts of $1,372,192 and $7,279,843 in forward foreign currency contracts to buy and forward foreign currency contracts to sell, respectively, during the six months ended April 30, 2016.

The fair value, realized gains or losses and change in unrealized gains or losses, if any, on derivative instruments are reflected in the appropriate financial statements.

9. INDEMNIFICATION

Under the Fund’s organizational documents, the officers and Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund may enter into contracts with service providers that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.

10. SUBSEQUENT DISTRIBUTIONS

The Fund declared the following distributions to shareholders:


Declaration date	Record date	Payable date	Per share amount
April 29, 2016	May 16, 2016	June 1, 2016	$0.0967
May 25, 2016	June 15, 2016	July 1, 2016	$0.0923

These distributions are not reflected in the accompanying financial statements. The final determination of the source of all distributions is subject to change and made after the Fund’s tax year-end.


28		Wells Fargo Multi-Sector Income Fund		Other information (unaudited)

PROXY VOTING INFORMATION

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, upon request, by calling 1-800-222-8222, visiting our website at wellsfargofunds.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website at wellsfargofunds.com or by visiting the SEC website at sec.gov.

ANNUAL MEETING OF SHAREHOLDERS

On February 8, 2016, an Annual Meeting of Shareholders for the Fund was held to consider the following proposal. The results of the proposal are indicated below.

Proposal 1 – Election of trustees:


Shares voted “For”	Peter Gordon	31,068,743
Shares voted “Withhold”		6,168,246
Shares voted “For”	Timothy Penny	31,173,794
Shares voted “Withhold”		6,063,195
Shares voted “For”	Michael Scofield	31,099,244
Shares voted “Withhold”		6,137,745

PORTFOLIO HOLDINGS INFORMATION

The complete portfolio holdings for the Fund are publicly available monthly on the Fund’s website (wellsfargofunds.com), on a one-month delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.


Other information (unaudited)		Wells Fargo Multi-Sector Income Fund			29

BOARD OF TRUSTEES AND OFFICERS

The following table provides basic information about the Board of Trustees (the “Trustees”) and Officers of the Fund. Each of the Trustees and Officers¹ listed below acts in identical capacities for each fund in the Wells Fargo family of funds, which consists of 141 mutual funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust, and four closed-end funds, including the Fund (collectively the “Fund Complex”). The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. The Board of Trustees is classified into three classes of which one is elected annually. Each Trustee serves a three-year term concurrent with the class from which the Trustee is elected. Each Officer serves an indefinite term.

Independent Trustees


Name and year of birth	Position held and length of service	Principal occupations during past five years or longer	Current other public company or investment company directorships
William R. Ebsworth (Born 1957)	Trustee, since 2015	Retired. From 1984 to 2013, equities analyst, portfolio manager, research director and chief financial officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc. where he lead a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Mr. Ebsworth is a CFA ^® charterholder and an Adjunct Lecturer, Finance, at Babson College.	Asset Allocation Trust
Jane A. Freeman (Born 1953)	Trustee, since 2015	Retired. From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller & Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to 2012 and the chair of the Audit Committee. Ms. Freeman is Chair of Taproot Foundation (non-profit organization), a Board Member of Ruth Bancroft Garden (non-profit organization) and an inactive chartered financial analyst.	Asset Allocation Trust
Peter G. Gordon (Born 1942)	Trustee, since 2010; Chairman, since 2010	Co-Founder, Retired Chairman, President and CEO of Crystal Geyser Water Company. Trustee Emeritus, Colby College.	Asset Allocation Trust
Isaiah Harris, Jr. (Born 1952)	Trustee, since 2010	Retired. Chairman of the Board of CIGNA Corporation since 2009, and Director since 2005. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Harbor Academy (charter school). Advisory Board Member, Child Evangelism Fellowship (non-profit). Mr. Harris is a certified public accountant (inactive status).	CIGNA Corporation; Asset Allocation Trust
Judith M. Johnson (Born 1949)	Trustee, since 2010; Audit Committee Chairman, since 2010	Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant.	Asset Allocation Trust
David F. Larcker (Born 1950)	Trustee, since 2010	James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005.	Asset Allocation Trust


30		Wells Fargo Multi-Sector Income Fund		Other information (unaudited)


Name and year of birth	Position held and length of service	Principal occupations during past five years or longer	Current other public company or investment company directorships
Olivia S. Mitchell (Born 1953)	Trustee, since 2010	International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993.	Asset Allocation Trust
Timothy J. Penny (Born 1951)	Trustee, since 2010	President and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007 and Senior Fellow at the Humphrey Institute Policy Forum at the University of Minnesota since 1995. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007.	Asset Allocation Trust
Michael S. Scofield (Born 1943)	Trustee, since 2003	Served on the Investment Company Institute’s Board of Governors and Executive Committee from 2008-2011 as well the Governing Council of the Independent Directors Council from 2006-2011 and the Independent Directors Council Executive Committee from 2008-2011. Chairman of the IDC from 2008-2010. Institutional Investor (Fund Directions) Trustee of Year in 2007. Trustee of the Evergreen Funds complex (and its predecessors) from 1984 to 2010. Chairman of the Evergreen Funds from 2000-2010. Former Trustee of the Mentor Funds. Retired Attorney, Law Offices of Michael S. Scofield.	Asset Allocation Trust

Officers


Name and year of birth	Position held and length of service	Principal occupations during past five years or longer
Karla M. Rabusch (Born 1959)	President, since 2010	Executive Vice President of Wells Fargo Bank, N.A. and President of Wells Fargo Funds Management, LLC since 2003.
Jeremy DePalma¹ (Born 1974)	Treasurer, since 2012	Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010.
C. David Messman (Born 1960)	Secretary, since 2010; Chief Legal Officer, since 2010	Senior Vice President and Secretary of Wells Fargo Funds Management, LLC since 2001. Assistant General Counsel of Wells Fargo Bank, N.A. since 2013 and Vice President and Managing Counsel of Wells Fargo Bank, N.A. from 1996 to 2013.
Michael Whitaker (Born 1967)	Chief Compliance Officer, since 2016*	Executive Vice President of Wells Fargo Funds Management, LLC since 2016. Chief Compliance Officer of Fidelity’s Fixed Income Funds and Asset Allocation Funds from 2008 to 2016, Compliance Officer of FMR Co., Inc. from 2014 to 2016, Fidelity Investments Money Management, Inc. from 2014 to 2016, Fidelity Investments from 2007 to 2016.
Debra Ann Early (Born 1964)	Chief Compliance Officer, since 2010**	Executive Vice President of Wells Fargo Funds Management, LLC since 2014, Senior Vice President and Chief Compliance Officer from 2007 to 2014.
David Berardi (Born 1975)	Assistant Treasurer, since 2009	Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010.

¹	Jeremy DePalma acts as Treasurer of 69 funds and Assistant Treasurer of 72 funds in the Fund Complex.

*	Michael Whitaker became Chief Compliance Officer effective May 16, 2016.

**	Debra Ann Early was the Chief Compliance Officer until May 15, 2016.


Automatic dividend reinvestment plan		Wells Fargo Multi-Sector Income Fund			31

AUTOMATIC DIVIDEND REINVESTMENT PLAN

All common shareholders are eligible to participate in the Automatic Dividend Reinvestment Plan (“the Plan”). Pursuant to the Plan, unless a common shareholder is ineligible or elects otherwise, all cash dividends and capital gains distributions are automatically reinvested by Computershare Trust Company, N.A., as agent for shareholders in administering the Plan (“Plan Agent”), in additional common shares of the Fund. Whenever the Fund declares an ordinary income dividend or a capital gain dividend (collectively referred to as “dividends”) payable either in shares or in cash, nonparticipants in the Plan will receive cash, and participants in the Plan will receive the equivalent in common shares. The shares are acquired by the Plan Agent for the participant’s account, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized common shares from the Fund (“newly issued common shares”) or (ii) by purchase of outstanding common shares on the open-market (open-market purchases) on the NYSE Amex or elsewhere. If, on the payment date for any dividend or distribution, the net asset value per share of the common shares is equal to or less than the market price per common share plus estimated brokerage commissions (“market premium”), the Plan Agent will invest the amount of such dividend or distribution in newly issued shares on behalf of the participant. The number of newly issued common shares to be credited to the participant’s account will be determined by dividing the dollar amount of the dividend by the net asset value per share on the date the shares are issued, provided that the maximum discount from the then current market price per share on the date of issuance may not exceed 5%. If on the dividend payment date the net asset value per share is greater than the market value (“market discount”), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participant in open-market purchases. There will be no brokerage charges with respect to shares issued directly by the Fund as a result of dividends or capital gains distributions payable either in shares or in cash. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open-market purchases in connection with the reinvestment of dividends. The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such dividends. All correspondence concerning the Plan should be directed to the Plan Agent at P.O. Box 30170, College Station, Texas 77842-3170 or by calling 1-800-730-6001.


32		Wells Fargo Multi-Sector Income Fund		List of abbreviations

The following is a list of common abbreviations for terms and entities that may have appeared in this report.

ACA	— ACA Financial Guaranty Corporation

ADR	— American depositary receipt

ADS	— American depositary shares

AGC	— Assured Guaranty Corporation

AGM	— Assured Guaranty Municipal

Ambac

— Ambac Financial Group Incorporated

AMT	— Alternative minimum tax

AUD	— Australian dollar

BAN	— Bond anticipation notes

BHAC	— Berkshire Hathaway Assurance Corporation

BRL	— Brazilian real

CAB	— Capital appreciation bond

CAD	— Canadian dollar

CCAB	— Convertible capital appreciation bond

CDA	— Community Development Authority

CDO	— Collateralized debt obligation

CHF	— Swiss franc

COP	— Colombian peso

CLP	— Chilean peso

DKK	— Danish krone

DRIVER

— Derivative inverse tax-exempt receipts

DW&P	— Department of Water & Power

DWR	— Department of Water Resources

ECFA	— Educational & Cultural Facilities Authority

EDA	— Economic Development Authority

EDFA	— Economic Development Finance Authority

ETF	— Exchange-traded fund

EUR

— Euro

FDIC	— Federal Deposit Insurance Corporation

FFCB	— Federal Farm Credit Banks

FGIC	— Financial Guaranty Insurance Corporation

FHA	— Federal Housing Administration

FHLB	— Federal Home Loan Bank

FHLMC

— Federal Home Loan Mortgage Corporation

FICO	— The Financing Corporation

FNMA	— Federal National Mortgage Association

FSA	— Farm Service Agency

GBP	— Great British pound

GDR	— Global depositary receipt

GNMA	— Government National Mortgage Association

GO	— General obligation

HCFR	— Healthcare facilities revenue

HEFA	— Health & Educational Facilities Authority

HEFAR

— Higher education facilities authority revenue

HFA	— Housing Finance Authority

HFFA	— Health Facilities Financing Authority

HKD	— Hong Kong dollar

HUD	— Department of Housing and Urban Development

HUF	— Hungarian forint

IDA	— Industrial Development Authority

IDAG	— Industrial Development Agency

IDR	— Indonesian rupiah

IEP	— Irish pound

JPY	— Japanese yen

KRW	— Republic of Korea won

LIBOR

— London Interbank Offered Rate

LIFER

— Long Inverse Floating Exempt Receipts

LIQ	— Liquidity agreement

LLC	— Limited liability company

LLLP	— Limited liability limited partnership

LLP	— Limited liability partnership

LOC	— Letter of credit

LP	— Limited partnership

MBIA	— Municipal Bond Insurance Association

MFHR	— Multifamily housing revenue

MSTR	— Municipal securities trust receipts

MTN	— Medium-term note

MUD	— Municipal Utility District

MXN	— Mexican peso

MYR	— Malaysian ringgit

National

— National Public Finance Guarantee Corporation

NGN	— Nigerian naira

NOK	— Norwegian krone

NZD	— New Zealand dollar

PCFA	— Pollution Control Financing Authority

PCL	— Public Company Limited

PCR	— Pollution control revenue

PFA	— Public Finance Authority

PFFA	— Public Facilities Financing Authority

PFOTER

— Puttable floating option tax-exempt receipts

plc	— Public limited company

PLN	— Polish zloty

PUTTER

— Puttable tax-exempt receipts

R&D	— Research & development

Radian

— Radian Asset Assurance

RAN	— Revenue anticipation notes

RDA	— Redevelopment Authority

RDFA	— Redevelopment Finance Authority

REIT	— Real estate investment trust

ROC	— Reset option certificates

RON	— Romanian lei

RUB	— Russian ruble

SAVRS

— Select auction variable rate securities

SBA	— Small Business Authority

SDR	— Swedish depositary receipt

SEK	— Swedish krona

SFHR	— Single-family housing revenue

SFMR	— Single-family mortgage revenue

SGD	— Singapore dollar

SPA	— Standby purchase agreement

SPDR	— Standard & Poor’s Depositary Receipts

SPEAR

— Short Puttable Exempt Adjustable Receipts

STRIPS

— Separate trading of registered interest and

principal securities

TAN	— Tax anticipation notes

TBA	— To be announced

THB	— Thai baht

TIPS	— Treasury inflation-protected securities

TRAN	— Tax revenue anticipation notes

TRY	— Turkish lira

TTFA	— Transportation Trust Fund Authority

TVA	— Tennessee Valley Authority

ZAR	— South African rand

LOGO

Transfer Agent, Registrar, Shareholder Servicing

Agent & Dividend Disbursing Agent

Computershare Trust Company, N.A.

P.O. Box 30170

College Station, TX 77842-3170

1-800-730-6001

Website: wellsfargofunds.com

Wells Fargo Funds Management, LLC, is a subsidiary of Wells Fargo & Company and is an affiliate of Wells Fargo & Company’s broker/dealer subsidiaries. Certain material contained in this report may be considered marketing material and has been reviewed by Wells Fargo Funds Distributor, LLC, Member FINRA, an affiliate of Wells Fargo & Company.

NOT FDIC INSURED ¡ NO BANK GUARANTEE ¡ MAY LOSE VALUE

242224 06-16

SMSI/SAR159 04-16

ITEM 2.

CODE OF ETHICS

Not applicable.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

ITEM 6.

INVESTMENTS

Wells Fargo Multi-Sector Income Fund included a Summary Portfolio of Investments under Item 1. A Portfolio of Investments for Wells Fargo Multi-Sector Income Fund is filed under this Item.


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			1


Security name	Interest rate			Maturity date		Principal		Value

Agency Securities: 2.49%
FHLMC ±		4.24	%		9-1-2032	$	1,202,023	$	1,273,768
FHLMC		8.50			7-1-2028		52,331		64,149
FHLMC		8.50			3-1-2030		30,926		31,431
FHLMC Series 1383 ±		2.66			2-1-2037		385,831		407,570
FHLMC Series 196 Class A ±		1.23			12-15-2021		26,173		26,463
FHLMC Series 2011-K16 Class B ±144A		4.75			11-25-2046		1,000,000		1,086,664
FHLMC Series 2011-K701 Class B ±144A		4.29			7-25-2048		165,000		169,074
FHLMC Series 2011-K702 Class B ±144A		4.77			4-25-2044		740,000		769,287
FHLMC Series 2012-K17 Class B ±144A		4.35			12-25-2044		675,000		724,831
FHLMC Series 2012-K18 Class B ±144A		4.26			1-25-2045		810,000		865,649
FHLMC Series 2012-K501 Class C ±144A		3.48			11-25-2046		800,000		802,314
FHLMC Series 2012-K705 Class B ±144A		4.16			9-25-2044		1,000,000		1,033,309
FHLMC Series 2012-K706 Class B ±144A		4.03			11-25-2044		500,000		515,414
FHLMC Series 2012-K706 Class C ±144A		4.03			11-25-2044		805,000		816,253
FHLMC Series 2012-K707 Class B ±144A		3.88			1-25-2047		930,000		956,503
FHLMC Series 2012-K709 Class B ±144A		3.74			4-25-2045		1,000,000		1,025,079
FHLMC Series 2012-K711 Class B ±144A		3.56			8-25-2045		264,000		269,113
FHLMC Series 2013-K30 Class B ±144A		3.67			6-25-2045		700,000		707,298
FHLMC Series 2013-K713 Class B ±144A		3.17			4-25-2046		1,000,000		1,006,773
FHLMC Series 2390 Class FD ±		0.88			12-15-2031		25,932		26,178
FHLMC Series 2567 Class FH ±		0.83			2-15-2033		74,422		75,195
FHLMC Series K007 Class X1 ±(c)		1.33			4-25-2020		943,835		31,168
FHLMC Series K016 Class X1 ±(c)		1.71			10-25-2021		375,846		25,706
FHLMC Series K020 Class X1 ±(c)		1.59			5-25-2022		6,679,659		481,492
FNMA ±		2.27			9-1-2037		501,259		528,986
FNMA		6.00			4-1-2033		65,286		68,141
FNMA		6.50			11-1-2032		58,102		60,997
FNMA		7.50			7-1-2017		1,521		1,525
FNMA		7.50			10-1-2028		2,264		2,277
FNMA		7.50			2-1-2030		30,819		31,291
FNMA		7.50			9-1-2030		76,483		81,712
FNMA		8.00			6-1-2030		9,087		9,216
FNMA Series 1996-46 Class FA ±		0.94			8-25-2021		15,533		15,628
FNMA Series 1997-20 Class IO ±(c)		1.84			3-25-2027		1,150,659		40,380
FNMA Series 2001-25 Class Z		6.00			6-25-2031		158,545		179,129
FNMA Series 2001-35 Class F ±		1.04			7-25-2031		6,957		7,063
FNMA Series 2001-57 Class F ±		0.94			6-25-2031		7,004		7,094
FNMA Series 2002-77 Class FH ±		0.84			12-18-2032		52,454		52,930
FNMA Series 2002-97 Class FR ±		0.99			1-25-2033		12,295		12,450
FNMA Series G91-16 Class F ±		0.89			6-25-2021		14,031		14,112
FNMA Series G92-17 Class F ±		1.49			3-25-2022		50,957		51,778
GNMA		6.50			6-15-2028		36,954		42,297
GNMA		7.25			7-15-2017		1,345		1,348
GNMA		7.25			8-15-2017		2,525		2,534
GNMA		7.25			8-15-2017		4,016		4,030
GNMA		7.25			9-15-2017		8,047		8,126
GNMA		7.25			10-15-2017		14,399		14,534
GNMA		7.25			10-15-2017		5,536		5,584
GNMA		7.25			11-15-2017		7,564		7,638
GNMA		7.25			1-15-2018		1,951		1,957


2		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Agency Securities (continued)
GNMA		7.25	%		1-15-2018	$	4,954	$	4,971
GNMA		7.25			2-15-2018		9,615		9,715
GNMA		7.25			5-15-2018		5,596		5,616

Total Agency Securities (Cost $13,630,968)									14,463,740


Asset-Backed Securities: 0.10%
CVS Pass-Through Trust Series T		6.04			12-10-2028		543,340		606,725


Total Asset-Backed Securities (Cost $608,247)									606,725


						Shares

Common Stocks: 0.07%

Energy: 0.07%

Oil, Gas & Consumable Fuels: 0.07%
Swift Energy Company †(i)							16,550		423,014


Materials: 0.00%

Chemicals: 0.00%
LyondellBasell Industries NV Class A							9		744


Total Common Stocks (Cost $4,298,672)									423,758


						Principal

Corporate Bonds and Notes: 72.38%

Consumer Discretionary: 12.60%

Auto Components: 0.58%
Cooper Tire & Rubber Company (i)		7.63			3-15-2027	$	1,680,000		1,789,200
Cooper Tire & Rubber Company		8.00			12-15-2019		550,000		624,250
Goodyear Tire & Rubber Company		7.00			5-15-2022		400,000		432,000
Goodyear Tire & Rubber Company		8.75			8-15-2020		468,000		554,580

									3,400,030


Distributors: 0.16%
LKQ Corporation		4.75			5-15-2023		900,000		904,500


Diversified Consumer Services: 0.83%
Service Corporation International		7.50			4-1-2027		2,993,000		3,516,775
Service Corporation International		7.63			10-1-2018		680,000		763,300
Service Corporation International		8.00			11-15-2021		475,000		555,750

									4,835,825


Hotels, Restaurants & Leisure: 2.60%
CCM Merger Incorporated 144A		9.13			5-1-2019		6,270,000		6,536,475
Greektown Holdings LLC 144A		8.88			3-15-2019		7,625,000		7,891,875
Hilton Worldwide Finance LLC		5.63			10-15-2021		195,000		203,102
Speedway Motorsports Incorporated		5.13			2-1-2023		425,000		437,750

									15,069,202


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			3


Security name	Interest rate			Maturity date		Principal		Value

Household Durables: 0.41%
American Greetings Corporation		7.38	%		12-1-2021	$	2,000,000	$	2,060,000
Tempur Sealy International Incorporated		5.63			10-15-2023		105,000		109,200
Tempur Sealy International Incorporated		6.88			12-15-2020		200,000		210,750

									2,379,950


Internet & Catalog Retail: 0.14%
Expedia Incorporated		5.95			8-15-2020		750,000		829,298


Leisure Products: 0.11%
Vista Outdoor Incorporated 144A		5.88			10-1-2023		600,000		630,000


Media: 6.16%
Altice US Finance I Corporation 144A		5.38			7-15-2023		1,395,000		1,424,365
Cable One Incorporated 144A		5.75			6-15-2022		375,000		385,313
Cablevision Systems Corporation		8.63			9-15-2017		1,310,000		1,388,600
CCO Holdings LLC		5.13			2-15-2023		300,000		307,500
CCO Holdings LLC 144A		5.13			5-1-2023		475,000		484,500
CCO Holdings LLC		5.25			9-30-2022		1,250,000		1,290,625
CCO Holdings LLC 144A		5.38			5-1-2025		4,150,000		4,248,563
CCO Holdings LLC 144A		5.50			5-1-2026		815,000		831,300
CCO Holdings LLC 144A		5.88			4-1-2024		750,000		785,625
CCO Holdings LLC 144A		5.88			5-1-2027		705,000		722,625
CCO Holdings LLC		6.63			1-31-2022		775,000		823,438
CCO Holdings LLC		7.38			6-1-2020		1,100,000		1,140,700
CCOH Safari LLC 144A		5.75			2-15-2026		3,375,000		3,484,688
Cequel Communications Holdings I LLC 144A		5.13			12-15-2021		1,335,000		1,258,238
Cequel Communications Holdings I LLC 144A		7.75			7-15-2025		2,030,000		2,060,450
Cinemark USA Incorporated 144A		4.88			6-1-2023		325,000		322,598
CSC Holdings LLC		7.88			2-15-2018		1,000,000		1,080,000
CSC Holdings LLC		8.63			2-15-2019		383,000		425,130
Gray Television Incorporated		7.50			10-1-2020		4,600,000		4,818,500
Interpublic Group of Companies		4.00			3-15-2022		750,000		783,599
Lamar Media Corporation		5.88			2-1-2022		690,000		722,775
LIN Television Corporation		6.38			1-15-2021		275,000		287,375
Live Nation Entertainment Incorporated 144A		7.00			9-1-2020		200,000		209,500
National CineMedia LLC		6.00			4-15-2022		1,725,000		1,806,938
National CineMedia LLC		7.88			7-15-2021		1,000,000		1,042,500
Nexstar Broadcasting Group Incorporated 144A		6.13			2-15-2022		175,000		175,438
Nexstar Broadcasting Group Incorporated		6.88			11-15-2020		1,750,000		1,833,125
Outfront Media Capital Corporation		5.63			2-15-2024		20,000		20,800
Outfront Media Capital Corporation		5.88			3-15-2025		775,000		809,875
Time Warner Cable Incorporated		4.00			1-15-2022		750,000		811,156

									35,785,839


Multiline Retail: 0.11%
Macy’s Retail Holdings Incorporated		3.88			1-15-2022		600,000		614,853


Specialty Retail: 1.50%
ABC Supply Company Incorporated 144A		5.63			4-15-2021		450,000		465,750
ABC Supply Company Incorporated 144A		5.75			12-15-2023		300,000		314,250


4		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Specialty Retail (continued)
Advance Auto Parts Incorporated		4.50	%		1-15-2022	$	600,000	$	640,349
Asbury Automotive Group Incorporated		6.00			12-15-2024		675,000		696,938
Century Intermediate Holding Company (PIK at 10.50%) 144A(i)¥		9.75			2-15-2019		300,000		303,750
L Brands Incorporated		6.63			4-1-2021		750,000		851,550
Penske Auto Group Incorporated		5.38			12-1-2024		2,150,000		2,166,125
Penske Auto Group Incorporated		5.75			10-1-2022		1,155,000		1,192,538
Sonic Automotive Incorporated		5.00			5-15-2023		1,224,000		1,217,880
Sonic Automotive Incorporated		7.00			7-15-2022		825,000		870,375

									8,719,505


Consumer Staples: 1.13%

Beverages: 0.14%
Cott Beverages Incorporated		6.75			1-1-2020		790,000		827,525


Food & Staples Retailing: 0.11%
SABMiller Holdings Incorporated 144A		3.75			1-15-2022		600,000		640,945


Food Products: 0.68%
B&G Foods Incorporated		4.63			6-1-2021		300,000		304,875
Darling Ingredients Incorporated		5.38			1-15-2022		180,000		187,650
Kraft Foods Group Incorporated		3.50			6-6-2022		750,000		795,688
Pilgrim’s Pride Corporation 144A		5.75			3-15-2025		1,130,000		1,149,775
Pinnacle Foods Incorporated 144A		5.63			5-1-2024		325,000		324,594
Pinnacle Foods Incorporated 144A		5.88			1-15-2024		75,000		79,313
Prestige Brands Incorporated 144A		6.38			3-1-2024		130,000		136,500
Simmons Foods Incorporated 144A		7.88			10-1-2021		1,100,000		946,000
Treehouse Foods Incorporated 144A		6.00			2-15-2024		50,000		53,188

									3,977,583


Household Products: 0.07%
Central Garden & Pet Company		6.13			11-15-2023		250,000		262,500
Spectrum Brands Incorporated		5.75			7-15-2025		100,000		106,065

									368,565


Tobacco: 0.13%
Reynolds American Incorporated 144A		6.88			5-1-2020		650,000		766,411


Energy: 16.36%

Energy Equipment & Services: 5.42%
Bristow Group Incorporated		6.25			10-15-2022		4,480,000		3,673,600
Cleaver Brooks Incorporated 144A		8.75			12-15-2019		95,000		93,100
Era Group Incorporated		7.75			12-15-2022		4,425,000		3,827,625
Forum Energy Technologies Incorporated		6.25			10-1-2021		250,000		227,500
Hilcorp Energy Company 144A		5.00			12-1-2024		500,000		465,000
Hilcorp Energy Company 144A		5.75			10-1-2025		1,300,000		1,225,250
Hilcorp Energy Company 144A		7.63			4-15-2021		325,000		331,500
Hornbeck Offshore Services Incorporated		1.50			9-1-2019		1,350,000		826,875
Hornbeck Offshore Services Incorporated		5.00			3-1-2021		2,835,000		1,803,769
Hornbeck Offshore Services Incorporated		5.88			4-1-2020		1,860,000		1,204,350
NGPL PipeCo LLC 144A		7.12			12-15-2017		2,060,000		2,126,950


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			5


Security name	Interest rate			Maturity date		Principal		Value

Energy Equipment & Services (continued)
NGPL PipeCo LLC 144A		7.77	%		12-15-2037	$	10,990,000	$	10,110,800
NGPL PipeCo LLC 144A		9.63			6-1-2019		435,000		453,705
PHI Incorporated		5.25			3-15-2019		5,525,000		5,093,387

									31,463,411


Oil, Gas & Consumable Fuels: 10.94%
Alpha Natural Resources Incorporated (i)(s)		6.25			6-1-2021		475,000		3,563
Arch Coal Incorporated (s)		7.00			6-15-2019		1,200,000		9,000
Arch Coal Incorporated (s)		7.25			6-15-2021		475,000		3,563
Berry Petroleum Company LLC		6.38			9-15-2022		3,175,000		809,625
Berry Petroleum Company LLC		6.75			11-1-2020		320,000		78,400
Continental Resources Incorporated		5.00			9-15-2022		825,000		765,188
CSI Compressco LP		7.25			8-15-2022		1,250,000		981,250
Denbury Resources Incorporated		4.63			7-15-2023		4,725,000		2,811,375
Denbury Resources Incorporated		5.50			5-1-2022		655,000		425,750
Denbury Resources Incorporated		6.38			8-15-2021		1,460,000		949,000
El Paso LLC		6.50			4-1-2020		750,000		815,502
Enable Midstream Partner LP		2.40			5-15-2019		2,350,000		2,131,323
Enable Midstream Partner LP		3.90			5-15-2024		1,500,000		1,264,952
Enable Midstream Partner LP		5.00			5-15-2044		275,000		204,975
Energy Transfer Partners LP		5.20			2-1-2022		750,000		752,234
Enlink Midstream LLC		4.15			6-1-2025		2,950,000		2,541,986
Enlink Midstream LLC		4.40			4-1-2024		3,200,000		2,771,869
Exterran Partners LP		6.00			4-1-2021		2,225,000		1,746,625
Kinder Morgan Energy Partners LP		3.95			9-1-2022		750,000		740,612
Kinder Morgan Incorporated		5.55			6-1-2045		925,000		861,390
Kinder Morgan Incorporated		6.50			9-15-2020		285,000		310,183
Kinder Morgan Incorporated		7.00			6-15-2017		530,000		554,014
Kinder Morgan Incorporated (i)		7.42			2-15-2037		800,000		799,902
Kinder Morgan Incorporated		7.80			8-1-2031		1,850,000		2,003,084
Nabors Industries Incorporated		4.63			9-15-2021		750,000		688,675
Northern Tier Energy LLC		7.13			11-15-2020		1,575,000		1,563,188
Overseas Shipholding Group Incorporated		8.13			3-30-2018		2,430,000		2,417,850
Phillips 66		4.30			4-1-2022		625,000		676,868
Pioneer Natural Resources Company		3.95			7-15-2022		750,000		777,112
Rockies Express Pipeline LLC 144A		5.63			4-15-2020		3,625,000		3,597,813
Rockies Express Pipeline LLC 144A		6.88			4-15-2040		5,199,000		4,575,120
Rockies Express Pipeline LLC 144A		7.50			7-15-2038		2,390,000		2,139,050
Rose Rock Midstream LP		5.63			11-15-2023		675,000		526,500
Sabine Oil & Gas Corporation (i)(s)		7.25			6-15-2019		520,000		2,600
Sabine Oil & Gas Corporation (i)(s)		7.50			9-15-2020		3,500,000		35,000
Sabine Pass Liquefaction LLC		5.63			2-1-2021		850,000		844,688
Sabine Pass Liquefaction LLC		5.63			4-15-2023		1,710,000		1,671,525
Sabine Pass Liquefaction LLC		5.63			3-1-2025		460,000		448,500
Sabine Pass Liquefaction LLC		5.75			5-15-2024		1,625,000		1,572,188
Sabine Pass Liquefaction LLC		6.25			3-15-2022		3,550,000		3,594,375
Sabine Pass LNG LP		6.50			11-1-2020		3,245,000		3,382,913
Sabine Pass LNG LP		7.50			11-30-2016		3,210,000		3,284,231
SemGroup Corporation		7.50			6-15-2021		2,755,000		2,424,400


6		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Oil, Gas & Consumable Fuels (continued)
Southern Star Central Corporation 144A		5.13	%		7-15-2022	$	50,000	$	47,625
Southwestern Energy Company		4.10			3-15-2022		425,000		345,844
Suburban Propane Partners LP		7.38			8-1-2021		309,000		318,270
Swift Energy Company (s)(a)		7.13			6-1-2017		5,696,000		0
Swift Energy Company (i)(s)(a)		8.88			1-15-2020		1,075,000		0
Ultra Petroleum Corporation 144A(s)		5.75			12-15-2018		410,000		61,500
Ultra Petroleum Corporation 144A(s)		6.13			10-1-2024		8,475,000		1,271,250
Weatherford International Incorporated		6.35			6-15-2017		650,000		659,750
Western Gas Partners LP		3.95			6-1-2025		175,000		157,255
Western Gas Partners LP		4.00			7-1-2022		175,000		167,797
Western Gas Partners LP		5.38			6-1-2021		728,000		739,453
Western Gas Partners LP		5.45			4-1-2044		650,000		559,121
Williams Partners LP		3.35			8-15-2022		750,000		653,868

									63,539,694


Financials: 14.61%

Banks: 0.91%
Bank of America Corporation		5.70			1-24-2022		250,000		287,210
CIT Group Incorporated		5.25			3-15-2018		100,000		103,125
CIT Group Incorporated 144A		5.50			2-15-2019		1,275,000		1,334,288
CIT Group Incorporated 144A		6.63			4-1-2018		550,000		579,563
Citigroup Incorporated		4.50			1-14-2022		250,000		273,226
Citigroup Incorporated		6.00			8-15-2017		650,000		686,723
City National Bank		5.38			7-15-2022		500,000		578,389
HSBC Bank USA		6.00			8-9-2017		650,000		681,805
JPMorgan Chase & Company		3.38			5-1-2023		750,000		758,073

									5,282,402


Capital Markets: 1.13%
ACE Securities Corporation ±		3.06			6-25-2033		399,612		394,096
Blackstone Holdings Finance Company LLC 144A		5.88			3-15-2021		750,000		870,151
Goldman Sachs Group Incorporated		5.75			1-24-2022		750,000		862,436
Jefferies Finance LLC 144A		6.88			4-15-2022		3,560,000		3,115,000
Jefferies Finance LLC 144A		7.38			4-1-2020		200,000		184,500
Jefferies Finance LLC 144A		7.50			4-15-2021		475,000		429,875
Neuberger Berman Group LLC 144A		5.88			3-15-2022		650,000		676,813

									6,532,871


Consumer Finance: 3.48%
Ally Financial Incorporated		5.75			11-20-2025		675,000		683,438
Ally Financial Incorporated		8.00			12-31-2018		780,000		853,125
Ally Financial Incorporated		8.00			3-15-2020		755,000		855,981
Discover Financial Services		5.20			4-27-2022		750,000		811,134
Ford Motor Credit Company LLC		5.00			5-15-2018		650,000		690,846
Ford Motor Credit Company LLC		8.00			12-15-2016		250,000		260,473
Homer City Generation LLC 144A		8.73			10-1-2026		1,236,785		717,335
Navient Corporation		5.88			3-25-2021		610,000		582,550
Navient Corporation		8.00			3-25-2020		3,280,000		3,411,200


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			7


Security name	Interest rate			Maturity date		Principal		Value

Consumer Finance (continued)
SLM Corporation		8.45	%		6-15-2018	$	1,675,000	$	1,792,250
Springleaf Finance Corporation		5.75			9-15-2016		1,100,000		1,108,131
Springleaf Finance Corporation		6.00			6-1-2020		1,735,000		1,661,263
Springleaf Finance Corporation		6.50			9-15-2017		200,000		205,750
Springleaf Finance Corporation		6.90			12-15-2017		4,550,000		4,754,750
Springleaf Finance Corporation		7.75			10-1-2021		500,000		493,750
Springleaf Finance Corporation		8.25			12-15-2020		175,000		181,125
Springleaf Finance Corporation		8.25			10-1-2023		1,160,000		1,160,000

									20,223,101


Diversified Financial Services: 1.82%
Denali Borrower LLC 144A		5.63			10-15-2020		3,510,000		3,694,275
General Electric Capital Corporation		4.65			10-17-2021		187,000		212,473
Infinity Acquisition LLC 144A(i)		7.25			8-1-2022		2,160,000		1,890,000
ING US Incorporated		5.50			7-15-2022		750,000		841,763
MGP Escrow Issuer LLC 144A		5.63			5-1-2024		200,000		208,125
Moody’s Corporation		5.50			9-1-2020		1,302,000		1,454,923
NewStar Financial Incorporated		7.25			5-1-2020		2,450,000		2,278,500

									10,580,059


Insurance: 1.73%
American International Group Incorporated		4.88			6-1-2022		750,000		822,965
Endurance Specialty Holdings Limited		7.00			7-15-2034		575,000		651,196
Hartford Financial Services Group Incorporated		5.13			4-15-2022		650,000		734,752
Hub Holdings LLC (PIK at 8.88%) 144A¥		8.13			7-15-2019		2,900,000		2,697,000
Hub International Limited 144A		7.88			10-1-2021		2,295,000		2,249,100
Liberty Mutual Group Incorporated 144A		4.95			5-1-2022		750,000		815,284
ProAssurance Corporation		5.30			11-15-2023		750,000		796,502
Progressive Corporation ±		6.70			6-15-2067		600,000		566,340
W.R. Berkley Corporation		4.63			3-15-2022		650,000		698,753

									10,031,892


Real Estate Management & Development: 0.55%
Onex Corporation 144A		7.75			1-15-2021		3,205,000		3,205,000


REITs: 4.99%
Alexandria Real Estate Company		4.60			4-1-2022		650,000		692,301
American Tower Corporation		5.90			11-1-2021		650,000		744,327
Crown Castle International Corporation		4.88			4-15-2022		460,000		499,100
Crown Castle International Corporation		5.25			1-15-2023		95,000		105,688
DuPont Fabros Technology Incorporated LP		5.63			6-15-2023		2,975,000		3,071,688
DuPont Fabros Technology Incorporated LP		5.88			9-15-2021		4,655,000		4,887,750
Equinix Incorporated		5.88			1-15-2026		425,000		449,701
ESH Hospitality Incorporated 144A		5.25			5-1-2025		1,825,000		1,799,906
Essex Portfolio LP		3.63			8-15-2022		750,000		778,430
Health Care REIT Incorporated		5.25			1-15-2022		650,000		720,489
Iron Mountain Incorporated		5.75			8-15-2024		4,990,000		5,127,225
Iron Mountain Incorporated 144A		6.00			10-1-2020		230,000		242,650
Iron Mountain Incorporated		6.00			8-15-2023		2,960,000		3,137,600


8		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

REITs (continued)
Sabra Health Care Incorporated		5.38	%		6-1-2023	$	900,000	$	875,250
Sabra Health Care Incorporated		5.50			2-1-2021		1,100,000		1,111,000
The Geo Group Incorporated		5.13			4-1-2023		800,000		786,000
The Geo Group Incorporated		5.88			1-15-2022		2,740,000		2,794,800
The Geo Group Incorporated		5.88			10-15-2024		465,000		474,300
Ventas Realty LP		4.25			3-1-2022		650,000		690,400

									28,988,605


Health Care: 7.21%

Biotechnology: 0.14%
Amgen Incorporated		3.63			5-15-2022		750,000		801,195


Health Care Equipment & Supplies: 1.06%
Crimson Merger Sub Incorporated 144A		6.63			5-15-2022		2,400,000		2,010,000
Hill-Rom Holdings Incorporated 144A		5.75			9-1-2023		200,000		207,000
Hologic Incorporated 144A		5.25			7-15-2022		670,000		701,825
Kinetics Conecpts Incorporated 144A		7.88			2-15-2021		775,000		837,969
Surgery Center Holdings Company 144A		8.88			4-15-2021		2,425,000		2,418,938

									6,175,732


Health Care Providers & Services: 4.12%
Acadia Healthcare Company Incorporated 144A		6.50			3-1-2024		190,000		200,450
Centene Corporation		5.75			6-1-2017		1,000,000		1,030,000
Coventry Health Care Incorporated		5.45			6-15-2021		750,000		848,498
DaVita HealthCare Partners Incorporated		5.00			5-1-2025		445,000		445,000
DaVita HealthCare Partners Incorporated		5.75			8-15-2022		525,000		549,938
Express Scripts Holding Company		3.90			2-15-2022		665,000		699,453
HCA Incorporated		5.25			6-15-2026		200,000		207,750
HCA Incorporated		6.50			2-15-2020		1,875,000		2,076,563
HealthSouth Corporation		5.75			11-1-2024		530,000		547,225
HealthSouth Corporation		5.75			9-15-2025		650,000		672,425
Humana Incorporated		7.20			6-15-2018		750,000		831,848
Mednax Incorporated 144A		5.25			12-1-2023		475,000		492,813
Molina Healthcare Incorporated 144A		5.38			11-15-2022		475,000		490,438
MPH Acquisition Holdings LLC 144A		6.63			4-1-2022		2,438,000		2,545,662
MPT Operating Partnership LP		6.38			2-15-2022		1,075,000		1,128,750
MPT Operating Partnership LP		6.38			3-1-2024		110,000		117,150
MPT Operating Partnership LP		6.88			5-1-2021		775,000		803,094
Select Medical Corporation		6.38			6-1-2021		6,215,000		5,896,481
Team Health Incorporated 144A		7.25			12-15-2023		950,000		1,008,781
Tenet Healthcare Corporation		6.00			10-1-2020		1,475,000		1,563,500
Vizient Incorporated 144A		10.38			3-1-2024		1,625,000		1,771,250

									23,927,069


Health Care Technology: 0.87%
Emdeon Incorporated 144A		6.00			2-15-2021		500,000		503,750
Emdeon Incorporated		11.00			12-31-2019		4,325,000		4,573,688

									5,077,438


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			9


Security name	Interest rate			Maturity date		Principal		Value

Life Sciences Tools & Services: 0.15%
Life Technologies Corporation		6.00	%		3-1-2020	$	750,000	$	843,673


Pharmaceuticals: 0.87%
Endo Finance LLC 144A		5.75			1-15-2022		715,000		693,550
Endo Finance LLC 144A		5.88			1-15-2023		375,000		359,063
Endo Finance LLC 144A		6.00			2-1-2025		775,000		740,125
Endo Finance LLC 144A		7.75			1-15-2022		2,385,000		2,456,550
Valeant Pharmaceuticals International Incorporated 144A		7.25			7-15-2022		75,000		66,188
Watson Pharmaceuticals Incorporated		3.25			10-1-2022		750,000		759,137

									5,074,613


Industrials: 4.31%

Aerospace & Defense: 0.18%
BAE Systems Holdings Incorporated 144A		3.80			10-7-2024		1,000,000		1,034,563


Airlines: 0.36%
Aviation Capital Group Corporation 144A		6.75			4-6-2021		1,320,000		1,496,550
Delta Air Lines Incorporated		4.75			11-7-2021		578,856		613,587

									2,110,137


Commercial Services & Supplies: 1.32%
ADT Corporation		3.50			7-15-2022		750,000		690,000
Aramark Services Incorporated		5.13			1-15-2024		120,000		126,900
Covanta Holding Corporation		5.88			3-1-2024		2,260,000		2,237,400
Covanta Holding Corporation		6.38			10-1-2022		1,500,000		1,545,000
Covanta Holding Corporation		7.25			12-1-2020		1,480,000		1,535,500
Penske Truck Leasing Company 144A		3.75			5-11-2017		750,000		765,426
Republic Services Incorporated		3.55			6-1-2022		750,000		787,505

									7,687,731


Construction & Engineering: 0.86%
AECOM		5.75			10-15-2022		215,000		224,138
AECOM		5.88			10-15-2024		2,610,000		2,740,500
United Rentals North America Incorporated		4.63			7-15-2023		1,200,000		1,192,500
United Rentals North America Incorporated		5.50			7-15-2025		850,000		845,294

									5,002,432


Professional Services: 0.15%
Ascent Capital Group Incorporated		4.00			7-15-2020		375,000		238,359
Verisk Analytics Incorporated		5.80			5-1-2021		530,000		604,074

									842,433


Road & Rail: 0.11%
TTX Company 144A		2.60			6-15-2020		650,000		652,072


Trading Companies & Distributors: 1.33%
Ashtead Capital Incorporated 144A		6.50			7-15-2022		4,100,000		4,325,500
H&E Equipment Services Incorporated		7.00			9-1-2022		3,250,000		3,282,500
International Lease Finance Corporation 144A		7.13			9-1-2018		75,000		82,275

									7,690,275


10		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Information Technology: 4.20%

Communications Equipment: 0.32%
CommScope Technologies Finance LLC 144A		6.00	%		6-15-2025	$	1,100,000	$	1,122,000
Motorola Solutions Incorporated		3.75			5-15-2022		750,000		742,513

									1,864,513


Electronic Equipment, Instruments & Components: 1.40%
Jabil Circuit Incorporated		8.25			3-15-2018		5,275,000		5,736,563
L-3 Communications Corporation		4.95			2-15-2021		750,000		806,580
Zebra Technologies Corporation		7.25			10-15-2022		1,450,000		1,569,770

									8,112,913


Internet Software & Services: 0.20%
Infor Software Parent LLC		6.50			5-15-2022		550,000		507,656
Infor Software Parent LLC (PIK at 7.88%) 144A¥		7.13			5-1-2021		550,000		463,375
Zayo Group LLC 144A		6.38			5-15-2025		175,000		182,219

									1,153,250


IT Services: 0.24%
First Data Corporation 144A		5.00			1-15-2024		420,000		424,200
First Data Corporation 144A		5.75			1-15-2024		320,000		324,800
First Data Corporation 144A		6.75			11-1-2020		585,000		614,250

									1,363,250


Semiconductors & Semiconductor Equipment: 0.55%
Micron Technology Incorporated 144A		5.25			8-1-2023		375,000		303,004
Micron Technology Incorporated 144A		5.25			1-15-2024		700,000		561,750
Micron Technology Incorporated		5.50			2-1-2025		1,100,000		874,500
Micron Technology Incorporated 144A		5.63			1-15-2026		900,000		715,500
Micron Technology Incorporated		5.88			2-15-2022		850,000		750,125

									3,204,879


Software: 0.61%
Activision Blizzard Incorporated 144A		5.63			9-15-2021		705,000		742,013
Activision Blizzard Incorporated 144A		6.13			9-15-2023		175,000		190,531
Boxer Parent Company Incorporated (PIK at 9.75%) 144A¥		9.00			10-15-2019		2,160,000		1,587,600
CA Incorporated		5.38			12-1-2019		750,000		817,638
SS&C Technologies Incorporated 144A		5.88			7-15-2023		200,000		206,000

									3,543,782


Technology Hardware, Storage & Peripherals: 0.88%
Hewlett-Packard Company		4.05			9-15-2022		750,000		778,145
NCR Corporation		5.88			12-15-2021		230,000		237,475
NCR Corporation		6.38			12-15-2023		3,950,000		4,108,000

									5,123,620


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			11


Security name	Interest rate			Maturity date		Principal		Value

Materials: 1.59%

Chemicals: 0.14%
Dow Chemical Company		4.13	%		11-15-2021	$	750,000	$	822,819


Containers & Packaging: 1.41%
Ball Corporation		5.25			7-1-2025		190,000		199,857
Berry Plastics Corporation		5.13			7-15-2023		350,000		353,500
Berry Plastics Corporation 144A		6.00			10-15-2022		215,000		224,675
Crown Cork & Seal Company Incorporated		7.38			12-15-2026		35,000		38,194
Crown Cork & Seal Company Incorporated (i)		7.50			12-15-2096		600,000		601,500
Owens-Illinois Incorporated 144A		5.38			1-15-2025		575,000		588,656
Owens-Illinois Incorporated 144A		5.88			8-15-2023		425,000		457,141
Owens-Illinois Incorporated 144A		6.38			8-15-2025		2,950,000		3,178,625
Owens-Illinois Incorporated		7.80			5-15-2018		1,295,000		1,421,263
Sealed Air Corporation 144A		5.13			12-1-2024		1,100,000		1,153,625

									8,217,036


Metals & Mining: 0.04%
Indalex Holdings Corporation (i)(s)(a)		11.50			2-1-2020		3,170,000		0
Kaiser Aluminum Corporation 144A%%		5.88			5-15-2024		200,000		204,125

									204,125


Telecommunication Services: 7.93%

Diversified Telecommunication Services: 2.83%
AT&T Incorporated		3.80			3-15-2022		750,000		794,648
CenturyLink Incorporated		5.80			3-15-2022		600,000		592,500
Citizens Communications Company		7.88			1-15-2027		355,000		291,100
Frontier Communications Corporation		8.13			10-1-2018		845,000		910,488
Frontier Communications Corporation		8.25			4-15-2017		1,040,000		1,092,915
Frontier Communications Corporation		8.50			4-15-2020		525,000		555,188
GCI Incorporated		6.75			6-1-2021		2,350,000		2,373,500
GCI Incorporated		6.88			4-15-2025		1,385,000		1,398,850
Level 3 Financing Incorporated		5.13			5-1-2023		975,000		992,063
Level 3 Financing Incorporated		5.38			8-15-2022		300,000		306,750
Level 3 Financing Incorporated 144A		5.38			1-15-2024		700,000		714,000
Level 3 Financing Incorporated		5.38			5-1-2025		975,000		992,063
Level 3 Financing Incorporated		5.63			2-1-2023		350,000		359,625
Level 3 Financing Incorporated		6.13			1-15-2021		175,000		183,313
Level 3 Financing Incorporated 144A		5.25			3-15-2026		650,000		659,750
Qwest Corporation (i)		7.63			8-3-2021		230,000		236,038
Syniverse Holdings Incorporated		9.13			1-15-2019		6,805,000		3,368,475
Windstream Corporation		6.38			8-1-2023		800,000		610,000

									16,431,266


Wireless Telecommunication Services: 5.10%
Crown Castle Towers LLC 144A		6.11			1-15-2040		750,000		830,586
MetroPCS Wireless Incorporated		6.63			11-15-2020		3,300,000		3,415,500
SBA Communications Corporation		4.88			7-15-2022		640,000		644,403


12		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Wireless Telecommunication Services (continued)
SBA Communications Corporation		5.63	%		10-1-2019	$	160,000	$	166,000
SBA Communications Corporation		5.75			7-15-2020		2,000,000		2,065,000
Sprint Capital Corporation		6.88			11-15-2028		14,540,000		10,795,911
Sprint Capital Corporation		8.75			3-15-2032		2,575,000		2,047,125
Sprint Communications Incorporated		7.00			8-15-2020		225,000		186,750
Sprint Corporation		7.13			6-15-2024		600,000		450,000
Sprint Corporation		7.63			2-15-2025		400,000		300,000
T-Mobile USA Incorporated		6.00			3-1-2023		300,000		315,000
T-Mobile USA Incorporated		6.13			1-15-2022		85,000		89,410
T-Mobile USA Incorporated		6.25			4-1-2021		165,000		172,013
T-Mobile USA Incorporated		6.38			3-1-2025		825,000		866,250
T-Mobile USA Incorporated		6.46			4-28-2019		160,000		163,200
T-Mobile USA Incorporated		6.50			1-15-2024		80,000		85,200
T-Mobile USA Incorporated		6.50			1-15-2026		500,000		530,000
T-Mobile USA Incorporated		6.54			4-28-2020		165,000		170,156
T-Mobile USA Incorporated		6.63			4-28-2021		925,000		974,719
T-Mobile USA Incorporated		6.63			4-1-2023		505,000		539,088
T-Mobile USA Incorporated		6.73			4-28-2022		3,490,000		3,678,390
T-Mobile USA Incorporated		6.84			4-28-2023		1,060,000		1,130,225

									29,614,926


Utilities: 2.44%

Electric Utilities: 0.47%
Great Plains Energy Incorporated		4.85			6-1-2021		750,000		817,026
Otter Tail Corporation (i)		9.00			12-15-2016		1,835,000		1,902,932

									2,719,958


Gas Utilities: 0.30%
AmeriGas Finance LLC		6.75			5-20-2020		1,700,000		1,755,743


Independent Power & Renewable Electricity Producers: 1.42%
Calpine Corporation 144A		6.00			1-15-2022		515,000		543,969
Calpine Corporation 144A		7.88			1-15-2023		530,000		565,775
NSG Holdings LLC 144A		7.75			12-15-2025		2,352,652		2,505,575
Reliant Energy Incorporated (i)		9.24			7-2-2017		394,314		386,427
Reliant Energy Incorporated		9.68			7-2-2026		410,000		393,600
TerraForm Power Operating LLC 144A		5.88			2-1-2023		2,800,000		2,443,000
TerraForm Power Operating LLC 144A		6.13			6-15-2025		1,625,000		1,397,500

									8,235,846


Multi-Utilities: 0.25%
Ameren Illinois Company		9.75			11-15-2018		500,000		596,936
CMS Energy Corporation		5.05			3-15-2022		750,000		846,055

									1,442,991


Total Corporate Bonds and Notes (Cost $425,326,379)									420,327,346


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			13


Security name	Interest rate			Maturity date		Principal		Value

Foreign Corporate Bonds and Notes @: 2.64%

Consumer Discretionary: 0.06%

Auto Components: 0.02%
HP Pelzer Holding GmbH (EUR)		7.50	%		7-15-2021	$	100,000	$	121,524


Internet & Catalog Retail: 0.04%
Priceline Group Incorporated (EUR)		2.38			9-23-2024		200,000		234,782


Consumer Staples: 0.14%

Food Products: 0.14%
BRF S.A. 144A (BRL)		7.75			5-22-2018		3,100,000		788,689


Energy: 0.27%

Energy Equipment & Services: 0.02%
Rapid Holding GmbH 144A (EUR)		6.63			11-15-2020		100,000		120,814


Oil, Gas & Consumable Fuels: 0.25%
Petroleos Mexicanos 144A (MXN)		7.19			9-12-2024		28,200,000		1,443,366


Financials: 1.70%

Banks: 1.61%
Eurofima (AUD)		6.25			12-28-2018		2,450,000		2,035,421
European Investment Bank (ZAR)		9.00			3-31-2021		17,400,000		1,223,073
KfW (TRY)		5.00			1-16-2017		11,400,000		3,937,058
KfW (AUD)		5.00			3-19-2024		1,300,000		1,130,128
Landwirtschaftliche Rentenbank (ZAR)		8.25			5-23-2022		15,000,000		1,017,221

									9,342,901


Diversified Financial Services: 0.09%
AA Bond Company Limited (GBP)		4.25			7-31-2043		200,000		299,159
TES Finance plc (GBP)		6.75			7-15-2020		200,000		247,314

									546,473


Materials: 0.12%

Chemicals: 0.12%
Albemarle Corporation (EUR)		1.88			12-8-2021		600,000		686,201


Telecommunication Services: 0.35%

Diversified Telecommunication Services: 0.07%
Verizon Communications Incorporated (EUR)		3.25			2-17-2026		300,000		401,031


Wireless Telecommunication Services: 0.28%
America Movil SAB de CV (MXN)		7.13			12-9-2024		28,850,000		1,620,697


Total Foreign Corporate Bonds and Notes (Cost $19,899,745)									15,306,478


Foreign Government Bonds @: 25.25%
Brazil (BRL)		10.00			1-1-2017		38,525,000		10,983,811
Brazil (BRL)		10.00			1-1-2025		32,800,000		8,410,217


14		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Foreign Government Bonds @ (continued)
Colombia (COP)		7.00	%		5-4-2022	$	18,650,000,000	$	6,303,136
Colombia (COP)		7.75			4-14-2021		5,250,000,000		1,877,047
Hungary (HUF)		6.75			11-24-2017		1,305,000,000		5,211,478
Indonesia (IDR)		7.88			4-15-2019		133,640,000,000		10,276,843
Indonesia (IDR)		10.00			7-15-2017		50,000,000,000		3,929,747
Korea (KRW)		5.25			3-10-2027		2,830,000,000		3,322,207
Malaysia (MYR)		3.66			10-15-2020		20,700,000		5,334,310
Malaysia (MYR)		4.18			7-15-2024		19,850,000		5,164,089
Mexico (MXN)		4.75			6-14-2018		191,800,000		11,219,820
Mexico (MXN)		6.50			6-10-2021		40,000,000		2,451,800
Mexico (MXN)		10.00			12-5-2024		62,120,000		4,653,480
Mexico (MXN)		10.00			12-5-2024		14,100,000		1,056,247
Poland (PLN)		2.50			7-25-2026		42,500,000		10,568,064
Poland (PLN)		3.25			7-25-2025		34,100,000		9,168,705
Queensland Treasury (AUD)		5.75			7-22-2024		4,100,000		3,783,050
Republic of South Africa (ZAR)		7.75			2-28-2023		103,000,000		6,846,648
Republic of South Africa (ZAR)		8.00			12-21-2018		129,000,000		9,020,054
Romania (RON)		5.85			4-26-2023		31,550,000		9,311,141
State of New South Wales Australia (AUD)		5.00			8-20-2024		3,900,000		3,498,309
Thailand (THB)		3.25			6-16-2017		110,000,000		3,216,311
Thailand (THB)		3.85			12-12-2025		108,500,000		3,664,421
Turkey (TRY)		6.30			2-14-2018		7,325,000		2,502,752
Turkey (TRY)		9.00			3-8-2017		13,600,000		4,855,754

Total Foreign Government Bonds (Cost $168,396,630)									146,629,441


Loans: 15.23%

Consumer Discretionary: 3.42%

Auto Components: 0.58%
Allison Transmission Incorporated ±		3.75			8-23-2019		3,358,600		3,360,716


Distributors: 0.51%
Spin Holdco Incorporated ±		4.25			11-14-2019		3,002,546		2,941,234


Hotels, Restaurants & Leisure: 0.12%
CCM Merger Incorporated ±		4.50			8-8-2021		633,825		635,213
TGI Friday’s Incorporated ±		5.25			7-15-2020		98,050		98,050

									733,263


Household Products: 0.03%
Anchor Glass Container Corporation ±		4.25			7-1-2022		163,710		164,017


Leisure Products: 0.36%
AMF Bowling Centers Incorporated ±		7.25			9-18-2021		1,716,282		1,707,701
Life Time Fitness Incorporated ±		4.25			6-10-2022		373,059		370,728

									2,078,429


Media: 1.28%
Altice US Finance I Corporation ±		4.25			12-14-2022		421,699		421,066
Cablevision Systems Corporation ±		5.00			10-9-2022		700,000		702,191


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			15


Security name	Interest rate			Maturity date		Principal		Value

Media (continued)
Charter Communications Operating LLC ±%%<		3.50	%		1-24-2023	$	920,000	$	923,616
Entercom Radio LLC ±		4.00			11-23-2018		1,026,127		1,022,710
Learfield Communications Incorporated ±		4.25			10-9-2020		1,433,762		1,429,289
Learfield Communications Incorporated ±		8.75			10-9-2021		2,669,807		2,656,458
Mission Broadcasting Incorporated ±		3.75			10-1-2020		124,911		124,599
Nexstar Broadcasting Incorporated ±		3.75			10-1-2020		141,651		141,297

									7,421,226


Multiline Retail: 0.03%
Doosan Infracore International Incorporated ±		4.50			5-28-2021		199,227		196,155


Specialty Retail: 0.51%
Focus Brands Incorporated ±		4.25			2-21-2018		656,285		657,105
Focus Brands Incorporated ±		10.25			8-21-2018		2,023,863		2,021,333
Staples Incorporated ±		4.75			2-2-2022		275,000		275,602

									2,954,040


Consumer Staples: 0.15%

Food Products: 0.15%
B&G Foods Incorporated ±		3.76			11-2-2022		640,110		643,310
Pinnacle Foods Incorporated ±		3.75			1-13-2023		249,375		250,452

									893,762


Energy: 0.49%

Energy Equipment & Services: 0.49%
Hummel Station LLC ±		7.00			10-27-2022		3,025,000		2,858,625


Financials: 2.12%

Capital Markets: 0.36%
American Capital Limited ±		3.50			8-22-2017		1,373,348		1,367,346
La Quinta Intermediate Holdings LLC ±		3.75			4-14-2021		748,116		736,894

									2,104,240


Consumer Finance: 0.03%
KAR Auction Services Incorporated ±		4.25			3-9-2023		200,000		200,750


Diversified Financial Services: 0.69%
American Beacon Advisors Incorporated ±		5.50			4-30-2022		2,336,206		2,311,395
American Beacon Advisors Incorporated ±(i)		9.75			3-3-2023		440,000		402,600
Ipreo Holdings LLC ±		4.00			8-6-2021		142,833		135,870
LPL Holdings Incorporated ±		4.75			11-20-2022		1,196,801		1,184,833

									4,034,698


Insurance: 0.26%
Asurion LLC ±		8.50			3-3-2021		360,000		345,085
Hub International Limited ±		4.25			10-2-2020		272,053		268,767
Solera Holdings Incorporated ±		5.75			3-3-2023		875,000		878,281

									1,492,133


16		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Real Estate Management & Development: 0.75%
Capital Automotive LP ±		4.00	%		4-10-2019	$	2,472,998	$	2,479,181
Capital Automotive LP ±		6.00			4-30-2020		1,849,333		1,853,957

									4,333,138


REITs: 0.03%
MGM Growth Properties LLC ±		4.00			4-25-2023		150,000		150,782


Health Care: 1.48%

Health Care Equipment & Supplies: 0.15%
DJO Finance LLC ±		4.25			6-8-2020		565,725		549,460
Prestige Brands Incorporated ±		3.52			9-3-2021		297,826		298,386

									847,846


Health Care Providers & Services: 0.75%
Acadia Healthcare Company Incorporated ±		4.25			2-11-2022		158,000		159,054
Acadia Healthcare Company Incorporated ±		4.50			2-16-2023		947,625		953,841
Community Health Systems Incorporated ±		4.00			1-27-2021		945,238		930,842
Surgery Center Holdings Incorporated ±		5.25			11-3-2020		1,110,938		1,113,026
TeamHealth Incorporated ±		4.50			11-23-2022		523,688		526,961
Vizient Incorporated ±%%<		6.25			2-13-2023		650,000		655,688

									4,339,412


Health Care Technology: 0.20%
Alere Incorporated ±		4.25			6-18-2022		101,743		100,725
Emdeon Incorporated ±		3.75			11-2-2018		992,327		991,712
Hill-Rom Holdings Incorporated ±		3.50			9-8-2022		69,938		70,214

									1,162,651


Pharmaceuticals: 0.38%
Endo Finance LLC ±		3.75			9-26-2022		299,250		298,128
Valeant Pharmaceuticals International Incorporated ±%%<		4.75			12-11-2019		1,545,866		1,504,514
Valeant Pharmaceuticals International Incorporated ±		5.00			4-1-2022		440,604		429,148

									2,231,790


Industrials: 1.69%

Aerospace & Defense: 0.52%
TransDigm Incorporated ±		3.75			2-28-2020		3,011,172		3,005,903


Chemicals: 0.05%
The Chemours Company ±		3.75			5-12-2022		277,900		269,980


Commercial Services & Supplies: 0.68%
ADS Waste Holdings Incorporated ±		3.75			10-9-2019		1,016,091		1,012,280
Gates Global Limited ±		4.25			7-6-2021		849,460		812,143
Sedgwick Claims Management Services Incorporated ±		3.75			3-1-2021		528,262		517,697
W3 Company ±		9.25			9-13-2020		289,275		121,496
WASH Multifamily Laundry Systems LLC ±		4.25			5-14-2022		1,280,325		1,261,120
WASH Multifamily Laundry Systems LLC ±		8.00			5-12-2023		17,885		16,901


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			17


Security name	Interest rate			Maturity date		Principal		Value

Commercial Services & Supplies (continued)
WASH Multifamily Laundry Systems LLC ±(i)		8.00	%		5-14-2023	$	102,115	$	96,499
Waste Industries USA Incorporated ±		4.25			2-27-2020		113,850		114,040

									3,952,176


Electrical Equipment: 0.17%
Nusil Technology LLC ±		5.25			4-7-2017		976,910		971,107


Machinery: 0.11%
Onex Wizard Acquisition Company ±		4.25			3-13-2022		634,348		632,648


Transportation Infrastructure: 0.16%
HGIM Corporation ±		5.50			6-18-2020		848,037		482,321
OSG Bulk Ships Incorporated ±		5.25			8-5-2019		80,415		76,193
OSG International Incorporated ±		5.75			8-5-2019		398,279		393,799

									952,313


Information Technology: 2.65%

Internet Software & Services: 0.48%
Black Knight InfoServ LLC ±		3.75			5-27-2022		496,873		497,186
CCC Information Services Incorporated ±		4.00			12-20-2019		581,470		577,109
Infor US Incorporated ±		3.75			6-3-2020		700,498		683,280
Sophia Holding Finance LP ±		4.75			9-30-2022		151,075		150,698
Vertafore Incorporated ±		9.75			10-29-2017		510,000		509,745
Zayo Group LLC ±		3.75			5-6-2021		356,913		356,720

									2,774,738


Semiconductors & Semiconductor Equipment: 0.25%
Avago Technologies ±		4.25			2-1-2023		1,000,000		1,000,180
NXP Semiconductors N.V. ±		3.75			12-7-2020		448,875		449,997

									1,450,177


Software: 0.11%
SS&C Technologies Incorporated ±		4.01			7-8-2022		596,759		598,251
SS&C Technologies Incorporated ±		4.02			7-8-2022		85,021		85,234

									683,485


Technology Hardware, Storage & Peripherals: 1.81%
CDW LLC ±		3.25			4-29-2020		873,251		872,491
Dell Incorporated ±		4.00			4-29-2020		8,231,686		8,228,722
Kronos Incorporated ±		4.50			10-30-2019		569,266		567,603
Peak 10 Incorporated ±(i)		8.25			6-17-2022		430,000		344,000
Riverbed Technology Incorporated ±		5.75			4-24-2022		487,724		490,494

									10,503,310


Materials: 0.03%

Containers & Packaging: 0.03%
Owens-Illinois Incorporated ±		3.50			9-1-2022		167,875		168,014


18		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Telecommunication Services: 1.74%

Diversified Telecommunication Services: 1.10%
Avaya Incorporated ±		5.13	%		10-26-2017	$	199,261	$	137,490
Level 3 Financing Incorporated ±		4.00			1-15-2020		1,700,000		1,704,675
nTelos Incorporated ±		5.75			11-9-2019		1,998,957		1,993,960
Telesat Canada ±		3.50			3-28-2019		2,551,221		2,546,961

									6,383,086


Wireless Telecommunication Services: 0.64%
LTS Buyer LLC ±		4.00			4-13-2020		1,853,133		1,846,647
LTS Buyer LLC ±(i)		8.00			4-12-2021		566,625		560,959
Syniverse Holdings Incorporated ±		4.00			4-23-2019		937,955		750,364
Syniverse Holdings Incorporated ±		4.00			4-23-2019		165,800		132,640
T-Mobile USA Incorporated ±		3.50			11-9-2022		448,875		451,402

									3,742,012


Utilities: 1.46%

Electric Utilities: 1.37%
Green Energy Partners ±(i)		6.50			11-13-2021		1,330,000		1,270,150
Texas Competitive Electric Holdings Company LLC ±(s)		4.66			10-10-2016		20,096,983		6,697,320

									7,967,470


Independent Power & Renewable Electricity Producers: 0.09%
Calpine Corporation ±		4.00			10-9-2019		493,606		493,730


Total Loans (Cost $102,342,187)									88,449,056


Municipal Obligations: 0.05%

New York: 0.05%
Build New York City Resource Corporation Bronx Charter School for Excellence Project Series B (Education Revenue)		5.00			4-1-2018		270,000		269,109


Total Municipal Obligations (Cost $270,000)									269,109


Non-Agency Mortgage-Backed Securities: 5.95%
American General Mortgage Loan Series 2010 Class 1A-A3 144A±		5.65			3-25-2058		20,033		20,003
Argent Securities Incorporated Series 2004-W5 Class AV3B ±		1.34			4-25-2034		68,759		62,642
Asset-Backed Funding Certificates Series 2003-AHL1 Class A1		4.18			3-25-2033		221,284		220,799
Asset-Backed Securities Corporation Home Equity Series 2002-HE3 Class M2 ±		2.76			10-15-2032		115,733		115,370
Banc of America Commercial Mortgage Securities Incorporated Series 2006-03 Class AM ±		6.08			7-10-2044		1,340,000		1,332,035
Banc of America Commercial Mortgage Securities Incorporated Series 2007-1 Class AMFX ±		5.48			1-15-2049		530,000		530,319
Banc of America Commercial Mortgage Securities Incorporated Series 2008-1 Class AM ±		6.48			2-10-2051		550,000		584,022
Banc of America Commercial Mortgage Trust Series 2006-5 Class AM		5.45			9-10-2047		750,000		757,681
Banc of America Funding Corporation Series 2005 Class 5-1A1		5.50			9-25-2035		373,950		387,079
Banc of America Funding Corporation Series 2009 Class R6-3A1 144A±		2.21			1-26-2037		52,408		52,316
Banc of America Mortgage Securities Series 2003 Class 1A1 ±		2.74			4-25-2033		346,359		322,282
Banc of America Mortgage Securities Series 2003 Class A-3A1 ±		2.91			2-25-2033		57,633		55,534


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			19


Security name	Interest rate			Maturity date		Principal		Value

Non-Agency Mortgage-Backed Securities (continued)
Bear Stearns Commercial Mortgage Series 2007-PW17 Class AM ±		5.92	%		6-11-2050	$	318,000	$	330,027
Bear Stearns Commercial Mortgage Series 2007-PW18 Class AM ±		6.08			6-11-2050		100,000		104,760
Bear Stearns Commercial Mortgage Series 2007-PW18 Class AMA ±		6.09			6-11-2050		715,000		748,756
Centex Home Equity Series 2002-A Class AF6		5.54			1-25-2032		81,377		81,194
Centex Home Equity Series 2002-D Class AF6 ±		4.66			12-25-2032		31,189		31,481
Centex Home Equity Series 2004-B Class AF6		4.69			3-25-2034		218,835		222,758
Citigroup Commercial Mortgage Trust Series 2012-GC8 Class C 144A±		5.04			9-10-2045		1,000,000		1,052,242
Citigroup Commercial Mortgage Trust Series 2015 Class A 144A±		1.58			9-15-2027		595,000		589,596
Citigroup Mortgage Loan Trust Incorporated Series 2003-HE3 Class A3 ±		0.81			12-25-2033		54,070		52,096
Commercial Mortgage Trust Series 2007-C9 144A±		1.08			12-10-2049		940,000		917,590
Commercial Mortgage Trust Series 2012-CR2 Class C ±		5.02			8-15-2045		1,000,000		1,049,047
Countrywide Asset Backed Certificates Series 2003-5 Class AF5		5.43			2-25-2034		97,099		97,570
Countrywide Home Loans Series 2003-48 Class 2A2 ±		2.82			10-25-2033		112,052		109,124
Credit Suisse Commercial Mortgage Trust Series 2006-C3 Class AM ±		6.24			6-15-2038		1,045,000		1,045,275
Credit Suisse Commercial Mortgage Trust Series 2006-C4 Class AM		5.51			9-15-2039		1,500,000		1,511,447
Credit Suisse Commercial Mortgage Trust Series 2006-C5 Class AM		5.34			12-15-2039		1,000,000		1,010,747
Credit Suisse First Boston Mortgage Securities Series 2002-AR25 Class 1A1 ±		2.36			9-25-2032		578,809		535,032
Credit Suisse First Boston Mortgage Securities Series 2003-AR15 Class 3A1 ±		2.93			6-25-2033		161,875		160,009
Credit Suisse First Boston Mortgage Securities Series 2003-AR9 Class 2A2 ±		2.64			3-25-2033		38,162		36,864
Credit-Based Asset Servicing & Securitization LLC Series 2005-CB2 Class M1 ±		1.09			4-25-2036		117,845		117,488
Equity One Asset Backed Securities Series 2004-2 Class AF4 ±		4.62			7-25-2034		423,501		427,452
First Horizon Mortgage Pass Through Series 2004-AR1 Class 1A1 ±		2.77			2-25-2034		421,472		414,365
First Horizon Mortgage Pass Through Series 2004-AR4 Class 3A1 ±		2.71			8-25-2034		11,349		11,052
Global Mortgage Securitization Limited Series 2004-A Class A2 144A±		0.76			11-25-2032		193,072		180,607
GMAC Mortgage Corporation Loan Series 2003-GH1 Class A5		5.47			7-25-2034		72,943		73,945
Great Wolf Trust Series 2015 Class A 144A±		1.89			5-15-2034		1,015,000		1,003,420
Greenwich Capital Commercial Funding Corporation Series 2007-GG11 Class A4		5.74			12-10-2049		378,182		394,676
GS Mortgage Securities Trust Series 2007-GG10 Class A4 ±		5.99			8-10-2045		879,081		902,768
GS Mortgage Securities Trust Series 2010-C1 Class X 144A±		1.59			8-10-2043		5,430,085		274,314
GS Mortgage Securities Trust Series 2012-GCJ7 Class XA ±		2.69			5-10-2045		4,625,636		379,200
GS Mortgage Securities Trust Series 2014-New Class C 144A		3.79			1-10-2031		1,000,000		969,475
GS Mortgage Securities Trust Series 2016-ICE2 Class A 144A±		2.36			2-15-2033		500,000		501,093
GSAA Home Equity Trust Series 2004-5 Class AF5 ±		4.75			6-25-2034		11,235		11,233
GSMPS Mortgage Loan Trust Series 2005-AHL Class M1 ±		0.87			4-25-2035		10,611		10,517
GSMPS Mortgage Loan Trust Series 2006-1 Class A1 144A±		0.74			3-25-2035		128,206		125,978
GSMPS Mortgage Loan Trust Series 2006-SEA1 Class A 144A±		0.73			5-25-2036		76,102		75,612
JPMorgan Chase Commercial Mortgage Securities Trust Series 2007-CB18 Class AM ±		5.47			6-12-2047		875,000		886,296
JPMorgan Chase Commercial Mortgage Securities Trust Series 2007-LDPX Class AM ±		5.46			1-15-2049		550,000		542,398
JPMorgan Chase Commercial Mortgage Securities Trust Series 2015-FL7 Class A 144A±		1.68			5-15-2028		377,396		373,574
JPMorgan Mortgage Trust Series 2004-A3 Class 2A1 ±		2.67			7-25-2034		72,299		69,861
JPMorgan Mortgage Trust Series 2004-A3 Series 3A3 ±		2.67			7-25-2034		72,433		69,947
JPMorgan Mortgage Trust Series 2005-A3 Class 11A2 ±		2.83			6-25-2035		254,504		256,821
JPMorgan Mortgage Trust Series 2009-7 Class 2A1 144A±		6.00			2-27-2037		46,462		47,095
JPMorgan Mortgage Trust Series 2009-7 Class 5A1 144A±		6.00			2-27-2037		191,541		192,363
Lehman XS Trust Series 2006-18N Class A5A ±		0.61			12-25-2036		18,036		14,805
MASTR Adjustable Rate Mortgage Trust Series 2003-6 Class 3A1 ±		2.74			12-25-2033		460,461		454,738
MASTR Adjustable Rate Mortgage Trust Series 2003-6 Class 4A2 ±		2.86			1-25-2034		18,422		17,731
MASTR Adjustable Rate Mortgage Trust Series 2004-13 Class 3A7 ±		2.78			11-21-2034		26,445		26,868
MASTR Alternative Loans Trust Series 2005-1 Class 5A1		5.50			1-25-2020		40,283		41,260


20		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Non-Agency Mortgage-Backed Securities (continued)
Merrill Lynch Countrywide Commercial Mortgage Trust Series 2006-4 Class AM		5.20	%		12-12-2049	$	340,000	$	345,196
Merrill Lynch Countrywide Commercial Mortgage Trust Series 2007-9 Class A4		5.70			9-12-2049		793,369		822,948
Merrill Lynch Mortgage Trust Series 2005-A8 Class A1B3 ±		5.25			8-25-2036		75,847		77,319
Merrill Lynch Mortgage Trust Series 2006-C1 Class AM ±		5.92			5-12-2039		306,979		306,707
Merrill Lynch Mortgage Trust Series 2007-C1 Class A1A ±		6.03			6-12-2050		608,556		625,615
Mesa Trust Asset Backed Certificates Series 2001-5 Class A 144A±		1.24			12-25-2031		17,321		15,918
Mid State Trust Series 11 Class A1		4.86			7-15-2038		234,661		249,278
MLCC Mortgage Investors Incorporated Series 2003-G Class A2 ±		1.31			1-25-2029		113,855		106,395
Morgan Stanley Bank of America Merrill Lynch Trust Series 2012-C5 Class XA 144A±		1.89			8-15-2045		5,367,210		339,551
Morgan Stanley Capital I Trust Series 2004-NC1 Class M1 ±		1.49			12-27-2033		527,408		508,742
Morgan Stanley Capital I Trust Series 2006-HQ10 Class AM		5.36			11-12-2041		500,000		504,910
Morgan Stanley Capital I Trust Series 2006-HQ9 Class AJ ±		5.79			7-12-2044		1,000,000		1,003,993
Morgan Stanley Capital I Trust Series 2006-HQ9 Class AM ±		5.77			7-12-2044		25,000		25,084
Morgan Stanley Capital I Trust Series 2006-IQ12 Class AM		5.37			12-15-2043		500,000		503,523
Morgan Stanley Capital I Trust Series 2007-HQ13 Class A3		5.57			12-15-2044		1,225,642		1,271,047
Morgan Stanley Capital I Trust Series 2010-GG10 Class A4B 144A±		5.99			8-15-2045		615,000		629,149
Morgan Stanley Capital I Trust Series 2012-C4 Class C 144A±		5.71			3-15-2045		900,000		962,987
New Century Home Equity Loan Trust Series 2004-3 Class M1 ±		1.37			11-25-2034		1,165,049		1,031,904
New Century Home Equity Loan Trust Series 2005-1 Class A1MZ ±		1.02			3-25-2035		62,015		61,936
Provident Funding Mortgage Loan Series 2005-1 Class 2A1 ±		2.78			5-25-2035		39,444		40,173
RBSSP Resecuritization Trust Series 2010-3 Class 4A1 144A±		3.13			12-26-2035		24,698		24,655
Renaissance Home Equity Loan Trust Series 2004-4 Class AF4		4.88			2-25-2035		410,814		412,687
Residential Funding Mortgage Securities Trust Series 03-S12 Class 2A1		4.00			12-25-2032		59,092		59,098
Saxon Asset Securities Trust Series 2002-1 Class AF5		4.87			12-25-2030		156,611		158,642
Saxon Asset Securities Trust Series 2003-1 Class AF7		4.03			6-25-2033		544,485		550,829
Sequoia Mortgage Trust Series 2003-1 Class 1A ±		1.20			4-20-2033		20,111		18,867
Structured Adjustable Rate Mortgage Loan Trust Series 2004-2 Class 2A ±		2.84			3-25-2034		67,479		66,282
Structured Asset Securities Corporation Series 1998-2 Class A ±		0.96			2-25-2028		257,303		248,276
Structured Asset Securities Corporation Series 2002-9 Class A2 ±		1.03			10-25-2027		75,775		73,626
Terwin Mortgage Trust Series 2003-6HE Class A3 ±		1.57			11-25-2033		173,407		163,516
Vendee Mortgage Trust Series 2003-2 Class IO ±		0.76			5-15-2033		5,569,109		175,371
Washington Mutual Mortgage Trust Series 2004-RA4 Class 3A		7.50			7-25-2034		179,858		191,859

Total Non-Agency Mortgage-Backed Securities (Cost $34,661,152)									34,568,732


Yankee Corporate Bonds and Notes: 8.03%

Consumer Discretionary: 0.50%

Media: 0.50%
Grupo Televisa SAB		6.00			5-15-2018		750,000		812,594
Myriad International Holdings BV		6.00			7-18-2020		500,000		545,480
Myriad International Holdings BV 144A		6.38			7-28-2017		750,000		783,750
WPP Finance 2010		3.63			9-7-2022		750,000		781,874

									2,923,698


Consumer Staples: 0.49%

Beverages: 0.35%
Anadolu Efes		3.38			11-1-2022		1,400,000		1,239,868
Pernod Ricard SA 144A		4.45			1-15-2022		760,000		824,814

									2,064,682


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			21


Security name	Interest rate			Maturity date		Principal		Value

Tobacco: 0.14%
BAT International Finance plc 144A		3.25	%		6-7-2022	$	750,000	$	792,298


Energy: 1.20%

Oil, Gas & Consumable Fuels: 1.20%
Baytex Energy Corporation 144A		5.63			6-1-2024		325,000		247,000
Griffin Coal Mining Company Limited 144A(i)(s)(a)		9.50			12-1-2016		1,685,411		674,164
Griffin Coal Mining Company Limited (i)(s)(a)		9.50			12-1-2016		137,792		55,117
Petrobras International Finance Company		5.38			1-27-2021		670,000		595,664
Petroleos Mexicanos		4.88			1-24-2022		750,000		755,625
Teekay Corporation 144A		8.50			1-15-2020		1,000,000		762,500
Teekay Corporation		8.50			1-15-2020		4,475,000		3,412,188
Woodside Finance Limited 144A		8.75			3-1-2019		405,000		465,295

									6,967,553


Financials: 0.99%

Banks: 0.79%
ABN AMRO Bank N.V. 144A		4.80			4-18-2026		750,000		767,622
Banco del Estado de Chile 144A		3.88			2-8-2022		650,000		693,999
Corporación Andina de Fomento		4.38			6-15-2022		958,000		1,051,673
Export Import Bank of Korea		5.00			4-11-2022		750,000		860,109
Macquarie Bank Limited 144A		5.00			2-22-2017		750,000		772,208
Nielsen Holding and Finance BV 144A		5.50			10-1-2021		415,000		432,638
Preferred Term Securities XII Limited (i)(s)(a)		1.00			12-24-2033		635,000		0

									4,578,249


Diversified Financial Services: 0.20%
GE Capital International Funding Company 144A		2.34			11-15-2020		527,000		539,455
Tyco Electronics Group SA		3.50			2-3-2022		625,000		647,646

									1,187,101


Health Care: 1.06%

Pharmaceuticals: 1.06%
Mallinckrodt plc 144A		5.50			4-15-2025		500,000		450,000
Mallinckrodt plc 144A		5.63			10-15-2023		275,000		257,125
Perrigo Finance plc		3.90			12-15-2024		1,000,000		1,013,936
Valeant Pharmaceuticals International Incorporated 144A%%		5.63			12-1-2021		700,000		593,250
Valeant Pharmaceuticals International Incorporated 144A		5.88			5-15-2023		1,660,000		1,395,438
Valeant Pharmaceuticals International Incorporated 144A		6.13			4-15-2025		2,050,000		1,701,500
Valeant Pharmaceuticals International Incorporated 144A		7.50			7-15-2021		785,000		718,275

									6,129,524


Industrials: 0.64%

Building Products: 0.04%
Allegion plc		5.88			9-15-2023		210,000		222,600


Commercial Services & Supplies: 0.42%
GFL Environmental Incorporated 144A		7.88			4-1-2020		1,900,000		1,928,500
GFL Environmental Incorporated 144A		9.88			2-1-2021		500,000		527,500

									2,456,000


22		Wells Fargo Multi-Sector Income Fund		Portfolio of investments—April 30, 2016 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value

Machinery: 0.04%
Sensata Technologies BV 144A		5.00	%		10-1-2025	$	235,000	$	236,175


Road & Rail: 0.14%
Canadian Pacific Railway Company		4.50			1-15-2022		750,000		820,219


Information Technology: 0.27%

Communications Equipment: 0.14%
Ericsson LM		4.13			5-15-2022		750,000		794,905


Internet Software & Services: 0.13%
Tencent Holdings Limited 144A		4.63			12-12-2016		750,000		765,215


Materials: 0.99%

Containers & Packaging: 0.57%
Ardagh Finance Holdings SA (PIK at 8.63%) 144A¥		8.63			6-15-2019		1,521,968		1,510,062
Ardagh Packaging Finance plc 144A%%		7.25			5-15-2024		725,000		725,000
Ardagh Packaging Finance plc 144A		9.13			10-15-2020		1,020,000		1,073,550

									3,308,612


Metals & Mining: 0.42%
ArcelorMittal SA		5.50			2-25-2017		725,000		748,563
ArcelorMittal SA		6.13			6-1-2025		275,000		268,813
Glencore Finance Canada Limited 144A		4.25			10-25-2022		750,000		692,213
Vale Overseas Limited		4.38			1-11-2022		750,000		693,750

									2,403,339


Telecommunication Services: 1.77%

Diversified Telecommunication Services: 1.54%
Intelsat Jackson Holdings SA		5.50			8-1-2023		6,775,000		4,280,953
Intelsat Jackson Holdings SA		7.25			4-1-2019		1,675,000		1,373,500
Intelsat Luxembourg SA		7.75			6-1-2021		1,435,000		480,725
Intelsat Luxembourg SA		8.13			6-1-2023		5,815,000		1,904,413
Qtel International Finance Limited		5.00			10-19-2025		300,000		332,484
Virgin Media Finance plc 144A		5.38			4-15-2021		162,000		169,290
Virgin Media Finance plc 144A		6.38			4-15-2023		365,000		375,950
									8,917,315


Wireless Telecommunication Services: 0.23%
Globo Communicacoes Participacoes SA 144A		4.88			4-11-2022		595,000		589,794
Telesat Canada Incorporated 144A		6.00			5-15-2017		775,000		774,070
									1,363,864


Utilities: 0.12%

Electric Utilities: 0.12%
Comision Federal de Electricidad 144A		4.88			5-26-2021		650,000		684,125


Total Yankee Corporate Bonds and Notes (Cost $55,735,817)									46,615,474


Portfolio of investments—April 30, 2016 (unaudited)		Wells Fargo Multi-Sector Income Fund			23


	Yield			Shares		Value

Short-Term Investments: 4.71%

Investment Companies: 4.71%
Wells Fargo Cash Investment Money Market Fund Select Class (l)(u)##		0.43	%		27,383,187	$	27,383,187


Total Short-Term Investments (Cost $27,383,187)							27,383,187


Total investments in securities (Cost $852,552,984) *	136.90	%		795,043,046
Other assets and liabilities, net	(36.90	)		(214,298,166	)

Total net assets	100.00	%	$	580,744,880

±	Variable rate investment. The rate shown is the rate in effect at period end.

144A	The security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933.

(c)	Investment in an interest-only security entitles holders to receive only the interest payments on the underlying mortgages. The principal amount shown is the notional amount of the underlying mortgages. The rate represents the coupon rate.

†	Non-income-earning security

(i)	Illiquid security

¥	A payment-in-kind (PIK) security is a security in which the issuer may make interest or dividend payments in cash or additional securities. These additional securities generally have the same terms as the original holdings.

(s)	The security is currently in default with regards to scheduled interest and/or principal payments. The Fund has stopped accruing interest on the security.

(a)	The security is fair valued in accordance with procedures approved by the Board of Trustees.

@	Foreign bond principal is denominated in the local currency of the issuer.

%%	The security is issued on a when-issued basis.

<	All or a portion of the position represents an unfunded loan commitment.

(l)	The issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940.

(u)	The rate represents the 7-day annualized yield at period end.

##	All or a portion of this security is segregated for when-issued securities and unfunded loans.

*	Cost for federal income tax purposes is $858,011,810 and unrealized gains (losses) consists of:


Gross unrealized gains	$	18,596,508
Gross unrealized losses		(81,565,272	)

Net unrealized losses	$	(62,968,764	)

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMEENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS


Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
11/1/2015 to 11/30/2015		—		—		—		42,055,000
12/1/215 to 12/31/2015		—		—		—		42,055,000
1/1/2016 to 1/31/2016		—		—		—		42,055,000
2/1/2016 to 2/29/2016		36,691	$	11.08		36,691		42,018,309
3/1/216 to 3/31/2016		—		—		—		42,018,309
4/1/2016 to 4/30/2016		—		—		—		42,018,309
Total		36,691	$	11.08		—		42,018,309

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees that have been implemented since the registrant’s last provided disclosure in response to the requirements of this Item.

ITEM 11.

CONTROLS AND PROCEDURES

(a) The President and Treasurer have concluded that the Wells Fargo Multi-Sector Income 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 significant changes in the Fund’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 12.

EXHIBITS

(a)(1) Not applicable

(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)(3) Not applicable.

(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is filed and attached hereto as Exhibit 99.906CERT

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 Multi-Sector Income Fund

By:

		/s/ Karla M. Rabusch
		Karla M. Rabusch
		President

Date: June 27, 2016

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 date indicated.


Wells Fargo Multi-Sector Income Fund

By:

		/s/ Karla M. Rabusch
		Karla M. Rabusch
		President

Date: June 27, 2016

By:

		/s/ Jeremy DePalma
		Jeremy DePalma
		Treasurer

Date: June 27, 2016