Small Cap Value Equity Pitchbook

1 Wells Fargo Small Cap Value EquityWells Fargo Funds Management, LLC

Wells Fargo Small Cap Value Equity Managed Account

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DISCLOSURE

Advisory services provided by Wells Fargo Funds Management, LLC, a registered investment advisor and wholly-owned subsidiary of Wells Fargo & Company.

Subadvisory services provided by Wells Capital Management, a registered investment adviser and wholly-owned subsidiary of Wells Fargo Bank, N.A.

The investment process and limitations described in this presentation are intended as an illustration of the manager’s general investment philosophy. Any client-specific investment guidelines or restrictions must be detailed in a written agreement between Wells Fargo Funds Management, LLC, and the client.

NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE


TABLE OF CONTENTS

I.

II.

III.

IV.

Introduction

Small Cap Value Equity Team

Philosophy and Process

Summary


INTRODUCTION


WELLS FARGO FUNDS MANAGEMENT

Over $93.7 billion in assets under management

$75.6 billion in mutual and variable trust funds

$18.1 billion in collective funds*

Boutique and independent money managers

Access to disciplined, tenured investment teams

*Collective funds are subject to the regulation of the Office of the Comptroller of the Currency. They are not mutual funds and are not subject to the same registration requirements and restrictions as mutual funds.

As of September 30, 2004As of September 30, 2004

Assets

Fixed-income16%

Equity 24%

Money Market 59%


A DISTINCT INVESTMENT HERITAGE

2002Wells Fargo celebrates 150th anniversary.

1852Wells Fargo & Company founded.

1978 – WFIA introduces an asset allocation strategy based on Harry Markowitz’s theories, for which he wins the Nobel Prize for in 1990.

1952Economist Harry Markowitz publishes his initial research on portfolio selection.

1971Wells Fargo Investment Advisors (WFIA) creates an index portfolio model.

1998 – Wells Fargo-Norwest merger creates $186 billion diversified financial services company.

1992 WFB launches the Stagecoach Funds.

1988 – Wells Fargo Bank (WFB) launches the Overland Funds.

2003Wells Fargo acquires Montgomery Asset Management, adding six new investment strategies.

2005Planned completion of the assets of Strong Financial by Wells Fargo.*

* Pending board and shareholder approval.* Pending board and shareholder approval.


WELLS FARGO SMALL CAP VALUE EQUITY TEAM



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Mr. Rinaldi has over 34 years of investment experience. Prior to joining Wells Capital Management in January 2005, Mr. Rinaldi was a Portfolio Manager for Strong Capital Management, Inc. He joined Strong Capital Management, Inc. in November 1997, as head of the firm’s small-cap value equity product. Previously, he was Senior Vice President and Portfolio Manager at Mutual of America Capital Management Corporation from November 1989 to November 1997. Prior to that, he was a portfolio manager at Glickenhaus and Company, Lehman Management Company, Arnhold & S. Bleichroeder and Gintel & Company and was a security analyst for ten years at Merrill Lynch Capital Markets. Mr. Rinaldi received his M.B.A. degree with high distinction in 1970 from Babson College and in 1965 he received a B.A. degree cum laude from St. Michaels College. He is a member of the National Honor Society, the Association for Investment Management and Research and the New York Society of Security Analysts.

Mr. Corton has over 16 years of investment industry experience. He is an associate portfolio manager and a member of Wells Capital Management’s domestic equity team. Prior to joining Wells Capital Management in January 2005, Mr. Corton was a Senior Vice President and Associate Portfolio Manager for Strong Capital Management, Inc. Prior to joining Strong in April 2000, Mr. Corton worked at Federated Investors for nine years, most recently as Vice President of Federated’s Institutional Group. Prior to joining Federated, he was an account executive at Richards Lynch and Pegher, Investment Bankers. He earned an M.S.I.A. (M.B.A.) degree from Carnegie-Mellon University in 1991 and a B.S. degree in finance and economics from Boston College in 1985. He is a member of the Association for Investment Management and Research and the Pittsburgh Society of Security Analysts. He has earned the right to use the CFA designation.

I. Charles Rinaldi

Portfolio Manager

Len Corton, CFA

Senior Vice President, Associate Portfolio Manager



Prior to joining Wells Capital Management in January 2005, Ms. Hoang was a Research Analyst for Strong Capital Management, Inc. Ms. Hoang joined Strong Capital Management, Inc. in 2000. She received a B.S. in biology from the University of Missouri, Kansas City in 1997.

Anh-Thi Hoang

Research Analyst

Mr. O’Conor has 21 years of investment industry experience. Prior to joining Wells Capital Management in January 2005, Mr. O’Conor was a Senior Research Analyst for Strong Capital Management, Inc. He joined Strong Capital Management, Inc. in 2001 as an equity research analyst. Prior to joining Strong, Mr. O’Conor was an equities analyst with Merrill Lynch & Company and with Deutsche Morgan Grenfell/C.J. Lawrence, Inc. Before that, he worked for 13 years outside the investment industry, principally as a management consultant with Arthur D. Little, Inc. and in project management as a senior engineer with BHP-Utah International, Inc. During this time, assignments were taken globally. He received his M.B.A. from the University of Chicago, Graduate School of Business, in 1988 and has a B.S. in engineering from the Colorado School of Mines, 1979.

Andrew J. O’Conor

Senior Research Analyst

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Prior to joining Wells Capital Management in January 2005, Mr. Schmitz was a Junior Research Analyst for Strong Capital Management, Inc. Mr. Schmitz joined the Strong Small Cap Value Equity team in 2004 as a research analyst for the energy, materials, and industrial sectors. Previous to that, he worked as a software engineer for Strong for three years. He received a B.A. in information systems analysis and design from the University of Wisconsin-Madison in 2001.

Scott N. Schmitz

Junior Research Analyst

Prior to joining Wells Capital Management in January 2005, Mr. Argent was a Trader for Strong Capital Management, Inc. Mr. Argent joined Strong Capital Management, Inc. in 1998. He received a B.A. in financial management and accounting with a minor in economics from the University of North Dakota-Grand Forks in 1998.

James P. Argent

Trader

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PHILOSOPHY AND PROCESS


WELLS FARGO SMALL CAP VALUE EQUITY

Has shown excess performance vs. peer group and benchmark

Experienced portfolio management team

Adds value through security selection

Consistent application of the investment process over the long term

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Why Wells Fargo Small Cap Value Equity?

Performance is historical and does not guarantee future results.



We believe the Small Cap market is largely inefficient. We add value by seeking to exploit these inefficiencies through bottom-up security selection.

Our Small Cap Value philosophy is to invest in undervalued, under-followed companies with an unrecognized positive dynamic for change.

We believe that investing in companies that have modest valuation will limit downside risk while providing opportunity for significant portfolio outperformance.

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Investment Philosophy



Wells Fargo’s Small Cap Value investment process combines both quantitative analysis and fundamental research. Approximately 70%-80% of our security selection process focuses on fundamental research in order to confirm or reject the results of the quantitative screens.

We construct client portfolios that seek to provide attractive risk/return characteristics. This is accomplished through careful security selection and adherence to strict risk controls and a consistent sell discipline.

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Investment Process Overview



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Investment Process

Small Cap Universe of Stocks

Under $2 billion in market cap

Domestically listed stocks

Security Selection

3-Step Process

Quantitative Analysis

Intrinsic value

Undervalued growth

Contrarian screens

Proprietary Dynamic Screens

TREND ANALYSIS

Revenue growth/profit margin

Inventory trends

Capital expenditures

Cash flow

CORRELATION ANALYSIS

Fundamental Research

POSITIVE DYNAMIC

New management or product

Improved business plan

Industry consolidation

Management trading patterns



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Investment Process (continued)

Watchlist250 Names

Maintain real-time watchlist of qualified ideas

Portfolio90-125 Holdings

Risk Controls

Security positions limited to 1%-4% at purchase

Sector limitations

Security positions reduced at 7% of portfolio

Strict sell discipline

Sell Discipline

Fundamentals deteriorate

Relative valuation vs. peer group and market

Catalyst not working

7% limit


SUMMARY



Has shown excess performance vs. peer group and benchmark

Experienced portfolio management team

Adds value through security selection

Consistent application of the investment process over the long term

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Why Wells Fargo Small Cap Value Equity?

Performance is historical and does not guarantee future results.


THANK YOU

Dedicated Managed Account Specialists are available to assist you with any questions you may have about Wells Fargo, our products, or services.

We are available Monday through Friday, 8:00 a.m. to 5:00 p.m. CT.

Wells Fargo Funds Management, LLC

Managed Accounts

100 Heritage Reserve

Menomonee Falls, WI 53051

1-800-368-0627

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Small Cap Value Equity Pitchbook

Economy & Finance

Transcript of Small Cap Value Equity Pitchbook