Wells Fargo Large Cap Growth Fund

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1 Overview General fund information Ticker: STNFX Portfolio managers: Thomas Ognar, CFA; Bruce Olson, CFA; Joseph Eberhardy, CFA, CPA Subadvisor: Wells Capital Management Inc. Category: Large-cap growth strategy Invests in companies where growth of revenue and earnings is robust, sustainable, and not fully recognized by the market Conducts fundamental, all-cap research that provides unique insights into a company's true growth rate Continuously manages risk by evaluating the rate and sustainability of a company's true growth rate relative to the market's expectation Acts quickly on new information, both positive and negative, in an effort to exploit investor biases Average annual total returns (%) as of * Year to Since inception 3 month date 1 year 3 year 5 year 10 year ( ) Large Cap Growth Inst Russell 1000 Growth Index *Returns for periods of less than one year are not annualized. Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on a fund. Investment return and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted and assumes the reinvestment of dividends and capital gains. Current month-end performance is available at the fund s website, wellsfargofunds.com. Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge. The fund s gross expense ratio is 0.83%. The fund s net expense ratio is 0.75%. The manager has contractually committed, through , to waive fees and/or reimburse expenses to the extent necessary to cap the fund s total annual fund operating expenses after fee waiver at 0.75% for the Institutional Class. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the cap. Without these reductions, the fund s returns would have been lower. After this time, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. The expense ratio paid by an investor is the net expense ratio or the total annual fund operating expense after fee waivers, as stated in the prospectus. Key drivers of performance The fund outperformed its benchmark, the Russell 1000 Growth Index, for the three-month period that ended September 30, Stock selection in the information technology (IT) and consumer staples sectors boosted relative returns. An overweight to the IT sector and underweights to the consumer staples and consumer discretionary sectors also aided relative results. Stock selection in the health care and materials sectors hindered results. Market and portfolio overview Continued strength in corporate earnings, accommodative central-bank policies, and generally healthy economic data propelled the U.S. equity market higher during the third quarter. The Russell 1000 Growth Index finished the quarter at a historical high despite fiscal policy uncertainties and periodic bouts of geopolitical concerns, such as elevated tensions with North Korea and severe storms in the U.S. Leading economic indicators and consensus earnings expectations continued to point to a steadily improving environment. Signs of increased global economic activity, especially in Europe, also boosted investor confidence. Investors continued to favor stocks with more durable earnings growth and greater exposure to strong, secular trends. Consequently, faster-growing stocks in industries such as IT services and semiconductors rallied as investors recognized the significant transformation these companies have been fostering across various parts of the economy. Investors also appeared to reward these stocks for the scarcity of their robust earningsgrowth potential in the midst of a slow but steady economic growth environment. Our team has continued to emphasize innovative companies operating in rapidly growing areas, such as software-as-a-service (SaaS), cloud computing, online retail, digital payments, and the internet of things. As a result, the fund remained overweight the IT sector given the prevalence of companies with disruptive business models and strong, secular drivers. In contrast, we continued to underweight the consumer discretionary and consumer staples sectors, influenced by the increased risk profile for many of these stocks given the secular shift to e-commerce. We believe the more recent strength from higher-growth stocks likely could continue, especially in an environment that persistently reflects steady growth and generally low interest rates. While these stocks have performed well thus far in 2017, we believe their valuations remain generally attractive, especially when considering their robust growth potential. We believe that a combination of attractive relative valuations, strong fundamentals, and powerful secular trends could lead to continued strength from the higher-growth stocks emphasized in the fund. 1

2 Quarterly attribution analysis (See pages 4 5 for important information.) Contributors Large Cap Growth versus Russell 1000 Growth Index Success in the IT sector was driven by our identification of innovative companies in rapidly growing areas, such as payment processing, online and mobile advertising, and SaaS. Holdings in the payment-processing segment benefited from powerful trends toward online retail and increased electronic transactions as well as from strong company execution. PayPal Holdings, Inc., which operates a leading global payments platform, exceeded consensus expectations on a variety of operating metrics. We believe PayPal could continue to benefit from its expanded market presence, the potential for higher profit margins, and favorable secular trends. Facebook, Inc., continued to exhibit strong fundamentals, evidenced by robust growth in advertising revenues. Microchip Technology Inc. also performed well, boosted by strong demand for its semiconductor products used in a variety of applications. Underweights to the consumer staples and consumer discretionary sectors boosted relative results. The ongoing disruption in brick-andmortar retail and corresponding shift to e-commerce continued to weigh on these sectors during the quarter. We have emphasized companies we believe are in a prime position to take advantage of the secular shift toward e-commerce and those we believe are effectively insulated from this pressure, in areas such as discount retail and companies offering consumer experiences. Dollar Tree, Inc., rallied this quarter based on solid results in its core business and signs of a turnaround in its Family Dollar segment. An underweight to the media industry also aided results; these firms often struggled with cord-cutting and viewership declines as consumers gravitated to nontraditional online media sources. Detractors Stock selection in the health care sector constrained the fund s results the most during the quarter. Within the equipment-and-supplies industry, Edwards Lifesciences Corp. continued to experience robust demand for its innovative treatment for severe aortic stenosis. The stock s weakness likely was influenced by some investors cautiously awaiting further confirmation regarding the level of strength for underlying patient demand. We continue to have a positive outlook for Edwards based on the company s ability to generate strong growth, partly through increased patient demand. The fund also suffered from declines in select biotechnology holdings, which possess innovative therapies that address serious medical conditions. Incyte Corp. was a key detractor despite positive pipeline developments and robust patient demand for its therapy that treats bone diseases. Consumer Consumer Discretionary Staples Energy Financials Health Care Industrials Info Tech Materials Real Estate Telecom Services Utilities Cash Sector weights (average % weight during the quarter) Large Cap Growth Russell 1000 Growth Index Over/underweight Sector returns (%) sector return Index sector return Relative return Sources: FactSet and Wells Fargo s Management, LLC Past performance is no guarantee of future results. Sector weights are subject to change and may have changed since the date specified. When reviewing the performance attribution of our portfolio, it is vital to remember that we construct our portfolio from the bottom up, one stock at a time. Each stock is included in the portfolio based on its own investment thesis. To help manage risk, we are aware of our sector and security weights, but we do not include a holding to obtain a sector distribution to resemble an index. Our exposure to any given sector is a result of our security selection process. 2

3 information Top holdings Stock % of net assets Facebook, Inc. Class A 6.57 Amazon.com, Inc Microsoft Corporation 5.03 Alphabet Inc. Class C 4.32 Mastercard Incorporated Class A 3.46 Visa Inc. Class A 3.26 Alphabet Inc. Class C 3.06 Microchip Technology Incorporated 2.95 Celgene Corporation 2.90 Texas Instruments Incorporated 2.41 Portfolio characteristics Russell 1000 Growth Index Weighted average market cap $208.32B $203.15B Weighted median market cap $88.90B $88.90B EPS growth (3- to 5-year forecast) 17.06% 12.58% P/E ratio (trailing 12-month) 33.09x 26.33x Turnover¹ 36.15% P/B ratio 6.05x 6.64x P/S ratio 4.27x 2.97x Number of equity holdings Source: FactSet facts Inception date Net expense ratio Inst 0.75% Assets all share classes $1,083.12M Portfolio holdings and characteristics are subject to change and may have changed since the date specified. The holdings listed should not be considered recommendations to purchase or sell a particular security. 1. Calculated based on a one-year period. Performance (%) 1 year 3 year 5 year 10 year Large Cap Growth Inst Russell 1000 Growth Index Lipper Large-Cap Growth s Average Morningstar Large Growth Average Rankings and ratings Morningstar total return rankings Institutional Class (as of ) Morningstar Category: Large growth 1 year 683 out of 1,398 funds 3 year 786 out of 1,259 funds 5 year 810 out of 1,125 funds 10 year NA Overall Morningstar Rating The Overall Morningstar Rating, a weighted average of the 3-, 5-, and 10-year (if applicable) ratings, is out of 1,259 funds in the large growth category, based on risk-adjusted returns as of Performance and volatility measures 2 Alpha Beta 1.04 Sharpe ratio 0.84 Standard deviation 11.38% R-squared 0.93 Information ratio Upside capture 93.74% Downside capture % Tracking error 3.12% Past performance is no guarantee of future results. 2. Calculated for the Institutional Class based on a three-year period. Relative measures are compared with the fund s benchmark. 3

4 Share class availability Share class Ticker Gross expense ratio (%) Net expense ratio (%) Contractual expense waiver date R STMFX A STAFX C STOFX Admin STDFX Inst STNFX R4 SLGRX R6 STFFX The manager has contractually committed to waive fees and/or reimburse expenses to the extent necessary to cap the fund s total annual fund operating expenses after fee waiver at 1.32% (R), 1.07 (A), 1.82 (C), 0.95 (Admin), 0.75 (I), 0.80 (R4), and 0.65 (R6). Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the cap. Without these reductions, the fund s returns would have been lower. After this time, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. The expense ratio paid by an investor is the net expense ratio or the total annual fund operating expense after fee waivers, as stated in the prospectus. Benchmark descriptions: The Lipper averages are compiled by Lipper, Inc., an independent mutual fund research and rating service. Each Lipper average represents a universe of funds that are similar in investment objective. You cannot invest directly in a Lipper average. The Morningstar Category average is the average return for the peer group based on the returns of each individual fund within the group. The total return of the Morningstar Category average does not include the effect of sales charges. You cannot invest directly in a Morningstar Category average. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price/book ratios and higher forecasted growth values. You cannot invest directly in an index. Attribution analysis: Performance attribution and sector returns are calculated using the Brinson-Fachler attribution model. As such, performance attribution calculations may differ from the fund s actual investment results. Definition of terms: Alpha measures the difference between a fund s actual returns and its expected performance given its level of risk (as measured by beta). Beta measures fund volatility relative to general market movements. It is a standardized measure of systematic risk in comparison with a specified index. The benchmark beta is 1.00 by definition. Downside capture measures a fund s replication of its benchmark during periods of negative returns. During periods of negative benchmark returns, a downside capture ratio less than 100% reflects product performance greater than the benchmark and a downside capture ratio greater than 100% reflects performance less than the benchmark. Information ratio measures the consistency of excess return (return in excess of a benchmark). This value is determined by taking the annualized excess return over a benchmark (style benchmark by default) and dividing it by the standard deviation of excess return. R-squared is a measurement of how similar a fund s historical performance has been to that of the benchmark. The measure ranges from 0.0, which means that the fund s performance bears no relationship to the performance of the index, to 1.0, which means that the fund s performance was perfectly synchronized with the performance of the benchmark. Sharpe ratio measures the potential reward offered by a mutual fund relative to its risk level. The ratio uses a fund s standard deviation and its excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the fund s historical risk-adjusted performance. Standard deviation represents the degree to which an investment s performance has varied from its average performance over a particular time period. Tracking error measures the extent to which a manager s performance mimics that of a benchmark. The value is the standard deviation of the difference between a fund s performance and a benchmark s performance. Upside capture measures a fund s replication of its benchmark during periods of positive returns. During periods of positive benchmark returns, an upside capture ratio greater than 100% reflects product performance greater than the benchmark and an upside capture ratio less than 100% reflects performance less than the benchmark. 4

5 Risks: Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). This fund is exposed to foreign investment risk. Consult the fund's prospectus for additional information on these and other risks. The views expressed in this document are as of and are those of the portfolio manager(s). The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Wells Fargo. Any specific securities discussed may or may not be current or future holdings of the fund. The securities discussed should not be considered recommendations to purchase or sell a particular security. Wells Fargo s Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements. The inception date of the Institutional Class was Performance shown for the Institutional Class prior to its inception reflects the performance of the fund s Investor Class and includes the higher expenses applicable to the Investor Class. If these expenses had not been included, returns would be higher. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar risk-adjusted return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges, loads, and redemption fees, unless otherwise indicated), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and is rated separately, which may cause slight variations in the distribution percentages.) Across U.S.- domiciled large growth funds, the Large Cap Growth received 3 stars among 1,259 funds, 2 stars among 1,125 funds, and 3 stars among 800 funds for the 3-, 5-, and 10-year periods, respectively. Morningstar Ratings and Rankings are for the Institutional Class only; other classes may have different performance characteristics. The Morningstar Return ranking is based on the fund s total return rank relative to all funds that have the same category for the same time period. Past performance is no guarantee of future results. Carefully consider a fund s investment objectives, risks, charges, and expenses before investing. For a current prospectus and, if available, a summary prospectus, containing this and other information, visit wellsfargofunds.com. Read it carefully before investing. Wells Fargo Asset Management (WFAM) is a trade name used by the asset management businesses of Wells Fargo & Company. Wells Fargo s Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo s. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the funds. The funds are distributed by Wells Fargo s Distributor, LLC, Member FINRA, an affiliate of Wells Fargo & Company. Neither Wells Fargo s Distributor nor Wells Fargo s Management holds fund shareholder accounts or assets. This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind including a recommendation for any specific investment, strategy, or plan QU