The Developing Political Climate In a Global Economy

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1 The Developing Political Climate In a Global Economy H. Cameron Hinds, CFA Regional Chief Investment Officer Wells Fargo Private Bank 2017 Tri-State Trust Conference Fargo April 25, 2017 Asset Class Performance Domestic equity continues to underperform its international counterparts. YTD Asset Class Total Returns Source: Bloomberg Finance, LLP, Morningstar Direct, total return as of 4/1/17. Performance results for the MGI 4AG w/o private equity Portfolio is hypothetical and for illustrative purposes only. Hypothetical results do not represent actual trading and the results achieved do not represent the experience of any individual investor. In addition, hypothetical results do not reflect the impact of any fees, expenses or taxes applicable to an actual investment. The indices reflect the historical performance of the represented assets and assume the reinvestment of dividends and other distributions. An index is unmanaged and not available for direct investment. Hypothetical and past performance do not guarantee future results. Different investments offer different levels of potential return and market risk. Definition of the indices and a description of the risks associated with investment in these asset classes are provided at the end of the presentation

2 Factors that Impact the Global Economy GLOBAL ECONOMIC FORCES TAILWINDS No recession: global growth Pro-growth U.S. policies Low interest rates Earnings acceleration anticipated Consumer optimism is on the rise HEADWINDS Global populism Anti-trade, antiimmigration policies/sentiment Currency volatility Federal Reserve (Fed) raises rates faster than anticipated Rising geopolitical risks Source: Wells Fargo Investment Institute; 03/31/ Rolling Geopolitical Shocks WHAT WE ARE WATCHING IN 2017 Source: Wells Fargo Investment Institute; as of 01/18/

3 Presidential Approval Rating PRESIDENTIAL APPROVAL RATING NEARING THE FIRST 100 DAYS* U.S. President Approval Rating Days in Office Donald Trump 38% On day 72 Barack Obama 65% On day 96 George W. Bush 62% On day 92 Bill Clinton 55% On day 94 Source: Presidential Job Approval Center, Gallup, as of April *Corresponding to the poll nearest to the presidents 100 th day in office, except for President Trump, whose approval rating is the latest available. Presidential approval is based on an occasional telephone survey of 1,500 national adults. 5 5 U.S. GDP Outlook Negative contributions from exports a drag on GDP in fourth quarter. Moderate GDP Growth Expected Real GDP Componets (QoQ%) Real GDP (QoQ % SAAR) Q Q Q Q Q Q Q Q3 Government Net Exports Personal Consumption 3 Fixed Investment Change in Private Inventories GDP Source: Bloomberg Finance, LLP, Data as of 4Q16. Wells Fargo Investment Institute estimates. Dotted line represents Bloomberg consensus estimates. Estimates are not guaranteed and are subject to change

4 Very Low, Positive U.S. Growth Atypical Number of Occurrences THE U.S. TENDS TO CRASH NOT SLIP INTO RECESSION Current U.S. growth rate Occurrences of Annual Growth by Half-Percentage-Point Intervals Source: Bloomberg, Wells Fargo Investment Institute, 12/31/2016. Annual data from Steady Job Gains Have Been the Backbone of the U.S. Economic Recovery 148 TOTAL NONFARM WORKERS AT NEW HIGH Millions '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Source: Bloomberg, Wells Fargo Investment Institute, 2/28/2017. Shaded area represents a U.S. economic recession

5 Employment Remains Steady Despite soft payroll gains, the unemployment rate fell to 4.5 percent. Payroll Gains and Unemployment Rate Total Non Farm Payrolls Added (in thousands) Unemployment Rate (in percent) 0 4 Mar 13 Jul 13 Nov 13 Mar 14 Jul 14 Nov 14 Mar 15 Jul 15 Nov 15 Mar 16 Jul 16 Nov 16 Mar 17 Non Farm Payrolls Added Unemployment Rate Source: FactSet, Data as of 4/1/17. 9 Global Manufacturing Sentiment Most countries point to expansion in manufacturing. Global Manufacturing Sentiment Source: Bloomberg, HSBC Markit, Data as of 4/1/17. Dotted line represents the threshold to signal expanding manufacturing sentiment. Green = Emerging Countries; Blue = Developed Countries; Purple = Global

6 Confidence Builds Despite Uncertainty Conference Board Consumer Confidence Index Level CONSUMER AND BUSINESS CONFIDENCE IMPROVING Consumer Confidence 10 Year Average: 75 NFIB Small Business 10 Year Average: NFIB Small Business Optimism Index Level 40 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Conference Board Consumer Confidence 12 month MA Consumer Confidence 10 year NFIB Small Business Optimism 12 month MA Small Business 10 year 85 Source: The Conference Board, National Federation of Independent Business (NFIB); Bloomberg, Wells Fargo Investment Institute. 2/28/2017. Shaded area represents a U.S. economic recession. The CCI tracks sentiment among households or consumers. The NFIB Small Business Index tracks the general state of the 11 economy as it relates to businesses. 11 U.S. Consumer in Good Shape 100 HOUSEHOLD NET WORTH AT ALL-TIME HIGHS Net Worth (in Trillions $) '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 Source: Federal Reserve Board, Factset, Wells Fargo Investment Institute. 12/31/

7 Inflation Moving Toward Fed s Target 3.3 U.S. INFLATION ALIGNING WITH EXPECTATIONS 2.8 Inflation Expectation YoY Change (%) Inflation Data PCE Core Deflator (%) Market's 5yr/5yr Forward Inflation (%) Source: Bloomberg, Wells Fargo Investment Institute. 2/28/2017. PCE deflators (or personal consumption expenditure deflators) track overall price changes for goods and services purchased by consumers. Deflators are calculated by dividing the appropriate nominal series by the corresponding real series and multiplying by 100. The market s 5 year/ 5 year forward inflation rate is a common measure, which is used by central banks and dealers, to 13 look at the market's future inflation expectations. 13 Inflation Rate and T-Bond Yield Converge 20% 10 YEAR U.S. TREASURY VS. INFLATION 15% Yield / Inflation rate 10% 5% 0% 5% '64 '68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12 '16 10 Year U.S. Treasury Note Sources: Bloomberg, Wells Fargo Investment Institute. 3/31/2017. Yields represent past performance. Past performance is no guarantee of future results. is the Consumer Price Index. It measures the price of a fixed basket of goods and services purchased by an average consumer

8 Interest Rate Expectations The market and the Fed rate expectations are becoming more inline. Yield % 3.5 Fed Expects Interest Rates to Rise Year endfed funds rate projected by the Fed Year end fed funds rate in the futuresmarket Longer Run Source: Federal Reserve Board, Wells Fargo Investment Institute, Fed FOMC meeting projection as of 3/15/17. Bloomberg, Data as of 4/11/17 for the fed funds futures market rates. 15 Global Interest Rates U.S. yields are highest among developed nations. U.S Italy Spain France Belgium Sweden Denmark Netherlands Finland Germany Japan Switzerland Yield % Source: FactSet. Data as of 4/1/17. Yields represent past performance. Past performance is no guarantee of future results. Yields fluctuate with market conditions. Current yields may be higher or lower than that shown. Yields represented are 10 Year yields

9 Bull Markets: Historical Perspective This bull market has exceeded the average bull-market return and length. Bull Market Return Source: Bloomberg Finance LLP, S&P 500 Index Price Return as of 4/1/17. Past performance is no guarantee of future results. 17 Forward-Looking Valuations Fair 30 FORWARD VALUATIONS ARE SLIGHTLY AHEAD OF LONGER-TERM AVERAGES 25 P/E Ratio Average=15.6x Average=14.5x 10 Average=10.6x U.S. Recessions S&P 500: 17.5x MSCI EAFE (Developed Markets): 14.8x MSCI Emerging Markets: 12.1x Sources: Factset, Wells Fargo Investment Institute, 3/31/2017. P/E ratios represent the total price of the index divided by its total earnings. Past performance is no guarantee of future results. An index is unmanaged and not available for direct investment. S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. The MSCI EAFE (DM) and Emerging 18 Markets (EM) Indices are equity indices which capture large and mid cap representation across 21 DM countries (excluding the US and Canada) and 23 EM countries around the world

10 Revisiting S&P 500 Index Valuations 8% S&P 500- INTEREST-RATE-ADJUSTED EARNINGS YIELD 6% Relatively Attractive S&P 500 Index Yield Spread 4% 2% 0% -2% Relatively Expensive S&P 500 Index -4% '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Interest Rate Adjusted Earnings Yield Median Source: Baseline, FactSet, Wells Fargo Investment Institute, 4/10/2017. The left axis shows the difference between the S&P 500 index earnings yield (the index s forward 12-month earnings-to-price ratio) and the 10-year U.S. Treasury note yield. Past performance is not a guarantee of future results Technology/Labor Impact Technology has a tremendous impact on a firm s need for labor. $600,000 $400,000 $200,000 $ Enterprise Value ($Millions) $399,100 Amazon $262,700 Walmart 2,500,000 2,000,000 1,500,000 1,000, ,000 Number of Employees 341,400 Amazon 2,300,000 Walmart $1,500,000 $1,000,000 Average Enterprise Value per Employee $500,000 $ $1,169,010 Amazon $114,217 Walmart Source: FactSet; as of 3/15/

11 The World at a Glance POPULATION GROSS DOMESTIC PRODUCT (PPP) STOCK CAPITALIZATION BONDS OUTSTANDING 85% 4% 10% 16% 11% 11% 39% 58% 26% 36% 54% 50% U.S. U.S. U.S. U.S. Developed Markets Ex- U.S. Emerging Markets Developed Markets Ex- U.S. Emerging Markets Developed Markets Ex-U.S. Emerging Markets Developed Markets Ex-U.S. Emerging Markets Sources: IMF Global Economic Outlook Database 2016, Bank of International Settlements as of 9/30/2016, MSCI as of 12/31/2016. Emerging markets includes Frontier markets. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. Stock capitalization is based on country weightings in the MSCI All Country World Index Oil Shifting West TOP GLOBAL OIL PRODUCERS AND CONSUMERS IN MILLION BARRELS/DAY MILLION BARRELS/DAY United States Saudi Russia China Canada Iraq Arabia 0 United States China Japan Saudi Arabia South Canada Korea Oil Production in 2015 Oil Consumption in 2015 Source: U.S. Energy Information Administration, Wells Fargo Investment Institute, 3/31/2017. Chart data has a one year lag, 2015 is the recent available data

12 Oil Supply Exceeds Demand Supply continues to outpace demand. 105 OPEC Oil Supply and Demand 100 Barrels per day (millions) demand supply Source: Energy Intelligence Group; OPEC (Organization of the Petroleum Exporting Countries consist of the following countries: Algeria, Angola, Ecuador, *Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudia Arabia, United Arab Emirates and Venezuela. 3/1/ Reasonable Valuations for REITs U.S. ESTATE INVESTMENT TRUSTS VALUATIONS ARE MIXED 8% REITS VS BONDS 6% 4% REITs Cheap 2% Spread 0% 2% REITs Expensive 4% 6% 8% Spread (U.S. REITs Yield U.S. Investment Grade Bond Yield) Median 10% Source: Bloomberg, National Association of Real Estate Investment Trusts, Morningstar, Wells Fargo Investment Institute. 3/31/2017. Yields represent past performance. Past performance is no guarantee of future results. U.S. REITs are represented by the FTSE NAREIT All Equity REITs Index. U.S. Investment Grade Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index. Note: Yield is the sum of gross dividend per share amounts over the prior 12 months, divided by the current index price. Gross and Net Dividend amounts are assumed to be the same when only one is reported. All Cash Dividend Types are included in this yield calculation. Yield may be higher or lower than that quoted above. Yields will fluctuate as market conditions change. Earnings yield are the earnings per share for the most recent 12-month period divided by the current market price per share

13 Hedge Funds and The Fed Hedge Fund performance improves as the Fed Funds rate moves higher. Fed Funds Target Rate (%) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Hedge Funds vs. Fed Target 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Four Year Annualized Returns (%) 0.0% 0.0% Fed Funds Target Rate (LHS) 48 Month Rolling Return (RHS) Source: Bloomberg, Monthly Data. As of 4/1/2017. Past performance is no guarantee of future results. An index is unmanaged and not available for direct investment. Hedge Funds represented by HFRI Fund Weighted Composite Index; detailed disclosure can be found in appendix under Global Hedge funds. 25 Hedge Funds May Win by Not Losing Note: 6.1Red 1.5cells 10.5indicate returns of less 9.3than 1.7-3%. 2.1 Global Equities (MSCI World) 26 HISTORICALLY HEDGE FUNDS HAVE HAD FEWER SIZABLE DOWNTURNS THAN GLOBAL YR J F M A M J J A S O N D Hedge Funds (HFRI Fund Weighted) YR J F M A M J J A S O N D Source: MPI Stylus, Wells Fargo Investment Institute. 1/1/ /31/2016. This information is hypothetical and for illustrative purposes only. It does not represent any specific investment or the experience of individual investors. Performance results are based on historical performance of the indices shown. Past performance is no guarantee of future results. Index returns do not reflect any fees, expenses or sales charges. Unlike most asset class indices, HFR Index returns reflect fees and expenses. Alternative investments, such as hedge funds, are not suitable for all investors and are only open to accredited or qualified investors within the meaning of the U.S. securities laws. They are speculative and involve a high degree of risk that is suitable only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program

14 4 Asset Group w/o Private Capital Moderate Growth & Income YTD Emg Mkt Public Real Emg Mkt Public Real Emg Mkt Dev ex US Emg Mkt US Small Emg-Mkt Public Real US Small Public Real US Large US Small US Large Commod Equity Estate Equity Estate Equity Fixed Inc Equity Cap Equity Fixed Inc Estate Cap Equity Estate Cap Equity Cap Equity Cap Equity 25.9% 56.3% 38.0% 34.5% 42.4% 39.8% 11.4% 79.0% 26.9% 8.5% 28.7% 38.8% 15.9% 1.4% 21.3% 5.9% Dev ex US US Small Emg Mkt Emg Mkt Inv Grade High Yield US Mid Cap Inv Grade Emg Mkt US Mid Cap US Large Emg-Mkt High Yield Emg Mkt Commod Commod Fixed Inc Cap Equity Equity Equity Fixed Inc Fixed Inc Equity Fixed Inc Equity Equity Cap Equity Fixed Inc Fixed Inc Equity 21.4% 16.2% 22.1% 47.3% 26.0% 32.6% 5.2% 58.2% 25.5% 7.8% 18.6% 34.8% 13.7% 1.2% 17.1% 5.5% Emg-Mkt Public Real Dev ex US Public Real Dev ex US Dev ex US Cash US Mid Cap Public Real Dev ex US Emg-Mkt US Large US Mid Cap 60%,40% US Mid Cap Dev ex US Fixed Inc Estate Equity Estate Equity Equity Alternative Equity Estate Fixed Inc Fixed Inc Cap Equity Equity Portf Equity Equity '02-'16 Average Emg Mkt Equity 9.8% Public Real Estate 9.8% US Mid Cap Equity 13.1% 40.7% 20.7% 15.4% 26.9% 11.6% 1.8% 40.5% 20.4% 5.9% 18.5% 32.4% 13.2% 1.2% 13.8% 4.4% 9.5% Inv Grade US Mid Cap US Mid Cap Dev ex US US Small Dev ex US Public Real Emg Mkt High Yield Dev ex US Dev ex US 60%,40% US Large 60%,40% Emg-Mkt Fixed Inc Equity Equity Equity Cap Equity Fixed Inc Estate Equity Fixed Inc Equity Equity Portf Cap Equity Portf Fixed Inc 0.1% 0.7% 10.3% 40.1% 20.2% 14.0% 18.4% 11.3% 38.3% 19.2% 5.0% 17.9% 23.3% 10.6% 12.0% 3.9% 9.1% Public Real Dev ex US US Small US Mid Cap US Large Hedge Emg-Mkt Dev ex US 60%,40% US Mid Cap 60%,40% Mod Grw th Inv Grade Public Real US Small Commod Commod Estate Equity Cap Equity Equity Cap Equity Funds Fixed Inc Equity Portf Equity Portf Inc Portf Fixed Inc Estate Cap Equity 16.8% 11.8% 2.8% 39.2% 18.3% 12.7% 15.8% 10.0% -10.9% 32.5% 5.0% 17.3% 17.7% 6.6% 0.5% 3.8% 8.5% High Yield Mod Grw th Emg-Mkt US Mid Cap Mod Grw th Hedge Emg-Mkt High Yield US Small Mod Grw th Inv Grade Public Real Emg Mkt Mod Grw th High Yield Fixed Inc Inc Portf Fixed Inc Equity Inc Portf Funds Fixed Inc Fixed Inc Cap Equity Inc Portf Fixed Inc Estate Equity Inc Portf Fixed Inc 2.4% 3.0% 29.0% 13.1% 10.7% 15.3% 7.4% -19.0% 28.2% 15.1% 16.3% 12.1% 6.0% 0.1% 11.6% 3.5% 8.4% Cash US Large Dev ex US Hedge Mod Grw th Inv Grade 60%,40% US Small US Large US Large US Large Hedge Emg-Mkt Cash Emg-Mkt High Yield Mod Grw th Alternative Cap Equity Fixed Inc Funds Inc Portf Fixed Inc Portf Cap Equity Cap Equity Cap Equity Cap Equity Funds Fixed Inc Alternative Fixed Inc Fixed Inc Inc Portf 1.7% 28.7% 12.0% 9.3% 14.5% 7.0% -21.6% 27.2% 15.1% 2.1% 16.0% 9.1% 5.5% 0.0% 10.2% 2.9% 7.3% High Yield Mod Grw th Emg-Mkt Mod Grw th Hedge Emg-Mkt Mod Grw th US Large Mod Grw th Mod Grw th High Yield High Yield US Small Dev ex US Mod Grw th US Mid Cap US Large Fixed Inc Inc Portf Fixed Inc Inc Portf Funds Fixed Inc Inc Portf Cap Equity Inc Portf Inc Portf Fixed Inc Fixed Inc Cap Equity Equity Inc Portf Equity Cap Equity -1.4% 26.2% 11.7% 7.9% 12.9% 6.3% -24.3% 26.5% 14.6% 0.8% 15.8% 7.4% 4.9% -0.4% 9.0% 2.4% 6.7% Hedge Emg-Mkt High Yield US Large High Yield 60%,40% High Yield Mod Grw th 60%,40% Cash Mod Grw th Public Real Hedge Hedge 60%,40% Hedge 60%,40% Funds Fixed Inc Fixed Inc Cap Equity Fixed Inc Portf Fixed Inc Inc Portf Portf Alternative Inc Portf Estate Funds Funds Portf Funds Portf -1.5% 25.7% 11.1% 4.9% 11.8% 6.2% -26.2% 26.0% 12.2% 0.1% 12.6% 4.4% 3.0% -1.1% 8.2% 2.2% 6.2% Mod Grw th US Large US Small 60%,40% US Mid Cap US Small Commod Hedge Emg-Mkt US Mid Cap 60%,40% High Yield Mod Grw th Hedge Dev ex US Dev ex US Inc Portf Cap Equity Cap Equity Portf Equity Cap Equity Funds Fixed Inc Equity Portf Fixed Inc Inc Portf Funds Fixed Inc Equity 23.9% 1.5% -3.9% 10.9% 4.6% 11.1% 5.6% -33.8% 20.0% 12.0% -1.5% 11.4% 2.5% -1.9% 5.5% 1.8% 5.8% Emg Mkt Hedge 60%,40% Emg-Mkt US Large Commod Commod Commod Hedge US Small Hedge Cash US Mid Cap Public Real Emg-Mkt Hedge Equity Funds Portf Fixed Inc Cap Equity Funds Cap Equity Funds Alternative Equity Estate Fixed Inc Funds 9.1% -35.6% 18.9% 0.8% -6.0% 19.5% 3.9% 9.9% 5.5% 10.2% -4.2% 6.4% 0.0% -2.4% 5.0% 1.4% 5.4% 60%,40% 60%,40% Hedge Dev ex US Cash US Large 60%,40% Dev ex US Hedge Inv Grade Inv Grade Cash US Small Inv Grade Dev ex US Portf Portf Funds Fixed Inc Alternative Cap Equity Portf Equity Funds Fixed Inc Fixed Inc Alternative Cap Equity Fixed Inc Fixed Inc 3.4% 0.6% -9.5% 18.6% 9.0% 6.8% 4.8% -37.0% 18.5% 8.2% -5.3% 4.2% -2.0% 0.0% -4.4% 2.6% 5.0% Dev ex US Dev ex US 60%,40% Cash Cash US Mid Cap Inv Grade Dev ex US Public Real Emg Mkt Emg Mkt High Yield US Small Inv Grade Equity Fixed Inc Portf Alternative Alternative Equity Fixed Inc Fixed Inc Estate Equity Equity Fixed Inc Cap Equity Fixed Inc 4.1% 1.7% 2.1% -15.7% 18.6% 8.4% 3.0% 4.8% -41.5% 5.9% 6.8% -5.8% -2.3% -1.8% -4.5% 0.4% 4.6% US Mid Cap Inv Grade Inv Grade High Yield Inv Grade High Yield Dev ex US Dev ex US Inv Grade Dev ex US Dev ex US Dev ex US Dev ex US Dev ex US Dev ex US Commod Equity Fixed Inc Fixed Inc Fixed Inc Fixed Inc Fixed Inc Equity Fixed Inc Fixed Inc Equity Fixed Inc Fixed Inc Fixed Inc Fixed Inc Fixed Inc 0.3% 2.1% -16.2% 4.1% 4.3% 2.7% 4.3% 1.9% -43.1% 3.9% 6.5% -11.7% 0.8% -5.1% -2.5% -4.8% 1.9% US Small Inv Grade US Small Public Real Cash Emg-Mkt Dev ex US Emg Mkt Dev ex US Inv Grade Cash Commod Cap Equity Fixed Inc Cap Equity Estate Alternative Fixed Inc Equity Equity Equity Fixed Inc Alternative 1.9% 3.3% 2.5% 2.7% 1.5% -13.3% -20.5% 2.4% -1.6% -47.7% 0.1% -6.6% -4.5% -14.6% 1.5% 0.2% 1.3% US Large Cash Cash Dev ex US Public Real Emg Mkt Cash Cash Emg Mkt Cash Cash Commod Commod Commod Commod Commod Commod Cap Equity Alternative Alternative Fixed Inc Estate Equity Alternative Alternative Equity Alternative Alternative 2.1% -1.1% -9.5% -17.0% -24.7% 1.2% -22.1% 1.0% 1.2% -9.2% -7.0% -53.2% 0.1% 0.1% -18.2% 0.3% 0.1% Data as of 2/28/2017 Source: Wells Fargo Investment Institute, Morningstar Direct. Average is calculated as geometric mean. Average is calculated as 15 years from Portfolios are rebalanced quarterly. 27 Diversification & Rebalancing Benefits $350,000 $300,000 $250,000 $200,000 HYPOTHETICAL BENEFITS OF DIVERSIFICATION & REBALANCING JANUARY 2000 THROUGH DECEMBER 2016 Hypothetical Moderate Growth and Income 4AG Portfolio w/o PC (Rebalanced Quarterly) 60% S&P 500 Total Return, 40% Bloomberg Barclays Agg (Rebalanced Quarterly) S&P 500 Total Return Hypothetical Moderate Growth and Income 4AG Portfolio w/o PC (No Rebalancing) 199% 146% 125% 124% $150,000 $100,000 $50,000 $0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Source: Morningstar Direct, Wells Fargo Investment Institute. 2/28/2017. Performance results for the Moderate Growth & Income 4AG Portfolio without private capital (PC) is hypothetical and is presented for illustrative purposes only. Hypothetical results do not represent actual trading and the results achieved do not represent the experience of any individual investor. In addition, hypothetical results do not reflect the impact of any fees, expenses or taxes applicable to an actual investment. The indices reflect the historical performance of the represented assets and assume the reinvestment of dividends and other distributions. An index is unmanaged and 28 not available for direct investment. Hypothetical and past performance is no guarantee of future results

15 Rational Return Expectations We are forecasting generally lower strategic (10-15 years) returns than historical averages Cyclical Hypothetical Return Strategic Hypothetical Return Historical Average Return ( ) 6.2% 2.8% 5.4% 9.8% 5.8% 8.6% 9.0% 1.9% 12.0% 8.0% 4.0% 0.9% 2.5% 1.7% 3.1% 2.8% 5.8% 7.7% 6.0% 7.5% 5.8% 9.0% 4.8% 7.2% 3.5% 4.4% 0.8% 0.0% Cash Alternatives U.S. Taxable Investment Grade Fixed Income Developed Mkt ex U.S. Fixed Income U.S. Large Cap Equities Developed Mkt Emerging Mkt Ex U.S. Equities Equities Public Real Estate Commodities Source: Wells Fargo Investment Institute Forecasts, Historical Data FactSet and Morningstar Direct. 9/30/2016. The average return is calculated using monthly returns from The same methodology used for calculating historical performance. Cyclical (three to five year) and Strategic (10 to 15 year) Hypothetical Returns are forward looking estimates from Wells Fargo Investment Institute of how asset classes and combinations of classes may respond during various market environments. Hypothetical returns do not represent the returns that an investor should expect in any particular year. They are not designed to predict actual performance and may differ greatly from actual performance. There are no assurances that any estimates given will be achieved. Historical average returns are for data from 1991 to An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results % Timing the Market is Risky 10.00% 9.00% AVERAGE EQUITY FUND INVESTOR UNDERPERFORMED BENCHMARK ( ) 8.00% 7.00% 6.00% 5.00% 4.00% 4.67% 8.19% 3.00% 2.00% 1.00% 2.20% 0.00% Average Investor Return S&P 500 Inflation Source: Dalbar, Inc. 2016, 20 years from ; Quantitative Analysis of Investor Behavior by Dalbar, Inc. (6/6/2016) and Lipper. Dalbar computed the average stock fund investor return by using industry cash flow reports from the Investment Company Institute. The average stock fund return figure represents the average return for all funds listed in Lipper s U.S. Diversified Equity fund classification model. All Dalbar returns were computed using the S&P 500 Index. Returns assume reinvestment of dividends and capital gain distributions. The fact that buy and hold has been a successful strategy in the past does not guarantee that it will continue to be successful in the future. The performance shown is not indicative of any particular investment. Past performance is not a guarantee of future results

16 Economic and Equity Outlook Economic Forecast 2017E Global GDP Growth 3.3% 3.1% 3.2% 3.4% 3.0% U.S. GDP Growth 2.3% 1.6% 2.6% 2.4% 1.7% U.S. 2.4% 2.1% 0.1% 1.6% 1.5% Unemployment Rate 4.5% 4.7% 5.3% 5.6% 6.7% 10 Year U.S. Treasury % 2.44% 2.27% 2.17% 3.04% Equity Market Forecast 2017E S&P ,363 2,044 2,059 1,848 S&P 500 EPS $127 $117 $118 $119 $110 Russell Midcap ,868 1,596 1,663 1,492 Russell ,386 1,136 1,205 1,164 MSCI EAFE ,793 1,716 1,775 1,916 MSCI Emerging Markets ,003 Sources: Bloomberg Finance LLP, Baseline, Wells Fargo Investment Institute. 4/1/ E as of 3/15/17. E: Wells Fargo Investment Institute for estimate. Forecasts are not guaranteed and are subject to change. Past performance is no guarantee of future results. GDP = gross domestic product = Consumer Price Index EPS = earnings per share Tactical Asset Allocation Recommendations All investors need to establish their strategic asset allocation. Some investors may want to make tactical adjustments to potentially take advantage of short-term market trends. Global Fixed Income Cash Alternatives U.S. Taxable Investment Grade FI U.S. Short Term Taxable FI U.S. Intermediate Term Taxable FI U.S. Long Term Taxable FI U.S. High Yield FI Developed-Market Ex.-U.S. FI Emerging-Market FI Global Equity U.S. Large Cap Equity U.S. Mid Cap Equity U.S. Small Cap Equity Developed-Market Ex.-U.S. Equity Emerging-Market Equity Overweight Overweight Underweight Underweight Underweight Global Real Assets Public Real Estate Private Real Estate Commodities Global Alternative Investments* Hedge Funds Relative Value Hedge Funds Macro Hedge Funds -Event Driven Hedge Funds Equity Hedge Private Equity Private Debt Overweight Underweight Overweight Underweight Overweight Source: Wells Fargo Investment Institute, 4/1/2017 Boldface indicates the most recent changes. *Alternative investments, such as hedge funds, private equity/private capital, real assets and private real estate funds are not suitable for all investors and are only open to accredited or qualified investors within the meaning of the U.S. securities laws.. They are speculative and involve a high degree of risk that is suitable only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program

17 Risk Disclosures Asset Class Risks: All investing involves some degree of risk, whether it is associated with market volatility, purchasing power, or a specific security. There is no guarantee any investment strategy will be successful. Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. Small and mid-sized company stocks involve greater risks than those customarily associated with larger companies. They often involve higher risks because of smaller and mid-sized companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions. Technology and Internet-related stocks, especially of smaller, less-seasoned companies, tend to be more volatile than the overall market. Foreign securities entail special risks such as currency, political, economic, and market risks. These risks are heightened in emerging and frontier markets. Real estate investing has special risks, including the possible illiquidity of the underlying property, credit risk, interest rate fluctuations and the impact of varied economic conditions. Commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity. Investments in securities of Master Limited Partnerships (MLPs) involve risks that differ from investments in common stock including risks related to limited control and limited rights to vote on matters affecting the MLP, risks related to potential conflicts of interest between the MLP and the MLP s general partner and cash flow risks, Other risks include the volatility associated with the use of leverage; volatility of the commodities markets; market risks; supply and demand; natural and man-made catastrophes; competition; liquidity; market price discount from NAV and other material risks. Real Estate Bonds are subject to market, interest rate, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. U.S. government securities are backed by the full faith and credit of the federal government as to payment of principal and interest if held to maturity. Although free from credit risk, they are subject to interest rate risk. Municipal bonds offer interest payments exempt from federal taxes, and potentially state and local income taxes. These bonds are subject to interest rate and credit/default risk and potentially the Alternative Minimum Tax (AMT). Quality varies widely depending on the specific issuer. High yield fixed income securities are considered speculative, involve greater risk of default, and tend to be more volatile than investment grade fixed income securities. In addition to the risks associated with investment in debt securities, investments in mortgage-related and asset-backed securities will be subject to prepayment and call risks. Changes in prepayments may significantly affect yield, average life and expected maturity. If called prior to maturity, similar yielding investments may not be available for the Fund to purchase. These risks may be heightened for longer maturity and duration securities. Hedge fund strategies, such as Arbitrage, Equity Hedge, Equity Market Neutral, Event Driven, Macro and Relative Value/Arbitrage are speculative and involve a high degree of risk. These strategies are affected in different ways and at different times by changing market conditions. They employ aggressive investment techniques, including using short sales, leverage, arbitrage, derivatives, such as swaps, futures contracts, options, forward contracts which can expose the investor to substantial risk. Investment returns, volatility and risk vary widely among the different strategies. The use of short selling involves the risk of potentially unlimited increase in the market value of the security sold short, which could result in potentially unlimited loss for the investment. In addition, taking short positions in securities is a form of leverage which may cause a portfolio to be more volatile. The use of leverage in a portfolio varies by strategy. Leverage can significantly increase return potential but create greater risk of loss. Derivatives generally have implied leverage which can magnify volatility and may entail other risks such as market, interest rate, credit, counterparty and management risks which may hurt a fund s performance. Counterparty risk is the risk that the other party to the agreement will default at some time during the life of the contract. Private capital funds use complex trading strategies, including hedging and leveraging through derivatives and short selling and other aggressive investment practices.. It is possible to lose your entire investment investing in these funds. They do not represent a complete investment program and should be considered an illiquid longterm investment suitable only for the wealth portion of a portfolio. Index Definitions Economic Indices The Consumer Confidence Index (CCI) is designed to measure consumer confidence which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured The Consumer Price Index is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in are used to assess price changes associated with the cost of living. The NFIB Small Business Optimism Index: is the small business optimism index is compiled from a survey that is conducted each month by the National Federation of Independent Business (NFIB) of its members. The index is a composite of ten seasonally adjusted components based on questions on the following: plans to increase employment, plans to make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job opening, expected credit conditions, now a good time to expand, and earnings trend. Market Indices The Alerian MLP Index is a composite of the 50 most prominent energy Master Limited Partnerships (MLPs) that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The index, which is calculated using a float-adjusted, capitalization-weighted methodology, is disseminated real-time on a price-return basis and on a total-return basis. The Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non-convertible. The Bloomberg Barclays Emerging Market Index is a flagship hard currency Emerging Markets debt benchmark that includes USD denominated debt from sovereign, quasi-sovereign, and corporate EM issuers. The index is broad-based in its coverage by sector and by country, and reflects the evolution of EM benchmarking from traditional sovereign bond indices to Aggregate-style benchmarks that are more representative of the EM investment choice set. Country eligibility and classification as an Emerging Market is rules-based and reviewed on an annual basis using World Bank income group and International Monetary Fund (IMF) country classifications. This index was previously called the Bloomberg Barclays US EM Index and history is available back to The Bloomberg Barclays Mortgage Backed Securities (MBS)Index is an unmanaged index of mortgage pools of the Government National Mortgage Association, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. The Bloomberg Barclays U.S. Aggregate: The Barclays U.S. Aggregate Bond Index is unmanaged and is composed of the Bloomberg Barclays U.S. Government/Credit Index and the Bloomberg Barclays U.S. Mortgage-Backed Securities Index, and includes Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities. The Bloomberg Barclays U.S. Aggregate 5-7 Year Bond Index is unmanaged and is composed of the Barclays U.S. Government/Credit Index and the Barclays U.S. Mortgage-Backed Securities Index, and includes Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities with maturities of 5-7 years

18 Index Definitions (continued) The Bloomberg Barclays U.S. Aggregate 10+ Year Bond Index is unmanaged and is composed of the Barclays U.S. Government/Credit Index and the Barclays U.S. Mortgage-Backed Securities Index, and includes Treasury issues, agency issues, corporate bond issues, and mortgagebacked securities with maturities of 10 years or more. The Bloomberg Barclays U.S. Aggregate Corporate Index includes publicly issued U.S. corporate and Yankee debentures and secured notes that meet specified maturity, liquidity, and quality requirements. The Bloomberg Barclays U.S. Corporate High-Yield Index covers the universe of fixed rate, non-investment grade debt. The Bloomberg Barclays U.S. Investment Grade Bond Index measures the performance of the investment grade corporate bond market. The Bloomberg Barclays U.S. Municipal Index represents municipal bonds with a minimum credit rating of at least Baa, an outstanding par value of at least $3 million and a remaining maturity of at least one year. The index excludes taxable municipal bonds, bonds with floating rates, derivatives and certificates of participation. The Bloomberg Barclays U.S. TIPS Index consists of Inflation-Protection securities issued by the U.S. Treasury. The Bloomberg Barclays U.S. Treasury Index is the U.S. Treasury component of the U.S. Government Index. The index consists of public obligations of the U.S. Treasury with a remaining maturity of one year or more. The Bloomberg Commodity Index represents futures contracts on 22 physical commodities. No related group of commodities (e.g., energy, precious metals, livestock and grains) may constitute more than 33 percent of the index as of the annual re-weightings of the components. No single commodity may constitute less than 2 percent of the index. The FTSE NAREIT U.S. All Equity REITs Index is designed to track the performance of REITs representing equity interests in (as opposed to mortgages on) properties. The FTSE EPRA/NAREIT Developed Index is designed to track the performance of listed real-estate companies and REITs in developed countries worldwide. The JPMorgan Global ex-u.s. Government Bond Index measures the performance of non-u.s. government bonds. The JPMorgan Emerging Markets Bond Index (EMBI Global) currently covers 27 emerging market countries. Included in the EMBI Global are U.S.-dollar-denominated Brady bonds, Eurobonds, traded loans, and local market debt instruments issued by sovereign and quasisovereign entities. Index Definitions (continued) The MSCI All Country World Index (ACWI) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 23 developed and 23 emerging market country indices. The MSCI Australia Index is designed to measure the performance of the large and mid cap segments of the Australia market. With 70 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in Australia. The MSCI Brazil Index is designed to measure the performance of the large and mid-cap segments of the Brazilian market. With 75 constituents, the index covers about 85% of the Brazilian equity universe. The MSCI China Index captures large and mid-cap representation across China H shares, B shares, Red Chips and P Chips. With 140 constituents, the index covers about 85% of the China equity universe. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. The MSCI Frontier Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of frontier markets. The MSCI Frontier Markets Index consists of 24 frontier market country indexes. The MSCI Germany Index is designed to measure the performance of the large and mid cap segments of the German market. With 54 constituents, the index covers about 85% of the equity universe in Germany. The MSCI United Kingdom Index is designed to measure the performance of the large and mid cap segments of the UK market. With 112 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in the UK. The MSCI U.S. Equity Indexes are a domestic only series - independent from MSCI s Global Equity Index family which reflect the investment opportunities in the US equity markets by market capitalization size, by value and growth investment styles and by sectors and industries

19 Index Definitions (continued) The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately eight percent of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap Index is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap Index represents approximately 27 percent of the total market capitalization of the Russell 1000 companies. The S&P 500 Index is a capitalization-weighted index calculated on a total return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies. The S&P Developed ex-us Property Index defines and measures the investable universe of publicly traded property companies domiciled in developed countries outside of the U.S. The companies included are engaged in real estate related activities, such as property ownership, management, development, rental and investment. Index Definitions (continued) Hedge Fund Indices Distressed Securities: The HFRI ED: Distressed/Restructuring Index strategies which employ an investment process focused on corporate fixed income instruments, primarily on corporate credit instruments of companies trading at significant discounts to their value at issuance or obliged (par value) at maturity as a result of either formal bankruptcy proceeding or financial market perception of near term proceedings. Managers are typically actively involved with the management of these companies, frequently involved on creditors' committees in negotiating the exchange of securities for alternative obligations, either swaps of debt, equity or hybrid securities. Managers employ fundamental credit processes focused on valuation and asset coverage of securities of distressed firms; in most cases portfolio exposures are concentrated in instruments which are publicly traded, in some cases actively and in others under reduced liquidity but in general for which a reasonable public market exists. In contrast to Special Situations, Distressed Strategies employ primarily debt (greater than 60%) but also may maintain related equity exposure. The HFRI ED Distressed/Restructuring Index is a composite of the hedge funds that employ the alternative strategies and who report their performance figure to HFRI. The number of hedge funds reporting may vary between each reporting period. Event Driven: The HFRI Event Driven Index: Event-Driven: Investment Managers who maintain positions in companies currently or prospectively involved in corporate transactions of a wide variety including but not limited to mergers, restructurings, financial distress, tender offers, shareholder buybacks, debt exchanges, security issuance or other capital structure adjustments. Security types can range from most senior in the capital structure to most junior or subordinated, and frequently involve additional derivative securities. Event Driven exposure includes a combination of sensitivities to equity markets, credit markets and idiosyncratic, company specific developments. Investment theses are typically predicated on fundamental characteristics (as opposed to quantitative), with the realization of the thesis predicated on a specific development exogenous to the existing capital structure. The HFRI Event Driven Index is a composite of the hedge funds that employ the alternative strategies and who report their performance figure to HFRI. The number of hedge funds reporting may vary between each reporting period. Equity Hedge: The HFRI Equity Hedge Index: Equity Hedge: Investment Managers who maintain positions both long and short in primarily equity and equity derivative securities. A wide variety of investment processes can be employed to arrive at an investment decision, including both quantitative and fundamental techniques; strategies can be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding period, concentrations of market capitalizations and valuation ranges of typical portfolios. EH managers would typically maintain at least 50% exposure to, and may in some cases be entirely invested in, equities, both long and short. The HFRI Equity Hedge Index is a composite of the hedge funds that employ the alternative strategies and who report their performance figure to HFRI. The number of hedge funds reporting may vary between each reporting period. Relative Value Arbitrage: The HFRI Relative Value Index maintains positions in which the investment thesis is predicated on realization of a valuation discrepancy in the relationship between multiple securities. Managers employ a variety of fundamental and quantitative techniques to establish investment theses, and security types range broadly across equity, fixed income, derivative or other security types. The HFRI Relative Value Index is a composite of the hedge funds that employ the alternative strategies and who report their performance figure to HFRI. The number of hedge funds reporting may vary between each reporting period. Arbitrage: The HFRI RV: Fixed Income-Sovereign Index: Fixed Income - Sovereign includes strategies in which the investment thesis is predicated on realization of a spread between related instruments in which one or multiple components of the spread is a sovereign fixed income instrument. Strategies employ an investment process designed to isolate attractive opportunities between a variety of fixed income instruments, typically realizing an attractive spread between multiple sovereign bonds or between a corporate and risk free government bond. Fixed Income Sovereign typically employ multiple investment processes including both quantitative and fundamental discretionary approaches and relative to other Relative Value Arbitrage sub-strategies, these have the most significant top-down macro influences, relative to the more idiosyncratic fundamental approaches employed. RV: Fixed Income: Sovereign funds would typically have a minimum of 50% exposure to global sovereign fixed income markets, but characteristically maintain lower net exposure than similar strategies in Macro: Multi-Strategy sub-strategy