Wells Fargo Enterprise Fund

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1 All information is as of unless otherwise indicated. Overview General fund information Key drivers of performance Ticker: WFEIX Portfolio managers: Michael Smith, CFA; Chris Warner, CFA Subadvisor: Wells Capital Management Inc. Category: Mid-cap growth Fund strategy Conducts a rigorous research process designed to surround the company and develop unique fundamental insights Performs a thorough analysis of a company s current balance sheet to gain insight into its potential to execute its business model and achieve future growth objectives Surrounds companies by analyzing competitors, suppliers, and customers up and down the market-capitalization spectrum Maintains valuation targets as part of a strong sell discipline and risk management process Constructs portfolios with a unique process that includes core holdings, developing situations, and valuation opportunities Average annual total returns (%) as of * Year to Since inception 3 month date 1 year 3 year 5 year 10 year ( ) Enterprise Fund Inst Russell Midcap Growth Index The fund underperformed its benchmark, the Russell Midcap Growth Index, for the 3-month period and outperformed the benchmark for the 12-month period that ended December 31, For the 3-month period, stock selection in the consumer discretionary and industrials sectors hindered results the most. However, stock selection in information technology (IT) and energy boosted results. For the 12-month period, stock selection in the IT and consumer discretionary sectors boosted results the most during the period. However, stock selection in industrials constrained results. Market and portfolio overview U.S. growth stocks continued to rally during the fourth quarter, boosted by a confluence of positive factors. Synchronized expansion in the global economy and favorable earnings from a variety of U.S. companies provided key catalysts for strong market gains. Consensus earnings estimates overall continued to rise, reflecting the improving fundamental backdrop. As the quarter progressed, stocks received an additional boost from growing optimism regarding the prospects for tax-reform legislation. The first half of the quarter reflected trends evident for much of 2017, with strong earnings reports driving share prices upward for many higher-growth stocks. During the latter part of the quarter, market leadership shifted modestly toward companies with cyclical characteristics and those regarded as the largest beneficiaries of corporate tax reform, which led to a resurgence in the financials, consumer discretionary, and industrials sectors. Increased clarity regarding U.S. fiscal policy and an anticipated boost to economic activity from tax-reform legislation influenced the recent shift in market leadership. We continue to have a favorable outlook for the strong, durable growth stocks in the fund. Recent fiscal-policy developments may provide a shortterm boost to the economy, but we believe it is unlikely that they will significantly alter the longer-term growth scenario for the U.S. economy of potentially modest to moderate expansion. Also, it appears that several deflationary forces, such as automation, may limit the likelihood of a concerning uptick in inflation. Our team also has been monitoring various market-risk factors, which may be indicating elevated levels of investor complacency. As a result, we have continued to emphasize companies with strong, durable growth potential that potentially could command a scarcity premium in the absence of sustained acceleration in the economy. Looking ahead, we believe the more recent reflationary market shift may subside as the scarcity of strong, sustainable-growth companies potentially becomes increasingly recognized by investors. *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, wffunds.com. Institutional Class shares are sold without a front-end sales charge or contingent deferred sales charge. The fund s gross expense ratio is 0.93%. The fund s net expense ratio is 0.85%. The manager has contractually committed, through January 31, 2018, 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 0.85% 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. Please keep in mind that high double-digit returns were primarily achieved during favorable market conditions. You should not expect that such favorable returns can be consistently achieved. A fund's performance, especially for short time periods, should not be the sole factor in making your investment decision. QU (See pages 4 5 for important information.) 1

2 Quarterly attribution analysis Contributors Enterprise Fund versus Russell Midcap Growth Index Holdings that gained share in the rapidly growing payment-processing market influenced success in the IT sector. Key contributors continued to demonstrate solid business momentum evidenced by steady organic growth and expanding profit margins. One of the top performers was WEX Inc., a corporate-payments provider that offers commercial fuel cards in addition to transaction processing in segments such as online travel. The stock rallied this quarter, influenced by its strong earnings report that highlighted WEX s declining credit losses and solid growth in its fleet-card and travel segments. The fund also benefited from a strong gain by MercadoLibre, Inc., which likely may have a tremendous growth opportunity as a provider of e-commerce, payments, and other online solutions in Latin America. The company has been successfully pursuing a strategy to extend its market-share lead through investments in its platform capabilities. Universal Display Corp. was among the largest contributors in the sector, aided by robust customer demand for its innovative OLED display solutions. Detractors Holdings in the media and automobiles industries influenced weakness in the consumer discretionary sector. Liberty Broadband Corp., a leading cable-services provider, was hindered by some consumers gravitation toward nontraditional online media sources. Auto holding Ferrari N.V. declined, as some investors likely were disappointed by its near-term guidance; however, Ferrari potentially could significantly boost revenues, driven by the upcoming launch of its SUV line in SLM Corp. (Sallie Mae), a leading student-lending company, struggled to advance this quarter, influencing the fund s underperformance in financials. SLM faced multiple challenges, including increased delinquencies, reduced loan-origination guidance, and some delays in receiving payments due to the effects of hurricanes in the U.S. We believe SLM s recent issues were largely transitory and that the firm may benefit from a more favorable regulatory environment and from further expansion in the graduate school market. Underperformance in industrials was influenced by isolated, companyspecific concerns and the fund s underweight to the most cyclically oriented stocks in the sector. Our team instead has focused on companies with more sustainable earnings-growth potential, such as Waste Connections, Inc., which suffered in the midst of a modest shift in market leadership toward the most cyclical segments of the sector. Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Info Tech Materials Real Estate Sector weights (average % weight during the quarter) Telecom Services Utilities Cash Enterprise Fund Russell Midcap Growth Index Over/underweight Sector returns (%) Fund sector return Index sector return Relative return Sources: FactSet and Wells Fargo Funds 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 Fund information Top holdings Stock % of net assets Waste Connections, Inc WEX Inc Rockwell Automation, Inc Aptiv PLC 1.97 Total System Services, Inc BWX Technologies, Inc Edwards Lifesciences Corporation 1.95 Bright Horizons Family Solutions, Inc Cintas Corporation 1.89 Univar, Inc Portfolio characteristics Russell Midcap Growth Fund Index Weighted average market cap $13.08B $11.06B Weighted median market cap $13.93B $15.82B EPS growth (3- to 5-year forecast) 15.00% 12.10% P/E ratio (trailing 12-month) 32.34x 29.01x Turnover¹ 70.94% P/B ratio 5.72x 6.06x P/S ratio 2.97x 2.44x Number of equity holdings Source: FactSet Fund facts Inception date Net expense ratio Inst 0.85% Assets all share classes $713.36M 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. High portfolio turnover may result in increased expenses and higher short-term capital gains. Performance (%) 1 year 3 year 5 year 10 year Enterprise Fund Inst Russell Midcap Growth Index Lipper Multi-Cap Growth Funds Average Morningstar Mid-Cap Growth Average Rankings and ratings Morningstar total return rankings Institutional Class (as of ) Morningstar Category: Mid-cap growth 1 year 95 out of 617 funds 3 year 225 out of 562 funds 5 year 192 out of 490 funds 10 year 187 out of 362 funds Overall Morningstar Rating The Overall Morningstar Rating, a weighted average of the 3-, 5-, and 10-year (if applicable) ratings, is out of 562 funds in the mid-cap growth category, based on risk-adjusted returns as of Performance and volatility measures 2 Fund Alpha Beta 1.04 Sharpe ratio 0.82 Standard deviation 11.88% R-squared 0.90 Information ratio Upside capture 99.77% Downside capture % Tracking error 3.78% 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 A SENAX C WENCX Admin SEPKX Inst WFEIX R6 WENRX 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 1.18% (A), 1.93 (C), 1.10 (Admin), 0.85 (I), and 0.80 (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 Midcap Growth Index measures the performance of those Russell Midcap companies with higher price/book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. You cannot invest directly in an index. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. 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. Smaller-company stocks tend to be more volatile and less liquid than those of larger companies. 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 December 31, 2017, 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 Fund. 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 Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements. 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 mid-cap growth funds, the Enterprise Fund received 3 stars among 562 funds, 3 stars among 490 funds, and 3 stars among 362 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 Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo Funds. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the funds. The funds are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA, an affiliate of Wells Fargo & Company. Neither Wells Fargo Funds Distributor nor Wells Fargo Funds 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