1 CM Wells Fargo International Equity Fund

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1 All information is as of 3/31/2018 unless otherwise indicated. Ticker: WFENX Portfolio managers: Dale A. Winner, CFA; and Venk Lal Subadvisor: Wells Capital Management Inc. Category: Foreign large blend Maintains a core equity style that emphasizes bottom-up stock selection based on rigorous, in-depth, fundamental company research Uses a bottom-up research process that targets companies with underestimated earnings growth potential or those trading at discounts to the team s estimate of normalized profitability Constructs the portfolio using both qualitative and quantitative risk measurements, seeking to maximize the portfolio s expected return against probable risks Applies a dynamic investment approach within a disciplined process that provides broad exposure to international markets by employing an all-cap research proces; the strategy is focused primarily on larger-cap companies and secondarily on smaller-cap and emerging market stocks International Equity Fund- Inst MSCI ACWI Index ex USA (Net) 3 month Year to date *Returns for periods of less than one year are not annualized. 1 year year year year Since inception (9/06/79) Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes 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 1.13%. The fund s net expense ratio is 0.90%. The manager has contractually committed, through February 28, 2019, to waive fees and/or reimburse expenses to the extent necessary to cap the fund s total annual fund operating expenses after fee waivers at 0.89% 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. 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. Without this cap, the fund s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectus The fund outperformed its benchmark, the MSCI ACWI ex USA Index (Net), for the trailing 3-month period and underperformed the index over the trailing 12-month period that ended March 31, International markets declined during the first quarter as inflation concerns and macroeconomic tensions weighed on performance. Strong stock selection in the consumer discretionary and financials sectors was the most significant contributor to relative performance. The first quarter of 2018 began as a continuation of the low volatility equity rally that investors experienced during 2017 but finished with a significant increase in volatility and a dramatic reversal of market performance. In January, international equity markets continued to advance based largely on the support of synchronized global growth, low inflation, and accommodative monetary policies. However, concerns about inflation following a higher-than-expected U.S. nonfarm payroll data release in late January was a catalyst for investors to take profits and began the dramatic reversal of performance in international equities. The MSCI ACWI ex USA Index (Net) reached a peak of nearly 8% during the first month of the quarter; however, markets fell globally based on uncertainty with the new Federal Reserve chairman, political uncertainty after the U.S. Secretary of State was fired, and potential regulatory actions facing some large information technology (IT) companies in the U.S. Investor sentiment was further rattled when U.S. President Donald Trump announced plans to impose tariffs on aluminum and steel imports in early March and proposed an additional $50 billion in tariffs later in the month specifically targeting China. The specter of a trade war between the world s two largest economies dramatically increased volatility, and the increasing trade tensions weighed on performance in Europe, the United Kingdom, and much of Asia. Similar to previous quarters, the fund s value focus hindered performance as growth continued to outperform value; however, strong stock selection overcame that headwind, and the fund outperformed its benchmark during the quarter. We continue to anticipate a rotation from growth into value sectors and expect that such a rotation would be constructive for our investment strategy. (See pages 8 9 for important information.) 1 CM Wells Fargo International Equity Fund

2 Driven by strong stock selection, investments in the consumer discretionary sector were the largest contributors to relative performance. Specifically, shares in U.K.-based conference and event organizer UBM plc advanced more than 30% during the quarter after a competitor announced a merger that placed a significant premium on the then-current UBM stock price. We view the equity as a value stock with self-help catalysts, and the proposed merger should create synergies that plug gaps in each company s programs and global footprint. In the financials sector, the fund s investment in CIMB Group Holdings Bhd was a significant contributor as shares in the company gained 16% during the quarter. The Malaysian bank is also considered a value stock with self-help catalysts benefiting from an improving macroeconomic environment and a management team that has effectively executed on the self-help catalysts. CIMB has instituted a cost-reduction program, and its book of business (which is largely regional and commodity-exposed) has improved. In the energy sector, an investment in Brazilian ethanol producer Cosan Ltd. was also a notable contributor. Shares in the company advanced 7% during the quarter based on rising global commodity prices and an improving macroeconomic environment in Brazil. Stock selection was a detractor in the telecommunication services sector and was largely driven by investments in Vodafone Group Plc and SK Telecom Co., Ltd., as shares in the wireless providers declined 14% and 13%, respectively, during the quarter. Both companies were significant outperformers during much of 2017, and profit-taking weighed on each stock s performance. Additionally, Vodafone has discussed an attempt to acquire a competitor s cable assets in Europe, and investors are worried that the company may overpay. In South Korea, investors perceived some regulatory risks to SK Telecom as the government placed some pressure on tariffs being charged by telecommunication services companies in the country. Weakness in the IT sector largely was driven by a lack of exposure to the semiconductor industry. International Equity Fund versus MSCI ACWI Index ex USA (Net) from sector weight (%) from stock selection (%) Total value added (%) discretionary discretionary staples staples Energy Energy Financials Financials Health care Health care International Equity Fund MSCI ACWI Index ex USA (Net) (Net) Over/underweight Fund sector return Index sector return Relative return Industrials Industrials Information technology Information technology Materials Materials Real estate Telecommunication services Utilities Telecommunication Real estate services Utilities 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 Wells Fargo International Equity Fund

3 The fund underperformed its benchmark over the trailing 12-month period that ended March 31, Strong stock selection in the financials and consumer discretionary sectors was the largest contributor, while a lack of exposure to the internet software and services industry was the largest detractor from relative performance. As a nonconsensus, value-focused manager, the significant underperformance of international value equities compared with their growth peers has been a severe headwind to relative performance. In fact, many of the largest detractors during the trailing 12-month period have been stocks that the fund does not own. Specifically, shares in Tencent Holdings Ltd. and Alibaba Group Holding Ltd. have advanced 82% and 70%, respectively, during the period. Not holding either company has detracted significantly from fund performance. We do not own these stocks, as neither company aligns with the fund s philosophy of nonconsensus value equities. Stock selection in the financials sector was the largest contributor to relative performance. Notably, the fund s investments in the banking industry supported results as shares in CIMB Group Holding Bhd, Hana Financial Group Inc., and DNB ASA each advanced more than 26% during the period. Each bank benefited from self-help catalysts in terms of aggressive cost-cutting measures, lower loan provisioning, and generally improving macroeconomic environments. For instance, the Norwegian bank DNB has significant exposure to the oil and commodity sectors through its loan book, and the company s stock has been aided by an increase in global commodity prices. In the consumer discretionary sector, an investment in Chinese glass manufacturer Xinyi Glass Holdings Ltd. was a significant contributor as shares gained more than 81%. Shares advanced late in 2017 after some competitors factories were temporarily closed by the government to combat an oversupply in the glass market. Stock selection in the consumer staples sector weighed on results, and the fund s investment in Brazilian meatpacking company JBS S.A. was a notable detractor. The stock declined sharply after the company s management was implicated in a corruption scandal. Following our sell discipline, we sold out of the position during the second quarter of 2017; unfortunately, the damage was already done. International Equity Fund versus MSCI ACWI Index ex USA (Net) from sector weight (%) from stock selection (%) Total value added (%) discretionary discretionary staples staples Energy Energy Financials Financials Health care Health care Industrials Industrials Information technology Information technology International Equity Fund MSCI ACWI Index ex USA (Net) (Net) Over/underweight Fund sector return Index sector return Relative return Materials Materials Real estate Telecommunication services Utilities Telecommunication Real estate services Utilities 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. 3 Wells Fargo International Equity Fund

4 International Equity Fund versus MSCI ACWI Index ex USA (Net) Investments in Italy were the largest contributors during the period and were led by the fund s investments in UniCredit S.p.A and Eni S.p.A. UniCredit, a multinational bank, benefited from self-help catalysts in cost-cutting measures and an improving macroeconomic environment. Eni, the large Italian oil company, announced strong fourth-quarter earnings during the first quarter of Stock selection in the U.K. contributed, with the vast majority of relative outperformance stemming from the fund s investment in conference and event organizer UBM. The company s stock advanced more than 30% during the period. from country weight (%) from stock selection (%) Total value added (%) Stock selection in Japan was the largest detractor during the quarter and was led lower by investments in Hitachi, Ltd., and Mitsubishi UFJ Financial Group, Inc. There were no stock-specific issues during the quarter for either company; however, Hitachi had been a significant outperformer and some profit-taking weighed on the stock s performance Australia Canada Emerging France Frontier Germany Hong Kong Italy Japan Netherlands Other Europe Spain Switzerland United Kingdom Other Australia Canada Emerging France Frontier Germany Hong Kong Italy Japan Netherlands Other Europe Spain Switzerland United Kingdom Other International Equity Fund MSCI ACWI Index ex USA (Net) (Net) Over/underweight International Equity Fund MSCI ACWI Index ex USA (Net) (Net) Relative Return Sources: FactSet and Wells Fargo Funds Management, LLC Past performance is no guarantee of future results. Country 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. 4 Wells Fargo International Equity Fund

5 As bottom-up stock pickers, our country allocations are solely based on where we are able to identify compelling companyspecific values. However, over the trailing 12-month period, our deviations from the benchmark in terms of country positioning have broadly contributed to relative performance. An underweight to and strong stock selection in the U.K. contributed to performance during the period. Specifically, an investment in Man Group plc supported results as the company s stock advanced 37%. The London-based asset manager executed very strongly during the trailing 12-month period and has used excess capital to initiate a 3% stock buyback program. Stock selection in China was a notable detractor during the period. The fund s lack of exposure to the Chinese internet software and services industry weighed on results, as did an investment in telecommunication services company China Mobile Ltd. International Equity Fund versus MSCI ACWI Index ex USA (Net) from country weight (%) from stock selection (%) Total value added (%) Australia Canada Emerging France Frontier Germany Hong Kong Italy Japan Netherlands Other Europe Spain Switzerland United Kingdom Other Australia Canada Emerging France Frontier Germany Hong Kong Italy Japan Netherlands Other Europe Spain Switzerland United Kingdom Other International Equity Fund MSCI ACWI Index ex USA (Net) (Net) Over/underweight International Equity Fund MSCI ACWI Index ex USA (Net) (Net) Relative Return Sources: FactSet and Wells Fargo Funds Management, LLC Past performance is no guarantee of future results. Country 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. 5 Wells Fargo International Equity Fund

6 Volatility returned to equity markets and stock returns fell during the first quarter a departure from low volatility and stock outperformance during Entering 2018, valuations were higher on the prior year s strong performance and inflation fears emerged after a higher-than-expected January wage report. Investors also contended with concerns about global trade and prospects for increased regulations on technology stocks. One of our largest exposures and overweights is telecommunication services in emerging markets. In our view, these companies generate high free cash flow with attractive dividend yields and are domestic-facing, which may mean they are less likely to be at risk from trade tensions. We remain positive on emerging markets thanks to a valuation discount to developed markets and improved competitive positioning which we view as long-term cycle positives as well as continued commodity price stabilization. In addition, we believe that because of demographics, broadly speaking, emerging markets will have higher sustainable-growth rates than developed markets. Our exposure to selected stocks in larger value sectors drove outperformance. We look for a continued rotation from growth sectors to value sectors like financials, industrials, telecommunication services, utilities, and commodity-related businesses as the inflation and economic cycles develop and as the effect of quantitative easing globally recedes. We expect these evolving conditions will be positive for our investing approach. Moving forward, we are attentive to three major risk factors that also can be sources of investment opportunity. First, a larger-than-expected slowdown in China s economy would be a negative for global growth but could benefit companies with pricing power. Second, higher-than-expected inflation, a risk we feel can be well managed, could cause bond volatility, which could benefit value stocks. Third, trade tensions, which we believe is more of a perceived risk at this time, could benefit investments in regions that are not targets of restrictive trade policies. We believe that, in particular, international markets and value sectors offer opportunities for our investment approach even as we closely monitor the evolution of these risks. Share class A C Admin Inst R R6 Ticker WFEAX WFEFX WFEDX WFENX WFERX WFEHX Gross expense ratio (%) Net expense ratio (%) Contractual expense waiver date 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 waivers at 1.14% (A), 1.89% (C), 1.14% (Admin), 0.89% (Inst), 1.39% (R), and 0.84% (R6). Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extra ordinary expenses are excluded from the cap. 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. Without this cap, the fund s returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectus. 6 Wells Fargo International Equity Fund

7 Stock Munich Reinsurance Company DNB ASA BP p.l.c. Hitachi,Ltd. UniCredit S.p.A. Nomura Holdings, Inc. Eni S.p.A. Compagnie de Saint-Gobain SA Bayer AG Royal Philips NV Weighted average market cap Weighted median market cap EPS Growth (3- to 5-year forcast) P/B ratio P/S ratio Number of equity holdings Source: FactSet Fund $46.18B $22.89B 13.00% 1.23x 0.92x 43 % of net assets $70.05B $36.15B 8.84% P/E ratio (trailing 12-month) 12.65x 14.16x Turnover % Inception date Net expense ratio Inst 9/06/ % MSCI ACWI Index ex USA (Net) 1.67x 1.21x 1864 Assets all share classes $518.93M Portfolio holdings and characteristics are subject to change and may have changed since the date specified. Holdings typically include the underlying ordinary shares combined with any depositary receipts. The holdings listed should not be considered recommendations to purchase or sell a particular security. 1. Calculated based on a one-year period. International Equity Fund-Inst MSCI ACWI Index ex USA (Net) Morningstar Foreign Large Blend Average 1 year year Morningstar total return rankings Institutional Class (as of 3/31/18) Morningstar Category Foreign large blend 1 year 3 year 5 year 10 year Overall Morningstar Rating 416 out of out of out of out of year year The Overall Morningstar Rating, a weighted average of the 3-, 5-, and 10-year (if applicable) ratings, is out of 605 funds in the Foreign large blend category, based on risk-adjusted returns as of 3/31/18. Alpha Beta Sharpe ratio Standard deviation R-squared Information ratio Upside capture Downside capture Fund % % 95.33% Tracking error 4.83% 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. 7 Wells Fargo International Equity Fund

8 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 Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) ex USA (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. You cannot invest directly in an index. Source: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. Attribution analysis: Performance attribution and sector and country returns are calculated using the Brinson- Fachler attribution model. As a result, 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. 8 Wells Fargo International Equity Fund

9 Risks: Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. The use of derivatives may reduce returns and/or increase volatility. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). This fund is exposed to smallercompany securities risk. Consult the fund s prospectus for additional information on these and other risks. The views expressed in this document are as of March 31, 2018, 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. The inception date of the Institutional Class was March 09, Historical performance shown for the Institutional Class of the fund prior to July 19, 2010, is based on the performance of the fund s predecessor, the Evergreen International Equity Fund. The Morningstar Rating for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product 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. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% 3-year rating for months of total returns, 60% 5-year rating/40% 3-year rating for months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods. Across U.S.-domiciled foreign large blend funds, the International Equity Fund received 4 stars among 605 funds, 5 stars among 536 funds, and 3 stars among 355 funds for the 3-, 5-, and 10-year periods, respectively. The Morningstar Rating is for the Institutional Class only; other classes may have different performance characteristics. 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 NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE CM Wells Fargo International Equity Fund