1 CM Wells Fargo Special Mid Cap Value Fund

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1 All information is as of 6/30/2018 unless otherwise indicated. Ticker: WFMIX Portfolio managers: James M. Tringas, CFA; and Bryant VanCronkhite, CFA, CPA Subadvisor: Wells Capital Management Inc. Category: Mid-cap value Focuses on companies with durable asset bases, flexible balance sheets, and sustainable free cash flows; investing in companies with these characteristics helps insulate the fund from volatility caused by cyclical earnings swings Appraises companies for both upside and downside potential; team invests only where the fund stands to be adequately compensated for the level of risk being taken Builds the portfolio in a manner intended to achieve diversification across sectors and industries to produce consistently strong risk-adjusted returns Special Mid Cap Value Fund- Inst Russell Midcap Value Index 3 month Year to date *Returns for periods of less than one year are not annualized. 1 year year year year Since inception (12/31/98) 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 0.85%. The fund s net expense ratio is 0.85%. The manager has contractually committed, through January 31, 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 0.85% 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. 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 underperformed the Russell Midcap Value Index for the three-month period that ended June 30, Stock selection in the health care sector was a key contributor to relative performance. Stock selection in the consumer sector was a key detractor from relative performance. The Russell Midcap Value Index rallied for most of the period, supported by a jobless rate that hit an 18-year low, strong earnings growth, and what appeared to be fading geopolitical risks on a number of fronts. By the middle of June, the index was 4% higher than it started the quarter. As the quarter s end approached, heightened trade rhetoric between China and the U.S. stalled the market s advance, and the index finished the quarter up 2.4%. During the period, two notable detractors from performance were Spectrum Brands Holdings, Inc., and an underweight to the real estate sector. Spectrum Brands is a global consumer products company that reported disappointing financial results. The company is in the process of selling some of its assets to strengthen its balance sheet and improve its financial performance. Also detracting from performance was an underweight to the real estate sector. The fund s underweight to the sector is largely due to our analysis that indicates there are better opportunities in other sectors. Contributing to performance was stock selection in the health care and financials sectors. In the health care sector, several companies contributed to performance one such contributor was STERIS plc. The company manufactures sterilization appliances and solutions for the health care industry, among other items. STERIS stock rallied after the company reported that adjusted earnings per diluted share increased 12% compared with the same quarter a year earlier and management offered an upbeat outlook. In the financials sector, insurance broker Brown & Brown, Inc., was a notable contributor. The insurance brokerage industry is highly fragmented, and the company used its financial flexibility to acquire several businesses over the years. During this quarter alone, Brown & Brown acquired six companies. These acquisitions are contributing to the company s growing revenue stream and building shareholder value. An essential element of our investment process is to invest in companies that we believe possess the financial flexibility to build shareholder value. We are confident our active investment process is equipped to take advantage of newly created opportunities caused by increased volatility. (See pages 6 7 for important information.) 1 CM Wells Fargo Special Mid Cap Value Fund

2 Special Mid Cap Value Fund versus Russell Midcap Value Index In the health care sector, several companies contributed to relative results. For example, STERIS manufactures sterilization solutions and appliances for the health care industry, among other items. During the period, STERIS reported solid financial results and management offered an upbeat outlook as a result, STERIS stock rallied. Over the past few years, the company used its financial flexibility to acquire a company and invest in research and development projects that ultimately increased earnings and the company s intrinsic value. Most important, now the company s gross leverage is below what we believe to be optimal meaning the company can deploy capital more aggressively, and those investments might help build shareholder value over time. Stock selection in the financials sector contributed to performance Brown & Brown was a key contributor. The insurance brokerage industry is highly fragmented, and the company used its financial flexibility to acquire several businesses over the years. During this quarter alone, Brown & Brown acquired six companies. These acquisitions are contributing to the company s growing revenue stream and building shareholder value. An essential element of our investment process is to invest in companies that we believe possess the financial flexibility to build shareholder value. Stock selection in the consumer sector was a notable detractor from performance, due in part to Spectrum Brands. Several challenges developed while in the process of reorganizing some of its manufacturing and distribution operations, and that meaningfully affected the company s financial performance, which weighed on valuation. Spectrum is in the process of selling two businesses, and it could use those proceeds to reduce debt, buy back stock, and invest in its business. We continue to hold a favorable view of the company due to its attractive valuation. from sector weight (%) from stock selection (%) Total value added (%) Special Mid Cap Value Fund Russell Midcap Value Index Over/underweight Real estate Real estate Telecom Services Telecom Services Utilities Utilities Cash & equivalents Cash An underweight to the real estate sector detracted from performance. The fund s underweight to the sector is largely due to our analysis that indicates there are better opportunities in other sectors. In this sector, we re focused on companies that we believe are less affected by changing interest rates; for example, CBRE Group, Inc., has transformed its business through acquisitions and now generates more than 40% of its revenues from contractual fees. Fund sector return Index sector return Relative return Sources: FactSet and Wells Fargo Funds Management, LLC 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 Special Mid Cap Value Fund

3 The fund underperformed the benchmark over the past 12 months. The consumer, real estate, health care, and financials sectors were key contributors to performance; consumer, materials, energy, and information were key detractors. Also, holding cash detracted 40 basis points (bps; 100 bps equal 1.00%) from relative performance. Our bottom-up, fundamental analysis focuses on businesses with flexible balance sheets and stable, or improving, cash flows. Should the stock market become more volatile, we believe companies with these characteristics could outperform. Stock selection in the consumer sector detracted from relative performance, largely due to TreeHouse Foods, Inc. It is a challenging environment for retailers, including grocers and their suppliers. The stock is no longer held in the fund. Stock selection in the materials sector was a key detractor from performance. International Flavors & Fragrances Inc. (IFF) had been a solid performer for the fund since we purchased shares. Recently, the company agreed to acquire Frutarom Industries Ltd., a leader in natural products and edible essences and oils. Market participants, including us, thought the deal was expensive, and IFF s stock took a tumble. We believe the acquisition might pay off due to growing demand for natural products and food ingredients. Stock selection in the consumer sector was a key contributor to performance, largely due to Kohl s Corp. The company has made meaningful strides to improve sales and has managed to navigate the tumultuous retail space. Kohl s management used the company s flexible balance sheet and cash flow to fund investments and new distribution centers that have improved its ability to optimize the use of its customer database and the customer experience. These actions are shaping the company s efforts to build a best-in-class omnichannel sales platform. Stock selection in the real estate sector contributed to performance, largely due to CBRE Group. The company has reported earnings above expectations several quarters in row, in part due to its growing fee-based business. In this sector, we ve focused on companies that we believe are less affected by changing interest rates. CBRE generates a meaningful portion of its revenues from contractual fees. Special Mid Cap Value Fund versus Russell Midcap Value Index from sector weight (%) from stock selection (%) Total value added (%) Special Mid Cap Value Fund Russell Midcap Value Index Over/underweight Fund sector return Index sector return Relative return Sources: FactSet and Wells Fargo Funds Management, LLC Sector weights are subject to change and may have changed since the date specified. Real estate Telecommunication services Utilities Telecommunication Real estate services Utilities Cash & equivalents Cash & equivalents 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 Special Mid Cap Value Fund

4 During the quarter, capital markets were volatile compared with recent years, a consequence of investors confronting sometimes conflicting signals, in our view. The Federal Reserve increased interest rates in June and indicated a likelihood of two more increases in The synchronized global economic growth of 2017 splintered and slowed. The benefits of last year s relatively weaker U.S. dollar for emerging markets were reversed as the dollar strengthened so far this year. Overarching these issues were increasing trade tensions as the U.S. seeks to negotiate concessions from trading partners. Our investment approach considers how macroeconomic issues such as interest rates, inflation data, economic trends, currency movements, and trade policies might affect individual stock performance. We seek to invest in stocks of companies that we expect can sustain their competitive advantages in the long run despite changing short-term conditions. We believe the portfolio is well positioned even as we remain alert to the potential effects that conditions such as input-cost inflation due to increasing commodity prices or a strengthening U.S. dollar may have on portfolio investments. We are comfortable with our positioning relative to growth or momentum investments given what we see from a valuation standpoint today. Several of the prevailing global investment and economic conditions during the second quarter suggest to some that the long cycle of economic growth may be slowing. In light of those influences, continued volatility is likely to be an ongoing symptom. As an investment manager that is fully invested and that maintains a long-term horizon, we will continue to target investments in companies with flexible balance sheets and strong cash flows, two fundamental measures that allow companies to make critical investments to strengthen their competitive positions in the marketplace throughout a market cycle. In our experience, it is the nature of these capital allocation decisions that often determine future success and business growth. Share class A C Admin Inst R R6 Ticker WFPAX WFPCX WFMDX WFMIX WFHHX WFPRX 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 1.19% (A), 1.94% (C), 1.11% (Admin), 0.85% (Inst), 1.44% (R), and 0.76% (R6). 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. 4 Wells Fargo Special Mid Cap Value Fund

5 Stock Jacobs Engineering Group Inc. Molson Coors Brewing Company Class B Fidelity National Services, Inc. Sealed Air Corporation Ameren Corporation Kansas City Southern Brown & Brown, Inc. Loews Corporation American Electric Power Company, Inc. American Water Works Company, Inc. Weighted average market cap Weighted median market cap EPS Growth (3- to 5-year forecast) P/B ratio P/S ratio Number of equity holdings Fund $15.14B $12.25B 9.66% 2.19x 1.60x 66 % of net assets $14.36B $13.25B 9.33% P/E ratio (trailing 12-month) 18.75x 17.67x Turnover % Source: FactSet Russell Midcap Value Index 2.00x 1.49x Inception date 12/31/98 Net expense ratio Inst 0.85% Assets all share classes $8.57B 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. 597 Special Mid Cap Value Fund-Inst Lipper Mid-Cap Value Funds Average Russell Midcap Value Index Morningstar Mid-Cap Value Average 1 year year Morningstar total return rankings Institutional Class (as of 6/30/18) Morningstar Category Mid-cap value 1 year 3 year 5 year 10 year Overall Morningstar Rating 350 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 365 funds in the Mid-cap value category, based on risk-adjusted returns as of 6/30/18. Alpha Beta Sharpe ratio Standard deviation R-squared ratio Upside capture Downside capture Fund % % 88.41% Tracking error 3.00% 2. Calculated for the Institutional Class based on a three-year period. Relative measures are compared with the fund s benchmark. 5 Wells Fargo Special Mid Cap Value Fund

6 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 Value Index measures the performance of those Russell Midcap companies with lower price/book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value Index. 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. 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. 6 Wells Fargo Special Mid Cap Value Fund

7 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. Consult the fund s prospectus for additional information on these and other risks. The views expressed in this document are as of June 30, 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 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 mid-cap value funds, the Special Mid Cap Value Fund received 3 stars among 365 funds, 4 stars among 307 funds, and 5 stars among 221 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. 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 the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker/dealer and Member FINRA) NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE CM Wells Fargo Special Mid Cap Value Fund

1 CM Wells Fargo Small Cap Value Fund

1 CM Wells Fargo Small Cap Value Fund All information is as of 6/30/2018 unless otherwise indicated. Ticker: WFSVX Portfolio managers: Michael Schneider, CFA; and Erik C. Astheimer Subadvisor: Wells Capital Management Inc. Category: Small