Explanatory Note: This Post-Effective Amendment No. 624 to the Registration Statement of Wells Fargo Funds Trust (the "Trust")
is being filed primarily to add one new series to the Trust - Wells Fargo Global Investment Grade Credit Fund, and to make
certain other non-material changes to the Registration Statement.
WELLS FARGO FUNDS TRUST
PART A
WELLS FARGO FIXED INCOME FUNDS
PROSPECTUS
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Prospectus
March 1, 2019
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Fund
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Class R6
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Wells Fargo Global Investment Grade Credit Fund
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WGCRX
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Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the
Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you
specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified
by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any
action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting
your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at
wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your
financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the
Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with
your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
As with all mutual funds, the U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon
the accuracy or adequacy of this Prospectus. Anyone who tells you otherwise is committing a crime.
Fund shares are NOT deposits or other obligations of, or guaranteed by, Wells Fargo Bank, N.A., its affiliates or any other depository institution.
Fund shares are not insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation or any other government agency
and may lose value.
Global Investment Grade Credit Fund Summary
Investment Objective
The Fund seeks total return, consisting of income and capital appreciation.
Fees and Expenses
These tables are intended to help you understand the various costs and expenses you will pay if you buy and hold
shares of the Fund.
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Shareholder Fees (fees paid directly from your investment)
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Maximum sales charge (load) imposed on purchases (as a percentage of offering price)
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None
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Maximum deferred sales charge (load) (as a percentage of offering price)
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None
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Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
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Management Fees
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0.40%
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Distribution (12b-1) Fees
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0.00%
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Other Expenses
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0.23%
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Total Annual Fund Operating Expenses
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0.63%
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Fee Waivers
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(0.18)%
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Total Annual Fund Operating Expenses After Fee Waivers
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0.45%
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1.
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Expenses are based on estimated amounts for the current fiscal year.
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2.
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The Manager has contractually committed through March 31, 2020, 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 the amounts shown above. Brokerage commissions, stamp duty fees, interest,
taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment
expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
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Example of Expenses
The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in
other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that fees and
expenses remain the same as in the tables above. To the extent that the Manager is waiving fees or reimbursing
expenses, the example assumes that such waiver or reimbursement will only be in place through the date noted
above. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
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After:
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1 Year
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$46
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3 Years
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$184
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares
are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. Since the Fund commenced operations on or around the date of this
Prospectus, no history of the portfolio turnover rate is available.
Wells Fargo Funds - Fixed Income Funds
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Principal Investment Strategies
Under normal circumstances, we invest:
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at least 80% of the Fund’s net assets in a diversified portfolio of investment grade credit debt securities issued by
U.S. or foreign (including emerging markets) corporate issuers
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up to 20% of net assets in debt securities rated below investment grade (i.e., junk bonds), as well as agencies,
Supranationals, taxable municipal bonds, sovereign bonds, and asset-backed securities including mortgage-backed
securities.
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Under normal circumstances, the Fund will invest in at least three different countries, including the U.S., and will invest
at least 40% of its net assets, as determined in our reasonable discretion, in issuers that maintain their principal place
of business or conduct their principal business activities outside the U.S. From time to time, the Fund may be below
this 40% level (but is not expected to fall below 30%) if the portfolio managers, in their discretion, determine that
market conditions warrant such lower level of investment. While the Fund may purchase securities of any
denomination, under normal circumstances the Fund expects to hedge all non-U.S. currency exposure to the U.S.
dollar.
We define investment grade securities to have received a rating of investment grade at the time of purchase from an
internationally recognized statistical ratings organization (i.e., Baa- or higher by Moody’s, BBB- or higher by Standard &
Poor’s or BBB- or higher by Fitch). We do not manage the Fund’s portfolio to a specific maturity or duration.
We may also use, for hedging or to enhance returns, interest rate swap agreements and futures to tailor interest rate
positioning, forward contracts and currency basis swap agreements to hedge currency exposure, or credit default
swap agreements to hedge credit exposure.
We focus on bottom-up credit research with a focus on well-underwritten credits and relative value. Elements of this
evaluation may include duration measurements, historical yield spread relationships, volatility trends, mortgage
refinance rates, as well as other factors. We may sell a security due to changes in our outlook, as well as changes in
portfolio strategy or cash flow needs. A security may also be sold and replaced with one that presents a better value or
risk/reward profile.
Principal Investment Risks
An investment in the Fund may lose money, is not a deposit of Wells Fargo Bank, N.A. or its affiliates, is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency, and is primarily subject
to the risks (in alphabetical order) briefly summarized below.
Credit Risk.
The issuer or guarantor of a debt security may be unable or perceived to be unable to pay interest or
repay principal when they become due, which could cause the value of an investment to decline and a Fund to lose
money.
Derivatives Risk.
The use of derivatives, such as futures, options and swap agreements, can lead to losses, including
those magnified by leverage, particularly when derivatives are used to enhance return rather than mitigate risk.
Certain derivative instruments may be difficult to sell when the portfolio manager believes it would be appropriate to
do so, or the other party to a derivative contract may be unwilling or unable to fulfill its contractual obligations.
Emerging Markets Risk.
Emerging market securities typically present even greater exposure to the risks described
under “Foreign Investment Risk” and may be particularly sensitive to global economic conditions. Emerging market
securities are also typically less liquid than securities of developed countries and could be difficult to sell, particularly
during a market downturn.
Foreign Currency Contracts Risk
. A Fund that enters into forwards or other foreign currency contracts, which are a
type of derivative, is subject to the risk that the portfolio manager may be incorrect in his or her judgment of future
exchange rate changes.
Foreign Investment Risk.
Foreign investments may be subject to lower liquidity, greater price volatility and risks
related to adverse political, regulatory, market or economic developments. Foreign investments may involve exposure
to changes in foreign currency exchange rates and may be subject to higher withholding and other taxes.
Futures Contracts Risk.
A Fund that uses futures contracts, which are a type of derivative, is subject to the risk of loss
caused by unanticipated market movements. In addition, there may at times be an imperfect correlation between the
movement in the prices of futures contracts and the value of their underlying instruments or indexes, and there may at
times not be a liquid secondary market for certain futures contracts.
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Wells Fargo Funds - Fixed Income Funds
High Yield Securities Risk
. High yield securities and unrated securities of similar credit quality (commonly known as
“junk bonds”) have a much greater risk of default or of not returning principal and their values tend to be more volatile
than higher-rated securities with similar maturities.
Interest Rate Risk.
When interest rates rise, the value of debt securities tends to fall. When interest rates decline,
interest that a Fund is able to earn on its investments in debt securities may also decline, but the value of those
securities may increase.
Management Risk.
Investment decisions, techniques, analyses or models implemented by a Fund’s manager or
sub-adviser in seeking to achieve the Fund’s investment objective may not produce expected returns, may cause the
Fund’s shares to lose value or may cause the Fund to underperform other funds with similar investment objectives.
Market Risk.
The values of, and/or the income generated by, securities held by a Fund may decline due to general
market conditions or other factors, including those directly involving the issuers of such securities. Securities markets
are volatile and may decline significantly in response to adverse issuer, regulatory, political, or economic
developments. Different sectors of the market and different security types may react differently to such developments.
Mortgage- and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities may decline in value and
become less liquid when defaults on the underlying mortgages or assets occur and may exhibit additional volatility in
periods of rising interest rates. Rising interest rates tend to extend the duration of these securities, making them more
sensitive to changes in interest rates than instruments with fixed payment schedules. When interest rates decline or
are low, the prepayment of mortgages or assets underlying such securities can reduce a Fund’s returns.
Municipal Securities Risk.
Municipal securities may be fully or partially backed or enhanced by the taxing authority of
a local government, by the current or anticipated revenues from a specific project or specific assets, or by the credit of,
or liquidity enhancement provided by, a private issuer. Various types of municipal securities are often related in such a
way that political, economic or business developments affecting one obligation could affect other municipal securities
held by a Fund.
New Fund Risk.
The Fund is a new fund, with a limited or no operating history and a small asset base. There can be no
assurance that the Fund will grow to or maintain a viable size. Due to the Fund’s small asset base, certain of the Fund’s
expenses and its portfolio transaction costs may be higher than those of a fund with a larger asset base. To the extent
that the Fund does not grow to or maintain a viable size, it may be liquidated, and the expenses, timing and tax
consequences of such liquidation may not be favorable to some shareholders.
Regulatory Risk.
Pursuant to section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
certain rules promulgated thereunder (collectively known as the “Volcker Rule”), if the Manager and/or its affiliates
own 25% or more of the outstanding shares of the Fund more than three years after the Fund’s inception date (or such
longer period as may be permitted by the Federal Reserve), the Fund will be subject to restrictions on trading that will
adversely impact the Fund’s ability to execute its investment strategy. Should this occur, the Fund may decide to
liquidate, or the Manager and/or its affiliates may be required to reduce their ownership interests in the Fund, either of
which may result in gains or losses, increased transaction costs and adverse tax consequences.
Swaps Risk
. Depending on their structure, swap agreements and options to enter into swap agreements
(“swaptions”), both of which are types of derivatives, may increase or decrease a Fund’s exposure to long- or short-term
interest rates, foreign currency values, mortgage-backed securities, corporate borrowing rates, or credit events or
other reference points such as security prices or inflation rates.
U.S. Government Obligations Risk.
U.S. Government obligations may be adversely impacted by changes in interest
rates, and securities issued or guaranteed by U.S. Government agencies or government-sponsored entities may not be
backed by the full faith and credit of the U.S. Government.
Performance
Because the Fund does not have annual returns for at least one calendar year, there is no performance to report.
Wells Fargo Funds - Fixed Income Funds
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Fund Management
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Manager
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Sub-Adviser
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Portfolio Manager, Title/Managed Since
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Wells Fargo Funds Management,
LLC
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Wells Fargo Asset Management
(International) Limited
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Henrietta Paquement, CFA,
Portfolio
Manager / 2019
Alex Temple,
Portfolio Manager / 2019
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Wells Capital Management Incorporated
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Scott M. Smith, CFA,
Portfolio Manager /
2019
Jonathan Terry, CFA,
Portfolio Manager /
2019
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Purchase and Sale of Fund Shares
Class R6 shares generally are available only to certain retirement plans, including: 401(k) plans, 457 plans, profit sharing
and money purchase pension plans, defined benefit plans, target benefit plans, and non-qualified deferred
compensation plans. Class R6 shares also are generally available only to retirement plans where plan level or omnibus
accounts are held on the books of the Fund. Class R6 shares also are available to funds of funds managed by Funds
Management. Class R6 shares generally are not available to retail accounts but may be offered through intermediaries
for the accounts of their customers to certain institutional and fee-based investors, and in each case, only if a dealer
agreement is in place with Wells Fargo Funds Distributor, LLC to offer Class R6 shares.
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Institutions Purchasing Fund Shares
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Minimum Initial Investment
Class R6: Eligible investors are not subject to a minimum initial investment (intermediaries may require different minimum
investment amounts)
Minimum Additional Investment
Class R6: None (intermediaries may require different minimum additional investment amounts)
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Tax Information
By investing in a Fund through a tax-deferred retirement account, you will not be subject to tax on dividends and
capital gains distributions from the Fund or the sale of Fund shares if those amounts remain in the tax-deferred
account.
Distributions taken from retirement plan accounts generally are taxable as ordinary income. For special rules
concerning tax-deferred retirement accounts, including applications, restrictions, tax advantages, and potential sales
charge waivers, contact your investment professional. To determine if a retirement plan may be appropriate for you
and to obtain further information, consult your tax adviser.
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Wells Fargo Funds - Fixed Income Funds
Details About the Fund
Global Investment Grade Credit Fund
Investment Objective
The Fund seeks total return, consisting of income and capital appreciation.
The Fund’s Board of Trustees can change this investment objective without a shareholder vote.
Principal Investment Strategies
Under normal circumstances, we invest:
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at least 80% of the Fund’s net assets in a diversified portfolio of investment grade credit debt securities issued by
U.S. or foreign (including emerging markets) corporate issuers
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up to 20% of net assets in debt securities rated below investment grade (i.e., junk bonds), as well as agencies,
Supranationals, taxable municipal bonds, sovereign bonds, and asset-backed securities including mortgage-backed
securities.
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Under normal circumstances, the Fund will invest in at least three different countries, including the U.S., and will invest
at least 40% of its net assets, as determined in our reasonable discretion, in issuers that maintain their principal place
of business or conduct their principal business activities outside the U.S. From time to time, the Fund may be below
this 40% level (but is not expected to fall below 30%) if the portfolio managers, in their discretion, determine that
market conditions warrant such lower level of investment. While the Fund may purchase securities of any
denomination, under normal circumstances the Fund expects to hedge all non-U.S. currency exposure to the U.S.
dollar.
We define investment grade securities to have received a rating of investment grade at the time of purchase from an
internationally recognized statistical ratings organization (i.e., Baa- or higher by Moody’s, BBB- or higher by Standard &
Poor’s or BBB- or higher by Fitch). We do not manage the Fund’s portfolio to a specific maturity or duration.
We may also use, for hedging or to enhance returns, interest rate swap agreements and futures to tailor interest rate
positioning, forward contracts and currency basis swap agreements to hedge currency exposure, or credit default
swap agreements to hedge credit exposure.
We focus on bottom-up credit research with a focus on well-underwritten credits and relative value. Elements of this
evaluation may include duration measurements, historical yield spread relationships, volatility trends, mortgage
refinance rates, as well as other factors. We may sell a security due to changes in our outlook, as well as changes in
portfolio strategy or cash flow needs. A security may also be sold and replaced with one that presents a better value or
risk/reward profile.
We may actively trade portfolio securities, which may lead to higher transaction costs that may affect the Fund’s
performance. In addition, active trading of portfolio securities may lead to higher taxes if your shares are held in a
taxable account.
The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations,
shares of other mutual funds and repurchase agreements, or make other short-term investments for purposes of
maintaining liquidity or for short-term defensive purposes when we believe it is in the best interests of the
shareholders to do so. During such periods, the Fund may not achieve its objective.
Wells Fargo Funds - Fixed Income Funds
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Principal Investment Risks
The Fund is primarily subject to the risks mentioned below (in alphabetical order).
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Credit Risk
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Derivatives Risk
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Emerging Markets Risk
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Foreign Currency Contracts Risk
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Foreign Investment Risk
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Futures Contracts Risk
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High Yield Securities Risk
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Interest Rate Risk
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Management Risk
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Market Risk
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Mortgage- and Asset-Backed Securities Risk
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Municipal Securities Risk
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New Fund Risk
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Regulatory Risk
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Swaps Risk
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U.S. Government Obligations Risk
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These and other risks could cause you to lose money in your investment in the Fund and could adversely affect the
Fund’s net asset value and total return. These risks are described in the “Description of Principal Investment Risks”
section.
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Wells Fargo Funds - Fixed Income Funds
Description of Principal Investment Risks
Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into
account your risk tolerance and preferences. The risks that are most likely to have a material effect on a particular
Fund as a whole are called “principal risks.” The principal risks for the Fund have been previously identified and are
described below. Additional information about the principal risks is included in the Statement of Additional
Information.
Credit Risk.
The issuer or guarantor of a debt security may be unable or perceived to be unable to pay interest or
repay principal when they become due. In these instances, the value of an investment could decline and the Fund
could lose money. Credit risk increases as an issuer’s credit quality declines.
Derivatives Risk.
The use of derivatives, such as futures, options and swap agreements, presents risks different from,
and possibly greater than, the risks associated with investing directly in traditional securities. The use of derivatives can
lead to losses because of adverse movements in the price or value of the derivatives’ underlying assets, indexes or
rates and the derivatives themselves, which may be magnified by certain features of the derivatives. These risks are
heightened when derivatives are used to enhance a Fund’s return or as a substitute for a position or security, rather
than solely to hedge (or mitigate) the risk of a position or security held by the Fund. The success of a derivative
strategy will be affected by the portfolio manager’s ability to assess and predict market or economic developments
and their impact on the derivatives’ underlying assets, indexes or reference rates, as well as the derivatives themselves.
Certain derivative instruments may become illiquid and, as a result, may be difficult to sell when the portfolio manager
believes it would be appropriate to do so. Certain derivatives create leverage, which can magnify the impact of a
decline in the value of their underlying assets, indexes or reference rates, and increase the volatility of the Fund’s net
asset value. Certain derivatives (e.g., over-the-counter swaps) are also subject to the risk that the counterparty to the
derivative contract will be unwilling or unable to fulfill its contractual obligations, which may cause a Fund to lose
money, suffer delays or incur costs arising from holding or selling an underlying asset. Changes in laws or regulations
may make the use of derivatives more costly, may limit the availability of derivatives, or may otherwise adversely affect
the use, value or performance of derivatives.
Emerging Markets Risk.
Emerging market securities typically present even greater exposure to the risks described
under “Foreign Investment Risk” and may be particularly sensitive to global economic conditions. For example,
emerging market countries are typically more dependent on exports and are, therefore, more vulnerable to recessions
in other countries. Emerging markets tend to have less developed legal and financial systems and a smaller market
capitalization than markets in developed countries. Some emerging markets are subject to greater political instability.
Additionally, emerging markets may have more volatile currencies and be more sensitive than developed markets to a
variety of economic factors, including inflation. Emerging market securities are also typically less liquid than securities
of developed countries and could be difficult to sell, particularly during a market downturn.
Foreign Currency Contracts Risk.
A Fund that enters into forwards or other foreign currency contracts, which are a
type of derivative, is subject to the risk that the portfolio manager may be incorrect in his or her judgment of future
exchange rate changes. The Fund’s gains from positions in foreign currency contracts may accelerate and/or lead to
recharacterization of the Fund’s income or gains and its distributions to shareholders. The Fund’s losses from such
positions may also lead to recharacterization of the Fund’s income and its distributions to shareholders and may cause
a return of capital to Fund shareholders.
Foreign Investment Risk.
Foreign investments may be subject to lower liquidity, greater price volatility and risks
related to adverse political, regulatory, market or economic developments. Foreign companies may be subject to
significantly higher levels of taxation than U.S. companies, including potentially confiscatory levels of taxation, thereby
reducing the earnings potential of such foreign companies. Foreign investments may involve exposure to changes in
foreign currency exchange rates. Such changes may reduce the U.S. dollar value of the investments. Foreign
investments may be subject to additional risks, such as potentially higher withholding and other taxes, and may also
be subject to greater trade settlement, custodial, and other operational risks than domestic investments. Certain
foreign markets may also be characterized by less stringent investor protection and disclosure standards.
Futures Contracts Risk.
A Fund that uses futures contracts, which are a type of derivative, is subject to the risk of loss
caused by unanticipated market movements. In addition, there may at times be an imperfect correlation between the
movement in the prices of futures contracts and the value of their underlying instruments or indexes, and there may at
times not be a liquid secondary market for certain futures contracts.
High Yield Securities Risk.
High yield securities and unrated securities of similar credit quality (commonly known as
“junk bonds”) have a much greater risk of default (or in the case of bonds currently in default, of not returning
Wells Fargo Funds - Fixed Income Funds
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8
principal) and their values tend to be more volatile than higher-rated securities with similar maturities. Additionally,
these securities tend to be less liquid and more difficult to value than higher-rated securities.
Interest Rate Risk.
When interest rates rise, the value of debt securities tends to fall. The longer the terms of the debt
securities held by a Fund, the more the Fund is subject to this risk. If interest rates decline, interest that the Fund is able
to earn on its investments in debt securities may also decline, which could cause the Fund to reduce the dividends it
pays to shareholders, but the value of those securities may increase. Some debt securities give the issuers the option
to call, redeem or prepay the securities before their maturity dates. If an issuer calls, redeems or prepays a debt security
during a time of declining interest rates, the Fund might have to reinvest the proceeds in a security offering a lower
yield, and therefore might not benefit from any increase in value as a result of declining interest rates. Changes in
market conditions and government policies may lead to periods of heightened volatility in the debt securities market,
reduced liquidity for certain Fund investments and an increase in Fund redemptions. Interest rate changes and their
impact on the Fund and its share price can be sudden and unpredictable.
Management Risk.
Investment decisions, techniques, analyses or models implemented by a Fund’s manager or
sub-adviser in seeking to achieve the Fund’s investment objective may not produce the returns expected, may cause
the Fund’s shares to lose value or may cause the Fund to underperform other funds with similar investment objectives.
Market Risk.
The values of, and/or the income generated by, securities held by a Fund may decline due to general
market conditions or other factors, including those directly involving the issuers of such securities. Securities markets
are volatile and may decline significantly in response to adverse issuer, regulatory, political, or economic
developments. Different sectors of the market and different security types may react differently to such developments.
Mortgage- and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities are subject to risk of default on
the underlying mortgages or assets, particularly during periods of economic downturn. Defaults on the underlying
mortgages or assets may cause such securities to decline in value and become less liquid. Rising interest rates tend to
extend the duration of these securities, making them more sensitive to changes in interest rates than instruments with
fixed payment schedules. As a result, in a period of rising interest rates, these securities may exhibit additional
volatility. When interest rates decline or are low, borrowers may pay off their mortgage or other debts sooner than
expected, which can reduce the returns of a Fund. Funds that may enter into mortgage dollar roll transactions are
subject to the risk that the market value of the securities that are required to be repurchased in the future may decline
below the agreed upon repurchase price. They also involve the risk that the party to whom the securities are sold may
become insolvent, limiting a Fund’s ability to repurchase securities at the agreed upon price.
Municipal Securities Risk.
Municipal securities may be fully or partially backed or enhanced by the taxing authority of
a local government, by the current or anticipated revenues from a specific project or specific assets, or by the credit of,
or liquidity enhancement provided by, a private issuer. Municipal securities may be difficult to obtain because of
limited supply, which may increase the cost to a Fund of purchasing such securities and effectively reduce the Fund’s
yield. Typically, less information is available about a municipal issuer than is available about other types of issuers.
Various types of municipal securities are often related in such a way that political, economic or business developments
affecting one obligation could affect other municipal securities held by the Fund. The value and liquidity of municipal
securities backed by the revenue from a particular project or other source may decline if the project or other source
fails to generate expected revenue. Although the Fund may strive to invest in municipal securities and other securities
that pay interest that is exempt from certain taxes (such as federal taxes, federal alternative minimum tax and/or state
taxes as applicable), some income earned by Fund investments may be subject to such taxes. Certain issuers of
municipal securities may have the ability to call or redeem a security prior to its maturity date, which could impair
Fund performance.
New Fund Risk.
The Fund is a new fund, with a limited or no operating history and a small asset base. There can be no
assurance that the Fund will grow to or maintain a viable size. Due to the Fund’s small asset base, certain of the Fund’s
expenses and its portfolio transaction costs may be higher than those of a fund with a larger asset base. To the extent
that the Fund does not grow to or maintain a viable size, it may be liquidated, and the expenses, timing and tax
consequences of such liquidation may not be favorable to some shareholders.
Regulatory Risk.
Pursuant to section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
certain rules promulgated thereunder (collectively known as the “Volcker Rule”), if the Manager and/or its affiliates
own 25% or more of the outstanding shares of the Fund more than three years after the Fund’s inception date (or such
longer period as may be permitted by the Federal Reserve), the Fund will be subject to restrictions on trading that will
adversely impact the Fund’s ability to execute its investment strategy. Should this occur, the Fund may decide to
liquidate, or the Manager and/or its affiliates may be required to reduce their ownership interests in the Fund, either of
which may result in gains or losses, increased transaction costs and adverse tax consequences.
9
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Wells Fargo Funds - Fixed Income Funds
Swaps Risk.
Depending on their structure, swap agreements and options to enter into swap agreements
(“swaptions”), both of which are types of derivatives, may increase or decrease a Fund’s exposure to long- or short-term
interest rates, foreign currency values, mortgage-backed securities, corporate borrowing rates, or credit events or
other reference points such as security prices or inflation rates.
U.S. Government Obligations Risk.
U.S. Government obligations may be adversely impacted by changes in interest
rates, and securities issued or guaranteed by U.S. Government agencies or government-sponsored entities may not be
backed by the full faith and credit of the U.S. Government. If a government-sponsored entity is unable to meet its
obligations or its creditworthiness declines, the performance of a Fund that holds securities issued or guaranteed by
the entity will be adversely impacted.
Portfolio Holdings Information
A description of the Wells Fargo Funds’ policies and procedures with respect to disclosure of the Wells Fargo Funds’
portfolio holdings is available in the Fund’s Statement of Additional Information.
Wells Fargo Funds - Fixed Income Funds
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10
Pricing Fund Shares
The Fund’s NAV is the value of a single share. The NAV is calculated as of the close of regular trading on the New York
Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time) on each day that the NYSE is open, although a Fund may
deviate from this calculation time under unusual or unexpected circumstances. The NAV is calculated separately for
each class of shares of a multiple-class Fund. The most recent NAV for each class of a Fund is available at
wellsfargofunds.com. To calculate the NAV of a Fund’s shares, the Fund’s assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of shares outstanding. The price at which a
purchase or redemption request is processed is based on the next NAV calculated after the request is received in good
order. Generally, NAV is not calculated, and purchase and redemption requests are not processed, on days that the
NYSE is closed for trading; however, under unusual or unexpected circumstances, a Fund may elect to remain open
even on days that the NYSE is closed or closes early. To the extent that a Fund’s assets are traded in various markets on
days when the Fund is closed, the value of the Fund’s assets may be affected on days when you are unable to buy or
sell Fund shares. Conversely, trading in some of a Fund’s assets may not occur on days when the Fund is open.
With respect to any portion of a Fund’s assets that may be invested in other mutual funds, the value of the Fund’s
shares is based on the NAV of the shares of the other mutual funds in which the Fund invests. The valuation methods
used by mutual funds in pricing their shares, including the circumstances under which they will use fair value pricing
and the effects of using fair value pricing, are included in the prospectuses of such funds. To the extent a Fund invests
a portion of its assets in non-registered investment vehicles, the Fund’s interests in the non-registered vehicles are fair
valued at NAV.
With respect to a Fund’s assets invested directly in securities, the Fund’s investments are generally valued at current
market prices. Equity securities, options and futures are generally valued at the official closing price or, if none, the last
reported sales price on the primary exchange or market on which they are listed (closing price). Equity securities that
are not traded primarily on an exchange are generally valued at the quoted bid price obtained from a broker-dealer.
Debt securities are valued at the evaluated bid price provided by an independent pricing service or, if a reliable price is
not available, the quoted bid price from an independent broker-dealer.
We are required to depart from these general valuation methods and use fair value pricing methods to determine the
values of certain investments if we believe that the closing price or the quoted bid price of a security, including a
security that trades primarily on a foreign exchange, does not accurately reflect its current market value as of the time
a Fund calculates its NAV. The closing price or the quoted bid price of a security may not reflect its current market value
if, among other things, a significant event occurs after the closing price or quoted bid price are made available, but
before the time as of which a Fund calculates its NAV, that materially affects the value of the security. We use various
criteria, including a systemic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a
foreign security’s market price is still reliable and, if not, what fair market value to assign to the security. In addition, we
use fair value pricing to determine the value of investments in securities and other assets, including illiquid securities,
for which current market quotations or evaluated prices from a pricing service or broker-dealer are not readily
available.
The fair value of a Fund’s securities and other assets is determined in good faith pursuant to policies and procedures
adopted by the Fund’s Board of Trustees. In light of the judgment involved in making fair value decisions, there can be
no assurance that a fair value assigned to a particular security is accurate or that it reflects the price that the
Fund could obtain for such security if it were to sell the security at the time as of which fair value pricing is determined.
Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or quoted bid
price. See the Statement of Additional Information for additional details regarding the determination of NAVs.
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Wells Fargo Funds - Fixed Income Funds
Management of the Fund
The Manager
Wells Fargo Funds Management, LLC (“Funds Management”), headquartered at 525 Market Street, San Francisco, CA
94105, provides advisory and fund-level administrative services to the Fund pursuant to an investment management
agreement (the “Management Agreement”). Funds Management is a wholly owned subsidiary of Wells Fargo &
Company, a publicly traded diversified financial services company that provides banking, insurance, investment,
mortgage and consumer financial services. Funds Management is a registered investment adviser that provides
advisory services for registered mutual funds, closed-end funds and other funds and accounts. Funds Management is a
part of Wells Fargo Asset Management, the trade name used by the asset management businesses of Wells Fargo &
Company.
Funds Management is responsible for implementing the investment objectives and strategies of the Fund. Funds
Management’s investment professionals review and analyze the Fund’s performance, including relative to peer funds,
and monitor the Fund’s compliance with its investment objectives and strategies. Funds Management is responsible
for reporting to the Board on investment performance and other matters affecting the Fund. When appropriate, Funds
Management recommends to the Board enhancements to Fund features, including changes to Fund investment
objectives, strategies and policies. Funds Management also communicates with shareholders and intermediaries
about Fund performance and features.
Funds Management is also responsible for providing fund-level administrative services to the Fund, which include,
among others, providing such services in connection with the Fund’s operations; developing and implementing
procedures for monitoring compliance with regulatory requirements and compliance with the Fund’s investment
objectives, policies and restrictions; and providing any other fund-level administrative services reasonably necessary
for the operation of the Fund, other than those services that are provided by the Fund’s transfer and dividend
disbursing agent, custodian and fund accountant.
To assist Funds Management in implementing the investment objectives and strategies of the Fund, Funds
Management may contract with one or more sub-advisers to provide day-to-day portfolio management services to
the Fund. Funds Management employs a team of investment professionals who identify and recommend the initial
hiring of any sub-adviser and oversee and monitor the activities of any sub-adviser on an ongoing basis. Funds
Management retains overall responsibility for the investment activities of the Fund.
A discussion regarding the basis for the Board’s approval of the Management Agreement and any applicable
sub-advisory agreements for the Fund will be available in the Fund’s Annual report for the period ended September
30th.
Because the Fund has not commenced operations prior to the date of this Prospectus, the Fund has not yet paid
its management fee to Funds Management. As compensation for its services under the Management Agreement,
Funds Management is entitled to receive a monthly fee at the annual rates indicated below based on the Fund’s
average daily net assets:
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Fund
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Fee
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Global Investment Grade Credit Fund
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First $500M
Next $500M
Next $2B
Next $2B
Next $5B
Over $10B
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0.400%
0.375%
0.350%
0.325%
0.290%
0.280%
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Wells Fargo Funds - Fixed Income Funds
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The Sub-Adviser and Portfolio Managers
The following sub-advisers and portfolio managers provide day-to-day portfolio management services to the Fund.
These services include making purchases and sales of securities and other investment assets for the Fund, selecting
broker-dealers, negotiating brokerage commission rates and maintaining portfolio transaction records.
The sub-advisers are compensated for their services by Funds Management from the fees Funds Management receives
for its services as investment manager to the Fund. The Statement of Additional Information provides additional
information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and
the portfolio managers’ ownership of securities in the Fund.
Wells Fargo Asset Management (International) Limited
(“WFAM (International) Limited”), is a registered investment
adviser located at 33 King William Street, London, England, United Kingdom, EC4R 9AT. WFAM (International) Limited
provides investment advisory services to insurance companies, commercial bank treasury departments, central banks,
private banks, and corporate clients. WFAM (International) Limited is a part of Wells Fargo Asset Management, the
trade name used by the asset management businesses of Wells Fargo & Company.
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Henrietta Pacquement, CFA
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Ms. Pacquement joined WFAM (International) Limited in 2006, where she currently serves
as a Portfolio Manager.
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Alex Temple
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Mr. Temple joined WFAM (International) Limited in 2006, where he currently serves as a
Portfolio Manager.
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Wells Capital Management Incorporated
(“Wells Capital Management”) is a registered investment adviser located at
525 Market Street, San Francisco, CA 94105. Wells Capital Management, an affiliate of Funds Management and indirect
wholly owned subsidiary of Wells Fargo & Company, is a multi-boutique asset management firm committed to
delivering superior investment services to institutional clients, including mutual funds. Wells Capital Management is a
part of Wells Fargo Asset Management, the trade name used by the asset management businesses of Wells Fargo &
Company.
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Scott M. Smith, CFA
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Mr. Smith joined Wells Capital Management in 1988, where he currently serves as a
Managing Director, Senior Portfolio Manager and Head for the Multi Sector Fixed Income –
Investment Grade team.
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Jonathan Terry, CFA
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Mr. Terry joined Wells Capital Management in 2007, where he currently serves as a Credit
Portfolio Manager.
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Multi-Manager Arrangement
The Fund and Funds Management have obtained an exemptive order from the SEC that permits Funds Management,
subject to Board approval, to select certain sub-advisers and enter into or amend sub-advisory agreements with them,
without obtaining shareholder approval. The SEC order extends to sub-advisers that are not otherwise affiliated with
Funds Management or the Fund , as well as sub-advisers that are wholly-owned subsidiaries of Funds Management or
of a company that wholly owns Funds Management (“Multi-Manager Sub-Advisers”).
Pursuant to the order, Funds Management, with Board approval, may hire or replace Multi-Manager Sub-Advisers for
each Fund that is eligible to rely on the order. Funds Management, subject to Board oversight, has the responsibility to
oversee Multi-Manager Sub-Advisers and to recommend their hiring, termination and replacement. If a new
sub-adviser is hired for a Fund pursuant to the order, the Fund is required to notify shareholders within 90 days.
The Fund is not required to disclose the individual fees that Funds Management pays to a Multi-Manager Sub-Adviser.
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Wells Fargo Funds - Fixed Income Funds
Account Information
Share Class Eligibility
Class R6 shares are generally available for employer sponsored retirement and benefit plans and through
intermediaries for the accounts of their customers to certain institutional and fee-based investors, and in each case,
only if a dealer agreement is in place with Wells Fargo Funds Distributor, LLC to offer Class R6 shares. The following
investors may purchase Class R6 shares:
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Employer sponsored retirement plans held in plan level or omnibus accounts, including but not limited to: 401(k)
plans, 457 plans, profit sharing and money purchase pension plans, defined benefit plans, target benefit plans and
non-qualified deferred compensation plans;
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Employee benefit plan programs;
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Broker-dealer managed account or wrap programs that charge an asset-based fee where omnibus accounts are held
on the books of the Fund;
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Registered investment adviser mutual fund wrap programs or other accounts that charge a fee for advisory,
investment, consulting or similar services where omnibus accounts are held on the books of the Fund;
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Private bank and trust company managed accounts or wrap programs that charge an asset-based fee;
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Funds of funds, including those advised by Funds Management;
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Institutional investors purchasing shares through an intermediary where omnibus accounts are held on the books of
the Fund including trust departments, insurance companies, foundations, local, city, and state governmental
institutions, private banks, endowments, non-profits, and charitable organizations.
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The information in this Prospectus is not intended for distribution to, or use by, any person or entity in any non-U.S.
jurisdiction or country where such distribution or use would be contrary to any law or regulation, or which would
subject Fund shares to any registration requirement within such jurisdiction or country.
Share Class Features
The table below summarizes the key features of the share class offered through this Prospectus.
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Class R6
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Initial Sales Charge
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None
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Contingent Deferred Sales Charge (CDSC)
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None
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Ongoing Distribution (12b-1) Fees
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None
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Compensation to Financial Professionals and Intermediaries
No compensation is paid to intermediaries from Fund assets on sales of Class R6 shares or for related services. Class R6
shares do not carry sales commissions or pay Rule 12b-1 fees, or make payments to intermediaries to assist in, or in
connection with, the sale of Fund shares. Neither Funds Management, the WFFD nor their affiliates make any type of
administrative or service payments to intermediaries in connection with investments in Class R6 shares.
Buying and Selling Fund Shares
Eligible retirement plans may make Class R6 shares available to plan participants by contacting certain intermediaries
that have dealer agreements with WFFD. These entities may impose transaction charges. Plan participants may
purchase shares through their retirement plan’s administrator or record-keeper by following the process outlined in
the terms of their plan.
Redemption requests received by a retirement plan’s administrator or record-keeper from the plan’s participants will
be processed according to the terms of the plan’s account with its intermediary. Plan participants should follow the
process for selling fund shares outlined in the terms of their plan.
Requests in “Good Order”.
All purchase and redemption requests must be received in “good order.” This means that a
request generally must include:
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The Fund name(s), share class(es) and account number(s);
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Wells Fargo Funds - Fixed Income Funds
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The amount (in dollars or shares) and type (purchase or redemption) of the request;
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For purchase requests, payment of the full amount of the purchase request; and
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Any supporting legal documentation that may be required.
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Purchase and redemption requests in good order will be processed at the next NAV calculated after the Fund’s transfer
agent or an authorized intermediary
1
receives your request. If your request is not received in good order, additional
documentation may be required to process your transaction. We reserve the right to waive any of the above
requirements.
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1.
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The Fund’s shares may be purchased through an intermediary that has entered into a dealer agreement with the Fund’s distributor. The Fund has
approved the acceptance of a purchase or redemption request effective as of the time of its receipt by such an authorized intermediary or its
designee, as long as the request is received by one of those entities prior to the Fund’s closing time. These intermediaries may charge transaction fees.
We reserve the right to adjust the closing time in certain circumstances.
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Timing of Redemption Proceeds.
We normally will send out redemption proceeds within one business day after we
accept your request to redeem. We reserve the right to delay payment for up to seven days. Payment of redemption
proceeds may be delayed for longer than seven days under extraordinary circumstances or as permitted by the SEC in
order to protect remaining shareholders. Such extraordinary circumstances are discussed further in the Statement of
Additional Information.
Exchanging Fund Shares
Exchanges between two funds involve two transactions: (1) the redemption of shares of one fund; and (2) the
purchase of shares of another. In general, the same rules and procedures described under “Buying and Selling Fund
Shares” apply to exchanges. There are, however, additional policies and considerations you should keep in mind while
making or considering an exchange:
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In general, exchanges may be made between like share classes of any fund in the Wells Fargo Funds complex offered
to the general public for investment (i.e., a fund not closed to new accounts), with the following exceptions: (1) Class
A shares of non-money market funds may also be exchanged for Service Class shares of any retail or government
money market fund; (2) Service Class shares may be exchanged for Class A shares of any non-money market fund;
and (3) no exchanges are allowed into institutional money market funds.
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If you make an exchange between Class A shares of a money market fund and Class A shares of a non-money market
fund, you will buy the shares at the public offering price of the new fund, unless you are otherwise eligible to buy
shares at NAV.
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Same-fund exchanges between share classes are permitted subject to the following conditions: (1) the shareholder
must meet the eligibility guidelines of the class being purchased in the exchange; (2) exchanges out of Class A and
Class C shares would not be allowed if shares are subject to a CDSC; and (3) for non-money market funds, in order to
exchange into Class A shares, the shareholder must be able to qualify to purchase Class A shares at NAV based on
current Prospectus guidelines.
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An exchange request will be processed on the same business day, provided that both funds are open at the time the
request is received. If one or both funds are closed, the exchange will be processed on the following business day.
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You should carefully read the Prospectus for the Fund into which you wish to exchange.
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Every exchange involves redeeming fund shares, which may produce a capital gain or loss for tax purposes.
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If you are making an initial investment into a fund through an exchange, you must exchange at least the minimum
initial investment amount for the new fund, unless your balance has fallen below that amount due to investment
performance.
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If you are making an additional investment into a fund that you already own through an exchange, you must
exchange at least the minimum subsequent investment amount for the fund you are exchanging into.
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Class C share exchanges will not trigger a CDSC. The new shares received in the exchange will continue to age
according to the original shares’ CDSC schedule and will be charged the CDSC applicable to the original shares upon
redemption.
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Generally, we will notify you at least 60 days in advance of any changes in the above exchange policies.
15
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Wells Fargo Funds - Fixed Income Funds
Frequent Purchases and Redemptions of Fund Shares
Wells Fargo Funds reserves the right to reject any purchase or exchange order for any reason. Purchases or exchanges
that a Fund determines could harm the Fund may be rejected.
Excessive trading by Fund shareholders can negatively impact a Fund and its long-term shareholders in several ways,
including disrupting Fund investment strategies, increasing transaction costs, decreasing tax efficiency, and diluting
the value of shares held by long-term shareholders. Excessive trading in Fund shares can negatively impact a Fund’s
long-term performance by requiring it to maintain more assets in cash or to liquidate portfolio holdings at a
disadvantageous time. Certain Funds may be more susceptible than others to these negative effects. For example,
Funds that have a greater percentage of their investments in non-U.S. securities may be more susceptible than other
Funds to arbitrage opportunities resulting from pricing variations due to time zone differences across international
financial markets. Similarly, Funds that have a greater percentage of their investments in small company securities may
be more susceptible than other Funds to arbitrage opportunities due to the less liquid nature of small company
securities. Both types of Funds also may incur higher transaction costs in liquidating portfolio holdings to meet
excessive redemption levels. Fair value pricing may reduce these arbitrage opportunities, thereby reducing some of
the negative effects of excessive trading.
Wells Fargo Funds, other than the Adjustable Rate Government Fund, Conservative Income Fund, Ultra
Short-Term Income Fund and Ultra Short-Term Municipal Income Fund (“Ultra-Short Funds”) and the money
market funds, (the “Covered Funds”).
The Covered Funds are not designed to serve as vehicles for frequent trading.
The Covered Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on
long-term shareholders that can result from excessive trading activity by Covered Fund shareholders. The Board has
approved the Covered Funds’ policies and procedures, which provide, among other things, that Funds Management
may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a
Covered Fund by increasing expenses or lowering returns. In this regard, the Covered Funds take steps to avoid
accommodating frequent purchases and redemptions of shares by Covered Fund shareholders. Funds Management
monitors available shareholder trading information across all Covered Funds on a daily basis. If a shareholder redeems
$5,000 or more (including redemptions that are part of an exchange transaction) from a Covered Fund, that
shareholder is “blocked” from purchasing shares of that Covered Fund (including purchases that are part of an
exchange transaction) for 30 calendar days after the redemption. This policy does not apply to:
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Dividend reinvestments;
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Systematic investments or exchanges where the financial intermediary maintaining the shareholder account
identifies the transaction as a systematic redemption or purchase at the time of the transaction;
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Rebalancing transactions within certain asset allocation or “wrap” programs where the financial intermediary
maintaining a shareholder account is able to identify the transaction as part of an asset allocation program approved
by Funds Management;
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Transactions initiated by a “fund of funds” or Section 529 Plan into an underlying fund investment;
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Permitted exchanges between share classes of the same Fund;
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Certain transactions involving participants in employer-sponsored retirement plans, including: participant
withdrawals due to mandatory distributions, rollovers and hardships, withdrawals of shares acquired by participants
through payroll deductions, and shares acquired or sold by a participant in connection with plan loans; and
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Purchases below $5,000 (including purchases that are part of an exchange transaction).
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The money market funds and the Ultra-Short Funds.
Because the money market funds and Ultra-Short Funds are
often used for short-term investments, they are designed to accommodate more frequent purchases and redemptions
than the Covered Funds. As a result, the money market funds and Ultra-Short Funds do not anticipate that frequent
purchases and redemptions, under normal circumstances, will have significant adverse consequences to the money
market funds or Ultra-Short Funds or their shareholders. Although the money market funds and Ultra-Short Funds do
not prohibit frequent trading, Funds Management will seek to prevent an investor from utilizing the money market
funds and Ultra-Short Funds to facilitate frequent purchases and redemptions of shares in the Covered Funds in
contravention of the policies and procedures adopted by the Covered Funds.
All Wells Fargo Funds
.
In addition, Funds Management reserves the right to accept purchases, redemptions and
exchanges made in excess of applicable trading restrictions in designated accounts held by Funds Management or its
affiliate that are used at all times exclusively for addressing operational matters related to shareholder accounts, such
Wells Fargo Funds - Fixed Income Funds
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16
as testing of account functions, and are maintained at low balances that do not exceed specified dollar amount
limitations.
In the event that an asset allocation or “wrap” program is unable to implement the policy outlined above, Funds
Management may grant a program-level exception to this policy. A financial intermediary relying on the exception is
required to provide Funds Management with specific information regarding its program and ongoing information
about its program upon request.
A financial intermediary through whom you may purchase shares of the Fund may independently attempt to identify
excessive trading and take steps to deter such activity. As a result, a financial intermediary may on its own limit or
permit trading activity of its customers who invest in Fund shares using standards different from the standards used by
Funds Management and discussed in this Prospectus. Funds Management may permit a financial intermediary to
enforce its own internal policies and procedures concerning frequent trading rather than the policies set forth above
in instances where Funds Management reasonably believes that the intermediary’s policies and procedures effectively
discourage disruptive trading activity. If you purchase Fund shares through a financial intermediary, you should
contact the intermediary for more information about whether and how restrictions or limitations on trading activity
will be applied to your account.
Account Policies
Advance Notice of Large Transactions.
We strongly urge you to make all purchases and redemptions of Fund shares
as early in the day as possible and to notify us or your intermediary at least one day in advance of transactions in Fund
shares in excess of $1 million. This will help us to manage the Funds most effectively. When you give this advance
notice, please provide your name and account number.
Householding.
To help keep Fund expenses low, a single copy of a Prospectus or shareholder report may be sent to
shareholders of the same household. If your household currently receives a single copy of a Prospectus or shareholder
report and you would prefer to receive multiple copies, please call Investor Services at 1-800-222-8222 or contact your
intermediary.
Transaction Authorizations.
We may accept telephone, electronic, and clearing agency transaction instructions from
anyone who represents that he or she is a shareholder and provides reasonable confirmation of his or her identity.
Neither we nor Wells Fargo Funds will be liable for any losses incurred if we follow such instructions we reasonably
believe to be genuine. For transactions through our website, we may assign personal identification numbers (PINs) and
you will need to create a login ID and password for account access. To safeguard your account, please keep these
credentials confidential. Contact us immediately if you believe there is a discrepancy on your confirmation statement
or if you believe someone has obtained unauthorized access to your online access credentials.
Identity Verification.
We are required by law to obtain from you certain personal information that will be used to
verify your identity. If you do not provide the information, we will not be able to open your account. In the rare event
that we are unable to verify your identity as required by law, we reserve the right to redeem your account at the
current NAV of the Fund’s shares. You will be responsible for any losses, taxes, expenses, fees, or other results of such a
redemption.
Right to Freeze Accounts, Suspend Account Services or Reject or Terminate an Investment.
We reserve the right,
to the extent permitted by law and/or regulations, to freeze any account or suspend account services when we have
received reasonable notice (written or otherwise) of a dispute between registered or beneficial account owners or
when we believe a fraudulent transaction may occur or has occurred. Additionally, we reserve the right to reject any
purchase or exchange request and to terminate a shareholder’s investment, including closing the shareholder’s
account.
Distributions
The Fund generally makes distributions of any net investment income monthly. The amount distributed in any given
period may be less than the amount earned in that period or more than the amount earned in that period, if it includes
amounts earned in a previous period that were retained for later distribution. The Fund makes and any realized net
capital gains at least annually. Please contact your institution for distribution options. Please note, distributions have
the effect of reducing the NAV per share by the amount distributed.
17
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Wells Fargo Funds - Fixed Income Funds
You are eligible to earn distributions beginning on the business day after the Fund’s transfer agent or an authorized
intermediary receives your purchase request in good order.
Other Information
Taxes
The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this
Prospectus and summarizes only some of the important federal income tax considerations affecting the Fund and you
as a shareholder. It does not apply to foreign or tax-exempt shareholders or those holding Fund shares through a
tax-advantaged account, such as a 401(k) Plan or IRA. This discussion is not intended as a substitute for careful tax
planning. You should consult your tax adviser about your specific tax situation. Please see the Statement of Additional
Information for additional federal income tax information.
The Fund elected to be treated, and intends to qualify each year, as a regulated investment company (“RIC”). A RIC is
not subject to tax at the corporate level on income and gains from investments that are distributed in a timely manner
to shareholders. However, the Fund’s failure to qualify as a RIC would result in corporate level taxation, and
consequently, a reduction in income available for distribution to you as a shareholder.
We will pass on to a Fund’s shareholders substantially all of the Fund’s net investment income and realized net capital
gains, if any. Distributions from a Fund’s ordinary income and net short-term capital gains, if any, generally will be
taxable to you as ordinary income. Distributions from a Fund’s net long-term capital gains, if any, generally will be
taxable to you as long-term capital gains. If you are an individual and meet certain holding period requirements with
respect to your Fund shares, you may be eligible for reduced tax rates on qualified dividend income, if any, distributed
by the Fund.
Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income.
Individual taxpayers are subject to a maximum tax rate of 37% on ordinary income and a maximum tax rate on
long-term capital gains and qualified dividends of 20%. For U.S. individuals with income exceeding $200,000 ($250,000
if married and filing jointly), a 3.8% Medicare contribution tax will apply on “net investment income,” including interest,
dividends, and capital gains. Corporations are subject to tax on all income and gains at a maximum tax rate of 21%.
However, a RIC is not subject to tax at the corporate level on income and gains from investments that are distributed in
a timely manner to shareholders.
Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or
automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal
income tax status of your distributions for the year.
If you buy shares of a Fund shortly before it makes a taxable distribution, your distribution will, in effect, be a taxable
return of part of your investment. Similarly, if you buy shares of a Fund when it holds appreciated securities, you will
receive a taxable return of part of your investment if and when the Fund sells the appreciated securities and distributes
the gain. The Fund has built up, or has the potential to build up, high levels of unrealized appreciation.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares ordinarily will result in a taxable
capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be
long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the
time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund
shares may be disallowed.
When you receive a distribution from a Fund or redeem shares, you may be subject to backup withholding.
Financial Highlights
Since the Fund commenced operations on or around the date of this Prospectus, financial highlights are not available
for the Fund.
Wells Fargo Funds - Fixed Income Funds
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18
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FOR MORE INFORMATION
More information on a Fund is available free upon request,
including the following documents:
Statement of Additional Information (“SAI”)
Supplements the disclosures made by this Prospectus.
The SAI, which has been filed with the SEC, is
incorporated by reference into this Prospectus and
therefore is legally part of this Prospectus.
Annual/Semi-Annual Reports
Provide financial and other important information,
including a discussion of the market conditions
and investment strategies that significantly affected
Fund performance over the reporting period.
To obtain copies of the above documents or for more
information about Wells Fargo Funds, contact us:
By telephone:
Individual Investors: 1-800-222-8222
Retail Investment Professionals: 1-888-877-9275
Institutional Investment Professionals: 1-800-260-5969
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By mail:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Online:
wellsfargofunds.com
From the SEC:
Visit the SEC’s Public Reference Room in Washington,
DC (phone 1-202-551-8090 for operational
information for the SEC’s Public Reference Room) or
the SEC’s website at sec.gov.
To obtain information for a fee, write or email:
SEC’s Public Reference Section
100 “F” Street, NE
Washington, DC 20549-0102
publicinfo@sec.gov
The Wells Fargo Funds are distributed by
Wells Fargo Funds Distributor, LLC, a member of FINRA,
and an affiliate of Wells Fargo & Company.
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© 2019 Wells Fargo Funds Management, LLC. All rights reserved
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039IF6R/P1007RG
ICA Reg. No. 811-09253
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SUPPLEMENT TO THE
INSTITUTIONAL CLASS AND CLASS R6 PROSPECTUSES
OF
WELLS FARGO ALTERNATIVE FUNDS
WELLS FARGO FIXED INCOME FUNDS
WELLS FARGO INTERNATIONAL AND GLOBAL EQUITY FUNDS
WELLS FARGO MULTI-ASSET FUNDS
WELLS FARGO MUNICIPAL FIXED INCOME FUNDS
WELLS FARGO SPECIALTY FUNDS
WELLS FARGO TARGET DATE RETIREMENT FUNDS
WELLS FARGO U.S. EQUITY FUNDS
(each a “Fund”, together the “Funds”)
Effective on or around March 31, 2019, sections entitled “Share Class Eligibility” and “Share Class Features” are amended
to add the following information:
I.
Share Class Eligibility
The following bullet point is added to the end of the section:
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Investors purchasing shares through an intermediary, acting solely as a broker on behalf of its customers, that holds
such shares in an omnibus account and charges investors a transaction based commission outside of the Fund. In
order to offer Fund shares, an intermediary must have an agreement with the Fund’s distributor authorizing the use
of the share class within this type of platform.
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II.
Share Class Features
The introductory paragraph will be deleted and replaced with the following:
The table below summarizes the key features of the share class offered through this Prospectus. Please note that if you
purchase shares through an intermediary that acts as a broker on your behalf, you may be required to pay a
commission to your intermediary in an amount determined and separately disclosed to you by the intermediary.
Consult your financial professional for further details.
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December 21, 2018
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IFIT128/P1004SP
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Prospectus
March 1, 2019
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Fund
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Institutional Class
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Wells Fargo Global Investment Grade Credit Fund
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WGCIX
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Beginning on January 1, 2021, as permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the
Wells Fargo Funds’ annual and semi-annual shareholder reports issued after this date will no longer be sent by mail, unless you
specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, and you will be notified
by mail each time a report is posted and provided with a website address to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any
action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting
your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-222-8222 or by enrolling at
wellsfargo.com/advantagedelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your
financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with the
Fund, you can call 1-800-222-8222. Your election to receive reports in paper will apply to all Wells Fargo Funds held in your account with
your financial intermediary or, if you are a direct investor, to all Wells Fargo Funds that you hold.
As with all mutual funds, the U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon
the accuracy or adequacy of this Prospectus. Anyone who tells you otherwise is committing a crime.
Fund shares are NOT deposits or other obligations of, or guaranteed by, Wells Fargo Bank, N.A., its affiliates or any other depository institution.
Fund shares are not insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation or any other government agency
and may lose value.
Global Investment Grade Credit Fund Summary
Investment Objective
The Fund seeks total return, consisting of income and capital appreciation.
Fees and Expenses
These tables are intended to help you understand the various costs and expenses you will pay if you buy and hold
shares of the Fund.
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Shareholder Fees (fees paid directly from your investment)
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Maximum sales charge (load) imposed on purchases (as a percentage of offering price)
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None
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Maximum deferred sales charge (load) (as a percentage of offering price)
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None
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Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
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Management Fees
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0.40%
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Distribution (12b-1) Fees
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0.00%
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Other Expenses
1
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0.28%
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Total Annual Fund Operating Expenses
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0.68%
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Fee Waivers
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(0.18)%
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Total Annual Fund Operating Expenses After Fee Waivers
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0.50%
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1.
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Expenses are based on estimated amounts for the current fiscal year.
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2.
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The Manager has contractually committed through March 31, 2020, 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 the amounts shown above. Brokerage commissions, stamp duty fees, interest,
taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment
expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees.
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Example of Expenses
The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in
other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that fees and
expenses remain the same as in the tables above. To the extent that the Manager is waiving fees or reimbursing
expenses, the example assumes that such waiver or reimbursement will only be in place through the date noted
above. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
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After:
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1 Year
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$51
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3 Years
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$200
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares
are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. Since the Fund commenced operations on or around the date of this
Prospectus, no history of the portfolio turnover rate is available.
Wells Fargo Funds - Fixed Income Funds
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2
Principal Investment Strategies
Under normal circumstances, we invest:
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at least 80% of the Fund’s net assets in a diversified portfolio of investment grade credit debt securities issued by
U.S. or foreign (including emerging markets) corporate issuers
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up to 20% of net assets in debt securities rated below investment grade (i.e., junk bonds), as well as agencies,
Supranationals, taxable municipal bonds, sovereign bonds, and asset-backed securities including mortgage-backed
securities.
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Under normal circumstances, the Fund will invest in at least three different countries, including the U.S., and will invest
at least 40% of its net assets, as determined in our reasonable discretion, in issuers that maintain their principal place
of business or conduct their principal business activities outside the U.S. From time to time, the Fund may be below
this 40% level (but is not expected to fall below 30%) if the portfolio managers, in their discretion, determine that
market conditions warrant such lower level of investment. While the Fund may purchase securities of any
denomination, under normal circumstances the Fund expects to hedge all non-U.S. currency exposure to the U.S.
dollar.
We define investment grade securities to have received a rating of investment grade at the time of purchase from an
internationally recognized statistical ratings organization (i.e., Baa- or higher by Moody’s, BBB- or higher by Standard &
Poor’s or BBB- or higher by Fitch). We do not manage the Fund’s portfolio to a specific maturity or duration.
We may also use, for hedging or to enhance returns, interest rate swap agreements and futures to tailor interest rate
positioning, forward contracts and currency basis swap agreements to hedge currency exposure, or credit default
swap agreements to hedge credit exposure.
We focus on bottom-up credit research with a focus on well-underwritten credits and relative value. Elements of this
evaluation may include duration measurements, historical yield spread relationships, volatility trends, mortgage
refinance rates, as well as other factors. We may sell a security due to changes in our outlook, as well as changes in
portfolio strategy or cash flow needs. A security may also be sold and replaced with one that presents a better value or
risk/reward profile.
Principal Investment Risks
An investment in the Fund may lose money, is not a deposit of Wells Fargo Bank, N.A. or its affiliates, is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency, and is primarily subject
to the risks (in alphabetical order) briefly summarized below.
Credit Risk.
The issuer or guarantor of a debt security may be unable or perceived to be unable to pay interest or
repay principal when they become due, which could cause the value of an investment to decline and a Fund to lose
money.
Derivatives Risk.
The use of derivatives, such as futures, options and swap agreements, can lead to losses, including
those magnified by leverage, particularly when derivatives are used to enhance return rather than mitigate risk.
Certain derivative instruments may be difficult to sell when the portfolio manager believes it would be appropriate to
do so, or the other party to a derivative contract may be unwilling or unable to fulfill its contractual obligations.
Emerging Markets Risk.
Emerging market securities typically present even greater exposure to the risks described
under “Foreign Investment Risk” and may be particularly sensitive to global economic conditions. Emerging market
securities are also typically less liquid than securities of developed countries and could be difficult to sell, particularly
during a market downturn.
Foreign Currency Contracts Risk
. A Fund that enters into forwards or other foreign currency contracts, which are a
type of derivative, is subject to the risk that the portfolio manager may be incorrect in his or her judgment of future
exchange rate changes.
Foreign Investment Risk.
Foreign investments may be subject to lower liquidity, greater price volatility and risks
related to adverse political, regulatory, market or economic developments. Foreign investments may involve exposure
to changes in foreign currency exchange rates and may be subject to higher withholding and other taxes.
Futures Contracts Risk.
A Fund that uses futures contracts, which are a type of derivative, is subject to the risk of loss
caused by unanticipated market movements. In addition, there may at times be an imperfect correlation between the
movement in the prices of futures contracts and the value of their underlying instruments or indexes, and there may at
times not be a liquid secondary market for certain futures contracts.
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Wells Fargo Funds - Fixed Income Funds
High Yield Securities Risk
. High yield securities and unrated securities of similar credit quality (commonly known as
“junk bonds”) have a much greater risk of default or of not returning principal and their values tend to be more volatile
than higher-rated securities with similar maturities.
Interest Rate Risk.
When interest rates rise, the value of debt securities tends to fall. When interest rates decline,
interest that a Fund is able to earn on its investments in debt securities may also decline, but the value of those
securities may increase.
Management Risk.
Investment decisions, techniques, analyses or models implemented by a Fund’s manager or
sub-adviser in seeking to achieve the Fund’s investment objective may not produce expected returns, may cause the
Fund’s shares to lose value or may cause the Fund to underperform other funds with similar investment objectives.
Market Risk.
The values of, and/or the income generated by, securities held by a Fund may decline due to general
market conditions or other factors, including those directly involving the issuers of such securities. Securities markets
are volatile and may decline significantly in response to adverse issuer, regulatory, political, or economic
developments. Different sectors of the market and different security types may react differently to such developments.
Mortgage- and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities may decline in value and
become less liquid when defaults on the underlying mortgages or assets occur and may exhibit additional volatility in
periods of rising interest rates. Rising interest rates tend to extend the duration of these securities, making them more
sensitive to changes in interest rates than instruments with fixed payment schedules. When interest rates decline or
are low, the prepayment of mortgages or assets underlying such securities can reduce a Fund’s returns.
Municipal Securities Risk.
Municipal securities may be fully or partially backed or enhanced by the taxing authority of
a local government, by the current or anticipated revenues from a specific project or specific assets, or by the credit of,
or liquidity enhancement provided by, a private issuer. Various types of municipal securities are often related in such a
way that political, economic or business developments affecting one obligation could affect other municipal securities
held by a Fund.
New Fund Risk.
The Fund is a new fund, with a limited or no operating history and a small asset base. There can be no
assurance that the Fund will grow to or maintain a viable size. Due to the Fund’s small asset base, certain of the Fund’s
expenses and its portfolio transaction costs may be higher than those of a fund with a larger asset base. To the extent
that the Fund does not grow to or maintain a viable size, it may be liquidated, and the expenses, timing and tax
consequences of such liquidation may not be favorable to some shareholders.
Regulatory Risk.
Pursuant to section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
certain rules promulgated thereunder (collectively known as the “Volcker Rule”), if the Manager and/or its affiliates
own 25% or more of the outstanding shares of the Fund more than three years after the Fund’s inception date (or such
longer period as may be permitted by the Federal Reserve), the Fund will be subject to restrictions on trading that will
adversely impact the Fund’s ability to execute its investment strategy. Should this occur, the Fund may decide to
liquidate, or the Manager and/or its affiliates may be required to reduce their ownership interests in the Fund, either of
which may result in gains or losses, increased transaction costs and adverse tax consequences.
Swaps Risk
. Depending on their structure, swap agreements and options to enter into swap agreements
(“swaptions”), both of which are types of derivatives, may increase or decrease a Fund’s exposure to long- or short-term
interest rates, foreign currency values, mortgage-backed securities, corporate borrowing rates, or credit events or
other reference points such as security prices or inflation rates.
U.S. Government Obligations Risk.
U.S. Government obligations may be adversely impacted by changes in interest
rates, and securities issued or guaranteed by U.S. Government agencies or government-sponsored entities may not be
backed by the full faith and credit of the U.S. Government.
Performance
Because the Fund does not have annual returns for at least one calendar year, there is no performance to report.
Wells Fargo Funds - Fixed Income Funds
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4
Fund Management
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Manager
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Sub-Adviser
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Portfolio Manager, Title/Managed Since
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Wells Fargo Funds Management,
LLC
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Wells Fargo Asset Management
(International) Limited
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Henrietta Paquement, CFA,
Portfolio
Manager / 2019
Alex Temple,
Portfolio Manager / 2019
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Wells Capital Management Incorporated
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Scott M. Smith, CFA,
Portfolio Manager /
2019
Jonathan Terry, CFA,
Portfolio Manager /
2019
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Purchase and Sale of Fund Shares
Institutional Class shares are generally available through intermediaries for the accounts of their customers and
directly to institutional investors and individuals. Institutional investors may include corporations; private banks and
trust companies; endowments and foundations; defined contribution, defined benefit and other employer sponsored
retirement plans; institutional retirement plan platforms; insurance companies; registered investment advisor firms;
bank trusts; 529 college savings plans; family offices; and funds of funds, including those managed by Funds
Management. In general, you can buy or sell shares of the Fund online or by mail, phone or wire, on any day the New
York Stock Exchange (“NYSE”) is open for regular trading. You also may buy and sell shares through a financial
professional.
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Minimum Investments
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To Buy or Sell Shares
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Minimum Initial Investment
Institutional Class: $1 million (this amount may be reduced or
eliminated for certain eligible investors)
Minimum Additional Investment
Institutional Class: None
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Mail:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Online:
wellsfargofunds.com
Phone or Wire:
1-800-222-8222
Contact your financial professional.
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Tax Information
Any distributions you receive from the Fund may be taxable as ordinary income or capital gains, except when your
investment is in an IRA, 401(k) or other tax-advantaged investment plan. However, subsequent withdrawals from such
a tax-advantaged investment plan may be subject to federal income tax. You should consult your tax adviser about
your specific tax situation.
Payments to Intermediaries
If you purchase a Fund through an intermediary, the Fund and its related companies may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict of interest by influencing the
intermediary and your financial professional to recommend the Fund over another investment. Consult your financial
professional or visit your intermediary’s website for more information.
5
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Wells Fargo Funds - Fixed Income Funds
Details About the Fund
Global Investment Grade Credit Fund
Investment Objective
The Fund seeks total return, consisting of income and capital appreciation.
The Fund’s Board of Trustees can change this investment objective without a shareholder vote.
Principal Investment Strategies
Under normal circumstances, we invest:
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at least 80% of the Fund’s net assets in a diversified portfolio of investment grade credit debt securities issued by
U.S. or foreign (including emerging markets) corporate issuers
|
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■
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up to 20% of net assets in debt securities rated below investment grade (i.e., junk bonds), as well as agencies,
Supranationals, taxable municipal bonds, sovereign bonds, and asset-backed securities including mortgage-backed
securities.
|
Under normal circumstances, the Fund will invest in at least three different countries, including the U.S., and will invest
at least 40% of its net assets, as determined in our reasonable discretion, in issuers that maintain their principal place
of business or conduct their principal business activities outside the U.S. From time to time, the Fund may be below
this 40% level (but is not expected to fall below 30%) if the portfolio managers, in their discretion, determine that
market conditions warrant such lower level of investment. While the Fund may purchase securities of any
denomination, under normal circumstances the Fund expects to hedge all non-U.S. currency exposure to the U.S.
dollar.
We define investment grade securities to have received a rating of investment grade at the time of purchase from an
internationally recognized statistical ratings organization (i.e., Baa- or higher by Moody’s, BBB- or higher by Standard &
Poor’s or BBB- or higher by Fitch). We do not manage the Fund’s portfolio to a specific maturity or duration.
We may also use, for hedging or to enhance returns, interest rate swap agreements and futures to tailor interest rate
positioning, forward contracts and currency basis swap agreements to hedge currency exposure, or credit default
swap agreements to hedge credit exposure.
We focus on bottom-up credit research with a focus on well-underwritten credits and relative value. Elements of this
evaluation may include duration measurements, historical yield spread relationships, volatility trends, mortgage
refinance rates, as well as other factors. We may sell a security due to changes in our outlook, as well as changes in
portfolio strategy or cash flow needs. A security may also be sold and replaced with one that presents a better value or
risk/reward profile.
We may actively trade portfolio securities, which may lead to higher transaction costs that may affect the Fund’s
performance. In addition, active trading of portfolio securities may lead to higher taxes if your shares are held in a
taxable account.
The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations,
shares of other mutual funds and repurchase agreements, or make other short-term investments for purposes of
maintaining liquidity or for short-term defensive purposes when we believe it is in the best interests of the
shareholders to do so. During such periods, the Fund may not achieve its objective.
Wells Fargo Funds - Fixed Income Funds
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6
Principal Investment Risks
The Fund is primarily subject to the risks mentioned below (in alphabetical order).
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Credit Risk
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Derivatives Risk
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Emerging Markets Risk
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Foreign Currency Contracts Risk
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Foreign Investment Risk
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Futures Contracts Risk
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High Yield Securities Risk
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Interest Rate Risk
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Management Risk
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Market Risk
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Mortgage- and Asset-Backed Securities Risk
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Municipal Securities Risk
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New Fund Risk
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Regulatory Risk
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Swaps Risk
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U.S. Government Obligations Risk
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These and other risks could cause you to lose money in your investment in the Fund and could adversely affect the
Fund’s net asset value and total return. These risks are described in the “Description of Principal Investment Risks”
section.
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Wells Fargo Funds - Fixed Income Funds
Description of Principal Investment Risks
Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into
account your risk tolerance and preferences. The risks that are most likely to have a material effect on a particular
Fund as a whole are called “principal risks.” The principal risks for the Fund have been previously identified and are
described below. Additional information about the principal risks is included in the Statement of Additional
Information.
Credit Risk.
The issuer or guarantor of a debt security may be unable or perceived to be unable to pay interest or
repay principal when they become due. In these instances, the value of an investment could decline and the Fund
could lose money. Credit risk increases as an issuer’s credit quality declines.
Derivatives Risk.
The use of derivatives, such as futures, options and swap agreements, presents risks different from,
and possibly greater than, the risks associated with investing directly in traditional securities. The use of derivatives can
lead to losses because of adverse movements in the price or value of the derivatives’ underlying assets, indexes or
rates and the derivatives themselves, which may be magnified by certain features of the derivatives. These risks are
heightened when derivatives are used to enhance a Fund’s return or as a substitute for a position or security, rather
than solely to hedge (or mitigate) the risk of a position or security held by the Fund. The success of a derivative
strategy will be affected by the portfolio manager’s ability to assess and predict market or economic developments
and their impact on the derivatives’ underlying assets, indexes or reference rates, as well as the derivatives themselves.
Certain derivative instruments may become illiquid and, as a result, may be difficult to sell when the portfolio manager
believes it would be appropriate to do so. Certain derivatives create leverage, which can magnify the impact of a
decline in the value of their underlying assets, indexes or reference rates, and increase the volatility of the Fund’s net
asset value. Certain derivatives (e.g., over-the-counter swaps) are also subject to the risk that the counterparty to the
derivative contract will be unwilling or unable to fulfill its contractual obligations, which may cause a Fund to lose
money, suffer delays or incur costs arising from holding or selling an underlying asset. Changes in laws or regulations
may make the use of derivatives more costly, may limit the availability of derivatives, or may otherwise adversely affect
the use, value or performance of derivatives.
Emerging Markets Risk.
Emerging market securities typically present even greater exposure to the risks described
under “Foreign Investment Risk” and may be particularly sensitive to global economic conditions. For example,
emerging market countries are typically more dependent on exports and are, therefore, more vulnerable to recessions
in other countries. Emerging markets tend to have less developed legal and financial systems and a smaller market
capitalization than markets in developed countries. Some emerging markets are subject to greater political instability.
Additionally, emerging markets may have more volatile currencies and be more sensitive than developed markets to a
variety of economic factors, including inflation. Emerging market securities are also typically less liquid than securities
of developed countries and could be difficult to sell, particularly during a market downturn.
Foreign Currency Contracts Risk.
A Fund that enters into forwards or other foreign currency contracts, which are a
type of derivative, is subject to the risk that the portfolio manager may be incorrect in his or her judgment of future
exchange rate changes. The Fund’s gains from positions in foreign currency contracts may accelerate and/or lead to
recharacterization of the Fund’s income or gains and its distributions to shareholders. The Fund’s losses from such
positions may also lead to recharacterization of the Fund’s income and its distributions to shareholders and may cause
a return of capital to Fund shareholders.
Foreign Investment Risk.
Foreign investments may be subject to lower liquidity, greater price volatility and risks
related to adverse political, regulatory, market or economic developments. Foreign companies may be subject to
significantly higher levels of taxation than U.S. companies, including potentially confiscatory levels of taxation, thereby
reducing the earnings potential of such foreign companies. Foreign investments may involve exposure to changes in
foreign currency exchange rates. Such changes may reduce the U.S. dollar value of the investments. Foreign
investments may be subject to additional risks, such as potentially higher withholding and other taxes, and may also
be subject to greater trade settlement, custodial, and other operational risks than domestic investments. Certain
foreign markets may also be characterized by less stringent investor protection and disclosure standards.
Futures Contracts Risk.
A Fund that uses futures contracts, which are a type of derivative, is subject to the risk of loss
caused by unanticipated market movements. In addition, there may at times be an imperfect correlation between the
movement in the prices of futures contracts and the value of their underlying instruments or indexes, and there may at
times not be a liquid secondary market for certain futures contracts.
High Yield Securities Risk.
High yield securities and unrated securities of similar credit quality (commonly known as
“junk bonds”) have a much greater risk of default (or in the case of bonds currently in default, of not returning
Wells Fargo Funds - Fixed Income Funds
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8
principal) and their values tend to be more volatile than higher-rated securities with similar maturities. Additionally,
these securities tend to be less liquid and more difficult to value than higher-rated securities.
Interest Rate Risk.
When interest rates rise, the value of debt securities tends to fall. The longer the terms of the debt
securities held by a Fund, the more the Fund is subject to this risk. If interest rates decline, interest that the Fund is able
to earn on its investments in debt securities may also decline, which could cause the Fund to reduce the dividends it
pays to shareholders, but the value of those securities may increase. Some debt securities give the issuers the option
to call, redeem or prepay the securities before their maturity dates. If an issuer calls, redeems or prepays a debt security
during a time of declining interest rates, the Fund might have to reinvest the proceeds in a security offering a lower
yield, and therefore might not benefit from any increase in value as a result of declining interest rates. Changes in
market conditions and government policies may lead to periods of heightened volatility in the debt securities market,
reduced liquidity for certain Fund investments and an increase in Fund redemptions. Interest rate changes and their
impact on the Fund and its share price can be sudden and unpredictable.
Management Risk.
Investment decisions, techniques, analyses or models implemented by a Fund’s manager or
sub-adviser in seeking to achieve the Fund’s investment objective may not produce the returns expected, may cause
the Fund’s shares to lose value or may cause the Fund to underperform other funds with similar investment objectives.
Market Risk.
The values of, and/or the income generated by, securities held by a Fund may decline due to general
market conditions or other factors, including those directly involving the issuers of such securities. Securities markets
are volatile and may decline significantly in response to adverse issuer, regulatory, political, or economic
developments. Different sectors of the market and different security types may react differently to such developments.
Mortgage- and Asset-Backed Securities Risk.
Mortgage- and asset-backed securities are subject to risk of default on
the underlying mortgages or assets, particularly during periods of economic downturn. Defaults on the underlying
mortgages or assets may cause such securities to decline in value and become less liquid. Rising interest rates tend to
extend the duration of these securities, making them more sensitive to changes in interest rates than instruments with
fixed payment schedules. As a result, in a period of rising interest rates, these securities may exhibit additional
volatility. When interest rates decline or are low, borrowers may pay off their mortgage or other debts sooner than
expected, which can reduce the returns of a Fund. Funds that may enter into mortgage dollar roll transactions are
subject to the risk that the market value of the securities that are required to be repurchased in the future may decline
below the agreed upon repurchase price. They also involve the risk that the party to whom the securities are sold may
become insolvent, limiting a Fund’s ability to repurchase securities at the agreed upon price.
Municipal Securities Risk.
Municipal securities may be fully or partially backed or enhanced by the taxing authority of
a local government, by the current or anticipated revenues from a specific project or specific assets, or by the credit of,
or liquidity enhancement provided by, a private issuer. Municipal securities may be difficult to obtain because of
limited supply, which may increase the cost to a Fund of purchasing such securities and effectively reduce the Fund’s
yield. Typically, less information is available about a municipal issuer than is available about other types of issuers.
Various types of municipal securities are often related in such a way that political, economic or business developments
affecting one obligation could affect other municipal securities held by the Fund. The value and liquidity of municipal
securities backed by the revenue from a particular project or other source may decline if the project or other source
fails to generate expected revenue. Although the Fund may strive to invest in municipal securities and other securities
that pay interest that is exempt from certain taxes (such as federal taxes, federal alternative minimum tax and/or state
taxes as applicable), some income earned by Fund investments may be subject to such taxes. Certain issuers of
municipal securities may have the ability to call or redeem a security prior to its maturity date, which could impair
Fund performance.
New Fund Risk.
The Fund is a new fund, with a limited or no operating history and a small asset base. There can be no
assurance that the Fund will grow to or maintain a viable size. Due to the Fund’s small asset base, certain of the Fund’s
expenses and its portfolio transaction costs may be higher than those of a fund with a larger asset base. To the extent
that the Fund does not grow to or maintain a viable size, it may be liquidated, and the expenses, timing and tax
consequences of such liquidation may not be favorable to some shareholders.
Regulatory Risk.
Pursuant to section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
certain rules promulgated thereunder (collectively known as the “Volcker Rule”), if the Manager and/or its affiliates
own 25% or more of the outstanding shares of the Fund more than three years after the Fund’s inception date (or such
longer period as may be permitted by the Federal Reserve), the Fund will be subject to restrictions on trading that will
adversely impact the Fund’s ability to execute its investment strategy. Should this occur, the Fund may decide to
liquidate, or the Manager and/or its affiliates may be required to reduce their ownership interests in the Fund, either of
which may result in gains or losses, increased transaction costs and adverse tax consequences.
9
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Wells Fargo Funds - Fixed Income Funds
Swaps Risk.
Depending on their structure, swap agreements and options to enter into swap agreements
(“swaptions”), both of which are types of derivatives, may increase or decrease a Fund’s exposure to long- or short-term
interest rates, foreign currency values, mortgage-backed securities, corporate borrowing rates, or credit events or
other reference points such as security prices or inflation rates.
U.S. Government Obligations Risk.
U.S. Government obligations may be adversely impacted by changes in interest
rates, and securities issued or guaranteed by U.S. Government agencies or government-sponsored entities may not be
backed by the full faith and credit of the U.S. Government. If a government-sponsored entity is unable to meet its
obligations or its creditworthiness declines, the performance of a Fund that holds securities issued or guaranteed by
the entity will be adversely impacted.
Portfolio Holdings Information
A description of the Wells Fargo Funds’ policies and procedures with respect to disclosure of the Wells Fargo Funds’
portfolio holdings is available in the Fund’s Statement of Additional Information.
Wells Fargo Funds - Fixed Income Funds
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10
Pricing Fund Shares
The Fund’s NAV is the value of a single share. The NAV is calculated as of the close of regular trading on the New York
Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time) on each day that the NYSE is open, although the Fund may
deviate from this calculation time under unusual or unexpected circumstances. The NAV is calculated separately for
each class of shares of a multiple-class Fund. The most recent NAV for each class of a Fund is available at
wellsfargofunds.com. To calculate the NAV of the Fund’s shares, the Fund’s assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of shares outstanding. The price at which a
purchase or redemption request is processed is based on the next NAV calculated after the request is received in good
order. Generally, NAV is not calculated, and purchase and redemption requests are not processed, on days that the
NYSE is closed for trading; however, under unusual or unexpected circumstances, the Fund may elect to remain open
even on days that the NYSE is closed or closes early. To the extent that the Fund’s assets are traded in various markets
on days when the Fund is closed, the value of the Fund’s assets may be affected on days when you are unable to buy or
sell Fund shares. Conversely, trading in some of the Fund’s assets may not occur on days when the Fund is open.
With respect to any portion of the Fund’s assets that may be invested in other mutual funds, the value of the Fund’s
shares is based on the NAV of the shares of the other mutual funds in which the Fund invests. The valuation methods
used by mutual funds in pricing their shares, including the circumstances under which they will use fair value pricing
and the effects of using fair value pricing, are included in the prospectuses of such funds. To the extent the Fund
invests a portion of its assets in non-registered investment vehicles, the Fund’s interests in the non-registered vehicles
are fair valued at NAV.
With respect to the Fund’s assets invested directly in securities, the Fund’s investments are generally valued at current
market prices. Equity securities, options and futures are generally valued at the official closing price or, if none, the last
reported sales price on the primary exchange or market on which they are listed (closing price). Equity securities that
are not traded primarily on an exchange are generally valued at the quoted bid price obtained from a broker-dealer.
Debt securities are valued at the evaluated bid price provided by an independent pricing service or, if a reliable price is
not available, the quoted bid price from an independent broker-dealer.
We are required to depart from these general valuation methods and use fair value pricing methods to determine the
values of certain investments if we believe that the closing price or the quoted bid price of a security, including a
security that trades primarily on a foreign exchange, does not accurately reflect its current market value as of the time
the Fund calculates its NAV. The closing price or the quoted bid price of a security may not reflect its current market
value if, among other things, a significant event occurs after the closing price or quoted bid price are made available,
but before the time as of which the Fund calculates its NAV, that materially affects the value of the security. We use
various criteria, including a systemic evaluation of U.S. market moves after the close of foreign markets, in deciding
whether a foreign security’s market price is still reliable and, if not, what fair market value to assign to the security. In
addition, we use fair value pricing to determine the value of investments in securities and other assets, including
illiquid securities, for which current market quotations or evaluated prices from a pricing service or broker-dealer are
not readily available.
The fair value of the Fund’s securities and other assets is determined in good faith pursuant to policies and procedures
adopted by the Fund’s Board of Trustees. In light of the judgment involved in making fair value decisions, there can be
no assurance that a fair value assigned to a particular security is accurate or that it reflects the price that the
Fund could obtain for such security if it were to sell the security at the time as of which fair value pricing is determined.
Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or quoted bid
price. See the Statement of Additional Information for additional details regarding the determination of NAVs.
11
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Wells Fargo Funds - Fixed Income Funds
Management of the Fund
The Manager
Wells Fargo Funds Management, LLC (“Funds Management”), headquartered at 525 Market Street, San Francisco, CA
94105, provides advisory and fund-level administrative services to the Fund pursuant to an investment management
agreement (the “Management Agreement”). Funds Management is a wholly owned subsidiary of Wells Fargo &
Company, a publicly traded diversified financial services company that provides banking, insurance, investment,
mortgage and consumer financial services. Funds Management is a registered investment adviser that provides
advisory services for registered mutual funds, closed-end funds and other funds and accounts. Funds Management is a
part of Wells Fargo Asset Management, the trade name used by the asset management businesses of Wells Fargo &
Company.
Funds Management is responsible for implementing the investment objectives and strategies of the Fund. Funds
Management’s investment professionals review and analyze the Fund’s performance, including relative to peer funds,
and monitor the Fund’s compliance with its investment objectives and strategies. Funds Management is responsible
for reporting to the Board on investment performance and other matters affecting the Fund. When appropriate, Funds
Management recommends to the Board enhancements to Fund features, including changes to Fund investment
objectives, strategies and policies. Funds Management also communicates with shareholders and intermediaries
about Fund performance and features.
Funds Management is also responsible for providing fund-level administrative services to the Fund, which include,
among others, providing such services in connection with the Fund’s operations; developing and implementing
procedures for monitoring compliance with regulatory requirements and compliance with the Fund’s investment
objectives, policies and restrictions; and providing any other fund-level administrative services reasonably necessary
for the operation of the Fund, other than those services that are provided by the Fund’s transfer and dividend
disbursing agent, custodian and fund accountant.
To assist Funds Management in implementing the investment objectives and strategies of the Fund, Funds
Management may contract with one or more sub-advisers to provide day-to-day portfolio management services to
the Fund. Funds Management employs a team of investment professionals who identify and recommend the initial
hiring of any sub-adviser and oversee and monitor the activities of any sub-adviser on an ongoing basis. Funds
Management retains overall responsibility for the investment activities of the Fund.
A discussion regarding the basis for the Board’s approval of the Management Agreement and any applicable
sub-advisory agreements for the Fund will be available in the Fund’s Annual report for the period ended September
30th.
Because the Fund has not commenced operations prior to the date of this Prospectus, the Fund has not yet paid
its management fee to Funds Management. As compensation for its services under the Management Agreement,
Funds Management is entitled to receive a monthly fee at the annual rates indicated below based on the Fund’s
average daily net assets:
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Fund
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Fee
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Global Investment Grade Credit Fund
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First $500M
Next $500M
Next $2B
Next $2B
Next $5B
Over $10B
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0.400%
0.375%
0.350%
0.325%
0.290%
0.280%
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Wells Fargo Funds - Fixed Income Funds
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12
The Sub-Advisers and Portfolio Managers
The following sub-advisers and portfolio managers provide day-to-day portfolio management services to the Fund.
These services include making purchases and sales of securities and other investment assets for the Fund, selecting
broker-dealers, negotiating brokerage commission rates and maintaining portfolio transaction records.
The sub-advisers are compensated for their services by Funds Management from the fees Funds Management receives
for its services as investment manager to the Fund. The Statement of Additional Information provides additional
information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and
the portfolio managers’ ownership of securities in the Fund.
Wells Fargo Asset Management (International) Limited
(“WFAM (International) Limited”), is a registered investment
adviser located at 33 King William Street, London, England, United Kingdom, EC4R 9AT. WFAM (International) Limited
provides investment advisory services to insurance companies, commercial bank treasury departments, central banks,
private banks, and corporate clients. WFAM (International) Limited is a part of Wells Fargo Asset Management, the
trade name used by the asset management businesses of Wells Fargo & Company.
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Henrietta Pacquement, CFA
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Ms. Pacquement joined WFAM (International) Limited in 2006, where she currently serves
as a Portfolio Manager.
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Alex Temple
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Mr. Temple joined WFAM (International) Limited in 2006, where he currently serves as a
Portfolio Manager.
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Wells Capital Management Incorporated
(“Wells Capital Management”) is a registered investment adviser located at
525 Market Street, San Francisco, CA 94105. Wells Capital Management, an affiliate of Funds Management and indirect
wholly owned subsidiary of Wells Fargo & Company, is a multi-boutique asset management firm committed to
delivering superior investment services to institutional clients, including mutual funds. Wells Capital Management is a
part of Wells Fargo Asset Management, the trade name used by the asset management businesses of Wells Fargo &
Company.
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Scott M. Smith, CFA
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Mr. Smith joined Wells Capital Management in 1988, where he currently serves as a
Managing Director, Senior Portfolio Manager and Head for the Multi Sector Fixed Income –
Investment Grade team.
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Jonathan Terry, CFA
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Mr. Terry joined Wells Capital Management in 2007, where he currently serves as a Credit
Portfolio Manager.
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Multi-Manager Arrangement
The Fund and Funds Management have obtained an exemptive order from the SEC that permits Funds Management,
subject to Board approval, to select certain sub-advisers and enter into or amend sub-advisory agreements with them,
without obtaining shareholder approval. The SEC order extends to sub-advisers that are not otherwise affiliated with
Funds Management or the Fund , as well as sub-advisers that are wholly-owned subsidiaries of Funds Management or
of a company that wholly owns Funds Management (“Multi-Manager Sub-Advisers”).
Pursuant to the order, Funds Management, with Board approval, may hire or replace Multi-Manager Sub-Advisers for
each Fund that is eligible to rely on the order. Funds Management, subject to Board oversight, has the responsibility to
oversee Multi-Manager Sub-Advisers and to recommend their hiring, termination and replacement. If a new
sub-adviser is hired for a Fund pursuant to the order, the Fund is required to notify shareholders within 90 days.
The Fund is not required to disclose the individual fees that Funds Management pays to a Multi-Manager Sub-Adviser.
13
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Wells Fargo Funds - Fixed Income Funds
Account Information
Share Class Eligibility
Institutional Class shares are generally available through intermediaries for the accounts of their customers and
directly to institutional investors and individuals. Institutional investors may include corporations; private banks; trust
companies; endowments and foundations; defined contribution, defined benefit and other employer sponsored
retirement plans; institutional retirement plan platforms; insurance companies; registered investment advisor firms;
bank trusts; 529 college savings plans; family offices; and funds of funds, including those managed by Funds
Management. The following investors may purchase Institutional Classshares and are not subject to a minimum initial
investment amount except, as noted below:
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Employee benefit plan programs;
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Broker-dealer managed account or wrap programs that charge an asset-based fee;
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Registered investment adviser mutual fund wrap programs or other accounts that charge a fee for advisory,
investment, consulting or similar services;
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Private bank and trust company managed accounts or wrap programs that charge an asset-based fee;
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Internal Revenue Code Section 529 college savings plan accounts;
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Funds of funds, including those advised by Funds Management;
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Investment Management and Trust Departments of Wells Fargo & Company purchasing shares on behalf of their
clients;
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Endowments, non-profits, and charitable organizations who invest a minimum initial investment amount of
$500,000 in a Fund;
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Any other institutions or customers of intermediaries who invest a minimum initial investment amount of $1 million
in a Fund;
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Individual investors who invest a minimum initial investment amount of $1 million directly in a Fund; and
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Certain investors and related accounts as detailed in the Statement of Additional Information.
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Eligibility requirements for Institutional Class shares may be modified or discontinued at any time.
Your Fund may offer other classes of shares in addition to those offered through this Prospectus. You may be eligible to
invest in one or more of these other classes of shares. Each share class bears varying expenses and may differ in other
features. Consult your financial professional for more information regarding a Fund’s available share classes.
The information in this Prospectus is not intended for distribution to, or use by, any person or entity in any non-U.S.
jurisdiction or country where such distribution or use would be contrary to any law or regulation, or which would
subject Fund shares to any registration requirement within such jurisdiction or country.
Share Class Features
The table below summarizes the key features of the share class offered through this Prospectus.
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Institutional Class
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Front-End Sales Charge
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None
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Contingent Deferred Sales Charge (CDSC)
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None
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Ongoing Distribution (12b-1) Fees
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None
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Information regarding sales charges, breakpoint levels, reductions and waivers is also available free of charge on our
website at wellsfargofunds.com. You may wish to discuss your choice of share class with your financial professional.
Compensation to Financial Professionals and Intermediaries
In addition to dealer reallowances and payments made by certain classes of the Fund for distribution and shareholder
servicing, the Fund’s manager, the distributor or their affiliates make additional payments (“Additional Payments”) to
certain financial professionals and intermediaries for selling shares and providing shareholder services, which include
broker-dealers and 401(k) service providers and record keepers. These Additional Payments, which may be significant,
are paid by the Fund’s manager, the distributor or their affiliates, out of their revenues, which generally come directly
or indirectly from Fund fees.
Wells Fargo Funds - Fixed Income Funds
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14
In return for these Additional Payments, the Fund’s manager and distributor expect the Fund to receive certain
marketing or servicing considerations that are not generally available to mutual funds whose sponsors do not make
such payments. Such considerations are expected to include, without limitation, placement of the Fund on a list of
mutual funds offered as investment options to the intermediary’s clients (sometimes referred to as “Shelf Space”);
access to the intermediary’s financial professionals; and/or the ability to assist in training and educating the
intermediary’s financial professionals.
The Additional Payments may create potential conflicts of interest between an investor and a financial professional or
intermediary who is recommending or making available a particular mutual fund over other mutual funds. Before
investing, you should consult with your financial professional and review carefully any disclosure by the intermediary
as to what compensation the intermediary receives from mutual fund sponsors, as well as how your financial
professional is compensated.
The Additional Payments are typically paid in fixed dollar amounts, based on the number of customer accounts
maintained by an intermediary, or based on a percentage of sales and/or assets under management, or a combination
of the above. The Additional Payments are either up-front or ongoing or both and differ among intermediaries. In a
given year, Additional Payments to an intermediary that is compensated based on its customers’ assets typically range
between 0.02% and 0.25% of assets invested in a Fund by the intermediary’s customers. Additional Payments to an
intermediary that is compensated based on a percentage of sales typically range between 0.10% and 0.25% of the
gross sales of a Fund attributable to the financial intermediary.
More information on the FINRA member firms that have received the Additional Payments described in this section is
available in the Statement of Additional Information, which is on file with the SEC and is also available on the Wells
Fargo Funds website at wellsfargofunds.com.
Buying and Selling Fund Shares
For more information regarding buying and selling Fund shares, please visit wellsfargofunds.com. You may buy
(purchase) and sell (redeem) Fund shares as follows:
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Opening an Account
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Adding to an Account or Selling Fund
Shares
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Through Your Financial
Professional
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Contact your financial professional.
Transactions will be subject to the terms
of your account with your intermediary.
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Contact your financial professional.
Transactions will be subject to the terms of
your account with your intermediary.
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Through Your Retirement Plan
|
Contact your retirement plan
administrator.
Transactions will be subject to the terms
of your retirement plan account.
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Contact your retirement plan
administrator.
Transactions will be subject to the terms of
your retirement plan account.
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Online
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New accounts cannot be opened online.
Contact your financial professional or
retirement plan administrator, or refer to
the section on opening an account by
mail.
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Visit wellsfargofunds.com.
Online transactions are limited to a
maximum of $100,000. You may be eligible
for an exception to this maximum. Please call
Investor Services at 1-800-222-8222 for more
information.
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By Telephone
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Call Investor Services at
1-800-222-8222.
Available only if you have another Wells
Fargo Fund account with your bank
information on file.
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Call Investor Services at 1-800-222-8222.
Redemption requests may not be made by
phone if the address on your account was
changed in the last 15 days. In this event, you
must request your redemption by mail. For
joint accounts, telephone requests generally
require only one of the account owners to
call unless you have instructed us otherwise.
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15
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Wells Fargo Funds - Fixed Income Funds
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Opening an Account
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Adding to an Account or Selling Fund
Shares
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By Mail
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Complete an account application and
submit it according to the instructions
on the application.
Account applications are available online
at wellsfargofunds.com or by calling
Investor Services at 1-800-222-8222.
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Send the items required under “Requests
in Good Order” below to:
Regular Mail
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Overnight Only
Wells Fargo Funds
430 W 7th Street STE 219967
Kansas City, MO 64105-1407
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Requests in “Good Order”.
All purchase and redemption requests must be received in “good order.” This means that a
request generally must include:
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The Fund name(s), share class(es) and account number(s);
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The amount (in dollars or shares) and type (purchase or redemption) of the request;
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If by mail, the signature of each registered owner as it appears in the account application;
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For purchase requests, payment of the full amount of the purchase request (see “Payment” below); and
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Any supporting legal documentation that may be required.
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Purchase and redemption requests in good order will be processed at the next NAV calculated after the Fund’s transfer
agent or an authorized intermediary
1
receives your request. If your request is not received in good order, additional
documentation may be required to process your transaction. We reserve the right to waive any of the above
requirements.
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1.
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The Fund’s shares may be purchased through an intermediary that has entered into a dealer agreement with the Fund’s distributor. The Fund has
approved the acceptance of a purchase or redemption request effective as of the time of its receipt by such an authorized intermediary or its
designee, as long as the request is received by one of those entities prior to the Fund’s closing time. These intermediaries may charge transaction fees.
We reserve the right to adjust the closing time in certain circumstances.
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Payment.
Payment for Fund shares may be made as follows:
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By Wire
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Purchases into a new or existing account may be funded by using the following wire
instructions:
State Street Bank & Trust
Boston, MA
Bank Routing Number: ABA 011000028
Wire Purchase Account: 9905-437-1
Attention: Wells Fargo Funds
(Name of Fund, Account Number and any applicable share class)
Account Name: Provide your name as registered on the Fund account or as included in
your account application.
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By Check
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Make checks payable to Wells Fargo Funds.
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By Exchange
|
Identify an identically registered Wells Fargo Fund account from which you wish to
exchange (see “Exchanging Fund Shares” below for restrictions on exchanges).
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By Electronic Funds Transfer
(“EFT”)
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Additional purchases for existing accounts may be funded by EFT using your linked bank
account.
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All payments must be in U.S. dollars, and all checks and EFTs must be drawn on U.S. banks. You will be charged a $25.00
fee for every check or EFT that is returned to us as unpaid.
Form of Redemption Proceeds.
You may request that your redemption proceeds be sent to you by check, by EFT into
a linked bank account, or by wire to a linked bank account. Please call Investor Services at 1-800-222-8222 regarding
the requirements for linking bank accounts or for wiring funds. Under normal circumstances, we expect to meet
redemption requests either by using uninvested cash or cash equivalents or by using the proceeds from the sale of
portfolio securities, at the discretion of the portfolio manager(s). The Wells Fargo Funds may also borrow through a
bank line of credit for the purpose of meeting redemption requests, although we do not expect to draw funds from
this source on a regular basis. In lieu of making cash payments, we reserve the right to determine in our sole discretion,
including under stressed market conditions, whether to satisfy one or more redemption requests by making payments
in securities. In such cases, we may meet all or part of a redemption request by making payment in securities equal in
Wells Fargo Funds - Fixed Income Funds
|
16
value to the amount of the redemption payable to you as permitted under the 1940 Act, and the rules thereunder, in
which case the redeeming shareholder should expect to incur transaction costs upon the disposition of any securities
received.
Timing of Redemption Proceeds.
We normally will send out redemption proceeds within one business day after we
accept your request to redeem. We reserve the right to delay payment for up to seven days. If you wish to redeem
shares purchased by check, by EFT or through the Automatic Investment Plan within seven days of purchase, you may
be asked to resubmit your redemption request if your payment has not yet cleared. Payment of redemption proceeds
may be delayed for longer than seven days under extraordinary circumstances or as permitted by the SEC in order to
protect remaining shareholders. Such extraordinary circumstances are discussed further in the Statement of
Additional Information.
Retirement Plans and Other Products.
If you purchased shares through a packaged investment product or
retirement plan, read the directions for redeeming shares provided by the product or plan. There may be special
requirements that supersede or are in addition to the requirements in this Prospectus.
Exchanging Fund Shares
Exchanges between two funds involve two transactions: (1) the redemption of shares of one fund; and (2) the
purchase of shares of another. In general, the same rules and procedures described under “Buying and Selling Fund
Shares” apply to exchanges. There are, however, additional policies and considerations you should keep in mind while
making or considering an exchange:
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In general, exchanges may be made between like share classes of any fund in the Wells Fargo Funds complex offered
to the general public for investment (i.e., a fund not closed to new accounts), with the following exceptions: (1) Class
A shares of non-money market funds may also be exchanged for Service Class shares of any retail or government
money market fund; (2) Service Class shares may be exchanged for Class A shares of any non-money market fund;
and (3) no exchanges are allowed into institutional money market funds.
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If you make an exchange between Class A shares of a money market fund and Class A shares of a non-money market
fund, you will buy the shares at the public offering price of the new fund, unless you are otherwise eligible to buy
shares at NAV.
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Same-fund exchanges between share classes are permitted subject to the following conditions: (1) the shareholder
must meet the eligibility guidelines of the class being purchased in the exchange; (2) exchanges out of Class A and
Class C shares would not be allowed if shares are subject to a CDSC; and (3) for non-money market funds, in order to
exchange into Class A shares, the shareholder must be able to qualify to purchase Class A shares at NAV based on
current Prospectus guidelines.
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An exchange request will be processed on the same business day, provided that both funds are open at the time the
request is received. If one or both funds are closed, the exchange will be processed on the following business day.
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You should carefully read the Prospectus for the Fund into which you wish to exchange.
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Every exchange involves redeeming fund shares, which may produce a capital gain or loss for tax purposes.
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If you are making an initial investment into a fund through an exchange, you must exchange at least the minimum
initial investment amount for the new fund, unless your balance has fallen below that amount due to investment
performance.
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If you are making an additional investment into a fund that you already own through an exchange, you must
exchange at least the minimum subsequent investment amount for the fund you are exchanging into.
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Class C share exchanges will not trigger a CDSC. The new shares received in the exchange will continue to age
according to the original shares’ CDSC schedule and will be charged the CDSC applicable to the original shares upon
redemption.
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Generally, we will notify you at least 60 days in advance of any changes in the above exchange policies.
Frequent Purchases and Redemptions of Fund Shares
Wells Fargo Funds reserves the right to reject any purchase or exchange order for any reason. Purchases or exchanges
that a Fund determines could harm the Fund may be rejected.
Excessive trading by Fund shareholders can negatively impact a Fund and its long-term shareholders in several ways,
including disrupting Fund investment strategies, increasing transaction costs, decreasing tax efficiency, and diluting
17
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Wells Fargo Funds - Fixed Income Funds
the value of shares held by long-term shareholders. Excessive trading in Fund shares can negatively impact a Fund’s
long-term performance by requiring it to maintain more assets in cash or to liquidate portfolio holdings at a
disadvantageous time. Certain Funds may be more susceptible than others to these negative effects. For example,
Funds that have a greater percentage of their investments in non-U.S. securities may be more susceptible than other
Funds to arbitrage opportunities resulting from pricing variations due to time zone differences across international
financial markets. Similarly, Funds that have a greater percentage of their investments in small company securities may
be more susceptible than other Funds to arbitrage opportunities due to the less liquid nature of small company
securities. Both types of Funds also may incur higher transaction costs in liquidating portfolio holdings to meet
excessive redemption levels. Fair value pricing may reduce these arbitrage opportunities, thereby reducing some of
the negative effects of excessive trading.
Wells Fargo Funds, other than the Adjustable Rate Government Fund, Conservative Income Fund, Ultra
Short-Term Income Fund and Ultra Short-Term Municipal Income Fund (“Ultra-Short Funds”) and the money
market funds, (the “Covered Funds”).
The Covered Funds are not designed to serve as vehicles for frequent trading.
The Covered Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on
long-term shareholders that can result from excessive trading activity by Covered Fund shareholders. The Board has
approved the Covered Funds’ policies and procedures, which provide, among other things, that Funds Management
may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a
Covered Fund by increasing expenses or lowering returns. In this regard, the Covered Funds take steps to avoid
accommodating frequent purchases and redemptions of shares by Covered Fund shareholders. Funds Management
monitors available shareholder trading information across all Covered Funds on a daily basis. If a shareholder redeems
$5,000 or more (including redemptions that are part of an exchange transaction) from a Covered Fund, that
shareholder is “blocked” from purchasing shares of that Covered Fund (including purchases that are part of an
exchange transaction) for 30 calendar days after the redemption. This policy does not apply to:
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Dividend reinvestments;
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Systematic investments or exchanges where the financial intermediary maintaining the shareholder account
identifies the transaction as a systematic redemption or purchase at the time of the transaction;
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Rebalancing transactions within certain asset allocation or “wrap” programs where the financial intermediary
maintaining a shareholder account is able to identify the transaction as part of an asset allocation program approved
by Funds Management;
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Transactions initiated by a “fund of funds” or Section 529 Plan into an underlying fund investment;
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Permitted exchanges between share classes of the same Fund;
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Certain transactions involving participants in employer-sponsored retirement plans, including: participant
withdrawals due to mandatory distributions, rollovers and hardships, withdrawals of shares acquired by participants
through payroll deductions, and shares acquired or sold by a participant in connection with plan loans; and
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Purchases below $5,000 (including purchases that are part of an exchange transaction).
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The money market funds and the Ultra-Short Funds.
Because the money market funds and Ultra-Short Funds are
often used for short-term investments, they are designed to accommodate more frequent purchases and redemptions
than the Covered Funds. As a result, the money market funds and Ultra-Short Funds do not anticipate that frequent
purchases and redemptions, under normal circumstances, will have significant adverse consequences to the money
market funds or Ultra-Short Funds or their shareholders. Although the money market funds and Ultra-Short Funds do
not prohibit frequent trading, Funds Management will seek to prevent an investor from utilizing the money market
funds and Ultra-Short Funds to facilitate frequent purchases and redemptions of shares in the Covered Funds in
contravention of the policies and procedures adopted by the Covered Funds.
All Wells Fargo Funds
.
In addition, Funds Management reserves the right to accept purchases, redemptions and
exchanges made in excess of applicable trading restrictions in designated accounts held by Funds Management or its
affiliate that are used at all times exclusively for addressing operational matters related to shareholder accounts, such
as testing of account functions, and are maintained at low balances that do not exceed specified dollar amount
limitations.
In the event that an asset allocation or “wrap” program is unable to implement the policy outlined above, Funds
Management may grant a program-level exception to this policy. A financial intermediary relying on the exception is
required to provide Funds Management with specific information regarding its program and ongoing information
about its program upon request.
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A financial intermediary through whom you may purchase shares of the Fund may independently attempt to identify
excessive trading and take steps to deter such activity. As a result, a financial intermediary may on its own limit or
permit trading activity of its customers who invest in Fund shares using standards different from the standards used by
Funds Management and discussed in this Prospectus. Funds Management may permit a financial intermediary to
enforce its own internal policies and procedures concerning frequent trading rather than the policies set forth above
in instances where Funds Management reasonably believes that the intermediary’s policies and procedures effectively
discourage disruptive trading activity. If you purchase Fund shares through a financial intermediary, you should
contact the intermediary for more information about whether and how restrictions or limitations on trading activity
will be applied to your account.
Account Policies
Advance Notice of Large Transactions.
We strongly urge you to make all purchases and redemptions of Fund shares
as early in the day as possible and to notify us or your intermediary at least one day in advance of transactions in Fund
shares in excess of $1 million. This will help us to manage the Funds most effectively. When you give this advance
notice, please provide your name and account number.
Householding.
To help keep Fund expenses low, a single copy of a Prospectus or shareholder report may be sent to
shareholders of the same household. If your household currently receives a single copy of a Prospectus or shareholder
report and you would prefer to receive multiple copies, please call Investor Services at 1-800-222-8222 or contact your
financial professional.
Retirement Accounts.
We offer a variety of retirement account types for individuals and small businesses. There may
be special distribution requirements for a retirement account, such as required distributions or mandatory Federal
income tax withholdings. For more information about the retirement accounts listed below, including any distribution
requirements, call Investor Services at 1-800-222-8222. For retirement accounts held directly with a Fund, certain fees
may apply including an annual account maintenance fee.
The retirement accounts available for individuals and small businesses are:
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Individual Retirement Accounts, including Traditional IRAs and Roth IRAs.
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Small business retirement accounts, including Simple IRAs and SEP IRAs.
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Small Account Redemptions.
We reserve the right to redeem accounts that have values that fall below a Fund’s
minimum initial investment amount due to shareholder redemptions (as opposed to market movement). Before doing
so, we will give you approximately 60 days to bring your account value above the Fund’s minimum initial investment
amount. Please call Investor Services at 1-800-222-8222 or contact your financial professional for further details.
Transaction Authorizations.
We may accept telephone, electronic, and clearing agency transaction instructions from
anyone who represents that he or she is a shareholder and provides reasonable confirmation of his or her identity.
Neither we nor Wells Fargo Funds will be liable for any losses incurred if we follow such instructions we reasonably
believe to be genuine. For transactions through our website, we may assign personal identification numbers (PINs) and
you will need to create a login ID and password for account access. To safeguard your account, please keep these
credentials confidential. Contact us immediately if you believe there is a discrepancy on your confirmation statement
or if you believe someone has obtained unauthorized access to your online access credentials.
Identity Verification.
We are required by law to obtain from you certain personal information that will be used to
verify your identity. If you do not provide the information, we will not be able to open your account. In the rare event
that we are unable to verify your identity as required by law, we reserve the right to redeem your account at the
current NAV of the Fund’s shares. You will be responsible for any losses, taxes, expenses, fees, or other results of such a
redemption.
Right to Freeze Accounts, Suspend Account Services or Reject or Terminate an Investment.
We reserve the right,
to the extent permitted by law and/or regulations, to freeze any account or suspend account services when we have
received reasonable notice (written or otherwise) of a dispute between registered or beneficial account owners or
when we believe a fraudulent transaction may occur or has occurred. Additionally, we reserve the right to reject any
purchase or exchange request and to terminate a shareholder’s investment, including closing the shareholder’s
account.
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Distributions
The Fund generally makes distributions of any net investment income monthly. The amount distributed in any given
period may be less than the amount earned in that period or more than the amount earned in that period, if it includes
amounts earned in a previous period that were retained for later distribution. The Fund makes and any realized net
capital gains at least annually. Please contact your institution for distribution options. Please note, distributions have
the effect of reducing the NAV per share by the amount distributed.
We offer the following distribution options. To change your current option for payment of distributions, please call
Investor Services at 1-800-222-8222.
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Automatic Reinvestment Option—Allows you to use distributions to buy new shares of the same class of the Fund
that generated the distributions. The new shares are purchased at NAV generally on the day the distribution is paid.
This option is automatically assigned to your account unless you specify another option.
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Check Payment Option—Allows you to receive distributions via checks mailed to your address of record or to
another name and address which you have specified in written instructions. A Medallion Guarantee may also be
required. If checks remain uncashed for six months or are undeliverable by the Post Office, we will reinvest the
distributions at the earliest date possible, and future distributions will be automatically reinvested.
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Bank Account Payment Option—Allows you to receive distributions directly in a checking or savings account
through EFT. The bank account must be linked to your Wells Fargo Fund account. Any distribution returned to us
due to an invalid banking instruction will be sent to your address of record by check at the earliest date possible, and
future distributions will be automatically reinvested.
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Directed Distribution Purchase Option—Allows you to buy shares of a different Wells Fargo Fund of the same share
class. The new shares are purchased at NAV generally on the day the distribution is paid. In order to use this option,
you need to identify the Fund and account the distributions are coming from, and the Fund and account to which
the distributions are being directed. You must meet any required minimum investment amounts in both Funds prior
to using this option.
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You are eligible to earn distributions beginning on the business day after the Fund’s transfer agent or an authorized
intermediary receives your purchase request in good order.
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Other Information
Taxes
The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this
Prospectus and summarizes only some of the important federal income tax considerations affecting the Fund and you
as a shareholder. It does not apply to foreign or tax-exempt shareholders or those holding Fund shares through a
tax-advantaged account, such as a 401(k) Plan or IRA. This discussion is not intended as a substitute for careful tax
planning. You should consult your tax adviser about your specific tax situation. Please see the Statement of Additional
Information for additional federal income tax information.
The Fund elected to be treated, and intends to qualify each year, as a regulated investment company (“RIC”). A RIC is
not subject to tax at the corporate level on income and gains from investments that are distributed in a timely manner
to shareholders. However, the Fund’s failure to qualify as a RIC would result in corporate level taxation, and
consequently, a reduction in income available for distribution to you as a shareholder.
We will pass on to a Fund’s shareholders substantially all of the Fund’s net investment income and realized net capital
gains, if any. Distributions from a Fund’s ordinary income and net short-term capital gains, if any, generally will be
taxable to you as ordinary income. Distributions from a Fund’s net long-term capital gains, if any, generally will be
taxable to you as long-term capital gains. If you are an individual and meet certain holding period requirements with
respect to your Fund shares, you may be eligible for reduced tax rates on qualified dividend income, if any, distributed
by the Fund.
Corporate shareholders may be able to deduct a portion of their distributions when determining their taxable income.
Individual taxpayers are subject to a maximum tax rate of 37% on ordinary income and a maximum tax rate on
long-term capital gains and qualified dividends of 20%. For U.S. individuals with income exceeding $200,000 ($250,000
if married and filing jointly), a 3.8% Medicare contribution tax will apply on “net investment income,” including interest,
dividends, and capital gains. Corporations are subject to tax on all income and gains at a maximum tax rate of 21%.
However, a RIC is not subject to tax at the corporate level on income and gains from investments that are distributed in
a timely manner to shareholders.
Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or
automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal
income tax status of your distributions for the year.
If you buy shares of a Fund shortly before it makes a taxable distribution, your distribution will, in effect, be a taxable
return of part of your investment. Similarly, if you buy shares of a Fund when it holds appreciated securities, you will
receive a taxable return of part of your investment if and when the Fund sells the appreciated securities and distributes
the gain. The Fund has built up, or has the potential to build up, high levels of unrealized appreciation.
Your redemptions (including redemptions in-kind) and exchanges of Fund shares ordinarily will result in a taxable
capital gain or loss, depending on the amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the amount you paid (or are deemed to have paid) for them. Such capital gain or loss generally will be
long-term capital gain or loss if you have held your redeemed or exchanged Fund shares for more than one year at the
time of redemption or exchange. In certain circumstances, losses realized on the redemption or exchange of Fund
shares may be disallowed.
When you receive a distribution from a Fund or redeem shares, you may be subject to backup withholding.
Financial Highlights
Since the Fund commenced operations on or around the date of this Prospectus, financial highlights are not available
for the Fund.
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FOR MORE INFORMATION
More information on a Fund is available free upon request,
including the following documents:
Statement of Additional Information (“SAI”)
Supplements the disclosures made by this Prospectus.
The SAI, which has been filed with the SEC, is
incorporated by reference into this Prospectus and
therefore is legally part of this Prospectus.
Annual/Semi-Annual Reports
Provide financial and other important information,
including a discussion of the market conditions
and investment strategies that significantly affected
Fund performance over the reporting period.
To obtain copies of the above documents or for more
information about Wells Fargo Funds, contact us:
By telephone:
Individual Investors: 1-800-222-8222
Retail Investment Professionals: 1-888-877-9275
Institutional Investment Professionals: 1-800-260-5969
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By mail:
Wells Fargo Funds
P.O. Box 219967
Kansas City, MO 64121-9967
Online:
wellsfargofunds.com
From the SEC:
Visit the SEC’s Public Reference Room in Washington,
DC (phone 1-202-551-8090 for operational
information for the SEC’s Public Reference Room) or
the SEC’s website at sec.gov.
To obtain information for a fee, write or email:
SEC’s Public Reference Section
100 “F” Street, NE
Washington, DC 20549-0102
publicinfo@sec.gov
The Wells Fargo Funds are distributed by
Wells Fargo Funds Distributor, LLC, a member of FINRA,
and an affiliate of Wells Fargo & Company.
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© 2019 Wells Fargo Funds Management, LLC. All rights reserved
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039IFIT/P1004G
ICA Reg. No. 811-09253
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SUPPLEMENT TO THE
INSTITUTIONAL CLASS AND CLASS R6 PROSPECTUSES
OF
WELLS FARGO ALTERNATIVE FUNDS
WELLS FARGO FIXED INCOME FUNDS
WELLS FARGO INTERNATIONAL AND GLOBAL EQUITY FUNDS
WELLS FARGO MULTI-ASSET FUNDS
WELLS FARGO MUNICIPAL FIXED INCOME FUNDS
WELLS FARGO SPECIALTY FUNDS
WELLS FARGO TARGET DATE RETIREMENT FUNDS
WELLS FARGO U.S. EQUITY FUNDS
(each a “Fund”, together the “Funds”)
Effective on or around March 31, 2019, sections entitled “Share Class Eligibility” and “Share Class Features” are amended
to add the following information:
I.
Share Class Eligibility
The following bullet point is added to the end of the section:
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Investors purchasing shares through an intermediary, acting solely as a broker on behalf of its customers, that holds
such shares in an omnibus account and charges investors a transaction based commission outside of the Fund. In
order to offer Fund shares, an intermediary must have an agreement with the Fund’s distributor authorizing the use
of the share class within this type of platform.
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II.
Share Class Features
The introductory paragraph will be deleted and replaced with the following:
The table below summarizes the key features of the share class offered through this Prospectus. Please note that if you
purchase shares through an intermediary that acts as a broker on your behalf, you may be required to pay a
commission to your intermediary in an amount determined and separately disclosed to you by the intermediary.
Consult your financial professional for further details.
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December 21, 2018
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IFIT128/P1004SP
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WELLS FARGO FUNDS TRUST
PART B
WELLS FARGO FIXED INCOME FUNDS
STATEMENT OF ADDITIONAL INFORMATION
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Statement of Additional Information
March 1, 2019
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Fund
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R6
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Institutional
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Wells Fargo Global Investment Grade Credit Fund
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WGCRX
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WGCIX
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Wells Fargo Funds Trust (the “Trust”) is an open-end, management investment company. This Statement of Additional Information (“SAI”) contains additional information
about one series of the Trust in the Wells Fargo family of funds - the above referenced Fund (the “Fund”). The Fund is considered diversified under the Investment Company
Act of 1940, as amended (the “1940 Act”). The Fund offers certain classes of shares as indicated above. This SAI relates to all such classes of shares.
This SAI is not a prospectus and should be read in conjunction with the Fund’s Prospectuses dated March 1, 2019. The Prospectuses may be obtained free of charge by
visiting our website at wellsfargofunds.com, calling 1-800-222-8222 or writing to Wells Fargo Funds, P.O. Box 219967, Kansas City, MO 64121-9967.
INCMS5/FASAI17
HISTORICAL FUND INFORMATION
The Trust was organized as a Delaware statutory trust on March 10, 1999. On March 25, 1999, the Board of Trustees of
Norwest Advantage Funds (“Norwest”), the Board of Directors of Stagecoach Funds, Inc. (“Stagecoach”) and the Board
of Trustees of the Trust (the “Board”), approved an Agreement and Plan of Reorganization providing for, among other
things, the transfer of the assets and stated liabilities of various predecessor Norwest and Stagecoach portfolios to
certain Funds of the Trust (the “Reorganization”). Prior to November 5, 1999, the effective date of the Reorganization,
the Trust had only nominal assets.
On December 16, 2002, the Boards of Trustees of The Montgomery Funds and The Montgomery Funds II (collectively,
“Montgomery”) approved an Agreement and Plan of Reorganization providing for, among other things, the transfer of
the assets and stated liabilities of various predecessor Montgomery portfolios into various Funds of the Trust. The
effective date of the reorganization was June 9, 2003.
On February 3, 2004, the Board, and on February 18, 2004, the Board of Trustees of The Advisors’ Inner Circle Fund (“AIC
Trust”), approved an Agreement and Plan of Reorganization providing for, among other things, the transfer of the
assets and stated liabilities of various predecessor AIC Trust portfolios into various Funds of the Trust. The effective date
of the reorganization was July 26, 2004.
In August and September 2004, the Boards of Directors of the Strong family of funds (“Strong”) and the Board
approved an Agreement and Plan of Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Strong mutual funds into various Funds of the Trust. The effective date of the
reorganization was April 8, 2005.
On December 30, 2009, the Board of Trustees of Evergreen Funds (“Evergreen”), and on January 11, 2010, the Board,
approved an Agreement and Plan of Reorganization providing for, among other things, the transfer of the assets and
stated liabilities of various predecessor Evergreen portfolios and Wells Fargo Advantage Funds portfolios to certain
Funds of the Trust. The effective date of the reorganization was July 12, 2010 for certain Evergreen Funds, and July 19,
2010 for the remainder of the Evergreen Funds.
On December 15, 2015, the Wells Fargo Advantage Funds changed its name to the Wells Fargo Funds.
The
Global Investment Grade Credit Fund
will commence operations on March 1, 2019.
FUND INVESTMENT POLICIES AND RISKS
Fundamental Investment Policies
The Fund has adopted the following fundamental investment policies; that is, they may not be changed without
approval by the holders of a majority (as defined under the 1940 Act) of the outstanding voting securities of the Fund.
The Fund may not:
(1) purchase the securities of issuers conducting their principal business activity in the same industry if, immediately
after the purchase and as a result thereof, the value of the Fund’s investments in that industry would equal or exceed
25% of the current value of the Fund’s total assets, provided that this restriction does not limit the Fund’s investments
in (i) securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) securities of other
investment companies, or (iii) repurchase agreements;
(2) purchase securities of any issuer if, as a result, with respect to 75% of the Fund’s total assets, more than 5% of the
value of its total assets would be invested in the securities of any one issuer or the Fund’s ownership would be more
than 10% of the outstanding voting securities of such issuer, provided that this restriction does not limit the Fund’s
investments in securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, or
investments in securities of other investment companies;
(3) borrow money, except to the extent permitted under the 1940 Act, including the rules, regulations and any
exemptive orders obtained thereunder;
Wells Fargo - Fixed Income Funds
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(4) issue senior securities, except to the extent permitted under the 1940 Act, including the rules, regulations and any
exemptive orders obtained thereunder;
(5) make loans to other parties if, as a result, the aggregate value of such loans would exceed one-third of the Fund’s
total assets. For the purposes of this limitation, entering into repurchase agreements, lending securities and acquiring
any debt securities are not deemed to be the making of loans;
(6) underwrite securities of other issuers, except to the extent that the purchase of permitted investments directly from
the issuer thereof or from an underwriter for an issuer and the later disposition of such securities in accordance
with the Fund’s investment program may be deemed to be an underwriting;
(7) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall
not prevent the Fund from investing in securities or other instruments backed by real estate or securities of companies
engaged in the real estate business); or
(8) purchase or sell commodities, provided that (i) currency will not be deemed to be a commodity for purposes of this
restriction, (ii) this restriction does not limit the purchase or sale of futures contracts, forward contracts or options, or
other financial instruments subject to the Commodity Exchange Act of 1936, as amended (“CEA”), and (iii) this
restriction does not limit the purchase or sale of securities or other instruments backed by commodities or the
purchase or sale of commodities acquired as a result of ownership of securities or other instruments.
Non-Fundamental Investment Policies
The Fund has adopted the following non-fundamental policies; that is, they may be changed by the Trustees at any
time without the approval of Fund shareholders.
(1) The Fund may invest in shares of other investment companies to the extent permitted under the 1940 Act,
including the rules, regulations and any exemptive orders obtained thereunder, provided however, that no Fund that
has knowledge that its shares are purchased by another investment company investor pursuant to Section 12(d)(1)(G)
of the 1940 Act will acquire any securities of registered open-end management investment companies or registered
unit investment trusts in reliance on Section 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.
(2) The Fund may not invest or hold more than 15% of the Fund’s net assets in illiquid securities.
(3) The Fund may lend securities from its portfolio to approved brokers, dealers and financial institutions, to the extent
permitted under the 1940 Act, including the rules, regulations and exemptions thereunder, which currently limit such
activities to one-third of the value of the Fund’s total assets (including the value of the collateral received). Any such
loans of portfolio securities will be fully collateralized based on values that are marked-to-market daily.
(4) The Fund may not make investments for the purpose of exercising control or management, provided that this
restriction does not limit the Fund’s investments in securities of other investment companies or investments in entities
created under the laws of foreign countries to facilitate investment in securities of that country.
(5) The Fund may purchase securities on margin (including for short-term credits necessary for the clearance of
transactions) to the extent permitted by applicable law.
Further Explanation of Investment Policies
Notwithstanding the foregoing policies, any other investment companies in which the Fund may invest have adopted
their own investment policies, which may be more or less restrictive than those listed above, thereby allowing the
Fund to participate in certain investment strategies indirectly that are prohibited under the fundamental and
non-fundamental investment policies listed above.
For purposes of the Fund’s fundamental investment policy with respect to making loans, bank loans and participations
are considered debt securities, rather than loans. In addition, for purposes of the Fund’s non-fundamental investment
policy with respect to investing in financial instruments subject to the CEA, exchange-traded funds that invest directly
in or have exposure to, commodities are considered securities backed by commodities.
With respect to repurchase agreements, the Fund invests only in repurchase agreements that are fully collateralized by
securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities. For purposes of the Fund’s
fundamental investment policy with respect to concentration, the Fund does not consider such repurchase
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agreements to constitute an industry, or group of industries, because the Fund chooses to look through such securities
to the underlying collateral, which is itself excepted from the Fund’s concentration policy.
Additional Approved Principal Investment Strategies
In addition to the principal investment strategies set forth in the Prospectus(es), the Funds may also use futures,
options or swap agreements, as well as other derivatives, to manage risk or to enhance return. Please refer to a Fund’s
Prospectuses for information regarding the Fund’s anticipated use of derivatives, if any, as a principal investment
strategy. Please note that even if a Fund’s Prospectuses do not currently include information regarding derivatives, or
only includes information regarding certain derivative instruments, the Fund may use any of the derivative securities
described below, at any time, and to any extent consistent with the Fund’s other principal investment strategies.
DERIVATIVES
Derivative Securities
Derivative securities are securities that derive their value, at least in part, from the price of another security or asset, or
the level of an index, such as the S&P 500 Index, or a rate, such as the London Interbank Offered Rate (“LIBOR”),
including structured notes, bonds or other instruments with interest rates that are determined by reference to changes
in the value of other interest rates, indices or financial indicators (“References”) or the relative change in two or more
References. Some forms of derivatives, such as exchange-traded futures and options on securities, commodities, or
indices, are traded on regulated exchanges. These types of derivatives are standardized contracts that can easily be
bought and sold, and whose market values are determined and published daily. Non-standardized derivatives, on the
other hand, tend to be more specialized or complex, and may be harder to value. Futures contracts and options are
also considered types of derivative securities, and are described more fully under the heading “Futures and Options
Contracts” below. Other common types of derivatives include forward foreign currency exchange contracts, forward
contracts on securities and securities indices, linked securities and structured products, collateralized mortgage
obligations, stripped securities, warrants, swap agreements, and swaptions.
An investment is often made in derivative securities as a “hedge” against fluctuations in the market value of the other
securities in a Fund’s portfolio due to currency exchange rate fluctuations or other factors in the securities markets,
although a Fund may also invest in certain derivative securities for investment purposes only. Other reasons why a
Fund may use derivative securities include protecting its unrealized gains reflected in the value of its portfolio of
securities, facilitating the sale of such securities for investment purposes, reducing transaction costs, and/or managing
the effective maturity or duration of its portfolio.
While derivative securities are useful for hedging and investment, they also carry additional risks. A hedging policy
may fail if the correlation between the value of the derivative securities and the other investments in a Fund’s portfolio
does not follow the sub-adviser’s expectations. If the sub-adviser’s expectations are not met, it is possible that the
hedging strategy will not only fail to protect the value of a Fund’s investments, but the Fund may also lose money on
the derivative security itself. In addition, some derivative securities represent relatively recent innovations in the bond
markets. The trading market for these instruments is less developed than the markets for traditional types of debt
instruments. It is uncertain how these derivative securities will perform under different economic interest-rate
scenarios. Because certain of these instruments are leveraged, their market values may be more volatile than other
types of securities and may present greater potential for capital gain or loss. Derivative securities and their underlying
instruments may experience periods of illiquidity, which could cause a Fund to hold a security it might otherwise sell
or a Fund could be forced to sell a security at inopportune times or for prices that do not reflect current market value.
The possibility of default by the issuer or the issuer’s credit provider may be greater for structured and derivative
instruments than for other types of instruments. As new types of derivative securities are developed and offered to
investors, the manager will, consistent with a Fund’s investment objective, policies, restrictions and quality standards,
consider making investments in such new types of derivative securities.
Additional risks of derivative securities include, but are not limited to: the risk of disruption of a Fund’s ability to trade
in derivative securities because of regulatory compliance problems or regulatory changes; credit risk of counterparties
to derivative contracts, and market risk (i.e., exposure to adverse price changes).
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The manager uses a variety of internal risk management procedures to ensure that derivatives are closely monitored
and that their use is consistent with a particular Fund’s investment objective, policies, restrictions and quality
standards, and does not expose such Fund to undue risk.
A Fund’s use of derivatives also is subject to broadly applicable investment policies. For example, no Fund may acquire
any illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of its net
assets in illiquid investments that are assets, which may include those derivatives that do not have active secondary
markets. A Fund also may not use certain derivatives without establishing adequate “cover” in compliance with the SEC
rules limiting the use of leverage. Consistent with SEC staff guidance, a Fund will consider its obligations involving
such derivatives as “covered” when a Fund (i) maintains an offsetting financial position, or (ii) segregates liquid assets
(which may include, but are not limited to, cash, cash equivalents, equities and debt securities) equal to a Fund’s
exposures relating to the derivative, as determined on a daily basis. If a Fund chooses to establish a “covered” position
by segregating liquid assets, the amount that must be segregated will be determined in accordance with current SEC
staff guidance, and will thus vary based on the specific derivative instrument being used. For example, for futures and
forward contracts that require only cash settlement, and swap agreements that call for periodic netting between a
Fund and its counterparty, the segregated amount will be the net amount due under the contract, as determined daily
on a mark-to-market basis. For other kinds of futures, forwards and swaps, a Fund must segregate a larger amount of
assets to cover its obligations, which essentially limits a Fund’s ability to use these instruments.
Both equity and credit derivatives include options, futures and options on futures, which may be used to hedge a
Fund’s portfolio, increase returns or maintain exposure to a market without buying individual securities. These
investments may pose risks in addition to those associated with investing directly in securities or other investments.
Such risks may include illiquidity of the derivative and imperfect correlation of the derivative with underlying
investments for which it is being substituted or the Fund’s other portfolio holdings. Accordingly, there is the risk that
such practices may fail to serve their intended purposes, and may reduce returns or increase volatility. These practices
also entail transactional expenses.
Additionally, the use of derivatives can lead to losses because of adverse movements in the price or value of the
underlying security, asset, index or reference rate, which may be magnified by certain features of the derivatives. These
risks are heightened when a Fund uses derivatives to enhance its return or as a substitute for a position or security,
rather than solely to hedge or offset the risk of a position or security held by a Fund. A Fund’s use of derivatives to
leverage risk also may exaggerate a loss, potentially causing a Fund to lose more money than if it had invested in the
underlying security, or limit a potential gain.
The success of management’s derivative strategies will depend on its ability to assess and predict the impact of market
or economic developments on the underlying security, asset, index or reference rate and the derivative itself, without
necessarily the benefit of observing the performance of the derivative under all possible market conditions. Other risks
arise from a Fund’s potential inability to terminate or sell its derivative positions as a liquid secondary market for such
positions may not exist at times when a Fund may wish to terminate or sell them. Over-the-counter instruments
(investments not traded on an exchange) may be illiquid. Derivatives traded in the over-the-counter market are
subject to the risk that the other party will not meet its obligations. Also, with some derivative strategies, there is the
risk that a Fund may not be able to find a suitable counterparty for the derivative transaction, and therefore may be
unable to invest in derivatives altogether. The use of derivatives may also increase the amount and accelerate the
timing of taxes payable by shareholders.
A Fund that is authorized to invest in derivatives may use any or all of the above investment techniques and may
purchase different types of derivative instruments at any time and in any combination. There is no particular strategy
that dictates the use of one technique over another, as the use of derivatives is a function of numerous variables,
including market conditions.
Credit Derivatives
. A credit derivative is a form of derivative that is divided into two categories: credit default swaps and
total return swaps. Both such categories of credit derivatives are usually governed by the standard terms and
conditions of an ISDA Master Agreement.
A credit default swap involves a protection buyer and a protection seller. A Fund may be either a protection buyer or
seller. The protection buyer makes periodic premium payments to the protection seller during the swap term in
exchange for the protection seller agreeing to make certain defined payments to the protection buyer in the event
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Wells Fargo - Fixed Income Funds
certain defined credit events occur with respect to a particular security, issuer or basket of securities. A total return
swap involves a total return receiver and a total return payor. A Fund may either be a total return receiver or payor.
Generally, the total return payor sells to the total return receiver an amount equal to all cash flows and price
appreciation on a defined security or asset payable at periodic times during the swap term (i.e., credit risk) in return for
a periodic payment from the total return receiver based on designated index (e.g., LIBOR) and spread plus the amount
of any price depreciation on the reference security or asset. The total return payor does not need to own the
underlying security or asset to enter into a total return swap. The final payment at the end of the swap term includes
final settlement of the current market price of the underlying reference security or asset, and payment by the
applicable party for any appreciation or depreciation in value. Usually, collateral must be posted by the total return
receiver to secure the periodic interest-based and market price depreciation payments depending on the credit
quality of the underlying reference security and creditworthiness of the total return receiver, and the collateral amount
is marked-to-market daily equal to the market price of the underlying reference security or asset between periodic
payment dates.
Other types of credit derivatives include credit-linked notes and other forms of debt obligations having an embedded
credit default swap component. In such type of credit derivative, payments of principal and interest are tied to the
performance of one or more reference obligations or assets.
In all of the above-referenced credit derivative transactions, the same general risks inherent to derivative transactions
are present. However, credit derivative transactions also carry with them greater risks of imperfect correlation between
the performance and price of the underlying reference security or asset, and the general performance of the
designated interest rate or index which is the basis for the periodic payment. If a Fund writes a credit default swap, it
receives an up-front premium. A Fund’s exposure under a credit default swap, though, is a form of leverage and will be
subject to the restrictions on leveraged derivatives.
Inverse Floaters
. A Fund may invest in inverse floating rate municipal securities or “inverse floaters,” sometimes also
referred to as a “residual interest certificates.” Inverse floaters are issued by tender option bond trusts (“trusts”) that are
established by a third party sponsor in connection with the transfer of municipal bonds to the trusts. In addition to
inverse floaters, these trusts typically issue short-term floating rate notes which are usually sold to money market
funds (“floating rate notes”). An inverse floater is a type of “derivative” debt instrument with a floating or variable
interest rate that moves in the opposite direction of the interest rate on another security, normally the floating rate
note. Because changes in the interest rate on the note inversely affect the rate of interest received on an inverse floater,
and because inverse floaters essentially represent a leveraged investment in a long-term bond, the value of an inverse
floater is generally more volatile than that of a conventional fixed-rate municipal bond having similar credit quality,
redemption provisions and maturity. Inverse floaters may have interest rate adjustment formulas which generally
reduce or eliminate the interest paid to a Fund when short-term interest rates rise, and increase the interest paid to a
Fund when short-term interest rates fall. The value of inverse floaters also tends to fall faster than the value of fixed rate
municipal bonds when interest rates rise, and conversely, their value tends to rise more rapidly when interest rates fall.
Inverse floaters have varying degrees of liquidity, and the market for these securities is relatively volatile. Inverse
floaters tend to underperform the market for fixed rate municipal bonds in a rising long-term interest rate
environment, but tend to outperform that market when long-term interest rates decline.
An investment in inverse floaters may involve greater risk than an investment in a fixed-rate municipal security. All
inverse floaters entail some degree of leverage. The interest rate on inverse floaters varies inversely at a pre-set
multiple of the change in short-term rates. An inverse floater that has a higher multiple, and therefore more leverage,
will be more volatile with respect to both price and income than an inverse floater with a lower degree of leverage or
than the underlying security. The markets for inverse floating rate securities may be less developed and have less
liquidity than the markets for conventional securities.
Under applicable financial accounting standards, inverse floater transactions in which the Fund has transferred a
municipal security it owned to a trust are considered a form of secured borrowing for financial reporting purposes,
requiring expenses and income to be shown in gross amount on the statement of operations. This increases a fund’s
overall expense ratio. This accounting treatment does not apply to any inverse floaters acquired by the Fund that were
created by a third-party’s transfer of a municipal security to the issuing trust.
Futures and Options Contracts
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In General.
A futures transaction involves a firm agreement to buy or sell a commodity or financial instrument at a
particular price on a specified future date, while an option transaction generally involves a right, which may or may not
be exercised, to buy or sell a commodity or financial instrument at a particular price on a specified future date. Futures
contracts and options are standardized and exchange-traded, where the exchange serves as the ultimate counterparty
for all contracts. Consequently, the primary credit risk on futures contracts is the creditworthiness of the exchange.
Futures contracts, however, are subject to market risk (i.e., exposure to adverse price changes).
Initially, when purchasing or selling futures contracts, the Fund will be required to deposit with the Fund’s custodian in
the broker’s name or with the broker as required an amount of cash or cash equivalents. This amount is subject to
change by the exchange or board of trade on which the contract is traded, and members of such exchange or board of
trade may impose their own higher requirements. This amount is known as “initial margin” and is in the nature of a
performance bond or good faith deposit on the contract that is returned to the Fund upon termination of the futures
position, assuming all contractual obligations have been satisfied. Subsequent payments, known as “variation margin,”
to and from the broker will be made daily as the price of the index or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract more or less valuable. At any time prior to the
expiration of a futures contract, a Fund may elect to close the position by taking an opposite position, at the then
prevailing price, thereby terminating its existing position in the contract.
Although a Fund intends to purchase or sell futures contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price
beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices
could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting a Fund to substantial losses. If it is not possible, or a Fund
determines not to close a futures position in anticipation of adverse price movements, the Fund will be required to
make daily cash payments of variation margin.
An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise
price at any time during the option exercise period. The writer (i.e., seller) of the option is required upon exercise to
assume an offsetting futures position (a short position if the option is a call and a long position if the option is a put).
Upon exercise of the option, the assumption of offsetting futures positions by both the writer and the holder of the
option will be accompanied by delivery of the accumulated cash balance in the writer’s futures margin account in the
amount by which the market price of the futures contract, at exercise, exceeds (in the case of a call) or is less than (in
the case of a put) the exercise price of the option on the futures contract. The potential loss related to the purchase of
options on futures contracts is limited to the premium paid for the option (plus transaction costs). Because the value of
the option is fixed at the time of sale, there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option may change daily, and that change would be reflected in the net
asset value (“NAV”) of the Fund.
A Fund may trade futures contracts and options on futures contracts in U.S. domestic markets, such as the Chicago
Board of Trade and the International Monetary Market of the Chicago Mercantile Exchange. Pursuant to regulations
and/or published positions of the SEC, a Fund may be required to segregate cash or high-quality money-market
instruments in connection with its futures transactions in an amount generally equal to the entire value of the
underlying security.
A Fund may engage in futures contracts sales to maintain the income advantage from continued holding of a
long-term security while endeavoring to avoid part or all of the loss in market value that would otherwise accompany
a decline in long-term security prices. If, however, securities prices rise, a Fund would realize a loss in closing out its
futures contract sales that would offset any increases in prices of the long-term securities they hold.
Another risk in employing futures contracts and options thereon to protect against cash market price volatility is the
possibility that futures prices will correlate imperfectly with the behavior of the prices of the securities in such portfolio
(the portfolio securities will not be identical to the debt instruments underlying the futures contracts).
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Options Trading.
Options on individual securities or options on indices of securities may be purchased or sold. The
purchaser of an option risks a total loss of the premium paid for the option if the price of the underlying security does
not increase or decrease sufficiently to justify the exercise of such option. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but foregoes any capital appreciation in
excess of the exercise price in the case of a call option and may be required to pay a price in excess of current market
value in the case of a put option.
A call option for a particular security gives the purchaser of the option the right to buy, and a writer the obligation to
sell, the underlying security at the stated exercise price at any time prior to the expiration of the option, regardless of
the market price of the security. The premium paid to the writer is in consideration for undertaking the obligation
under the option contract. A put option for a particular security gives the purchaser the right to sell, and the writer the
option to buy, the security at the stated exercise price at any time prior to the expiration date of the option, regardless
of the market price of the security.
A Fund will write call options only if they are “covered.” In the case of a call option on a security or currency, the option
is “covered” if a Fund owns the instrument underlying the call or has an absolute and immediate right to acquire that
instrument without additional cash consideration (or, if additional cash consideration is required, cash, U.S.
Government securities or other liquid high-grade debt obligations, in such amount are held in a segregated account
by such Fund’s custodian) upon conversion or exchange of other securities held by it. For a call option on an index, the
option is covered if a Fund maintains with its custodian a diversified portfolio of securities comprising the index or
liquid assets equal to the contract value. A call option is also covered if a Fund holds an offsetting call on the same
instrument or index as the call written.
A Fund may buy put and call options and write covered call and secured put options. Options trading is a highly
specialized activity which entails greater than ordinary investment risk. Options may be more volatile than the
underlying instruments, and therefore, on a percentage basis, an investment in options may be subject to greater
fluctuation than an investment in the underlying instruments themselves. Purchasing options is a specialized
investment technique that entails a substantial risk of a complete loss of the amounts paid as premiums to the writer
of the option. If the sub-adviser is incorrect in its forecast of market value or other factors when writing options, the
Fund would be in a worse position than it would have been had if it had not written the option. If a Fund wishes to sell
an underlying instrument (in the case of a covered call option) or liquidate assets in a segregated account (in the case
of a secured put option), the Fund must purchase an offsetting option if available, thereby incurring additional
transactions costs.
Below is a description of some of the types of futures and options in which the Funds may invest.
Stock Index Options
. A Fund may purchase and write (i.e., sell) put and call options on stock indices only as a substitute
for comparable market positions in the underlying securities. A stock index fluctuates with changes of the market
values of the stocks included in the index. The effectiveness of purchasing or writing stock index options will depend
upon the extent to which price movements of the securities in a Fund’s portfolio correlate with price movements of
the stock index selected. Because the value of an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether a Fund will realize a gain or loss from purchasing or writing stock
index options depends upon movements in the level of stock prices in the stock market generally or, in the case of
certain indices, in an industry or market segment, rather than movements in the price of particular stock. When a Fund
writes an option on a stock index, such Funds will place in a segregated account with the Fund’s custodian cash or
liquid securities in an amount at least equal to the market value of the underlying stock index and will maintain the
account while the option is open or otherwise will cover the transaction.
Stock Index Futures and Options on Stock Index Futures
. A Fund may invest in stock index futures and options on stock
index futures only as a substitute for a comparable market position in the underlying securities. A stock index future
obligates the seller to deliver (and the purchaser to take), effectively, an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the close of the last trading day of the
contract and the price at which the agreement is made. No physical delivery of the underlying stocks in the index is
made. With respect to stock indices that are permitted investments, each Fund intends to purchase and sell futures
contracts on the stock index for which it can obtain the best price with consideration also given to liquidity.
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Foreign Currency Futures Contracts
. A Fund may invest in foreign currency futures contracts which entail the same risks
as other futures contracts as described above, but have the additional risks associated with international investing (see
“Foreign Obligations and Securities” below). Similar to other futures contracts, a foreign currency futures contract is an
agreement for the future delivery of a specified currency at a specified time and at a specified price that will be
secured by margin deposits, is regulated by the CFTC and is traded on designated exchanges. A Fund will incur
brokerage fees when it purchases and sells futures contracts.
To the extent that a Fund may invest in securities denominated in currencies other than the U.S. dollar and may
temporarily hold funds in bank deposits or other money market investments denominated in foreign currencies, it
may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between
such currencies and the dollar. The rate of exchange between the U.S. dollar and other currencies is determined by the
forces of supply and demand in the foreign exchange markets. The international balance of payments and other
economic and financial conditions, government intervention, speculation and other factors affect these forces.
If a fall in exchange rates for a particular currency is anticipated, a Fund may sell a foreign currency futures contract as
a hedge. If it is anticipated that exchange rates will rise, a Fund may purchase a foreign currency futures contract to
protect against an increase in the price of securities denominated in a particular currency the Fund intends to
purchase. These foreign currency futures contracts will be used only as a hedge against anticipated currency rate
changes. Although such contracts are intended to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might result should the value of such currency
increase.
The use of foreign currency futures contracts involves the risk of imperfect correlation between movements in futures
prices and movements in the price of currencies which are the subject of the hedge. The successful use of foreign
currency futures contracts also depends on the ability of the sub-adviser to correctly forecast interest rate movements,
currency rate movements and general stock market price movements. There can be no assurance that the
sub-adviser’s judgment will be accurate. The use of foreign currency futures contracts also exposes a Fund to the
general risks of investing in futures contracts, including: the risk of an illiquid market for the foreign currency futures
contracts and the risk of adverse regulatory actions. Any of these events may cause a Fund to be unable to hedge its
currency risks, and may cause a Fund to lose money on its investments in foreign currency futures contracts.
Interest Rate Futures Contracts and Options on Interest Rate Futures Contracts
. A Fund may invest in interest rate futures
contracts and options on interest rate futures contracts as a substitute for a comparable market position in the
underlying securities. The Fund may also sell options on interest rate futures contracts as part of closing purchase
transactions to terminate its options positions. No assurance can be given that such closing transactions can be
effected or as to the degree of correlation between price movements in the options on interest rate futures and price
movements in the Fund’s portfolio securities which are the subject of the transaction.
Future Developments
. A Fund may take advantage of opportunities in the areas of options and futures contracts and
options on futures contracts and any other derivative investments which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed, to the extent such opportunities are both
consistent with a Fund’s investment objective and legally permissible for the Fund.
Swap Agreements and Swaptions
Swap agreements are derivative instruments that can be individually negotiated and structured to address exposure
to a variety of different types of investments or market factors. Depending on their structure, swap agreements may
increase or decrease a Fund’s exposure to long- or short-term interest rates, foreign currency values, mortgage
securities, corporate borrowing rates, or other factors such as security prices or inflation rates. A Fund may enter into a
variety of swap agreements, including interest rate, index, commodity, equity, credit default and currency exchange
rate swap agreements, and other types of swap agreements such as caps, collars and floors. A Fund also may enter into
swaptions, which are options to enter into a swap agreement. In a swaption, in exchange for an option premium, the
purchaser of the swaption acquires the right, but not the obligation, to enter into a specified swap agreement with a
counterparty on a specified future date. If there is a default by the other party to a swap agreement or swaption, the
Fund will have contractual remedies pursuant to the agreements related to the transaction.
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The use of swaps and swaptions is a highly specialized activity that involves investment techniques and risks different
from those associated with ordinary portfolio security transactions. These transactions generally do not involve the
delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to swap
agreements and swaptions generally is limited to the net amount of payments that the Fund is contractually obligated
to make. There is also a risk of a default by the other party to a swap agreement or swaption, in which case a Fund may
not receive the net amount of payments that such Fund contractually is entitled to receive.
Interest Rate Swap Agreements
. In a typical interest rate swap, one party agrees to make regular payments equal to a
floating interest rate times a “notional principal amount,” in return for payments equal to a fixed rate times the same
amount, for a specified period of time. The exchange commitment can involve payments to be made in the same
currency or in different currencies. A Fund will usually enter into swap agreements on a net basis. In so doing, the two
payment streams under the swap agreement are netted out, with the Fund receiving or paying, as the case may be,
only the net amount of the two payments. If the Fund enters into a swap agreement, it will maintain a segregated
account on a gross basis, unless the contract provides for a segregated account on a net basis. If a swap agreement
provides for payments in different currencies, the parties might agree to exchange notional principal amount as well.
In a total return swap agreement, the non-floating rate side of the swap is based on the total return of an individual
security, a basket of securities, an index or another reference asset. Swaps may also depend on other prices or rates,
such as the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in
return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon
level. Caps and floors have an effect similar to buying or writing options. A collar combines elements of buying a cap
and selling a floor.
Swap agreements will tend to shift a Fund’s investment exposure from one type of investment to another. For
example, if a Fund agreed to pay fixed rates in exchange for floating rates while holding fixed-rate bonds, the swap
would tend to decrease a Fund’s exposure to long-term interest rates. Another example is if a Fund agreed to
exchange payments in dollars for payments in foreign currency, the swap agreement would tend to decrease a Fund’s
exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates.
Swap agreements are sophisticated hedging instruments that typically involve a small investment of cash relative to
the magnitude of risks assumed. As a result, swaps can be highly volatile and may have a considerable impact on a
Fund’s performance. Depending on how they are used, swap agreements may increase or decrease the overall
volatility of a Fund’s investments and its share price and yield. Additionally, whether a Fund’s use of swap agreements
will be successful in furthering its investment objective will depend on the sub-adviser’s ability correctly to predict
whether certain types of investments likely are to produce greater returns than other investments. Because they are
two party contracts and because they may have terms of greater than seven days, swap agreements may be
considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement counterparty. The most significant factor in
the performance of swap agreements is the change in the specific interest rate, currency, or other factor that
determines the amounts of payments due to and from a Fund. If a swap agreement calls for payments by a Fund, a
Fund must be prepared to make such payments when due. In addition, if the counterparty’s creditworthiness declines,
the value of a swap agreement likely would decline, potentially resulting in losses for a Fund. A Fund will closely
monitor the credit of a swap agreement counterparty in order to attempt to minimize this risk. A Fund may also suffer
losses if it is unable to terminate outstanding swap agreements (either by assignment or other disposition) or reduce
its exposure through offsetting transactions (i.e., by entering into an offsetting swap agreement with the same party or
a similarly creditworthy party).
Credit Default Swap Agreements
. A Fund may enter into credit default swap agreements, which may have as reference
obligations one or more securities or a basket of securities that are or are not currently held by a Fund. The protection
“buyer” in a credit default swap agreement is generally obligated to pay the protection “seller” an upfront or a periodic
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stream of payments over the term of the contract provided that no credit event, such as a default, on a reference
obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional
value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in
the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. A Fund may
be either the buyer or seller in the transaction. If a Fund is a buyer and no credit event occurs, a Fund may recover
nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may
elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of
the reference entity whose value may have significantly decreased. As a seller, a Fund generally receives an upfront
payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. As the seller,
a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, a Fund would be
subject to investment exposure on the notional amount of the swap.
Credit default swap agreements may involve greater risks than if a Fund had invested in the reference obligation
directly since, in addition to risks relating to the reference obligation, credit default swaps are subject to illiquidity risk,
counterparty risk and credit risk. A Fund will enter into credit default swap agreements generally with counterparties
that meet certain standards of creditworthiness. A buyer generally also will lose its investment and recover nothing
should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of
any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received,
may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller.
Equity Swaps
. A Fund may engage in equity swaps. Equity swaps allow the parties to the swap agreement to exchange
components of return on one equity investment (e.g., a basket of equity securities or an index) for a component of
return on another non-equity or equity investment, including an exchange of differential rates of return. Equity swaps
may be used to invest in a market without owning or taking physical custody of securities in circumstances where
direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps also may be used for
other purposes, such as hedging or seeking to increase total return.
The values of equity swaps can be very volatile. To the extent that the sub-adviser does not accurately analyze and
predict the potential relative fluctuation on the components swapped with the other party, a Fund may suffer a loss.
The value of some components of an equity swap (such as the dividend on a common stock) may also be sensitive to
changes in interest rates. Furthermore, during the period a swap is outstanding, a Fund may suffer a loss if the
counterparty defaults.
Total Return Swap Agreements
. Total return swap agreements are contracts in which one party agrees to make periodic
payments to another party based on the change in market value of the assets underlying the contract, which may
include a specified security, basket of securities or securities indices during the specified period, in return for periodic
payments based on a fixed or variable interest rate or the total return from other underlying assets. Total return swap
agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such
security or investing directly in such market. Total return swap agreements may effectively add leverage to a Fund’s
portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional
amount of the swap.
Total return swap agreements are subject to the risk that a counterparty will default on its payment obligations to a
Fund thereunder, and conversely, that a Fund will not be able to meet its obligation to the counterparty. Generally, a
Fund will enter into total return swaps on a net basis (i.e., the two payment streams are netted against one another
with a Fund receiving or paying, as the case may be, only the net amount of the two payments). The net amount of the
excess, if any, of a Fund’s obligations over its entitlements with respect to each total return swap will be accrued on a
daily basis, and an amount of liquid assets having an aggregate net asset value at least equal to the accrued excess will
be segregated by a Fund. If the total return swap transaction is entered into on other than a net basis, the full amount
of a Fund’s obligations will be accrued on a daily basis, and the full amount of a Fund’s obligations will be segregated
by a Fund in an amount equal to or greater than the market value of the liabilities under the total return swap
agreement or the amount it would have cost a Fund initially to make an equivalent direct investment, plus or minus
any amount a Fund is obligated to pay or is to receive under the total return swap agreement.
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Variance, Volatility and Correlation Swap Agreements
. Variance and volatility swaps are contracts that provide exposure
to increases or decreases in the volatility of certain referenced assets. Correlation swaps are contracts that provide
exposure to increases or decreases in the correlation between the prices of different assets or different market rates.
Permitted Investment Activities and Certain Associated Risks
Set forth below are descriptions of permitted investment activities for the Fund and certain of its associated risks. The
activities are organized into various categories. To the extent that an activity overlaps two or more categories, the
activity is referenced only once in this section. The Fund is subject to the limitations as described in this section and
elsewhere in this SAI and/or the Prospectus(es). The Fund does not necessarily participate in all of the investment
activities described below. For purposes of monitoring the investment policies and restrictions of the Fund (with the
exception of the loans of portfolio securities policy described below), the amount of any securities lending collateral
held by the Fund will be excluded in calculating total assets. Unless otherwise noted or required by applicable law, the
percentage limitations and qualitative investment policies included in this SAI or the Prospectus apply at the time of
purchase of a security. To the extent a security type is described in this SAI that is not referenced in the
Prospectus(es), the Fund under normal circumstances will not invest more than 15% of its assets in the security type
unless otherwise specified.
The Prospectus(es) identify and summarize the types of securities and assets in which the Fund may invest as part of
its principal investment strategies, and the principal risks associated with such investments. This SAI identifies and
summarizes other types of securities and assets in which the Fund may invest, each of which is subject to the same
kinds of risks as are described in the Prospectus(es). Certain additional risks associated with each type of investment
are identified and described below.
DEBT SECURITIES
Bank Obligations
Bank obligations include certificates of deposit, time deposits, bankers’ acceptances and other short-term obligations
of domestic banks, foreign subsidiaries of domestic banks, foreign branches of domestic banks, domestic and foreign
branches of foreign banks, domestic savings and loan associations and other banking institutions. With respect to such
obligations issued by foreign branches of domestic banks, foreign subsidiaries of domestic banks, and domestic and
foreign branches of foreign banks, a Fund may be subject to additional investment risks that are different in some
respects from those incurred by a Fund that invests only in debt obligations of domestic issuers. Such risks include
possible future political, regulatory or economic developments, the possible imposition of foreign withholding and
other taxes (at potentially confiscatory levels) on amounts realized on such obligations, the possible establishment of
exchange controls or the adoption of other foreign governmental restrictions that might adversely affect the payment
of principal and interest on these obligations and the possible seizure or nationalization of foreign deposits. In
addition, foreign branches of U.S. banks and foreign banks may be subject to less stringent reserve requirements and
to different regulatory, accounting, auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.
Certificates of deposit are negotiable certificates evidencing the obligation of a bank to repay funds deposited with it
for a specified period of time.
Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a
stated interest rate. Time deposits that may be held by a Fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”).
Bankers’ acceptances are credit instruments evidencing the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include uninsured, direct obligations, bearing fixed,
floating or variable interest rates.
Commercial Paper
Commercial paper (including variable amount master demand notes, see “Floating and Variable Rate Obligations”
below), refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and typically has a maturity at the time of issuance not exceeding
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nine months. Variable amount master demand notes are demand obligations which permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements between the issuer and a
commercial bank acting as agent for the payee of such notes whereby both parties have the right to vary the amount
of the outstanding indebtedness on the notes.
Asset-Backed Commercial Paper
. Securities that are issued from commercial paper conduits are called asset-backed
commercial paper securities. Credit support for such securities falls into two categories: liquidity protection and
protection against ultimate default under the underlying assets. Liquidity protection refers to the provision of
advances, generally by the entity administering the pool of assets, to ensure that scheduled payments on the
securities or underlying pool are made in a timely fashion. Protection against ultimate default ensures payment on at
least a portion of the assets in the pool. This protection may be provided through guarantees, insurance policies or
letters of credit obtained from third parties, through various means of structuring the transaction, such as by issuing
senior and subordinated instruments or through a combination of these approaches. The degree of credit support
provided on each issue is based generally on historical information relating to the level of credit risk associated with
the payments. Delinquency or loss that exceeds the anticipated amount or a downgrade or loss of credit support
could adversely impact the value of or return on an investment in an asset-backed commercial paper security.
Commercial paper is also subject to the risks generally associated with debt securities discussed elsewhere in this SAI
and the Prospectus(es).
Convertible Securities
A convertible security is generally a debt obligation or preferred stock that may be converted within a specified period
of time into a certain amount of common stock of the same or a different issuer. A convertible security provides a
fixed-income stream and the opportunity, through its conversion feature, to participate in the capital appreciation
resulting from a market price advance in its underlying common stock. As with a straight fixed-income security, a
convertible security tends to increase in market value when interest rates decline and decrease in value when interest
rates rise. Like a common stock, the value of a convertible security also tends to increase as the market value of the
underlying stock rises, and it tends to decrease as the market value of the underlying stock declines. Because its value
can be influenced by both interest-rate and market movements, a convertible security tends not to be as sensitive to
interest rates as a similar fixed-income security, and tends not to be as sensitive to changes in share price as its
underlying stock.
Investing in convertible securities is subject to certain risks in addition to those generally associated with debt
securities discussed elsewhere in this SAI and the Prospectus(es). Certain convertible securities, particularly securities
that are convertible into securities of an issuer other than the issuer of the convertible security, may be or become
illiquid and, therefore, may be more difficult to resell in a timely fashion or for a fair price, which could result in
investment losses.
The creditworthiness of the issuer of a convertible security is important because the holder of a convertible security
will have recourse only to the issuer. In addition, a convertible security may be subject to conversion or redemption by
the issuer, but only after a specified date and under circumstances established at the time the security is issued. This
feature may require a holder to convert the security into the underlying common stock, even if the value of the
underlying common stock has declined substantially. In addition, companies that issue convertible securities
frequently are small- and mid-capitalization companies and, accordingly, carry the risks associated with investments in
such companies.
While the Funds use the same criteria to evaluate the credit quality of a convertible debt security that they would use
for a more conventional debt security, a convertible preferred stock is treated like a preferred stock for a Fund’s credit
evaluation, as well as financial reporting and investment limitation purposes. Preferred stock is subordinated to all
debt obligations in the event of insolvency, and an issuer’s failure to make a dividend payment is generally not an
event of default entitling the preferred shareholders to take action. Preferred stock generally has no maturity date, so
its market value is dependent on the issuer’s business prospects for an indefinite period of time. In addition,
distributions on preferred stock generally are taxable as dividend income, rather than interest payments, for federal
income tax purposes.
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Contingent Convertible Bonds.
Contingent convertible bonds are a type of convertible security typically issued by
non-U.S. banks. Unlike more traditional convertible securities, which typically may convert into equity after the issuer’s
common stock has reached a certain strike price, the trigger event for a contingent convertible bond is typically a
decline in the issuing bank’s capital threshold below a specified level. Contingent convertible bonds typically are
subordinated to other debt instruments of the issuer and generally rank junior to the claims of all holders of
unsubordinated obligations of the issuer. Coupon payments on contingent convertible securities may be discretionary
and may be cancelled by the issuer. Contingent convertible bonds are a new form of instrument, and the market and
regulatory environment for contingent convertible bonds is evolving. Therefore, it is uncertain how the overall market
for contingent convertible bonds would react to a triggering event or coupon suspension applicable to one issuer. A
Fund may lose money on its investment in a contingent convertible bond when holders of the issuer’s equity securities
do not.
Custodial Receipts for Treasury Securities
These securities are typically represented by participations in trusts that hold U.S. Treasury securities, such as Treasury
Investors Growth Receipts and Certificates of Accrual on Treasury Securities, or other obligations where the trust
participations evidence ownership in either the future interest payments or the future principal payments on the
obligations. These participations are normally issued at a discount to their “face value,” and can exhibit greater price
volatility than ordinary debt securities because of the way in which their principal and interest are returned to
investors.
Dollar Roll Transactions
Dollar roll transactions are transactions wherein a Fund sells fixed-income securities, such as mortgage-backed
securities,and makes a commitment to purchase similar, but not identical, securities at a later date from the same
party. Like a forward commitment, during the roll period no payment is made for the securities purchased and no
interest or principal payments on the security accrue to the purchaser, but the Fund assumes the risk of ownership. A
Fund is compensated for entering into dollar roll transactions by the difference between the current sales price and
the forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale. Like
other when-issued securities or firm commitment agreements, dollar roll transactions involve the risk that the market
value of the securities sold by a Fund may decline below the price at which the Fund is committed to purchase similar
securities. In the event the buyer of securities from a Fund under a dollar roll transaction becomes insolvent, the Fund’s
use of the proceeds of the transaction may be restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund’s obligation to repurchase the securities. A Fund will engage in dollar roll
transactions for the purpose of acquiring securities for its portfolio and not for investment leverage.
Floating- and Variable-Rate Obligations
Floating- and variable-rate obligations include obligations such as demand notes and bonds. Variable-rate demand
notes include master demand notes that are obligations that permit a Fund to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund, as lender, and the borrower. The
interest rate on a floating-rate demand obligation is based on a referenced lending rate, such as a bank’s prime rate,
and is adjusted automatically each time such rate is adjusted. The interest rate on a variable-rate demand obligation is
adjusted automatically at specified intervals. The issuer of such obligations ordinarily has a right, after a given period,
to prepay at its discretion the outstanding principal amount of the obligations plus accrued interest upon a specified
number of days notice to the holders of such obligations. Frequently, such obligations are secured by letters of credit
or other credit support arrangements provided by banks. Such features often include unconditional and irrevocable
letters of credit that are issued by a third party, usually a bank, savings and loan association or insurance company
which assumes the obligation for payment of principal and interest in the event of default by the issuer. Letters of
credit are designed to enhance liquidity and ensure repayment of principal and any accrued interest if the underlying
variable-rate demand obligation should default. Some variable rate obligations feature other credit enhancements,
such as standby bond purchase agreements (“SBPAs”). An SBPA can feature a liquidity facility that is designed to
provide funding for the purchase price of variable rate obligations that are unable to be successfully remarketed for
resale. The liquidity facility provider is obligated solely to advance funds for the purchase of tendered variable rate
bonds that fail to be remarketed and does not guarantee the repayment of principal or interest. The liquidity facility
provider’s obligations under the SBPA are subject to conditions, including the continued creditworthiness of the
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underlying borrower or issuer, and the facility may terminate upon the occurrence of certain events of default or at the
expiration of its term. In addition, a liquidity facility provider may be unable or unwilling to perform its obligations. A
Fund may be unable to timely dispose of a variable rate obligation if the underlying issuer defaults and the letter of
credit or liquidity facility provider is unable or unwilling to perform its obligations or the facility otherwise terminates
and a successor letter of credit or liquidity provider is not immediately obtained. The potential adverse impact to a
Fund resulting from the inability of a letter of credit or liquidity facility provider to meet its obligations could be
magnified to the extent the provider also furnishes credit support for other variable-rate obligations held by the Fund.
There generally is no established secondary market for certain variable-rate obligations, such as those not supported
by letters of credit, SBPAs or other credit support arrangements, because they are direct lending arrangements
between the lender and borrower. Accordingly, where these obligations are not secured by letters of credit, SBPAs or
other credit support arrangements, a Fund is dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations may not be rated by credit rating agencies and a Fund may invest in obligations which are
not so rated only if the manager determines that at the time of investment the obligations are of comparable quality
to the other obligations in which such Fund may invest. The manager, on behalf of a Fund, monitors the
creditworthiness of the issuers of the floating- and variable-rate demand obligations in such Fund’s portfolio. Floating-
and variable-rate instruments are subject to interest-rate and credit risks and other risks generally associated with debt
securities.The floating- and variable-rate instruments that the Funds may purchase include certificates of participation
in such instruments.
Letters of Credit
Certain of the debt obligations (including certificates of participation, commercial paper and other short-term
obligations) which a Fund may purchase may be backed by an unconditional and irrevocable letter of credit of a bank,
savings and loan association or insurance company which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Only banks, savings banks and insurance companies which, in the opinion
of the sub-adviser, are of comparable quality to issuers of other permitted investments of the Fund, may be used for
letter of credit-backed investments.
Loans
Loans in which a Fund may invest are subject generally to the same risks as debt securities in which the Fund may
invest. Loans in which a Fund invests may be made to finance highly leveraged corporate acquisitions. The highly
leveraged capital structure of the borrowers in such transactions may make such loans especially vulnerable to
adverse changes in economic or market conditions. Loans generally are subject to restrictions on transfer, and only
limited opportunities may exist to sell such participations in secondary markets. As a result, a Fund may be unable to
sell loans at a time when it may otherwise be desirable to do so or may be able to sell them only at a price that is less
than their fair market value. Market bids may be unavailable for loans from time to time; a Fund may find it difficult to
establish a fair value for loans held by it. If a Fund only acquires an assignment or a participation in a loan made by a
third party, the Fund may not be able to control the exercise of any remedies that the lender would have under the
corporate loan. In addition, a Fund may have to rely on the assignor(s) or participating institution(s) to demand and
receive payments in respect of the loans, and to pay those amounts on to the Fund; the Fund will be subject to the risk
that the assignor(s) may be unwilling or unable to do so. Many loans in which a Fund invests may be unrated, and the
portfolio manager will be required to rely exclusively on its analysis of the borrower in determining whether to acquire,
or to continue to hold, a loan. In addition, under legal theories of lender liability, a Fund potentially might be held
liable as a co-lender.
Synthetic Convertible Securities
“Synthetic” convertible securities, are derivative positions composed of two or more different securities whose
investment characteristics, taken together, resemble those of convertible securities. For example, a Fund may purchase
a non-convertible debt security and a warrant or option, which enables a Fund to have a convertible-like position with
respect to a company, group of companies or stock index. Synthetic convertible securities are typically offered by
financial institutions and investment banks in private placement transactions. Upon conversion, a Fund generally
receives an amount in cash equal to the difference between the conversion price and the then current value of the
underlying security. Unlike a true convertible security, a synthetic convertible comprises two or more separate
securities, each with its own market value. Therefore, the market value of a synthetic convertible is the sum of the
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values of its fixed-income component and its convertible component. For this reason, the values of a synthetic
convertible and a true convertible security may respond differently to market fluctuations. A Fund only invests in
synthetic convertibles with respect to companies whose corporate debt securities are rated “A” or higher by Moody’s or
S&P.
Unrated Investments
A Fund may purchase instruments that are not rated if, in the opinion of the sub-adviser, such obligations are of
investment quality comparable to other rated investments that are permitted to be purchased by such Fund. After
purchase by a Fund, a security may cease to be rated or its rating may be reduced below the minimum required for
purchase by such Funds. Neither event will require a sale of such security by the Fund. To the extent the ratings given
by Moody’s, Fitch, or S&P may change as a result of changes in such organizations or their rating systems, a Fund will
attempt to use comparable ratings as standards for investments in accordance with the investment policies contained
in its Prospectus and in this SAI.
U.S. Government Obligations
U.S. Government obligations include securities issued by the U.S. Treasury, U.S. Government agencies or U.S.
Government sponsored entities. While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S.
Government, securities issued by U.S. Government agencies or government-sponsored entities may not be backed by
the full faith and credit of the U.S. Government. The Government National Mortgage Association (“GNMA”), a wholly
owned U.S. Government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government,
the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by
pools of mortgages insured by the Federal Housing Administration or the Department of Veterans Affairs.
Government-sponsored entities (whose obligations are not backed by the full faith and credit of the U.S. Government)
include the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation
(“FHLMC”). Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by
FNMA but are not backed by the full faith and credit of the U.S. Government. FHLMC guarantees the timely payment of
interest and ultimate collection or scheduled payment of principal, but its participation certificates are not backed by
the full faith and credit of the U.S. Government. If a government-sponsored entity is negatively impacted by legislative
or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that
holds securities of the entity will be adversely impacted. U.S. Government obligations are subject to low but varying
degrees of credit risk, and are still subject to interest rate and market risk. U.S. Government obligations may be
adversely affected by a default by, or decline in the credit quality of, the U.S. Government.
EQUITY SECURITIES
Initial Public Offerings
Smaller companies may offer initial public offerings which typically have additional risks including more limited
product lines, markets and financial resources than larger, more seasoned companies and their securities may trade
less frequently and in more limited volume than those of larger, more mature companies.
Preferred Stock
Preferred stocks represent an equity or ownership interest in an issuer that pay dividends at a specified rate and that
has precedence over common stock in the payment of dividends. In the event an issuer is liquidated or declares
bankruptcy, the claims of owners of bond take precedence over the claims of those who own preferred securities and
common stock.
Smaller Company Securities
Investments in smaller capitalization companies carry greater risk than investments in larger capitalization companies.
Smaller capitalization companies generally experience higher growth rates and higher failure rates than do larger
capitalization companies; and the trading volume of smaller capitalization companies’ securities is normally lower than
that of larger capitalization companies and, consequently, generally has a disproportionate effect on market price
(tending to make prices rise more in response to buying demand and fall more in response to selling pressure).
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Securities owned by a Fund that are traded in the over-the-counter market or on a regional securities exchange may
not be traded every day or in the volume typical of securities trading on a national securities exchange. As a result,
disposition by a Fund of a portfolio security, to meet redemption requests by other investors or otherwise, may require
the Fund to sell these securities at a discount from market prices, to sell during periods when disposition is not
desirable, or to make many small sales over a lengthy period of time.
Investments in smaller, less seasoned issuers generally carry greater risk than is customarily associated with larger,
more seasoned companies. Such issuers often have products and management personnel that have not been tested
by time or the marketplace and their financial resources may not be as substantial as those of more established
companies. Their securities (which a Fund may purchase when they are offered to the public for the first time) may
have a limited trading market that can adversely affect their sale by a Fund and can result in such securities being
priced lower than otherwise might be the case. If other institutional investors were to engage in trading this type of
security, a Fund may be forced to dispose of its holdings in this type of security at prices lower than might otherwise
be obtained in the absence of institutional trading in such security.
FOREIGN SECURITIES AND CURRENCY TRANSACTIONS
Emerging Market Securities
The Funds consider countries with emerging markets to include the following: (i) countries included in the MSCI
Emerging Markets Index; and (ii) countries with low- to middle-income economies according to the International Bank
for Reconstruction and Development (more commonly referred to as the World Bank). Examples of countries that are
commonly considered to have emerging markets include, but are not limited to, Brazil, Chile, China, Colombia, Czech
Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Peru, the Philippines, Poland, Russia, South Africa, South
Korea, Taiwan, Thailand and Turkey.
Equity securities of emerging market issuers may include common stock, preferred stocks (including convertible
preferred stocks) and warrants, bonds, notes and debentures convertible into common or preferred stock, equity
interests in foreign investment funds or trusts and real estate investment trust (“REIT”) securities. The Funds may invest
in American Depositary Receipts (“ADRs”), Canadian Depositary Receipts (“CDRs”), European Depositary Receipts
(“EDRs”), Global Depositary Receipts (“GDRs”) and International Depositary Receipts (“IDRs”) of such issuers.
There are special risks involved in investing in emerging-market countries. Many investments in emerging markets can
be considered speculative, and their prices can be much more volatile than in the more developed nations of the
world. This difference reflects the greater uncertainties of investing in less established markets and economies. The
financial markets of emerging markets countries are generally less well capitalized and thus securities of issuers based
in such countries may be less liquid. Most are heavily dependent on international trade, and some are especially
vulnerable to recessions in other countries. Many of these countries are also sensitive to world commodity prices.
Some countries may still have obsolete financial systems, economic problems or archaic legal systems. The currencies
of certain emerging market countries, and therefore the value of securities denominated in such currencies, may be
more volatile than currencies of developed countries. In addition, many of these nations are experiencing political and
social uncertainties.
Furthermore, with respect to certain foreign countries, taxes may be withheld at the source under foreign tax laws, and
there is a possibility of expropriation or potentially confiscatory levels of taxation, political, social and monetary
instability or diplomatic developments that could adversely affect investments in, the liquidity of, and the ability to
enforce contractual obligations with respect to, securities of issuers located in those countries. Amounts realized on
foreign securities in which a Fund may invest may be subject to foreign withholding or other taxes that could reduce
the return on these securities. Applicable tax treaties between the United States and foreign countries, however, may
reduce or eliminate the amount of foreign taxes to which the Funds would otherwise be subject.
Foreign Obligations and Securities
The Funds consider equity securities of foreign issuers (or foreign securities) to be equity securities: (1) issued by
companies with their principal place of business or principal office or both, as determined in the sub-adviser’s
reasonable discretion, in a country, other than the U.S.; or (2) issued by companies for which the principal securities
trading market is a country other than the U.S. Foreign company stocks may lose value or be more difficult to trade as
a result of adverse changes in currency exchange rates or other developments in the issuer’s home country.
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Concentrated investment by a Fund in any single country, especially a less developed country, would make such
Fund’s value more sensitive to economic, currency and regulatory changes within that country.
Investments in foreign obligations and securities include high-quality, short-term debt obligations of foreign issuers,
including foreign branches of U.S. banks, U.S. branches of foreign banks, and short-term debt obligations of foreign
governmental agencies and foreign companies that are denominated in and pay interest in U.S. dollars. Investments in
foreign obligations involve certain considerations that are not typically associated with investing in domestic
obligations. There may be less publicly available information about a foreign issuer than about a domestic issuer and
the available information may be less reliable. Foreign issuers also are not generally subject to the same accounting,
auditing and financial reporting standards or governmental supervision as domestic issuers. In addition, with respect
to certain foreign countries, taxes may be withheld at the source under foreign tax laws, and there is a possibility of
expropriation or potentially confiscatory levels of taxation, political or social instability or diplomatic developments
that could adversely affect investments in, the liquidity of, and the ability to enforce contractual obligations with
respect to, obligations of issuers located in those countries. Amounts realized on certain foreign securities in which a
Fund may invest may be subject to foreign withholding or other taxes that could reduce the return on these securities.
Tax treaties between the United States and foreign countries, however, may reduce or eliminate the amount of foreign
taxes to which the Fund would otherwise be subject.
Foreign securities include, among others, ADRs and similar investments, including CDRs, EDRs, GDRs, and IDRs. ADRs,
CDRs, EDRs, GDRs, and IDRs are depositary receipts for foreign company stocks issued by a bank and held in trust at
that bank, and which entitle the owner of such depositary receipts to any capital gains or dividends from the foreign
company stocks underlying the depositary receipts. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs (sponsored or unsponsored) are receipts typically
issued by a U.S. bank or trust company and traded on a U.S. stock exchange, and CDRs are receipts typically issued by a
Canadian bank or trust company that evidence ownership of underlying foreign securities. Issuers of unsponsored
ADRs are not contractually obligated to disclose material information in the U.S. and, therefore, such information may
not correlate to the market value of the unsponsored ADR. EDRs and IDRs are receipts typically issued by European
banks and trust companies, and GDRs are receipts issued by either a U.S. or non-U.S. banking institution, that evidence
ownership of the underlying foreign securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets and EDRs and IDRs in bearer form are designed primarily for use in Europe.
Foreign securities also include securities denominated in currencies other than the U.S. dollar and may temporarily
hold funds in bank deposits or other money market investments denominated in foreign currencies. Therefore, the
Funds may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate
between such currencies and the dollar.
Because a Fund may invest in securities denominated in currencies other than the U.S. dollar and may temporarily hold
funds in bank deposits or other money market investments denominated in foreign currencies, it may be affected
favorably or unfavorably by exchange control regulations or changes in the exchange rate between such currencies
and the dollar. Changes in foreign currency exchange rates influence values within the Fund from the perspective of
U.S. investors. The rate of exchange between the U.S. dollar and other currencies is determined by a wide range of
political and economic factors, including the forces of supply and demand in the foreign exchange markets. The
international balance of payments and other economic and financial conditions, government intervention and
stability, speculation and other factors also affect exchange rates.
A Fund may engage in foreign currency transactions in order to hedge its portfolio and to protect it against possible
variations in foreign exchange rates pending the settlement of securities transactions. If a fall in exchange rates for a
particular currency is anticipated, a Fund may enter into a forward contract to protect against a decrease in the price of
securities denominated in a particular currency a Fund intends to purchase. If it is anticipated that exchange rates will
rise, a Fund may enter into a forward contract to protect against an increase in the price of securities denominated in a
particular currency the Fund intends to purchase. These forward contracts will be used only as a hedge against
anticipated currency rate changes. Although such contracts are intended to minimize the risk of loss due to a decline
in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result should
the value of such currency increase.
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Foreign currency transactions, such as forward foreign currency exchange contracts, are contracts for the future
delivery of a specified currency at a specified time and at a specified price. These transactions differ from futures
contracts in that they are usually conducted on a principal basis instead of through an exchange, and therefore there
are no brokerage fees, margin deposits are negotiated between the parties, and the contracts are settled through
different procedures. The Manager considers on an ongoing basis the creditworthiness of the institutions with which
the Fund enters into foreign currency transactions.
The use of foreign currency transactions involves the risk of imperfect correlation between movements in futures
prices and movements in the price of currencies which are the subject of the hedge. The successful use of foreign
currency transactions strategies also depends on the ability of the sub-adviser to correctly forecast interest rate
movements, currency rate movements and general stock market price movements. There can be no assurance that the
sub-adviser’s judgment will be accurate. The use of foreign currency transactions also exposes a Fund to the general
risks of investing in futures contracts, including: the risk of an illiquid market for the foreign currency transactions and
the risk of adverse regulatory actions. Any of these events may cause a Fund to be unable to hedge its securities, and
may cause a Fund to lose money on its investments in foreign currency transactions. The Funds will either cover a
position in such a transaction or maintain, in a segregated account with their custodian bank, cash or high-grade
marketable money market securities having an aggregate value equal to the amount of any such commitment until
payment is made.
Market Disruptions and Geo-Political Risks
There are increasing concerns regarding the ability of multiple sovereign entities to continue to meet their debt
obligations. In particular, ratings agencies have downgraded the credit ratings of various countries and may
downgrade the credit ratings of other countries. Many economies are facing acute fiscal pressures as they struggle to
balance budgetary austerity with stagnant growth. Many observers predict that a depressed economic environment
will cause budget deficits in these economies to expand in the short term and further increase the perceived risk of a
default, thereby rendering access to capital markets even more expensive and compounding the debt problem. In
particular, the Eurozone has been undergoing a collective debt crisis. Greece, Ireland and Portugal, for example, have
already received one or more “bailouts” from other Eurozone member states (“Member States”), and it is unclear how
much additional funding they will require or if additional Member States will require bailouts in the future. Investor
confidence in other Member States, as well as European banks exposed to risky sovereign debt, has been severely
impacted, threatening capital markets throughout the Eurozone. Although the resources of various financial stability
mechanisms in the Eurozone continue to be bolstered, many market participants have expressed doubt that the level
of funds being committed to such facilities will be sufficient to resolve the crisis. There also appears to be a lack of
political consensus in the Eurozone concerning whether and how to restructure sovereign debt. The consequences of
any sovereign default would likely be severe and wide-reaching, and could include the removal of a Member State
from the Eurozone, or even the abolition of the Euro. Such events could have adverse consequences on the market
values of various securities, currencies and derivatives, and could create conditions of volatility and limited liquidity in
various currency, securities and other markets.
In June 2016, Citizens of the the United Kingdom (UK) voted to leave the European Union (EU) following a referendum
commonly referred to as “Brexit”. In March 2017, the UK formally invoked Article 50 of the Treaty of Lisbon by which the
UK will begin negotiations to exit the EU within two years, unless agreed by all EU members to extend the withdraw
period. However, there is considerable uncertainty about how the UK exit from the EU will be conducted, how
negotiations of necessary treaties and trade agreements will proceed, or how the financial markets will react. In
addition, it is not yet known whether Brexit will increase the likelihood of other EU member countries seeking to
depart the EU (or possibly the UK). Immediately following the vote, markets in the UK, Europe and the world were
negatively impacted. In light of the uncertainties surrounding the impact of Brexit on the broader global economy, the
negative impact could be significant, potentially resulting in increased volatility and illiquidity and lower economic
growth for companies that rely significantly on Europe for their business activities and revenues. Any further exits from
the EU, or the possibility of such exits, would likely cause additional market disruption globally and introduce new
legal and regulatory uncertainties.
Participation Notes
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The Funds may purchase participation notes, also known as participation certificates. Participation notes are issued by
banks or broker-dealers and are designed to replicate the performance of foreign companies or foreign securities
markets and can be used by a Fund as an alternative means to access the securities market of a country. The
performance results of participation notes will not replicate exactly the performance of the foreign companies or
foreign securities markets that they seek to replicate due to transaction costs and other expenses. Investments in
participation notes involve the same risks associated with a direct investment in the underlying foreign companies or
foreign securities markets that they seek to replicate. There can be no assurance that the trading price of participation
notes will equal the underlying value of the foreign companies or foreign securities markets that they seek to replicate.
Participation notes are generally traded over-the-counter. Participation notes are subject to counterparty risk, which is
the risk that the broker-dealer or bank that issues them will not fulfill its contractual obligation to complete the
transaction with the Fund. Participation notes constitute general unsecured contractual obligations of the banks or
broker-dealers that issue them, the counterparty, and the Fund is relying on the creditworthiness of such counterparty
and has no rights under a participation note against the issuer of the underlying security. Participation notes involve
transaction cost. Participation notes may be illiquid and therefore subject to the Fund’s percentage limitation for
illiquid investments that are assets. Participation notes offer a return linked to a particular underlying equity, debt or
currency.
OTHER INVESTMENTS AND TECHNIQUES
Borrowing
Money may be borrowed for temporary or emergency purposes, including the meeting of redemption requests.
Borrowing involves special risk considerations. Interest costs on borrowings may fluctuate with changing market rates
of interest and may partially offset or exceed the return earned on borrowed funds (or on the assets that were retained
rather than sold to meet the needs for which funds were borrowed). Under adverse market conditions, a Fund might
have to sell portfolio securities to meet interest or principal payments at a time when investment considerations
would not favor such sales. Reverse repurchase agreements, dollar roll transactions and other similar investments that
involve a form of leverage have characteristics similar to borrowings, but are not considered borrowings if the Fund
maintains a segregated account.
Closed-End Investment Companies
A Fund may invest in the securities of closed-end investment companies that invest primarily in foreign securities.
Because of restrictions on direct investment by U.S. entities in certain countries, other investment companies may
provide the most practical or only way for the Fund to invest in certain markets.
A Fund will invest in such companies when, in the manager’s judgment, the potential benefits of the investment justify
the payment of any applicable premium or sales charge. Other investment companies incur their own fees and
expenses.
Commodity-Related Investments
The value of commodities investments will generally be affected by overall market movements and factors specific to a
particular industry or commodity, which may include weather, embargoes, tariffs, and health, political, international
and regulatory developments. Economic and other events (whether real or perceived) can reduce the demand for
commodities, which may reduce market prices and cause the value of Fund shares to fall. The frequency and
magnitude of such changes cannot be predicted. Exposure to commodities and commodities markets may subject the
Fund to greater volatility than investments in traditional securities. No active trading market may exist for certain
commodities investments, which may impair the ability of the Fund to sell or to realize the full value of such
investments in the event of the need to liquidate such investments. In addition, adverse market conditions may impair
the liquidity of actively traded commodities investments. Certain types of commodities instruments (such as total
return swaps and commodity-linked notes) are subject to the risk that the counterparty to the instrument will not
perform or will be unable to perform in accordance with the terms of the instrument.
Certain commodities are subject to limited pricing flexibility because of supply and demand factors. Others are subject
to broad price fluctuations as a result of the volatility of the prices for certain raw materials and the instability of
supplies of other materials. These additional variables may create additional investment risks and result in greater
volatility than investments in traditional securities. The commodities that underlie commodity futures contracts and
Wells Fargo - Fixed Income Funds
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commodity swaps may be subject to additional economic and non-economic variables, such as drought, floods,
weather, livestock disease, embargoes, tariffs, and international economic, political and regulatory developments.
Unlike the financial futures markets, in the commodity futures markets there are costs of physical storage associated
with purchasing the underlying commodity. The price of the commodity futures contract will reflect the storage costs
of purchasing the physical commodity, including the time value of money invested in the physical commodity. To the
extent that the storage costs for an underlying commodity change while the Fund is invested in futures contracts on
that commodity, the value of the futures contract may change proportionately.
In the commodity futures markets, producers of the underlying commodity may decide to hedge the price risk of
selling the commodity by selling futures contracts today to lock in the price of the commodity at delivery tomorrow. In
order to induce speculators to purchase the other side of the same futures contract, the commodity producer
generally must sell the futures contract at a lower price than the expected future spot price. Conversely, if most
hedgers in the futures market are purchasing futures contracts to hedge against a rise in prices, then speculators will
only sell the other side of the futures contract at a higher futures price than the expected future spot price of the
commodity. The changing nature of the hedgers and speculators in the commodity markets will influence whether
futures prices are above or below the expected future spot price, which can have significant implications for the Fund.
If the nature of hedgers and speculators in futures markets has shifted when it is time for the Fund to reinvest the
proceeds of a maturing contract in a new futures contract, the Fund might reinvest at higher or lower futures prices, or
choose to pursue other investments.
Exchange-Traded Notes
Exchange-traded notes (“ ETNs”) are generally notes representing debt of an issuer, usually a financial institution. ETNs
combine aspects of both bonds and ETFs. An ETN’s returns are based on the performance of one or more underlying
assets, reference rates or indexes, minus fees and expenses. Similar to ETFs, ETNs are listed on an exchange and traded
in the secondary market. However, unlike an ETF, an ETN can be held until the ETN’s maturity, at which time the issuer
will pay a return linked to the performance of the specific asset, index or rate (“reference instrument”) to which the ETN
is linked minus certain fees. Unlike regular bonds, ETNs do not make periodic interest payments, and principal is not
protected.
The value of an ETN may be influenced by, among other things, time to maturity, levels of supply and demand for the
ETN, volatility and lack of liquidity in underlying markets, changes in the applicable interest rates, the performance of
the reference instrument, changes in the issuer’s credit rating and economic, legal, political or geographic events that
affect the reference instrument. An ETN that is tied to a reference instrument may not replicate the performance of the
reference instrument. ETNs also incur certain expenses not incurred by their applicable reference instrument. Some
ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair
price. Levered ETNs are subject to the same risk as other instruments that use leverage in any form. While leverage
allows for greater potential returns, the potential for loss is also greater. Finally, additional losses may be incurred if the
investment loses value because, in addition to the money lost on the investment, the loan still needs to be repaid.
Because the return on an ETN is dependent on the issuer’s ability or willingness to meet its obligations, the value of the
ETN may change due to a change in the issuer’s credit rating, despite there being no change in the underlying
reference instrument. The market value of ETN shares may differ from the value of the reference instrument. This
difference in price may be due to the fact that the supply and demand in the market for ETN shares at any point in time
is not always identical to the supply and demand in the market for the assets underlying the reference instrument that
the ETN seeks to track.
There may be restrictions on the Fund’s right to redeem its investment in an ETN, which is generally meant to be held
until maturity. The Fund’s decision to sell its ETN holdings may be limited by the unavailability or limited nature of a
secondary market. The Fund could lose some or all of the amount invested in an ETN.
Forward Commitments, When-Issued and Delayed-Delivery Transactions
Securities may be purchased or sold on a when-issued or delayed-delivery basis and contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time may also be made. Delivery and
payment on such transactions normally take place within 120 days after the date of the commitment to purchase.
Securities purchased or sold on a when-issued, delayed-delivery or forward commitment basis involve a risk of loss if
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the value of the security to be purchased declines, or the value of the security to be sold increases, before the
settlement date.
The Funds have a segregated account in which they may maintain cash, U.S. Government obligations or other
high-quality debt instruments in an amount at least equal in value to each Fund’s commitments to purchase
when-issued securities. If the value of these assets declines, a Fund will place additional liquid assets in the account on
a daily basis so that the value of the assets in the account is at least equal to the amount of such commitments.
Illiquid Investments
Securities not registered under the 1933 Act, and other securities subject to legal or other restrictions on resale may be
less liquid than other investments and may be difficult to sell promptly at an acceptable price. Delay or difficulty in
selling securities may result in a loss or be costly to a Fund. No Fund may acquire any illiquid investment if,
immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments
that are assets.
In October 2016, the SEC adopted a liquidity risk management rule requiring certain open-end funds to establish a
liquidity risk management program and enhance disclosures regarding fund liquidity. The Funds will be required to
comply with certain elements of the rule by December 1, 2018, and the remaining elements of the rule by June 1,
2019. Effective December 1, 2018, the Funds will implement a written liquidity risk management program designed to
meet the relevant requirements. In addition, the Board approved the designation of Funds Management as the
administrator of the Funds’ liquidity risk management program. The effect the rule will have on the Funds, and on the
open-end fund industry in general, is not yet fully known, but the rule may impact each Fund’s performance and
ability to achieve its investment objective.
Master Limited Partnerships
Master limited partnerships (“MLPs”) are publicly traded partnerships primarily engaged in the transportation, storage,
processing, refining, marketing, exploration, production, and mining of minerals and natural resources. Investments in
securities of 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, cash flow risks, dilution risks and risks related to the general partner’s right to require
unit-holders to sell their common units at an undesirable time or price. Certain MLP securities may trade in lower
volumes due to their smaller capitalizations. Accordingly, those MLPs may be subject to more abrupt or erratic price
movements and may lack sufficient market liquidity to enable the Fund to effect sales at an advantageous time or
without a substantial drop in price. MLPs are generally considered interest-rate sensitive investments. During periods
of interest rate volatility, these investments may not provide attractive returns. Depending on the state of interest rates
in general, the use of MLPs could enhance or harm the overall performance of the Fund. MLPs are subject to various
risks related to the underlying operating companies they control, including dependence upon specialized
management skills and the risk that such companies may lack or have limited operating histories. The success of the
Fund’s investments also will vary depending on the underlying industry represented by the MLP’s portfolio.
The Fund must recognize income that it receives from underlying MLPs for tax purposes, even if the Fund does not
receive cash distributions from the MLPs in an amount necessary to pay such tax liability. In addition, a percentage of a
distribution received by the Fund as the holder of an MLP interest may be treated as a return of capital, which would
reduce the Fund’s adjusted tax basis in the interests of the MLP, which will result in an increase in the amount of
income or gain (or decrease in the amount of loss) that will be recognized by the Fund for tax purposes upon the sale
of any such interests or upon subsequent distributions in respect of such interests. Furthermore, any return of capital
distribution received from the MLP may require the Fund to restate the character of its distributions and amend any
shareholder tax reporting previously issued. MLPs do not pay U.S. federal income tax at the partnership level. Rather,
each partner is allocated a share of the partnership’s income, gains, losses, deductions and expenses. A change in
current tax law, or a change in the underlying business mix of a given MLP, could result in an MLP being treated as a
corporation for U.S. federal income tax purposes, which would result in the MLP being required to pay U.S. federal
income tax (as well as state and local income taxes) on its taxable income. The classification of an MLP as a corporation
for U.S. federal income tax purposes would have the effect of reducing the amount of cash available for distribution by
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the MLP. If any MLP in which the Fund invests were treated as a corporation for U.S. federal income tax purposes, it
could result in a reduction of the value of the Fund’s investment in the MLP and lower income to the Fund.
Other Investment Companies
A Fund may invest in shares of other open-end and closed-end management investment companies up to the limits
prescribed in Section 12(d) under the 1940 Act, subject to the fund’s non-fundamental investment policies. Currently,
under the 1940 Act, a fund that invests directly in a portfolio of securities is limited to, subject to certain exceptions: (i)
3% of the total voting stock of any one investment company; (ii) 5% of such fund’s total assets with respect to any one
investment company; and (iii) 10% of such fund’s total assets.
Other investment companies in which the Fund invests can be expected to charge fees for operating expenses, such as
investment advisory and administration fees, that would be in addition to those charged by the Fund. Other
investment companies may include exchange-traded funds (“ETFs”), which are shares of publicly traded unit
investment trusts, open-end funds or depositary receipts that seek to track the performance of specific indexes or
companies in related industries. ETFs generally are subject to the same risks as the underlying securities the ETFs are
designed to track and to the risks of the specific sector or industry tracked by the ETF. ETFs also are subject to the risk
that their prices may not totally correlate to the prices of the underlying securities the ETFs are designed to track and
the risk of possible trading halts due to market conditions or for other reasons. Although ETFs that track broad market
indexes are typically large and their shares are fairly liquid, ETFs that track more specific indexes tend to be newer and
smaller, and all ETFs have limited redemption features. Pursuant to certain exemptive relief granted by the SEC, the
Fund’s investments in certain ETFs may exceed certain of the limits described above.
Under the 1940 Act and rules and regulations thereunder, a Fund may purchase shares of other affiliated Funds,
including the money market Funds, subject to certain conditions. Investing in affiliated Funds may present certain
actual or potential conflicts of interest.
iShares.
iShares Trust and iShares, Inc. (“iShares”) are registered investment companies that consist of numerous
separate series (each, an “iShares Fund”), each of which seeks investment results similar to the performance of a single
stock market or of a group of stock markets in a single geographic location. iShares combine characteristics of stocks
with those of index funds. Like stocks, iShares are liquid and can be traded in any number of shares; like index funds,
they provide diversification and market tracking. iShares trade on the American Stock Exchange, the Chicago Board of
Options Exchange and the New York Stock Exchange in the same way as shares of a publicly held company.
Private Placement and Other Restricted Securities
Private placement securities are not registered under the 1933 Act. Private placements often may offer attractive
opportunities for investment not otherwise available on the open market. However, private placement and other
“restricted” securities typically cannot be resold without registration under the 1933 Act or the availability of an
exemption from registration (such as Rules 144 or 144A (a “Rule 144A Security”)), and may not be readily marketable.
Private placement and other restricted securities typically may be resold only to qualified institutional buyers, or in a
privately negotiated transaction, or to a limited number of purchasers, or in limited quantities after they have been
held for a specified period of time and other conditions are met for an exemption from registration. Investing in
private placement and other restricted securities is subject to certain additional risks. They may be considered illiquid
securities as they typically are subject to restrictions on resale as a matter of contract or under federal securities laws.
Because there may be relatively few potential purchasers for such securities, especially under adverse market or
economic conditions or in the event of adverse changes in the financial condition of the issuer, a Fund could find it
more difficult to sell such securities when it may be advisable to do so or it may be able to sell such securities only at
prices lower than if such securities were more widely held and traded. At times, it also may be more difficult to
determine the fair value of such securities for purposes of computing a Fund’s net asset value due to the absence of an
active trading market. Delay or difficulty in selling such securities may result in a loss to a Fund. Restricted securities,
including Rule 144A Securities, that are “illiquid” are subject to a Fund’s policy of not acquiring any illiquid investment
if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid
investments that are assets. There can be no assurance that a restricted security that is deemed to be liquid when
purchased will continue to be liquid for as long as it is held by a Fund.
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Repurchase Agreements
Repurchase agreements are agreements wherein the seller of a security to a Fund agrees to repurchase that security
from a Fund at a mutually agreed upon time and price. All repurchase agreements will be “collateralized fully,” as
defined under the 1940 Act. A Fund may enter into repurchase agreements only with respect to securities that could
otherwise be purchased by such Fund. The maturities of the underlying securities in a repurchase agreement
transaction may be greater than twelve months, although the maximum term of a repurchase agreement will always
be less than twelve months. Repurchase agreements generally are subject to counterparty risk. If the seller defaults
and the value of the underlying securities has declined, a Fund may incur a loss. In addition, if bankruptcy proceedings
are commenced with respect to the seller of the security, a Fund’s disposition of the underlying securities may be
delayed or limited.
A Fund may not enter into a repurchase agreement with a maturity of more than seven days, if, as a result, more than
15% of the market value of such Fund’s net assets would be invested in repurchase agreements with maturities of
more than seven days and other illiquid investments that are assets. A Fund will only enter into repurchase agreements
with broker-dealers and commercial banks that meet guidelines established by the Board and that are not affiliated
with the Fund’s manager. The Funds may participate in pooled repurchase agreement transactions with other funds
advised by the manager.
Reverse Repurchase Agreements
A reverse repurchase agreement is an agreement under which a Fund sells a portfolio security and agrees to
repurchase it at an agreed-upon date and price. At the time a Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account liquid assets such as U.S. Government securities or other liquid high-grade
debt securities having a value equal to or greater than the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure that such value is maintained. Reverse repurchase agreements involve
the risk that the market value of the securities sold by a Fund may decline below the price at which a Fund is obligated
to repurchase the securities. In the event the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, a Fund’s use of proceeds of the agreement may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce a Fund’s obligation to repurchase the
securities. Reverse repurchase agreements may be viewed as a form of borrowing.
Short Sales
A short sale is a transaction in which a Fund sells a security it does not own in anticipation of a decline in market price.
When a Fund makes a short sale, the proceeds it receives are retained by the broker until a Fund replaces the borrowed
security. In order to deliver the security to the buyer, a Fund must arrange through a broker to borrow the security and,
in so doing, a Fund becomes obligated to replace the security borrowed at its market price at the time of replacement,
whatever that price may be. Short sales “against the box” means that a Fund owns the securities, which are placed in a
segregated account until the transaction is closed out, or has the right to obtain securities equivalent in kind and
amount to the securities sold short. A Fund’s ability to enter into short sales transactions is limited by the requirements
of the 1940 Act.
Short sales by a Fund that are not made “against the box” are limited to transactions in futures and options. Such
transactions create opportunities to increase a Fund’s return but, at the same time, involve special risk considerations
and may be considered a speculative technique. Since a Fund in effect profits from a decline in the price of the futures
or options sold short without the need to invest the full purchase price of the futures or options on the date of the
short sale, a Fund’s NAV per share will tend to increase more when the futures or options it has sold short decrease in
value, and to decrease more when the futures or options it has sold short increase in value, than would otherwise be
the case if it had not engaged in such short sales. Short sales theoretically involve unlimited loss potential, as the
market price of futures or options sold short may continuously increase, although a Fund may mitigate such losses by
replacing the futures or options sold short before the market price has increased significantly. Under adverse market
conditions, a Fund might have difficulty purchasing futures or options to meet its short sale delivery obligations, and
might have to sell portfolio securities to raise the capital necessary to meet its short sale obligations at a time when
fundamental investment considerations would not favor such sales.
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If a Fund makes a short sale “against the box,” a Fund would not immediately deliver the securities sold and would not
receive the proceeds from the sale. The seller is said to have a short position in the securities sold until it delivers the
securities sold, at which time it receives the proceeds of the sale. A Fund’s decision to make a short sale “against the
box” may be a technique to hedge against market risks when the investment manager believes that the price of a
security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or
exchangeable for such security. In such case, any future losses in the Fund’s long position would be reduced by a gain
in the short position. Short sale transactions may have adverse tax consequences to the Fund and its shareholders.
In the view of the SEC, a short sale involves the creation of a “senior security” as such term is defined under the 1940
Act, unless the sale is “against the box” and the securities sold are placed in a segregated account (not with the broker),
or unless the Fund’s obligation to deliver the securities sold short is “covered” by segregating (not with the broker)
cash, U.S. Government securities or other liquid debt or equity securities in an amount equal to the difference between
the market value of the securities sold short at the time of the short sale and any cash or securities required to be
deposited as collateral with a broker in connection with the sale (not including the proceeds from the short sale),
which difference is adjusted daily for changes in the value of the securities sold short. The total value of the cash and
securities deposited with the broker and otherwise segregated may not at any time be less than the market value of
the securities sold short at the time of the short sale.
To avoid limitations under the 1940 Act on borrowing by investment companies, all short sales by a Fund will be
“against the box,” or the Fund’s obligation to deliver the futures or options sold short not “against the box” will be
“covered” by segregating cash, U.S. Government securities or other liquid debt or equity securities in an amount equal
to the market value of its delivery obligation. A Fund will not make short sales of futures or options not “against the
box” or maintain a short position if doing so could create liabilities or require collateral deposits and segregation of
assets aggregating more than 25% of the value of the Fund’s total assets.
Warrants
Warrants are instruments, typically issued with preferred stock or bonds, that give the holder the right to purchase a
given number of shares of common stock at a specified price, usually during a specified period of time. The price
usually represents a premium over the applicable market value of the common stock at the time of the warrant’s
issuance. Warrants have no voting rights with respect to the common stock, receive no dividends and have no rights
with respect to the assets of the issuer. Warrants do not pay a fixed dividend. Investments in warrants involve certain
risks, including the possible lack of a liquid market for the resale of the warrants, potential price fluctuations as a result
of speculation or other factors and failure of the price of the common stock to rise. A warrant becomes worthless if it is
not exercised within the specified time period.
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Other Risks
Operational and Cyber Security Risks
Our business, financial, accounting, data processing systems or other operating systems and facilities may stop
operating properly or become disabled or damaged as a result of a number of factors including events that are wholly
or partially beyond our control. For example, there could be sudden increases in shareholder transaction volume;
electrical or telecommunications outages; degradation or loss of public internet domain; climate change related
impacts and natural disasters such as earthquakes, tornados, and hurricanes; disease pandemics; or events arising
from local or larger scale political or social matters, including terrorist acts.
The Funds are also subject to the risk of potential cyber incidents which may include, but are not limited to, the
harming of or unauthorized access to digital systems (for example, through “hacking” or infection by computer viruses
or other malicious software code), denial-of-service attacks on websites, and the inadvertent or intentional release of
confidential or proprietary information. Cyber incidents may, among other things, harm Fund operations, result in
financial losses to a Fund and its shareholders, cause the release of confidential or highly restricted information, and
result in regulatory penalties, reputational damage, and/or increased compliance, reimbursement or other
compensation costs. Fund operations that may be disrupted or halted due to a cyber incident include trading, the
processing of shareholder transactions, and the calculation of a Fund’s net asset value.
Issues affecting operating systems and facilities, either through cyber incidents or any of the other scenarios described
above, may harm the Funds by affecting a Fund’s manager, sub-adviser(s), or other service providers, or issuers of
securities in which a Fund invests. Although we have business continuity plans and other safeguards in place,
including what we believe to be robust information security procedures and controls, there is no guarantee that these
measures will prevent cyber incidents or prevent or ameliorate the effects of significant and widespread disruption to
our physical infrastructure or operating systems. Furthermore, we cannot directly control the security or other
measures taken by unaffiliated service providers or the issuers of securities in which the Funds invest. Such risks at
issuers of securities in which the Trust invests could result in material adverse consequences for such issuers, and may
cause the Trust’s investment in such securities to lose value.
Liquidation Risk
There can be no assurance that a Fund will grow to or maintain a viable size. To the extent that a Fund does not grow
to or maintain a viable size, it may be liquidated, and the expenses, timing and tax consequences of such liquidation
may not be favorable to some shareholders. In addition, pursuant to section 619 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act and certain rules promulgated thereunder (collectively known as the “Volcker Rule”), if
the Manager and/or its affiliates own 25% or more of the outstanding shares of a Fund more than three years after the
Fund’s inception date (or such longer period as may be permitted by the Federal Reserve Board and/or other federal
regulatory agencies overseeing the Volcker Rule), the Fund will be subject to restrictions on trading that will adversely
impact the Fund’s ability to execute its investment strategy. Should this occur, a Fund may be liquidated, or the
Manager and/or its affiliates may be required to reduce their ownership interests in the Fund, either of which may
result in gains or losses, increased transaction and other costs and adverse tax consequences. In addition, other large
shareholders controlling a significant portion of a Fund’s shares, such as other funds, institutional investors, financial
intermediaries, individuals and other accounts, may elect to redeem a portion or all of their shares at any time, and the
Fund may no longer be able to maintain a viable size after meeting the redemption request. In these circumstances, a
Fund’s board may determine to liquidate the Fund. Other factors and events that may lead to the liquidation of a Fund
include changes in laws or regulations governing the Fund or affecting the type of assets in which the Fund invests, or
economic developments or trends having a significant adverse impact on the business or operations of the Fund.
Under the Declaration of Trust, a Fund’s board is authorized to liquidate, dissolve and terminate the Fund or any share
class of the Fund without obtaining any authorization or vote of shareholders.
In the event of a Fund’s liquidation, shareholders holding Fund shares through tax-deferred accounts would receive a
liquidating distribution, and depending on the arrangements with the custodian of account assets, receipt of the
distribution may be taxable to the account beneficiary and/or subject to tax penalties.
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TRUSTEES AND OFFICERS
The following information supplements, and should be read in conjunction with, the section in the Prospectus entitled
“Management of the Fund.”
General
The following table provides basic information about the Trustees and Officers of the Trust. Each of the Trustees and
Officers listed below acts in identical capacities for the Wells Fargo family of funds which consists of, as of September
30, 2018, 153 series comprising the Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust and four closed-end
funds (collectively, the “Fund Complex” or the “Trusts”). The business address of each Trustee and Officer is 525 Market
Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, with the Trustees subject
to retirement from service, as required pursuant to the Trust’s retirement policy, at the end of the calendar year in
which a Trustee turns 75.
Information for Trustees, all of whom are not “interested” persons of the Trust, as that term is defined under the 1940
Act (each, an “Independent Trustee” and collectively, the “Independent Trustees”), appears below. In addition to the
Officers listed below, the Fund has appointed an Anti-Money Laundering Compliance Officer.
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Name and Year of Birth
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Position Held
with Registrant/
Length of
Service
1
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Principal Occupation(s) During Past 5 Years or
Longer
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Current Other Public Company or
Investment Company Directorships
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INDEPENDENT TRUSTEES
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William R. Ebsworth
(Born 1957)
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Trustee, since
2015
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Retired. From 1984 to 2013, equities analyst,
portfolio manager, research director and chief
investment officer at Fidelity Management
and Research Company in Boston, Tokyo, and
Hong Kong, and retired in 2013 as Chief
Investment Officer of Fidelity Strategic
Advisers, Inc. where he led a team of
investment professionals managing client
assets. Prior thereto, Board member of Hong
Kong Securities Clearing Co., Hong Kong
Options Clearing Corp., the Thailand
International Fund, Ltd., Fidelity Investments
Life Insurance Company, and Empire Fidelity
Investments Life Insurance Company. Board
member of the Vincent Memorial Hospital
Endowment (non-profit organization), where
he serves on the Investment Committee and
as Chair of the Audit Committee. Mr. Ebsworth
is a CFA
®
charterholder.
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N/A
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Jane A. Freeman
(Born 1953)
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Trustee, since
2015; Chair
Liaison, since
2018
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Retired. From 2012 to 2014 and 1999 to 2008,
Chief Financial Officer of Scientific Learning
Corporation. From 2008 to 2012, Ms. Freeman
provided consulting services related to
strategic business projects. Prior to 1999,
Portfolio Manager at Rockefeller & Co. and
Scudder, Stevens & Clark. Board member of
the Harding Loevner Funds from 1996 to 2014,
serving as both Lead Independent Director
and chair of the Audit Committee. Board
member of the Russell Exchange Traded Funds
Trust from 2011 to 2012 and the chair of the
Audit Committee. Ms. Freeman is a Board
Member of The Ruth Bancroft Garden
(non-profit organization). She is also an
inactive Chartered Financial Analyst.
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N/A
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Wells Fargo - Fixed Income Funds
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Name and Year of Birth
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Position Held
with Registrant/
Length of
Service
1
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Principal Occupation(s) During Past 5 Years or
Longer
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Current Other Public Company or
Investment Company Directorships
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Isaiah Harris, Jr.
2
(Born 1952)
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Trustee, since
2009; Audit
Committee
Chairman, since
2019
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Retired. Chairman of the Board of CIGNA
Corporation since 2009, and Director since
2005. From 2003 to 2011, Director of Deluxe
Corporation. Prior thereto, President and CEO
of BellSouth Advertising and Publishing Corp.
from 2005 to 2007, President and CEO of
BellSouth Enterprises from 2004 to 2005 and
President of BellSouth Consumer Services
from 2000 to 2003. Emeritus member of the
Iowa State University Foundation Board of
Governors. Emeritus Member of the Advisory
Board of Iowa State University School of
Business. Advisory Board Member, Palm
Harbor Academy (private school). Advisory
Board Member, Child Evangelism Fellowship
(non-profit). Mr. Harris is a certified public
accountant (inactive status).
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CIGNA Corporation
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Judith M. Johnson
(Born 1949)
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Trustee, since
2008;
Audit
Committee
Chairman, from
2009 to 2018
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Retired. Prior thereto, Chief Executive Officer
and Chief Investment Officer of Minneapolis
Employees Retirement Fund from 1996 to
2008. Ms. Johnson is an attorney, certified
public accountant and a certified managerial
accountant.
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N/A
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David F. Larcker
(Born 1950)
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Trustee, since
2009
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James Irvin Miller Professor of Accounting at
the Graduate School of Business, Stanford
University, Director of the Corporate
Governance Research Initiative and Senior
Faculty of The Rock Center for Corporate
Governance since 2006. From 2005 to 2008,
Professor of Accounting at the Graduate
School of Business, Stanford University. Prior
thereto, Ernst & Young Professor of
Accounting at The Wharton School, University
of Pennsylvania from 1985 to 2005.
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N/A
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Olivia S. Mitchell
(Born 1953)
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Trustee, since
2006;
Nominating and
Governance
Committee
Chairman, since
2018
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International Foundation of Employee Benefit
Plans Professor, Wharton School of the
University of Pennsylvania since 1993. Director
of Wharton’s Pension Research Council and
Boettner Center on Pensions & Retirement
Research, and Research Associate at the
National Bureau of Economic Research.
Previously, Cornell University Professor from
1978 to 1993.
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N/A
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Timothy J. Penny
(Born 1951)
|
Trustee, since
1996; Chairman,
since 2018; Vice
Chairman, from
2017 to 2018
|
President and Chief Executive Officer of
Southern Minnesota Initiative Foundation, a
non-profit organization, since 2007. Member
of the Board of Trustees of NorthStar
Education Finance, Inc., a non-profit
organization, since 2007.
|
N/A
|
Wells Fargo - Fixed Income Funds
|
28
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|
|
|
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Name and Year of Birth
|
Position Held
with Registrant/
Length of
Service
1
|
Principal Occupation(s) During Past 5 Years or
Longer
|
Current Other Public Company or
Investment Company Directorships
|
|
James G. Polisson
(Born 1959)
|
Trustee, since
2018; Advisory
Board Member,
from 2017 to
2018
|
Retired. Chief Marketing Officer, Source (ETF)
UK Services, Ltd, from 2015 to 2017. From
2012 to 2015, Principal of The Polisson Group,
LLC, a management consulting, corporate
advisory and principal investing company.
Chief Executive Officer and Managing Director
at Russell Investments, Global Exchange
Traded Funds from 2010 to 2012. Managing
Director of Barclays Global Investors from
1998 to 2010 and Global Chief Marketing
Officer for iShares and Barclays Global
Investors from 2000 to 2010. Trustee of the
San Francisco Mechanics’ Institute, a
non-profit organization, from 2013 to 2015.
Board member of the Russell Exchange Traded
Fund Trust from 2011 to 2012. Director of
Barclays Global Investors Holdings
Deutschland GmbH from 2006 to 2009. Mr.
Polisson is an attorney and has a retired status
with the Massachusetts and District of
Columbia Bar Associations.
|
N/A
|
|
Pamela Wheelock
(Born 1959)
|
Trustee, since
2018; Advisory
Board Member,
from 2017 to
2018
|
Chief Operating Officer, Twin Cities Habitat for
Humanity, since January, 2017. Vice President
of University Services, University of Minnesota
from 2012 to 2017. Prior thereto, on the Board
of Directors, Governance Committee and
Finance Committee for the Minnesota
Philanthropy Partners (Saint Paul Foundation)
from 2012 to 2018, Interim President and
Chief Executive Officer of Blue Cross Blue
Shield of Minnesota from 2010 to 2011,
Chairman of the Board from 2009 to 2011 and
Board Director from 2003 to 2015. Vice
President, Leadership and Community
Engagement, Bush Foundation, Saint Paul,
Minnesota (a private foundation) from 2009 to
2011. Executive Vice President and Chief
Financial Officer, Minnesota Sports and
Entertainment from 2004 to 2009 and Senior
Vice President from 2002 to 2004.
Commissioner of Finance, State of Minnesota,
from 1999 to 2002. Currently the Board Chair
of the Minnesota Wild Foundation since 2010.
|
N/A
|
|
1.
|
Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable.
|
|
2.
|
Isaiah Harris, Jr. became Chairman of the Audit Committee effective January 1, 2019.
|
29
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Wells Fargo - Fixed Income Funds
|
|
|
|
|
Name and Year of Birth
|
Position Held with
Registrant/Length of
Service
1
|
Principal Occupation(s) During Past 5 Years or Longer
|
|
|
|
OFFICERS
|
|
Andrew Owen
(Born 1960)
|
President, since
2017
|
Executive Vice President of Wells Fargo & Company and Head of Affiliated
Managers, Wells Fargo Asset Management, since 2014. In addition, Mr. Owen is
currently President, Chief Executive Officer and Director of Wells Fargo Funds
Management, LLC since 2017. Prior thereto, Executive Vice President responsible
for marketing, investments and product development for Wells Fargo Funds
Management, LLC, from 2009 to 2014.
|
|
Jeremy DePalma
(Born 1974)
2
|
Treasurer, since
2012; Assistant
Treasurer, since
2009
|
Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior
Vice President of Evergreen Investment Management Company, LLC from 2008
to 2010 and head of the Fund Reporting and Control Team within Fund
Administration from 2005 to 2010.
|
|
Nancy Wiser
(Born 1967)
3
|
Treasurer, since
2012
|
Executive Vice President of Wells Fargo Funds Management since 2011. Chief
Operating Officer and Chief Compliance Officer at LightBox Capital Management
LLC, from 2008 to 2011.
|
|
Alexander Kymn
(Born 1973)
|
Secretary and Chief
Legal Officer, since
2018
|
Senior Company Counsel of Wells Fargo Bank, N.A since 2018 (previously Senior
Counsel from 2007 to 2018). Vice President of Wells Fargo Funds Management,
LLC from 2008 to 2014.
|
|
Michael H. Whitaker
(Born 1967)
|
Chief Compliance
Officer, since 2016
|
Senior Vice President and Chief Compliance Officer since 2016. Senior Vice
President and Chief Compliance Officer for Fidelity Investments from 2007 to
2016.
|
|
David Berardi
(Born 1975)
|
Assistant Treasurer,
since 2009
|
Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President
of Evergreen Investment Management Company, LLC from 2008 to 2010.
Manager of Fund Reporting and Control for Evergreen Investment Management
Company, LLC from 2004 to 2010.
|
|
1.
|
Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable.
|
|
2.
|
Currently serves as Treasurer to the Allocation Funds, Alternative Funds, Dynamic Target Date Funds, International Equity Funds, Large Cap Stock Funds, Multi-Asset Funds,
Target Date Retirement Funds, WealthBuilder Funds and the International Value Fund. Also serves as Assistant Treasurer for the remaining series of the Trust.
|
|
3.
|
Currently serves as Treasurer to the CoreBuilder
®
Shares, Equity Gateway Funds (except International Value Fund), Income Funds, Money Market Funds, Municipal Income
Funds, Small to Mid Cap Stock Funds, Specialty Funds, U.S. Equity Funds, Wells Fargo Emerging Markets Bond Fund, Wells Fargo Factor Enhanced Emerging Markets Fund, Wells
Fargo Factor Enhanced International Fund, Wells Fargo Factor Enhanced Large Cap Fund, Wells Fargo Factor Enhanced Small Cap Fund, Wells Fargo High Yield Corporate Bond
Fund, and Wells Fargo U.S. Core Bond Fund.
|
The Trust’s Declaration of Trust, as amended and restated from time to time (the “Declaration of Trust”), does not set
forth any specific qualifications to serve as a Trustee other than that no person shall stand for initial election or
appointment as a Trustee if such person has already reached the age of 72. The Charter and the Statement of
Governance Principles of the Nominating and Governance Committee also do not set forth any specific qualifications,
but do set forth certain factors that the Nominating and Governance Committee may take into account in considering
Trustee candidates and a process for evaluating potential conflicts of interest, which identifies certain disqualifying
conflicts. All of the current Trustees are Independent Trustees. Among the attributes or skills common to all Trustees
are their ability to review critically, evaluate, question and discuss information provided to them, to interact effectively
with the other Trustees, Wells Fargo Funds Management, LLC (“Funds Management” or the “Manager”), sub-advisers,
other service providers, counsel and the independent registered public accounting firm, and to exercise effective and
independent business judgment in the performance of their duties as Trustees. Each Trustee’s ability to perform his or
her duties effectively has been attained through the Trustee’s business, consulting, public service, professional and/or
academic positions and through experience from service as a board member of the Trust and the other Trusts in the
Fund Complex (and/or in other capacities, including for any predecessor funds), other registered investment
companies, public companies, and/or non-profit entities or other organizations. Each Trustee’s ability to perform his or
her duties effectively also has been enhanced by his or her educational background, professional training, and/or
other life experiences. The specific experience, qualifications, attributes and/or skills that led to the conclusion that a
Trustee should serve as a Trustee of the Trusts in the Fund Complex are as set forth below.
William R. Ebsworth.
Mr. Ebsworth has served as a Trustee of the Trusts in the Fund Complex since January 1, 2015. He
also served as a Trustee of Asset Allocation Trust from 2015 to 2018. From 1984 to 2013, he was employed as an
equities analyst, portfolio manager and research director at Fidelity Management and Research Company in Boston,
Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity Strategic Advisers, Inc., where he led
a team of investment professionals managing client assets. Prior thereto, he was a Board member of Hong Kong
Wells Fargo - Fixed Income Funds
|
30
Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity Investments
Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Mr. Ebsworth is a CFA
®
charterholder.
Jane A. Freeman.
Ms. Freeman has served as a Trustee of the Trusts in the Fund Complex since January 1, 2015. She also
served as a Trustee of Asset Allocation Trust from 2015 to 2018. From 2012 to 2014 and 1999 to 2008, Ms. Freeman
served as the Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided
consulting services related to strategic business projects. Prior to joining Scientific Learning, Ms. Freeman was
employed as a portfolio manager at Rockefeller & Co. and Scudder, Stevens & Clark. She served as a board member of
the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit
Committee. She also served as a board member of the Russell Exchange Traded Funds Trust from 2011 to 2012, and as
chair of the Audit Committee. Ms. Freeman serves as a Board Member of the Ruth Bancroft Garden (non-profit
organization) and the Glimmerglass Festival. Ms. Freeman is a Chartered Financial Analyst (inactive).
Isaiah Harris, Jr
. Mr. Harris has served as a Trustee of the Trusts in the Fund Complex since 2009 and as Chair of the
Audit Committee since 2019 and was an Advisory Board Member from 2008 to 2009. He also served as a Trustee of
Asset Allocation Trust from 2010 to 2018. He has been the Chairman of the Board of CIGNA Corporation since 2009,
and has been a director of CIGNA Corporation since 2005. He served as a director of Deluxe Corporation from 2003 to
2011. As a director of these and other public companies, he has served on board committees, including Governance,
Audit and Compensation Committees. Mr. Harris served in senior executive positions, including as president, chief
executive officer, vice president of finance and/or chief financial officer, of operating companies for approximately 20
years.
Judith M. Johnson
. Ms. Johnson has served as a Trustee of the Trusts in the Fund Complex since 2008 and as Chair of the
Audit Committee from 2009 to 2018. She has also served as a trustee and chair of the audit committee of Asset
Allocation Trust from 2010 to 2018. She served as the Chief Executive Officer and Chief Investment Officer of the
Minneapolis Employees Retirement Fund for twelve years until her retirement in 2008. Ms. Johnson is a licensed
attorney, as well as a certified public accountant and a certified managerial accountant. Ms. Johnson has been
determined by the Board to be an audit committee financial expert, as such term is defined in the applicable rules of
the SEC.
David F. Larcker
. Mr. Larcker has served as a Trustee of the Trusts in the Fund Complex since 2009 and was an Advisory
Board Member from 2008 to 2009. He also served as a Trustee of Asset Allocation Trust from 2010 to 2018. Mr. Larcker
is the James Irvin Miller Professor of Accounting at the Graduate School of Business of Stanford University. He is also
the Morgan Stanley Director of the Center for Leadership Development and Research and Co-director of The Rock
Center for Corporate Governance at Stanford University. He has been a professor of accounting for over 30 years. He
has written numerous articles on a range of topics, including managerial accounting, financial statement analysis and
corporate governance.
Olivia S. Mitchell
. Ms. Mitchell has served as a Trustee of the Trusts in the Fund Complex since 2006 and as chairman of
the Nominating and Governance Committee since 2018. She also served as a Trustee of Asset Allocation Trust from
2010 to 2018. Ms. Mitchell is the International Foundation of Employee Benefit Plans Professor at the Wharton School
of the University of Pennsylvania, where she is also Professor of Insurance/Risk Management and Business Economics/
Policy. She also serves in senior positions with academic and policy organizations that conduct research on pensions,
retirement, insurance, risk management and related topics, including as Executive Director of the Pension Research
Council and Director of the Boettner Center on Pensions and Retirement Research, both at the University of
Pennsylvania. She has taught on, and served as a consultant on economics, insurance, and risk management, served as
Department Chair, advised numerous governmental entities, and written numerous articles and books on topics
including retirement systems, private and social insurance, and health and retirement policy.
Timothy J. Penny
. Mr. Penny has served as a Trustee of the Trusts in the Fund Complex and their predecessor funds since
1996, and Chairman of the Board of Trustees since 2018. He also served as a Trustee of Asset Allocation Trust from 2010
to 2018. He has been President and Chief Executive Officer of Southern Minnesota Initiative Foundation since 2007. He
31
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Wells Fargo - Fixed Income Funds
also serves as a member of the board of another non-profit organization. Mr. Penny was a member of the U.S. House of
Representatives for 12 years representing Southeastern Minnesota’s First Congressional District.
James G. Polisson.
Mr. Polisson has served as a Trustee of the Trusts in the Fund Complex since 2018 and was an
Advisory Board member in 2017. Mr. Polisson has extensive experience in the financial services industry, including over
15 years in the ETF industry. From 2015 to July 31, 2017, Mr. Polisson was the Chief Marketing Officer of Source (ETF)
UK Services, Ltd., one of the largest providers of exchange-traded products in Europe. From 2012 to 2015, Mr. Polisson
was Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing firm.
Prior to 2012, Mr. Polisson was Chief Executive Officer and Managing Director of Russell Investments’ global ETF
business from 2010 to 2012. He was also a member of the Board of Trustees of Russell Exchange Traded Funds Trust,
where he served as Chairman, President and Chief Executive Officer, from 2011 to 2012. Mr. Polisson also served as
Chief Marketing Officer for Barclays Global Investors from 2000 to 2010, where he led global marketing for the iShares
ETF business.
Pamela Wheelock.
Ms. Wheelock has served as a Trustee of the Trusts in the Fund Complex since 2018 and was an
Advisory Board member in 2017. Ms. Wheelock is the Chief Operating Officer of Twin Cities Habitat for Humanity. Ms.
Wheelock has more than 25 years of leadership experience in the private, public and nonprofit sectors. Prior to joining
Habitat for Humanity in 2017, Ms. Wheelock was on the Board of Directors, Governance Committee and Finance
Committee for the Minnesota Philanthropy Partners (Saint Paul Foundation) and the Vice President of University
Services at the University of Minnesota from 2012 to 2017, where she served as chief operations officer of the
University. She also served as Interim President and Chief Executive Officer of Blue Cross Blue Shield of Minnesota from
2011 to 2012, Vice President of the Bush Foundation from 2009 to 2011, and Executive Vice President and Chief
Financial Officer of Minnesota Sports and Entertainment from 2004 to 2009. Ms. Wheelock served as the Executive
Budget Officer and Finance Commissioner for the State of Minnesota from 1999 to 2002.
Board of Trustees - Leadership Structure and Oversight Responsibilities
Overall responsibility for oversight of the Trust and the Funds rests with the Board of Trustees. The Board has engaged
Funds Management to manage the Funds on a day-to day basis. The Board is responsible for overseeing Funds
Management and other service providers in the operation of the Trust in accordance with the provisions of the 1940
Act, applicable provisions of Delaware law, other applicable laws and the Declaration of Trust. The Board is currently
composed of nine members, each of whom is an Independent Trustee. The Board currently conducts regular in-person
meetings five times a year. In addition, the Board may hold special in-person or telephonic meetings or informal
conference calls to discuss specific matters that may arise or require action between regular meetings. The
Independent Trustees have engaged independent legal counsel to assist them in performing their oversight
responsibilities.
The Board has appointed an Independent Trustee to serve in the role of Chairman. The Chairman’s role is to preside at
all meetings of the Board and to act as a liaison with respect to governance-related matters with service providers,
officers, attorneys, and other Trustees generally between meetings. The Chairman may also perform such other
functions as may be delegated by the Board from time to time.Timothy Penny serves as chairman of the Board. In
order to assist the Chairman in maintaining effective communications with the other Trustees and Funds
Management, the Board has appointed a Chair Liaison to work with the Chairman to coordinate Trustee
communications and to help coordinate timely responses to Trustee inquiries relating to board governance and
fiduciary matters. The Chair Liaison serves for a one-year term, which may be extended with the approval of the Board.
Except for any duties specified herein or pursuant to the Trust’s charter document, the designation of Chairman or
Chair Liaison does not impose on such Independent Trustee any duties, obligations or liability that are greater than the
duties, obligations or liability imposed on such person as a member of the Board generally.
The Board also has established a Nominating and Governance Committee, an Audit Committee, a Valuation
Committee and a Dividend Committee to assist the Board in the oversight and direction of the business and affairs of
the Trust, and from time to time may establish informal working groups to review and address the policies and
practices of the Trust with respect to certain specified matters. Additionally, the Board has established investment
teams to review in detail the performance of each of the Funds, to meet with portfolio managers, and to report back to
Wells Fargo - Fixed Income Funds
|
32
the full Board. The Board occasionally engages independent consultants to assist it in evaluating initiatives or
proposals. The Board believes that the Board’s current leadership structure is appropriate because it allows the Board
to exercise informed and independent judgment over matters under its purview, and it allocates areas of responsibility
among committees of Trustees and the full Board in a manner that enhances effective oversight. The leadership
structure of the Board may be changed, at any time and in the discretion of the Board, including in response to
changes in circumstances or the characteristics of the Trust.
The Funds and Trusts are subject to a number of risks, including investment, compliance, operational, liquidity and
valuation risks, among others. Day-to-day risk management functions are subsumed within the responsibilities of
Funds Management, the sub-advisers and other service providers (depending on the nature of the risk), who carry out
the Funds’ investment management and business affairs. Each of Funds Management, the sub-advisers and other
service providers have their own, independent approach to risk management, and their policies and methods of
carrying out risk management functions will depend, in part, on their individual priorities, resources and controls.
Risk oversight forms part of the Board’s general oversight of the Funds and Trusts and is addressed as part of various
Board and Committee activities. The Board recognizes that it is not possible to identify all of the risks that may affect a
Fund or to develop processes and controls to eliminate or mitigate their occurrence or effects and that it is necessary
for the Funds to bear certain risks (such as investment-related risks) to pursue their goals. As part of its regular
oversight of the Trusts, the Board, directly or through a Committee, interacts with and reviews reports from, among
others, Funds Management, sub-advisers, the Chief Compliance Officer of the Funds, the Chief Risk Officer of Funds
Management, the independent registered public accounting firm for the Funds, and internal compliance auditors for
Funds Management or its affiliates, as appropriate, regarding risks faced by the Funds and relevant risk functions. The
Board, with the assistance of its investment teams, also reviews investment policies and risks in connection with its
review of the Funds’ performance, and considers information regarding the oversight of liquidity risks from Funds
Management’s investment personnel. The Board has appointed a Chief Compliance Officer who oversees the
implementation and testing of the Funds’ compliance program and regularly reports to the Board regarding
compliance matters for the Funds and their principal service providers. Funds Management has appointed a Chief Risk
Officer to enhance the framework around the assessment, management, measurement and monitoring of risk
indicators and other risk matters concerning the Funds and develop periodic reporting of risk management matters to
the Board. In addition, as part of the Board’s periodic review of the Funds’ advisory, subadvisory and other service
provider agreements, the Board may consider risk management aspects of their operations and the functions for
which they are responsible. With respect to valuation, the Board oversees a management valuation team comprised of
officers and employees of Funds Management, has approved and periodically reviews written valuation policies and
procedures applicable to valuing Fund portfolio investments, and has established a valuation committee of Trustees.
The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role.
Committees.
As noted above, the Board has established a standing Nominating and Governance Committee, a standing Audit
Committee, a standing Valuation Committee and a standing Dividend Committee to assist the Board in the oversight
and direction of the business and affairs of the Trust. The Nominating and Governance Committee and Audit
Committee operate pursuant to charters approved by the Board. The Valuation Committee’s responsibilities are set
forth in Valuation Procedures approved by the Board, and the Dividend Committee’s responsibilities were set forth by
the Board when it established the Committee. Each Independent Trustee is a member of the Trust’s Nominating and
Governance Committee, Audit Committee and Valuation Committee. The Dividend Committee is comprised of three
Independent Trustees.
(1)
Nominating and
Governance Committee.
Except with respect to any trustee nomination made by an eligible
shareholder or shareholder group as permitted by applicable law and applicable provisions of the Declaration of Trust
and any By-Laws of a Trust, the Committee shall make all nominations for membership on the Board of Trustees of
each Trust. The Committee shall evaluate each candidate’s qualifications for Board membership and his or her
independence from the Funds’ Manager, sub-adviser(s) and principal underwriter(s) and, as it deems appropriate,
other principal service providers. Olivia Mitchell serves as the chairman of the Nominating and Governance
Committee.
33
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Wells Fargo - Fixed Income Funds
The Nominating and Governance Committee has adopted procedures by which a shareholder may properly submit a
nominee recommendation for the Committee’s consideration, which are set forth in Appendix A to the Trusts’
Nominating and Governance Committee Charter. The shareholder must submit any such recommendation (a
“Shareholder Recommendation”) in writing to the Trust, to the attention of the Trust’s Secretary, at the address of the
principal executive offices of the Trust. The Shareholder Recommendation must include: (i) a statement in writing
setting forth (A) the name, age, date of birth, business address, residence address, and nationality of the person
recommended by the shareholder (the “candidate”), (B) the series (and, if applicable, class) and number of all shares of
the Trust owned of record or beneficially by the candidate, as reported to such shareholder by the candidate; (C) any
other information regarding the candidate called for with respect to director nominees by paragraphs (a), (d), (e), and
(f ) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), adopted by the SEC (or the corresponding provisions of any
regulation or rule subsequently adopted by the SEC or any successor agency applicable to the Trust); (D) any other
information regarding the candidate that would be required to be disclosed if the candidate were a nominee in a
proxy statement or other filing required to be made in connection with solicitation of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (E) whether
the recommending shareholder believes that the candidate is or will be an “interested person” of the Trust (as defined
in the 1940 Act) and information regarding the candidate that will be sufficient for the Trust to make such
determination; (ii) the written and signed consent of the candidate to be named as a nominee and to serve as a
Trustee if elected; (iii) the recommending shareholder’s name as it appears on the Trust’s books; (iv) the series (and, if
applicable, class) and number of all shares of the Trust owned beneficially and of record by the recommending
shareholder; and (v) a description of all arrangements or understandings between the recommending shareholder and
the candidate and any other person or persons (including their names) pursuant to which the recommendation is
being made by the recommending shareholder. In addition, the Nominating and Governance Committee may require
the candidate to interview in person or furnish such other information as it may reasonably require or deem necessary
to determine the eligibility of such candidate to serve as a Trustee of the Trust. The Nominating and Governance
Committee has full discretion to reject candidates recommended by shareholders, and there is no assurance that any
such person properly recommended and considered by the Committee will be nominated for election to the Board. In
the event of any conflict or inconsistency with respect to the requirements applicable to a Shareholder
Recommendation as between those established in the procedures and those in the By-Laws of a Closed-End Fund, the
requirements of the By-Laws of such Closed-End Fund shall control.
The Nominating and Governance Committee may from time-to-time propose nominations of one or more individuals
to serve as members of an “advisory board,” as such term is defined in Section 2(a)(1) of the 1940 Act.
(2)
Audit Committee.
The Audit Committee oversees the Funds’ accounting and financial reporting policies, including
their internal controls over financial reporting; oversees the quality and objectivity of the Funds’ financial statements
and the independent audit thereof; and interacts with the Funds’ independent registered public accounting firm on
behalf of the full Board and with appropriate officers of the Trust. Judith M. Johnson serves as the chairman of the
Audit Committee.
(3)
Valuation Committee.
The Board has delegated to the Valuation Committee the authority to take any action
regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate,
including determining the fair value of securities between regularly scheduled Board meetings in instances where that
determination has not otherwise been delegated to the valuation team (“Management Valuation Team”) of Funds
Management. The Board considers for ratification at each quarterly meeting any valuation actions taken during the
previous quarter by the Valuation Committee or by the Management Valuation Team other than pursuant to
Board-approved methodologies. Any one member of the Valuation Committee may constitute a quorum for a meeting
of the committee.
(4)
Dividend Committee.
The Board has delegated to the Dividend Committee the responsibility to review and approve
certain dividend amount determinations made by a separate committee composed of representatives from Funds
Management and certain sub-advisers (“Management Open-End Dividend Committee”). The Board has delegated to
the Management Open-End Dividend Committee the authority to determine periodic dividend amounts subject to
certain Board-approved parameters to be paid by each of the Core Plus Bond Fund, Diversified Income Builder Fund,
Emerging Markets Equity Income Fund, International Bond Fund, Real Return Fund and Strategic Income Fund. Under
Wells Fargo - Fixed Income Funds
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34
certain circumstances, the Dividend Committee must review and consider for approval, as it deems appropriate,
recommendations of the Management Open-End Dividend Committee.
As the Fund has not yet commenced operations as of the date of this SAI, the Board’s committees have not yet met
with respect to the Fund.
Compensation.
The Trustees do not receive any retirement benefits or deferred compensation from the Trust or any other member of
the Fund Complex. The Trust’s Officers are not compensated by the Trust for their services.The Funds have not yet paid
compensation to the Trustees because the Funds did not begin operations until on or around the date of this SAI.
The below table lists the compensation estimated to be paid to each Trustee by the Fund for the fiscal year ending
September 30, 2019 and the total compensation paid to each Trustee by the Fund Complex for the calendar year
ended December 31, 2018.
|
|
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|
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Trustee Compensation
|
|
Trustee
|
|
Estimated Compensation From the
Fund for the Fiscal Period Ending
September 30, 2019
|
Total Compensation from the Fund
Complex for the Calendar Year
Ending December 31, 2018
1
|
|
William R. Ebsworth
|
|
$1,980
|
$301,000
|
|
Jane A. Freeman
|
|
$2,112
|
$321,000
|
|
Isaiah Harris, Jr.
|
|
$1,898
|
$288,500
|
|
Judith M. Johnson
|
|
$2,178
|
$331,000
|
|
David F. Larcker
|
|
$1,980
|
$301,000
|
|
Olivia S. Mitchell
|
|
$2,112
|
$321,000
|
|
Timothy J. Penny
|
|
$2,474
|
$376,000
|
|
James G. Polisson
|
|
$1,980
|
$301,000
|
|
Pamela Wheelock
|
|
$1,980
|
$301,000
|
|
1.
|
As of December 31, 2018, there were 152 funds in the Fund Complex.
|
Beneficial Equity Ownership Information.
The following table contains specific information about the dollar range of
equity securities beneficially owned by each Trustee as of December 31, 2018 in each Fund and the aggregate dollar
range of equity securities in other Fund in the Fund Complex overseen by the Trustees, stated as one of the following
ranges: A = $0; B = $1 - $10,000; C = 10,001 - $50,000; D = $50,001 - $100,000; and E = Over $100,000.
|
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|
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|
|
|
|
Fund
|
Ebsworth
|
Freeman
|
Harris
|
Johnson
|
Larcker
|
Mitchell
|
Penny
|
Polisson
|
Wheelock
|
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Global Investment Grade Credit Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
|
Aggregate Dollar Range of Equity Securities
in All Funds Overseen by Trustee in Fund
Complex
1
|
E
|
E
|
E
|
E
|
E
|
E
|
E
|
E
|
E
|
|
1.
|
Includes Trustee ownership in shares of funds within the entire Wells Fargo Fund Complex (consisting of 152 funds).
|
Ownership of Securities of Certain Entities.
As of the calendar year ended December 31, 2018, none of the Independent
Trustees and/or their immediate family members owned securities of the manager, any sub-advisers, or the distributor,
or any entity directly or indirectly controlling, controlled by, or under common control with the manager, any
sub-advisers, or the distributor.
35
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Wells Fargo - Fixed Income Funds
MANAGER AND OTHER SERVICE PROVIDERS
Manager and Class-Level Administrator
Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company and an affiliate of Wells Fargo
Bank, is the manager and class-level administrator for the Funds. Funds Management provides advisory and Fund-level
administrative services to the Funds under an investment management agreement (the “Management Agreement”)
and provides class-level administrative services to the Funds under a class-level administration agreement (the
“Class-Level Administration Agreement”). Under the Management Agreement, Funds Management is responsible for,
among other services, (i) implementing the investment objectives and strategies of the Funds, (ii) supervising the
applicable Sub-Adviser(s), (iii) providing Fund-level administrative services in connection with the Funds’ operations,
(iv) developing and implementing procedures for monitoring compliance with regulatory requirements and
compliance with the Funds’ investment objectives, policies and restrictions, and (v) providing any other Fund-level
administrative services reasonably necessary for the operation of the Funds other than those services that are
provided by the Funds’ transfer and dividend disbursing agent, custodian, and fund accountant. Funds Management
also furnishes office space and certain facilities required for conducting the Funds’ business together with ordinary
clerical and bookkeeping services.
Under the Class-Level Administration Agreement, Funds Management is responsible for, among other services, (i)
coordinating, supervising and paying the applicable transfer agent and various sub-transfer agents and omnibus
account servicers and record-keepers, (ii) coordinating the preparation and filing of registration statements, notices,
shareholder reports and other information materials, including prospectuses, proxies and other shareholder
communications for a class, (iii) receiving and tabulating class-specific shareholder votes, (iv) reviewing bills submitted
to a Fund and, upon determining that a bill is appropriate, allocating amounts to the appropriate classes thereof and
instructing the Funds’ custodian to pay such bills, and (v) assembling and disseminating information concerning class
performance, expenses, distributions and administration. Funds Management has agreed to pay all of the Funds’ fees
and expenses for services provided by the Funds’ transfer agent and various sub-transfer agents and omnibus account
servicers and record-keepers out of the fees it receives pursuant to the Class-Level Administration Agreement.
As compensation for its services under the Management Agreement, Funds Management is entitled to receive a
monthly fee at the annual rates indicated below of each Fund’s average daily net assets:
|
|
|
|
|
Fund
|
Fee
|
|
Global Investment Grade Credit Fund
|
First $500M
Next $500M
Next $2B
Next $2B
Next $5B
Over $10B
|
0.400%
0.375%
0.350%
0.325%
0.290%
0.280%
|
For providing class-level administrative services to the Funds pursuant to the Class-Level Administration Agreement,
including paying the Funds’ fees and expenses for services provided by the Funds’ transfer agent and various
sub-transfer agents and omnibus account servicers and record-keepers, Funds Management is entitled to receive an
annual fee at the rates indicated below, as a percentage of the total net assets of each Class:
|
|
|
|
|
|
|
Class-Level
Administrator
Fee
|
|
Share Class
|
|
% of Total
Net Assets
|
|
Class R6
|
|
0.03%
|
|
Institutional Class
|
|
0.08%
|
General.
The Fund’s Management Agreement will continue in effect provided the continuance is approved annually (i)
by the holders of a majority of the respective Fund’s outstanding voting securities or by the Board and (ii) by a majority
of the Trustees who are not parties to the Management Agreement or “interested persons” (as defined under the 1940
Act) of any such party. The Management Agreement may be terminated at any time by vote of the Board or by vote of
Wells Fargo - Fixed Income Funds
|
36
a majority of a Fund’s outstanding voting securities, or by Funds Management on 60 days’ written notice. It will
terminate automatically if assigned.
The Class-Level Administration Agreement will continue in effect provided the continuance is approved annually by
the Board, including a majority of the Trustees who are not “interested persons” (as defined under the 1940 Act) of any
party to the Class-Level Administration Agreement. The Class-Level Administration Agreement may be terminated on
60 days’ written notice by either party.
Conflicts of Interest
. Wells Fargo & Company is a diversified financial services company providing banking, insurance,
investment, mortgage and consumer financial services. The involvement of various subsidiaries of Wells Fargo &
Company, including Funds Management, in the management and operation of the Fund and in providing other
services or managing other accounts gives rise to certain actual and potential conflicts of interest.
For example, certain investments may be appropriate for a Fund and also for other clients advised by Funds
Management and its affiliates, and there may be market or regulatory limits on the amount of such investments, which
may cause competition for limited positions. Also, various clients and proprietary accounts of Funds Management and
its affiliates may at times take positions that are adverse to a Fund. Funds Management applies various policies to
address these situations, but a Fund may nonetheless incur losses or underperformance during periods when Wells
Fargo & Company, its affiliates and their clients achieve gains or outperformance.
Wells Fargo & Company may have interests in or provide services to portfolio companies or Fund shareholders or
intermediaries that may not be fully aligned with the interests of all investors. Funds Management and its affiliates
serve in multiple roles, including as manager and, for most Wells Fargo Funds, sub-adviser, as well as class-level
administrator and principal underwriter.
These are all considerations of which an investor should be aware and which may cause conflicts that could
disadvantage a Fund. Funds Management has instituted business and compliance policies, procedures and disclosures
that are designed to identify, monitor and mitigate such conflicts of interest.
Fund Expenses
. From time to time, Funds Management may waive fees from a Fund in whole or in part. Any such
waiver will reduce expenses and, accordingly, have a favorable impact on a Fund’s performance.
Except for the expenses borne by Funds Management, the Trust bears all costs of its operations, including the
compensation of the Independent Trustees; investment management, shareholder services and class-level
administrative fees; payments pursuant to any 12b-1 Plan; interest charges; taxes; fees and expenses of its
independent auditors, legal counsel, transfer agent and distribution disbursing agent; expenses of redeeming shares;
expenses of preparing and printing prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a 12b-1 Plan), shareholders’ reports, notices, proxy
statements and reports to regulatory agencies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues (including membership dues in the Investment Company Institute
allocable to a Fund); brokerage and other expenses connected with the execution of portfolio transactions; fees and
expenses of its custodian, including those for keeping books and accounts and calculating the NAV per share of a
Fund; expenses of shareholders’ meetings; expenses relating to the issuance, registration and qualification of a Fund’s
shares; pricing services, organizational expenses and any extraordinary expenses. Expenses attributable to a Fund are
charged against the Fund’s assets. General expenses of the Trust are allocated among all of the series of the Trust,
including the Funds, in a manner proportionate to the net assets of each Fund, on a transactional basis, or on such
other basis as the Board deems equitable.
Sub-Advisers
Funds Management has engaged Wells Fargo Asset Management (International) Limited (“WFAM (International)
Limited”) and Wells Capital Management Incorporated (“Wells Capital Management”) and indirect wholly owned
subsidiary of Wells Fargo & Company and an affiliate of Funds Management, to serve as sub-advisers to the Fund (each
a “Sub-Adviser” and collectively, the “Sub-Advisers”), as indicated in the table below. Subject to the direction of the
Board and the overall supervision and control of Funds Management and the Trust, the Sub-Advisers provide
day-to-day portfolio management for the Fund. The Sub-Advisers furnish to Funds Management periodic reports on
the investment activity and performance of the Fund. The Sub-Advisers also furnish such additional reports and
information as Funds Management and the Board and Officers may reasonably request. Funds Management may, from
37
|
Wells Fargo - Fixed Income Funds
time to time and in its sole discretion, allocate and reallocate services provided by and fees paid WFAM (International)
Limited or Wells Capital Management.
For providing sub-advisory services to the Fund, the Sub-Advisers are entitled to receive monthly fees at the annual
rates indicated below of the Fund’s average daily net assets. These fees may be paid by Funds Management or directly
by the Fund. If a subadvisory fee is paid directly by the Fund, the compensation paid to Funds Management for
advisory fees will be reduced accordingly.
|
|
|
|
|
|
Master Portfolios
|
Sub-Adviser
|
Fee
|
|
|
Global Investment Grade Credit
Fund
|
WFAM (International) Limited
|
First $100M
Next $200M
Next $200M
Over $500M
|
0.100%
0.087%
0.075%
0.050%
|
|
|
Wells Capital Management
|
First $100M
Next $200M
Next $200M
Over $500M
|
0.100%
0.087%
0.075%
0.050%
|
Portfolio Managers
The following information supplements, and should be read in conjunction with, the section in the Prospectus entitled
“Portfolio Managers.” The information in this section is provided as of October 31, 2018 for the Fund managed by the
portfolio managers listed below (each, a “Portfolio Manager” and together, the “Portfolio Managers”).
|
|
|
|
|
Fund
|
Sub-Adviser
|
Portfolio Managers
|
|
Global Investment Grade Credit Fund
|
WFAM (International) Limited
|
Henrietta Pacquement, CFA
Alex Temple
|
|
|
Wells Capital Management
|
Scott M. Smith, CFA
Jonathan Terry, CFA
|
Management of Other Accounts
.
The following table(s) provide information relating to other accounts managed by the
Portfolio Manager(s). The table(s) do not include the Funds or any personal brokerage accounts of the Portfolio
Manager(s) and their families.
|
|
|
|
|
WFAM (International) Limited
|
|
Henrietta Pacquement,
CFA
|
Registered Investment Companies
|
|
|
|
Number of Accounts
|
0
|
|
|
Total Assets Managed
|
$0
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Pooled Investment Vehicles
|
|
|
|
Number of Accounts
|
2
|
|
|
Total Assets Managed
|
$37M
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Accounts
|
|
|
|
Number of Accounts
|
2
|
|
|
Total Assets Managed
|
$411M
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
|
|
|
Alex Temple
|
Registered Investment Companies
|
|
|
|
Number of Accounts
|
0
|
Wells Fargo - Fixed Income Funds
|
38
|
|
|
|
|
|
Total Assets Managed
|
$0
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Pooled Investment Vehicles
|
|
|
|
Number of Accounts
|
2
|
|
|
Total Assets Managed
|
$152M
|
|
|
Number of Accounts Subject to Performance Fee
|
1
|
|
|
Assets of Accounts Subject to Performance Fee
|
$138M
|
|
|
Other Accounts
|
|
|
|
Number of Accounts
|
2
|
|
|
Total Assets Managed
|
$216M
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
|
|
|
Wells Capital Management
|
|
Scott M. Smith, CFA
|
Registered Investment Companies
|
|
|
|
Number of Accounts
|
0
|
|
|
Total Assets Managed
|
$0
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Pooled Investment Vehicles
|
|
|
|
Number of Accounts
|
5
|
|
|
Total Assets Managed
|
$2.75B
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Accounts
|
|
|
|
Number of Accounts
|
141
|
|
|
Total Assets Managed
|
$23.4B
|
|
|
Number of Accounts Subject to Performance Fee
|
1
|
|
|
Assets of Accounts Subject to Performance Fee
|
$920M
|
|
|
|
|
|
Jonathan Terry, CFA
|
Registered Investment Companies
|
|
|
|
Number of Accounts
|
0
|
|
|
Total Assets Managed
|
$0
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Pooled Investment Vehicles
|
|
|
|
Number of Accounts
|
0
|
|
|
Total Assets Managed
|
$0
|
|
|
Number of Accounts Subject to Performance Fee
|
0
|
|
|
Assets of Accounts Subject to Performance Fee
|
$0
|
|
|
Other Accounts
|
|
|
|
Number of Accounts
|
20
|
|
|
Total Assets Managed
|
$15.59B
|
|
|
Number of Accounts Subject to Performance Fee
|
1
|
|
|
Assets of Accounts Subject to Performance Fee
|
$922M
|
39
|
Wells Fargo - Fixed Income Funds
Material Conflicts of Interest
.
The Portfolio Managers face inherent conflicts of interest in their day-to-day
management of the Funds and other accounts because the Funds may have different investment objectives, strategies
and risk profiles than the other accounts managed by the Portfolio Managers. For instance, to the extent that the
Portfolio Managers manage accounts with different investment strategies than the Funds, they may from time to time
be inclined to purchase securities, including initial public offerings, for one account but not for a Fund. Additionally,
some of the accounts managed by the Portfolio Managers may have different fee structures, including performance
fees, which are or have the potential to be higher or lower, in some cases significantly higher or lower, than the fees
paid by the Funds. The differences in fee structures may provide an incentive to the Portfolio Managers to allocate
more favorable trades to the higher-paying accounts.
To minimize the effects of these inherent conflicts of interest, the Sub-Advisers have adopted and implemented
policies and procedures, including brokerage and trade allocation policies and procedures, that they believe address
the potential conflicts associated with managing portfolios for multiple clients and are designed to ensure that all
clients are treated fairly and equitably. Accordingly, security block purchases are allocated to all accounts with similar
objectives in a fair and equitable manner. Furthermore, the Sub-Advisers have adopted a Code of Ethics under Rule
17j-1 under the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”) to address
potential conflicts associated with managing the Funds and any personal accounts the Portfolio Managers may
maintain.
WFAM (International) Limited.
WFAM (International) Limited and its portfolio managers manage accounts that
include performance-adjusted fees and other accounts that do not. There could be an incentive to favor those
accounts that include a performance-based fee. WFAM (International) Limited and its portfolio managers must allocate
time and investment ideas across multiple funds and accounts. In general, potential conflicts of interest may arise
among accounts that have different objectives, benchmarks, time horizons and fees. To address potential conflicts of
interest, WFAM (International) Limited manages accounts in a similar manner, with similar investments and similar
allocations whenever possible, and consistent with individual client guidelines and requirements. Potential conflicts of
interest also may arise if orders for a client do not get fully executed due to being aggregated with orders of other
accounts managed by WFAM (International) Limited. WFAM (International) Limited portfolio managers also might
execute transactions for some accounts that could adversely impact the value of securities held by other client
accounts. Although WFAM (International) Limited monitors such transactions to attempt to ensure equitable
treatment across all of its accounts, there can be no assurance that the price of a security held by a particular client
account would not be impacted as a result of WFAM (International) Limited’s portfolio management activities on
behalf of its other clients. Also, securities selected for a particular account may outperform the securities selected for
other accounts managed by the same portfolio manager.
WFAM (International) Limited has adopted compliance procedures to deter and detect potential conflicts of interest
that might arise as a result of the performance-based fee structure of these accounts.
Wells Capital Management.
Wells Capital Management’s Portfolio Managers often provide investment management
for separate accounts advised in the same or similar investment style as that provided to mutual funds. While
management of multiple accounts could potentially lead to conflicts of interest over various issues such as trade
allocation, fee disparities and research acquisition, Wells Capital Management has implemented policies and
procedures for the express purpose of ensuring that clients are treated fairly and that potential conflicts of interest are
minimized.
Compensation
.
The Portfolio Managers were compensated by their employing Sub-Adviser using the following
compensation structure:
WFAM (International) Limited.
The compensation structure for WFAM (International) Limited’s Portfolio Managers
includes a competitive fixed base salary plus variable incentives, payable annually and over a longer term
period. WFAM (International) Limited participates in third party investment management compensation surveys for
market-based compensation information to help support individual pay decisions. In addition to surveys, WFAM
(International) Limited also considers prior professional experience, tenure, seniority and a Portfolio Manager’s team
size, scope and assets under management when determining his/her fixed base salary.
WFAM (International) Limited’s investment incentive program plays an important role in aligning the interests of our
portfolio managers, investment team members, clients and shareholders. Incentive awards for portfolio managers are
Wells Fargo - Fixed Income Funds
|
40
determined based on a review of relative investment and business/team performance. Investment performance is
generally evaluated for 1, 3, and 5 year performance results, with a predominant weighting on the 3- and 5- year time
periods, versus the relevant benchmarks and/or peer groups consistent with the investment style. In the case of each
Fund, the benchmark(s) against which the performance of the Fund’s portfolio may be compared for these purposes
generally are indicated in the “Average Annual Total Returns” table in the Prospectus. Once determined, incentives are
awarded to portfolio managers annually, with a portion awarded as annual cash and a portion awarded as long term
incentive. The long term portion of incentives generally carry a pro-rated vesting schedule over a three year period.
Wells Capital Management.
The compensation structure for Wells Capital Management’s Portfolio Managers includes
a competitive fixed base salary plus variable incentives, payable annually and over a longer term period. Wells Capital
Management participates in third party investment management compensation surveys for market-based
compensation information to help support individual pay decisions. In addition to surveys, Wells Capital Management
also considers prior professional experience, tenure, seniority and a Portfolio Manager’s team size, scope and assets
under management when determining his/her fixed base salary. In addition, Portfolio Managers, who meet the
eligibility requirements, may participate in Wells Fargo’s 401(k) plan that features a limited matching contribution.
Eligibility for and participation in this plan is on the same basis for all employees.
Wells Capital Management’s investment incentive program plays an important role in aligning the interests of our
portfolio managers, investment team members, clients and shareholders. Incentive awards for portfolio managers are
determined based on a review of relative investment and business/team performance. Investment performance is
generally evaluated for 1, 3, and 5 year performance results, with a predominant weighting on the 3- and 5- year time
periods, versus the relevant benchmarks and/or peer groups consistent with the investment style. In the case of each
Fund, the benchmark(s) against which the performance of the Fund’s portfolio may be compared for these purposes
generally are indicated in the “Average Annual Total Returns” table in the Prospectus. Once determined, incentives are
awarded to portfolio managers annually, with a portion awarded as annual cash and a portion awarded as long term
incentive. The long term portion of incentives generally carry a pro-rated vesting schedule over a three year period. For
many of our portfolio managers, Wells Capital Management further requires a portion of their annual long-term award
be allocated directly into each strategy they manage through a deferred compensation vehicle. In addition, our
investment team members who are eligible for long term awards also have the opportunity to invest up to 100% of
their awards into investment strategies they support (through a deferred compensation vehicle).
Beneficial Ownership in the Funds.
The following table shows for each Portfolio Manager the dollar value of Fund equity
securities beneficially owned by the Portfolio Manager, stated as one of the following ranges:
$0;
$1 - $10,000;
$10,001 - $50,000;
$50,001 - $100,000;
$100,001 - $500,000;
$500,001 - $1,000,000; and
over $1,000,000.
|
|
|
|
|
Portfolio Manager Fund Holdings
|
|
|
|
Portfolio Manager
|
Fund
|
Beneficial Ownership
|
|
WFAM (International) Limited
|
|
Henrietta Pacquement, CFA
|
Global Investment Grade Credit Fund
|
$0
|
|
Alex Temple
|
Global Investment Grade Credit Fund
|
$0
|
|
Wells Capital Management
|
|
Scott M. Smith, CFA
|
Global Investment Grade Credit Fund
|
$0
|
|
Jonathan Terry, CFA
|
Global Investment Grade Credit Fund
|
$0
|
41
|
Wells Fargo - Fixed Income Funds
Distributor and Shareholder Servicing Agent
Wells Fargo Funds Distributor, LLC (the “Distributor”), an affiliate of Funds Management located at 525 Market Street,
San Francisco, California 94105, serves as the distributor to the Fund.
General
. The 12b-1 Plan and Distribution Agreement will continue in effect from year to year if such continuance is
approved at least annually by vote of a majority of both the Trustees and the Non-Interested Trustees. The Distribution
Agreement will terminate automatically if assigned, and may be terminated at any time, without payment of any
penalty, on not less than 60 days’ written notice, by the Trust’s Board, by a vote of a majority of the outstanding voting
securities of the Fund or by the Distributor. The 12b-1 Plan may not be amended to increase materially the amounts
payable thereunder by the relevant class of a Fund without approval by a vote of a majority of the outstanding voting
securities of such class, and no material amendment to the 12b-1 Plan shall be made unless approved by vote of a
majority of both the Trustees and Non-Interested Trustees. The 12b-1 Plan provides that, if and to the extent any
shareholder servicing payments are deemed to be payments for the financing of any activity primarily intended to
result in the sale of Fund shares, such payments are deemed to have been approved under the 12b-1 Plan.
Underwriting Commissions
The Distributor serves as the principal underwriter distributing securities of the Fund on a continuous basis.
As the Fund has not commenced operations as of the date of this SAI, information regarding underwriting
commissions paid is not yet available.
Custodian and Fund Accountant
State Street Bank and Trust Company (“State Street”), located at State Street Financial Center, One Lincoln Street,
Boston, Massachusetts 02111, acts as Custodian and fund accountant for the Fund. As Custodian, State Street, among
other things, maintains a custody account or accounts in the name of the Fund, handles the receipt and delivery of
securities, selects and monitors foreign sub-custodians as the Fund’s global custody manager, determines income and
collects interest on the Fund’s investments and maintains certain books and records. As fund accountant, State Street
is responsible for calculating the Fund’s daily net asset value per share and for maintaining its portfolio and general
accounting records. For its services, State Street is entitled to receive certain transaction fees, asset-based fees and
out-of-pocket costs.
Securities Lending Agent
Goldman Sachs Bank USA, d/b/a Goldman Sachs Agency Lending (the “Securities Lending Agent”) serves as the
securities lending agent to the Funds responsible for the implementation and administration of the Funds’ securities
lending program including facilitating the lending of the Funds’ available securities to approved borrowers and
negotiating the terms and conditions of each loan with a borrower. The Securities Lending Agent ensures that all
substitute interest, dividends, and other distributions paid with respect to loaned securities is credited to each Fund’s
relevant account on the date such amounts are delivered by the borrower to the Securities Lending Agent.
The Securities Lending Agent ensures that all collateral received in connection with securities loans is invested in the
Cash Collateral Fund, as described above in the section entitled “Permitted Investment Activities and Certain
Associated Risks – Loans of Portfolio Securities”. The Securities Lending Agent monitors the marked value of the
collateral delivered in connection with a securities loan so that such collateral equals to at least 102% of the market
value of any domestic securities loaned or 105% of the market value of any foreign securities loaned. The loaned
securities are marked to market on a daily basis, and additional collateral is required to be paid to maintain coverage.
At the termination of the loan, the Securities Lending Agent returns the collateral to the borrower upon the return of
the loaned securities.
The Securities Lending Agent maintains records of all loans and makes available to the Funds a monthly statement
describing the loans made and the income derived from the loans during the period. The Securities Lending Agent
performs compliance monitoring and testing of the securities lending program and provides quarterly report to the
Funds’ Board of Trustees.
As the Fund has not commenced operations as of the date of this SAI, information regarding Securities Lending Agent
is not yet available.
Wells Fargo - Fixed Income Funds
|
42
Transfer and Distribution Disbursing Agent
DST Asset Manager Solutions, Inc. (“DST”), located at Two Thousand Crown Colony Drive, Quincy, Massachusetts
02169, acts as transfer and distribution disbursing agent for the Funds. For providing such services, DST is entitled to
receive fees from the Administrator.
Independent Registered Public Accounting Firm
KPMG LLP (“KPMG”) has been selected as the independent registered public accounting firm for the Funds. KPMG
provides audit services, tax return preparation and assistance and consultation in connection with review of certain
SEC filings. KPMG’s address is Two Financial Center, 60 South Street, Boston, MA 02111.
Under Rule 2-01(c)(1)(ii)(A) of Regulation S-X (the “Loan Rule”), accounting firms such as KPMG are not independent if
they or any of their covered persons have certain financial relationships with their audit clients or certain affiliates of
those clients. The Funds are required under various securities laws to have their financial statements audited by an
independent accounting firm.
The Loan Rule specifically provides that an accounting firm would not be independent if it or certain affiliates and
covered persons receives a loan from a lender that is a record or beneficial owner of more than ten percent of an audit
client’s equity securities. For purposes of the Loan Rule, audit clients include all of the series of the Fund Complex,
including the Funds. KPMG has informed the Trust’s Audit Committee that it and certain of its covered persons have
relationships with one or more lenders who hold, as record owner, more than ten percent of the shares of certain series
of the Fund Complex, which implicates the Loan Rule.
On June 20, 2016, the SEC staff issued a “no-action” letter to another mutual fund complex (see Fidelity Management &
Research Company, et al., No-Action Letter) (the “No-Action Letter”) related to the Loan Rule. In the No-Action Letter,
the SEC staff provided assurances that it would not recommend enforcement action against a fund that relied on audit
services performed by an accounting firm that was not in compliance with the Loan Rule in certain specified
circumstances. The circumstances described in the No-Action Letter are substantially similar to the circumstances that
may implicate KPMG’s independence under the Loan Rule with respect to the Funds. While the SEC had indicated that
the assurances granted in the No-Action Letter would expire eighteen months from its issuance, on September 22,
2017, the SEC staff extended its assurances indefinitely and indicated that the No-Action Letter would be withdrawn
upon the effectiveness of any amendments to the Loan Rule designed to address the concerns expressed in the
No-Action Letter.
KPMG has communicated to the Trust’s Audit Committee that, after evaluating the facts and circumstances and the
Loan Rule and No-Action Letter, it believes that the relationships reported to the Trust’s Audit Committee do not bear
on its ability to be objective and impartial in the performance of its audits of the Funds and that a reasonable investor,
with knowledge of all relevant facts and circumstances, would reach the same conclusion. Based on this evaluation,
KPMG has confirmed that it continues to be an independent accountant with respect to the Funds within the meaning
of PCAOB Rule 3520 and all relevant professional and regulatory standards. In May 2018, the SEC proposed
amendments to revise its auditor independence rules related to loans or debtor-creditor relationships. The rules, as
proposed, are not expected to alter this conclusion.
If, in the future, the independence of KPMG is called into question under the Loan Rule by circumstances that are not
addressed in the No-Action Letter, the Funds may need to take action in order for the Funds’ filings with the SEC
containing financial statements to be deemed compliant with applicable securities laws. Such actions could result in
additional costs, impair the ability of the Funds to issue new shares or have other material adverse consequences for
the Funds.
Code of Ethics
The Fund Complex, Funds Management, the Distributor and the Sub-Advisers each has adopted a code of ethics which
contains policies on personal securities transactions by “access persons” as defined in each of the codes. These policies
comply with Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, as applicable. Each code of ethics,
among other things, permits access persons to invest in certain securities, subject to various restrictions and
requirements. To facilitate enforcement, the codes of ethics generally require that an access person submit reports to a
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designated compliance person regarding personal securities transactions. The codes of ethics for the Fund Complex,
Funds Management, the Distributor and the Sub-Advisers are on public file with, and are available from, the SEC.
Proxy Voting Policies and Procedures
The Trusts have adopted policies and procedures for the Funds (“Fund Proxy Voting Procedures”) that are used to
determine how to vote proxies relating to portfolio securities held by the Funds of the Trusts. The Fund Proxy Voting
Procedures are designed to ensure that proxies are voted in the best interests of Fund shareholders, without regard to
any relationship that any affiliated person of a Fund (or an affiliated person of such affiliated person) may have with the
issuer of the security and with the goal of maximizing value to shareholders consistent with governing laws and the
investment policies of each Fund. While securities are not purchased to exercise control or to seek to effect corporate
change through share ownership activism, the Funds support sound corporate governance practices within
companies in which they invest.
The Board of the Trusts has delegated the responsibility for voting proxies relating to the Funds’ portfolio securities to
Funds Management. Funds Management has adopted the Wells Fargo Asset Management (“WFAM”) Proxy Voting
Policies and Procedures (the “WFAM Policies and Procedures”) and WFAM has established a Proxy Voting Committee
(“WFAM Proxy Committee”) that is responsible for overseeing the proxy voting process and ensuring that the voting
process is implemented in conformance with the WFAM Policies and Procedures. The following outlines certain key
aspects of the WFAM Policies and Procedures relating to the administration of the proxy voting process and how
proxies are voted.
Proxy Administrator.
The proxy voting process is administered by Wells Capital Management’s Operations Department
(“Proxy Administrator”), who reports to WFAM’s Chief Operations Officer. The Proxy Administrator is responsible for
administering and overseeing the proxy voting process to ensure the implementation of the WFAM Policies and
Procedures, including regular operational reviews, typically conducted on a weekly basis. The Proxy Administrator
monitors third party voting of proxies to ensure it is being done in a timely and responsible manner, including review
of scheduled vendor reports. The Proxy Administrator in conjunction with the WFAM Proxy Committee reviews the
continuing appropriateness of the WFAM Policies and Procedures, and recommends revisions as necessary.
Third Party Proxy Voting Vendor.
WFAM has retained a third-party proxy voting service, Institutional Shareholder
Services Inc. (“ISS”), to assist in the implementation of certain proxy voting-related functions including: 1.) Providing
research on proxy matters 2.) Providing technology to facilitate the sharing of research and discussions related to
proxy votes 3.) Voting proxies in accordance with WFAM’s guidelines 4.) Handling administrative and reporting items
5.) Maintaining records of proxy statements received in connection with proxy votes and provide copies/analyses
upon request. Except in instances where clients have retained voting authority, WFAM retains the responsibility for
proxy voting decisions.
Proxy Committee and Sub-Committees.
The WFAM Proxy Committee shall be responsible for overseeing the proxy
voting process to ensure its implementation in conformance with the WFAM Policies and Procedures. The WFAM Proxy
Committee shall coordinate with WFAM Risk and Compliance to monitor ISS, the proxy voting agent currently retained
by WFAM, to determine that ISS is accurately applying the WFAM Policies and Procedures and operates as an
independent proxy voting agent. WFAM’s ISS vendor oversight process includes an assessment of ISS’ Policy and
Procedures (“P&P”), including conflict controls and monitoring, receipt and review of routine performance-related
reporting by ISS to WFAM and periodic onsite due diligence meetings. Due diligence meetings typically include:
meetings with key staff, P&P related presentations and discussions, technology-related demonstrations and
assessments, and some sample testing, if appropriate. The WFAM Proxy Committee shall review the continuing
appropriateness of the WFAM Policies and Procedures. The WFAM Proxy Committee may delegate certain powers and
responsibilities to sub- committees consisting of a “Proxy Voting Sub-Committee” and a “Proxy Governance
Sub-Committee.”
Proxy Voting Sub-Committee.
Among other delegated matters, the Proxy Voting Sub-Committee, in accordance with
the WFAM Policies and Procedures, reviews and votes on routine proxy proposals that it considers under the WFAM
Policies and Procedures in a timely manner. If necessary, the Proxy Voting Sub- Committee escalates issues to the Proxy
Governance Sub-Committee that are determined to be material by the Proxy Voting Sub-Committee or otherwise in
accordance with the WFAM Policies and Procedures. The Proxy Voting Sub-Committee coordinates with WFAM Risk and
Compliance to review the performance and independence of ISS in exercising its proxy voting responsibilities.
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Proxy Governance Sub-Committee.
The Proxy Governance Sub-Committee reviews and, in accordance with the WFAM
Policies and Procedures, votes on issues that have been escalated from the Proxy Voting Sub- Committee. Members of
the Proxy Governance Sub-Committee also oversee the implementation of WFAM Proxy Committee recommendations
for the respective functional areas in WFAM that they represent.
Voting Procedures.
Unless otherwise required by applicable law, proxies will be voted in accordance with the following
steps and in the following order of consideration:
First, any voting items related to WFAM “Top-of-House” voting principles (as described below under the heading
“WFAM Proxy Voting Principles/Guidelines”) will generally be voted in accordance with a custom voting policy with ISS
(“Custom Policy”) designed to implement the WFAM’s Top-of-House voting principles.
Second, any voting items for meetings deemed of “high importance” (e.g., proxy contests, mergers and acquisitions,
capitalization proposals and anti-takeover proposals) where ISS opposes management recommendations will be
referred to the portfolio management teams for recommendation or the Proxy Voting Sub-Committee (or escalated to
the Proxy Governance Sub- Committee) for case-by-case review and vote determination.
Third, with respect to any voting items where ISS Sustainability Voting Guidelines provide a different recommendation
than ISS Standard Voting Guidelines, the following steps are taken:
a. The WFAM Portfolio Risk Management and Analytics team (the “PRMA team”) evaluates the matter for materiality
and any other relevant considerations.
b. If the PRMA team recommends further review, the voting item is then referred to the portfolio management teams
for recommendation or the Proxy Voting Sub-Committee (or escalated to the Proxy Governance Sub-Committee) for
case-by-case review and vote determination.
c. If the PRMA team does not recommend further review, the matter is voted in accordance with ISS Standard Voting
Guidelines.
Fourth, any remaining proposals are voted in accordance with ISS Standard Voting Guidelines.
Commitment to the Principles of Responsible Investment.
As a signatory to the Principles for Responsible Investment,
WFAM has integrated certain environmental, social, and governance factors into its investment processes, which
includes the proxy process. As described under Voting Procedures above, WFAM considers ISS’s Sustainability Voting
Guidelines as a point of reference in certain cases deemed to be material to a company’s long-term shareholder value.
Voting Discretion.
In all cases, the WFAM Proxy Committee (and any sub-committee thereof) will exercise its voting
discretion in accordance with the voting philosophy of the WFAM Policies and Procedures. In cases where a proxy item
is forwarded by ISS to the WFAM Proxy Committee or a sub-committee thereof, the WFAM Proxy Committee or its
sub-committee may be assisted in its voting decision through receipt of: (i) independent research and voting
recommendations provided by ISS or other independent sources; (ii) input from the investment sub-adviser
responsible for purchasing the security; and (iii) information provided by company management and shareholder
groups.
Portfolio Manager and Sub-Adviser Input.
The WFAM Proxy Committee may consult with portfolio management teams
and Fund sub-advisers on specific proxy voting issues, as it deems appropriate. In addition, portfolio management
teams or Fund sub-advisers may proactively make recommendations to the WFAM Proxy Committee regarding any
proxy voting issue. In this regard, the process takes into consideration expressed views of portfolio management
teams and Fund sub-advisers given their deep knowledge of investee companies. For any proxy vote, portfolio
management teams and Fund sub-advisers may make a case to vote against the ISS or WFAM Proxy Committee’s
recommendation (which is described under Voting Procedures above). Any portfolio management team’s or Fund
sub-adviser’s opinion will be documented in a brief write-up for consideration by the WFAM Proxy Committee who will
determine, or escalate to the Proxy Voting Sub-Committee, the final voting decision.
Consistent Voting.
Proxies will be voted consistently on the same matter when securities of an issuer are held by WFAM
multiple client accounts without “split voting” across different accounts.
WFAM Top-of-House Proxy Voting Principles/Guidelines.
The following reflects WFAM’s Top-of- House Voting Principles.
WFAM has put in place a custom voting policy with ISS to implement these voting principles.
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Policies and Procedures for Disclosure of Fund Portfolio Holdings
I. Scope of Policies and Procedures. The following policies and procedures (the “Procedures”) govern the disclosure of
portfolio holdings and any ongoing arrangements to make available information about portfolio holdings for the
separate series of Wells Fargo Funds Trust (“Funds Trust”), Wells Fargo Master Trust (“Master Trust”), Wells Fargo Variable
Trust (“Variable Trust”) (each of Funds Trust, Master Trust and Variable Trust are referred to collectively herein as the
“Funds” or individually as the “Fund”) now existing or hereafter created.
II. Disclosure Philosophy. The Funds have adopted these Procedures to ensure that the disclosure of a Fund’s portfolio
holdings is accomplished in a manner that is consistent with a Fund’s fiduciary duty to its shareholders. For purposes
of these Procedures, the term “portfolio holdings” means the stock, bond and derivative positions held by a Fund and
includes the cash investments held by the Fund.
Under no circumstances shall Wells Fargo Funds Management, LLC (“Funds Management”), Wells Fargo Asset
Management (“WFAM”) or the Funds receive any compensation in return for the disclosure of information about a
Fund’s portfolio holdings or for any ongoing arrangements to make available information about a Fund’s portfolio
holdings.
III. Disclosure of Fund Portfolio Holdings. The complete portfolio holdings and top ten holdings information referenced
below (except for the Funds of Master Trust (“Master Portfolios”) and Funds of Variable Trust) will be available on the
Funds’ website until updated for the next applicable period. Funds Management may withhold any portion of a Fund’s
portfolio holdings from online disclosure when deemed to be in the best interest of the Fund. Once holdings
information has been posted on the website, it may be further disseminated without restriction.
A. Complete Holdings. The complete portfolio holdings for each Fund (except for Money Market Funds and Alternative
Funds and Master Portfolios) shall be made publicly available monthly on the Funds’ website (wellsfargofunds.com), on
a one-month delayed basis. Money Market Fund portfolio holdings shall be made publicly available on the Fund’s
website, on a 1-day delayed basis. In addition to the foregoing, each Money Market Fund shall post on its website such
portfolio holdings and other information required by Rule 2a-7 under the Investment Company Act of 1940, as
amended. The categories of information included on the website may differ slightly from what is included in the
Funds’ financial statements.
B. Top Ten Holdings. Top ten holdings information (excluding derivative positions) for each Fund (except for Money
Market Funds, Alternative Funds and Master Portfolios) shall be made publicly available on the Funds’ website on a
monthly, seven-day or more delayed basis.
C. Fund of Funds Structures.
1. The underlying funds held by a Fund that operates as a fund of funds and invests exclusively in multiple affiliated
underlying funds or multiple unaffiliated underlying funds or in a combination of affiliated and unaffiliated underlying
funds (“fund of funds”) shall be posted to the Funds’ website on a monthly, one-month delayed basis.
2. The individual holdings of the underlying master funds held by Funds that operate as a feeder fund in a
master-feeder structure shall be posted to the Funds’ website on a monthly, one-month delayed basis.
3. A change to the underlying funds held by a fund of funds or changes in fund of funds’ target allocations between or
among its fixed-income and/or equity investments may be posted to the Funds’ website simultaneous with the
occurrence of the change.
D. Alternative Funds.
The following holdings disclosure policy applies to Alternative Funds:
1. Complete Holdings as of Fiscal Quarter Ends. As of each fiscal quarter end, the Alternative Funds’ complete portfolio
holdings shall be made publicly available quarterly on the Funds’ website, on a one-month delayed basis.
2. Holdings as of Other Month Ends. As of each month end other than a month end that coincides with a fiscal quarter
end, each Alternative Fund shall make publicly available monthly on the Fund’s website, on a one-month delayed
basis, the following: (i) all portfolio holdings held long other than any put options on equity securities; (ii) portfolio
holdings held short other than short positions in equity securities of single issuers; and (iii) the aggregate dollar value
of each of the following: (a) equity securities of single issuers held short, and (b) any put options on equity securities
held long.
3. Top Ten Holdings. Each Alternative Fund shall make publicly available on the Fund’s website on a monthly,
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seven-day or more delayed basis information about its top ten holdings information, provided that the following
holdings shall be excluded: (i) derivative positions; and (ii) short positions (other than any Publicly Disclosed Short
Positions).
E. Master Portfolios.
1. The complete portfolio holdings of Master Portfolios shall be posted to the Funds’ website on a semi-annual,
one-month delayed basis.
Furthermore, each Fund shall file such forms and portfolio holdings information in filings made with the SEC in the
manner specified on such forms and with such frequency as required by such forms and applicable SEC rules and
regulations.
IV. List of Approved Recipients. The following list describes the limited circumstances in which a Fund’s portfolio
holdings may be disclosed to select third parties in advance of the monthly release on the Funds’ website. In each
instance, a determination will be made by Funds Management that such advance disclosure is supported by a
legitimate business purpose and that the recipients, where feasible, are subject to an independent duty or contractual
obligation not to disclose or trade on the nonpublic information.
A.
Wells Fargo Affiliates
. Team members of Wells Fargo & Co. (“Wells Fargo”) and its affiliates who perform risk
management functions and provide other services to the Fund(s), as well as the third-party service providers utilized
by them to perform such functions and provide such services, shall have full daily access to the portfolio holdings of
the Fund(s).
B.
Sub-Advisers
. Sub-advisers shall have full daily access to fund holdings for the Fund(s) for which they have direct
management responsibility. Sub-advisers may also release to and discuss portfolio holdings with various
broker/dealers for purposes of analyzing the impact of existing and future market changes on the prices, availability/
demand and liquidity of such securities, as well as for the purpose of assisting portfolio managers in the trading of
such securities.
A new Fund sub-adviser may periodically receive full portfolio holdings information for such Fund from the date of
Board approval through the date upon which they take over day-to- day investment management activities. Such
disclosure will be subject to confidential treatment.
C.
Money Market Portfolio Management Team
. The money market portfolio management team at Wells Capital
Management Incorporated (“Wells Capital Management”) shall have full daily access to daily transaction information
across the Wells Fargo Funds for purposes of anticipating money market sweep activity which in turn helps to enhance
liquidity management within the money market funds.
D.
Funds Management/Wells Fargo Funds Distributor, LLC (“Funds Distributor”)
.
1. Funds Management personnel that deal directly with the processing, settlement, review, control, auditing,
reporting, and/or valuation of portfolio trades shall have full daily access to Fund portfolio holdings through access to
the fund accountant’s system.
2. Funds Management personnel that deal directly with investment review and analysis of the Funds shall have full
daily access to Fund portfolio holdings. through FactSet, a program that is used, among other things, to evaluate
portfolio characteristics against available benchmarks.
3. Funds Management and Distributor personnel may be given advance disclosure of any changes to the underlying
funds in a fund of funds structure or changes in a Fund’s target allocations that result in a shift between or among
asset classes.
E.
External Servicing Agents
. Portfolio holdings may be disclosed to servicing agents in connection with the day-to-day
operations and management of the funds. These recipients include, but are not limited to: a fund’s auditors; a fund’s
custodians; a fund’s accountants; proxy voting service providers; class action processing service providers; pricing
service vendors; prime brokers; securities lending agents; counsel to a fund or its independent Trustees; regulatory
authorities; third parties that assist in the review, processing and/or analysis of Fund portfolio transactions, portfolio
accounting and reconciliation, portfolio performance, trade order management, portfolio data analytics, electronic
order matching and other analytical or operational systems and services in connection with supporting a fund’s
operations; a fund’s insurers; financial printers; and providers of electronic systems providing access to materials for
meetings of a fund’s board of Trustees.
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F.
Rating Agencies
. Nationally Recognized Statistical Ratings Organizations may receive full Fund holdings for rating
purposes.
G.
Reorganizations
. Entities hired as trading advisors that assist with the analysis and trading associated with
transitioning portfolios may receive full portfolio holdings of both the target fund and the acquiring fund. In addition,
the portfolio managers of the target fund and acquiring fund may receive full portfolio holdings of the acquiring fund
and target fund, respectively, in order to assist with aligning the portfolios prior to the closing date of the
reorganization.
H.
Investment Company Institute
. The Investment Company Institute may receive information about full money
market Fund holdings concurrently at the time each money market Fund files with the SEC a report containing such
information.
I.
In-Kind Redemptions
. In connection with satisfying in-kind redemption requests from Funds, the redeeming
shareholders and their advisers and service providers may receive full Fund holdings as reasonably necessary to
operationally process such redemptions.
V.
Additions to List of Approved Recipients
. Any additions to the list of approved recipients requires approval by the
President, Chief Legal Officer and Chief Compliance Officer of the Funds based on a review of: (i) the type of fund
involved; (ii) the purpose for receiving the holdings information; (iii) the intended use of the information; (iv) the
frequency of the information to be provided; (v) the length of the lag, if any, between the date of the information and
the date on which the information will be disclosed; (vi) the proposed recipient’s relationship to the Funds; (vii) the
ability of Funds Management to monitor that such information will be used by the proposed recipient in accordance
with the stated purpose for the disclosure; (viii) whether a confidentiality agreement will be in place with such
proposed recipient; and (ix) whether any potential conflicts exist regarding such disclosure between the interests of
Fund shareholders, on the one hand, and those of the Fund’s investment manager/adviser, principal underwriter, or
any affiliated person of the Fund.
VI.
Commentaries
. Funds Management and WFAM may disclose any views, opinions, judgments, advice or
commentary, or any analytical, statistical, performance or other information in connection with or relating to a Fund or
its portfolio holdings (including historical holdings information), or any changes to the portfolio holdings of a Fund.
The portfolio commentary and statistical information may be provided to members of the press, shareholders in the
Funds, persons considering investment in the Funds or representatives of such shareholders or potential shareholders.
The content and nature of the information provided to each of these persons may differ.
Certain of the information described above will be included in periodic fund commentaries (e.g., quarterly, monthly,
etc.) and will contain information that includes, among other things, top contributors/detractors from fund
performance and significant portfolio changes during the relevant period (e.g., calendar quarter, month, etc.). This
information will be posted contemporaneously with their distribution on the Funds’ website.
No person shall receive any of the information described above if, in the sole judgment of Funds Management and
WFAM, the information could be used in a manner that would be harmful to the Funds.
VII.
Other Investment Products
. Funds Management, WFAM and/or their affiliates manage other investment products,
including investment companies, offshore funds, and separate accounts. Many of these other investment products
have strategies that are the same or substantially similar to those of the Funds and thus may have the same or
substantially similar portfolio holdings. The portfolio holdings of these other investment products are made available
to clients, investors, and in some cases, third-party sponsors, at different times than portfolio holdings of the Funds are
publicly disclosed. It is possible that any recipient of portfolio holdings for these other investment products could
trade ahead or against a Fund based on the information received.
VIII.
Board Approval
. The Board shall review these Procedures, including the list of approved recipients, as often as they
deem appropriate, but not less often than annually, and will consider for approval any changes that they deem
appropriate.
IX.
Education Component
. In order to promote strict compliance with these Procedures, Funds Management has
informed its employees, and other parties possessing Fund portfolio holdings information (such as sub-advisers, the
fund accounting agent and the custodian), of the limited circumstances in which the Funds’ portfolio holdings may be
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disclosed in advance of the monthly disclosure on the Funds’ website and the ramifications, including possible
dismissal, if disclosure is made in contravention of these Procedures.
BROKERAGE
The Trust has no obligation to deal with any broker-dealer or group of broker-dealers in the execution of transactions
in portfolio securities. Subject to the supervision of the Trust’s Board and the supervision of the Adviser, each
Sub-Adviser is responsible for the Fund’s portfolio decisions and the placing of portfolio transactions. In placing orders,
it is the policy of the Sub-Advisers to seek to obtain the best overall results taking into account various factors,
including, but not limited to, the size and type of transaction involved; the broker-dealer’s risk in positioning the
securities involved; the nature and character of the market for the security; the confidentiality, speed and certainty of
effective execution required for the transaction, the general execution and operational capabilities of the
broker-dealer; the reputation, reliability, experience and financial condition of the firm, the value and quality of the
services rendered by the firm in this and other transactions; and the reasonableness of the spread or commission.
While the Sub-Adviser generally seeks reasonably competitive spreads or commissions, the Fund will not necessarily
be paying the lowest spread or commission available.
Purchases and sales of equity securities on a securities exchange are effected through broker-dealers who charge a
negotiated commission for their services. Orders may be directed to any broker-dealer including, to the extent and in
the manner permitted by applicable law, affiliated broker-dealers. However, the Fund and Funds Management have
adopted a policy pursuant to Rule 12b- 1(h) under the 1940 Act that prohibits the Fund from directing portfolio
brokerage to brokers who sell Fund shares as compensation for such selling efforts. In the over-the-counter market,
securities are generally traded on a “net” basis with brokerdealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a profit to the broker-dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount of compensation to the underwriter,
generally referred to as the underwriter’s concession or discount.
In placing orders for portfolio securities of the Fund, each Sub-Adviser seeks to obtain the most favorable price and
efficient execution. This means that the Sub-Adviser will seek to execute each transaction at a price and commission, if
any, that provide the most favorable total cost or proceeds reasonably attainable in the circumstances. Commission
rates are established pursuant to negotiations with the broker-dealer based, in part, on the quality and quantity of
execution services provided by the broker-dealer and in the light of generally prevailing rates. Furthermore, the
Adviser oversees the trade execution procedures of the Sub-Adviser to ensure that such procedures are in place, that
they are adhered to, and that adjustments are made to the procedures to address ongoing changes in the
marketplace.
A Sub-Adviser may, in circumstances in which two or more broker-dealers are in a position to offer comparable results
for a portfolio transaction, give preference to a broker-dealer that has provided statistical or other research services to
the Sub-Adviser. In selecting a broker-dealer under these circumstances, the Sub-Adviser will consider, in addition to
the factors listed above, the quality of the research provided by the broker-dealer.
A Sub-Adviser may pay higher commissions than those obtainable from other broker-dealers in exchange for such
research services. The research services generally include: (1) furnishing advice as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the advisability of securities or purchasers or sellers of
securities; (2) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (3) effecting securities transactions and performing functions
incidental thereto. By allocating transactions in this manner, a Sub-Adviser is able to supplement its research and
analysis with the views and information of securities firms. Information so received will be in addition to, and not in
lieu of, the services required to be performed by the Sub-Adviser under the advisory contracts, and the expenses of
the Sub-Adviser will not necessarily be reduced as a result of the receipt of this supplemental research information.
Furthermore, research services furnished by broker-dealers through which a Sub-adviser places securities transactions
for a Fund may be used by the Sub-Adviser in servicing its other accounts, and not all of these services may be used by
the Sub-Adviser in connection with advising the Fund.
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Portfolio Turnover. The portfolio turnover rate is not a limiting factor when a Sub-Adviser deems portfolio changes
appropriate. Changes may be made in the portfolios consistent with the investment objectives and policies of the
Fund’s whenever such changes are believed to be in the best interests of the Fund and its shareholders. The portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities by the average monthly
value of a Fund’s portfolio securities. For purposes of this calculation, portfolio securities exclude all securities having a
maturity when purchased of one year or less. Portfolio turnover generally involves some expenses to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and the
reinvestment in other securities. Portfolio turnover may also result in adverse tax consequences to a Fund’s
shareholders.
Because the Fund commenced operations on or around the date of this SAI, no history of the portfolio turnover rate is
available.
Brokerage Commissions.
Because the Fund commenced operations on or around the date of this SAI, the Fund has no
brokerage commissions to disclose as of the date of this SAI.
Securities of Regular Broker-Dealers
. The Fund is required to identify any securities of its “regular brokers or dealers” (as
defined under the 1940 Act) or of its parents that the Fund may hold at the close of its most recent fiscal year. Because
the Fund commenced operations on or around the date of this SAI, information on ownership of securities of regular
broker-dealers is not yet available.
DETERMINATION OF NET ASSET VALUE
A Fund’s NAV is the value of a single share. The NAV is calculated as of the close of regular trading on the New York
Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time) on each day that the NYSE is open, although a Fund may
deviate from this calculation time under unusual or unexpected circumstances. The NAV is calculated separately for
each class of shares of a multiple-class Fund. The most recent NAV for each class of a Fund is available at
wellsfargofunds.com. To calculate the NAV of a Fund’s shares, the Fund’s assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of shares outstanding. The price at which a
purchase or redemption request is processed is based on the next NAV calculated after the request is received in good
order. Generally, NAV is not calculated, and purchase and redemption requests are not processed, on days that the
NYSE is closed for trading; however under unusual or unexpected circumstances a Fund may elect to remain open
even on days that the NYSE is closed or closes early. To the extent that a Fund’s assets are traded in various markets on
days when the Fund is closed, the value of the Fund’s assets may be affected on days when you are unable to buy or
sell Fund shares. Conversely, trading in some of a Fund’s assets may not occur on days when the Fund is open.
With respect to any portion of a Fund’s assets that may be invested in other mutual funds, the value of the Fund’s
shares is based on the NAV of the shares of the other mutual funds in which the Fund invests. The valuation methods
used by mutual funds in pricing their shares, including the circumstances under which they will use fair value pricing
and the effects of using fair value pricing, are included in the Prospectuses of such funds. To the extent a Fund invests a
portion of its assets in non-registered investment vehicles, the Fund’s interests in the non-registered vehicles are fair
valued at NAV.
With respect to a Fund’s assets invested directly in securities, the Fund’s investments are generally valued at current
market prices. Equity securities, options and futures are generally valued at the official closing price or, if none, the last
reported sales price on the primary exchange or market on which they are listed (closing price). Equity securities that
are not traded primarily on an exchange are generally valued at the quoted bid price obtained from a broker-dealer.
Debt securities are valued at the evaluated bid price provided by an independent pricing service or, if a reliable price is
not available, the quoted bid price from an independent broker-dealer.
We are required to depart from these general valuation methods and use fair value pricing methods to determine the
values of certain investments if we believe that the closing price or the quoted bid price of a security, including a
security that trades primarily on a foreign exchange, does not accurately reflect its current market value at the time as
of which a Fund calculates its NAV. The closing price or the quoted bid price of a security may not reflect its current
market value if, among other things, a significant event occurs after the closing price or quoted bid price but before
the time as of which a Fund calculates its NAV that materially affects the value of the security. We use various criteria,
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including a systemic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a foreign
security’s market price is still reliable and, if not, what fair market value to assign to the security. In addition, we use fair
value pricing to determine the value of investments in securities and other assets, including illiquid securities, for
which current market quotations or evaluated prices from a pricing service or broker-dealer are not readily available.
The fair value of a Fund’s securities and other assets is determined in good faith pursuant to policies and procedures
adopted by the Fund’s Board of Trustees. In light of the judgment involved in making fair value decisions, there can be
no assurance that a fair value assigned to a particular security is accurate or that it reflects the price that the Fund
could obtain for such security if it were to sell the security at the time as of which fair value pricing is determined. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or quoted bid price.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Payment for shares may, in the discretion of the Manager, be made in the form of securities that are permissible
investments for a Fund. For further information about this form of payment, please contact the Distributor. In
connection with an in-kind securities payment, the Funds will require, among other things, that the securities be
valued on the day of purchase in accordance with the pricing methods used by a Fund and that such Fund receives
satisfactory assurances that (i) it will have good and marketable title to the securities received by it; (ii) that the
securities are in proper form for transfer to the Fund; and (iii) adequate information will be provided concerning the
basis and other matters relating to the securities.
Each Fund reserves the right to reject any purchase orders, and under the 1940 Act, may suspend the right of
redemption or postpone the date of payment upon redemption for any period during which the NYSE is closed (other
than customary weekend and holiday closings), or during which trading is restricted, or during which, as determined
by SEC rule, regulation or order, an emergency exists as a result of which disposal or valuation of portfolio securities is
not reasonably practicable, or for such periods as the SEC may permit. The Fund may also redeem shares involuntarily
or make payment for redemption in securities or other property if it appears appropriate to do so in light of the Fund’s
responsibilities under the 1940 Act. In addition, the Fund may redeem shares involuntarily to reimburse the Fund for
any losses sustained by reason of the failure of a shareholder to make full payment for shares purchased or to collect
any charge relating to a transaction effected for the benefit of a shareholder which is applicable to shares of the Fund
as provided from time to time in the Prospectuses.
Online Purchases and Redemptions for Existing Wells Fargo Funds Account Holders
. All shareholders with an existing
Wells Fargo Funds account may purchase additional shares of funds or classes of funds within the Wells Fargo Fund
family of funds that they already own and redeem existing shares online. For purchases, such account holders must
have a bank account linked to their Wells Fargo Funds account. Redemptions may be deposited into a linked bank
account or mailed via check to the shareholder’s address of record. Online account access is available for institutional
clients. Shareholders should contact Investor Services at 1-800-222-8222 or log on at wellsfargofunds.com for further
details. Shareholders who hold their shares in a brokerage account should contact their selling agent.
Extraordinary Circumstances Affecting Redemptions
. Under the extraordinary circumstances discussed under Section
22(e) under the 1940 Act, we may suspend the right of redemption or postpone the date of payment of a redemption
for longer than seven days for each Fund. Generally, those extraordinary circumstances are when: (i) the NYSE is closed
or trading thereon is restricted; (ii) an emergency exists which makes the disposal by a Fund of securities it owns, or
the fair determination of the value of the Fund’s net assets not reasonable or practical; or (iii) the SEC, by order, permits
the suspension of the right of redemption for the protection of shareholders.
Purchases and Redemptions Through Brokers and/or Their Affiliates
. A broker may charge transaction fees on the
purchase and/or sale of Fund shares in addition to those fees described in the Prospectuses in the Summary of
Expenses. The Trust has authorized one or more brokers to receive on its behalf purchase and redemption orders, and
such brokers are authorized to designate other intermediaries to receive purchase and redemption orders on the
Trust’s behalf. The Trust will be deemed to have received a purchase or redemption order for Fund shares when an
authorized broker or, if applicable, a broker’s authorized designee, receives the order, and such orders will be priced at
the Fund’s NAV next calculated after they are received by the authorized broker or the broker’s designee.
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Wells Fargo - Fixed Income Funds
Reduced Sales Charges for Former C&B Portfolio Shareholders
. Shareholders who purchased shares of the C&B
Portfolios directly from the C&B Portfolios, and who became Wells Fargo Fund shareholders in the reorganization
between the Advisors’ Inner Circle Fund and the Trust effective July 26, 2004 may purchase Class A shares of any Wells
Fargo Fund at NAV. However, beginning on July 1, 2013, this privilege will only be available to those former C&B
Portfolio shareholders whose shares are held directly with the Fund. Please see your account representative for details.
Reduced Sales Charges for Former Montgomery Fund Shareholders
. Former Montgomery Fund Class P and Class R
shareholders who purchased their shares directly from the Montgomery Funds and became Wells Fargo Fund
shareholders in the reorganization, may purchase Class A shares of any Wells Fargo Fund at NAV. However, beginning
on July 1, 2013, this privilege will only be available to those former Montgomery Fund shareholders whose shares are
held directly with the Fund. Shareholders who did not purchase such shares directly from the Montgomery Funds may
purchase additional shares in the respective acquiring Wells Fargo Fund at NAV. However, beginning on July 1, 2013,
this privilege will only be available to those former Montgomery Fund shareholders whose shares are held directly
with the Fund.
Reduced Sales Charges for Certain Former Advisor Class Shareholders.
Investors who held Advisor Class shares of a
Wells Fargo Fund at the close of business on June 20, 2008 (the “Eligibility Time”), so long as the following conditions
are met: (1) any purchases at NAV are limited to Class A shares of the same Fund in which the investor held Advisor
Class shares at the Eligibility Time; (2) share purchases are made in the same account through which the investor held
Advisor Class shares at the Eligibility Time; (3) the owner of the account remains the same as the account owner at the
Eligibility Time; and (4) following the Eligibility Time, the account maintains a positive account balance at some time
during a period of at least six months in length. Investors who held Advisor Class shares at the Eligibility Time are also
eligible to exchange their Class A shares for Class A shares of another Wells Fargo Fund without imposition of any Class
A sales charges and would be eligible to make additional purchases of Class A shares of such other Fund at NAV in the
account holding the shares received in exchange. The eligibility of such investors that hold Fund shares through an
account maintained by a financial institution is also subject to the following additional limitation. In the event that
such an investor’s relationship with and/or the services such investor receives from the financial institution
subsequently change, such investor shall thereafter no longer be eligible to purchase Class A shares at NAV. Please
consult with your financial representative for further details.
Reduced Sales Charges for Certain Former Evergreen Fund Shareholders
. Former Evergreen Class IS shareholders who
received Class A shares of a Fund as a result of a reorganization can continue to purchase Class A shares of that Fund
and any other Wells Fargo Fund purchased subsequently by exchange at NAV, without paying the customary sales
load, after which subsequent purchases of shares of the subsequent Fund may also be made at NAV. However,
beginning on July 31, 2012, this privilege will only be available to those former Evergreen Fund shareholders whose
shares are held directly with the Fund.
Former Evergreen Class R shareholders who received Class A shares of a Fund as a result of a reorganization can
continue to purchase Class A shares of that Fund and any other Wells Fargo Fund purchased subsequently by
exchange at NAV, without paying the customary sales load, after which subsequent purchases of shares of the
subsequent Fund may also be made at NAV. However, beginning on July 31, 2012, this privilege will only be available
to those former Evergreen Fund shareholders whose shares are held directly with the Fund.
Certain investors in acquired funds who became investors in the Evergreen Funds and subsequently became Wells
Fargo Fund shareholders in a reorganization, including former Class IS shareholders of Evergreen Strategic Value Fund
and Evergreen Limited Duration Fund, former Investor Class shareholders of Undiscovered Managers Funds, former
shareholders of the GMO Global Balanced Allocation Fund, the GMO Pelican Fund and America’s Utility Fund, former
shareholders of an Atlas Fund and shareholders of record on October 12, 1990 (and members of their immediate
families) in any series of the Salem Funds in existence on that date, may purchase Class A shares of any Wells Fargo
Fund at NAV. However, beginning on July 1, 2013, this privilege will only be available to former Evergreen Fund
shareholders whose shares are held directly with the Fund.
Reduced Sales Charges for Affiliated Funds
. Any affiliated fund that invests in a Wells Fargo Fund may purchase Class A
shares of such Fund at NAV.
Reduced Sales Charges for Certain Holders of Class C Shares
. No CDSC is imposed on redemptions of Class C shares
where a Fund did not pay a sales commission at the time of purchase.
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Reduced Sales Charges for Certain Former Investor Class Shareholders.
Former Investor Class shareholders who
received Class A shares of a Fund as a result of a conversion at the close of business on October 23, 2015, can continue
to purchase Class A shares of that Fund and any other Wells Fargo Fund purchased subsequently by exchange at NAV,
without paying the customary sales load, after which subsequent purchases of shares of the subsequent Fund may
also be made at NAV.
Elimination of Minimum Initial Investment Amount for Administrator Class Shares for Eligible Investors.
An “Eligible
Investor” (as defined below) may purchase Administrator Class shares of the Wells Fargo Funds without meeting the
minimum initial investment amount. Eligible Investors include:
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Clients of sub-advisers to those Funds which offer an Administrator Class who are clients of such subadvisers at the
time of their purchase of such Administrator Class shares;
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Clients of Wells Capital Management who are clients of Wells Capital Management at the time of their purchase of
Administrator Class shares; and
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Clients of Wells Fargo Institutional Retirement Trust (IRT) who are clients of IRT at the time of their purchase of
Administrator Class shares.
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Related shareholders or shareholder accounts may be aggregated in order to meet the minimum initial investment
requirement for Administrator Class shares. The following are examples of relationships that may qualify for
aggregation:
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Related business entities, including: (i) corporations and their subsidiaries; (ii) general and limited partners; and (iii)
other business entities under common ownership or control.
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Shareholder accounts that share a common tax-id number.
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Accounts over which the shareholder has individual or shared authority to buy or sell shares on behalf of the
account (i.e., a trust account or a solely owned business account).
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Any of the minimum initial investment waivers listed above may be modified or discontinued at any time.
Elimination of Minimum Initial Investment Amount for Institutional Class Shares for Eligible Investors.
An “Eligible
Investor” (as defined below) may purchase Institutional Class shares of the Wells Fargo Funds without meeting the
minimum initial investment amount. Eligible Investors include:
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Clients of sub-advisers to those Funds which offer an Institutional Class who are clients of such sub-advisers at the
time of their purchase of such Institutional Class shares;
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Clients of Wells Capital Management who are clients of Wells Capital Management at the time of their purchase of
Institutional Class shares; and
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Clients of Wells Fargo Institutional Retirement Trust (IRT) who are clients of IRT at the time of their purchase of
Institutional Class shares.
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Related shareholders or shareholder accounts may be aggregated in order to meet the minimum initial investment
requirement for Institutional Class shares. The following are examples of relationships that may qualify for aggregation:
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Related business entities, including: (i) corporations and their subsidiaries; (ii) general and limited partners; and (iii)
other business entities under common ownership or control.
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Shareholder accounts that share a common tax-id number.
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Accounts over which the shareholder has individual or shared authority to buy or sell shares on behalf of the
account (i.e., a trust account or a solely owned business account).
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Former Institutional Class shareholders of an Evergreen Fund (including former Class Y shareholders of an Evergreen
Fund, former SouthTrust shareholders and former Vestaur Securities Fund shareholders who became Institutional Class
shareholders of an Evergreen Fund) who received Institutional Class shares of a Wells Fargo Fund in connection with
the reorganization of their Evergreen Fund. Such investors may purchase Institutional Class shares at their former
minimum investment amount.
Former Institutional Class shareholders of Golden Large Cap Core Fund or Golden Small Cap Core Fund who received
Institutional Class shares of Wells Fargo Large Cap Core Fund or Wells Fargo Small Cap Core Fund in connection with
the reorganization of their Fund may purchase Institutional Class shares of any Wells Fargo Fund at their former
minimum investment amount.
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Wells Fargo - Fixed Income Funds
Any of the minimum initial investment waivers listed above may be modified or discontinued at any time.
Waiver of Minimum Initial and Subsequent Investment Amounts for All Share Classes for Special Operational Accounts
.
Shares of any and all share classes of the Wells Fargo Funds may be acquired in special operational accounts (as
defined below) without meeting the applicable minimum initial or subsequent investment amounts. Special
operational accounts are designated accounts held by Funds Management or its affiliate that are used exclusively for
addressing operational matters related to shareholder accounts, such as testing of account functions.
Compensation to Financial Professionals and Intermediaries.
Set forth below is a list of the member firms of FINRA to
which the Manager, the Distributor or their affiliates made payments out of their revenues in connection with the sale
and distribution of shares of the Funds or for services to the Funds and their shareholders in the year ending
December 31, 2018 (“Additional Payments”). (Such payments are in addition to any amounts paid to such FINRA firms
in the form of dealer reallowances or fees for shareholder servicing or distribution. The payments are discussed in
further detail in the Prospectuses under the title “Compensation to Financial Professionals and Intermediaries”). Any
additions, modifications, or deletions to the member firms identified in this list that have occurred since December 31,
2018, are not reflected:
FINRA member firms
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ADP Broker-Dealer, Inc.
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Alight Financial Solutions, LLC
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Ameriprise Financial Services, Inc.
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Broadridge Business Process Outsourcing, LLC
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Charles Schwab & Co., Inc.
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Citigroup Global Markets, Inc.
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Commonwealth Financial Network
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Deutsche AM Distributors, Inc.
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Fidelity Brokerage Services LLC
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Goldman, Sachs & Co. LLC
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Hightower Securities, LLC
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Janney Montgomery Scott LLC
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J.J.B. Hilliard, W. L. Lyons, LLC
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J.P. Morgan Securities LLC
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Merrill Lynch, Pierce, Fenner & Smith, Incorporated
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Mid Atlantic Capital Corporation
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Morgan Stanley & Co. LLC
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Nationwide Investment Services, Corporation
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Oak Tree Securities, Inc.
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PNC Capital Markets LLC
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Raymond James & Associates, Inc.
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Raymond James Financial Services, Inc.
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RBC Capital Markets, LLC
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Robert W. Baird & Co. Incorporated
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State Street Global Markets, LLC
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Stifel, Nicolaus & Company, Incorporated
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UBS Financial Services, Inc.
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VALIC Financial Advisors, Inc.
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Wells Fargo Clearing Services, LLC
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Wells Fargo Securities, LLC
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In addition to member firms of FINRA, Additional Payments are also made to other selling and shareholder servicing
agents, and to affiliates of selling and shareholder servicing agents that sell shares of or provide services to the Funds
and their shareholders, such as banks, insurance companies and plan administrators. These firms are not included on
the list above, although they may be affiliated with companies on the above list.
No compensation is paid to broker-dealers or other financial intermediaries (such as banks) from Fund assets on sales
of Class R6 shares and related services. Class R6 shares do not carry sales commissions or pay Rule 12b-1 fees, or make
payments to financial intermediaries to assist in, or in connection with, the sale of the Fund’s shares. None of the
Fund’s Manager, the distributor or their affiliates makes any type of administrative or service payments to financial
intermediaries in connection with investments in Class R6 shares.
Also not included on the list above are other subsidiaries of Wells Fargo & Company who may receive revenue from the
Manager, the Distributor or their affiliates through intra-company compensation arrangements and for financial,
distribution, administrative and operational services.
U.S. FEDERAL INCOME TAXES
The following information supplements and should be read in conjunction with the section in each Prospectus
entitled “Taxes.” Each Prospectus generally describes the U.S. federal income tax treatment of distributions by the
Funds. This section of the SAI provides additional information concerning U.S. federal income taxes. It is based on the
Internal Revenue Code of 1986, as amended (the “Code”), applicable Treasury Regulations, judicial authority, and
administrative rulings and practice, all as of the date of this SAI and all of which are subject to change, including
changes with retroactive effect. Except as specifically set forth below, the following discussion does not address any
state, local or foreign tax matters.
A shareholder’s tax treatment may vary depending upon the shareholder’s particular situation. Except as specifically
set forth below, this discussion applies only to U.S. individual shareholders holding Fund shares as capital assets within
the meaning of the Code. A shareholder may also be subject to special rules not discussed below if they are a certain
kind of shareholder, including, but not limited to: an insurance company; a tax-exempt organization; a shareholder
holding a Fund’s shares through tax-advantaged accounts (such as an individual retirement account (an “IRA”), a 401(k)
plan account or other qualified retirement account); a financial institution or broker-dealer; a person who is neither a
citizen nor resident of the United States or entity that is not organized under the laws of the United States or political
subdivision thereof; a shareholder who holds Fund shares as part of a hedge, straddle or conversion transaction; a
shareholder subject to the alternative minimum tax; or an entity taxable as a partnership for U.S. federal income tax
purposes and investors in such an entity. The summary discussion that follows may not be considered to be individual
tax advice and may not be relied upon by any shareholder.
The Trust has not requested and will not request an advance ruling from the Internal Revenue Service (the “IRS”) as to
the U.S. federal income tax matters described below. The IRS could adopt positions contrary to those discussed below
and such positions could be sustained. In addition, the following discussion and the discussions in each Prospectus
applicable to each shareholder address only some of the U.S. federal income tax considerations generally affecting
investments in the Funds.
On December 22, 2017, new tax legislation was enacted which includes significant changes in tax rates, restrictions on
miscellaneous itemized deductions, changes to the dividends received deduction, restrictions on the deduction of
interest and the international operations of domestic businesses. Certain changes have sunset provisions, which are
important to note. Because the tax legislation is recently enacted and Treasury Regulations related to such legislation
have not been drafted, there is still uncertainty in how the legislation will affect the Fund’s investments and
shareholders and whether such legislation could have an adverse effect on a Fund’s investments or the taxation of the
shareholders of a Fund. Shareholders are urged and advised to consult their own tax advisor with respect to the
impact of this legislation.
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Wells Fargo - Fixed Income Funds
Prospective shareholders are urged to consult their own tax advisers and financial planners regarding the U.S.
federal tax consequences of an investment in a Fund, the application of state, local or foreign laws, and the
effect of any possible changes in applicable tax laws on their investment in the Funds.
Qualification as a Regulated Investment Company.
It is intended that each Fund qualify as a regulated investment
company (“RIC”) under Subchapter M of Subtitle A, Chapter 1 of the Code. Each Fund will be treated as a separate
entity for U.S. federal income tax purposes. Thus, the provisions of the Code applicable to RICs generally will apply
separately to each Fund even though each Fund is a series of the Trust. Furthermore, each Fund will separately
determine its income, gains, losses and expenses for U.S. federal income tax purposes.
In order to qualify as a RIC under the Code, each Fund must, among other things, derive at least 90% of its gross
income each taxable year generally from (i) dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock, securities or foreign currencies, and other income attributable to its
business of investing in such stock, securities or foreign currencies (including, but not limited to, gains from options,
futures or forward contracts) and (ii) net income derived from an interest in a qualified publicly traded partnership, as
defined in the Code (together with (i) the “qualifying income requirement”). Future U.S. Treasury regulations may
(possibly retroactively) exclude from qualifying income foreign currency gains that are not directly related to a Fund’s
principal business of investing in stock, securities or options and futures with respect to stock or securities. In general,
for purposes of this 90% gross income requirement, income derived from a partnership, except a qualified publicly
traded partnership, will be treated as qualifying income only to the extent such income is attributable to items of
income of the partnership which would be qualifying income if realized by the RIC.
Each Fund must also diversify its holdings so that, at the end of each quarter of the Fund’s taxable year: (i) at least 50%
of the fair market value of its assets consists of (A) cash and cash items (including receivables), U.S. government
securities and securities of other RICs, and (B) securities of any one issuer (other than those described in clause (A)) to
the extent such securities do not exceed 5% of the value of the Fund’s total assets and do not exceed 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund’s total assets consists
of the securities of any one issuer (other than those described in clause (i)(A)), the securities of two or more issuers the
Fund controls and which are engaged in the same, similar or related trades or businesses, or the securities of one or
more qualified publicly traded partnerships (together with (i), the “diversification requirement”). In addition, for
purposes of meeting this diversification requirement, the term “outstanding voting securities of such issuer” includes
the equity securities of a qualified publicly traded partnership. The qualifying income and diversification requirements
applicable to a Fund may limit the extent to which it can engage in transactions in options, futures contracts, forward
contracts and swap agreements.
If a Fund fails to satisfy the qualifying income or diversification requirements in any taxable year, such Fund may be
eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid
with respect to each failure to satisfy the applicable requirements. Additionally, relief is provided for certain de minimis
failures of the diversification requirements where the Fund corrects the failure within a specified period. If the
applicable relief provisions are not available or cannot be met, such Fund will be taxed in the same manner as an
ordinary corporation, described below.
In addition, with respect to each taxable year, each Fund generally must distribute to its shareholders at least 90% of
its investment company taxable income, which generally includes its ordinary income and the excess of any net
short-term capital gain over net long-term capital loss, and at least 90% of its net tax-exempt interest income earned
for the taxable year. If a Fund meets all of the RIC qualification requirements, it generally will not be subject to U.S.
federal income tax on any of the investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) it distributes to its shareholders. For this purpose, a Fund
generally must make the distributions in the same year that it realizes the income and gain, although in certain
circumstances, a Fund may make the distributions in the following taxable year. Shareholders generally are taxed on
any distributions from a Fund in the year they are actually distributed. However, if a Fund declares a distribution to
shareholders of record in October, November or December of one year and pays the distribution by January 31 of the
Wells Fargo - Fixed Income Funds
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following year, the Fund and its shareholders will be treated as if the Fund paid the distribution by December 31 of the
first taxable year. Each Fund intends to distribute its net income and gain in a timely manner to maintain its status as a
RIC and eliminate fund-level U.S. federal income taxation of such income and gain. However, no assurance can be
given that a Fund will not be subject to U.S. federal income taxation.
Moreover, the Funds may retain for investment all or a portion of their net capital gain. If a Fund retains any net capital
gain, it will be subject to a tax at regular corporate rates on the amount retained, but may report the retained amount
as undistributed capital gain in a written statement furnished to its shareholders, who (i) will be required to include in
income for U.S. federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and
(ii) will be entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount
against their U.S. federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds such
liabilities. For U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of the Fund will be
increased by an amount equal to the difference between the amount of undistributed capital gain included in the
shareholder’s gross income and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence. A
Fund is not required to, and there can be no assurance that it will, make this designation if it retains all or a portion of
its net capital gain in a taxable year.
If, for any taxable year, a Fund fails to qualify as a RIC, and is not eligible for relief as described above, it will be taxed in
the same manner as an ordinary corporation without any deduction for its distributions to shareholders, and all
distributions from the Fund’s current and accumulated earnings and profits (including any distributions of its net
tax-exempt income and net long-term capital gain) to its shareholders will be taxable as dividend income. To re-qualify
to be taxed as a RIC in a subsequent year, the Fund may be required to distribute to its shareholders its earnings and
profits attributable to non-RIC years reduced by an interest charge on 50% of such earnings and profits payable by the
Fund to the IRS. In addition, if a Fund initially qualifies as a RIC but subsequently fails to qualify as a RIC for a period
greater than two taxable years, the Fund generally would be required to recognize and pay tax on any net unrealized
gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if the
Fund had been liquidated) or, alternatively, be subject to tax on such unrealized gain recognized for a period of five
years, in order to re-qualify as a RIC in a subsequent year.
Equalization Accounting.
Each Fund may use the so-called “equalization method” of accounting to allocate a portion of
its “earnings and profits,” which generally equals a Fund’s undistributed investment company taxable income and net
capital gain, with certain adjustments, to redemption proceeds. This method permits a Fund to achieve more balanced
distributions for both continuing and redeeming shareholders. Although using this method generally will not affect a
Fund’s total returns, it may reduce the amount that the Fund would otherwise distribute to continuing shareholders by
reducing the effect of redemptions of Fund shares on Fund distributions to shareholders. However, the IRS may not
have expressly sanctioned the particular equalization method used by a Fund, and, thus a Fund’s use of this method
may be subject to IRS scrutiny.
Capital Loss Carry-Forwards.
For net capital losses realized in taxable years beginning before January 1, 2011, a Fund is
permitted to carry forward a net capital loss to offset its capital gain, if any, realized during the eight years following
the year of the loss, and such capital loss carry-forward is treated as a short-term capital loss in the year to which it is
carried. For net capital losses realized in taxable years beginning on or after January 1, 2011, a Fund is permitted to
carry forward a net capital loss to offset its capital gain indefinitely. For capital losses realized in taxable years
beginning after January 1, 2011, the excess of a Fund’s net short-term capital loss over its net long-term capital gain is
treated as a short-term capital loss arising on the first day of the Fund’s next taxable year and the excess of a Fund’s net
long-term capital loss over its net short-term capital gain is treated as a long-term capital loss arising on the first day of
the Fund’s next taxable year. If future capital gain is offset by carried-forward capital losses, such future capital gain is
not subject to fund-level U.S. federal income tax, regardless of whether it is distributed to shareholders. Accordingly,
the Funds do not expect to distribute any such offsetting capital gain. The Funds cannot carry back or carry forward
any net operating losses.
If a Fund engages in a reorganization, either as an acquiring fund or acquired fund, its capital loss carry-forwards (if
any), its unrealized losses (if any), and any such losses of other funds participating in the reorganization may be subject
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to severe limitations that could make such losses, in particular losses realized in taxable years beginning before
January 1, 2011, substantially unusable. The Funds have engaged in reorganizations in the past and/or may engage in
reorganizations in the future.
Excise Tax.
If a Fund fails to distribute by December 31 of each calendar year at least the sum of 98% of its ordinary
income for that year (excluding capital gains and losses), 98.2% of its capital gain net income (adjusted for certain net
ordinary losses) for the 12-month period ending on October 31 of that year, and any of its ordinary income and capital
gain net income from previous years that was not distributed during such years, the Fund will be subject to a
nondeductible 4% U.S federal excise tax on the undistributed amounts (other than to the extent of its tax-exempt
interest income, if any). For these purposes, a Fund will be treated as having distributed any amount on which it is
subject to corporate level U.S. federal income tax for the taxable year ending within the calendar year. Each Fund
generally intends to actually, or be deemed to, distribute substantially all of its ordinary income and capital gain net
income, if any, by the end of each calendar year and thus expects not to be subject to the excise tax. However, no
assurance can be given that a Fund will not be subject to the excise tax. Moreover, each Fund reserves the right to pay
an excise tax rather than make an additional distribution when circumstances warrant (for example, the amount of
excise tax to be paid by a Fund is determined to be de minimis).
Investment through Master Portfolio.
A Fund that invests its assets through one or more master portfolios will seek to
continue to qualify as a RIC. Each master portfolio will be treated as a non-publicly traded partnership (or, in the event
that a Fund is the sole investor in the corresponding master portfolio, as disregarded from the Fund) for U.S. federal
income tax purposes rather than as a RIC or a corporation under the Code. Under the rules applicable to a non-publicly
traded partnership (or disregarded entity), a proportionate share of any interest, dividends, gains and losses of a
master portfolio will be deemed to have been realized (i.e., “passed-through”) by its investors, including the
corresponding Fund, regardless of whether any amounts are actually distributed by the master portfolio. Each investor
in a master portfolio will be taxed on such share, as determined in accordance with the governing instruments of the
particular master portfolio, the Code and U.S. Treasury regulations, in determining such investor’s U.S. federal income
tax liability. Therefore, to the extent a master portfolio were to accrue but not distribute any income or gains, the
corresponding Fund would be deemed to have realized its proportionate share of such income or gains without
receipt of any corresponding distribution. However, each of the master portfolios will seek to minimize recognition by
its investors (such as a corresponding Fund) of income and gains without a corresponding distribution. Furthermore,
each master portfolio intends to manage its assets, income and distributions in such a way that an investor in a master
portfolio will be able to continue to qualify as a RIC by investing its assets through the master portfolio.
Taxation of Investments.
In general, realized gains or losses on the sale of securities held by a Fund will be treated as
capital gains or losses, and long-term capital gains or losses if the Fund has held the disposed securities for more than
one year at the time of disposition.
If a Fund purchases a debt obligation with original issue discount (“OID”) (generally, a debt obligation with a purchase
price at original issuance less than its principal amount, such as a zero-coupon bond), which generally includes
“payment-in-kind” or “PIK” bonds, the Fund generally is required to annually include in its taxable income a portion of
the OID as ordinary income, even though the Fund may not receive cash payments attributable to the OID until a later
date, potentially until maturity or disposition of the obligation. A portion of the OID includible in income with respect
to certain high-yield corporate discount obligations may be treated as a dividend for U.S. federal income tax purposes.
Similarly, if a Fund purchases a debt obligation with market discount (generally a debt obligation with a purchase price
after original issuance less than its principal amount (reduced by any OID)) and a Fund elects to include market
discount in income as it accrues, the Fund generally is required to annually include in its taxable income a portion of
the market discount as ordinary income, even though the Acquiring Fund may not receive cash payments attributable
to the market discount until a later date, potentially until maturity or disposition of the obligation. A Fund generally
will be required to make cash distributions to shareholders representing the OID or market discount income on debt
obligations that is currently includible in income, even though the cash representing such income may not have been
received by a Fund. Cash to pay such distributions may be obtained from sales proceeds of securities held by the Fund
which a Fund otherwise might have continued to hold; obtaining such cash might be disadvantageous for the Fund.
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If a Fund invests in distressed debt obligations or obligations of issuers that later become distressed, including debt
obligations of issuers not currently paying interest or who are in default, special tax issues may exist for the Fund. U.S.
federal income tax rules are not entirely clear about issues such as when a Fund may cease to accrue interest, OID, or
market discount, when and to what extent deductions may be taken for bad debts or worthless securities, and how
payments received on obligations in default should be allocated between principal and income. Under recently
enacted legislation, for tax years beginning after December 31, 2018, the Fund may be required to include in income
certain fees that are treated as OID and required to be included in income for financial statement purposes when
received (rather than when accrued into income under current law). It is unclear whether this provision applies to
market discount as well. These and other related issues will be addressed by a Fund when, as, and if it invests in such
securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not
become subject to U.S. federal income or excise tax.
If an option granted by a Fund is sold, lapses or is otherwise terminated through a closing transaction, such as a
repurchase by the Fund of the option from its holder, the Fund will realize a short-term capital gain or loss, depending
on whether the premium income is greater or less than the amount paid by the Fund in the closing transaction. Some
capital losses realized by a Fund in the sale, exchange, exercise, or other disposition of an option may be deferred if
they result from a position that is part of a “straddle,” discussed below. If securities are sold by a Fund pursuant to the
exercise of a covered call option granted by it, the Fund generally will add the premium received to the sale price of
the securities delivered in determining the amount of gain or loss on the sale. If securities are purchased by a Fund
pursuant to the exercise of a put option granted by it, the Fund generally will subtract the premium received from its
cost basis in the securities purchased.
Some regulated futures contracts, certain foreign currency contracts, and non-equity, listed options used by a Fund
will be deemed “Section 1256 contracts.” A Fund will be required to “mark-to-market” any such contracts held at the
end of the taxable year by treating them as if they had been sold on the last day of that year at market value. Provided
such positions are held as capital assets and are not part of a “hedging transaction” nor part of a “straddle,” 60% of any
net gain or loss realized on all dispositions of Section 1256 contracts, including deemed dispositions under the
“mark-to-market” rule, generally will be treated as long-term capital gain or loss, and the remaining 40% will be treated
as short-term capital gain or loss (although certain foreign currency gains and losses from such contracts may be
treated as ordinary income or loss (as described below)). These provisions may require a Fund to recognize income or
gains without a concurrent receipt of cash. Transactions that qualify as designated hedges are exempt from the
mark-to-market rule and the “60%/40%” rule and may require the Fund to defer the recognition of losses on certain
futures contracts, foreign currency contracts and non-equity options.
Foreign currency gains and losses realized by a Fund in connection with certain transactions involving foreign
currency-denominated debt obligations, certain options, futures contracts, forward contracts, and similar instruments
relating to foreign currency, foreign currencies, or payables or receivables denominated in a foreign currency are
subject to Section 988 of the Code, which generally causes such gains and losses to be treated as ordinary income or
loss and may affect the amount and timing of recognition of the Fund’s income. Under future U.S. Treasury regulations,
any such transactions that are not directly related to a Fund’s investments in stock or securities (or its options contracts
or futures contracts with respect to stock or securities) may have to be limited in order to enable the Fund to satisfy the
90% income test described above. If the net foreign currency loss exceeds a Fund’s net investment company taxable
income (computed without regard to such loss) for a taxable year, the resulting ordinary loss for such year will not be
deductible by the Fund or its shareholders in future years.
Offsetting positions held by a Fund involving certain derivative instruments, such as financial forward, futures, and
options contracts, may be considered, for U.S. federal income tax purposes, to constitute “straddles.” “Straddles” are
defined to include “offsetting positions” in actively traded personal property. The tax treatment of “straddles” is
governed by Section 1092 of the Code which, in certain circumstances, overrides or modifies the provisions of Section
1256. If a Fund is treated as entering into a “straddle” and at least one (but not all) of the Fund’s positions in derivative
contracts comprising a part of such straddle is governed by Section 1256 of the Code, described above, then such
straddle could be characterized as a “mixed straddle.” A Fund may make one or more elections with respect to “mixed
straddles.” Depending upon which election is made, if any, the results with respect to a Fund may differ. Generally, to
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the extent the straddle rules apply to positions established by a Fund, losses realized by the Fund may be deferred to
the extent of unrealized gain in any offsetting positions. Moreover, as a result of the straddle rules, short-term capital
loss on straddle positions may be recharacterized as long-term capital loss, and long-term capital gain may be
characterized as short-term capital gain. In addition, the existence of a straddle may affect the holding period of the
offsetting positions. As a result, the straddle rules could cause distributions that would otherwise constitute qualified
dividend income (defined below) to fail to satisfy the applicable holding period requirements (described below) and
therefore to be taxed as ordinary income. Furthermore, the Fund may be required to capitalize, rather than deduct
currently, any interest expense and carrying charges applicable to a position that is part of a straddle, including any
interest expense on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle.
Because the application of the straddle rules may affect the character and timing of gains and losses from affected
straddle positions, the amount which must be distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gain, may be increased or decreased substantially as compared to the situation
where a Fund had not engaged in such transactions.
If a Fund enters into a “constructive sale” of any appreciated financial position in stock, a partnership interest, or certain
debt instruments, the Fund will be treated as if it had sold and immediately repurchased the property and must
recognize gain (but not loss) with respect to that position. A constructive sale of an appreciated financial position
occurs when a Fund enters into certain offsetting transactions with respect to the same or substantially identical
property, including: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv)
other transactions identified in future U.S. Treasury regulations. The character of the gain from constructive sales will
depend upon a Fund’s holding period in the appreciated financial position. Losses realized from a sale of a position
that was previously the subject of a constructive sale will be recognized when the position is subsequently disposed
of. The character of such losses will depend upon a Fund’s holding period in the position and the application of various
loss deferral provisions in the Code. Constructive sale treatment does not apply to certain closed transactions,
including if such a transaction is closed on or before the 30th day after the close of the Fund’s taxable year and the
Fund holds the appreciated financial position unhedged throughout the 60-day period beginning with the day such
transaction was closed.
The amount of long-term capital gain a Fund may recognize from certain derivative transactions with respect to
interests in certain pass-through entities is limited under the Code’s constructive ownership rules. The amount of
long-term capital gain is limited to the amount of such gain a Fund would have had if the Fund directly invested in the
pass-through entity during the term of the derivative contract. Any gain in excess of this amount is treated as ordinary
income. An interest charge is imposed on the amount of gain that is treated as ordinary income.
In addition, a Fund’s transactions in securities and certain types of derivatives (e.g., options, futures contracts, forward
contracts, and swap agreements) may be subject to other special tax rules, such as the wash sale rules or the short sale
rules, the effect of which may be to accelerate income to the Fund, defer losses to the Fund, cause adjustments to the
holding periods of the Fund’s securities, convert long-term capital gains into short-term capital gains, and/or convert
short-term capital losses into long- term capital losses. These rules could therefore affect the amount, timing, and
character of distributions to shareholders.
Rules governing the U.S. federal income tax aspects of derivatives, including swap agreements, are not entirely clear in
certain respects, particularly in light of IRS revenue rulings that held that income from a derivative contract with
respect to a commodity index is not qualifying income for a RIC. Accordingly, while each Fund intends to account for
such transactions in a manner it deems appropriate, the IRS might not accept such treatment. If the IRS did not accept
such treatment, the status of a Fund as a RIC might be jeopardized. Certain requirements that must be met under the
Code in order for each Fund to qualify as a RIC may limit the extent to which a Fund will be able to engage in
derivatives transactions.
A Fund may invest in real estate investment trusts (“REITs”). Investments in REIT equity securities may require a Fund to
accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund
may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise
would have continued to hold. A Fund’s investments in REIT equity securities may at other times result in the Fund’s
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receipt of cash in excess of the REIT’s earnings if the Fund distributes these amounts, these distributions could
constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Dividends received by the
Fund from a REIT generally will not constitute qualified dividend income and will not qualify for the dividends-received
deduction.
A Fund may invest directly or indirectly in residual interests in real estate mortgage investment conduits (“REMICs”) or
in other interests that may be treated as taxable mortgage pools (“TMPs”) for U.S. federal income tax purposes. Under
IRS guidance, a Fund must allocate “excess inclusion income” received directly or indirectly from REMIC residual
interests or TMPs to its shareholders in proportion to dividends paid to such shareholders, with the same
consequences as if the shareholders had invested in the REMIC residual interests or TMPs directly.
In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a
limited exception for certain thrift institutions), (ii) constitutes unrelated business taxable income to Keogh, 401(k) and
qualified pension plans, as well as investment retirement accounts and certain other tax exempt entities, thereby
potentially requiring such an entity, which otherwise might not be required to file a tax return, to file a tax return and
pay tax on such income, and (iii) in the case of a foreign shareholder, does not qualify for any reduction, by treaty or
otherwise, in the 30% U.S. federal withholding tax. In addition, if at any time during any taxable year a “disqualified
organization” (as defined in the Code) is a record holder of a share in a Fund, then the Fund will be subject to a tax
equal to that portion of its excess inclusion income for the taxable year that is allocable to the disqualified
organization, multiplied by the highest federal corporate income tax rate. To the extent permitted under the 1940 Act,
a Fund may elect to specially allocate any such tax to the applicable disqualified organization, and thus reduce such
shareholder’s distributions for the year by the amount of the tax that relates to such shareholder’s interest in the Fund.
The Funds have not yet determined whether such an election will be made.
“Passive foreign investment companies” (“PFICs”) are generally defined as foreign corporations with respect to which at
least 75% of their gross income for their taxable year is income from passive sources (such as interest, dividends,
certain rents and royalties, or capital gains) or at least 50% of their assets on average produce such passive income. If a
Fund acquires any equity interest in a PFIC, the Fund could be subject to U.S. federal income tax and interest charges
on “excess distributions” received from the PFIC or on gain from the sale of such equity interest in the PFIC, even if all
income or gain actually received by the Fund is timely distributed to its shareholders. Excess distributions will be
characterized as ordinary income even though, absent the application of PFIC rules, some excess distributions may
have been classified as capital gain.
A Fund will not be permitted to pass through to its shareholders any credit or deduction for taxes and interest charges
incurred with respect to PFICs. Elections may be available that would ameliorate these adverse tax consequences, but
such elections could require a Fund to recognize taxable income or gain without the concurrent receipt of cash.
Investments in PFICs could also result in the treatment of associated capital gains as ordinary income. The Funds may
attempt to limit and/or manage their holdings in PFICs to minimize their tax liability or maximize their returns from
these investments but there can be no assurance that they will be able to do so. Moreover, because it is not always
possible to identify a foreign corporation as a PFIC in advance of acquiring shares in the corporation, a Fund may incur
the tax and interest charges described above in some instances. Dividends paid by PFICs will not be eligible to be
treated as qualified dividend income.
In addition to the investments described above, prospective shareholders should be aware that other investments
made by the Funds may involve complex tax rules that may result in income or gain recognition by the Funds without
corresponding current cash receipts. Although the Funds seek to avoid significant non-cash income, such non-cash
income could be recognized by the Funds, in which case the Funds may distribute cash derived from other sources in
order to meet the minimum distribution requirements described above. In this regard, the Funds could be required at
times to liquidate investments prematurely in order to satisfy their minimum distribution requirements.
Taxation of Distributions.
Except for exempt-interest dividends (defined below) paid out by “Tax-Free Funds”,
distributions paid out of a Fund’s current and accumulated earnings and profits (as determined at the end of the year),
whether paid in cash or reinvested in the Fund, generally are deemed to be taxable distributions and must be reported
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by each shareholder who is required to file a U.S. federal income tax return. Dividends and distributions on a Fund’s
shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund’s
realized income and gains, even though such dividends and distributions may economically represent a return of a
particular shareholder’s investment. Such distributions are likely to occur in respect of shares acquired at a time when
the Fund’s net asset value reflects gains that are either unrealized, or realized but not distributed. For U.S. federal
income tax purposes, a Fund’s earnings and profits, described above, are determined at the end of the Fund’s taxable
year and are allocated pro rata to distributions paid over the entire year. Distributions in excess of a Fund’s current and
accumulated earnings and profits will first be treated as a return of capital up to the amount of a shareholder’s tax
basis in the shareholder’s Fund shares and then as capital gain. A Fund may make distributions in excess of its earnings
and profits, from time to time.
For U.S. federal income tax purposes, distributions of investment income are generally taxable as ordinary income, and
distributions of gains from the sale of investments that a Fund owned for one year or less will be taxable as ordinary
income. Distributions properly designated by a Fund as capital gain dividends will be taxable to shareholders as
long-term capital gain (to the extent such distributions do not exceed the Fund’s net capital gain for the taxable year),
regardless of how long a shareholder has held Fund shares, and do not qualify as dividends for purposes of the
dividends-received deduction or as qualified dividend income. Each Fund will report capital gain dividends, if any, in a
written statement furnished to its shareholders after the close of the Fund’s taxable year.
Fluctuations in foreign currency exchange rates may result in foreign exchange gain or loss on transactions in foreign
currencies, foreign currency-denominated debt obligations, and certain foreign currency options, futures contracts
and forward contracts. Such gains or losses are generally characterized as ordinary income or loss for tax purposes. The
Fund must make certain distributions in order to qualify as a Regulated Investment Company (“RIC”), and the timing of
and character of transactions such as foreign currency-related gains and losses may result in the fund paying a
distribution treated as a return of capital. Such distribution is nontaxable to the extent of the recipient’s basis in its
shares.
Some states will not tax distributions made to individual shareholders that are attributable to interest a Fund earned
on direct obligations of the U.S. government if the Fund meets the state’s minimum investment or reporting
requirements, if any. Investments in GNMA or FNMA securities, bankers’ acceptances, commercial paper and
repurchase agreements collateralized by U.S. government securities generally do not qualify for tax-free treatment.
This exemption may not apply to corporate shareholders.
Sales and Exchanges of Fund Shares.
If a shareholder sells, pursuant to a cash or in-kind redemption, or exchanges the
shareholder’s Fund shares, subject to the discussion below, the shareholder generally will recognize a taxable capital
gain or loss on the difference between the amount received for the shares (or deemed received in the case of an
exchange) and the shareholder’s tax basis in the shares. This gain or loss will be long-term capital gain or loss if the
shareholder has held such Fund shares for more than one year at the time of the sale or exchange, and short-term
otherwise.
If a shareholder sells or exchanges Fund shares within 90 days of having acquired such shares and if, before January 31
of the calendar year following the calendar year of the sale or exchange, as a result of having initially acquired those
shares, the shareholder subsequently pays a reduced sales charge on a new purchase of shares of the Fund or a
different RIC, the sales charge previously incurred in acquiring the Fund’s shares generally shall not be taken into
account (to the extent the previous sales charges do not exceed the reduction in sales charges on the new purchase)
for the purpose of determining the amount of gain or loss on the disposition, but generally will be treated as having
been incurred in the new purchase. Also, if a shareholder recognizes a loss on a disposition of Fund shares, the loss will
be disallowed under the “wash sale” rules to the extent the shareholder purchases substantially identical shares within
the 61-day period beginning 30 days before and ending 30 days after the disposition. Any disallowed loss generally
will be reflected in an adjustment to the tax basis of the purchased shares.
If a shareholder receives a capital gain dividend with respect to any Fund share and such Fund share is held for six
months or less, then (unless otherwise disallowed) any loss on the sale or exchange of that Fund share will be treated
as a long-term capital loss to the extent of the capital gain dividend. If such loss is incurred from the redemption of
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shares pursuant to a periodic redemption plan then U.S. Treasury regulations may permit an exception to this
six-month rule. No such regulations have been issued as of the date of this SAI.
In addition, if a shareholder of a Tax-Free Fund holds such Fund shares for six months or less, any loss on the sale or
exchange of those shares will be disallowed to the extent of the amount of exempt-interest dividends (defined below)
received with respect to the shares. If such loss is incurred from the redemption of shares pursuant to a periodic
redemption plan then U.S. Treasury regulations may permit an exception to this six-month rule. Such a loss will also
not be disallowed where the loss is incurred with respect to shares of a Fund that declares exempt-interest dividends
on a daily basis in an amount equal to at least 90% of its net-tax exempt interest and distributes such dividends on a
monthly, or more frequent, basis. Additionally, where a Fund regularly distributes at least 90% of its net tax-exempt
interest, if any, the Treasury Department is authorized to issue regulations reducing the six month holding period
requirement to a period of not less than the greater of 31 days or the period between regular distributions. No such
regulations have been issued as of the date of this filing.
Foreign Taxes.
Amounts realized by a Fund from sources within foreign countries may be subject to withholding and
other taxes imposed by such countries. Although in some countries a portion of these taxes is recoverable by the Fund,
the unrecovered portion of foreign withholding taxes will reduce the income received from such securities. If more
than 50% of the value of a Fund’s total assets at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible to file an annual election with the IRS pursuant to which the Fund may
pass-through to its shareholders on a pro rata basis certain foreign income and similar taxes paid by the Fund, and
such taxes may be claimed, subject to certain limitations, either as a tax credit or deduction by the shareholders.
However, even if a Fund qualifies for the election for any year, it may not make the election for such year. If a Fund does
not so elect, then shareholders will not be entitled to claim a credit or deduction with respect to foreign taxes paid or
withheld. If a Fund does elect to “pass through” its foreign taxes paid in a taxable year, the Fund will furnish a written
statement to its shareholders reporting such shareholders proportionate share of the Funds’ foreign taxes paid.
Even if a Fund qualifies for the election, foreign income and similar taxes will only pass through to the Fund’s
shareholders if the Fund and its shareholders meet certain holding period requirements. Specifically, (i) the
shareholders must have held the Fund shares for at least 16 days during the 31-day period beginning 15 days prior to
the date upon which the shareholders became entitled to receive Fund distributions corresponding with the pass
through of such foreign taxes paid by the Fund, and (ii) with respect to dividends received by the Fund on foreign
shares giving rise to such foreign taxes, the Fund must have held the shares for at least 16 days during the 31-day
period beginning 15 days prior to the date upon which the Fund became entitled to the dividend. These holding
periods increase for certain dividends on preferred stock. A Fund may choose not to make the election if the Fund has
not satisfied its holding requirement.
If a Fund makes the election, the Fund will not be permitted to claim a credit or deduction for foreign taxes paid in that
year, and the Fund’s dividends-paid deduction will be increased by the amount of foreign taxes paid that year. Fund
shareholders that have satisfied the holding period requirements and certain other requirements shall include their
proportionate share of the foreign taxes paid by the Fund in their gross income and treat that amount as paid by them
for the purpose of the foreign tax credit or deduction. If the shareholder claims a credit for foreign taxes paid, the
credit will be limited to the extent it exceeds the shareholder’s federal income tax attributable to foreign source
taxable income. If the credit is attributable, wholly or in part, to qualified dividend income (as defined below), special
rules will be used to limit the credit in a manner that reflects any resulting dividend rate differential.
In general, an individual with $300 ($600 if married filing jointly) or less of creditable foreign taxes may elect to be
exempt from the foreign source taxable income and qualified dividend income limitations if the individual has no
foreign source income other than qualified passive income. A deduction for foreign taxes paid may only be claimed by
shareholders that itemize their deductions. Notably, for tax years beginning after December 31, 2017 (but not for tax
years beginning after December 31, 2025), miscellaneous itemized deductions are suspended for non-corporate
taxpayers. Accordingly, during this time period, individuals may be more likely to take advantage of a foreign tax
credit. Shareholders should consult their tax advisers regarding the impact of these changes on their personal
situation.
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U.S. Federal Income Tax Rates.
Noncorporate Fund shareholders (i.e., individuals, trusts and estates) currently are taxed
at a maximum rate of 37% on ordinary income and 20% on long-term capital gain for taxable years.
In general, “qualified dividend income” realized by noncorporate Fund shareholders is taxable at the same rate as net
capital gain. Generally, qualified dividend income is dividend income attributable to certain U.S. and foreign
corporations, as long as certain holding period requirements are met. After this date, all dividend income generally will
be taxed at the same rate as ordinary income. If 95% or more of a Fund’s gross income (excluding net long-term capital
gain over net short-term capital loss) constitutes qualified dividend income, all of its distributions (other than capital
gain dividends) will be generally treated as qualified dividend income in the hands of individual shareholders, as long
as they have owned their Fund shares for at least 61 days during the 121-day period beginning 60 days before the
Fund’s ex-dividend date (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90
days before such date). In general, if less than 95% of a Fund’s income is attributable to qualified dividend income,
then only the portion of the Fund’s distributions that is attributable to qualified dividend income and designated as
such in a timely manner will be so treated in the hands of individual shareholders. Payments received by a Fund from
securities lending, repurchase, and other derivative transactions ordinarily will not qualify. The rules attributable to the
qualification of Fund distributions as qualified dividend income are complex, including the holding period
requirements. Individual Fund shareholders therefore are urged to consult their own tax advisers and financial
planners. Income and bond Funds typically do not distribute significant amounts of “qualified dividend income”
eligible for reductions in individual U.S. federal income tax rates applicable to certain dividend income.
The maximum stated corporate U.S. federal income tax rate applicable to ordinary income and net capital gain
currently is 21%. Actual marginal tax rates may be higher for some shareholders, for example, through reductions in
deductions. Distributions from an Income Fund generally will not qualify for the “dividends-received deduction”
applicable to corporate shareholders with respect to certain dividends. Distributions from an Equity Fund may qualify
for the “dividends-received deduction” applicable to corporate shareholders with respect to certain dividends.
Naturally, the amount of tax payable by any taxpayer will be affected by a combination of tax laws covering, for
example, deductions, credits, deferrals, exemptions, sources of income and other matters.
Noncorporate Fund shareholders with income exceeding $200,000 ($250,000 if married and filing jointly) generally will
be subject to a 3.8% tax on their “net investment income,” which ordinarily includes taxable distributions received from
the Funds and taxable gain on the disposition of Fund shares.
Backup Withholding.
A Fund is generally required to withhold and remit to the U.S. Treasury, subject to certain
exemptions (such as for certain corporate or foreign shareholders), an amount equal to 24% of all distributions and
redemption proceeds (including proceeds from exchanges and redemptions in-kind) paid or credited to a Fund
shareholder if (i) the shareholder fails to furnish the Fund with a correct “taxpayer identification number” (“TIN”), (ii) the
shareholder fails to certify under penalties of perjury that the TIN provided is correct, (iii) the shareholder fails to make
certain other certifications, or (iv) the IRS notifies the Fund that the shareholder’s TIN is incorrect or that the
shareholder is otherwise subject to backup withholding. Backup withholding is not an additional tax imposed on the
shareholder. The shareholder may apply amounts withheld as a credit against the shareholder’s U.S. federal income tax
liability and may obtain a refund of any excess amounts withheld, provided that the required information is furnished
to the IRS. If a shareholder fails to furnish a valid TIN upon request, the shareholder can also be subject to IRS penalties.
A shareholder may generally avoid backup withholding by furnishing a properly completed IRS Form W-9. State
backup withholding may also be required to be withheld by the Funds under certain circumstances.
Corporate Shareholders.
Subject to limitation and other rules, a corporate shareholder of a Fund may be eligible for the
dividends received deduction on Fund distributions attributable to dividends received by the Fund from domestic
corporations, which, if received directly by the corporate shareholder, would qualify for such a deduction. For eligible
corporate shareholders, the dividends-received deduction may be subject to certain reductions, and a distribution by
a Fund attributable to dividends of a domestic corporation will be eligible for the deduction only if certain holding
period and other requirements are met. These requirements are complex; therefore, corporate shareholders of the
Funds are urged to consult their own tax advisers and financial planners.
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Foreign Shareholders.
For purposes of this discussion, “foreign shareholders” include: (i) nonresident alien individuals,
(ii) foreign trusts (i.e., a trust other than a trust with respect to which a U.S. court is able to exercise primary supervision
over administration of that trust and one or more U.S. persons have authority to control substantial decisions of that
trust), (iii) foreign estates (i.e., the income of which is not subject to U.S. tax regardless of source), and (iv) foreign
corporations.
Distributions made to foreign shareholders attributable to net investment income generally are subject to U.S. federal
income tax withholding at a 30% rate (or such lower rate provided under an applicable income tax treaty).
Notwithstanding the foregoing, if a distribution described above is effectively connected with the conduct of a trade
or business carried on by a foreign shareholder within the United States (or, if an income tax treaty applies, is
attributable to a permanent establishment in the United States), federal income tax withholding and exemptions
attributable to foreign persons will not apply. Instead, the distribution will be subject to withholding at the highest
applicable U.S. tax rate (currently 37% in the case of individuals and 21% in the case of corporations) and the foreign
shareholder will be subject to federal income tax reporting requirements generally applicable to U.S. persons
described above.
Under U.S. federal tax law, a foreign shareholder is not, in general, subject to federal income tax or withholding tax on
capital gains (and is not allowed a deduction for losses) realized on the sale of shares of the Funds and on long-term
capital gains dividends, provided that the Funds obtain a properly completed and signed certificate of foreign status,
unless (i) such gains or distributions are effectively connected with the conduct of a trade or business carried on by the
foreign shareholder within the United States (or, if an income tax treaty applies, are attributable to a permanent
establishment in the United States of the foreign shareholder); (ii) in the case of an individual foreign shareholder, the
shareholder is present in the United States for a period or periods aggregating 183 days or more during the year of the
sale and certain other conditions are met; or (iii) the shares of the Funds constitute U.S. real property interests
(“USRPIs”), as described below.
Under current law, if a Fund is considered to be a “United States Real Property Holding Corporation” (as defined in the
Code and Treasury Regulations), then distributions attributable to certain underlying real estate investment trust
(“REIT”) investments and redemption proceeds paid to a foreign shareholder that owns at least 5% of a Fund, generally
will cause the foreign shareholder to treat such gain or distribution as income effectively connected with a trade or
business in the United States, subject to such gain or distribution withholding tax and cause the foreign shareholder to
be required to file a federal income tax return. In addition, in any year when at least 50% of a Fund’s assets are USRPIs
(as defined in the Code and Treasury Regulations), distributions of the Fund that are attributable to gains from the sale
or exchange of shares in USRPIs may be subject to U.S. withholding tax (regardless of such shareholder’s percentage
interest in the Fund) and may require the foreign shareholder to file a U.S. federal income tax return in order to receive
a refund (if any) of the withheld amount.
Subject to the additional rules described herein, federal income tax withholding will apply to distributions attributable
to dividends and other investment income distributed by the Funds. The federal income tax withholding rate may be
reduced (and, in some cases, eliminated) under an applicable tax treaty between the United States and the foreign
shareholder’s country of residence or incorporation. In order to qualify for treaty benefits, a foreign shareholder must
comply with applicable certification requirements relating to its foreign status (generally by providing a Fund with a
properly completed Form W-8BEN).
Pursuant to the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax generally is imposed on
payments of interest and dividends to (i) foreign financial institutions including non-U.S. investment funds and (ii)
certain other foreign entities, unless the foreign financial institution or foreign entity provides the withholding agent
with documentation sufficient to show that it is compliant with FATCA (generally by providing the Fund with a
properly completed Form W-8BEN or Form W-8BEN-E, as applicable). If the payment is subject to the 30% withholding
tax under FATCA, a foreign shareholder will not be subject to the 30% withholding tax described above on the same
income. Starting in 2019, payments of the gross proceeds (including distributions designated as capital gain dividends
to the extent the payment is attributable to property that produces U.S. source interest or dividends) may also be
subject to FATCA withholding absent proof of FATCA compliance prior to January 1, 2019.
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Before investing in a Fund’s shares, a prospective foreign shareholder should consult with its own tax advisors,
including whether the shareholder’s investment can qualify for benefits under an applicable income tax treaty.
Tax-Deferred Plans.
Shares of the Funds may be available for a variety of tax-deferred retirement and other
tax-advantaged plans and accounts. However, shares of a Tax-Free Fund may not be suitable for tax-deferred,
retirement and other tax-advantaged plans and accounts, since such plans and accounts are generally tax-exempt and,
therefore, would not benefit from the tax-exempt status of certain distributions from the Tax-Free Fund (discussed
below). Such distributions may ultimately be taxable to the beneficiaries when distributed to them.
Prospective investors should contact their tax advisers and financial planners regarding the tax consequences
to them of holding Fund shares through such plans and/or accounts.
Tax-Exempt Shareholders.
Shares of a Tax-Free Fund may not be suitable for tax-exempt shareholders since such
shareholders generally would not benefit from the tax-exempt status of distributions from the Tax-Free Funds
(discussed below). Tax-exempt shareholders should contact their tax advisers and financial planners regarding the tax
consequences to them of an investment in the Funds.
Any investment in residual interests of a collateralized mortgage obligation that has elected to be treated as a REMIC
can create complex U.S. federal income tax consequences, especially if a Fund has state or local governments or other
tax-exempt organizations as shareholders.
Special tax consequences apply to charitable remainder trusts (“CRTs”) (as defined in Section 664 of the Code) that
invest in RICs that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. CRTs are urged
to consult their own tax advisers and financial planners concerning these special tax consequences.
Foreign Bank and Financial Accounts and Foreign Financial Assets Reporting Requirements.
A shareholder that owns
directly or indirectly more than 50% by vote or value of the Fund, is urged and advised to consult its own tax adviser
regarding its filing obligations with respect to IRS Form FinCEN114, Report of Foreign Bank and Financial Accounts.
Also, under recently enacted rules, subject to exceptions, individuals (and, to the extent provided in forthcoming
future U.S. Treasury regulations, certain domestic entities) must report annually their interests in “specified foreign
financial assets” on their U.S. federal income tax returns. It is currently unclear whether and under what circumstances
stockholders would be required to report their indirect interests in the Fund’s “specified foreign financial assets” (if any)
under these new rules.
Shareholders may be subject to substantial penalties for failure to comply with these reporting requirements.
Shareholders are urged and advised to consult their own tax advisers to determine whether these reporting
requirements are applicable to them.
Tax Shelter Reporting Regulations.
Generally, under U.S. Treasury regulations, if an individual shareholder recognizes a
loss of $2 million or more or if a corporate shareholder recognizes a loss of $10 million or more, the shareholder must
file with the IRS a disclosure statement on Form 8886. The fact that a loss is reportable under these regulations does
not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should
consult their own tax advisers to determine the applicability of these regulations in light of their individual
circumstances.
Additional Considerations for the Tax-Free Funds
. If at least 50% of the value of a Fund’s total assets at the close of each
quarter of its taxable years consists of debt obligations that generate interest exempt from U.S. federal income tax
under Section 103 of the Internal Revenue Code, then the Fund may qualify to pass through to its shareholders the
tax-exempt character of its income from such debt obligations by paying exempt-interest dividends. The Tax-Free
Funds intend to so qualify and are designed to provide shareholders with income exempt from U.S. federal income tax
in the form of exempt-interest dividends. “Exempt-interest dividends” are dividends (other than capital gain dividends)
Wells Fargo - Fixed Income Funds
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66
paid by a RIC that are properly reported as such in a written statement furnished to shareholders.
Each Tax-Free Fund will report to its shareholders the portion of the distributions for the taxable year that constitutes
exempt-interest dividends. The designated portion cannot exceed the excess of the amount of interest excludable
from gross income under Section 103 of the Internal Revenue Code received by a Tax-Free Fund during the taxable
year over any amounts disallowed as deductions under Sections 265 and 171(a)(2) of the Internal Revenue Code.
Interest on indebtedness incurred to purchase or carry shares of the Tax-Free Funds will not be deductible to the
extent that the Tax-Free Funds’ distributions are exempt from U.S. federal income tax. In addition, an investment in a
Tax-Free Fund may result in liability for U.S. federal alternative minimum tax (“AMT”). Certain deductions and
exemptions have been designated “tax preference items” which must be added back to taxable income for purposes of
calculating the U.S. federal AMT. Tax preference items include tax-exempt interest on certain “private activity bonds.” To
the extent a Tax-Free Fund invests in certain private activity bonds, its shareholders will be required to report that
portion of the Fund’s distributions attributable to income from the bonds as a tax preference item in determining their
U.S. federal AMT, if any. Shareholders will be notified of the tax status of distributions made by a Tax-Free Fund.
Persons who may be “substantial users” (or “related persons” of substantial users) of facilities financed by private
activity bonds should consult their tax advisers before purchasing shares in a Tax-Free Fund. Furthermore,
shareholders will not be permitted to deduct any of their share of a Tax-Free Fund’s expenses in computing their U.S.
federal AMT. As of the date of this filing, individuals are subject to the U.S. federal AMT at a maximum rate of 28%.
Corporations are not subject to the U.S. federal AMT for taxable years beginning after December 31, 2017.
Shareholders with questions or concerns about the U.S. federal AMT should consult own their own tax advisers.
The IRS is paying increased attention to whether debt obligations intended to produce interest exempt from U.S.
federal income tax in fact meet the requirements for such exemption. Ordinarily, the Tax-Free Funds rely on opinions
from the issuer’s bond counsel that interest on the issuer’s debt obligation will be exempt from U.S. federal income tax.
However, no assurance can be given that the IRS will not successfully challenge such exemption, which could cause
interest on the debt obligation to be taxable and could jeopardize a Tax-Free Fund’s ability to pay any exempt-interest
dividends. Similar challenges may occur as to state-specific exemptions.
A shareholder who receives Social Security or railroad retirement benefits should consult the shareholder’s own tax
adviser to determine what effect, if any, an investment in a Tax-Free Fund may have on the U.S. federal taxation of such
benefits. Exempt-interest dividends are included in income for purposes of determining the amount of benefits that
are taxable.
Distributions of a Tax-Free Fund’s income other than exempt-interest dividends generally will be taxable to
shareholders. Gains realized by a Tax-Free Fund on the sale or exchange of investments that generate tax-exempt
income will also be taxable to shareholders.
Although exempt-interest dividends are generally exempt from U.S. federal income tax, there may not be a similar
exemption under the laws of a particular state or local taxing jurisdiction. Thus, exempt-interest dividends may be
subject to state and local taxes. You should consult your own tax advisor to discuss the tax consequences of your
investment in a Tax-Free Fund.
Legislative Proposals.
Prospective shareholders should recognize that the present U.S. federal income tax treatment of
the Funds and their shareholders may be modified by legislative, judicial or administrative actions at any time, which
may be retroactive in effect. The rules dealing with U.S. federal income taxation are constantly under review by
Congress, the IRS and the Treasury Department, and statutory changes as well as promulgation of new regulations,
revisions to existing statutes, and revised interpretations of established concepts occur frequently. You should consult
your advisors concerning the status of legislative proposals that may pertain to holding Fund shares.
Cost Basis Reporting
Each Fund or its delegate is required to report cost basis information for shareholders who are individuals and S
Corporations to the Internal Revenue Service for redemptions of Fund shares acquired on or after January 1, 2012. This
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information will also be reported to a shareholder on Form 1099-B and the IRS each year. If a shareholder is a
corporation and has not instructed a Fund that it is a C corporation by written instruction, the Fund will treat the
shareholder as an S corporation and file a Form 1099-B.
Fund shareholders should consult their tax advisors to obtain more information about how the new cost basis rules
apply to them and determine which cost basis method allowed by the Internal Revenue Service is best for their tax
situation. Methods allowed by the IRS include, but are not limited to:
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■
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Average Cost
. The cost per share is determined by dividing the aggregate cost amount by the total shares in the
account. The basis of the shares redeemed is determined by multiplying the shares redeemed by the cost per share.
Starting in 2012, accounts may maintain two separate average costs: one average for covered shares and a separate
average for noncovered shares. Under the Average Cost method, noncovered shares are generally depleted first.
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■
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First in first out (FIFO)
. Shares acquired first in the shareholder’s account are the first shares depleted and
determine the shareholder’s cost basis. The basis of the shares redeemed is determined by the adjusted purchase
price of each date the shares were acquired.
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■
|
Specific Identification
. A shareholder selects the shares to be redeemed from any of the purchase lots that still
have shares remaining. The basis of the shares redeemed is determined by the adjusted purchase price of each date
the shares were acquired.
|
In the absence of a shareholder method election, the Fund will apply its default method, Average Cost. If the Average
Cost method is applied either by default or at the shareholder’s election, the shareholder’s ability to change such
election once a sale occurs will be limited under the IRS rules. After an election has been made, but before a
disposition of shares occurs, a shareholder may make a retroactive change to an alternate method. The cost basis
method a shareholder elects may not be changed with respect to a redemption of shares after the settlement date of
the redemption. At any time, a shareholder may designate a new election for future purchases.
Redemptions of shares acquired prior to January 1, 2012 will continue to be reported using the Average Cost method,
if available, and will not be reported to the IRS.
Money Market Fund Shares.
The cost basis reporting rules described above do not apply to shares in money market
funds. Beginning in 2016, pursuant to SEC rules, certain money market funds will begin to use a floating net asset
value rather than a stable net asset value. However, the IRS has issued proposed regulations, upon which taxpayers
may rely, that permit taxpayers to utilize a simplified method of accounting for gains and losses from redemptions of
shares in money market funds that have a floating net asset value (the “NAV method”). If taxpayers properly elect the
NAV method, taxpayers will not compute gain or loss for each redemption. Instead, taxpayers utilizing the NAV
method, will aggregate the gains and losses for a period and report the aggregate gain or loss on an annual basis. If
taxpayers do not elect the NAV method, the wash sales rules shall not apply to losses generated by the redemption of
money market shares. Any capital gains or losses reported utilizing the NAV method will be short-term capital gains or
losses.
CONTROL PERSONS AND PRINCIPAL FUND HOLDERS
The Fund is one series of the Trust in the Wells Fargo family of funds. The Trust was organized as a Delaware statutory
trust on March 10, 1999.
Most of the Trust’s series are authorized to issue multiple classes of shares, one class generally subject to a front-end
sales charge and, in some cases, classes subject to a CDSC, that are offered to retail investors. Certain of the Trust’s
series also are authorized to issue other classes of shares, which are sold primarily to institutional investors. Each share
in a series represents an equal, proportionate interest in the series with all other shares. Shareholders bear their pro
rata portion of a series’ operating expenses, except for certain class-specific expenses (e.g., any state securities
registration fees, shareholder servicing fees or distribution fees that may be paid under Rule 12b-1) that are allocated
to a particular class. Please contact Investor Services at 1-800-222-8222 if you would like additional information about
other series or classes of shares offered.
With respect to matters affecting one class but not another, shareholders vote as a class; for example, the approval of a
Plan. Subject to the foregoing, all shares of a Fund have equal voting rights and will be voted in the aggregate, and not
Wells Fargo - Fixed Income Funds
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68
by series, except where voting by a series is required by law or where the matter involved only affects one series. For
example, a change in a Fund’s fundamental investment policy affects only one series and would be voted upon only by
shareholders of the Fund involved. Additionally, approval of an advisory agreement, since it affects only one Fund, is a
matter to be determined separately by each series. Approval by the shareholders of one series is effective as to that
series whether or not sufficient votes are received from the shareholders of the other series to approve the proposal as
to those series.
As used in the Prospectus(es) and in this SAI, the term “majority,” when referring to approvals to be obtained from
shareholders of a class of shares of a Fund means the vote of the lesser of (i) 67% of the shares of the class represented
at a meeting if the holders of more than 50% of the outstanding shares of the class are present in person or by proxy,
or (ii) more than 50% of the outstanding shares of the class of the Fund. The term “majority,” when referring to
approvals to be obtained from shareholders of the Fund, means the vote of the lesser of (i) 67% of the shares of the
Fund represented at a meeting if the holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy, or (ii) more than 50% of the outstanding shares of the Fund. The term “majority,” when referring to
the approvals to be obtained from shareholders of the Trust as a whole, means the vote of the lesser of (i) 67% of the
Trust’s shares represented at a meeting if the holders of more than 50% of the Trust’s outstanding shares are present in
person or by proxy, or (ii) more than 50% of the Trust’s outstanding shares.
Shareholders are not entitled to any preemptive rights. All shares are issued in uncertificated form only, and, when
issued will be fully paid and non-assessable by the Trust. The Trust may dispense with an annual meeting of
shareholders in any year in which it is not required to elect Trustees under the 1940 Act.
Each share of a class of the Fund represents an equal proportional interest in the Fund with each other share of the
same class and is entitled to such dividends and distributions out of the income earned on the assets belonging to the
Fund as are declared in the discretion of the Trustees. In the event of the liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets attributable to that Fund that are available for distribution,
and a distribution of any general assets not attributable to a particular Fund that are available for distribution in such
manner and on such basis as the Trustees in their sole discretion may determine.
Since the Fund commenced operations on or around the date of this SAI, information relating to beneficial ownership
of the Fund is not available.
For purposes of the 1940 Act, any person who owns directly or through one or more controlled companies more than
25% of the voting securities of a company is presumed to “control” such company. Accordingly, to the extent that a
person identified in the foregoing table is identified as the beneficial owner of more than 25% of a Fund, or is
identified as the record owner of more than 25% of a Fund and has voting and/or investment powers, it may be
presumed to control such Fund. A controlling person’s vote could have a more significant effect on matters presented
to shareholders for approval than the vote of other Fund shareholders.
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WELLS FARGO FUNDS TRUST
FILE NOS. 333-74295; 811-09253
PART C
OTHER INFORMATION
Item 28. Exhibits
Unless otherwise indicated, each of the Exhibits listed below is filed herewith.
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Number
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Exhibit Description
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Location
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(a)
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Amended and Restated Declaration of Trust
|
Incorporated by reference to Post-Effective Amendment No. 448, filed February 25, 2016.
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(b)
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Not applicable
|
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(c)
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Not applicable
|
|
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(d)(1)
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Investment Management Agreement with Wells Fargo Funds Management, LLC
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Incorporated by reference to Post-Effective Amendment No. 407, filed August 26, 2015; Schedule A, incorporated by reference
to Post-Effective Amendment No. 609, filed November 26, 2018.
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|
(d)(2)
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Investment Management Agreement with Wells Fargo Funds Management, LLC (Asset Allocation Fund)
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Incorporated by reference to Post-Effective Amendment No. 398, filed June 25, 2015.
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(d)(3)
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Investment Management Agreement with Wells Fargo Funds Management, LLC (Absolute Return Fund)
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Incorporated by reference to Post-Effective Amendment No. 235, filed February 29, 2012; Schedule A, incorporated by reference
to Post-Effective Amendment No. 398, filed June 25, 2015.
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|
(d)(4)
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Investment Management Agreement with Wells Fargo Funds Management, LLC (New Funds since November 2015)
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Incorporated by reference to Post-Effective Amendment No. 440, filed December 24, 2015; Schedule A, incorporated by reference
to Post-Effective Amendment No. 609, filed November 26, 2018.
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|
(d)(5)
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Amended and Restated Fee and Expense Agreement between Wells Fargo Funds Trust, Wells Fargo Master Trust and Wells Fargo
Funds Management, LLC
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Incorporated by reference to Post-Effective Amendment No. 580, filed June 26, 2018; Schedule A, filed herewith.
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(d)(6)
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Investment Sub-Advisory Agreement with Schroder Investment Management North America Inc.
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Incorporated by reference to Post-Effective Amendment No. 20, filed May 1, 2001; Schedule A, incorporated by reference to
Post-Effective Amendment No. 83, filed April 11, 2005.
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(d)(7)
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Amended and Restated Investment Sub-Advisory Agreement with Wells Capital Management Incorporated
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Incorporated by reference to Post-Effective Amendment No. 266, filed November 16, 2012; Appendix A and Schedule A, incorporated
by reference to Post-Effective Amendment No. 609, filed November 26, 2018.
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|
(d)(8)
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Investment Sub-Advisory Agreement with RCM Capital Management LLC (formerly Dresdner RCM Global Investors, LLC) and Novation
of Sub-Advisory Agreement substituting Allianz Global Investors, U.S. LLC for RCM Capital Management LLC
|
Incorporated by reference to Post-Effective Amendment No. 32, filed February 8, 2002; Novation of Sub-Advisory Agreement,
incorporated by reference to Post-Effective Amendment No. 307, filed July 26, 2013; Appendix, incorporated by reference to
Post-Effective Amendment No. 398, filed June 25, 2015; Schedule A, incorporated by reference to Post-Effective Amendment No.
545 filed on September 25, 2017.
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|
(d)(9)
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Investment Sub-Advisory Agreement with LSV Asset Management
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Incorporated by reference to Post-Effective Amendment No. 147, filed January 28, 2010; Appendix A and Appendix B, incorporated
by reference to Post-Effective Amendment No. 156, filed April 30, 2010.
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|
(d)(10)
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Investment Sub-Advisory Agreement with Cooke & Bieler, L.P.
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Incorporated by reference to Post-Effective Amendment No. 74, filed July 26, 2004; Appendix A and Schedule A, incorporated
by reference to Post-Effective Amendment No. 295, filed April 23, 2013.
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|
(d)(11)
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Amended and Restated Investment Sub-Advisory Agreement with First International Advisors, LLC (now known as Wells Fargo Asset
Management (International), LLC)
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Incorporated by reference to Post-Effective Amendment No. 266, filed November 16, 2012; Appendix A and Appendix B, incorporated
by reference to Post-Effective Amendment No. 609, filed November 26, 2018.
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|
(d)(12)
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Investment Sub-Advisory Agreement with Crow Point Partners, LLC
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Incorporated by reference to Post-Effective Amendment No. 169, filed July 16, 2010.
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(d)(13)
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Investment Sub-Advisory Agreement with Artisan Partners, Limited Partnership
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Incorporated by reference to Post-Effective Amendment No. 341, filed March 28, 2014.
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(d)(14)
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Expense Assumption Agreement with Wells Fargo Funds Management, LLC
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Incorporated by reference to Post-Effective Amendment No. 456, filed April 26, 2016.
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(d)(15)
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Investment Sub-Advisory Agreement with Wells Fargo Asset Management (International) Limited
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Filed herewith.
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(e)
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Distribution Agreement with Wells Fargo Funds Distributor, LLC
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Incorporated by reference to Post-Effective Amendment No. 335, filed February 25, 2014; Schedule I, incorporated by reference
to Post-Effective Amendment No. 609, filed November 26, 2018.
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(f)
|
Not applicable
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|
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(g)(1)
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Securities Lending Agency Agreement by and among Wells Fargo Funds Trust, Wells Fargo Master Trust, Wells Fargo Variable
Trust, Wells Fargo Funds Management, LLC and Goldman Sachs Bank USA
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Incorporated by reference to Post-Effective Amendment No. 163, filed June 28, 2010; Fifth Amendment incorporated by reference
to Post-Effective Amendment No. 174, filed October 27, 2010; Schedule 2, First Amendment, Second Amendment, Third Amendment,
Fourth Amendment and Sixth Amendment incorporated by reference to Post-Effective Amendment No. 177, filed January 28, 2011;
Seventh Amendment, incorporated by reference to Post-Effective Amendment No. 200, filed June 24, 2011; Eighth Amendment incorporated
by reference to Post-Effective Amendment No. 237 filed March 16, 2012; Ninth Amendment incorporated by reference to Post-Effective
Amendment No. 274, filed December 26, 2012; Tenth Amendment, incorporated by reference to Post-Effective Amendment No. 393,
filed April 28, 2015; Eleventh Amendment, incorporated by reference to Post-Effective Amendment No. 440, filed December 24,
2015; Thirteenth Amendment, incorporated by reference to Post-Effective Amendment No. 483, filed September 27, 2016; Fourteenth
Amendment, incorporated by reference to Post-Effective Amendment No. 545 filed on September 25, 2017; Appendix A, incorporated
by reference to Post-Effective Amendment No. 617, filed January 24, 2019.
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|
(g)(2)
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Master Custodian Agreement with State Street Bank and Trust Company
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Incorporated by reference to Post-Effective Amendment No. 139, filed September 28, 2009; Appendix A, incorporated by reference
to Post-Effective Amendment No. 617, filed January 24, 2019.
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(h)(1)
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Class-Level Administration Agreement with Wells Fargo Funds Management, LLC
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Incorporated by reference to Post-Effective Amendment No. 398, filed June 25, 2015; Appendix A, incorporated by reference
to Post-Effective Amendment No. 545 filed on September 25, 2017.; Schedule A to Appendix A, filed herewith.
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|
(h)(2)
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Transfer Agency and Service Agreement with Boston Financial Data Services, Inc.
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Incorporated by reference to Post-Effective Amendment No. 92, filed May 1, 2006; Schedule A, incorporated by reference to
Post-Effective Amendment No. 609, filed November 26, 2018.
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|
(h)(3)
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Shareholder Servicing Plan
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Incorporated by reference to Post-Effective Amendment No. 335, filed February 25, 2014; Appendix A, filed herewith.
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|
(h)(4)
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Administrative and Shareholder Servicing Agreement, Form of Agreement
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Incorporated by reference to Post-Effective Amendment No. 335, filed February 25, 2014. Schedule I, incorporated by reference
to Post-Effective Amendment No. 609, filed November 26, 2018.
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|
(h)(5)
|
Shareholder Servicing Agreement with Wells Fargo Funds Distributor, LLC and Wells Fargo Funds Management, LLC
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Incorporated by reference to Post-Effective Amendment No. 580, filed June 26, 2018.
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|
(i)
|
Legal Opinion
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Filed herewith.
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|
(j)(A)
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Consent of Independent Registered Accounting Firm
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Filed herewith.
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|
(j)(1)
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Power of Attorney, Pamela Wheelock
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Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
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|
(j)(2)
|
Power of Attorney, Timothy J. Penny
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Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(3)
|
Power of Attorney, Andrew Owen
|
Incorporated by reference to Post-Effective Amendment No. 511, filed January 25, 2017.
|
|
(j)(4)
|
Power of Attorney, Olivia S. Mitchell
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Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(5)
|
Power of Attorney, Judith M. Johnson
|
Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(6)
|
Power of Attorney, Isaiah Harris, Jr.
|
Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(7)
|
Power of Attorney, David F. Larcker
|
Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(8)
|
Power of Attorney, Nancy Wiser
|
Incorporated by reference to Post-Effective Amendment No. 254, filed September 4, 2012.
|
|
(j)(9)
|
Power of Attorney, Jeremy DePalma
|
Incorporated by reference to Post-Effective Amendment No. 266, filed November 16, 2012.
|
|
(j)(10)
|
Power of Attorney, William R. Ebsworth
|
Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(11)
|
Power of Attorney, Jane A. Freeman
|
Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(j)(12)
|
Power of Attorney, James G. Polisson
|
Incorporated by reference to Post-Effective Amendment No. 574, filed April 26, 2018.
|
|
(k)
|
Not applicable
|
|
|
(l)
|
Not applicable
|
|
|
(m)
|
Distribution Plan
|
Incorporated by reference to Post-Effective Amendment No. 335, filed February 25, 2014; Appendix A, incorporated by reference
to Post-Effective Amendment No. 609, filed November 26, 2018.
|
|
(n)
|
Rule 18f-3 Multi-Class Plan
|
Incorporated by reference to Post-Effective Amendment No. 609, filed November 26, 2018; Appendix A and Appendix B, filed herewith.
|
|
(o)
|
Not applicable
|
|
|
(p)(1)
|
Joint Code of Ethics for Asset Allocation Trust, Wells Fargo Global Dividend Opportunity Fund, Wells Fargo Income Opportunities
Fund, Wells Fargo Multi-Sector Income Fund, Wells Fargo Utilities & High Income Fund, Wells Fargo Funds Trust, Wells Fargo
Master Trust, and Wells Fargo Variable Trust
|
Incorporated by reference to Post-Effective Amendment No. 467, filed June 21, 2016.
|
|
(p)(2)
|
Joint Code of Ethics for Wells Fargo Funds Management, LLC and Wells Fargo Funds Distributor, LLC
|
Incorporated by reference to Post-Effective Amendment No. 467, filed June 21, 2016.
|
|
(p)(3)
|
Allianz Global Investors U.S. LLC (formerly RCM Capital Management, LLC) Code of Ethics
|
Incorporated by reference to Post-Effective Amendment No. 509, filed December 23, 2016.
|
|
(p)(4)
|
Schroder Investment Management North America Inc. Code of Ethics
|
Incorporated by reference to Post-Effective Amendment No. 580, filed June 26, 2018.
|
|
(p)(5)
|
LSV Asset Management Code of Ethics and Personal Trading Policy
|
Incorporated by reference to Post-Effective Amendment No. 304, filed June 26, 2013.
|
|
(p)(6)
|
Cooke & Bieler, L.P. Code of Ethics
|
Incorporated by reference to Post-Effective Amendment No. 335, filed February 25, 2014.
|
|
(p)(7)
|
Artisan Partners Limited Partnership Code of Ethics
|
Incorporated by reference to Post-Effective Amendment No. 609, filed November 26, 2018.
|
|
(p)(8)
|
Joint Code of Ethics of Wells Capital Management Incorporated, Wells Fargo Bank N.A. (dba Wells Capital Management Singapore),
First International Advisors, LLC (now known as Wells Fargo Asset Management (International), LLC) and Analytic Investors,
LLC
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Incorporated by reference to Post-Effective Amendment No. 531, filed on June 26, 2017.
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(p)(9)
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Crow Point Partners, LLC Code of Ethics
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Incorporated by reference to Post-Effective Amendment No. 349, filed June 25, 2014.
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Item 29. Persons Controlled by or Under Common Control with Registrant.
Registrant believes that no person is controlled by or under common control with Registrant.
Item 30. Indemnification.
Article IX of the Registrant's Declaration of Trust limits the liability and, in certain instances, provides for mandatory
indemnification of the Registrant's Trustees, officers, employees, agents and holders of beneficial interests in the Trust.
In addition, the Trustees are empowered under Article III, Section 1(t) of the Registrant's Declaration of Trust to obtain
such insurance policies as they deem necessary.
Item 31. Business and Other Connections of the Investment Adviser.
(a) To the knowledge of Registrant, none of the directors or officers of Wells Fargo Funds Management, LLC is or has been
at any time during the past two fiscal years engaged in any other business, profession, vocation or employment of a substantial
nature, except that they also hold various positions with and engage in business for Wells Fargo Bank.
(b) Wells Capital Management Incorporated ("Wells Capital Management"), a wholly owned subsidiary of Wells Fargo Bank, serves
as sub-adviser to various Funds of the Trust. The descriptions of Wells Capital Management in Parts A and B of the Registration
Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Wells
Capital Management is or has been at any time during the past two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature.
(c) Schroder Investment Management North America Inc. ("Schroder"), serves as sub-adviser to various funds of the Trust. The
descriptions of Schroder in Parts A and B of the Registration Statement are incorporated by reference herein. Schroder Capital
Management International Limited ("Schroder Ltd.") is a United Kingdom affiliate of Schroder which provides investment management
services to international clients located principally in the United States. Schroder Ltd. and Schroder p.l.c. are located
at 31 Gresham St., London ECZV 7QA, United Kingdom. To the knowledge of the Registrant, none of the directors or officers
of Schroder is or has been at any time during the last two fiscal years engaged in any other business, profession, vocation
or employment of a substantial nature.
(d) Allianz Global Investors U.S. LLC ("Allianz") (formerly RCM Capital Management, LLC), serves as sub-adviser for various
funds of the Trust. The descriptions of Allianz in Parts A and B of the Registration Statement are incorporated by reference
herein. To the knowledge of the Registrant, none of the directors or officers of Allianz is or has been at any time during
the last two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.
(e) LSV Asset Management ("LSV") serves as sub-adviser to various funds of the Trust. The descriptions of LSV in Parts A and
B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors
or officers of LSV is or has been at any time during the past two fiscal years engaged in any other business, profession,
vocation, or employment of a substantial nature.
(f) Cooke & Bieler, L.P. ("Cooke & Bieler") serves as sub-adviser for various funds of the Trust. The descriptions of Cooke
& Bieler in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant,
none of the directors or officers of Cooke & Bieler is or has been at any time during the past two fiscal years engaged in
any other business, profession, vocation, or employment of a substantial nature.
(g) Artisan Partners Limited Partnership ("Artisan") serves as sub-adviser for various funds of the Trust. The descriptions
of Artisan in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant,
none of the directors or officers of Artisan is or has been at any time during the past two fiscal years engaged in any other
business, profession, vocation, or employment of a substantial nature.
(h) Wells Fargo Asset Management (International), LLC (WFAMI) (formerly known as First International Advisors, LLC) an indirect
wholly-owned subsidiary of Wells Fargo & Company, serves as sub-adviser for various funds of the Trust. The descriptions of
WFAMI in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant,
none of the directors or officers of the sub-adviser is or has been at any time during the last two fiscal years engaged in
any other business, profession, vocation or employment of a substantial nature.
(i) Crow Point Partners, LLC ("Crow Point") serves as sub-adviser for various funds of the Trust. The descriptions of Crow
Point in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant,
none of the directors or officers of Crow Point is or has been at any time during the last two fiscal years engaged in any
other business, profession, vocation or employment of a substantial nature.
(j) Wells Capital Management Singapore, a separately identifiable division of Wells Fargo Bank, N.A., serves as sub-adviser
for various funds of the Trust. The descriptions of Wells Capital Management Singapore in Parts A and B of the Registration
Statement are incorporated by reference herein. To the knowledge of the Registrant, none of the directors or officers of Wells
Capital Management Singapore is or has been at any time during the last two fiscal years engaged in any other business, profession,
vocation or employment of a substantial nature.
(k) Wells Fargo Asset Management (International) Limited ("WFAM (International) Limited"), an indirect wholly-owned subsidiary
of Wells Fargo & Company, serves as sub-adviser for various funds of the Trust. The descriptions of WFAM (International) Limited
in Parts A and B of the Registration Statement are incorporated by reference herein. To the knowledge of the Registrant, none
of the directors or officers of the sub-adviser is or has been at any time during the last two fiscal years engaged in any
other business, profession, vocation or employment of a substantial nature.
Item 32. Principal Underwriter.
(a) Wells Fargo Funds Distributor, LLC, distributor for the Registrant, also acts as principal underwriter for Wells Fargo
Variable Trust, and is the exclusive placement agent for Wells Fargo Master Trust, both of which are registered open-end management
investment companies.
(b) The following table provides information for each director and officer of Wells Fargo Funds Distributor, LLC.
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Name
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Positions and Offices with Underwriter
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Positions and Offices with Fund
|
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Andrew Owen
Wells Fargo Asset Management Group
525 Market Street, 12th Floor
San Francisco, CA 94105
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Director, Chairman of the Board
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President
|
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Wayne Badorf
Wells Fargo Funds Distributor, LLC
525 Market Street, 12th Floor
San Francisco, CA 94105
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Director, President
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None
|
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David G. Bullock
Wells Fargo Bank, NA
401 S. Tyron Street
Charlotte, NC 28202
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Director
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None
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A. Erdem Cimen
Wells Fargo Funds Management, LLC
525 Market Street, 12th Floor
San Francisco, CA 94105
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Director, Financial Operations Officer (FINOP)
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None
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Larry E. Fernandes
Wells Capital Management Incorporated
525 Market Street, 10th Floor
San Francisco, CA 94105
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Director
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None
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Nicole E. Gallo
Wells Fargo Funds Distributor, LLC
401 S. Tyron Street
Charlotte, NC 28202
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Chief Compliance Officer, Anti-Money Laundering Compliance Officer
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None
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Gale Gebstadt
Wells Fargo Funds Distributor, LLC
45 Fremont Street, 26th Floor
San Francisco, CA 94105
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Secretary
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None
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(c) Not applicable.
Item 33. Location of Accounts and Records.
(a) The Registrant maintains accounts, books and other documents required by Section 31(a) of the Investment Company Act of
1940 and the rules thereunder (collectively, "Records") at the offices of Wells Fargo Funds Management, LLC, 525 Market Street,
12th Floor, San Francisco, CA 94105.
(b) Wells Fargo Funds Management, LLC maintains all Records relating to its services as investment manager and class-level
administrator at 525 Market Street, 12th Floor, San Francisco, CA 94105.
(c) DST Asset Manager Solutions, Inc. (formerly Boston Financial Data Services, Inc.) maintains all Records relating to its
services as transfer agent at Two Heritage Drive, Quincy, Massachusetts 02171.
(d) Wells Fargo Funds Distributor, LLC maintains all Records relating to its services as distributor at 525 Market Street,
12th Floor, San Francisco, CA 94105.
(e) Wells Fargo Bank, N.A. (formerly Wells Fargo Bank Minnesota, N.A.) maintains all Records relating to its services as former custodian
at 6th & Marquette, Minneapolis, MN 55479-0040.
(f) Wells Capital Management Incorporated maintains all Records relating to its services as investment sub-adviser at 525
Market Street, 10th Floor, San Francisco, CA 94105.
(g) Schroder Investment Management North America Inc. maintains all Records relating to its services as investment sub-adviser
at 7 Bryant Park, New York, New York 10018-3706.
(h) Allianz Global Investors U.S. LLC (formerly RCM Capital Management, LLC) maintains all Records relating to its services
as investment sub-adviser at 555 Mission Street Suite 1700, San Francisco, CA 94105.
(i) LSV Asset Management maintains all Records relating to its services as investment sub-adviser at One North Wacker Drive,
Suite 4000, Chicago, Illinois 60606.
(j) Cooke & Bieler, L.P. maintains all Records relating to its services as investment sub-adviser at 1700 Market Street, Philadelphia,
PA 19103.
(k) Artisan Partners Limited Partnership maintains all Records relating to its services as investment sub-adviser at 875 East
Wisconsin Avenue, Suite 800, Milwaukee, WI 53202.
(l) Wells Fargo Asset Management (International), LLC (formerly known as First International Advisors, LLC) maintains all
Records relating to its services as investment sub-adviser at One Plantation Place, 30 Fenchurch, London, England, EC3M 3BD.
(m) Crow Point Partners, LLC maintains all Records relating to its services as investment sub-adviser at 25 Recreation Park
Drive, Suite 110, Hingham, Massachusetts 02043.
(n) State Street Bank and Trust Company maintains all Records relating to its services as custodian and fund accountant at
1 Iron Street, Boston, Massachusetts 02210.
(o) Wells Fargo Bank, N.A. d/b/a Wells Capital Management Singapore maintains all Records relating to its services as investment
sub-adviser at 26/F, 80 Raffles Place, 20/21, UOB Plaza, Singapore 048624.
(p) Wells Fargo Asset Management (International) Limited maintains all Records relating to its services as investment sub-adviser
at 33 King William Street, London, England, United Kingdom, EC4R 9AT.
Item 34. Management Services.
Other than as set forth under the captions "Management of the Funds" in the Prospectuses constituting Part A of this Registration
Statement and "Management" in the Statement of Additional Information constituting Part B of this Registration Statement,
the Registrant is not a party to any management-related service contract.
Item 35. Undertakings.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this Amendment to the Registration Statement on Form N-1A, pursuant
to Rule 485(b) under the Securities Act of 1933, and has duly caused this Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized in the City of San Francisco, State of California on the 28th day
of February, 2019.
WELLS FARGO FUNDS TRUST
By: /s/ Maureen E. Towle
--------------------
Maureen E. Towle
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 624 to its Registration Statement
on Form N-1A has been signed below by the following persons in the capacities and on the date indicated:
|
/s/ James G. Polisson
James G. Polisson*
Trustee
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/s/ Isaiah Harris, Jr.
Isaiah Harris, Jr.*
Trustee
|
/s/ Judith M. Johnson
Judith M. Johnson*
Trustee
|
|
/s/ David F. Larcker
David F. Larcker*
Trustee
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/s/ Olivia S. Mitchell
Olivia S. Mitchell*
Trustee
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/s/ Timothy J. Penny
Timothy J. Penny*
Trustee
|
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/s/ Jane A. Freeman
Jane A. Freeman*
Trustee
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/s/ William R. Ebsworth
William R. Ebsworth*
Trustee
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/s/ Pamela Wheelock
Pamela Wheelock*
Trustee
|
|
/s/ Andrew Owen
Andrew Owen*
President
(Principal Executive Officer)
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/s/ Jeremy M. DePalma
Jeremy M. DePalma*
Treasurer
(Principal Financial Officer)
|
|
*By: /s/ Maureen E. Towle
Maureen E. Towle
As Attorney-in-Fact
February 28, 2019
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Exhibit No.
|
Exhibits
|
|
(d)(5)
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Schedule A to the Amended and Restated Fee and Expense Agreement between Wells Fargo Funds Trust, Wells Fargo Master Trust
and Wells Fargo Funds Management, LLC
|
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(d)(15)
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Investment Sub-Advisory Agreement with Wells Fargo Asset Management (International) Limited
|
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(h)(1)
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Appendix A and Schedule A to the Class-Level Administration Agreement with Wells Fargo Funds Management, LLC
|
|
(h)(3)
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Appendix A to the Shareholder Servicing Plan
|
|
(i)
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Legal Opinion
|
|
(j)(A)
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Consent of Independent Registered Accounting Firm
|
|
(n)
|
Appendix A and Appendix B to the Rule 18f-3 Multi-Class Plan
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