May 1, 2014 Introducing Wells Fargo Advantage Alternative Strategies Fund Effective May 1, 2014, Wells Fargo Advantage Funds added a multistrategy alternative to its lineup of mutual funds. Created to meet the demand for a new and growing slice of the asset allocation pie, the Wells Fargo Advantage Alternative Strategies Fund gives investors who are interested in alternative investment strategies: A diversified portfolio of alternative strategies The fund combines four strategies equity hedged, event driven, global macro, and relative value designed to help diversify and stabilize a portfolio in all types of markets. Extensive alternative investing expertise The fund s subadvisor The Rock Creek Group, LP (Rock Creek) has used a disciplined process honed for over a decade to select what it believes to be outstanding managers for each of the four alternative strategies. Active asset allocation and manager selection Rock Creek blends its global investment outlook with disciplined risk analysis, dynamically varying the fund s exposure among managers and strategies to capitalize on market opportunities while managing for risk. In addition, the fund offers the transparency and daily liquidity of a mutual fund, providing investors access to Rock Creek strategies that usually require a higher minimum initial investment. Please find more detailed answers to common questions below. Fund summary Fund subadvisor and underlying managers Share classes and minimal initial investment Fees and expenses Fund summary Q. What is the fund s investment objective? A. The fund seeks long-term capital appreciation. Q. What is the fund s principal investment strategy? A. The fund seeks to achieve relatively low sensitivity and low volatility relative to major equity markets, primarily by allocating assets across a number of alternative investment strategies, each of which may invest in a broad array of security types. 1
Q. What alternative investment strategies does the fund employ? A. The fund is designed around four strategies equity hedged, event driven, global macro, and relative value that are used in combination to help diversify and stabilize a portfolio in all types of markets. The fund may use all or some of these strategies to varying degrees, depending on market conditions. The fund employs one or more underlying managers with experience in alternative investing to execute each of the fund's strategies. Q. What is the fund s investment approach? A. Rock Creek uses a unique top-down approach to formulate an outlook on different asset classes, strategies, and regions over a variety of time horizons. This outlook is the primary driver behind the strategy, asset, and subadvisor allocation decisions and may change at any time. The factors considered in making allocation decisions include macroeconomic research; the actions of central banks and policymakers; and the opinions of leading hedge fund managers, analysts, other market participants, and leading economists. Q. How are the fund s assets allocated among the underlying managers? A. Rock Creek makes recommendations regarding the selection of underlying managers, who provide day-to-day portfolio management services for the fund. The Rock Creek team dynamically varies the fund s exposure among managers and strategies to capitalize on market opportunities while managing for risk. The firm blends its macroeconomic investment outlook with disciplined risk analysis and allocates and reallocates the fund's assets across investment strategies and underlying managers. Q. Does the fund have a target or neutral allocation? A. Yes. The fund s current target allocations are outlined below. The fund may change these allocation ranges at any time, may choose not to allocate to one or more investment strategies, and may add additional strategies in the future: Equity hedged: 25% 55% Event driven: 10% 40% Global macro: 10% 25% Relative value: 10% 35% Q. How will changes in the underlying managers and their positions be communicated? A. Formal shareholder communication will be required in the event that we hire an underlying manager, whether newly added or as a replacement for a manager we terminate. Information regarding allocations to each underlying manager will be provided in regulatory reports and communications and in quarterly fund commentary. Fund subadvisor and underlying managers Q. Can you tell me more about Rock Creek? A. Rock Creek, a registered investment advisor located at 1133 Connecticut Ave NW, Suite 810, Washington, DC, 20036, was launched in 2002. Today, the firm oversees approximately $10 billion in assets under management. It is an affiliate of Wells Fargo Funds Management, LLC, and an indirect subsidiary of Wells Fargo & Company. (Wells Fargo indirectly owns a 65% majority stake of the company s shares but does not control the day-to-day operations of the company.) In addition to the fund, Rock Creek provides investment advice to 2
foundations, endowments, state and public pension plans, sovereign wealth funds, and other institutional investors. The fund s management team from Rock Creek is headed by the following three directors: Sudhir Krishnamurthi, senior managing director joined Rock Creek in 2002 Dr. Krishnamurthi is the senior managing director of The Rock Creek Group. Prior to this, he was the director of the World Bank s investment management department, responsible for managing investment assets, including $12 billion of pension assets in equities, fixed-income securities, and alternative assets. Dr. Krishnamurthi led the alternatives program at the World Bank and was responsible for pioneering work in risk management and asset allocation. Previously, he also served at the World Bank as the director of corporate finance, where he managed $27 billion of equity, and as principal officer in the derivatives division, where he worked extensively on structured products. Prior to joining the World Bank, Dr. Krishnamurthi was an assistant professor at the Sloan School of Management, Massachusetts Institute of Technology. Dr. Krishnamurthi received a degree in mechanical engineering from the Indian Institute of Technology and a degree in business from the Indian Institute of Management. He received a Ph.D. from Harvard Business School. Kenneth LaPlace, managing director joined Rock Creek in 2003 Mr. LaPlace is a director at The Rock Creek Group, where he works on manager research. Prior to this, he was at Cambridge Associates, an investment advisory firm to endowed nonprofit institutions, international organizations, private clients, and corporations. While there, Mr. LaPlace oversaw the development of marketable alternative asset manager coverage within the firm s investment manager database group and contributed to various research reports on alternative investment managers. Previously, he spent two summers serving in the closing department for Crestar Mortgage (now SunTrust Mortgage). Mr. LaPlace received a bachelor s degree in finance from Virginia Tech in 1996. He also holds a master s degree from The George Washington University, where he graduated magna cum laude in 2002. Ronald van der Wouden, managing director joined Rock Creek in 2005 Mr. van der Wouden is a managing director at The Rock Creek Group. Prior to this, he spent over seven years at the World Bank, most recently as co-head of risk management in the World Bank Treasury. In that position, he was responsible for risk management across different businesses within the Treasury (the global fixed-income portfolios, the alternative investment portfolio, and fixed-income relative value). Mr. van der Wouden s previous responsibilities included developing innovative asset/liability management and strategic asset allocation strategies at the World Bank s investment management department. He also conducted research on optimal pension plan design, covering allocation to hedge funds and private equity, and pension reform issues for developing countries. Before joining the World Bank, Mr. van der Wouden worked at Robeco Asset Management Group and at Ortec Management Consultants in the Netherlands. Mr. Van der Wouden received a master s degree in econometrics from the Erasmus University Rotterdam. 3
Q. Who are the underlying managers responsible for managing the fund s portfolio on a day-to-day basis? Underlying manager(s) Investment strategy Chilton Investment Company, LLC Mellon Capital Management Corporation Global macro strategy Passport Capital, LLC Pine River Capital Management L.P. Relative value strategy River Canyon Fund Management LLC Event driven strategy Sirios Capital Management, L.P. Wellington Management Company, LLP Share classes and minimal initial investment Q. What share classes are available for the fund? Wells Fargo Advantage Fund Share class CUSIP Ticker symbol TA number Alternative Strategies Fund Q. What is the minimum initial investment for the fund? Minimum initial investment Class A and Class C Regular accounts $1,000 IRAs, rollover IRAs, Roth IRAs $250 UGMA/UTMA accounts $50 A 94988A775 WALTX 3367 C 94988A767 WACTX 3559 Administrator 94988A791 WADTX 3775 Institutional 94988A783 WAITX 3176 Employer sponsored retirement plans No minimum Administrator Class $1 million (this amount may be reduced or eliminated for certain eligible investors) Institutional Class $5 million (this amount may be reduced or eliminated for certain eligible investors) Minimum additional investments Class A and Class C Regular accounts $100 UGMA/UTMA accounts $50 Employer sponsored retirement plans No minimum Administrator Class Institutional Class None None 4
Fees and expenses Q. What are the fund s fees and expenses? Shareholder fees fees paid directly from your investment (%) Share class A C Administrator Institutional Maximum sales charge (load) imposed 5.75 None None None on purchases (as a percentage of offering price) Maximum deferred sales charge (load) None 1 1.00 None None (as a percentage of offering price) 1. Investments of $1 million or more are not subject to a front-end sales charge but generally will be subject to a deferred sales charge of 1.00% if redeemed within 18 months from the date of purchase. Annual fund operating expenses expenses that you pay each year as a percentage of the value of your investment (%) Share class A C Administrator Institutional Management fees 1.80 1.80 1.80 1.80 Distribution (12b-1) fees 0.00 0.75 0.00 0.00 Other expenses 1 1.71 1.71 1.55 1.28 Acquired fund fees and expenses 0.09 0.09 0.09 0.09 Total annual fund operating expenses 2 3.60 4.35 3.44 3.17 Fee waivers 0.38 0.38 0.37 0.20 Total annual fund operating expenses after fee waivers 2, 3 3.22 3.97 3.07 2.97 1. Expenses are based on estimated amounts for the current fiscal year. 2. Total annual fund operating expenses listed above include 0.68% of dividend and interest expense on short positions and 0.04% of interest expense on borrowings. 3. The advisor has committed through November 30, 2015, to waive fees and/or reimburse expenses to the extent necessary to cap the fund's total annual fund operating expenses after fee waiver at 2.35% for Administrator Class, 2.25% for Institutional Class, 2.50% for Class A, and 3.25% for Class C. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses, expenses from dividend and interest on short positions, and extraordinary expenses are excluded from the cap. Acquired fund fees incurred by investments made by The Rock Creek Group, LP, a subadvisor of the fund, will be included in the cap. After this time, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. 5
The fund does not invest directly in hedge funds but pursues similar strategies to those typically used by hedge funds. The fund invests using alternative investment strategies, such as equity hedged, event driven, global macro, and relative value, which are speculative and entail a high degree of risk. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. In general, when interest rates rise, bond values fall and investors may lose principal. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. The use of derivatives may reduce returns and/or increase volatility. Borrowing money to purchase securities or cover short positions magnifies losses and incurs expenses. Short selling is generally considered speculative, has the potential for unlimited loss, and may involve leverage. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). This fund is exposed to high-yield securities risk, mortgage- and asset-backed securities risk, convertible securities risk, loan risk, and smaller-company securities risk. Consult a fund s prospectus for additional information on these and other risks. Carefully consider a fund s investment objectives, risks, charges, and expenses before investing. For a current prospectus and, if available, a summary prospectus, containing this and other information, visit wellsfargoadvantagefunds.com. Read it carefully before investing. Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo Advantage Funds. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the funds. The funds are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company. 224123. 5-14 NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE 6