Global Investment Strategy Cyclical Asset Allocation Quarterly

Global Investment Strategy Cyclical Asset Allocation Quarterly January 26, 2015 Our cyclical asset allocation process is based on a rolling three-year outlook which means that the Investment Strategy Committee evaluates how the portfolios are expected to perform over the next 36 months based on asset valuations as well as economic and market outlooks. This is different than a tactical or momentum-driven allocation process, which constantly adjusts to changing shortterm conditions. The cyclical approach is very much driven by fundamental valuations, which can lead to entering and exiting positions as opportunities arise. Over time, this approach may help avoid chasing unsustainable, wild market swings driven by fear and greed near the end of cyclical declines or advances. Overview» Economic growth bounced back after a rocky start at the beginning of 2014. After all the quarters are tallied, we look for growth in the 2.1% area for the full year. Looking ahead, we see the economy picking up modest speed and growing at a 3.0% pace this year. That is still below the longer-term trend, but the economy is moving in the right direction.» The inflation rate is still quite low. As measured by Personal Consumption Expenditures (PCE), the Federal Reserve s (the Fed s) preferred gauge, inflation continues to hold below our central bankers 2% target. A number of regions around the globe, such as the Eurozone, are experiencing disinflation and could be heading for outright deflation for a period. The European Central Bank (ECB) is expected to do more this year to stimulate economic growth and inflation. Wage growth in the United States remains stagnant, but we look for some improvement as the year progresses. We expect the Consumer Price Index (CPI) to increase just 1.4% in 2015, well below the longer-term average.» Businesses and consumers are feeling better about the future. Confidence has crawled back from the lows seen during the last financial crisis to the highest levels seen in seven years. However, most of these readings are still below levels historically associated with a good economy. We look for confidence to rise further in coming quarters. Improvement in the consumer confidence indicators has been an important key to our positive equity market outlook.» We continue to believe this cyclical bull market has more room to run over the next couple of years. Our work suggests we should focus on those equity sectors more sensitive to the economy s ebb and flow. Earnings growth this year will likely be in the 6% to 7% range.» In terms of international equities, we remain cautious on the emerging markets but are somewhat more optimistic when it comes to developedcountry equities. We think both will trail the S&P 500 Index s performance over the next 12 months.» Interest rates will likely increase modestly as we move through 2015 and beyond. Given our outlook for economic growth, we believe the yield on the 10-year Treasury note will rise from the current level into the 2.25% to 2.75% range by the end of 2015. We are taking a balanced approach to fixed income allocations at the present time. As a result, we recommend investors adjust their portfolios to be largely in line with their strategic fixed income allocations. Page 1 of 7

Economic and market considerations Based on current economic policy and market conditions, Wells Fargo Investment Institute used the following themes in its asset allocation decisions: Debt markets The Fed brought the most recent quantitative easing (QE) program to an uneventful end in October. It is widely expected that the U.S. central bank will embark on the journey of normalizing interest rates in 2015. For the record, we believe the Fed will not begin to push interest rates higher until the year s second half. Note that the fed funds target rate has been sitting at virtually zero since 2008. In our opinion, two hikes are likely to bring the fed funds target rate to 75 basis points* by the end of this year. The Fed s goal throughout the latest QE process was to push interest rates lower and provide the economy with liquidity. Boosting the value of assets such as stocks and housing were also goals. The economy is slowly moving in the right direction, and GDP growth should improve in the coming 12 months. The yield on the 10-year Treasury note has fallen steadily this year and currently stands near the lower 2.25% level. We are looking for interest rates to rise slowly over the coming year or two. We expect the yield on the 10-year Treasury note will be in the 2.25% to 2.75% range by the end of 2015. For longerdated paper, we are looking for the yield on the 30-year Treasury bond to end the year in the 2.75% to 3.25% range. If interest rates appear ready to increase over the next few years, some investors may question the need to own bonds. Remember, as interest rates rise, bond prices tend to fall. However, we encourage investors to consider this asset class s total return. Bonds pay interest, and this potentially helps offset negative price movement. In addition, we expect a well-diversified fixed income portfolio to outperform cash alternative allocations over time. Bonds can also help diversify a portfolio to help preserve a portfolio s value in the face of a frequently uncertain future. While our opinion is that interest rates will slowly move higher over time, there are no guarantees. Of course, one of the primary reasons to own fixed income investments is that this asset class is typically less volatile than stocks. Bonds, when used properly as part of a diversified investment strategy, may help smooth out a portfolio s overall performance. We made a number of changes to the fixed income allocations in all models with debt exposure. We reduced the allocation to intermediate fixed income and redeployed those funds into high yield fixed income and short-term fixed income. The intermediate portion of the fixed income spectrum has rallied, pushing yields lower, while high yield spreads have widened, offering an attractive opportunity to increase exposure to this asset class. However, the bulk of our fixed income exposure continues to reside in the intermediate portion of the yield curve in most of the models. We also slightly increased the exposure to long-term fixed income in two of the models as we take more of a barbell approach to our fixed income allocations. Given our expectation of further flattening of the yield curve as rates slowly rise, we look for longer-duration debt to be less sensitive to fed funds target rate movements. Although we are not expecting rates to rise quickly, we do see better opportunities for equity allocations over the next several years. * Basis point = 1/100 of 1% Page 2 of 7

Fixed income remains an important asset class in portfolios despite the low interest rate environment and our outlook for the future. Investors should be sure to diversify their fixed income holdings. With the movement in the fixed income market over the past year, we have moved to a neutral weighting in most areas across the fixed income spectrum. We also continue to recommend a slightly short of benchmark duration in portfolios given our outlook for a modest increase in rates. Equities The S&P 500 Index and the Dow Jones Industrial Average continued to set record highs in recent months as the modest growth/modest inflation environment we have been living with for the last four years helped propel stocks higher. Investors the world over appear to view U.S. economic growth as quite dependable, albeit at a pace below the longer-term trend. Inflation has also remained low in nearly all of the world s developed regions. We do not think this environment will change much over the next year or two. In 2015, we look for the U.S. economy to grow approximately 3.0%. Our analysis suggests S&P 500 operating earnings growth will be in the 6% to 7% range this year. Our year-end 2015 target range for the S&P 500 Index is 2150-2250. We have a positive view of the stock market over the next 12 months and believe this cyclical bull market has more room to run. We look for the improving economy to push revenues and earnings ahead in the coming year. Given our outlook for continued growth, we want to focus on those cyclical sectors that are more sensitive to the economy s ebb and flow. We made only small adjustments to the models equity portions in this rebalancing process. We continue to feel it is appropriate to carry meaningful small- and mid-cap allocations in the Moderate Growth and Long Term Growth models. We continue to carry exposures to emerging market equities in four of the five models. Stocks overall, in our opinion, appear to be trading at more attractive valuations versus bonds. One of the biggest risks to our outlook continues to be on the international front. While we continue to believe the rebalancing in emerging market economies away from exports and toward domestic consumption will be a major theme in coming years, below-trend growth in the developed countries is likely to continue to have a meaningful impact on emerging market economies. Style Our work suggests that allocations should be balanced in terms of value versus growth. At this point in the cycle, a neutral approach is desirable, in our opinion. As a result, we continue to carry a 50%/50% value versus growth weighting across Large, Mid, and Equity asset classes. Page 3 of 7

The models We have five cyclical asset allocation models. For investors with income as a primary objective, our allocations attempt to limit market risk and price volatility, as income investors tend to favor preservation of principal. However, maintaining purchasing power over a long time period is also an important investment objective, and toward that goal, we include what are perceived as more risk-oriented assets, even in our income portfolios. For those investors with growth objectives, our allocations are weighted more toward stocks, which usually have a fair amount of volatility and risk. Across all models, we stress diversification. We pay attention to the longer-term strategic Capital Market Assumptions (CMAs) when allocating among the various asset classes. Our goal is to make cyclical adjustments around the long term CMAs based on where we are in the economic cycle. Currently, our allocations lean toward equities across all of the portfolios, and we continue to carry a more cyclical view in terms of sector exposure. In fixed income, note that we still remain slightly short duration versus the benchmark. We want to position the models equity portions to take advantage of our belief that the domestic and global economic recoveries will continue. Page 4 of 7

Moderate Income Moderate Growth REIT High Yield Debt 6% Equity 2% Fixed Income 7% Equity 6% Equity 2% Equity 2% Equity 16% Fixed Income 4% Fixed Income 19% Intermediate Fixed Income 34% High Yield Fixed Income 3% Equity 12% Equity 14% Equity 14% Equity 14% Reit Equity2% Fixed Income 2% Fixed Income 2% Equity 35% Conservative Growth & Income Growth REIT Equity 2% High Yield Debt 5% Fixed Income 5% Equity 4% Equity 7% Equity 4% Equity 4% Equity 20% Fixed Income 14% Intermediate Fixed Income 27% Fixed Income 6% Equity 12% Equity 19% Equity 18% Reit Equity2% Equity 31% Equity 16% Moderate Growth & Income Debt 7% High Yield Fixed Income 6% Equity 7% Equity 8% Equity 8% Equity 8% Reit Equity2% Fixed Income 5% Intermediate Fixed Income 17% Fixed Income 2% Equity 28% Source: Wells Fargo Investment Institute. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. For more information on the Cyclical Asset Allocation Portfolio Plus (CAAP Plus) program, please ask your Financial Advisor. Page 5 of 7

Cyclical Asset Allocation models (First-quarter 2015) For more information on the Cyclical Asset Allocation Portfolio Plus (CAAP Plus) program, please ask your Financial Advisor. Moderate Income Conservative Growth & Income Moderate Growth & Income Moderate Growth Growth Current Change Current Change Current Change Current Change Current Change none 2% none 2% none 2% none 2% none Fixed Income 19% 2% 14% 2% 5% 2% 2% 2% Intermediate Fixed Income 34% (4%) 27% (3%) 17% (4%) 0% (5%) Fixed Income 4% 2% 6% none 2% none 2% 2% High Yield Fixed Income 7% 2% 5% 3% 6% 2% 3% 3% REIT Equity 2% none 2% none 2% none 2% none 2% none Equity 16% (2%) 20% (2%) 28% none 35% none 31% (2%) Equity 2% none 4% none 8% none 14% none 16% none Equity 2% none 4% none 8% 2% 14% none 18% 2% Equity 6% none 7% none 8% (2%) 14% (2%) 19% none Equity 4% none 7% none 12% none 12% none Debt 6% none 5% none 7% none Total 100% 100% 100% 100% 100% Source: Wells Fargo Investment Institute. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Disclaimers Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets. The prices of small- and mid-cap company stocks are generally more volatile than large-company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions. There are special risks associated with an investment in real estate, including possible illiquidity of the underlying properties, credit risk, interest rate fluctuations and the impact of varied economic conditions. Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. In general, when interest rates rise, bond values fall and investors may lose principal value. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment. Duration is a measure used to determine a bond/s or bond portfolio s sensitivity to movements in interest rates. Generally, the longer the duration the more sensitive a bond or bond portfolio is to changes in interest rates. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change. The Cyclical Asset Allocation program is not designed for excessively traded or inactive accounts and may not be suitable for all investors. Please carefully review the Wells Fargo Advisors advisory disclosure document for a full description of our services. The minimum account size for these programs is $50,000. Effective early January, 2015, certain research functions were delegated to our affiliate, Wells Fargo Investment Institute, Inc., formerly known as Alternative Strategies Group, Inc. (SEC File #801-64191). Functions such as creating capital markets assumptions and creating asset allocation research have transitioned to Wells Fargo Investment Institute. Prior to transitioning, these functions were performed by Wells Fargo Advisors, LLC. This piece was authored prior to the transition to Wells Fargo Investment Institute. Global Investment Strategy ( GIS ) is a division of Wells Fargo Investment Institute, Inc. ( WFII ). WFII is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors and other Wells Fargo affiliates. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company. The information in this report was prepared by the GIS division of WFII. Opinions represent GIS opinion as of the date of this report and are for general informational purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. GIS does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including you existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Page 6 of 7

The Investment Strategy Committee Cyclical Asset Allocation models Gary Thayer, CFA Head of Global Macro Strategy Stuart Freeman, CFA Co-Head of Global Equity Strategy Paul Christopher, CFA Head of Strategy Co-Head of Real Asset Strategy Brian Rehling, CFA Co-Head of Global Fixed Income Strategy Sameer Samana, CFA Global Strategist Greg Sigmund, CFA COO & Head of Global Research Scott Wren Senior Global Equity Strategist Cyclical Asset Allocation models provide a rolling three-year outlook and are based not only on past performance of various asset classes but, more important, on future expectations. The Investment Strategy Committee focuses on yield for income accounts, return for growth accounts and risk exposure for all accounts by using quantitative research and qualitative experience. Because the committee continually looks forward, the recommended allocations may change in periods of less than three years, if market conditions warrant. The charts in this report illustrate the various allocations based on investor type. Changes to the models may be made quarterly. Additional information is available upon request. The material contained herein has been prepared from sources and data we believe to be reliable, but we make no guarantee as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell or a solicitation of an offerto buy or sell any security or investment product. This material is not to be construed as providing investment services in any jurisdiction where such offers or solicitation would be illegal. Opinions and estimates are as of a certain date and subject to change without notice. You should be aware that investments can fluctuate in price, value and/or income, and you may get back less than you invested. Past performance is no guarantee of future results. Investment or investment services mentioned may not be suitable for you, and if you have any doubts, you should seek advice from your Financial Advisor. Where an investment is described as being likely to yield income or as being suitable for an investor particularly seeking income, the income from the investment may fluctuate and part of the capital invested may be used to pay that income. Where the purchase or sale of an investment requires a change from one currency to another, fluctuations in the exchange rate may have an adverse effect on the value, price or income of the investment. Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value Brokerage products and services are offered through Wells Fargo Advisors. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company. First Clearing, LLC, Member SIPC, is a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. 2015 Wells Fargo Investment Institute. All rights reserved. 0115-05040 [95530-v2] e7464 Page 7 of 7