Wells Fargo Advantage High Yield Bond Fund

All information is as of 6-30-15 unless otherwise indicated. General fund information Ticker: EKHYX Portfolio managers: Margaret D. Patel Subadvisor: Wells Capital Management, Inc. Category: High-yield bond Fund strategy Seeks to outperform the broad high-yield fixed-income market (represented by the BofA Merrill Lynch U.S. High Yield Master II Constrained Index) over a full market cycle Principally invests in below-investment-grade debt securities of corporate issuers, including traditional corporate bonds and convertible bonds Seeks to identify the best relatively valued debt securities by evaluating the entire capital structure of a company Uses a top-down macroeconomic approach to determine which sectors and industries to invest in and applies fundamental research to identify the most attractive companies within those sectors and industries Seeks to invest in debt securities issued by companies with sustainable competitive advantages and high barriers to entry, specifically preferring companies with strong management teams and financial flexibility Key drivers of performance The fund s longer-than-benchmark duration weighed on performance in a quarter in which U.S. Treasury yields rose. Sector allocation among high-yield bonds detracted, but an out-of-benchmark allocation to stocks modestly contributed. Average annual total returns (%) as of 06-30-15* Year to Since inception 3 month date 1 year 3 year 5 year 10 year (9-11-35) High Yield Bond Fund Admin -0.78 1.50-0.27 6.01 7.35 6.80 7.97 Lipper High Yield Funds Average 0.14 2.29-1.29 5.97 7.60 6.55 BofA Merrill Lynch U.S. High Yield Master II Constrained Index *Returns for periods of less than one year are not annualized. -0.05 2.49-0.54 6.80 8.38 7.78 Figures quoted represent past performance, which is no guarantee of future results. Investment return, principal value, and yields of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted and assumes the reinvestment of dividends and capital gains. Current month-end performance is available at the fund s website, wellsfargoadvantagefunds.com. Administrator Class shares are sold without a front-end sales charge or contingent deferred sales charge. The advisor has committed, through 12-31-15, to waive fees and/or reimburse expenses to the extent necessary to cap the fund s total annual fund operating expenses after fee waiver, excluding certain expenses, at 0.80%. After this time, the cap may be increased or terminated only with the approval of the Board of Trustees. Without this cap, the fund s returns would have been lower. The fund s net expense ratio is 0.80% for the Administrator Class. The fund s gross expense ratio is 0.97% for the Administrator Class. Portfolio characteristics Wells Fargo Advantage High Yield Bond Fund BofA ML U.S. High Yield Master II Constrained Index Avg. eff. duration 5.33 4.09 30-day SEC yield 4.33% Avg. maturity (yrs.) 6.37 6.79 Sector weights (%) High-yield industrial 83.7 86.8 High-yield utility 5.6 3.1 High-yield financials 1.5 10.0 Equity 8.7 0.0 Cash equivalents 0.5 0.0 Credit-quality allocation (%) 1 BBB/Baa 0.2 0.0 BB/Ba 48.9 46.6 B/B 41.5 39.1 CCC and below 0.0 14.3 Nonrated 0.2 0.0 Equity 8.7 0.0 Cash equivalents 0.5 0.0 1. The ratings indicated are from Standard & Poor's, Fitch, and/or Moody's Investors Service. The percentages of the fund s portfolio with the ratings depicted in the chart are calculated based on the total investments of the fund. If a security was rated by all three rating agencies, the median rating was used. If a security was rated by two of three rating agencies, the lower rating was used. If a security was rated by one of the agencies, that rating was used. The fund's 30-day unsubsidized SEC yield is 4.15%. (See pages 4-5 for important information.) 1 QU217 07-15

Fixed-income market review The yield curve steepened as longer-term yields increased Yields (%) 3.5 3.0 2.5 2.0 1.5 U.S. Treasury yield curve 1.0 6-30-15 0.5 3-31-15 0.0 0 yr. 5 yr. 10 yr. 15 yr. 20 yr. 25 yr. 30 yr. U.S. Treasury yields increased during the quarter, with longer-term bonds underperforming shorterterm ones. Yields rose more than 40 basis points (bps; 100 bps equals 1.00%) on bonds with maturities greater than 10 years. Meanwhile, short-term yields with maturities less than one year were little changed at ultra-low levels. Bond yields have risen since mid-april partly due to a correction following a strong rally but also due to improved outlooks for the economy but remain low by historical standards. The federal funds rate is likely to increase gradually Percent (%) 4 3.5 3 2.5 2 1.5 1 0.5 0 Target federal funds rate at year-end (dots) Dec-15 Dec-16 Dec-17 Longer-run Chair Yellen recently said that sometimes too much attention is placed on the timing of the first increase in the federal funds target rate. And what should matter to market participants is the entire expected trajectory of policy. The Federal Open Market Committee expects that economic conditions will evolve in a way that will make it appropriate for it to raise rates gradually over time. Longer-duration (BBB-rated) and lower-quality debt lagged High-yield sectors (%) High-yield subsectors (%) Credit quality (%) High yield -0.05 Oil field services 6.95 BBB -2.75 Industrials -0.10 Department stores 2.92 BB -0.36 Utilities 0.30 Multi-line insurance 2.49 B 0.46 Financials 0.36 Automakers -1.86 CCC 0.06 I tit ti Telecom/satellite -2.39 CC -20.43 Trucking & delivery -2.68 C -9.71 Treasury yields rose during the quarter and high-yield bonds outperformed Treasuries; the BofA ML U.S. High Yield Master II Constrained Index ending the period basically flat with a -0.05% return. The index s worst month was in June, when market participants came to terms with a disappointing estimate for first-quarter gross domestic product (GDP) growth and potential credit defaults in Greece and Puerto Rico. In the high-yield space, short- and intermediate-term bonds meaningfully outperformed longer-dated issues as rising yields weighed on performance. Likewise, more interest-rate-sensitive BBB-rated and BB-rated bonds underperformed lower-rated debt. Sources: Bloomberg L.P., Federal Reserve, and Bank of America Merrill Lynch. Past performance is no guarantee of future results. 2

Portfolio review and strategy Sector attribution and positioning Among high-yield bonds, sector allocation detracted from performance. A significant underweight to the outperforming energy sector weighed on returns relative to the benchmark. The fund s underweight to energy reflects our view that high-yield energy fundamentals are deteriorating, a process that will likely continue over the next few years. The fund s out-of-benchmark allocation to stocks contributed to relative performance because stocks generally outperformed high-yield bonds for the quarter. Quality attribution and positioning Credit-quality allocation was a modest contributor to relative performance during the quarter. A slight overweight to B-rated bonds contributed because these issues outperformed. A significant underweight to bonds rated CCC and below also aided relative results because these issues notably underperformed. However, an overweight to BBrated issues detracted. The fund s preference for higher-quality bonds resulted in a longer duration profile than the benchmark. This detracted from the fund s relative performance during the quarter because high-yield bonds with longer durations underperformed as Treasury yields rose. Issue selection attribution and positioning Although the out-of-benchmark allocation to stocks aided the fund s sector positioning, the specific stocks in the portfolio underperformed the BofA ML U.S. High Yield Master II Constrained Index. To a certain degree, we use the fund s stock exposure as a replacement for CCC-rated high-yield bonds because we find more value in the equity capital structure of some companies than in their lowest-quality debt. Outlook We expect slow growth to continue. Questions about corporate earnings, economic growth, and monetary policy may result in continued volatility. Despite expectations of an impending rise in short-term interest rates, we do not expect long-term bond yields to rise quickly. Rather, we believe a flatter yield curve is more likely. Despite the uncertainty, rising rates could actually turn out to be stimulative bank lending is quite low today, and higher rates may spur additional lending and restore functioning to the capital markets. We continue to favor stocks; despite underwhelming stock returns relative to history, we believe bond return expectations are more modest given current credit spreads and yields. We kept the fund s fixed-income duration longer than that of the index in an attempt to benefit from a steep yield curve. Credit conditions remained favorable. Given low default rates, strong demand, and stable credit fundamentals, we believe spreads are appropriate. Although we find high-yield bonds more attractive than investment-grade bonds, we prefer the higher-quality segments of the high-yield market. We continue to believe the incremental yield of CCC-rated bonds is insufficient relative to the incremental amount of capital impairment risk. As a result, the fund s credit-quality exposure is largely allocated among B-rated and BB-rated bonds. If yield spreads widen, the defensive nature of BB-rated bonds should help them better hold their value. Despite a weak first quarter, the trend for U.S. GDP is slow growth Billions of chained 2009 dollars 16,400 16,300 16,200 16,100 16,000 15,900 15,800 15,700 Real gross domestic product 15,600 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Source: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis, 12-26-14 through 4-3-15 (last date available) Past performance is no guarantee of future results. 3

Fund facts Inception date 9-11-35 Net expense ratio Admin 0.80% Assets all share classes $271.97M Rankings and ratings Morningstar total return rankings Administrator Class (as of 6-30-15) Morningstar category: High yield bond 1 year 283 out of 746 funds 3 year 314 out of 611 funds 5 year 331 out of 516 funds 10 year 144 out of 362 funds Overall Morningstar Rating The Overall Morningstar Rating, a weighted average of the 3-, 5-, and 10-year (if applicable) ratings, is out of 611 funds in the high yield bond category, based on risk-adjusted returns as of 6-30-15. Share class availability Share class Ticker Gross expense ratio (%) Net expense ratio (%) Contractual expense cap (%) Contractual expense waiver date A EKHAX 1.03 1.03 1.03 12-31-15 B* EKHBX 1.78 1.78 1.78 12-31-15 C EKHCX 1.78 1.78 1.78 12-31-15 Admin EKHYX 0.97 0.80 0.80 12-31-15 Inst EKHIX 0.70 0.70 0.70 12-31-15 The advisor has committed to waive fees and/or reimburse expenses to the extent necessary to cap the fund s total annual fund operating expenses after fee waiver, excluding certain expenses, at the amount shown above. Please consult the prospectus for additional information on applicable sales charges and expenses for the available share classes. *Class B is closed to new investors and additional investments from existing shareholders. Portfolio characteristics: Portfolio characteristics, sector weights, and allocations are subject to change and may have changed since the date specified. Negative cash percentage and credit-quality allocation greater than 100% is due to unsettled derivative contract positions, which cause the sector/credit weight(s) to increase proportionately to the negative cash amount. Benchmark descriptions: The BofA Merrill Lynch U.S. High Yield Master II Constrained Index is a market-valueweighted index of all domestic and Yankee high-yield bonds, including deferred interest bonds and payment-in-kind securities. Issues included in the index have maturities of one year or more and have a credit rating lower than BBB-/Baa3 but are not in default. The BofA Merrill Lynch U.S. High Yield Master II Constrained Index limits any individual issuer to a maximum of 2% benchmark exposure. You cannot invest directly in an index. The Lipper averages are compiled by Lipper, Inc., an independent mutual fund research and rating service. Each Lipper average represents a universe of funds that are similar in investment objective. You cannot invest directly in a Lipper average. Definition of terms: 30-day SEC yield: The 30-day SEC yield is calculated with a standardized formula mandated by the SEC. The formula is based on maximum offering price per share and includes the effect of any fee waivers. Without waivers, yields would be reduced. The 30-day unsubsidized SEC yield does not reflect waivers in effect. A fund's actual distribution rate will differ from the SEC yield, and any income distributions from the fund may be higher or lower than the SEC yield. Credit-quality ratings: Credit-quality ratings apply to underlying holdings of the fund and not the fund itself. Standard & Poor's and Fitch rate the creditworthiness of bonds from AAA (highest) to D (lowest). Ratings from A to CCC may be modified by the addition of a plus (+) or minus (-) to show relative standing within the rating categories. Standard & Poor's rates the creditworthiness of short-term notes from SP-1 (highest) to SP-3 (lowest). Moody s rates the creditworthiness of bonds from Aaa (highest) to CC (lowest). Ratings Aa to B may be modified by the addition of a number 1 (highest) to 3 (lowest) to show relative standing within the ratings categories. Credit quality and credit-quality ratings are subject to change. Duration: Duration is the weighted average of the timing of cash-flow payments from fixedincome securities. Duration is used as a measurement of sensitivity to interest rates. Yield curve: The yield curve is a graphical representation of fixed-income security yields (usually U.S. Treasuries) at their respective maturities, starting with the shortest time to maturity and sequentially plotting in a line chart to the longest maturity. 4

The views expressed in this document are as of 6-30-15 and are those of the portfolio manager(s). The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Wells Fargo Advantage Fund. Any specific securities discussed may or may not be current or future holdings of the fund. The securities discussed should not be considered recommendations to purchase or sell a particular security. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements. The inception date of the Administrator Class was 4-14-98. Historical performance shown for the Administrator Class prior to its inception is based on the performance of Class A and has not been adjusted to reflect the lower expenses applicable to the Administrator Class. Performance for Class A prior to its inception is based on the performance of Class B, the original class offered, and has not been adjusted to reflect the lower expenses applicable to Class A. If these returns had been adjusted, returns would be higher. Historical performance shown for the Administrator Class prior to 7-9-10 is based on the performance of the fund's predecessor, the Evergreen High Income Fund. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar risk-adjusted return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges, loads, and redemption fees, unless otherwise indicated), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and is rated separately, which may cause slight variations in the distribution percentages.) Across U.S.-domiciled high yield bond funds, the High Yield Bond Fund received 3 stars among 611 funds, 3 stars among 516 funds, and 3 stars among 362 funds for the 3-, 5-, and 10-year periods, respectively. Morningstar Ratings and Rankings are for Administrator Class shares only; other classes may have different performance characteristics. The Morningstar return ranking is based on the fund s total return rank relative to all funds that have the same category for the same time period. Past performance is no guarantee of future results. Risks: Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest-rate changes and their impact on the fund and its share price can be sudden and unpredictable. The use of derivatives may reduce returns and/or increase volatility. High-yield securities have a greater risk of default and tend to be more volatile than higher-rated debt securities. Loans are subject to risks similar to those associated with other below-investment-grade bond investments, such as credit risk (for example, risk of issuer default), below-investment-grade bond risk (for example, risk of greater volatility in value), and risk that the loan may become illiquid or difficult to price. This fund is exposed to foreign investment risk. Consult the 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, an affiliate of Wells Fargo & Company. 234694 07-15 QU217 07-15 5