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1. 2016 Midyear Outlook
Eyes on the Horizon
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2. 22016 Midyear Outlook Eyes on the Horizon
A Letter to Investors from Darrell Cronk
We’ve been through a lot in the first half of 2016. We began January with the worst
start to a calendar year in history for domestic equities. Concerns about China’s growth
rate, slowing U.S. growth, and a new downturn in oil prices had many questioning the
viability of the recovery and an aging bull market.
A climax of negative sentiment finally arrived in February only to see markets fully
recover in April and May to levels approaching 2015 highs. We also celebrated
the seven-year anniversary of the current U.S. equity bull market in March, and by
the end of April, we found ourselves in the second longest bull market in history,
surpassed only by the bull market from 1987 to 2000.
Let’s reflect on the five major changes we anticipated in our 2016 Outlook with an
eye toward what we expect between now and year-end. We believe the five changes
we discussed in our December report are as relevant today as they were then.
The first two changes, Changing Consumer Behavior and Change in the Political
Landscape, are exactly where we expected them to be at midyear. Consumer spending
remains the bulwark of U.S. and global economic growth. Despite a tepid start, spending
is now accelerating at midyear as consumers benefit from lower energy prices and
improved labor markets. We believe that the consumer is poised to increase spending
even more in the second half of this year.
Separately, this election year is shaping up to be one of the more important in recent
memory as all three branches of government (executive, legislative, and judicial) remain
in flux. Divergent views, Washington gridlock, and important progress needed on key
policy issues mean that investors will need to remain vigilant in understanding evolving
political agendas and their implications for financial markets. Later in this report, we
outline key factors about this election for investors to watch.
Last December, we also highlighted a continuing Shift in Monetary Policy. We had
expected the Federal Reserve (Fed) to moderate its guidance for interest-rate hikes,
and we forecast that other major central banks’ easing policy initiatives would widen
the global interest-rate differentials. That is exactly what has transpired during the first
half of this year as tepid growth and global instability led the Fed and the markets to
downshift their interest-rate expectations closer to our outlook during the first quarter
of 2016. Simultaneously, the Bank of Japan and European Central Bank continued
down their paths of easing monetary policy.
InvestmentandInsuranceProducts: NOTFDICInsured NOBankGuarantee MAYLoseValue

3. 32016 Midyear Outlook Eyes on the Horizon
Global Economic Transition continues to evolve at a rapid pace. Admittedly, global
growth has remained underwhelming during the first half of 2016, consistent with the
trend of this entire economic recovery dating back to 2009. However, it is important
to note the resiliency of global growth at just over 3 percent for the past four years, even
as it has weathered sizable shocks from intense currency movements, the second largest
decline in oil prices in modern history beginning in mid-2014, and a long-standing
extensive decline in emerging-market growth rates.
We expected Growing Uncertainty in 2016 and made recommendations to seek to
benefit from it. One of our recommendations was to add high-yield bonds to our fixed-
income allocations in an attempt to take advantage of the Fed remaining on hold during
the first half of the year. We have continued to reduce our overall equity exposure within
asset classes that traditionally have higher volatility and challenged fundamentals, like
small-cap equities and emerging markets, while still favoring U.S. large-cap equities. In
our opinion, heightened volatility and largely sideways movements in major equity and
fixed-income indices during the first half of the year make it even more important for
qualified investors to utilize alternative investment strategies such as hedge fund or
private capital opportunities focused on unlocking value and complementing asset
allocation in portfolios.
We expect many of the headwinds blunting progress early this year to turn and become
tailwinds in the second half. We see a steadying U.S. dollar as favorable once again
for profits, and expect the stabilization of energy prices to lift the weight on corporate
earnings we observed during prior quarters. We also see consumers in a very healthy
position and expect spending to accelerate in the second half of 2016. Despite those
tailwinds, we expect volatility. Upcoming elections, both domestic and abroad; questions
about future monetary policy; and the need for new sources of fuel for economic growth
will create plenty of uncertainty during the second half of 2016. That means we’re
more likely to experience a bumpy ride than smooth sailing—so keep your eyes on
the horizon.
Darrell Cronk, CFA®
President, Wells Fargo Investment Institute
Chief Investment Officer, Wealth and Investment Management
Five Drivers of Change: Midyear Update
ChangingConsumer
Behavior
With employment
and consumer
sentiment up, we
expect spending
to accelerate.
Changein
PoliticalLandscape
Contentious
primaries
reveal a divided
electorate seeking
change.
Shiftin
MonetaryPolicy
U.S. and
international
monetary policy
should continue
to diverge.
GlobalEconomic
Transition
Global growth
remains constrained
amid fiscal and
monetary
challenges.
Growing
Uncertainty
Sluggish economic
growth and
sociopolitical shocks
continue to fuel
volatility.

4. 42016 Midyear Outlook Eyes on the Horizon
EYES ON THE HORIZON
Asset Class Overview
Global Economy Page 6
After a weak first half globally, we see a turnaround for many advanced
economies.
We are slightly revising many of our GDP growth forecasts.
The dollar may finish the year near current values, but volatility is to be expected.
We see ongoing economic growth and believe a U.S. recession is unlikely.
Global Equities Page 8
As expected, stock market prices have seen increased volatility.
Continued flat earnings estimates are muting our second-half
international outlook.
U.S. company earnings are likely to improve.
Investors who look beyond the volatility may be rewarded.
Global Fixed Income Page 10
The Fed will likely continue with its cautious approach to interest-rate increases.
We’ve revised our recommendation regarding higher-yielding investments.
Municipals appear to offer attractive tax-equivalent return opportunities.
We prefer emerging-market over developed-market debt.
Global Real Assets Page 12
Commodity prices are likely to remain flat or move lower.
Oil prices have seen a bounce and will likely be range-bound in the
coming months.
Quality, liquid, larger-cap master limited partnerships (MLPs) look attractive.
We expect real estate investment trusts (REITs) to continue accumulating gains.
Global Alternative Investments Page 14
Our outlook remains much the same as at the beginning of the year.
Today appears to offer an attractive entry point for Relative Value and
Event Driven.
Equity Hedge remains well positioned.
We anticipate opportunity within Private Capital and Event Driven-distressed
strategies.
2016 FORECAST
YEAR-END NUMBERS
1.9%
U.S. GDP Growth
1.4%
U.S. Inflation
4.8%
U.S. Unemployment
2190−2290
S&P 500 Index
0.50−0.75%
Federal Funds Rate
$35−$45
West Texas Intermediate
Crude per barrel
Source: Wells Fargo Investment Institute,
May 31, 2016. Subject to change.

5. 52016 Midyear Outlook Eyes on the Horizon
What to Watch as U.S. Elections Approach
Gridlock in Congress complicates strategies to buy or sell based on the election results. In a Congress
that may split between Republican leadership (in the House) and Democratic control (Senate), or may
remain Republican in both chambers but without a veto-proof majority, there is a strong probability of
a continued impasse on many issues. It is not even clear that a Republican president can consistently
marshal Republican support. Consequently, the four factors that we believe are most important to
monitor between now and January 2017 are mainly about the prospect for unity. Generally, the more
unity between the new Congress and the new president, the more investors may anticipate policies
and, therefore, election implications for the financial markets. Here are four factors we’re watching:
Voter Turnout
As of this writing, some polls are nearly
even between the two presumptive
presidential nominees, particularly in
battleground states Pennsylvania, Ohio, and Florida.
It’s going to be important to see who can both
energize and unite his or her base to get it to turn
out for the election.
Polls can be misleading in a close race when one
party’s voters are more energized.
Running Mate
The vice presidential candidate
typically balances the ticket for
the party and voters but also is
someone to run interference with Congress. The pick
may balance the ticket in any number of ways:
geography (e.g., someone from a contested state),
ideologically (a pragmatist to match an ideologue),
or age (someone younger with someone older).
Investors should consider whether each pick
balances the ticket (a good sign for unity) or
reinforces too much one or another feature of
the presidential candidate.
Party Unity
Ideological differences are
on display among the leaders
of each party. Yet, it is typical
for candidates to stake out more extreme views in
the primary season but to moderate in the general
election campaign.
If the personal attacks persist into the conventions,
the unification process and, possibly, the post-
election collaboration across party lines could
be very difficult.
The Senate
The Senate seems closer to a majority
change than the House.
Watch the polls: The more that
Democratic Senate candidates strengthen in
the polls as Secretary Clinton strengthens in hers,
the more sensitive the Senate majority may be to
the presidential race.
INVESTOR WATCH
More election-driven policy
implications should become
evident after the summer political
conventions, and market volatility
likely will remain elevated until
year-end.
Investors should hold enough
bonds which can help stabilize
portfolio values in times of
market turmoil.
Investors should keep a longer-term
perspective, globally diversify their
holdings, and rebalance portfolios
regularly seeking to use market
volatility to their advantage.
8
November

6. 62016 Midyear Outlook Eyes on the Horizon
GLOBAL ECONOMY
SLOW GROWTH
Paul Christopher, CFA®
Head Global Market Strategist
Improvement Following a Difficult First Quarter
Falling oil prices and global trade plus China’s economic slowdown headlined investor
concerns for the three quarters that ended in March 2016. However, we see the
economic impact of these factors waning since early in the second quarter:
Oil prices have stabilized, and we expect U.S. prices (measured by prices of
West Texas Intermediate Crude) to finish 2016 in the $35-$45 per barrel range.
Global trade contracted sharply in January but stabilized in the following three
months for the U.S., Eurozone, Japanese, and Chinese economies.
China’s government has injected economic stimulus, mostly through construction
and infrastructure spending, which appears to have steadied economic growth.
The first quarter proved weaker than we estimated in February, and we are revising
our U.S. and some international economic growth forecasts lower as a result. However,
we already see signs that the drivers of the first quarter’s weakness are dissipating,
and we anticipate better performance for the U.S., the Eurozone, and developed Asian
economies, including Japan, in the second half. The expected improvement makes
our downward revisions small, and we expect markets to respond positively to this
development as the year progresses. Our largest downgrades are for emerging
economies in Brazil and Mexico, which are both commodity producers and may
not enjoy a second-half improvement while commodity prices remain volatile.
We Are Lowering Many of Our Growth Forecasts
GDP Growth Forecasts
Feb. ‘16 Latest
Advanced Economies 1.93% 1.72%
Developing Economies 4.24% 4.10%
World 3.26% 3.10%
Selected Countries Feb. ‘16 Latest
United States 2.1% 1.9%
United Kingdom 2.2% 2.2%
Eurozone 1.8% 1.6%
Japan 1.0% 0.5%
Brazil -2.5% -3.5%
Mexico 3.0% 2.6%
China 6.2% 6.2%
India 7.2% 7.4%
Sources: IMF, Bloomberg, and Wells Fargo Investment Institute, May 2016. Subject to change.

7. 72016 Midyear Outlook Eyes on the Horizon
Global inflation pressures remain subdued along with global growth and
commodity prices. Inflation trends are rising from a near-zero pace to
more historically typical levels in some developed economies, including
the U.S., but the normalization is slow, especially in Europe and Japan.
Inflation risks in emerging economies have been more balanced—lower
commodity prices and weak trade have offset higher pricing pressures
via accumulated currency depreciation since 2014.
U.S. Dollar Appreciation on Hold for a While Longer
The U.S. dollar weakened in the first quarter, reflecting a changing global
monetary policy environment. Despite negative interest rates across
Japan and parts of Europe, the dollar’s recent reversal lower seems to
acknowledge the sentiment that extraordinary monetary stimulus now
faces much stronger headwinds than it did previously from low oil prices,
contracting global trade, and weak China growth. As the dollar turned
lower, many emerging-market currencies reversed higher from deeply
pessimistic valuations, but these same factors may limit their further
gains. Considering the muted influence of monetary policy, we think
the dollar could finish the year close to current values but may swing
significantly higher and lower in the meantime.
Furthermore, some major risk events—new and closely watched elections
in Europe and the U.S. and potentially another summer cash crisis in
Greece—could cause sharp dollar moves higher or lower. Recent short-
term monetary policy impotence and upcoming event risks do not suggest
a quick resumption of dollar strength but also may fail to sustain a dollar
downtrend.
Main Risks to Our Outlook
One principal risk to our economic and dollar outlook is that a new swoon in
oil prices or trade, or new Chinese economic stress, may undermine the faster
second-half economic pace we expect in the U.S., Europe, and developed Asia.
For perspective, we see ongoing economic growth and put the probability of a
U.S. recession at no more than 25 percent this year.
What is our forecast
for the U.S. dollar?
We believe the U.S. dollar’s
key exchange values will
finish the year close to their
mid-May levels, between
$1.10-$1.14 per euro and
¥107–¥113 yen per dollar.
What impact can a
rising or falling dollar
have on investors?
Strong gains in the dollar
tend to come when the
U.S. economy is stronger
than those abroad. This
favors U.S. markets and
allocations. Conversely,
falling dollar values against
key currencies suggest
international economies
are improving and tend
to benefit international
allocations.
INVESTOR WATCH
Even if oil prices, China, and trade
do not relapse, pessimism and
sentiment swings may accompany
market-unfriendly political news.
While the global economy is
gradually gaining pace, growth is
still in low gear and sentiment
remains potentially vulnerable.
A neutral view on currencies and
ultra-low yields does not justify
adding international developed-
market sovereign debt exposure
at this time, and we reiterate our
advice to hold less than target
allocations.
The outlook is for global
improvement with volatility.
To reduce the potential impact,
stay well-diversified.

8. 82016 Midyear Outlook Eyes on the Horizon
GLOBAL EQUITIES
VOLATILITY TO CONTINUE
Stuart Freeman, CFA®
Co-Head of Global Equity Strategy
Sean Lynch, CFA®
Co-Head of Global Equity Strategy
Scott Wren
Senior Global Equity Strategist
More Stormy Seas Are Probably Ahead
During the past 12 months, investors have experienced volatility not seen during
the first years of the economic recovery, resulting, in part, from concerns over China’s
economic growth rate and currency, questions surrounding global growth and the
Fed’s attitude toward tightening, along with crude oil’s negative impact on energy-sector
earnings. Since July 2015, we’ve seen a 12 percent decline in the S&P 500 Index, a
13 percent rebound, a 13 percent defensive decline, and another 14 percent cyclical
rebound since February. International developed- and emerging-market movements
followed similar patterns.
We should not be terribly surprised by higher levels of global stock market volatility;
we have been calling for more. The world generally is struggling to sustain economic
improvement. The U.S. has been more consistent but is experiencing more noticeable
equity-market swings.
Fundamentals Are Less Constructive for International Markets
Continued flat earnings estimates create a muted second-half international outlook.
Slow economic growth should further limit aggressively stimulative monetary policy
in Europe and Japan. Among emerging markets, economic reform and restructuring
remain the main themes. While valuation remains near historical averages, slowing
Stock Prices Appear Reasonable
’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16
0
’96
35
30
25
20
15
10
5
■ Trailing 12-Month S&P 500 Index P/E
■ S&P 500 Index P/E if Trading at Average Relationship Relative to 10-Year Treasury yield,
back to 1996
Equity valuations are
not expensive relative
to the10-year Treasury
yield. The average
20-year relationship
between the two would
put the yield-adjusted
P/E multiple at28X-29X,
while it’s actually in
the 18X area and
the 10-year Treasury
currently is yielding
only 1.9 percent.
Sources: Baseline, Factset, and Wells Fargo Investment Institute. April 30, 2016
Past performance is no guarantee of future results.

9. 92016 Midyear Outlook Eyes on the Horizon
economic growth likely will leave investors skeptical about earnings
growth this year. By year-end, advancing structural reforms may improve
the earnings outlook and could move us to get more constructive on
international markets. Until then, we remain neutral on international
developed and underweight emerging-market equities.
Seven Reasons U.S. Earnings Should Improve
Year-to-year earnings declines in recent quarters have been particularly
negatively impacted by decreases of between 50 percent and 90 percent
in Energy-sector earnings. We believe earnings comparisons will slowly
improve as:
1. Year-to-year crude oil price comparisons and energy earnings comparisons
become easier during the last half of the year and into 2017.
2. The combination of low energy prices and low interest rates favorably
impacts both consumers and most nonenergy corporations.
3. The Fed continues on a “lower for longer” course for interest rates as
inflation remains modest. Low inflation, low interest rates, and lifting
consumer and investor confidence should bolster price-to-earnings (P/E)
valuations in coming quarters (see chart on page 8).
4. Global monetary policy remains dovish and supportive over the next
12 months.
5. Modest domestic job growth, increasing consumer confidence, and real consumer
income growth bolster consumer spending and the housing market this year
and into 2017.
6. Late-cycle industrial demand slowly lifts as capacity utilization tightens.
7. The dollar offers less of a headwind this year than during most of 2015.
We forecast roughly flat S&P 500 Index operating earnings this year ($119) and expect
Energy-sector earnings to pare roughly 4 percentage points of annual earnings growth.
We also believe investors are looking past the negative energy earnings drag and
forward to better overall economic growth. We are carrying a 2190-2290 year-end
target range for the S&P 500 Index.
Equity Recommendations
for the Second Half
Overweight
Large-Cap Equities
Evenweight
Mid-Cap Equities
International Developed-
Market Equities
Underweight
Small-Cap Equities
Emerging-Market Equities
Top Sectors
Consumer Discretionary
Health Care
Industrials
Information Technology
INVESTOR WATCH
We prefer U.S. stocks over
international developed and
emerging-market stocks for
the second half of the year.
In terms of market cap size, we
prefer large-capitalization over
mid-cap and mid-cap over
small-cap stocks in the U.S.
We are underweighting the Utility
and Telecommunication Services
sectors that are likely to be more
vulnerable to rate increases. The
Consumer Staples sector is also a
least-favored sector due to its lower
ability to capitalize upon continuing
cyclical growth trends.

10. 102016 Midyear Outlook Eyes on the Horizon
GLOBAL FIXED INCOME
LOWER FOR LONGER
Brian Rehling, CFA®
Co-Head of Global Fixed Income Strategy
George Rusnak
Co-Head of Global Fixed Income Strategy
Fixed-Income Volatility Likely to Pick Up
We expected a volatile year for fixed income in 2016 as investors struggled with an
uncertain economic, monetary, and political outlook. The bond market experienced
significant declines in rates and widening credit spreads throughout January and
early February. The bond market stabilized once the S&P 500 Index reached its low
on February 11, but we expect a reemergence of fixed-income volatility before the end
of the year. While we expect volatility to pick up, we do not anticipate that bond yields
will sustain a material move higher. We encourage investors to plan and prepare for
a volatile environment, yet one in which low rates persist.
Pace of Interest-Rate Hikes Should Remain Slow
We expect just one Fed rate increase before year-end as the Federal Open Market
Committee continues its cautious approach to rate increases during the second half
of 2016. Regardless of the eventual timing of the next rate hike, it is important that
investors continue to focus on the general path of rate increases. It should be clear that
the Fed will move forward at a very gradual pace as it slowly raises interest rates. A
deliberate Fed coupled with an inflationary environment that remains subdued should
help support a low-rate environment. As the time frame into year-end compresses, we
are tightening year-end expectations for the 10-year Treasury yield to 2.00-2.25 percent,
the lower end of our previous range of 2.00-2.50 percent. Our 30-year Treasury yield
target has been refined to 2.50-2.75 percent from 2.50-3.00 percent.
Bond Yields and Total Returns Remain Historically Low
’79 ’82 ’85 ’88 ’91 ’94 ’97 ’00 ’03 ’06 ’09 ’12 ’15
-5%
’76
20%
15%
10%
5%
0%
■ Initial Yield
■ Three-Year Annualized Total Return
Yields remain low
andpricesareunlikely
to increase, which should
dampen bonds’ total
return picture.
Sources: Morningstar and Wells Fargo Investment Institute. May 2, 2016
Data Sample: Monthly, January 1976 - April 2016. Past performance is no guarantee of future results.

11. 112016 Midyear Outlook Eyes on the Horizon
Portfolio Positioning
Credit: After a difficult start to 2016 for investors in credit, we have seen
a pronounced rebound in recent months. The prospects of a prolonged
low-interest-rate environment make higher-yielding investments more
compelling than in an environment in which the Fed is raising rates
on a more frequent and regular basis. After initiating an underweight
stance in August 2015, we moved our high-yield recommendation back to
evenweight on March 17, 2016, as energy prices rebounded and prospects
of a deeper economic slowdown dissipated. It is important to note that
illiquidity concerns in the high-yield fixed income class remain a
significant consideration. While investors should expect credit-market
volatility at times through year-end, we find credit markets currently
offer a balanced risk/reward profile.
Municipals: Although municipal securities slightly underperformed their
taxable counterparts in the first half of the year, we believe that they offer attractive
tax-equivalent return opportunities and are well positioned for growth through the
rest of 2016. We recommend focusing on higher-quality issues rated “A” or better in
essential service sectors and believe the best opportunity is in the intermediate part
of the yield curve with slight premium coupons.1
International: It is difficult to foresee strong returns for international developed-market
bonds with yields in the two major index constituents (the Eurozone and Japan) either
close to zero or already negative. Taking into account our relatively benign view for
interest-rate increases in the U.S. and evidence that any further monetary easing in
Europe or Japan will be less effective in weakening currencies, we recommend an
underweight stance in developed-market fixed income.
The fundamentals of many emerging-market economies remain challenged. Since
we believe that commodity prices will remain in a lower-level trading range, we do
not expect the early-2016 rally in emerging-market currencies, which has boosted
returns on local-currency debt, to be sustained. We expect more stable returns in
dollar-denominated sovereign bonds, which are insulated from currency volatility and
for which higher spreads over U.S. Treasury securities attract demand in a low-return
environment. We recommend an even weighting in emerging-market debt.
1
”A” rated bonds are defined as upper-medium grade quality and subject to low risk.
Fixed-Income Sector
Recommendations
Favorable
Treasury Inflation-
Protected Securities (TIPS)
Corporate Securities
Essential Service Revenue
Unfavorable
Treasury Securities
Municipal High Yield
INVESTOR WATCH
Investors should be prepared for
lower returns in high-quality fixed
income over the coming years.
While we expect returns to remain
positive, the low-yield environment
will likely pull down total returns
relative to historical experience.
For investors looking to maximize
income generation, we recommend
a well-diversified approach to limit
concentration risks.
We favor intermediate maturities.
Investors who overweight short-
term maturities or cash will likely
find little opportunity for yield.
Long-maturity instruments can
expose portfolios to increased
interest-rate volatility.

12. 122016 Midyear Outlook Eyes on the Horizon
GLOBAL REAL ASSETS
FOCUS ON QUALITY
John LaForge
Head of Real Asset Strategy
Selectivity Is Key
For the second half, we are expecting REITs to continue to accumulate gains, albeit
slowly and methodically. On the other hand, for commodities, we are expecting to see
flat-to-down prices as the bear super-cycle reasserts its dominance over the average
commodity. For MLPs, we are expecting flattish prices but positive overall gains once
dividend yields are incorporated.
A Bounce in Commodities from Previous Lows
Since becoming commodity bearish in 2013, we have been expecting lower gold prices
each year. This was the case in 2015, too, as we set our 2016 gold targets. Our research
indicated that most commodity-price damage is typically done in the first five years of
a commodity bear super-cycle, and during those down years, to try to “catch the falling
knife” is considered a very risky investment strategy as it is likely prices will continue
to drop. Let’s call this period Phase 1. As we entered 2016, we still appeared to be in
Phase 1, so we felt it was still prudent to remain gold negative until signs of a major low
appeared. Now, in June, it does appear that gold found a major low, around $1,050 per
ounce. The 2016 rally has been strong enough that it appears that Phase 1 may be over.
Phase 2 of a commodity bear super-cycle typically involves a price bounce, similar to
what we have seen in 2016, a flattening of prices, then many years of range-bound
action. If gold has indeed entered Phase 2, we can no longer argue for lower gold prices
We Expect Only Short-Term Rallies in Gold Prices
Aug. ’11 Aug. ’14 Aug. ’17
’83 ’86 ’89 ’92 ’95 ’98
IndexLevel
■ Gold Bullion, Jan. 1980 - Dec. 1999 (bottom scale)
■ Gold Bullion, Aug. 2011- Apr. 2016 (top scale)
25.00
31.25
37.50
43.75
50.00
62.50
75.00
87.50
100.00
125.00
’80
We believe gold is in the
midst of a commodity
bear super-cycle, much
as it was from 1980-1999.
If so, short-term price
rallies are to be expected,
but we doubt that they
will amount to much.
Sources: Bloomberg, London Bullion Market Association, and Wells Fargo Investment Institute. April 27, 2016
Data sample; daily 1/21/1980-12/30/1999, 8/17/2011-4/27/2016. Prices shown are in logarithmic scale.
Gold bullion prices are indexed to 100 at 1/16/1970 and 2/15/2001. Past performance is no guarantee of future results.

13. 132016 Midyear Outlook Eyes on the Horizon
year after year. It also means that it is now appropriate to adjust our 2016
year-end targets to reflect the major low of $1,050 per ounce set in December
2015. Thus, we are adjusting our year-end 2016 price range for gold from
$950-$1,050 per ounce to $1,150-$1,250 per ounce. To be clear, this is us
becoming gold neutral on a strategic basis (10 years or more). We have not
become long-term gold bulls—just less bearish.
We are expecting similar range-bound action from most other commodities
over the coming years. Oil has seen a healthy bounce and looks to be closing
in on the $60 per barrel resistance area. That is the level where we believe
extra oil supplies will begin seeping into the marketplace, which could cap
the oil-price rally. Our best estimate for an oil range is $30 to $60 over the
coming years. Not all commodities should stay range-bound, however, now
that Phase 1 looks to be complete. Some have the potential to pull away from
the pack. We believe that agricultural commodities, especially, have the
potential to outpace the rest. The reason is that China has recently altered
its GDP growth strategy. It is now targeting consumer-led GDP growth vs.
building more roads, bridges, and the like. The result, we believe, will involve
more food consumption, which could pressure many agricultural prices higher.
Potential Opportunties for MLPs
With the major oil low likely in place as of February 2016, we believe select MLPs can
now be purchased. As we enter the second half of 2016, the dividend yields on many
MLPs remain quite attractive vs. comparable high-yielding investments. We began
advising selective buying in March when we released two publications, “MLPs Look
Cheap—But for Good Reason” and “MLPs—Quality and Reaching for Yield.” Our advice
remains the same today as it was in March—if you are going to buy, buy quality. Don’t
reach for yield for yield’s sake only. Reaching for the highest-yielding MLPs is not
necessarily the best long-term strategy. We prefer quality, liquid, larger-cap, MLP names.
Fundamentals Attractive for REITs
In the real asset space, we believe that the best fundamentals remain in REITs. This has
been the case since 2011. In late 2015, we moved to tactically overweighting REITs,
and we are not altering this advice. We have slight valuation concerns as REITs are not
overly cheap vs. other comparable high-yielding investments. They are not necessarily
expensive either, though, which is why we say our concerns are slight. As we enter the
back half of 2016, we continue to recommend a tactical overweight to REITs.
What Is a Super-Cycle?
If you look at commodity
prices over the very long
term (hundreds of years),
it becomes evident that
they tend to move in overall
bull and bear cycles, some
lasting decades. These are
super-cycles. If a particular
commodity (gold, for
example) is in a bear
super-cycle, you might see
short-term bull markets, but
over the longer term, lower
prices would be expected.
INVESTOR WATCH
Selective MLP buying can be
considered now that oil has
likely bottomed. We recommend
high-quality, large-cap and
liquid MLPs.
Gold in the $1,200-$1,300 per ounce
area does not appear to be a good
entry point to us. Before adding to
gold positions, we would wait for
prices below $1,150 per ounce, and
ideally closer to $1,050 per ounce,
the 2015 low.
REITs can continue to be considered
as trends are positive and valuations
do not appear overly expensive.

14. 142016 Midyear Outlook Eyes on the Horizon
GLOBAL ALTERNATIVE INVESTMENTS
BALANCED AND TACTICAL
Adam Taback
Head of Global Alternative Investments
View on Alternative Strategies Remains Intact
Despite a highly volatile start to the year, our outlook on alternative investments
remains largely intact. Our preference for “BOLT” strategies—those exhibiting a
Balanced, Opportunistic, Low-net exposure, and Tactical profile—served investors
well during the steep market correction at the start of the year. As selling pressure
accelerated, the diversification benefit of alternative investments became evident,
with some strategies such as Macro and Equity Hedge outperforming global equity
indices as much as 10 percent.
The violent collapse in risky assets abruptly gave way to a V-shaped recovery through
the second half of the first quarter as stabilization in oil markets and dovish central-bank
rhetoric calmed market jitters. Credit spreads tightened from levels not seen since 2009,
allowing Relative Value and Event Driven managers to recoup a portion of their losses.
Unfortunately, both Equity Hedge and Macro strategies missed much of the recovery
due to conservative positioning, short squeezes, and the (expected) lag in systematic
model recognition of the changing environment.
Strategies such as Relative Value and Event Driven that focused on corporate and
structured credit were naturally susceptible to wider credit spreads and faced notable
mark-to-market losses. However, we believe that as we enter the second half of the year,
these strategies offer very compelling entry points for investors, especially with the
strong fundamentals in asset-backed securities and developing opportunities in
distressed investing (see chart).
High-Yield Debt Default Rates Accelerating, Especially in Energy Sector
As the credit cycle
matures, defaults are
expected to increase,
providing potential
opportunities for
distressedinvesting.
Source: Wells Fargo Investment Institute, May 31, 2016
0%
16%
12%
8%
4%
20%
’98 ’00 ’02 ’04 ’06 ’08 ’10 ’12 ’14 ’16
Past12MonthIssuerDefaultRate
■ BofA-ML U.S. High Yield Default Rate
■ Energy

15. 152016 Midyear Outlook Eyes on the Horizon
More interesting are the opportunities within Structured Credit.
We believe the mark-to-market losses seen in the first quarter were
technical in nature and not reflective of weakening fundamentals within
commercial and residential real-estate markets. Certain sectors, such as
commercial mortgage-backed securities, have not recovered to the extent
that high-yield corporate credit has, which we believe creates an attractive
opportunity for investors over the next few quarters. Importantly, while
Relative Value historically has the lowest volatility measured by standard
deviation (a statistical measure of the volatility of returns) among hedge
fund strategies, we expect the changing liquidity environment to produce
higher volatility for this strategy going forward.
Present Environment Offers Opportunities
Equity Hedge, especially managers with low-net equity exposure, remains well
positioned to benefit from a decline in global, sector, and intra-index correlations as
well as a continued increase in dispersion. Despite disappointing performance in
the first quarter, we believe this is a stock-picker’s environment with a compelling
opportunity to deliver short alpha (performance generated by hedge funds by being
short stocks) as the market distinguishes between companies with robust balance
sheets and earnings growth and those artificially supported by low interest rates.
We need to be mindful, however, of the impact that crowded positions as well as
factor (i.e., momentum, growth, value) reversals have on performance.
We anticipate a significant opportunity within both Private Capital and Event Driven–
Distressed strategies as the credit cycle peaks. Patience is the better part of valor with
this opportunity, however, as we would like to see weakness spread to sectors not tied to
commodity weakness, such as Materials, Automotive, and Retail. Ultimately, we think
this could be a very robust default cycle with some estimates in excess of $1.5 trillion of
defaulted paper that hedge fund managers can parse through and work out to deliver
strong returns.
Macro strategies are expected to improve diversification and reduce volatility, just as
we saw in January and February. Unfortunately, we remain in an environment mired by
central-bank intervention, which has a tendency to truncate trends and lead to choppy
market conditions. While persistent trends can indeed develop that both discretionary
and macro managers can capitalize upon, we believe it is more likely that managers will
muddle through the next few quarters until the market has more clarity on the strength
of the global economy and the likely direction of asset prices.
Favorable Strategies
Relative Value-Asset
Backed
Event-Driven-Distressed
Equity Hedge & Relative
Value
Private Capital
INVESTOR WATCH
Prequalified investors may want to
utilize alternative investments to
not only reduce beta and provide
diversification but also to take
advantage of episodic volatility.
We anticipate tactical opportunities
within Relative Value-Structured
Credit over the medium term.
We remain in a stock-picker’s
environment and one in which
low-net equity exposure is
preferred over more directional
equity exposure.
Alternative investments, such as hedge funds and private capital funds are not suitable for all investors and are only available to persons who are
“accredited investors” or “qualified purchasers” within the meaning of U.S. securities laws. Any offer to purchase or sell a specific hedge fund or private
capital fund will be made by the product’s official offering documents. Investors should carefully review the Confidential Private Placement Memorandum
or other offering documents for information regarding terms, including all applicable fees, as well as other factors before investing in these products.

16. 162016 Midyear Outlook Eyes on the Horizon
Economic and Market Forecast
Global Economy 2016E 2015 2014
Domestic U.S. GDP growth 1.9% 2.4% 2.4%
Domestic U.S. inflation 1.4% 0.1% 1.6%
Domestic U.S. unemployment rate 4.8% 5.0% 5.6%
Global GDP growth 3.1% 3.1% 3.4%
Developed-market GDP growth 1.7% 1.9% 1.8%
Developed-market inflation 1.3% 0.4% 0.7%
Emerging-market GDP growth 4.1% 4.0% 4.6%
Emerging-market inflation 5.6% 4.5% 5.3%
Eurozone GDP growth 1.6% 1.5% 0.9%
Eurozone inflation 1.0% 0.0% -0.2%
Dollar/euro exchange rate $1.10-1.14 $1.09 $1.21
Yen/dollar exchange rate ¥107-113 ¥120 ¥119
Global Equities
S&P 500 Index 2190-2290 2044 2059
S&P 500 operating earnings per share $119 $118 $119
Russell Midcap® Index 1650-1750 1596 1663
Russell Small Cap Index 970-1070 1135 1205
MSCI Europe, Australasia, Far East (EAFE) Index 1590-1690 1716 1775
MSCI Emerging Markets (EM) Index 720-800 794 956
Global Fixed Income
10-year U.S. Treasury yield 2.0-2.25% 2.3% 2.17%
30-year U.S. Treasury yield 2.5-2.75% 3.00% 2.75%
Fed funds rate 0.5-0.75% 0.50% 0.25%
Global Real Assets
West Texas Intermediate Crude price $35-45 $38 $53
Brent Crude price $40-50 $37 $57
Gold price $1150-1250 $1061 $1184
We see modest domestic
GDP growth and put
the probability of a U.S.
recession at no more than
25 percent this year.
We may see sharp dollar
moves higher or lower;
we take a neutral view
on the dollar.
While increased levels of
market volatility would
not be surprising, we
expect stocks in the
end will be higher than
at midyear.
We expect one rate
increase from the Fed,
which means a continued
low-rate environment.
Oil prices have stabilized,
and we believe they will
be range-bound for the
remainder of the year.
Sources: FactSet, Bloomberg, and Wells Fargo Investment Institute, May 31, 2016
GDP = gross domestic product
E = estimate
West Texas Intermediate Crude Oil is a light, sweet (i.e., low sulfur) crude oil which is the main type of U.S.
crude oil traded in U.S. futures markets. Brent Crude Oil is a light, sweet crude oil extracted from the North
Sea. It serves as a major benchmark price for purchases of oil worldwide.
Wells Fargo Investment Institute forecasts. Forecasts are not guaranteed and are subject to change.
Past performance is no guarantee of future results. An index is unmanaged and not available for direct
investment.

17. 182016 Midyear Outlook Eyes on the Horizon
Definitions
Indexes
An index is unmanaged and not available for direct investment.
Barclays U.S. Aggregate Bond Index covers the U.S. dollar-denominated,
investment-grade (rated Baa3 or above by Moody’s), fixed-rate, and taxable
areas of the bond market. This is the broadest measure of the taxable U.S.
bond market, including most Treasury, agency, corporate, mortgage-backed,
asset-backed, and international dollar-denominated issues, all with maturities
of one year or more.
BofA Merrill Lynch U.S. High-Yield Master II Index tracks the performance of
below-investment-grade publically issued U.S. corporate bonds.
MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market
capitalization index that is designed to measure the equity market performance
of developed markets, excluding the US & Canada. The Index consists of the
following 21 developed market country indexes: Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan,
the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, and the United Kingdom.
MSCI Emerging Markets Index is a free float-adjusted market capitalization
index that is designed to measure equity market performance of emerging
markets. The Index consists of the following 23 emerging market country
indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary,
India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia,
South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
Russell 2000® Index (small cap) measures the performance of the 2,000
smallest companies in the Russell 3000® Index, which represents approximately
8% of the total market capitalization of the Russell 3000 Index.
Russell Midcap® Index measures the performance of the 800 smallest
companies in the Russell 1000® Index, which represent approximately 25%
of the total market capitalization of the Russell 1000® Index.
S&P 500® Index consists of 500 industrial, financial, utility and transportation
companies with market capitalizations of $4 billion or more.
Risk Considerations
All investing involve risks, including the possible loss of principal. There can
be no assurance that any investment strategy will be successful or will meet
its investment objective. Investments fluctuate with changes in market and
economic conditions and in different environments due to numerous factors
some of which may be unpredictable. Each asset class has its own risks and
return characteristics. The risks associated with the asset classes discussed
in this report include:
Alternative Investments: The use of alternative investments, such as hedge funds
and private capital funds, includes the risk of investment loss, including the loss
of the entire amount invested. While investors may potentially benefit from the
ability of alternative investments to potentially improve the risk-reward profiles
of their portfolios, the investments themselves can carry significant risks.
Government regulation and monitoring of these types of investments may
be minimal or nonexistent. There may be no secondary market for alternative
investment interests and transferability may be limited or even prohibited.
Alternative investments employ aggressive investment techniques, including
the use of short sales, leverage, swaps, futures contracts, options, forward
contracts and other derivatives which can expose the investor to substantial
risk. Short selling involves the potential for unlimited loss of the security sold
short. The use of derivatives for other than hedging purposes is considered
speculative and involves greater risks than those used for hedging. Investing in
derivatives carries the risk of the underlying instrument as well as the derivative
itself and may not be successful, resulting in losses to the fund, and the cost of
such strategies may also reduce the fund’s returns.
Alternative Strategy Risk: Event Driven strategies involve investing in
opportunities created by significant transactional events, such as spinoffs,
mergers and acquisitions, bankruptcy reorganization, recapitalization and share
buybacks. Managers who use such strategies may invest in, and might sell
short, the securities of companies where the security’s price has been, or is
expected to be, affected by a distressed situation. Event Driven-Distressed
strategies involve a high degree of risk. Distressed companies could declare
bankruptcy shortly, could currently be in bankruptcy proceedings or just
emerging from bankruptcy. Because of their distressed situation, these
securities may be illiquid, have low trading volumes, and be subject to
substantial interest rate and credit risks. Equity Hedge strategies maintain
positions both long and short in primarily equity and equity derivative
securities. Macro managers trade a broad range of strategies in which the
investment process is predicated on movements in underlying economic
variables and the impact these have on equity, fixed income, hard currency and
commodity markets. Relative Value strategies focus on exploiting perceived
imbalances or valuation discrepancies between related markets or instruments.
Structured credit strategies are not suitable for all investors. These strategies
aim to generate returns via positions in the credit sensitive area of the fixed
income markets. The strategy generally involves the purchase of corporate
bonds, mortgages, suppliers’claims and bank loans with hedging of the interest
exposure. Such strategies involve taking advantage of mispriced credit
exposure at certain points in the term structure of single name credits relative
to other points in the same term structure. Positions may use, but are not
limited to, traditional fixed income and credit securities, as well as other
structured credit products and credit derivatives, such as credit default swaps.
The use of these strategies may require a manager’s skill in assessing corporate
events, the anticipation of future movements in securities prices, interest rates,
or other economic factors. No assurance can be given that a manager’s view
of the economy will be correct which may result in lower investment returns
or higher return volatility. There can be no assurance that a manager that uses
these strategies will be successful or that a manager will not deviate from its
stated investment strategy and not employ other investment techniques in
an effort to meet the fund’s investment objective.

18. 192016 Midyear Outlook Eyes on the Horizon
Risk Considerations
Commodities: In addition to the risks of investing in commodities generally,
investing in gold carries special risk considerations such as potentially severe
price fluctuations over short periods of time and storage costs that exceed the
custodial and/or brokerage costs associated with a portfolio’s other holdings.
Currency: Currency risk is the risk that foreign currencies will decline in value
relative to that of the U.S. dollar. Exchange rate risk between the U.S. dollar
and foreign currencies may cause a portfolio to decline.
Equity investments are subject to market risk which means their value
may fluctuate in response to general economic and market conditions,
the prospects of individual companies, and industry sectors. Technology
and Internet-related stocks: Technology and Internet-related stocks, especially of
smaller, less-seasoned companies, tend to be more volatile than the
overall market.
Master limited partnerships (MLPs): MLPs involve certain risks which differ
from an investment in the securities of a corporation. MLPs may be sensitive
to price changes in oil, natural gas, etc., regulatory risk, and rising interest rates.
A change in the current tax law regarding MLPs could result in the MLP being
treated as a corporation for federal income tax purposes, which would reduce
the amount of cash flows distributed by the MLP. Other risks include the
volatility associated with the use of leverage, volatility of the commodities
markets, market risks, supply and demand, natural and man-made catastrophes,
competition, liquidity, market price discount from Net Asset Value, and other
material risks.
Fixed-income securities: Investments in fixed-income securities are subject
to market, interest rate, credit and other risks. Bond prices fluctuate inversely
to changes in interest rates. Therefore, a general rise in interest rates can result
in the decline in the bond’s price. Credit risk is the risk that an issuer will default
on payments of interest and/or principal. This risk is heightened in lower
rated bonds. High yield fixed income securities (junk bonds) are considered
speculative, involve greater risk of default, and tend to be more volatile than
investment grade fixed income securities. If sold prior to maturity, fixed income
securities are subject to market risk. All fixed income investments may be
worth less than their original cost upon redemption or maturity.
Foreign securities: Investing in foreign securities presents certain risks not
associated with domestic investments, such as currency fluctuations, political
and economic instability, and different accounting standards. This may result
in greater share price volatility. These risks are heightened in emerging markets.
Mortgage-related securities: Investments in mortgage and asset-backed
securities are subject to prepayment risk. Changes in prepayments may
significantly affect yield, average life and expected maturity. Commercial
Mortgage Backed Securities (CMBS) are a type of mortgage-backed security
backed by commercial mortgages rather than residential real estate. CMBS
tend to be more complex and volatile than residential mortgage-backed
securities due to the unique nature of the underlying property assets.
Municipal bonds offer interest payments exempt from federal taxes, and
potentially state and local income taxes. These bonds are subject to credit risk
and potentially the Alternative Minimum Tax. Quality varies widely depending
on the specific issuer.
Real estate: There are special risks associated with an investment in real estate,
including the illiquidity of underlying properties, credit risk, interest rate
fluctuations and the impact of varied economic conditions.
Small- and mid-capitalization stocks: 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.
Sovereign Debt: In addition to the risks associated with investing in
international and emerging markets, sovereign debt involves the risk that
the issuing entity may not be able or willing to repay principal and/or
interest when due in accordance with the terms of the debt agreement.
Treasury Inflation-Protected Securities (TIPS): TIPs are subject to interest
rate risk, especially when real interest rates rise. This may cause the underlying
value of the bond in the portfolio to fluctuate more than other fixed
income securities.