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Quarterly Report Q1 2014 | All information is as of 3-31-14 unless otherwise indicated.

Wells Fargo Advantage Intermediate Tax/AMT-Free Fund

General fund information

Ticker: SIMBX Portfolio managers: Lyle J. Fitterer, CFA, CPA; Robert J. Miller Subadvisor: Wells Capital Management Category: Intermediate municipal bond

Fund strategy

  • Uses both bottom-up credit research and top-down macroeconomic analysis.

  • Seeks to generate excess performance through actively managing the four key elements of total return: duration, sector rotation, security selection, and yield-curve positioning.

  • Uses a relative-value approach based on extensive credit analysis that seeks opportunities from changing market trends and pricing inefficiencies to generate excess returns.

  • Manages the portfolio in a tax-sensitive manner by avoiding bonds subject to the Alternative Minimum Tax (AMT).

Key drivers of performance

  • Municipal bond returns were positive in the first quarter, helped by investor demand, limited supply, and lower interest rates.

  • The fund outperformed its benchmark, the Barclays Municipal Bond 1–15 Year Blend Index, during the first quarter but

underperformed during the 12-month period that ended March 31, 2014.

  • Security selection and credit-quality allocation helped performance.

Average annual total returns (%) as of 3-31-14*

Year to

Since inception

3 month

date

1 year

3 year

5 year

10 year

(7-31-01)

2.66

2.66

0.46

5.29

5.99

4.23

5.02

2.19

2.19

-0.38

4.27

4.64

3.40

2.26

2.26

0.83

4.59

4.63

4.16

Intermediate Tax/AMT-Free Fund–Inv Lipper Intermediate Municipal Debt Funds Avg. Barclays Municipal Bond 1–15 Year Blend Index

*Returns for periods of less than one year are not annualized.

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. Investor Class shares are sold without a front-end sales charge or contingent deferred sales charge.

Portfolio characteristics

Wells Fargo Advantage Intermediate Tax/AMT-Free Fund

Avg. eff. duration Avg. maturity (yrs.)¹ 30-day SEC yield AMT²

5.05 10.42 1.90% 0.00%

Credit-quality allocation (%)3

AAA/Aaa AA/Aa A/A BBB/Baa BB/Ba B/B Nonrated SP-1/MIG1 SP-2/MIG2

2.6 27.2 42.3 13.2 1.3 0.1 4.1 2.0 4.1

Cash equivalents Sector allocation (%)

3.2

GO bonds Insured bonds Prerefunded bonds Revenue bonds

36.4 0.2 0.2 60.0

Barclays Municipal Bond 1–15 Year Blend Index

5.34 8.80 3.17%

15.5 52.3 27.9 4.3 0.0 0.0 0.0 0.0 0.0 0.0

33.4 0.2 6.1 60.3

1. Weighted average time to maturity. 2. % of net assets in AMT bonds. 3. 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 advisor has committed, through 10-31-14, 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 0.73%. Without this cap, the fund’s returns would have been lower. The fund’s net expense ratio is 0.73% for Investor Class shares. The fund’s gross expense ratio is 0.83% for Investor Class shares.

The fund's 30-day unsubsidized SEC yield is 1.79%.

(See pages 6–7 for important information.)

1 CM204 04-14

Video-enabled edition. For more information, see page 7.

Wells Fargo Advantage Intermediate Tax/AMT-Free Fund

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