WELLS FARGO (LUX) WORLDWIDE FUND | QUARTERLY COMMENTARY Q2 2021 | All information is as of 30 Jun 2021 unless otherwise indicated. Emerging Markets Equity Income Fund MARKETING COMMUNICATION Quarterly review GENERAL FUND INFORMATION ● The Emerging Markets Equity Income Fund underperformed the MSCI Emerging Portfolio managers: Alison Shimada, Markets Index (Net) but outperformed the MSCI Emerging Markets High Dividend and Elaine Tse Yield Index (Net) for the quarter that ended 30 June 2021. ● Positioning in communication services, utilities, South Africa and the Philippines Sub-adviser: Wells Capital contributed to relative attribution but was outweighed by negative stock selection in Management, Incorporated information technology (IT), industrials, China/Hong Kong and Taiwan. Benchmark: MSCI Emerging Markets Index (Net) Market review Fund inception: 29 Jun 2012 The MSCI Emerging Markets Index (Net) advanced 5.05% during the second quarter, INVESTMENT OBJECTIVES the fifth consecutive quarter of positive returns, taking the year-to-date return to AND PROCESS 7.45% and the one-year return to 40.90%. The MSCI Emerging Markets High Dividend ● The fund seeks long-term capital Yield Index (Net) underperformed, returning 2.31% during the second quarter. Ten out appreciation and current income. of eleven sectors generated positive returns during the quarter, including health care, ● The fund invests at least 80% of its industrials and energy. Real estate was the only sector that posted a negative return. At assets in dividend-paying emerging the country level, 17 out of 27 countries advanced, including Brazil, Poland, Hungary, market equity securities (companies the Czech Republic, Russia, the United Arab Emirates (UAE) and Saudi Arabia. tied economically to emerging markets Brazil was the best-performing country in the index and the largest contributor to index countries as defined by the MSCI returns as it raised its 2021 gross domestic product forecast to 4.6%, up from 3.6% in Emerging Markets Index), directly March, driven by an increase in demand for commodities and government spending. through equity securities or indirectly The central bank took up its policy rate by 75 basis points (bps; 100 bps = 1.00%) twice though notes, convertibles or during the quarter to 4.25%, benefitting the currency, and the lower house approved a certificates. bill that would dilute the government’s stake in Eletrobras from 60% to 45%, a win for ● The fund's sub-adviser uses a the Bolsonaro administration’s privatisation agenda. top-down and bottom-up strategy to identify companies with sustainable Calendar year performance (%) high dividend yields and strong YTD 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 earnings growth to construct a Emerging Markets Equity 8.66 8.40 17.05 -11.47 26.10 6.10 -9.49 1.31 -1.63 portfolio with the potential for Income Fund - Class I maximum portfolio dividend yield (USD) within a controlled level of risk. The fund may invest: MSCI Emerging Markets 7.45 18.31 18.42 -14.57 37.28 11.19 -14.92 -2.19 -2.60 18.22 -18.42 ● in equity securities, participatory notes, Index (Net) convertible securities, equity linked Past performance is not indicative of future performance. Fund performance calculations are net of all applicable fees and are calculated on an NAV-to-NAV basis in US dollars (with notes/certificates, depositary receipts income re-invested). Share class inception date: 29 Jun 2012 and US$-denominated equities issued MSCI Emerging Markets Index (Net) is a reference benchmark, selected as the most appropriate comparison for this fund, and by non-US issuers may change without notice. ● in an aggregate of up to 10% of fund Key risks assets both directly and indirectly in Market risk: securities may decline in value due to factors affecting securities markets generally, and China A shares equity securities generally have greater price volatility than debt securities. Smaller company ● by using futures/derivatives for securities risk: securities of companies with smaller market capitalisations tend to be more volatile hedging or efficient portfolio and less liquid than securities of larger companies. Emerging market risk: emerging markets may be more sensitive than more mature markets to a variety of economic factors and may be less liquid than management purposes markets in the developed world. FOR PROFESSIONAL/QUALIFIED INVESTOR USE ONLY. CM705 07-21 (See pages 9-10 for important information.) QUARTERLY COMMENTARY Q2 2021 | All information is as of 30 Jun 2021 unless otherwise indicated. Emerging Markets Equity Income Fund Portfolio positioning Emerging Markets Equity Income Fund versus MSCI Emerging Markets Index (Net) Quarterly sector attribution and Value added from Value added from Total value added (%) analysis sector weight (%) share selection (%) ● Stock selection in the communication 1.0 services and utilities sectors resulted in positive attribution but was offset by positioning in IT and industrials. ● The leading contributor in the utilities 0.0 sector was Kunlun Energy, a mid-stream and downstream gas transmission and distribution platform in China, which -1.0 reported 2020 net profit up 9% year over year, representing a strong turnaround Cash & Energy staples Utilities Materials Financials Consumer Consumer Industrials from a 25% decline in the first half of technology Real estate Health care equivalents Information discretionary 2020, as retail gas volume grew 34.7% Comm. services year over year. Looking forward, management expects retail gas volume to grow 15% year over year and we expect the company to experience sustainable growth given China’s decarbonisation goals and expectations Comm. services Consumer discretionary Consumer staples Energy Financials Health care Industrials Information technology Materials Real estate Utilities Cash & equivalents for natural gas to grow to approximately Sector weights (average % weight during the quarter) 12% of the country’s primary energy mix in 2030 versus 8.7% in 2020. Emerging Markets 5.75 14.69 4.34 1.50 22.43 1.50 4.89 25.93 6.21 4.01 4.92 3.82 Equity Income ● The IT sector underperformed during the Fund quarter, resulting in negative allocation effects from an average overweight. MSCI Emerging 11.55 17.18 5.66 4.89 18.17 4.75 4.52 20.68 8.53 2.07 1.99 0.00 Stock selection was also negative, driven Markets Index by a position in Lenovo, the world’s (Net) largest PC maker, which underperformed Over/underweight -5.80 -2.49 -1.32 -3.39 4.26 -3.25 0.37 5.25 -2.32 1.94 2.93 3.82 despite reporting a 46% year-over-year increase in PC revenues driven by continued strength in work-from-home Sector returns (%) and gaming demand as well as rising Fund sector return 6.19 2.23 9.82 10.18 3.04 5.25 0.84 1.46 14.14 -6.81 10.46 -0.42 traction in e-commerce primarily due to concerns of rising component costs given Index sector return 1.93 3.55 4.50 12.44 4.16 14.10 13.17 3.84 8.19 -6.01 2.00 0.00 the ongoing chip shortage, which is Relative return 4.26 -1.32 5.32 -2.26 -1.12 -8.85 -12.33 -2.38 5.95 -0.80 8.46 -0.42 expected to persist for the next 12 to 18 months, per company management. Based on the returns calculated over a three-month period. Source: FactSet. Returns shown are gross and not adjusted for share class level expenses. Past performance is not indicative of future performance. 2 QUARTERLY COMMENTARY Q2 2021 | All information is as of 30 Jun 2021 unless otherwise indicated. Emerging Markets Equity Income Fund Portfolio positioning Emerging Markets Equity Income Fund versus MSCI Emerging Markets Index (Net) Trailing 12-month sector Value added from Value added from Total value added (%) attribution analysis sector weight (%) share selection (%) ● An overweight to IT and stock selection 3.0 in the consumer discretionary sector 2.0 contributed to relative returns but were partially offset by holdings in financials 1.0 and an overweight to real estate. 0.0 ● Chow Tai Fook Jewellery, a leading jewelry retailer in mainland China, Hong -1.0 Kong and Macau, was the leading -2.0 contributor in the consumer discretionary sector as it reported a Cash & Energy staples Utilities Materials Financials Consumer Consumer Industrials strong beat with fiscal-year 2021 technology Real estate Health care equivalents Information discretionary revenue up 23.6% year over year and net Comm. services profit up 107.7% due to strong same-store sales growth and store expansion in mainland China with solid operating leverage. Looking forward, the company targets to open 700+ (net) stores in China this fiscal year with Comm. services Consumer discretionary Consumer staples Energy Financials Health care Industrials Information technology Materials Real estate Utilities Cash & equivalents sustainable growth coming from a Sector weights (average % weight during the past 12 months) preference for local products, including the HUA Collection, which features Emerging Markets 7.26 14.11 4.56 2.75 20.50 1.42 4.81 25.66 7.28 4.27 3.74 3.63 traditional Chinese heritage Equity Income craftsmanship with modern design and Fund accounted for 39.5% of the company’s MSCI Emerging 12.26 18.57 5.85 5.14 17.88 4.47 4.42 19.63 7.59 2.20 2.00 0.00 fiscal-year 2021 gold and jewelry retail Markets Index sales value in China, up from 29% the (Net) previous year. Over/underweight -5.00 -4.46 -1.29 -2.39 2.62 -3.05 0.39 6.03 -0.31 2.07 1.74 3.63 ● Ping An Insurance, the second-largest life insurer in China, which also offers other financial services in the areas of non-life Sector returns (%) insurance, banking and investments, was Fund sector return 24.15 52.99 21.97 18.35 28.05 32.19 47.04 78.36 85.64 6.61 60.77 -3.36 the leading relative detractor within financials given investor skepticism over Index sector return 23.06 36.93 23.67 32.25 33.01 32.37 44.81 75.54 71.06 6.57 20.29 0.00 plans to acquire a 51.1%–70% stake in Relative return 1.09 16.06 -1.70 -13.90 -4.96 -0.18 2.23 2.82 14.58 0.04 40.48 -3.36 New Founder Group, which is a new entity incorporated through the “asset Based on the returns calculated over a 12-month period.