Complementary Strategies For Clients of The Private Bank at Wells Fargo

1. 200909044 TPB-PB21074 (09/09) Complementary Strategies For Clients of The Private Bank at Wells Fargo Prepared for: MidSouth Alternative Investment Association Presenter Names: Ghislaine Austin, Senior Director of Investments, SE region Mark Van Kouteren, Regional Alternatives Specialist, SE November 16, 2010 To be given by a non-WFI Private Bank relationship manager or Investment Manager. For clients who meet the eligibility criteria of The Private Bank. To be given by a non-WFI Private Bank relationship manager or Investment Manager. For clients who meet the eligibility criteria of The Private Bank.

2. 200909044 TPB-PB21074 (09/09) Wells Fargo � A history of investment innovation At Wells Fargo we have had a history of innovation going back a number of decades. Starting about 50 years ago (near the middle of the slide): �Wells Fargo [was] the live test environment in which Harry Markowitz, William Sharpe, Fischer Black, Myron Scholes, Eugene Fama, Merton Miller, Jack Treynor, Michael Jensen, and James Lorie explored their theories about �the financial frontier,� portfolio management, indexed funds, and asset allocation� As Peter Bernstein remarked in his Capital Ideas: �It is ironic that the revolution in portfolio management got its start at Wells Fargo Bank, one of the oldest banks in the United States.�� (Source: Stagecoach�Book 2: Wells Fargo and the Rise of the American Financial Services Industry, p. 268) Standout dates include: Fischer Black and Myron Scholes� 1970 presentation of their first options pricing paper at a Wells Fargo sponsored conference The first index fund, launched by Wells Fargo in July 1971, for the Samsonite pension fund The theory of Tactical Asset Allocation, first introduced by Wells Fargo in 1974, was offered to corporate pension plans and other institutional clients such as CREF (now known as TIAA-CREF) and Harvard University Norwest Equity Partners, one of the first venture capital firmscreated in the countryAt Wells Fargo we have had a history of innovation going back a number of decades. Starting about 50 years ago (near the middle of the slide): �Wells Fargo [was] the live test environment in which Harry Markowitz, William Sharpe, Fischer Black, Myron Scholes, Eugene Fama, Merton Miller, Jack Treynor, Michael Jensen, and James Lorie explored their theories about �the financial frontier,� portfolio management, indexed funds, and asset allocation� As Peter Bernstein remarked in his Capital Ideas: �It is ironic that the revolution in portfolio management got its start at Wells Fargo Bank, one of the oldest banks in the United States.�� (Source: Stagecoach�Book 2: Wells Fargo and the Rise of the American Financial Services Industry, p. 268) Standout dates include: Fischer Black and Myron Scholes� 1970 presentation of their first options pricing paper at a Wells Fargo sponsored conference The first index fund, launched by Wells Fargo in July 1971, for the Samsonite pension fund The theory of Tactical Asset Allocation, first introduced by Wells Fargo in 1974, was offered to corporate pension plans and other institutional clients such as CREF (now known as TIAA-CREF) and Harvard University Norwest Equity Partners, one of the first venture capital firmscreated in the country

3. 200909044 TPB-PB21074 (09/09) Core investment belief To minimize this risk we: Employ broad asset class diversification and broad diversification within each asset class in our clients� portfolios Pay attention to the risks beyond volatility Provide our clients access to objective and impartial investment choices from proprietary and non-proprietary sources Develop long-term relationships with our clients and their families

4. 200909044 TPB-PB21074 (09/09) Risk is more than just volatility Risk to a portfolio can come from many areas. We believe it is important to consider multiple types of risk across different categories. Every investor takes risk. The key is to spend your �risk budget� wisely, achieve results which are in line with your goals, and avoid surprises. Just because certain types of investment are associated with higher degrees of risk does not mean you should avoid investing in them. For example, the flexible nature of alternatives, which makes the risks so unique, is also the same flexibility that tends to create diversification and low correlation with traditional portfolios. We encourage you to work with your investment professionals to balance those risks and �spend� your risk budget wisely. Some alternative investments may be available only to pre-qualified investors only.Every investor takes risk. The key is to spend your �risk budget� wisely, achieve results which are in line with your goals, and avoid surprises. Just because certain types of investment are associated with higher degrees of risk does not mean you should avoid investing in them. For example, the flexible nature of alternatives, which makes the risks so unique, is also the same flexibility that tends to create diversification and low correlation with traditional portfolios. We encourage you to work with your investment professionals to balance those risks and �spend� your risk budget wisely. Some alternative investments may be available only to pre-qualified investors only.

5. 200909044 TPB-PB21074 (09/09) Four asset class approach We�re on Step Three now, where we put our capital-market assumptions into the Optimizer and generate an efficient frontier. The efficient frontier represents the best risk-return tradeoffs you can get using the available asset classes we talked about and some constraints. The more asset classes and the fewer constraints you have, the better the frontier looks. That�s why the blue curve, representing 4-group allocation, falls to the northwest of the gold 2-group curve. The constraints are needed to keep the Optimizer from putting the whole portfolio into a few asset classes, which is what it tends to do when left to its own devices. Because of our fiduciary responsibilities we need portfolios that are a lot more prudent. You could call the efficient frontiers on this slide Prudent Efficient Frontiers. We�re on Step Three now, where we put our capital-market assumptions into the Optimizer and generate an efficient frontier. The efficient frontier represents the best risk-return tradeoffs you can get using the available asset classes we talked about and some constraints. The more asset classes and the fewer constraints you have, the better the frontier looks. That�s why the blue curve, representing 4-group allocation, falls to the northwest of the gold 2-group curve. The constraints are needed to keep the Optimizer from putting the whole portfolio into a few asset classes, which is what it tends to do when left to its own devices. Because of our fiduciary responsibilities we need portfolios that are a lot more prudent. You could call the efficient frontiers on this slide Prudent Efficient Frontiers.

6. 200909044 TPB-PB21074 (09/09) Thinking about Complementary Strategies in Portfolio Construction Our philosophy regarding complementary strategies is one of risk reduction, not performance enhancement Through the use of different strategies that have low or no correlation to the traditional investments in the portfolio we can reduce portfolio volatility Clients that experience lower volatility tend to stay with an investment program longer and allow it to reach it�s full potential for them Our best thinking includes a balance between bottoms up security selection specialists with top down thematic, global investors The structures available to invest in these strategies do come with tradeoffs Less transparency Higher fees including incentive fees to the managers Less liquidity Potentially delayed tax reporting

7. 200909044 TPB-PB21074 (09/09) Thinking about Complementary Strategies in Portfolio Construction Qualified Purchaser Partnerships Provide great access to investment talent High minimums Low liquidity Late tax reporting potential Accredit Investor � Registered Partnerships Better liquidity Significantly lower minimums Higher costs to operate Tax reporting has evolved to early K-1s and even 1099s Mutual fund (or Complementary Strategies Lite) Best liquidity Lowest minimums Least attractive venue for investment talent 40 Act restricts many strategies from realizing full potential

8. 200909044 TPB-PB21074 (09/09) Thinking about Complementary Strategies in Portfolio Construction Replacing an equity position with a long/short manager The goal here is to achieve market returns with 1/3 � � the volatility This is accomplished through security selection, market exposure management and leverage control We are not looking for a manager that is �all Alpha� we prefer controlled risk management � inverse of efficient market theory This is a true equity replacement � not a complement but substitute Replacing an equity position with a multi-strategy hedge fund Here we can engage managers that have strategies completely unrelated to the overall equity market direction Goal is still equity like returns with 1/3 � � the risk, low correlation Examples today include Merger Arb and Capital Structure Arb Replacing an equity position with a managed futures/global macro manager The goal of the global macro manager is to take a top-down approach, no security selection, but rather invest with themes (short dollar, long gold) The goal is to achieve equity market returns with � - � equity risk and 0% correlation

9. 200909044 TPB-PB21074 (09/09) Disclosures Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and it�s various affiliates and subsidiaries. Wells Fargo & Company and its affiliates do not provide tax or legal advice. Please consult your tax or legal advisors to determine how this information may apply to your own situation. The information and opinions in this report were prepared by the investment management division within Wells Fargo Private Bank. Information and opinions have been obtained or derived from sources we consider reliable, but we cannot guarantee their accuracy or completeness. Opinions represent Wells Fargo Private Bank�s opinion as of the date of this report and are for general information purposes only. Wells Fargo Private Bank 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. The investments discussed or recommended in this report are not insured by the Federal Deposit Insurance Corporation (FDIC) and may be unsuitable for some investors depending on their specific investment objectives and financial position. WFB, including its parent, subsidiaries, and/or affiliates and their personnel (WFC affiliates) may trade for their own accounts, be on the opposite side of customer orders, and have a position in securities related to issuers mentioned in this report. WFC affiliates may also serve as directors of companies mentioned and participate or invest in financing transactions with these companies, as well as perform services or solicit business from them. This material is for general information only, is not suitable for all investors and is not soliciting any action from any particular investor. Information and opinions presented have been obtained or derived from sources we believe reliable, but we cannot guarantee their accuracy or completeness. Opinions represent WFB�s judgment as of the date of the report and are subject to change without notice. WFC affiliates may issue reports or have opinions, which are inconsistent with, and reach different conclusions from, this report. Past performance does not indicate future results. The value or income associated with a security or an investment may fluctuate. There is always the potential for loss as well as gain. Investments discussed in this presentation are not insured by the Federal Deposit Insurance Corporation (FDIC) and may be unsuitable for some investors depending on their specific investment objectives and financial position. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Asset allocation suggestions do not take the place of a comprehensive financial analysis. Investing in foreign securities presents certain risks that may not be present in domestic securities. For example, investments in foreign and emerging markets present special risks including currency fluctuation, the potential for diplomatic and political instability, regulatory and liquidity risks, foreign taxation and differences in auditing and other financial standards. This presentation is not an offer to buy or sell, or a solicitation of an offer to buy or sell the investments mentioned. The investments discussed or recommended in this presentation may be unsuitable for some investors depending on their specific investment objectives and financial position.Additional information is available upon request. Not for broker/dealer use.