UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-09255
Wells Fargo Variable Trust
(Exact name of registrant as specified in charter)
525 Market St., San Francisco, CA 94105
(Address of principal executive offices) (Zip code)
C. David Messman
Wells Fargo Funds Management, LLC
525 Market St., San Francisco, CA 94105
(Name and address of agent for service)
Registrant's telephone number, including area code: 800-643-9691
Date of fiscal year end: December 31, 2005
Date of reporting period: December 31, 2005
ITEM 1. REPORT TO SHAREHOLDERS
[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
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DECEMBER 31, 2005
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[GRAPHIC OMITTED] Annual Report
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WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
Wells Fargo Advantage Asset Allocation Fund
Wells Fargo Advantage C&B Large Cap Value Fund
Wells Fargo Advantage Discovery Fund(SM)
Wells Fargo Advantage Equity Income Fund
Wells Fargo Advantage International Core Fund
Wells Fargo Advantage Large Company Core Fund
Wells Fargo Advantage Large Company Growth Fund
Wells Fargo Advantage Money Market Fund
Wells Fargo Advantage Multi Cap Value Fund
Wells Fargo Advantage Opportunity Fund(SM)
Wells Fargo Advantage Small Cap Growth Fund
Wells Fargo Advantage Total Return Bond Fund
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
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Table of Contents
Letter to Contractholders ............................................ 1
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Performance Highlights
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Wells Fargo Advantage Asset Allocation Fund ....................... 2
Wells Fargo Advantage C&B Large Cap Value Fund .................... 4
Wells Fargo Advantage Discovery Fund .............................. 6
Wells Fargo Advantage Equity Income Fund .......................... 8
Wells Fargo Advantage International Core Fund ..................... 10
Wells Fargo Advantage Large Company Core Fund ..................... 12
Wells Fargo Advantage Large Company Growth Fund ................... 14
Wells Fargo Advantage Money Market Fund ........................... 16
Wells Fargo Advantage Multi Cap Value Fund ........................ 18
Wells Fargo Advantage Opportunity Fund ............................ 20
Wells Fargo Advantage Small Cap Growth Fund ....................... 22
Wells Fargo Advantage Total Return Bond Fund ...................... 24
Fund Expenses (Unaudited) ............................................ 26
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Portfolio of Investments
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Wells Fargo Advantage Asset Allocation Fund ....................... 28
Wells Fargo Advantage C&B Large Cap Value Fund .................... 43
Wells Fargo Advantage Discovery Fund .............................. 46
Wells Fargo Advantage Equity Income Fund .......................... 50
Wells Fargo Advantage International Core Fund ..................... 53
Wells Fargo Advantage Large Company Core Fund ..................... 57
Wells Fargo Advantage Large Company Growth Fund ................... 59
Wells Fargo Advantage Money Market Fund ........................... 61
Wells Fargo Advantage Multi Cap Value Fund ........................ 63
Wells Fargo Advantage Opportunity Fund ............................ 69
Wells Fargo Advantage Small Cap Growth Fund ....................... 73
Wells Fargo Advantage Total Return Bond Fund ...................... 78
Financial Statements
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Statements of Assets and Liabilities .............................. 88
Statements of Operations .......................................... 92
Statements of Changes in Net Assets ............................... 96
Financial Highlights .............................................. 102
Notes to Financial Highlights ........................................ 106
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Notes to Financial Statements ........................................ 107
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Report of Independent Registered Public Accounting Firm .............. 119
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Tax Information (Unaudited) .......................................... 120
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Other Information (Unaudited) ........................................ 121
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List of Abbreviations ................................................ 123
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NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE
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THIS PAGE IS INTENTIONALLY LEFT BLANK --
LETTER TO CONTRACTHOLDERS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
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DEAR VALUED CONTRACTHOLDER,
Enclosed is your WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS(SM) annual
report for the year ended December 31, 2005. On the following pages, you will
find a discussion of the 12 Funds, including the Fund managers' performance
highlights, information about the holdings of each Fund, and the Fund managers'
strategic outlooks.
ECONOMIC OVERVIEW
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The expansion of the U.S. economy remains strong, with real gross domestic
product (GDP), the most comprehensive measure of economic activity, growing at a
3.5% rate for 2005. This is surprisingly strong growth, given the record high
energy prices reported during the year. The price of crude oil rose to a new
record level during the third quarter and closed the year at $61.06 a barrel,
creating fears of a possible slowdown in consumer spending.
Low interest rates and a consequent extended boom in the housing sector
helped to offset the negative effects of high oil and gas prices in the early
part of the year. Steady growth in employment and household incomes helped bring
consumer spending back to relatively healthy levels. Solid growth in capital
spending by businesses, fueled by strong cash flow and low borrowing costs, also
contributed to economic growth.
Rising energy prices did have an impact on inflation, pushing the
inflation rate upward toward the end of 2005. The consumer price index (CPI)
rose approximately 3% at an annual rate over 12 months ended December 31, 2005.
The core CPI, however, which excludes the volatile food and energy components,
increased by only 2.2% by the end of the year. With core inflation generally
contained, the Federal Reserve (the Fed) continued its strategy of raising
interest rates at a "measured pace" for the year. Since December 2004, the Fed
has incrementally raised the federal funds rate -- its principal policy tool --
from 2.25% to 4.25%. Long-term bond yields did not increase with the federal
funds rate, allowing mortgage rates to remain unusually low.
STOCKS: MODERATE GAINS FOR THE YEAR
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After an impressive rally in the fourth quarter of 2004, stock prices
showed little net change during 2005. The S&P 500 Index began the year at 1202
and ended at 1248. Strong corporate earnings helped the equity markets, while
record prices for crude oil and concerns of a slowdown in worldwide economic
growth capped and often reversed rallies.In the United States, the
fundamentalsof strong earnings and low inflation kept the equity markets steady.
BONDS: UNPRECEDENTED PERFORMANCE
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Yields on most U.S. Treasury notes and bonds declined as the federal funds
rate increased during the year. Exceptional demand for U.S. Treasury securities
from foreign investors and the tame core inflation data were two factors thought
to have kept bond yields low. The flattening in the yield curve was one of the
main elements that contributed to good returns from bonds throughout the year.
The high yield and investment grade segments of the corporate bond market
had positive performance in light of the interest rate environment in 2005.
During April and May 2005, however, downgrades of General Motors and Ford bonds
caused the corporate bond market to underperform. By the close of 2005, the
corporate sectors recovered and again produced solid returns. Municipal bonds
generally performed better than bonds in most taxable sectors during 2005, but
they lagged behind the rally in U.S. Treasuries in May and June. Overall, by the
end of 2005, municipal yields were very attractive relative to yields on
comparable U.S. Treasuries.
LOOKING AHEAD
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We may see some slowing in the economy in 2006 due to lingering effects
from higher energy prices and higher short-term interest rates. Inflation will
likely stay in check and it is expected that the Fed may pull back on its
monetary tightening policy. We believe successful investing includes a balanced
approach of owning a diversified portfolio while keeping a long-term
perspective. While diversification may not prevent losses in a downturn, it may
help reduce them and keep you on track to reach your financial goals. To help
you reach your diversification goals, we offer funds across every key category,
each guided by skillful, independent money managers -- our subadvisors -- chosen
for their focused attention to a particular investment style. We believe that
our insistence on seeking outstanding money managers who share our dedication to
pursuing consistent, long-term results, offers our investors a firmer footing to
navigate changing market conditions and move forward to their financial
destinations.
Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your
confidence in us. Through each market cycle, we are committed to helping you
meet your financial needs. If you have any questions about your investment,
please contact your investment professional, or call us at 1-800-222-8222. You
may also want to visit our Web site at www.wellsfargo.com/advantagefunds.
Sincerely,
/s/ Karla M. Rabusch
Karla M. Rabusch
President
WELLS FARGO ADVANTAGE FUNDS
1
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND (the Fund) seeks long-term
total return, consistent with reasonable risk.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Galen G. Blomster, CFA 04/15/1994
Jeffrey P. Mellas
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
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The Fund returned 4.99%(1) for the 12-month period ended December 31,
2005, outperforming its benchmark, the S&P 500 Index(2), which returned 4.91%
during the same period. The Fund underperformed its other benchmark, the Lehman
Brothers 20+ Year U.S. Treasury Index(3), which returned 8.57% during the same
period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
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The past year was challenging for investors. The S&P 500 index was up only
4.91% for the year and bond yields ended the year at about the same level as
they began, with plenty of volatility in between. Through it all, the economy
showed remarkable resilience, despite rising short-term rates, rising energy
prices, and a devastating hurricane season.
The Federal Reserve (the Fed) continued to remove its expansionary bias by
raising the federal funds rate eight times during 2005 to 4.25%. While
short-term rates rose sharply from the Fed's action, longer-term treasury yields
actually declined 0.30% as a result of strong foreign demand for U.S. treasury
securities and favorable inflation reports late in the year. Domestic large-cap
stocks rallied late in the year to produce a modest gain for stocks. While
stocks generally outperformed bonds in 2005, long-term treasury bonds led the
bond market and outperformed the S&P 500.
While the portfolio's exposure to long-term Treasury bonds contributed to
the Fund's performance, the 25% Tactical Asset Allocation (TAA) shift from
long-term Treasury bonds to stocks did not benefit the Fund.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
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The stock holdings in the Fund are indexed to the S&P 500 Index and the
bond holdings are indexed to the Lehman Brothers 20+ Year U.S. Treasury Bond
Index. The Tactical Asset Allocation (TAA) Model, which seeks to enhance
portfolio returns by shifting assets between stocks and bonds, maintained a 25%
shift toward stocks throughout the 12-month period. In implementing the shift
toward stocks, the Fund employed a hedged futures overlay transaction, thus
keeping the portfolio's underlying assets near their long-term strategic
allocation of 60% stocks and 40% bonds. With the shift toward stocks, the
portfolio maintained a long position in S&P 500 Index futures and was short in
the long-term Treasury bond futures. Throughout the 12-month period, the Fund
was at a maximum equity overweight with an effective target allocation of 85%
stocks and 15% bonds.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
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While stocks outperformed the broad bond market during the period, the TAA
Model currently indicates that stocks remain compellingly attractive relative to
bonds. As a result, the Fund will keep its overweighted position in stocks until
the relative valuation between stocks and bonds returns to more normal levels.
BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS SHOULD ONLY BE
CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES
OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. BOND VALUES
FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, GENERAL
MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES. IN GENERAL, WHEN
INTEREST RATES RISE, BOND VALUES FALL AND INVESTORS MAY LOSE PRINCIPAL VALUE.
CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER
RISKS.
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The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND.
2
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
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AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
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6-Month* 1-Year 5-Year 10-Year
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WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND (Incept. Date 04/15/1994) 4.03 4.99 2.59 7.79
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Benchmarks
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S&P 500 Index(2) 5.76 4.91 0.54 9.07
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Lehman Brothers 20+ Year U.S. Treasury Index(3) (2.07) 8.57 7.87 7.63
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF DECEMBER 31, 2005)
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Beta** 0.81
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Weighted Average Coupon of Bond Portfolio 5.97%
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Weighted Average Maturity of Bond Portfolio 22.49 years
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Modified Duration of Bond Portfolio 13.04 years
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Portfolio Turnover 2%
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Net Asset Value (NAV) $ 13.05
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (11%)
Consumer Staples (10%)
Energy (9%)
Financial Services (21%)
Health Care (14%)
Industrials (11%)
Information Technology (15%)
Materials (3%)
Telecommunications Services (3%)
Utilities (3%)
TEN LARGEST HOLDINGS(4,5) (AS OF DECEMBER 31, 2005)
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U.S. Treasury Bond, 6.13%, 11/15/2027 5.22%
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U.S. Treasury Bond, 6.25%, 5/15/2030 4.36%
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U.S. Treasury Bond, 5.38%, 2/15/2031 3.90%
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U.S. Treasury Bond, 6.00%, 2/15/2026 3.19%
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U.S. Treasury Bond, 6.88%, 8/15/2025 2.80%
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U.S. Treasury Bond, 6.13%, 8/15/2029 2.68%
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U.S. Treasury Bond, 6.50%, 11/15/2026 2.64%
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U.S. Treasury Bond, 5.50%, 8/15/2028 2.60%
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U.S. Treasury Bond, 5.25%, 2/15/2029 2.45%
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U.S. Treasury Bond, 6.63%, 2/15/2027 2.36%
GROWTH OF $10,000 INVESTMENT(6)
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[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
LEHMAN BROTHERS 20+
WELLS FARGO ADVANTAGE YEAR U.S TREASURY
ASSEST ALLOCATION FUND INDEX S & P 500 INDEX
12/31/1995 10000 10,000 10,000
1/31/1996 10186 9,988 10,340
2/29/1996 10106 9,458 10,436
3/31/1996 10165 9,254 10,536
4/30/1996 10147 9,090 10,691
5/31/1996 10237 9,042 10,966
6/30/1996 10376 9,243 11,008
7/31/1996 10140 9,243 10,521
8/31/1996 10121 9,111 10,743
9/30/1996 10509 9,377 11,347
10/31/1996 10877 9,769 11,660
11/30/1996 11438 10,118 12,540
12/31/1996 11146 9,854 12,292
1/31/1997 11360 9,766 13,060
2/28/1997 11390 9,768 13,162
3/31/1997 10984 9,499 12,623
4/30/1997 11428 9,741 13,375
5/31/1997 11814 9,853 14,188
6/30/1997 12131 10,060 14,824
7/31/1997 12962 10,705 16,002
8/31/1997 12431 10,374 15,106
9/30/1997 12900 10,682 15,932
10/31/1997 12920 11,075 15,400
11/30/1997 13214 11,248 16,113
12/31/1997 13473 11,448 16,390
1/31/1998 13675 11,688 16,571
2/28/1998 14282 11,595 17,765
3/31/1998 14796 11,618 18,675
4/30/1998 14921 11,657 18,866
5/31/1998 14841 11,904 18,541
6/30/1998 15394 12,217 19,294
7/31/1998 15245 12,148 19,089
8/31/1998 13792 12,741 16,331
9/30/1998 14566 13,211 17,378
10/31/1998 15406 12,986 18,790
11/30/1998 16153 13,106 19,929
12/31/1998 16876 13,076 21,077
1/31/1999 17453 13,200 21,958
2/28/1999 16826 12,494 21,275
3/31/1999 17305 12,439 22,126
4/30/1999 17796 12,450 22,983
5/31/1999 17419 12,252 22,440
6/30/1999 17905 12,102 23,686
7/31/1999 17513 12,033 22,946
8/31/1999 17424 11,976 22,833
9/30/1999 17172 12,063 22,207
10/31/1999 17783 12,064 23,612
11/30/1999 17935 11,972 24,092
12/31/1999 18450 11,761 25,511
1/31/2000 18066 11,965 24,230
2/29/2000 18194 12,390 23,772
3/31/2000 19505 12,854 26,097
4/30/2000 19080 12,726 25,312
5/31/2000 18759 12,662 24,793
6/30/2000 19194 12,937 25,405
7/31/2000 19117 13,193 25,009
8/31/2000 20005 13,515 26,562
9/30/2000 19222 13,284 25,159
10/31/2000 19276 13,506 25,054
11/30/2000 18457 13,964 23,079
12/31/2000 18638 14,290 23,192
1/31/2001 19110 14,289 24,016
2/28/2001 17856 14,540 21,828
3/31/2001 16989 14,424 20,446
4/30/2001 17802 13,971 22,033
5/31/2001 17924 13,995 22,181
6/30/2001 17668 14,139 21,642
7/31/2001 17749 14,698 21,429
8/31/2001 17130 15,050 20,090
9/30/2001 16277 15,085 18,469
10/31/2001 16768 15,983 18,822
11/30/2001 17344 15,135 20,265
12/31/2001 17341 14,809 20,444
1/31/2002 17215 15,016 20,145
2/28/2002 17018 15,181 19,756
3/31/2002 17232 14,480 20,499
4/30/2002 16779 15,073 19,257
5/31/2002 16708 15,075 19,116
6/30/2002 16143 15,342 17,755
7/31/2002 15310 15,828 16,372
8/31/2002 15482 16,654 16,478
9/30/2002 14169 17,392 14,689
10/31/2002 15108 16,743 15,980
11/30/2002 15830 16,608 16,920
12/31/2002 15113 17,327 15,927
1/31/2003 14779 17,273 15,511
2/28/2003 14620 17,819 15,278
3/31/2003 14712 17,521 15,425
4/30/2003 15733 17,746 16,696
5/31/2003 16520 18,883 17,574
6/30/2003 16639 18,496 17,799
7/31/2003 16595 16,591 18,112
8/31/2003 16902 16,953 18,465
9/30/2003 16861 17,883 18,270
10/31/2003 17551 17,331 19,302
11/30/2003 17683 17,431 19,472
12/31/2003 18452 17,639 20,492
1/31/2004 18777 17,993 20,869
2/29/2004 19028 18,384 21,159
3/31/2004 18822 18,665 20,840
4/30/2004 18378 17,498 20,513
5/31/2004 18555 17,427 20,794
6/30/2004 18872 17,596 21,197
7/31/2004 18380 17,918 20,496
8/31/2004 18534 18,659 20,578
9/30/2004 18708 18,862 20,801
10/31/2004 18987 19,182 21,118
11/30/2004 19558 18,706 21,973
12/31/2004 20176 19,222 22,720
1/31/2005 19896 19,899 22,166
2/28/2005 20192 19,636 22,631
3/31/2005 19868 19,502 22,231
4/30/2005 19664 20,265 21,808
5/31/2005 20274 20,885 22,502
6/30/2005 20362 21,309 22,533
7/31/2005 20891 20,670 23,371
8/31/2005 20827 21,362 23,159
9/30/2005 20804 20,598 23,346
10/31/2005 20417 20,148 22,956
11/30/2005 21078 20,288 23,824
12/31/2005 21183 20,872 23,834
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(1) The Fund's Advisor has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund.Actual reductions of operating expenses can
increase total return to shareholders.Without these reductions,the Fund's return
would have been lower.
Performance for the Fund prior to September 20,1999 reflects performance
of the Life and Annuity Trust Asset Allocation Fund,its predecessor fund.\
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an Index.
(3) The Lehman Brothers 20+ Year U.S.Treasury Index is an unmanaged index
composed of securities in the U.S.Treasury Index with maturities of 20 years or
greater.You cannot invest directly in an Index.
(4) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution,portfolio holdings and fund characteristics.
(5) The ten largest holdings are calculated based on the market value of the
securities divided by total market value of the portfolio of the Fund.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE ASSET
ALLOCATION FUND for the most recent ten years of the Fund with the S&P 500 Index
and the Lehman Brothers 20+ Year U.S.Treasury Index.The chart assumes a
hypothetical $10,000 investment and reflects all operating expenses of the Fund.
3
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
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WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
INVESTMENT OBJECTIVE
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The WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND (the Fund) seeks
maximum long-term total return, consistent with minimizing risk to principal.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Cooke & Bieler, L.P.
FUND MANAGERS INCEPTION DATE
Kermick S. Eck, CFA 05/01/1998
Michael M. Meyer, CFA
James R. Norris
Edward W. O'Connor, CFA
R. James O'Neil, CFA
Mehul Trivedi, CFA
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
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The Fund returned 3.11%(1) for the 12-month period ended December 31,
2005, underperforming its broad-based benchmark, the S&P 500 Index(2), which
returned 4.91%, and underperforming the Russell 1000(R) Value Index(3), which
returned 7.05%, during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
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The Fund's disappointing returns in 2005 relative to its benchmarks
(especially the Russell 1000(R) Value Index which has substantial exposure to
energy and utilities stocks) was attributable to its underweighted position in
energy and utilities and to its investment in companies (primarily industrial
manufacturing and retailing) that were negatively impacted by rising energy
costs. After back-to-back years of significant gains from the energy and
utilities sectors in an otherwise largely uneventful environment, we believe
that their recent returns are not sustainable when viewed in the context of
longer-term fundamental prospects. Consequently, we currently see very limited
opportunities in energy and utilities from a bottom-up, long-term perspective,
and we believe that the Fund will benefit, going forward, from its lack of
significant exposure to these groups, even if energy prices permanently remain
at their currently high prices.
The other notable, though less material, factors in the Fund's
underperformance in 2005 was the impact of stock selection due to the weak
relative performance of high-quality stocks, a staple in the Fund. Although some
stocks underperformed, including Vodafone, Comcast, and Gannett, there were no
major fundamental setbacks in the Fund, and numerous holdings posted strong
double-digit returns, including HCA, Wendy's, and Principal Financial Group.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
New additions to the portfolio during the year included Applied Materials,
Avon Products, Boston Scientific, Carnival Corp., Fed Ex, Flextronics
International, and Tyco. To make room for these holdings, several others were
eliminated including Kohl's, Wendy's, Parametric Technology and Principal
Financial Group, which reached our cash flow driven price targets, and Snap-On,
which was sold due to our concerns regarding the company's ability to generate
long-term results consistent with the Fund's investment style, resulting in a
higher portfolio turnover rate for this year than in prior periods.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
While inflation remains generally moderate and we continue to characterize
the underlying economic environment as favorable for investing in equities,
however, the outlook for 2006 is not without its challenges. The recently
inverted yield curve has historically been a leading indicator of economic
weakness while the housing market, which has been a very important growth engine
in the recent past, appears to be slowing. High energy prices could also further
impact consumer and industrial demand. In addition, the federal government
continues to spend more money than it receives while the U.S. economy remains
dependent upon foreign capital to finance its trade deficit. On the valuation
side of the equation, there appears to be certain pockets of excess, and the
broad equity market seems to be acting reasonably given the underlying economic
environment and current interest rate levels.
We continue to remain committed to our "high-quality, low-risk" investment
approach and we believe that we hold solid businesses with competitive
advantages, good cash flow characteristics, and conservative balance sheets.
Short-term disappointments are inevitable, given our willingness to be different
from the holdings in our benchmark. We are hopeful that adherence to our
investment process may reward the Fund over the long run.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS INCLUDING
INFORMATION REGARDING SURRENDER CHARGES,MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005, and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND.
4
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- -----------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND (Incept. Date 05/01/1998) 1.82 3.11 0.46 0.21
- -----------------------------------------------------------------------------------------------------------------------
Benchmarks
- -----------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) 5.76 4.91 0.54 3.09
- -----------------------------------------------------------------------------------------------------------------------
Russell 1000(R) Value Index(3) 5.20 7.05 5.28 5.69
- -----------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF DECEMBER 31, 2005)
- -----------------------------------------------------------------------------
Beta** 1.10
- -----------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 16.20
- -----------------------------------------------------------------------------
Price to Book Ratio 3.82
- -----------------------------------------------------------------------------
Median Market Cap ($B) $ 22.91
- -----------------------------------------------------------------------------
Portfolio Turnover(6) 106%
- -----------------------------------------------------------------------------
Net Asset Value (NAV) $ 9.34
- -----------------------------------------------------------------------------
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (20%)
Consumer Staples ( 9%)
Energy (5%)
Financial (22%)
Health Care (11%)
Industrials (21%)
Information Technology (7%)
Materials (2%)
Telecommunications Services (3%)
TEN LARGEST EQUITY HOLDINGS(4,5) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Bank Of America Corporation 3.72%
- --------------------------------------------------------------------------------
McDonald's Corporation 3.20%
- --------------------------------------------------------------------------------
Vodafone Group plc ADR 3.07%
- --------------------------------------------------------------------------------
American Express Company 3.00%
- --------------------------------------------------------------------------------
Molex Incorporated 2.88%
- --------------------------------------------------------------------------------
Dover Corporation 2.88%
- --------------------------------------------------------------------------------
Exxon Mobil Corporation 2.84%
- --------------------------------------------------------------------------------
Manpower Incorporated 2.81%
- --------------------------------------------------------------------------------
Omnicom Group Incorporated 2.81%
- --------------------------------------------------------------------------------
State Street Corporation 2.76%
GROWTH OF $10,000 INVESTMENT(6)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE RUSSELL 1000(R)
C&B LARGE CAP VALUE FUND VALUE INDEX S&P 500 INDEX
5/1/1998 10000 10,000 10,000
5/31/1998 9680 9,852 9,828
6/30/1998 9739 9,978 10,227
7/31/1998 9268 9,801 10,119
8/31/1998 8156 8,343 8,656
9/30/1998 8626 8,822 9,211
10/31/1998 9199 9,506 9,960
11/30/1998 9460 9,949 10,564
12/31/1998 9624 10,288 11,172
1/31/1999 9403 10,370 11,639
2/28/1999 9161 10,224 11,277
3/31/1999 9380 10,436 11,728
4/30/1999 10188 11,410 12,182
5/31/1999 10087 11,285 11,895
6/30/1999 10399 11,612 12,555
7/31/1999 10024 11,272 12,163
8/31/1999 9477 10,854 12,103
9/30/1999 8981 10,475 11,771
10/31/1999 9285 11,078 12,516
11/30/1999 9255 10,992 12,770
12/31/1999 9386 11,044 13,522
1/31/2000 9142 10,684 12,844
2/29/2000 8715 9,891 12,601
3/31/2000 9498 11,097 13,833
4/30/2000 9284 10,968 13,417
5/31/2000 9416 11,084 13,142
6/30/2000 9157 10,577 13,466
7/31/2000 9311 10,709 13,256
8/31/2000 9974 11,305 14,080
9/30/2000 9813 11,409 13,336
10/31/2000 10048 11,689 13,280
11/30/2000 9527 11,256 12,234
12/31/2000 9929 11,820 12,294
1/31/2001 10103 11,865 12,730
2/28/2001 9806 11,535 11,570
3/31/2001 9420 11,128 10,838
4/30/2001 9953 11,673 11,679
5/31/2001 10107 11,935 11,757
6/30/2001 9824 11,671 11,471
7/31/2001 9783 11,646 11,359
8/31/2001 9249 11,179 10,649
9/30/2001 8553 10,392 9,790
10/31/2001 8738 10,303 9,977
11/30/2001 9222 10,901 10,742
12/31/2001 9295 11,158 10,836
1/31/2002 8821 11,073 10,678
2/28/2002 8769 11,090 10,472
3/31/2002 9341 11,615 10,866
4/30/2002 8794 11,216 10,207
5/31/2002 8711 11,273 10,133
6/30/2002 8157 10,625 9,411
7/31/2002 7392 9,637 8,678
8/31/2002 7423 9,711 8,735
9/30/2002 6436 8,631 7,786
10/31/2002 6977 9,270 8,471
11/30/2002 7424 9,854 8,969
12/31/2002 7056 9,427 8,442
1/31/2003 6857 9,199 8,222
2/28/2003 6658 8,953 8,098
3/31/2003 6673 8,968 8,176
4/30/2003 7197 9,757 8,850
5/31/2003 7606 10,388 9,315
6/30/2003 7745 10,517 9,435
7/31/2003 7872 10,674 9,601
8/31/2003 7903 10,841 9,788
9/30/2003 7858 10,734 9,684
10/31/2003 8292 11,391 10,231
11/30/2003 8376 11,546 10,321
12/31/2003 8859 12,258 10,862
1/31/2004 9008 12,473 11,062
2/29/2004 9253 12,740 11,216
3/31/2004 9147 12,629 11,046
4/30/2004 8998 12,321 10,873
5/31/2004 9009 12,446 11,022
6/30/2004 9151 12,740 11,236
7/31/2004 8969 12,561 10,864
8/31/2004 9044 12,739 10,908
9/30/2004 9111 12,937 11,026
10/31/2004 9176 13,152 11,194
11/30/2004 9562 13,817 11,647
12/31/2004 9854 14,280 12,043
1/31/2005 9789 14,025 11,749
2/28/2005 10016 14,490 11,996
3/31/2005 9904 14,291 11,784
4/30/2005 9720 14,035 11,560
5/31/2005 9958 14,374 11,927
6/30/2005 9978 14,530 11,944
7/31/2005 10270 14,950 12,388
8/31/2005 10075 14,886 12,276
9/30/2005 9978 15,094 12,375
10/31/2005 9805 14,711 12,168
11/30/2005 10185 15,192 12,628
12/31/2005 10160 15,285 12,633
- --------------------------------------------------------------------------------
(1) The Fund's Advisor has committed through April 30, 2006 to waive fees and/or
reimburse expenses to the extent necessary to maintain a certain net operating
expense ratio for the Fund.Actual reductions of operating expenses can increase
total return to shareholders.Without these reductions,the Fund's returns would
have been lower.
Prior to April 11,2005,the WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND
was named the Wells Fargo Equity Value Fund.Performance shown for the Fund for
periods prior to September 20,1999 reflects performance of the Life and Annuity
Trust Equity Value Fund,its predecessor fund.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an Index.
(3) The Russell 1000(R) Value Index measures performance of those Russell
1000(R) companies with lower price-to-book ratios and lower forecasted growth
values.You cannot invest directly in an Index.
(4) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution,portfolio holdings and fund characteristics.
(5) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio of the Fund.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE C&B LARGE
CAP VALUE FUND for the life of the Fund with the S&P 500 Index and the Russell
1000(R) Value Index.The chart assumes a hypothetical $10,000 investment and
reflects all operating expenses of the Fund.
5
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE DISCOVERY FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE DISCOVERY FUND(SM) (the Fund) seeks long-term
capital appreciation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Thomas J. Pence, CFA 05/08/1992
James M. Leach, CFA
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 8.27%(1) for the 12-month period ended December 31,
2005, underperforming its benchmark, the Russell Midcap(R) Growth Index(2),
which returned 12.65% during the same period. The Fund however, outperformed its
other benchmark, the Russell 2000(R) Index(3), which returned 4.55% during the
same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Information technology holdings detracted from performance during the
period. Our strategy in technology was to focus on companies with products that
were a high priority among technology purchasers. This strategy led us to
holdings in software, communications equipment and semiconductors. For example,
Cogent Inc., a core growth holding, produced volatile returns. Nevertheless,
this biometric company that provides automated fingerprint identification
systems to governments, may see new contract wins due to its strong competitive
position. Conversely, the Fund's performance significantly benefited from large
positions in Marvell Technology Group Ltd. Marvell is a semiconductor firm with
increasing sales; it continues to penetrate multiple consumer products,
including wireless LAN and optical storage.
The Fund experienced strong returns from its holdings in the
telecommunication and energy sectors. In telecommunication, our long-term
holding in NII Holdings positively impacted returns during the period. The
U.S.-based wireless firm continued to see strong subscriber growth in Latin
America, specifically Mexico, Brazil, Argentina and Peru. In addition, we
continue to believe there is a balance in supply and demand for the energy
market, which is positive for both service companies and E&P (Exploration and
Production) companies. A specific stock holding during the period that
experienced strong returns was Chesapeake Energy Corp., an independent producer
of natural gas in the United States. The firm entered into an agreement to
acquire a private company, CNR, that will expand its geographic footprint.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Throughout the reporting period, we continued to utilize our bottom-up
research process seeking to identify unique growth opportunities in different
sectors. For example, we increased our exposure in the industrial sector by
initiating positions in BE Aerospace and Foster Wheeler Ltd. BE Aerospace is a
leading manufacturer of cabin interior products and distributor of fasteners for
the commercial aerospace markets. The firm benefited from strong international
demand for cabin interior products because airlines were undertaking major
premium-class upgrades to accommodate and attract travelers flying on profitable
long-haul flights. Foster Wheeler Ltd., offers a range of design, engineering,
construction, manufacturing, project development and management, research, and
plant operation services.
Our energy weighting was increased early in the period based on our solid
conviction that demand would exceed supply. We also increased our weightings in
the telecommunications and materials sectors.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We expect 2006 to be more challenging than 2005. With little expectation
that valuations will rise meaningfully, we believe earnings growth will be the
driver of market returns. Currently, market participants appear to be
discounting long-term earnings growth by 5%. These muted investor expectations
may provide potential for some upside surprises in 2006. We will continue to
focus on our investment process of identifying long-term growth opportunities in
both core growth as well as developing growth companies.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. FUNDS THAT INVEST IN SMALLER COMPANIES INVOLVE
ADDITIONAL RISKS BECAUSE THESE COMPANIES OFTEN HAVE LIMITED FINANCIAL RESOURCES,
AND THEIR STOCKS TEND TO BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGER
COMPANIES. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN
AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE
HIGHER SHORT-TERM CAPITAL GAINS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR
MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN
INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN
INVESTMENT RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES,MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005, and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE DISCOVERY FUND.
6
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
- ---------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE DISCOVERY FUND(SM) (Incept. Date 05/08/1992) 9.13 8.27 9.85 7.77
- ---------------------------------------------------------------------------------------------------------
Benchmarks
- ---------------------------------------------------------------------------------------------------------
Russell Midcap(R) Growth Index(2) 8.41 12.65 8.45 12.49
- ---------------------------------------------------------------------------------------------------------
Russell 2000(R) Index(3) 5.88 4.55 8.22 9.26
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Beta** 0.99
- --------------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 33.25
- --------------------------------------------------------------------------------
Price to Book Ratio 4.35
- --------------------------------------------------------------------------------
Median Market Cap ($B) $ 2.24
- --------------------------------------------------------------------------------
Portfolio Turnover 144%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $ 14.34
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (22%)
Consumer Staples ( 2%)
Energy (12%)
Financial (2%)
Health Care (19%)
Industrials (10%)
Information Technology (23%)
Materials (4%)
Telecommunications Services (6%)
TEN LARGEST EQUITY HOLDINGS(4,5) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
NII Holdings Incorporated 3.26%
- --------------------------------------------------------------------------------
Chesapeake Energy Corporation 2.90%
- --------------------------------------------------------------------------------
Hilton Hotels Corporation 2.51%
- --------------------------------------------------------------------------------
Regal Entertainment Group 2.49%
- --------------------------------------------------------------------------------
BE Aerospace Incorporated 2.42%
- --------------------------------------------------------------------------------
Digene Corporation 2.21%
- --------------------------------------------------------------------------------
Foster Wheeler Limited 2.20%
- --------------------------------------------------------------------------------
Cogent Incorporated 2.19%
- --------------------------------------------------------------------------------
Grant Prideco Incorporated 2.12%
- --------------------------------------------------------------------------------
Cognizant Technology Soultions Corporation 1.93%
GROWTH OF $10,000 INVESTMENT(6)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE RUSSELL MIDCAP(R) RUSSELL 2000(R)
DISCOVERY FUND GROWTH INDEX INDEX
12/31/1995 10000 10,000 10,000
1/31/1996 10007 10,211 9,989
2/29/1996 9635 10,451 10,301
3/31/1996 9696 10,602 10,511
4/30/1996 10154 10,902 11,073
5/31/1996 10437 11,067 11,509
6/30/1996 9769 10,901 11,036
7/31/1996 8914 10,226 10,073
8/31/1996 9199 10,713 10,658
9/30/1996 9679 11,242 11,075
10/31/1996 9642 11,332 10,904
11/30/1996 10118 12,022 11,354
12/31/1996 10081 11,900 11,651
1/31/1997 10324 12,345 11,884
2/28/1997 9745 12,326 11,596
3/31/1997 9073 11,802 11,049
4/30/1997 9175 12,096 11,080
5/31/1997 10174 12,979 12,313
6/30/1997 10510 13,403 12,841
7/31/1997 11369 14,521 13,439
8/31/1997 11481 14,364 13,746
9/30/1997 12237 15,183 14,753
10/31/1997 11640 14,593 14,105
11/30/1997 11612 14,940 14,013
12/31/1997 11229 15,352 14,258
1/31/1998 11117 15,063 14,033
2/28/1998 11948 16,240 15,070
3/31/1998 12489 17,010 15,691
4/30/1998 12394 17,053 15,777
5/31/1998 11836 16,525 14,927
6/30/1998 12091 16,754 14,958
7/31/1998 11523 15,955 13,747
8/31/1998 9658 13,403 11,077
9/30/1998 9999 14,270 11,944
10/31/1998 10567 15,243 12,432
11/30/1998 11107 15,965 13,083
12/31/1998 12044 16,901 13,893
1/31/1999 12129 16,872 14,078
2/28/1999 11003 16,311 12,938
3/31/1999 10822 16,822 13,139
4/30/1999 11200 18,065 14,317
5/31/1999 11233 18,013 14,526
6/30/1999 11389 18,648 15,182
7/31/1999 10833 18,136 14,766
8/31/1999 10166 17,667 14,220
9/30/1999 10043 17,046 14,223
10/31/1999 10032 17,853 14,281
11/30/1999 10900 18,367 15,134
12/31/1999 12657 19,983 16,847
1/31/2000 12157 19,322 16,576
2/29/2000 14025 20,807 19,312
3/31/2000 14136 21,998 18,040
4/30/2000 13469 20,957 16,954
5/31/2000 13636 20,402 15,965
6/30/2000 14147 21,005 17,357
7/31/2000 14448 20,770 16,798
8/31/2000 14837 22,760 18,080
9/30/2000 14081 22,436 17,549
10/31/2000 13402 22,090 16,766
11/30/2000 12301 20,102 15,044
12/31/2000 13213 21,631 16,336
1/31/2001 14103 21,980 17,187
2/28/2001 13169 20,642 16,060
3/31/2001 12824 19,361 15,275
4/30/2001 14114 21,017 16,469
5/31/2001 14046 21,408 16,874
6/30/2001 14499 21,207 17,456
7/31/2001 13700 20,600 16,512
8/31/2001 13047 19,808 15,979
9/30/2001 11714 17,419 13,828
10/31/2001 12500 18,109 14,637
11/30/2001 13180 19,627 15,770
12/31/2001 13753 20,415 16,743
1/31/2002 13713 20,293 16,569
2/28/2002 13473 20,078 16,115
3/31/2002 14366 21,282 17,410
4/30/2002 13953 20,869 17,569
5/31/2002 13886 20,633 16,789
6/30/2002 13127 19,250 15,956
7/31/2002 12180 17,371 13,547
8/31/2002 12180 17,466 13,513
9/30/2002 11487 15,855 12,543
10/31/2002 12140 16,656 12,945
11/30/2002 12767 17,812 14,100
12/31/2002 12100 17,111 13,314
1/31/2003 11754 16,765 12,946
2/28/2003 11741 16,543 12,555
3/31/2003 11887 16,706 12,717
4/30/2003 12713 17,919 13,922
5/31/2003 13633 19,559 15,416
6/30/2003 13686 19,757 15,695
7/31/2003 14672 20,408 16,678
8/31/2003 15645 21,294 17,441
9/30/2003 15126 21,028 17,119
10/31/2003 16458 22,633 18,557
11/30/2003 16698 23,268 19,216
12/31/2003 16871 23,965 19,606
1/31/2004 17484 24,661 20,456
2/29/2004 17871 25,192 20,641
3/31/2004 17671 25,198 20,833
4/30/2004 16951 24,272 19,770
5/31/2004 17311 24,875 20,084
6/30/2004 17804 25,563 20,930
7/31/2004 16392 24,445 19,521
8/31/2004 15792 24,551 19,420
9/30/2004 16978 25,348 20,332
10/31/2004 17618 26,047 20,732
11/30/2004 18964 27,634 22,531
12/31/2004 19523 28,810 23,197
1/31/2005 18710 28,097 22,230
2/28/2005 18750 28,965 22,606
3/31/2005 18302 28,737 21,959
4/30/2005 17099 27,821 20,701
5/31/2005 18632 29,153 22,057
6/30/2005 19369 29,937 22,908
7/31/2005 20578 31,515 24,361
8/31/2005 20519 31,294 23,910
9/30/2005 21079 31,711 23,984
10/31/2005 20018 30,759 23,238
11/30/2005 20814 32,125 24,365
12/31/2005 21138 32,456 24,253
- --------------------------------------------------------------------------------
(1) The Fund's Advisor has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund.Actual reductions of operating expenses can
increase total return to shareholders.Without these reductions,the Fund's return
would have been lower.
Performance shown for the WELLS FARGO ADVANTAGE DISCOVERY FUNDSM for
periods prior to April 11, 2005 reflects the performance of the Strong Discovery
Fund II, its predecessor fund.
(2) The Russell Midcap(R) Growth Index measures the performance of those Russell
Midcap(R) companies with higher price-to-book ratios and higher forecasted
growth values.The stocks are also members of the Russell 1000(R) Growth
index.You cannot invest directly in an Index.
(3) The Russell 2000(R) Index measures the performance of the 2,000 smallest
companies in the Russell 3000(R) Index, which represents approximately 8% of the
total market capitalization of the Russell 3000(R) Index.You cannot invest
directly in an Index.
(4) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution,portfolio holdings and fund characteristics.
(5) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio of the Fund.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE DISCOVERY
FUNDSM for the most recent ten years of the Fund with the Russell Midcap(R)
Growth Index and the Russell 2000(R) Index.The chart assumes a hypothetical
$10,000 investment and reflects all operating expenses of the Fund.
7
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE EQUITY INCOME FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE EQUITY INCOME FUND (the Fund) seeks long-term
capital appreciation and above-average dividend income.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Gary J. Dunn, CFA 05/06/1996
David L. Roberts, CFA
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 5.38%(1) for the 12-month period ended December 31,
2005, outperforming its broad-based benchmark, the S&P 500 Index(2) which
returned 4.91%, and underperforming the Russell 1000(R) Value Index(3), which
returned 7.05% for the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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 DATE QUOTED. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Sectors that helped performance included utilities, energy, information
technology and the consumer sectors. Public Service Enterprise Group was one of
the Fund's top performers after agreeing to be acquired by Exelon. Utilities, in
general, benefited from an industry-wide earnings recovery attributable to an
improved pricing structure. Energy companies including ConocoPhillips produced
record profits and Hewlett Packard (HP), under new management, was up more than
36% as earnings increased 20% on 8% revenue growth. Cost reductions, improved
execution and a higher degree of consistency and credibility were all positives
for HP.
PepsiCo benefited from good earnings increases, as Pepsi Beverages North
American and Pepsi International both had better than expected results. Altria
was up significantly after reporting good third quarter results and an improving
litigation environment. A split-up of the company could occur as early as the
first quarter of 2006, potentially enhancing Altria's total company value.
Sectors that had a negative impact on performance included telecommunication
services, health care, materials, and industrials. The intense competition in
the telecommunications sector -- including the competition for local calling
customers from cable and Internet companies -- continued to be challenging.
Verizon declined as investors struggled with the pending MCI merger,
larger-than-expected costs of the fiber build-out, and a no-growth earnings
year.
Abbott Labs declined after disappointing reports on its new heart drug
were published, but we believe valuation looks attractive. Dupont declined as
speculation regarding issues with the Senate asbestos bill continued to persist,
and higher raw materials costs negatively impacted earnings. However, Dupont's
fundamentals are solid and improving as pricing power becomes more evident.
Industrial giants 3M and General Electric both had negative returns for 2005
despite good earnings growth and double-digit increases in dividends. It is
believed that both companies may be expected to grow their earnings at a
double-digit level long-term.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The consumer stocks in the portfolio have performed extremely well over
the last several years so we took advantage of this performance to reduce our
weightings in both sectors. We sold entire positions of Kimberly Clark and Sara
Lee, and added a new position in Colgate. We reduced our overall weight in
industrials by trimming all positions and used the proceeds to add to sectors we
felt were attractive based on valuation and fundamentals, such as financials.
In the financial sector, we added new positions in Fifth Third Bancorp and
North Fork Bancorp. In the health care sector Quest Diagnostics was added, and
in information technology we added to existing positions. The holdings in the
energy and telecommunication services sectors were diversified by the additions
of Kinder Morgan and Tidewater in energy and Alltel in telecommunications. By
making these changes we placed an emphasis on those sectors that we believe
present the best opportunities.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Large-cap stocks have outperformed small and mid-cap stocks since the end
of July. High quality, large-cap, dividend-paying stocks have assumed a
leadership role since mid-year, though there was somewhat of a reversal in
December. Strong fundamentals including very good expected earnings growth,
strong historical earnings growth, and attractive valuation still leaves plenty
of room for large-cap stocks to move higher. High-quality stocks, which have
underperformed low-quality stocks from an annual perspective over the past two
years, are attractive on a valuation basis. These factors, along with a higher
than average dividend yield and dividend growth rate, may continue to provide a
positive catalyst for the Equity Income Fund in 2006.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES,MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE EQUITY INCOME FUND.
8
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE EQUITY INCOME FUND (Incept. Date 05/06/1996) 4.44 5.38 2.44 7.76
- ------------------------------------------------------------------------------------------------------------
Benchmarks
- ------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) 5.76 4.91 0.54 8.65
- ------------------------------------------------------------------------------------------------------------
Russell 1000(R) Value Index(3) 5.20 7.05 5.28 10.67
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Beta** 0.91
- --------------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 15.00
- --------------------------------------------------------------------------------
Price to Book Ratio 2.60
- --------------------------------------------------------------------------------
Median Market Cap ($B) $ 60.00
- --------------------------------------------------------------------------------
Portfolio Turnover 23%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $ 16.96
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (10%)
Consumer Staples (8%)
Energy (12%)
Financial Services (28%)
Health Care (10%)
Industrials (10%)
Information Technology (10%)
Materials (4%)
Telecommunications Services (3%)
Utilities (5%)
TEN LARGEST EQUITY HOLDINGS(4,5) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Citigroup Incorporated 4.29%
- --------------------------------------------------------------------------------
Exxon Mobil Corporation 3.83%
- --------------------------------------------------------------------------------
General Electric Company 3.76%
- --------------------------------------------------------------------------------
St. Paul Travelers Companies Incorporated 2.91%
- --------------------------------------------------------------------------------
PepsiCo Incorporated 2.81%
- --------------------------------------------------------------------------------
Morgan Stanley 2.71%
- --------------------------------------------------------------------------------
Fortune Brands Incorporated 2.71%
- --------------------------------------------------------------------------------
3M Company 2.59%
- --------------------------------------------------------------------------------
E.I. du Pont de Nemours & Company 2.53%
- --------------------------------------------------------------------------------
Target Corporation 2.50%
GROWTH OF $10,000 INVESTMENT(6)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE RUSSELL 1000(R)
EQUITY INCOME FUND S&P 500 INDEX VALUE INDEX
5/6/1996 10000 10,000 10,000
5/31/1996 10000 10,442 10,338
6/30/1996 10110 10,482 10,346
7/31/1996 9710 10,018 9,955
8/31/1996 9830 10,230 10,240
9/30/1996 10250 10,805 10,646
10/31/1996 10490 11,103 11,058
11/30/1996 11170 11,941 11,860
12/31/1996 10995 11,705 11,708
1/31/1997 11540 12,436 12,276
2/28/1997 11691 12,533 12,457
3/31/1997 11348 12,019 12,008
4/30/1997 11681 12,736 12,513
5/31/1997 12215 13,510 13,212
6/30/1997 12719 14,115 13,779
7/31/1997 13535 15,238 14,816
8/31/1997 12910 14,384 14,289
9/30/1997 13525 15,171 15,152
10/31/1997 13132 14,664 14,729
11/30/1997 13716 15,343 15,380
12/31/1997 13953 15,607 15,829
1/31/1998 13994 15,779 15,606
2/28/1998 14902 16,917 16,656
3/31/1998 15647 17,783 17,676
4/30/1998 15800 17,964 17,794
5/31/1998 15585 17,655 17,531
6/30/1998 15830 18,372 17,755
7/31/1998 15381 18,177 17,441
8/31/1998 13545 15,551 14,846
9/30/1998 14290 16,547 15,698
10/31/1998 15290 17,893 16,915
11/30/1998 15993 18,977 17,703
12/31/1998 16523 20,070 18,306
1/31/1999 16472 20,909 18,453
2/28/1999 16482 20,259 18,193
3/31/1999 17091 21,069 18,569
4/30/1999 17959 21,884 20,304
5/31/1999 17917 21,368 20,080
6/30/1999 18630 22,554 20,663
7/31/1999 18145 21,850 20,057
8/31/1999 17856 21,742 19,313
9/30/1999 17195 21,146 18,639
10/31/1999 17659 22,484 19,713
11/30/1999 17814 22,941 19,559
12/31/1999 17829 24,292 19,653
1/31/2000 16911 23,072 19,012
2/29/2000 15607 22,636 17,600
3/31/2000 17163 24,850 19,747
4/30/2000 17132 24,102 19,518
5/31/2000 17435 23,608 19,723
6/30/2000 17021 24,191 18,821
7/31/2000 16706 23,814 19,057
8/31/2000 17637 25,293 20,116
9/30/2000 17459 23,957 20,301
10/31/2000 17951 23,856 20,801
11/30/2000 17341 21,977 20,029
12/31/2000 18245 22,084 21,032
1/31/2001 18202 22,868 21,112
2/28/2001 17676 20,785 20,525
3/31/2001 16696 19,469 19,801
4/30/2001 17825 20,980 20,771
5/31/2001 18158 21,121 21,238
6/30/2001 17631 20,607 20,767
7/31/2001 17459 20,405 20,723
8/31/2001 17087 19,130 19,892
9/30/2001 16000 17,586 18,492
10/31/2001 16188 17,922 18,333
11/30/2001 17065 19,297 19,398
12/31/2001 17257 19,467 19,856
1/31/2002 17002 19,182 19,703
2/28/2002 17124 18,812 19,734
3/31/2002 17712 19,520 20,668
4/30/2002 17132 18,337 19,959
5/31/2002 17121 18,203 20,059
6/30/2002 16206 16,907 18,907
7/31/2002 14729 15,590 17,149
8/31/2002 14830 15,691 17,279
9/30/2002 12868 13,987 15,358
10/31/2002 13835 15,216 16,496
11/30/2002 14702 16,111 17,535
12/31/2002 13933 15,165 16,774
1/31/2003 13571 14,770 16,368
2/28/2003 13164 14,548 15,931
3/31/2003 13201 14,688 15,958
4/30/2003 14268 15,898 17,362
5/31/2003 15086 16,734 18,484
6/30/2003 15376 16,948 18,715
7/31/2003 15652 17,247 18,994
8/31/2003 15722 17,583 19,290
9/30/2003 15633 17,397 19,101
10/31/2003 16454 18,380 20,270
11/30/2003 16630 18,541 20,546
12/31/2003 17585 19,513 21,812
1/31/2004 17880 19,872 22,195
2/29/2004 18339 20,148 22,671
3/31/2004 18136 19,844 22,472
4/30/2004 17853 19,532 21,924
5/31/2004 17876 19,800 22,148
6/30/2004 18144 20,184 22,670
7/31/2004 17777 19,516 22,351
8/31/2004 17931 19,595 22,669
9/30/2004 18082 19,807 23,020
10/31/2004 18213 20,109 23,403
11/30/2004 18974 20,923 24,586
12/31/2004 19534 21,634 25,409
1/31/2005 19426 21,107 24,957
2/28/2005 20024 21,550 25,783
3/31/2005 19636 21,168 25,430
4/30/2005 19264 20,766 24,975
5/31/2005 19768 21,426 25,577
6/30/2005 19709 21,456 25,855
7/31/2005 20313 22,255 26,603
8/31/2005 20180 22,052 26,488
9/30/2005 20411 22,231 26,859
10/31/2005 20096 21,860 26,177
11/30/2005 20689 22,686 27,033
12/31/2005 20584 22,695 27,198
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund.Actual reductions of operating expenses can
increase total return to shareholders.Without these reductions,the Fund's return
would have been lower.
Performance shown for the Fund for periods prior to September
20,1999,reflects performance of the Norwest Select Income Equity Fund,its
predecessor fund.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an Index.
(3) The Russell 1000(R) Value Index measures performance of those Russell
1000(R) companies with lower price-to-book ratios and lower forecasted growth
values.You cannot invest directly in an Index.
(4) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution,portfolio holdings and fund characteristics.
(5) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio of the Fund.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE EQUITY
INCOME FUND for the life of the Fund with the S&P 500 Index and the Russell
1000(R) Value Index.The chart assumes a hypothetical $10,000 investment and
reflects all operating expenses of the Fund.
9
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND (the Fund) seeks
long-term capital appreciation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC New Star Institutional Managers Limited
FUND MANAGERS INCEPTION DATE
Mark Beale 07/03/2000
Richard D. Lewis
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 9.67%(1) for the 12-month period ended December 31,
2005, underperforming the MSCI EAFE Index(2), which returned 13.54%, during the
same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
International equity markets were strong in 2005 with the MSCI EAFE Index
up 29.5% in local currency terms. This solid performance was eroded by currency
weakness and the gain to a U.S. dollar-based investor was a more modest 14%.
Japan was the best performing major market in the international equity asset
class, gaining 26.3% and the Fund's underweighted presence in this market was a
negative contributor to performance during the year. Europe (excluding the U.K.)
was slightly disappointing with a dollar return of 11%; the Fund's overweighted
position in this region also contributed negatively to performance.
Emerging markets were very strong in 2005 and the Fund's modest exposure
to securities here added to performance. The Fund's increased underweighted
position in the U.K. also added to performance as the U.K. market lagged with a
dollar gain of 7.2%.
The best performing sectors included materials, industrials and energy.
The continued strength in materials was unexpected and our underweighted
presence had a negative impact on performance. We were overweighted in the
energy sector, which contributed positively to performance. Elsewhere, the
financial sector performed well, particularly in Japan, so being underweighted
in Japanese banks proved disappointing.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
We made significant changes to the Fund's holdings during the year. In
response to improved domestic conditions in Japan, we increased the Fund's
weighting by adding to non-bank financials with the purchase of two insurance
companies, Millea and Mitsui Sumitomo, and two brokerage firms Nikko Cordial and
Nomura securities.
The Fund continued to be overweighted in energy companies, but we rotated
exposure into more operationally geared companies such as Statoil of Norway and
Lukoil in Russia. The rotation was financed by reducing oil majors like British
Petroleum in the U.K. and Royal Dutch in Holland.
We added to the health care sector with purchases of Astrazenica and
Glaxosmithkline in the U.K. and Roche in Switzerland. These companies continue
to generate strong profits and returns on invested capital which we anticipate
may perform well as profit momentum in cyclical companies decelerates.
We reduced the Fund's holdings in the materials and industrial sectors
with sales of companies like Nippon Steel in Japan, BHP Billiton in Australia,
Autoliv in Sweden, and Mitsui & Co in Japan. While these holdings delivered good
returns, we anticipated that companies with more stable earnings in health care
and information technology would outperform as profits in cyclicals abated.
However, that proved to be incorrect and in retrospect the switch was
implemented too early in the year.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Moving forward, we believe that profits in cyclical stocks will come under
pressure, and therefore the Fund remains underweighted in the materials and
industrial sectors. The Fund is overweighted in energy where continuing supply
constraints underpin profitability. In information technology, health care, and
financials, the Fund remains overweighted.
At a regional level, the U.K. looks vulnerable as domestic consumption is
weak and unlikely to accelerate in the near term. In the Asian market, we plan
to increase our exposure in Japan where there is increasing evidence of a
domestic recovery and where companies continue to benefit from strong Asian
(China, in particular) demand. In general, we expect to add to our holdings in
Asia as we feel the region may benefit from an end to interest rate hikes in the
United States. The Fund retains selected modest exposure to emerging markets and
remains neutral in Europe (excluding the U.K.).
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. FOREIGN INVESTMENTS PRESENT CERTAIN RISKS THAT
MAY NOT BE PRESENT IN DOMESTIC INVESTMENTS, INCLUDING CURRENCY FLUCTUATION, THE
POTENTIAL FOR DIPLOMATIC AND POLITICAL INSTABILITY, REGULATORY AND LIQUIDITY
RISKS, FOREIGN TAXATION AND DIFFERENCES IN AUDITING AND OTHER FINANCIAL
STANDARDS. THESE RISKS ARE GENERALLY INTENSIFIED IN EMERGING MARKETS. THE FUND'S
INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO
TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM
CAPITAL GAINS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS
OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE
TO THE BROADER MARKET). THIS FUND IS EXPOSED TO SMALL COMPANY SECURITIES RISK.
CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER
RISKS.
10
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- ------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND (Incept. Date 07/03/2000) 10.74 9.67 0.44 (1.57)
- ------------------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index(2) 14.88 13.54 4.55 2.05
- ------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Beta** 0.98
- --------------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 17.24
- --------------------------------------------------------------------------------
Price to Book Ratio 2.50
- --------------------------------------------------------------------------------
Median Market Cap ($B) $ 18.79
- --------------------------------------------------------------------------------
Portfolio Turnover 53%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $ 8.66
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
PORTFOLIO COMPOSITION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Australia (2%)
Continental Europe (47%)
Emerging Markets (1%)
Japan (24%)
Southeast Asia (7%)
United Kingdom (19%)
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Glaxosmithkline plc 3.21%
- --------------------------------------------------------------------------------
Aeon Company Limited 2.74%
- --------------------------------------------------------------------------------
Vodafone Group plc 2.41%
- --------------------------------------------------------------------------------
Novartis AG 2.29%
- --------------------------------------------------------------------------------
Sumitomo Trust & Banking 2.28%
- --------------------------------------------------------------------------------
Roche Holdings AG - Genusschein 2.23%
- --------------------------------------------------------------------------------
ENI SpA ADR 1.97%
- --------------------------------------------------------------------------------
Nomura Holding Inc 1.94%
- --------------------------------------------------------------------------------
Total SA ADR 1.94%
- --------------------------------------------------------------------------------
Unicredito Italiano Spa 1.92%
GROWTH OF $10,000 INVESTMENT(5)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND MSCI EAFE INDEX
7/3/2000 10000 $10,000
7/31/2000 9670 $ 9,581
8/31/2000 9870 $ 9,664
9/30/2000 9280 $ 9,194
10/31/2000 9150 $ 8,977
11/30/2000 8650 $ 8,640
12/31/2000 8967 $ 8,947
1/31/2001 9187 $ 8,942
2/28/2001 8465 $ 8,272
3/31/2001 7914 $ 7,720
4/30/2001 8315 $ 8,256
5/31/2001 8255 $ 7,965
6/30/2001 8024 $ 7,639
7/31/2001 7813 $ 7,500
8/31/2001 7594 $ 7,310
9/30/2001 6882 $ 6,570
10/31/2001 7113 $ 6,738
11/30/2001 7374 $ 6,987
12/31/2001 7524 $ 7,028
1/31/2002 7193 $ 6,655
2/28/2002 7083 $ 6,701
3/31/2002 7424 $ 7,064
4/30/2002 7424 $ 7,111
5/31/2002 7313 $ 7,201
6/30/2002 6996 $ 6,914
7/31/2002 6282 $ 6,232
8/31/2002 6232 $ 6,217
9/30/2002 5508 $ 5,550
10/31/2002 5770 $ 5,848
11/30/2002 6071 $ 6,113
12/31/2002 5800 $ 5,908
1/31/2003 5538 $ 5,661
2/28/2003 5398 $ 5,531
3/31/2003 5297 $ 5,423
4/30/2003 5770 $ 5,954
5/31/2003 6111 $ 6,315
6/30/2003 6192 $ 6,468
7/31/2003 6273 $ 6,624
8/31/2003 6444 $ 6,784
9/30/2003 6585 $ 6,993
10/31/2003 6989 $ 7,429
11/30/2003 7150 $ 7,594
12/31/2003 7624 $ 8,187
1/31/2004 7634 $ 8,302
2/29/2004 7725 $ 8,494
3/31/2004 7745 $ 8,542
4/30/2004 7483 $ 8,349
5/31/2004 7483 $ 8,377
6/30/2004 7584 $ 8,561
7/31/2004 7318 $ 8,283
8/31/2004 7307 $ 8,319
9/30/2004 7439 $ 8,537
10/31/2004 7621 $ 8,828
11/30/2004 8076 $ 9,431
12/31/2004 8359 $ 9,845
1/31/2005 8217 $ 9,665
2/28/2005 8601 $10,082
3/31/2005 8359 $ 9,829
4/30/2005 8177 $ 9,598
5/31/2005 8156 $ 9,603
6/30/2005 8278 $ 9,731
7/31/2005 8557 $10,029
8/31/2005 8755 $10,283
9/30/2005 8953 $10,741
10/31/2005 8692 $10,427
11/30/2005 8765 $10,683
12/31/2005 9167 $11,179
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES,MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's managers.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 the WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND.
(1) The Fund's Advisor has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund.Actual reductions of operating expenses can
increase total return to shareholders.Without these reductions,the Fund's return
would have been lower.
Prior to April 11,2005,the WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND
was named the Wells Fargo International Equity Fund.
(2) The Morgan Stanley Capital International Europe, Australasia and Far East
("MSCI/EAFE") Stock Index is an unmanaged group of securities widely regarded by
investors to be representations of the stock markets of Europe,Australasia and
the Far East.You cannot invest directly in an Index.
(3) Portfolio composition, portfolio holdings and fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of portfolio composition,portfolio holdings and fund
characteristics.
(4) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio of the Fund.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE
INTERNATIONAL CORE FUND for the life of the Fund with the MSCI EAFE Index. The
chart assumes a hypothetical $10,000 investment and reflects all operating
expenses of the Fund.
11
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND (the Fund) seeks total
return comprised of long-term capital appreciation and current income.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Matrix Asset Advisors, Inc.
FUND MANAGER INCEPTION DATE
David A. Katz, CFA 04/12/1994
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned (2.24)%1 for the 12-month period ended December 31,
2005, underperforming its benchmark, the S&P 500 Index(2), which returned 4.91%,
for the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Fund was under-represented relative to its benchmark in energy,
utilities, and real estate-related companies, which represented areas in the
market that showed favorable returns, and was overweight in a number of mega-cap
stocks, which were among the biggest laggards for the year.
Under-representation in energy, utilities, and real-estate related
companies was based on our assessment that these stocks were either fully valued
or that their positive business and stock trends were not sustainable. Over the
short term, speculative trading, heightened geopolitical concerns, and a
volatile hurricane season caused a spike in energy prices. In addition, factors
that drove the real estate boom exceeded expectations and drove many stocks to
inflated valuations.
Our belief that a number of the market's biggest and best businesses
represented a rare opportunity was premature, as strong business progress and
historic low valuations for these companies did not help performance. However,
some of the market drivers we identified started to play out in the fourth
quarter, and we ended the year with the Fund performing well on an absolute and
relative basis.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
During the reporting period, we focused on building positions in a number
of high quality businesses with strong potential and compelling prices. During
2005, we believed the best investment opportunities were found in many of the
market's biggest companies and the Fund currently holds nine of the 15 largest
companies in the S&P 500. While we employ a bottom-up, stock-by-stock investment
strategy, we have overweighted industries which we believe are poised for
growth. These include technology with a bias toward semi-conductors, money
center banks, brokers, media, entertainment stocks, drugs and selected
retailers.
We sold American Express and Baxter International as they reached our
target sale price, and scaled back on American Power Conversion and MedImmune as
both stocks became oversized as a result of stock appreciation. We also sold
positions in Fannie Mae, Fifth Third Bancorp, Lucent, and Merck as a result of
weakening business outlooks.
During the last six months of the year we purchased new positions in Cisco
Systems, First Data Corp., and Tyco International.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Looking ahead, we believe the Fund's limited exposure to energy,
utilities, and real estate in 2006 will help performance. We are expecting
continued profit growth, reasonable inflation, moderate interest rates, and
stabilizing commodity prices for the year ahead. With the historically low
relative valuation of large-cap stocks in comparison to small and mid-cap
stocks, we expect the market to shift its focus to large and mega-cap stocks.
At year end, the Fund maintained overweighted exposure to capital
market-oriented financials and technology companies. Both sectors are trading at
historically low valuation levels and could benefit from increased business
spending as well as the expectation that the Federal Reserve will likely end its
cycle of raising short-term interest rates. We continue to find value in
large-cap and mega-cap blue chip stocks that offer attractive long-term business
fundamentals.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR
MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN
INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES,MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's manager. 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 the WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND.
12
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
- -------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND (Incept. Date 04/12/1994) 4.01 (2.24) (4.74) 4.21
- -------------------------------------------------------------------------------------------------------------
Benchmark
- -------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) 5.76 4.91 0.54 9.07
- -------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Beta** 0.92
- --------------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 19.80
- --------------------------------------------------------------------------------
Price to Book Ratio 2.33
- --------------------------------------------------------------------------------
Median Market Cap ($B) $ 53.13
- --------------------------------------------------------------------------------
Portfolio Turnover 112%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $ 13.58
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (14%)
Consumer Staples (4%)
Energy (2%)
Financials (31%)
Health Care (13%)
Industrials (10%)
Information Technology (26%)
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Vishay Intertechnology Incorporated 4.45%
- --------------------------------------------------------------------------------
Citigroup Incorporated 4.01%
- --------------------------------------------------------------------------------
Microsoft Corporation 3.99%
- --------------------------------------------------------------------------------
Morgan Stanley 3.98%
- --------------------------------------------------------------------------------
American International Group Incorporated 3.92%
- --------------------------------------------------------------------------------
Novellus Systems Incorporated 3.92%
- --------------------------------------------------------------------------------
Symbol Technologies Incorporated 3.92%
- --------------------------------------------------------------------------------
Wal-Mart Stores Incorporated 3.86%
- --------------------------------------------------------------------------------
Bank Of America Corporation 3.81%
- --------------------------------------------------------------------------------
Intel Corporation 3.81%
GROWTH OF $10,000 INVESTMENT(5)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
LARGE COMPANY CORE FUND S&P 500 INDEX
12/31/1995 10000 $10,000
1/31/1996 10186 $10,340
2/29/1996 10565 $10,436
3/31/1996 10593 $10,536
4/30/1996 10942 $10,691
5/31/1996 11214 $10,966
6/30/1996 11022 $11,008
7/31/1996 10453 $10,521
8/31/1996 10757 $10,743
9/30/1996 11297 $11,347
10/31/1996 11602 $11,660
11/30/1996 12345 $12,540
12/31/1996 12244 $12,292
1/31/1997 12946 $13,060
2/28/1997 12571 $13,162
3/31/1997 12134 $12,623
4/30/1997 12622 $13,375
5/31/1997 13423 $14,188
6/30/1997 13712 $14,824
7/31/1997 14828 $16,002
8/31/1997 13969 $15,106
9/30/1997 14526 $15,932
10/31/1997 14067 $15,400
11/30/1997 14285 $16,113
12/31/1997 14366 $16,390
1/31/1998 14631 $16,571
2/28/1998 15418 $17,765
3/31/1998 16159 $18,675
4/30/1998 16270 $18,866
5/31/1998 16021 $18,541
6/30/1998 16800 $19,294
7/31/1998 16714 $19,089
8/31/1998 14388 $16,331
9/30/1998 15053 $17,378
10/31/1998 16273 $18,790
11/30/1998 17365 $19,929
12/31/1998 18505 $21,077
1/31/1999 19216 $21,958
2/28/1999 18569 $21,275
3/31/1999 19454 $22,126
4/30/1999 20045 $22,983
5/31/1999 19426 $22,440
6/30/1999 20512 $23,686
7/31/1999 19921 $22,946
8/31/1999 19948 $22,833
9/30/1999 19414 $22,207
10/31/1999 20551 $23,612
11/30/1999 21004 $24,092
12/31/1999 22282 $25,511
1/31/2000 21293 $24,230
2/29/2000 21006 $23,772
3/31/2000 22883 $26,097
4/30/2000 22051 $25,312
5/31/2000 21459 $24,793
6/30/2000 22245 $25,405
7/31/2000 22005 $25,009
8/31/2000 23384 $26,562
9/30/2000 22041 $25,159
10/31/2000 21414 $25,054
11/30/2000 19131 $23,079
12/31/2000 19253 $23,192
1/31/2001 19505 $24,016
2/28/2001 17647 $21,828
3/31/2001 16212 $20,446
4/30/2001 17525 $22,033
5/31/2001 17586 $22,181
6/30/2001 16960 $21,642
7/31/2001 16505 $21,429
8/31/2001 15168 $20,090
9/30/2001 14075 $18,469
10/31/2001 14539 $18,822
11/30/2001 15500 $20,265
12/31/2001 15555 $20,444
1/31/2002 15069 $20,145
2/28/2002 14583 $19,756
3/31/2002 15102 $20,499
4/30/2002 14550 $19,257
5/31/2002 14450 $19,116
6/30/2002 13648 $17,755
7/31/2002 12100 $16,372
8/31/2002 12122 $16,478
9/30/2002 11403 $14,689
10/31/2002 12055 $15,980
11/30/2002 12188 $16,920
12/31/2002 11536 $15,927
1/31/2003 11337 $15,511
2/28/2003 11281 $15,278
3/31/2003 11491 $15,425
4/30/2003 12089 $16,696
5/31/2003 12509 $17,574
6/30/2003 12520 $17,799
7/31/2003 12962 $18,112
8/31/2003 13283 $18,465
9/30/2003 12929 $18,270
10/31/2003 13825 $19,302
11/30/2003 13880 $19,472
12/31/2003 14256 $20,492
1/31/2004 14467 $20,869
2/29/2004 14544 $21,159
3/31/2004 14511 $20,840
4/30/2004 14278 $20,513
5/31/2004 14555 $20,794
6/30/2004 14666 $21,197
7/31/2004 13847 $20,496
8/31/2004 13703 $20,578
9/30/2004 14079 $20,801
10/31/2004 14345 $21,118
11/30/2004 15020 $21,973
12/31/2004 15451 $22,720
1/31/2005 14854 $22,166
2/28/2005 15020 $22,631
3/31/2005 14699 $22,231
4/30/2005 14467 $21,808
5/31/2005 14820 $22,502
6/30/2005 14522 $22,533
7/31/2005 15064 $23,371
8/31/2005 14599 $23,159
9/30/2005 14500 $23,346
10/31/2005 14356 $22,956
11/30/2005 14997 $23,824
12/31/2005 15105 $23,834
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund.Actual reductions of operating expenses can
increase total return to shareholders.Without these reductions,the Fund's return
would have been lower.
Prior to April 11, 2005, the WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND
was named the Wells Fargo Growth Fund. Performance shown for the Fund for
periods prior to September 20,1999 reflects performance of the Annuity Trust
Growth Fund,its predecessor fund.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an Index.
(3) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution,portfolio holdings and fund characteristics.
(4) The Ten Largest Equity Holdings are calculated based on the market value of
the securities divided by total market value of the portfolio of the Fund.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE LARGE
COMPANY CORE FUND for the most recent ten years of the Fund with the S&P 500
Index.The chart assumes a hypothetical $10,000 investment and reflects all
operating expenses of the Fund.
13
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND (the Fund) seeks
long-term capital appreciation by investing primarily in large, domestic
companies that we believe have superior growth potential.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Peregrine Capital Management, Inc.
FUND MANAGERS INCEPTION DATE
John S. Dale, CFA 09/20/1999
Gary E. Nussbaum, CFA
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 5.70%(1) for the 12-month period ended December 31,
2005, outperforming its benchmark, the S&P 500 Index(2), which returned 4.91%
during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Large-cap value stocks outpaced large-cap growth stocks for the sixth
consecutive year. However, while value led growth in the first quarter, the tide
turned convincingly in favor of growth investing as the year progressed.
The Fund outperformed its benchmark, the S&P 500 Index.(2) Energy and
utility stocks were the big winners during the first three months. As growth
stocks began to perform better, they outpaced the general market. Leaders in the
Fund included Genentech, Franklin Resources, Fastenal, Goldman Sachs and Amgen.
Stocks such as Nokia, Charles Schwab, and Paychex rebounded dramatically during
the year. Relatively new portfolio additions, Legg Mason and Google, added
significantly to returns for the year. Laggards included eBay, which was hit
hard in January 2005 and had a negative impact on the Fund's first quarter
return, along with Cisco, Wal-Mart, and Apollo Group.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
During 2005, the Fund acquired Legg Mason, Google, and Texas Instruments.
All three were consistent with our focus on companies with sustained rapid
earnings growth and high profitability. Positions eliminated during the year
included State Street and Pfizer. The removal of Pfizer aided performance.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
The market environment for long-term growth investing continues to be
positive. As the underlying earnings growth in average U.S. companies moderates,
the gap between true gains in growth companies and average companies will widen.
Historically, this gap has been a positive indicator for growth investing. The
key to future growth in profit for most U.S. companies will be revenue growth
without the benefit of price increases (also known as unit volume growth).
For the past few years, average U.S. companies have relied upon margin
gains versus unit volume growth, to increase earnings above historical trends.
We believe that these margin improvements have run their course and S&P 500
earnings may be moderating toward a more historical 6%-7% trend in growth. The
Fund is built on the premise of high unit volume growth. Portfolio unit volume
growth in 2005 averaged 18%, three times the market rate.
The valuation compression across the market continues at an extreme level.
In other words, most stocks, regardless of quality or growth, are selling near
the market's median price-to-earnings multiple. Overall, the Fund is valued at
1.2 times the market multiple, with 3 times the long-term earnings growth
potential of average U.S. companies. We expect a much more broad-based stock
market valuation differentiation to take hold over the next few years, which we
believe may benefit growth stock investing.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR
MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN
INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies.The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on,among other things,the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES,MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND.
14
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- --------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND (Incept. Date 09/20/1999) 9.78 5.70 (4.72) (1.00)
- --------------------------------------------------------------------------------------------------------------------
Benchmark
- --------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) 5.76 4.91 0.54 1.13
- --------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS4 (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Beta** 1.33
- --------------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 24.00
- --------------------------------------------------------------------------------
Price to Book Ratio 4.58
- --------------------------------------------------------------------------------
Median Market Cap ($B) $ 53.20
- --------------------------------------------------------------------------------
Portfolio Turnover 11%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $ 9.37
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (18%)
Consumer Staples (2%)
Financial Services (22%)
Health Care (16%)
Industrials (5%)
Information Technology (37%)
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
eBay Incorporated 6.90%
- --------------------------------------------------------------------------------
Goldman Sachs Group Incorporated 6.76%
- --------------------------------------------------------------------------------
Medtronic Incorporated 6.06%
- --------------------------------------------------------------------------------
Microsoft Corporation 4.93%
- --------------------------------------------------------------------------------
Genentech Incorporated 4.63%
- --------------------------------------------------------------------------------
American International Group Incorporated 4.13%
- --------------------------------------------------------------------------------
Franklin Resources Incorporated 4.03%
- --------------------------------------------------------------------------------
Charles Schwab Corporation 4.03%
- --------------------------------------------------------------------------------
Paychex Incorporated 3.75%
- --------------------------------------------------------------------------------
Amgen Incorporated 3.70%
GROWTH OF $10,000 INVESTMENT(5)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
LARGE COMPANY GROWTH FUND S&P 500 INDEX
Sep-99 10000 $10,000
9/30/1999 9590 $ 9,605
10/31/1999 10420 $10,213
11/30/1999 10830 $10,420
12/31/1999 12030 $11,034
1/31/2000 11800 $10,480
2/29/2000 12000 $10,282
3/31/2000 13430 $11,288
4/30/2000 13020 $10,948
5/31/2000 12200 $10,723
6/30/2000 13130 $10,988
7/31/2000 13230 $10,817
8/31/2000 14000 $11,489
9/30/2000 13150 $10,882
10/31/2000 13130 $10,836
11/30/2000 12080 $ 9,982
12/31/2000 11960 $10,031
1/31/2001 12150 $10,387
2/28/2001 10320 $ 9,441
3/31/2001 9260 $ 8,844
4/30/2001 10240 $ 9,530
5/31/2001 10150 $ 9,594
6/30/2001 9880 $ 9,361
7/31/2001 9700 $ 9,269
8/31/2001 8843 $ 8,690
9/30/2001 8003 $ 7,988
10/31/2001 8373 $ 8,141
11/30/2001 9353 $ 8,765
12/31/2001 9463 $ 8,842
1/31/2002 9403 $ 8,713
2/28/2002 8783 $ 8,545
3/31/2002 9193 $ 8,866
4/30/2002 8483 $ 8,329
5/31/2002 8223 $ 8,268
6/30/2002 7673 $ 7,680
7/31/2002 6932 $ 7,081
8/31/2002 7012 $ 7,127
9/30/2002 6242 $ 6,353
10/31/2002 6962 $ 6,912
11/30/2002 7422 $ 7,318
12/31/2002 6812 $ 6,889
1/31/2003 6572 $ 6,709
2/28/2003 6532 $ 6,608
3/31/2003 6622 $ 6,672
4/30/2003 7192 $ 7,221
5/31/2003 7523 $ 7,601
6/30/2003 7613 $ 7,699
7/31/2003 7993 $ 7,834
8/31/2003 8123 $ 7,987
9/30/2003 7923 $ 7,902
10/31/2003 8383 $ 8,349
11/30/2003 8353 $ 8,422
12/31/2003 8603 $ 8,863
1/31/2004 8703 $ 9,026
2/29/2004 8703 $ 9,152
3/31/2004 8583 $ 9,014
4/30/2004 8453 $ 8,872
5/31/2004 8563 $ 8,994
6/30/2004 8563 $ 9,168
7/31/2004 8053 $ 8,865
8/31/2004 8043 $ 8,901
9/30/2004 8133 $ 8,997
10/31/2004 8283 $ 9,134
11/30/2004 8633 $ 9,504
12/31/2004 8883 $ 9,827
1/31/2005 8393 $ 9,587
2/28/2005 8413 $ 9,789
3/31/2005 8193 $ 9,615
4/30/2005 8003 $ 9,433
5/31/2005 8533 $ 9,733
6/30/2005 8553 $ 9,746
7/31/2005 9149 $10,109
8/31/2005 9008 $10,017
9/30/2005 8998 $10,098
10/31/2005 9099 $ 9,929
11/30/2005 9590 $10,305
12/31/2005 9389 $10,309
- --------------------------------------------------------------------------------
(1) The Fund's Advisor has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund.Actual reductions of operating expenses can
increase total return to shareholders.Without these reductions,the Fund's return
would have been lower.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value.You cannot invest
directly in an Index.
(3) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio.
(4) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution,portfolio holdings and fund characteristics.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE LARGE
COMPANY GROWTH FUND for the life of the Fund with the S&P 500 Index.The chart
assumes a hypothetical $10,000 investment and reflects all operating expenses of
the Fund.
15
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MONEY MARKET FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MONEY MARKET FUND (the Fund) seeks high current
income, while preserving capital and liquidity.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
Dave Sylvester 05/19/1994
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 2.55%1 for the 12-month period ended December 31, 2005,
slightly outperforming the 2.42% return of its benchmark, the iMoneyNet First
Tier Retail Money Fund Average.(2)
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. YIELDS WILL FLUCTUATE. THE
FUND'S YIELD FIGURES MORE CLOSELY REFLECT THE CURRENT EARNINGS OF THE FUND THAN
THE TOTAL RETURN FIGURES. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING
866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Federal Open Market Committee (FOMC) continued to raise the benchmark
Federal Funds rate by 0.25% at each meeting held during the year. In total, the
target rate rose by another 2.00% from 2.25% to 4.25%. The slope of the money
market yield curve flattened over the year as shorter-term money market rates
rose faster than longer-term interest rates.
During the reporting period, the one-year London Inter-Bank Offered Rate (LIBOR)
rose from 3.10% to 4.84%, while the three-month LIBOR increased from 2.56% to
4.54%. The increase in rates proceeded in a steady and uninterrupted fashion.
The only pause came during late summer. The market widely expected that the
undetermined economic impact of Hurricane Katrina would cause the FOMC to leave
rates unchanged at their meeting on September 20, 2005 and cause money market
yields to fall dramatically. The one-year LIBOR fell 0.35% over three days, but
the rates soon resumed their upward path.
The FOMC proceeded at the "measured pace" that they had promised and
raised rates by another 0.25%, while acknowledging that the hurricane's negative
effects on the economy would be transitory. Since the Fund was positioned for
rising rates, there was a positive impact on fund performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
During the 12-month period that ended December 31, 2005, we made very few
changes to the types of securities the Fund held, or the strategy we pursued. In
2004, we began shortening the average life of the Fund and holding more very
short-term securities to take advantage of what we perceived to be a period of
rising interest rates. Consequently, we have emphasized investments that
provided for a frequent reset of their interest rates, such as short-term paper
and variable rate notes. These have provided, and continue to provide, the best
returns. While investments in longer-term instruments temporarily enhance the
Fund's yield in the near term, we have tended to de-emphasize them as they can
be a drag on the yield in the long term. As the table below illustrates, the
Federal Funds rose 2.00% during the period. The Fund clearly kept pace with that
increase, rising 1.99% as the weighted average maturity (WAM) decreased, even
though assets held steady.
12/31/04 6/30/05 12/31/05
FED FUNDS TARGET 2.25% 3.25% 4.25%
The Fund's yield* 1.60% 2.50% 3.59%
The Fund's WAM (days) 44 32 28
The Fund's Assets (mln) $58.70 $55.50 $55.40
*SIMPLE ONE-DAY YIELD, NET OF EXPENSES
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We continue to maintain a significant portion of the Fund's portfolio in
very short-term instruments to take advantage of higher reinvestment rates. As
of December 31, 2005, 61% of the Fund's portfolio matured within 14 days; less
than 2% matured in 180 days or longer. This portfolio structure is expected to
take advantage of the longer-term direction of interest rates, which we believe
to be increasing.
It appears that we may be getting closer to the end of this period of
rising interest rates and should expect to see some stability moving forward.
Should interest rates experience an unexpected dramatic decline, we would adjust
our strategy to meet the changing market conditions.
AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies. The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on, among other things, the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's manager. 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 the WELLS FARGO ADVANTAGE MONEY MARKET FUND.
16
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
- ------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MONEY MARKET FUND (INCEPT. DATE 05/19/1994) 1.52 2.55 1.74 3.33
- ------------------------------------------------------------------------------------------------------
Benchmark
- ------------------------------------------------------------------------------------------------------
iMoneyNet First Tier Retail Money Fund Average(2) 1.47 2.42 1.63 3.28
- ------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND YIELD SUMMARY(1) (AS OF DECEMBER 31, 2005)
- ------------------------------------------------
7-Day Current Yield 3.56%
- ------------------------------------------------
7-Day Effective Yield 3.62%
- ------------------------------------------------
30-Day Simple Yield 3.46%
- ------------------------------------------------
30-Day Effective Yield 3.52%
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- -------------------------------------------------
Weighted Average Maturity 28
- ------------------------------------------------
PORTFOLIO ALLOCATION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Corporate Bonds and Notes (4%)
Variable and Floating Rate Notes (18%)
Commercial Paper (30%)
Certificates of Deposits (5%)
Repurchase Agreement (34%)
Time Deposit (9%)
MATURITY DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
0-1 Days (61%)
2-14 Days (12%)
15-29 Days (9%)
30-59 Days (12%)
60-89 Days (4%)
90-179 Days (2%)
- --------------------------------------------------------------------------------
(1) The Fund's Adviser has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without waived fees and/or reimbursed
expenses, the Fund's 7-day current yield would have been 3.49%.
Performance for the Fund prior to September 20,1999 reflects performance
of the Life and Annuity Trust Money Market Fund, its predecessor fund.
(2) The iMoneyNet First Tier Retail Money Fund Average is the average
performance of all money funds in the First Tier Retail Money Fund Category.
This category includes only non-government retail funds that are also not
holding any second tier securities. Portfolio holdings of First Tier funds
include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations,
Foreign Bank Obligations, First Tier CP, Floating Rate Notes, and Asset Backed
Commercial Paper. You cannot invest directly in an Average.
(3) Fund characteristics, portfolio allocation and maturity distribution are
subject to change.
17
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND (the Fund) seeks long-term
capital appreciation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGER INCEPTION DATE
I. Charles Rinaldi 10/10/1997
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 16.50%1 for the 12-month period ended December 31, 2005,
outperforming the S&P500 Index(2), which returned 4.91%, and outperforming the
Russell 3000(R) Value Index(3), which returned 6.85% for the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The equity markets got off to a rough start in 2005, but finished the year
firmly in positive territory. The year was marked by soaring real-estate prices,
rising values of commodities, and great human tragedies from the hurricane
season. Growth stocks started to creep back into the limelight by year end,
while mid- and large-cap stocks outperformed small-cap stocks.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The materials sector was the main area of positive contribution to
performance. The Fund's overweighting in materials, as well as superior stock
selection within the metals and mining sector added significant value. During
the year, especially in the latter half, we witnessed a continued rise in the
price of commodities, particularly gold and silver. Gold reached multi-decade
highs and positively impacted stocks. The team continues to favor metals and
mining stocks, as we believe these companies appear to be relatively cheap,
exhibit positive cash flows, and have clean balance sheets.
Technology was another area that contributed positively to performance.
The Fund was overweighted relative to the benchmark, and good stock selection
added value. Electronic equipment and semiconductor names in particular produced
exceptional returns during the year. The Fund is currently underweighted in the
semiconductor industry; however, we are actively looking for opportunities
within this area.
The financial sector produced mixed results. Stock selection within the
area enhanced performance; however, the Fund's underweighted exposure negatively
impacted relative performance. Insurance and commercial bank holdings, which
were somewhat weak during most of the year, were strong during the fourth
quarter and added to overall performance. In contrast, a significant
underweighting in real estate investment trusts (REITs) and commercial banks
relative to the benchmark detracted from performance. The Fund has remained
underweight to financials for some time. Our investment approach, which
identifies undervalued stocks, tends to lead us into other areas, especially at
current valuations.
The energy sector was a key driver of performance throughout much of the
year. During the fourth quarter, energy prices declined from highs experienced
earlier in the year. Despite short-term disruptions, we believe that energy
names will add value as the supply-demand equation for oil and natural gas
remains favorable in the long term.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Our outlook for the economy includes continued high energy prices, with
commodities and materials costs remaining high. The economy has the potential to
slow in the coming months and may come under the effects of inflationary
pressure. We hold a cautious outlook longer term for financial markets, but near
term expect to see a rally. Equity markets may also rally in the near term, but
we remain guarded for the long term.
We will continue to look for undervalued stocks that will add value,
especially names in the energy and materials sectors. Stock selection will be
the key to outperforming the markets going forward. CAUTION is the word for the
near term in the small-cap value asset class as money flows to growth stocks.
However, over the long term we believe the asset class remains attractive as
many small-cap names continue to be ignored. We remain focused on identifying
investment opportunities in stocks with quality management and strong
fundamentals that are attractively valued.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR
MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN
INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO SMALL
COMPANY SECURITIES RISK AND FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S
PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies. The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on, among other things, the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
18
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- ----------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND (Incept. Date 10/10/1997) 14.12 16.50 8.54 5.87
- ----------------------------------------------------------------------------------------------------------------------
Benchmarks
- ----------------------------------------------------------------------------------------------------------------------
S&P 500 Index(2) 5.76 4.91 0.54 5.00
- ----------------------------------------------------------------------------------------------------------------------
Russell 3000(R) Value Index(3) 5.07 6.85 5.86 7.47
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF DECEMBER 31, 2005)
- -----------------------------------------------------------
Beta** 1.12
- -----------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 44.64
- -----------------------------------------------------------
Price to Book Ratio 2.12
- -----------------------------------------------------------
Median Market Cap ($B) $ 0.62
- -----------------------------------------------------------
Portfolio Turnover 112%
- -----------------------------------------------------------
Net Asset Value (NAV) $13.66
**A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS
1.00 BY DEFINITION.
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (7%)
Consumer Staples (2%)
Energy (24%)
Financial Services (12%)
Health Care (10%)
Industrials (11%)
Information Technology (19%)
Materials (14%)
Telecommunications Services (1%)
TEN LARGEST EQUITY HOLDINGS(4,5) (AS OF DECEMBER 31, 2005)
- -----------------------------------------------------------
Global Industries Limited 4.12%
- -----------------------------------------------------------
Trilogy Energy Trust 2.87%
- -----------------------------------------------------------
Covalent Group Incorporated 2.21%
- -----------------------------------------------------------
Randgold Resources Limited ADR 1.93%
- -----------------------------------------------------------
Apex Silver Mines Limited 1.81%
- -----------------------------------------------------------
Key Energy Services Incorporated 1.75%
- -----------------------------------------------------------
Quanta Capital Holdings Limited 1.68%
- -----------------------------------------------------------
Sun Microsystems Incorporated 1.66%
- -----------------------------------------------------------
McMoran Exploration Company 1.65%
- -----------------------------------------------------------
Range Resources Corporation 1.64%
GROWTH OF $10,000 INVESTMENT(6)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELL FORGO ADVANTAGE
MULTI CAP VALUE FUND S&P 500 INDEX RUSSELL 3000(R) VALUE INDEX
10/10/1997 10000 $ 10,000 $ 10,000
10/31/1997 9580 $ 9,666 $ 9,721
11/30/1997 9670 $ 10,114 $ 10,119
12/31/1997 9919 $ 10,287 $ 10,419
1/31/1998 9578 $ 10,401 $ 10,267
2/28/1998 10240 $ 11,151 $ 10,952
3/31/1998 10720 $ 11,721 $ 11,600
4/30/1998 10640 $ 11,841 $ 11,675
5/31/1998 10220 $ 11,637 $ 11,479
6/30/1998 10005 $ 12,110 $ 11,606
7/31/1998 9663 $ 11,981 $ 11,339
8/31/1998 7667 $ 10,250 $ 9,644
9/30/1998 7817 $ 10,907 $ 10,196
10/31/1998 8720 $ 11,794 $ 10,946
11/30/1998 9663 $ 12,509 $ 11,438
12/31/1998 10135 $ 13,229 $ 11,825
1/31/1999 10085 $ 13,782 $ 11,891
2/28/1999 9803 $ 13,353 $ 11,674
3/31/1999 10177 $ 13,888 $ 11,891
4/30/1999 11141 $ 14,425 $ 13,000
5/31/1999 11016 $ 14,085 $ 12,895
6/30/1999 11016 $ 14,866 $ 13,276
7/31/1999 10467 $ 14,402 $ 12,893
8/31/1999 9990 $ 14,331 $ 12,415
9/30/1999 9203 $ 13,938 $ 11,995
10/31/1999 9607 $ 14,820 $ 12,618
11/30/1999 9773 $ 15,121 $ 12,530
12/31/1999 9844 $ 16,012 $ 12,612
1/31/2000 9434 $ 15,208 $ 12,206
2/29/2000 8884 $ 14,921 $ 11,410
3/31/2000 10093 $ 16,380 $ 12,701
4/30/2000 10395 $ 15,887 $ 12,569
5/31/2000 10438 $ 15,561 $ 12,679
6/30/2000 9844 $ 15,946 $ 12,163
7/31/2000 10006 $ 15,697 $ 12,332
8/31/2000 10578 $ 16,672 $ 13,009
9/30/2000 10708 $ 15,791 $ 13,116
10/31/2000 10881 $ 15,725 $ 13,414
11/30/2000 10125 $ 14,486 $ 12,931
12/31/2000 10615 $ 14,557 $ 13,625
1/31/2001 11276 $ 15,074 $ 13,700
2/28/2001 10972 $ 13,700 $ 13,343
3/31/2001 10636 $ 12,833 $ 12,889
4/30/2001 11417 $ 13,829 $ 13,519
5/31/2001 11612 $ 13,922 $ 13,826
6/30/2001 11168 $ 13,583 $ 13,579
7/31/2001 11352 $ 13,450 $ 13,531
8/31/2001 10875 $ 12,610 $ 13,023
9/30/2001 9628 $ 11,592 $ 12,069
10/31/2001 9856 $ 11,813 $ 11,994
11/30/2001 10430 $ 12,720 $ 12,702
12/31/2001 11052 $ 12,831 $ 13,035
1/31/2002 10684 $ 12,644 $ 12,955
2/28/2002 10792 $ 12,400 $ 12,980
3/31/2002 11627 $ 12,866 $ 13,620
4/30/2002 11519 $ 12,087 $ 13,225
5/31/2002 11291 $ 11,998 $ 13,251
6/30/2002 10445 $ 11,144 $ 12,527
7/31/2002 8579 $ 10,276 $ 11,311
8/31/2002 8905 $ 10,343 $ 11,387
9/30/2002 7896 $ 9,220 $ 10,152
10/31/2002 8037 $ 10,030 $ 10,861
11/30/2002 8601 $ 10,620 $ 11,558
12/31/2002 8493 $ 9,996 $ 11,056
1/31/2003 8190 $ 9,735 $ 10,785
2/28/2003 8038 $ 9,589 $ 10,493
3/31/2003 7864 $ 9,681 $ 10,517
4/30/2003 8365 $ 10,479 $ 11,447
5/31/2003 9495 $ 11,030 $ 12,216
6/30/2003 9506 $ 11,172 $ 12,373
7/31/2003 9867 $ 11,368 $ 12,588
8/31/2003 10345 $ 11,590 $ 12,805
9/30/2003 10170 $ 11,467 $ 12,679
10/31/2003 10508 $ 12,115 $ 13,474
11/30/2003 10893 $ 12,222 $ 13,683
12/31/2003 11754 $ 12,862 $ 14,499
1/31/2004 12022 $ 13,099 $ 14,773
2/29/2004 12325 $ 13,281 $ 15,087
3/31/2004 12278 $ 13,080 $ 14,981
4/30/2004 11404 $ 12,875 $ 14,583
5/31/2004 11485 $ 13,051 $ 14,733
6/30/2004 12057 $ 13,304 $ 15,113
7/31/2004 11555 $ 12,864 $ 14,859
8/31/2004 11345 $ 12,916 $ 15,065
9/30/2004 12103 $ 13,056 $ 15,328
10/31/2004 11905 $ 13,255 $ 15,581
11/30/2004 13351 $ 13,791 $ 16,419
12/31/2004 13724 $ 14,260 $ 16,955
1/31/2005 13409 $ 13,912 $ 16,623
2/28/2005 14260 $ 14,205 $ 17,156
3/31/2005 13496 $ 13,953 $ 16,910
4/30/2005 12606 $ 13,688 $ 16,560
5/31/2005 13109 $ 14,123 $ 17,008
6/30/2005 14011 $ 14,143 $ 17,242
7/31/2005 14994 $ 14,669 $ 17,783
8/31/2005 15427 $ 14,536 $ 17,676
9/30/2005 16036 $ 14,653 $ 17,900
10/31/2005 15240 $ 14,409 $ 17,445
11/30/2005 15755 $ 14,953 $ 18,028
12/31/2005 15989 $ 14,959 $ 18,117
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005 and are those of the
Fund's manager. 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 the WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND.
(1) The Fund's Advisor has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
return would have been lower.
Performance shown for the WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND for
periods prior to April 11, 2005 reflects the performance of the Strong Multi Cap
Value Fund II, its predecessor fund.
(2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an Index.
(3) The Russell 3000(R) Value Index measures the performance of those Russell
3000(R) Index companies with lower price-to-book ratios and lower forecasted
growth values. The stocks in this Index are also members of either the Russell
1000(R) Value or the Russell 2000(R) Value Indices. You cannot invest directly
in an Index.
(4) Sector distribution, portfolio holdings and fund characteristics are subject
to change. Cash and cash equivalents are not reflected in the calculations of
sector distribution, portfolio holdings and fund characteristics.
(5) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE MULTI CAP
VALUE FUND for the life of the Fund with the S&P 500 Index and the Russell
3000(R) Value Index. The chart assumes a hypothetical $10,000 investment and
reflects all operating expenses of the Fund.
19
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OPPORTUNITY FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE OPPORTUNITY FUND(SM) (the Fund) seeks long-term
capital appreciation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Ann M. Miletti 05/08/1992
Richard T. Weiss
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 7.88%(1) for the 12-month period ended December 31,
2005, underperforming its benchmark, the Russell Midcap Index(2), which returned
12.65%, during the same period. The Fund, however, outperformed its other
benchmark, the S&P 500 Index(3), which returned 4.91% during the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Detracting from performance was the Fund's holdings in the media sector,
where changes in advertising and delivery of media to consumers negatively
affected stocks in the Fund. Specific holdings that detracted from the Fund's
performance during the period included Interpublic Group of Cos, a provider of
marketing and business services, and Comcast Corp, which engages in the
development, management, and operation of broadband cable networks, as well as
provision of programming content in the United States. In addition, the Fund
held Northwest Airlines Corp., which filed for bankruptcy and dragged on
performance towards the end of the period.
Conversely, the financial and energy sectors delivered the strongest
performance in the portfolio versus the benchmark. The solid performance of the
financial sector was driven by stock selection. The Fund's average financial
position rose 16.6% during the period versus the 11.7% in the benchmark.
Holdings from the financial sector that provided significant contributions
during the period included AmeriTrade Holding Corp., a provider of securities
brokerage services and technology-based financial services, and ACE Ltd., a
provider of insurance and reinsurance products. The Fund's overweighted position
relative to the benchmark in the energy sector contributed positively to
performance, as energy was the strongest sector in the market due to the
continued strength in commodity prices.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
The Fund stayed true to its methodology of buying stocks that are selling
at a discount to their intrinsic private market value and selling stocks that
approached their private market value (the price a private investor would be
willing to pay for the entire company, which we determine from a company's cash
flow, asset valuations, and competitive positioning). This discipline allows us
to be patient with stocks that are out-of-favor with the market, which is
becoming the exception, as the market becomes more short-term focused.
Our selection strategy of choosing equities on a stock-by-stock basis led
us to be overweighted in the energy and consumer sectors and underweighted in
the financial sector. We were also underweighted, to a lesser extent, in the
cyclical and health care sectors. These sector weightings were fairly consistent
with the prior reporting period.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
Economic indicators may be pointing to a slowing economy in 2006,
especially on the consumer side. This may cause corporate earnings to decelerate
from the double-digit growth rate we have experienced for the past several years
to a more moderate single-digit level. While we will continue to adhere to our
private market value methodology, we will focus more on downside potential and
attempt to minimize the Fund's risk by choosing quality companies at attractive
valuations.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. FUNDS THAT INVEST IN SMALLER COMPANIES INVOLVE
ADDITIONAL RISKS BECAUSE THESE COMPANIES OFTEN HAVE LIMITED FINANCIAL RESOURCES,
AND THEIR STOCKS TEND TO BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGER
COMPANIES. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR
FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO
THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN INVESTMENTS RISK. CONSULT
THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS.
20
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
- -------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE OPPORTUNITY FUND(SM) (Incept. Date 05/08/1992) 7.22 7.88 4.25 11.54
- -------------------------------------------------------------------------------------------------------------------
Benchmarks Life of Fund
- -------------------------------------------------------------------------------------------------------------------
Russell Midcap(R) Index(2) 8.41 12.65 8.45 12.49
- -------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 5.76 4.91 0.54 9.07
- -------------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(5) (AS OF DECEMBER 31, 2005)
- -------------------------------------------------------------------
Beta** 0.98
- -------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 23.50
- -------------------------------------------------------------------
Price to Book Ratio 2.51
- -------------------------------------------------------------------
Median Market Cap ($B) $ 8.42
- -------------------------------------------------------------------
Portfolio Turnover 41%
- -------------------------------------------------------------------
Net Asset Value (NAV) $24.22
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(5) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (32%)
Consumer Staples (2%)
Energy (13%)
Financials (14%)
Health Care (7%)
Industrials (8%)
Information Technology (16%)
Materials (5%)
Telecommunication Services (1%)
Utilities (2%)
TEN LARGEST EQUITY HOLDINGS(4,5) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Weatherford International Limited 3.07%
- --------------------------------------------------------------------------------
GlobalSantaFe Corporation 2.63%
- --------------------------------------------------------------------------------
Red Hat Incorporated 2.33%
- --------------------------------------------------------------------------------
Praxair Incorporated 2.06%
- --------------------------------------------------------------------------------
Nordstrom Incorporated 2.02%
- --------------------------------------------------------------------------------
BJ Services Company 1.98%
- --------------------------------------------------------------------------------
AutoNation Incorporated 1.94%
- --------------------------------------------------------------------------------
JB Hunt Transport Services Incorporated 1.91%
- --------------------------------------------------------------------------------
Devon Energy Corporation 1.88%
- --------------------------------------------------------------------------------
ENSCO International Incorporated 1.85%
GROWTH OF $10,000 INVESTMENT(6)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
OPPORTUNITY FUND RUSSELL MIDCAP(R) INDEX S&P 500 INDEX
12/31/1995 10000 10,000 10,000
1/31/1996 10205 10,211 10,340
2/29/1996 10511 10,451 10,436
3/31/1996 10552 10,602 10,536
4/30/1996 10967 10,902 10,691
5/31/1996 11041 11,067 10,966
6/30/1996 10726 10,901 11,008
7/31/1996 10108 10,226 10,521
8/31/1996 10506 10,713 10,743
9/30/1996 10900 11,242 11,347
10/31/1996 11060 11,332 11,660
11/30/1996 11845 12,022 12,540
12/31/1996 11815 11,900 12,292
1/31/1997 12030 12,345 13,060
2/28/1997 11932 12,326 13,162
3/31/1997 11552 11,802 12,623
4/30/1997 11885 12,096 13,375
5/31/1997 12853 12,979 14,188
6/30/1997 13101 13,403 14,824
7/31/1997 14158 14,521 16,002
8/31/1997 14281 14,364 15,106
9/30/1997 15011 15,183 15,932
10/31/1997 14547 14,593 15,400
11/30/1997 14602 14,940 16,113
12/31/1997 14822 15,352 16,390
1/31/1998 14802 15,063 16,571
2/28/1998 15990 16,240 17,765
3/31/1998 16927 17,010 18,675
4/30/1998 17306 17,053 18,866
5/31/1998 16664 16,525 18,541
6/30/1998 16811 16,754 19,294
7/31/1998 16223 15,955 19,089
8/31/1998 13439 13,403 16,331
9/30/1998 14352 14,270 17,378
10/31/1998 15643 15,243 18,790
11/30/1998 16084 15,965 19,929
12/31/1998 16830 16,901 21,077
1/31/1999 17372 16,872 21,958
2/28/1999 16861 16,311 21,275
3/31/1999 17603 16,822 22,126
4/30/1999 19053 18,065 22,983
5/31/1999 19236 18,013 22,440
6/30/1999 20145 18,648 23,686
7/31/1999 20249 18,136 22,946
8/31/1999 19437 17,667 22,833
9/30/1999 19254 17,046 22,207
10/31/1999 20372 17,853 23,612
11/30/1999 21071 18,367 24,092
12/31/1999 22704 19,983 25,511
1/31/2000 22032 19,322 24,230
2/29/2000 22416 20,807 23,772
3/31/2000 24722 21,998 26,097
4/30/2000 24250 20,957 25,312
5/31/2000 24416 20,402 24,793
6/30/2000 23630 21,005 25,405
7/31/2000 23351 20,770 25,009
8/31/2000 24941 22,760 26,562
9/30/2000 24023 22,436 25,159
10/31/2000 24172 22,090 25,054
11/30/2000 22599 20,102 23,079
12/31/2000 24202 21,631 23,192
1/31/2001 25678 21,980 24,016
2/28/2001 24171 20,642 21,828
3/31/2001 22999 19,361 20,446
4/30/2001 24707 21,017 22,033
5/31/2001 24839 21,408 22,181
6/30/2001 24212 21,207 21,642
7/31/2001 23868 20,600 21,429
8/31/2001 22463 19,808 20,090
9/30/2001 19359 17,419 18,469
10/31/2001 20512 18,109 18,822
11/30/2001 22392 19,627 20,265
12/31/2001 23306 20,415 20,444
1/31/2002 23066 20,293 20,145
2/28/2002 22527 20,078 19,756
3/31/2002 23689 21,282 20,499
4/30/2002 22431 20,869 19,257
5/31/2002 22275 20,633 19,116
6/30/2002 19771 19,250 17,755
7/31/2002 17518 17,371 16,372
8/31/2002 17530 17,466 16,478
9/30/2002 15529 15,855 14,689
10/31/2002 16524 16,656 15,980
11/30/2002 18309 17,812 16,920
12/31/2002 17056 17,111 15,927
1/31/2003 16539 16,765 15,511
2/28/2003 16465 16,543 15,278
3/31/2003 16318 16,706 15,425
4/30/2003 17806 17,919 16,696
5/31/2003 19589 19,559 17,574
6/30/2003 19810 19,757 17,799
7/31/2003 20449 20,408 18,112
8/31/2003 21421 21,294 18,465
9/30/2003 21003 21,028 18,270
10/31/2003 22196 22,633 19,302
11/30/2003 22540 23,268 19,472
12/31/2003 23367 23,965 20,492
1/31/2004 24351 24,661 20,869
2/29/2004 24770 25,192 21,159
3/31/2004 24634 25,198 20,840
4/30/2004 24290 24,272 20,513
5/31/2004 24856 24,875 20,794
6/30/2004 25422 25,563 21,197
7/31/2004 24585 24,445 20,496
8/31/2004 24192 24,551 20,578
9/30/2004 25127 25,348 20,801
10/31/2004 25533 26,047 21,118
11/30/2004 26812 27,634 21,973
12/31/2004 27625 28,810 22,720
1/31/2005 26825 28,097 22,166
2/28/2005 27095 28,965 22,631
3/31/2005 26788 28,737 22,231
4/30/2005 25890 27,821 21,808
5/31/2005 27243 29,153 22,502
6/30/2005 27797 29,937 22,533
7/31/2005 29470 31,515 23,371
8/31/2005 29138 31,294 23,159
9/30/2005 29150 31,711 23,346
10/31/2005 28387 30,759 22,956
11/30/2005 29544 32,125 23,824
12/31/2005 29803 32,456 23,834
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies. The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on, among other things, the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE OPPORTUNITY FUND.
(1) The Fund's Advisor has committed through April 30, 2007, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
return would have been lower.
Performance shown for the WELLS FARGO ADVANTAGE OPPORTUNITY FUND(SM) for
periods prior to April 11, 2005 reflects the performance of the Strong
Opportunity Fund II, its predecessor fund.
(2) The Russell Midcap(R) Index measures the performance of the 800 smallest
companies in the Russell 1000(R) Index, which represent approximately 25% of the
total market capitalization of the Russell 1000(R) Index. You cannot invest
directly in an Index.
(3) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity,
and industry group representation. It is a market value weighted index with each
stock's weight in the Index proportionate to its market value. You cannot invest
directly in an Index.
(4) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the portfolio.
(5) Portfolio holdings, Fund characteristics and sector distributions are
subject to change. Cash and cash equivalents are not reflected in the
calculations of sector distribution, portfolio holdings and fund
characteristics.
(6) The chart compares the performance of the WELLS FARGO ADVANTAGE OPPORTUNITY
FUND(SM) for the most recent ten years of the Fund with the S&P 500 Index and
the Russell Midcap(R) Index. The chart assumes a hypothetical $10,000 investment
and reflects all operating expenses of the Fund.
21
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND (the Fund) seeks long-term
capital appreciation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
Jerome "Cam" Philpott, CFA 05/01/1995
Stuart Roberts
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 6.24%(1) for the 12-month period ended December 31,
2005, outperforming its broad-based benchmark, the Russell 2000(R) Index(2),
which returned 4.55% for the same period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
Rising interest rates and concerns over weakening consumer spending
provided the U.S. equity market with plenty of volatility during 2005. Soaring
energy prices led to strong gains in the energy sector, but overall market
returns were generally modest.
Top performing sectors included financials, telecommunication services,
and industrials. Appreciation in CB Richard Ellis Group Inc. and the market
expansion of OptionXpress bolstered the financial sectors. NII Holdings and
UbiquiTel, telecommunications holdings, both benefited from margin growth, while
NII Holdings also received positive market expansion. Industrials benefited from
holdings including Gardner Denver, Labor Ready, and Wesco International.
Energy and healthcare sectors were our biggest detractors. Energy
performed well due to higher oil prices, but our lack of exposure hurt relative
performance. In the healthcare sector, stock selection detracted from
performance when compared to the benchmark. Negative market developments hurt
stocks like Eyetech Pharmaceuticals and SFBC International.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
Our biggest changes in allocations came through an increase in consumer
discretionary and information technologies, and a decrease in industrials.
Examples of purchases in the consumer discretionary sector include GameStop
Corp. and Children's Place Retail Stores, two stocks that have performed very
well for the Fund. We also added to information technology through purchases of
such companies as Integrated Device Technologies and Wright Express. We
decreased our exposure in the industrials sector mostly due to profit-taking in
companies that met our price targets. Labor Ready is an example of a company
that performed quite well, up 47% for the year, and we decided to take profits.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the underlying economic backdrop is stronger than broadly
believed and the challenges confronting equity investors during 2005 were
primarily higher energy prices and higher interest rates. Energy prices remained
high throughout most of the year even though there was a slight retreat from
absolute highs following hurricanes Katrina and Rita. The economy demonstrated
it could grow at reasonable rates with energy prices at existing levels, so we
do not view the current energy price levels as a significant obstacle to
corporate profits.
Investors are more concerned about interest rates than any other variable.
We do not know when the Federal Reserve Board (the Fed) will pull back on its
policy of incremental rate increases, but historical evidence along with recent
trading activity suggest equity multiples will expand when the Fed halts
interest rate increases.
The central component to our particular investment style has been
individual company fundamentals. We currently own more companies serving
businesses than consumers, but the portfolio is broadly diversified across the
economic spectrum. In general, we do not think companies were given enough
credit in 2005 for the earnings growth they recorded. Finally, solid company
earnings combined with a possible pull-back by the Fed on interest rate hikes
may bode well for equity investors in the year ahead.
STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES
FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL
MARKET AND ECONOMIC CONDITIONS. FUNDS THAT INVEST IN SMALLER COMPANIES INVOLVE
ADDITIONAL RISKS BECAUSE THESE COMPANIES OFTEN HAVE LIMITED FINANCIAL RESOURCES,
AND THEIR STOCKS TEND TO BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGER
COMPANIES. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN
AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE
HIGHER SHORT-TERM CAPITAL GAINS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR
MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN
INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN
INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON
THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies. The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on, among other things, the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
22
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year 10-Year
- ---------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND (Incept. Date 05/01/1995) 9.74 6.24 (4.28) 2.47
- ---------------------------------------------------------------------------------------------------------------
Benchmark
- ---------------------------------------------------------------------------------------------------------------
Russell 2000(R) Index(2) 5.88 4.55 8.22 9.26
- ---------------------------------------------------------------------------------------------------------------
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
Beta** 0.96
- --------------------------------------------------------------------------------
Price to Earnings Ratio (trailing 12 months) 31.85
- --------------------------------------------------------------------------------
Price to Book Ratio 3.12
- --------------------------------------------------------------------------------
Median Market Cap ($B) $ 0.96
- --------------------------------------------------------------------------------
Portfolio Turnover 128%
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $ 8.34
** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK
BETA IS 1.00 BY DEFINITION.
SECTOR DISTRIBUTION(3) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary (17%)
Energy (2%)
Financial Services (6%)
Health Care (21%)
Industrials (20%)
Information Technology (29%)
Materials (2%)
Telecommunications Services (3%)
TEN LARGEST EQUITY HOLDINGS(3,4) (AS OF DECEMBER 31, 2005)
- ----------------------------------------------------------------
Resources Connection Incorporated 3.27%
- ----------------------------------------------------------------
Gardner Denver Incorporated 2.85%
- ----------------------------------------------------------------
WESCO International Incorporated 2.60%
- ----------------------------------------------------------------
WebEx Communications Incorporated 2.57%
- ----------------------------------------------------------------
ValueClick Incorporated 2.49%
- ----------------------------------------------------------------
Wright Express Corporation 2.28%
- ----------------------------------------------------------------
Integrated Device Technology Incorporated 2.18%
- ----------------------------------------------------------------
Priceline.com Incorporated 2.15%
- ----------------------------------------------------------------
Quest Software Incorporated 2.02%
- ----------------------------------------------------------------
SI International Incorporated 1.91%
GROWTH OF $10,000 INVESTMENT(5)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE
SMALL CAP GROWTH FUND RUSSELL 2000(R) INDEX
12/31/1995 10000 10,000
1/31/1996 10036 9,989
2/29/1996 10312 10,301
3/31/1996 10767 10,511
4/30/1996 11980 11,073
5/31/1996 12435 11,509
6/30/1996 11561 11,036
7/31/1996 10446 10,073
8/31/1996 11365 10,658
9/30/1996 11918 11,075
10/31/1996 12150 10,904
11/30/1996 12721 11,354
12/31/1996 13147 11,651
1/31/1997 13429 11,884
2/28/1997 12670 11,596
3/31/1997 11628 11,049
4/30/1997 11287 11,080
5/31/1997 13565 12,313
6/30/1997 13809 12,841
7/31/1997 14695 13,439
8/31/1997 15065 13,746
9/30/1997 16195 14,753
10/31/1997 15153 14,105
11/30/1997 14510 14,013
12/31/1997 14433 14,258
1/31/1998 14094 14,033
2/28/1998 15428 15,070
3/31/1998 15858 15,691
4/30/1998 15892 15,777
5/31/1998 14738 14,927
6/30/1998 14863 14,958
7/31/1998 13279 13,747
8/31/1998 10191 11,077
9/30/1998 10712 11,944
10/31/1998 11164 12,432
11/30/1998 11820 13,083
12/31/1998 12344 13,893
1/31/1999 11958 14,078
2/28/1999 10835 12,938
3/31/1999 10597 13,139
4/30/1999 11198 14,317
5/31/1999 11175 14,526
6/30/1999 11754 15,182
7/31/1999 11743 14,766
8/31/1999 11822 14,220
9/30/1999 12276 14,223
10/31/1999 14080 14,281
11/30/1999 16440 15,134
12/31/1999 20524 16,847
1/31/2000 20978 16,576
2/29/2000 26140 19,312
3/31/2000 22770 18,040
4/30/2000 19991 16,954
5/31/2000 17869 15,965
6/30/2000 22192 17,357
7/31/2000 20864 16,798
8/31/2000 23605 18,080
9/30/2000 23081 17,549
10/31/2000 19877 16,766
11/30/2000 14855 15,044
12/31/2000 15890 16,336
1/31/2001 16073 17,187
2/28/2001 12767 16,060
3/31/2001 10914 15,275
4/30/2001 12705 16,469
5/31/2001 12721 16,874
6/30/2001 13027 17,456
7/31/2001 12216 16,512
8/31/2001 11251 15,979
9/30/2001 9292 13,828
10/31/2001 10379 14,637
11/30/2001 11175 15,770
12/31/2001 12017 16,743
1/31/2002 11420 16,569
2/28/2002 10409 16,115
3/31/2002 11297 17,410
4/30/2002 10777 17,569
5/31/2002 10134 16,789
6/30/2002 9261 15,956
7/31/2002 7516 13,547
8/31/2002 7486 13,513
9/30/2002 6873 12,543
10/31/2002 7409 12,945
11/30/2002 7960 14,100
12/31/2002 7424 13,314
1/31/2003 7118 12,946
2/28/2003 6980 12,555
3/31/2003 7011 12,717
4/30/2003 7730 13,922
5/31/2003 8373 15,416
6/30/2003 8680 15,695
7/31/2003 9093 16,678
8/31/2003 9521 17,441
9/30/2003 9231 17,119
10/31/2003 10149 18,557
11/30/2003 10471 19,216
12/31/2003 10562 19,606
1/31/2004 11159 20,456
2/29/2004 11175 20,641
3/31/2004 11481 20,833
4/30/2004 10945 19,770
5/31/2004 11358 20,084
6/30/2004 11527 20,930
7/31/2004 10226 19,521
8/31/2004 9797 19,420
9/30/2004 10440 20,332
10/31/2004 10761 20,732
11/30/2004 11267 22,531
12/31/2004 12017 23,197
1/31/2005 11496 22,230
2/28/2005 11328 22,606
3/31/2005 11098 21,959
4/30/2005 10471 20,701
5/31/2005 11144 22,057
6/30/2005 11634 22,908
7/31/2005 12430 24,361
8/31/2005 12323 23,910
9/30/2005 12476 23,984
10/31/2005 12139 23,238
11/30/2005 12950 24,365
12/31/2005 12767 24,253
- --------------------------------------------------------------------------------
The views expressed are as of December 31, 2005 and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND.
(1) The Fund's Advisor has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
returns would have been lower.
Performance shown for the Fund for periods prior to September 20,1999
reflects performance of the Norwest Small Company Stock Fund, its predecessor
fund.
(2) The Russell 2000(R) Index measures the performance of the 2,000 smallest
companies in the Russell 3000(R) Index, which represents approximately 8% of the
total market capitalization of the Russell 3000(R) Index. You cannot invest
directly in an Index.
(3) Portfolio holdings, sector distributions and Fund characteristics are
subject to change. Cash and cash equivalents are not reflected in the
calculations of sector distribution, portfolio holdings and fund
characteristics.
(4) The ten largest equity holdings are calculated based on the market value of
the securities divided by total market value of the fund.
(5) The chart compares the performance of the WELLS FARGO ADVANTAGE SMALL CAP
GROWTH FUND for the most recent ten years with the Russell 2000(R) Index. The
chart assumes a hypothetical $10,000 investment and reflects all operating
expenses of the Fund.
23
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS
- --------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND (the Fund) seeks total
return consisting of income and capital appreciation.
ADVISOR SUBADVISOR
Wells Fargo Funds Management, LLC Wells Capital Management Incorporated
FUND MANAGERS INCEPTION DATE
William Stevens 09/20/1999
Marie Chandoha
Thomas O'Connor, CFA
HOW DID THE FUND PERFORM OVER THE 12-MONTH REPORTING PERIOD?
- --------------------------------------------------------------------------------
The Fund returned 1.90%1 for the 12-month period ended December 31, 2005,
underperforming its benchmark, the Lehman Brothers U.S. Aggregate Bond Index(2)
which returned 2.43% during the same period, and slightly underperforming the
Lehman Brothers U.S. Credit Bond Index(3), which returned 1.97%, during the same
period.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON
FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND
PRINCIPAL VALUE 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. CURRENT
MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 866-765-0778.
PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO
THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF
THEY DID, RETURNS WOULD BE LOWER.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
- --------------------------------------------------------------------------------
The Fund's investment style relies on finding relative value
opportunities. During 2005, lower-than-average market volatility limited our
ability to add value through relative value trades or by finding other
dislocations in the market.
In the early part of the year, the yield curve and the Fund's overweighted
position in the corporate sector detracted from performance. Specific issue
detractors included JC Penney, which was impacted by leveraged buyout rumors,
GMAC, Ford, Georgia Pacific, TXU, Kroger, and Royal Bank of Scotland. In
mortgages, our underweighted position to the 30-year Government National
Mortgage Association (GNMA) sector negatively impacted performance as foreign
buying overwhelmed the low supply in the sector. Our underweighted position to
the outperforming 15-year 4.5% coupon also detracted from performance.
On the positive side, the Fund's overweighted position to the Commercial
Mortgage Backed Securities (CMBS) and Asset Backed Securities (ABS) sectors
modestly added to performance. From a security selection perspective, top
contributors in corporate bonds were Daimler Chrysler, Residential Capital,
Russia, Lazard, Time Warner, Energy Transfer Partners, May Department Stores,
AT&T Corporation, and Amerada Hess. In the mortgage sector, we performed some
well-timed relative value trades during the year in the Collateralized Mortgage
Obligations (CMO) sector. Our overweight to the 15-year Federal Home Loans
Mortgage Corporation (FHLMC) pools also added to performance.
WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD?
- --------------------------------------------------------------------------------
For most of the period, we kept the portfolio neutral in duration and
yield curve compared to its benchmark, and focused on finding undervalued
securities and relative value in the markets within the Fund's strategy. The
Fund ended the year with the portfolio duration slightly shorter than its
benchmark.
The Fund maintained a close-to-neutral weighting in mortgages on a
risk-adjusted basis for most of the period. In mid-November, when mortgages
reached their cheapest valuations of the year, we increased our risk-adjusted
overweighted position to 3%.
Mid-year, we increased our CMBS exposure to an overweighted position of 6%
on a dollar duration basis, relative to its benchmark, as we felt the sector
offered relative value versus mortgages and agencies. In mid-November, as we
edged up our mortgage exposure, we in turn reduced our CMBS exposure on concerns
about spread widening due to a heavy December issuance calendar. We ended the
year 4% overweighted in CMBS.
The Fund maintained a slightly overweighted position in corporates, on a
risk-adjusted basis, for most of the period. In late 2005 we reduced our
overweighted exposure to an almost neutral positioning in corporate bonds
reflecting our caution going into 2006 and desire to take advantage of a heavy
new issue calendar in January. Our largest industry overweights remain in
insurance, real estate investment trusts (REITs), and energy. We have been
cautious since last summer in the cable, media, and telecommunications sectors
and continue to maintain underweighted exposure. The expectation is to reinvest
in these sectors at more attractive valuations.
LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK?
- --------------------------------------------------------------------------------
We believe the Federal Reserve Board is nearing the end of its tightening
cycle, and we expect that volatility will increase and that the portfolio may be
well positioned to take advantage of this shift. While fundamentals are still
strong across sectors and economic growth continues to be solid, we believe
fundamentals for many sectors have peaked and are now on a slow decline.
In corporate bonds, we expect profitability to slow, but remain positive.
Balance sheet liquidity is strong, but we believe will continue to decline as
companies pursue shareholder-friendly activities such as share buybacks.
Leveraged buyout risk continues to be of concern, particularly in industrials.
The technicals, however, remain surprisingly strong. Structured corporate issues
(Collateralized Debt Obligations or CDOs) and overseas buying remain strong
supporters of valuation levels. We are also closely watching the ever-evolving
derivative markets; they are playing a bigger role in creating volatility in
both corporate bonds and structured products like CMBS and ABS. These flows may
increasingly dominate the cash markets, and at times, valuation levels.
Mortgages are trading at fair levels, but we are paying close attention to both
overseas and domestic bank buying of these instruments.
BOND FUND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF
INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN
INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND
INVESTORS CAN LOSE PRINCIPAL VALUE. INVESTMENT STRATEGIES THAT EMPHASIZE
PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK
OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO
FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL
INFORMATION ON THESE AND OTHER RISKS.
- --------------------------------------------------------------------------------
The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase
through certain variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies. The
participating insurance companies and their separate accounts are the
shareholders or investors in the Fund and the separate accounts of the
participating insurance companies place orders to purchase and redeem shares of
the Fund based on, among other things, the amount of premium payments to be
invested and the amount of surrender and transfer requests to be affected that
day.
24
PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
6-Month* 1-Year 5-Year Life of Fund
- ---------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND (Incept. Date 09/20/1999) (0.38) 1.90 5.94 6.30
- ---------------------------------------------------------------------------------------------------------------------
Benchmarks
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Bond Index(2) (0.08) 2.43 5.87 6.51
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Credit Bond Index(3) 0.99 1.97 7.11 7.19
* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FUND CHARACTERISTICS(4) (AS OF DECEMBER 31, 2005)
- ------------------------------------------------------
Average Credit Quality(5) Aa1
- ------------------------------------------------------
Weighted Average Coupon 5.19%
- ------------------------------------------------------
Weighted Average Maturity 6.51 years
- ------------------------------------------------------
Average Duration 4.53 years
- ------------------------------------------------------
Portfolio Turnover 714%
- ------------------------------------------------------
Distribution Rate(6) 3.99%
- ------------------------------------------------------
30-Day SEC Yield(7) 3.89%
- ------------------------------------------------------
Net Asset Value (NAV) $9.86
SECTOR DISTRIBUTION(4) (AS OF DECEMBER 31, 2005)
- --------------------------------------------------------------------------------
ABS/CMBS(9) (19%)
MBS(10) (20%)
U.S. Agency Securities (8%)
Corporate Bonds & Notes (15%)
U.S. Treasury Securities (15%)
CMO(11) (23%)
GROWTH OF $10,000 INVESTMENT(8)
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
WELLS FARGO ADVANTAGE LEHMAN BROTHERS U.S. LEHMAN BROTHERS U.S.
TOTAL RETURN BOND FUND AGGREGATE BOND INDEX CREDIT BOND INDEX
9/20/1999 10000 $ 10,000 $ 10,000
9/30/1999 10005 $ 10,028 $ 10,109
10/31/1999 10060 10,065 $ 10,155
11/30/1999 10030 10,064 $ 10,166
12/31/1999 9984 10,016 $ 10,112
1/31/2000 9958 9,983 $ 10,076
2/29/2000 10082 10,104 $ 10,170
3/31/2000 10252 10,237 $ 10,257
4/30/2000 10059 10,208 $ 10,166
5/31/2000 10011 10,203 $ 10,129
6/30/2000 10244 10,415 $ 10,383
7/31/2000 10342 10,510 $ 10,509
8/31/2000 10515 10,662 $ 10,645
9/30/2000 10539 10,730 $ 10,702
10/31/2000 10587 10,800 $ 10,712
11/30/2000 10729 10,978 $ 10,852
12/31/2000 11004 11,182 $ 11,062
1/31/2001 11202 11,365 $ 11,365
2/28/2001 11343 11,464 $ 11,464
3/31/2001 11369 11,521 $ 11,535
4/30/2001 11274 11,473 $ 11,494
5/31/2001 11346 11,542 $ 11,599
6/30/2001 11350 11,586 $ 11,658
7/31/2001 11647 11,845 $ 11,963
8/31/2001 11787 11,981 $ 12,123
9/30/2001 11687 12,122 $ 12,105
10/31/2001 11987 12,375 $ 12,405
11/30/2001 11932 12,204 $ 12,297
12/31/2001 11820 12,126 $ 12,212
1/31/2002 11881 12,224 $ 12,316
2/28/2002 11948 12,343 $ 12,410
3/31/2002 11819 12,138 $ 12,180
4/30/2002 12021 12,373 $ 12,349
5/31/2002 12132 12,479 $ 12,512
6/30/2002 12085 12,586 $ 12,532
7/31/2002 12006 12,738 $ 12,526
8/31/2002 12247 12,953 $ 12,851
9/30/2002 12413 13,163 $ 13,095
10/31/2002 12291 13,103 $ 12,943
11/30/2002 12455 13,099 $ 13,111
12/31/2002 12735 13,370 $ 13,498
1/31/2003 12780 13,381 $ 13,541
2/28/2003 13009 13,566 $ 13,812
3/31/2003 13081 13,555 $ 13,822
4/30/2003 13388 13,667 $ 14,077
5/31/2003 13709 13,921 $ 14,521
6/30/2003 13720 13,893 $ 14,484
7/31/2003 13270 13,427 $ 13,867
8/31/2003 13397 13,515 $ 13,976
9/30/2003 13775 13,873 $ 14,463
10/31/2003 13642 13,744 $ 14,309
11/30/2003 13663 13,777 $ 14,374
12/31/2003 13805 13,918 $ 14,534
1/31/2004 13921 14,029 $ 14,681
2/29/2004 14073 14,181 $ 14,866
3/31/2004 14172 14,287 $ 15,010
4/30/2004 13828 13,916 $ 14,537
5/31/2004 13777 13,860 $ 14,435
6/30/2004 13842 13,939 $ 14,496
7/31/2004 13981 14,077 $ 14,675
8/31/2004 14234 14,346 $ 15,021
9/30/2004 14274 14,384 $ 15,106
10/31/2004 14385 14,505 $ 15,252
11/30/2004 14270 14,389 $ 15,099
12/31/2004 14411 14,522 $ 15,296
1/31/2005 14496 14,613 $ 15,417
2/28/2005 14422 14,527 $ 15,326
3/31/2005 14322 14,453 $ 15,135
4/30/2005 14509 14,648 $ 15,337
5/31/2005 14668 14,806 $ 15,552
6/30/2005 14741 14,888 $ 15,675
7/31/2005 14601 14,752 $ 15,518
8/31/2005 14778 14,941 $ 15,754
9/30/2005 14617 14,787 $ 15,518
10/31/2005 14501 14,670 $ 15,349
11/30/2005 14548 14,735 $ 15,442
12/31/2005 14685 14,875 $ 15,595
- -------------------------------------------------------------------------------
PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE
COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR
INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND
OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES.
The views expressed are as of December 31, 2005 and are those of the
Fund's managers. 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 the WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND.
(1) The Fund's Advisor has committed through April 30, 2006, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
operating expense ratio for the Fund. Actual reductions of operating expenses
can increase total return to shareholders. Without these reductions, the Fund's
return would have been lower.
(2) The Lehman Brothers U.S. Aggregate Bond Index is composed of the Lehman
Brothers Government/Credit Index and the Mortgage-Backed Securities Index and
includes U.S. Treasury issues, agency issues, corporate bond issues, and
mortgage-backed securities. You cannot invest directly in an Index.
(3) The Lehman Brothers U.S. Credit Bond Index contains publicly issued U.S.
corporate and specified foreign debentures and secured notes that meet the
specified maturity, liquidity, and quality requirements. To qualify, bonds must
be SEC-registered. You cannot invest directly in an Index.
(4) Sector distribution and Fund characteristics are subject to change. Cash and
cash equivalents are not reflected in the calculations of sector distribution,
portfolio holdings and fund characteristics.
(5) The average credit quality is compiled from the ratings of Standard & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(6) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(7) SEC yields include the actual amount of interest earned adjusted by any gain
or loss realized due to the return of principal, less expenses and the maximum
offering price calculated on a 30-day month-end basis.
(8) The chart compares the performance of the WELLS FARGO ADVANTAGE TOTAL RETURN
BOND FUND for the life of the Fund with the Lehman Brothers U.S. Aggregate Bond
Index and the Lehman Brothers U.S. Credit Bond Index. The chart assumes a
hypothetical $10,000 investment and reflects all operating expenses of the Fund.
(9) ABS/CMBS -- Asset-Backed Securities/Commercial Mortgage-Backed Securities.
(10) MBS -- Mortgage-Backed Securities.
(11) CMO -- Collateralized Mortgage Obligations.
25
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS FUND EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
redemption fees (if any) and exchange fees (if any); and (2) ongoing costs,
including management fees; distribution (12b-1) and/or shareholder service fees;
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period (July 1, 2005 to December 31,
2005).
ACTUAL EXPENSES
The "Actual" line of the table below provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the "Actual" line under the heading entitled "Expenses Paid During
Period" for your applicable class of shares to estimate the expenses you paid on
your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as
sales charges (loads), redemption fees, or exchange fees. Therefore, the
"Hypothetical" line of the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would have
been higher.
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
Asset Allocation Fund 07/01/05 12/31/05 the Period* Ratio
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,040.30 $ 5.14 1.00%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.16 $ 5.09 1.00%
C&B Large Cap Value Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,018.20 $ 5.09 1.00%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.16 $ 5.09 1.00%
Discovery Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,091.30 $ 6.22 1.15%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.41 $ 6.01 1.15%
Equity Income Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,044.40 $ 5.15 1.00%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.16 $ 5.09 1.00%
International Core Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,107.40 $ 5.31 1.00%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.16 $ 5.09 1.00%
Large Company Core Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,040.10 $ 5.14 1.00%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.16 $ 5.09 1.00%
Large Company Growth Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,097.80 $ 5.29 1.00%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.16 $ 5.09 1.00%
26
FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Net Annual
Value Value Paid During Expense
Money Market Fund 07/01/05 12/31/05 the Period* Ratio
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,015.20 $ 3.81 0.75%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,021.42 $ 3.82 0.75%
Multi Cap Value Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,141.20 $ 6.21 1.14%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.46 $ 5.85 1.14%
Opportunity Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,072.20 $ 5.80 1.07%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.81 $ 5.65 1.07%
Small Cap Growth Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,097.40 $ 6.34 1.20%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.16 $ 6.11 1.20%
Total Return Bond Fund
- -------------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $996.20 $ 4.53 0.90%
- -------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.67 $ 4.58 0.90%
* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSES RATIO MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF
DAYS IN THE MOST RECENT FISCAL HALF-YEAR DIVIDED BY THE NUMBER OF DAYS IN
THE FISCAL YEAR (TO REFLECT THE ONE-HALF YEAR PERIOD).
27
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 55.99%
AMUSEMENT & RECREATION SERVICES - 0.12%
1 CCE SPINCO INCORPORATED+ $ 8
2,828 HARRAH'S ENTERTAINMENT INCORPORATED 201,608
5,185 INTERNATIONAL GAME TECHNOLOGY 159,595
361,211
----------------
APPAREL & ACCESSORY STORES - 0.21%
8,832 GAP INCORPORATED 155,797
5,305 KOHL'S CORPORATION+ 257,823
5,358 LIMITED BRANDS 119,751
3,363 NORDSTROM INCORPORATED 125,776
659,147
----------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.06%
1,797 JONES APPAREL GROUP INCORPORATED 55,204
1,641 LIZ CLAIBORNE INCORPORATED 58,781
1,368 VF CORPORATION 75,705
189,690
----------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 0.05%
2,785 AUTONATION INCORPORATED+ 60,518
849 AUTOZONE INCORPORATED+ 77,896
138,414
----------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.01%
987 RYDER SYSTEM INCORPORATED 40,487
----------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.21%
1,965 CENTEX CORPORATION<< 140,478
4,188 D.R. HORTON INCORPORATED 149,637
1,204 KB HOME 87,483
2,113 LENNAR CORPORATION CLASS A 128,935
3,301 PULTE HOMES INCORPORATED 129,927
636,460
----------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.71%
32,688 HOME DEPOT INCORPORATED 1,323,210
12,032 LOWE'S COMPANIES INCORPORATED 802,053
1,727 SHERWIN-WILLIAMS COMPANY 78,441
2,203,704
----------------
BUSINESS SERVICES - 3.38%
9,251 ADOBE SYSTEMS INCORPORATED+<< 341,917
1,912 AFFILIATED COMPUTER SERVICES INCORPORATED CLASS A+<< 113,152
3,551 AUTODESK INCORPORATED+<< 152,515
8,872 AUTOMATIC DATA PROCESSING INCORPORATED 407,136
3,328 BMC SOFTWARE INCORPORATED+<< 68,191
15,763 CENDANT CORPORATION 271,912
2,713 CITRIX SYSTEMS INCORPORATED+ 78,080
7,061 COMPUTER ASSOCIATES INTERNATIONAL INCORPORATED 199,050
28
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
BUSINESS SERVICES (CONTINUED)
2,846 COMPUTER SCIENCES CORPORATION+ $ 144,121
5,962 COMPUWARE CORPORATION+ 53,479
2,154 CONVERGYS CORPORATION+ 34,141
17,586 EBAY INCORPORATED+ 760,594
4,625 ELECTRONIC ARTS INCORPORATED+<< 241,934
8,025 ELECTRONIC DATA SYSTEMS CORPORATION 192,921
1,998 EQUIFAX INCORPORATED 75,964
11,757 FIRST DATA CORPORATION 505,669
2,839 FISERV INCORPORATED+ 122,844
3,565 IMS HEALTH INCORPORATED 88,840
6,624 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+<< 63,922
2,722 INTUIT INCORPORATED+ 145,083
1,332 MERCURY INTERACTIVE CORPORATION+ 37,016
140,869 MICROSOFT CORPORATION 3,683,724
1,894 MONSTER WORLDWIDE INCORPORATED+ 77,313
2,825 NCR CORPORATION+<< 95,880
5,878 NOVELL INCORPORATED+<< 51,903
2,774 OMNICOM GROUP INCORPORATED 236,151
57,872 ORACLE CORPORATION+ 706,617
4,190 PARAMETRIC TECHNOLOGY CORPORATION+ 25,559
2,620 ROBERT HALF INTERNATIONAL INCORPORATED 99,272
8,141 SIEBEL SYSTEMS INCORPORATED 86,132
52,538 SUN MICROSYSTEMS INCORPORATED+ 220,134
16,641 SYMANTEC CORPORATION+ 291,217
5,251 UNISYS CORPORATION+<< 30,613
19,430 YAHOO! INCORPORATED+ 761,267
10,464,263
----------------
CHEMICALS & ALLIED PRODUCTS - 5.58%
23,870 ABBOTT LABORATORIES 941,194
3,414 AIR PRODUCTS & CHEMICALS INCORPORATED 202,075
1,161 ALBERTO-CULVER COMPANY CLASS B 53,116
18,993 AMGEN INCORPORATED+ 1,497,788
1,699 AVERY DENNISON CORPORATION 93,904
7,053 AVON PRODUCTS INCORPORATED 201,363
5,222 BIOGEN IDEC INCORPORATED+<< 236,713
30,107 BRISTOL-MYERS SQUIBB COMPANY 691,859
1,683 CHIRON CORPORATION+ 74,826
2,319 CLOROX COMPANY<< 131,928
7,971 COLGATE PALMOLIVE COMPANY 437,209
14,851 DOW CHEMICAL COMPANY 650,771
14,147 E.I. DU PONT DE NEMOURS & COMPANY 601,247
1,253 EASTMAN CHEMICAL COMPANY 64,642
2,836 ECOLAB INCORPORATED 102,862
17,490 ELI LILLY & COMPANY 989,759
5,198 FOREST LABORATORIES INCORPORATED+ 211,455
3,973 GENZYME CORPORATION+ 281,209
7,046 GILEAD SCIENCES INCORPORATED+ 370,831
29
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
CHEMICALS & ALLIED PRODUCTS (CONTINUED)
2,475 HOSPIRA INCORPORATED+ $ 105,880
1,243 INTERNATIONAL FLAVORS & FRAGRANCES INCORPORATED 41,640
3,720 KING PHARMACEUTICALS INCORPORATED+ 62,942
3,786 MEDIMMUNE INCORPORATED+ 132,586
33,648 MERCK & COMPANY INCORPORATED 1,070,343
4,131 MONSANTO COMPANY 320,276
3,363 MYLAN LABORATORIES INCORPORATED 67,125
113,431 PFIZER INCORPORATED 2,645,211
2,570 PPG INDUSTRIES INCORPORATED 148,803
4,959 PRAXAIR INCORPORATED 262,629
51,577 PROCTER & GAMBLE COMPANY 2,985,277
2,216 ROHM & HAAS COMPANY 107,299
22,742 SCHERING-PLOUGH CORPORATION 474,171
1,034 SIGMA-ALDRICH CORPORATION 65,442
20,654 WYETH 951,530
17,275,905
----------------
COMMUNICATIONS - 2.08%
5,892 ALLTEL CORPORATION 371,785
60,112 AT&T INCORPORATED 1,472,143
6,444 AVAYA INCORPORATED+ 68,757
28,139 BELLSOUTH CORPORATION 762,567
2,015 CENTURYTEL INCORPORATED 66,817
8,317 CLEAR CHANNEL COMMUNICATIONS INCORPORATED 261,570
33,415 COMCAST CORPORATION CLASS A+ 867,453
23,756 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED+<< 134,221
45,463 SPRINT NEXTEL CORPORATION 1,062,016
3,440 UNIVISION COMMUNICATIONS INCORPORATED CLASS A+<< 101,102
42,547 VERIZON COMMUNICATIONS INCORPORATED 1,281,516
6,449,947
----------------
DEPOSITORY INSTITUTIONS - 5.78%
5,363 AMSOUTH BANCORPORATION 140,564
61,800 BANK OF AMERICA CORPORATION 2,852,070
11,852 BANK OF NEW YORK COMPANY INCORPORATED 377,486
8,344 BB&T CORPORATION 349,697
77,848 CITIGROUP INCORPORATED 3,777,963
2,543 COMERICA INCORPORATED 144,341
1,916 COMPASS BANCSHARES INCORPORATED 92,524
8,538 FIFTH THIRD BANCORP 322,053
1,938 FIRST HORIZON NATIONAL CORPORATION 74,497
3,921 GOLDEN WEST FINANCIAL CORPORATION 258,786
3,511 HUNTINGTON BANCSHARES INCORPORATED 83,386
53,843 JP MORGAN CHASE & COMPANY 2,137,029
6,275 KEYCORP 206,636
1,227 M&T BANK CORPORATION 133,804
3,218 MARSHALL & ILSLEY CORPORATION 138,503
6,434 MELLON FINANCIAL CORPORATION 220,365
30
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
DEPOSITORY INSTITUTIONS (CONTINUED)
8,481 NATIONAL CITY CORPORATION $ 284,707
7,320 NORTH FORK BANCORPORATION INCORPORATED 200,262
2,854 NORTHERN TRUST CORPORATION 147,894
4,496 PNC FINANCIAL SERVICES GROUP 277,988
7,046 REGIONS FINANCIAL CORPORATION 240,691
5,495 SOVEREIGN BANCORP INCORPORATED 118,802
5,045 STATE STREET CORPORATION 279,695
5,561 SUNTRUST BANKS INCORPORATED 404,618
4,805 SYNOVUS FINANCIAL CORPORATION 129,783
27,950 US BANCORP 835,425
23,904 WACHOVIA CORPORATION 1,263,565
15,183 WASHINGTON MUTUAL INCORPORATED 660,461
25,732 WELLS FARGO & COMPANY++ 1,616,742
1,606 ZIONS BANCORPORATION<< 121,349
17,891,686
----------------
EATING & DRINKING PLACES - 0.33%
2,015 DARDEN RESTAURANTS INCORPORATED 78,343
19,367 MCDONALD'S CORPORATION 653,055
1,788 WENDY'S INTERNATIONAL INCORPORATED 98,805
4,355 YUM! BRANDS INCORPORATED 204,163
1,034,366
----------------
EDUCATIONAL SERVICES - 0.04%
2,239 APOLLO GROUP INCORPORATED CLASS A+ 135,370
----------------
ELECTRIC, GAS & SANITARY SERVICES - 2.15%
10,051 AES CORPORATION+ 159,107
2,505 ALLEGHENY ENERGY INCORPORATED+ 79,283
3,358 ALLIED WASTE INDUSTRIES INCORPORATED+<< 29,349
3,143 AMEREN CORPORATION 161,047
6,058 AMERICAN ELECTRIC POWER COMPANY INCORPORATED 224,691
4,771 CENTERPOINT ENERGY INCORPORATED<< 61,307
3,068 CINERGY CORPORATION 130,267
5,138 CITIZENS COMMUNICATIONS COMPANY 62,838
3,386 CMS ENERGY CORPORATION+<< 49,131
3,769 CONSOLIDATED EDISON INCORPORATED<< 174,618
2,746 CONSTELLATION ENERGY GROUP INCORPORATED 158,170
5,343 DOMINION RESOURCES INCORPORATED 412,480
2,736 DTE ENERGY COMPANY 118,168
14,273 DUKE ENERGY CORPORATION 391,794
4,636 DYNEGY INCORPORATED CLASS A+<< 22,438
5,013 EDISON INTERNATIONAL 218,617
10,145 EL PASO CORPORATION 123,363
3,192 ENTERGY CORPORATION 219,131
10,267 EXELON CORPORATION 545,588
5,075 FIRSTENERGY CORPORATION 248,624
6,076 FPL GROUP INCORPORATED<< 252,519
2,683 KEYSPAN CORPORATION 95,756
31
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRIC, GAS & SANITARY SERVICES (CONTINUED)
1,619 KINDER MORGAN INCORPORATED $ 148,867
679 NICOR INCORPORATED 26,692
4,195 NISOURCE INCORPORATED 87,508
586 PEOPLES ENERGY CORPORATION 20,551
5,279 PG&E CORPORATION 195,956
1,523 PINNACLE WEST CAPITAL CORPORATION 62,976
5,849 PPL CORPORATION 171,961
3,872 PROGRESS ENERGY INCORPORATED 170,058
3,857 PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED 250,589
3,956 SEMPRA ENERGY 177,387
11,410 SOUTHERN COMPANY 393,987
3,202 TECO ENERGY INCORPORATED 55,010
7,429 TXU CORPORATION 372,862
8,491 WASTE MANAGEMENT INCORPORATED 257,702
8,817 WILLIAMS COMPANIES INCORPORATED 204,290
6,199 XCEL ENERGY INCORPORATED 114,434
6,649,116
----------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 5.29%
1,792 ADC TELECOMMUNICATIONS INCORPORATED+<< 40,033
6,217 ADVANCED MICRO DEVICES INCORPORATED+ 190,240
5,577 ALTERA CORPORATION+ 103,342
2,644 AMERICAN POWER CONVERSION CORPORATION 58,168
5,644 ANALOG DEVICES INCORPORATED 202,450
2,499 ANDREW CORPORATION+ 26,814
4,597 APPLIED MICRO CIRCUITS CORPORATION+ 11,814
4,450 BROADCOM CORPORATION CLASS A+ 209,817
8,893 CIENA CORPORATION+ 26,412
94,522 CISCO SYSTEMS INCORPORATED+ 1,618,217
3,108 COMVERSE TECHNOLOGY INCORPORATED+ 82,642
1,409 COOPER INDUSTRIES LIMITED CLASS A 102,857
6,321 EMERSON ELECTRIC COMPANY 472,179
6,315 FREESCALE SEMICONDUCTOR INCORPORATED CLASS B+ 158,949
162,593 GENERAL ELECTRIC COMPANY 5,698,885
92,774 INTEL CORPORATION 2,315,639
2,677 JABIL CIRCUIT INCORPORATED+ 99,290
25,427 JDS UNIPHASE CORPORATION+ 60,008
3,037 KLA-TENCOR CORPORATION 149,815
1,848 L-3 COMMUNICATIONS HOLDINGS INCORPORATED 137,399
4,689 LINEAR TECHNOLOGY CORPORATION 169,132
6,027 LSI LOGIC CORPORATION+ 48,216
68,397 LUCENT TECHNOLOGIES INCORPORATED+<< 181,936
5,044 MAXIM INTEGRATED PRODUCTS INCORPORATED 182,795
1,233 MAYTAG CORPORATION 23,205
9,509 MICRON TECHNOLOGY INCORPORATED+ 126,565
2,208 MOLEX INCORPORATED 57,298
38,328 MOTOROLA INCORPORATED 865,830
5,288 NATIONAL SEMICONDUCTOR CORPORATION 137,382
32
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT (CONTINUED)
5,726 NETWORK APPLIANCE INCORPORATED+ $ 154,602
2,052 NOVELLUS SYSTEMS INCORPORATED+<< 49,494
2,634 NVIDIA CORPORATION+<< 96,299
2,819 PMC-SIERRA INCORPORATED+ 21,734
1,238 QLOGIC CORPORATION+ 40,247
25,300 QUALCOMM INCORPORATED 1,089,924
2,658 ROCKWELL COLLINS INCORPORATED 123,517
8,088 SANMINA-SCI CORPORATION+ 34,455
2,363 SCIENTIFIC-ATLANTA INCORPORATED 101,774
6,900 TELLABS INCORPORATED+ 75,210
24,898 TEXAS INSTRUMENTS INCORPORATED 798,479
1,038 WHIRLPOOL CORPORATION<< 86,943
5,363 XILINX INCORPORATED<< 135,201
16,365,208
----------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 0.21%
1,336 FLUOR CORPORATION 103,219
3,818 MOODY'S CORPORATION<< 234,502
5,132 PAYCHEX INCORPORATED 195,632
2,549 QUEST DIAGNOSTICS INCORPORATED 131,222
664,575
----------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.18%
1,601 BALL CORPORATION 63,592
2,248 FORTUNE BRANDS INCORPORATED 175,389
3,150 ILLINOIS TOOL WORKS INCORPORATED 277,168
891 SNAP-ON INCORPORATED 33,466
549,615
----------------
FINANCIAL SERVICES - 0.02%
3,319 JANUS CAPITAL GROUP INCORPORATED 61,833
----------------
FOOD & KINDRED PRODUCTS - 1.75%
11,946 ANHEUSER-BUSCH COMPANIES INCORPORATED 513,200
10,051 ARCHER-DANIELS-MIDLAND COMPANY 247,858
2,863 CAMPBELL SOUP COMPANY 85,232
31,851 COCA-COLA COMPANY 1,283,914
4,663 COCA-COLA ENTERPRISES INCORPORATED 89,390
7,985 CONAGRA FOODS INCORPORATED<< 161,936
3,027 CONSTELLATION BRANDS INCORPORATED CLASS A+ 79,398
5,467 GENERAL MILLS INCORPORATED 269,632
1,735 HERCULES INCORPORATED+ 19,606
2,786 HERSHEY FOODS CORPORATION 153,927
5,149 HJ HEINZ COMPANY 173,624
3,952 KELLOGG COMPANY 170,805
2,059 MCCORMICK & COMPANY INCORPORATED 63,664
868 MOLSON COORS BREWING COMPANY 58,147
2,109 PEPSI BOTTLING GROUP INCORPORATED 60,339
25,531 PEPSICO INCORPORATED 1,508,372
33
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
FOOD & KINDRED PRODUCTS (CONTINUED)
11,687 SARA LEE CORPORATION $ 220,884
3,873 TYSON FOODS INCORPORATED CLASS A 66,228
2,760 WM. WRIGLEY JR. COMPANY 183,512
5,409,668
----------------
FOOD STORES - 0.33%
5,674 ALBERTSON'S INCORPORATED<< 121,140
11,154 KROGER COMPANY+ 210,588
6,913 SAFEWAY INCORPORATED 163,562
11,825 STARBUCKS CORPORATION+ 354,868
2,119 WHOLE FOODS MARKET INCORPORATED 163,989
1,014,147
----------------
FORESTRY - 0.08%
3,742 WEYERHAEUSER COMPANY 248,244
----------------
FURNITURE & FIXTURES - 0.12%
2,830 LEGGETT & PLATT INCORPORATED 64,977
6,521 MASCO CORPORATION 196,869
4,239 NEWELL RUBBERMAID INCORPORATED 100,803
362,649
----------------
GENERAL MERCHANDISE STORES - 1.14%
1,753 BIG LOTS INCORPORATED+<< 21,054
4,872 DOLLAR GENERAL CORPORATION 92,909
2,389 FAMILY DOLLAR STORES INCORPORATED 59,223
4,187 FEDERATED DEPARTMENT STORES INCORPORATED 277,724
3,573 JC PENNEY COMPANY INCORPORATED 198,659
1,535 SEARS HOLDINGS CORPORATION+<< 177,339
13,528 TARGET CORPORATION 743,634
7,089 TJX COMPANIES INCORPORATED 164,677
38,440 WAL-MART STORES INCORPORATED 1,798,992
3,534,211
----------------
HEALTH SERVICES - 0.33%
6,921 CAREMARK RX INCORPORATED+ 358,439
6,523 HCA INCORPORATED 329,411
3,803 HEALTH MANAGEMENT ASSOCIATION INCORPORATED CLASS A 83,514
2,045 LABORATORY CORPORATION OF AMERICA HOLDINGS+ 110,123
1,217 MANOR CARE INCORPORATED 48,400
7,223 TENET HEALTHCARE CORPORATION+ 55,328
1,560 WATSON PHARMACEUTICALS INCORPORATED+<< 50,716
1,035,931
----------------
HOLDING & OTHER INVESTMENT OFFICES - 0.42%
1,472 APARTMENT INVESTMENT & MANAGEMENT COMPANY CLASS A<< 55,745
3,262 ARCHSTONE-SMITH TRUST 136,645
6,250 EQUITY OFFICE PROPERTIES TRUST 189,562
4,434 EQUITY RESIDENTIAL<< 173,458
2,832 PLUM CREEK TIMBER COMPANY 102,094
34
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HOLDING & OTHER INVESTMENT OFFICES (CONTINUED)
3,746 PROLOGIS $ 175,013
1,272 PUBLIC STORAGE INCORPORATED<< 86,140
2,869 SIMON PROPERTY GROUP INCORPORATED<< 219,851
1,816 VORNADO REALTY TRUST 151,582
1,290,090
----------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.17%
4,568 BED BATH & BEYOND INCORPORATED+ 165,133
6,289 BEST BUY COMPANY INCORPORATED 273,446
2,410 CIRCUIT CITY STORES INCORPORATED 54,442
2,071 RADIO SHACK CORPORATION 43,553
536,574
----------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.16%
5,048 HILTON HOTELS CORPORATION<< 121,707
2,533 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 169,635
3,373 STARWOOD HOTELS & RESORTS WORLDWIDE INCORPORATED 215,400
506,742
----------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 3.17%
11,693 3M COMPANY 906,207
2,813 AMERICAN STANDARD COMPANIES INCORPORATED 112,379
12,968 APPLE COMPUTER INCORPORATED+ 932,269
24,967 APPLIED MATERIALS INCORPORATED 447,908
5,260 BAKER HUGHES INCORPORATED<< 319,703
1,206 BLACK & DECKER CORPORATION 104,874
10,467 CATERPILLAR INCORPORATED<< 604,679
720 CUMMINS INCORPORATED 64,606
3,711 DEERE & COMPANY 252,756
36,216 DELL INCORPORATED+ 1,086,118
3,118 DOVER CORPORATION 126,248
2,277 EATON CORPORATION 152,764
36,788 EMC CORPORATION+ 501,053
4,076 GATEWAY INCORPORATED+ 10,231
44,086 HEWLETT-PACKARD COMPANY 1,262,182
5,090 INGERSOLL-RAND COMPANY CLASS A 205,483
24,305 INTERNATIONAL BUSINESS MACHINES CORPORATION 1,997,871
1,785 LEXMARK INTERNATIONAL INCORPORATED+ 80,022
2,682 NATIONAL-OILWELL VARCO INCORPORATED+<< 168,161
1,917 PALL CORPORATION 51,491
1,842 PARKER HANNIFIN CORPORATION 121,498
3,510 PITNEY BOWES INCORPORATED 148,297
14,058 SOLECTRON CORPORATION+ 51,452
1,119 STANLEY WORKS 53,757
3,861 SYMBOL TECHNOLOGIES INCORPORATED<< 49,498
9,811,507
----------------
35
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INSURANCE AGENTS, BROKERS & SERVICE - 0.26%
4,924 AON CORPORATION<< $ 177,018
2,505 HUMANA INCORPORATED+ 136,096
2,062 JEFFERSON-PILOT CORPORATION 117,390
8,381 MARSH & MCLENNAN COMPANIES INCORPORATED 266,180
4,585 UNUMPROVIDENT CORPORATION 104,309
800,993
----------------
INSURANCE CARRIERS - 3.51%
4,960 ACE LIMITED 265,062
4,401 AETNA INCORPORATED 415,058
7,699 AFLAC INCORPORATED 357,388
9,981 ALLSTATE CORPORATION 539,673
1,618 AMBAC FINANCIAL GROUP INCORPORATED 124,683
39,941 AMERICAN INTERNATIONAL GROUP INCORPORATED 2,725,174
3,076 CHUBB CORPORATION 300,371
1,935 CIGNA CORPORATION 216,139
2,688 CINCINNATI FINANCIAL CORPORATION 120,100
5,795 GENWORTH FINANCIAL INCORPORATED 200,391
4,622 HARTFORD FINANCIAL SERVICES GROUP INCORPORATED 396,984
2,665 LINCOLN NATIONAL CORPORATION 141,325
2,086 LOEWS CORPORATION 197,857
2,062 MBIA INCORPORATED 124,050
11,653 METLIFE INCORPORATED 570,997
1,396 MGIC INVESTMENT CORPORATION 91,885
4,310 PRINCIPAL FINANCIAL GROUP INCORPORATED 204,423
3,035 PROGRESSIVE CORPORATION 354,427
7,770 PRUDENTIAL FINANCIAL INCORPORATED 568,686
1,901 SAFECO CORPORATION 107,407
10,655 ST. PAUL COMPANIES INCORPORATED 475,959
1,596 TORCHMARK CORPORATION 88,738
20,986 UNITEDHEALTH GROUP INCORPORATED 1,304,070
10,155 WELLPOINT INCORPORATED+ 810,267
2,683 XL CAPITAL LIMITED CLASS A 180,781
10,881,895
----------------
LEATHER & LEATHER PRODUCTS - 0.06%
5,848 COACH INCORPORATED+ 194,972
----------------
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE - 0.01%
1,627 LOUISIANA-PACIFIC CORPORATION 44,694
----------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 1.67%
6,326 AGILENT TECHNOLOGIES INCORPORATED+ 210,593
2,025 ALLERGAN INCORPORATED 218,619
2,891 APPLERA CORPORATION-APPLIED BIOSYSTEMS GROUP 76,785
827 BAUSCH & LOMB INCORPORATED 56,153
9,596 BAXTER INTERNATIONAL INCORPORATED 361,289
3,878 BECTON DICKINSON & COMPANY 232,990
3,832 BIOMET INCORPORATED 140,136
9,079 BOSTON SCIENTIFIC CORPORATION+ 222,345
36
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (CONTINUED)
1,613 C.R. BARD INCORPORATED $ 106,329
3,650 DANAHER CORPORATION 203,597
4,419 EASTMAN KODAK COMPANY<< 103,405
1,886 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+<< 116,668
5,105 GUIDANT CORPORATION 330,549
18,613 MEDTRONIC INCORPORATED 1,071,550
801 MILLIPORE CORPORATION+<< 52,898
2,012 PERKINELMER INCORPORATED 47,403
6,874 RAYTHEON COMPANY 275,991
2,756 ROCKWELL AUTOMATION INCORPORATED 163,045
5,640 ST. JUDE MEDICAL INCORPORATED+ 283,128
4,487 STRYKER CORPORATION 199,357
1,283 TEKTRONIX INCORPORATED 36,194
3,029 TERADYNE INCORPORATED+ 44,133
2,495 THERMO ELECTRON CORPORATION+ 75,174
1,703 WATERS CORPORATION+ 64,373
14,778 XEROX CORPORATION+<< 216,498
3,812 ZIMMER HOLDINGS INCORPORATED+ 257,081
5,166,283
----------------
MEDICAL MANAGEMENT SERVICES - 0.05%
2,499 COVENTRY HEALTH CARE INCORPORATED+ 142,343
----------------
METAL MINING - 0.24%
2,832 FREEPORT-MCMORAN COPPER & GOLD INCORPORATED CLASS B 152,362
6,875 NEWMONT MINING CORPORATION 367,125
1,562 PHELPS DODGE CORPORATION 224,725
744,212
----------------
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS - 0.03%
1,567 VULCAN MATERIALS COMPANY 106,164
----------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 1.25%
2,744 HASBRO INCORPORATED 55,374
45,778 JOHNSON & JOHNSON 2,751,258
6,213 MATTEL INCORPORATED 98,290
2,188 TIFFANY & COMPANY 83,778
30,977 TYCO INTERNATIONAL LIMITED 893,996
3,882,696
----------------
MISCELLANEOUS RETAIL - 0.72%
4,719 AMAZON.COM INCORPORATED+<< 222,501
7,264 COSTCO WHOLESALE CORPORATION 359,350
12,528 CVS CORPORATION 330,990
947 DILLARDS INCORPORATED CLASS A 23,504
2,241 EXPRESS SCRIPTS INCORPORATED+ 187,796
4,752 OFFICE DEPOT INCORPORATED+ 149,213
11,254 STAPLES INCORPORATED 255,578
15,573 WALGREEN COMPANY 689,261
2,218,193
----------------
37
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MOTION PICTURES - 0.82%
37,444 NEWS CORPORATION CLASS A $ 582,254
71,748 TIME WARNER INCORPORATED 1,251,285
29,600 WALT DISNEY COMPANY 709,512
2,543,051
----------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING - 0.41%
16,981 UNITED PARCEL SERVICE INCORPORATED CLASS B 1,276,122
----------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 1.34%
19,107 AMERICAN EXPRESS COMPANY 983,246
4,608 CAPITAL ONE FINANCIAL CORPORATION 398,131
3,074 CIT GROUP INCORPORATED 159,172
9,189 COUNTRYWIDE FINANCIAL CORPORATION 314,172
14,894 FANNIE MAE 726,976
10,633 FREDDIE MAC 694,867
19,313 MBNA CORPORATION 524,541
6,421 SLM CORPORATION 353,733
4,154,838
----------------
OIL & GAS EXTRACTION - 1.71%
3,650 ANADARKO PETROLEUM CORPORATION 345,838
5,067 APACHE CORPORATION 347,191
4,960 BJ SERVICES COMPANY 181,883
5,817 BURLINGTON RESOURCES INCORPORATED 501,425
6,836 DEVON ENERGY CORPORATION 427,523
3,717 EOG RESOURCES INCORPORATED 272,716
7,891 HALLIBURTON COMPANY 488,926
1,784 KERR-MCGEE CORPORATION 162,094
2,431 NABORS INDUSTRIES LIMITED+ 184,148
2,106 NOBLE CORPORATION 148,557
6,186 OCCIDENTAL PETROLEUM CORPORATION<< 494,138
1,682 ROWAN COMPANIES INCORPORATED 59,947
9,064 SCHLUMBERGER LIMITED 880,568
5,079 TRANSOCEAN INCORPORATED+ 353,956
5,349 WEATHERFORD INTERNATIONAL LIMITED+ 193,634
5,588 XTO ENERGY INCORPORATED 245,537
5,288,081
----------------
PAPER & ALLIED PRODUCTS - 0.31%
1,620 BEMIS COMPANY INCORPORATED 45,133
7,547 INTERNATIONAL PAPER COMPANY 253,654
7,189 KIMBERLY-CLARK CORPORATION 428,824
2,792 MEADWESTVACO CORPORATION 78,260
1,089 OFFICEMAX INCORPORATED 27,617
2,204 PACTIV CORPORATION+ 48,488
1,727 TEMPLE-INLAND INCORPORATED 77,456
959,432
----------------
38
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PERSONAL SERVICES - 0.07%
2,119 CINTAS CORPORATION $ 87,260
5,041 H & R BLOCK INCORPORATED 123,757
211,017
----------------
PETROLEUM REFINING & RELATED INDUSTRIES - 3.21%
1,231 AMERADA HESS CORPORATION<< 156,115
1,104 ASHLAND INCORPORATED 63,922
34,546 CHEVRONTEXACO CORPORATION 1,961,176
21,351 CONOCOPHILLIPS 1,242,201
95,750 EXXON MOBIL CORPORATION 5,378,278
5,639 MARATHON OIL CORPORATION 343,817
2,540 MURPHY OIL CORPORATION 137,135
2,094 SUNOCO INCORPORATED 164,128
9,489 VALERO ENERGY CORPORATION 489,632
9,936,404
----------------
PRIMARY METAL INDUSTRIES - 0.24%
13,390 ALCOA INCORPORATED 395,942
1,308 ALLEGHENY TECHNOLOGIES INCORPORATED 47,192
1,845 ENGELHARD CORPORATION 55,627
2,394 NUCOR CORPORATION 159,728
1,744 UNITED STATES STEEL CORPORATION<< 83,834
742,323
----------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.58%
907 DOW JONES & COMPANY INCORPORATED 32,190
1,309 E.W. SCRIPPS COMPANY CLASS A 62,858
3,691 GANNETT COMPANY INCORPORATED 223,564
1,067 KNIGHT-RIDDER INCORPORATED 67,541
5,768 MCGRAW-HILL COMPANIES INCORPORATED 297,802
644 MEREDITH CORPORATION 33,707
2,232 NEW YORK TIMES COMPANY CLASS A<< 59,036
3,343 RR DONNELLEY & SONS COMPANY 114,364
4,028 TRIBUNE COMPANY 121,887
23,781 VIACOM INCORPORATED CLASS B+ 775,261
1,788,210
----------------
RAILROAD TRANSPORTATION - 0.38%
5,746 BURLINGTON NORTHERN SANTA FE CORPORATION 406,932
3,342 CSX CORPORATION 169,673
6,254 NORFOLK SOUTHERN CORPORATION 280,367
4,076 UNION PACIFIC CORPORATION 328,159
1,185,131
----------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.06%
943 COOPER TIRE & RUBBER COMPANY 14,447
2,714 GOODYEAR TIRE & RUBBER COMPANY+<< 47,169
810 REEBOK INTERNATIONAL LIMITED<< 47,166
1,252 SEALED AIR CORPORATION+<< 70,325
179,107
----------------
39
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.43%
3,785 AMERIPRISE FINANCIAL INCORPORATED $ 155,185
1,743 BEAR STEARNS COMPANIES INCORPORATED 201,369
15,873 CHARLES SCHWAB CORPORATION 232,857
6,294 E*TRADE FINANCIAL CORPORATION+ 131,293
1,303 FEDERATED INVESTORS INCORPORATED CLASS B 48,263
2,284 FRANKLIN RESOURCES INCORPORATED 214,719
6,936 GOLDMAN SACHS GROUP INCORPORATED 885,797
4,122 LEHMAN BROTHERS HOLDINGS INCORPORATED<< 528,317
14,140 MERRILL LYNCH & COMPANY INCORPORATED 957,702
16,587 MORGAN STANLEY 941,146
2,011 T. ROWE PRICE GROUP INCORPORATED 144,852
4,441,500
----------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.15%
23,450 CORNING INCORPORATED+ 461,027
----------------
TOBACCO PRODUCTS - 0.85%
32,043 ALTRIA GROUP INCORPORATED 2,394,253
1,315 REYNOLDS AMERICAN INCORPORATED<< 125,359
2,517 UST INCORPORATED 102,769
2,622,381
----------------
TRANSPORTATION BY AIR - 0.21%
4,663 FEDEX CORPORATION 482,107
10,734 SOUTHWEST AIRLINES COMPANY 176,360
658,467
----------------
TRANSPORTATION EQUIPMENT - 1.57%
12,422 BOEING COMPANY 872,521
1,484 BRUNSWICK CORPORATION 60,340
2,314 DANA CORPORATION 16,615
28,585 FORD MOTOR COMPANY<< 220,676
3,097 GENERAL DYNAMICS CORPORATION 353,213
8,702 GENERAL MOTORS CORPORATION<< 168,993
2,670 GENUINE PARTS COMPANY 117,267
1,891 GOODRICH CORPORATION 77,720
4,225 HARLEY-DAVIDSON INCORPORATED 217,545
12,968 HONEYWELL INTERNATIONAL INCORPORATED 483,058
1,420 ITT INDUSTRIES INCORPORATED 146,005
2,969 JOHNSON CONTROLS INCORPORATED 216,470
5,502 LOCKHEED MARTIN CORPORATION 350,092
949 NAVISTAR INTERNATIONAL CORPORATION+ 27,160
5,467 NORTHROP GRUMMAN CORPORATION 328,621
2,605 PACCAR INCORPORATED 180,344
2,036 TEXTRON INCORPORATED 156,731
15,675 UNITED TECHNOLOGIES CORPORATION 876,389
4,869,760
----------------
TRANSPORTATION SERVICES - 0.02%
2,019 SABRE HOLDINGS CORPORATION 48,678
----------------
40
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
WATER TRANSPORTATION - 0.12%
6,666 CARNIVAL CORPORATION $ 356,431
----------------
WHOLESALE TRADE NON-DURABLE GOODS - 0.58%
3,208 AMERISOURCEBERGEN CORPORATION<< 132,811
1,278 BROWN-FORMAN CORPORATION CLASS B 88,591
6,589 CARDINAL HEALTH INCORPORATED 452,994
4,734 MCKESSON CORPORATION 244,227
4,732 MEDCO HEALTH SOLUTIONS INCORPORATED+ 264,045
2,925 NIKE INCORPORATED CLASS B 253,861
2,095 SUPERVALU INCORPORATED 68,046
9,545 SYSCO CORPORATION 296,372
1,800,947
----------------
WHOLESALE TRADE-DURABLE GOODS - 0.05%
2,127 PATTERSON COMPANIES INCORPORATED+ 71,042
1,169 W.W. GRAINGER INCORPORATED 83,116
154,158
----------------
TOTAL COMMON STOCKS (COST $171,065,613) 173,380,270
----------------
PRINCIPAL INTEREST RATE MATURITY DATE
US TREASURY SECURITIES - 36.60%
US TREASURY BOND - 36.60%
$ 6,341,000 US TREASURY BOND+<< 6.88% 08/15/2025 8,166,016
7,885,000 US TREASURY BOND+<< 6.00 02/15/2026 9,298,142
4,860,000 US TREASURY BOND+<< 6.75 08/15/2026 6,223,837
6,170,000 US TREASURY BOND+<< 6.50 11/15/2026 7,710,575
5,428,000 US TREASURY BOND+<< 6.63 02/15/2027 6,886,352
5,104,000 US TREASURY BOND+<< 6.38 08/15/2027 6,322,779
12,612,000 US TREASURY BOND+<< 6.13 11/15/2027 15,219,140
6,757,000 US TREASURY BOND+<< 5.50 08/15/2028 7,597,665
6,306,000 US TREASURY BOND+<< 5.25 11/15/2028 6,877,973
6,538,000 US TREASURY BOND+<< 5.25 02/15/2029 7,134,338
6,422,000 US TREASURY BOND+<< 6.13 08/15/2029 7,822,548
10,232,000 US TREASURY BOND<< 6.25 05/15/2030 12,707,663
10,135,000 US TREASURY BOND<< 5.38 02/15/2031 11,384,453
113,351,481
----------------
TOTAL US TREASURY SECURITIES (COST $102,736,364) 113,351,481
----------------
COLLATERAL FOR SECURITIES LENDING - 37.91%
COLLATERAL INVESTED IN MONEY MARKET FUNDS - 1.44%
2,082,014 SCUDDER DAILY ASSETS MONEY MARKET FUND 2,082,014
2,373,582 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 2,373,582
4,455,596
----------------
COLLATERAL INVESTED IN OTHER ASSETS - 36.47%
15,000,000 BANK OF AMERICA SECURITIES REPURCHASE AGREEMENT
(MATURITY VALUE $15,007,167) 4.30% 01/03/2006 15,000,000
15,000,000 BEAR, STEARNS & COMPANY REPURCHASE AGREEMENT
(MATURITY VALUE $15,007,167) 4.30 01/03/2006 15,000,000
6,000,000 BUCKINGHAM CDO LLC 4.35 02/03/2006 5,977,680
41
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED)
$ 6,000,000 BUCKINGHAM II CDO LLC 4.30% 01/09/2006 $ 5,995,740
6,000,000 CONCORD MINUTEMEN CAPITAL COMPANY (SERIES B)+/- 4.30 01/06/2007 6,000,000
6,000,000 CORPORATE ASSET SECURITIZATION AUSTRALIA, LTD 4.29 01/06/2006 5,997,900
6,000,000 CREDIT SUISSE FIRST BOSTON NEW YORK SERIES YCD1+/- 4.30 05/04/2006 5,983,140
4,000,000 DEER VALLEY FUNDING LLC 4.33 01/13/2006 3,995,280
2,000,000 DEER VALLEY FUNDING LLC 4.39 01/17/2006 1,996,680
3,000,000 GOLDMAN SACHS GROUP INCORPORATED+/- 4.35 06/30/2006 3,000,000
3,000,000 ING USA ANNUITY & LIFE INSURANCE+/- 4.41 06/06/2006 3,000,000
6,000,000 KAUPTHING BANK HF++/- 4.43 01/19/2007 5,999,520
2,000,000 LEHMAN BROTHERS HOLDINGS INCORPORATED+/- 4.30 03/16/2006 2,000,000
6,000,000 LIBERTY LIGHT US CAPITAL SERIES MTN+/- 4.23 05/26/2006 6,000,840
2,000,000 LIQUID FUNDING LIMITED+/- 4.29 03/03/2006 2,000,000
4,000,000 LIQUID FUNDING LIMITED+/- 4.34 08/14/2006 4,000,000
6,000,000 MORGAN STANLEY 4.33 01/13/2006 6,000,000
6,000,000 NATEXIS BANQUE POPULAIRES 4.06 02/01/2006 6,000,000
4,000,000 PREMIUM ASSET TRUST SERIES 2001-2+/- 4.87 03/28/2006 4,003,240
5,000,000 WHITE PINE FINANCE LLC SERIES MTN+/- 4.23 06/12/2006 5,000,800
112,950,820
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING** (COST $117,406,416) 117,406,416
----------------
SHARES
SHORT-TERM INVESTMENTS - 6.95%
MUTUAL FUND - 5.28%
16,335,808 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 16,335,808
---------------
PRINCIPAL
US TREASURY BILLS - 1.67%
$ 5,000 US TREASURY BILL+^# 3.66 02/09/2006 4,981
5,245,000 US TREASURY BILL+^# 4.13 05/11/2006 5,169,126
5,174,107
----------------
TOTAL SHORT-TERM INVESTMENTS (COST $21,508,769) 21,509,915
----------------
TOTAL INVESTMENTS IN SECURITIES
(COST $412,717,162)* 137.45% $ 425,648,083
------ ---------------
OTHER ASSETS AND LIABILITIES, NET (37.45) (115,974,914)
------ ---------------
TOTAL NET ASSETS 100.00% $ 309,673,169
------ ---------------
+ NON-INCOME EARNING SECURITIES.
<< ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2)
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
+ VARIABLE RATE INVESTMENTS.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $17,504,165.
# SECURITY PLEDGED AS COLLATERAL FOR FUTURES TRANSACTIONS.
** SECURITIES PURCHASED WITH CASH COLLATERAL FROM SECURITIES OUT-ON-LOAN. THE
FUND HAS ALSO RECEIVED NON-CASH COLLATERAL IN THE AMOUNT OF $888,978. THE
TOTAL COLLATERAL RECEIVED REPRESENTS 102.00% OF THE VALUE OF THE PORTFOLIO
SECURITIES LOANED.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $414,308,797 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 46,375,982
GROSS UNREALIZED DEPRECIATION (35,036,696)
------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 11,339,286
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 95.19%
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 3.18%
16,200 JONES APPAREL GROUP INCORPORATED $ 497,664
7,500 VF CORPORATION 415,050
912,714
---------------
BUSINESS SERVICES - 7.81%
16,500 MANPOWER INCORPORATED 767,250
27,000 MICROSOFT CORPORATION 706,050
9,000 OMNICOM GROUP INCORPORATED 766,170
2,239,470
---------------
CHEMICALS & ALLIED PRODUCTS - 6.94%
21,000 AVON PRODUCTS INCORPORATED 599,550
11,000 BRISTOL-MYERS SQUIBB COMPANY 252,780
12,200 COLGATE PALMOLIVE COMPANY 669,170
14,700 MERCK & COMPANY INCORPORATED 467,607
1,989,107
---------------
COMMUNICATIONS - 4.71%
19,900 COMCAST CORPORATION CLASS A+ 511,231
36,500 VODAFONE GROUP PLC ADR 783,655
2,500 VODAFONE GROUP PLC ADR 53,675
1,348,561
---------------
DEPOSITORY INSTITUTIONS - 8.00%
22,000 BANK OF AMERICA CORPORATION 1,015,300
13,195 JP MORGAN CHASE & COMPANY 523,710
13,600 STATE STREET CORPORATION 753,984
2,292,994
---------------
EATING & DRINKING PLACES - 5.18%
22,000 ARAMARK CORPORATION CLASS B 611,160
25,900 MCDONALD'S CORPORATION 873,348
1,484,508
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 5.21%
24,500 FLEXTRONICS INTERNATIONAL LIMITED+ 255,780
32,000 MOLEX INCORPORATED CLASS A 786,880
24,660 NOKIA OYJ ADR 451,278
1,493,938
---------------
FOOD & KINDRED PRODUCTS - 1.57%
10,500 ANHEUSER-BUSCH COMPANIES INCORPORATED 451,080
---------------
FURNITURE & FIXTURES - 1.71%
21,400 LEGGETT & PLATT INCORPORATED 491,344
---------------
GENERAL MERCHANDISE STORES - 1.37%
32,800 BIG LOTS INCORPORATED+ 393,928
---------------
43
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HEALTH SERVICES - 1.85%
10,500 HCA INCORPORATED $ 530,250
---------------
HOLDING & OTHER INVESTMENT OFFICES - 2.36%
230 BERKSHIRE HATHAWAY INCORPORATED+ 675,165
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 7.86%
18,200 APPLIED MATERIALS INCORPORATED 326,508
19,400 DOVER CORPORATION 785,506
7,700 EATON CORPORATION 516,593
14,800 PITNEY BOWES INCORPORATED 625,300
2,253,907
---------------
INSURANCE CARRIERS - 4.61%
11,100 ALLSTATE CORPORATION 600,177
12,000 MBIA INCORPORATED 721,920
1,322,097
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 4.94%
14,000 BAXTER INTERNATIONAL INCORPORATED 527,100
5,200 BECTON DICKINSON & COMPANY 312,416
23,500 BOSTON SCIENTIFIC CORPORATION+ 575,515
1,415,031
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 3.43%
21,300 HASBRO INCORPORATED 429,834
19,200 TYCO INTERNATIONAL LIMITED 554,112
983,946
---------------
MISCELLANEOUS RETAIL - 1.47%
16,800 ZALE CORPORATION+ 422,520
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 6.29%
15,900 AMERICAN EXPRESS COMPANY 818,214
16,000 COUNTRYWIDE FINANCIAL CORPORATION 547,040
6,700 FREDDIE MAC 437,845
1,803,099
---------------
PAPER & ALLIED PRODUCTS - 1.87%
9,000 KIMBERLY-CLARK CORPORATION 536,850
---------------
PETROLEUM REFINING & RELATED INDUSTRIES - 4.61%
13,800 EXXON MOBIL CORPORATION 775,146
8,860 ROYAL DUTCH SHELL PLC ADR CLASS A 544,801
1,319,947
---------------
PRIMARY METAL INDUSTRIES - 3.20%
19,600 ENGELHARD CORPORATION 590,940
7,200 HUBBELL INCORPORATED CLASS B 324,864
915,804
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.46%
6,900 GANNETT COMPANY INCORPORATED 417,933
---------------
44
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
TRANSPORTATION BY AIR - 1.84%
5,100 FEDEX CORPORATION $ 527,289
---------------
TRANSPORTATION EQUIPMENT - 2.39%
6,000 GENERAL DYNAMICS CORPORATION 684,300
---------------
WATER TRANSPORTATION - 1.33%
7,100 CARNIVAL CORPORATION 379,637
---------------
TOTAL COMMON STOCKS (COST $26,507,277) 27,285,419
---------------
SHORT-TERM INVESTMENTS - 4.75%
1,359,850 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 1,359,850
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,359,849) 1,359,850
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $27,867,126)* 99.94% $ 28,645,269
------ ---------------
OTHER ASSETS AND LIABILITIES, NET 0.06 18,487
------ ---------------
TOTAL NET ASSETS 100.00% $ 28,663,756
------ ---------------
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,359,849.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $27,887,063 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 1,689,868
GROSS UNREALIZED DEPRECIATION (931,662)
-----------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 758,206
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
45
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.48%
AEROSPACE, DEFENSE - 2.36%
268,533 BE AEROSPACE INCORPORATED+ $ 5,907,726
---------------
AMUSEMENT & RECREATION SERVICES - 2.71%
43,400 HARRAH'S ENTERTAINMENT INCORPORATED 3,093,986
96,800 LIFETIME FITNESS INCORPORATED+ 3,687,112
6,781,098
---------------
APPAREL & ACCESSORY STORES - 4.08%
48,500 ABERCROMBIE & FITCH COMPANY CLASS A 3,161,230
24,900 CARTER'S INCORPORATED+ 1,465,365
27,900 CHICO'S FAS INCORPORATED+ 1,225,647
104,900 DSW INCORPORATED+ 2,750,478
63,200 URBAN OUTFITTERS INCORPORATED+ 1,599,592
10,202,312
---------------
BUSINESS SERVICES - 11.44%
170,600 CHECK POINT SOFTWARE TECHNOLOGIES LIMITED+<< 3,429,060
236,100 COGENT INCORPORATED+ 5,354,748
93,400 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION CLASS A+ 4,702,690
170,161 EMAGEON INCORPORATED+ 2,705,560
57,200 F5 NETWORKS INCORPORATED+ 3,271,268
63,700 MONSTER WORLDWIDE INCORPORATED+ 2,600,234
166,779 OPENTV CORPORATION CLASS A+<< 373,585
108,600 RED HAT INCORPORATED+ 2,958,264
110,000 VALUECLICK INCORPORATED+ 1,992,100
19,000 WEBSENSE INCORPORATED+ 1,247,160
28,634,669
---------------
CHEMICALS & ALLIED PRODUCTS - 2.99%
185,214 DIGENE CORPORATION+ 5,402,692
123,300 INTERMUNE INCORPORATED+ 2,071,440
7,474,132
---------------
COMMUNICATIONS - 8.92%
132,500 ADTRAN INCORPORATED 3,940,550
143,300 AMERICAN TOWER CORPORATION CLASS A+ 3,883,430
401,100 DOBSON COMMUNICATIONS CORPORATION CLASS A+ 3,008,250
86,800 EQUINIX INCORPORATED+ 3,537,968
182,076 NII HOLDINGS INCORPORATED+ 7,953,080
22,323,278
---------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 0.71%
134,400 QUANTA SERVICES INCORPORATED+ 1,770,048
---------------
EATING & DRINKING PLACES - 1.09%
53,700 RED ROBIN GOURMET BURGERS INCORPORATED+ 2,736,552
---------------
46
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRIC, GAS & SANITARY SERVICES - 2.10%
37,072 COVANTA HOLDING CORPORATION+ $ 558,304
202,300 WILLIAMS COMPANIES INCORPORATED 4,687,291
5,245,595
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 8.67%
45,850 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 4,486,422
54,100 MARVELL TECHNOLOGY GROUP LIMITED+ 3,034,469
199,700 MEMC ELECTRONIC MATERIALS INCORPORATED+ 4,427,349
112,000 MICROSEMI CORPORATION+ 3,097,920
110,200 NETWORK APPLIANCE INCORPORATED+ 2,975,400
92,100 TESSERA TECHNOLOGIES INCORPORATED+ 2,380,785
29,700 VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES INCORPORATED+ 1,304,721
21,707,066
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.25%
64,000 GEN-PROBE INCORPORATED+ 3,122,560
---------------
HEALTH SERVICES - 2.72%
95,400 COMMUNITY HEALTH SYSTEMS+ 3,657,636
35,600 PEDIATRIX MEDICAL GROUP INCORPORATED+ 3,153,092
6,810,728
---------------
HEAVY CONSTRUCTION OTHER THAN BUILDING CONSTRUCTION CONTRACTS - 2.15%
146,209 FOSTER WHEELER LIMITED+<< 5,377,567
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.05%
83,000 GAMESTOP CORPORATION+ 2,641,060
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 2.45%
254,500 HILTON HOTELS CORPORATION 6,135,995
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 5.24%
117,300 GRANT PRIDECO INCORPORATED+ 5,175,276
111,200 NETGEAR INCORPORATED+ 2,140,600
116,000 SCIENTIFIC GAMES CORPORATION CLASS A+ 3,164,480
78,000 UNOVA INCORPORATED+ 2,636,400
13,116,756
---------------
INSURANCE CARRIERS - 1.88%
131,100 ENDURANCE SPECIALTY HOLDINGS LIMITED 4,699,935
---------------
JUSTICE, PUBLIC ORDER & SAFETY - 0.88%
48,900 CORRECTIONS CORPORATION OF AMERICA+ 2,199,033
---------------
LEATHER & LEATHER PRODUCTS - 1.18%
88,500 COACH INCORPORATED+ 2,950,590
---------------
47
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 6.80%
133,200 AMERICAN MEDICAL SYSTEMS HOLDINGS INCORPORATED+ $ 2,374,956
50,600 DENTSPLY INTERNATIONAL INCORPORATED 2,716,714
207,400 EV3 INCORPORATED+<< 3,057,076
55,100 HAEMONETICS CORPORATION+ 2,692,186
47,400 MENTOR CORPORATION 2,184,192
72,400 METTLER-TOLEDO INTERNATIONAL INCORPORATED+ 3,996,480
17,021,604
---------------
MEDICAL MANAGEMENT SERVICES - 1.59%
69,900 COVENTRY HEALTH CARE INCORPORATED+ 3,981,504
---------------
METAL MINING - 3.77%
118,800 GLAMIS GOLD LIMITED+<< 3,264,624
108,800 GOLDCORP INCORPORATED<< 2,424,064
199,300 PAN AMERICAN SILVER CORPORATION+<< 3,752,819
9,441,507
---------------
MISCELLANEOUS RETAIL - 2.10%
238,049 MARVEL ENTERTAINMENT INCORPORATION+ 3,899,243
38,300 MICHAELS STORES INCORPORATED 1,354,671
5,253,914
---------------
OIL & GAS EXTRACTION - 6.71%
63,800 CANADIAN NATURAL RESOURCES LIMITED 3,165,756
223,000 CHESAPEAKE ENERGY CORPORATION 7,075,790
55,600 EDGE PETROLEUM CORPORATION+ 1,384,996
73,900 PIONEER DRILLING COMPANY+ 1,325,027
100,800 TODCO+<< 3,836,448
16,788,017
---------------
PRIMARY METAL INDUSTRIES - 1.32%
63,900 PRECISION CASTPARTS CORPORATION 3,310,659
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.78%
34,600 CARBO CERAMICS INCORPORATED 1,955,592
---------------
THEATERS & ENTERTAINMENT - 2.43%
319,800 REGAL ENTERTAINMENT GROUP CLASS A 6,082,596
---------------
TRANSPORTATION EQUIPMENT - 2.49%
69,200 AUTOLIV INCORPORATED 3,143,064
173,500 GENCORP INCORPORATED+ 3,079,625
6,222,689
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 4.23%
87,000 CENTRAL EUROPEAN DISTRIBUTION CORPORATION+ 3,492,180
64,200 DEAN FOODS COMPANY+ 2,417,772
154,900 ENDO PHARMACEUTICALS HOLDINGS INCORPORATED+ 4,687,274
10,597,226
---------------
48
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
DISCOVERY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
WHOLESALE TRADE-DURABLE GOODS - 1.39%
123,700 CYTYC CORPORATION+ $ 3,492,051
---------------
TOTAL COMMON STOCKS (COST $216,816,204) 243,984,059
---------------
RIGHTS - 0.00%
90,400 SEAGATE TECHNOLOGY RIGHTS+(a) 0
TOTAL RIGHTS (COST $0) 0
---------------
COLLATERAL FOR SECURITIES LENDING - 6.40%
COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.57%
864,177 SCUDDER DAILY ASSETS MONEY MARKET FUND 864,177
549,767 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 549,767
1,413,944
---------------
PRINCIPAL INTEREST RATE MATURITY DATE
COLLATERAL INVESTED IN OTHER ASSETS - 5.83%
$14,600,000 MORGAN STANLEY REPURCHASE AGREEMENT
(MATURITY VALUE $14,605,171) 4.25% 01/03/2006 14,600,000
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $16,013,944) 16,013,944
---------------
SHARES
SHORT-TERM INVESTMENTS - 0.94%
2,349,788 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 2,349,788
TOTAL SHORT-TERM INVESTMENTS (COST $2,349,788) 2,349,788
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $235,179,936)* 104.82% $ 262,347,791
------ ---------------
OTHER ASSETS AND LIABILITIES, NET (4.82) (12,072,706)
------ ---------------
TOTAL NET ASSETS 100.00% $ 250,275,085
------ ---------------
+ NON-INCOME EARNING SECURITIES.
(a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE
BOARD OF TRUSTEES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,349,788.
<< ALL OR A PORTION OF THIS SECURITY IS ON LOAN.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $235,735,432 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 32,072,845
GROSS UNREALIZED DEPRECIATION (5,460,486)
------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 26,612,359
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
49
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.12%
BUSINESS SERVICES - 1.90%
82,900 MICROSOFT CORPORATION $ 2,167,835
---------------
CHEMICALS & ALLIED PRODUCTS - 12.12%
63,150 ABBOTT LABORATORIES 2,490,005
18,560 AIR PRODUCTS & CHEMICALS INCORPORATED 1,098,566
21,800 COLGATE PALMOLIVE COMPANY 1,195,730
67,400 E.I. DU PONT DE NEMOURS & COMPANY 2,864,500
78,355 PFIZER INCORPORATED 1,827,239
41,190 PROCTER & GAMBLE COMPANY 2,384,077
23,289 ROHM & HAAS COMPANY 1,127,653
19,100 WYETH 879,937
13,867,707
---------------
COMMUNICATIONS - 3.34%
10,800 ALLTEL CORPORATION 681,480
47,045 AT&T INCORPORATED 1,152,132
66,149 VERIZON COMMUNICATIONS INCORPORATED 1,992,408
3,826,020
---------------
DEPOSITORY INSTITUTIONS - 14.77%
58,555 BANK OF AMERICA CORPORATION 2,702,313
100,240 CITIGROUP INCORPORATED 4,864,647
27,300 FIFTH THIRD BANCORP 1,029,756
64,370 JP MORGAN CHASE & COMPANY 2,554,846
40,100 NORTH FORK BANCORPORATION INCORPORATED 1,097,136
74,700 US BANCORP 2,232,783
45,600 WACHOVIA CORPORATION 2,410,416
16,891,897
---------------
EATING & DRINKING PLACES - 2.04%
69,050 MCDONALD'S CORPORATION 2,328,366
---------------
ELECTRIC, GAS & SANITARY SERVICES - 6.29%
18,320 DOMINION RESOURCES INCORPORATED 1,414,304
13,322 FIRSTENERGY CORPORATION 652,645
31,050 FPL GROUP INCORPORATED 1,290,438
17,800 KINDER MORGAN INCORPORATED 1,636,710
33,880 PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED 2,201,183
7,195,280
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 10.28%
31,145 EMERSON ELECTRIC COMPANY 2,326,532
121,730 GENERAL ELECTRIC COMPANY 4,266,637
86,565 INTEL CORPORATION 2,160,662
78,475 MOTOROLA INCORPORATED 1,772,750
67,250 NOKIA OYJ ADR 1,230,675
11,757,256
---------------
50
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.03%
22,800 QUEST DIAGNOSTICS INCORPORATED $ 1,173,744
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 2.68%
39,345 FORTUNE BRANDS INCORPORATED 3,069,697
---------------
FOOD & KINDRED PRODUCTS - 2.78%
53,865 PEPSICO INCORPORATED 3,182,344
---------------
GENERAL MERCHANDISE STORES - 3.01%
9,033 FEDERATED DEPARTMENT STORES INCORPORATED 599,159
51,640 TARGET CORPORATION 2,838,651
3,437,810
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 6.37%
37,959 3M COMPANY 2,941,823
68,815 HEWLETT-PACKARD COMPANY 1,970,173
28,945 INTERNATIONAL BUSINESS MACHINES CORPORATION 2,379,279
7,291,275
---------------
INSURANCE CARRIERS - 7.83%
28,650 ALLSTATE CORPORATION 1,549,106
36,338 AMERICAN INTERNATIONAL GROUP INCORPORATED 2,479,342
33,080 METLIFE INCORPORATED 1,620,920
73,950 ST. PAUL COMPANIES INCORPORATED 3,303,346
8,952,714
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 1.99%
23,550 BAXTER INTERNATIONAL INCORPORATED 886,658
23,215 BECTON DICKINSON & COMPANY 1,394,757
2,281,415
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 2.02%
9,763 ACCO BRANDS CORPORATION+ 239,194
34,495 JOHNSON & JOHNSON 2,073,149
2,312,343
---------------
MOTION PICTURES - 1.93%
66,100 TIME WARNER INCORPORATED 1,152,784
43,900 WALT DISNEY COMPANY 1,052,283
2,205,067
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 2.06%
45,770 AMERICAN EXPRESS COMPANY 2,355,324
---------------
OIL & GAS EXTRACTION - 1.06%
27,300 TIDEWATER INCORPORATED 1,213,758
---------------
51
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PETROLEUM REFINING & RELATED INDUSTRIES - 9.54%
22,809 BP PLC ADR $ 1,464,794
44,925 CHEVRONTEXACO CORPORATION 2,550,392
34,450 CONOCOPHILLIPS 2,004,301
77,314 EXXON MOBIL CORPORATION 4,342,727
9,000 ROYAL DUTCH SHELL PLC ADR CLASS A 553,410
10,915,624
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 3.03%
9,534 AMERIPRISE FINANCIAL INCORPORATED 390,894
54,135 MORGAN STANLEY 3,071,620
3,462,514
---------------
TOBACCO PRODUCTS - 1.69%
25,870 ALTRIA GROUP INCORPORATED 1,933,006
---------------
TRANSPORTATION EQUIPMENT - 1.36%
41,658 HONEYWELL INTERNATIONAL INCORPORATED 1,551,760
---------------
TOTAL COMMON STOCKS (COST $96,580,574) 113,372,756
---------------
SHORT-TERM INVESTMENTS - 1.11%
1,271,141 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 1,271,141
TOTAL SHORT-TERM INVESTMENTS (COST $1,271,141) 1,271,141
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $97,851,715)* 100.23% $ 114,643,897
------ ---------------
OTHER ASSETS AND LIABILITIES, NET (0.23) (268,735)
------ ---------------
TOTAL NET ASSETS 100.00% $ 114,375,162
------ ---------------
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,271,141
* COST FOR FEDERAL INCOME TAX PURPOSES IS $97,924,541 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 19,996,588
GROSS UNREALIZED DEPRECIATION (3,277,232)
------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 16,719,356
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
52
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 98.64%
AUSTRALIA - 2.43%
24,447 PUBLISHING & BROADCASTING LIMITED (PRINTING, PUBLISHING &
ALLIED INDUSTRIES) $ 295,356
30,000 WESTFIELD GROUP (PROPERTIES) 399,393
9,332 WOODSIDE PETROLEUM LIMITED (OIL & GAS EXTRACTION) 268,110
962,859
---------------
BELGIUM - 1.02%
12,600 FORTIS (DEPOSITORY INSTITUTIONS) 402,015
---------------
DENMARK - 2.04%
40 A P MOLLER - MAERSK A/S (LOCAL & SUB-TRANSIT & INTERURBAN
HIGHWAY PASS TRANSPORTATION) 413,837
11,200 DANSKE BANK A/S (DEPOSITORY INSTITUTIONS) 394,541
808,378
---------------
FINLAND - 1.31%
28,300 NOKIA OYJ (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 517,640
---------------
FRANCE - 10.77%
34,900 ALCATEL SA (COMMUNICATIONS)+ 432,598
18,300 AXA SA (INSURANCE CARRIERS) 590,595
8,600 BOUYGUES SA (ENGINEERING CONSTRUCTION) 420,496
8,166 CAP GEMINI SA (INDUSTRIAL & COMMERCIAL MACHINERY &
COMPUTER EQUIPMENT)+ 327,831
6,300 CARREFOUR SA (FOOD STORES) 295,209
3,800 LAFARGE SA (STONE, CLAY, GLASS & CONCRETE PRODUCTS) 341,909
6,100 SANOFI-AVENTIS SA (CHEMICALS & ALLIED PRODUCTS) 534,410
700 TOTAL SA (PETROLEUM REFINING & RELATED INDUSTRIES) 175,856
6,000 TOTAL SA ADR (OIL & GAS EXTRACTION) 758,400
12,400 VIVENDI UNIVERSAL SA (COMMUNICATIONS) 388,440
4,265,744
---------------
GERMANY - 7.42%
2,600 ALLIANZ AG (INSURANCE CARRIERS)+ 393,815
4,400 BAYERISCHE MOTOREN WERKE AG (AUTOMOTIVE DEALERS & GASOLINE
SERVICE STATIONS) 192,999
4,200 CELESIO AG (WHOLESALE TRADE-DURABLE GOODS) 361,291
18,000 DEUTSCHE TELEKOM AG (COMMUNICATIONS) 300,046
4,300 E.ON AG (ELECTRIC, GAS & SANITARY SERVICES) 444,880
3,100 FRESENIUS MEDICAL CARE AG (HEALTH SERVICES) 326,637
13,000 METRO AG (FOOD STORES) 627,938
1,600 SAP AG (BUSINESS SERVICES) 290,120
2,937,726
---------------
GREECE - 1.50%
12,305 ALPHA BANK AE (DEPOSITORY INSTITUTIONS) 359,825
10,544 COSMOTE MOBILE COMMUNICATIONS SA (COMMUNICATIONS) 234,430
594,255
---------------
HONG KONG - 4.40%
26,000 CHEUNG KONG HOLDINGS LIMITED (REAL ESTATE) 266,752
56,500 CHINA MOBILE (HONG KONG) LIMITED (COMMUNICATIONS) 267,429
742,000 CHINA PETROLEUM & CHEMICAL CORPORATION (SINOPEC) (OIL
COMPANIES) 368,433
53
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HONG KONG (CONTINUED)
553,000 GUANGDONG INVESTMENT LIMITED (BUSINESS SERVICES) $ 206,831
98,000 LI & FUNG LIMITED (WHOLESALE TRADE NON-DURABLE GOODS) 188,956
28,560 SUNG HUNG KAI PROPERTIES LIMITED (REAL ESTATE) 278,099
31,000 TELEVISION BROADCASTS LIMITED (MOTION PICTURES) 164,722
1,741,222
---------------
HUNGARY - 0.53%
3,224 OTP BANK GDR (DEPOSITORY INSTITUTIONS) 211,494
---------------
INDIA - 0.49%
9,000 DOCTOR REDDY'S LABORATORIES LIMITED ADR (HEALTH SERVICES) 194,400
---------------
ITALY - 4.34%
27,807 ENI SPA (PETROLEUM REFINING & RELATED INDUSTRIES) 771,329
18,500 MEDIASET SPA (COMMUNICATIONS) 196,023
109,000 UNICREDITO ITALIANO SPA (DEPOSITORY INSTITUTIONS) 751,039
1,718,391
---------------
JAPAN - 24.15%
42,100 AEON COMPANY LIMITED (MISCELLANEOUS RETAIL) 1,070,929
34,000 AJINOMOTO COMPANY INCORPORATED (FOOD & KINDRED PRODUCTS) 347,971
33,000 KANEKA CORPORATION (CHEMICALS & ALLIED PRODUCTS) 398,737
16,000 KAO CORPORATION (CHEMICALS & ALLIED PRODUCTS) 428,711
1,500 KEYENCE CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT
& COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 426,718
36 MILLEA HOLDINGS INCORPORATED (INSURANCE CARRIERS) 619,663
30,000 MITSUI SUMITOMO INSURANCE COMPANY LIMITED (INSURANCE CARRIERS) 367,067
6,300 MURATA MANUFACTURING COMPANY LIMITED
(ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT) 403,849
33,000 NIKKO CORDIAL CORPORATION (MISCELLANEOUS RETAIL) 522,695
61,000 NIPPON OIL CORPORATION (OIL & GAS EXTRACTION) 473,269
39,600 NOMURA HOLDINGS INCORPORATED (SECURITY & COMMODITY BROKERS,
DEALERS, EXCHANGES & SERVICES) 758,859
254 NTT DOCOMO INCORPORATED (COMMUNICATIONS) 387,671
19,800 OMRON CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 456,658
8,500 SECOM COMPANY LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT
& COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 444,694
20,000 SEINO TRANSPORTATION COMPANY LIMITED (MOTOR FREIGHT
TRANSPORTATION & WAREHOUSING) 217,917
31,000 SHARP CORPORATION (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT
& COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 471,565
10,000 SHIMACHU COMPANY LIMITED (MISCELLANEOUS RETAIL) 303,557
99,000 SHINSEI BANK LIMITED (DEPOSITORY INSTITUTIONS) 572,502
87,000 SUMITOMO TRUST & BANKING COMPANY LIMITED (DEPOSITORY INSTITUTIONS) 888,922
9,561,954
---------------
NETHERLANDS - 4.21%
24,000 ASML HOLDING NV (SEMICONDUCTOR EQUIPMENT MANUFACTURING & RELATED)+ 480,187
17,600 ING GROEP NV (FINANCIAL SERVICES) 610,511
2,400 UNILEVER NV (FOOD & KINDRED PRODUCTS) 164,372
20,400 WOLTERS KLUWER NV (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 412,507
1,667,577
---------------
NORWAY - 1.28%
22,000 STATOIL ASA (PETROLEUM REFINING & RELATED INDUSTRIES) 505,238
---------------
54
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
RUSSIA - 1.89%
7,600 LUKOIL COMPANY ADR (OIL & GAS EXTRACTION) $ 452,200
8,500 MOBILE TELESYSTEMS ADR (COMMUNICATIONS) 297,500
749,700
---------------
SINGAPORE - 0.58%
26,000 UNITED OVERSEAS BANK LIMITED (DEPOSITORY INSTITUTIONS) 228,310
---------------
SOUTH KOREA - 0.93%
760 SAMSUNG ELECTRONICS COMPANY LIMITED - PREFERRED
(ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT) 369,155
---------------
SPAIN - 1.47%
20,000 BANCO BILBAO VIZCAYA ARGENTARIA SA (DEPOSITORY INSTITUTIONS) 357,062
11,606 INDRA SISTEMAS SA (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT) 226,852
583,914
---------------
SWEDEN - 1.11%
3,354 ASSA ABLOY AB (FABRICATED METAL PRODUCTS, EXCEPT MACHINERY &
TRANSPORTATION EQUIPMENT) 52,772
23,300 SECURITAS AB (BUSINESS SERVICES) 387,136
439,908
---------------
SWITZERLAND - 7.57%
700 NESTLE SA (FOOD & KINDRED PRODUCTS) 209,353
17,000 NOVARTIS AG (CHEMICALS & ALLIED PRODUCTS) 893,307
5,800 ROCHE HOLDING AG (HEALTH SERVICES) 870,850
5,400 UBS AG (FINANCIAL SERVICES) 514,090
2,389 ZURICH FINANCIAL SERVICES AG (FINANCIAL SERVICES)+ 509,052
2,996,652
---------------
THAILAND - 0.91%
140,000 ADVANCED INFORMATION SERVICE PUBLIC COMPANY LIMITED (FOREIGN
REGISTERED) (COMMUNICATIONS) 361,731
---------------
UNITED KINGDOM - 18.29%
4,129 ASTRAZENECA PLC (CHEMICALS & ALLIED PRODUCTS) 200,969
52,043 AVIVA PLC (INSURANCE CARRIERS) 631,253
49,000 BAE SYSTEMS PLC (TRANSPORTATION BY AIR) 321,830
46,300 BARCLAYS PLC (DEPOSITORY INSTITUTIONS) 486,714
21,290 EMAP PLC (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 316,110
49,600 GLAXOSMITHKLINE PLC (CHEMICALS & ALLIED PRODUCTS) 1,253,590
34,400 HSBC HOLDINGS PLC (DEPOSITORY INSTITUTIONS) 552,195
195,000 LEGAL & GENERAL GROUP PLC (INSURANCE CARRIERS) 409,304
72,700 ROLLS ROYCE GROUP PLC (AEROSPACE, DEFENSE) 534,715
2,428,180 ROLLS ROYCE GROUP PLC CLASS B (AEROSPACE, DEFENSE) 4,282
23,000 ROYAL DUTCH SHELL PLC CLASS A (PETROLEUM REFINING & RELATED
INDUSTRIES) 700,807
50,000 SCOTTISH & NEWCASTLE PLC (FOOD & KINDRED PRODUCTS) 418,509
21,200 STANDARD CHARTERED PLC (DEPOSITORY INSTITUTIONS) 472,343
436,000 VODAFONE GROUP PLC (COMMUNICATIONS) 941,417
7,244,038
---------------
TOTAL COMMON STOCKS (COST $33,800,852) 39,062,301
---------------
55
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
RIGHTS
61,000 CHEUNG KONG HOLDINGS RIGHTS+(A) $ 0
TOTAL RIGHTS (COST $0) 0
---------------
SHORT-TERM INVESTMENTS - 1.54%
610,646 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 610,646
TOTAL SHORT-TERM INVESTMENTS (COST $610,646) 610,646
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $34,411,498)* 100.18% $ 39,672,947
------- ---------------
OTHER ASSETS AND LIABILITIES, NET (0.18) (71,349)
------- ---------------
TOTAL NET ASSETS 100.00% $ 39,601,598
------- ---------------
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $610,646.
(a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE
BOARD OF TRUSTEES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $34,477,810 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 5,835,808
GROSS UNREALIZED DEPRECIATION (640,671)
------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 5,195,137
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 98.27%
APPAREL & ACCESSORY STORES - 6.39%
55,000 GAP INCORPORATED $ 970,200
29,400 ROSS STORES INCORPORATED 849,660
1,819,860
------------
BUSINESS SERVICES - 7.75%
8,600 FIRST DATA CORPORATION 369,886
75,000 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+ 723,750
42,496 MICROSOFT CORPORATION 1,111,270
2,204,906
------------
CHEMICALS & ALLIED PRODUCTS - 10.14%
26,800 MEDIMMUNE INCORPORATED+ 938,536
40,000 PFIZER INCORPORATED 932,800
22,000 WYETH 1,013,540
2,884,876
------------
COMMUNICATIONS - 3.41%
37,800 COMCAST CORPORATION CLASS A+ 971,082
------------
DEPOSITORY INSTITUTIONS - 14.51%
23,000 BANK OF AMERICA CORPORATION 1,061,450
32,000 BANK OF NEW YORK COMPANY INCORPORATED 1,019,200
23,000 CITIGROUP INCORPORATED 1,116,190
23,500 JP MORGAN CHASE & COMPANY 932,715
4,129,555
------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 22.16%
39,000 AMERICAN POWER CONVERSION CORPORATION 858,000
13,000 CISCO SYSTEMS INCORPORATED+ 222,560
30,000 GENERAL ELECTRIC COMPANY 1,051,500
42,500 INTEL CORPORATION 1,060,800
43,000 NOKIA OYJ ADR 786,900
45,200 NOVELLUS SYSTEMS INCORPORATED+ 1,090,224
90,000 VISHAY INTERTECHNOLOGY INCORPORATED+ 1,238,400
6,308,384
------------
GENERAL MERCHANDISE STORES - 3.78%
22,970 WAL-MART STORES INCORPORATED 1,074,996
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 3.83%
85,000 SYMBOL TECHNOLOGIES INCORPORATED 1,089,700
------------
INSURANCE AGENTS, BROKERS & SERVICE - 3.24%
29,000 MARSH & MCLENNAN COMPANIES INCORPORATED 921,040
------------
INSURANCE CARRIERS - 3.84%
16,000 AMERICAN INTERNATIONAL GROUP INCORPORATED 1,091,680
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 2.41%
28,000 BOSTON SCIENTIFIC CORPORATION+ 685,720
------------
57
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
MISCELLANEOUS MANUFACTURING INDUSTRIES - 3.14%
31,000 TYCO INTERNATIONAL LIMITED $ 894,660
------------
MOTION PICTURES - 4.65%
58,000 TIME WARNER INCORPORATED 1,011,520
13,000 WALT DISNEY COMPANY 311,610
1,323,130
------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.64%
2,800 FREDDIE MAC 182,980
------------
OIL & GAS EXTRACTION - 1.64%
10,500 TIDEWATER INCORPORATED 466,830
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 6.74%
12,000 MERRILL LYNCH & COMPANY INCORPORATED 812,760
19,500 MORGAN STANLEY 1,106,430
1,919,190
------------
TOTAL COMMON STOCKS (COST $28,375,282) 27,968,589
------------
WARRANTS - 0.00%
899 LUCENT TECHNOLOGIES INCORPORATED (EXPIRE ON 12/10/2007)+ 508
TOTAL WARRANTS (COST $1,429) 508
------------
SHORT-TERM INVESTMENTS - 1.42%
402,054 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 402,054
------------
TOTAL SHORT-TERM INVESTMENTS (COST $402,054) 402,054
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $28,778,765)* 99.69% $ 28,371,151
------ ------------
OTHER ASSETS AND LIABILITIES, NET 0.31 89,266
------ ------------
TOTAL NET ASSETS 100.00% $ 28,460,417
------ ------------
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $402,054.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $28,862,425 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 1,079,092
GROSS UNREALIZED DEPRECIATION (1,570,366)
-------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ (491,274)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 97.13%
APPAREL & ACCESSORY STORES - 1.68%
40,000 KOHL'S CORPORATION+ $ 1,944,000
------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 7.72%
73,200 FASTENAL COMPANY 2,868,708
64,000 HOME DEPOT INCORPORATED 2,590,720
52,400 LOWE'S COMPANIES INCORPORATED 3,492,984
8,952,412
------------
BUSINESS SERVICES - 20.31%
22,800 AUTOMATIC DATA PROCESSING INCORPORATED 1,046,292
179,800 EBAY INCORPORATED+ 7,776,350
76,600 FIRST DATA CORPORATION 3,294,566
19,100 FISERV INCORPORATED+ 826,457
7,200 GOOGLE INCORPORATED CLASS A+ 2,986,992
212,200 MICROSOFT CORPORATION 5,549,030
53,100 YAHOO! INCORPORATED+ 2,080,458
23,560,145
------------
CHEMICALS & ALLIED PRODUCTS - 9.31%
52,800 AMGEN INCORPORATED+ 4,163,808
56,400 GENENTECH INCORPORATED+ 5,217,000
20,100 GENZYME CORPORATION+ 1,422,678
10,803,486
------------
EDUCATIONAL SERVICES - 1.44%
27,700 APOLLO GROUP INCORPORATED CLASS A+ 1,674,742
------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 13.86%
213,900 CISCO SYSTEMS INCORPORATED+ 3,661,968
163,000 INTEL CORPORATION 4,068,480
62,900 LINEAR TECHNOLOGY CORPORATION 2,268,803
217,500 NOKIA OYJ ADR 3,980,250
65,400 TEXAS INSTRUMENTS INCORPORATED 2,097,378
16,076,879
------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 3.64%
110,750 PAYCHEX INCORPORATED 4,221,790
------------
GENERAL MERCHANDISE STORES - 4.60%
59,600 TARGET CORPORATION 3,276,212
44,000 WAL-MART STORES INCORPORATED 2,059,200
5,335,412
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 4.44%
102,400 DELL INCORPORATED+ 3,070,976
152,400 EMC CORPORATION+ 2,075,688
5,146,664
------------
59
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INSURANCE CARRIERS - 4.01%
68,175 AMERICAN INTERNATIONAL GROUP INCORPORATED $ 4,651,580
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 5.89%
118,575 MEDTRONIC INCORPORATED 6,826,363
------------
PERSONAL SERVICES - 2.32%
65,400 CINTAS CORPORATION 2,693,172
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 17.91%
309,150 CHARLES SCHWAB CORPORATION 4,535,231
48,300 FRANKLIN RESOURCES INCORPORATED 4,540,683
59,675 GOLDMAN SACHS GROUP INCORPORATED 7,621,094
34,100 LEGG MASON INCORPORATED 4,081,429
20,778,437
------------
TOTAL COMMON STOCKS (COST $106,741,212) 112,665,082
------------
SHORT-TERM INVESTMENTS - 3.83%
4,445,999 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 4,445,999
TOTAL SHORT-TERM INVESTMENTS (COST $4,445,999) 4,445,999
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $111,187,211)* 100.96% $117,111,081
------ ------------
OTHER ASSETS AND LIABILITIES, NET (0.96) (1,108,321)
------ ------------
TOTAL NET ASSETS 100.00% $116,002,760
------ ------------
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $4,445,999.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $112,789,896 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 21,486,676
GROSS UNREALIZED DEPRECIATION (17,165,491)
------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 4,321,185
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ASSET-BACKED SECURITIES - 0.35%
$ 192,907 HONDA AUTO RECEIVABLES OWNER TRUST SERIES 2005-5 4.22% 11/15/2006 $ 192,907
TOTAL ASSET-BACKED SECURITIES (COST $192,907) 192,907
------------
CERTIFICATES OF DEPOSIT - 3.60%
500,000 CREDIT SUISSE FIRST BOSTON NEW YORK 4.18 09/22/2006 500,000
1,500,000 ROYAL BANK OF SCOTLAND NEW YORK 3.83 03/06/2006 1,499,821
TOTAL CERTIFICATES OF DEPOSIT (COST $1,999,821) 1,999,821
------------
COMMERCIAL PAPER - 30.48%
1,500,000 ALLIANCE & LEICESTER PLC^ 4.07 03/23/2006 1,486,603
1,000,000 AMSTERDAM FUNDING CORPORATION^ 4.36 01/05/2006 999,758
1,000,000 ATLAS CAPITAL FUNDING CORPORATION+/- 4.35 02/27/2006 1,000,000
1,500,000 CONCORD MINUTEMEN CAPITAL COMPANY^ 4.12 01/18/2006 1,497,425
1,000,000 CULLINAN FINANCE CORPORATION^ 3.90 03/23/2006 991,442
1,000,000 FCAR OWNER TRUST I^ 4.53 06/07/2006 980,496
1,500,000 FORTIS FUNDING LLC^ 3.83 01/23/2006 1,496,808
1,500,000 GEORGE STREET FINANCE LLC^ 4.06 01/12/2006 1,498,478
1,500,000 HARRIER FINANCE FUNDING US LLC^ 4.24 02/15/2006 1,492,403
1,000,000 IXIS COMMERCIAL PAPER CR^ 4.43 04/19/2006 986,956
1,000,000 KLIO III FUNDING CORPORATION^ 4.45 03/20/2006 990,606
1,500,000 LEXINGTON PARKER CAPITAL^ 4.02 01/10/2006 1,498,827
500,000 MORGAN STANLEY 4.35 07/11/2006 500,000
1,500,000 WHITE PINE FINANCE LLC^ 4.07 02/01/2006 1,495,082
TOTAL COMMERCIAL PAPER (COST $16,914,884) 16,914,884
------------
CORPORATE BONDS & NOTES - 0.45%
250,000 LASALLE NATIONAL BANK 4.24 07/26/2006 250,186
------------
TOTAL CORPORATE BONDS & NOTES (COST $250,186) 250,186
------------
EXTENDABLE BONDS - 9.19%
1,000,000 BANK OF IRELAND+++/- 4.34 01/19/2007 1,000,000
1,000,000 GENERAL ELECTRIC CAPITAL CORPORATION+/- 4.44 01/09/2007 1,000,000
1,000,000 NORDEA BANK AB+++/- 4.34 01/11/2007 1,000,000
1,000,000 NORTHERN ROCK PLC+++/- 4.50 01/09/2007 1,000,000
600,000 NORTHERN ROCK PLC+++/- 4.22 10/20/2006 600,319
500,000 PREMIUM ASSET TRUST+++/- 4.38 12/15/2006 500,000
TOTAL EXTENDABLE BONDS (COST $5,100,319) 5,100,319
------------
MEDIUM TERM NOTES - 10.27%
800,000 BANK OF AMERICA SECURITIES+/-SS. 4.33 09/09/2034 800,000
1,000,000 BEAR STEARNS COMPANIES INCORPORATED+/-SS. 4.37 09/09/2049 1,000,000
1,000,000 CREDIT SUISSE FIRST BOSTON NEW YORK+/- 4.34 05/19/2006 1,000,000
500,000 CULLINAN FINANCE CORPORATION+++/- 4.33 12/20/2006 499,899
500,000 GOLDMAN SACHS GROUP INCORPORATED+/- 4.39 10/27/2006 500,703
1,000,000 LIQUID FUNDING LIMITED+++/- 4.37 09/29/2006 1,000,000
900,000 NATIONWIDE BUILDING SOCIETY+++/- 4.60 12/11/2006 900,948
TOTAL MEDIUM TERM NOTES (COST $5,701,550) 5,701,550
------------
61
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PROMISSORY NOTES - 1.80%
$ 1,000,000 CITIGROUP GLOBALSS. 4.32% 09/09/2049 $ 1,000,000
TOTAL PROMISSORY NOTES (COST $1,000,000) 1,000,000
------------
REPURCHASE AGREEMENTS - 34.78%
2,000,000 BANK OF AMERICA NA - 102% COLLATERALIZED BY US GOVERNMENT SECURITIES
(MATURITY VALUE $2,000,949) 4.27 01/03/2006 2,000,000
1,000,000 BARCLAYS CAPITAL INCORPORATED - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $1,000,478) 4.30 01/03/2006 1,000,000
1,000,000 CREDIT SUISSE FIRST BOSTON - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $1,000,482) 4.34 01/03/2006 1,000,000
1,000,000 GOLDMAN SACHS & COMPANY - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $1,000,477) 4.29 01/06/2006 1,000,000
1,000,000 GOLDMAN SACHS & COMPANY - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $1,000,478) 4.30 01/03/2006 1,000,000
1,000,000 MORGAN STANLEY & COMPANY - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $1,000,479) 4.31 01/03/2006 1,000,000
12,306,443 MORGAN STANLEY & COMPANY - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES
(MATURITY VALUE $12,312,282) 4.27 01/03/2006 12,306,443
TOTAL REPURCHASE AGREEMENTS (COST $19,306,443) 19,306,443
------------
TIME DEPOSITS - 9.01%
1,000,000 DEUTSCHE BANK CAYMAN 4.40 01/03/2006 1,000,000
1,000,000 HBOS TREASURY SERVICES 4.45 01/03/2006 1,000,000
1,000,000 RABOBANK NED CAYMAN ISLAND 4.06 01/03/2006 1,000,000
1,000,000 SOCIETE GENERALE (CANADA) 4.41 01/04/2006 1,000,000
1,000,000 US BANK NA CAYMAN 4.00 01/03/2006 1,000,000
TOTAL TIME DEPOSITS (COST $5,000,000) 5,000,000
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $55,466,110)* 99.93% $ 55,466,110
OTHER ASSETS AND LIABILITIES, NET 0.07 37,508
------
TOTAL NET ASSETS 100.00% $ 55,503,618
------ ------------
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES
ACT OF 1933, AS AMENDED.
^ ZERO COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY.
+/- VARIABLE RATE INVESTMENTS.
SS. THESE SECURITIES ARE SUBJECT TO A DEMAND FEATURE WHICH REDUCES THE
EFFECTIVE MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR
FINANCIAL REPORTING PURPOSES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.82%
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 0.20%
1,535 LITHIA MOTORS INCORPORATED CLASS A $ 48,260
-------------
BUSINESS SERVICES - 8.59%
75,570 3COM CORPORATION+ 272,052
11,555 ABM INDUSTRIES INCORPORATED 225,900
33,280 EMBARCADERO TECHNOLOGIES INCORPORATED+ 242,278
8,000 IMS HEALTH INCORPORATED 199,360
10,910 KFORCE INCORPORATED+ 121,756
23,620 MOBIUS MANAGEMENT SYSTEMS INCORPORATED+ 158,726
5,795 MONEYGRAM INTERNATIONAL INCORPORATED 151,134
94,110 SUN MICROSYSTEMS INCORPORATED+ 394,321
17,543 VIGNETTE CORPORATION+ 286,126
2,051,653
-------------
CHEMICALS & ALLIED PRODUCTS - 4.27%
16,000 NOVEN PHARMACEUTICALS INCORPORATED+ 242,080
20,435 ORASURE TECHNOLOGIES INCORPORATED+ 180,237
23,945 POLYONE CORPORATION+ 153,966
71,170 REVLON INCORPORATED CLASS A+ 220,627
3,915 RPM INTERNATIONAL INCORPORATED 68,004
23,000 WELLMAN INCORPORATED 155,940
1,020,854
-------------
COMMUNICATIONS - 3.02%
64,655 CINCINNATI BELL INCORPORATED+ 226,939
19,410 GRUPO RADIO CENTRO S.A. DE C.V. ADR+ 135,093
43,344 LIGHTBRIDGE INCORPORATED+ 359,322
721,354
-------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 1.22%
6,760 CHICAGO BRIDGE & IRON COMPANY NV 170,420
12,199 MATRIX SERVICE COMPANY+ 120,038
290,458
-------------
CONSUMER SERVICES - 1.17%
33,160 EMDEON CORPORATION+ 280,534
-------------
DEPOSITORY INSTITUTIONS - 1.61%
2,150 COMMUNITY BANCORP+ 67,962
12,295 FIRST SECURITY GROUP INCORPORATED 119,753
4,205 MIDWEST BANC HOLDINGS INCORPORATED 93,561
8,759 PACIFIC PREMIER BANCORP INCORPORATED+ 103,356
384,632
-------------
EATING & DRINKING PLACES - 0.28%
2,090 CALIFORNIA PIZZA KITCHEN INCORPORATED+# 66,817
-------------
ELECTRIC, GAS & SANITARY SERVICES - 0.94%
18,395 EL PASO CORPORATION 223,683
-------------
63
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT- 10.28%
15,745 C-COR INCORPORATED+ $ 76,521
11,415 CATAPULT COMMUNICATIONS CORPORATION+ 168,828
14,755 CELESTICA INCORPORATED+ 155,813
24,935 EVANS & SUTHERLAND COMPUTER CORPORATION+ 122,181
5,445 FLEXTRONICS INTERNATIONAL LIMITED+ 56,846
32,825 GRAFTECH INTERNATIONAL LIMITED+ 204,171
28,190 KEMET CORPORATION+ 199,303
38,295 MCDATA CORPORATION+ 132,118
100 MEMC ELECTRONIC MATERIALS INCORPORATED+ 2,217
17,680 MICRON TECHNOLOGY INCORPORATED+ 235,321
112,265 MRV COMMUNICATIONS INCORPORATED+ 230,143
95,360 NORTEL NETWORKS CORPORATION+ 291,802
6,455 OSI SYSTEMS INCORPORATED+ 118,707
8,895 RICHARDSON ELECTRONICS LIMITED 64,489
41,715 SILICON STORAGE TECHNOLOGY INCORPORATED+ 210,661
27,415 STATS CHIPPAC LIMITED ADR+ 186,422
2,455,543
-------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.42%
9,910 CV THERAPEUTICS INCORPORATED+ 245,074
3,395 WATSON WYATT & COMPANY HOLDINGS 94,721
339,795
-------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.49%
3,335 CRANE COMPANY 117,625
-------------
FOOD & KINDRED PRODUCTS - 1.55%
8,175 DEL MONTE FOODS COMPANY 85,265
10,135 HERCULES INCORPORATED+ 114,526
175 MOLSON COORS BREWING COMPANY 11,723
5,220 SANDERSON FARMS INCORPORATED 159,367
370,881
-------------
HEALTH SERVICES - 0.84%
5,500 GENESIS HEALTHCARE CORPORATION+ 200,860
-------------
HOLDING & OTHER INVESTMENT OFFICES - 2.05%
18,440 AFFORDABLE RESIDENTIAL COMMUNITIES 175,733
14,775 DISCOVERY HOLDING COMPANY CLASS A+ 223,841
5,660 UNITED MOBILE HOMES INCORPORATED 89,428
489,002
-------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 0.91%
10,715 EMPIRE RESORTS INCORPORATED+ 79,291
5,630 ISLE OF CAPRI CASINOS INCORPORATED+ 137,147
216,438
-------------
64
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.58%
138,525 CRAY INCORPORATED+ $ 184,238
655 PALL CORPORATION 17,594
5,180 UNOVA INCORPORATED+ 175,084
376,916
-------------
INSURANCE CARRIERS - 6.66%
3,110 EMC INSURANCE GROUP INCORPORATED 62,013
3,330 ENDURANCE SPECIALTY HOLDINGS LIMITED 119,380
4,815 KMG AMERICA CORPORATION+ 44,202
2,670 MERCURY GENERAL CORPORATION 155,447
19,690 NORTH POINTE HOLDINGS CORPORATION+ 302,635
8,220 NYMAGIC INCORPORATED 203,774
11,260 PXRE GROUP LIMITED 145,930
78,390 QUANTA CAPITAL HOLDINGS LIMITED+ 399,789
9,490 SEABRIGHT INSURANCE HOLDINGS INCORPORATED+ 157,819
1,590,989
-------------
JUSTICE, PUBLIC ORDER & SAFETY - 0.52%
5,433 GEO GROUP INCORPORATED+ 124,579
-------------
LEATHER & LEATHER PRODUCTS - 1.24%
19,179 BAKERS FOOTWEAR GROUP INCORPORATED+ 294,973
-------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS - 2.39%
36,875 ALLIED HEALTHCARE PRODUCTS INCORPORATED+ 211,663
20,900 CREDENCE SYSTEMS CORPORATION+ 145,464
17,245 INPUT OUTPUT INCORPORATED+ 121,232
9,335 SYNOVIS LIFE TECHNOLOGIES INCORPORATED+ 93,630
571,989
-------------
MEMBERSHIP ORGANIZATIONS - 0.82%
212,500 INTEGRATED ELECTRICAL SERVICES+ 116,875
15,455 TRANSGLOBE ENERGY CORPORATION+ 79,130
196,005
-------------
METAL MINING - 7.85%
27,015 APEX SILVER MINES LIMITED+ 429,539
6,450 GLAMIS GOLD LIMITED+ 177,246
6,955 GOLDCORP INCORPORATED 154,958
13,005 HARMONY GOLD MINING COMPANY LIMITED ADR 169,715
5,220 NEWMONT MINING CORPORATION# 278,748
28,425 RANDGOLD RESOURCES LIMITED ADR+ 458,495
17,125 SOUTHWESTERN RESOURCES CORPORATION 199,027
700 SOUTHWESTERN RESOURCES CORPORATION 144A 8,135
1,875,863
-------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.93%
9,110 ACCO BRANDS CORPORATION+ 223,195
-------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING - 0.25%
4,255 COVENANT TRANSPORT INCORPORATED CLASS A+ 59,485
-------------
65
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
NON-DEPOSITORY CREDIT INSTITUTIONS - 0.87%
7,095 FIRST CASH FINANCIAL SERVICES INCORPORATED+ $ 206,890
-------------
OIL & GAS EXTRACTION - 20.27%
5,145 CANADIAN NATURAL RESOURCES LIMITED# 255,295
2,390 FOREST OIL CORPORATION+# 108,912
86,260 GLOBAL INDUSTRIES LIMITED+ 979,051
17,875 GREY WOLF INCORPORATED+ 138,174
1,090 HELMERICH & PAYNE INCORPORATED 67,482
30,905 KEY ENERGY SERVICES INCORPORATED+ 416,290
19,840 MCMORAN EXPLORATION COMPANY+ 392,237
23,445 NEWPARK RESOURCES INCORPORATED+ 178,885
2,545 NOBLE ENERGY INCORPORATED# 102,563
9,590 PETROHAWK ENERGY CORPORATION+ 126,780
14,395 PETROQUEST ENERGY INCORPORATED+ 119,191
1,565 PIONEER NATURAL RESOURCES COMPANY 80,238
3,895 PRIDE INTERNATIONAL INCORPORATED+ 119,771
14,842 RANGE RESOURCES CORPORATION 390,938
2,770 ROWAN COMPANIES INCORPORATED 98,723
115,030 SEITEL INCORPORATED+ 240,413
1,470 TRANSOCEAN INCORPORATED+ 102,444
33,305 TRILOGY ENERGY TRUST 681,887
16,855 WILLBROS GROUP INCORPORATED+ 243,386
4,842,660
-------------
PAPER & ALLIED PRODUCTS - 0.52%
10,470 WAUSAU PAPER CORPORATION 124,069
-------------
PETROLEUM REFINING & RELATED INDUSTRIES - 0.96%
3,950 ASHLAND INCORPORATED 228,705
-------------
PRIMARY METAL INDUSTRIES - 2.05%
4,815 ENCORE WIRE CORPORATION+ 109,589
5,385 OREGON STEEL MILLS INCORPORATED+ 158,427
5,695 ROANOKE ELECTRIC STEEL CORPORATION 134,402
1,835 UNITED STATES STEEL CORPORATION 88,209
490,627
-------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 1.49%
2,495 E.W. SCRIPPS COMPANY CLASS A 119,810
16,865 JOURNAL COMMUNICATIONS INCORPORATED CLASS A 235,267
355,077
-------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 2.94%
40,075 CONSTAR INTERNATIONAL INCORPORATED+ 140,262
39,970 INTERTAPE POLYMER GROUP INCORPORATED+ 358,531
22,515 ROYAL GROUP TECHNOLOGIES LIMITED+ 202,635
701,428
-------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.16%
24,285 MARKETAXCESS HOLDINGS INCORPORATED+ 277,578
-------------
66
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SOCIAL SERVICES - 0.62%
15,185 ABB LIMITED ADR+ $ 147,598
-------------
TRANSPORTATION BY AIR - 1.84%
6,645 AIRTRAN HOLDINGS INCORPORATED+ 106,519
10,650 PETROLEUM HELICOPTERS INCORPORATED (NON-VOTING)+ 332,601
439,120
-------------
TRANSPORTATION EQUIPMENT - 0.83%
2,880 SEQUA CORPORATION+ 198,864
-------------
TRANSPORTATION SERVICES - 0.59%
12,770 RAILAMERICA INCORPORATED+ 140,342
-------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.58%
5,545 ENDO PHARMACEUTICALS HOLDINGS INCORPORATED+ 167,792
18,955 SOURCE INTERLINK COMPANIES INCORPORATED+ 210,779
378,571
-------------
WHOLESALE TRADE-DURABLE GOODS - 3.02%
240,695 COVALENT GROUP INCORPORATED+ 524,715
30,745 US HOME SYSTEMS INCORPORATED+ 196,682
721,397
-------------
TOTAL COMMON STOCKS (COST $20,787,011) 23,845,309
-------------
RIGHTS
1,500 SEAGATE TECHNOLOGY RIGHTS+(a) 0
TOTAL RIGHTS (COST $0) 0
-------------
SHORT-TERM INVESTMENTS - 0.27%
65,324 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 65,324
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $65,324) 65,324
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $20,852,335)* 100.09% $ 23,910,633
OTHER ASSETS AND LIABILITIES, NET (0.09) (22,011)
------ -------------
TOTAL NET ASSETS 100.00% $ 23,888,622
------ -------------
+ NON-INCOME EARNING SECURITIES.
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $65,324.
# ALL OR PORTION OF THIS SECURITY IS SEGREGATED AS COLLATERAL FOR DERIVATIVE
INVESTMENTS. (SEE NOTE 2).
(a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE
BOARD OF TRUSTEES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $21,715,931 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 3,711,903
GROSS UNREALIZED DEPRECIATION (1,517,201)
-----------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 2,194,702
67
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
CONTRACTS DESCRIPTION STRIKE PRICE EXPIRATION DATE VALUE
WRITTEN OPTIONS - (0.27%)
(5) CALIFORNIA PIZZA KITCHEN INCORPORATED CALL+ $ 30.00 01/24/2006 $ (1,125)
(10) CANADIAN NATURAL RESOURCES LIMITED CALL+ 50.00 03/18/2006 (3,200)
(5) FOREST OIL CORPORATION CALL+ 40.00 01/21/2006 (2,800)
(5) FOREST OIL CORPORATION CALL+ 45.00 01/21/2006 (1,075)
(10) NEWMONT MINING CORPORATION CALL+ 47.50 01/24/2006 (6,400)
(10) NOBLE ENERGY INCORPORATED CALL+ 40.00 02/18/2006 (2,250)
(20) NOVEN PHARMACEUTICALS INCORPORATED CALL+ 10.00 01/24/2006 (10,000)
(120) NOVEN PHARMACEUTICALS INCORPORATED CALL+ 12.50 01/24/2006 (31,200)
(20) NOVEN PHARMACUETICALS INCORPORATED CALL+ 12.50 04/22/2006 (6,400)
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED $(37,774)) (64,450)
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 84.18%
APPAREL & ACCESSORY STORES - 4.24%
735,000 GAP INCORPORATED $ 12,965,400
465,000 NORDSTROM INCORPORATED 17,391,000
485,000 URBAN OUTFITTERS INCORPORATED+ 12,275,350
42,631,750
-------------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS - 1.74%
804,000 AUTONATION INCORPORATED+ 17,470,920
-------------
BUSINESS SERVICES - 12.29%
455,000 ACTIVISION INCORPORATED+ 6,251,700
875,000 Cadence Design Systems Incorporated+ 14,805,000
830,000 CNET NETWORKS INCORPORATED+# 12,192,700
240,000 ComputeR SCIENCES CORPORATION+ 12,153,600
600,000 IMS HEALTH INCORPORATED 14,952,000
1,275,000 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+ 12,303,750
154,000 OMNICOM GROUP INCORPORATED 13,110,020
770,000 RED HAT INCORPORATED+# 20,974,800
765,000 UNISYS CORPORATION+<< 4,459,950
560,000 VERISIGN INCORPORATED+ 12,275,200
123,478,720
-------------
CHEMICALS & ALLIED PRODUCTS - 3.15%
286,400 ALBERTO-CULVER COMPANY CLASS B 13,102,800
350,000 PRAXAIR INCORPORATED 18,536,000
31,638,800
-------------
COMMUNICATIONS - 5.09%
645,000 CABLEVISION SYSTEMS NEW YORK GROUP CLASS A+ 15,138,150
503,000 COMCAST CORPORATION CLASS A+ 12,922,070
795,000 DIRECTV GROUP INCORPORATED+ 11,225,400
330,000 TELEPHONE & DATA SYSTEMS INCORPORATED 11,889,900
51,175,520
-------------
DEPOSITORY INSTITUTIONS - 3.87%
305,000 FIFTH THIRD BANCORP 11,504,600
339,900 MELLON FINANCIAL CORPORATION 11,641,575
300,000 TORONTO-DOMINION BANK 15,776,162
38,922,337
-------------
ELECTRIC, GAS & SANITARY SERVICES - 2.41%
595,000 NISOURCE INCORPORATED 12,411,700
390,000 WASTE MANAGEMENT INCORPORATED 11,836,500
24,248,200
-------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT - 5.30%
2,900,000 ARM HOLDINGS PLC 6,037,196
1,140,000 CELESTICA INCORPORATED+ 12,038,400
625,000 MOLEX INCORPORATED CLASS A 15,368,750
69
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT (CONTINUED)
1,780,000 SANMINA-SCI CORPORATION+ $ 7,582,800
885,000 VISHAY INTERTECHNOLOGY INCORPORATED+ 12,177,600
53,204,746
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 1.47%
510,000 ACCENTURE LIMITED CLASS A 14,723,700
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 1.20%
137,000 ILLINOIS TOOL WORKS INCORPORATED 12,054,630
---------------
FOOD & KINDRED PRODUCTS - 0.54%
285,000 COCA-COLA ENTERPRISES INCORPORATED 5,463,450
---------------
FORESTRY - 1.25%
190,000 WEYERHAEUSER COMPANY 12,604,600
---------------
GENERAL MERCHANDISE STORES - 2.96%
270,000 TARGET CORPORATION 14,841,900
640,000 TJX COMPANIES INCORPORATED 14,867,200
29,709,100
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 1.21%
335,000 BED BATH & BEYOND INCORPORATED+ 12,110,250
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 1.15%
290,000 AMERICAN STANDARD COMPANIES INCORPORATED 11,585,500
---------------
INSURANCE CARRIERS - 6.24%
240,000 ACE LIMITED 12,825,600
160,000 AMBAC FINANCIAL GROUP INCORPORATED 12,329,600
181,000 MGIC INVESTMENT CORPORATION 11,913,420
282,000 RENAISSANCERE HOLDINGS LIMITED 12,439,020
195,000 XL CAPITAL LIMITED CLASS A 13,139,100
62,646,740
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL
GOODS - 3.93%
345,000 BIOMET INCORPORATED 12,616,650
230,000 FISHER SCIENTIFIC INTERNATIONAL INCORPORATED+ 14,227,800
335,000 WATERS CORPORATION+ 12,663,000
39,507,450
---------------
METAL MINING - 1.28%
200,000 BARRICK GOLD CORPORATION<< 5,574,000
135,000 FREEPORT-MCMORAN COPPER & GOLD INCORPORATED CLASS B 7,263,000
12,837,000
---------------
MISCELLANEOUS RETAIL - 1.39%
615,000 STAPLES INCORPORATED 13,966,650
---------------
MOTION PICTURES - 1.06%
1,357,000 LIBERTY MEDIA CORPORATION CLASS A+ 10,679,590
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING - 1.71%
760,000 J.B. HUNT TRANSPORT SERVICES INCORPORATED 17,206,400
---------------
70
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
OIL & GAS EXTRACTION - 10.20%
485,000 BJ SERVICES COMPANY $ 17,784,950
270,000 DEVON ENERGY CORPORATION 16,885,800
375,000 ENSCO INTERNATIONAL INCORPORATED 16,631,250
490,000 GLOBALSANTAFE CORPORATION 23,593,500
761,000 WEATHERFORD INTERNATIONAL LIMITED+ 27,548,200
102,443,700
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 2.29%
283,000 E.W. SCRIPPS COMPANY CLASS A 13,589,660
310,000 TRIBUNE COMPANY 9,380,600
22,970,260
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.41%
590,000 AMERITRADE HOLDING CORPORATION+ 14,160,000
---------------
TEXTILE MILL PRODUCTS - 1.36%
157,000 MOHAWK INDUSTRIES INCORPORATED+ 13,655,860
---------------
TRANSPORTATION EQUIPMENT - 1.36%
190,000 MAGNA INTERNATIONAL INCORPORATED CLASS A 13,676,200
---------------
TRANSPORTATION SERVICES - 1.50%
630,000 EXPEDIA INCORPORATED+<< 15,094,800
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.38%
160,000 NIKE INCORPORATED CLASS B 13,886,400
---------------
WHOLESALE TRADE-DURABLE GOODS - 1.20%
170,000 W.W. GRAINGER INCORPORATED 12,087,000
---------------
TOTAL COMMON STOCKS (COST $658,271,983) 845,840,273
---------------
INVESTMENT COMPANIES - 5.33%
STOCK FUNDS - 5.33%
55,000 BIOTECH HOLDRS TRUST 11,032,450
270,000 ISHARES S&P SMALLCAP 600 INDEX FUND 15,606,000
80,000 ISHARES NASDAQ BIOTECH INDEX FUND+ 6,179,200
85,000 ISHARES RUSSELL 2000 GROWTH INDEX FUND+ 5,921,100
110,000 MIDCAP SPDR TRUST SERIES 1 14,815,900
53,554,650
---------------
TOTAL INVESTMENT COMPANIES (COST $38,475,573) 53,554,650
---------------
CONTRACTS STRIKE PRICE EXPIRATION DATE
OPTIONS - 0.06%
3,855 CNET NETWORKS INCORPORATED PUT+ $ 15.00 04/22/2006 481,875
200 RED HAT INCORPORATED PUT+ 30.00 03/18/2006 68,000
700 RED HAT INCORPORATED PUT+ 25.00 03/18/2006 70,000
TOTAL OPTIONS (PREMIUMS PAID $695,812) 619,875
---------------
71
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
RIGHTS - 0.00%
230,000 SEAGATE TECHNOLOGY RIGHTS+(A) $ 0
TOTAL RIGHTS (COST $0) 0
---------------
COLLATERAL FOR SECURITIES LENDING - 0.65%
COLLATERAL INVESTED IN MONEY MARKET FUNDS - 0.14%
658,504 SCUDDER DAILY ASSETS MONEY MARKET FUND 658,504
720,525 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 720,525
1,379,029
---------------
PRINCIPAL INTEREST RATE MATURITY DATE
COLLATERAL INVESTED IN OTHER ASSETS - 0.51%
$ 900,000 BUCKINGHAM CDO LLC 4.35% 02/03/2006 896,652
584,000 BUCKINGHAM II CDO LLC 4.30 01/09/2006 583,585
1,000,000 CONCORD MINUTEMEN CAPITAL COMPANY (SERIES B) 4.30 01/06/2007 1,000,000
450,000 CORPORATE ASSET SECURITIZATION AUSTRALIA, LTD 4.29 01/06/2006 449,843
1,000,000 DEER VALLEY FUNDING, LLC 4.39 01/17/2006 998,340
1,200,000 MORGAN STANLEY REPURCHASE AGREEMENT (MATURITY VALUE $1,200,425) 4.25 01/03/2006 1,200,000
5,128,420
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $6,507,449) 6,507,449
---------------
SHORT-TERM INVESTMENTS - 10.99%
110,405,501 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ 110,405,501
TOTAL SHORT-TERM INVESTMENTS (COST $110,405,501) 110,405,501
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $814,356,318)* 101.14% $ 1,016,927,748
------ ---------------
OTHER ASSETS AND LIABILITIES, NET (1.14) (12,164,402)
------ ---------------
TOTAL NET ASSETS 100.00% $ 1,004,763,346
------ ---------------
+ NON-INCOME EARNING SECURITIES.
(A) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE
BOARD OF TRUSTEES.
# ALL OR A PORTION OF THIS SECURITY IS SEGREGATED AS COLLATERAL FOR
DERIVATIVE INVESTMENTS. (SEE NOTE 2).
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $110,405,501.
<< ALL OR A PORTION OF THIS SECURITY IS ON LOAN.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $818,147,439 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 234,287,904
GROSS UNREALIZED DEPRECIATION (35,507,594)
--------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 198,780,310
CONTRACTS STRIKE PRICE EXPIRATION DATE
WRITTEN OPTIONS - (0.07%)
(3,855) CNET NETWORKS INCORPORATED CALL+ $15.00 04/22/2006 (424,050)
(200) RED HAT CORPORATED CALL 30.00 03/18/2006 (21,000)
(700) RED HAT INCORPORATED CALL+ 25.00 03/18/2006 (253,400)
TOTAL WRITTEN OPTIONS (PREMIUMS RECEIVED $(847,957)) (698,450)
---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
72
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMON STOCKS - 99.77%
APPAREL & ACCESSORY STORES - 1.40%
29,000 AEROPOSTALE INCORPORATED+ $ 762,700
31,775 CHILDRENS PLACE RETAIL STORES INCORPORATED+<< 1,570,320
2,333,020
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 1.15%
37,519 QUIKSILVER INCORPORATED+ 519,263
91,012 SKECHERS U.S.A. INCORPORATED CLASS A+ 1,394,304
1,913,567
---------------
AUTOMOTIVE REPAIR, SERVICES & PARKING - 2.28%
173,148 WRIGHT EXPRESS CORPORATION+ 3,809,256
---------------
BUSINESS SERVICES - 22.12%
1,948 ACCELR8 TECHNOLOGY CORPORATION+<< 5,824
9,700 ALLIANCE DATA SYSTEMS CORPORATION+ 345,320
56,651 COGENT INCORPORATED+<< 1,284,845
47,450 GEVITY HR INCORPORATED 1,220,414
66,049 HUDSON HIGHLAND GROUP INCORPORATED+ 1,146,611
235,527 HYPERCOM CORPORATION+ 1,505,017
347,168 iVILLAGE INCORPORATED+ 2,784,287
78,402 JUPITERMEDIA CORPORATION+<< 1,158,782
110,668 MPS GROUP INCORPORATED+ 1,512,832
1 NETIQ CORPORATION+ 12
82,562 OPEN SOLUTIONS INCORPORATED+<< 1,892,321
172,091 PLANETOUT INCORPORATED+ 1,495,471
232,681 QUEST SOFTWARE INCORPORATED+ 3,394,816
158,900 REALNETWORKS INCORPORATED+ 1,233,064
25,808 SAFENET INCORPORATED+<< 831,534
94,375 SECURE COMPUTING CORPORATION+<< 1,157,037
103,807 SI INTERNATIONAL INCORPORATED+ 3,173,380
120,742 SKILSOFT PLC ADR+ 664,081
96,885 TALEO CORPORATION CLASS A+ 1,286,633
235,474 VALUECLICK INCORPORATED+ 4,264,434
48,500 VENTIV HEALTH INCORPORATED+ 1,145,570
197,908 WEBEX COMMUNICATIONS INCORPORATED+ 4,280,750
151,101 WEBMETHODS INCORPORATED+ 1,164,989
36,948,024
---------------
CHEMICALS & ALLIED PRODUCTS - 8.07%
32,645 ADAMS RESPIRATORY THERAPEUTICS INCORPORATED+<< 1,327,346
83,253 ALKERMES INCORPORATED+<< 1,591,797
70,323 CUBIST PHARMACEUTICALS INCORPORATED+ 1,494,364
193,400 ENCYSIVE PHARMACEUTICALS INCORPORATED+<< 1,525,926
92,668 FIRST HORIZON PHARMACEUTICAL CORPORATION+<< 1,598,523
48,325 NEUROCRINE BIOSCIENCES INCORPORATED+<< 3,031,427
70,904 NITROMED INCORPORATED+<< 989,111
66,785 ONYX PHARMACEUTICALS INCORPORATED+<< 1,920,736
13,479,230
---------------
73
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
COMMUNICATIONS - 4.56%
89,818 CBEYOND COMMUNICATIONS INCORPORATED+<< $ 925,125
23,200 EQUINIX INCORPORATED+<< 945,632
97,174 LODGENET ENTERTAINMENT CORPORATION+<< 1,354,606
49,100 NEUSTAR INCORPORATED CLASS A+ 1,497,059
292,951 UBIQUITEL INCORPORATED+ 2,897,285
7,619,707
---------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS - 0.43%
14,500 CHEMED CORPORATION 720,360
---------------
DEPOSITORY INSTITUTIONS - 1.49%
35,350 FIDELITY BANKSHARES INCORPORATED 1,155,945
35,872 FIRST REPUBLIC BANK 1,327,623
2,483,568
---------------
EATING & DRINKING PLACES - 0.87%
45,515 CALIFORNIA PIZZA KITCHEN INCORPORATED+ 1,455,115
---------------
EDUCATIONAL SERVICES - 2.08%
37,700 EDUCATION MANAGEMENT CORPORATION+ 1,263,327
42,067 LAUREATE EDUCATION INCORPORATED+ 2,208,938
3,472,265
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 5.54%
115,627 HEXEL CORPORATION+ 2,087,067
275,000 INTEGRATED DEVICE TECHNOLOGY INCORPORATED+ 3,624,500
56,002 MERCURY COMPUTER SYSTEMS INCORPORATED+ 1,155,321
454,164 NMS COMMUNICATIONS CORPORATION+ 1,585,033
76,175 UNIVERSAL DISPLAY CORPORATION+<< 800,599
9,252,520
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES - 8.26%
32,206 ADVISORY BOARD COMPANY+ 1,535,260
36,400 GEN-PROBE INCORPORATED+ 1,775,956
40,950 HURON CONSULTING GROUP INCORPORATED+ 982,391
53,834 LUMINEX CORPORATION+ 625,551
76,990 NAVIGANT CONSULTING INCORPORATED+ 1,692,240
209,275 RESOURCES CONNECTION INCORPORATED+<< 5,453,706
108,505 SFBC INTERNATIONAL INCORPORATED+<< 1,737,165
13,802,269
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.47%
16,434 MOBILE MINI INCORPORATED+<< 778,972
---------------
FOOD & KINDRED PRODUCTS - 0.90%
124,611 SENOMYX INCORPORATED+ 1,510,285
---------------
HEALTH SERVICES - 1.88%
60,881 KINDRED HEALTHCARE INCORPORATED+<< 1,568,295
19,600 SIERRA HEALTH SERVICES INCORPORATED+<< 1,567,216
3,135,511
---------------
74
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.84%
44,016 GAMESTOP CORPORATION+<< $ 1,400,589
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES - 3.76%
69,177 GAYLORD ENTERTAINMENT COMPANY+ 3,015,425
87,719 ORIENT EXPRESS HOTELS LIMITED CLASS A 2,764,903
7,492 STATION CASINOS INCORPORATED 507,958
6,288,286
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT - 3.66%
24,405 ACTUANT CORPORATION CLASS A 1,361,799
96,345 GARDNER DENVER INCORPORATED+ 4,749,808
6,111,607
---------------
INSURANCE AGENTS, BROKERS & SERVICE - 0.25%
7,977 NATIONAL FINANCIAL PARTNERS CORPORATION 419,191
---------------
INSURANCE CARRIERS - 1.30%
31,400 THE NAVIGATORS GROUP INCORPORATED+ 1,369,354
19,627 WELLCARE HEALTH PLANS INCORPORATED+ 801,763
2,171,117
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL
GOODS - 5.71%
71,300 ADVANCED MEDICAL OPTICS INCORPORATED+<< 2,980,340
57,869 DJ ORTHOPEDICS INCORPORATED+ 1,596,027
24,700 HAEMONETICS CORPORATION+ 1,206,842
75,200 IXIA+ 1,111,456
28,600 KYPHON INCORPORATED+<< 1,167,738
80,304 PHOTON DYNAMICS INCORPORATED+ 1,467,957
9,530,360
---------------
MEMBERSHIP ORGANIZATIONS - 2.13%
38,100 AVIALL+ 1,097,280
95,751 TRAMMELL CROW COMPANY+ 2,456,013
3,553,293
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 1.40%
260,645 IDENTIX INCORPORATED+<< 1,305,832
41,395 SHUFFLE MASTER INCORPORATED+<< 1,040,670
2,346,502
---------------
MISCELLANEOUS RETAIL - 3.69%
100,571 CKX INCORPORATED+ 1,307,423
77,207 MARVEL ENTERTAINMENT INCORPORATION+<< 1,264,651
160,830 PRICELINE.COM INCORPORATED+<< 3,589,725
6,161,799
---------------
OIL & GAS EXTRACTION - 2.18%
28,625 COMSTOCK RESOURCES INCORPORATED+ 873,349
63,473 GOODRICH PETROLEUM CORPORATION+<< 1,596,346
38,200 TETRA TECH INCORPORATED+ 1,165,864
3,635,559
---------------
75
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
PERSONAL SERVICES - 1.69%
51,700 JACKSON HEWITT TAX SERVICE INCORPORATED $ 1,432,607
39,256 STEINER LEISURE LIMITED+ 1,395,943
2,828,550
---------------
REAL ESTATE - 0.75%
21,322 CB RICHARD ELLIS GROUP INCORPORATED CLASS A+ 1,254,800
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.58%
39,657 OPTIONSXPRESS HOLDINGS INCORPORATED<< 973,579
---------------
TRANSPORTATION EQUIPMENT - 1.91%
60,150 K & F INDUSTRIES HOLDINGS INCORPORATED+ 923,904
25,352 OSHKOSH TRUCK CORPORATION 1,130,446
76,107 RUSH ENTERPRISES INCORPORATED+ 1,132,472
3,186,822
---------------
TRANSPORTATION SERVICES - 0.92%
43,690 HUB GROUP INCORPORATED CLASS A+ 1,544,442
---------------
WHOLESALE TRADE NON-DURABLE GOODS - 1.61%
81,874 AIRGAS INCORPORATED 2,693,655
---------------
WHOLESALE TRADE-DURABLE GOODS - 5.89%
68,924 HUGHES SUPPLY INCORPORATED 2,470,926
205,186 PSS WORLD MEDICAL INCORPORATED+ 3,044,960
101,219 WESCO INTERNATIONAL INCORPORATED+<< 4,325,088
9,840,974
---------------
TOTAL COMMON STOCKS (COST $151,300,322) 166,654,794
---------------
COLLATERAL FOR SECURITIES LENDING - 22.34%
COLLATERAL INVESTED IN MONEY MARKET FUNDS - 1.26%
1,488,173 SCUDDER DAILY ASSETS MONEY MARKET FUND 1,488,173
622,247 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 622,247
2,110,420
---------------
PRINCIPAL INTEREST RATE MATURITY DATE
COLLATERAL INVESTED IN OTHER ASSETS - 21.08%
$ 11,200,000 BEAR STEARNS INTERNATIONAL REPURCHASE AGREEMENT
(MATURITY VALUE $11,205,351) 4.30% 01/03/2006 11,200,000
24,000,000 MORGAN STANLEY REPURCHASE AGREEMENT
(MATURITY VALUE $24,011,333) 4.25 01/03/2006 24,000,000
35,200,000
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $37,310,420) 37,310,420
---------------
76
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
SHARES SECURITY NAME VALUE
SHORT-TERM INVESTMENTS - 0.77%
1,279,062 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~++ $ 1,279,062
TOTAL SHORT-TERM INVESTMENTS (COST $1,279,062) 1,279,062
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $189,889,804)* 122.88% $ 205,244,276
OTHER ASSETS AND LIABILITIES, NET (22.88) (38,211,255)
------ ---------------
TOTAL NET ASSETS 100.00% $ 167,033,021
------ ---------------
+ NON-INCOME EARNING SECURITIES.
<< ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2)
~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR
LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND
DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS.
++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,279,062.
* COST FOR FEDERAL INCOME TAX PURPOSES IS $191,239,454 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 20,090,119
GROSS UNREALIZED DEPRECIATION (6,085,297)
--------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $ 14,004,822
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
77
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ASSET-BACKED SECURITIES - 12.83%
$ 68,000 ADVANTA BUSINESS CARD MASTER TRUST SERIES 2005-A4 CLASS A4 4.75% 01/20/2011 $ 67,893
190,000 AMERICREDIT AUTOMOBILE RECEIVABLES TRUST SERIES 2005-CF CLASS A3 4.47 05/06/2010 188,880
117,000 AMERICREDIT AUTOMOBILE RECEIVABLES TRUST SERIES 2005-DA CLASS A2 4.75 11/06/2008 116,963
288,000 AMERICREDIT AUTOMOBILE SERIES 2003-DM CLASS A4 2.84 08/06/2010 283,040
137,393 AMERIQUEST MORTGAGE SECURITIES INCORPORATED SERIES 2004-R12 CLASS A3+/- 4.66 01/25/2035 137,683
38,760 ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC SERIES 2003-1 CLASS A1 2.89 07/20/2011 37,496
138,000 BRAZOS HIGHER EDUCATION AUTHORITY INCORPORATED SERIES 2005-4 CLASS A5+/- 4.91 12/01/2040 138,000
250,000 CABELA'S MASTER CREDIT CARD TRUST SERIES 2005-1A CLASS 1A++ 4.97 10/15/2013 250,635
163,350 CAPITAL AUTO RECEIVABLES ASSET TRUST SERIES 2004-1 CLASS A3 2.00 11/15/2007 161,294
95,000 CAPITAL AUTO RECEIVABLES ASSET TRUST SERIES 2004-2 CLASS A2 3.35 02/15/2008 93,788
155,000 CAPITAL ONE MASTER TRUST SERIES 2001-3A CLASS A 5.45 03/16/2009 155,474
232,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2005-A2 CLASS A2 4.05 02/15/2011 228,365
341,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2005-A8 CLASS A 4.40 08/15/2011 337,620
168,000 CARRINGTON MORTGAGE LOAN TRUST SERIES 2005-NC3 CLASS A1B+/- 4.54 06/25/2035 167,999
148,000 CARRINGTON MORTGAGE LOAN TRUST SERIES 2005-OPT2 CLASS A1B+/- 4.53 05/25/2035 148,019
158,000 CHASE MANHATTAN AUTO OWNER TRUST SERIES 2003-A CLASS A4 2.06 12/15/2009 154,449
348,465 CHASE MANHATTAN AUTO OWNER TRUST SERIES 2004-A CLASS A3 2.08 05/15/2008 344,532
78,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2000-A3 CLASS A3 6.88 11/16/2009 80,883
100,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2003-A3 CLASS A3 3.10 03/10/2010 96,452
446,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2004-A1 CLASS A1 2.55 01/20/2009 435,596
147,000 CITIBANK CREDIT CARD ISSUANCE TRUST SERIES 2005-B1 CLASS B1 4.40 09/15/2010 144,825
92,424 COMED TRANSITIONAL FUNDING TRUST SERIES 1998-1 CLASS A6 5.63 06/25/2009 93,017
34,000 COMED TRANSITIONAL FUNDING TRUST SERIES 1998-1 CLASS A7 5.74 12/25/2010 34,661
107,808 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2005-12 CLASS 1A1+/- 4.34 02/25/2036 107,802
68,000 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2005-17 CLASS 1AF2 5.36 12/25/2035 68,017
84,971 COUNTRYWIDE ASSET-BACKED CERTIFICATES SERIES 2005-BC4 CLASS 2A1+/- 4.31 08/25/2035 84,978
302,000 DAIMLERCHRYSLER AUTO TRUST SERIES 2004-B CLASS A3 3.18 09/08/2008 299,003
88,146 DETROIT EDISON SECURITIZATION FUNDING LLC SERIES 2001-1 CLASS A3 5.88 03/01/2010 89,146
148,374 ENCORE CREDIT RECEIVABLES TRUST SERIES 2005-3 CLASS 2A1+/- 4.50 10/25/2035 148,395
132,000 FORD CREDIT AUTO OWNER TRUST SERIES 2005-A CLASS A3 3.48 11/15/2008 130,331
206,000 FORD CREDIT AUTO OWNER TRUST SERIES 2005-B CLASS A3 4.17 01/15/2009 204,374
48,000 FRANKLIN AUTO TRUST SERIES 2005-1 CLASS A2 4.84 09/22/2008 48,000
146,000 GS AUTO LOAN TRUST SERIES 2005-1 CLASS A3 4.45 05/17/2010 144,935
100,000 HOUSEHOLD AUTOMOTIVE TRUST SERIES 2005-3 CLASS A2 4.70 01/20/2009 99,909
180,000 HYUNDAI AUTO RECEIVABLES TRUST SERIES 2005-A CLASS A4 4.18 02/15/2012 176,205
58,383 ILLINOIS POWER SPECIAL PURPOSE TRUST SERIES 1998-1 CLASS A6 5.54 06/25/2009 58,726
168,000 JP MORGAN MORTGAGE ACQUISITION CORPORATION SERIES 2005-OPT2 CLASS A3+/- 4.61 12/25/2035 168,000
191,000 MASSACHUSETTS RRB SPECIAL PURPOSE TRUST SERIES 2005-1 CLASS A2 3.78 09/15/2010 187,702
176,608 MASTER ASSET BACKED SECURITIES TRUST SERIES 2004-FRE1 CLASS A2+/- 4.72 07/25/2034 176,991
161,757 MASTER ASSET BACKED SECURITIES TRUST SERIES 2005-AB1 CLASS A1B+/- 5.14 11/25/2035 161,401
50,184 MASTR ASSET BACKED SECURITIES TRUST SERIES 2004-OPT2 CLASS A2+/- 4.73 09/25/2034 50,272
505,000 MBNA CREDIT CARD MASTER NOTE TRUST SERIES 2005-A1 CLASS A1 4.20 09/15/2010 498,836
151,433 MERRILL LYNCH MORTGAGE INVESTORS INCORPORATED SERIES 2005-SD1 CLASS A1+/- 4.56 05/25/2046 151,446
229,769 MORGAN STANLEY ABS CAPITAL I SERIES 2004-WMC2 CLASS A2+/- 4.74 07/25/2034 229,767
337,000 MORGAN STANLEY ABS CAPITAL I SERIES 2005-HE2 CLASS A3B+/- 4.60 01/25/2035 336,997
104,000 NISSAN AUTO LEASE TRUST SERIES 2005-A CLASS A2 4.61 01/15/2008 103,836
104,000 NISSAN AUTO RECEIVABLES OWNER TRUST SERIES 2005-B CLASS A2 3.75 09/17/2007 103,620
78
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
ASSET-BACKED SECURITIES (CONTINUED)
$ 118,000 NORTHSTAR EDUCATION FINANCE INCORPORATED SERIES 2005-1 CLASS A5 4.74% 10/30/2045 $ 118,000
149,000 NOVASTAR HOME EQUITY LOAN SERIES 2005-2 CLASS A2B+/- 4.53 10/25/2035 149,018
165,258 PECO ENERGY TRANSITION TRUST SERIES 1999-A CLASS A6 6.05 03/01/2009 166,628
271,000 PECO ENERGY TRANSITION TRUST SERIES 2001-A CLASS A1 6.52 12/31/2010 288,345
59,000 PG&E ENERGY RECOVERY FUNDING LLC SERIES 2005-1 CLASS A2 3.87 06/25/2011 57,920
262,000 PG&E ENERGY RECOVERY FUNDING LLC SERIES 2005-2 CLASS A1 4.85 06/25/2011 262,120
77,354 RESIDENTIAL ASSET MORTGAGE PRODUCTS INCORPORATED SERIES 2003-RS3
CLASS A2+/- 4.74 04/25/2033 77,581
276,000 SLM STUDENT LOAN TRUST SERIES 2003-11 CLASS A5++ 2.99 12/15/2022 270,626
186,000 SLM STUDENT LOAN TRUST SERIES 2004-1 CLASS A2+/- 3.79 07/25/2018 186,658
125,000 SLM STUDENT LOAN TRUST SERIES 2005-7 CLASS A3 4.41 07/25/2025 124,009
336,000 SLM STUDENT LOAN TRUST SERIES 2005-8 CLASS A4 4.25 01/25/2028 331,367
183,000 SPECIALTY UNDERWRITING & RESIDENTIAL FINANCE SERIES 2005-BC1 CLASS A1B+/- 4.61 12/25/2035 183,063
182,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2005-11 CLASS A4+/- 4.47 01/25/2036 182,000
147,000 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2005-11 CLASS A6+/- 4.61 01/25/2036 147,000
82,660 STRUCTURED ASSET INVESTMENT LOAN TRUST SERIES 2005-5 CLASS A2+/- 4.47 06/25/2035 82,668
111,000 TRIAD AUTO RECEIVABLES OWNER TRUST SERIES 2005-B CLASS A3 4.28 06/14/2010 109,905
105,000 USAA AUTO OWNER TRUST SERIES 2005-3 CLASS A2 4.52 06/16/2008 104,756
170,000 WACHOVIA AUTO OWNER TRUST SERIES 2005-B CLASS A2 4.82 02/20/2009 170,053
222,000 WFS FINANCIAL OWNER TRUST SERIES 2005-3 CLASS A4 4.38 05/17/2013 219,060
10,957,030
----------
TOTAL ASSET-BACKED SECURITIES (COST $11,025,527)
COLLATERALIZED MORTGAGE OBLIGATIONS - 7.02%
161,000 BANK OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2005-6
CLASS AM+/- 5.18 09/10/2047 161,250
170,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES SERIES 2005-PW10 CLASS AAB 5.38 12/11/2040 172,282
260,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES SERIES 2005-PWR8 CLASS AAB 4.58 06/11/2041 251,453
121,000 CITIGROUP DEUTSCHE BANK COMMERCIAL MORTGAGE SERIES 2005-CD1 CLASS A3+/- 5.23 07/15/2044 121,683
110,000 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1999-1 CLASS E+/- 7.23 05/15/2032 115,462
40,000 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATION SERIES 2000-C1 CLASS C 7.71 08/15/2033 43,755
145,945 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2005-J4 CLASS 2A1B+/- 4.31 07/25/2035 145,853
256,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2002-CKS4 CLASS A2 5.18 11/15/2036 256,812
62,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2003-CPN1 CLASS A2 4.60 03/15/2035 60,398
135,000 CS FIRST BOSTON MORTGAGE SECURITIES CORPORATION SERIES 2005-C6 CLASS B 5.23 12/15/2040 133,195
194,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 2001-C3 CLASS A3 6.42 08/15/2033 205,453
111,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST PASS-THROUGH
CERTIFICATES, SERIES 2001-C4 CLASS B 6.42 12/12/2033 118,154
223,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2002-2A CLASS A3 5.35 08/11/2036 225,953
181,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2005-C3 CLASS A2 4.85 07/10/2045 179,687
75,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2002-C2 CLASS A3 5.71 10/15/2038 77,453
185,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2003-C3 CLASS A4 5.02 04/10/2040 183,411
105,272 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2004-C1 CLASS A1 3.12 03/10/2038 102,062
34,249 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2004-C2 CLASS A1 3.90 08/10/2038 33,553
173,000 GREENWICH CAPITAL COMMERCIAL FUNDING CORPORATION SERIES 2005-GG5 CLASS
AAB+/- 5.19 04/10/2037 173,446
330,000 GS MORTGAGE SECURITIES CORPORATION SERIES 1998-GLII CLASS A2 6.56 04/13/2031 339,980
41,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2005-CB11 CLASS ASB+/- 5.20 08/12/2037 41,120
100,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2005-LDP5 CLASS A4 5.18 12/15/2044 100,607
47,000 JP MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2005-LDP5 CLASS B 5.33 12/15/2044 47,236
79
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 57,796 LB COMMERCIAL CONDUIT MORTGAGE TRUST SERIES 1999-C2 CLASS A1 7.11% 10/15/2032 $ 58,480
55,000 LB COMMERCIAL CONDUIT MORTGAGE TRUST SERIES 1999-C2 CLASS B 7.43 10/15/2032 59,391
109,000 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2003-C7 CLASS A4+/- 4.93 09/15/2035 107,720
60,837 LB-UBS COMMERCIAL MORTGAGE TRUST SERIES 2005-C2 CLASS A1 4.59 04/15/2030 60,374
68,000 MERRILL LYNCH MORTGAGE TRUST SERIES 2003-KEY1 CLASS A3 4.89 11/12/2035 67,268
154,000 MERRILL LYNCH MORTGAGE TRUST SERIES 2005-CKI1 CLASS A6+/- 5.24 11/12/2037 155,612
177,000 MERRILL LYNCH MORTGAGE TRUST SERIES 2005-CKI1 CLASS ASB+/- 5.24 11/12/2037 178,688
135,000 MERRILL LYNCH MORTGAGE TRUST SERIES 2005-LC1 CLASS AM+/- 5.26 01/12/2044 136,034
168,000 MORGAN STANLEY CAPITAL I SERIES 2004-HQ4 CLASS A2 3.92 04/14/2040 164,254
174,000 MORGAN STANLEY CAPITAL I SERIES 2005-IQ10 CLASS AAB+/- 5.18 09/15/2042 174,320
186,000 SPECIALTY UNDERWRITING & RESIDENTIAL FINANCE SERIES 2005-BC4 CLASS A2A+/- 4.48 09/25/2036 185,997
97,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C6 CLASS A3 4.96 08/15/2035 96,221
116,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C8 CLASS A3 4.45 11/15/2035 112,791
193,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C17 CLASS A4+/- 5.08 03/15/2042 191,508
149,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C18 CLASS APB 4.81 04/15/2042 146,168
195,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C19 CLASS APB 4.62 05/15/2044 188,786
172,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C21 CLASS A4+/- 5.38 10/15/2044 173,419
172,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C22 CLASS A3+/- 5.19 12/15/2044 173,336
140,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2005-C22 CLASS AM+/- 5.19 12/15/2044 141,507
139,000 WASHINGTON MUTUAL ASSET SECURITIES CORPORATION SERIES 2005-C1A
CLASS AJ+++/- 5.19 05/25/2036 138,139
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $6,063,188) 6,000,271
---------
CORPORATE BONDS & NOTES - 14.58%
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS - 0.03%
25,000 PULTE HOMES INCORPORATED 6.00 02/15/2035 22,190
---------
BUSINESS SERVICES - 0.23%
190,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 6.00 06/15/2012 200,106
---------
COMMUNICATIONS - 2.09%
155,000 AMERICA MOVIL SA DE CV 6.38 03/01/2035 152,876
60,000 AT&T INCORPORATED 9.75 11/15/2031 75,367
75,000 AT&T INCORPORATED 6.15 09/15/2034 75,335
50,000 COMCAST CABLE COMMUNICATIONS HOLDINGS INCORPORATED 8.38 03/15/2013 57,874
75,000 COMCAST CORPORATION 5.50 03/15/2011 75,407
120,000 COMCAST CORPORATION 5.65 06/15/2035 110,416
75,000 NEWS AMERICA INCORPORATED 6.20 12/15/2034 74,497
35,000 NEWS AMERICA INCORPORATED++ 6.40 12/15/2035 35,278
255,000 SPRINT CAPITAL CORPORATION 6.00 01/15/2007 257,494
145,000 SPRINT CAPITAL CORPORATION 6.13 11/15/2008 149,105
75,000 SPRINT CAPITAL CORPORATION 7.63 01/30/2011 82,705
85,000 SPRINT CAPITAL CORPORATION 8.75 03/15/2032 112,802
205,000 TELECOM ITALIA CAPITAL SA 5.25 11/15/2013 201,161
80,000 TIME WARNER ENTERTAINMENT COMPANY LP 8.38 07/15/2033 94,501
65,000 VERIZON GLOBAL FUNDING CORPORATION 5.85 09/15/2035 62,639
170,000 VERIZON WIRELESS CAPITAL LLC 5.38 12/15/2006 170,560
1,788,017
---------
80
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
DEPOSITORY INSTITUTIONS - 1.07%
$ 115,000 BAC CAPITAL TRUST VI<< 5.63% 03/08/2035 $ 113,448
240,000 CITIGROUP INCORPORATED 5.00 09/15/2014 236,245
135,000 PNC FUNDING CORPORATION 5.25 11/15/2015 134,593
110,000 WACHOVIA CORPORATION 5.50 08/01/2035 107,174
105,000 WASHINGTON MUTUAL BANK FA<< 5.13 01/15/2015 102,590
73,000 WASHINGTON MUTUAL INCORPORATED 4.00 01/15/2009 70,801
145,000 ZIONS BANCORPORATION 6.00 09/15/2015 151,531
916,382
-------------
ELECTRIC, GAS & SANITARY SERVICES - 0.87%
216,000 AMERICAN ELECTRIC POWER SERIES C 5.38 03/15/2010 217,738
60,000 DOMINION RESOURCES INCORPORATED 5.95 06/15/2035 58,565
125,000 KANSAS GAS & ELECTRIC 5.65 03/29/2021 123,716
76,000 PACIFIC GAS & ELECTRIC COMPANY<< 6.05 03/01/2034 78,657
35,000 PROGRESS ENERGY INCORPORATED 7.00 10/30/2031 38,840
55,000 PSEG POWER LLC 8.63 04/15/2031 72,373
130,000 PUBLIC SERVICE COMPANY OF COLORADO 7.88 10/01/2012 151,339
741,228
-------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 0.09%
75,000 PEPCO HOLDINGS INCORPORATED 6.45 08/15/2012 78,916
-------------
FINANCIAL SERVICES - 0.46%
200,000 CAPITAL ONE FINANCIAL CORPORATION 8.75 02/01/2007 207,755
175,000 CITIGROUP INCORPORATED 6.50 01/18/2011 186,463
394,218
-------------
FOOD & KINDRED PRODUCTS - 0.18%
90,000 KRAFT FOODS INCORPORATED 5.63 11/01/2011 92,340
55,000 KRAFT FOODS INCORPORATED 6.50 11/01/2031 60,508
152,848
-------------
FOOD STORES - 0.05%
40,000 KROGER COMPANY 7.50 04/01/2031 44,655
GENERAL MERCHANDISE STORES - 0.08%
75,000 WAL-MART STORES 5.25 09/01/2035 72,801
-------------
HEALTH SERVICES - 0.40%
100,000 COVENTRY HEALTH CARE INCORPORATED 6.13 01/15/2015 102,500
240,000 WYETH++ 5.50 02/15/2016 242,787
345,287
-------------
HOLDING & OTHER INVESTMENT OFFICES - 0.80%
145,000 CREDIT SUISSE FIRST BOSTON USA INCORPORATED 4.88 08/15/2010 143,888
100,000 GOLDMAN SACHS GROUP INCORPORATED<< 5.13 01/15/2015 98,869
265,000 MERRILL LYNCH & COMPANY 4.25 02/08/2010 257,772
75,000 MORGAN STANLEY 4.00 01/15/2010 72,145
75,000 NUVEEN INVESTMENTS 5.00 09/15/2010 73,794
35,000 NUVEEN INVESTMENTS 5.50 09/15/2015 34,404
680,872
-------------
81
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
INSURANCE AGENTS, BROKERS & SERVICE - 0.22%
$ 59,000 MARSH & MCLENNAN COMPANIES INCORPORATED 5.15% 09/15/2010 $ 58,607
47,000 PRUDENTIAL FINANCIAL INCORPORATED 4.75 06/13/2015 45,549
80,000 TRAVELERS PROPERTY CASUALTY CORPORATION 6.38 03/15/2033 85,190
189,346
-------------
INSURANCE CARRIERS - 0.99%
100,000 AEGON FUNDING CORPORATION 5.75 12/15/2020 101,512
300,000 AMERICAN INTERNATIONAL GROUP++ 4.70 10/01/2010 295,661
100,000 AMERICAN INTERNATIONAL GROUP++ 5.05 10/01/2015 98,143
75,000 AMERICAN INTERNATIONAL GROUP INCORPORATED 4.25 05/15/2013 71,335
85,000 METLIFE INCORPORATED 5.70 06/15/2035 85,315
80,000 REINSURANCE GROUP OF AMERICA INCORPORATED+/- 6.75 12/15/2049 80,710
105,000 UNUMPROVIDENT FINANCE COMPANY++ 6.85 11/15/2015 109,371
842,047
-------------
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.15%
120,000 TYCO INTERNATIONAL GROUP SA 6.38 10/15/2011 124,631
-------------
MISCELLANEOUS RETAIL - 0.28%
240,000 PROLOGIS++ 5.25 11/15/2010 240,165
-------------
NON-DEPOSITORY CREDIT INSTITUTIONS - 3.22%
175,000 AMERICAN GENERAL FINANCE CORPORATION 3.88 10/01/2009 167,611
145,000 CAPITAL ONE BANK SERIES BKNT 4.88 05/15/2008 144,410
130,000 CIT GROUP INCORPORATED 4.75 08/15/2008 129,505
287,000 FORD MOTOR CREDIT COMPANY<< 5.70 01/15/2010 243,968
37,000 FORD MOTOR CREDIT COMPANY<< 7.00 10/01/2013 31,615
72,000 GENERAL ELECTRIC CAPITAL CORPORATION 3.75 12/15/2009 69,078
150,000 GENERAL ELECTRIC CAPITAL CORPORATION<< 4.88 03/04/2015 147,937
440,000 HSBC FINANCE CORPORATION<< 4.75 04/15/2010 433,485
100,000 HSBC FINANCE CORPORATION 5.00 06/30/2015 97,242
75,000 JP MORGAN CHASE CAPITAL XV 5.88 03/15/2035 74,567
70,000 KINDER MORGAN FINANCE COMPANY ULC++ 5.35 01/05/2011 70,100
100,000 KINDER MORGAN FINANCE COMPANY ULC++ 6.40 01/05/2036 102,488
205,000 LAZARD GROUP LLC 7.13 05/15/2015 215,269
475,000 RESIDENTIAL CAPITAL CORPORATION 6.13 11/21/2008 476,155
345,000 RESIDENTIAL CAPITAL CORPORATION 6.38 06/30/2010 350,560
2,753,990
-------------
OIL & GAS EXTRACTION - 0.70%
150,000 CANADIAN NATURAL RESOURCES 5.85 02/01/2035 151,336
105,000 ENERGY TRANSFER PARTNERS 5.95 02/01/2015 104,631
75,000 HALLIBURTON COMPANY 5.50 10/15/2010 76,602
127,000 HALLIBURTON COMPANY 8.75 02/15/2021 167,116
35,000 PEMEX PROJECT FUNDING MASTER TRUST 7.38 12/15/2014 38,885
60,000 VALERO LOGISTICS 6.05 03/15/2013 61,983
600,553
-------------
82
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
PETROLEUM REFINING & RELATED INDUSTRIES - 0.46%
$ 175,000 AMERADA HESS CORPORATION 7.13% 03/15/2033 $ 198,645
110,000 VALERO ENERGY CORPORATION 6.88 04/15/2012 119,860
60,000 VALERO ENERGY CORPORATION 7.50 04/15/2032 72,918
391,423
-------------
PIPELINES, EXCEPT NATURAL GAS - 0.42%
150,000 DUKE CAPITAL LLC 7.50 10/01/2009 161,076
110,000 ENERGY TRANSFER PARTNERS++ 5.65 08/01/2012 108,739
85,000 MAGELLAN MIDSTREAM PARTNERS 5.65 10/15/2016 85,674
355,489
-------------
RAILROAD TRANSPORTATION - 0.13%
90,000 NORFOLK SOUTHERN CORPORATION 7.05 05/01/2037 107,399
-------------
REITS - 0.72%
150,000 DEVELOPERS DIVERS REALTY 5.38 10/15/2012 147,737
100,000 HEALTH CARE REIT INCORPORATED 6.20 06/01/2016 100,041
95,000 SIMON PROPERTY GROUP LIMITED PARTNERSHIP 5.10 06/15/2015 91,880
75,000 SIMON PROPERTY GROUP LIMITED PARTNERSHIP 4.60 06/15/2010 73,114
205,000 SIMON PROPERTY GROUP LIMITED PARTNERSHIP++ 5.38 06/01/2011 205,490
618,262
-------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 0.68%
95,000 GOLDMAN SACHS GROUP INCORPORATED 6.13 02/15/2033 99,704
170,000 JP MORGAN CHASE & COMPANY 6.75 02/01/2011 182,083
295,000 MORGAN STANLEY 5.38 10/15/2015 295,286
577,073
-------------
TRANSPORTATION EQUIPMENT - 0.26%
95,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 6.50 11/15/2013 99,469
100,000 DAIMLERCHRYSLER NA HOLDING CORPORATION 8.50 01/18/2031 121,002
220,471
-------------
TOTAL CORPORATE BONDS & NOTES (COST $12,569,437) 12,458,369
-------------
FOREIGN CORPORATE BONDS - 0.62%
75,000 BT GROUP PLC 8.88 12/15/2030 100,346
120,000 CODELCO INCORPORATED++ 5.63 09/21/2035 119,456
35,000 EMPRESA NACIONAL ELECTRIC 8.63 08/01/2015 40,984
54,000 ENCANA CORPORATION 6.50 08/15/2034 60,337
209,000 FRANCE TELECOM 7.45 03/01/2006 209,838
TOTAL FOREIGN CORPORATE BONDS@ (COST $534,549) 530,961
-------------
FOREIGN GOVERNMENT BONDS - 1.12%
75,000 CELULOSA ARAUCO CONSTITUTION 5.63 04/20/2015 74,453
110,000 MOLSON COORS CAPITAL FINANCE ULC<< 4.85 09/22/2010 108,490
70,000 PETRO-CANADA 5.95 05/15/2035 71,010
250,000 RAS LAFFAN LNG III++ 5.84 09/30/2027 250,800
135,000 RUSSIAN FEDERATION+++/- 5.00 03/31/2030 152,213
110,000 TELECOM ITALIA CAPITAL 4.88 10/01/2010 107,843
83
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FOREIGN GOVERNMENT BONDS (CONTINUED)
$ 100,000 TELEFONOS DE MEXICO S.A. SERIES WI 5.50% 01/27/2015 $ 98,650
35,000 UNITED MEXICAN STATES SERIES MTNA 5.88 01/15/2014 36,225
51,000 UNITED MEXICAN STATES SERIES MTNA<< 6.75 09/27/2034 55,781
TOTAL FOREIGN GOVERNMENT BONDS@ (COST $954,844) 955,465
-------------
AGENCY SECURITIES - 56.22%
FEDERAL HOME LOAN BANK - 0.93%
806,209 FHLB SERIES TQ-2015 CLASS A 5.07 10/20/2015 795,186
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 14.51%
1,323,000 FNMA 6.00 05/15/2011 1,399,254
399,187 FNMA #254631 5.00 02/01/2018 395,553
216,438 FNMA #254918 4.50 09/01/2033 204,602
12,906 FNMA #387501 4.95 07/01/2015 12,828
91,225 FNMA #555388 5.50 03/01/2018 91,856
128,440 FNMA #615062 5.50 01/01/2017 129,382
88,322 FNMA #624228 5.50 01/01/2017 88,969
62,289 FNMA #624277 5.50 01/01/2017 62,745
271,529 FNMA #725564 4.53 04/01/2009 268,485
260,304 FNMA #734830 4.50 08/01/2033 246,069
116,948 FNMA #745047 4.50 09/01/2035 110,553
168,656 FNMA #808093 4.50 02/01/2035 158,835
177,692 FNMA #815422 4.50 02/01/2035 167,345
245,940 FNMA #815426 4.50 02/01/2035 232,148
324,897 FNMA #819357<< 4.50 03/01/2035 305,978
337,516 FNMA SERIES 2003-113 CLASS PN 3.50 02/25/2013 329,999
588,950 FNMA SERIES 2003-63 CLASS QP 3.50 10/25/2031 550,947
850,986 FNMA SERIES 2003-76 CLASS DE 4.00 09/25/2031 808,597
633,000 FNMA SERIES 2003-92 CLASS KQ 3.50 06/25/2023 618,302
93,000 FNMA SERIES 2003-92 CLASS NM 3.50 04/25/2013 90,888
283,000 FNMA SERIES 2005-40 CLASS YG 5.00 05/25/2025 271,471
1,442,474 FNMA SERIES 2005-51 CLASS KC 4.50 01/25/2025 1,424,374
318,000 FNMA SERIES 2005-51 CLASS ND 5.50 11/25/2033 312,670
670,007 FNMA SERIES 2005-65 CLASS WG 4.50 08/25/2026 662,969
54,000 FNMA SERIES 2005-69 CLASS AD 5.00 08/25/2035 53,634
300,000 FNMA SERIES 2005-69 CLASS JM 4.50 08/25/2025 278,970
1,446,347 FNMA SERIES 2005-77 CLASS BX<< 4.50 07/25/2028 1,429,584
1,674,000 FNMA TBA%% 6.00 02/01/2034 1,687,077
12,394,084
-------------
FHLMC - 40.78%
136,000 FHLMC 4.13 04/02/2007 134,947
993,000 FHLMC 4.25 04/05/2007 986,722
1,451,000 FHLMC 4.00 08/17/2007 1,434,029
2,334,000 FHLMC 6.63 09/15/2009 2,479,740
768,000 FHLMC<< 4.13 07/12/2010 748,917
28,913 FHLMC #A29225 4.50 01/01/2035 27,202
191,547 FHLMC #A38837 4.50 05/01/2035 180,214
84
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FHLMC (CONTINUED)
$ 141,823 FHLMC #A38838 4.50% 05/01/2035 $ 133,431
454,600 FHLMC #A46696 4.50 08/01/2035 427,703
42,796 FHLMC #B17291 5.00 11/01/2019 42,392
247,716 FHLMC #B18247 5.00 04/01/2020 245,271
43,811 FHLMC #B19002 5.00 03/01/2020 43,378
34,907 FHLMC #B19212 5.50 04/01/2020 35,118
284,414 FHLMC #B19221 5.00 04/01/2020 281,607
90,176 FHLMC #B19318 5.00 05/01/2020 89,286
78,025 FHLMC #B19338 5.00 05/01/2020 77,255
94,434 FHLMC #B19339 5.00 05/01/2020 93,502
60,612 FHLMC #B19376 5.00 06/01/2020 60,013
194,410 FHLMC #B19389 5.50 05/01/2020 195,589
157,571 FHLMC #B19393 5.00 05/01/2020 156,015
381,000 FHLMC #C90940 6.00 12/01/2025 387,231
101,000 FHLMC #C90947 6.00 01/01/2026 102,652
208,372 FHLMC #E01279 5.50 01/01/2018 209,750
261,892 FHLMC #E01497 5.50 11/01/2018 263,553
39,039 FHLMC #E88979 5.50 04/01/2017 39,296
84,247 FHLMC #G01805 4.50 04/01/2035 79,262
414,212 FHLMC #G01842 4.50 06/01/2035 389,705
525,000 FHLMC #G01977 5.00 12/01/2035 508,266
505,000 FHLMC #G01981 5.00 12/01/2035 488,903
74,371 FHLMC #G08083 4.50 08/01/2035 69,970
194,842 FHLMC #G11594 5.50 08/01/2019 196,076
878,426 FHLMC #G11658 5.50 01/01/2020 883,887
327,235 FHLMC #G18006 5.50 08/01/2019 329,269
138,676 FHLMC #J02089 5.50 06/01/2020 139,517
125,497 FHLMC #J02372 5.50 05/01/2020 126,291
125,688 FHLMC #J02373 5.50 05/01/2020 126,485
189,000 FHLMC SERIES 2631 CLASS MT 3.50 01/15/2022 185,183
244,000 FHLMC SERIES 2645 CLASS MK 3.50 07/15/2022 238,350
304,352 FHLMC SERIES 2692 CLASS YB 3.50 05/15/2016 298,062
550,348 FHLMC SERIES 2731 CLASS PK 3.50 05/15/2026 537,107
631,689 FHLMC SERIES 2736 CLASS DB 3.30 11/15/2026 608,508
376,714 FHLMC SERIES 2890 CLASS AP 3.75 12/15/2011 367,679
384,278 FHLMC SERIES 2893 CLASS PA 4.00 04/15/2025 377,236
333,006 FHLMC SERIES 2948 CLASS YD 5.50 08/15/2033 334,405
1,185,189 FHLMC SERIES 2953 CLASS LD 5.00 12/15/2034 1,156,573
139,595 FHLMC SERIES 2957 CLASS KJ 4.50 10/15/2024 138,085
85,920 FHLMC SERIES 2960 CLASS EH 4.50 05/15/2024 85,071
764,422 FHLMC SERIES 2961 CLASS PB 5.50 07/15/2028 769,213
428,477 FHLMC SERIES 2963 CLASS WL 4.50 07/15/2025 423,778
366,287 FHLMC SERIES 2966 CLASS NW 5.00 08/15/2025 365,423
136,713 FHLMC SERIES 2971 CLASS PE 4.50 03/15/2026 135,146
880,281 FHLMC SERIES 2975 CLASS OL 4.50 06/15/2026 870,176
747,805 FHLMC SERIES 2982 CLASS LC 4.50 01/15/2025 739,359
403,000 FHLMC SERIES 2989 CLASS TG 5.00 06/15/2025 385,258
85
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
FHLMC (CONTINUED)
$ 81,000 FHLMC SERIES 2992 CLASS OG 5.50% 06/15/2033 $ 79,877
215,000 FHLMC SERIES 3019 CLASS VQ 5.00 05/15/2022 205,396
381,636 FHLMC SERIES 3035 CLASS DM 5.50 11/15/2025 384,789
117,000 FHLMC SERIES 3036 CLASS NC 5.00 03/15/2031 114,418
90,000 FHLMC SERIES 3044 CLASS LJ 5.50 03/15/2035 89,223
527,000 FHLMC SERIES 3044 CLASS MD 5.50 02/15/2035 521,577
188,000 FHLMC SERIES 3056 CLASS DP 5.50 01/15/2035 186,063
277,000 FHLMC SERIES 3057 CLASS PE 5.50 11/15/2034 274,146
566,436 FHLMC SERIES 3059 CLASS CA 5.00 03/15/2025 565,317
312,000 FHLMC SERIES 3067 CLASS YE 5.50 10/15/2034 308,750
586,000 FHLMC SERIES 3075 CLASS PD 5.50 01/15/2035 579,908
308,000 FHLMC SERIES 3078 CLASS PD 5.50 07/15/2034 305,186
575,000 FHLMC SERIES 3081 CLASS CM 5.50 02/15/2030 579,220
977,000 FHLMC SERIES 3089 CLASS LP 5.50 12/15/2029 983,504
9,365,000 FHLMC TBA%% 6.00 02/01/2036 9,444,022
34,848,452
-------------
TOTAL AGENCY SECURITIES (COST $48,302,608) 48,037,722
-------------
US TREASURY SECURITIES - 16.35%
US TREASURY BONDS - 6.04%
181,000 US TREASURY BOND<< 4.13 05/15/2015 177,034
734,000 US TREASURY BOND<< 7.13 02/15/2023 949,498
1,598,000 US TREASURY BOND<< 6.25 08/15/2023 1,908,238
1,192,000 US TREASURY BOND<< 6.00 02/15/2026 1,405,629
529,000 US TREASURY BOND<< 6.25 05/15/2030 656,993
58,000 US TREASURY BOND<< 5.38 02/15/2031 65,150
5,162,542
-------------
US TREASURY NOTES - 10.31%
948,000 US TREASURY NOTE<< 4.00 09/30/2007 941,408
402,000 US TREASURY NOTE<< 4.25 10/31/2007 400,822
217,000 US TREASURY NOTE<< 4.25 11/30/2007 216,364
461,000 US TREASURY NOTE<< 4.13 08/15/2010 456,462
2,083,000 US TREASURY NOTE<< 4.50 11/15/2010 2,094,229
1,417,000 US TREASURY NOTE<< 4.38 12/15/2010 1,418,107
384,000 US TREASURY NOTE<< 4.25 11/15/2014 379,530
523,000 US TREASURY NOTE<< 4.00 02/15/2015 507,065
457,000 US TREASURY NOTE<< 4.25 08/15/2015 451,091
1,925,000 US TREASURY NOTE<< 4.50 11/15/2015 1,940,791
8,805,869
-------------
TOTAL US TREASURY SECURITIES (COST $13,842,522) 13,968,411
-------------
86
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
REPURCHASE AGREEMENTS - 3.12%
$ 2,664,000 GREENWICH CAPITAL MARKETS INCORPORATED - 102% COLLATERALIZED BY
US GOVERNMENT SECURITIES (MATURITY VALUE $2,665,273) 4.30% 01/03/2006 $ 2,664,000
TOTAL REPURCHASE AGREEMENTS (COST $2,664,000) 2,664,000
--------------
COLLATERAL FOR SECURITIES LENDING - 19.15%
SHARES
COLLATERAL INVESTED IN MONEY MARKET FUNDS - 1.25%
325,346 SCUDDER DAILY ASSETS MONEY MARKET FUND 325,346
739,717 SHORT TERM INVESTMENT COMPANY MONEY MARKET FUND 739,717
1,065,063
--------------
PRINCIPAL
COLLATERAL INVESTED IN OTHER ASSETS - 17.90%
4,500,000 BEAR STEARNS INTERNATIONAL REPURCHASE AGREEMENT (MATURITY VALUE 4.30 01/03/2006 4,500,000
$4,502,150)
10,800,000 MORGAN STANLEY REPURCHASE AGREEMENT (MATURITY VALUE $10,805,100) 4.25 01/03/2006 10,800,000
15,300,000
--------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $16,365,063) 16,365,063
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $112,321,738)* 131.01% $ 111,937,292
------ --------------
OTHER ASSETS AND LIABILITIES, NET (31.01) (26,492,772)
------
TOTAL NET ASSETS 100.00% $ 85,444,520
====== --------------
+/- VARIABLE RATE INVESTMENTS.
<< ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2)
++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER
RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE
SECURITIES ACT OF 1933, AS AMENDED.
@ FOREIGN BOND PRINCIPAL IS DENOMINATED IN US DOLLARS EXCEPT AS INDICATED
PARENTHETICALLY.
%% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2)
* COST FOR FEDERAL INCOME TAX PURPOSES IS $112,457,205 AND NET UNREALIZED
APPRECIATION (DEPRECIATION) CONSISTS OF:
GROSS UNREALIZED APPRECIATION $ 276,073
GROSS UNREALIZED DEPRECIATION (795,986)
---------
NET UNREALIZED APPRECIATION (DEPRECIATION) $(519,913)
PRINCIPAL DESCRIPTION
SCHEDULE OF TBA SALE COMMITMENTS - (1.03%)
$ (661,000) FHLMC TBA%% 5.00 02/01/2036 (639,311)
(255,000) FNMA TBA%% 4.50 02/01/2036 (240,019)
TOTAL TBA SALE COMMITMENTS (TOTAL PROCEEDS $(881,286)) (879,330)
--------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
87
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION C&B LARGE CAP DISCOVERY
FUND VALUE FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE .............................................. $ 290,289,117 $ 27,285,419 $ 243,984,059
COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 117,406,416 0 16,013,944
INVESTMENTS IN AFFILIATES ................................................... 17,952,550 1,359,850 2,349,788
REPURCHASE AGREEMENTS ....................................................... 0 0 0
---------------- ------------- -------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................. 425,648,083 28,645,269 262,347,791
---------------- ------------- -------------
CASH ........................................................................ 50,000 50,000 0
RECEIVABLE FOR FUND SHARES ISSUED ........................................... 72,373 25,366 87,448
RECEIVABLE FOR INVESTMENTS SOLD ............................................. 204,617 0 4,566,498
RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 1,957,810 46,286 39,281
---------------- ------------- -------------
TOTAL ASSETS ................................................................... 427,932,883 28,766,921 267,041,018
---------------- ------------- -------------
LIABILITIES
OPTION WRITTEN, AT VALUE .................................................... 0 0 0
PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 199,225 0 0
PAYABLE FOR FUND SHARES REDEEMED ............................................ 146,774 57,481 192,953
PAYABLE FOR INVESTMENTS PURCHASED ........................................... 220,273 0 194,660
DIVIDENDS PAYABLE ........................................................... 313 0 0
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 165,438 16,422 234,207
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT ..................... 70,382 6,045 56,551
PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 117,406,416 0 16,013,944
ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 50,893 23,217 73,618
---------------- ------------- -------------
TOTAL LIABILITIES .............................................................. 118,259,714 103,165 16,765,933
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 309,673,169 $ 28,663,756 $ 250,275,085
================ ============= =============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................................................. $ 305,482,855 $ 32,204,621 $ 454,060,142
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 55,079 0 0
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (6,235,787) (4,319,008) (230,952,912)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ....................................................... 12,930,921 778,143 27,167,855
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... (2,559,899) 0 0
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS,
AND SHORT SALES .......................................................... 0 0 0
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 309,673,169 $ 28,663,756 $ 250,275,085
---------------- ------------- -------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS .................................................................. $ 309,673,169 $ 28,663,756 $ 250,275,085
SHARES OUTSTANDING .......................................................... 23,733,068 3,067,915 17,458,929
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................................ $ 13.05 $ 9.34 $ 14.34
---------------- ------------- -------------
INVESTMENTS AT COST ............................................................ $ 412,717,162 $ 27,867,126 $ 235,179,936
================ ============= =============
SECURITIES ON LOAN, AT MARKET VALUE (NOTE 2) ................................... $ 115,865,645 $ 0 $ 15,181,937
================ ============= =============
PREMIUMS RECEIVED ON WRITTEN OPTIONS (NOTE 2) .................................. $ 0 $ 0 $ 0
================ ============= =============
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
88
STATEMENTS OF ASSETS AND LIABILITIES -- DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
EQUITY INCOME INTERNATIONAL LARGE COMPANY
FUND CORE FUND CORE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE .............................................. $ 113,372,756 $ 39,062,301 $ 27,969,097
COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 0 0 0
INVESTMENTS IN AFFILIATES ................................................... 1,271,141 610,646 402,054
REPURCHASE AGREEMENTS ....................................................... 0 0 0
---------------- ------------- -------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................. 114,643,897 39,672,947 28,371,151
---------------- ------------- -------------
CASH ........................................................................ 50,000 50,000 50,000
RECEIVABLE FOR FUND SHARES ISSUED ........................................... 22,344 15,090 0
RECEIVABLE FOR INVESTMENTS SOLD ............................................. 0 0 354,233
RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 165,591 54,589 23,628
---------------- ------------- -------------
TOTAL ASSETS ................................................................... 114,881,832 39,792,626 28,799,012
---------------- ------------- -------------
LIABILITIES
OPTION WRITTEN, AT VALUE .................................................... 0 0 0
PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 0 0 0
PAYABLE FOR FUND SHARES REDEEMED ............................................ 378,301 127,190 67,503
PAYABLE FOR INVESTMENTS PURCHASED ........................................... 0 0 224,075
DIVIDENDS PAYABLE ........................................................... 0 0 0
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 71,602 30,932 16,142
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT ..................... 25,909 8,293 5,942
PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 0 0 0
ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 30,858 24,613 24,933
---------------- ------------- -------------
TOTAL LIABILITIES .............................................................. 506,670 191,028 338,595
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 114,375,162 $ 39,601,598 $ 28,460,417
================ ============= =============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................................................. $ 97,409,284 $ 32,770,271 $ 45,200,457
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 5,458 0 2,409
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... 168,238 1,571,644 (16,334,835)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ....................................................... 16,792,182 5,259,683 (407,614)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... 0 0 0
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS,
AND SHORT SALES .......................................................... 0 0 0
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 114,375,162 $ 39,601,598 $ 28,460,417
---------------- ------------- -------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS .................................................................. $ 114,375,162 $ 39,601,598 $ 28,460,417
SHARES OUTSTANDING .......................................................... 6,745,708 4,573,281 2,095,078
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................................ $ 16.96 $ 8.66 $ 13.58
---------------- ------------- -------------
INVESTMENTS AT COST ............................................................ $ 97,851,715 $ 34,411,498 $ 28,778,765
================ ============= =============
SECURITIES ON LOAN, AT MARKET VALUE (NOTE 2) ................................... $ 0 $ 0 $ 0
================ ============= =============
PREMIUMS RECEIVED ON WRITTEN OPTIONS (NOTE 2) .................................. $ 0 $ 0 $ 0
================ ============= =============
LARGE COMPANY MONEY MARKET MULTI CAP
GROWTH FUND FUND VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE .............................................. $ 112,665,082 $ 36,159,667 $ 23,845,309
COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 0 0 0
INVESTMENTS IN AFFILIATES ................................................... 4,445,999 0 65,324
REPURCHASE AGREEMENTS ....................................................... 0 19,306,443 0
---------------- ------------- -------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................. 117,111,081 55,466,110 23,910,633
---------------- ------------- -------------
CASH ........................................................................ 50,000 50,000 0
RECEIVABLE FOR FUND SHARES ISSUED ........................................... 106,374 0 1,362
RECEIVABLE FOR INVESTMENTS SOLD ............................................. 0 0 180,093
RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 40,770 86,059 22,195
---------------- ------------- -------------
TOTAL ASSETS ................................................................... 117,308,225 55,602,169 24,114,283
---------------- ------------- -------------
LIABILITIES
OPTION WRITTEN, AT VALUE .................................................... 0 0 64,450
PAYABLE FOR DAILY VARIATION MARGIN ON FUTURES CONTRACTS ..................... 0 0 0
PAYABLE FOR FUND SHARES REDEEMED ............................................ 46,871 0 41,342
PAYABLE FOR INVESTMENTS PURCHASED ........................................... 1,129,823 0 66,182
DIVIDENDS PAYABLE ........................................................... 0 10,713 0
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 74,622 20,618 21,888
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT ..................... 26,067 12,290 4,850
PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 0 0 0
ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 28,082 54,930 26,949
---------------- ------------- -------------
TOTAL LIABILITIES .............................................................. 1,305,465 98,551 225,661
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 116,002,760 $ 55,503,618 $ 23,888,622
================ ============= =============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................................................. $ 138,539,667 $ 55,502,257 $ 18,061,513
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 0 306 (145,049)
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... (28,460,777) 1,055 2,940,629
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ....................................................... 5,923,870 0 3,058,205
NET UNREALIZED APPRECIATION (DEPRECIATION) OF FUTURES ....................... 0 0 0
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS,
AND SHORT SALES .......................................................... 0 0 (26,676)
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 116,002,760 $ 55,503,618 $ 23,888,622
---------------- ------------- -------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS .................................................................. $ 116,002,760 $ 55,503,618 $ 23,888,622
SHARES OUTSTANDING .......................................................... 12,380,073 55,505,115 1,748,238
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................................ $ 9.37 $ 1.00 $ 13.66
---------------- ------------- -------------
INVESTMENTS AT COST ............................................................ $ 111,187,211 $ 55,466,110 $ 20,852,335
================ ============= =============
SECURITIES ON LOAN, AT MARKET VALUE (NOTE 2) ................................... $ 0 $ 0 $ 0
================ ============= =============
PREMIUMS RECEIVED ON WRITTEN OPTIONS (NOTE 2) .................................. $ 0 $ 0 $ 37,774
================ ============= =============
89
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- DECEMBER 31, 2005
- --------------------------------------------------------------------------------
OPPORTUNITY SMALL CAP TOTAL RETURN
FUND GROWTH FUND BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
IN SECURITIES, AT MARKET VALUE .............................................. $ 900,014,798 $ 166,654,794 $ 92,908,229
COLLATERAL FOR SECURITIES LOANED (NOTE 2) ................................... 6,507,449 37,310,420 16,365,063
INVESTMENTS IN AFFILIATES ................................................... 110,405,501 1,279,062 0
REPURCHASE AGREEMENTS ....................................................... 0 0 2,664,000
---------------- ------------- -------------
TOTAL INVESTMENTS AT MARKET VALUE (SEE COST BELOW) ............................. 1,016,927,748 205,244,276 111,937,292
---------------- ------------- -------------
CASH ........................................................................ 3,994 50,000 64,229
RECEIVABLE FOR FUND SHARES ISSUED ........................................... 229,893 33,381 41,249
RECEIVABLE FOR INVESTMENTS SOLD ............................................. 11,335,525 996,913 29,867,818
RECEIVABLES FOR DIVIDENDS AND INTEREST ...................................... 1,086,331 13,960 697,585
---------------- ------------- -------------
TOTAL ASSETS ................................................................... 1,029,583,491 206,338,530 142,608,173
---------------- ------------- -------------
LIABILITIES
OPTION WRITTEN, AT VALUE .................................................... 698,450 0 0
TBA SALE COMMITMENTS, AT VALUE .............................................. 0 0 879,330
PAYABLE FOR FUND SHARES REDEEMED ............................................ 480,819 35,856 32,091
PAYABLE FOR INVESTMENTS PURCHASED ........................................... 15,726,191 1,743,539 39,783,642
DIVIDENDS PAYABLE ........................................................... 0 0 17,608
PAYABLE TO INVESTMENT ADVISOR AND AFFILIATES (NOTE 3) ....................... 713,979 141,639 45,187
PAYABLE TO THE TRUSTEES AND SHAREHOLDER SERVICING AGENT ..................... 229,424 38,021 18,583
PAYABLE FOR EQUITY SWAPS .................................................... 147,489 0 0
PAYABLE FOR SECURITIES LOANED (NOTE 2) ...................................... 6,507,449 37,310,420 16,365,063
ACCRUED EXPENSES AND OTHER LIABILITIES ...................................... 316,344 36,034 22,149
---------------- ------------- -------------
TOTAL LIABILITIES .............................................................. 24,820,145 39,305,509 57,163,653
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 1,004,763,346 $ 167,033,021 $ 85,444,520
================ ============= =============
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL ............................................................. $ 702,763,062 $ 148,637,534 $ 86,896,409
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................. 149,220 0 4,629
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS ....................... 99,282,654 3,041,015 (1,074,028)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS, FOREIGN
CURRENCIES AND TRANSLATION OF ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES ....................................................... 202,566,392 15,354,472 (384,446)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF OPTIONS, SWAP AGREEMENTS,
AND SHORT SALES .......................................................... 2,018 0 1,956
---------------- ------------- -------------
TOTAL NET ASSETS ............................................................... $ 1,004,763,346 $ 167,033,021 $ 85,444,520
---------------- ------------- -------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE(1)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS .................................................................. $ 1,004,763,346 $ 167,033,021 $ 85,444,520
SHARES OUTSTANDING .......................................................... 41,486,282 20,029,847 8,668,052
NET ASSET VALUE AND OFFERING PRICE PER SHARE ................................ $ 24.22 $ 8.34 $ 9.86
---------------- ------------- -------------
INVESTMENTS AT COST ............................................................ $ 814,356,318 $ 189,889,804 $ 112,321,738
================ ============= =============
SECURITIES ON LOAN, AT MARKET VALUE (NOTE 2) ................................... $ 6,195,573 $ 35,540,611 $ 16,020,858
================ ============= =============
PROCEEDS FOR TBA SALE COMMITMENTS (NOTE 2) ..................................... $ 0 $ 0 $ 881,286
================ ============= =============
PREMIUMS RECEIVED ON WRITTEN OPTIONS (NOTE 2) ................................. $ 847,957 $ 0 $ 0
================ ============= =============
(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
90
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2005
- --------------------------------------------------------------------------------
ASSET ALLOCATION C&B LARGE CAP DISCOVERY
FUND VALUE FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ....................................................... $ 3,311,027 $ 471,433 $ 727,677
INTEREST ........................................................... 5,799,111 143 13,613
INCOME FROM AFFILIATED SECURITIES .................................. 454,486 41,323 107,166
SECURITIES LENDING INCOME, NET ..................................... 133,787 766 14,154
---------------- ------------- ------------
TOTAL INVESTMENT INCOME ............................................... 9,698,411 513,665 862,610
---------------- ------------- ------------
EXPENSES
ADVISORY FEES ...................................................... 1,740,779 160,223 1,620,255
ADMINISTRATION FEES ................................................ 506,408 46,610 328,299
CUSTODY FEES ....................................................... 63,301 5,826 39,715
ACCOUNTING FEES .................................................... 35,736 21,448 40,468
DISTRIBUTION FEES (NOTE 3) ......................................... 791,263 72,828 456,980
PROFESSIONAL FEES .................................................. 25,834 17,305 24,335
REGISTRATION FEES .................................................. 3,584 113 1,440
SHAREHOLDER REPORTS ................................................ 57,309 6,568 35,483
TRUSTEES' FEES ..................................................... 6,838 7,076 4,943
OTHER FEES AND EXPENSES ............................................ 57,350 1,584 23,360
---------------- ------------- ------------
TOTAL EXPENSES ........................................................ 3,288,402 339,581 2,575,278
---------------- ------------- ------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ....................... (123,330) (48,267) (153,659)
NET EXPENSES ....................................................... 3,165,072 291,314 2,421,619
---------------- ------------- ------------
NET INVESTMENT INCOME (LOSS) .......................................... 6,533,339 222,351 (1,559,009)
---------------- ------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... 908,759 4,250,051 26,101,116
FUTURES TRANSACTIONS ............................................... 2,729,051 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 0 0 0
AFFILIATED SECURITIES .............................................. 65,956 0 0
---------------- ------------- ------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ............................. 3,703,766 4,250,051 26,101,116
---------------- ------------- ------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- -------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... 8,595,908 (3,584,156) 6,142,490
FUTURES TRANSACTIONS ............................................... (3,770,176) 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 0 0 0
---------------- ------------- ------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... 4,825,732 (3,584,156) 6,142,490
================ ============= ============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ 8,529,498 665,895 32,243,606
---------------- ------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... 15,062,837 888,246 30,684,597
================ ============= ============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............................ $ 0 $ 5,963 $ 4,421
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
92
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2005
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
EQUITY INCOME INTERNATIONAL LARGE COMPANY
FUND CORE FUND CORE FUND
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ....................................................... $ 2,832,859 $ 946,183 $ 453,994
INTEREST ........................................................... 84 0 933
INCOME FROM AFFILIATED SECURITIES .................................. 27,314 36,039 20,750
SECURITIES LENDING INCOME, NET ..................................... 1,950 0 1,936
---------------- ------------- -------------
TOTAL INVESTMENT INCOME ............................................... 2,862,207 982,222 477,613
---------------- ------------- -------------
EXPENSES
ADVISORY FEES ...................................................... 648,990 281,825 176,466
ADMINISTRATION FEES ................................................ 188,797 60,123 51,335
CUSTODY FEES ....................................................... 23,600 37,577 6,417
ACCOUNTING FEES .................................................... 25,865 40,862 21,602
DISTRIBUTION FEES (NOTE 3) ......................................... 294,995 93,942 80,212
PROFESSIONAL FEES .................................................. 21,597 7,051 18,353
REGISTRATION FEES .................................................. 415 133 250
SHAREHOLDER REPORTS ................................................ 19,087 2,000 215
TRUSTEES' FEES ..................................................... 6,832 5,137 7,088
OTHER FEES AND EXPENSES ............................................ 7,722 706 483
---------------- ------------- -------------
TOTAL EXPENSES ........................................................ 1,237,900 529,356 362,421
---------------- ------------- -------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ....................... (57,920) (153,588) (41,575)
NET EXPENSES ....................................................... 1,179,981 375,768 320,846
---------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) .......................................... 1,682,226 606,454 156,767
---------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... 5,822,817 1,709,193 6,924,173
FUTURES TRANSACTIONS ............................................... 0 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 0 0 0
AFFILIATED SECURITIES .............................................. 0 0 0
---------------- ------------- -------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ............................. 5,822,817 1,709,193 6,924,173
---------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- --------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... (1,474,612) 1,290,570 (8,137,614)
FUTURES TRANSACTIONS ............................................... 0 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 0 0 0
---------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... (1,474,612) 1,290,570 (8,137,614)
================ ============= =============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ 4,348,205 2,999,763 (1,213,441)
---------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... 6,030,431 3,606,217 (1,056,674)
================ ============= =============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............................ $ 10,547 $ 100,821 $ 4,650
LARGE COMPANY MONEY MARKET MULTI CAP
GROWTH FUND FUND VALUE FUND
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ....................................................... $ 752,041 $ 0 $ 150,449
INTEREST ........................................................... 0 1,871,082 1,547
INCOME FROM AFFILIATED SECURITIES .................................. 71,710 0 5,984
SECURITIES LENDING INCOME, NET ..................................... 6,301 0 0
---------------- ------------- -------------
TOTAL INVESTMENT INCOME ............................................... 830,052 1,871,082 157,980
---------------- ------------- -------------
EXPENSES
ADVISORY FEES ...................................................... 580,928 171,018 181,113
ADMINISTRATION FEES ................................................ 168,997 91,210 64,515
CUSTODY FEES ....................................................... 21,125 11,401 12,240
ACCOUNTING FEES .................................................... 25,232 22,829 15,814
DISTRIBUTION FEES (NOTE 3) ......................................... 264,058 142,515 42,981
PROFESSIONAL FEES .................................................. 18,109 17,720 18,567
REGISTRATION FEES .................................................. 427 192 179
SHAREHOLDER REPORTS ................................................ 22,028 46 6,840
TRUSTEES' FEES ..................................................... 6,832 6,838 3,604
OTHER FEES AND EXPENSES ............................................ 2,158 5,625 9,769
---------------- ------------- -------------
TOTAL EXPENSES 1,109,894 469,394 355,622
---------------- ------------- -------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ....................... (53,661) (41,851) (79,481)
NET EXPENSES ....................................................... 1,056,233 427,543 276,141
---------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) .......................................... (226,181) 1,443,539 (118,161)
---------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... (1,564,512) 1,859 5,750,272
FUTURES TRANSACTIONS ............................................... 0 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 0 0 (28,709)
AFFILIATED SECURITIES .............................................. 0 0 0
---------------- ------------- -------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ............................. (1,564,512) 1,859 5,721,563
---------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- --------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... 7,873,544 0 (2,070,163)
FUTURES TRANSACTIONS ............................................... 0 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 0 0 (13,188)
---------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... 7,873,544 0 (2,083,351)
================ ============= =============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ 6,309,032 1,859 3,638,212
---------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... 6,082,851 1,445,397 3,520,051
================ ============= =============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............................ $ 14,287 $ 0 $ 10,131
93
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 2005
- --------------------------------------------------------------------------------
OPPORTUNITY SMALL CAP TOTAL RETURN
FUND GROWTH FUND BOND FUND
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
DIVIDENDS(1) ....................................................... $ 8,182,054 $ 205,942 $ 0
INTEREST ........................................................... 584,341 108 3,605,529
INCOME FROM AFFILIATED SECURITIES .................................. 1,690,770 44,601 0
SECURITIES LENDING INCOME, NET ..................................... 16,575 105,786 29,535
---------------- ------------- -------------
TOTAL INVESTMENT INCOME ............................................... 10,473,740 356,437 3,635,064
---------------- ------------- -------------
EXPENSES
ADVISORY FEES ...................................................... 7,575,059 1,248,106 365,352
ADMINISTRATION FEES ................................................ 3,073,168 266,262 129,903
CUSTODY FEES ....................................................... 163,548 33,283 16,238
ACCOUNTING FEES .................................................... 77,390 28,275 24,023
DISTRIBUTION FEES (NOTE 3) ......................................... 1,927,255 416,036 202,973
PROFESSIONAL FEES ..................................................... 58,685 20,575 18,235
REGISTRATION FEES .................................................. 3,872 573 279
SHAREHOLDER REPORTS ................................................ 126,666 39,989 12,265
TRUSTEES' FEES ..................................................... 50,913 7,217 7,217
OTHER FEES AND EXPENSES ............................................ 228,510 3,150 2,388
---------------- ------------- -------------
TOTAL EXPENSES ........................................................ 13,285,066 2,063,466 778,873
---------------- ------------- -------------
LESS:
WAIVED FEES AND REIMBURSED EXPENSES (NOTE 3) ....................... (2,171,105) (66,297) (47,696)
NET EXPENSES ....................................................... 11,113,961 1,997,169 731,177
---------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) .......................................... (640,221) (1,640,732) 2,903,887
---------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) FROM:
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... 132,757,447 19,948,736 (724,565)
FUTURES TRANSACTIONS ............................................... 588,466 0 0
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... 394,315 0 0
---------------- ------------- -------------
NET REALIZED GAIN (LOSS) FROM INVESTMENTS ............................. 133,740,228 19,948,736 (724,565)
---------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF:
- --------------------------------------------------------------------------------------------------------------------------
SECURITIES, FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION .... (57,969,555) (8,933,160) (683,408)
OPTIONS, SWAP AGREEMENTS AND SHORT SALE TRANSACTIONS ............... (194,752) 0 1,956
---------------- ------------- -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS ... (58,164,307) (8,933,160) (681,452)
================ ============= =============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ 75,575,921 11,015,576 (1,406,017)
---------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... 74,935,700 9,374,845 1,497,870
================ ============= =============
(1) NET OF FOREIGN WITHHOLDING TAXES OF ............................ $ 122,981 $ 0 $ 0
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
94
THIS PAGE IS INTENTIONALLY LEFT BLANK --
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
-------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................................... $326,373,676 $290,722,925
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................................... 6,533,339 6,404,091
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................ 3,703,766 6,471,231
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................... 4,825,732 14,932,837
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........................... 15,062,837 27,808,159
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................................. (6,511,857) (6,364,542)
NET REALIZED GAIN ON SALES OF INVESTMENTS .............................................. (6,949,202) (9,827,535)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................................... (13,461,059) (16,192,077)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .............................................................. 23,187,871 49,510,435
REINVESTMENT OF DISTRIBUTIONS .......................................................... 13,460,744 16,192,078
COST OF SHARES REDEEMED ................................................................ (54,950,900) (41,667,844)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS
- TOTAL ................................................................................ (18,302,285) 24,034,669
============ ============
NET INCREASE (DECREASE) IN NET ASSETS ..................................................... (16,700,507) 35,650,751
============ ============
ENDING NET ASSETS ......................................................................... $309,673,169 $326,373,676
------------ ------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD ............................................................................ 1,801,649 3,942,726
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ......................................... 1,042,132 1,327,761
SHARES REDEEMED ........................................................................ (4,264,928) (3,346,735)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS ........................................................................... (1,421,147) 1,923,752
============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .............................. $ 55,079 $ 28,873
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
96
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND DISCOVERY FUND
------------------------------------ -------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2005 DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................. $ 30,286,684 $29,481,977 $ 93,047,848 $ 94,114,959
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................... 222,351 475,449 (1,559,009) (825,807)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........... 4,250,051 (216,943) 26,101,116 13,028,691
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .................. (3,584,156) 2,874,230 6,142,490 651,584
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ......................... 888,246 3,132,736 30,684,597 12,854,468
------------ ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME ............................. (226,321) (477,934) 0 0
NET REALIZED GAIN ON SALES OF INVESTMENTS ......... 0 0 (8,101,469) 0
------------ ----------- ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................. (226,321) (477,934) (8,101,469) 0
------------ ----------- ------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD ......................... 7,527,983 5,754,662 179,537,035 4,918,232
REINVESTMENT OF DISTRIBUTIONS ..................... 226,321 477,935 8,101,469 0
COST OF SHARES REDEEMED ........................... (10,039,157) (8,082,692) (52,994,395) (18,839,811)
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - TOTAL ................ (2,284,853) (1,850,095) 134,644,109 (13,921,579)
============ =========== ============ ============
NET INCREASE (DECREASE) IN NET ASSETS ................ (1,622,928) 804,707 157,227,237 (1,067,111)
============ =========== ============ ============
ENDING NET ASSETS .................................... $ 28,663,756 $30,286,684 $250,275,085 $ 93,047,848
------------ ----------- ------------ ------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD ....................................... 813,392 670,341 14,406,806 369,685
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS .... 24,483 55,042 650,199 0
SHARES REDEEMED ................................... (1,088,473) (941,885) (3,948,021) (1,455,984)
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS ......... (250,598) (216,502) 11,108,984 (1,086,299)
============ =========== ============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ..................................... $ 0 $ 0 $ 0 $ 0
============ =========== ============ ============
EQUITY INCOME FUND
------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................................... $120,138,117 $103,157,429
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................................... 1,682,226 1,776,962
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................ 5,822,817 (902,225)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................... (1,474,612) 11,028,303
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........................... 6,030,431 11,903,040
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................................. (1,696,104) (1,768,654)
NET REALIZED GAIN ON SALES OF INVESTMENTS .............................................. 0 0
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................................... (1,696,104) (1,768,654)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .............................................................. 18,396,659 35,692,523
REINVESTMENT OF DISTRIBUTIONS .......................................................... 1,696,104 1,768,654
COST OF SHARES REDEEMED ................................................................ (30,190,045) (30,614,875)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - TOTAL ................................................................... (10,097,282) 6,846,302
============ ============
NET INCREASE (DECREASE) IN NET ASSETS ..................................................... (5,762,955) 16,980,688
============ ============
ENDING NET ASSETS ......................................................................... $114,375,162 $120,138,117
------------ ------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD ............................................................................ 1,111,888 2,331,831
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ......................................... 102,059 113,755
SHARES REDEEMED ........................................................................ (1,823,349) (1,999,068)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... (609,402) 446,518
============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .............................. $ 5,458 $ 8,308
============ ============
97
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND
------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................................... $ 35,071,405 $ 22,033,435
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................................... 606,454 243,778
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................ 1,709,193 2,578,909
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................... 1,290,570 216,367
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........................... 3,606,217 3,039,054
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................................. (741,605) (62,505)
NET REALIZED GAIN ON SALES OF INVESTMENTS (1,020,677) 0
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................................... (1,762,282) (62,505)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .............................................................. 16,592,049 18,660,921
REINVESTMENT OF DISTRIBUTIONS .......................................................... 1,762,282 62,505
COST OF SHARES REDEEMED ................................................................ (15,668,073) (8,662,005)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - TOTAL ... 2,686,258 10,061,421
============ ============
NET INCREASE (DECREASE) IN NET ASSETS ..................................................... 4,530,193 13,037,970
============ ============
ENDING NET ASSETS ......................................................................... $ 39,601,598 $ 35,071,405
------------ ------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD ............................................................................ 2,001,352 2,463,069
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ......................................... 212,671 8,413
SHARES REDEEMED ........................................................................ (1,882,902) (1,142,373)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... 331,121 1,329,109
============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .............................. $ 0 $ 131,647
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
98
STATEMENTS OF CHANGES IN NET ASSETS
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND LARGE COMPANY GROWTH FUND
------------------------------------ -------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2005 DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS .............................. $38,054,560 $43,383,784 $107,228,921 $ 96,801,871
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ...................... 156,767 (14,553) (226,181) 186,876
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........... 6,924,173 1,475,808 (1,564,512) (1,770,467)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS ................... (8,137,614) 1,593,757 7,873,544 5,003,680
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ........................................ (1,056,674) 3,055,012 6,082,851 3,420,089
------------ ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME ............................. (162,985) 0 (186,924) 0
NET REALIZED GAIN ON SALES OF INVESTMENTS ......... 0 0 0 0
------------ ----------- ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................. (162,985) 0 (186,924) 0
------------ ----------- ------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD ......................... 906,354 1,475,372 23,235,887 24,127,276
REINVESTMENT OF DISTRIBUTIONS ..................... 162,985 0 186,924 0
COST OF SHARES REDEEMED ........................... (9,443,823) (9,859,608) (20,544,899) (17,120,315)
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS - TOTAL ................ (8,374,484) (8,384,236) 2,877,912 7,006,961
============ =========== ============ ============
NET INCREASE (DECREASE) IN NET ASSETS ................ (9,594,143) (5,329,224) 8,773,839 10,427,050
============ =========== ============ ============
ENDING NET ASSETS .................................... $28,460,417 $38,054,560 $116,002,760 $107,228,921
------------ ----------- ------------ ------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD ....................................... 68,314 113,513 2,639,508 2,851,399
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS .... 11,923 0 20,631 0
SHARES REDEEMED ................................... (708,247) (756,914) (2,353,988) (2,038,011)
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS ......... (628,010) (643,401) 306,151 813,388
============ =========== ============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME
(LOSS) ............................................ $ 2,409 $ 0 $ 0 $ 186,876
============ =========== ============ ============
MONEY MARKET FUND
------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ................................................................... $ 58,737,611 $ 81,583,027
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ........................................................... 1,443,539 450,569
NET REALIZED GAIN (LOSS) ON INVESTMENTS ................................................ 1,859 (294)
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS .................... 0 0
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ................................................................................ 1,445,398 450,275
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME .................................................................. (1,443,538) (450,833)
NET REALIZED GAIN ON SALES OF INVESTMENTS .............................................. 0 0
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................................................... (1,443,538) (450,833)
------------ ------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .............................................................. 56,243,472 45,544,163
REINVESTMENT OF DISTRIBUTIONS .......................................................... 1,443,538 397,542
COST OF SHARES REDEEMED ................................................................ (60,922,863) (68,786,563)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS - TOTAL ... (3,235,853) (22,844,858)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ..................................................... (3,233,993) (22,845,416)
------------ ------------
ENDING NET ASSETS ......................................................................... $ 55,503,618 $ 58,737,611
------------ ------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD ............................................................................ 56,243,472 45,544,163
SHARES ISSUED IN REINVESTMENT OF DISTRIBUTIONS ......................................... 1,443,538 397,542
SHARES REDEEMED ........................................................................ (60,922,863) (68,786,563)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE TRANSACTIONS ... (3,235,851) (22,844,858)
============ ============
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .............................. $ 306 $ 1
============ ============
99
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND
-------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 25,989,364 $ 27,712,972
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. (118,161) (71,970)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... 5,721,563 1,956,468
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. (2,083,351) 1,870,955
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... 3,520,051 3,755,453
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME ........................ (96,372) 0
NET REALIZED GAIN ON SALES OF
INVESTMENTS ................................ 0 0
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............ (96,372) 0
----------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .................... 3,225,144 3,570,867
REINVESTMENT OF DISTRIBUTIONS ................ 96,372 0
COST OF SHARES REDEEMED ...................... (8,845,937) (9,049,928)
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS ................................. (5,524,421) (5,479,061)
================= =================
NET INCREASE (DECREASE) IN NET ASSETS .......... (2,100,742) (1,723,608)
================= =================
ENDING NET ASSETS .............................. $ 23,888,622 $ 25,989,364
----------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD .................................. 259,733 339,924
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS .............................. 8,245 0
SHARES REDEEMED .............................. (728,641) (880,386)
----------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (460,663) (540,462)
----------------- -----------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................ $ (145,049) $ 96,372
================= =================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
100
STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
OPPORTUNITY FUND SMALL CAP GROWTH FUND
------------------------------------- -------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2005 DECEMBER 31, 2004
- --------------------------------------------------------------------------------------- -------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 1,118,121,068 $ 1,097,612,483 $ 180,229,571 $ 138,151,323
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. (640,221) (2,524,219) (1,640,732) (1,443,430)
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... 133,740,228 149,522,359 19,948,736 14,439,078
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. (58,164,307) 33,667,988 (8,933,160) 7,792,215
----------------- ----------------- ----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... 74,935,700 180,666,128 9,374,844 20,787,863
----------------- ----------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME ........................ 0 0 0 0
NET REALIZED GAIN ON SALES OF
INVESTMENTS .................................. 0 0 0 0
----------------- ----------------- ----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............ 0 0 0 0
----------------- ----------------- ----------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .................... 46,087,654 82,236,807 9,800,839 34,146,551
REINVESTMENT OF DISTRIBUTIONS ................ 0 0 0 0
COST OF SHARES REDEEMED ...................... (234,381,076) (242,394,350) (32,372,233) (12,856,166)
----------------- ----------------- ----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS ............................... (188,293,422) (160,157,543) (22,571,394) 21,290,385
================= ================= ================= =================
NET INCREASE (DECREASE) IN NET ASSETS .......... (113,357,722) 20,508,585 (13,196,550) 42,078,248
================= ================= ================= =================
ENDING NET ASSETS .............................. $ 1,004,763,346 $ 1,118,121,068 $ 167,033,021 $ 180,229,571
----------------- ----------------- ----------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD .................................. 2,025,540 4,054,638 1,282,013 4,758,243
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS .............................. 0 0 0 0
SHARES REDEEMED .............................. (10,370,808) (12,056,023) (4,220,207) (1,824,123)
----------------- ----------------- ----------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... (8,345,268) (8,001,385) (2,938,194) 2,934,120
----------------- ----------------- ----------------- -----------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................ $ 149,220 $ 0 $ 0 $ 0
================= ================= ================= =================
TOTAL RETURN BOND FUND
-------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
- ---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS ......................... $ 76,682,692 $ 70,987,859
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ................. 2,903,887 2,452,171
NET REALIZED GAIN (LOSS) ON INVESTMENTS ...... (724,565) 224,000
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS .............. (681,452) 421,054
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... 1,497,870 3,097,225
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME ........................ (2,987,277) (2,440,669)
NET REALIZED GAIN ON SALES OF
INVESTMENTS .................................. (342,527) (4,614,905)
----------------- -----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ............ (3,329,804) (7,055,574)
----------------- -----------------
CAPITAL SHARES TRANSACTIONS:
PROCEEDS FROM SHARES SOLD .................... 30,845,348 40,374,910
REINVESTMENT OF DISTRIBUTIONS ................ 3,326,107 7,048,230
COST OF SHARES REDEEMED ...................... (23,577,693) (37,769,958)
----------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS ............................... 10,593,762 9,653,182
================= =================
NET INCREASE (DECREASE) IN NET ASSETS .......... 8,761,828 5,694,833
================= =================
ENDING NET ASSETS .............................. $ 85,444,520 $ 76,682,692
----------------- -----------------
SHARES ISSUED AND REDEEMED:
SHARES SOLD .................................. 3,090,488 3,874,408
SHARES ISSUED IN REINVESTMENT OF
DISTRIBUTIONS .............................. 333,520 699,022
SHARES REDEEMED .............................. (2,363,403) (3,625,319)
----------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING
RESULTING FROM CAPITAL SHARE TRANSACTIONS .... 1,060,605 948,111
----------------- -----------------
ENDING BALANCE OF UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) ................................ $ 4,629 $ 11,502
================= =================
101
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- ------------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 12.97 0.27 0.37 (0.27) (0.29)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 12.51 0.26 0.86 (0.26) (0.40)
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 10.41 0.18 2.10 (0.18) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 12.32 0.21 (1.78) (0.23) (0.11)
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 13.82 0.20 (1.17) (0.20) (0.33)
C&B LARGE CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 9.13 0.07 0.21 (0.07) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 8.34 0.14 0.79 (0.14) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 6.75 0.12 1.59 (0.12) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 9.02 0.10 (2.27) (0.10) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 9.70 0.06 (0.68) (0.06) 0.00
DISCOVERY FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 14.65 (0.09) 1.09 0.00 (1.31)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 12.66 (0.13) 2.12 0.00 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 9.08 (0.04) 3.62 0.00 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 10.32 (0.01) (1.23) 0.00 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 11.88 (0.02) 0.63 (0.08) (2.09)
EQUITY INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 16.33 0.24 0.63 (0.24) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 14.93 0.24 1.40 (0.24) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 12.32 0.21 2.95 (0.21) (0.34)
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 15.52 0.21 (3.19) (0.22) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 17.01 0.16 (1.09) (0.15) (0.41)
INTERNATIONAL CORE FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 8.27 0.13 0.64 (0.16) (0.22)
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 7.56 0.06 0.67 (0.02) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 5.77 0.02 1.79 (0.02) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 7.50 0.02 (1.74) (0.01) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 8.94 0.02 (1.46) 0.00 0.00
LARGE COMPANY CORE FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 13.97 0.08 (0.39) (0.08) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 12.89 0.00 1.08 0.00 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 10.43 (0.05) 2.51 0.00 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 14.08 (0.02) (3.62) (0.01) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 19.06 0.01 (3.65) 0.00 (1.34)
LARGE COMPANY GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 8.88 (0.02) 0.53 (0.02) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 8.60 0.02 0.26 0.00 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 6.81 (0.03) 1.82 0.00 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 9.46 (0.05) (2.60) 0.00 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 11.96 (0.04) (2.46) 0.00 0.00
MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 1.00 0.03 0.00 (0.03) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 1.00 0.01 0.00 (0.01) 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 1.00 0.01 0.00 (0.01) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 1.00 0.01 0.00 (0.01) 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 1.00 0.04 0.00 (0.04) 0.00
MULTI CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... $ 11.77 (0.06) 2.00 (0.05) 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... $ 10.08 (0.03) 1.72 0.00 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... $ 7.29 0.00 2.80 (0.01) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... $ 10.19 0.01 (2.36) (0.04) (0.51)
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... $ 9.79 0.04 0.36 0.00 0.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
102
FINANCIAL HIGHLIGHTS
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
NET ASSET ------------------------------------------------
RETURN VALUE PER NET INVESTMENT GROSS EXPENSES NET
OF CAPITAL SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 13.05 2.06% 1.04% (0.04)% 1.00%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 12.97 2.08% 1.02% (0.02)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 12.51 1.64% 1.02% (0.02)% 1.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 10.41 1.90% 1.02% (0.02)% 1.00%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 12.32 1.64% 1.04% (0.04)% 1.00%
C&B LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 9.34 0.76% 1.17% (0.17)% 1.00%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 9.13 1.58% 1.19% (0.19)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 8.34 1.62% 1.20% (0.20)% 1.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 6.75 1.19% 1.27% (0.27)% 1.00%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 9.02 0.55% 1.16% (0.16)% 1.00%
DISCOVERY FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 14.34 (0.76)% 1.26% (0.08)% 1.18%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 14.65 (0.92)% 1.23% (0.04)% 1.19%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 12.66 (0.36)% 1.24% (0.11)% 1.13%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 9.08 (0.12)% 1.25% (0.06)% 1.19%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 10.32 (0.20)% 1.24% (0.02)% 1.22%
EQUITY INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 16.96 1.43% 1.05% (0.05)% 1.00%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 16.33 1.59% 1.03% (0.03)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 14.93 1.59% 1.06% (0.06)% 1.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 12.32 1.46% 1.09% (0.09)% 1.00%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 15.52 1.05% 1.23% (0.23)% 1.00%
INTERNATIONAL CORE FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 8.66 1.61% 1.41% (0.41)% 1.00%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 8.27 0.87% 1.42% (0.42)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 7.56 0.69% 1.59% (0.59)% 1.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 5.77 0.71% 3.26% (2.26)% 1.00%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 7.50 0.48% 7.21% (6.21)% 1.00%
LARGE COMPANY CORE FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 13.58 0.49% 1.13% (0.13)% 1.00%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 13.97 (0.03)% 1.13% (0.13)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 12.89 (0.44)% 1.13% (0.13)% 1.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 10.43 (0.14)% 1.14% (0.14)% 1.00%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 14.08 0.08% 1.27% (0.27)% 1.00%
LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 9.37 (0.21)% 1.05% (0.05)% 1.00%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 8.88 0.18% 1.05% (0.05)% 1.00%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 8.60 (0.46)% 1.06% (0.06)% 1.00%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 6.81 (0.56)% 1.08% (0.08)% 1.00%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 9.46 (0.47)% 1.01% (0.03)% 0.98%
MONEY MARKET FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 1.00 2.53% 0.82% (0.07)% 0.75%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 1.00 0.68% 0.87% (0.12)% 0.75%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 1.00 0.51% 0.89% (0.14)% 0.75%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 1.00 1.24% 0.73% (0.01)% 0.72%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 1.00 3.46% 0.73% (0.00)% 0.73%
MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 0.00 $ 13.66 (0.49)% 1.48% (0.33)% 1.15%
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.00 $ 11.77 (0.29)% 1.49% (0.37)% 1.12%
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.00 $ 10.08 (0.07)% 1.61% (0.48)% 1.13%
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 0.00 $ 7.29 0.08% 1.42% (0.24)% 1.18%
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 0.00 $ 10.19 0.45% 1.34% (0.14)% 1.20%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE (000's OMITTED)
- -----------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 4.99% 2% $ 309,673
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 9.34% 5% $ 326,374
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 22.09% 7% $ 290,723
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (12.85)% 16% $ 212,574
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... (6.96)% 25% $ 255,938
C&B LARGE CAP VALUE FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 3.11% 106% $ 28,664
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 11.22% 16% $ 30,287
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 25.57% 20% $ 29,482
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (24.09)% 98% $ 25,124
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... (6.39)% 107% $ 38,721
DISCOVERY FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 8.27% 144% $ 250,275
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 15.72% 168% $ 93,048
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 39.43% 293% $ 94,115
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (12.02)% 417% $ 84,761
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 4.08% 503% $ 121,495
EQUITY INCOME FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 5.38% 23% $ 114,375
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 11.08% 13% $ 120,138
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 26.21% 15% $ 103,157
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (19.26)% 16% $ 78,400
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... (5.41)% 5% $ 106,199
INTERNATIONAL CORE FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 9.67% 53% $ 39,602
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 9.63% 115% $ 35,071
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 31.46% 90% $ 22,033
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (22.92)% 54% $ 9,316
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... (16.09)% 41% $ 4,946
LARGE COMPANY CORE FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... (2.24)% 112% $ 28,460
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 8.38% 45% $ 38,055
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 23.59% 58% $ 43,384
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (25.84)% 120% $ 42,644
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... (19.21)% 50% $ 73,631
LARGE COMPANY GROWTH FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 5.70% 11% $ 116,003
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 3.26% 15% $ 107,229
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 26.28% 10% $ 96,802
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (28.01)% 18% $ 69,108
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... (20.88)% 14% $ 104,888
MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 2.55% N/A $ 55,504
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 0.70% N/A $ 58,738
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 0.50% N/A $ 81,583
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... 1.25% N/A $ 96,274
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 3.73% N/A $ 105,360
MULTI CAP VALUE FUND
- -----------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 ............... 16.50% 112% $ 23,889
JANUARY 1, 2004 TO DECEMBER 31, 2004 ............... 16.77% 72% $ 25,989
JANUARY 1, 2003 TO DECEMBER 31, 2003 ............... 38.39% 71% $ 27,713
JANUARY 1, 2002 TO DECEMBER 31, 2002 ............... (23.16)% 70% $ 24,045
JANUARY 1, 2001 TO DECEMBER 31, 2001 ............... 4.12% 61% $ 33,334
103
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NET REALIZED
BEGINNING NET AND DISTRIBUTIONS DISTRIBUTIONS
NET ASSET INVESTMENT UNREALIZED FROM NET FROM NET
VALUE PER INCOME GAIN (LOSS) ON INVESTMENT REALIZED
SHARE (LOSS) INVESTMENTS INCOME GAINS
- ------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND
- ------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. $22.45 (0.02) 1.79 0.00 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. $18.99 (0.05) 3.51 0.00 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. $13.87 (0.02) 5.15 (0.01) 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. $19.45 0.01 (5.21) (0.07) (0.31)
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. $23.94 0.04 (0.94) (0.07) (3.52)
SMALL CAP GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. $ 7.85 (0.08) 0.57 0.00 0.00
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. $ 6.90 (0.06) 1.01 0.00 0.00
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. $ 4.85 (0.04) 2.09 0.00 0.00
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. $ 7.85 (0.04) (2.96) 0.00 0.00
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. $10.38 (0.04) (2.49) 0.00 0.00
TOTAL RETURN BOND FUND
- ------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. $10.08 0.36 (0.17) (0.37) (0.04)
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. $10.66 0.34 0.10 (0.34) (0.68)
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. $10.38 0.45 0.41 (0.45) (0.13)
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. $10.24 0.61 0.16 (0.61) (0.02)
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. $10.14 0.64 0.10 (0.64) 0.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
104
FINANCIAL HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
ENDING RATIO TO AVERAGE NET ASSETS (ANNUALIZED)(1)
NET ASSET ------------------------------------------------
RETURN VALUE PER NET INVESTMENT GROSS EXPENSES NET
OF CAPITAL SHARE INCOME (LOSS) EXPENSES WAIVED EXPENSES
- -------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND
- -------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. 0.00 $24.22 (0.06)% 1.32% (0.21)% 1.11%
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. 0.00 $22.45 (0.22)% 1.41% (0.35)% 1.06%
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. 0.00 $18.99 (0.13)% 1.40% (0.31)% 1.09%
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. 0.00 $13.87 0.11% 1.38% (0.29)% 1.09%
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. 0.00 $19.45 0.36% 1.35% (0.25)% 1.10%
SMALL CAP GROWTH FUND
- -------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. 0.00 $ 8.34 (0.99)% 1.24% (0.04)% 1.20%
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. 0.00 $ 7.85 (0.91)% 1.24% (0.04)% 1.20%
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. 0.00 $ 6.90 (0.91)% 1.25% (0.05)% 1.20%
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. 0.00 $ 4.85 (0.92)% 1.32% (0.12)% 1.20%
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. 0.00 $ 7.85 (0.85)% 1.32% (0.14)% 1.18%
TOTAL RETURN BOND FUND
- -------------------------------------------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. 0.00 $9.86 3.58% 0.96% (0.06)% 0.90%
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. 0.00 $10.08 3.34% 0.96% (0.06)% 0.90%
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. 0.00 $10.66 4.17% 0.97% (0.07)% 0.90%
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. 0.00 $10.38 5.97% 1.02% (0.12)% 0.90%
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. 0.00 $10.24 6.20% 1.14% (0.24)% 0.90%
PORTFOLIO NET ASSETS AT
TOTAL TURNOVER END OF PERIOD
RETURN(2) RATE (000'S OMITTED)
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
- --------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. 7.88% 41% $1,004,763
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. 18.22% 40% $1,019,885
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. 37.01% 56% $1,021,895
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. (26.82)% 69% $ 861,525
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. (3.70)% 93% $1,283,453
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. 6.24% 128% $ 167,033
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. 13.77% 175% $ 180,230
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. 42.27% 191% $ 138,151
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. (38.22)% 243% $ 68,349
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. (24.37)% 218% $ 57,216
TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
JANUARY 1, 2005 TO DECEMBER 31, 2005 .. 1.90% 714%(3) $ 85,445
JANUARY 1, 2004 TO DECEMBER 31, 2004 .. 4.39% 773% $ 76,683
JANUARY 1, 2003 TO DECEMBER 31, 2003 .. 8.40% 619% $ 70,988
JANUARY 1, 2002 TO DECEMBER 31, 2002 .. 7.75% 82% $ 68,499
JANUARY 1, 2001 TO DECEMBER 31, 2001 .. 7.41% 69% $ 72,920
105
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
(1) During each period, various fees and expenses were waived and
reimbursed as indicated. The ratio of Gross Expenses to Average Net
Assets reflects the expense ratio in the absence of any waivers and
reimbursements (Note 3).
(2) Total return calculations do not include any sales charges, and
would have been lower had certain expenses not been waived or
reimbursed during the periods shown. Returns for periods less than
one year are not annualized.
(3) Portfolio turnover ratio excluding TBAs is 414%.
106
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
1. ORGANIZATION
- --------------------------------------------------------------------------------
Wells Fargo Variable Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. As of December 31, 2005, the Trust consists of 12
separate funds (each, a "Fund", collectively, the "Funds"). These financial
statements present the Asset Allocation Fund, C&B Large Cap Value Fund (formerly
named the Equity Value Fund), Discovery Fund, Equity Income Fund, International
Core Fund (formerly named the International Equity Fund), Large Company Core
Fund (formerly named the Growth Fund), Large Company Growth Fund, Money Market
Fund, Multi Cap Value Fund, Opportunity Fund, Small Cap Growth Fund, and Total
Return Bond Fund. The Funds are available exclusively as pooled funding vehicles
for certain participating life insurance companies offering variable annuity
contracts and variable life insurance policies.
In August and September 2004, the Board of Trustees of the Trust and the
Boards of Directors of the Strong Funds ("Strong Funds") approved an Agreement
and Plan of Reorganization providing for the reorganization of certain Strong
Funds into certain Funds of the Trust.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets
of the following Target Funds ("Target Funds") through a tax-free exchange under
section 368 of the Internal Revenue Code. The following is a summary of shares
outstanding and net assets immediately before and after the reorganization:
Before Reorganization After Reorganization
--------------------------------- --------------------
Target Fund Target Fund* Acquiring Fund
Wells Fargo
Strong Mid Cap Strong Discovery Advantage
Fund Growth Fund II Fund II Discovery Fund
- ----------------------------------------------------------------------------------------------------
Shares:
- ----------------------------------------------------------------------------------------------------
Investor Class 10,722,956 6,693,290 20,101,904
- ----------------------------------------------------------------------------------------------------
Net Assets:
- ----------------------------------------------------------------------------------------------------
Investor Class $ 165,962,549 $ 82,844,918 $ 248,807,467
- ----------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) $ 3,934,203 $ 10,571,216 $ 14,505,419
- ----------------------------------------------------------------------------------------------------
Accumulated net realized losses ($ 256,263,207) ($ 112,951) ($ 256,376,158)
- ----------------------------------------------------------------------------------------------------
* Designates the accounting survivor.
Effective at the close of business on April 8, 2005, the following
Acquiring Funds ("Acquiring Funds") acquired all of the net assets of the
following Target Funds ("Target Funds") through a tax-free exchange under
section 368 of the Internal Revenue Code.
Acquiring Funds Target Funds
- --------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Multi-Cap Value Fund Strong Multi-Cap Value Fund II Investor Class
- --------------------------------------------------------------------------------------------------------
Wells Fargo Advantage Opportunity Fund Strong Opportunity Fund II Advisor Class and Investor Class
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
The following significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Trust, are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") for investment companies.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
In the normal course of business, the Trust may enter into contracts that
provide certain indemnifications. The Trust's maximum exposure under these
arrangements is dependent on future claims that may be made against the Funds
and, therefore, cannot be estimated; however, based on experience, the risk of
loss from such claims is considered remote.
SECURITY VALUATION
Investments in securities are valued each business day as of the close of
regular trading on the New York Stock Exchange, which is usually 4:00 p.m.
(Eastern Time). Securities which are traded on a national or foreign securities
exchange are valued at the last reported sales price. Securities listed on The
NASDAQ Stock Market, Inc. are valued at the NASDAQ Official Closing Price
("NOCP"), and if no NOCP is available, then at the last reported sales price. In
the absence of any sale of such securities, and in the case of other securities,
including U.S. Government obligations, but excluding debt securities maturing in
60 days or less, the valuations are based on the latest quoted bid prices.
107
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Certain fixed income securities with maturities exceeding 60 days are
valued by using a pricing service approved by the Trust's Board of Trustees. The
service uses market prices as quoted by an independent pricing service or by
dealers in these securities when, in the service's judgment, these prices are
readily available and are representative of the securities' market values. For
some securities, such prices are not readily available. These securities will
generally be fair valued using methods which may include consideration of yields
or prices of securities of comparable quality, coupon rate, maturity and type of
issue, indications as to values from dealers in securities, trading
characteristics, and general market conditions.
Securities denominated in foreign currencies are translated into U.S.
dollars using the closing rates of exchange in effect on the day of valuation.
Many securities markets and exchanges outside the U.S. close prior to the
close of the New York Stock Exchange and therefore may not fully reflect trading
or events that occur after the close of the principal exchange in which the
foreign investments are traded but before the close of the New York Stock
Exchange. If such trading or events are expected to materially affect the value
of the investments, then those investments are fair valued following procedures
approved by the Board of Trustees. These procedures take into account multiple
factors including movements in U.S. securities markets after foreign exchanges
close. Depending on market activity, such fair valuations may be frequent. In
light of the judgment involved in fair value decisions, there can be no
assurance that a fair value assigned to a particular security is accurate. Such
fair value pricing may result in NAVs that are higher or lower than NAVs based
on the closing price or latest quoted bid price.
Debt securities maturing in 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value.
The Money Market Fund values its shares at 12:00 p.m. (Eastern Time) each
business day. The Money Market Fund invests only in securities with remaining
maturities not exceeding 397 days (13 months). Certain floating- and
variable-rate instruments in the portfolio may have maturities in excess of 397
days, but carry a demand feature that permits the holder to tender the
instruments back to the issuer at par value prior to maturity.
The Money Market Fund uses the amortized cost method to value portfolio
securities. The amortized cost method involves valuing a security at its cost,
plus accretion of discount or minus amortization of premium over the period
until maturity, which approximates market value. The Money Market Fund seeks to
maintain a constant net asset value of $1.00 per share, although there is no
assurance that it will be able to do so.
Investments which are not valued using any of the methods discussed above
are valued at their fair value as determined by procedures approved by the Board
of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Interest income is accrued daily and bond discounts are accreted and premiums
are amortized daily.
Dividend income is recognized on the ex-dividend date, except for certain
dividends from foreign securities, which are recorded as soon as the Fund is
informed of the ex-dividend date. Dividend income from foreign securities is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured.
FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. Assets, including
investment securities, and liabilities denominated in foreign currency are
translated into U.S. dollars at the prevailing rates of exchange at the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the prevailing rate of exchange on the respective dates of such
transactions. Reported net realized foreign exchange gains or losses arise from
sales of foreign currencies, currency gains or losses realized between the trade
and settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded and the
U.S. dollar equivalent of the amounts actually paid or received. Net unrealized
foreign exchange gains and losses arise from changes in the fair value of assets
and liabilities other than investments in securities, at fiscal period-end,
resulting from changes in exchange rates.
The changes in net assets arising from changes in exchange rates and the
changes in net assets resulting from changes in market prices of securities at
fiscal period-end are not separately presented. Such changes are recorded with
net realized and unrealized gain from investments. Gains and losses from certain
foreign currency transactions are treated as ordinary income for U.S. federal
income tax purposes.
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, for the Large Company Core, International
Core, Large Company Growth, and Small Cap Growth Funds is declared and
distributed to shareholders annually. Net investment income, if any, for the
Asset Allocation, Equity Income, and C&B Large Cap Value Funds is declared and
distributed quarterly. Net investment income, if any, for the Money Market and
Total Return Bond Funds is declared daily and distributed monthly. Distributions
to shareholders from net realized capital gains, if any, are declared and
distributed at least annually.
Distributions are based on amounts calculated in accordance with the
applicable federal income tax regulations, which may differ from GAAP. The
timing and character of distributions made during the period from net investment
income or net realized gains may also differ from their ultimate
characterization for federal income tax purposes. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment. Temporary
differences do not require reclassifications.
108
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
At December 31, 2005, as result of permanent book-to-tax differences, the
following reclassification adjustments were made on the Statement of Assets and
Liabilities:
Undistributed Net Undistributed Net
Investment Income Realized Gain/Loss Paid-in-Capital
- --------------------------------------------------------------------------------------
Asset Allocation Fund $ 4,724 $ (4,724) $ 0
- --------------------------------------------------------------------------------------
C & B Large Cap Value Fund 3,970 (3,366) (604)
- --------------------------------------------------------------------------------------
Discovery Fund 1,559,009 28,108 (1,587,117)
- --------------------------------------------------------------------------------------
Equity Income Fund 11,028 (11,028) 0
- --------------------------------------------------------------------------------------
International Core Fund 3,504 (3,504) 0
- --------------------------------------------------------------------------------------
Large Company Core Fund 8,627 (8,627) 0
- --------------------------------------------------------------------------------------
Large Company Growth Fund 226,229 (9,205) (217,024)
- --------------------------------------------------------------------------------------
Money Market Fund 304 (304) 0
- --------------------------------------------------------------------------------------
Multi Cap Value Fund (26,889) 86,091 (59,202)
- --------------------------------------------------------------------------------------
Opportunity Fund 789,441 18,797 (808,238)
- --------------------------------------------------------------------------------------
Small Cap Growth Fund 1,640,732 (6,450) (1,634,282)
- --------------------------------------------------------------------------------------
Total Return Bond Fund 76,517 (76,517) 0
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
It is the policy of each Fund of the Trust to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined under subchapter M of the Internal Revenue Code
(the "Code"), and to make distributions of substantially all of its investment
company taxable income and any net realized capital gains (after reduction for
capital loss carryforwards) sufficient to relieve it from all, or substantially
all, federal income taxes. Accordingly, no provision for federal income taxes
was required at December 31, 2005.
At December 31, 2005, estimated net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Fund Year Expires Capital Loss Carryforwards
- -------------------------------------------------------------------------------
C&B Large Cap Value Fund 2010 $ 2,163,945
2011 1,929,288
2012 205,838
- --------------------------------------------------------------------------------
Discovery Fund 2008 135,870,302
2009 94,527,114
- --------------------------------------------------------------------------------
Large Company Core Fund 2009 72,486
2010 14,395,487
2011 1,781,980
- --------------------------------------------------------------------------------
Large Company Growth Fund 2009 6,092,101
2010 14,881,364
2011 2,858,910
2012 1,003,450
2013 2,022,267
- --------------------------------------------------------------------------------
Total Return Bond Fund 2013 523,334
- --------------------------------------------------------------------------------
At December 31, 2005, current year deferred post-October capital losses,
which will be treated as realized for tax purposes on the first day of the
succeeding year, were:
Deferred Post-October
Fund Capital Loss
- --------------------------------------------------------------------------------
Large Company Core Fund $ 1,222
- --------------------------------------------------------------------------------
Total Return Bond Fund 415,227
109
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund(s) may enter into forward foreign currency contracts to protect
against a possible loss resulting from an adverse change in the relationship
between foreign currencies and the U.S. dollar, or between foreign currencies. A
forward contract is an agreement between two counterparties for future delivery
or receipt of currency at a specified price. Risks arise from the possible
inability of counterparties to meet the terms of their contracts and from
movements in currency values. Realized gains or losses are recognized when the
transaction is completed. Contracts which have been offset but have not reached
their settlement date are included in unrealized gains and losses. At December
31, 2005, the Fund(s) had no open forward foreign currency contracts.
FUTURES CONTRACTS
The Fund(s) may purchase futures contracts to gain exposure to market
changes, which may be more efficient or cost effective than actually buying the
securities. A futures contract is an agreement between parties to buy or sell a
security at a set price on a future date. Upon entering into such a contract, a
Fund is required to pledge to the broker an amount of cash, U.S. Government
obligations or other high-quality debt securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract.
Such receipts or payments are known as "variation margin" and are recorded by
the Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission (the "SEC") for long futures positions, the Fund is required
to segregate highly liquid securities as permitted by the SEC in connection with
futures transactions in an amount generally equal to the entire value of the
underlying contracts. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. At December 31, 2005, the following Fund(s) held futures contracts:
Net Unrealized
Notional Appreciation
Fund Contracts Type Expiration Date Contract Amount (Depreciation)
- -------------------------------------------------------------------------------------------------------------
Asset Allocation Fund 241 Long S&P 500 Index March 2006 76,616,913 (1,015,213)
29 Long S&P 500 Index March 2006 9,219,463 (122,163)
1 Long S&P 500 Index March 2006 316,575 (2,875)
2 Long S&P 500 Index March 2006 635,150 (7,750)
1 Long U.S. 20 Year T-Bonds March 2006 112,344 1,844
31 Long U.S. 20 Year T-Bonds March 2006 3,487,016 52,797
2 Long U.S. 20 Year T-Bonds March 2006 224,250 4,125
1 Long U.S. 20 Year T-Bonds March 2006 112,063 2,125
7 Long U.S. 20 Year T-Bonds March 2006 783,344 15,969
3 Long U.S. 20 Year T-Bonds March 2006 336,000 6,563
4 Long U.S. 20 Year T-Bonds March 2006 447,125 9,625
2 Long U.S. 20 Year T-Bonds March 2006 223,750 4,625
693 Short U.S. T-Bonds March 2006 77,639,867 (1,492,071)
8 Short U.S. T-Bonds March 2007 896,000 (17,500)
- -------------------------------------------------------------------------------------------------------------
TBA SALE COMMITMENTS
The fund may enter into TBA sale commitments to hedge its portfolio
positions or to sell mortgage-backed securities it owns under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date. During the time a TBA sale commitment is
outstanding, equivalent deliverable securities, or an offsetting TBA purchase
commitment deliverable on or before the sale commitment date, are held as
"cover" for the transaction. Unsettled TBA sale commitments are valued at the
current market value of the underlying securities, generally according to the
procedures described under "Security valuation" above. The contract is
"marked-to-market" daily and the change in market value is recorded by the fund
as an unrealized gain or loss. If the TBA sale commitment is closed through the
acquisition of an offsetting purchase commitment, the fund realizes a gain or
loss. If the fund delivers securities under the commitment, the fund realizes a
gain or a loss from the sale of the securities based upon the unit price
established at the date the commitment was entered into. TBA sale commitments
outstanding at year ended December 31, 2005 are listed after the Fund's
Portfolio of Investments.
MORTGAGE DOLLAR ROLL TRANSACTIONS
The Funds may engage in mortgage dollar roll transactions with respect to
mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar
roll transaction, a Fund sells a mortgage-backed security to a financial
institution, such as a bank or broker-dealer and simultaneously agrees to
repurchase a substantially similar security from the institution at a later date
at an agreed upon price. The mortgage-backed securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different pre-payment
histories. During the roll period, a Fund foregoes principal and interest paid
on the securities. A Fund is compensated by the difference between the current
sales price and the forward price for the future purchase as well as by the
earnings on the cash proceeds of the initial
110
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
sale. Mortgage dollar rolls may be renewed without physical delivery of the
securities subject to the contract. The Funds account for dollar roll
transactions as purchases and sales.
REPURCHASE AGREEMENTS
The Fund(s) may invest in repurchase agreements and may participate in
pooled repurchase agreement transactions with other funds advised by Wells Fargo
Funds Management, LLC. The repurchase agreements must be fully collateralized
based on values that are marked to market daily. The collateral may be held by
an agent bank under a tri-party agreement. It is the custodian's responsibility
to value collateral daily and to take action to obtain additional collateral as
necessary to maintain market value equal to or greater than the resale price.
The repurchase agreements are collateralized by instruments such as U.S.
Treasury, federal agency, or high-grade corporate obligations. There could be
potential loss to a Fund in the event that such Fund is delayed or prevented
from exercising its rights to dispose of the collateral, including the risk of a
possible decline in the value of the underlying obligations during the period in
which a Fund seeks to assert its rights.
SECURITY LOANS
The Fund(s) may loan securities in return for securities, irrevocable
letters of credit or cash collateral, which is invested in various short-term
fixed income securities. A Fund may receive compensation for lending securities
in the form of fees or by retaining a portion of interest on the investment
securities or cash received as collateral. A Fund also continues to receive
interest or dividends on the securities loaned. Security loans are secured at
all times by collateral. The collateral is equal to at least 102% of the market
value of the securities loaned plus accrued interest when the transaction is
entered into. The collateral supporting loans of domestic and foreign equity
securities and corporate bonds is remarked daily while collateral supporting
loans of U.S. government securities is remarked back to 102% only if the given
collateral falls below 100% of the market value of the securities loaned plus
any accrued interest. Gain or loss in the market price of the securities loaned
that may occur during the term of the loan are reflected in the value of the
Fund. The risks from securities lending are that the borrower may not provide
additional collateral when required or return the securities when due or when
called for by the Fund. Wells Fargo Bank, N.A., the Funds' custodian, acts as
the securities lending agent for the Funds and receives for its services 30% of
the revenues earned on the securities lending activities and incurs all
expenses. Prior to October 1, 2005, Wells Fargo Bank, N.A. received 35% of the
revenue earned on the securities lending activities and incurred all expenses.
The value of the securities on loan and the value of the related collateral at
December 31, 2005 are shown on the Statement of Assets and Liabilities.
SWAP CONTRACTS
Certain Funds may enter into customized equity basket swaps ("Equity
Swaps") to manage their exposure to the equity markets. In these transactions,
the Funds enter into an agreement with a counterparty to receive/pay the
return/loss on a customized basket of equity securities (the "Notional"). In
exchange, the Fund pays/receives interest plus any losses/less any gains on the
notional amount. Equity swap contracts are marked to market daily based upon
quotations from market makers and the change, if any, is recorded as unrealized
gain or loss. Payments received or made are recorded as realized gains or loss.
The fund could be exposed to credit or market risk due to unfavorable changes in
the fluctuation of interest rates or in the price of the underlying basket of
securities, the possibility that there is no liquid market for these agreements
or that the counterparty may default on its obligation to perform. Risk of loss
may exceed amounts recognized on the statements of assets and liabilities.
Equity swap contracts outstanding at year-ended December 31, 2005 are listed
below:
Swap Notional Interest Rate/ Interest Rate/ Maturity Net Unrealized
Fund Counter Party Principal Index Received Index Paid Date Gain/(Loss)
- -----------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND Lehman $15,653,462 Market Value Notional Amount 14-Jan-06 (147,489)
Brothers Appreciation x (3 Months USD
Finance on Customize Libor plus 30 bps)
Stock Index* plus Market Value
Depreciation on
Customized Stock
Index
- -----------------------------------------------------------------------------------------------------------------
*Customized Stock Index consists of the following basket of common stocks
valued as of December 31, 2005: Viacom Incorporated, Vodafone Group plc ADR,
AFLAC Incorporated, Carnival Corporation, Cisco Systems Incorporated,
Unitedhealthcare Group Incorporated, Morgan Stanley, Juniper Networks, General
Motors, and Abott Laboratories.
WHEN-ISSUED TRANSACTIONS
Each Fund may purchase securities on a forward commitment or `when-issued'
basis. A Fund records a when-issued transaction on the trade date and will
segregate with the custodian qualifying assets having a value sufficient to make
payment for the securities purchased. Securities purchased on a when-issued
basis are marked-to-market daily and the Fund begins earning interest on the
settlement date. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
111
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
WRITTEN OPTIONS
An option is a right to buy or sell a particular security at a specified
price within a limited period of time. The writer of the option, in return for a
premium received from the seller, has the obligation to sell (in the case of a
call option) or buy (in the case of a put option) the underlying security of the
contract. The premium received in cash from writing options is recorded as an
asset with an equal liability that is adjusted to reflect the option's value.
The premium received from writing options which expire is recorded as realized
gains. The premium received from writing options which are exercised or closed
is offset against the proceeds or amount paid on the closing transaction to
determine the realized gain or loss. If a put option is exercised, the premium
reduces the cost basis of the security or currency purchased. Options are valued
based on their quoted daily settlement prices.
Risks could arise from entering into written options transactions from the
potential inability of counterparties to meet the terms of their contracts, the
potential inability to enter into a closing transaction because of an illiquid
secondary market, and from unexpected movements in interest or exchange rates or
securities values. Written options transactions during the year ended December
31, 2005, were as follows:
MULTI CAP VALUE FUND
Principal Amount Premiums
of Contracts Received
- ---------------------------------------------------------------------------
CALL OPTIONS WRITTEN
- ---------------------------------------------------------------------------
Options at beginning of period (420) $ (115,931)
- ---------------------------------------------------------------------------
Options written (1,061) (256,101)
- ---------------------------------------------------------------------------
Options terminated in closing transactions 908 256,991
- ---------------------------------------------------------------------------
Options expired 240 54,432
- ---------------------------------------------------------------------------
Options exercised 128 22,835
- ---------------------------------------------------------------------------
Options at end of period (205) (37,774)
- ---------------------------------------------------------------------------
OPPORTUNITY FUND
Principal Amount Premiums
of Contracts Received
- ---------------------------------------------------------------------------
CALL OPTIONS WRITTEN
- ---------------------------------------------------------------------------
Options at beginning of period 0 $ 0
- ---------------------------------------------------------------------------
Options written (6,905) (1,142,495)
- ---------------------------------------------------------------------------
Options terminated in closing transactions 2,150 294,537
- ---------------------------------------------------------------------------
Options expired 0 0
- ---------------------------------------------------------------------------
Options exercised 0 0
- ---------------------------------------------------------------------------
Options at end of period (4,755) (847,957)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
PUT OPTIONS WRITTEN
- ---------------------------------------------------------------------------
Options at beginning of period (210) (209,370)
- ---------------------------------------------------------------------------
Options written (670) (367,829)
- ---------------------------------------------------------------------------
Options terminated in closing transactions 650 531,889
- ---------------------------------------------------------------------------
Options expired 230 45,310
- ---------------------------------------------------------------------------
Options exercised 0 0
- ---------------------------------------------------------------------------
Options at end of period 0 0
- ---------------------------------------------------------------------------
3. EXPENSES
- --------------------------------------------------------------------------------
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). The adviser is responsible for
implementing investment policies and guidelines and for supervising the
sub-adviser, who is responsible for day-to-day portfolio management.
Pursuant to the contract, Funds Management is entitled to receive an
advisory fee for its services as adviser. Funds Management may retain the
services of certain investment sub-advisers to provide daily portfolio
management. The fees related
112
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
to sub-advisory services are borne directly by the adviser and do not increase
the overall fees paid by a Fund to the adviser. Funds Management and the
investment sub-adviser(s) are entitled to be paid a monthly fee at the following
annual rates:
Advisory Fee Sub-Advisory Fee**
Average Daily (% of Average Average Daily (% of Average
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Daily Net Assets)
- ----------------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND $0 - $499 million 0.550 Wells $0 - $1 billion 0.150
$500 million - $999 million 0.500 Capital > $1 billion 0.100
$1 billion - $2.99 billion 0.450 Management
$3 billion - $4.99 billion 0.425 Incorporated
> $4.99 billion 0.400
- ----------------------------------------------------------------------------------------------------------------------------------
C&B LARGE CAP $0 - $499 million 0.550 Cooke & $0 - $250 million 0.450
VALUE FUND $500 million - $999 million 0.500 Bieler, $250 - $500 million 0.400
$1 billion - $2.99 billion 0.450 L.P. $500 - $750 million 0.350
$3 billion - $4.99 billion 0.425 > $750 million 0.300
> $4.99 billion 0.400
- ----------------------------------------------------------------------------------------------------------------------------------
DISCOVERY FUND* $0 - $499 million 0.750 Wells $0 - $200 million 0.350
$500 million - $999 million 0.700 Capital > $200 million 0.300
$1 billion - $2.99 billion 0.650 Management
$3 billion - $4.99 billion 0.625 Incorporated
> $4.99 billion 0.600
- ----------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND $0 - $499 million 0.550 Wells $0 - $200 million 0.250
$500 million - $999 million 0.500 Capital $200 - $400 million 0.200
$1 billion - $2.99 billion 0.450 Management > $400 million 0.150
$3 billion - $4.99 billion 0.425 Incorporated
> $4.99 billion 0.400
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL CORE $0 - $499 million 0.750 New Star $0 - $50 million 0.350
FUND $500 million - $999 million 0.700 Institutional $50 - $550 million 0.290
$1 billion - $2.99 billion 0.650 Managers > $550 million 0.200
$3 billion - $4.99 billion 0.625 Limited
> $4.99 billion 0.600
- ----------------------------------------------------------------------------------------------------------------------------------
LARGE COMPANY $0 - $499 million 0.550 Matrix $0 - $50 million 0.200
CORE FUND $500 million - $999 million 0.500 Asset > $50 million 0.160
$1 billion - $2.99 billion 0.450 Advisors
$3 billion - $4.99 billion 0.425
> $4.99 billion 0.400
- ----------------------------------------------------------------------------------------------------------------------------------
LARGE COMPANY $0 - $499 million 0.550 Peregrine $0 - $25 million 0.750
GROWTH FUND $500 million - $999 million 0.500 Capital $25 - $50 million 0.600
$1 billion - $2.99 billion 0.450 Management $50 - $275 million 0.500
$3 billion - $4.99 billion 0.425 > $275 million 0.300
> $4.99 billion 0.400
- ----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND $0 - $999 million 0.300 Wells Capital $0 - $1 billion 0.050
$1 billion - $4.99 billion 0.275 Management > $1 billion 0.040
>$4.99 billion 0.250 Incorporated
- ----------------------------------------------------------------------------------------------------------------------------------
MULTI CAP VALUE FUND* $0 - $499 million 0.750 Wells $0 - $200 million 0.350
$500 million - $999 million 0.700 Capital > $200 million 0.300
$1 billion - $2.99 billion 0.650 Management
$3 billion - $4.99 billion 0.625 Incorporated
> $4.99 billion 0.600
- ----------------------------------------------------------------------------------------------------------------------------------
113
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Advisory Fee Sub-Advisory Fee
Average Daily (% of Average Average Daily (% of Average
Fund Net Assets Daily Net Assets) Sub-Adviser Net Assets Daily Net Assets)
OPPORTUNITY FUND* $0 - $499 million 0.750 Wells $0 - $200 million 0.350
$500 million - $999 million 0.700 Capital > $200 million 0.300
$1 billion - $2.99 billion 0.650 Management
$3 billion - $4.99 billion 0.625 Incorporated
> $4.99 billion 0.600
- ----------------------------------------------------------------------------------------------------------------------------------
SMALL CAP $0 - $499 million 0.750 Wells $0 - $200 million 0.250
GROWTH FUND $500 million - $999 million 0.700 Capital > $200 million 0.200
$1 billion - $2.99 billion 0.650 Management
$3 billion - $4.99 billion 0.625 Incorporated
> $4.99 billion 0.600
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN $0 - $499 million 0.450 Wells $0 - $400 million 0.150
BOND FUND $500 million - $999 million 0.400 Capital $400 - $800 million 0.125
$1 billion - $2.99 billion 0.350 Management > $800 million 0.100
$3 billion - $4.99 billion 0.325 Incorporated
> $4.99 billion 0.300
* Effective April 11, 2005. Prior to January 1, 2005, Strong Capital
Management, Inc. ("SCM") served as investment adviser to each of the predecessor
Strong Funds. From January 1, 2005 through April 10, 2005, Funds Management
served as interim investment adviser to each of the predecessor Strong Funds.
Both SCM and Funds Management, for their respective periods of time were
entitled to receive an annual fee at the following rates:
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- --------------------------------------------------------------------
DISCOVERY FUND all asset levels 1.000
- --------------------------------------------------------------------
MULTI CAP VALUE FUND $0 - $4 billion 0.750
$4 - $6 billion 0.725
> $6 billion 0.700
- --------------------------------------------------------------------
OPPORTUNITY FUND $0 - $4 billion 0.750
$4 - $6 billion 0.725
> $6 billion 0.700
- --------------------------------------------------------------------
** At the April 2005 meeting, the Board of the Trust reapproved the
sub-advisory agreements among Variable Trust, Funds Management and the
respective sub-advisers, including the compensation payable to each sub-adviser
for providing investment advisory services to certain of the Wells Fargo Funds.
Effective January 1, 2006 the investment sub-adviser(s) will be entitled to be
paid a monthly fee at the following rates:
Sub-Advisory Fee
Average Daily (% of Average
Fund Sub-Adviser Net Assets Daily Net Assets)
- ------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND Wells Capital $0 - $100 million 0.150
Management Incorporated $100 - $200 million 0.125
> $200 million 0.100
- ------------------------------------------------------------------------------------------
DISCOVERY FUND Wells Capital $0 - $100 million 0.450
Management Incorporated $100 - $200 million 0.400
> $200 million 0.350
- ------------------------------------------------------------------------------------------
EQUITY INCOME FUND Wells Capital $0 - $100 million 0.350
Management Incorporated $100 - $200 million 0.300
$200 - $500 million 0.200
> $500 million 0.150
- ------------------------------------------------------------------------------------------
114
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
Sub-Advisory Fee
Average Daily (% of Average
Fund Sub-Adviser Net Assets Daily Net Assets)
MONEY MARKET FUND Wells Capital $0 - $1 billion 0.050
Management Incorporated $1 - $3 billion 0.030
$3 - $6 billion 0.020
> $6 billion 0.010
- ------------------------------------------------------------------------------------------
MULTI CAP VALUE FUND Wells Capital $0 - $100 million 0.450
Management Incorporated $100 - $200 million 0.400
> $200 million 0.350
- ------------------------------------------------------------------------------------------
OPPORTUNITY FUND Wells Capital $0 - $100 million 0.450
Management Incorporated $100 - $200 million 0.400
> $200 million 0.300
- ------------------------------------------------------------------------------------------
SMALL CAP GROWTH FUND Wells Capital $0 - $100 million 0.550
Management Incorporated $100 - $200 million 0.500
> $200 million 0.400
- ------------------------------------------------------------------------------------------
TOTAL RETURN BOND FUND Wells Capital $0 - $100 million 0.200
Management Incorporated $100 - $300 million 0.175
$300 - $500 million 0.150
> $500 million 0.100
ADMINISTRATION AND TRANSFER AGENT FEES
The Trust has entered into an Administration Agreement with Funds
Management. Under this Agreement, for providing administrative services, which
includes paying fees and expenses for services provided by the transfer agent,
sub-transfer agents, omnibus account servicers and record-keepers, Funds
Management is entitled to receive the following annual fees:
(% of Average
Fund Average Daily Net Assets Daily Net Assets)
- ---------------------------------------------------------------------
ALL FUNDS* $0 - $4.99 billion 0.16
$5 billion - $9.99 billion 0.15
>$9.99 billion 0.14
- ---------------------------------------------------------------------
* For the Opportunity Fund, Multi Cap Value Fund and Discovery Fund, these
rates are effective April 11, 2005. Prior to April 11, 2005, Strong Investor
Services, Inc. ("SISI") served as administrator to each of the predecessor
Strong Funds and was entitled to receive an annual fee at the following rates:
Administration Fee
(% of Average
Fund Daily Net Assets)
- ---------------------------------------------------------------------
MULTI CAP VALUE FUND 0.30
- ---------------------------------------------------------------------
OPPORTUNITY FUND 0.30
The Trust has entered into an agreement with Boston Financial Data
Services ("BFDS") as the transfer agent for the Trust.
For the Discovery Fund, Multi Cap Value Fund and Opportunity Fund, the
agreement with BFDS was entered into on March 14, 2005. Prior to March 14, 2005,
SISI served as transfer agent to each of the predecessor Strong Funds. BFDS is
entitled to receive fees from the administrator for its services as transfer
agent. For the predecessor Strong Funds transfer agent fees were paid by the
Funds themselves prior to April 11, 2005. For financial statement presentation,
transfer agent fees for the period January 1, 2005 through April 11, 2005, as
shown below have been combined with administration fees.
Transfer Agent Fees
and Other
Fund Related Expenses
- ----------------------------------------------------------------------
DISCOVERY FUND $ 36,372
- ----------------------------------------------------------------------
MULTI CAP VALUE FUND 16,138
- ----------------------------------------------------------------------
OPPORTUNITY FUND 1,006,643
- ----------------------------------------------------------------------
115
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
CUSTODY FEES
The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"),
whereby WFB is responsible for providing custody services. Pursuant to the
contract, WFB is entitled to certain transaction charges plus a monthly fee for
custody services at the following annual rates:
(% of Average
Fund Daily Net Assets)
- --------------------------------------------------------------------------------
ALL VARIABLE TRUST FUNDS (EXCEPT INTERNATIONAL CORE FUND) 0.02
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND 0.10
Prior to February 28, 2005, State Street served as custodian for the
Strong Opportunity Fund II. Prior to March 28, 2005, State Street served as
custodian for Strong Multi Cap Value Fund II. Prior to April 25, 2005, State
Street served as custodian for the Strong Discovery Fund II. State Street was
entitled to receive a fee that was substantially transaction-based.
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan ("Plan") for the Fund(s),
pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are charged and
paid to Wells Fargo Funds Distributor, LLC at an annual rate of up to 0.25% of
average daily net assets. Prior to April 11, 2005, the Strong Opportunity Fund
II adopted a 12b-1 distribution plan under the 1940 Act on behalf of its Advisor
Class shares. Under this plan, Strong Investments, Inc. was paid an annual rate
of 0.25% of average daily net assets of the Advisor class shares of the Strong
Opportunity Fund II.
For the year ended December 31, 2005, distribution fees paid are disclosed
on the Statements of Operations.
OTHER FEES
PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is
entitled to receive an annual asset-based fee, and an annual fixed fee from each
Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses
reasonably incurred in providing these services. Prior to February 28, 2005,
State Street served as fund accountant for the Strong Opportunity Fund II. Prior
to March 28, 2005, State Street served as fund accountant for the Strong Multi
Cap Value Fund II. Prior to April 11, 2005, State Street served as the fund
accountant for the Strong Discovery Fund II and the Strong Mid Cap Growth Fund
II. Fund accounting fees were paid by the funds' administrator through April 10,
2005, and not by the funds. From April 11, 2005 to April 22, 2005, State Street
served as interim fund accountant for the Discovery Fund and was entitled to
receive an annual asset based fee, a fixed fund accounting base fee and certain
out-of-pocket expenses.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statements
of Operations, for the year ended December 31, 2005, were waived by Funds
Management, first from advisory fees, and then any remaining amount
consecutively from administration, custody and shareholder servicing fees
collected, if any. The Fund's Adviser has committed to waive fees and/or
reimburse expenses to the extent necessary to maintain a certain net operating
expense ratio for the Fund(s). Net operating expense ratios in effect from April
11, 2005 through December 31, 2005 were as follows:
Net Operating
Fund Expense Ratios
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND 1.00%
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND 1.00%
- --------------------------------------------------------------------------------
DISCOVERY FUND* 1.15%
- --------------------------------------------------------------------------------
EQUITY INCOME FUND 1.00%
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND 1.00%
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 1.00%
- --------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND 1.00%
- --------------------------------------------------------------------------------
MONEY MARKET FUND 0.75%
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND* 1.14%
- --------------------------------------------------------------------------------
OPPORTUNITY FUND* 1.07%
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND 1.20%
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND 0.90%
* The rates for these funds were in effect from April 11, 2005 through
December 31, 2005. Prior to April 11, 2005, the Strong Funds' adviser and/or
administrator could voluntarily waive or absorb certain expenses at their
discretion. Pursuant to the direction of the Strong Funds Board of Directors and
certain regulatory settlements, the predecessor adviser, Strong Capital
Management, Inc. ("SCM") had contractually agreed to waive fees and/or absorb
expenses in the amount of 0.033% for the
116
NOTES TO FINANCIAL STATEMENTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
Strong Discovery Fund II, Strong Multi Cap Value Fund II and Strong Opportunity
Fund II from May 21, 2004 to May 21, 2005. However, effective April 11, 2005,
the Funds are subject to a different expense structure. SISI also allocated to
each Fund certain charges or credits resulting from transfer agency banking
activities based on each Funds' subscription and redemption activity. Transfer
Agency Banking Credits allocated by SISI, if any, served to reduce the transfer
agency expenses incurred by the Funds. From January 1, 2005 through April 10,
2005, the expense offsets that are included in the waived fees and reimbursed
expenses amount on the Statements of Operations are as follows:
Waived Fees and
Fund Reimbursed Expenses
- --------------------------------------------------------------------------------
DISCOVERY FUND $ (12,039)
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND (31,787)
- --------------------------------------------------------------------------------
OPPORTUNITY FUND (1,226,565)
- --------------------------------------------------------------------------------
4. INVESTMENT PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) for the year
ended December 31, 2005, were as follows:
Fund Purchases at Cost Sales Proceeds
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND $ 6,026,483 $ 34,277,086
- --------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND 29,585,198 33,166,142
- --------------------------------------------------------------------------------
DISCOVERY FUND 382,881,248 442,722,525
- --------------------------------------------------------------------------------
EQUITY INCOME FUND 27,138,999 36,768,809
- --------------------------------------------------------------------------------
INTERNATIONAL CORE FUND 19,910,941 18,900,421
- --------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 35,167,948 43,521,549
- --------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND 11,577,674 11,298,401
- --------------------------------------------------------------------------------
MULTI CAP VALUE FUND 26,865,536 32,251,480
- --------------------------------------------------------------------------------
OPPORTUNITY FUND $ 395,496,713 538,867,814
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND 211,472,353 231,242,230
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND 623,304,986 603,793,128
- --------------------------------------------------------------------------------
The Money Market Fund trades exclusively in short-term securities, as such
purchases and sales are not reflected in the schedule.
5. BANK BORROWINGS
- --------------------------------------------------------------------------------
Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the
money market funds) share in a revolving Credit Agreement with The Bank of New
York, whereby the Funds are permitted to use bank borrowings for temporary or
emergency purposes, such as to fund shareholder redemption requests. The
agreement permits borrowings of up to $150 million, collectively. Interest is
charged to each Fund based on its borrowing at a rate equal to the Federal Funds
Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to
0.1% per annum of the credit line. For the year ended December 31, 2005, there
were no borrowings under the agreement.
Prior to April 11, 2005, the predecessor Strong Funds had established a
line of credit agreement ("LOC") with certain financial institutions to be used
for temporary or emergency purposes. Combined borrowings among all participating
Strong Funds were subject to a $200 million cap on the total LOC. For an
individual fund, borrowings under the LOC were limited to either the lesser of
15% of the market value of the fund's total assets or any explicit borrowing
limits in the fund's registration statement. The principal amount of each
borrowing under the LOC was due not more than 45 days after the date of the
borrowing. Borrowings under the LOC accrued interest based on prevailing market
rates as defined in the LOC. A commitment fee of 0.09% per annum was incurred on
the unused portion of the LOC and was allocated to all participating Strong
Funds based on their net assets. For the year ended December 31, 2005, there
were no borrowings by Variable Trust Funds under either agreement.
117
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. DISTRIBUTION TO SHAREHOLDERS
- --------------------------------------------------------------------------------
The tax character of distributions paid during the years ended December
31, 2005 and December 31, 2004 was as follows:
Ordinary Income Long-term Capital Gain Total
Fund 2005 2004 2005 2004 2005 2004
- -------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND $ 9,260,151 $ 6,364,542 $ 4,200,908 $ 9,827,535 $13,461,059 $16,192,077
- -------------------------------------------------------------------------------------------------------------
C&B LARGE CAP VALUE FUND 226,321 477,934 0 0 226,321 477,934
- -------------------------------------------------------------------------------------------------------------
DISCOVERY FUND 152,683 0 7,948,786 0 8,101,469 0
- -------------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND 1,696,104 1,768,654 0 0 1,696,104 1,768,654
- -------------------------------------------------------------------------------------------------------------
INTERNATIONAL CORE FUND 1,069,540 62,505 692,742 0 1,762,282 62,505
- -------------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 162,985 0 0 0 162,985 0
- -------------------------------------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND 186,924 0 0 0 186,924 0
- -------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND 1,443,538 450,833 0 0 1,443,538 450,833
- -------------------------------------------------------------------------------------------------------------
MULTI CAP VALUE FUND 96,372 0 0 0 96,372 0
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN BOND FUND 3,241,100 4,896,328 88,704 2,159,246 3,329,804 7,055,574
As of December 31, 2005, the components of distributable earnings on a tax
basis are shown on the table below. The difference between book basis and tax
basis appreciation is attributable to deferral of loss on wash sales, straddles
and REIT adjustments.
Undistributed Undistributed Unrealized
Ordinary Long-Term Appreciation Capital Loss
Fund Income Gain (Depreciation) Carryforward* Total
- ----------------------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND $ 1,348,980 $ 2,005,281 $ 836,366 $ 0 $ 4,190,627
- ----------------------------------------------------------------------------------------------------------
C & B LARGE CAP VALUE FUND 0 0 758,206 (4,299,071) (3,540,865)
- ----------------------------------------------------------------------------------------------------------
DISCOVERY FUND 0 0 26,612,359 (230,397,416) (203,785,057)
- ----------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND 5,458 241,064 16,719,356 0 16,965,878
- ----------------------------------------------------------------------------------------------------------
INTERNATIONAL CORE FUND 1,046,133 591,823 5,193,371 0 6,831,327
- ----------------------------------------------------------------------------------------------------------
LARGE COMPANY CORE FUND 2,409 0 (491,274) (16,251,175) (16,740,400)
- ----------------------------------------------------------------------------------------------------------
LARGE COMPANY GROWTH FUND 0 0 4,321,185 (26,858,092) (22,536,907)
- ----------------------------------------------------------------------------------------------------------
MONEY MARKET FUND 361 1,000 0 0 1,361
- ----------------------------------------------------------------------------------------------------------
MULTI CAP VALUE FUND 0 3,659,175 2,167,932 0 5,827,107
- ----------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND 0 103,073,775 198,926,509 0 302,000,284
- ----------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH FUND 0 4,390,665 14,004,822 0 18,395,487
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN BOND FUND 22,237 0 (517,957) (938,561) (1,434,281)
*This amount includes the post-October loss, which will reverse on the first day
of the following fiscal year.
7. LEGAL AND REGULATORY MATTERS
- --------------------------------------------------------------------------------
In 2004, the predecessor funds' investment adviser and affiliates
(collectively, "Strong") entered into agreements with certain regulators,
including the Securities and Exchange Commission and the New York Attorney
General ("NYAG"), to settle markettiming investigations. In the settlements,
Strong agreed to pay investor restoration and civil penalties. Although some
portion of these payments is likely to be distributed to predecessor fund
shareholders, no determination has yet been made as to the distribution of these
amounts, and the successor funds are not expected to receive any portion of
these payments. The NYAG settlement also imposed fee reductions across the
predecessor fund complex (excluding money market funds and very short-term
income funds) totaling at least $35 million by May 2009. The current Funds'
adviser has agreed to honor these fee reductions for the benefit of shareholders
across the successor funds. Although civil litigation against Strong and certain
predecessor funds relating to these matters is continuing, neither the current
adviser nor the successor funds is a party to any such suit.
118
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO VARIABLE TRUST
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Asset Allocation Fund, C&B Large
Cap Value Fund (formerly named the Equity Value Fund), Equity Income Fund,
International Core Fund (formerly named the International Equity Fund), Large
Company Core Fund (formerly named the Growth Fund), Large Company Growth Fund,
Money Market Fund, Small Cap Growth Fund, and Total Return Bond Fund, nine of
the Funds constituting the Wells Fargo Variable Trust as of December 31, 2005,
and the related statements of operations for the year then ended, and the
statements of changes in net assets and the financial highlights for the periods
presented. We have also audited the accompanying statements of assets and
liabilities, including the portfolios of investments, of the Discovery Fund,
Multi Cap Value Fund, and the Opportunity Fund, three of the Funds constituting
the Wells Fargo Variable Trust as of December 31, 2005, and the related
statements of operations for the year then ended, and the statements of changes
in net assets and financial highlights for each of the two years in the period
ended December 31, 2005. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Discovery Fund, Multi Cap Value Fund,
and the Opportunity Fund for each of the years ended December 31, 2003, and
prior, were audited by other auditors whose report dated February 3, 2004
expressed an unqualified opinion on those financial statements and financial
highlights.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 2005, by correspondence with
the custodian and brokers. As to securities purchased or sold but not yet
received or delivered, we performed other appropriate auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned funds of the Wells Fargo Variable Trust as of
December 31, 2005, the results of their operations, changes in their net assets
and their financial highlights for the periods indicated in the paragraph above,
in conformity with U.S. generally accepted accounting principles.
[KPMG LLP LOGO]
Philadelphia, Pennsylvania
February 20, 2006
119
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The following fund has elected to pass through to its shareholders the
foreign taxes paid during the tax year ended December 31, 2005. The foreign
income and taxes paid were as follows:
Foreign Foreign
Fund Income Taxes
- --------------------------------------------------------------------------------
VARIABLE TRUST INTERNATIONAL EQUITY FUND $ 1,030,338 $ 68,513
- --------------------------------------------------------------------------------
The country-by-country breakout is as follows:
Country Gross Income % Foreign Tax Paid %
- --------------------------------------------------------------------------------
AUSTRALIA 2.27% 0.00%
- --------------------------------------------------------------------------------
BELGIUM 2.89% 2.50%
- --------------------------------------------------------------------------------
SWITZERLAND 3.10% 0.00%
- --------------------------------------------------------------------------------
GERMANY 6.33% 9.33%
- --------------------------------------------------------------------------------
DENMARK 1.81% 0.65%
- --------------------------------------------------------------------------------
SPAIN 3.05% 7.13%
- --------------------------------------------------------------------------------
FINLAND 0.56% 1.30%
- --------------------------------------------------------------------------------
FRANCE 14.39% 26.91%
- --------------------------------------------------------------------------------
GREECE 3.66% 0.00%
- --------------------------------------------------------------------------------
HONG KONG 4.00% 0.00%
- --------------------------------------------------------------------------------
HUNGARY 0.75% 2.91%
- --------------------------------------------------------------------------------
IRELAND 0.07% 0.00%
- --------------------------------------------------------------------------------
ISRAEL 0.14% 0.39%
- --------------------------------------------------------------------------------
INDIA 0.10% 0.00%
- --------------------------------------------------------------------------------
ITALY 6.35% 14.28%
- --------------------------------------------------------------------------------
JAPAN 8.56% 12.06%
- --------------------------------------------------------------------------------
SOUTH KOREA 0.54% 3.26%
- --------------------------------------------------------------------------------
NETHERLANDS 6.34% 14.59%
- --------------------------------------------------------------------------------
RUSSIA 0.71% 1.67%
- --------------------------------------------------------------------------------
SWEDEN 1.45% 3.02%
- --------------------------------------------------------------------------------
SINGAPORE 2.11% 0.00%
- --------------------------------------------------------------------------------
TAIWAN 0.70% 0.00%
- --------------------------------------------------------------------------------
THAILAND 1.85% 0.00%
- --------------------------------------------------------------------------------
UNITED KINGDOM 24.89% 0.00%
- --------------------------------------------------------------------------------
SUBTOTAL 96.62% 100.00%
- --------------------------------------------------------------------------------
UNITED STATES 3.38% 0.00%
- --------------------------------------------------------------------------------
TOTAL 100.00% 100.00%
- --------------------------------------------------------------------------------
Pursuant to Section 854(b)(2) of the Internal Revenue Code, the Variable
Trust Asset Allocation Fund, the Variable Trust C&B Large Cap Value Fund, the
Variable Trust Equity Income Fund, the Variable Trust Large Company Core Fund,
theVariable Trust Large Company Growth Fund and the Variable Trust Multi Cap
Value Fund designate 41.38%, 100.00%, 100.00%, 100.00%, 100.00% and 100.00%,
respectively, of the ordinary income dividends distributed during the year as
qualifying for the corporate dividend-received deduction.
Pursuant to Section 852(b)(3) of the Internal Revenue Code, the following
funds designate capital gain dividends as follows:
Capital Gain
Fund Dividends
- --------------------------------------------------------------------------------
VARIABLE TRUST ASSET ALLOCATION FUND $ 4,200,908
- --------------------------------------------------------------------------------
VARIABLE TRUST DISCOVERY FUND 7,948,786
- --------------------------------------------------------------------------------
VARIABLE TRUST INTERNATIONAL CORE FUND 692,742
- --------------------------------------------------------------------------------
VARIABLE TRUST TOTAL RETURN BOND FUND 88,704
120
OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities and
information regarding how to obtain the results of such voting during the
most recent 12-month period ended June 30, is available without charge, upon
request, by calling 1-800-222-8222, visiting our Web site at
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS, or visiting the SEC Web site at
WWW.SEC.GOV.
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for each Fund are publicly available on
the Funds' Web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day
or more delayed basis. In addition, top ten holdings information for each
Fund is publicly available on the Funds' Web site on a monthly, seven-day or
more delayed basis. Each Fund files its complete schedule of portfolio
holdings with the SEC for the first and third quarters of each fiscal year on
Form N-Q, which is available without charge by visiting the SEC Web site at
WWW.SEC.GOV. In addition, each Fund's Form N-Q may be reviewed and copied at
the SEC's Public Reference Room in Washington, DC, and at regional offices in
New York City, at 233 Broadway, and in Chicago, at 175 West Jackson
Boulevard, Suite 900. Information about the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
BOARD OF TRUSTEES
The following table provides basic information about the Board of Trustees
(the "Trustees") of the Wells Fargo Variable Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information* of each Fund. Each of the Trustees
listed below acts in identical capacities for each of the 139 funds
comprising the Trust, Wells Fargo Funds Trust and Wells Fargo Master Trust
(collectively the "Fund Complex"). All of the non-interested Trustees are
also members of the Audit and Governance Committees of each Trust in the Fund
Complex. The address of each Trustee and Officer is 525 Market Street, 12th
Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite
term, however, each Trustee serves such term until reaching the mandatory
retirement age established by the Trustees.
NON-INTERESTED TRUSTEES ****
Thomas S. Goho Trustee, since 1987 Associate Professor of Finance, None
63 Wake Forest University,
Calloway School of Business
and Accountancy.
- ----------------------------------------------------------------------------------------------------------
Peter G. Gordon Trustee, since 1998 Chairman, CEO, and Co- None
63 (Chairman, since 2001) Founder of Crystal Geyser
Water Company and President
of Crystal Geyser Roxane Water
Company.
- ----------------------------------------------------------------------------------------------------------
Richard M. Leach Trustee, since 1987 Retired. Prior thereto, President None
72 of Richard M. Leach Associates
(a financial consulting firm).
- ----------------------------------------------------------------------------------------------------------
Timothy J. Penny Trustee, since 1996 Senior Counselor to the public None
54 relations firm of Himle-Horner
and Senior Fellow at the
Humphrey Institute,
Minneapolis, Minnesota (a pub-
lic policy organization).
- ----------------------------------------------------------------------------------------------------------
Donald C. Willeke Trustee, since 1996 Principal of the law firm of None
65 Willeke & Daniels.
- ----------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE**
- ----------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE *** PAST FIVE YEARS OTHER DIRECTORSHIPS
- ----------------------------------------------------------------------------------------------------------
J. Tucker Morse Trustee, since 1987 Private Investor/Real Estate None
61 Developer; Chairman of White
Point Capital, LLC.
121
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
OFFICERS*****
- ----------------------------------------------------------------------------------------------------------
POSITION HELD AND PRINCIPAL OCCUPATIONS DURING
NAME AND AGE LENGTH OF SERVICE PAST FIVE YEARS OTHER DIRECTORSHIPS
- ----------------------------------------------------------------------------------------------------------
Karla M. Rabusch President, since 2003 Executive Vice President of None
46 Wells Fargo Bank, N.A. and
President of Wells Fargo Funds
Management, LLC. Senior
Vice President and Chief
Administrative Officer of Wells
Fargo Funds Management, LLC
from 2001 to 2003. Vice
President of Wells Fargo Bank,
N.A. from 1997 to 2000.
- ----------------------------------------------------------------------------------------------------------
Stacie D. DeAngelo Treasurer, since 2003 Senior Vice President of Wells None
36 Fargo Bank, N.A. and Senior
Vice President of
Operations for Wells
Fargo Funds
Management, LLC.
Prior there-to,
Operations Manager
at Scudder Weisel
Capital, LLC from
2000 to 2001 and
Director of
Shareholder Services
at BISYS Fund
Services from 1999
to 2000.
- ----------------------------------------------------------------------------------------------------------
C. David Messman Secretary, since 2000 Vice President and Managing None
45 Senior Counsel of Wells Fargo
Bank, N.A. and Senior Vice
President and Secretary of Wells
Fargo Funds Management, LLC.
Vice President and Senior
Counsel of Wells Fargo Bank,
N.A. from 1996 to 2003.
- ----------------------------------------------------------------------------------------------------------
* The Statement of Additional Information includes additional
information about the Funds' Trustees and is available, without
charge, upon request, by calling 1-800-222-8222 or by visiting the
Funds' website at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
** As of December 31, 2005, one of the six Trustees is considered an
"interested person" of the Trusts as defined in the Investment
Company Act of 1940. The interested Trustee, J. Tucker Morse, is
affiliated with a government securities dealer that is registered
under the Securities Exchange Act of 1934, which is not itself
affiliated with Wells Fargo Funds Management, LLC.
*** Length of service dates reflects a Trustee's commencement of service
with the Trust's predecessor entities.
**** Effective January 1, 2006, Olivia Mitchell joined the Board of
Trustees as a non-interested Trustee.
***** Effective February 8, 2006, A. Erdem Cimen replaced Stacie D.
DeAngelo as the Treasurer of the Funds.
122
LIST OF ABBREVIATIONS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- --------------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
ABAG -- Association of Bay Area Governments
ADR -- American Depositary Receipt
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
Connie Lee -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STEERS -- Structured Enhanced Return Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
XLCA -- XL Capital Assurance
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[LOGO]
WELLS ADVANTAGE
FARGO FUNDS
More information about WELLS FARGO ADVANTAGE FUNDS (SM) is
available free upon request. To obtain literature, please
write, e-mail, visit the funds' Web site, or call:
WELLS FARGO ADVANTAGE FUNDS
P.O. Box 8266
Boston, MA 02266-8266
E-mail: wfaf@wellsfargo.com
Web: www.wellsfargo.com/advantage
Retail Investment Professionals: 888-877-9275
Institutional Investment Professionals:866-765-0778
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If
this report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call 1-800-222-8222.
or visit the funds' Web site at www.wellsfargo.com/advantagefunds Please
consider the investment objective, risks, charges and expenses of the investment
carefully before investing. This and other information about WELLS FARGO
ADVANTAGE FUNDS can be found in the current prospectus. Read the prospectus
carefully before you invest or send money.
Wells Fargo Funds Management, LLC, a whollyowned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for the WELLS
FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide
sub-advisory and other services for the Funds. The Funds are distributed by
WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company.
-----------------------------------------------------
NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE
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- --------------------------------------------------------------------------------
(c) 2006 Wells Fargo www.wellsfargo.com/advantagefunds RT55157 02-06
Advantage Funds, LLC. AVTF/AR124 12-05
All rights reserved.
ITEM 2. CODE OF ETHICS
As of the end of the period, December 31, 2005, Wells Fargo Variable Trust has
adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to
its President and Treasurer. A copy of the code of ethics is filed as an exhibit
to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of Wells Fargo Variable Trust has determined that Thomas
S. Goho is an audit committee financial expert, as defined in Item 3 of Form
N-CSR. Mr. Goho is independent for purposes of Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a)
AUDIT FEES - Provided below are the aggregate fees billed for the fiscal years
ended December 31, 2004 and December 31, 2005 for professional services rendered
by the principal accountant for the audit of the Registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements.
For the fiscal years ended December 31, 2004 and December 31, 2005, the
Audit Fees were $128,805 and $213,000, respectively.
(b)
AUDIT-RELATED FEES - There were no audit-related fees incurred for the fiscal
years ended December 31, 2004 and December 31, 2005 for assurance and related
services by the principal accountant for the Registrant.
(c)
TAX FEES - Provided below are the aggregate fees billed for the fiscal years
ended December 31, 2004 and December 31, 2004 for professional services rendered
by the principal accountant for the Registrant for tax compliance, tax advice,
and tax planning.
For the fiscal years ended December 31, 2004 and December 31, 2005, the
Tax Fees were $0 and $0, respectively.
For the fiscal years ended December 31, 2004 and December 31, 2005, the
Tax Fees were $13,500 and $20,040, respectively. The incurred Tax Fees are
comprised of tax preparation services.
(d)
ALL OTHER FEES - There were no other fees incurred for the fiscal years ended
December 31, 2004 and December 31, 2005.
(e)(1)
The Chairman of the Audit Committees is authorized to pre-approve: (1) audit
services to the mutual funds of Wells Fargo Funds Trust, Wells Fargo Variable
Trust and Wells Fargo Master Trust (the "Funds"); (2) non-audit tax or
compliance consulting or training services provided to the Funds by the
independent auditors ("Auditors") if the fees for any particular engagement are
not anticipated to exceed $50,000; and (3) non-audit tax or compliance
consulting or training services provided by the Auditors to a Fund's investment
adviser and its controlling entities (where pre-approval is required because the
engagement relates directly to the operations and financial reporting of the
Fund) if the fee to the Auditors for any particular engagement is not
anticipated to exceed $50,000. For any such pre-approval sought from the
Chairman, Management shall prepare a brief description of the proposed services.
If the Chairman approves of such service, he or she shall sign the statement
prepared by Management. Such written statement shall be presented to the full
Committees at their next regularly scheduled meetings.
(e)(2)
Not Applicable.
(f)
Not Applicable.
(g)
Provided below are the aggregate non-audit fees billed for the fiscal years
ended December 31, 2004 and December 31, 2005 by the principal accountant for
services rendered to the Registrant, and rendered to the Registrant's investment
adviser, and any entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the Registrant.
For the fiscal years ended December 31, 2004 and December 31, 2005, the
Registrant incurred non-audit fees in the amount of $77,000 and $115,000,
respectively. The non-audit fees consist of SAS70 control reviews of Wells
Fargo Bank, N.A., the Funds' custodian.
For the fiscal years ended December 31, 2004 and December 31, 2005, the
Registrant's investment adviser incurred non-audit fees in the amount of
$96,000 and $36,000 respectively. The non-audit fees consist of procedure
reviews for pending mergers associated with fund reorganizations and
examinations of securities pursuant to Rule 206(4)-2 under the Investment
Adviser Act of 1940.
(h)
The Registrant's audit committee of the board of directors has determined that
non-audit services rendered to the registrant's investment adviser, that were
not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of the Regulation
S-X, does not compromise the independence of the principal accountant.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a)(i) The President and Treasurer have concluded that the Wells Fargo Variable
Trust (the "Trust") disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances
that material information relating to the Trust is made known to them by the
appropriate persons based on their evaluation of these controls and procedures
as of a date within 90 days of the filing of this report.
(a)(ii) There were no significant changes in the Trust's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the evaluation referenced in (a)(i) above.
ITEM 10. EXHIBITS
(a) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto
as Exhibit 10a.
(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Wells Fargo Variable Trust
By: /s/ Karla M. Rabusch
Karla M. Rabusch
President
Date: February 21, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Wells Fargo Variable Trust
By: /s/ A. Erdem Cimen
A. Erdem Cimen
Treasurer
Date: February 21, 2006