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 - -------------------------------------------------------------------------------- DECEMBER 31, 2005 - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] Annual Report - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- Table of Contents Letter to Contractholders ............................................ 1 - -------------------------------------------------------------------------------- Performance Highlights - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- Portfolio of Investments - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- Notes to Financial Statements ........................................ 107 - -------------------------------------------------------------------------------- Report of Independent Registered Public Accounting Firm .............. 119 - -------------------------------------------------------------------------------- Tax Information (Unaudited) .......................................... 120 - -------------------------------------------------------------------------------- Other Information (Unaudited) ........................................ 121 - -------------------------------------------------------------------------------- List of Abbreviations ................................................ 123 --------------------------------------------------- NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE --------------------------------------------------- THIS PAGE IS INTENTIONALLY LEFT BLANK -- LETTER TO CONTRACTHOLDERS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND INVESTMENT OBJECTIVE - -------------------------------------------------------------------------------- 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? - -------------------------------------------------------------------------------- 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? - -------------------------------------------------------------------------------- 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? - -------------------------------------------------------------------------------- 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? - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF DECEMBER 31, 2005) - -------------------------------------------------------------------------------- 6-Month* 1-Year 5-Year 10-Year - ------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND (Incept. Date 04/15/1994) 4.03 4.99 2.59 7.79 - ------------------------------------------------------------------------------------------------------------ Benchmarks - ------------------------------------------------------------------------------------------------------------ S&P 500 Index(2) 5.76 4.91 0.54 9.07 - ------------------------------------------------------------------------------------------------------------ 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) - ----------------------------------------------------------------------------- Beta** 0.81 - ----------------------------------------------------------------------------- Weighted Average Coupon of Bond Portfolio 5.97% - ----------------------------------------------------------------------------- Weighted Average Maturity of Bond Portfolio 22.49 years - ----------------------------------------------------------------------------- Modified Duration of Bond Portfolio 13.04 years - ----------------------------------------------------------------------------- Portfolio Turnover 2% - ----------------------------------------------------------------------------- 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) - -------------------------------------------------------------------------------- [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) - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.13%, 11/15/2027 5.22% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.25%, 5/15/2030 4.36% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.38%, 2/15/2031 3.90% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.00%, 2/15/2026 3.19% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.88%, 8/15/2025 2.80% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.13%, 8/15/2029 2.68% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.50%, 11/15/2026 2.64% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.50%, 8/15/2028 2.60% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.25%, 2/15/2029 2.45% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.63%, 2/15/2027 2.36% GROWTH OF $10,000 INVESTMENT(6) - -------------------------------------------------------------------------------- [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 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND INVESTMENT OBJECTIVE - -------------------------------------------------------------------------------- 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? - -------------------------------------------------------------------------------- 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? - -------------------------------------------------------------------------------- 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 123 THIS PAGE IS INTENTIONALLY LEFT BLANK -- THIS PAGE IS INTENTIONALLY LEFT BLANK -- THIS PAGE IS INTENTIONALLY LEFT BLANK -- [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 ----------------------------------------------------- - -------------------------------------------------------------------------------- (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