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, 2008
Date of reporting period: December 31, 2008
ITEM 1. REPORT TO SHAREHOLDERS
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[GRAPHICS] ANNUAL REPORT
DECEMBER 31, 2008
WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS
- WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND
- WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND
- WELLS FARGO ADVANTAGE VT DISCOVERY FUND (SM)
- WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND
- WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
- WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND
- WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND
- WELLS FARGO ADVANTAGE VT MONEY MARKET FUND
- WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (SM)
- WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND
- WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND
- WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND
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Contents
LETTER TO SHAREHOLDERS........................................................... 2
PERFORMANCE HIGHLIGHTS
Wells Fargo Advantage VT Asset Allocation Fund................................... 6
Wells Fargo Advantage VT C&B Large Cap Value Fund................................ 10
Wells Fargo Advantage VT Discovery Fund.......................................... 16
Wells Fargo Advantage VT Equity Income Fund...................................... 22
Wells Fargo Advantage VT International Core Fund................................. 26
Wells Fargo Advantage VT Large Company Core Fund................................. 30
Wells Fargo Advantage VT Large Company Growth Fund............................... 34
Wells Fargo Advantage VT Money Market Fund....................................... 40
Wells Fargo Advantage VT Opportunity Fund........................................ 46
Wells Fargo Advantage VT Small Cap Growth Fund................................... 50
Wells Fargo Advantage VT Small/Mid Cap Value Fund................................ 56
Wells Fargo Advantage VT Total Return Bond Fund.................................. 62
FUND EXPENSES.................................................................... 66
PORTFOLIO OF INVESTMENTS
Wells Fargo Advantage VT Asset Allocation Fund................................... 68
Wells Fargo Advantage VT C&B Large Cap Value Fund................................ 83
Wells Fargo Advantage VT Discovery Fund.......................................... 87
Wells Fargo Advantage VT Equity Income Fund...................................... 92
Wells Fargo Advantage VT International Core Fund................................. 96
Wells Fargo Advantage VT Large Company Core Fund................................. 100
Wells Fargo Advantage VT Large Company Growth Fund............................... 104
Wells Fargo Advantage VT Money Market Fund....................................... 107
Wells Fargo Advantage VT Opportunity Fund........................................ 111
Wells Fargo Advantage VT Small Cap Growth Fund................................... 116
Wells Fargo Advantage VT Small/Mid Cap Value Fund................................ 121
Wells Fargo Advantage VT Total Return Bond Fund.................................. 125
FINANCIAL STATEMENTS
Statements of Assets and Liabilities............................................. 138
Statements of Operations......................................................... 142
Statements of Changes in Net Assets.............................................. 146
Financial Highlights............................................................. 152
NOTES TO FINANCIAL STATEMENTS.................................................... 156
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.......................... 170
OTHER INFORMATION................................................................ 171
LIST OF ABBREVIATIONS............................................................ 174
The views expressed are as of December 31, 2008, and are those of the Fund
managers. Any reference to a specific security in this report is not a
recommendation to purchase or sell any specific security or adopt any investment
strategy. 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 VARIABLE TRUST FUNDS.
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
WELLS FARGO INVESTMENT HISTORY
1971 Introduced one of the first institutional index funds.
1978 One of the first firms to apply asset allocation theory to investment
portfolio management.
1985 One of the first firms to create a three-way asset allocation fund that
"tilts" investments toward portions of the market that our proprietary
models indicate will perform better.
1994 Introduced target date funds that automatically reallocate the asset mix
over specific time horizons.
1997 Wells Fargo launched the Wealth Builder Portfolios, a unique "fund of
funds" that uses flexible asset allocation strategies to shift assets.
1999 Reorganized the NORWEST ADVANTAGE FUNDS(R) and STAGECOACH FUNDS(R) into
the WELLS FARGO FUNDS(R).
2003 Expanded fixed-income, small cap, and emerging markets lineup from
Montgomery Asset Management, LLC.
2004 Added additional large cap and mid cap funds to the lineup by adopting the
Cooke & Bieler value funds.
2005 Wells Fargo Funds merged with Strong Funds to become WELLS FARGO ADVANTAGE
FUNDS, forming a fund family of over 120 funds and placing it among the
top 20 mutual fund families in the United States.
2006 Enhanced and renamed the WELLS FARGO ADVANTAGE OUTLOOK FUNDS(SM) to the
WELLS FARGO ADVANTAGE DOW JONES TARGET DATE FUNDS(SM), which seek to
replicate returns of the appropriate Dow Jones Target Date Indexes, the
first life cycle indexes in the investment industry.
WELLS FARGO ADVANTAGE FUNDS(R)
Wells Fargo Advantage Funds skillfully guides institutions, financial advisors,
and individuals through the investment terrain to help them reach their
financial objectives. Everything we do on behalf of our investors is backed by
our unique combination of qualifications.
STRENGTH
Our organization is built on the standards of integrity and service established
by our parent company -- Wells Fargo & Company -- more than 150 years ago. Our
diverse family of mutual funds covers a broad spectrum of investment styles and
asset classes. And, because we're part of a widely diversified financial
enterprise, we offer the scale and resources to help investors succeed,
providing access to complementary solutions such as separately managed accounts,
college investing plans, and retirement plans.
EXPERTISE
Our approach to investing is guided by the belief that agile, independent
investment teams -- each with its own distinct strengths and disciplines --
provide a superior level of insight and expertise. Each team is free to
concentrate on managing money through well-defined philosophies and processes
that have proven to be consistent and repeatable over time.
PARTNERSHIP
Our collaborative approach is built around understanding the needs and goals of
our clients. By adhering to core principles of sound judgment and steady
guidance, we support you through every stage of the investment decision process.
For 529 plans, an investor's or a designated beneficiary's home state may offer
state tax or other benefits that are only available for investments in that
state's qualified tuition program. Please consider this before investing.
Carefully consider the investment objectives, risks, charges, and expenses
before investing. For a current prospectus for WELLS FARGO ADVANTAGE FUNDS or a
current program description for certain 529 college savings plans, containing
this and other information, visit www.wellsfargo.com/advantagefunds. Read it
carefully before investing.
Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for Wells
Fargo Advantage Funds, the Wells Fargo AdvisorSM program, Wells Fargo Managed
Account Services, and certain 529 college savings plans. Other affiliates of
Wells Fargo & Company provide subadvisory and other services for the Funds. The
Funds and shares in the 529 plans are distributed by WELLS FARGO FUNDS
DISTRIBUTOR, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company.
Not part of the annual report.
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
WELLS FARGO ADVANTAGE FUNDS OFFERS MORE THAN 100 MUTUAL FUNDS ACROSS A WIDE
RANGE OF ASSET CLASSES, REPRESENTING OVER $170 BILLION IN ASSETS UNDER
MANAGEMENT, AS OF DECEMBER 31, 2008.
EQUITY FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
Asia Pacific Fund Growth Fund Small Cap Disciplined Fund
C&B Large Cap Value Fund Growth Equity Fund Small Cap Growth Fund
C&B Mid Cap Value Fund Index Fund Small Cap Opportunities Fund
Capital Growth Fund International Core Fund Small Cap Value Fund
Common Stock Fund International Equity Fund Small Company Growth Fund
Discovery Fund+ International Value Fund Small Company Value Fund
Diversified Equity Fund Large Cap Appreciation Fund Small/Mid Cap Value Fund
Diversified Small Cap Fund Large Cap Growth Fund Social Sustainability Fund+
Emerging Growth Fund Large Company Core Fund Specialized Financial Services Fund
Emerging Markets Equity Fund Large Company Growth Fund Specialized Technology Fund
Endeavor Select Fund+ Large Company Value Fund Strategic Small Cap Value Fund
Enterprise Fund+ Mid Cap Disciplined Fund U.S. Value Fund
Equity Income Fund Mid Cap Growth Fund
Equity Value Fund Opportunity Fund+
BOND FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
California Limited-Term Tax-Free Fund Inflation-Protected Bond Fund Short-Term Municipal Bond Fund
California Tax-Free Fund Intermediate Tax/AMT-Free Fund Stable Income Fund
Colorado Tax-Free Fund Minnesota Tax-Free Fund Strategic Income Fund
Diversified Bond Fund Municipal Bond Fund Total Return Bond Fund
Government Securities Fund(1) Short Duration Government Bond Fund(1) Ultra Short-Term Income Fund
High Income Fund Short-Term Bond Fund Ultra Short-Term Municipal Income Fund
Income Plus Fund Short-Term High Yield Bond Fund Wisconsin Tax-Free Fund
ASSET ALLOCATION FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
Aggressive Allocation Fund WealthBuilder Growth Allocation Target 2020 Fund(2)+
Portfolio+
Asset Allocation Fund WealthBuilder Growth Balanced Target 2025 Fund(2)+
Portfolio+
Conservative Allocation Fund WealthBuilder Moderate Balanced Target 2030 Fund(2)+
Portfolio+
Growth Balanced Fund WealthBuilder Tactical Equity Target 2035 Fund(2)+
Portfolio+
Moderate Balanced Fund Target Today Fund(2)+ Target 2040 Fund(2)+
WealthBuilder Conservative Allocation Target 2010 Fund(2)+ Target 2045 Fund(2)+
Portfolio+
WealthBuilder Equity Portfolio+ Target 2015 Fund(2)+ Target 2050 Fund(2)+
MONEY MARKET FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
100% Treasury Money Market Fund(1) Heritage Money Market Fund+ National Tax-Free Money Market Fund
California Tax-Free Money Market Fund Minnesota Money Market Fund National Tax-Free Money Market Trust
California Tax-Free Money Market Trust Money Market Fund Overland Express Sweep Fund+
Cash Investment Money Market Fund Money Market Trust Prime Investment Money Market Fund
Government Money Market Fund(1) Municipal Money Market Fund Treasury Plus Money Market Fund(1)
VARIABLE TRUST FUNDS(3)
- ----------------------------------------------------------------------------------------------------------------------------
VT Asset Allocation Fund VT International Core Fund VT Opportunity Fund+
VT C&B Large Cap Value Fund VT Large Company Core Fund VT Small Cap Growth Fund
VT Discovery Fund+ VT Large Company Growth Fund VT Small/Mid Cap Value Fund
VT Equity Income Fund VT Money Market Fund VT Total Return Bond Fund
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 Wells
Fargo Advantage Money Market Funds seek to preserve the value of your investment
at $1.00 per share, it is possible to lose money by investing in a money market
fund.
- --------------------------------------------------------------------------------
1. The U.S. government guarantee applies to certain of the underlying
securities and NOT to shares of the Fund.
2. The full name of this Fund series is the Wells Fargo Advantage Dow Jones
Target Date Funds(SM).
3. The Variable Trust Funds are generally available only through insurance
company variable contracts.
+ In this report, the Wells Fargo Advantage Discovery Fund(SM), Wells Fargo
Advantage Endeavor Select Fund(SM), Wells Fargo Advantage Enterprise
Fund(SM), Wells Fargo Advantage Opportunity Fund(SM), Wells Fargo
Advantage Social Sustainability Fund(SM), Wells Fargo Advantage
WealthBuilder Conservative Allocation Portfolio(SM), Wells Fargo Advantage
WealthBuilder Equity Portfolio(SM), Wells Fargo Advantage WealthBuilder
Growth Allocation Portfolio(SM), Wells Fargo Advantage WealthBuilder
Growth Balanced Portfolio(SM), Wells Fargo Advantage WealthBuilder
Moderate Balanced Portfolio(SM), Wells Fargo Advantage WealthBuilder
Tactical Equity Portfolio(SM), Wells Fargo Advantage Dow Jones Target
Today Fund(SM), Wells Fargo Advantage Dow Jones Target 2010 Fund(SM),
Wells Fargo Advantage Dow Jones Target 2015 Fund(SM), Wells Fargo
Advantage Dow Jones Target 2020 Fund(SM), Wells Fargo Advantage Dow Jones
Target 2025 Fund(SM), Wells Fargo Advantage Dow Jones Target 2030
Fund(SM), Wells Fargo Advantage Dow Jones Target 2035 Fund(SM), Wells
Fargo Advantage Dow Jones Target 2040 Fund(SM), Wells Fargo Advantage Dow
Jones Target 2045 Fund(SM), Wells Fargo Advantage Dow Jones Target 2050
Fund(SM), Wells Fargo Advantage Heritage Money Market Fund(SM), Wells
Fargo Advantage Overland Express Sweep Fund(SM), Wells Fargo Advantage VT
Discovery Fund(SM), and Wells Fargo Advantage VT Opportunity Fund(SM) are
referred to as the Discovery Fund, Endeavor Select Fund, Enterprise Fund,
Opportunity Fund, Social Sustainability Fund, WealthBuilder Conservative
Allocation Portfolio, WealthBuilder Equity Portfolio, WealthBuilder Growth
Allocation Portfolio, WealthBuilder Growth Balanced Portfolio,
WealthBuilder Moderate Balanced Portfolio, WealthBuilder Tactical Equity
Portfolio, Target Today Fund, Target 2010 Fund, Target 2015 Fund, Target
2020 Fund, Target 2025 Fund, Target 2030 Fund, Target 2035 Fund, Target
2040 Fund, Target 2045 Fund, Target 2050 Fund, Heritage Money Market Fund,
Overland Express Sweep Fund, VT Discovery Fund, and VT Opportunity Fund,
respectively.
Not part of the annual report.
2 Wells Fargo Advantage Variable Trust Funds
Letter to Shareholders
[PHOTO OF KARLA M. RABUSCH]
KARLA M. RABUSCH,
President
WELLS FARGO ADVANTAGE FUNDS
AS THE PERIOD BEGAN, DELINQUENCIES AND FORECLOSURES IN THE HOUSING MARKET
CONTINUED TO ACCELERATE, FURTHER BOOSTING HOUSING INVENTORY LEVELS AND
DEPRESSING HOME PRICES.
BY THE END OF THE 12-MONTH PERIOD, THE FINANCIAL LANDSCAPE WAS IN THE MIDST OF
ITS MOST CONSEQUENTIAL CHANGES SINCE THE 1930S.
Dear Valued Shareholder,
We are pleased to provide you with this annual report for the Wells Fargo
Advantage Variable Trust Funds for the 12-month period that ended December 31,
2008. The period was marked by extreme volatility across the financial markets
and proved to be a challenging time for investors. Although periods of
volatility can present challenges, we believe that investors should remember the
importance of maintaining a long-term investment strategy based on their
individual goals and risk tolerance.
MARKET VOLATILITY SPIKED AMID GLOBAL FINANCIAL CRISIS.
Volatility across the financial markets rose to record highs during the 12-month
period. Dislocations that had first surfaced in the subprime mortgage market
after years of credit excesses and lax lending standards spread across the
financial system. This contagion resulted in a vicious circle of declining asset
values that escalated the credit crunch into a global financial crisis.
As the period began, delinquencies and foreclosures in the housing market
continued to accelerate, further boosting housing inventory levels and
depressing home prices. Mounting loan losses among lenders and a decline in the
value of the mortgage-backed securities (MBS) tied to those loans hurt the
capital ratios of the overleveraged institutions that held the securities. As
the market for lower-quality securities dried up, financial institutions and
other investors were forced to sell their most-liquid securities to maintain
liquidity, required capital ratios, and, in some cases, solvency. This caused
further deterioration in the value of these and other securities, which in turn
caused further deterioration in the asset bases of the financial institutions
that held the securities.
RAPID STRUCTURAL CHANGES TRANSFORMED THE FINANCIAL LANDSCAPE.
By the end of the 12-month period, the financial landscape was in the midst of
its most consequential changes since the 1930s. Fear reached extreme levels in
March, with the forced sale of failing investment bank Bear Stearns to JPMorgan
Chase and again during September and October in one of the most tumultuous
two-month spans that the financial markets have ever experienced. The failure or
government takeover of several of the nation's most well-known financial
institutions led to a crisis of confidence that resulted in the global financial
system becoming nearly frozen, with large financial institutions too fearful
even to lend to one another.
In September alone, government-sponsored enterprises Fannie Mae and Freddie Mac
were placed into government receivership, investment bank Lehman Brothers filed
Chapter 11 bankruptcy, Merrill Lynch was hastily sold to Bank of America, the
government effectively took over insurer American International Group,
investment banks Goldman Sachs and Morgan Stanley converted into bank holding
companies and JPMorgan Chase bought Washington Mutual. In December, interbank
lending rates began to come down a bit, but they remained far higher than normal
through year-end.
Wells Fargo Advantage Variable Trust Funds 3
Letter to Shareholders
THROUGHOUT THE 12-MONTH PERIOD, THE FED TOOK REPEATED ACTIONS TO STABILIZE THE
FINANCIAL SYSTEM.
GOVERNMENT TOOK UNPRECEDENTED ACTIONS TO STABILIZE FINANCIAL SYSTEM.
Throughout the 12-month period, the Fed took repeated actions to stabilize the
financial system. This included a rapid succession of cuts in the federal funds
rate to a range of 0% to 0.25% by December 2008, the lowest federal funds rate
in history; large injections of capital into the financial system; and the
initiation of several nontraditional, nonmonetary programs.
In addition to successive cuts in the federal funds rate, Congress passed an
economic stimulus bill in February 2008 that featured tax-rebate checks for
consumers. This helped boost spending through early summer, but spending fell
sharply in July and remained weak throughout the rest of the period. In October,
Congress passed the Emergency Economic Stabilization Act of 2008, which
authorized the Treasury to establish the $700 billion Troubled Asset Relief
Program (TARP) to purchase distressed mortgage securities and other assets from
financial institutions. This later morphed into a program for providing capital
directly to banks and the automotive industry.
In late November, two more programs were implemented: a $600 billion program to
buy the debt and MBS of Fannie Mae, Freddie Mac, and other agencies and a $200
billion Term Asset-Backed Securities Loan Facility (TALF) to support the
consumer credit and small business segments of the economy.
ECONOMIC GROWTH WEAKENED, BUT INFLATION PRESSURES EASED.
Economic growth weakened during the 12-month period, leading the National Bureau
of Economic Research to declare on December 1, 2008, that a U.S. recession had
begun in December 2007. Amid this environment, consumer confidence slipped as
income growth slowed and the unemployment rate rose to 7.2%.
On the positive side, the economic slowing helped ease the inflation fears that
had grown due to surging gasoline and food prices during the first half of 2008.
Headline inflation declined as crude oil prices reversed rapidly in the second
half of the year. This gave the Fed more leeway for interest-rate cuts and
additional stimulus without the immediate concern of higher inflation pressures.
EQUITY MARKETS EXPERIENCED EXTREME VOLATILITY.
The equity markets were turbulent throughout the year, with volatility spiking
to unprecedented levels in September 2008 and remaining elevated through
year-end. The broad market, as measured by the Standard & Poor's 500 Index,
declined throughout the year and ended the 12-month period down 37%, with a
nearly 17% decline during October in the worst month for the stock markets since
October 1987. For the year, the NASDAQ Composite Index declined 40%, falling
more than 17% in October.
Small cap stocks outpaced both large cap and mid cap stocks in 2008 but still
declined nearly 34%, as measured by the Russell 2000(R) Index (1). The value
style slightly outpaced the growth style, in spite of the value indices' higher
weightings to the volatile financial sector.
- ---------------
1. 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 Index. You cannot
invest directly in an index.
4 Wells Fargo Advantage Variable Trust Funds
Letter to Shareholders
Despite an extremely difficult market and economic environment in the United
States, the U.S. stock markets outperformed the international markets for the
year. International stocks, as measured by the MSCI EAFE(R) Index (2), declined
more than 43% during 2008. Emerging markets suffered even larger declines, with
the MSCI Emerging Markets Index (3) down more than 53% for the 12-month period.
GOVERNMENT SECURITIES DOMINATED FIXED-INCOME MARKETS.
Government securities was the favored asset class in 2008, generating positive
returns while most other fixed-income classes and equities were in decline.
Agency debt and agency MBS benefited from the explicit support of the government
in various forms over the last four months of the year. It is no coincidence
that U.S. Treasuries, agencies, and MBS produced positive returns for the year
while corporates, asset-backed securities (ABS), commercial mortgage-backed
securities (CMBS), and municipal bonds lost value. These latter credit sectors
did not receive the same explicit government support that the former ones did.
DON'T LET SHORT-TERM VOLATILITY DERAIL LONG-TERM INVESTMENT GOALS.
Although periods of volatility can present challenges, experience has taught us
that maintaining a long-term investment strategy based on individual goals and
risk tolerance can be an effective way to plan for the future. As a whole, WELLS
FARGO ADVANTAGE FUNDS represent investments across a broad range of asset
classes and investment styles, giving you an opportunity to create a diversified
investment portfolio. While diversification may not prevent losses in a
downturn, it may help to reduce them and provide you with one way of managing
risk. Our diverse family of mutual funds may also help. We offer more than 100
Funds that cover a broad spectrum of investment styles and asset classes.
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
- -----------------
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. The Morgan Stanley Capital International Emerging Markets (MSCI Emerging
Markets) Index is a free float-adjusted market capitalization index
designed to measure the equity market performance in the global emerging
markets. The index is currently comprised of 25 emerging market country
indices. You cannot invest directly in an index.
6 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (the Fund) seeks long-term
total return, consisting of capital appreciation and current income.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Galen G. Blomster, CFA
Gregory T. Genung, CFA
Jeffrey P. Mellas, CAIA
FUND INCEPTION
April 15, 1994
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- ---- --------
VT Asset Allocation Fund (29.11)%
BENCHMARK
S&P 500 Index (1) (37.00)%
Barclays Capital 20+ Year U.S. Treasury
Index (2) 33.72%
Asset Allocation Composite Index (3) (13.82)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST ASSET ALLOCATION FUND ARE
1.00% AND 1.04%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (4)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
ASSET ALLOCATION
VT ASSET LEHMAN BROTHERS COMPOSITE
ALLOCATION FUND S & P 500 INDEX 20+ TREASURY INDEX BENCHMARK INDEX
--------------- --------------- ------------------ ----------------
12/31/1998 10,000 10,000 10,000 10,000
1/31/1999 10,342 10,418 10,095 10,288
2/28/1999 9,970 10,094 9,556 9,875
3/31/1999 10,254 10,498 9,513 10,093
4/30/1999 10,545 10,905 9,521 10,330
5/31/1999 10,322 10,647 9,370 10,109
6/30/1999 10,610 11,238 9,255 10,395
7/31/1999 10,377 10,887 9,202 10,176
8/31/1999 10,325 10,834 9,159 10,125
9/30/1999 10,176 10,537 9,226 9,986
10/31/1999 10,537 11,203 9,226 10,365
11/30/1999 10,628 11,431 9,156 10,458
12/31/1999 10,933 12,104 8,994 10,752
1/31/2000 10,705 11,496 9,151 10,502
2/29/2000 10,781 11,279 9,476 10,531
3/31/2000 11,558 12,381 9,831 11,305
4/30/2000 11,306 12,009 9,733 11,055
5/31/2000 11,116 11,763 9,684 10,895
6/30/2000 11,374 12,053 9,894 11,150
7/31/2000 11,328 11,865 10,090 11,132
8/31/2000 11,854 12,601 10,336 11,654
9/30/2000 11,390 11,936 10,159 11,204
10/31/2000 11,422 11,886 10,329 11,249
11/30/2000 10,937 10,949 10,679 10,868
12/31/2000 11,044 11,003 10,929 11,001
1/31/2001 11,324 11,393 10,928 11,233
2/28/2001 10,580 10,355 11,120 10,697
3/31/2001 10,067 9,699 11,031 10,255
4/30/2001 10,549 10,453 10,685 10,603
5/31/2001 10,621 10,523 10,703 10,651
6/30/2001 10,469 10,267 10,813 10,538
7/31/2001 10,517 10,166 11,241 10,641
8/31/2001 10,151 9,530 11,510 10,342
9/30/2001 9,645 8,760 11,537 9,850
10/31/2001 9,936 8,927 12,223 10,195
11/30/2001 10,277 9,612 11,575 10,446
12/31/2001 10,276 9,696 11,325 10,410
1/31/2002 10,201 9,555 11,484 10,376
2/28/2002 10,084 9,371 11,610 10,300
3/31/2002 10,211 9,723 11,074 10,340
4/30/2002 9,943 9,134 11,528 10,133
5/31/2002 9,901 9,067 11,529 10,087
6/30/2002 9,565 8,421 11,733 9,726
7/31/2002 9,072 7,765 12,105 9,393
8/31/2002 9,174 7,816 12,737 9,624
9/30/2002 8,396 6,967 13,301 9,166
10/31/2002 8,952 7,580 12,805 9,511
11/30/2002 9,380 8,025 12,701 9,814
12/31/2002 8,955 7,554 13,251 9,636
1/31/2003 8,758 7,357 13,210 9,472
2/28/2003 8,663 7,246 13,628 9,504
3/31/2003 8,718 7,316 13,400 9,494
4/30/2003 9,323 7,919 13,572 10,010
5/31/2003 9,789 8,335 14,441 10,581
6/30/2003 9,860 8,442 14,145 10,573
7/31/2003 9,833 8,591 12,688 10,248
8/31/2003 10,016 8,758 12,965 10,455
9/30/2003 9,991 8,665 13,677 10,616
10/31/2003 10,400 9,155 13,254 10,843
11/30/2003 10,478 9,236 13,331 10,924
12/31/2003 10,934 9,720 13,490 11,317
1/31/2004 11,126 9,898 13,761 11,531
2/29/2004 11,275 10,036 14,060 11,725
3/31/2004 11,153 9,884 14,275 11,689
4/30/2004 10,890 9,729 13,382 11,285
5/31/2004 10,995 9,863 13,328 11,357
6/30/2004 11,183 10,054 13,457 11,532
7/31/2004 10,891 9,722 13,703 11,386
8/31/2004 10,983 9,761 14,270 11,599
9/30/2004 11,086 9,866 14,425 11,723
10/31/2004 11,251 10,017 14,670 11,908
11/30/2004 11,589 10,422 14,306 12,076
12/31/2004 11,956 10,777 14,701 12,454
1/31/2005 11,790 10,514 15,218 12,446
2/28/2005 11,965 10,735 15,017 12,534
3/31/2005 11,773 10,545 14,915 12,365
4/30/2005 11,652 10,345 15,498 12,416
5/31/2005 12,014 10,674 15,973 12,802
6/30/2005 12,065 10,690 16,297 12,915
7/31/2005 12,379 11,087 15,808 13,046
8/31/2005 12,341 10,986 16,338 13,146
9/30/2005 12,327 11,075 15,753 13,020
10/31/2005 12,098 10,890 15,409 12,774
11/30/2005 12,490 11,302 15,516 13,094
12/31/2005 12,552 11,306 15,962 13,246
1/31/2006 12,783 11,605 15,761 13,388
2/28/2006 12,850 11,636 15,954 13,471
3/31/2006 12,851 11,781 15,210 13,319
4/30/2006 12,919 11,939 14,786 13,275
5/31/2006 12,600 11,596 14,801 13,048
6/30/2006 12,629 11,611 14,941 13,106
7/31/2006 12,724 11,683 15,255 13,263
8/31/2006 13,039 11,960 15,740 13,617
9/30/2006 13,349 12,268 16,044 13,931
10/31/2006 13,736 12,668 16,179 14,248
11/30/2006 13,993 12,909 16,565 14,543
12/31/2006 14,076 13,090 16,110 14,502
1/31/2007 14,215 13,287 15,936 14,569
2/28/2007 14,056 13,027 16,500 14,601
3/31/2007 14,136 13,173 16,211 14,594
4/30/2007 14,666 13,756 16,344 15,028
5/31/2007 15,037 14,236 15,993 15,209
6/30/2007 14,824 14,000 15,826 14,992
7/31/2007 14,714 13,566 16,325 14,901
8/31/2007 15,001 13,770 16,627 15,141
9/30/2007 15,362 14,285 16,678 15,496
10/31/2007 15,599 14,512 16,935 15,738
11/30/2007 15,269 13,905 17,843 15,676
12/31/2007 15,145 13,809 17,745 15,573
1/31/2008 14,369 12,981 18,106 15,138
2/28/2008 13,934 12,559 18,076 14,828
3/31/2008 13,967 12,505 18,376 14,886
4/30/2008 14,445 13,114 17,948 15,180
5/31/2008 14,497 13,284 17,509 15,145
6/30/2008 13,503 12,164 17,935 14,524
7/31/2008 13,346 12,062 17,823 14,412
8/31/2008 13,574 12,236 18,390 14,716
9/30/2008 12,645 11,146 18,643 14,008
10/31/2008 10,870 9,274 18,266 12,481
11/30/2008 10,377 8,609 20,919 12,664
12/31/2008 10,736 8,700 23,729 13,421
- ----------
1. 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.
2. The Barclays Capital 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.
Wells Fargo Advantage Variable Trust Funds 7
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - While the Fund underperformed the Asset Allocation Composite Index and the
Barclays Capital 20+ Treasury Index, it outperformed the S&P 500 Index.
- - At the end of the period, the Fund was at a maximum equity overweighting,
with an effective target allocation of 85% stocks and 15% bonds.
- - Even though the Fund's high exposure to stocks hurt relative performance,
at the close of the period, we continued to see stocks as more attractive
than bonds.
INVESTORS FLOCKED TOWARD SAFETY DURING 2008 AS THE ECONOMY CONTINUED TO LANGUISH
UNDER THE WEIGHT OF THE ECONOMIC DOWNTURN.
U.S treasury bonds rallied to unprecedented low yields as investors continued to
exit equities and other assets that they deemed to be risky. Further weakening
real estate values and stock portfolios extended the decline in household
wealth. Credit continued to tighten to a point where companies had trouble
securing working capital from lenders and homebuyers had difficulty obtaining
mortgage loans. Many companies were forced into bankruptcy or into a position of
being acquired by a competitor as banks were reluctant to extend credit and
retail spending retracted in anticipation of a long recession. While the
financial sector was hardest hit with companies such as Bear Stearns, Lehman
Brothers, and Countrywide either being acquired or filing for bankruptcy, other
industries such as real estate, newspapers, and retailers also saw companies
forced into bankruptcy. The subprime mortgage dilemma continued to take its toll
as quasi-government agencies Fannie Mae and Freddie Mac were pushed into the
conservatorship of the U.S. government. The unemployment rate jumped from 4.90%
to 7.20% during the period and poignantly reflected the difficult state of the
economy. In addition, consumers were further strapped as the price of crude oil
peaked at over $145 per barrel early in the period and required consumers to dig
deep into their pockets to fill
SECTOR DISTRIBUTION(5)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 6%
Consumer Staples 8%
Energy 9%
Financials 9%
Healthcare 10%
Industrials 7%
Information Technology 10%
Materials 2%
Telecommunications Services 3%
U.S. Treasury Securities 33%
Utilities 3%
- ---------------
3. The Asset Allocation Composite Index is weighted 60% in the S&P 500 Index
and 40% in the Barclays Capital 20+ Year U.S. Treasury Index. You cannot
invest directly in an Index.
4. The chart compares the performance of the WELLS FARGO ADVANTAGE VT ASSET
ALLOCATION FUND for the most recent ten years of the Fund with the Asset
Allocation Composite Index, S&P 500 Index and the Barclays Capital 20+
Year U.S. Treasury Index. The chart assumes a hypothetical $10,000
investment and reflects all operating expenses of the Fund.
5. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculation of sector distribution.
8 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (CONTINUED)
gas tanks, thereby causing them to spend less on other goods and services. All
of these factors led consumer confidence to its lowest point since the
Confidence Board began keeping records in 1969. Consequently, investors sold out
of the stock market throughout the period, culminating with the S&P 500 Index
ending the period with a decline of 37.00%. Indeed, none of the ten sectors in
the S&P 500 Index had positive gains for the year, however, consumer staples
came away the least scathed, while the financials space was the laggard.
The Fund invests a neutral allocation in the underlying portfolio of 60% stocks
and 40% bonds and employs futures contracts to tactically make adjustments to
that allocation. The Tactical Asset Allocation (TAA) Model shifted to its
maximum overweight equity position in late 2007, and we maintained that
effective allocation of 85% stocks/15% bonds throughout 2008. During the year,
investors fled from stocks to the safety of U.S. Treasury securities, leading
stocks to underperform bonds. This underperformance of stocks to bonds detracted
from the Fund's performance for the year. In addition, investments made with
cash collateral received from securities lending activities, while generally
considered a benign means of earning additional income, detracted from portfolio
performance during this period of distress in short term markets, primarily due
to the decline in value of a number of the collateral holdings.
THERE WERE NO CHANGES TO THE FUND'S TACTICAL ALLOCATION.
There were changes to the underlying indices, and we made those adjustments
congruently with the S&P 500 Index and the Barclays Capital 20+ Treasury Index
throughout the year.
THE TAA MODEL CONTINUES TO FAVOR STOCKS RELATIVE TO BONDS.
The stock market seems closer to the bottom than to the top of this cycle, and
in our opinion, bonds appear rich at these unprecedented low yields. A great
deal of stimulus has been directed toward relieving this recession. For example,
the Fed cut the federal funds target rate to a range of 0.25% to 0.00% and vowed
to purchase long-dated bonds. In addition, the U.S. Treasury provided $700
billion toward the recovery effort, and President-elect Obama proposed an $825
billion stimulus package. We believe that equities will eventually benefit from
these measures once they take hold. Consequently, we will remain overweight
stocks until the relative valuation between stocks and bond returns to a more
normal environment.
TEN LARGEST PORTFOLIO HOLDINGS (6)
(AS OF DECEMBER 31, 2008)
U.S. Treasury Bond, 4.50%, 2/15/2036 6.69%
U.S. Treasury Bond, 4.50%, 5/15/2038 5.68%
U.S. Treasury Bond, 6.25%, 5/15/2030 4.64%
U.S. Treasury Bond, 5.38%, 2/15/2031 4.33%
U.S. Treasury Bond, 5.00%, 5/15/2037 4.22%
U.S. Treasury Bond, 4.38%, 2/15/2038 4.21%
U.S. Treasury Bond, 4.75%, 2/15/2037 4.09%
Exxon Mobil Corporation 3.00%
U.S. Treasury Bond, 6.13%, 8/15/2029 2.79%
U.S. Treasury Bond, 5.25%, 2/15/2029 2.70%
- ------------
6. The ten largest portfolio holdings are calculated based on the market
value of the securities divided by total market value of the portfolio of
the Fund.
Wells Fargo Advantage Variable Trust Funds 9
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
-------------------
6 Months* 1 Year 5 Year 10 Year Gross (7) Net (8)
--------- ------ ------ ------- --------- -------
VT Asset Allocation Fund (20.49) (29.11) (0.37) 0.71 1.04% 1.00%
S&P 500 Index (1) (28.48) (37.00) (2.19) (1.38)
Barclays Capital 20+ Year U.S. Treasury Index (2) 32.31 33.72 11.96 9.02
Asset Allocation Composite Index (3) (7.60) (13.82) 3.47 2.99
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Balanced funds may invest in stocks and bonds. Stock 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. The use of derivatives may reduce
returns and/or increase volatility. Consult the Fund's prospectus for additional
information on these and other risks.
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.
- --------------
7. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
8. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
10 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (the Fund) seeks maximum
long-term total return (current income and capital appreciation), consistent
with minimizing risk to principal.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Cooke & Bieler, L.P.
PORTFOLIO MANAGERS
Kermit S. Eck, CFA
Daren C. Heitman, CFA
Michael M. Meyer, CFA
James R. Norris
Edward W. O'Connor, CFA
R. James O'Neil, CFA
Mehul Trivedi, CFA
FUND INCEPTION
May 1, 1998
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- ---- --------
VT C&B Large Cap Value Fund (35.01)%
BENCHMARK
Russell 1000(R) Value Index (1) (36.85)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST C&B LARGE CAP VALUE FUND ARE
1.00% AND 1.17%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT C&B LARGE CAP RUSSELL 1000
VALUE FUND VALUE INDEX
------------- -----------
12/31/1998 10000 10,000
1/31/1999 9770 10,080
2/28/1999 9518 9,938
3/31/1999 9746 10,144
4/30/1999 10586 11,091
5/31/1999 10481 10,969
6/30/1999 10805 11,287
7/31/1999 10415 10,956
8/31/1999 9847 10,550
9/30/1999 9331 10,182
10/31/1999 9648 10,768
11/30/1999 9616 10,684
12/31/1999 9752 10,735
1/31/2000 9499 10,385
2/29/2000 9055 9,614
3/31/2000 9869 10,787
4/30/2000 9646 10,662
5/31/2000 9784 10,774
6/30/2000 9515 10,281
7/31/2000 9674 10,410
8/31/2000 10363 10,989
9/30/2000 10196 11,090
10/31/2000 10440 11,362
11/30/2000 9899 10,941
12/31/2000 10316 11,489
1/31/2001 10497 11,533
2/28/2001 10189 11,212
3/31/2001 9787 10,816
4/30/2001 10342 11,346
5/31/2001 10502 11,602
6/30/2001 10208 11,344
7/31/2001 10165 11,320
8/31/2001 9610 10,866
9/30/2001 8887 10,101
10/31/2001 9079 10,014
11/30/2001 9582 10,596
12/31/2001 9657 10,846
1/31/2002 9165 10,763
2/28/2002 9111 10,780
3/31/2002 9706 11,290
4/30/2002 9137 10,903
5/31/2002 9051 10,957
6/30/2002 8475 10,328
7/31/2002 7680 9,368
8/31/2002 7712 9,439
9/30/2002 6687 8,389
10/31/2002 7249 9,011
11/30/2002 7713 9,579
12/31/2002 7331 9,163
1/31/2003 7125 8,941
2/28/2003 6918 8,702
3/31/2003 6933 8,717
4/30/2003 7478 9,484
5/31/2003 7903 10,097
6/30/2003 8047 10,223
7/31/2003 8179 10,376
8/31/2003 8212 10,537
9/30/2003 8165 10,434
10/31/2003 8615 11,073
11/30/2003 8703 11,223
12/31/2003 9205 11,915
1/31/2004 9360 12,124
2/29/2004 9614 12,384
3/31/2004 9504 12,276
4/30/2004 9350 11,976
5/31/2004 9361 12,098
6/30/2004 9508 12,384
7/31/2004 9319 12,209
8/31/2004 9397 12,383
9/30/2004 9467 12,575
10/31/2004 9534 12,784
11/30/2004 9935 13,430
12/31/2004 10238 13,880
1/31/2005 10171 13,633
2/28/2005 10407 14,084
3/31/2005 10290 13,891
4/30/2005 10099 13,643
5/31/2005 10346 13,971
6/30/2005 10367 14,124
7/31/2005 10671 14,532
8/31/2005 10469 14,469
9/30/2005 10368 14,672
10/31/2005 10188 14,299
11/30/2005 10582 14,767
12/31/2005 10556 14,857
1/31/2006 10839 15,433
2/28/2006 10873 15,528
3/31/2006 11125 15,737
4/30/2006 11408 16,137
5/31/2006 11238 15,729
6/30/2006 11148 15,829
7/31/2006 11205 16,214
8/31/2006 11591 16,485
9/30/2006 11978 16,814
10/31/2006 12413 17,364
11/30/2006 12710 17,761
12/31/2006 12891 18,159
1/31/2007 13098 18,392
2/28/2007 12731 18,105
3/31/2007 12764 18,385
4/30/2007 13292 19,064
5/31/2007 13579 19,752
6/30/2007 13430 19,290
7/31/2007 12969 18,398
8/31/2007 12923 18,605
9/30/2007 13403 19,244
10/31/2007 13507 19,246
11/30/2007 13056 18,305
12/31/2007 12740 18,128
1/31/2008 12207 17,401
2/28/2008 11697 16,672
3/31/2008 11759 16,547
4/30/2008 12225 17,353
5/31/2008 12260 17,325
6/30/2008 11047 15,667
7/31/2008 11315 15,611
8/31/2008 11549 15,876
9/30/2008 10809 14,709
10/31/2008 8652 12,163
11/30/2008 7937 11,291
12/31/2008 8279 11,448
- ------------
1. The Russell 1000 Value Index measures performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth
values. You cannot invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT C&B
LARGE CAP VALUE FUND for the most recent ten years of the Fund with the
Russell 1000 Value Index. The chart assumes a hypothetical $10,000
investment and reflects all operating expenses of the Fund.
3. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculation of sector distribution.
Wells Fargo Advantage Variable Trust Funds 11
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - Although the Fund's return for the period was negative, it outperformed
its value benchmark.
- - Stock selection was the key driver of outperformance.
- - Our stock selection process was positive in numerous sectors and the
impact on performance was strongest in the industrials and media and
services sectors.
FROM THE PERSPECTIVE OF A FULLY INVESTED EQUITY MANAGER OPERATING IN THE WORST
MARKET SINCE 1931, MEANINGFUL LOSSES WERE UNAVOIDABLE.
Our goal of outperforming in a down market was accomplished, and even though we
would like to have outperformed more than we did, our sense is that we could not
have done much better, considering the breadth and intensity of the market's
decline.
For the entire 12-month period, the Fund outperformed its benchmark. This, of
course, is a result for which we always strive, but it was a hollow victory.
Even our high-quality orientation was overwhelmed by the market tailspin. The
impact of the Fund's portfolio quality bias, though undoubtedly beneficial, was
muted by wholesale, indiscriminant selling of stocks to buy U.S. Treasuries.
We were pleased that a positive stock selection result explained the vast
majority of the Fund's outperformance. While stock selection was positive in
numerous sectors, the impact was strongest in the industrials and media and
services sectors. As bottom-up stock pickers, our goal is to add value through
our stock selection process. Thus, when our stock picks work, we view it as
evidence that our process is working. As investors with a long-term perspective,
we tend to judge our performance over longer periods of time. Accordingly, we
believe that the validity and benefits of our high-quality, low-risk investment
approach are apparent in our long-term record.
SECTOR DISTRIBUTION(3)
(AS DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 16%
Consumer Staples 13%
Energy 5%
Financials 19%
Health Care 14%
Industrials 18%
Information Technology 10%
Telecommunication Services 3%
Materials 2%
In contrast, our investments made with cash collateral received from securities
lending activities, while generally considered a benign means of earning
additional income, detracted from portfolio performance during this period of
distress in short term markets, primarily due to the decline in value of a
number of the collateral holdings.
12 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (CONTINUED)
THE MARKET'S SIGNIFICANT DECLINE AND VOLATILITY DURING THE 12-MONTH PERIOD
PROVIDED US WITH THE OPPORTUNITY TO ESTABLISH FOUR NEW INVESTMENTS IN THE FUND.
Beyond adding to existing holdings, we also established new positions in Fiserv,
Manpower, NVR, and Old Republic. To make room for these opportunities, we sold
Anheuser Busch, Wal-Mart, and Zale because these companies had achieved their
valuation targets that we had set for them. We also eliminated the following
stocks due to fundamental reasons: American International Group (AIG),
Countrywide Financial, Jones Apparel, MBIA, and Office Depot.
THE RECENT STEADY STREAM OF INCREASINGLY NEGATIVE ECONOMIC DATA HAS REMOVED ANY
DOUBT FROM OUR MINDS THAT WE ARE IN THE MIDST OF A RECESSION.
The good news is that the market no longer has to deal with that uncertainty.
The bad news is that there is still plenty of uncertainty facing investors. Now
that we know we are in a recession, the relevant question centers on its
duration and magnitude. Given the complexity of the economy and the vast array
of variables that must be considered and factored into the equation, such
questions are inherently difficult, if not impossible, to answer.
TEN LARGEST EQUITY HOLDINGS (4)
(AS OF DECEMBER 31, 2008)
Exxon Mobil Corporation 5.25%
Quest Diagnostics Incorporated 3.72%
Colgate-Palmolive Company 3.57%
Johnson & Johnson 3.47%
Vodafone Group plc ADR 3.40%
Allstate Corporation 3.27%
Omnicom Group Incorporated 3.11%
Willis Group Holdings Limited 3.09%
Kohl's Corporation 3.02%
McDonald's Corporation 2.93%
On one hand, the global credit crunch continues to wreak havoc with the global
economy. Deflationary pressures are building momentum and infecting the real
economy. Increasing caution and pessimism on the part of businesses and
consumers represent the negative feedback loop that could send the economy into
a deeper, more severe recession. Thus, with weakening fundamental underpinnings,
the investing environment is likely to remain volatile and challenging. As such,
caution is urged, especially in the short term.
On the other hand, as a market-based, flexible, free-enterprise system, history
has demonstrated that our economy has the capacity to be resilient time and time
again. Even though we have to endure a recession, the current purging process is
working to establish a foundation for future economic growth. And while it has
created much pain, we believe that the process is underway and that it began
well over a year ago. Consequently, we believe that much of the excess, though
difficult to quantify, has been removed from the system. Furthermore, with the
recent narrowing of interest-rate spreads and improving conditions in the credit
markets, we are seeing encouraging signs that perhaps the worst is behind us.
Finally, the
- ------------
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.
Wells Fargo Advantage Variable Trust Funds 13
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (CONTINUED)
U.S. government has demonstrated a commitment and willingness to take decisive
and bold action to ensure that caution and pessimism do not conspire to create a
wicked negative feedback loop.
Thus, all things considered, we believe that careful and selective risk-taking
in this environment will be more than adequately rewarded. While it may seem
perverse, history shows that it is times like these, when fear is heightened and
the outlook bleak, that patient, longer-term investors should be most bullish.
At this point, our intuitive sense of bullishness is only strengthened by
valuations we are seeing in the stock market, which have become extremely
attractive in more and more instances. We recognize that stock prices can trade
at unprecedented valuation levels in a bear market and we do not yet believe
that we are fundamentally to the point where one can have confidence that all
boats will be lifted by a surging tide, but we are comforted by the quality
embedded in the portfolio. Our investment philosophy is centered on investing in
financially strong, competitively advantaged companies that have attractive
underlying business models. Because companies with these characteristics are
built to last, this approach allows us to maintain the uniquely longer-term
investing perspective that is so valuable during times like these. As such and
as always, we remain steadfastly committed to our high-quality, low-risk
investment approach.
14 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
-------------------
6 Months* 1 Year 5 Year 10 Year Gross (5) Net (6)
--------- ------- ------ ------- --------- -------
VT C&B Large Cap Value Fund (25.05) (35.01) (2.10) (1.87) 1.17% 1.00%
Russell 1000 Value Index (1) (26.93) (36.85) (0.79) 1.36
* Returns for periods of less than one year are not annualized.
FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN 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
1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED
PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY
CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. The use of derivatives may
reduce returns and/or increase volatility. Consult the Fund's prospectus for
additional information on these and other risks.
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.
- -------------
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
16 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT DISCOVERY FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT DISCOVERY FUND (the Fund) seeks long-term capital
appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
James M. Leach, CFA
Thomas J. Pence, CFA
FUND INCEPTION
May 8, 1992
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- ---- --------
VT Discovery Fund (44.36)%
BENCHMARK
Russell 2500 (TM) Growth Index (1) (41.50)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST DISCOVERY FUND ARE 1.15% AND
1.21%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY COMMITTED THROUGH
APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE EXTENT NECESSARY
TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT THESE REDUCTIONS, THE
FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT DISCOVERY FUND RUSSELL 2500 GROWTH INDEX
----------------- -------------------------
12/31/1998 10,000 10,000
1/31/1999 10,071 10,289
2/28/1999 9,135 9,454
3/31/1999 8,985 9,895
4/30/1999 9,299 10,684
5/31/1999 9,327 10,795
6/30/1999 9,456 11,558
7/31/1999 8,994 11,322
8/31/1999 8,440 11,077
9/30/1999 8,339 11,157
10/31/1999 8,330 11,700
11/30/1999 9,050 13,081
12/31/1999 10,509 15,548
1/31/2000 10,093 15,462
2/29/2000 11,645 19,428
3/31/2000 11,737 17,903
4/30/2000 11,183 16,159
5/31/2000 11,322 14,720
6/30/2000 11,746 16,666
7/31/2000 11,996 15,301
8/31/2000 12,319 17,295
9/30/2000 11,691 16,176
10/31/2000 11,128 15,176
11/30/2000 10,213 12,285
12/31/2000 10,971 13,046
1/31/2001 11,709 13,891
2/28/2001 10,934 11,748
3/31/2001 10,647 10,448
4/30/2001 11,719 12,041
5/31/2001 11,662 12,389
6/30/2001 12,038 12,670
7/31/2001 11,375 11,736
8/31/2001 10,832 10,955
9/30/2001 9,726 9,240
10/31/2001 10,379 10,151
11/30/2001 10,943 11,028
12/31/2001 11,419 11,633
1/31/2002 11,386 11,136
2/28/2002 11,186 10,448
3/31/2002 11,928 11,290
4/30/2002 11,585 10,915
5/31/2002 11,529 10,365
6/30/2002 10,899 9,412
7/31/2002 10,113 8,243
8/31/2002 10,113 8,241
9/30/2002 9,538 7,618
10/31/2002 10,080 8,056
11/30/2002 10,600 8,805
12/31/2002 10,047 8,248
1/31/2003 9,759 8,068
2/28/2003 9,748 7,880
3/31/2003 9,870 7,984
4/30/2003 10,556 8,681
5/31/2003 11,319 9,601
6/30/2003 11,363 9,798
7/31/2003 12,182 10,451
8/31/2003 12,990 11,012
9/30/2003 12,558 10,775
10/31/2003 13,665 11,661
11/30/2003 13,864 12,056
12/31/2003 14,008 12,069
1/31/2004 14,517 12,572
2/29/2004 14,838 12,689
3/31/2004 14,672 12,733
4/30/2004 14,074 12,193
5/31/2004 14,373 12,446
6/30/2004 14,782 12,750
7/31/2004 13,610 11,752
8/31/2004 13,112 11,516
9/30/2004 14,096 12,035
10/31/2004 14,628 12,377
11/30/2004 15,745 13,198
12/31/2004 16,210 13,829
1/31/2005 15,535 13,342
2/28/2005 15,568 13,607
3/31/2005 15,196 13,231
4/30/2005 14,197 12,516
5/31/2005 15,470 13,350
6/30/2005 16,082 13,702
7/31/2005 17,086 14,591
8/31/2005 17,037 14,423
9/30/2005 17,502 14,564
10/31/2005 16,621 14,088
11/30/2005 17,281 14,875
12/31/2005 17,551 14,960
1/31/2006 18,897 16,093
2/28/2006 18,885 16,044
3/31/2006 19,460 16,729
4/30/2006 19,852 16,780
5/31/2006 18,469 15,779
6/30/2006 18,689 15,704
7/31/2006 17,967 14,940
8/31/2006 18,432 15,298
9/30/2006 18,579 15,515
10/31/2006 19,374 16,280
11/30/2006 20,256 16,834
12/31/2006 20,121 16,795
1/31/2007 20,904 17,329
2/28/2007 20,867 17,321
3/31/2007 21,357 17,473
4/30/2007 21,749 18,009
5/31/2007 23,254 18,873
6/30/2007 23,364 18,694
7/31/2007 23,168 17,910
8/31/2007 23,487 18,185
9/30/2007 24,980 18,816
10/31/2007 25,751 19,595
11/30/2007 24,307 18,438
12/31/2007 24,613 18,423
1/31/2008 21,834 16,922
2/28/2008 21,137 16,582
3/31/2008 20,415 16,381
4/30/2008 22,483 17,368
5/31/2008 24,686 18,283
6/30/2008 24,013 16,974
7/31/2008 23,230 16,914
8/31/2008 23,156 17,197
9/30/2008 19,631 14,921
10/31/2008 15,629 11,561
11/30/2008 13,377 10,257
12/31/2008 13,695 10,777
- ----------------
1. The Russell 2500 Growth Index measures the performance of those Russell
2500 companies with higher price-to-book ratios and higher forecasted
growth values. You cannot invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT
DISCOVERY FUND (SM) for the most recent ten years of the Fund with the
Russell 2500 Growth Index. The chart assumes a hypothetical $10,000
investment and reflects all operating expenses of the Fund.
3. 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.
Wells Fargo Advantage Variable Trust Funds 17
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The financial crisis stemming from the bursting real estate bubble and
Lehman Brothers bankruptcy weighed heavily on Fund performance during
2008.
- - Detractors from performance came from industrials, information technology,
and telecommunication services.
- - Contributors for the year came from consumer discretionary, energy, and
materials.
THE EQUITY MARKETS FOR 2008 CAN BEST BE DESCRIBED AS A "TALE OF TWO MARKETS."
The first half of the year was characterized as a stock-picker's market.
Commodity price inflation fueled by global growth and demand for goods from
emerging markets were the primary drivers despite early signs of financial
troubles here at home. Energy prices spiked to historically high levels, global
infrastructure building drove higher commodity prices, and continued consumer
growth in emerging markets fueled higher and higher food prices. Throughout the
first half, the Fund, with its team of investment managers providing solid
"surround the company" research, was able to provide positive returns. In the
meantime, early signs of the ensuing financial meltdown emerged, with JPMorgan
buying Bear Stearns and setting up the second market "tale."
The second half of the year was dominated by a slowdown in worldwide growth, a
bursting of the residential real estate bubble, and the resulting financial
crisis that was highlighted by financial company failures. Deleveraging by
financial institutions, forced selling of assets, and investor and consumer
panic culminated in a drop in equity markets not seen since the Great
Depression. Global growth slowed dramatically, credit markets froze up, and
commodity prices spiraled downward as demand fell. As a result of the
uncertainty in the market and the economy, the only "safe" investment seemed to
be U.S. Treasuries.
TEN LARGEST EQUITY HOLDINGS (3)
(AS OF DECEMBER 31, 2008)
Equinix Incorporated 3.58%
DeVry Incorporated 2.96%
SBA Communications Corporation 2.92%
Airgas Incorporated 2.82%
Lincare Holdings Incorporated 2.77%
Concur Technologies Incorporated 2.51%
PSS World Medical Incorporated 2.19%
Solera Holdings Incorporated 2.12%
NII Holdings Incorporated 2.12%
Activision Blizzard Incorporated 2.04%
Areas of weakness for the portfolio during the year were in industrials,
information technology, and telecommunication services. Investments made with
cash collateral received from securities lending activities, while generally
considered a benign means of earning additional income, also detracted from
portfolio performance during this period of distress in short term markets,
primarily due to the decline in value of a number of the collateral holdings.
Bright spots included stock selection in consumer discretionary, energy, and
materials.
18 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED)
A SLOWDOWN IN GLOBAL GROWTH PUT PRESSURE ON THE INDUSTRIAL SECTOR WHILE
SELECTIVE POSITIONING IN THE CONSUMER SPACE HELPED STEM LOSSES.
The global recession was reflected in the earnings outlooks and valuations for
the industrial sector, which was a detractor in the portfolio during the period.
We continued to believe in a longer-term global growth trend, which we believe
will ultimately benefit this sector, but the near-term cyclical pressures were
too difficult to overcome. McDermott International, a global engineering and
construction firm that is heavily involved in the energy business, declined with
the price of oil and gas. Unfortunately, the company misexecuted on a contract
and had worse-than-expected earnings despite a record backlog level with
cash-rich customers. Furthermore, recession deepened during the second half of
the period and commodity prices continued to decline, the stock declined with
them.
SECTOR DISTRIBUTION(4)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 14%
Consumer Staples 6%
Energy 6%
Financials 13%
Health Care 18%
Industrials 8%
Information Technology 22%
Materials 8%
Telecommunication Services 5%
Despite tough economic conditions for the consumer -- especially rising
unemployment and tightening credit standards -- stock selection within the
consumer discretionary sector provided a life vest to the portfolio for the
period. Our selective approach within consumer discretionary is focused on
companies with unique market niches and with businesses that can thrive in a
potentially slowing consumer-spending environment. A good example of this was
our position in DeVry. As a leading provider of for-profit postsecondary
education, DeVry is benefiting from rising enrollment numbers as an increasing
number of unemployed people decide to advance their education. In addition,
positioning for a trade down by consumers, Big Lots, a discount retail chain,
provided a positive return during the period.
OUR OUTLOOK IS ONE OF CAUTIOUS OPTIMISM FOR EQUITIES IN 2009.
Interbank lending rates finally retreated toward the end of 2008, signaling that
financial institutions might start lending again. Importantly, policymakers
finally targeted mortgage rates as a tool to aid the housing market, and
homeowners responded with a tidal wave of refinancing activity. Some clarity is
emerging on the staggering size and scope of domestic infrastructure spending by
the new administration to help bolster employment and provide economic stimulus.
Energy prices and raw material costs have declined dramatically, helping control
manufacturing costs and lowering gas prices for consumers. In addition,
policymakers around the globe appear to be determined and coordinated in taking
drastic measures to get credit flowing again.
- ------------
4. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
Wells Fargo Advantage Variable Trust Funds 19
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED)
Although we expect the dire economic headlines to continue into 2009, we have
the distinct view that the markets have largely priced in the bad news. If the
economy avoids another major leg down, which is our expectation, and traction
takes hold in the banking sector from the policy stimulus in place, we would not
be surprised to see a market rally in early 2009. Rather than hunker down in an
overly defensive stance, we believe that the time has come to focus on new
leadership in a market recovery. We are prudently and gradually shifting the
portfolio to balance our defensive core growth holdings with positions in
developing situations that we believe will provide buoyancy in a market that
rebounds. As such, our "surround the company" research process is finding
interesting ideas in the financial, consumer discretionary, and technology
sectors. The fact that our process is generating these compelling ideas has us
entering 2009 with considerable optimism.
20 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
6 Months* 1 Year 5 Year 10 Year Gross (5) Net(6)
--------- ------ ------ ------- --------- ------
VT Discovery Fund (42.97) (44.36) (0.45) 3.19 1.21% 1.15%
Russell 2500 Growth Index (1) (36.51) (41.50) (2.24) 0.75
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. Smaller company stocks
tend to be more volatile and less liquid than those of larger companies. The use
of derivatives may reduce returns and/or increase volatility. Active trading
results in increased turnover and trading expenses and may generate higher
short-term capital gains. Certain investment strategies 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.
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.
- -----------------
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
22 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (the Fund) seeks long-term
capital appreciation and dividend income.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Gary J. Dunn, CFA
Robert M. Thornberg
FUND INCEPTION
May 6, 1996
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
Fund 1 Year
- ------------------------- ------
VT Equity Income Fund (36.47)%
BENCHMARK
Russell 1000 Value Index (1) (36.85)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST EQUITY INCOME FUND ARE 1.00%
AND 1.04%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY COMMITTED
THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE EXTENT
NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT THESE
REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT EQUITY INCOME FUND RUSSELL 1000 VALUE INDEX
--------------------- ------------------------
12/31/1998 10000 10,000
1/31/1999 9969 10,080
2/28/1999 9975 9,938
3/31/1999 10344 10,144
4/30/1999 10869 11,091
5/31/1999 10844 10,969
6/30/1999 11275 11,287
7/31/1999 10981 10,956
8/31/1999 10806 10,550
9/30/1999 10406 10,182
10/31/1999 10688 10,768
11/30/1999 10781 10,684
12/31/1999 10790 10,735
1/31/2000 10235 10,385
2/29/2000 9445 9,614
3/31/2000 10387 10,787
4/30/2000 10368 10,662
5/31/2000 10552 10,774
6/30/2000 10301 10,281
7/31/2000 10111 10,410
8/31/2000 10674 10,989
9/30/2000 10566 11,090
10/31/2000 10864 11,362
11/30/2000 10495 10,941
12/31/2000 11042 11,489
1/31/2001 11016 11,533
2/28/2001 10698 11,212
3/31/2001 10104 10,816
4/30/2001 10788 11,346
5/31/2001 10989 11,602
6/30/2001 10670 11,344
7/31/2001 10566 11,320
8/31/2001 10341 10,866
9/30/2001 9683 10,101
10/31/2001 9797 10,014
11/30/2001 10328 10,596
12/31/2001 10444 10,846
1/31/2002 10289 10,763
2/28/2002 10363 10,780
3/31/2002 10719 11,290
4/30/2002 10368 10,903
5/31/2002 10362 10,957
6/30/2002 9808 10,328
7/31/2002 8914 9,368
8/31/2002 8975 9,439
9/30/2002 7788 8,389
10/31/2002 8373 9,011
11/30/2002 8897 9,579
12/31/2002 8432 9,163
1/31/2003 8213 8,941
2/28/2003 7967 8,702
3/31/2003 7989 8,717
4/30/2003 8635 9,484
5/31/2003 9130 10,097
6/30/2003 9306 10,223
7/31/2003 9473 10,376
8/31/2003 9515 10,537
9/30/2003 9461 10,434
10/31/2003 9958 11,073
11/30/2003 10065 11,223
12/31/2003 10643 11,915
1/31/2004 10821 12,124
2/29/2004 11099 12,384
3/31/2004 10976 12,276
4/30/2004 10805 11,976
5/31/2004 10819 12,098
6/30/2004 10981 12,384
7/31/2004 10759 12,209
8/31/2004 10852 12,383
9/30/2004 10943 12,575
10/31/2004 11022 12,784
11/30/2004 11483 13,430
12/31/2004 11822 13,880
1/31/2005 11757 13,633
2/28/2005 12119 14,084
3/31/2005 11884 13,891
4/30/2005 11659 13,643
5/31/2005 11964 13,971
6/30/2005 11928 14,124
7/31/2005 12293 14,532
8/31/2005 12213 14,469
9/30/2005 12353 14,672
10/31/2005 12162 14,299
11/30/2005 12521 14,767
12/31/2005 12457 14,857
1/31/2006 12634 15,433
2/28/2006 12715 15,528
3/31/2006 12794 15,737
4/30/2006 13141 16,137
5/31/2006 12787 15,729
6/30/2006 12811 15,829
7/31/2006 13080 16,214
8/31/2006 13392 16,485
9/30/2006 13700 16,814
10/31/2006 14140 17,364
11/30/2006 14408 17,761
12/31/2006 14768 18,159
1/31/2007 14821 18,392
2/28/2007 14544 18,105
3/31/2007 14755 18,385
4/30/2007 15333 19,064
5/31/2007 15865 19,752
6/30/2007 15545 19,290
7/31/2007 14965 18,398
8/31/2007 15238 18,605
9/30/2007 15828 19,244
10/31/2007 15900 19,246
11/30/2007 15319 18,305
12/31/2007 15182 18,128
1/31/2008 14445 17,401
2/28/2008 13902 16,672
3/31/2008 13777 16,547
4/30/2008 14330 17,353
5/31/2008 14330 17,325
6/30/2008 13021 15,667
7/31/2008 12942 15,611
8/31/2008 13086 15,876
9/30/2008 12135 14,709
10/31/2008 10127 12,163
11/30/2008 9584 11,291
12/31/2008 9645 11,448
- -------------
1. The Russell 1000 Value Index measures performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth
values. You cannot invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT EQUITY
INCOME FUND for the most recent ten years of the Fund with the Russell
1000 Value Index. The chart assumes a hypothetical $10,000 investment and
reflects all operating expenses of the Fund.
3. 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.
Wells Fargo Advantage Variable Trust Funds 23
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - In one of the toughest equity years in modern history, the Fund narrowly
outperformed its benchmark.
- - Solid stock selection provided most of the relative outperformance, as
Fund holdings in a number of sectors performed better than their
respective Russell 1000 Value Index sector returns.
- - The financials sector was the story of the year and was the
worst-performing sector, with declines in excess of 50%.
MOST INVESTORS WOULD PROBABLY LIKE TO FORGET 2008.
U.S. stocks, as measured by the S&P 500 Index, fell 37.00% on a total return
basis for the 12-month period, the biggest annual drop in over 70 years. The
year started out poorly in January 2008 and only got worse as investors feared
that the Fed's interest rate cuts would not be enough to avert a recession --
which eventually proved to be true by the end of the period. The credit crisis
that started in the housing market spread to many other credit segments and
affected almost every financial company. By the end of 2008, an estimated $7
trillion in domestic equity market value had disappeared.
Most of the Fund's relative outperformance was due to good stock selection.
Consumer discretionary outperformance was led by the strong positive gain of
McDonald's, a company that continues to execute in a tough economic environment.
Rohm & Haas in the materials sector was another leading performer as the stock
moved higher on the planned acquisition by Dow Chemical. Even though Verizon
declined during the period, the slide was much less than that of most
telecommunication stocks and allowed the Fund to outperform the index in this
area. Larger-capitalization technology stocks, including many owned in the Fund,
held up better than the Russell technology sector and added to relative
performance. Hewlett-Packard and Symantec were the Fund's leading technology
contributors.
TEN LARGEST EQUITY HOLDINGS (3)
(AS OF DECEMBER 31, 2008)
Exxon Mobil Corporation 6.18%
AT&T Incorporated 4.33%
Chevron Corporation 4.01%
JPMorgan Chase & Company 3.90%
Verizon Communications Incorporated 3.23%
Procter & Gamble Company 3.21%
ConocoPhillips 3.16%
The Travelers Companies Incorporated 2.74%
General Electric Company 2.45%
FPL Group Incorporated 2.37%
By the end of the 12-month period, the Fund's financial holdings had fallen more
than 50%, which was in line with the Russell sector drop. The financial crisis
that spearheaded the economic recession resulted in the disappearance of several
well-recognized financial institutions, leaving the future of Wall Street as we
know it in a state of confusion. Companies like Citigroup, Bank of America, and
American Express fell more than 60% during the period. Many insurance stocks
came under pressure as investment portfolio losses mounted and concerns over
24 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (CONTINUED)
new capital-raising needs weighed on the group. Both Travelers and U.S. Bancorp
escaped the year with relatively modest losses. While the financials sector was
a poor performer, the Fund's approximate 17% underweighting of financials versus
the benchmark's allocation was a major contributor to Fund performance.
Investments made with cash collateral received from securities lending
activities, while generally considered a benign means of earning additional
income, also detracted from portfolio performance during this period of distress
in short term markets, primarily due to the decline in value of a number of the
collateral holdings.
STOCK ADJUSTMENTS DURING THE YEAR FOCUSED ON IMPROVING THE QUALITY AND REDUCING
THE RISK OF THE PORTFOLIO.
Within the much-maligned financials sector, we sold several familiar names,
including American International Group (AIG), Goldman Sachs, Lehman Brothers,
Morgan Stanley, and Wachovia. Health care provider WellPoint was sold because we
believed that margin compression within the health care services industry would
continue. New buys to the portfolio centered on adding market-leading companies
with strong balance sheets and proven product lines that are expected to grow
well into the future. Primary additions included Costco, Medtronic, Oracle,
Prudential Financial, and Schering-Plough. We increased the Fund's exposure to
health care throughout the year and funded it with our reduction in the
financials sector.
SECTOR DISTRIBUTION(4)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 7%
Consumer Staples 11%
Energy 16%
Financials 17%
Health Care 13%
Industrials 9%
Information Technology 9%
Materials 4%
Telecommunication Services 8%
Utilities 6%
CREDIT MARKETS SET THE TONE FOR MARKET BEHAVIOR IN 2008.
In our view, how the equity markets perform in 2009 is dependent on how deep the
recession is going to be and the degree to which the credit markets once again
start to function. The Fed and the Treasury Department have taken many steps
throughout the year to stem the credit and economic slide, including a $700
billion rescue package, actions to buy certain issues of commercial paper, and
interest-rate reductions that have left the federal funds rate near zero. The
Fed also started buying mortgage-backed securities as part of a $500 billion
program designed to support real estate demand and help lower mortgage rates. In
addition, the new proposal for an economic recovery package by President-elect
Obama should provide another potential catalyst for recovery. We believe that
the combination of governmental intervention, the lowering of interest rates --
especially mortgage rates -- and much lower oil prices will all contribute to
setting the stage for a market and economic recovery by the end of 2009. In the
meantime, our focus will remain on companies with strong balance sheets, solid
cash flows, and liquidity, all of which are difficult to maintain in our current
economic environment. Market leaders who can sustain earnings profitability in
tough economic times should weather the storm better than those who are not so
well positioned.
Wells Fargo Advantage Variable Trust Funds 25
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
6 Months* 1 Year 5 Year 10 Year Gross (5) Net (6)
--------- ------ ------ ------- --------- -------
VT Equity Income Fund (25.93) (36.47) (1.95) (0.36) 1.04% 1.00%
Russell 1000 Value Index (1) (26.93) (36.85) (0.79) 1.36
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. The use of derivatives may
reduce returns and/or increase volatility. Consult the Fund's prospectus for
additional information on these and other risks.
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.
- --------------
4. Sector distribution are subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
26 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (the Fund) seeks long-term
capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
New Star Institutional Managers Limited
PORTFOLIO MANAGERS
Mark Beale
Brian Coffey
Richard Lewis
FUND INCEPTION
July 3, 2000
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- -------------------------- ------
VT International Core Fund (43.41)%
BENCHMARK
MSCI EAFE Index (1) (43.38)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST INTERNATIONAL CORE FUND ARE
1.00% AND 1.43%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT INTERNATIONAL CORE FUND MSCI EAFE INDEX
------------------------- ---------------
7/3/2000 $10,000 $10,000
7/31/2000 $ 9,670 $ 9,503
8/31/2000 $ 9,870 $ 9,585
9/30/2000 $ 9,280 $ 9,119
10/31/2000 $ 9,150 $ 8,903
11/30/2000 $ 8,650 $ 8,569
12/31/2000 $ 8,967 $ 8,874
1/31/2001 $ 9,187 $ 8,869
2/28/2001 $ 8,465 $ 8,205
3/31/2001 $ 7,914 $ 7,658
4/30/2001 $ 8,315 $ 8,190
5/31/2001 $ 8,255 $ 7,901
6/30/2001 $ 8,024 $ 7,578
7/31/2001 $ 7,813 $ 7,440
8/31/2001 $ 7,594 $ 7,251
9/30/2001 $ 6,882 $ 6,517
10/31/2001 $ 7,113 $ 6,684
11/30/2001 $ 7,374 $ 6,930
12/31/2001 $ 7,524 $ 6,971
1/31/2002 $ 7,193 $ 6,601
2/28/2002 $ 7,083 $ 6,647
3/31/2002 $ 7,424 $ 7,007
4/30/2002 $ 7,424 $ 7,053
5/31/2002 $ 7,313 $ 7,142
6/30/2002 $ 6,996 $ 6,858
7/31/2002 $ 6,282 $ 6,181
8/31/2002 $ 6,232 $ 6,167
9/30/2002 $ 5,508 $ 5,505
10/31/2002 $ 5,770 $ 5,801
11/30/2002 $ 6,071 $ 6,064
12/31/2002 $ 5,800 $ 5,860
1/31/2003 $ 5,538 $ 5,615
2/28/2003 $ 5,398 $ 5,486
3/31/2003 $ 5,297 $ 5,379
4/30/2003 $ 5,770 $ 5,906
5/31/2003 $ 6,111 $ 6,264
6/30/2003 $ 6,192 $ 6,415
7/31/2003 $ 6,273 $ 6,570
8/31/2003 $ 6,444 $ 6,729
9/30/2003 $ 6,585 $ 6,936
10/31/2003 $ 6,989 $ 7,369
11/30/2003 $ 7,150 $ 7,533
12/31/2003 $ 7,624 $ 8,121
1/31/2004 $ 7,634 $ 8,236
2/29/2004 $ 7,725 $ 8,426
3/31/2004 $ 7,745 $ 8,473
4/30/2004 $ 7,483 $ 8,282
5/31/2004 $ 7,483 $ 8,310
6/30/2004 $ 7,584 $ 8,492
7/31/2004 $ 7,318 $ 8,216
8/31/2004 $ 7,307 $ 8,252
9/30/2004 $ 7,439 $ 8,468
10/31/2004 $ 7,621 $ 8,757
11/30/2004 $ 8,076 $ 9,355
12/31/2004 $ 8,359 $ 9,765
1/31/2005 $ 8,217 $ 9,586
2/28/2005 $ 8,601 $10,000
3/31/2005 $ 8,359 $ 9,749
4/30/2005 $ 8,177 $ 9,520
5/31/2005 $ 8,156 $ 9,525
6/30/2005 $ 8,278 $ 9,651
7/31/2005 $ 8,557 $ 9,947
8/31/2005 $ 8,755 $10,198
9/30/2005 $ 8,953 $10,652
10/31/2005 $ 8,692 $10,341
11/30/2005 $ 8,765 $10,594
12/31/2005 $ 9,167 $11,087
1/31/2006 $ 9,749 $11,768
2/28/2006 $ 9,643 $11,742
3/31/2006 $ 9,950 $12,129
4/30/2006 $10,363 $12,708
5/31/2006 $ 9,876 $12,215
6/30/2006 $ 9,887 $12,214
7/31/2006 $ 9,961 $12,335
8/31/2006 $10,270 $12,674
9/30/2006 $10,281 $12,694
10/31/2006 $10,624 $13,187
11/30/2006 $10,889 $13,581
12/31/2006 $11,074 $14,008
1/31/2007 $11,209 $14,102
2/28/2007 $11,333 $14,216
3/31/2007 $11,579 $14,579
4/30/2007 $11,961 $15,226
5/31/2007 $12,331 $15,493
6/30/2007 $12,499 $15,512
7/31/2007 $12,164 $15,284
8/31/2007 $12,032 $15,045
9/30/2007 $12,802 $15,850
10/31/2007 $13,332 $16,473
11/30/2007 $12,790 $15,931
12/31/2007 $12,477 $15,572
1/31/2008 $11,345 $14,134
2/28/2008 $11,333 $14,336
3/31/2008 $11,237 $14,185
4/30/2008 $11,875 $14,955
5/31/2008 $12,104 $15,101
6/30/2008 $11,128 $13,866
7/31/2008 $10,599 $13,421
8/31/2008 $10,140 $12,877
9/30/2008 $ 8,746 $11,015
10/31/2008 $ 7,030 $ 8,792
11/30/2008 $ 6,586 $ 8,317
12/31/2008 $ 7,061 $ 8,817
- -------------
1. 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.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT
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.
3. Portfolio composition is subject to change. Cash and cash equivalents are
not reflected in the calculations of portfolio composition.
Wells Fargo Advantage Variable Trust Funds 27
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund slightly underperformed its benchmark during a time of extreme
volatility.
- - Our underweight in Europe and the United Kingdom was positive for the
Fund, but our modest overweight in Hong Kong, Canada, and emerging markets
offset this.
- - Poor performance in energy and cyclically sensitive holdings eroded the
benefit of our underweight in banks.
INVESTORS HAD A DISMAL YEAR IN NEARLY ALL ASSET CLASSES.
The ongoing credit crunch and fears regarding debt deflation resulted in
disarray across global equity markets. Authorities around the world have acted
in what has so far been an unsuccessful attempt to restore confidence in the
global banking system and credit markets, which are at the heart of the crisis.
Despite what seemed to have been an appropriate policy response, equity markets
fell sharply as the growing body of evidence pointed to a sharp and continued
contraction in the global economy. In this environment of declining earnings and
rising capital costs for companies, we have positioned the portfolio to focus on
large cap companies with relatively secure earnings and low levels of
indebtedness.
As the 12-month period progressed, the Fund's underweight in financials,
particularly the underweight in banks in the United Kingdom and in Europe,
helped performance. The overweight in health care and telecommunications were
also positive contributors, but these factors were more than offset by poor
performance elsewhere in the Fund's portfolio. The Fund's underweight in
utilities, which performed well during the period, detracted from overall
performance. We have long been overweight in energy stocks, and while these
performed well in the first half of the 12-month period, declines in oil prices
during the second half of the year resulted in a negative contribution from this
sector.
PORTFOLIO COMPOSITION(3)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Australia/New Zealand 5%
Cash Equivalent 3%
Continental Europe 49%
Japan 19%
Southeast Asia 8%
United Kingdom 16%
WE MADE SEVERAL CHANGES TO THE FUND DURING THE REPORTING PERIOD.
We added to telecommunications, health care, consumer staples, and energy. We
reduced exposure to materials, industrials, and consumer discretionary.
Generally, we shifted the portfolio to a more defensive positioning with a focus
on large cap companies that are financially sound and generate good returns on
capital. In the telecommunications sector, we added to Telefonica in Spain,
Deutsche Telekom in
28 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (CONTINUED)
Germany, and NTT DOCOMO in Japan. Strong cash flows in these businesses were
attractive and allowed healthy dividends to be sustained. In health care, we
added Sonic Healthcare in Australia, Takeda in Japan, and Bayer in Germany. New
positions in consumer staples included Unilever in the United Kingdom, Nestle in
Switzerland, and Heineken in Holland.
We reduced the Fund's overall exposure to materials during the period, with
sales of Arcelor in Europe and Rio Tinto in Australia. We were positive on the
sector at the start of the 12-month period on the expectation that demand from
the emerging economies of the world would offset declines elsewhere, but that
view altered as the impact of the credit crunch on trade finance escalated. We
reduced exposure to industrials with sales of Siemens in Germany and Rolls Royce
in the United Kingdom, as both are very sensitive to the global economy, for
which the outlook has significantly deteriorated. Consumer discretionary
companies similarly look vulnerable to rising uncertainty over employment and
reduced availability of consumer finance. We sold Michelin in France and Daimler
in Germany in the automobile industry. We also sold Pinault Printemps, a luxury
goods company, in France.
TEN LARGEST EQUITY HOLDINGS (4)
(AS OF DECEMBER 31, 2008)
Roche Holding AG 3.02%
Telefonica SA 2.80%
Deutsche Telekom AG 2.68%
Takeda Pharmaceutical Company Limited 2.39%
GlaxoSmithKline plc 2.38%
BP plc 2.27%
Nokia Oyj 2.27%
East Japan Railway Company 2.17%
Novartis AG 2.16%
Bayer AG 2.14%
WHILE THE OUTLOOK FOR THE GLOBAL ECONOMY LOOKS BLEAK, EQUITY MARKETS HAVE
RETREATED TO REFLECT THIS EXPECTATION.
It is impossible to predict the near-term direction for equity markets, but we
believe that 2009 will undoubtedly prove to be challenging. Analyst earnings
expectations have shifted downward over the course of the past year, but we are
confident that further downgrades will follow because the current forecasts
reflect neither the normal recessionary profitability nor the likely impact of a
severe contraction. On the other hand, relative to government bond markets and
cash, equities look enticing, as do corporate bonds. High cash holdings and
super-low interest rates are likely to cause shifts toward risk assets of
equities and corporate bonds this year. The resulting stronger asset prices will
face periodic tests from very poor economic and corporate news, leading to
volatile markets. In this environment, we believe that it is prudent to focus
the Fund on securities that generate reliable economic profits above their cost
of capital. The characteristics of the portfolio include a strong return on
equity, good net income margin, low debt levels, and large market
capitalization. Undoubtedly, the coming year will be challenging, but we are
confident with our positioning.
- -------------
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.
Wells Fargo Advantage Variable Trust Funds 29
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
6 Months* 1 Year 5 Year Life of Fund Gross (5) Net (6)
--------- ------ ------ ------------ --------- -------
VT International Core Fund (36.55) (43.41) (1.52) (4.01) 1.43% 1.00%
MSCI EAFE Index (1) (36.41) (43.38) 1.66 (1.49)
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. Foreign investments are
especially volatile, and can rise or fall dramatically due to differences in the
political and economic conditions of the host country. These risks are generally
intensified in emerging markets. The use of derivatives may reduce returns
and/or increase volatility. Certain investment strategies tend to increase the
total risk of an investment (relative to the broader market). This Fund is
exposed to small company investment risk. Consult the Fund's prospectus for
additional information on these and other risks.
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.
- -------------
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
30 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (the Fund) seeks total
return comprised of long-term capital appreciation and current income.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Matrix Asset Advisors, Inc.
PORTFOLIO MANAGER
David A. Katz, CFA
FUND INCEPTION
April 12, 1994
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- -------------------------- --------
VT Large Company Core Fund (39.48)%
BENCHMARK
S&P 500 Index (1) (37.00)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST LARGE COMPANY CORE FUND ARE
1.00% AND 1.21%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT LARGE COMPANY CORE FUND S & P 500 INDEX
-------------------------- ---------------
12/31/1998 10000 $10,000
1/31/1999 10384 $10,418
2/28/1999 10035 $10,094
3/31/1999 10513 $10,498
4/30/1999 10832 $10,905
5/31/1999 10498 $10,647
6/30/1999 11085 $11,238
7/31/1999 10765 $10,887
8/31/1999 10780 $10,834
9/30/1999 10491 $10,537
10/31/1999 11106 $11,203
11/30/1999 11351 $11,431
12/31/1999 12041 $12,104
1/31/2000 11507 $11,496
2/29/2000 11352 $11,279
3/31/2000 12366 $12,381
4/30/2000 11916 $12,009
5/31/2000 11597 $11,763
6/30/2000 12021 $12,053
7/31/2000 11891 $11,865
8/31/2000 12637 $12,601
9/30/2000 11911 $11,936
10/31/2000 11572 $11,886
11/30/2000 10339 $10,949
12/31/2000 10404 $11,003
1/31/2001 10541 $11,393
2/28/2001 9536 $10,355
3/31/2001 8761 $ 9,699
4/30/2001 9471 $10,453
5/31/2001 9503 $10,523
6/30/2001 9165 $10,267
7/31/2001 8919 $10,166
8/31/2001 8197 $ 9,530
9/30/2001 7606 $ 8,760
10/31/2001 7857 $ 8,927
11/30/2001 8376 $ 9,612
12/31/2001 8406 $ 9,696
1/31/2002 8143 $ 9,555
2/28/2002 7881 $ 9,371
3/31/2002 8161 $ 9,723
4/30/2002 7863 $ 9,134
5/31/2002 7809 $ 9,067
6/30/2002 7375 $ 8,421
7/31/2002 6539 $ 7,765
8/31/2002 6551 $ 7,816
9/30/2002 6162 $ 6,967
10/31/2002 6515 $ 7,580
11/30/2002 6586 $ 8,025
12/31/2002 6234 $ 7,554
1/31/2003 6126 $ 7,357
2/28/2003 6096 $ 7,246
3/31/2003 6210 $ 7,316
4/30/2003 6533 $ 7,919
5/31/2003 6760 $ 8,335
6/30/2003 6766 $ 8,442
7/31/2003 7005 $ 8,591
8/31/2003 7178 $ 8,758
9/30/2003 6987 $ 8,665
10/31/2003 7471 $ 9,155
11/30/2003 7501 $ 9,236
12/31/2003 7704 $ 9,720
1/31/2004 7818 $ 9,898
2/29/2004 7860 $10,036
3/31/2004 7842 $ 9,884
4/30/2004 7716 $ 9,729
5/31/2004 7866 $ 9,863
6/30/2004 7925 $10,054
7/31/2004 7483 $ 9,722
8/31/2004 7405 $ 9,761
9/30/2004 7609 $ 9,866
10/31/2004 7752 $10,017
11/30/2004 8117 $10,422
12/31/2004 8350 $10,777
1/31/2005 8027 $10,514
2/28/2005 8117 $10,735
3/31/2005 7943 $10,545
4/30/2005 7818 $10,345
5/31/2005 8009 $10,674
6/30/2005 7848 $10,690
7/31/2005 8140 $11,087
8/31/2005 7889 $10,986
9/30/2005 7836 $11,075
10/31/2005 7758 $10,890
11/30/2005 8105 $11,302
12/31/2005 8163 $11,306
1/31/2006 8319 $11,605
2/28/2006 8307 $11,636
3/31/2006 8295 $11,781
4/30/2006 8409 $11,939
5/31/2006 8157 $11,596
6/30/2006 7982 $11,611
7/31/2006 7959 $11,683
8/31/2006 8188 $11,960
9/30/2006 8620 $12,268
10/31/2006 9053 $12,668
11/30/2006 9185 $12,909
12/31/2006 9439 $13,090
1/31/2007 9560 $13,287
2/28/2007 9288 $13,027
3/31/2007 9457 $13,173
4/30/2007 10196 $13,756
5/31/2007 10486 $14,236
6/30/2007 10413 $14,000
7/31/2007 9942 $13,566
8/31/2007 10081 $13,770
9/30/2007 10208 $14,285
10/31/2007 10244 $14,512
11/30/2007 9742 $13,905
12/31/2007 9657 $13,809
1/31/2008 9318 $12,981
2/28/2008 8973 $12,559
3/31/2008 8931 $12,505
4/30/2008 9403 $13,114
5/31/2008 9548 $13,284
6/30/2008 8719 $12,164
7/31/2008 8660 $12,062
8/31/2008 8905 $12,236
9/30/2008 7883 $11,146
10/31/2008 6359 $ 9,274
11/30/2008 5747 $ 8,609
12/31/2008 5845 $ 8,700
- --------------
1. 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.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT 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.
3. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
Wells Fargo Advantage Variable Trust Funds 31
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund underperformed its benchmark in what was an across-the-board
horrific year for the stock market.
- - The Fund outpaced its benchmark for most of the year, but that changed
during the dramatic market decline that began in September and continued
through the end of the period.
- - Holdings in financials and information technology stocks were the biggest
detractors from Fund performance.
THE FUND WAS BATTERED BY THE UNIVERSAL NEGATIVE MOVEMENT OF THE STOCK MARKET IN
2008.
Declines were seen across all equity sectors, and some were more negatively
impacted than others. For example, the Fund was hurt by its overweight position
in information technology stocks, one of the worst-performing areas of the
market; in addition, Fund performance suffered from holdings in the financials
sector.
Investments made with cash collateral received from securities lending
activities, while generally considered a benign means of earning additional
income, also detracted from portfolio performance during this period of distress
in short term markets, primarily due to the decline in value of a number of the
collateral holdings.
SECTOR DISTRIBUTION (3)
(AS OF DECEMBER 31, 2008)
SECTOR DISTRIBUTION (3)
(AS OF DECEMBER 31, 2008)
- --------------------------------------------------------------------------------
Consumer Discretionary 20%
Consumer Staples 5%
Energy 16%
Financials 12%
Haelth Care 9%
Industrials 10%
Materials 3%
Information Technology 25%
- --------------------------------------------------------------------------------
On the positive side, while health care stocks were negative for the overall
market, the Fund was able to post a small gain in this sector. Similarly, the
Fund's consumer staple stocks fared better than the overall market.
THE FUND TOOK PROFITS EARLY IN THE YEAR ON CERTAIN HOLDINGS.
As the market decline intensified during the period, we made changes to the Fund
when we wanted to forestall further declines in relatively defensive stocks or
when we no longer had confidence in a company's ability to navigate through the
economic turmoil. We also took advantage of buying what we believed to be strong
companies when prices dipped to what we felt were compelling valuations.
Successful sales for the Fund included Yahoo (which we repurchased at a lower
price than what we sold it for), Johnson & Johnson, Teva Pharmaceuticals, Amgen,
and Western Union.
In contrast, the Fund took a loss on some of its sales because even though the
holdings held up better than their peers, we believed that they were vulnerable
32 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (CONTINUED)
to further declines. Examples in this category included Discover Financial and
3M. Sales that we made based on loss of confidence included AIG and Office
Depot.
We added some new positions early in the period. Examples in consumer stocks
included Carnival Cruise Lines, Monster Worldwide, Omnicom Group, and Walgreen
Co. In the health care sector, we added Amgen and Bristol Myers. Valero was a
new addition in energy, and American Express and Bank of New York Mellon were
added to the Fund's holdings in financials.
TEN LARGEST EQUITY HOLDINGS (4)
(AS OF DECEMBER 31, 2008)
Devon Energy Corporation 4.34%
ConocoPhillips 4.24%
Chevron Corporation 4.04%
Comcast Corporation 3.93%
Time Warner Incorporated 3.91%
Microsoft Corporation 3.86%
Cisco Systems Incorporated 3.83%
Wyeth 3.74%
Staples Incorporated 3.67%
McGraw-Hills Companies Incorporated 3.53%
As the sell-off peaked during the fourth quarter of 2008, we bought Johnson
Controls and Rockwell Automation. We also reinitiated our position in Western
Union.
DESPITE THE HISTORIC DECLINES WE ENDURED DURING 2008, WE BELIEVE THAT THE STOCK
MARKET IS POISED FOR A SIGNIFICANT RECOVERY IN 2009.
We base our outlook on several fundamental market and historical factors,
including the valuation of leading companies in the market today, the pattern of
recovery of markets after reaching bear market lows, and the traditional role of
the stock market as a forward indicator of economic conditions.
In our view, the economy will remain in recession through at least the first
half of 2009 and will likely begin to recover during the second half of the
year. If this is accurate, it would mean that the recession will have lasted at
least a year and a half. Historically, markets begin to rally midway through a
recession.
There are ample fundamental reasons why stocks should rally, but the most
compelling reason is that valuations are low. Companies are being valued using
historically low multiples that are applied to depressed earnings levels.
Therefore, we believe that an economic recovery will result in higher multiples
on higher earnings, resulting in substantially higher stock prices.
Consequently, we believe that we have positioned the Fund to be a prime
beneficiary of this recovery and that with the economically sensitive and
growth-oriented holdings, the Fund is likely to see appreciation that is greater
than the overall market. In addition, the Fund holds several positions that are
realistic acquisition candidates in a world of consolidation and strategic
buying by other companies.
Wells Fargo Advantage Variable Trust Funds 33
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
6 Months* 1 Year 5 Year 10 Year Gross (5) Net (6)
--------- ------ ------ ------- --------- -------
VT Large Company Core Fund (32.97) (39.48) (5.37) (5.23) 1.21% 1.00%
S&P 500 Index (1) (28.48) (37.00) (2.19) (1.38)
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. The use of derivatives may
reduce returns and/or increase volatility. Certain investment strategies 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.
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.
- -------------
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. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
34 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (the Fund) seeks
long-term capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Peregrine Capital Management, Inc.
PORTFOLIO MANAGERS
John S. Dale, CFA
Gary E. Nussbaum, CFA
FUND INCEPTION
September 20, 1999
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- --------------------------------- --------
VT Large Company Growth Fund (38.99)%
BENCHMARK
Russell 1000(R) Growth Index (1) (38.44)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST LARGE COMPANY GROWTH FUND
ARE 1.00% AND 1.05%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT LARGE COMPANY GROWTH FUND RUSSELL 1000 GROWTH INDEX
---------------------------- -------------------------
9/20/1999 10000 $10,000
9/30/1999 9590 $ 9,561
10/31/1999 10420 $10,283
11/30/1999 10830 $10,838
12/31/1999 12030 $11,965
1/31/2000 11800 $11,404
2/29/2000 12000 $11,962
3/31/2000 13430 $12,818
4/30/2000 13020 $12,208
5/31/2000 12200 $11,593
6/30/2000 13130 $12,472
7/31/2000 13230 $11,952
8/31/2000 14000 $13,034
9/30/2000 13150 $11,801
10/31/2000 13130 $11,243
11/30/2000 12080 $ 9,585
12/31/2000 11960 $ 9,282
1/31/2001 12150 $ 9,923
2/28/2001 10320 $ 8,239
3/31/2001 9260 $ 7,342
4/30/2001 10240 $ 8,271
5/31/2001 10150 $ 8,149
6/30/2001 9880 $ 7,960
7/31/2001 9700 $ 7,761
8/31/2001 8843 $ 7,127
9/30/2001 8003 $ 6,415
10/31/2001 8373 $ 6,752
11/30/2001 9353 $ 7,400
12/31/2001 9463 $ 7,386
1/31/2002 9403 $ 7,256
2/28/2002 8783 $ 6,955
3/31/2002 9193 $ 7,195
4/30/2002 8483 $ 6,608
5/31/2002 8223 $ 6,448
6/30/2002 7673 $ 5,852
7/31/2002 6932 $ 5,530
8/31/2002 7012 $ 5,547
9/30/2002 6242 $ 4,971
10/31/2002 6962 $ 5,427
11/30/2002 7422 $ 5,722
12/31/2002 6812 $ 5,327
1/31/2003 6572 $ 5,197
2/28/2003 6532 $ 5,174
3/31/2003 6622 $ 5,270
4/30/2003 7192 $ 5,659
5/31/2003 7523 $ 5,942
6/30/2003 7613 $ 6,024
7/31/2003 7993 $ 6,174
8/31/2003 8123 $ 6,327
9/30/2003 7923 $ 6,260
10/31/2003 8383 $ 6,611
11/30/2003 8353 $ 6,680
12/31/2003 8603 $ 6,911
1/31/2004 8703 $ 7,052
2/29/2004 8703 $ 7,097
3/31/2004 8583 $ 6,966
4/30/2004 8453 $ 6,885
5/31/2004 8563 $ 7,013
6/30/2004 8563 $ 7,101
7/31/2004 8053 $ 6,699
8/31/2004 8043 $ 6,666
9/30/2004 8133 $ 6,729
10/31/2004 8283 $ 6,834
11/30/2004 8633 $ 7,070
12/31/2004 8883 $ 7,347
1/31/2005 8393 $ 7,102
2/28/2005 8413 $ 7,177
3/31/2005 8193 $ 7,047
4/30/2005 8003 $ 6,912
5/31/2005 8533 $ 7,247
6/30/2005 8553 $ 7,220
7/31/2005 9149 $ 7,573
8/31/2005 9008 $ 7,475
9/30/2005 8998 $ 7,510
10/31/2005 9099 $ 7,437
11/30/2005 9590 $ 7,758
12/31/2005 9389 $ 7,733
1/31/2006 9359 $ 7,869
2/28/2006 9399 $ 7,857
3/31/2006 9520 $ 7,973
4/30/2006 9359 $ 7,962
5/31/2006 8898 $ 7,692
6/30/2006 8738 $ 7,662
7/31/2006 8377 $ 7,516
8/31/2006 8748 $ 7,750
9/30/2006 9129 $ 7,963
10/31/2006 9540 $ 8,243
11/30/2006 9640 $ 8,407
12/31/2006 9610 $ 8,435
1/31/2007 10001 $ 8,652
2/28/2007 9700 $ 8,489
3/31/2007 9580 $ 8,535
4/30/2007 10081 $ 8,937
5/31/2007 10431 $ 9,259
6/30/2007 10251 $ 9,121
7/31/2007 9940 $ 8,979
8/31/2007 10171 $ 9,122
9/30/2007 10732 $ 9,504
10/31/2007 11123 $ 9,828
11/30/2007 10572 $ 9,466
12/31/2007 10341 $ 9,432
1/31/2008 9640 $ 8,696
2/28/2008 8938 $ 8,523
3/31/2008 8918 $ 8,471
4/30/2008 9459 $ 8,916
5/31/2008 9419 $ 9,243
6/30/2008 8738 $ 8,577
7/31/2008 8941 $ 8,414
8/31/2008 9132 $ 8,505
9/30/2008 8278 $ 7,520
10/31/2008 6842 $ 6,196
11/30/2008 6169 $ 5,703
12/31/2008 6309 $ 5,806
- ----------------
1. The Russell 1000 Growth Index measures performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth
values. You cannot invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT LARGE
COMPANY GROWTH FUND for the life of the Fund with the Russell 1000 Growth
Index. The chart assumes a hypothetical $10,000 investment and reflects
all operating expenses of the Fund.
3. The ten largest equity holdings are calculated based on the market value
of the securities divided by total market value of the portfolio.
Wells Fargo Advantage Variable Trust Funds 35
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund slightly underperformed its benchmark during a challenging time
in the stock market.
- - Our historically overweight financial sector exposure hurt the Fund's
relative performance.
- - Contributors to the Fund's performance included retail holdings Wal-Mart
and Lowe's and biotech holdings Amgen and Genentech.
DURING 2008, THE U.S. EQUITY MARKET MOVED THROUGH THREE DISTINCT PHASES.
The first phase, January-May, was dominated by the continued commodity bubble.
Oil prices were on the path to $130 a barrel by May 2008 and peaked at over $145
in July. The commodity and heavy industrial sectors led stock market performance
from August 2007 through May 2008. Low-quality stocks outperformed high-quality
stocks by a wide margin. During the low-quality, commodity bubble period --
including late 2007 -- the Fund underperformed its benchmark. While the
benchmark's exposure to commodities and heavy industrials rose to 30%, we had no
exposure to these sectors.
The second phase, June-August, suggested a return to normalcy. Both the energy
and housing bubbles were collapsing, and it appeared that individual company
fundamentals were once again directing stock market performance. High-quality
stocks came roaring back relative to low-quality stocks. The Fund picked up a
substantial amount of relative performance during this period.
The third phase, September-December, was characterized by financial market
collapse. Sectors most affected by credit and economic cyclicality were
significantly impacted. Faster-growth companies suffered from increased
uncertainty. Correlations among stocks and sectors spiked as investors simply
dumped U.S. equities -- often because they were the most liquid. During this
third phase, the Fund declined slightly less than the general market.
TEN LARGEST EQUITY HOLDINGS (3)
(AS OF DECEMBER 31, 2008)
Microsoft Corporation 6.63%
Charles Schwab Corporation 6.32%
Goldman Sachs Group Incorporated 6.06%
Cisco Systems Incorporated 5.71%
Google Incorporated Class A 5.17%
Medtronic Incorporated 4.84%
Genentech Incorporated 4.49%
Target Corporation 4.21%
Paychex Incorporated 4.18%
Amgen Incorporated 3.90%
High-quality stocks assumed leadership for the first time in several years.
Holdings in retailers Target, Lowe's, and Kohl's contributed to relative
performance for the 12-month period. Wal-Mart was a contributor on both a
relative and an absolute basis. Consistent with history, the earnings of quality
companies typically hold up better than average in an economic decline, and the
strong retailers often emerge from a recession in a better competitive position.
Stock selection and our sector weighting in health care also boosted relative
performance, with both Genentech and Amgen up significantly for the year.
Genzyme and Medtronic
36 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (CONTINUED)
outperformed the market. The portfolio's quality bias aided performance during
the June-December timeframe. Although high-quality holdings detracted from
relative performance in the first half of the year, high-quality stocks
outperformed low-quality during the full 12-month period for the first time in
several years.
The Fund's greater-than-market exposure to financial holdings hurt Fund
performance. The sector was hit hard, especially in the September-December
time frame. Overall, our financials performed slightly worse than the
benchmark's financials, and our historically overweight financial sector
exposure hurt relative performance. Legg Mason, Goldman Sachs, and AIG were the
culprits. Schwab helped relative performance. While the near-term downside
impact was great, the portfolio's financial holdings provide strong
fundamentals, earnings growth prospects, and attractive valuations.
Our investments made with cash collateral received from securities lending
activities, while generally considered a benign means of earning additional
income, also detracted from portfolio performance during this period of distress
in short-term markets, primarily due to the decline in value of a number of the
collateral holdings.
ATTRACTIVE VALUATIONS ALLOWED US TO FURTHER INCREASE THE FUND'S LONG-TERM GROWTH
RATE.
Our portfolio turnover was minimal again this year. On a long-term basis, the
companies in the portfolio are meeting our growth and quality expectations.
Portfolio valuations remain extremely attractive. On the margin, we have been
able to add to the portfolio's long-term earnings growth rate without having to
pay a significant premium for that growth. We added new positions in Qualcomm,
Apple, and FactSet Research during the year and removed Texas Instruments, AIG,
and Legg Mason. Qualcomm is the semiconductor technology leader for wireless
devices. Apple continues to build a user and developer environment around its
fast-growing, innovative product base. FactSet is a niche provider of research
and tools to the investment management industry. In all three cases, disruptive
markets allowed attractive entry points. Overall, the portfolio changes,
including position additions and reductions during the year, added approximately
50 basis points (100 basis points equals 1.00%) of relative performance.
SECTOR DISTRIBUTION(4)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 11%
Consumer Staples 3%
Financials 19%
Health Care 17%
Information Technology 41%
Industrials 9%
- -------------
4. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
Wells Fargo Advantage Variable Trust Funds 37
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (CONTINUED)
HIGHER-QUALITY COMPANIES SHOULD BENEFIT FROM THE SHIFT IN THE MARKET PARADIGM.
Lower systemic leverage is likely to remain for years. The series of bubbles --
Internet, housing, commodities -- were a result of extraordinarily easy access
to capital over a period of several years. For myriad reasons, we believe that
this period is likely over for at least a few cycles. This is not a bad result.
The lower leverage and global systemic risk may mean lower global economic and
corporate earnings growth but potentially higher equity valuations due to
normalized equity risk premiums. Higher-quality companies should benefit from
this shift. We believe that the better balance sheets, access to capital, and
strong cash flow should benefit higher-quality companies in the near term.
Lower-quality companies that need easy access to cash to survive will fall by
the wayside.
We are mindful of the risks but remain optimistic. The world is currently
pessimistic. We believe that there are many early markers, however, that should
embolden equity investors. Lower inflation, lower interest rates, a fortified
financial system, lower leverage, and the fundamental position of higher-quality
companies all suggest future stability.
38 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
6 Months* 1 Year 5 Year Life of Fund Gross (5) Net (6)
--------- ------ ------ ------------ --------- -------
VT Large Company Growth Fund (27.80) (38.99) (6.01) (4.84) 1.05% 1.00%
Russell 1000(R) Growth Index (1) (32.31) (38.44) (3.42) (5.74)
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. The use of derivatives may
reduce returns and/or increase volatility. Certain investment strategies 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.
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.
- -------------
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
40 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT MONEY MARKET FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (the Fund) seeks current income,
while preserving capital and liquidity.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGER
David D. Sylvester
FUND INCEPTION
May 19, 1994
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- -------------------- ------
VT Money Market Fund 2.27%
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 PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING
1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED
PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY
CONTRACTS.
FUND YIELD SUMMARY
(AS OF DECEMBER 31, 2008)
7-Day Current Yield 0.96%
7-Day Effective Yield 0.97%
30-Day Simple Yield 1.20%
30-Day Effective Yield 1.20%
Wells Fargo Advantage Variable Trust Funds 41
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund had steady performance in a volatile environment.
- - The breadth and scope of the liquidity and credit crisis were
unprecedented.
- - Liquidity in the Fund was increased as general market conditions
deteriorated.
THE MOST SIGNIFICANT FACTOR THAT AFFECTED THE FUND IN 2008 WAS THE CONTINUATION
OF THE PROLONGED CREDIT CRISIS THAT HAS AFFECTED ALL FIXED-INCOME MARKETS SINCE
EARLY 2007.
The fixed-income markets in 2008 went through a self-reinforcing cycle of price
deterioration. Risk aversion turned into an abandonment of credit risk, which
created more problems that led to increased credit fear in the market. Fear
became its own technical force as losses in the markets appeared to inspire
further increases in negative sentiment; thus ensued a vicious cycle of price
declines. Major episodes of these conditions occurred in March and September.
In March, we witnessed the collapse of Bear Stearns, which was subsequently
acquired by JPMorgan. In September, Fannie Mae and Freddie Mac were placed under
the conservatorship of the U.S. government, with the U.S. Treasury taking an
equity stake in the companies to inject capital and stabilize them. That felt
like a watershed event at the time, but as September continued, the credit
crisis worsened. Lehman Brothers filed for bankruptcy on September 15, 2008, and
severely tested the market's "too-big-to-fail" theory. This event resulted in
extraordinary levels of credit distress in the fixed-income markets over the
subsequent trading week, as investors became highly skeptical of some financial
institutions.
The consequences to the markets prompted the U.S. government to intervene on
behalf of more financial institutions. Merrill Lynch fled into the arms of Bank
of America, leaving only Morgan Stanley and Goldman Sachs still standing as the
remaining major, independent investment banks. Both Morgan Stanley and Goldman
Sachs subsequently became bank-holding companies in order to benefit from
federal sources of capital. There would be several other government
interventions to support financial companies, but none was larger than the
direct provision of more than $120 billion in capital support to American
International Group (AIG), which was an AAA-rated company when the events began
but approached insolvency due to a rapid deterioration in its creditworthiness
within days of the Lehman Brothers' bankruptcy.
Later that week, the government announced two programs to support money market
securities; the Asset-Backed Commercial Paper Money Market Fund Liquidity
Facility (AMLF) and the U.S. Treasury Temporary Guarantee Program for
42 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED)
Money Market Funds (MMMF) (1). These programs were aimed at restoring liquidity
to the money markets, which improved pricing over the subsequent weeks. As the
credit crisis continued to unfold, the Fed and the U.S. Treasury, as well as
governments around the world, actively intervened to improve liquidity
conditions across the full breadth of the credit markets. Central banks used
coordinated rate cuts as well as further government guarantee programs to
bolster the global credit systems. The Fed and the U.S. Treasury introduced many
new programs designed to enhance liquidity for banks, primary dealers, money
market funds, and commercial paper issuers. These had the cumulative effect of
increasing liquidity in areas of the markets and lowering interest rates.
The three-month London Interbank Offered Rate (LIBOR) hovered between 2.50% and
3.00% from February to mid-September after declining from 4.70% at the end of
2007. As credit concerns began to increase in September, overnight LIBOR
suddenly spiked to as high as 6.875% by the end of the month as financial
institutions increasingly demonstrated an extraordinary unwillingness to lend.
Continued central bank easing efforts in the fourth quarter of 2008 began to
take effect, bringing rates back down. By December, the three-month LIBOR was
down to 1.42%, and overnight LIBOR fell to below 0.13%.
PORTFOLIO ALLOCATION (2)
(AS OF DECEMBER 31, 2008)
Corporate Bonds and Notes 1%
Variable and Floating Rate Notes 13%
Commercial Paper 52%
Certificates of Deposit 5%
Municipal Bonds and Notes 2%
Repurchase Agreements 16%
Time Deposit 11%
As the Fed continued to inject liquidity into the U.S. economy, the federal
funds rate began to trade well below its official target rate. Usually the
target rate and effective rate trade in tandem, but that changed during the
period as extraordinary levels of quantitative easing (federal capital
injections) drove the effective rate to less than 0.12% in the days just prior
to the Fed's December meeting. In acknowledgment of the massive effects of
quantitative easing, which decoupled the target rate from the effective rate,
the Fed cut the target rate to a range of 0.00% to 0.25%. This is a record low
for the target rate and a signal that the Fed has, for all practical purposes,
abandoned the targeting of the federal funds rate altogether.
MATURITY DISTRIBUTION(2)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
2-14 Days 56%
15-29 Days 15%
30-59 Days 15%
60-89 Days 12%
90-179 Days 2%
- -------------
1. Certain Details of the Program - The U.S. Treasury Temporary Guarantee
Program provides a guarantee to participating money market mutual fund
shareholders based on the number of shares invested in the fund at the
close of business on September 19, 2008. - Any increase in the number of
shares an investor holds after the close of business on September 19,
2008, will not be guaranteed. - If a customer closes his/her account with
a fund or broker/dealer, any future investment in the fund will not be
guaranteed. - If the number of shares an investor holds fluctuates over
the period, the investor will be covered for either the number of shares
held as of the close of business on September 19, 2008, or the current
amount, whichever is less. - The Program expires on April 30, 2009, unless
extended by the U.S. Treasury.
2. Portfolio allocation and maturity distribution are subject to change.
Wells Fargo Advantage Variable Trust Funds 43
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED)
WE MADE SEVERAL STRATEGIC MOVES TO PROTECT THE FUND'S YIELD AND NET ASSET VALUE
IN THIS ENVIRONMENT.
The weighted-average maturity (WAM) of the Fund's assets was held in the
mid-30-day range for the first five months of the year. In the face of continued
uncertainty, we shortened the WAM to the mid-20-day area for the balance of the
year. The percentage of the Fund's assets maturing within 14 days was in the
area of 50% for most of the year. As market and credit conditions deteriorated
in September, we increased the liquidity in the Fund. Because the Fund's assets
grew in the fourth quarter, as markets began to stabilize again, we were able to
decrease liquidity and take advantage of attractively priced, longer-dated
investments.
As credit spreads widened, floating-rate notes became a less-attractive
investment option. Over the year, the percentage of the Fund's assets allocated
to this sector decreased, from 28% at the end of 2007 to 18% by the end of 2008.
CONDITIONS IN THE FINANCIAL MARKET HAVE SPILLED OVER TO THE POINT OF AFFECTING
ECONOMIC GROWTH.
There are signs of newfound stability in some sectors of the money markets. A
combination of government intervention programs and investor extension into
longer-dated investments has ameliorated the intensity of the credit crunch from
its heights early in the fall of 2008. Nonetheless, because our highest priority
is to meet liquidity demand and provide principal protection through a stable
net asset value of $1.00, we will continue to pursue our current strategy, which
emphasizes a conservative, shorter-weighted average maturity and high credit
quality until we are convinced that the market turmoil is firmly behind us.
44 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
6 Months* 1 Year 5 Year 10 Year
--------- ------ ------ -------
VT Money Market Fund 0.95 2.27 2.91 3.02
* Returns for periods of less than one year are not annualized.
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 PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING
1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED
PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY
CONTRACTS.
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 WELLS
FARGO ADVANTAGE MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT
AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN A MONEY MARKET
FUND.
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.
46 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (the Fund) seeks long-term capital
appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Ann M. Miletti
FUND INCEPTION
May 8, 1992
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
FUND 1 YEAR
- ---------------------------- --------
VT Opportunity Fund (40.10)%
BENCHMARK
Russell Midcap (R) Index (1) (41.46)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST OPPORTUNITY FUND ARE 1.07%
AND 1.22% RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY COMMITTED
THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE EXTENT
NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT THESE
REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT OPPORTUNITY FUND RUSSELL MIDCAP INDEX
------------------- --------------------
12/31/1998 10000 10,000
1/31/1999 10322 9,983
2/28/1999 10018 9,651
3/31/1999 10459 9,953
4/30/1999 11321 10,688
5/31/1999 11430 10,658
6/30/1999 11970 11,034
7/31/1999 12032 10,731
8/31/1999 11549 10,453
9/30/1999 11440 10,085
10/31/1999 12105 10,563
11/30/1999 12520 10,867
12/31/1999 13491 11,823
1/31/2000 13091 11,432
2/29/2000 13319 12,311
3/31/2000 14690 13,016
4/30/2000 14409 12,400
5/31/2000 14508 12,071
6/30/2000 14041 12,428
7/31/2000 13875 12,289
8/31/2000 14819 13,467
9/30/2000 14274 13,275
10/31/2000 14363 13,070
11/30/2000 13428 11,893
12/31/2000 14380 12,799
1/31/2001 15257 13,005
2/28/2001 14362 12,213
3/31/2001 13666 11,455
4/30/2001 14681 12,435
5/31/2001 14759 12,667
6/30/2001 14386 12,548
7/31/2001 14182 12,188
8/31/2001 13347 11,720
9/30/2001 11503 10,306
10/31/2001 12188 10,715
11/30/2001 13305 11,612
12/31/2001 13848 12,079
1/31/2002 13706 12,007
2/28/2002 13385 11,879
3/31/2002 14076 12,592
4/30/2002 13328 12,347
5/31/2002 13236 12,208
6/30/2002 11748 11,389
7/31/2002 10409 10,278
8/31/2002 10416 10,334
9/30/2002 9227 9,381
10/31/2002 9818 9,855
11/30/2002 10879 10,539
12/31/2002 10134 10,124
1/31/2003 9827 9,919
2/28/2003 9784 9,788
3/31/2003 9696 9,884
4/30/2003 10580 10,602
5/31/2003 11639 11,573
6/30/2003 11771 11,690
7/31/2003 12151 12,075
8/31/2003 12728 12,599
9/30/2003 12480 12,441
10/31/2003 13188 13,391
11/30/2003 13393 13,767
12/31/2003 13885 14,179
1/31/2004 14469 14,591
2/29/2004 14718 14,905
3/31/2004 14638 14,909
4/30/2004 14433 14,361
5/31/2004 14769 14,718
6/30/2004 15106 15,125
7/31/2004 14608 14,463
8/31/2004 14374 14,526
9/30/2004 14930 14,998
10/31/2004 15171 15,411
11/30/2004 15932 16,350
12/31/2004 16414 17,046
1/31/2005 15939 16,624
2/28/2005 16100 17,138
3/31/2005 15917 17,003
4/30/2005 15383 16,460
5/31/2005 16188 17,249
6/30/2005 16517 17,713
7/31/2005 17511 18,646
8/31/2005 17314 18,516
9/30/2005 17321 18,762
10/31/2005 16868 18,199
11/30/2005 17555 19,007
12/31/2005 17708 19,203
1/31/2006 18527 20,190
2/28/2006 18242 20,166
3/31/2006 18535 20,666
4/30/2006 19032 20,811
5/31/2006 18308 20,109
6/30/2006 17986 20,133
7/31/2006 17605 19,693
8/31/2006 18160 20,193
9/30/2006 18747 20,558
10/31/2006 19202 21,368
11/30/2006 19831 22,138
12/31/2006 19872 22,135
1/31/2007 20319 22,883
2/28/2007 20203 22,920
3/31/2007 20600 23,104
4/30/2007 21262 23,984
5/31/2007 22156 24,889
6/30/2007 21974 24,327
7/31/2007 21258 23,422
8/31/2007 21238 23,462
9/30/2007 21998 24,233
10/31/2007 22258 24,624
11/30/2007 21325 23,449
12/31/2007 21190 23,374
1/31/2008 20007 21,851
2/29/2008 19940 21,352
3/31/2008 19488 21,042
4/30/2008 20844 22,464
5/31/2008 21796 23,482
6/30/2008 19998 21,605
7/31/2008 19640 21,056
8/31/2008 20290 21,445
9/30/2008 17916 18,815
10/31/2008 13831 14,610
11/30/2008 12394 13,123
12/31/2008 12694 13,683
- -------------
1. The Russell Midcap Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 25% of
the total market capitalization of the Russell 1000 Index. You cannot
invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT
OPPORTUNITY FUND for the most recent ten years of the Fund with the
Russell Midcap Index. The chart assumes a hypothetical $10,000 investment
and reflects all operating expenses of the Fund.
3. The ten largest equity holdings are calculated based on the market value
of the securities divided by total market value of the portfolio.
Wells Fargo Advantage Variable Trust Funds 47
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund outperformed its benchmark during a challenging 12-month period
for the stock market.
- - Top contributors to relative performance for the Fund came from holdings
in the industrials sector.
- - Concerns about slowing growth of global demand, especially from emerging
market economies, weighed on the price of energy commodities and,
consequently, our holdings in this sector.
FALLING PRICES OF ENERGY COMMODITIES NEGATIVELY AFFECTED OUR HOLDINGS IN ENERGY,
WHILE IN FINANCIALS, HOLDINGS IN INSURANCE AND CAPITAL MARKETS HELPED THE FUND'S
RELATIVE PERFORMANCE.
The Fund's holdings in the industrials sector were the top contributors to
relative performance during the year, as our holdings held up better than the
broader sector. Specifically, within industrials, our security selection in the
machinery industry and our road and rail holdings significantly outperformed.
The financials sector was another positive contributor to relative performance
because our insurance and capital market holdings proved to be less volatile
than the overall sector and the entire benchmark. Security selection in the
consumer discretionary sector also contributed positively to relative
performance, which benefited from strong relative performance in the media
industry.
After contributing smartly to performance for the past few years, the energy
sector detracted from relative performance. Concerns about slowing growth of
global demand, especially from emerging market economies, weighed on the price
of energy commodities and, consequently, our holdings in this sector.
Information technology, which contributed positively to relative performance
last year, was another detractor from performance due primarily to
company-specific issues in software and storage.
TEN LARGEST EQUITY HOLDINGS (3)
(AS OF DECEMBER 31, 2008)
Praxair Incorporated 2.37%
RenaissanceRe Holdings Limited 2.31%
Comcast Corporation Class A 2.20%
ACE Limited 2.19%
Pall Corporation 2.07%
ResMed Incorporated 2.03%
Republic Services Incorporated 2.01%
XTO Energy Incorporated 1.96%
Illinois Tool Works Incorporated 1.95%
Invesco Limited 1.94%
Investments made with cash collateral received from securities lending
activities, while generally considered a benign means of earning additional
income, also detracted from portfolio performance during this period of distress
in short term markets, primarily due to the decline in value of a number of the
collateral holdings.
48 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (CONTINUED)
OUR METHODOLOGY INCLUDES BUYING STOCKS THAT ARE SELLING AT A DISCOUNT TO THEIR
INTRINSIC PRIVATE MARKET VALUE AND SELLING STOCKS THAT APPROACH THEIR PRIVATE
MARKET VALUE.
We target companies that we believe are underpriced but have attractive growth
prospects based on an analysis of "Private Market Value" -- the price an
investor would be willing to pay for the entire company. This discipline allows
us to be patient with stocks that are out of favor with the market. During the
past year, all stocks seemed to be out of favor with the market as the
unprecedented volatility in the market increased investor focus on the short
term rather than the long term. Although this dynamic is challenging, we view it
favorably, as the indiscriminate sell-off has punished many companies that we
perceive to be higher-quality businesses with strong management teams.
Consequently, we added positions in several sectors and industries. These
additions have generally been complemented by sales of companies that we had
identified as having inappropriate valuations, lower-quality business models, or
deteriorating fundamentals. While comprising relatively small changes overall,
the two sectors that had the largest increases as a percentage of the Fund's
exposure were financials and information technology. The sector with the largest
decrease was energy. Most sector weightings were fairly consistent throughout
the year. The Fund was overweight information technology, health care, and
consumer discretionary while being underweight in financials, utilities, and
industrials.
SECTOR DISTRIBUTION(4)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 21%
Consumer Staples 5%
Energy 8%
Financials 16%
Health Care 12%
Industrials 13%
Information Technology 20%
Materials 5%
THE MARKET EXPERIENCED UNPRECEDENTED LEVELS OF VOLATILITY DURING THE PERIOD.
Credit markets froze, businesses failed, and governments were forced to
intervene. The magnitude and duration of these events are still unknown. We view
this turmoil as a tremendous opportunity to either add to current holdings at
more favorable prices and valuations or to upgrade our holdings with
high-quality companies that are trading at what we believe are attractive
discounts. Through it all, we are guided by our bottom-up process of identifying
companies that have solid business models, strong management teams, and that
trade at attractive discounts.
- -------------
4. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
Wells Fargo Advantage Variable Trust Funds 49
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
------------------
6 Months* 1 Year 5 Year 10 Year Gross (5) Net (6)
--------- -------- ------ ------- --------- -------
VT Opportunity Fund (SM) (36.52) (40.10) (1.78) 2.41 1.22% 1.07%
Russell Midcap Index (1) (36.67) (41.46) (0.71) 3.18
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. Smaller company stocks
tend to be more volatile and less liquid than those of larger companies. The use
of derivatives may reduce returns and/or increase volatility. Certain investment
strategies 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.
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.
- -------------
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
50 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND
THE FUND IS CLOSED TO NEW INVESTORS.
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (the Fund) seeks long-term
capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Jerome "Cam" Philpott, CFA
Stuart Roberts
FUND INCEPTION
May 1, 1995
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
Fund 1 Year
- ---- --------
VT Small Cap Growth Fund (41.42)%
BENCHMARK
Russell 2000 (R) Growth Index (1) (38.54)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST SMALL CAP GROWTH FUND ARE
1.20% AND 1.26%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT SMALL CAP GROWTH FUND RUSSELL 2000 GROWTH INDEX
------------------------ -------------------------
12/31/1998 10000 10,000
1/31/1999 9688 10,450
2/28/1999 8778 9,494
3/31/1999 8585 9,832
4/30/1999 9072 10,700
5/31/1999 9053 10,717
6/30/1999 9522 11,282
7/31/1999 9513 10,933
8/31/1999 9577 10,524
9/30/1999 9945 10,727
10/31/1999 11406 11,002
11/30/1999 13318 12,165
12/31/1999 16627 14,309
1/31/2000 16994 14,176
2/29/2000 21176 17,474
3/31/2000 18447 15,638
4/30/2000 16195 14,059
5/31/2000 14476 12,828
6/30/2000 17978 14,485
7/31/2000 16903 13,243
8/31/2000 19123 14,636
9/30/2000 18698 13,909
10/31/2000 16102 12,780
11/30/2000 12034 10,460
12/31/2000 12872 11,100
1/31/2001 13021 11,998
2/28/2001 10343 10,354
3/31/2001 8842 9,412
4/30/2001 10293 10,565
5/31/2001 10305 10,809
6/30/2001 10553 11,104
7/31/2001 9896 10,157
8/31/2001 9115 9,522
9/30/2001 7528 7,986
10/31/2001 8408 8,754
11/30/2001 9053 9,485
12/31/2001 9735 10,075
1/31/2002 9251 9,717
2/28/2002 8433 9,088
3/31/2002 9152 9,878
4/30/2002 8730 9,664
5/31/2002 8210 9,099
6/30/2002 7503 8,328
7/31/2002 6089 7,048
8/31/2002 6064 7,044
9/30/2002 5568 6,536
10/31/2002 6002 6,866
11/30/2002 6449 7,547
12/31/2002 6015 7,026
1/31/2003 5767 6,836
2/28/2003 5655 6,653
3/31/2003 5680 6,754
4/30/2003 6263 7,393
5/31/2003 6783 8,226
6/30/2003 7031 8,385
7/31/2003 7366 9,019
8/31/2003 7714 9,503
9/30/2003 7478 9,263
10/31/2003 8222 10,063
11/30/2003 8482 10,391
12/31/2003 8557 10,437
1/31/2004 9040 10,986
2/29/2004 9053 10,969
3/31/2004 9301 11,020
4/30/2004 8867 10,467
5/31/2004 9202 10,675
6/30/2004 9338 11,030
7/31/2004 8284 10,040
8/31/2004 7937 9,824
9/30/2004 8458 10,367
10/31/2004 8718 10,619
11/30/2004 9127 11,517
12/31/2004 9735 11,931
1/31/2005 9313 11,393
2/28/2005 9177 11,549
3/31/2005 8991 11,116
4/30/2005 8482 10,409
5/31/2005 9028 11,143
6/30/2005 9425 11,503
7/31/2005 10070 12,307
8/31/2005 9983 12,134
9/30/2005 10107 12,230
10/31/2005 9834 11,778
11/30/2005 10491 12,445
12/31/2005 10343 12,426
1/31/2006 11124 13,625
2/28/2006 11434 13,552
3/31/2006 12104 14,211
4/30/2006 12401 14,170
5/31/2006 11719 13,172
6/30/2006 11583 13,180
7/31/2006 10937 12,496
8/31/2006 11345 12,862
9/30/2006 11396 12,949
10/31/2006 12173 13,788
11/30/2006 12581 14,118
12/31/2006 12696 14,084
1/31/2007 13002 14,346
2/28/2007 13155 14,301
3/31/2007 13308 14,433
4/30/2007 13499 14,811
5/31/2007 14429 15,488
6/30/2007 14710 15,400
7/31/2007 14091 14,600
8/31/2007 14390 14,968
9/30/2007 14912 15,402
10/31/2007 15642 16,096
11/30/2007 14375 14,984
12/31/2007 14449 15,078
1/31/2008 13122 13,695
2/29/2008 12451 13,221
3/31/2008 12451 13,144
4/30/2008 12943 13,819
5/31/2008 13674 14,602
6/30/2008 12272 13,732
7/31/2008 12249 14,051
8/31/2008 12981 14,400
9/30/2008 11903 12,773
10/31/2008 8607 10,000
11/30/2008 7894 8,790
12/31/2008 8464 9,267
- --------------
1. The Russell 2000 Growth Index measures the performance shown of those
Russell 2000 companies with higher price-to-book ratios and higher
forecasted growth values. You cannot invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT SMALL
CAP GROWTH FUND for the most recent ten years with the Russell 2000 Growth
Index. The chart assumes a hypothetical $10,000 investment and reflects
all operating expenses of the Fund.
Wells Fargo Advantage Variable Trust Funds 51
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund underperformed its benchmark in a difficult macroeconomic
environment.
- - Sector weightings contributed to relative performance; stock selection
detracted.
- - Health care stocks were the main detriment to the portfolio, but holdings
in consumer discretionary and financials also detracted from Fund
performance.
- - Portfolio holdings in industrials and energy significantly outperformed
those in the index.
THE FUND SUFFERED MOST FROM ITS HOLDINGS IN HEALTH CARE, CONSUMER DISCRETIONARY,
AND FINANCIALS.
Health care was the sector that negatively impacted relative portfolio
performance the most; both our underweight positioning and stock selection hurt
results. The leading detractor, Sirona Dental Systems, actually posted strong
results, but investors remained concerned about the company's prospects because
of cyclical fears and credit worries. Sirona, like others in the portfolio, is
trading at a historically low valuation despite posting solid results throughout
the 12-month period. The broader industry data on dental trends does not support
investor fears of negative growth. We maintain our position in the company
because execution remains on track. Similarly, InVentiv Health, a provider of
various outsourced services to drug makers, stumbled in the market as analysts
downgraded it, saying that budget cuts among the company's client base would
hurt its revenue.
Consumer discretionary stocks were broadly negative for the year on investor
concerns regarding consumer spending. Stock selection within the sector led to
our relative underperformance in the group for the year. Shutterfly, the leading
Internet-based social expression and personal publishing service, was the worst
performer. After the company announced a 10% surge in overall third-quarter
revenue growth, it lowered its revenue expectation for the holiday season to
well below analyst estimates. This lower guidance in an already jittery market
caused further stock price deterioration. Great Wolf Resorts, another
significant detractor in the sector, was down in the year due to falling tourism
and mortgage loan concerns.
TEN LARGEST EQUITY HOLDINGS (3)
(AS OF DECEMBER 31, 2008)
SkillSoft plc ADR 3.90%
VistaPrint Limited 3.81%
Sykes Enterprises Incorporated 3.29%
Resources Connection Incorporated 3.22%
Solera Holdings Incorporated 3.20%
GSI Commerce Incorporated 2.86%
PMC-Sierra Incorporated 2.33%
WMS Industries Incorporated 2.18%
Omniture Incorporated 2.07%
Tower Group Incorporated 1.97%
- -------------
3. The ten largest equity holdings are calculated based on the market value
of the securities divided by total market value of the fund.
52 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED)
The financial sector also performed poorly for the portfolio. In particular,
FCStone Group, an integrated commodity risk management company, disclosed a
large charge because of counterparty trading issues. We sold this position
entirely because of this breakdown in risk control. Although we were underweight
the group, our stock selection hurt results.
Investments made with cash collateral received from securities lending
activities, while generally considered a benign means of earning additional
income, also detracted from portfolio performance during this period of distress
in short term markets, primarily due to the decline in value of a number of the
collateral holdings.
The three top-performing sectors for the Fund were industrials, energy, and
telecommunication services. Industrials were the best-performing group for the
Fund during the period. In October, this sector took one of the hardest hits
when the recession put the breaks on manufacturing. However, the prospect of
infrastructure-aimed stimulus packages boosted this sector later in the fourth
quarter of 2008, and our overweight position benefited the portfolio. Two
holdings were particularly successful during this difficult year. One, Sykes
Enterprises, benefited from cost-slashing businesses looking to outsource their
call centers, while the other, Watson Wyatt Worldwide, a consulting firm focused
on human capital and financial management, profited from a growing number of
budget-conscious businesses.
The energy sector was also a positive contributor to Fund performance, due to
our underweight position and, more significantly, good stock selection. Oil was
down more than $100 per barrel in the second half of the period, which depressed
the sector considerably, so owning less in energy benefited performance. Among
the energy holdings that we did have, Petrohawk Energy, an independent oil and
natural gas company, had a great year. The expectation of the company's
performance escalated as its new operations in the Haynesville Shale were deemed
more valuable than previously expected.
SECTOR DISTRIBUTION(4)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 13%
Telecommunication Services 2%
Energy 3%
Financials 7%
Health Care 16%
Industrials 21%
Information Technology 38%
Telecommunication services also relatively outperformed, mainly on the
performance of two holdings. Centennial Communications, a regional wireless
service provider, was one of our top relative contributors for the year. After
Centennial reported strong quarterly results in the fourth quarter, AT&T
acquired the company at more than double the closing price of the stock, and we
subsequently sold our entire position. Cbeyond, a leading IP-based managed
service provider to small businesses, was another leading contributor, and it
continues to show growth in the current environment.
- --------------
4. Sector distribution and are subject to change. Cash and cash equivalents
are not reflected in the calculations of sector distribution.
Wells Fargo Advantage Variable Trust Funds 53
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED)
OUR MOST SIGNIFICANT SHIFTS DURING THE PERIOD WERE ADDING TO INFORMATION
TECHNOLOGY, CONSUMER DISCRETIONARY, AND ENERGY, WHILE WE SHIFTED AWAY FROM THE
HEALTH CARE, INDUSTRIAL, AND TELECOMMUNICATION SERVICES SECTORS.
The Fund's movement out of these sectors was mainly the result of taking profits
from specific stocks as these holdings reached or exceeded our price targets.
We found attractive buying opportunities in information technology and increased
the Fund's exposure in this area. In energy, we continued to maintain an
underweight position, even though we increased the Fund's exposure early in the
period when oil prices were rising and we found buying opportunities within the
sector. We also decreased the Fund's exposure to telecommunication services
stocks and health care because we found better buying opportunities elsewhere.
MORE TOUGH MARKETS LOOM AHEAD, BUT WE WILL STRIVE TO POSITION THE FUND TO TAKE
ADVANTAGE OF MARKET APPRECIATION WHEN INVESTOR CONFIDENCE RETURNS.
We agree with the consensus-held notion that the worst of the macroeconomic data
is not behind us and that we will likely continue to see weak data into 2009.
With this in mind, the investment community must consider how much of the bad
news has already been priced into the equity market. The bearish contingent
argues that the macroeconomic data will be significantly worse, especially on
the payroll and housing fronts. The bullish camp believes that while near-term
economic data will be weak, monetary and fiscal stimulus initiatives will take
hold, and macroeconomic improvement will be clearly visible by the second half
of 2009. In December 2008, the bullish camp pointed to the rebounding market as
an indication that investors were already willing to look through poor data
toward a better economic environment. Also, conditions in the credit markets
showed gradual improvement in December. Many market pundits have said that,
because seizures in the credit markets initiated the cataclysmic decline of the
equity markets, those markets must improve first for equities to mount a
sustained recovery.
Given the valuations that we see in our portfolio holdings, we argue that much
of the bad news is reflected in current equity prices. We also understand that
much of the investment discussion now taking place among market participants
seems to center on what could go wrong from here, rather than what could go
right. We cautiously compare this period of time to instances in the past, when
investors remained too negative and focused on short-term challenges, causing
them to overlook improving conditions and longer-term recovery. The current
macroeconomic environment clearly remains challenging, but we continue to focus
on our fundamentals and believe that current equity prices will ultimately prove
to be compelling investments.
54 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
------------------
6 Months* 1 Year 5 Year 10 Year Gross (5) Net (6)
--------- -------- ------ ------- --------- -------
VT Small Cap Growth Fund (31.03) (41.42) (0.22) (1.65) 1.26% 1.20%
Russell 2000 Growth Index (1) (32.51) (38.54) (2.35) (0.76)
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. Smaller company stocks
tend to be more volatile and less liquid than those of larger companies. The use
of derivatives may reduce returns and/or increase volatility. Active trading
results in increased turnover and trading expenses, and may generate higher
short-term capital gains. Consult the Fund's prospectus for additional
information on these and other risks.
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.
- -------------
5. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
6. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
56 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND (the Fund) seeks long-term
capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Erik C. Astheimer
I. Charles Rinaldi
Michael Schneider, CFA
FUND INCEPTION
October 10, 1997
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
Fund 1 Year
- ----------------------------------- --------
VT Small/Mid Cap Value Fund (44.55)%
BENCHMARK
Russell 2500 (TM) Value Index (1) (31.99)%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST SMALL/MID CAP VALUE FUND ARE
1.14% AND 1.45%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
RUSSELL 2500 VALUE
VT SMALL/MID CAP VALUE FUND INDEX
--------------------------- ------------------
12/31/1998 10000 $10,000
1/31/1999 9950 $ 9,712
2/28/1999 9673 $ 9,214
3/31/1999 10041 $ 9,200
4/30/1999 10992 $10,108
5/31/1999 10869 $10,314
6/30/1999 10869 $10,674
7/31/1999 10328 $10,470
8/31/1999 9857 $10,068
9/30/1999 9080 $ 9,751
10/31/1999 9479 $ 9,761
11/30/1999 9642 $ 9,814
12/31/1999 9713 $10,149
1/31/2000 9309 $ 9,727
2/29/2000 8765 $ 9,895
3/31/2000 9958 $10,623
4/30/2000 10256 $10,619
5/31/2000 10299 $10,600
6/30/2000 9713 $10,560
7/31/2000 9873 $10,789
8/31/2000 10438 $11,354
9/30/2000 10565 $11,287
10/31/2000 10736 $11,280
11/30/2000 9990 $11,137
12/31/2000 10473 $12,259
1/31/2001 11126 $12,430
2/28/2001 10826 $12,326
3/31/2001 10495 $12,017
4/30/2001 11265 $12,701
5/31/2001 11457 $13,091
6/30/2001 11019 $13,217
7/31/2001 11201 $13,129
8/31/2001 10730 $13,016
9/30/2001 9500 $11,571
10/31/2001 9724 $11,819
11/30/2001 10291 $12,729
12/31/2001 10905 $13,453
1/31/2002 10541 $13,577
2/28/2002 10648 $13,746
3/31/2002 11472 $14,598
4/30/2002 11365 $14,847
5/31/2002 11141 $14,603
6/30/2002 10306 $14,088
7/31/2002 8465 $12,457
8/31/2002 8786 $12,524
9/30/2002 7791 $11,499
10/31/2002 7930 $11,664
11/30/2002 8487 $12,515
12/31/2002 8380 $12,125
1/31/2003 8081 $11,759
2/28/2003 7931 $11,470
3/31/2003 7759 $11,547
4/30/2003 8253 $12,593
5/31/2003 9368 $13,757
6/30/2003 9380 $14,004
7/31/2003 9736 $14,612
8/31/2003 10207 $15,200
9/30/2003 10035 $15,093
10/31/2003 10368 $16,245
11/30/2003 10748 $16,908
12/31/2003 11597 $17,572
1/31/2004 11862 $18,141
2/29/2004 12161 $18,510
3/31/2004 12115 $18,658
4/30/2004 11252 $17,681
5/31/2004 11332 $18,036
6/30/2004 11896 $18,753
7/31/2004 11401 $17,998
8/31/2004 11194 $18,224
9/30/2004 11942 $18,799
10/31/2004 11747 $19,139
11/30/2004 13173 $20,705
12/31/2004 13541 $21,364
1/31/2005 13231 $20,676
2/28/2005 14071 $21,193
3/31/2005 13316 $20,910
4/30/2005 12438 $20,128
5/31/2005 12935 $21,245
6/30/2005 13824 $22,024
7/31/2005 14794 $23,203
8/31/2005 15221 $22,781
9/30/2005 15822 $22,806
10/31/2005 15037 $22,134
11/30/2005 15545 $23,041
12/31/2005 15776 $23,017
1/31/2006 17335 $24,532
2/28/2006 16734 $24,564
3/31/2006 17554 $25,426
4/30/2006 18005 $25,526
5/31/2006 17173 $24,643
6/30/2006 17046 $24,782
7/31/2006 16619 $24,437
8/31/2006 17018 $25,087
9/30/2006 16770 $25,343
10/31/2006 17472 $26,532
11/30/2006 17953 $27,362
12/31/2006 18187 $27,663
1/31/2007 18614 $28,280
2/28/2007 18517 $28,215
3/31/2007 18517 $28,516
4/30/2007 19082 $29,113
5/31/2007 19659 $30,149
6/30/2007 19563 $29,347
7/31/2007 18587 $27,150
8/31/2007 18015 $27,288
9/30/2007 19291 $27,573
10/31/2007 19962 $27,764
11/30/2007 17802 $25,985
12/31/2007 18129 $25,652
1/31/2008 17458 $24,738
2/29/2008 17622 $23,842
3/31/2008 16804 $23,800
4/30/2008 17753 $24,899
5/31/2008 18718 $25,926
6/30/2008 17982 $23,505
7/31/2008 16897 $23,920
8/31/2008 17100 $24,886
9/30/2008 14622 $23,219
10/31/2008 10703 $18,424
11/30/2008 9708 $16,497
12/31/2008 10053 $17,446
- -------------
1. The Russell 2500 Value Index measures the performance of those Russell
2500 companies with lower price-to-book ratios and lower forecasted growth
values. You cannot invest directly in an Index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT
SMALL/MID CAP VALUE FUND for the most recent ten years of the Fund with
the Russell 2500 Value Index. The chart assumes a hypothetical $10,000
investment and reflects all operating expenses of the Fund.
3. The ten largest equity holdings are calculated based on the market value
of the securities divided by total market value of the portfolio.
Wells Fargo Advantage Variable Trust Funds 57
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund underperformed its benchmark during a period that left all equity
indices deep in the red.
- - The Fund's weak relative performance for the 12-month period was primarily
attributable to weakness in the energy sector, an area of overweight in
the portfolio for years.
- - We continued to maintain investments in precious metals, specifically in
shares of gold mining companies. These shares generally outperformed
during the tough market environment in 2008, but they too were not immune
to the market decline.
THE EQUITY MARKET SAW SHARP DECLINES THAT BEGAN IN THE FIRST HALF OF THE YEAR
AND ACCELERATED INTO THE SECOND HALF.
Even with a modest rally in the closing month of the 12-month period, all equity
indices ended 2008 in deep negative territory. The losses in many cases were
staggering as evidenced by the biggest calendar year loss in 77 years for the
S&P 500. The Fund's weak relative performance for the period was primarily
attributable to weakness in the energy sector, an area of overweight in the
portfolio for years. The fact that energy stocks outperformed by a wide margin
in the first half of the period made the group vulnerable to selling because
investors sold what they could into a weak market during the second half. Forced
liquidation by hedge funds and institutional investors further exacerbated the
downward pressure.
Despite the poor performance of energy stocks, we believe that secular dynamics
for energy companies are positive and that the industry will generate
above-average growth over the coming decade. While the short-term industry
fundamentals are clearly diminished due to slowing worldwide economic activity,
valuations for energy companies are as cheap as we have seen them in many years.
Moreover, project delays will lead to further supply constraints in years ahead.
We will likely maintain investments in energy despite the current headwind.
While we had good stock selection in financials during the period, the
underweight to the sector hurt Fund performance as small-cap financials
outperformed on a relative basis. Banks specifically declined only 15% in the
Russell 2500 Value Index, making them one of the best-performing
TEN LARGEST EQUITY HOLDINGS (3)
(AS OF DECEMBER 31, 2008)
Randgold Resources Limited ADR 6.74%
Annaly Capital Management Incorporated 5.74%
Goldcorp Incorporated 4.42%
Hill International Incorporated 4.01%
Geo Group Incorporated 2.59%
3Com Corporation 2.49%
Capstead Mortgage Corporation 2.33%
Newmont Mining Corporation 2.21%
Intermec Incorporated 2.16%
InterOil Corporation 1.98%
58 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND (CONTINUED)
groups despite the sector being at the eye of the credit storm. There is a
perception that smaller banks are less prone to mortgage-related losses. While
that may be true to a degree, we noted that credit quality continued to
deteriorate and also affected land development loans, commercial real estate
loans, and C&I loans (commercial & industrial). Moreover, these loans were not
marked to market so we believe that additional write-offs are likely to be
forthcoming. With the economy in a recession, many of these entities are not
particularly well equipped to deal with a prolonged slowdown due to low loan
loss reserves.
Fund holdings in the financials sector were mainly high-quality mortgage REITs
whose business is investing in mortgage-backed securities fully guaranteed by
the U.S. government. Mortgage REITs are different from the equity REITs that
make up the majority of the holdings in the Fund's benchmark. Because the
mortgage REITs we favor only buy government-backed mortgages, they avoid credit
risk. Moreover, with borrowing costs trending lower and the return on
investments steady, the spread between short-term borrowing costs and long-term
yields is widening, resulting in higher profits and rising dividends. The
mortgage REITs owned in the Fund have current payouts that average in the mid
teens. The balance of the Fund's financial exposure is in insurance companies
that generally held up relatively well. Overall, the portfolio's financial
holdings outperformed for the calendar year, but the underweight made it
difficult to offset the weakness in other areas. The benchmark is heavily
concentrated in financials, with a 35% allo- cation as of December 31, 2008. We
do not believe that a 35% exposure to financials is prudent given the weakening
fundamentals, tepid future growth, and relative valuation.
We maintained the Fund's investments in precious metals, specifically shares of
gold mining companies. These shares generally outperformed during the tough
market environment in 2008, but they were not immune to the market decline. With
central banks around the world printing money to inject into the banking system,
we believe that gold will likely outperform as the value of paper currencies
fall. Given the state of global affairs and monetary policies, we think that
gold adds a prudent element to portfolio diversification.
SECTOR DISTRIBUTION(4)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
Consumer Discretionary 8
Consumer Staples 1
Energy 19
Financials 17
Health Care 7
Industrials 13
Information Technology 17
Materials 17
Telecommunication Services 1
- -----------
4. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
Wells Fargo Advantage Variable Trust Funds 59
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND (CONTINUED)
INDIVIDUAL COMPANY FUNDAMENTALS CONTINUE TO BE OUR MOST IMPORTANT METRIC WHEN
SELECTING A STOCK.
The Fund continues to be overweight in energy and materials and underweight in
financial services. In select instances, we added to a few of our core energy
holdings. We selectively added to technology, but the investments were highly
company specific. We reduced consumer discretionary holdings in the portfolio
given the difficult macroeconomic conditions. It is important to point out that
decisions are derived from the team's bottom-up investment process. Individual
company fundamentals will continue to be our most important metric when it comes
to stock selection.
THE FUND CONTINUES TO FAVOR COMPANIES THAT ARE SELLING AT REASONABLE VALUATIONS
WHILE EXHIBITING ABOVE MARKET GROWTH PROFILES.
We remain cautious on the overall economy. It will take some time to wring out
the excesses in both the financial and economic systems that have built up over
many years. Economic conditions are likely to remain challenging through 2009.
What is encouraging is that valuations are generally more attractive. While
valuation isn't the only criteria for investing success, it is a key starting
point. Moreover, markets like the current one, in which fear reigns above all
else, tend to be good environments for stock pickers. With an investment process
that has proven itself over time, we are confident that the portfolio is well
positioned for 2009.
60 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (5) (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
------------------
6 Months* 1 Year 5 Year 10 Year Gross (6) Net (7)
--------- -------- ------ ------- --------- -------
VT Small/Mid Cap Value Fund (44.09) (44.55) (2.82) 0.05 1.45% 1.14%
Russell 2500 Value Index (1) (25.78) (31.99) (0.15) 5.72
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
Stock fund values fluctuate in response to the activities of individual
companies and general market and economic conditions. Smaller company stocks
tend to be more volatile and less liquid than those of larger companies. The use
of derivatives may reduce returns and/or increase volatility. Certain investment
strategies 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.
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.
- ------------
5. Prior to May 1, 2006, the WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE
FUND was named the Wells Fargo Advantage Multi Cap Value Fund.
6. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
7. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
62 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND
INVESTMENT OBJECTIVE
The WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (the Fund) seeks total
return, consisting of income and capital appreciation.
INVESTMENT ADVISER
Wells Fargo Funds Management, LLC
SUBADVISER
Wells Capital Management Incorporated
PORTFOLIO MANAGERS
Troy Ludgood
Thomas O'Connor, CFA
Lynne A. Royer
William Stevens
FUND INCEPTION
September 20, 1999
PERFORMANCE SUMMARY
12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2008
Fund 1 Year
- ------------------------------------------- --------
VT Total Return Bond Fund 2.39%
BENCHMARK
Barclays Capital U.S. Aggregate Index (1) 5.24%
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
NET AND GROSS EXPENSE RATIOS FOR THE VARIABLE TRUST TOTAL RETURN BOND FUND ARE
0.90% AND 0.98%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY
COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE
EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT
THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER.
GROWTH OF $10,000 INVESTMENT (2)
(AS OF DECEMBER 31, 2008)
[LINE GRAPH]
VT TOTAL RETURN BARCLAYS CAPITAL U.S.
BOND FUND AGGREGATE INDEX
--------------- ---------------------
9/20/1999 10000 $10,000
9/30/1999 10015 $10,028
10/31/1999 10070 10,065
11/30/1999 10040 10,064
12/31/1999 9994 10,016
1/31/2000 9968 9,983
2/29/2000 10092 10,104
3/31/2000 10262 10,237
4/30/2000 10069 10,208
5/31/2000 10021 10,203
6/30/2000 10254 10,415
7/31/2000 10352 10,510
8/31/2000 10526 10,662
9/30/2000 10550 10,730
10/31/2000 10597 10,800
11/30/2000 10740 10,978
12/31/2000 11015 11,182
1/31/2001 11214 11,365
2/28/2001 11354 11,464
3/31/2001 11381 11,521
4/30/2001 11285 11,473
5/31/2001 11357 11,542
6/30/2001 11361 11,586
7/31/2001 11658 11,845
8/31/2001 11799 11,981
9/30/2001 11698 12,122
10/31/2001 11999 12,375
11/30/2001 11944 12,204
12/31/2001 11831 12,126
1/31/2002 11892 12,224
2/28/2002 11960 12,343
3/31/2002 11831 12,138
4/30/2002 12033 12,373
5/31/2002 12145 12,479
6/30/2002 12097 12,586
7/31/2002 12018 12,738
8/31/2002 12259 12,953
9/30/2002 12425 13,163
10/31/2002 12303 13,103
11/30/2002 12468 13,099
12/31/2002 12748 13,370
1/31/2003 12793 13,381
2/28/2003 13022 13,566
3/31/2003 13094 13,555
4/30/2003 13401 13,667
5/31/2003 13723 13,921
6/30/2003 13734 13,893
7/31/2003 13284 13,427
8/31/2003 13410 13,515
9/30/2003 13789 13,873
10/31/2003 13656 13,744
11/30/2003 13677 13,777
12/31/2003 13819 13,918
1/31/2004 13935 14,029
2/29/2004 14087 14,181
3/31/2004 14186 14,287
4/30/2004 13842 13,916
5/31/2004 13790 13,860
6/30/2004 13856 13,939
7/31/2004 13995 14,077
8/31/2004 14248 14,346
9/30/2004 14288 14,384
10/31/2004 14400 14,505
11/30/2004 14284 14,389
12/31/2004 14426 14,522
1/31/2005 14510 14,613
2/28/2005 14436 14,527
3/31/2005 14337 14,453
4/30/2005 14523 14,648
5/31/2005 14682 14,806
6/30/2005 14756 14,888
7/31/2005 14616 14,752
8/31/2005 14793 14,941
9/30/2005 14631 14,787
10/31/2005 14516 14,670
11/30/2005 14563 14,735
12/31/2005 14700 14,875
1/31/2006 14688 14,876
2/28/2006 14735 14,925
3/31/2006 14592 14,779
4/30/2006 14568 14,753
5/31/2006 14546 14,736
6/30/2006 14570 14,767
7/31/2006 14762 14,967
8/31/2006 14971 15,196
9/30/2006 15104 15,329
10/31/2006 15193 15,431
11/30/2006 15374 15,610
12/31/2006 15261 15,519
1/31/2007 15256 15,513
2/28/2007 15501 15,752
3/31/2007 15481 15,752
4/30/2007 15571 15,837
5/31/2007 15440 15,717
6/30/2007 15388 15,671
7/31/2007 15495 15,802
8/31/2007 15668 15,995
9/30/2007 15777 16,117
10/31/2007 15903 16,261
11/30/2007 16158 16,554
12/31/2007 16205 16,600
1/31/2008 16446 16,879
2/29/2008 16457 16,902
3/31/2008 16484 16,960
4/30/2008 16497 16,925
5/31/2008 16377 16,801
6/30/2008 16391 16,787
7/31/2008 16323 16,773
8/31/2008 16458 16,933
9/30/2008 16240 16,705
10/31/2008 15601 16,311
11/30/2008 15976 16,842
12/31/2008 16593 17,470
- ------------
1. The Barclays Capital U.S. Aggregate Index includes bonds from the
Treasury, government-related, corporate, agency, mortgage-backed
securities, and asset-backed securities sectors. You cannot invest
directly in an index.
2. The chart compares the performance of the WELLS FARGO ADVANTAGE VT TOTAL
RETURN BOND FUND for the life of the Fund with the Barclays Capital U.S
Aggregate Index. The chart assumes a hypothetical $10,000 investment and
reflects all operating expenses of the Fund.
Wells Fargo Advantage Variable Trust Funds 63
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (CONTINUED)
MANAGER'S DISCUSSION
FUND HIGHLIGHTS
- - The Fund underperformed its benchmark during a challenging time in the
credit markets.
- - Overweight positions in the commercial-backed, asset-backed, and
mortgage-backed sectors detracted from the Fund's relative performance.
- - Good security selection helped the Fund's relative performance.
DURING THE 12-MONTH PERIOD, RISK AVERSION INTENSIFIED TO RISK AVOIDANCE AS
DELEVERAGING, ONGOING HOUSING MARKET WOES, TIGHT CREDIT CONDITIONS, AND A
RAPIDLY WEAKENING LABOR MARKET PROMPTED A STRONG FLIGHT TO QUALITY.
U.S. Treasury yields fell throughout the period, due to a strong demand for U.S.
Government debt and a shunning of lower-quality investments. Treasury bills
dropped to a 0% yield at points during the fourth quarter of 2008, while other
sector yields marched higher as their security values posted some of their worst
annual performance on record. Commercial mortgage-backed securities,
asset-backed securities, and corporate securities -- particularly those of
financial institutions -- were hardest hit. The year 2008 brought widespread woe
to investors, with bank failures, the Madoff scheme, government bailouts, and
the evaporation of market values.
Our investment strategy underperformed the benchmark for the fourth quarter of
2008 and for the 12-month period. For the period, overweights compared to the
benchmark in the commercial mortgage-backed, asset-backed, and mortgage-backed
securities sectors detracted from Fund performance. Security selection in the
corporate and mortgage-backed sectors was the primary contributor to
underperformance.
Investments made with cash collateral received from securities lending
activities, while generally considered a benign means of earning additional
income, also detracted from portfolio performance during this period of distress
in short term markets, primarily due to the decline in value of a number of the
collateral holdings.
SECTOR DISTRIBUTION(3)
(AS OF DECEMBER 31, 2008)
[PIE CHART]
ABS/CMBS(4) 21%
MBS(5) 43%
Corporate Bonds & Notes 18%
U.S. Treasury Securities 7%
CMO(6) 11%
- -----------
3. Sector distribution is subject to change. Cash and cash equivalents are
not reflected in the calculations of sector distribution.
4. ABS/CMBS -- Asset-Backed Securities/Commercial Mortgage-Backed Securities.
5. MBS -- Mortgage-Backed Securities.
6. CMO -- Collateralized Mortgage Obligations.
64 Wells Fargo Advantage Variable Trust Funds
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (CONTINUED)
WE MADE SEVERAL CHANGES DURING THE PERIOD TO MANAGE VOLATILITY.
During the period, the Fund maintained overweights to both the commercial
mortgage-backed securities and asset-backed securities sectors. We gradually
reduced the commercial mortgage-back securities overweight from 7% to 3%.
Conversely, the asset-backed securities overweight was gradually increased
during the year. The Fund's exposure to mortgages was fairly neutral to the
benchmark throughout the first half of the period, with a shift to a sizeable
overweight during the second half of the year. Corporate sector positioning was
modestly overweight most of the year, with a brief spike in April as we took
advantage of the first peak in credit spreads, which occurred in March 2008. We
scaled back into an overweight, beginning in October, as credit spreads widened
further during the fourth quarter.
Compared to the Barclays Capital U.S. Aggregate Bond Index, we are maintaining
an overweight in commercial mortgage-backed and AAA-rated consumer asset-backed
securities because we believe that they offer good relative value. Our modest
corporate overweight features energy, financial institutions, and
telecommunications, and our underweights are in high-quality, non-U.S.
sovereigns, retail, and consumer products. In mortgage securities, we maintained
a moderate overweight, especially in 30-year 5.5% fixed-rate mortgage pools.
WE CLOSED OUR 2007 COMMENTARY NOTING, "THE WORST IS NOT YET BEHIND US." IT WAS
HARDLY A CONTRARIAN VIEWPOINT AT THE TIME, YET WE, AND EVEN THE MOST PESSIMISTIC
COMMENTATORS, WERE SURPRISED BY THE EVENTS OF 2008.
Our domestic economic crisis has often been compared to the 1929 stock market
crash and the Great Depression, but the current meltdown can't be likened to any
historical precedent. Lessons from the past have been learned. After Lehman
Brothers failed, the government realized that the ramifications of another major
financial institution failing would be too dangerous to the global financial
system. Unlike 1929, policy response has been fast, aggressive, and widespread.
The overriding theme for 2009 will center on whether government policies will be
able to stem the economic implosion. High cash holdings and discussions about
President-elect Obama's stimulus package may continue to support the market. The
contest among the destructive, systemic power of deleveraging, counterparty
distrust, and massive government action will likely continue. While we doubt
that severe volatility will continue in 2009, we expect plenty of false starts
and stops. Restoration of normalized markets will likely be gradual.
The economy's fundamentals may weaken further in 2009, but there are many
securities that are trading well below the discounted present value of their
cash flows. We believe that as is often the case in times of economic
uncertainty, the market is overdiscounting itself. Consequently, we expect that
2009 will bring us many opportunities for our tested investment process.
Wells Fargo Advantage Variable Trust Funds 65
Performance Highlights (Unaudited)
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2008)
Expense Ratio
-------------------
6 Months* 1 Year 5 Year Life of Fund Gross (7) Net (8)
--------- -------- ------ ------------ --------- --------
VT Total Return Bond Fund 1.23 2.39 3.73 5.61 0.98% 0.90%
Barclays Capital U.S. Aggregate Index (1) 4.07 5.24 4.65 6.19
* Returns for periods of less than one year are not annualized.
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 1-866-765-0778. PERFORMANCE
FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS.
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 may
lose principal value. The use of derivatives may reduce returns and/or increase
volatility. Active trading results in increased turnover and trading expenses,
and may generate higher short-term capital gains. Certain investment strategies
tend to increase the total risk of an investment (relative to the broader
market). This Fund is exposed to foreign investment risk and mortgage- and
asset- backed securities risk. Consult the Fund's prospectus for additional
information on these and other risks.
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.
- ------------
7. Reflects the gross expense ratio as stated in the May 1, 2008, prospectus.
8. The investment adviser has contractually committed through April 30, 2009,
to waive fees and/or reimburse expenses to the extent necessary to
maintain the net operating expense ratio shown. Without these reductions,
the Fund's returns would have been lower.
66 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
six-month period and held for the entire six-month period, from July 1, 2008 to
December 31, 2008.
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 Expenses
Account Value Account Value Paid During Net Annual
07-01-2008 12-31-2008 the Period* Expense Ratio
------------- ------------- ----------- -------------
VT ASSET ALLOCATION FUND
Actual $1,000.00 $ 795.10 $4.51 1.00%
Hypothetical (5% return before expenses) $1,000.00 $1,020.11 $5.08 1.00%
VT C&B LARGE CAP VALUE FUND
Actual $1,000.00 $ 749.50 $4.40 1.00%
Hypothetical (5% return before expenses) $1,000.00 $1,020.11 $5.08 1.00%
VT DISCOVERY FUND
Actual $1,000.00 $ 570.30 $4.54 1.15%
Hypothetical (5% return before expenses) $1,000.00 $1,019.36 $5.84 1.15%
VT EQUITY INCOME FUND
Actual $1,000.00 $ 740.70 $4.38 1.00%
Hypothetical (5% return before expenses) $1,000.00 $1,020.11 $5.08 1.00%
VT INTERNATIONAL CORE FUND
Actual $1,000.00 $ 634.50 $4.11 1.00%
Hypothetical (5% return before expenses) $1,000.00 $1,020.11 $5.08 1.00%
VT LARGE COMPANY CORE FUND
Actual $1,000.00 $ 670.30 $4.20 1.00%
Hypothetical (5% return before expenses) $1,000.00 $1,020.11 $5.08 1.00%
Wells Fargo Advantage Variable Trust Funds 67
Fund Expenses (Unaudited)
Beginning Ending Expenses
Account Value Account Value Paid During Net Annual
07-01-2008 12-31-2008 the Period* Expense Ratio
------------- ------------- ----------- -------------
VT LARGE COMPANY GROWTH FUND
Actual $1,000.00 $ 722.00 $4.33 1.00%
Hypothetical (5% return before expenses) $1,000.00 $1,020.11 $5.08 1.00%
VT MONEY MARKET FUND
Actual $1,000.00 $1,009.50 $3.79 0.75%
Hypothetical (5% return before expenses) $1,000.00 $1,021.37 $3.81 0.75%
VT OPPORTUNITY FUND
Actual $1,000.00 $ 634.80 $4.40 1.07%
Hypothetical (5% return before expenses) $1,000.00 $1,019.76 $5.43 1.07%
VT SMALL CAP GROWTH FUND
Actual $1,000.00 $ 689.70 $5.10 1.20%
Hypothetical (5% return before expenses) $1,000.00 $1,019.10 $6.09 1.20%
VT SMALL/MID CAP VALUE FUND
Actual $1,000.00 $ 559.10 $4.47 1.14%
Hypothetical (5% Return before expenses) $1,000.00 $1,019.41 $5.79 1.14%
VT TOTAL RETURN BOND FUND
Actual $1,000.00 $1,012.30 $4.55 0.90%
Hypothetical (5% Return before expenses) $1,000.00 $1,020.61 $4.57 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).
68 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ----------------- ------------------------------------------------------------- ---------
COMMON STOCKS: 55.66%
AMUSEMENT & RECREATION SERVICES: 0.02%
2,513 INTERNATIONAL GAME TECHNOLOGY $ 29,880
APPAREL & ACCESSORY STORES: 0.19%
742 ABERCROMBIE & FITCH COMPANY CLASS A 17,118
6,024 GAP INCORPORATED 80,661
2,598 KOHL'S CORPORATION+ 94,048
2,747 LIMITED BRANDS INCORPORATED 27,580
1,836 NORDSTROM INCORPORATED 24,435
243,842
---------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS: 0.07%
711 JONES APPAREL GROUP INCORPORATED 4,166
841 POLO RALPH LAUREN CORPORATION 38,190
938 VF CORPORATION 51,374
93,730
---------
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS: 0.07%
1,508 AUTONATION INCORPORATED+ << 14,899
494 AUTOZONE INCORPORATED+ 68,898
83,797
---------
AUTOMOTIVE REPAIR, SERVICES & PARKING: 0.01%
474 RYDER SYSTEM INCORPORATED 18,382
---------
BIOPHARMACEUTICALS: 0.65%
3,907 CELGENE CORPORATION+ 215,979
583 CEPHALON INCORPORATED+ << 44,914
2,306 GENZYME CORPORATION+ 153,049
7,844 GILEAD SCIENCES INCORPORATED+ 401,142
815,084
---------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS: 0.06%
1,060 CENTEX CORPORATION+ 11,278
2,700 D.R. HORTON INCORPORATED 19,089
764 KB HOME<< 10,406
1,369 LENNAR CORPORATION CLASS A<< 11,869
2,195 PULTE HOMES INCORPORATED+ 23,991
76,633
---------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS: 0.56%
1,266 FASTENAL COMPANY<< 44,120
14,458 HOME DEPOT INCORPORATED<< 332,823
12,499 LOWE'S COMPANIES INCORPORATED 268,978
996 SHERWIN-WILLIAMS COMPANY<< 59,511
705,432
---------
BUSINESS SERVICES: 3.87%
4,527 ADOBE SYSTEMS INCORPORATED+ 96,380
831 AFFILIATED COMPUTER SERVICES INCORPORATED CLASS A+ 38,184
1,442 AKAMAI TECHNOLOGIES INCORPORATED+ 21,760
1,929 AUTODESK INCORPORATED+ 37,905
4,331 AUTOMATIC DATA PROCESSING INCORPORATED 170,382
1,599 BMC SOFTWARE INCORPORATED+ 43,029
Wells Fargo Advantage Variable Trust Funds 69
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ----------------- ------------------------------------------------------------- ----------
BUSINESS SERVICES (continued)
4,419 CA INCORPORATED $ 81,884
1,549 CITRIX SYSTEMS INCORPORATED+ 36,510
2,483 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION CLASS A+ 44,843
1,291 COMPUTER SCIENCES CORPORATION+ 45,366
2,102 COMPUWARE CORPORATION+ 14,189
1,040 CONVERGYS CORPORATION+ 6,666
10,889 EBAY INCORPORATED+ 152,010
2,736 ELECTRONIC ARTS INCORPORATED+ 43,885
1,077 EQUIFAX INCORPORATED 28,562
1,620 FIDELITY NATIONAL INFORMATION SERVICES INCORPORATED 26,357
1,365 FISERV INCORPORATED+ 49,645
2,684 GOOGLE INCORPORATED CLASS A+ 825,733
1,551 IMS HEALTH INCORPORATED 23,513
4,063 INTERPUBLIC GROUP OF COMPANIES INCORPORATED+ 16,089
2,729 INTUIT INCORPORATED+ 64,923
4,502 JUNIPER NETWORKS INCORPORATED+ 78,830
1,102 MASTERCARD INCORPORATED CLASS A 157,509
1,302 MCAFEE INCORPORATED+ 45,010
75,860 MICROSOFT CORPORATION 1,474,718
1,050 MONSTER WORLDWIDE INCORPORATED+ 12,695
2,944 NOVELL INCORPORATED+ 11,452
2,650 OMNICOM GROUP INCORPORATED 71,338
43,956 ORACLE CORPORATION+ 779,340
1,323 ROBERT HALF INTERNATIONAL INCORPORATED<< 27,545
1,040 SALESFORCE.COM INCORPORATED+ 33,290
6,298 SUN MICROSYSTEMS INCORPORATED+ 24,058
7,129 SYMANTEC CORPORATION+ << 96,384
1,678 TOTAL SYSTEM SERVICES INCORPORATED 23,492
1,654 VERISIGN INCORPORATED+ << 31,558
11,834 YAHOO! INCORPORATED+ 144,375
4,879,409
----------
CASINO & GAMING: 0.03%
955 WYNN RESORTS LIMITED+ << 40,358
----------
CHEMICALS & ALLIED PRODUCTS: 6.94%
13,231 ABBOTT LABORATORIES 706,138
1,787 AIR PRODUCTS & CHEMICALS INCORPORATED 89,832
9,035 AMGEN INCORPORATED+ 521,771
906 AVERY DENNISON CORPORATION 29,653
3,635 AVON PRODUCTS INCORPORATED<< 87,349
2,488 BIOGEN IDEC INCORPORATED+ 118,503
16,881 BRISTOL-MYERS SQUIBB COMPANY 392,483
484 CF INDUSTRIES HOLDINGS INCORPORATED 23,793
1,182 CLOROX COMPANY 65,672
4,304 COLGATE-PALMOLIVE COMPANY 294,996
7,877 DOW CHEMICAL COMPANY 118,864
7,695 E.I. DU PONT DE NEMOURS & COMPANY 194,684
618 EASTMAN CHEMICAL COMPANY 19,597
2,013 ECOLAB INCORPORATED 70,757
9,695 ELI LILLY & COMPANY 390,418
1,674 ESTEE LAUDER COMPANIES INCORPORATED CLASS A 51,827
2,570 FOREST LABORATORIES INCORPORATED+ 65,458
1,361 HOSPIRA INCORPORATED+ 36,502
670 INTERNATIONAL FLAVORS & FRAGRANCES INCORPORATED 19,912
23,661 JOHNSON & JOHNSON 1,415,638
70 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ----------------- ------------------------------------------------------------- ----------
CHEMICALS & ALLIED PRODUCTS (continued)
2,101 KING PHARMACEUTICALS INCORPORATED+ $ 22,313
1,472 LIFE TECHNOLOGIES CORPORATION+ 34,312
4,672 MONSANTO COMPANY 328,675
2,598 MYLAN LABORATORIES INCORPORATED+ << 25,694
57,503 PFIZER INCORPORATED 1,018,378
1,400 PPG INDUSTRIES INCORPORATED 59,402
2,629 PRAXAIR INCORPORATED 156,057
25,461 PROCTER & GAMBLE COMPANY 1,573,999
1,664 ROHM & HAAS COMPANY 102,819
13,862 SCHERING-PLOUGH CORPORATION 236,070
1,069 SIGMA-ALDRICH CORPORATION 45,155
11,354 WYETH 425,889
8,742,610
----------
COAL MINING: 0.08%
1,545 CONSOL ENERGY INCORPORATED 44,156
726 MASSEY ENERGY COMPANY 10,012
2,273 PEABODY ENERGY CORPORATION 51,711
105,879
----------
COMMUNICATIONS: 2.54%
3,382 AMERICAN TOWER CORPORATION CLASS A+ 99,160
50,255 AT&T INCORPORATED 1,432,268
853 CENTURYTEL INCORPORATED<< 23,312
24,558 COMCAST CORPORATION CLASS A 414,539
8,956 DIRECTV GROUP INCORPORATED+ 205,182
1,212 EMBARQ CORPORATION 43,584
14,526 QWEST COMMUNICATIONS INTERNATIONAL INCORPORATED<< 52,875
1,396 SCRIPPS NETWORKS INTERACTIVE INCORPORATED 30,712
24,363 SPRINT NEXTEL CORPORATION+ 44,584
24,223 VERIZON COMMUNICATIONS INCORPORATED 821,160
3,747 WINDSTREAM CORPORATION 34,472
3,201,848
----------
DEPOSITORY INSTITUTIONS: 3.76%
42,789 BANK OF AMERICA CORPORATION 602,469
9,786 BANK OF NEW YORK MELLON CORPORATION 277,237
4,711 BB&T CORPORATION 129,364
46,473 CITIGROUP INCORPORATED 311,834
1,283 COMERICA INCORPORATED 25,468
4,924 FIFTH THIRD BANCORP 40,672
1,751 FIRST HORIZON NATIONAL CORPORATION+ 18,507
4,445 HUDSON CITY BANCORP INCORPORATED 70,942
3,121 HUNTINGTON BANCSHARES INCORPORATED<< 23,907
31,829 JPMORGAN CHASE & COMPANY 1,003,576
4,221 KEYCORP 35,963
940 M&T BANK CORPORATION<< 53,965
2,219 MARSHALL & ILSLEY CORPORATION 30,267
17,363 NATIONAL CITY CORPORATION 31,427
1,902 NORTHERN TRUST CORPORATION 99,170
2,968 PNC FINANCIAL SERVICES GROUP 145,432
5,900 REGIONS FINANCIAL CORPORATION 46,964
5,662 SOVEREIGN BANCORP INCORPORATED+ 16,873
3,683 STATE STREET CORPORATION 144,852
3,019 SUNTRUST BANKS INCORPORATED 89,181
Wells Fargo Advantage Variable Trust Funds 71
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ----------------- ------------------------------------------------------------- ----------
DEPOSITORY INSTITUTIONS (CONTINUED)
14,962 US BANCORP $ 374,200
18,428 WACHOVIA CORPORATION(l) 102,091
32,318 WELLS FARGO & COMPANY(l) 952,735
6,102 WESTERN UNION COMPANY 87,503
983 ZIONS BANCORPORATION<< 24,093
4,738,692
----------
E-COMMERCE/SERVICES: 0.15%
3,657 AMAZON.COM INCORPORATED+ 187,531
----------
EATING & DRINKING PLACES: 0.59%
1,183 DARDEN RESTAURANTS INCORPORATED 33,337
9,504 MCDONALD'S CORPORATION 591,054
3,944 YUM! BRANDS INCORPORATED 124,236
748,627
----------
EDUCATIONAL SERVICES: 0.08%
1,356 APOLLO GROUP INCORPORATED CLASS A+ 103,897
----------
ELECTRIC, GAS & SANITARY SERVICES: 2.55%
5,737 AES CORPORATION+ 47,273
1,441 ALLEGHENY ENERGY INCORPORATED 48,792
1,803 AMEREN CORPORATION 59,968
3,441 AMERICAN ELECTRIC POWER COMPANY INCORPORATED 114,516
2,934 CENTERPOINT ENERGY INCORPORATED 37,027
1,929 CMS ENERGY CORPORATION 19,502
2,333 CONSOLIDATED EDISON INCORPORATED 90,824
1,521 CONSTELLATION ENERGY GROUP INCORPORATED 38,162
4,957 DOMINION RESOURCES INCORPORATED 177,659
1,390 DTE ENERGY COMPANY 49,581
10,790 DUKE ENERGY CORPORATION 161,958
7,188 DYNEGY INCORPORATED CLASS A+ 14,376
2,778 EDISON INTERNATIONAL 89,229
5,979 EL PASO CORPORATION<< 46,816
1,614 ENTERGY CORPORATION 134,172
5,610 EXELON CORPORATION 311,972
2,599 FIRSTENERGY CORPORATION 126,259
3,485 FPL GROUP INCORPORATED 175,400
2,654 FRONTIER COMMUNICATIONS CORPORATION 23,196
651 INTEGRYS ENERGY GROUP INCORPORATED 27,980
385 NICOR INCORPORATED 13,375
2,338 NISOURCE INCORPORATED 25,648
1,843 PEPCO HOLDINGS INCORPORATED 32,732
3,078 PG&E CORPORATION 119,149
859 PINNACLE WEST CAPITAL CORPORATION 27,600
3,197 PPL CORPORATION 98,116
2,243 PROGRESS ENERGY INCORPORATED 89,384
4,315 PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED 125,869
1,479 QUESTAR CORPORATION 48,349
3,220 REPUBLIC SERVICES INCORPORATED 79,824
1,002 SCANA CORPORATION 35,671
2,077 SEMPRA ENERGY 88,543
5,210 SPECTRA ENERGY CORPORATION 82,005
729 STERICYCLE INCORPORATED+ 37,966
1,814 TECO ENERGY INCORPORATED 22,403
72 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
ELECTRIC, GAS & SANITARY SERVICES (CONTINUED)
6,605 THE SOUTHERN COMPANY $ 244,385
4,183 WASTE MANAGEMENT INCORPORATED 138,625
997 WISCONSIN ENERGY CORPORATION 41,854
3,829 XCEL ENERGY INCORPORATED 71,028
3,217,188
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER
EQUIPMENT: 3.32%
5,189 ADVANCED MICRO DEVICES INCORPORATED+ << 11,208
2,535 ALTERA CORPORATION 42,360
1,499 AMPHENOL CORPORATION CLASS A 35,946
2,483 ANALOG DEVICES INCORPORATED 47,227
4,353 BROADCOM CORPORATION CLASS A+ 73,870
770 CIENA CORPORATION+ << 5,159
49,931 CISCO SYSTEMS INCORPORATED+ 813,875
1,478 COOPER INDUSTRIES LIMITED CLASS A 43,202
6,541 EMERSON ELECTRIC COMPANY 239,466
89,571 GENERAL ELECTRIC COMPANY 1,451,050
499 HARMAN INTERNATIONAL INDUSTRIES INCORPORATED 8,348
1,147 HARRIS CORPORATION 43,643
1,796 JABIL CIRCUIT INCORPORATED 12,123
1,874 JDS UNIPHASE CORPORATION+ 6,840
1,440 KLA-TENCOR CORPORATION<< 31,378
1,018 L-3 COMMUNICATIONS HOLDINGS INCORPORATED 75,108
1,890 LINEAR TECHNOLOGY CORPORATION<< 41,807
5,501 LSI LOGIC CORPORATION+ 18,098
1,914 MEMC ELECTRONIC MATERIALS INCORPORATED+ 27,332
1,551 MICROCHIP TECHNOLOGY INCORPORATED<< 30,291
6,513 MICRON TECHNOLOGY INCORPORATED+ 17,194
1,501 MOLEX INCORPORATED 21,749
19,327 MOTOROLA INCORPORATED 85,619
1,957 NATIONAL SEMICONDUCTOR CORPORATION 19,707
2,815 NETAPP INCORPORATED+ 39,326
832 NOVELLUS SYSTEMS INCORPORATED+ 10,267
4,580 NVIDIA CORPORATION+ 36,961
1,090 QLOGIC CORPORATION+ 14,650
14,117 QUALCOMM INCORPORATED 505,812
1,350 ROCKWELL COLLINS INCORPORATED 52,772
3,394 TELLABS INCORPORATED+ 13,983
11,055 TEXAS INSTRUMENTS INCORPORATED 171,574
3,902 TYCO ELECTRONICS LIMITED 63,251
626 WHIRLPOOL CORPORATION 25,885
2,335 XILINX INCORPORATED 41,610
4,178,691
---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES: 0.19%
1,547 FLUOR CORPORATION 69,414
1,047 JACOBS ENGINEERING GROUP INCORPORATED+ 50,361
2,044 MOODY'S CORPORATION<< 41,064
3,076 PAYCHEX INCORPORATED 80,837
241,676
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION
EQUIPMENT: 0.21%
806 BALL CORPORATION 33,522
1,278 FORTUNE BRANDS INCORPORATED 52,756
Wells Fargo Advantage Variable Trust Funds 73
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ---------------------------------------------------------------------- ---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT (CONTINUED)
4,359 ILLINOIS TOOL WORKS INCORPORATED $ 152,783
489 SNAP-ON INCORPORATED 19,257
258,318
---------------
FINANCIAL SERVICES: 0.01%
1,346 JANUS CAPITAL GROUP INCORPORATED 10,808
---------------
FOOD & KINDRED PRODUCTS: 2.50%
5,470 ARCHER DANIELS MIDLAND COMPANY 157,700
3,078 CAMPBELL SOUP COMPANY 92,371
4,161 COCA-COLA ENTERPRISES INCORPORATED 50,057
3,812 CONAGRA FOODS INCORPORATED 62,898
1,865 CONSTELLATION BRANDS INCORPORATED CLASS A+ 29,411
2,163 DR PEPPER SNAPPLE GROUP INCORPORATED+ 35,149
2,849 GENERAL MILLS INCORPORATED 173,077
2,681 H.J. HEINZ COMPANY 100,806
1,009 JM SMUCKER COMPANY 43,750
3,255 KELLOGG COMPANY 142,732
12,529 KRAFT FOODS INCORPORATED CLASS A 336,400
1,108 MCCORMICK & COMPANY INCORPORATED 35,301
1,566 MOLSON COORS BREWING COMPANY<< 76,609
1,800 PEPSI BOTTLING GROUP INCORPORATED 40,518
13,244 PEPSICO INCORPORATED 725,374
6,028 SARA LEE CORPORATION 59,014
19,729 THE COCA-COLA COMPANY 893,132
1,937 THE HERSHEY COMPANY 67,291
3,220 TYSON FOODS INCORPORATED CLASS A 28,207
3,149,797
---------------
FOOD STORES: 0.24%
5,564 KROGER COMPANY 146,945
3,655 SAFEWAY INCORPORATED 86,879
6,272 STARBUCKS CORPORATION+ 59,333
1,196 WHOLE FOODS MARKET INCORPORATED+ << 11,290
304,447
---------------
FORESTRY: 0.04%
1,801 WEYERHAEUSER COMPANY 55,129
---------------
FURNITURE & FIXTURES: 0.06%
1,332 LEGGETT & PLATT INCORPORATED 20,233
3,069 MASCO CORPORATION 34,158
2,363 NEWELL RUBBERMAID INCORPORATED 23,110
77,501
---------------
GENERAL MERCHANDISE STORES: 1.85%
700 BIG LOTS INCORPORATED+ 10,143
1,191 FAMILY DOLLAR STORES INCORPORATED 31,049
1,894 JCPENNEY COMPANY INCORPORATED 37,312
3,587 MACY'S INCORPORATED 37,126
1,054 SEARS HOLDINGS CORPORATION+ << 40,969
6,419 TARGET CORPORATION 221,648
3,550 TJX COMPANIES INCORPORATED 73,024
33,451 WAL-MART STORES INCORPORATED 1,875,263
2,326,534
---------------
74 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
HEALTH SERVICES: 0.19%
3,066 CARDINAL HEALTH INCORPORATED $ 105,685
885 DAVITA INCORPORATED+ 43,869
921 LABORATORY CORPORATION OF AMERICA HOLDINGS+ << 59,322
4,069 TENET HEALTHCARE CORPORATION+ 4,679
892 WATSON PHARMACEUTICALS INCORPORATED+ 23,700
237,255
---------------
HOLDING & OTHER INVESTMENT OFFICES: 0.55%
863 APARTMENT INVESTMENT & MANAGEMENT COMPANY CLASS A 9,969
657 AVALONBAY COMMUNITIES INCORPORATED 39,801
1,030 BOSTON PROPERTIES INCORPORATED 56,650
1,025 DEVELOPERS DIVERSIFIED REALTY CORPORATION 5,002
2,319 EQUITY RESIDENTIAL 69,153
2,154 HCP INCORPORATED<< 59,817
4,456 HOST HOTELS & RESORTS INCORPORATED 33,732
2,270 KIMCO REALTY CORPORATION 41,496
1,422 PLUM CREEK TIMBER COMPANY 49,400
2,265 PROLOGIS 31,461
1,444 PUBLIC STORAGE INCORPORATED 114,798
1,925 SIMON PROPERTY GROUP INCORPORATED<< 102,275
1,316 VORNADO REALTY TRUST 79,421
692,975
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES: 0.12%
2,214 BED BATH & BEYOND INCORPORATED+ << 56,280
3,512 BEST BUY COMPANY INCORPORATED 98,722
155,002
---------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES: 0.08%
2,977 MARRIOTT INTERNATIONAL INCORPORATED CLASS A 57,903
1,560 STARWOOD HOTELS & RESORTS WORLDWIDE INCORPORATED 27,924
1,512 WYNDHAM WORLDWIDE CORPORATION 9,904
95,731
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 3.98%
5,909 3M COMPANY 340,004
7,580 APPLE INCORPORATED+ 646,953
11,441 APPLIED MATERIALS INCORPORATED 115,897
2,622 BAKER HUGHES INCORPORATED 84,088
512 BLACK & DECKER CORPORATION 21,407
1,872 CAMERON INTERNATIONAL CORPORATION+ 38,376
5,144 CATERPILLAR INCORPORATED 229,782
1,717 CUMMINS INCORPORATED 45,895
3,641 DEERE & COMPANY 139,523
16,581 DELL INCORPORATED+ 169,789
1,585 DOVER CORPORATION 52,178
1,406 EATON CORPORATION 69,892
17,403 EMC CORPORATION+ 182,209
482 FLOWSERVE CORPORATION 24,823
1,396 GAMESTOP CORPORATION CLASS A+ 30,237
20,885 HEWLETT-PACKARD COMPANY 757,917
2,718 INGERSOLL-RAND COMPANY LIMITED CLASS A 47,157
47,432 INTEL CORPORATION 695,353
11,456 INTERNATIONAL BUSINESS MACHINES CORPORATION 964,137
668 LEXMARK INTERNATIONAL INCORPORATED+ 17,969
Wells Fargo Advantage Variable Trust Funds 75
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ -------------------------------------------------------------------------------- ---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT (CONTINUED)
1,111 MANITOWOC COMPANY INCORPORATED $ 9,621
3,558 NATIONAL OILWELL VARCO INCORPORATED+ 86,958
1,006 PALL CORPORATION 28,601
1,374 PARKER HANNIFIN CORPORATION 58,450
1,757 PITNEY BOWES INCORPORATED 44,768
1,927 SANDISK CORPORATION+ 18,499
1,866 SMITH INTERNATIONAL INCORPORATED 42,713
671 STANLEY WORKS 22,881
1,500 TERADATA CORPORATION+ 22,245
5,008,322
---------------
INSURANCE AGENTS, BROKERS & SERVICE: 0.25%
2,300 AON CORPORATION 105,064
1,438 HUMANA INCORPORATED+ 53,609
4,384 MARSH & MCLENNAN COMPANIES INCORPORATED 106,400
2,823 UNUMPROVIDENT CORPORATION 52,508
317,581
---------------
INSURANCE CARRIERS: 1.74%
3,932 AETNA INCORPORATED 112,062
3,975 AFLAC INCORPORATED 182,214
4,570 ALLSTATE CORPORATION 149,713
22,930 AMERICAN INTERNATIONAL GROUP INCORPORATED+ 36,000
1,003 ASSURANT INCORPORATED 30,090
3,033 CHUBB CORPORATION 154,683
2,343 CIGNA CORPORATION 39,480
1,384 CINCINNATI FINANCIAL CORPORATION 40,233
3,693 GENWORTH FINANCIAL INCORPORATED+ 10,451
2,569 HARTFORD FINANCIAL SERVICES GROUP INCORPORATED 42,183
1,986 LEUCADIA NATIONAL CORPORATION 39,323
2,182 LINCOLN NATIONAL CORPORATION 41,109
3,718 LOEWS CORPORATION 105,034
1,959 MBIA INCORPORATED+ << 7,973
6,767 METLIFE INCORPORATED 235,898
2,211 PRINCIPAL FINANCIAL GROUP INCORPORATED 49,902
3,615 PRUDENTIAL FINANCIAL INCORPORATED 109,390
5,761 THE PROGRESSIVE CORPORATION 85,320
4,984 THE TRAVELERS COMPANIES INCORPORATED 225,277
725 TORCHMARK CORPORATION 32,408
10,300 UNITEDHEALTH GROUP INCORPORATED 273,980
4,341 WELLPOINT INCORPORATED+ 182,886
2,820 XL CAPITAL LIMITED CLASS A<< 10,434
2,196,043
---------------
LEATHER & LEATHER PRODUCTS: 0.05%
2,787 COACH INCORPORATED+ 57,886
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 1.00%
2,984 AGILENT TECHNOLOGIES INCORPORATED+ 46,640
2,073 BECTON DICKINSON & COMPANY 141,772
12,804 BOSTON SCIENTIFIC CORPORATION+ 99,103
845 C.R. BARD INCORPORATED 71,200
4,294 COVIDIEN LIMITED 155,615
2,725 DANAHER CORPORATION 154,262
1,270 DENTSPLY INTERNATIONAL INCORPORATED 35,865
76 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------------------ ---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS (CONTINUED)
2,289 EASTMAN KODAK COMPANY $ 15,062
1,185 FLIR SYSTEMS INCORPORATED 36,356
471 MILLIPORE CORPORATION+ 24,266
1,007 PERKINELMER INCORPORATED 14,007
1,668 QUEST DIAGNOSTICS INCORPORATED 86,586
3,531 RAYTHEON COMPANY 180,222
1,206 ROCKWELL AUTOMATION INCORPORATED 38,881
1,443 TERADYNE INCORPORATED+ 6,089
3,583 THERMO FISHER SCIENTIFIC INCORPORATED+ 122,073
838 WATERS CORPORATION+ 30,713
1,258,712
---------------
MEDICAL EQUIPMENT & SUPPLIES: 0.38%
333 INTUITIVE SURGICAL INCORPORATED+ 42,288
9,536 MEDTRONIC INCORPORATED 299,621
2,935 ST. JUDE MEDICAL INCORPORATED+ 96,738
1,059 VARIAN MEDICAL SYSTEMS INCORPORATED+ 37,107
475,754
---------------
MEDICAL MANAGEMENT SERVICES: 0.25%
1,270 COVENTRY HEALTH CARE INCORPORATED+ 18,898
2,110 EXPRESS SCRIPTS INCORPORATED+ 116,008
4,247 MEDCO HEALTH SOLUTIONS INCORPORATED+ 177,992
312,898
---------------
MEDICAL PRODUCTS: 0.92%
2,622 ALLERGAN INCORPORATED 105,719
5,288 BAXTER INTERNATIONAL INCORPORATED 283,384
18,029 MERCK & COMPANY INCORPORATED 548,082
3,443 STRYKER CORPORATION 137,548
1,915 ZIMMER HOLDINGS INCORPORATED+ 77,404
1,152,137
---------------
METAL MINING: 0.19%
3,220 FREEPORT-MCMORAN COPPER & GOLD INCORPORATED CLASS B+ 78,697
3,874 NEWMONT MINING CORPORATION 157,672
236,369
---------------
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT FUELS: 0.05%
939 VULCAN MATERIALS COMPANY<< 65,336
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES: 0.16%
1,187 HASBRO INCORPORATED<< 34,625
3,056 MATTEL INCORPORATED 48,896
1,049 TIFFANY & COMPANY<< 24,788
4,034 TYCO INTERNATIONAL LIMITED 87,124
195,433
---------------
MISCELLANEOUS RETAIL: 0.70%
3,681 COSTCO WHOLESALE CORPORATION 193,253
12,248 CVS CAREMARK CORPORATION 352,008
2,344 OFFICE DEPOT INCORPORATED+ 6,985
1,066 RADIOSHACK CORPORATION<< 12,728
6,083 STAPLES INCORPORATED 109,007
8,441 WALGREEN COMPANY 208,239
882,220
---------------
Wells Fargo Advantage Variable Trust Funds 77
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
MISCELLANEOUS SERVICES: 0.03%
459 D&B CORPORATION $ 35,435
---------------
MOTION PICTURES: 0.69%
22,288 NEWS CORPORATION CLASS A 202,598
30,593 TIME WARNER INCORPORATED 307,766
15,785 WALT DISNEY COMPANY<< 358,162
868,526
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING: 0.51%
2,654 FEDEX CORPORATION 170,254
8,486 UNITED PARCEL SERVICE INCORPORATED CLASS B 468,088
638,342
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS: 0.35%
1,763 AMERICAN CAPITAL LIMITED+ << 5,712
9,891 AMERICAN EXPRESS COMPANY 183,478
3,340 CAPITAL ONE FINANCIAL CORPORATION<< 106,513
3,075 CIT GROUP INCORPORATED<< 13,961
4,092 DISCOVER FINANCIAL SERVICES 38,997
2,965 PEOPLE'S UNITED FINANCIAL INCORPORATED 52,866
3,984 SLM CORPORATION+ << 35,458
436,985
---------------
OFFICE EQUIPMENT: 0.05%
7,381 XEROX CORPORATION 58,827
---------------
OIL & GAS EXTRACTION: 1.98%
3,914 ANADARKO PETROLEUM CORPORATION 150,885
2,854 APACHE CORPORATION 212,709
2,489 BJ SERVICES COMPANY 29,047
881 CABOT OIL & GAS CORPORATION 22,906
5,124 CHESAPEAKE ENERGY CORPORATION 82,855
3,767 DEVON ENERGY CORPORATION 247,530
1,209 ENSCO INTERNATIONAL INCORPORATED 34,324
2,128 EOG RESOURCES INCORPORATED 141,682
1,115 EQUITABLE RESOURCES INCORPORATED 37,408
7,621 HALLIBURTON COMPANY<< 138,550
2,426 NABORS INDUSTRIES LIMITED+ 29,039
2,250 NOBLE CORPORATION 49,703
1,473 NOBLE ENERGY INCORPORATED 72,501
6,906 OCCIDENTAL PETROLEUM CORPORATION 414,291
1,003 PIONEER NATURAL RESOURCES COMPANY 16,229
1,324 RANGE RESOURCES CORPORATION 45,532
963 ROWAN COMPANIES INCORPORATED 15,312
10,200 SCHLUMBERGER LIMITED 431,766
2,927 SOUTHWESTERN ENERGY COMPANY+ 84,795
5,808 WEATHERFORD INTERNATIONAL LIMITED+ 62,843
4,919 XTO ENERGY INCORPORATED 173,493
2,493,400
---------------
PAPER & ALLIED PRODUCTS: 0.09%
850 BEMIS COMPANY INCORPORATED 20,128
3,646 INTERNATIONAL PAPER COMPANY 43,023
78 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
PAPER & ALLIED PRODUCTS (CONTINUED)
1,456 MEADWESTVACO CORPORATION $ 16,293
1,120 PACTIV CORPORATION+ 27,866
107,310
---------------
PERSONAL SERVICES: 0.08%
1,302 CINTAS CORPORATION 30,245
2,890 H & R BLOCK INCORPORATED 65,661
95,906
---------------
PETROLEUM REFINING & RELATED INDUSTRIES: 4.72%
17,326 CHEVRON CORPORATION 1,281,604
12,713 CONOCOPHILLIPS 658,533
43,378 EXXON MOBIL CORPORATION 3,462,866
2,780 HESS CORPORATION 149,119
6,017 MARATHON OIL CORPORATION 164,631
1,624 MURPHY OIL CORPORATION 72,024
996 SUNOCO INCORPORATED<< 43,286
1,180 TESORO PETROLEUM CORPORATION 15,541
4,400 VALERO ENERGY CORPORATION 95,216
5,942,820
---------------
PIPELINES: 0.06%
4,934 THE WILLIAMS COMPANIES INCORPORATED 71,444
---------------
PRIMARY METAL INDUSTRIES: 0.28%
955 AK STEEL HOLDING CORPORATION 8,901
6,825 ALCOA INCORPORATED<< 76,850
821 ALLEGHENY TECHNOLOGIES INCORPORATED 20,960
2,677 NUCOR CORPORATION 123,677
1,188 PRECISION CASTPARTS CORPORATION 70,662
1,544 TITANIUM METALS CORPORATION<< 13,603
991 UNITED STATES STEEL CORPORATION 36,865
351,518
---------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES: 0.23%
5,798 CBS CORPORATION CLASS B<< 47,486
1,945 GANNETT COMPANY INCORPORATED<< 15,560
2,682 MCGRAW-HILL COMPANIES INCORPORATED 62,196
385 MEREDITH CORPORATION<< 6,591
1,226 NEW YORK TIMES COMPANY CLASS A<< 8,987
1,748 RR DONNELLEY & SONS COMPANY 23,738
5,232 VIACOM INCORPORATED CLASS B+ 99,722
79 WASHINGTON POST COMPANY CLASS B 30,830
295,110
---------------
RAILROAD TRANSPORTATION: 0.54%
2,919 BURLINGTON NORTHERN SANTA FE CORPORATION 220,997
3,364 CSX CORPORATION 109,229
3,157 NORFOLK SOUTHERN CORPORATION 148,537
4,318 UNION PACIFIC CORPORATION 206,400
685,163
---------------
REAL ESTATE: 0.01%
2,237 CB RICHARD ELLIS GROUP INCORPORATED CLASS A+ 9,664
---------------
Wells Fargo Advantage Variable Trust Funds 79
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS: 0.03%
1,346 SEALED AIR CORPORATION $ 20,109
2,057 THE GOODYEAR TIRE & RUBBER COMPANY+ 12,280
32,389
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 1.11%
1,847 AMERIPRISE FINANCIAL INCORPORATED 43,146
9,851 CHARLES SCHWAB CORPORATION 159,291
571 CME GROUP INCORPORATED 118,831
4,799 E*TRADE FINANCIAL CORPORATION+ << 5,519
868 FEDERATED INVESTORS INCORPORATED CLASS B 14,721
1,984 FRANKLIN RESOURCES INCORPORATED 126,540
3,770 GOLDMAN SACHS GROUP INCORPORATED 318,150
616 INTERCONTINENTAL EXCHANGE INCORPORATED+ 50,783
3,282 INVESCO LIMITED 47,392
1,210 LEGG MASON INCORPORATED 26,511
13,654 MERRILL LYNCH & COMPANY INCORPORATED 158,933
9,056 MORGAN STANLEY<< 145,258
1,707 NASDAQ STOCK MARKET INCORPORATED+ 42,180
2,259 NYSE EURONEXT INCORPORATED 61,851
2,203 T. ROWE PRICE GROUP INCORPORATED<< 78,074
1,397,180
---------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS: 0.13%
13,255 CORNING INCORPORATED 126,320
1,424 OWENS-ILLINOIS INCORPORATED 38,904
165,224
---------------
TOBACCO PRODUCTS: 1.02%
17,570 ALTRIA GROUP INCORPORATED 264,604
1,433 LORILLARD INCORPORATED 80,750
17,252 PHILIP MORRIS INTERNATIONAL 750,635
2,485 REYNOLDS AMERICAN INCORPORATED 100,170
1,265 UST INCORPORATED 87,766
1,283,925
---------------
TRANSPORTATION BY AIR: 0.04%
6,308 SOUTHWEST AIRLINES COMPANY 54,375
---------------
TRANSPORTATION EQUIPMENT: 1.57%
6,249 BOEING COMPANY 266,645
20,372 FORD MOTOR COMPANY+ << 46,652
3,324 GENERAL DYNAMICS CORPORATION 191,429
5,205 GENERAL MOTORS CORPORATION+ << 16,656
1,359 GENUINE PARTS COMPANY 51,452
1,049 GOODRICH CORPORATION 38,834
1,985 HARLEY-DAVIDSON INCORPORATED<< 33,685
6,193 HONEYWELL INTERNATIONAL INCORPORATED 203,316
1,548 ITT CORPORATION 71,193
5,067 JOHNSON CONTROLS INCORPORATED 92,017
3,380 LOCKHEED MARTIN CORPORATION 284,190
2,788 NORTHROP GRUMMAN CORPORATION 125,572
3,092 PACCAR INCORPORATED 88,431
2,056 TEXTRON INCORPORATED 28,517
8,106 UNITED TECHNOLOGIES CORPORATION 434,482
1,973,071
---------------
80 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
TRANSPORTATION SERVICES: 0.11%
1,442 C.H. ROBINSON WORLDWIDE INCORPORATED $ 79,353
1,808 EXPEDITORS INTERNATIONAL OF WASHINGTON INCORPORATED 60,152
139,505
---------------
TRAVEL & RECREATION: 0.12%
5,323 CARNIVAL CORPORATION 129,455
2,447 EXPEDIA INCORPORATED+ 20,163
149,618
---------------
WHOLESALE TRADE NON-DURABLE GOODS: 0.46%
1,332 AMERISOURCEBERGEN CORPORATION 47,499
1,286 BROWN-FORMAN CORPORATION CLASS B 66,216
1,312 DEAN FOODS COMPANY+ 23,577
2,352 MCKESSON CORPORATION 91,093
4,182 NIKE INCORPORATED CLASS B 213,282
1,805 SUPERVALU INCORPORATED 26,353
5,109 SYSCO CORPORATION 117,200
585,220
---------------
WHOLESALE TRADE-DURABLE GOODS: 0.20%
3,528 KIMBERLY-CLARK CORPORATION 186,067
1,036 PATTERSON COMPANIES INCORPORATED+ 19,425
648 W.W. GRAINGER INCORPORATED 51,079
256,571
---------------
TOTAL COMMON STOCKS (COST $89,051,635) 70,102,902
---------------
PRINCIPAL INTEREST RATE MATURITY DATE
- ------------ ------------- -------------
US TREASURY SECURITIES: 36.11%
US TREASURY BONDS: 36.11%
$ 2,351,000 US TREASURY BOND<< 5.25% 02/15/2029 3,117,647
2,198,000 US TREASURY BOND<< 6.13 08/15/2029 3,226,251
3,569,000 US TREASURY BOND<< 6.25 05/15/2030 5,366,884
3,645,000 US TREASURY BOND<< 5.38 02/15/2031 5,008,456
5,816,000 US TREASURY BOND<< 4.50 02/15/2036 7,727,103
3,392,000 US TREASURY BOND<< 4.75 02/15/2037 4,726,542
3,364,000 US TREASURY BOND<< 5.00 05/15/2037 4,874,120
3,634,000 US TREASURY BOND<< 4.38 02/15/2038 4,867,289
4,808,000 US TREASURY BOND<< 4.50 05/15/2038 6,562,170
45,476,462
---------------
TOTAL US TREASURY SECURITIES (COST $35,336,284) 45,476,462
---------------
SHARES
- ------------
COLLATERAL FOR SECURITIES LENDING: 37.87%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 7.11%
2,239,829 AIM STIT-LIQUID ASSETS PORTFOLIO 2,239,829
2,239,829 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 2,239,829
2,239,829 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 2,239,829
2,239,829 DWS MONEY MARKET SERIES INSTITUTIONAL 2,239,829
8,959,316
---------------
Wells Fargo Advantage Variable Trust Funds 81
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ------------ ------------------------------------------------------------------ ------------- ------------- ---------------
COLLATERAL INVESTED IN OTHER ASSETS: 30.76%
$ 889,998 ANTALIS US FUNDING CORPORATION++ 1.20% 01/15/2009 $ 889,583
5,844,323 BANK OF AMERICA REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY MORTGAGE BACKED SECURITIES
(MATURITY VALUE $ 5,844,349) 0.08 01/02/2009 5,844,323
207,666 BANK OF IRELAND 0.15 01/02/2009 207,666
889,998 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 889,968
332,095 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 5,480
3,209,928 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $ 3,209,930) 0.01 01/02/2009 3,209,928
4,924,658 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $4,924,685) 0.10 01/02/2009 4,924,658
867,748 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 867,748
741,665 E.ON AG++ 0.95 01/20/2009 741,294
127,566 GEMINI SECURITIZATION CORPORATION LLC++ 0.55 01/12/2009 127,545
533,999 GEMINI SECURITIZATION CORPORATION LLC++ 0.55 01/16/2009 533,877
5,933,323 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 5,933,343) 0.06 01/02/2009 5,933,323
693,677 GRYPHON FUNDING LIMITED (a) (i) 0.00 08/23/2009 290,442
3,085,328 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 3,085,337) 0.05 01/02/2009 3,085,328
860,332 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 860,332
889,998 METLIFE SHORT TERM FUNDING++ 0.70 01/12/2009 889,808
889,998 MONT BLANC CAPITAL CORPORATION++ 0.75 01/16/2009 889,720
4,924,658 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 4,924,669) 0.04 01/02/2009 4,924,658
800,999 PRUDENTIAL PLC++ 1.25 01/14/2009 800,638
148,333 PRUDENTIAL PLC++ 1.35 01/12/2009 148,272
481,044 REGENCY MARKETS #1 LLC++ 0.57 01/09/2009 480,983
978,998 UNICREDITO ITALIANO NY 3.15 01/05/2009 979,247
632,818 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 341,722
629,348 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.46 05/02/2008 339,848
1,001,402 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 540,757
38,747,148
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $48,758,307) 47,706,464
---------------
SHARES
- ------------
SHORT-TERM INVESTMENTS: 8.26%
MUTUAL FUNDS: 4.25%
5,356,757 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ ++ 5,356,757
---------------
PRINCIPAL
- ------------
US TREASURY BILLS: 4.01%
$ 205,000 US TREASURY BILL## # 0.29 02/05/2009 204,996
60,000 US TREASURY BILL## # 0.81 02/05/2009 59,999
2,280,000 US TREASURY BILL## # 1.89 02/05/2009 2,279,957
145,000 US TREASURY BILL## # 1.91 02/05/2009 144,997
115,000 US TREASURY BILL## # 0.41 05/07/2009 114,977
475,000 US TREASURY BILL## # 0.41 05/07/2009 474,903
65,000 US TREASURY BILL## # 0.80 05/07/2009 64,987
1,625,000 US TREASURY BILL## # 0.98 05/07/2009 1,624,667
80,000 US TREASURY BILL## # 0.23 06/04/2009 79,965
5,049,448
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $10,395,880) 10,406,205
---------------
82 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT ASSET ALLOCATION FUND
PRINCIPAL VALUE
- ------------ ---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $183,542,106)* 137.90% $ 173,692,033
OTHER ASSETS AND LIABILITIES, NET (37.90) (47,734,135)
------ ---------------
TOTAL NET ASSETS 100.00% $ 125,957,898
------ ---------------
- ----------
+ Non-income earning securities.
<< All or a portion of this security is on loan.
(l) Long-term security of an affiliate of the Fund with a cost of $1,495,026.
++ Securities that may be resold to "qualified institutional buyer"under rule
144A or securities offered pursuant to section 4(2) of the Securities Act
of 1933, as amended.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $5,356,757.
## Zero coupon bond. Interest rate presented is yield to maturity.
# Security pledged as collateral for futures transactions.
* Cost for federal income tax purposes is $188,970,464 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 20,410,926
Gross unrealized depreciation (35,689,357)
-------------
Net unrealized appreciation (depreciation) $ (15,278,431)
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 83
Portfolio of Investments -- December 31, 2008
VT C&B LARGE CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
COMMON STOCKS: 95.59%
APPAREL & ACCESSORY STORES: 2.88%
14,353 KOHL'S CORPORATION+ $ 519,579
---------------
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS &
SIMILAR MATERIALS: 1.52%
5,010 VF CORPORATION 274,398
---------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS: 1.18%
466 NVR INCORPORATED+ 212,613
---------------
BUSINESS SERVICES: 8.28%
5,100 FISERV INCORPORATED+ 185,487
8,750 MANPOWER INCORPORATED 297,413
24,380 MICROSOFT CORPORATION 473,947
19,880 OMNICOM GROUP INCORPORATED 535,170
1,492,017
---------------
CHEMICALS & ALLIED PRODUCTS: 15.22%
12,310 AVERY DENNISON CORPORATION 402,906
13,570 AVON PRODUCTS INCORPORATED<< 326,087
8,960 COLGATE-PALMOLIVE COMPANY 614,118
6,160 HENKEL KGAA ADR 165,088
8,700 HENKEL KGAA ADR PREFERRED 279,705
12,024 INTERNATIONAL FLAVORS & FRAGRANCES INCORPORATED 357,353
9,990 JOHNSON & JOHNSON 597,702
2,742,959
---------------
COMMUNICATIONS: 3.25%
28,612 VODAFONE GROUP PLC ADR 584,829
---------------
DEPOSITORY INSTITUTIONS: 5.23%
15,726 BANK OF AMERICA CORPORATION 221,422
7,405 JPMORGAN CHASE & COMPANY 233,480
12,390 STATE STREET CORPORATION 487,299
942,201
---------------
EATING & DRINKING PLACES: 4.74%
12,400 DARDEN RESTAURANTS INCORPORATED 349,432
8,121 MCDONALD'S CORPORATION 505,045
854,477
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT: 5.39%
73,540 FLEXTRONICS INTERNATIONAL LIMITED+ 188,262
24,550 GENERAL ELECTRIC COMPANY 397,710
18,530 MOLEX INCORPORATED CLASS A 239,964
8,922 TYCO ELECTRONICS LIMITED 144,626
970,562
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION
EQUIPMENT: 1.96%
10,050 ILLINOIS TOOL WORKS INCORPORATED 352,253
---------------
FOOD & KINDRED PRODUCTS: 2.66%
8,460 DIAGEO PLC ADR 480,020
---------------
84 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT C&B LARGE CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
HEALTH SERVICES: 2.28%
11,900 CARDINAL HEALTH INCORPORATED $ 410,193
---------------
HOLDING & OTHER INVESTMENT OFFICES: 2.02%
113 BERKSHIRE HATHAWAY INCORPORATED CLASS B+ 363,182
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 8.83%
12,765 DELL INCORPORATED+ 130,714
10,500 DIEBOLD INCORPORATED 294,945
13,170 DOVER CORPORATION 433,556
7,080 EATON CORPORATION 351,947
14,900 PITNEY BOWES INCORPORATED 379,652
1,590,814
---------------
INSURANCE AGENTS, BROKERS & SERVICE: 2.95%
21,380 WILLIS GROUP HOLDINGS LIMITED 531,934
---------------
INSURANCE CARRIERS: 4.80%
17,210 ALLSTATE CORPORATION 563,800
25,200 OLD REPUBLIC INTERNATIONAL CORPORATION 300,384
864,184
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC,
MEDICAL & OPTICAL GOODS: 6.38%
2,690 BECTON DICKINSON & COMPANY 183,969
41,880 BOSTON SCIENTIFIC CORPORATION+ 324,151
12,350 QUEST DIAGNOSTICS INCORPORATED 641,089
1,149,209
---------------
MEDICAL PRODUCTS: 1.34%
4,520 BAXTER INTERNATIONAL INCORPORATED 242,227
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES: 1.41%
11,782 TYCO INTERNATIONAL LIMITED 254,491
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS: 2.72%
26,380 AMERICAN EXPRESS COMPANY 489,349
---------------
PETROLEUM REFINING & RELATED INDUSTRIES: 5.02%
11,330 EXXON MOBIL CORPORATION 904,474
---------------
PRIMARY METAL INDUSTRIES: 1.08%
5,980 HUBBELL INCORPORATED CLASS B 195,423
---------------
TRAVEL & RECREATION: 2.17%
16,090 CARNIVAL CORPORATION 391,309
---------------
WHOLESALE TRADE-DURABLE GOODS: 2.28%
7,780 KIMBERLY-CLARK CORPORATION 410,317
---------------
TOTAL COMMON STOCKS (COST $24,037,411) 17,223,014
---------------
COLLATERAL FOR SECURITIES LENDING: 1.66%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 0.33%
14,629 AIM STIT-LIQUID ASSETS PORTFOLIO 14,629
14,629 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 14,629
14,629 DREYFUS CASH MANAGEMENT INSTITUTIONAL 14,629
Wells Fargo Advantage Variable Trust Funds 85
Portfolio of Investments -- December 31, 2008
VT C&B LARGE CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
COLLATERAL INVESTED IN MONEY MARKET FUNDS (continued)
14,629 DWS MONEY MARKET SERIES INSTITUTIONAL $ 14,629
58,516
---------------
PRINCIPAL INTEREST RATE MATURITY DATE
- ------------ ------------------------------------------------------------------ ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 1.33%
$ 5,352 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 5,349
4,460 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 4,458
1,144 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 1,143
25,155 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $25,155) 0.08 01/02/2009 25,155
1,427 BANK OF IRELAND 0.15 01/02/2009 1,427
5,352 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 5,352
5,352 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 5,355
1,160 CHARIOT FUNDING LLC++ 0.28 01/05/2009 1,160
4,555 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 75
3,507 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 58
5,709 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 5,706
13,827 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $13,827) 0.01 01/02/2009 13,827
21,230 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 21,230) 0.10 01/02/2009 21,230
5,486 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 5,486
6,244 E.ON AG++ 0.95 01/20/2009 6,241
2,855 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 2,854
21,230 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 21,230) 0.06 01/02/2009 21,230
16,845 GRYPHON FUNDING LIMITED(a) (i) 0.00 08/23/2009 7,053
13,202 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 13,202) 0.05 01/02/2009 13,202
5,709 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 5,706
5,709 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 5,706
5,887 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 5,887
5,352 METLIFE SHORT TERM FUNDING++ 0.70 01/12/2009 5,351
5,352 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 5,351
21,230 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $ 21,230) 0.04 01/02/2009 21,230
4,995 PARK AVENUE RECEIVABLES++ 0.35 01/12/2009 4,995
3,568 PRUDENTIAL PLC++ 1.25 01/14/2009 3,567
1,249 PRUDENTIAL PLC 1.35 01/12/2009 1,248
892 PRUDENTIAL PLC 2.00 01/12/2009 891
5,352 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 5,351
2,682 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 2,682
6,066 UNICREDITO ITALIANO NY 3.15 01/05/2009 6,067
6,553 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 3,539
3,806 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 2,055
4,667 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 2,520
7,576 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 4,091
7,035 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 6,225
892 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 892
239,715
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $311,908) 298,231
---------------
86 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT C&B LARGE CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ --------------------------------------------- ---------------
SHORT-TERM INVESTMENTS: 4.24%
763,797 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ ++ $ 763,797
---------------
TOTAL SHORT-TERM INVESTMENTS (COST $763,797) 763,797
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $25,113,116)* 101.49% $ 18,285,042
Other Assets and Liabilities, Net (1.49) (267,808)
------ ---------------
TOTAL NET ASSETS 100.00% $ 18,017,234
------ ---------------
- ----------
+ Non-income earning securities.
<< All or a portion of this security is on loan.
++ 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $763,797.
* Cost for federal income tax purposes is $ 25,354,834 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 659,426
Gross unrealized depreciation (7,729,218)
-------------
Net unrealized appreciation (depreciation) $ (7,069,792)
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 87
Portfolio of Investments -- December 31, 2008
VT DISCOVERY FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------- ---------------
COMMON STOCKS: 98.83%
AMUSEMENT & RECREATION SERVICES: 1.75%
73,600 WMS INDUSTRIES INCORPORATED+ $ 1,979,840
---------------
APPAREL & ACCESSORY STORES: 1.40%
48,000 AEROPOSTALE INCORPORATED+ 772,800
54,300 URBAN OUTFITTERS INCORPORATED+ 813,414
1,586,214
---------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS: 0.73%
46,900 RYLAND GROUP INCORPORATED<< 828,723
---------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS: 0.54%
58,400 LUMBER LIQUIDATORS INCORPORATED+ 616,704
---------------
BUSINESS SERVICES: 10.94%
264,100 ACTIVISION BLIZZARD INCORPORATED+ 2,281,824
38,543 ANSYS INCORPORATED+ 1,074,964
85,502 CONCUR TECHNOLOGIES INCORPORATED+ << 2,806,176
26,500 F5 NETWORKS INCORPORATED+ << 605,790
51,500 LENDER PROCESSING SERVICES INCORPORATED 1,516,675
59,300 MCAFEE INCORPORATED+ 2,050,001
99,400 OMNITURE INCORPORATED+ << 1,057,616
78,700 PHASE FORWARD INCORPORATED+ 985,324
12,378,370
---------------
CHEMICALS & ALLIED PRODUCTS: 3.33%
138,800 CALGON CARBON CORPORATION+ << 2,131,968
165,100 MYLAN LABORATORIES INCORPORATED+ << 1,632,839
3,764,807
---------------
COMMUNICATIONS: 9.16%
75,263 EQUINIX INCORPORATED+ << 4,003,239
37,500 GEOEYE INCORPORATED+ << 721,125
130,345 NII HOLDINGS INCORPORATED+ 2,369,672
200,200 SBA COMMUNICATIONS CORPORATION CLASS A+ << 3,267,264
10,361,300
---------------
DEPOSITORY INSTITUTIONS: 1.45%
137,100 NEW YORK COMMUNITY BANCORP INCORPORATED<< 1,639,716
---------------
EDUCATIONAL SERVICES: 2.93%
57,694 DEVRY INCORPORATED 3,312,213
---------------
ELECTRIC, GAS & SANITARY SERVICES: 1.84%
32,800 CLEAN HARBORS INCORPORATED+ 2,080,832
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 4.85%
82,686 MONOLITHIC POWER SYSTEMS+ 1,042,670
45,500 NETLOGIC MICROSYSTEMS INCORPORATED+ << 1,001,455
21,400 SILICON LABORATORIES INCORPORATED+ 530,292
98,472 SOLERA HOLDINGS INCORPORATED+ 2,373,175
13,100 WHIRLPOOL CORPORATION 541,685
5,489,277
---------------
88 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT DISCOVERY FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES: 1.98%
35,364 AECOM TECHNOLOGY CORPORATION+ $ 1,086,736
30,817 IHS INCORPORATED+ 1,153,172
2,239,908
---------------
FOOD & KINDRED PRODUCTS: 5.54%
84,050 CENTRAL EUROPEAN DISTRIBUTION CORPORATION+ 1,655,785
66,902 FLOWERS FOODS INCORPORATED 1,629,733
133,000 SMART BALANCE INCORPORATED+ << 904,400
76,300 TREEHOUSE FOODS INCORPORATED+ 2,078,412
6,268,330
---------------
FOOTWEAR: 0.92%
13,000 DECKERS OUTDOOR CORPORATION+ 1,038,310
---------------
GENERAL MERCHANDISE STORES: 0.76%
82,900 MACY'S INCORPORATED 858,015
---------------
HEALTH SERVICES: 7.56%
35,500 AMEDISYS INCORPORATED+ << 1,467,570
30,100 LABORATORY CORPORATION OF AMERICA HOLDINGS+ << 1,938,741
114,900 LINCARE HOLDINGS INCORPORATED+ << 3,094,257
38,900 PSYCHIATRIC SOLUTIONS INCORPORATED+ << 1,083,365
109,500 SUN HEALTHCARE GROUP INCORPORATED+ 969,075
8,553,008
---------------
HEAVY CONSTRUCTION OTHER THAN BUILDING CONSTRUCTION CONTRACTS: 1.31%
63,218 FOSTER WHEELER LIMITED+ 1,478,037
---------------
HOLDING & OTHER INVESTMENT OFFICES: 1.39%
65,100 ASPEN INSURANCE HOLDINGS LIMITED 1,578,675
---------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES: 0.61%
79,700 HHGREGG INCORPORATED+ 691,796
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 6.42%
88,200 DATA DOMAIN INCORPORATED+ << 1,658,160
75,200 GAMESTOP CORPORATION CLASS A+ 1,628,832
258,960 NETEZZA CORPORATION+ 1,719,494
105,300 NUANCE COMMUNICATIONS INCORPORATED+ 1,090,908
41,100 PALL CORPORATION 1,168,473
7,265,867
---------------
INSURANCE CARRIERS: 8.35%
76,300 AXIS CAPITAL HOLDINGS LIMITED 2,221,856
68,682 ENDURANCE SPECIALTY HOLDINGS LIMITED 2,096,861
46,689 IPC HOLDINGS LIMITED 1,396,001
28,400 PARTNERRE LIMITED 2,024,068
39,800 THE HANOVER INSURANCE GROUP INCORPORATED 1,710,206
9,448,992
---------------
LEGAL SERVICES: 0.71%
17,993 FTI CONSULTING INCORPORATED+ << 803,927
---------------
Wells Fargo Advantage Variable Trust Funds 89
Portfolio of Investments -- December 31, 2008
VT DISCOVERY FUND
SHARES SECURITY NAME VALUE
- ------------ -------------------------------------------------------------------------------- ---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 4.71%
91,636 HOLOGIC INCORPORATED+ $ 1,197,683
79,300 ICON PLC ADR+ << 1,561,417
13,800 ITRON INCORPORATED+ << 879,612
82,700 WRIGHT MEDICAL GROUP INCORPORATED+ 1,689,561
5,328,273
---------------
MEDICAL EQUIPMENT & SUPPLIES: 2.17%
130,355 PSS WORLD MEDICAL INCORPORATED+ 2,453,281
---------------
MEDICAL PRODUCTS: 1.00%
43,600 ILLUMINA INCORPORATED+ << 1,135,780
---------------
MISCELLANEOUS MANUFACTURING INDUSTRIES: 1.07%
58,380 INTREPID POTASH INCORPORATED+ << 1,212,553
---------------
MISCELLANEOUS RETAIL: 2.65%
81,900 DICK'S SPORTING GOODS INCORPORATED+ 1,155,609
117,700 HIBBETT SPORTS INCORPORATED+ << 1,849,067
3,004,676
---------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING: 1.12%
44,440 OLD DOMINION FREIGHT LINE INCORPORATED+ 1,264,762
---------------
OIL & GAS EXTRACTION: 3.90%
53,100 ATWOOD OCEANICS INCORPORATED+ 811,368
29,200 FOREST OIL CORPORATION+ 481,508
48,100 NEWFIELD EXPLORATION COMPANY+ 949,975
138,600 PETROHAWK ENERGY CORPORATION+ 2,166,318
4,409,169
---------------
PAPER & ALLIED PRODUCTS: 0.96%
43,500 PACTIV CORPORATION+ 1,082,280
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 1.71%
64,900 LAZARD LIMITED 1,930,126
---------------
TRANSPORTATION EQUIPMENT: 0.89%
61,700 HORNBECK OFFSHORE+ 1,008,178
---------------
WHOLESALE TRADE NON-DURABLE GOODS: 2.78%
80,786 AIRGAS INCORPORATED 3,149,846
---------------
WHOLESALE TRADE-DURABLE GOODS: 1.40%
16,270 MARTIN MARIETTA MATERIALS INCORPORATED<< 1,579,492
---------------
TOTAL COMMON STOCKS (COST $146,585,773) 111,821,277
---------------
RIGHTS: 0.00%
90,400 SEAGATE TECHNOLOGY RIGHTS+ (a) (i) 0
TOTAL RIGHTS (COST $0) 0
---------------
COLLATERAL FOR SECURITIES LENDING: 17.39%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 3.41%
965,149 AIM STIT-LIQUID ASSETS PORTFOLIO 965,149
965,149 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 965,149
965,149 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 965,149
965,149 DWS MONEY MARKET SERIES INSTITUTIONAL 965,149
3,860,596
---------------
90 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT DISCOVERY FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ------------ ------------------------------------------------------------------ ------------- ------------- ---------------
COLLATERAL INVESTED IN OTHER ASSETS: 13.98%
$ 353,103 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 $ 352,903
294,253 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 294,115
75,446 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 75,416
1,659,585 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,659,592) 0.08 01/02/2009 1,659,585
94,161 BANK OF IRELAND 0.15 01/02/2009 94,161
353,103 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 353,091
353,103 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 353,033
76,506 CHARIOT FUNDING LLC++ 0.28 01/05/2009 76,503
300,499 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 4,958
231,354 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 3,817
376,644 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 376,475
912,183 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $912,184) 0.01 01/02/2009 912,183
1,400,643 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,400,651) 0.10 01/02/2009 1,400,643
361,931 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 361,931
411,954 E.ON AG++ 0.95 01/20/2009 411,747
188,322 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 188,290
1,400,643 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,400,648) 0.06 01/02/2009 1,400,643
1,111,297 GRYPHON FUNDING LIMITED(a)(i) 0.00 08/23/2009 465,300
870,988 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $870,990) 0.05 01/02/2009 870,988
376,644 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 376,453
376,644 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 376,475
388,414 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 388,414
353,103 METLIFE SHORT TERM FUNDING++ 0.70 01/12/2009 353,028
353,103 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 352,995
1,400,643 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,400,646) 0.04 01/02/2009 1,400,643
329,563 PARK AVENUE RECEIVABLES++ 0.35 01/12/2009 329,528
235,402 PRUDENTIAL PLC++ 1.25 01/14/2009 235,296
82,391 PRUDENTIAL PLC 1.35 01/12/2009 82,357
58,851 PRUDENTIAL PLC 2.00 01/12/2009 58,815
353,103 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 353,006
176,940 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 176,936
400,184 UNICREDITO ITALIANO NY 3.15 01/05/2009 400,268
432,342 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 233,464
251,068 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 135,577
307,909 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 166,271
499,821 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 269,903
464,098 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 410,680
58,851 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 58,847
15,814,738
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $20,357,091) 19,675,334
---------------
Wells Fargo Advantage Variable Trust Funds 91
Portfolio of Investments -- December 31, 2008
VT DISCOVERY FUND
SHARES SECURITY NAME VALUE
- ------------ --------------------------------------------- ---------------
SHORT-TERM INVESTMENTS: 1.06%
1,204,393 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ ++ $ 1,204,393
TOTAL SHORT-TERM INVESTMENTS (COST $1,204,393) 1,204,393
---------------
TOTAL INVESTMENTS IN SECURITIES
(COST $168,147,257)* 117.28% $ 132,701,004
Other Assets and Liabilities, Net 17.28) (19,552,280)
------ ---------------
TOTAL NET ASSETS 100.00% $ 113,148,724
------ ---------------
- ----------
+ Non-income earning securities.
<< All or a portion of this security is on loan.
++ 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $1,204,393.
* Cost for federal income tax purposes is $ 169,624,351 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 2,590,545
Gross unrealized depreciation (39,513,892)
-------------
Net unrealized appreciation (depreciation) $ (36,923,347)
The accompanying notes are an integral part of these financial statements.
92 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT EQUITY INCOME FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------- ---------------
COMMON STOCKS: 98.02%
BUSINESS SERVICES: 2.76%
20,750 MICROSOFT CORPORATION $ 403,380
17,125 ORACLE CORPORATION+ 303,626
36,250 SYMANTEC CORPORATION+ << 490,100
1,197,106
---------------
CHEMICALS & ALLIED PRODUCTS: 16.82%
16,600 ABBOTT LABORATORIES 885,942
9,160 AIR PRODUCTS & CHEMICALS INCORPORATED 460,473
29,450 BRISTOL-MYERS SQUIBB COMPANY 684,713
3,375 COLGATE-PALMOLIVE COMPANY 231,323
18,600 E.I. DU PONT DE NEMOURS & COMPANY 470,580
16,765 JOHNSON & JOHNSON 1,003,050
53,780 PFIZER INCORPORATED 952,444
22,090 PROCTER & GAMBLE COMPANY 1,365,604
11,039 ROHM & HAAS COMPANY 682,100
18,400 SCHERING-PLOUGH CORPORATION 313,352
6,925 WYETH 259,757
7,309,338
---------------
COMMUNICATIONS: 7.41%
64,720 AT&T INCORPORATED 1,844,520
40,624 VERIZON COMMUNICATIONS INCORPORATED 1,377,154
3,221,674
---------------
DEPOSITORY INSTITUTIONS: 11.18%
49,330 BANK OF AMERICA CORPORATION 694,566
31,401 BANK OF NEW YORK MELLON CORPORATION 889,590
53,490 CITIGROUP INCORPORATED 358,918
52,695 JPMORGAN CHASE & COMPANY 1,661,473
11,025 STATE STREET CORPORATION 433,613
32,825 US BANCORP 820,953
4,859,113
---------------
EATING & DRINKING PLACES: 1.70%
11,875 MCDONALD'S CORPORATION 738,506
---------------
ELECTRIC, GAS & SANITARY SERVICES: 5.70%
14,340 DOMINION RESOURCES INCORPORATED 513,946
6,597 FIRSTENERGY CORPORATION 320,482
20,050 FPL GROUP INCORPORATED 1,009,117
7,625 MDU RESOURCES GROUP INCORPORATED 164,548
16,110 PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED 469,929
2,478,022
---------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 5.67%
21,750 CISCO SYSTEMS INCORPORATED+ 354,525
18,715 EMERSON ELECTRIC COMPANY 685,156
64,380 GENERAL ELECTRIC COMPANY 1,042,956
24,325 NOKIA OYJ ADR 379,470
2,462,107
---------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT: 1.69%
12,300 COMMERCIAL METALS COMPANY 146,001
14,270 FORTUNE BRANDS INCORPORATED 589,066
735,067
---------------
Wells Fargo Advantage Variable Trust Funds 93
Portfolio of Investments -- December 31, 2008
VT EQUITY INCOME FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------------- ---------------
FOOD & KINDRED PRODUCTS: 2.56%
10,084 KRAFT FOODS INCORPORATED CLASS A $ 270,755
15,340 PEPSICO INCORPORATED 840,172
1,110,927
---------------
GENERAL MERCHANDISE STORES: 1.98%
24,940 TARGET CORPORATION<< 861,178
---------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 6.15%
11,009 3M COMPANY 633,458
27,090 HEWLETT-PACKARD COMPANY 983,096
33,765 INTEL CORPORATION 494,995
6,660 INTERNATIONAL BUSINESS MACHINES CORPORATION 560,506
2,672,055
---------------
INSURANCE CARRIERS: 4.80%
22,425 METLIFE INCORPORATED 781,736
4,600 PRUDENTIAL FINANCIAL INCORPORATED 139,196
25,775 THE TRAVELERS COMPANIES INCORPORATED 1,165,030
2,085,962
---------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 1.08%
6,840 BECTON DICKINSON & COMPANY 467,788
---------------
MEDICAL EQUIPMENT & SUPPLIES: 1.16%
16,100 MEDTRONIC INCORPORATED 505,862
---------------
MEDICAL PRODUCTS: 0.91%
12,975 MERCK & COMPANY INCORPORATED 394,440
---------------
MISCELLANEOUS RETAIL: 2.47%
7,000 COSTCO WHOLESALE CORPORATION 367,500
24,525 CVS CAREMARK CORPORATION 704,849
1,072,349
---------------
MOTION PICTURES: 1.70%
37,325 TIME WARNER INCORPORATED 375,490
16,000 WALT DISNEY COMPANY<< 363,040
738,530
---------------
NON-DEPOSITORY CREDIT INSTITUTIONS: 1.22%
14,470 AMERICAN EXPRESS COMPANY 268,419
8,150 CAPITAL ONE FINANCIAL CORPORATION 259,904
528,323
---------------
OIL & GAS EXTRACTION: 1.49%
12,775 CHESAPEAKE ENERGY CORPORATION 206,572
23,375 HALLIBURTON COMPANY<< 424,958
400 SCHLUMBERGER LIMITED 16,932
648,462
---------------
PETROLEUM REFINING & RELATED INDUSTRIES: 13.97%
23,100 CHEVRON CORPORATION 1,708,707
26,000 CONOCOPHILLIPS 1,346,800
32,989 EXXON MOBIL CORPORATION 2,633,512
94 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT EQUITY INCOME FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
PETROLEUM REFINING & RELATED INDUSTRIES (continued)
13,975 MARATHON OIL CORPORATION $ 382,356
6,071,375
---------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 0.21%
2,034 AMERIPRISE FINANCIAL INCORPORATED 47,514
3,750 MERRILL LYNCH & COMPANY INCORPORATED 43,650
91,164
---------------
TOBACCO PRODUCTS: 1.02%
10,195 PHILIP MORRIS INTERNATIONAL 443,584
---------------
TRANSPORTATION EQUIPMENT: 3.42%
22,033 HONEYWELL INTERNATIONAL INCORPORATED 723,343
14,200 UNITED TECHNOLOGIES CORPORATION 761,120
1,484,463
---------------
WHOLESALE TRADE NON-DURABLE GOODS: 0.95%
18,015 SYSCO CORPORATION 413,259
---------------
TOTAL COMMON STOCKS (COST $51,395,203) 42,590,654
---------------
COLLATERAL FOR SECURITIES LENDING: 4.59%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 0.90%
97,927 AIM STIT-LIQUID ASSETS PORTFOLIO 97,927
97,927 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 97,927
97,927 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 97,927
97,927 DWS MONEY MARKET SERIES INSTITUTIONAL 97,927
391,708
---------------
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE
- ------------ ------------------------------------------------------------------ ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 3.69%
$ 35,827 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 35,807
29,856 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 29,842
7,655 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 7,652
168,386 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $168,387) 0.08 01/02/2009 168,386
9,554 BANK OF IRELAND 0.15 01/02/2009 9,554
35,827 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 35,826
35,827 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 35,820
7,763 CHARIOT FUNDING LLC++ 0.28 01/05/2009 7,762
30,490 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 503
23,474 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 387
38,215 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 38,198
92,553 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $92,553) 0.01 01/02/2009 92,553
142,113 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $142,114) 0.10 01/02/2009 142,113
36,723 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 36,723
41,798 E.ON AG++ 0.95 01/20/2009 41,777
19,108 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 19,104
142,113 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $142,113) 0.06 01/02/2009 142,113
112,756 GRYPHON FUNDING LIMITED(a) (i) 0.00 08/23/2009 47,211
Wells Fargo Advantage Variable Trust Funds 95
Portfolio of Investments -- December 31, 2008
VT EQUITY INCOME FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ------------ ------------------------------------------------------------------ ------------- ------------- ---------------
COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED)
$ 88,373 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $88,373) 0.05% 01/02/2009 $ 88,373
38,215 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 38,196
38,215 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 38,198
39,410 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 39,410
35,827 METLIFE SHORT TERM FUNDING++ 0.70 01/12/2009 35,819
35,827 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 35,816
142,113 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $142,113) 0.04 01/02/2009 142,113
33,438 PARK AVENUE RECEIVABLES++ 0.35 01/12/2009 33,435
23,885 PRUDENTIAL PLC++ 1.25 01/14/2009 23,874
8,360 PRUDENTIAL PLC 1.35 01/12/2009 8,356
5,971 PRUDENTIAL PLC 2.00 01/12/2009 5,968
35,827 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 35,817
17,953 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 17,952
40,604 UNICREDITO ITALIANO NY 3.15 01/05/2009 40,612
43,867 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 23,688
25,474 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 13,756
31,241 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 16,870
50,713 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 27,385
47,089 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 41,669
5,971 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 5,971
1,604,609
---------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $2,057,837) 1,996,317
---------------
SHARES
- ------------
SHORT-TERM INVESTMENTS: 2.08%
901,327 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ +++ 901,327
TOTAL SHORT-TERM INVESTMENTS (COST $901,327) 901,327
TOTAL INVESTMENTS IN SECURITIES
(COST $54,354,367)* 104.69% $ 45,488,298
Other Assets and Liabilities, Net (4.69) (2,036,655)
------ ---------------
TOTAL NET ASSETS 100.00% $ 43,451,643
------ ---------------
- ----------
+ Non-income earning securities.
<< All or a portion of this security is on loan.
++ 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $901,327.
* Cost for federal income tax purposes is $ 54,523,640 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 4,183,808
Gross unrealized depreciation (13,219,150)
-------------
Net unrealized appreciation (depreciation) $ (9,035,342)
The accompanying notes are an integral part of these financial statements.
96 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT INTERNATIONAL CORE FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------ ---------------
COMMON STOCKS: 96.83%
AUSTRALIA: 4.67%
47,169 PALADIN ENERGY LIMITED (DIVERSIFIED MINING)+ $ 82,893
19,550 QBE INSURANCE GROUP LIMITED (INSURANCE CARRIERS) 353,333
2,301 RIO TINTO LIMITED (METAL MINING) 61,662
20,788 SANTOS LIMITED (OIL & GAS EXTRACTION) 217,815
17,611 SONIC HEALTHCARE LIMITED (HEALTH SERVICES) 179,421
895,124
---------------
BELGIUM: 0.00%
4 DELHAIZE GROUP (FOOD STORES) 247
---------------
CHINA: 0.77%
166,000 PETROCHINA COMPANY LIMITED (OIL & GAS EXTRACTION) 147,517
---------------
FINLAND: 2.93%
6,440 FORTUM OYJ (ELECTRIC, GAS & SANITARY SERVICES) 139,975
26,807 NOKIA OYJ (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 420,665
560,640
---------------
FRANCE: 9.78%
3,070 ALSTOM (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 182,956
10,900 AXA SA (INSURANCE CARRIERS) 244,657
3,500 BOUYGUES SA (ENGINEERING CONSTRUCTION) 148,482
4,389 GAZ DE FRANCE (GAS DISTRIBUTION) 217,857
2,524 LVMH MOET HENNESSY LOUIS VUITTON SA (CONSUMER SERVICES) 169,155
2,627 TECHNIP SA (OIL & GAS EXTRACTION) 80,659
6,590 TOTAL SA (OIL & GAS EXTRACTION) 362,312
760 VALLOUREC SA (STEEL PRODUCERS, PRODUCTS) 86,412
11,683 VIVENDI UNIVERSAL SA (COMMUNICATIONS) 380,796
1,873,286
---------------
GERMANY: 9.49%
1,900 ALLIANZ SE (INSURANCE CARRIERS) 202,161
6,800 BAYER AG (MEASURING, ANALYZING & CONTROLLING INSTRUMENTS:
PHOTOGRAPHIC, MEDICAL & OPTICAL) 396,225
7,100 DEUTSCHE BANK AG (DEPOSITORY INSTITUTIONS) 280,778
32,857 DEUTSCHE TELEKOM AG (COMMUNICATIONS) 496,775
6,200 E.ON AG (ELECTRIC, GAS & SANITARY SERVICES) 243,456
6,917 GEA GROUP AG (HOLDING & OTHER INVESTMENT OFFICES) 120,115
5,600 SYMRISE AG (CHEMICALS & ALLIED PRODUCTS) 78,391
1,817,901
---------------
GREECE: 0.78%
15,867 ALPHA BANK AE (DEPOSITORY INSTITUTIONS) 148,445
---------------
HONG KONG: 4.88%
37,200 BANK OF EAST ASIA LIMITED (DEPOSITORY INSTITUTIONS) 78,469
24,000 CHEUNG KONG HOLDINGS LIMITED (REAL ESTATE) 228,951
29,500 CHINA MOBILE (HONG KONG) LIMITED (COMMUNICATIONS) 299,310
72,000 HANG LUNG PROPERTIES LIMITED (REAL ESTATE) 158,081
560 SUN HUNG KAI PROPERTIES LIMITED (REAL ESTATE) 4,712
50,000 TELEVISION BROADCASTS LIMITED (MOTION PICTURES) 163,913
933,436
---------------
ITALY: 1.32%
10,507 ENI SPA (PETROLEUM REFINING & RELATED INDUSTRIES) 252,837
---------------
Wells Fargo Advantage Variable Trust Funds 97
Portfolio of Investments -- December 31, 2008
VT INTERNATIONAL CORE FUND
SHARES SECURITY NAME VALUE
- ----------------- ---------------------------------------------------------------------------------------------- ------------
JAPAN: 21.15%
23,000 BANK OF YOKOHAMA LIMITED (DEPOSITORY INSTITUTIONS) $ 135,672
7,100 CAPCOM COMPANY LIMITED (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 160,624
52 EAST JAPAN RAILWAY COMPANY (RAILROADS)(a) 403,094
4,700 FANUC LIMITED (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT) 336,857
11,000 HITACHI METALS LIMITED (PRIMARY METAL INDUSTRIES) 51,161
23 INPEX HOLDINGS INCORPORATED (OIL & GAS EXPLORATION) 183,357
12,000 KAO CORPORATION (CHEMICALS & ALLIED PRODUCTS) 364,504
10,300 MITSUBISHI CORPORATION (BUSINESS SERVICES) 145,890
50,000 MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED (DEPOSITORY INSTITUTIONS) 314,257
22,000 MITSUI FUDOSAN COMPANY LIMITED (REAL ESTATE) 366,789
3,200 NIDEC CORPORATION (WHOLESALE TRADE-DURABLE GOODS) 125,150
8,800 NOMURA HOLDINGS INCORPORATED (SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES) 73,272
7,300 NOMURA RESEARCH INSTITUTE LIMITED (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 139,256
183 NTT DOCOMO INCORPORATED (COMMUNICATIONS) 360,202
4,100 SHIN-ETSU CHEMICAL COMPANY LIMITED (CHEMICALS & ALLIED PRODUCTS) 189,221
8,500 TAKEDA PHARMACEUTICAL COMPANY LIMITED (CHEMICALS & ALLIED PRODUCTS) 443,040
7,800 TOYOTA MOTOR CORPORATION (AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS) 257,855
4,050,201
------------
NETHERLANDS: 5.80%
10,822 ASML HOLDING NV (SEMICONDUCTOR EQUIPMENT MANUFACTURING & RELATED) 195,090
6,220 HEINEKEN NV (EATING & DRINKING PLACES) 190,436
24,900 ING GROEP NV (FINANCIAL SERVICES) 274,047
7,792 UNILEVER NV (FOOD & KINDRED PRODUCTS) 188,862
13,800 WOLTERS KLUWER NV (PRINTING, PUBLISHING & ALLIED INDUSTRIES) 261,655
1,110,090
------------
NORWAY: 0.53%
4,600 YARA INTERNATIONAL ASA (AGRICULTURAL SERVICES) 101,185
------------
RUSSIA: 0.62%
3,550 GAZPROM ADR (OIL & GAS EXTRACTION) 50,588
2,115 LUKOIL ADR (OIL & GAS EXTRACTION)<< 67,680
118,268
------------
SINGAPORE: 0.80%
70,000 CAPITALAND LIMITED (REAL ESTATE) 152,735
------------
SPAIN: 3.73%
8,518 INDRA SISTEMAS SA (INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT) 195,512
23,000 TELEFONICA SA (COMMUNICATIONS) 519,148
714,660
------------
SWITZERLAND: 11.81%
11,400 CREDIT SUISSE GROUP (NON-DEPOSITORY CREDIT INSTITUTIONS) 319,480
3,540 HOLCIM LIMITED (BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS) 204,896
7,580 NESTLE SA (FOOD & KINDRED PRODUCTS) 300,154
8,000 NOVARTIS AG (CHEMICALS & ALLIED PRODUCTS) 400,652
3,620 ROCHE HOLDINGS AG GENUSSCHEIN (MEDICAL PRODUCTS) 560,438
1,000 SYNGENTA AG (CHEMICALS & ALLIED PRODUCTS) 194,266
1,289 ZURICH FINANCIAL SERVICES AG (FINANCIAL SERVICES) 281,622
2,261,508
------------
TAIWAN: 1.03%
25,010 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED ADR (ELECTRONIC & OTHER ELECTRICAL
EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT) 197,579
------------
98 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT INTERNATIONAL CORE FUND
SHARES SECURITY NAME VALUE
- ----------------- ---------------------------------------------------------------------------------------------- ------------
UNITED KINGDOM: 16.74%
24,751 AVIVA PLC (INSURANCE CARRIERS) $ 140,251
33,877 BAE SYSTEMS PLC (TRANSPORTATION BY AIR) 184,363
12,546 BG GROUP PLC (OIL & GAS EXTRACTION) 173,657
7,710 BHP BILLITON PLC (COAL MINING) 149,540
54,572 BP PLC (OIL & GAS EXTRACTION) 421,265
25,882 BRITISH SKY BROADCASTING PLC (COMMUNICATIONS) 182,777
23,708 GLAXOSMITHKLINE PLC (CHEMICALS & ALLIED PRODUCTS) 440,916
21,071 INTERNATIONAL POWER PLC (ELECTRIC, GAS & SANITARY SERVICES) 73,427
110,426 LEGAL & GENERAL GROUP PLC (INSURANCE CARRIERS) 123,425
19,153 NATIONAL GRID PLC (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 189,260
11,610 ROYAL DUTCH SHELL PLC CLASS A (OIL & GAS EXTRACTION) 305,031
11,000 SABMILLER PLC (EATING & DRINKING PLACES) 184,721
22,736 SMITH & NEPHEW PLC (CHEMICALS & ALLIED PRODUCTS) 145,204
9,359 SMITHS GROUP PLC (ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT) 120,263
5,808 UNILEVER PLC (FOOD & KINDRED PRODUCTS) 133,409
116,196 VODAFONE GROUP PLC (COMMUNICATIONS) 237,929
3,205,438
------------
TOTAL COMMON STOCKS (COST $25,057,615) 18,541,097
------------
COLLATERAL FOR SECURITIES LENDING: 0.34%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 0.07%
3,183 AIM STIT-LIQUID ASSETS PORTFOLIO 3,183
3,183 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 3,183
3,183 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 3,183
3,183 DWS MONEY MARKET SERIES INSTITUTIONAL 3,183
12,732
------------
PRINCIPAL INTEREST RATE MATURITY DATE
- ----------------- ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 0.27%
$ 1,164 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 1,164
970 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 970
249 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 249
5,473 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $5,473) 0.08 01/02/2009 5,473
311 BANK OF IRELAND 0.15 01/02/2009 311
1,164 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 1,164
1,164 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 1,164
252 CHARIOT FUNDING LLC++ 0.28 01/05/2009 252
991 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 16
763 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 13
1,242 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 1,241
3,008 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES (MATURITY VALUE $3,008) 0.01 01/02/2009 3,008
4,619 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $4,619) 0.10 01/02/2009 4,619
1,194 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 1,194
1,358 E.ON AG++ 0.95 01/20/2009 1,358
621 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 621
4,619 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $4,619) 0.06 01/02/2009 4,619
3,665 GRYPHON FUNDING LIMITED (a) (i) 0.00 08/23/2009 1,534
2,872 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $2,872) 0.05 01/02/2009 2,872
Wells Fargo Advantage Variable Trust Funds 99
Portfolio of Investments -- December 31, 2008
VT INTERNATIONAL CORE FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------------- ---------------------------------------------------------------- ------------- -------------- ---------
COLLATERAL INVESTED IN OTHER ASSETS (continued)
$ 1,242 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40% 01/14/2009 $ 1,241
1,242 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 1,241
1,281 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 1,281
1,164 METLIFE SHORT TERM FUNDING++ 0.70 01/12/2009 1,164
1,164 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 1,164
4,619 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $4,619) 0.04 01/02/2009 4,619
1,087 PARK AVENUE RECEIVABLES++ 0.35 01/12/2009 1,087
776 PRUDENTIAL PLC++ 1.25 01/14/2009 776
272 PRUDENTIAL PLC 1.35 01/12/2009 272
194 PRUDENTIAL PLC 2.00 01/12/2009 194
1,164 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 1,162
583 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 583
1,320 UNICREDITO ITALIANO NY 3.15 01/05/2009 1,320
1,426 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 770
828 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 447
1,015 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 548
1,648 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 890
1,530 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 1,354
194 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 194
52,149
---------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $66,347) 64,881
---------
SHARES
- -----------------
SHORT-TERM INVESTMENTS: 3.01%
576,524 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ +++ 576,524
TOTAL SHORT-TERM INVESTMENTS (COST $576,524) 576,524
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $25,700,486)* 100.18% $19,182,502
OTHER ASSETS AND LIABILITIES, NET (0.18) (33,768)
------ -----------
TOTAL NET ASSETS 100.00% $19,148,734
------ -----------
- ----------
+ Non-income earning securities.
<< All or a portion of this security is on loan.
++ 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $576,524.
* Cost for federal income tax purposes is $25,817,777 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 767,767
Gross unrealized depreciation (7,403,042)
--------------
Net unrealized appreciation $ (6,635,275)
(depreciation)
The accompanying notes are an integral part of these financial statements.
100 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY CORE FUND
SHARES SECURITY NAME VALUE
- ----------------- --------------------------------------------------------------------------------- ------------
COMMON STOCKS: 97.71%
BUSINESS SERVICES: 11.25%
14,000 EBAY INCORPORATED+ $ 195,440
18,900 MICROSOFT CORPORATION 367,416
27,000 MONSTER WORLDWIDE INCORPORATED+ 326,430
3,000 OMNICOM GROUP INCORPORATED 80,760
10,400 YAHOO! INCORPORATED+ 126,880
1,096,926
------------
CHEMICALS & ALLIED PRODUCTS: 7.55%
10,000 BRISTOL-MYERS SQUIBB COMPANY 232,500
8,300 PFIZER INCORPORATED 146,993
9,500 WYETH 356,345
735,838
------------
COMMUNICATIONS: 3.84%
23,200 COMCAST CORPORATION CLASS A 374,680
------------
DEPOSITORY INSTITUTIONS: 7.51%
14,100 BANK OF AMERICA CORPORATION 198,528
7,000 BANK OF NEW YORK MELLON CORPORATION 198,310
18,200 CITIGROUP INCORPORATED 122,122
6,100 JPMORGAN CHASE & COMPANY 192,333
1,500 WESTERN UNION COMPANY 21,510
732,803
------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 14.25%
16,000 ANALOG DEVICES INCORPORATED 304,320
22,400 CISCO SYSTEMS INCORPORATED+ 365,120
17,500 GENERAL ELECTRIC COMPANY 283,500
37 NORTEL NETWORKS CORPORATION ADR+ << 10
24,000 NOVELLUS SYSTEMS INCORPORATED+ 296,160
8,700 TYCO ELECTRONICS LIMITED 141,027
1,390,137
------------
GENERAL MERCHANDISE STORES: 2.82%
4,900 WAL-MART STORES INCORPORATED 274,694
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 5.63%
27,800 DELL INCORPORATED+ 284,672
18,000 INTEL CORPORATION 263,880
548,552
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 1.90%
4,500 COVIDIEN LIMITED 163,080
700 ROCKWELL AUTOMATION INCORPORATED 22,568
185,648
------------
MISCELLANEOUS MANUFACTURING INDUSTRIES: 2.95%
13,300 TYCO INTERNATIONAL LIMITED 287,280
------------
MISCELLANEOUS RETAIL: 6.11%
19,500 STAPLES INCORPORATED 349,440
10,000 WALGREEN COMPANY 246,700
596,140
------------
Wells Fargo Advantage Variable Trust Funds 101
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY CORE FUND
SHARES SECURITY NAME VALUE
- ----------------- --------------------------------------------------------------------------------- ------------
MOTION PICTURES: 3.82%
37,000 TIME WARNER INCORPORATED $ 372,220
------------
NON-DEPOSITORY CREDIT INSTITUTIONS: 1.05%
5,500 AMERICAN EXPRESS COMPANY 102,025
------------
OIL & GAS EXTRACTION: 4.24%
6,300 DEVON ENERGY CORPORATION 413,973
------------
PETROLEUM REFINING & RELATED INDUSTRIES: 11.30%
5,200 CHEVRON CORPORATION 384,644
7,800 CONOCOPHILLIPS 404,040
14,500 VALERO ENERGY CORPORATION 313,780
1,102,464
------------
PRIMARY METAL INDUSTRIES: 2.47%
21,400 ALCOA INCORPORATED<< 240,964
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES: 3.45%
14,500 MCGRAW-HILL COMPANIES INCORPORATED 336,255
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 3.36%
11,900 MERRILL LYNCH & COMPANY INCORPORATED 138,516
11,800 MORGAN STANLEY<< 189,272
327,788
------------
TRANSPORTATION EQUIPMENT: 1.47%
7,900 JOHNSON CONTROLS INCORPORATED 143,463
------------
TRAVEL & RECREATION: 2.74%
11,000 CARNIVAL CORPORATION 267,520
------------
TOTAL COMMON STOCKS (COST $16,225,912) 9,529,370
------------
COLLATERAL FOR SECURITIES LENDING: 2.90%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 0.57%
13,855 AIM STIT-LIQUID ASSETS PORTFOLIO 13,855
13,855 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 13,855
13,855 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 13,855
13,855 DWS MONEY MARKET SERIES INSTITUTIONAL 13,855
55,420
------------
PRINCIPAL INTEREST RATE MATURITY DATE
- ----------------- ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 2.33%
$ 5,069 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 5,066
4,224 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 4,222
1,083 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 1,083
23,824 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $23,824) 0.08 01/02/2009 23,824
1,352 BANK OF IRELAND 0.15 01/02/2009 1,352
5,069 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 5,069
5,069 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 5,068
1,098 CHARIOT FUNDING LLC++ 0.28 01/05/2009 1,098
4,314 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 71
3,321 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 55
5,407 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 5,404
102 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY CORE FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------------- ---------------------------------------------------------------- ------------- ------------- ---------
COLLATERAL INVESTED IN OTHER ASSETS (continued)
$ 13,094 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $13,094) 0.01% 01/02/2009 $ 13,094
20,106 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $20,106) 0.10 01/02/2009 20,106
5,196 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 5,196
5,914 E.ON AG++ 0.95 01/20/2009 5,911
2,703 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 2,703
20,106 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $20,106) 0.06 01/02/2009 20,106
15,953 GRYPHON FUNDING LIMITED (a) (i) 0.00 08/23/2009 6,679
12,503 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $12,503) 0.05 01/02/2009 12,503
5,407 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 5,404
5,407 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 5,404
5,576 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 5,576
5,069 METLIFE SHORT TERM FUNDING++ 0.70 01/12/2009 5,068
5,069 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 5,067
20,106 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $20,106) 0.04 01/02/2009 20,106
4,731 PARK AVENUE RECEIVABLES++ 0.35 01/12/2009 4,730
3,379 PRUDENTIAL PLC++ 1.25 01/14/2009 3,378
1,183 PRUDENTIAL PLC 1.35 01/12/2009 1,182
845 PRUDENTIAL PLC 2.00 01/12/2009 844
5,069 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 5,069
2,540 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 2,540
5,745 UNICREDITO ITALIANO NY 3.15 01/05/2009 5,746
6,206 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 3,351
3,604 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 1,946
4,420 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 2,387
7,175 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 3,874
6,662 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 5,895
845 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 845
227,022
---------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $297,687) 282,442
---------
SHARES
- -----------------
SHORT-TERM INVESTMENTS: 2.72%
265,492 Wells Fargo Advantage Money Market Trust~++ 265,492
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $265,492) 265,492
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $16,789,091)* 103.33% $10,077,304
OTHER ASSETS AND LIABILITIES, NET (3.33) (324,944)
------ -----------
TOTAL NET ASSETS 100.00% $ 9,752,360
------ -----------
Wells Fargo Advantage Variable Trust Funds 103
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY CORE FUND
- ----------
+ Non-income earning securities.
<< All or a portion of this security is on loan.
++ 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $265,492.
* Cost for federal income tax purposes is $16,851,391 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 129,669
Gross unrealized depreciation (6,903,756)
------------
Net unrealized appreciation (depreciation) $ (6,774,087)
The accompanying notes are an integral part of these financial statements.
104 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY GROWTH FUND
SHARES SECURITY NAME VALUE
- ----------------- --------------------------------------------------------------------------------- -------------
COMMON STOCKS: 98.29%
APPAREL & ACCESSORY STORES: 1.74%
23,600 KOHL'S CORPORATION+ $ 854,320
-------------
BIOPHARMACEUTICALS: 7.94%
26,100 GENENTECH INCORPORATED+ 2,163,951
26,000 GENZYME CORPORATION+ 1,725,620
3,889,571
-------------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS: 6.18%
36,200 FASTENAL COMPANY<< 1,261,570
82,200 LOWE'S COMPANIES INCORPORATED 1,768,944
3,030,514
-------------
BUSINESS SERVICES: 16.55%
22,100 AUTOMATIC DATA PROCESSING INCORPORATED 869,414
74,000 EBAY INCORPORATED+ 1,033,040
11,800 FACTSET RESEARCH SYSTEMS INCORPORATED<< 522,032
8,100 GOOGLE INCORPORATED CLASS A+ 2,491,965
164,270 MICROSOFT CORPORATION 3,193,409
8,109,860
-------------
CHEMICALS & ALLIED PRODUCTS: 3.83%
32,500 AMGEN INCORPORATED+ 1,876,875
-------------
DEPOSITORY INSTITUTIONS: 1.07%
36,700 WESTERN UNION COMPANY 526,278
-------------
E-COMMERCE/SERVICES: 1.40%
13,400 AMAZON.COM INCORPORATED+ 687,152
-------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 11.98%
168,900 CISCO SYSTEMS INCORPORATED+ 2,753,070
41,100 LINEAR TECHNOLOGY CORPORATION<< 909,132
83,100 NOKIA OYJ ADR 1,296,360
25,550 QUALCOMM INCORPORATED 915,457
5,874,019
-------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES: 4.11%
76,650 PAYCHEX INCORPORATED 2,014,362
-------------
GENERAL MERCHANDISE STORES: 6.97%
58,700 TARGET CORPORATION<< 2,026,911
24,800 WAL-MART STORES INCORPORATED 1,390,288
3,417,199
-------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 6.63%
9,400 APPLE INCORPORATED+ 802,290
56,000 EMC CORPORATION+ 586,320
126,900 INTEL CORPORATION 1,860,354
3,248,964
-------------
MEDICAL EQUIPMENT & SUPPLIES: 4.75%
74,175 MEDTRONIC INCORPORATED 2,330,579
-------------
PERSONAL SERVICES: 1.13%
23,800 CINTAS CORPORATION 552,874
-------------
Wells Fargo Advantage Variable Trust Funds 105
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY GROWTH FUND
SHARES SECURITY NAME VALUE
- ----------------- --------------------------------------------------------------------------------- -----------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 19.02%
188,350 CHARLES SCHWAB CORPORATION $ 3,045,620
3,100 CME GROUP INCORPORATED 645,141
23,700 FRANKLIN RESOURCES INCORPORATED 1,511,586
34,625 GOLDMAN SACHS GROUP INCORPORATED 2,922,004
33,800 T. ROWE PRICE GROUP INCORPORATED<< 1,197,872
9,322,223
-----------
TRANSPORTATION SERVICES: 4.99%
24,800 C.H. ROBINSON WORLDWIDE INCORPORATED 1,364,744
32,500 EXPEDITORS INTERNATIONAL OF WASHINGTON INCORPORATED 1,081,273
2,446,017
-----------
TOTAL COMMON STOCKS (COST $62,451,472) 48,180,807
-----------
COLLATERAL FOR SECURITIES LENDING: 11.04%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 2.17%
265,499 AIM STIT-LIQUID ASSETS PORTFOLIO 265,499
265,499 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 265,499
265,499 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 265,499
265,499 DWS MONEY MARKET SERIES INSTITUTIONAL 265,499
1,061,996
-----------
PRINCIPAL INTEREST RATE MATURITY DATE
- ----------------- ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 8.87%
$ 97,134 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 97,079
80,945 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 80,907
20,754 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 20,746
456,528 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $456,530) 0.08 01/02/2009 456,528
25,902 BANK OF IRELAND 0.15 01/02/2009 25,902
97,134 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 97,130
97,134 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 97,114
21,046 CHARIOT FUNDING LLC++ 0.28 01/05/2009 21,045
82,663 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 1,364
63,642 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 1,050
103,609 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 103,563
250,929 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $250,929) 0.01 01/02/2009 250,929
385,297 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $385,299) 0.10 01/02/2009 385,297
99,562 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 99,562
113,323 E.ON AG++ 0.95 01/20/2009 113,266
51,805 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 51,796
385,297 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $385,298) 0.06 01/02/2009 385,297
305,702 GRYPHON FUNDING LIMITED (a) (i) 0.00 08/23/2009 127,997
239,596 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $239,597) 0.05 01/02/2009 239,596
103,609 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 103,557
103,609 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 103,563
106,847 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 106,845
97,134 METLIFE SHORT TERM FUNDING LLC++ 0.70 01/12/2009 97,113
97,134 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 97,104
106 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT LARGE COMPANY GROWTH FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------------- ----------------------------------------------------------- ------------- ------------- -----------
COLLATERAL INVESTED IN OTHER ASSETS (CONTINUED)
$ 385,297 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $385,298) 0.04% 01/02/2009 $ 385,297
90,658 PARK AVENUE RECEIVABLES++ 0.35 01/12/2009 90,648
64,756 PRUDENTIAL PLC++ 1.25 01/14/2009 64,727
22,665 PRUDENTIAL PLC 1.35 01/12/2009 22,655
16,189 PRUDENTIAL PLC 2.00 01/12/2009 16,179
97,134 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 97,107
48,674 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 48,672
110,085 UNICREDITO ITALIANO NY 3.15 01/05/2009 110,105
118,931 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 64,223
69,065 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 37,295
84,701 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 45,739
137,494 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 74,247
127,667 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 112,974
16,189 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 16,188
4,350,406
-----------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $5,494,777) 5,412,402
-----------
SHARES
- -----------------
SHORT-TERM INVESTMENTS: 1.93%
945,031 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ +++ 945,031
------------
TOTAL SHORT-TERM INVESTMENTS (COST $945,031) 945,031
TOTAL INVESTMENTS IN SECURITIES
(COST $68,891,280)* 111.26% $ 54,538,240
Other Assets and Liabilities, Net (11.26) (5,521,532)
------ ------------
TOTAL NET ASSETS 100.00% $ 49,016,708
------ ------------
- ----------
+ Non-income earning securities.
<< 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $945,031.
* Cost for federal income tax purposes is $70,004,177 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 1,707,413
Gross unrealized depreciation (17,173,350)
------------
Net unrealized appreciation (depreciation) $(15,465,937)
------------
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 107
Portfolio of Investments -- December 31, 2008
VT MONEY MARKET FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------------- ----------------------------------------------------------- ------------- ------------- -----------
CERTIFICATES OF DEPOSIT: 4.53%
$ 1,000,000 BANK OF SCOTLAND PLC (NEW YORK)+/- 2.55% 08/14/2009 $ 1,000,000
250,000 BARCLAYS BANK PLC (NEW YORK)+/- 0.97 02/27/2009 250,000
500,000 BNP PARIBAS (NEW YORK) 3.12 02/20/2009 500,000
500,000 CALYON (NEW YORK) 3.00 01/20/2009 500,000
250,000 RABOBANK NEDERLAND NV (NEW YORK) 3.02 03/09/2009 250,000
250,000 U.S. BANK NATIONAL ASSOCIATION 2.86 04/20/2009 250,000
TOTAL CERTIFICATES OF DEPOSIT (COST $2,750,000) 2,750,000
-----------
COMMERCIAL PAPER: 51.90%
500,000 ACTS RETIREMENT-LIFE COMMUNITIES INCORPORATED 2.00 01/08/2009 499,833
400,000 ALLIED IRISH BANKS PLC++ 2.08 02/13/2009 399,029
300,000 ALLIED IRISH BANKS PLC++ 2.25 03/12/2009 298,706
1,000,000 AMSTEL FUNDING CORPORATION++ 2.60 01/09/2009 999,494
250,000 ANZ NATIONAL INTERNATIONAL LIMITED++ 3.04 04/20/2009 247,720
200,000 BASF SE++ 1.90 01/12/2009 199,894
250,000 BASF SE++ 1.90 02/11/2009 249,472
400,000 BELMONT FUNDING LLC++ 1.40 01/08/2009 399,907
250,000 CAFCO LLC++ 1.65 02/17/2009 249,473
250,000 CHARTA LLC++ 1.65 02/13/2009 249,519
500,000 CITIBANK CREDIT CARD ISSUANCE TRUST++ 1.70 02/25/2009 498,725
250,000 CITIBANK CREDIT CARD ISSUANCE TRUST++ 1.80 03/03/2009 249,250
250,000 CITIBANK OMNI MASTER TRUST++ 4.50 01/22/2009 249,375
250,000 CITIBANK OMNI MASTER TRUST++ 4.50 01/26/2009 249,250
250,000 CITIBANK OMNI MASTER TRUST++ 4.50 01/29/2009 249,156
1,000,000 CLIPPER RECEIVABLES COMPANY LLC++ 1.25 01/06/2009 999,862
500,000 CME GROUP INCORPORATED++ 3.00 01/13/2009 499,542
250,000 CME GROUP INCORPORATED++ 2.45 01/14/2009 249,796
500,000 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.00 01/06/2009 499,944
250,000 CRC FUNDING LLC++ 1.65 02/17/2009 249,473
500,000 E.ON AG++ 2.40 01/22/2009 499,333
600,000 EBBETS FUNDING LLC++ 1.40 01/08/2009 599,860
250,000 EDISON ASSET SECURITIES LLC++ 1.75 02/19/2009 249,417
250,000 EKSPORTFINANS ASA++ 1.80 03/09/2009 249,175
300,000 ERASMUS CAPITAL CORPORATION++ 2.50 01/02/2009 300,000
250,000 FAIRWAY FINANCE CORPORATION++ 4.40 01/14/2009 249,633
300,000 FALCON ASSET SECURITY COMPANY LLC++ 1.50 02/10/2009 299,513
250,000 FORTIS FUNDING LLC++ 3.10 03/05/2009 248,665
1,000,000 FORTIS FUNDING LLC++ 1.50 01/05/2009 999,875
1,000,000 GALLEON CAPITAL LLC++ 1.25 01/06/2009 999,862
400,000 GE CAPITAL 1.85 02/18/2009 399,034
250,000 GOVCO LLC++ 1.60 02/11/2009 249,556
250,000 GOVCO LLC++ 2.50 04/27/2009 248,003
1,000,000 GRAMPIAN FUNDING LLC++ 0.70 01/07/2009 999,903
250,000 IRISH LIFE & PERMANENT LLC++ 2.85 03/05/2009 248,773
250,000 IRISH LIFE & PERMANENT LLC++ 4.45 01/20/2009 249,444
400,000 KBC FINANCIAL PRODUCTION INTERNATIONAL LIMITED++ 2.15 06/25/2009 395,843
250,000 KBC FINANCIAL PRODUCTION INTERNATIONAL LIMITED++ 3.01 02/05/2009 249,289
500,000 KINGDOM OF DENMARK 1.52 03/04/2009 498,712
500,000 KINGDOM OF DENMARK 1.55 03/16/2009 498,428
600,000 LEXINGTON PARKER CAPITAL++ 1.00 01/06/2009 599,933
500,000 LIBERTY STREET FUNDING LLC++ 4.60 01/15/2009 499,169
250,000 LIBERTY STREET FUNDING LLC++ 4.00 01/23/2009 249,417
250,000 LIBERTY STREET FUNDING LLC++ 2.00 03/02/2009 249,181
500,000 LMA AMERICAS LLC++ 2.00 02/27/2009 498,444
500,000 MATCHPOINT MASTER TRUST++ 4.45 01/13/2009 499,320
108 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT MONEY MARKET FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------------- ----------------------------------------------------------- ------------- ------------- -----------
COMMERCIAL PAPER (continued)
$ 1,000,000 MERRILL LYNCH & COMPANY TLGP 2.42% 01/21/2009 $ 998,725
500,000 METLIFE SHORT TERM FUNDING LLC++ 4.50 01/16/2009 499,125
250,000 METLIFE SHORT TERM FUNDING LLC++ 3.80 01/23/2009 249,446
250,000 METLIFE SHORT TERM FUNDING LLC++ 2.11 02/13/2009 249,385
400,000 MONT BLANC CAPITAL CORPORATION++ 2.00 03/09/2009 398,533
300,000 NATIONWIDE BUILDING SOCIETY++ 3.04 01/12/2009 299,747
250,000 PICAROS FUNDING LLC++ 4.75 01/12/2009 249,670
250,000 RANGER FUNDING COMPANY LLC++ 1.60 02/24/2009 249,411
250,000 REGENCY MARKETS # 1 LLC++ 1.75 01/14/2009 249,854
250,000 REGENCY MARKETS # 1 LLC++ 4.40 01/20/2009 249,450
350,000 REGENCY MARKETS # 1 LLC++ 2.00 02/17/2009 349,106
250,000 SCALDIS CAPITAL LLC++ 2.40 02/17/2009 249,233
500,000 SCALDIS CAPITAL LLC++ 2.35 02/19/2009 498,433
250,000 SHEFFIELD RECEIVABLES CORPORATION++ 1.60 02/06/2009 249,611
350,000 STARBIRD FUNDING CORPORATION++ 2.00 01/16/2009 349,728
250,000 SURREY FUNDING CORPORATION++ 4.50 01/27/2009 249,219
250,000 SURREY FUNDING CORPORATION++ 4.50 01/28/2009 249,188
300,000 SWEDISH EXPORT CREDIT CORPORATION 1.72 01/27/2009 299,642
250,000 SWEDISH EXPORT CREDIT CORPORATION 1.70 02/09/2009 249,551
300,000 SWEDISH EXPORT CREDIT CORPORATION 1.83 03/13/2009 298,933
250,000 THAMES ASSET GLOBAL SECURITIZATION INCORPORATED++ 4.50 01/26/2009 249,250
250,000 THAMES ASSET GLOBAL SECURITIZATION INCORPORATED++ 2.00 02/25/2009 249,250
350,000 THAMES ASSET GLOBAL SECURITIZATION INCORPORATED++ 2.20 03/09/2009 348,588
250,000 THUNDER BAY FUNDING LLC++ 1.65 03/05/2009 249,290
250,000 TICONDEROGA FUNDING LLC++ 1.50 01/09/2009 249,927
250,000 TOYOTA MOTOR CREDIT CORPORATION 2.20 02/17/2009 249,297
500,000 TOYOTA MOTOR CREDIT CORPORATION 2.30 03/03/2009 498,083
250,000 TULIP FUNDING CORPORATION++ 4.60 01/15/2009 249,585
500,000 TULIP FUNDING CORPORATION++ 4.55 01/21/2009 498,799
500,000 TULIP FUNDING CORPORATION++ 1.75 03/02/2009 498,566
600,000 UBS FINANCE DELAWARE LLC 2.28 03/06/2009 597,606
1,000,000 VERSAILLES COMMERCIAL PAPER LLC++ 1.50 01/07/2009 999,792
500,000 WESTPAC SECURITIES NZ LIMITED++ 1.64 03/18/2009 498,292
250,000 WINDMILL FUNDING CORPORATION++ 4.60 01/07/2009 249,840
TOTAL COMMERCIAL PAPER (COST $31,537,357) 31,537,357
-----------
CORPORATE BONDS & NOTES: 8.56%
1,000,000 BANK OF IRELAND+/- ++ 4.32 10/02/2009 1,000,000
300,000 BASF FINANCE EUROPE NV+/- ++ 4.51 11/20/2009 300,000
300,000 BES FINANCE LIMITED+/- ++ 1.96 03/02/2009 300,000
250,000 CAISSE NATIONALE DES CAISSES D'EPARGNE ET DE PREVOYANCE+/- ++ 2.36 09/10/2009 250,000
250,000 COMMONWEALTH BANK (AUSTRALIA)+/- ++ 4.35 10/02/2009 250,000
500,000 DNB NOR BANK ASA+/- ++ 0.48 03/25/2009 500,000
100,000 GBG LLC+/- ++ SS 4.00 09/01/2027 100,000
250,000 IBM INTERNATIONAL GROUP CAPITAL LLC+/- ++ 2.39 09/25/2009 250,000
500,000 INTESA BANK (IRELAND) PLC+/- ++ 0.49 03/25/2009 500,000
100,000 LTF REAL ESTATE VRDN I LLC+/- ++ SS 1.75 06/01/2033 100,000
500,000 RABOBANK NEDERLAND NV+/- ++ 2.58 10/09/2009 500,000
250,000 ROYAL BANK OF CANADA+/- ++ 2.45 10/15/2009 250,000
400,000 ROYAL BANK OF SCOTLAND GROUP PLC+/- ++ 2.40 10/09/2009 400,000
250,000 SVENSKA HANDELSBANKEN AB+/- ++ 3.89 08/25/2009 250,000
250,000 WACHOVIA BANK NA+/- (l) 4.42 05/01/2009 250,000
TOTAL CORPORATE BONDS & NOTES (COST $5,200,000) 5,200,000
-----------
Wells Fargo Advantage Variable Trust Funds 109
Portfolio of Investments -- December 31, 2008
VT MONEY MARKET FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------------- ------------------------------ ------------- ------------- -----------
EXTENDABLE BONDS: 1.15%
$ 500,000 MERRILL LYNCH & COMPANY+/- 0.60% 03/24/2009 $ 500,000
200,000 MERRILL LYNCH & COMPANY+/- 1.02 03/18/2009 200,000
TOTAL EXTENDABLE BONDS (COST $700,000) 700,000
-----------
MEDIUM TERM NOTES: 1.64%
250,000 BEAR STEARNS COMPANY INCORPORATED+/- 1.56 03/30/2009 249,312
500,000 GENERAL ELECTRIC CAPITAL CORPORATION+/- 1.89 10/09/2009 500,000
250,000 ING USA GLOBAL FUNDING TRUST+/-(i) 2.03 10/19/2009 250,000
TOTAL MEDIUM TERM NOTES (COST$999,312) 999,312
-----------
MUNICIPAL BONDS & NOTES: 1.25%
300,000 COLORADO HOUSING & FINANCE AUTHORITY SINGLE TAXABLE CL I
SERIES A-2 (HOUSING REVENUE, DEXIA INSURED)+/- ss 6.25 05/01/2038 300,000
460,000 MISSISSIPPI STATE TAXABLE NISSAN PROJECT A
(GO UNLIMITED, BANK OF AMERICA NA LOC)+/- ss 0.95 11/01/2028 459,979
TOTAL MUNICIPAL BONDS & NOTES (COST $759,979) 759,979
-----------
SECURED MASTER NOTE AGREEMENT: 3.68%
1,102,000 BANK OF AMERICA SECURITIES LLC+/- ss (e) 0.17 1,102,000
1,137,000 CITIGROUP GLOBAL MARKETS INCORPORATED+/- ss (e) 0.17 1,137,000
TOTAL SECURED MASTER NOTE AGREEMENT (COST $2,239,000) 2,239,000
-----------
REPURCHASE AGREEMENTS: 15.48%
3,000,000 BANK OF AMERICA NA - 102% COLLATERALIZED BY US GOVERNMENT
SECURITIES (MATURITY VALUE $3,000,013) 0.08 01/02/2009 3,000,000
3,404,785 CITIGROUP GLOBAL MARKETS - 102% COLLATERALIZED BY US
GOVERNMENT SECURITIES (MATURITY VALUE $3,404,787) 0.10 01/02/2009 3,404,785
1,000,000 GOLDMAN SACHS & COMPANY - 102% COLLATERALIZED BY US
GOVERNMENT SECURITIES (MATURITY VALUE $1,000,003)(i) 1.00 01/13/2009 1,000,000
1,000,000 GOLDMAN SACHS & COMPANY - 102% COLLATERALIZED BY US
GOVERNMENT SECURITIES (MATURITY VALUE $1,000,004) 0.07 01/05/2009 1,000,000
1,000,000 GOLDMAN SACHS & COMPANY - 102% COLLATERALIZED BY US
GOVERNMENT SECURITIES (MATURITY VALUE $1,000,007) 0.12 01/06/2009 1,000,000
TOTAL REPURCHASE AGREEMENTS (COST $9,404,785) 9,404,785
-----------
TIME DEPOSITS: 11.35%
1,000,000 DANSKE BANK AS COPENHAGEN 1.00 01/02/2009 1,000,000
900,000 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 900,000
1,000,000 KBC BANK NV BRUSSELS 0.03 01/02/2009 1,000,000
1,000,000 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 1,000,000
1,000,000 NATEXIS BANQUES POPULAIR 1.00 01/02/2009 1,000,000
1,000,000 NORDEA BANK AB 0.02 01/02/2009 1,000,000
1,000,000 SOCIETE GENERALE CAYMAN ISLANDS 0.05 01/07/2009 1,000,000
TOTAL TIME DEPOSITS (COST $6,900,000) 6,900,000
-----------
TOTAL INVESTMENTS IN SECURITIES (COST $60,490,433)* 99.54% $60,490,433
Other Assets and Liabilities, Net 0.46 277,139
------ -----------
TOTAL NET ASSETS 100.00% $60,767,572
------ -----------
110 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT MONEY MARKET FUND
- ----------
+/- Variable rate investments.
++ 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.
(i) Illiquid security.
ss These securities are subject to a demand feature which reduces the
effective maturity.
(e) The security is a private placement with no stated maturity date.
(l) Long-term security of an affiliate of the Fund with a cost of $250,000.
* 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.
Wells Fargo Advantage Variable Trust Funds 111
Portfolio of Investments -- December 31, 2008
VT OPPORTUNITY FUND
SHARES SECURITY NAME VALUE
- ----------------- ---------------------------------------------------------------------------------------------- -----------
COMMON STOCKS: 88.75%
AMUSEMENT & RECREATION SERVICES: 1.01%
320,000 INTERNATIONAL GAME TECHNOLOGY $ 3,804,800
-----------
APPAREL & ACCESSORY STORES: 1.09%
310,000 NORDSTROM INCORPORATED<< 4,126,100
-----------
BUSINESS SERVICES: 9.71%
377,000 AKAMAI TECHNOLOGIES INCORPORATED<< + 5,688,930
265,000 ELECTRONIC ARTS INCORPORATED+ 4,250,600
160,000 FISERV INCORPORATED+ 5,819,200
337,000 IMS HEALTH INCORPORATED 5,108,920
355,000 NCR CORPORATION+ 5,019,700
198,100 OMNICOM GROUP INCORPORATED 5,332,852
415,000 RED HAT INCORPORATED+ 5,486,300
36,706,502
-----------
CHEMICALS & ALLIED PRODUCTS: 4.98%
102,620 AMGEN INCORPORATED+ 5,926,305
83,000 CLOROX COMPANY 4,611,480
140,000 PRAXAIR INCORPORATED 8,310,400
18,848,185
-----------
COAL MINING: 0.39%
65,000 PEABODY ENERGY CORPORATION 1,478,750
-----------
COMMUNICATIONS: 6.33%
375,000 CABLEVISION SYSTEMS CORPORATION NEW YORK GROUP CLASS A 6,315,000
477,000 COMCAST CORPORATION CLASS A 7,703,550
226,000 LIBERTY MEDIA CORPORATION ENTERTAINMENT CLASS A+ 3,950,480
605,000 LIBERTY MEDIA CORPORATION INTERACTIVE SERIES A+ 1,887,600
185,000 SCRIPPS NETWORKS INTERACTIVE INCORPORATED 4,070,000
23,926,630
-----------
DEPOSITORY INSTITUTIONS: 3.95%
230,000 BANK OF NEW YORK MELLON CORPORATION 6,515,900
129,000 BB&T CORPORATION 3,542,340
190,000 MARSHALL & ILSLEY CORPORATION<< 2,591,600
65,000 TORONTO-DOMINION BANK 2,287,768
14,937,608
-----------
EATING & DRINKING PLACES: 1.77%
237,023 DARDEN RESTAURANTS INCORPORATED 6,679,308
-----------
EDUCATIONAL SERVICES: 1.63%
80,442 APOLLO GROUP INCORPORATED CLASS A+ 6,163,466
-----------
ELECTRIC, GAS & SANITARY SERVICES: 1.86%
284,500 REPUBLIC SERVICES INCORPORATED 7,052,755
-----------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 10.08%
200,000 AMPHENOL CORPORATION CLASS A 4,796,000
4,190,000 ARM HOLDINGS PLC 5,304,470
285,000 MEMC ELECTRONIC MATERIALS INCORPORATED+ 4,069,800
335,000 MICROSEMI CORPORATION+ 4,234,400
395,000 NETAPP INCORPORATED<< + 5,518,150
1,302,000 ON SEMICONDUCTOR CORPORATION<< + 4,426,800
112 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT OPPORTUNITY FUND
SHARES SECURITY NAME VALUE
- ------------ ----------------------------------------------------------------------------- ------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT (continued)
318,000 POLYCOM INCORPORATED<< + $ 4,296,180
140,000 ROCKWELL COLLINS INCORPORATED 5,472,600
38,118,400
------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES: 1.68%
194,000 ACCENTURE LIMITED CLASS A 6,361,260
------------
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT: 2.67%
170,000 CROWN HOLDINGS INCORPORATED+ 3,264,000
195,000 ILLINOIS TOOL WORKS INCORPORATED 6,834,750
10,098,750
------------
FOOD & KINDRED PRODUCTS: 1.43%
240,000 PEPSI BOTTLING GROUP INCORPORATED 5,402,400
------------
FOOD STORES: 1.01%
145,000 KROGER COMPANY 3,829,450
------------
GENERAL MERCHANDISE STORES: 1.20%
132,000 TARGET CORPORATION<< 4,557,960
------------
HEALTH SERVICES: 1.11%
2,350,000 HEALTH MANAGEMENT ASSOCIATION INCORPORATED CLASS A+ 4,206,500
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 5.45%
175,000 DOVER CORPORATION 5,761,000
175,000 NATIONAL OILWELL VARCO INCORPORATED+ 4,277,000
255,000 PALL CORPORATION 7,249,650
750,000 SEAGATE TECHNOLOGY 3,322,500
20,610,150
------------
INSURANCE CARRIERS: 5.30%
145,000 ACE LIMITED 7,673,400
160,000 HCC INSURANCE HOLDINGS INCORPORATED 4,280,000
157,000 RENAISSANCERE HOLDINGS LIMITED 8,094,920
20,048,320
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 5.79%
305,000 COOPER COMPANIES INCORPORATED 5,002,000
190,000 RESMED INCORPORATED+ 7,121,200
117,200 ROCKWELL AUTOMATION INCORPORATED 3,778,528
163,500 WATERS CORPORATION+ 5,992,275
21,894,003
------------
MEDICAL EQUIPMENT & SUPPLIES: 1.37%
165,000 MEDTRONIC INCORPORATED 5,184,300
------------
MEDICAL PRODUCTS: 1.23%
115,000 ZIMMER HOLDINGS INCORPORATED+ 4,648,300
------------
METAL MINING: 0.23%
35,000 FREEPORT-MCMORAN COPPER & GOLD INCORPORATED CLASS B+ 855,400
------------
MISCELLANEOUS RETAIL: 3.02%
173,000 CVS CAREMARK CORPORATION 4,972,020
360,000 STAPLES INCORPORATED 6,451,200
11,423,220
------------
Wells Fargo Advantage Variable Trust Funds 113
Portfolio of Investments -- December 31, 2008
VT OPPORTUNITY FUND
SHARES SECURITY NAME VALUE
- ------------ ----------------------------------------------------------------------------- -------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING: 1.27%
183,520 J.B. HUNT TRANSPORT SERVICES INCORPORATED $ 4,821,070
-------------
OIL & GAS EXTRACTION: 5.76%
30,000 APACHE CORPORATION 2,235,900
143,000 TRANSOCEAN LIMITED+ 6,756,750
545,000 WEATHERFORD INTERNATIONAL LIMITED+ 5,896,900
195,000 XTO ENERGY INCORPORATED 6,877,650
21,767,200
-------------
PERSONAL SERVICES: 0.89%
230,700 REGIS CORPORATION 3,352,071
-------------
PRIMARY METAL INDUSTRIES: 1.05%
86,000 NUCOR CORPORATION 3,973,200
-------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 1.80%
470,800 INVESCO LIMITED 6,798,352
-------------
TRANSPORTATION BY AIR: 0.83%
380,000 TAM SA ADR<< + 3,131,200
-------------
TRANSPORTATION EQUIPMENT: 1.51%
315,000 JOHNSON CONTROLS INCORPORATED 5,720,400
-------------
TRAVEL & RECREATION: 1.35%
210,000 CARNIVAL CORPORATION 5,107,200
-------------
TOTAL COMMON STOCKS (COST $ 463,633,025) 335,633,210
-------------
INVESTMENT COMPANIES: 3.91%
STOCK FUNDS: 3.91%
180,000 UTILITIES SELECT SECTOR SPDR FUND 5,225,400
132,100 VANGUARD REIT ETF 4,815,046
78,000 VANGUARD UTILITIES ETF 4,761,900
14,802,346
-------------
TOTAL INVESTMENT COMPANIES (COST $ 14,617,263) 14,802,346
-------------
RIGHTS: 0.00%
230,000 SEAGATE TECHNOLOGY RIGHTS+(a) 0
TOTAL RIGHTS (COST $ 0) 0
-------------
COLLATERAL FOR SECURITIES LENDING: 4.83%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 0.95%
895,968 AIM STIT-LIQUID ASSETS PORTFOLIO 895,968
895,968 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 895,968
895,968 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 895,968
895,968 DWS MONEY MARKET SERIES INSTITUTIONAL 895,968
3,583,872
-------------
PRINCIPAL INTEREST RATE MATURITY DATE
- ------------ ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 3.88%
$ 327,793 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 327,608
273,161 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 273,034
70,039 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 70,011
114 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT OPPORTUNITY FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ------------ ------------------------------------------------------------------- ------------- ------------- ------------
COLLATERAL INVESTED IN OTHER ASSETS (continued)
$ 1,540,629 BANK of America Repurchase Agreement - 102% Collateralized by
Mortgage Backed Securities (Maturity Value $ 1,540,636) 0.08% 01/02/2009 $ 1,540,629
87,412 BANK OF IRELAND 0.15 01/02/2009 87,412
327,793 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 327,782
327,793 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 327,728
71,022 CHARIOT FUNDING LLC++ 0.28 01/05/2009 71,020
278,960 CHEYNE FINANCE LLC#### (a) (i)++ +/- 0.00 02/25/2008 4,603
214,771 CHEYNE FINANCE LLC#### (a) (i)++ +/- 0.00 05/19/2008 3,544
349,646 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 349,490
846,799 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES (MATURITY VALUE $846,799) 0.01 01/02/2009 846,799
1,300,247 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,300,254) 0.10 01/02/2009 1,300,247
335,988 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 335,988
382,426 E.ON AG++ 0.95 01/20/2009 382,234
174,823 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 174,794
1,300,247 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,300,251) 0.06 01/02/2009 1,300,247
1,031,641 GRYPHON FUNDING LIMITED(a) (i) 0.00 08/23/2009 431,948
808,557 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $808,559) 0.05 01/02/2009 808,557
349,646 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 349,469
349,646 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 349,490
360,573 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 360,573
327,793 METLIFE SHORT TERM FUNDING LLC++ 0.70 01/12/2009 327,723
327,793 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 327,693
1,300,247 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,300,250) 0.04 01/02/2009 1,300,247
305,940 PARK AVENUE RECEIVABLES COMPANY LLC++ 0.35 01/12/2009 305,908
218,529 PRUDENTIAL PLC++ 1.25 01/14/2009 218,430
76,485 PRUDENTIAL PLC 1.35 01/12/2009 76,454
54,632 PRUDENTIAL PLC 2.00 01/12/2009 54,599
327,793 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 327,703
164,257 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 164,250
371,499 UNICREDITO ITALIANO NY 3.15 01/05/2009 371,578
401,352 VICTORIA FINANCE LLC#### (a) (i) ++ +/- 0.11 07/28/2008 216,730
233,072 VICTORIA FINANCE LLC#### (a) (i) ++ +/- 0.14 08/07/2008 125,859
285,839 VICTORIA FINANCE LLC#### (a) (i) ++ +/- 1.43 04/03/2008 154,353
463,994 VICTORIA FINANCE LLC#### (a) (i) ++ +/- 1.44 02/15/2008 250,557
430,832 WHITE PINE FINANCE LLC#### (a) (i) ++ +/- 1.39 02/22/2008 381,241
54,632 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 54,629
14,681,161
------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $ 19,843,913) 18,265,033
------------
Wells Fargo Advantage Variable Trust Funds 115
Portfolio of Investments -- December 31, 2008
VT OPPORTUNITY FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------- -------------
SHORT-TERM INVESTMENTS: 7.97%
30,145,145 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ +++ $ 30,145,145
TOTAL SHORT-TERM INVESTMENTS (COST $30,145,145) 30,145,145
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $528,239,346)* 105.46% $ 398,845,734
OTHER ASSETS AND LIABILITIES, NET (5.46) (20,648,245)
------ -------------
TOTAL NET ASSETS 100.00% $ 378,197,489
------ -------------
- ----------
<< All or a portion of this security is on loan.
+ Non-income earning securities.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
++ 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.
+/- 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.
+++ Short-term security of an affiliate of the Fund with a cost of
$30,145,145.
* Cost for federal income tax purposes is $532,494,851 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 22,167,365
Gross unrealized depreciation (155,816,482)
--------------
Net unrealized appreciation (depreciation) $ (133,649,117)
The accompanying notes are an integral part of these financial statements.
116 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT SMALL CAP GROWTH FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------------ ------------
COMMON STOCKS: 101.52%
AMUSEMENT & RECREATION SERVICES: 2.22%
90,697 WMS INDUSTRIES INCORPORATED+ << $ 2,439,749
------------
AUTOMOTIVE REPAIR, SERVICES & PARKING: 1.65%
144,242 WRIGHT EXPRESS CORPORATION+ 1,817,449
------------
BUSINESS SERVICES: 22.70%
26,041 BANKRATE INCORPORATED+ << 989,558
51,600 FORRESTER RESEARCH INCORPORATED+ 1,455,636
104,599 GARTNER INCORPORATED+ 1,865,000
338,820 GLOBAL CASH ACCESS INCORPORATED+ 752,180
259,911 LAWSON SOFTWARE INCORPORATED+ 1,231,978
209,219 MARCHEX INCORPORATED CLASS B 1,219,747
46,300 MONSTER WORLDWIDE INCORPORATED+ 559,767
216,894 OMNITURE INCORPORATED+ << 2,307,752
300,334 ON ASSIGNMENT INCORPORATED+ 1,702,894
47,949 PHASE FORWARD INCORPORATED+ 600,321
190,000 SAPIENT CORPORATION+ 843,600
610,736 SKILLSOFT PLC ADR+ 4,360,655
192,034 SYKES ENTERPRISES INCORPORATED+ 3,671,690
125,758 SYNCHRONOSS TECHNOLOGIES INCORPORATED+ 1,340,580
153,522 TELETECH HOLDINGS INCORPORATED+ 1,281,909
95,032 THE KNOT INCORPORATED+ 790,666
24,973,933
------------
CASINO & GAMING: 0.27%
38,400 PINNACLE ENTERTAINMENT INCORPORATED+ 294,912
------------
CHEMICALS & ALLIED PRODUCTS: 2.25%
49,183 INVERNESS MEDICAL INNOVATIONS INCORPORATED+ << 930,051
98,754 NOVEN PHARMACEUTICALS INCORPORATED+ 1,086,294
47,179 PAREXEL INTERNATIONAL CORPORATION+ 458,108
2,474,453
------------
COMMUNICATIONS: 3.40%
124,425 CBEYOND INCORPORATED+ 1,988,312
193,000 LIVE NATION INCORPORATED+ << 1,107,820
71,449 LODGENET ENTERTAINMENT CORPORATION+ << 50,014
412,586 PAETEC HOLDING CORPORATION+ 594,124
3,740,270
------------
DEPOSITORY INSTITUTIONS: 0.97%
64,800 FIRST COMMONWEALTH FINANCIAL CORPORATION 802,224
9,252 SIGNATURE BANK+ 265,440
1,067,664
------------
E-COMMERCE/SERVICES: 3.78%
303,186 GSI COMMERCE INCORPORATED+ << 3,189,517
13,200 PRICELINE.COM INCORPORATED+ << 972,180
4,161,697
------------
EATING & DRINKING PLACES: 0.49%
70,000 TEXAS ROADHOUSE INCORPORATED CLASS A+ << 542,500
------------
EDUCATIONAL SERVICES: 0.38%
22,166 GRAND CANYON EDUCATION INCORPORATED+ << 416,277
------------
Wells Fargo Advantage Variable Trust Funds 117
Portfolio of Investments -- December 31, 2008
VT SMALL CAP GROWTH FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------------ ------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 15.88%
13,225 ACUITY BRANDS INCORPORATED $ 461,685
61,200 GRAFTECH INTERNATIONAL LIMITED+ 509,184
50,700 GREATBATCH INCORPORATED+ << 1,341,522
227,934 INFORMATION SERVICES GROUP INCORPORATED+ 774,976
37,400 INTERSIL CORPORATION CLASS A 343,706
128,551 MICROSEMI CORPORATION+ 1,624,885
535,600 PMC-SIERRA INCORPORATED+ 2,603,016
89,133 POLYPORE INTERNATIONAL INCORPORATED+ 673,845
68,972 POWER INTEGRATIONS INCORPORATED<< 1,371,163
25,500 REGAL-BELOIT CORPORATION 968,745
46,700 SILICON LABORATORIES INCORPORATED+ 1,157,226
148,388 SOLERA HOLDINGS INCORPORATED+ 3,576,151
75,654 SYNAPTICS INCORPORATED+ << 1,252,830
86,169 UNIVERSAL DISPLAY CORPORATION+ << 814,297
17,473,231
------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES: 5.94%
38,459 ADVISORY BOARD COMPANY+ 857,636
52,294 NAVIGANT CONSULTING INCORPORATED+ 829,906
219,580 RESOURCES CONNECTION INCORPORATED+ << 3,596,720
26,170 WATSON WYATT & COMPANY HOLDINGS 1,251,449
6,535,711
------------
FINANCIAL INSTITUTIONS: 0.77%
81,800 Dollar FINANCIAL Corporation+ 842,540
------------
FOOD & KINDRED PRODUCTS: 0.41%
161,103 Senomyx INCORPORATED+ 449,477
------------
FOOTWEAR: 0.27%
3,700 Deckers OUTDOOR Corporation+ 295,519
------------
HEALTH SERVICES: 2.15%
52,959 CARDIONET INCORPORATED+ 1,305,439
91,594 INVENTIV HEALTH INCORPORATED+ 1,056,995
2,362,434
------------
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES: 0.84%
106,700 hhgregg INCORPORATED+ 926,156
------------
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGE PLACES: 0.48%
342,783 Great Wolf RESORTS Incorporated+ << 527,886
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 3.63%
100,610 Actuant CORPORATION Class A 1,913,602
67,735 Gardner Denver INCORPORATED+ 1,580,935
18,100 The Middleby CORPORATION+ << 493,587
3,988,124
------------
INSURANCE CARRIERS: 3.49%
50,477 First Mercury FINANCIAL Corporation+ 719,802
16,745 The Navigators GROUP Incorporated+ 919,468
77,800 Tower Group INCORPORATED 2,194,738
3,834,008
------------
118 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT SMALL CAP GROWTH FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------------ ------------
LEGAL SERVICES: 0.87%
21,409 FTI CONSULTING INCORPORATED+ << $ 956,554
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 10.30%
76,700 ALIGN TECHNOLOGY INCORPORATED+ << 671,125
98,942 CELERA CORPORATION+ 1,101,224
34,500 ESTERLINE TECHNOLOGIES CORPORATION+ 1,307,205
158,400 EV3 INCORPORATED+ 966,240
308,965 IXIA+ 1,785,818
118,345 SENORX INCORPORATED+ 276,927
104,505 SIRONA DENTAL SYSTEMS INCORPORATED+ << 1,097,303
73,123 SONOSITE INCORPORATED+ 1,395,187
233,017 SPECTRANETICS CORPORATION+ 608,174
118,528 SYMMETRY MEDICAL INCORPORATED+ 944,668
34,999 VARIAN INCORPORATED+ 1,172,816
11,326,687
------------
MEDICAL MANAGEMENT SERVICES: 0.55%
40,600 COVENTRY HEALTH CARE INCORPORATED+ 604,128
------------
MEDICAL PRODUCTS: 1.24%
90,826 VOLCANO CORPORATION+ 1,362,390
------------
METAL FABRICATE, HARDWARE: 0.43%
44,900 CHART INDUSTRIES INCORPORATED+ 477,287
------------
MISCELLANEOUS MANUFACTURING INDUSTRIES: 0.83%
184,042 SHUFFLE MASTER INCORPORATED+ 912,848
------------
MOTION PICTURES: 2.22%
95,564 CINEMARK HOLDINGS INCORPORATED 710,041
171,120 NATIONAL CINEMEDIA INCORPORATED 1,735,157
2,445,198
------------
OIL & GAS EXTRACTION: 2.95%
110,900 BRIGHAM EXPLORATION COMPANY+ 354,880
56,300 CONCHO RESOURCES INCORPORATED+ 1,284,766
28,000 GOODRICH PETROLEUM CORPORATION+ << 838,600
61,400 VENOCO INCORPORATED+ 166,394
18,000 WHITING PETROLEUM CORPORATION+ 602,280
3,246,920
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES: 5.94%
178,892 INNERWORKINGS INCORPORATED+ << 1,171,743
159,350 SHUTTERFLY INCORPORATED+ 1,113,857
228,510 VISTAPRINT LIMITED+ << 4,252,571
6,538,171
------------
REAL ESTATE: 0.43%
109,250 CB RICHARD ELLIS GROUP INCORPORATED CLASS A+ << 471,960
------------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 1.25%
62,141 EVERCORE PARTNERS INCORPORATED CLASS A 776,141
170,800 GFI GROUP INCORPORATED 604,632
1,380,773
------------
Wells Fargo Advantage Variable Trust Funds 119
Portfolio of Investments -- December 31, 2008
VT SMALL CAP GROWTH FUND
SHARES SECURITY NAME VALUE
- ------------ --------------------------------------------------------- ------------
TRANSPORTATION EQUIPMENT: 1.05%
40,300 POLARIS INDUSTRIES INCORPORATED<< $ 1,154,595
------------
TRANSPORTATION SERVICES: 1.49%
33,700 HUB GROUP INCORPORATED CLASS A+ 894,061
190,814 ORBITZ WORLDWIDE INCORPORATED+ 740,361
1,634,422
------------
TOTAL COMMON STOCKS (COST $170,811,409) 111,675,923
------------
COLLATERAL FOR SECURITIES LENDING: 20.93%
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 4.11%
1,129,067 AIM STIT-LIQUID ASSETS PORTFOLIO 1,129,067
1,129,067 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 1,129,067
1,129,067 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 1,129,067
1,129,067 DWS MONEY MARKET SERIES INSTITUTIONAL 1,129,067
4,516,268
------------
INTEREST MATURITY
PRINCIPAL RATE DATE
- ------------ -------- ----------
COLLATERAL INVESTED IN OTHER ASSETS: 16.82%
$ 413,073 AMSTEL FUNDING CORPORATION++ 1.70% 01/13/2009 412,839
344,228 ANTALIS US FUNDING CORPORATION++ 1.20 01/15/2009 344,067
88,260 ANTALIS US FUNDING CORPORATION++ 1.30 01/12/2009 88,225
1,941,444 BANK OF AMERICA REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY MORTGAGE BACKED SECURITIES
(MATURITY VALUE $1,941,453) 0.08 01/02/2009 1,941,444
110,153 BANK OF IRELAND 0.15 01/02/2009 110,153
413,073 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 413,059
413,073 CANCARA ASSET SECURITIZATION LIMITED++ 0.90 01/09/2009 412,991
89,499 CHARIOT FUNDING LLC++ 0.28 01/05/2009 89,496
351,535 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 02/25/2008 5,800
270,646 CHEYNE FINANCE LLC++ +/- #### (a) (i) 0.00 05/19/2008 4,466
440,612 CONCORD MINUTEMAN CAPITAL COMPANY++ 1.15 01/15/2009 440,414
1,067,106 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $1,067,107) 0.01 01/02/2009 1,067,106
1,638,524 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,638,533) 0.10 01/02/2009 1,638,524
423,400 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 423,400
481,919 E.ON AG++ 0.95 01/20/2009 481,677
220,306 FALCON ASSET SECURITIZATION CORPORATION++ 0.55 01/12/2009 220,269
1,638,524 GOLDMAN SACHS REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,638,529) 0.06 01/02/2009 1,638,524
1,300,037 GRYPHON FUNDING LIMITED (a) (i) 0.00 08/23/2009 544,325
1,018,914 JPMORGAN CHASE REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,018,917) 0.05 01/02/2009 1,018,914
440,612 KBC FINANCIAL PRODUCTS INTERNATIONAL LIMITED++ 1.40 01/14/2009 440,389
440,612 LEXINGTON PARKER CAPITAL++ 1.15 01/15/2009 440,414
454,381 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 454,381
413,073 METLIFE SHORT TERM FUNDING LLC++ 0.70 01/12/2009 412,985
413,073 MONT BLANC CAPITAL CORPORATION++ 1.00 01/12/2009 412,947
1,638,524 MORGAN STANLEY REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES (MATURITY VALUE $1,638,528) 0.04 01/02/2009 1,638,524
385,535 PARK AVENUE RECEIVABLES 0.35 01/12/2009 385,494
275,382 PRUDENTIAL PLC++ 1.25 01/14/2009 275,258
96,384 PRUDENTIAL PLC 1.35 01/12/2009 96,344
120 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT SMALL CAP GROWTH FUND
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
- ------------ ---------------------------------------- -------- ---------- -------------
COLLATERAL INVESTED IN OTHER ASSETS (continued)
$ 68,846 PRUDENTIAL PLC 2.00% 01/12/2009 $ 68,803
413,073 REGENCY MARKETS #1 LLC++ 0.90 01/12/2009 412,960
206,991 TICONDEROGA MASTER FUNDING LIMITED++ 0.30 01/06/2009 206,982
468,150 UNICREDITO ITALIANO NY 3.15 01/05/2009 468,249
505,769 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.11 07/28/2008 273,115
293,709 VICTORIA FINANCE LLC++ +/- #### (a) (i) 0.14 08/07/2008 158,603
360,204 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.43 04/03/2008 194,510
584,709 VICTORIA FINANCE LLC++ +/- #### (a) (i) 1.44 02/15/2008 315,743
542,918 WHITE PINE FINANCE LLC++ +/- #### (a) (i) 1.39 02/22/2008 480,429
68,846 WINDMILL FUNDING CORPORATION++ 0.35 01/07/2009 68,842
18,500,665
-------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $ 24,180,690) 23,016,933
-------------
SHARES
- --------------------------------------------------------------
SHORT-TERM INVESTMENTS: 0.01%
11,440 WELLS FARGO ADVANTAGE MONEY MARKET TRUST~ +++ 11,440
TOTAL SHORT-TERM INVESTMENTS (COST $11,440) 11,440
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $195,003,539)* 122.46% $ 134,704,296
OTHER ASSETS AND LIABILITIES, NET (22.46) (24,708,178)
------ -------------
TOTAL NET ASSETS 100.00% $ 109,996,118
------ -------------
- ----------
+ Non-income earning securities.
<< 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.
+/- Variable rate investments.
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $11,440.
* Cost for federal income tax purposes is $198,944,379 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 2,621,964
Gross unrealized depreciation (66,862,047)
-------------
Net unrealized appreciation (depreciation) $ (64,240,083)
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 121
Portfolio of Investments -- December 31, 2008
VT SMALL/MID CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ---------------------------------------------------------------------------- ------------
COMMON STOCKS: 96.44%
AMUSEMENT & RECREATION SERVICES: 0.27%
20,680 CENTURY CASINOS INCORPORATED+ $ 21,300
------------
APPAREL & ACCESSORY STORES: 0.40%
14,375 DELIA*S INCORPORATED+ 31,625
------------
BIOPHARMACEUTICALS: 0.61%
178,360 ENCORIUM GROUP INCORPORATED+ 48,157
------------
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE BUILDERS: 1.82%
2,375 CAVCO INDUSTRIES INCORPORATED+ 63,864
16,104 PALM HARBOR HOMES INCORPORATED+ 80,198
144,062
------------
BUSINESS SERVICES: 11.85%
83,735 3COM CORPORATION+ 190,916
4,915 ABM INDUSTRIES INCORPORATED 93,631
5,560 CLARUS CORPORATION+ 23,630
3,710 HEALTHCARE SERVICES GROUP 59,100
2,750 HENRY JACK & ASSOCIATES INCORPORATED 53,378
43,715 HILL INTERNATIONAL INCORPORATED+ 307,754
4,275 IMS HEALTH INCORPORATED 64,809
27,175 TIER TECHNOLOGIES INCORPORATED CLASS B+ 146,745
939,963
------------
CHEMICALS & ALLIED PRODUCTS: 1.82%
2,260 INTERNATIONAL FLAVORS & FRAGRANCES INCORPORATED 67,167
20,975 ORASURE TECHNOLOGIES INCORPORATED+ 77,188
144,355
------------
COMMUNICATIONS: 1.92%
18,010 CHINA GRENTECH CORPORATION LIMITED ADR+ 21,612
21,560 CINCINNATI BELL INCORPORATED+ 41,611
37,240 CITADEL BROADCASTING CORPORATION+ 5,958
66,580 SANDVINE CORPORATION+ (a) 39,282
1,980 SCRIPPS NETWORKS INTERACTIVE INCORPORATED 43,560
152,023
------------
CONSTRUCTION SPECIAL TRADE CONTRACTORS: 0.53%
64,370 CHAMPION ENTERPRISES INCORPORATED+ 36,047
2,395 U.S. HOME SYSTEMS INCORPORATED+ 6,203
42,250
------------
DEPOSITORY INSTITUTIONS: 1.73%
7,240 FIRST SECURITY GROUP INCORPORATED 33,449
550 IBERIABANK CORPORATION 26,400
7,068 PACIFIC PREMIER BANCORP INCORPORATED+ 27,495
3,455 WESTERN UNION COMPANY 49,545
136,889
------------
ELECTRIC, GAS & SANITARY SERVICES: 0.75%
7,590 EL PASO CORPORATION 59,430
------------
122 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT SMALL/MID CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ------------------------------------------------------------------------------- ------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT: 6.04%
8,555 EMCORE CORPORATION+ $ 11,122
28,178 EVANS & SUTHERLAND COMPUTER CORPORATION+ 16,907
11,855 GLOBECOMM SYSTEMS INCORPORATED+ 65,084
6,015 INTEGRATED ELECTRICAL SERVICES INCORPORATED+ 52,692
28,700 MICRON TECHNOLOGY INCORPORATED+ 75,768
113,860 MRV COMMUNICATIONS INCORPORATED+ 87,672
6,885 OSI SYSTEMS INCORPORATED+ 95,357
34,920 POWER-ONE INCORPORATED+ 41,555
11,090 RICHARDSON ELECTRONICS LIMITED 32,716
478,873
------------
ENGINEERING, ACCOUNTING, RESEARCH MANAGEMENT & RELATED SERVICES: 0.93%
12,425 Symyx Technologies Incorportated+ 73,805
------------
HEALTH SERVICES: 1.93%
1,995 Bio-Reference LABORATORIES Incorporated+ 52,329
10,238 Cross Country HEALTHCARE Incorporated+ 89,992
650 Ensign Group INCORPORATED 10,881
153,202
------------
HOLDING & OTHER INVESTMENT OFFICES: 13.33%
27,755 ANNALY CAPITAL MANAGEMENT INCORPORATED 440,472
22,010 ANWORTH MORTGAGE ASSET CORPORATION 141,524
16,615 CAPSTEAD MORTGAGE CORPORATION 178,944
8,100 HILLTOP HOLDINGS INCORPORATED+ 78,898
15,665 PRIMORIS SERVICES CORPORATION+ 80,988
4,920 SUN COMMUNITIES INCORPORATED 68,880
11,252 UMH PROPERTIES INCORPORATED 66,949
1,056,655
------------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 3.97%
14,515 BROCADE COMMUNICATIONS SYSTEMS INCORPORATED+ 40,642
13,961 CRAY INCORPORATED+ 29,038
12,470 INTERMEC INCORPORATED+ 165,602
2,955 LEXMARK INTERNATIONAL INCORPORATED+ 79,490
314,772
------------
INSURANCE CARRIERS: 1.37%
2,365 Mercury General Corporation 108,766
------------
JUSTICE, PUBLIC ORDER & SAFETY: 2.50%
11,003 Geo Group INCORPORATED+ 198,384
------------
LEATHER & LEATHER PRODUCTS: 0.10%
14,430 Bakers Footwear GROUP Incorporated+ 8,225
------------
MEASURING, ANALYZING & CONTROLLING INSTRUMENTS: PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS: 2.08%
37,020 Allied Healthcare PRODUCTS Incorporated+ 107,728
875 Haemonetics CORPORATION+ 49,438
27,501 LTX-Credence CORPORATION+ 7,425
164,591
------------
METAL MINING: 15.30%
1,995 Agnico-Eagle Mines Limited 102,403
23,385 Apex Silver Mines LIMITED+ 22,917
610 Freeport-McMoRan COPPER & Gold Incorporated Class B+ 14,908
Wells Fargo Advantage Variable Trust Funds 123
Portfolio of Investments -- December 31, 2008
VT SMALL/MID CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ---------------------------------------------------------------------------- -------------
METAL MINING (continued)
10,760 GOLDCORP INCORPORATED $ 339,263
4,170 NEWMONT MINING CORPORATION 169,719
30,830 PETAQUILLA MINERALS LIMITED+ 11,099
11,770 RANDGOLD RESOURCES LIMITED ADR 516,938
4,600 YAMANA GOLD INCORPORATED 35,512
1,212,759
------------
MISCELLANEOUS MANUFACTURING INDUSTRIES: 1.16%
26,690 ACCO BRANDS CORPORATION+ 92,081
------------
MOTION PICTURES: 0.99%
2,850 DISCOVERY COMMUNICATIONS INCORPORATED+ 40,356
2,845 DISCOVERY HOLDING COMPANY+ 38,095
78,451
------------
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING: 0.25%
6,955 YRC WORLDWIDE INCORPORATED+ 19,961
------------
OIL & GAS EXTRACTION: 15.37%
3,265 CANADIAN NATURAL RESOURCES LIMITED 130,535
19,450 ENERGY XXI BERMUDA LIMITED 15,366
28,400 GLOBAL INDUSTRIES LIMITED+ 99,116
8,170 HELIX ENERGY SOLUTIONS GROUP INCORPORATED+ 59,151
2,915 HELMERICH & PAYNE INCORPORATED 66,316
5,515 HERCULES OFFSHORE INCORPORATED+ 26,196
13,970 KEY ENERGY SERVICES INCORPORATED+ 61,611
15,478 MCMORAN EXPLORATION COMPANY+ 151,684
1,880 NEWFIELD EXPLORATION COMPANY+ 37,130
36,430 NEWPARK RESOURCES INCORPORATED+ 134,791
2,190 PENN WEST ENERGY TRUST 24,353
2,780 PETROQUEST ENERGY INCORPORATED+ 18,793
2,115 PIONEER NATURAL RESOURCES COMPANY 34,221
2,300 PRIDE INTERNATIONAL INCORPORATED+ 36,754
3,682 RANGE RESOURCES CORPORATION 126,624
4,320 SANDRIDGE ENERGY INCORPORATED+ 26,568
21,250 TRILOGY ENERGY TRUST 99,494
8,250 WILLBROS GROUP INCORPORATED+ 69,878
1,218,581
------------
OIL FIELD SERVICES: 0.24%
4,360 TRICO MARINE SERVICES INCORPORATED+ 19,489
------------
PETROLEUM REFINING & RELATED INDUSTRIES: 3.30%
11,060 INTEROIL CORPORATION+ 152,075
1,935 MARATHON OIL CORPORATION 52,942
1,990 WD-40 COMPANY 56,297
261,314
------------
PRINTING, PUBLISHING & ALLIED INDUSTRIES: 0.24%
50,780 R.H. DONNELLEY CORPORATION+ 18,789
------------
REAL ESTATE: 1.92%
10,040 CHIMERA INVESTMENT CORPORATION 34,638
4,435 HATTERAS FINANCIAL CORPORATION 117,971
152,609
------------
124 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT SMALL/MID CAP VALUE FUND
SHARES SECURITY NAME VALUE
- ------------ ---------------------------------------------------------------------------- ------------
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS: 0.41%
44,308 Intertape Polymer Group Incorporated+ $ 32,345
------------
SOCIAL SERVICES: 0.61%
3,215 ABB Limited ADR 48,257
------------
STONE, CLAY, GLASS & CONCRETE PRODUCTS: 1.75%
15,740 Gentex Corporation 138,984
------------
THEATERS & ENTERTAINMENT: 0.90%
6,960 Regal Entertainment Group Class A 71,055
------------
TRANSPORTATION EQUIPMENT: 0.05%
39,905 Fleetwood Enterprises Incorporated+ 3,991
------------
TOTAL COMMON STOCKS (COST $ 14,157,998) 7,645,993
------------
EXPIRATION DATE
---------------
WARRANTS: 0.27%
21,715 Primoris Services Corporation Warrant+ 10/22/2010 21,281
TOTAL WARRANTS (COST $ 55,520) 21,281
------------
SHORT-TERM INVESTMENTS: 1.92%
152,421 Wells Fargo Advantage Money Market Trust~ +++ 152,421
------------
TOTAL SHORT-TERM INVESTMENTS (COST $ 152,421) 152,421
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $14,365,939)* 98.63% $ 7,819,695
OTHER ASSETS AND LIABILITIES, NET 1.37 108,666
------ ------------
TOTAL NET ASSETS 100.00% $ 7,928,361
------ ------------
- ----------
+ 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.
+++ Short-term security of an affiliate of the Fund with a cost of $152,421.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
* Cost for federal income tax purposes is $14,753,421 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 402,091
Gross unrealized depreciation (7,335,817)
------------
Net unrealized appreciation (depreciation) $ (6,933,726)
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 125
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
- ------------ ---------------------------------------------------------------------------- ---------- ---------- -----------
ASSET BACKED SECURITIES: 10.56%
$ 270,000 AMERICREDIT PRIME AUTOMOBILE RECEIVABLES TRUST SERIES 2007-1 CLASS A3 5.27% 11/08/2011 $ 267,562
246,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2005-A10 CLASS A+/- 1.28 09/15/2015 173,312
152,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2005-A6 CLASS A6+/- 4.80 07/15/2015 117,284
550,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2006-A11 CLASS A11+/- 1.29 06/17/2019 317,076
105,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2006-A5 CLASS A5+/- 1.26 01/15/2016 77,660
308,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2007-A4 CLASS A4+/- 1.23 03/15/2015 231,009
195,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2007-A6 CLASS A6+/- 1.27 05/15/2013 175,532
1,114,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2008-A3 CLASS A3 5.05 02/16/2016 971,871
181,000 CAPITAL ONE MULTI-ASSET EXECUTION TRUST SERIES 2008-A5 CLASS A5 4.85 02/18/2014 167,935
7,678 CITICORP RESIDENTIAL MORTGAGE SECURITIES INCORPORATED SERIES 2006-1 CLASS A1 5.96 07/25/2036 7,560
141,000 CITICORP RESIDENTIAL MORTGAGE SECURITIES INCORPORATED SERIES 2006-1 CLASS A2 5.68 07/25/2036 132,792
160,000 CITICORP RESIDENTIAL MORTGAGE SECURITIES INCORPORATED SERIES 2006-2 CLASS A2 5.56 09/25/2036 153,019
74,730 CITIGROUP MORTGAGE LOAN TRUST INCORPORATED SERIES 2007-AHL1 CLASS A2A+/- 0.51 12/25/2036 64,330
478,000 COMET SERIES 2007-A7 CLASS A7 5.75 07/15/2020 359,132
157,116 COUNTRYWIDE ASSET BACKED CERTIFICATES SERIES 2006-S1 CLASS A2 5.55 08/25/2021 130,432
407,000 DAIMLER MASTER OWNER TRUST SERIES 2006-A CLASS A+/- (i) 1.23 11/15/2011 382,970
450,000 DISCOVER CARD MASTER TRUST SERIES 2006-2 CLASS A3+/- 1.28 01/19/2016 325,392
297,000 DISCOVER CARD MASTER TRUST SERIES 2007-A1 CLASS A1 5.65 03/16/2020 224,905
265,000 DISCOVER CARD MASTER TRUST SERIES 2007-A2 CLASS A2+/- 3.16 06/15/2015 203,412
349,000 DISCOVER CARD MASTER TRUST SERIES 2008-A3 CLASS A3 5.10 10/15/2013 327,996
689,000 DISCOVER CARD MASTER TRUST SERIES 2008-A4 CLASS A4 5.65 12/15/2015 611,619
251,000 DOMINOS PIZZA MASTER ISSUER LLC SERIES 2007-1 CLASS A2++ (i) 5.26 04/25/2037 160,101
323,000 FORD CREDIT FLOORPLAN MASTER OWNER TRUST SERIES 2006-4 CLASS A+/- (i) 1.45 06/15/2013 260,754
85,615 GREAT AMERICA LEASING RECEIVABLES SERIES 2006-1 CLASS A3++ 5.34 01/15/2010 85,545
81,000 HARLEY DAVIDSON MOTORCYCLE TRUST SERIES 2007-2 CLASS A4 5.12 08/15/2013 77,800
112,000 HARLEY DAVIDSON MOTORCYCLE TRUST SERIES 2008-1 CLASS A3A 4.25 02/15/2013 107,980
100,000 HARLEY DAVIDSON MOTORCYCLE TRUST SERIES 2006-3 CLASS A4 5.22 06/15/2013 96,027
79,000 HONDA AUTO RECEIVABLES OWNER TRUST SERIES 2008-1 CLASS A4 4.88 08/18/2011 71,581
463,000 HUNTINGTON AUTO TRUST SERIES 2008-1 CLASS A3A++ (i) 4.81 04/16/2012 427,056
314,000 HUNTINGTON AUTO TRUST SERIES 2008-1 CLASS A4++ (i) 5.64 02/15/2013 276,173
72,000 HYUNDAI AUTO RECEIVABLES TRUST SERIES 2008-A CLASS A4 5.48 11/17/2014 61,904
52,326 MORGAN STANLEY ABS CAPITAL I SERIES 2007-HE2 CLASS A2A+/- 0.51 01/25/2037 48,496
49,125 MORGAN STANLEY HOME EQUITY LOANS SERIES 2007-1 CLASS A1+/- 0.52 12/25/2036 45,051
70,565 MORGAN STANLEY MORTGAGE LOAN TRUST SERIES 2007-6XS CLASS 2A1S+/- 0.58 02/25/2047 66,994
204,000 NISSAN AUTO RECEIVABLES OWNER TRUST SERIES 2007-B CLASS A4 5.16 03/17/2014 192,836
520,000 SLM STUDENT LOAN TRUST SERIES 2005-6 CLASS A5B+/- 4.00 07/27/2026 488,800
191,000 SLM STUDENT LOAN TRUST SERIES 2006-5 CLASS A4+/- 3.62 04/25/2023 165,098
100,000 SLM STUDENT LOAN TRUST SERIES 2007-7 CLASS A4 3.87 01/25/2022 76,324
100,000 SLM STUDENT LOAN TRUST SERIES 2008-4 CLASS A4+/- 5.19 07/25/2022 86,630
526,000 SLM STUDENT LOAN TRUST SERIES 2008-6 CLASS A4+/- 4.64 10/25/2014 442,991
546,000 SLM STUDENT LOAN TRUST SERIES 2008-8 CLASS A4+/- 5.04 04/25/2023 471,821
100,000 SWIFT MASTER AUTO RECEIVABLES TRUST SERIES 2007-1 CLASS A+/- (i) 1.30 06/15/2012 68,059
217,106 TRIAD AUTO RECEIVABLES OWNER TRUST SERIES 2006-B CLASS A3 5.41 08/12/2011 211,011
120,201 TRIAD AUTO RECEIVABLES OWNER TRUST SERIES 2006-C CLASS A3 5.26 11/14/2011 116,528
176,000 VOLKSWAGEN AUTO LOAN ENHANCED TRUST SERIES 2008-1 CLASS A3 4.50 07/20/2012 166,763
193,000 WASHINGTON MUTUAL MASTER NOTE TRUST SERIES 2006-A2A CLASS A+/- ++ (i) 1.25 06/15/2015 108,774
100,000 WASHINGTON MUTUAL MASTER NOTE TRUST SERIES 2007-A2 CLASS A2+/- ++ (i) 1.23 05/15/2014 82,752
TOTAL ASSET BACKED SECURITIES (COST $ 11,332,254) 9,886,649
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS: 26.14%
251,000 AMERICAN TOWER TRUST SERIES 2007-1A CLASS AFX++ 5.42 04/15/2037 206,171
189,932 BANK OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2000-1 CLASS A2A+/- 7.33 11/15/2031 189,399
100,000 BANK OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2002-PB2 CLASS B 6.31 06/11/2035 89,477
160,000 BANK OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2003-1 CLASS A2 4.65 09/11/2036 142,001
40,000 BANK OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2004-2 CLASS A5 4.58 11/10/2038 33,504
126 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- --------- ----------------------------------------------------------------- ------------- ------------- -----------
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
$ 371,000 BANK OF AMERICA COMMERCIAL MORTGAGE INCORPORATED SERIES 2008-1
CLASS A4+/- 6.35% 12/10/2049 $ 286,284
708,515 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2000-WF1 CLASS A2+/- 7.78 02/15/2032 708,963
139,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2001-TOP2 CLASS A2 6.48 02/15/2035 135,697
68,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2001-TOP4 CLASS A3 5.61 11/15/2033 64,573
92,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2002-PBW1 CLASS A2+/- 4.72 11/11/2035 83,052
264,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2004-ESA CLASS C++ 4.94 05/14/2016 264,247
45,000 BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES
2004-PWR6 CLASS A6 4.83 11/11/2041 38,883
122,000 CITIGROUP COMMERCIAL MORTGAGE TRUST SERIES 2008-C7 CLASS A4+/- 6.30 04/01/2038 94,193
1,019 CITIMORTGAGE ALTERNATIVE LOAN TRUST SERIES 2006-A1 CLASS 1A6 6.00 04/25/2036 540
157,000 COMMERCIAL MORTGAGE ASSET TRUST SERIES 1999-C1 CLASS A4+/- 6.98 01/17/2032 142,457
369,000 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE SERIES 2001-J2A
CLASS A2++ 6.10 07/16/2034 354,752
156,603 COUNTRYWIDE ALTERNATIVE LOAN TRUST SERIES 2006-0C6 CLASS 2A1+/- 0.54 07/25/2036 140,475
141,571 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CF2 CLASS A4 6.51 02/15/2034 139,122
78,607 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CK1 CLASS A3 6.38 12/18/2035 77,043
225,574 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2001-CKN5 CLASS A4 5.44 09/15/2034 208,680
30,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2002-CKN2 CLASS A3 6.13 04/15/2037 28,553
5,753 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2002-CKS4 CLASS A1 4.49 11/15/2036 5,457
399,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2002-CKS4 CLASS A2 5.18 11/15/2036 364,700
63,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2002-CP5 CLASS A2 4.94 12/15/2035 56,680
118,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2003-C4 CLASS A4+/- 5.14 08/15/2036 104,949
85,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2003-CK2 CLASS A4 4.80 03/15/2036 75,435
53,000 CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORPORATION
SERIES 2003-CPN1 CLASS A2 4.60 03/15/2035 46,436
14,625 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 1999-CG2 CLASS A1B+/- 7.30 06/10/2032 14,591
165,420 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 1999-CG3 CLASS A1B 7.34 10/10/2032 165,122
148,896 DLJ COMMERCIAL MORTGAGE CORPORATION SERIES 2000-CKP1 CLASS A1B 7.18 11/10/2033 148,289
466,218 FHLB SERIES I7-2014 CLASS 1 5.34 03/20/2014 493,317
933,186 FHLB SERIES VN-2015 CLASS A 5.46 11/27/2015 962,968
235,000 FHLMC SERIES 2558 CLASS BD 5.00 01/15/2018 237,312
68,976 FHLMC SERIES 2564 CLASS BQ 5.50 10/15/2017 71,866
80,000 FHLMC SERIES 2590 CLASS BY 5.00 03/15/2018 80,778
185,000 FHLMC SERIES 2590 CLASS NU 5.00 06/15/2017 189,611
166,000 FHLMC SERIES 2623 CLASS AJ 4.50 07/15/2016 168,629
33,612 FHLMC SERIES 2672 CLASS HA 4.00 09/15/2016 33,732
281,000 FHLMC SERIES 2694 CLASS QG 4.50 01/15/2029 286,628
195,000 FHLMC SERIES 2695 CLASS BG 4.50 04/15/2032 197,504
171,000 FHLMC SERIES 2702 CLASS AD 4.50 08/15/2032 173,034
69,379 FHLMC SERIES 2727 CLASS PW 3.57 06/15/2029 69,255
37,845 FHLMC SERIES 2780 CLASS TB 3.00 12/15/2024 37,790
201,000 FHLMC SERIES 2790 CLASS TN 4.00 05/15/2024 189,903
Wells Fargo Advantage Variable Trust Funds 127
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- --------- --------------------------------------------------------------- ------------- ------------- -----------
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
$ 102,000 FHLMC SERIES 2799 CLASS ME 5.00% 08/15/2032 $ 102,952
191,000 FHLMC SERIES 2843 CLASS BC 5.00 08/15/2019 192,397
244,000 FHLMC SERIES 2882 CLASS NC 5.00 10/15/2034 245,944
24,127 FHLMC SERIES 3000 CLASS PA 3.90 01/15/2023 24,147
2,000 FHLMC SERIES 3008 CLASS JM 4.50 07/15/2025 1,944
177,508 FHLMC SERIES 3017 CLASS TA 4.50 08/15/2035 182,090
201,000 FHLMC SERIES 3079 CLASS MD 5.00 03/15/2034 202,485
142,524 FHLMC SERIES 3253 CLASS A 5.00 08/15/2020 144,523
138,000 FHLMC SERIES 3268 CLASS HC 5.00 12/15/2032 140,347
152,000 FHLMC SERIES 3298 CLASS VB 5.00 11/15/2025 153,990
463,590 FHLMC SERIES 3316 CLASS HA 5.00 07/15/2035 474,952
110,000 FHLMC SERIES 3317 CLASS PG 5.00 04/15/2036 111,252
79,000 FHLMC SERIES 3320 CLASS TB 5.50 06/15/2030 81,593
82,466 FHLMC SERIES 3325 CLASS JL 5.50 06/15/2037 85,657
178,000 FHLMC SERIES 3372 CLASS BD 4.50 10/15/2022 174,965
242,000 FHLMC SERIES 3460 CLASS PC 5.00 08/15/2034 244,725
114,402 FIRST HORIZON ALTERNATIVE MORTGAGE SECURITY SERIES 2006-FA6
CLASS 2A10 (i) 6.00 11/25/2036 93,706
203,880 FIRST HORIZON ALTERNATIVE MORTGAGE SECURITY SERIES 2006-RE1
CLASS A1 (i) 5.50 05/25/2035 107,037
8,796 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 1999-C4
CLASS A2 7.39 12/15/2031 8,777
112,998 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 2000-C2
CLASS A2 7.20 10/15/2032 113,525
111,000 FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE SERIES 2001-C4
CLASS B 6.42 12/12/2033 106,830
2,090,216 FNMA SERIES 2001-81 CLASS HE 6.50 01/25/2032 2,171,261
47,000 FNMA SERIES 2003-108 CLASS BE 4.00 11/25/2018 45,430
2,459 FNMA SERIES 2003-113 CLASS PN 3.50 02/25/2013 2,454
66,962 FNMA SERIES 2003-15 CLASS CH 4.00 02/25/2017 67,213
80,725 FNMA SERIES 2003-16 CLASS PN 4.50 10/25/2015 81,323
184,000 FNMA SERIES 2003-3 CLASS HJ 5.00 02/25/2018 185,505
170,437 FNMA SERIES 2003-30 CLASS ET 3.50 08/25/2016 170,151
46,557 FNMA SERIES 2004-34 CLASS PI 3.50 05/25/2014 46,523
117,890 FNMA SERIES 2004-60 CLASS PA 5.50 04/25/2034 121,577
104,858 FNMA SERIES 2005-58 CLASS MA 5.50 07/25/2035 109,117
303,000 FNMA SERIES 2005-69 CLASS JM 4.50 08/25/2025 295,515
206,000 FNMA SERIES 2007-113 CLASS DB 4.50 12/25/2022 204,108
57,000 FNMA SERIES 2007-26 CLASS BA 5.50 05/25/2029 58,050
468,573 FNMA SERIES 2007-39 CLASS NA 4.25 01/25/2037 473,740
57,060 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2001-2 CLASS A3 6.03 08/11/2033 56,373
103,000 GE CAPITAL COMMERCIAL MORTGAGE CORPORATION SERIES 2002-1A CLASS
A3 6.27 12/10/2035 96,728
186,360 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED+/- 7.72 03/15/2033 186,348
216,209 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2000-C2
CLASS A2+/- 7.46 08/16/2033 215,765
1,414,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2001-C2
CLASS A2 6.70 04/15/2034 1,386,412
209,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2002-C3
CLASS A2 4.93 07/10/2039 188,873
79,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2003-C2
CLASS A2+/- 5.67 05/10/2040 71,004
626,000 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2003-C3
CLASS A4 5.02 04/10/2040 548,537
7,051 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2004-C1
CLASS A1 3.12 03/10/2038 7,036
6,358 GMAC COMMERCIAL MORTGAGE SECURITIES INCORPORATED SERIES 2004-C2
CLASS A1 3.90 08/10/2038 6,299
49,503 GNMA SERIES 2006-3 CLASS A 4.21 01/16/2028 49,887
127,000 GNMA SERIES 2006-37 CLASS JG 5.00 07/20/2036 129,295
336,000 GS MORTGAGE SECURITIES CORPORATION II SERIES 2001-GL3A CLASS
A2+/- ++ 6.45 08/05/2018 326,517
521,848 GSR MORTGAGE LOAN TRUST SERIES 2006-8F CLASS 3A5 (i) 6.25 09/25/2036 467,155
122,919 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2000-C10 CLASS A2+/- 7.37 08/15/2032 122,642
368,000 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2001-CIB3 CLASS A3 6.47 11/15/2035 356,047
76,000 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2002-CIB5 CLASS A2 5.16 10/12/2037 69,242
128 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- --------- ----------------------------------------------------------------- ------------- ------------- ----------
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
$ 169,000 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2003-CB7 CLASS A4+/- 4.88% 01/12/2038 $ 144,911
218,000 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2003-PM1A CLASS A4+/- 5.33 08/12/2040 191,383
2,165 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2004-C3 CLASS A1 3.77 01/15/2042 2,131
24,837 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2005-LDP2 CLASS A1 4.33 07/15/2042 24,558
28,211 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2005-LDP3 CLASS A1 4.66 08/15/2042 27,584
108,000 JPMORGAN CHASE COMMERCIAL MORTGAGE SECURITIES CORPORATION SERIES
2006-CB15 CLASS ASB+/- 5.79 06/12/2043 83,308
55,000 LEHMAN BROTHERS UBS COMMERCIAL MORTGAGE TRUST SERIES 1999-C2
CLASS B 7.43 10/15/2032 54,899
59,115 LEHMAN BROTHERS UBS COMMERCIAL MORTGAGE TRUST SERIES 2000-C4
CLASS A2 7.37 08/15/2026 59,075
198,012 LEHMAN BROTHERS UBS COMMERCIAL MORTGAGE TRUST SERIES 2000-C5
CLASS A2 6.51 12/15/2026 195,024
337,000 LEHMAN BROTHERS UBS COMMERCIAL MORTGAGE TRUST SERIES 2002-C2
CLASS A4 5.59 06/15/2031 314,895
1,296 LEHMAN BROTHERS UBS COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
CLASS A2 3.48 07/15/2027 1,289
166,000 MERRILL LYNCH MORTGAGE TRUST SERIES 2004-KEY2 CLASS A4+/- 4.86 08/12/2039 137,616
97,247 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2001-TOP1 CLASS A4 6.66 02/15/2033 95,720
215,522 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2001-TOP3 CLASS A4 6.39 07/15/2033 209,265
404,000 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2001-TOP5 CLASS A4 6.39 10/15/2035 389,938
16,361 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2002-IQ2 CLASS A3 5.52 12/15/2035 16,265
276,000 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2003-HQ2 CLASS A2 4.92 03/12/2035 245,529
249,000 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2003-IQ5 CLASS A4 5.01 04/15/2038 224,709
157,000 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2004-HQ3 CLASS A4 4.80 01/13/2041 133,434
248,000 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2005-HQ5 CLASS AAB 5.04 01/14/2042 206,889
304,000 MORGAN STANLEY DEAN WITTER CAPITAL I SERIES 2005-HQ7 CLASS AAB+/- 5.36 11/14/2042 247,840
181,000 NOMURA ASSET SECURITIES CORPORATION SERIES 1998-D6 CLASS A1C 6.69 03/15/2030 177,474
114,028 SALOMON BROTHERS MORTGAGE SECURITIES SERIES 2000-C3 CLASS A2 6.59 12/18/2033 111,937
143,372 SALOMON BROTHERS MORTGAGE SECURITIES VII SERIES 2002-KEY2 CLASS A2 4.47 03/18/2036 133,489
559,229 US BANK NA SERIES 2007-1 CLASS A 5.92 05/25/2012 604,851
167,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2002-C1 CLASS A4 (l) 6.29 04/15/2034 159,351
138,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2002-C2 CLASS A4 (l) 4.98 11/15/2034 122,422
63,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5 CLASS A2 (l) 3.99 06/15/2035 52,007
489,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C6 CLASS
A3+/-(l) 4.96 08/15/2035 459,195
28,243 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C7 CLASS
A1++ (l) 4.24 10/15/2035 26,875
116,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C8 CLASS A3 (l) 4.45 11/15/2035 110,078
240,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C10 CLASS
A4(l) 4.75 02/15/2041 197,618
91,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11 CLASS
A4(l) 5.03 01/15/2041 79,995
201,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2006-C26 CLASS
A3+/-(l) 6.01 06/15/2045 164,100
85,000 WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2006-C26 CLASS
APB(l) 6.00 06/15/2045 65,671
104,312 WASHINGTON MUTUAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES
2006-AR12 CLASS 1A1+/- (i) 6.06 10/25/2036 87,272
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS(COST $25,269,132) 24,470,614
-----------
CORPORATE BONDS & NOTES: 16.12%
APPAREL & ACCESSORY STORES: 0.07%
105,000 NORDSTROM INCORPORATED 7.00 01/15/2038 62,359
-----------
CHEMICALS & ALLIED PRODUCTS: 0.19%
175,000 SCHERING-PLOUGH CORPORATION 6.55 09/15/2037 176,406
-----------
COMMUNICATIONS: 2.11%
140,000 AT&T INCORPORATED 5.10 09/15/2014 137,618
670,000 COMCAST CABLE COMMUNICATIONS HOLDINGS INCORPORATED 8.38 03/15/2013 693,131
Wells Fargo Advantage Variable Trust Funds 129
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- --------- --------------------------------------------------- ------------- ------------- -----------
COMMUNICATIONS (continued)
$ 250,000 QWEST CORPORATION 7.50% 10/01/2014 $ 207,500
60,000 VERIZON COMMUNICATIONS INCORPORATED 8.75 11/01/2018 70,393
60,000 VERIZON COMMUNICATIONS INCORPORATED 8.95 03/01/2039 77,501
405,000 VERIZON WIRELESS++ 7.38 11/15/2013 427,307
310,000 VERIZON WIRELESS++ 8.50 11/15/2018 363,220
1,976,670
-----------
DEPOSITORY INSTITUTIONS: 2.18%
250,000 AMERICAN EXPRESS BANK FSB SERIES BKNT 5.50 04/16/2013 236,810
80,000 BANK OF AMERICA CORPORATION 5.38 06/15/2014 78,413
175,000 BANK OF AMERICA CORPORATION 5.65 05/01/2018 176,038
160,000 CITIGROUP INCORPORATED 3.63 02/09/2009 159,490
685,000 CITIGROUP INCORPORATED 6.50 08/19/2013 691,224
215,000 CITIGROUP INCORPORATED 6.13 05/15/2018 217,391
190,000 CITIGROUP INCORPORATED+/- 8.40 04/29/2049 125,455
175,000 JPMORGAN CHASE & COMPANY 6.40 05/15/2038 207,018
155,000 PNC FUNDING CORPORATION 5.25 11/15/2015 149,285
2,041,124
-----------
EATING & DRINKING PLACES: 0.12%
145,000 YUM! BRANDS INCORPORATED 6.88 11/15/2037 114,907
-----------
ELECTRIC UTILITIES: 0.09%
85,000 PROGRESS ENERGY INCORPORATED 6.85 04/15/2012 85,241
-----------
ELECTRIC, GAS & SANITARY SERVICES: 1.78%
130,000 ALLEGHENY ENERGY SUPPLY++ 8.25 04/15/2012 128,050
100,000 CMS ENERGY CORPORATION 6.55 07/17/2017 80,503
95,000 COMMONWEALTH EDISON COMPANY 6.15 09/15/2017 88,336
325,000 DOMINION RESOURCES INCORPORATED PUTTABLE SS 8.88 01/15/2019 350,476
315,000 DPL INCORPORATED 6.88 09/01/2011 309,953
300,000 NEVADA POWER COMPANY SERIES A 8.25 06/01/2011 306,183
155,000 PACIFICORP 6.25 10/15/2037 163,855
115,000 SPECTRA ENERGY CAPITAL LLC 7.50 09/15/2038 98,101
110,000 VIRGINIA ELECTRIC & POWER COMPANY 8.88 11/15/2038 139,212
1,664,669
-----------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT:
0.08%
70,000 DUKE ENERGY CAROLINAS LLC 6.00 01/15/2038 76,262
-----------
FOOD & KINDRED PRODUCTS: 0.45%
75,000 KRAFT FOODS INCORPORATED 6.75 02/19/2014 77,832
350,000 KRAFT FOODS INCORPORATED 6.13 02/01/2018 342,964
420,796
-----------
HEALTH SERVICES: 0.13%
235,000 COVENTRY HEALTH CARE INCORPORATED 5.95 03/15/2017 122,516
-----------
HOLDING & OTHER INVESTMENT OFFICES: 0.54%
450,000 ALLIED CAPITAL CORPORATION(i) 6.63 07/15/2011 346,851
175,000 GOLDMAN SACHS GROUP INCORPORATED 5.15 01/15/2014 157,610
504,461
-----------
130 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------- ----------------------------------------------- ------------- ------------- -----------
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER EQUIPMENT: 0.24%
$ 70,000 HEWLETT-PACKARD COMPANY 6.13% 03/01/2014 $ 74,410
125,000 INTERNATIONAL BUSINESS MACHINES CORPORATION 7.63 10/15/2018 149,899
224,309
-----------
INSURANCE CARRIERS: 0.32%
70,000 ACE INA HOLDINGS INCORPORATED 5.70 02/15/2017 62,765
35,000 ACE INA HOLDINGS INCORPORATED 6.70 05/15/2036 30,668
139,000 LIBERTY MUTUAL GROUP++ (i) 7.50 08/15/2036 84,639
135,000 UNITEDHEALTH GROUP INCORPORATED 6.88 02/15/2038 118,207
296,279
-----------
NON-DEPOSITORY CREDIT INSTITUTIONS: 0.77%
65,000 AMERICAN EXPRESS 8.15 03/19/2038 74,538
260,000 CREDIT SUISSE NEW YORK 6.00 02/15/2018 238,765
210,000 GENERAL ELECTRIC CAPITAL CORPORATION SERIES MTNA 3.75 12/15/2009 210,359
220,000 JPMORGAN CHASE CAPITAL XXV 6.80 10/01/2037 202,705
726,367
-----------
OFFICE EQUIPMENT: 0.27%
115,000 XEROX CORPORATION 5.50 05/15/2012 96,376
205,000 XEROX CORPORATION 6.35 05/15/2018 160,329
256,705
-----------
OIL & GAS EXTRACTION: 1.21%
310,000 DEVON FINANCING CORPORATION 6.88 09/30/2011 312,840
60,000 EL PASO NATURAL GAS COMPANY 5.95 04/15/2017 47,677
145,000 SOUTHERN NATURAL GAS COMPANY++ 5.90 04/01/2017 114,906
90,000 WEATHERFORD INTERNATIONAL INCORPORATED 5.95 06/15/2012 85,525
110,000 WEATHERFORD INTERNATIONAL INCORPORATED 6.35 06/15/2017 93,878
315,000 XTO ENERGY INCORPORATED 5.75 12/15/2013 305,780
180,000 XTO ENERGY INCORPORATED 6.50 12/15/2018 174,244
1,134,850
-----------
PHARMACEUTICALS: 0.65%
155,000 GLAXOSMITHKLINE CAPITAL INCORPORATED 6.38 05/15/2038 175,124
414,000 WYETH 6.95 03/15/2011 431,133
606,257
-----------
PIPELINES: 0.60%
490,000 KINDER MORGAN INCORPORATED 6.50 09/01/2012 414,050
181,000 PLAINS ALL AMERICAN PIPELINE LP 6.50 05/01/2018 144,347
558,397
-----------
PRIMARY METAL INDUSTRIES: 0.16%
125,000 ALCOA INCORPORATED 6.00 07/15/2013 113,023
50,000 CORNING INCORPORATED (i) 7.25 08/15/2036 40,280
153,303
-----------
REAL ESTATE: 0.34%
445,000 WEA FINANCE LLC++ 7.13 04/15/2018 315,679
-----------
REAL ESTATE INVESTMENT TRUSTS (REITS): 0.15%
240,000 HEALTH CARE PROPERTIES INVESTORS INCORPORATED 5.65 12/15/2013 143,414
-----------
Wells Fargo Advantage Variable Trust Funds 131
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------- --------------------------------------------------- ------------- ------------- -----------
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES: 2.61%
$ 320,000 GOLDMAN SACHS CAPITAL II+/- 5.79% 05/17/2049 $ 123,015
145,000 GOLDMAN SACHS GROUP INCORPORATED 5.13 01/15/2015 133,032
355,000 GOLDMAN SACHS GROUP INCORPORATED 6.75 10/01/2037 288,213
305,000 LAZARD GROUP LLC 7.13 05/15/2015 193,695
245,000 LAZARD GROUP LLC 6.85 06/15/2017 155,970
60,000 MERRILL LYNCH & COMPANY INCORPORATED 5.45 02/05/2013 57,675
415,000 MERRILL LYNCH & COMPANY INCORPORATED SERIES MTN 6.88 04/25/2018 434,101
280,000 MORGAN STANLEY 5.30 03/01/2013 253,929
195,000 MORGAN STANLEY SERIES MTN 6.25 08/28/2017 166,118
195,000 MORGAN STANLEY SERIES MTN 5.95 12/28/2017 161,846
540,000 MORGAN STANLEY SERIES MTN 6.63 04/01/2018 473,737
2,441,331
-----------
TOBACCO PRODUCTS: 0.38%
250,000 ALTRIA GROUP INCORPORATED 9.70 11/10/2018 270,208
75,000 ALTRIA GROUP INCORPORATED 9.95 11/10/2038 81,661
351,869
-----------
TRANSPORTATION EQUIPMENT: 0.68%
365,000 DAIMLER NA HOLDING CORPORATION 6.50 11/15/2013 284,705
60,000 DAIMLER NA HOLDING CORPORATION 8.50 01/18/2031 43,873
305,000 DAIMLER NA HOLDING CORPORATION SERIES MTN+/- 2.35 03/13/2009 304,847
633,425
-----------
TOTAL CORPORATE BONDS & NOTES (COST $ 16,306,353) 15,087,596
-----------
FOREIGN CORPORATE BONDS@: 3.98%
145,000 ASTRAZENECA PLC 5.40 09/15/2012 153,132
150,000 BRITISH SKY BROADCASTING GROUP PLC++ 9.50 11/15/2018 153,135
165,000 BRITISH TELECOM PLC 9.13 12/15/2030 175,385
190,000 CREDIT SUISSE NEW YORK 5.00 05/15/2013 182,862
100,000 DIAGEO CAPITAL PLC 5.20 01/30/2013 98,402
230,000 EXPORT-IMPORT BANK OF KOREA EIBKOR 5.50 10/17/2012 213,309
170,000 FRANCE TELECOM SA 7.75 03/01/2011 178,892
145,000 HSBC HOLDINGS PLC 6.80 06/01/2038 153,227
60,000 HUSKY ENERGY INCORPORATED 6.80 09/15/2037 49,990
75,000 HUSKY OIL COMPANY 7.55 11/15/2016 73,303
150,000 HUTCHISON WHAMPOA INTERNATIONAL LIMITED++ 7.45 11/24/2033 133,968
125,000 PETRO CANADA 6.80 05/15/2038 94,329
180,000 PETROBRAS INTERNATIONAL FINANCE COMPANY 5.88 03/01/2018 161,820
250,000 RAS LAFFAN LIQUEFIED NATURAL GAS COMPANY LIMITED III++ 6.33 09/30/2027 167,973
310,000 RIO TINTO FINANCE USA LIMITED 5.88 07/15/2013 246,919
165,000 RIO TINTO FINANCE USA LIMITED 6.50 07/15/2018 120,973
80,000 ROGERS CABLE INCORPORATED 5.50 03/15/2014 73,804
340,000 ROGERS WIRELESS INCORPORATED 6.38 03/01/2014 323,203
215,000 SHELL INTERNATIONAL FINANCE BV 6.38 12/15/2038 241,873
285,000 TELEFONICA EMISIONES SAU 5.98 06/20/2011 281,087
80,000 TELEFONICA EMISIONES SAU 5.86 02/04/2013 77,764
110,000 THOMSON REUTERS CORPORATION 5.95 07/15/2013 102,413
85,000 TRANSCANADA PIPELINES LIMITED 7.25 08/15/2038 84,611
60,000 WEATHERFORD INTERNATIONAL LIMITED 7.00 03/15/2038 46,051
181,000 WESTFIELD GROUP++ 5.40 10/01/2012 138,812
TOTAL FOREIGN CORPORATE BONDS (COST $ 4,107,860) 3,727,237
-----------
132 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------- -------------------------------- ------------- ------------- -----------
AGENCY SECURITIES: 54.71%
FEDERAL HOME LOAN MORTGAGE CORPORATION: 22.16%
$ 213,738 FHLMC #1B3391+/- 5.73% 05/01/2037 $ 218,067
3,316 FHLMC #1B7562+/- 6.03 11/01/2037 3,393
47,795 FHLMC #1G1619+/- 5.94 03/01/2037 48,910
81,512 FHLMC #1G1919+/- 5.94 05/01/2037 83,291
60,530 FHLMC #1G1949+/- 5.93 05/01/2037 61,806
113,680 FHLMC #1G2254+/- 6.37 10/01/2037 116,098
141,638 FHLMC #1J1409+/- 5.86 12/01/2036 144,961
388,462 FHLMC #1J1581+/- << 5.92 04/01/2037 397,711
313,509 FHLMC #1J2842+/- 6.15 09/01/2037 322,089
41,819 FHLMC #1N0166+/- 6.31 06/01/2036 42,939
139,541 FHLMC #1Q0251+/- 6.31 04/01/2037 143,567
172,389 FHLMC #A79090 6.50 07/01/2034 180,416
156,304 FHLMC #A81215 6.50 08/01/2038 162,507
121,198 FHLMC #E01279 5.50 01/01/2018 125,334
283,712 FHLMC #E01445 4.00 09/01/2018 290,901
151,996 FHLMC #E01497 5.50 11/01/2018 157,168
120,744 FHLMC #E01539 5.50 12/01/2018 124,847
628,957 FHLMC #G01938 5.50 09/01/2035 644,610
599,284 FHLMC #G04794 5.50 01/01/2036 614,198
510,084 FHLMC #G04897 6.00 05/01/2037 526,045
2,127,000 FHLMC #G05040 6.50 08/01/2038 2,211,628
108,302 FHLMC #G11594 5.50 08/01/2019 112,024
99,801 FHLMC #G11653<< 5.50 12/01/2019 103,231
423,158 FHLMC #G11658 5.50 01/01/2020 437,172
187,649 FHLMC #G11786 5.00 10/01/2014 193,757
206,158 FHLMC #G11850 5.50 07/01/2020 212,985
254,123 FHLMC #G11940 5.50 05/01/2020 262,538
194,607 FHLMC #G11944 5.50 07/01/2020 201,052
241,029 FHLMC #G11983 5.50 01/01/2020 249,011
79,232 FHLMC #G12258 6.00 08/01/2016 82,160
161,313 FHLMC #G12474 5.50 01/01/2017 167,260
250,408 FHLMC #G12827 5.50 02/01/2021 259,170
150,436 FHLMC #G12888 5.50 07/01/2018 155,700
83,843 FHLMC #G13169 5.50 06/01/2020 86,934
203,329 FHLMC #G13330 6.00 10/01/2019 210,842
282,385 FHLMC #G13333 6.00 11/01/2022 292,836
2,170,000 FHLMC #G13367 5.50 12/01/2018 2,245,931
1,553,479 FHLMC #H09079 5.50 06/01/2037 1,559,031
280,210 FHLMC #H09153 5.50 04/01/2038 281,211
1,021,260 FHLMC #H09175 6.50 09/01/2038 1,045,859
24,931 FHLMC #H10170 5.50 07/01/2037 24,510
209,861 FHLMC #H19000 5.50 01/01/2036 206,320
779,749 FHLMC #H19011 5.50 08/01/2037 766,590
55,475 FHLMC #H19028 5.50 02/01/2038 54,539
72,959 FHLMC #J02372 5.50 05/01/2020 75,466
66,888 FHLMC #J02373 5.50 05/01/2020 69,187
83,863 FHLMC #J02376 6.00 05/01/2020 86,964
75,968 FHLMC #J04514 5.50 03/01/2017 78,626
500,000 FHLMC TBA%% 6.00 01/01/2021 517,500
500,000 FHLMC TBA%% 5.50 01/01/2034 511,719
500,000 FHLMC TBA%% 6.00 01/01/2036 515,000
Wells Fargo Advantage Variable Trust Funds 133
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------- -------------------------------------- ------------- ------------- -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (continued)
$ 500,000 FHLMC TBA%% 6.50% 01/01/2039 $ 519,219
2,500,000 FHLMC TBA%% 5.50 03/01/2039 2,542,188
20,747,018
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 27.48%
156,053 FNMA #190129 6.00 11/01/2023 161,779
202,568 FNMA #254758 4.50 06/01/2013 207,037
18,912 FNMA #256003 5.50 11/01/2035 18,628
66,943 FNMA #256097 5.50 01/01/2036 65,939
101,118 FNMA #256181 5.50 03/01/2036 99,602
358,065 FNMA #256658 5.50 03/01/2037 359,904
568,895 FNMA #256687 5.50 04/01/2037 571,817
237,960 FNMA #462404+/- 6.28 09/01/2037 241,095
7,364 FNMA #725068<< 5.50 01/01/2019 7,624
641,968 FNMA #725598 5.50 07/01/2034 659,248
495,678 FNMA #725946 5.50 11/01/2034 509,020
186,600 FNMA #745526 6.00 05/01/2021 193,859
60,374 FNMA #745914 7.00 08/01/2028 63,926
34,173 FNMA #745954 7.00 07/01/2032 36,155
17,549 FNMA #850672 5.50 01/01/2036 17,286
127,835 FNMA #888911+/- 6.11 11/01/2037 131,093
2,033,452 FNMA #889069 5.50 01/01/2021 2,105,240
214,842 FNMA #889115 5.50 12/01/2019 223,501
458,973 FNMA #889183 5.50 09/01/2021 475,176
448,635 FNMA #889213 5.50 10/01/2020 464,193
1,210,495 FNMA #889318 5.50 07/01/2020 1,253,230
344,889 FNMA #889495 6.50 03/01/2038 358,611
401,361 FNMA #889514 6.50 04/01/2038 416,663
440,184 FNMA #889568 5.50 03/01/2020 455,724
396,867 FNMA #899303 5.50 03/01/2037 398,905
151,791 FNMA #905215 5.50 11/01/2036 152,571
82,488 FNMA #905629+/- 6.12 12/01/2036 84,912
288,380 FNMA #906216+/- 5.92 01/01/2037 295,418
99,688 FNMA #906403+/- 6.02 01/01/2037 102,121
127,080 FNMA #906404+/- 5.95 01/01/2037 130,083
84,641 FNMA #909569+/- 5.88 02/01/2037 86,619
103,234 FNMA #914819+/- 5.98 04/01/2037 105,451
70,589 FNMA #914820+/- 6.00 04/01/2037 72,147
301,271 FNMA #915790 5.50 07/01/2037 302,818
164,010 FNMA #917894+/- 5.75 05/01/2037 167,596
207,720 FNMA #940518 5.50 07/01/2037 208,787
564,750 FNMA #944275 5.50 07/01/2037 567,651
82,722 FNMA #944357 6.00 06/01/2022 85,935
220,601 FNMA #944856 5.50 07/01/2037 221,734
238,064 FNMA #945032+/- 5.77 08/01/2037 243,340
87,467 FNMA #945657+/- << 6.23 09/01/2037 89,560
151,207 FNMA #949593 6.00 08/01/2022 157,080
68,150 FNMA #964800 5.50 08/01/2038 68,500
108,876 FNMA #970087 5.50 03/01/2038 109,436
121,484 FNMA #970165 5.50 04/01/2038 122,108
43,980 FNMA #986720 5.50 07/01/2038 44,206
129,913 FNMA #986721 5.50 07/01/2038 130,581
106,350 FNMA #987015 5.50 07/01/2038 106,896
351,007 FNMA #995092 6.50 12/01/2037 363,977
1,484,000 FNMA #995182 5.50 12/01/2049 1,529,911
134 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------- ----------------------------------- ------------- ------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (continued)
$ 554,000 FNMA #995183 5.50% 12/01/2049 $ 545,690
1,000,000 FNMA TBA%% 5.50 01/01/2023 1,029,688
1,968,000 FNMA TBA%% 5.50 03/01/2032 2,004,286
4,432,000 FNMA TBA%% 5.50 01/01/2034 4,542,800
500,000 FNMA TBA%% 5.00 02/01/2035 508,906
1,500,000 FNMA TBA%% 4.50 01/01/2036 1,520,157
500,000 FNMA TBA%% 7.00 01/01/2039 523,438
25,719,658
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION: 5.07%
622,402 GNMA #782044<< 6.50 12/15/2032 655,177
1,000,000 GNMA TBA%% 6.00 02/01/2037 1,025,315
1,500,000 GNMA TBA%% 6.00 03/01/2037 1,533,285
500,000 GNMA TBA%% 5.50 02/01/2039 511,096
1,000,000 GNMA TBA%% 5.50 03/01/2039 1,018,130
4,743,003
-----------
TOTAL AGENCY SECURITIES (COST $ 50,614,985) 51,209,679
-----------
US TREASURY SECURITIES: 7.59%
US TREASURY BONDS: 5.42%
200,000 US TREASURY BOND<< 7.13 02/15/2023 290,156
686,000 US TREASURY BOND<< 6.25 05/15/2030 1,031,573
951,000 US TREASURY BOND<< 5.38 02/15/2031 1,306,733
1,048,400 US TREASURY BOND<< 4.75 02/15/2037 1,460,880
200 US TREASURY BOND 5.00 05/15/2037 290
723,000 US TREASURY BOND<< 4.38 02/15/2038 968,368
10,000 US TREASURY BOND 4.50 05/15/2038 13,648
5,071,648
-----------
US TREASURY NOTES: 2.17%
35,000 US TREASURY NOTE<< 1.25 11/30/2010 35,376
34,000 US TREASURY NOTE 2.75 02/28/2013 36,327
14,000 US TREASURY NOTE<< 2.00 11/30/2013 14,363
44,000 US TREASURY NOTE 3.50 02/15/2018 48,703
30,700 US TREASURY NOTE 4.00 08/15/2018 35,451
1,645,000 US TREASURY NOTE 3.75 11/15/2018 1,862,187
2,032,407
-----------
TOTAL US TREASURY SECURITIES (COST $ 6,437,508) 7,104,055
-----------
COLLATERAL FOR SECURITIES LENDING: 7.06%
SHARES
- ---------
COLLATERAL INVESTED IN MONEY MARKET FUNDS: 1.33%
310,327 AIM STIT-LIQUID ASSETS PORTFOLIO 310,327
310,327 BLACKROCK LIQUIDITY FUNDS TEMPFUND PORTFOLIO 310,327
310,327 DREYFUS CASH MANAGEMENT FUND INSTITUTIONAL 310,327
310,327 DWS MONEY MARKET SERIES INSTITUTIONAL 310,327
1,241,308
-----------
Wells Fargo Advantage Variable Trust Funds 135
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- ----------- ------------------------------------------------------------- ------------- ------------- -------------
COLLATERAL INVESTED IN OTHER ASSETS: 5.73%
$ 123,309 ANTALIS US FUNDING CORPORATION++ 1.20% 01/15/2009 $ 123,251
809,727 BANK OF AMERICA REPURCHASE AGREEMENT - 102% COLLATERALIZED BY
MORTGAGE BACKED SECURITIES (MATURITY VALUE $809,731) 0.08 01/02/2009 809,727
28,772 BANK OF IRELAND 0.15 01/02/2009 28,772
123,309 BARTON CAPITAL CORPORATION++ 0.25 01/06/2009 123,304
46,012 CHEYNE FINANCE LLC+/- ++ #### (a) (i) 0.00 02/25/2008 759
444,733 CREDIT SUISSE FIRST BOSTON REPURCHASE AGREEMENT -
102% COLLATERALIZED BY US TREASURY SECURITIES
(MATURITY VALUE $444,733) 0.01 01/02/2009 444,733
682,308 DEUTSCHE BANK REPURCHASE AGREEMENT - 102% COLLATERALIZED
BY MORTGAGE BACKED SECURITIES
(MATURITY VALUE $682,312) 0.10 01/02/2009 682,308
120,226 DEXIA CREDIT LOCAL DE FRANCE SA 0.90 01/02/2009 120,226
102,757 E.ON AG++ 0.95 01/20/2009 102,706
17,674 GEMINI SECURITIZATION CORPORATION LLC++ 0.55 01/12/2009 17,671
73,985 GEMINI SECURITIZATION CORPORATION LLC++ 0.55 01/16/2009 73,968
822,058 GOLDMAN SACHS REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY MORTGAGE BACKED SECURITIES
(MATURITY VALUE $822,061) 0.06 01/02/2009 822,058
96,108 GRYPHON FUNDING LIMITED(a) (i) 0.00 08/23/2009 40,241
427,470 JPMORGAN CHASE REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY MORTGAGE BACKED SECURITIES
(MATURITY VALUE $427,471) 0.05 01/02/2009 427,470
119,198 LLOYDS TSB BK PLC LONDON 0.30 01/02/2009 119,198
123,309 METLIFE SHORT TERM FUNDING LLC++ 0.70 01/12/2009 123,282
123,309 MONT BLANC CAPITAL CORPORATION++ 0.75 01/16/2009 123,270
682,308 MORGAN STANLEY REPURCHASE AGREEMENT - 102%
COLLATERALIZED BY MORTGAGE BACKED SECURITIES
(MATURITY VALUE $682,310) 0.04 01/02/2009 682,308
110,978 PRUDENTIAL PLC++ 1.25 01/14/2009 110,928
20,551 PRUDENTIAL PLC++ 1.35 01/12/2009 20,543
66,648 REGENCY MARKETS #1 LLC++ 0.57 01/09/2009 66,640
135,640 UNICREDITO ITALIANO NY 3.15 01/05/2009 135,674
87,677 VICTORIA FINANCE LLC+/- ++ #### (a) (i) 0.14 08/07/2008 47,345
87,196 VICTORIA FINANCE LLC+/- ++ #### (a) (i) 0.46 05/02/2008 47,086
138,744 VICTORIA FINANCE LLC+/- ++ #### (a) (i) 1.43 04/03/2008 74,924
5,368,392
-------------
TOTAL COLLATERAL FOR SECURITIES LENDING (COST $7,052,598) 6,609,700
-------------
SHARES
- ---------
SHORT-TERM INVESTMENTS: 1.82%
1,702,474 WELLS FARGO ADVANTAGE CASH INVESTMENT FUND~ ++ 1,702,474
-------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,702,474) 1,702,474
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST $122,823,164)* 127.98% $ 119,798,004
OTHER ASSETS AND LIABILITIES, NET (27.98) (26,187,840)
------ -------------
TOTAL NET ASSETS 100.00% $ 93,610,164
------ -------------
136 Wells Fargo Advantage Variable Trust Funds
Portfolio of Investments -- December 31, 2008
VT TOTAL RETURN BOND FUND
PRINCIPAL SECURITY NAME INTEREST RATE MATURITY DATE VALUE
- --------- -------------------------------------------------- ------------- ------------- -------------
SCHEDULE OF TBA SALE COMMITMENTS: (5.48%)
$ (1,000,000) FHLMC TBA%% 6.00% 01/01/2021 $ (1,035,000)
(500,000) FHLMC TBA%% 6.00 01/01/2036 (515,000)
(1,500,000) FNMA TBA%% 4.50 01/01/2036 (1,520,157)
(2,000,000) FNMA TBA%% 5.50 01/01/2023 (2,059,376)
TOTAL SCHEDULE OF TBA SALE COMMITMENTS (PROCEEDS $(5,088,878)) $ (5,129,533)
-------------
- --------------
+/- Variable rate investments.
++ 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.
<< All or a portion of this security is on loan. (See Note 2)
@ Foreign bond principal is denominated in US dollars.
%% Securities issued on a when-issued (TBA) basis. (See Note 2)
#### This security is currently in default with regards to scheduled interest
and/or principal payments.
(a) Security fair valued in accordance with the procedures approved by the
Board of Trustees.
(i) Illiquid security.
~ 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.
(l) Long-term security of an affiliate of the Fund with a cost of $1,589,399.
+++ Short-term security of an affiliate of the Fund with a cost of $1,702,474.
ss These securities are subject to a demand feature which reduces the
effective maturity.
* Cost for federal income tax purposes is $ 123,133,723 and net unrealized
appreciation (depreciation) consists of:
Gross unrealized appreciation $ 2,215,871
Gross unrealized depreciation (5,551,590)
---------------
Net unrealized appreciation $ (3,335,719)
(depreciation)
The accompanying notes are an integral part of these financial statements.
138 Wells Fargo Advantage Variable Trust Funds
Statements of Assets and Liabilities -- December 31, 2008
VT C&B
VT Asset Large Cap
Allocation Fund Value Fund
--------------- ------------
ASSETS
Investments
In securities, at fair value (including securities on loan) ... $ 120,526,721 $ 17,223,014
Collateral received for securities loaned (Note 2) ............ 47,706,464 298,231
In affiliates . ............................................... 5,458,848 763,797
Repurchase Agreements ......................................... 0 0
--------------- ------------
Total investments at fair value (see cost below) ................... 173,692,033 18,285,042
--------------- ------------
Cash . ............................................................. 50,000 50,000
Receivable for Fund shares issued .................................. 7,670 7,771
Variation margin receivable on futures contracts ................... 1,189,466 0
Receivable for investments sold .................................... 3,941 0
Receivables for dividends and interest ............................. 637,338 59,750
--------------- ------------
Total assets ............................................................. 175,580,448 18,402,563
--------------- ------------
LIABILITIES
Payable for Fund shares redeemed ................................... 189,399 38,255
Payable for investments purchased .................................. 110,931 0
Dividends payable .................................................. 0 0
Payable upon return of securities loaned (Note 2) .................. 49,121,955 317,578
Payable to investment advisor and affiliates (Note 3) .............. 95,139 7,112
Accrued expenses and other liabilities ............................. 105,126 22,384
--------------- ------------
Total liabilities ........................................................ 49,622,550 385,329
--------------- ------------
TOTAL NET ASSETS ......................................................... $ 125,957,898 $ 18,017,234
=============== ============
NET ASSETS CONSIST OF
Paid-in capital .................................................... $ 171,610,307 $ 27,311,129
Undistributed net investment income (loss) ......................... 96,630 31,075
Undistributed net realized gain (loss) on investments .............. (33,338,156) (2,496,896)
Net unrealized appreciation (depreciation) of investments,
foreign currencies and translation of assets and liabilities
denominated in foreign currencies ................................ (8,798,230) (6,814,397)
Net unrealized appreciation (depreciation) of collateral received
for securities loaned ........................................... (1,051,843) (13,677)
Net unrealized appreciation (depreciation) of futures .............. (2,560,810) 0
--------------- ------------
TOTAL NET ASSETS ......................................................... $ 125,957,898 $ 18,017,234
=============== ============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE (1)
Net assets ......................................................... $ 125,957,898 $ 18,017,234
Shares outstanding . 13,526,219 2,561,437
Net asset value and offering price per share ....................... $ 9.31 $ 7.03
--------------- ------------
Investments at cost ...................................................... $ 183,542,106 $ 25,113,116
--------------- ------------
Securities on loan, at fair value (Note 2) ............................... $ 48,651,109 $ 326,087
--------------- ------------
- -----------
1. Each Fund has an unlimited number of authorized shares.
2. Maximum offering price is computed as 100/94.25 of net asset value. On
investments of $50,000 or more, the offering price is reduced. The
accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 139
Statements of Assets and Liabilities -- December 31, 2008
VT Large VT Large VT Money
VT Discovery VT Equity VT International Company Company Market VT Opportunity
Fund Income Fund Core Fund Core Fund Growth Fund Fund Fund Fund
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
$ 111,821,277 $ 42,590,654 $ 18,541,097 $ 9,529,370 $ 48,180,807 $ 50,835,648 $ 350,435,556
19,675,334 1,996,317 64,881 282,442 5,412,402 0 18,265,033
1,204,393 901,327 576,524 265,492 945,031 250,000 30,145,145
0 0 0 0 0 9,404,785 0
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
132,701,004 45,488,298 19,182,502 10,077,304 54,538,240 60,490,433 398,845,734
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
0 50,000 50,000 50,000 50,000 50,000 0
152,334 25,173 619 0 39,465 230,673 357,421
0 0 0 0 0 0 0
4,635,048 0 0 0 0 0 1,444,801
25,604 90,859 44,558 14,145 46,479 54,796 461,599
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
137,513,990 45,654,330 19,277,679 10,141,449 54,674,184 60,825,902 401,109,555
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
51,084 29,923 15,111 2,611 51,436 0 294,419
3,326,793 0 10,105 56,240 0 0 1,119,386
0 0 0 0 0 1,621 0
20,867,533 2,104,557 67,811 307,737 5,533,262 0 21,078,156
87,018 28,452 7,914 51 31,845 33,145 294,949
32,838 39,755 28,004 22,450 40,933 23,564 125,156
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
24,365,266 2,202,687 128,945 389,089 5,657,476 58,330 22,912,066
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
$ 113,148,724 $ 43,451,643 $ 19,148,734 $ 9,752,360 $ 49,016,708 $ 60,767,572 $ 378,197,489
============== ============ ================ ============== ============== ============= ==================
$ 275,563,561 $ 56,026,143 $ 28,675,051 $ 29,480,697 $ 95,993,753 $ 60,772,049 $ 558,089,541
0 27,273 535,743 192,996 239,595 (1,108) 0
(126,968,584) (3,735,704) (3,541,750) (13,209,546) (32,863,600) (3,369) (50,498,440)
(34,764,496) (8,804,549) (6,518,844) (6,696,542) (14,270,665) 0 (127,814,732)
(681,757) (61,520) (1,466) (15,245) (82,375) 0 (1,578,880)
0 0 0 0 0 0 0
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
$ 113,148,724 $ 43,451,643 $ 19,148,734 $ 9,752,360 $ 49,016,708 $ 60,767,572 $ 378,197,489
============== ============ ================ ============== ============== ============= ==================
$ 113,148,724 $ 43,451,643 $ 19,148,734 $ 9,752,360 $ 49,016,708 $ 60,767,572 $ 378,197,489
10,114,520 4,398,531 4,152,963 1,021,658 7,808,667 60,774,908 37,227,135
$ 11.19 $ 9.88 $ 4.61 $ 9.55 $ 6.28 $ 1.00 $ 10.16
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
$ 168,147,257 $ 54,354,367 $ 25,700,486 $ 16,789,091 $ 68,891,280 $ 60,490,433 $ 528,239,346
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
$ 21,328,039 $ 2,139,276 $ 67,680 $ 335,610 $ 5,917,517 $ 0 $ 19,668,553
- -------------- ------------ ---------------- -------------- -------------- ------------- ------------------
140 Wells Fargo Advantage Variable Trust Funds
Statements of Assets and Liabilities -- December 31, 2008
VT Small Cap VT Small/Mid VT Total Return
Growth Fund Cap Value Fund Bond Fund
- -------------------------------------------------------------------- -------------- --------------- -----------------
ASSETS
Investments
In securities, at fair value (including
securities on loan) ................................ $ 111,675,923 $ 7,667,274 $ 110,048,518
Collateral received for securities loaned (Note 2) ...... 23,016,933 0 6,609,700
In affiliates . ......................................... 11,440 152,421 3,139,786
-------------- --------------- -----------------
Total investments at fair value (see cost below) ............. 134,704,296 7,819,695 119,798,004
-------------- --------------- -----------------
Cash. ........................................................ 50,000 0 50,000
Receivable for Fund shares issued ............................ 22,403 612 569,727
Receivable for investments sold .............................. 662,753 101,332 60,621,592
Receivables for dividends and interest . ..................... 17,593 33,303 762,460
-------------- --------------- -----------------
Total assets ....................................................... 135,457,045 7,954,942 181,801,783
-------------- --------------- -----------------
LIABILITIES
Sale commitments, at fair value .............................. 0 0 5,129,533
Payable for Fund shares redeemed ............................. 71,279 5,538 280,005
Payable for investments purchased ............................ 179,188 3,373 75,479,465
Dividends payable ............................................ 0 0 11,673
Payable upon return of securities loaned (Note 2) ............ 25,002,831 0 7,203,983
Payable to investment advisor and affiliates (Note 3) ........ 97,460 431 19,132
Accrued expenses and other liabilities . ..................... 110,169 17,239 67,828
-------------- --------------- -----------------
Total liabilities .................................................. 25,460,927 26,581 88,191,619
-------------- --------------- -----------------
TOTAL NET ASSETS ................................................... $ 109,996,118 $ 7,928,361 $ 93,610,164
============== =============== =================
NET ASSETS CONSIST OF
Paid-in capital .............................................. $ 195,897,618 $ 15,081,906 $ 96,760,686
Undistributed net investment income (loss) ................... 0 108,598 17,650
Undistributed net realized gain (loss) on investments . ...... (25,602,257) (715,899) (102,357)
Net unrealized appreciation (depreciation) of investments,
foreign currencies and translation of assets and
liabilities denominated in foreign currencies .............. (59,135,486) (6,546,244) (2,582,262)
Net unrealized appreciation (depreciation) of
collateral received for securities loaned .................. (1,163,757) 0 (442,898)
Net unrealized appreciation (depreciation) of options, swap
agreements, and short sales ................................ 0 0 (40,655)
-------------- --------------- -----------------
TOTAL NET ASSETS ................................................... $ 109,996,118 $ 7,928,361 $ 93,610,164
============== =============== =================
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE (1)
Net assets ................................................... $ 109,996,118 $ 7,928,361 $ 93,610,164
Shares outstanding ........................................... 26,418,383 1,600,392 9,646,110
Net asset value and offering price per share ................. $ 4.16 $ 4.95 $ 9.70
-------------- --------------- -----------------
Investments at cost ................................................ $ 195,003,539 $ 14,365,939 $ 122,823,164
-------------- --------------- -----------------
Proceeds from sale commitments ..................................... $ 0 $ 0 $ 5,088,878
-------------- --------------- -----------------
Securities on loan, at fair value (Note 2) ......................... $ 24,914,645 $ 0 $ 6,778,684
-------------- --------------- -----------------
- ----------
1. Each Fund has an unlimited number of authorized shares.
2. Maximum offering price is computed as 100/94.25 of net asset value. On
investments of $50,000 or more, the offering price is reduced. The
accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
142 Wells Fargo Advantage Variable Trust Funds
Statements of Operations -- For the Year Ended December 31, 2008
VT Asset VT C&B
Allocation Large Cap
Fund Value Fund
------------- --------------
INVESTMENT INCOME
Dividends (1) .................................................... $ 2,522,619 $ 609,380
Interest ......................................................... 3,308,484 30
Income from affiliated securities ................................ 159,807 12,505
Securities lending income ........................................ 453,227 4,027
------------- --------------
Total investment income ................................................ 6,444,137 625,942
------------- --------------
EXPENSES
Advisory fees .................................................... 1,050,867 135,202
Administration fees .............................................. 305,706 39,331
Custody fees ..................................................... 38,213 4,916
Accounting fees .................................................. 32,180 19,626
Distribution fees (Note 3) ....................................... 477,667 61,456
Professional fees ................................................ 32,438 29,802
Shareholder reports .............................................. 70,272 25,729
Trustees' fees ................................................... 8,646 8,646
Other fees and expenses .......................................... 27,073 3,778
------------- --------------
Total expenses ......................................................... 2,043,062 328,486
------------- --------------
LESS
Waived fees and reimbursed expenses (Note 3) ..................... (132,396) (82,664)
Net expenses ..................................................... 1,910,666 245,822
------------- --------------
Net investment income (loss) ........................................... 4,533,471 380,120
------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) FROM
Securities, foreign currencies and foreign currency translation .. 877,031 (2,372,172)
Collateral received for securities loaned ........................ (363,648) (5,670)
Futures transactions ............................................. (27,663,638) 0
Options, swap agreements, MMD rate locks and sale commitments .... 0 0
Affiliated Securities ............................................ 34,007 0
------------- --------------
Net realized gain and loss from investments ............................ (27,116,248) (2,377,842)
------------- --------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Securities, foreign currencies and foreign currency translation .. (37,303,216) (8,054,766)
Collateral received for securities loaned ........................ (942,489) (9,608)
Futures transactions ............................................. (2,576,509) 0
Options, swap agreements, MMD rate locks and sale commitments .... 0 0
Net change in unrealized appreciation (depreciation) of investments .... (40,822,214) (8,064,374)
------------- --------------
Net realized and unrealized gain (loss) on investments ................. (67,938,462) (10,442,216)
------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ $ (63,404,991) $ (10,062,096)
============= ==============
1. Net of foreign withholding taxes of ................................. $ 0 $ 1,924
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 143
Statements of Operations -- For the Year Ended December 31, 2008
VT Large VT Large VT Money
VT Discovery VT Equity VT International Company Company Market VT Opportunity
Fund Income Fund Core Fund Core Fund Growth Fund Fund Fund
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
$ 665,027 $ 1,982,932 $ 1,000,767 $ 342,242 $ 949,643 $ 0 $ 7,684,423
7,243 453 12 32 66 1,640,415 120,148
181,542 14,324 5,420 3,883 22,132 4,503 1,364,192
108,380 20,108 181 1,094 13,363 0 222,405
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
962,192 2,017,817 1,006,380 347,251 985,204 1,644,918 9,391,168
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
1,381,556 375,351 239,392 84,838 410,069 165,280 4,498,490
294,732 109,193 51,070 24,680 119,293 88,150 974,215
36,841 13,649 31,919 3,085 14,912 11,019 121,777
15,859 23,222 7,035 19,278 23,473 21,322 23,479
460,519 170,614 79,797 38,563 186,395 137,733 1,522,211
42,277 30,133 34,743 28,977 29,483 37,504 64,715
92,567 56,481 52,816 19,325 61,325 21,666 188,720
8,646 8,646 8,646 8,646 8,646 8,646 8,646
8,548 3,846 21,145 4,656 4,705 8,777 14,324
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
2,341,545 791,135 526,563 232,048 858,301 500,097 7,416,577
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(223,160) (108,534) (206,640) (77,797) (112,706) (80,739) (895,727)
2,118,385 682,601 319,923 154,251 745,595 419,358 6,520,850
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(1,156,193) 1,335,216 686,457 193,000 239,609 1,225,560 2,870,318
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(31,588,073) (3,623,706) (3,643,756) (178,234) (5,336,215) (3,369) (45,107,433)
(510,442) (46,721) (1,464) (10,050) (38,486) 0 (1,234,223)
0 0 0 0 0 0 0
0 0 0 0 0 0 (2,063,040)
0 0 0 0 0 0 0
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(32,098,515) (3,670,427) (3,645,220) (188,284) (5,374,701) (3,369) (48,404,696)
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(64,238,488) (26,843,563) (13,990,979) (6,964,086) (29,587,982) 0 (228,010,121)
(559,068) (51,279) (1,381) (14,241) (77,346) 0 (1,348,150)
0 0 0 0 0 0 0
0 0 0 0 0 0 969,892
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(64,797,556) (26,894,842) (13,992,360) (6,978,327) (29,665,328) 0 (228,388,379)
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
(96,896,071) (30,565,269) (17,637,580) (7,166,611) (35,040,029) (3,369) (276,793,075)
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
- --------------- -------------- ----------------- ------------- -------------- ------------- -------------------
$ (98,052,264) $ (29,230,053) $ (16,951,123) $ (6,973,611) $ (34,800,420) $ 1,222,191 $ (273,922,757)
=============== ============== ================= ============= ============== ============= ===================
$ 1,784 $ 3,682 $ 111,890 $ 0 $ 20,056 $ 0 $ 85,331
144 Wells Fargo Advantage Variable Trust Funds
Statements of Operations -- For the Year Ended December 31, 2008
VT Small Cap VT Small/Mid VT Total Return
Growth Fund Cap Value Fund Bond Fund
-------------- --------------- -----------------
INVESTMENT INCOME
Dividends (1) .................................................... $ 419,146 $ 306,471 $ 0
Interest ......................................................... 6,795 0 5,892,860
Income from affiliated securities ................................ 53,328 3,240 215,439
Securities lending income ........................................ 308,904 0
94,888
-------------- --------------- -----------------
Total investment income ................................................ 788,173 309,711 6,203,187
-------------- --------------- -----------------
EXPENSES
Advisory fees .................................................... 1,262,077 99,998 512,109
Administration fees .............................................. 269,244 21,333 182,083
Custody fees ..................................................... 33,656 2,667 22,760
Accounting fees .................................................. 28,779 18,390 26,269
Distribution fees (Note 3) ....................................... 420,692 33,333 284,505
Professional fees ................................................ 29,549 35,759 32,570
Shareholder reports .............................................. 71,612 3,540 282,624
Trustees' fees ................................................... 8,646 8,646 8,646
Other fees and expenses .......................................... 5,379 2,974 5,145
-------------- --------------- -----------------
Total expenses ......................................................... 2,129,634 226,640 1,356,711
-------------- --------------- -----------------
LESS
Waived fees and reimbursed expenses (Note 3) ..................... (109,622) (74,630) (332,493)
Net expenses ..................................................... 2,020,012 152,010 1,024,218
-------------- --------------- -----------------
Net investment income (loss) ........................................... (1,231,839) 157,701 5,178,969
-------------- --------------- -----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) FROM
Securities, foreign currencies and foreign currency translation .. (23,825,151) (483,182) 1,903,979
Collateral received for securities loaned ........................ (822,141) 0 (151,385)
Affiliated Securities ............................................ 0 0 5,322
-------------- --------------- -----------------
Net realized gain and loss from investments ............................ (24,647,292) (483,182) 1,757,916
-------------- --------------- -----------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Securities, foreign currencies and foreign currency translation .. (57,889,232) (6,233,419) (4,235,506)
Collateral received for securities loaned ........................ (952,376) 0 (403,204)
Options, swap agreements, MMD rate locks and sale commitments .... 0 0 (32,172)
-------------- --------------- -----------------
Net change in unrealized appreciation (depreciation) of investments .... (58,841,608) (6,233,419) (4,670,882)
-------------- --------------- -----------------
Net realized and unrealized gain (loss) on investments ................. (83,488,900) (6,716,601) (2,912,966)
-------------- --------------- -----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ........ $ (84,720,739) $ (6,558,900) $ 2,266,003
-------------- --------------- -----------------
1. Net of foreign withholding taxes of ................................. $ 0 $ 2,972 $ 0
The accompanying notes are an integral part of these financial statements.
146 Wells Fargo Advantage Variable Trust Funds
Statements of Changes in Net Assets
VT ASSET ALLOCATION FUND
---------------------------------------
For the For the
Year Ended Year Ended
December 31, 2008 December 31, 2007
------------------- -----------------
INCREASE (DECREASE) IN NET ASSETS
Beginning Net Assets ................................................... $ 254,054,290 $ 288,387,160
OPERATIONS
Net investment income (loss) ........................................... 4,533,471 6,201,322
Net realized gain (loss) on investments ..................................... (27,116,248) 16,303,749
Net change in unrealized appreciation (depreciation) of investments .... (40,822,214) (2,142,553)
------------------- -----------------
Net increase (decrease) in net assets resulting from operations ............. (63,404,991) 20,362,518
------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income .................................................. (4,529,434) (6,059,537)
Net realized gain on sales of investments .............................. (15,226,958) (4,230,151)
------------------- -----------------
Total distributions to shareholders ......................................... (19,756,392) (10,289,688)
------------------- -----------------
CAPITAL SHARES TRANSACTIONS
Proceeds from shares sold .............................................. 10,395,528 15,975,890
Reinvestment of distributions .......................................... 19,756,396 10,289,756
Cost of shares redeemed ................................................ (75,086,933) (70,671,346)
------------------- -----------------
Net increase (decrease) in net assets resulting from capital
share transactions - Total .......................................... (44,935,009) (44,405,700)
=================== =================
NET INCREASE (DECREASE) IN NET ASSETS ....................................... (128,096,392) (34,332,870)
=================== =================
ENDING NET ASSETS ........................................................... $ 125,957,898 $ 254,054,290
=================== =================
SHARES ISSUED AND REDEEMED
Shares sold ............................................................ 795,214 1,090,079
Shares issued in reinvestment of distributions ......................... 1,689,360 701,089
Shares redeemed ........................................................ (6,308,752) (4,844,255)
------------------- -----------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING
FROM CAPITAL SHARE TRANSACTIONS ..................................... (3,824,178) (3,053,087)
=================== =================
Ending balance of undistributed net investment income (loss) ................ $ 96,630 $ 119,020
------------------- -----------------
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 147
Statements of Changes in Net Assets
VT C&B LARGE CAP VALUE FUND VT DISCOVERY FUND VT EQUITY INCOME FUND
- ------------------------------------- ------------------------------------- -------------------------------------
For the For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
$ 30,467,090 $ 32,168,833 $ 238,893,691 $ 233,946,749 $ 94,096,532 $ 116,232,202
380,120 358,915 (1,156,193) (1,736,985) 1,335,216 1,568,163
(2,377,842) 2,454,447 (32,098,515) 53,314,005 (3,670,427) 10,471,070
(8,064,374) (3,327,040) (64,797,556) (3,454,623) (26,894,842) (8,869,555)
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(10,062,096) (513,678) (98,052,264) 48,122,397 (29,230,053) 3,169,678
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(369,107) (338,853) 0 0 (1,271,085) (1,552,694)
0 0 0 0 (10,495,427) (6,896,727)
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(369,107) (338,853) 0 0 (11,766,512) (8,449,421)
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
8,255,803 11,932,733 43,160,770 32,983,718 9,261,108 10,217,892
369,107 338,853 0 0 11,766,512 8,449,441
(10,643,563) (13,120,798) (70,853,473) (76,159,173) (30,675,944) (35,523,260)
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(2,018,653) (849,212) (27,692,703) (43,175,455) (9,648,324) (16,855,927)
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(12,449,856) (1,701,743) (125,744,967) 4,946,942 (50,644,889) (22,135,670)
================= ================= ================= ================= ================= =================
$ 18,017,234 $ 30,467,090 $ 113,148,724 $ 238,893,691 $ 43,451,643 $ 94,096,532
================= ================= ================= ================= ================= =================
873,828 1,032,150 2,510,179 1,744,047 681,676 517,597
41,002 29,870 0 0 877,757 424,591
(1,126,012) (1,150,985) (4,272,197) (4,093,604) (2,181,200) (1,808,274)
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(211,182) (88,965) (1,762,018) (2,349,557) (621,767) (866,086)
================= ================= ================= ================= ================= =================
$ 31,075 $ 20,062 $ 0 $ 0 $ 27,273 $ 15,454
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
148 Wells Fargo Advantage Variable Trust Funds
Statements of Changes in Net Assets
VT INTERNATIONAL CORE FUND
-----------------------------------------
For the For the
Year Ended Year Ended
December 31, 2008 December 31, 2007
------------------- ------------------
INCREASE (DECREASE) IN NET ASSETS
Beginning Net Assets ....................................................... $ 44,470,148 $ 44,316,850
OPERATIONS
Net investment income (loss) ............................................... 686,457 727,001
Net realized gain (loss) on investments .................................... (3,645,220) 6,508,824
Net change in unrealized appreciation (depreciation) of investments ........ (13,992,360) (1,710,827)
------------ ------------
Net increase (decrease) in net assets resulting from operations ................. (16,951,123) 5,524,998
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income ...................................................... (630,655) (6,103)
Net realized gain on sales of investments .................................. (6,581,030) (3,343,838)
------------ ------------
Total distributions to shareholders ............................................. (7,211,685) (3,349,941)
------------ ------------
CAPITAL SHARES TRANSACTIONS
Proceeds from shares sold .................................................. 7,147,838 6,824,060
Reinvestment of distributions .............................................. 7,211,685 3,349,870
Cost of shares redeemed .................................................... (15,518,129) (12,195,689)
------------ ------------
Net increase (decrease) in net assets resulting from capital share
transactions - Total ....................................................... (1,158,606) (2,021,759)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ........................................... (25,321,414) 153,298
============ ============
ENDING NET ASSETS ............................................................... $ 19,148,734 $ 44,470,148
============ ============
SHARES ISSUED AND REDEEMED
Shares sold ................................................................ 978,032 656,751
Shares issued in reinvestment of distributions ............................. 1,028,771 314,837
Shares redeemed ............................................................ (2,146,466) (1,167,028)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING FROM CAPITAL SHARE
TRANSACTIONS (139,663) (195,440)
============ ============
Ending balance of undistributed net investment income (loss) .................... $ 535,743 $ 611,585
============ ============
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 149
Statements of Changes in Net Assets
VT LARGE COMPANY CORE FUND VT LARGE COMPANY GROWTH FUND VT MONEY MARKET FUND
- ------------------------------------- ------------------------------------- -------------------------------------
For the For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
$ 20,140,962 $ 25,349,251 $ 99,065,355 $ 108,621,014 $ 50,603,118 $ 52,499,083
193,000 179,325 239,609 202,662 1,225,560 2,203,670
(188,284) 2,739,690 (5,374,701) 2,378,797 (3,369) 211
(6,978,327) (2,154,945) (29,665,328) 5,501,174 0 0
------------- ------------ ------------- ------------- ------------- -------------
(6,973,611) 764,070 (34,800,420) 8,082,633 1,222,191 2,203,881
------------- ------------ ------------- ------------- ------------- -------------
(179,329) 0 (202,677) 0 (1,226,818) (2,203,670)
0 0 0 0 0 0
------------- ------------ ------------- ------------- ------------- -------------
(179,329) 0 (202,677) 0 (1,226,818) (2,203,670)
------------- ------------ ------------- ------------- ------------- -------------
1,020,673 1,726,212 6,019,409 5,962,327 72,973,557 52,256,429
179,329 0 202,677 0 1,231,310 2,210,831
(4,435,664) (7,698,571) (21,267,636) (23,600,619) (64,035,786) (56,363,436)
(3,235,662) (5,972,359) (15,045,550) (17,638,292) 10,169,081 (1,896,176)
------------- ------------ ------------- ------------- ------------- -------------
(10,388,602) (5,208,289) (50,048,647) (9,555,659) 10,164,454 (1,895,965)
============= ============ ============= ============= ============= =============
$ 9,752,360 $ 20,140,962 $ 49,016,708 $ 99,065,355 $ 60,767,572 $ 50,603,118
============= ============ ============= ============= ============= =============
72,442 103,579 718,483 590,520 72,973,557 52,256,429
12,709 0 22,850 0 1,231,310 2,210,831
(325,148) (467,398) (2,533,719) (2,316,245) (64,035,786) (56,363,436)
------------- ------------ ------------- ------------- ------------- -------------
(239,997) (363,819) (1,792,386) (1,725,725) 10,169,081 (1,896,176)
============= ============ ============= ============= ============= =============
$ 192,996 $ 179,325 $ 239,595 $ 202,663 $ (1,108) $ 0
============= ============ ============= ============= ============= =============
150 Wells Fargo Advantage Variable Trust Funds
Statements of Changes in Net Assets
VT OPPORTUNITY FUND
-------------------------------------
For the For the
Year Ended Year Ended
December 31, 2008 December 31, 2007
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS
Beginning Net Assets ...................................................... $ 779,285,577 $ 897,046,934
OPERATIONS
Net investment income (loss) .............................................. 2,870,318 6,405,785
Net realized gain (loss) on investments ................................... (48,404,696) 141,371,076
Net change in unrealized appreciation (depreciation) of investments ....... (228,388,379) (87,770,740)
-------------- --------------
Net increase (decrease) in net assets resulting from operations ................ (273,922,757) 60,006,121
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income ..................................................... (11,553,162) (5,147,124)
Net realized gain on sales of investments ................................. (136,366,472) (120,619,260)
-------------- --------------
Total distributions to shareholders ............................................ (147,919,634) (125,766,384)
-------------- --------------
CAPITAL SHARES TRANSACTIONS
Proceeds from shares sold ................................................. 63,008,780 65,979,170
Reinvestment of distributions ............................................. 147,919,633 125,766,640
Cost of shares redeemed ................................................... (190,174,110) (243,746,904)
-------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions - Total ........................................... 20,754,303 (52,001,094)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS .......................................... (401,088,088) (117,761,357)
============== ==============
ENDING NET ASSETS ............................................................. $ 378,197,489 $ 779,285,577
============== ==============
SHARES ISSUED AND REDEEMED
Shares sold ............................................................... 3,771,975 2,723,976
Shares issued in reinvestment of distributions ............................ 9,439,670 5,390,769
Shares redeemed ........................................................... (11,363,179) (10,081,414)
-------------- --------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING RESULTING
FROM CAPITAL SHARE TRANSACTIONS .............................................. $ 1,848,466 $ (1,966,669)
============== ==============
Ending balance of undistributed net investment income (loss) ................... $ 0 $ 12,522,814
============== ==============
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 151
Statements of Changes in Net Assets
VT SMALL CAP GROWTH FUND VT SMALL/MID CAP VALUE FUND VT TOTAL RETURN BOND FUND
- ------------------ ------------------ ------------------------------------- -------------------------------------
For the For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007 December 31, 2008 December 31, 2007
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
$ 221,394,115 $ 190,516,263 $ 17,526,968 $ 23,462,113 $ 129,097,689 $ 116,449,325
(1,231,839) (1,524,342) 157,701 (63,687) 5,178,969 5,817,560
(24,647,292) 48,101,338 (483,182) 2,998,200 1,757,916 270,020
(58,841,608) (20,819,556) (6,233,419) (2,917,502) (4,670,882) 1,470,381
------------- ------------- ------------- ------------- ------------- -------------
(84,720,739) 25,757,440 (6,558,900) 17,011 2,266,003 7,557,961
------------- ------------- ------------- ------------- ------------- -------------
0 0 0 (4,115) (5,436,067) (5,839,104)
(46,824,280) (31,940,178) (2,731,743) (3,459,810) 0 0
------------- ------------- ------------- ------------- ------------- -------------
(46,824,280) (31,940,178) (2,731,743) (3,463,925) (5,436,067) (5,839,104)
------------- ------------- ------------- ------------- ------------- -------------
20,577,751 29,958,902 3,352,202 5,064,947 15,432,543 28,392,338
46,824,656 31,939,491 2,731,744 3,463,925 5,439,219 5,851,603
(47,255,385) (24,837,803) (6,391,910) (11,017,103) (53,189,223) (23,314,434)
20,147,022 37,060,590 (307,964) (2,488,231) (32,317,461) 10,929,507
------------- ------------- ------------- ------------- ------------- -------------
(111,397,997) 30,877,852 (9,598,607) (5,935,145) (35,487,525) 12,648,364
============= ============= ============= ============= ============= =============
$ 109,996,118 $ 221,394,115 $ 7,928,361 $ 17,526,968 $ 93,610,164 $ 129,097,689
============= ============= ============= ============= ============= =============
2,847,306 2,962,137 477,256 389,409 1,568,666 2,898,839
7,856,486 3,162,328 327,940 283,928 557,253 596,842
(7,135,470) (2,400,873) (787,217) (865,255) (5,467,273) (2,381,720)
------------- ------------- ------------- ------------- ------------- -------------
3,568,322 3,723,592 17,979 (191,918) (3,341,354) 1,113,961
============= ============= ============= ============= ============= =============
$ 0 $ 0 $ 108,598 $ (24,142) $ 17,650 $ 15,216
============= ============= ============= ============= ============= =============
152 Wells Fargo Advantage Variable Trust Funds
Financial Highlights
Beginning Net Realized Distributions
Net Asset Net and Unrealized from Net Distributions
Value Per Investment Gain (Loss) Investment from Net
Share Income (Loss) on Investments Income Realized Gains
--------- ------------- -------------- ------------- --------------
VT ASSET ALLOCATION FUND
January 1, 2008 to December 31, 2008 ............... $14.64 0.30 (4.32) (0.30) (1.01)
January 1, 2007 to December 31, 2007 ............... $14.13 0.34 0.73 (0.33) (0.23)
January 1, 2006 to December 31, 2006 ............... $13.05 0.31 1.23 (0.31) (0.15)
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)
VT C&B LARGE CAP VALUE FUND
January 1, 2008 to December 31, 2008 ............... $10.99 0.14 (3.96) (0.14) 0.00
January 1, 2007 to December 31, 2007 ............... $11.24 0.13 (0.26) (0.12) 0.00
January 1, 2006 to December 31, 2006 ............... $ 9.34 0.15 1.90 (0.15) 0.00
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
VT DISCOVERY FUND
January 1, 2008 to December 31, 2008 ............... $20.11 (0.11) (8.81) 0.00 0.00
January 1, 2007 to December 31, 2007 ............... $16.44 (0.15) 3.82 0.00 0.00
January 1, 2006 to December 31, 2006 ............... $14.34 (0.13) 2.23 0.00 0.00
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
VT EQUITY INCOME FUND
January 1, 2008 to December 31, 2008 ............... $18.74 0.30 (6.46) (0.28) (2.42)
January 1, 2007 to December 31, 2007 ............... $19.75 0.30 0.33 (0.30) (1.34)
January 1, 2006 to December 31, 2006 ............... $16.96 0.28 2.83 (0.28) (0.04)
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
VT INTERNATIONAL CORE FUND
January 1, 2008 to December 31, 2008 ............... $10.36 0.19 (4.03) (0.17) (1.74)
January 1, 2007 to December 31, 2007 ............... $ 9.87 0.17 1.10 0.00 (0.78)
January 1, 2006 to December 31, 2006 ............... $ 8.66 0.18 1.56 (0.16) (0.37)
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
VT LARGE COMPANY CORE FUND
January 1, 2008 to December 31, 2008 ............... $15.96 0.21 (6.46) (0.16) 0.00
January 1, 2007 to December 31, 2007 ............... $15.59 0.14 0.23 0.00 0.00
January 1, 2006 to December 31, 2006 ............... $13.58 0.10 2.01 (0.10) 0.00
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
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. These ratios do not include expenses from the Underlying Funds.
3. 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.
4. Portfolio turnover ratio excluding TBAs is 337%.
5. Portfolio turnover ratio excluding TBAs is 309%.
6. Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. Portfolio turnover rates presented
for periods of less than one year are not annualized.
7. Portfolio turnover ratio excluding TBAs is 272%.
8. Calculated based upon average shares outstanding.
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 153
Financial Highlights
Ending
Net Asset Ratio to Average Net Assets (Annualized)(1) Portfolio Net Assets at
Return Value Per Net Investment Gross Expenses Net Total Turnover End of Period
of Capital Share Income (Loss) Expenses (2) Waived (2) Expenses (2) Return (3) Rate (6) (000's omitted)
- ---------- --------- ------------- ------------ ----------- ----------- ----------- ---------- ---------------
0.00 $ 9.31 2.37% 1.07% (0.07)% 1.00% (29.11)% 21% $125,958
0.00 $14.64 2.26% 1.02% (0.02)% 1.00% 7.60% 25% $254,054
0.00 $14.13 2.27% 1.02% (0.02)% 1.00% 12.14% 12% $288,387
0.00 $13.05 2.06% 1.04% (0.04)% 1.00% 4.99% 2% $309,673
0.00 $12.97 2.08% 1.02% (0.02)% 1.00% 9.34% 5% $326,374
0.00 $ 7.03 1.55% 1.33% (0.33)% 1.00% (35.01)% 26% $ 18,017
0.00 $10.99 1.11% 1.17% (0.17)% 1.00% (1.17)% 35% $ 30,467
0.00 $11.24 1.44% 1.17% (0.17)% 1.00% 22.12% 30% $ 32,169
0.00 $ 9.34 0.76% 1.17% (0.17)% 1.00% 3.11% 106% $ 28,664
0.00 $ 9.13 1.58% 1.19% (0.19)% 1.00% 11.22% 16% $ 30,287
0.00 $11.19 (0.63)% 1.27% (0.12)% 1.15% (44.36)% 166% $113,149
0.00 $20.11 (0.72)% 1.21% (0.06)% 1.15% 22.32% 135% $238,894
0.00 $16.44 (0.76)% 1.21% (0.06)% 1.15% 14.64% 114% $233,947
0.00 $14.34 (0.76)% 1.26% (0.08)% 1.18% 8.27% 144% $250,275
0.00 $14.65 (0.92)% 1.23% (0.04)% 1.19% 15.72% 168% $ 93,048
0.00 $ 9.88 1.95% 1.15% (0.15)% 1.00% (36.47)% 9% $ 43,452
0.00 $18.74 1.49% 1.05% (0.05)% 1.00% 2.80% 20% $ 94,097
0.00 $19.75 1.53% 1.04% (0.04)% 1.00% 18.55% 14% $116,232
0.00 $16.96 1.43% 1.05% (0.05)% 1.00% 5.38% 23% $114,375
0.00 $16.33 1.59% 1.03% (0.03)% 1.00% 11.08% 13% $120,138
0.00 $ 4.61 2.15% 1.64% (0.64)% 1.00% (43.41)% 49% $ 19,149
0.00 $10.36 1.57% 1.44% (0.44)% 1.00% 12.67% 65% $ 44,470
0.00 $ 9.87 1.85% 1.43% (0.43)% 1.00% 20.81% 43% $ 44,317
0.00 $ 8.66 1.61% 1.41% (0.41)% 1.00% 9.67% 53% $ 39,602
0.00 $ 8.27 0.87% 1.42% (0.42)% 1.00% 9.63% 115% $ 35,071
0.00 $ 9.55 1.25% 1.50% (0.50)% 1.00% (39.48)% 31% $ 9,752
0.00 $15.96 0.76% 1.22% (0.22)% 1.00% 2.37% 42% $ 20,141
0.00 $15.59 0.64% 1.19% (0.19)% 1.00% 15.57% 19% $ 25,349
0.00 $13.58 0.49% 1.13% (0.13)% 1.00% (2.24)% 112% $ 28,460
0.00 $13.97 (0.03)% 1.13% (0.13)% 1.00% 8.38% 45% $ 38,055
154 Wells Fargo Advantage Variable Trust Funds
Financial Highlights
Beginning Net Realized Distributions
Net Asset Net and Unrealized from Net Distributions
Value Per Investment Gain (Loss) Investment from Net
Share Income (Loss) on Investments Income Realized Gains
--------- -------------- ---------------- ------------- ----------------
VT LARGE COMPANY GROWTH FUND
January 1, 2008 to December 31, 2008 .......... $10.32 0.03 (4.05) (0.02) 0.00
January 1, 2007 to December 31, 2007 .......... $ 9.59 0.02 0.71 0.00 0.00
January 1, 2006 to December 31, 2006 .......... $ 9.37 (0.02) 0.24 0.00 0.00
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
VT MONEY MARKET FUND
January 1, 2008 to December 31, 2008 .......... $ 1.00 0.02 0.00 (0.02) 0.00
January 1, 2007 to December 31, 2007 .......... $ 1.00 0.05 0.00 (0.05) 0.00
January 1, 2006 to December 31, 2006 .......... $ 1.00 0.04 0.00 (0.04) 0.00
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
VT OPPORTUNITY FUND
January 1, 2008 to December 31, 2008 .......... $22.03 0.12 (7.30) (0.37) (4.32)
January 1, 2007 to December 31, 2007 .......... $24.02 0.21 1.60 (0.16) (3.64)
January 1, 2006 to December 31, 2006 .......... $24.22 0.13 2.43 0.00 (2.76)
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
VT SMALL CAP GROWTH FUND
January 1, 2008 to December 31, 2008 .......... $ 9.69 (0.05) (3.31) 0.00 (2.17)
January 1, 2007 to December 31, 2007 .......... $ 9.96 (0.07) 1.52 0.00 (1.72)
January 1, 2006 to December 31, 2006 .......... $ 8.34 (0.09) 1.94 0.00 (0.23)
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
VT SMALL/MID CAP VALUE FUND
January 1, 2008 to December 31, 2008 .......... $11.08 0.098 (4.21) 0.00 (2.01)
January 1, 2007 to December 31, 2007 .......... $13.22 (0.04) 0.21 0.00 (2.31)
January 1, 2006 to December 31, 2006 .......... $13.66 (0.03) 1.84 0.00 (2.25)
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
VT TOTAL RETURN BOND FUND
January 1, 2008 to December 31, 2008 .......... $ 9.94 0.44 (0.21) (0.47) 0.00
January 1, 2007 to December 31, 2007 .......... $ 9.81 0.45 0.13 (0.45) 0.00
January 1, 2006 to December 31, 2006 .......... $ 9.86 0.43 (0.05) (0.43) 0.00
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)
The accompanying notes are an integral part of these financial statements.
Wells Fargo Advantage Variable Trust Funds 155
Financial Highlights
Ending
Net Asset Ratio to Average Net Assets (Annualized)(1) Portfolio Net Assets at
Return Value Per Net Investment Gross Expenses Net Total Turnover End of Period
of Capital Share Income (Loss) Expenses (2) Waived (2) Expenses (2) Return (3) Rate (6) (000's omitted)
- ---------- --------- -------------- ------------ ---------- ------------ --------- -------- ---------------
0.00 $ 6.28 0.32% 1.15% (0.15)% 1.00% (38.99)% 7% $ 49,017
0.00 $10.32 0.19% 1.05% (0.05)% 1.00% 7.61% 10% $ 99,065
0.00 $ 9.59 (0.16)% 1.04% (0.04)% 1.00% 2.35% 12% $ 108,621
0.00 $ 9.37 (0.21)% 1.05% (0.05)% 1.00% 5.70% 11% $ 116,003
0.00 $ 8.88 0.18% 1.05% (0.05)% 1.00% 3.26% 15% $ 107,229
0.00 $ 1.00 2.24% 0.89% (0.14)% 0.75% 2.27% NA $ 60,768
0.00 $ 1.00 4.56% 0.84% (0.09)% 0.75% 4.68% NA $ 50,603
0.00 $ 1.00 4.33% 0.82% (0.07)% 0.75% 4.41% NA $ 52,499
0.00 $ 1.00 2.53% 0.82% (0.07)% 0.75% 2.55% NA $ 55,504
0.00 $ 1.00 0.68% 0.87% (0.12)% 0.75% 0.70% NA $ 58,738
0.00 $10.16 0.47% 1.21% (0.14)% 1.07% (40.10)% 70% $ 378,197
0.00 $22.03 0.74% 1.19% (0.12)% 1.07% 6.63% 64% $ 779,286
0.00 $24.02 0.48% 1.18% (0.11)% 1.07% 12.22% 41% $ 897,047
0.00 $24.22 (0.06)% 1.32% (0.21)% 1.11% 7.88% 41% $1,004,763
0.00 $22.45 (0.22)% 1.41% (0.35)% 1.06% 18.22% 40% $1,019,885
0.00 $ 4.16 (0.73)% 1.26% (0.06)% 1.20% (41.42)% 76% $ 109,996
0.00 $ 9.69 (0.73)% 1.22% (0.02)% 1.20% 13.81% 121% $ 221,394
0.00 $ 9.96 (0.98)% 1.23% (0.03)% 1.20% 22.75% 135% $ 190,516
0.00 $ 8.34 (0.99)% 1.24% (0.04)% 1.20% 6.24% 128% $ 167,033
0.00 $ 7.85 (0.91)% 1.24% (0.04)% 1.20% 13.77% 175% $ 180,230
0.00 $ 4.95 1.18% 1.69% (0.55)% 1.14% (44.55)% 39% $ 7,928
0.00 $11.08 (0.31)% 1.51% (0.37)% 1.14% (0.32)% 60% $ 17,527
0.00 $13.22 (0.23)% 1.46% (0.32)% 1.14% 15.29% 81% $ 23,462
0.00 $13.66 (0.49)% 1.48% (0.33)% 1.15% 16.50% 112% $ 23,889
0.00 $11.77 (0.29)% 1.49% (0.37)% 1.12% 16.77% 72% $ 25,989
0.00 $ 9.70 4.55% 1.19% (0.29)% 0.90% 2.39% 692% (7) $ 93,610
0.00 $ 9.94 4.58% 0.94% (0.04)% 0.90% 6.08% 580% (5) $ 129,098
0.00 $ 9.81 4.36% 0.95% (0.05)% 0.90% 3.92% 662% (4) $ 116,449
0.00 $ 9.86 3.58% 0.96% (0.06)% 0.90% 1.90% 714% $ 85,445
0.00 $10.08 3.34% 0.96% (0.06)% 0.90% 4.39% 773% $ 76,683
156 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
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, 2008, the Trust consists of 12 separate
funds (each, a "Fund", collectively, the "Funds"). These financial statements
present the VT Asset Allocation Fund, VT C&B Large Cap Value Fund (formerly
named the Equity Value Fund), VT Discovery Fund, VT Equity Income Fund, VT
International Core Fund (formerly named the International Equity Fund), VT Large
Company Core Fund , VT Large Company Growth Fund, VT Money Market Fund, VT
Opportunity Fund, VT Small Cap Growth Fund, VT Small/Mid Cap Value Fund and VT
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. Each Fund is a
diversified series of the Trust.
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.
Under the Trust's organizational documents, their officers and directors are
indemnified against certain liabilities that may arise out of performance of
their duties to the Trust. Additionally, in the normal course of business, the
Trust may enter into contracts with service providers that contain a variety of
indemnification clauses. 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. ("NASDAQ") are valued at the NASDAQ Official Closing
Price ("NOCP"), and if no NOCP is available, then at the last reported sales
price. If no sale price is shown on the NASDAQ, the bid price will be used. In
the absence of any sale of securities listed on the NASDAQ, and in the case of
other securities, including U.S. Government obligations, but excluding debt
securities maturing in 60 days or less, the price will be deemed "stale" and the
valuations will be determined in accordance with the Funds' Fair Valuation
Procedures.
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.
Wells Fargo Advantage Variable Trust Funds 157
Notes to Financial Statements
Debt securities with original maturities of 60 days or less and other short-term
debt securities in which cash collateral received for securities loaned may be
invested, 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 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.
FAIR VALUATION MEASUREMENTS
The Funds adopted Statement of Financial Accounting Standards No. 157, Fair
Value Measurements ("FAS 157"), effective January 1, 2008. In accordance with
FAS 157, fair value is defined as the price that a Fund would receive upon
selling an investment in a timely transaction to an independent buyer in the
principal or most advantageous market of the investment. FAS 157 established a
three-tier hierarchy to maximize the use of observable market data and minimize
the use of unobservable inputs and to establish classification of fair value
measurements for disclosure purposes. Inputs refer broadly to the assumptions
that market participants would use in pricing the asset or liability, including
assumptions about risk. Inputs may be observable or unobservable. Observable
inputs are inputs that reflect the assumptions market participants would use in
pricing the asset or liability developed based on market data obtained from
sources independent of the reporting entity. Unobservable inputs are inputs that
reflect the reporting entity's own assumptions regarding the assumptions market
participants would use in pricing the asset or liability, based on the best
information available in the circumstances. The three-tier hierarchy of inputs
is summarized in the three broad Levels listed below.
- - Level 1 - quoted prices in active markets for identical investments
- - Level 2 - other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayment speeds, credit risk, etc.)
- - Level 3 - significant unobservable inputs (including the Funds' own
assumptions in determining the fair value of investments)
The following is a summary of the inputs used as of December 31, 2008 in valuing
the Funds' investments in securities:
Total Fair Value
Fund Level (1) Level (2) Level (3) as of 12/31/08
- --------------------------- ------------ ------------ ----------- -----------------
VT ASSET ALLOCATION FUND $ 84,418,975 $ 87,754,809 $ 1,518,249 $ 173,692,033
VT C&B LARGE CAP VALUE FUND 17,600,534 658,892 25,616 18,285,042
VT DISCOVERY FUND 116,886,266 14,124,767 1,689,971 132,701,004
VT EQUITY INCOME FUND 43,883,689 1,433,140 171,469 45,488,298
VT INTERNATIONAL CORE FUND 905,103 17,868,733 408,666 19,182,502
VT LARGE COMPANY CORE FUND 9,850,282 202,764 24,258 10,077,304
VT LARGE COMPANY GROWTH FUND 50,187,834 3,885,517 464,889 54,538,240
VT MONEY MARKET FUND 0 60,490,433 0 60,490,433
VT OPPORTUNITY FUND 378,860,103 18,416,796 1,568,835 398,845,734
VT SMALL CAP GROWTH FUND 116,203,631 16,523,674 1,976,991 134,704,296
VT SMALL/MID CAP VALUE FUND 7,680,919 99,494 39,282 7,819,695
VT TOTAL RETURN BOND FUND 2,943,782 112,370,928 4,483,294 119,798,004
158 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
The following is a summary of the inputs used as of December 31, 2008 in valuing
the Funds' investments in other financial instruments:*
Total Unrealized
Appreciation/
Fund Level (1) Level (2) Level (3) (Depreciation)
- ------------------------- -------------- ---------- ---------- ----------------
VT ASSET ALLOCATION FUND $ (2,560,810) $ 0 $ 0 $ (2,560,810)
VT TOTAL RETURN BOND FUND 0 (40,655) 0 (40,655)
* Other financial instruments include: futures, options, sale commitments, and
swaps.
The following is a reconciliation of investments in which significant
unobservable inputs (Level 3) were used in determining value:
VT Asset VT C&B VT Large
Allocation Large Cap VT Discovery VT Equity VT International Company
Fund Value Fund Fund Income Fund Core Fund Core Fund
- ------------------------------------ -------------- ---------- ------------ ----------- ---------------- ---------
Balance as of 12/31/2007 $ 14,300,664 $ 153,181 $ 4,156,534 $ 526,907 $ 3,043 $ 38,051
Accrued discounts (premiums) 0 0 0 0 0 0
Realized gain (loss) (363,648) (5,670) (510,442) (46,721) (1,464) (10,050)
Net change in unrealized
appreciation (depreciation) (942,489) (9,608) (559,068) (51,279) (9,017) (14,241)
Net purchases (sales) (11,476,278) (112,287) (1,397,053) (257,438) 5,374 10,498
Net Transfer in (out) of Level 3 0 0 0 0 410,730 0
Balance as of 12/31/2008 $ 1,518,249 $ 25,616 $ 1,689,971 $ 171,469 $ 408,666 $ 24,258
VT Large VT Small Cap VT Small/Mid
Company VT Money VT Opportunity Growth Cap Value VT Total Return
Growth Fund Market Fund Fund Fund Fund Bond Fund
------------ ----------- -------------- ------------- ------------ ---------------
Balance as of 12/31/2007 $ 174,267 $ 0 $ 12,434,175 $ 7,228,637 $ 0 $ 4,833,957
Accrued discounts (premiums) 0 0 0 0 0 (259)
Realized gain (loss) (38,486) 0 (1,266,483) (822,141) 0 (131,376)
Net change in unrealized
appreciation (depreciation) (77,346) 0 (1,348,150) (952,376) (34,216) (346,836)
Net purchases (sales) 406,454 0 (8,250,707) (3,477,129) 73,498 589,165
Net Transfer in (out) of Level 3 0 0 0 0 0 (461,357)
Balance as of 12/31/2008 $ 464,889 $ 0 $ 1,568,835 $ 1,976,991 $ 39,282 $ 4,483,294
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 using the effective interest method.
Debt obligations may be placed on non-accrual status and related investment
income may be reduced by ceasing current accruals and writing off receivables
when the collection of all or a portion of income has become doubtful based on
consistently applied procedures. A debt obligation is removed from non-accrual
status when the issuer resumes interest payments or when collectibility of
interest is reasonably assured.
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
Wells Fargo Advantage Variable Trust Funds 159
Notes to Financial Statements
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 VT Discovery, VT International Core, VT
Large Company Core, VT Large Company Growth, VT Opportunity, VT Small Cap Growth
and VT Small/Mid Cap Value Funds is declared and distributed to shareholders
annually. Net investment income, if any, for the VT Asset Allocation, VT C&B
Large Value and VT Equity Income Funds is declared and distributed quarterly.
Net investment income, if any, for the VT Money Market and VT 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.
At December 31, 2008, as result of permanent book-to-tax differences, the
following reclassification adjustments were made on the Statements of Assets and
Liabilities:
Undistributed Net Undistributed Net
Fund Investment Income Realized Gain/Loss Paid-in- Capital
- --------------------------- ----------------- ------------------ ----------------
VT Asset Allocation Fund $ (26,427) $ 26,427 $ 0
VT Discovery Fund 1,156,193 52,628,018 (53,784,211)
VT Equity Income Fund (52,312) 52,312 0
VT International Core Fund (131,644) 131,644 0
VT Money Market Fund 150 (150) 0
VT Opportunity Fund (3,839,970) 4,063,889 (223,919)
VT Small Cap Growth Fund 1,231,839 52 (1,231,891)
VT Small/Mid Cap Value Fund (24,961) 24,986 (25)
VT Total Return Bond Fund 259,532 (259,532) 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, 2008.
Management has analyzed the Fund's tax positions taken on federal income tax
returns for all open tax years and has concluded that as of December 31, 2008,
no provision for income tax would be required in the Fund's financial
statements. The Fund's federal and state income and federal excise tax returns
for tax years for which the applicable statutes of limitations have not expired
(open tax years: December 31, 2005; December 31, 2006; December 31, 2007;
December 31, 2008) are subject to examination by the Internal Revenue Service
and state departments of revenue.
160 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
At December 31, 2008, the Fund's net capital loss carryforwards, which are
available to offset future net realized capital gains, were:
Capital Loss
FUND Expiration Year Carryforwards
- -------------------------------- --------------- -------------
VT ASSET ALLOCATION FUND 2016 $ 24,320,298
VT C&B LARGE CAP VALUE FUND 2012 78,234
2016 1,139,689
VT DISCOVERY FUND 2009 94,527,114
2016 2,690,760
VT EQUITY INCOME FUND 2016 3,566,431
VT INTERNATIONAL CORE FUND 2016 981,156
VT LARGE COMPANY CORE FUND 2010 11,186,858
2011 1,781,980
2016 79,792
VT LARGE COMPANY GROWTH FUND 2009 4,034,254
2010 14,881,364
2011 2,858,910
2012 1,003,450
2013 2,022,267
2014 1,615,063
2016 4,132,177
VT MONEY MARKET FUND 2016 3,369
VT OPPORTUNITY FUND 2016 20,712,708
VT SMALL CAP GROWTH FUND 2016 16,036,825
VT SMALL/MID CAP VALUE FUND 2016 114,452
The Funds had deferred post-October capital losses occurring subsequent to
December 31, 2008. For tax purposes, such losses were treated as having occurred
on January 1, 2009. As of December 31, 2008, deferred post-October capital
losses were as follows:
Deferred
Post-October
FUND Capital Loss
- -------------------------------- ------------
VT ASSET ALLOCATION FUND $ 6,139,060
VT C&B LARGE CAP VALUE FUND 1,037,255
VT DISCOVERY FUND 28,273,618
VT INTERNATIONAL CORE FUND 2,443,303
VT LARGE COMPANY CORE FUND 98,614
VT LARGE COMPANY GROWTH FUND 1,203,219
VT OPPORTUNITY FUND 24,832,371
VT SMALL CAP GROWTH FUND 5,624,592
VT SMALL/MID CAP VALUE FUND 214,183
VT TOTAL RETURN BOND FUND 176,005
FORWARD FOREIGN CURRENCY CONTRACTS
The Funds 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, 2008, the Funds had no open forward foreign currency contracts.
Wells Fargo Advantage Variable Trust Funds 161
Notes to Financial Statements
FUTURES CONTRACTS
The Funds 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, 2008, the following Fund held futures contracts:
Notional Net Unrealized
Contract Appreciation/
FUND Contracts Type Expiration Date Amount (Depreciation)
- ------------------------ --------- -------------- --------------- ------------ --------------
VT ASSET ALLOCATION FUND 157 Long S&P 500 Future March 2008 34,878,745 450,180
9 Long U.S. Long Bond March 2008 1,242,893 (471)
220 Short U.S. Long Bond March 2008 27,359,794 (3,010,519)
TBA SALE COMMITMENTS
The Funds 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, 2008, 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 forgoes 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 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 Funds 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
162 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
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. Repurchase agreements outstanding at year ended December 31, 2008,
are listed in the Funds' Portfolio of Investments.
SECURITY LOANS
The Funds 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 payable by the borrower or by retaining a portion of interest on the
investment securities purchased with cash received as collateral (after payment
of a "broker rebate fee" to the borrower). A Fund also continues to receive
interest or dividends on the securities loaned. Security loans are secured at
all times by collateral, although the loans may not be fully supported at all
times if, for example, the instruments in which cash collateral is invested
decline in value or the borrower fails to provide additional collateral when
required in a timely manner or at all. 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 to at least 102% of
the marked value of the securities loaned (including any accrued interest) on a
daily basis, without taking into account any increase or decrease in the value
of instruments in which cash collateral is invested. Collateral supporting loans
of U.S. Government Securities is remarked to 102% of the loaned securities'
market value, without taking into account any increase or decrease in the value
of instruments in which cash collateral is invested, only if the given
collateral falls below 100% of the market value of the securities loaned plus
any accrued interest. Cash collateral received by a Fund pursuant to these loans
generally is invested on behalf of the Fund by the securities lending agent in
high-quality short-term debt investments (including money market instruments)
that have been evaluated and approved by the Fund's adviser and are permissible
investments for the Fund. Cash collateral is invested on behalf of a Fund in a
manner similar to the Fund's investment of its cash reserves and the Fund bears
all of the gains and losses on such investments. The net asset value of a Fund
will be affected by an increase or decrease in the value of the securities
loaned and by an increase or decrease in the value of instruments in which cash
collateral is invested. Another risk from securities lending is that the
borrower may not provide additional collateral when required or return the
securities when due or when called for by the Fund. In either case, a Fund could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. Wells Fargo Bank, N.A., the Funds'
custodian, acts as the securities lending agent for the Funds and receives for
its services 25% of the revenues earned on the securities lending activities
(reduced from 30% effective September 1, 2007) and incurs all expenses. The
securities lending agent may make payments to borrowers and placing brokers, who
may not be affiliated, directly or indirectly, with the Trust, the adviser or
the distributor. For the entire annual period, Wells Fargo Bank, N.A. waived its
share of revenues earned on securities lending activities. Such waivers by Wells
Fargo Bank, N.A. have the impact of increasing securities lending income on the
Statements of Operations. The value of the securities on loan, the related
collateral and the liability to return the collateral at December 31, 2008, are
shown on the Statements 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. There
were no equity swap contracts outstanding as of December 31, 2008.
The Funds may enter into various hedging transactions, such as interest rate
swaps to preserve a return or spread on a particular investment or portion of
its portfolio, to create synthetic adjustable-rate mortgage securities or for
other purposes.
Wells Fargo Advantage Variable Trust Funds 163
Notes to Financial Statements
Swaps involve the exchange of commitments to make or receive payments, e.g., an
exchange of floating-rate payments for fixed rate payments. The Funds record as
an increase or decrease to realized gain/loss, the amount due or owed by the
Funds at termination or settlement. Swaps are valued based on prices quoted by
independent brokers. These valuations represent the net present value of all
future cash settlement amounts based on implied forward interest rates or index
values. At December 31, 2008, the Funds had no open interest rate swap
contracts.
The Funds may enter into various hedging transactions, such as credit default
swap agreements to preserve a return or spread on a particular investment or
portion of its portfolio, to create synthetic adjustable-rate mortgage
securities or for other purposes. Swaps involve the exchange of commitments to
make or receive payments. The Funds record as an increase or decrease to
unrealized gain/loss, the amount due or owed by the Funds at termination or
settlement. Swaps are valued based on prices quoted by independent brokers.
Credit default swaps involve the periodic payment by the Fund or counterparty of
interest based on a specified rate multiplied by a notional amount assigned to
an underlying debt instrument or group of debt instruments in exchange for the
assumption of credit risk on the same instruments. In the event of a credit
event, usually in the form of a credit rating downgrade, the party receiving
periodic payments (i.e. floating rate payer) must pay the other party (i.e.
fixed rate payer) an amount equal to the outstanding principal of the downgraded
debt instrument. At December 31, 2008, the Funds had no open credit default swap
contracts.
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.
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, 2008, were as
follows:
VT Opportunity Fund
------------------------
Premiums
Call Options Written Contracts Received
- ------------------------------ ----------- -----------
Options at beginning of year 0 $ 0
Options written (520) (206,337)
Options expired 400 158,798
Options exercised 120 47,539
Options at end of year 0 0
STRUCTURED INVESTMENT VEHICLES
The Funds may invest in structured debt securities, such as those issued by
Structured Investment Vehicles ("SIVs"). SIVs invest in a diversified pool of
underlying securities, which may include finance company debt and structured
finance assets, residential mortgage-backed securities, commercial
mortgage-backed securities, collateralized loan obligations,
164 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
collateralized debt obligations and other asset backed securities. The ability
of a SIV to repay debt depends primarily on the cash collections received from
the SIV's underlying asset portfolio, which may include certain assets such as
subprime mortgages that are subject to heightened risks of credit quality or
market value deterioration under the continuing adverse conditions in the U.S.
credit markets, and on the ability to obtain short-term funding through the
issuance of new debt. Investments in these securities present increased credit
and liquidity risks as there could be losses to a Fund in the event of credit or
market value deterioration in a SIV's underlying portfolio, mismatches in the
timing of the cash flows of the underlying asset interests and the repayment
obligations of maturing securities issued by a SIV, or a SIV's inability to
issue new debt.
As of December 31, 2008, the following Funds owned certain of these types of
SIVs which are currently in default and valued at fair value in the Portfolio of
Investments or have been restructured following default, including the
percentage of each Fund's net assets invested in these securities:
Defaulted SIVs % of
Fund ($Market Value) Net Assets
- ------------------------------ --------------- ----------
VT ASSET ALLOCATION FUND 1,227,807 0.97
VT C&B LARGE CAP VALUE FUND 18,563 0.10
VT DISCOVERY FUND 1,224,670 1.08
VT EQUITY INCOME FUND 124,258 0.29
VT INTERNATIONAL CORE FUND 4,038 0.02
VT LARGE COMPANY CORE FUND 17,579 0.18
VT LARGE COMPANY GROWTH FUND 336,892 0.69
VT OPPORTUNITY FUND 1,136,887 0.30
VT SMALL CAP GROWTH FUND 1,432,666 1.30
VT TOTAL RETURN BOND FUND 170,114 0.18
3. EXPENSES
ADVISORY FEES
The Trust has entered into an advisory contract with Wells Fargo Funds
Management, LLC ("Funds Management"). Funds Management is responsible for
implementing investment policies and guidelines and for supervising the
subadviser, 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 subadvisers to provide daily portfolio management. The fees
related to subadvisory 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 subadviser(s) are entitled to be paid a monthly fee at the
following annual rates:
Advisory Subadvisory
Fees (% of Fees (% of
Average Daily Average Daily Average Daily Average Daily
FUND Net Assets Net Assets) Subadviser Net Assets Net Assets)
- --------------------------- ------------------ ------------- ------------- ------------------ --------------
VT ASSET ALLOCATION FUND First $500 million 0.550 Wells Capital First $100 million 0.150
Next $500 million 0.500 Management Next $100 million 0.125
Next $2 billion 0.450 Incorporated Over $200 million 0.100
Next $2 billion 0.425
Over $5 billion 0.400
VT C&B LARGE CAP VALUE FUND First $500 million 0.550 Cooke & First $250 million 0.450
Next $500 million 0.500 Bieler, LP Next $250 million 0.400
Next $2 billion 0.450 Next $250 million 0.350
Next $2 billion 0.425 Over $750 million 0.300
Over $5 billion 0.400
Wells Fargo Advantage Variable Trust Funds 165
Notes to Financial Statements
Advisory Subadvisory
Fees (% of Fees (% of
Average Daily Average Daily Average Daily Average Daily
FUND Net Assets Net Assets) Subadviser Net Assets Net Assets)
- ---------------------------- ------------------ -------------- ----------------- ------------------- --------------
VT DISCOVERY FUND First $500 million 0.750 Wells Capital First $100 million 0.450
Next $500 million 0.700 Management Next $100 million 0.400
Next $2 billion 0.650 Incorporated Over $200 million 0.350
Next $2 billion 0.625
Over $5 billion 0.600
VT EQUITY INCOME FUND First $500 million 0.550 Wells Capital First $100 million 0.350
Next $500 million 0.500 Management Next $100 million 0.300
Next $2 billion 0.450 Incorporated Next $300 million 0.200
Next $2 billion 0.425 Over $500 million 0.150
Over $5 billion 0.400
VT INTERNATIONAL CORE FUND First $500 million 0.750 New Star First $50 million 0.350
Next $500 million 0.700 Institutional Next $500 million 0.290
Next $2 billion 0.650 Managers Limited Over $550 million 0.200
Next $2 billion 0.625
Over $5 billion 0.600
VT LARGE COMPANY CORE FUND First $500 million 0.550 Matrix Asset First $50 million 0.200
Next $500 million 0.500 Advisors Over $50 million 0.160
Next $2 billion 0.450 Incorporated
Next $2 billion 0.425
Over $5 billion 0.400
VT LARGE COMPANY GROWTH FUND First $500 million 0.550 Peregrine First $25 million 0.550
Next $500 million 0.500 Capital Next $25 million 0.450
Next $2 billion 0.450 Management Next $100 million 0.400
Next $2 billion 0.425 Incorporated Next $125 million 0.350
Over $5 billion 0.400 Over $275 million 0.225
VT MONEY MARKET FUND First $500 million 0.300 Wells Capital First $1 billion 0.050
Next $500 million 0.300 Management Next $2 billion 0.030
Next $2 billion 0.275 Incorporated Next $3 billion 0.020
Next $2 billion 0.275 Over $6 billion 0.010
Over $5 billion 0.250
VT OPPORTUNITY FUND First $500 million 0.750 Wells Capital First $100 million 0.450
Next $500 million 0.700 Management Next $100 million 0.400
Next $2 billion 0.650 Incorporated Over $200 million 0.300
Next $2 billion 0.625
Over $5 billion 0.600
VT SMALL CAP GROWTH FUND First $500 million 0.750 Wells Capital First $100 million 0.550
Next $500 million 0.700 Management Next $100 million 0.500
Next $2 billion 0.650 Incorporated Over $200 million 0.400
Next $2 billion 0.625
Over $5 billion 0.600
VT SMALL/MID CAP VALUE FUND First $500 million 0.750 Wells Capital First $100 million 0.450
Next $500 million 0.700 Management Next $100 million 0.400
Next $2 billion 0.650 Incorporated Over $200 million 0.350
Next $2 billion 0.625
Over $5 billion 0.600
166 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
Advisory Subadvisory
Fees (% of Fees (% of
Average Daily Average Daily Average Daily Average Daily
FUND Net Assets Net Assets) Subadviser Net Assets Net Assets)
- ---------------------------- ------------------ ------------- ----------------- ------------------ --------------
VT TOTAL RETURN BOND FUND First $500 million 0.450 Wells Capital First $100 million 0.200
Next $500 million 0.400 Management Next $200 million 0.175
Next $2 billion 0.350 Incorporated Next $200 million 0.150
Next $2 billion 0.325 Over $500 million 0.100
Over $5 billion 0.300
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 First $5 billion 0.16
Next $5 billion 0.15
Over $10 billion 0.14
The Trust has entered into an agreement with Boston Financial Data Services
("BFDS") as the transfer agent for the Trust. BFDS is entitled to receive fees
from the administrator for its services as transfer agent.
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 a monthly fee for custody services at the following
annual rates:
(% of Average
FUND Daily Net Assets)
- ------------------------------------------------------------ -----------------
ALL VARIABLE TRUST FUNDS (EXCEPT VT INTERNATIONAL CORE FUND) 0.02
VT INTERNATIONAL CORE FUND 0.10
DISTRIBUTION FEES
The Trust has adopted a Distribution Plan ("Plan") for the Funds, 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.
For the year ended December 31, 2008, distribution fees paid are disclosed on
the Statements of Operations.
OTHER FEES AND EXPENSES
PNC Global Investment Servicing ("PNC") 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. PNC is also entitled to be reimbursed for all out-of-pocket
expenses reasonably incurred in providing these services.
Each Fund also bears its share of other fees and expenses incurred in the normal
course of business, including but not limited to: professional fees,
registration fees, shareholder reporting costs, and Trustees fees and expenses.
The Trust compensates its Trustees for their services, plus travel and other
expenses incurred in attending Board meetings.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statements of
Operations, for the year December 31, 2008, 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. Funds
Management has contractually committed through April 30, 2009, to waive fees
and/or reimburse expenses to the extent necessary to maintain a certain net
Wells Fargo Advantage Variable Trust Funds 167
Notes to Financial Statements
operating expense ratio for the Funds. Net operating expense ratios in effect
for the year ended December 31, 2008, were as follows:
Net Operating
FUND Expense Ratios
- ---------------------------- --------------
VT ASSET ALLOCATION FUND 1.00%
VT C&B LARGE CAP VALUE FUND 1.00%
VT DISCOVERY FUND 1.15%
VT EQUITY INCOME FUND 1.00%
VT INTERNATIONAL CORE FUND 1.00%
VT LARGE COMPANY CORE FUND 1.00%
VT LARGE COMPANY GROWTH FUND 1.00%
VT MONEY MARKET FUND 0.75%
VT OPPORTUNITY FUND 1.07%
VT SMALL CAP GROWTH FUND 1.20%
VT SMALL/MID CAP VALUE FUND 1.14%
VT TOTAL RETURN BOND FUND 0.90%
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, 2008, were as follows:
FUND Purchases at Cost Sales Proceeds
- ------------------------------ ----------------- --------------
VT ASSET ALLOCATION FUND $ 35,919,187 $ 125,004,871
VT C&B LARGE CAP VALUE FUND 6,285,789 8,672,986
VT DISCOVERY FUND 302,288,776 328,567,658
VT EQUITY INCOME FUND 6,281,397 25,980,652
VT INTERNATIONAL CORE FUND 15,925,100 23,538,972
VT LARGE COMPANY CORE FUND 4,828,187 7,994,387
VT LARGE COMPANY GROWTH FUND 5,447,803 19,249,057
VT OPPORTUNITY FUND 393,083,389 459,213,156
VT SMALL CAP GROWTH FUND 129,508,242 148,984,981
VT SMALL/MID CAP VALUE FUND 5,179,360 8,103,846
VT TOTAL RETURN BOND FUND 857,350,419 877,583,570
The Money Market Fund trades exclusively in short-term securities, so 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, 2008, there
were no borrowings by any of the Funds under this agreement.
168 Wells Fargo Advantage Variable Trust Funds
Notes to Financial Statements
6. DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during the years ended December 31,
2008, and December 31, 2007, was as follows:
Ordinary Income Long-term Capital Gain Total
-------------------------- --------------------------- ----------------------------
Fund 2008 2007 2008 2007 2008 2007
- ---------------------------- ------------ ------------ ------------ ------------- ------------- -------------
VT ASSET ALLOCATION FUND $ 10,853,378 $ 8,931,742 $ 8,903,014 $ 1,357,946 $ 19,756,392 $ 10,289,688
VT C&B LARGE CAP VALUE FUND 369,107 338,853 0 0 369,107 338,853
VT EQUITY INCOME FUND 1,307,943 1,838,055 10,458,569 6,611,366 11,766,512 8,449,421
VT INTERNATIONAL CORE FUND 2,056,712 659,812 5,154,973 2,690,129 7,211,685 3,349,941
VT LARGE COMPANY CORE FUND 179,329 0 0 0 179,329 0
VT LARGE COMPANY GROWTH FUND 202,677 0 0 0 202,677 0
VT MONEY MARKET FUND 1,226,818 2,203,670 0 0 1,226,818 2,203,670
VT OPPORTUNITY FUND 51,681,923 20,855,034 96,237,711 104,911,350 147,919,634 125,766,384
VT SMALL CAP GROWTH FUND 27,294,979 16,770,316 19,529,301 15,169,862 46,824,280 31,940,178
VT SMALL/MID CAP VALUE FUND 384,729 1,864,362 2,347,014 1,599,563 2,731,743 3,463,925
VT TOTAL RETURN BOND FUND 5,436,067 5,839,104 0 0 5,436,067 5,839,104
As of December 31, 2008, 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 tax deferral of losses on wash sales,
mark-to-market and straddle loss deferred adjustment.
Unrealized
Undistributed Undistributed Appreciation Capital Loss
FUND Ordinary Income Long-Term Gain (Depreciation) Carryforward* Total
- ---------------------------- --------------- -------------- -------------- -------------- ----------------
VT ASSET ALLOCATION FUND $ 85,380 $ 0 $ (15,278,431) $ (30,459,358) $ (45,652,409)
VT C&B LARGE CAP VALUE FUND 31,074 0 (7,069,791) (2,255,178) (9,293,895)
VT DISCOVERY FUND 0 0 (36,923,347) (125,491,492) (162,414,839)
VT EQUITY INCOME FUND 27,273 0 (9,035,342) (3,566,431) (12,574,500)
VT INTERNATIONAL CORE FUND 535,743 0 (6,637,601) (3,424,459) (9,526,317)
VT LARGE COMPANY CORE FUND 192,994 0 (6,774,087) (13,147,244) (19,728,337)
VT LARGE COMPANY GROWTH FUND 239,596 0 (15,465,937) (31,750,704) (46,977,045)
VT MONEY MARKET FUND 513 0 0 (3,369) (2,856)
VT OPPORTUNITY FUND 0 0 (134,346,973) (45,545,079) (179,892,052)
VT SMALL CAP GROWTH FUND 0 0 (64,240,083) (21,661,417) (85,901,500)
VT SMALL/MID CAP VALUE FUND 108,816 0 (6,933,726) (328,635) (7,153,545)
VT TOTAL RETURN BOND FUND 413,530 0 (3,376,374) (176,005) (3,138,849)
* 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 market timing 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
Wells Fargo Advantage Variable Trust Funds 169
Notes to Financial Statements
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.
8. NEW ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards 161
("SFAS 161"), "Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133." SFAS 161 requires additional
discussion about the reporting entity's derivative instruments and hedging
activities, by providing for qualitative disclosures about the objectives and
strategies for using derivatives, quantitative data about the fair value of and
gains and losses on derivative contracts, and details of credit-risk-related
contingent features in their hedged positions. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, and interim periods within those years. As of December 31,
2008, Management is continuing to evaluate the impact, if any, that adoption of
SFAS 161 may have on the financial statements.
9. SUBSEQUENT EVENT
At its February 11, 2009 meeting, the Wells Fargo Variable Trust Board of
Trustees ("Board") unanimously approved the replacement of New Star
Institutional Managers Limited ("New Star"), the sole investment sub-adviser for
the VT International Core Fund (the "Fund") with Evergreen Investment Management
Company, LLC ("Evergreen Investments"), a registered investment adviser.
In connection with the Board's approval of Evergreen Investments, the Board also
approved revising the principal investment strategies of the Fund. The Fund's
investment objective, principal investments and non-fundamental and fundamental
investment policies remain the same.
For providing sub-advisory services to the
Fund, Evergreen Investments will receive the same sub-advisory fees currently
paid to New Star, until such time as the contract holders of the Fund are asked
to approve an investment sub-advisory agreement with Evergreen Investments,
which is anticipated to occur in the third quarter of 2009.
Additional information, including a detailed description of the change of the
investment sub-adviser for the Fund and the Board's reasons for approving such
change will be provided in the Proxy Statement that is expected to be mailed to
contract holders of the VT International Core Fund by the second quarter of
2009. The Proxy Statement will also confirm the date, time, and location of the
special contract holder meeting.
170 Wells Fargo Advantage Variable Trust Funds
Report of Independent Registered Public Accounting Firm
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 VT Asset Allocation Fund, VT C&B Large Cap
Value Fund, VT Discovery Fund, VT Equity Income Fund, VT International Core
Fund, VT Large Company Core Fund, VT Large Company Growth Fund, VT Money Market
Fund, VT Opportunity Fund, VT Small Cap Growth Fund, VT Small/Mid Cap Value
Fund, and the VT Total Return Bond Fund, (collectively the "Funds"), twelve of
the Funds constituting the Wells Fargo Variable Trust as of December 31, 2008,
and the related statements of operations for the year then ended, statements of
changes in net assets for each of the years in the two year period then ended,
and the financial highlights for each of the years in the five year period then
ended. 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.
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, 2008, by correspondence with
the custodian and brokers or by 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, 2008, the results of their operations for the year then
ended, the changes in their net assets for each of the years in the two year
period then ended, and the financial highlights for each of the years in the
five period then ended, in conformity with U.S. generally accepted accounting
principles.
[KPMG LLP]
Philadelphia, Pennsylvania
February 23, 2009
Wells Fargo Advantage Variable Trust Funds 171
Other Information
PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities 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.
Information regarding how the Funds voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available
without charge on the Funds' Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or by
visiting the SEC Web site at WWW.SEC.GOV.
TAX INFORMATION
Pursuant to Section 853 of the Internal Revenue Code, the Funds designate the
following amounts as foreign taxes paid for the year ended December 31, 2008.
Foreign taxes paid for purposes of Section 853 may be less than actual foreign
taxes paid for financial statement purposes.
Fund Foreign Source Income* Creditable Foreign Taxes Paid
- -------------------------- ---------------------- -----------------------------
VT INTERNATIONAL CORE FUND $ 1,119,385 $ 102,768
* The Fund listed above did not derive any income from ineligible foreign
sources as defined under Section 901(j) of the Internal Revenue Code.
Pursuant to Section 852(b)(3) of the Internal Revenue Code, the following Funds
designate the amounts listed below as a long-term capital gain distribution for
the year ended December 31, 2008:
Capital Gain
FUND Dividends
- -------------------------- -------------
VT ASSET ALLOCATION FUND $ 8,903,014
VT EQUITY INCOME FUND 10,458,569
VT INTERNATIONAL CORE FUND 5,154,973
VT OPPORTUNITY FUND 96,237,711
VT SMALL CAP GROWTH FUND 19,529,301
VT SMALL/MID CAP VALUE FUND 2,347,014
Pursuant to Section 854(b)(2) of the Internal Revenue Code, the Funds listed
below designates a percentage of its ordinary income dividends distributed
during the year ended December 31, 2008 as qualifying for the corporate
dividends-received deduction:
Dividend-Received
Deduction (% of
Ordinary Income
FUND Dividends)
- ---------------------------- -----------------
VT ASSET ALLOCATION FUND 36.73%
VT C&B LARGE CAP VALUE FUND 100.00%
VT EQUITY INCOME FUND 100.00%
VT LARGE COMPANY CORE FUND 100.00%
VT LARGE COMPANY GROWTH FUND 100.00%
VT OPPORTUNITY FUND 20.75%
VT SMALL CAP GROWTH FUND 1.48%
VT SMALL/MID CAP VALUE FUND 19.68%
172 Wells Fargo Advantage Variable Trust Funds
Other Information
PORTFOLIO HOLDINGS INFORMATION
The complete portfolio holdings for each Fund, except money market funds, are
publicly available on the Funds' Web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on
a monthly, 30-day or more delayed basis, and for money market funds, on a
monthly, seven-day 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 Funds Trust (the "Trust"). This table
supplements, and should be read in conjunction with, the Prospectus and the
Statement of Additional Information1 of each Fund. Each of the Trustees listed
below acts in identical capacities for each of the 134 funds comprising the
Trust, Wells Fargo Variable 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
Position Held and Other
Name and Age Length of Service (2) Principal Occupations During Past Five Years Directorships
- ------------------- --------------------- ---------------------------------------------------------------------------- -------------
Thomas S. Goho Trustee, since 1987 Co-Director for the Calloway School of Stephens University of Wake None
66 Forest University. Prior thereto, the Thomas Goho Chair of Finance
of Wake Forest University, Calloway School of Business and Accountancy,
from 2006-2007 and Associate Professor of Finance from 1999 - 2005.
Peter G. Gordon Trustee, since 1998; Co-Founder, Chairman, President and CEO of Crystal Geyser Water None
66 Chairman, since 2005 Company.
(Lead Trustee since
2001)
Judith M. Johnson Trustee, since 2008 Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer None
59 of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson
is a certified public accountant and a certified managerial accountant.
Olivia S. Mitchell Trustee, since 2006 Professor of Insurance and Risk Management, Wharton School, None
55 University of Pennsylvania. Director of the Boettner Center on
Pensions and Retirement Research. Research associate and board
member, Penn Aging Research Center. Research associate, National
Bureau of Economic Research.
Timothy J. Penny Trustee, since 1996 President and CEO of Southern Minnesota Initiative Foundation, None
57 a non-profit organization since 2007 and Senior Fellow at the Humphrey
Institute Policy Forum at the University of Minnesota since 1995.
Member of the Board of Trustees of NorthStar Education Finance, Inc.,
a non-profit organization, since 2007.
Donald C. Willeke Trustee, since 1996 Principal of the law firm of Willeke & Daniels. General Counsel None
68 of the Minneapolis Employees Retirement Fund from 1984 to present.
INTERESTED TRUSTEE (3)
Position Held and Other
Name and Age Length of Service (2) Principal Occupations During Past Five Years Directorships
- ------------------- --------------------- ---------------------------------------------------------------------------- -------------
J. Tucker Morse4 Trustee, since 1987 Private Investor/Real Estate Developer. Prior thereto, Chairman of None
64 Whitepoint Capital, LLC until 2004.
Wells Fargo Advantage Variable Trust Funds 173
Other Information
ADVISORY BOARD MEMBERS
Position Held and Other
Name and Age Length of Service (2) Principal Occupations During Past Five Years Directorships
- ------------------- --------------------- ---------------------------------------------------------------------------- -------------
Isaiah Harris, Jr. Advisory Board Retired. Prior thereto, President and CEO of BellSouth Advertising CIGNA
56 Member, since 2008 and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Corporation;
Enterprises from 2004 to 2005 and President of BellSouth Consumer Deluxe
Services from 2000 to 2003. Currently a member of the Iowa State University Corporation
Foundation Board of Governors and a member of the Advisory Board of
Iowa State University School of Business.
David F. Larcker Advisory Board James Irvin Miller Professor of Accounting at the Graduate None
58 Member, since 2008 School of Business, Stanford University. Director of Corporate
Governance Research Program and Co-Director of The Rock Center for
Corporate Governance since 2006. From 2005 to 2008, Professor of
Accounting at the Graduate School of Business, Stanford University. Prior
thereto, Ernst & Young Professor of Accounting at The Wharton School,
University of Pennsylvania from 1985 to 2005.
OFFICERS
Position Held and Other
Name and Age Length of Service (2) Principal Occupations During Past Five Years Directorships
- ------------------- --------------------- ---------------------------------------------------------------------------- -------------
Karla M. Rabusch President, since Executive Vice President of Wells Fargo Bank, N.A. and President of None
49 2003 Wells Fargo Funds Management, LLC since 2003. Senior Vice President
and Chief Administrative Officer of Wells Fargo Funds Management, LLC
from 2001 to 2003.
C. David Messman Secretary, since Senior Vice President and Secretary of Wells Fargo Funds Management, None
48 2000; Chief Legal LLC since 2001. Managing Counsel of Wells Fargo Bank, N.A. since 2000.
Officer, since 2003
Stephen W.
Leonhardt Treasurer, since Vice President and Manager of Fund Accounting, Reporting and Tax for None
49 2007 Wells Fargo Funds Management, LLC since 2007. Director of Fund
Administration and SEC Reporting for TIAA-CREF from 2005 to 2007.
Chief Operating Officer for UMB Fund Services, Inc. from 2004 to 2005.
Controller for Sungard Transaction Networks from 2002 to 2004.
Debra Ann Early Chief Compliance Chief Compliance Officer of Wells Fargo Funds Management, LLC None
44 Officer, since 2007 since 2007. Chief Compliance Officer of Parnassus Investments from
2005 to 2007. Chief Financial Officer of Parnassus Investments from
2004 to 2007. Senior Audit Manager of PricewaterhouseCoopers
LLP from 1998 to 2004.
- ----------
1. 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'Web site at
WWW.WELLSFARGO.COM/ADVANTAGEFUNDS.
2. Length of service dates reflects a Trustee's commencement of service with
the Trust's predecessor entities.
3. As of November 30, 2008, one of the seven 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.
4. Retired as Interested Trustee effective December 31, 2008.
174 Wells Fargo Advantage Variable Trust Funds
List of Abbreviations
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
CDO -- Collateralized Debt Obligation
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CIFG -- CDC (Caisse des Depots et Consignations) IXIS Financial
Guarantee
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
ECFA -- Educational & Cultural Facilities Authority
EDFA -- Economic Development Finance Authority
ETET -- Eagle Tax-Exempt Trust
FFCB -- Federal Farm Credit Bank
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHAG -- Federal Housing Agency
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Farm Service Agency
GDR -- Global Depositary Receipt
GNMA -- Government National Mortgage Association
GO -- General Obligation
HCFR -- Healthcare Facilities Revenue
HEFA -- Health & Educational Facilities Authority
HEFAR -- Higher Education Facilities Authority Revenue
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
HUD -- Housing & Urban Development
IDA -- Industrial Development Authority
IDAG -- Industrial Development Agency
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
MTN -- Medium Term Note
MUD -- Municipal Utility District
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PFFA -- Public Facilities Financing Authority
plc -- Public Limited Company
PSFG -- Public School Fund Guaranty
R&D -- Research & Development
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
REITS -- Real Estate Investment Trusts
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
SLMA -- Student Loan Marketing Association
STIT -- Short-Term Investment Trust
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
XLCA -- XL Capital Assurance
(REDUCE CLUTTER. SAVE TREES. LOGO)
Sign up for electronic delivery of prospectuses and shareholders
reports at WWW.WELLSFARGO.COM/ADVANTAGEDELIVERY
(WELLS FARGO LOGO)
More information about WELLS FARGO ADVANTAGE FUNDS
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 site: www.wellsfargo.com/advantagefunds
Individual Investors: 1-800-222-8222
Retail Investment Professionals: 1-888-877-9275
Institutional Investment Professionals: 1-866-765-0778
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF 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 OBJECTIVES, 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.
"Dow Jones"and "Dow Jones Target Date Indexes"are service marks of Dow Jones &
Company, Inc., and have been licensed for use for certain purposes by Global
Index Advisors, Inc., and Wells Fargo Funds Management, LLC. The Dow Jones
Target Date Indexes are based in part on the Barclays Capital Bond Indexes,
which are published by Barclays Capital Inc. The Wells Fargo Advantage Dow Jones
Target Date Funds, based on the Dow Jones Target Date Indexes, are not
sponsored, endorsed, sold or promoted by Dow Jones or Barclays Capital, and
neither Dow Jones nor Barclays Capital makes any representation regarding the
advisability of investing in such product(s) and/or about the quality, accuracy
and/or completeness of the Dow Jones Target Date Indexes or the Barclays Capital
Bond Indexes. IN NO EVENT SHALL DOW JONES, BARCLAYS CAPITAL OR ANY OF THEIR
LICENSORS HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo &
Company, provides investment advisory and administrative services for Wells
Fargo Advantage Funds. Other affiliates of Wells Fargo & Company provide
subadvisory and other services for the Funds. The Funds are distributed by WELLS
FARGO FUNDS DISTRIBUTOR, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo &
Company.
NOT FDIC INSURED - NO BANK GAURANTEE - MAY LOSE VALUE
(C) 2009 Wells Fargo Funds Management, LLC. All rights reserved. www.wellsfargo.com/advantagefunds 114430 02-09
AVTF/AR124 12-08
ITEM 2. CODE OF ETHICS
As of the end of the period, December 31, 2008, 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, 2007 and December 31, 2008 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, 2007 and December 31, 2008, the
Audit Fees were $234,500 and $248,080 respectively.
(b) AUDIT-RELATED FEES - There were no audit-related fees incurred for the
fiscal years ended December 31, 2007 and December 31, 2008 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, 2007 and December 31, 2008 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, 2007 and December 31, 2008, the Tax
Fees were $0 and $0, respectively. The incurred Tax Fees are comprised of
excise tax review services.
For the fiscal years ended December 31, 2007 and December 31, 2008, the Tax
Fees were $21,660 and $22,500 respectively. The incurred Tax Fees are
comprised of tax preparation and consulting services.
(d) ALL OTHER FEES - There were no other fees incurred for the fiscal years
ended December 31, 2007 and December 31, 2008.
(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, 2007 and December 31, 2008, 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, 2007 and December 31, 2008, the
Registrant incurred non-audit fees in the amount of $215,000 and $70,000,
respectively. The non-audit fees for the fiscal year ended December 31,
2007 consist of SAS70 control reviews of Wells Fargo Bank, N.A., the Funds'
custodian of $145,000 and Securities Lending agent of $70,000. The
non-audit fees for the fiscal year ended December 31, 2008 consist of SAS70
control reviews of Wells Fargo Bank, N.A., Securities Lending agent of
$70,000.
For the fiscal years ended December 31, 2007 and December 31, 2008, the
Registrant's investment adviser incurred non-audit fees in the amount of
$42,000 and $180,000, respectively. The non-audit fees for the
year-ended December 31, 2007 relate to examination of securities pursuant
to rule 206 (4)-2 under the Investment Advisors Act of 1940. The non-audit
fees for the year ended December 31, 2008 consist of procedure reviews for
mergers associated with fund reorganizations in the amount of $135,000 and
the non-audit fees in the amount of $45,000 relate to examinations of
securities pursuant to rule 206 (4) - 2 under the Investment Advisors 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.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEMS 6. SCHEDULE OF INVESTMENTS
The Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Governance Committee (the "Committee") of the Board of Trustees of the
registrant (the "Trust") has adopted procedures by which a shareholder of any
series of the Trust may submit properly a nominee recommendation for the
Committee's consideration.
The shareholder must submit any such recommendation (a "Shareholder
Recommendation") in writing to the Trust, to the attention of the Trust's
Secretary, at the address of the principal executive offices of the Trust.
The Shareholder Recommendation must be delivered to, or mailed and received at,
the principal executive offices of the Trust not less than forty-five (45)
calendar days nor more than seventy-five (75) calendar days prior to the date of
the Committee meeting at which the nominee would be considered.
The Shareholder Recommendation must include: (i) a statement in writing setting
forth (A) the name, age, date of birth, business address, residence address and
nationality of the person recommended by the shareholder (the "candidate"); (B)
the series (and, if applicable, class) and number of all shares of the Trust
owned of record or beneficially by the candidate, as reported to such
shareholder by the candidate; (C) any other information regarding the candidate
called for with respect to director nominees by paragraphs (a), (d), (e) and (f)
of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101
(Schedule 14A) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), adopted by the Securities and Exchange Commission (or the
corresponding provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency applicable to the
Trust); (D) any other information regarding the candidate that would be required
to be disclosed if the candidate were a nominee in a proxy statement or other
filing required to be made in connection with solicitation of proxies for
election of directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder; and (E) whether the recommending
shareholder believes that the candidate is or will be an "interested person" of
the Trust (as defined in the Investment Company Act of 1940, as amended) and, if
not an "interested person," information regarding the candidate that will be
sufficient for the Trust to make such determination; (ii) the written and signed
consent of the candidate to be named as a nominee and to serve as a Trustee if
elected; (iii) the recommending shareholder's name as it appears on the Trust's
books; (iv) the series (and, if applicable, class) and number of all shares of
the Trust owned beneficially and of record by the recommending shareholder; and
(v) a description of all arrangements or understandings between the recommending
shareholder and the candidate and any other person or persons (including their
names) pursuant to which the recommendation is being made by the recommending
shareholder. In addition, the Committee may require the candidate to interview
in person and furnish such other information as it may reasonably require or
deem necessary to determine the eligibility of such candidate to serve as a
Trustee of the Trust.
ITEM 11. CONTROLS AND PROCEDURES
(a) The President and Treasurer have concluded that the Wells Fargo Funds 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.
(b) There were no significant changes in the Trust's internal controls over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of 1940) that occurred during the second quarter of the period covered by
this report that materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
(a)(1) 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)) is filed and attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) is filed and 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 Funds Trust
By: /s/ Karla M. Rabusch
Karla M. Rabusch
President
Date: February 20, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.
By: /s/ Karla M. Rabusch
Karla M. Rabusch
President
Date: February 20, 2009
By: /s/ Stephen W. Leonhardt
Stephen W. Leonhardt
Treasurer
Date: February 20, 2009
Exhibit 99.CERT
CERTIFICATION
I, Karla M. Rabusch, certify that:
1. I have reviewed this report on Form N-CSR of the Wells Fargo Advantage VT
Asset Allocation Fund, Wells Fargo Advantage VT Equity Income Fund, Wells Fargo
Advantage VT C&B Large Cap Value Fund, Wells Fargo Advantage VT Discovery Fund,
Wells Fargo Advantage VT Large Company Core Fund, Wells Fargo Advantage VT
International Core Fund, Wells Fargo Advantage VT Large Company Growth Fund,
Wells Fargo Advantage VT Money Market Fund, Wells Fargo Advantage VT Small/Mid
Cap Value Fund, Wells Fargo Advantage VT Opportunity Fund, Wells Fargo Advantage
VT Small Cap Growth Fund, and the Wells Fargo Advantage VT Total Return Bond
Fund;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations, changes in net assets, and cash
flows (if the financial statements are required to include a statement of cash
flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and
have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing of this report based on such
evaluation; and
d) disclosed in this report any change in the registrant's internal
controls over financial reporting that occurred during the
registrant's most recent fiscal half-year (the registrant's second
fiscal half-year in the case of an annual report) that has materially
affected or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process,
summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: February 20, 2009
/s/ Karla M. Rabusch
- ----------------------------------------
Karla M. Rabusch
President
Wells Fargo Funds Trust
Exhibit 99.CERT
CERTIFICATION
I, Stephen W. Leonhardt, certify that:
1.I have reviewed this report on Form N-CSR of the Wells Fargo Advantage VT
Asset Allocation Fund, Wells Fargo Advantage VT Equity Income Fund, Wells Fargo
Advantage VT C&B Large Cap Value Fund, Wells Fargo Advantage VT Discovery Fund,
Wells Fargo Advantage VT Large Company Core Fund, Wells Fargo Advantage VT
International Core Fund, Wells Fargo Advantage VT Large Company Growth Fund,
Wells Fargo Advantage VT Money Market Fund, Wells Fargo Advantage VT Small/Mid
Cap Value Fund, Wells Fargo Advantage VT Opportunity Fund, Wells Fargo Advantage
VT Small Cap Growth Fund, and the Wells Fargo Advantage VT Total Return Bond
Fund;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations, changes in net assets, and cash
flows (if the financial statements are required to include a statement of cash
flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and
have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of a date
within 90 days prior to the filing of this report based on such
evaluation; and
d) disclosed in this report any change in the registrant's internal
controls over financial reporting that occurred during the
registrant's most recent fiscal half-year (the registrant's second
fiscal half-year in the case of an annual report) that has materially
affected or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process,
summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: February 20, 2009
/s/ Stephen W. Leonhardt
- -----------------------
Stephen W. Leonhardt
Treasurer
Wells Fargo Funds Trust
SECTION 906 CERTIFICATION
Pursuant to 18 U.S.C. ss. 1350, the undersigned officer of Wells Fargo
Variable Trust (the "Trust"), hereby certifies, to the best of her knowledge,
that the Trust's report on Form N-CSR for the period ended December 31, 2008
(the "Report") fully complies with the requirements of Section 15(d) of the
Securities Exchange Act of 1934 and that the information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Trust.
Date: February 20, 2009
/s/ Karla M. Rabusch
Karla M. Rabusch
President
Wells Fargo Funds Trust
This certification is being furnished to the Securities and Exchange Commission
pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended
and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with
the Securities and Exchange Commission.
SECTION 906 CERTIFICATION
Pursuant to 18 U.S.C. ss. 1350, the undersigned officer of Wells Fargo
Variable Trust (the "Trust"), hereby certifies, to the best of his knowledge,
that the Trust's report on Form N-CSR for the period ended December 31, 2008
(the "Report") fully complies with the requirements of Section 15(d) of the
Securities Exchange Act of 1934 and that the information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Trust.
Date: February 20, 2009
/s/ Stephen W. Leonhardt
Stephen W. Leonhardt
Treasurer
Wells Fargo Funds Trust
This certification is being furnished to the Securities and Exchange Commission
pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended
and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with
the Securities and Exchange Commission.
WELLS FARGO FUNDS TRUST
WELLS FARGO MASTER TRUST
WELLS FARGO VARIABLE TRUST
JOINT CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND SENIOR FINANCIAL
OFFICERS
I. COVERED OFFICERS / PURPOSE OF THE CODE
This Code of Ethics ("Code") of Wells Fargo Funds Trust, Wells Fargo
Master Trust and Wells Fargo Variable Trust (collectively, the "Trusts" and
each, "a Trust") applies to each Trust's Principal Executive Officer, Principal
Financial Officer and any other Trust officer's listed on Exhibit A (the
"Covered Officers") for the purpose of promoting:
o honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
o full, fair, accurate, timely and understandable financial disclosure in
reports and documents that a Trust files with, or submits to, the
Securities and Exchange Commission ("SEC") and in other public
communications made by the Trust;
o compliance with applicable laws and governmental rules and regulations;
o the prompt internal reporting of violations of the Code to an appropriate
person or persons identified in the Code; and
o accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business
ethics and should be sensitive to situations that may give rise to actual as
well as apparent conflicts of interest.
II. COVERED OFFICERS SHOULD HANDLE ETHICALLY BOTH ACTUAL AND APPARENT
CONFLICTS OF INTEREST
OVERVIEW. A "conflict of interest" occurs when a Covered Officer's
private interest interferes with the interests of, or his or her service to, a
Trust. For example, a conflict of interest would arise if a Covered Officer, or
a member of his or her family, receives improper personal benefits as a result
of his or her position with the Trust. Certain conflicts of interest arise out
of the relationships between Covered Officers and the Trust and already are
subject to conflict of interest provisions in the Investment Company Act of 1940
("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment
Advisers Act"). For example, Covered Officers may not individually engage in
certain transactions (such as the purchase or sale of securities or other
property) with the Trust because of their status as "affiliated persons" of the
Trust. The compliance programs and procedures of the Trust and Wells Fargo Funds
Management, LLC (the
"Adviser") are designed to prevent, or identify and correct, violations of these
provisions. This Code does not, and is not intended to, repeat or replace these
programs and procedures, and such conflicts fall outside of the parameters of
this Code.
Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Trust and the Adviser, of which the Covered Officers are also
officers or employees. As a result, this Code recognizes that the Covered
Officers will, in the normal course of their duties (whether formally for the
Trust or for the Adviser, or for both), be involved in establishing policies and
implementing decisions that will have different effects on the Adviser and the
Trust. The participation of the Covered Officers in such activities is inherent
in the contractual relationship between the Trust and the Adviser and is
consistent with the performance by the Covered Officers of their duties as
officers of the Trust. Each Covered Officer recognizes that, as an officer of a
Trust, he or she has a duty to act in the best interests of the Trust and its
shareholders. If a Covered Officer believes that his or her responsibilities as
an officer or employee of the Adviser are likely to materially compromise his or
her objectivity or his or her ability to perform the duties of his or her role
as an officer of the Trust, he or she should consult with the Chief Legal
Officer. Under appropriate circumstances, a Covered Officer should also consider
whether to present the matter to the Board. In addition, it is recognized by the
Trust's Board of Trustees ("Board") that the Covered Officers may also be
officers or employees of one or more other investment companies covered by this
or other codes.
Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Investment Advisers Act. The following list provides examples of
conflicts of interest under the Code, but Covered Officers should keep in mind
that these examples are not exhaustive. The overarching principle is that the
personal interest of a Covered Officer should not be placed improperly before
the interest of the Trust.
* * * *
Each Covered Officer must:
o not use his or her personal influence or personal relationships
improperly to influence investment decisions or financial reporting by
a Trust whereby the Covered Officer would benefit personally to the
detriment of the Trust;
o not cause the Trust to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the
benefit of a Trust;
o not use material non-public knowledge of portfolio transactions made or
contemplated for the Trust to trade personally or cause others to trade
personally in contemplation of the market effect of such transactions;
o not retaliate against any other Covered Officer or any employee of a
Trust or its affiliated persons for reports of potential violations
that are made in good
2
faith; and
o not engage in personal, business or professional relationships or
dealings that would impair his or her independence of judgment or
adversely affect the performance of his or her duties in the best
interests of the Trust and their shareholders.
There are some conflict of interest situations that should always be
approved in advance by the Chief Legal Officer of the Trust (the "Chief Legal
Officer") if material. Examples of these include:
o service as a director on the board of any public or private for-profit
company (provided, however, that a Covered Officer who is employed by
another company (e.g., Wells Fargo) may serve as a director of such
company or any entity, controlling, controlled by, or under common
control with, such company);
o acquiring a financial interest in any company that provides services to
the Trust (provided, however, that a Covered Officer who is employed by
another company (e.g., Wells Fargo) may have an ownership interest in
his or her employer or the employer's parent company);
o the receipt of any entertainment or gifts from any person or company
with which the Trust has current or prospective business dealings
unless such entertainment is business-related, reasonable in cost,
appropriate as to time and place, and not so frequent as to raise any
question of impropriety;
o any consulting or employment relationship with any of the Trust's
service providers, other than with the primary employer of the Covered
Officer; and
o a direct or indirect financial interest in commissions, transaction
charges or spreads paid by the Trust for effecting portfolio
transactions or for selling or redeeming shares, other than an interest
arising from the Covered Officer's primary employment, such as
compensation or equity ownership.
III. DISCLOSURE AND COMPLIANCE
Each Covered Officer should familiarize himself or herself with the
disclosure requirements generally applicable to the Trust.
Each Covered Officer should not knowingly misrepresent, or cause others
to misrepresent, facts about the Trust to others, whether within or outside the
Trust, including to the Board and the Trust's auditors, and to governmental
regulators and self-regulatory organizations.
Each Covered Officer should, to the extent appropriate within his or
her area of responsibility, consult with other officers and employees of the
Trust and the Adviser with the goal of promoting full, fair, accurate, timely
and understandable
3
disclosure in the reports and documents the Trust files with, or submits to, the
SEC and in other public communications made by the Trust.
It is the responsibility of each Covered Officer to promote compliance
with the standards and restrictions imposed by applicable laws, rules and
regulations.
Each Covered Officer should, consistent with his or her
responsibilities, exercise appropriate supervision over and assist relevant
Trust service providers in developing financial information and other disclosure
that complies with relevant law and presents information in a clear,
comprehensible and complete manner.
Each Covered Officer is responsible for the accuracy of the records and
reports that he or she is responsible for maintaining. The books and records of
the Trust shall meet the highest standards and accurately reflect the true
nature of the transactions they record. The Covered Officers must not create
false or misleading documents or accounting, financial or electronic records for
any purpose, and must not direct any other person to do so. If a Covered Officer
becomes aware that information filed with the SEC or made available to the
public contains any false or misleading information or omits to disclose
necessary information, he shall promptly report it to Chief Legal Officer for a
determination as to what, if any, corrective action is necessary or appropriate.
No undisclosed or unrecorded account or fund shall be established for
any purpose. No false or misleading entries shall be made in a Trust's books or
records for any reason. No disbursement of a Trust's assets shall be made
without adequate supporting documentation or for any purpose other than as
described in the Trust's documents or contracts.
A Trust will maintain and preserve for a period of not less than six
(6) years from the date such action is taken, the first two (2) years in an
easily accessible place, a copy of the information or materials supplied to the
Board: (i) that provided the basis for any amendment or waiver to this Code, and
(ii) relating to any violation of the Code and sanctions imposed for such
violation, together with a written record of the approval or action taken by the
Board.
IV. REPORTING AND ACCOUNTABILITY
Each Covered Officer must:
o upon adoption of the Code (or thereafter upon becoming a Covered
Officer), affirm in writing (in the form attached to this Code) to the
Board that he or she has received, read, and understands the Code;
o annually thereafter affirm in writing (in the form attached to this
Code) to the Board that he or she has complied with the requirements of
the Code; and
4
o notify the Chief Legal Officer of the Trust promptly if he or she knows
of any violation of this Code. Failure to do so is itself a violation
of this Code.
The Chief Legal Officer is responsible for applying this Code to
specific situations in which questions are presented under it and has the
authority to interpret this Code in any particular situation. While the Chief
Legal Officer in authorized to interpret this Code, an approval of a situation
that is expressly prohibited by this Code is deemed to be a "waiver" and can be
approved only by the Board.
The Trust will follow these procedures in investigating and enforcing
this Code:
o the Chief Legal Officer will take all appropriate action to investigate
any potential violations reported to him or her;
o if, after such investigation, the Chief Legal Officer believes that no
violation has occurred, the Chief Legal Officer is not required to take
any further action;
o any matter that the Chief Legal Officer believes is a violation will be
reported to the Board;
o if the Board concurs that a violation has occurred, it will consider
appropriate action, which may include review of, and appropriate
modifications to, applicable policies and procedures; notification to
appropriate personnel of the Adviser; or a recommendation to dismiss
the Covered Officer;
o the Board will be responsible for granting waivers, as appropriate (a
"waiver" is the approval of a situation that is expressly prohibited by
this Code); and
o any changes to or waivers of this Code will, to the extent required, be
disclosed as provided by SEC rules.
V. OTHER POLICIES AND PROCEDURES
This Code shall be the sole code of ethics adopted by the Trusts for
purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms
applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Trusts or the Adviser govern or purport to govern
the behavior or activities of the Covered Officers who are subject to this Code,
they are superseded by this Code to the extent that they overlap or conflict
with the provisions of this Code. The codes of ethics adopted by the Trusts and
the Adviser under Rule 17j-1 under the Investment Company Act are separate
requirements applying to the Covered Officers and others, and are not part of
this Code.
5
VI. AMENDMENTS
Any amendments to this Code, other than amendments to Exhibit A, must
be approved or ratified by a majority vote of the Board, including a majority of
independent Trustees.
VII. CONFIDENTIALITY
All reports and records prepared or maintained pursuant to this Code
will be considered confidential and shall be maintained and protected
accordingly. Except upon request of the SEC or another regulatory agency, or as
otherwise required by law or this Code, such matters shall not be disclosed to
anyone other than Board and its counsel.
VIII. INTERNAL USE
The Code is intended solely for the internal use by each Trust and does
not constitute an admission, by or on behalf of any Trust, as to any fact,
circumstance, or legal conclusion.
Adopted: August 5, 2003
6
EXHIBIT A
PERSONS COVERED BY THE CODE
Karla Rabusch, President of each Trust
Stephen Leonhardt, Treasurer of each Trust
Exhibit A amended: May 9, 2007
7
EXHIBIT B
COMPLIANCE CERTIFICATIONS
INITIAL CERTIFICATION
I CERTIFY THAT I: (I) HAVE RECEIVED, READ AND REVIEWED THE JOINT CODE
OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND
SENIOR FINANCIAL OFFICERS (the "Code");
(II) UNDERSTAND THE POLICIES AND PROCEDURES IN THE
CODE;
(III) RECOGNIZE THAT I AM SUBJECT TO SUCH POLICIES
AND PROCEDURES;
(IV) UNDERSTAND THE PENALTIES FOR NON-COMPLIANCE;
(V) WILLFULLY COMPLY WITH THE CODE AND ANY RELATED
PROCEDURES;
(VI) ACKNOWLEDGE MY RESPONSIBILITY TO REPORT ANY
VIOLATION OF THE CODE TO LEGAL COUNSEL;
(VII) UNDERSTAND THAT THE TRUSTS HAVE THE RIGHT TO
AMEND, INTERPRET, MODIFY OR WITHDRAW ANY OF THE
PROVISIONS OF THE CODE AT ANY TIME IN THEIR
SOLE DISCRETION, WITH OR WITHOUT NOTICE; AND
(VIII) HAVE FULLY AND ACCURATELY COMPLETED THIS
CERTIFICATE.
Signature:
--------------------------------------------------------
(Please print)
Name:
--------------------------------------------------------
Date Submitted:
--------------------------------------------------------
Date Due:
--------------------------------------------------------
8
ANNUAL CERTIFICATION
I CERTIFY THAT I: (I) HAVE RECEIVED, READ AND REVIEWED THE JOINT CODE
OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND
SENIOR FINANCIAL OFFICERS (the "Code");
(II) UNDERSTAND THE POLICIES AND PROCEDURES IN THE
CODE;
(III) RECOGNIZE THAT I AM SUBJECT TO SUCH POLICIES
AND PROCEDURES;
(IV) UNDERSTAND THE PENALTIES FOR NON-COMPLIANCE;
(V) HAVE FULLY COMPLIED
WITH THE CODE AND ANY RELATED PROCEDURES;
(VI) HAVE FULLY DISCLOSED ANY EXCEPTIONS TO MY
COMPLIANCE WITH THE CODE;
(VII) WILLFULLY COMPLY WITH THE CODE OF ETHICS;
(VIII) ACKNOWLEDGE MY RESPONSIBILITY TO REPORT ANY
VIOLATION OF THE CODE TO LEGAL COUNSEL;
(IX) UNDERSTAND THAT THE TRUSTS HAVE THE RIGHT TO
AMEND, INTERPRET, MODIFY OR WITHDRAW ANY OF THE
PROVISIONS OF THE CODE AT ANY TIME IN THEIR
SOLE DISCRETION, WITH OR WITHOUT NOTICE; AND
(X) HAVE FULLY AND ACCURATELY COMPLETED THIS
CERTIFICATE
EXCEPTION(S):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature:
--------------------------------------------------------
(Please print)
Name:
--------------------------------------------------------
Date Submitted:
--------------------------------------------------------
Date Due:
--------------------------------------------------------
9