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 [WELS FARGO LOGO] [REDUCE CLUTTER. SAVE TREES. LOGO] Sign up for electronic delivery of prospectuses and shareholder reports at WWW.WELLSFARGO.COM/ADVANTAGEDELIVERY [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 REDUCE CLUTTER. SAVE TREES. Sign up for electronic delivery of prospectuses and shareholder reports at WWW.WELLSFARGO.COM/ADVANTAGEDELIVERY 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