N-CSRS 1 variable_ncsrs.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-09255 Wells Fargo Variable Trust (Exact name of registrant as specified in charter) 525 Market St., San Francisco, CA 94105 (Address of principal executive offices) (Zip code) C. David Messman Wells Fargo Funds Management, LLC 525 Market St., San Francisco, CA 94105 (Name and address of agent for service) Registrant's telephone number, including area code: 800-643-9691 Date of fiscal year end: December 31, 2005 Date of reporting period: June 30, 2005 ITEM 1. REPORT TO SHAREHOLDERS [LOGO] WELLS ADVANTAGE FARGO FUNDS -------------------------------------------------------------------------------- JUNE 30, 2005 -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT [PHOTO OMITTED] -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND WELLS FARGO ADVANTAGE DISCOVERY FUND(SM) WELLS FARGO ADVANTAGE EQUITY INCOME FUND WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND WELLS FARGO ADVANTAGE MONEY MARKET FUND WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND WELLS FARGO ADVANTAGE OPPORTUNITY FUND(SM) WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- TABLE OF CONTENTS Letter to Contractholders ................................................ 1 -------------------------------------------------------------------------------- Performance Highlights -------------------------------------------------------------------------------- Wells Fargo Advantage Asset Allocation Fund .......................... 2 Wells Fargo Advantage C&B Large Cap Value Fund ....................... 4 Wells Fargo Advantage Discovery Fund ................................. 6 Wells Fargo Advantage Equity Income Fund ............................. 8 Wells Fargo Advantage International Core Fund ........................ 10 Wells Fargo Advantage Large Company Core Fund ........................ 12 Wells Fargo Advantage Large Company Growth Fund ...................... 14 Wells Fargo Advantage Money Market Fund .............................. 16 Wells Fargo Advantage Multi Cap Value Fund ........................... 18 Wells Fargo Advantage Opportunity Fund ............................... 20 Wells Fargo Advantage Small Cap Growth Fund .......................... 22 Wells Fargo Advantage Total Return Bond Fund ......................... 24 Fund Expenses (Unaudited) ................................................ 26 -------------------------------------------------------------------------------- Portfolio of Investments -------------------------------------------------------------------------------- Wells Fargo Advantage Asset Allocation Fund .......................... 28 Wells Fargo Advantage C&B Large Cap Value Fund ....................... 43 Wells Fargo Advantage Discovery Fund ................................. 46 Wells Fargo Advantage Equity Income Fund ............................. 50 Wells Fargo Advantage International Core Fund ........................ 53 Wells Fargo Advantage Large Company Core Fund ........................ 57 Wells Fargo Advantage Large Company Growth Fund ...................... 59 Wells Fargo Advantage Money Market Fund .............................. 61 Wells Fargo Advantage Multi Cap Value Fund ........................... 63 Wells Fargo Advantage Opportunity Fund ............................... 69 Wells Fargo Advantage Small Cap Growth Fund .......................... 73 Wells Fargo Advantage Total Return Bond Fund ......................... 78 Financial Statements -------------------------------------------------------------------------------- Statements of Assets and Liabilities ................................. 88 Statements of Operations ............................................. 92 Statements of Changes in Net Assets .................................. 96 Financial Highlights ................................................. 102 Notes to Financial Highlights ............................................ 106 -------------------------------------------------------------------------------- Notes to Financial Statements ............................................ 107 -------------------------------------------------------------------------------- Other Information (Unaudited) ............................................ 118 -------------------------------------------------------------------------------- List of Abbreviations .................................................... 124 -------------------------------------------------------------------------------- --------------------------------------------------- NOT FDIC INSURED-NO BANK GUARANTEE-MAY LOSE VALUE --------------------------------------------------- THIS PAGE IS INTENTIONALLY LEFT BLANK -- LETTER TO CONTRACTHOLDERS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- DEAR VALUED CONTRACTHOLDER, I am pleased to introduce you to WELLS FARGO ADVANTAGE FUNDS(SM). You now have access to an expanded array of mutual funds, giving you the flexibility to invest in a family of funds covering nearly every asset class and investment style. To learn more about our funds and the talented team of money managers behind them, please visit our new Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. You can also call one of our investment service representatives now available 24 hours a day, 7 days a week at 1-800-222-8222, or speak with your investment professional. Following is your WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS semi-annual report for the period ended June 30, 2005. On the following pages, you will find a discussion of each Fund, including performance highlights, the Fund managers' strategic outlook, and information about the Fund's investment portfolio. ECONOMIC EXPANSION CONTINUES -------------------------------------------------------------------------------- The expansion of the U.S. economy remains solid, with real gross domestic product (GDP), the most comprehensive measure of economic activity, growing at a 3.5% rate for the first half of 2005. This is impressive, if not surprising, given the record high energy prices reported during the period. The price of crude oil rose to a new record level during the second quarter of 2005, creating fears of a possible slowdown in consumer spending. However, low interest rates and a consequent extended boom in the housing sector helped to offset the negative effects of high oil and gas prices. Steady growth in employment and household incomes helped bring spending back to relatively healthy levels. Solid growth in capital spending by businesses, fueled by strong cash flow and low borrowing costs, also contributed to economic growth. Rising energy prices did have an impact on inflation, pushing it upward during the reporting period. The consumer price index (CPI) rose at around a 3% rate over the twelve months ended June 30, 2005. The core CPI, which excludes the volatile food and energy components, was up only around 2% this past year, a good record this far into an economic expansion. With core inflation generally contained, the Federal Reserve (the Fed) was able to stay with a strategy of raising interest rates at a "measured pace." Since June of last year, the Fed has raised the federal funds rate -- its principal policy tool--from 1% to 3.25%. Additional increases in this rate are expected during the rest of 2005. Bond yields, however, did not increase with the federal funds rate and, as a result, mortgage rates remained unusually low and the housing sector remained very strong. STOCKS: SIDEWAYS PATTERN -------------------------------------------------------------------------------- After an impressive rally in the fourth quarter of 2004, stock prices showed little net change over the first half of the year. The S&P 500 Index was around 1200 as the year began. It ended the first half of 2005 at 1191. Strong corporate earnings have helped the markets, while record prices for crude oil and concerns of a slowdown in worldwide economic growth have capped and often reversed rallies. In the U.S., however, the fundamentals of solid earnings and low inflation have helped the equity markets improve over time. BONDS: UNPRECEDENTED PERFORMANCE -------------------------------------------------------------------------------- Yields on most U.S. Treasury notes and bonds declined as the federal funds rate increased during the period. Exceptional demand for U.S. Treasury securities from foreign investors and the tame core inflation data are two factors thought to be keeping bond yields low. The flattening in the yield curve has been one of the main elements contributing to good returns from bonds during most of the reporting period. The high yield and investment grade segments of the corporate bond market continued to perform well during most of the period. During April and May 2005, however, downgrades of General Motors and Ford bonds caused those sectors to underperform. In June 2005, the corporate sectors recovered and again produced solid returns. Municipal bonds generally performed better than most taxable sectors during most of 2005, but, they lagged behind the rally in U.S. Treasuries in May and June. Overall, by the end of the second quarter of 2005, municipal yields were very attractive relative to yields on comparable U.S. Treasuries. LOOKING AHEAD: MORE OF THE SAME? -------------------------------------------------------------------------------- The economy has shown remarkably steady growth over the reporting period -- growth that has been sufficient to bring the unemployment rate down to 5.0%, its lowest rate since 2001. As stock and bond investors seek to determine where inflation, interest rates, and corporate earnings are headed, we may see more unpredictable moves in the markets. Uncertainty and risk will always be a part of investing. We believe that an important thing you can do to manage risk is to own a broadly diversified portfolio with stocks, bonds, and cash that can help you weather unexpected market shifts. While diversification may not prevent losses in a downturn, it may help reduce them and keep you on track to reach your financial goals. 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. Sincerely, /s/ Karla M. Rabusch Karla M. Rabusch President WELLS FARGO ADVANTAGE FUNDS 1 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- ASSET ALLOCATION FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE ASSET ALLOCATION FUND (the Fund) seeks long-term total return, consistent with reasonable risk. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Galen G. Blomster, CFA 4/15/1994 Jeffrey P. Mellas HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned 0.92%(1) for the six-month period ended June 30, 2005, outperforming its benchmark, the S&P 500 Index(2), which returned (0.81)%, and underperforming the Lehman Brothers 20+ Treasury Index(3), which returned 10.87%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- After finishing 2004 on an optimistic note, stocks followed an irregular pattern during the first six months of 2005. Record oil prices and the ninth consecutive quarter-percentage-point interest rate hike by the Federal Reserve led investors to be concerned about an economic slowdown, and this concern was reflected in the stock market's overall weakness. In this environment, however, bond yields plummeted and prices rose accordingly, with long Treasury bonds returning 10.87% for the period. The Fund's Tactical Asset Allocation (TAA) model, which seeks to enhance portfolio returns by shifting assets between stocks and bonds, indicated that stocks remained compellingly attractive during the six-month period. As a result, we maintained a 25% shift in favor of stocks throughout the period. The very strong performance by long Treasury bonds during the period both hurt and helped performance of the Fund. As long Treasury bonds significantly outperformed stocks, our shift toward stocks hurt the portfolio's performance during the period. However, the Fund's underlying holdings of long Treasury bonds benefited its performance. Overall, we were pleased that the Fund was able to outperform its benchmark, the S&P 500 Index, during the reporting period. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The underlying assets in the portfolio remained at their long-term strategic allocation with 60% indexed to the S&P 500 Index and 40% indexed to the Lehman Brothers 20+ Treasury Index. With the 25% TAA shift toward stocks, the portfolio maintained a long position in S&P 500 index futures and was short in long-term Treasury bond futures. Throughout the period, the Fund was at its maximum allowable equity overweighting, with 85% of the portfolio invested in stocks and 15% in bonds. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Despite periodic concerns of an economic slowdown, this remains a very broad-based economic expansion marked by low inflation, strong corporate earnings, low interest rates and rising employment. With the sharp decline in bond yields during the period, our TAA model indicates that stock prices are attractive relative to bond prices. As a result, the Fund will remain overweighted in stocks until the relative valuation between stocks and bonds returns to more normal levels. BALANCED FUNDS MAY INVEST IN STOCKS AND BONDS. STOCKS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. BOND VALUES FLUCTUATE IN RESPONSE TO THE FINANCIAL CONDITION OF INDIVIDUAL ISSUERS, GENERAL MARKET AND ECONOMIC CONDITIONS, AND CHANGES IN INTEREST RATES. IN GENERAL, WHEN INTEREST RATES RISE, BOND FUND VALUES FALL AND INVESTORS CAN LOSE PRINCIPAL VALUE. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLe TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. The views expressed are as of June 30, 2005 and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE VARIABLE TRUST ASSET ALLOCATION FUND. 2 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005) --------------------------------------------------------------------------------

* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(4) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Beta** 1.00 ----------------------------------------------------------------------------- Price to Earnings Ratio (trailing 12 months) 16.60x ----------------------------------------------------------------------------- Price to Book Ratio 3.70x ----------------------------------------------------------------------------- Median Market Cap ($B) $22.00 ----------------------------------------------------------------------------- Portfolio Turnover 91% ----------------------------------------------------------------------------- Net Asset Value (NAV) $ 9.21 ** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS 1.00 BY DEFINITION. TEN LARGEST EQUITY HOLDINGS(4),(5)(AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- American Express Company 3.19% ----------------------------------------------------------------------------- General Dynamics Corporation 2.98% ----------------------------------------------------------------------------- Exxon Mobil Corporation 2.96% ----------------------------------------------------------------------------- Molex Incorporated 2.87% ----------------------------------------------------------------------------- MBIA Incorporated 2.72% ----------------------------------------------------------------------------- Omnicom Group Incorporated 2.70% ----------------------------------------------------------------------------- Dover Corporation 2.69% ----------------------------------------------------------------------------- Bank Of America Corporation 2.66% ----------------------------------------------------------------------------- Hasbro Incorporated 2.62% ----------------------------------------------------------------------------- McDonald's Corporation 2.60% SECTOR DISTRIBUTION(4) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary 25% Consumer Staples 7% Energy 6% Financials 22% Health Care 11% Industrial 16% Information Technology 8% Materials 2% Telecommunication Services 3% GROWTH OF $10,000 INVESTMENT(6) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE RUSSELL 1000 S&P 500 FUND VALUE INDEX INDEX 5/1/1998 10,000 10,000 10,000 5/31/1998 9,680 9,852 9,828 6/30/1998 9,739 9,978 10,227 7/31/1998 9,268 9,801 10,119 8/31/1998 8,156 8,343 8,656 9/30/1998 8,626 8,822 9,211 10/31/1998 9,199 9,506 9,960 11/30/1998 9,460 9,949 10,564 12/31/1998 9,624 10,288 11,172 1/31/1999 9,403 10,370 11,639 2/28/1999 9,161 10,224 11,277 3/31/1999 9,380 10,436 11,728 4/30/1999 10,188 11,410 12,182 5/31/1999 10,087 11,285 11,895 6/30/1999 10,399 11,612 12,555 7/31/1999 10,024 11,272 12,163 8/31/1999 9,477 10,854 12,103 9/30/1999 8,981 10,475 11,771 10/31/1999 9,285 11,078 12,516 11/30/1999 9,255 10,992 12,770 12/31/1999 9,386 11,044 13,522 1/31/2000 9,142 10,684 12,844 2/29/2000 8,715 9,891 12,601 3/31/2000 9,498 11,097 13,833 4/30/2000 9,284 10,968 13,417 5/31/2000 9,416 11,084 13,142 6/30/2000 9,157 10,577 13,466 7/31/2000 9,311 10,709 13,256 8/31/2000 9,974 11,305 14,080 9/30/2000 9,813 11,409 13,336 10/31/2000 10,048 11,689 13,280 11/30/2000 9,527 11,256 12,234 12/31/2000 9,929 11,820 12,294 1/31/2001 10,103 11,865 12,730 2/28/2001 9,806 11,535 11,570 3/31/2001 9,420 11,128 10,838 4/30/2001 9,953 11,673 11,679 5/31/2001 10,107 11,935 11,757 6/30/2001 9,824 11,671 11,471 7/31/2001 9,783 11,646 11,359 8/31/2001 9,249 11,179 10,649 9/30/2001 8,553 10,392 9,790 10/31/2001 8,738 10,303 9,977 11/30/2001 9,222 10,901 10,742 12/31/2001 9,295 11,158 10,836 1/31/2002 8,821 11,073 10,678 2/28/2002 8,769 11,090 10,472 3/31/2002 9,341 11,615 10,866 4/30/2002 8,794 11,216 10,207 5/31/2002 8,711 11,273 10,133 6/30/2002 8,157 10,625 9,411 7/31/2002 7,392 9,637 8,678 8/31/2002 7,423 9,711 8,735 9/30/2002 6,436 8,631 7,786 10/31/2002 6,977 9,270 8,471 11/30/2002 7,424 9,854 8,969 12/31/2002 7,056 9,427 8,442 1/31/2003 6,857 9,199 8,222 2/28/2003 6,658 8,953 8,098 3/31/2003 6,673 8,968 8,176 4/30/2003 7,197 9,757 8,850 5/31/2003 7,606 10,388 9,315 6/30/2003 7,745 10,517 9,435 7/31/2003 7,872 10,674 9,601 8/31/2003 7,903 10,841 9,788 9/30/2003 7,858 10,734 9,684 10/31/2003 8,292 11,391 10,231 11/30/2003 8,376 11,546 10,321 12/31/2003 8,859 12,258 10,862 1/31/2004 9,008 12,473 11,062 2/29/2004 9,253 12,740 11,216 3/31/2004 9,147 12,629 11,046 4/30/2004 8,998 12,321 10,873 5/31/2004 9,009 12,446 11,022 6/30/2004 9,151 12,740 11,236 7/31/2004 8,969 12,561 10,864 8/31/2004 9,044 12,739 10,908 9/30/2004 9,111 12,937 11,026 10/31/2004 9,176 13,152 11,194 11/30/2004 9,562 13,817 11,647 12/31/2004 9,854 14,280 12,043 1/31/2005 9,789 14,025 11,749 2/28/2005 10,016 14,490 11,996 3/31/2005 9,904 14,291 11,784 4/30/2005 9,720 14,035 11,560 5/31/2005 9,958 14,374 11,927 6/30/2005 9,978 14,530 11,944 -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND was named the Wells Fargo Equity Value Fund. Performance shown for the Fund for periods prior to September 20, 1999 reflects performance of the Life and Annuity Trust Equity Value Fund, its predecessor fund. Effective at the close of business September 17,1999, the Life and Annuity Trust and Norwest Select Funds were reorganized into the WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS. (2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the Index proportionate to its market value. You cannot invest directly in an index. (3) The Russell 1000(R) Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in an index. (4) Sector distribution, portfolio holdings and fund characteristics are subject to change. Cash and cash equivalents are not reflected in the calculations of sector distribution, portfolio holdings and fund characteristics. (5) The Ten Largest Equity Holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. (6) The chart compares the performance of the WELLS FARGO ADVANTAGE C&B LARGE CAP VALUE FUND for the life of the Fund with the S&P 500 Index and the Russell 1000(R) Value Index. The chart assumes a hypothetical investment of $10,000 and reflects all operating expenses of the Fund. 5 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- DISCOVERY FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE DISCOVERY FUND(SM) (the Fund) seeks long-term capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Thomas J. Pence, CFA 5/8/1992 James M. Leach, CFA HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned (0.79)%(1) for the six-month period ended June 30, 2005, outperforming its benchmark, the Russell 2000(R) Index(2), which returned (1.25)%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1- 888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The Fund's performance was hampered by its exposure to smaller-capitalization companies, which noticeably underperformed mid-capitalization companies during the period. In addition, disappointments within the technology and health care sectors detracted from the strong performance generated by the Fund's energy holdings. While we were diligent in attempting to identify technology companies that provide high-priority products for corporate customers, corporations were slow to spend money on such products. This was especially evident within the software industry, where several of the Fund's holdings suffered from lackluster performance. Firms such as Tibco Software, a developer of business integration software, and Cognos, a developer of business intelligence software, were negatively affected by reduced spending for information technology. In the health care sector, we eliminated several positions when we identified deteriorating fundamentals. Specifically, we sold Elan, a specialty pharmaceutical company, after the firm disclosed a voluntary suspension in the marketing of Tysabri(R), a drug used to treat multiple sclerosis and which faced safety questions. The weakness of these sectors was offset by strong returns from our energy and telecommunications holdings. Within energy, Canadian Natural Resources, an exploration, development, and production company of crude oil and natural gas, was a solid performer as the firm consistently grew its natural gas production to meet rising demand. In oil services, Noble and Grant Prideco positively contributed to portfolio gains. In telecom, the Fund benefited from its position in NII Holdings, a provider of wireless services in Latin America that experienced strong subscriber growth and successfully increased its market share in Mexico. Similarly, Nextel Partners, which provides wireless service in less-populated areas of the United States, also experienced continued subscriber growth strength, which led to positive stock performance. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- We continued to identify opportunities across a variety of sectors. As such, we increased our positions in a number of specialty retailers with unique growth profiles, such as PETsMART and Williams-Sonoma. In addition, we added various leisure stocks such as Great Wolf Resorts and Hilton Hotels, as well as added to our position in Harrah's Entertainment. Within health care, we considerably increased our exposure to equipment companies Fisher Scientific and American Medical Systems Holdings. Likewise, we added to our holdings in health care service companies by initiating a new position in PacifiCare Health Systems. Finally, we reduced our technology exposure by selling a variety of computer hardware and semiconductor firms. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Key concerns for the second half of the year continue to be slowing economic momentum, the effects of high oil prices, and increases in short-term rates. As a result, we believe investors will be very sensitive regarding their expectations for economic growth. Despite these concerns, we expect corporate profits to continue to rise. Earnings growth should be more moderate than in 2004, but we are encouraged that we will continue to identify long-term growth opportunities for the Fund. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. FUNDS THAT INVEST IN SMALLER COMPANIES INVOLVE ADDITIONAL RISKS BECAUSE THESE COMPANIES OFTEN HAVE LIMITED FINANCIAL RESOURCES, AND THEIR STOCKS TEND TO BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGER COMPANIES. INVESTMENT STRATEGIES THAT EMPHASIZE IN PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN INVESTMENTS RISK. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. The views expressed are as of June 30, 2005 and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE DISCOVERY FUND. 6 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1)(%)(AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- 6-Month* 1-Year 5-Year 10-Year -------------------------------------------------------------------------------- Discovery Fund (0.79) 8.79 6.48 8.43 -------------------------------------------------------------------------------- Benchmark -------------------------------------------------------------------------------- Russell 2000(R) Index(2) (1.25) 9.45 5.71 9.90 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Beta** 1.41 ----------------------------------------------------------------------------- Price to Earnings Ratio (trailing 12 months) 33.60x ----------------------------------------------------------------------------- Price to Book Ratio 3.84x ----------------------------------------------------------------------------- Median Market Cap ($B) $ 3.08 ----------------------------------------------------------------------------- Portfolio Turnover 78% ----------------------------------------------------------------------------- Net Asset Value (NAV) $13.14 ** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS 1.00 BY DEFINITION. TEN LARGEST EQUITY HOLDINGS(3),(4)(AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- NII Holdings Incorporated 3.14% ----------------------------------------------------------------------------- Fisher Scientific International Incorporated 2.53% ----------------------------------------------------------------------------- Marvel Enterprises Incorporated 2.41% ----------------------------------------------------------------------------- Royal Caribbean Cruises Limited 2.38% ----------------------------------------------------------------------------- Digene Corporation 2.25% ----------------------------------------------------------------------------- Chesapeake Energy Corporation 2.24% ----------------------------------------------------------------------------- Marvell Technology Group Limited 2.21% ----------------------------------------------------------------------------- Pacificare Health Systems 2.18% ----------------------------------------------------------------------------- Cogent Incorporated 2.16% ----------------------------------------------------------------------------- Gencorp Incorporated 2.09% SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary 24% Energy 12% Financials 4% Health Care 22% Industrial 7% Information Technology 22% Materials 2% Telecommunication Services 7% GROWTH OF $10,000 INVESTMENT(5) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE RUSSELL 2000(R) DISCOVERY FUND INDEX 6/30/1995 10,000 10,000 7/31/1995 10,869 10,576 8/31/1995 10,971 10,795 9/30/1995 11,235 10,988 10/31/1995 11,014 10,497 11/30/1995 11,755 10,938 12/31/1995 11,598 11,227 1/31/1996 11,607 11,214 2/29/1996 11,175 11,564 3/31/1996 11,245 11,800 4/30/1996 11,777 12,431 5/31/1996 12,105 12,921 6/30/1996 11,331 12,390 7/31/1996 10,338 11,308 8/31/1996 10,669 11,965 9/30/1996 11,226 12,433 10/31/1996 11,183 12,242 11/30/1996 11,735 12,746 12/31/1996 11,692 13,080 1/31/1997 11,973 13,342 2/28/1997 11,302 13,019 3/31/1997 10,523 12,404 4/30/1997 10,642 12,439 5/31/1997 11,800 13,824 6/30/1997 12,190 14,417 7/31/1997 13,186 15,087 8/31/1997 13,316 15,433 9/30/1997 14,193 16,562 10/31/1997 13,500 15,835 11/30/1997 13,467 15,732 12/31/1997 13,023 16,007 1/31/1998 12,894 15,755 2/28/1998 13,857 16,919 3/31/1998 14,485 17,616 4/30/1998 14,375 17,713 5/31/1998 13,727 16,758 6/30/1998 14,024 16,793 7/31/1998 13,365 15,433 8/31/1998 11,202 12,436 9/30/1998 11,597 13,410 10/31/1998 12,256 13,957 11/30/1998 12,882 14,688 12/31/1998 13,969 15,597 1/31/1999 14,068 15,805 2/28/1999 12,761 14,525 3/31/1999 12,551 14,751 4/30/1999 12,990 16,073 5/31/1999 13,029 16,307 6/30/1999 13,209 17,045 7/31/1999 12,564 16,578 8/31/1999 11,790 15,964 9/30/1999 11,649 15,967 10/31/1999 11,636 16,033 11/30/1999 12,642 16,990 12/31/1999 14,680 18,913 1/31/2000 14,099 18,609 2/29/2000 16,267 21,681 3/31/2000 16,396 20,252 4/30/2000 15,622 19,033 5/31/2000 15,815 17,923 6/30/2000 16,409 19,486 7/31/2000 16,757 18,859 8/31/2000 17,208 20,298 9/30/2000 16,331 19,701 10/31/2000 15,544 18,822 11/30/2000 14,267 16,889 12/31/2000 15,325 18,340 1/31/2001 16,357 19,296 2/28/2001 15,273 18,030 3/31/2001 14,873 17,148 4/30/2001 16,370 18,489 5/31/2001 16,291 18,944 6/30/2001 16,816 19,598 7/31/2001 15,889 18,537 8/31/2001 15,132 17,939 9/30/2001 13,586 15,524 10/31/2001 14,498 16,432 11/30/2001 15,286 17,704 12/31/2001 15,951 18,796 1/31/2002 15,904 18,601 2/28/2002 15,626 18,091 3/31/2002 16,662 19,546 4/30/2002 16,183 19,724 5/31/2002 16,105 18,848 6/30/2002 15,224 17,913 7/31/2002 14,127 15,208 8/31/2002 14,127 15,170 9/30/2002 13,323 14,081 10/31/2002 14,081 14,533 11/30/2002 14,807 15,829 12/31/2002 14,034 14,948 1/31/2003 13,632 14,534 2/28/2003 13,617 14,095 3/31/2003 13,787 14,277 4/30/2003 14,745 15,630 5/31/2003 15,812 17,307 6/30/2003 15,874 17,620 7/31/2003 17,017 18,723 8/31/2003 18,146 19,581 9/30/2003 17,543 19,219 10/31/2003 19,088 20,833 11/30/2003 19,367 21,573 12/31/2003 19,568 22,010 1/31/2004 20,279 22,966 2/29/2004 20,727 23,172 3/31/2004 20,495 23,388 4/30/2004 19,660 22,195 5/31/2004 20,078 22,548 6/30/2004 20,650 23,497 7/31/2004 19,011 21,915 8/31/2004 18,316 21,802 9/30/2004 19,691 22,826 10/31/2004 20,433 23,275 11/30/2004 21,994 25,294 12/31/2004 22,643 26,043 1/31/2005 21,701 24,957 2/28/2005 21,747 25,379 3/31/2005 21,227 24,653 4/30/2005 19,832 23,240 5/31/2005 21,610 24,762 6/30/2005 22,465 25,718 -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's return would have been lower. Performance shown for the WELLS FARGO ADVANTAGE DISCOVERY FUND for periods prior to April 11, 2005 reflects the performance of the Strong Discovery Fund II, its predecessor fund. Effective at the close of business on April 8, 2005, certain of the Strong Funds were reorganized into certain of the WELLS FARGO ADVANTAGE FUNDS. (2) The Russell 2000(R) Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. You cannot invest directly in an index. (3) Sector distribution, portfolio holdings and fund characteristics are subject to change. Cash and cash equivalents are not reflected in the calculations of sector distribution, portfolio holdings and fund characteristics. (4) The Ten Largest Equity Holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE DISCOVERY FUND for the most recent ten years of the Fund with the Russell 2000(R) Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. 7 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- EQUITY INCOME FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE EQUITY INCOME FUND (the Fund) seeks long-term capital appreciation and above-average dividend income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Gary J. Dunn, CFA 5/6/1996 David L. Roberts, CFA HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned 0.90%(1) for the six-month period ended June 30, 2005, outperforming its benchmark, the S&P 500 Index(2), which returned (0.81)%, and underperforming the Russell 1000(R) Value Index(3) which returned 1.76%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Sectors that contributed positively to the Fund's performance during the period included utilities, energy, and consumer discretionary. Lower intermediate-term interest rates helped the utility sector overall. Florida utility FPL had good fourth-quarter results from 2004 as demand for power increased. Another of the Fund's utility holdings, Public Service Enterprise Group, agreed to be acquired by Exelon and benefited from Exelon's strong first-quarter earnings. In energy, continued high oil prices boosted energy companies' profits, and in the consumer discretionary sector, May Department Stores was the portfolio's best performer, rising more than 36% after agreeing to a merger with Federated Department Stores. Fortune Brands also was up nicely in the first half of 2005, thanks to two factors. The company entered into an agreement that should significantly improve its wines and spirits lineup, and Fortune Brands made progress on a planned spin-off of its business products division. Sectors that detracted from performance included telecommunication services, industrials, consumer staples, and financials. In telecom, intense competition, particularly from cable and Internet companies looking to offer local voice service, continued to weigh on corporate shares. In industrials, 3M declined, as a good first-quarter earnings report and reaffirmation of its full-year earnings guidance was not enough to offset the unexpected departure of the company's CEO. Consumer staples stock Sara Lee faltered, despite a restructuring announcement that we believe should be a long-term positive. Insurance giant AIG declined because of a number of issues: increased regulatory scrutiny, questionable accounting for reinsurance transactions, and the departure of long-time CEO Hank Greenberg. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- Year-to-date transactions included initiating new positions in Alltel, Masco, and Time Warner. We also added to existing positions in Bank of America, Citicorp, Wachovia, St. Paul Travelers, Intel, Microsoft, Motorola, General Electric, Emerson Electric, Honeywell, and 3M. We trimmed a number of positions based on concerns about company fundamentals or to increase the Fund's diversification. For example, we sold part of our holdings in American Express, US Bancorp, JPMorgan Chase, Hewlett-Packard, IBM, Fortune Brands, Kimberly Clark, McDonald's and PepsiCo. These transactions led to a reduced weighting in the consumer sector, increased diversification in the technology and financial sectors, and a higher weighting in industrials. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- The Fund's mid-year fundamentals remain very attractive. The Fund's dividend yield is nearly 50% higher than that of the general market, as measured by the S&P 500 Index. In addition, the Fund's current price-to-earnings ratio and the consensus long-term earnings growth expectations of its holdings are better than those of the general market. We believe these positive attributes along with a below-market risk profile (as measured by beta) could make the Fund an attractive equity investment in the period ahead. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. The views expressed are as of June 30, 2005 and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE VARIABLE TRUST EQUITY INCOME FUND. 8 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1)(%)(AS OF JUNE 30, 2005) --------------------------------------------------------------------------------

* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Beta** 0.96 ----------------------------------------------------------------------------- Price to Earnings Ratio (trailing 12 months) 14.93x ----------------------------------------------------------------------------- Price to Book Ratio 2.50x ----------------------------------------------------------------------------- Median Market Cap ($B) $13.91 ----------------------------------------------------------------------------- Portfolio Turnover 26% ----------------------------------------------------------------------------- Net Asset Value (NAV) $ 8.19 ** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS 1.00 BY DEFINITION. TEN LARGEST EQUITY HOLDINGS(3),(4) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Roche Holdings AG -- Genusschein 2.48% ----------------------------------------------------------------------------- Novartis AG 2.19% ----------------------------------------------------------------------------- Royal Dutch Petroleum Company 2.10% ----------------------------------------------------------------------------- GlaxoSmithKline plc 2.08% ----------------------------------------------------------------------------- KAO Corporation 1.98% ----------------------------------------------------------------------------- Total SA ADR 1.97% ----------------------------------------------------------------------------- Unicredito Italiano SpA 1.88% ----------------------------------------------------------------------------- Vodafone Group plc 1.87% ----------------------------------------------------------------------------- NTT DoCoMo Incorporated 1.73% ----------------------------------------------------------------------------- Aviva plc 1.63% PORTFOLIO COMPOSITION(3) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Continental Europe 51% Emerging Markets 3% Japan 18% Southeast Asia 6% United Kingdom 20% Australia 2% GROWTH OF $10,000 INVESTMENT(5) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE MSCI EAFE INTERNATIONAL CORE FUND INDEX 7/3/2000 $ 10,000 $ 10,000 7/31/2000 $ 9,670 $ 9,581 8/31/2000 $ 9,870 $ 9,664 9/30/2000 $ 9,280 $ 9,194 10/31/2000 $ 9,150 $ 8,977 11/30/2000 $ 8,650 $ 8,640 12/31/2000 $ 8,967 $ 8,947 1/31/2001 $ 9,187 $ 8,942 2/28/2001 $ 8,465 $ 8,272 3/31/2001 $ 7,914 $ 7,720 4/30/2001 $ 8,315 $ 8,256 5/31/2001 $ 8,255 $ 7,965 6/30/2001 $ 8,024 $ 7,639 7/31/2001 $ 7,813 $ 7,500 8/31/2001 $ 7,594 $ 7,310 9/30/2001 $ 6,882 $ 6,570 10/31/2001 $ 7,113 $ 6,738 11/30/2001 $ 7,374 $ 6,987 12/31/2001 $ 7,524 $ 7,028 1/31/2002 $ 7,193 $ 6,655 2/28/2002 $ 7,083 $ 6,701 3/31/2002 $ 7,424 $ 7,064 4/30/2002 $ 7,424 $ 7,111 5/31/2002 $ 7,313 $ 7,201 6/30/2002 $ 6,996 $ 6,914 7/31/2002 $ 6,282 $ 6,232 8/31/2002 $ 6,232 $ 6,217 9/30/2002 $ 5,508 $ 5,550 10/31/2002 $ 5,770 $ 5,848 11/30/2002 $ 6,071 $ 6,113 12/31/2002 $ 5,800 $ 5,908 1/31/2003 $ 5,538 $ 5,661 2/28/2003 $ 5,398 $ 5,531 3/31/2003 $ 5,297 $ 5,423 4/30/2003 $ 5,770 $ 5,954 5/31/2003 $ 6,111 $ 6,315 6/30/2003 $ 6,192 $ 6,468 7/31/2003 $ 6,273 $ 6,624 8/31/2003 $ 6,444 $ 6,784 9/30/2003 $ 6,585 $ 6,993 10/31/2003 $ 6,989 $ 7,429 11/30/2003 $ 7,150 $ 7,594 12/31/2003 $ 7,624 $ 8,187 1/31/2004 $ 7,634 $ 8,302 2/29/2004 $ 7,725 $ 8,494 3/31/2004 $ 7,745 $ 8,542 4/30/2004 $ 7,483 $ 8,349 5/31/2004 $ 7,483 $ 8,377 6/30/2004 $ 7,584 $ 8,561 7/31/2004 $ 7,318 $ 8,283 8/31/2004 $ 7,307 $ 8,319 9/30/2004 $ 7,439 $ 8,537 10/31/2004 $ 7,621 $ 8,828 11/30/2004 $ 8,076 $ 9,431 12/31/2004 $ 8,359 $ 9,845 1/31/2005 $ 8,217 $ 9,665 2/28/2005 $ 8,601 $ 10,082 3/31/2005 $ 8,359 $ 9,829 4/30/2005 $ 8,177 $ 9,598 5/31/2005 $ 8,156 $ 9,603 6/30/2005 $ 8,278 $ 9,731 -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's return would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND was named the Wells Fargo International Equity Fund. (2) The Morgan Stanley Capital International Europe, Australasia and Far East ("MSCI EAFE") Stock Index is an unmanaged group of securities widely regarded by investors to be representative of the stock markets of Europe, Australasia and the Far East. You cannot invest directly in an index. (3) Sector distribution, portfolio holdings and fund characteristics are subject to change. Cash and cash equivalents are not reflected in the calculations of sector distribution, portfolio holdings and fund characteristics. (4) The Ten Largest Equity Holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE INTERNATIONAL CORE FUND for the life of the Fund with the MSCI EAFE Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. 11 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- LARGE COMPANY CORE FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND (the Fund) seeks total return comprised of long-term capital appreciation and current income. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Matrix Asset Advisors, Inc. FUND MANAGER INCEPTION DATE David A. Katz, CFA 4/12/1994 HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned (6.01)%(1) for the six-month period ended June 30, 2005, underperforming its benchmark, the S&P 500 Index(2), which returned (0.81)%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Compared with its benchmark, the Fund's performance lagged primarily because of our emphasis on certain sectors and industries of the market that were out of favor during the first half of the year. While the individual companies that the Fund owned generally exhibited strong operating performance and were leaders in their respective industries, many of our stocks underperformed market indices. During much of the period, investors were concerned that the economy would slow because of high energy prices and rising interest rates. These concerns had a substantial negative impact on many of our holdings, particularly in the financial and information technology sectors. For example, Citigroup and JP Morgan Chase derive a significant portion of revenue from activities not directly impacted by the near-term movement of interest rates, but were adversely impacted because of concerns about the impact of rising interest rates on overall financial performance. With the exception of companies such as Morgan Stanley and Symbol Technologies that experienced short-term operating issues, and which therefore declined substantially during the quarter, most of our underperformance can be attributed to a focus on sectors that were out of favor and an under-representation in sectors that were in favor. On the positive side, we had attractive performance from such stocks as technology bellwethers Intel and Nokia, and pharmacy retailer CVS. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- Our strategy is not a strategy where we seek to mirror benchmark sector weightings. Rather, we seek to include our best investment ideas. This might result in our being over, under or not represented in a particular sector at various times. During the beginning of the reporting period, we repositioned the Fund with an eye toward upgrading the quality of its holdings which we believe will enable it to participate more meaningfully in the next leg of the economic recovery. We increased exposure to sectors where we continued to find attractive growth opportunities at reasonable valuations, including financials, health care, and information technology. Our focus on these sectors is based on several factors including the cyclical prospects for the sector and the industry and the attractive price at which many of these companies can now be purchased. Our strategy leads us to companies we believe are strong, but are experiencing short-term problems, which have negatively impacted stock price. We believe this opportunistic focus should bear positive results as the year unfolds. We also scaled back weightings in sectors we perceived to be trading above reasonable valuation levels. Again, we are concerned that many companies within strong performing sectors year-to-date have reached and surpassed fair value based on fundamentals, and are increasingly vulnerable to a price correction. We seek to take profits while stocks are still strong, before they have had a chance to give back some or all of their gains. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We are quite optimistic for the balance of the year. We base that optimism on the growing evidence that the U.S. economy is more resilient and capable of sustained growth than many investors have recently assumed. We do not believe that energy prices will continue to move much higher; rather, we believe that most of the upside has already been captured and there is more likelihood of downward movement over the next twelve months. We also do not believe that interest rates will be raised to a level that will stifle economic growth. Finally, near the end of the period, the share prices of many of our holdings began to strengthen. We will continue to diligently apply the same methodology of picking quality stocks with attractive growth prospects relative to their valuations. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. 12 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- 6-Month* 1-Year 5-Year 10-Year ------------------------------------------------------------------------- Large Company Core Fund (6.01) (0.98) (8.18) 4.85 ------------------------------------------------------------------------- Benchmark ------------------------------------------------------------------------- S&P 500 Index(2) (0.81) 6.32 (2.37) 9.94 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Beta** 0.83 ----------------------------------------------------------------------------- Price to Earnings Ratio (trailing 12 months) 25.49x ----------------------------------------------------------------------------- Price to Book Ratio 3.04x ----------------------------------------------------------------------------- Median Market Cap ($B) $52.00 ----------------------------------------------------------------------------- Portfolio Turnover 97% ----------------------------------------------------------------------------- Net Asset Value (NAV) $13.13 ** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS 1.00 BY DEFINITION. TEN LARGEST EQUITY HOLDINGS(3),(4) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Medimmune Incorporated 4.32% ----------------------------------------------------------------------------- Microsoft Corporation 4.02% ----------------------------------------------------------------------------- General Electric Company 3.96% ----------------------------------------------------------------------------- American International Group Incorporated 3.95% ----------------------------------------------------------------------------- Morgan Stanley 3.94% ----------------------------------------------------------------------------- Intel Corporation 3.91% ----------------------------------------------------------------------------- Pfizer Incorporated 3.87% ----------------------------------------------------------------------------- Bank of New York Company Incorporated 3.85% ----------------------------------------------------------------------------- Citigroup Incorporated 3.85% ----------------------------------------------------------------------------- Novellus Systems Incorporated 3.81% SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary 13% Consumer Staples 4% Financials 34% Health Care 18% Industrials 8% Information Technology 23% GROWTH OF $10,000 INVESTMENT(5) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE S&P 500 LARGE COMPANY CORE FUND INDEX 6/30/1995 $ 10,000 $ 10,000 7/31/1995 $ 10,311 $ 10,331 8/31/1995 $ 10,479 $ 10,357 9/30/1995 $ 10,830 $ 10,794 10/31/1995 $ 10,484 $ 10,756 11/30/1995 $ 10,914 $ 11,227 12/31/1995 $ 11,054 $ 11,444 1/31/1996 $ 11,260 $ 11,833 2/29/1996 $ 11,679 $ 11,943 3/31/1996 $ 11,709 $ 12,057 4/30/1996 $ 12,096 $ 12,235 5/31/1996 $ 12,397 $ 12,549 6/30/1996 $ 12,184 $ 12,597 7/31/1996 $ 11,555 $ 12,040 8/31/1996 $ 11,891 $ 12,294 9/30/1996 $ 12,488 $ 12,985 10/31/1996 $ 12,825 $ 13,343 11/30/1996 $ 13,647 $ 14,351 12/31/1996 $ 13,534 $ 14,067 1/31/1997 $ 14,311 $ 14,946 2/28/1997 $ 13,896 $ 15,062 3/31/1997 $ 13,413 $ 14,445 4/30/1997 $ 13,953 $ 15,306 5/31/1997 $ 14,838 $ 16,236 6/30/1997 $ 15,157 $ 16,964 7/31/1997 $ 16,391 $ 18,312 8/31/1997 $ 15,441 $ 17,287 9/30/1997 $ 16,058 $ 18,232 10/31/1997 $ 15,551 $ 17,623 11/30/1997 $ 15,791 $ 18,439 12/31/1997 $ 15,880 $ 18,756 1/31/1998 $ 16,174 $ 18,963 2/28/1998 $ 17,044 $ 20,330 3/31/1998 $ 17,862 $ 21,371 4/30/1998 $ 17,985 $ 21,589 5/31/1998 $ 17,711 $ 21,218 6/30/1998 $ 18,571 $ 22,079 7/31/1998 $ 18,476 $ 21,845 8/31/1998 $ 15,904 $ 18,688 9/30/1998 $ 16,640 $ 19,886 10/31/1998 $ 17,989 $ 21,503 11/30/1998 $ 19,196 $ 22,806 12/31/1998 $ 20,456 $ 24,120 1/31/1999 $ 21,242 $ 25,128 2/28/1999 $ 20,527 $ 24,346 3/31/1999 $ 21,505 $ 25,320 4/30/1999 $ 22,158 $ 26,300 5/31/1999 $ 21,474 $ 25,680 6/30/1999 $ 22,674 $ 27,105 7/31/1999 $ 22,021 $ 26,259 8/31/1999 $ 22,051 $ 26,129 9/30/1999 $ 21,461 $ 25,412 10/31/1999 $ 22,718 $ 27,021 11/30/1999 $ 23,218 $ 27,570 12/31/1999 $ 24,631 $ 29,193 1/31/2000 $ 23,538 $ 27,728 2/29/2000 $ 23,221 $ 27,204 3/31/2000 $ 25,296 $ 29,864 4/30/2000 $ 24,376 $ 28,965 5/31/2000 $ 23,722 $ 28,372 6/30/2000 $ 24,591 $ 29,072 7/31/2000 $ 24,325 $ 28,619 8/31/2000 $ 25,849 $ 30,396 9/30/2000 $ 24,364 $ 28,791 10/31/2000 $ 23,672 $ 28,670 11/30/2000 $ 21,148 $ 26,411 12/31/2000 $ 21,282 $ 26,540 1/31/2001 $ 21,562 $ 27,483 2/28/2001 $ 19,507 $ 24,979 3/31/2001 $ 17,922 $ 23,398 4/30/2001 $ 19,373 $ 25,213 5/31/2001 $ 19,440 $ 25,382 6/30/2001 $ 18,748 $ 24,766 7/31/2001 $ 18,245 $ 24,523 8/31/2001 $ 16,767 $ 22,990 9/30/2001 $ 15,558 $ 21,135 10/31/2001 $ 16,071 $ 21,539 11/30/2001 $ 17,134 $ 23,191 12/31/2001 $ 17,195 $ 23,395 1/31/2002 $ 16,658 $ 23,053 2/28/2002 $ 16,120 $ 22,608 3/31/2002 $ 16,694 $ 23,458 4/30/2002 $ 16,084 $ 22,037 5/31/2002 $ 15,974 $ 21,876 6/30/2002 $ 15,087 $ 20,318 7/31/2002 $ 13,375 $ 18,735 8/31/2002 $ 13,400 $ 18,857 9/30/2002 $ 12,605 $ 16,809 10/31/2002 $ 13,326 $ 18,287 11/30/2002 $ 13,473 $ 19,362 12/31/2002 $ 12,752 $ 18,226 1/31/2003 $ 12,532 $ 17,750 2/28/2003 $ 12,471 $ 17,484 3/31/2003 $ 12,703 $ 17,652 4/30/2003 $ 13,363 $ 19,106 5/31/2003 $ 13,828 $ 20,111 6/30/2003 $ 13,840 $ 20,368 7/31/2003 $ 14,329 $ 20,727 8/31/2003 $ 14,684 $ 21,131 9/30/2003 $ 14,292 $ 20,907 10/31/2003 $ 15,283 $ 22,088 11/30/2003 $ 15,344 $ 22,283 12/31/2003 $ 15,759 $ 23,450 1/31/2004 $ 15,992 $ 23,882 2/29/2004 $ 16,077 $ 24,214 3/31/2004 $ 16,041 $ 23,848 4/30/2004 $ 15,784 $ 23,474 5/31/2004 $ 16,090 $ 23,795 6/30/2004 $ 16,212 $ 24,257 7/31/2004 $ 15,307 $ 23,454 8/31/2004 $ 15,148 $ 23,548 9/30/2004 $ 15,564 $ 23,803 10/31/2004 $ 15,857 $ 24,167 11/30/2004 $ 16,603 $ 25,145 12/31/2004 $ 17,080 $ 26,000 1/31/2005 $ 16,420 $ 25,365 2/28/2005 $ 16,603 $ 25,898 3/31/2005 $ 16,248 $ 25,440 4/30/2005 $ 15,992 $ 24,956 5/31/2005 $ 16,383 $ 25,750 6/30/2005 $ 16,053 $ 25,786 -------------------------------------------------------------------------------- The views expressed are as of June 30, 2005 and are those of the Fund's manager. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND. (1) The Fund's Adviser has committed through April 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's return would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND was named the Wells Fargo Growth Fund. Performance shown for the Fund for periods prior to September 20, 1999 reflects performance of the Life and Annuity Trust Growth Fund, its predecessor fund. Effective at the close of business September 17, 1999, the Life and Annuity Trust and Norwest Select Funds were reorganized into the WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS. (2) The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the Index proportionate to its market value. You cannot invest directly in an index. (3) Sector distribution, portfolio holdings and fund characteristics are subject to change. Cash and cash equivalents are not reflected in the calculations of sector distribution, portfolio holdings and fund characteristics. (4) The Ten Largest Equity Holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE LARGE COMPANY CORE FUND for the most recent ten years of the Fund with the S&P 500 Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. 13 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- LARGE COMPANY GROWTH FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND (the Fund) seeks long-term capital appreciation by investing primarily in large, domestic companies that we believe have superior growth potential. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Peregrine Capital Management, Inc. FUND MANAGERS INCEPTION DATE John S. Dale, CFA 9/20/1999 Gary E. Nussbaum, CFA HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned (3.72)%(1) for the six-month period ended June 30, 2005, underperforming its benchmark, the S&P 500 Index(2), which returned (0.81)%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- The first half of 2005 was marked by two distinct periods. In the first quarter, large-cap growth stocks underperformed the general market and value stocks by a wide margin. In the second quarter, large-cap growth stocks regained their footing and outperformed value stocks by a slim margin. However, this second-quarter rally was not enough to make up for the losses of the first quarter. As a pure growth-style portfolio, the Fund underperformed in the first half of the year, although it exceeded the S&P 500 Index during the second quarter. Our lack of energy and defense names hurt first quarter performance, while our high quality dynamic growth exposure helped second quarter performance as the market started paying attention to these factors once again. Year to date, Genentech (biotechnology), Kohl's (retail), Intel (technology), and Franklin Resources (finance) have been big contributors to performance. Portfolio newcomers Legg Mason (finance) and Google (Internet) have also aided returns. On the down side, eBay (Internet retail), Cintas (business services), and AIG (finance) have been a drag on returns during the reporting period. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- During the last six months, Google and Legg Mason were added to the portfolio, while Pfizer (pharmaceuticals) was sold out of the portfolio. Portfolio turnover was very low during the first quarter, with the addition of Legg Mason as our only major portfolio move. We believe Legg Mason offers a premier asset management franchise, with rapid organic growth and a proven acquisition strategy. We added Google to the portfolio in the second quarter. While the company has been around for over five years, the company went public less than a year ago. The company is early in its life cycle, but already exhibits a number of the attributes we look for. It is the dominant company in a rapidly growing business--online advertising; returns on capital exceed 80%; it has a strong balance sheet with no debt and generates substantial free cash flow. Management of Google needs to be tested over time and will be key to its long-term success. We sold the remaining portion of Pfizer. While still an outstanding global franchise, the holding has been replaced with stronger growth investments. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- In the near term, the big story for the stock market and for growth investors is the slowdown in earnings growth for most U.S. companies. S&P earnings growth began to moderate in the first half of 2005, and we expect further moderation as the year progresses. Historically, a more normalized earnings-growth environment is good for growth investing--simply put, the revenue and earnings-growth gap between true growth companies and average companies becomes quite apparent. Investors searching for growth have fewer options from which to choose, so true growth companies become highly valued in the marketplace. Over the long term, a company's earnings growth is a key driver of its stock price. The types of companies in which the Fund invests have consistently grown their earnings at rapid rates. Given our stock selection criteria, we have a high degree of confidence that this pattern will continue into the future, providing a solid foundation for the Fund's long-term performance. In addition, valuation levels are currently attractive among growth stocks, and we believe the superior earnings-growth potential of the Fund's holdings should drive strong capital appreciation over the long term. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. The views expressed are as of June 30, 2005 and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE LARGE COMPANY GROWTH FUND. 14 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005) --------------------------------------------------------------------------------

* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND YIELD SUMMARY(1) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- 7-Day Current Yield(2) 2.45% ----------------------------------------------------------------------------- 7-Day Effective Yield 2.48% ----------------------------------------------------------------------------- 30-Day Simple Yield 2.39% ----------------------------------------------------------------------------- 30-Day Effective Yield 2.42% FUND CHARACTERISTICS(4) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Weighted Average Maturity 32 days PORTFOLIO ALLOCATION(4) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Corporate Bonds and Notes 3% Variable and Floating Rate Notes 13% Commercial Paper 46% Certificates of Deposit 12% Repurchase Agreements 26% MATURITY DISTRIBUTION(4) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] 0-1 Days 27% 2-14 Days 25% 15-29 Days 11% 30-59 Days 22% 60-89 Days 7% 90-179 Days 8% -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE MONEY MARKET FUND was named the Wells Fargo Money Market Fund. Performance shown for the Fund for periods prior to September 20, 1999 reflects performance of the Life and Annuity Trust Money Market Fund, its predecessor fund. Effective at the close of business September 17,1999, the Life and Annuity Trust and Norwest Select Funds were reorganized into the WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS. (2) Without waived fees and/or reimbursed expenses, the Fund's 7-day current yield would have been 2.38%. (3) The iMoneyNet First Tier Retail Money Fund Average is an average of non-government retail funds that do not hold any second tier securities. Portfolio holdings of first tier funds include U.S. Treasury securities, U.S. other securities, repos, time deposits, domestic bank obligations, foreign bank obligations, first tier commercial paper, floating rate notes and asset-backed commercial paper. (4) Portfolio holdings, portfolio allocation, maturity distribution and fund characteristics are subject to change. 17 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- MULTI CAP VALUE FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND (the Fund) seeks long-term capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGER INCEPTION DATE I. Charles Rinaldi 10/10/1997 HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned 2.09%(1) for the six-month period ended June 30, 2005, outperforming its benchmark, the S&P 500 Index(2), which returned (0.81)%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE AVAILABLE BY CALLING 1- 888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. From time to time, the Fund's performance was significantly enhanced through investments in initial public offerings (IPOs). The effect of IPOs purchased when the Fund's asset base was small may have been magnified. Investors should not expect that such enhanced returns can be consistently achieved. Please consider this before investing. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Throughout this period, energy and health care stocks were significant positive contributors to the Fund's performance. More specifically, the Fund's overweight in the energy sector contributed greatly to the return. Stocks such as Canadian Natural Resources, Range Resources, and Forest Oil are a few examples of the excellent performers. Beverly Enterprises, a health care service company also contributed favorably to Fund performance during the period. On the other hand, the Fund's holdings in material and industrial stocks negatively contributed to the Fund's performance. Companies such as United States Steel and Apex Silver illustrate this point. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- The investment management team actively managed this Fund during the period. Sectors such as information technology, financials, health care, and materials were increased in the Fund's portfolio during the period, while energy and industrial stocks were trimmed. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Valuations continue to be attractive relative to those of many other asset classes. Additionally, demand for value stocks continues to be strong, as investors become increasingly aware of their performance potential. Moreover, we are comfortable with the Fund's current holdings and sector weightings, and we believe the portfolio is well positioned for the balance of 2005. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO SMALL COMPANY SECURITIES RISK AND FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. The views expressed are as of June 30, 2005 and are those of the Fund's manager. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE MULTI CAP VALUE FUND. 18 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005) --------------------------------------------------------------------------------

* RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Beta** 1.17 ----------------------------------------------------------------------------- Price to Earnings Ratio (trailing 12 months) 23.20x ----------------------------------------------------------------------------- Price to Book Ratio 2.33x ----------------------------------------------------------------------------- Median Market Cap ($B) $ 8.50 ----------------------------------------------------------------------------- Portfolio Turnover 18% ----------------------------------------------------------------------------- Net Asset Value (NAV) $22.59 ** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENTS. THE BENCHMARK BETA IS 1.00 BY DEFINITION. TEN LARGEST EQUITY HOLDINGS(3),(4) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Weatherford International Limited 2.89% ----------------------------------------------------------------------------- Global Santa Fe Corporation 2.61% ----------------------------------------------------------------------------- Nordstrom Incorporated 2.39% ----------------------------------------------------------------------------- Cablevision Systems Incorporated 2.13% ----------------------------------------------------------------------------- Praxair Incorporated 2.10% ----------------------------------------------------------------------------- Ameritrade Holding Corporation 1.94% ----------------------------------------------------------------------------- BJ Services Company 1.87% ----------------------------------------------------------------------------- Autonation Incorporated 1.73% ----------------------------------------------------------------------------- Devon Energy Corporation 1.73% ----------------------------------------------------------------------------- Ensco International Incorporated 1.67% SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary 28% Consumer Staples 5% Energy 13% Financials 13% Health Care 8% Industrials 8% Information Technology 16% Materials 5% Telecommunication Services 2% Utilities 2% GROWTH OF $10,000 INVESTMENT(5) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE RUSSELL MIDCAP(R) OPPORTUNITY FUND INDEX 6/30/1995 10,000 $ 10,000 7/31/1995 10,364 10,486 8/31/1995 10,539 10,646 9/30/1995 10,699 10,887 10/31/1995 10,465 10,643 11/30/1995 10,849 11,173 12/31/1995 11,123 11,238 1/31/1996 11,351 11,475 2/29/1996 11,690 11,744 3/31/1996 11,736 11,914 4/30/1996 12,198 12,252 5/31/1996 12,280 12,437 6/30/1996 11,930 12,250 7/31/1996 11,242 11,492 8/31/1996 11,685 12,039 9/30/1996 12,124 12,633 10/31/1996 12,301 12,735 11/30/1996 13,174 13,511 12/31/1996 13,141 13,373 1/31/1997 13,380 13,873 2/28/1997 13,271 13,852 3/31/1997 12,848 13,263 4/30/1997 13,220 13,593 5/31/1997 14,295 14,585 6/30/1997 14,571 15,062 7/31/1997 15,748 16,319 8/31/1997 15,884 16,142 9/30/1997 16,697 17,063 10/31/1997 16,180 16,399 11/30/1997 16,241 16,789 12/31/1997 16,486 17,252 1/31/1998 16,463 16,927 2/28/1998 17,785 18,250 3/31/1998 18,827 19,116 4/30/1998 19,248 19,164 5/31/1998 18,535 18,571 6/30/1998 18,698 18,828 7/31/1998 18,044 17,930 8/31/1998 14,948 15,062 9/30/1998 15,963 16,037 10/31/1998 17,399 17,130 11/30/1998 17,889 17,941 12/31/1998 18,719 18,993 1/31/1999 19,322 18,961 2/28/1999 18,753 18,330 3/31/1999 19,578 18,904 4/30/1999 21,191 20,301 5/31/1999 21,395 20,243 6/30/1999 22,406 20,957 7/31/1999 22,523 20,381 8/31/1999 21,619 19,853 9/30/1999 21,415 19,156 10/31/1999 22,659 20,063 11/30/1999 23,436 20,640 12/31/1999 25,253 22,456 1/31/2000 24,505 21,713 2/29/2000 24,932 23,382 3/31/2000 27,497 24,721 4/30/2000 26,973 23,551 5/31/2000 27,157 22,927 6/30/2000 26,283 23,605 7/31/2000 25,972 23,341 8/31/2000 27,740 25,578 9/30/2000 26,720 25,213 10/31/2000 26,885 24,824 11/30/2000 25,136 22,590 12/31/2000 26,919 24,309 1/31/2001 28,560 24,700 2/28/2001 26,885 23,197 3/31/2001 25,580 21,758 4/30/2001 27,481 23,618 5/31/2001 27,627 24,058 6/30/2001 26,930 23,832 7/31/2001 26,547 23,150 8/31/2001 24,985 22,260 9/30/2001 21,533 19,575 10/31/2001 22,814 20,351 11/30/2001 24,906 22,056 12/31/2001 25,922 22,942 1/31/2002 25,655 22,805 2/28/2002 25,056 22,563 3/31/2002 26,348 23,916 4/30/2002 24,949 23,452 5/31/2002 24,776 23,187 6/30/2002 21,990 21,632 7/31/2002 19,485 19,521 8/31/2002 19,498 19,628 9/30/2002 17,272 17,817 10/31/2002 18,379 18,718 11/30/2002 20,364 20,017 12/31/2002 18,970 19,228 1/31/2003 18,396 18,840 2/28/2003 18,314 18,590 3/31/2003 18,149 18,774 4/30/2003 19,804 20,137 5/31/2003 21,788 21,980 6/30/2003 22,034 22,202 7/31/2003 22,745 22,934 8/31/2003 23,825 23,930 9/30/2003 23,360 23,630 10/31/2003 24,687 25,434 11/30/2003 25,070 26,148 12/31/2003 25,990 26,931 1/31/2004 27,085 27,714 2/29/2004 27,550 28,310 3/31/2004 27,400 28,316 4/30/2004 27,017 27,277 5/31/2004 27,646 27,953 6/30/2004 28,276 28,727 7/31/2004 27,345 27,471 8/31/2004 26,907 27,590 9/30/2004 27,947 28,485 10/31/2004 28,399 29,271 11/30/2004 29,822 31,054 12/31/2004 30,726 32,376 1/31/2005 29,836 31,575 2/28/2005 30,137 32,550 3/31/2005 29,795 32,294 4/30/2005 28,796 31,264 5/31/2005 30,301 32,761 6/30/2005 30,917 33,643 -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2007, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's return would have been lower. Performance shown for the WELLS FARGO ADVANTAGE OPPORTUNITY FUND for periods prior to April 11, 2005 reflects the performance of the Strong Opportunity Fund II, its predecessor fund. Effective at the close of business on April 8, 2005, certain of the Strong Funds were organized into certain of the WELLS FARGO ADVANTAGE FUNDS. (2) Russell Midcap(R) Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 25% of the total market capitalization of the Russell 1000 Index. You cannot invest directly in an index. (3) Sector distribution, portfolio holdings and fund characteristics are subject to change. Cash and cash equivalents are not reflected in the calculations of sector distribution, portfolio holdings and fund characteristics. (4) The Ten Largest Equity Holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE OPPORTUNITY FUND for the most recent ten years of the Fund with the Russell Midcap(R) Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. 21 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- SMALL CAP GROWTH FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND (the Fund) seeks long-term capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE Jerome "Cam" Philpott, CFA 5/1/1995 Stuart Roberts HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned (3.18)%(1) for the six-month period ended June 30, 2005, underperforming its benchmark, the Russell 2000(R) Index(2), which returned (1.25)%, during the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- A sharp stock market sell-off early in 2005 that unexpectedly lasted the entire first quarter, coupled with persistently negative investor sentiment and sustained-high energy prices, depressed small-cap growth stocks. However, toward the end of the period, the portfolio gained ground as investors became more hopeful that there would be a pause in its series of interest rate hikes, spurring a market rally. Financial stocks were an area of strength for the Fund. For example, Internet lender E-Loan Inc. benefited from rising mortgage refinancing rates and a recent agreement to provide auto financing to eBay's customers. Stock selection in telecommunication services--most notably from Ubiquitel, a Sprint affiliate--also benefited the Fund. Finally, technology stocks contributed as several holdings reported good operating results, including Concur Technologies, a software company focused on expense management, and WebEx Communications, which helps enable meetings over the Internet. Conversely, the Fund's relative performance was hurt by its lack of meaningful exposure to the energy sector, which performed well given the lofty oil prices. Traditionally, this sector is not one in which small-cap growth managers tend to be highly invested. Elsewhere, the Fund's holdings in industrial groups lagged, solely due to Navigant Consulting's weak performance. Falling demand for Navigant's services hurt the company's earnings growth. Similarly, the Fund's underperformance in the health care sector primarily came from Eyetech Corporation. The stock fell when clinical trials revealed that its competitor, Genentech, had developed a more effective macular degeneration treatment. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- Within the consumer discretionary group, Gamestop's merger with Electronics Boutique made Gamestop an attractive buy. We also purchased shares of Education Management, a post-secondary education company that reported the industry's best student enrollment figures in the year's first quarter. We also added to the Fund's weighting in technology stocks because of strong returns in that sector. Major sales included Eyetech and Navigant Consulting, both of which suffered from negative fundamental changes, as discussed above. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- We continue to believe the small-cap market's fundamentals warrant higher stock prices, and our outlook remains favorable for the balance of the year. Although earnings multiples have been constrained largely by interest rates and oil prices, we currently believe the Fed is closer to pausing its interest rate increases. Inflation and other macroeconomic data seem to support this view. However, a more lingering issue remains: the high--and rising--price of crude oil. The economy has held up surprisingly well to this point, but just how much energy prices will affect future growth is an ongoing debate. Nonetheless, consistent with our bottom-up, fundamental stock selection approach, we treat energy costs as just another element in determining the attractiveness of individual companies. Our recent conversations with company management teams have revitalized our search for exciting growth opportunities, and we are optimistic about upcoming earnings reports. STOCK FUNDS SHOULD ONLY BE CONSIDERED FOR LONG-TERM GOALS AS VALUES FLUCTUATE IN RESPONSE TO THE ACTIVITIES OF INDIVIDUAL COMPANIES AND GENERAL MARKET AND ECONOMIC CONDITIONS. FUNDS THAT INVEST IN SMALLER COMPANIES INVOLVE ADDITIONAL RISKS BECAUSE THESE COMPANIES OFTEN HAVE LIMITED FINANCIAL RESOURCES, AND THEIR STOCKS TEND TO BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGER COMPANIES. THE FUND'S INVESTMENT PROCESS MAY, AT TIMES, RESULT IN HIGHER THAN AVERAGE PORTFOLIO TURNOVER AND INCREASED TRADING EXPENSES, AND MAY GENERATE HIGHER SHORT-TERM CAPITAL GAINS. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS are available for purchase through certain variable annuity contracts and variable life insurance policies offered by the separate accounts of participating insurance companies. The participating insurance companies and their separate accounts are the shareholders or investors in the Fund and the separate accounts of the participating insurance companies place orders to purchase and redeem shares of the Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be affected that day. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. The views expressed are as of June 30, 2005 and are those of the Fund's managers. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND. 22 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- 6-Month* 1-Year 5-Year 10-Year -------------------------------------------------------------------------------- Small Cap Growth Fund (3.18) 0.93 (12.12) 2.37 -------------------------------------------------------------------------------- Benchmark -------------------------------------------------------------------------------- Russell 2000(R) Index(2) (1.25) 9.45 5.71 9.90 * RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. FUND CHARACTERISTICS(3) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Beta** 0.89 ----------------------------------------------------------------------------- Price to Earnings Ratio (trailing 12 months) 23.20x ----------------------------------------------------------------------------- Price to Book Ratio 3.30x ----------------------------------------------------------------------------- Median Market Cap ($B) $ 0.92 ----------------------------------------------------------------------------- Portfolio Turnover 60% ----------------------------------------------------------------------------- Net Asset Value (NAV) $ 7.60 ** A MEASURE OF THE FUND'S SENSITIVITY TO MARKET MOVEMENT. THE BENCHMARK BETA IS 1.00 BY DEFINITION. TEN LARGEST EQUITY HOLDINGS(3),(4) (AS OF JUNE 30, 2005) ----------------------------------------------------------------------------- Marvel Enterprises Incorporated 2.87% ----------------------------------------------------------------------------- Open Solutions Incorporated 2.68% ----------------------------------------------------------------------------- Ubiquitel Incorporated 2.65% ----------------------------------------------------------------------------- Advanced Medical Optics Incorporated 2.54% ----------------------------------------------------------------------------- Gardner Denver Incorporated 2.29% ----------------------------------------------------------------------------- Resources Connection Incorporated 2.27% ----------------------------------------------------------------------------- iVillage Incorporated 2.19% ----------------------------------------------------------------------------- Quest Software Incorporated 2.16% ----------------------------------------------------------------------------- Hughes Supply Incorporated 2.03% ----------------------------------------------------------------------------- CNet Networks Incorporated 2.01% SECTOR DISTRIBUTION(3) (AS OF JUNE 30, 2005) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary 16% Consumer Staples 1% Energy 1% Financial Services 5% Health Care 19% Industrials 21% Information Technology 31% Materials 2% Telecommunications Services 4% GROWTH OF $10,000 INVESTMENT(5) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE RUSSELL 2000(R) SMALL CAP GROWTH INDEX 6/30/1995 10,000 $ 10,000 7/31/1995 11,003 10,576 8/31/1995 11,218 10,795 9/30/1995 11,172 10,988 10/31/1995 10,572 10,497 11/30/1995 10,862 10,938 12/31/1995 10,867 11,227 1/31/1996 10,906 11,214 2/29/1996 11,206 11,564 3/31/1996 11,700 11,800 4/30/1996 13,019 12,431 5/31/1996 13,513 12,921 6/30/1996 12,563 12,390 7/31/1996 11,351 11,308 8/31/1996 12,350 11,965 9/30/1996 12,951 12,433 10/31/1996 13,203 12,242 11/30/1996 13,823 12,746 12/31/1996 14,286 13,080 1/31/1997 14,593 13,342 2/28/1997 13,768 13,019 3/31/1997 12,635 12,404 4/30/1997 12,265 12,439 5/31/1997 14,741 13,824 6/30/1997 15,006 14,417 7/31/1997 15,969 15,087 8/31/1997 16,371 15,433 9/30/1997 17,598 16,562 10/31/1997 16,466 15,835 11/30/1997 15,768 15,732 12/31/1997 15,684 16,007 1/31/1998 15,315 15,755 2/28/1998 16,766 16,919 3/31/1998 17,233 17,616 4/30/1998 17,269 17,713 5/31/1998 16,016 16,758 6/30/1998 16,151 16,793 7/31/1998 14,430 15,433 8/31/1998 11,075 12,436 9/30/1998 11,640 13,410 10/31/1998 12,132 13,957 11/30/1998 12,845 14,688 12/31/1998 13,414 15,597 1/31/1999 12,995 15,805 2/28/1999 11,774 14,525 3/31/1999 11,515 14,751 4/30/1999 12,169 16,073 5/31/1999 12,144 16,307 6/30/1999 12,773 17,045 7/31/1999 12,760 16,578 8/31/1999 12,847 15,964 9/30/1999 13,340 15,967 10/31/1999 15,300 16,033 11/30/1999 17,864 16,990 12/31/1999 22,303 18,913 1/31/2000 22,796 18,609 2/29/2000 28,406 21,681 3/31/2000 24,744 20,252 4/30/2000 21,723 19,033 5/31/2000 19,418 17,923 6/30/2000 24,115 19,486 7/31/2000 22,673 18,859 8/31/2000 25,651 20,298 9/30/2000 25,081 19,701 10/31/2000 21,599 18,822 11/30/2000 16,143 16,889 12/31/2000 17,267 18,340 1/31/2001 17,466 19,296 2/28/2001 13,873 18,030 3/31/2001 11,860 17,148 4/30/2001 13,807 18,489 5/31/2001 13,823 18,944 6/30/2001 14,156 19,598 7/31/2001 13,274 18,537 8/31/2001 12,226 17,939 9/30/2001 10,097 15,524 10/31/2001 11,278 16,432 11/30/2001 12,143 17,704 12/31/2001 13,058 18,796 1/31/2002 12,409 18,601 2/28/2002 11,312 18,091 3/31/2002 12,276 19,546 4/30/2002 11,711 19,724 5/31/2002 11,012 18,848 6/30/2002 10,064 17,913 7/31/2002 8,168 15,208 8/31/2002 8,134 15,170 9/30/2002 7,469 14,081 10/31/2002 8,051 14,533 11/30/2002 8,650 15,829 12/31/2002 8,068 14,948 1/31/2003 7,735 14,534 2/28/2003 7,585 14,095 3/31/2003 7,619 14,277 4/30/2003 8,400 15,630 5/31/2003 9,099 17,307 6/30/2003 9,432 17,620 7/31/2003 9,881 18,723 8/31/2003 10,347 19,581 9/30/2003 10,031 19,219 10/31/2003 11,029 20,833 11/30/2003 11,378 21,573 12/31/2003 11,478 22,010 1/31/2004 12,127 22,966 2/29/2004 12,143 23,172 3/31/2004 12,476 23,388 4/30/2004 11,894 22,195 5/31/2004 12,343 22,548 6/30/2004 12,526 23,497 7/31/2004 11,112 21,915 8/31/2004 10,646 21,802 9/30/2004 11,345 22,826 10/31/2004 11,694 23,275 11/30/2004 12,243 25,294 12/31/2004 13,058 26,043 1/31/2005 12,493 24,957 2/28/2005 12,310 25,379 3/31/2005 12,060 24,653 4/30/2005 11,378 23,240 5/31/2005 12,110 24,762 6/30/2005 12,642 25,718 -------------------------------------------------------------------------------- (1) The Fund's Adviser has committed through April 30, 2006, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Fund. Actual reductions of operating expenses can increase total return to shareholders. Without these reductions, the Fund's returns would have been lower. Prior to April 11, 2005, the WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND was named the Wells Fargo Small Cap Growth Fund. Performance shown for the Fund for periods prior to September 20, 1999 reflects performance of the Norwest Select Small Company Stock Fund, (the accounting survivor of a merger of the Life and Annuity Trust Strategic Growth Fund and the Norwest Select Small Company Stock Fund) its predecessor fund. Effective at the close of business September 17,1999, the Life and Annuity Trust and Norwest Select Funds were reorganized into the WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS. (2) The Russell 2000(R) Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, and represents approximately 8% of the total market capitalization of the Russell 3000 Index. You cannot invest directly in an index. (3) Sector distribution, portfolio holdings and fund characteristics are subject to change. Cash and cash equivalents are not reflected in the calculations of sector distribution, portfolio holdings and fund characteristics. (4) The Ten Largest Equity Holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. (5) The chart compares the performance of the WELLS FARGO ADVANTAGE SMALL CAP GROWTH FUND for the most recent ten years with the Russell 2000(R) Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. 23 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PERFORMANCE HIGHLIGHTS -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- The WELLS FARGO ADVANTAGE TOTAL RETURN BOND FUND (the Fund) seeks total return consisting of both income and capital appreciation. ADVISER SUB-ADVISER Wells Fargo Funds Management, LLC Wells Capital Management Incorporated FUND MANAGERS INCEPTION DATE William Stevens 9/20/1999 Marie Chandoha Thomas O'Connor, CFA HOW DID THE FUND PERFORM OVER THE SIX-MONTH REPORTING PERIOD? -------------------------------------------------------------------------------- The Fund returned 2.29%(1) for the six-month period ended June 30, 2005, underperforming its benchmark, the Lehman Brothers Aggregate Bond Index(2), which returned 2.51%, for the same period. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-888-877-9275. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. IF THEY DID, RETURNS WOULD BE LOWER. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? -------------------------------------------------------------------------------- Several corporate holdings were strong contributors to performance, in particular Daimler Chrysler and Time Warner. Our positioning in Russian bonds also benefited performance as Russia rallied on higher oil prices and its long-awaited upgrade to investment-grade paper by Standard & Poor's rating agency. Relative value trades in large CMO (Centralized Mortgage Obligation) positions contributed to performance. Our overweighting in 15-year Freddie Mac mortgage pools contributed to performance as the sector outperformed 30-year mortgage pools, which make up most of the mortgage component of the benchmark. Our overweight to AAA-rated CMBS (Commercial Mortgage Backed Securities) and ABS (Asset Based Security) contributed to performance as these sectors outperformed Treasuries. A detractor from Fund performance was our overweighting in the corporate sector. Specific holdings detracted from performance including JC Penney and Georgia Pacific. Being underweighted in the 15-year, 4.5% mortgage sector also detracted from performance. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS DURING THE PERIOD? -------------------------------------------------------------------------------- During the period, we kept the Fund's portfolio close to its benchmark in terms of duration and yield curve. We found opportunities in CMOs and specific mortgage pools, yet our overall positioning in mortgages was more conservative than the benchmark. We were overweighted in the corporate sector during most of the period, but reduced our corporate holdings as volatility and event risk (i.e. unpredictable risk due to unforeseen events partaken by or associated with a company) rose in the sector in the second quarter of 2005. Our portfolio turnover was higher than average during the period as we found opportunities that we believed would add to performance versus our benchmark through our relative value approach. LOOKING AHEAD, WHAT IS YOUR STRATEGIC OUTLOOK? -------------------------------------------------------------------------------- Our portfolio positioning is cautious and selective as we enter the second half of the year. Outside of the CMBS market--where we still see value and maintain a 5% overweight position--we are happy with our positioning in other sectors. Our attention remains focused on extracting value through relative value trading and identifying undervalued securities where we see opportunities. We believe valuation levels in mortgages continue to look expensive and fundamentals are weak with 10-year Treasury yields hovering around the nail biting level of 4%. Mortgages can be expected to have very different risk characteristics if interest rates rise or fall just 25 basis points from here. Our focus is on mortgage instruments that will weather even small market moves better than the overall Mortgage Sector. In the corporate market, companies continue to cater to shareholders - buying back stock, restructuring, and paying bigger dividends. Credit fundamentals probably peaked in the fourth quarter and we are likely to see continued deceleration of revenue and EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) growth with second quarter earnings. The prospect of leveraged buy-outs also continues to weigh on the market. We like regulated industries such as utilities and insurance and other sectors such as REITs (Real Estate Investment Trust) where bond issues have covenants to protect investors. We are avoiding sectors like retail, entertainment, cable/media and consumer products where there is likely to be significant event risk and investors are not compensated for it. We also like sectors that are unlikely to see much event risk, like aerospace and defense, railroads and telecom (where event risk has been happening for some time and we now believe is coming to a close). In industries where we believe event risk is more priced in, notably supermarkets and paper, we have taken neutral positions. We have limited interest rate and yield curve exposures versus the Fund's benchmark. We continue to find undervalued securities on a security specific level and are taking advantage of them. 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 FUND VALUES FALL AND INVESTORS CAN LOSE PRINCIPAL VALUE. INVESTMENT STRATEGIES THAT EMPHASIZE PARTICULAR MARKET SEGMENTS OR FEWER SECURITIES TEND TO INCREASE THE TOTAL RISK OF AN INVESTMENT (RELATIVE TO THE BROADER MARKET). THIS FUND IS EXPOSED TO FOREIGN INVESTMENTS RISK. CONSULT THE FUND'S PROSPECTUS FOR ADDITIONAL INFORMATION ON THESE AND OTHER RISKS. -------------------------------------------------------------------------------- 24 PERFORMANCE HIGHLIGHTS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN(1) (%) (AS OF JUNE 30, 2005) --------------------------------------------------------------------------------

26 FUND EXPENSES (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS --------------------------------------------------------------------------------

* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSES RATIO MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR DIVIDED BY THE NUMBER OF DAYS IN THE FISCAL YEAR (TO REFLECT THE ONE-HALF YEAR PERIOD). 27 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

28 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

29 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

30 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

31 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

32 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

33 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

34 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

35 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

36 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

37 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

38 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

39 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

40 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

41 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $12,638,700. ~ 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. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) ** SECURITIES PURCHASED WITH CASH COLLATERAL FROM SECURITIES OUT-ON-LOAN. THE FUND HAS ALSO RECEIVED NON-CASH COLLATERAL IN THE AMOUNT OF $276,925. THE TOTAL COLLATERAL RECEIVED REPRESENTS 101.81% OF THE VALUE OF THE PORTFOLIO SECURITIES LOANED. * 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. 42 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

43 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30,2005 (UNAUDITED) --------------------------------------------------------------------------------

44 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,724,962. * 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. 45 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

46 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

47 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

48 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. (a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE BOARD OF TRUSTEES. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,324,379. * 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. 49 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

50 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

51 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $992,537. * 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. 52 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

53 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

54 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

55 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,382,232. * 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. 56 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

57 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $740,097. ~ 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. * 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. 58 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

59 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $2,661,137. ~ 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. * 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. 60 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

61 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

++ SECURITIES THAT MAY BE RESOLD TO "QUALIFIED INSTITUTIONAL BUYERS" UNDER RULE 144A OR SECURITIES OFFERED PURSUANT TO SECTION 4 (2) OF THE SECURITIES ACT OF 1933, AS AMENDED. ^ ZERO COUPON/ STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. +/- VARIABLE RATE INVESTMENTS. * COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR FINANCIAL REPORTING PURPOSES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 62 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

63 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

64 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

65 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

66 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ 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. %% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2) # SECURITY OF AN AFFILIATE OF THE FUND WITH COST OF $86,596. * COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR FINANCIAL REPORTING PURPOSES. 67 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 68 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

69 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

70 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

71 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. (a) SECURITY FAIR VALUED IN ACCORDANCE WITH THE PROCEDURES APPROVED BY THE BOARD OF TRUSTEES. ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $81,666,048. ^ ZERO COUPON/STEPPED COUPON BOND. INTEREST RATE PRESENTED IS YIELD TO MATURITY. * COST FOR FEDERAL INCOME TAX PURPOSES IS SUBSTANTIALLY THE SAME AS FOR FINANCIAL REPORTING PURPOSES.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 72 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

73 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

74 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

75 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

76 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

+ NON-INCOME EARNING SECURITIES. << ALL OR A PORTION OF THIS SECURITY IS ON LOAN. (SEE NOTE 2) ~ THIS WELLS FARGO ADVANTAGE FUND INVESTS CASH BALANCES THAT IT RETAINS FOR LIQUIDITY PURPOSES IN A WELLS FARGO ADVANTAGE MONEY MARKET FUND. THE FUND DOES NOT PAY AN INVESTMENT ADVISORY FEE FOR SUCH INVESTMENTS. ++ SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $1,589,705. * 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. 77 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

78 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

79 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

80 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

81 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

82 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

83 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

84 PORTFOLIO OF INVESTMENTS -- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

85 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS PORTFOLIO OF INVESTMENTS -- JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

<< 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. %% SECURITIES ISSUED ON A WHEN-ISSUED (TBA) BASIS. (SEE NOTE 2) @ FOREIGN BOND PRINCIPAL IS DENOMINATED IN US DOLLARS EXCEPT AS INDICATED PARENTHETICALLY. * 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. 86 THIS PAGE IS INTENTIONALLY LEFT BLANK -- WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF ASSETS AND LIABILITIES -- TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

88 STATEMENTS OF ASSETS AND LIABILITIES -- WELLS FARGO ADVANTAGE VARIABLE JUNE 30, 2005 (UNAUDITED) TRUST FUNDS --------------------------------------------------------------------------------

(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 89 WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF ASSETS AND LIABILITIES -- TRUST FUNDS JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

(1) EACH FUND HAS AN UNLIMITED NUMBER OF AUTHORIZED SHARES. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 90 THIS PAGE IS INTENTIONALLY LEFT BLANK -- WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF OPERATIONS -- FOR THE SIX TRUST FUNDS MONTHS ENDED JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

92 STATEMENTS OF OPERATIONS -- FOR THE SIX WELLS FARGO ADVANTAGE VARIABLE MONTHS ENDED JUNE 30, 2005 (UNAUDITED) TRUST FUNDS --------------------------------------------------------------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 93 WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF OPERATIONS -- FOR THE SIX TRUST FUNDS MONTHS ENDED JUNE 30, 2005 (UNAUDITED) --------------------------------------------------------------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 94 THIS PAGE IS INTENTIONALLY LEFT BLANK -- WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF CHANGES IN NET ASSETS TRUST FUNDS --------------------------------------------------------------------------------

96 STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS --------------------------------------------------------------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 97 WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF CHANGES IN NET ASSETS TRUST FUNDS --------------------------------------------------------------------------------

98 STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS --------------------------------------------------------------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 99 WELLS FARGO ADVANTAGE VARIABLE STATEMENTS OF CHANGES IN NET ASSETS TRUST FUNDS --------------------------------------------------------------------------------

100 STATEMENTS OF CHANGES IN NET ASSETS WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS --------------------------------------------------------------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 101 WELLS FARGO ADVANTAGE VARIABLE FINANCIAL HIGHLIGHTS TRUST FUNDS --------------------------------------------------------------------------------

102

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 103 WELLS FARGO ADVANTAGE VARIABLE FINANCIAL HIGHLIGHTS TRUST FUNDS --------------------------------------------------------------------------------

104

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 105 WELLS FARGO ADVANTAGE VARIABLE NOTES TO FINANCIAL HIGHLIGHTS TRUST FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL HIGHLIGHTS (1) During each period, various fees and expenses were waived and reimbursed as indicated. The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements (Note 3). (2) Total return calculations do not include any insurance costs, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Total return figures do not reflect changes pursuant to the terms of the variable life insurance policies and variable annuity contracts funded by separate accounts that invest in the Fund's shares. Total returns for periods less than one year are not annualized. (3) Commencement of operations. (4) Portfolio turnover ratio excluding TBAs is 376%. 106 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- 1. ORGANIZATION -------------------------------------------------------------------------------- Wells Fargo Variable Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. As of June 30, 2005, the Trust consists of 12 separate funds (each, a "Fund", collectively, the "Funds"). These financial statements present the Asset Allocation Fund, C&B Large Cap Value Fund (formerly named the Equity Value Fund), Discovery Fund, Equity Income Fund, International Core Fund (formerly named the International Equity Fund), Large Company Core Fund (formerly named the Growth Fund), Large Company Growth Fund, Money Market Fund, Multi Cap Value Fund, Opportunity Fund, Small Cap Growth Fund, and Total Return Bond Fund. The Funds are available exclusively as pooled funding vehicles for certain participating life insurance companies offering variable annuity contracts and variable life insurance policies. In August and September 2004, the Board of Trustees of the Trust and the Boards of Directors of the Strong Funds ("Strong Funds") approved an Agreement and Plan of Reorganization providing for the reorganization of certain Strong Funds into certain Funds of the Trust. Effective at the close of business on April 8, 2005, the following Acquiring Funds ("Acquiring Funds") acquired substantially all of the net assets of the following Target Funds ("Target Funds") through a tax-free exchange under section 368 of the Internal Revenue Code. The following is a summary of shares outstanding and net assets immediately before and after the reorganization:

(1) Effective at the close of business on April 8, 2005, the Advisor Class and Investor Class of the Stong Opportunity Fund II merged into the Wells Fargo Advantage Opportunity Fund.(SM)

* Designates the accounting survivor. Effective at the close of business on April 8, 2005, the following Acquiring Funds ("Acquiring Funds") acquired all of the net assets of the following Target Funds ("Target Funds") through a tax-free exchange under section 368 of the Internal Revenue Code.

107 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES -------------------------------------------------------------------------------- The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America ("GAAP") for investment companies. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Trust may enter into contracts that provide certain indemnifications. The Trust's maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. SECURITY VALUATION Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on The NASDAQ Stock Market, Inc. are valued at the NASDAQ Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. In the absence of any sale of such securities, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, the valuations are based on the latest quoted bid prices. Prior to April 1, 2005, the predecessor Strong Fund valuations were based on the mean of the bid and asked prices. Certain fixed income securities with maturities exceeding 60 days are valued by using a pricing service approved by the Trust's Board of Trustees. The service uses market prices as quoted by an independent pricing service or by dealers in these securities when, in the service's judgment, these prices are readily available and are representative of the securities' market values. For some securities, such prices are not readily available. These securities will generally be fair valued using methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, indications as to values from dealers in securities, trading characteristics, and general market conditions. Securities denominated in foreign currencies are translated into U.S. dollars using the closing rates of exchange in effect on the day of valuation. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore may not fully reflect trading or events that occur after the close of the principal exchange in which the foreign investments are traded but before the close of the New York Stock Exchange. If such trading or events are expected to materially affect the value of the investments, then those investments are fair valued following procedures approved by the Board of Trustees. These procedures take into account multiple factors including movements in U.S. securities markets after foreign exchanges close. Depending on market activity, such fair valuations may be frequent. In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular security is accurate. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or latest quoted bid price. Debt securities maturing in 60 days or less generally are valued at amortized cost. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value. The Money Market Fund values its shares at 12:00 p.m. (Eastern Time) each business day. The Money Market Fund invests only in securities with remaining maturities not exceeding 397 days (13 months). Certain floating- and variable-rate instruments in the portfolio may have maturities in excess of 397 days, but carry a demand feature that permits the holder to tender the instruments back to the issuer at par value prior to maturity. The Money Market Fund uses the amortized cost method to value portfolio securities. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity, which approximates market value. The Money Market Fund seeks to maintain a constant net asset value of $1.00 per share, although there is no assurance that it will be able to do so. Investments which are not valued using any of the methods discussed above are valued at their fair value as determined by procedures approved by the Board of Trustees. SECURITY TRANSACTIONS AND INCOME RECOGNITION Securities transactions are recorded on a trade date basis. Realized gains or losses are reported on the basis of identified cost of securities delivered. Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily. Dividend income is recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed of the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured. FOREIGN CURRENCY TRANSLATION The accounting records are maintained in U.S. dollars. Assets, including investment securities, and liabilities denominated in foreign currency are translated into U.S. dollars at the prevailing rates of exchange at the date of valuation. Purchases and sales 108 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities, at fiscal period-end, resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities at fiscal period-end are not separately presented. Such changes are recorded with net realized and unrealized gain from investments. Gains and losses from certain foreign currency transactions are treated as ordinary income for U.S. federal income tax purposes. DISTRIBUTIONS TO SHAREHOLDERS Net investment income, if any, for the Large Company Core, International Core, Large Company Growth, and Small Cap Growth Funds is declared and distributed to shareholders annually. Net investment income, if any, for the Asset Allocation, Equity Income, and C&B Large Cap Value Funds is declared and distributed quarterly. Net investment income, if any, for the Money Market and Total Return Bond Funds is declared daily and distributed monthly. Distributions to shareholders from net realized capital gains, if any, are declared and distributed at least annually. Distributions are based on amounts calculated in accordance with the applicable federal income tax regulations, which may differ from GAAP. The timing and character of distributions made during the period from net investment income or net realized gains may also differ from their ultimate characterization for federal income tax purposes. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment. Temporary differences do not require reclassifications. 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 June 30, 2005. At December 31, 2004, estimated net capital loss carryforwards, which are available to offset future net realized capital gains, were:

109 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------------------------------- At December 31, 2004, current year deferred post-October capital losses, which will be treated as realized for tax purposes on the first day of the succeeding year, were: Deferred Post-October Fund Capital Loss -------------------------------------------------------------------------------- C&B LARGE CAP VALUE FUND $ 40,359 -------------------------------------------------------------------------------- EQUITY INCOME FUND 300,907 -------------------------------------------------------------------------------- LARGE COMPANY GROWTH FUND 430,803 -------------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY CONTRACTS The Fund(s) may enter into forward foreign currency contracts to protect against a possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar, or between foreign currencies. A forward contract is an agreement between two counterparties for future delivery or receipt of currency at a specified price. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in currency values. Realized gains or losses are recognized when the transaction is completed. Contracts which have been offset but have not reached their settlement date are included in unrealized gains and losses. Based on exchange rates at June 30, 2005, the Fund(s) had entered into a foreign currency forward contract under which it is obligated to exchange currencies at a specified future date. FUTURES CONTRACTS The Fund(s) may purchase futures contracts to gain exposure to market changes, which may be more efficient or cost effective than actually buying the securities. A futures contract is an agreement between parties to buy or sell a security at a set price on a future date. Upon entering into such a contract, a Fund is required to pledge to the broker an amount of cash, U.S. Government obligations or other high-quality debt securities equal to the minimum "initial margin" requirements of the exchange on which the futures contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as "variation margin" and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Pursuant to regulations and/or published positions of the Securities and Exchange Commission (the "SEC") for long futures positions, the Fund is required to segregate highly liquid securities as permitted by the SEC in connection with futures transactions in an amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. At June 30, 2005, the following Fund(s) held futures contracts:

110 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- MORTGAGE DOLLAR ROLL TRANSACTIONS The Funds may engage in mortgage dollar roll transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. In a mortgage dollar roll transaction, a Fund sells a mortgage-backed security to a financial institution, such as a bank or broker-dealer and simultaneously agrees to repurchase a substantially similar security from the institution at a later date at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories. During the roll period, a Fund foregoes principal and interest paid on the securities. A Fund is compensated by the difference between the current sales price and the forward price for the future purchase as well as by the earnings on the cash proceeds of the initial sale. Mortgage dollar rolls may be renewed without physical delivery of the securities subject to the contract. The Funds account for dollar roll transactions as purchases and sales. REPURCHASE AGREEMENTS The Fund(s) may invest in repurchase agreements and may participate in pooled repurchase agreement transactions with other funds advised by Wells Fargo Funds Management, LLC. The repurchase agreements must be fully collateralized based on values that are marked to market daily. The collateral may be held by an agent bank under a tri-party agreement. It is the custodian's responsibility to value collateral daily and to take action to obtain additional collateral as necessary to maintain market value equal to or greater than the resale price. The repurchase agreements are collateralized by instruments such as U.S. Treasury, federal agency, or high-grade corporate obligations. There could be potential loss to a Fund in the event that such Fund is delayed or prevented from exercising its rights to dispose of the collateral, including the risk of a possible decline in the value of the underlying obligations during the period in which a Fund seeks to assert its rights. SECURITY LOANS The Fund(s) may loan securities in return for securities, irrevocable letters of credit or cash collateral, which is invested in various short-term fixed income securities. A Fund may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Fund also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest when the transaction is entered into. If the collateral falls to 100%, it will be brought back to 102%. Gain or loss in the market price of the securities loaned that may occur during the term of the loan are reflected in the value of the Fund. The risks from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund. Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending agent for the Funds and receives for its services 35% of the revenues earned on the securities lending activities and incurs all expenses. The value of the securities on loan and the value of the related collateral at June 30, 2005 are shown on the Statement of Assets and Liabilities. 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. 111 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------------------------------- Written options transactions during the six months ended June 30, 2005, were as follows:

3. EXPENSES -------------------------------------------------------------------------------- ADVISORY FEES The Trust has entered into an advisory contract with Wells Fargo Funds Management, LLC ("Funds Management"). The adviser is responsible for implementing investment policies and guidelines and for supervising the sub-adviser, who is responsible for day-to-day portfolio management. Pursuant to the contract, Funds Management is entitled to receive an advisory fee for its services as adviser. Funds Management may retain the services of certain investment sub-advisers to provide daily portfolio management. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by a Fund to the adviser. Funds Management and the investment sub-adviser(s) are entitled to be paid a monthly fee at the following annual rates:

112 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS --------------------------------------------------------------------------------

113 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------------------------------- * Effective August 2, 2004. Prior to August 2, 2004, Funds Management was entitled to receive a monthly advisory fee at the following rates: Advisory Fee (% of Average Fund Daily Net Assets) -------------------------------------------------------------------------------- ASSET ALLOCATION FUND 0.55 -------------------------------------------------------------------------------- C&B LARGE CAP VALUE FUND 0.55 -------------------------------------------------------------------------------- EQUITY INCOME FUND 0.55 -------------------------------------------------------------------------------- INTERNATIONAL CORE FUND 0.75 -------------------------------------------------------------------------------- LARGE COMPANY CORE FUND 0.55 -------------------------------------------------------------------------------- LARGE COMPANY GROWTH FUND 0.55 -------------------------------------------------------------------------------- MONEY MARKET FUND 0.40 -------------------------------------------------------------------------------- SMALL CAP GROWTH FUND 0.75 -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 0.45 -------------------------------------------------------------------------------- ** As of September 15, 2004 New Star Institutional Managers Limited began providing sub-advisory services to the International Core Fund. Prior to September 15, 2004, Wells Capital Management served as the Fund's sub-adviser and received an annual fee based on the following: Sub-Advisory (% of Average Fund Average Daily Net Assets Daily Net Assets) ------------------------------------------------------------------------------- INTERNATIONAL CORE FUND $0 - $200 million 0.35 >$200 million 0.25 *** Effective April 11, 2005. Prior to January 1, 2005, Strong Capital Management, Inc. ("SCM") served as investment adviser to each of the predecessor Strong Funds. From January 1, 2005 through April 10, 2005, Funds Management served as interim investment adviser to each of the predecessor Strong Funds. Both SCM and Funds Management, for their respective periods of time were entitled to receive an annual fee at the following rates: (% of Average Fund Average Daily Net Assets Daily Net Assets) -------------------------------------------------------------------------------- DISCOVERY FUND all asset levels 1.000 -------------------------------------------------------------------------------- MULTI CAP VALUE FUND $0 - $4 billion 0.750 $4 - $6 billion 0.725 >$6 billion 0.700 -------------------------------------------------------------------------------- OPPORTUNITY FUND $0 - $4 billion 0.750 $4 - $6 billion 0.725 >$6 billion 0.700 -------------------------------------------------------------------------------- ADMINISTRATION AND TRANSFER AGENT FEES The Trust has entered into an Administration Agreement with Funds Management. Under this Agreement, for providing administrative services, which includes paying fees and expenses for services provided by the transfer agent, sub-transfer agents, omnibus account servicers and record-keepers, Funds Management is entitled to receive the following annual fees: (% of Average Fund Average Daily Net Assets Daily Net Assets)**** -------------------------------------------------------------------------------- ALL FUNDS***** $0 - $4.99 billion 0.16 $5 billion - $9.99 billion 0.15 >$9.99 billion 0.14 -------------------------------------------------------------------------------- 114 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- **** Effective August 2, 2004. Prior to August 2, 2004 Funds Management was entitled to receive administration fees at the annual rate of 0.16% of the average daily net assets of each fund. ***** For the Opportunity Fund, Multi Cap Value Fund and Discovery Fund, these rates are effective April 11, 2005. Prior to April 11, 2005, Strong Investor Services, Inc. ("SISI") served as administrator to each of the predecessor Strong Funds and was entitled to receive an annual fee at the following rates: Administration Fee (% of Average Fund Daily Net Assets) -------------------------------------------------------------------------------- MULTI CAP VALUE FUND 0.30 -------------------------------------------------------------------------------- OPPORTUNITY FUND 0.30 The Trust has entered into an agreement with Boston Financial Data Services ("BFDS") as the transfer agent for the Trust. For the Discovery Fund, Multi Cap Value Fund and Opportunity Fund, the agreement with BFDS was entered into on March 14, 2005. Prior to March 14, 2005, SISI served as transfer agent to each of the predecessor Strong Funds. BFDS is entitled to receive fees from the administrator for its services as transfer agent. For the predecessor Strong Funds transfer agent fees were paid by the Funds themselves prior to April 11, 2005. For financial statement presentation, transfer agent fees for the period January 1, 2005 through April 11, 2005, as shown below have been combined with administration fees. Transfer Agent Fees and Other Fund Related Expenses -------------------------------------------------------------------------- DISCOVERY FUND $ 36,372 -------------------------------------------------------------------------- MULTI CAP VALUE FUND 16,138 -------------------------------------------------------------------------- OPPORTUNITY FUND 1,006,643 CUSTODY FEES The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"), whereby WFB is responsible for providing custody services. Pursuant to the contract, WFB is entitled to certain transaction charges plus a monthly fee for custody services at the following annual rates: (% of Average Fund Daily Net Assets) -------------------------------------------------------------------------------- ALL VARIABLE TRUST FUNDS (EXCEPT INTERNATIONAL CORE FUND) 0.02 -------------------------------------------------------------------------------- INTERNATIONAL CORE FUND 0.10 Prior to February 28, 2005, State Street served as custodian for the Strong Opportunity Fund II. Prior to March 28, 2005, State Street served as custodian for Strong Multi Cap Value Fund II. Prior to April 25, 2005, State Street served as custodian for the Strong Discovery Fund II and Strong Mid Cap Growth Fund II and, since the merger the Acquiring Fund. State Street was entitled to receive a fee that was substantially transaction-based. DISTRIBUTION FEES The Trust has adopted a Distribution Plan ("Plan") for the Fund(s), pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are charged and paid to Wells Fargo Funds Distributor, LLC at an annual rate of up to 0.25% of average daily net assets. Prior to April 11, 2005, the Strong Opportunity Fund II adopted a 12b-1 distribution plan under the 1940 Act on behalf of its Advisor Class shares. Under this plan, Strong Investments, Inc. was paid an annual rate of 0.25% of average daily net assets of the Advisor class shares of the Strong Opportunity Fund II. For the six months ended June 30, 2005, distribution fees paid are disclosed on the Statement of Operations. OTHER FEES PFPC, Inc. ("PFPC") serves as fund accountant for the Trust and is entitled to receive an annual asset based fee, and an annual fixed fee from each Fund. PFPC is also entitled to be reimbursed for all out-of-pocket expenses reasonably incurred in providing these services. Prior to February 28, 2005, State Street served as fund accountant for the Strong Opportunity Fund II. Prior to March 28, 2005, State Street served as fund accountant for the Strong Multi Cap Value Fund II. Prior to April 11, 2005, State Street served as the fund accountant for the Strong Discovery Fund II and the Strong Mid Cap Growth Fund II. Fund accounting fees were paid by the funds' administrator through April 10, 2005, and not by the funds. From April 11, 2005 to April 22, 2005, State Street served as interim fund accountant for the Discovery Fund and was entitled to receive an annual asset based fee, a fixed fund accounting base fee and certain out-of-pocket expenses. WAIVED FEES AND REIMBURSED EXPENSES All amounts shown as waived fees or reimbursed expenses on the Statement of Operations, for the six months ended June 30, 2005, were waived by Funds Management, first from advisory fees, and then any remaining amount consecutively from administration, custody and shareholder servicing fees collected, if any. The Fund's Adviser has committed to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating 115 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -------------------------------------------------------------------------------- expense ratio for the Fund(s). Net operating expense ratios in effect from April 11, 2005 through June 30, 2005 were as follows: Net Operating Fund Expense Ratios -------------------------------------------------------------------------------- ASSET ALLOCATION FUND 1.00% -------------------------------------------------------------------------------- C&B LARGE CAP VALUE FUND 1.00% -------------------------------------------------------------------------------- DISCOVERY FUND* 1.15% -------------------------------------------------------------------------------- EQUITY INCOME FUND 1.00% -------------------------------------------------------------------------------- INTERNATIONAL CORE FUND 1.00% -------------------------------------------------------------------------------- LARGE COMPANY CORE FUND 1.00% -------------------------------------------------------------------------------- LARGE COMPANY GROWTH FUND 1.00% -------------------------------------------------------------------------------- MONEY MARKET FUND 0.75% -------------------------------------------------------------------------------- MULTI CAP VALUE FUND* 1.14% -------------------------------------------------------------------------------- OPPORTUNITY FUND* 1.07% -------------------------------------------------------------------------------- SMALL CAP GROWTH FUND 1.20% -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 0.90% * The rates for these funds were in effect from April 11, 2005 through June 30, 2005. Prior to April 11, 2005, the Strong Funds' adviser and/or administrator could voluntarily waive or absorb certain expenses at their discretion. Pursuant to the direction of the Strong Funds Board of Directors and certain regulatory settlements, the predecessor adviser, Strong Capital Management, Inc. ("SCM") had contractually agreed to waive fees and/or absorb expenses in the amount of 0.033% for the Strong Discovery Fund II, Strong Multi Cap Value Fund II and Strong Opportunity Fund II from May 21, 2004 to May 21, 2005. However, effective April 11, 2005, the Funds are subject to a different expense structure. SISI also allocated to each Fund certain charges or credits resulting from transfer agency banking activities based on each Funds' subscription and redemption activity. Transfer Agency Banking Credits allocated by SISI, if any, served to reduce the transfer agency expenses incurred by the Funds. From January 1, 2005 through April 10, 2005, the expense offsets that are included in the waived fees and reimbursed expenses amount on the Statement of Operations are as follows: Waived Fees and Fund Reimbursed Expenses -------------------------------------------------------------------------------- DISCOVERY FUND $ (12,039) -------------------------------------------------------------------------------- MULTI CAP VALUE FUND (31,787) -------------------------------------------------------------------------------- OPPORTUNITY FUND (1,226,565) 4. INVESTMENT PORTFOLIO TRANSACTIONS -------------------------------------------------------------------------------- Purchases and sales of investments, exclusive of short-term securities (securities with maturities of one year or less at purchase date) for the six months ended June 30, 2005, were as follows: Fund Purchases at Cost Sales Proceeds -------------------------------------------------------------------------------- ASSET ALLOCATION FUND $20,399,619 $ 27,442,792 -------------------------------------------------------------------------------- C&B LARGE CAP VALUE FUND 26,895,096 31,653,196 -------------------------------------------------------------------------------- DISCOVERY FUND 497,079,515 559,344,052 -------------------------------------------------------------------------------- EQUITY INCOME FUND 17,082,376 18,434,085 -------------------------------------------------------------------------------- INTERNATIONAL CORE FUND 44,119,220 37,318,201 -------------------------------------------------------------------------------- LARGE COMPANY CORE FUND 42,057,927 51,685,628 -------------------------------------------------------------------------------- LARGE COMPANY GROWTH FUND 13,783,855 16,012,420 -------------------------------------------------------------------------------- MULTI CAP VALUE FUND 23,388,807 28,581,839 -------------------------------------------------------------------------------- OPPORTUNITY FUND 364,236,416 554,940,738 -------------------------------------------------------------------------------- SMALL CAP GROWTH FUND 238,035,538 244,312,732 -------------------------------------------------------------------------------- TOTAL RETURN BOND FUND 537,022,257 519,750,652 The Money Market Fund, not reflected in this schedule, trades exclusively in short-term securities. 116 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- 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 six months ended June 30, 2005, there were no borrowings under the agreement. Prior to April 11, 2005, the predecessor Strong Funds had established a line of credit agreement ("LOC") with certain financial institutions to be used for temporary or emergency purposes. Combined borrowings among all participating Strong Funds were subject to a $200 million cap on the total LOC. For an individual fund, borrowings under the LOC were limited to either the lesser of 15% of the market value of the fund's total assets or any explicit borrowing limits in the fund's registration statement. The principal amount of each borrowing under the LOC was due not more than 45 days after the date of the borrowing. Borrowings under the LOC accrued interest based on prevailing market rates as defined in the LOC. A commitment fee of 0.09% per annum was incurred on the unused portion of the LOC and was allocated to all participating Strong Funds based on their net assets. For the six-months ended June 30, 2005, there were no borrowings under either agreement. 6. LEGAL AND REGULATORY MATTERS -------------------------------------------------------------------------------- In 2004, the predecessor funds' investment adviser and affiliates (collectively, "Strong") entered into agreements with certain regulators, including the Securities and Exchange Commission and the New York Attorney General ("NYAG"), to settle markettiming investigations. In the settlements, Strong agreed to pay investor restoration and civil penalties. Although some portion of these payments is likely to be distributed to predecessor fund shareholders, no determination has yet been made as to the distribution of these amounts, and the successor funds are not expected to receive any portion of these payments. The NYAG settlement also imposed fee reductions across the predecessor fund complex (excluding money market funds and very short-term income funds) totaling at least $35 million by May 2009. The current Funds' adviser has agreed to honor these fee reductions for the benefit of shareholders across the successor funds. Although civil litigation against Strong and certain predecessor funds relating to these matters is continuing, neither the current adviser nor the successor funds is a party to any such suit. 117 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- PROXY VOTING INFORMATION A description of the policies and procedures that the Fund(s) uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-800-222-8222 or visiting our website at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. PORTFOLIO HOLDINGS INFORMATION The Fund(s) 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, the 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 Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330. BOARD OF TRUSTEES The following table provides basic information about the Board of Trustees (the "Trustees") of the Wells Fargo Variable Trust (the "Trust"). This table supplements, and should be read in conjunction with, the Prospectus and the Statement of Additional Information* of each Fund. Each of the Trustees listed below acts in identical capacities for each of the 138 funds comprising the Trust, Wells Fargo Funds Trust and Wells Fargo Master Trust (collectively the "Fund Complex"). All of the non-interested Trustees are also members of the Audit and Nominating 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.

118 OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS --------------------------------------------------------------------------------

* 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. ** As of June 30, 2005, one of the six Trustees is considered an "interested person" of the Trusts as defined in the Investment Company Act of 1940. The interested Trustee, J. Tucker Morse, is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, which is not itself affiliated with Wells Fargo Funds Management, LLC. Robert C. Brown was an interested Trustee prior to his retirement on April 5, 2005. *** Length of service dates includes a Trustee's commencement of service with the Trust's predecessor entities. 119 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS: ASSET ALLOCATION FUND, C&B LARGE CAP VALUE FUND, DISCOVERY FUND, EQUITY INCOME FUND, INTERNATIONAL CORE FUND, LARGE COMPANY CORE FUND, LARGE COMPANY GROWTH FUND, MONEY MARKET FUND, MULTI CAP VALUE FUND, OPPORTUNITY FUND, SMALL CAP GROWTH FUND AND TOTAL RETURN BOND FUND -------------------------------------------------------------------------------- Section 15(c) of the Investment Company Act of 1940 (the "1940 Act") contemplates that the Board of Trustees (the "Board") of Wells Fargo Variable Trust (the "Trust"), including a majority of the Trustees who have no direct or indirect interest in the investment advisory and sub-advisory agreements and are not "interested persons" of the Trust, as defined in the 1940 Act (the "Independent Trustees"), will annually review and consider the continuation of the investment advisory and sub-advisory agreements. In this regard, the Board reviewed and re-approved, during the six months covered by this report: (i) an investment advisory agreement with Wells Fargo Funds Management, LLC ("Funds Management") for the Asset Allocation Fund, C&B Large Cap Value Fund, Discovery Fund, Equity Income Fund, International Core Fund, Large Company Core Fund, Large Company Growth Fund, Money Market Fund, Multi Cap Value Fund, Opportunity Fund, Small Cap Growth Fund and Total Return Bond Fund (the "Funds"); (ii) an investment sub-advisory agreement with Wells Capital Management Incorporated ("Wells Capital Management") for the Asset Allocation Fund, Discovery Fund, Equity Income Fund, Money Market Fund, Multi Cap Value Fund, Opportunity Fund, Small Cap Growth Fund and Total Return Bond Fund; (iii) an investment sub-advisory agreement with Cooke & Bieler, L.P. ("Cooke & Bieler") for the C&B Large Cap Value Fund; (iv) an investment sub-advisory agreement with Matrix Asset Advisors, Inc. ("Matrix") for the Large Company Core Fund; (v) an investment sub-advisory agreement with New Star Institutional Managers Limited ("New Star") for the International Core Fund; and (vi) an investment sub-advisory agreement with Peregrine Capital Management, Inc. ("Peregrine") for the Large Company Growth Fund. The investment advisory agreement with Funds Management and the investment sub-advisory agreements with Wells Capital Management, Cooke & Bieler, Matrix, New Star and Peregrine (the "Sub-Advisers") are collectively referred to as the "Advisory Agreements." More specifically, at meetings held on April 4, 2005, the Board, including the Independent Trustees advised by their independent legal counsel, considered the factors and reached the conclusions described below relating to the selection of Funds Management and the Sub-Advisers, and the continuation of the Advisory Agreements. The Board initially approved the Advisory Agreements for the Discovery Fund, Multi Cap Value Fund and Opportunity Fund, at a meeting held August 9-10, 2004 in connection with its approval of the reorganization of certain of the Strong Funds into certain of the Wells Fargo Advantage Funds (the "Reorganization"), as follows: STRONG FUNDS WELLS FARGO ADVANTAGE FUNDS -------------------------------------------------------------------------------- Discovery II Fund* Mid Cap Growth II Fund Discovery Fund -------------------------------------------------------------------------------- Multi Cap Value II Fund* Multi Cap Value Fund -------------------------------------------------------------------------------- Opportunity II Fund* Opportunity Fund -------------------------------------------------------------------------------- * ACCOUNTING SURVIVOR. The Reorganization was effective at the close of business on April 8, 2005. These Funds commenced operations on April 11, 2005. Accordingly, references to these Funds refer to either the predecessor funds or the Funds as the context requires. Similarly, references to the various fee rates refer to either the rates of the predecessor funds or those of these Funds as the context requires. NATURE, EXTENT AND QUALITY OF SERVICES -------------------------------------------------------------------------------- The Board received and considered various data and information regarding the nature, extent and quality of services provided to the Funds (and that would be provided to the Discovery Fund, Multi Cap Value Fund and Opportunity Fund) by Funds Management and the Sub-Advisers under the Advisory Agreements. Responses of Funds Management and the Sub-Advisers to a detailed set of requests submitted by the Independent Trustees' independent legal counsel on behalf of such Trustees were provided to the Board. The Board reviewed and considered the data and information, which included, among other things, information about the background and experience of the senior management and the expertise of the investment personnel of Funds Management and the Sub-Advisers. The Board also considered the ability of Funds Management and the Sub-Advisers, based on their respective resources, reputations and other attributes, to attract and retain highly qualified investment professionals, including research, advisory, and supervisory personnel. In this connection, the Board 120 OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- considered information regarding Funds Management's and each Sub-Adviser's compensation for its personnel involved in the management of the Funds (or that would be involved in the management of the Discovery Fund, Multi Cap Value Fund and Opportunity Fund). In addition, the Board considered the effects of certain personnel changes in light of the acquisition of certain of the asset management arrangements of Strong Capital Management, Inc. by Wells Fargo & Company. The Board further considered the compliance programs and compliance records of Funds Management and the Sub-Advisers. In addition, the Board took into account the administrative services provided to the Funds (and those anticipated to be provided to the Discovery Fund, Multi Cap Value Fund and Opportunity Fund) by Funds Management and its affiliates. In considering these matters, the Board considered not only the specific information presented in connection with the meetings, but also the knowledge gained over the course of interacting with Funds Management, including with respect to Funds Management's oversight of service providers, such as the investment sub-advisers. Based on the above factors, together with those referenced below, the Board concluded that it was generally satisfied with the nature, extent and quality of the investment advisory services provided to the Funds by Funds Management and the Sub-Advisers. FUND PERFORMANCE AND EXPENSES -------------------------------------------------------------------------------- The Board considered the performance results for each of the Funds over various time periods. The Board also considered these results in comparison to the median performance results of the group of funds that was determined to be the most similar to a given Fund (the "Peer Group") and to the median performance of a broader universe of relevant funds (the "Universe"), as well as to each Fund's benchmark index. Lipper Inc. ("Lipper"), an independent provider of investment company data, determined the Peer Group and Universe for each Fund. The Board was provided with a description of the methodology used by Lipper to select the mutual funds in each Fund's Peer Group and Universe. The Board noted that the performance of each Fund, except the C&B Large Cap Value Fund, Equity Income Fund, International Core Fund and Large Company Growth Fund, was better than, or not appreciably below, the median performance of each Fund's Peer Group for most time periods. The Board noted that the performance of the C&B Large Cap Value Fund, Equity Income Fund, International Core Fund and Large Company Growth Fund, was below each Fund's Peer Group for most time periods, and required further review. Upon further review, the Board noted that the Equity Income Fund's underperformance was due primarily to the Fund's exposure to very large capitalization stocks and that the portfolio manager was taking steps to improve the Fund's diversification. In addition, the Board noted that there had been sub-adviser changes for the C&B Large Cap Value Fund and International Core Fund during the past few months. The Board asked for a further report on the performance of the C&B Large Cap Value Fund, Equity Income Fund and Large Company Growth Fund. The Board received and considered information regarding each Fund's net operating expense ratio and its various components, including contractual advisory fees, actual advisory fees, actual non-management fees, Rule 12b-1 and non-Rule 12b-1 service fees, fee waivers/caps and/or expense reimbursements. The Board also considered comparisons of these fees to the expense information for each Fund's Peer Group and Universe, which comparative data was provided by Lipper. The Board noted that the Funds' net operating expense ratios, except for the Opportunity Fund, were lower than, or not appreciably higher than, the Funds' Peer Groups' median net operating expense ratios. The Board noted that the net operating expense ratio for the Opportunity Fund was higher than its Peer Group's median net operation expense ratio, but the Board further noted that the Advisory Agreement Rates (as defined below) were within a reasonable range of the median rates of the Fund's Peer Group. Management also discussed the Lipper data and rankings, and other relevant information, for the Funds. Based on the above-referenced considerations and other factors, the Board concluded that the overall performance and expense results supported the re-approval of the Advisory Agreements for the Funds. INVESTMENT ADVISORY AND SUB-ADVISORY FEE RATES -------------------------------------------------------------------------------- The Board reviewed and considered the contractual investment advisory fee rates payable by the Funds to Funds Management for investment advisory services, both on a stand-alone basis and on a combined basis with the Funds' administration fee rates (the "Advisory Agreement Rates"). The Board took into account the separate administration services covered by the administration fee rates. The Board also reviewed and considered the contractual investment sub-advisory fee rates (the "Sub-Advisory Agreement Rates") payable by Funds Management to the Sub-Advisers for investment sub-advisory services. In addition, the Board reviewed and considered the existing fee waiver/cap arrangements applicable to the Advisory Agreement Rates and considered the Advisory Agreement Rates after taking the waivers/caps into account (the "Net Advisory Rates"). The Board received and considered information comparing the Advisory Agreement Rates and Net Advisory Rates with those of the other funds in the Peer Groups. The Board noted that the Advisory 121 WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS OTHER INFORMATION (UNAUDITED) -------------------------------------------------------------------------------- Agreement Rates and the Net Advisory Rates for the Funds were lower than, or not appreciably higher than, the median rates of each Fund's Peer Group. In addition, the Board concluded that the combined investment advisory/administration fee rates for the Funds (before and after waivers/caps and/or expense reimbursements) were each reasonable in relation to each Fund's respective Peer Group, and reasonable in relation to the services provided. The Board also reviewed and considered the Sub-Advisory Agreement Rates and concluded that the Sub-Advisory Agreement Rates were fair and equitable, based on its consideration of the factors described above. PROFITABILITY -------------------------------------------------------------------------------- The Board received and considered a detailed profitability analysis of Funds Management based on the Advisory Agreement Rates and the Net Advisory Rates, as well as on other relationships between the Funds, as applicable, and Funds Management and its affiliates. Because the Discovery Fund, Multi Cap Value Fund and Opportunity Fund had not yet commenced operations, the Board did not consider the historical profitability with regard to Funds Management's arrangements with these Funds. The Board concluded that, in light of the costs of providing investment management and other services to the Funds, the profits and other ancillary benefits that Funds Management and its affiliates received with regard to providing these services to the Funds were not unreasonable. The Board did not consider a separate profitability analysis of Wells Capital Management and Peregrine, as their separate profitability from their relationships with the Asset Allocation Fund, Discovery Fund, Equity Income Fund, Money Market Fund, Multi Cap Value Fund, Opportunity Fund, Small Cap Growth Fund and Total Return Bond Fund was not a material factor in determining whether to renew the agreements. The Board did not consider profitability information with respect to Cooke & Bieler, Matrix and New Star, which are not affiliated with Funds Management. The Board considered that the sub-advisory fees paid to Cooke & Bieler, Matrix and New Star had been negotiated by Funds Management on an arms length basis and that Cooke & Bieler's, Matrix's and New Star's separate profitability from their relationships with the C&B Large Cap Value Fund, International Equity Fund and Large Company Core Fund was not a material factor in determining whether to renew the agreements. ECONOMIES OF SCALE -------------------------------------------------------------------------------- The Board received and considered information regarding whether there have been economies of scale with respect to the management of the Funds, whether the Funds have appropriately benefited from any economies of scale, and whether there is potential for realization of further economies of scale. The Board acknowledged the inherent limitations of any analysis of an investment adviser's economies of scale and of any attempt to correlate breakpoints with such economies, stemming largely from the Board's understanding that economies of scale are realized, if at all, by an investment adviser across a variety of products and services, not just in respect to a single fund. The Board concluded that any actual or potential economies of scale are, or would be, shared reasonably with Fund shareholders, including most particularly through Advisory Agreement Rate breakpoints, which are applicable to the Funds. INFORMATION ABOUT SERVICES TO OTHER CLIENTS -------------------------------------------------------------------------------- The Board also received and considered information about the nature, extent and quality of services and fee rates offered by Funds Management to other similarly situated series within the Trusts, and those offered by the Sub-Advisers to other clients, including other registered investment companies and separate accounts. The Board concluded that the Advisory Agreement Rates, the Sub-Advisory Agreement Rates and the Net Advisory Rates were within a reasonable range of the fee rates offered to others by Funds Management and the Sub-Advisers, giving effect to differences in services covered by such fee rates. OTHER BENEFITS TO FUNDS MANAGEMENT AND THE SUB-ADVISERS -------------------------------------------------------------------------------- The Board received and considered information regarding potential "fall-out" or ancillary benefits received by Funds Management and its affiliates and the Sub-Advisers as a result of their relationship with the Funds. Such benefits could include, among others, benefits directly attributable to the relationship of Funds Management and the Sub-Advisers with the Funds and benefits potentially derived from an increase in the business of Funds Management and the Sub-Advisers as a result of their relationship with the Funds (such as the ability to market to shareholders other financial products offered by Funds Management and its affiliates or the Sub-Advisers and their affiliates). The Board also considered the policies of the Funds in achieving the best execution of portfolio transactions, whether and to what extent soft dollar credits are, or would be, sought and how any such credits are, or would be, utilized, potential benefits that may be realized by using an affiliated broker, and the controls applicable to brokerage allocation procedures. The Board also took note of the policies of the Sub-Advisers regarding the allocation of portfolio investment opportunities among the Funds and other clients. 122 OTHER INFORMATION (UNAUDITED) WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS -------------------------------------------------------------------------------- OTHER FACTORS AND BROADER REVIEW The Board also considered the markets for distribution of the Funds, including the principal channels through which the Funds' shares/interests are offered and sold. The Board noted that the Funds are now part of one of the few fund families that have both direct-to-fund and intermediary distribution. As discussed above, the Board reviewed detailed materials received from Funds Management and the Sub-Advisers annually as part of the re-approval process under Section 15(c) of the 1940 Act. The Board also regularly reviews and assesses the quality of the services that the Funds receive throughout the year. In this regard, the Board reviews reports of Funds Management and the Sub-Advisers at least quarterly, which include, among other things, a detailed portfolio review, and detailed fund performance reports. In addition, the Board meets with the portfolio managers of the Funds at various times throughout the year. After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Board concluded that approval of the continuation of the Advisory Agreements for the Funds was in the best interest of the Funds and their shareholders. Accordingly, the Board unanimously approved the continuation of the Advisory Agreements. 123 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 Depository Receipt AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax ARM -- Adjustable Rate Mortgages BART -- Bay Area Rapid Transit CDA -- Community Development Authority CDSC -- Contingent Deferred Sales Charge CGIC -- Capital Guaranty Insurance Company CGY -- Capital Guaranty Corporation CMT -- Constant Maturity Treasury COFI -- Cost of Funds Index Connie Lee -- Connie Lee Insurance Company COP -- Certificate of Participation CP -- Commercial Paper CTF -- Common Trust Fund DW&P -- Department of Water & Power DWR -- Department of Water Resources EDFA -- Education Finance Authority FFCB -- Federal Farm Credit Bank FGIC -- Financial Guaranty Insurance Corporation FHA -- Federal Housing Authority FHLB -- Federal Home Loan Bank FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association FRN -- Floating Rate Notes FSA -- Financial Security Assurance, Inc GDR -- Global Depository Receipt GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority HFFA -- Health Facilities Financing Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue LIBOR -- London Interbank Offered Rate LLC -- Limited Liability Corporation LOC -- Letter of Credit LP -- Limited Partnership MBIA -- Municipal Bond Insurance Association MFHR -- Multi-Family Housing Revenue MUD -- Municipal Utility District MTN -- Medium Term Note PCFA -- Pollution Control Finance Authority PCR -- Pollution Control Revenue PFA -- Public Finance Authority PLC -- Private Placement PSFG -- Public School Fund Guaranty RAW -- Revenue Anticipation Warrants RDA -- Redevelopment Authority RDFA -- Redevelopment Finance Authority R&D -- Research & Development SFHR -- Single Family Housing Revenue SFMR -- Single Family Mortgage Revenue SLMA -- Student Loan Marketing Association STEERS -- Structured Enhanced Return Trust TBA -- To Be Announced TRAN -- Tax Revenue Anticipation Notes USD -- Unified School District V/R -- Variable Rate WEBS -- World Equity Benchmark Shares XLCA -- XL Capital Assurance 124 THIS PAGE IS INTENTIONALLY LEFT BLANK -- THIS PAGE IS INTENTIONALLY LEFT BLANK -- [LOGO] WELLS ADVANTAGE FARGO FUNDS More information about WELLS FARGO ADVANTAGE FUNDS(SM) is available free upon request. To obtain literature, please write, e-mail, or call: WELLS FARGO ADVANTAGE FUNDS P.O. Box 8266 Boston, MA 02266-8266 E-mail: wfaf@wellsfargo.com Retail Investment Professionals: 888-877-9275 Institutional Investment Professionals: 866-765-0778 Web: www.wellsfargo.com/advantagefunds This report and the financial statements contained herein are submitted for the general information of the shareholders of the WELLS FARGO ADVANTAGE FUNDS. If this report is used for promotional purposes, distribution of the report must be accompanied or preceded by a current prospectus. For a prospectus containing more complete information, including charges and expenses, call 1-800-222-8222. Please consider the investment objective, risks, charges and expenses of the investment carefully before investing. This and other information about WELLS FARGO ADVANTAGE FUNDS can be found in the current prospectus. Read the prospectus carefully before you invest or send money. Wells Fargo Funds Management, LLC, a wholly-owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for the WELLS FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide sub-advisory and other services for the Funds. The Funds are distributed by WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member NASD/SIPC, an affiliate of Wells Fargo & Company. ------------------------------------------------------- NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE ------------------------------------------------------- -------------------------------------------------------------------------------- (c) 2005 Wells Fargo www.wellsfargo.com/advantagefunds RT51871 08-05 Advantage Funds, LLC. SVTF/SAR124 06-05 All rights reserved. ITEM 2. CODE OF ETHICS Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable. ITEMS 5-6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES (a)(i) The President and Treasurer have concluded that the Wells Fargo Variable Trust (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report. (a)(ii) There were no significant changes in the Trust's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in (a)(i) above. ITEM 10. EXHIBITS (a) Not applicable. (a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant. Wells Fargo Variable Trust By: /s/ Karla M. Rabusch Karla M. Rabusch President By: /s/ Stacie D. DeAngelo Stacie D. DeAngelo Treasurer Date: August 15, 2005