-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KBbt0k6oRnElJ8JJSj+Gtwcx8g3+7xqhKegYHS77lKf+wrrHFTwYFl+M7vhjUShs eGZipbsbGEc23RS9ggXJAg== 0000935069-08-000498.txt : 20080229 0000935069-08-000498.hdr.sgml : 20080229 20080229144935 ACCESSION NUMBER: 0000935069-08-000498 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071231 FILED AS OF DATE: 20080229 DATE AS OF CHANGE: 20080229 EFFECTIVENESS DATE: 20080229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLS FARGO VARIABLE TRUST CENTRAL INDEX KEY: 0001081402 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09255 FILM NUMBER: 08654842 BUSINESS ADDRESS: STREET 1: 525 MARKET STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94163 BUSINESS PHONE: 800-222-8222 MAIL ADDRESS: STREET 1: 525 MARKET STREET STREET 2: 12TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94105

0001081402 S000007215 VT Asset Allocation Fund

C000019811 VT Asset Allocation Fund

0001081402 S000007218 VT Discovery Fund

C000019816 VT Discovery Fund

0001081402 S000007219 VT Total Return Bond Fund

C000019817 VT Total Return Bond Fund

0001081402 S000007220 VT Large Company Growth Fund

C000019818 VT Large Company Growth Fund

0001081402 S000007221 VT Equity Income Fund

C000019819 VT Equity Income Fund

0001081402 S000007222 VT International Core Fund

C000019820 VT International Core Fund

0001081402 S000007223 VT C&B Large Cap Value Fund

C000019821 VT C&B Large Cap Value Fund

0001081402 S000007224 VT Large Company Core Fund

C000019822 VT Large Company Core Fund

0001081402 S000007225 VT Money Market Fund

C000019823 VT Money Market Fund

0001081402 S000007226 VT Small/Mid Cap Value Fund

C000019824 VT Small/Mid Cap Value Fund

0001081402 S000007227 VT Opportunity Fund

C000019825 VT Opportunity Fund

0001081402 S000007228 VT Small Cap Growth Fund

C000019826 VT Small Cap Growth Fund

N-CSR 1 g43674_vatrustncsr.txt G43674_VATRUSTNCSR.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, 2007 Date of reporting period: December 31, 2007 ITEM 1. REPORT TO SHAREHOLDERS =============================== ---------------- [LOGO] WELLS ADVANTAGE FARGO FUNDS ---------------- - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] Annual Report December 31, 2007 - -------------------------------------------------------------------------------- WELLS FARGO ADVANTAGE VARIABLE TRUST FUNDS o WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND o WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND o WELLS FARGO ADVANTAGE VT DISCOVERY FUND(SM) o WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND o WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND o WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND o WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND o WELLS FARGO ADVANTAGE VT MONEY MARKET FUND o WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND(SM) o WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND o WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND o WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND WANT TO RECEIVE YOUR ANNUAL AND SEMI-ANNUAL REPORTS FASTER? Sign up for e-delivery at www.wellsfargo.com/advantagefunds, Keyword: eDocs. Contents - -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS .................................................. 2 PERFORMANCE HIGHLIGHTS Wells Fargo Advantage VT Asset Allocation Fund .......................... 6 Wells Fargo Advantage VT C&B Large Cap Value Fund ....................... 10 Wells Fargo Advantage VT Discovery Fund ................................. 14 Wells Fargo Advantage VT Equity Income Fund ............................. 20 Wells Fargo Advantage VT International Core Fund ........................ 26 Wells Fargo Advantage VT Large Company Core Fund ........................ 30 Wells Fargo Advantage VT Large Company Growth Fund ...................... 36 Wells Fargo Advantage VT Money Market Fund .............................. 40 Wells Fargo Advantage VT Opportunity Fund ............................... 44 Wells Fargo Advantage VT Small Cap Growth Fund .......................... 48 Wells Fargo Advantage VT Small/Mid Cap Value Fund ....................... 54 Wells Fargo Advantage VT Total Return Bond Fund ......................... 60 FUND EXPENSES ........................................................... 64 PORTFOLIO OF INVESTMENTS Wells Fargo Advantage VT Asset Allocation Fund .......................... 66 Wells Fargo Advantage VT C&B Large Cap Value Fund ....................... 81 Wells Fargo Advantage VT Discovery Fund ................................. 85 Wells Fargo Advantage VT Equity Income Fund ............................. 90 Wells Fargo Advantage VT International Core Fund ........................ 95 Wells Fargo Advantage VT Large Company Core Fund ........................ 100 Wells Fargo Advantage VT Large Company Growth Fund ...................... 104 Wells Fargo Advantage VT Money Market Fund .............................. 108 Wells Fargo Advantage VT Opportunity Fund ............................... 111 Wells Fargo Advantage VT Small Cap Growth Fund .......................... 116 Wells Fargo Advantage VT Small/Mid Cap Value Fund ....................... 121 Wells Fargo Advantage VT Total Return Bond Fund ......................... 125 FINANCIAL STATEMENTS Statements of Assets and Liabilities .................................... 138 Statements of Operations ................................................ 142 Statements of Changes in Net Assets ..................................... 146 Financial Highlights 152 NOTES TO FINANCIAL STATEMENTS ........................................... 156 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ................. 168 OTHER INFORMATION ....................................................... 169 LIST OF ABBREVIATIONS ................................................... 173 - -------------------------------------------------------------------------------- The views expressed are as of December 31, 2007, and are those of the Fund 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 FUNDS. ----------------------------------------------------- NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE ----------------------------------------------------- [GRAPHIC OMITTED] WELLS FARGO INVESTMENT HISTORY 1971 INTRODUCED ONE OF THE FIRST INSTITUTIONAL INDEX FUNDS. 1978 ONE OF THE FIRST FIRMS TO APPLY ASSET ALLOCATION THEORY TO INVESTMENT PORTFOLIO MANAGEMENT. 1985 ONE OF THE FIRST FIRMS TO CREATE A THREE- WAY ASSET ALLOCATION FUND THAT "TILTS" INVESTMENTS TOWARD PORTIONS OF THE MARKET THAT OUR PROPRIETARY MODELS INDICATE WILL PERFORM BETTER. 1994 INTRODUCED TARGET DATE FUNDS THAT AUTOMATICALLY REALLOCATE THE ASSET MIX OVER SPECIFIC TIME HORIZONS. 1997 WELLS FARGO LAUNCHED THE WEALTHBUILDER PORTFOLIOS, A UNIQUE "FUND OF FUNDS" THAT USES FLEXIBLE ASSET ALLOCATION STRATEGIES TO SHIFT ASSETS. 1999 REORGANIZED THE NORWEST ADVANTAGE FUNDS(R) AND STAGECOACH FUNDS(R) INTO THE WELLS FARGO FUNDS(R). 2003 EXPANDED FIXED-INCOME, SMALL CAP, AND EMERGING MARKETS LINEUP FROM MONTGOMERY ASSET MANAGEMENT, LLC. 2004 ADDED ADDITIONAL LARGE CAP AND MID CAP FUNDS TO THE LINEUP BY ADOPTING THE COOKE & BIELER VALUE FUNDS. 2005 WELLS FARGO FUNDS MERGED WITH STRONG FUNDS TO BECOME WELLS FARGO ADVANTAGE FUNDS, FORMING A FUND FAMILY OF OVER 120 FUNDS AND PLACING IT AMONG THE TOP 20 MUTUAL FUND FAMILIES IN THE UNITED STATES. 2006 ENHANCED AND RENAMED THE WELLS FARGO ADVANTAGE OUTLOOK FUNDS(SM) TO THE WELLS FARGO ADVANTAGE DOW JONES TARGET DATE FUNDS(SM), WHICH SEEK TO REPLICATE RETURNS OF THE APPROPRIATE DOW JONES TARGET DATE INDEXES, THE FIRST LIFE CYCLE INDEXES IN THE INVESTMENT INDUSTRY. WELLS FARGO ADVANTAGE FUNDS(R) Integrity. Expertise. Solutions. - -------------------------------------------------------------------------------- GUIDED BY A DISTINGUISHED HERITAGE. Since 1852 Wells Fargo has distinguished itself by safely delivering people and their valuables to distant destinations. To meet the needs of a vibrant, expanding nation, the company successfully forged partnerships with local specialists who knew the terrain. Although much has changed since then, WELLS FARGO ADVANTAGE FUNDS continues to put the same time and effort into selecting independent portfolio management teams who oversee our Funds. It's our way of maintaining this early commitment to integrity and expertise and to providing solutions that help you reach your destination. INDEPENDENT THINKING. With a primary focus on delivering long-term performance and risk management, our approach offers investors access to the strategic thinking of independent investment teams from 15 different management firms. While each of our teams concentrates on a specific strategy, collectively they provide in-depth knowledge and insight across distinct investment styles. TIME-TESTED APPROACH. Our teams are chosen for their expertise in particular investment styles and for their consistent, repeatable processes. All remain independent and free to concentrate solely on managing money and producing results. Our strict adherence to this approach provides a consistent focus on long-term results and allows investors to tap into the expertise of leading institutional investment managers to create fully diversified portfolios. SOLUTIONS FOR EVERY STAGE. WELLS FARGO ADVANTAGE FUNDS provides investors with strategic investment solutions that help navigate the complex and ever-changing investment landscape. Our diverse family of mutual funds includes more than 120 Funds that cover a broad spectrum of investment styles and asset classes, and each Fund has its own disciplined approach to investing. NOT PART OF THE ANNUAL REPORT. WELLS FARGO ADVANTAGE FUNDS OFFERS MORE THAN 120 MUTUAL FUNDS ACROSS A WIDE RANGE OF ASSET CLASSES, REPRESENTING OVER $155 BILLION IN ASSETS UNDER MANAGEMENT, AS OF DECEMBER 31, 2007. EQUITY FUNDS - -------------------------------------------------------------------------------- Asia Pacific Fund C&B Large Cap Value Fund C&B Mid Cap Value Fund Capital Growth Fund Common Stock Fund Discovery Fund Diversified Equity Fund Diversified Small Cap Fund Dividend Income Fund Emerging Growth Fund Emerging Markets Focus Fund Endeavor Large Cap Fund Endeavor Select Fund Enterprise Fund Equity Income Fund Equity Index Fund Equity Value Fund Growth and Income Fund Growth Fund Growth Equity Fund Index Fund International Core Fund International Equity Fund International Value Fund Large Cap Appreciation Fund Large Cap Growth Fund Large Company Core Fund Large Company Growth Fund Mid Cap Disciplined Fund Mid Cap Growth Fund Opportunity Fund Overseas Fund Small Cap Disciplined Fund Small Cap Growth Fund Small Cap Opportunities Fund Small Cap Value Fund Small Company Growth Fund Small Company Value Fund Small/Mid Cap Value Fund Specialized Financial Services Fund Specialized Technology Fund Strategic Small Cap Value Fund U.S. Value Fund Value Fund BOND FUNDS - -------------------------------------------------------------------------------- California Limited-Term Tax-Free Fund California Tax-Free Fund Colorado Tax-Free Fund Corporate Bond Fund Diversified Bond Fund Government Securities Fund 1 High Income Fund High Yield Bond Fund Income Plus Fund Inflation-Protected Bond Fund Intermediate Government Income Fund 1 Intermediate Tax-Free Fund Minnesota Tax-Free Fund Municipal Bond Fund National Limited-Term Tax-Free Fund National Tax-Free Fund Short Duration Government Bond Fund 1 Short-Term Bond Fund Short-Term High Yield Bond Fund Short-Term Municipal Bond Fund Stable Income Fund Strategic Income Fund Total Return Bond Fund Ultra Short-Term Income Fund Ultra Short-Term Municipal Income Fund Ultra-Short Duration Bond Fund Wisconsin Tax-Free Fund ASSET ALLOCATION FUNDS - -------------------------------------------------------------------------------- Aggressive Allocation Fund Asset Allocation Fund Balanced Fund Conservative Allocation Fund Growth Balanced Fund Moderate Balanced Fund Life Stage-Aggressive Portfolio Life Stage-Conservative Portfolio Life Stage-Moderate Portfolio WealthBuilder Conservative Allocation Portfolio WealthBuilder Equity Portfolio WealthBuilder Growth Allocation Portfolio WealthBuilder Growth Balanced Portfolio WealthBuilder Moderate Balanced Portfolio WealthBuilder Tactical Equity Portfolio Target Today Fund 2 Target 2010 Fund 2 Target 2015 Fund 2 Target 2020 Fund 2 Target 2025 Fund 2 Target 2030 Fund 2 Target 2035 Fund 2 Target 2040 Fund 2 Target 2045 Fund 2 Target 2050 Fund 2 MONEY MARKET FUNDS - -------------------------------------------------------------------------------- 100% Treasury Money Market Fund 1 California Tax-Free Money Market Fund California Tax-Free Money Market Trust Cash Investment Money Market Fund Government Money Market Fund 1 Heritage Money Market Fund Minnesota Money Market Fund Money Market Fund Money Market Trust Municipal Money Market Fund National Tax-Free Money Market Fund National Tax-Free Money Market Trust Overland Express Sweep Fund Prime Investment Money Market Fund Treasury Plus Money Market Fund 1 VARIABLE TRUST FUNDS 3 - -------------------------------------------------------------------------------- VT Asset Allocation Fund VT C&B Large Cap Value Fund VT Discovery Fund VT Equity Income Fund VT International Core Fund VT Large Company Core Fund VT Large Company Growth Fund VT Money Market Fund VT Opportunity Fund VT Small Cap Growth Fund VT Small/Mid Cap Value Fund VT Total Return Bond Fund AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE WELLS FARGO ADVANTAGE MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN A MONEY MARKET FUND. - -------------------------------------------------------------------------------- 1 The U.S. Government guarantee applies to certain of the underlying securities and NOT to shares of the Fund. 2 The full name of this Fund series is the WELLS FARGO ADVANTAGE DOW JONES TARGET DATE FUNDS(SM). 3 The Variable Trust Funds are generally available only through insurance company variable contracts. NOT PART OF THE ANNUAL REPORT. 2 Wells Fargo Advantage Variable Trust Funds Letter to Shareholders [PHOTO OMITTED] KARLA M. RABUSCH, PRESIDENT WELLS FARGO ADVANTAGE FUNDS - -------------------------------------------------------------------------------- SUBPRIME MORTGAGE LOANS AND A DECLINING HOUSING MARKET--COUPLED WITH CONCERNS ABOUT CONSUMER DISCRETIONARY SPENDING, RISING PRICES AT THE GAS PUMPS, AND HIGHER FOOD PRICES--CONTINUED TO AFFECT BOTH THE STOCK AND THE BOND MARKETS. - -------------------------------------------------------------------------------- Dear Valued Contractholder, You may have noticed that your annual report for the 12-month period that ended December 31, 2007, has a new look. We would like to call your attention to a few enhancements. First, we have redesigned your annual shareholder report so that Fund performance is at the beginning of the section for each Fund. Second, we have allocated more space for our letter to you and for the portfolio manager discussions of the Funds in each report. Third, you may want to look for "Fund Highlights" at the beginning of each commentary on the page following the Fund's performance. Our goal is to offer you a high-level overview of how the Fund performed followed by a discussion of the details that affected Fund performance, changes made to the Fund, and the portfolio manager's outlook for the Fund. We will continue to provide you with a general overview of the economy and the asset classes that are represented in each report. We hope that you find these improvements helpful and informative. INTERNATIONAL STOCKS CONTINUED TO OUTPACE DOMESTIC STOCKS DURING THE PERIOD AS THE UNITED STATES TRIED TO TAME A DECLINING HOUSING MARKET, INFLATION, AND ONGOING CONCERNS IN THE SUBPRIME MORTGAGE ARENA. Subprime mortgage loans and a declining housing market--coupled with concerns about consumer discretionary spending, rising prices at the gas pumps, and higher food prices--continued to affect both the stock and the bond markets. Equity markets broke several records during the period, with the Dow Jones Industrial Average (DJIA) closing above 14,000 for the first time ever in mid-July 2007 before falling back below 13,000 in the following weeks as growing problems in the subprime mortgage market created a global credit squeeze. Equity markets rallied sharply in mid-September after the Fed surprised investors with a larger-than-expected 50 basis point (100 basis points equals 1.00%) cut in the federal funds target rate, its first cut in four years. The DJIA set another record above 14,000 in mid-October before again falling sharply back below 13,000 during the following weeks. At the close of 2007, the DJIA closed at 13,264.82, up from 12,463.15 compared to last year at this time. A style rotation also occurred during the 12-month period, as growth indices moved ahead of their value counterparts after seven consecutive years of relative underperformance. With relative risk premiums for growth companies at multidecade lows, investors were willing to pay for companies that showed strong sustainable earnings and revenue growth despite the slowing economy. Companies that were able to show steady growth stood out as corporate profits slowed significantly during the 12-month period and turned negative during the third quarter of 2007 for the first time in five years. The value indices also came under pressure as the turmoil in the credit markets led to significant weakness among financial companies. Letter to Shareholders Wells Fargo Advantage Variable Trust Funds 3 International stocks continued to outpace domestic stocks during the period, with the emerging markets again posting the strongest returns despite some sharp declines. The dollar continued to weaken throughout most of the period. LIQUIDITY PROBLEMS IN THE FIXED-INCOME MARKETS SPARKED A GLOBAL CREDIT CRUNCH. As liquidity in the fixed-income markets evaporated during the 12-month period, a global credit crunch drove U.S. Treasury prices up and widened spreads between Treasuries and the rest of the credit market. Defaults in subprime mortgages were mostly to blame, as the global financial system seemed to collectively discover that these debt obligations were embedded in a vast spectrum of structured debt products and that their expected cash flows were increasingly unlikely to come in as promised. As a result, credit and structured product spreads widened dramatically while investors fled unknown risk and sought the safety of U.S. Treasuries--a true flight-to-quality rally. The seizing of the credit market engine was extreme enough to get the attention of the Fed. In mid-August, the Fed announced a surprise cut in the discount rate by 50 basis points in an effort to bolster liquidity after injecting billions of dollars into the financial system during the preceding weeks. However, in the Fed's estimation, these actions were not enough, and the Fed subsequently dropped both the federal funds rate and the discount rate by another 50 basis points at its scheduled meeting in mid-September, reversing more than a year of ongoing "inflation risk" vigilance and replacing it with a "risk to growth" cautionary assessment of economic conditions. After a modest rebound in credit conditions during late September and October, the credit crunch returned for a second act in mid-November, prompting further monetary accommodation by the Fed in the last month of the year. As an alternative option for banks seeking liquidity support from the Fed but not wishing to publicly display their needs for cash through the discount window, the Fed introduced a silent-auction loan. This was a new and innovative way for the Fed to offer supplemental monetary accommodation. However, conventional methods were not neglected either as the Fed further cut the federal funds rate in December by a quarter point to 4.25%. Although the credit crunch caused spreads to widen and challenged debt valuations across the board, corporate issues, asset-backed securities (ABS), and even mortgage-backed securities (MBS) were able to show positive returns. Much of the period's spread widening can be attributed to the strong rally in U.S. Treasuries. Yields in credit and structured products declined as well during the period but did not nearly keep pace with the descent of U.S. Treasury yields. - -------------------------------------------------------------------------------- AS AN ALTERNATIVE OPTION FOR BANKS SEEKING LIQUIDITY SUPPORT FROM THE FED BUT NOT WISHING TO PUBLICLY DISPLAY THEIR NEEDS FOR CASH THROUGH THE DISCOUNT WINDOW, THE FED INTRODUCED A SILENT-AUCTION LOAN. - -------------------------------------------------------------------------------- 4 Wells Fargo Advantage Variable Trust Funds Letter to Shareholders THE UNCERTAINTY OF FUTURE FED ACTION COMBINED WITH OTHER MARKET FORCES SUPPORTS OUR BELIEF THAT SUCCESSFUL INVESTING INCLUDES A BALANCED APPROACH OF OWNING A DIVERSIFIED PORTFOLIO WHILE KEEPING A LONG-TERM PERSPECTIVE. While diversification may not prevent losses in a downturn, it may help to reduce them and provide you with one way of managing risk. Our diverse family of mutual funds may also help. We offer more than 120 Funds that cover a broad spectrum of investment styles and asset classes. Each Fund is managed according to a disciplined approach to investing that features the strategic thinking of portfolio managers chosen for their in-depth knowledge and methodology. We believe that our insistence on seeking investment teams who share our dedication to pursuing consistent long-term results offers you a way to navigate changing market conditions and move forward with your financial planning. Thank you for choosing WELLS FARGO ADVANTAGE FUNDS. We appreciate your confidence in us. Through each market cycle, we are committed to helping you meet your financial needs. If you have any questions about your investment, please contact your investment professional or call us at 1-800-222-8222. You may also want to visit our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. Sincerely, /s/ Karla M. Rabusch Karla M. Rabusch President WELLS FARGO ADVANTAGE FUNDS THIS PAGE IS INTENTIONALLY LEFT BLANK. 6 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE The WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (the Fund) seeks long-term total return, consisting of capital appreciation and current income. INVESTMENT ADVISER Wells Fargo Funds Management, LLC SUBADVISER Wells Capital Management Incorporated PORTFOLIO MANAGERS Galen G. Blomster, CFA Gregory T. Genung, CFA Jeffrey P. Mellas FUND INCEPTION April 15, 1994 PERFORMANCE SUMMARY 12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2007 - -------------------------------------------------------------------------------- FUND 1 YEAR - -------------------------------------------------------------------------------- VT Asset Allocation Fund 7.60% - -------------------------------------------------------------------------------- BENCHMARKS Asset Allocation Composite Index 1 7.40% S&P 500 Index 2 5.49% Lehman Brothers 20+ Year U.S. Treasury Index 3 10.15% - -------------------------------------------------------------------------------- FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. NET AND GROSS EXPENSE RATIOS FOR THE FUND ARE 1.00% AND 1.02%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER. - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTMENT 4 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]

- -------------------------------------------------------------------------------- 1 The Asset Allocation Composite Index is weighted 60% in the S&P 500 Index and 40% in the Lehman Brothers 20+ Year U.S. Treasury Index. You cannot invest directly in an Index. 2 The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the Index proportionate to its market value. You cannot invest directly in an Index. 3 The Lehman Brothers 20+ Year U.S. Treasury Index is an unmanaged index composed of securities in the U.S. Treasury Index with maturities of 20 years or greater. You cannot invest directly in an Index. Performance Highlights Wells Fargo Advantage Variable Trust Funds 7 WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (CONTINUED) - -------------------------------------------------------------------------------- MANAGER'S DISCUSSION FUND HIGHLIGHTS o The Fund's solid performance outperformed its benchmark and the S&P 500 Index while lagging behind the extraordinary performance of the Lehman Brothers 20+ Year U.S. Treasury Index. o At the end of the period, the Fund was at a maximum equity overweighting, with an effective target allocation of 85% stocks and 15% bonds. o We continue to see stocks as more attractive than bonds. THE STRESS OF THE SUBPRIME MORTGAGE AND CREDIT MARKETS WORE ON INVESTORS THROUGHOUT THE PERIOD AND STOCKS FAILED TO HOLD THE HIGHS SEEN IN MID-OCTOBER. The S&P 500 managed to return 5.49% for the year but struggled with many challenges throughout the volatile period. Rising oil prices, increasing unemployment, and a weak housing market were constantly in the headlines. Stocks came to life with a strong second-quarter rally in 2007 that rewarded players with a 6.28% total return on the S&P 500 Index for the quarter. The employment picture continued to wane, however. The Fed sought to reinforce confidence in the U.S. economy with hopes that a much-worried-about recession would be avoided. In an effort to forestall additional slowing, the Fed acted by reducing both the federal funds target rate and its discount rate by a larger than expected 0.50% at its September meeting. Investor confidence returned to U.S. equities, sparking a late third-quarter rally in 2007 that advanced stocks to new highs in many indices. The remainder of 2007 proved challenging as financial companies such as Citigroup and Merrill Lynch announced large quarterly losses, costing shareholders valuable gains and chief executives their jobs. As negative market news regularly appeared on the front page, oil prices continued to rise. This, in turn, led to higher gasoline prices and less for consumers to spend on other goods and services. In the end, eight of ten S&P 500 sectors ended 2007 in positive territory on a total return basis, but the fourth quarter provided the index with its first negative - -------------------------------------------------------------------------------- SECTOR DISTRIBUTION 5 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] U.S. Treasury Securities (34%) Utilities (2%) Consumer Discretionary (6%) Consumer Staples (7%) Energy (8%) Financials (12%) Healthcare (8%) Industrials (8%) Information Technology (11%) Materials (2%) Telecommunications Services (2%) - -------------------------------------------------------------------------------- 4 The chart compares the performance of the WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND for the most recent ten years of the Fund with the Asset Allocation Composite Index, S&P 500 Index and the Lehman Brothers 20+ Year U.S. Treasury Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. 5 Portfolio holdings and sector distribution are subject to change. Cash and cash equivalents are not reflected in the calculations of portfolio holdings and sector distribution. 8 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TEN LARGEST PORTFOLIO HOLDINGS 5,6 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- U.S. Treasury Bond, 4.50%, 2/15/2036 7.18% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.25%, 5/15/2030 5.44% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.38%, 2/15/2031 5.04% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.00%, 5/15/2037 4.49% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 4.75%, 2/15/2037 4.36% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.50%, 8/15/2028 3.33% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 6.13%, 8/15/2029 3.30% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.25%, 2/15/2029 3.17% - -------------------------------------------------------------------------------- U.S. Treasury Bond, 5.25%, 11/15/2028 3.02% - -------------------------------------------------------------------------------- Exxon Mobil Corporation 2.41% - -------------------------------------------------------------------------------- quarter since the second quarter of 2006. Treasury bond returns were positive during the year, benefiting from their status as a safe haven during times of turmoil. Rising unemployment, a weak housing market, and the credit disruptions provided too much stress for investors to take on additional risk. The rally in U.S. Treasury debt in the fourth quarter of 2007 drove longer-dated yields to lows that had not been seen since mid-2005. WE READJUSTED ALLOCATION ON A FEW OCCASIONS DURING THE 12-MONTH PERIOD. The stock holdings in the Fund are indexed to the S&P 500 Index, and the bond holdings are indexed to the Lehman Brothers 20+ Year U.S. Treasury Bond Index. The Tactical Asset Allocation (TAA) Model, which seeks to enhance portfolio returns by shifting assets between stocks and bonds, readjusted allocation on a few occasions throughout the 12-month period and ended the year with a bias toward stocks. In implementing the shift, the Fund employed a futures overlay transaction, thus keeping the portfolio's underlying assets near their long-term strategic allocation of 60% stocks and 40% bonds. With the shift toward stocks, the portfolio maintained a long position in the S&P 500 Index futures and a short position in the long-term U.S. Treasury bond futures. At the end of the period, the Fund was at a maximum equity overweighting, with an effective target allocation of 85% stocks and 15% bonds. OUR MODELS INDICATE THAT STOCKS REMAIN COMPELLINGLY ATTRACTIVE RELATIVE TO BONDS. Exports are on the rise and improving our trade deficit, money supply is increasing, and corporate balance sheets remain strong. Add a declining interest rate environment to the equation, and we believe that this is a generally constructive environment for equities. As a result, the Fund will remain overweight in stocks until the relative valuation returns to a more normal environment. - -------------------------------------------------------------------------------- 6 The ten largest portfolio holdings are calculated based on the market value of the securities divided by total market value of the portfolio of the Fund. Performance Highlights Wells Fargo Advantage Variable Trust Funds 9 WELLS FARGO ADVANTAGE VT ASSET ALLOCATION FUND (CONTINUED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2007)

- -------------------------------------------------------------------------------- 1 The Russell 2500 Growth Index measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. You cannot invest directly in an Index. 2 The chart compares the performance of the WELLS FARGO ADVANTAGE VT DISCOVERY FUND for the most recent ten years of the Fund with the Russell 2500 Growth Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. Performance Highlights Wells Fargo Advantage Variable Trust Funds 15 WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED) - -------------------------------------------------------------------------------- MANAGER'S DISCUSSION FUND HIGHLIGHTS o The Fund's exceptional performance during the 12-month period outpaced its benchmark. o Performance strength came from Fund holdings in consumer discretionary, industrials, and information technology. o Detractors from Fund performance came from holdings in materials and telecommunication services. THE EQUITY MARKETS EXPERIENCED SIGNIFICANT VOLATILITY DURING THE YEAR AS THE RISK ADJUSTMENT THAT BEGAN DURING THE SUMMER CONTINUED IN RESPONSE TO THE DEEPENING TURMOIL IN THE MORTGAGE AND CREDIT MARKETS. Investors struggled to gain clarity over the tightening credit markets, write-downs at commercial and investment banks, and the broader implications for overall consumer spending. Simultaneously, third-quarter profit growth in 2007 slowed more than expected, actually turning negative on a year-over-year basis. As the housing and financial concerns continued to intensify during the year, the divergence between the value and growth investing styles widened further, favoring the growth style. The growth indices have significantly outperformed the value indices for the period. As a result, several of the value indices reported flat to negative performance for 2007. Growth stocks continued to gain favor as investors placed a premium on companies that had the ability to exhibit strong growth in the face of a slowing profit environment. Small and mid cap companies, however, saw greater challenges within this environment, whereas large cap companies with significant international exposure continued to benefit from strong global growth. With this backdrop, rather than focusing on the broader macroeconomic environment, we remained fully engaged in finding companies that we believed possessed sustainable growth potential despite an uncertain market environment. Areas of strength during the period included holdings in the industrials, consumer discretionary, and information technology sectors. Slightly detracting from these solid gains were Fund holdings in the materials and telecommunication services sectors. - -------------------------------------------------------------------------------- SECTOR DISTRIBUTION 3 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary (13%) Consumer Staples (1%) Energy (10%) Financials (7%) Health Care (18%) Industrials (12%) Information Technology (30%) Materials (2%) Telecommunication Services (7%) - -------------------------------------------------------------------------------- 3 Equity holdings and sector distribution are subject to change. Cash and cash equivalents are not reflected in the calculations of equity holdings and sector distribution. 16 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TEN LARGEST EQUITY HOLDINGS 3,4 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- Equinix Incorporated 3.84% - -------------------------------------------------------------------------------- BE Aerospace Incorporated 3.22% - -------------------------------------------------------------------------------- SBA Communications Corporation 2.87% - -------------------------------------------------------------------------------- FMC Corporation 2.37% - -------------------------------------------------------------------------------- Spirit Aerosystems Holdings Incorporated 2.34% - -------------------------------------------------------------------------------- NII Holdings Incorporated 2.29% - -------------------------------------------------------------------------------- Activision Incorporated 2.24% - -------------------------------------------------------------------------------- Assurant Incorporated 2.15% - -------------------------------------------------------------------------------- GameStop Corporation Class A 1.98% - -------------------------------------------------------------------------------- Newfield Exploration Company 1.96% - -------------------------------------------------------------------------------- WE CONTINUED TO INCREASE OUR EXPOSURE TO THE INDUSTRIAL SECTOR AND DECIDED TO HANG ON TO, BUT CLOSELY MONITOR, NII HOLDINGS, INC. A detractor during the period was NII Holdings. After years of exceptional performance, the wireless telecommunications company reported slightly weaker than expected subscriber growth from its Mexico operations. As a result, many investors chose to sell the stock based on the negative headlines. We added to the Fund's holdings after our team collaborated on a "gang tackle" review of NII Holdings and concluded that the issues in Mexico were likely short-term and related primarily to transitory external factors. We acknowledge that short-term risk is heightened, and we are closely monitoring the company. We remain focused on the exciting future potential growth opportunity that we believe NII Holdings has to remain the fastest growing post-paid wireless provider in Latin America. Overall, Foster Wheeler has been a strong performer in the industrial space for the portfolio and fits at the center of what we believe are powerful global growth trends, particularly in oil-and-gas infrastructure and power generation. We added to the position during the period. The firm has long-term contracts with entities such as Saudi Aramco, and we expect it to continue to win large contracts. About 85% of its business is international, including a significant presence in the Middle East, India, and Southeast Asia. We have done a great deal of research on energy companies in recent years and have focused on energy and oilfield services companies because we believe that many are well positioned to benefit from increased capital expenditures. DESPITE THE DIFFICULT CONDITIONS IN THE CONSUMER AND FINANCIAL SECTORS, WE REMAIN CAUTIOUSLY OPTIMISTIC ABOUT 2008. We believe that the global economy will continue to grow at a healthy rate amid strong energy and industrial demand, rising commodity prices, and emerging market development. U.S. companies stand to benefit from these ongoing developments, especially manufacturers of capital goods and technology products, as well as energy service companies. These companies may also benefit from a weaker U.S. dollar. Furthermore, as corporate earnings come under pressure due to a slowing domestic economic environment, we expect that the companies delivering strong earnings growth to be disproportionately rewarded in 2008. Our investment approach is to look at companies one at a time and to - -------------------------------------------------------------------------------- 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. Performance Highlights Wells Fargo Advantage Variable Trust Funds 17 WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED) - -------------------------------------------------------------------------------- invest in the ones that have our highest confidence in their ability to produce sustainable growth. This kind of selective market has historically been favorable for our approach to growth-stock investing. We are convinced that by sticking to our approach of "surrounding the companies" that we invest in, we will have the opportunity to find companies that can deliver significant growth even in a more challenging economic environment. We remain resolutely focused on implementing our process with discipline and consistency. 18 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT DISCOVERY FUND (CONTINUED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN 5 (%) (AS OF DECEMBER 31, 2007)

* Returns for periods of less than one year are not annualized. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. Stock fund values fluctuate in response to the activities of individual companies and general market and economic conditions. The use of derivatives may reduce returns and/or increase volatility. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). This Fund is exposed to foreign investment risk. Consult the Fund's prospectus for additional information on these and other risks. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. - -------------------------------------------------------------------------------- 5 Reflects the gross expense ratio as stated in the May 1, 2007, prospectus and is based on the Fund's previous fiscal year expenses as reported in the Financial Highlights. 6 The investment adviser has contractually committed through April 30, 2009, to waive fees and/or reimburse expenses to the extent necessary to maintain the net operating expense ratio shown. Without these reductions, the Fund's returns would have been lower. 40 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT MONEY MARKET FUND - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE The WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (The Fund) seeks current income, while preserving capital and liquidity. INVESTMENT ADVISER Wells Fargo Funds Management, LLC SUBADVISER Wells Capital Management Incorporated PORTFOLIO MANAGER David D. Sylvester FUND INCEPTION May 19, 1994 PERFORMANCE SUMMARY 12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2007 - -------------------------------------------------------------------------------- FUND 1 YEAR - -------------------------------------------------------------------------------- VT Money Market Fund 4.68% - -------------------------------------------------------------------------------- FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. YIELDS WILL FLUCTUATE. THE FUND'S YIELD FIGURES MORE CLOSELY REFLECT THE CURRENT EARNINGS OF THE FUND THAN THE TOTAL RETURN FIGURES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. - -------------------------------------------------------------------------------- FUND YIELD SUMMARY (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- 7-Day Current Yield 4.36% - -------------------------------------------------------------------------------- 7-Day Effective Yield 4.45% - -------------------------------------------------------------------------------- 30-Day Simple Yield 4.30% - -------------------------------------------------------------------------------- 30-Day Effective Yield 4.39% - -------------------------------------------------------------------------------- Performance Highlights Wells Fargo Advantage Variable Trust Funds 41 WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED) - -------------------------------------------------------------------------------- MANAGER'S DISCUSSION FUND HIGHLIGHTS o The Fund had solid performance in a decreasing rate environment. o A general decline in liquidity raised a caution flag for banks and investors alike. o Liquidity in the Fund was increased as general market conditions deteriorated. THE MOST SIGNIFICANT FACTOR AFFECTING THE FUND IN 2007 WAS THE LIQUIDITY CRISIS THAT HIT THE MONEY MARKET SECTOR MID-SUMMER. A general decline in liquidity gripped short-term credit markets following downgrades by rating agencies of structured mortgage products and the extension of several extendible commercial paper programs. This led the Fed to ease the overnight funding target rate of 5.25% to 4.75% in September. However, short-term LIBOR (London Interbank Offered Rate) rates remained elevated, as banks showed caution in lending to each other. The dichotomy between funding rates and LIBOR (London Interbank Offered Rate) continued until year-end, even as the Fed decreased the target rate by 25 basis points (100 basis points equals 1.00%) at each of its next two FOMC (Federal Open Market Committee) meetings. The difference between the effective overnight federal funds rate and the one-month LIBOR rate averaged 45 basis points between August 1 and December 31, 2007. This was unusual because the relationship between the two rates is usually closer to zero when the Fed is lowering rates. WE MADE SEVERAL STRATEGIC MOVES TO PROTECT THE FUND'S YIELD IN A DECREASING RATE ENVIRONMENT. Because rates were generally stable during the first half of 2007, the portfolio was positioned with fewer very-short-term instruments so that it could take advantage of the positive yield curve. The percentage of the Fund maturing within 14 days was 45% for the first seven months of the year. Liquidity in the Fund was increased as general market conditions deteriorated. Very short term assets were increased by 5% in August and by another 5% in November to ensure liquidity through year-end. - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION 1 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] 2-14 Days (54%) 15-29 Days (28%) 30-59 Days (10%) 60-89 Days (5%) 90-179 Days (3%) - -------------------------------------------------------------------------------- 1 Portfolio allocation and maturity distribution are subject to change. 42 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MATURITY DISTRIBUTION 1 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] 2-14 Days (54%) 15-29 Days (28%) 30-59 Days (10%) 60-89 Days (5%) 90-179 Days (3%) Floating-rate notes remained an integral part of the Fund's portfolio composition with a weighting that ranged between 25% and 30%. During the year, we gradually increased the Fund's holdings in floating-rate notes that reset quarterly and decreased holdings in those that reset monthly. The less-frequent resets help to protect the portfolio yield in a decreasing rate environment. CONDITIONS IN THE FINANCIAL MARKET HAVE SPILLED OVER TO THE POINT OF AFFECTING ECONOMIC GROWTH. We believe that the Fed will continue to lower rates until prospects for growth stabilize, which may take several months. Therefore, while we continue to manage the Fund to maintain liquidity and preservation of principal, we will seek opportunities to modestly extend the Fund's average maturity. Performance Highlights Wells Fargo Advantage Variable Trust Funds 43 WELLS FARGO ADVANTAGE VT MONEY MARKET FUND (CONTINUED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- 6 Months* 1 Year 5 Year 10 Year - -------------------------------------------------------------------------------- VT Money Market Fund 2.31 4.68 2.55 3.26 - -------------------------------------------------------------------------------- * Returns for periods of less than one year are not annualized. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. YIELDS WILL FLUCTUATE. THE FUND'S YIELD FIGURES MORE CLOSELY REFLECT THE CURRENT EARNINGS OF THE FUND THAN THE TOTAL RETURN FIGURES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. 44 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE The WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (the Fund) seeks long-term capital appreciation. INVESTMENT ADVISER Wells Fargo Funds Management, LLC SUBADVISER Wells Capital Management Incorporated PORTFOLIO MANAGERS Ann M. Miletti Richard T. Weiss FUND INCEPTION May 8, 1992 PERFORMANCE SUMMARY 12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2007 - -------------------------------------------------------------------------------- FUND 1-YEAR - -------------------------------------------------------------------------------- VT Opportunity Fund 6.63% - -------------------------------------------------------------------------------- BENCHMARK Russell Midcap Index 1 5.60% - -------------------------------------------------------------------------------- FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. NET AND GROSS EXPENSE RATIOS FOR THE FUND ARE 1.07% AND 1.18%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER. - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTMENT 2 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND Russell Midcap(R) Index 12/31/1997 $10,000 $10,000 1/31/1998 $ 9,986 $ 9,812 2/28/1998 $10,788 $10,579 3/31/1998 $11,420 $11,081 4/30/1998 $11,675 $11,108 5/31/1998 $11,242 $10,764 6/30/1998 $11,342 $10,913 7/31/1998 $10,945 $10,393 8/31/1998 $ 9,067 $ 8,731 9/30/1998 $ 9,683 $ 9,296 10/31/1998 $10,554 $ 9,929 11/30/1998 $10,851 $10,400 12/31/1998 $11,354 $11,009 1/31/1999 $11,720 $10,991 2/28/1999 $11,375 $10,625 3/31/1999 $11,876 $10,958 4/30/1999 $12,854 $11,767 5/31/1999 $12,978 $11,734 6/30/1999 $13,591 $12,147 7/31/1999 $13,662 $11,814 8/31/1999 $13,113 $11,508 9/30/1999 $12,990 $11,103 10/31/1999 $13,744 $11,630 11/30/1999 $14,216 $11,964 12/31/1999 $15,318 $13,017 1/31/2000 $14,864 $12,586 2/29/2000 $15,123 $13,553 3/31/2000 $16,679 $14,330 4/30/2000 $16,361 $13,651 5/31/2000 $16,473 $13,290 6/30/2000 $15,942 $13,683 7/31/2000 $15,754 $13,529 8/31/2000 $16,826 $14,826 9/30/2000 $16,208 $14,615 10/31/2000 $16,308 $14,389 11/30/2000 $15,247 $13,094 12/31/2000 $16,328 $14,091 1/31/2001 $17,324 $14,317 2/28/2001 $16,308 $13,446 3/31/2001 $15,516 $12,612 4/30/2001 $16,669 $13,690 5/31/2001 $16,758 $13,945 6/30/2001 $16,335 $13,814 7/31/2001 $16,103 $13,419 8/31/2001 $15,155 $12,903 9/30/2001 $13,061 $11,347 10/31/2001 $13,839 $11,796 11/30/2001 $15,107 $12,785 12/31/2001 $15,723 $13,298 1/31/2002 $15,562 $13,219 2/28/2002 $15,198 $13,078 3/31/2002 $15,982 $13,863 4/30/2002 $15,133 $13,594 5/31/2002 $15,028 $13,440 6/30/2002 $13,339 $12,539 7/31/2002 $11,819 $11,315 8/31/2002 $11,827 $11,377 9/30/2002 $10,477 $10,328 10/31/2002 $11,148 $10,850 11/30/2002 $12,352 $11,603 12/31/2002 $11,507 $11,146 1/31/2003 $11,158 $10,920 2/28/2003 $11,108 $10,776 3/31/2003 $11,009 $10,882 4/30/2003 $12,013 $11,673 5/31/2003 $13,216 $12,741 6/30/2003 $13,365 $12,870 7/31/2003 $13,796 $13,294 8/31/2003 $14,452 $13,871 9/30/2003 $14,170 $13,697 10/31/2003 $14,974 $14,743 11/30/2003 $15,207 $15,156 12/31/2003 $15,765 $15,611 1/31/2004 $16,429 $16,064 2/29/2004 $16,711 $16,410 3/31/2004 $16,620 $16,414 4/30/2004 $16,387 $15,811 5/31/2004 $16,769 $16,203 6/30/2004 $17,151 $16,651 7/31/2004 $16,587 $15,923 8/31/2004 $16,321 $15,992 9/30/2004 $16,952 $16,511 10/31/2004 $17,226 $16,967 11/30/2004 $18,089 $18,001 12/31/2004 $18,637 $18,767 1/31/2005 $18,098 $18,302 2/28/2005 $18,280 $18,868 3/31/2005 $18,073 $18,719 4/30/2005 $17,467 $18,122 5/31/2005 $18,380 $18,990 6/30/2005 $18,753 $19,501 7/31/2005 $19,882 $20,529 8/31/2005 $19,658 $20,385 9/30/2005 $19,667 $20,656 10/31/2005 $19,152 $20,036 11/30/2005 $19,932 $20,926 12/31/2005 $20,107 $21,142 1/31/2006 $21,036 $22,228 2/28/2006 $20,713 $22,202 3/31/2006 $21,045 $22,752 4/30/2006 $21,609 $22,911 5/31/2006 $20,787 $22,139 6/30/2006 $20,422 $22,166 7/31/2006 $19,990 $21,681 8/31/2006 $20,619 $22,231 9/30/2006 $21,286 $22,634 10/31/2006 $21,802 $23,525 11/30/2006 $22,516 $24,372 12/31/2006 $22,563 $24,370 1/31/2007 $23,071 $25,193 2/28/2007 $22,939 $25,234 3/31/2007 $23,390 $25,436 4/30/2007 $24,141 $26,405 5/31/2007 $25,156 $27,401 6/30/2007 $24,949 $26,783 7/31/2007 $24,137 $25,786 8/31/2007 $24,115 $25,830 9/30/2007 $24,978 $26,680 10/31/2007 $25,272 $27,110 11/30/2007 $24,213 $25,816 12/31/2007 $24,060 $25,734 - -------------------------------------------------------------------------------- 1 The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. You cannot invest directly in an Index. 2 The chart compares the performance of the WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND for the most recent ten years of the Fund with the Russell Midcap Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. Performance Highlights Wells Fargo Advantage Variable Trust Funds 45 WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (CONTINUED) - -------------------------------------------------------------------------------- MANAGER'S DISCUSSION FUND HIGHLIGHTS o The Fund's solid performance outpaced its benchmark. o Holdings in the energy and information technology sectors benefited Fund performance. The Fund's underweight exposure to the financial sector also benefited its relative performance. o Holdings in the industrial sector were the largest detractors from the Fund's relative performance due to its underweight exposure in two areas: construction and engineering and aerospace and defense. THE FUND'S HOLDINGS IN THE ENERGY SECTOR WERE THE TOP CONTRIBUTORS TO PERFORMANCE DURING YEAR, AS THE COMPANIES IN THIS SECTOR CONTINUED TO BENEFIT FROM AN IMBALANCE BETWEEN STRONG DEMAND AND LIMITED SUPPLY. Information technology was another sector that contributed smartly to performance. The Fund's holdings within the technology sector benefited from company-specific dealings rather than a broad secular theme. The Fund's underweight exposure to the financial sector, which had been a headwind the past few years, was also beneficial to relative performance. Even with the recent turmoil in this sector, we have continued to find a limited number of companies trading at attractive discounts to our private market valuations (PMV). (PMV is the value an investor would pay to own the entire company.) The industrial sector was the largest detractor from the Fund's relative performance due to its underweight exposure in two areas: construction and engineering and aerospace and defense, all of which did well during the period. The Fund's underweight exposure to the utility sector was also a headwind for the portfolio because the sector continued to benefit from relatively low interest rates. Media was another area of relative underperformance for the Fund, as concerns about the macro environment and competitive dynamics in the industry weighed on some of the Fund's holdings. - -------------------------------------------------------------------------------- TEN LARGEST EQUITY HOLDINGS 3,4 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- Transocean Incorporated 17.01% - -------------------------------------------------------------------------------- Weatherford International Limited 15.82% - -------------------------------------------------------------------------------- Toronto-Dominion Bank 12.23% - -------------------------------------------------------------------------------- Praxair Incorporated 11.96% - -------------------------------------------------------------------------------- Waters Corporation 9.36% - -------------------------------------------------------------------------------- Accenture Limited Class A 6.80% - -------------------------------------------------------------------------------- MEMC Electronic Materials Incorporated 6.79% - -------------------------------------------------------------------------------- Red Hat Incorporated 6.74% - -------------------------------------------------------------------------------- Chesapeake Energy Corporation 6.66% - -------------------------------------------------------------------------------- Stapeles Incorporated 6.63% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 Equity holdings and sector distribution are subject to change. Cash and cash equivalents are not reflected in the calculations of equity holdings and sector distribution. 4 The ten largest equity holdings are calculated based on the market value of the securities divided by total market value of the portfolio. 46 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECTOR DISTRIBUTION 3 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Information Technology (22%) Materials (6%) Consumer Discretionary (21%) Consumer Staples (3%) Health Care (13%) Financials (13%) Energy (12%) Industrials (10%) OUR METHODOLOGY INCLUDES BUYING STOCKS THAT ARE SELLING AT A DISCOUNT TO THEIR INTRINSIC PRIVATE MARKET VALUE AND SELLING STOCKS THAT APPROACH THEIR PRIVATE MARKET VALUE. This discipline allows us to be patient with stocks that are out of favor with the market, an approach that seems to be at odds with investor sentiment because the recent volatility in the market seems to have increased investor focus on the short term rather than the long term. Consequently, we have continued to trim exposure from many of the Fund's energy holdings, as these holdings continued to outperform while becoming a more noticeable piece of the market. We also decreased the Fund's exposure to the technology sector, as a few of our holdings reached what we believed to be full valuation. And, although the consumer staples sector is still a relatively small part of the portfolio, we did increase the Fund's number of holdings in it. The remaining sector weightings were fairly consistent throughout the 12-month period. The Fund was overweighted in the technology, consumer discretionary, and energy sectors while being underweighted in the financial, utility, and industrial sectors. EVEN WITH RECENT MARKET TURBULENCE, EQUITY MARKETS HAVE PRODUCED RELATIVELY IMPRESSIVE RESULTS DURING THE PAST 12 MONTHS. A combination of relatively low borrowing costs, better-than-expected economic data, and, thus far, relatively benign inflation data have been positive for the market. As we get further into the cycle, the investment landscape and investor expectations appear to be more uncertain, and many of the recent secular tailwinds may be reversing course. Companies that may have been supported by an easier credit environment or overly optimistic growth expectations will likely face an increased amount of pressure until expectations are fully reset. Our fundamental, bottom-up process of identifying companies that have solid business models and strong management teams--and that trade at a discount to our perceived PMV--will continue to help guide us in our decision-making process. Performance Highlights Wells Fargo Advantage Variable Trust Funds 47 WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND (CONTINUED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN 5 (%) (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- Expense Ratio 6 Months* 1 Year 5 Year 10 Year Gross 6 Net 7 - -------------------------------------------------------------------------------- VT Opportunity Fund (SM) (3.56) 6.63 15.90 9.18 1.18% 1.07% - -------------------------------------------------------------------------------- BENCHMARKS Russell Midcap Index 1 (3.92) 5.60 18.21 9.91 - -------------------------------------------------------------------------------- * Returns for periods of less than one year are not annualized. FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. Stock fund values fluctuate in response to the activities of individual companies and general market and economic conditions. Smaller company stocks tend to be more volatile and less liquid than those of larger companies. The use of derivatives may reduce returns and/or increase volatility. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). This Fund is exposed to foreign investment risk. Consult the Fund's prospectus for additional information on these and other risks. PLEASE REFER TO THE PROSPECTUS PROVIDED BY YOUR PARTICIPATING INSURANCE COMPANY FOR DETAILED INFORMATION DESCRIBING THE SEPARATE ACCOUNTS FOR INFORMATION REGARDING SURRENDER CHARGES, MORTALITY AND EXPENSE RISK FEES AND OTHER CHARGES THAT MAY BE ASSESSED BY THE PARTICIPATING INSURANCE COMPANIES. - -------------------------------------------------------------------------------- 5 Performance shown prior to April 11, 2005 for the Fund reflects the performance of the Investor Class shares of the Strong Opportunity Fund II. 6 Reflects the gross expense ratio as stated in the May 1, 2007, prospectus and is based on the Fund's previous fiscal year expenses as reported in the Financial Highlights. 7 The investment adviser has contractually committed through April 30, 2009, to waive fees and/or reimburse expenses to the extent necessary to maintain the net operating expense ratio shown. Without these reductions, the Fund's returns would have been lower. 48 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE THE WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (The Fund) Seeks long-term capital appreciation. INVESTMENT ADVISER Wells Fargo Funds Management, LLC SUBADVISER Wells Capital Management Incorporated PORTFOLIO MANAGERS Jerome "Cam" Philpott, CFA Stuart Roberts FUND INCEPTION May 1, 1995 PERFORMANCE SUMMARY 12-MONTH TOTAL RETURN AS OF DECEMBER 31, 2007 - -------------------------------------------------------------------------------- FUND 1 YEAR - -------------------------------------------------------------------------------- VT Small Cap Growth Fund 13.81% - -------------------------------------------------------------------------------- BENCHMARK Russell 2000 Growth Index 1 7.06% - -------------------------------------------------------------------------------- FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER MAY PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. CURRENT MONTH-END PERFORMANCE IS AVAILABLE BY CALLING 1-866-765-0778. PERFORMANCE FIGURES OF THE FUND DO NOT REFLECT FEES CHARGED PURSUANT TO THE TERMS OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS. NET AND GROSS EXPENSE RATIOS FOR THE FUND ARE 1.20% AND 1.23%, RESPECTIVELY. THE INVESTMENT ADVISER HAS CONTRACTUALLY COMMITTED THROUGH APRIL 30, 2009 TO WAIVE FEES AND/OR REIMBURSE EXPENSES TO THE EXTENT NECESSARY TO MAINTAIN THE NET OPERATING EXPENSE RATIO SHOWN. WITHOUT THESE REDUCTIONS, THE FUND'S RETURNS WOULD HAVE BEEN LOWER. - -------------------------------------------------------------------------------- GROWTH OF $10,000 INVESTMENT 2 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] WELLS FARGO ADVANTAGE VT SMALL Russell 2000(R) CAP GROWTH FUND Growth Index 12/31/1997 $10,000 $10,000 1/31/1998 $ 9,765 $ 9,867 2/28/1998 $10,690 $10,738 3/31/1998 $10,987 $11,188 4/30/1998 $11,011 $11,257 5/31/1998 $10,212 $10,439 6/30/1998 $10,298 $10,546 7/31/1998 $ 9,201 $ 9,665 8/31/1998 $ 7,061 $ 7,434 9/30/1998 $ 7,422 $ 8,188 10/31/1998 $ 7,735 $ 8,615 11/30/1998 $ 8,190 $ 9,283 12/31/1998 $ 8,553 $10,123 1/31/1999 $ 8,285 $10,578 2/28/1999 $ 7,507 $ 9,611 3/31/1999 $ 7,342 $ 9,953 4/30/1999 $ 7,759 $10,832 5/31/1999 $ 7,743 $10,849 6/30/1999 $ 8,144 $11,420 7/31/1999 $ 8,136 $11,067 8/31/1999 $ 8,191 $10,653 9/30/1999 $ 8,505 $10,859 10/31/1999 $ 9,755 $11,137 11/30/1999 $11,390 $12,315 12/31/1999 $14,220 $14,485 1/31/2000 $14,535 $14,350 2/29/2000 $18,111 $17,689 3/31/2000 $15,777 $15,830 4/30/2000 $13,851 $14,231 5/31/2000 $12,381 $12,985 6/30/2000 $15,376 $14,663 7/31/2000 $14,456 $13,406 8/31/2000 $16,355 $14,816 9/30/2000 $15,992 $14,080 10/31/2000 $13,772 $12,937 11/30/2000 $10,292 $10,588 12/31/2000 $11,009 $11,236 1/31/2001 $11,137 $12,146 2/28/2001 $ 8,846 $10,481 3/31/2001 $ 7,562 $ 9,528 4/30/2001 $ 8,803 $10,694 5/31/2001 $ 8,814 $10,942 6/30/2001 $ 9,026 $11,240 7/31/2001 $ 8,464 $10,282 8/31/2001 $ 7,796 $ 9,639 9/30/2001 $ 6,438 $ 8,084 10/31/2001 $ 7,191 $ 8,862 11/30/2001 $ 7,743 $ 9,602 12/31/2001 $ 8,326 $10,199 1/31/2002 $ 7,912 $ 9,836 2/28/2002 $ 7,212 $ 9,200 3/31/2002 $ 7,827 $ 9,999 4/30/2002 $ 7,467 $ 9,783 5/31/2002 $ 7,021 $ 9,211 6/30/2002 $ 6,417 $ 8,430 7/31/2002 $ 5,208 $ 7,134 8/31/2002 $ 5,186 $ 7,131 9/30/2002 $ 4,762 $ 6,616 10/31/2002 $ 5,133 $ 6,951 11/30/2002 $ 5,515 $ 7,640 12/31/2002 $ 5,144 $ 7,113 1/31/2003 $ 4,932 $ 6,920 2/28/2003 $ 4,836 $ 6,735 3/31/2003 $ 4,858 $ 6,837 4/30/2003 $ 5,356 $ 7,484 5/31/2003 $ 5,802 $ 8,327 6/30/2003 $ 6,014 $ 8,488 7/31/2003 $ 6,300 $ 9,130 8/31/2003 $ 6,597 $ 9,620 9/30/2003 $ 6,396 $ 9,376 10/31/2003 $ 7,032 $10,187 11/30/2003 $ 7,255 $10,519 12/31/2003 $ 7,318 $10,566 1/31/2004 $ 7,732 $11,121 2/29/2004 $ 7,743 $11,103 3/31/2004 $ 7,955 $11,155 4/30/2004 $ 7,583 $10,595 5/31/2004 $ 7,870 $10,806 6/30/2004 $ 7,986 $11,166 7/31/2004 $ 7,085 $10,164 8/31/2004 $ 6,788 $ 9,945 9/30/2004 $ 7,233 $10,495 10/31/2004 $ 7,456 $10,750 11/30/2004 $ 7,806 $11,658 12/31/2004 $ 8,326 $12,077 1/31/2005 $ 7,965 $11,533 2/28/2005 $ 7,849 $11,691 3/31/2005 $ 7,690 $11,253 4/30/2005 $ 7,255 $10,537 5/31/2005 $ 7,721 $11,280 6/30/2005 $ 8,061 $11,644 7/31/2005 $ 8,612 $12,458 8/31/2005 $ 8,538 $12,283 9/30/2005 $ 8,644 $12,380 10/31/2005 $ 8,411 $11,923 11/30/2005 $ 8,973 $12,598 12/31/2005 $ 8,846 $12,579 1/31/2006 $ 9,514 $13,792 2/28/2006 $ 9,779 $13,719 3/31/2006 $10,352 $14,385 4/30/2006 $10,606 $14,344 5/31/2006 $10,023 $13,334 6/30/2006 $ 9,906 $13,342 7/31/2006 $ 9,354 $12,649 8/31/2006 $ 9,703 $13,020 9/30/2006 $ 9,746 $13,108 10/31/2006 $10,411 $13,957 11/30/2006 $10,760 $14,291 12/31/2006 $10,858 $14,257 1/31/2007 $11,120 $14,523 2/28/2007 $11,251 $14,477 3/31/2007 $11,382 $14,611 4/30/2007 $11,545 $14,994 5/31/2007 $12,341 $15,678 6/30/2007 $12,581 $15,589 7/31/2007 $12,052 $14,780 8/31/2007 $12,307 $15,152 9/30/2007 $12,753 $15,592 10/31/2007 $13,378 $16,294 11/30/2007 $12,294 $15,168 12/31/2007 $12,358 $15,264 - -------------------------------------------------------------------------------- 1 The Russell 2000 Growth Index measures the performance shown of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. You cannot invest directly in an Index. 2 The chart compares the performance of the WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND for the most recent ten years with the Russell 2000 Growth Index. The chart assumes a hypothetical $10,000 investment and reflects all operating expenses of the Fund. Performance Highlights Wells Fargo Advantage Variable Trust Funds 49 WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED) - -------------------------------------------------------------------------------- MANAGER'S DISCUSSION FUND HIGHLIGHTS o The Fund's solid performance significantly outpaced its benchmark. o Holdings in the information technology sector outperformed due to strong stock selection and an overweight position. o The Fund's underweight position in energy hindered relative performance. THE THREE TOP-PERFORMING SECTORS FOR THE FUND WERE INFORMATION TECHNOLOGY, CONSUMER DISCRETIONARY, AND FINANCIALS. Fund holdings in the information technology sector outperformed due to strong stock selection and an overweight position. Specifically, aQuantive, ValueClick, and Taleo were top contributors in information technology. Digital marketing company aQuantive was the second best performer in the Fund for the 12-month period. We have previously expressed optimism in regards to the growth in Internet advertising, and aQuantive's 42% organic growth rate in revenues in early 2007 clearly illustrated the company's success in that market. Following aQuantive's first-quarter report, Microsoft acquired the company at an astonishing 85% premium. We sold the entire position following that news. ValueClick, an online advertising agency, was another top IT performer. The company reported revenue growth significantly above analysts' estimates, and the shares appreciated sharply. We sold a considerable portion of this position into the upward move. In the consumer discretionary sector, many holdings contributed to excellent absolute and relative performance. Several of the better performing stocks included Priceline.com, an online travel company, VistaPrint Limited, an online supplier of graphic design services, and Shutterfly, an online photography company. Priceline.com was the single best performer in the Fund. It had strong stock performance as the result of accelerated growth in international markets and stable growth in the United States. Shutterfly was also a top contributor as the company's efforts to build revenues outside the holiday season are bearing fruit, and the company recently signed a distribution agreement with Target Stores that enables customers to retrieve their online orders at any local Target store. - -------------------------------------------------------------------------------- TEN LARGEST EQUITY HOLDINGS 3,4 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- FTI Consulting Incorporated 13.12% - -------------------------------------------------------------------------------- VistaPrint Limited 12.76% - -------------------------------------------------------------------------------- SkillSoft plc ADR 10.05% - -------------------------------------------------------------------------------- inVentive Health Incorporated 9.99% - -------------------------------------------------------------------------------- Resources Connection Incorporated 9.50% - -------------------------------------------------------------------------------- Shutterfly Incorporated 9.49% - -------------------------------------------------------------------------------- Sciele Pharma Incorporated 9.26% - -------------------------------------------------------------------------------- GSI Commerce Incorporated 8.92% - -------------------------------------------------------------------------------- Microsemi Corporation 8.69% - -------------------------------------------------------------------------------- Sykes Enterprises Incorporated 8.22% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 Equity holdings and sector distribution and are subject to change. Cash and cash equivalents are not reflected in the calculations of equity holdings and sector distribution. 4 The ten largest equity holdings are calculated based on the market value of the securities divided by total market value of the fund. 50 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECTOR DISTRIBUTION 3 (AS OF DECEMBER 31, 2007) - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Consumer Discretionary (13%) Consumer Staples (1%) Energy (2%) Financials (7%) Health Care (19%) Industrials (25%) Information Technology (30%) Telecommunication Services (3%) Financial holdings outperformed due to good stock selection and an underweight position compared to the benchmark. The Fund did not own companies with exposure to the subprime mortgage market, and the financial holdings we held were different from those contained in the benchmark. Among the better performing stocks were Tower Group, a specialized property and casualty insurance company, and FCStone Group, a commodity exchange trading company. Health care and energy were positive absolute performers, yet they lagged the benchmark for the period. Broadly speaking, we had several solid health care stocks that performed well, but negative returns from a few holdings hurt the Fund's overall performance in this group. Examples of underperformers were DJO, the Medicines Company, and Sciele Pharma. Energy stocks continued to perform well for much of the period. Even though the Fund's underweight position in energy hindered relative performance, Petrohawk Energy Corporation--a company engaged in the acquisition, production, exploration, and development of oil and gas--was a top contributor. WE TOOK PROFITS FROM SPECIFIC STOCKS IN CONSUMER STAPLES, HEALTH CARE, AND ENERGY AFTER THEY HAD REACHED OR EXCEEDED OUR PRICE TARGETS FOR THEM. The most significant changes included adding to the Fund's holdings in information technology, financials, industrials, and consumer staples because the sectors contained strong individual stocks. The Fund's movement out of consumer discretionary, health care, and energy was mainly the result of taking profits from specific stocks as these holdings reached or exceeded our price targets for them. WE ARE OPTIMISTIC GIVEN THE CURRENT ATTRACTIVE VALUATIONS COMBINED WITH POSITIVE FUNDAMENTALS. The first half of the year may be challenging as investor skepticism regarding economic conditions will probably take time to dissipate. Market pundits currently anticipate that the Fed will take further action to ease the credit crunch, and those moves could possibly shorten the time required to repair investor sentiment. Nevertheless, we anticipate a rather choppy pattern for equities in the near term. Performance Highlights Wells Fargo Advantage Variable Trust Funds 51 WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED) - -------------------------------------------------------------------------------- Looking to the second half of 2008, we are optimistic for several reasons. First, overall, equity valuations are attractive, and it appears that a lot of investor anxiety is currently discounted into existing prices. If we compare this period to periods earlier in the decade, valuations were historically high entering the previous slowdown. Second, our fundamental work with our portfolio holdings suggests that earnings growth is more promising than is broadly perceived. Another interesting point, and differentiating factor from earlier in this decade, is the high amount of insider buying that we have seen in the Fund's portfolio holdings. We would also point out that as we move into the second half of the 2008, year-over-year earnings comparisons become easier to assess. Finally, because the effect of interest rate cuts is lagged, we expect the benefits from the initial interest rate cuts in the second half of 2007 to help economic growth in the second half of 2008. 52 Wells Fargo Advantage Variable Trust Funds Performance Highlights WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (CONTINUED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 2007)

Fund Expenses (Unaudited) Wells Fargo Advantage Variable Trust Funds 65

- -------------------------------------------------------------------------------- * Expenses are equal to the Fund's annualized expense 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). 66 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 67 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

68 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 69 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

70 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 71 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

72 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 73 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

74 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 75 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

76 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 77 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

78 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 79 VT ASSET ALLOCATION FUND - --------------------------------------------------------------------------------

80 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 - -------------------------------------------------------------------------------- + Non-income earning securities. << All or a portion of this security is on loan. ### Long-term security of an affiliate of the Fund with a cost of $949,409. +++ Short-term security of an affiliate of the Fund with a cost of $8,059,090. +/- Variable rate investments. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. ~ 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 bond. Interest rate presented is yield to maturity. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. %% Securities issued on a when-issued (TBA) basis. # Security pledged as collateral for futures transactions. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. * Cost for federal income tax purposes is $333,119,295 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 45,123,392 Gross unrealized depreciation (17,849,323) ------------ Net unrealized appreciation (depreciation) $ 27,274,069 The accompanying notes are an integral part of these financial statements. Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 81 VT C&B LARGE CAP VALUE FUND - --------------------------------------------------------------------------------

82 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT C&B LARGE CAP VALUE FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 83 VT C&B LARGE CAP VALUE FUND - --------------------------------------------------------------------------------

84 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT C&B LARGE CAP VALUE FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + Non-income earning securities. << All or a portion of this security is on loan. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. +/- Variable rate investments. ~ This 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. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. +++ Security of an affiliate of the Fund with a cost of $268,536. * Cost for federal income tax purposes is $30,872,819 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 3,919,448 Gross unrealized depreciation (2,723,970) ----------- Net unrealized appreciation (depreciation) $ 1,195,478 The accompanying notes are an integral part of these financial statements. Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 85 VT DISCOVERY FUND - --------------------------------------------------------------------------------

86 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT DISCOVERY FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 87 VT DISCOVERY FUND - --------------------------------------------------------------------------------

88 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT DISCOVERY FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 89 VT DISCOVERY FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + Non-income earning securities. << All or a portion of this security is on loan. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. +/- Variable rate investments. +++ Security of an affiliate of the Fund with a cost of $5,993,079. ~ 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. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. * Cost for federal income tax purposes is $257,603,002 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 36,438,042 Gross unrealized depreciation (7,284,024) ------------ Net unrealized appreciation (depreciation) $ 29,154,018 The accompanying notes are an integral part of these financial statements. 90 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT EQUITY INCOME FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 91 VT EQUITY INCOME FUND - --------------------------------------------------------------------------------

92 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT EQUITY INCOME FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 93 VT EQUITY INCOME FUND - --------------------------------------------------------------------------------

94 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT EQUITY INCOME FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + Non-income earning securities. << All or a portion of this security is on loan. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. +/- Variable rate investments. ~ This 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. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. +++ Security of an affiliate of the Fund with a cost of $1,300,460. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. * Cost for federal income tax purposes is $82,007,839 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 22,113,795 Gross unrealized depreciation (4,187,562) ------------ Net unrealized appreciation (depreciation) $ 17,926,233 The accompanying notes are an integral part of these financial statements. Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 95 VT INTERNATIONAL CORE FUND - --------------------------------------------------------------------------------

96 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT INTERNATIONAL CORE FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 97 VT INTERNATIONAL CORE FUND - --------------------------------------------------------------------------------

98 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT INTERNATIONAL CORE FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 99 VT INTERNATIONAL CORE FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + Non-income earning securities. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. +/- Variable rate investments. ~ This Wells Fargo Advantage Fund invests cash balances that it retains for liquidity purposes in a Wells Fargo Advantage Money Market Fund. The Fund does not pay an investment advisory fee for such investments. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. +++ Security of an affiliate of the Fund with a cost of $715,845. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. * Cost for federal income tax purposes is $36,980,699 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 9,488,063 Gross unrealized depreciation (2,064,583) ----------- Net unrealized appreciation (depreciation) $ 7,423,480 The accompanying notes are an integral part of these financial statements. 100 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT LARGE COMPANY CORE FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 101 VT LARGE COMPANY CORE FUND - --------------------------------------------------------------------------------

102 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT LARGE COMPANY CORE FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 103 VT LARGE COMPANY CORE FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- << All or a portion of this security is on loan. + Non-income earning securities. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. +/- Variable rate investments. ~ This Wells Fargo Advantage Fund invests cash balances that it retains for liquidity purposes in a Wells Fargo Advantage Money Market Fund. The Fund does not pay an investment advisory fee for such investments. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. +++ Security of an affiliate of the Fund with a cost of $140,645. * Cost for federal income tax purposes is $20,340,991 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 1,675,098 Gross unrealized depreciation (1,460,982) ------------ Net unrealized appreciation (depreciation) $ 214,116 The accompanying notes are an integral part of these financial statements. 104 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT LARGE COMPANY GROWTH FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 105 VT LARGE COMPANY GROWTH FUND - --------------------------------------------------------------------------------

106 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT LARGE COMPANY GROWTH FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 107 VT LARGE COMPANY GROWTH FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + Non-income earning securities. << All or a portion of this security is on loan. (See Note 2) ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. +/- Variable rate investments. ~ This 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 $816,369. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. * Cost for federal income tax purposes is $85,821,143 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $20,758,264 Gross unrealized depreciation (6,519,567) ----------- Net unrealized appreciation (depreciation) $14,238,697 The accompanying notes are an integral part of these financial statements. 108 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT MONEY MARKET FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 109 VT MONEY MARKET FUND - --------------------------------------------------------------------------------

110 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT MONEY MARKET FUND - --------------------------------------------------------------------------------

112 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT OPPORTUNITY FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 113 VT OPPORTUNITY FUND - --------------------------------------------------------------------------------

114 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT OPPORTUNITY FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 115 VT OPPORTUNITY FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- << All or a portion of this security is on loan. + Non-income earning securities. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. ^Zero coupon bond. Interest rate presented is yield to maturity. (J) The holder of an exchangeable equity-linked note will receive, at the note's maturity, shares of the referenced equity based on the final index value of the equity (or the cash equivalent). The index value and maturity date are both defined in the terms of the note. +/- Variable rate investments. ~ This Wells Fargo Advantage Fund invests cash balances that it retains for liquidity purposes in a Wells Fargo Advantage Money Market Fund. The Fund does not pay an investment advisory fee for such investments. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. +++ Security of an affiliate of the Fund with a cost of $77,768,956. * Cost for federal income tax purposes is $756,547,627 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 157,505,892 Gross unrealized depreciation (62,977,296) ------------- Net unrealized appreciation (depreciation) $ 94,528,596 The accompanying notes are an integral part of these financial statements. 116 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT SMALL CAP GROWTH FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 117 VT SMALL CAP GROWTH FUND - --------------------------------------------------------------------------------

118 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT SMALL CAP GROWTH FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 119 VT SMALL CAP GROWTH FUND - --------------------------------------------------------------------------------

120 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT SMALL CAP GROWTH FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + Non-income earning securities. << All or a portion of this security is on loan. (See Note 2) +/- Variable rate investments. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. ~ 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. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. +++ Security of an affiliate of the Fund with a cost of $10,060,650. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. * Cost for federal income tax purposes is $305,999,372 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 19,770,601 Gross unrealized depreciation (22,183,199) ------------ Net unrealized appreciation (depreciation) $ (2,412,598) The accompanying notes are an integral part of these financial statements. Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 121 VT SMALL/MID CAP VALUE FUND - --------------------------------------------------------------------------------

122 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT SMALL/MID CAP VALUE FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 123 VT SMALL/MID CAP VALUE FUND - --------------------------------------------------------------------------------

124 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT SMALL/MID CAP VALUE FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- + 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 $278,087. * Cost for federal income tax purposes is $18,247,793 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 2,948,971 Gross unrealized depreciation (3,543,616) ------------ Net unrealized appreciation (depreciation) $ (594,645) The accompanying notes are an integral part of these financial statements. Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 125 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

126 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 127 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

128 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 129 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

130 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 131 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

132 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 133 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

134 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 135 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

136 Wells Fargo Advantage Variable Trust Funds Portfolio of Investments--December 31, 2007 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

Portfolio of Investments--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 137 VT TOTAL RETURN BOND FUND - --------------------------------------------------------------------------------

- -------------------------------------------------------------------------------- +/- Variable rate investments. ++ Securities that may be resold to "qualified institutional buyers" under rule 144A or securities offered pursuant to section 4(2) of the Securities Act of 1933, as amended. @ Foreign bond principal is denominated in US dollars. (E) The security is a private placement with no stated maturity date. (K) Subsequent to December 31, 2007, this security has been classified as a defaulted security. (A) Security fair valued in accordance with the procedures approved by the Board of Trustees. (I) Illiquid security. << All or a portion of this security is on loan. (See Note 2) %% Securities issued on a when-issued (TBA) basis. ~ 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 $1,512,796. ^^ This security is currently in default with regards to scheduled interest and/or principal payments. * Cost for federal income tax purposes is $160,327,407 and net unrealized appreciation (depreciation) consists of: Gross unrealized appreciation $ 1,934,735 Gross unrealized depreciation (465,259) ----------- Net unrealized appreciation (depreciation) $ 1,469,476 The accompanying notes are an integral part of these financial statements. 138 Wells Fargo Advantage Variable Trust Funds Statements of Assets and Liabilities--December 31, 2007

- -------------------------------------------------------------------------------- 1 Each Fund has an unlimited number of authorized shares. The accompanying notes are an integral part of these financial statements. Statements of Assets and Liabilities--December 31, 2007 Wells Fargo Advantage Variable Trust Funds 139

140 Wells Fargo Advantage Variable Trust Funds Statements of Assets and Liabilities--December 31, 2007

- -------------------------------------------------------------------------------- 1 Each Fund has an unlimited number of authorized shares. The accompanying notes are an integral part of these financial statements. THIS PAGE IS INTENTIONALLY LEFT BLANK. 142 Wells Fargo Advantage Variable Trust Funds Statements of Operations--For the Year Ended December 31, 2007

- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. Statements of Operations--For the Year Ended December 31, 2007 Wells Fargo Advantage Variable Trust Funds 143

144 Wells Fargo Advantage Variable Trust Funds Statements of Operations--For the Year Ended December 31, 2007

- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. THIS PAGE IS INTENTIONALLY LEFT BLANK. 146 Wells Fargo Advantage Variable Trust Funds Statements of Changes in Net Assets

- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. Statements of Changes in Net Assets Wells Fargo Advantage Variable Trust Funds 147

148 Wells Fargo Advantage Variable Trust Funds Statements of Changes in Net Assets

- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. Statements of Changes in Net Assets Wells Fargo Advantage Variable Trust Funds 149

150 Wells Fargo Advantage Variable Trust Funds Statements of Changes in Net Assets

- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. Statements of Changes in Net Assets Wells Fargo Advantage Variable Trust Funds 151

152 Wells Fargo Advantage Variable Trust Funds 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 These ratios do not include expenses from the Underlying Funds. 3 Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. 4 Portfolio turnover ratio excluding TBAs is 337%. 5 Portfolio turnover ratio excluding TBAs is 309%. 6 Calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. Portfolio turnover rates presented for periods of less than one year are not annualized. The accompanying notes are an integral part of these financial statements. Financial Highlights Wells Fargo Advantage Variable Trust Funds 153

154 Wells Fargo Advantage Variable Trust Funds Financial Highlights

- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. Financial Highlights Wells Fargo Advantage Variable Trust Funds 155

156 Wells Fargo Advantage Variable Trust Funds Notes to Financial Statements 1. ORGANIZATION Wells Fargo Variable Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. As of December 31, 2007, the Trust consists of 12 separate funds (each, a "Fund", collectively, the "Funds"). These financial statements present the VT Asset Allocation Fund, VT C&B Large Cap Value Fund (formerly named the Equity Value Fund), VT Discovery Fund, VT Equity Income Fund, VT International Core Fund (formerly named the International Equity Fund), VT Large Company Core Fund (formerly named the Growth Fund), VT Large Company Growth Fund, VT Money Market Fund, VT Opportunity Fund, VT Small Cap Growth Fund, VT Small/Mid Cap Value Fund (formerly named the Multi Cap Value Fund), and VT Total Return Bond Fund. The Funds are available exclusively as pooled funding vehicles for certain participating life insurance companies offering variable annuity contracts and variable life insurance policies. Each Fund is a diversified series of the Trust. 2. SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Trust, are in conformity with accounting principles generally accepted in the United States of America ("GAAP") for investment companies. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Under the Trust's organizational documents, their officers and directors are indemnified against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust's maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. SECURITY VALUATION Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price. Securities listed on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued at the NASDAQ Official Closing Price ("NOCP"), and if no NOCP is available, then at the last reported sales price. If no sale price is shown on the NASDAQ, the bid price will be used. In the absence of any sale of securities listed on the NASDAQ, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, the price will be deemed "stale" and the valuations will be determined in accordance with the Funds' Fair Valuation Procedures. Certain fixed income securities with maturities exceeding 60 days are valued by using a pricing service approved by the Trust's Board of Trustees. The service uses market prices as quoted by an independent pricing service or by dealers in these securities when, in the service's judgment, these prices are readily available and are representative of the securities' market values. For some securities, such prices are not readily available. These securities will generally be fair valued using methods which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, indications as to values from dealers in securities, trading characteristics, and general market conditions. Securities denominated in foreign currencies are translated into U.S. dollars using the closing rates of exchange in effect on the day of valuation. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore may not fully reflect trading or events that occur after the close of the principal exchange in which the foreign investments are traded but before the close of the New York Stock Exchange. If such trading or events are expected to materially affect the value of the investments, then those investments are fair valued following procedures approved by the Board of Trustees. These procedures take into account multiple factors including movements in U.S. securities markets after foreign exchanges close. Depending on market activity, such fair valuations may be frequent. In light of the judgment Notes to Financial Statements Wells Fargo Advantage Variable Trust Funds 157 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 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. Debt obligations may be placed on non-accrual status and related investment income may be reduced by ceasing current accruals and writing off receivables when the collection of all or a portion of income has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured. Dividend income is recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed of the ex-dividend date. Dividend income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured. FOREIGN CURRENCY TRANSLATION The accounting records are maintained in U.S. dollars. Assets, including investment securities, and liabilities denominated in foreign currency are translated into U.S. dollars at the prevailing rates of exchange at the date of valuation. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities, at fiscal period-end, resulting from changes in exchange rates. The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities at fiscal period-end are not separately presented. Such changes are recorded with net realized and unrealized gain from investments. Gains and losses from certain foreign currency transactions are treated as ordinary income for U.S. federal income tax purposes. DISTRIBUTIONS TO SHAREHOLDERS Net investment income, if any, for the VT Discovery, VT International Core, VT Large Company Core, VT Large Company Growth, VT Opportunity, VT Small Cap Growth and VT Small/Mid Cap Value Funds is declared and distributed to shareholders annually. Net investment income, if any, for the VT Asset Allocation, VT C&B Large Value and VT Equity Income Funds is declared and distributed quarterly. Net investment income, if any, for the VT Money Market and VT Total Return Bond Funds is declared daily and distributed monthly. Distributions to shareholders from net realized capital gains, if any, are declared and distributed at least annually. 158 Wells Fargo Advantage Variable Trust Funds Notes to Financial Statements Distributions are based on amounts calculated in accordance with the applicable federal income tax regulations, which may differ from GAAP. The timing and character of distributions made during the period from net investment income or net realized gains may also differ from their ultimate characterization for federal income tax purposes. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment. Temporary differences do not require reclassifications. At December 31, 2007, as result of permanent book-to-tax differences, the following reclassification adjustments were made on the Statements of Assets and Liabilities:

FEDERAL INCOME TAXES Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund of the Trust to continue to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code (the "Code"), and to make distributions of substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly, no provision for federal income taxes was required at December 31, 2007. Management has analyzed the Fund's tax positions taken on federal income tax returns for all open tax years and has concluded that as of December 31, 2007, no provision for income tax would be required in the Fund's financial statements. The Fund's federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue. At December 31, 2007, the Fund's net capital loss carryforwards, which are available to offset future net realized capital gains, were: - --------------------------------------------------------------------------- CAPITAL LOSS FUND EXPIRATION YEAR CARRYFORWARDS - --------------------------------------------------------------------------- VT C&B LARGE CAP VALUE FUND 2012 $ 78,234 - --------------------------------------------------------------------------- VT DISCOVERY FUND 2008 52,572,927 2009 94,527,114 - --------------------------------------------------------------------------- VT LARGE COMPANY CORE FUND 2010 11,186,858 2011 1,781,980 - --------------------------------------------------------------------------- VT LARGE COMPANY GROWTH FUND 2009 4,034,254 2010 14,881,364 2011 2,858,910 2012 1,003,450 2013 2,022,267 2014 1,615,063 - --------------------------------------------------------------------------- VT TOTAL RETURN BOND FUND 2013 308,309 2014 1,148,359 - --------------------------------------------------------------------------- Notes to Financial Statements Wells Fargo Advantage Variable Trust Funds 159 The Funds had deferred post-October capital losses occurring subsequent to December 31, 2007. For tax purposes, such losses were treated as having occurred on January 1, 2008. As of December 31, 2007, deferred post-October capital losses were as follows: - -------------------------------------------------------------------------------- DEFERRED POST-OCTOBER FUND CAPITAL LOSS - -------------------------------------------------------------------------------- VT ASSET ALLOCATION FUND $ 1,781,112 - -------------------------------------------------------------------------------- VT DISCOVERY FUND 200,761 - -------------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY CONTRACTS The Funds may enter into forward foreign currency contracts to protect against a possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar, or between foreign currencies. A forward contract is an agreement between two counterparties for future delivery or receipt of currency at a specified price. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in currency values. Realized gains or losses are recognized when the transaction is completed. Contracts which have been offset but have not reached their settlement date are included in unrealized gains and losses. At December 31, 2007, the Funds had no open forward foreign currency contracts. FUTURES CONTRACTS The Funds may purchase futures contracts to gain exposure to market changes, which may be more efficient or cost effective than actually buying the securities. A futures contract is an agreement between parties to buy or sell a security at a set price on a future date. Upon entering into such a contract, a Fund is required to pledge to the broker an amount of cash, U.S. Government obligations or other high-quality debt securities equal to the minimum "initial margin" requirements of the exchange on which the futures contract is traded. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as "variation margin" and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Pursuant to regulations and/or published positions of the Securities and Exchange Commission (the "SEC") for long futures positions, the Fund is required to segregate highly liquid securities as permitted by the SEC in connection with futures transactions in an amount generally equal to the entire value of the underlying contracts. Risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contract may not correlate with changes in the value of the underlying securities. At December 31, 2007, the following Fund held futures contracts:

TBA SALE COMMITMENTS The Funds may enter into TBA sale commitments to hedge its portfolio positions or to sell mortgage-backed securities it owns under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as "cover" for the transaction. Unsettled TBA sale commitments are valued at the current market value of the underlying securities, generally according to the procedures described under "Security valuation" above. The contract is "marked-to-market" daily and the change in market value is recorded by the Fund as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss. If the Fund delivers securities under the commitment, the Fund realizes a gain or a loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. TBA sale commitments outstanding at year ended December 31, 2007, are listed after the Fund's Portfolio of Investments. 160 Wells Fargo Advantage Variable Trust Funds Notes to Financial Statements 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 prepayment histories. During the roll period, a Fund forgoes principal and interest paid on the securities. A Fund is compensated by the difference between the current sales price and the forward price for the future purchase as well as by the earnings on the cash proceeds of the initial sale. Mortgage dollar rolls may be renewed without physical delivery of the securities subject to the contract. The Funds account for dollar roll transactions as purchases and sales. REPURCHASE AGREEMENTS The Funds may invest in repurchase agreements and may participate in pooled repurchase agreement transactions with other funds advised by Wells Fargo Funds Management, LLC. The repurchase agreements must be fully collateralized based on values that are marked to market daily. The collateral may be held by an agent bank under a tri-party agreement. It is the custodian's responsibility to value collateral daily and to take action to obtain additional collateral as necessary to maintain market value equal to or greater than the resale price. The repurchase agreements are 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 Funds may loan securities in return for securities, irrevocable letters of credit or cash collateral, which is invested in various short-term fixed income securities. A Fund may receive compensation for lending securities in the form of fees or by retaining a portion of interest on the investment securities or cash received as collateral. A Fund also continues to receive interest or dividends on the securities loaned. Security loans are secured at all times by collateral. The collateral is equal to at least 102% of the market value of the securities loaned plus accrued interest when the transaction is entered into. The collateral supporting loans of domestic and foreign equity securities and corporate bonds is remarked daily while collateral supporting loans of U.S. government securities is remarked back to 102% only if the given collateral falls below 100% of the market value of the securities loaned plus any accrued interest. Gain or loss in the market price of the securities loaned that may occur during the term of the loan are reflected in the value of the Fund. The risks from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called for by the Fund. Wells Fargo Bank, N.A., the Funds' custodian, acts as the securities lending agent for the Funds and receives for its services 25% of the revenues earned on the securities lending activities (reduced from 30% effective September 1, 2007) and incurs all expenses. For a portion of the period, Wells Fargo Bank, N.A. waived its share of revenues earned on securities lending activities. Such waivers by Wells Fargo Bank, N.A. have the impact of increasing securities lending income on the Statements of Operations. The value of the securities on loan and the value of the related collateral at December 31, 2007 are shown on the Statements of Assets and Liabilities. SWAP CONTRACTS Certain Funds may enter into customized equity basket swaps ("Equity Swaps") to manage their exposure to the equity markets. In these transactions, the Funds enter into an agreement with a counterparty to receive/pay the return/loss on a customized basket of equity securities (the "Notional"). In exchange, the Fund pays/receives interest plus any losses/less any gains on the notional amount. Equity swap contracts are marked to market daily based upon quotations from market makers and the change, if any, is recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or loss. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying basket of securities, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. Risk of loss may exceed amounts recognized on the Statements of Assets and Liabilities. Equity swap contracts outstanding at December 31, 2007, are listed below: Notes to Financial Statements Wells Fargo Advantage Variable Trust Funds 161

* Customized Stock Index consists of the following basket of common stocks valued as of December 31, 2007: Carnival Corporation, Time Warner Incorporated, UnitedHealth Group Incorporated, and Pfizer Incorporated. ** Customized Stock Index consists of the following basket of common stocks valued as of December 31, 2007: Companhia Vale do Rio Doce (CVRD), BHP Billiton Limited, Alcoa Incorporated and Newmont Mining Corporation. *** Customized Stock Index consists of the following basket of common stocks valued as of December 31, 2007: DR Horton Incorporated, KB Home, Lennar Corporation, Pulte Homes Incorporated and Ryland Group Incorporated. **** Customized Stock Index consists of the following basket of common stocks valued as of December 31, 2007: Norfolk Southern Corporation, Union Pacific Corporation, Burlington Northern Santa Fe Corporation and Con-Way Incorporated. The Funds may enter into various hedging transactions, such as interest rate swaps to preserve a return or spread on a particular investment or portion of its portfolio, to create synthetic adjustable-rate mortgage securities or for other purposes. Swaps involve the exchange of commitments to make or receive payments, e.g., an exchange of floating-rate payments for fixed rate payments. The Funds record as an increase or decrease to realized gain/loss, the amount due or owed by the Funds at termination or settlement. Swaps are valued based on prices quoted by independent brokers. These valuations represent the net present value of all future cash settlement amounts based on implied forward interest rates or index values. At December 31, 2007, the Funds had no open interest rate swap contracts. The Funds may enter into various hedging transactions, such as credit default swap agreements to preserve a return or spread on a particular investment or portion of its portfolio, to create synthetic adjustable-rate mortgage securities or for other purposes. Swaps involve the exchange of commitments to make or receive payments. The Funds record as an increase or decrease to unrealized gain/loss, the amount due or owed by the Funds at termination or settlement. Swaps are valued based on prices quoted by independent brokers. Credit default swaps involve the periodic payment by the Fund or counterparty of interest based on a specified rate multiplied by a notional amount assigned to an underlying debt instrument or group of debt instruments in exchange for the assumption of credit risk on the same instruments. In the event of a credit event, usually in the form of a credit rating downgrade, the party receiving periodic payments (i.e. floating rate payer) must pay the other party (i.e. fixed rate payer) an amount equal to the outstanding principal of the downgraded debt instrument. At December 31, 2007, the Funds had no open credit default swap contracts. 162 Wells Fargo Advantage Variable Trust Funds Notes to Financial Statements WHEN-ISSUED TRANSACTIONS Each Fund may purchase securities on a forward commitment or 'when-issued' basis. A Fund records a when-issued transaction on the trade date and will segregate with the custodian qualifying assets having a value sufficient to make payment for the securities purchased. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract. WRITTEN OPTIONS An option is a right to buy or sell a particular security at a specified price within a limited period of time. The writer of the option, in return for a premium received from the seller, has the obligation to sell (in the case of a call option) or buy (in the case of a put option) the underlying security of the contract. The premium received in cash from writing options is recorded as an asset with an equal liability that is adjusted to reflect the option's value. The premium received from writing options which expire is recorded as realized gains. The premium received from writing options which are exercised or closed is offset against the proceeds or amount paid on the closing transaction to determine the realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the security or currency purchased. Options are valued based on their quoted daily settlement prices. Risks could arise from entering into written options transactions from the potential inability of counterparties to meet the terms of their contracts, the potential inability to enter into a closing transaction because of an illiquid secondary market, and from unexpected movements in interest or exchange rates or securities values. Written options transactions during the year ended December 31, 2007, were as follows: - -------------------------------------------------------------------------------- VT OPPORTUNITY FUND --------------------------- PREMIUMS CALL OPTIONS WRITTEN CONTRACTS RECEIVED - -------------------------------------------------------------------------------- Options at beginning of period (15,288) $(1,072,631) - -------------------------------------------------------------------------------- Options written (2,160) (1,162,402) - -------------------------------------------------------------------------------- Options expired 6,116 548,129 - -------------------------------------------------------------------------------- Options exercised 11,332 1,686,904 - -------------------------------------------------------------------------------- Options at end of period 0 0 - -------------------------------------------------------------------------------- 3. EXPENSES ADVISORY FEES The Trust has entered into an advisory contract with Wells Fargo Funds Management, LLC ("Funds Management"). Funds Management is responsible for implementing investment policies and guidelines and for supervising the subadviser, who is responsible for day-to-day portfolio management. Pursuant to the contract, Funds Management is entitled to receive an advisory fee for its services as adviser. Funds Management may retain the services of certain investment subadvisers to provide daily portfolio management. The fees related to subadvisory services are borne directly by the adviser and do not increase the overall fees paid by a Fund to the adviser. Funds Management and the investment subadviser(s) are entitled to be paid a monthly fee at the following annual rates:

Notes to Financial Statements Wells Fargo Advantage Variable Trust Funds 163

164 Wells Fargo Advantage Variable Trust Funds Notes to Financial Statements

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:

The Trust has entered into an agreement with Boston Financial Data Services ("BFDS") as the transfer agent for the Trust. BFDS is entitled to receive fees from the administrator for its services as transfer agent. CUSTODY FEES The Trust has entered into a contract with Wells Fargo Bank, N.A. ("WFB"), whereby WFB is responsible for providing custody services. Pursuant to the contract, WFB is entitled to a monthly fee for custody services at the following annual rates: - -------------------------------------------------------------------------------- % OF AVERAGE FUND DAILY NET ASSETS - -------------------------------------------------------------------------------- ALL VARIABLE TRUST FUNDS (EXCEPT VT INTERNATIONAL CORE FUND) 0.02 - -------------------------------------------------------------------------------- VT INTERNATIONAL CORE FUND 0.10 - -------------------------------------------------------------------------------- DISTRIBUTION FEES The Trust has adopted a Distribution Plan ("Plan") for the Funds, pursuant to Rule 12b-1 under the 1940 Act. Distribution fees are charged and paid to Wells Fargo Funds Distributor, LLC at an annual rate of up to 0.25% of average daily net assets. For the year ended December 31, 2007, distribution fees paid are disclosed on the Statements of Operations. OTHER FEES AND EXPENSES 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. Each Fund also bears its share of other fees and expenses incurred in the normal course of business, including but not limited to: professional fees, registration fees, shareholder reporting costs, and Trustees fees and expenses. The Trust compensates its Trustees for their services, plus travel and other expenses incurred in attending Board meetings. WAIVED FEES AND REIMBURSED EXPENSES All amounts shown as waived fees or reimbursed expenses on the Statements of Operations, for the year ended December 31, 2007, were waived by Funds Management, first from advisory fees, and then any remaining amount Notes to Financial Statements Wells Fargo Advantage Variable Trust Funds 165 consecutively from administration, custody and shareholder servicing fees collected, if any. Funds Management has contractually committed through April 30, 2009, to waive fees and/or reimburse expenses to the extent necessary to maintain a certain net operating expense ratio for the Funds. Net operating expense ratios in effect for the year ended December 31, 2007 were as follows:

4. INVESTMENT PORTFOLIO TRANSACTIONS Purchases and sales of investments, exclusive of short-term securities (securities with maturities of one year or less at purchase date) for the year ended December 31, 2007, were as follows:

The Money Market Fund trades exclusively in short-term securities, so such purchases and sales are not reflected in the schedule. 5. BANK BORROWINGS Wells Fargo Funds Trust and Wells Fargo Variable Trust (excluding the money market funds) share in a revolving Credit Agreement with The Bank of New York, whereby the Funds are permitted to use bank borrowings for temporary or emergency purposes, such as to fund shareholder redemption requests. The agreement permits borrowings of up to $150 million, collectively. Interest is charged to each Fund based on its borrowing at a rate equal to the Federal Funds Rate plus 0.40%. In addition, the Funds pay a quarterly commitment fee equal to 0.1% per annum of the credit line. For the year ended December 31, 2007, there were no borrowings by any of the Funds under this agreement. 166 Wells Fargo Advantage Variable Trust Funds Notes to Financial Statements 6. DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions paid during the years ended December 31, 2007, and December 31, 2006, was as follows:

As of December 31, 2007, the components of distributable earnings on a tax basis are shown on the table below. The difference between book basis and tax basis appreciation is attributable to tax deferral of losses on wash sales, mark-to-market and straddle loss deferred adjustment.

* This amount includes the post-October loss, which will reverse on the first day of the following fiscal year. 7. LEGAL AND REGULATORY MATTERS In 2004, the predecessor funds' investment adviser and affiliates (collectively, "Strong") entered into agreements with certain regulators, including the Securities and Exchange Commission and the New York Attorney General ("NYAG"), to settle market timing investigations. In the settlements, Strong agreed to pay investor restoration and civil penalties. Although some portion of these payments is likely to be distributed to predecessor fund shareholders, no determination has yet been made as to the distribution of these amounts, and the successor funds are not expected to receive any portion of these payments. The NYAG settlement also imposed fee reductions across the predecessor fund complex (excluding money market funds and very short-term income funds) totaling at least $35 million by May 2009. The current Funds' adviser has agreed to honor these fee reductions for the benefit of shareholders across the successor 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. Notes to Financial Statements Wells Fargo Advantage Variable Trust Funds 167 8. NEW ACCOUNTING PRONOUNCEMENTS In September 2006, the FASB issued Statement on Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of December 31, 2007, Funds Management does not believe the adoption of SFAS No. 157 will impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. 168 Wells Fargo Advantage Variable Trust Funds Report of Independent Registered Public Accounting Firm THE BOARD OF TRUSTEES AND SHAREHOLDERS OF WELLS FARGO VARIABLE TRUST: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of the VT Asset Allocation Fund, VT C&B Large Cap Value Fund, VT Discovery Fund, VT Equity Income Fund, VT International Core Fund, VT Large Company Core Fund, VT Large Company Growth Fund, VT Money Market Fund, VT Opportunity Fund, VT Small Cap Growth Fund, VT Small/Mid Cap Value Fund, and the VT Total Return Bond Fund, twelve of the Funds constituting the Wells Fargo Variable Trust as of December 31, 2007, and the related statements of operations for the year then ended, statements of changes in net assets for each of the years in the two year period then ended and the financial highlights of the VT Asset Allocation Fund, VT C&B Large Cap Value Fund, VT Equity Income Fund, VT International Core Fund, VT Large Company Core Fund, VT Large Company Growth Fund, VT Money Market Fund, VT Small Cap Growth Fund and VT Total Return Bond Fund for each of the years in the five year period then ended and the VT Discovery Fund, VT Opportunity Fund and the VT Small/Mid Cap Value Fund for each of the years in the four year period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the VT Discovery Fund, VT Opportunity Fund and VT Small/Mid Cap Value Fund for the year ended December 31, 2003 were audited by other auditors whose report dated February 3, 2004 expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the aforementioned funds of the Wells Fargo Variable Trust as of December 31, 2007, the results of their operations for the year then ended, changes in their net assets for each of the years in the two year period then ended and the financial highlights for the periods indicated in the first paragraph above, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Philadelphia, Pennsylvania February 21, 2008 Other Information Wells Fargo Advantage Variable Trust Funds 169 PROXY VOTING INFORMATION A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-800-222-8222, visiting our Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS, or visiting the SEC Web site at WWW.SEC.GOV. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Funds'Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS or by visiting the SEC Web site at WWW.SEC.GOV. TAX INFORMATION The following Fund has elected to pass through to its shareholders the foreign taxes paid during the tax year ended December 31, 2007. The foreign income and taxes paid were as follows: - -------------------------------------------------------------------------------- FUND Foreign Income Foreign Taxes - -------------------------------------------------------------------------------- VT INTERNATIONAL CORE FUND $1,232,620 $87,600 - -------------------------------------------------------------------------------- The country-by-country breakout is as follows: - -------------------------------------------------------------------------------- COUNTRY Gross Income Foreign Tax Paid - -------------------------------------------------------------------------------- AUSTRALIA 4.83% 0.00% - -------------------------------------------------------------------------------- AUSTRIA 0.55% 1.15% - -------------------------------------------------------------------------------- BELGIUM 2.74% 5.78% - -------------------------------------------------------------------------------- CANADA 0.00% 0.00% - -------------------------------------------------------------------------------- FINLAND 2.00% 4.22% - -------------------------------------------------------------------------------- FRANCE 10.27% 21.67% - -------------------------------------------------------------------------------- GERMANY 5.90% 12.44% - -------------------------------------------------------------------------------- GREECE 1.32% 0.00% - -------------------------------------------------------------------------------- HONG KONG 4.73% 0.00% - -------------------------------------------------------------------------------- INDIA 0.11% 0.00% - -------------------------------------------------------------------------------- IRELAND 0.10% 0.00% - -------------------------------------------------------------------------------- ITALY 4.16% 8.77% - -------------------------------------------------------------------------------- LUXEMBOURG 0.95% 2.00% - -------------------------------------------------------------------------------- NETHERLANDS 4.50% 9.49% - -------------------------------------------------------------------------------- RUSSIA 0.76% 1.60% - -------------------------------------------------------------------------------- JAPAN 9.60% 9.45% - -------------------------------------------------------------------------------- SPAIN 2.29% 4.84% - -------------------------------------------------------------------------------- SWITZERLAND 4.63% 9.78% - -------------------------------------------------------------------------------- SWEDEN 2.76% 5.83% - -------------------------------------------------------------------------------- SINGAPORE 1.79% 0.00% - -------------------------------------------------------------------------------- TAIWAN 1.05% 2.97% - -------------------------------------------------------------------------------- TURKEY 0.94% 0.00% - -------------------------------------------------------------------------------- UNITED KINGDOM 34.02% 0.00% - -------------------------------------------------------------------------------- TOTAL 100.00% 100.00% - -------------------------------------------------------------------------------- 170 Wells Fargo Advantage Variable Trust Funds Other Information Pursuant to Section 852(b)(3) of the Internal Revenue Code, the following Funds designate the amounts listed below as a long-term capital gain distribution for the year ended December 31, 2007: - -------------------------------------------------------------------------------- Capital Gain FUND Dividends - -------------------------------------------------------------------------------- VT ASSET ALLOCATION FUND $ 1,357,946 - -------------------------------------------------------------------------------- VT EQUITY INCOME FUND 6,611,366 - -------------------------------------------------------------------------------- VT INTERNATIONAL CORE FUND 2,690,129 - -------------------------------------------------------------------------------- VT OPPORTUNITY FUND 104,911,350 - -------------------------------------------------------------------------------- VT SMALL CAP GROWTH FUND 15,169,862 - -------------------------------------------------------------------------------- VT SMALL/MID CAP VALUE FUND 1,599,563 - -------------------------------------------------------------------------------- Pursuant to Section 854(b)(2) of the Internal Revenue Code, the Funds listed below designates a percentage of its ordinary income dividends distributed during the year ended December 31, 2007 as qualifying for the corporate dividends-received deduction: - -------------------------------------------------------------------------------- Dividend-Received Deduction (% of Ordinary Income FUND Dividends) - -------------------------------------------------------------------------------- VT ASSET ALLOCATION FUND 27.15 - -------------------------------------------------------------------------------- VT C&B LARGE CAP VALUE FUND 100.00 - -------------------------------------------------------------------------------- VT EQUITY INCOME FUND 100.00 - -------------------------------------------------------------------------------- VT OPPORTUNITY FUND 48.78 - -------------------------------------------------------------------------------- VT SMALL CAP GROWTH FUND 0.81 - -------------------------------------------------------------------------------- VT SMALL/MID CAP VALUE FUND 5.16 - -------------------------------------------------------------------------------- Other Information Wells Fargo Advantage Variable Trust Funds 171 PORTFOLIO HOLDINGS INFORMATION The complete portfolio holdings for each Fund are publicly available on the Funds'Web site (WWW.WELLSFARGO.COM/ADVANTAGEFUNDS) on a monthly, 30-day or more delayed basis. In addition, top ten holdings information for each Fund is publicly available on the Funds'Web site on a monthly, seven-day or more delayed basis. Each Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available without charge by visiting the SEC Web site at WWW.SEC.GOV. In addition, each Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330. BOARD OF TRUSTEES The following table provides basic information about the Board of Trustees (the "Trustees") of the Wells Fargo Funds Trust (the "Trust"). This table supplements, and should be read in conjunction with, the Prospectus and the Statement of Additional Information 1 of each Fund. Each of the Trustees listed below acts in identical capacities for each of the 148 funds comprising the Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (collectively the "Fund Complex"). All of the non-interested Trustees are also members of the Audit and Governance Committees of each Trust in the Fund Complex. The address of each Trustee and Officer is 525 Market Street, 12th Floor, San Francisco, CA 94105. Each Trustee and Officer serves an indefinite term, however, each Trustee serves such term until reaching the mandatory retirement age established by the Trustees. NON-INTERESTED TRUSTEES

INTERESTED TRUSTEE 3

172 Wells Fargo Advantage Variable Trust Funds Other Information OFFICERS

- -------------------------------------------------------------------------------- 1 The Statement of Additional Information includes additional information about the Funds'Trustees and is available, without charge, upon request, by calling 1-800-222-8222 or by visiting the Funds'Web site at WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. 2 Length of service dates reflects a Trustee's commencement of service with the Trust's predecessor entities. 3 As of December 31, 2007, one of the seven Trustees is considered an "interested person" of the Trusts as defined in the Investment Company Act of 1940. The interested Trustee, J. Tucker Morse, is affiliated with a government securities dealer that is registered under the Securities Exchange Act of 1934, which is not itself affiliated with Wells Fargo Funds Management, LLC. 4 Retired as Trustee effective December 31, 2007. List of Abbreviations Wells Fargo Advantage Variable Trust Funds 173 The following is a list of common abbreviations for terms and entities which may have appeared in this report. ABAG -- Association of Bay Area Governments ADR -- American Depositary Receipt AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax ARM -- Adjustable Rate Mortgages BART -- Bay Area Rapid Transit BKNT -- Bank Notes CDA -- Community Development Authority CDO -- Collateralized Debt Obligation CDS -- Credit Default Swap CDSC -- Contingent Deferred Sales Charge CGIC -- Capital Guaranty Insurance Company CGY -- Capital Guaranty Corporation COP -- Certificate of Participation CP -- Commercial Paper CTF -- Common Trust Fund DW&P -- Department of Water & Power DWR -- Department of Water Resources ECFA -- Educational & Cultural Facilities Authority EDFA -- Economic Development Finance Authority ETET -- Eagle Tax-Exempt Trust FFCB -- Federal Farm Credit Bank FGIC -- Financial Guaranty Insurance Corporation FHA -- Federal Housing Authority FHAG -- Federal Housing Agency FHLB -- Federal Home Loan Bank FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association GDR -- Global Depositary Receipt GMTN -- Global Medium-Term Notes GNMA -- Government National Mortgage Association GO -- General Obligation HCFR -- Healthcare Facilities Revenue HEFA -- Health & Educational Facilities Authority HEFAR -- Higher Education Facilities Authority Revenue HFA -- Housing Finance Authority HFFA -- Health Facilities Financing Authority IDA -- Industrial Development Authority IDAG -- Industrial Development Agency IDR -- Industrial Development Revenue LIBOR -- London Interbank Offered Rate LLC -- Limited Liability Corporation LOC -- Letter of Credit LP -- Limited Partnership MBIA -- Municipal Bond Insurance Association MFHR -- Multi-Family Housing Revenue MTN -- Medium Term Note MUD -- Municipal Utility District PCFA -- Pollution Control Finance Authority PCR -- Pollution Control Revenue PFA -- Public Finance Authority PFFA -- Public Facilities Financing Authority plc -- Public Limited Company PSFG -- Public School Fund Guaranty R&D -- Research & Development RDA -- Redevelopment Authority RDFA -- Redevelopment Finance Authority REITS -- Real Estate Investment Trusts SFHR -- Single Family Housing Revenue SFMR -- Single Family Mortgage Revenue SLMA -- Student Loan Marketing Association TBA -- To Be Announced TRAN -- Tax Revenue Anticipation Notes USD -- Unified School District XLCA -- XL Capital Assurance THIS PAGE IS INTENTIONALLY LEFT BLANK. [LOGO] - ---------------- WELLS ADVANTAGE FARGO FUNDS - ---------------- More information about WELLS FARGO ADVANTAGE FUNDS is available free upon request. To obtain literature, please write, e-mail, visit the Funds' Web site, or call: WELLS FARGO ADVANTAGE FUNDS P.O. Box 8266 Boston, MA 02266-8266 E-mail: wfaf@wellsfargo.com Web site: www.wellsfargo.com/advantagefunds Individual Investors: 1-800-222-8222 Retail Investment Professionals: 1-888-877-9275 Institutional Investment Professionals: 1-866-765-0778 THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF WELLS FARGO ADVANTAGE FUNDS. IF THIS REPORT IS USED FOR PROMOTIONAL PURPOSES, DISTRIBUTION OF THE REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS. FOR A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION, INCLUDING CHARGES AND EXPENSES, CALL 1-800-222-8222 OR VISIT THE FUNDS' WEB SITE AT WWW.WELLSFARGO.COM/ADVANTAGEFUNDS. PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES, AND EXPENSES OF THE INVESTMENT CAREFULLY BEFORE INVESTING. THIS AND OTHER INFORMATION ABOUT WELLS FARGO ADVANTAGE FUNDS CAN BE FOUND IN THE CURRENT PROSPECTUS. READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. "Dow Jones" and "Dow Jones Target Date Indexes" are service marks of Dow Jones & Company, Inc. and have been licensed for use for certain purposes by Global Index Advisors, Inc. and Wells Fargo Funds Management, LLC. The Dow Jones Target Date Indexes are based in part on the Lehman Brothers Bond Indexes, which are published by Lehman Brothers Inc. The WELLS FARGO ADVANTAGE DOW JONES TARGET DATE FUNDS, based on the Dow Jones Target Date Indexes, are not sponsored, endorsed, sold or promoted by Dow Jones or Lehman Brothers, and neither Dow Jones nor Lehman Brothers makes any representation regarding the advisability of investing in such product(s) and/or about the quality, accuracy and/or completeness of the Dow Jones Target Date Indexes or the Lehman Brothers Bond Indexes. IN NO EVENT SHALL DOW JONES, LEHMAN BROTHERS OR ANY OF THEIR LICENSORS HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for WELLS FARGO ADVANTAGE FUNDS. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the Funds. The Funds are distributed by WELLS FARGO FUNDS DISTRIBUTOR, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company. - ----------------------------------------------------- NOT FDIC INSURED o NO BANK GUARANTEE o MAY LOSE VALUE - ----------------------------------------------------- - -------------------------------------------------------------------------------- (C) 2008 Wells Fargo Funds Management, LLC. All rights reserved. www.wellsfargo.com/advantagefunds 108275 02-08 AVTF/AR124 12-07 ITEM 2. CODE OF ETHICS ======================= As of the end of the period, December 31, 2007, Wells Fargo Variable Trust has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT ========================================= The Board of Trustees of Wells Fargo Variable Trust has determined that Thomas S. Goho is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Goho is independent for purposes of Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES ====================== (a) AUDIT FEES - Provided below are the aggregate fees billed for the fiscal years ended December 31, 2006 and December 31, 2007 for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. For the fiscal years ended December 31, 2006 and December 31, 2007, the Audit Fees were $220,500 and $234,500, respectively. (b) AUDIT-RELATED FEES - There were no audit-related fees incurred for the fiscal years ended December 31, 2006 and December 31, 2007 for assurance and related services by the principal accountant for the Registrant. (c) TAX FEES - Provided below are the aggregate fees billed for the fiscal years ended December 31, 2006 and December 31, 2007 for professional services rendered by the principal accountant for the Registrant for tax compliance, tax advice, and tax planning. For the fiscal years ended December 31, 2006 and December 31, 2007, the Tax Fees were $0 and $0, respectively. The incurred Tax Fees are comprised of excise tax review services. For the fiscal years ended December 31, 2006 and December 31, 2007, the Tax Fees were $20,820 and $21,660 respectively. The incurred Tax Fees are comprised of tax preparation and consulting services. (d) ALL OTHER FEES - There were no other fees incurred for the fiscal years ended December 31, 2006 and December 31, 2007. (e)(1) The Chairman of the Audit Committees is authorized to pre-approve: (1) audit services to the mutual funds of Wells Fargo Funds Trust, Wells Fargo Variable Trust and Wells Fargo Master Trust (the "Funds"); (2) non-audit tax or compliance consulting or training services provided to the Funds by the independent auditors ("Auditors") if the fees for any particular engagement are not anticipated to exceed $50,000; and (3) non-audit tax or compliance consulting or training services provided by the Auditors to a Fund's investment adviser and its controlling entities (where pre-approval is required because the engagement relates directly to the operations and financial reporting of the Fund) if the fee to the Auditors for any particular engagement is not anticipated to exceed $50,000. For any such pre-approval sought from the Chairman, Management shall prepare a brief description of the proposed services. If the Chairman approves of such service, he or she shall sign the statement prepared by Management. Such written statement shall be presented to the full Committees at their next regularly scheduled meetings. (e)(2) Not Applicable. (f) Not Applicable. (g) Provided below are the aggregate non-audit fees billed for the fiscal years ended December 31, 2006 and December 31, 2007, by the principal accountant for services rendered to the Registrant, and rendered to the Registrant's investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant. For the fiscal years ended December 31, 2006 and December 31, 2007, the Registrant incurred non-audit fees in the amount of $170,000 and $175,000, respectively. The non-audit fees consist of SAS70 control reviews of Wells Fargo Bank, N.A., the Funds' custodian. For the fiscal years ended December 31, 2006 and December 31, 2007, the Registrant's investment adviser incurred non-audit fees in the amount of $44,000 and $46,000, respectively. The non-audit fees for the year ended December 31, 2007 consist of procedure reviews for pending mergers associated with fund reorganizations. The non-audit fees for the year ended December 31, 2007 relates to examinations of securities pursuant to rule 206 (4)- 2 under the Investment Advisors Act of 1940. (h) The Registrant's audit committee of the board of directors has determined that non-audit services rendered to the registrant's investment adviser, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of the Regulation S-X, does not compromise the independence of the principal accountant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS ============================================= Not applicable. ITEMS 6. SCHEDULE OF INVESTMENTS ================================= The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES =============================================================== Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES ============================================================================= Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASES ============================================================================= Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECUIRTY HOLDERS ============================================================ Not applicable. ITEM 11. CONTROLS AND PROCEDURES ================================ (a) The President and Treasurer have concluded that the Wells Fargo Funds Trust (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report. (b) There were no significant changes in the Trust's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second quarter of the period covered by this report that materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS ================= (a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as Exhibit 10a. (a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is filed and attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Wells Fargo Funds Trust By: /s/ Karla M. Rabusch Karla M. Rabusch President Date: February 20, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. By: /s/ Karla M. Rabusch Karla M. Rabusch President Date: February 20, 2008 By: /s/ Stephen W. Leonhardt Stephen W. Leonhardt Treasurer Date: February 20, 2008 CERTIFICATION I, Karla M. Rabusch, certify that: 1. I have reviewed this report on Form N-CSR of the Wells Fargo Advantage VT Asset Allocation Fund, Wells Fargo Advantage VT Equity Income Fund, Wells Fargo Advantage VT C&B Large Cap Value Fund, Wells Fargo Advantage VT Discovery Fund, Wells Fargo Advantage VT Large Company Core Fund, Wells Fargo Advantage VT International Core Fund, Wells Fargo Advantage VT Large Company Growth Fund, Wells Fargo Advantage VT Money Market Fund, Wells Fargo Advantage VT Small/Mid Cap Value Fund, Wells Fargo Advantage VT Opportunity Fund, Wells Fargo Advantage VT Small Cap Growth Fund, and the Wells Fargo Advantage VT Total Return Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal controls over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: February 20, 2008 /s/ Karla M. Rabusch - ----------------------- Karla M. Rabusch President Wells Fargo Funds Trust Exhibit 99.CERT CERTIFICATION I, Stephen W. Leonhardt, certify that: 1. I have reviewed this report on Form N-CSR of the Wells Fargo Advantage VT Asset Allocation Fund, Wells Fargo Advantage VT Equity Income Fund, Wells Fargo Advantage VT C&B Large Cap Value Fund, Wells Fargo Advantage VT Discovery Fund, Wells Fargo Advantage VT Large Company Core Fund, Wells Fargo Advantage VT International Core Fund, Wells Fargo Advantage VT Large Company Growth Fund, Wells Fargo Advantage VT Money Market Fund, Wells Fargo Advantage VT Small/Mid Cap Value Fund, Wells Fargo Advantage VT Opportunity Fund, Wells Fargo Advantage VT Small Cap Growth Fund, and the Wells Fargo Advantage VT Total Return Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal controls over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: February 20, 2008 /s/ Stephen W. Leonhardt - ----------------------- Stephen W. Leonhardt Treasurer Wells Fargo Funds Trust Exhibit 99.CERT SECTION 906 CERTIFICATION Pursuant to 18 U.S.C. ss. 1350, the undersigned officer of Wells Fargo Variable Trust (the "Trust"), hereby certifies, to the best of her knowledge, that the Trust's report on Form N-CSR for the period ended December 31, 2007 (the "Report") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust. Date: February 20, 2008 /s/ Karla M. Rabusch Karla M. Rabusch President Wells Fargo Funds Trust This certification is being furnished to the Securities and Exchnage Commission pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission. SECTION 906 CERTIFICATION Pursuant to 18 U.S.C. ss. 1350, the undersigned officer of Wells Fargo Variable Trust (the "Trust"), hereby certifies, to the best of his knowledge, that the Trust's report on Form N-CSR for the period ended December 31, 2007 (the "Report") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust. Date: February 20, 2008 /s/ Stephen W. Leonhardt Stephen W. Leonhardt Treasurer Wells Fargo Funds Trust This certification is being furnished to the Securities and Exchnage Commission pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission. EX-99.CODE ETH 2 codeeth.txt CODEETH.TXT WELLS FARGO FUNDS TRUST WELLS FARGO MASTER TRUST WELLS FARGO VARIABLE TRUST JOINT CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS I. COVERED OFFICERS / PURPOSE OF THE CODE This Code of Ethics ("Code") of Wells Fargo Funds Trust, Wells Fargo Master Trust and Wells Fargo Variable Trust (collectively, the "Trusts" and each, "a Trust") applies to each Trust's Principal Executive Officer, Principal Financial Officer and any other Trust officer's listed on Exhibit A (the "Covered Officers") for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable financial disclosure in reports and documents that a Trust files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Trust; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. COVERED OFFICERS SHOULD HANDLE ETHICALLY BOTH ACTUAL AND APPARENT CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his or her service to, a Trust. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Trust. Certain conflicts of interest arise out of the relationships between Covered Officers and the Trust and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Trust because of their status as "affiliated persons" of the Trust. The compliance programs and procedures of the Trust and Wells Fargo Funds Management, LLC (the "Adviser") are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Trust and the Adviser, of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Trust or for the Adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Adviser and the Trust. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trust and the Adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Trust. Each Covered Officer recognizes that, as an officer of a Trust, he or she has a duty to act in the best interests of the Trust and its shareholders. If a Covered Officer believes that his or her responsibilities as an officer or employee of the Adviser are likely to materially compromise his or her objectivity or his or her ability to perform the duties of his or her role as an officer of the Trust, he or she should consult with the Chief Legal Officer. Under appropriate circumstances, a Covered Officer should also consider whether to present the matter to the Board. In addition, it is recognized by the Trust's Board of Trustees ("Board") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust. * * * * Each Covered Officer must: o not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Trust whereby the Covered Officer would benefit personally to the detriment of the Trust; o not cause the Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of a Trust; o not use material non-public knowledge of portfolio transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; o not retaliate against any other Covered Officer or any employee of a Trust or its affiliated persons for reports of potential violations that are made in good 2 faith; and o not engage in personal, business or professional relationships or dealings that would impair his or her independence of judgment or adversely affect the performance of his or her duties in the best interests of the Trust and their shareholders. There are some conflict of interest situations that should always be approved in advance by the Chief Legal Officer of the Trust (the "Chief Legal Officer") if material. Examples of these include: o service as a director on the board of any public or private for-profit company (provided, however, that a Covered Officer who is employed by another company (e.g., Wells Fargo) may serve as a director of such company or any entity, controlling, controlled by, or under common control with, such company); o acquiring a financial interest in any company that provides services to the Trust (provided, however, that a Covered Officer who is employed by another company (e.g., Wells Fargo) may have an ownership interest in his or her employer or the employer's parent company); o the receipt of any entertainment or gifts from any person or company with which the Trust has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any consulting or employment relationship with any of the Trust's service providers, other than with the primary employer of the Covered Officer; and o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trust for effecting portfolio transactions or for selling or redeeming shares, other than an interest arising from the Covered Officer's primary employment, such as compensation or equity ownership. III. DISCLOSURE AND COMPLIANCE Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Trust. Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Trust to others, whether within or outside the Trust, including to the Board and the Trust's auditors, and to governmental regulators and self-regulatory organizations. Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Trust and the Adviser with the goal of promoting full, fair, accurate, timely and understandable 3 disclosure in the reports and documents the Trust files with, or submits to, the SEC and in other public communications made by the Trust. It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. Each Covered Officer should, consistent with his or her responsibilities, exercise appropriate supervision over and assist relevant Trust service providers in developing financial information and other disclosure that complies with relevant law and presents information in a clear, comprehensible and complete manner. Each Covered Officer is responsible for the accuracy of the records and reports that he or she is responsible for maintaining. The books and records of the Trust shall meet the highest standards and accurately reflect the true nature of the transactions they record. The Covered Officers must not create false or misleading documents or accounting, financial or electronic records for any purpose, and must not direct any other person to do so. If a Covered Officer becomes aware that information filed with the SEC or made available to the public contains any false or misleading information or omits to disclose necessary information, he shall promptly report it to Chief Legal Officer for a determination as to what, if any, corrective action is necessary or appropriate. No undisclosed or unrecorded account or fund shall be established for any purpose. No false or misleading entries shall be made in a Trust's books or records for any reason. No disbursement of a Trust's assets shall be made without adequate supporting documentation or for any purpose other than as described in the Trust's documents or contracts. A Trust will maintain and preserve for a period of not less than six (6) years from the date such action is taken, the first two (2) years in an easily accessible place, a copy of the information or materials supplied to the Board: (i) that provided the basis for any amendment or waiver to this Code, and (ii) relating to any violation of the Code and sanctions imposed for such violation, together with a written record of the approval or action taken by the Board. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o upon adoption of the Code (or thereafter upon becoming a Covered Officer), affirm in writing (in the form attached to this Code) to the Board that he or she has received, read, and understands the Code; o annually thereafter affirm in writing (in the form attached to this Code) to the Board that he or she has complied with the requirements of the Code; and 4 o notify the Chief Legal Officer of the Trust promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. The Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. While the Chief Legal Officer in authorized to interpret this Code, an approval of a situation that is expressly prohibited by this Code is deemed to be a "waiver" and can be approved only by the Board. The Trust will follow these procedures in investigating and enforcing this Code: o the Chief Legal Officer will take all appropriate action to investigate any potential violations reported to him or her; o if, after such investigation, the Chief Legal Officer believes that no violation has occurred, the Chief Legal Officer is not required to take any further action; o any matter that the Chief Legal Officer believes is a violation will be reported to the Board; o if the Board concurs that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Adviser; or a recommendation to dismiss the Covered Officer; o the Board will be responsible for granting waivers, as appropriate (a "waiver" is the approval of a situation that is expressly prohibited by this Code); and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Trusts for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Trusts or the Adviser govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The codes of ethics adopted by the Trusts and the Adviser under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. 5 VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent Trustees. VII. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except upon request of the SEC or another regulatory agency, or as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than Board and its counsel. VIII. INTERNAL USE The Code is intended solely for the internal use by each Trust and does not constitute an admission, by or on behalf of any Trust, as to any fact, circumstance, or legal conclusion. Adopted: August 5, 2003 6 EXHIBIT A PERSONS COVERED BY THE CODE Karla Rabusch, President of each Trust Stephen Leonhardt, Treasurer of each Trust Exhibit A amended: May 9, 2007 7 EXHIBIT B COMPLIANCE CERTIFICATIONS INITIAL CERTIFICATION I CERTIFY THAT I: (I) HAVE RECEIVED, READ AND REVIEWED THE JOINT CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS (the "Code"); (II) UNDERSTAND THE POLICIES AND PROCEDURES IN THE CODE; (III) RECOGNIZE THAT I AM SUBJECT TO SUCH POLICIES AND PROCEDURES; (IV) UNDERSTAND THE PENALTIES FOR NON-COMPLIANCE; (V) WILLFULLY COMPLY WITH THE CODE AND ANY RELATED PROCEDURES; (VI) ACKNOWLEDGE MY RESPONSIBILITY TO REPORT ANY VIOLATION OF THE CODE TO LEGAL COUNSEL; (VII) UNDERSTAND THAT THE TRUSTS HAVE THE RIGHT TO AMEND, INTERPRET, MODIFY OR WITHDRAW ANY OF THE PROVISIONS OF THE CODE AT ANY TIME IN THEIR SOLE DISCRETION, WITH OR WITHOUT NOTICE; AND (VIII) HAVE FULLY AND ACCURATELY COMPLETED THIS CERTIFICATE. Signature: -------------------------------------------------------- (Please print) Name: -------------------------------------------------------- Date Submitted: -------------------------------------------------------- Date Due: -------------------------------------------------------- 8 ANNUAL CERTIFICATION I CERTIFY THAT I: (I) HAVE RECEIVED, READ AND REVIEWED THE JOINT CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS (the "Code"); (II) UNDERSTAND THE POLICIES AND PROCEDURES IN THE CODE; (III) RECOGNIZE THAT I AM SUBJECT TO SUCH POLICIES AND PROCEDURES; (IV) UNDERSTAND THE PENALTIES FOR NON-COMPLIANCE; (V) HAVE FULLY COMPLIED WITH THE CODE AND ANY RELATED PROCEDURES; (VI) HAVE FULLY DISCLOSED ANY EXCEPTIONS TO MY COMPLIANCE WITH THE CODE; (VII) WILLFULLY COMPLY WITH THE CODE OF ETHICS; (VIII) ACKNOWLEDGE MY RESPONSIBILITY TO REPORT ANY VIOLATION OF THE CODE TO LEGAL COUNSEL; (IX) UNDERSTAND THAT THE TRUSTS HAVE THE RIGHT TO AMEND, INTERPRET, MODIFY OR WITHDRAW ANY OF THE PROVISIONS OF THE CODE AT ANY TIME IN THEIR SOLE DISCRETION, WITH OR WITHOUT NOTICE; AND (X) HAVE FULLY AND ACCURATELY COMPLETED THIS CERTIFICATE EXCEPTION(S): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature: -------------------------------------------------------- (Please print) Name: -------------------------------------------------------- Date Submitted: -------------------------------------------------------- Date Due: -------------------------------------------------------- 9 -----END PRIVACY-ENHANCED MESSAGE-----