<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Contract Holders.................................. 2
Wells Fargo Variable Trust Financial Statements............. 3
American Skandia Trust Financial Statements................. 91
Alger American Fund Financial Statements.................... 177
Montgomery Variable Series.................................. 191
Invesco Variable Fund....................................... 207
</TABLE>
This report has been prepared to provide information to owners of American
Skandia Life Assurance Corporation's Stagecoach Variable Annuity, Stagecoach
Variable Annuity Plus, Stagecoach Extra Credit Variable Annuity and Stagecoach
Variable Annuity Flex. If it is used for any other purpose, it must be
accompanied or preceded by a current prospectus, as applicable, which discloses
any charges and other important information about the Account, together with the
current applicable prospectus for the Wells Fargo Variable Trust, the American
Skandia Trust, the Alger American Growth Fund, the Montgomery Variable Series
and the Invesco Variable Fund.
The financial statements for the sub-accounts that invest in Portfolios of
American Skandia Trust reflect financial activity for the Stagecoach Variable
Annuities and other products that use the same sub-accounts.
VARIABLE ANNUITIES:
- ---------------------------------------------------------------------
- are NOT insured by the FDIC or U.S. Government
- are NOT obligations or deposits of Wells Fargo Bank nor guaranteed by the
Bank
- involve investment risk, including possible loss of principal [NO FDIC LOGO]
1
<PAGE> 2
STAGECOACH VARIABLE ANNUITY
STAGECOACH VARIABLE ANNUITY PLUS
STAGECOACH EXTRA CREDIT VARIABLE ANNUITY
STAGECOACH VARIABLE ANNUITY FLEX
ANNUAL REPORT
Dear Investor:
Congratulations on another prosperous year! Strong and sustained economic
growth, rapid technological innovation and low inflation allowed the millennium
to conclude with yet another encore market performance. Yet, 1999 was a
particularly successful year for investors as a variety of market sectors posted
solid gains. While the S&P 500 Index rose an impressive 21.04%, the tech-laden
NASDAQ Composite Index and the small company benchmark Russell 2000 Index both
outperformed the bell-weather indicator, increasing 85.5% and 21.26%
respectively. However, exceptional market results were not limited to the U.S.
The popular International benchmark, the MSCI EAFE Index, (which comprises
markets in Europe, Asia and the Far East) gained 25.27%, spurred by recovery in
a number of emerging economies and strong economic growth in developed markets.
Offering you the best possible investment performance is one of our most honored
and treasured commitments. Our disciplined investment selection process provides
our investors with the broadest and most diversified array of top-flight
investment managers in the industry.
Clearly, our investment process delivers results. Even with the solid
performance of existing advisors, our effort to bring you additional superior
money managers continues vigorously. In 1999, the opportunities for investment
through our partnership with Wells Fargo expanded to include 10 new variable
portfolios, bringing the number of options to 27. We added new funds from Wells
Fargo Variable Trust, American Century and MFS, as well as two new sector funds
from INVESCO, the VIF Health Sciences and the Technology portfolios.
We are committed to driving performance to even higher levels and continuing our
thriving relationship with you. We hope that you continue to make use of this
successful partnership in your future financial planning offerings.
Sincerely,
/s/ Wade Dokken
Wade Dokken
Chief Operating Officer
American Skandia
2
<PAGE> 3
WELLS FARGO VARIABLE TRUST
ANNUAL REPORT
DECEMBER 31, 1999
ASSET ALLOCATION FUND
CORPORATE BOND FUND
EQUITY INCOME FUND
EQUITY VALUE FUND
GROWTH FUND
LARGE COMPANY GROWTH FUND
MONEY MARKET FUND
SMALL CAP GROWTH FUND
3
<PAGE> 4
VARIABLE TRUST ASSET ALLOCATION FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Asset Allocation Fund (the "Fund") seeks
long-term total return, consistent with reasonable risk. The Fund invests in
common stocks, U.S. Treasury bonds and money market instruments.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Team managed
INCEPTION DATE
4/15/94
PERFORMANCE HIGHLIGHTS
The Fund returned 9.33%(1) for the 12-month period ended December 31, 1999.
The Fund's benchmark is allocated 60% S&P 500 Index(2), which returned 21.04%
during the period, and 40% Lehman Brothers 20+ Bond Index(3), which returned
(2.56)%. The Fund distributed $0.26 per share in dividend income and minimal
capital gains during the period. Please keep in mind past performance is no
guarantee of future results.
The Fund's portfolio comprises three classes of investments: stocks, bonds
and cash. It normally allocates its assets 60% stocks, 40% bonds and 0% cash. In
early 1999, the Fund had been significantly overweighted in stocks to take
advantage of the rising stock market, but during the first half of the year it
returned to its normal allocation. This shift enabled the Fund to capture
significant gains and take advantage of the stronger performance of the 30-year
bond relative to the S&P 500 Index in the final month of the third quarter. The
Fund ended 1999 with its asset allocation model at 62% stocks, 38% bonds and 0%
cash.
The Federal Reserve Board (the "Fed") raised interest rates to 5.00% from
4.75% during the second quarter of 1999, citing improved global financial
conditions, recovering foreign economies and continued robustness in the
domestic economy. The S&P 500 Index enjoyed a healthy gain of 7.05% during the
second quarter to end on a new high. June, in particular, was a strong month,
returning 5.55% on the back of May's 2.36% loss. Underpinning the market's
ascent was a consumer confidence level that had not been seen in decades, as the
U.S. economy continued to grow.
Bond markets, early in the year, experienced disappointing returns as
interest rates remained at their highest levels in over a year and bond prices
fell. Evidence of a troubled second quarter for bonds came in the form of a
continued decline in 30-year U.S. Treasury bond prices, while yields were pushed
up from 4.70% to 6.10% during the eight-month period ended June 30, 1999.
Additionally, yield spreads of corporate bonds widened relative to comparable
maturity U.S. Treasury bonds in June and, as a result, the higher returns of
corporate bonds were negated by the lower performance of equivalent-duration
U.S. Treasury securities.
In the third and fourth quarters of 1999, the Fed raised interest rates
again, demonstrating that it did not think U.S. inflation had been tamed. In a
reprise of what became one of the recent years' rites of summer, the stock
market sagged in the third quarter as investors grew cautious about the
prospects of extending the nation's economic expansion into its tenth year.
Technology stocks continued to outperform and were largely responsible for the
positive performance of the S&P 500 Index during the fourth quarter. The bond
market staged a rally late in the fourth quarter as nervous investors fled the
lower-performing third quarter stock market.
4
<PAGE> 5
VARIABLE TRUST ASSET ALLOCATION FUND(6)
[WFVT ASSET ALLOCATION PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
LEHMAN BROTHERS 20+ BOND
WFVT ASSET ALLOCATION FUND INDEX S&P 500 INDEX
-------------------------- ------------------------ -------------
<S> <C> <C> <C>
10000.00 10000.00 10000.00
9940.00 10118.00 10164.00
6-94 9796.00 10017.00 9915.00
10107.00 10246.00 10241.00
10248.00 10275.00 10660.00
9-94 9964.00 10069.00 10400.00
10055.00 9804.00 10633.00
9954.00 9574.00 10246.00
12-94 10113.00 9875.00 10398.00
10384.00 10261.00 10668.00
10707.00 10633.00 11083.00
3-95 10894.00 10755.00 11409.00
11137.00 10752.00 11745.00
11686.00 11158.00 12214.00
6-95 11870.00 10986.00 12497.00
12031.00 11043.00 12911.00
12127.00 11194.00 12944.00
9-95 12438.00 11283.00 13490.00
12514.00 11523.00 13442.00
12860.00 11778.00 14031.00
12-95 13041.00 11943.00 14301.00
13284.00 12004.00 14788.00
13180.00 11867.00 14925.00
3-96 13256.00 11677.00 15068.00
13233.00 11630.00 15290.00
13350.00 11644.00 15683.00
6-96 13531.00 11808.00 15742.00
13223.00 11924.00 15047.00
13199.00 11905.00 15364.00
9-96 13705.00 12145.00 16227.00
14185.00 12291.00 16675.00
14917.00 12548.00 17934.00
12-96 14535.00 12474.00 17579.00
14815.00 12462.00 18678.00
14853.00 12595.00 18824.00
3-97 14323.00 12397.00 18050.00
14904.00 12535.00 19126.00
15406.00 12760.00 20294.00
6-97 15820.00 12921.00 21197.00
16903.00 13355.00 22883.00
16211.00 13191.00 21601.00
9-97 16822.00 13373.00 22783.00
16849.00 13471.00 22022.00
17232.00 13580.00 23041.00
12-97 17569.00 13827.00 23438.00
17833.00 13982.00 23696.00
18624.00 13972.00 25404.00
3-98 19295.00 13992.00 26705.00
19458.00 13920.00 26977.00
19354.00 14172.00 26513.00
6-98 20075.00 14236.00 27590.00
19881.00 14266.00 27297.00
17985.00 14513.00 23353.00
9-98 18996.00 14717.00 24850.00
20090.00 14670.00 26867.00
21065.00 14738.00 28496.00
12-98 22008.00 14770.00 30137.00
22760.00 14928.00 31406.00
21942.00 14865.00 30426.00
3-99 22567.00 14918.00 31643.00
23208.00 14958.00 32867.00
22715.00 14846.00 32092.00
6-99 23349.00 14605.00 33838.00
22838.00 14623.00 32781.00
22723.00 14387.00 32619.00
9-99 22394.00 14341.00 31725.00
23190.00 14044.00 33733.00
23389.00 14254.00 34418.00
12-99 24060.00 14080.00 36445.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
6-Month 3.04%
1-Year 9.33%
5-Year 18.93%
Since Inception 16.61%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK S&P 500 INDEX LEHMAN BROTHERS 20+ BOND INDEX
- --------- ------------- ------------------------------
<S> <C> <C>
6-Month 7.69% (2.82)%
1-Year 21.04% (10.06)%
5-Year 28.56% 9.30%
</TABLE>
5
<PAGE> 6
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
<TABLE>
<S> <C>
Portfolio Turnover Ratio 30%
Number of Holdings 528
Weighted Average Maturity of Bond Portfolio 22.2 Years
Estimated Duration of Bond Portfolio 10.5 Years
NAV $14.42
</TABLE>
TEN LARGEST HOLDINGS (AS OF DECEMBER 31, 1999)(4)
<TABLE>
<CAPTION>
NAME % OF FUND
- ---- ---------
<S> <C>
US T-Bond 8.00% 11/15/21 3.30%
Microsoft Corporation 2.90%
US T-Bond 6.25% 8/15/23 2.70%
US T-Bill 1/27/00 2.70%
US T-Bond 8.75% 8/15/20 2.60%
General Electric Corporation 2.50%
US T-Bond 7.13% 2/15/23 2.00%
US T-Bond 8.50% 2/15/20 1.80%
Cisco Systems, Incorporated 1.70%
US T-Bond 6.88% 8/15/25 1.70%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(5)
[PIE CHART]
<TABLE>
<S> <C>
Bonds 38.00%
Stocks 62.00%
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's managers have voluntarily waived all or a
portion of their management fees or assumed responsibility for other expenses,
which reduces operating expenses and increases total return to shareholders.
Without these reductions the Fund's returns would have been lower. These
reductions may be discontinued at any time. Performance figures of the Fund do
not reflect charges pursuant to the terms of the variable life insurance
policies and variable annuity contracts funded by separate accounts that invest
in the Fund's shares.
Performance shown for the Wells Fargo Variable Trust Asset Allocation Fund for
periods prior to September 20, 1999, reflects performance of the Life and
Annuity Trust Asset Allocation Fund, its predecessor fund. Effective at the
close of business September 17, 1999, the Life and Annuity Trust and Norwest
Select Funds were reorganized into the Wells Fargo Variable Trust Funds.
(2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks
representing, among others, industrial, financial, utility, and transportation
companies listed or traded on national exchanges or over-the-counter markets.
The Fund is a professionally managed mutual fund. You cannot invest directly in
an index.
6
<PAGE> 7
(3) The Lehman Brothers 20+ Bond Index is an unmanaged index composed of
securities in the U.S. Treasury Index with maturities of 20 years or greater.
The U.S. Treasury Index represents public obligations of the U.S. Treasury with
a remaining maturity of one year or more. You cannot invest directly in an
index.
(4) The Ten Largest Holdings is calculated based on the market value of the
securities divided by total market value of the portfolio.
(5) Represents recommended asset mix. There is no guarantee that the Fund will
continue to hold any one particular security or stay invested in any one sector.
The composition of the Fund's portfolio is subject to change depending on
current market activity.
(6) The chart compares the performance of the Wells Fargo Variable Trust Asset
Allocation Fund since inception with the S&P 500 Index and the Lehman Brothers
20+ Bond Index. The chart assumes a hypothetical $10,000 investment and reflects
all operating expenses. The Fund is a professionally managed mutual fund.
7
<PAGE> 8
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS--60.77%
AEROSPACE--0.01%
1,312 B.F. Goodrich Company $ 36,080
AGRICULTURAL PRODUCTION--CROPS--0.02%
3,921 Nabisco Group Holdings $ 41,661
AMUSEMENT & RECREATION SERVICES--0.02%
1,525 Harrah's Entertainment Incorporated+ $ 40,317
APPAREL & ACCESSORY STORES--0.32%
10,224 Gap Incorporated $ 470,304
1,941 Kohls Corporation+ 140,116
2,553 Limited Incorporated 110,577
1,672 Nordstrom Incorporated 43,786
------------
$ 764,783
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS &
SIMILAR MATERIALS--0.03%
750 Liz Claiborne Incorporated $ 28,219
1,421 V.F. Corporation 42,630
------------
$ 70,849
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS--0.03%
1,773 AutoZone Incorporated+ $ 57,290
600 Pep Boys--Manny Moe & Jack 5,475
------------
$ 62,765
AUTOMOTIVE REPAIR, SERVICES & PARKING--0.01%
719 Ryder Systems Incorporated $ 17,571
BUILDING CONSTRUCTION--GENERAL CONTRACTORS & OPERATIVE
BUILDERS--0.07%
689 Centex Corporation $ 17,010
578 Kaufman & Broad Home Corporation 13,980
5,277 Masco Corporation 133,904
472 Pulte Corporation 10,620
------------
$ 175,514
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME
DEALERS--0.89%
27,132 Home Depot Incorporated $ 1,860,238
4,542 Lowe's Company Incorporated 271,385
------------
$ 2,131,623
</TABLE>
8
<PAGE> 9
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
BUSINESS SERVICES--4.34%
4,171 3COM Corporation+ $ 196,037
1,457 Adobe Systems Incorporated 97,983
26,391 America Online Incorporated+ 1,990,871
724 Autodesk Incorporated 24,435
7,357 Automatic Data Processing 396,358
2,850 BMC Software Incorporated+ 227,822
2,090 Cabletron Systems Incorporated+ 54,340
8,602 Cendant Corporation+ 228,491
1,740 Ceridian Corporation 37,519
976 Citrix Systems 120,048
6,404 Computer Associates International Incorporated 447,880
1,909 Computer Sciences Corporation+ 180,639
1,547 Ecolab Incorporated 60,526
5,647 Electronic Data Systems Corporation 377,996
1,720 Equifax Incorporated 40,528
5,059 First Data Corporation 249,472
3,741 IMS Health Incorporated 101,708
3,359 Interpublic Group Companies Incorporated 193,772
3,395 McKesson HBOC Incorporated 76,600
4,018 Novell Incorporated+ 160,469
2,121 Omnicom Group 212,100
16,952 Oracle Systems Corporation+ 1,899,684
3,228 Parametric Technology Corporation + 87,358
2,930 Peoplesoft Incorporated+ 62,446
302 Shared Medical System Corporation 15,383
18,429 Sun Microsystems Incorporated+ 1,427,096
3,647 Unisys Corporation+ 116,476
3,126 Yahoo Incorporated+ 1,352,581
------------
$ 10,436,618
</TABLE>
9
<PAGE> 10
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
CHEMICALS & ALLIED PRODUCTS--6.16%
18,094 Abbott Laboratories $ 657,038
2,733 Air Products & Chemicals Incorporated 91,726
675 Alberto Culver Company Class B 17,423
1,226 Alza Corporation+ 42,450
15,568 American Home Products Corporation 613,963
12,156 Amgen Incorporated+ 730,120
2,994 Avon Products Incorporated 98,802
23,617 Bristol-Myers Squibb Company 1,515,916
2,798 Clorox Company 140,949
6,943 Colgate-Palmolive Company 451,295
2,621 Dow Chemical Company 350,231
12,413 DuPont (E.I.) de Nemours and Company 817,706
936 Eastman Chemical Company 44,636
346 FMC Corporation+ 19,830
12,828 Gillette Company 528,353
694 Great Lakes Chemical Corporation 26,502
1,293 Hercules Incorporated 36,042
1,238 International Flavors & Fragrances Incorporated 46,735
13,016 Lilly (Eli) & Company 865,564
798 Mallinckrodt Incorporated 25,386
27,820 Merck & Company Incorporated 1,865,679
7,549 Monsanto Company 268,933
46,084 Pfizer Incorporated 1,494,850
6,040 Pharmacia and Upjohn Incorporated 271,800
2,073 PPG Industries Incorporated 129,692
1,903 Praxair Incorporated 95,745
15,641 Procter & Gamble Company 1,713,667
2,580 Rohm & Haas Company 104,974
17,500 Schering-Plough Corporation 738,281
2,017 Sherwin Williams Company 42,357
1,561 Union Carbide Corporation 104,197
893 W.R. Grace & Company+ 12,390
10,167 Warner Lambert Company 833,059
1,135 Watson Pharmaceuticals Incorporated+ 40,647
------------
$ 14,836,938
COMMERCIAL SERVICES--0.01%
1,383 Quintiles Transnational Corporation+ $ 25,845
</TABLE>
10
<PAGE> 11
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMUNICATIONS--5.22%
3,634 Alltel Corporation $ 300,486
38,012 American Telephone & Telegraph Corporation 1,929,109
18,481 Bell Atlantic Corporation 1,137,737
22,433 BellSouth Corporation 1,050,145
1,662 Centurytel Incorporated 78,737
4,018 Clear Channel Communications Incorporated+ 358,607
8,934 Comcast Corporation Class A 451,725
9,080 Global Crossing Limited 454,000
11,590 GTE Corporation 817,819
33,428 MCI Worldcom Incorporated+ 1,773,747
7,224 Media One Group Incorporated+ 554,894
4,299 Nextel Communications Class A+ 443,334
40,593 SBC Communications Incorporated 1,978,889
10,336 Sprint Corporation (FON Group) 695,742
5,159 Sprint Corporation (PCS Group)+ 528,798
------------
$ 12,553,769
COMPUTERS--2.97%
61,165 Microsoft Corporation+ $ 7,141,014
CONSUMER PRODUCTS--0.03%
2,000 Fortune Brands Incorporated $ 66,125
</TABLE>
11
<PAGE> 12
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
DOMESTIC DEPOSITORY INSTITUTIONS--4.06%
4,673 AmSouth Bancorp $ 90,247
13,744 Banc One Corporation 440,667
20,346 Bank of America Corporation 1,021,115
8,762 Bank of New York Incorporated 350,480
3,807 BB&T Corporation 104,217
9,846 Chase Manhattan Corporation 764,911
40,119 Citigroup Incorporated 2,229,112
1,865 Comerica Incorporated 87,072
3,597 Fifth Third Bancorp 263,930
11,395 First Union Corporation 373,898
11,745 Firstar Corporation 248,113
10,864 Fleet Boston Financial Corporation 378,203
1,965 Golden West Financial 65,828
2,730 Huntington Bancshares Incorporated 65,179
2,082 JP Morgan & Company Incorporated 263,633
5,367 KeyCorp 118,745
6,132 Mellon Financial Corporation 208,871
7,367 National City Corporation 174,506
2,639 Northern Trust Corporation 139,867
1,082 Old Kent Financial Corporation 38,276
3,581 PNC Bank Corporation 159,355
2,675 Regions Financial Corporation 67,209
1,234 Republic New York Corporation 88,848
1,974 SouthTrust Corporation 74,642
1,921 State Street Corporation 140,353
2,094 Summit Bancorp 64,129
3,833 SunTrust Banks Incorporated 263,758
3,213 Synovus Financial Corporation 63,858
8,724 U.S. Bancorp 207,740
1,720 Union Planters Corporation 67,833
2,417 Wachovia Corporation 164,356
6,906 Washington Mutual Incorporated 179,556
19,596 Wells Fargo & Company** 792,413
------------
$ 9,760,920
EATING & DRINKING PLACES--0.32%
1,557 Darden Restaurants Incorporated $ 28,221
16,139 McDonald's Corporation 650,603
1,830 Tricon Global Restaurants Incorporated+ 70,684
1,455 Wendy's International Incorporated 30,009
------------
$ 779,517
</TABLE>
12
<PAGE> 13
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRIC, GAS & SANITARY SERVICES--1.41%
2,445 AES Corporation+ $ 182,764
2,275 Allied Waste Industries Incorporated+ 20,048
1,657 Ameren Corporation 54,267
2,291 American Electric Power Incorporated 73,598
1,920 Carolina Power & Light Company 58,440
2,562 Central & South West Corporation 51,240
1,892 Cinergy Corporation 45,645
1,383 CMS Energy Corporation 43,132
2,559 Coastal Corporation 90,685
994 Columbia Energy Group 62,871
2,640 Consolidated Edison Incorporated 91,080
1,137 Consolidated Natural Gas Company 73,834
1,770 Constellation Energy Group 51,330
1,732 Detroit Energy Company 54,342
2,288 Dominion Resources Incorporated 89,804
4,353 Duke Energy Corporation 218,194
270 Eastern Enterprises 15,508
4,132 Edison International 108,207
2,719 El Paso Energy Corporation 105,531
8,505 Enron Corporation 377,409
2,956 Entergy Corporation 76,117
2,826 First Energy Corporation 64,115
1,187 Florida Progress Corp 50,225
2,134 FPL Group Incorporated 91,362
1,518 GPU Incorporated 45,445
1,395 New Century Energies Incorporated 42,373
2,220 Niagara Mohawk Holdings Incorporated 30,941
524 NICOR Incorporated 17,030
1,834 Northern States Power Company 35,763
368 Oneok Incorporated 9,246
2,225 PECO Energy Company 77,319
424 Peoples Energy Corporation 14,204
4,593 PG&E Corporation 94,157
1,040 Pinnacle West Capital Corp 31,785
1,878 PP&L Resources Incorporated 42,959
2,616 Public Services Enterprise Group 91,070
3,533 Reliant Energy Incorporated 80,817
2,874 Sempra Energy 49,936
8,146 Southern Company 191,431
3,316 Texas Utilities Company 117,925
7,356 Waste Management Incorporated 126,431
5,178 Williams Companies Incorporated 158,253
------------
$ 3,406,833
</TABLE>
13
<PAGE> 14
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT--7.96%
1,236 Adaptec Incorporated+ $ 61,646
1,766 Advanced Micro Devices+ 51,104
937 Andrew Corporation+ 17,744
1,139 Cooper Industries Incorporated 46,058
5,177 Emerson Electric Company 297,030
38,998 General Electric Company 6,034,941
2,064 General Instrument Corporation+ 175,440
39,512 Intel Corporation 3,252,332
1,736 LSI Logic Corporation+ 117,180
37,033 Lucent Technologies Incorporated 2,770,531
1,051 Maytag Corporation 50,448
3,006 Micron Technology Incorporated+ 233,717
1,673 Molex Incorporated 94,838
7,220 Motorola Incorporated 1,063,145
1,983 National Semiconductor Corporation+ 84,897
465 National Service Industries Incorporated 13,718
1,744 Network Appliance Incorporated+ 144,861
15,795 Nortel Networks Corporation 1,595,295
7,724 Qualcomm Incorporated+ 1,361,355
910 Scientific-Atlanta Incorporated 50,619
4,661 Tellabs Incorporated+ 299,178
2,039 Teradyne Incorporated+ 134,574
9,387 Texas Instruments Incorporated 909,366
655 Thomas & Betts Corporation 20,878
1,103 W W Grainger Incorporated 52,737
902 Whirlpool Corporation 58,686
3,764 Xilinx Incorporated+ 171,144
------------
$ 19,163,462
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED
SERVICES--0.16%
1,922 Dun & Bradstreet Corporation $ 56,699
5,277 Halliburton Company 212,399
2,912 Paychex Incorporated 116,480
------------
$ 385,578
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION
EQUIPMENT--0.08%
368 Ball Corporation $ 14,490
803 Crane Company 15,960
1,470 Crown Cork & Seal Company 32,891
1,301 Parker Hannifin Corporation 66,758
798 Snap-On Incorporated 21,197
1,059 Stanley Works 31,902
------------
$ 183,198
</TABLE>
14
<PAGE> 15
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FOOD & KINDRED PRODUCTS--2.00%
417 Adolph Coors Company Class B $ 21,893
5,567 Anheuser-Busch Incorporated 394,561
7,420 Archer-Daniels-Midland Company 90,431
3,331 Bestfoods 175,086
765 Brown-Forman Corporation Class B 43,796
5,173 Campbell Soup Company 200,130
29,384 Coca-Cola Company 1,711,618
5,087 Coca-Cola Enterprises Incorporated 102,376
5,857 ConAgra Incorporated 132,149
3,663 General Mills Incorporated 130,952
4,258 H J Heinz Company 169,522
1,667 Hershey Foods Corporation 79,183
4,827 Kellogg Company 148,732
17,399 Pepsico Incorporated 613,315
1,588 Quaker Oats Company 104,213
3,885 Ralston-Purina Group 108,294
10,776 Sara Lee Corporation 237,746
5,140 Seagram Company Limited 230,979
1,378 Wm. Wrigley Jr Company 114,288
------------
$ 4,809,264
FOOD STORES--0.17%
5,039 Albertson's Incorporated $ 162,508
464 Great Atlantic & Pacific Tea Company 12,934
9,883 Kroger Company+ 186,542
1,784 Winn-Dixie Stores Incorporated 42,705
------------
$ 404,689
GENERAL MERCHANDISE STORES--1.98%
1,368 Consolidated Stores Corporation+ $ 22,230
5,269 Dayton-Hudson Corporation 386,942
1,260 Dillards Incorporated Class A 25,436
2,664 Dollar General Corporation 60,606
2,487 Federated Department Stores Incorporated+ 125,749
798 Harcourt General Incorporated 32,120
3,161 J C Penney Company Incorporated 63,022
5,854 K-Mart Corporation+ 58,906
3,967 May Department Stores Company+ 127,936
4,534 Sears Roebuck & Company 138,004
3,809 TJX Companies Incorporated 77,846
52,905 Wal-Mart Stores Incorporated 3,657,058
------------
$ 4,775,855
HEALTH SERVICES--0.14%
6,730 Columbia HCA Healthcare Corporation $ 197,273
4,988 Healthsouth Corporation+ 26,811
1,253 Manor Care Incorporated 20,048
3,743 Tenet Healthcare Corporation+ 87,961
------------
$ 332,093
</TABLE>
15
<PAGE> 16
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
HEAVY CONSTRUCTION OTHER THAN BUILDING
CONSTRUCTION-CONTRACTORS--0.02%
910 Fluor Corporation $ 41,746
452 Foster Wheeler Corporation 4,012
------------
$ 45,758
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES--0.12%
2,431 Best Buy Company Incorporated+ $ 122,006
2,371 Circuit City Stores Incorporated 106,843
2,373 Leggett & Platt Incorporated 50,871
------------
$ 279,720
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES--0.07%
3,055 Hilton Hotels Corporation $ 29,404
2,963 Marriott International 93,520
2,363 Mirage Resorts Incorporated+ 36,183
------------
$ 159,107
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--5.86%
1,917 Apple Computer Incorporated+ $ 197,092
4,468 Applied Materials Incorporated+ 566,040
3,899 Baker Hughes Incorporated 82,123
1,040 Black & Decker Corporation 54,340
283 Briggs & Stratton Corporation 15,176
1,143 Brunswick Corporation 25,432
4,240 Caterpillar Incorporated 199,545
38,703 Cisco Systems Incorporated+ 4,146,059
20,222 Compaq Computer Corporation 547,258
4,254 Compuware Corporation+ 158,462
443 Cummins Engine Company Incorporated 21,402
2,772 Deere & Company 120,236
30,240 Dell Computer Corporation+ 1,542,240
2,470 Dover Corporation 112,076
12,069 EMC Corporation+ 1,318,538
3,736 Gateway Incorporated 269,226
12,051 Hewlett Packard Company 1,373,061
1,967 Ingersoll-Rand Company 108,308
21,443 International Business Machines Corporation 2,315,844
1,530 Lexmark International Group Incorporated Class A+ 138,465
700 McDermott International Incorporated 6,344
410 Milacron Incorporated 6,304
1,489 Pall Corporation 32,107
3,191 Pitney Bowes Incorporated 154,165
2,458 Seagate Technology Incorporated+ 114,451
2,258 Silicon Graphics Incorporated+ 22,157
3,407 Solectron Corporation+ 324,091
2,304 Tandy Corporation 113,328
718 Timken Company 14,674
------------
$ 14,098,544
</TABLE>
16
<PAGE> 17
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
INSURANCE AGENTS, BROKERS & SERVICE--0.24%
3,077 AON Corporation $ 123,080
2,082 Humana Incorporated+ 17,046
3,149 Marsh & McLennan Companies Incorporated 301,320
1,307 MGIC Investment Corporation 78,665
1,451 T. Rowe Price & Associates 53,596
------------
$ 573,707
INSURANCE CARRIERS--1.72%
1,791 Aetna Incorporated $ 99,960
3,179 AFLAC Incorporated 150,009
9,520 Allstate Corporation 228,480
2,965 American General Corporation 224,969
18,426 American International Group Incorporated 1,992,311
2,100 Chubb Corporation 118,256
2,215 CIGNA Corporation 178,446
1,983 Cincinnati Financial Corporation 61,845
2,699 Hartford Financial Services Group 127,865
1,261 Jefferson Pilot Corporation 86,063
2,377 Lincoln National Corporation 95,080
1,278 Loews Corporation 77,559
1,196 MBIA Incorporated 63,164
872 Progressive Corporation 63,765
1,681 Providian Financial Corporation 153,076
1,591 Safeco Corporation 39,576
2,702 St. Paul Companies Incorporated 91,024
1,582 Torchmark Corporation 45,977
2,065 United Healthcare Corporation 109,703
2,861 UnumProvident Corporation 91,731
787 Wellpoint Health Networks 51,893
------------
$ 4,150,752
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE--0.01%
1,261 Louisiana-Pacific Corporation $ 17,969
</TABLE>
17
<PAGE> 18
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS--1.31%
1,569 Allergan Incorporated $ 78,058
2,058 Analog Devices Incorporated+ 191,394
679 Bausch & Lomb Incorporated 46,469
3,459 Baxter International Incorporated 217,268
3,003 Becton Dickinson & Company 80,330
1,338 Biomet Incorporated+ 53,520
4,930 Boston Scientific Corporation+ 107,844
567 C R Bard Incorporated 30,051
1,686 Danaher Corporation 81,350
3,776 Eastman Kodak Company 250,160
852 Eaton Corporation 61,877
3,605 Guidant Corporation+ 169,435
9,404 Honeywell International Incorporated 542,493
1,006 Johnson Controls Incorporated 57,216
1,053 KLA-Tencor Corporation+ 117,278
13,977 Medtronic Incorporated 509,287
540 Millipore Corporation 20,858
1,215 PE Biosystems Group 146,180
505 Perkinelmer Incorporated 21,052
492 Polaroid Corporation 9,256
4,033 Raytheon Company Class B 107,127
1,024 St. Jude Medical Incorporated+ 31,424
565 Tektronix Incorporated 21,964
1,905 Thermo Electron Corporation+ 28,575
7,913 Xerox Corporation 179,526
------------
$ 3,159,992
MEDIA--0.24%
9,084 CBS Corporation+ $ 580,808
METAL MINING--0.12%
4,657 Barrick Gold Corporation $ 82,371
1,971 Freeport McMoran Copper & Gold Incorporated Class B 41,637
3,064 Homestake Mining Company 23,938
1,996 Newmont Mining Corporation 48,902
923 Phelps Dodge Corporation 61,956
3,878 Placer Dome Incorporated 41,689
------------
$ 300,493
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT
FUELS--0.02%
1,186 Vulcan Materials Company $ 47,366
MISCELLANEOUS MANUFACTURING INDUSTRIES--0.37%
2,326 Hasbro Incorporated $ 44,339
415 Jostens Incorporated 10,090
5,067 Mattel Incorporated 66,504
51 Nacco Industries Incorporated Class A 2,834
19,941 Tyco International Limited 775,206
------------
$ 898,973
</TABLE>
18
<PAGE> 19
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
MISCELLANEOUS RETAIL--0.62%
1,677 Bed Bath & Beyond Incorporated+ $ 58,276
2,629 Costco Wholesale Corporation 239,896
4,670 CVS Corporation 186,508
6,345 Kimberly-Clark Corporation 414,011
423 Longs Drug Stores Corporation 10,919
4,271 Office Depot Incorporated+ 46,714
3,052 Rite Aid Corporation 34,144
5,577 Staples Incorporated+ 115,723
2,925 Toys "R" Us Incorporated+ 41,864
11,960 Walgreen's Company 349,830
------------
$ 1,497,885
MOTION PICTURES--0.80%
15,332 Time Warner Incorporated $ 1,110,612
2,587 Unicom Corporation 86,665
24,579 Walt Disney Company 718,936
------------
$ 1,916,213
MOTOR FREIGHT TRANSPORTATION & WAREHOUSING--0.06%
3,544 FDX Corporation+ $ 145,083
NONDEPOSITORY CREDIT INSTITUTIONS--1.27%
5,341 American Express Corporation $ 887,941
8,680 Associates First Capital Corporation 238,158
2,369 Capital One Financial Corporation 114,156
3,919 Conseco Incorporated 70,052
1,352 Countrywide Credit Industries Incorporated 34,138
8,289 Federal Home Loan Mortgage Corporation 390,101
12,195 Federal National Mortgage Association 761,425
5,682 Household International Incorporated 211,655
9,567 MBNA Corporation 260,700
1,901 SLM Holding Corporation 80,317
------------
$ 3,048,643
OIL & GAS EXTRACTION--0.48%
1,508 Anadarko Petroleum Corporation $ 51,461
1,345 Apache Corporation 49,681
3,843 Atlantic Richfield Corporation 332,420
2,591 Burlington Resources Incorporated 85,665
314 Helmerich & Payne Incorporated 6,849
1,027 Kerr McGee Corporation 63,674
4,173 Occidental Petroleum Corporation 90,241
990 Rowan Companies Incorporated+ 21,470
6,525 Schlumberger Limited 367,031
1,263 Transocean Sedco Forex Incorporated 42,555
2,992 Union Pacific Resources Group Incorporated 38,148
------------
$ 1,149,195
</TABLE>
19
<PAGE> 20
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PAPER & ALLIED PRODUCTS--0.67%
1,320 Avery Dennison Corporation $ 96,195
612 Bemis Company Incorporated 21,344
689 Boise Cascade Corporation 27,905
1,138 Champion International Corporation 70,485
2,633 Fort James Corporation 72,078
2,040 Georgia-Pacific Corporation 103,530
1,838 IKON Office Solutions 12,521
4,933 International Paper Company 278,405
1,211 Mead Corporation 52,603
4,802 Minnesota Mining & Manufacturing Company 469,996
2,089 Pactiv Corporation 22,195
994 Sealed Air Corporation+ 51,502
675 Temple-Inland Incorporated 44,508
1,187 Westvaco Corporation 38,726
2,793 Weyerhaeuser Company 200,572
1,326 Willamette Industries Incorporated 61,576
------------
$ 1,624,141
PERSONAL SERVICES--0.03%
1,176 H&R Block Incorporated $ 51,450
3,323 Service Corporation International 23,053
------------
$ 74,503
PETROLEUM REFINING & RELATED INDUSTRIES--2.73%
1,057 Amerada Hess Corporation $ 59,985
851 Ashland Incorporated 28,030
7,813 Chevron Corporation 676,801
7,482 Conoco Incorporated Class B 186,115
41,063 Exxon Mobil Corporation 3,308,138
3,022 Phillips Petroleum Company 142,034
25,522 Royal Dutch Petroleum Company ADR 1,542,470
1,062 Sunoco Incorporated 24,957
6,589 Texaco Incorporated 357,865
1,826 Tosco Corporation 49,644
2,912 Unocal Corporation 97,734
3,693 USX-Marathon Group 91,171
------------
$ 6,564,944
</TABLE>
20
<PAGE> 21
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PRIMARY METAL INDUSTRIES--0.32%
2,718 Alcan Aluminum Limited $ 111,948
4,369 Alcoa Incorporated 362,627
1,155 Allegheny Technologies Incorporated 25,915
1,698 Bethlehem Steel Corporation+ 14,220
1,481 Engelhard Corporation 27,954
2,290 Inco Limited 53,815
1,044 Nucor Corporation 57,224
753 Reynolds Metals Company 57,699
1,068 USX-US Steel Group 35,244
1,077 Worthington Industries Incorporated 17,838
------------
$ 764,484
PRINTING, PUBLISHING & ALLIED INDUSTRIES--0.60%
850 American Greetings Corporation Class A $ 20,080
893 Deluxe Corporation 24,502
1,083 Dow Jones & Company Incorporated 73,644
3,331 Gannett Company Incorporated 271,685
970 Knight-Ridder Incorporated 57,715
2,330 McGraw-Hill Incorporated 143,585
551 Meredith Corporation 22,970
2,074 New York Times Company Class A+ 101,885
1,506 RR Donnelley & Sons Company 37,368
695 Times Mirror Company Class A+ 46,565
2,817 Tribune Company 155,111
8,286 Viacom Incorporated Class B+ 500,785
------------
$ 1,455,895
RAILROAD TRANSPORTATION--0.22%
5,548 Burlington Northern Santa Fe $ 134,539
2,605 CSX Corporation 81,732
1,293 Kansas City Southern Industries Incorporated 96,490
4,514 Norfolk Southern Corporation 92,537
2,963 Union Pacific Corporation 129,260
------------
$ 534,558
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS--0.25%
455 Armstrong World Industries Incorporated $ 15,185
871 Cooper Tire & Rubber Company 13,555
1,858 Goodyear Tire & Rubber Company 52,372
3,575 Illinois Tool Works Incorporated 241,536
3,360 Newell Rubbermaid Incorporated 97,440
3,358 Nike Incorporated Class B 166,431
639 Reebok International Limited+ 5,232
715 Tupperware Corporation 12,110
------------
$ 603,861
</TABLE>
21
<PAGE> 22
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES--0.84%
1,427 Bear Stearns & Company Incorporated $ 61,004
9,744 Charles Schwab Corporation 373,925
2,986 Franklin Resources Incorporated 95,739
1,425 Lehman Brothers Holdings 120,680
4,407 Merrill Lynch & Company Incorporated 367,985
6,648 Morgan Stanley Dean Witter & Company 949,002
1,723 Painewebber Group Incorporated 66,874
------------
$ 2,035,209
STONE, CLAY, GLASS & CONCRETE PRODUCTS--0.18%
2,896 Corning Incorporated $ 373,403
621 Owens Corning Fiberglass Corporation 11,993
1,858 Owens-Illinois Incorporated+ 46,566
------------
$ 431,962
TELECOMMUNICATIONS--0.28%
1,774 ADC Telecommunication+ $ 128,725
833 Comverse Technology Incorporated+ 120,577
6,008 U.S. West Incorporated 432,576
------------
$ 681,878
TEXTILE MILL PRODUCTS--0.01%
388 Russell Corporation $ 6,499
204 Springs Industries Incorporated Class A 8,147
------------
$ 14,646
TOBACCO PRODUCTS--0.29%
28,255 Philip Morris Companies Incorporated $ 655,163
2,083 UST Incorporated 52,465
------------
$ 707,628
TRANSPORTATION BY AIR--0.14%
1,795 AMR Corporation+ $ 120,265
1,649 Delta Air Lines Incorporated 82,140
6,066 Southwest Airlines Company 98,193
870 US Air Group Incorporated+ 27,894
------------
$ 328,492
</TABLE>
22
<PAGE> 23
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
TRANSPORTATION EQUIPMENT--1.27%
11,191 Boeing Company $ 465,125
1,998 Dana Corporation 59,815
6,739 Delphi Automotive Systems Corporation+ 106,139
405 Fleetwood Enterprises Incorporated 8,353
14,399 Ford Motor Company 769,447
2,379 General Dynamics Corporation 125,492
7,653 General Motors Corporation 556,277
1,054 ITT Industries Incorporated 35,243
4,729 Lockheed Martin Corporation 103,447
793 Navistar International+ 37,568
824 Northrop Grumman Corporation+ 44,548
959 PACCAR Incorporated 42,495
2,282 Rockwell International Corporation 109,250
1,796 Textron Incorporated 137,730
1,432 TRW Incorporated 74,375
5,745 United Technologies Corporation 373,425
------------
$ 3,048,729
WATER TRANSPORTATION--0.14%
7,305 Carnival Corporation Class A $ 349,270
WHOLESALE TRADE-DURABLE GOODS--0.66%
2,158 Genuine Parts Company $ 53,545
16,371 Johnson & Johnson 1,524,549
356 Potlatch Corporation 15,887
------------
$ 1,593,981
WHOLESALE TRADE-NONDURABLE GOODS--0.40%
3,244 Cardinal Health Incorporated $ 155,307
6,107 Safeway Incorporated+ 217,180
1,223 Sigma Aldrich Corporation 36,765
1,659 Supervalu Incorporated 33,180
3,941 Sysco Corporation 155,915
6,816 Unilever NV 371,045
------------
$ 969,392
TOTAL COMMON STOCKS
(Cost $116,968,728) $146,256,662
</TABLE>
23
<PAGE> 24
WELLS FARGO VARIABLE TRUST ASSET ALLOCATION FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES--35.64%
U.S. TREASURY BONDS--35.64%
$3,750,000 U.S. Treasury Bonds 5.25% 11/15/28 $ 3,089,063
2,250,000 U.S. Treasury Bonds 5.25 02/15/29 1,860,458
2,050,000 U.S. Treasury Bonds 5.50 08/15/28 1,748,260
4,200,000 U.S. Treasury Bonds 6.00 02/15/26 3,842,328
3,750,000 U.S. Treasury Bonds 6.13 11/15/27 3,489,825
2,350,000 U.S. Treasury Bonds 6.13 08/15/29 2,240,208
6,950,000 U.S. Treasury Bonds 6.25 08/15/23 6,552,530
3,700,000 U.S. Treasury Bonds 6.38 08/15/27 3,553,739
2,600,000 U.S. Treasury Bonds 6.50 11/15/26 2,535,000
2,150,000 U.S. Treasury Bonds 6.63 02/15/27 2,130,844
3,050,000 U.S. Treasury Bonds 6.75 08/15/26 3,064,305
4,150,000 U.S. Treasury Bonds 6.88 08/15/25 4,227,149
4,600,000 U.S. Treasury Bonds 7.13 02/15/23 4,789,014
2,150,000 U.S. Treasury Bonds 7.25 08/15/22 2,266,573
3,200,000 U.S. Treasury Bonds 7.50 11/15/24 3,493,504
2,250,000 U.S. Treasury Bonds 7.63 11/15/22 2,468,678
3,650,000 U.S. Treasury Bonds 7.63 02/15/25 4,045,222
2,350,000 U.S. Treasury Bonds 7.88 02/15/21 2,626,854
7,100,000 U.S. Treasury Bonds 8.00 11/15/21 8,057,364
2,200,000 U.S. Treasury Bonds 8.13 05/15/21 2,521,750
3,400,000 U.S. Treasury Bonds 8.13 08/15/21 3,899,358
3,700,000 U.S. Treasury Bonds 8.50 02/15/20 4,372,919
2,100,000 U.S. Treasury Bonds 8.75 05/15/20 2,541,650
5,250,000 U.S. Treasury Bonds 8.75 08/15/20 6,360,690
-------------
TOTAL U.S. TREASURY SECURITIES (COST $92,984,785) $ 85,777,285
SHORT-TERM INVESTMENTS--2.84%
U.S. TREASURY BILLS--2.84%
$ 250,000 U.S. Treasury Bills@ 5.12++ 03/23/00 $ 247,133
6,618,000 U.S. Treasury Bills 5.36++ 01/27/00 6,595,058
-------------
TOTAL SHORT-TERM INSTRUMENTS (COST $6,842,959) $ 6,842,191
TOTAL INVESTMENTS IN SECURITIES
(Cost $216,796,472)* (Notes 1 and 3) 99.25% $238,876,138
Other Assets and Liabilities, Net 0.75 1,794,852
------ ------------
TOTAL NET ASSETS 100.00% $240,670,990
====== ============
</TABLE>
- --------------------------------------------------------------------------------
** Security of an affiliate of the Fund with a cost of $725,572.
+ Non-income earning securities.
++ Yield to maturity.
@ Securities pledged as collateral for Futures transactions.
* Cost for federal income tax purposes is $217,891,405 and net unrealized
appreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $ 38,352,059
Gross Unrealized Depreciation (17,367,326)
------------
NET UNREALIZED APPRECIATION $ 20,984,733
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 25
VARIABLE TRUST CORPORATE BOND FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Corporate Bond Fund (the "Fund") seeks a high
level of current income, consistent with reasonable risk. The Fund invests
primarily in corporate debt securities and U.S. Government obligations.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
N. Graham Allen, FCMA
John W. (Jack) Burgess
Jacqueline A. Flippin
Daniel J. Kokoszka, CFA
Scott Smith, CFA
INCEPTION DATE
9/20/99
PERFORMANCE HIGHLIGHTS
The Fund returned (0.16%)(1) for the period from September 20, 1999
(commencement of operations) to December 31, 1999. The Fund distributed $0.16
per share in dividend income and no capital gains during the period. Please keep
in mind past performance is no guarantee of future results.
The Fund had a negative return as long-term interest rates rose. The
duration/average maturity was positioned approximately 10% longer than the
benchmark as the benign inflation environment continued. The Fund's negative
return was due to its long duration in a rising interest rate environment, and
concerns over Y2K which drove high-yield and investment-grade corporate spreads
wider. This rise in rates was driven by strong domestic economic growth with low
inflation.
In addition, corporate spreads widened on a record level of new-issue
corporate bonds and fears over Y2K disruptions. Portfolio duration hindered
performance, but holdings in energy bonds and real estate investment trusts
(REIT) debentures had a positive impact. The Fund added to its high-yield
exposure as spreads widened in the fourth quarter, and the fundamental earnings
outlook remained very positive for corporations. Consumer spending remained
robust in the fourth quarter and will likely follow through into the first
quarter of the new year.
STRATEGIC OUTLOOK
While the Fund expects inflation to remain under control, the Federal
Reserve Board may raise interest rates again during the spring and summer of
2000. In such an environment, the Fund's duration will be reduced to neutral and
fundamentals for the corporate sector should remain intact. The Fund will
maintain a full weighting in both high-yield and investment-grade corporate
securities.
25
<PAGE> 26
VARIABLE TRUST CORPORATE BOND FUND(7)
[Variable Trust Corporate Bond Fund GRAPH]
TOTAL RETURN (%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<S> <C>
1-month (0.46)%
3-month (0.21)%
Since Inception (0.16)%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK LEHMAN BROTHERS CORPORATE LONG BOND INDEX(2)
--------- --------------------------------------------
<S> <C>
1-month (0.91)%
3-month (0.47)%
1-Year (5.78)%
</TABLE>
<TABLE>
<S> <C> <C>
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
Portfolio Turnover 59%
Number of Holdings 79
Average Credit Quality(3) Baa1
NAV $9.82
Distribution Rate(4) 6.53%
SEC Yield(5) 6.71%
</TABLE>
26
<PAGE> 27
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(6)
[PIE CHART]
<TABLE>
<S> <C>
Fixed-Rate Notes 41.74%
Fixed-Rate Bonds 32.42%
T-bonds 16.07%
T-notes 5.79%
Mortgage-Backed Securities 3.31%
Repurchase Agreements 0.38%
Muni Notes 0.29%
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund managers have voluntarily waived all or a portion
of their management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time. Performance figures of the Fund do not reflect
charges pursuant to the terms of the variable life insurance policies and
variable annuity contracts funded by separate accounts that invest in the Fund's
shares.
(2) The Lehman Brothers Corporate Long Bond Index is a total return index of all
publicly-issued, fixed-rate, non-convertible investment grade domestic corporate
bonds and Yankee Bonds. All bonds have maturities of at least 10 years or more.
The returns are weighted by market value including accrued interest. The bonds
represented in this index are subject to investment risk, including loss of
principal, if sold prior to maturity, and also to default. You cannot invest
directly in an index.
(3) The average credit rating is compiled from the ratings of Standards & Poor's
and/or Moody's Investors Service (together "rating agencies"). Standard & Poor's
is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not
sponsored, sold or promoted by these rating agencies and these rating agencies
make no representation regarding the advisability of investing in the Fund.
(4) The distribution rate is based on the actual distributions made by the Fund.
The distribution rate is calculated by annualizing the Fund's most recent income
dividend and dividing that figure by the applicable current public offering
price.
(5) The formula used to calculate the SEC yield is described in detail in the
Fund's Statement of Additional Information and is designed to standardize the
yield calculations so that all mutual fund companies with the same or similar
portfolios quote a uniform yield figure for their non-money market
advertisements. SEC yields include the actual amount of interest earned adjusted
by any gain or loss realized due to the return of principal, less expenses and
the maximum offering price calculated on a 30-day month-end basis.
(6) Portfolio holdings are subject to change.
(7) The chart compares the performance of the Wells Fargo Variable Trust
Corporate Bond Fund since inception with the Lehman Brothers Corporate Long Bond
Index. The chart assumes a hypothetical $10,000 investment and reflects all
operating expenses. The fund is a professionally managed mutual fund.
27
<PAGE> 28
WELLS FARGO VARIABLE TRUST CORPORATE BOND FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
CORPORATE BONDS & NOTES--72.58%
AMUSEMENT & RECREATION SERVICES--0.36%
$ 250,000 Hollywood Park Incorporated 9.25% 02/15/07 $ 247,500
BUSINESS SERVICES--4.46%
2,270,000 Cendant Corporation 7.75% 12/01/03 $ 2,244,462
500,000 First Data Corporation 6.38 12/15/07 468,125
350,000 Oracle Corporation 6.72 02/15/04 340,375
-------------
$ 3,052,962
CHEMICALS & ALLIED PRODUCTS--1.41%
235,000 American Home Products Corporation 7.25% 03/01/23 $ 221,488
250,000 Huntsman ICI Chemicals 9.56 07/01/09 263,731
250,000 Lyondell Chemical Company 9.63 05/01/07 256,875
250,000 Merck & Company Incorporated 6.40 03/01/28 220,000
-------------
$ 962,094
COMMUNICATIONS--6.45%
250,000 Adelphia Communications 9.38% 11/15/09 $ 246,250
250,000 Adelphia Communications 9.88 03/01/07 255,938
250,000 Charter Comm Holdings Limited Liability Corporation 8.63 04/01/09 231,250
450,000 Clear Channel Communications Incorporated 7.25 10/15/27 386,438
500,000 CSC Holdings Incorporated 9.25 11/01/05 515,000
500,000 LCI International Incorporated (Qwest) 7.25 06/15/07 480,625
500,000 Sprint Capital Corporation 6.13 11/15/08 451,875
2,000,000 Teleglobe Incorporated 7.20 07/20/09 1,842,500
-------------
$ 4,409,876
DEPOSITORY INSTITUTIONS--10.46%
500,000 Bank United 8.00% 03/15/09 $ 463,125
500,000 FleetBoston Financial Corporation 6.88 07/15/03 493,750
500,000 Bankers Trust New York Company 7.38 05/01/08 489,375
2,500,000 Chase Manhattan Corporation 7.00 11/15/09 2,409,375
2,000,000 HSBC USA 6.63 03/01/09 1,852,500
500,000 PNC Bank Corporation 6.50 05/01/08 461,250
500,000 Providian National Bank 6.65 02/01/04 475,000
500,000 Society Corporation 8.13 06/15/02 510,625
-------------
$ 7,155,000
ELECTRIC, GAS & SANITARY SERVICES--6.43%
500,000 Coastal Corporation 6.95% 06/01/28 $ 432,500
2,000,000 PP&L Capital Funding 7.70 11/15/02 1,995,000
2,000,000 NRG Energy Incorporated 8.00 11/01/03 1,967,500
-------------
$ 4,395,000
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY &
TRANSPORTATION EQUIPMENT--2.92%
2,000,000 Lockheed Martin Corporation 8.50% 12/01/29 $ 1,997,500
FINANCIAL SERVICES--2.88%
2,000,000 Washington Mutual Incorporated 7.50% 08/15/06 $ 1,972,500
</TABLE>
28
<PAGE> 29
WELLS FARGO VARIABLE TRUST CORPORATE BOND FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
FOOD & KINDRED PRODUCTS--1.19%
$ 500,000 Anheuser Busch Companies 9.00% 12/01/09 $ 555,000
250,000 International Home Foods 10.38 11/01/06 258,125
-------------
$ 813,125
GENERAL MERCHANDISE STORES--0.61%
500,000 Saks Incorporated 7.38% 02/15/19 $ 418,125
HOLDING & OTHER INVESTMENT OFFICES--7.90%
2,000,000 EOP Operating Limited Partnership 6.80% 01/15/09 $ 1,792,500
1,750,000 ERP Operating Limited Partnership 7.95 04/15/02 1,754,375
2,000,000 Spieker Properties Limited Partnership 7.25 05/01/09 1,857,500
-------------
$ 5,404,375
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--0.40%
300,000 Dell Computer Corporation 7.10% 04/15/28 $ 273,750
INDUSTRIAL SERVICES--0.25%
200,000 Gruma SA de CV 7.63% 10/15/07 $ 174,000
INSURANCE CARRIERS--4.39%
200,000 AMBAC Incorporated 9.38% 08/01/11 $ 228,500
2,500,000 Conseco Incorporated 9.00 10/15/06 2,565,625
250,000 Willis Corroon Corporation 9.00 02/01/09 208,125
-------------
$ 3,002,250
NONDEPOSITORY CREDIT INSTITUTIONS--8.74%
2,000,000 Countrywide Home Loan 6.25% 04/15/09 $ 1,792,500
500,000 Ford Motor Credit Company 5.13 10/15/01 485,000
3,000,000 Ford Motor Credit Company 7.38 10/28/09 2,970,000
185,000 General Electric Capital Corporation 7.88 12/01/06 191,013
500,000 General Electric Capital Corporation 8.63 06/15/08 538,750
-------------
$ 5,977,263
OIL & GAS EXTRACTION--3.58%
2,500,000 Petroleum Geo-Services 7.50% 03/31/07 $ 2,446,875
PAPER & ALLIED PRODUCTS--1.11%
500,000 Playtex Family Products Corporation 9.00% 12/15/03 $ 493,750
250,000 Kappa Beheer BV 9.73 07/15/09 264,358
-------------
$ 758,108
PETROLEUM REFINING & RELATED INDUSTRIES--0.60%
200,000 Atlantic Richfield Company 9.00% 04/01/21 $ 224,750
200,000 Tosco Corporation 7.80 01/01/27 186,750
-------------
$ 411,500
PRINTING & PUBLICATIONS--0.36%
250,000 Hollinger International Publishing 9.25% 03/15/07 $ 247,500
PRINTING, PUBLISHING & ALLIED INDUSTRIES--0.39%
255,000 News America Holdings 8.88% 04/26/23 $ 269,025
</TABLE>
29
<PAGE> 30
WELLS FARGO VARIABLE TRUST CORPORATE BOND FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
REAL ESTATE--0.73%
$ 500,000 Rouse Company 8.50% 01/15/03 $ 500,625
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES--5.60%
2,000,000 Goldman Sachs Group Incorporated 6.65% 05/15/09 $ 1,860,000
2,000,000 Lehman Brothers Holdings 7.00 05/15/03 1,970,000
-------------
$ 3,830,000
TOBACCO PRODUCTS--0.66%
500,000 Imperial Tobacco 7.13% 04/01/09 $ 448,750
WHOLESALE TRADE-NONDURABLE GOODS--0.70%
500,000 Staples Incorporated 7.13% 08/15/07 $ 478,750
TOTAL CORPORATE BONDS & NOTES
(Cost $50,404,419) $ 49,646,453
MUNICIPAL SECURITIES--0.29%
MUNICIPAL NOTES--0.29%
200,000 Denver Colorado City and County School District #1
Educational Facilities Revenue Bonds Taxable Pension School
Facilities Lease AMBAC insured 6.49% 12/15/02 $ 197,000
TOTAL MUNICIPAL SECURITIES
(Cost $199,783) $ 197,000
U.S. GOVERNMENT AGENCY SECURITIES--3.26%
FEDERAL HOME LOAN MORTGAGE CORPORATION--0.44%
300,000 FHLMC 7.10% 04/10/07 $ 301,131
FEDERAL NATIONAL MORTGAGE ASSOCIATION--2.58%
478,271 FNMA, #449466 6.50% 11/01/28 $ 450,617
470,503 FNMA, #454390 6.00 12/01/28 430,510
963,964 FNMA, #455607 6.00 12/01/28 882,027
-------------
$ 1,763,154
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--0.24%
164,942 GNMA, #445071 7.50% 01/15/27 $ 163,086
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(Cost $2,274,797) $ 2,227,371
U.S. TREASURY SECURITIES--21.43%
U.S. TREASURY BONDS--15.75%
750,000 U.S. Treasury Bonds 5.25% 11/15/28 $ 617,933
7,000,000 U.S. Treasury Bonds 5.25 02/15/29 5,794,950
300,000 U.S. Treasury Bonds 8.88 02/15/19 365,082
300,000 U.S. Treasury Bonds 8.88 08/15/17 362,427
700,000 U.S. Treasury Bonds 10.75 08/15/05 835,051
200,000 U.S. Treasury Bonds 11.25 02/15/15 282,614
1,300,000 U.S. Treasury Bonds 7.88 11/15/04 1,374,217
500,000 U.S. Treasury Bonds 8.13 08/15/21 573,470
500,000 U.S. Treasury Bonds 8.13 08/15/19 569,625
-------------
$ 10,775,369
</TABLE>
30
<PAGE> 31
WELLS FARGO VARIABLE TRUST CORPORATE BOND FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY NOTES--5.68%
$1,450,000 U.S. Treasury Notes 4.75% 11/15/08 $ 1,279,103
625,000 U.S. Treasury Notes 5.63 12/31/02 613,650
500,000 U.S. Treasury Notes 6.13 08/15/07 487,635
800,000 U.S. Treasury Notes 6.50 08/15/05 799,792
700,000 U.S. Treasury Notes 6.63 05/15/07 $ 702,513
-------------
3,882,693
TOTAL U.S. TREASURY SECURITIES
(Cost $15,029,051) $ 14,658,062
SHORT-TERM INSTRUMENTS--0.38%
REPURCHASE AGREEMENTS--0.38%
202,000 Goldman Sachs Repurchase Agreement
-102% Collateralized by U.S. Government Securities 2.03% 01/03/00 $ 202,000
61,000 JP Morgan Securities Incorporated Repurchase Agreement
-102% Collateralized by U.S. Government Securities 2.48 01/03/00 61,000
TOTAL SHORT-TERM INSTRUMENTS
(Cost $263,000) $ 263,000
TOTAL INVESTMENTS IN SECURITIES
(Cost $68,171,050)* 97.94% $ 66,991,886
Other Assets and Liabilities, Net 2.06 1,431,132
------ -------------
TOTAL NET ASSETS 100.00% $ 68,423,018
====== =============
</TABLE>
- --------------------------------------------------------------------------------
+ Yield to Maturity.
* Cost for federal income tax purposes is the same as for financial statement
purposes and net unrealized depreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $ 49,826
Gross Unrealized Depreciation (1,228,990)
------------
NET UNREALIZED DEPRECIATION $ (1,179,164)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 32
VARIABLE TRUST EQUITY INCOME FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Equity Income Fund (the "Fund") seeks long-term
capital appreciation and above-average dividend income.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
David L. Roberts, CFA
Gary J. Dunn, CFA
INCEPTION DATE
5/6/96
PERFORMANCE HIGHLIGHTS
The Fund returned 7.90%(1) for the 12-month period ended December 31, 1999,
underperforming the S&P 500 Index(2), which returned 21.04% for the period, but
outperforming the Russell 1000 Value Index(3), which returned 7.35%. The Fund
underperformed the S&P 500 Index as it chose to underweight in the technology
sector. Valuations for technology stocks were at historically high levels,
especially for large cap technology stocks. Excluding the technology and
telecommunications companies in the S&P 500 Index, the remaining 434 companies
actually declined by 4.2% for 1999. The Fund distributed $0.17 per share in
dividend income and no capital gains during the period. Please keep in mind past
performance is no guarantee of future results.
The Fund benefited from its overweighted position in capital goods stocks,
such as General Electric and Honeywell; energy stocks including Atlantic
Richfield, Royal Dutch and Schlumberger; and financial holdings, including
American Express and J.P. Morgan. In the financial sector, the Fund built a
position in St. Paul Companies, the fourth largest property/casualty company in
the country. St. Paul Companies, which trades at about book value, grew its
dividend 7% annually over the past five years and sells at less than 12 times
earnings. The Fund rebounded 65% from the depressed levels of 1998.
U.S. Bancorp, which was down 35% in 1999, announced it would not meet
fourth quarter earnings estimates. Tyco International was down based on
questions concerning liberal accounting practices that may have resulted in
higher earnings being reported than if more conservative accounting methods had
been utilized. The stock price was even for the year after dropping 30% in value
in the fourth quarter.
The Fund added IBM and Disney during the fourth quarter. IBM's earnings
were expected to grow about 18% and double-digit revenue and earnings per share
growth were expected over the next three years. The Fund believes that Disney is
a tremendous franchise and provides significant growth opportunities in its film
and broadcasting divisions, theme parks and resorts.
Over the past year, the Fund has seen very good value in the consumer goods
sector and has been building its positions in Fortune Brands, Pepsico and May
Department Stores. These all have had double digit annual earnings growth over
the past five years that has not been recognized in their stock prices.
32
<PAGE> 33
STRATEGIC OUTLOOK
The Fund expects slower economic growth in the U.S. in 2000, but increased
growth in Europe and Asia. As foreign economies improve, the Fund should benefit
from its exposure to many U.S. companies that derive 35% to 50% of their revenue
from non-U.S. sources. If, however, growth in technology continues to
accelerate, Fund performance could lag as a result of its lower weighting in the
technology sector.
VARIABLE TRUST EQUITY INCOME FUND(7)
[WFVTEIF ASSET ALLOCATION PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
WFVT EQUITY INCOME FUND RUSSELL 1000 VALUE INDEX S&P 500 INDEX
----------------------- ------------------------ -------------
<S> <C> <C> <C>
10000.00 10000.00 10000.00
10000.00 10125.00 10257.00
6/96 10110.00 10133.00 10296.00
9710.00 9750.00 9841.00
9830.00 10029.00 10049.00
9/96 10250.00 10427.00 10613.00
10490.00 10831.00 10906.00
11170.00 11616.00 11730.00
12/96 10995.00 11467.00 11497.00
11540.00 12023.00 12216.00
11691.00 12200.00 12311.00
3/97 11348.00 11761.00 11805.00
11681.00 12255.00 12509.00
12215.00 12940.00 13273.00
6/97 12719.00 13495.00 13864.00
13535.00 14511.00 14966.00
12910.00 13995.00 14128.00
9/97 13525.00 14840.00 14901.00
13132.00 14426.00 14403.00
13716.00 15063.00 15070.00
12/97 13953.00 15503.00 15329.00
13994.00 15285.00 15498.00
14902.00 16313.00 16615.00
3/98 15647.00 17312.00 17466.00
15800.00 17428.00 17644.00
15585.00 17170.00 17340.00
6/98 15830.00 17389.00 18044.00
15381.00 17082.00 17853.00
13545.00 14540.00 15273.00
9/98 14290.00 15375.00 16252.00
15290.00 16566.00 17572.00
15993.00 17338.00 18637.00
12/98 16523.00 17929.00 19710.00
16472.00 18073.00 20540.00
16482.00 17818.00 19899.00
3/99 17091.00 18187.00 20695.00
17959.00 19885.00 21496.00
17917.00 19667.00 20989.00
6/99 18630.00 20237.00 22131.00
18145.00 19644.00 21440.00
17856.00 18915.00 21334.00
9/99 17195.00 18255.00 20749.00
17659.00 19307.00 22062.00
17814.00 19156.00 22510.00
12/99 17829.00 19248.00 23836.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
6-Month (4.30)%
1-Year 7.90%
Since Inception 17.14%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK RUSSELL 1000 VALUE INDEX S&P 500 INDEX
- --------- ------------------------ -------------
<S> <C> <C>
6-Month (4.90)% 7.69%
1-Year 7.35% 21.04%
</TABLE>
33
<PAGE> 34
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
<TABLE>
<S> <C>
Portfolio Turnover 5%
Number of Holdings 51
NAV $17.09
SEC Yield(4) 0.89%
</TABLE>
TEN LARGEST EQUITY HOLDINGS (AS OF DECEMBER 31, 1999)(5)
<TABLE>
<CAPTION>
NAME % OF FUND
- ---- ---------
<S> <C>
Hewlett-Packard Company 5.54%
Lucent Technologies, Incorporated 4.34%
AT&T Corporation 3.62%
PepsiCo 3.35%
Procter & Gamble Company 3.30%
Exxon Mobil Corporation 3.19%
General Electric Company 3.16%
Tyco International Limited 2.96%
Dayton Hudson Corporation 2.84%
American Express 2.76%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(6)
[PIE CHART]
<TABLE>
<S> <C>
Cash 2.16%
Stocks 97.84%
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund managers have voluntarily waived all or a portion
of their management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time. Performance figures of the Fund do not reflect
charges pursuant to the terms of the variable life insurance policies and
variable annuity contracts funded by separate accounts that invest in the Fund's
shares.
Performance shown for the Wells Fargo Variable Trust Equity Income Fund for
periods prior to September 20, 1999, reflects performance of the Norwest Select
Income Equity Fund, its predecessor fund. Effective at the close of business
September 17, 1999, the Life and Annuity Trust and Norwest Select Funds were
reorganized into the Wells Fargo Variable Trust Funds.
(2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks
representing, among others, industrial, financial, utility, and transportation
companies listed or traded on national exchanges or over-the-counter markets.
The Fund is a professionally managed mutual fund. You cannot invest directly in
an index.
(3) The Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
34
<PAGE> 35
(4) The formula used to calculate the SEC yield is described in detail in the
Fund's Statement of Additional Information and is designed to standardize the
yield calculations so that all mutual fund companies with the same or similar
portfolios quote a uniform yield figure for their non-money market
advertisements. SEC yields include the actual amount of interest earned adjusted
by any gain or loss realized due to the return of principal, less expenses and
the maximum offering price calculated on a 30-day month-end basis.
(5) The Ten Largest Equity Holdings is calculated based on the market value of
the securities divided by total market value of the portfolio.
(5) The Ten Largest Equity Holdings is calculated based on the market value of
the securities divided by total market value of the portfolio.
(6) Portfolio holdings are subject to change.
(7) The chart compares the performance of the Wells Fargo Variable Trust Equity
Income Fund since inception with the S&P 500 Index and the Russell 1000 Value
Index. The chart assumes a hypothetical $10,000 investment and reflects all
operating expenses. The Fund is a professionally managed mutual fund.
35
<PAGE> 36
WELLS FARGO VARIABLE TRUST EQUITY INCOME FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK--97.33%
BUSINESS SERVICES--1.92%
9,561 Gartner Group Incorporated--Class B+ $ 132,061
85,470 IMS Health Incorporated 2,323,716
------------
$ 2,455,777
CHEMICALS & ALLIED PRODUCTS--13.22%
59,730 American Home Products Corporation $ 2,355,602
48,430 E.I. du Pont de Nemours & Company 3,190,326
41,200 Merck & Company Incorporated 2,762,975
83,180 Pfizer Incorporated 2,698,151
38,300 Procter & Gamble Company 4,196,245
41,394 Rohm & Haas Company 1,684,218
------------
$ 16,887,517
COMMUNICATIONS--5.72%
90,577 AT&T Corporation $ 4,596,782
38,520 GTE Corporation 2,718,068
------------
$ 7,314,850
DEPOSITORY INSTITUTIONS--3.40%
20,465 J.P. Morgan & Company Incorporated $ 2,591,381
73,340 U.S. Bancorp 1,746,408
------------
$ 4,337,789
EATING & DRINKING PLACES--1.81%
57,410 McDonald's Corporation $ 2,314,341
ELECTRIC, GAS & SANITARY SERVICES--4.64%
25,310 Consolidated Natural Gas Company $ 1,643,569
25,670 Pacific Gas & Electric Company 526,236
34,190 Public Service Enterprise Group Incorporated 1,190,239
57,603 Texas Utilities Company 2,048,507
30,219 Waste Management Incorporated 519,388
------------
$ 5,927,939
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT--9.69%
49,590 Emerson Electric Company $ 2,845,226
25,950 General Electric Company 4,015,763
73,740 Lucent Technologies Incorporated 5,516,674
------------
$ 12,377,663
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED
SERVICES--1.83%
79,350 Dun & Bradstreet Corporation $ 2,340,825
</TABLE>
36
<PAGE> 37
WELLS FARGO VARIABLE TRUST EQUITY INCOME FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION
EQUIPMENT--2.49%
96,320 Fortune Brands Incorporated $ 3,184,580
FOOD & KINDRED PRODUCTS--4.86%
120,780 PepsiCo Incorporated $ 4,257,495
88,200 Sara Lee Corporation 1,945,913
------------
$ 6,203,408
GENERAL MERCHANDISE STORES--6.48%
49,110 Dayton Hudson Corporation $ 3,606,516
53,545 J.C. Penney Company Incorporated 1,067,554
78,367 May Department Stores Company 2,527,335
35,530 Sears, Roebuck and Company 1,081,444
------------
$ 8,282,849
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--7.37%
61,840 Hewlett-Packard Company $ 7,045,895
22,000 IBM Corporation 2,376,000
------------
$ 9,421,895
INSURANCE CARRIERS--6.86%
33,604 Aegon NV, ADR $ 3,209,182
34,180 American General Corporation 2,593,408
87,910 St. Paul Cos. Incorporated 2,961,468
------------
$ 8,764,058
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS--4.40%
28,825 Eastman Kodak Company $ 1,909,656
54,543 Honeywell International Incorporated 3,146,448
25,000 Xerox Corporation 567,188
------------
$ 5,623,292
MISCELLANEOUS MANUFACTURING INDUSTRIES--2.94%
96,748 Tyco International Limited $ 3,761,077
MOTION PICTURES--0.80%
35,000 Walt Disney Company $ 1,023,750
NONDEPOSITORY CREDIT INSTITUTIONS--2.74%
21,100 American Express Company $ 3,507,875
OIL & GAS EXTRACTION--1.49%
30,410 Schlumberger Limited $ 1,710,563
5,887 Transocean Sedco Forex Incorporated 198,330
------------
$ 1,908,893
PAPER & ALLIED PRODUCTS--2.17%
28,292 Minnesota Mining and Manufacturing Company $ 2,769,080
</TABLE>
37
<PAGE> 38
WELLS FARGO VARIABLE TRUST EQUITY INCOME FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PETROLEUM REFINING & RELATED INDUSTRIES--7.61%
27,810 Atlantic Richfield Company $ 2,405,565
23,225 Chevron Corporation 2,011,865
50,357 Exxon Mobil Corporation 4,056,887
20,800 Royal Dutch Petroleum Company New York Registered Shares 1,257,100
------------
$ 9,731,417
TOBACCO PRODUCTS--1.15%
63,610 Philip Morris Cos. Incorporated $ 1,474,957
TRANSPORTATION EQUIPMENT--1.82%
35,750 United Technologies Corporation $ 2,323,750
WHOLESALE TRADE--DURABLE GOODS--1.92%
26,310 Johnson & Johnson $ 2,450,119
TOTAL COMMON STOCK
(Cost $106,514,010) $124,387,701
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL RATE DATE
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--2.15%
$2,748,720 Lehman Brothers Incorporated Repurchase Agreement
-102% Collateralized by U.S. Government Securities 4.55% 01/03/00 $ 2,748,720
TOTAL REPURCHASE AGREEMENTS
(Cost $2,748,720) $ 2,748,720
TOTAL INVESTMENTS IN SECURITIES
(Cost $109,262,730)* 99.48% $127,136,421
Other Assets and Liabilities, Net 0.52 657,058
------ -------------
TOTAL NET ASSETS 100.00% $127,793,479
====== =============
</TABLE>
- --------------------------------------------------------------------------------
+ Non-income earning securities.
* Cost for federal income tax purposes is $109,262,792 and net unrealized
appreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $ 26,397,465
Gross Unrealized Depreciation (8,523,836)
------------
NET UNREALIZED APPRECIATION $ 17,873,629
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE> 39
VARIABLE TRUST EQUITY VALUE FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Equity Value Fund (the "Fund") seeks long-term
capital appreciation. The Fund invests in common stocks and foreign and domestic
convertible debt securities.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Allen Wisniewski, CFA
Gregg Giboney, CFA
INCEPTION DATE
5/1/98
PERFORMANCE HIGHLIGHTS
The Fund returned (2.48)%(1) for the 12-month period ended December 31,
1999. The Fund underperformed the S&P 500 Index(2), which returned 21.04%, and
the Russell 1000 Value Index(3), which returned 7.35%. The Fund underperformed
due to overall weakness in the returns provided by traditional value strategies,
market capitalization less than that of the benchmark in the first half of the
year and an emphasis on deeply discounted stocks. Another way to view the Fund's
performance is that it was contained within a rather narrow group of stocks that
failed to meet the disciplined value parameters of the Fund. The Fund
distributed $0.08 per share in dividend income and no capital gains during the
period. Please keep in mind past performance is no guarantee of future results.
Economic factors changed significantly over the 12-month period. In the
first quarter, investors were still cautious following the Asian economic
crisis. This emphasis on safety allowed only large and liquid stocks to
outperform. In the second quarter, Asian worries abated and the Fund benefited
from broad market improvement and the effect of higher oil prices on energy
stocks. The third quarter was the Fund's worst period as Y2K worries peaked and
interest rates moved higher. During the fourth quarter, improving global and
domestic economic conditions began to positively influence certain cyclical and
industrial stocks.
Stocks that provided the best performance during the year included Alcoa
(basic goods), Exxon Mobil (energy), Honeywell (producer durables), Apple
Computer, IBM and Motorola (technology), and Morgan Stanley Dean Witter and
Citigroup (brokerage/financial).
STRATEGIC OUTLOOK
The Fund expects continued improvement in global economic conditions,
healthy domestic economic conditions and higher interest rates in the coming
year. A higher interest rate scenario implies a higher level of economic growth,
which would be helpful for basic goods and industrial companies. Technology may
continue to present excellent growth opportunities, and the Fund is expected to
participate to the extent that it can under its value discipline.
Value versus growth was the subject of considerable debate at the end of
the period. Growth stocks have dominated over the past few years due to factors
such as technological innovation and other disinflationary factors. Growth
stocks were trading at extremely high levels of valuation and inflation is
currently creeping higher. Under these conditions, traditional value investment
strategies may start to provide better relative and nominal returns.
39
<PAGE> 40
VARIABLE TRUST EQUITY VALUE FUND(6)
[WFVT EQUITY VALUE PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
WFVT EQUITY VALUE FUND RUSSELL 1000 VALUE INDEX S&P 500 INDEX
---------------------- ------------------------ -------------
<S> <C> <C> <C>
4/98 10000.00 10000.00 17644.00
5/98 9680.00 9852.00 17340.00
6/98 9739.00 9978.00 18044.00
7/98 9268.00 9802.00 17853.00
8/98 8156.00 8344.00 15273.00
9/98 8626.00 8823.00 16252.00
10/98 9199.00 9507.00 17572.00
11/98 9460.00 9950.00 18637.00
12/98 9624.00 10288.00 19710.00
1/99 9403.00 10370.00 20540.00
2/99 9161.00 10224.00 19899.00
3/99 9380.00 10436.00 20695.00
4/99 10188.00 11410.00 21496.00
5/99 10087.00 11285.00 20989.00
6/99 10399.00 11612.00 22131.00
7/99 10024.00 11272.00 21440.00
8/99 9477.00 10854.00 21334.00
9/99 8981.00 10475.00 20749.00
10/99 9285.00 11078.00 22062.00
11/99 9255.00 10992.00 22510.00
12/99 9386.00 11045.00 23836.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
6-Month (9.74)%
1-Year (2.48)%
Since Inception (3.73)%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK S&P 500 INDEX RUSSELL 1000 VALUE INDEX
- --------- --------------- --------------------------
<S> <C> <C>
6-Month 7.69% (4.90)%
1-Year 21.04% 7.35%
</TABLE>
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
<TABLE>
<S> <C>
Portfolio Turnover 139%
Number of Holdings 88
NAV $9.23
</TABLE>
40
<PAGE> 41
TEN LARGEST EQUITY HOLDINGS (AS OF DECEMBER 31, 1999)(4)
<TABLE>
<CAPTION>
NAME % OF FUND
- ---- ---------
<S> <C>
Citigroup, Incorporated 4.50%
Exxon Mobil Corporation 4.30%
Morgan Stanley Dean Witter & Company 3.20%
SBC Communications 2.70%
American International Group, Incorporated 2.40%
Media One Group, Incorporated 2.10%
GTE Corporation 1.90%
Philips Electronics NV ADR 1.90%
Bellsouth Corporation 1.80%
TRW Incorporated 1.80%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(5)
[PIE CHART]
<TABLE>
<S> <C>
Cash 6.00%
Stocks 94.00%
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund managers have voluntarily waived all or a portion
of their management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time. Performance figures of the Fund do not reflect
charges pursuant to the terms of the variable life insurance policies and
variable annuity contracts funded by separate accounts that invest in the Fund's
shares.
Performance shown for the Wells Fargo Variable Trust Equity Value Fund for
periods prior to September 20, 1999, reflects performance of the Life and
Annuity Trust Equity Value Fund, its predecessor fund. Effective at the close of
business September 17, 1999, the Life and Annuity Trust and Norwest Select Funds
were reorganized into the Wells Fargo Variable Trust Funds.
(2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks
representing, among others, industrial, financial, utility, and transportation
companies listed or traded on national exchanges or over-the-counter markets.
The Fund is a professionally managed mutual fund. You cannot invest directly in
an index.
(3) The Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.
You cannot invest directly in an index.
(4) The Ten Largest Equity Holdings is calculated based on the securities market
value divided by total market value of the portfolio.
(5) Portfolio holdings are subject to change.
(6) The chart compares the performance of the Wells Fargo Variable Trust Equity
Value Fund since inception with the S&P 500 and the Russell 1000 Value Index.
The chart assumes a hypothetical $10,000 investment and reflects all operating
expenses. The Fund is a professionally managed mutual fund.
41
<PAGE> 42
WELLS FARGO VARIABLE TRUST EQUITY VALUE FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS--94.93%
BUILDING CONSTRUCTION-GENERAL CONTRACTORS & OPERATIVE
BUILDERS--0.48%
5,000 Masco Corporation $ 126,875
BUSINESS SERVICES--2.08%
4,100 Computer Associates International Incorporated $ 286,744
8,350 Unisys Corporation+ 266,678
-----------
$ 553,422
CHEMICALS & ALLIED PRODUCTS--4.46%
3,150 Abbott Laboratories $ 114,384
2,550 American Home Products Corporation 100,566
1,550 Dow Chemical Company 207,119
5,000 DuPont (E.I.) de Nemours and Company 329,375
6,600 Hercules Incorporated 183,975
6,950 Watson Pharmaceuticals Incorporated+ 248,897
-----------
$ 1,184,316
COMMUNICATIONS--12.69%
8,387 American Telephone & Telegraph Corporation $ 425,640
7,175 Bell Atlantic Corporation 441,711
10,275 BellSouth Corporation 480,998
7,075 GTE Corporation 499,230
1,313 MCI Worldcom Incorporated+ 69,645
7,400 Media One Group Incorporated+ 568,413
15,012 SBC Communications Incorporated 731,835
2,300 Sprint Corporation (FON Group) 154,819
-----------
$ 3,372,291
CONSUMER DURABLES--1.91%
3,761 Philips Electronics NV ADR $ 507,735
DOMESTIC DEPOSITORY INSTITUTIONS--10.79%
3,525 Bank of America Corporation $ 176,911
5,200 Chase Manhattan Corporation 403,975
21,988 Citigroup Incorporated 1,221,708
1,550 Comerica Incorporated 72,366
3,300 First Security Corporation 84,253
11,450 Mellon Financial Corporation 390,016
1,200 SunTrust Banks Incorporated 82,575
4,825 Union BanCal Corporation 190,286
3,425 U.S. Bancorp 81,558
6,300 Washington Mutual Incorporated 163,800
-----------
$ 2,867,448
</TABLE>
42
<PAGE> 43
WELLS FARGO VARIABLE TRUST EQUITY VALUE FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRIC, GAS & SANITARY SERVICES--7.33%
7,300 Coastal Corporation $ 258,694
7,150 Columbia Energy Group 452,238
3,350 Enron Corporation 148,656
4,375 Montana Power Company 157,773
12,450 Potomac Electric Power Company 285,572
6,900 Texas Utilities Company 245,381
13,050 Williams Companies Incorporated 398,841
-----------
$ 1,947,155
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT--3.33%
10,600 American Power Conversion+ $ 279,575
4,175 Emerson Electric Company 239,541
2,475 Motorola Incorporated 364,444
-----------
$ 883,560
FOOD & KINDRED PRODUCTS--1.61%
3,500 Anheuser-Busch Incorporated $ 248,063
6,450 Ralston-Purina Group 179,794
-----------
$ 427,857
FOOD STORES--0.42%
5,391 Delhaize America Incorporated $ 112,537
GENERAL MERCHANDISE STORES--1.00%
5,250 Federated Department Stores Incorporated+ $ 265,453
HOLDING & OTHER INVESTMENT OFFICES--1.11%
6,925 Equity Residential Properties Trust $ 295,611
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES--0.57%
12,200 Park Place Entertainment Corporation+ $ 152,500
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--3.78%
2,250 Apple Computer Incorporated+ $ 231,328
1,700 Hewlett Packard Company 193,694
2,250 International Business Machines Corporation 243,000
7,200 Seagate Technology Incorporated+ 335,250
-----------
$ 1,003,272
INSURANCE AGENTS, BROKERS & SERVICE--1.67%
4,625 Marsh & McLennan Companies Incorporated $ 442,555
INSURANCE CARRIERS--5.45%
2,850 American General Corporation $ 216,244
6,062 American International Group Incorporated 655,454
3,400 Hartford Financial Services Group 161,075
1,650 Hartford Life Class A+ 72,600
5,350 MBIA Incorporated 282,547
2,100 Torchmark Corporation 61,030
-----------
$ 1,448,950
</TABLE>
43
<PAGE> 44
WELLS FARGO VARIABLE TRUST EQUITY VALUE FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
LOCAL & SUBURBAN TRANSIT & INTERURBAN HIGHWAY PASSENGER
TRANSPORTATION--1.28%
12,900 Canadian National Railway Company $ 339,431
MANUFACTURING PROCESSING--2.02%
8,175 Bowater Incorporated $ 444,005
1,300 Teva Pharmaceutical ADR 93,194
-----------
$ 537,199
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS--2.84%
4,225 Eaton Corporation $ 306,840
7,775 Honeywell International Incorporated 448,520
-----------
$ 755,360
MISCELLANEOUS MANUFACTURING INDUSTRIES--0.53%
3,600 Tyco International Limited $ 139,950
MISCELLANEOUS RETAIL--2.61%
10,575 Avalonbay Communities Incorporated $ 362,855
5,050 Kimberly-Clark Corporation 329,513
-----------
$ 692,368
MOTION PICTURES--0.37%
3,400 Walt Disney Company $ 99,450
NONDEPOSITORY CREDIT INSTITUTIONS--5.09%
7,150 Federal Home Loan Mortgage Corporation $ 336,497
5,550 Federal National Mortgage Association 346,528
9,350 Household International Incorporated 348,288
7,575 SLM Holding Corporation 320,044
-----------
$ 1,351,357
OIL & GAS EXTRACTION--1.25%
3,350 Burlington Resources Incorporated $ 110,759
6,550 Transocean Sedco Forex Incorporated 220,653
-----------
$ 331,412
PAPER & ALLIED PRODUCTS--1.53%
4,000 Mead Corporation $ 173,750
2,375 Minnesota Mining & Manufacturing Company 232,453
-----------
$ 406,203
PETROLEUM REFINING & RELATED INDUSTRIES--8.36%
1,950 Chevron Corporation $ 168,919
12,350 Conoco Incorporated Class B 307,205
14,327 Exxon Mobil Corporation 1,154,219
4,275 Phillips Petroleum Company 200,925
15,800 USX-Marathon Group 390,063
-----------
$ 2,221,331
</TABLE>
44
<PAGE> 45
WELLS FARGO VARIABLE TRUST EQUITY VALUE FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PRIMARY METAL INDUSTRIES--1.47%
4,700 Alcoa Incorporated $ 390,100
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES--3.24%
6,025 Morgan Stanley Dean Witter & Company $ 860,069
STONE, CLAY, GLASS & CONCRETE PRODUCTS--0.51%
5,350 Owens-Illinois Incorporated+ $ 134,084
TOBACCO PRODUCTS--0.58%
6,650 Philip Morris Companies Incorporated $ 154,197
TRANSPORTATION EQUIPMENT--4.57%
3,100 Ford Motor Company $ 165,655
3,600 General Dynamics Corporation 189,900
5,325 General Motors Corporation 387,060
9,100 TRW Incorporated 472,630
-----------
$ 1,215,245
TOTAL COMMON STOCKS
(Cost $24,207,611) $25,219,293
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL RATE DATE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS--6.48%
REPURCHASE AGREEMENTS--6.48%
$1,293,000 Goldman Sachs Pooled Repurchase Agreement--102%
Collateralized by U.S. Government Securities 2.00% 01/03/00 $ 1,293,000
430,000 JP Morgan Securities Incorporated Repurchase Agreement--102%
Collateralized by U.S. Government Securities 2.45 01/03/00 430,000
TOTAL SHORT-TERM INSTRUMENTS
(Cost $1,723,000) $ 1,723,000
TOTAL INVESTMENTS IN SECURITIES
(Cost $25,930,611)* (Notes 1 and 3) 101.41% $26,942,293
Other Assets and Liabilities, Net (1.41) (375,240)
------ ------------
TOTAL NET ASSETS 100.00% $26,567,053
====== ============
</TABLE>
- --------------------------------------------------------------------------------
+ Non-income earning securities.
* Cost for federal income tax purposes is $26,229,871 and net unrealized
appreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $ 2,177,452
Gross Unrealized Depreciation (1,465,030)
------------
NET UNREALIZED APPRECIATION $ 712,422
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
45
<PAGE> 46
VARIABLE TRUST GROWTH FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Growth Fund (the "Fund") seeks long-term capital
appreciation by investing primarily in common stocks, preferred stocks and
convertible debt securities.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGER
Kelli Hill
INCEPTION DATE
4/12/94
PERFORMANCE HIGHLIGHTS
The Fund returned 20.41%(1) for the 12-month period ended December 31,
1999. The Fund slightly underperformed its benchmark, the S&P 500 Index(2) which
returned 21.04%. The Fund distributed $0.03 per share in dividend income and no
capital gains during the period. Please keep in mind past performance is no
guarantee of future results.
The Fund finished 1999 slightly below the benchmark in what could have been
considered an extremely volatile environment. While rotation from growth stocks
to value stocks helped fuel much of this volatility, the technology sector was
clearly a contributor to performance throughout much of the year. Earnings were
strong for the first three quarters across the board, however the disparity
across sector performance remained great over the course of the year. Even
technology managed to stage a comeback at the end of the third quarter with a
positive return. The financial sector had a mixed personality in 1999, with very
strong performance in the first half and then giving most of the gain back in
the third quarter with no recovery in the fourth quarter. In both sectors, stock
selection was a key element to outperformance.
The year began with the fear of rising interest rates, but by March that
fear had subsided. As the second quarter unfolded, the world economy showed
signs of recovery with money flowing from large, consistent growth stocks into
cyclical and value stocks as the S&P 500 earnings growth began to accelerate.
However, the third quarter was an example of a reversal of fortune for value
stocks as the market narrowed and momentum prevailed.
The biggest contributors to performance were in the technology sector. JDS
Uniphase was up 287.83%, while Veritas Software was up 270.75%. The Fund added
to these positions as well as to Nortel, Cisco Systems and Microsoft in an
effort to overweight the technology sector in the fourth quarter.
STRATEGIC OUTLOOK
The outlook for financial markets for the first half of 2000 could be more
subdued than the last half of 1999, with the uncertainty of higher interest
rates becoming a reality. The Fund believes visibility will be key to its
strategy in 2000, and it anticipates that companies able to demonstrate solid,
visible earnings growth going forward will command a premium in the overall
market. The Fund will continue to look for earnings growth and relative
price/earnings growth, which will be even more important this year.
46
<PAGE> 47
VARIABLE TRUST GROWTH FUND(5)
[WFVT ASSET ALLOCATION PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
WFVTGROWTH S&P500 INDEX
---------- ------------
<S> <C> <C>
10000 10000
10110 10164
6/94 9888 9915
10189 10241
10511 10660
9/94 10422 10400
10502 10633
10260 10246
12/94 10447 10398
10508 10668
10994 11083
3/95 11237 11409
11390 11745
11930 12214
6/95 12209 12497
12589 12911
12794 12944
9/95 13223 13490
12801 13442
13325 14031
12/95 13497 14301
13748 14788
14260 14925
3/96 14297 15068
14769 15290
15136 15683
6/96 14876 15742
14108 15047
14518 15364
9/96 15247 16227
15659 16675
16662 17934
12/96 16525 17579
17473 18678
16966 18824
3/97 16376 18050
17036 19126
18117 20294
6/97 18506 21197
20013 22883
18853 21601
9/97 19906 22783
18986 22022
19280 23041
12/97 19389 23438
19747 23696
20810 25404
3/98 21809 26705
21959 26977
21624 26513
6/98 22674 27590
22558 27297
19418 23353
9/98 20316 24850
21964 26867
23437 28496
12/98 24975 30137
25935 31406
25063 30426
3/99 26256 31643
27054 32867
26218 32092
6/99 27684 33838
26886 32781
26924 32619
9/99 26202 31725
27737 33733
28348 34418
12/99 30074 36445
</TABLE>
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
6-Month 8.63%
1-Year 20.41%
5-Year 23.55%
Since Inception 21.22%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK S&P 500 INDEX
- --------- -------------
<S> <C> <C>
6-Month 7.69%
1-Year 21.04%
5-Year 28.56%
</TABLE>
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
<TABLE>
<S> <C>
Portfolio Turnover 54%
Number of Holdings 91
NAV $24.10
</TABLE>
47
<PAGE> 48
TEN LARGEST EQUITY HOLDINGS (AS OF DECEMBER 31, 1999)(3)
<TABLE>
<CAPTION>
NAME % OF FUND
- ---- ---------
<S> <C>
Microsoft Corporation 4.90%
General Electric Company 4.20%
Cisco Systems, Incorporated 4.10%
American International Group, Incorporated 3.50%
Exxon Mobil Corporation 3.10%
Intel Corporation 2.80%
Wal-Mart Stores, Incorporated 2.70%
Citigroup, Incorporated 2.20%
Lucent Technologies, Incorporated 2.10%
America Online, Incorporated 2.10%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1994)(4)
[PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
Cash 3.00%
Stocks 97.00%
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund's manager has voluntarily waived all or a portion
of its management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time. Performance figures of the Fund do not reflect
charges pursuant to the terms of the variable life insurance policies and
variable annuity contracts funded by separate accounts that invest in the Fund's
shares.
Performance shown for the Wells Fargo Variable Trust Growth Fund for periods
prior to September 20, 1999, reflects performance of the Life and Annuity Trust
Growth Fund, its predecessor fund. Effective at the close of business September
17, 1999, the Life and Annuity Trust and Norwest Select Funds were reorganized
into the Wells Fargo Variable Trust Funds.
(2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks
representing, among others, industrial, financial, utility and transportation
companies listed or traded on national exchanges or over-the-counter markets.
The Fund is a professionally managed mutual fund. You cannot invest directly in
an index.
(3) The Ten Largest Equity Holdings is calculated based on the securities market
value divided by total market value of the portfolio.
(4) Portfolio holdings are subject to change.
(5) The chart compares the performance of the Wells Fargo Variable Trust Growth
Fund since inception with the S&P 500 Index. The chart assumes a hypothetical
$10,000 investment and reflects all operating expenses. The Fund is a
professionally managed mutual fund.
48
<PAGE> 49
WELLS FARGO VARIABLE TRUST GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS--96.56%
APPAREL & ACCESSORY STORES--0.39%
7,000 Kohls Corporation+ $ 505,313
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME
DEALERS--1.92%
27,450 Home Depot Incorporated $ 1,882,040
9,750 Lowe's Company Incorporated 582,563
------------
$ 2,464,603
BUSINESS SERVICES--5.93%
35,722 America Online Incorporated+ $ 2,694,778
6,500 Computer Associates International Incorporated 454,594
16,400 Interpublic Group Companies Incorporated 946,075
7,000 Oracle Systems Corporation+ 784,438
18,664 Sun Microsystems Incorporated+ 1,445,294
9,000 Veritas Software Corporation+ 1,288,125
------------
$ 7,613,304
CHEMICALS & ALLIED PRODUCTS--10.34%
20,751 Abbott Laboratories $ 753,520
9,264 Amgen Incorporated+ 556,419
26,823 Bristol-Myers Squibb Company 1,721,700
15,000 Clorox Company 755,625
24,100 Colgate-Palmolive Company 1,566,500
10,765 DuPont (E.I.) de Nemours and Company 709,144
22,288 Gillette Company 917,987
16,888 Lilly (Eli) & Company 1,123,052
19,067 Merck & Company Incorporated 1,278,680
50,812 Pfizer Incorporated 1,648,214
13,972 Procter & Gamble Company 1,530,807
17,290 Schering-Plough Corporation 729,422
------------
$ 13,291,070
COMMUNICATIONS--9.02%
25,223 American Telephone & Telegraph Corporation $ 1,280,067
28,276 Bell Atlantic Corporation 1,740,740
15,000 Charter Communications Incorporated+ 328,125
12,000 Clear Channel Communications Incorporated+ 1,071,000
47,300 Fox Entertainment Group Incorporated+ 1,179,544
24,398 GTE Corporation 1,721,584
15,362 MCI Worldcom Incorporated+ 815,120
4,200 Nextel Communications Class A+ 433,125
45,652 SBC Communications Incorporated 2,225,535
11,678 Sprint Corporation (FON Group) 786,075
------------
$ 11,580,915
COMPUTERS--4.89%
53,823 Microsoft Corporation+ $ 6,283,835
</TABLE>
49
<PAGE> 50
WELLS FARGO VARIABLE TRUST GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
DOMESTIC DEPOSITORY INSTITUTIONS--4.30%
31,414 Chase Manhattan Corporation $ 2,440,475
51,507 Citigroup Incorporated 2,861,858
6,594 Mellon Financial Corporation 224,608
------------
$ 5,526,941
EATING & DRINKING PLACES--0.58%
18,500 McDonald's Corporation $ 745,781
ELECTRIC, GAS & SANITARY SERVICES--2.56%
23,400 AES Corporation+ $ 1,749,150
9,700 Coastal Corporation 343,744
29,018 Edison International 759,909
14,190 Williams Companies Incorporated 433,682
------------
$ 3,286,485
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT--12.33%
35,247 General Electric Company $ 5,454,473
44,076 Intel Corporation 3,628,006
36,443 Lucent Technologies Incorporated 2,726,392
25,848 Nortel Networks Corporation 2,610,648
14,702 Texas Instruments Incorporated 1,424,256
------------
$ 15,843,775
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED
SERVICES--0.13%
4,000 Halliburton Company $ 161,000
FOOD & KINDRED PRODUCTS--2.50%
13,500 Anheuser-Busch Incorporated $ 956,813
28,260 Coca-Cola Company 1,646,145
17,400 Pepsico Incorporated 613,350
------------
$ 3,216,308
GENERAL MERCHANDISE STORES--4.45%
30,460 Dayton-Hudson Corporation $ 2,236,905
50,352 Wal-Mart Stores Incorporated 3,480,582
------------
$ 5,717,487
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--8.65%
6,500 Applied Materials Incorporated+ $ 823,469
49,380 Cisco Systems Incorporated+ 5,289,833
14,668 Dell Computer Corporation+ 748,068
10,398 EMC Corporation+ 1,135,982
11,093 Hewlett Packard Company 1,263,909
17,212 International Business Machines Corporation 1,858,896
------------
$ 11,120,157
</TABLE>
50
<PAGE> 51
WELLS FARGO VARIABLE TRUST GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
INSURANCE CARRIERS--3.94%
6,448 AFLAC Incorporated $ 304,265
41,564 American International Group Incorporated 4,494,108
5,580 Hartford Financial Services Group 264,353
------------
$ 5,062,726
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS--4.55%
22,417 Baxter International Incorporated $ 1,408,068
11,744 Danaher Corporation 566,648
7,671 Guidant Corporation+ 360,537
44,078 Honeywell International Incorporated 2,542,750
4,200 JDS Uniphase Corporation+ 677,513
7,862 Medtronic Incorporated 286,472
------------
$ 5,841,988
MEDIA--0.37%
7,500 CBS Corporation+ $ 479,530
MISCELLANEOUS MANUFACTURING INDUSTRIES--0.78%
25,800 Tyco International Limited $ 1,002,975
MISCELLANEOUS RETAIL--0.22%
8,000 Bed Bath & Beyond Incorporated+ $ 278,000
MOTION PICTURES--1.30%
11,400 Time Warner Incorporated $ 825,788
28,900 Walt Disney Company 845,325
------------
$ 1,671,113
NONDEPOSITORY CREDIT INSTITUTIONS--3.43%
40,733 Federal Home Loan Mortgage Corporation $ 1,916,997
20,669 Federal National Mortgage Association 1,290,521
32,281 Household International Incorporated 1,202,467
------------
$ 4,409,985
OIL & GAS EXTRACTION--0.44%
9,100 Schlumberger Limited $ 511,875
1,762 Transocean Sedco Forex Incorporated 59,349
------------
$ 571,224
PAPER & ALLIED PRODUCTS--0.70%
16,000 International Paper Company $ 903,000
PETROLEUM REFINING & RELATED INDUSTRIES--6.22%
17,745 Chevron Corporation $ 1,537,161
23,602 Conoco Incorporated Class B 587,100
50,009 Exxon Mobil Corporation 4,028,850
28,908 Royal Dutch Petroleum Company ADR 1,747,127
1,802 Texaco Incorporated 97,871
------------
$ 7,998,109
</TABLE>
51
<PAGE> 52
WELLS FARGO VARIABLE TRUST GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
PRIMARY METAL INDUSTRIES--1.23%
19,000 Alcoa Incorporated $ 1,577,000
PRINTING, PUBLISHING & ALLIED INDUSTRIES--1.33%
20,940 Gannett Company Incorporated $ 1,707,919
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES--1.62%
27,978 Charles Schwab Corporation $ 1,073,656
7,102 Morgan Stanley Dean Witter & Company 1,013,810
------------
$ 2,087,466
TRANSPORTATION EQUIPMENT--0.60%
11,800 United Technologies Corporation $ 767,000
TRANSPORTATION SERVICES--0.51%
9,450 United Parcel Service Incorporated Class B $ 652,050
WHOLESALE TRADE-DURABLE GOODS--1.33%
18,373 Johnson & Johnson $ 1,710,986
TOTAL COMMON STOCKS
(Cost $90,797,420) $124,078,045
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL RATE DATE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS--3.48%
REPURCHASE AGREEMENTS--3.48%
$4,263,000 Goldman Sachs Pooled Repurchase Agreement--102%
Collateralized by U.S. Government Securities 2.00% 01/03/00 $ 4,263,000
203,000 JP Morgan Securities Incorporated Repurchase
Agreement--102% Collateralized by U.S. Government
Securities 2.45% 01/03/00 203,000
TOTAL SHORT-TERM INSTRUMENTS
(Cost $4,466,000) $ 4,466,000
TOTAL INVESTMENTS IN SECURITIES
(Cost $95,263,420)* (Notes 1 and 3) 100.04% $128,544,045
Other Assets and Liabilities, Net (0.04) (48,614)
------ ------------
TOTAL NET ASSETS 100.00% $128,495,431
====== ============
</TABLE>
- --------------------------------------------------------------------------------
+ Non-income earning securities.
* Cost for federal income tax purposes is $95,284,677 and net unrealized
appreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $ 35,607,284
Gross Unrealized Depreciation (2,347,916)
------------
NET UNREALIZED APPRECIATION $ 33,259,368
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
52
<PAGE> 53
VARIABLE TRUST LARGE COMPANY GROWTH FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Large Company Growth Fund (the "Fund") seeks
long-term capital appreciation by investing primarily in large, high-quality
domestic companies.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
John S. Dale, CFA
Gary E. Nussbaum, CFA
INCEPTION DATE
9/20/99
PERFORMANCE HIGHLIGHTS
The Fund returned 20.30%(1) for the period from September 20, 1999
(commencement of operations) to December 31, 1999, slightly outperforming its
benchmark, the S&P 500 Index(2) which returned 14.88% for the three-month period
ended December 31, 1999. The Fund distributed no dividend income or capital
gains during the period. Please keep in mind past performance is no guarantee of
future results.
A disproportionate level of the Fund's return came from the largest
holdings in the Fund, such as Cisco Systems, Microsoft, Home Depot and American
International. Other strong performers included First Data Corporation, Ericsson
and Charles Schwab. The Fund had no portfolio turnover during the period because
all holdings met or exceeded the Fund's long-term fundamental expectations.
STRATEGIC OUTLOOK
Although corrections are inevitable and necessary, the stock market is
standing on generally solid ground. Strong corporate profit growth is providing
a firm underpinning to the stock market. Improving global economies are reducing
the world's dependence on the U.S. economy. And, very importantly, outstanding
U.S. productivity gains are offsetting higher wages and commodity prices,
resulting in continued low inflation. As in the past, future stock market
drivers will be corporate earnings growth and price/earnings ratios. The Fund's
strong positioning in current market conditions gives it confidence and optimism
for the future.
53
<PAGE> 54
VARIABLE TRUST LARGE COMPANY GROWTH FUND(5)
[WFVT ASSET ALLOCATION PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
WFVT LARGE COMPANY GROWTH FUND S&P 500 INDEX
------------------------------ -------------
<S> <C> <C>
9/20/99 10000.00 10000.00
9/30/99 9590.00 9726.00
10/99 10420.00 10342.00
11/99 10830.00 10551.00
12/99 12030.00 11173.00
</TABLE>
TOTAL RETURN (%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
1-Month 11.08%
3-Month 25.44%
Since Inception 20.30%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK S&P 500 INDEX
- --------- -------------
<S> <C> <C>
1-Month 5.89%
3-Month 14.88%
</TABLE>
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
<TABLE>
<S> <C>
Portfolio Turnover 0%
Number of Holdings 35
NAV $12.03
</TABLE>
54
<PAGE> 55
TEN LARGEST EQUITY HOLDINGS (AS OF DECEMBER 31, 1999)(3)
<TABLE>
<CAPTION>
NAME % OF FUND
- ---- ---------
<S> <C>
Cisco Systems, Incorporated 9.42%
Microsoft Corporation 8.39%
Intel Corporation 5.82%
Home Depot, Incorporated 5.26%
Goldman Sachs Group, Incorporated 4.77%
Nokia Corporation ADR 4.70%
Solectron Corporation 4.59%
American International Group, Incorporated 4.19%
Lucent Technologies, Incorporated 4.07%
Schwab (Charles) & Company, Incorporated 3.87%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(4)
[PIE CHART]
<TABLE>
<CAPTION>
STOCKS CASH
- ------ ----
<S> <C>
95.15 4.85
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund managers have voluntarily waived all or a portion
of their management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time. Performance figures of the Fund do not reflect
charges pursuant to the terms of the variable life insurance policies and
variable annuity contracts funded by separate accounts that invest in the Fund's
shares.
(2) The S&P 500 Index is an unmanaged index of 500 widely held common stocks
representing, among others, industrial, financial, utility and transportation
companies listed or traded on national exchanges or over-the-counter markets.
The Fund is a professionally managed mutual fund. You cannot invest directly in
an index.
(3) The Ten Largest Equity Holdings is calculated based on the market value of
the securities divided by total market value of the portfolio.
(4) Portfolio holdings are subject to change.
(5) The chart compares the performance of the Wells Fargo Variable Trust Large
Company Growth Fund since inception with the S&P 500 Index. The chart assumes a
hypothetical $10,000 investment and reflects all operating expenses. The Fund is
a professionally managed mutual fund.
55
<PAGE> 56
WELLS FARGO VARIABLE TRUST LARGE COMPANY GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK--95.52%
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME
DEALERS--5.69%
4,600 Fastenal Company $ 206,713
39,300 Home Depot Incorporated 2,694,506
-----------
$ 2,901,219
BUSINESS SERVICES--9.85%
15,300 Automatic Data Processing Incorporated $ 824,287
8,700 DST Systems Incorporated+ 663,918
17,800 First Data Corporation 877,762
21,000 Fiserv Incorporated+ 804,563
57,700 IMS Health Incorporated 1,568,719
11,900 Sungard Data Systems Incorporated+ 282,625
-----------
$ 5,021,874
CHEMICALS & ALLIED PRODUCTS--4.67%
47,200 Pfizer Incorporated $ 1,531,050
10,400 Warner-Lambert Company 852,150
-----------
$ 2,383,200
COMPUTERS--8.43%
36,800 Microsoft Corporation+ $ 4,296,400
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS,
EXCEPT COMPUTER EQUIPMENT--17.62%
36,200 Intel Corporation $ 2,979,713
27,850 Lucent Technologies Incorporated 2,083,528
12,650 Nokia Corporation ADR 2,403,500
23,100 Telfonaktiebolaget LM Ericsson Series B ADR 1,517,381
-----------
$ 8,984,122
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED
SERVICES--2.05%
26,100 Paychex Incorporated $ 1,044,000
FINANCIAL--0.93%
6,500 State Street Corporation $ 474,906
FOOD & KINDRED PRODUCTS--1.64%
14,400 Coca-Cola Company $ 838,800
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--17.43%
45,000 Cisco Systems Incorporated+ $ 4,820,625
15,700 EMC Corporation+ 1,715,225
24,700 Solectron Corporation+ 2,349,588
-----------
$ 8,885,438
INSURANCE CARRIERS--4.21%
19,850 American International Group Incorporated $ 2,146,281
</TABLE>
56
<PAGE> 57
WELLS FARGO VARIABLE TRUST LARGE COMPANY GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS--3.52%
49,200 Medtronic Incorporated $ 1,792,725
MISCELLANEOUS RETAIL--1.92%
47,300 Staples Incorporated+ $ 981,475
MOTION PICTURES--0.66%
11,500 Walt Disney Company $ 336,375
OIL & GAS EXTRACTION--0.71%
5,800 Schlumberger Limited $ 326,250
1,123 Transocean Sedco Forex Incorporated 37,827
-----------
$ 364,077
PERSONAL SERVICES--1.34%
12,900 Cintas Corporation $ 685,313
PHARMACEUTICALS--1.88%
14,300 Merck & Company Incorporated $ 958,994
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES--12.02%
51,600 Charles Schwab Corporation $ 1,980,150
22,400 Franklin Resources Incorporated 718,200
25,900 Goldman Sachs Group Incorporated 2,439,456
26,800 T Rowe Price 989,925
-----------
$ 6,127,731
WHOLESALE TRADE-NONDURABLE GOODS--0.95%
10,100 Cardinal Health Incorporated $ 483,538
TOTAL COMMON STOCK
(Cost $40,500,208) $48,706,468
</TABLE>
57
<PAGE> 58
WELLS FARGO VARIABLE TRUST LARGE COMPANY GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.86%
$2,477,847 Lehman Brothers Incorporated Repurchase Agreement
--102% Collateralized by U.S. Government Securities 4.55% 01/03/00 $ 2,477,847
TOTAL REPURCHASE AGREEMENTS
(Cost $2,477,847) $ 2,477,847
TOTAL INVESTMENTS IN SECURITIES
(Cost $42,978,055)* 100.38% $ 51,184,315
Other Assets and Liabilities, Net (0.38) (196,298)
------ ------------
TOTAL NET ASSETS 100.00% $ 50,988,017
====== ============
</TABLE>
- --------------------------------------------------------------------------------
+ Non-income earning securities.
* Cost for federal income tax purposes is the same as for financial statement
purposes and net unrealized appreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $ 8,817,032
Gross Unrealized Depreciation (610,772)
-----------
NET UNREALIZED APPRECIATION $ 8,206,260
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
58
<PAGE> 59
VARIABLE TRUST MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Money Market Fund (the "Fund") seeks high current
income, while preserving capital and liquidity, by investing in high-quality,
short-term instruments.
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Dave Sylvester
Laurie White
Mike Neitzke
INCEPTION DATE
5/19/94
PERFORMANCE HIGHLIGHTS
The Fund returned 4.46%(1) for the 12-month period ended December 31, 1999,
and the 30-day simple yield was 5.04%. The Fund distributed $0.04 per share in
dividend income and no capital gains during the period. Please keep in mind past
performance is no guarantee of future results.
During most of the period, the Fund maintained a longer than average
weighted maturity to take advantage of a steepening yield curve. The Federal
Reserve Board raised interest rates three times in 1999, most recently on
November 16, 1999, to 5.50%. Toward the end of the year, the Fund added
securities maturing in January and February, taking advantage of attractive
yields caused by issuers' needs for funding over year-end. It also targeted
maturity dates for fixed-rate securities to ensure adequate liquidity in the
one-month period surrounding year-end.
The average maturity of the Fund at each quarter-end was 60 days for the
first quarter, 65 days for the second quarter, 75 days for the third quarter and
57 days at year-end. The Fund increased liquidity at the end of the year to
accommodate the need for funding at year-end. Cash flows did not affect
management of the portfolio throughout the year.
STRATEGIC OUTLOOK
Economic growth may be on the verge of slowing but possibly not fast enough
to forestall further interest rate increases during 2000. However, there are
several reasons why future interest rate increases are likely to be modest.
First, inflation is expected to be little changed from the 2%-2.5% rate in 1999.
Second, real or inflation-adjusted interest rates already are at historic highs,
suggesting that only modest, additional increases in those rates may be
necessary to sufficiently slow the economy.
59
<PAGE> 60
VARIABLE TRUST MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURN (%) (AS OF DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
6-Month 2.33%
1-Year 4.46%
5-Year 4.88%
Since Inception 4.83%
</TABLE>
FUND YIELD SUMMARY
<TABLE>
<S> <C>
7-Day Simple Yield 5.06%
30-Day Simple Yield 5.04%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(2)
[PIE CHART]
<TABLE>
<CAPTION>
SHORT-TERM FEDERAL SHORT-TERM CORPORATE
COMMERCIAL PAPER CDS AGENCY SECURITIES BONDS MASTER NOTES
- ---------------- --- ------------------ -------------------- ------------
<S> <C> <C> <C> <C>
63 18.00 4.00 12.00 3.00
</TABLE>
FUND CHARACTERISTICS
<TABLE>
<S> <C>
Weighted Average Maturity 55 days
</TABLE>
60
<PAGE> 61
MATURITY DISTRIBUTION (AS OF DECEMBER 31, 1999)(2)
[MATURITY DISTRIBUTION PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
2-14 Days 30.70%
30-59 Days 29.90%
60-89 Days 28.60%
90-179 Days 5.80%
180-269 Days 5.00%
</TABLE>
- ---------------
(1) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return will fluctuate. The Fund's yield figures more closely
reflect the current earnings of the Fund than the total return figures. The Fund
managers have voluntarily waived all or a portion of their management fees or
assumed responsibility for other expenses, which reduces operating expenses and
increases total return to shareholders. Without these reductions the Fund's
returns would have been lower. These reductions may be discontinued at any time.
Performance figures of the Fund do not reflect charges pursuant to the terms of
the variable life insurance policies and variable annuity contracts funded by
separate accounts that invest in the Fund's shares.
Performance shown for the Wells Fargo Variable Trust Money Market Fund for
periods prior to September 20, 1999, reflects performance of the Life and
Annuity Trust Money Market Fund, its predecessor fund. Effective at the close of
business September 17, 1999, the Life and Annuity Trust and Norwest Select Funds
were reorganized into the Wells Fargo Variable Trust Funds.
(2) Portfolio holdings are subject to change.
61
<PAGE> 62
WELLS FARGO VARIABLE TRUST MONEY MARKET FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES--4.29%
$1,309,000 Federal Home Loan Bank 4.51%++ 01/07/00 $ 1,308,235
500,000 Federal Home Loan Bank 4.79 02/04/00 499,867
------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (COST $1,808,102) $ 1,808,102
COMMERCIAL PAPER--63.08%
1,500,000 Alpine Securitization 5.56++ 01/14/00 $ 1,497,259
1,400,000 Atlantis One Funding Corporation 5.68++ 02/10/00 1,391,458
1,500,000 Bank Of America Corporation 6.03++ 03/07/00 1,483,867
700,000 CC USA Incorporated 5.83++ 03/30/00 690,171
2,000,000 Concord Minuteman 6.24++ 02/11/00 1,986,242
1,500,000 Corporation Asset Securitization 5.91++ 02/18/00 1,488,538
1,000,000 CPI Funding Corporation 6.05++ 02/25/00 991,019
1,000,000 Credit Suisse First Boston 5.78++ 03/06/00 989,833
400,000 Goldman Sachs Group 5.16++ 01/14/00 399,322
1,500,000 Goldman Sachs Group 5.94++ 03/13/00 1,482,646
1,500,000 Grand Funding 5.90++ 02/03/00 1,492,185
1,700,000 Irish Perm Plc 5.93++ 03/09/00 1,681,456
1,700,000 JP Morgan & Company 5.91++ 03/08/00 1,681,798
1,500,000 Mont Blanc Capital Corporation 5.97++ 02/24/00 1,486,935
1,000,000 Old Line Funding 5.76++ 01/12/00 998,433
600,000 Perry IV Funding 5.85++ 03/16/00 592,870
1,500,000 Salomon Smith Barney 6.10++ 02/03/00 1,491,927
800,000 Special Purpose A/R Corporation 5.88++ 02/18/00 793,918
1,000,000 Special Purpose A/R Corporation 6.04++ 02/23/00 991,358
2,000,000 Surrey Funding Corporation 5.81++ 01/11/00 1,997,164
1,000,000 Sydney Capital 5.77++ 03/03/00 990,333
------------
TOTAL COMMERCIAL PAPER (COST $26,598,732) $ 26,598,732
CORPORATE BONDS & NOTES--12.10%
500,000 Abbey National Treasury Services 5.13 05/04/00 $ 499,887
1,000,000 Beta Finance Incorporated 6.15 10/06/00 1,000,000
700,000 CC USA Incorporated 5.61 06/07/00 700,000
400,000 First USA Bank 5.99 09/21/00 399,918
500,000 IBM Credit Corporation 5.27 04/07/00 499,909
500,000 Salomon Incorporated 6.70 07/05/00 501,563
1,500,000 Southtrust Bank Corporation 6.03 03/29/00 1,500,000
------------
TOTAL CORPORATE BONDS & NOTES (COST $5,101,277) $ 5,101,277
CERTIFICATES OF DEPOSIT--18.32%
500,000 Bayerische Hypoverins Bank 5.27 03/03/00 $ 499,937
2,000,000 Chase Manhattan Bank 5.50 01/03/00 2,000,000
450,000 CommerzBank NY 5.16 05/05/00 449,854
300,000 CommerzBank NY 5.22 05/12/00 299,955
2,000,000 Lehman Brothers Incorporated 4.75 01/03/00 2,000,000
1,775,151 Mercantile Bank St. Louis Grand Cayman 4.50 01/03/00 1,775,151
500,000 RaboBank Nederland NY 5.13 03/24/00 499,947
200,000 Union Bank of Switzerland 6.22 12/11/00 199,866
------------
TOTAL CERTIFICATES OF DEPOSIT ($7,724,710) $ 7,724,710
</TABLE>
62
<PAGE> 63
WELLS FARGO VARIABLE TRUST MONEY MARKET FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY DESCRIPTION RATE DATE VALUE
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--2.37%
$1,000,000 Deutsche Banc Alex Brown--102% Collateralized by
U.S. Government Securities (Cost $1,000,000) 6.00% 01/03/00 $ 1,000,000
TOTAL INVESTMENTS IN SECURITIES
(Cost $42,232,821)* (Note 1) 100.16% $42,232,821
Other Assets and Liabilities, Net (0.16) (69,252)
------ ------------
TOTAL NET ASSETS 100.00% $42,163,569
====== ============
</TABLE>
- --------------------------------------------------------------------------------
++ Yield to maturity.
* Cost for federal income tax purposes is the same as for financial statement
purposes.
The accompanying notes are an integral part of these financial statements.
63
<PAGE> 64
VARIABLE TRUST SMALL CAP GROWTH FUND
INVESTMENT OBJECTIVE
The Wells Fargo Variable Trust Small Cap Growth Fund (the "Fund") seeks
long-term capital appreciation. The Fund invests in growth-oriented common
stocks whose market capitalization falls within the range of the Russell 2000
Index(1).
ADVISOR
Wells Fargo Bank, N.A.
FUND MANAGERS
Fund Managers
Tom Zeifang, CFA
Chris Greene
INCEPTION DATE
05/01/95
PERFORMANCE HIGHLIGHTS
The Fund returned 66.27%(2) for the 12-month period ended December 31,
1999, outperforming the Russell 2000 Index, which returned 21.26%. The Fund
distributed no dividends or capital gains during the period. Please keep in mind
past performance is no guarantee of future results.
Small cap stocks began to rebound in the second half of 1999 following a
long bear market relative to large cap stocks. During the second half of 1999,
the Fund experienced accelerating outperformance attributed to stock selection
concentrated in the technology sector and continuous analysis of portfolio
exposure. The Fund's portfolio analysis led it to participate in the hot
subsectors within the small cap universe, including semiconductor,
telecommunications services and e-commerce infrastructure, while limiting
exposure to poor performing groups, such as client-server software, health care
services and consumer staples.
Individual holdings that outperformed in 1999 included Broadvision and
Vignette (internet infrastructure), True North and Cumulus (advertising/radio),
Pharmacyclics and IDEC Pharma (biotechnology) and Optical Coating Labs (fiber
optics).
STRATEGIC OUTLOOK
The Fund will continue to search for companies that can grow earnings
independent of the economic cycle. The Fund expects small cap stocks to grow in
2000, and it believes that a new, longer-term small cap growth cycle has begun.
64
<PAGE> 65
VARIABLE TRUST SMALL CAP GROWTH FUND(5)
[WFVT ASSET ALLOCATION PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
WFVT SMALL CAP GROWTH FUND RUSSELL 2000 INDEX
-------------------------- ------------------
<S> <C> <C>
10000.00 10000.00
10040.00 10172.00
6/95 10670.00 10700.00
11740.00 11316.00
11970.00 11549.00
9/95 11920.00 11756.00
11280.00 11231.00
11590.00 11702.00
12/95 11595.00 12011.00
11636.00 11999.00
11957.00 12374.00
3/96 12484.00 12626.00
13891.00 13301.00
14419.00 13827.00
6/96 13405.00 13259.00
12112.00 12100.00
13177.00 12803.00
9/96 13819.00 13303.00
14088.00 13099.00
14750.00 13638.00
12/96 15243.00 13997.00
15571.00 14277.00
14690.00 13931.00
3/97 13482.00 13274.00
13087.00 13311.00
15729.00 14792.00
6/97 16011.00 15426.00
17039.00 16143.00
17468.00 16513.00
9/97 18778.00 17721.00
17569.00 16941.00
16824.00 16833.00
12/97 16735.00 17129.00
16341.00 16860.00
17889.00 18108.00
3/98 18387.00 18856.00
18427.00 18962.00
17089.00 17941.00
6/98 17233.00 17979.00
15397.00 16525.00
11817.00 13315.00
9/98 12420.00 14357.00
12944.00 14943.00
13705.00 15726.00
12/98 14312.00 16699.00
13865.00 16921.00
12563.00 15550.00
3/99 12287.00 15793.00
12984.00 17208.00
12958.00 17459.00
6/99 13628.00 18248.00
13615.00 17747.00
13707.00 17090.00
9/99 14234.00 17093.00
16325.00 17163.00
19061.00 18188.00
12/99 23797.00 20247.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)(2)
<TABLE>
<CAPTION>
SHARE PERFORMANCE
- -----------------
<S> <C>
6-Month 74.61%
1-Year 66.27%
Since Inception 20.41%
</TABLE>
<TABLE>
<CAPTION>
BENCHMARK RUSSELL 2000 INDEX
- --------- ------------------
<S> <C>
6-Month 23.19%
1-Year 21.26%
</TABLE>
FUND CHARACTERISTICS (AS OF DECEMBER 31, 1999)
<TABLE>
<S> <C>
Portfolio Turnover 314%
Number of Holdings 280
NAV $18.09
</TABLE>
65
<PAGE> 66
TEN LARGEST EQUITY HOLDINGS (AS OF DECEMBER 31, 1999)(3)
<TABLE>
<CAPTION>
NAME % OF FUND
- ---- ---------
<S> <C>
Cumulus Media, Incorporated 2.64%
Broadvision, Incorporated 2.63%
Mercury Interactive Corporation 2.36%
Visual Networks, Incorporated 2.18%
LAM Research Corporation 1.87%
Optical Coating Lab, Incorporated 1.86%
Micromuse, Incorporated 1.86%
Maker Communications, Incorporated 1.77%
Power Integrations, Incorporated 1.69%
Verticalnet, Incorporated 1.67%
</TABLE>
PORTFOLIO ALLOCATION (AS OF DECEMBER 31, 1999)(4)
[PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
Cash 0.98%
Stocks 99.02%
</TABLE>
- ---------------
(1) The Russell 2000 Index is an index subset of the Russell 3000 Index and
includes the 2,000 smallest stocks representing approximately 11% of the U.S.
equity market. You cannot invest directly in an index.
(2) FIGURES QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE
RESULTS. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. The Fund managers have voluntarily waived all or a portion
of their management fees or assumed responsibility for other expenses, which
reduces operating expenses and increases total return to shareholders. Without
these reductions the Fund's returns would have been lower. These reductions may
be discontinued at any time. Performance figures of the Fund do not reflect
charges pursuant to the terms of the variable life insurance policies and
variable annuity contracts funded by separate accounts that invest in the Fund's
shares.
Performance shown for the Wells Fargo Variable Trust Small Cap Growth Fund for
periods prior to September 20, 1999, reflects performance of the Norwest Select
Small Company Stock Fund (the accounting survivor of a merger of the Life and
Annuity Trust Strategic Growth Fund and the Norwest Select Small Company Stock
Fund), its predecessor fund. Effective at the close of business September 17,
1999, the Life and Annuity Trust and Norwest Select Funds were reorganized into
the Wells Fargo Variable Trust Funds.
(3) The Ten Largest Equity Holdings is calculated based on the market value of
the securities divided by total market value of the portfolio.
(4) Portfolio holdings are subject to change.
(5) The chart compares the performance of the Wells Fargo Variable Trust Small
Cap Growth Fund since inception with the Russell 2000 Index. The chart assumes a
hypothetical $10,000 investment and reflects all operating expenses. The Fund is
a professionally managed mutual fund.
66
<PAGE> 67
WELLS FARGO VARIABLE TRUST SMALL CAP GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCK--100.09%
AMUSEMENT & RECREATION SERVICES--0.86%
2,712 SFX Entertainment Incorporated+ $ 98,141
7,438 Tickets.com Incorporated+ 106,456
-----------
$ 204,597
APPAREL & ACCESSORY STORES--0.42%
6,050 The Children's Place Retail Store Incorporated+ $ 99,447
AUTOMOTIVE DEALERS & GASOLINE SERVICE STATIONS--0.56%
7,673 CSK Auto Corporation+ $ 134,278
AUTOMOTIVE REPAIR, SERVICES & PARKING--0.49%
4,627 Avis Rent A Car Incorporated+ $ 118,278
BUSINESS SERVICES--24.78%
3,585 24/7 Media Incorporated+ $ 201,655
5,243 Actuate Corporation+ 224,794
1,152 Administaff Incorporated+ 34,848
2,085 AGENCY.COM Incorporated+ 106,335
5,261 Bindview Development Corporation+ 261,406
883 Breakaway Solutions Incorporated+ 64,459
3,760 Broadvision Incorporated+ 639,435
3,182 Digital Insight Corporation+ 115,745
1 DoubleClick Incorporated+ 253
377 Ebenx Incorporated+ 17,059
4,545 Getty Images Incorporated+ 222,137
4,638 Globix Corporation+ 278,280
1,343 Go2Net Incorporated+ 116,841
1,689 Liquid Audio Incorporated+ 44,336
2,169 McAfee.com Corporation+ 97,605
5,305 Mercury Interactive Corporation+ 572,608
2,655 Micromuse Incorporated+ 451,350
1,839 NaviSite Incorporated+ 183,900
4,612 NetRatings Incorporated+ 221,953
4,668 NOVA Corporation+ 147,334
2,234 pcOrder.com Incorporated+ 113,934
3,130 S1 Corporation+ 244,531
1,828 Saleslogix Corporation+ 75,062
3,538 SciQuest.com Incorporated+ 281,271
1,582 TenFold Corporation+ 63,181
5,744 TSI International Software Limited+ 325,254
2,479 Verticalnet Incorporated+ 406,556
1,905 Vignette Corporation+ 310,515
5,516 Women.Com Networks Incorporated+ 78,603
-----------
$ 5,901,240
</TABLE>
67
<PAGE> 68
WELLS FARGO VARIABLE TRUST SMALL CAP GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
CHEMICALS & ALLIED PRODUCTS--6.84%
6,335 Cambrex Corporation $ 218,162
2,810 Gilead Sciences Incorporated+ 152,091
3,714 ICN Pharmaceuticals Incorporated 94,011
2,643 IDEC Pharmaceuticals Corporation+ 259,675
2,948 King Pharmaceuticals Incorporated+ 165,244
5,465 Medicis Pharmaceutical Corporation+ 232,604
5,744 Pharmacyclics Incorporated+ 236,940
2,520 Shire Pharmaceuticals Group PLC+ 73,401
5,304 Viropharma Incorporated+ 196,248
-----------
$ 1,628,376
COMMUNICATIONS--14.95%
1,472 AirGate PCS Incorporated+ $ 77,648
5,274 Allied Riser Communications Corporation+ 109,105
3,326 Classic Communications Incorporated+ 121,606
4,690 Commonwealth Telephone Enterprises Incorporated+ 247,984
4,659 Crown Castle International Corporation+ 149,670
12,633 Cumulus Media Incorporated+ 641,125
3,199 DSET Corporation+ 119,563
2,804 Emmis Communications Corporation+ 349,492
1,482 Illuminet Holdings Incorporated+ 81,510
4,783 Insight Communications Company Incorporated+ 141,696
2,525 Intermedia Communications Incorporated+ 98,002
3,099 Mediaplex Incorporated+ 194,462
1,675 MGC Communications Incorporated+ 85,006
5,165 NDS Group PLC ADR+ 157,533
1,775 NorthPoint Communications Group Incorporated+ 42,600
3,158 Razorfish Incorporated+ 300,405
4,194 Spanish Broadcasting System Incorporated+ 168,809
1,431 Triton PCS Incorporated+ 65,111
5,769 True North Communications Incorporated 257,802
2,841 Viatel Incorporated+ 152,349
-----------
$ 3,561,478
DEPOSITORY INSTITUTIONS--2.36%
10,637 Community First Bankshares Incorporated $ 167,533
11,302 FirstFed Financial Corporation+ 158,934
4,752 Silicon Valley Bancshares+ 235,224
-----------
$ 561,691
EDUCATIONAL SERVICES--0.27%
3,481 DeVry Incorporated+ $ 64,834
</TABLE>
68
<PAGE> 69
WELLS FARGO VARIABLE TRUST SMALL CAP GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT
COMPUTER EQUIPMENT--11.81%
6,637 Amkor Technology Incorporated+ $ 187,495
1,900 Aspect Communications Corporation+ 74,338
3,219 Burr-Brown Corporation+ 116,286
5,986 CTC Communications Group Incorporated+ 233,547
7,035 Cypress Semiconductor Corporation+ 227,758
3,700 Digital Microwave Corporation+ 86,718
1,839 DII Group Incorporated+ 130,512
1,730 Harmonic Incorporated+ 164,242
1,007 hi/fn Incorporated+ 39,021
1,265 JNI Corporation+ 83,490
3,228 Lattice Semiconductor Corporation+ 152,120
10,040 Maker Communications Incorporated+ 429,210
2,629 Micrel Incorporated+ 149,689
2,902 PLX Technology Incorporated+ 54,957
8,585 Power Integrations Incorporated+ 411,543
2,526 Terayon Communication Systems Incorporated+ 158,664
1,570 Transwitch Corporation+ 113,923
-----------
$ 2,813,513
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED
SERVICES--4.88%
1,085 Affymetrix Incorporated+ $ 184,111
9,230 Cephalon Incorporated+ 319,012
1,505 Diamond Technology Partners Incorporated+ 129,336
961 Flycast Communications Corporation+ 124,870
2,660 Harris Interactive Incorporated+ 34,746
3,306 Management Network Group Incorporated+ 107,858
1,229 Maxygen+ 87,259
1,085 Millennium Pharmaceuticals Incorporated+ 132,370
1,570 Profit Recovery Group International Incorporated+ 41,703
-----------
$ 1,161,265
FOOD & KINDRED PRODUCTS--0.58%
4,456 American Italian Pasta Company+ $ 137,022
GENERAL MERCHANDISE STORES--1.50%
5,136 Ames Department Stores Incorporated+ $ 147,981
5,744 BJ's Wholesale Club Incorporated+ 209,656
-----------
$ 357,637
HEALTH SERVICES--1.69%
12,938 Caremark Rx Incorporated+ $ 65,498
4,390 Enzon Incorporated+ 190,416
956 Human Genome Science Incorporated+ 145,910
-----------
$ 401,824
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES--1.28%
6,461 Rex Stores Corporation+ $ 226,135
4,287 Tuesday Morning Corporation+ 79,042
-----------
$ 305,177
</TABLE>
69
<PAGE> 70
WELLS FARGO VARIABLE TRUST SMALL CAP GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT--6.94%
1,981 Asyst Technologies Incorporated+ $ 129,879
1,911 Emulex Corporation+ 214,988
4,070 Lam Research Corporation+ 454,059
2,975 Paradyne Networks Incorporated+ 81,069
1,378 PRI Automation Incorporated+ 92,498
1,575 SanDisk Corporation+ 151,594
6,684 Visual Networks Incorporated+ 529,707
-----------
$ 1,653,794
INSURANCE CARRIERS--0.71%
5,888 FPIC Insurance Group Incorporated+ $ 98,256
4,912 MIIX Group Incorporated 71,838
-----------
$ 170,094
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS--4.03%
5,026 Cerus Corporation+ $ 133,189
4,786 Cymer Incorporated+ 220,156
6,833 LTX Corporation+ 152,888
1,530 Optical Coating Laboratories Incorporated 452,880
-----------
$ 959,113
MISCELLANEOUS MANUFACTURING INDUSTRIES--0.54%
7,908 Yankee Candle Company Incorporated+ $ 128,999
MISCELLANEOUS RETAIL--1.59%
2,799 Michaels Stores Incorporated+ $ 79,772
8,548 Petco Animal Supplies Incorporated+ 127,151
3,540 Zale Corporation+ 171,248
-----------
$ 378,171
NONDEPOSITORY CREDIT INSTITUTIONS--2.59%
13,432 AmeriCredit Corporation+ $ 248,492
6,739 Metris Companies Incorporated 240,498
4,447 NextCard Incorporated+ 128,407
-----------
$ 617,397
OIL & GAS EXTRACTION--5.14%
3,766 B.J. Services Company+ $ 157,465
11,998 Helmerich & Payne Incorporated 261,706
12,829 Marine Drilling Company Incorporated+ 287,851
3,750 Newfield Exploration Company+ 100,313
7,375 Ocean Energy Incorporated+ 57,156
7,283 Precision Drilling Corporation+ 187,082
2,030 Stone Energy Corporation+ 72,319
4,313 UTI Energy Corporation+ 99,469
-----------
$ 1,223,361
PRIMARY METAL INDUSTRIES--0.59%
3,481 CommScope Incorporated+ $ 140,328
</TABLE>
70
<PAGE> 71
WELLS FARGO VARIABLE TRUST SMALL CAP GROWTH FUND--DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION VALUE
<C> <S> <C>
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES--1.44%
1,596 SEI Investments Company $ 189,949
5,684 Waddell & Reed Financial Incorporated--Class A 154,179
-----------
$ 344,128
TRANSPORTATION SERVICES--0.72%
2,993 C.H. Robinson Worldwide Incorporated $ 118,973
1,524 Expedia Incorporated+ 53,340
-----------
$ 172,313
WHOLESALE TRADE--DURABLE GOODS--2.25%
2,000 ACT Manufacturing Incorporated+ $ 75,000
3,156 Cytyc Corporation+ 192,713
4,509 Insight Enterprises Incorporated+ 183,178
3,770 Kent Electronics Corporation+ 85,768
-----------
$ 536,659
WHOLESALE TRADE--NONDURABLE GOODS--0.28%
2,279 Barrett Resources Corporation+ $ 67,088
TOTAL COMMON STOCK
(Cost $16,947,136) $23,842,102
</TABLE>
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL RATE DATE
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--1.97%
$ 469,947 Lehman Brothers Incorporated Repurchase Agreement
--102% Collateralized by U.S. Government Securities 4.55% 01/03/00 $ 469,947
TOTAL REPURCHASE AGREEMENTS
(Cost $469,947) $ 469,947
TOTAL INVESTMENTS IN SECURITIES
(Cost $17,417,083)* 102.06% $24,312,049
Other Assets and Liabilities, Net (2.06) (493,058)
------ ------------
TOTAL NET ASSETS 100.00% $23,818,991
====== ============
</TABLE>
- --------------------------------------------------------------------------------
+ Non-income earning securities.
* Cost for federal income tax purposes is $17,499,580 and net unrealized
appreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation $7,387,548
Gross Unrealized Depreciation (575,079)
----------
NET UNREALIZED APPRECIATION $6,812,469
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
71
<PAGE> 72
WELLS FARGO VARIABLE TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Large
Asset Corporate Equity Equity Company
Allocation Bond Income Value Growth Growth
Fund Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
In securities, at market value (see
cost below) $238,876,138 $66,991,886 $127,136,421 $26,942,293 $128,544,045 $51,184,315
Cash 2,271 5,593 0 9,237 19,160 0
Receivable for dividends and
interest and other receivables 1,877,720 1,192,218 248,970 24,879 55,471 13,397
Receivable for investments sold 4,718 0 0 0 0 0
Receivable for Fund shares issued 228,946 386,422 583,824 206,429 60,725 63,629
Receivable from investment adviser
and affiliates 0 0 0 0 0 0
Variation margin on futures
contracts 9,350 0 0 0 0 0
Unrealized appreciation on forward
foreign currency contracts 0 4,573 0 0 0 0
TOTAL ASSETS 240,999,143 68,580,692 127,969,215 27,182,838 128,679,401 51,261,341
LIABILITIES
Payable for investments purchased 0 0 0 549,202 0 195,653
Dividends Payable 0 24,368 0 0 0 0
Payable for Fund shares redeemed 0 0 0 0 0 0
Payable to investment adviser and
affiliates 122,553 16,713 62,560 3,524 55,599 12,159
Payable to other related parties 157,578 53,739 84,765 25,656 91,305 35,535
Accrued expenses and other
liabilities 48,022 62,854 28,411 37,403 37,066 29,977
TOTAL LIABILITIES 328,153 157,674 175,736 615,785 183,970 273,324
TOTAL NET ASSETS $240,670,990 $68,423,018 $127,793,479 $26,567,053 $128,495,431 $50,988,017
NET ASSETS CONSIST OF:
Paid-in capital $211,171,901 $69,649,218 $108,048,369 $27,184,181 $ 84,650,095 $42,865,180
Undistributed (overdistributed) net
investment income 137,010 18,058 0 4,768 0 0
Undistributed net realized gain
(loss) on investments 7,210,288 (69,552) 1,871,419 (1,633,578) 10,564,711 (83,423)
Net unrealized appreciation
(depreciation) of investments 22,079,666 (1,179,164) 17,873,691 1,011,682 33,280,625 8,206,260
Net unrealized appreciation
(depreciation) of foreign
currency transactions 0 4,458 0 0 0 0
Net unrealized appreciation
(depreciation) of futures
contracts 72,125 0 0 0 0 0
TOTAL NET ASSETS $240,670,990 $68,423,018 $127,793,479 $26,567,053 $128,495,431 $50,988,017
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE
Net Assets $240,670,990 $68,423,018 $127,793,479 $26,567,053 $128,495,431 $50,988,017
Shares outstanding 16,688,676 6,966,686 7,478,001 2,877,459 5,330,893 4,239,563
Net asset value and offering price $14.42 $9.82 $17.09 $9.23 $24.10 $12.03
INVESTMENT AT COST (NOTE 10) $216,796,472 $68,171,050 $109,262,730 $25,930,611 $ 95,263,420 $42,978,055
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Money Small Cap
Market Growth
Fund Fund
<S> <C> <C>
ASSETS
Investments:
In securities, at market value (see
cost below) $42,232,821 $24,312,049
Cash 0 0
Receivable for dividends and
interest and other receivables 187,046 1,224
Receivable for investments sold 0 110,799
Receivable for Fund shares issued 0 1,058
Receivable from investment adviser
and affiliates 0 5,838
Variation margin on futures
contracts 0 0
Unrealized appreciation on forward
foreign currency contracts 0 0
TOTAL ASSETS 42,419,867 24,430,968
LIABILITIES
Payable for investments purchased 0 120,761
Dividends Payable 185,411 0
Payable for Fund shares redeemed 0 400,459
Payable to investment adviser and
affiliates 19,212 0
Payable to other related parties 12,046 25,812
Accrued expenses and other
liabilities 39,629 64,945
TOTAL LIABILITIES 256,298 611,977
TOTAL NET ASSETS $42,163,569 $23,818,991
NET ASSETS CONSIST OF:
Paid-in capital $42,163,569 $15,947,851
Undistributed (overdistributed) net
investment income 0 0
Undistributed net realized gain
(loss) on investments 0 976,174
Net unrealized appreciation
(depreciation) of investments 0 6,894,966
Net unrealized appreciation
(depreciation) of foreign
currency transactions 0 0
Net unrealized appreciation
(depreciation) of futures
contracts 0 0
TOTAL NET ASSETS $42,163,569 $23,818,991
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE
Net Assets $42,163,569 $23,818,991
Shares outstanding 42,163,603 1,316,622
Net asset value and offering price $1.00 $18.09
INVESTMENT AT COST (NOTE 10) $42,232,821 $17,417,083
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
72
<PAGE> 73
WELLS FARGO VARIABLE TRUST
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Large
Asset Corporate Equity Equity Company
Allocation Bond Income Value Growth Growth
Fund Fund(1) Fund Fund Fund Fund(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,672,256 $ 0 $2,034,373 $ 351,905 $ 1,068,202 $ 39,083
Interest 4,295,018 1,321,953 187,062 51,665 259,955 24,272
TOTAL INVESTMENT INCOME 5,967,274 1,321,953 2,221,435 403,570 1,328,157 63,355
EXPENSES
Advisory fees 1,152,381 87,894 791,587 116,209 658,836 65,721
Administration fees 247,853 29,297 127,550 25,910 139,129 17,924
Shareholder servicing fees 332,258 0 0 32,442 195,932 0
Portfolio accounting fees 92,667 19,141 47,929 45,477 78,666 18,880
Custody 0 3,907 21,989 3,561 26,407 2,390
Transfer agent 224,633 35,342 94,295 30,832 159,484 21,867
Distribution fees 161,346 48,830 88,004 17,424 85,727 29,874
Legal and audit fees 76,885 12,738 27,833 21,741 63,991 6,812
Registration fees 2,141 0 0 1,945 1,657 0
Directors' fees 4,018 1,620 2,503 4,028 1,293 1,620
Shareholder reports 16,488 816 10,957 2,751 11,450 2,103
Other 8,083 4,387 15,367 2,314 3,196 3,469
TOTAL EXPENSES 2,318,753 243,972 1,228,014 304,634 1,425,768 170,660
Less: Waived fees and reimbursed expenses (398,328) (68,198) (278,662) (92,366) (221,406) (51,615)
Net Expenses 1,920,425 175,774 949,352 212,268 1,204,362 119,045
NET INVESTMENT INCOME (LOSS) 4,046,849 1,146,179 1,272,083 191,302 123,795 (55,690)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) from:
Securities 7,407,467 (69,552) 1,883,661 (1,551,864) 10,638,775 (83,423)
Foreign currency transactions 0 18,068 0 0 0 0
NET REALIZED GAIN (LOSS) FROM INVESTMENTS 7,407,467 (51,484) 1,883,661 (1,551,864) 10,638,775 (83,423)
Net Change in Unrealized Appreciation
(Depreciation) of:
Securities 6,204,795 (1,179,164) 3,863,205 569,740 10,407,812 8,206,260
Foreign currency transactions 0 4,458 0 0 0 0
Financial futures transactions 72,125 0 0 0 0 0
Net Change in Unrealized Appreciation
(Depreciation) of Investments 6,276,920 (1,174,706) 3,863,205 569,740 10,407,812 8,206,260
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 13,684,387 (1,226,190) 5,746,866 (982,124) 21,046,587 8,122,837
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $17,731,236 $ (80,011) $7,018,949 $ (790,822) $21,170,382 $8,067,147
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Money Small Cap
Market Growth
Fund Fund
- ----------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 0 $ 28,768
Interest 1,768,904 51,565
TOTAL INVESTMENT INCOME 1,768,904 80,333
EXPENSES
Advisory fees 144,255 107,145
Administration fees 42,312 16,352
Shareholder servicing fees 53,893 0
Portfolio accounting fees 54,522 57,951
Custody 8,475 2,745
Transfer agent 27,765 22,871
Distribution fees 0 13,157
Legal and audit fees 15,371 20,643
Registration fees 1,370 0
Directors' fees 4,031 1,724
Shareholder reports 3,945 4,260
Other 885 18,464
TOTAL EXPENSES 356,824 265,312
Less: Waived fees and reimbursed expenses (71,025) (135,102)
Net Expenses 285,799 130,210
NET INVESTMENT INCOME (LOSS) 1,483,105 (49,877)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) from:
Securities 11 4,402,871
Foreign currency transactions 0 0
NET REALIZED GAIN (LOSS) FROM INVESTMENTS 11 4,402,871
Net Change in Unrealized Appreciation
(Depreciation) of:
Securities 0 5,150,330
Foreign currency transactions 0 0
Financial futures transactions 0 0
Net Change in Unrealized Appreciation
(Depreciation) of Investments 0 5,150,330
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 11 9,553,201
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,483,116 $9,503,324
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on September 20, 1999.
The accompanying notes are an integral part of these financial statements.
73
<PAGE> 74
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Asset Allocation Fund Corporate Bond Fund Equity Income Fund
----------------------------- ------------------- -----------------------------
From
Sept. 20, 1999
For the For the (commencement For the For the
Year Ended Year Ended of operations) to Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS $156,240,933 $ 86,505,856 $ 0 $ 86,068,731 $39,888,248
Operations:
Net investment income (loss) 4,046,849 3,009,495 1,146,179 1,272,083 930,041
Net realized gain (loss) on sale of
investments and foreign currency
transactions 7,407,467 9,956,845 (51,484) 1,883,661 124,787
Net change in unrealized appreciation
(depreciation) of investments and
translation of assets in foreign currency 6,204,795 14,560,276 (1,179,164) 3,863,205 9,270,806
Net change in unrealized appreciation
(depreciation) of forward foreign currency
contracts 0 0 4,458 0 0
Net change in unrealized appreciation
(depreciation) of futures 72,125 (718,350) 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 17,731,236 26,808,266 (80,011) 7,018,949 10,325,634
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,909,839) (3,009,495) (1,146,189) (1,284,267) (932,147)
Net realized gain on sale of investments (200,663) (11,816,851) 0 0 (124,789)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 71,043,067 44,467,683 70,873,232 38,101,683 37,717,863
Reinvestment of dividends 4,579,771 14,826,346 1,121,820 1,284,267 1,056,936
Cost of shares redeemed (4,813,515) (1,540,872) (2,345,834) (3,395,884) (1,863,014)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 70,809,323 57,753,157 69,649,218 35,990,066 36,911,785
NET INCREASE (DECREASE) IN NET ASSETS 84,430,057 69,735,077 68,423,018 41,724,748 46,180,483
NET ASSETS:
ENDING NET ASSETS $240,670,990 $156,240,933 $68,423,018 $127,793,479 $86,068,731
SHARES ISSUED AND REDEEMED:
Shares sold 5,092,781 3,380,397 7,089,778 2,229,286 2,522,285
Shares issued in reinvestment of dividends 329,334 1,141,331 113,155 75,691 66,058
Shares redeemed (351,542) (120,729) (236,247) (205,745) (124,465)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 5,070,573 4,400,999 6,966,686 2,099,232 2,463,878
Ending balance of undistributed net investment
income $ 137,010 $ 0 $ 18,058 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Equity Value Fund
-----------------------------
For the For the
Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1999
- ---------------------------------------------- -----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS $11,071,528 $ 0
Operations:
Net investment income (loss) 191,302 53,366
Net realized gain (loss) on sale of
investments and foreign currency
transactions (1,551,864) (81,714)
Net change in unrealized appreciation
(depreciation) of investments and
translation of assets in foreign currency 569,740 441,942
Net change in unrealized appreciation
(depreciation) of forward foreign currency
contracts 0 0
Net change in unrealized appreciation
(depreciation) of futures 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (790,822) 413,594
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (186,534) (53,366)
Net realized gain on sale of investments 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 19,315,350 11,413,266
Reinvestment of dividends 213,190 53,366
Cost of shares redeemed (3,055,659) (755,332)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 16,472,881 10,711,300
NET INCREASE (DECREASE) IN NET ASSETS 15,495,525 11,071,528
NET ASSETS:
ENDING NET ASSETS $26,567,053 $11,071,528
SHARES ISSUED AND REDEEMED:
Shares sold 2,010,909 1,234,474
Shares issued in reinvestment of dividends 22,806 5,850
Shares redeemed (315,799) (80,781)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,717,916 1,159,543
Ending balance of undistributed net investment
income $ 4,768 $ 0
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) "Proceeds from shares sold" includes $2,616,673 and "Shares sold" includes
239,403 as a result of the consolidation of the Life & Annuity Trust
Strategic Growth Fund.
The accompanying notes are an integral part of these financial statements.
74
<PAGE> 75
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Large Company
Growth Fund Growth Fund Money Market Fund
----------------------------- ----------------- -----------------------------
From
Sept. 20, 1999
For the For the (commencement For the For the
Year Ended Year Ended of operations) to Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS $100,926,722 $ 71,943,868 $ 0 $26,318,825 $ 14,787,628
Operations:
Net investment income (loss) 123,795 437,253 (55,690) 1,483,105 807,850
Net realized gain (loss) on sale of
investments and foreign currency
transactions 10,638,775 3,245,542 (83,423) 11 551
Net change in unrealized
appreciation (depreciation) of
investments and translation of
assets in foreign currency 10,407,812 18,355,014 8,206,260 0 0
Net change in unrealized
appreciation (depreciation) of
forward foreign currency contracts 0 0 0 0 0
Net change in unrealized
appreciation (depreciation) of
futures 0 0 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 21,170,382 22,037,809 8,067,147 1,483,116 808,401
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (143,726) (437,253) 0 (1,483,116) (807,850)
Net realized gain on sale of
investments 0 (6,510,869) 0 0 (551)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 13,327,810 13,257,592 44,008,193 49,943,149 29,184,120
Reinvestment of dividends 178,395 6,948,122 0 1,389,785 808,401
Cost of shares redeemed (6,964,151) (6,312,547) (1,087,323) (35,488,190) (18,461,324)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS 6,542,054 13,893,167 42,920,870 15,844,744 11,531,197
NET INCREASE (DECREASE) IN NET ASSETS 27,568,710 28,982,854 50,988,017 15,844,744 11,531,197
NET ASSETS:
ENDING NET ASSETS $128,495,431 $100,926,722 $50,988,017 $42,163,569 $ 26,318,825
SHARES ISSUED AND REDEEMED:
Shares sold 612,846 729,308 4,344,118 49,943,177 29,184,121
Shares issued in reinvestment of
dividends 8,405 368,338 0 1,389,786 808,531
Shares redeemed (325,078) (348,326) (104,555) (35,488,190) (18,461,454)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING 296,173 749,320 4,239,563 15,844,773 11,531,198
Ending balance of undistributed net
investment income $ 0 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Small Cap Growth Fund
--------------------------------
For the For the
Year Ended Year Ended
Dec. 31, 1999(1) Dec. 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
BEGINNING NET ASSETS $ 13,294,779 $11,481,832
Operations:
Net investment income (loss) (49,877) 39,314
Net realized gain (loss) on sale of
investments and foreign currency
transactions 4,402,871 (3,079,073)
Net change in unrealized
appreciation (depreciation) of
investments and translation of
assets in foreign currency 5,150,330 1,006,437
Net change in unrealized
appreciation (depreciation) of
forward foreign currency contracts 0 0
Net change in unrealized
appreciation (depreciation) of
futures 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 9,503,324 (2,033,322)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income 0 (39,617)
Net realized gain on sale of
investments 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 4,726,759 6,332,722
Reinvestment of dividends 0 39,617
Cost of shares redeemed (3,705,871) (2,486,453)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS 1,020,888 3,885,886
NET INCREASE (DECREASE) IN NET ASSETS 10,524,212 1,812,947
NET ASSETS:
ENDING NET ASSETS $ 23,818,991 $13,294,779
SHARES ISSUED AND REDEEMED:
Shares sold 413,588 515,865
Shares issued in reinvestment of
dividends 0 3,641
Shares redeemed (318,587) (197,147)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING 95,001 322,359
Ending balance of undistributed net
investment income $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) "Proceeds from shares sold" includes $2,616,673 and "Shares sold" includes
239,403 as a result of the consolidation of the Life & Annuity Trust
Strategic Growth Fund.
The accompanying notes are an integral part of these financial statements.
75
<PAGE> 76
WELLS FARGO VARIABLE TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Asset Allocation Fund
--------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $ 13.45 $ 11.99 $ 11.42 $ 11.27 $ 9.71
Net investment income (loss) 0.27 0.34 0.60 0.56 0.55
Net realized and unrealized gain (loss) on investments 0.97 2.60 1.73 0.69 2.21
Dividends from net investment income (0.26) (0.34) (0.60) (0.56) (0.55)
Distributions from net realized gains (0.01) (1.14) (1.16) (0.54) (0.65)
Return of capital 0.00 0.00 0.00 0.00 0.00
--------- --------- -------- -------- --------
ENDING NET ASSET VALUE PER SHARE $ 14.42 $ 13.45 $ 11.99 $ 11.42 $ 11.27
========= ========= ======== ======== ========
RATIO TO AVERAGE NET ASSETS (ANNUALIZED):
Net investment income (loss) 2.05% 2.62% 5.20% 5.34% 5.58%
Net expenses 0.97% 0.92% 0.80% 0.69% 0.41%
Gross expenses(1) 1.17% 1.11% 0.85% 0.80% 1.22%
- ----------------------------------------------------------------------------------------------------------------------------
Total Return(2) 9.33% 25.26% 20.88% 11.46% 28.95%
Portfolio turnover rate 30% 29% 156% 4% 97%
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 240,671 $ 156,241 $ 86,506 $ 51,797 $ 25,467
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
76
<PAGE> 77
WELLS FARGO VARIABLE TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Corporate
Bond Fund Equity Income Fund
-------------- --------------------------------------------------
Sept. 20, May 6,
1999(3) Year Ended Year Ended Year Ended 1996(3)
to Dec. 31, Dec. 31, Dec. 31, Dec. 31, to Dec. 31,
1999 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $ 10.00 $ 16.00 $ 13.68 $ 10.91 $ 10.00
Net investment income (loss) 0.16 0.17 0.18 0.14 0.08
Net realized and unrealized gain (loss) on investments (0.18) 1.09 2.34 2.79 0.92
Dividends from net investment income (0.16) (0.17) (0.18) (0.14) (0.08)
Distributions from net realized gains 0.00 0.00 (0.02) (0.02) (0.01)
Return of capital 0.00 0.00 0.00 0.00 0.00
-------- --------- -------- -------- -------
ENDING NET ASSET VALUE PER SHARE $ 9.82 $ 17.09 $ 16.00 $ 13.68 $ 10.91
======== ========= ======== ======== =======
RATIO TO AVERAGE NET ASSETS (ANNUALIZED):
Net investment income (loss) 5.87% 1.16% 1.47% 1.85% 2.31%
Net expenses 0.90% 0.86% 0.80% 0.80% 0.80%
Gross expenses(1) 1.25% 1.12% 1.10% 1.34% 2.51%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return(2) (0.16%) 7.90% 18.42% 26.90% 9.95%
Portfolio turnover rate 59% 5% 2% 3% 4%
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 68,423 $ 127,793 $ 86,069 $ 39,888 $ 9,415
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
77
<PAGE> 78
WELLS FARGO VARIABLE TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Equity Value Fund Growth Fund
------------------------ --------------------------------------------------------------
May 1,
Year Ended 1998(3) Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, to Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $ 9.55 $ 10.00 $ 20.05 $ 16.79 $ 15.34 $ 12.91 $ 10.30
Net investment income (loss) 0.08 0.07 0.02 0.09 0.19 0.20 0.22
Net realized and unrealized gain
(loss) on investments (0.32) (0.45) 4.06 4.65 2.48 2.68 2.77
Dividends from net investment income (0.08) (0.07) (0.03) (0.09) (0.19) (0.20) (0.22)
Distributions from net realized
gains 0.00 0.00 0.00 (1.39) (1.03) (0.25) (0.16)
Return of capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- --------- --------- -------- -------- --------
ENDING NET ASSET VALUE PER SHARE $ 9.23 $ 9.55 $ 24.10 $ 20.05 $ 16.79 $ 15.34 $ 12.91
======== ======== ========= ========= ======== ======== ========
RATIO TO AVERAGE NET ASSETS
(ANNUALIZED):
Net investment income (loss) 0.96% 1.54% 0.11% 0.51% 1.19% 1.53% 2.05%
Net expenses 1.06% 1.09% 1.07% 1.04% 0.65% 0.60% 0.43%
Gross expenses(1) 1.53% 2.52% 1.27% 1.18% 1.01% 1.12% 2.02%
- --------------------------------------------------------------------------------------------------------------------------------
Total Return(2) (2.48%) (3.76%) 20.41% 28.81% 17.33% 22.44% 29.19%
Portfolio turnover rate 139% 27% 54% 69% 124% 95% 84%
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (000'S
OMITTED) $ 26,567 $ 11,072 $ 128,495 $ 100,927 $ 71,944 $ 33,381 $ 10,920
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
78
<PAGE> 79
WELLS FARGO VARIABLE TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Large
Company
Growth Fund Money Market Fund
------------------ --------------------------------------------------------------
Sept. 20,
1999(3) Year Ended Year Ended Year Ended Year Ended Year Ended
to Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $ 10.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income (loss) (0.01) 0.04 0.05 0.05 0.05 0.05
Net realized and unrealized gain (loss) on
investments 2.04 0.00 0.00 0.00 0.00 0.00
Dividends from net investment income 0.00 (0.04) (0.05) (0.05) (0.05) (0.05)
Distributions from net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
Return of capital 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------
ENDING NET ASSET VALUE PER SHARE $ 12.03 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== =======
RATIO TO AVERAGE NET ASSETS (ANNUALIZED):
Net investment income (loss) (0.47%) 4.45% 4.62% 4.95% 4.64% 5.15%
Net expenses 1.00% 0.86% 0.82% 0.53% 0.51% 0.42%
Gross expenses(1) 1.43% 1.07% 1.28% 1.07% 1.22% 3.83%
- -------------------------------------------------------------------------------------------------------------------------------
Total Return(2) 20.30% 4.46% 4.77% 5.04% 4.72% 5.41%
Portfolio turnover rate 0% N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 50,988 $ 42,164 $ 26,319 $ 14,788 $ 12,667 $ 5,823
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
79
<PAGE> 80
WELLS FARGO VARIABLE TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Small Cap Growth Fund
---------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BEGINNING NET ASSET VALUE PER SHARE $ 10.88 $ 12.77 $ 13.50 $ 11.21 $ 10.00
Net investment income (loss) (0.04) 0.03 0.01 0.02 0.06
Net realized and unrealized gain (loss) on investments 7.25 (1.89) 1.24 3.51 1.54
Dividends from net investment income 0.00 (0.03) (0.01) (0.02) (0.06)
Distributions from net realized gains 0.00 0.00 (1.59) (1.22) (0.33)
Return of capital 0.00 0.00 (0.38) 0.00 0.00
-------- -------- -------- ------- -------
ENDING NET ASSET VALUE PER SHARE $ 18.09 $ 10.88 $ 12.77 $ 13.50 $ 11.21
======== ======== ======== ======= =======
RATIO TO AVERAGE NET ASSETS (ANNUALIZED):
Net investment income (loss) (0.37%) 0.31% 0.07% 0.16% 1.02%
Net expenses 0.95% 0.80% 0.80% 0.80% 0.80%
Gross expenses(1) 1.94% 1.51% 1.88% 2.82% 5.38%
- -----------------------------------------------------------------------------------------------------------------------------
Total Return(2) 66.27% (14.47%) 9.87% 31.47% 15.95%
Portfolio turnover rate 314% 135% 209% 195% 51%
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 23,819 $ 13,295 $ 11,482 $ 6,091 $ 2,027
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
80
<PAGE> 81
WELLS FARGO VARIABLE TRUST
NOTES TO FINANCIAL HIGHLIGHTS
(1) During each period, various fees and expenses were waived and reimbursed.
The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
in the absence of any waivers and reimbursements (Note 9).
(2) Total return calculations do not include any sales charges, and would have
been lower had certain expenses not been waived or reimbursed during the
period shown. Total return figures do not reflect charges pursuant to the
terms of the variable life insurance policies and variable annuity contracts
funded by separate accounts that invest in the Fund's shares.
(3) Commencement of operations.
The accompanying notes are an integral part of these financial statements.
81
<PAGE> 82
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 series
management investment company. The Trust currently consists of eight separate
diversified funds (each, a "Fund", collectively, the "Funds"): the Asset
Allocation, Corporate Bond, Equity Income, Equity Value, Growth, Large Company
Growth, Money Market, and Small Cap Growth Funds. The Funds are available
exclusively as pooled funding vehicles for certain participating life insurance
companies offering variable annuity contracts and variable life insurance
policies.
Concurrent with the establishment of the Trust, the Board of Trustees of the
Life & Annuity Trust ("LAT") and the Board of Trustees of the Norwest Select
Funds ("Select") approved a consolidation agreement providing for the
acquisition of the assets and the assumption of liabilities of certain LAT and
Norwest Select Funds into the Wells Fargo Variable Trust Funds. Effective on the
close of business September 17, 1999 the LAT and/or Select Funds were
consolidated into the respective Wells Fargo Variable Trust Funds through an
exchange of shares as follows:
<TABLE>
<CAPTION>
LIFE & ANNUITY TRUST FUND NORWEST SELECT FUND WELLS FARGO VARIABLE TRUST FUND
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Asset Allocation Fund Asset Allocation Fund*
U.S. Government Allocation Fund Income Fund Corporate Bond Fund***
Income Equity Fund Equity Income Fund**
Equity Value Fund Equity Value Fund*
Growth Fund Growth Fund*
ValuGrowth Stock Fund Large Company Growth Fund***
Money Market Fund Money Market Fund*
Strategic Growth Fund Small Company Stock Fund Small Cap Growth Fund**
</TABLE>
- ---------------
* LAT Fund accounting survivor
** Select Fund accounting survivor
*** New Fund. No accounting survivor
Concurrent with the reorganization of the LAT Strategic Growth Fund and the
Norwest Select Small Company Stock Fund into the Wells Fargo Variable Trust
Small Cap Growth Fund, the Wells Fargo Variable Trust Small Cap Growth Fund
acquired all the net assets of the LAT Strategic Growth Fund and Norwest Select
Small Company Stock Fund. The LAT Strategic Growth Fund exchanged its 173,629
shares (valued at $2,616,673 million, including $270,587 of unrealized
appreciation) for 239,403 shares of the Wells Fargo Variable Trust Small Cap
Growth Fund. The Select Small Company Stock Fund, as accounting survivor,
exchanged its shares at a rate of one for one carrying all of its assets and
liabilities (valued at $12,170,942) into the Wells Fargo Variable Trust Small
Cap Growth Fund.
The Wells Fargo Variable Trust Corporate Bond and Large Company Growth Funds did
receive assets from the LAT and Select Trust Funds, but have a different
investment objective, among other operating differences, than those respective
LAT and Select Trust Funds. Thus, the Wells Fargo Variable Trust Corporate Bond
and Large Company Growth Funds do not have an accounting survivor and commenced
operations on September 20, 1999 for financial reporting purposes.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies which are consistently followed by
the Trust in the preparation of its financial statements are in conformity with
generally accepted accounting principles ("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
82
<PAGE> 83
NOTES TO FINANCIAL STATEMENTS
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
Investments in securities for all Funds, with the exception of the Money Market
Fund, are valued at the close of each business day. Securities which are traded
on a national or foreign securities exchange or the National Association of
Securities Dealers Automated Quotation ("NASDAQ") National Market are valued at
the last reported sales price. In the absence of any sale of such securities,
and in the case of other securities, including U.S. Government obligations, but
excluding debt securities maturing in 60 days or less, the valuations are based
on the latest quoted bid prices. Securities denominated in foreign currencies
are translated into U.S. dollars using the closing rates of exchange in effect
on the day of valuation. Securities for which quotations are not readily
available are valued at fair value as determined by policies set by the Trust's
Board of Trustees.
The Money Market Fund invests only in securities with remaining maturities not
exceeding 397 days (13 months). Securities held in the Money Market Fund and
debt securities maturing in 60 days or less are valued using the amortized cost
method which 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.
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 under provisions of the Internal Revenue Code of 1986, as amended
(the "Code").
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 amounts are translated into U.S. dollars at the mean of the bid
and ask price of such currencies against U.S. dollars as follows: (i) assets and
liabilities at the rate of exchange at the end of the respective period; and
(ii) purchases and sales of securities and income and expenses at the rate of
exchange prevailing on the dates of such transactions. The portion of the
results of operations arising from changes in the exchange rates and the portion
due to fluctuations arising from changes in the market prices of securities are
not isolated. Such fluctuations are included with the net realized and
unrealized gain or loss on investments.
REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements and may participate in pooled
repurchase agreement transactions with other funds advised by Wells Fargo Bank,
N.A. ("WFB"). 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 Funds' custodians' 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 held by the Funds are collateralized by instruments
such as U.S. Treasury or federal agency obligations.
FUTURES CONTRACTS
The Asset Allocation and Equity Value 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
83
<PAGE> 84
NOTES TO FINANCIAL STATEMENTS
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. On December
31, 1999, the Asset Allocation Fund held the following long futures contracts:
<TABLE>
<CAPTION>
Notional Net Unrealized
CONTRACTS Type Expiration Date Contract Value Appreciation
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 S & P 500 Index March 2000 $4,081,550 $72,125
</TABLE>
The Asset Allocation Fund has pledged to brokers U.S. Treasury bills for initial
margin requirements with a par value of $250,000.
Forward Foreign Currency Contract
At December 31, 1999, the Corporate Bond Fund had entered into a forward foreign
currency contract under which it is obligated to exchange currencies at a
specified future date. The Fund had an outstanding contract to sell EURO$538,000
and receive $545,155 on February 9, 2000. Net unrealized appreciation of $4,573
on this contract is included in the accompanying financial statements. Risks
arise from the possible inability of counterparties to meet the terms of their
contracts and from movements in currency values.
Reclassification of Capital Accounts
On the statement of assets and liabilities, as a result of permanent book-to-tax
and merger-related differences, reclassification adjustments were made as
follows:
<TABLE>
<CAPTION>
Undistributed Net Net Realized
Investment Income Gain/Loss Paid in Capital
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate Bond Fund 18,068 (18,068) 0
Equity Income Fund 12,184 (12,184) 0
Growth Fund 19,932 (13,417) (6,515)
Large Company Growth Fund 55,690 0 (55,690)
Money Market Fund 11 (11) 0
Small Cap Growth Fund 49,877 (51,403) 1,526
</TABLE>
Distributions to Shareholders
Dividends to shareholders from net investment income, if any, for the Growth,
Large Company Growth, and Small Cap Growth Funds are declared and distributed
annually. Dividends to shareholders from net investment income, if any, for the
Asset Allocation, Equity Income, and Equity Value Funds are declared and
distributed quarterly. Dividends to shareholders from net investment income, if
any, for the Corporate Bond and Money Market Funds are declared daily and
distributed monthly. Distributions to shareholders from net realized capital
gains, if any, are declared and distributed at least annually.
84
<PAGE> 85
NOTES TO FINANCIAL STATEMENTS
Distributions are based on amounts calculated in accordance with the applicable
federal income tax regulations, which may differ from generally accepted
accounting principles. 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. The differences
between the income or gains distributed on a book versus tax basis are shown as
excess distributions of net investment income and net realized gain on sales of
investments in the accompanying Statements of Changes in Net Assets. To the
extent that these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassifications.
Federal Income Taxes
Each Fund of the Trust is treated as a separate entity for federal income tax
purposes. It is the policy of each Fund to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined in 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, 1999.
For tax purposes, the Corporate Bond, Equity Value, and Large Company Growth
Funds have current year deferred post-October capital losses of $35,028, $52,061
and $83,423, respectively. These losses will be realized for tax purposes on the
first day of the succeeding year. The following Funds had estimated net capital
loss carryforwards at December 31, 1999, which are available to offset future
net realized capital gains:
<TABLE>
<CAPTION>
Capital Loss
DATE Fund Year Expires Carryforwards
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
December 31, 1999 Corporate Bond 2007 $34,524
December 31, 1999 Equity Value 2006 79,556
Equity Value 2007 1,202,701
December 31, 1999 Small Cap Growth 2005 3,248,572
Small Cap Growth 2006 582,614
</TABLE>
The Small Cap Growth Fund has an annual capital loss carryforward application
limit of $645,910 as a result of its reorganization.
3. ADVISORY FEES
The Trust has entered into separate advisory contracts on behalf of the Funds
with WFB. Pursuant to the contracts, WFB has agreed to provide the following
Funds with daily portfolio management, for which, WFB is entitled to be paid a
monthly advisory fee at the following annual rates:
<TABLE>
<CAPTION>
% of Average
FUND Daily Net Assets
- -----------------------------------------------------------------------------------------
<S> <C>
Asset Allocation Fund 0.55
Corporate Bond Fund 0.45
Equity Income Fund 0.55
Equity Value Fund 0.55
Growth Fund 0.55
Large Company Growth Fund 0.55
Money Market Fund 0.40
Small Cap Growth Fund 0.75
</TABLE>
Prior to September 20, 1999 the Trust had entered into separate advisory
contracts on behalf of all the Funds, except the Equity Income and Small Cap
Growth Funds, with WFB. Pursuant to the contracts, WFB had agreed to provide the
Funds with daily portfolio management. Under the old contracts with the Asset
Allocation, Equity Value, and Growth Funds, WFB was entitled to a monthly
advisory fee at an annual rate of 0.60% of each Fund's average daily net assets.
Under the old
85
<PAGE> 86
NOTES TO FINANCIAL STATEMENTS
contract with the Money Market Fund, WFB was entitled to a monthly advisory fee
at an annual rate of 0.45% of the Fund's average daily net assets. Prior to
September 20, 1999 the investment adviser to the Equity Income and Small Cap
Growth Funds was Norwest Investment Management, Inc. ("Adviser"), a wholly owned
subsidiary of Norwest Bank Minnesota, N.A. ("Norwest"), which is a subsidiary of
Wells Fargo & Company. The Adviser received an annual advisory fee from each
Fund at an annual rate of 0.80% of the average daily net assets of the
respective Fund.
Wells Capital Management Incorporated ("WCM"), a wholly-owned subsidiary of WFB,
acts as investment sub-advisor to the Corporate Bond, Equity Income, Equity
Value, Growth, Money Market, and Small Cap Growth Funds. WCM is entitled to
receive from WFB, as compensation for its sub-advisory services to the Equity
Income, Equity Value, Growth, and Small Cap Growth Funds, a monthly fee at the
annual rate of 0.25% of each Fund's average daily net assets up to $200 million,
0.20% for the next $200 million and 0.15% of the Fund's average daily net assets
in excess of $400 million. WCM is entitled to receive from WFB, as compensation
for its sub-advisory services to the Corporate Bond Fund, a monthly fee at the
annual rate of 0.15% of the Fund's average daily net assets up to $400 million,
0.125% for the next $400 million and 0.10% of the Fund's average daily net
assets in excess of $800 million. WCM is entitled to receive from WFB, as
compensation for its sub-advisory services to the Money Market Fund, a monthly
fee at the annual rate of 0.05% of the Fund's average daily net assets up to $1
billion and 0.04% of the Fund's average daily net assets in excess of $1
billion. Prior to September 20, 1999 the Equity Value, Growth, and Money Market
Funds were charged at the same annual rates.
Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of Barclays
Global Investors, N.A. ("BGI") and indirect subsidiary of Barclays Bank PLC,
acts as sub-adviser to the Asset Allocation Fund. BGFA is entitled to receive
from WFB, as compensation for its sub-advisory services, a monthly fee at the
annual rate of 0.15% of the Fund's average daily net assets up to $900 million
and 0.10% of its average daily net assets in excess of $900 million. Prior to
September 20, 1999, the Asset Allocation Fund was charged at the same annual
rates.
Peregrine Capital Management Incorporated acts as sub-adviser to the Large
Company Growth Fund. Peregrine is entitled to receive from WFB, as compensation
for its sub-advisory services, a monthly fee at the annual rate of 0.75% of the
Fund's average daily net assets up to $25 million, 0.60% of the Fund's average
daily net assets for the next $25 million, 0.50% of the Fund's average daily net
assets for the next $225 million, and 0.30% of the Fund's average daily net
assets in excess of $275 million.
4. DISTRIBUTION FEES
The Trust has adopted a Distribution Plan ("Plan") for the Funds, excluding the
Money Market Fund, pursuant to Rule 12b-1 under the 1940 Act. Distribution fees
are charged and paid to Stephens, Inc. ("Stephens") at a rate of 0.25% of the
average daily net assets of each Fund. The distribution fees paid on behalf of
the Funds for the period ended December 31, 1999 are disclosed on the Statement
of Operations.
5. ADMINISTRATION
The Trust has entered into administration agreements on behalf of the Funds with
WFB whereby WFB is entitled to receive monthly fees at the annual rate of 0.15%
of each Fund's average daily net assets.
Prior to September 20, 1999, the Administrator for the Equity Income and Small
Cap Growth Funds was Forum Administrative Services, LLC ("FAdS"). The Funds were
charged monthly fees at the annual rate of 0.05% of each Fund's average daily
net assets. Prior to March 25, 1999, the Asset Allocation, Equity Value, Growth,
and Money Market Funds retained WFB as administrator and Stephens Inc. as
co-administrator. For these services, WFB and Stephens Inc. were entitled to
receive monthly fees at the annual rates of 0.03% and 0.04%, respectively, of
each Fund's average daily net assets.
86
<PAGE> 87
NOTES TO FINANCIAL STATEMENTS
6. TRANSFER AGENT
The Trust has entered into a transfer agency agreement on behalf of the Funds
with Boston Financial Data Services ("BFDS"). WFB has been engaged by BFDS to
provide sub-transfer agency services for the Funds.
Prior to September 20, 1999, Norwest provided transfer agency, custody, and
shareholder services for the Equity Income and Small Cap Growth Funds at an
annual rate of 0.08% of the average daily net assets of each Fund. Prior to July
17, 1999, WFB provided transfer agency services for the Asset Allocation, Equity
Value, and Growth Funds at an annual rate of 0.14% of the average daily net
assets of each Fund, and for the Money Market Fund at an annual rate of 0.10% of
the average daily net assets of the Fund.
7. SHAREHOLDER SERVICING
Prior to September 20, 1999 the Asset Allocation, Equity Value, Growth, and
Money Market Funds were charged 0.25% of each Fund's average daily net assets
for shareholder services.
8. OTHER FEES AND TRANSACTIONS WITH AFFILIATES
Forum Accounting Services, LLC ("Forum") provides portfolio accounting services
to the Funds. WFB provides sub-portfolio accounting services to the Asset
Allocation, Equity Value, Growth, and Money Market Funds. For these services WFB
is entitled to receive a fixed monthly fee plus an annual fee of 0.0025% of the
Fund's average daily net assets. Prior to September 20, 1999, the Trust entered
into contracts on behalf of the Asset Allocation, Equity Value, Growth, and
Money Market Funds with WFB, whereby WFB was responsible for providing portfolio
accounting services for the Funds. Pursuant to the contract, WFB was entitled to
a monthly base fee from each Fund of $2,000 plus an annual fee of 0.07% of the
first $50 million of each Fund's average daily net assets, 0.045% of the next
$50 million, and 0.02% of each Fund's average daily net assets in excess of $100
million.
The Trust has entered into contracts on behalf of each Fund (other than the
Asset Allocation Fund, for which BGI serves as custodian) with Norwest Bank
Minnesota, N.A. ("Norwest"), whereby Norwest is responsible for providing
custody services for the Funds. Pursuant to the contracts, Norwest is entitled
to certain transaction charges plus a monthly fee for custody services at the
annual rate of 0.02% of the average daily net assets of each Fund. Prior to
September 20, 1999 the Equity Value, Growth, and Money Market Funds had the
above service performed for a fee at an annual rate of 0.0167% of the average
daily net assets of each Fund. The Equity Income and Small Cap Growth Funds had
Norwest serve as the custodian. For its custody services, in addition to
shareholder servicing and transfer agent services, Norwest was entitled to
receive a fee at an annual rate of 0.08% of the average daily net assets of each
Fund.
BGI, a wholly-owned subsidiary of Barclays Global Investors Inc., acts as
custodian to the Asset Allocation Fund. BGI is not entitled to receive
compensation for its custodial services to the Fund so long as BGFA is entitled
to receive compensation for providing investment sub-advisory services to it.
Prior to September 20, 1999 BGI performed the same services above for the Asset
Allocation Fund and was not entitled to receive compensation so long as BGFA was
entitled to receive compensation for providing investment sub-advisory services
to the Fund.
Certain officers of the Trust are also officers of Stephens. As of December 31,
1999, Stephens owned 4,147 shares of the Asset Allocation Fund, 3,428 shares of
the Corporate Bond Fund, 10,148 shares of the Equity Value Fund, 3,119 shares of
the Growth Fund, no shares of the Equity Income Fund, no shares of the Large
Company Growth Fund, 32,362 shares of the Money Market Fund, and 16,148 shares
of the Small Cap Growth Fund.
9. WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees or reimbursed expenses on the Statement of
Operations, for the year ended December 31, 1999, were waived by WFB or FAdS.
Waived fees and reimbursed expenses continue at the discretion of WFB.
87
<PAGE> 88
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Fees Waived Expenses Reimbursed Fees Waived
FUND by FAdS by Stephens by WFB Total Fees Waived
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Allocation Fund $0 $0 $398,328 $398,328
Corporate Bond Fund 0 0 68,198 68,198
Equity Income Fund 74,748 0 203,914 278,662
Equity Value Fund 0 0 92,366 92,366
Growth Fund 0 0 221,406 221,406
Large Company Growth Fund 0 0 51,615 51,615
Money Market Fund 0 0 71,025 71,025
Small Cap Growth Fund 8,460 16,898 109,744 135,102
</TABLE>
10. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date) and U.S.
Government Securities, for each Fund for the year or period ended December 31,
1999, were as follows:
<TABLE>
<CAPTION>
Purchases
AGGREGATE PURCHASES AND SALES at Cost Sales Proceeds
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Asset Allocation Fund $123,363,443 $57,693,750
Corporate Bond Fund 107,106,667 39,293,555
Equity Income Fund 40,145,530 4,877,969
Equity Value Fund 41,597,026 26,098,628
Growth Fund 65,129,388 57,751,238
Large Company Growth Fund 40,988,151 0
Small Cap Growth Fund 41,974,422 40,866,447
</TABLE>
The Money Market Fund, not reflected in this schedule, trades exclusively in
short-term securities.
88
<PAGE> 89
INDEPENDENT AUDITORS' REPORT
THE BOARD OF TRUSTEES AND
SHAREHOLDERS OF WELLS FARGO VARIABLE TRUST FUNDS:
We have audited the accompanying statements of assets and liabilities of
Asset Allocation Fund, Corporate Bond Fund, Equity Income Fund, Equity Value
Fund, Growth Fund, Large Company Growth Fund, Money Market Fund and Small Cap
Growth Fund, portfolios of Wells Fargo Variable Trust Funds, including the
schedules of investments, as of December 31, 1999, and the related statements of
operations for the year then ended for Asset Allocation Fund, Equity Income
Fund, Equity Value Fund, Growth Fund, Money Market Fund and Small Cap Growth
Fund, and for the period from September 20, 1999 (commencement of operations) to
December 31, 1999 for Corporate Bond Fund and Large Company Growth Fund, the
statements of changes in net assets for each of the years in the two-year period
then ended for Asset Allocation Fund, Equity Income Fund, Growth Fund, Money
Market Fund and Small Cap Growth Fund, the year ended December 31, 1999 and the
period from May 1, 1998 (commencement of operations) to December 31, 1998 for
the Equity Value Fund and the period from September 20, 1999 (commencement of
operations) to December 31, 1999 for Corporate Bond Fund and Large Company
Growth Fund and financial highlights for each of the years or periods indicated
herein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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, 1999 by correspondence with the custodian and brokers. 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
Asset Allocation Fund, Corporate Bond Fund, Equity Income Fund, Equity Value
Fund, Growth Fund, Large Company Growth Fund, Money Market Fund and Small Cap
Growth Fund as of December 31, 1999, the results of their operations, changes in
their net assets and their financial highlights for the years or periods
presented above in conformity with generally accepted accounting principles.
/s/ KPMG LLP
San Francisco, California
February 2, 2000
89
<PAGE> 90
LIST OF ABBREVIATIONS
The following is a list of common abbreviations for terms and entities
which may have appeared in this report.
<TABLE>
<S> <C> <C>
ABAG -- Association of Bay Area Governments
ADR -- American Depository Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
CONNIE LEE -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc.
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
LIBOR -- London Interbank Offered Rate
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PLC -- Private Placement
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFMR -- Single Family Mortgage Revenue
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
WEBS -- World Equity Benchmark Shares
</TABLE>
<PAGE> 91
<TABLE>
<S> <C>
---------------------
PRSRT
STANDARD
U.S. POSTAGE
American Skandia Life PAID
Assurance Company B.F.C.
Tower One Corporate Drive MAILED FROM
Shelton, CT 06484 ZIP CODE 07102
---------------------
</TABLE>
This report and the financial statements contained herein are submitted for the
general information of the contract holders of the Stagecoach Variable Annuity,
Stagecoach Variable Annuity Plus, Stagecoach Extra Credit Variable Annuity, and
the Stagecoach Variable Annuity Flex. If this report is used for promotional
purposes, distribution of the report must be accompanied or proceeded by a
current prospectus. For a prospectus containing more complete information,
including charges and expenses, call 1-800-680-8920. Read the prospectus
carefully before you invest.
Printed on Recycled Paper (C)1999 American Skandia AR 014 (2/00)
