<PAGE>
[LETTERHEAD OF KPMG]
Independent Auditors' Report
To the Board of Trustees of
Wells Fargo Variable Trust Funds:
We have examined management's assertion, included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940, that Asset Allocation Fund, a portfolio of Wells Fargo Variable
Trust Funds (the Fund), complied with the requirements of subsections (b) and
(c) of Rule 17f-2 under the Investment Company Act of 1940 as of December 31,
1999. Management is responsible for the Fund's compliance with those
requirements. Our responsibility is to express an opinion on management's
assertion about the Fund's compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Fund's compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of December 31, 1999, and with respect to agreement of security
purchases and sales, for the period from June 30, 1999 (date of our last
examination) through December 31, 1999.
(1) Inspection of documentation of all securities located in the vault, if any,
of Barclays Global Investors, N.A., the Custodian;
(2) Inspection of documentation of securities held in book entry form by
Participant Trust Company, Bankers Trust Company, Bank of New York, Morgan
Stanley Trust Company, Depository Trust Company, and the Federal Reserve
Bank and examination of selected security position reconciliations;
(3) Inspection of documentation of other securities held in safekeeping by the
Custodian but not included in (1) or (2) above and examination of selected
security position reconciliations;
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(4) Confirmation or inspection of documentation of all securities purchased but
not received, hypothecated, pledged, placed in escrow, or out for transfer
with brokers, pledges and/or transfer agents;
(5) Reconciliation of all such securities to the books and records of the Fund
and the Custodian; and
(6) Tests of selected security transactions since the date of our last report.
We believed that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the Fund's compliance
with the specified requirements.
In our opinion, management's assertion that Wells Fargo Variable Trust Asset
Allocation Fund complied with the requirements of subsections (b) and (c) of
Rule 17f-2 of the Investment Company Act of 1940 as of December 31, 1999, with
respect to securities reflected in the investment account of Wells Fargo
Variable Trust Asset Allocation Fund, is fairly stated, in all material
respects.
This report is intended solely for the information and use of management and the
Board of Trustees of Wells Fargo Variable Trust Asset Allocation Fund and the
Securities and Exchange Commission and is not intended to be and should not be
used by anyone other than these specified parties.
KPMG LLP
San Francisco, California
February 23, 2000
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[LOGO OF WELLS FARGO FUNDS]
February 23, 2000
KPMG LLP
99 High Street
Boston, MA 02110-2371
RE: Management Statement Regarding Compliance with Certain Provisions of the
Investment Company Act of 1940
Ladies and Gentlemen:
We, as members of management of Asset Allocation Fund (the "Fund"), one
portfolio of Wells Fargo Variable Trust Funds, are responsible for complying
with the requirements of subsections (b) and (c) of Rule 17f-2, "Custody of
Investments of Registered Management Investment Companies," of the Investment
Company Act of 1940. We are also responsible for establishing and maintaining
effective internal controls over compliance with those requirements. We have
performed an evaluation of the Fund's compliance with the requirements of
subsections (b) and (c) of Rule 17f-2 as of December 31, 1999 and for the period
from June 30, 1999 (date of your last examination) through December 31, 1999.
Based on this evaluation, we assert that Asset Allocation Fund was in compliance
with the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of December 31, 1999 and from June 30, 1999 (date of your
last examination) through December 31, 1999, with respect to securities
reflected in the investment accounts of the Wells Fargo Variable Trust Asset
Allocation Fund.
Sincerely,
/s/ Karla Rabusch
Karla Rabusch
Vice President and
Chief Financial Officer
Wells Fargo Mutual Funds Group
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FOR ????
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OMB Number: 3235-0360
Expires: July 31, 1991
Estimated average burden
hours per response..0.05
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Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270, 17f-2]
<TABLE>
<CAPTION>
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1. Investment Company Act File Number: Date examination completed:
801-8202 12/31/99
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2. State identification Number:
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<S> <C> <C> <C> <C> <C>
AL AK AZ AR CA CO
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CT DE DC FL GA HI
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ID IL IN IA KS KY
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LA ME MD MA MI MN
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MS MO MT NE NV NH
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NJ NM NY NC ND OH
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OK OR PA RI SC SD
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TN TX UT VT VA WA
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WV WI WY PUERTO RICO
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Other (specify):
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3. Exact name of investment company as specified in registration statement:
Wells Fargo Variable Trust Asset Allocation Fund
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4. Name under which business is conducted, if different from above:
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5. Address of principal place of business (number, street, city, state, zip code):
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS
This Form must be completed by investment companies that have custody of
securities or similar investments.
Investment Company
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance with
Rule 17f-2 under the Act and applicable state law, examines securities and
similar investments in the custody of the investment company.
Accountant
3. Submit this Form to the Securities and Exchange Commission and appropriate
state securities administrators when filing the certificate of accounting
required by Rule 17f-2 under the Act and applicable state law. File the
original and one copy with the Securities and Exchange Commission's
principal office in Washington, D.C., one copy with the regional office for
the region in which the investment company's principal business operations
are conducted and one copy with the appropriate state administrator(s), if
applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
Note: The estimated average burden hours are made solely for purposes of the
Paperwork Reduction Act, and are not derived from a comprehensive or even
a representative survey or study of the costs of SEC rules and forms.
Direct any comments concerning the accuracy of the estimated average
burden hours for compliance with SEC rules and forms to Kenneth A. Fogash,
Deputy Executive Director, U.S. Securities and Exchange Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 and Gary Waxman, Clearance
Officer, Office of Management and Budget, Room 3208 New Executive Office
Building, Washington, D.C. 20503.
