Index: src/vdbetrace.c
==================================================================
--- src/vdbetrace.c
+++ src/vdbetrace.c
@@ -91,10 +91,13 @@
       }else{
         idx = nextIndex;
       }
     }else{
       assert( zRawSql[0]==':' || zRawSql[0]=='$' || zRawSql[0]=='@' );
+      testcase( zRawSql[0]==':' );
+      testcase( zRawSql[0]=='$' );
+      testcase( zRawSql[0]=='@' );
       n = sqlite3GetToken((u8*)zRawSql, &dummy);
       idx = 0;
       for(i=0, pOp=p->aOp; ALWAYS(i<p->nOp); i++, pOp++){
         if( pOp->opcode!=OP_Variable ) continue;
         if( pOp->p3>1 ) continue;
@@ -114,11 +117,24 @@
     }else if( pVar->flags & MEM_Int ){
       sqlite3XPrintf(&out, "%lld", pVar->u.i);
     }else if( pVar->flags & MEM_Real ){
       sqlite3XPrintf(&out, "%!.15g", pVar->r);
     }else if( pVar->flags & MEM_Str ){
-      sqlite3XPrintf(&out, "'%.*q'", pVar->n, pVar->z);
+#ifndef SQLITE_OMIT_UTF16
+      if( ENC(db)!=SQLITE_UTF8 ){
+        Mem utf8;
+        memset(&utf8, 0, sizeof(utf8));
+        utf8.db = db;
+        sqlite3VdbeMemSetStr(&utf8, pVar->z, pVar->n, ENC(db), SQLITE_STATIC);
+        sqlite3VdbeChangeEncoding(&utf8, SQLITE_UTF8);
+        sqlite3XPrintf(&out, "'%.*q'", utf8.n, utf8.z);
+        sqlite3VdbeMemRelease(&utf8);
+      }else
+#endif
+      {
+        sqlite3XPrintf(&out, "'%.*q'", pVar->n, pVar->z);
+      }
     }else{
       assert( pVar->flags & MEM_Blob );
       sqlite3StrAccumAppend(&out, "x'", 2);
       for(i=0; i<pVar->n; i++){
         sqlite3XPrintf(&out, "%02x", pVar->z[i]&0xff);

Index: test/trace.test
==================================================================
--- test/trace.test
+++ test/trace.test
@@ -181,7 +181,57 @@
   execsql {SELECT $::t6int, $::t6real, $t6str, $t6blob, $t6null}
 } {6 6.0 {test-six y'all} 01234 {}}
 do_test trace-6.2 {
   set TRACE_OUT
 } {{SELECT 6, 6.0, 'test-six y''all', x'3031323334', NULL}}
+do_test trace-6.3 {
+  set TRACE_OUT {}
+  execsql {SELECT $::t6int, ?1, $::t6int}
+} {6 6 6}
+do_test trace-6.4 {
+  set TRACE_OUT
+} {{SELECT 6, 6, 6}}
+do_test trace-6.5 {
+  execsql {CREATE TABLE t6([$::t6int],"?1"); INSERT INTO t6 VALUES(1,2)}
+  set TRACE_OUT {}
+  execsql {SELECT '$::t6int', [$::t6int], $::t6int, ?1, "?1", $::t6int FROM t6}
+} {{$::t6int} 1 6 6 2 6}
+do_test trace-6.6 {
+  set TRACE_OUT
+} {{SELECT '$::t6int', [$::t6int], 6, 6, "?1", 6 FROM t6}}
+
+# Do these same tests with a UTF16 database.
+#
+do_test trace-6.100 {
+  db close
+  sqlite3 db :memory:
+  db eval {
+     PRAGMA encoding=UTF16be;
+     CREATE TABLE t6([$::t6str],"?1");
+     INSERT INTO t6 VALUES(1,2);
+  }
+  db trace trace_proc
+  set TRACE_OUT {}
+  execsql {SELECT '$::t6str', [$::t6str], $::t6str, ?1, "?1", $::t6str FROM t6}
+} {{$::t6str} 1 {test-six y'all} {test-six y'all} 2 {test-six y'all}}
+do_test trace-6.101 {
+  set TRACE_OUT
+} {{SELECT '$::t6str', [$::t6str], 'test-six y''all', 'test-six y''all', "?1", 'test-six y''all' FROM t6}}
+
+do_test trace-6.200 {
+  db close
+  sqlite3 db :memory:
+  db eval {
+     PRAGMA encoding=UTF16le;
+     CREATE TABLE t6([$::t6str],"?1");
+     INSERT INTO t6 VALUES(1,2);
+  }
+  db trace trace_proc
+  set TRACE_OUT {}
+  execsql {SELECT '$::t6str', [$::t6str], $::t6str, ?1, "?1", $::t6str FROM t6}
+} {{$::t6str} 1 {test-six y'all} {test-six y'all} 2 {test-six y'all}}
+do_test trace-6.101 {
+  set TRACE_OUT
+} {{SELECT '$::t6str', [$::t6str], 'test-six y''all', 'test-six y''all', "?1", 'test-six y''all' FROM t6}}
+
 
 finish_test