Edgar Filing: WELLS FARGO ADVANTAGE UTILITIES & HIGH INCOME FUND

Form N-CSRS

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-21507

Wells Fargo Advantage Utilities and High Income Fund

(Exact name of registrant as specified in charter)

525 Market St., San Francisco, CA 94105

(Address of principal executive offices) (Zip code)

C. David Messman

Wells Fargo Funds Management, LLC

525 Market St., San Francisco, CA 94105

(Name and address of agent for service)

Registrant’s telephone number, including area code: 800-222-8222

Date of fiscal year end: August 31, 2012

Date of reporting period: February 28, 2013

ITEM 1.

REPORT TO SHAREHOLDERS

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Wells Fargo Advantage

Utilities and High Income Fund

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Semi-Annual Report

February 28, 2013

This closed-end fund is no longer offered as an initial public offering and is only offered through broker/dealers on the secondary market. A closed-end fund is not required to buy its shares back from investors upon request.

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Contents



Letter to shareholders			2

Performance highlights			4

Summary portfolio of investments			7

Financial statements
Statement of assets and liabilities			14
Statement of operations			15
Statement of changes in net assets			16
Statement of cash flows			17
Financial highlights			18

Notes to financial statements			19

Other information			24

Automatic dividend reinvestment plan			27

List of abbreviations			28

The views expressed and any forward-looking statements are as of February 28, 2013, unless otherwise noted, and are those of the Fund managers and/or Wells Fargo Funds Management, LLC. Discussions of individual securities, or the markets generally, or any Wells Fargo Advantage Fund are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements; the views expressed are subject to change at any time in response to changing circumstances in the market. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.

NOT FDIC INSURED ¡ NO BANK GUARANTEE ¡ MAY LOSE VALUE


2		Wells Fargo Advantage Utilities and High Income Fund		Letter to shareholders (unaudited)

LOGO

Karla M. Rabusch

President

Wells Fargo Advantage Funds

Entering the period, concerns about the eurozone sovereign debt situation held center stage as investors again focused on economic weakness in southern European economies.

Dear Valued Shareholder:

We are pleased to offer you this semi-annual report for the Wells Fargo Advantage Utilities and High Income Fund for the six-month period that ended February 28, 2013. The macroeconomic picture was dominated by continued concerns about the possible effects that the ongoing European sovereign debt crisis would have on the global economy. However, relatively solid economic data in the U.S. and efforts by European authorities to address the sovereign debt issue seemed to alleviate investor fears and supported global stock markets. Utilities stocks posted solid returns but underperformed the broader market. High-yield bonds, however, outperformed the broader bond market on strong demand from yield-hungry investors in a low-yielding environment.

The period was dominated by worries that ongoing debt problems in the eurozone would affect global economic growth.

Entering the period, concerns about the eurozone sovereign debt situation held center stage as investors again focused on economic weakness in southern European economies. Because many eurozone banks owned southern European debt and many U.S. banks had financial ties to eurozone banks, investors worried about the effects of a possible southern European debt default on the global financial system and economy. Ongoing weakness in the Greek economy made it difficult for the country to meet previously agreed upon austerity targets. Toward the end of the reporting period, political risk resurfaced in both Italy and Spain. In Italy, Prime Minister Mario Monti, an economist who was appointed to implement austerity measures and labor market reforms, had resigned in December 2012. However, Italy’s general election in February 2013 resulted in no party winning a clear majority in the Senate, leading to a hung parliament.

European leaders took concerted action to calm investor concerns. In September 2012, the European Central Bank (ECB) announced that it would purchase an unlimited amount of one- to three-year sovereign debt from countries that had applied for a formal bailout through either the European Financial Stability Facility or the European Stability Mechanism. In another positive sign, in late November 2012, finance ministers from the 17-country eurozone and the International Monetary Fund struck a deal aimed at reducing Greece’s debt by the year 2020.

Central banks continued to provide stimulus.

Major central banks, including the U.S. Federal Reserve (Fed) and the ECB, continued to inject liquidity into the banks and the markets through various quantitative easing policies. Throughout the reporting period, the Federal Open Market Committee (FOMC) kept its key interest rates effectively at zero in order to support the economy and the financial system. The ECB was similarly aggressive, keeping its key rate at a historic low of 0.75%. Just prior to the beginning of the reporting period, the FOMC announced its intention to keep interest rates low until at least mid-2015 in order to support the sluggish economy. The Fed also announced open-ended purchases of $40 billion per month in mortgage-backed securities in an effort to support the housing market.

Stock markets posted solid gains in an eventful period.

Aggressive central bank actions helped support stock prices, as did relatively solid economic data. For much of the reporting period, the U.S. stock market benefited from favorable gross domestic product (GDP) data. Even though the GDP growth rate moderated from 3.1% (annualized) in the third quarter of 2012 to 0.1% (annualized) in the fourth quarter, many investors attributed the weak number to


Letter to shareholders (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			3

the aftereffects of Hurricane Sandy on the Eastern Seaboard. Consequently, the U.S. stock market remained resilient. European stocks also posted gains, despite anxiety late in the period about Italy’s political situation, as European authorities continued to address the continent’s credit crisis. Utilities stocks participated in the general market gain but lagged more economically sensitive sectors such as industrials.

Within the fixed-income market, historically low interest rates continued to support bond prices, leading to generally positive returns across the asset class. High-yield debt further benefited from a continued low rate of credit defaults, as the favorable interest-rate environment allowed companies to reduce interest expense by refinancing higher-coupon debt. High-yield bonds thus outperformed the broad fixed-income market.

We employ a diverse array of investment strategies, even as many variables are at work in the market.

The full effect of the European credit crisis remains unknown. Elevated unemployment and debt defaults continue to pressure consumers and businesses alike. As a whole, Wells Fargo Advantage Funds represents investments across a range of asset classes and investment styles, giving you an opportunity to create a diversified investment portfolio. While diversification may not prevent losses in a downturn, we believe it helps manage risk.

Thank you for choosing to invest with Wells Fargo Advantage Funds. We appreciate your confidence in us and remain committed to helping you meet your financial needs. For current information about your fund investments, contact your investment professional, visit our website at wellsfargoadvantagefunds.com, or call us directly at 1-800-222-8222. We are available 24 hours a day, 7 days a week.

Sincerely,

LOGO

Karla M. Rabusch

President

Wells Fargo Advantage Funds

Within the fixed-income market, historically low interest rates continued to support bond prices, leading to generally positive returns across the asset class.


4		Wells Fargo Advantage Utilities and High Income Fund		Performance highlights (unaudited)

Investment objective

The Fund seeks a high level of current income and moderate capital growth, with an emphasis on providing tax-advantaged dividend income.

Adviser

Wells Fargo Funds Management, LLC

Subadviser

Crow Point Partners, LLC

Wells Capital Management Incorporated

Portfolio managers

Niklas Nordenfelt, CFA

Timothy P. O’Brien, CFA

Phillip Susser

Average annual total return¹ (%) as of Feburary 28, 2013


	1 year		5 year			Since inception 4-28-2004
Based on market value		6.84		(5.77	)		6.70
Based on net asset value (NAV) per share		10.50		0.55			7.68

Figures quoted represent past performance, which is no guarantee of future results and do not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sales of fund shares. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted and assumes the reinvestment of dividends and capital gains. To obtain performance information current to the most recent month-end, please call 1.800.222.8222.

The Fund’s annualized expense ratio for the six months ended February 28, 2013, is 1.24% which includes 0.22% of interest expense.

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The Fund is leveraged through borrowings and may issue preferred shares. The use of leverage results in certain risks including, among others, the likelihood of greater volatility of net asset value and the market price of common shares. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. A fund which concentrates its investments in a single industry or sector may face increased risk of price fluctuation over more diversified funds due to adverse developments within that industry or sector. Non-diversified funds may face increased risk of price fluctuation over more diversified funds due to adverse developments within certain sectors. Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track. High yield, lower-rated bonds may contain more risk due to the increased possibility of default.

Total returns based on market value are calculated assuming a purchase of common stock at the closing market price prior to the first day’s opening market price and a sale at the last day’s closing market price for the period reported. Total returns based on NAV are calculated based on the NAV at the beginning of the period and end of period. Dividends and distributions are assumed for the purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan. Total returns do not reflect brokerage commissions or sales charges. If these charges were included, the returns would be lower.

2.	This chart does not reflect any brokerage commissions or sales charges.


Performance highlights (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			5

MANAGER’S DISCUSSION

Strategy

In the six-month period that ended February 28, 2013, the Fund’s equity portfolio was positioned somewhat defensively, with an above-average cash allocation. The Fund also modestly increased its weighting in utilities and telecommunication services preferred stocks. Short-term industry fundamentals remained mixed. Electricity demand continues to be anemic at best, with higher industrial sales more than offset by weak residential and commercial sales. Among U.S. utilities, the Fund was more focused on fully regulated integrated and network utilities and relatively less exposed to utilities companies with direct or indirect commodity risk. The Fund maintained a modest exposure to European utilities and telecommunication services names in anticipation of a nascent recovery in Europe.

The equity allocation of the Fund continued to be managed with a focus on income generation. The Fund’s equity investment process includes a dividend capture strategy, which is used in an attempt to achieve the Fund’s primary investment objective of high current income. In employing dividend capture, a fund purchases a stock before an ex-dividend date, becomes entitled to the dividend, and then typically sells the stock on or after the stock’s ex-dividend date. This may result in a lack of capital appreciation over time, which may also lead to erosion in the value of the fund. Dividend capture may also increase the portfolio turnover rate and related transaction costs of the fund.

High-yield bonds continued to benefit from rising stock prices (as high-yield bonds often trade in sympathy with stocks), relatively low volatility, and strong investor interest due to a dearth of attractive income opportunities. In addition, companies that issue high-yield debt were generally successful at cutting costs and at refinancing older, higher-cost debt at lower yields. Although leveraged buyout activity and debt-funded dividends continue to increase, we are still below the levels seen in 2007, and individual high-yield company leverage levels appear to be consistent with historical averages.


Ten largest holdings³(%) as of February 28, 2013
Great Plains Energy Incorporated			5.85
ITC Holdings Corporation			4.55
Nextera Energy Incorporated			4.51
Deutsche Post AG			4.02
Scana Corporation			4.01
Northeast Utilities			3.77
Duke Energy Corporation			3.62
The Williams Companies Incorporated			3.11
National Fuel Gas Company			2.61
Spectra Energy Corporation			2.60

Credit quality⁴as of February 28, 2013

Contributors to performance

Within its equity holdings, the Fund’s position in Deutsche Post AG was a major contributor to performance. Other significant contributors included ITC Holdings Corporation; Nextera Energy Incorporated; Northeast Utilities; AOL Incorporated; DISH Network Corporation; Comcast Corporation Class A; Sempra Energy; NV Energy Incorporated; and VimpelCom Limited ADR. The Fund also participated in the strong appreciation of the high-yield bond market, and a position in Sprint Nextel Corporation was a significant contributor.

Detractors from performance

Within the equity portfolio, the Fund’s European names generally detracted from performance, with Telecom Italia SpA and France Telecom SA lagging badly while Italian utility Enel SpA lagged slightly. In addition, the Fund’s largest position, Great Plains Energy Incorporated, was a modest detractor.

The high-yield component lagged the broader high-yield market because the Fund holds relatively shorter-maturity bonds, which detracted in a market that rewarded more-volatile issues. Holding relatively shorter-maturity bonds detracted in a market that rewarded higher-risk issues.

3.	The ten largest holdings are calculated based on the value of the securities divided by total net assets of the Fund. Holdings are subject to change and may have changed since the date specified.

Credit quality is subject to change and is calculated based on the total market value of bonds.The ratings indicated are from Standard & Poor’s, Moody’s Investors Service, and/or Fitch Ratings Ltd. Credit Quality Ratings: Credit quality ratings apply to underlying holdings of the Fund and not the Fund itself. Standard & Poor’s rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). Ratings from A to CCC may be modified by the addition of a plus (+) or minus (–) sign to show relative standing within the rating categories. Standard & Poor’s rates the creditworthiness of short-term notes from SP-1 (highest) to SP-3 (lowest). Moody’s rates the creditworthiness of bonds, ranging from Aaa (highest) to C (lowest). Ratings Aa to B may be modified by the addition of a number 1 (highest) to 3 (lowest) to show relative standing within the ratings categories. Moody’s rates the creditworthiness of short-term U.S. tax-exempt municipal securities from MIG 1/VMIG 1 (highest) to SG (lowest). Fitch rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). If a security was rated by all three rating agencies, the middle rating was utilized. If rated by two of three rating agencies, the lower rating was utilized and if rated by one of the agencies that rating was utilized. We generally define higher quality bonds as bonds that have a rating of BBB/Baa and above and lower quality bonds as bonds with a rating below BBB/Baa.


6		Wells Fargo Advantage Utilities and High Income Fund		Performance highlights (unaudited)

Country allocation⁵as of February 28, 2013

Management Outlook

The stock team hopes that what appears to be a modest economic recovery in the U.S. will be sustained in the coming months. While stronger economic growth would be positive for utilities suffering from weak sales, growth will also eventually result in rising interest rates as the Federal Reserve withdraws monetary stimulus. Rising interest rates would be a headwind for dividend-paying utilities stocks. Although the team has substantially reduced the cash position, the stock portfolio remains somewhat defensively positioned. At some point, the team may want to move out of the more defensive fully regulated names currently held in the Fund and into some less defensively-positioned commodity-sensitive utilities.

The high-yield team believes that two scenarios could derail the high-yield market. One would be a meaningful increase in U.S. Treasury yields, which could create a viable alternative to corporate credit. A more likely near-term scenario would be a large and sustained drop in equities, which would likely put fear into market participants and spark outflows from the high-yield market. The factor that has historically tended to cause a high-yield sell-off, a sharply rising default rate, appears to be a ways off at this point unless the economy experiences an unexpected shock. The team believes that the fundamentals of high-yield companies, combined with paltry yield alternatives and a significant risk of rising rates, make high yield a reasonable alternative to other fixed-income assets on a risk-adjusted basis. However, the run-up in high-yield bond prices makes the asset class more subject to price risk, especially if equities should experience heightened volatility.

5.	Country allocation is subject to change and is calculated based on the total long-term investments of the Fund.


Summary portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			7

The Summary Portfolio of Investments shows the 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the total net assets as of the report date. The remaining securities held are grouped as “Other securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by accessing the following website:

http://a584.g.akamai.net/f/584/1326/1d/www.wellsfargoadvantagefunds.com/pdf/semi/holdings/utilitiesandhighincome.pdf or by calling Wells Fargo Advantage Funds at 1-800-222-8222. This complete schedule, filed on the Form N-CSR, is also available on the SEC’s website at sec.gov.


Security name	Shares		Value		Percent of net assets


Common Stocks: 63.18%

Consumer Discretionary: 3.00%

Media: 3.00%
Comcast Corporation Class A		40,300	$	1,603,537		1.44	%
DISH Network Corporation		50,000		1,740,000		1.56

				3,343,537		3.00


Energy: 7.69%

Oil, Gas & Consumable Fuels: 7.69%
EQT Corporation		15,000		946,350		0.85
QR Energy LP		50,000		870,500		0.78
Spectra Energy Corporation		100,000		2,904,000		2.60
The Williams Companies Incorporated		100,000		3,471,000		3.11
Other securities				392,089		0.35

				8,583,939		7.69


Industrials: 4.09%

Air Freight & Logistics: 4.02%
Deutsche Post AG		200,000		4,487,174		4.02


Building Products: 0.07%
Other securities				74,790		0.07


Information Technology: 1.96%

Internet Software & Services: 1.96%
AOL Incorporated		59,200		2,184,480		1.96


Telecommunication Services: 7.47%

Diversified Telecommunication Services: 5.03%
BCE Incorporated		16,000		721,120		0.65
France Telecom SA		150,000		1,452,881		1.30
Tele2 AB Series B		50,000		796,301		0.71
Telecom Italia SpA		2,000,000		1,289,883		1.16
Telefonica Brasil ADR		18,600		490,296		0.44
Windstream Corporation		100,000		859,000		0.77

				5,609,481		5.03


Wireless Telecommunication Services: 2.44%
Shenandoah Telecommunications Company		40,000		576,400		0.52
Turkcell Iletisim Hizmetleri AS ADR †		50,000		825,500		0.74
VimpelCom Limited ADR		100,000		1,194,000		1.07
Other securities				125,700		0.11

				2,721,600		2.44

The accompanying notes are an integral part of these financial statements.


8		Wells Fargo Advantage Utilities and High Income Fund		Summary portfolio of investments—February 28, 2013 (unaudited)


Security name	Shares		Value		Percent of net assets


Utilities: 38.97%

Electric Utilities: 29.94%
American Electric Power Company Incorporated		25,000	$	1,169,750		1.05	%
Duke Energy Corporation		30,514		2,113,095		1.89
Enel SpA		350,000		1,266,644		1.13
Great Plains Energy Incorporated		298,810		6,522,995		5.85
Hera SpA		1,467,400		2,488,577		2.23
IDACORP Incorporated		25,000		1,167,250		1.05
ITC Holdings Corporation		60,000		5,071,200		4.55
Nextera Energy Incorporated		70,000		5,030,900		4.51
Northeast Utilities		101,312		4,205,461		3.77
NV Energy Incorporated		75,000		1,482,000		1.33
The Southern Company		60,000		2,700,600		2.42
Other securities				169,955		0.16

				33,388,427		29.94


Gas Utilities: 2.85%
National Fuel Gas Company		50,000		2,909,500		2.61
Other securities				268,440		0.24

				3,177,940		2.85


Multi-Utilities: 3.98%
CenterPoint Energy Incorporated		50,000		1,071,500		0.96
Public Service Enterprise Group Incorporated		50,000		1,629,500		1.46
Sempra Energy		19,900		1,547,424		1.39
Other securities				185,345		0.17

				4,433,769		3.98


Water Utilities: 2.20%
American Water Works Company Incorporated		50,000		1,972,500		1.77
Middlesex Water Company		25,000		486,500		0.43

				2,459,000		2.20


Total Common Stocks (Cost $57,239,814)				70,464,137		63.18


Corporate Bonds and Notes: 30.25%

Consumer Discretionary: 7.09%

Auto Components: 0.61%
Other securities				683,282		0.61


Diversified Consumer Services: 0.66%
Other securities				730,172		0.66


Hotels, Restaurants & Leisure: 2.55%
Other securities				2,847,764		2.55


Household Durables: 0.05%
Other securities				51,656		0.05

The accompanying notes are an integral part of these financial statements.


Summary portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			9


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets


Media: 2.74%
Other securities								$	3,060,802		2.74	%


Specialty Retail: 0.48%
Other securities									530,501		0.48


Consumer Staples: 0.22%

Food Products: 0.22%
Other securities									247,748		0.22


Energy: 5.66%

Energy Equipment & Services: 1.68%
Other securities									1,876,176		1.68


Oil, Gas & Consumable Fuels: 3.98%
Other securities									4,440,823		3.98


Financials: 5.04%

Commercial Banks: 0.55%
Other securities									609,107		0.55


Consumer Finance: 2.89%
Ally Financial Incorporated		8.30	%		2-12-2015	$	825,000		917,813		0.82
Nielsen Finance LLC Company		7.75			10-15-2018		515,000		570,363		0.51
Other securities									1,737,661		1.56

									3,225,837		2.89


Diversified Financial Services: 0.48%
Other securities									535,925		0.48


Real Estate Management & Development: 0.27%
Other securities									302,776		0.27


REITs: 0.85%
Dupont Fabros Technology Incorporated		8.50			12-15-2017		565,000		613,731		0.55
Other securities									331,613		0.30

									945,344		0.85


Health Care: 1.41%

Health Care Equipment & Supplies: 0.10%
Other securities									116,050		0.10


Health Care Providers & Services: 1.17%
Other securities									1,301,040		1.17


Pharmaceuticals: 0.14%
Other securities									154,568		0.14

The accompanying notes are an integral part of these financial statements.


10		Wells Fargo Advantage Utilities and High Income Fund		Summary portfolio of investments—February 28, 2013 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets


Industrials: 1.53%

Aerospace & Defense: 0.15%
Other securities								$	163,407		0.15	%


Air Freight & Logistics: 0.15%
Other securities									172,000		0.15


Airlines: 0.15%
Other securities									167,943		0.15


Commercial Services & Supplies: 0.64%
Other securities									710,833		0.64


Machinery: 0.10%
Other securities									107,626		0.10


Professional Services: 0.15%
Other securities									170,063		0.15


Trading Companies & Distributors: 0.19%
Other securities									213,525		0.19


Information Technology: 2.49%

Communications Equipment: 0.15%
Other securities									169,701		0.15


Computers & Peripherals: 0.19%
Other securities									213,925		0.19


Electronic Equipment, Instruments & Components: 0.77%
Jabil Circuit Incorporated		8.25	%		3-15-2018	$	620,000		745,550		0.67
Other securities									106,301		0.10

									851,851		0.77


Internet Software & Services: 0.10%
Other securities									115,213		0.10


IT Services: 1.20%
First Data Corporation		11.25			3-31-2016		495,000		489,431		0.44
Other securities									847,765		0.76

									1,337,196		1.20


Software: 0.08%
Other securities									86,063		0.08


Materials: 0.51%

Chemicals: 0.10%
Other securities									111,288		0.10

The accompanying notes are an integral part of these financial statements.


Summary portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			11


Security name	Interest rate			Maturity date		Principal		Value		Percent of net assets


Containers & Packaging: 0.24%
Other securities								$	266,088		0.24	%


Paper & Forest Products: 0.17%
Other securities									187,211		0.17


Telecommunication Services: 4.20%

Diversified Telecommunication Services: 1.53%
Qwest Corporation		7.25	%		9-15-2025	$	125,000		144,196		0.13
Other securities									1,561,505		1.40

									1,705,701		1.53


Wireless Telecommunication Services: 2.67%
Sprint Capital Corporation		6.88			11-15-2028		1,100,000		1,111,000		1.00
Sprint Capital Corporation		8.75			3-15-2032		220,000		258,500		0.23
Other securities									1,606,564		1.44

									2,976,064		2.67


Utilities: 2.10%

Electric Utilities: 0.95%
Mirant Mid-Atlantic LLC Series C		10.06			12-30-2028		438,432		499,813		0.45
Other securities									563,625		0.50

									1,063,438		0.95


Gas Utilities: 0.25%
Other securities									274,888		0.25


Independent Power Producers & Energy Traders: 0.90%
Other securities									1,007,542		0.90


Total Corporate Bonds and Notes (Cost $31,529,028)									33,731,137		30.25


	Dividend yield					Shares
Preferred Stocks: 15.36%

Financials: 0.05%

Diversified Financial Services: 0.05%
Other securities									58,388		0.05


Telecommunication Services: 2.15%

Diversified Telecommunication Services: 2.15%
Qwest Corporation		7.00					90,000		2,394,000		2.15


Utilities: 13.16%

Electric Utilities: 6.87%
Duke Energy Corporation †		5.13					161,000		4,033,050		3.62
Indianapolis Power & Light Company		5.65					20,000		2,006,250		1.80
SCE Trust I		5.63					23,000		606,280		0.54

The accompanying notes are an integral part of these financial statements.


12		Wells Fargo Advantage Utilities and High Income Fund		Summary portfolio of investments—February 28, 2013 (unaudited)


Security name	Dividend yield			Maturity date		Shares		Value		Percent of net assets


Electric Utilities (continued)
Southern California Edison		6.50	%				5,000	$	530,938		0.48	%
Wisconsin Public Service		5.08					4,804		484,754		0.43

									7,661,272		6.87


Multi-Utilities : 6.29%
DTE Energy Company		5.25					100,000		2,544,000		2.28
Scana Corporation		7.70					165,000		4,476,450		4.01

									7,020,450		6.29


Total Preferred Stocks (Cost $16,694,105)									17,134,110		15.36


	Interest rate					Principal

Term Loans : 2.79%
Texas Competitive Electric Holdings Company		3.73			10-10-2014	$	1,471,940		1,056,853		0.95
Other securities									2,049,838		1.84

Total Term Loans (Cost $3,331,479)									3,106,691		2.79


						Shares
Warrants: 0.06%

Utilities: 0.06%

Electric Utilities: 0.00%
Other securities							10,000		240		0.00


Gas Utilities: 0.06%
Other securities							16,000		70,400		0.06


Total Warrants (Cost $42,480)									70,640		0.06


Yankee Corporate Bonds and Notes: 1.62%

Consumer Discretionary: 0.10%

Media: 0.10%
Other securities									114,738		0.10


Energy: 0.21%

Oil, Gas & Consumable Fuels: 0.21%
Other securities									236,496		0.21


Financials: 0.11%

Consumer Finance: 0.11%
Other securities									115,775		0.11


Information Technology: 0.27%

Computers & Peripherals: 0.27%
Other securities									295,701		0.27


Materials: 0.25%

Metals & Mining: 0.17%
Other securities									193,250		0.17

The accompanying notes are an integral part of these financial statements.


Summary portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			13


Security name						Value			Percent of net assets



Paper & Forest Products: 0.08%
Other securities						$	87,500			0.08	%


Telecommunication Services: 0.68%

Diversified Telecommunication Services: 0.61%
Other securities							684,907			0.61


Wireless Telecommunication Services: 0.07%
Other securities							73,425			0.07


Total Yankee Corporate Bonds and Notes (Cost $1,699,597)							1,801,792			1.62


	Yield			Shares

Short-Term Investments: 6.40%

Investment Companies: 6.40%
Wells Fargo Advantage Cash Investment Money Market Fund, Select Class (l)(u)##		0.13	%		7,142,517		7,142,517			6.40


Total Short-Term Investments (Cost $7,142,517)							7,142,517			6.40

Total investments in securities
(Cost $117,679,020)*							133,451,024			119.66	%
Other assets and liabilities, net							(21,924,117	)		(19.66	)

Total Net Assets						$	111,526,907			100.00	%

†	Non-income-earning security

(l)	Investment in an affiliate

(u)	Rate shown is the 7-day annualized yield at period end.

##	All or a portion of this security has been segregated for when-issued securities.

*	Cost for federal income tax purposes is $118,366,914 and unrealized appreciation (depreciation) consists of:


Gross unrealized appreciation	$	20,177,764
Gross unrealized depreciation		(5,093,654	)

Net unrealized appreciation	$	15,084,110

The accompanying notes are an integral part of these financial statements.


14		Wells Fargo Advantage Utilities and High Income Fund		Statement of assets and liabilities—February 28, 2013 (unaudited)




Assets
Investments
In unaffiliated securities, at value (see cost below)	$	126,308,507
In affiliated securities, at value (see cost below)		7,142,517

Total investments, at value (see cost below)		133,451,024
Foreign currency, at value (see cost below)		37
Receivable for investments sold		140,043
Receivable for dividends and interest		1,192,069

Total assets		134,783,173


Liabilities
Dividends payable		692,078
Payable for investments purchased		379,926
Secured borrowing payable		22,002,050
Advisory fee payable		61,474
Due to other related parties		5,123
Accrued expenses and other liabilities		115,615

Total liabilities		23,256,266

Total net assets	$	111,526,907


NET ASSETS CONSIST OF
Paid-in capital	$	151,435,986
Overdistributed net investment income		(2,775,350	)
Accumulated net realized losses on investments		(52,913,409	)
Net unrealized gains on investments		15,779,680

Total net assets	$	111,526,907


NET ASSET VALUE PER SHARE
Based on $111,526,907 divided by 9,231,183 shares issued and outstanding (unlimited number of shares authorized)	$	12.08


Investments in unaffiliated securities, at cost	$	110,536,503

Investments in affiliated securities, at cost	$	7,142,517

Total investments, at cost	$	117,679,020

Foreign currency, at cost	$	33

The accompanying notes are an integral part of these financial statements.


Statement of operations—six months ended February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			15




Investment income
Dividends*	$	1,565,264
Interest		1,419,274
Income from affiliated securities		4,560

Total investment income		2,989,098


Expenses
Advisory fee		386,071
Administration fee		32,172
Custody and accounting fees		11,553
Professional fees		31,801
Shareholder report expenses		27,531
Trustees’ fees and expenses		7,131
Transfer agent fees		14,657
Interest expense		115,639
Secured borrowing fees		5,329
Other fees and expenses		31,783

Total expenses		663,667

Net investment income		2,325,431


REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses on investments		(154,044	)
Net change in unrealized gains (losses) on investments		5,118,785

Net realized and unrealized gains (losses) on investments		4,964,741

Net increase in net assets resulting from operations	$	7,290,172


* Net of foreign dividend withholding taxes in the amount of		$31,122

The accompanying notes are an integral part of these financial statements.


16		Wells Fargo Advantage Utilities and High Income Fund		Statement of changes in net assets


	Six months ended February 28, 2013 (unaudited)			Year ended August 31, 2012

Operations
Net investment income	$	2,325,431		$	7,992,913
Net realized losses on investments		(154,044	)		(4,406,056	)
Net change in unrealized gains (losses) on investments		5,118,785			4,675,015

Net increase in net assets resulting from operations		7,290,172			8,261,872


Distributions to shareholders from
Net investment income		(4,153,831	)		(8,292,871	)


Capital share transactions
Net asset value of common shares issued under the Automatic Dividend Reinvestment Plan		63,685			211,885

Total increase in net assets		3,200,026			180,886


Net assets
Beginning of period		108,326,881			108,145,995

End of period	$	111,526,907		$	108,326,881


Overdistributed net investment income	$	(2,775,350	)	$	(753,857	)

The accompanying notes are an integral part of these financial statements.


Statement of cash flows—six months ended February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			17




Cash flows from operating activities:
Net increase in net assets resulting from operations	$	7,290,172

Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities:
Purchase of securities		(25,970,354	)
Proceeds from sale of securities		26,422,115
Amortization		(35,346	)
Proceeds from short-term investment securities net		1,160,329
Decrease in dividends and interest receivable		65,763
Increase in receivable for securities sold		(140,043	)
Decrease in prepaid expenses and other assets		11,533
Increase in payable for securities purchased		301,942
Decrease in advisory fee payable		(15,256	)
Decrease in due to other related parties		(1,271	)
Decrease in accrued expenses and other liabilities		(31,510	)
Unrealized gains on investments		(5,118,785	)
Net realized losses on investments		154,044

Net cash provided by operating activities		4,093,333


Cash flows from financing activities:
Cash distributions paid on common shares		(4,089,763	)
Decrease in secured borrowing		(3,569	)

Net cash used in financing activities		(4,093,332	)

Net increase in cash		1


Cash (including foreign currency):
Beginning of period	$	36

End of period	$	37


Supplemental cash disclosure:
Cash paid for interest	$	115,639


Supplemental non-cash financing disclosure:
Reinvestment of dividends	$	63,685

The accompanying notes are an integral part of these financial statements.


18		Wells Fargo Advantage Utilities and High Income Fund		Financial highlights (unaudited)


	Six months ended February 28, 2013 (unaudited)			Year ended August 31
	Six months ended February 28, 2013 (unaudited)			2012			2011			2010			2009			2008
Net asset value, beginning of period	$	11.74		$	11.75		$	11.23		$	11.38		$	17.50		$	24.05
Net investment income		0.25	¹		0.87	¹		0.99	¹		0.59	¹		0.97	¹		2.49	¹
Net realized and unrealized gains (losses) on investments		0.54			0.02			0.43			0.41			(5.29	)		(4.18	)
Distributions to preferred shareholders from net investment income		0.00			0.00			0.00			0.00			0.00			(0.33	)

Total from investment operations		0.79			0.89			1.42			1.00			(4.32	)		(2.02	)
Distributions to common shareholders from
Net investment income		(0.45	)		(0.90	)		(0.90	)		(0.53	)¹		(1.00	)¹		(2.76	)
Net realized gains		0.00			0.00			0.00			0.00			0.00			(1.77	)
Tax basis return of capital		0.00			0.00			0.00			(0.62	)¹		(0.80	)¹		0.00

Total distributions to common shareholders		(0.45	)		(0.90	)		(0.90	)		(1.15	)		(1.80	)		(4.53	)
Net asset value, end of period	$	12.08		$	11.74		$	11.75		$	11.23		$	11.38		$	17.50
Market value, end of period	$	11.69		$	11.92		$	11.03		$	11.23		$	12.49		$	21.02
Total return based on market value²		6.93	%		17.03	%		5.99	%		(1.24	)%		(30.46	)%		(7.86	)%
Ratios to average net assets (annualized)
Gross expenses		1.24	%		1.20	%		1.24	%		2.52	%		3.44	%		1.92	%
Net expenses		1.24	%		1.20	%		1.24	%		1.52	%		2.25	%		1.89	%
Interest expense		0.22	%		0.25	%		0.25	%		0.19	%		0.70	%		0.52	%
Net investment income		4.35	%		7.48	%		8.14	%		5.19	%		8.75	%		10.33	%³
Supplemental data
Portfolio turnover rate		15	%		48	%		64	%		59	%		137	%		153	%
Net assets of common shareholders, end of period (000s omitted)		$111,527			$108,327			$108,146			$103,245			$103,687			$156,384

Borrowings outstanding, end of period (000s omitted)		$22,000			$22,000			$22,000			$22,000			$22,000			$86,500
Asset coverage per $1,000 of borrowing, end of period	$	6,009		$	5,866		$	5,916		$	5,693		$	5,713		$	2,808

1.	Calculated based upon average common shares outstanding

Total return is calculated assuming a purchase of common stock on the first day and a sale on the last day of the period reporting. Dividends and distributions are assumed for the purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan. Total return does not reflect brokerage commissions or sales charges.

3.	The net investment income ratio reflects distributions paid to preferred shareholders.

The accompanying notes are an integral part of these financial statements.


Notes to financial statements (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			19

1. ORGANIZATION

Wells Fargo Advantage Utilities and High Income Fund (the “Fund”) was organized as a statutory trust under the laws of the state of Delaware on February 4, 2004 and is registered as a non-diversified closed-end management investment company under the Investment Company Act of 1940, as amended. The primary investment objective of the Fund is to seek a high level of current income and moderate capital growth, with an emphasis on providing tax advantaged dividend income.

2. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Securities valuation

All investments are valued each business day as of the close of regular trading on the New York Stock Exchange (normally 4 p.m. Eastern Time).

Equity securities that are listed on a foreign or domestic exchange, except for The Nasdaq Stock Market, Inc. (“Nasdaq”), are valued at the official closing price or, if none, the last sales price. Securities listed on Nasdaq are valued at the Nasdaq Official Closing Price (“NOCP”). If no NOCP is available, securities are valued at the last sales price. If no sales price is shown on the Nasdaq, the bid price will be used. If no sale occurs on the primary exchange or market for the security that day or if no sale occurs and no bid price is shown on Nasdaq, the prior day’s price will be deemed “stale” and fair values will be determined in accordance with the Fund’s Valuation Procedures.

Securities denominated in foreign currencies are translated into U.S. dollars using the rates of exchange in effect on the day of valuation at a time specified by the Management Valuation Team of Wells Fargo Funds Management, LLC (“Funds Management”).

Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore may not fully reflect trading or events that occur after the close of the principal exchange in which the foreign securities are traded, but before the close of the New York Stock Exchange. If such trading or events are expected to materially affect the value of such securities, then fair value pricing procedures approved by the Board of Trustees are applied. These procedures take into account multiple factors including movements in U.S. securities markets after foreign exchanges close. Foreign securities that are fair valued under these procedures are categorized as Level 2 and the application of these procedures may result in transfers between Level 1 and Level 2. Depending on market activity, such fair valuations may be frequent. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the last reported sales price or latest quoted bid price. On February 28, 2013, fair value pricing was not used in pricing foreign securities.

Fixed income securities acquired with maturities exceeding 60 days are valued based on evaluated bid prices received from an independent pricing service which may utilize both transaction data and market information such as yield, prices of securities of comparable quality, coupon rate, maturity, type of issue, trading characteristics and other market data. If valuations are not available from the independent pricing service or values received are deemed not representative of market value, values will be obtained from a broker-dealer or otherwise determined based on the Fund’s Valuation Procedures.

Debt securities of sufficient credit quality acquired with maturities of 60 days or less generally are valued at amortized cost which approximates fair value. The amortized cost method involves valuing a security at its cost, plus accretion of discount or minus amortization of premium over the period until maturity.

Investments in registered open-end investment companies are valued at net asset value.

Investments which are not valued using any of the methods discussed above are valued at their fair value, as determined by procedures established in good faith and approved by the Board of Trustees. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to the Management Valuation Team. The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation


20		Wells Fargo Advantage Utilities and High Income Fund		Notes to financial statements (unaudited)

Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Management Valuation Team which may include items for ratification.

Valuations of fair valued securities are compared to the next actual sales price when available, or other appropriate market information to assess the continued appropriateness of the fair valuation methodology used. These securities are fair valued on a day-to-day basis, taking into consideration changes to appropriate market information and any significant changes to the input factors considered in the valuation process until there is a readily available price provided on the exchange or by an independent pricing service. Valuations received from an independent pricing service or broker quotes are periodically validated by comparisons to most recent trades and valuations provided by other independent pricing services in addition to the review of prices by the adviser and/or subadviser. Unobservable inputs used in determining fair valuations are identified based on the type of security, taking into consideration factors utilized by market participants in valuing the investment, knowledge about the issuer and the current market environment.

Foreign currency translation

The accounting records of the Fund are maintained in U.S. dollars. Assets, including investment securities, and liabilities denominated in foreign currency are translated into U.S. dollars at the rates of exchange at a time specified by the Management Valuation Team on the date of valuation. Purchases and sales of securities, and income and expenses are translated at the rate of exchange on the respective dates of such transactions. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded and the U.S. dollar equivalent of the amounts actually paid or received. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities other than investments in securities resulting in changes in exchange rates.

The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities are not separately presented. Such changes are recorded with net realized and unrealized gains or losses from investments. Gains and losses from certain foreign currency transactions are treated as ordinary income for U.S. federal income tax purposes.

When-issued transactions

The Fund may purchase securities on a forward commitment or ‘when-issued’ basis. The Fund records a when-issued transaction on the trade date and will segregate assets in an amount at least equal in value to the Fund’s commitment to purchase when-issued securities. Securities purchased on a when-issued basis are marked-to-market daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.

Term loans

The Fund may invest in term loans. The Fund begins earning interest when the loans are funded. The loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. The Fund assumes the credit risk of the borrower and there could be potential loss to the Fund in the event of default by the borrower.

Options

The Fund may be subject to equity price risk in the normal course of pursuing its investment objectives. The Fund may write covered call options or secured put options on individual securities. When the Fund writes an option, an amount equal to the premium received is recorded as a liability and is subsequently adjusted to the current market value of the written option. Premiums received from written options that expire unexercised are recognized as realized gains from investments on the expiration date. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as a realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in calculating the realized gain or loss on the sale. If a put option is exercised, the premium reduces the cost of the security purchased. The Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.

The Fund may also purchase call or put options. The premium is included in the Statement of Assets and Liabilities as an investment, the value of which is subsequently adjusted based on to the current market value of the option. Premiums paid for purchased options that expire are recognized as realized losses from investments on the expiration date. Premiums paid for purchased options that are exercised or closed are added to the amount paid or offset against the proceeds received for the underlying security to determine the realized gain or loss. The risk of loss associated with purchased options is limited to the premium paid.


Notes to financial statements (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			21

Options traded on an exchange are regulated and terms of the options are standardized. Options traded over the counter expose the Fund to counterparty risk in the event the counterparty does not perform. This risk is mitigated by having a master netting arrangement between the Fund and the counterparty and by having the counterparty post collateral to cover the Fund’s exposure to the counterparty.

Security transactions and income recognition

Securities transactions are recorded on a trade date basis. Realized gains or losses are recorded on the basis of identified cost.

Interest income is accrued daily and bond discounts are accreted and premiums are amortized daily based on the effective interest method. To the extent debt obligations are placed on non-accrual status, any related interest income may be reduced by writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. If the issuer subsequently resumes interest payments or when the collectability of interest is reasonably assured, the debt obligation is removed from non-accrual status.

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.

Distributions to shareholders

Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with federal income tax regulations, which may differ in amount or character from net investment income and realized gains recognized for purposes of U.S. generally accepted accounting principles.

Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company by distributing 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.

The Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund’s tax positions taken on federal, state, and foreign tax returns for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.

At August 31, 2012, net capital loss carryforwards, which were available to offset future net realized capital gains, were as follows:


Pre-enactment capital loss expiration*		Post-enactment capital losses**
2016	2017	Short-term	Long-term
$20,548,693	$27,435,579	$2,882,575	$1,372,044

*	Losses incurred in taxable years beginning before December 22, 2010.

**	Losses incurred in taxable years which began after December 22, 2010 are carried forward for an unlimited period.

3. FAIR VALUATION MEASUREMENTS

Fair value measurements of investments are determined within a framework that has established a fair value hierarchy based upon the various data inputs utilized in determining the value of the Fund’s investments. The three-level hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to significant unobservable inputs (Level 3). The Fund’s investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The inputs are summarized into three broad levels as follows:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, use of amortized cost, etc.)


22		Wells Fargo Advantage Utilities and High Income Fund		Notes to financial statements (unaudited)

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used for valuing investments in securities are not necessarily an indication of the risk associated with investing in those securities.

As of February 28, 2013, the inputs used in valuing investments in securities, which are carried at fair value, were as follows:


Investments in securities	Quoted prices (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Equity securities
Common stocks	$	70,464,137	$	0	$	0	$	70,464,137
Preferred stocks		14,112,168		3,021,942		0		17,134,110
Warrants		0		70,640		0		70,640

Corporate bonds and notes		0		33,731,137		0		33,731,137

Term loans		0		2,679,063		427,628		3,106,691

Yankee corporate bonds and notes		0		1,801,792		0		1,801,792

Short-term investments
Investment companies		7,142,517		0		0		7,142,517
	$	91,718,822	$	41,304,574	$	427,628	$	133,451,024

Further details on the major security types listed above can be found in the Summary Portfolio of Investments.

Transfers in and transfers out are recognized at the end of the reporting period. For the six months ended February 28, 2013, the Fund did not have any transfers into/out of Level 1 or Level 2.

4. TRANSACTIONS WITH AFFILIATES AND OTHER EXPENSES

Advisory fee

Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”) is the adviser to the Fund and is entitled to receive a fee at an annual rate of 0.60% of the Fund’s average daily total assets. Total assets consist of net assets of the Fund plus borrowings or other leverage for investment purposes to the extent excluded in calculating net assets.

Funds Management has retained the services of certain investment subadvisers to provide daily portfolio management to the Fund. The fees for subadvisory services are borne by Funds Management. Wells Capital Management Incorporated (an affiliate of Funds Management) and Crow Point Partners, LLC are each investment subadvisers to the Fund and are each entitled to receive a fee from Funds Management at an annual rate of 0.20% of the Fund’s average daily total assets.

Administration fee

Funds Management also serves as the administrator to the Fund providing the Fund with facilities, equipment and personnel. Funds Management is entitled to receive an annual administration fee from the Fund equal to 0.05% of the Fund’s average daily total assets.

5. CAPITAL SHARE TRANSACTIONS

The Fund has authorized an unlimited number of shares with no par value. For the six months ended February 28, 2013 and year ended August 31, 2012, the Fund issued 5,359 and 18,219 shares, respectively.

6. BORROWINGS

The Fund has borrowed $22 million through a secured debt financing agreement administered by a major financial institution (the “Facility”). The Facility has a commitment amount of $25 million which expires on February 24, 2014, at which point it may be renegotiated and potentially renewed for another one-year term. At February 28, 2013, the Fund had secured borrowings outstanding in the amount of $22,002,050 (including accrued interest and usage and commitment fees payable).


Notes to financial statements (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			23

The Fund’s borrowings under the Facility are generally charged interest at a rate determined by the type of loan elected by the Fund. During six months ended February 28, 2013, an effective interest rate of 1.06% was incurred on the borrowings. Interest expense of $115,639, representing 0.22% of the Fund’s average daily net assets, was incurred during the six months ended February 28, 2013.

The Fund has pledged all of its assets to secure the borrowings and pays a commitment fee at an annual rate equal to 0.15% of average daily unutilized amounts of the $25 million commitment amount. The secured borrowing fees on the Statement of Operations represents structuring fees and commitment fees. Of this amount, $2,755 represents structuring fees.

7. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, excluding U.S. government obligations (if any) and short-term securities, for the six months ended February 28, 2013 were $21,675,244 and $18,207,042, respectively.

As of February 28 2013, the Fund had unfunded term loan commitments of $270,000.

8. CONCENTRATION RISK

The Fund invests a substantial portion of its assets in the utilities industry and, therefore, may be more affected by changes in that industry than would be a fund whose investments are not heavily weighted in any industry.

9. INDEMNIFICATION

Under the Fund’s organizational documents, the officers and directors are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund may enter into contracts with service providers that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.

10. NEW ACCOUNTING PRONOUNCEMENT

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. ASU 2011-11, which amends FASB ASC Topic 210, Balance Sheet, creates new disclosure requirements which require entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently assessing the potential impact, in addition to expanded financial statement disclosure, that may result from adopting this ASU.

11. SUBSEQUENT DISTRIBUTIONS

The Fund declared the following distributions to common shareholders:


Declaration date	Record date	Payable date	Net investment income
February 21, 2013	March 14, 2013	April 1, 2013	$0.075
March 28, 2013	April 16, 2013	May 1, 2013	$0.075
April 26, 2013	May 15, 2013	June 3, 2013	$0.075

These distributions are not reflected in the accompanying financial statements.


24		Wells Fargo Advantage Utilities and High Income Fund		Other information (unaudited)

PROXY VOTING INFORMATION

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-800-222-8222, visiting our website at wellsfargoadvantagefunds.com, or visiting the SEC website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Fund’s website at wellsfargoadvantagefunds.com or by visiting the SEC website at sec.gov.

ANNUAL MEETING OF SHAREHOLDERS

On December 10, 2012, an Annual Meeting of Shareholders for the Fund was held to consider the following proposal. The results of the proposal are indicated below.

Proposal 1 – Election of Trustees:


Net assets voted “For”	Judith M. Johnson	$	95,906,017
Net assets voted “Withhold”		$	4,971,223
Net assets voted “For”	Leroy Keith, Jr.	$	95,747,502
Net assets voted “Withhold”		$	5,129,738
Net assets voted “For”	Donald C. Willeke	$	95,780,755
Net assets voted “Withhold”		$	5,096,485

PORTFOLIO HOLDINGS INFORMATION

The complete portfolio holdings for the Fund are publicly available on the Fund’s website (wellsfargoadvantagefunds.com) on a monthly, 30-day or more delayed basis. The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which is available without charge by visiting the SEC website at sec.gov. In addition, the Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and at regional offices in New York City, at 233 Broadway, and in Chicago, at 175 West Jackson Boulevard, Suite 900. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.


Other information (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			25

BOARD OF TRUSTEES AND OFFICERS

The following table provides basic information about the Board of Trustees (the “Trustees”) and Officers of the Fund. Each

of the Trustees and Officers listed below acts in identical capacities for the Wells Fargo Advantage family of funds, which

consists of 135 funds comprising the Wells Fargo Funds Trust, Wells Fargo Variable Trust, Wells Fargo Master Trust, and

four closed-end funds, including the Fund (collectively the “Fund Complex”). All of the Trustees are also Members of the

Audit and Governance Committees of each Trust in the Fund Complex. The mailing address of each Trustee and Officer is

525 Market Street, 12th Floor, San Francisco, CA 94105. The Board of Trustees is classified into three classes of which one

is elected annually. Each Trustee serves a three-year term concurrent with the class from which the Trustee is elected.

Each Officer serves an indefinite term.

Independent Trustees


Name and year of birth	Position held and length of service*	Principal occupations during past five years	Other directorships during past five years
Peter G. Gordon (Born 1942)	Trustee, since 2010; Chairman, since 2010	Co-Founder, Retired Chairman, President and CEO of Crystal Geyser Water Company. Trustee Emeritus, Colby College.	Asset Allocation Trust
Isaiah Harris, Jr. (Born 1952)	Trustee, since 2010	Retired. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007, President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa State University School of Business. Advisory Board Member, Palm Coast Academy (charter school). Mr. Harris is a certified public accountant.	CIGNA Corporation; Deluxe Corporation; Asset Allocation Trust
Judith M. Johnson (Born 1949)	Trustee, since 2010; Audit Committee Chairman, since 2010	Retired. Prior thereto, Chief Executive Officer and Chief Investment Officer of Minneapolis Employees Retirement Fund from 1996 to 2008. Ms. Johnson is an attorney, certified public accountant and a certified managerial accountant.	Asset Allocation Trust
Leroy Keith, Jr. (Born 1939)	Trustee, since 2004	Chairman, Bloc Global Services (development and construction). Trustee of the Evergreen Funds from 1983 to 2010. Former Managing Director, Almanac Capital Management (commodities firm), former Partner, Stonington Partners, Inc. (private equity fund), former Director, Obagi Medical Products Co. and former Director, Lincoln Educational Services.	Trustee, Virtus Fund Complex (consisting of 48 portfolios as of 1/31/2013); Asset Allocation Trust
David F. Larcker (Born 1950)	Trustee, since 2010	James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Morgan Stanley Director of the Center for Leadership Development and Research and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005 to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005.	Asset Allocation Trust
Olivia S. Mitchell (Born 1953)	Trustee, since 2010	International Foundation of Employee Benefit Plans Professor, Wharton School of the University of Pennsylvania since 1993. Director of Wharton’s Pension Research Council and Boettner Center on Pensions & Retirement Research, and Research Associate at the National Bureau of Economic Research. Previously, Cornell University Professor from 1978 to 1993.	Asset Allocation Trust
Timothy J. Penny (Born 1951)	Trustee, since 2010	President and CEO of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007 and Senior Fellow at the Humphrey Institute Policy Forum at the University of Minnesota since 1995. Member of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007.	Asset Allocation Trust


26		Wells Fargo Advantage Utilities and High Income Fund		Other information (unaudited)


Name and year of birth	Position held and length of service*	Principal occupations during past five years	Other directorships during past five years
Michael S. Scofield (Born 1943)	Trustee, since 2004	Served on the Investment Company Institute’s Board of Governors and Executive Committee from 2008-2011 as well the Governing Council of the Independent Directors Council from 2006-2011 and the Independent Directors Council Executive Committee from 2008-2011. Chairman of the IDC from 2008-2010. Institutional Investor (Fund Directions) Trustee of Year in 2007. Trustee of the Evergreen Funds (and its predecessors) from 1984 to 2010. Chairman of the Evergreen Funds from 2000-2010. Former Trustee of the Mentor Funds. Retired Attorney, Law Offices of Michael S. Scofield.	Asset Allocation Trust
Donald C. Willeke (Born 1940)	Trustee, since 2010	Principal of the law firm of Willeke & Daniels. General Counsel of the Minneapolis Employees Retirement Fund from 1984 until its consolidation into the Minnesota Public Employees Retirement Association on June 30, 2010. Director and Vice Chair of The Tree Trust (non-profit corporation). Director of the American Chestnut Foundation (non-profit corporation).	Asset Allocation Trust

*	Length of service dates reflect the Trustee’s commencement of service with the Trust’s predecessor entities, where applicable.

Officers


Name and year of birth	Position held and length of service	Principal occupations during past five years
Karla M. Rabusch (Born 1959)	President, since 2010	Executive Vice President of Wells Fargo Bank, N.A. and President of Wells Fargo Funds Management, LLC since 2003.
Nancy Wiser¹ (Born 1967)	Treasurer, since 2012	Executive Vice President of Wells Fargo Funds Management, LLC since 2011. Chief Operating Officer and Chief Compliance Officer at LightBox Capital Management LLC, from 2008 to 2011. Owned and operated a consulting business providing services to various hedge funds including acting as Chief Operating Officer and Chief Compliance Officer for a hedge fund from 2007 to 2008. Chief Operating Officer and Chief Compliance Officer of GMN Capital LLC from 2006 to 2007.
C. David Messman (Born 1960)	Secretary, since 2010; Chief Legal Officer, since 2010	Senior Vice President and Secretary of Wells Fargo Funds Management, LLC since 2001. Vice President and Managing Counsel of Wells Fargo Bank, N.A. since 1996.
Debra Ann Early (Born 1964)	Chief Compliance Officer, since 2010	Chief Compliance Officer of Wells Fargo Funds Management, LLC since 2007. Chief Compliance Officer of Parnassus Investments from 2005 to 2007. Chief Financial Officer of Parnassus Investments from 2004 to 2007.
David Berardi (Born 1975)	Assistant Treasurer, since 2009	Vice President of Wells Fargo Funds Management, LLC since 2009. Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Assistant Vice President of Evergreen Investment Services, Inc. from 2004 to 2008. Manager of Fund Reporting and Control for Evergreen Investment Management Company, LLC from 2004 to 2010.
Jeremy DePalma¹ (Born 1974)	Assistant Treasurer, since 2005	Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010. Vice President, Evergreen Investment Services, Inc. from 2004 to 2007. Head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010.

1.	Nancy Wiser acts as Treasurer of 74 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 61 funds and Assistant Treasurer of 74 funds in the Fund Complex.

2.	The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling 1-800-222-8222 or by visiting the website at wellsfargoadvantagefunds.com.


Automatic dividend reinvestment plan		Wells Fargo Advantage Utilities and High Income Fund			27

AUTOMATIC DIVIDEND REINVESTMENT PLAN

All common shareholders are eligible to participate in the Automatic Dividend Reinvestment Plan (“the Plan”). Pursuant to the Plan, unless a common shareholder is ineligible or elects otherwise, all cash dividends and capital gains distributions are automatically reinvested by Computershare Trust Company, N.A., as agent for shareholders in administering the Plan (“Plan Agent”), in additional common shares of the Fund. Whenever the Fund declares an ordinary income dividend or a capital gain dividend (collectively referred to as “dividends”) payable either in shares or in cash, nonparticipants in the Plan will receive cash, and participants in the Plan will receive the equivalent in shares of common shares. The shares are acquired by the Plan Agent for the participant’s account, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized common shares from the Fund (“newly issued common shares”) or (ii) by purchase of outstanding common shares on the open-market (open-market purchases) on the NYSE Amex or elsewhere. If, on the payment date for any dividend or distribution, the net asset value per share of the common shares is equal to or less than the market price per common share plus estimated brokerage commissions (“market premium”), the Plan Agent will invest the amount of such dividend or distribution in newly issued shares on behalf of the participant. The number of newly issued common shares to be credited to the participant’s account will be determined by dividing the dollar amount of the dividend by the net asset value per share on the date the shares are issued, provided that the maximum discount from the then current market price per share on the date of issuance may not exceed 5%. If on the dividend payment date the net asset value per share is greater than the market value or market premium (“market discount”), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participant in open-market purchases. There will be no brokerage charges with respect to shares issued directly by the Fund as a result of dividends or capital gains distributions payable either in shares or in cash. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open-market purchases in connection with the reinvestment of dividends. The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such dividends. All correspondence concerning the Plan should be directed to the Plan Agent at P.O. Box 43010, Providence, Rhode Island 02940-3010 or by calling 1-800-730-6001.


28		Wells Fargo Advantage Utilities and High Income Fund		List of abbreviations

The following is a list of common abbreviations for terms and entities that may have appeared in this report.

ACA	— ACA Financial Guaranty Corporation

ADR	— American depositary receipt

ADS	— American depositary shares

AGC	— Assured Guaranty Corporation

AGM	— Assured Guaranty Municipal

Ambac

— Ambac Financial Group Incorporated

AMT	— Alternative minimum tax

AUD	— Australian dollar

BAN	— Bond anticipation notes

BHAC	— Berkshire Hathaway Assurance Corporation

BRL	— Brazilian real

CAB	— Capital appreciation bond

CAD	— Canadian dollar

CCAB	— Convertible capital appreciation bond

CDA	— Community Development Authority

CDO	— Collateralized debt obligation

CHF	— Swiss franc

COP	— Certificate of participation

DKK	— Danish krone

DRIVER

— Derivative inverse tax-exempt receipts

DW&P	— Department of Water & Power

DWR	— Department of Water Resources

ECFA	— Educational & Cultural Facilities Authority

EDA	— Economic Development Authority

EDFA	— Economic Development Finance Authority

ETF	— Exchange-traded fund

EUR

— Euro

FDIC	— Federal Deposit Insurance Corporation

FFCB	— Federal Farm Credit Banks

FGIC	— Financial Guaranty Insurance Corporation

FHA	— Federal Housing Administration

FHLB	— Federal Home Loan Bank

FHLMC

— Federal Home Loan Mortgage Corporation

FICO	— The Financing Corporation

FNMA	— Federal National Mortgage Association

FSA	— Farm Service Agency

GBP	— Great British pound

GDR	— Global depositary receipt

GNMA	— Government National Mortgage Association

GO	— General obligation

HCFR	— Healthcare facilities revenue

HEFA	— Health & Educational Facilities Authority

HEFAR

— Higher education facilities authority revenue

HFA	— Housing Finance Authority

HFFA	— Health Facilities Financing Authority

HKD	— Hong Kong dollar

HUD	— Department of Housing and Urban Development

HUF	— Hungarian forint

IDA	— Industrial Development Authority

IDAG	— Industrial Development Agency

IDR	— Industrial development revenue

IEP	— Irish pound

JPY	— Japanese yen

KRW	— Republic of Korea won

LIBOR

— London Interbank Offered Rate

LIQ	— Liquidity agreement

LLC	— Limited liability company

LLP	— Limited liability partnership

LOC	— Letter of credit

LP	— Limited partnership

MBIA	— Municipal Bond Insurance Association

MFHR	— Multifamily housing revenue

MSTR	— Municipal securities trust receipts

MTN	— Medium-term note

MUD	— Municipal Utility District

MXN	— Mexican peso

MYR	— Malaysian ringgit

National

— National Public Finance Guarantee Corporation

NOK	— Norwegian krone

NZD	— New Zealand dollar

PCFA	— Pollution Control Financing Authority

PCL	— Public Company Limited

PCR	— Pollution control revenue

PFA	— Public Finance Authority

PFFA	— Public Facilities Financing Authority

PFOTER

— Puttable floating option tax-exempt receipts

plc	— Public limited company

PLN	— Polish zloty

PUTTER

— Puttable tax-exempt receipts

R&D	— Research & development

Radian

— Radian Asset Assurance

RAN	— Revenue anticipation notes

RDA	— Redevelopment Authority

RDFA	— Redevelopment Finance Authority

REIT	— Real estate investment trust

ROC	— Reset option certificates

SAVRS

— Select auction variable rate securities

SBA	— Small Business Authority

SEK	— Swedish krona

SFHR	— Single-family housing revenue

SFMR	— Single-family mortgage revenue

SGD	— Singapore dollar

SKK	— Slovakian koruna

SPA	— Standby purchase agreement

SPDR	— Standard & Poor’s Depositary Receipts

STRIPS

— Separate trading of registered interest and principal securities

TAN	— Tax anticipation notes

TBA	— To be announced

TIPS	— Treasury inflation-protected securities

TRAN	— Tax revenue anticipation notes

TRY	— Turkish lira

TTFA	— Transportation Trust Fund Authority

TVA	— Tennessee Valley Authority

ZAR	— South African rand

LOGO

Transfer Agent, Registrar, Shareholder Servicing

Agent & Dividend Disbursing Agent

Computershare Trust Company, N.A.

P.O. Box 43010

Providence, RI 02940-3010

1-800-730-6001

Website: wellsfargoadvantagefunds.com

Wells Fargo Funds Management, LLC, is a subsidiary of Wells Fargo & Company and is an affiliate of Wells Fargo & Company’s broker/dealer subsidiaries. This material is being prepared by Wells Fargo Funds Distributor, LLC. Member FINRA/SIPC, an affiliate of Wells Fargo & Company.

NOT FDIC INSURED ¡ NO BANK GUARANTEE ¡ MAY LOSE VALUE

215353 04-13

SUHIF/SAR152 2-13

ITEM 2.

CODE OF ETHICS

Not required in this filing

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT

Not required in this filing.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not required in this filing.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS

Not required in this filing.

ITEM 6.

PORTFOLIO OF INVESTMENTS

The Portfolio of investments is included as part of the report to shareholders filed under Item 1 of this Form.


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			1


Security name	Shares		Value


Common Stocks: 63.18%

Consumer Discretionary: 3.00%

Media: 3.00%
Comcast Corporation Class A		40,300	$	1,603,537
DISH Network Corporation		50,000		1,740,000

				3,343,537


Energy: 7.69%

Oil, Gas & Consumable Fuels: 7.69%
EQT Corporation		15,000		946,350
Kinder Morgan Incorporated		10,577		392,089
QR Energy LP		50,000		870,500
Spectra Energy Corporation		100,000		2,904,000
The Williams Companies Incorporated		100,000		3,471,000

				8,583,939


Industrials: 4.09%

Air Freight & Logistics: 4.02%
Deutsche Post AG		200,000		4,487,174


Building Products: 0.07%
Ameresco Incorporated Class A †		9,000		74,790


Information Technology: 1.96%

Internet Software & Services: 1.96%
AOL Incorporated		59,200		2,184,480


Telecommunication Services: 7.47%

Diversified Telecommunication Services: 5.03%
BCE Incorporated		16,000		721,120
France Telecom SA		150,000		1,452,881
Tele2 AB Series B		50,000		796,301
Telecom Italia SpA		2,000,000		1,289,883
Telefonica Brasil ADR		18,600		490,296
Windstream Corporation		100,000		859,000

				5,609,481


Wireless Telecommunication Services: 2.44%
Shenandoah Telecommunications Company		40,000		576,400
Turkcell Iletisim Hizmetleri AS ADR †		50,000		825,500
VimpelCom Limited ADR		100,000		1,194,000
Vodafone Group plc ADR		5,000		125,700

				2,721,600


Utilities: 38.97%

Electric Utilities: 29.94%
American Electric Power Company Incorporated		25,000		1,169,750
Chesapeake Utilities Corporation		200		9,606


2		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2013 (unaudited)


Security name						Shares		Value


Electric Utilities (continued)
Duke Energy Corporation							30,514	$	2,113,095
Edison International							2,000		96,060
Enel SpA							350,000		1,266,644
Entergy Corporation							1,000		62,260
Great Plains Energy Incorporated							298,810		6,522,995
Hera SpA							1,467,400		2,488,577
IDACORP Incorporated							25,000		1,167,250
ITC Holdings Corporation							60,000		5,071,200
Nextera Energy Incorporated							70,000		5,030,900
Northeast Utilities							101,312		4,205,461
NV Energy Incorporated							75,000		1,482,000
Pepco Holdings Incorporated							100		2,029
The Southern Company							60,000		2,700,600

									33,388,427


Gas Utilities: 2.85%
Gas Natural Incorporated							25,000		248,500
National Fuel Gas Company							50,000		2,909,500
New Jersey Resources							200		8,912
South Jersey Industries Incorporated							200		11,028

									3,177,940


Multi-Utilities: 3.98%
CenterPoint Energy Incorporated							50,000		1,071,500
CH Energy Group Incorporated							500		32,565
Dominion Resources Incorporated							300		16,800
MDU Resources Group Incorporated							500		12,080
Public Service Enterprise Group Incorporated							50,000		1,629,500
Sempra Energy							19,900		1,547,424
Wisconsin Energy Corporation							3,000		123,900

									4,433,769


Water Utilities: 2.20%
American Water Works Company Incorporated							50,000		1,972,500
Middlesex Water Company							25,000		486,500
									2,459,000


Total Common Stocks (Cost $57,239,814)									70,464,137


	Interest rate			Maturity date		Principal
Corporate Bonds and Notes: 30.25%

Consumer Discretionary: 7.09%

Auto Components: 0.61%
Allison Transmission Incorporated 144A		7.13	%		5-15-2019	$	270,000		287,550
Cooper Tire & Rubber Company		7.63			3-15-2027		215,000		224,675
Goodyear Tire & Rubber Company		7.00			5-15-2022		25,000		26,063
Penske Automotive Group Incorporated 144A		5.75			10-1-2022		10,000		10,463
UR Financing Escrow Corporation		5.75			7-15-2018		125,000		134,531

									683,282


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			3


Security name	Interest rate			Maturity date		Principal		Value


Diversified Consumer Services: 0.66%
Service Corporation International		6.75	%		4-1-2016	$	100,000	$	111,125
Service Corporation International		7.00			6-15-2017		25,000		28,281
Service Corporation International		7.50			4-1-2027		351,000		387,416
Service Corporation International		7.63			10-1-2018		25,000		29,500
Service Corporation International		8.00			11-15-2021		40,000		47,600
Sotheby’s 144A		5.25			10-1-2022		125,000		126,250

									730,172


Hotels, Restaurants & Leisure: 2.55%
Ameristar Casinos Incorporated		7.50			4-15-2021		225,000		241,031
Burger King Corporation		9.88			10-15-2018		75,000		85,500
CCM Merger Incorporated 144A		9.13			5-1-2019		465,000		470,813
CityCenter Holdings LLC		7.63			1-15-2016		100,000		107,625
CityCenter Holdings LLC ¥		10.75			1-15-2017		210,431		232,526
DineEquity Incorporated		9.50			10-30-2018		350,000		397,250
Greektown Superholdings Incorporated Series A		13.00			7-1-2015		300,000		322,500
Greektown Superholdings Incorporated Series B		13.00			7-1-2015		150,000		161,250
NAI Entertainment Holdings LLC 144A		8.25			12-15-2017		330,000		359,700
Penn National Gaming Incorporated		8.75			8-15-2019		75,000		85,125
Ruby Tuesday Incorporated 144A		7.63			5-15-2020		135,000		132,300
Scientific Games Corporation		9.25			6-15-2019		60,000		66,450
Speedway Motorsports Incorporated 144A		6.75			2-1-2019		20,000		21,325
Speedway Motorsports Incorporated		6.75			2-1-2019		35,000		37,319
Speedway Motorsports Incorporated		8.75			6-1-2016		120,000		127,050

									2,847,764


Household Durables: 0.05%
American Greetings Corporation		7.38			12-1-2021		25,000		25,281
Tempur-Pedic International Incorporated 144A		6.88			12-15-2020		25,000		26,375

									51,656


Media: 2.74%
Cablevision Systems Corporation		8.63			9-15-2017		145,000		168,200
CCO Holdings LLC		6.50			4-30-2021		75,000		79,875
CCO Holdings LLC		7.00			1-15-2019		125,000		134,688
Cinemark USA Incorporated		7.38			6-15-2021		75,000		83,250
Cinemark USA Incorporated		8.63			6-15-2019		165,000		182,944
CSC Holdings LLC		7.63			7-15-2018		45,000		51,750
CSC Holdings LLC		7.88			2-15-2018		75,000		86,438
DISH DBS Corporation		7.88			9-1-2019		115,000		136,131
EchoStar DBS Corporation		7.13			2-1-2016		50,000		55,625
Gray Television Incorporated		7.50			10-1-2020		245,000		256,025
Lamar Media Corporation		5.88			2-1-2022		75,000		81,375
Lamar Media Corporation		7.88			4-15-2018		130,000		141,700
Lamar Media Corporation Series C		9.75			4-1-2014		25,000		27,094
LIN Television Corporation 144A		6.38			1-15-2021		25,000		26,750
LIN Television Corporation		8.38			4-15-2018		150,000		163,313
Local TV Finance LLC 144A		9.25			6-15-2015		425,000		428,188
Lynx I Corporation 144A		5.38			4-15-2021		25,000		25,625


4		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2013 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Media (continued)
Lynx II Corporation 144A		6.38	%		4-15-2023	$	25,000	$	25,906
National CineMedia LLC		6.00			4-15-2022		170,000		182,325
National CineMedia LLC		7.88			7-15-2021		50,000		55,750
Nexstar Broadcasting Group Incorporated 144A		6.88			11-15-2020		95,000		99,275
Regal Cinemas Corporation		8.63			7-15-2019		285,000		316,350
Salem Communications Corporation		9.63			12-15-2016		228,000		252,225

									3,060,802


Specialty Retail: 0.48%
Gap Incorporated		5.95			4-12-2021		50,000		56,563
Limited Brands Incorporated		6.63			4-1-2021		25,000		28,188
RadioShack Corporation		6.75			5-15-2019		165,000		121,069
Rent-A-Center Incorporated		6.63			11-15-2020		100,000		107,750
Toys “R” Us Property Company I LLC		10.75			7-15-2017		55,000		59,056
Toys “R” Us Property Company II LLC		8.50			12-1-2017		150,000		157,875

									530,501


Consumer Staples: 0.22%

Food Products: 0.22%
B&G Foods Incorporated		7.63			1-15-2018		50,000		53,625
Dole Food Company Incorporated		13.88			3-15-2014		181,000		194,123

									247,748


Energy: 5.66%

Energy Equipment & Services: 1.68%
Cleaver Brooks Incorporated 144A		8.75			12-15-2019		25,000		26,875
Dresser-Rand Group Incorporated		6.50			5-1-2021		75,000		79,500
Era Group Incorporated Company 144A		7.75			12-15-2022		100,000		102,000
Gulfmark Offshore Incorporated		6.38			3-15-2022		255,000		263,288
Hornbeck Offshore Services Incorporated		5.88			4-1-2020		30,000		31,500
Hornbeck Offshore Services Incorporated Series B		8.00			9-1-2017		240,000		255,300
NGPL PipeCo LLC 144A		7.12			12-15-2017		25,000		27,500
NGPL PipeCo LLC 144A		7.77			12-15-2037		220,000		232,650
NGPL PipeCo LLC 144A		9.63			6-1-2019		225,000		261,000
Northern Tier Energy LLC 144A		7.13			11-15-2020		40,000		41,800
Oil States International Incorporated 144A		5.13			1-15-2023		45,000		45,000
Oil States International Incorporated		6.50			6-1-2019		154,000		164,780
PHI Incorporated		8.63			10-15-2018		305,000		331,688
Pride International Incorporated		8.50			6-15-2019		10,000		13,295

									1,876,176


Oil, Gas & Consumable Fuels: 3.98%
CVR Refining LLC 144A		6.50			11-1-2022		100,000		100,750
Denbury Resources Incorporated		4.63			7-15-2023		25,000		24,531
Denbury Resources Incorporated		6.38			8-15-2021		25,000		27,313
Denbury Resources Incorporated		8.25			2-15-2020		140,000		157,150
El Paso Corporation		6.50			9-15-2020		45,000		50,133
El Paso Corporation		7.00			6-15-2017		75,000		85,343


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			5


Security name	Interest rate			Maturity date		Principal		Value


Oil, Gas & Consumable Fuels (continued)
El Paso Corporation		7.25	%		6-1-2018	$	175,000	$	200,302
El Paso Corporation		7.42			2-15-2037		90,000		93,224
El Paso Corporation		7.80			8-1-2031		100,000		112,028
Energy Transfer Equity LP		7.50			10-15-2020		300,000		342,750
Ferrellgas LP		9.13			10-1-2017		200,000		215,000
HollyFrontier Corporation		9.88			6-15-2017		220,000		234,850
Inergy Midstream LP 144A		6.00			12-15-2020		55,000		56,925
Kinder Morgan Energy 144A		6.00			1-15-2018		25,000		27,595
Overseas Shipholding Group Incorporated (s)		7.50			2-15-2024		50,000		21,000
Petrohawk Energy Corporation		7.88			6-1-2015		95,000		98,672
Petrohawk Energy Corporation		10.50			8-1-2014		60,000		63,631
Pioneer Natural Resources Company		7.50			1-15-2020		145,000		184,214
Plains Exploration & Production Company		8.63			10-15-2019		325,000		371,313
Rockies Express Pipeline LLC 144A		5.63			4-15-2020		25,000		23,313
Rockies Express Pipeline LLC 144A		6.00			1-15-2019		200,000		196,000
Rockies Express Pipeline LLC 144A		6.88			4-15-2040		510,000		446,888
Rockies Express Pipeline LLC 144A		7.50			7-15-2038		205,000		182,450
Sabine Pass LNG LP 144A		6.50			11-1-2020		390,000		411,450
Sabine Pass LNG LP		7.50			11-30-2016		300,000		331,500
Suburban Propane Partners LP		7.38			3-15-2020		60,000		64,500
Suburban Propane Partners LP		7.38			8-1-2021		36,000		39,150
Suburban Propane Partners LP		7.50			10-1-2018		42,000		45,360
Susser Holdings LLC		8.50			5-15-2016		125,000		131,563
Tesoro Corporation		9.75			6-1-2019		90,000		101,925

									4,440,823


Financials: 5.04%

Commercial Banks: 0.55%
CIT Group Incorporated 144A		4.75			2-15-2015		120,000		126,300
CIT Group Incorporated		5.00			5-15-2017		25,000		26,594
CIT Group Incorporated		5.25			3-15-2018		25,000		26,875
CIT Group Incorporated 144A		5.50			2-15-2019		100,000		108,750
CIT Group Incorporated 144A		6.63			4-1-2018		50,000		56,750
Emigrant Bancorp Incorporated 144A		6.25			6-15-2014		275,000		263,838

									609,107


Consumer Finance: 2.89%
Ally Financial Incorporated		5.50			2-15-2017		50,000		54,215
Ally Financial Incorporated		8.30			2-12-2015		825,000		917,813
American General Finance Corporation		5.40			12-1-2015		150,000		150,000
American General Finance Corporation		5.75			9-15-2016		50,000		49,500
American General Finance Corporation		6.50			9-15-2017		50,000		48,250
Clearwire Communications Finance Corporation 144A		12.00			12-1-2015		130,000		140,725
Ford Motor Credit Company LLC		8.00			12-15-2016		25,000		29,960
General Motors Financial Company Incorporated		6.75			6-1-2018		120,000		138,000
GMAC LLC		6.75			12-1-2014		36,000		38,700
Homer City Funding LLC		8.73			10-1-2026		142,567		156,467
International Lease Finance Corporation 144A		6.75			9-1-2016		50,000		56,500
International Lease Finance Corporation 144A		7.13			9-1-2018		35,000		40,906


6		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2013 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Consumer Finance (continued)
International Lease Finance Corporation		8.63	%		9-15-2015	$	75,000	$	85,313
JBS USA Finance Incorporated		11.63			5-1-2014		420,000		464,625
Nielsen Finance LLC Company 144A		4.50			10-1-2020		40,000		39,500
Nielsen Finance LLC Company		7.75			10-15-2018		515,000		570,363
Springleaf Finance Corporation		6.90			12-15-2017		250,000		245,000

									3,225,837


Diversified Financial Services: 0.48%
HUB International Limited Company 144A		8.13			10-15-2018		210,000		218,925
Nuveen Investments		5.50			9-15-2015		275,000		266,750
Nuveen Investments 144A		9.13			10-15-2017		50,000		50,250

									535,925


Real Estate Management & Development: 0.27%
Ashtead Capital Incorporated 144A		6.50			7-15-2022		125,000		134,688
Onex Corporation 144A		7.75			1-15-2021		170,000		168,088

									302,776


REITs: 0.85%
Dupont Fabros Technology Incorporated		8.50			12-15-2017		565,000		613,731
Host Hotels & Resorts LP		9.00			5-15-2017		30,000		31,800
Omega Healthcare Investors Incorporated		6.75			10-15-2022		125,000		137,813
Sabra Health Care Incorporated		8.13			11-1-2018		150,000		162,000

									945,344


Health Care: 1.41%

Health Care Equipment & Supplies: 0.10%
Hologic Incorporated 144A		6.25			8-1-2020		110,000		116,050


Health Care Providers & Services: 1.17%
Apria Healthcare Group Incorporated		11.25			11-1-2014		70,000		72,275
Aviv HealthCare Properties LP		7.75			2-15-2019		100,000		107,250
Centene Corporation		5.75			6-1-2017		75,000		79,500
Community Health Systems Incorporated		5.13			8-15-2018		40,000		42,050
Community Health Systems Incorporated		7.13			7-15-2020		50,000		53,875
DaVita HealthCare Partners Incorporated		5.75			8-15-2022		55,000		57,338
DaVita HealthCare Partners Incorporated		6.38			11-1-2018		5,000		5,331
HCA Incorporated		4.75			5-1-2023		25,000		24,938
HCA Incorporated		5.88			3-15-2022		25,000		26,938
HCA Incorporated		6.50			2-15-2020		175,000		196,000
HCA Incorporated		7.50			11-15-2095		50,000		44,125
HCA Incorporated		8.50			4-15-2019		250,000		276,875
Health Management Associates Incorporated		6.13			4-15-2016		50,000		55,000
HealthSouth Corporation		5.75			11-1-2024		50,000		50,250
HealthSouth Corporation		7.25			10-1-2018		22,000		23,760
HealthSouth Corporation		7.75			9-15-2022		22,000		24,035
MPT Operating Partnership LP		6.38			2-15-2022		25,000		26,656
MPT Operating Partnership LP		6.88			5-1-2021		125,000		134,844

									1,301,040


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			7


Security name	Interest rate			Maturity date		Principal		Value


Pharmaceuticals: 0.14%
Mylan Incorporated 144A		6.00	%		11-15-2018	$	115,000	$	126,664
Mylan Incorporated 144A		7.63			7-15-2017		25,000		27,904

									154,568


Industrials: 1.53%

Aerospace & Defense: 0.15%
GeoEye Incorporated		9.63			10-1-2015		55,000		60,294
TransDigm Group Incorporated 144A		5.50			10-15-2020		20,000		20,800
TransDigm Group Incorporated		7.75			12-15-2018		75,000		82,313

									163,407


Air Freight & Logistics: 0.15%
Bristow Group Incorporated		6.25			10-15-2022		160,000		172,000


Airlines: 0.15%
Aviation Capital Group Corporation 144A		4.63			1-31-2018		25,000		25,392
Aviation Capital Group Corporation 144A		6.75			4-6-2021		80,000		86,609
Aviation Capital Group Corporation 144A		7.13			10-15-2020		50,000		55,942

									167,943


Commercial Services & Supplies: 0.64%
Corrections Corporation of America		7.75			6-1-2017		95,000		100,047
Covanta Holding Corporation		6.38			10-1-2022		50,000		54,225
Covanta Holding Corporation		7.25			12-1-2020		10,000		10,971
Geo Group Incorporated		7.75			10-15-2017		160,000		171,600
Iron Mountain Incorporated		5.75			8-15-2024		25,000		24,938
Iron Mountain Incorporated		8.00			6-15-2020		25,000		26,344
Iron Mountain Incorporated		8.38			8-15-2021		180,000		197,550
KAR Holdings Incorporated ±		4.30			5-1-2014		125,000		125,158

									710,833


Machinery: 0.10%
Columbus McKinnon Corporation		7.88			2-1-2019		75,000		80,813
Titan International Incorporated		7.88			10-1-2017		25,000		26,813

									107,626


Professional Services: 0.15%
Interactive Data Corporation		10.25			8-1-2018		150,000		170,063


Trading Companies & Distributors: 0.19%
H&E Equipment Services Incorporated 144A		7.00			9-1-2022		195,000		213,525


Information Technology: 2.49%

Communications Equipment: 0.15%
Avaya Incorporated		9.75			11-1-2015		50,000		49,188
Lucent Technologies Incorporated		6.45			3-15-2029		155,000		120,513

									169,701


8		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2013 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Computers & Peripherals: 0.19%
NCR Corporation 144A		5.00	%		7-15-2022	$	215,000	$	213,925


Electronic Equipment, Instruments & Components: 0.77%
CDW Financial Corporation		12.54			10-12-2017		99,000		106,301
Jabil Circuit Incorporated		8.25			3-15-2018		620,000		745,550

									851,851


Internet Software & Services: 0.10%
Equinix Incorporated %%		4.88			4-1-2020		10,000		10,000
Equinix Incorporated		8.13			3-1-2018		95,000		105,213

									115,213


IT Services: 1.20%
Audatex North American Incorporated 144A		6.75			6-15-2018		50,000		53,375
CyrusOne LLC 144A		6.38			11-15-2022		25,000		26,313
Fidelity National Information Services Incorporated		7.63			7-15-2017		50,000		53,813
Fidelity National Information Services Incorporated		7.88			7-15-2020		100,000		113,125
First Data Corporation 144A		7.38			6-15-2019		50,000		52,563
First Data Corporation		11.25			3-31-2016		495,000		489,431
SunGard Data Systems Incorporated 144A		6.63			11-1-2019		100,000		102,750
SunGard Data Systems Incorporated		7.38			11-15-2018		390,000		418,763
SunGard Data Systems Incorporated		7.63			11-15-2020		25,000		27,063

									1,337,196


Software: 0.08%
Nuance Communications Incorporated 144A		5.38			8-15-2020		85,000		86,063


Materials: 0.51%

Chemicals: 0.10%
Celanese US Holdings LLC		5.88			6-15-2021		20,000		21,850
Tronox Finance LLC 144A		6.38			8-15-2020		90,000		89,438

									111,288


Containers & Packaging: 0.24%
Ball Corporation		5.00			3-15-2022		25,000		26,063
Crown Americas LLC 144A		4.50			1-15-2023		50,000		48,875
Crown Americas LLC		6.25			2-1-2021		20,000		21,800
Crown Cork & Seal Company Incorporated (i)		7.50			12-15-2096		50,000		47,500
Owens-Illinois Incorporated		7.80			5-15-2018		60,000		70,350
Silgan Holdings Incorporated		5.00			4-1-2020		50,000		51,500

									266,088


Paper & Forest Products: 0.17%
Georgia-Pacific LLC		8.88			5-15-2031		125,000		187,211


Telecommunication Services: 4.20%

Diversified Telecommunication Services: 1.53%
Citizens Communications Company		7.88			1-15-2027		200,000		198,500
Frontier Communications Corporation		8.13			10-1-2018		60,000		68,025


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			9


Security name	Interest rate			Maturity date		Principal		Value


Diversified Telecommunication Services (continued)
Frontier Communications Corporation		8.25	%		5-1-2014	$	3,000	$	3,210
GCI Incorporated		6.75			6-1-2021		75,000		71,250
GCI Incorporated		8.63			11-15-2019		368,000		389,160
Qwest Corporation		7.25			9-15-2025		125,000		144,196
Qwest Corporation		7.63			8-3-2021		20,000		21,662
SBA Telecommunications Incorporated 144A		5.75			7-15-2020		100,000		104,000
SBA Telecommunications Incorporated		8.25			8-15-2019		7,000		7,735
Syniverse Holdings Incorporated		9.13			1-15-2019		365,000		397,850
Windstream Corporation		7.88			11-1-2017		265,000		300,113

									1,705,701


Wireless Telecommunication Services: 2.67%
Allbritton Communications Company		8.00			5-15-2018		150,000		162,938
Cricket Communications Incorporated		7.75			5-15-2016		125,000		131,250
Cricket Communications Incorporated		7.75			10-15-2020		150,000		152,625
Crown Castle International Corporation 144A		5.25			1-15-2023		100,000		102,500
Crown Castle International Corporation		7.13			11-1-2019		10,000		10,950
MetroPCS Communications Incorporated		6.63			11-15-2020		240,000		251,100
MetroPCS Communications Incorporated		7.88			9-1-2018		130,000		140,238
SBA Telecommunications Incorporated 144A		5.63			10-1-2019		10,000		10,300
Sprint Capital Corporation		6.88			11-15-2028		1,100,000		1,111,000
Sprint Capital Corporation		8.75			3-15-2032		220,000		258,500
Sprint Nextel Corporation 144A		9.00			11-15-2018		25,000		31,000
Sprint Nextel Corporation		11.50			11-15-2021		25,000		34,438
TW Telecommunications Holdings Incorporated		5.38			10-1-2022		420,000		437,850
TW Telecommunications Holdings Incorporated		8.00			3-1-2018		130,000		141,375

									2,976,064


Utilities: 2.10%

Electric Utilities: 0.95%
Energy Future Intermediate Holding Company LLC 144A		6.88			8-15-2017		25,000		26,375
IPALCO Enterprises Incorporated		5.00			5-1-2018		100,000		106,500
IPALCO Enterprises Incorporated 144A		7.25			4-1-2016		160,000		179,200
Mirant Mid-Atlantic LLC Series C		10.06			12-30-2028		438,432		499,813
Otter Tail Corporation		9.00			12-15-2016		215,000		251,550

									1,063,438


Gas Utilities: 0.25%
AmeriGas Finance LLC		6.75			5-20-2020		175,000		188,563
AmeriGas Finance LLC		7.00			5-20-2022		75,000		81,000
AmeriGas Partners LP		6.50			5-20-2021		5,000		5,325

									274,888


Independent Power Producers & Energy Traders: 0.90%
Calpine Construction Finance Corporation 144A		7.25			10-15-2017		360,000		382,950
Calpine Construction Finance Corporation 144A		8.00			6-1-2016		125,000		131,875
NRG Energy Incorporated		8.50			6-15-2019		185,000		205,813
NSG Holdings LLC 144A (i)		7.75			12-15-2025		125,000		130,000


10		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2013 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Independent Power Producers & Energy Traders (continued)
Reliant Energy Incorporated		7.63	%		6-15-2014	$	50,000	$	53,375
Reliant Energy Incorporated		9.24			7-2-2017		84,017		92,629
Reliant Energy Incorporated		9.68			7-2-2026		10,000		10,900

									1,007,542


Total Corporate Bonds and Notes (Cost $31,529,028)									33,731,137


	Dividend yield					Shares

Preferred Stocks: 15.36%

Financials: 0.05%

Diversified Financial Services: 0.05%
GMAC Capital Trust I ±		7.62					2,200		58,388


Telecommunication Services: 2.15%

Diversified Telecommunication Services: 2.15%
Qwest Corporation		7.00					90,000		2,394,000


Utilities: 13.16%

Electric Utilities: 6.87%
Duke Energy Corporation †		5.13					161,000		4,033,050
Indianapolis Power & Light Company		5.65					20,000		2,006,250
SCE Trust I		5.63					23,000		606,280
Southern California Edison		6.50					5,000		530,938
Wisconsin Public Service		5.08					4,804		484,754


									7,661,272


Multi-Utilities: 6.29%
DTE Energy Company		5.25					100,000		2,544,000
Scana Corporation		7.70					165,000		4,476,450

									7,020,450


Total Preferred Stocks (Cost $16,694,105)									17,134,110


	Interest rate					Principal

Term Loans: 2.79%
Alliance Laundry Systems LLC		9.50			12-10-2019	$	98,213		99,932
Capital Automotive LP		5.25			3-11-2017		262,828		264,032
CCM Merger Incorporated		6.00			3-1-2017		172,014		173,304
Centaur LLC <		0.00			2-15-2020		25,000		25,375
Coinmach Corporation		3.21			11-14-2014		268,388		262,349
Crossmark Holdings Incorporated <		0.00			12-21-2020		10,000		10,000
Energy Transfer Equity LP		3.75			3-23-2017		75,000		75,246
Federal-Mogul Corporation		2.14			12-27-2014		81,404		75,740
Federal-Mogul Corporation		2.14			12-27-2015		41,533		38,643
Focus Brands Incorporated		10.25			8-21-2018		176,935		181,358
Greektown Casino LLC <		0.00			12-18-2018		125,000		125,573


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			11


Security name	Interest rate			Maturity date		Principal		Value


Term Loans (continued)
Level 3 Financing Incorporated		4.75	%		2-1-2016	$	299,250	$	302,617
Springleaf Finance Corporation		5.50			5-10-2017		100,000		100,354
Tallgrass Operations LLC		5.25			11-13-2018		201,829		204,352
Texas Competitive Electric Holdings Company		3.73			10-10-2014		1,471,940		1,056,853
WASH Multifamily Laundry Systems LLC <		0.00			2-15-2019		110,000		110,963

Total Term Loans (Cost $3,331,479)									3,106,691


						Shares

Warrants: 0.06%

Utilities: 0.06%

Electric Utilities: 0.00%
China Hydroelectric Company ADR (Utilities, Electric Utilities) †							10,000		240


Gas Utilities: 0.06%
Kinder Morgan Incorporated (Utilities, Gas Utilities) †							16,000		70,400


Total Warrants (Cost $42,480)									70,640


						Principal

Yankee Corporate Bonds and Notes: 1.62%

Consumer Discretionary: 0.10%

Media: 0.10%
Videotron Limited		5.00			7-15-2022	$	35,000		35,613
Videotron Limited		9.13			4-15-2018		75,000		79,125

									114,738


Energy: 0.21%

Oil, Gas & Consumable Fuels: 0.21%
Griffin Coal Mining Company Limited 144A (s)		9.50			12-1-2016		160,361		131,496
Ship Finance International Limited		8.50			12-15-2013		105,000		105,000

									236,496


Financials: 0.11%

Consumer Finance: 0.11%
Wind Acquisition Finance SpA 144A		11.75			7-15-2017		110,000		115,775


Information Technology: 0.27%

Computers & Peripherals: 0.27%
Seagate Technology HDD Holdings		6.80			10-1-2016		50,000		56,250
Seagate Technology HDD Holdings		6.88			5-1-2020		25,000		26,813
Seagate Technology HDD Holdings		7.00			11-1-2021		25,000		27,125
Seagate Technology HDD Holdings		7.75			12-15-2018		170,000		185,513

									295,701


12		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2013 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Materials: 0.25%

Metals & Mining: 0.17%
Novelis Incorporated		8.38	%		12-15-2017	$	100,000	$	109,250
Novelis Incorporated		8.75			12-15-2020		75,000		84,000

									193,250


Paper & Forest Products: 0.08%
Sappi Limited 144A		7.50			6-15-2032		100,000		87,500


Telecommunication Services: 0.68%

Diversified Telecommunication Services: 0.61%
Intelsat Bermuda Limited		11.25			2-4-2017		90,000		95,625
Intelsat Jackson Holdings Limited		7.25			4-1-2019		225,000		241,313
Intelsat Jackson Holdings Limited		7.50			4-1-2021		50,000		54,125
Intelsat Jackson Holdings SA		7.25			10-15-2020		150,000		160,875
Intelsat Luxembourg SA		11.50			2-4-2017		125,000		132,969

									684,907


Wireless Telecommunication Services: 0.07%
Digicel Group Limited 144A		12.00			4-1-2014		20,000		21,300
Telesat Canada Incorporated 144A		6.00			5-15-2017		50,000		52,125

									73,425


Total Yankee Corporate Bonds and Notes (Cost $1,699,597)									1,801,792


	Yield					Shares
Short-Term Investments: 6.40%

Investment Companies: 6.40%
Wells Fargo Advantage Cash Investment Money Market Fund, Select Class (l)(u)##		0.13					7,142,517		7,142,517


Total Short-Term Investments (Cost $7,142,517)									7,142,517

Total investments in securities
(Cost $117,679,020) *		119.66	%						133,451,024
Other assets and liabilities, net		(19.66	)						(21,924,117	)

Total net assets		100.00	%					$	111,526,907


Portfolio of investments—February 28, 2013 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			13

¥	A payment-in-kind (PIK) security is a security in which the issuer may make interest or dividend payments in cash or additional securities. These additional securities generally have the same terms as the original holdings.

†	Non-income-earning security

144A	Security that may be resold to “qualified institutional buyers” under Rule 144A or security offered pursuant to Section 4(2) of the Securities Act of 1933, as amended.

(i)	Illiquid security

(s)	Security is currently in default with regards to scheduled interest and/or principal payments. The Fund has stopped accruing interest on this security.

±	Variable rate investment. The rate shown is the rate in effect at period end.

%%	Security issued on a when-issued basis.

<	All or a portion of the position represents an unfunded loan commitment.

(l)	Investment in an affiliate

(u)	Rate shown is the 7-day annualized yield at period end.

##	All or a portion of this security has been segregated for when-issued securities and/or unfunded loans.

*	Cost for federal income tax purposes is $118,366,914 and unrealized appreciation (depreciation) consists of:


Gross unrealized appreciation	$	20,177,764
Gross unrealized depreciation		(5,093,654	)

Net unrealized appreciation	$	15,084,110

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMEENT INVESTMENT COMPANY AND AFFILIATED PURCHASES

Not applicable.

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Governance Committee (the “Committee”) of the Board of Trustees of the registrant (the “Trust”) has adopted procedures by which a shareholder of any series of the Trust may submit properly a nominee recommendation for the Committee’s consideration.

The shareholder must submit any such recommendation (a “Shareholder Recommendation”) in writing to the Trust, to the attention of the Trust’s Secretary, at the address of the principal executive offices of the Trust.

The Shareholder Recommendation must be delivered to, or mailed and received at, the principal executive offices of the Trust not less than forty-five (45) calendar days nor more than seventy-five (75) calendar days prior to the date of the Committee meeting at which the nominee would be considered.

The Shareholder Recommendation must include: (i) a statement in writing setting forth (A) the name, age, date of birth, business address, residence address and nationality of the person recommended by the shareholder (the “candidate”); (B) the series (and, if applicable, class) and number of all shares of the Trust owned of record or beneficially by the candidate, as reported to such shareholder by the candidate; (C) any other information regarding the candidate called for with respect to director nominees by paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation or rule subsequently adopted by the Securities and Exchange Commission or any successor agency applicable to the Trust); (D) any other information regarding the candidate that would be required to be disclosed if the candidate were a nominee in a proxy statement or other filing required to be made in connection with solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (E) whether the recommending shareholder believes that the candidate is or will be an “interested person” of the Trust (as defined in the Investment Company Act of 1940, as amended) and, if not an “interested person,” information regarding the candidate that will be sufficient for the Trust to make such determination; (ii) the written and signed consent of the candidate to be named as a nominee and to serve as a Trustee if elected; (iii) the recommending shareholder’s name as it appears on the Trust’s books; (iv) the series (and, if applicable, class) and number of all shares of the Trust owned beneficially and of record by the recommending shareholder; and (v) a description of all arrangements or understandings between the recommending shareholder and the candidate and any other person or persons (including their names) pursuant to which the recommendation is being made by the recommending shareholder. In addition, the Committee may require the candidate to interview in person and furnish such other information as it may reasonably require or deem necessary to determine the eligibility of such candidate to serve as a Trustee of the Trust.

ITEM 11.

CONTROLS AND PROCEDURES

(a) The President and Treasurer have concluded that the Wells Fargo Advantage Multi-Sector Income Fund (the “Trust”) disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing of this report.

(b) There were no significant changes in the Trust’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second quarter of the period covered by this report that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 12.

EXHIBITS

(a)(1) Not required in this filing.

(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)(3) Not applicable.

(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is filed and attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Wells Fargo Advantage Utilities and High Income Fund

By:		/s/ Karla M. Rabusch
		Karla M. Rabusch
		President

Date: April 26, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.


Wells Fargo Advantage Utilities and High Income Fund

By:		/s/ Karla M. Rabusch
		Karla M. Rabusch
		President

Date: April 26, 2013

By:		/s/ Nancy Wiser
		Nancy Wiser
		Treasurer

Date: April 26, 2013