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

Date of reporting period: February 28, 2014

ITEM 1.

REPORT TO STOCKHOLDERS

LOGO

Wells Fargo Advantage
Utilities and High Income Fund

LOGO

Semi-Annual Report

February 28, 2014

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

List of abbreviations			27

The views expressed and any forward-looking statements are as of February 28, 2014, 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 and the Fund disclaim 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

The U.S. high-yield market provided relatively strong fixed-income returns during the period while U.S. utilities stocks generated positive investment value.

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, 2014. The U.S. high-yield market (measured by the Barclays U.S. High Yield Bond Index¹) provided relatively strong fixed-income returns during the period while U.S. utilities stocks (measured by the Utilities sector of S&P 500 Index) generated positive investment value. Equity markets (measured by the S&P 500 Index²) vacillated between price rallies and subsequent price corrections, which stirred up volatility across equity and fixed-income markets (measured by the Barclays U.S. Aggregate Bond Index³) alike. U.S. Treasury yields correspondingly fluctuated with the shifts in equity market exuberance, as strengthening economic confidence pushed yields higher and weakened confidence drove them lower.

On the whole, the investment-grade (measured by the Barclays U.S. Aggregate Bond Index) and high-yield markets generated positive returns during the period, notably benefiting from the strong price improvement and declining U.S. Treasury yields that occurred during the opening months of 2014. The high-yield market is often correlated with U.S. equity performance; however, over the period, the high-yield market generally performed well both when equities were improving and U.S. Treasury yields were declining as well as when equity markets were in decline and fixed-income markets rallied. The lower-rated corporate bond credit tiers outperformed each respectively higher-rated credit tier during the quarter. Meanwhile, the utilities equity sector lagged the returns of the S&P 500 Index but, nonetheless, generated relatively strong total returns compared with U.S. Treasuries and investment-grade bonds.

A decline in bond prices was halted by the Fed’s postponement of tapering its bond-buying program.

Before the six-month period began, equity markets rallied, most notably in May and June of 2013. This led to a sharp increase in U.S. Treasury yields and declining valuations for much of the fixed-income markets. However, in July and August of 2013, that equity exuberance quieted a bit, and fixed-income markets stabilized. Returns across the fixed-income markets were largely negative in investment-grade and high-yield markets but modest in comparison with the declines in May and June of 2013.

But, by September and October of 2013, investment-grade and high-yield markets began generating positive returns yet again, as the U.S. Federal Reserve (Fed) backtracked on its intentions to taper its quantitative easing program, postponing it until 2014, at the earliest. This created a temporary rally in bonds that lasted until around November 20, 2013, when notes were released from the Fed’s October 2013 meeting indicating that tapering of the bond-buying programs would not be postponed beyond January 2014. In response, long-term U.S. Treasury yields and mortgage rates ratcheted higher on expectations for an unwinding of monetary accommodation in the upcoming months. This led to declines in pricing across much of the core fixed-income markets (measured by the Barclays U.S. Aggregate Bond Index); however, U.S. high-yield markets were better able to absorb the shift in U.S. Treasury yields and continued to provide positive returns along with rallies in the equity markets. The utilities equity sector rallied in October of 2013 and then declined through much of November and December of 2013.

1.	The Barclays U.S. High Yield Bond Index is an index consisting of all domestic and Yankee bonds, rated below investment grade, with a minimum outstanding amount of $100 million and maturing over one year. You cannot invest directly in an index.

2.	The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index.

The Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM passthroughs), ABS, and CMBS. You cannot invest directly in an index.


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

Favorable conditions for fixed-income markets were restored in January and February of 2014.

Seemingly much to the surprise of many everyday investors and seasoned investment professionals alike, fixed-income markets largely outperformed U.S. equity markets during the opening months of 2014. A pullback in equity exuberance in January 2014 and reassurances from the Fed that a highly accommodative monetary policy would continue throughout 2014 inspired price rallies across both the investment-grade and high-yield markets. U.S. Treasury yields declined in January 2014 while corporate high-yield bonds (measured by the Barclays U.S. High Yield Bond Index) performed notably well. Initially, U.S. high-yield securities generated positive returns in January 2014 but lagged the rally across the investment-grade bond markets. This theme reversed in February 2014, as high-yield sectors rallied and investment-grade sectors performed well but not to the extent of the lowest-rated credit tiers. The S&P 500 Index declined significantly in January, but the utilities sector did a better job of protecting against the price corrections and only declined modestly by comparison. In February 2014, the utilities sector rallied strongly along with the broad domestic equity market and generated compelling total returns to finish off a relatively generous six-month return compared with returns from the investment-grade fixed-income market.

Don’t let short-term uncertainty derail long-term investment goals.

Periods of investment uncertainty can present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.

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

Reassurances from the Fed that a highly accommodative monetary policy would continue throughout 2014 inspired price rallies across both the investment-grade and high-yield markets.


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

Phillip Susser

Niklas Nordenfelt, CFA

Timothy P. O’Brien, CFA

Average annual total return¹ (%) as of February 28, 2014


	1 year		5 year		Since inception 4-28-2004
Based on market value		14.06		15.54		7.43
Based on net asset value (NAV) per share		18.49		16.27		8.74

Figures quoted represent past performance, which is no guarantee of future results, and do not reflect 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, which assumes the reinvestment of dividends and capital gains. Performance figures of the Fund do not reflect brokerage commissions that a shareholder would pay on the purchase and sale of shares. If taxes and such brokerage commissions had been reflected, performance would have been lower. To obtain performance information current to the most recent month-end, please call 1-800-222-8222.

The Fund’s gross and net expense ratios for the six months ended February 28, 2014, were 1.11% and 1.11%, respectively, which includes 0.19% of interest expense.

Comparison of NAV vs. market value since inception²

LOGO

High-yield, lower-rated bonds may contain more risk due to the increased possibility of default. Foreign investments may contain more risk due to the inherent risks associated with changing political climates, foreign market instability, and foreign currency fluctuations. Risks of international investing are magnified in emerging or developing markets. Funds that concentrate their 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. Small- and mid-cap securities may be subject to special risks associated with narrower product lines and limited financial resources compared with their large-cap counterparts. 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. Derivatives involve additional risks, including interest-rate risk, credit risk, the risk of improper valuation, and the risk of noncorrelation to the relevant instruments they are designed to hedge or to closely track. There are numerous risks associated with transactions in options on securities. Illiquid securities may be subject to wide fluctuations in market value and may be difficult to sell.

Total returns based on market value are calculated assuming a purchase of common stock on the first day and sale on the last day of 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, if any, are assumed for the purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan.

2.	This chart does not reflect any brokerage commissions charged on the Fund’s common stock. Dividends and distributions have the effect of reducing the Fund’s NAV.


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

MANAGER’S DISCUSSION

The Fund’s return based on market value was 6.71% during the six months ended February 28, 2014. During the same period, the Fund’s return based on NAV was 12.69%.

Overview

For the six-month period that ended February 28, 2014, high-yield bonds continued to benefit from rising stock prices (as high-yield bonds often trade in sympathy with stocks), rising U.S. Treasury prices, relatively low volatility, and strong investor interest due to a scarcity of attractive income opportunities. High-yield companies continued to add debt as companies took advantage of the strong investor demand for high-yield debt and low borrowing costs. While leverage levels are not at record highs, they have been creeping higher over the past several years as, among other reasons, companies gain more and more confidence in their outlooks. On the other hand, historically low interest rates and a wave of refinancings have kept companies’ interest costs low and pushed out near-term maturities.

In the utilities stock allocation, the Fund was positioned somewhat more aggressively compared with the prior six months. Interest-rate-sensitive stocks had declined sharply beginning in June 2013 following the U.S. Federal Reserve’s announcement of its intention to taper off the pace of bond purchases. Thus, by the end of August 2013, we added a number of issues that we viewed as attractively priced after the price declines. For example, we added to an existing position in Vodafone and initiated positions in Energen and Veresen.

Contributors to performance

In the high-yield allocation, the Fund benefited from the strong appreciation of the high-yield bond market generally and more particularly from the Fund’s longer-duration assets. Fixed-income holdings of pipeline and wireless companies also helped performance. In the equity allocation, the Fund maintained a modestly higher exposure to European utilities and telecommunication services names in anticipation of a nascent recovery in Europe. On balance, the Fund’s European names contributed to performance, with Deutsche Post AG, Suez Environnement Company SA, and Veolia Environnement SA, particularly standing out. A modest increase in the euro/dollar exchange rate also helped. In the domestic utilities space, ITC Holdings Corporation, American Electric Power Company Incorporated, Great Plains Energy Incorporated, The Williams Companies Incorporated, and NextEra Energy Incorporated were significant performance contributors.


Ten largest holdings³(%) as of February 28, 2014
Deutsche Post AG		4.59
Suez Environnement Company SA		4.48
American Electric Power Company Incorporated		4.09
ITC Holdings Corporation		3.76
Great Plains Energy Incorporated		3.75
NextEra Energy Incorporated		3.73
The Williams Companies Incorporated		3.37
Northeast Utilities		3.26
Telefonica Brasil ADR		3.23
Edison International		3.20

Credit quality⁴as of February 28, 2014

Detractors from performance

Holding relatively shorter average-life bonds and higher-quality, higher-rated bonds restrained performance in a market that rewarded risk. The portfolio’s overall lower risk profile, as a result, had a detracting impact on performance. In the equity allocation, foreign companies that detracted included Telefonica Brasil and Vimpelcom Limited, while detracting domestic laggards included Verizon Communications Incorporated and Energen Corporation.

Management outlook

Our high-yield fixed-income outlook has not changed materially since the fiscal year that ended August 31, 2013, except that yields have continued to grind lower, which has both reduced the return of high yield bonds and increased the risk of a fall in prices of high yield bonds. Our base case is that high-yield bonds are relatively stable and could potentially outperform other fixed-income asset classes such as the Barclays U.S. Aggregate Bond Index⁵, the 10-year U.S. Treasury, and the investment-grade corporate markets (which may be more vulnerable to yield increases).

Please see footnotes on page 6.


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

Country allocation⁶as of February 28, 2014

In the long run, we expect that the relative performance of high yield bonds will be primarily driven by corporate fundamentals and defaults. In the near term, our default outlook remains benign and supportive of the high yield markets. Over a full cycle, we believe the best way to protect the Fund from periodic bouts of systemic fears and rebalancing will be our continued focus on a bottom-up approach that attempts to minimize downside risk while capturing the return potential of high-yield issuers.

In the equity allocation, we are watching what appears to be a modest economic recovery in the U.S. While stronger economic growth can be positive for utilities that are suffering from weak revenues, it can also eventually lead to rising interest rates as monetary stimulus is withdrawn. This could be a near-term headwind for utilities stocks. Longer-term, fundamentals for regulated network operators remain robust, in our view, while the outlook for utilities with significant commodity price exposure remains challenging.

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.

The credit quality of portfolio holdings reflected in the chart is based on ratings from Standard & Poor’s, Moody’s Investors Service, and/or Fitch Ratings Ltd. Credit quality ratings apply to the underlying holdings of the Fund and not to the Fund itself. The percentages of the Fund’s portfolio with the ratings depicted in the chart are calculated based on the total market value of fixed income securities held by the Fund. 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 rating agencies, that rating was utilized. 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). Credit quality, and credit quality ratings, are subject to change.

6.	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, 2014 (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-CSRS, is also available on the SEC’s website at sec.gov.


Security name	Shares		Value		Percent of net assets

Common Stocks: 65.38%

Energy: 8.69%

Oil, Gas & Consumable Fuels: 8.69%
Energen Corporation		15,000	$	1,206,600		0.98	%
EQT Corporation		15,000		1,534,350		1.25
Spectra Energy Corporation		75,000		2,796,000		2.28
The Williams Companies Incorporated		100,000		4,130,000		3.37
Veresen Incorporated		42,900		648,556		0.53
Other securities				336,877		0.28

				10,652,383		8.69


Industrials: 4.67%

Air Freight & Logistics: 4.59%
Deutsche Post AG		150,000		5,633,696		4.59


Construction & Engineering: 0.08%
Other securities				92,340		0.08


Telecommunication Services: 13.85%

Diversified Telecommunication Services: 9.26%
BCE Incorporated		16,000		697,600		0.57
CenturyLink Incorporated		100,000		3,126,000		2.55
Telefonica Brasil ADR		212,500		3,963,125		3.23
Verizon Communications Incorporated		41,291		1,964,626		1.60
Windstream Holdings Incorporated		200,000		1,604,000		1.31

				11,355,351		9.26


Wireless Telecommunication Services: 4.59%
Shenandoah Telecommunications Company		40,000		1,057,200		0.86
VimpelCom Limited ADR		100,000		1,016,000		0.83
Vodafone Group plc ADR		85,636		3,559,904		2.90

				5,633,104		4.59


Utilities: 38.17%

Electric Utilities: 25.60%
American Electric Power Company Incorporated		100,000		5,020,000		4.09
Duke Energy Corporation		30,514		2,162,832		1.76
Edison International		75,000		3,927,750		3.20
Enel SpA		200,000		1,026,943		0.84
Great Plains Energy Incorporated		175,000		4,597,250		3.75
IDACORP Incorporated		25,000		1,404,750		1.15
ITC Holdings Corporation		45,000		4,617,000		3.76

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, 2014 (unaudited)


Security name						Shares		Value		Percent of net assets

Electric Utilities (continued)
NextEra Energy Incorporated							50,000	$	4,569,500		3.73	%
Northeast Utilities							90,000		4,000,500		3.26
Other securities									77,707		0.06

									31,404,232		25.60


Gas Utilities: 0.02%
Other securities									20,438		0.02


Multi-Utilities: 10.72%
CenterPoint Energy Incorporated							50,000		1,182,500		0.96
Public Service Enterprise Group Incorporated							50,000		1,833,000		1.50
Sempra Energy							19,900		1,879,953		1.53
Suez Environnement Company SA							275,000		5,496,356		4.48
Veolia Environnement SA							137,000		2,592,577		2.11
Other securities									169,680		0.14

									13,154,066		10.72


Water Utilities: 1.83%
American Water Works Company Incorporated							50,000		2,242,000		1.83


Total Common Stocks (Cost $59,471,577)									80,187,610		65.38


	Interest rate			Maturity date		Principal
Corporate Bonds and Notes: 29.17%

Consumer Discretionary: 6.06%

Auto Components: 0.55%
Other securities									677,438		0.55


Distributors: 0.06%
Other securities									71,438		0.06


Diversified Consumer Services: 0.56%
Other securities									688,233		0.56


Hotels, Restaurants & Leisure: 2.19%
CCM Merger Incorporated 144A		9.13	%		5-1-2019	$	465,000		494,063		0.40
Other securities									2,191,300		1.79

									2,685,363		2.19


Household Durables: 0.04%
Other securities									53,406		0.04


Media: 2.19%
Other securities									2,680,636		2.19


Specialty Retail: 0.47%
Other securities									571,664		0.47

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


Summary portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			9


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

Consumer Staples: 0.13%

Food Products: 0.13%
Other securities								$	161,363		0.13	%


Energy: 5.85%

Energy Equipment & Services: 1.91%
NGPL PipeCo LLC 144A		7.77	%		12-15-2037	$	515,000		472,513		0.39
Other securities									1,871,244		1.52

									2,343,757		1.91


Oil, Gas & Consumable Fuels: 3.94%
Other securities									4,833,813		3.94


Financials: 4.94%

Banks: 0.38%
Other securities									469,701		0.38


Consumer Finance: 2.77%
Ally Financial Incorporated		8.30			2-12-2015		825,000		878,625		0.72
Nielsen Finance LLC		7.75			10-15-2018		515,000		551,694		0.45
Other securities									1,969,940		1.60

									3,400,259		2.77


Diversified Financial Services: 0.57%
Other securities									696,364		0.57


Insurance: 0.04%
Other securities									47,925		0.04


Real Estate Management & Development: 0.35%
Other securities									424,075		0.35


REITs: 0.83%
Other securities									1,023,438		0.83


Health Care: 1.97%

Health Care Equipment & Supplies: 0.10%
Other securities									116,875		0.10


Health Care Providers & Services: 1.56%
Other securities									1,918,477		1.56


Health Care Technology: 0.06%
Other securities									72,450		0.06


Pharmaceuticals: 0.25%
Other securities									309,232		0.25

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, 2014 (unaudited)


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

Industrials: 1.79%

Aerospace & Defense: 0.12%
Other securities								$	151,219		0.12	%


Airlines: 0.14%
Other securities									165,691		0.14


Commercial Services & Supplies: 0.69%
Other securities									840,869		0.69


Machinery: 0.07%
Other securities									81,000		0.07


Professional Services: 0.13%
Other securities									162,750		0.13


Trading Companies & Distributors: 0.53%
Other securities									652,713		0.53


Transportation Infrastructure: 0.11%
Other securities									138,658		0.11


Information Technology: 2.32%

Communications Equipment: 0.19%
Other securities									226,926		0.19


Electronic Equipment, Instruments & Components: 0.61%
Jabil Circuit Incorporated		8.25	%		3-15-2018	$	620,000		745,550		0.60
Other securities									8,400		0.01

									753,950		0.61


Internet Software & Services: 0.06%
Other securities									75,175		0.06


IT Services: 1.04%
SunGard Data Systems Incorporated		7.38			11-15-2018		515,000		548,475		0.45
Other securities									730,709		0.59

									1,279,184		1.04


Semiconductors & Semiconductor Equipment: 0.10%
Other securities									120,175		0.10


Software: 0.09%
Other securities									109,350		0.09


Technology Hardware, Storage & Peripherals: 0.23%
Other securities									283,550		0.23


Materials: 0.60%

Chemicals: 0.02%
Other securities									21,550		0.02

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


Summary portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			11


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

Containers & Packaging: 0.43%
Other securities								$	525,956		0.43	%


Paper & Forest Products: 0.15%
Other securities									181,626		0.15


Telecommunication Services: 4.08%

Diversified Telecommunication Services: 1.79%
Qwest Corporation		7.25	%		9-15-2025	$	125,000		139,470		0.11
Other securities									2,054,100		1.68

									2,193,570		1.79


Wireless Telecommunication Services: 2.29%
Sprint Capital Corporation		6.88			11-15-2028		1,100,000		1,091,750		0.89
Other securities									1,719,390		1.40

									2,811,140		2.29


Utilities: 1.43%

Electric Utilities: 0.74%
Mirant Mid-Atlantic LLC Series C		10.06			12-30-2028		438,432		468,027		0.38
Other securities									440,089		0.36

									908,116		0.74


Gas Utilities: 0.23%
Other securities									278,063		0.23


Independent Power & Renewable Electricity Producers: 0.46%
Other securities									570,077		0.46


Total Corporate Bonds and Notes (Cost $33,567,185)									35,777,215		29.17


	Dividend yield					Shares
Preferred Stocks: 13.75%

Financials: 0.50%

Capital Markets: 0.42%
Morgan Stanley ±		0.65					20,000		517,600		0.42


Diversified Financial Services: 0.08%
Other securities									93,858		0.08


Telecommunication Services: 1.84%

Diversified Telecommunication Services: 1.84%
Qwest Corporation		8.13					90,000		2,254,500		1.84


Utilities: 11.41%

Electric Utilities: 7.75%
Duke Energy Corporation		5.13					130,000		2,809,300		2.29

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, 2014 (unaudited)


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

Electric Utilities (continued)
Entergy Arkansas Incorporated		4.75	%				65,000	$	1,302,600		1.06	%
Entergy Louisiana LLC		4.70					70,483		1,402,612		1.14
Indianapolis Power & Light Company		5.65					20,000		1,883,750		1.54
Interstate Power & Light Company		5.10					50,000		1,114,500		0.91
SCE Trust I		5.63					23,000		519,800		0.42
Wisconsin Public Service		5.08					4,804		474,996		0.39

									9,507,558		7.75


Multi-Utilities: 3.66%
DTE Energy Company Series Q		5.25					100,000		2,126,000		1.73
Integrys Energy Group ±		2.77					95,000		2,368,350		1.93

									4,494,350		3.66


Total Preferred Stocks (Cost $17,915,738)									16,867,866		13.75

	Interest rate					Principal

Term Loans ±: 3.05%
Dell Incorporated		4.50			4-29-2020	$	603,488		601,653		0.49
Texas Competitive Electric Holdings LLC		3.74			10-10-2014		1,471,940		1,027,571		0.84
Other securities									2,108,994		1.72

Total Term Loans (Cost $4,124,844)									3,738,218		3.05



Warrants: 0.02%

Utilities: 0.02%

Gas Utilities: 0.02%
Other securities									29,600		0.02


Total Warrants (Cost $30,480)									29,600		0.02


Yankee Corporate Bonds and Notes: 1.48%

Consumer Discretionary: 0.04%

Media: 0.04%
Other securities									51,038		0.04


Energy: 0.06%

Oil, Gas & Consumable Fuels: 0.06%
Other securities									69,606		0.06


Financials: 0.12%

Consumer Finance: 0.09%
Other securities									116,463		0.09


Diversified Financial Services: 0.03%
Other securities									31,575		0.03

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


Summary portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			13


Security name						Value			Percent of net assets

Health Care: 0.12%

Pharmaceuticals: 0.12%
Other securities						$	152,025			0.12	%


Information Technology: 0.12%

Technology Hardware, Storage & Peripherals: 0.12%
Other securities							142,925			0.12


Materials: 0.22%

Metals & Mining: 0.16%
Other securities							191,375			0.16


Paper & Forest Products: 0.06%
Other securities							80,500			0.06


Telecommunication Services: 0.80%

Diversified Telecommunication Services: 0.76%
Other securities							931,457			0.76


Wireless Telecommunication Services: 0.04%
Other securities							51,875			0.04


Total Yankee Corporate Bonds and Notes (Cost $1,730,316)							1,818,839			1.48


	Yield			Shares
Short-Term Investments: 2.98%

Investment Companies: 2.98%
Wells Fargo Advantage Cash Investment Money Market Fund, Select Class (l)(u)##		0.07	%		3,652,555		3,652,555			2.98


Total Short-Term Investments (Cost $3,652,555)							3,652,555			2.98

Total investments in securities (Cost $120,492,695)*							142,071,903			115.83
Other assets and liabilities, net							(19,420,652	)		(15.83	)

Total net assets						$	122,651,251			100.00	%

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.

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

(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 unfunded term loans.

*	Cost for federal income tax purposes is $120,979,775 and unrealized appreciation (depreciation) consists of:


Gross unrealized appreciation	$	25,451,342
Gross unrealized depreciation		(4,359,214	)

Net unrealized appreciation	$	21,092,128

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, 2014 (unaudited)



Assets
Investments
In unaffiliated securities, at value (see cost below)	$	138,419,348
In affiliated securities, at value (see cost below)		3,652,555

Total investments, at value (see cost below)		142,071,903
Foreign currency, at value (see cost below)		86,447
Receivable for investments sold		334,903
Receivable for dividends and interest		3,955,129

Total assets		146,448,382


Liabilities
Dividends payable		692,078
Payable for investments purchased		894,478
Secured borrowing payable		22,001,406
Advisory fee payable		69,822
Due to other related parties		5,819
Accrued expenses and other liabilities		133,528

Total liabilities		23,797,131

Total net assets	$	122,651,251


NET ASSETS CONSIST OF
Paid-in capital	$	151,438,236
Undistributed net investment income		290,679
Accumulated net realized losses on investments		(50,668,611	)
Net unrealized gains on investments		21,590,947

Total net assets	$	122,651,251


NET ASSET VALUE PER SHARE
Based on $122,651,251 divided by 9,231,183 shares issued and outstanding (unlimited number of shares authorized)	$	13.29


Investments in unaffiliated securities, at cost	$	116,840,140

Investments in affiliated securities, at cost	$	3,652,555

Total investments, at cost	$	120,492,695

Foreign currency, at cost	$	77,285

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


Statement of operations—six months ended February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			15



Investment income
Dividends*	$	4,529,987
Interest		1,422,903
Income from affiliated securities		1,860

Total investment income		5,954,750


Expenses
Advisory fee		413,807
Administration fee		34,484
Custody and accounting fees		7,252
Professional fees		36,663
Shareholder report expenses		13,447
Trustees’ fees and expenses		4,720
Transfer agent fees		15,361
Interest expense		112,757
Secured borrowing fees		1,714
Other fees and expenses		4,722

Total expenses		644,927

Net investment income		5,309,823


REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS

Net realized gains (losses) on:
Unaffiliated securities		2,219,661
Written options		(4,108	)

Net realized gains on investments		2,215,553

Net change in unrealized gains (losses) on investments		6,278,786

Net realized and unrealized gains (losses) on investments		8,494,339

Net increase in net assets resulting from operations	$	13,804,162


* Net of foreign dividend withholding taxes in the amount of		$10,505

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, 2014 (unaudited)			Year ended August 31, 2013

Operations
Net investment income	$	5,309,823		$	7,992,766
Net realized gains on investments		2,215,553			274,386
Net change in unrealized gains (losses) on investments		6,278,786			4,651,266

Net increase in net assets resulting from operations		13,804,162			12,918,418


Distributions to shareholders from
Net investment income		(4,154,032	)		(8,307,863	)

Capital share transactions
Net asset value of shares issued under the Automatic Dividend Reinvestment Plan		0			63,685

Total increase in net assets		9,650,130			4,674,240


Net assets
Beginning of period		113,001,121			108,326,881

End of period	$	122,651,251		$	113,001,121


Undistributed (overdistributed) net investment income	$	290,679		$	(678,412	)

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


Statement of cash flows—six months ended February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			17




Cash flows from operating activities:
Net increase in net assets resulting from operations	$	13,804,162

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Purchase of securities		(29,265,038	)
Proceeds from sale of securities		28,841,996
Amortization		(29,854	)
Proceeds from short-term investment securities, net		(1,189,609	)
Increase in receivables for dividends and interest		(2,524,614	)
Decrease in receivable for securities sold		324,538
Increase in payable for investments purchased		851,545
Decrease in advisory fee payable		(4,387	)
Decrease in due to other related parties		(365	)
Decrease in accrued expenses and other liabilities		(64,948	)
Change in unrealized gains (losses) on investments		(6,278,786	)
Net realized losses on written options		4,108
Net realized gains on unaffiliated securities		(2,219,661	)

Net cash provided by operating activities		2,249,087


Cash flows from financing activities:
Cash distributions paid		(4,154,032	)
Decrease in secured borrowing		(2,533	)

Net cash used in financing activities		(4,156,565	)

Net increase in cash		(1,907,478	)


Cash (including foreign currency):
Beginning of period	$	1,993,925

End of period	$	86,447


Supplemental cash disclosure:
Cash paid for interest	$	110,224


Supplemental non-cash financing disclosure:
Reinvestment of dividends	$	0

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


18		Wells Fargo Advantage Utilities and High Income Fund		Financial highlights

(For a share outstanding throughout each period)


	Six months ended February 28, 2014 (unaudited)			Year ended August 31
	Six months ended February 28, 2014 (unaudited)			2013			2012			2011			2010			2009
Net asset value, beginning of period	$	12.24		$	11.74		$	11.75		$	11.23		$	11.38		$	17.50
Net investment income		0.58	¹		0.87	¹		0.87	¹		0.99	¹		0.59	¹		0.97	¹
Net realized and unrealized gains (losses) on investments		0.92			0.53			0.02			0.43			0.41			(5.29	)

Total from investment operations		1.50			1.40			0.89			1.42			1.00			(4.32	)
Distributions to shareholders from
Net investment income		(0.45	)		(0.90	)		(0.90	)		(0.90	)		(0.53	)¹		(1.00	)¹
Tax basis return of capital		0.00			0.00			0.00			0.00			(0.62	)¹		(0.80	)¹

Total distributions to shareholders		(0.45	)		(0.90	)		(0.90	)		(0.90	)		(1.15	)		(1.80	)
Net asset value, end of period	$	13.29		$	12.24		$	11.74		$	11.75		$	11.23		$	11.38
Market value, end of period	$	12.38		$	12.04		$	11.92		$	11.03		$	11.23		$	12.49
Total return based on market value²		6.71	%		8.93	%		17.03	%		5.99	%		(1.24	)%		(30.46	)%
Ratios to average net assets (annualized)
Gross expenses³		1.11	%		1.25	%		1.20	%		1.24	%		2.52	%		3.44	%
Net expenses³		1.11	%		1.25	%		1.20	%		1.24	%		1.52	%		2.25	%
Net investment income		9.17	%		7.11	%		7.48	%		8.14	%		5.19	%		8.75	%
Supplemental data
Portfolio turnover rate		17	%		65	%		48	%		64	%		59	%		137	%
Net assets, end of period (000s omitted)		$122,651			$113,001			$108,327			$108,146			$103,245			$103,687

Borrowings outstanding, end of period (000s omitted)		$22,000			$22,000			$22,000			$22,000			$22,000			$22,000
Asset coverage per $1,000 of borrowing, end of period	$	6,575		$	6,136		$	5,866		$	5,916		$	5,693		$	5,713

1.	Calculated based upon average 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 reported. Dividends and distributions, if any, are assumed for 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 that a shareholder would pay on the purchase and sale of shares.

3.	Ratios include interest expense relating to interest associated with borrowings and/or leverage transactions as follows:


Six months ended February 28, 2014 (unaudited)	0.19	%
Year ended August 31, 2013	0.21	%
Year ended August 31, 2012	0.25	%
Year ended August 31, 2011	0.25	%
Year ended August 31, 2010	0.19	%
Year ended August 31, 2009	0.70	%

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

The 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.

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 (generally 4 p.m. Eastern Time).

Equity securities and options that are listed on a foreign or domestic exchange or market are valued at the official closing price or, if none, the last sales price. If no sale occurs on the primary exchange or market for the security that day, the prior day’s price will be deemed “stale” and fair values will be determined in accordance with the Fund’s Valuation Procedures.

The values of securities denominated in foreign currencies will be converted to U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Management Valuation Team.

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 of the Fund 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, 2014, such 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 provided by an independent pricing service which may utilize both transaction data and market information such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. If prices are not available from the independent pricing service or prices received are deemed not representative of market value, prices will be obtained from an independent broker-dealer or otherwise determined based on the Fund’s Valuation Procedures.

Short-term securities, with maturities of 60 days or less at time of purchase, 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 in good faith 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 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 values, to assess the continued appropriateness of the fair valuation methodologies 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 inputs considered in the valuation process until there is a readily available price provided on an exchange or by an independent pricing service. Valuations received from an independent pricing service or independent broker-dealer quotes


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

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. The values of other assets and liabilities denominated in foreign currencies will be converted to U.S. dollars at rates provided by an independent foreign currency pricing source at a time each business day specified by the Management Valuation Team. Purchases and sales of securities, and income and expenses are converted 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 from changes in exchange rates.

The changes in net assets arising from changes in exchange rates and the changes in net assets resulting from changes in market prices of securities 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 and/or indexes. 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. For exercised options, 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 and/or index 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 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.

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.


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

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.

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.

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.

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.

As of August 31 2013, capital loss carryforwards available to offset future net realized capital gains were as follows through the indicated expiration dates:


		No expiration
2017	2018	Short-term
$20,548,693	$27,435,579	$4,033,372

As of August 31, 2013, the Fund had $341,205 of current year deferred post-October capital losses, which were recognized on the first day of the current fiscal year.

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.)

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.


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

As of February 28, 2014, the inputs used in valuing investments in securities were as follows:


Investments in securities	Quoted prices (Level 1)		Other significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Equity securities
Common stocks	$	80,187,610	$	0	$	0	$	80,187,610
Preferred stocks		14,509,120		2,358,746		0		16,867,866
Warrants		0		29,600		0		29,600

Corporate bonds and notes		0		35,777,215		0		35,777,215

Term loans		0		3,001,492		736,726		3,738,218

Yankee bonds		0		1,818,839		0		1,818,839

Short-term investments
Investment companies		3,652,555		0		0		3,652,555
	$	98,349,285	$	42,985,892	$	736,726	$	142,071,903

Transfers in and transfers out are recognized at the end of the reporting period. For the six months ended February 28, 2014, the Fund did not have any transfers into/out of Level 1, Level 2, or Level 3.

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 an indirect, wholly owned subsidiary of Wells Fargo) 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 and transfer agent fees

Funds Management also serves as the administrator to the Fund providing the Fund with a wide range of administrative services necessary to the operation of the Fund. 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, 2014, the Fund did not issue any shares. For the year ended August 31, 2013, the Fund issued 5,359 shares.

6. BORROWINGS

The Fund has borrowed approximately $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 23, 2015, at which point it may be renegotiated and potentially renewed for another one-year term. At February 28, 2014, the Fund had secured borrowings outstanding in the amount of $22,001,406 (including accrued interest and usage and commitment fees payable).

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 the six months ended February 28, 2014, an effective interest rate of 1.02% was incurred on the borrowings. Interest expense of $112,757, representing 0.19% of the Fund’s average daily net assets, was incurred during the six months ended February 28, 2014.

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. Secured borrowing fees on the Statement of Operations represents commitment fees.


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

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, 2014 were $24,123,708 and $22,538,131, respectively.

As of February 28, 2014, the Fund had unfunded term loan commitments of $119,388.

8. DERIVATIVE TRANSACTIONS

During the six months ended February 28, 2014, the Fund entered into written options for economic hedging purposes.

During the six months ended February 28, 2014, the Fund had written call option activities as follows:


	Number of contracts			Premiums received
Options outstanding at August 31, 2013		0		$	0
Options written		100			8,571
Options expired		0			0
Options closed		(100	)		(8,571	)
Options exercised		0			0
Options outstanding at February 28, 2014		0		$	0

As of February 28, 2014, the Fund did not have any open written options but had an average of 5 written option contracts during the six months ended February 28, 2014.

The fair value, realized gains or losses and change in unrealized gains or losses, if any, on derivative instruments are reflected in the appropriate financial statements.

9. CONCENTRATION RISK

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

10. 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.

11. SUBSEQUENT DISTRIBUTIONS

The Fund declared the following distributions to common shareholders:


Declaration date	Record date	Payable date	Per share amount
February 20, 2014	March 17, 2014	April 1, 2014	$0.075
March 28, 2014	April 15, 2014	May 1, 2014	$0.075
April 25, 2014	May 14, 2014	June 2, 2014	$0.075

These distributions are not reflected in the accompanying financial statements. The final determination of the source of all distributions is subject to change and made after the Fund’s tax year-end.


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 9, 2013, 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”	Peter G. Gordon	$	101,268,180
Net assets voted “Against”		$	4,567,843
Net assets voted “For”	Timothy J. Penny	$	101,443,327
Net assets voted “Against”		$	4,392,696
Net assets voted “For”	Michael S. Scofield	$	101,245,960
Net assets voted “Against”		$	4,590,063

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 each fund in the Wells Fargo Advantage family of funds, which consists of 132 mutual 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 Harbor 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 50 portfolios as of 12/16/2013); 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

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 73 funds in the Fund Complex. Jeremy DePalma acts as Treasurer of 59 funds and Assistant Treasurer of 73 funds in the Fund Complex.


List of abbreviations		Wells Fargo Advantage Utilities and High Income Fund			27

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	— Columbian Peso

CLP	— Chilean peso

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	— Indonesian rupiah

IEP	— Irish pound

JPY	— Japanese yen

KRW	— Republic of Korea won

LIBOR

— London Interbank Offered Rate

LIQ	— Liquidity agreement

LLC	— Limited liability company

LLLP	— Limited liability limited partnership

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

NGN	— Nigerian naira

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

RON	— Romanian lei

RUB	— Russian ruble

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

THB	— Thai baht

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

This page is intentionally left blank.

LOGO

Transfer Agent, Registrar, Shareholder Servicing

Agent & Dividend Disbursing Agent

Computershare Trust Company, N.A.

P.O. Box 30170

College Station, TX 77842-3170

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

223538 04-14

SUHIF/SAR152 02-14

ITEM 2.

CODE OF ETHICS

Not applicable.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

ITEM 6.

INVESTMENTS

Except as noted below, the schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form. The schedule of investments for Wells Fargo Advantage Utilities and High Income Fund, is filed under this Item.


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			1


Security name	Shares		Value


Common Stocks: 65.38%

Energy: 8.69%

Oil, Gas & Consumable Fuels: 8.69%
Energen Corporation		15,000	$	1,206,600
EQT Corporation		15,000		1,534,350
Kinder Morgan Incorporated		10,577		336,877
Spectra Energy Corporation		75,000		2,796,000
The Williams Companies Incorporated		100,000		4,130,000
Veresen Incorporated		42,900		648,556

				10,652,383


Industrials: 4.67%

Air Freight & Logistics: 4.59%
Deutsche Post AG		150,000		5,633,696


Construction & Engineering: 0.08%
Ameresco Incorporated Class A †		9,000		92,340


Telecommunication Services: 13.85%

Diversified Telecommunication Services: 9.26%
BCE Incorporated		16,000		697,600
CenturyLink Incorporated		100,000		3,126,000
Telefonica Brasil SA ADR		212,500		3,963,125
Verizon Communications Incorporated		41,291		1,964,626
Windstream Holdings Incorporated		200,000		1,604,000

				11,355,351


Wireless Telecommunication Services: 4.59%
Shenandoah Telecommunications Company		40,000		1,057,200
VimpelCom Limited ADR		100,000		1,016,000
Vodafone Group plc ADR		85,636		3,559,904

				5,633,104


Utilities: 38.17%

Electric Utilities: 25.60%
American Electric Power Company Incorporated		100,000		5,020,000
Chesapeake Utilities Corporation		200		11,848
Duke Energy Corporation		30,514		2,162,832
Edison International		75,000		3,927,750
Enel SpA		200,000		1,026,943
Entergy Corporation		1,000		63,820
Great Plains Energy Incorporated		175,000		4,597,250
IDACORP Incorporated		25,000		1,404,750
ITC Holdings Corporation		45,000		4,617,000
NextEra Energy Incorporated		50,000		4,569,500
Northeast Utilities		90,000		4,000,500
Pepco Holdings Incorporated		100		2,039

				31,404,232


2		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2014 (unaudited)


Security name						Shares		Value


Gas Utilities: 0.02%
New Jersey Resources Corporation							200	$	9,002
South Jersey Industries Incorporated							200		11,436

									20,438


Multi-Utilities: 10.72%
CenterPoint Energy Incorporated							50,000		1,182,500
Dominion Resources Incorporated							300		20,820
MDU Resources Group Incorporated							500		16,980
Public Service Enterprise Group Incorporated							50,000		1,833,000
Sempra Energy							19,900		1,879,953
Suez Environnement Company SA							275,000		5,496,356
Veolia Environnement SA							137,000		2,592,577
Wisconsin Energy Corporation							3,000		131,880

									13,154,066


Water Utilities: 1.83%
American Water Works Company Incorporated							50,000		2,242,000


Total Common Stocks (Cost $59,471,577)									80,187,610


	Interest rate			Maturity date		Principal

Corporate Bonds and Notes: 29.17%

Consumer Discretionary: 6.06%

Auto Components: 0.55%
Allison Transmission Incorporated 144A		7.13	%		5-15-2019	$	340,000		367,200
Cooper Tire & Rubber Company		7.63			3-15-2027		205,000		201,925
Goodyear Tire & Rubber Company		7.00			5-15-2022		25,000		27,875
United Rentals North America Incorporated		5.75			7-15-2018		75,000		80,438

									677,438


Distributors: 0.06%
LKQ Corporation 144A		4.75			5-15-2023		75,000		71,438


Diversified Consumer Services: 0.56%
Ceridian Corporation 144A		11.00			3-15-2021		10,000		11,438
Service Corporation International		6.75			4-1-2016		100,000		108,875
Service Corporation International		7.00			6-15-2017		25,000		28,094
Service Corporation International		7.50			4-1-2027		351,000		372,938
Service Corporation International		7.63			10-1-2018		25,000		29,063
Service Corporation International		8.00			11-15-2021		40,000		46,150
Sotheby’s 144A		5.25			10-1-2022		95,000		91,675

									688,233


Hotels, Restaurants & Leisure: 2.19%
Burger King Corporation		9.88			10-15-2018		75,000		81,938
CCM Merger Incorporated 144A		9.13			5-1-2019		465,000		494,063
CEC Entertainment Incorporated 144A		8.00			2-15-2022		75,000		77,063
DineEquity Incorporated		9.50			10-30-2018		350,000		383,250


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			3


Security name	Interest rate			Maturity date		Principal		Value


Hotels, Restaurants & Leisure (continued)
Greektown Holdings LLC 144A%%		8.88	%		3-15-2019	$	315,000	$	324,450
Greektown Superholdings Incorporated Series A		13.00			7-1-2015		435,000		455,010
Greektown Superholdings Incorporated Series B		13.00			7-1-2015		150,000		156,900
Hilton Worldwide Finance LLC 144A		5.63			10-15-2021		15,000		15,863
Pinnacle Entertainment Incorporated		7.50			4-15-2021		355,000		386,063
Ruby Tuesday Incorporated		7.63			5-15-2020		135,000		119,813
Scientific Games Corporation		9.25			6-15-2019		60,000		63,750
Speedway Motorsports Incorporated		6.75			2-1-2019		120,000		127,200

									2,685,363


Household Durables: 0.04%
American Greetings Corporation		7.38			12-1-2021		25,000		26,031
Tempur Sealy International Incorporated		6.88			12-15-2020		25,000		27,375

									53,406


Media: 2.19%
Allbritton Communications Company		8.00			5-15-2018		150,000		157,695
Cablevision Systems Corporation		8.63			9-15-2017		145,000		172,913
CBS Outdoor Americas Capital LLC 144A		5.25			2-15-2022		15,000		15,375
Cinemark USA Incorporated		7.38			6-15-2021		75,000		83,625
CSC Holdings LLC		7.63			7-15-2018		45,000		52,313
CSC Holdings LLC		7.88			2-15-2018		75,000		87,188
CSC Holdings LLC		8.63			2-15-2019		125,000		150,000
DISH DBS Corporation		5.13			5-1-2020		25,000		25,875
DISH DBS Corporation		7.88			9-1-2019		115,000		135,125
DreamWorks Animation SKG Incorporated 144A		6.88			8-15-2020		170,000		182,325
EchoStar DBS Corporation		7.13			2-1-2016		50,000		55,000
Gray Television Incorporated		7.50			10-1-2020		385,000		419,650
Lamar Media Corporation		5.88			2-1-2022		75,000		79,500
Lamar Media Corporation		7.88			4-15-2018		130,000		136,175
LIN Television Corporation		6.38			1-15-2021		25,000		26,500
LIN Television Corporation		8.38			4-15-2018		150,000		157,313
Live Nation Entertainment Incorporated 144A		7.00			9-1-2020		15,000		16,463
Lynx I Corporation 144A		5.38			4-15-2021		25,000		25,750
Lynx II Corporation 144A		6.38			4-15-2023		25,000		26,438
National CineMedia LLC		6.00			4-15-2022		170,000		178,075
National CineMedia LLC		7.88			7-15-2021		50,000		55,250
Nexstar Broadcasting Group Incorporated		6.88			11-15-2020		145,000		156,238
Regal Entertainment Group		5.75			6-15-2023		30,000		30,225
Regal Entertainment Group %%		5.75			3-15-2022		250,000		255,625

									2,680,636


Specialty Retail: 0.47%
ABC Supply Company Incorporated 144A		5.63			4-15-2021		40,000		41,100
Ahern Rentals Incorporated 144A		9.50			6-15-2018		85,000		93,500
Century Intermediate Holding Company (PIK at 9.75%) 144A¥		9.75			2-15-2019		15,000		15,788
Neiman Marcus Group Limited 144A		8.00			10-15-2021		15,000		16,088
Penske Auto Group Incorporated		5.75			10-1-2022		80,000		83,600
Rent-A-Center Incorporated		6.63			11-15-2020		145,000		151,163


4		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2014 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Specialty Retail (continued)
Sonic Automotive Incorporated		5.00	%		5-15-2023	$	70,000	$	67,550
Toys “R” Us Property Company II LLC		8.50			12-1-2017		100,000		102,875

									571,664


Consumer Staples: 0.13%

Food Products: 0.13%
Darling International Incorporated 144A		5.38			1-15-2022		15,000		15,394
Simmons Foods Incorporated 144A		10.50			11-1-2017		135,000		145,969

									161,363


Energy: 5.85%

Energy Equipment & Services: 1.91%
Bristow Group Incorporated		6.25			10-15-2022		265,000		281,563
Cleaver Brooks Incorporated 144A		8.75			12-15-2019		25,000		27,750
Dresser-Rand Group Incorporated		6.50			5-1-2021		90,000		96,300
Era Group Incorporated		7.75			12-15-2022		185,000		196,563
Forum Energy Technologies Incorporated 144A		6.25			10-1-2021		15,000		15,938
Gulfmark Offshore Incorporated		6.38			3-15-2022		430,000		442,900
Hornbeck Offshore Services Incorporated		5.00			3-1-2021		190,000		189,050
Hornbeck Offshore Services Incorporated		5.88			4-1-2020		40,000		41,600
NGPL PipeCo LLC 144A		7.77			12-15-2037		515,000		472,513
NGPL PipeCo LLC 144A		9.63			6-1-2019		35,000		37,713
Oil States International Incorporated		6.50			6-1-2019		114,000		120,555
PHI Incorporated		8.63			10-15-2018		380,000		408,500
Pride International Incorporated		8.50			6-15-2019		10,000		12,812

									2,343,757


Oil, Gas & Consumable Fuels: 3.94%
Crestwood Midstream Partners LP		6.00			12-15-2020		76,000		79,990
Crestwood Midstream Partners LP 144A		6.13			3-1-2022		25,000		26,125
CVR Refining LLC		6.50			11-1-2022		100,000		103,750
Denbury Resources Incorporated		4.63			7-15-2023		95,000		89,538
Denbury Resources Incorporated		6.38			8-15-2021		25,000		26,938
Denbury Resources Incorporated		8.25			2-15-2020		140,000		153,125
El Paso LLC		6.50			9-15-2020		45,000		49,327
El Paso LLC		7.00			6-15-2017		75,000		84,802
El Paso LLC		7.25			6-1-2018		175,000		199,767
El Paso LLC		7.42			2-15-2037		90,000		87,915
El Paso LLC		7.80			8-1-2031		100,000		106,046
Energy Transfer Equity LP		7.50			10-15-2020		300,000		342,750
Exterran Partners LP		6.00			4-1-2021		225,000		222,750
Kinder Morgan Finance Company LLC 144A		6.00			1-15-2018		25,000		27,563
Murphy Oil USA Incorporated 144A		6.00			8-15-2023		30,000		30,525
Northern Tier Energy LLC		7.13			11-15-2020		140,000		150,500
Pioneer Natural Resources Company		7.50			1-15-2020		145,000		179,033
Plains Exploration & Production Company		8.63			10-15-2019		325,000		355,063
Rockies Express Pipeline LLC 144A		5.63			4-15-2020		260,000		251,550
Rockies Express Pipeline LLC 144A		6.00			1-15-2019		25,000		25,000


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			5


Security name	Interest rate			Maturity date		Principal		Value


Oil, Gas & Consumable Fuels (continued)
Rockies Express Pipeline LLC 144A		6.88	%		4-15-2040	$	435,000	$	391,500
Rockies Express Pipeline LLC 144A		7.50			7-15-2038		205,000		193,725
Sabine Pass Liquefaction LLC 144A		5.63			4-15-2023		75,000		73,688
Sabine Pass Liquefaction LLC 144A		5.88			2-1-2021		75,000		76,875
Sabine Pass Liquefaction LLC 144A		6.25			3-15-2022		125,000		129,375
Sabine Pass LNG LP		6.50			11-1-2020		390,000		407,550
Sabine Pass LNG LP		7.50			11-30-2016		370,000		410,700
Semgroup Corporation Company		7.50			6-15-2021		220,000		235,400
Suburban Propane Partners LP		7.38			3-15-2020		60,000		64,500
Suburban Propane Partners LP		7.38			8-1-2021		26,000		28,600
Suburban Propane Partners LP		7.50			10-1-2018		42,000		44,730
Tesoro Corporation		9.75			6-1-2019		90,000		96,075
Ultra Petroleum Corporation 144A		5.75			12-15-2018		85,000		89,038

									4,833,813


Financials: 4.94%

Banks: 0.38%
CIT Group Incorporated		5.25			3-15-2018		25,000		27,125
CIT Group Incorporated 144A		5.50			2-15-2019		100,000		108,750
CIT Group Incorporated 144A		6.63			4-1-2018		50,000		56,375
Emigrant Bancorp Incorporated 144A		6.25			6-15-2014		275,000		277,451

									469,701


Consumer Finance: 2.77%
Ally Financial Incorporated		5.50			2-15-2017		50,000		54,625
Ally Financial Incorporated		6.75			12-1-2014		36,000		37,395
Ally Financial Incorporated		7.50			9-15-2020		90,000		108,900
Ally Financial Incorporated		8.00			3-15-2020		65,000		80,438
Ally Financial Incorporated		8.30			2-12-2015		825,000		878,625
BMC Software Finance Incorporated 144A		8.13			7-15-2021		45,000		47,306
Credit Acceptance Corporation 144A		6.13			2-15-2021		30,000		31,125
Ford Motor Credit Company LLC		8.00			12-15-2016		25,000		29,396
General Motors Financial Company Incorporated		6.75			6-1-2018		95,000		110,675
Homer City Funding LLC (PIK at 9.23%) ¥		8.73			10-1-2026		149,149		156,606
Nielsen Finance LLC		7.75			10-15-2018		515,000		551,694
SLM Corporation		7.25			1-25-2022		70,000		77,000
SLM Corporation		8.00			3-25-2020		330,000		381,150
SLM Corporation		8.45			6-15-2018		125,000		147,969
Springleaf Finance Corporation		5.40			12-1-2015		140,000		147,525
Springleaf Finance Corporation		5.75			9-15-2016		50,000		53,000
Springleaf Finance Corporation		6.00			6-1-2020		175,000		178,938
Springleaf Finance Corporation		6.50			9-15-2017		50,000		53,750
Springleaf Finance Corporation		6.90			12-15-2017		243,000		266,389
Springleaf Finance Corporation		7.75			10-1-2021		7,000		7,753

									3,400,259


Diversified Financial Services: 0.57%
Denali Borrower LLC144A		5.63			10-15-2020		330,000		339,488
MPH Intermediate Holding Company (PIK at 9.13%) 144A¥		8.38			8-1-2018		25,000		26,063


6		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2014 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Diversified Financial Services (continued)
Nuveen Investments Incorporated		5.50	%		9-15-2015	$	275,000	$	278,438
Nuveen Investments Incorporated 144A		9.13			10-15-2017		50,000		52,375

									696,364


Insurance: 0.04%
Fidelity & Guaranty Life Holdings Incorporated 144A		6.38			4-1-2021		45,000		47,925


Real Estate Management & Development: 0.35%
Hockey Merger Sub 2 Incorporated 144A		7.88			10-1-2021		230,000		242,075
Onex Corporation 144A		7.75			1-15-2021		175,000		182,000

									424,075


REITs: 0.83%
Crown Castle International Corporation		5.25			1-15-2023		75,000		76,875
DuPont Fabros Technology Incorporated LP		5.88			9-15-2021		340,000		358,700
Omega Healthcare Investors Incorporated		6.75			10-15-2022		125,000		135,313
Sabra Health Care Incorporated		5.38			6-1-2023		50,000		49,875
Sabra Health Care Incorporated		5.50			2-1-2021		55,000		56,650
The Geo Group Incorporated		5.13			4-1-2023		125,000		120,625
The Geo Group Incorporated		5.88			1-15-2022		200,000		204,000
The Geo Group Incorporated		6.63			2-15-2021		20,000		21,400

									1,023,438


Health Care: 1.97%

Health Care Equipment & Supplies: 0.10%
Hologic Incorporated		6.25			8-1-2020		110,000		116,875


Health Care Providers & Services: 1.56%
Aviv Healthcare Properties LP		6.00			10-15-2021		40,000		41,700
Aviv Healthcare Properties LP		7.75			2-15-2019		100,000		108,000
Capella Healthcare Incorporated		9.25			7-1-2017		65,000		69,550
Centene Corporation		5.75			6-1-2017		75,000		81,188
Community Health Systems Incorporated		6.88			2-1-2022		95,000		101,056
Community Health Systems Incorporated		5.13			8-1-2021		15,000		15,525
DaVita HealthCare Partners Incorporated		5.75			8-15-2022		55,000		58,163
DaVita HealthCare Partners Incorporated		6.38			11-1-2018		5,000		5,256
HCA Incorporated		5.88			3-15-2022		25,000		27,313
HCA Incorporated		6.50			2-15-2020		175,000		197,531
HCA Incorporated		7.50			11-15-2095		50,000		44,000
HCA Incorporated		8.50			4-15-2019		275,000		288,750
HealthSouth Corporation		5.75			11-1-2024		25,000		25,563
HealthSouth Corporation		7.25			10-1-2018		20,000		21,250
HealthSouth Corporation		8.13			2-15-2020		60,000		65,400
MPT Operating Partnership LP		6.38			2-15-2022		70,000		73,500
MPT Operating Partnership LP		6.88			5-1-2021		125,000		135,313
Multiplan Incorporated 144A		9.88			9-1-2018		165,000		180,469
Select Medical Corporation		6.38			6-1-2021		220,000		224,400
Tenet Healthcare Corporation 144A		6.00			10-1-2020		50,000		53,750
Tenet Healthcare Corporation		8.13			4-1-2022		90,000		100,800

									1,918,477


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			7


Security name	Interest rate			Maturity date		Principal		Value


Health Care Technology: 0.06%
Healthcare Technology Intermediate Incorporated (PIK at 8.13%) 144A¥		7.38	%		9-1-2018	$	70,000	$	72,450


Pharmaceuticals: 0.25%
Endo Finance Company 144A		5.75			1-15-2022		65,000		67,113
Par Pharmaceutical Company		7.38			10-15-2020		85,000		92,013
Pinnacle Incorporated 144A		9.50			10-1-2023		35,000		37,800
Salix Pharmaceuticals Incorporated 144A		6.00			1-15-2021		100,000		107,000
Valeant Pharmaceuticals International Incorporated 144A		5.63			12-1-2021		5,000		5,306

									309,232


Industrials: 1.79%

Aerospace & Defense: 0.12%
TransDigm Group Incorporated		5.50			10-15-2020		70,000		70,875
TransDigm Group Incorporated		7.75			12-15-2018		75,000		80,344

									151,219


Airlines: 0.14%
Aviation Capital Group Corporation 144A		6.75			4-6-2021		100,000		109,564
Aviation Capital Group Corporation 144A		7.13			10-15-2020		50,000		56,127

									165,691


Commercial Services & Supplies: 0.69%
ADT Corporation 144A		6.25			10-15-2021		55,000		57,888
Covanta Holding Corporation %%		5.88			3-1-2024		35,000		35,710
Covanta Holding Corporation		6.38			10-1-2022		100,000		105,750
Covanta Holding Corporation		7.25			12-1-2020		10,000		10,900
Iron Mountain Incorporated		5.75			8-15-2024		315,000		307,125
Iron Mountain Incorporated		6.00			8-15-2023		205,000		217,813
Iron Mountain Incorporated		8.38			8-15-2021		99,000		105,683

									840,869


Machinery: 0.07%
Columbus McKinnon Corporation		7.88			2-1-2019		75,000		81,000


Professional Services: 0.13%
Interactive Data Corporation		10.25			8-1-2018		150,000		162,750


Trading Companies & Distributors: 0.53%
Ashtead Capital Incorporated 144A		6.50			7-15-2022		290,000		314,650
H&E Equipment Services Incorporated		7.00			9-1-2022		195,000		214,500
International Lease Finance Corporation 144A		7.13			9-1-2018		35,000		40,688
International Lease Finance Corporation		8.63			9-15-2015		75,000		82,875

									652,713


Transportation Infrastructure: 0.11%
Florida East Coast Railway Corporation		8.13			2-1-2017		65,000		67,958
Watco Companies LLC 144A		6.38			4-1-2023		70,000		70,700

									138,658


8		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2014 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Information Technology: 2.32%

Communications Equipment: 0.19%
Avaya Incorporated		9.75	%		11-1-2015	$	50,000	$	49,875
CyrusOne LP		6.38			11-15-2022		25,000		26,313
Lucent Technologies Incorporated		6.45			3-15-2029		155,000		150,738

									226,926


Electronic Equipment, Instruments & Components: 0.61%
CDW Financial Corporation		12.54			10-12-2017		8,000		8,400
Jabil Circuit Incorporated		8.25			3-15-2018		620,000		745,550

									753,950


Internet Software & Services: 0.06%
First Data Holdings Incorporated (PIK at 14.50%) 144A¥		14.50			9-24-2019		65,000		64,675
Sophia Holding Finance LP (PIK at 9.63%) 144A¥		9.63			12-1-2018		10,000		10,500

									75,175


IT Services: 1.04%
Audatex North America Incorporated 144A		6.00			6-15-2021		125,000		133,438
Audatex North America Incorporated 144A		6.13			11-1-2023		30,000		32,100
Fidelity National Information Services Incorporated		7.88			7-15-2020		100,000		108,245
First Data Corporation 144A		6.75			11-1-2020		80,000		86,400
First Data Corporation 144A		7.38			6-15-2019		50,000		54,188
First Data Corporation 144A		11.75			8-15-2021		155,000		165,850
First Data Corporation 144A		11.75			8-15-2021		15,000		16,050
SunGard Data Systems Incorporated		6.63			11-1-2019		100,000		106,875
SunGard Data Systems Incorporated		7.38			11-15-2018		515,000		548,475
SunGard Data Systems Incorporated		7.63			11-15-2020		25,000		27,563

									1,279,184


Semiconductors & Semiconductor Equipment: 0.10%
Micron Technology Incorporated 144A		5.88			2-15-2022		115,000		120,175


Software: 0.09%
Activision Blizzard Incorporated 144A		5.63			9-15-2021		45,000		48,375
Activision Blizzard Incorporated 144A		6.13			9-15-2023		10,000		10,850
Nuance Communications Incorporated 144A		5.38			8-15-2020		50,000		50,125

									109,350


Technology Hardware, Storage & Peripherals: 0.23%
NCR Corporation 144A		5.88			12-15-2021		15,000		16,050
NCR Corporation 144A		6.38			12-15-2023		250,000		267,500

									283,550


Materials: 0.60%

Chemicals: 0.02%
Celanese US Holdings LLC		5.88			6-15-2021		20,000		21,550


Containers & Packaging: 0.43%
Crown Americas LLC		6.25			2-1-2021		20,000		21,900


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			9


Security name	Interest rate			Maturity date		Principal		Value


Containers & Packaging (continued)
Crown Cork & Seal Company Incorporated		7.38	%		12-15-2026	$	15,000	$	16,800
Crown Cork & Seal Company Incorporated (i)		7.50			12-15-2096		50,000		47,000
Owens-Illinois Incorporated		7.80			5-15-2018		60,000		70,500
Sealed Air Corporation 144A		6.88			7-15-2033		70,000		70,700
Sealed Air Corporation 144A		8.38			9-15-2021		215,000		248,056
Silgan Holdings Incorporated		5.00			4-1-2020		50,000		51,000

									525,956


Paper & Forest Products: 0.15%
Georgia-Pacific LLC		8.88			5-15-2031		125,000		181,626


Telecommunication Services: 4.08%

Diversified Telecommunication Services: 1.79%
Citizens Communications Company		7.88			1-15-2027		200,000		200,500
Frontier Communications Corporation		8.13			10-1-2018		60,000		69,600
GCI Incorporated		6.75			6-1-2021		170,000		169,150
GCI Incorporated		8.63			11-15-2019		368,000		395,600
Qwest Corporation		7.25			9-15-2025		125,000		139,470
Qwest Corporation		7.63			8-3-2021		20,000		21,450
Syniverse Holdings Incorporated		9.13			1-15-2019		365,000		399,675
TW Telecommunications Holdings Incorporated		5.38			10-1-2022		445,000		453,900
TW Telecommunications Holdings Incorporated		5.38			10-1-2022		40,000		40,800
Windstream Corporation		7.88			11-1-2017		265,000		303,425

									2,193,570


Wireless Telecommunication Services: 2.29%
Cricket Communications Incorporated		7.75			10-15-2020		180,000		204,075
Crown Castle International Corporation		7.13			11-1-2019		10,000		10,675
MetroPCS Wireless Incorporated		6.63			11-15-2020		240,000		257,400
MetroPCS Wireless Incorporated		7.88			9-1-2018		130,000		138,450
SBA Telecommunications Corporation		5.63			10-1-2019		10,000		10,475
SBA Telecommunications Corporation		5.75			7-15-2020		100,000		105,250
SBA Telecommunications Corporation		8.25			8-15-2019		7,000		7,464
Sprint Capital Corporation		6.88			11-15-2028		1,100,000		1,091,750
Sprint Capital Corporation		8.75			3-15-2032		105,000		117,863
Sprint Communications Incorporated		7.00			8-15-2020		120,000		131,100
Sprint Communications Incorporated 144A		9.00			11-15-2018		25,000		30,625
Sprint Communications Incorporated		11.50			11-15-2021		25,000		33,500
Sprint Corporation 144A		7.13			6-15-2024		70,000		73,500
Sprint Corporation 144A		7.25			9-15-2021		10,000		10,950
Sprint Corporation 144A		7.88			9-15-2023		10,000		11,075
T-Mobile USA Incorporated		6.13			1-15-2022		5,000		5,281
T-Mobile USA Incorporated		6.25			4-1-2021		35,000		37,319
T-Mobile USA Incorporated		6.46			4-28-2019		10,000		10,675
T-Mobile USA Incorporated		6.50			1-15-2024		5,000		5,300
T-Mobile USA Incorporated		6.54			4-28-2020		10,000		10,825
T-Mobile USA Incorporated		6.63			4-1-2023		35,000		37,625
T-Mobile USA Incorporated		6.63			4-28-2021		65,000		70,363
T-Mobile USA Incorporated		6.73			4-28-2022		305,000		329,400
T-Mobile USA Incorporated		6.84			4-28-2023		65,000		70,200

									2,811,140


10		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2014 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Utilities: 1.43%

Electric Utilities: 0.74%
Energy Future Intermediate Holding Company LLC 144A		6.88	%		8-15-2017	$	25,000	$	25,656
IPALCO Enterprises Incorporated 144A		7.25			4-1-2016		145,000		160,225
Mirant Mid-Atlantic LLC Series C		10.06			12-30-2028		438,432		468,027
Otter Tail Corporation (i)		9.00			12-15-2016		215,000		254,208

									908,116


Gas Utilities: 0.23%
AmeriGas Finance LLC		6.50			5-20-2021		5,000		5,375
AmeriGas Finance LLC		6.75			5-20-2020		175,000		190,750
AmeriGas Finance LLC		7.00			5-20-2022		75,000		81,938

									278,063


Independent Power & Renewable Electricity Producers: 0.46%
Calpine Construction Finance Corporation 144A		6.00			1-15-2022		35,000		37,100
NRG Energy Incorporated		8.50			6-15-2019		185,000		195,638
NSG Holdings LLC 144A		7.75			12-15-2025		245,000		260,925
Reliant Energy Incorporated		9.24			7-2-2017		67,388		66,714
Reliant Energy Incorporated		9.68			7-2-2026		10,000		9,700

									570,077


Total Corporate Bonds and Notes (Cost $33,567,185)									35,777,215


	Dividend yield					Shares

Preferred Stocks: 13.75%

Financials: 0.50%

Capital Markets: 0.42%
Morgan Stanley ±		0.65					20,000		517,600


Diversified Financial Services: 0.08%
GMAC Capital Trust I ±		7.48					3,457		93,858


Telecommunication Services: 1.84%

Diversified Telecommunication Services: 1.84%
Qwest Corporation		8.13					90,000		2,254,500


Utilities: 11.41%

Electric Utilities: 7.75%
Duke Energy Corporation		5.13					130,000		2,809,300
Entergy Arkansas Incorporated		4.75					65,000		1,302,600
Entergy Louisiana LLC		4.70					70,483		1,402,612
Indianapolis Power & Light Company		5.65					20,000		1,883,750
Interstate Power & Light Company		5.10					50,000		1,114,500
SCE Trust I		5.63					23,000		519,800
Wisconsin Public Service		5.08					4,804		474,996

									9,507,558


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			11


Security name	Dividend yield			Maturity date		Shares		Value


Multi-Utilities: 3.66%
DTE Energy Company Series Q		5.25	%				100,000	$	2,126,000
Integrys Energy Group ±		2.77					95,000		2,368,350

									4,494,350


Total Preferred Stocks (Cost $17,915,738)									16,867,866


	Interest rate					Principal
Term Loans ±: 3.05%
Accellent Incorporated <		0.00			2-21-2022	$	45,000		45,394
Alliance Laundry Systems LLC		9.50			12-10-2019		159,122		161,111
Applied Systems Incorporated		7.50			1-22-2022		25,000		25,519
Asurion LLC <		0.00			2-19-2021		25,000		24,625
Capital Automotive LP		4.00			4-10-2019		198,032		198,527
Capital Automotive LP		6.00			4-30-2020		110,000		113,575
CBAC Borrower LLC		8.25			7-2-2020		85,000		87,656
CCM Merger Incorporated		5.00			3-1-2017		157,639		158,427
Centaur LLC		8.75			2-20-2020		135,000		137,700
Dell Incorporated		4.50			4-29-2020		603,488		601,653
Focus Brands Incorporated		10.25			8-21-2018		176,935		179,589
Four Seasons Holdings Incorporated		6.25			12-24-2020		25,000		25,500
Learfield Communications Incorporated <		0.00			10-9-2021		15,000		15,300
Level 3 Financing Incorporated		4.00			1-15-2020		250,000		250,625
Philadelphia Energy Solutions LLC		6.25			4-4-2018		223,313		200,981
Sedgwick CMS Holdings Incorporated <		0.00			12-12-2018		45,000		45,426
Spin Holdco Incorporated		4.25			11-14-2019		119,800		119,899
Springleaf Finance Corporation		4.75			9-30-2019		35,000		35,403
Tallgrass Operations LLC		4.25			11-13-2018		103,074		103,828
Texas Competitive Electric Holdings LLC		3.74			10-10-2014		1,471,940		1,027,571
TWCC Holdings Corporation		7.00			6-26-2020		15,000		14,513
Vertafore Incorporated		9.75			10-29-2017		35,000		35,525
W3 Company		9.25			9-13-2020		19,950		20,150
WASH Multifamily Laundry Systems LLC		4.50			2-21-2019		109,175		109,721

Total Term Loans (Cost $4,124,844)									3,738,218


				Expiration date		Shares

Warrants: 0.02%

Utilities: 0.02%

Gas Utilities: 0.02%
Kinder Morgan Incorporated †					05-25-2017		16,000		29,600


Total Warrants (Cost $30,480)									29,600


12		Wells Fargo Advantage Utilities and High Income Fund		Portfolio of investments—February 28, 2014 (unaudited)


Security name	Interest rate			Maturity date		Principal		Value


Yankee Corporate Bonds and Notes: 1.48%

Consumer Discretionary: 0.04%

Media: 0.04%
Videotron Limited		5.00	%		7-15-2022	$	35,000	$	35,438
Videotron Limited		9.13			4-15-2018		15,000		15,600

									51,038


Energy: 0.06%

Oil, Gas & Consumable Fuels: 0.06%
Griffin Coal Mining Company Limited 144A(s)		9.50			12-1-2016		93,118		69,606


Financials: 0.12%

Consumer Finance: 0.09%
Wind Acquisition Finance SpA 144A		11.75			7-15-2017		110,000		116,463


Diversified Financial Services: 0.03%
Nielsen Holding and Finance BV 144A		5.50			10-1-2021		30,000		31,575


Health Care: 0.12%

Pharmaceuticals: 0.12%
Valeant Pharmaceuticals International, Incorporated 144A		6.75			8-15-2018		50,000		55,125
VPII Escrow Corporation 144A		7.50			7-15-2021		85,000		96,900

									152,025


Information Technology: 0.12%

Technology Hardware, Storage & Peripherals: 0.12%
Seagate Technology HDD Holdings		6.80			10-1-2016		50,000		56,125
Seagate Technology HDD Holdings		6.88			5-1-2020		80,000		86,800

									142,925


Materials: 0.22%

Metals & Mining: 0.16%
Novelis Incorporated		8.38			12-15-2017		100,000		107,000
Novelis Incorporated		8.75			12-15-2020		75,000		84,375

									191,375


Paper & Forest Products: 0.06%
Sappi Limited 144A		7.50			6-15-2032		100,000		80,500


Telecommunication Services: 0.80%

Diversified Telecommunication Services: 0.76%
Intelsat Bermuda Limited 144A		7.75			6-1-2021		95,000		102,244
Intelsat Bermuda Limited 144A		8.13			6-1-2023		40,000		43,450
Intelsat Jackson Holdings SA 144A		5.50			8-1-2023		210,000		207,638
Intelsat Jackson Holdings SA		6.63			12-15-2022		55,000		58,025
Intelsat Jackson Holdings SA		7.25			4-1-2019		240,000		258,600
Intelsat Jackson Holdings SA		7.25			10-15-2020		150,000		163,125


Portfolio of investments—February 28, 2014 (unaudited)		Wells Fargo Advantage Utilities and High Income Fund			13


Security name	Interest rate			Maturity date		Principal		Value


Diversified Telecommunication Services (continued)
Intelsat Jackson Holdings SA		7.50	%		4-1-2021	$	50,000	$	55,125
Intelsat Jackson Holdings SA		8.50			11-1-2019		40,000		43,250

									931,457


Wireless Telecommunication Services: 0.04%
Telesat Canada Incorporated 144A		6.00			5-15-2017		50,000		51,875


Total Yankee Corporate Bonds and Notes (Cost $1,730,316)									1,818,839


	Yield					Shares
Short-Term Investments: 2.98%

Investment Companies: 2.98%
Wells Fargo Advantage Cash Investment Money Market Fund, Select Class (u)(l)##		0.07					3,652,555		3,652,555


Total Short-Term Investments (Cost $3,652,555)									3,652,555


Total investments in securities (Cost $120,492,695) *	115.83	%		142,071,903
Other assets and liabilities, net	(15.83	)		(19,420,652	)

Total net assets	100.00	%	$	122,651,251

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

†	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.

(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.

¥	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.

(i)	Illiquid security

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

(l)	Investment in an affiliate

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

*	Cost for federal income tax purposes is $120,979,775 and unrealized appreciation (depreciation) consists of:


Gross unrealized appreciation	$	25,451,342
Gross unrealized depreciation		(4,359,214	)

Net unrealized appreciation	$	21,092,128

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 PURCHASERS

Not applicable.

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees that have been implemented since the Registrant’s last provided disclosure in response to the requirements of this Item.

ITEM 11.

CONTROLS AND PROCEDURES

(a) The President and Treasurer have concluded that the Wells Fargo Advantage Utilities and High 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 fiscal 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 applicable

(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 25, 2014

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 25, 2014

By:
		/s/ Nancy Wiser

		Nancy Wiser
		Treasurer

Date:		April 25, 2014