Edgar Filing: WELLS FARGO ADVANTAGE UTILITIES & HIGH INCOME FUND

Name and

Position Held and

Year of Birth

Length of Service

Principal Occupations During Past Five Years

Debra Ann Early
(Born 1964)

Chief Compliance Officer,
since 2007

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 and Senior Audit Manager of PricewaterhouseCoopers LLP from 1998 to 2004.

nvcsrs

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 & 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: 800-643-9691

Date of fiscal year end: August 31, 2010

Date of reporting period: February 28, 2011

ITEM 1. REPORT TO SHAREHOLDERS

WELLS FARGO ADVANTAGE UTILITIES AND HIGH INCOME FUND

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

Notice of Annual Meeting of Shareholders			5

Portfolio of Investments			6

Financial Statements
Statement of Assets and Liabilities			17
Statement of Operations			18
Statements of Changes in Net Assets			19
Statement of Cash Flows			20
Financial Highlights			21

Notes to Financial Statements			22

Other Information			29

Automatic Dividend Reinvestment Plan			33

List of Abbreviations			34

The views expressed are as of February 28, 2011. Any reference to a specific security in this report is not a recommendation to purchase or sell any specific security or adopt any investment strategy. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the Wells Fargo Advantage Utilities and High Income Fund.

NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE


2 Wells Fargo Advantage Utilities and High Income Fund		Letter to Shareholders

Dear Valued Shareholder:

We are pleased to provide you with this semi-annual report for the Wells Fargo Advantage Utilities and High Income Fund for the six-month period that ended February 28, 2011.

While the equity markets delivered strong six-month returns against the backdrop of a strengthening economy, the period was not without its share of macroeconomic challenges, domestic and international political uncertainty, and market volatility—once again highlighting the value of a well-diversified investment strategy. As always, we believe that following such a strategy may enable investors to balance risks and opportunities as they pursue long-term financial goals in a dynamic market environment.

The economic recovery stayed on track.

The U.S. economic recovery that began in the summer of 2009 gained momentum, particularly toward the end of 2010. After expanding by an annual rate of 2.6% in the third quarter of 2010, gross domestic product accelerated to an annualized rate of 3.2% in the fourth quarter. Although the path of recovery has been uneven at times, and growth remains subpar compared with previous recoveries, the general consensus among economists is that the economy will likely avoid a double-dip recession and continue to expand, albeit slowly. We, however, think that persistent weakness in the labor and housing markets bears close watching in the months ahead.

Jobs and housing remained troublesome.

At the end of 2010, the unemployment rate stood at 9.4%—down from 9.9% a year earlier but still stubbornly high. The rate fell even further in January and February 2011 to 9.0% and 8.9%, respectively. Unfortunately, the drop may be more attributable to a decline in the labor force than to a meaningful uptick in hiring. In fact, employers added only 1.1 million jobs for all of 2010, suggesting that the improving economy has yet to translate into widespread hiring. Meanwhile, the beleaguered housing market was an ongoing source of concern, despite some tentative late-year signs of stabilization.

Other economic data was more encouraging, reflecting greater confidence in the recovery on the part of both consumers and businesses. Retail sales came in strong at certain points during the six-month period—including the critical holiday shopping season—while industrial production and new orders have picked up. Although still reluctant to hire, businesses have gradually increased spending in other areas, such as equipment and technology. Core inflation, which excludes volatile food and energy prices, remained benign.

The Federal Reserve continued to do its part.

With inflation subdued, the Federal Reserve (Fed) held its target range for the federal funds rate—a proxy for short-term interest rates—steady at 0% to 0.25%. In its first statement of 2011, released on January 26, the Fed explained that the most recent economic data “confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about significant improvement in labor market conditions.” The statement noted that, while consumer and business spending has risen,


Letter to Shareholders		Wells Fargo Advantage Utilities and High Income Fund 3

activity remains constrained due to modest income growth, lower housing wealth, and tight credit. As a result, the Fed indicated that it intends to keep short-term rates at historically low levels for as long as needed to promote a more robust recovery.

The Fed also stated that it plans to proceed with other stimulus measures, including its second round of quantitative easing (QE2)—a plan to purchase $600 billion in long-term Treasury securities by mid-2011. The introduction of QE2 in November 2010 marked a turning point for equity markets in that it ushered in a favorable shift in investor sentiment. By and large, investors interpreted the plan as further evidence of the Fed’s commitment to stabilizing the rate of inflation and spurring economic growth.

The second half of 2010 was a solid year for equities.

QE2 was certainly not the only catalyst for equity markets during the period. Along with more upbeat economic data, better-than-expected corporate earnings played a role in driving stock prices higher. Throughout the past year, quarterly earnings per share for the majority of companies in the S&P 500 Index consistently exceeded Wall Street estimates. As 2010 drew to a close, the midterm congressional elections and the extension of the Bush-era tax cuts provided additional tailwinds, helping the markets finish the six-month period on a strong note.

The broad equity market indexes posted exceptionally strong returns during the period. The S&P 500 Index¹and the Dow Jones Industrial Average²advanced 27.7% and 23.6%, respectively, and the tech-heavy NASDAQ Composite Index³returned 32.4%. Within the fixed-income markets, the broad-based investment-grade BofA Merrill Lynch U.S. Corporate, Government and Mortgage Index⁴posted a -1.06% return, while the BofA Merrill Lynch High-Yield Master II Index⁵returned 9.81%.

1.		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.

2.		The Dow Jones Industrial Average is a price-weighted index of 30 “blue-chip” industrial U.S. stocks. You cannot invest directly in an index.

3.		The NASDAQ Composite Index measures the market value of all domestic and foreign common stocks, representing a wide array of more than 5,000 companies, listed on the NASDAQ Stock Market. You cannot invest directly in an index.

4.		The BofA Merrill Lynch U.S. Corporate, Government and Mortgage Index tracks the performance of US dollar-denominated investment grade Government and Corporate public debt issued in the US Domestic bond market, including Mortgage Pass-Through securities but excluding Asset Backed securities. Qualifying bonds must have at least one year remaining term to maturity, a fixed coupon schedule and a minimum outstanding of $1 billion for US Treasuries and $150 million for all other securities. Bonds must be rated investment grade based on a composite of Moody’s and S&P. (NOTE: Index formerly named Merrill Lynch U.S. Domestic Master Index — name changed in 2006 or 2007 to be more descriptive). You cannot invest directly in an index.

5.		The BofA Merrill Lynch High Yield Master II Index is a market capitalization-weighted index of domestic and Yankee high-yield bonds. The index tracks the performance of high-yield securities traded in the U.S. bond market. You cannot invest directly in an index.


4 Wells Fargo Advantage Utilities and High Income Fund		Letter to Shareholders

Diversification and fundamentally sound investments remain the focus of the Fund.

As always, the management teams of the Wells Fargo Advantage Utilities and High Income Fund remained focused on pursuing a high level of current income and moderate capital growth for investors. Throughout the period, the utility sleeve continued to be managed with a relatively modest weight to companies with direct natural gas exposure and companies that are selectively invested in telecommunications. In an effort to generate a good level of income, the portfolio managers remained focused on investment opportunities, such as preferred stocks, that are offering a higher level of income relative to comparable assets. Within the high-yield sleeve, the portfolio managers continued to position the Fund’s bond allocation defensively, with a focus on avoiding what they view as uncompensated risk. As an example, they have avoided overleveraged companies and have reduced the portfolio’s exposure to issues with greater interest-rate sensitivity.

Investors should keep a long-term perspective.

In our view, the equity markets’ dramatic rebound over the past two years from a severe downturn underscores the importance of maintaining a disciplined, long-term investment strategy through changing market cycles. By staying focused on your long-term goals, you may be better positioned to both navigate falling markets and participate in rising markets.

To help you build a well-diversified strategy based on your personal objectives and risk tolerance, Wells Fargo Advantage Funds^® offers more than 120 mutual funds and other investments covering a wide range of asset classes and investment styles. 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.

Thank you for choosing Wells Fargo Advantage Funds. We appreciate your continued confidence in us and are committed to helping you meet your financial needs. If you have any questions about your investments, please contact your investment professional, call us at 1-800-222-8222, or visit www.wellsfargo.com/advantagefunds.

Sincerely,

/s/ Karla M. Rabusch

Karla M. Rabusch
President
Wells Fargo Advantage Funds


Notice of Annual Meeting of Shareholders		Wells Fargo Advantage Utilities and High Income Fund 5

Notice of Annual Meeting of Shareholders

Notice is hereby given that the Annual Meeting of Shareholders will be held on June 13, 2011 at 10 a.m. Pacific time, at the offices of Wells Fargo Advantage Funds^®, 525 Market Street, 12th Floor, San Francisco, California 94105.

There are no items currently on the meeting agenda for shareholder consideration. Pursuant to a special meeting held on July 9, 2010, Fund shareholders have already elected Trustees through the 2011 annual shareholder meeting. To the extent necessary, shareholders will be able to transact such other business as may properly come before the meeting or any adjournment thereof.

Any Shareholder desiring to present a proposal for consideration at the 2011 annual meeting of Shareholders of the Fund to be included in the Fund’s proxy materials should submit such a timely proposal in writing to the Secretary, c/o Wells Fargo Advantage Utilities and High Income Fund, 525 Market Street, San Francisco, CA 94105 by the close of business on or before July 2, 2011.

Any Shareholder desiring to present a proposal for consideration at the 2011 annual meeting of Shareholders of the Fund that will not be included in the Fund’s proxy materials should submit such a timely proposal in writing to the Secretary, c/o Wells Fargo Advantage Utilities and High Income Fund, 525 Market Street, San Francisco, CA 94105 by the close of business on or before August 1, 2011, but no earlier than July 2, 2011.

Mere submission of a proposal does not guarantee inclusion of the proposal in the proxy statement or presentation of the proposal at the 2011 annual meeting since such inclusion and presentation are subject to various conditions and requirements, including those required by applicable law.


6 Wells Fargo Advantage Utilities and High Income Fund		Portfolio of Investments—February 28, 2011 (Unaudited)


Principal		Security Name	Interest Rate			Maturity Date		Value
Corporate Bonds and Notes: 28.14%

Consumer Discretionary: 4.76%

Auto Components: 0.51%
$	215,000	Cooper Tire & Rubber Company		7.63	%		03/15/2027	$	207,475
	335,000	Goodyear Tire & Rubber Company		10.50			05/15/2016		381,900
									589,375


Automobiles: 0.21%
	235,000	Ford Motor Credit Company		9.88			08/10/2011		242,759


Diversified Consumer Services: 0.96%
	185,000	Carriage Services Incorporated		7.88			01/15/2015		187,775
	75,000	Service Corporation International		6.75			04/01/2016		79,688
	40,000	Service Corporation International		8.00			11/15/2021		43,800
	465,000	Service Corporation International		7.50			04/01/2027		454,538
	325,000	Stonemor Partners LP††		10.25			12/01/2017		340,438
									1,106,239


Hotels, Restaurants & Leisure: 0.86%
	125,000	Ameristar Casinos Incorporated		9.25			06/01/2014		134,375
	75,000	Burger King Corporation		9.88			10/15/2018		80,063
	100,000	Chukchansi Economic Development Authority		3.94			11/15/2012		75,250
	25,000	Citycenter Holdings LLC		7.63			01/15/2016		26,063
	50,000	Citycenter Holdings LLC		11.50			01/15/2017		52,250
	50,000	DineEquity Incorporated		9.50			10/30/2018		54,125
	225,000	Greektown Superholdings		13.00			07/01/2015		255,375
	60,000	Scientific Games Corporation		9.25			06/15/2019		65,850
	120,000	Speedway Motorsports Incorporated		8.75			06/01/2016		131,850
	25,000	Speedway Motorsports Incorporated		6.75			02/01/2019		25,375
	75,000	Yonkers Racing Corporation		11.38			07/15/2016		84,188
									984,764


Household Durables: 0.01%
	9,000	Sealy Mattress Corporation††		10.88			04/15/2016		10,215

Media: 1.99%
	145,000	Cablevision Systems Corporation††		8.63			09/15/2017		162,400
	605,000	CCH II Capital Corporation		13.50			11/30/2016		732,806
	595,000	Charter Communications Incorporated Step Bondºº††		10.88			09/15/2014		668,631
	115,000	DISH DBS Corporation		7.88			09/01/2019		124,631
	50,000	Gray Television Incorporated		10.50			06/29/2015		53,125
	25,000	Interactive Data Corporation		10.25			08/01/2018		28,000
	25,000	Lamar Media Corporation Series C		9.75			04/01/2014		29,063
	75,000	LIN Television Corporation††		8.38			04/15/2018		81,563
	75,000	Nal Enter Holdings LLC		8.25			12/15/2017		80,625
	200,000	Regal Cinemas Corporation		8.63			07/15/2019		214,500
	96,000	Salem Communications Corporation		9.63			12/15/2016		105,360
									2,280,704


Specialty Retail: 0.02%
	25,000	Rent-A-Center Incorporated		6.63			11/15/2020		24,688


Textiles, Apparel & Luxury Goods: 0.20%
	200,000	Oxford Industries Incorporated		11.38			07/15/2015		225,000


Portfolio of Investments—February 28, 2011 (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 7


Principal		Security Name	Interest Rate			Maturity Date		Value
Consumer Staples: 0.26%

Food Products: 0.26%
$	50,000	Blue Merger Incorporated		7.63	%		02/15/2019	$	50,500
	25,000	Darling International Incorporated		8.50			12/15/2018		26,969
	181,000	Dole Food Company Incorporated		13.88			03/15/2014		221,499
									298,968


Energy: 4.31%

Energy Equipment & Services: 0.77%
	110,000	Bristow Group Incorporated		7.50			09/15/2017		115,775
	225,000	Gulfmark Offshore Incorporated		7.75			07/15/2014		228,375
	260,000	Hornbeck Offshore Services Incorporated Series B		6.13			12/01/2014		260,650
	55,000	Hornbeck Offshore Services Incorporated Series B		8.00			09/01/2017		56,444
	200,000	PHI Incorporated		8.63			10/15/2018		209,500
	10,000	Pride International Incorporated		8.50			06/15/2019		12,200
									882,944


Oil, Gas & Consumable Fuels: 3.54%
	255,000	Chesapeake Energy Corporation		9.50			02/15/2015		316,200
	45,000	Coffeyville Resources Energy Incorporated††		9.00			04/01/2015		49,050
	100,000	Coffeyville Resources Energy Incorporated††		10.88			04/01/2017		113,250
	20,000	Connacher Oil & Gas Limited††		11.75			07/15/2014		21,650
	55,000	Connacher Oil & Gas Limited††		10.25			12/15/2015		58,163
	165,000	Consol Energy Incorporated††		8.25			04/01/2020		181,913
	25,000	Denbury Resources Incorporated		8.25			02/15/2020		27,813
	25,000	Denbury Resources Incorporated		6.38			08/15/2021		25,250
	75,000	El Paso Corporation		7.25			06/01/2018		84,831
	45,000	El Paso Corporation		6.50			09/15/2020		47,911
	100,000	El Paso Corporation		7.80			08/01/2031		105,803
	90,000	El Paso Corporation		7.42			02/15/2037		89,177
	250,000	Energy Transfer Equity LP		7.50			10/15/2020		270,938
	100,000	Ferrellgas LP		9.13			10/01/2017		110,500
	50,000	Ferrellgas LP		6.50			05/01/2021		48,750
	65,000	Forest Oil Corporation		8.50			02/15/2014		72,313
	95,000	Forest Oil Corporation		7.25			06/15/2019		98,325
	220,000	Holly Corporation		9.88			06/15/2017		244,750
	50,000	Inergy LP		6.88			08/01/2021		51,125
	55,000	Newfield Exploration Company		6.88			02/01/2020		58,438
	50,000	OPTI Canada Incorporated		8.25			12/15/2014		27,250
	390,000	Peabody Energy Corporation		7.88			11/01/2026		436,800
	10,000	Penn Virginia Corporation		10.38			06/15/2016		11,225
	60,000	Petrohawk Energy Corporation		10.50			08/01/2014		69,000
	95,000	Petrohawk Energy Corporation		7.88			06/01/2015		100,700
	145,000	Pioneer Natural Resource Company		7.50			01/15/2020		162,805
	325,000	Plains Exploration & Production Company		8.63			10/15/2019		363,188
	25,000	Regency Energy Partners		6.88			12/01/2018		26,250
	250,000	Sabine Pass LNG LP††		7.25			11/30/2013		253,750
	125,000	Sabine Pass LNG LP		7.50			11/30/2016		126,563
	90,000	Sandridge Energy Incorporated††		8.75			01/15/2020		97,200
	49,000	Stallion Oilfield Holdings Incorporated††		10.50			02/15/2015		53,165
	25,000	Suburban Propane Partners LP		7.38			03/15/2020		26,750
	125,000	Tesoro Corporation		7.50			07/17/2012		128,750
	90,000	Tesoro Corporation		9.75			06/01/2019		101,475
									4,061,021


8 Wells Fargo Advantage Utilities and High Income Fund		Portfolio of Investments—February 28, 2011 (Unaudited)


Principal		Security Name	Interest Rate			Maturity Date		Value
Financials: 6.14%

Capital Markets: 0.32%
$	68,000	ETRADE Financial Corporation*		12.50	%		11/30/2017	$	80,580
	175,000	Nuveen Investments Incorporated		5.50			09/15/2015		153,125
	125,000	Nuveen Investments Incorporated		10.50			11/15/2015		127,813

									361,518


Commercial Banks: 0.92%
	215,000	CapitalSource Incorporated††		12.75			07/15/2014		258,000
	781,417	Citigroup Incorporated		7.00			05/01/2013		797,046

									1,055,046


Consumer Finance: 2.78%
	125,000	American General Finance Corporation		5.40			12/01/2015		113,125
	50,000	American General Finance Corporation		5.75			09/15/2016		44,313
	50,000	American General Finance Corporation		6.50			09/15/2017		44,250
	125,000	American General Finance Corporation		6.90			12/15/2017		112,188
	125,000	Calpine Construction Finance Corporation††		8.00			06/01/2016		135,625
	130,000	Clearwire Communications Finance Corporation		12.00			12/01/2015		141,700
	6,000	GMAC LLC		6.88			09/15/2011		6,135
	146,000	GMAC LLC		6.88			08/28/2012		154,760
	36,000	GMAC LLC		6.75			12/01/2014		38,520
	144,801	Homer City Funding LLC		8.73			10/01/2026		132,493
	75,000	International Lease Finance Corporation††		8.63			09/15/2015		84,563
	140,000	International Lease Finance Corporation		4.75			01/13/2012		142,275
	275,000	International Lease Finance Corporation		5.30			05/01/2012		280,088
	50,000	International Lease Finance Corporation Series MTN		5.75			06/15/2011		50,275
	420,000	JBS USA Finance Incorporated		11.63			05/01/2014		491,400
	49,000	Nielsen Finance LLC Company		11.50			05/01/2016		57,698
	125,000	Nielsen Finance LLC Company		7.75			10/15/2018		135,156
	285,000	Sprint Capital Corporation		8.38			03/15/2012		302,456
	120,000	Sprint Capital Corporation		6.90			05/01/2019		121,050
	675,000	Sprint Capital Corporation		6.88			11/15/2028		608,344

									3,196,414


Diversified Financial Services: 1.15%
	825,000	Ally Financial Incorporated††		8.30			02/12/2015		931,219
	38,000	Dunkin Finance Corporation		9.63			12/01/2018		38,475
	313,000	Leucadia National Corporation		8.13			09/15/2015		344,300

									1,313,994

Insurance: 0.23%
	225,000	Emigrant Bancorp Incorporated(i)		6.25			06/15/2014		187,596
	75,000	Hub International Holdings Incorporated		10.25			06/15/2015		78,000

									265,596


Real Estate Investment Trusts (REITs): 0.74%
	565,000	Dupont Fabros Technology Incorporated		8.50			12/15/2017		622,913
	30,000	Host Marriott Corporation		9.00			05/15/2017		33,675
	100,000	Omega Healthcare Investors Incorporated		6.75			10/15/2022		101,000
	90,000	Ventas Incorporated		9.00			05/01/2012		96,134

									853,722


Portfolio of Investments—February 28, 2011 (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 9


Principal		Security Name	Interest Rate			Maturity Date		Value
Health Care: 1.20%

Health Care Equipment & Supplies: 0.20%
$	60,000	Biomet Incorporated		10.38	%		10/15/2017	$	67,125
	100,000	Biomet Incorporated		11.63			10/15/2017		112,750
	50,000	Fresenius Medical Care Incorporated		5.75			02/15/2021		48,375

									228,250


Health Care Providers & Services: 0.88%
	120,000	Apria Healthcare Group††		11.25			11/01/2014		129,900
	100,000	Aviv Healthcare Properties LP		7.75			02/15/2019		104,250
	400,000	HCA Incorporated		9.25			11/15/2016		432,000
	129,000	HCA Incorporated		9.63			11/15/2016		139,965
	25,000	Healthsouth Corporation		7.25			10/01/2018		25,938
	25,000	Healthsouth Corporation		7.75			09/15/2022		26,031
	50,000	Omnicare Incorporated		6.88			12/15/2015		51,625
	100,000	Sabra Health Care Corporation		8.13			11/01/2018		105,500

									1,015,209


Life Sciences Tools & Services: 0.05%
	50,000	Community Health Systems Incorporated Series WI		8.88			07/15/2015		53,000


Pharmaceuticals: 0.07%
	25,000	Mylan Incorporated††		7.63			07/15/2017		27,469
	25,000	Mylan Incorporated		7.88			07/15/2020		27,938
	25,000	Mylan Incorporated		6.00			11/15/2018		25,594
									81,001


Industrials: 2.64%

Aerospace & Defense: 1.06%
	225,000	Alliant Techsystems Incorporated		6.75			04/01/2016		232,313
	50,000	Digitalglobe Incorporated		10.50			05/01/2014		56,813
	55,000	Geoeye Incorporated††		9.63			10/01/2015		62,013
	53,000	Hexcel Corporation		6.75			02/01/2015		54,391
	130,000	Kratos Defense & Security††		10.00			06/01/2017		146,575
	216,000	L-3 Communications Holdings Incorporated		5.88			01/15/2015		220,212
	360,000	L-3 Communications Holdings Incorporated		6.38			10/15/2015		371,700
	70,000	Wyle Services Corporation††		10.50			04/01/2018		72,450

									1,216,467


Commercial Services & Supplies: 0.85%
	25,000	Brickman Group Holdings		9.13			11/01/2018		26,875
	220,000	Casella Waste Systems Incorporated		11.00			07/15/2014		249,700
	25,000	Casella Waste Systems Incorporated		7.75			02/15/2019		25,625
	60,000	Corrections Corporation of America		6.25			03/15/2013		60,075
	95,000	Corrections Corporation of America		7.75			06/01/2017		104,025
	100,000	Geo Group Incorporated		7.75			10/15/2017		106,625
	155,000	Iron Mountain Incorporated		8.38			08/15/2021		171,469
	75,000	Kar Holdings Incorporated		4.30			05/01/2014		74,063
	25,000	Kar Holdings Incorporated		10.00			05/01/2015		26,500
	150,000	NCO Group Incorporated		11.88			11/15/2014		133,875

									978,832


Construction & Engineering: 0.18%
	200,000	GCI Incorporated		7.25			02/15/2014		202,000


10 Wells Fargo Advantage Utilities and High Income Fund		Portfolio of Investments—February 28, 2011 (Unaudited)


Principal		Security Name	Interest Rate			Maturity Date		Value
Industrial Conglomerates: 0.21%
$	215,000	Otter Tail Corporation		9.00	%		12/15/2016	$	243,488


Machinery: 0.29%
	55,000	Cleaver-Brooks Incorporated††		12.25			05/01/2016		59,125
	50,000	Columbus Mckinnon Corporation		7.88			02/01/2019		51,750
	181,050	Commercial Vehicle Group Incorporated††		11.00			02/15/2013		193,724
	25,000	Titan International Incorporated		7.88			10/01/2017		26,750

									331,349


Road & Rail: 0.05%
	50,000	RailAmerica Incorporated		9.25			07/01/2017		55,375

Information Technology: 2.05%

Communications Equipment: 0.25%
	155,000	Lucent Technologies Incorporated		6.45			03/15/2029		134,850
	160,000	Lucent Technologies Incorporated Series B		2.88			06/15/2025		155,600

									290,450


Computers & Peripherals: 0.16%
	50,000	Seagate Technology HDD Holdings		6.80			10/01/2016		52,188
	100,000	Seagate Technology HDD Holdings		7.75			12/15/2018		102,500
	25,000	Seagate Technology HDD Holdings		6.88			05/01/2020		24,500

									179,188


Electronic Equipment & Instruments: 1.05%
	105,000	Intcomex Incorporated††		13.25			12/15/2014		111,825
	620,000	Jabil Circuit Incorporated		8.25			03/15/2018		705,250
	160,000	Kemet Corporation††		10.50			05/01/2018		181,600
	50,000	Sungard Data Systems Incorporated		7.38			11/15/2018		51,625
	25,000	Sungard Data Systems Incorporated		7.63			11/15/2020		25,813
	115,000	Viasystem Group Incorporated††		12.00			01/15/2015		130,238

									1,206,351


Internet Software & Services: 0.25%
	95,000	Equinix Incorporated		8.13			03/01/2018		103,075
	150,000	Terremark Worldwide Incorporated		12.00			06/15/2017		186,000

									289,075


IT Services: 0.34%
	225,000	SunGard Data Systems Incorporated		10.25			08/15/2015		237,094
	70,000	Unisys Corporation††		12.75			10/15/2014		82,775
	55,000	Unisys Corporation††		14.25			09/15/2015		65,588

									385,457


Materials: 1.66%

Chemicals: 0.51%
	140,000	Huntsman International LLC††		5.50			06/30/2016		138,250
	75,000	LBI Escrow Corporation		8.00			11/01/2017		84,422
	240,241	Lyondell Chemical Company		11.00			05/01/2018		275,677
	50,000	Solutia Incorporated		7.88			03/15/2020		55,000
	25,000	Vertellus Specialties		9.38			10/01/2015		26,891

									580,240


Portfolio of Investments—February 28, 2011 (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 11


Principal		Security Name	Interest Rate			Maturity Date		Value
Construction Materials: 0.29%
$	150,000	CPG International Incorporated		10.63	%		09/01/2014	$	162,375
	145,000	Headwaters Incorporated		11.38			11/01/2014		170,375

									332,750


Containers & Packaging: 0.34%
	280,000	Exopack Holding Corporation		11.25			02/01/2014		290,150
	100,000	Graham Packaging Company Incorporated		9.88			10/15/2014		103,500

									393,650


Metals & Mining: 0.28%
	295,000	Freeport-McMoRan Copper & Gold Incorporated		8.38			04/01/2017		327,450


Paper & Forest Products: 0.24%
	70,000	Clearwater Paper Corporation††		10.63			06/15/2016		79,975
	38,000	Georgia-Pacific Corporation††		7.00			01/15/2015		39,330
	125,000	Georgia-Pacific Corporation		8.88			05/15/2031		152,813

									272,118

Telecommunication Services: 2.74%

Diversified Telecommunication Services: 1.53%
	475,000	Citizens Communications Company		7.88			01/15/2027		458,375
	140,000	Frontier Communications Corporation		8.25			05/01/2014		157,325
	60,000	Frontier Communications Corporation		8.13			10/01/2018		66,675
	350,000	Qwest Corporation		8.88			03/15/2012		375,813
	20,000	Qwest Corporation		7.63			08/03/2021		20,600
	180,000	Qwest Corporation		7.50			06/15/2023		180,450
	50,000	SBA Telecommunications Incorporated		8.00			08/15/2016		54,500
	25,000	SBA Telecommunications Incorporated		8.25			08/15/2019		27,563
	125,000	U.S. West Communications Incorporated		7.25			09/15/2025		131,875
	265,000	Windstream Corporation		7.88			11/01/2017		287,856

									1,761,032


Wireless Telecommunication Services: 1.21%
	75,000	Allbritton Communications Company		8.00			05/15/2018		78,563
	50,000	CC Holdings GS V LLC		7.75			05/01/2017		55,188
	150,000	Cricket Communications Incorporated Series I		7.75			05/15/2016		158,625
	10,000	Crown Castle International Corporation		7.13			11/01/2019		10,638
	276,000	Intelsat Subsidiary Holding Company Limited		8.50			01/15/2013		277,725
	50,000	MetroPCS Communications Incorporated		7.88			09/01/2018		52,813
	175,000	MetroPCS Communications Incorporated		6.63			11/15/2020		170,406
	475,000	Sprint Nextel Corporation Series D		7.38			08/01/2015		476,188
	100,000	Syniverse Holdings Incorporated		9.13			01/15/2019		108,000

									1,388,146

Utilities: 2.39%

Electric Utilities: 1.82%
	794,000	Aquila Incorporated Step Bondºº		11.88			07/01/2012		890,130
	46,751	Energy Future Holdings Corporation		12.00			11/01/2017		38,219
	438,432	Mirant Mid-Atlantic LLC Series C		10.06			12/30/2028		495,429
	200,000	NRG Energy Incorporated		7.38			02/01/2016		207,000
	250,000	NRG Energy Incorporated		7.38			01/15/2017		263,438
	185,000	NRG Energy Incorporated		8.50			06/15/2019		197,025

									2,091,241


12 Wells Fargo Advantage Utilities and High Income Fund		Portfolio of Investments—February 28, 2011 (Unaudited)


Principal		Security Name	Interest Rate			Maturity Date		Value
Gas Utilities: 0.05%
$	50,000	AmeriGas Partners LP		6.50	%		05/20/2021	$	51,500


Independent Power Producers & Energy Traders: 0.52%
	250,000	Calpine Construction Finance Corporation		7.25			10/15/2017		261,875
	190,000	Dynegy Holding Incorporated		7.63			10/15/2026		126,350
	108,798	Reliant Energy Incorporated		9.24			07/02/2017		116,414
	10,000	Reliant Energy Incorporated		9.68			07/02/2026		10,700
	50,000	RRI Energy Incorporated		7.63			06/15/2014		52,250
	30,000	RRI Energy Incorporated		7.88			06/15/2017		30,075
									597,664


Total Corporate Bonds and Notes (Cost $29,791,786)									32,304,250


Yankee Corporate Bonds and Notes: 0.98%

Consumer Discretionary: 0.07%

Media: 0.07%
	75,000	Videotron Limited		9.13			04/15/2018		84,188

Energy: 0.34%

Oil, Gas & Consumable Fuels: 0.34%
	100,000	General Maritime Corporation		12.00			11/15/2017		91,750
	321,000	Griffin Coal Mining Company Limited^^††		9.50			12/31/2049		272,048
	60,000	OPTI Canada Incorporated		7.88			12/15/2014		32,700

									396,498

Financials: 0.25%

Capital Markets: 0.05%
	50,000	FMC Finance III SA		6.88			07/15/2017		52,688


Consumer Finance: 0.11%
	110,000	Wind Acquisition Finance SA††		11.75			07/15/2017		126,225


Diversified Financial Services: 0.09%
	105,000	Ship Finance International Limited		8.50			12/15/2013		106,838


Materials: 0.29%

Metals & Mining: 0.16%
	50,000	Novelis Incorporated		8.38			12/15/2017		55,125
	50,000	Novelis Incorporated		8.75			12/15/2020		55,125
	55,000	Teck Resources Limited		10.75			05/15/2019		70,857

									181,107


Paper & Forest Products: 0.13%
	55,000	Sappi Limited††		6.75			06/15/2012		57,338
	100,000	Sappi Limited††		7.50			06/15/2032		90,263

									147,601

Telecommunication Services: 0.03%

Diversified Telecommunication Services: 0.01%
	5,000	Global Crossing Limited		12.00			09/15/2015		5,738


Wireless Telecommunication Services: 0.02%
	20,000	Digicel Group Limited††		12.00			04/01/2014		23,450


Total Yankee Corporate Bonds and Notes (Cost $1,024,376)									1,124,333


Portfolio of Investments—February 28, 2011 (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 13


	Shares		Security Name	Value
Common Stocks: 69.61%

Consumer Discretionary: 1.07%

Media: 1.07%
		47,900	Comcast Corporation Class A	$	1,233,873


Energy: 5.64%

Oil, Gas & Consumable Fuels: 5.64%
		9,200	Enbridge Incorporated		551,080
		15,000	EQT Corporation		739,500
		25,000	Southwestern Energy Company		987,000
		100,000	Spectra Energy Corporation		2,675,000
		50,000	The Williams Companies Incorporated		1,518,000

					6,470,580


Financials: 4.51%

Capital Markets: 0.50%
		35,600	optionsXpress Holdings Incorporated		577,076


Consumer Finance: 4.01%
		10,000	MasterCard Incorporated		2,405,600
		30,000	Visa Incorporated Class A		2,191,500
					4,597,100


Industrials: 0.11%

Construction & Engineering: 0.11%
		9,000	Ameresco Incorporated Class A		129,780


Information Technology: 0.18%

IT Services: 0.18%
		15,000	Convergys Corporation		211,050


Telecommunication Services: 8.69%

Diversified Telecommunication Services: 2.22%
		16,000	BCE Incorporated		593,920
		40,000	Shenandoah Telecommunications Company(i)		700,000
		100,000	Windstream Corporation		1,254,000
					2,547,920


Wireless Telecommunication Services: 6.47%
		585,000	Portugal Telecom SGPS SA ADR		6,844,500
		12,000	Vivo Participacoes SA ADR		441,720
		5,000	Vodafone Group plc ADR		143,100
					7,429,320


Utilities: 49.41%

Electric Utilities: 27.37%
		600	American Electric Power Company Incorporated		21,468
		50,000	CenterPoint Energy Incorporated		793,000
		500	CH Energy Group Incorporated		24,530
		5,000	Chesapeake Midstream Partner LP		130,200
		200	Chesapeake Utilities Corporation		8,168
		10,000	China Hydroelectric Company ADR†		70,800
		75,000	DPL Incorporated		1,951,500


14 Wells Fargo Advantage Utilities and High Income Fund		Portfolio of Investments—February 28, 2011 (Unaudited)


	Shares		Security Name				Value
Electric Utilities (continued)
		500	Duke Energy Corporation				$	8,995
		2,000	Edison International					74,240
		1,000	Entergy Corporation					71,200
		70,000	Exelon Corporation					2,923,200
		25,000	FirstEnergy Corporation					957,500
		150,000	Great Plains Energy Incorporated					2,880,000
		200,000	Hawaiian Electric Industries Incorporated					4,830,000
		36,000	ITC Holdings Corporation					2,467,800
		5,000,000	Mirant Corporation Escrow(i)(a)†					0
		70,000	Nextera Energy Incorporated					3,882,900
		150,000	Northeast Utilities					5,106,000
		1,000	NSTAR					45,150
		75,000	NV Energy Incorporated					1,101,750
		100	Pepco Holdings Incorporated					1,873
		75,000	Portland General Electric Company					1,756,500
		400	Progress Energy Incorporated					18,289
		200	South Jersey Industries Incorporated					10,972
		60,000	The Southern Company					2,286,600

								31,422,635


Gas Utilities: 8.24%
		25,000	El Paso Corporation					465,000
		500	MDU Resources Group Incorporated					10,735
		40,000	National Fuel Gas Company					2,916,000
		200	New Jersey Resources Corporation					8,366
		100,000	Niska Gas Storage Partners					2,025,000
		48,500	ONEOK Incorporated					4,032,775

								9,457,876


Independent Power Producers & Energy Traders: 2.71%
		100,000	Constellation Energy Group Incorporated					3,107,000


Multi-Utilities: 6.29%
		300	Dominion Resources Incorporated					13,689
		96,000	PG&E Corporation					4,421,760
		50,000	Public Service Enterprise Group Incorporated					1,635,000
		19,900	Sempra Energy					1,059,277
		1,500	Wisconsin Energy Corporation					88,800

								7,218,526


Water Utilities: 4.80%
		50,000	American Water Works Company Incorporated					1,387,000
		25,000	Middlesex Water Company					469,250
		130,000	Pennichuck Corporation(i)					3,655,600

								5,511,850


Total Common Stocks (Cost $69,123,775)								79,914,586

Preferred Stocks: 11.60%

Utilities: 11.60%

Electric Utilities: 7.58%				Yield
		50,000	Great Plains Energy Incorporated		4.62	%		3,132,500
		136,613	Interstate Power & Light Company		3.87			3,893,471
		21,082	Union Electric Company		3.21			1,678,638

								8,704,609


Portfolio of Investments—February 28, 2011 (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 15


	Shares		Security Name	Yield				Value
Multi-Utilities: 4.02%
		165,000	Scana Corporation		3.21	%		$	4,611,750


Total Preferred Stocks (Cost $12,828,379)									13,316,359


Warrants: 0.00%							Expiration Date

Electric Utilities: 0.00%
		10,000	China Hydroelectric Company ADR†				01/25/2014		2,700

Total Warrants (Cost $12,000)									2,700


Investment Companies: 0.06%
		3,152	Dreyfus High Yield Strategies Fund Incorporated						14,688
		1,700	Eaton Vance Limited Duration Income Trust						26,826
		2,603	New America High Income Fund Incorporated						26,707

Total Investment Companies (Cost $34,145)									68,221


Principal			Interest Rate		Maturity Date
Term Loans: 2.85%
$	148,500	Blackstone Group LP		7.75		11/02/2014	151,470
	233,117	Capital Automotive REIT		4.75		12/14/2012	241,859
	125,000	CCM Merger Incorporated<		0.00		02/11/2017	126,563
	274,038	Coinmach Corporation		3.30		11/20/2014	258,281
	325,000	Fairpoint Communications Incorporated		6.50		01/22/2016	320,050
	32,938	Federal Mogul Corporation		2.20		12/29/2014	31,837
	16,805	Federal Mogul Corporation		2.20		12/28/2015	16,243
	400,000	First Data Corporation		3.01		09/24/2014	377,820
	71,815	Gray Television Incorporated		3.77		12/31/2014	71,495
	124,484	Local TV Finance LLC		2.31		05/07/2013	121,475
	96,320	Merisant Company (i)		7.50		01/08/2014	93,672
	74,779	NCO Group Incorporated		7.50		11/15/2013	74,072
	365,000	Newsday LLC		10.50		08/01/2013	386,674
	23,684	Panolam Industries International		8.25		12/31/2013	21,612
	94,763	Sugarhouse HSP Gaming Properties Limited Partnership		11.25		09/23/2014	96,263
	1,046,269	TXU Energy Company LLC		3.77		10/10/2014	878,573

Total Term Loans (Cost $3,152,419)							3,267,959


Shares			Yield
Short-Term Investments: 5.91%
Investment Companies: 5.91%
	6,786,861	Wells Fargo Advantage Cash Investment Money Market Fund(u)(l)##		0.12			6,786,861


Total Short-Term Investments (Cost $6,786,861)							6,786,861


Total Investments in Securities


(Cost $122,753,741)*	119.15	%		136,785,269
Other Assets and Liabilities, Net	(19.15	)		(21,983,808	)

Total Net Assets	100.00	%	$	114,801,461


16 Wells Fargo Advantage Utilities and High Income Fund		Portfolio of Investments—February 28, 2011 (Unaudited)


(i)		Illiquid security

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

(l)		Investment in an affiliate.

ºº		The rate shown is the stated rate at the current period end.

^^		This security is currently in default with regards to scheduled interest and/or principal payments.

(a)		Security is fair valued by the Management Valuation Team, and in certain instances by the Board of Trustees, in accordance with procedures approved by the Board of Trustees.

†		Non-income earning securities.

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

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

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

*		Cost for federal income tax purposes is $123,178,411 and net realized appreciation (depreciation) consist of:


Gross unrealized appreciation	$	16,026,324
Gross unrealized depreciation		(2,419,466	)

Net unrealized appreciation	$	13,606,858

The following table shows the percent of total long-term investments by geographic location as of February 28, 2011:


United States	92.1	%
Portugal	5.3	%
Canada	1.2	%
Bermuda	0.3	%
Brazil	0.3	%
Australia	0.2	%
Cayman Islands	0.2	%
Austria	0.1	%
Luxembourg	0.1	%
Marshalls Islands	0.1	%
United Kingdom	0.1	%

	100.0	%

The following table shows the percent of total bonds by credit quality based on Moody’s and Standard & Poor’s ratings as of February 28, 2011:


BBB	5.8	%
BB	37.9	%
B	48.1	%
CCC	6.8	%
CC	0.5	%
D	0.7	%
NR	0.2	%

	100.0	%

The following table shows the percent of total bonds based on effective maturity as of February 28, 2011:


Less than 1 year	17.3	%
1 to 3 year(s)	28.1	%
3 to 5 years	27.4	%
5 to 10 years	17.3	%
10 to 20 years	8.8	%
20 to 30 years	1.1	%

	100.0	%

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


Statement of Assets and Liabilities—February 28, 2011 (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 17


Assets
Investments
In unaffiliated securities, at value	$	129,998,408
In affiliated securities, at value		6,786,861

Total investments, at value (see cost below)		136,785,269
Foreign currency, at value (see cost below)		227,428
Receivable for securities sold		222,575
Dividends and interest receivable		1,429,349
Prepaid expenses and other assets		41,805

Total assets		138,706,426

Liabilities
Dividends payable		690,572
Payable for securities purchased		719,558
Written options, at value (premiums received $1,418)		1,750
Secured borrowing payable		22,001,755
Advisory fee payable		66,864
Due to other related parties		5,572
Accrued expenses and other liabilities		418,894

Total liabilities		23,904,965

Net assets	$	114,801,461


NET ASSETS REPRESENTED BY
Paid-in capital	$	151,146,485
Overdistributed net investment income		(1,701,446	)
Accumulated net realized losses on investments		(48,703,548	)
Net unrealized gains on investments		14,059,970

Total net assets		114,801,461


NET ASSETS VALUE PER SHARE
Based on $114,801,461 divided by 9,207,605 shares issued and outstanding (unlimited number of common shares authorized)	$	12.47


Total investments, at cost	$	122,753,741
Foreign currency, at cost	$	224,386

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


18 Wells Fargo Advantage Utilities and High Income Fund		Statement of Operations—Six Months Ended February 28, 2011 (Unaudited)


Investment income
Dividends*	$	2,408,469
Interest		1,668,661
Income from affiliated securities		6,566

Total investment income		4,083,696

Expenses
Advisory fee		395,625
Administration fee		32,969
Transfer agent fees		17,682
Trustees’ fees and expenses		1,877
Printing and postage expenses		36,300
Custodian and accounting fees		14,074
Professional fees		34,742
Commitment fee		33,183
Interest expense		135,180
Other		79,530

Total expenses		781,162

Net investment income		3,302,534


NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS

Net realized gains (losses) on:
Unaffiliated securities		3,250,326
Written options		158

Net realized gains on investments		3,250,484


Net change in unrealized gains (losses) on:
Unaffiliated securities		8,983,663
Written options		(332	)

Net change in unrealized gains (losses) on investments		8,983,331

Net realized and unrealized gains (losses) on investments		12,233,815

Net increase in net assets resulting from operations	$	15,536,349


* Net of foreign withholding taxes of	$	154,866

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


Statements of Changes in Net Assets		Wells Fargo Advantage Utilities and High Income Fund 19


	Six Months Ended
	February 28, 2011			Year Ended
	(Unaudited)			August 31, 2010

Operations
Net investment income	$	3,302,534		$	5,346,993
Net realized gains on investments		3,250,484			761,910
Net change in unrealized gains (losses) on investments		8,983,331			2,877,761

Net increase in net assets resulting from operations		15,536,349			8,986,664


Distributions to shareholders from
Net investment income		(4,141,911	)		(4,848,035	)
Tax basis return of capital		0			(5,644,957	)

Total distributions to shareholders		(4,141,911	)		(10,492,992	)


Capital share transactions
Net asset value of common shares issued under the Automatic Dividend Reinvestment Plan		162,439			1,064,214

Total increase (decrease) in net assets applicable to shareholders		11,556,877			(442,114	)


Net assets
Beginning of period		103,244,584			103,686,698

End of period	$	114,801,461		$	103,244,584


Overdistributed net investment income	$	(1,701,446	)	$	(765,075	)

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


20 Wells Fargo Advantage Utilities and High Income Fund		Statement of Cash Flows—Six Months Ended February 28, 2011 (Unaudited)


Cash flows from operating activities:
Net increase in net assets resulting from operations	$	15,536,349

Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities:
Purchase of investment securities		(36,410,624	)
Proceeds from sales of securities		38,302,532
Paydowns		662,627
Amortization		(78,979	)
Cost of written options		(3,728	)
Premiums received from written options		3,886
Purchase of short-term investment securities, net		(195,023	)
Decrease in dividends and interest receivable		361,734
Decrease in receivable for securities sold		649,493
Decrease in prepaid expenses and other assets		69
Increase in payable for securities purchased		211,160
Decrease in advisory fee payable		(1,596	)
Decrease in due to other related parties		(133	)
Increase in accrued expenses and other liabilities		95,129
Decrease in payable to custodian		(2,692,310	)
Unrealized appreciation on investments		(8,983,331	)
Net realized gains on written options		(158	)
Net realized gains on securities in unaffiliated issuers		(3,250,326	)

Net cash provided by operating activities		4,206,771


Cash flows from financing activities:
Cash distributions paid		(3,978,451	)
Decrease in secured borrowing		(892	)

Net cash used in financing activities		(3,979,343	)

Net increase in cash		227,428


Cash (including foreign currency):
Beginning of period		0

End of period	$	227,428


Supplemental cash disclosure:
Cash paid for interest	$	135,180


Supplemental non-cash financing disclosure:
Reinvestment of dividends	$	162,439

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


Financial Highlights		Wells Fargo Advantage Utilities and High Income Fund 21

(For a share outstanding throughout each period)


	Six Months Ended
	February 28, 2011			Year Ended August 31,
	(unaudited)			2010			2009			2008			2007			2006

Net asset value, beginning of period	$	11.23		$	11.38		$	17.50		$	24.05		$	23.16		$	25.43
Income from investment operations
Net investment income¹		0.36			0.59			0.97			2.49			2.81			4.07
Net realized and unrealized gains (losses) on investments		1.33			0.41			(5.29	)		(4.18	)		2.37			(0.51	)
Distributions to preferred shareholders from
Net investment income		0.00			0.00			0.00			(0.33	)		(0.30	)		(0.39	)
Net realized gains		0.00			0.00			0.00			0.00			(0.20	)		(0.02	)

Total from investment operations		1.69			1.00			(4.32	)		(2.02	)		4.68			3.15

Distributions to common shareholders from
Net investment income		(0.45	)		(0.53	)¹		(1.00	)¹		(2.76	)		(3.79	)		(2.76	)
Net realized gains		0.00			0.00			0.00			(1.77	)		0.00			(2.67	)
Tax basis return of capital		0.00			(0.62	)¹		(0.80	)¹		0.00			0.00			0.00

Total distributions to common shareholders		(0.45	)		(1.15	)		(1.80	)		(4.53	)		(3.79	)		(5.43	)

Offering costs charged to capital for
Preferred shares		0.00			0.00			0.00			0.00			0.00			0.01	^1,2
Net asset value, end of period	$	12.47		$	11.23		$	11.38		$	17.50		$	24.05		$	23.16

Market value, end of period	$	11.77		$	11.23		$	12.49		$	21.02		$	27.30		$	23.50

Total return based on market value³		8.84	%		(1.24	)%		(30.46	)%		(7.86	)%		34.05	%		35.89	%

Ratios and supplemental data
Net assets of common shareholders, end of period (thousands)	$	114,801		$	103,245		$	103,687		$	156,384		$	209,066		$	195,955
Liquidation value of preferred shares, end of period (thousands)	NA			NA			NA			NA			$	80,000		$	80,000
Asset coverage ratio, end of period	NA			NA			NA			NA				360	%		341	%
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.42	%		1.52	%		2.25	%		1.89	%		1.42	%		1.70	%
Expenses excluding waivers/reimbursements and expense reductions		1.42	%		2.25	%		3.44	%		1.92	%		1.42	%		1.70	%
Expenses including waivers/reimbursements but excluding expense reductions and interest expense		1.17	%		1.33	%		1.55	%		1.37	%		1.20	%		1.39	%
Interest expense		0.25	%		0.19	%		0.70	%		0.52	%		0.22	%		0.31	%
Net investment income		6.00	%		5.19	%		8.75	%		10.33	%⁴		9.41	%⁴		16.00	%⁴
Portfolio turnover rate		64	%		59	%		137	%		153	%		117	%		122	%


1.		Calculated based on average common shares outstanding during the period.

2.		Amount represents a refund of certain preferred share offering expenses.

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

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

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


22 Wells Fargo Advantage Utilities and High Income Fund		Notes to Financial Statements (Unaudited)

1. ORGANIZATION

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

2. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund, are in conformity with U.S. generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management has considered the circumstances under which the Fund should recognize or make disclosures regarding events or transactions occurring subsequent to the balance sheet date through the date the financial statements are issued. Adjustments or additional disclosures, if any, have been included in these financial statements.

Securities valuation

Investments in securities are valued each business day as of the close of regular trading on the New York Stock Exchange, which is usually 4:00 p.m. (Eastern Time). Securities which are traded on a national or foreign securities exchange are valued at the last reported sales price, except that securities listed on The Nasdaq Stock Market, Inc. (“Nasdaq”) are valued at the Nasdaq Official Closing Price (“NOCP”), and if no NOCP is available, then at the last reported sales price. If no sales price is shown on the Nasdaq, the bid price will be used. In the absence of any sale of securities listed on the Nasdaq, and in the case of other securities, including U.S. Government obligations, but excluding debt securities maturing in 60 days or less, the price will be deemed “stale” and the valuations will be determined in accordance with the Fund’s Fair Valuation Procedures.

Securities denominated in foreign currencies are translated into U.S. dollars using the closing rates of exchange in effect on the day of valuation.

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 investments 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 the investments, then those investments are fair valued following procedures approved by the Board of Trustees. These procedures take into account multiple factors including movements in U.S. securities markets after foreign exchanges close. 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 closing price or latest quoted bid price.

Certain fixed income securities with maturities exceeding 60 days are valued based on available market quotations received from an independent pricing service approved by the Trust’s Board of Trustees which may utilize both transaction data and market information such as yield, prices of securities of comparable quality, coupon rate, maturity, type of issue, trading characteristics and other market data. If valuations are not available from the pricing service or values received are deemed not representative of market value, values will be obtained from a third party broker-dealer or determined based on the Fund’s Fair Value Procedures.

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

Investments in open-end mutual funds and non-registered investment companies are generally valued at net asset value.

Certain investments which are not valued using any of the methods discussed above, are valued at their fair value, as determined by procedures established in good faith and approved by the Board of Trustees.


Notes to Financial Statements (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 23

The valuation techniques used by the Fund to measure fair value are consistent with the market approach, income approach and/or cost approach, where applicable, for each security type.

Foreign currency translation

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

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

When-issued transactions

The Fund may purchase securities on a forward commitment or ‘when-issued’ basis. The Fund records a when-issued transaction on the trade date and will segregate assets to cover its obligation by confirming the availability of qualifying assets having a value sufficient to make payment for the securities purchased. 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

Each Fund may invest in term loans. The loans are marked-to-market daily and 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 put or call options. 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, which expire unexercised, are recognized as realized gains from investments on the expiration date. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as a realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in calculating the realized gain or loss on the sale. If a put option is exercised, the premium reduces the cost of the security purchased. The Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.

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


24 Wells Fargo Advantage Utilities and High Income Fund		Notes to Financial Statements (Unaudited)

Credit default swaps

The Fund may be subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into credit default swap contracts for hedging or speculative purposes to provide or receive a measure of protection against default on a referenced entity, obligation or index or for investment gains. Credit default swaps involve an exchange of a stream of payments for protection against the loss in value of an underlying security or index. Under the terms of the swap, one party acts as a guarantor (referred to as the seller of protection) and receives a periodic stream of payments, provided that there is no credit event, from another party (referred to as the buyer of protection) that is a fixed percentage applied to a notional principal amount over the term of the swap. An index credit default swap references all the names in the index, and if a credit event is triggered, the credit event is settled based on that name’s weight in the index. A credit event includes bankruptcy, failure to pay, obligation default, obligation acceleration, repudiation/moratorium, and restructuring. The Fund may enter into credit default swaps as either the seller of protection or the buyer of protection. As the seller of protection, the Fund is subject to investment exposure on the notional amount of the swap and has assumed the risk of default of the underlying security or index. As the buyer of protection, the Fund could be exposed to risks if the seller of the protection defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates. The maximum potential amount of future payments (undiscounted) that the Fund as the seller of protection could be required to make under the credit default swap contract would be an amount equal to the notional amount of the swap contract. The Fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. 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.

If the Fund is the seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will pay to the buyer of protection the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index. If the Fund is the buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will receive from the seller of protection the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index.

Any premiums paid or received on the transactions are recorded as an asset or liability on the Statement of Assets and Liabilities and amortized. The value of the swap contract is marked-to-market daily based on quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. In addition, payments received or made as a result of a credit event or termination of the contract are recognized as realized gains or losses.

Certain credit default swap contracts entered into by the Fund provide for conditions that result in events of default or termination that enable the counterparty to the agreement to cause an early termination of the transactions under those agreements. Any election by the counterparty to terminate early may impact the amounts reported on the financial statements.

Security transactions and income recognition

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

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

Dividend income is recognized on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed of the ex-dividend date.

Dividend and interest income from foreign securities is recorded net of foreign taxes withheld where recovery of such taxes is not assured.


Notes to Financial Statements (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 25

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 income tax regulations, which may differ from 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.

As of August 31, 2010 , the Fund had estimated net capital loss carryforwards, which were available to offset future net realized capital gains, in the amount of $50,967,880 with $701,198 expiring in 2016, $22,831,103 expiring in 2017 and $27,435,579 expiring in 2018.

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 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, 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 securities are not necessarily an indication of the risk associated with investing in those securities.

As of February 28, 2011 the inputs used in valuing the Fund’s assets, which are carried at fair value, were as follows:


			Significant Other		Significant
	Quoted Prices		Observable Inputs		Unobservable Inputs
Investments in Securities	(Level 1)		(Level 2)		(Level 3)		Total

Equity securities
Common stocks	$	79,914,586	$	0	$	0	$	79,914,586
Preferred stocks		13,316,359		0		0		13,316,359
Warrants		2,700		0		0		2,700
Investment companies		68,221		0		0		68,221
Corporate bonds and notes		0		31,681,702		622,548		32,304,250
Term loans		0		3,267,959		0		3,267,959
Yankee corporate bonds and notes		0		1,124,333		0		1,124,333
Short-term investments
Investment companies		6,786,861		0		0		6,786,861

Total	$	100,088,727	$	36,073,994	$	622,548	$	136,785,269

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


26 Wells Fargo Advantage Utilities and High Income Fund		Notes to Financial Statements (Unaudited)

As of February 28, 2011, the inputs used in valuing the Fund’s other financial instruments, which are carried at fair value, were as follows:


			Significant Other		Significant
	Quoted Prices		Observable Inputs		Unobservable Inputs
Other financial instruments	(Level 1)		(Level 2)		(Level 3)		Total
Written options	$	0	$	1,750	$	0	$	1,750

For the six months ended February 28, 2011, the Fund did not have any significant transfers into/out of Level 1 and Level 2.

The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:


	Corporate bonds
	and notes
Balance as of August 31, 2010	$	0
Accrued discounts (premiums)		0
Realized gains (losses)		0
Change in unrealized gains (losses)		0
Purchases		0
Sales		0
Transfers into Level 3		622,548
Transfers out of Level 3		0
Balance as of February 28, 2011	$	622,548
Change in unrealized gains (losses) included in earnings relating to securities still held at February 28, 2011	$	0

4. TRANSACTIONS WITH AFFILIATES AND OTHER EXPENSES

Advisory fee

Wells Fargo Funds Management, LLC (“Funds Management”), an indirect wholly owned subsidiary of Wells Fargo & Company (“Wells Fargo”), is the adviser to the Fund and is paid an annual fee of 0.60% of the Fund’s average daily total assets. Total assets consist of the net assets of the Fund plus borrowings or other leverage for investment purposes. For the six months ended February 28, 2011, the advisory fee was equivalent to an annual rate of 0.72% of the Fund’s average daily net assets.

Funds Management may retain the services of certain investment sub-advisers to provide daily portfolio management to the Fund. The fees related to sub-advisory services are borne directly by the adviser and do not increase the overall fees paid by the Fund to the adviser. Wells Capital Management Incorporated, an affiliate of Funds Management, and Crow Point Partners, LLC are each investment sub-advisers to the Fund and are each paid an annual fee of 0.20% of the Fund’s average daily total assets.

Administration fee

Funds Management also serves as the administrator to the Fund providing the Fund with facilities, equipment and personnel. Funds Management is paid an annual administrative fee of 0.05% of the Fund’s average daily total assets. For the six months ended February 28, 2011, the administration fee was equivalent to an annual rate of 0.06% of the Fund’s average daily net assets.

5. CAPITAL SHARE TRANSACTIONS

The Fund has authorized an unlimited number of common shares with no par value. For the six months ended February 28, 2011 and the year ended August 31, 2010, the Fund issued 13,611 and 84,763 shares, respectively.


Notes to Financial Statements (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 27

6. BORROWINGS

The Fund had secured debt financing in April 2008 from a multi-seller commercial paper conduit administered by a major financial institution (the “Facility”) in order to redeem all of its outstanding Preferred Shares. The Facility was refinanced on April 26, 2010 with a new borrowing facility, administered by a different major financial institution, with a commitment amount of $25 million and a 364 day term (“Refinancing Facility”). As of February 28, 2011, the Fund had borrowed $22 million under the Refinancing Facility. The Fund’s borrowings under the Refinancing Facility are generally charged interest at a rate determined by the type of loan elected by the Fund. Under the Facility, the Fund had been generally charged interest at a rate based on the rates of the commercial paper notes issued or at LIBOR plus 9.5%. During the six months ended February 28, 2011, an effective interest rate of 1.22% was incurred on the borrowings. Interest expense of $135,180, representing 0.25% of the Fund’s average daily net assets, was incurred during the six months ended February 28, 2011. The Fund has pledged its assets to secure the borrowings and pays a commitment fee at an annual rate equal to (a) 0.30% as of any date upon which the loan balance exceeds 50% of the facility amount and (b) 0.50% as of any other date when the loan balance is less than 50% of the facility amount.

7. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, excluding U.S. government obligations and short-term securities (securities with maturities of one year or less at purchase date), were $36,412,174 and $38,220,470, respectively, for the six months ended February 28, 2011.

As of February 28, 2011, the Fund had unfunded loan commitments of $90,168.

8. DERIVATIVE TRANSACTIONS

During the six months ended February 28, 2011, the Fund entered into written options for hedging purposes.

During the six months ended February 28, 2011, the Fund had written option activities as follows:


	Number of			Premiums
	Contracts			Received
Options outstanding at August 31, 2010		0		$	0
Options written		108			3,886
Options terminated in closing purchase transactions		(62	)		(1,844	)
Options exercised		(21	)		(624	)
Options outstanding at February 28, 2011		25		$	1,418

Open call options written at February 28, 2011 were as follow for the Fund:

Expiration

Number of

Strike

Market

Premiums

Date

Issuer Name

Contracts

Price

Value

Received

April 2011

Comcast Corporation Class A

26.00

1,750

1,418

The Fund had average premiums received on written options in the amount of $473 during the six months ended February 28, 2011.

The fair value, realized gains or losses and change in unrealized gains or losses 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 industry and, therefore, may be more affected by changes in that industry than would be a comparable mutual fund whose investments are not heavily weighted in any industry.


28 Wells Fargo Advantage Utilities and High Income Fund		Notes to Financial Statements (Unaudited)

10. INDEMNIFICATION

Under the Trust’s organizational documents, the officers and directors are indemnified against certain liabilities that may arise out of performance of their duties to the Trust. Additionally, in the normal course of business, the Trust may enter into contracts with service providers that contain a variety of indemnification clauses. The Trust’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 shareholders:

Net Investment

Declaration Date

Record Date

Payable Date

Income

February 18, 2011

March 15, 2011

April 01, 2011

0.075

March 18, 2011

April 13, 2011

May 02, 2011

0.075

April 22, 2011

May 16, 2011

June 01, 2011

0.075

These distributions are not reflected in the accompanying financial statements.


Other Information (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 29

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 Web site at wellsfargo.com/advantagefunds, or visiting the SEC Web site at www.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 Web site at wellsfargo.com/advantagefunds or by visiting the SEC Web site at www.sec.gov.


30 Wells Fargo Advantage Utilities and High Income Fund		Other Information (Unaudited)

PORTFOLIO HOLDINGS INFORMATION

The complete portfolio holdings for the Fund are publicly available on the Fund’s Web site (www.wellsfargo.com/advantagefunds) on a monthly, 30-day or more delayed basis. In addition, top ten holdings information for the Fund is publicly available on the Fund’s Web site on a monthly, seven-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 Web site at www.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.

BOARD OF TRUSTEES

The following table provides basic information about the Board of Trustees (the “Trustees”) and Officers of the Fund. Each of the Trustees and Officers listed below acts in identical capacities for the Wells Fargo Advantage family of funds, which consists of 152 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	Position Held and
Year of Birth	Length of Service	Principal Occupations During Past Five Years	Other Directorships
Peter G. Gordon (Born 1942)	Trustee, since 1998; Chairman, since 2005 (Lead Trustee since 2001)	Co-Founder, Chairman, President and CEO of Crystal Geyser. Water Company. Trustee Emeritus, Colby College	Asset Allocation Trust

Isaiah Harris, Jr. (Born 1952)	Trustee, since 2009	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. Mr. Harris is a certified public accountant.	CIGNA Corporation; Deluxe Corporation; Asset Allocation Trust

Judith M. Johnson (Born 1949)	Trustee, since 2008	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 2010	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 45 portfolios as of 12/31/10); Director, Diversapack Co. (packaging company); Asset Allocation Trust

David F. Larcker (Born 1951)	Trustee, since 2009	James Irvin Miller Professor of Accounting at the Graduate School of Business, Stanford University, Director of Corporate Governance Research Program and Co-Director 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


Other Information (Unaudited)		Wells Fargo Advantage Utilities and High Income Fund 31


Name and	Position Held and
Year of Birth	Length of Service	Principal Occupations During Past Five Years	Other Directorships
Olivia S. Mitchell (Born 1953)	Trustee, since 2006	International Foundation of Employee Benefit Plans Professor and Chair of the Department of Insurance and Risk Management, 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 1996	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

Michael S. Scofield (Born 1943)	Trustee, since 2010	Currently serves on the Investment Company Institute’s Board of Governors and Executive Committee as well the Independent Director’s Counsel Board of Governors and Executive Committee. Former Chairman of the Independent Directors Counsel. Trustee of the Evergreen Funds from 1984 to 2010. Retired Attorney, Law Offices of Michael S. Scofield and former Director and Chairman, Branded Media Corporation (multi-media branding company).	Asset Allocation Trust

Donald C. Willeke (Born 1940)	Trustee, since 1996	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.	Asset Allocation Trust

Officers


Name and	Position Held and
Year of Birth	Length of Service	Principal Occupations During Past Five Years
Karla M. Rabusch (Born 1959)	President, since 2003	Executive Vice President of Wells Fargo Bank, N.A. and President of Wells Fargo Funds Management, LLC since 2003. Senior Vice President and Chief Administrative Officer of Wells Fargo Funds Management, LLC from 2001 to 2003.

C. David Messman (Born 1960)	Secretary, since 2000; Chief Legal Counsel, since 2003	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.

Kasey Phillips (Born 1970)	Treasurer, since 2009	Senior Vice President of Wells Fargo Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2006 to 2010. Treasurer of the Evergreen Funds from 2005 to 2010. Vice President and Assistant Vice President of Evergreen Investment Services, Inc. from 1999 to 2006.

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 DePalma (Born 1974)	Assistant Treasurer, since 2009	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. Assistant Vice President, Evergreen Investment Services, Inc. from 2000 to 2004 and the head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010.


32 Wells Fargo Advantage Utilities and High Income Fund		Other Information (Unaudited)


Automatic Divdend Reinvestment Plan		Wells Fargo Advantage Utilities and High Income Fund 33

AUTOMATIC DIVIDEND REINVESTMENT PLAN

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


34 Wells Fargo Advantage Utilities and High Income Fund		List of Abbreviations

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


ABAG	—	Association of Bay Area Governments
ACB	—	Agricultural Credit Bank
ADR	—	American Depositary Receipt
ADS	—	American Depository Shares
AGC-ICC	—	Assured Guaranty Corporation — Insured Custody Certificates
AGM	—	Assured Guaranty Municipal
AMBAC	—	American Municipal Bond Assurance Corporation
AMT	—	Alternative Minimum Tax
ARM	—	Adjustable Rate Mortgages
AUD	—	Australian Dollar
BAN	—	Bond Anticipation Notes
BART	—	Bay Area Rapid Transit
BHAC	—	Berkshire Hathaway Assurance Corporation
BRL	—	Brazil Real
CAD	—	Canadian Dollar
CDA	—	Community Development Authority
CDO	—	Collateralized Debt Obligation
CDSC	—	Contingent Deferred Sales Charge
CGIC	—	Capital Guaranty Insurance Company
CGY	—	Capital Guaranty Corporation
CHF	—	Swiss Franc
CIFG	—	CDC (Caisse des Dépôts et Consignations) IXIS Financial Guarantee
COP	—	Certificate of Participation
CP	—	Commercial Paper
CR	—	Custody Receipts
CTF	—	Common Trust Fund
DEM	—	Deutsche Mark
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
EDFA	—	Economic Development Finance Authority
ETET	—	Eagle Tax-Exempt Trust
ETF	—	Exchange-Traded Fund
EUR	—	Euro
FFCB	—	Federal Farm Credit Bank
FGIC	—	Financial Guaranty Insurance Corporation
FHA	—	Federal Housing Authority
FHAG	—	Federal Housing Agency
FHLB	—	Federal Home Loan Bank
FHLMC	—	Federal Home Loan Mortgage Corporation
FNMA	—	Federal National Mortgage Association
FRF	—	French Franc
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	—	Housing & Urban Development
HUF	—	Hungarian Forint
IDA	—	Industrial Development Authority
IDAG	—	Industrial Development Agency
IDR	—	Industrial Development Revenue
IEP	—	Irish Pound
JPY	—	Japanese Yen
KRW	—	Republic of Korea Won
LIBOR	—	London Interbank Offered Rate
LLC	—	Limited Liability Company
LLP	—	Limited Liability Partnership
LOC	—	Letter of Credit
LP	—	Limited Partnership
MBIA	—	Municipal Bond Insurance Association
MFHR	—	Multi-Family Housing Revenue
MFMR	—	Multi-Family Mortgage Revenue
MMD	—	Municipal Market Data
MSTR	—	Municipal Securities Trust Receipts
MTN	—	Medium Term Note
MUD	—	Municipal Utility District
MXN	—	Mexican Peso
MYR	—	Malaysian Ringgit
NATL-RE	—	National Public Finance Guarantee Corporation
NLG	—	Netherlands Guilder
NOK	—	Norwegian Krone
NZD	—	New Zealand Dollar
PCFA	—	Pollution Control Finance Authority
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
PSFG	—	Public School Fund Guaranty
PUTTER	—	Puttable Tax-Exempt Receipts
R&D	—	Research & Development
RDA	—	Redevelopment Authority
RDFA	—	Redevelopment Finance Authority
REITS	—	Real Estate Investment Trusts
ROC	—	Reset Option Certificates
SEK	—	Swedish Krona
SFHR	—	Single Family Housing Revenue
SFMR	—	Single Family Mortgage Revenue
SGD	—	Singapore Dollar
SKK	—	Slovakian Koruna
SLMA	—	Student Loan Marketing Association
SPDR	—	Standard & Poor’s Depositary Receipts
STIT	—	Short-Term Investment Trust
STRIPS	—	Separately Traded Registered Interest and Principal Securities
TAN	—	Tax Anticipation Notes
TBA	—	To Be Announced
TRAN	—	Tax Revenue Anticipation Notes
TCR	—	Transferable Custody Receipts
TRY	—	Turkish Lira
TTFA	—	Transportation Trust Fund Authority
USD	—	Unified School District
XLCA	—	XL Capital Assurance
ZAR	—	South African Rand

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ITEM 2.		CODE OF ETHICS

Not required in this filing


ITEM 3.		AUDIT COMMITTEE FINANCIAL EXPERT

Not required in this filing.


ITEM 4.		PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not required in this filing.


ITEM 5.		AUDIT COMMITTEE OF LISTED REGISTRANTS

Not required in this filing.


ITEM 6.		SCHEDULE OF INVESTMENTS

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


ITEM 7.		DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.


ITEM 8.		PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.


ITEM 9.		PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMEENT INVESTMENT COMPANY AND AFFILIATED PURCHASES

Not applicable.


ITEM 10.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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

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

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

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

candidate to interview in person and furnish such other information as it may reasonably require or deem necessary to determine the eligibility of such candidate to serve as a Trustee of the Trust.


ITEM 11.		CONTROLS AND PROCEDURES

(a) The President and Treasurer have concluded that the Wells Fargo Advantage Utilities & 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 quarter of the period covered by this report that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.


ITEM 12.		EXHIBITS

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

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

(a)(3) Not applicable.

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

SIGNATURES

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


	Wells Fargo Advantage Utilities & High Income Fund
	By:	/s/ Karla M. Rabusch
		Karla M. Rabusch
		President
	Date:	April 28, 2011

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.


	By:	/s/ Karla M. Rabusch
		Karla M. Rabusch
		President
	Date: April 28, 2011

	By:	/s/ Kasey L. Phillips
		Kasey L. Phillips
		Treasurer
	Date: April 28, 2011