ITEM 1. REPORT TO STOCKHOLDERS
Annual Report
August 31, 2022
Allspring
Utilities and High Income Fund (ERH)
Managed Distribution Plan
Pursuant to an exemptive order issued by the
Securities and Exchange Commission (“Order”), the Fund is authorized to distribute long-term capital gains to shareholders more frequently than once per year. Pursuant to the Order, the Fund’s Board of Trustees approved a Managed
Distribution Plan (“MDP”) for the Fund pursuant to which the Fund makes monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share.
The Fund’s Board has adopted a managed
distribution plan for the Fund at an annual minimum fixed rate of 7% based on the Fund’s average monthly NAV per share over the prior 12 months. The Fund makes distributions monthly. You should not draw any conclusions about the Fund’s
investment performance from the amount of these distributions or from the terms of the MDP. The MDP will be subject to regular periodic review by the Board and the Board may amend or terminate the MDP at any time without prior notice to Fund
shareholders. However, at this time there are no reasonably foreseeable circumstances that might cause the termination of the MDP.
The Fund may distribute more than its income
and net realized capital gains and, therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of
capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.
With each distribution, the Fund will issue
a notice to shareholders and a press release containing information about the amount and sources of the distribution and other related information. The amounts and sources of distributions reported in the notice and press release are only estimates
and are not provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax
regulations. The Fund will send you a Form 1099-DIV for the calendar year that
will tell you how to report these
distributions for federal income tax purposes.
The views expressed and any forward-looking statements are as
of August 31, 2022, unless otherwise noted, and are those of the Fund's portfolio managers and/or Allspring Global Investments. Discussions of individual securities or the markets generally are not intended as individual recommendations. Future
events or results may vary significantly from those expressed in any forward-looking statements. The views expressed are subject to change at any time in response to changing circumstances in the market. Allspring Global Investments disclaims any
obligation to publicly update or revise any views expressed or forward-looking statements.
Allspring Utilities and High Income
Fund | 1
Letter to shareholders
(unaudited)
Andrew Owen
President
Allspring Funds
Dear Shareholder:
We are pleased to offer you this annual
report for the Allspring Utilities and High Income Fund for the 12-month period that ended August 31, 2022. Globally, stocks and bonds experienced heightened volatility through the period. Non-U.S. securities fared the worst as the global economy
faced multiple challenges. Bonds had historically poor performance during a difficult period, with major fixed income indexes all falling substantially for the 12-month period. The performance of non-U.S. investments was worsened by the strong U.S.
dollar.
Earlier tailwinds provided by
global stimulus programs, vaccination rollouts, and recovering consumer and corporate sentiment were wiped away by the highest rate of inflation in four decades, the impact of aggressive central bank rate hikes, more highly contagious COVID-19
variants, and the Russia-Ukraine war. The already-significant global supply-chain disruptions were compounded by China’s COVID-19 lockdowns.
For the 12-month period, both stocks and
bonds registered significant losses, with U.S. large-cap stocks faring better overall than non-U.S. developed market equities and emerging market stocks. Fixed income securities were also deeply in the red, in a period of high inflation and sharply
rising interest rates. For the period, U.S. stocks, based on the S&P 500 Index,1 lost 11.23%. International stocks, as measured by the MSCI ACWI ex USA Index (Net),2 returned -19.52%, while the MSCI EM Index (Net) (USD),3 had weaker performance with a decline of 21.80%.
Among bond indexes, the Bloomberg U.S. Aggregate Bond Index4 returned -11.52%, the Bloomberg Global Aggregate ex-USD Index (unhedged)5 tumbled 22.05%, and the Bloomberg Municipal Bond Index6 declined 8.63%, and the ICE BofA U.S. High Yield
Index7 fell 10.41%.
Rising inflation, COVID, and the Russian
invasion of Ukraine in February drove market performance.
Global financial assets, except for
commodities, began the period with a broad retreat in September 2021, as concerns over inflation and the interest rate outlook depressed investor confidence. Emerging markets declined on concerns over supply-chain disruptions along with rising
energy and food prices. Meanwhile, the Federal Reserve (Fed) indicated it would soon start to slow the pace of asset purchases. U.S. concerns included a congressional debt ceiling showdown, the 2022 federal government budget, and the infrastructure
package. Meanwhile, commodities thrived in September, driven by sharply higher energy prices.
“
Global financial assets, except for commodities, began the period with a broad retreat in September 2021, as concerns over inflation and the interest rate outlook depressed investor confidence.”
| 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 Morgan Stanley Capital
International (MSCI) All Country World Index (ACWI) ex USA Index (Net) is a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the U.S.
Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices
or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. You cannot invest directly in an index. |
| 3 |
The MSCI Emerging Markets
(EM) Index (Net) (USD) is a free-float-adjusted market-capitalization-weighted index that is designed to measure equity market performance of emerging markets. You cannot invest directly in an index. |
| 4 |
The Bloomberg U.S. Aggregate
Bond Index is a broad-based benchmark that measures the investment-grade, U.S.-dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate and
hybrid adjustable-rate mortgage pass-throughs), asset-backed securities, and commercial mortgage-backed securities. You cannot invest directly in an index. |
| 5 |
The Bloomberg Global
Aggregate ex-USD Index (unhedged) is an unmanaged index that provides a broad-based measure of the global investment-grade fixed-income markets excluding the U.S.-dollar-denominated debt market. You cannot invest directly in an index.
|
| 6 |
The Bloomberg Municipal Bond
Index is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa. You cannot invest directly in an index. |
| 7 |
The ICE BofA U.S. High Yield
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. Copyright 2022. ICE Data
Indices, LLC. All rights reserved. |
2 | Allspring Utilities and High Income
Fund
Letter to shareholders
(unaudited)
Elevated inflation pressures and the global supply bottleneck
continued in October, but strong earnings provided a bright spot in the U.S., the eurozone, and many Asian countries. Government bond yields rose globally as central banks prepared to tighten monetary policy. Commodity prices continued to
rise.
In November, as COVID-19 hospitalizations rose,
most major global asset classes declined. Two exceptions were U.S. investment-grade bonds and Treasury Inflation-Protected Securities. President Biden signed a long-awaited infrastructure bill to upgrade U.S. roads, bridges, and railways. Meanwhile,
the U.S. Consumer Price Index (CPI),1 a measure of domestic inflation conditions, jumped to its highest level in 31 years. While the threat of consistently high inflation led
the Fed to discuss a faster pace of tapering, the Omicron strain created uncertainty. Commodities lost ground for the month, driven by sharp declines in oil prices (and energy costs in general) as well as precious metals.
Global volatility lessened in December as data indicated a
lower risk of severe disease and death from the Omicron variant. Even so, several countries introduced restrictions on travel and hospitality, among other sectors, in an effort to reduce the spread. In the U.S., data indicated a stable economy
overall, with robust corporate earnings. Consumer spending potential looked strong heading into 2022 on elevated household savings and the lowest household debt ratio since 1973. U.S. corporate and high-yield bonds had monthly gains while Treasuries
declined. Bonds were adversely affected by the increased likelihood of multiple rate hikes in 2022.
In January 2022, the main focus was on potential U.S. interest
rate hikes and the Russia-Ukraine conflict. The Fed hinted that a March interest rate hike was likely. Meanwhile, Russia threatened a potential invasion of Ukraine, which could disrupt Russia’s massive energy supplies and drive demand from
non-Russian oil-producing countries. Elsewhere overseas, Europe saw food and energy prices spike, leading to rising inflation. Within fixed income, corporate bonds struggled in January, underperforming government bonds, as investors focused on
continued elevated inflation and ongoing uncertainty over the U.S. monetary path.
The Russian invasion of Ukraine dominated the financial world
in February and March. Equity, bond, and commodities markets were shaken by fear, uncertainty, and an upending of demand-supply dynamics. Major global stock indexes were down in February, along with global bonds overall, with ongoing high levels of
volatility in March along with mixed results that favored U.S. large-cap stocks. Prices of commodities spiked, including crude oil, natural gas, wheat, and precious metals, on elevated concerns of supply shortages. All of this fed already-high
inflation concerns and added to expectations of more aggressive central bank interest rate hikes. Sweeping sanctions against Russia and corporate pullouts contributed to market volatility. Despite the geopolitical turmoil, the U.S. economic outlook
remained largely unchanged, with a healthy job market and signs of economic resilience accompanying higher prices.
In April, market volatility continued, with deepening losses
across major capital markets, as both the S&P 500 and MSCI ACWI (Net)2 fell 8% or more for the month. The Chinese economy struggled through a strict lockdown as the
government tried to contain a major COVID-19 outbreak, creating a global ripple effect that compounded existing supply shortages. This was exacerbated by the impact of the Russia-Ukraine war on global commodities. Meanwhile, U.S. annual inflation
raged at 8.5%, its highest level since 1981, and investors braced themselves for aggressive Fed monetary tightening moves.
“
The Russian invasion of Ukraine dominated the financial world in February and March. Equity, bond, and commodities markets were shaken by fear, uncertainty, and an upending of demand-supply
dynamics.”
| 1 |
The Consumer Price Index
(CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. You cannot invest directly in an index. |
| 2 |
The MSCI ACWI (Net) is a
free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. You cannot invest directly in an index. |
Allspring Utilities and High Income
Fund | 3
Letter to shareholders
(unaudited)
Market volatility continued in May,
although stocks recovered ground late in the month. Value stocks continued to outperform growth stocks. The concerns that had dominated markets for months continued, including high inflation and geopolitical tensions that exacerbated high crude oil,
gasoline, and food prices. In response, the Fed raised the federal funds rate by 0.50%, with widescale expectations of multiple rate hikes to come. Meanwhile, highly contagious COVID-19 variants persisted. However, labor markets in the U.S., the
U.K., and Europe remained strong. The U.S. recorded a 3.6% unemployment rate, although labor market participation remained low. U.S. retail sales for April, released in May, indicated a fourth consecutive monthly increase, reflecting continued
consumer resilience.
A historically
bad year in the financial markets continued in June with stocks posting further losses en route to their worst first half of a year in 50 years. Bonds didn’t fare much better. Driving the losses were the same factors that have been at play:
rising global inflation and fears of recession as central banks increase rates to try to curb inflation, which climbed above 9% in June in the U.S. The Fed raised its short-term rate by another 0.75% in June. Meanwhile, U.S. economic data remained
relatively robust as the U.S. unemployment rate held firm at 3.6% and the housing market was only marginally affected, so far, by sharply higher mortgage rates.
Markets rebounded in July, led by U.S.
stocks. While evidence began to point to an economic slowdown, and possibly a recession after two consecutive quarters of negative GDP growth, the U.S. labor market remained surprisingly strong: July nonfarm payrolls grew by more than 500,000 and
U.S. unemployment dipped to 3.5%. Meanwhile, crude oil and retail gasoline prices—major contributors to recent overall inflation—fell substantially from earlier highs. And while U.S. housing market data indicated a continued rise in home
prices, home sales fell as houses became less affordable with mortgage rates at a 13-year high. The Fed raised the federal funds rate another 0.75% in July—to a range of 2.25% to 2.50%—and forecasts pointed to continued rate
increases.
August was yet another
broadly challenging month for financial markets, with more red ink flowing. Inflation persisted at historically high levels, cresting 9% in the eurozone on an annual basis and remaining above 8% in the United States despite the Fed’s earnestly
aggressive monetary policy and a major drop in global crude oil and gasoline prices from their June peak. The hint of a silver lining in the U.S.—and a questionable one—was the continued resilience of the country’s jobs market.
However, the dark edge to even that silver lining was the increased likelihood of further Fed rate hikes: The Fed’s job was clearly not complete. One longer-term bright spot was the U.S. Congress’s passage of the Inflation Reduction Act.
Its primary stated goals include: to reduce inflation (though not immediately) by curbing the deficit, capping health care spending by seniors, and investing in domestic sources of clean energy.
4 | Allspring Utilities and High Income
Fund
Letter to shareholders
(unaudited)
Don’t let short-term uncertainty derail long-term
investment goals.
Periods of investment uncertainty can
present challenges, but experience has taught us that maintaining long-term investment goals can be an effective way to plan for the future. Although diversification cannot guarantee an investment profit or prevent losses, we believe it can be an
effective way to manage investment risk and potentially smooth out overall portfolio performance. We encourage investors to know their investments and to understand that appropriate levels of risk-taking may unlock opportunities.
Thank you for choosing to invest with Allspring Funds. We
appreciate your confidence in us and remain committed to helping you meet your financial needs.
Sincerely,
Andrew Owen
President
Allspring Funds
Notice to Shareholders
On November 12, 2021, the Fund announced a
renewal of its open-market share repurchase program (the “Buyback Program”). Under the renewed Buyback Program, the Fund may repurchase up to 10% of its outstanding shares in open market transactions during the period beginning on
January 1, 2022 and ending on December 31, 2022. The Fund’s Board of Trustees has delegated to Allspring Funds Management, LLC, the Fund’s adviser, discretion to administer the Buyback Program, including the determination of the amount
and timing of repurchases in accordance with the best interests of the Fund and subject to applicable legal limitations.
For further information about your fund,
contact your investment professional, visit our website at allspringglobal.com, or call us directly at 1-800-222-8222.
Allspring Utilities and High Income
Fund | 5
Performance highlights
(unaudited)
| Investment
objective |
The Fund seeks a high level
of current income and moderate capital growth, with an emphasis on providing tax-advantaged dividend income. |
| Strategy
summary |
The Fund allocates its assets
between two separate investment strategies, or sleeves. Under normal market conditions, the Fund will allocate approximately 70% of its total assets to a sleeve that places a focus on common, preferred and convertible preferred stocks of utility
companies and approximately 30% of its total assets to a sleeve of U.S. dollar denominated below investment grade (high yield) debt. |
| Adviser
|
Allspring Funds Management,
LLC |
| Subadviser
|
Allspring Global Investments,
LLC |
| Portfolio
managers |
Chris Lee
, CFA®‡, Kent Newcomb, CFA®‡, Michael J. Schueller, CFA®‡, Jack Spudich, CFA®‡ |
| Average
annual total returns (%) as of August 31, 20221 |
| |
1
year |
5
year |
10
year |
| Based
on market value |
-10.17
|
5.66
|
7.81
|
| Based
on net asset value (NAV) |
4.02
|
6.42
|
8.48
|
| ERH
Blended Index2 |
4.85
|
7.76
|
9.40
|
| ICE
BofA U.S. High Yield Constrained Index3 |
-10.42
|
2.41
|
4.43
|
| S&P
500 Utilities Index4 |
11.72
|
9.83
|
11.31
|
Figures quoted represent past
performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on an investment in a fund. Investment return and principal value of an investment will fluctuate so that an
investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted, which assumes the reinvestment of dividends and capital gains. Performance figures
of the Fund do not reflect brokerage commissions that a shareholder would pay on the purchase and sale of shares. If taxes and such brokerage commissions had been reflected, performance would have been lower. To obtain performance information
current to the most recent month-end, please call 1-800-222-8222.
The Fund’s expense ratio for the year ended August 31,
2022, was 1.25% which includes 0.32% of interest expense.
|
1 |
Total
returns based on market value are calculated assuming a purchase of common stock on the first day and a sale on the last day of the period reported. Total returns based on NAV are calculated based on the NAV at the beginning of the period and at the
end of the period. Dividends and distributions, if any, are assumed for the purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan. |
|
2 |
Source:
Allspring Funds Management, LLC. The ERH Blended Index is weighted 70% in the S&P 500 Utilities Index and 30% in the ICE BofA U.S. High Yield Constrained Index. Effective October 15, 2019, the ERH Blended Index changed the high yield component
of the index from the ICE BofA U.S. High Yield Index with the ICE BofA U.S. High Yield Constrained Index in order to better match the Fund’s investment strategy. You cannot invest directly in an index. |
|
3 |
The ICE
BofA U.S. High Yield Constrained Index is a market value-weighted index of all domestic and Yankee high-yield bonds, including deferred interest bonds and payment-in kind securities. Issues included in the index have maturities of one year or more
and have a credit rating lower than BBB–/Baa3, but are not in default. The ICE BofA U.S. High Yield Constrained Index limits any individual issuer to a maximum of 2% benchmark exposure. You cannot invest directly in an index. Copyright 2022.
ICE Data Indices, LLC. All rights reserved. |
|
4 |
The
S&P 500 Utilities Index is a market-value-weighted index that measures the performance of all stocks within the utilities sector of the S&P 500 Index. You cannot invest directly in an index. |
| ‡
|
CFA® and Chartered
Financial Analyst® are trademarks owned by CFA Institute. |
6 | Allspring Utilities and High Income
Fund
Performance highlights
(unaudited)
| Growth
of $10,000 investment as of August 31, 20221 |
| 1
|
The chart compares the
performance of the Fund for the most recent ten years with the ERH Blended Index, ICE BofA U.S. High Yield Constrained Index and S&P 500 Utilities Index. The chart assumes a hypothetical investment of $10,000 investment and reflects all
operating expenses of the Fund. |
| Comparison
of NAV vs. market value1 |
| 1
|
This chart does not reflect
any brokerage commissions charged on the purchase and sale of the Fund’s common stock. Dividends and distributions paid by the Fund are included in the Fund’s average annual total returns but have the effect of reducing the Fund’s
NAV. |
Risk summary
This closed-end fund is no longer available 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. Shares of the Fund may trade at either a premium or discount relative to the Fund’s net asset
value, and there can be no assurance that any discount will decrease. The values of, and/or the income generated by, securities held by the Fund may decline due to general market conditions or other factors, including those directly involving the
issuers of such securities. Equity securities fluctuate in value in response to factors specific to the issuer of the security. Debt securities are subject to credit risk and interest rate risk, and high yield securities and unrated securities of
similar credit quality have a much greater risk of default and their values tend to be more volatile than higher-rated securities with similar maturities. Funds that concentrate their investments in a single industry or sector may face increased
risk of price fluctuation due to adverse developments within that industry or sector. The Fund is also subject to risks associated with any concentration of its investments in the utility sector. The Fund is leveraged through a revolving credit
facility and also may incur leverage by issuing preferred shares in the future. The use of leverage results in certain risks, including, among others, the likelihood of greater volatility of net asset value and the market price of common shares.
Foreign investments may contain more risk due to the inherent risks associated with changing political climates, foreign market instability, and foreign currency fluctuations. Derivatives involve additional risks, including interest rate risk,
credit risk, the risk of improper valuation, and the risk of noncorrelation to the relevant instruments they are designed to hedge or closely track.
Allspring Utilities and High Income
Fund | 7
Performance highlights
(unaudited)
More
detailed information about the Fund’s investment objective, principal investment strategies and the principal risks associated with investing in the Fund can be found on page 11.
8 | Allspring Utilities and High Income
Fund
Performance highlights
(unaudited)
MANAGER'S DISCUSSION
Overview
The Fund’s return based on market value was -10.17% for the 12-month
period that ended August 31, 2022. During the same period, the Fund’s return based on net asset value (NAV) was 4.02%. Based on its market value and NAV return, the Fund underperformed the ERH Blended Index, which returned 4.85%.
Equity sleeve: A strong year for utilities
Utility stocks outperformed the S& P 500 Index by
approximately 23% for the period, with a gain of 11.72%. The Fund’s equity sleeve trailed the S&P 500 Utilities Index by less than 0.5%. The broader market turned sharply lower in January on concerns that U.S. inflation rates not seen in
decades would prompt the Federal Reserve (Fed) to raise interest rates, which would likely slow the economy. The managers believe utilities’ healthy fundamentals, attractive relative valuation, and defensive nature led to strong relative
performance.
During the period, the Fund managers added a
new position in Evergy, Inc., a regulated utility with what they believe are improving growth prospects, driven by plans to produce more power from renewable sources. They also added to CenterPoint Energy, Inc., as new management moved quickly to
sell non-core assets, improve the balance sheet, and position the company for expected faster growth in its core utilities.
The Fund benefited from overweight positions in several
utilities that outperformed the S&P 500 Utilities Index, including Exelon Corporation. Exelon saw its valuation improve with the spin-off of its unregulated power generation subsidiary.
Not owning Consolidated Edison, Inc., which outperformed the
index, detracted from performance. Consolidated Edison operates in the State of New York, and because the managers view New York as a less desireable market from a regulatory standpoint, the Fund does not hold this issuer during the
period.
High-yield sleeve: Portfolio changes were
made to improve quality
We have spent much of 2022
positioning for a higher probability of recession by rotating into shorter, higher-quality bonds. We have increased the portfolio’s allocation to BB-rated bonds and decreased its allocation to CCC-rated bonds. The portfolio maintained its
overweight to energy as tight supply continues to help producers generate cash, de-lever balance sheets, and improve credit ratings. We reduced our overweight to the air transportation sector and increased our overweight to the consumer and
commercial finance sector.
| Ten
largest holdings (%) as of August 31, 20221 |
| NextEra
Energy Incorporated |
15.01
|
| Dominion
Energy Incorporated |
5.58
|
| Duke
Energy Corporation |
5.31
|
| Sempra
Energy |
5.27
|
| American
Electric Power Company Incorporated |
4.99
|
| The
Southern Company |
4.66
|
| Xcel
Energy Incorporated |
4.40
|
| Exelon
Corporation |
4.01
|
| DTE
Energy Company |
3.37
|
| CMS
Energy Corporation |
3.34
|
| 1 |
Figures represent the
percentage of the Fund's net assets. Holdings are subject to change and may have changed since the date specified. |
The main detractors from the performance of the high-yield
sleeve came from the air leasing and pharmaceutical sectors. The international air travel recovery has lagged North America’s, dampening international aircraft utilization rates. The underperformance of the pharmaceutical credit, Bausch
Health, resulted from the proposed spinout of a lucrative business and a patent invalidation lawsuit that threatens its best-performing drug.
| Sector
allocation as of August 31, 20221 |
| 1 |
Figures represent the
percentage of the Fund's long-term investments. Allocations are subject to change and may have changed since the date specified. |
Allspring Utilities and High Income
Fund | 9
Performance highlights
(unaudited)
Top-performing high-yield bond contributors included debt investments in the
pharmaceutical and oil and gas sectors. The investments in the pharmaceutical sector benefited from the settlement of opioid liabilities. Strong price realization and debt repayment drove the positive performance of a debt issued by an oil and gas
company holding.
Leverage impact
The Fund's use of leverage had a negative impact on total
return performance during this reporting period.
| Credit
quality as of August 31, 20221 |
| 1 |
The credit quality
distribution of portfolio holdings reflected in the chart is based on ratings from Standard & Poor’s, Moody’s Investors Service, and/or Fitch Ratings Ltd. Credit quality ratings apply to the underlying holdings of the Fund and not to
the Fund itself. The percentages of the portfolio with the ratings depicted in the chart are calculated based on the market value of fixed income securities held by the Fund. If a security was rated by all three rating agencies, the middle rating
was utilized. If rated by two of the three rating agencies, the lower rating was utilized, and if rated by one of the rating agencies, that rating was utilized. Standard & Poor’s rates the creditworthiness of bonds, ranging from AAA
(highest) to D (lowest). Ratings from A to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories. Standard & Poor’s
rates the creditworthiness of short-term notes from SP-1 (highest) to SP-3 (lowest). Moody’s rates the creditworthiness of bonds, ranging from Aaa (highest) to C (lowest). Ratings Aa to B may be modified by the addition of a number 1 (highest)
to 3 (lowest) to show relative standing within the ratings categories. Moody’s rates the creditworthiness of short-term U.S. tax-exempt municipal securities from MIG 1/VMIG 1 (highest) to SG (lowest). Fitch rates the creditworthiness of bonds,
ranging from AAA (highest) to D (lowest). Credit quality distribution is subject to change and may have changed since the date specified. |
Outlook: Potential for moderate growth despite inflationary pressures
Relative to the S&P 500 Index, utilities stocks currently
trade above long-term average valuation levels. Fundamentally, the managers continue to see a clear path for moderate yet consistent growth in utility stock earnings and dividends. This, combined with what the managers believe are attractive
absolute dividend yields, could provide investors with solid total return potential and below-average volatility, particularly if economic growth slows in response to Fed rate hikes. Challenges to the sector include the potential for inflation to
pressure customer bills. Higher bills could limit utilities’ ability to pass along capital costs to customers and limit plans for capital spending, which are currently robust. Investor rotation back into more cyclical and/or higher growth
stocks could also affect utility stock performance.
With
high-yield credit option-adjusted spreads (OAS) at 505 basis points (bps; 100 bps equals 1.00%), valuations are in a precarious position, with little cushion to absorb the rise in defaults that typically coincides with recession. Leading economic
indicators are declining, the war in Ukraine is ongoing, and labor costs are increasing. U.S. gross domestic product growth expectations continue to decline, with the latest forecast of 1.7% for fiscal-year 2022, down from a forecast of 4% at the
start of the calendar year. Inflation remains in focus with the Fed forgoing employment and growth concerns to fully focus on “restoring price stability.” Despite macroeconomic challenges, credit fundamentals remain mostly intact with
adequate cash flows and few defaults, and the past year’s volatility has created opportunities for security selection.
| Geographic
allocation as of August 31, 20221 |
| 1 |
Figures represent the
percentage of the Fund's long-term investments. Allocations are subject to change and may have changed since the date specified. |
10 | Allspring Utilities and High Income
Fund
Objective, strategies and risks
(unaudited)
Investment objective
The Fund seeks a high level of current income and moderate capital growth,
with an emphasis on providing tax-advantaged dividend income. The Fund’s investment objective is a fundamental policy and may not be changed without the approval of a majority of the outstanding voting securities (as defined in the 1940 Act)
of the Fund.
Principal investment strategies
The Fund allocates its assets between two separate investment strategies, or
sleeves.
Equity sleeve.
Under normal market conditions, the Fund allocates approximately 70% of its total assets to an investment strategy that focuses on common, preferred and convertible preferred stocks of utility companies (“equity sleeve”). Utility
companies may include, for example, companies that provide basic services such as water, sewage, and the transmission, generation and distribution of electricity and transmission and distribution of natural gas. The Fund may invest this
portion of assets in companies across all market capitalizations.
We focus on dividend-paying companies that we expect to pay and
increase dividends consistently. Our process applies a rigorous analytical methodology to all of our investment decisions, which might include the following analyses of a company and its stock: cash flow analysis, debt levels, discipline of company
management, relative and absolute valuation levels and dividend yield. In selecting companies, we begin with a screen of a broad universe of equity securities that looks first, but not exclusively, at dividend yield, dividend growth potential, and
market capitalization. In addition, a review of company fundamentals, such as valuation, earnings growth, and financial condition, helps the portfolio managers focus on companies with dividends that appear reasonably sustainable with potential for
moderate dividend growth.
We regularly review the
investments of the equity sleeve and may sell a holding when there is deterioration in the underlying fundamentals of the business, dividend growth is no longer expected or there is the possibility of a dividend cut, the stock price reflects full or
overvaluation, it has achieved its valuation target or we have identified a more attractive investment opportunity.
Material Changes During the Fiscal Year: There were no material changes to the equity sleeve during the fiscal year.
High Yield Bond Sleeve. Under
normal market conditions, the Fund allocates approximately 30% of its total assets to an investment strategy that focuses on U.S. dollar-denominated below investment-grade bonds, debentures, and other income obligations (often called “high
yield” securities or “junk bonds”). We may invest in below investment-grade debt securities of any credit quality. This portion of the Fund invests in high yield securities rated between and including B3 and Ba1 by Moody’s or
B- and BB+ by S&P or, if unrated, that are deemed by us to be of comparable quality at the time of purchase. This portion of the
Fund’s portfolio targets securities with a minimum rating of B to BB at the time of purchase and attempts to maintain a weighted average credit quality with respect to the high yield securities of B to BB. This portion of the Fund will not
purchase high yield securities with a rating of CCC or below, although the Fund may hold such securities as a result of a downgrade in ratings subsequent to their purchase. No more than 10% of this portion of the Fund’s assets may be invested
in securities that are rated CCC or below or are unrated.
Securities in the Fund’s high yield bond sleeve may be
issued by domestic or foreign issuers (including foreign governments), and may include securities of emerging market issuers. The Fund may invest in non-investment-grade securities of any credit quality at the time of purchase.
For purposes of the Fund’s credit quality policies, if a
security receives different ratings from nationally recognized securities rating organizations, the Fund will use the rating chosen by the portfolio managers as most representative of the security’s credit quality. The Fund’s high yield
securities may have fixed or variable principal payments and all types of interest rate and dividend payment and reset terms, including fixed rate, adjustable rate, contingent, deferred, payment in kind and auction rate features. The Fund’s
weighted average duration range for high yield U.S. debt securities is six years or less.
The Fund’s high yield sleeve is managed following a
rigorous investment process that emphasizes both quality and value. The research driven approach includes both a top-down review of macroeconomic factors and intensive, bottom-up scrutiny of individual securities. We consider both broad economic and
issuer specific factors in selecting the high yield portfolio. In assessing the appropriate maturity and duration for the Fund’s high yield sleeve and the credit quality parameters and weighting objectives for each sector and industry in this
portion of the Fund’s portfolio, we consider a variety of factors that are expected to influence the economic environment and the dynamics of the high yield market. These factors include fundamental economic indicators, such as interest rate
trends, the rates of economic growth and inflation, the performance of equity markets, commodities prices, Federal Reserve monetary policy and the relative value of the U.S. dollar compared to other currencies. Once we determine the preferable
portfolio characteristics, we conduct further evaluation to determine capacity and inventory levels in each targeted industry. We also identify any circumstances that may lead to improved business
Allspring Utilities and High Income
Fund | 11
Objective, strategies and risks
(unaudited)
conditions, thus increasing the attractiveness of a particular industry. We
select individual securities based upon the terms of the securities (such as yields compared to U.S. Treasuries or comparable issues), liquidity, rating, sector and issuer diversification. We also employ due diligence and fundamental research to
assess an issuer’s credit quality, taking into account financial condition and profitability, future capital needs, potential for change in rating, industry outlook, the competitive environment and management ability.
The analysis of issuers may include, among other things,
historic and current financial conditions, current and anticipated cash flow and borrowing requirements, value of assets in relation to historical costs, strength of management, responsiveness to business conditions, credit standing, the
company’s leverage versus industry norms and current and anticipated results of operations. While we consider as one factor in our credit analysis the ratings assigned by the rating services, we perform our own independent credit analysis of
issuers.
In making decisions for the high yield sleeve,
we rely on the knowledge, experience and judgment of our team who have access to a wide variety of research. We apply a strict sell discipline, which is as important as purchase criteria in determining the performance of this portion of this
portfolio. We routinely meet to review profitability outlooks and discuss any deteriorating business fundamentals, as well as consider changes in equity valuations and market perceptions before selling securities.
In other than normal market conditions, when changing economic
conditions and other factors cause the yield difference between lower rated and higher rated securities to narrow, the high yield bond sleeve may purchase higher rated U.S. debt instruments if we believe that the risk of loss of income and principal
may be reduced substantially with only a relatively small reduction in yield.
We regularly review the investments of the portfolio and may
sell a portfolio holding when it has achieved its valuation target, there is deterioration in the underlying fundamentals of the business, or we have identified a more attractive investment opportunity.
Material Changes During the Fiscal Year: There were no material changes to the high yield sleeve during the fiscal year.
The Fund’s Overall Portfolio. We monitor the weighting of each investment strategy within the Fund’s portfolio on an ongoing basis and rebalance the Fund’s assets when we determine that such a rebalancing is necessary to align the
portfolio in accordance with the investment strategies described above. From time to time, we may make adjustments to the weighting of each investment strategy. Such adjustments would be based on our review and consideration of the
expected returns for each investment strategy and would factor in the stock, bond and money markets, interest rate and corporate earnings growth trends, and economic conditions which support changing investment opportunities.
The Fund may invest up to 25% of its total assets in foreign
securities.
The investment policies of the Fund described
above are non-fundamental and may be changed by the Board of Trustees of the Fund so long as shareholders are provided with at least 60 days prior written notice of any change to the extent required by the rules under the 1940 Act.
Other investment techniques and strategies
Foreign Currency Transactions. The Fund
may engage in foreign currency transactions for the purpose of hedging against foreign exchange risk arising from the Fund’s investment or anticipated investment in securities denominated in foreign currencies. The Fund also may enter into
these contracts for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another.
Preferred Shares. The Fund may
invest in preferred shares. Preferred shares are equity securities, but they have many characteristics of fixed income securities, such as a fixed dividend payment rate and/or a liquidity preference over the issuer’s common shares. However,
because preferred shares are equity securities, they may be more susceptible to risks traditionally associated with equity investments than the Fund’s fixed income securities.
Loans. The Fund may invest in
direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. The Fund may invest up to 10% of its total assets in corporate loans. The loans in which the Fund invests primarily consist of direct
obligations of a borrower. The Fund may invest in a loan at origination as a co-lender or by acquiring in the secondary market participations in, assignments of or novations of a corporate loan. By purchasing a participation, the Fund acquires some
or all of the interest of a bank or other lending institution in a loan to a borrower. The participations typically will result in the Fund having a contractual relationship only with the lender, not the borrower. The Fund will have the right to
receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. Many such loans are secured, although some may be
unsecured. Loans that are fully secured offer the Fund more protection than an unsecured loan in the event of non-payment of scheduled
12 | Allspring Utilities and High Income
Fund
Objective, strategies and risks
(unaudited)
interest or principal. However, there is no assurance that the liquidation of
collateral from a secured loan would satisfy the corporate borrower’s obligation, or that the collateral can be liquidated. Direct debt instruments may involve a risk of loss in case of default or insolvency of the borrower and may offer less
legal protection to the Fund in the event of fraud or misrepresentation. In addition, loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The markets in loans are not regulated by federal securities
laws or the U.S. Securities and Exchange Commission.
Structured Securities. The
Fund may invest in structured securities. The value of the principal and/or interest on such securities is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators
(“Reference”) or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the Reference. The terms of the
structured securities may provide in certain circumstances that no principal is due at maturity and, therefore, may result in a loss of the Fund’s investment. Changes in the interest rate or principal payable at maturity may be a multiple of
the changes in the value of the Reference. Consequently, structured securities may entail a greater degree of market risk than other types of fixed income securities.
U.S. Government Securities.
The Fund may invest in U.S. government securities, including debt securities issued or guaranteed by the U.S. Treasury, U.S. Government agencies or government-sponsored entities. These securities may have fixed,
floating or variable rate and also include mortgage-backed securities.
Other Investment Companies.
The Fund may invest in other investment companies to the extent permitted under the Investment Company Act of 1940, as amended, and the rules, regulations, and exemptive orders thereunder. The Fund, as a holder of
the securities of other investment companies, will bear its pro rata portion of the other investment companies’ expenses, including advisory fees. These expenses are in addition to the direct expenses of the Fund’s own
operations.
Defensive and Temporary Investments. Under unusual market or economic conditions or for temporary defensive purposes, the Fund may invest up to 100% of its total assets in securities issued or guaranteed by the U.S. government or its instrumentalities or
agencies, certificates of deposit, bankers’ acceptances and other bank obligations, commercial paper rated in the highest category by a nationally recognized statistical rating organization or other fixed income securities deemed by us to be
consistent with a defensive posture, or may hold cash. To the extent the Fund implements defensive strategies, it may be unable to achieve its investment objective.
Derivatives. The Fund may
purchase and sell derivative instruments such as exchange-listed and over-the-counter put and call options on securities, financial futures, equity, fixed-income and interest rate indices, and other financial instruments, purchase and sell financial
futures contracts and options thereon, and enter into various interest rate transactions such as swaps, caps, floors or collars. The Fund also may purchase derivative instruments that combine features of these instruments. Collectively, all of the
above are referred to as “derivatives.” The Fund generally seeks to use derivatives as a portfolio management or hedging technique to seek to protect against possible adverse changes in the market value of securities held in or to be
purchased for the Fund’s portfolio, protect the value of the Fund’s portfolio, facilitate the sale of certain securities for investment purposes, manage the effective interest rate exposure of the Fund, manage the effective maturity or
duration of the Fund’s portfolio, or establish positions in the derivatives markets as a temporary substitute for purchasing or selling particular securities. The Fund may invest up to 10% of its total assets in futures and options on
securities and indices and in other derivatives. In addition, the Fund may enter into interest rate swap transactions with respect to the total amount the Fund is leveraged in order to hedge against adverse changes in interest rates affecting
dividends payable on any preferred shares or interest payable on borrowings constituting leverage. In connection with any such swap transaction, the Fund will segregate liquid securities in the amount of its obligations under the transaction. The
Fund generally does not anticipate using derivatives for non-hedging purposes, but in the event we use derivatives for non-hedging purposes, no more than 10% of the Fund’s total assets will be committed to initial margin for derivatives for
such purposes.
Repurchase Agreements. The Fund may enter into repurchase agreements with broker-dealers, member banks of the Federal Reserve System and other financial institutions. Repurchase agreements are arrangements under which the Fund purchases
securities and the seller agrees to repurchase the securities within a specific time and at a specific price. We review and monitor the creditworthiness of any institution which enters into a repurchase agreement with the Fund. The
counterparty’s obligations under the repurchase agreement are collateralized with U.S. Treasury and/or agency obligations with a market value of not less than 100% of the obligations, valued daily. Collateral is held by the Fund’s
custodian in a segregated, safekeeping account for the benefit of the Fund. Repurchase agreements afford the Fund an opportunity to earn income on temporarily available cash at low risk. In the event that the counterparty to a repurchase
agreement is unwilling or unable to fulfill its contractual obligations to repurchase the underlying security, the Fund may lose money, suffer delays, or incur costs arising from holding or selling the underlying security.
Allspring Utilities and High Income
Fund | 13
Objective, strategies and risks
(unaudited)
Portfolio Turnover. It is the
policy of the Fund not to engage in trading for short-term profits although portfolio turnover is not considered a limiting factor in the execution of investment decisions for the Fund.
Leverage. The Fund may borrow
money from banks or financial institutions. Although it has no current intention to do so, the Fund also reserves the flexibility to issue preferred shares and debt securities for leveraging purposes. The Fund also may borrow money as a temporary
measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely dispositions of the Fund’s holdings. The Fund will not borrow or issue
preferred shares if, immediately after such borrowing or issuance, total leverage for the Fund exceeds 38% of the Fund’s total assets. The Fund may also borrow through reverse repurchase agreements (up to 20% of its total assets). Reverse
repurchase agreements involve the sale of a security by the Fund to another party (generally a bank or dealer) in return for cash and an agreement by the Fund to buy the security back at a specified price and time. When the Fund leverages its
assets, the fees paid to us for investment advisory and management services will be higher than if the Fund did not leverage because our fees are calculated based on the Fund’s total assets including the proceeds of the issuance of preferred
shares or any other amounts representing leverage. Consequently, the Fund's investment adviser may have differing interests than the Fund in determining whether to leverage the Fund’s assets. The Board of Trustees monitors this potential
conflict.
Principal risks
An investment in the Fund may lose money, is not a deposit of a bank, is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency, and is primarily subject to the risks briefly summarized below.
Market Risk. The values
of, and/or the income generated by, securities held by a Fund may decline due to general market conditions or other factors, including those directly involving the issuers of such securities. Securities markets are volatile and may decline
significantly in response to adverse issuer, regulatory, political, or economic developments. Different sectors of the market and different security types may react differently to such developments. Political, geopolitical, natural and other events,
including war, terrorism, trade disputes, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events have led, and in the future may lead, to economic
uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such events may have significant adverse direct or indirect effects on a Fund and its investments. In
addition, economies and financial markets throughout the world are becoming increasingly interconnected, which increases the likelihood that events or conditions in one country or region will adversely impact markets or issuers in other countries or
regions.
Equity Securities Risk. The values of equity securities may experience periods of substantial price volatility and may decline significantly over short time periods. In general, the values of equity securities are more volatile than those of
debt securities. Equity securities fluctuate in value and price in response to factors specific to the issuer of the security, such as management performance, financial condition, and market demand for the issuer’s products or services, as
well as factors unrelated to the fundamental condition of the issuer, including general market, economic and political conditions. Different parts of a market, industry and sector may react differently to adverse issuer, market, regulatory,
political, and economic developments.
Utility
Securities Risk. Investments in utility sectors include the unique risks associated with decreases in the demand for utility company products and services, increased competition resulting from deregulation, and
rising energy costs, among others. Such developments also could cause utility companies such as water, gas and electric companies, to reduce the dividends they pay on their stock, potentially decreasing the dividends you receive from the Fund.
Water, gas and electric companies typically borrow heavily to support continuing operations. Increases in interest rates could increase these utility companies’ borrowing costs, which could adversely impact their financial results and
stock price, and ultimately the value of and total return on your Fund shares.
Industry Concentration Risk. A
fund that concentrates its investments in an industry or group of industries is more vulnerable to adverse market, economic, regulatory, political or other developments affecting such industry or group of industries than a fund that invests its
assets more broadly.
Debt Securities Risk. Debt securities are subject to credit risk and interest rate risk. Credit risk is the possibility that the issuer or guarantor of a debt security may be unable, or perceived to be unable, to pay interest or repay
principal when they become due. In these instances, the value of an investment could decline and the Fund could lose money. Credit risk increases as an issuer’s credit quality or financial strength declines. Interest rate risk is the
possibility that interest rates will change over time. When interest rates rise, the value of debt securities tends to fall. The longer the terms of the debt securities held by a Fund, the more the Fund is subject to this risk. If interest rates
decline, interest that the Fund is able to earn on its investments in debt securities may also decline, which could cause the Fund to reduce the dividends it pays to shareholders, but the value of those securities may increase. Very low or negative
interest rates may magnify interest rate risk.
14 | Allspring Utilities and High Income
Fund
Objective, strategies and risks
(unaudited)
High Yield Securities Risk.
High yield securities and unrated securities of similar credit quality (commonly known as “junk bonds”) have a much greater risk of default (or in the case of bonds currently in default, of not returning
principal) and their values tend to be more volatile than higher-rated securities with similar maturities. Additionally, these securities tend to be less liquid and more difficult to value than higher-rated securities.
Leverage Risk. Leverage
creates risks which may adversely affect the return for the holders of common shares, including (i) the likelihood of greater volatility of net asset value and the market price of common shares or fluctuations in the dividend paid to the Fund; (ii)
fluctuations in the dividend rates on any preferred shares or in interest rates on borrowings and short-term debt; (iii) increased operating costs, which may reduce the Fund’s total return; and (iv) the potential for a decline in the value of
an investment acquired with borrowed funds, while the Fund’s obligations under such borrowing remain fixed. To the extent the income or capital appreciation derived from securities purchased with funds received from leverage exceeds the
cost of leverage, the Fund’s return will be greater than if leverage had not been used. Conversely, if the income or capital appreciation from the securities purchased with such funds is not sufficient to cover the cost of leverage or if
the Fund incurs capital losses, the return of the Fund will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders as dividends and other distributions will be reduced or potentially
eliminated.
Anti-takeover Provisions Risk. The Fund’s Agreement and Declaration of Trust and By-laws include provisions that could limit the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board of
Trustees. Such provisions could limit the ability of shareholders to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund. These provisions include staggered
terms of office for the Trustees, advance notice requirements for shareholder proposals, and supermajority voting requirements for open-ending the Fund or a merger, liquidation, asset sale or similar transactions.
Closed-end Fund Risk.
Closed-end funds involve investment risks different from those associated with other investment companies. Shares of closed-end funds frequently trade at either a premium or discount relative to their net asset
value (“NAV”). There can be no assurance that the discount will decrease. It is possible that a market discount may increase and the Fund may suffer realized or unrealized capital losses due to further decline in the market
price of the securities held by the Fund, thereby adversely affecting the NAV of the Fund’s shares. Similarly, there can be no assurance that the Fund’s shares will trade at a premium, will continue to trade at a premium or that the
premium will not decrease over time. The Fund’s shares are designed primarily for long-term investors, and the Fund should not be viewed as a vehicle for short-term trading purposes.
Convertible Securities Risk.
A convertible security has characteristics of both equity and debt securities and, as a result, is exposed to risks that are typically associated with both types of securities. The market value of a convertible security tends to decline
as interest rates increase but also tends to reflect changes in the market price of the common stock of the issuing company. A convertible security is also exposed to the risk that an issuer is unable to meet its obligation to make dividend or
interest and principal payments when due as a result of changing financial or market conditions. In the event of a liquidation of the issuer, holders of a convertible security would generally be paid only after holders of any senior debt
obligations. A Fund may be forced to convert a convertible security before it would otherwise choose to do so, which may decrease the Fund's return.
Derivatives Risk. The
use of derivatives, such as futures, options and swap agreements, presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. The use of derivatives can lead to losses because of
adverse movements in the price or value of the derivatives’ underlying assets, indexes or rates and the derivatives themselves, which may be magnified by certain features of the derivatives. These risks are heightened when derivatives are used
to enhance a Fund's return or as a substitute for a position or security, rather than solely to hedge (or mitigate) the risk of a position or security held by the Fund. The success of a derivative strategy will be affected by the portfolio
manager’s ability to assess and predict market or economic developments and their impact on the derivatives’ underlying assets, indexes or rates and the derivatives themselves. Certain derivative instruments may become illiquid and, as a
result, may be difficult to sell when the portfolio manager believes it would be appropriate to do so. Certain derivatives create leverage, which can magnify the impact of a decline in the value of their underlying assets, indexes or rates and
increase the volatility of the Fund’s net asset value. Certain derivatives (e.g., over-the-counter swaps) are also subject to the risk that the counterparty to the derivative contract will be unwilling or unable to fulfill its
contractual obligations, which may cause a Fund to lose money, suffer delays or incur costs arising from holding or selling an underlying asset. Changes in laws or regulations may make the use of derivatives more costly, may limit the
availability of derivatives, or may otherwise adversely affect the use, value or performance of derivatives.
Foreign Currency Risk.
The Fund may invest in non-dollar-denominated investments. The Fund may be limited in its ability to hedge the value of its non-dollar denominated investments against currency fluctuations. As a result, a decline in the value of
Allspring Utilities and High Income
Fund | 15
Objective, strategies and risks
(unaudited)
currencies in which the Fund’s investments are denominated against the
dollar will result in a corresponding decline in the dollar value of the Fund’s assets. These declines will in turn affect the Fund’s income and net asset value.
Foreign Investment Risk.
Foreign investments may be subject to lower liquidity, greater price volatility and risks related to adverse political, regulatory, market or economic developments. Foreign companies may be subject to significantly higher levels of taxation
than U.S. companies, including potentially confiscatory levels of taxation, thereby reducing the earnings potential of such foreign companies. Foreign investments may involve exposure to changes in foreign currency exchange rates. Such changes
may reduce the U.S. dollar value of the investments. Foreign investments may be subject to additional risks such as potentially higher withholding and other taxes, and may also be subject to greater trade settlement, custodial, and other operational
risks than domestic investments. Certain foreign markets may also be characterized by less stringent investor protection and disclosure standards.
Growth/Value Investment Risk.
Securities that exhibit growth or value characteristics tend to perform differently and shift into and out of favor with investors depending on changes in market and economic sentiment and conditions. As a result, a
Fund's performance may at times be worse than the performance of other mutual funds that invest more broadly or in securities of a different investment style.
Investment Risk. An investment
in the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest. Your investment in the Fund represents an indirect investment in the securities owned by the Fund. The value of these
securities may increase or decrease, at times rapidly and unexpectedly. Your investment in the Fund may at any point in the future be worth less than your original investment even after taking into account the reinvestment of dividends and
distributions.
Issuer Risk. The value of corporate income-producing securities may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the
issuer’s goods and services.
Loans Risk. Loans may be unrated, less liquid and more difficult to value than traditional debt securities. Loans may be made to finance highly leveraged corporate operations or acquisitions. The highly leveraged capital structure
of the borrowers in such transactions may make such loans especially vulnerable to adverse changes in financial, economic or market conditions. Loans generally are subject to restrictions on transfer, and only limited opportunities may exist to sell
such loans in secondary markets. As a result, a Fund may be unable to sell loans at a desired time or price. If the Fund acquires only an assignment or a participation in a loan made by a third party, the Fund may not be able to control amendments,
waivers or the exercise of any remedies that a lender would have under a direct loan and may assume liability as a lender.
Market Capitalization Risk.
The Fund may invest the portion of its assets invested in utility securities in securities of companies of all market capitalizations. Stocks fall into three broad market capitalization categories—large, medium and small. Investing
primarily in one category carries the risk that due to current market conditions that category may be out of favor with investors. If valuations of large capitalization companies appear to be greatly out of proportion to the valuations of small or
medium capitalization companies, investors may migrate to the stocks of small- and mid-sized companies causing a fund that invests in these companies to increase in value more rapidly than a fund that invests in larger, fully-valued companies.
Investing in medium and small capitalization companies may be subject to special risks associated with narrower product lines, more limited financial resources, smaller management groups or greater dependence on a few key employees, and a more
limited trading market for their stocks as compared to larger capitalization companies. As a result, stocks of small and medium capitalization companies may decline significantly in market downturns or their value may fluctuate more sharply than
other securities.
Market Price of Shares Risk. Whether investors will realize a gain or loss upon the sale of the Fund’s common shares will depend upon whether the market value of the shares at the time of sale is above or below the price the investor paid,
taking into account transaction costs, for the shares and is not directly dependent upon the Fund’s net asset value. Because the market value of the Fund’s shares will be determined by factors such as the relative demand for and supply
of the shares in the market, general market conditions and other factors beyond the control of the Fund, the Fund cannot predict whether its common shares will trade at, below or above net asset value, or below or above the initial offering price
for the shares.
Preferred Stock Risk. The Fund may purchase preferred stock. Preferred stock, unlike common stock, has a stated dividend rate payable from the corporation’s earnings. Preferred stock dividends may be cumulative or non-cumulative,
participating, or auction rate. “Cumulative” dividend provisions require all or a portion of prior unpaid dividends to be paid. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of
preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, which can be a negative feature when interest rates decline. The rights of preferred stock on
distribution of a corporation’s assets in the event of a liquidation are generally subordinate to the rights associated with a corporation’s debt securities.
16 | Allspring Utilities and High Income
Fund
Portfolio of
investments—August 31, 2022
| |
|
|
|
Shares
|
Value
|
| Common
stocks: 86.33% |
|
|
|
|
|
| Communication
services: 0.08% |
|
|
|
|
|
| Diversified
telecommunication services: 0.08% |
|
|
|
|
|
| Intelsat
SA ‡† |
|
|
|
3,909
|
$ 101,634
|
| Energy: 0.14%
|
|
|
|
|
|
| Energy
equipment & services: 0.08% |
|
|
|
|
|
| Bristow
Group Incorporated † |
|
|
|
3,368
|
97,706
|
| Oil,
gas & consumable fuels: 0.06% |
|
|
|
|
|
| Denbury
Incorporated † |
|
|
|
746
|
66,342
|
| Financials: 0.17%
|
|
|
|
|
|
| Mortgage
REITs: 0.17% |
|
|
|
|
|
| Blackstone
Mortgage Trust Incorporated Class A |
|
|
|
2,257
|
65,408
|
| Ladder
Capital Corporation |
|
|
|
6,254
|
69,169
|
| Starwood
Property Trust Incorporated |
|
|
|
2,796
|
64,112
|
| |
|
|
|
|
198,689
|
| Utilities: 85.94%
|
|
|
|
|
|
| Electric
utilities: 49.94% |
|
|
|
|
|
| Alliant
Energy Corporation |
|
|
|
29,270
|
1,786,641
|
| American
Electric Power Company Incorporated |
|
|
|
59,781
|
5,990,056
|
| Constellation
Energy Corporation |
|
|
|
29,898
|
2,439,378
|
| Duke
Energy Corporation |
|
|
|
59,709
|
6,383,489
|
| Entergy
Corporation |
|
|
|
22,292
|
2,570,268
|
| Evergy
Incorporated |
|
|
|
29,385
|
2,013,754
|
| Eversource
Energy |
|
|
|
29,400
|
2,636,886
|
| Exelon
Corporation |
|
|
|
109,843
|
4,823,206
|
| FirstEnergy
Corporation |
|
|
|
61,615
|
2,436,873
|
| NextEra
Energy Incorporated |
|
|
|
212,045
|
18,036,548
|
| The
Southern Company |
|
|
|
72,666
|
5,600,369
|
| Xcel
Energy Incorporated |
|
|
|
71,281
|
5,292,614
|
| |
|
|
|
|
60,010,082
|
| Gas
utilities: 3.87% |
|
|
|
|
|
| Atmos
Energy Corporation |
|
|
|
29,092
|
3,298,451
|
| ONE
Gas Incorporated |
|
|
|
17,268
|
1,351,566
|
| |
|
|
|
|
4,650,017
|
| Multi-utilities:
29.64% |
|
|
|
|
|
| Ameren
Corporation |
|
|
|
38,992
|
3,611,439
|
| CenterPoint
Energy Incorporated |
|
|
|
114,071
|
3,596,659
|
| CMS
Energy Corporation |
|
|
|
59,487
|
4,017,752
|
| Dominion
Energy Incorporated |
|
|
|
81,959
|
6,704,246
|
| DTE
Energy Company |
|
|
|
31,112
|
4,055,138
|
| Public
Service Enterprise Group Incorporated |
|
|
|
55,246
|
3,555,633
|
| Sempra
Energy |
|
|
|
38,379
|
6,331,384
|
| WEC
Energy Group Incorporated |
|
|
|
36,310
|
3,745,013
|
| |
|
|
|
|
35,617,264
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 17
Portfolio of
investments—August 31, 2022
| |
|
|
|
Shares
|
Value
|
| Water
utilities: 2.49% |
|
|
|
|
|
| American
Water Works Company Incorporated |
|
|
|
20,113
|
$ 2,985,775
|
| Total
Common stocks (Cost $81,253,879) |
|
|
|
|
103,727,509
|
| |
|
Interest
rate |
Maturity
date |
Principal
|
|
| Corporate
bonds and notes: 30.17% |
|
|
|
|
|
| Communication
services: 4.83% |
|
|
|
|
|
| Diversified
telecommunication services: 0.30% |
|
|
|
|
|
| Cablevision
Lightpath LLC 144A |
|
3.88%
|
9-15-2027
|
$ 30,000
|
26,182
|
| Cablevision
Lightpath LLC 144A |
|
5.63
|
9-15-2028
|
105,000
|
85,556
|
| Level
3 Financing Incorporated 144A |
|
3.63
|
1-15-2029
|
155,000
|
124,405
|
| Level
3 Financing Incorporated 144A |
|
4.25
|
7-1-2028
|
100,000
|
83,125
|
| Level
3 Financing Incorporated 144A |
|
4.63
|
9-15-2027
|
50,000
|
44,171
|
| |
|
|
|
|
363,439
|
| Entertainment: 0.42%
|
|
|
|
|
|
| Live
Nation Entertainment Incorporated 144A |
|
3.75
|
1-15-2028
|
260,000
|
227,557
|
| Live
Nation Entertainment Incorporated 144A |
|
5.63
|
3-15-2026
|
48,000
|
46,320
|
| Live
Nation Entertainment Incorporated 144A |
|
6.50
|
5-15-2027
|
225,000
|
224,634
|
| |
|
|
|
|
498,511
|
| Media: 4.11%
|
|
|
|
|
|
| CCO
Holdings LLC 144A |
|
4.25
|
1-15-2034
|
125,000
|
95,170
|
| CCO
Holdings LLC 144A |
|
4.50
|
8-15-2030
|
320,000
|
269,112
|
| CCO
Holdings LLC |
|
4.50
|
5-1-2032
|
50,000
|
40,574
|
| CCO
Holdings LLC 144A |
|
5.00
|
2-1-2028
|
25,000
|
22,846
|
| CCO
Holdings LLC 144A |
|
5.13
|
5-1-2027
|
250,000
|
237,299
|
| CCO
Holdings LLC 144A |
|
5.50
|
5-1-2026
|
2,000
|
1,980
|
| Cinemark
USA Incorporated 144A |
|
5.25
|
7-15-2028
|
235,000
|
190,366
|
| Cinemark
USA Incorporated 144A |
|
5.88
|
3-15-2026
|
65,000
|
57,668
|
| Cinemark
USA Incorporated 144A |
|
8.75
|
5-1-2025
|
110,000
|
112,821
|
| Clear
Channel Outdoor Holdings 144A |
|
7.50
|
6-1-2029
|
270,000
|
217,073
|
| CSC
Holdings LLC 144A |
|
4.63
|
12-1-2030
|
200,000
|
143,000
|
| CSC
Holdings LLC 144A |
|
5.75
|
1-15-2030
|
150,000
|
116,166
|
| CSC
Holdings LLC 144A |
|
6.50
|
2-1-2029
|
200,000
|
184,047
|
| DIRECTV
Financing LLC 144A |
|
5.88
|
8-15-2027
|
145,000
|
132,675
|
| DISH
DBS Corporation 144A |
|
5.75
|
12-1-2028
|
185,000
|
142,055
|
| Gray
Escrow II Incorporated 144A |
|
5.38
|
11-15-2031
|
425,000
|
359,202
|
| Gray
Television Incorporated 144A |
|
4.75
|
10-15-2030
|
250,000
|
206,000
|
| Lamar
Media Corporation |
|
4.88
|
1-15-2029
|
130,000
|
120,701
|
| Lamar
Media Corporation |
|
4.00
|
2-15-2030
|
80,000
|
69,650
|
| Match
Group Holdings II LLC 144A |
|
5.63
|
2-15-2029
|
225,000
|
210,129
|
| Nexstar
Broadcasting Incorporated 144A |
|
4.75
|
11-1-2028
|
125,000
|
113,125
|
| Nexstar
Broadcasting Incorporated 144A |
|
5.63
|
7-15-2027
|
125,000
|
119,022
|
| Outfront
Media Capital Corporation 144A |
|
4.63
|
3-15-2030
|
150,000
|
125,144
|
| Outfront
Media Capital Corporation 144A |
|
5.00
|
8-15-2027
|
85,000
|
77,797
|
| QVC
Incorporated |
|
4.38
|
9-1-2028
|
200,000
|
151,783
|
| QVC
Incorporated |
|
4.75
|
2-15-2027
|
345,000
|
284,946
|
| QVC
Incorporated |
|
5.95
|
3-15-2043
|
95,000
|
65,627
|
| Salem
Media Group Incorporated 144A |
|
6.75
|
6-1-2024
|
170,000
|
164,900
|
| Scripps
Escrow II Incorporated 144A |
|
3.88
|
1-15-2029
|
35,000
|
29,675
|
| Scripps
Escrow II Incorporated 144A |
|
5.38
|
1-15-2031
|
425,000
|
351,688
|
The accompanying notes are an integral part of these financial
statements.
18 | Allspring Utilities and High Income
Fund
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Media
(continued) |
|
|
|
|
|
| Scripps
Escrow II Incorporated 144A |
|
5.88%
|
7-15-2027
|
$ 50,000
|
$
45,249 |
| Townsquare
Media Incorporated 144A |
|
6.88
|
2-1-2026
|
510,000
|
477,146
|
| |
|
|
|
|
4,934,636
|
| Consumer
discretionary: 4.17% |
|
|
|
|
|
| Auto
components: 0.47% |
|
|
|
|
|
| Allison
Transmission Incorporated 144A |
|
5.88
|
6-1-2029
|
170,000
|
159,813
|
| Clarios
Global LP 144A |
|
6.25
|
5-15-2026
|
144,000
|
142,400
|
| Cooper
Tire & Rubber Company |
|
7.63
|
3-15-2027
|
257,000
|
260,534
|
| |
|
|
|
|
562,747
|
| Automobiles: 0.11%
|
|
|
|
|
|
| Ford
Motor Company |
|
3.25
|
2-12-2032
|
175,000
|
136,691
|
| Diversified
consumer services: 0.12% |
|
|
|
|
|
| Service
Corporation International |
|
7.50
|
4-1-2027
|
140,000
|
146,825
|
| Hotels,
restaurants & leisure: 2.08% |
|
|
|
|
|
| Carnival
Corporation 144A |
|
4.00
|
8-1-2028
|
150,000
|
125,061
|
| Carnival
Corporation 144A |
|
6.00
|
5-1-2029
|
120,000
|
90,978
|
| Carnival
Corporation 144A |
|
7.63
|
3-1-2026
|
203,000
|
172,824
|
| Carnival
Corporation 144A |
|
9.88
|
8-1-2027
|
100,000
|
100,375
|
| Carnival
Corporation 144A |
|
10.50
|
2-1-2026
|
60,000
|
61,800
|
| CCM
Merger Incorporated 144A |
|
6.38
|
5-1-2026
|
555,000
|
521,571
|
| Cedar
Fair LP 144A |
|
5.50
|
5-1-2025
|
80,000
|
78,472
|
| Churchill
Downs Incorporated 144A |
|
4.75
|
1-15-2028
|
130,000
|
118,255
|
| Hilton
Domestic Operating Company Incorporated 144A |
|
5.38
|
5-1-2025
|
110,000
|
109,049
|
| NCL
Corporation Limited 144A |
|
5.88
|
3-15-2026
|
265,000
|
214,291
|
| NCL
Corporation Limited 144A |
|
5.88
|
2-15-2027
|
170,000
|
154,075
|
| NCL
Corporation Limited 144A |
|
7.75
|
2-15-2029
|
110,000
|
89,330
|
| Royal
Caribbean Cruises Limited 144A |
|
5.38
|
7-15-2027
|
25,000
|
19,341
|
| Royal
Caribbean Cruises Limited 144A |
|
5.50
|
8-31-2026
|
95,000
|
75,937
|
| Royal
Caribbean Cruises Limited 144A |
|
5.50
|
4-1-2028
|
150,000
|
113,250
|
| Royal
Caribbean Cruises Limited 144A |
|
9.13
|
6-15-2023
|
95,000
|
95,770
|
| Royal
Caribbean Cruises Limited 144A |
|
10.88
|
6-1-2023
|
100,000
|
101,813
|
| Royal
Caribbean Cruises Limited 144A |
|
11.63
|
8-15-2027
|
155,000
|
151,925
|
| Six
Flags Entertainment Company 144A |
|
5.50
|
4-15-2027
|
50,000
|
45,850
|
| Six
Flags Entertainment Company 144A |
|
7.00
|
7-1-2025
|
55,000
|
55,587
|
| |
|
|
|
|
2,495,554
|
| Household
durables: 0.09% |
|
|
|
|
|
| Allied
Universal Holdco LLC 144A |
|
6.63
|
7-15-2026
|
115,000
|
107,673
|
| Multiline
retail: 0.35% |
|
|
|
|
|
| LSF9
Atlantis Holdings LLC 144A |
|
7.75
|
2-15-2026
|
200,000
|
185,001
|
| Macy's
Retail Holdings LLC 144A |
|
5.88
|
4-1-2029
|
245,000
|
212,048
|
| Macy's
Retail Holdings LLC 144A |
|
6.13
|
3-15-2032
|
30,000
|
24,912
|
| |
|
|
|
|
421,961
|
| Specialty
retail: 0.75% |
|
|
|
|
|
| GAP
Incorporated 144A |
|
3.88
|
10-1-2031
|
255,000
|
176,846
|
| Group
1 Automotive Incorporated 144A |
|
4.00
|
8-15-2028
|
145,000
|
123,885
|
| Lithia
Motors Incorporated 144A |
|
3.88
|
6-1-2029
|
80,000
|
67,521
|
| Michaels
Companies Incorporated 144A |
|
7.88
|
5-1-2029
|
145,000
|
96,425
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 19
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Specialty
retail (continued) |
|
|
|
|
|
| NMG
Holding Company Incorporated 144A |
|
7.13%
|
4-1-2026
|
$ 200,000
|
$
187,114 |
| Rent-A-Center
Incorporated 144A |
|
6.38
|
2-15-2029
|
295,000
|
249,181
|
| |
|
|
|
|
900,972
|
| Textiles,
apparel & luxury goods: 0.20% |
|
|
|
|
|
| G-III
Apparel Group Limited 144A |
|
7.88
|
8-15-2025
|
240,000
|
236,815
|
| Consumer
staples: 0.20% |
|
|
|
|
|
| Food
products: 0.20% |
|
|
|
|
|
| CHS
Incorporated 144A |
|
5.25
|
5-15-2030
|
145,000
|
109,842
|
| CHS
Incorporated 144A |
|
6.00
|
1-15-2029
|
10,000
|
8,208
|
| CHS
Incorporated 144A |
|
6.88
|
4-15-2029
|
185,000
|
115,625
|
| |
|
|
|
|
233,675
|
| Energy:
5.95% |
|
|
|
|
|
| Energy
equipment & services: 1.27% |
|
|
|
|
|
| Bristow
Group Incorporated 144A |
|
6.88
|
3-1-2028
|
375,000
|
347,813
|
| Hilcorp
Energy Company 144A |
|
5.75
|
2-1-2029
|
55,000
|
50,066
|
| Hilcorp
Energy Company 144A |
|
6.00
|
4-15-2030
|
30,000
|
27,619
|
| Hilcorp
Energy Company 144A |
|
6.00
|
2-1-2031
|
55,000
|
49,727
|
| Hilcorp
Energy Company 144A |
|
6.25
|
11-1-2028
|
75,000
|
70,871
|
| Hilcorp
Energy Company 144A |
|
6.25
|
4-15-2032
|
30,000
|
26,890
|
| Oceaneering
International Incorporated |
|
4.65
|
11-15-2024
|
80,000
|
74,634
|
| Oceaneering
International Incorporated |
|
6.00
|
2-1-2028
|
225,000
|
192,095
|
| Pattern
Energy Operations LP 144A |
|
4.50
|
8-15-2028
|
500,000
|
450,523
|
| USA
Compression Partners LP |
|
6.88
|
4-1-2026
|
150,000
|
140,678
|
| USA
Compression Partners LP |
|
6.88
|
9-1-2027
|
100,000
|
92,444
|
| |
|
|
|
|
1,523,360
|
| Oil,
gas & consumable fuels: 4.68% |
|
|
|
|
|
| Aethon
United 144A |
|
8.25
|
2-15-2026
|
430,000
|
429,819
|
| Antero
Resources Corporation 144A |
|
5.38
|
3-1-2030
|
65,000
|
61,182
|
| Archrock
Partners LP 144A |
|
6.25
|
4-1-2028
|
135,000
|
122,850
|
| Archrock
Partners LP 144A |
|
6.88
|
4-1-2027
|
125,000
|
117,188
|
| Buckeye
Partners LP 144A |
|
4.50
|
3-1-2028
|
25,000
|
22,134
|
| Buckeye
Partners LP |
|
5.85
|
11-15-2043
|
150,000
|
114,448
|
| Cheniere
Energy Partners LP |
|
4.50
|
10-1-2029
|
75,000
|
69,062
|
| CQP
Holdco LP 144A |
|
5.50
|
6-15-2031
|
295,000
|
260,919
|
| DT
Midstream Incorporated 144A |
|
4.13
|
6-15-2029
|
85,000
|
74,628
|
| DT
Midstream Incorporated 144A |
|
4.38
|
6-15-2031
|
180,000
|
153,900
|
| Encino
Acquisition Partners Company 144A |
|
8.50
|
5-1-2028
|
355,000
|
337,977
|
| EnLink
Midstream Partners LP |
|
5.05
|
4-1-2045
|
210,000
|
151,293
|
| EnLink
Midstream Partners LP |
|
5.38
|
6-1-2029
|
297,000
|
277,695
|
| EnLink
Midstream Partners LP |
|
5.45
|
6-1-2047
|
105,000
|
80,194
|
| EnLink
Midstream Partners LP |
|
5.60
|
4-1-2044
|
75,000
|
58,772
|
| EnLink
Midstream Partners LP 144A |
|
5.63
|
1-15-2028
|
35,000
|
33,623
|
| EnLink
Midstream Partners LP 144A |
|
6.50
|
9-1-2030
|
155,000
|
154,225
|
| Enviva
Partners LP 144A |
|
6.50
|
1-15-2026
|
600,000
|
582,810
|
| EQM
Midstream Partners 144A |
|
7.50
|
6-1-2027
|
5,000
|
4,944
|
| EQM
Midstream Partners 144A |
|
7.50
|
6-1-2030
|
120,000
|
119,137
|
| Harvest
Midstream LP 144A |
|
7.50
|
9-1-2028
|
145,000
|
137,190
|
| Hess
Midstream Operation Company 144A |
|
5.50
|
10-15-2030
|
30,000
|
27,315
|
| Kinetik
Holdings LP Company 144A |
|
5.88
|
6-15-2030
|
120,000
|
114,157
|
The accompanying notes are an integral part of these financial
statements.
20 | Allspring Utilities and High Income
Fund
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Oil,
gas & consumable fuels (continued) |
|
|
|
|
|
| Murphy
Oil Corporation |
|
5.75%
|
8-15-2025
|
$ 15,000
|
$
14,857 |
| Murphy
Oil Corporation |
|
5.88
|
12-1-2027
|
25,000
|
24,310
|
| Murphy
Oil Corporation |
|
6.13
|
12-1-2042
|
75,000
|
58,683
|
| Murphy
Oil Corporation |
|
6.38
|
7-15-2028
|
135,000
|
132,943
|
| Nabors
Industries Limited 144A |
|
7.38
|
5-15-2027
|
180,000
|
173,700
|
| New
Fortress Energy Incorporated 144A |
|
6.50
|
9-30-2026
|
305,000
|
288,942
|
| Occidental
Petroleum Corporation |
|
6.45
|
9-15-2036
|
525,000
|
561,062
|
| Rockies
Express Pipeline LLC 144A |
|
6.88
|
4-15-2040
|
180,000
|
149,816
|
| Southwestern
Energy Company |
|
4.75
|
2-1-2032
|
130,000
|
115,877
|
| Southwestern
Energy Company |
|
7.75
|
10-1-2027
|
41,000
|
42,486
|
| Southwestern
Energy Company |
|
8.38
|
9-15-2028
|
110,000
|
115,713
|
| Tallgrass
Energy Partners LP 144A |
|
6.00
|
12-31-2030
|
125,000
|
109,408
|
| Tallgrass
Energy Partners LP 144A |
|
6.00
|
9-1-2031
|
125,000
|
109,375
|
| Venture
Global LNG Incorporated 144A |
|
3.88
|
11-1-2033
|
35,000
|
29,079
|
| Western
Midstream Operating LP |
|
5.30
|
3-1-2048
|
225,000
|
197,838
|
| |
|
|
|
|
5,629,551
|
| Financials:
4.91% |
|
|
|
|
|
| Capital
markets: 0.27% |
|
|
|
|
|
| MSCI
Incorporated 144A |
|
4.00
|
11-15-2029
|
120,000
|
106,813
|
| Oppenheimer
Holdings Incorporated |
|
5.50
|
10-1-2025
|
225,000
|
224,021
|
| |
|
|
|
|
330,834
|
| Consumer
finance: 2.25% |
|
|
|
|
|
| FirstCash
Incorporated 144A |
|
4.63
|
9-1-2028
|
80,000
|
69,269
|
| FirstCash
Incorporated 144A |
|
5.63
|
1-1-2030
|
145,000
|
129,775
|
| Ford
Motor Credit Company LLC |
|
4.39
|
1-8-2026
|
400,000
|
376,592
|
| Ford
Motor Credit Company LLC |
|
5.11
|
5-3-2029
|
535,000
|
494,434
|
| LFS
TopCo LLC 144A |
|
5.88
|
10-15-2026
|
120,000
|
97,696
|
| Navient
Corporation |
|
5.00
|
3-15-2027
|
195,000
|
166,943
|
| Navient
Corporation |
|
5.50
|
3-15-2029
|
185,000
|
149,857
|
| Navient
Corporation |
|
5.63
|
8-1-2033
|
125,000
|
93,375
|
| Navient
Corporation |
|
5.88
|
10-25-2024
|
225,000
|
216,044
|
| OneMain
Finance Corporation |
|
5.38
|
11-15-2029
|
75,000
|
62,116
|
| OneMain
Finance Corporation |
|
6.13
|
3-15-2024
|
50,000
|
48,820
|
| OneMain
Finance Corporation |
|
7.13
|
3-15-2026
|
125,000
|
116,436
|
| PECF
USS Intermediate Holding III Corporation 144A |
|
8.00
|
11-15-2029
|
160,000
|
133,625
|
| PRA
Group Incorporated 144A |
|
5.00
|
10-1-2029
|
320,000
|
275,718
|
| Rocket
Mortgage LLC 144A |
|
2.88
|
10-15-2026
|
190,000
|
159,600
|
| Rocket
Mortgage LLC 144A |
|
4.00
|
10-15-2033
|
155,000
|
115,492
|
| |
|
|
|
|
2,705,792
|
| Diversified
financial services: 0.47% |
|
|
|
|
|
| Hat
Holdings LLC 144A |
|
3.38
|
6-15-2026
|
120,000
|
104,135
|
| Hat
Holdings LLC 144A |
|
6.00
|
4-15-2025
|
125,000
|
121,118
|
| LPL
Holdings Incorporated 144A |
|
4.38
|
5-15-2031
|
210,000
|
184,811
|
| United
Wholesale Mortgage LLC 144A |
|
5.50
|
11-15-2025
|
170,000
|
150,025
|
| |
|
|
|
|
560,089
|
| Insurance: 0.79%
|
|
|
|
|
|
| Amwins
Group Incorporated 144A |
|
4.88
|
6-30-2029
|
210,000
|
182,706
|
| AssuredPartners
Incorporated 144A |
|
5.63
|
1-15-2029
|
135,000
|
112,213
|
| Broadstreet
Partners Incorporated 144A |
|
5.88
|
4-15-2029
|
345,000
|
284,482
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 21
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Insurance
(continued) |
|
|
|
|
|
| HUB
International Limited 144A |
|
5.63%
|
12-1-2029
|
$ 65,000
|
$
56,852 |
| HUB
International Limited 144A |
|
7.00
|
5-1-2026
|
55,000
|
53,887
|
| Ryan
Specialty Group LLC 144A |
|
4.38
|
2-1-2030
|
165,000
|
148,706
|
| Tri
Pointe Homes |
|
5.88
|
6-15-2024
|
110,000
|
108,577
|
| |
|
|
|
|
947,423
|
| Mortgage
REITs: 0.30% |
|
|
|
|
|
| Blackstone
Mortgage Trust Incorporated 144A |
|
3.75
|
1-15-2027
|
125,000
|
108,769
|
| Starwood
Property Trust Incorporated 144A |
|
4.38
|
1-15-2027
|
185,000
|
164,650
|
| Starwood
Property Trust Incorporated |
|
4.75
|
3-15-2025
|
90,000
|
85,698
|
| |
|
|
|
|
359,117
|
| Thrifts
& mortgage finance: 0.83% |
|
|
|
|
|
| Enact
Holdings Incorporated 144A |
|
6.50
|
8-15-2025
|
460,000
|
439,300
|
| Ladder
Capital Finance Holdings LP 144A |
|
4.25
|
2-1-2027
|
50,000
|
43,738
|
| Ladder
Capital Finance Holdings LP 144A |
|
4.75
|
6-15-2029
|
220,000
|
186,417
|
| Ladder
Capital Finance Holdings LP 144A |
|
5.25
|
10-1-2025
|
195,000
|
189,688
|
| United
Wholesale Mortgage LLC 144A |
|
5.50
|
4-15-2029
|
180,000
|
140,026
|
| |
|
|
|
|
999,169
|
| Health
care: 1.06% |
|
|
|
|
|
| Health
care providers & services: 0.87% |
|
|
|
|
|
| 180
Medical Incorporated 144A |
|
3.88
|
10-15-2029
|
200,000
|
174,104
|
| Air
Methods Corporation 144A |
|
8.00
|
5-15-2025
|
110,000
|
61,355
|
| Davita
Incorporated 144A |
|
4.63
|
6-1-2030
|
370,000
|
297,865
|
| Encompass
Health Corporation |
|
5.75
|
9-15-2025
|
75,000
|
74,301
|
| Pediatrix
Medical Group 144A |
|
5.38
|
2-15-2030
|
110,000
|
93,772
|
| Select
Medical Corporation 144A |
|
6.25
|
8-15-2026
|
255,000
|
243,948
|
| Tenet
Healthcare Corporation 144A |
|
4.88
|
1-1-2026
|
100,000
|
95,000
|
| |
|
|
|
|
1,040,345
|
| Health
care technology: 0.16% |
|
|
|
|
|
| IQVIA
Incorporated 144A |
|
5.00
|
10-15-2026
|
200,000
|
193,752
|
| Life
sciences tools & services: 0.03% |
|
|
|
|
|
| Charles
River Laboratories Incorporated 144A |
|
4.00
|
3-15-2031
|
50,000
|
42,438
|
| Industrials:
3.83% |
|
|
|
|
|
| Aerospace
& defense: 0.78% |
|
|
|
|
|
| Spirit
AeroSystems Holdings Incorporated 144A |
|
5.50
|
1-15-2025
|
335,000
|
328,005
|
| Spirit
AeroSystems Holdings Incorporated 144A |
|
7.50
|
4-15-2025
|
157,000
|
153,532
|
| TransDigm
Group Incorporated 144A |
|
6.25
|
3-15-2026
|
145,000
|
142,463
|
| TransDigm
Group Incorporated |
|
6.38
|
6-15-2026
|
75,000
|
72,000
|
| TransDigm
Group Incorporated |
|
7.50
|
3-15-2027
|
245,000
|
238,875
|
| |
|
|
|
|
934,875
|
| Airlines: 0.66%
|
|
|
|
|
|
| American
Airlines Group Incorporated 144A |
|
5.75
|
4-20-2029
|
90,000
|
81,247
|
| Hawaiian
Airlines Incorporated |
|
3.90
|
7-15-2027
|
147,316
|
124,046
|
| Hawaiian
Brand Intellectual Property Limited 144A |
|
5.75
|
1-20-2026
|
375,000
|
342,294
|
| Spirit
Loyalty Cayman Limited 144A |
|
8.00
|
9-20-2025
|
245,000
|
248,839
|
| |
|
|
|
|
796,426
|
The accompanying notes are an integral part of these financial
statements.
22 | Allspring Utilities and High Income
Fund
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Commercial
services & supplies: 0.69% |
|
|
|
|
|
| Allied
Universal Holdco LLC 144A |
|
6.00%
|
6-1-2029
|
$ 385,000
|
$
285,745 |
| Aramark
Services Incorporated 144A |
|
6.38
|
5-1-2025
|
130,000
|
128,863
|
| CoreCivic
Incorporated |
|
8.25
|
4-15-2026
|
420,000
|
415,208
|
| |
|
|
|
|
829,816
|
| Electrical
equipment: 0.12% |
|
|
|
|
|
| Sensata
Technologies BV 144A |
|
5.88
|
9-1-2030
|
155,000
|
151,509
|
| Electronic
equipment, instruments & components: 0.20% |
|
|
|
|
|
| Wesco
Distribution Incorporated 144A |
|
7.13
|
6-15-2025
|
245,000
|
245,044
|
| Machinery: 0.61%
|
|
|
|
|
|
| Stevens
Holding Company Incorporated 144A |
|
6.13
|
10-1-2026
|
165,000
|
163,763
|
| TK
Elevator US Newco Incorporated 144A |
|
5.25
|
7-15-2027
|
335,000
|
304,850
|
| Werner
FinCo LP 144A |
|
8.75
|
7-15-2025
|
295,000
|
259,753
|
| |
|
|
|
|
728,366
|
| Road
& rail: 0.46% |
|
|
|
|
|
| Uber
Technologies Incorporated 144A |
|
4.50
|
8-15-2029
|
300,000
|
260,438
|
| Uber
Technologies Incorporated 144A |
|
8.00
|
11-1-2026
|
285,000
|
287,928
|
| |
|
|
|
|
548,366
|
| Trading
companies & distributors: 0.31% |
|
|
|
|
|
| Fortress
Transportation & Infrastructure Investors LLC 144A |
|
5.50
|
5-1-2028
|
150,000
|
127,631
|
| Fortress
Transportation & Infrastructure Investors LLC 144A |
|
6.50
|
10-1-2025
|
214,000
|
199,375
|
| Fortress
Transportation & Infrastructure Investors LLC 144A |
|
9.75
|
8-1-2027
|
43,000
|
43,104
|
| |
|
|
|
|
370,110
|
| Information
technology: 1.72% |
|
|
|
|
|
| Communications
equipment: 0.16% |
|
|
|
|
|
| Ciena
Corporation 144A |
|
4.00
|
1-31-2030
|
80,000
|
69,100
|
| CommScope
Technologies LLC 144A |
|
4.75
|
9-1-2029
|
60,000
|
51,057
|
| CommScope
Technologies LLC 144A |
|
5.00
|
3-15-2027
|
85,000
|
67,083
|
| |
|
|
|
|
187,240
|
| IT
services: 0.48% |
|
|
|
|
|
| Sabre
GLBL Incorporated 144A |
|
7.38
|
9-1-2025
|
40,000
|
37,896
|
| Sabre
GLBL Incorporated 144A |
|
9.25
|
4-15-2025
|
550,000
|
541,910
|
| |
|
|
|
|
579,806
|
| Semiconductors
& semiconductor equipment: 0.06% |
|
|
|
|
|
| QORVO
Incorporated 144A |
|
3.38
|
4-1-2031
|
90,000
|
72,054
|
| Software: 1.02%
|
|
|
|
|
|
| Fair
Isaac Corporation 144A |
|
5.25
|
5-15-2026
|
220,000
|
212,826
|
| MPH
Acquisition Holdings LLC 144A |
|
5.50
|
9-1-2028
|
125,000
|
106,563
|
| MPH
Acquisition Holdings LLC 144A |
|
5.75
|
11-1-2028
|
340,000
|
269,960
|
| NCR
Corporation 144A |
|
5.13
|
4-15-2029
|
40,000
|
37,351
|
| NCR
Corporation 144A |
|
6.13
|
9-1-2029
|
200,000
|
190,708
|
| NortonLifeLock
Incorporated 144A |
|
5.00
|
4-15-2025
|
225,000
|
222,075
|
| SS&C
Technologies Incorporated 144A |
|
5.50
|
9-30-2027
|
200,000
|
189,510
|
| |
|
|
|
|
1,228,993
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 23
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Materials:
1.37% |
|
|
|
|
|
| Chemicals: 0.50%
|
|
|
|
|
|
| Avient
Corporation 144A |
|
7.13%
|
8-1-2030
|
$ 60,000
|
$
59,245 |
| Celanese
US Holding LLC |
|
6.05
|
3-15-2025
|
230,000
|
230,585
|
| Chemours
Company 144A |
|
4.63
|
11-15-2029
|
185,000
|
152,625
|
| Olympus
Water US Holding Corporation 144A |
|
4.25
|
10-1-2028
|
200,000
|
162,600
|
| |
|
|
|
|
605,055
|
| Containers
& packaging: 0.70% |
|
|
|
|
|
| Ball
Corporation |
|
2.88
|
8-15-2030
|
140,000
|
113,550
|
| Berry
Global Incorporated 144A |
|
5.63
|
7-15-2027
|
270,000
|
263,655
|
| Clydesdale
Acquisition Holdings Incorporated 144A |
|
8.75
|
4-15-2030
|
135,000
|
117,387
|
| Crown
Cork & Seal Company Incorporated |
|
7.38
|
12-15-2026
|
165,000
|
172,425
|
| Sealed
Air Corporation 144A |
|
5.00
|
4-15-2029
|
85,000
|
80,750
|
| Sealed
Air Corporation 144A |
|
5.13
|
12-1-2024
|
100,000
|
99,000
|
| |
|
|
|
|
846,767
|
| Metals
& mining: 0.15% |
|
|
|
|
|
| Arches
Buyer Incorporated 144A |
|
4.25
|
6-1-2028
|
125,000
|
100,625
|
| Cleveland-Cliffs
Incorporated |
|
5.88
|
6-1-2027
|
80,000
|
76,600
|
| |
|
|
|
|
177,225
|
| Paper
& forest products: 0.02% |
|
|
|
|
|
| Clearwater
Paper Corporation 144A |
|
4.75
|
8-15-2028
|
20,000
|
17,882
|
| Real
estate: 0.78% |
|
|
|
|
|
| Equity
REITs: 0.78% |
|
|
|
|
|
| Iron
Mountain Incorporated 144A |
|
4.50
|
2-15-2031
|
250,000
|
207,680
|
| Iron
Mountain Incorporated 144A |
|
5.25
|
7-15-2030
|
315,000
|
278,775
|
| Service
Properties Trust Company |
|
3.95
|
1-15-2028
|
130,000
|
96,795
|
| Service
Properties Trust Company |
|
4.38
|
2-15-2030
|
100,000
|
73,305
|
| Service
Properties Trust Company |
|
4.75
|
10-1-2026
|
100,000
|
81,305
|
| Service
Properties Trust Company |
|
4.95
|
2-15-2027
|
150,000
|
121,479
|
| Service
Properties Trust Company |
|
5.25
|
2-15-2026
|
75,000
|
63,830
|
| Service
Properties Trust Company |
|
7.50
|
9-15-2025
|
15,000
|
14,395
|
| |
|
|
|
|
937,564
|
| Utilities:
1.35% |
|
|
|
|
|
| Electric
utilities: 0.40% |
|
|
|
|
|
| NextEra
Energy Operating Partners LP 144A |
|
4.25
|
9-15-2024
|
2,000
|
1,950
|
| NextEra
Energy Operating Partners LP 144A |
|
4.50
|
9-15-2027
|
200,000
|
185,000
|
| PG&E
Corporation |
|
5.00
|
7-1-2028
|
25,000
|
22,199
|
| PG&E
Corporation |
|
5.25
|
7-1-2030
|
315,000
|
272,318
|
| |
|
|
|
|
481,467
|
| Independent
power & renewable electricity producers: 0.95% |
|
|
|
|
|
| NSG
Holdings LLC 144A |
|
7.75
|
12-15-2025
|
202,208
|
195,636
|
| TerraForm
Power Operating LLC 144A |
|
4.75
|
1-15-2030
|
175,000
|
154,937
|
| TerraForm
Power Operating LLC 144A |
|
5.00
|
1-31-2028
|
525,000
|
481,199
|
The accompanying notes are an integral part of these financial
statements.
24 | Allspring Utilities and High Income
Fund
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
Independent
power & renewable electricity producers
(continued) |
|
|
|
|
|
| Vistra
Operations Company LLC 144A |
|
4.38%
|
5-1-2029
|
$ 110,000
|
$
95,898 |
| Vistra
Operations Company LLC 144A |
|
5.63
|
2-15-2027
|
225,000
|
216,563
|
| |
|
|
|
|
1,144,233
|
| Total
Corporate bonds and notes (Cost $39,461,258) |
|
|
|
|
36,254,167
|
| Loans:
2.17% |
|
|
|
|
|
| Communication
services: 0.18% |
|
|
|
|
|
| Media: 0.18%
|
|
|
|
|
|
| Clear
Channel Outdoor Holdings (1 Month LIBOR +3.50%) <± |
|
5.94
|
8-21-2026
|
90,000
|
83,163
|
| Hubbard
Radio LLC (3 Month LIBOR +4.25%) ± |
|
6.78
|
3-28-2025
|
140,155
|
132,212
|
| |
|
|
|
|
215,375
|
| Consumer
discretionary: 0.11% |
|
|
|
|
|
| Hotels,
restaurants & leisure: 0.07% |
|
|
|
|
|
| Dave
& Buster's Incorporated (U.S. SOFR 1 Month +5.00%) <± |
|
7.46
|
6-29-2029
|
85,000
|
82,946
|
| Multiline
retail: 0.04% |
|
|
|
|
|
| LSF9
Atlantis Holdings LLC (U.S. SOFR 1 Month +7.25%) ౠ|
|
9.30
|
3-31-2029
|
55,000
|
53,488
|
| Energy:
0.17% |
|
|
|
|
|
| Oil,
gas & consumable fuels: 0.17% |
|
|
|
|
|
| GIP
II Blue Holdings LP (1 Month LIBOR +4.50%) ± |
|
6.75
|
9-29-2028
|
124,687
|
123,284
|
| M6
ETX Holdings II MidCo LLC (U.S. SOFR 1 Month +4.50%) <± |
|
7.12
|
8-10-2029
|
85,000
|
83,672
|
| |
|
|
|
|
206,956
|
| Financials:
0.68% |
|
|
|
|
|
| Diversified
financial services: 0.48% |
|
|
|
|
|
| Intelsat
Jackson Holdings SA (U.S. SOFR 1 Month +4.50%) <± |
|
7.44
|
2-1-2029
|
238,675
|
225,746
|
| Resolute
Investment Managers Incorporated (1 Month LIBOR +4.25%) ౠ|
|
6.50
|
4-30-2024
|
93,790
|
85,349
|
| Resolute
Investment Managers Incorporated (1 Month LIBOR +8.00%) ౠ|
|
10.81
|
4-30-2025
|
105,857
|
97,653
|
| Russell
Investments US Institutional Holdco Incorporated (1 Month LIBOR +3.50%) ± |
|
5.00
|
5-30-2025
|
173,532
|
163,880
|
| |
|
|
|
|
572,628
|
| Insurance: 0.09%
|
|
|
|
|
|
| Asurion
LLC (3 Month LIBOR +2.00%) <± |
|
5.36
|
11-3-2023
|
26,132
|
24,347
|
| Asurion
LLC (1 Month LIBOR +5.25%) ± |
|
7.77
|
1-31-2028
|
105,000
|
89,775
|
| |
|
|
|
|
114,122
|
| Mortgage
REITs: 0.11% |
|
|
|
|
|
| Claros
Mortgage Trust Incorporated (U.S. SOFR 1 Month +4.50%) ౠ|
|
6.89
|
8-9-2026
|
134,325
|
130,631
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 25
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Health
care: 0.23% |
|
|
|
|
|
| Health
care equipment & supplies: 0.05% |
|
|
|
|
|
| Surgery
Center Holdings Incorporated (1 Month LIBOR +3.75%) ± |
|
5.63%
|
8-31-2026
|
$ 58,032
|
$
56,229 |
| Pharmaceuticals: 0.18%
|
|
|
|
|
|
| Bausch
Health Companies Incorporated (U.S. SOFR 1 Month +5.25%) <± |
|
7.66
|
2-1-2027
|
270,000
|
214,650
|
| Industrials:
0.80% |
|
|
|
|
|
| Airlines: 0.31%
|
|
|
|
|
|
| Mileage
Plus Holdings LLC (1 Month LIBOR +5.25%) ± |
|
7.31
|
6-21-2027
|
250,000
|
253,555
|
| SkyMiles
IP Limited (3 Month LIBOR +3.75%) ± |
|
6.46
|
10-20-2027
|
115,000
|
116,375
|
| |
|
|
|
|
369,930
|
| Commercial
services & supplies: 0.32% |
|
|
|
|
|
| Polaris
Newco LLC (1 Month LIBOR +4.00%) ± |
|
6.52
|
6-2-2028
|
163,114
|
156,325
|
| The
Geo Group Incorporated (3 Month LIBOR +2.00%) ± |
|
4.79
|
3-22-2024
|
239,028
|
230,423
|
| |
|
|
|
|
386,748
|
| Machinery: 0.17%
|
|
|
|
|
|
| Vertical
US Newco Incorporated (6 Month LIBOR +3.50%) ± |
|
6.87
|
7-30-2027
|
41,016
|
39,760
|
| Werner
FinCo LP (3 Month LIBOR +4.00%) ౠ|
|
6.52
|
7-24-2024
|
177,209
|
163,476
|
| |
|
|
|
|
203,236
|
| Total
Loans (Cost $2,736,775) |
|
|
|
|
2,606,939
|
| |
|
|
Expiration
date |
Shares
|
|
| Rights: 0.00%
|
|
|
|
|
|
| Communication
services: 0.00% |
|
|
|
|
|
| Diversified
telecommunication services: 0.00% |
|
|
|
|
|
| Intelsat
Jackson Holdings SA Series A ♦† |
|
|
12-5-2025
|
460
|
0
|
| Intelsat
Jackson Holdings SA Series B ♦† |
|
|
12-5-2025
|
460
|
0
|
| Total
Rights (Cost $0) |
|
|
|
|
0
|
| |
|
|
Maturity
date |
Principal
|
|
| Yankee
corporate bonds and notes: 3.40% |
|
|
|
|
|
| Communication
services: 0.46% |
|
|
|
|
|
| Media: 0.21%
|
|
|
|
|
|
| Videotron
Limited 144A |
|
5.13
|
4-15-2027
|
$ 270,000
|
253,125
|
| Wireless
telecommunication services: 0.25% |
|
|
|
|
|
| Connect
U.S. Finco LLC 144A |
|
6.75
|
10-1-2026
|
100,000
|
91,698
|
| Telesat
Canada 144A |
|
5.63
|
12-6-2026
|
70,000
|
40,809
|
| VMED
O2 UK Financing I plc 144A |
|
4.75
|
7-15-2031
|
200,000
|
164,625
|
| |
|
|
|
|
297,132
|
The accompanying notes are an integral part of these financial
statements.
26 | Allspring Utilities and High Income
Fund
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Energy:
0.45% |
|
|
|
|
|
| Oil,
gas & consumable fuels: 0.45% |
|
|
|
|
|
| Baytex
Energy Corporation 144A |
|
8.75%
|
4-1-2027
|
$ 275,000
|
$
281,188 |
| Griffin
Coal Mining Company Limited 144A♦† |
|
9.50
|
12-1-2016
|
61,339
|
0
|
| Northriver
Midstream Finance LP 144A |
|
5.63
|
2-15-2026
|
270,000
|
259,200
|
| |
|
|
|
|
540,388
|
| Financials:
0.30% |
|
|
|
|
|
| Diversified
financial services: 0.30% |
|
|
|
|
|
| Castlelake
Aviation Finance 144A |
|
5.00
|
4-15-2027
|
170,000
|
146,597
|
| New
Red Finance Incorporated 144A |
|
4.00
|
10-15-2030
|
135,000
|
109,561
|
| New
Red Finance Incorporated 144A |
|
5.75
|
4-15-2025
|
110,000
|
110,550
|
| |
|
|
|
|
366,708
|
| Health
care: 0.71% |
|
|
|
|
|
| Biotechnology: 0.19%
|
|
|
|
|
|
| Grifols
Escrow Issuer SA 144A |
|
4.75
|
10-15-2028
|
265,000
|
220,891
|
| Pharmaceuticals: 0.52%
|
|
|
|
|
|
| Bausch
Health Companies Incorporated 144A |
|
4.88
|
6-1-2028
|
125,000
|
86,408
|
| Bausch
Health Companies Incorporated 144A |
|
5.25
|
1-30-2030
|
410,000
|
151,700
|
| Teva
Pharmaceutical Finance Netherlands III BV |
|
4.75
|
5-9-2027
|
35,000
|
30,614
|
| Teva
Pharmaceutical Finance Netherlands III BV |
|
6.00
|
4-15-2024
|
370,000
|
359,411
|
| |
|
|
|
|
628,133
|
| Industrials:
1.15% |
|
|
|
|
|
| Aerospace
& defense: 0.19% |
|
|
|
|
|
| Bombardier
Incorporated 144A |
|
7.88
|
4-15-2027
|
240,000
|
229,812
|
| Airlines: 0.43%
|
|
|
|
|
|
| Air
Canada Pass-Through Trust Series 2020-1 Class C 144A |
|
10.50
|
7-15-2026
|
340,000
|
356,283
|
| VistaJet
Malta Finance PLC 144A |
|
6.38
|
2-1-2030
|
180,000
|
154,800
|
| |
|
|
|
|
511,083
|
| Electrical
equipment: 0.31% |
|
|
|
|
|
| Sensata
Technologies BV 144A |
|
4.00
|
4-15-2029
|
270,000
|
233,105
|
| Sensata
Technologies BV 144A |
|
5.00
|
10-1-2025
|
45,000
|
44,056
|
| Sensata
Technologies BV 144A |
|
5.63
|
11-1-2024
|
100,000
|
100,424
|
| |
|
|
|
|
377,585
|
| Trading
companies & distributors: 0.22% |
|
|
|
|
|
| Fly
Leasing Limited 144A |
|
7.00
|
10-15-2024
|
485,000
|
266,750
|
| Materials:
0.33% |
|
|
|
|
|
| Containers
& packaging: 0.22% |
|
|
|
|
|
| Ardagh
Packaging Finance plc 144A |
|
4.13
|
8-15-2026
|
100,000
|
86,267
|
| Ardagh
Packaging Finance plc 144A |
|
5.25
|
4-30-2025
|
25,000
|
23,645
|
| Ardagh
Packaging Finance plc 144A |
|
6.00
|
6-15-2027
|
155,000
|
151,937
|
| |
|
|
|
|
261,849
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 27
Portfolio of
investments—August 31, 2022
| |
|
Interest
rate |
Maturity
date |
Principal
|
Value
|
| Metals
& mining: 0.11% |
|
|
|
|
|
| Constellium
SE 144A |
|
5.88%
|
2-15-2026
|
$ 140,000
|
$
134,648 |
| Total
Yankee corporate bonds and notes (Cost $4,958,816) |
|
|
|
|
4,088,104
|
| |
|
Yield
|
|
Shares
|
|
| Short-term
investments: 2.69% |
|
|
|
|
|
| Investment
companies: 2.69% |
|
|
|
|
|
| Allspring
Government Money Market Fund Select Class ♠∞## |
|
2.09
|
|
3,237,394
|
3,237,394
|
| Total
Short-term investments (Cost $3,237,394) |
|
|
|
|
3,237,394
|
| Total
investments in securities (Cost $131,648,122) |
124.76%
|
|
|
|
149,914,113
|
| Other
assets and liabilities, net |
(24.76)
|
|
|
|
(29,754,419)
|
| Total
net assets |
100.00%
|
|
|
|
$120,159,694
|
| ‡
|
Security
is valued using significant unobservable inputs. |
| †
|
Non-income-earning
security |
| 144A
|
The
security may be resold in transactions exempt from registration, normally to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933. |
| <
|
All or a
portion of the position represents an unfunded loan commitment. The rate represents the current interest rate if the loan is partially funded. |
| ±
|
Variable
rate investment. The rate shown is the rate in effect at period end. |
| ♦
|
The
security is fair valued in accordance with procedures approved by the Board of Trustees. |
| ##
|
All or a
portion of this security is segregated for unfunded loans. |
| ♠
|
The
issuer of the security is an affiliated person of the Fund as defined in the Investment Company Act of 1940. |
| ∞
|
The
rate represents the 7-day annualized yield at period end. |
| Abbreviations:
|
| LIBOR
|
London
Interbank Offered Rate |
| REIT
|
Real
estate investment trust |
| SOFR
|
Secured
Overnight Financing Rate |
Investments in affiliates
An
affiliated investment is an investment in which the Fund owns at least 5% of the outstanding voting shares of the issuer or as a result of other relationships, such as the Fund and the issuer having the same adviser or investment manager.
Transactions with issuers that were affiliates of the Fund at the end of the period were as follows:
| |
Value,
beginning of
period |
Purchases
|
Sales
proceeds |
Net
realized
gains
(losses) |
Net
change in
unrealized
gains
(losses) |
Value,
end of
period |
Shares,
end
of period |
Income
from
affiliated
securities |
| Short-term
investments |
|
|
|
|
|
|
|
| Allspring
Government Money Market Fund Select Class |
$3,085,704
|
$26,220,351
|
$(26,068,661)
|
$0
|
$0
|
$3,237,394
|
3,237,394
|
$11,029
|
The accompanying notes are an integral part of these
financial statements.
28 | Allspring Utilities and High Income
Fund
Statement of assets and
liabilities—August 31, 2022
| |
|
| Assets
|
|
|
Investments in unaffiliated securities, at value (cost
$128,410,728)
|
$
146,676,719 |
|
Investments in affiliated securities, at value (cost
$3,237,394)
|
3,237,394
|
|
Receivable for dividends and
interest
|
1,313,338
|
|
Receivable for investments
sold
|
293,862
|
|
Prepaid expenses and other
assets
|
3,060
|
|
Total
assets
|
151,524,373
|
| Liabilities
|
|
|
Secured borrowing
payable
|
30,000,000
|
|
Dividends
payable
|
705,826
|
|
Payable for investments
purchased
|
566,070
|
|
Advisory fee
payable
|
65,438
|
|
Accrued expenses and other
liabilities
|
27,345
|
|
Total
liabilities
|
31,364,679
|
|
Total net
assets
|
$120,159,694
|
| Net
assets consist of |
|
|
Paid-in
capital
|
$
103,151,704 |
|
Total distributable
earnings
|
17,007,990
|
|
Total net
assets
|
$120,159,694
|
| Net
asset value per share |
|
|
Based on $120,159,694 divided by 9,292,296 shares issued and outstanding (unlimited number of shares
authorized)
|
$12.93
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 29
Statement of
operations—year ended August 31, 2022
| |
|
| Investment
income |
|
|
Dividends
|
$
2,839,532 |
|
Interest
|
2,679,890
|
|
Income from affiliated
securities
|
11,029
|
|
Total investment
income
|
5,530,451
|
| Expenses
|
|
|
Advisory
fee
|
748,342
|
|
Administration
fee
|
74,834
|
|
Custody and accounting
fees
|
19,674
|
|
Professional
fees
|
140,678
|
|
Shareholder report
expenses
|
62,087
|
|
Trustees’ fees and
expenses
|
21,793
|
|
Transfer agent
fees
|
21,585
|
|
Interest
expense
|
386,111
|
|
Other fees and
expenses
|
26,587
|
|
Total
expenses
|
1,501,691
|
|
Net investment
income
|
4,028,760
|
| Realized
and unrealized gains (losses) on investments |
|
|
Net realized losses on
investments
|
(94,809)
|
|
Net change in unrealized gains (losses) on
investments
|
858,474
|
|
Net realized and unrealized gains (losses) on
investments
|
763,665
|
|
Net increase in net assets resulting from
operations
|
$4,792,425
|
The accompanying notes are an integral part of these
financial statements.
30 | Allspring Utilities and High Income
Fund
Statement of changes in net
assets
| |
|
|
| |
Year
ended
August 31, 2022 |
Year
ended
August 31, 2021 |
| Operations
|
|
|
|
Net investment
income
|
$
4,028,760 |
$
4,083,654 |
|
Net realized gains (losses) on
investments
|
(94,809)
|
1,243,278
|
|
Net change in unrealized gains (losses) on
investments
|
858,474
|
14,799,145
|
|
Net increase in net assets resulting from
operations
|
4,792,425
|
20,126,077
|
| Distributions
to shareholders from |
|
|
|
Net investment income and net realized
gains
|
(4,273,223)
|
(5,288,149)
|
|
Tax basis return of
capital
|
(4,078,136)
|
(2,655,332)
|
|
Total distributions to
shareholders
|
(8,351,359)
|
(7,943,481)
|
| Capital
share transactions |
|
|
|
Net asset value of common shares issued under the Automatic Dividend Reinvestment
Plan
|
108,832
|
150,407
|
|
Total increase (decrease) in net
assets
|
(3,450,102)
|
12,333,003
|
| Net
assets |
|
|
|
Beginning of
period
|
123,609,796
|
111,276,793
|
|
End of
period
|
$120,159,694
|
$123,609,796
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 31
Statement of cash
flows—year ended August 31, 2022
| |
|
| Cash
flows from operating activities: |
|
|
Net increase in net assets resulting from
operations
|
$
4,792,425 |
| Adjustments
to reconcile net increase in net assets from operations to net cash provided by operating activities: |
|
|
Purchase of long-term
securities
|
(36,195,771)
|
|
Proceeds from the sales of long-term
securities
|
35,243,059
|
|
Amortization,
net
|
107,824
|
|
Purchases and sales of short-term securities,
net
|
(151,690)
|
|
Decrease in receivable for investments
sold
|
123,796
|
|
Increase in receivable for dividends and
interest
|
(24,954)
|
|
Decrease in prepaid expenses and other
assets
|
15,121
|
|
Decrease in payable for investments
purchased
|
(159,841)
|
|
Increase in advisory fee
payable
|
2,612
|
|
Increase in accrued expenses and other
liabilities
|
21,062
|
|
Net realized losses on
investments
|
94,809
|
|
Net change in unrealized gains (losses) on
investments
|
(858,474)
|
|
Net cash provided by operating
activities
|
3,009,978
|
| Cash
flows from financing activities: |
|
|
Increase in secured borrowing
payable
|
5,000,000
|
|
Cash distributions
paid
|
(8,209,644)
|
|
Net cash used in financing
activities
|
(3,209,644)
|
|
Net decrease in
cash
|
(199,666)
|
| Cash:
|
|
|
Beginning of
period
|
199,666
|
|
End of
period
|
$
0 |
| Supplemental
cash disclosure |
|
|
Cash paid for
interest
|
$
383,663 |
| Supplemental
non-cash financing disclosure |
|
|
Reinvestment of
dividends
|
$
108,832 |
The accompanying notes are an integral part of these
financial statements.
32 | Allspring Utilities and High Income
Fund
Financial highlights
(For a share outstanding throughout each period)
| |
Year
ended August 31 |
| |
2022
|
2021
|
2020
|
2019
|
2018
|
|
Net asset value, beginning of
period
|
$13.31
|
$12.00
|
$12.94
|
$12.43
|
$13.48
|
|
Net investment
income
|
0.43
|
0.33
|
0.37
|
0.80
|
0.85
|
|
Net realized and unrealized gains (losses) on
investments
|
0.09
|
1.84
|
(0.36)
|
0.61
|
(1.00)
|
|
Total from investment
operations
|
0.52
|
2.17
|
0.01
|
1.41
|
(0.15)
|
| Distributions
to shareholders from |
|
|
|
|
|
|
Net investment
income
|
(0.46)
|
(0.46)
|
(0.41)
|
(0.85)
|
(0.90)
|
|
Net realized
gains
|
0.00
|
(0.11)
|
(0.04)
|
0.00
|
0.00
|
|
Tax basis return of
capital
|
(0.44)
|
(0.29)
|
(0.50)
|
(0.05)
|
0.00
|
|
Total distributions to
shareholders
|
(0.90)
|
(0.86)
|
(0.95)
|
(0.90)
|
(0.90)
|
|
Net asset value, end of
period
|
$12.93
|
$13.31
|
$12.00
|
$12.94
|
$12.43
|
|
Market value, end of
period
|
$12.34
|
$14.71
|
$12.78
|
$13.03
|
$12.65
|
|
Total return based on market
value1
|
(10.17)%
|
23.02%
|
5.72%
|
10.70%
|
1.85%
|
| Ratios
to average net assets (annualized) |
|
|
|
|
|
|
Net
expenses2
|
1.25 %
|
1.09%
|
1.35%
|
1.63%
|
1.42%
|
|
Net investment
income
|
3.34 %
|
3.49%
|
3.21%
|
6.60%
|
6.51%
|
| Supplemental
data |
|
|
|
|
|
|
Portfolio turnover
rate
|
23%
|
34%
|
68%
|
131%
|
109%
|
|
Net assets, end of period (000s
omitted)
|
$120,160
|
$123,610
|
$111,277
|
$119,820
|
$114,992
|
|
Borrowings outstanding, end of period (000s
omitted)
|
$30,000
|
$25,000
|
$22,000
|
$22,000
|
$22,000
|
|
Asset coverage per $1,000 of borrowing, end of
period
|
$5,005
|
$5,944
|
$6,058
|
$6,446
|
$6,227
|
|
1 |
Total
return is calculated assuming a purchase of common stock on the first day and a sale on the last day of the period reported. Dividends and distributions, if any, are assumed for purposes of these calculations to be reinvested at prices obtained
under the Fund’s Automatic Dividend Reinvestment Plan. Total return does not reflect brokerage commissions that a shareholder would pay on the purchase and sale of shares. |
|
2 |
Ratios
include interest expense relating to interest associated with borrowings and/or leverage transactions as follows: |
| Year
ended August 31, 2022 |
0.32%
|
| Year
ended August 31, 2021 |
0.17%
|
| Year
ended August 31, 2020 |
0.41%
|
| Year
ended August 31, 2019 |
0.59%
|
| Year
ended August 31, 2018 |
0.46%
|
The accompanying notes are an integral part of these financial
statements.
Allspring Utilities and High Income
Fund | 33
Notes to financial
statements
1. ORGANIZATION
Allspring 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 . Originally classified as non-diversified, the Fund was reclassified as a diversified closed-end management investment company in
September 2014. As an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), the Fund follows the accounting and reporting guidance in Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
Effective on November 1, 2021, the sale transaction of Wells
Fargo Asset Management ("WFAM") by Wells Fargo & Company to GTCR LLC and Reverence Capital Partners, L.P. was closed. In connection with the closing of the transaction, WFAM became known as Allspring Global Investments (“Allspring”)
and various entities that provided services to the Fund changed their names to "Allspring", including Allspring Funds Management, LLC, the adviser to the Fund, and Allspring Global Investments, LLC, the subadviser to the Fund. Consummation of the
transaction resulted in new advisory and subadvisory agreements which became effective on November 1, 2021.
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 income and expenses during the reporting period. Actual results could differ from those estimates.
Securities valuation
All investments are valued each business day as of the close of regular
trading on the New York Stock Exchange (generally 4 p.m. Eastern Time), although the Fund may deviate from this calculation time under unusual or unexpected circumstances.
Equity securities that are listed on a foreign or domestic
exchange or market are valued at the official closing price or, if none, the last sales price.
Debt securities are valued at the evaluated bid price provided
by an independent pricing service (e.g. taking into account various factors, including yields, maturities, or credit ratings) or, if a reliable price is not available, the quoted bid price from an independent broker-dealer.
Investments in registered open-end investment companies are
valued at net asset value.
Investments which are not
valued using any of the methods discussed above are valued at their fair value, as determined in good faith by the Board of Trustees. The Board of Trustees has established a Valuation Committee comprised of the Trustees and has delegated to it the
authority to take any actions regarding the valuation of portfolio securities that the Valuation Committee deems necessary or appropriate, including determining the fair value of portfolio securities, unless the determination has been delegated to
the Allspring Global Investments Pricing Committee at Allspring Funds Management, LLC ("Allspring Funds Management"). The Board of Trustees retains the authority to make or ratify any valuation decisions or approve any changes to the Valuation
Procedures as it deems appropriate. On a quarterly basis, the Board of Trustees receives reports on any valuation actions taken by the Valuation Committee or the Allspring Global Investments Pricing Committee which may include items for
ratification.
When-issued transactions
The Fund may purchase securities on a forward commitment or when-issued basis.
The Fund records a when-issued transaction on the trade date and will segregate assets in an amount at least equal in value to the Fund's commitment to purchase when-issued securities. Securities purchased on a when-issued basis are marked-to-market
daily and the Fund begins earning interest on the settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.
Loans
The Fund may invest in direct debt instruments which are interests in amounts
owed to lenders by corporate or other borrowers. The loans pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. Investments in loans may be in the form of participations in loans or assignments of all
or a portion of loans from third parties. When the Fund purchases participations, it generally has no rights to enforce compliance with the terms of the loan agreement with the borrower. As a result, the Fund assumes the credit risk of both the
borrower and the lender that is selling the participation. When the Fund purchases assignments from lenders, it acquires direct rights against the borrower on the loan
34 | Allspring Utilities and High Income
Fund
Notes to financial
statements
and may enforce compliance by the borrower with the terms of the loan
agreement. Loans may include fully funded term loans or unfunded loan commitments, which are contractual obligations for future funding.
Security transactions and income recognition
Securities transactions are recorded on a trade date basis. Realized gains or
losses are recorded on the basis of identified cost.
Interest income is accrued daily and bond discounts are
accreted and premiums are amortized daily. 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 been
determined to be doubtful based on consistently applied procedures and the fair value has decreased. 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.
Distributions to
shareholders
Under a managed distribution plan, the Fund pays monthly
distributions to shareholders at an annual minimum fixed rate of 7% based on the Fund’s average monthly net asset value per share over the prior 12 months. The monthly distributions may be sourced from income, paid-in capital, and/or capital
gains, if any. To the extent that sufficient investment income is not available on a monthly basis, the Fund may distribute paid-in capital and/ or capital gains, if any, in order to maintain its managed distribution level.
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 accordance with income tax regulations and may differ from U.S. generally accepted accounting principles. Dividend sources are estimated at the
time of declaration. The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made prior to the Fund’s fiscal year end may be categorized as a tax return of
capital at year end.
Federal and other taxes
The Fund intends to continue to qualify as a regulated investment company by
distributing substantially all of its investment company taxable income and any net realized capital gains (after reduction for capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income taxes. Accordingly,
no provision for federal income taxes was required.
The
Fund’s income and federal excise tax returns and all financial records supporting those returns for the prior three fiscal years are subject to examination by the federal and Delaware revenue authorities. Management has analyzed the Fund's tax
positions taken on federal, state, and foreign tax returns, as applicable, for all open tax years and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
As of August 31, 2022, the aggregate cost of all investments
for federal income tax purposes was $131,952,358 and the unrealized gains (losses) consisted of:
| Gross
unrealized gains |
$23,198,004
|
| Gross
unrealized losses |
(5,236,249)
|
| Net
unrealized gains |
$17,961,755
|
As of August 31, 2022, the Fund had
capital loss carryforwards which consisted of $208,078 in short-term capital losses.
Allspring Utilities and High Income
Fund | 35
Notes to financial
statements
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 investments in
securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used in valuing the
Fund’s assets and liabilities as of August 31, 2022:
| |
Quoted
prices
(Level 1) |
Other
significant
observable inputs
(Level 2) |
Significant
unobservable inputs
(Level 3) |
Total
|
|
Assets |
|
|
|
|
| Investments
in: |
|
|
|
|
| Common
stocks |
|
|
|
|
| Communication
services |
$
0 |
$
0 |
$
101,634 |
$
101,634 |
| Energy
|
164,048
|
0
|
0
|
164,048
|
| Financials
|
198,689
|
0
|
0
|
198,689
|
| Utilities
|
103,263,138
|
0
|
0
|
103,263,138
|
| Corporate
bonds and notes |
0
|
36,254,167
|
0
|
36,254,167
|
| Loans
|
0
|
2,076,342
|
530,597
|
2,606,939
|
| Rights
|
|
|
|
|
| Communication
services |
0
|
0
|
0
|
0
|
| Yankee
corporate bonds and notes |
0
|
4,088,104
|
0
|
4,088,104
|
| Short-term
investments |
|
|
|
|
| Investment
companies |
3,237,394
|
0
|
0
|
3,237,394
|
| Total
assets |
$106,863,269
|
$42,418,613
|
$632,231
|
$149,914,113
|
Additional sector, industry or
geographic detail, if any, is included in the Portfolio of Investments.
For the year ended August 31, 2022, the Fund did not have any
transfers into/out of Level 3.
4. TRANSACTIONS WITH
AFFILIATES
Advisory fee
Allspring Funds Management, a wholly owned subsidiary of Allspring Global
Investments Holdings, LLC, a holding company indirectly owned by certain private funds of GTCR LLC and Reverence Capital Partners, L.P., is the adviser to the Fund and is entitled to receive a fee at an annual rate of 0.50% 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 to the extent excluded in calculating net assets.
Allspring Funds Management has retained the services of a
subadviser to provide daily portfolio management to the Fund. The fee for subadvisory services is borne by Allspring Funds Management. Allspring Global Investments, LLC, an affiliate of Allspring Funds Management and a wholly owned subsidiary of
Allspring Global Investments Holdings, LLC, is the subadviser to the Fund and is entitled to receive a fee from Allspring Funds Management at an annual rate of 0.40% of the Fund’s average daily total assets.
36 | Allspring Utilities and High Income
Fund
Notes to financial
statements
Administration fee
Allspring Funds Management also serves as the administrator to the Fund,
providing the Fund with a wide range of administrative services necessary to the operation of the Fund. Allspring Funds Management is entitled to receive an annual administration fee from the Fund equal to 0.05% of the Fund’s average daily
total assets.
Interfund transactions
The Fund may purchase or sell portfolio investment securities to certain
affiliates pursuant to Rule 17a-7 under the 1940 Act and under procedures adopted by the Board of Trustees. The procedures have been designed to ensure that these interfund transactions, which do not incur broker commissions, are effected at current
market prices. Pursuant to these procedures, the Fund had $3,363,108, $748,799 and $(18,241) in interfund purchases, sales and net realized gains (losses), respectively, during the year ended August 31, 2022.
5. CAPITAL SHARE TRANSACTIONS
The Fund has authorized an unlimited number of shares with no
par value. For the years ended August 31, 2022 and August 31, 2021, the Fund issued 8,014 and 11,872 shares, respectively.
Under an open-market share repurchase program (the
“Buyback Program”), the Fund is authorized to repurchase up to 10% of its outstanding shares in open market transactions. The Fund’s Board of Trustees has delegated to Allspring Funds Management full discretion to administer the
Buyback Program including the determination of the amount and timing of repurchases in accordance with the best interests of the Fund and subject to applicable legal limitations. During the year ended ended August 31, 2022, the Fund did not
repurchase any of its shares under the open-market share repurchase program.
6. BORROWINGS
The Fund has borrowed $30,000,000 through a revolving credit
facility administered by a major financial institution (the “Facility”). The Facility has a commitment amount of up to $30,000,000. The Fund is charged interest at the 1 Month London Interbank Offered Rate (LIBOR) plus a spread and a
commitment fee based on the unutilized amount of the commitment amount. With the market-wide transition away from LIBOR, when the 1 Month LIBOR ceases to be published (currently through June 30, 2023), the interest rate will transition to a spread
over the secured overnight financing rate (SOFR) rather than a spread over LIBOR. The financial institution holds a security interest in all the assets of the Fund as collateral for the borrowing. Based on the nature of the terms of the Facility and
comparative market rates, the carrying amount of the borrowings at August 31, 2022 approximates its fair value. If measured at fair value, the borrowings would be categorized as a Level 2 under the fair value hierarchy. Prior to October 8, 2021, the
Fund had a commitment amount of $25,000,000 with interest charged at the 30 day LIBOR or the 1 Month LIBOR plus a spread and a commitment fee based on the unutilized amount of the commitment amount.
During the year ended August 31, 2022, the Fund had average
borrowings outstanding of $28,769,863 at an average interest rate of 1.34% and recorded interest in the amount of $386,111, which represents 0.32% of its average daily net assets.
7. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding U.S. government
obligations (if any) and short-term securities, for the year ended August 31, 2022 were $36,195,771 and $34,040,551, respectively.
As of August 31, 2022, the Fund had unfunded loan commitments
of $512,651 with unrealized losses of $45,302.
8.
DISTRIBUTIONS TO SHAREHOLDERS
The tax character of
distributions paid during the years ended August 31, 2022 and August 31, 2021 were as follows:
| |
Year
ended August 31 |
| |
2022
|
2021
|
| Ordinary
income |
$4,273,223
|
$4,230,520
|
| Long-term
capital gain |
0
|
1,057,629
|
| Tax
basis return of capital |
4,078,136
|
2,655,332
|
As of August 31, 2022,
distributable earnings on a tax basis consisted of $(208,078) in capital loss carryover and $17,949,912 in unrealized gains (losses).
Allspring Utilities and High Income
Fund | 37
Notes to financial
statements
9. CONCENTRATION RISKS
As of the end of the period, the Fund concentrated its
portfolio of investments in the utilities sector. A fund that invests a substantial portion of its assets in any sector may be more affected by changes in that sector than would be a fund whose investments are not heavily weighted in any
sector.
10. INDEMNIFICATION
Under the Fund's organizational documents, the officers and
Trustees have been granted certain indemnification rights against certain liabilities that may arise out of performance of their duties to the Fund. The Fund has entered into a separate agreement with each Trustee that converts indemnification
rights currently existing under the Fund’s organizational documents into contractual rights that cannot be changed in the future without the consent of the Trustee. Additionally, in the normal course of business, the Fund may enter into
contracts with service providers that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated.
11. CORONAVIRUS (COVID-19) PANDEMIC
On March 11, 2020, the World Health Organization announced that
it had made the assessment that coronavirus disease 2019 (“COVID-19”) is a pandemic. The impacts of COVID-19 are affecting the entire global economy, individual companies and investment products, the funds, and the market in general.
There is significant uncertainty around the extent and duration of business disruptions related to COVID-19 and the impacts may last for an extended period of time. COVID-19 has led to significant uncertainty and volatility in the financial
markets.
12. SUBSEQUENT DISTRIBUTIONS
Under the managed distribution plan, the Fund declared the
following distributions to common shareholders:
| Declaration
date |
Record
date |
Payable
date |
Per
share amount |
| August 17, 2022
|
September 13, 2022
|
October 3, 2022
|
$0.07580
|
| September 30, 2022
|
October 14, 2022
|
November 1, 2022
|
0.07584
|
These distributions are not
reflected in the accompanying financial statements.
38 | Allspring Utilities and High Income
Fund
Report of independent
registered public accounting firm
To the Shareholders and Board of Trustees
Allspring
Utilities and High Income Fund:
Opinion on the Financial
Statements
We have audited the accompanying statement
of assets and liabilities of Allspring Utilities and High Income Fund (formerly, Wells Fargo Utilities and High Income Fund) (the Fund), including the portfolio of investments, as of August 31, 2022, the related statements of operations and cash
flows for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the
five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of August 31, 2022, the results of its operations and its cash flows for
the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting
principles.
Basis for Opinion
These financial statements and financial highlights are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of August 31, 2022, by correspondence with the
custodian, transfer agent, agent banks and brokers, or by other appropriate auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have not
been able to determine the specific year that we began serving as the auditor of one or more Allspring Funds investment companies; however, we are aware that we have served as the auditor of one or more Allspring Funds investment companies since at
least 1955.
Boston, Massachusetts
October 27, 2022
Allspring Utilities and High Income
Fund | 39
Other information
(unaudited)
TAX INFORMATION
For corporate shareholders, pursuant to Section 854 of the
Internal Revenue Code, 67% of ordinary income dividends qualify for the corporate dividends-received deduction for the fiscal year ended August 31, 2022.
Pursuant to Section 854 of the Internal Revenue Code,
$2,826,059 of income dividends paid during the fiscal year ended August 31, 2022 has been designated as qualified dividend income (QDI).
For the fiscal year ended August 31, 2022, $1,635,923 has been
designated as interest-related dividends for nonresident alien shareholders pursuant to Section 871 of the Internal Revenue Code.
PROXY VOTING INFORMATION
A description of the policies and procedures used to determine
how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-800-222-8222, visiting our website at allspringglobal.com, or
visiting the SEC website at sec.gov. Information regarding how the proxies related to portfolio securities were voted during the most recent 12-month period ended June 30 is available on the website at
allspringglobal.com or by visiting the SEC website at sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files its complete schedule of portfolio holdings with
the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the SEC website at sec.gov.
DELAWARE STATUTORY TRUST ACT – CONTROL SHARE
ACQUISITIONS
Because the Fund is organized as a Delaware
statutory trust, it is subject to the control share acquisition statute (the “Control Share Statute”) contained in Subchapter III of the Delaware Statutory Trust Act (the “DSTA”), which became automatically applicable to
listed closed-end funds, such as the Fund, upon its effective date of August 1, 2022 (the “Effective Date”).
The Control Share Statute provides for a series of voting power
thresholds above which shares are considered control shares. The first such threshold is 10% or more, but less than 15%, of all voting power. Voting power is defined by the Control Share Statute as the power to directly or indirectly exercise or
direct the exercise of the voting power of Fund shares in the election of trustees. Whether a voting power threshold is met is determined by aggregating the holdings of the acquirer as well as those of its “associates,” as defined by the
Control Share Statute.
Once a threshold is reached, an
acquirer has no voting rights under the DSTA or the governing documents of the Fund with respect to shares acquired in excess of that threshold (i.e., the “control shares”) unless approved by shareholders or exempted by the Fund’s
Board of Trustees. Approval by shareholders requires the affirmative vote of two-thirds of all votes entitled to be cast on the matter, excluding shares held by the acquirer and its associates as well as shares held by certain insiders of the Fund.
The Control Share Statute provides procedures for an acquirer to request a shareholder meeting for the purpose of considering whether voting rights shall be accorded to control shares. Further approval by the Fund’s shareholders would be
required with respect to additional acquisitions of control shares above the next applicable threshold level. In addition, the Fund’s Board of Trustees is permitted, but not obligated to, exempt specific acquisitions or classes of acquisitions
of control shares, either in advance or retroactively.
The Control Share Statute does not retroactively apply to
acquisitions of shares that occurred prior to the Effective Date. However, such shares will be aggregated with any shares acquired after the Effective Date for purposes of determining whether a voting power threshold is exceeded, resulting in the
newly acquired shares constituting control shares.
The
Control Share Statute requires shareholders to disclose to the Fund any control share acquisition within 10 days of such acquisition and, upon request, to provide any information that the Fund’s Board of Trustees reasonably believes is
necessary or desirable to determine whether a control share acquisition has occurred.
The foregoing is only a summary of certain aspects of the
Control Share Statute. Shareholders should consult their own legal counsel to determine the application of the Control Share Statute with respect to their shares of the Fund and any subsequent acquisitions of shares.
40 | Allspring Utilities and High Income
Fund
Other information
(unaudited)
BOARD OF TRUSTEES AND OFFICERS
The following table provides basic information about the Board
of Trustees (the “Trustees”) and Officers of the Fund. Each of the Trustees and Officers listed below acts in identical capacities for each fund in the Allspring family of funds, which consists of 124 mutual funds comprising the
Allspring Funds Trust, Allspring Variable Trust, Allspring Master Trust, and four closed-end funds, including the Fund (collectively the “Fund Complex”). The mailing address of each Trustee and Officer is 525 Market Street, 12th Floor,
San Francisco, CA 94105. The Board of Trustees is classified into three classes of which one is elected annually. Each Trustee serves a three-year term concurrent with the class from which the Trustee is elected. Each Officer serves an indefinite
term.
Independent Trustees
Name
and
year of birth |
Position
held and
length of service* |
Principal
occupations during past five years or longer |
Current
other
public company or
investment
company
directorships |
| Class
I - Non-Interested Trustees to serve until 2023 Annual Meeting of Shareholders |
Isaiah
Harris, Jr.
(Born 1952) |
Trustee,
since 2009; Audit
Committee
Chair,
since 2019 |
Retired.
Chairman of the Board of CIGNA Corporation from 2009 to 2021, and Director from 2005 to 2008. From 2003 to 2011, Director of Deluxe Corporation. Prior thereto, President and CEO of BellSouth Advertising and Publishing Corp. from 2005 to 2007,
President and CEO of BellSouth Enterprises from 2004 to 2005 and President of BellSouth Consumer Services from 2000 to 2003. Emeritus member of the Iowa State University Foundation Board of Governors. Emeritus Member of the Advisory Board of Iowa
State University School of Business. Advisory Board Member, Palm Harbor Academy (private school). Advisory Board Member, Fellowship of Christian Athletes. Mr. Harris is a certified public accountant (inactive status). |
N/A
|
David
F. Larcker
(Born 1950) |
Trustee,
since 2009 |
James
Irvin Miller Professor of Accounting at the Graduate School of Business (Emeritus), Stanford University, Director of the Corporate Governance Research Initiative and Senior Faculty of The Rock Center for Corporate Governance since 2006. From 2005
to 2008, Professor of Accounting at the Graduate School of Business, Stanford University. Prior thereto, Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania from 1985 to 2005. |
N/A
|
Olivia
S. Mitchell
(Born 1953) |
Trustee,
since 2006;
Nominating and
Governance
Committee Chair,
since 2018 |
International
Foundation of Employee Benefit Plans Professor since 1993, Wharton School of the University of Pennsylvania. 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 taught at Cornell University from 1978 to 1993. |
N/A
|
Allspring Utilities and High Income
Fund | 41
Other information
(unaudited)
Name
and
year of birth |
Position
held and
length of service* |
Principal
occupations during past five years or longer |
Current
other
public company or
investment
company
directorships |
| Class
II - Non-Interested Trustees to serve until 2024 Annual Meeting of Shareholders |
William
R. Ebsworth
(Born 1957) |
Trustee,
since 2015 |
Retired.
From 1984 to 2013, equities analyst, portfolio manager, research director and chief investment officer at Fidelity Management and Research Company in Boston, Tokyo, and Hong Kong, and retired in 2013 as Chief Investment Officer of Fidelity
Strategic Advisers, Inc. where he led a team of investment professionals managing client assets. Prior thereto, Board member of Hong Kong Securities Clearing Co., Hong Kong Options Clearing Corp., the Thailand International Fund, Ltd., Fidelity
Investments Life Insurance Company, and Empire Fidelity Investments Life Insurance Company. Audit Committee Chair and Investment Committee Chair of the Vincent Memorial Hospital Endowment (non-profit organization). Mr. Ebsworth is a CFA®
charterholder. |
N/A
|
Jane
A. Freeman
(Born 1953) |
Trustee,
since 2015;
Chair Liaison,
since 2018 |
Retired.
From 2012 to 2014 and 1999 to 2008, Chief Financial Officer of Scientific Learning Corporation. From 2008 to 2012, Ms. Freeman provided consulting services related to strategic business projects. Prior to 1999, Portfolio Manager at Rockefeller
& Co. and Scudder, Stevens & Clark. Board member of the Harding Loevner Funds from 1996 to 2014, serving as both Lead Independent Director and chair of the Audit Committee. Board member of the Russell Exchange Traded Funds Trust from 2011 to
2012 and the chair of the Audit Committee. Ms. Freeman is also an inactive Chartered Financial Analyst. |
N/A
|
| Class
III - Non-Interested Trustees to serve until 2022 Annual Meeting of Shareholders |
Timothy
J. Penny
(Born 1951) |
Trustee,
since 1996;
Chair,
since 2018 |
President
and Chief Executive Officer of Southern Minnesota Initiative Foundation, a non-profit organization, since 2007. Vice Chair of the Economic Club of Minnesota, since 2007. Co-Chair of the Committee for a Responsible Federal Budget, since 1995. Member
of the Board of Trustees of NorthStar Education Finance, Inc., a non-profit organization, since 2007. Senior Fellow of the University of Minnesota Humphrey Institute from 1995 to 2017. |
N/A
|
James
G. Polisson
(Born 1959) |
Trustee,
since 2018 |
Retired.
Chief Marketing Officer, Source (ETF) UK Services, Ltd, from 2015 to 2017. From 2012 to 2015, Principal of The Polisson Group, LLC, a management consulting, corporate advisory and principal investing company. Chief Executive Officer and Managing
Director at Russell Investments, Global Exchange Traded Funds from 2010 to 2012. Managing Director of Barclays Global Investors from 1998 to 2010 and Global Chief Marketing Officer for iShares and Barclays Global Investors from 2000 to 2010. Trustee
of the San Francisco Mechanics’ Institute, a non-profit organization, from 2013 to 2015. Board member of the Russell Exchange Traded Fund Trust from 2011 to 2012. Director of Barclays Global Investors Holdings Deutschland GmbH from 2006 to
2009. Mr. Polisson is an attorney and has a retired status with the Massachusetts and District of Columbia Bar Associations. |
N/A
|
Pamela
Wheelock
(Born 1959) |
Trustee,
since January
2020; previously
Trustee from
January 2018 to
July 2019 |
Retired.
Executive and Senior Financial leadership positions in the public, private and nonprofit sectors. Interim President and CEO, McKnight Foundation, 2020. Interim Commissioner, Minnesota Department of Human Services, 2019. Chief Operating Officer,
Twin Cities Habitat for Humanity, 2017-2019. Vice President for University Services, University of Minnesota, 2012-2016. Interim President and CEO, Blue Cross and Blue Shield of Minnesota, 2011-2012. Executive Vice-President and Chief Financial
Officer, Minnesota Wild, 2002-2008. Commissioner, Minnesota Department of Finance, 1999-2002. Chair of the Board of Directors of Destination Medical Center Corporation. Board member of the Minnesota Wild Foundation. |
N/A
|
* Length of service dates reflect the
Trustee’s commencement of service with the Trust’s predecessor entities, where applicable.
42 | Allspring Utilities and High Income
Fund
Other information
(unaudited)
Officers1
Name
and
year of birth |
Position
held and
length of service |
Principal
occupations during past five years or longer |
Andrew
Owen
(Born 1960) |
President,
since 2017 |
President,
Chief Executive Officer and Director of Allspring Funds Management, LLC since 2017 and co-president of Galliard Capital Management, LLC, an affiliate of Allspring Funds Management, LLC, since 2019. Prior thereto, Head of Affiliated Managers,
Allspring Global Investments, from 2014 to 2019 and Executive Vice President responsible for marketing, investments and product development for Allspring Funds Management, LLC, from 2009 to 2014. In addition, Mr. Owen was an Executive Vice President
of Wells Fargo & Company from 2014 to 2021. |
Jeremy
DePalma
(Born 1974) |
Treasurer,
since 2012
(for certain funds in
the Fund Complex);
since 2021 (for
the remaining funds in the
Fund Complex) |
Senior
Vice President of Allspring Funds Management, LLC since 2009. Senior Vice President of Evergreen Investment Management Company, LLC from 2008 to 2010 and head of the Fund Reporting and Control Team within Fund Administration from 2005 to 2010.
|
Kate
McKinley
(Born 1977) |
Chief
Legal Officer,
since 2021 |
Chief
Legal Officer of Allspring Global Investments since 2021. Prior thereto, held various roles at State Street Global Advisors beginning in 2010, including serving as Senior Vice President and General Counsel from 2019 to 2021, and Chief Operating
Officer of the Institutional Client Group from 2016 - 2019. Prior to working at State Street Global Advisors served as Assistant General Counsel for Bank of America Corporation from 2005 to 2010 and as an Associate at WilmerHale from 2002 to 2005.
|
Christopher
Baker
(Born 1976) |
Chief
Compliance Officer, since 2022 |
Global
Chief Compliance Officer for Allspring Global Investments since 2022. Prior thereto, Chief Compliance Officer for State Street Global Advisors from 2018 to 2021. Senior Compliance Officer for the State Street divisions of Alternative Investment
Solutions, Sector Solutions, and Global Marketing from 2015 to 2018. From 2010 to 2015 Vice President, Global Head of Investment and Marketing Compliance for State Street Global Advisors. |
Matthew
Prasse
(Born 1983) |
Secretary,
since 2021 |
Senior
Counsel of the Allspring Legal Department since 2021. Senior Counsel of the Wells Fargo Legal Department from 2018 to 2021. Previously, Counsel for Barings LLC from 2015 to 2018. Prior to joining Barings, Associate at Morgan, Lewis & Bockius
LLP from 2008 to 2015. |
1 For those Officers with tenures at Allspring Global Investments and/or Allspring Funds Management, LLC that began prior to
2021, such tenures include years of service during which these businesses/entities were known as Wells Fargo Asset Management and Wells Fargo Funds Management, LLC, respectively.
Allspring Utilities and High Income
Fund | 43
Automatic dividend reinvestment
plan
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 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 (“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 505000, Louisville, Kentucky
40233 or by calling 1-800-730-6001.
44 | Allspring Utilities and High Income
Fund
Transfer Agent, Registrar, Shareholder Servicing
Agent
& Dividend Disbursing Agent
Computershare Trust
Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233
1-800-730-6001
Website:
allspringglobal.com
Allspring Global
InvestmentsTM is the trade name for the asset management firms of Allspring Global Investments Holdings, LLC, a holding company indirectly owned by certain private funds of GTCR
LLC and Reverence Capital Partners, L.P. These firms include but are not limited to Allspring Global Investments, LLC, and Allspring Funds Management, LLC. Certain products managed by Allspring entities are distributed by Allspring Funds
Distributor, LLC (a broker-dealer and Member FINRA/SIPC).
This material is for general informational and educational
purposes only and is NOT intended to provide investment advice or a recommendation of any kind - including a recommendation for any specific investment, strategy, or plan.
© 2022 Allspring Global Investments Holdings, LLC. All
rights reserved.
PAR-0922-00056 10-22
AUHIF/AR134 08-22
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
PROXY VOTING POLICIES AND PROCEDURES EFFECTIVE March 2022
The Allspring Utilities and High Income Fund has adopted policies and procedures (“Fund Proxy Voting Procedures”) that are used to determine how to
vote proxies relating to portfolio securities held by the Fund. The Fund Proxy Voting Procedures are designed to ensure that proxies are voted in the best interests of Fund shareholders, without regard to any relationship that any affiliated person
of a Fund (or an affiliated person of such affiliated person) may have with the issuer of the security and with the goal of maximizing value to shareholders consistent with governing laws and the investment policies of the Fund. While securities are
not purchased to exercise control or to seek to effect corporate change through share ownership activism, the Fund supports sound corporate governance practices within companies in which it invests. The Board of the Fund has delegated the
responsibility for voting proxies relating to the Fund’s portfolio securities to Allspring Funds Management. Allspring Funds Management utilizes the Allspring Global Investments Proxy Voting Policies and Procedures, included below, to ensure
that proxies relating to the Fund’s portfolio securities are voted in shareholders’ best interests.
2
Allspring Global Investments (Allspring) Stewardship
As fiduciaries, we are committed to effective stewardship of the assets we manage on behalf of our clients. To us, good stewardship reflects responsible,
active ownership and includes both engaging with investee companies and voting proxies in a manner that we believe will maximize the long-term value of our investments.
Scope of Policies and Procedures
In conjunction with the
Allspring Engagement Policy, these Proxy Voting Policies and Procedures (“Policies and Procedures”) set out how Allspring complies with applicable regulatory requirements in respect of how we exercise voting rights when we invest in shares
traded on a regulated market on behalf of a client.
With respect to client accounts of Allspring Funds Management, LLC (“Allspring Funds
Management”)this includes, among others, Allspring Funds Trust, Allspring Master Trust, Allspring Variable Trust, Allspring Global Dividend Opportunity Fund, Allspring Income Opportunities Fund, Allspring Multi-Sector Income Fund, Allspring
Utilities and High Income Fund (the “Trusts”). It also includes Allspring (Lux) Worldwide Fund and Allspring Worldwide Alternative Fund SICAV-SIF, both domiciled in Luxembourg (the “Luxembourg
Funds”). Aside from the investment funds managed by Funds Management, Allspring also offers medium term note programs, managed for issuers of such notes domiciled in Luxembourg. Hereafter, all series of the Trusts, and all such Trusts not
having separate series, and all sub-funds of the Luxembourg Funds, as well as the MTN issuers, are referred to as the “Investment Products”. In addition, these Policies and Procedures are used to
determine how to vote proxies for the assets managed on behalf of Allspring’s other clients. Not all clients delegate proxy voting authority to Allspring. Allspring will not vote proxies, or provide advice to clients on how to vote proxies in
the absence of specific delegation of authority, a pre-existing contractual agreement, or an obligation under applicable law (e.g., securities that are held in an investment advisory account for which
Allspring exercises no investment discretion are not voted by Allspring).
Luxembourg Products
Allspring Global Investments Luxembourg S.A. (“Allspring Luxembourg”) has delegated the portfolio management of the Luxembourg Funds it manages to
Allspring and the responsibility for exercising voting rights in conjunction with such delegation; as such, these Policies and Procedures shall apply to the portfolio management of the Allspring (Lux) Worldwide Fund. The respective portfolio
management may also delegate the responsibility for exercising voting rights to the Proxy Voting Vendor, with the prior consent of Allspring Luxembourg. Responsibility for exercising voting rights has also been delegated to Allspring with respect to
the Allspring Worldwide Alternative Fund SICAV-SIF and to the MTN issuers.
Voting Philosophy
Allspring has adopted these Policies and Procedures to ensure that proxies are voted in the best interests of clients and Investment Product investors, without
regard to any relationship that any affiliated person of Allspring or the Investment Product (or an affiliated person of such affiliated person) may have with the issuer. Allspring exercises its voting responsibility as a fiduciary with the goal of
maximizing value to clients consistent with governing laws and the investment policies of each client. While securities are not purchased to exercise control or to seek to effect corporate change through share ownership activism, Allspring supports
sound corporate governance practices at companies in which client assets are invested.
3
Allspring has established an appropriate strategy determining when and how the voting rights related to the
instruments held in portfolios managed are exercised, so that these rights are exclusively reserved to the relevant Investment Product and its investors.
Proxy Administrator
Allspring’s Operations Department
(“Proxy Administrator”) administers the proxy voting process. The Proxy Administrator, reports to Allspring’s Chief Operations Officer. The Proxy Administrator is responsible for administering and overseeing the proxy voting process
to ensure the implementation of the Policies and Procedures, including regular operational reviews, typically conducted on a weekly basis. The Proxy Administrator monitors third party voting of proxies to ensure it is being done in a timely and
responsible manner, including review of scheduled vendor reports. The Proxy Administrator in conjunction with the Allspring Proxy Governance Committee reviews the continuing appropriateness of the Policies and Procedures set forth herein, and
recommends revisions as necessary.
Third Party Proxy Voting Vendor
Allspring has retained a third-party proxy voting service, Institutional Shareholder Services Inc. (“ISS”), to assist in the implementation of
certain proxy voting-related functions including: 1.) Providing research on proxy matters 2.) Providing technology to facilitate the sharing of research and discussions related to proxy votes 3.) Vote proxies in accordance with Allspring’s
guidelines 4.) Handle administrative and reporting items 5.) Maintain records of proxy statements received in connection with proxy votes and provide copies/analyses upon request. Except in instances where clients have retained voting authority,
Allspring retains the responsibility for proxy voting decisions.
Proxy Committee
Allspring Proxy Governance Committee
The Allspring Proxy
Governance Committee shall be responsible for overseeing the proxy voting process to ensure its implementation in conformance with these Policies and Procedures. The Allspring Proxy Governance Committee shall coordinate with Allspring Compliance to
monitor ISS, the proxy voting agent currently retained by Allspring, to determine that ISS is accurately applying the Policies and Procedures as set forth herein and operates as an independent proxy voting agent. Allspring’s ISS Vendor
Oversight process includes an assessment of ISS’ Policy and Procedures (“P&P”), including conflict controls and monitoring, receipt and review of routine performance-related reporting by ISS to Allspring and periodic onsite due
diligence meetings. Due diligence meetings typically include: meetings with key staff, P&P related presentations and discussions, technology-related demonstrations and assessments, and some sample testing, if appropriate. The Allspring Proxy
Governance Committee shall review the continuing appropriateness of the Policies and Procedures set forth herein. The Allspring Proxy Governance Committee may delegate certain powers and responsibilities to proxy voting working groups. The Allspring
Proxy Governance Committee reviews and, in accordance with these Policies and Procedures, votes on issues that have been escalated from proxy voting working groups. Members of the Allspring Proxy Governance Committee also oversee the implementation
of Allspring Proxy Governance Committee recommendations for the respective functional areas in Allspring that they represent.
Proxy Voting Due Diligence
Working Group
Among other delegated matters, the proxy voting Due Diligence Working Group (‘DDWG’) in accordance with these Policies and
Procedures, reviews and votes on routine proxy proposals that it considers under these Policies and Procedures in a timely manner. If necessary, the DDWG escalates issues to the Allspring Proxy Governance Committee that are determined to be material
by the DDWG or otherwise in accordance with these Policies and Procedures. The DDWG coordinates with Allspring’s Investment Analytics and Compliance teams to review the performance and independence of ISS in exercising its proxy voting
responsibilities.
4
Meetings; Committee Actions
The Allspring Proxy Governance Committee shall convene or act through written consent, including through the use of electronic systems of record, of a majority
of Allspring Proxy Governance Committee members as needed and when discretionary voting determinations need to be considered. Any working group of the Allspring Proxy Governance Committee shall have the authority on matters delegated to it to act by
vote or written consent, including through the use of electronic systems of record, of a majority of the working group members available at that time. The Allspring Proxy Governance Committee shall also meet quarterly to review the Policies and
Procedures.
Membership
Members are selected based on
subject matter expertise for the specific deliverables the committee is required to complete. The voting members of the Allspring Proxy Governance Committee are identified in the Allspring Proxy Charter. Changes to the membership of the Allspring
Proxy Governance Committee will be made only with approval of the Allspring Proxy Governance Committee. Upon departure from Allspring Global Investments, a member’s position on the Allspring Proxy Governance Committee will automatically
terminate.
Voting Procedures
Unless otherwise required by applicable law,1 proxies will be voted in accordance with the following
steps and in the following order of consideration:
| |
1. |
First, any voting items related to Allspring
“Top-of-House” voting principles (as described below under the heading “Allspring Proxy Voting Principles/Guidelines”) will generally be voted in
accordance with a custom voting policy with ISS (“Custom Policy”) designed to implement the Allspring’s Top-of-House voting principles.2 |
| |
2. |
Second, any voting items for meetings deemed of “high importance”3 (e.g., proxy contests, significant transactions such as mergers and acquisitions) where ISS opposes management recommendations will be referred to the Portfolio Management teams for recommendation or
the DDWG (or escalated to the Allspring Proxy Governance -Committee) for case-by-case review and vote determination. |
| |
3. |
Third, with respect to any voting items where ISS Sustainability Voting Guidelines4 provide a different recommendation than ISS Standard Voting Guidelines, the following steps are taken: |
| |
a. |
The Allspring Investment Analytics team5 evaluates the
matter for materiality and any other relevant considerations. |
| 1 |
Where provisions of the Investment Company Act of 1940 (the “1940 Act”) specify the manner in which
items for any third party registered investment companies (e.g., mutual funds, exchange-traded funds and closed-end funds) and business development companies (as defined in Section 2(a)(48) of the 1940
Act) (“Third Party Fund Holding Voting Matters”) held by the Trusts or series thereof, Allspring shall vote the Third Party Fund Holding Voting Matter on behalf of the Trusts or series thereof accordingly. |
| 2 |
The Allspring Proxy Governance Committee may determine that additional review of a Top-of-House voting matter is warranted. For example, voting matters for declassified boards or annual election of directors of public operating and holding companies that
have certain long-term business commitments (e.g., developing proprietary technology; or having an important strategic alliance in place) may warrant referral to the DDWG (or escalation to the Proxy Governance Committee) for case-by-case review and vote determination. |
| 3 |
The term “high importance” is defined as those items designated Proxy Level 6 or 5 by ISS, which
include proxy contests and significant transactions such as mergers and acquisitions. |
| 4 |
ISS’s Sustainability Voting Guidelines seeks to promote support for recognized global governing bodies
encouraging sustainable business practices advocating for stewardship of environment, fair labor practices, non-discrimination, and the protection of human rights. |
| 5 |
The Investment Analytics team comprises of approximately 35 team members, focused on equity and fixed income
risk analytics, mutual fund risk analytics, counterparty risk analytics, model documentation, scientific learning and portfolio analytics (including portfolio characteristics, portfolio construction research, multi-asset class risk analytics, and
ESG analytics). The team and its processes serve a similar function as an investment risk committee and reports into the Allspring Chief Investment Officer(s). |
5
| |
b. |
If the Investment Analytics team recommends further review, the voting item is then referred to the Portfolio
Management teams for recommendation or the DDWG (or escalated to the Allspring Proxy Governance Committee) for case-by-case review and vote determination.
|
| |
c. |
If the Investment Analytics team does not recommend further review, the matter is voted in accordance with ISS
Standard Voting Guidelines. |
| |
4. |
Fourth, any remaining proposals are voted in accordance with ISS Standard Voting Guidelines.6 |
Commitment to the Principles of Responsible Investment
As a signatory to the Principles for Responsible Investment, Allspring has integrated certain material environmental, social, and governance factors into its
investment processes, which includes the proxy process. As described under Voting Procedures above, Allspring considers ISS’s Sustainability Voting Guidelines as a point of reference in certain cases deemed to be material to a company’s
long-term shareholder value.
Voting Discretion
In all
cases, the Allspring Proxy Governance Committee (and any working group thereof) will exercise its voting discretion in accordance with the voting philosophy of these Policies and Procedures. In cases where a proxy item is forwarded by ISS to the
Allspring Proxy Governance Committee or a working group thereof, the Allspring Proxy Governance Committee or its working group may be assisted in its voting decision through receipt of: (i) independent research and voting recommendations
provided by ISS or other independent sources; (ii) input from the investment sub-adviser responsible for purchasing the security; and (iii) information provided by company management and shareholder
groups.
Portfolio Manager and Sub-Adviser Input
The Allspring Proxy Governance Committee (and any working group thereof) may consult with portfolio management teams and Fund
sub-advisers on specific proxy voting issues as it deems appropriate. In addition, portfolio management teams or Fund sub-advisers may proactively make recommendations
to the Allspring Proxy Governance Committee regarding any proxy voting issue. In this regard, the process takes into consideration expressed views of portfolio management teams and Fund sub-advisers given
their deep knowledge of investee companies. For any proxy vote, portfolio management teams and Investment Product advisers and sub-advisers may make a case to vote against the ISS or Allspring Proxy Governance
Committee’s recommendation (which is described under Voting Procedures above). Any portfolio management team’s or Investment Product adviser’s or sub-adviser’s opinion should be documented
in a brief write-up for consideration by the DDWG who will determine, or escalate to the Allspring Proxy Governance Committee, the final voting decision.
Consistent Voting
Proxies will be voted consistently on the
same matter when securities of an issuer are held by multiple client accounts unless there are special circumstances such as, for example, proposals concerning corporate actions such as mergers, tender offers, and acquisitions or as reasonably
necessary to implement specified proxy voting guidelines as established by a client (e.g. Taft Hartley ISS Guidelines or custom proxy guidelines).
| 6 |
The voting of proxies for Taft Hartley clients may incorporate the use of ISS’s Taft Hartley voting
guidelines. |
6
Governance and Oversight
Allspring Top-of-House Proxy Voting Principles/Guidelines.
The following reflects Allspring’s Top-of-House Voting Principles in
effect as of the date of these Policies and Procedures. Allspring has put in place a custom voting policy with ISS to implement these voting principles.
We believe that Boards of Directors of investee companies should have strong, independent leadership and should adopt structures and practices that enhance
their effectiveness. We recognize that the optimal board size and governance structure can vary by company size, industry, region of operations, and circumstances specific to the company.
| |
• |
|
We generally vote for the election of Directors in uncontested elections. We reserve the right to vote on a case-by-case basis when directors fail to meet their duties as a board member, such as failing to act in the best economic interest of shareholders; failing to maintain
independent audit, compensation, nominating committees; and failing to attend at least 75% of meetings, etc. |
| |
• |
|
We generally vote for an independent board that has a majority of outside directors who are not affiliated with
the top executives and have minimal or no business dealings with the company to avoid potential conflicts of interests. |
| |
• |
|
Generally speaking, we believe Directors serving on an excessive number of boards could result in time
constraints and an inability to fulfill their duties. |
| |
• |
|
We generally support adopting a declassified board structure for public operating and holding companies. We
reserve the right to vote on a case-by-case basis when companies have certain long-term business commitments. |
| |
• |
|
We generally support annual election of directors of public operating and holding companies. We reserve the right
to vote on a case-by-case basis when companies have certain long-term business commitments. |
| |
• |
|
We believe a well-composed board should embody multiple dimensions of diversity in order to bring personal and
professional experiences to bear and create a constructive debate of competing perspectives and opinions in the boardroom. Diversity should consider factors such as gender, ethnicity, and age as well as professional factors such as area of
expertise, industry experience and geographic location. |
We believe it is the responsibility of the Board of Directors to create,
enhance, and protect shareholder value and that companies should strive to maximize shareholder rights and representation.
| |
• |
|
We believe that companies should adopt a one-share, one-vote standard and avoid adopting share structures that create unequal voting rights among their shareholders. We will normally support proposals seeking to establish that shareholders are entitled to voting
rights in proportion to their economic interests |
| |
• |
|
We believe that directors of public operating and holding companies be elected by a majority of the shares voted.
We reserve the right to vote on a case-by-case basis when companies have certain long-term business commitments. This ensures that directors of public operating and
holding companies who are not broadly supported by shareholders are not elected to serve as their representatives. We will normally support proposals seeking to introduce bylaws requiring a majority vote standard for director elections.
|
7
| |
• |
|
We believe a simple majority voting standard should be required to pass proposals. We will normally support
proposals seeking to introduce bylaws requiring a simple majority vote. |
| |
• |
|
We believe that shareholders who own a meaningful stake in the company and have owned such stake for a sufficient
period of time should have, in the form of proxy access, the ability to nominate directors to appear on the management ballot at shareholder meetings. In general we support market-standardized proxy access proposals and we will analyze them based on
various criteria such as threshold ownership levels, a minimum holding period, and the % and/or number of directors that are subject to nomination. |
| |
• |
|
We believe that shareholders should have the right to call a special meeting and not wait for company management
to schedule a meeting if there is sufficiently high shareholder support for doing so on issues of substantial importance. In general we support the right to call a special meeting if there is balance between a reasonable threshold of shareholders
and a hurdle high enough to also avoid the waste of corporate resources for narrowly supported interests. We will evaluate the issues of importance on the basis of serving all shareholders well and not structured for the benefit of a dominant
shareholder over others. |
Practical Limitations to Proxy Voting
While Allspring uses its reasonable best efforts to vote proxies, in certain circumstances, it may be impractical or impossible for Allspring to vote proxies
(e.g., limited value or unjustifiable costs).
Securities on Loan
As a general matter, securities on loan will not be recalled to facilitate proxy voting (in which case the borrower of the security shall be entitled to vote
the proxy). However, as it relates to portfolio holdings of the Investment Products, if the Allspring Proxy Governance Committee is aware of an item in time to recall the security and has determined in good faith that the importance of the matter to
be voted upon outweighs the loss in lending revenue that would result from recalling the security (e.g., if there is a controversial upcoming merger or acquisition, or some other significant matter), the security will be recalled for voting.
Share Blocking
Proxy voting in certain countries requires
‘share blocking’. Shareholders wishing to vote their proxies must deposit their shares with a designated depository before the date of the meeting. Consequently, the shares may not be sold in the period preceding the proxy vote. Absent
compelling reasons, Allspring believes that the benefit derived from voting these shares is outweighed by the burden of limited trading. Therefore, if share blocking is required in certain markets, Allspring will not participate and will refrain
from voting proxies for those clients impacted by share blocking.
Conflicts of Interest
We always seek to place the interests of our clients first and to identify and manage any conflicts of interest, including those that arise from proxy voting
or engagement. Allspring acts as a fiduciary with respect to its asset management activities and therefore we must act in the best interest of our clients and address conflicts that arise.
Conflicts of interest are identified and managed through a strict and objective application of our voting policy and procedures. Allspring may have a conflict
of interest regarding a proxy to be voted upon if, for example, Allspring or its affiliates (such as a sub-adviser or principal underwriter) have other relationships with the issuer of the proxy. This type of
conflict is generally mitigated by the information barriers between
8
Allspring and its affiliates and our commitment as a fiduciary to independent judgement. However, when the
Allspring Proxy Governance Committee becomes aware of a conflict of interest (that gets uncovered through the Allspring Proxy Voting Policy and Procedures), it takes additional steps to mitigate the conflict, by using any of the following methods:
| |
1. |
Instructing ISS to vote in accordance with its recommendation; |
| |
2. |
Disclosing the conflict to the relevant Board and obtaining its consent before voting; |
| |
3. |
Submitting the matter to the relevant Board to exercise its authority to vote on such matter;
|
| |
4. |
Engaging an independent fiduciary who will direct the vote on such matter, |
| |
5. |
Consulting with Legal and Compliance and, if necessary, outside legal counsel for guidance on resolving the
conflict of interest, |
| |
6. |
Voting in proportion to other shareholders (“mirror voting”) following consultation with the Board of
the Funds if the conflict pertains to a matter involving a portfolio holding of the Funds; or |
| |
7. |
Voting in other ways that are consistent with Allspring’s obligation to vote in the best interests of its
clients. |
Vendor Oversight
The Allspring
Proxy Administrator monitors the ISS proxy process against specific criteria in order to identify potential issues relating to account reconciliation, unknown and rejected ballot reviews, upcoming proxy reviews, share reconciliation oversight, etc.
With respect to ISS’s management of its potential conflicts of interest with corporate issuers, ISS provides institutional clients such as Allspring with its “Policy and disclosure of Significant ISS Relationships” and tools to
provide transparency of those relationships.
Other Provisions
Policy Review and Ad Hoc Meetings
The Allspring Proxy
Governance Committee meets at least annually to review this Policy and consider any appropriate changes. Meetings may be convened more frequently (for example, to discuss a specific proxy agenda or proposal) as requested by the Manager of Proxy
Administrator, any member of the Allspring Proxy Governance Committee, or Chief Compliance Officer. The Allspring Proxy Governance Committee includes representation from Portfolio Management, Operations, Investment Analytics and, in a non-voting consultative capacity, Compliance.
Records Retention
The Allspring Proxy Administrator will maintain the following records relating to the implementation of the Policies and Procedures:
| |
• |
|
A copy of these proxy voting policies and procedures; |
| |
• |
|
Proxy statements received for client securities (which will be satisfied by relying on ISS); Records of votes
cast on behalf of Investment Products and separate account clients (which ISS maintains on behalf of Allspring); and |
| |
• |
|
Any documents prepared by Allspring or ISS that were material to making a proxy voting decision.
|
Such proxy voting books and records shall be maintained at an office of Allspring in an easily accessible place for a period of six
years.
Compliance with Regional Regulations and Client Delegation Arrangements
U.S. Regulation
These Policies and Procedures have been written
in compliance with Rule 206(4)-6 of the Investment Advisers Act of 1940. Proxy voting records for Allspring’s mutual funds are disclosed on Form N-PX annually, as
required by Section 30 and Rule 30b1-4 of the Investment Company Act of 1940, to the Securities and Exchange Commission (“SEC”).
9
E.U. Regulation
These Policies and Procedures have been established, implemented and maintained, as they apply to Allspring Luxembourg and Allspring Global Investments (UK)
Limited, in accordance the EU Shareholder Rights Directive II (EU 2017/828) (SEF II). Specific to Allspring Luxembourg, the Policies and Procedures also comply with Article 23 of CSSF Regulation No. 10-4,
and the CSSF Circular 18/698.
Disclosure of policies and procedures
A summary of the proxy voting policy and procedures are disclosed on Allspring’s website.
In addition, Allspring will disclose to its separate clients (i.e. proxy votes for assets managed on behalf of Allspring’s other clients as per a
delegation arrangement) a summary description of its proxy voting policy and procedures via mail.
Disclosure of proxy voting results
Allspring will provide to clients proxy statements and any records as to how Allspring voted proxies on behalf of clients, quarterly or upon request. For
assistance, clients may contact their relationship manager, call Allspring at 1-800-259-3305 or
e-mail: allspring.clientadministration@asllspring-global.com to request a record of proxies voted on their behalf.
Allspring will publish high-level proxy voting statistics in periodic reports. However, except as otherwise required by law, Allspring has a general policy of
not disclosing to any issuer specific or third party how its separate account client proxies are voted.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
PORTFOLIO MANAGERS
Chris Lee, CFA
Chris Lee is a senior portfolio manager on
the Multi-Sector Fixed Income - Plus and High Yield team. Previously, Chris served as head of high yield trading for the U.S. High Yield Fixed Income team since 2012. Prior to this he was with Silver Lake Credit where he served as a managing
director, portfolio manager, and head of trading. Before joining Silver Lake in 2007, Chris was a senior research analyst with Wells Fargo’s Proprietary Investments Group. Chris earned a bachelor’s degree in political science from
University of California, Irvine, where he graduated magna cum laude. He also earned a master’s degree in business administration from the Graduate School of Management at the University of California, Davis. Chris is a graduate of Wells
Fargo’s Credit Management Training Program and has earned the right to use the Chartered Financial Analyst® (CFA®) designation.
Kent Newcomb
Mr. Newcomb is a portfolio
manager for the ALLSPRING GLOBAL INVESTMENTS Compass Equity team. In this capacity, he manages the managed diversified stock income plan portfolio. Kent began his investment industry career as an equity analyst for A. G. Edwards. Prior to assuming
his current duties, he had research responsibility for the firm’s DSIP list and the industrials and utilities sectors. He earned a bachelor’s degree in economics from Northwestern University and a master’s degree in business
administration with an emphasis in finance from Washington University. Kent has earned the right to use the Chartered Financial Analyst®
(CFA®) designation and is a member of CFA Institute and CFA Society St. Louis.
10
Michael J. Schueller, CFA
Michael (Mike) Schueller is a portfolio manager and research analyst for the Multi-Sector Fixed Income - Plus and High Yield team. Previously, Mike was a
senior investment research analyst. Prior to that, he was with Strong Capital Management in a similar position. He rejoined Strong after leaving to start a trust department for Community Bank & Trust in Sheboygan, Wisconsin. Mike first
joined Strong as associate counsel in the legal department. Prior to this, he practiced law with Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C., in Milwaukee, specializing in corporate reorganizations, mergers, and acquisitions.
He earned a bachelor’s degree in economics from the University of Minnesota and a law degree from the University of Wisconsin, Madison. Mike has earned the right to use the Chartered Financial Analyst® (CFA®) designation.
Jack Spudich, CFA
Mr. Spudich is a senior portfolio manager and team leader of the ALLSPRING GLOBAL INVESTMENTS Compass Equity team. Before joining predecessor
firm A. G. Edwards, where he began his investment industry career, Jack was a certified public accountant and audit manager for an international accounting firm. He earned a bachelor’s degree in accountancy from the University of Illinois and
has earned the right to use the Chartered Financial Analyst® (CFA®) designation. Jack is also a member of CFA Institute and CFA Society
St. Louis.
OTHER FUNDS AND ACCOUNTS MANAGED
The following
table provides information about the registered investment companies (including the Fund) and other pooled investment vehicles and accounts managed by the portfolio manager of the Fund as of the Fund’s most recent year ended August 31,
2022.
Chris Lee
|
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|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
7 |
|
|
|
0 |
|
|
|
0 |
|
| Total assets of above accounts (millions) |
|
$ |
2,668.91 |
|
|
$ |
0 |
|
|
$ |
0 |
|
performance based fee accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
| Total assets of above accounts (millions) |
|
$ |
0.0 |
|
|
$ |
0.0 |
|
|
$ |
0.0 |
|
Kent Newcomb
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
2 |
|
|
|
0 |
|
|
|
1 |
|
| Total assets of above accounts (millions) |
|
$ |
567.17 |
|
|
$ |
0 |
|
|
$ |
0.10 |
|
performance based fee accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
| Total assets of above accounts (millions) |
|
$ |
0.0 |
|
|
$ |
0.0 |
|
|
$ |
0.0 |
|
11
Michael Schueller
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
14 |
|
|
|
5 |
|
|
|
23 |
|
| Total assets of above accounts (millions) |
|
$ |
8,412.31 |
|
|
$ |
108.79 |
|
|
$ |
249.49 |
|
performance based fee accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
| Total assets of above accounts (millions) |
|
$ |
0.0 |
|
|
$ |
0.0 |
|
|
$ |
0.0 |
|
Jack Spudich
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
2 |
|
|
|
0 |
|
|
|
1 |
|
| Total assets of above accounts (millions) |
|
$ |
567.17 |
|
|
$ |
0 |
|
|
$ |
0.10 |
|
performance based fee accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
| I manage the following types of accounts: |
|
Other Registered
Investment Companies |
|
|
Other Pooled
Investment Vehicles |
|
|
Other Accounts |
|
| Number of above accounts |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
| Total assets of above accounts (millions) |
|
$ |
0.0 |
|
|
$ |
0.0 |
|
|
$ |
0.0 |
|
MATERIAL CONFLICTS OF INTEREST
The Portfolio Managers face inherent conflicts of interest in their day-to-day
management of the Funds and other accounts because the Funds may have different investment objectives, strategies and risk profiles than the other accounts managed by the Portfolio Managers. For instance, to the extent that the Portfolio Managers
manage accounts with different investment strategies than the Funds, they may from time to time be inclined to purchase securities, including initial public offerings, for one account but not for a Fund. Additionally, some of the accounts managed by
the Portfolio Managers may have different fee structures, including performance fees, which are or have the potential to be higher or lower, in some cases significantly higher or lower, than the fees paid by the Funds. The differences in fee
structures may provide an incentive to the Portfolio Managers to allocate more favorable trades to the higher-paying accounts.
To minimize the effects of
these inherent conflicts of interest, the Sub-Advisers have adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, that they believe
12
address the potential conflicts associated with managing portfolios for multiple clients and ensure that all
clients are treated fairly and equitably. Additionally, some of the Sub-Advisers minimize inherent conflicts of interest by assigning the Portfolio Managers to accounts having similar objectives. Accordingly,
security block purchases are allocated to all accounts with similar objectives in proportionate weightings. Furthermore, the Sub-Advisers have adopted a Code of Ethics under Rule
17j-1 of the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”) to address potential conflicts associated with managing
the Funds and any personal accounts the Portfolio Managers may maintain.
Allspring Investments
Allspring Investments’ Portfolio Managers often provide investment management for separate accounts advised in the same or similar investment style as
that provided to mutual funds. While management of multiple accounts could potentially lead to conflicts of interest over various issues such as trade allocation, fee disparities and research acquisition, Allspring Investments has implemented
policies and procedures for the express purpose of ensuring that clients are treated fairly and that potential conflicts of interest are minimized.
COMPENSATION
The Portfolio Managers were compensated by their
employing sub-adviser from the fees the Adviser paid the Sub-Adviser using the following compensation structure:
Allspring Investments Compensation.
The compensation
structure for Allspring Investments’ Portfolio Managers includes a competitive fixed base salary plus variable incentives (Allspring Investments utilizes investment management compensation surveys as confirmation). Incentive bonuses are
typically tied to pretax relative investment performance of all accounts under his or her management within acceptable risk parameters. Relative investment performance is generally evaluated for 1, 3, and 5 year performance results, with a
predominant weighting on the 3- and 5- year time periods, versus the relevant benchmarks and/or peer groups consistent with the investment style. This evaluation takes
into account relative performance of the accounts to each account’s individual benchmark and/or the relative composite performance of all accounts to one or more relevant benchmarks consistent with the overall investment style. In the case of
each Fund, the benchmark(s) against which the performance of the Fund’s portfolio may be compared for these purposes generally are indicated in the Performance” sections of the Prospectuses.
Allspring Investments’ investment incentive program plays an important role in aligning the interests of our portfolio managers, investment team members,
clients, and shareholders. Incentive awards for portfolio managers are determined based on a review of relative investment and business/team performance. Investment performance is generally evaluated for 1, 3, and 5 year performance results, with a
predominant weighting on the 3- and 5- year time periods, versus the relevant benchmarks and/or peer groups consistent with the investment style. Once determined,
incentives are awarded to portfolio managers annually, with a portion awarded as annual cash and a portion awarded as long term incentive. The long term portion of incentives generally carry a pro-rated
vesting schedule over a three year period. For many of our portfolio managers, Allspring Investments further requires a portion of their annual long-term award be allocated directly into each strategy they manage through a deferred compensation
vehicle. In addition, our investment team members who are eligible for long term awards also have the opportunity to invest up to 100% of their awards into investment strategies they support (through a deferred compensation vehicle).
BENEFICIAL OWNERSHIP OF THE FUND
The following table shows for
each Portfolio Manager the dollar value of the Fund beneficially owned by the Portfolio Manager as of August 31, 2022:
|
|
|
|
|
| Chris Lee |
|
$ |
10,001-50,000 |
|
| Kent Newcomb |
|
|
none |
|
| Michael Schueller |
|
|
none |
|
| Jack Spudich |
|
|
none |
|
13
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period |
|
(a)
Total Number
of Shares
Purchased |
|
|
(b)
Average Price
Paid per Share |
|
|
(c)
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs |
|
|
(d)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs |
|
| 9/1/2021 to 9/30/2021 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
927,619 |
|
| 10/1/2021 to 10/31/21 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
927,619 |
|
| 11/1/2021to 11/30/2021 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
927,619 |
|
| 12/1/2021 to 12/31/2021 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
927,619 |
|
| 1/1/2022 to 1/31/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 2/1/2022 to 2/28/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 3/1/2022 to 3/31/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 4/1/2022 to 4/30/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 5/1/2022 to 5/31/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 6/1/2022 to 6/30/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 7/1/2022 to 7/31/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
| 8/1/2022 to 8/31/2022 |
|
|
0 |
|
|
|
0.00 |
|
|
|
0 |
|
|
|
928,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
928,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
On November 12, 2021, the Fund announced a renewal of its open-market share repurchase program (the
“Buyback Program”). Under the renewed Buyback Program, the Fund may repurchase up to 10% of its outstanding shares in open market transactions during the period beginning on January 1, 2022 and ending on December 31, 2022. The
Fund’s Board of Trustees has delegated to Allspring Funds Management, LLC, the Fund’s adviser, discretion to administer the Buyback Program, including the determination of the amount and timing of repurchases in accordance with the best
interests of the
Fund and subject to applicable legal limitations.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees that have been
implemented since the registrant’s last provided disclosure in response to the requirements of this Item.