nvq
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5769
Van Kampen High Income Trust II
 
(Exact name of registrant as specified in charter)
     
522 Fifth Avenue, New York, New York 10036
 
(Address of principal executive offices) (Zip code)
Edward C. Wood III
522 Fifth Avenue, New York, New York 10036
 
(Name and address of agent for service)
Registrant’s telephone number, including area code: 212-762-4000
Date of fiscal year end: 12/31
Date of reporting period: 9/30/09
 
 

 

 

Item 1. Schedule of Investments.
The Trust’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:
Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited)
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Corporate Bonds 155.4%
                        
       
Aerospace & Defense 2.0%
                        
$ 780    
Bombardier, Inc. (Canada) (a)
    6.300 %     05/01/14     $ 756,600  
  395    
Hexcel Corp.
     6.750       02/01/15       378,212  
       
 
                      
       
 
                     1,134,812  
       
 
                      
       
Broadcasting 1.3%
                        
  335    
LIN Television Corp., Ser B
     6.500       05/15/13       294,800  
  515    
Salem Communications Corp.
     7.750       12/15/10       404,275  
       
 
                      
       
 
                     699,075  
       
 
                      
       
Cable 7.0%
                        
  785    
Anixter, Inc.
     10.000       03/15/14       832,100  
  785    
Charter Communications Operating LLC (a)
    12.875       09/15/14       853,687  
  1,510    
CSC Holdings, Inc. (a)
    8.625       02/15/19       1,604,375  
  340    
Echostar DBS Corp.
     6.625       10/01/14       331,500  
  145    
NTL Cable PLC (United Kingdom)
    8.750       04/15/14       148,625  
  100    
NTL Cable PLC (United Kingdom)
    9.125       08/15/16       103,250  
       
 
                      
       
 
                     3,873,537  
       
 
                      
       
Chemicals 6.7%
                        
  605    
Airgas, Inc. (a)
    7.125       10/01/18       625,419  
  740    
Innophos, Inc.
     8.875       08/15/14       751,100  
  705    
Koppers, Inc.
     9.875       10/15/13       731,437  
  750    
Terra Capital, Inc.
     7.000       02/01/17       785,625  
  834    
Westlake Chemical Corp.
     6.625       01/15/16       788,130  
       
 
                      
       
 
                     3,681,711  
       
 
                      
       
Consumer Products 3.6%
                        
  770    
Goodyear Tire & Rubber Co.
     10.500       05/15/16       839,300  
  540    
Great Atlantic & Pacific Tea Co. (a)
    11.375       08/01/15       548,100  

1

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Consumer Products (continued)
                        
$ 740    
Steinway Musical Instruments, Inc. (a)
    7.000 %     03/01/14     $ 632,700  
       
 
                      
       
 
                     2,020,100  
       
 
                      
       
Energy 20.1%
                        
  905    
Atlas Energy Operating Co., LLC (a)
    10.750       02/01/18       943,462  
  1,500    
Chesapeake Energy Corp.
     9.500       02/15/15       1,586,250  
  230    
Cimarex Energy Co.
     7.125       05/01/17       215,050  
  565    
Compagnie Generale de Geophysique, SA (France)
    7.500       05/15/15       565,000  
  60    
Forest Oil Corp.
     7.250       06/15/19       56,400  
  275    
Forest Oil Corp.
     7.750       05/01/14       270,875  
  625    
Hilcorp Energy/Finance Corp. (a)
    7.750       11/01/15       593,750  
  430    
Key Energy Services, Inc.
     8.375       12/01/14       410,650  
  1,055    
Massey Energy Co.
     6.875       12/15/13       1,023,350  
  400    
Mirant North America LLC
    7.375       12/31/13       400,000  
  730    
Newfield Exploration Co.
     6.625       09/01/14       720,875  
  195    
Newfield Exploration Co.
     7.125       05/15/18       195,487  
  620    
OPTI Canada, Inc. (Canada)
    8.250       12/15/14       483,600  
  540    
Orion Power Holdings, Inc.
     12.000       05/01/10       561,600  
  210    
Plains Exploration & Production Co.
     7.625       06/01/18       206,850  
  770    
Plains Exploration & Production Co.
     7.750       06/15/15       768,075  
  1,355    
Western Refining, Inc. (a)
    11.250       06/15/17       1,287,250  
  750    
Williams Cos, Inc.
     7.625       07/15/19       811,148  
       
 
                      
       
 
                     11,099,672  
       
 
                      
       
Financial 9.6%
                        
  765    
CB Richard Ellis Services, Inc. (a)
    11.625       06/15/17       830,025  

2

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Financial (continued)
                        
$ 1,090    
FireKeepers Development Authority (a)
    13.875 %     05/01/15     $ 1,163,575  
  1,355    
GMAC LLC (a)
    6.875       09/15/11       1,294,025  
  1,050    
JBS USA LLC/JBS USA Finance, Inc. (a)
    11.625       05/01/14       1,134,000  
  500    
LaBranche & Co., Inc.
     11.000       05/15/12       485,000  
  435    
LPL Holdings, Inc. (a)
    10.750       12/15/15       429,019  
       
 
                      
       
 
                     5,335,644  
       
 
                      
       
Food & Drug 3.4%
                        
  355    
Axcan Intermediate Holdings, Inc.
     12.750       03/01/16       385,175  
  285    
M-Foods Holdings, Inc. (a)
    9.750       10/01/13       294,262  
  1,030    
Rite Aid Corp.
     8.625       03/01/15       843,313  
  365    
SUPERVALU, Inc.
     7.500       11/15/14       368,650  
       
 
                      
       
 
                     1,891,400  
       
 
                      
       
Food & Tobacco 3.6%
                        
  465    
Constellation Brands, Inc.
     7.250       05/15/17       465,000  
  1,500    
Tyson Foods, Inc.
     7.850       04/01/16       1,537,500  
       
 
                      
       
 
                     2,002,500  
       
 
                      
       
Forest Products 7.8%
                        
  1,270    
Crown Americas LLC
    7.625       11/15/13       1,289,050  
  850    
Georgia-Pacific Corp. (a)
    7.125       01/15/17       835,125  
  500    
Graphic Packaging International, Inc.
     9.500       08/15/13       517,500  
  320    
P.H. Glatfelter Co.
     7.125       05/01/16       312,800  
  395    
Verso Paper Holdings LLC, Inc.
     9.125       08/01/14       294,275  
  1,045    
Verso Paper Holdings LLC, Inc. (a)
    11.500       07/01/14       1,076,350  
       
 
                      
       
 
                     4,325,100  
       
 
                      
       
Gaming & Leisure 9.4%
                        
  620    
Ameristar Casinos, Inc. (a)
    9.250       06/01/14       646,350  

3

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Gaming & Leisure (continued)
                        
$ 1,690    
Harrah’s Operating Escrow LLC (a)
    11.250 %     06/01/17     $ 1,744,925  
  860    
Las Vegas Sands Corp.
     6.375       02/15/15       774,000  
  1,310    
MGM Mirage, Inc. (a)
    10.375       05/15/14       1,404,975  
  245    
MGM Mirage, Inc. (a)
    13.000       11/15/13       281,750  
  350    
Scientific Games International, Inc. (a)
    9.250       06/15/19       365,750  
       
 
                      
       
 
                     5,217,750  
       
 
                      
       
Health Care 12.4%
                        
  625    
Apria Healthcare Group, Inc. (a)
    11.250       11/01/14       675,000  
  500    
Apria Healthcare Group, Inc. (a)
    12.375       11/01/14       536,250  
  490    
Biomet, Inc.
     11.625       10/15/17       536,550  
  960    
Community Health Systems, Inc.
     8.875       07/15/15       986,400  
  665    
FMC Finance III SA (Luxembourg)
    6.875       07/15/17       648,375  
  1,345    
HCA, Inc.
     9.125       11/15/14       1,392,075  
  455    
Healthsouth Corp.
     10.750       06/15/16       495,950  
  165    
Invacare Corp.
     9.750       02/15/15       175,725  
  710    
Omnicare, Inc.
     6.875       12/15/15       685,150  
  750    
Res-Care, Inc.
     7.750       10/15/13       735,000  
       
 
                      
       
 
                     6,866,475  
       
 
                      
       
Housing 2.0%
                        
  1,090    
Interface, Inc., Ser B
    9.500       02/01/14       1,085,913  
       
 
                      
 
       
Information Technology 7.3%
                        
  435    
Expedia, Inc. (a)
    8.500       07/01/16       461,100  
  1,075    
First Data Corp.
     9.875       09/24/15       998,406  
  628    
Flextronics International Ltd. (Singapore)
    6.500       05/15/13       615,440  
  1,015    
Unisys Corp. (a)
    14.250       09/15/15       1,050,525  

4

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Information Technology (continued)
                        
$ 955    
Vangent, Inc.
     9.625 %     02/15/15     $ 894,119  
       
 
                      
       
 
                     4,019,590  
       
 
                      
       
Manufacturing 5.5%
                        
  330    
Baldor Electric Co.
     8.625       02/15/17       336,600  
  1,200    
Case New Holland, Inc.
     7.125       03/01/14       1,182,000  
  925    
JohnsonDiversey, Inc., Ser B
    9.625       05/15/12       943,500  
  605    
RBS Global, Inc. & Rexnord Corp.
     9.500       08/01/14       589,875  
       
 
                      
       
 
                     3,051,975  
       
 
                      
       
Metals 6.1%
                        
  550    
ArcelorMittal (Luxembourg)
    9.850       06/01/19       651,599  
  245    
Foundation PA Coal Co.
     7.250       08/01/14       244,694  
  130    
Freeport-McMoRan Copper & Gold, Inc.
     8.375       04/01/17       138,480  
  1,070    
Novelis, Inc. (Canada)
    7.250       02/15/15       930,900  
  1,225    
Teck Resources, Ltd. (Canada)
    10.250       05/15/16       1,390,375  
       
 
                      
       
 
                     3,356,048  
       
 
                      
       
Pipelines 2.1%
                        
  1,000    
El Paso Corp.
     12.000       12/12/13       1,145,000  
       
 
                      
       
 
                        
       
Retail 6.3%
                        
  1,045    
Brown Shoe Co., Inc.
     8.750       05/01/12       1,031,937  
  690    
Eye Care Centers of America
    10.750       02/15/15       712,425  
  850    
Oxford Industries, Inc.
     11.375       07/15/15       914,813  
  790    
Sally Holdings LLC/Sally Capital, Inc.
     9.250       11/15/14       821,600  
       
 
                      
       
 
                     3,480,775  
       
 
                      
       
Services 6.4%
                        
  215    
ARAMARK Corp.
     8.500       02/01/15       217,956  
  1,000    
Gaylord Entertainment Co.
     8.000       11/15/13       1,030,000  
  1,350    
Ticketmaster Entertainment, Inc.
     10.750       08/01/16       1,390,500  

5

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Services (continued)
                        
$ 895    
United Rentals North America, Inc.
     6.500 %     02/15/12     $ 901,713  
       
 
                      
       
 
                     3,540,169  
       
 
                      
       
Telecommunications 10.5%
                        
  780    
DISH DBS Corp.
     7.000       10/01/13       789,750  
  750    
Intelsat Corp.
     9.250       06/15/16       776,250  
  300    
L-3 Communications Corp.
     7.625       06/15/12       304,875  
  1,000    
Nielsen Finance LLC / Nielsen Finance Co.
     11.625       02/01/14       1,060,000  
  955    
Qwest Capital Funding, Inc.
     7.250       02/15/11       959,775  
  750    
Sprint Capital Corp.
     6.900       05/01/19       675,000  
  815    
Wind Acquisition Finance, SA (Luxembourg) (a)
    10.750       12/01/15       900,575  
  345    
Windstream Corp.
     8.125       08/01/13       356,213  
       
 
                      
       
 
                     5,822,438  
       
 
                      
       
Transportation 3.5%
                        
  645    
Commercial Barge Line Co. (a)
     12.500       07/15/17       674,025  
  1,340    
Ford Motor Credit Co.
     7.000       10/01/13       1,258,807  
       
 
                      
       
 
                     1,932,832  
       
 
                      
       
Utility 12.9%
                        
  1,275    
AES Corp.
     7.750       03/01/14       1,290,937  
  740    
AES Corp. (a)
    8.750       05/15/13       757,575  
  615    
CMS Energy Corp.
     6.300       02/01/12       629,543  
  795    
Dynegy Holdings, Inc.
     7.750       06/01/19       681,713  
  425    
Edison Mission Energy
    7.750       06/15/16       374,000  
  800    
Intergen NV (Netherlands) (a)
    9.000       06/30/17       828,000  
  405    
IPALCO Enterprises, Inc.
     8.625       11/14/11       417,150  
  765    
NRG Energy, Inc.
     7.375       01/15/17       742,050  
  735    
RRI Energy, Inc.
     7.875       06/15/17       721,219  

6

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
                                 
Par                        
Amount                        
(000)     Description   Coupon     Maturity     Value  
 
       
Utility (continued)
                        
$ 950    
Texas Competitive Electric Holdings Co., LLC, Ser A
    10.250 %     11/01/15     $ 688,750  
       
 
                      
       
 
                     7,130,937  
       
 
                      
       
Wireless Communications 4.5%
                        
  1,775    
Nextel Communications, Inc., Ser E
    6.875       10/31/13       1,655,188  
  820    
XM Satellite Radio, Inc. (a)
    11.250       06/15/13       861,000  
       
 
                      
       
 
                     2,516,188  
       
 
                      
       
Wireline 1.4%
                        
  815    
Citizens Communications Co.
     7.125       03/15/19       772,212  
       
 
                      
       
Total Corporate Bonds 155.4%
                     86,001,853  
       
 
                      
       
 
                        
Equities 0.3%        
DecisionOne Corp. (5,483 Common Shares) (b)(c)(d)     0  
Hosiery Corp. of America, Inc., Class A (1,000 Common Shares) (b)(c)(d)     0  
Preferred Blocker, Inc. (287 Preferred Shares) (a)     166,478  
VS Holdings, Inc. (20,207 Common Shares) (b)(c)(d)     0  
       
 
                      
       
 
                        
Total Equities 0.3%     166,478  
       
 
                      
       
 
                        
Total Long-Term Investments 155.7%
 (Cost $83,645,233)
     86,168,331  
       
 
                      
       
 
                        
Repurchase Agreements 1.1%        
Banc of America Securities ($144,142 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 0.04%, dated 09/30/09, to be sold on 10/01/09 at $144,142)
     144,142  
JPMorgan Chase & Co. ($434,613 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 0.05%, dated 09/30/09, to be sold on 10/01/09 at $434,614)
     434,613  

7

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
         
Description   Value  
 
Repurchase Agreements (continued)
        
State Street Bank & Trust Co. ($24,245 par collateralized by U.S. Government obligations in a pooled cash account, interest rate of 0.01%, dated 09/30/09, to be sold on 10/01/09 at $24,245)
   $ 24,245  
 
      
 
        
Total Repurchase Agreements 1.1%
 (Cost $603,000)
    603,000  
 
        
Total Investments 156.8%
 (Cost $84,248,233)
    86,771,331  
 
        
Other Assets in Excess of Liabilities 2.0%
    1,092,635  
 
        
Preferred Shares (including accrued distributions) (58.8%)
    (32,516,081 )
 
      
 
        
Net Assets Applicable to Common Shares 100.0%
  $ 55,347,885  
 
      
Percentages are calculated as a percentage of net assets applicable to common shares.
 
(a)   144A-Private Placement security which is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers.
 
(b)   Market value is determined in accordance with procedures established in good faith by the Board of Trustees.
 
(c)   Non-income producing security.
 
(d)   Security has been deemed illiquid.
Security Valuation Investments are stated at value using market quotations or indications of value obtained from an independent pricing service. For those securities where quotations or prices are not readily available, valuations are obtained from yield data relating to instruments or securities with similar characteristics in accordance with procedures established in good faith by the Board of Trustees. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances. Futures contracts are valued at the settlement price established each day on the exchange on which they are traded. Short-term securities with remaining maturities of 60 days or less are valued at amortized cost, which approximates market value.

8

 

Van Kampen High Income Trust II
Portfolio of Investments ■ September 30, 2009 (Unaudited) continued
Fair Value Measurements Financial Accounting Standards Board Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) (formerly known as FAS 157), defines fair value as the price that the Trust would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Trust’s investments. The inputs are summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical investments
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3—significant unobservable inputs (including the Trust’s own assumptions in determining the fair value of investments)
          The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
          The following is a summary of the inputs used as of September 30, 2009 in valuing the Trust’s investments carried at value.
                                 
    Level 1   Level 2   Level 3    
                    Significant    
            Other Significant   Unobservable    
Investment   Quoted Prices   Observable Inputs   Inputs   Total
 
Investments in an Asset Position
                                
Corporate Bonds
   $ —     $ 86,001,853     $ —     $ 86,001,853  
Common and Preferred Stocks
                                
Apparel, Accessories & Luxury Goods
     —       —       —       —  
Highways & Railtracks
     —       —       —       —  
IT Consulting & Other Services
     —       —       —       —  
Wireless Communications
     —       166,478       —       166,478  
Repurchase Agreements
     —       603,000       —       603,000  
     
Total Investments in an Asset Position
   $ —     $ 86,771,331     $ —     $ 86,771,331  
     
          Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:
                 
    Common Stocks     Corporate Bonds  
Balance as of 12/31/08
   $ -0-     $ -0-  
Accrued Discounts/Premiums
     -0-       -0-  
Realized Gain/Loss
     -0-       (124,169 )
Change in Unrealized Appreciation/Depreciation
     -0-       124,169  
Net Purchases/Sales
     -0-       -0-  
Net Transfers in and/or out of Level 3
     -0-       -0-  
 
            
Balance as of 9/30/09
   $ -0-     $ -0-  
 
            
Net Change in Unrealized Appreciation/Depreciation from Investments still held as of 9/30/09
   $ -0-     $ -0-  

9

 

Item 2. Controls and Procedures.
(a) The Trust’s principal executive officer and principal financial officer have concluded that the Trust’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.
(b) There were no changes in the Trust’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.
Item 3. Exhibits.
(a) A certification for the Principal Executive Officer of the registrant is attached hereto as part of EX-99.cert.
(b) A certification for the Principal Financial Officer of the registrant is attached hereto as part of EX-99.cert.

 

 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
(Registrant) Van Kampen High Income Trust II
    
 
    
By: /s/ Edward C. Wood III
 
Name: Edward C. Wood III
   
Title: Principal Executive Officer
    
Date: November 19, 2009
    
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
     
By: /s/ Edward C. Wood III
 
Name: Edward C. Wood III
   
Title: Principal Executive Officer
    
Date: November 19, 2009
    
 
    
By: /s/ Stuart N. Schuldt
 
Name: Stuart N. Schuldt
   
Title: Principal Financial Officer
    
Date: November 19, 2009