UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-7868
Van Kampen Advantage Municipal Income Trust II
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 10/31___
Date of reporting period: 4/30/07
Item 1. Report to Shareholders.
The Trust's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Advantage Municipal Income Trust II performed during the semiannual
period. The portfolio management team will provide an overview of the
market conditions and discuss some of the factors that affected
investment performance during the reporting period. In addition, this
report includes the trust's financial statements and a list of trust
investments as of April 30, 2007.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. TRUSTS ARE SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE TRUST WILL DECLINE AND
THAT THE VALUE OF THE TRUST SHARES MAY THEREFORE BE LESS THAN WHAT YOU
PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS TRUST.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
Performance Summary as of 4/30/07
ADVANTAGE MUNICIPAL INCOME TRUST II
SYMBOL: VKI
------------------------------------------------------------
AVERAGE ANNUAL BASED ON BASED ON
TOTAL RETURNS NAV MARKET PRICE
Since Inception (8/27/93) 6.44% 6.01%
10-year 7.51 8.48
5-year 7.27 7.46
1-year 6.96 12.49
6-month 1.14 8.40
------------------------------------------------------------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS, NET
ASSET VALUE (NAV) AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES,
WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
NAV per share is determined by dividing the value of the trust's portfolio
securities, cash and other assets, less all liabilities and preferred shares, by
the total number of common shares outstanding. The common share market price is
the price the market is willing to pay for shares of the trust at a given time.
Common share market price is influenced by a range of factors, including supply
and demand and market conditions. Total return assumes an investment at the
beginning of the period, reinvestment of all distributions for the period in
accordance with the trust's dividend reinvestment plan, and sale of all shares
at the end of the period. The trust's adviser has waived or reimbursed fees and
expenses from time to time; absent such waivers/reimbursements the trust's
returns would have been lower.
The Lehman Brothers Municipal Bond Index is a broad-based statistical composite
of municipal bonds. The index does not include any expenses, fees or sales
charges, which would lower performance. The index is unmanaged and should not be
considered an investment. It is not possible to invest directly in an index.
1
Trust Report
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2007
MARKET CONDITIONS
The overall environment for municipal bonds was favorable during the reporting
period, but mixed economic indicators and concerns about the residential housing
sector led to increased market uncertainty and volatility. At the beginning of
the period, the pace of economic growth appeared to be slowing, but in December,
the outlook for the economy turned positive following a slate of
stronger-than-expected economic releases. The improved economic picture pushed
bond yields higher and effectively reversed the run-up in prices that had begun
in July on concern over the weak housing market's potential drag on the economy.
Bonds continued to decline until February, when the sub-prime mortgage market
showed signs of deterioration, causing a sell-off in equities and a
flight-to-quality bond market rally. In March, the rally ended as strong
employment reports and upward movement in inflationary pressures sparked selling
in an overbought Treasury market. At month end, however, the short end of the
bond market rebounded strongly following news that the Federal Open Market
Committee (the "Fed") had dropped its bias toward higher rates. This came as
somewhat of a surprise, given the fact that core inflation readings remained
elevated.
Municipal bond yields followed the general movement of the Treasury market.
However, the 30-year AAA municipal yield reached lows not seen in decades,
declining to 4.00 percent in the first half of the reporting period before
reversing course and ending the period higher at 4.10 percent. Yields on the
short end of the municipal curve rose more than long-term yields during the
period. As a result, the short end of the curve posted the lowest returns while
the long end outperformed other portions of the curve by as much as 70 basis
points. The slope of the municipal curve (which is defined by the traditional
yield advantage of bonds with longer maturities) still remained relatively flat
and as such, the yield differential between long maturity and short maturity
issues was quite small.
New issue supply rose dramatically during the period, increasing by 34 percent
versus the same six-month period a year ago, as relatively low interest rates
spurred municipalities to refinance their debt. Demand for municipal bonds was
robust as well, particularly for high-yield securities, as investors proved
increasingly willing to take on more risk in return for relatively higher
yields. The strong demand caused most credit spreads, which were already near
historically tight levels, to further narrow. As a result, the lower-quality,
higher yielding segment of the market considerably outperformed, returning 182
basis points more than the investment-grade segment for the overall period.
2
PERFORMANCE ANALYSIS
The Trust's return can be calculated based upon either the market price or the
net asset value (NAV) of its shares. NAV per share is determined by dividing the
value of the Trust's portfolio securities, cash and other assets, less all
liabilities and preferred shares, by the total number of common shares
outstanding, while market price reflects the supply and demand for the shares.
As a result, the two returns can differ, as they did during the reporting
period. On an NAV basis, the Trust underperformed its benchmark index, the
Lehman Brothers Municipal Bond Index. On a market price basis, the Trust
outperformed its benchmark.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2007
------------------------------------------------------
BASED ON
BASED ON MARKET LEHMAN BROTHERS
NAV PRICE MUNICIPAL BOND INDEX
1.14% 8.40% 1.59%
------------------------------------------------------
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. Investment return, net asset value and common share market price will
fluctuate and Trust shares, when sold, may be worth more or less than their
original cost. See Performance Summary for additional performance information
and index definition.
A variety of strategies drove the Trust's performance during the course of the
period. One of the key drivers was our focus on the long end of the yield curve.
Given the relatively flat shape of the curve throughout the period, we invested
in bonds with maturities of 25 years or more in order to capture more attractive
yields. The emphasis on longer-maturity issues proved beneficial to performance
as this segment of the curve outperformed for the overall period.
We also focused on the higher-yielding sector of the market, adding to positions
in BBB rated credits in particular. Additionally, in an effort to further
enhance yield, we added to the fund's holdings of inverse floating-rate
securities.* Overall, these strategies were additive to the Trust's performance
during the first four months of the period. In the last two months, however,
spread widening led the performance of lower-rated credits to wane and rising
interest rates hurt the performance of inverse floating-rate securities. As a
result, the Trust's emphasis on these credits detracted somewhat from
performance late in the period. Because the inverse floating-rate securities
effectively added to the portfolio's duration (a measure of interest-rate risk),
we hedged that risk by selling 10- and 30-year U.S. Treasury futures. This
strategy was additive to performance for the overall period and served to keep
the Trust's duration neutral to that of the Lehman Brothers Municipal Bond
Index.
*An inverse floating-rate security, or "inverse floater", is a variable rate
security whose coupon rate changes in the opposite direction from the change in
the reference rate used to calculate the coupon rate.
3
With regard to industry sectors, we added to the portfolio's holdings in tobacco
revenue bonds, which also enhanced performance for the first four months of the
period, but detracted for returns in the last two months due to spread widening
in the sector. A large amount of older tobacco bonds were pre-refunded during
the period. Unlike the Lehman Brothers Municipal Bond Index, which contained
these older bonds, the Trust only had positions in newer tobacco bonds which
were not pre-refunded. As such, the portfolio was not able to benefit from the
refundings that took place during the period, which detracted from the
performance of the Trust's holdings in this sector relative to those of the
Lehman Brothers Municipal Bond Index.
The Trust was overweighted versus the Lehman Brothers Municipal Bond Index in
health care securities. Over the course of the period, an abundance of supply in
the sector pushed spreads wider and prices lower. As a result, the portfolio's
positioning here dampened returns.
The Trust remained well represented across a broad spectrum of municipal market
sectors. As of the end of the period, hospitals, public education and the master
tobacco settlement represented the portfolio's largest sector weightings.
The Trustees have approved a procedure whereby the trust may, when appropriate,
repurchase its shares in the open market or in privately negotiated transactions
at a price not above market value or NAV, whichever is lower at the time of
purchase. This may help support the market value of the trust's shares.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the Trust in
the future.
CHANGES IN INVESTMENT POLICIES
The Board of Trustees of the trust recently approved a non-fundamental
investment policy for the trust allowing it to invest up to 20 percent of its
assets in unrated securities that have been determined by Van Kampen Asset
Management (the "Adviser") to be of comparable quality to those rated investment
grade. This is in addition to the trust's current non-fundamental policy
allowing it to invest up to 20 percent of its assets in unrated securities that
have been determined by the Adviser to be of comparable quality to those rated
below investment grade (BB/Ba or B by Standard & Poor's, Moody's Investor
Services, Inc. or Fitch Ratings, Inc.).
Unrated securities may be less liquid than rated securities. This may have the
effect of limiting the ability of the trust to sell such securities at their
fair value in response to changes in the economy or the financial markets.
4
RATINGS ALLOCATION AS OF 4/30/07
AAA/Aaa 58.6%
AA/Aa 15.0
A/A 8.5
BBB/Baa 15.8
BB/Ba 0.2
B/B 0.3
Non-Rated 1.6
TOP FIVE SECTORS AS OF 4/30/07
Hospital 17.3%
Public Education 8.7
Master Tobacco Settlement 8.1
Airports 7.5
Single-Family 6.7
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 4/30/07
California 18.6%
Illinois 6.7
New Jersey 6.0
Texas 5.6
New York 5.5
Arizona 3.9
Florida 3.8
Missouri 3.4
Louisiana 3.3
Washington 2.8
Tennessee 2.5
Maryland 2.5
Colorado 2.4
Alabama 2.4
Puerto Rico 2.3
South Carolina 2.3
Nevada 2.2
Indiana 2.1
Pennsylvania 2.0
Ohio 1.8
Oregon 1.8
Michigan 1.7
Georgia 1.4
Massachusetts 1.4
Virginia 1.2
Wisconsin 1.1
Hawaii 0.9
Kentucky 0.9
West Virginia 0.8
Nebraska 0.8
Oklahoma 0.8
Kansas 0.6
Alaska 0.6
Connecticut 0.5
Mississippi 0.5
(continued on next page)
5
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 4/30/07
(continued from previous page)
Minnesota 0.5
District of Columbia 0.4
Utah 0.3
Iowa 0.3
New Hampshire 0.3
Arkansas 0.3
South Dakota 0.2
Wyoming 0.2
Montana 0.2
North Carolina 0.1
New Mexico 0.1
-----
Total Investments 100%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings and summary of investments by
state classification are as a percentage of total investments. Sectors are as a
percentage of long-term investments. Securities are classified by sectors that
represent broad groupings of related industries. Van Kampen is a wholly owned
subsidiary of a global securities firm which is engaged in a wide range of
financial services including, for example, securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services. Rating allocations based upon ratings as issued by Standard
and Poor's and Moody's, respectively.
6
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen trust provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
Trust's second and fourth fiscal quarters. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Van Kampen
also delivers the semiannual and annual reports to trust shareholders,
and makes these reports available on its public Web site,
www.vankampen.com. In addition to the semiannual and annual reports that
Van Kampen delivers to shareholders and makes available through the Van
Kampen public Web site, each trust files a complete schedule of portfolio
holdings with the SEC for the trust's first and third fiscal quarters on
Form N-Q. Van Kampen does not deliver the reports for the first and third
fiscal quarters to shareholders, nor are the reports posted to the Van
Kampen public Web site. You may, however, obtain the Form N-Q filings (as
well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web
site, http://www.sec.gov. You may also review and copy them at the SEC's
Public Reference Room in Washington, DC. Information on the operation of
the SEC's Public Reference Room may be obtained by calling the SEC at
(800) SEC-0330. You can also request copies of these materials, upon
payment of a duplicating fee, by electronic request at the SEC's e-mail
address (publicinfo@sec.gov) or by writing the Public Reference section
of the SEC, Washington, DC 20549-0102.
You may obtain copies of a trust's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 341-2929.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the Trust's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 341-2929 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the Trust voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
7
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED)
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MUNICIPAL BONDS 194.7%
ALABAMA 4.7%
$ 3,000 Birmingham Baptist Med Ctr AL Spl Care
Fac Fin Auth Rev Baptist Hlth Sys Ser
A........................................ 5.000% 11/15/30 $ 3,061,590
2,000 Birmingham Baptist Med Ctr AL Spl Care
Fac Fin Auth Rev Baptist Hlth Sys Ser
A........................................ 5.875 11/15/24 2,133,640
4,000 Jefferson Cnty, AL Ltd Oblig Sch Wt Ser
A........................................ 5.250 01/01/23 4,259,800
4 Mobile, AL Indl Dev Brd Solid Waste Disp
Rev Mobile Energy Svc Co Proj Rfdg....... 6.950 01/01/20 352
19,635 University AL at Birmingham Hosp Rev
Ser A (a)................................ 5.000 09/01/41 20,030,187
1,000 Valley, AL Spl Care Fac Fin Auth Rev
Lanier Mem Hosp Ser A.................... 5.600 11/01/16 1,019,010
--------------
30,504,579
--------------
ALASKA 1.1%
1,000 Alaska St Hsg Fin Corp Gen Hsg Ser A
(FGIC Insd).............................. 5.250 12/01/41 1,061,230
6,250 Northern Tob Sec Corp AK Tob Settlement
Ser A.................................... 5.000 06/01/46 6,149,500
--------------
7,210,730
--------------
ARIZONA 7.7%
5,000 Arizona Sch Fac Brd Ctfs Ser B (FGIC
Insd) (Prerefunded @ 9/01/13)............ 5.250 09/01/18 5,429,500
3,000 Arizona St Transn Brd Hwy Rev Ser B...... 5.250 07/01/19 3,207,330
5,250 Arizona Tourism & Sports Auth Multipurp
Stad Fac Ser A (MBIA Insd)
(Prerefunded @ 7/01/13).................. 5.375 07/01/23 5,726,280
2,235 Arizona Tourism & Sports Auth Tax Rev
Multipurp Stad Fac Ser A (MBIA Insd)
(Prerefunded @ 7/01/13).................. 5.375 07/01/21 2,437,759
5,000 Glendale, AZ Indl Dev Auth John C Lincoln
Hlth Rfdg Ser B.......................... 5.000 12/01/37 5,077,900
4,500 Maricopa Cnty, AZ Hosp Rev Sun Hlth
Corp..................................... 5.000 04/01/35 4,565,925
8,020 Mesa, AZ Util Sys Rev Rfdg Second Ser
(FGIC Insd) (a).......................... 4.500 07/01/28 8,055,368
2,000 Phoenix, AZ Civic Impt Corp Arpt Rev Jr
Lien (FGIC Insd) (AMT)................... 5.375 07/01/29 2,004,240
2,085 Pima Cnty, AZ Indl Dev Auth Indl Rev
Lease Oblig Irvington Proj Tucson Rfdg
Ser A (FSA Insd)......................... 7.250 07/15/10 2,143,005
2,685 South Campus Group LLC AZ Std Hsg Rev AZ
St Univ South Campus Proj (MBIA Insd).... 5.625 09/01/35 2,933,201
9,000 University Med Ctr Corp AZ Hosp Rev...... 5.000 07/01/35 9,135,090
--------------
50,715,598
--------------
8 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
ARKANSAS 0.5%
$ 1,930 Arkansas St Cap Apprec College Svg....... * 06/01/16 $ 1,352,235
2,000 Arkansas St Dev Fin Auth Rev St Agy Fac
Donaghey Plaza Proj (FSA Insd)........... 5.000% 06/01/34 2,092,740
--------------
3,444,975
--------------
CALIFORNIA 36.5%
6,000 Anaheim, CA Pub Fin Auth Lease Rev Cap
Apprec Sub Pub Impt Proj Ser C (FSA
Insd).................................... * 09/01/19 3,584,400
7,195 Anaheim, CA Pub Fin Auth Lease Rev Cap
Apprec Sub Pub Impt Proj Ser C (FSA
Insd).................................... * 09/01/21 3,913,001
1,300 Anaheim, CA Pub Fin Auth Lease Rev Pub
Impt Proj Ser C (FSA Insd)............... 6.000 09/01/16 1,506,648
2,095 Bay Area Govt Assn CA Rev Tax Alloc CA
Redev Pool Ser A (XLCA Insd)............. 5.250 09/01/35 2,240,037
3,000 California Cnty, CA Tob Sec Agy Tob LA
Cnty Sec (b)............................. 0.000/5.250 06/01/21 2,631,870
2,050 California Cnty, CA Tob Sec Agy Tob
Merced Cnty Rfdg Ser A................... 5.125 06/01/38 2,056,642
1,000 California Cnty, CA Tob Sec Agy Tob
Merced Cnty Rfdg Ser A................... 5.250 06/01/45 1,012,570
2,000 California Cnty, CA Tob Sec Agy Tob
Sonoma Cnty Corp Rfdg.................... 5.125 06/01/38 2,002,540
1,600 California Hlth Fac Fin Auth Rev Kaiser
Permanente Ser A......................... 5.000 04/01/37 1,644,560
5,050 California Hlth Fac Fin Auth Rev Cedars-
Sinai Med Ctr Rfdg (a)................... 5.000 11/15/34 5,655,066
3,400 California Hsg Fin Agy Rev Home Mtg Ser M
(AMT) (a)................................ 4.625 08/01/26 3,393,480
6,200 California Hsg Fin Agy Rev Home Mtg Ser M
(AMT) (a)................................ 4.650 08/01/31 6,168,380
4,290 California Hsg Fin Agy Rev Home Mtg Ser M
(AMT) (a)................................ 4.700 08/01/36 4,281,774
7,030 California Hsg Fin Agy Rev Home Mtg Ser M
(AMT) (a)................................ 7.750 08/01/42 7,016,520
3,000 California Pollutn Ctl Fin Auth Solid
Waste Disp Rev Waste Mgmt Inc Proj Ser C
(AMT).................................... 5.125 11/01/23 3,121,140
140 California St (AMBAC Insd)............... 5.125 10/01/27 142,052
840 California St (AMBAC Insd)
(Prerefunded @ 10/01/07)................. 5.125 10/01/27 853,432
6,500 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A.......... 5.250 07/01/30 6,759,870
1,000 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A.......... 5.250 07/01/35 1,035,520
4,000 California Statewide Cmnty Dev Auth Rev
Hlth Fac Adventist Hlth Ser A............ 5.000 03/01/30 4,106,680
3,400 California Statewide Cmnty Dev Auth Rev
Kaiser Permanente Ser B.................. 5.000 03/01/41 3,486,462
See Notes to Financial Statements 9
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 5,000 California Statewide Cmnty Dev Auth Rev
Kaiser Permanente Ser B.................. 5.250% 03/01/45 $ 5,250,150
4,000 California Statewide Cmnty Dev Auth Rev
Kaiser Permanente Ser C.................. 5.250 08/01/31 4,238,720
2,000 California St Dept Wtr Res Pwr Ser A
(Prerefunded @ 5/01/12).................. 6.000 05/01/15 2,235,180
2,345 California St Dept Wtr Res Pwr Ser A
(XLCA Insd) (Prerefunded @ 5/01/12)...... 5.375 05/01/17 2,554,197
3,000 California St Dept Wtr Res Pwr Supply Rev
Ser A (Prerefunded @ 5/01/12)............ 5.875 05/01/16 3,335,730
5,000 California St Pub Wks Brd Dept Gen Svc
Cap East End Ser A (AMBAC Insd).......... 5.125 12/01/21 5,342,150
4,000 California St Pub Wks Brd Lease Rev Dept
of Corrections St Prisons Rfdg Ser A
(AMBAC Insd)............................. 5.000 12/01/19 4,351,880
6,000 California St Pub Wks Brd Lease Rev Dept
of Corrections St Prisons Rfdg Ser A
(AMBAC Insd)............................. 5.250 12/01/13 6,448,980
5,000 California St Pub Wks Brd Lease Rev Dept
of Mental Hlth Coalinga Ser A............ 5.000 06/01/24 5,231,850
4,600 California St Pub Wks Brd Lease Rev Var
Univ CA Proj Rfdg Ser A.................. 5.500 06/01/10 4,777,836
5,905 California St Pub Wks Brd Lease Rev Var
Univ CA Proj Rfdg Ser A.................. 5.500 06/01/14 6,386,080
5,000 California St Rfdg....................... 5.000 02/01/19 5,226,050
2,000 Florin, CA Res Consv Dist Cap Impt Elk
Grove Wtr Svc Ser A (MBIA Insd).......... 5.000 09/01/33 2,102,380
5,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg (MBIA Insd).......... * 01/15/18 2,926,250
30,000 Foothill/Eastern Corridor Agy CA Toll Rd
Rev Cap Apprec Rfdg Ser A................ * 01/15/22 13,238,400
5,500 Golden St Tob Securitization Corp CA Tob
Settlement Rev Ser A-1 (a)............... 5.000 06/01/33 5,773,240
10,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Ser (a)................... 5.000 06/01/38 10,490,900
3,350 Imperial Irr Dist CA Ctf Part Elec Sys
Proj (FSA Insd) (c)...................... 5.250 11/01/19 3,599,006
3,950 Los Angeles, CA Dept Wtr & Pwr Ser A
(FGIC Insd).............................. 5.125 07/01/40 4,136,677
5,000 Los Angeles, CA Uni Sch Dist Ser A (FSA
Insd) (Prerefunded @ 07/01/13)........... 5.250 07/01/20 5,442,450
5,500 Port Oakland, CA Ser L (FGIC Insd)
(AMT).................................... 5.000 11/01/32 5,684,140
9,000 Riverside Cnty, CA Asset Leasing Corp
Leasehold Rev Riverside Cnty Hosp Proj
(MBIA Insd).............................. * 06/01/21 4,880,520
10 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 13,880 San Joaquin Hills, CA Transn Corridor Agy
Toll Rd Rev Cap Apprec Rfdg Ser A (MBIA
Insd).................................... * 01/15/28 $ 5,613,072
4,200 Tobacco Sec Auth Northn CA Tob Settlement
Rev Ser A1............................... 5.375% 06/01/38 4,315,038
4,300 Tobacco Sec Auth Northn CA Tob Settlement
Rev Ser A1............................... 5.500 06/01/45 4,435,880
1,000 Tobacco Sec Auth Southn CA Tob Settlement
Sr Ser A1................................ 5.000 06/01/37 993,030
14,000 Tobacco Sec Auth Southn CA Tob Settlement
Sr Ser A1................................ 5.125 06/01/46 14,015,820
7,750 University CA Rev Gen Ser J (FSA Insd)
(a)...................................... 4.500 05/15/28 7,761,714
7,750 University CA Rev Gen Ser J (FSA Insd)
(a)...................................... 4.500 05/15/31 7,761,715
7,750 University CA Rev Gen Ser J (FSA Insd)
(a)...................................... 4.500 05/15/35 7,761,715
2,720 Washington, CA Uni Sch Dist Yolo Cnty
Election 2004 Ser A (FGIC Insd) (c)...... 5.250 08/01/19 2,946,168
3,070 Washington, CA Uni Sch Dist Yolo Cnty
Election 2004 Ser A (FGIC Insd) (c)...... 5.250 08/01/20 3,325,271
--------------
239,194,833
--------------
COLORADO 4.7%
1,945 Colorado Ed & Cultural Fac Auth Rev
Charter Sch Pinnacle Impt & Rfdg (XLCA
Insd).................................... 5.250 06/01/23 2,069,169
3,000 Colorado Hlth Fac Auth Rev Catholic Hlth
Initiatives Ser A (d).................... 5.500 03/01/32 3,223,200
4,250 Colorado Hlth Fac Auth Rev Covenant
Retirement Cmnty Inc..................... 5.000 12/01/35 4,316,555
2,700 Colorado Hlth Fac Auth Rev Hlth Fac
Evangelical Lutheran..................... 5.000 06/01/35 2,758,239
2,250 Colorado Hlth Fac Auth Rev Hosp
Portercare Adventist Hlth (Prerefunded @
11/15/11)................................ 6.500 11/15/31 2,524,635
5,460 Colorado Hsg Fin Auth Single Family Mtg
Rev Ser C-3 (AMT) (a).................... 4.625 11/01/36 5,382,195
55 Colorado Hsg Fin Auth Single Family Pgm
Sr Ser A2 (AMT).......................... 7.250 05/01/27 55,073
24 Colorado Hsg Fin Auth Single Family Pgm
Sr Ser B1 (AMT).......................... 7.650 11/01/26 24,382
1,500 Denver, CO City & Cnty Arpt Rev Ser D
(AMT).................................... 7.750 11/15/13 1,663,230
6,160 E-470 Pub Hwy Auth CO Rev Sr Ser A (MBIA
Insd).................................... 5.000 09/01/21 6,245,870
1,000 Park Creek Metro Dist CO Rev Sr Ltd Tax
Ppty Tax Rfdg............................ 5.500 12/01/30 1,067,040
1,500 University CO Hosp Auth Rev Ser A........ 5.000 11/15/37 1,524,405
--------------
30,853,993
--------------
See Notes to Financial Statements 11
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
CONNECTICUT 1.0%
$ 5,000 Connecticut St Ser C (FGIC Insd)......... 5.000% 04/01/22 $ 5,327,450
990 Mashantucket Western Pequot Tribe CT Spl
Rev Ser A (Prerefunded @ 09/01/07) (e)... 6.400 09/01/11 1,008,711
--------------
6,336,161
--------------
DISTRICT OF COLUMBIA 0.8%
5,000 Metropolitan Washington DC Arpt Auth Sys
Ser A (FGIC Insd) (AMT).................. 5.250 10/01/32 5,254,400
--------------
FLORIDA 7.2%
2,500 Dade Cnty, FL Wtr & Swr Sys Rev
(FGIC Insd).............................. 5.250 10/01/21 2,540,625
570 Escambia Cnty, FL Hlth Fac Auth Rev
(AMBAC Insd)............................. 5.950 07/01/20 591,808
1,800 Florida Hsg Fin Corp Rev Ser G (AMT)
(a)...................................... 4.550 07/01/26 1,779,367
3,520 Florida Hsg Fin Corp Rev Ser G (AMT)
(a)...................................... 4.625 07/01/31 3,479,652
2,500 Florida Hsg Fin Corp Rev Ser G (AMT)
(a)...................................... 4.700 07/01/37 2,471,344
3,000 Halifax Hosp Med Ctr FL Hosp Rev Impt
Rfdg Ser A............................... 5.250 06/01/26 3,149,040
3,800 Highlands Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys Ser C................. 5.250 11/15/36 3,982,970
1,000 Highlands Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys Ser D................. 5.000 11/15/35 1,020,530
3,980 Jacksonville, FL Port Auth
(MBIA Insd) (AMT)........................ 5.700 11/01/30 4,202,442
2,780 Jacksonville, FL Port Auth (MBIA Insd)
(Prerefunded @ 11/01/10) (AMT)........... 5.700 11/01/30 2,939,100
3,000 Lake Cnty, FL Sch Brd Ctf Part (AMBAC
Insd) (Prerefunded @ 7/01/12)............ 5.375 07/01/17 3,236,490
11,500 Miami-Dade Cnty, FL Aviation Rev Miami
Intl Arpt (FGIC Insd) (AMT).............. 5.375 10/01/32 12,142,160
5,000 Ocoee, FL Wtr & Swr Sys Rev Impt & Rfdg
(AMBAC Insd)............................. 5.125 10/01/33 5,267,800
--------------
46,803,328
--------------
GEORGIA 2.7%
5,000 Georgia Muni Elec Auth Pwr Rev Ser B
(FGIC Insd) (d).......................... 5.700 01/01/19 5,733,750
2,000 Georgia St Rd & Twy Auth Rev............. 5.000 10/01/19 2,137,280
1,700 Marietta, GA Dev Auth Rev First Mtg Life
College Ser B (FSA Insd) (c)............. 5.375 09/01/09 1,707,616
6,740 Municipal Elec Auth GA Comb Turbine Proj
Ser A (MBIA Insd)........................ 5.250 11/01/20 7,212,541
1,000 Richmond Cnty, GA Dev Auth ASU Jaguar
Student Hsg LLC Ser A.................... 5.250 02/01/35 1,047,930
--------------
17,839,117
--------------
12 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
HAWAII 1.7%
$ 10,430 Hawaii St Dept Budget & Fin Spl
Purp Rev Hawaiian Elec Co Inc Ser A
(MBIA Insd) (AMT)........................ 5.650% 10/01/27 $ 11,297,150
--------------
ILLINOIS 13.2%
1,710 Bolingbrook, IL Cap Apprec Rfdg Ser C
(MBIA Insd) (c).......................... * 01/01/29 661,667
3,750 Bolingbrook, IL Cap Apprec Ser B
(MBIA Insd).............................. * 01/01/32 997,950
6,000 Chicago, IL Lakefront Millenium Pkg Fac
(MBIA Insd).............................. 5.750 01/01/29 6,627,900
3,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
Third Lien Ser A (a)..................... 5.250 01/01/23 3,252,840
4,200 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
Third Lien Ser A (MBIA Insd) (a)......... 5.250 01/01/24 4,721,043
13,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
Third Lien Ser A (MBIA Insd) (a)......... 5.250 01/01/25 14,612,751
50 Chicago, IL Single Family Mtg Rev Ser A
(GNMA Collateralized) (AMT).............. 7.000 09/01/27 51,236
3,345 Cook Cnty, IL Sch Dist No. 100 Berwyn
South Ser D (FSA Insd)................... 5.500 12/01/23 3,686,491
4,500 Cook Cnty, IL Ser A (FGIC Insd)
(Prerefunded @ 5/15/11).................. 5.500 11/15/31 4,804,020
1,000 Illinois Dev Fin Auth Rev Cmnty Rehab
Providers Fac Ser A...................... 7.375 07/01/25 1,081,090
1,500 Illinois Fin Auth Rev IL Inst of
Technology Ser A......................... 5.000 04/01/31 1,545,645
2,500 Illinois Fin Auth Rev Northwestern Mem
Hosp Ser A............................... 5.500 08/15/43 2,720,150
1,335 Illinois Fin Auth Solid Waste Rev Disp
Waste Mgmt Inc Proj Ser A (AMT).......... 5.050 08/01/29 1,365,478
1,325 Illinois Fin Auth Student Hsg Rev MJH Ed
Assistance IV Sr Ser A................... 5.125 06/01/35 1,360,563
3,180 Illinois Hlth Fac Auth Rev Children's Mem
Hosp (MBIA Insd)......................... 6.250 08/15/13 3,468,839
1,485 Illinois Hlth Fac Auth Rev Evangelical
Hosp Rfdg Ser A (FSA Insd) (d)........... 6.750 04/15/17 1,751,157
825 Illinois Hlth Fac Auth Rev Evangelical
Hosp Ser C (FSA Insd).................... 6.750 04/15/17 972,865
1,000 Illinois Hlth Fac Auth Rev Highland Park
Hosp Proj Ser A (MBIA Insd)
(Prerefunded @ 10/01/07)................. 5.750 10/01/17 1,027,940
8,000 Illinois St First Ser (FSA Insd)......... 5.250 12/01/19 8,576,560
3,400 Illinois St First Ser (FSA Insd)......... 5.250 04/01/27 3,580,234
2,070 Northern IL Univ Ctf Part Hoffman Estates
Ctr Proj (FSA Insd)...................... 5.400 09/01/16 2,239,140
See Notes to Financial Statements 13
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 160 Peoria, Moline & Freeport, IL Coll Mtg
Ser A (GNMA Collateralized) (AMT)........ 7.600% 04/01/27 $ 162,478
5,000 Regional Trans Auth IL Ser A (AMBAC
Insd).................................... 8.000 06/01/17 6,612,500
10,000 Will Cnty, IL Sch Dist No. 122 Rfdg Ser B
(FGIC Insd).............................. 5.250 11/01/20 10,580,099
--------------
86,460,636
--------------
INDIANA 4.1%
3,070 East Chicago, IN Elementary Sch Bldg Corp
First Mtg Ser A.......................... 6.250 07/05/08 3,120,870
1,660 Indiana Hlth & Ed Fac Fin Auth Hosp Rev
Clarian Hlth Oblig Ser A................. 5.000 02/15/36 1,705,650
3,000 Indiana Hlth Fac Fin Auth Hosp Rev
Columbus Regl Hosp Rfdg (FSA Insd)....... 7.000 08/15/15 3,433,559
1,500 Indiana St Dev Fin Auth Rev Exempt Fac
Conv Rfdg (AMT).......................... 5.950 08/01/30 1,542,495
2,300 Indiana St Hsg & Cmnty Dev Auth Single
Family Mtg Rev Mtg Ser D-1 (GNMA
Collateralized) (AMT) (a)................ 4.600 07/01/31 2,261,970
10,000 Indiana St Hsg & Cmnty Dev Auth Single
Family Mtg Rev Mtg Ser D-1 (GNMA
Collateralized) (AMT) (a)................ 4.625 07/01/38 9,757,550
2,000 Petersburg, IN Pollutn Ctl Rev IN Pwr &
Lt (AMT)................................. 5.950 12/01/29 2,133,220
2,850 Southwest Parke Cmnty Sch Bldg First Mtg
(FGIC Insd) (c).......................... 5.250 07/15/21 3,083,985
--------------
27,039,299
--------------
IOWA 0.6%
1,500 Tobacco Settlement Auth IA Tob Settlement
Rev Ser C................................ 5.375 06/01/38 1,536,060
2,500 Tobacco Settlement Auth IA Tob Settlement
Rev Ser C................................ 5.500 06/01/42 2,597,525
--------------
4,133,585
--------------
KANSAS 1.1%
3,430 Kansas St Dev Fin Auth Rev KS Proj Ser N
(AMBAC Insd) (c)......................... 5.250 10/01/20 3,656,723
3,615 Kansas St Dev Fin Auth Rev KS Proj Ser N
(AMBAC Insd) (c)......................... 5.250 10/01/21 3,840,323
--------------
7,497,046
--------------
KENTUCKY 1.7%
10,005 Louisville & Jefferson Cnty KY Metro Govt
Hlth Sys Rev Norton Hlthcare Inc (a)..... 5.250 10/01/36 10,408,535
500 Mount Sterling, KY Lease Rev KY League
Cities Fdg Ser B......................... 6.100 03/01/18 582,320
--------------
10,990,855
--------------
14 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
LOUISIANA 6.5%
$ 5,000 Lafayette, LA Util Rev (MBIA Insd)....... 5.250% 11/01/21 $ 5,408,400
2,500 Louisiana Loc Govt Environment Fac Pkg
Fac Corp Garage Proj Ser A (AMBAC
Insd).................................... 5.375 10/01/31 2,631,700
5,970 Louisiana Loc Govt Environment Southeastn
LA Student Hsg Ser A (MBIA Insd) (c)..... 5.250 08/01/24 6,398,527
1,400 Louisiana Pub Fac Auth Rev Hlth Fac Glen
Retirement Ser A......................... 6.700 12/01/25 1,410,038
7,000 Louisiana St Gas & Fuels Tax Rev Ser A
(a)...................................... 5.000 05/01/41 7,370,615
8,065 Louisiana St Office Fac Corp LA St Cap
Complex Pgm (MBIA Insd) (c).............. 5.000 11/01/20 8,468,572
4,000 New Orleans, LA Rfdg (FGIC Insd)......... 5.500 12/01/21 4,417,480
6,000 New Orleans, LA Rfdg (MBIA Insd)......... 5.125 09/01/21 6,279,180
--------------
42,384,512
--------------
MARYLAND 5.0%
3,000 Baltimore, MD Convention Ctr Hotel Rev Sr
Ser A (XLCA Insd) (a).................... 5.250 09/01/25 3,268,860
11,440 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Residential Ser A (AMT) (a).... 4.700 09/01/37 11,338,928
1,255 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Ser P (AMT) (a)................ 4.450 09/01/21 1,241,747
1,000 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Ser P (AMT) (a)................ 4.550 09/01/26 989,440
1,300 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Ser P (AMT) (a)................ 4.625 09/01/31 1,286,272
725 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Ser P (AMT) (a)................ 4.700 03/01/37 717,344
5,000 Maryland St Econ Dev Corp MD Aviation
Admin Fac (FSA Insd) (AMT)............... 5.375 06/01/20 5,323,200
1,000 Maryland St Econ Dev Corp Student Hsg Rev
Univ MD College Pk Proj
(Prerefunded @ 06/01/13)................. 5.625 06/01/35 1,106,020
2,000 Maryland St Hlth & Higher Ed Fac Auth Rev
MD Inst College of Art................... 5.000 06/01/40 2,038,680
1,200 Maryland St Hlth & Higher Ed Fac Auth Rev
Uni Hosp Cecil Cnty Issue................ 5.000 07/01/40 1,227,384
4,000 Maryland St Trans Auth Arpt Baltimore/WA
Intl Arpt Ser B (AMBAC Insd) (AMT)....... 5.125 03/01/24 4,189,160
--------------
32,727,035
--------------
MASSACHUSETTS 2.7%
1,200 Massachusetts Bay Tran Auth MA Gen Tran
Sys Rfdg Ser A........................... 6.250 03/01/12 1,331,208
2,500 Massachusetts Bay Trans Auth Ser A
(Prerefunded @ 7/01/12).................. 5.000 07/01/32 2,654,550
2,000 Massachusetts Muni Whsl Elec Co Proj No.
6-A Ser A (MBIA Insd).................... 5.250 07/01/16 2,145,000
See Notes to Financial Statements 15
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
$ 1,750 Massachusetts St Hlth & Ed Fac Auth Rev
Hlthcare Sys Covenant Hlth............... 6.000% 07/01/31 $ 1,891,575
2,000 Massachusetts St Hlth & Ed Fac Auth Rev
Saint Mem Med Ctr Ser A.................. 6.000 10/01/23 2,002,100
5,450 Massachusetts St Hlth & Ed Fac Auth Rev
Univ MA Mem Issue Ser D.................. 5.000 07/01/33 5,535,456
925 Massachusetts St Indl Fin Agy Wtr
Treatment Amern Hingham (AMT)............ 6.900 12/01/29 937,534
925 Massachusetts St Indl Fin Agy Wtr
Treatment Amern Hingham (AMT)............ 6.950 12/01/35 937,783
--------------
17,435,206
--------------
MICHIGAN 3.4%
3,000 Detroit, MI City Sch Dist Sch Bldg & Site
Impt Ser A (FGIC Insd) (Prerefunded @
5/01/13)................................. 5.375 05/01/24 3,265,740
2,790 Detroit, MI Wtr Supply Sys Rev Sr Lien
Rfdg Ser C (MBIA Insd) (c)............... 5.250 07/01/19 3,006,504
3,185 Detroit, MI Wtr Supply Sys Rev Sr Lien
Ser A (MBIA Insd) (Prerefunded @ 7/01/13)
(c)...................................... 5.250 07/01/20 3,444,896
2,000 Grand Rapids, MI Wtr Supply (FGIC
Insd).................................... 5.750 01/01/15 2,137,940
4,000 Kent Hosp Fin Auth MI Rev Metro Hosp Proj
Ser A.................................... 6.000 07/01/35 4,408,960
2,285 Taylor, MI Bldg Auth (AMBAC Insd) (c).... 6.000 03/01/13 2,551,477
3,090 Troy, MI Downtown Dev Auth Dev Rfdg (MBIA
Insd).................................... 5.500 11/01/15 3,316,373
--------------
22,131,890
--------------
MINNESOTA 0.9%
1,065 Duluth, MN Econ Dev Auth Hlthcare Fac Rev
Benedictine Hlth Sys Saint Marys......... 5.250 02/15/33 1,104,597
1,175 Maple Grove, MN Hlthcare Fac Rev North
Mem Hlthcare............................. 5.000 09/01/35 1,211,683
2,200 Saint Paul, MN Hsg & Redev Auth Hosp Rev
Hlth East Proj........................... 6.000 11/15/30 2,439,250
1,000 Saint Paul, MN Hsg & Redev Auth Hosp Rev
Hlth East Proj........................... 6.000 11/15/35 1,104,190
--------------
5,859,720
--------------
MISSISSIPPI 0.9%
1,405 Mississippi Dev Bk Spl Oblig Cap Proj &
Equip Acquisition Ser A2 (AMBAC Insd).... 5.000 07/01/24 1,421,748
1,550 Mississippi Dev Bk Spl Oblig Madison Cnty
Hosp Proj (Prerefunded @ 7/01/09)........ 6.400 07/01/29 1,664,498
16 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
MISSISSIPPI (CONTINUED)
$ 2,595 Mississippi Dev Bk Spl Oblig MS Ltd Oblig
Hosp Impt (MBIA Insd) (c)................ 5.250% 07/01/32 $ 2,726,463
415 Mississippi Home Corp Single Family Rev
Mtg Ser C (GNMA Collateralized) (AMT).... 7.600 06/01/29 432,700
--------------
6,245,409
--------------
MISSOURI 6.7%
325 Cape Girardeau Cnty, MO Indl Dev Auth
Hlthcare Fac Rev Southeast MO Hosp
Assoc.................................... 5.625 06/01/27 340,915
1,675 Cape Girardeau Cnty, MO Indl Dev Auth
Hlthcare Fac Rev Southeast MO Hosp Assoc
(Prerefunded @ 6/01/12).................. 5.625 06/01/27 1,794,695
1,250 Cole Cnty, MO Indl Dev Auth Sr Living Fac
Rev Lutheran Sr Svc Heisinger Proj....... 5.500 02/01/35 1,319,775
2,000 Curators Univ MO Sys Fac Rev Rfdg
Ser B (c)................................ 5.000 11/01/20 2,132,980
1,000 Missouri Jt Muni Elec Util Comnty Pwr
Proj Rev Plum Point Proj (MBIA Insd)..... 5.000 01/01/26 1,063,180
4,625 Missouri Jt Mun Elec Util Comnty Pwr Proj
Rev Plum Point Proj (MBIA Insd).......... 5.000 01/01/27 4,913,739
2,500 Missouri St Dev Fin Brd Infrastructure
Fac Rev Crackerneck Creek Proj Ser C..... 5.000 03/01/26 2,590,575
2,195 Missouri St Hlth & Ed Fac Rev Univ MO
Columbia Arena Proj (c).................. 5.000 11/01/16 2,308,833
4,000 Platte Cnty, MO Indl Dev Auth Trans
Rev...................................... 4.500 12/01/24 4,023,640
2,500 Platte Cnty, MO Neighborhood Impt
Parkville Ser B (MBIA Insd).............. 5.000 02/01/25 2,640,325
1,500 Saint Louis Cnty, MO Mtg Rev Ctf Rcpt Ser
H (AMT) (d).............................. 5.400 07/01/18 1,640,160
9,855 Saint Louis, MO Arpt Rev Arpt Dev Pgm Ser
A (MBIA Insd) (Prerefunded @ 7/01/11).... 5.250 07/01/31 10,445,512
2,380 Saint Louis, MO Arpt Rev Cap Impt Pgm Ser
A (MBIA Insd) (Prerefunded @ 7/01/12)
(c)...................................... 5.375 07/01/19 2,567,615
2,745 Springfield, MO Pub Bldg Corp Leasehold
Rev Springfield Branson Arpt Ser B (AMT)
(a)...................................... 4.550 07/01/29 2,696,839
3,355 Springfield, MO Pub Bldg Corp Leasehold
Rev Springfield Branson Arpt Ser B (AMT)
(a)...................................... 4.600 07/01/36 3,296,137
--------------
43,774,920
--------------
MONTANA 0.4%
2,300 Forsyth, MT Pollutn Ctl Rev Northwestn
Corp Colstrip Rfdg (AMBAC Insd).......... 4.650 08/01/23 2,376,222
--------------
See Notes to Financial Statements 17
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
NEBRASKA 1.5%
$ 5,235 Omaha Pub Pwr Dist NE Elec Rev Sys
Ser A.................................... 5.000% 02/01/34 $ 5,470,837
4,260 University NE Univ Rev Lincoln Student
Fees & Fac Ser B......................... 5.000 07/01/23 4,474,959
--------------
9,945,796
--------------
NEVADA 4.2%
8,000 Clark Cnty, NV Arpt Rev Sub Lien Ser A-2
(FGIC Insd).............................. 5.000 07/01/36 8,349,440
2,000 Clark Cnty, NV Econ Dev Rev Alexander
Dawson Sch Proj.......................... 5.375 05/15/33 2,110,020
7,000 Clark Cnty, NV Indl Dev Rev Southwest Gas
Corp Proj Ser A (AMBAC Insd) (AMT)....... 5.250 07/01/34 7,401,730
4,375 Las Vegas Vly, NV Wtr Dist Rfdg Ser B
(MBIA Insd).............................. 5.000 06/01/27 4,569,644
10 Nevada Hsg Div Single Family Pgm Mezz B
(FHA/VA Gtd) (AMT)....................... 6.550 10/01/12 10,104
5,000 Reno, NV Lien Trans Proj (AMBAC Insd)
(Prerefunded @ 6/01/12).................. 5.250 06/01/41 5,350,150
--------------
27,791,088
--------------
NEW HAMPSHIRE 0.5%
1,000 New Hampshire Hlth & Ed Fac Auth Rev
Derryfield Sch........................... 7.000 07/01/30 1,083,400
1,400 New Hampshire Hlth & Ed Fac Hlthcare Sys
Covenant Hlth............................ 5.500 07/01/34 1,482,250
1,000 New Hampshire St Bus Fin Auth Wtr Fac Rev
Pennichuck Wtrwks Inc
(AMBAC Insd) (AMT)....................... 6.300 05/01/22 1,021,840
--------------
3,587,490
--------------
NEW JERSEY 11.8%
1,000 New Jersey Econ Dev Auth Rev Cig Tax..... 5.500 06/15/31 1,062,080
1,900 New Jersey Econ Dev Auth Rev Cig Tax..... 5.750 06/15/29 2,057,491
5,000 New Jersey Econ Dev Auth Rev Sch Fac
Constr Ser I (Prerefunded @ 9/01/14)..... 5.000 09/01/23 5,398,050
2,210 New Jersey Econ Dev Auth Wtr Fac Rev NJ
Amern Wtr Co Inc Ser B (FGIC Insd)
(AMT).................................... 5.375 05/01/32 2,279,063
4,350 New Jersey Econ Dev Wtr NJ Amern Wtr Co
Inc Ser A (FGIC Insd) (AMT).............. 5.250 07/01/38 4,488,504
1,000 New Jersey Hlthcare Fac Fin Auth Rev Cap
Hlth Sys Oblig Grp Ser A................. 5.375 07/01/33 1,040,060
2,500 New Jersey Hlthcare Fac Fin Auth Rev Gen
Hosp Ctr at Passaic (FSA Insd) (d)....... 6.750 07/01/19 3,058,650
10,000 New Jersey St Ed Fac Auth Higher Ed Cap
Impt Ser A (AMBAC Insd)
(Prerefunded @ 9/01/12).................. 5.250 09/01/20 10,766,400
18 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
$ 2,000 New Jersey St Tpk Auth Tpk Rev Ser C-1
(AMBAC Insd)............................. 5.000% 01/01/35 $ 2,051,580
10,750 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth
Rev Pollutn Ctl Pub Svc Elec & Gas Ser A
(MBIA Insd) (AMT)........................ 5.450 02/01/32 10,819,875
30,000 Tobacco Settlement Fin Corp NJ Ser 1A
(a)...................................... 5.000 06/01/41 29,583,000
5,000 Tobacco Settlement Fin Corp NJ Ser 1A.... 4.750 06/01/34 4,758,450
--------------
77,363,203
--------------
NEW MEXICO 0.2%
1,500 Jicarilla, NM Apache Nation Rev Adj Ser A
(Acquired 10/23/03, Cost $1,514,910)
(f)...................................... 5.000 09/01/18 1,571,925
--------------
NEW YORK 10.8%
7,000 Metropolitan Trans Auth NY Rev Rfdg Ser A
(FGIC Insd).............................. 5.250% 11/15/31 $ 7,438,060
1,500 Nassau Cnty, NY Tob Settlement Corp
Ser A-3.................................. 5.000 06/01/35 1,525,695
3,500 Nassau Cnty, NY Tob Settlement Corp
Ser A-3.................................. 5.125 06/01/46 3,581,515
5,000 New York City Muni Wtr Fin Auth Wtr & Swr
Sys Rev Ser D............................ 5.000 06/15/38 5,249,900
5,000 New York City Ser H (MBIA Insd).......... 5.250 03/15/14 5,318,300
7,575 New York St Dorm Auth Rev City Univ Sys
Cons Ser A............................... 5.625 07/01/16 8,399,917
1,520 New York St Dorm Auth Rev Insd John T
Mather Mem Hosp (Connie Lee Insd) (c).... 6.500 07/01/09 1,605,409
3,845 New York St Dorm Auth Rev Secd Hosp Gen
Hosp Rfdg................................ 5.750 02/15/20 4,217,657
2,310 New York St Med Care Fac Fin Agy Rev
Saint Peter's Hosp Proj Ser A (AMBAC
Insd).................................... 5.375 11/01/13 2,312,749
5,000 New York St Urban Dev Corp Rev St
Fac Rfdg................................. 5.700 04/01/20 5,746,100
21,920 Port Auth NY & NJ Cons 144th Ser (a)..... 5.000 10/01/35 23,245,612
2,150 Westchester, NY Tob Asset Sec Corp....... 5.125 06/01/38 2,201,342
--------------
70,842,256
--------------
NORTH CAROLINA 0.3%
1,500 North Carolina Eastn Muni Pwr Agy Pwr Sys
Rev Ser D................................ 6.700 01/01/19 1,610,430
--------------
OHIO 3.6%
3,000 Cincinnati, OH City Sch Dist Sch Impt
(FSA Insd)............................... 5.250 06/01/18 3,219,330
3,150 Cuyahoga Cnty, OH Hosp Fac Rev Canton Inc
Proj..................................... 7.500 01/01/30 3,452,809
1,000 Dayton, OH Arpt Rev James M Cox Dayton
Rfdg Ser C (Radian Insd) (AMT)........... 5.250 12/01/27 1,041,140
See Notes to Financial Statements 19
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
OHIO (CONTINUED)
$ 3,540 Franklin Cnty, OH Hosp Rev Doctor's Hosp
Proj Impt & Rfdg (d)..................... 5.875% 12/01/23 $ 3,820,014
5,130 Muskingum Cnty, OH Hosp Fac Rev Bethesda
Care Sys Impt & Rfdg (Connie Lee Insd)
(c)...................................... 6.250 12/01/10 5,241,834
5,000 Ohio St Air Quality Dev Auth Rev Coll
Dayton Pwr & Lt Co Proj (a).............. 4.800 09/01/36 5,057,338
1,035 Toledo Lucas Cnty, OH Port Auth Dev Rev
Northwest OH Bd Fd Ser C (AMT)........... 6.600 11/15/15 1,115,658
565 Toledo Lucas Cnty, OH Port Auth Northwest
Bd Fd Ser A (AMT)........................ 6.000 05/15/11 589,312
--------------
23,537,435
--------------
OKLAHOMA 1.5%
1,500 Jenks, OK Aquarium Auth Rev First Mtg
(MBIA Insd) (Prerefunded @ 7/01/10)...... 6.100 07/01/30 1,620,705
5,000 Tulsa Cnty, OK Indl Auth Hlthcare Rev
Saint Francis Hlth Sys (a)............... 5.000 12/15/36 5,171,575
2,755 Tulsa Cnty, OK Pub Fac Auth Cap Impt Rev
(AMBAC Insd) (Prerefunded @ 11/01/09).... 6.250 11/01/22 2,977,384
--------------
9,769,664
--------------
OREGON 3.5%
2,010 Emerald Peoples Util Dist OR Rfdg
(FGIC Insd) (c).......................... 7.350 11/01/09 2,182,739
2,060 Multnomah Cnty, OR Sch Dist No. 007
Reynolds Ser 2005 (MBIA Insd)............ 5.000 06/01/30 2,119,184
5,000 Oregon Hlth Sciences Univ Insd Ser A
(MBIA Insd).............................. 5.250 07/01/22 5,324,400
5,000 Oregon St Dept Admin Rfdg Ser C
(MBIA Insd).............................. 5.250 11/01/18 5,321,650
2,000 Oregon St Hsg & Cmnty Svc Dept Mtg Rev
Ser B (AMT) (a).......................... 4.750 07/01/27 2,009,615
1,000 Oregon St Hsg & Cmnty Svc Dept Mtg Rev
Ser B (AMT) (a).......................... 4.800 07/01/32 1,004,808
1,100 Oregon St Hsg & Cmnty Svc Dept Mtg Rev
Ser B (AMT) (a).......................... 4.850 07/01/37 1,105,288
3,580 Yamhill Cnty, OR Sch Dist No. 029J
Newburg (MBIA Insd) (Prerefunded @
6/15/12)................................. 5.250 06/15/21 3,839,335
--------------
22,907,019
--------------
PENNSYLVANIA 4.0%
24,740 Pennsylvania St Pub Sch Bldg Auth Lease
Rev Sch Dist Philadelphia Proj Ser B
(a)...................................... 4.500 06/01/32 24,646,978
1,370 Philadelphia, PA Hosp & Higher Ed Fac
Auth Rev Cmnty College Rfdg Ser B
(MBIA Insd) (c).......................... 6.500 05/01/08 1,406,401
--------------
26,053,379
--------------
20 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
SOUTH CAROLINA 4.5%
$ 3,125 Charleston Ed Excellence Fin Corp SC Rev
Charleston Cnty Sch Dist (a)............. 5.250% 12/01/25 $ 3,345,984
9,375 Charleston Ed Excellence Fin Corp SC Rev
Charleston Cnty Sch Dist (a)............. 5.250 12/01/26 10,037,954
3,115 Greenville, SC Impt & Rfdg (MBIA Insd)
(c)...................................... 5.250 04/01/21 3,331,306
1,000 Newberry Invt in Newberry Cnty Sch
Dist Proj................................ 5.000 12/01/30 1,036,690
1,015 Rock Hill, SC Util Sys Rev Comb Rfdg Ser
C (FSA Insd) (c)......................... 5.000 01/01/11 1,058,584
6,500 South Carolina Jobs Econ Dev Auth Indl
Rev Elec & Gas Co Proj Ser A (AMBAC
Insd).................................... 5.200 11/01/27 6,871,994
3,750 South Carolina Jobs Econ Dev Auth Indl
Rev Elec & Gas Co Proj Ser B
(AMBAC Insd) (AMT)....................... 5.450 11/01/32 3,982,163
--------------
29,664,675
--------------
SOUTH DAKOTA 0.4%
1,375 Deadwood, SD Ctf Partn (ACA Insd)........ 6.375 11/01/20 1,456,579
1,000 South Dakota St Hlth & Ed Fac Auth Rev
Childrens Care Hosp Rfdg
(Prerefunded @ 11/01/09)................. 6.125 11/01/29 1,066,210
--------------
2,522,789
--------------
TENNESSEE 4.9%
2,130 Chattanooga, TN Hlth Ed & Hsg Fac Brd Rev
CDFI Phase I LLC Proj Rfdg Ser A......... 5.000 10/01/25 2,173,175
2,595 Chattanooga, TN Hlth Ed & Hsg Fac Brd Rev
CDFI Phase I LLC Proj Rfdg Ser A......... 5.125 10/01/35 2,653,647
1,270 Elizabethton, TN Hlth & Ed Fac Brd Rev
Hosp First Mtg Impt & Rfdg Ser B......... 8.000 07/01/33 1,485,392
7,050 Hallsdale Powell Util Dist Knox Cnty TN
Wtr & Swr Rev Impt Ser B (FGIC Insd)..... 5.000 04/01/34 7,365,205
12,525 Johnson City, TN Hlth & Ed Fac Brd Hosp
Rev Cap Apprec First Mtg Rfdg Ser A
(MBIA Insd).............................. * 07/01/26 5,448,250
4,800 Johnson City, TN Hlth & Ed Fac Brd Hosp
Rev First Mtg Mtn St Hlth Rfdg Ser A
(MBIA Insd).............................. 7.500 07/01/25 5,729,520
6,500 Johnson City, TN Hlth & Ed Fac Brd Hosp
Rev First Mtg Mtn St Hlth Ser A.......... 5.500 07/01/36 6,925,685
--------------
31,780,874
--------------
TEXAS 10.9%
2,335 Beaumont, TX Wtrwks & Swr Sys (FGIC Insd)
(Prerefunded @ 9/01/10).................. 6.250 09/01/14 2,520,492
2,000 Brazos Cnty, TX Hlth Fac Dev Oblig Grp... 5.375 01/01/32 2,090,360
3,565 Brazos Riv Auth TX Pollutn Ctl Rev Adj
TXU Elec Co Proj Rfdg Ser C (AMT) (i).... 5.750 05/01/36 3,674,517
See Notes to Financial Statements 21
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 650 Brownsville, TX Util Sys Rev (d)......... 7.375% 01/01/10 $ 688,220
8,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt
Impt & Rfdg Ser A (FGIC Insd) (AMT)...... 5.500 11/01/31 8,451,200
2,345 Denton Cnty, TX Perm Impt
(Prerefunded @ 7/15/10) (c).............. 5.500 07/15/19 2,471,818
1,000 Harris Cnty, TX Hlth Fac Dev Corp Hosp
Rev Mem Hermann Hlthcare Ser A
(Prerefunded @ 6/01/11).................. 6.375 06/01/29 1,106,140
5,000 Harris Cnty, TX Sr Lien Toll Rd Rfdg (FSA
Insd).................................... 5.125 08/15/32 5,248,550
2,320 Houston, TX Arpt Sys Rev (d)............. 9.500 07/01/10 2,537,941
3,000 Houston, TX Arpt Sys Rev Sub Lien Ser A
(FSA Insd) (AMT)......................... 5.625 07/01/30 3,141,300
5,000 Houston, TX Util Sys Rev Comb First Lien
Ser A (FSA Insd)......................... 5.250 05/15/20 5,399,300
3,920 Lower CO Riv Auth TX Transmission
Contract Rev LCRA Svc Corp Proj (FGIC
Insd).................................... 5.000 05/15/33 4,027,330
5,000 Matagorda Cnty, TX Navig Dist No. 1 Rev
Houston Lt Rfdg (AMBAC Insd) (AMT)....... 5.125 11/01/28 5,482,350
2,000 Mesquite, TX Hlth Fac Dev Corp Retirement
Fac Christian Care Ctr Ser A
(Prerefunded @ 02/15/10)................. 7.625 02/15/28 2,213,880
1,500 Mesquite, TX Hlth Fac Dev Retirement Fac
Christian Care Ctr....................... 5.625 02/15/35 1,582,830
3,500 Metropolitan Hlth Fac Dev Corp TX Wilson
N Jones Mem Hosp Proj.................... 7.250 01/01/31 3,629,920
3,325 North Central, TX Hlth Fac Dev Corp Rev
Hosp Baylor Hlthcare Sys Proj Ser A...... 5.125 05/15/29 3,405,265
3,000 Prosper, TX Indpt Sch Dist (PSF Gtd)..... 5.500 08/15/33 3,218,430
3,960 Stafford, TX Econ Dev Corp (FGIC Insd)... 5.500 09/01/30 4,375,840
1,990 Stafford, TX Econ Dev Corp (FGIC Insd)
(c)...................................... 6.000 09/01/19 2,289,435
3,510 Texas St Wtr Fin Assistance.............. 5.500 08/01/35 3,630,533
--------------
71,185,651
--------------
UTAH 0.5%
4,950 Intermountain Pwr Agy UT Pwr Supply Rev
Rfdg Ser A (FGIC Insd) (d)............... * 07/01/17 3,190,127
--------------
VIRGINIA 2.4%
2,000 Fairfax Cnty, VA Ctf Partn............... 5.300 04/15/23 2,130,521
1,030 Richmond, VA Indl Dev Auth Govt Fac Rev
Bd (AMBAC Insd).......................... 5.000 07/15/14 1,108,177
675 Richmond, VA Indl Dev Auth Govt Fac Rev
Bd (AMBAC Insd).......................... 5.000 07/15/16 734,339
1,465 Richmond, VA Indl Dev Auth Govt Fac Rev
Bd (AMBAC Insd).......................... 5.000 07/15/17 1,596,982
1,520 Tobacco Settlement Fin Corp VA........... 5.500 06/01/26 1,625,731
22 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
VIRGINIA (CONTINUED)
$ 1,660 Tobacco Settlement Fin Corp VA
(Prerefunded @ 6/01/15).................. 5.625% 06/01/37 $ 1,846,551
3,140 Virginia St Hsg Auth Dev Auth Rental Hsg
Ser D (AMT) (a).......................... 4.500 07/01/29 3,094,344
3,640 Virginia St Hsg Auth Dev Auth Rental Hsg
Ser D (AMT) (a).......................... 4.600 07/01/33 3,615,157
--------------
15,751,802
--------------
WASHINGTON 4.8%
5,000 Clark Cnty, WA Sch Dist 114 (FSA Insd)... 5.250 06/01/19 5,380,600
1,370 King Cnty, WA Ser B (Prerefunded
@ 12/01/07).............................. 5.900 12/01/14 1,414,059
3,630 King Cnty, WA Ser B (Prerefunded
@ 12/01/07).............................. 5.900 12/01/14 3,746,741
2,245 King Cnty, WA Ser B (Prerefunded
@ 12/01/07).............................. 6.625 12/01/15 2,326,561
700 Quinault Indian Nation, WA Quinault Beach
Impt & Rfdg Ser A (ACA Insd)............. 5.800 12/01/15 728,294
3,000 Spokane, WA Pub Fac Dist Hotel Motel &
Sales Use Tax (MBIA Insd)................ 5.250 09/01/33 3,196,380
9,855 Washington St Mtr Veh Fuel Tax 2007 Ser B
(FSA Insd) (c)........................... 5.000 07/01/27 10,491,731
4,000 Washington St Pub Pwr Supply Rfdg Ser A
(FGIC Insd).............................. 7.000 07/01/08 4,146,400
--------------
31,430,766
--------------
WEST VIRGINIA 1.6%
6,420 Harrison Cnty, WV Cnty Cmnty Solid Waste
Disp Rev West PA Pwr Co Ser C
(AMBAC Insd) (AMT)....................... 6.750 08/01/24 6,520,024
3,750 West Virginia Univ Rev Impt Univ Proj Ser
C (FGIC Insd)............................ 5.000 10/01/34 3,943,087
--------------
10,463,111
--------------
WISCONSIN 2.1%
10,000 Wisconsin Hsg & Econ Dev Auth Home
Ownership Rev Ser A (AMT) (a)............ 4.750 09/01/33 9,995,700
890 Wisconsin St Hlth & Ed Fac Auth Rev
Bellin Mem Hosp (AMBAC Insd)............. 6.625 02/15/08 910,025
2,675 Wisconsin St Hlth & Ed Fac FH Hlthcare
Dev Inc Proj (Prerefunded @ 11/15/09).... 6.250 11/15/28 2,862,330
--------------
13,768,055
--------------
WYOMING 0.3%
2,000 Sweetwater Cnty, WY Solid Waste Disp Rev
FMC Corp Proj Rfdg (AMT)................. 5.600 12/01/35 2,125,160
--------------
See Notes to Financial Statements 23
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
----------------------------------------------------------------------------------------------
PUERTO RICO 4.6%
$ 21,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy
Rev Rfdg Ser Y (FSA Insd) (g)............ 6.250% 07/01/21 $ 25,981,200
4,000 Puerto Rico Pub Bldgs Auth Gtd Pub Ed &
Hlth Fac Rfdg Ser M (MBIA Insd).......... 5.600 07/01/08 4,086,680
--------------
30,067,880
--------------
TOTAL LONG-TERM INVESTMENTS 194.7%
(Cost $1,216,063,069)...................................................... $1,275,441,774
TOTAL SHORT-TERM INVESTMENTS 1.1%
(Cost $7,115,000).......................................................... 7,115,000
--------------
TOTAL INVESTMENTS 195.8%
(Cost $1,223,178,069)...................................................... 1,282,556,774
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS
RELATED TO SECURITIES HELD (33.6%)
(Cost ($220,170,000))......................................................
(220,170) Notes with interest rates ranging from
3.94% to 4.08% at April 30, 2007 and
contractual maturities of collateral ranging
from 2021 to 2042 (See Note 1) (h).............................. (220,170,000)
--------------
TOTAL NET INVESTMENTS 162.2%
(Cost $1,003,008,069)...................................................... 1,062,386,774
OTHER ASSETS IN EXCESS OF LIABILITIES 2.0%................................... 13,093,570
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (64.2%)................... (420,437,547)
--------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%................................ $ 655,042,797
==============
Percentages are calculated as a percentage of net assets applicable to common
shares.
* Zero coupon bond
(a) Underlying security related to Inverse Floaters entered into by the Trust.
See Note 1.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) The Trust owns 100% of the outstanding bond issuance.
(d) Escrowed to Maturity
(e) 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.
24 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2007 (UNAUDITED) continued
(f) Security is restricted and may be resold only in transactions exempt from
registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 0.2% of net assets
applicable to common shares.
(g) All or a portion of this security has been physically segregated in
connection with open futures contracts.
(h) Floating rate notes. The interest rates shown reflect the rates in effect at
April 30, 2007. See Note 1.
(i) Variable Rate Coupon
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FHA/VA--Federal Housing Administration/Department of Veterans Affairs
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
PSF--Public School Fund
Radian--Radian Asset Assurance
XLCA--XL Capital Assurance Inc.
FUTURES CONTRACTS OUTSTANDING AS OF APRIL 30, 2007:
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bonds Futures, June 2007 (Current Notional
Value of $111,750 per contract)........................... 1,708 $861,938
----- --------
See Notes to Financial Statements 25
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2007 (Unaudited)
ASSETS:
Total Investments (Cost $1,223,178,069)..................... $1,282,556,774
Cash........................................................ 9,353
Receivables:
Interest.................................................. 17,151,022
Investments Sold.......................................... 4,245,545
Other..................................................... 8,224
--------------
Total Assets............................................ 1,303,970,918
--------------
LIABILITIES:
Floating Rate Note Obligations.............................. 220,170,000
Payables:
Investments Purchased..................................... 5,126,095
Variation Margin on Futures............................... 1,441,125
Investment Advisory Fee................................... 396,957
Income Distributions--Common Shares....................... 68,304
Other Affiliates.......................................... 37,486
Trustees' Deferred Compensation and Retirement Plans........ 1,178,494
Accrued Expenses............................................ 72,113
--------------
Total Liabilities....................................... 228,490,574
Preferred Shares (including accrued distributions).......... 420,437,547
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 655,042,797
==============
NET ASSET VALUE PER COMMON SHARE ($655,042,797 divided by
45,038,168 shares outstanding)............................ $ 14.54
--------------
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 45,038,168 shares issued and
outstanding).............................................. $ 450,381
Paid in Surplus............................................. 596,603,009
Net Unrealized Appreciation................................. 60,240,643
Accumulated Net Realized Loss............................... (3,087,596)
Accumulated Undistributed Net Investment Income............. 836,360
--------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $ 655,042,797
--------------
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 16,800 issued with liquidation preference of
$25,000 per share)........................................ $ 420,000,000
==============
NET ASSETS INCLUDING PREFERRED SHARES....................... $1,075,042,797
==============
26 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended April 30, 2007 (Unaudited)
INVESTMENT INCOME:
Interest.................................................... $29,860,766
-----------
EXPENSES:
Interest and Residual Trust Expenses........................ 2,987,330
Investment Advisory Fee..................................... 2,950,156
Preferred Share Maintenance................................. 559,463
Trustees' Fees and Related Expenses......................... 86,787
Accounting and Administrative Expenses...................... 86,570
Professional Fees........................................... 78,107
Custody..................................................... 41,612
Reports to Shareholders..................................... 30,302
Transfer Agent Fees......................................... 24,097
Registration Fees........................................... 13,787
Other....................................................... 92,378
-----------
Total Expenses.......................................... 6,950,589
Investment Advisory Fee Reduction....................... 447,179
Net Expenses............................................ 6,503,410
-----------
NET INVESTMENT INCOME....................................... $23,357,356
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 355,726
Futures................................................... (611,417)
Swap Contracts............................................ (1,779,879)
-----------
Net Realized Loss........................................... (2,035,570)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period..................................... 67,603,859
-----------
End of the Period:
Investments............................................... 59,378,705
Futures................................................... 861,938
-----------
60,240,643
-----------
Net Unrealized Depreciation During the Period............... (7,363,216)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(9,398,786)
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $(7,357,440)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 6,601,130
===========
See Notes to Financial Statements 27
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2007 OCTOBER 31, 2006
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 23,357,356 $ 35,590,923
Net Realized Gain/ Loss................................. (2,035,570) 184,552
Net Unrealized Appreciation/Depreciation During the
Period................................................ (7,363,216) 12,550,580
Distributions to Preferred Shareholders:
Net Investment Income................................. (7,357,440) (10,848,528)
Net Realized Gain..................................... -0- (522,549)
------------ ------------
Change in Net Assets Applicable to Common Shares from
Operations............................................ 6,601,130 36,954,978
Distributions to Common Shareholders:
Net Investment Income................................. (15,466,176) (25,395,909)
Net Realized Gain..................................... -0- (2,119,257)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES
FROM INVESTMENT ACTIVITIES............................ (8,865,046) 9,439,812
------------ ------------
FROM CAPITAL TRANSACTIONS:
Repurchase of Shares.................................... (921,119) -0-
Proceeds from Shares Acquired Through Merger............ -0- 535,839,011
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS APPLICABLE TO
COMMON SHARES......................................... (9,786,165) 545,278,823
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period................................. 664,828,962 119,550,139
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $836,360 and
$302,620, respectively)............................... $655,042,797 $664,828,962
============ ============
28 See Notes to Financial Statements
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -----------------------------------------------
2007 2006 2005 2004 2003 2002
------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD....... $ 14.74 $ 14.62 $ 14.86 $ 14.69 $ 14.87 $ 14.77
------- ------- ------- ------- ------- -------
Net Investment Income......................... 0.52(a) 0.98(a) 1.01 1.05 1.08 1.10
Net Realized and Unrealized Gain/Loss......... (0.22) 0.44 (0.14) 0.18 (0.16) 0.10
Common Share Equivalent of Distributions Paid
to Preferred Shareholders:
Net Investment Income....................... (0.16) (0.30) (0.21) (0.10) (0.10) (0.14)
Net Realized Gain........................... 0.00 (0.01) 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- -------
Total from Investment Operations............... 0.14 1.11 0.66 1.13 0.82 1.06
Distributions Paid to Common Shareholders:
Net Investment Income....................... (0.34) (0.73) (0.90) (0.96) (1.00) (0.96)
Net Realized Gain........................... 0.00 (0.26) 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF THE PERIOD............. $ 14.54 $ 14.74 $ 14.62 $ 14.86 $ 14.69 $ 14.87
======= ======= ======= ======= ======= =======
Common Share Market Price at End of the
Period........................................ $ 13.85 $ 13.10 $ 13.08 $ 14.70 $ 13.90 $ 13.98
Total Return * (b)............................. 8.40%** 7.86% -5.06% 13.05% 6.57% 15.64%
Net Assets Applicable to Common Shares at End
of the Period (In millions)................... $ 655.0 $ 664.8 $ 119.6 $ 121.5 $ 120.0 $ 121.4
Ratio of Expenses to Average Net Assets
Applicable to Common Shares * (c)............. 1.98% 1.36% 1.33% 1.46% 1.48% 1.58%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares * (c)...... 7.12% 6.90% 6.78% 7.14% 7.23% 7.55%
Portfolio Turnover............................. 5%** 14% 29% 29% 26% 45%
* If certain expenses had not been voluntarily assumed by Van Kampen, total return would have been lower and
the ratios would have been as follows:
Ratio of Expenses to Average Net Assets
Applicable to Common Shares (c)............... 2.12% N/A N/A N/A N/A N/A
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (c)........ 6.98% N/A N/A N/A N/A N/A
SUPPLEMENTAL RATIOS:
Ratio of Expenses (Excluding Interest and
Residual Trust Expenses) to Average Net Assets
Applicable to Common Shares (c)............... 1.07% 1.28% 1.33% 1.46% 1.48% 1.58%
Ratio of Expenses (Excluding Interest and
Residual Trust Expenses) to Average Net Assets
Including Preferred Shares (c)................ 0.66% 0.77% 0.80% 0.88% 0.89% 0.95%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares (d)........ 4.88% 4.80% 5.40% 6.44% 6.57% 6.59%
SENIOR SECURITIES:
Total Preferred Shares Outstanding............. 16,800 16,800 3,200 3,200 3,200 3,200
Asset Coverage Per Preferred Share (e)......... $64,017 $64,593 $62,369 $62,967 $62,499 $62,954
Involuntary Liquidating Preference Per
Preferred Share............................... $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Average Market Value Per Preferred Share....... $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
** Non-annualized
N/A=Not Applicable
(a)Based on average shares outstanding.
(b)Total return assumes an investment at the common share market price at the
beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale of
all shares at the closing common share market price at the end of the period
indicated.
(c)Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(d)Ratios reflect the effect of dividend payments to preferred shareholders.
(e)Calculated by subtracting the Trust's total liabilities (not including
preferred shares) from the Trust's total assets and dividing this by the
number of preferred shares outstanding.
See Notes to Financial Statements 29
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Advantage Municipal Income Trust II (the Trust) is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940 (the "1940 Act"), as amended. The Trust's investment
objective is to seek to provide a high level of current income exempt from
federal income tax, consistent with preservation of capital. The Trust will
invest substantially all of its assets in municipal securities rated investment
grade at the time of investment. The Trust commenced investment operations on
August 27, 1993.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION Municipal bonds are valued by independent pricing services
or dealers using the mean of the last reported bid and asked prices or, in the
absence of market quotations, at fair value based upon yield data relating to
municipal bonds with similar characteristics and general market conditions.
Securities which are not valued by independent pricing services or dealers are
valued at fair value using procedures established in good faith by the Board of
Trustees. Futures contracts are valued at the settlement price established each
day on the exchange on which they are traded. Interest rate swaps are valued
using market quotations obtained from brokers. Short-term securities with
remaining maturities of 60 days or less are valued at amortized cost, which
approximates market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when-issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At April 30, 2007, there were no when-issued or delayed
delivery purchase commitments.
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At October 31, 2006, the Trust had an
30
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED) continued
accumulated capital loss carryforward for tax purposes of $2,455,675 which will
expire on October 31, 2014.
At April 30, 2007, the cost and related gross unrealized appreciation and
depreciation are as follows:
Cost of investments for tax purposes........................ $1,001,668,791
==============
Gross tax unrealized appreciation........................... $ 62,699,441
Gross tax unrealized depreciation........................... (1,981,458)
--------------
Net tax unrealized appreciation on investments.............. $ 60,717,983
==============
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed at least annually on a pro rata basis to common and
preferred shareholders. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included as ordinary
income for tax purposes.
The tax character of distributions paid during the year ended October 31,
2006 was as follows:
Distributions paid from:
Ordinary income........................................... $ 259,199
Tax-exempt income......................................... 35,640,851
Long-term capital gain.................................... 2,641,806
-----------
$38,541,856
===========
As of October 31, 2006, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income............................... $ -0-
Undistributed tax-exempt income............................. 831,984
Undistributed long-term capital gain........................ -0-
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sales
transactions and gains or losses recognized on securities for tax purposes but
not for book purposes.
F. FLOATING RATE OBLIGATIONS RELATED TO SECURITIES HELD The Trust enters into
transactions in which it transfers to dealer trusts fixed rate bonds in exchange
for cash and residual interests in the dealer trusts' assets and cash flows,
which are in the form of inverse floating rate investments. The dealer trusts
fund the purchases of the fixed rate bonds by issuing floating rate notes to
third parties and allowing the Trust to retain residual interests in the bonds.
The Trust enters into shortfall agreements with the dealer trusts, which commit
the Trust to pay the dealer trusts, in certain circumstances, the difference
between the liquidation value of the fixed rate bonds held by the dealer trusts
and the liquidation value of the floating rate notes held by third parties, as
well as any shortfalls in interest cash flows. The residual
31
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED) continued
interests held by the Trust (inverse floating rate investments) include the
right of the Trust (1) to cause the holders of the floating rate notes to tender
their notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Trust, thereby collapsing the
dealer trusts. The Trust accounts for the transfer of bonds to the dealer trusts
as secured borrowings, with the securities transferred remaining in the Trust's
investment assets, and the related floating rate notes reflected as Trust
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Trust records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" on the Trust's
Statement of Operations. The notes issued by the dealer trusts have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At April 30, 2007, Trust investments with a value of $306,396,841 are held
by the dealer trusts and serve as collateral for the $220,170,000 in floating
rate notes outstanding at that date. Contractual maturities of the floating rate
notes and interest rates in effect at April 30, 2007 are presented on the
Portfolio of Investments.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") provides investment advice and facilities to the
Trust for an annual fee payable monthly of .55% of the average daily net assets
including preferred shares of the Trust. Effective December 1, 2006, the Adviser
has agreed to waive investment advisory fees equal to 0.10% of the average daily
net assets including preferred shares of the Trust. During the period ended
April 30, 2007, the Adviser waived $447,179 of its advisory fees. This waiver is
voluntary and can be discontinued at any time.
For the six months ended April 30, 2007, the Trust recognized expenses of
approximately $40,100, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a Trustee of the Trust is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Trust.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer (CCO) Employment agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Trust. The costs of
these services are allocated to each trust. For the six months ended April 30,
2007, the Trust recognized expenses of approximately $45,600 representing Van
Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Trust, as well as the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative Expenses" on the Statement of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
also officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement
32
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED) continued
plan are payable upon retirement for a ten-year period and are based upon each
trustee's years of service to the Trust. The maximum annual benefit per trustee
under the plan
is $2,500.
3. CAPITAL TRANSACTIONS
For the six months ended April 30, 2007 and for the year ended October 31, 2006,
transactions in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2007 OCTOBER 31, 2006
Beginning Shares........................................ 45,104,868 8,175,881
Shares Repurchased*..................................... (66,700) -0-
Shares Acquired Through Merger.......................... -0- 36,928,987
---------- ----------
Ending Shares........................................... 45,038,168 45,104,868
========== ==========
* On February 28, 2007, the Trust commenced a share repurchase program for
purposes of enhancing stockholder value and reducing the discount at which the
Trust's shares trade from their net asset value. For the period ended April 30,
2007, the Trust repurchased 66,700 of its shares at an average discount of 5.85%
from net asset value per share. The Trust expects to continue to repurchase its
outstanding shares at such time and in such amounts as it believes such activity
will further the accomplishment of the foregoing objectives, subject to review
of the Trustees.
On January 27, 2006 the Trust acquired all of the assets and liabilities of
Van Kampen Municipal Opportunity Trust II (ticker symbol VOT) and Van Kampen
Value Municipal Income Trust (ticker symbol VKV) through a tax free
reorganization approved by VOT and VKV shareholders on January 11, 2006. The
Trust issued 36,928,946 common shares with a net asset value of $535,839,011 and
13,600 Auction Preferred Shares (APS) with a liquidation value of $340,000,000
in exchange for VOT's and VKV's net assets. The shares of VOT were converted
into Trust shares at a ratio of 1.025341 to 1 and 1 to 1, for common shares and
APS, respectively. The shares of VKV were converted into Trust shares at a ratio
of 1.059290 to 1 and 1 to 1, for common shares and APS, respectively. Net
unrealized appreciation of VOT and VKV as of January 27, 2006 was $15,400,172
and $31,522,823, respectively. The Trust assumed VOT's and VKV's book to tax
accretion differences, which resulted in a $775,214 increase to accumulated
undistributed net investment income and a corresponding decrease to net
unrealized appreciation. Combined net assets applicable to common shares on the
day of the reorganization were $654,455,555 and combined net assets including
preferred shares were $1,074,455,555. The Trust incurred merger expense of
$269,325, which represent costs related to the preparation, printing and
distribution of the Proxy Statement/Prospectus, Reorganization Agreement and
registration statements as well as a legal, audit and filing fees. Included in
these net assets are gains or losses of $290,000 recognized for tax purposes on
open futures transactions at January 27, 2006, and deferred losses relating to
wash sales transactions of $861, which are included with accumulated net
realized loss of which all, can be utilized by the acquiring Trust.
Additionally, included in these net assets was a deferred compensation
retirement plan balance of $675,787, which is included with accumulated
undistributed net investment income.
33
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED) continued
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $199,460,117 and $65,571,941,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or
fixed-income market changes, for duration management or for risk management
purposes, but may also enter into theses transactions to generate additional
income. All of the Trust's portfolio holdings, including derivative instruments,
are marked to market each day with the change in value reflected in unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when taking delivery of a security underlying a
futures contract. In this instance, the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in exchange traded futures contracts on U.S. Treasury
Bonds and Notes and typically closes the contract prior to the delivery date.
These contracts are generally used to manage the Trust's effective maturity and
duration. Upon entering into futures contracts, the Trust maintains an amount of
cash or liquid securities with a value equal to a percentage of the contract
amount with either a futures commission merchant pursuant to the rules and
regulations promulgated under the 1940 Act, as amended, or with its custodian in
an account in the broker's name. This amount is known as initial margin. During
the period the futures contract is open, payments are received from or made to
the broker based upon changes in the value of the contract (the variation
margin). The risk of loss associated with a futures contract is in excess of the
variation margin reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts for the six months ended April 30, 2007,
were as follow:
Outstanding at October 31, 2006............................. 770
Futures Opened.............................................. 5,384
Futures Closed.............................................. (4,446)
------
Outstanding at April 30, 2007............................... 1,708
======
B. INTEREST RATE SWAPS The Trust may enter into forward interest rate swap
transactions intended to help the Trust manage its overall interest rate
sensitivity, either shorter or longer, generally to more closely align the
Trust's interest rate sensitivity with that of the broader
34
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED) continued
municipal market. Forward interest rate swap transactions involve the Trust's
agreement with a counterparty to pay, in the future, a fixed or variable rate
payment in exchange for the counterparty paying the Trust a variable or fixed
rate payment, the accruals for which would begin at a specified date in the
future (the "effective date"). The amount of the payment obligation is based on
the notional amount of the forward swap contract and the termination date of the
swap (which is akin to a bond's maturity). The value of the Trust's swap
commitment would increase or decrease based primarily on the extent to which
long-term interest rates for bonds having a maturity of the swap's termination
date increases or decreases. The Trust may terminate a swap contract prior to
the effective date, at which point a realized gain or loss is recognized. When a
forward swap is terminated, it ordinarily does not involve the delivery of
securities or other underlying assets or principal, but rather is settled in
cash on a net basis. The Trust intends, but is not obligated, to terminate its
forward swaps before the effective date. Accordingly, the risk of loss with
respect to the swap counterparty on such transactions is limited to the credit
risk associated with a counterparty failing to honor its commitment to pay any
realized gain to the Trust upon termination. To reduce such credit risk, all
counterparties are required to pledge collateral daily (based on the daily
valuation of each swap) on behalf of the Trust with a value approximately equal
to the amount of any unrealized gain. Reciprocally, when the Trust has an
unrealized loss on a swap contract, the Trust has instructed the custodian to
pledge cash or liquid securities as collateral with a value approximately equal
to the amount of the unrealized loss. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate. Restricted
cash, if any, for segregating purposes is shown on the Statement of Assets and
Liabilities.
C. INVERSE FLOATING RATE SECURITIES The Trust may invest a portion of its assets
in inverse floating rate instruments, either through outright purchases of
inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Trust in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that may
expose the Trust to greater risk and increased costs. Leverage may cause the
Trust's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Trust's portfolio securities. The use of leverage may also
cause the Trust to liquidate portfolio positions when it may not be advantageous
to do so in order to satisfy its obligations with respect to inverse floating
rate instruments.
6. PREFERRED SHARES
The Trust has outstanding 16,800 APS. Series A, Series B, Series C and Series D
each contain 1,600 shares, Series E contains 1,400 shares, Series F, Series G,
Series H, and Series I each contain 2,000 shares, and Series J contains 1,000
shares. Dividends are cumulative and the dividend rates are generally reset
every 7 days for Series A, Series B, Series, C, Series D, Series E, Series F,
Series J, while Series G, Series H, and Series I are generally reset every 28
days through an auction process. The average rate in effect on April 30, 2007
was 3.795%. During the six months ended April 30, 2007, the rates ranged from
2.940% to 3.980%.
35
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2007 (UNAUDITED) continued
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of "Preferred Share
Maintenance" expense on the Statement of Operations.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
7. INDEMNIFICATIONS
The Trust enters into contracts that contain a variety of indemnifications. The
Trust's maximum exposure under these arrangements is unknown. However, the Trust
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
8. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation
of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes
by prescribing the minimum recognition threshold a tax position must meet before
being recognized in the financial statements. FIN 48 is effective for fiscal
years beginning after December 15, 2006 and is to be applied to all open tax
years as of the effective date. Recent SEC guidance allows implementing FIN in
the Trust NAV calculations as late as the Trust's last NAV calculation in the
first required financial statement period. As a result, the Trust will
incorporate FIN 48 in its semiannual report on April 30, 2008. The impact to the
Trust's financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Trust's financial statement disclosure.
36
VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
BOARD OF TRUSTEES, OFFICERS, AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
JAMES GARRETT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
TRANSFER AGENT
COMPUTERSHARE TRUST COMPANY, N.A.
c/o Computershare Investor Services
P.O. Box 43011
Providence, Rhode Island 02940-3010
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
111 South Wacker Drive
Chicago, Illinois 60606-4301
* "Interested persons" of the Trust, as defined in the investment Company Act
of 1940, as amended.
37
Van Kampen Advantage Municipal Income Trust II
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Advantage Municipal Income Trust II
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Advantage Municipal Income Trust II
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza, Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member NASD/SIPC.
VKISAR 6/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-01464P-Y04/07
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable for semi-annual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
TOTAL NUMBER OF MAXIMUM NUMBER
SHARES PURCHASED AS OF SHARES THAT MAY
PART OF PUBLICLY YET BE PURCHASED
TOTAL NUMBER OF AVERAGE PRICE ANNOUNCED PLANS UNDER THE PLANS OR
PERIOD* SHARES PURCHASED PAID PER SHARE OR PROGRAMS PROGRAMS
------- ---------------- -------------- ------------------- ------------------
November -- -- -- --
December -- -- -- --
January -- -- -- --
February 4,500 13.82 4,500 4,505,987
March 46,300 13.78 46,300 4,459,687
April 15,900 13.77 15,900 4,443,787
* The Share Repurchase Program commenced on 2/28/2007.
The Trust expects to continue to repurchase its outstanding shares at such time
and in such amounts as it believes will further the accomplishment of the
foregoing objectives, subject to review by the Board of Trustees.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. 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-CSRS 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 registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(1) Code of Ethics - Not applicable for semi-annual reports.
(2)(a) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(2)(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 Advantage
Municipal Income Trust II
By: /s/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: June 21, 2007
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/ Ronald E. Robison
---------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: June 21, 2007
By: /s/ Stuart N. Schuldt
---------------------------------
Name: Stuart N. Schuldt
Title: Principal Financial Officer
Date: June 21, 2007