<PAGE> 1
HIGH INCOME ADVANTAGE TRUST II
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
As was the case in the first half of 1994, the second half of 1994 was also
disappointing for all fixed-income markets, including the high-yield bond
market, as questions regarding the strength of the economy, inflation prospects,
interest rate levels and possible further Federal Reserve Board moves created a
great deal of uncertainty for the financial markets. High-yield investors,
concerned over rising interest rates and possible further tightening moves by
the Federal Reserve Board, remained nervous throughout most of the year,
contributing to the significant downturn in bond prices. In addition, a rather
large amount of new-issue supply in a year of weak demand also added to the
market weakness.
For the six-month period ended January 31, 1995, the Trust's total return
was 2.28 percent, based on its closing market price on the New York Stock
Exchange (NYSE) of $6.00 per share. Based on its net asset value (NAV) of $5.73
per share on January 31, 1995, the Trust's total return for the six-month period
was -3.25 percent. For the trailing 12-month period ended January 31, 1995, the
Trust's total return was -2.48 percent, based on the closing NYSE market price
per share quoted above and -9.31 percent, based on the NAV quoted above.
As of January 31, 1995, the Trust had net assets in excess of $203 million.
Over the past six months, the Trust continued to distribute regular income
dividends at a rate of 0.0525 per share per month. For the full six-month
period, income dividends totaled approximately 0.402 per share, including an
extra income dividend of 0.087 per share paid on December 23, 1994.
INVESTMENT STRATEGY
After entering 1994 positioned quite defensively, the Trust became a buyer
during the second quarter, as a correction in the market pushed bond prices to
more attractive levels. At this point, despite the fact that corporate credit
quality in most cases remained strong, B-rated issues could be purchased at 12
to 13 percent yield levels, versus the 10 percent levels that existed earlier in
the year and at significant discounts to par (face) value. The Trust maintained
its buying activity during the second half of 1994 with an increased emphasis on
discounted issues, which possess more upside opportunity for the Trust when the
high-yield market rebounds. While the Trust's portfolio, overall, is positioned
for a recovery in the high-yield market, it still retains a sizeable exposure to
various defensive securities, in order to provide the flexibility needed to take
advantage of any interim opportunities that may arise.
MARKET OUTLOOK
Given our outlook for slower, albeit continued economic growth, we find
today's B-rated issues -- now yielding more than 600 basis points (6 percent)
above U.S. Treasury securities and trading at steep discounts -- offer excellent
long-term return potential. Over the near term, we expect continued volatility
in the financial markets as investors assess the economy's strength, the future
direction of interest rates and possible Federal Reserve Board actions. However,
despite this potential short-term weakness, we consider today's high-yield
market to be an attractive long-term opportunity for investors. Current high-
<PAGE> 2
yield issues provide an exceptionally attractive yield advantage over U.S.
Treasury securities, with the opportunity for substantial capital appreciation
if the high-yield market rebounds.
We would like to remind you that the Trustees have approved a procedure
whereby the Trust, when appropriate, may repurchase shares in the open market or
in privately negotiated transactions at a price not above market value or net
asset value, whichever is lower at the time of purchase.
We thank you for your continued support of High Income Advantage Trust II
and look forward to continuing to serve your investment needs.
Sincerely yours,
CHARLES A. FIUMEFREDDO
----------------------
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 3
HIGH INCOME ADVANTAGE TRUST II
PORTFOLIO OF INVESTMENTS January 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
-------- ------ --------- -------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (79.9%)
AEROSPACE (2.6%)
$ 6,000 Sabreliner Corp. (Series B)............................ 12.50% 04/15/03 $ 5,400,000
-------------
AIRLINES (3.7%)
10,000 GPA Delaware, Inc. .................................... 8.75 12/15/98 7,450,000
-------------
AUTOMOTIVE (0.9%)
2,500 Envirotest Systems Corp. .............................. 9.625 04/01/03 1,912,500
-------------
CABLE & TELECOMMUNICATIONS (1.3%)
5,000 Marcus Cable Co. ...................................... 13.50++ 08/01/04 2,650,000
-------------
CHEMICALS (1.3%)
2,500 Georgia Gulf Corp. .................................... 15.00 04/15/00 2,534,375
-------------
COMPUTER EQUIPMENT (2.6%)
5,000 Unisys Corp. .......................................... 13.50 07/01/97 5,362,500
-------------
CONSUMER PRODUCTS (2.9%)
3,000 Icon Health & Fitness, Inc. (Units)**** - 144A**....... 13.00 07/15/02 3,037,500
2,500 J.B. Williams Holdings, Inc. .......................... 12.50* 03/01/04 2,375,000
500 Thermoscan, Inc. (Units)**** - 144A**.................. 11.75* 08/15/01 490,000
-------------
5,902,500
-------------
CONTAINERS (1.0%)
5,000 Ivex Holdings Corp. (Series B)......................... 13.25++ 03/15/05 2,100,000
-------------
ELECTRICAL & ALARM SYSTEMS (1.8%)
5,000 Mosler, Inc. .......................................... 11.00 04/15/03 3,700,000
-------------
ENTERTAINMENT/GAMING & LODGING (10.0%)
1,000 Fitzgeralds Gaming Corp. - 144A**...................... 13.50* 03/15/96 551,250
5,000 Motels of America, Inc. ............................... 12.00 04/15/04 5,062,500
11,873 Spectravision, Inc. ................................... 11.65+ 12/01/02 2,003,569
5,000 Trump Castle Funding, Inc. ............................ 11.75 11/15/03 2,850,000
11,130 Trump Plaza Holding Assoc. ............................ 12.50+ 06/15/03 9,905,896
-------------
20,373,215
-------------
FOODS & BEVERAGES (5.1%)
4,994 Envirodyne Industries, Inc. ........................... 10.25 12/01/01 3,770,470
15,000 Specialty Foods Acquisition Corp. (Series B)........... 13.00++ 08/15/05 6,600,000
-------------
10,370,470
-------------
FOREST & PAPER PRODUCTS (2.7%)
5,500 Fort Howard Corp. ..................................... 14.125 11/01/04 5,541,250
-------------
MANUFACTURING (5.8%)
5,000 Berry Plastics Corp. .................................. 12.25 04/15/04 4,850,000
5,000 MS Essex Holdings, Inc. ............................... 16.00++ 05/15/04 4,875,000
2,500 Uniroyal Technology Corp. ............................. 11.75 06/01/03 2,050,000
-------------
11,775,000
-------------
MANUFACTURING - DIVERSIFIED (5.3%)
5,000 Interlake Corp. ....................................... 12.125 03/01/02 4,800,000
2,500 J.B. Poindexter, Inc. ................................. 12.50 05/15/04 2,350,000
2,500 Jordan Industries, Inc. ............................... 10.375 08/01/03 2,287,500
2,500 Jordan Industries, Inc. ............................... 11.75++ 08/01/05 1,331,250
2,500 Starcraft Industrial Corp. (c) ........................ 16.50 01/15/98 25
-------------
10,768,775
-------------
</TABLE>
<PAGE> 4
HIGH INCOME ADVANTAGE TRUST II
PORTFOLIO OF INVESTMENTS January 31, 1995 (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
-------- ------ --------- -------------
<C> <S> <C> <C> <C>
OIL & GAS (6.4%)
$ 3,000 Deeptech International, Inc. .......................... 12.00% 12/15/00 $ 2,760,000
5,000 Empire Gas Corp. ...................................... 7.00 07/15/04 3,668,750
7,600 Presidio Oil Co. (Series B)............................ 13.675*** 07/15/02 6,688,000
-------------
13,116,750
-------------
PUBLISHING (5.8%)
5,000 Affiliated Newspapers Inv., Inc. ...................... 13.25++ 07/01/06 2,462,500
4,800 BFP Holdings, Inc. (Series B).......................... 13.50++ 04/15/04 2,784,000
2,500 Garden State Newspapers, Inc. ......................... 12.00 07/01/04 2,425,000
5,000 United States Bancorp.................................. 10.375 06/01/02 4,175,000
-------------
11,846,500
-------------
RESTAURANTS (7.6%)
10,000 American Restaurant Group Holdings, Inc. .............. 14.00++ 12/15/05 4,800,000
5,000 Carrols Corp. ......................................... 11.50 08/15/03 4,612,500
7,500 Flagstar Corp. ........................................ 11.25 11/01/04 6,028,125
-------------
15,440,625
-------------
RETAIL (5.9%)
5,000 Cort Furniture Rental Corp. ........................... 12.00 09/01/00 4,725,000
2,500 County Seat Stores Co. ................................ 12.00 10/01/01 2,462,500
5,000 Thrifty Payless Holdings, Inc. ........................ 12.25 04/15/04 4,737,500
-------------
11,925,000
-------------
RETAIL - FOOD CHAINS (4.6%)
2,500 Food 4 Less Holdings, Inc. ............................ 15.25++ 12/15/04 1,925,000
21,500 Grand Union Capital Corp. (Series A)(c)................ 15.00++ 07/15/04 779,375
55,500 Grand Union Capital Corp. (Series A)(c)................ 0.00 01/15/07 485,625
7,500 Purity Supreme, Inc. (Series B)........................ 11.75 08/01/99 6,131,250
-------------
9,321,250
-------------
TEXTILES - APPAREL MANUFACTURERS (2.6%)
7,313 JPS Textiles Group, Inc. .............................. 10.85 06/01/99 5,375,055
-------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $191,392,626)............................................... 162,865,765
-------------
CONVERTIBLE BONDS (1.2%)
RETAIL (1.2%)
2,500 Federated Department Stores, Inc.
(Identified Cost $2,448,233)......................... 6.00++ 02/15/04 2,450,000
-------------
U.S. GOVERNMENT OBLIGATIONS (10.0%)
16,500 U.S. Treasury Note..................................... 12.625 05/15/95 16,806,797
3,500 U.S. Treasury Note..................................... 11.50 11/15/95 3,625,234
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $20,767,421)................................................ 20,432,031
-------------
</TABLE>
<TABLE>
<CAPTION>
Number
of
Shares
--------
<C> <S> <C>
COMMON STOCKS (A) (6.0%)
BUILDING & CONSTRUCTION (2.5%)
240,267 USG Corp.(b)................................................................. 5,015,574
-------------
</TABLE>
<PAGE> 5
HIGH INCOME ADVANTAGE TRUST II
PORTFOLIO OF INVESTMENTS January 31, 1995 (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
-------- -------------
<C> <S> <C>
COMPUTER EQUIPMENT (0.1%)
222,958 Memorex Telex Corp. (ADR)(b)................................................. $ 153,284
-------------
ENTERTAINMENT/GAMING & LODGING (0.3%)
5,000 Motels of America, Inc. - 144A**............................................. 475,000
67,051 Spectravision, Inc. (Class B)................................................ 29,335
5,210 Trump Taj Mahal, Inc. (Class A).............................................. 52,100
-------------
556,435
-------------
FOODS & BEVERAGES (0.2%)
225,000 Specialty Foods Acquisition Corp. - 144A**................................... 506,250
-------------
MANUFACTURING - DIVERSIFIED (2.3%)
396,350 Thermadyne Holdings Corp.(b)................................................. 4,706,656
-------------
PUBLISHING (0.3%)
5,000 Affiliated Newspapers Inv., Inc. (Class B)................................... 125,000
38,400 BFP Holdings, Inc. - 144A** (Class D)........................................ 576,000
-------------
701,000
-------------
RESTAURANTS (0.1%)
10,000 American Restaurant Group Holdings, Inc. - 144A**............................ 220,000
-------------
RETAIL (0.2%)
91 Northern Holdings Industrial Corp. - 144A** (b).............................. --
95,000 Thrifty Payless Holdings, Inc. (Class C)..................................... 427,500
-------------
427,500
-------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $38,792,639).............................................. 12,286,699
-------------
</TABLE>
<TABLE>
<CAPTION>
Number of Expiration
Warrants Date
-------- ---------
<C> <S> <C> <C>
WARRANTS (A) (0.6%)
AEROSPACE (0.0%)
6,000 Sabreliner Corp.(b).............................................. 04/15/03 60,000
-------------
CONTAINERS (0.1%)
5,000 Crown Packaging Holdings, Ltd. - 144A** (Canada)................. 10/15/03 275,588
-------------
ENTERTAINMENT/GAMING & LODGING (0.1%)
3,263 Casino America, Inc. ............................................ 11/15/96 2,039
1,000 Fitzgeralds Gaming Corp. - 144A**................................ 03/15/99 20,000
200 Trump Plaza Holding Assoc. ...................................... 06/18/96 142,000
-------------
164,039
-------------
MANUFACTURING (0.1%)
5,000 BPC Holdings Corp. .............................................. 04/15/04 62,500
25,000 Uniroyal Technology Corp. ....................................... 06/01/03 37,500
-------------
100,000
-------------
OIL & GAS (0.0%)
6,900 Empire Gas Corp. ................................................ 07/15/04 69,000
-------------
RETAIL (0.3%)
5,000 County Seat Holdings Co. ........................................ 10/15/98 125,000
165,000 New Cort Holdings Corp. ......................................... 09/01/98 412,500
-------------
537,500
-------------
RETAIL - FOOD CHAINS (0.0%)
17,327 Purity Supreme, Inc.** .......................................... 08/06/97 866
-------------
TOTAL WARRANTS
(IDENTIFIED COST $690,444).................................................. 1,206,993
-------------
</TABLE>
<PAGE> 6
HIGH INCOME ADVANTAGE TRUST II
PORTFOLIO OF INVESTMENTS January 31, 1995 (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
-------- ------ -------- ------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (0.2%)
REPURCHASE AGREEMENT
$ 368 The Bank of New York (dated 01/31/95; proceeds
$368,374; collateralized by $367,773 U.S. Treasury
Note 8.25% due 07/15/98 valued at $377,305)
(Identified Cost $368,318)........................... 5.50% 02/01/95 $ 368,318
------------
TOTAL INVESTMENTS (IDENTIFIED COST $254,459,681)(D).............. 97.9% 199,609,806
OTHER ASSETS IN EXCESS OF LIABILITIES............................ 2.1 4,303,796
------- ------------
NET ASSETS....................................................... 100.0% $203,913,602
------- ------------
------- ------------
</TABLE>
- ---------------
ADR American Depository Receipt.
* Adjustable rate. Rate shown is the rate in effect at January 31, 1995.
** Resale is restricted to qualified institutional investors.
*** Floating rate. Coupon is linked to the Gas Index. Rate shown is the
rate in effect at January 31, 1995.
**** Consists of more than one class of securities traded together as a unit;
generally bonds with attached stocks/warrants.
+ Payment-in-kind securities.
++ Currently zero coupon bond and will pay interest at the rate shown at a
future specified date.
(a) Non-income producing security.
(b) Acquired through exchange offer.
(c) Non-income producing, issuer in bankruptcy.
(d) The aggregate cost for federal income tax purposes is $254,740,091; the
aggregate gross unrealized appreciation is $2,735,509 and the aggregate
gross unrealized depreciation is $57,865,794, resulting in net unrealized
depreciation of $55,130,285.
See Notes to Financial Statements
<PAGE> 7
HIGH INCOME ADVANTAGE TRUST II
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1995 (unaudited)
- -------------------------------------------
ASSETS:
Investments in securities, at value
(identified cost $254,459,681)........... $ 199,609,806
Interest receivable........................ 4,593,480
Prepaid expenses and other assets.......... 3,543
-------------
TOTAL ASSETS....................... 204,206,829
-------------
LIABILITIES:
Investment management fee payable.......... 134,101
Accrued expenses and other payables........ 159,126
-------------
TOTAL LIABILITIES.................. 293,227
-------------
NET ASSETS:
Paid-in-capital............................ 344,428,742
Net unrealized depreciation................ (54,849,875)
Accumulated undistributed net investment
income................................... 1,683,560
Accumulated net realized loss.............. (87,348,825)
-------------
NET ASSETS......................... $ 203,913,602
=============
NET ASSET VALUE PER SHARE,
35,611,307 shares outstanding (unlimited
shares authorized of $.01 par value)..... $5.73
-----
-----
STATEMENT OF OPERATIONS For the six months
ended January 31, 1995 (unaudited)
- -------------------------------------------
NET INVESTMENT INCOME:
INTEREST INCOME........................... $ 13,301,165
-------------
EXPENSES
Investment management fee................ 800,838
Transfer agent fees and expenses......... 85,941
Professional fees........................ 32,598
Shareholder reports and notices.......... 21,584
Trustees' fees and expenses.............. 13,988
Registration fees........................ 13,849
Custodian fees........................... 9,031
Other.................................... 5,827
-------------
TOTAL EXPENSES......................... 983,656
-------------
NET INVESTMENT INCOME.............. 12,317,509
-------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................ (11,402,078)
Net change in unrealized depreciation.... (7,367,272)
-------------
TOTAL LOSS............................. (18,769,350)
-------------
NET DECREASE....................... $ (6,451,841)
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six
months ended For the
January 31, 1995 year ended
(unaudited) July 31, 1994
---------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.......................................................... $ 12,317,509 $ 24,813,347
Net realized loss.............................................................. (11,402,078) (19,165,908)
Net change in unrealized depreciation.......................................... (7,367,272) 9,011,697
---------------- -------------
Net increase (decrease).................................................... (6,451,841) 14,659,136
Dividends to shareholders from net investment income............................. (14,315,745) (25,016,824)
---------------- -------------
Total decrease............................................................. (20,767,586) (10,357,688)
NET ASSETS:
Beginning of period.............................................................. 224,681,188 235,038,876
---------------- -------------
END OF PERIOD (including undistributed net investment income of $1,683,560 and
$3,681,796, respectively)....................................................... $203,913,602 $ 224,681,188
================ =============
</TABLE>
See Notes to Financial Statements
<PAGE> 8
HIGH INCOME ADVANTAGE TRUST II
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- High Income Advantage Trust II (the
"Trust") is registered under the Investment Company Act of 1940, as amended, as
a diversified, closed-end management investment company. The Trust was organized
as a Massachusetts business trust on July 7, 1988 and commenced operations on
September 30, 1988.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- (1) an equity security listed or traded on
the New York or American Stock Exchange is valued at its latest sale price
on that exchange prior to the time when assets are valued (if there were no
sales that day, the security is valued at the latest bid price); (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to the
time of valuation; (3) when market quotations are not readily available,
portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of
the Trustees; (4) certain of the Trust's portfolio securities may be valued
by an outside pricing service approved by the Trustees. The pricing service
utilizes a matrix system incorporating security quality, maturity and
coupon as the evaluation model parameters, and/or research and evaluations
by its staff, including review of broker-dealer market price quotations, if
available, in determining what it believes is the fair valuation of the
portfolio securities valued by such pricing service; and (5) short-term
debt securities having a maturity date of more than sixty days at time of
purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st
day. Short-term debt securities having a maturity date of sixty days or
less at the time of purchase are valued at amortized cost.
B. Accounting for Investments -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Discounts on securities purchased are amortized over the life of
the respective securities. The Trust does not amortize premiums on
securities. Interest income is accrued daily except where collection is not
expected.
C. Federal Income Tax Status -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D. Dividends and Distributions to Shareholders -- The Trust records
dividends and distributions to its shareholders on the record date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent
in nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
<PAGE> 9
HIGH INCOME ADVANTAGE TRUST II
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), the
Trust pays its Investment Manager a management fee, calculated weekly and
payable monthly, by applying the following annual rates to the Trust's average
weekly net assets: 0.75% to the portion of average weekly net assets not
exceeding $250 million; 0.60% to the portion of average weekly net assets
exceeding $250 million but not exceeding $500 million; 0.50% to the portion of
average weekly net assets exceeding $500 million but not exceeding $750 million;
0.40% to the portion of average weekly net assets exceeding $750 million but not
exceeding $1 billion; and 0.30% to the portion of average weekly net assets
exceeding $1 billion.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust's book and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Trust who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended January 31, 1995, aggregated $31,065,880
and $40,925,473, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At January 31, 1995, the Trust had transfer agent fees
and expenses payable of approximately $35,000.
The Trust established an unfunded noncontributory defined benefit pension
plan covering all independent Trustees of the Trust who will have served as
independent Trustees for at least five years at the time of retirement. Benefits
under this plan are based on years of service and compensation during the last
five years of service. Aggregate pension costs for the six months ended January
31, 1995, included in Trustees' fees and expenses in the Statement of Operations
amounted to $4,019. At January 31, 1995, the Trust had an accrued pension
liability of $47,506 which is included in accrued expenses in the Statement of
Assets and Liabilities.
4. SHARES OF BENEFICIAL INTEREST --
<TABLE>
<CAPTION>
Par Value Capital Paid
of in Excess of
Shares Shares Par Value
----------- --------- -------------
<S> <C> <C> <C>
Balance, July 31, 1993, July 31, 1994 and
January 31, 1995............................. 35,611,307 $ 356,113 $ 344,073,816
========== ========= =============
</TABLE>
5. DIVIDENDS -- The Trust has declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
Declaration Amount Record Payable
Date per Share Date Date
----------- --------- ------ -------
<S> <C> <C> <C>
January 31, 1995 $0.0525 February 10,1995 February 24, 1995
February 28, 1995 $0.0525 March 10, 1995 March 24, 1995
</TABLE>
<PAGE> 10
HIGH INCOME ADVANTAGE TRUST II
NOTES TO FINANCIAL STATEMENTS (unaudited)(continued)
- --------------------------------------------------------------------------------
6. FEDERAL INCOME TAX STATUS -- At July 31, 1994, the Trust had approximate net
capital loss carryovers which may be used to offset future capital gains to the
extent provided by regulations as follows:
<TABLE>
<CAPTION>
Available through July 31,
- ---------------------------------------------------------------------------
1998 1999 2000 2002 Total
---- ---- ---- ---- -----
<S> <C> <C> <C> <C>
$28,000 $20,947,000 $29,353,000 $8,200,000 $58,528,000
</TABLE>
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Trust's next
taxable year. The Trust incurred and will elect to defer net capital losses of
approximately $17,156,000 during fiscal 1994.
At July 31, 1994, the Trust had temporary book/tax differences primarily
attributable to post-October losses.
7. SELECTED QUARTERLY FINANCIAL DATA --
<TABLE>
<CAPTION>
Quarters Ended*
---------------------------------------
1/31/95 10/31/94
----------------- -----------------
Per Per
Total Share Total Share
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Total investment income................................ $ 6,184 $ .17 $ 7,117 $ .20
Net investment income.................................. 5,715 .16 6,603 .19
Net realized and unrealized loss on investments........ (6,800) (.19) (11,969) (.34)
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended*
------------------------------------------------------------------------
7/31/94 4/30/94 1/31/94 10/31/93
----------------- ---------------- --------------- ---------------
Per Per Per Per
Total Share Total Share Total Share Total Share
--------- ----- -------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment
income................. $ 6,876 $ .19 $ 6,444 $ .18 $ 6,727 $.19 $ 7,029 $.20
Net investment income.... 6,326 .18 5,876 .16 6,132 .17 6,479 .18
Net realized and
unrealized gain (loss)
on investments......... (16,859) (.47) (11,031) (.31) 12,043 .34 5,693 .16
</TABLE>
- ---------------
* Totals expressed in thousands of dollars.
<PAGE> 11
HIGH INCOME ADVANTAGE TRUST II
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the six
months
ended For the year ended July 31,
January 31, -----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period....................... $ 6.31 $ 6.60 $ 6.43 $ 5.68 $ 6.44 $ 8.76
----------- ----------- ----------- ----------- ----------- -----------
Net investment income.......... 0.35 0.69 0.77 0.91 0.77 1.13
Net realized and unrealized
gain (loss) on investments... (0.53) (0.28) 0.31 0.50 (0.70) (2.26)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations................... (0.18) 0.41 1.08 1.41 0.07 (1.13)
----------- ----------- ----------- ----------- ----------- -----------
Less dividends and
distributions:
Net investment income........ (0.40) (0.70) (0.91) (0.66) (0.77) (1.19)
Net realized gain............ -- -- -- -- (0.06) --
----------- ----------- ----------- ----------- ----------- -----------
Total dividends and
distributions................ (0.40) (0.70) (0.91) (0.66) (0.83) (1.19)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of
period....................... $ 5.73 $ 6.31 $ 6.60 $ 6.43 $ 5.68 $ 6.44
========= ======== ======== ======== ======== ========
Market value, end of period.... $ 6.00 $ 6.25 $ 6.875 $ 6.50 $ 5.125 $ 6.00
========= ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+....... 2.28%(1) 0.90% 22.16% 42.17% 3.03% (13.61)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)................... $ 203,914 $ 224,681 $ 235,039 $ 228,283 $ 210,595 $ 251,793
Ratios to average net assets:
Expenses..................... 0.92%(2) 0.94% 0.95% 0.98% 1.07% 0.93%
Net investment income........ 11.54%(2) 10.33% 12.17% 14.83% 14.85% 15.74%
Portfolio turnover rate........ 17%(1) 113% 138% 99% 129% 31%
</TABLE>
- ---------------
+ Total investment return is based upon the current market value on the last
day of each period reported. Dividends and distributions are assumed to be
reinvested at the prices obtained under the Trust's dividend reinvestment
plan. Total investment return does not reflect sales charges or brokerage
commissions.
(1) Not Annualized.
(2) Annualized.
See Notes to Financial Statements
- --------------------------------------------------------------------------------
The financial statements included herein have been taken from the records
of the Trust without examination by the independent accountants and accordingly
they do not express an opinion thereon.
<PAGE> 12
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Peter M. Avelar
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
HIGH
INCOME
ADVANTAGE
TRUST II
Semiannual Report
January 31, 1995
