DECS TRUST II
N-30D, 2000-04-06
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DECS TRUST II





Semiannual Report
June 30, 1999







Trustees
  Donald J. Puglisi, Managing Trustee
  William R. Latham III
  James B. O'Neill



Administrator, Custodian, Transfer Agent
and Paying Agent
  The Bank of New York
  101 Barclay Street
  New York, New York 10286






<PAGE>
DECS TRUST II

Summary Information
- --------------------------------------------------------------------------------

Each of the DECS issued by the DECS Trust II represents  the right to receive an
annual distribution of $1.81328, and will be exchanged on November 15, 2000 (the
"Exchange Date") for between 0.8130 and 1.0 subordinate  voting shares,  without
par value  ("Subordinate  Voting Shares"),  of Royal Group Technologies  Limited
(the "Company"),  or an equivalent value in cash or cash and Subordinate  Voting
Shares.  The DECS are designed to provide investors with a higher yield than the
dividend yield paid on the Subordinate  Voting Shares,  while also providing the
opportunity  for  investors  to  share  in  the  appreciation,  if  any,  of the
Subordinate Voting Shares above a threshold appreciation price. The DECS are not
subject to redemption prior to the Exchange Date.

The Trust was  established  to purchase  and hold a portfolio  of stripped  U.S.
Treasury securities maturing on a quarterly basis through November 15, 2000, and
forward  purchase  contracts  with  certain  shareholders  of the  Company  (the
"Sellers").  The  trustees  of the  Trust  do not  have  the  power  to vary the
investments  held by the Trust. The Trust's  investment  objective is to provide
each holder of DECS with a quarterly  distribution of $0.45332 per DECS, payable
on each  February 15, May 15,  August 15 and November 15,  through  November 15,
2000,  and, on November 15, 2000, a number of  Subordinate  Voting Shares of the
Company  per  DECS  (or,  if  some or all of the  Sellers  exercise  their  cash
settlement option in the forward purchase contracts, the cash equivalent of such
shares or a  combination  of  Subordinate  Voting  Shares and cash)  computed as
follows:  if the Exchange  Price (as defined  below) is equal to or greater than
$32.44,  holders of DECS will receive 0.8130 Subordinate Voting Shares per DECS;
if the Exchange  Price is less than $32.44 but equal to or greater than $26.375,
holders of DECS will receive a fraction of a Subordinate  Voting Shares per DECS
having a value  (determined at the Exchange Price) equal to $26.375;  and if the
Exchange  Price  is  less  than  $26.375,  holders  of  DECS  will  receive  one
Subordinate  Voting  Shares  per DECS,  subject  in each case to  adjustment  in
certain  events.  Upon any  distribution  of  Subordinate  Voting  Shares of the
Company,  holders of DECS will  receive the number of whole  Subordinate  Voting
Shares  to which  their  DECS  entitle  them  and cash in lieu of any  remaining
fractional share. The "Exchange Price" is the average closing price per share of
Subordinate  Voting Shares the Company on the New York Stock Exchange (or if the
Subordinate  Voting  Shares are not then  listed on the NYSE,  on the  principal
Canadian  securities exchange on which the Subordinate Voting Shares are listed)
for the 20 trading days  immediately  prior to, but not including,  November 15,
2000.



<PAGE>

                                    CONTENTS

- --------------------------------------------------------------------------------

FINANCIAL STATEMENTS

     Statement of net assets                                                  1

     Schedule of investments                                                  2

     Statement of operations                                                  3

     Statements of changes in net assets                                      4

     Notes to financial statements                                          5-7

     Financial highlights                                                     8












<PAGE>

<TABLE>
<CAPTION>
DECS TRUST II

STATEMENT OF NET ASSETS
June 30, 1999
(Unaudited)
- ---------------------------------------------------------------------------------------------

<S>                                                                             <C>
ASSETS
     Investments, at value (amortized cost $72,957,460) (Notes 2, 4, and 8)     $  83,574,003
     Cash                                                                                 927
                                                                                -------------
          Total Assets                                                          $  83,574,930
                                                                                =============

          Net Assets                                                            $  83,574,930
                                                                                =============


COMPOSITION OF NET ASSETS
     DECS no par value;
       3,150,000 shares issued and outstanding (Note 9)                         $  72,230,824
     Net unrealized appreciation of investments                                    10,616,543
     Undistributed net investment income                                              727,563
                                                                                -------------
          Net Assets                                                            $  83,574,930
                                                                                =============

          Net Asset Value per DECS                                              $       26.53
                                                                                =============
</TABLE>





See Notes to Financial Statements.



                                       1
<PAGE>

<TABLE>
<CAPTION>
DECS TRUST II

SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
                                               Par        Maturity          Market           Amortized
Securities Description                        Value         Date             Value              Cost
- ------------------------------------------------------------------------------------------------------

<S>                                      <C>              <C>          <C>               <C>
UNITED STATES GOVERNMENT
SECURITIES:

United States Treasury Strips            $  1,428,000     08/15/99     $   1,419,775     $   1,418,016
United States Treasury Strips               1,428,000     11/15/99         1,402,624         1,398,187
United States Treasury Strips               1,428,000     02/15/00         1,384,560         1,378,277
United States Treasury Strips               1,428,000     05/15/00         1,365,925         1,359,313
United States Treasury Strips               1,428,000     08/15/00         1,345,704         1,339,954
United States Treasury Strips               1,428,000     11/15/00         1,327,669         1,320,763
                                         ------------                  -------------     -------------
                                         $  8,568,000                      8,246,257         8,214,510
                                         ============

FORWARD PURCHASE CONTRACTS:
Royal Group Technologies Limited
  Subordinate Voting Shares
    Forward Purchase Agreements                           11/15/00        75,327,746        64,742,950
                                                                       -------------     -------------
          Total                                                        $  83,574,003     $  72,957,460
                                                                       =============     =============
</TABLE>





See Notes to Financial Statements.





                                       2
<PAGE>

<TABLE>
<CAPTION>
DECS TRUST II

STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
- ------------------------------------------------------------------------------------------------------

<S>                                                                  <C>                 <C>
ACCRETION OF ORIGINAL ISSUE DISCOUNT                                                     $     264,438

EXPENSES:
     Administrative fees and expenses                                $      18,787
     Legal fees                                                              7,351
     Accounting fees                                                         7,841
     Mailing expense                                                         7,351
     Trustees' fees (Note 5)                                                 5,881
                                                                     -------------

          Total fees and expenses                                           47,211

EXPENSE REIMBURSEMENT (Note 7)                                             (47,211)
                                                                     -------------

          Total expenses- net                                                                    ---
                                                                                         -------------

          Net investment income                                                                264,438

          Net change in unrealized appreciation
            of investments                                                                  16,854,987
                                                                                         -------------

          Net increase in net assets resulting from operations                           $  17,119,425
                                                                                         =============
</TABLE>





See Notes to Financial Statements.




                                       3
<PAGE>

<TABLE>
<CAPTION>
DECS TRUST II

STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30,1999 and the year ended December 31, 1998
(Unaudited)
                                                                      Six months               Year ended
                                                                         ended                December 31,
                                                                     June 30, 1999                1998
- ----------------------------------------------------------------------------------------------------------

<S>                                                                  <C>                    <C>
OPERATIONS
     Net investment income                                           $     264,438          $     741,685
     Unrealized appreciation (depreciation) of investments              16,854,987             (3,658,446)
                                                                     -------------          -------------
          Net increase (decrease) in net assets
            from operations                                             17,119,425             (2,916,761)
                                                                     -------------          -------------

DISTRIBUTIONS
     Net investment income                                                (213,386)              (202,686)
     Return of capital                                                  (2,642,530)            (5,715,471)
                                                                     -------------          -------------
          Net decrease in net assets from distributions                 (2,855,916)            (5,918,157)
                                                                     -------------          -------------


          Total increase (decrease) in net assets for
            the period                                                  14,263,509             (8,834,918)

          Net assets, beginning of period                               69,311,421             78,146,339
                                                                     -------------          -------------

          Net assets, end of period                                  $  83,574,930          $  69,311,421
                                                                     =============          =============
</TABLE>




See Notes to Financial Statements.



                                       4
<PAGE>

DECS TRUST II

NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------

NOTE 1. ORGANIZATION

DECS Trust II ("Trust") was  established  on September 2, 1997 and is registered
as  a  non-diversified,  closed-end  management  investment  company  under  the
Investment  Company Act of 1940 (the "Act").  In September  1997, the Trust sold
DECS (each, a "DECS") to the public pursuant to a Registration Statement on Form
N-2 under the Securities Act of 1933 and the Act. The Trust used the proceeds to
purchase a portfolio  comprised of stripped U.S. Treasury securities and forward
purchase  contracts for  Subordinate  Voting Shares of Royal Group  Technologies
Limited ("ROYAL") with certain shareholders of ROYAL (the "Sellers").  The stock
is deliverable pursuant to the contracts on November 15, 2000 and the Trust will
thereafter terminate.

Pursuant to the  Administration  Agreement between the Trust and The Bank of New
York (the "Administrator"), the Trustees have delegated to the Administrator the
administrative duties with respect to the Trust.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant  accounting  policies  followed by
the  Trust,  which  are  in  conformity  with  generally   accepted   accounting
principles.

   Valuation of Investments
   ------------------------

     The U.S. Treasury Strips are valued at the mean of the bid and ask price at
     the close of the period.  Amortized cost is calculated  using the effective
     interest method. The forward purchase contract is valued at the mean of the
     bid  prices  received  by the  Trust  at the end of each  period  from  two
     independent  broker-dealer firms unaffiliated with the Trust who are in the
     business of making bids on  financial  instruments  similar to the Contract
     and with terms comparable thereto.

   Investment Transactions
   -----------------------

     Securities transactions are accounted for as of the date the securities are
     purchased and sold (trade date).  Interest income is recorded as earned and
     consists of accrual of discount.  Realized  gains and losses are  accounted
     for on the specific identification method.

   Use of Estimates
   ----------------

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported  amount 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.

                                       5
<PAGE>

DECS TRUST II

NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------

NOTE 3. DISTRIBUTIONS

DECS  holders are  entitled to receive  distributions  from the maturity of U.S.
Treasury  Strips of $1.81328  per annum or $.45332  per quarter  (except for the
first distribution on February 15, 1998 which was $.519).

NOTE 4. PURCHASES AND SALES OF INVESTMENT

Maturities  of U.S.  Treasury  Strips for the six months ended June 30, 1999 and
the year ended December 31, 1998 totaled $2,856,000 and $5,919,000 respectively.
There were no purchases or sales of such investments during either period.

NOTE 5. TRUSTEES FEES

Each of the three Trustees was paid a one-time,  up front fee of $10,800 for his
services  during the life of the Trust.  In addition,  the Managing  Trustee was
paid an  additional  one-time,  up  front  fee of  $3,600  for  serving  in such
capacity. The total fees paid to the Trustees of $36,000 are being expensed over
the life of the Trust.  As of June 30, 1999,  the Trust had expensed  $19,625 of
such fees.

NOTE 6. INCOME TAXES

The Trust is not an association  taxable as a corporation for Federal income tax
purposes; accordingly, no provision is required for such taxes.

As of June 30, 1999,  net  unrealized  appreciation  of  investments  aggregated
$10,616,543, consisting of gross appreciation and depreciation of investments of
$10,616,543 and $0,  respectively.  The amortized cost of investment  securities
for Federal income tax purposes was $72,957,460 at June 30, 1999.

NOTE 7. EXPENSES

The  estimated  expenses  to be  incurred  by the Trust in  connection  with the
offering of the DECS and its ongoing  operations  is  $459,000.  Of this amount,
$170,000  represents  offering expenses  ($160,000) and organizational  expenses
($10,000)  incurred by the Trust.  All of these expenses are being paid directly
by the sponsor of the Trust and the Sellers.  The  remaining  amount of $289,000
represents  a  prepayment  of  estimated   administrative  and  other  operating
expenses.  Such amount was paid to the  Administrator  by the sponsor.  Expenses
incurred in excess of this amount will be paid by the Sellers.

Cash received by the Administrator from the sponsor of the Trust of $289,000 for
the payment of administrative  and related  operating  expenses of the Trust has
not been included in the Trust's financial  statements since the amount does not
represent  Trust  property.  At June 30,  1999,  $208,692  had been  paid by the
Administrator  for  current  and prepaid  administrative  and related  operating
expenses.  All  administrative  and related  operating  expenses incurred by the
Trust  are  reflected  in  the  Trust's  financial  statements  net  of  amounts
reimbursed.

                                       6
<PAGE>

DECS TRUST II

NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------

NOTE 8. FORWARD PURCHASE CONTRACTS

On November 4, 1997, the Trust entered into forward purchase  contracts with the
Sellers and paid to the Sellers $64,742,950 in connection therewith. Pursuant to
such  contracts,  the Sellers are  obligated to deliver to the Trust a specified
number of ROYAL  Subordinate  Voting Shares on November 15, 2000 (the  "Exchange
Date") so as to permit the holders of the DECS to exchange on the Exchange  Date
each of their DECS for between .813 and 1.00 Subordinate  Voting Shares. See the
Trust's  original  prospectus  dated October 29, 1997 for the formula upon which
such exchange will be determined.

The  forward  purchase  contracts  held by the  Trust  at June  30,  1999 are as
follows:

<TABLE>
<CAPTION>
                                 Exchange          Cost of           Contracts'       Unrealized
                                   Date           Contracts            Value         Appreciation
                                   ----           ---------            -----         ------------

<S>                              <C>           <C>                <C>                <C>
Royal Group Technologies
  Limited Subordinated
  Voting Shares Forward
  Purchase Agreements            11/15/00      $  64,742,950      $  75,327,746      $ 10,584,796
                                               =============      =============      ============
</TABLE>

The Sellers' obligations under the forward purchase contracts are collateralized
by ROYAL  Subordinate  Voting  Shares which are being held in the custody of the
Trust's  Custodian,  The Bank of New York. At June 30, 1999,  the Custodian held
1,450,000 shares with an aggregate value of $42,684,375.

NOTE 9. CAPITAL SHARE TRANSACTIONS

On  October  8,  1997  one DECS  was  sold to the  underwriters  of the DECS for
$100,000.  As a result of a stock split effected immediately prior to the public
offering  of the DECS,  this DECS was  converted  into  3,791  DECS.  During the
offering  period,  the Trust sold  3,146,209 DECS to the public and received net
proceeds of $80,488,825 ($82,981,262 less sales commission of $2,492,437). As of
June 30, 1999 there were 3,150,000 DECS issued and outstanding with an aggregate
cost, net of sales commission and return of capital, of $72,230,824.






                                       7
<PAGE>

DECS TRUST II

FINANCIAL HIGHLIGHTS
(Unaudited)
- --------------------------------------------------------------------------------

The Trust's  financial  highlights are presented  below. The per share operating
performance  data  is  designed  to  allow  investors  to  trace  the  operating
performance, on a per share basis, from the Trust's beginning net asset value to
the  ending  net  asset  value  so that  they can  understand  what  effect  the
individual  items have on their  investment  assuming it was held throughout the
period.  Generally,  the per share amounts are derived by converting  the actual
dollar amounts  incurred for each item as disclosed in the financial  statements
to their equivalent per share amounts.

The total return based on market value measures the Trust's performance assuming
investors  purchased  shares at market value as of the  beginning of the period,
reinvested  dividends and other  distributions  at market  value,  and then sold
their  shares at the market  value per share on the last day of the period.  The
total return  computations do not reflect any sales charges  investors may incur
in  purchasing  or selling  shares of the Trust.  The total return for period of
less than one year is not annualized.

<TABLE>
<CAPTION>

                                                       Six Months            Year          November 4, 1997
                                                         Ended               Ended           Commencement
                                                        June 30,          December 31,     of Operations) to
                                                          1999               1998          December 31, 1997
                                                          ----               ----          -----------------
<S>                                                   <C>                 <C>                 <C>
PER SHARE OPERATING PERFORMANCE FOR A
DECS OUTSTANDING THROUGHOUT THE PERIOD
Investment income                                     $     0.08          $     0.24          $     0.04
Expenses                                                    0.00                0.00                0.00
                                                      ----------          ----------          ----------
Investment income - net                                     0.08                0.24                0.04
Distributions from income                                  (0.06)              (0.07)               0.00
Return of capital                                          (0.84)              (1.82)               0.00
Adjustments to capital (sales commissions)                                                         (0.79)
Unrealized gain (loss) on investments                       5.35               (1.16)              (0.82)
Net increase (decrease) in net asset value                  4.53               (2.81)              (1.57)
Beginning net asset value                                  22.00               24.81               26.38
                                                      ----------          ----------          ----------
Ending net asset value                                $    26.53          $    22.00          $    24.81
                                                      ==========          ==========          ==========
Ending market value                                   $    26.63          $    22.00          $    23.63
                                                      ==========          ==========          ==========

TOTAL INVESTMENT RETURN BASED ON MARKET VALUE              25.55 %             (6.90)%            (10.43)%

RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets:
     Before reimbursements (1)                              0.12 %              0.12 %              0.11 %
     After reimbursements (1)                               0.00 %              0.00 %              0.00 %
Ratio of net investments income to average
  net assets:
     Before reimbursements (1)                              0.58 %              0.81 %              1.04 %
     After reimbursements (1)                               0.70 %              0.93 %              1.15 %
Net assets, end of period (in thousands)              $   83,575          $   69,311          $   78,146
</TABLE>
     (1) Annualized


                                       8



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