MERRILL LYNCH
CORPORATE
HIGH YIELD
FUND, INC.
FUND LOGO
Quarterly Report
June 30, 1999
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Corporate High Yield Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH CORPORATE HIGH YIELD FUND, INC.
TO OUR SHAREHOLDERS
The quarter ended June 30, 1999 proved difficult for fixed-income
markets. It became evident as reports on the economy accumulated
that the widely anticipated slowdown in US economic growth in 1999
was an illusion. Expectations as to the interest rate outlook
shifted accordingly. The 25 basis point (0.25%) increase in short-
term interest rates by the Federal Reserve Board at June quarter-end
was already discounted in security prices. The total return on ten-
year US Treasury bonds was -3.36% for the June quarter. On the other
hand, lower-quality assets benefited from the improved economic
environment. The US high-yield market is driven not just by interest
rates but also by expectations about credit quality. The unmanaged
benchmark CS First Boston Global High Yield Index returned +1.16%,
and the unmanaged Standard & Poor's 500 Index advanced 12.4% during
the June quarter. Merrill Lynch Corporate High Yield Fund, Inc.
performed in line with the benchmark.
The market continued to experience relatively poor liquidity during
the three-month period ended June 30, 1999. Net flows into high-
yield mutual funds were weak throughout the quarter, and firms
involved in underwriting and market making appeared unwilling to
commit capital to provide liquidity to investors. Despite this,
approximately $31 billion of new-issue supply was sold. We believed
that a large amount of additional supply would enter the market if
interest rates declined significantly and that this could put a
ceiling on price rallies.
While data relating to credit conditions in the high-yield market
are mixed, on balance we believe that credit quality is improving.
Credit conditions in a number of industries sensitive to economic
conditions have improved markedly this year. Oil and gas, steel, and
paper/forest product companies have experienced good product demand
and higher prices. Most industries have maintained stable quality.
It is difficult to think of a significant sector of the high-yield
universe that has experienced deteriorating fundamentals, with the
exception of managed care, which has been negatively affected by
lower Medicare/Medicaid payments. Nevertheless, default rates
continue to rise. For example, for the 12 months ended June 30,
1999, Moody's Investors Service, Inc. reported a default rate of
4.27% for the high-yield universe compared with 3.68% for the 12
months ended March 31, 1999. However, default rates are a lagging
indicator.
While the high-yield market outperformed Treasury issues year-to-
date June 30, 1999, valuations remain attractive. The yield spread
of the unmanaged CS First Boston Global High Yield Index relative to
US Treasury bonds was 5.75%. Although this is considerably tighter
than the 6.46% level at the beginning of the year, it is still wide
by historic measures. We believe that yield spreads will continue to
narrow as conditions normalize over the remainder of the year.
Portfolio Strategy
While the fundamentals for the high-yield market are somewhat mixed,
our view is positive. Currently, Merrill Lynch Corporate High Yield
Fund, Inc. is fully invested, and we expect to maintain this
strategy over the near term. The overall credit quality of the
Fund's holdings remains modestly above the benchmark CS First Boston
Global High Yield Index. The Fund's holdings are diversified among a
variety of issuers and industries.
During the June quarter, the Fund's performance benefited from
improvements in fundamentals for a number of holdings. Specifically,
Canadian telecommunications operator Metronet Communications' bonds
appreciated with an investment by AT&T Corp. and a computer chip
manufacturer Zilog Inc.'s high-yield debt benefited from a
turnaround in its operations. Weak sectors included healthcare and
energy.
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
During the June quarter, we disposed of positions where we believed
downside risk outweighed upside potential and swapped into credits
with what we viewed as better prospects. We sold bonds of Revlon
Consumer Products, Verio Inc., Westpoint Stevens Inc., Orange PLC
and Collins & Aikman Products at much higher prices than they are
today. We established new core positions in Avis Rent A Car Inc.,
Nextlink Communications Inc., Lyondell Chemical Company, Orion
Network Systems, Inc. and Cablevision SA.
The Fund's largest industry concentrations are communications, 17.8%
of net assets; energy, 7.8%; cable, 9.1%; and healthcare, 6.2%.
There are no significant overweightings or underweightings among
industry groups, relative to the CS First Boston Global High Yield
Index. The average maturity of the portfolio was 7.8 years at June
30, 1999, unchanged over the past six months. Our exposure to
emerging markets remained our most significant overweight, relative
to the CS First Boston Global High Yield Index, with the US dollar-
denominated bonds of corporations domiciled in countries with credit
ratings below investment grade constituting 13.6% of net assets at
June 30, 1999, compared with 7.1% for the Index.
In Conclusion
We appreciate your ongoing investment in Merrill Lynch Corporate
High Yield Fund, Inc., and we look forward to assisting you with
your financial needs in the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent T. Lathbury III)
Vincent T. Lathbury III
Senior Vice President and Portfolio Manager
August 10, 1999
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
<TABLE>
PORTFOLIO INFORMATION
<CAPTION>
Percent of
Ten Largest Corporate Holdings Net Assets
<S> <S> <C>
RBF Finance Co. R&B Falcon (the parent company of RBF Finance Co.) owns and operates the world's 2.8%
largest fleet of marine drilling rigs. The company operates in most of the world's
major offshore hydrocarbon producing regions and in all water depths. The RBF notes
are guaranteed by R&B Falcon, as well as secured by first-priority liens on certain
new rigs and related long-term contracts.
Nextel Nextel offers digital and analog wireless communication services throughout the 2.1
Communications United States. The company's digital service currently covers approximately 50%
Inc. of the total US population and will, once completed, enable Nextel to offer
nationwide digital wireless service.
HMH Properties, HMH, a wholly-owned subsidiary of Host Marriott Corporation, owns or holds controlling 1.9
Inc. interests in 69 full-service hotels, comprising the majority of Host Marriott's
lodging properties. The properties are generally operated under the Marriott and
Ritz-Carlton brand names. Host Marriott manages most of the properties for fees based
on revenues or operating profit.
Impsat Corp. Impsat provides telecommunications services throughout Latin America and is one of the 1.9
largest providers of data transmission services in Argentina.
Doman Industries Doman is an integrated forest products company. The company grows and harvests timber, 1.8
Limited sawmills logs into lumber and wood chips, manufactures value-added lumber, and produces
dissolving sulphite pulp and NBSK pulp. Doman also provides reforestation services.
Supercanal Supercanal is the third-largest cable TV provider in Argentina. It has a well-positioned 1.8
Holdings SA operation and almost no competition throughout its service territory with good demand
prospects.
Stena AB Stena is one of the largest privately held companies in Sweden. The company's operating 1.7
activities include ownership and chartering of roll-on/roll-off vessels; crude and petroleum
product tankers; drilling rigs, and investing in residential and commercial real estate.
In addition to these activities, the company has significant strategic investments in Stena
Line AB, one of the world's largest international passenger and freight ferry service
operators, and Coflexip S.A., the world leader in engineering, manufacture and installation
of offshore flexible pipe and a leading subsea contractor to the offshore oil and gas
industry.
PharMerica, Inc. PharMerica is a leading provider of pharmacy products and services to patients in skilled 1.5
nursing facilities, assisted living facilities, residential and independent living
communities, specialty hospitals and in-home settings. PharMerica was acquired in April
1999 by Bergen Brunswig Corporation, a pharmaceutical and medical supply management
company based in California.
Extendicare Extendicare Health Services (EHSI), based in Milwaukee, Wisconsin, operates 195 skilled 1.5
Health Services nursing facilities and 31 assisted-living facilities in the United States with a total
of 21,500 licensed beds. EHSI is a wholly-owned US subsidiary of Extendicare, Inc., one
of the largest operators of long-term care facilities in North America based in Ontario,
Canada.
AEI Resources Inc. Based on revenues, AEI is one of the largest coal producers in the United States. The 1.4
company's primary focus is on steam coal that is produced through its 53 mines throughout
Kentucky, West Virginia, Tennessee, Indiana, Illinois, Ohio and Colorado. These mines have
approximately 1.1 billion tons of proven and recoverable coal reserves.
</TABLE>
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
PORTFOLIO INFORMATION (concluded)
As of June 30, 1999
Quality Profile* Percent of
S&P Rating/Moody's Rating Long-Term Investments
BBB/Baa 4.1%
BB/Ba 33.5
B/B 54.1
CCC/Caa and Lower 8.3
[FN]
*In cases when bonds are rated differently by Standard & Poor's
Corporation and Moody's Investors Service, Inc., bonds are
categorized according to the higher of the two ratings.
Percent of
Five Largest Industries Net Assets
Health Services 7.9%
Cable--International 7.5
Transportation 5.1
Energy 5.0
Telephone--Competitive Local
Exchange Carriers 4.9
Geographic Profile Percent of
Top Five Foreign Countries* Net Assets
Canada 7.7%
Argentina 5.6
Mexico 3.0
United Kingdom 3.0
Brazil 1.9
[FN]
*All holdings are denominated in US dollars.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Aldona Schwartz, Vice President
Donald C. Burke, Vice President and Treasurer
William E. Zitelli, Secretary
Custodian
State Street Bank and Trust Company
One Heritage Drive, P2N
North Quincy, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.50% and an account
maintenance fee of 0.25%. These classes of shares automatically
convert to Class D Shares after approximately 10 years. (There is no
initial sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results
<CAPTION>
Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 6/30/99
<S> <C> <C> <C> <C>
ML Corporate High Yield Fund, Inc. Class A Shares* +2.58% +0.11% +2.63% 10.09%
ML Corporate High Yield Fund, Inc. Class B Shares* +1.80 -0.07 +1.72 9.71
ML Corporate High Yield Fund, Inc. Class C Shares* +1.76 -0.09 +1.66 9.67
ML Corporate High Yield Fund, Inc. Class D Shares* +2.33 +0.05 +2.33 9.82
Merrill Lynch High Yield US Corporates, Cash Pay Index** +0.94 +0.67 +2.08
CS First Boston Global High Yield Index** -0.85 +1.16 -0.35
Ten-Year US Treasury Securities*** +0.66 -3.36 +3.08
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date. The
Fund's inception date is 5/01/98.
**Unmanaged. These market-weighted Indexes mirror the high-yield
debt market of securities rated BBB or lower. Since inception total
return for Merrill Lynch High Yield US Corporates, Cash Pay Index is
from 5/01/98. Since inception total return for CS First Boston High
Yield Index is from 4/30/98.
***Since inception total return is from 4/30/98.
</TABLE>
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/99 +2.58% -1.52%
Inception (5/01/98)
through 6/30/99 +2.25 -1.27
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 +1.80% -1.93%
Inception (5/01/98)
through 6/30/99 +1.48 -0.90
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/99 +1.76% +0.82%
Inception (5/01/98)
through 6/30/99 +1.43 +0.64
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/99 +2.33% -1.77%
Inception (5/01/98)
through 6/30/99 +2.00 -1.52
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Bonds Cost Value
Bonds
<S> <C> <C> <C> <S> <C> <C>
Aerospace--3.3% B- B3 $10,000,000 Fairchild Corporation, 10.75% due
4/15/2009 $ 9,990,000 $ 9,850,000
B+ B1 10,000,000 Hexcel Corp., 9.75% due 1/15/2009 10,037,500 9,950,000
B+ B1 5,000,000 Kitty Hawk, Inc., 9.95% due 11/15/2004 4,893,750 5,025,000
-------------- --------------
24,921,250 24,825,000
Airlines--1.4% B B1 10,150,000 USAir Inc., 9.625% due 2/01/2001 10,581,375 10,358,989
Automotive BB+ Ba2 10,000,000 Federal-Mogul Corporation, 7.375% due
- --1.3% 1/15/2006 9,958,300 9,428,220
Broadcasting-- Globo Comunicacoes e Participacoes, Ltd.:
Radio & B+ B2 7,500,000 10.50% due 12/20/2006 4,906,250 5,418,750
Television-- B+ B2 1,500,000 10.50% due 12/20/2006 735,000 1,087,500
1.2% BB Ba2 2,500,000 Grupo Televisa, SA de CV, 11.875% due
5/15/2006 2,310,000 2,575,000
-------------- --------------
7,951,250 9,081,250
Cable--2.2% B+ B2 7,000,000 Charter Communications Holding LLC,
8.625% due 4/01/2009 6,978,650 6,755,000
B B2 10,000,000 Echostar DBS Corp., 9.25% due 2/01/2006 10,000,000 10,162,500
-------------- --------------
16,978,650 16,917,500
Cable-- BB- Ba3 4,500,000 Century Communications Corporation, 9.75%
Domestic--0.6% due 2/15/2002 4,725,000 4,601,250
Cable-- BB Ba3 10,000,000 Cablevision SA, 13.75% due 5/01/2009 10,000,000 9,125,000
International BB+ Ba3 10,000,000 Multicanal SA, 13.125% due 4/15/2009 10,034,620 9,150,000
- --7.5% B- B3 10,000,000 NTL Communications Corp., 11.753% due
10/01/2008 (c) 6,273,466 6,875,000
D Caa3 25,000,000 Supercanal Holdings SA, 11.50% due
5/15/2005 14,947,500 13,437,500
Telewest Communications PLC:
B+ B1 7,000,000 10.793% due 10/01/2007 (c) 4,782,178 4,698,750
B+ B1 5,000,000 11.25% due 11/01/2008 5,000,000 5,637,500
B B3 11,000,000 United International Holdings, Inc.,
12.37% due 2/15/2008 (a)(c) 6,771,093 7,287,500
-------------- --------------
57,808,857 56,211,250
Chemicals--2.1% BB- Ba3 5,000,000 ISP Holdings Inc., 9.75% due 2/15/2002 5,256,250 5,112,500
B+ B2 10,000,000 Lyondell Chemical Company, 10.875% due
5/01/2009 10,000,000 10,450,000
-------------- --------------
15,256,250 15,562,500
Child Care-- B- B3 10,000,000 Kindercare Learning Centers, Inc., 9.50%
1.3% due 2/15/2009 9,849,375 9,550,000
Communications B+ B2 17,215,000 Impsat Corp., 12.375% due 6/15/2008 15,483,500 14,202,375
- --3.1% B+ B2 17,000,000 Orion Network Systems, Inc., 16.429% due
1/15/2007 (c) 9,946,565 9,350,000
-------------- --------------
25,430,065 23,552,375
Computer B B2 10,000,000 Amkor Technologies Inc., 10.50% due
Services/ 5/01/2009 10,000,000 9,675,000
Electronics-- B B2 6,000,000 Hadco Corp., 9.50% due 6/15/2008 5,893,000 5,865,000
2.8% B- B2 6,000,000 Zilog Inc., 9.50% due 3/01/2005 4,732,500 5,310,000
-------------- --------------
20,625,500 20,850,000
Conglomerates-- B- B3 5,000,000 Eagle-Picher Industries, 9.375% due 3/01/2008 4,600,000 4,775,000
1.2% B+ NR* 5,000,000 Voto-Votorantim O/S Trading, 8.50% due
6/27/2005 4,638,750 4,412,500
-------------- --------------
9,238,750 9,187,500
</TABLE>
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Bonds Cost Value
Bonds (continued)
<S> <C> <C> <C> <S> <C> <C>
Consumer B B3 $10,000,000 Corning Consumer Products, 9.625% due
Products--1.2% 5/01/2008 $ 9,428,219 $ 8,675,000
Consumer B- Caa2 3,500,000 AP Holdings Inc., 11.174% due 3/15/2008 (c) 2,346,367 1,925,000
Services--2.8% BB- B2 10,000,000 Avis Rent A Car Inc., 11% due 5/01/2009 10,000,000 10,187,500
BB+ Ba3 10,000,000 Protection One Alarm Monitoring, 8.125% due
1/15/2009 10,000,000 9,312,500
-------------- --------------
22,346,367 21,425,000
Energy--5.0% B B3 2,220,000 Chesapeake Energy Corp., 9.625% due 5/01/2005 2,246,850 2,086,800
BBB- Ba3 2,000,000 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A., 9% due 1/30/2004 2,040,000 1,860,000
Ocean Energy Inc.:
BB+ Ba2 4,000,000 7.625% due 7/01/2005 3,882,500 3,850,000
BB- B1 7,000,000 8.375% due 7/01/2008 6,915,490 6,825,000
B- B3 6,000,000 Ocean Rig Norway AS, 10.25% due 6/01/2008 5,840,000 4,350,000
B+ B1 6,000,000 Parker Drilling Co., 9.75% due 11/15/2006 6,077,500 5,580,000
BB- Ba3 5,000,000 RBF Finance Co., 11.375% due 3/15/2009 5,000,000 5,200,000
BB- B1 5,000,000 Tesoro Petroleum Corp., 9% due 7/01/2008 4,971,450 4,887,500
D C 9,000,000 TransAmerican Energy Corp., 0/13% due
6/15/2002 (c) 5,713,467 1,091,250
B- B3 3,000,000 United Refining Co., 10.75% due 6/15/2007 2,865,000 2,055,000
-------------- --------------
45,552,257 37,785,550
Entertainment-- B+ B1 4,275,000 Intrawest Corp., 9.75% due 8/15/2008 4,357,660 4,328,437
0.6%
Financial CCC+ Caa3 5,000,000 Amresco Inc., 9.875% due 3/15/2005 5,090,000 3,850,000
Services--1.1% BB+ baa2 5,000,000 SB Treasury Company LLC, 9.40% due
12/29/2049 (d)(e) 4,980,000 4,833,565
-------------- --------------
10,070,000 8,683,565
Food & Beverage B B3 5,000,000 Agrilink Foods, Inc., 11.875% due 11/01/2008 5,000,000 5,175,000
- --1.4% B+ B1 5,000,000 Chiquita Brands International Inc., 9.125%
due 3/01/2004 4,906,250 5,075,000
-------------- --------------
9,906,250 10,250,000
Gaming--3.3% Circus Circus Enterprises, Inc.:
BB+ Ba2 2,000,000 9.25% due 12/01/2005 2,000,000 2,030,000
BB+ Ba2 4,000,000 7.625% due 7/15/2013 3,355,000 3,520,000
BB+ Ba2 7,000,000 Harrah's Operating Co. Inc., 7.875% due
12/15/2005 6,995,000 6,755,000
BB+ Ba2 10,000,000 Park Place Entertainment, 7.875% due
12/15/2005 9,984,375 9,575,000
B B2 3,000,000 Trump Atlantic City Associates/Funding Inc.,
11.25% due 5/01/2006 2,972,826 2,700,000
-------------- --------------
25,307,201 24,580,000
Health Services B- Caa1 10,500,000 ALARIS Medical Inc., 14.993% due 8/01/2008 (c) 5,055,823 5,748,750
- --7.9% B+ Ba3 5,000,000 Beverly Enterprises Inc., 9% due 2/15/2006 5,237,500 4,950,000
B- B2 15,000,000 Extendicare Health Services, 9.35% due
12/15/2007 13,285,000 11,025,000
B+ ba3 10,000,000 Fresenius Medical Capital Trust II, 7.875%
due 2/01/2008 9,535,000 9,325,000
B- Caa1 10,000,000 Magellan Health Services, 9% due 2/15/2008 9,340,625 8,600,000
CC C 7,000,000 Mariner Post--Acute Network, 9.50% due
11/01/2007 2,427,500 1,365,000
</TABLE>
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
S&P Moody's Face
Industries Rating Rating Amount Bonds Cost Value
Bonds (continued)
<S> <C> <C> <C> <S> <C> <C>
Health Services BBB Ba2 $11,000,000 PharMerica, Inc., 8.375% due 4/01/2008 $ 11,085,000 $ 11,220,000
(concluded) BB- Ba3 7,500,000 Tenet Healthcare Corp., 8.125% due 12/01/2008 7,409,975 7,125,000
-------------- --------------
63,376,423 59,358,750
Hotels--3.2% BB Ba2 5,000,000 HMH Properties, Inc., 8.45% due 12/01/2008 4,983,200 4,775,000
BB Ba2 10,000,000 Host Marriott LP, 8.375% due 2/15/2006 10,000,000 9,762,500
BB- B2 10,000,000 Signature Resorts, Inc., 9.25% due 5/15/2006 9,766,250 9,700,000
-------------- --------------
24,749,450 24,237,500
Independent B+ Ba3 8,000,000 The AES Corporation, 8.375% due 8/15/2007 7,690,000 7,560,000
Power BB Ba2 6,000,000 Caithness Coso Fund Corp., 9.05% due
Producers--2.4% 12/15/2009 6,000,000 6,015,000
BB Ba2 5,000,000 Calpine Corp., 7.75% due 4/15/2009 4,996,900 4,712,500
-------------- --------------
18,686,900 18,287,500
Industrial Neff Corp.:
Services--1.6% B B3 4,000,000 10.25% due 6/01/2008 4,000,000 4,100,000
B B3 4,000,000 10.25% due 6/01/2008 3,940,640 4,100,000
CCC+ Caa1 2,000,000 Thermadyne Holdings Corp., 12.50% due
6/01/2008 (c) 1,243,570 960,000
CCC+ B3 3,000,000 Thermadyne Manufacturing, 9.875% due
6/01/2008 2,976,420 2,655,000
-------------- --------------
12,160,630 11,815,000
Internet B- B3 7,000,000 PSINet, Inc., 10% due 2/15/2005 7,070,000 7,070,000
Transport--0.9%
Media & Call-Net Enterprises Inc.:
Communications BB- B2 3,000,000 8% due 8/15/2008 2,986,260 2,670,000
- --International BB- B2 13,000,000 8.94% due 8/15/2008 (c) 9,062,707 7,247,500
- --1.3% -------------- --------------
12,048,967 9,917,500
Metals & B- Caa1 11,000,000 AEI Resources Inc., 11.50% due 12/15/2006 10,825,000 10,807,500
Mining--4.0% BB Baa3 12,000,000 Grupo Minero Mexico SA, 8.25% due 4/01/2008 10,342,000 9,840,000
CCC+ B3 5,000,000 Kaiser Aluminum & Chemical Corp., 12.75%
due 2/01/2003 4,902,500 5,050,000
B B3 5,000,000 Ormet Corporation, 11% due 8/15/2008 5,000,000 4,725,000
-------------- --------------
31,069,500 30,422,500
Paper & Forest CCC+ Caa1 6,000,000 APP International Finance, 11.75% due
Products--4.2% 10/01/2005 4,886,250 4,608,336
B- B2 5,000,000 Container Corporation of America, 9.75% due
4/01/2003 5,025,000 5,175,000
Doman Industries Limited:
B Caa1 5,000,000 8.75% due 3/15/2004 3,137,500 3,150,000
B+ B3 8,000,000 12% due 7/01/2004 7,572,403 7,760,000
B Caa1 5,000,000 9.25% due 11/15/2007 2,875,000 2,975,000
CCC+ Caa1 11,000,000 Pindo Deli Financial Mauritius, 10.75% due
10/01/2007 7,040,000 7,672,500
-------------- --------------
30,536,153 31,340,836
Product B- Caa1 5,000,000 Nebco Evans Holding Co., 16.34% due
Distribution-- 7/15/2007 (c) 2,695,383 2,475,000
1.2% CCC+ Caa1 10,350,000 US Office Products Co., 9.75% due 6/15/2008 8,786,460 6,934,500
-------------- --------------
11,481,843 9,409,500
</TABLE>
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Bonds Cost Value
Bonds (concluded)
<S> <C> <C> <C> <S> <C> <C>
Publishing & BB- Ba3 $ 5,000,000 Primedia, Inc., 7.625% due 4/01/2008 $ 4,725,000 $ 4,800,000
Printing--1.9% BB- B1 10,000,000 World Color Press Inc., 7.75% due 2/15/2009 9,830,100 9,450,000
-------------- --------------
14,555,100 14,250,000
Real Estate-- BB- Ba3 4,875,000 Forest City Enterprises Inc., 8.50% due
0.6% 3/15/2008 4,906,406 4,655,625
Steel--1.2% BB- B2 5,000,000 CSN Iron SA, 9.125% due 6/01/2007 4,507,750 3,825,000
B B2 5,000,000 Weirton Steel Corp., 11.375% due 7/01/2004 5,412,500 4,900,000
-------------- --------------
9,920,250 8,725,000
Telephone-- B B2 10,000,000 Intermedia Communications Inc., 8.60% due
Competitive 6/01/2008 9,740,625 9,250,000
Local Exchange B B3 8,000,000 Level 3 Communications, 9.125% due 5/01/2008 7,702,500 7,900,000
Carriers--4.9% Metronet Communications:
B B3 8,000,000 9.95% due 6/15/2008 (c) 5,446,627 5,920,000
B B3 3,500,000 10.625% due 11/01/2008 3,525,000 3,963,750
B B3 5,000,000 Nextlink Communications Inc., 10.75% due
6/01/2009 5,000,000 5,150,000
RSL Communications PLC:
B- B2 4,000,000 9.125% due 3/01/2008 3,672,500 3,710,000
B- B2 2,000,000 12.793% due 3/01/2008 (c) 1,145,858 1,200,000
-------------- --------------
36,233,110 37,093,750
Textiles--0.9% B B3 10,000,000 Galey & Lord, Inc., 9.125% due 3/01/2008 9,235,000 6,600,000
Transportation BB- NR* 11,000,000 Autopistas del Sol SA, 10.25% due 8/01/2009 8,572,500 8,277,500
- --5.1% BB Ba3 10,000,000 GS Superhighway Holdings, 10.25% due
8/15/2007 5,965,000 5,125,000
CCC- Caa2 5,000,000 Hvide Marine, Inc., 8.375% due 2/15/2008 2,875,000 2,275,000
BB Ba2 12,500,000 Stena AB, 10.50% due 12/15/2005 13,138,750 12,437,500
TFM, SA de CV:
B+ B2 5,000,000 10.25% due 6/15/2007 4,647,500 4,350,000
B+ B2 10,000,000 13.696% due 6/15/2009 (c) 6,215,995 6,000,000
-------------- --------------
41,414,745 38,465,000
Waste BB Ba3 6,500,000 Allied Waste North America, 7.375% due
Management-- 1/01/2004 6,490,445 6,191,250
0.8%
Wireless CCC+ B3 7,000,000 Metrocall Inc., 11% due 9/15/2008 6,951,280 5,425,000
Communications-- CCC+ B3 5,000,000 Nextel Partners Inc., 14% due 2/01/2009 (c) 2,688,209 2,950,000
Domestic Paging NR* B3 8,775,000 TeleCorp PCS Inc., 11.625% due 4/15/2009 (c) 5,106,066 4,892,062
& Cellular--1.8% -------------- --------------
14,745,555 13,267,062
Wireless CCC+ Caa1 10,000,000 Dolphin Telecom PLC, 17.059% due 6/01/2008 (c) 4,324,746 5,100,000
Communications B- Caa1 12,000,000 Nextel International Inc., 13.258% due
- --International 4/15/2008 (c) 7,133,105 6,060,000
Paging & Telesystem International Wireless Inc. (c):
Cellular--2.6% CCC+ Caa1 7,000,000 14.26% due 6/30/2007 4,475,547 3,815,000
CCC+ Caa1 10,000,000 14.014% due 11/01/2007 5,585,491 4,650,000
-------------- --------------
21,518,889 19,625,000
Total Investments in Bonds--89.9% 710,491,942 676,585,159
</TABLE>
Merrill Lynch Corporate High Yield Fund, Inc.
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares
Industries Held Issue Cost Value
Preferred Stocks
<S> <C> <S> <C> <C>
Energy--2.1% 15,000 R & B Falcon Corp. $ 15,350,000 $ 15,600,000
TCR Holdings (Convertible Preferred):
6,426 (Class B) 386 386
3,534 (Class C) 198 198
9,317 (Class D) 494 494
19,277 (Class E) 1,214 1,214
-------------- --------------
15,352,292 15,602,292
Product 5,875 Nebco Evans Holding Co. (b) 536,425 233,531
Distribution--0.0%
Publishing & 50,000 Primedia, Inc. (Series H) 4,837,500 4,768,750
Printing--0.6%
Wireless Communications 3,260 Crown Castle International Corporation (b) 3,284,149 3,430,824
- --Domestic Paging 6,500 Nextel Communications, Inc. (Series D)(b) 7,507,500 7,085,000
& Cellular--1.8% 2,796 Rural Cellular Corp. (Series B)(b) 2,786,693 2,830,950
-------------- --------------
13,578,342 13,346,774
Total Investments in Preferred
Stocks--4.5% 34,304,559 33,951,347
Face
Amount
Short-Term Securities
Commercial $26,702,000 General Motors Acceptance Corp., 5.63% due
Paper**--3.6% 7/01/1999 26,702,000 26,702,000
Total Investments in Short-Term
Securities--3.6% 26,702,000 26,702,000
Total Investments--98.0% $ 771,498,501 737,238,506
============== --------------
Other Assets Less Liabilities--2.0% 14,885,338
--------------
Net Assets--100.0% $ 752,123,844
==============
Net Asset Class A--Based on net assets of $14,071,571 and 1,528,280 shares
Value: outstanding $ 9.21
==============
Class B--Based on net assets of $538,735,332 and 58,501,789 shares
outstanding $ 9.21
==============
Class C--Based on net assets of $124,703,893 and 13,542,324 shares
outstanding $ 9.21
==============
Class D--Based on net assets of $74,613,048 and 8,102,183 shares
outstanding $ 9.21
==============
<FN>
*Not Rated.
**Commercial Paper is traded on a discount basis; the interest rates
shown reflect the discount rates paid at the time of purchase by the
Fund.
(a)Each $1,000 face amount contains one warrant of United
International Holdings, Inc.
(b)Represents a pay-in-kind security which may pay
interest/dividends in additional face/shares.
(c)Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Fund.
(d)The security is a perpetual bond and has no definite maturity
date.
(e)Floating Rate Note.
</TABLE>
