HIGH INCOME
PORTFOLIO
Merrill Lynch
Corporate Bond Fund, Inc.
FUND LOGO
Quarterly Report
June 30, 1998
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 Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
HIGH INCOME PORTFOLIO
TO OUR SHAREHOLDERS
Increasing volatility characterized the capital markets during the
three-month period ended June 30, 1998. At times, US stock and bond
prices reflected expectations that the slowdown in Asian economic
growth would impact US exports and the US trade deficit and slow
overall US business activity. The deterioration of economic
conditions in Japan was of particular concern, and caused a sharp
drop in the yen's value relative to the US dollar. During other
periods, US investors appeared to expect that the positive trends of
a moderately expanding economy, declining unemployment, enhanced
productivity and corporate profits growth would continue, unimpeded
by developments in Asia. To date, there have been only a few signs
that Asia's troubles are influencing US economic activity--such as
a surge in the accumulation of inventories--largely because
domestic demand has remained strong. In Europe, the major event was
the greater progress toward achieving European Monetary Union,
although there were concerns that interest rates may have to be
increased, especially in the United Kingdom, to curtail potential
inflationary pressures.
As we move into the second half of 1998, it is likely that investor
focus will remain on developments in Asia. The US Federal Reserve
Board has kept monetary policy on hold as the Asian financial crisis
deepened, which has benefited US bond and stock prices. Looking
ahead, if there is continued evidence of noninflationary economic
growth, it should have a positive influence on the US capital
markets.
The High-Yield Market
For the three months ended June 30, 1998, the high-yield market
struggled to digest an exceptionally heavy supply of new issues. A
total of $44.9 billion in high-yield issues was sold during the June
quarter, bringing the total for the year-to-date to $96.9 billion.
Investment performance is reflected in the +1.26% total return
provided by the unmanaged CS First Boston High Yield Index during
the quarter ended June 30, 1998.
The largest new issues brought to market during the June quarter
included Niagara Mohawk Power Corp.'s eight-tranche refinancing at a
$3.45 billion total, PSINet Inc.'s $600 million refinancing,
Chesapeake Energy Corporation's $500 million refinancing, Tenet
Healthcare Corp.'s two-tranche $1.35 billion issue, and P&L Coal
Holdings Corp.'s $800 million two-tranche offering. We made
purchases for the Portfolio in all of these issues.
During the three months ended June 30, 1998, the market was
depressed by turmoil in Asia and Russia, which seemed to heighten
credit quality sensitivity, especially to emerging market issuers.
The unmanaged JP Morgan Emerging Markets Bond Index (EMBI+), a
composite index of emerging market bonds, returned -6%. The
combination of a strong US Treasury bond market and a soft high-
yield market caused yield differentials between the two markets to
widen significantly.
Yield spreads between B-rated issues widened about twice as much as
yield spreads between BB-rated issues. The bonds of oil and gas
producing companies widened the most (about 0.75%), largely in
response to the decline in oil and gas prices. The forest product
sector was also weak, presumably because of disappointing product
pricing.
Offsetting the heavy supply has been a heavy pace of debt
retirement, which was largely the result of merger and acquisition
activity. For the six months ended June 30, 1998, $18 billion in
high yield-issues was retired at a premium over par value of 8%.
Our outlook for moderate economic growth and relatively stable
interest rates suggests a benign investment environment for high-
yield bonds. Merger and acquisition activity continues at a record
pace and is likely to continue to create positive surprises for
specific high-yield issues. Overall credit quality remained good and
default rates were below average. Emerging market bonds provided
extremely poor total returns during the June quarter. Argentine and
Brazilian issues were impacted by problems in Asia and Russia, and
the yields on these securities are not reflective of the positive
fundamentals. Investors are beginning to differentiate between
better-quality credits and riskier investments, and we believe this
new trend will continue. The new-issue calendar has moderated
considerably, although it could build in the fall. Overall, we
remain constructive toward the high-yield bond market.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
Portfolio Strategy
Effective March 24, 1998, we ceased selling new shares of High
Income Portfolio to most categories of investors. The purpose of
this action was to preserve our ability to actively manage the
Portfolio. By reducing cash inflows, we can more effectively focus
on assets under management.
Portfolio activity during the June quarter involved selling all or
part of fully valued issues such as Comcast Corporation, HMC
Acquisition Properties, Midland Cogeneration Venture Limited
Partnership, Pacific Lumber Co. and Reliance Group Holdings Inc.,
all of which provided yields of less than 2% higher than Treasury
securities of similar maturity. In addition, the Portfolio received
proceeds from tendered issues, among which CLN Holdings Inc.,
Showboat Inc., Teleport Communications Group Inc. and Westpoint
Stevens Inc. were the largest. The total proceeds received from
these issues was $174 million. The aggregate yield to maturity (or
call) on these issues was 7.25%. We redeployed these assets largely
into new issues including Cathay International Ltd., Chesapeake
Energy Corporation, Federal-Mogul Corp., Impsat Corp., Laidlaw
Environmental Systems (LES) Inc., Level 3 Communications, Inc.,
Monterrey Power, S.A. de C.V., Niagara Mohawk Power Corp., Ocean Rig
Norway AS, P & L Coal Holdings Corp., PSINet Inc., Regal Cinemas,
Inc., Supercanal Holdings S.A., Tenet Healthcare Corp., Tesoro
Petroleum Corporation and US Office Products Co., and a new
Westpoint Stevens Inc. issue. These purchases totaled $413 million
and provided a yield to maturity of 9.69%. Overall, these trades
improved the Fund's income.
At June 30, 1998, cash and cash equivalents totaled 4.0% of net
assets, and the average maturity of the Portfolio was 7.6 years. The
"Portfolio Information" section on pages 3 and 4 of this report to
shareholders highlights the Fund's top holdings and industries as
well as quality and geographic profiles.
In Conclusion
We appreciate your ongoing investment in High Income Portfolio of
Merrill Lynch Corporate Bond Fund, Inc., and we look forward to
assisting you with your financial needs in the months and years
ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent T. Lathbury III)
Vincent T. Lathbury III
Senior Vice President and Portfolio Manager
August 11, 1998
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
PORTFOLIO INFORMATION
<CAPTION>
Percent of
Ten Largest Corporate Holdings Net Assets
<S> <S> <C>
TransAmerican Energy TransAmerican is a privately held holding company whose principal subsidiaries are 3.5%
Corp. wholly-owned TransAmerican Refining Corp. (TARC) and 69%-owned TransTexas Gas
Corp., a publicly held company which explores for and produces oil and natural gas
primarily in South Texas. TARC is in the midst of a two-phase construction and expansion
program which, when finished, will give it one of the largest and most complex refineries
in the United States. Our bonds are secured by some 33 million shares of TransTexas
common, and two intercompany loans secured by mortgages on substantially all of the
assets of TARC and TransTexas.
Nextel Communications Nextel offers digital and analog wireless communication services throughout the 2.4
Inc. United States. The company's digital service currently covers approximately 50% of the
total US population and once completed, will enable Nextel to offer nationwide digital
wireless service.
NTL Inc. Through various subsidiaries, NTL Inc. owns and operates television and radio 1.5
broadcasting, cable television and radio broadcasting, cable television and telecommu-
nications systems in the United Kingdom. Prior to March of 1997, the company was
called International Cabletel.
Lenfest Communications, Through its primary subsidiary, Suburban Cable, Lenfest offers cable service to nearly 1.4
Inc. one million cable customers in Pennsylvania, New Jersey and Delaware.
Century Century owns and operates 70 cable systems in 25 states and Puerto Rico. In addition, 1.3
Communications the company has a 31.8% common equity interest in Centennial Cellular, a provider of
Corporation wireless telephone service in four geographic areas in the United States and Puerto Rico.
HMC Acquisition HMC, a wholly-owned subsidiary of Host Marriott Corporation, owns 50 full-service 1.3
Properties hotels and has investment stakes in eight others, comprising the majority of Host
Marriott's lodging properties. All but three are operated under Marriott or Ritz-Carlton
brand names. Host Marriott manages most of the properties for fees based on revenues
or operating profit.
Time Warner Inc. Time Warner is a media and entertainment company with interests in entertainment, 1.3
cable programming and sports franchises, publishing and cable. Our holding, a preferred
stock, can be paid in cash or preferred stock at the company's option.
Fresenius Medical Fresenius Medical Care is the world's largest integrated provider of dialysis products 1.2
Care AG and services. Its 910 dialysis centers treat 68,000 patients worldwide, including
approximately 23% of the US dialysis patients. The company also is the world's second-
largest manufacturer and distributor of dialysis equipment and related supplies, selling
products in more than 110 companies.
EchoStar Communications EchoStar Communications provides Direct Broadcast Satellite ("DBS") television, 1.2
Corp. delivering digital television signals directly to dishes on subscribers' homes. EchoStar
began service in 1996 as the third US DBS provider and has rapidly grown to 1.2 million
subscribers. The company also manufactures and sells set-top boxes, antennae and
other digital equipment.
Trump Atlantic Trump Atlantic City owns and operates the Trump Taj Mahal, the Trump Plaza and the 1.1
City Associates/ Trump World's Fair hotel-casinos, all located on the boardwalk in Atlantic City, New
Funding Inc. Jersey. These bonds are secured by mortgages on the properties.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
PORTFOLIO INFORMATION (concluded)
As of June 30, 1998
Quality Profile* Percent of
S&P Rating/Moody's Rating Market Value
BBB/Baa 4.0%
BB/Ba 34.2
B/B 52.6
CCC/Caa 4.5
Not Rated 4.7
[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
Energy 9.2%
Cable--Domestic 7.1
Health Services 6.1
Cable--International 4.6
Utilities 4.3
Geographic Profile Percent of
Top Five Foreign Countries* Net Assets
Brazil 4.6%
Argentina 3.4
United Kingdom 3.3
Mexico 2.6
Canada 2.2
[FN]
*All holdings are denominated in US dollars.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Christopher G. Ayoub, Senior Vice President
Jay C. Harbeck, Senior Vice President
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
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.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 + 8.72% + 4.37%
Five Years Ended 6/30/98 + 9.65 + 8.75
Ten Years Ended 6/30/98 +11.80 +11.34
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 + 7.90% + 3.96%
Five Years Ended 6/30/98 + 8.85 + 8.85
Inception (10/21/88)
through 6/30/98 +11.03 +11.03
[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 6/30/98 + 7.85% + 6.86%
Inception (10/21/94)
through 6/30/98 +11.04 +11.04
[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 6/30/98 + 8.45% + 4.12%
Inception (10/21/94)
through 6/30/98 +11.66 +10.44
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
Ten Year/ Standardized
12 Month 3 Month Since Inception 30-Day Yield
Total Return Total Return Total Return As of 6/30/98
<S> <C> <C> <C> <C>
High Income Portfolio Class A Shares* + 8.72% -0.31% +204.95% 8.89%
High Income Portfolio Class B Shares* + 7.90 -0.37 +175.62 8.47
High Income Portfolio Class C Shares* + 7.85 -0.51 + 47.17 8.42
High Income Portfolio Class D Shares* + 8.45 -0.37 + 50.25 8.64
Merrill Lynch High Yield Master Index** +11.40 +1.68 +202.29/+192.11/+57.88
CSFirst Boston High Yield Index** +10.98 +1.26 +199.36/+190.20/+54.86
Ten-Year US Treasury Securities*** +12.96 +2.78 +139.41/+130.32/+45.93
<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 ten-year/inception dates are: Class A Shares, ten years ended
6/30/98; Class B Shares, 10/21/88; and Class C and Class D Shares,
10/21/94.
**Unmanaged. These market-weighted Indexes mirror the high-yield
debt market of securities rated BBB or lower. Ten year/since
inception total returns for Merrill Lynch High Yield Master Index
are: for the ten years ended 6/30/98; from 10/21/88 to 6/30/98; and
from 10/21/94 to 6/30/98, respectively. Ten year/since inception
total returns for CS First Boston High Yield Index are: for the ten
years ended 6/30/98; from 10/31/88 to 6/30/98; and from 10/31/94 to
6/30/98, respectively.
***Ten year/since inception total returns are: for the ten years
ended 6/30/98; from 10/31/88 to 6/30/98; and from 10/31/94 to
6/30/98, respectively.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds
<S> <S> <S> <C> <S> <C> <C>
Aerospace--0.4% B+ B1 $ 30,000,000 Kitty Hawk, Inc., 9.95% due 11/15/2004 $ 30,033,750 $ 31,200,000
Airlines--1.1% Piedmont Aviation, Inc.:
B+ Ba2 1,304,000 Series 88J, 10.05% due 5/13/2005 1,181,685 1,448,535
BB Ba2 1,116,000 Series 88J, 10.10% due 5/13/2007 999,021 1,270,488
BB Ba2 3,767,000 Series 88J, 10.10% due 5/13/2009 3,327,542 4,325,401
BB Ba2 2,710,000 Series 88J, 10.15% due 5/13/2011 2,366,806 3,191,499
B+ Ba2 2,226,000 Series 88K, 10% due 5/13/2004 2,026,506 2,429,556
B+ Ba2 2,666,000 Series 88K, 10.10% due 5/13/2008 2,374,020 3,037,174
B+ Ba2 2,550,000 Series 88K, 10.15% due 5/13/2010 2,251,293 2,958,867
B+ Ba2 1,985,000 Series E, 10.30% due 3/28/2007 1,855,291 2,281,678
B+ Ba2 1,950,000 Series F, 10.35% due 3/28/2011 1,999,719 2,273,681
BB Ba2 1,500,000 Series H, 10% due 11/08/2012 1,493,250 1,734,165
USAir Inc.:
B B1 25,000,000 9.625% due 2/01/2001 20,109,906 26,062,500
BB Ba2 21,000,000 10.375% due 3/01/2013 20,768,125 23,708,160
B+ B1 4,634,836 Series 89A1, 9.33% due 1/01/2006++ 4,384,418 5,021,719
BB B1 1,432,000 Series A, 10.70% due 1/15/2007 1,525,137 1,584,021
BB B1 1,815,000 Series C, 10.70% due 1/15/2007 1,933,048 2,007,680
BB B1 1,107,000 Series E, 10.70% due 1/15/2007 1,159,472 1,224,519
B+ B1 1,092,000 Series F, 10.70% due 1/01/2003 984,165 1,209,510
B+ B1 1,092,000 Series G, 10.70% due 1/01/2003 984,165 1,209,510
B+ B1 1,092,000 Series H, 10.70% due 1/01/2003 984,165 1,209,510
B+ B1 1,092,000 Series I, 10.70% due 1/01/2003 984,165 1,209,510
-------------- --------------
73,691,899 89,397,683
Automotive-- B B3 10,000,000 Collins & Aikman Corp., 11.50%
0.9% due 4/15/2006 10,000,000 11,150,000
BB+ Ba2 20,000,000 Federal-Mogul Corp., 7.875%
due 7/01/2010 19,950,800 19,950,800
B+ B2 40,000,000 Venture Holdings Trust, 9.50%
due 7/01/2005 38,672,085 40,700,000
-------------- --------------
68,622,885 71,800,800
Broadcasting-- CCC NR* 4,686,000 ACME Intermediate Holdings/Finance,
Radio & 0/12% due 9/30/2005 (a) 2,820,718 2,893,605
Television--2.6% B- B3 3,000,000 ACME Television/Finance, 10.976% due
9/30/2004 (a) 2,351,988 2,445,000
NR* NR* 4,000,000 Big City Radio, Inc., 11.129% due
3/15/2005 (a) 2,999,286 3,060,000
B- B2 17,500,000 EZ Communications, Inc., 9.75% due
12/01/2005 17,361,575 19,151,563
B- B3 25,000,000 LIN Holdings Corp., 10% due
3/01/2008 (a) 15,848,516 17,000,000
B- B2 35,000,000 LIN Television Corp., 8.375% due
3/01/2008 34,918,100 35,875,000
B- B3 23,022,000 SFX Broadcasting Inc., 10.75% due
5/15/2006 22,940,750 25,439,310
B- B3 21,000,000 Salem Communications Corp., 9.50% due
10/01/2007 21,160,625 22,050,000
Sinclair Broadcasting Group Inc.:
B B2 50,000,000 10% due 9/30/2005 50,343,269 53,875,000
B B2 9,700,000 9% due 7/15/2007 9,631,204 10,136,500
B B2 15,000,000 8.75% due 12/15/2007 14,941,200 15,525,000
-------------- --------------
195,317,231 207,450,978
Building Nortek Inc.:
Materials--0.4% B- B3 20,550,000 9.875% due 3/01/2004 20,362,365 21,346,313
B+ B1 9,000,000 9.25% due 3/15/2007 8,947,980 9,292,500
-------------- --------------
29,310,345 30,638,813
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Cable-- American Telecasting, Inc. (a):
Domestic--6.7% CCC Ca $ 32,225,000 21.117% due 6/15/2004 $ 21,581,330 $ 8,378,500
CCC Ca 6,440,000 26.322% due 8/15/2005 2,666,803 1,449,000
NR* NR* 20,000,000 CCA Industries, Inc., 13% due
12/31/1999++++ 16,463,336 21,722,935
CSC Holdings Inc.:
BB- B1 13,750,000 9.875% due 5/15/2006 13,718,750 15,090,625
BB- B1 5,000,000 10.50% due 5/15/2016 4,900,000 5,837,500
Century Communications Corporation:
BB- Ba3 44,500,000 9.75% due 2/15/2002 44,895,938 47,726,250
BB- Ba3 45,000,000 9.50% due 3/01/2005 44,542,813 48,768,750
BB- Ba3 4,050,000 8.375% due 12/15/2007 3,976,250 4,141,125
B- B2 70,000,000 Echostar Communications Corp.,
11.712% due 6/01/2004 (a)(f) 62,852,035 68,075,000
CCC+ B3 25,000,000 Echostar Satellite Broadcasting,
11.25% due 3/15/2004 (a) 21,609,555 23,062,500
B B2 31,000,000 Intermedia Capital Partners L.P.,
11.25% due 8/01/2006 31,002,500 35,340,000
Lenfest Communications, Inc.:
BB+ Ba3 50,000,000 8.375% due 11/01/2005 47,987,450 53,250,000
BB- B2 40,000,000 10.50% due 6/15/2006 40,444,200 46,700,000
BB- B2 10,000,000 8.25% due 2/15/2008 9,972,600 10,450,000
B B1 50,000,000 Olympus Communications L.P.,
10.625% due 11/15/2006 50,282,500 55,500,000
BB+ Ba2 40,000,000 TCI Communications Inc., 9.65%
due 3/31/2027 40,258,360 49,136,000
B B3 40,000,000 TCI Satellite Entertainment, Inc.,
12.15% due 2/15/2007 (a) 26,134,271 27,200,000
CCC+ Ca 50,338,000 Wireless One Inc., 13.50% due
8/01/2006 (a)(c) 32,669,300 5,285,490
-------------- --------------
515,957,991 527,113,675
Cable-- Australis Media Ltd.:
International-- NR* NR* 8,699,997 14.391% due 11/01/2002 (a) 6,339,681 5,915,998
4.3% D C 1,353,490 1.75%/15.75% due 5/15/2003 (i) 751,091 101,512
NR* NR* 79,117,000 1.75%/15.75% due 5/15/2003 (d)(i)++++ 56,318,088 5,933,775
B- B2 55,000,000 Comcast UK Cable Partners Ltd.,
11.23% due 11/15/2007 (a) 42,379,289 46,062,500
Diamond Cable Communications PLC (a):
B- B3 15,000,000 11.366% due 12/15/2005 11,546,301 12,487,500
B- B3 25,000,000 10.87% due 2/15/2007 16,968,964 18,562,500
NTL Inc.:
B- B3 25,000,000 10% due 2/15/2007 25,015,625 26,875,000
B- B3 80,000,000 Series B, 11.701% due 2/01/2006 (a) 59,157,715 66,400,000
B B3 25,000,000 Supercanal Holdings S.A., 11.50% due
5/15/2005 25,000,000 24,125,000
B+ B1 75,000,000 TeleWest Communications PLC, 11.02% due
10/01/2007 (a) 58,842,017 61,968,750
B B2 5,000,000 Tevecap S.A., 12.625% due 11/26/2004 5,087,500 4,650,000
B B3 107,500,000 United International Holdings, Inc.,
10.75% due 2/15/2008 (a)(j) 66,216,326 66,650,000
-------------- --------------
373,622,597 339,732,535
Capital Goods-- B- B3 40,000,000 International Wire Group, Inc.,
0.9% 11.75% due 6/01/2005 41,298,750 44,050,000
B- B3 25,250,000 Trench Electric & Trench Inc.,
10.25% due 12/15/2007 25,315,625 25,691,875
-------------- --------------
66,614,375 69,741,875
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Chemicals-- BB- Ba3 $ 10,000,000 Agriculture Minerals & Chemicals
0.5% Company, L.P., 10.75% due 9/30/2003 $ 10,060,000 $ 10,700,000
ISP Holdings Inc.:
BB- Ba3 19,502,000 9.75% due 2/15/2002 19,502,000 20,574,610
BB- Ba3 10,000,000 9% due 10/15/2003 9,972,100 10,425,000
-------------- --------------
39,534,100 41,699,610
Child Care--0.2% B- B3 18,000,000 KinderCare Learning Centers, Inc.,
9.50% due 2/15/2009 17,896,875 18,225,000
Communications-- B B3 20,000,000 Level 3 Communications, Inc., 9.125%
0.3% due 5/01/2008 19,915,800 19,575,000
Computer B Ba3 59,500,000 Advanced Micro Devices, Inc., 11% due
Services-- 8/01/2003 61,781,250 63,070,000
Electronics-- CCC Caa1 40,500,000 Dictaphone Corp., 11.75% due 8/01/2005 40,114,375 40,905,000
2.1% B+ B3 15,000,000 Jordan Telecom Products, Series B,
9.875% due 8/01/2007 14,882,460 15,375,000
B- B3 20,000,000 PSINet Inc., Senior Notes, 10% due
2/15/2005 20,000,000 20,500,000
B- NR* 4,000,000 Verio Inc., 10.375% due 4/01/2005 4,000,000 4,130,000
B B2 30,000,000 Zilog, Inc., 9.50% due 3/01/2005 28,266,250 21,450,000
-------------- --------------
169,044,335 165,430,000
Conglomerates-- BB Ba3 15,000,000 Dine, S.A. de C.V., 8.75% due 10/15/2007 14,887,200 13,725,000
1.5% B- B3 24,000,000 Eagle-Picher Industries, Inc.,
9.375% due 3/01/2008 24,124,540 24,360,000
B+ B1 26,000,000 Sequa Corp., 9.375% due 12/15/2003 25,146,563 27,007,500
BB- NR* 60,000,000 Voto-Votorantim S.A., 8.50% due 6/27/2005 58,884,775 52,725,000
-------------- --------------
123,043,078 117,817,500
Consumer B B3 5,000,000 Corning Consumer Products Co.,
Products--0.8% 9.625% due 5/01/2008 4,985,650 4,987,500
B+ Ba3 15,000,000 Coty Inc., 10.25% due 5/01/2005 15,000,000 16,087,500
B+ B1 45,880,000 International Semi-Tech Microelectronics,
Inc., 12.51% due 8/15/2003 (a) 34,391,688 13,993,400
B- B3 30,000,000 Revlon Consumer Products Corp., 8.625%
due 2/01/2008 29,989,800 30,187,500
-------------- --------------
84,367,138 65,255,900
Consumer B- NR* 8,000,000 AP Holdings Inc., 11.164% due
Services--0.4% 3/15/2008 (a) 4,812,708 4,880,000
B- B3 15,000,000 Apcoa Inc., 9.25% due 3/15/2008 15,012,500 14,962,500
B+ B2 13,650,000 Coinmach Corp., 11.75% due 11/15/2005 15,004,875 15,219,750
-------------- --------------
34,830,083 35,062,250
Convertible NR* B3 6,195,000 Builders Transport, Inc., 8% due
Bonds**--0.1% 8/15/2005 (2) 3,614,250 1,548,750
BBB Ba1 6,375,000 Quantum Health Resources Inc., 4.75%
due 10/01/2000 (1) 5,956,562 5,992,500
-------------- --------------
9,570,812 7,541,250
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Energy--9.1% B+ B2 $ 20,000,000 Benton Oil & Gas Co., 9.375%
due 11/01/2007 $ 20,097,688 $ 19,700,000
Chesapeake Energy Corporation:
B+ B1 20,000,000 9.625% due 5/01/2005 20,000,000 20,150,000
B+ B1 4,400,000 9.125% due 4/15/2006 4,388,100 4,356,000
B+ B1 1,000,000 Series B, 7.875% due 3/15/2004 983,750 940,000
B+ B2 15,000,000 Clark R & M Holdings, Inc., 8.875% due
11/15/2007 14,892,150 15,037,500
B+ B3 25,000,000 Clark USA Inc., Series B, 10.875% due
12/01/2005 26,515,000 27,625,000
BBB- Ba3 40,000,000 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A., 9% due 1/30/2004 41,372,500 39,300,000
B B2 10,000,000 Cross Timbers Oil Company, 8.75% due
11/01/2009 10,000,000 10,100,000
B B2 15,000,000 Energy Corp. of America, 9.50% due
5/15/2007 15,000,000 14,775,000
B B2 20,000,000 Forcenergy, Inc., 8.50% due 2/15/2007 19,740,050 19,100,000
KCS Energy Inc.:
B B1 22,000,000 11% due 1/15/2003 22,723,750 23,760,000
B- B3 20,000,000 8.875% due 1/15/2008 19,900,000 19,050,000
B- B3 27,000,000 Ocean Rig Norway AS, 10.25% due
6/01/2008 26,990,000 25,785,000
BBB- Baa3 28,593,750 Oleoducto Centrale S.A., 9.35% due
9/01/2005++ 28,584,219 28,951,172
Parker Drilling Co.:
B+ B1 7,000,000 9.75% due 11/15/2006 7,268,310 7,192,500
B+ B1 25,500,000 9.75% due 11/15/2006 25,510,725 26,137,500
Petroleo Brasileiro S.A.--Petrobras:
BB- B1 15,000,000 10% due 10/17/2006 14,869,813 15,262,500
B+ B1 15,000,000 10% due 10/17/2006 15,097,500 15,262,500
BB+ Ba3 25,000,000 Seagull Energy Corp., 8.625% due
8/01/2005 24,990,000 25,687,500
B- B3 17,000,000 Southwest Royalties Inc., 10.50%
due 10/15/2004 16,137,500 13,940,000
BB- B1 30,000,000 Tesoro Petroleum Corporation, 9% due
7/01/2008 29,828,700 29,828,700
NR* B3 289,840,000 TransAmerican Energy Corp., Series B,
13.176% due 6/15/2002 (a) 255,147,256 238,393,400
NR* NR* 36,000,000 TransAmerican Refining Corporation,
13% due 12/15/2002 35,640,000 36,900,000
Trico Marine Services, Inc.:
BB- Ba3 10,000,000 8.50% due 8/01/2005 10,100,000 9,775,000
BB- Ba3 5,000,000 8.50% due 8/01/2005 5,012,500 4,887,500
BB Ba2 15,000,000 Triton Energy Corp., 9.25% due
4/15/2005 14,936,550 16,397,100
B- B2 12,500,000 United Refining Co., 10.75% due
6/15/2007 12,405,000 12,156,250
-------------- --------------
738,131,061 720,450,122
Entertainment-- B B2 24,495,000 AMF Group Inc., Series B, 12.578% due
2.0% 3/15/2006 (a) 17,405,117 19,779,713
B B1 15,000,000 Fox/Liberty Networks LLC, 8.875% due
8/15/2007 14,930,000 15,300,000
B- B3 16,250,000 Premier Parks Inc., 10% due 4/01/2008 (a) 10,218,312 10,867,188
B B3 25,000,000 Regal Cinemas, Inc., 9.50% due 6/01/2008 24,957,750 25,281,250
Six Flags Theme Parks Inc.:
B- B3 20,000,000 8.611% due 6/15/2005 (a) 22,163,007 22,850,000
B- B3 40,000,000 12.25% due 6/15/2005 (a) 40,000,000 45,700,000
B- B3 15,000,000 8.875% due 4/01/2006 15,000,000 15,356,250
-------------- --------------
144,674,186 155,134,401
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Financial B B2 $ 15,000,000 Amresco, Inc., 9.875% due 3/15/2005 $ 15,037,500 $ 15,225,000
Services-- First Nationwide Holdings Inc.:
2.5% B B3 17,000,000 12.50% due 4/15/2003 16,806,710 19,337,500
B Ba3 12,000,000 10.625% due 10/01/2003 12,000,000 13,320,000
BB+ Baa2 40,000,000 Fuji JGB Investments LLC (Preferred),
9.87% (h) 39,980,000 35,213,000
NR* Baa2 30,000,000 IBJ Preferred Capital Co. LLC, 8.79% (h) 29,655,000 27,464,880
BB- B2 9,000,000 Penncorp Financial Group Inc., 9.25% due
12/15/2003 9,090,000 9,382,500
BB- Ba2 9,950,000 Reliance Group Holdings Inc., 9.75% due
11/15/2003 10,360,500 10,460,336
BBB- Baa1 30,000,000 SB Treasury Company LLC, 9.40% (h) 30,000,000 29,568,810
BB+ Ba3 10,000,000 SIG Capital Trust I, 9.50% due 8/15/2027 10,000,000 10,275,000
BB- NR* 17,000,000 Veritas Capital Trust, 10% due 1/01/2028 17,290,000 17,892,500
BB NR* 8,449,000 Veritas Holdings GMBH, 9.625% due
12/15/2003 8,449,000 8,892,573
-------------- --------------
198,668,710 197,032,099
Food & Beverage-- Chiquita Brands International Inc.:
1.7% B+ B1 30,000,000 9.125% due 3/01/2004 29,585,625 30,750,000
B+ B1 20,000,000 10.25% due 11/01/2006 19,881,400 21,700,000
B B3 23,450,000 Curtice Burns Food, Inc., 12.25% due
2/01/2005 23,562,125 25,677,750
CCC B2 20,000,000 DGS International Finance Co., 10% due
6/01/2007 20,068,200 15,450,000
B- B2 24,000,000 International Home Foods, Inc.,
10.375% due 11/01/2006 24,000,000 26,160,000
B B2 12,000,000 Southern Foods SFG, 9.875% due 9/01/2007 12,000,000 12,570,000
-------------- --------------
129,097,350 132,307,750
Foreign B+ NR* 10,000,000 City of Saint Petersburgh, 9.50%
Government due 6/18/2002 9,751,270 7,775,000
Obligations--1.3% Republic of Argentina:
BB Ba3 30,000,000 11% due 10/09/2006 30,154,530 31,875,000
BB Ba3 30,750,000 Global Bonds, 11.375% due 1/30/2017 31,692,220 32,810,250
BB- B1 12,500,000 Republic of Brazil, Global Bonds,
10.125% due 5/15/2027 10,406,250 10,793,750
BB Ba2 20,000,000 United Mexican States, Global Bonds,
11.50% due 5/15/2026 21,056,250 22,750,000
-------------- --------------
103,060,520 106,004,000
Gaming--3.8% BB- B1 15,000,000 Boyd Gaming Corporation, 9.50%
due 7/15/2007 14,848,500 15,675,000
B+ B2 37,000,000 GB Property Funding Corp., 10.875% due
1/15/2004 35,072,500 32,190,000
Grand Casinos Inc.:
BB Ba3 20,000,000 10.125% due 12/01/2003 19,837,500 21,850,000
B+ B2 5,000,000 9% due 10/15/2004 5,000,000 5,425,000
D Caa 60,115,000 Harrah's Jazz Co., 14.25% due 11/15/2001 49,536,050 19,537,375
B+ B2 20,000,000 Hollywood Casino Corp., 12.75% due
11/01/2003 19,295,043 22,000,000
CCC+ B2 15,000,000 Planet Hollywood International, 12% due
4/01/2005 15,000,000 13,650,000
B+ Ba3 15,000,000 Sun International Hotels Ltd., 8.625%
due 12/15/2007 15,000,000 15,525,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Gaming Trump Atlantic City
(concluded) Associates/Funding Inc.:
B B1 $ 32,900,000 11.25% due 5/01/2006 $ 32,263,863 $ 32,077,500
BB- B1 59,100,000 11.25% due 5/01/2006 57,838,438 57,622,500
NR* Caa 10,000,000 Trump's Castle Funding, Inc., 11.75%
due 11/15/2003 8,576,240 9,400,000
Venetian Casino Resort LLC:
CCC+ Caa1 17,500,000 10% due 11/15/1999 16,512,857 16,275,000
B- B3 36,000,000 12.25% due 11/15/2004 36,000,000 37,350,000
-------------- --------------
324,780,991 298,577,375
Health Services-- B- B3 16,800,000 ALARIS Medical Systems, Inc.,
6.1% 9.75% due 12/01/2006 16,994,313 17,304,000
B+ Ba3 47,725,000 Beverly Enterprises, Inc., 9%
due 2/15/2006 46,845,488 49,872,625
Columbia/HCA Healthcare Corp.:
BBB Ba2 1,000,000 6.91% due 6/15/2005 940,800 973,905
BBB Ba2 8,460,000 8.85% due 1/01/2007 8,980,882 9,073,265
BBB Ba2 10,000,000 7.25% due 5/20/2008 9,393,300 9,728,950
BBB Ba2 14,150,000 8.70% due 2/10/2010 14,502,653 15,207,996
BBB Ba2 17,640,000 9% due 12/15/2014 18,400,090 19,565,759
BBB Ba2 2,500,000 7.50% due 12/15/2023 2,258,750 2,358,713
BBB Ba2 15,000,000 8.36% due 4/15/2024 14,614,910 15,830,849
B- B2 33,250,000 Extendicare Health Services, 9.35% due
12/15/2007 33,254,375 33,665,625
B+ ba3 53,400,000 Fresenius Medical Capital Trust I,
7.875% due 2/01/2008 53,567,750 52,599,000
B+ Ba3 41,091,000 Fresenius Medical Care AG, 9% due
12/01/2006 41,993,598 42,991,459
B- B3 25,000,000 Kinetic Concepts, Inc., 9.625%
due 11/01/2007 25,153,750 25,375,000
B- B3 45,000,000 Magellan Health Services Inc., 9%
due 2/15/2008 45,150,000 44,887,500
B- B3 52,000,000 Paragon Health Networks Inc., 9.50% due
11/01/2007 51,768,080 53,170,000
B B2 5,000,000 Pharmerica Inc., 8.375% due 4/01/2008 5,000,000 5,037,500
B- B2 20,000,000 Sun Healthcare Group, Inc., 9.50% due
7/01/2007 19,762,555 20,400,000
Tenet Healthcare Corp.:
BB- Ba3 30,000,000 8.625% due 1/15/2007 29,968,200 30,825,000
BB- Ba3 36,000,000 8.125% due 12/01/2008 35,860,320 36,405,000
-------------- --------------
474,409,814 485,272,146
Home Builders-- BB+ Ba1 15,000,000 Greystone Homes Inc., 10.75%
0.6% due 3/01/2004 14,115,000 16,275,000
BB- B1 32,000,000 U.S. Home Corp., 8.88% due 8/15/2007 32,017,500 32,480,000
-------------- --------------
46,132,500 48,755,000
Hotels--1.5% BB- Ba3 80,000,000 HMC Acquisition Properties, 9%
due 12/15/2007 79,272,500 87,000,000
BB- Ba3 15,000,000 HMH Properties Inc., 9.50% due 5/15/2005 14,711,926 16,331,250
Signature Resorts, Inc.:
BB- B2 10,000,000 9.25% due 5/15/2006 10,000,000 10,050,000
B B3 5,000,000 9.75% due 10/01/2007 5,000,000 4,850,000
-------------- --------------
108,984,426 118,231,250
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Independent AES Corporation (The):
Power B+ Ba1 $ 30,000,000 10.25% due 7/15/2006 $ 30,000,000 $ 32,775,000
Producers--2.3% B+ Ba1 21,000,000 8.375% due 8/15/2007 20,901,300 21,315,000
BB Ba2 30,000,000 CE Casecnan Water & Energy Co.,
11.45% due 11/15/2005 30,000,000 30,412,500
BB+ Ba2 20,000,000 California Energy Company, Inc.,
9.875% due 6/30/2003 20,122,500 21,400,200
BB- Ba2 46,000,000 Calpine Corporation, 8.75% due 7/15/2007 46,206,325 47,495,000
BB Ba1 10,000,000 ESI Tractebal Acquisition Corp.,
7.99% due 12/30/2011 10,000,000 10,174,940
Midland Cogeneration Venture Limited
Partnership:
B B2 11,250,000 11.75% due 7/23/2005 11,310,000 13,548,712
B B2 5,500,000 13.25% due 7/23/2006 6,002,565 7,123,352
-------------- --------------
174,542,690 184,244,704
Industrial CCC+ Caa1 8,000,000 Thermadyne Holdings Corp., 12.50% due
Services--0.2% 6/01/2008 (a) 4,406,538 4,400,000
CCC+ B3 12,000,000 Thermadyne Manufacturing LLC/Capital,
9.875% due 6/01/2008 11,905,680 12,090,000
-------------- --------------
16,312,218 16,490,000
Media & Comtel Brasileira Ltd.:
Communications-- BB- B1 42,500,000 10.75% due 9/26/2004 41,815,050 39,312,500
International-- NR* NR* 3,000,000 10.75% due 9/26/2004 2,867,500 2,827,500
2.8% Globo Comunicacoes e Participacoes, Ltd.:
BB- B1 40,000,000 10.50% due 12/20/2006 40,144,450 36,100,000
BB- B1 10,000,000 10.625% due 12/05/2008 9,992,000 8,925,000
Grupo Televisa, S.A. de C.V.:
BB Ba2 2,500,000 11.375% due 5/15/2003 2,637,500 2,693,750
BB Ba2 39,000,000 11.875% due 5/15/2006 42,079,687 43,485,000
BB Ba2 15,000,000 11.363% due 5/15/2008 (a) 11,572,754 11,962,500
B+ B2 15,000,000 Orion Network Systems, Inc., 11.25% due
1/15/2007 (e) 14,825,550 16,725,000
Philippine Long Distance Telephone Company:
BB+ Ba2 9,600,000 10.625% due 6/02/2004 9,988,000 9,848,083
BB Ba2 8,500,000 9.875% due 8/01/2005 8,512,500 8,382,827
BBB- Ba3 40,000,000 Telefonica de Argentina S.A., 11.875%
due 11/01/2004 38,763,075 43,000,000
-------------- --------------
223,198,066 223,262,160
Metals & Mining-- BB Ba2 15,000,000 Great Central Mines Ltd., 8.875% due
2.4% 4/01/2008 15,000,000 14,812,500
CCC+ B2 50,000,000 Kaiser Aluminum & Chemical Corp.,
12.75% due 2/01/2003 51,088,125 53,187,500
Maxxam Group, Inc.:
CCC+ B3 11,750,000 11.25% due 8/01/2003 11,816,250 12,396,250
CCC+ B3 41,155,000 12.37% due 8/01/2003 (a) 40,616,491 42,389,650
B B2 15,000,000 Metals USA Inc., 8.625% due 2/15/2008 15,000,000 14,662,500
B- Ba3 25,000,000 Murrin Murrin Holdings, Inc., 9.375% due
8/31/2007 24,845,000 24,625,000
B B2 30,000,000 P & L Coal Holdings Corp., 9.625% due
5/15/2008 29,914,200 30,975,000
-------------- --------------
188,280,066 193,048,400
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Packaging--0.4% B B3 $ 10,000,000 AEP Industries Inc., 9.875%
due 11/15/2007 $ 9,922,400 $ 10,325,000
B B1 12,000,000 Silgan Corp., 9% due 6/01/2009 12,000,000 12,480,000
B+ Ba3 10,000,000 Vicap S.A., 11.375% due 5/15/2007 9,947,000 10,762,500
-------------- --------------
31,869,400 33,567,500
Paper & Forest CCC+ caa 21,000,000 APP Finance II Mauritius Ltd.,
Products--3.7% 12% (a)(h) 18,425,000 14,805,000
CCC+ Caa1 40,000,000 APP International Finance Co.,
11.75% due 10/01/2005 39,716,250 35,400,000
B B3 60,000,000 Ainsworth Lumber Company, 12.50% due
7/15/2007++++ 58,571,014 61,340,055
Container Corporation of America:
B+ B1 15,420,000 9.75% due 4/01/2003 15,433,400 16,615,050
B+ B1 13,000,000 11.25% due 5/01/2004 13,000,000 14,072,500
Doman Industries Ltd.:
BB- B1 60,000,000 8.75% due 3/15/2004 57,006,250 58,800,000
BB- B1 5,000,000 9.25% due 11/15/2007 5,000,000 5,025,000
CCC+ Caa 14,500,000 P.T. Indah Kiat International Finance,
12.50% due 6/15/2006 14,572,500 11,817,500
BB- Ba3 10,000,000 Pindo Deli Finance Mauritius, 10.75% due
10/01/2007 9,969,637 7,025,000
Riverwood International Corp.:
B- B3 15,000,000 10.25% due 4/01/2006 14,396,250 15,337,500
CCC+ Caa 30,000,000 10.875% due 4/01/2008 29,248,750 30,712,500
BB Ba3 32,500,000 Tjiwi Kimia Finance Mauritius, 10% due
8/01/2004 30,977,000 23,156,250
-------------- --------------
306,316,051 294,106,355
Product AmeriServ Food Company:
Distribution-- B+ B1 14,000,000 8.875% due 10/15/2006 14,000,000 14,070,000
1.2% B- B3 42,000,000 10.125% due 7/15/2007 42,000,000 43,470,000
B+ B3 12,000,000 Fleming Companies Inc., 10.50%
due 12/01/2004 11,930,280 12,540,000
B- B3 20,000,000 US Office Products Co., 9.75%
due 6/15/2008 19,907,600 20,100,000
-------------- --------------
87,837,880 90,180,000
Publishing & B B1 10,000,000 American Lawyer Media Inc., 9.75% due
Printing--0.9% 12/15/2007 10,052,500 10,400,000
Hollinger International, Inc.:
BB+ Ba3 5,000,000 8.625% due 3/15/2005 4,975,000 5,237,500
BB- B1 21,500,000 9.25% due 2/01/2006 20,925,312 22,548,125
BB- Ba3 12,250,000 Primedia Inc., 7.625% due 4/01/2008 12,179,562 11,974,375
BB- B1 20,000,000 World Color Press, Inc., 9.125%
due 3/15/2003 20,019,375 20,850,000
-------------- --------------
68,151,749 71,010,000
Real Estate--0.4% BB- Ba3 30,000,000 Forest City Enterprises Inc., 8.50%
due 3/15/2008 30,213,750 29,850,000
Restaurants-- BB- Ba3 27,000,000 Foodmaker, Inc., 9.75% due 11/01/2003 26,216,200 28,687,500
0.4%
Specialty NR* NR* 24,702,000 Cumberland Farms, Inc. DE, 10.50% due
Retailing--0.3% 10/01/2003 23,545,832 24,331,470
Steel--3.8% BB- Ba2 25,000,000 A.K. Steel Holding Corp., 9.125%
due 12/15/2006 25,056,250 26,250,000
NR* B1 95,000,000 CSN Iron Panama, 9.125% due 6/01/2007 89,758,750 76,237,500
BB Ba3 20,000,000 Hysla, S.A. de C.V., 9.25% due 9/15/2007 19,872,930 18,650,000
NR* NR* 20,000,000 Renco Steel Holdings, 10.875% due
2/01/2005 20,045,700 20,100,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Steel B B3 $ 25,000,000 Republic Engineered Steel Inc.,
(concluded) 9.875% due 12/15/2001 $ 24,117,500 $ 24,625,000
B+ B2 25,000,000 WCI Steel Inc., 10% due 12/01/2004 25,000,000 25,812,500
B B3 25,000,000 WHX Corporation, 10.50% due 4/15/2005 25,000,000 25,500,000
Weirton Steel Inc.:
B B2 3,000,000 11.375% due 7/01/2004 3,247,500 3,206,250
B B2 23,000,000 10.75% due 6/01/2005 22,413,750 24,207,500
BB- B2 55,000,000 Wheeling-Pittsburgh Steel Corp.,
9.25% due 11/15/2007 54,776,725 56,375,000
-------------- --------------
309,289,105 300,963,750
Supermarkets-- Pueblo Xtra International Inc.:
0.3% B- B3 3,000,000 9.50% due 8/01/2003 2,747,612 2,940,000
B- B3 21,075,000 9.50% due 8/01/2003 19,460,250 20,758,875
-------------- --------------
22,207,862 23,698,875
Telephone-- B- Caa1 4,500,000 Esprit Telecom Group PLC, 10.875% due
Competitive Local 6/15/2008 4,500,000 4,477,500
Exchange B+ B2 27,000,000 Impsat Corp., 12.375% due 6/15/2008 27,000,000 27,405,000
Carriers--2.3% B B2 15,500,000 Intermedia Communications Inc., 8.60%
due 6/01/2008 15,500,000 15,771,250
B B3 43,000,000 Nextlink Communications Inc., 9% due
3/15/2008 42,913,140 43,215,000
RSL Communications PLC:
B- B3 46,000,000 9.125% due 3/01/2008 46,000,000 44,850,000
B- B3 72,000,000 10.125% due 3/01/2008 (a) 45,366,445 43,200,000
CCC Caa 3,000,000 Teligent, Inc., 12.122% due 3/01/2008 (a) 1,694,546 1,668,750
-------------- --------------
182,974,131 180,587,500
Textiles--1.0% B B3 20,000,000 Galey & Lord Inc., 9.125% due 3/01/2008 19,850,000 19,400,000
B B2 20,000,000 Polymer Group Inc., 8.75% due 3/01/2008 20,000,000 20,075,000
Polysindo International Finance Co.:
NR* NR* 7,500,000 8.648% due 2/12/1999 4,200,000 3,000,000
CCC- Caa3 45,600,000 11.375% due 6/15/2006 44,674,000 16,416,000
CCC- Caa3 14,250,000 9.375% due 7/30/2007 9,930,000 5,130,000
BB Ba3 12,000,000 Westpoint Stevens Inc., 7.875%
due 6/15/2008 11,841,000 12,135,000
-------------- --------------
110,495,000 76,156,000
Transportation-- BB- NR* 45,000,000 Autopistas del Sol S.A., 10.25%
4.2% due 8/01/2009 44,935,000 41,962,500
BB- Ba3 20,000,000 Cathay International Ltd., 13%
due 4/15/2008 20,000,000 17,700,000
BB- Ba2 25,000,000 Eletson Holdings, Inc., 9.25% due
11/15/2003 24,472,500 25,812,500
GS Superhighway Holdings:
BB Ba2 43,000,000 9.875% due 8/15/2004 37,956,250 30,906,250
BB Ba3 49,000,000 10.25% due 8/15/2007 47,933,550 34,973,750
BB Ba2 20,000,000 Gearbulk Holdings, Ltd., 11.25%
due 12/01/2004 20,518,750 21,900,000
BB B1 40,000,000 Hvide Marine Inc., 8.375% due 2/15/2008 39,872,500 38,400,000
B+ B2 21,500,000 TFM, S.A. de C.V., 11.767% due
6/15/2009 (a) 13,664,052 13,491,250
Transportacion Maritima Mexicana,
S.A. de C.V.:
BB- Ba3 20,000,000 9.25% due 5/15/2003 17,092,750 18,925,000
BB- Ba3 31,800,000 10% due 11/15/2006 31,387,250 29,971,500
B- B3 60,606,000 Transtar Holdings L.P., Series B,
11.892% due 12/15/2003 (a) 52,147,741 56,666,610
-------------- --------------
349,980,343 330,709,360
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (continued)
<S> <S> <S> <C> <S> <C> <C>
Utilities--4.2% NR* NR* $ 20,000,000 Companhia de Saneamento Basico do
Estado de Sao-Paulo, 10% due 7/28/2005 $ 20,000,000 $ 17,450,000
BB+ Baa3 10,000,000 Empresa Electricidad del Norte, 10.50%
due 6/15/2005 10,000,000 10,250,000
BB- B1 70,000,000 Espirito Santo-Escelsa, 10% due 7/15/2007 69,476,250 59,500,000
BB+ NR* 37,000,000 Inversora de Electrica, 9% due 9/16/2004 36,895,000 35,150,000
BBB- Ba3 40,000,000 Metrogas S.A., 12% due 8/15/2000 40,031,875 41,900,000
BB Ba2 25,000,000 Monterrey Power, S.A. de C.V., 9.625%
due 11/15/2009 24,977,680 22,687,500
Niagara Mohawk Power Corp.:
BB- Ba3 15,000,000 7.75% due 10/01/2008 14,961,900 15,394,725
BB- Ba3 18,750,000 8.539% due 7/01/2010 (a) 12,315,375 12,937,500
NR* NR* 15,274,129 Sunflower Electric Power Corp., 8% due
12/31/2016++ 10,019,396 10,863,724
BBB- Baa3 41,428,800 Trans Gas de Occidente, 9.79% due
11/01/2010++ 41,502,780 43,762,319
Tucson Electric & Power Co.++:
NR* NR* 34,947,781 10.21% due 1/01/2009 33,168,609 39,351,551
NR* NR* 21,526,207 10.732% due 1/01/2013 20,326,836 25,485,522
-------------- --------------
333,675,701 334,732,841
Waste B B3 20,000,000 Allied Waste North America, 10.25%
Management-- due 12/01/2006 20,000,000 22,000,000
0.7% B+ B2 29,000,000 Laidlaw Environmental Systems (LES) Inc.,
9.25% due 6/01/2008 29,000,000 29,435,000
D Ca 23,700,000 Mid-American Waste Systems, Inc., 12.25%
due 2/15/2003 13,341,827 4,568,175
-------------- --------------
62,341,827 56,003,175
Wireless CCC+ B2 13,000,000 Cencall Communications Corporation,
Communications-- 9.037% due 1/15/2004 (a) 12,690,798 12,780,625
Domestic Paging BB+ Ba3 48,050,000 Comcast Cellular Communications, Inc.,
& Cellular-- 4.4% 9.50% due 5/01/2007 48,846,375 50,332,375
CCC B3 10,000,000 Metrocall, Inc., 9.75% due 11/01/2007 10,000,000 10,200,000
D C 50,500,000 Mobilemedia Communication, Inc.,
11.58% due 12/01/2003 (a) 20,630,116 13,887,500
Nextel Communications Inc. (a):
CCC+ B2 85,000,000 11.877% due 8/15/2004 71,988,461 82,768,750
CCC+ B2 30,000,000 10.147% due 10/31/2007 19,257,717 19,650,000
CCC+ B2 25,000,000 9.987% due 2/15/2008 15,909,183 16,093,750
NR* Caa2 29,000,000 Page Mart Inc., 11.25% due 2/01/2008 (a) 17,555,161 17,980,000
B B2 75,000,000 Paging Network, Inc., 10% due 10/15/2008 74,756,250 77,437,500
B- NR* 3,250,000 Pinnacle Holdings Inc., 10% due
3/15/2008 (a) 2,052,677 2,145,000
B+ B1 25,000,000 Vanguard Cellular Systems, Inc.,
9.375% due 4/15/2006 24,975,250 26,312,500
B- B3 15,000,000 Western Wireless Corp., 10.50%
due 2/01/2007 15,062,500 16,162,500
-------------- --------------
333,724,488 345,750,500
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds (concluded)
<S> <S> <S> <C> <S> <C> <C>
Wireless B B3 $ 11,000,000 CTI Holdings S.A., 11.50% due
Communications-- 4/15/2008 (a) $ 6,436,686 $ 6,160,000
International B+ B3 56,472,000 Comunicacion Celular S.A., 12.68%
Paging & due 11/15/2003 (a)(g) 42,279,721 43,765,800
Cellular--2.1% CCC+ Caa1 26,000,000 McCaw International Ltd., 12.265%
due 4/15/2007 (a) 16,878,847 17,160,000
B- B3 90,000,000 Millicom International Cellular S.A.,
13.39% due 6/01/2006 (a) 61,735,826 70,650,000
CCC+ NR* 33,000,000 Nextel International Inc., 12.125% due
4/15/2008 (a) 18,775,481 19,305,000
CCC+ NR* 13,000,000 Telesystems International Wireless Inc.,
11.382% due 6/30/2007 (a) 8,876,119 8,612,500
-------------- --------------
154,982,680 165,653,300
Total Investments in
Bonds--89.8% 7,155,467,891 7,102,480,402
Shares
Held
Preferred Stocks
Broadcasting--Radio & 5,000 Cumulus Media Inc. 5,000,000 5,000,000
Television--0.1%
Cable--Domestic--0.3% 192,481 CSC Holdings Inc.++++ 14,634,820 22,183,435
Cable--International--0.3% 22,904 NTL Inc.++++ 23,232,660 27,112,610
Conglomerates--0.1% 1,700 Eagle-Picher Holdings 9,584,090 9,902,500
Entertainment--1.3% 89,328 Time Warner Inc. (Series M)++++ 90,197,931 99,712,380
Financial Services--0.4% 1,230,000 California Federal Bank (Series A) 30,815,000 33,594,375
Product Distribution--0.3% 251,502 Nebco Evans Holding Co.++++ 25,234,953 25,716,079
Publishing & 292,500 Primedia Inc. 29,109,500 28,518,750
Printing--0.5% 125,000 Primedia Inc. (Series D) 12,500,000 13,218,750
-------------- --------------
41,609,500 41,737,500
Steel--0.2% 550,000 USX Capital LLC (Series A) 13,750,000 13,715,625
Telephone--Competitive 11,910 Intermedia Communications Inc. (Series B)
Local Exchange Carriers--0.2% (Convertible)++++ 12,192,986 14,113,350
Utilities--0.1% 7,500 American Tower Corp. (Class A) 7,450,000 7,562,662
2 El Paso Electric Company++++ 219 219
-------------- --------------
7,450,219 7,562,881
Wireless Communications 20,556 Nextel Communications Inc.++++ 20,593,530 21,224,070
Domestic Paging & Cellular-- 21,966 Nextel Communications Inc. (Series D) 22,248,700 24,656,835
0.6% 5,000 Rural Cellular Corp.++++ 5,000,000 5,025,000
-------------- --------------
47,842,230 50,905,905
Total Investments in
Preferred Stocks--4.4% 321,544,389 351,256,640
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares
Industries Held Issue Cost Value
Common Stocks
<S> <C> <S> <C> <C>
Cable--Domestic--0.1% 2,887 CS Wireless Systems Inc. $ 20,336 $ 58
195,096 Echostar Communications Corp.
(Series A) 1,385,894 4,694,497
-------------- --------------
1,406,230 4,694,555
Energy--0.1% 914,710 Chi Energy Inc. (Series B) 14,284,292 12,348,585
8,176 Pioneer Natural Resources Co. 199,648 195,202
-------------- --------------
14,483,940 12,543,787
Entertainment--0.2% 1,166,381 On Command Corporation 51,395,186 16,256,435
Wireless Communications-- 170,421 Nextel Communications Inc. 2,749,981 4,233,897
Domestic Paging & Cellular--0.1%
Total Investments in
Common Stocks--0.5% 70,035,337 37,728,674
Trusts & Warrants
Cable--Domestic--0.0% 177,500 American Telecasting Inc. (Warrants)(b) 413,723 2,219
25,000 People's Choice T.V. Corp. (Warrants)(b) 140,353 12,625
50,338 Wireless One Inc. (Warrants)(b) 1,063,139 503
-------------- --------------
1,617,215 15,347
Cable--International--0.0% 45,000 UIH Australia/Pacific (Warrants)(b) 540,000 675,000
50,000 United International Holdings, Inc.
(Warrants)(b) 1,418,645 750,000
-------------- --------------
1,958,645 1,425,000
Energy--0.0% 74,562 Chi Energy Inc. (Series B)(Warrants)(b) 74,562 111,843
48,400 Chi Energy Inc. (Series C)(Warrants)(b) 48,400 72,600
-------------- --------------
122,962 184,443
Entertainment--0.1% 379,186 On Command Corporation (Warrants)(b) 3,033,504 1,967,027
Gaming--0.0% 7,550 Goldriver Hotel & Casino Corp.
Liquidating Trust 192,320 0
113,386 Trump Castle Funding, Inc. (Warrants)(b) 0 0
-------------- --------------
192,320 0
Media & Communications-- 15,000 Orion Network Systems, Inc.
International--0.0% (Warrants)(b) 174,450 247,500
Wireless Communications-- 57,040 Page Mart Inc. (Warrants)(b) 236,127 288,765
Domestic Paging & Cellular--0.0%
Wireless Communications-- 53,472 Comunicacion Celular S.A. (Warrants)(b) 109,680 387,672
International Paging & Cellular--0.0%
Total Investments in
Trusts & Warrants--0.1% 7,444,903 4,515,754
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face
Amount Issue Cost Value
Short-Term Securities
<S> <C> <S> <C> <C>
Commercial Paper***--3.8% $ 10,000,000 Atlantic Asset Securitization Corp.,
5.58% due 7/16/1998 $ 9,976,750 $ 9,976,750
32,000,000 Corporate Asset Funding Co., 5.52% due
7/08/1998 31,965,653 31,965,653
15,000,000 Countrywide Home Loans, Inc., 5.56% due
7/24/1998 14,946,717 14,946,717
53,000,000 Finova Capital Corp., 5.54% due 7/09/1998 52,934,751 52,934,751
22,477,000 General Motors Acceptance Corp., 6.50%
due 7/01/1998 22,477,000 22,477,000
30,000,000 Morgan (J.P.) & Company, Inc., 5.52% due
7/06/1998 29,977,000 29,977,000
60,000,000 Navistar Financial Corp., 5.90% due
7/02/1998 59,990,167 59,990,167
15,000,000 Onyx Corporation, 6.03% due 7/08/1998 14,982,413 14,982,413
23,000,000 Park Avenue Receivables Corp., 5.54%
due 7/08/1998 22,975,224 22,975,224
Republic Industries, Inc.:
15,000,000 5.54% due 7/20/1998 14,956,142 14,956,142
27,000,000 5.55% due 7/23/1998 26,908,425 26,908,425
-------------- --------------
302,090,242 302,090,242
US Government 20,000,000 Federal Home Loan Mortgage Corp.,
Agency Obligations***--0.3% 5.44% due 7/31/1998 19,909,333 19,909,333
Total Investments in
Short-Term Securities--4.1% 321,999,575 321,999,575
Total Investments--98.9% $7,876,492,095 7,817,981,045
==============
Other Assets Less Liabilities--1.1% 90,911,559
--------------
Net Assets--100.0% $7,908,892,604
==============
Net Asset Class A--Based on net assets of $1,123,923,914 and 140,579,862 shares outstanding $ 7.99
Value: ==============
Class B--Based on net assets of $5,545,381,520 and 693,410,375 shares outstanding $ 8.00
==============
Class C--Based on net assets of $701,474,025 and 87,656,176 shares outstanding $ 8.00
==============
Class D--Based on net assets of $538,113,145 and 67,260,886 shares outstanding $ 8.00
==============
<FN>
++Subject to principal paydowns.
++++Represents a pay-in-kind security which may pay
interest/dividends in additional face/shares.
*Not Rated.
**Industry classifications for convertible bonds are: (1) Health
Services; (2) Transportation Services.
***Commercial Paper and certain US Government Agency Obligations are
traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Portfolio.
(a)Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Portfolio.
(b)Warrants entitle the Portfolio to purchase a predetermined number
of shares of common stock/face amount of bonds and are non-income
producing. The purchase price and number of shares/face amount are
subject to adjustment under certain conditions until the expiration
date.
(c)Each $1,000 face amount contains one warrant of Wireless One Inc.
(d)Each $1,000 face amount contains one warrant of Australis Media
Ltd.
(e)Each $1,000 face amount contains one warrant of Orion Network
Systems, Inc.
(f)Each $1,000 face amount contains six warrants of Echostar
Communications Corp.
(g)Each $1,000 face amount contains one warrant of Comunicacion
Celular S.A.
(h)The security is a perpetual bond and has no definite maturity
date.
(i)Represents a step bond. Coupon payments are paid-in-kind, in
which the Portfolio receives additional face amount at an annual
rate of 1.75% until May 15, 2000. Subsequently, the Portfolio will
receive cash coupon payments at an annual rate of 15.75% until
maturity.
(j)Each $1,000 face amount contains one warrant of United
International Holdings, Inc.
</TABLE>
Investment Grade Portfolio & Interment Term Portfolio
Merrill Lynch Corporate Bond Fund, Inc.
June 30, 1998
INVESTMENT GRADE
PORTFOLIO &
INTERMEDIATE
TERM PORTFOLIO
Merrill Lynch
Corporate Bond Fund, Inc.
FUND LOGO
Quarterly Report
June 30, 1998
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 Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Investment Grade Portfolio & Intermediate Term Portfolio
TO OUR SHAREHOLDERS
Increasing volatility characterized the capital markets during the
three-month period ended June 30, 1998. At times, US stock and bond
prices reflected expectations that the slowdown in Asian economic
growth would impact US exports and the US trade deficit and slow
overall US business activity. The deterioration of economic
conditions in Japan was of particular concern, and caused a sharp
drop in the yen's value relative to the US dollar. During other
periods, US investors appeared to expect that the positive trends of
a moderately expanding economy, declining unemployment, enhanced
productivity and corporate profits growth would continue, unimpeded
by developments in Asia. To date, there have been only a few signs
that Asia's troubles are influencing US economic activity--such as
a surge in the accumulation of inventories--largely because
domestic demand has remained strong. In Europe, the major event was
the greater progress toward achieving European Monetary Union,
although there were concerns that interest rates may have to be
increased, especially in the United Kingdom, to curtail potential
inflationary pressures.
As we move into the second half of 1998, it is likely that investor
focus will remain on developments in Asia. The US Federal Reserve
Board has kept monetary policy on hold as the Asian financial crisis
deepened, which has benefited US bond and stock prices. Looking
ahead, if there is continued evidence of noninflationary economic
growth, it should have a positive influence on US capital markets.
Portfolio Strategy
After a strong first quarter of 1998, in which the economy grew at a
rate of 5.4%, there were signs that a slower growth pattern was
emerging. Three of the major factors that fueled the first quarter
growth slowed down during the spring. These were consumer spending,
inventory accumulation and capital expenditure. In addition, data on
job growth, hours worked and industrial production further indicated
slower growth for the second quarter. In April, the Dow Jones
Industrial Average reached the 9,200 level and left investors
concerned about inflated stock prices. Each new release of economic
data was examined under the assumption that the Federal Reserve
Board would raise interest rates at its May meeting but no such
decision was made. Instead, the combination of low energy prices, a
strong dollar and weak demand in Asia pushed interest rates lower.
With inflation almost nonexistent, the yield on the long-term bond
fell below 5.80% in May and continued its rally to below 5.60% in
June.
During the quarter ended June 30, 1998, we kept the duration of
Investment Grade Portfolio in the 5.8-year--5.9-year range, which
was consistent with the duration of the unmanaged Merrill Lynch
Corporate Master Index. Structured securities made up 10.5% of the
Investment Grade Portfolio's net assets at June 30, 1998. The
average quality rating of the Portfolio was A+, as rated by Standard
& Poor's Corp., which was slightly higher than the Merrill Lynch
Corporate Master Index average rating of A. During the quarter ended
June 30, 1998, we kept the duration of Intermediate Term Portfolio
in the 4.0-year--4.2-year range. Structured securities comprised
4.6% of the Portfolio's net assets at June 30, 1998. The average
quality rating of the Portfolio was A, as rated by Standard & Poor's
Corp.
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
During the quarter ended June 30, 1998, we aggressively invested by
reducing each Portfolio's positions in cash and Treasury holdings
and by purchasing floating rate notes and asset-backed obligations
as well as adding to real estate investment trusts as yield spreads
widened. In addition, we kept the Investment Grade and Intermediate
Term Portfolios underweighted in utilities because we believed that
the yield spreads were too tight relative to the Treasury market. We
also held underweighted positions in Canadian and Yankee issues
because their values were being impacted by the deteriorating
situation in Asia.
In Conclusion
We appreciate your ongoing investment in Investment Grade and
Intermediate Term Portfolios of Merrill Lynch Corporate Bond Fund,
Inc., and we look forward to assisting you with your financial needs
in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Christopher G. Ayoub)
Christopher G. Ayoub
Senior Vice President and Co-Portfolio Manager
(Jay C. Harbeck)
Jay C. Harbeck
Senior Vice President and Co-Portfolio Manager
July 28, 1998
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Christopher G. Ayoub, Senior Vice President
Jay C. Harbeck, Senior Vice President
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
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 for Investment Grade Portfolio. Intermediate Term Portfolio
incurs a maximum initial sales charge (front-end load) of 1% and
bears 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 for Investment Grade
Portfolio. Intermediate Term Portfolio is subject to a maximum
contingent deferred sales charge of 1% if redeemed within one year
of purchase. In addition, Investment Grade Portfolio is subject to a
distribution fee of 0.50% and an account maintenance fee of 0.25%.
Intermediate Term Portfolio is subject to a 0.25% distribution fee
and a 0.25% account maintenance fee. These 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% for Investment Grade Portfolio.
Intermediate Term Portfolio is subject to a distribution fee of
0.25% 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) for
Investment Grade Portfolio. Intermediate Term Portfolio incurs a
maximum initial sales charge of 1% and an account maintenance fee of
0.10% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "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.
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
PERFORMANCE DATA (continued)
Average Annual Total Return--Investment Grade Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +9.88% +5.49%
Five Years Ended 6/30/98 +6.33 +5.46
Ten Years Ended 6/30/98 +8.82 +8.37
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +9.05% +5.05%
Five Years Ended 6/30/98 +5.52 +5.52
Inception (10/21/88)
through 6/30/98 +7.96 +7.96
[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 6/30/98 +8.99% +7.99%
Inception (10/21/94)
through 6/30/98 +8.50 +8.50
[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 6/30/98 +9.61% +5.23%
Inception (10/21/94)
through 6/30/98 +9.12 +7.92
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Average Annual Total Return--Intermediate Term Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/98 +8.86% +7.77%
Five Years Ended 6/30/98 +6.25 +6.04
Ten Years Ended 6/30/98 +8.52 +8.41
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/98 +8.30% +7.30%
Five Years Ended 6/30/98 +5.71 +5.71
Inception (11/13/92)
through 6/30/98 +6.72 +6.72
[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 % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/98 +8.28% +7.28%
Inception (10/21/94)
through 6/30/98 +8.27 +8.27
[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 % Return
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/98 +8.75% +7.66%
Inception (10/21/94)
through 6/30/98 +8.74 +8.44
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results*
<CAPTION>
Ten Years/ Standardized
12 Month 3 Month Since Inception 30-day Yield
Total Return Total Return Total Return As of 6/30/98
<S> <C> <C> <C> <C>
Investment Grade Portfolio Class A Shares** +9.88% +2.63% +132.80% 5.77%
Investment Grade Portfolio Class B Shares** +9.05 +2.43 +110.12 5.24
Investment Grade Portfolio Class C Shares** +8.99 +2.42 + 35.14 5.19
Investment Grade Portfolio Class D Shares** +9.61 +2.56 + 38.01 5.53
Intermediate Term Portfolio Class A Shares*** +8.86 +2.03 +126.59 5.65
Intermediate Term Portfolio Class B Shares*** +8.30 +1.81 + 44.21 5.19
Intermediate Term Portfolio Class C Shares*** +8.28 +1.90 + 34.09 5.18
Intermediate Term Portfolio Class D Shares*** +8.75 +1.92 + 36.22 5.55
<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 Portfolio's ten-year/inception dates are: Class A Shares, ten
years ended 6/30/98; Class B Shares, 10/21/88; and Class C and Class
D Shares, 10/21/94.
***The Portfolio's ten-year/inception dates are: Class A Shares, ten
years ended 6/30/98; Class B Shares, 11/13/92; and Class C and Class
D Shares, 10/21/94.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes Investment Grade Portfolio
<S> <S> <S> <C> <S> <C> <C>
US Government United States Treasury Bonds & Notes:
Obligations-- AAA Aaa $ 5,000,000 5.50% due 3/31/2000 $ 4,997,070 $ 4,998,450
5.9% AAA Aaa 4,500,000 7.50% due 11/15/2001 4,775,273 4,766,490
AAA Aaa 2,000,000 6.25% due 1/31/2002 2,064,375 2,044,680
AAA Aaa 6,500,000 5.50% due 3/31/2003 6,465,469 6,495,905
AAA Aaa 3,500,000 5.50% due 5/31/2003 3,484,961 3,500,560
AAA Aaa 2,500,000 5.75% due 8/15/2003 2,532,031 2,526,550
AAA Aaa 1,500,000 5.875% due 2/15/2004 1,533,281 1,527,660
AAA Aaa 3,000,000 7.50% due 2/15/2005 3,280,781 3,320,610
AAA Aaa 21,750,000 6.50% due 5/15/2005 22,885,742 22,956,473
AAA Aaa 8,500,000 5.625% due 5/15/2008 8,599,688 8,615,515
AAA Aaa 14,400,000 6.125% due 11/15/2027 15,362,578 15,430,464
-------------- --------------
75,981,249 76,183,357
Asset-Backed AAA Aaa 15,000,000 Aames Financial Corp., 6.46%
Securities++-- due 5/15/2028 14,995,313 15,117,188
8.0% AAA Aaa 1,792,088 Arcadia Automobile Receivables Trust,
6.10% due 6/15/2000 1,791,739 1,794,310
NR+++ Baa2 2,000,000 Bistro Trust 1998-1000, 6.58% due
3/26/2001 1,999,920 2,005,920
Citibank Credit Card Master Trust I:
AAA Aaa 8,000,000 5.85% due 4/10/2003 7,997,840 7,985,000
AAA Aaa 10,000,000 5.807% due 12/10/2008 (a) 9,996,100 9,971,800
BBB Baa2 11,000,000 DLJ Commercial Mortgage Corp., Series
1998-CG1-B1, 6.91% due 11/01/2005 11,115,156 11,110,000
A A2 9,000,000 First Dominion Funding I, 6.431% due
6/10/2013 8,966,133 8,955,000
AAA Aaa 6,500,000 First Greensboro, 6.55% due 12/25/2029 6,500,000 6,491,875
AAA Aaa 6,500,000 First Union-Lehman Brothers-Bank of
America, 98-C2-A2, 6.56% due 11/15/2035 6,597,310 6,620,250
AA Aaa 10,663,073 GMAC Grantor Trust, 6.50% due 4/15/2002 10,660,099 10,719,374
AAA Aaa 12,000,000 IMC-Home Equity, 6.36% due 8/20/2022 11,997,673 12,011,256
AAA Aaa 11,000,000 Money Store Home Equity Trust (The),
6.13% due 12/15/2000 11,000,000 11,024,063
-------------- --------------
103,617,283 103,806,036
Banking--9.5% BBB+ A3 6,250,000 BB&T Corporation, 7.25% due 6/15/2007 6,220,813 6,640,250
BankAmerica Corp.:
A+ Aa3 3,000,000 6.65% due 5/01/2001 2,997,090 3,049,470
A+ Aa3 3,000,000 7.125% due 5/12/2005 3,087,560 3,153,630
A+ A1 10,000,000 First Bank System, Inc., 6.375% due
3/15/2001 9,903,258 10,068,900
A- A2 11,000,000 First Union Corporation, 6.30% due
4/15/2028 10,958,420 11,008,910
BBB+ A2 4,750,000 Fleet Capital Trust II, 7.92% due
12/11/2026 4,690,720 5,086,918
HSBC Americas Inc.:
A- A3 6,000,000 7% due 11/01/2006 5,949,600 6,180,300
BBB+ A2 14,000,000 7.808% due 12/15/2026 13,838,440 14,385,924
BBB A1 16,400,000 KeyCorp Capital I, 6.427% due 7/01/2028 16,235,016 16,252,236
BBB+ Baa1 13,750,000 MBNA America Bank N.A., 5.987%
due 6/10/2004 13,537,838 13,518,038
BBB+ a2 6,000,000 Mellon Capital I, 7.72% due 12/01/2026 6,000,000 6,395,280
A A3 5,250,000 Mellon Financial Co., 6.375% due
2/15/2010 5,258,138 5,260,028
NationsBank Corp.:
A+ Aa3 6,000,000 5.75% due 3/15/2001 5,979,480 5,965,980
A A1 1,300,000 6.50% due 8/15/2003 1,336,075 1,317,446
Norwest Corp.:
AA- Aa3 3,500,000 6.75% due 5/12/2000 3,494,785 3,555,370
A+ A1 5,000,000 6.625% due 3/15/2003 5,104,650 5,098,050
BBB+ a1 5,500,000 Wells Fargo Capital I, 7.96% due
12/15/2026 5,401,385 5,986,365
-------------- --------------
119,993,268 122,923,095
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (continued) Investment Grade Portfolio
<S> <S> <S> <C> <S> <C> <C>
Canadian Province of Quebec (Canada)(1):
Provinces*-- A+ A2 $ 6,000,000 8.80% due 4/15/2003 $ 6,774,360 $ 6,626,280
1.0% A+ A2 4,500,000 13% due 10/01/2013 5,706,285 4,783,230
A+ A2 1,500,000 7.125% due 2/09/2024 1,562,415 1,605,510
-------------- --------------
14,043,060 13,015,020
Finance--2.9% A A2 9,500,000 Beneficial Corporation, 6.80%
due 9/16/2003 9,500,000 9,743,856
A aa3 1,250,000 CIT Capital Trust I, 7.70% due
2/15/2027 1,244,300 1,329,940
A+ Aa3 8,000,000 CIT Group Holdings, Inc., 6.625%
due 6/15/2005 8,027,120 8,205,200
Commercial Credit Co.:
A+ A1 5,000,000 6.45% due 7/01/2002 5,009,800 5,042,450
A+ A1 8,850,000 6.75% due 7/01/2007 9,104,349 9,183,734
A- Baa1 4,500,000 Finova Capital Corp., 6.45% due
6/01/2000 4,524,435 4,534,335
-------------- --------------
37,410,004 38,039,515
Finance-- Bear Stearns Companies, Inc.:
Other--11.3% A A2 2,000,000 6.50% due 7/05/2000 1,996,360 2,018,040
A A2 2,000,000 6.75% due 5/01/2001 1,993,680 2,033,960
A A2 11,650,000 6.70% due 8/01/2003 10,667,430 11,905,717
A A2 3,000,000 8.75% due 3/15/2004 3,224,430 3,360,540
BBB- Baa2 6,400,000 Commercial Net Lease Realty, 7.125% due
3/15/2008 6,382,656 6,409,536
A+ A1 3,500,000 Dean Witter, Discover & Co., 6.75% due
8/15/2000 3,486,805 3,553,130
Donaldson, Lufkin & Jenrette Inc.:
A- A3 11,000,000 6.875% due 11/01/2005 10,952,615 11,284,020
A- A3 3,500,000 6.50% due 6/01/2008 3,485,475 3,499,720
A A2 9,290,000 Equitable Companies Inc., 7% due 4/01/2028 9,422,234 9,491,036
A A2 7,500,000 Equitable Life Assurance Society of
the US, 7.70% due 12/01/2015 7,448,310 8,353,792
BBB- Baa3 4,600,000 Hospitality Properties Trust, 7% due
3/01/2008 4,591,720 4,595,630
Lehman Brothers Holdings, Inc.:
A Baa1 7,000,000 6.50% due 10/01/2002 6,993,350 7,044,800
A Baa1 3,000,000 6.25% due 4/01/2003 2,995,350 3,003,750
A Baa1 3,000,000 7.375% due 5/15/2004 3,107,100 3,158,160
AA Aa2 3,950,000 MBIA, Inc., 7.15% due 7/15/2027 3,940,323 4,253,952
A+ A1 8,000,000 Morgan Stanley, Dean Witter, Discover
& Co., 6.09% due 3/09/2011 7,998,720 7,998,400
A+ A1 9,200,000 Morgan Stanley Group, Inc., 6.875% due
3/01/2007 9,166,972 9,532,672
BBB+ Baa1 7,500,000 PaineWebber Group Inc., 7.99% due
6/09/2017 7,500,000 8,188,500
A A2 10,000,000 Salomon Inc., 6.25% due 1/15/2005 9,942,460 10,049,000
A A2 2,850,000 Salomon Smith Barney Holdings, Inc.,
7.375% due 5/15/2007 2,847,464 3,024,619
BBB+ Baa1 1,000,000 Simon Debartolo Group, Inc., 6.75% due
6/15/2005 990,460 995,052
BBB Baa2 6,000,000 Spieker Properties LP, 7.35% due
12/01/2017 5,999,700 6,015,246
Travelers Corp. (The):
AA- Aa3 3,000,000 9.50% due 3/01/2002 3,163,980 3,328,440
AA- Aa3 10,800,000 7.875% due 5/15/2025 10,845,324 12,482,640
-------------- --------------
139,142,918 145,580,352
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (continued) Investment Grade Portfolio
<S> <S> <S> <C> <S> <C> <C>
Industrial-- A+ A1 $ 3,000,000 Anheuser-Busch Cos., Inc., 8.75% due
Consumer--5.5% 12/01/1999 $ 3,367,590 $ 3,111,450
AA- Aa3 13,480,000 Archer-Daniels-Midland Company,
8.375% due 4/15/2017 16,259,445 16,420,392
A A3 10,000,000 Avon Products, Inc., 6.25% due
5/01/2018 9,987,600 10,263,070
BBB- Baa3 2,500,000 Flowers Industries, Inc., 7.15%
due 4/15/2028 2,486,750 2,569,200
Nabisco, Inc.:
BBB Baa2 9,000,000 6% due 2/15/2011 8,997,750 8,875,080
BBB Baa2 4,000,000 7.55% due 6/15/2015 3,988,860 4,048,320
A A1 5,670,000 PepsiCo, Inc., 5.75% due 1/02/2003 5,641,310 5,645,647
Philip Morris Companies, Inc.:
A A2 9,500,000 9% due 1/01/2001 9,698,815 10,088,905
A A2 5,000,000 7.75% due 1/15/2027 5,361,500 5,348,300
A A2 5,000,000 Series A, 6.15% due 3/15/2010 4,997,400 4,999,900
-------------- --------------
70,787,020 71,370,264
Industrial-- AA Aa2 4,075,000 BP America Inc., 9.375% due 11/01/2000 4,488,287 4,385,270
Energy--1.7% BBB Baa2 7,250,000 Occidental Petroleum Corp., 6.50% due
4/01/2005 7,208,675 7,249,927
BBB+ A3 10,000,000 Sonat, Inc., 7% due 2/01/2018 10,098,000 10,292,900
-------------- --------------
21,794,962 21,928,097
Industrial-- Applied Materials Inc.:
Manufacturing-- BBB+ A3 5,000,000 6.75% due 10/15/2007 4,996,750 5,104,150
9.8% BBB+ A3 13,000,000 7.125% due 10/15/2017 12,911,080 13,204,750
Du Pont (E.I.) de Nemours & Co.:
AA- Aa3 5,150,000 6.75% due 9/01/2007 5,293,943 5,364,652
AA- Aa3 4,500,000 8.25% due 1/15/2022 4,676,445 4,937,760
Ford Motor Credit Co.:
A A1 5,000,000 7% due 9/25/2001 4,980,100 5,125,100
A A1 5,000,000 8% due 6/15/2002 5,286,350 5,339,050
A A1 5,000,000 7.50% due 6/15/2004 5,140,200 5,310,300
A A1 1,000,000 7.75% due 3/15/2005 999,090 1,081,130
A A1 7,000,000 8.90% due 1/15/2032 8,650,180 8,957,970
General Motors Acceptance Corp.:
A- A2 4,000,000 6.625% due 9/19/2002 3,915,080 4,074,960
A A2 10,000,000 7.70% due 4/15/2016 10,911,500 11,125,300
BBB- Baa2 5,000,000 Georgia-Pacific Group, 7.25%
due 6/01/2028 4,975,150 5,099,600
A- Baa1 3,500,000 Goodrich B.F. Company (The), 7% due
4/15/2038 3,479,385 3,596,250
BBB+ A3 5,000,000 Lockheed Martin Corp., 6.85% due
5/15/2001 4,995,950 5,105,950
BBB+ A3 11,000,000 Loral Corporation, 8.375% due
6/15/2024 11,056,040 13,290,860
Martin Marietta Corp.:
BBB+ A3 6,500,000 6.50% due 4/15/2003 6,539,845 6,569,420
BBB+ A3 4,000,000 7.375% due 4/15/2013 3,846,440 4,358,160
Raytheon Co.:
BBB Baa1 2,750,000 6.30% due 3/15/2005 2,743,813 2,762,237
BBB Baa1 3,000,000 7.20% due 8/15/2027 2,995,560 3,209,340
BBB Ba1 14,000,000 Seagate Technology, Inc., 7.125% due
3/01/2004 13,975,500 13,832,420
-------------- --------------
122,368,401 127,449,359
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (continued) Investment Grade Portfolio
<S> <S> <S> <C> <S> <C> <C>
Industrial-- A A2 $10,000,000 Bass America, Inc., 8.125% due
Services--19.4% 3/31/2002 $ 10,250,610 $ 10,667,200
A A2 8,000,000 Carnival Cruise Lines, Inc., 7.70%
due 7/15/2004 8,076,380 8,605,360
BBB- Baa3 10,000,000 Circus Circus Enterprises, Inc., 6.70%
due 11/15/2096 9,977,700 9,700,200
A- Baa1 22,850,000 Computer Associates International,
Inc., 6.375% due 4/15/2005 22,729,123 22,950,563
A+ A2 5,000,000 Dillard Department Stores, Inc.,
9.125% due 8/01/2011 6,054,000 6,212,100
First Data Corporation:
A A2 11,500,000 6.75% due 7/15/2005 11,911,930 11,892,380
A A2 10,000,000 6.375% due 12/15/2007 9,974,300 10,175,800
AAA Aaa 7,000,000 Johnson & Johnson, 8.72% due 11/01/2024 7,057,420 8,097,250
News American Holdings, Inc.:
BBB- Baa3 12,445,000 8.625% due 2/01/2003 13,585,486 13,574,259
BBB- Baa3 10,000,000 8% due 10/17/2016 9,699,900 11,017,700
A A2 5,900,000 Nordstrom, Inc., 6.95% due 3/15/2028 5,898,525 6,023,310
Oracle Corporation:
BBB+ Baa2 5,000,000 6.72% due 2/15/2004 5,000,000 5,089,300
BBB+ Baa2 4,000,000 6.91% due 2/15/2007 4,000,000 4,094,760
BBB- Baa2 12,700,000 Royal Caribbean Cruises Ltd., 6.75%
due 3/15/2008 12,620,404 12,732,512
A- A2 8,000,000 Sears, Roebuck & Co., 6.82% due
10/17/2002 8,016,320 8,211,280
Service Corporation International:
BBB+ Baa1 7,000,000 6.75% due 6/01/2001 6,978,580 7,101,150
BBB+ Baa1 9,500,000 7.20% due 6/01/2006 9,235,900 10,010,435
BBB+ Baa1 7,000,000 6.30% due 3/15/2020 6,992,300 6,990,550
BBB- Baa3 8,980,000 TCI Communications, Inc., 8.75% due
8/01/2015 10,534,079 10,811,202
Time Warner Entertainment Co.:
BBB- Baa2 6,000,000 10.15% due 5/01/2012 7,356,180 7,866,120
BBB- Baa2 9,900,000 8.375% due 3/15/2023 10,525,871 11,595,969
A- Baa1 10,500,000 Tyco International Group S.A., 7% due
6/15/2028 10,424,295 10,620,645
AA Aa2 14,345,000 Wal-Mart Stores, Inc., 8.50% due
9/15/2024 14,488,240 16,386,580
Walt Disney Co.:
A A2 5,500,000 6.375% due 3/30/2001 5,500,000 5,570,180
A A2 14,151,130 6.85% due 1/10/2007++ 14,141,649 14,523,305
-------------- --------------
241,029,192 250,520,110
Industrial-- BBB Baa2 6,500,000 CSX Corporation, 7.95% due 5/01/2027 6,466,330 7,528,293
Transportation-- BBB Baa2 9,000,000 Federal Express Corporation, 9.65% due
3.1% 6/15/2012 10,137,590 11,433,960
BBB+ Baa1 1,000,000 Norfolk Southern Corporation, 6.95% due
5/01/2002 998,480 1,027,560
Southwest Airlines, Inc.:
A- A3 10,000,000 9.40% due 7/01/2001 11,326,040 10,864,300
A- A3 2,000,000 8% due 3/01/2005 1,989,220 2,177,200
A- A3 3,000,000 7.875% due 9/01/2007 2,983,950 3,349,200
BBB- Baa3 4,000,000 Union Pacific Corp., 6.625% due
2/01/2008 3,964,880 3,992,640
-------------- --------------
37,866,490 40,373,153
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (continued) Investment Grade Portfolio
<S> <S> <S> <C> <S> <C> <C>
Mortgage-Backed Federal Home Loan Mortgage Corp.:
Securities++-- AAA Aaa $ 2,000,000 6% due 6/15/2023 $ 1,989,375 $ 1,994,360
2.9% AAA Aaa 2,000,000 6.35% due 9/15/2023 2,022,734 2,029,360
NR+++ A2 8,500,000 Mortgage Capital Funding, 6.726% due
6/18/2008 8,585,000 8,585,000
Nomura Asset Securities Corp.,
Series 1998-D6:
AAA Aaa 8,367,386 Class A1A, 6.28% due 3/15/2030 8,411,838 8,422,297
AAA Aaa 10,000,000 Class A1B, 6.59% due 3/15/2030 10,153,125 10,075,000
AAA Aaa 5,680,589 Class A2, 6.769% due 3/17/2028 5,781,996 5,893,157
-------------- --------------
36,944,068 36,999,174
Utilities-- A- A2 8,700,000 ALLTEL Corporation, 6.75% due 9/15/2005 8,566,020 8,878,263
Communications-- AA- A2 9,500,000 GTE California, Inc., 8.07% due
3.6% 4/15/2024 10,152,935 10,331,915
A Baa1 7,500,000 GTE Corp., 9.375% due 12/01/2000 8,235,170 8,035,875
Southwestern Bell Telecommunications
Corp.:
AA Aa3 2,000,000 6.125% due 3/01/2000 2,011,250 2,006,520
AA Aa3 5,000,000 6.375% due 11/15/2007 5,023,800 5,072,650
BBB- Baa2 11,000,000 WorldCom Inc., 7.75% due 4/01/2007 11,977,665 11,931,260
-------------- --------------
45,966,840 46,256,483
Utilities-- AAA Aaa 5,850,000 Cleveland Electric/Toledo Edison
Electric--5.3% (Class B), 7.13% due 7/01/2007 6,137,176 6,276,172
A+ A1 9,115,000 Consolidated Edison, Inc., 6.25%
due 2/01/2008 9,115,000 9,107,252
BBB+ Baa3 5,000,000 Consumers Energy Company, 6.375% due
2/01/2008 4,951,650 4,976,005
AA- A1 8,000,000 Pacific Gas and Electric Company,
6.25% due 8/01/2003 8,149,200 8,083,760
A- A3 3,000,000 Pennsylvania Power & Light Resources
Inc., 6.125% due 5/01/2001 2,998,200 3,007,200
A- A3 10,000,000 Public Service Electric & Gas Co.,
6.50% due 6/01/2000 9,995,705 10,081,900
AA- A1 5,000,000 TECO Energy, Inc., 9.27% due 6/12/2000 5,000,000 5,310,700
Texas Utilities Electric Company:
AAA Baa3 6,971,000 6.375% due 10/01/2004 6,995,198 7,100,173
BBB Baa2 5,000,000 8.175% due 1/30/2037 5,000,000 5,244,600
A A2 8,500,000 Virginia Electric & Power Co., 8.625%
due 10/01/2024 8,377,160 9,669,345
-------------- --------------
66,719,289 68,857,107
Yankee AA- Aa2 6,000,000 ABN AMRO Holding N.V., 7.125% due
Corporates*-- 6/18/2007 (2) 5,997,060 6,303,240
7.7% AmVescap PLC (2):
BBB A3 3,000,000 6.375% due 5/15/2003 2,994,570 3,011,583
BBB A3 9,000,000 6.60% due 5/15/2005 8,986,530 9,095,283
A+ A1 6,000,000 Australia & New Zealand Banking
Group Ltd., 7.55% due 9/15/2006 (2) 5,990,880 6,377,160
BBB+ A3 7,500,000 Banco Central Hispanoamercano S.A.
(Cayman Islands), 7.70% due 7/15/2006 (2) 7,973,775 8,043,975
Enersis S.A. (3):
A- Baa1 2,500,000 6.90% due 12/01/2006 2,493,550 2,356,450
A- Baa1 4,000,000 6.60% due 12/01/2026 3,992,400 3,836,160
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (concluded) Investment Grade Portfolio
<S> <S> <S> <C> <S> <C> <C>
Yankee Fairfax Financial Holdings Ltd. (2):
Corporates* BBB+ Baa3 $ 300,000 7.375% due 4/15/2018 $ 299,346 $ 307,746
(concluded) BBB+ Baa3 9,800,000 7.75% due 7/15/2037 9,751,098 10,145,940
Ford Capital B.V. (2):
A A1 10,000,000 9.875% due 5/15/2002 10,531,200 11,237,000
A A1 3,995,000 9.50% due 6/01/2010 4,430,215 4,979,448
A Aa3 2,000,000 Midland Bank PLC, 7.625% due
6/15/2006 (2) 1,995,240 2,138,480
A A2 6,500,000 Norsk Hydro A/S, 6.70% due
1/15/2018 (3) 6,466,720 6,556,355
BBB+ A3 1,500,000 Philips Electronics N.V., 7.75%
due 4/15/2004 (3) 1,602,615 1,607,580
BBB+ Baa2 2,000,000 Saga Petroleum ASA, 7.25% due
9/23/2027 (3) 1,979,980 2,023,140
A+ Aa3 4,000,000 Sony Corp., 6.125% due 3/04/2003 (3) 3,991,520 4,009,320
AA+ Aaa 15,500,000 Swiss Bank Corp.-New York, 7.375% due
6/15/2017 (2) 16,581,680 16,886,475
-------------- --------------
96,058,379 98,915,335
Total Investments in
Bonds & Notes--97.6% 1,229,722,423 1,262,216,457
Short-Term Securities
Repurchase 4,411,000 Nikko Securities International,
Agreements**--0.3% Inc., purchased on 6/30/1998 to yield
6.15% to 7/01/1998 4,411,000 4,411,000
Total Investments in
Short-Term Securities--0.3% 4,411,000 4,411,000
Total Investments--97.9% $1,234,133,423 1,266,627,457
==============
Other Assets Less Liabilities--2.1% 27,603,591
--------------
Net Assets--100.0% $1,294,231,048
==============
Net Asset Class A--Based on net assets of $567,960,471 and 49,023,943 shares outstanding $ 11.59
Value: ==============
Class B--Based on net assets of $570,084,886 and 49,206,690 shares outstanding $ 11.59
==============
Class C--Based on net assets of $58,840,962 and 5,076,898 shares outstanding $ 11.59
==============
Class D--Based on net assets of $97,344,729 and 8,397,888 shares outstanding $ 11.59
==============
<FN>
*Corresponding industry groups for foreign securities which are
denominated in US dollars:
(1)Government Entity; Guaranteed by the Province.
(2)Financial Institution.
(3)Industrial.
**Repurchase Agreements are fully collateralized by US Government
and Agency Obligations.
(a)Floating Rate Note.
++Subject to principal paydowns.
+++Not Rated.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes Intermediate Term Portfolio
<S> <S> <S> <C> <S> <C> <C>
US Government United States Treasury Bonds & Notes:
Obligations-- AAA Aaa $ 5,000,000 5.75% due 4/30/2003 $ 5,020,313 $ 5,049,200
6.4% AAA Aaa 9,500,000 7.50% due 2/15/2005 10,502,695 10,515,265
AAA Aaa 2,100,000 6.50% due 5/15/2005 2,220,328 2,216,487
AAA Aaa 1,000,000 5.50% due 2/15/2008 985,000 999,370
AAA Aaa 9,500,000 5.625% due 5/15/2008 9,579,844 9,629,105
-------------- --------------
28,308,180 28,409,427
Asset-Backed NR+++ Baa2 3,500,000 Bistro Trust 1998-1000, 6.58%
Securities++-- due 3/26/2001 3,499,860 3,510,360
4.6% AAA Aaa 2,000,000 First Bank, Corporate Card Master
Trust, 6.40% due 2/15/2003 1,997,545 2,036,020
B B3 10,000,000 Spinnaker Industries, Inc., 6.652%
due 5/01/2001 10,000,000 9,980,000
BBB- Baa1 5,000,000 York Funding Ltd., 5% due 9/15/2005 5,000,000 4,998,440
-------------- --------------
20,497,405 20,524,820
Banking--14.0% BBB+ A3 4,000,000 BB&T Corporation, 7.25% due 6/15/2007 3,981,320 4,249,760
A A2 3,500,000 Bank of New York Company, Inc. (The),
7.875% due 11/15/2002 3,873,450 3,744,405
BankAmerica Corp.:
A A1 4,000,000 7.50% due 10/15/2002 4,268,880 4,208,200
A+ Aa3 3,000,000 7.125% due 5/12/2005 2,956,500 3,153,630
A A2 9,000,000 First Chicago Corp., 9% due 6/15/1999 9,548,820 9,245,160
A- A3 1,000,000 HSBC Americas Inc., 7% due 11/01/2006 991,600 1,030,050
BBB+ Baa1 4,000,000 MBNA America Bank N.A., 5.987% due
6/10/2004 3,938,280 3,932,520
A A3 6,000,000 Mellon Financial Co., 6.875% due
3/01/2003 5,483,220 6,170,760
NationsBank Corp.:
A+ Aa3 2,000,000 5.75% due 3/15/2001 1,993,160 1,988,660
A+ Aa3 11,500,000 6.65% due 4/09/2002 11,423,540 11,753,575
Norwest Corp.:
AA- Aa3 2,000,000 6.125% due 10/15/2000 1,996,440 2,010,200
A+ A1 1,000,000 6.625% due 3/15/2003 1,003,060 1,019,610
BBB+ A3 9,000,000 Washington Mutual Inc., 7.25% due
8/15/2005 8,930,520 9,537,840
-------------- --------------
60,388,790 62,044,370
Canadian A+ A2 5,000,000 Province of Quebec (Canada), 8.80% due 5,538,670 5,521,900
Provinces*--1.3% 4/15/2003 (1)
Finance--3.1% A A2 9,250,000 Beneficial Corporation, 6.80% due
9/16/2003 9,250,000 9,487,438
A+ Aa3 1,000,000 CIT Group Holdings, Inc., 6.625% due
6/15/2005 1,003,390 1,025,650
A+ A1 3,000,000 Commercial Credit Co., 6.45% due
7/01/2002 3,005,880 3,025,470
-------------- --------------
13,259,270 13,538,558
Finance-- Bear Stearns Companies, Inc.:
Other--9.6% A A2 2,000,000 6.50% due 7/05/2000 1,996,360 2,018,040
A A2 3,000,000 8.75% due 3/15/2004 3,224,430 3,360,540
BBB- Baa2 5,000,000 Centerpoint Properties Corporation,
6.75% due 4/01/2005 4,978,150 5,008,600
BBB- Baa2 5,000,000 Commercial Net Lease Realty, 7.125% due
3/15/2008 4,986,450 5,007,450
A+ A1 6,250,000 Dean Witter, Discover & Co., 6.75% due
8/15/2000 6,226,438 6,344,875
BBB- Baa3 4,250,000 Hospitality Properties Trust, 7% due
3/01/2008 4,242,350 4,245,963
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (continued) Intermediate Term Portfolio
<S> <S> <S> <C> <S> <C> <C>
Finance-- A Baa1 $ 3,000,000 Lehman Brothers Holdings, Inc.,
Other 7.375% due 5/15/2004 $ 3,107,100 $ 3,158,160
(concluded) A A2 2,000,000 Salomon Inc., 6.50% due 3/01/2000 2,000,000 2,015,200
Salomon Smith Barney Holdings, Inc.:
A A2 4,000,000 6.25% due 1/15/2005 3,991,240 4,019,600
A A2 1,000,000 7.375% due 5/15/2007 999,110 1,061,270
BBB+ Baa1 4,000,000 Simon Debartolo Group, Inc., 6.75% due
6/15/2005 3,961,840 3,980,208
AA- Aa3 2,000,000 Travelers Corp. (The), 9.50% due
3/01/2002 2,168,400 2,218,960
-------------- --------------
41,881,868 42,438,866
Industrial-- A+ A1 5,481,000 Anheuser-Busch Cos., Inc., 8.75% due
Consumer--6.9% 12/01/1999 6,189,909 5,684,619
A A3 2,000,000 Avon Products, Inc., 6.25% due 5/01/2018 1,997,520 2,052,614
Nabisco, Inc.:
BBB Baa2 5,000,000 6.70% due 6/15/2002 4,997,050 5,037,750
BBB Baa2 3,000,000 6.85% due 6/15/2005 2,994,300 3,008,970
BBB Baa2 6,000,000 6% due 2/15/2011 5,998,500 5,916,720
Philip Morris Companies, Inc.:
A A2 3,500,000 9% due 1/01/2001 3,576,195 3,716,965
A A2 5,000,000 6.15% due 3/15/2010 4,997,400 4,999,900
-------------- --------------
30,750,874 30,417,538
Industrial-- BBB Baa2 4,000,000 Ashland Inc., 6.625% due 2/15/2008 3,995,200 4,027,440
Energy--3.5% BBB Baa2 3,000,000 Occidental Petroleum Corp., 6.50% due
4/01/2005 2,982,900 2,999,970
A+ A1 2,000,000 Texaco Capital Inc., 9% due 12/15/1999 2,342,460 2,084,560
BBB Baa2 6,000,000 Ultramar Credit Corp., 8.625% due
7/01/2002 6,521,940 6,487,440
-------------- --------------
15,842,500 15,599,410
Industrial-- A A2 3,000,000 AlliedSignal, Inc., 6.20% due
Manufacturing-- 2/01/2008 2,995,980 3,029,910
9.0% Applied Materials Inc.:
BBB+ A3 4,000,000 6.65% due 9/05/2000 4,000,000 4,056,080
BBB+ A3 4,300,000 6.75% due 10/15/2007 4,297,205 4,389,569
BBB Ba1 3,000,000 Blount Inc., 7% due 6/15/2005 2,968,650 2,956,680
General Motors Acceptance Corp.:
A A2 3,000,000 6.625% due 10/01/2002 2,994,600 3,033,750
A A2 2,000,000 9% due 10/15/2002 2,213,880 2,209,940
BBB+ A3 8,000,000 Lockheed Martin Corp., 6.85% due
5/15/2001 8,018,810 8,169,520
Raytheon Co.:
BBB Baa1 2,750,000 5.95% due 3/15/2001 2,746,617 2,739,770
BBB Baa1 5,000,000 6.75% due 8/15/2007 4,987,750 5,127,150
BBB Ba1 4,000,000 Seagate Technology, Inc., 7.125%
due 3/01/2004 3,993,000 3,952,120
-------------- --------------
39,216,492 39,664,489
Industrial-- A A2 3,000,000 Bass America, Inc., 6.625% due 3/01/2003 2,825,520 3,047,910
Services--15.5% A A2 6,000,000 Carnival Cruise Lines, Inc., 7.70%
due 7/15/2004 5,952,060 6,454,020
BBB- Baa3 4,000,000 Comcast Cable Communications Company,
8.375% due 5/01/2007 4,060,680 4,492,620
Computer Associates International, Inc.:
A- Baa1 4,000,000 6.25% due 4/15/2003 3,992,480 4,001,648
A- Baa1 1,500,000 6.375% due 4/15/2005 1,492,065 1,506,602
News American Holdings, Inc.:
BBB- Baa3 4,000,000 8.625% due 2/01/2003 4,286,440 4,362,960
BBB- Baa3 4,500,000 8.50% due 2/15/2005 4,677,305 4,984,875
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (continued) Intermediate Term Portfolio
<S> <S> <S> <C> <S> <C> <C>
Industrial-- BBB+ Baa2 $ 1,000,000 Oracle Corporation, 6.91% due
Services 2/15/2007 $ 1,000,000 $ 1,023,690
(concluded) BBB- Baa2 3,000,000 Royal Caribbean Cruises Ltd.,
6.75% due 3/15/2008 2,982,840 3,007,680
Service Corporation International:
BBB+ Baa1 1,000,000 6.75% due 6/01/2001 996,940 1,014,450
BBB+ Baa1 1,500,000 7.20% due 6/01/2006 1,495,455 1,580,595
BBB+ Baa1 2,000,000 6.30% due 3/15/2020 1,997,800 1,997,300
TCI Communications, Inc.:
BBB- Baa3 3,000,000 8.65% due 9/15/2004 3,099,270 3,355,350
BBB- Baa3 5,500,000 8% due 8/01/2005 5,561,380 6,005,450
BBB- Baa2 5,000,000 Time Warner Entertainment Co.,
9.625% due 5/01/2002 5,586,000 5,585,350
BBB- Baa3 5,000,000 Turner Broadcasting System, Inc.
(Class B), 7.40% due 2/01/2004 5,108,150 5,226,550
Walt Disney Co.:
A A2 6,000,000 6.75% due 3/30/2006 6,145,320 6,269,760
A A2 4,639,715 6.85% due 1/10/2007++ 4,636,606 4,761,739
-------------- --------------
65,896,311 68,678,549
Industrial-- BBB- Baa3 4,310,000 AMR Corporation, 9.50% due 7/15/1998 4,606,528 4,314,439
Transportation-- BBB+ Baa1 5,000,000 Norfolk Southern Corporation, 6.95%
4.2% due 5/01/2002 4,992,400 5,137,800
Southwest Airlines, Inc.:
A- A3 6,500,000 9.40% due 7/01/2001 7,564,180 7,061,795
A- A3 1,000,000 8% due 3/01/2005 994,610 1,088,600
BBB- Baa3 1,000,000 Union Pacific Corp., 6.625% due 2/01/2008 991,220 998,160
-------------- --------------
19,148,938 18,600,794
Services--1.1% BBB Baa3 5,000,000 HEALTHSOUTH Corporation, 7% due
6/15/2008 4,952,500 4,948,585
Utilities-- A Baa1 5,000,000 360 Communications Co., 7.50% due
Communications-- 3/01/2006 5,170,100 5,329,900
5.8% A- A2 4,000,000 ALLTEL Corporation, 6.75% due 9/15/2005 3,938,400 4,081,960
A Baa1 1,000,000 GTE Corp., 9.375% due 12/01/2000 1,090,310 1,071,450
Southwestern Bell Telecommunications
Corp.:
AA Aa3 1,000,000 6.50% due 3/12/2003 1,009,780 1,023,190
AA Aa3 2,200,000 6.625% due 4/01/2005 2,108,590 2,271,522
BBB- Baa2 11,000,000 WorldCom Inc., 7.75% due 4/01/2007 11,756,720 11,931,260
-------------- --------------
25,073,900 25,709,282
Utilities-- A- Baa1 4,000,000 Arizona Public Service Company,
Electric--4.7% 6.75% due 11/15/2006 3,905,840 4,103,600
AAA Aaa 3,000,000 Cleveland Electric/Toledo Edison
(Class B), 7.13% due 7/01/2007 3,147,270 3,218,550
BBB+ Baa3 9,000,000 Consumers Energy Company, 6.375% due
2/01/2008 8,912,970 8,956,809
AA- A1 1,500,000 Pacific Gas and Electric Company,
6.25% due 8/01/2003 1,527,975 1,515,705
A- A3 1,000,000 Pennsylvania Power & Light Resources
Inc., 6.125% due 5/01/2001 999,400 1,002,400
A- A3 2,000,000 Public Service Electric & Gas Co.,
6.50% due 6/01/2000 1,999,120 2,016,380
-------------- --------------
20,492,575 20,813,444
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
Bonds & Notes (concluded) Intermediate Term Portfolio
<S> <S> <S> <C> <S> <C> <C>
Yankee BBB- Baa3 $3,000,000 Abitibi-Consolidated Inc., 6.95% due
Corporates*-- 4/01/2008 (3) $ 2,994,180 $ 3,031,200
7.5% AmVescap PLC (2):
BBB A3 2,000,000 6.375% due 5/15/2003 1,996,380 2,007,722
BBB A3 2,000,000 6.60% due 5/15/2005 1,997,007 2,021,174
BBB+ A3 5,000,000 Banco Central Hispanoamercano S.A.
(Cayman Islands), 7.70% due
7/15/2006 (2) 5,315,850 5,362,650
A- Baa1 1,500,000 Enersis S.A., 6.90% due 12/01/2006 (3) 1,496,130 1,413,870
A A1 2,000,000 Ford Capital B.V., 9.875% due
5/15/2002 (2) 2,300,380 2,247,400
BBB- Ba2 3,000,000 Gruma, S.A de C.V., 7.625% due
10/15/2007 (3) 2,994,960 3,016,272
AAA Aaa 2,000,000 International Bank for Reconstruction &
Development, 5.625% due 3/17/2003 (2) 1,993,300 1,998,640
BBB+ A3 2,650,000 Philips Electronics N.V., 7.75% due
4/15/2004 (3) 2,831,286 2,840,058
A+ A1 4,000,000 Santander Financial Issuances Ltd., 7%
due 4/01/2006 (2) 4,106,280 4,133,240
A- A2 5,000,000 Trans-Canada Pipelines, 6.43% due
3/15/2029 (3) 5,000,000 5,058,350
-------------- --------------
33,025,753 33,130,576
Total Investments in Bonds &
Notes--97.2% 424,274,026 430,040,608
Repurchase 6,001,000 Nikko Securities International, Inc.,
Agreements**--1.4% purchased on 6/30/1998 to yield
6.15% to 7/01/1998 6,001,000 6,001,000
Total Investments in Short-Term
Securities--1.4% 6,001,000 6,001,000
Total Investments--98.6% $ 430,275,026 436,041,608
==============
Other Assets Less Liabilities--1.4% 6,223,664
--------------
Net Assets--100.0% $ 442,265,272
==============
Net Asset Class A--Based on net assets of $191,084,750 and 16,474,061 shares outstanding $ 11.60
Value: ==============
Class B--Based on net assets of $152,801,377 and 13,172,916 shares outstanding $ 11.60
==============
Class C--Based on net assets of $2,178,823 and 187,910 shares outstanding $ 11.60
==============
Class D--Based on net assets of $96,200,322 and 8,293,119 shares outstanding $ 11.60
==============
<FN>
*Corresponding industry groups for foreign securities which are
denominated in US dollars:
(1)Government Entity.
(2)Financial Institution.
(3)Industrial.
**Repurchase Agreements are fully collateralized by US Government
and Agency Obligations.
++Subject to principal paydowns.
+++Not rated.
</TABLE>
