HIGH INCOME
PORTFOLIO
Merrill Lynch
Corporate Bond Fund, Inc.
FUND LOGO
Quarterly Report
June 30, 1999
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Corporate Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
HIGH INCOME PORTFOLIO
TO OUR SHAREHOLDERS
The quarter ended June 30, 1999 proved difficult for fixed-income
markets. It became evident as reports on the economy accumulated
that the widely anticipated slowdown in US economic growth in 1999
was an illusion. Expectations as to the interest rate outlook
shifted accordingly. The 25 basis point (0.25%) increase in short-
term interest rates by the Federal Reserve Board at June quarter-end
was already discounted in security prices. The total return on ten-
year US Treasury bonds was -3.36% for the June quarter. On the other
hand, lower-quality assets benefited from the improved economic
environment. The US high-yield market is driven not just by interest
rates but also by expectations about credit quality. The unmanaged
CS First Boston Global High Yield Index returned +1.16%, and the
unmanaged Standard & Poor's 500 Index advanced 7.05% during the June
quarter. High Income Portfolio performed in line with the CS First
Boston Global High Yield Index, the Portfolio's benchmark.
The high-yield market continued to experience relatively poor
liquidity during the three-month period ended June 30, 1999. Net
flows into high-yield mutual funds were weak throughout the quarter,
and firms involved in underwriting and market making appeared
unwilling to commit capital to provide liquidity to investors.
Despite this, approximately $31 billion of new-issue supply was
sold. We believed that a large amount of additional supply would
enter the market if interest rates declined significantly and that
this could put a ceiling on price rallies.
While data relating to credit conditions in the high-yield market
are mixed, on balance we believe that credit quality is improving.
Credit conditions in a number of industries sensitive to economic
conditions have improved markedly this year. Oil and gas, steel, and
paper/forest product companies have experienced good product demand
and higher prices. Most industries have maintained stable quality.
It is difficult to think of a significant sector of the high-yield
universe that has experienced deteriorating fundamentals, with the
exception of managed care, which has been negatively affected by
lower Medicare/Medicaid payments. Nevertheless, default rates
continue to rise. For example, for the 12 months ended June 30,
1999, Moody's Investors Service, Inc. reported a default rate of
4.27% for the high-yield universe compared with 3.68% for the 12
months ended March 31, 1999. However, default rates are a lagging
indicator.
While the high-yield market outperformed Treasury issues year-to-
date June 30, 1999, valuations remain attractive. The yield of the
unmanaged CS First Boston Global High Yield Index exceeds US
Treasury bonds by 5.75%. Although this is considerably tighter than
the 6.46% level at the beginning of the year, it is still wide by
historic measures. We believe that yield spreads may continue to
narrow as conditions normalize over the remainder of the year.
Portfolio Strategy
While the fundamentals for the high-yield market are somewhat mixed,
our view is positive. Currently, the Portfolio is fully invested,
and we expect to maintain this strategy over the near term. The
overall credit quality of the Portfolio's holdings remains modestly
above the benchmark CS First Boston Global High Yield Index. The
Portfolio's holdings are diversified among a variety of issuers and
industries.
During the June quarter, we sold a portion of our positions in
Nextel Communications, Inc., RSL Communications PLC and NTL
Incorporated since these companies were the subject of merger and
acquisition rumors that caused the bonds to trade to overvalued
levels. We also sold most of our Lenfest Communications, Inc.
holdings since the bonds traded to investment-grade levels
subsequent to acquisition by AT&T Corp. We also eliminated Comcast
Cellular Holdings because of its acquisition by investment-grade
rated Sprint Corp. We established new core positions in Lyondell
Chemical Company and Cablevision SA.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
There were no significant overweightings or underweightings among
industry groups, relative to the CS First Boston Global High Yield
Index at June 30, 1999. The average maturity of the portfolio
remained unchanged at 7.3 years over the six-month period ended June
30, 1999. Our exposure to emerging markets remained our most
significant overweight, relative to the CS First Boston Global High
Yield Index, with the US dollar-denominated bonds of corporations
domiciled in countries with credit ratings below investment grade
constituting 17.0% of net assets at June 30 compared with 7.1% for
the Index. (See page 4 of this report to shareholders for a list of
the Five Largest Industries and Top Five Foreign Countries in the
Portfolio.)
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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent T. Lathbury III)
Vincent T. Lathbury III
Senior Vice President and Portfolio Manager
August 12, 1999
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
PORTFOLIO INFORMATION
As of June 30, 1999
<TABLE>
Percent of
Ten Largest Corporate Holdings Net Assets
<S> <S> <C>
Nextel Communications, Nextel offers digital and analog wireless communication services throughout the United 2.5%
Inc. 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 Incorporated Through various subsidiaries, NTL Inc. owns and operates television, radio broadcasting, 2.1
cable television and telecommunications systems in the United Kingdom. The company
also owns Comcast and Diamond cable and telephone operations.
Century Communications Century owns and operates 70 cable systems in 25 states and Puerto Rico. Since March 5, 1.4
Corporation the company has been in the process of a merger with Adelphia Communication.
United International The company has interests in and operates cable television, telephony, high speed 1.4
Holdings, Inc. Internet access and programming services in ten countries across Europe and in Israel.
Fresenius Medical Fresenius Medical Care is the world's largest integrated provider of dialysis products and 1.4
Care AG 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 countries.
TransAmerican Energy TransAmerican is a privately held holding company whose principal subsidiaries are 1.3
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.
CSN Iron SA CSN Iron manufactures and distributes hot rolled, cold rolled and galvanized steel 1.3
products and tin mill products. CSN Iron distributes primarily to customers in the
automobile, auto-parts, civil construction, tubes and pipes and electrical equipment
industries. The company markets its product mainly in Latin America, North America,
Europe and Asia.
USAir Inc. USAir is the sixth-largest US airline, with major hubs in Pittsburgh, Charlotte, 1.3
Philadelphia and Baltimore and routes covering most of the Eastern half of the United
States. Our investment includes a sizable amount of equipment trust certificates secured
by modern, saleable aircraft.
Columbia/HCA Healthcare Columbia, together with its subsidiaries, operates hospitals and related health care 1.2
Corp. entities. The company currently operates general, acute care hospitals that offer a full
range of services. Columbia's facilities are primarily located in urban areas in the
United States.
Trump Atlantic City Trump Atlantic City owns and operates the Trump Taj Mahal, the Trump Plaza and the 1.2
Associates/Funding Inc. Trump World's Fair hotel-casinos, all located on the boardwalk in Atlantic City, New
Jersey. These bonds are secured by mortgages on the properties.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
PORTFOLIO INFORMATION (concluded)
As of June 30, 1999
Credit Profile* Percent of
S&P Rating/Moody's Rating Market Value
BBB/Baa 4.0%
BB/Ba 30.4
B/B 56.1
CCC/Caa 5.2
Not Rated 4.3
[FN]
*In cases when bonds are rated differently by Standard & Poor's
Corporation and Moody's Investors Service, Inc., bonds are
categorized according to the higher of the two ratings.
Percent of
Five Largest Industries Net Assets
Energy 8.0%
Health Services 6.1
Cable--International 5.1
Transportation 5.0
Cable--Domestic 4.8
Geographic Profile Percent of
Top Five Foreign Countries* Net Assets
Brazil 5.5%
Argentina 3.6
Mexico 3.1
Canada 2.6
Indonesia 2.1
[FN]
*All holdings are denominated in US dollars.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.50% and an account
maintenance fee of 0.25%. These classes of shares automatically
convert to Class D Shares after approximately 10 years. (There is no
initial sales charge for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results
<CAPTION>
Ten Year/ Standardized
12 Month 3 Month Since Inception 30-day Yield
Total Return Total Return Total Return As of 6/30/99
<S> <C> <C> <C> <C>
High Income Portfolio Class A Shares* -2.40% +1.05% +171.84% 10.54%
High Income Portfolio Class B Shares* -3.12 +1.00 +152.13 10.19
High Income Portfolio Class C Shares* -3.17 +0.84 + 42.50 10.14
High Income Portfolio Class D Shares* -2.63 +1.13 + 46.31 10.28
Merrill Lynch High Yield USCorporates, Cash Pay Index** +0.94 +0.67 +175.20/+59.36 --
CS First Boston Global High Yield Index** -0.85 +1.16 +170.62/+53.54 --
Ten-Year US Treasury Securities*** +0.66 -3.36 +112.34/+46.89 --
<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/since inception periods are ten years for Class
A & Class B Shares and from 10/21/94 for Class C & Class D Shares.
**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 US Corporates,
Cash Pay Index are ten years and from 10/21/94, respectively. Ten
year/since inception total returns for CS First Boston Global High
Yield Index are ten years and from 10/31/94, respectively.
***Ten year/since inception total returns are ten years and from
10/31/94, respectively.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/99 - 2.40% - 6.31%
Five Years Ended 6/30/99 + 8.21 + 7.33
Ten Years Ended 6/30/99 +10.52 +10.07
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 -3.12% -6.56%
Five Years Ended 6/30/99 +7.42 +7.42
Ten Years Ended 6/30/99 +9.69 +9.69
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced
to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/99 -3.17% -4.03%
Inception (10/21/94)
through 6/30/99 +7.84 +7.84
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/99 -2.63% -6.52%
Inception (10/21/94)
through 6/30/99 +8.45 +7.51
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
<S> <S> <S> <C> <S> <C> <C>
Bonds
Aerospace--1.1% B- B3 $ 20,000,000 Fairchild Corporation, 10.75%
due 4/15/2009 $ 20,000,000 $ 19,700,000
B+ B1 15,000,000 Hexcel Corp., 9.75% due 1/15/2009 15,000,000 14,925,000
B+ B1 25,000,000 Kitty Hawk, Inc., 9.95% due 11/15/2004 25,033,750 25,125,000
-------------- --------------
60,033,750 59,750,000
Airlines--1.3% Piedmont Aviation, Inc.:
B+ Ba2 1,985,000 Series E, 10.30% due 3/28/2007 1,855,291 2,119,603
B+ Ba2 1,950,000 Series F, 10.35% due 3/28/2011 1,999,718 2,129,497
BB Ba2 1,500,000 Series H, 10% due 11/08/2012 1,493,250 1,600,800
B+ Ba2 1,304,000 Series J, 10.05% due 5/13/2005 1,181,685 1,355,808
BB Ba2 1,116,000 Series J, 10.10% due 5/13/2007 999,021 1,180,237
BB Ba2 3,767,000 Series J, 10.10% due 5/13/2009 3,327,542 4,018,975
BB Ba2 2,710,000 Series J, 10.15% due 5/13/2011 2,366,806 2,922,193
B+ Ba2 2,226,000 Series K, 10% due 5/13/2004 2,026,506 2,313,593
B+ Ba2 2,666,000 Series K, 10.10% due 5/13/2008 2,374,020 2,832,438
B+ Ba2 2,550,000 Series K, 10.15% due 5/13/2010 2,251,293 2,739,669
USAir Inc.:
B B1 15,000,000 9.625% due 2/01/2001 12,109,906 15,308,850
B+ Ba2 1,092,000 Series 88F, 10.70% due 1/01/2003 984,165 1,148,227
B+ Ba2 1,092,000 Series 88G, 10.70% due 1/01/2003 984,165 1,148,227
B+ Ba2 1,092,000 Series 88H, 10.70% due 1/01/2003 984,165 1,148,227
B+ Ba2 1,092,000 Series 88I, 10.70% due 1/01/2003 984,165 1,148,227
BB Ba2 4,332,085 Series 89A1, 9.33% due 1/01/2006++ 4,098,025 4,619,887
BB Ba2 15,000,000 Series 93A3, 10.375% due 3/01/2013 14,768,125 15,922,500
BB Ba2 1,432,000 Series A, 10.70% due 1/15/2007 1,525,137 1,562,727
BB Ba2 1,815,000 Series C, 10.70% due 1/15/2007 1,933,048 1,980,691
BB Ba2 1,107,000 Series E, 10.70% due 1/15/2007 1,159,472 1,208,058
-------------- --------------
59,405,505 68,408,434
Automotive--0.7% Venture Holdings Trust:
B B2 25,000,000 11% due 6/01/2007 25,000,000 25,375,000
B- B3 10,000,000 12% due 6/01/2009 10,000,000 10,125,000
-------------- --------------
35,000,000 35,500,000
Broadcasting-- NR* NR* 4,686,000 Acme Intermediate Holdings/Finance, 0/12%
Radio & due 9/30/2005 (f) 3,173,312 3,069,330
Television--2.6% B- B3 3,000,000 Acme Television/Finance, 10.976% due
9/30/2004 (f) 2,616,059 2,475,000
B- B3 15,000,000 LIN Holdings Corp., 10.299% due
3/01/2008 (f) 10,265,595 9,975,000
B- B2 25,000,000 LIN Television Corporation, 8.375% due
3/01/2008 24,941,500 24,000,000
B- B3 23,022,000 SFX Broadcasting Inc., 10.75% due
5/15/2006 22,940,750 25,036,425
B- B3 15,000,000 Salem Communications Corp., 9.50% due
10/01/2007 15,160,625 15,825,000
Sinclair Broadcasting Group Inc.:
B B2 45,000,000 10% due 9/30/2005 45,343,269 45,900,000
B B2 15,000,000 8.75% due 12/15/2007 14,941,200 14,625,000
-------------- --------------
139,382,310 140,905,755
Building Nortek Inc.:
Materials-- B- B3 14,550,000 9.875% due 3/01/2004 14,409,525 14,841,000
0.5% B+ B1 9,000,000 9.25% due 3/15/2007 8,947,980 9,045,000
-------------- --------------
23,357,505 23,886,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Cost Value
<S> <S> <S> <C> <S> <C> <C>
Bonds (continued)
Cable-- NR* B1 $ 10,000,000 Adelphia Communications, 7.875% due
Domestic--4.5% 5/01/2009 $ 10,000,000 $ 9,325,000
American Telecasting Inc. (f):
CCC Ca 26,664,305 22.395% due 6/15/2004 18,929,175 28,130,842
CCC Ca 5,328,724 26.322% due 8/15/2005 2,582,987 5,088,931
BB- B1 8,750,000 CSC Holdings Inc., 9.875% due 5/15/2006 8,857,500 9,362,500
Century Communications Corporation:
BB- Ba3 30,000,000 9.75% due 2/15/2002 30,644,062 30,675,000
BB- Ba3 45,000,000 9.50% due 3/01/2005 44,542,812 46,462,500
B+ B2 15,000,000 Charter Communications Holding LLC, 8.625%
due 4/01/2009 14,954,250 14,475,000
B B2 30,000,000 Intermedia Capital Partners LP, 11.25% due
8/01/2006 30,002,500 33,525,000
BB- B1 10,000,000 Lenfest Communications, Inc., 8.25% due
2/15/2008 9,972,600 10,212,500
B+ B1 50,000,000 Olympus Communications LP/Capital Corp.,
10.625% due 11/15/2006 50,282,500 54,250,000
-------------- --------------
220,768,386 241,507,273
Cable-- Australis Media Ltd.:
International-- NR* NR* 1,077,816 14.398% due 11/01/2002 (f) 899,335 619,744
4.6% D NR* 79,117,000 1.75%/15.75% due 5/15/2003 (a)(e) 56,318,088 2,769,095
D NR* 1,353,490 1.75%/15.75% due 5/15/2003 (e) 751,091 20,302
BB Ba3 25,000,000 Cablevision SA, 13.75% due 5/01/2009 25,000,000 22,812,500
B- B2 50,000,000 Comcast UK Cable Partners Ltd., 11.231%
due 11/15/2007 (f) 42,963,515 45,000,000
B- B3 25,000,000 Diamond Cable Communications PLC, 10.87%
due 2/15/2007 (f) 18,856,595 19,375,000
B- B3 30,000,000 International Cabletel, Inc., 12.034%
due 2/01/2006 (f) 24,356,980 26,325,000
D Caa3 33,500,000 Supercanal Holdings SA, 11.50% due
5/15/2005 29,896,250 18,006,250
B+ B1 50,000,000 TeleWest Communications PLC, 11.024% due
10/01/2007 (f) 43,628,514 44,500,000
B B3 107,500,000 United International Holdings, Inc.,
10.75% due 2/15/2008 (f) 73,526,853 71,218,750
-------------- --------------
316,197,221 250,646,641
Capital Goods-- International Wire Group, Inc.:
1.0% B- B3 15,000,000 11.75% due 6/01/2005 14,986,250 15,637,500
B- B3 15,000,000 Series B, 11.75% due 6/01/2005 16,312,500 15,637,500
B- B3 25,250,000 Trench Electric & Trench Inc., 10.25% due
12/15/2007 25,315,625 23,735,000
-------------- --------------
56,614,375 55,010,000
Chemicals-- ISP Holdings Inc.:
0.9% BB- Ba3 19,502,000 9.75% due 2/15/2002 19,502,000 19,940,795
BB- Ba3 10,000,000 9% due 10/15/2003 9,972,100 10,000,000
BB Ba3 20,000,000 Lyondell Chemical Company, 9.625% due
5/01/2007 20,038,750 20,650,000
-------------- --------------
49,512,850 50,590,795
Child Care-- B- B3 20,000,000 Kindercare Learning Centers, Inc.,
0.4% 9.50% due 2/15/2009 19,924,375 19,100,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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>
Computer B Ba3 $ 40,000,000 Advanced Micro Devices, Inc., 11% due
Services-- 8/01/2003 $ 42,330,000 $ 40,400,000
Electronics-- CCC Caa1 40,500,000 Dictaphone Corp., 11.75% due 8/01/2005 40,114,375 23,287,500
2.3% B- B3 25,000,000 PSINet, Inc., 10% due 2/15/2005 25,135,000 25,250,000
NR* NR* 11,000,000 Splitrock Services Inc., 11.75%
due 7/15/2008 10,840,500 10,340,000
B- B2 30,000,000 Zilog Inc., 9.50% due 3/01/2005 28,266,250 26,550,000
-------------- --------------
146,686,125 125,827,500
Conglomerates-- BB Ba3 16,900,000 Dine, SA de CV, 8.75% due 10/15/2007 16,540,200 14,512,875
2.2% B- B3 25,000,000 Eagle-Picher Industries, 9.375% due
3/01/2008 25,109,540 23,875,000
B+ B1 26,000,000 Sequa Corp., 9.375% due 12/15/2003 25,146,562 26,390,000
B+ NR* 60,000,000 Voto-Votorantim O/S Trading, 8.50% due
6/27/2005 58,884,775 52,950,000
-------------- --------------
125,681,077 117,727,875
Consumer B- B3 8,500,000 Albecca Inc., 10.75% due 8/15/2008 7,905,000 6,970,000
Products--0.3% B B3 13,000,000 Corning Consumer Products, 9.625% due
5/01/2008 12,432,431 11,277,500
-------------- --------------
20,337,431 18,247,500
Consumer B- Caa2 8,000,000 AP Holdings Inc., 11.164% due
Services--0.3% 3/15/2008 (f) 5,359,411 4,400,000
B- Caa1 15,000,000 Apcoa Inc., 9.25% due 3/15/2008 15,012,500 13,593,750
-------------- --------------
20,371,911 17,993,750
Convertible NR* Caa3 6,195,000 Builders Transport, 8%
Bonds**--0.1% due 8/15/2005 (2) 3,614,250 46,462
BB+ Ba3 6,375,000 Quantum Health Resources, Inc., 4.75% due
10/01/2000 (1) 5,956,562 5,434,687
-------------- --------------
9,570,812 5,481,149
Energy--7.8% B B3 20,000,000 Benton Oil & Gas Co., 9.375% due
11/01/2007 20,097,687 13,125,000
Chesapeake Energy Corp.:
B B3 25,000,000 9.625% due 5/01/2005 25,056,250 23,500,000
B B3 4,400,000 9.125% due 4/15/2006 4,388,100 3,872,000
B+ B2 15,000,000 Clark R & M, Inc., 8.875% due 11/15/2007 14,892,150 13,256,250
B+ B3 25,000,000 Clark USA Inc., 10.875% due 12/01/2005 26,515,000 21,562,500
BBB- Ba3 20,000,000 Compania Naviera Perez Companc
S.A.C.F.I.M.F.A., 9% due 1/30/2004 21,053,750 18,600,000
B B2 10,000,000 Cross Timbers Oil Company, 8.75% due
11/01/2009 10,000,000 9,450,000
B B2 15,000,000 Energy Corp. of America, 9.50%
due 5/15/2007 15,000,000 13,800,000
CCC- Caa1 22,000,000 KCS Energy Inc., 11% due 1/15/2003 22,723,750 13,970,000
BB- B1 25,000,000 Ocean Energy Inc., 8.375% due 7/01/2008 24,788,350 24,375,000
B- B3 27,000,000 Ocean Rig Norway AS, 10.25% due 6/01/2008 26,990,000 19,575,000
BBB- Baa3 25,781,250 Oleoducto Centrale SA, 9.35%
due 9/01/2005++ 25,772,656 23,525,391
B+ B1 39,500,000 Parker Drilling Co., 9.75% due 11/15/2006 39,884,035 36,735,000
Petroleo Brasileiro SA:
NR* B2 15,000,000 10% due 10/17/2006 15,097,500 14,250,000
BB- B1 10,500,000 10% due 10/17/2006 10,395,312 9,555,000
BB- Ba3 30,000,000 RBF Finance Co., 11% due 3/15/2006 30,112,500 31,050,000
CCC- Caa2 15,000,000 Southwest Royalties Inc., 10.50% due
10/15/2004 14,160,000 7,125,000
BB- B1 30,000,000 Tesoro Petroleum Corp., 9% due 7/01/2008 29,828,700 29,325,000
D C 289,840,000 TransAmerican Energy Corp., 13% due
6/15/2002 280,205,538 35,143,100
NR* NR* 36,000,000 TransAmerican Refining Corporation,
13% due 12/15/2002 35,640,000 36,180,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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 Triton Energy Ltd./Corp.:
(concluded) B+ B1 $ 1,000,000 8.75% due 4/15/2002 $ 922,500 $ 980,000
B+ B1 14,000,000 9.25% due 4/15/2005 13,940,780 13,669,320
B- B3 14,500,000 United Refining Co., 10.75% due 6/15/2007 14,355,000 9,932,500
-------------- --------------
721,819,558 422,556,061
Entertainment-- CCC+ B3 27,495,000 AMF Bowling Worldwide Inc., 12.581% due
1.4% 3/15/2006 (f) 22,048,859 17,046,900
B+ B1 1,500,000 Intrawest Corp., 9.75% due 8/15/2008 1,476,615 1,518,750
B- B3 16,250,000 Premier Parks Inc., 10% due 4/01/2008 (f) 11,265,701 10,867,187
B B3 20,000,000 Regal Cinemas Inc., 9.50% due 6/01/2008 19,966,200 18,800,000
B- B3 15,000,000 Six Flags Entertainment, 8.875%
due 4/01/2006 15,000,000 15,075,000
B B1 10,000,000 Vail Resorts Inc., 8.75% due 5/15/2009 10,000,000 9,775,000
-------------- --------------
79,757,375 73,082,837
Financial CCC+ Caa3 20,000,000 Amresco Inc., 9.875% due 3/15/2005 20,087,500 15,400,000
Services--2.3% NR* ba1 40,000,000 Fuji JGB Investment LLC (Preferred),
9.87% (b)(d) 39,980,000 34,858,440
NR* ba1 30,000,000 IBJ Capital Co. LLC (Preferred),
8.79% (b)(d) 29,655,000 25,168,650
CCC- Caa3 9,000,000 PennCorp Financial Group, 9.25% due
12/15/2003 9,090,000 7,200,000
BB+ baa2 20,000,000 SB Treasury Company LLC, 9.40% (b)(d) 20,000,000 19,334,260
BB+ ba3 10,000,000 SIG Capital Trust I, 9.50% due 8/15/2027 10,000,000 7,525,000
B NR* 17,000,000 Veritas Capital Trust, 10% due 1/01/2028 17,290,000 13,642,500
-------------- --------------
146,102,500 123,128,850
Food & Chiquita Brands International Inc.:
Beverage--1.1% B+ B1 25,000,000 9.125% due 3/01/2004 24,585,625 25,375,000
B+ B1 20,000,000 10.25% due 11/01/2006 19,881,400 21,200,000
CCC Caa1 20,000,000 DGS International Finance Company
BV, 10% due 6/01/2007 20,068,200 14,550,000
-------------- --------------
64,535,225 61,125,000
Foreign B+ B2 12,500,000 Republic of Brazil, 10.125% due 5/15/2027 10,406,250 9,406,250
Government
Obligations--0.2%
Gaming--3.7% D Caa1 42,126,000 GB Property Funding Corp., 10.875% due
1/15/2004 38,250,620 25,591,545
BB+ Ba2 5,000,000 Harrah's Operating Co. Inc., 7.875% due
12/15/2005 5,000,000 4,825,000
Jazz Casino Co. LLC:
NR* NR* 42,231,321 5.927% due 11/15/2009++++ 21,658,169 26,711,311
NR* NR* 2,524,830 Contingent Notes, due 11/15/2009 (g) 0 0
BB+ Ba2 25,000,000 Park Place Entertainment, 7.875% due
12/15/2005 25,000,000 23,937,500
B+ B2 4,000,000 Station Casinos Inc., 9.75% due 4/15/2007 3,746,022 4,080,000
Trump Atlantic City Associates/Funding Inc.:
B B2 38,100,000 11.25% due 5/01/2006 36,838,438 34,099,500
B B2 32,900,000 11.25% due 5/01/2006 32,332,512 29,610,000
Venetian Casino/LV Sands:
B- B3 35,000,000 12.25% due 11/15/2004 34,775,000 35,175,000
CCC+ Caa1 17,500,000 10% due 11/15/2005 17,150,459 17,062,500
-------------- --------------
214,751,220 201,092,356
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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>
Health Services-- B- B3 $ 8,800,000 ALARIS Medical Systems, Inc., 9.75% due
6.6% 12/01/2006 $ 8,994,312 $ 8,624,000
B+ Ba3 40,000,000 Beverly Enterprises Inc., 9% due
2/15/2006 39,119,175 39,600,000
Columbia/HCA Healthcare Corp.:
BB+ Ba2 1,000,000 6.91% due 6/15/2005 940,800 911,980
BB+ Ba2 8,460,000 8.85% due 1/01/2007 8,980,882 8,215,675
BB+ Ba2 10,000,000 7.25% due 5/20/2008 9,393,300 9,062,700
BB+ Ba2 14,150,000 8.70% due 2/10/2010 14,502,652 13,593,622
BB+ Ba2 17,640,000 9% due 12/15/2014 18,400,090 16,719,368
BB+ Ba2 2,500,000 7.50% due 12/15/2023 2,258,750 2,040,600
BB+ Ba2 15,000,000 8.36% due 4/15/2024 14,614,910 14,111,400
B- B2 37,250,000 Extendicare Health Services, 9.35% due
12/15/2007 37,180,000 27,378,750
B+ ba3 36,091,000 Fresenius Medical Capital Trust I, 9% due
12/01/2006 36,993,597 38,797,825
B+ ba3 40,000,000 Fresenius Medical Capital Trust II,
7.875% due 2/01/2008 40,060,000 37,300,000
B- B3 25,000,000 Kinetic Concepts, Inc., 9.625%
due 11/01/2007 25,153,750 22,375,000
B- Caa1 50,000,000 Magellan Health Services, 9% due
2/15/2008 49,996,875 43,000,000
Mariner Post--Acute Network:
CC C 49,000,000 9.50% due 11/01/2007 48,781,460 9,555,000
CC C 12,750,000 18.346% due 11/01/2007 (f) 6,132,614 1,530,000
BBB Ba2 5,700,000 PharMerica, Inc., 8.375% due 4/01/2008 5,747,250 5,814,000
Tenet Healthcare Corp.:
BB- Ba3 30,000,000 8.625% due 1/15/2007 29,968,200 29,250,000
BB- Ba3 30,000,000 8.125% due 12/01/2008 29,883,600 28,500,000
-------------- --------------
427,102,217 356,379,920
Home Builders-- BB- B1 32,000,000 US Home Corp., 8.88% due 8/15/2007 32,017,500 30,720,000
0.6%
Hotels--1.2% HMH Properties, Inc.:
BB Ba2 3,000,000 7.875% due 8/01/2005 2,999,160 2,850,000
BB Ba2 40,000,000 7.875% due 8/01/2008 39,740,800 37,100,000
BB Ba2 9,000,000 8.45% due 12/01/2008 8,969,760 8,595,000
Signature Resorts, Inc.:
BB- B2 10,000,000 9.25% due 5/15/2006 10,000,000 9,700,000
B B3 5,000,000 9.75% due 10/01/2007 5,000,000 4,375,000
-------------- --------------
66,709,720 62,620,000
Independent The AES Corporation:
Power B+ Ba3 30,000,000 10.25% due 7/15/2006 30,000,000 30,825,000
Producers--2.7% B+ Ba3 15,000,000 8.375% due 8/15/2007 14,929,500 14,175,000
BB+ Ba2 30,000,000 CE Casecnan Water & Energy Co., 11.45%
due 11/15/2005 30,000,000 28,725,000
BB Ba2 45,000,000 Calpine Corporation, 8.75% due 7/15/2007 45,209,972 44,550,000
BB Ba1 10,000,000 ESI Tractebel Acquisition Corp.,
7.99% due 12/30/2011 10,000,000 9,539,740
BB Ba2 25,000,000 Monterrey Power, SA de CV, 9.625% due
11/15/2009 24,977,680 20,187,500
-------------- --------------
155,117,152 148,002,240
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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>
Industrial CCC+ Caa1 $ 9,500,000 Thermadyne Holdings Corp., 12.426% due
Services--0.3% 6/01/2008 (f) $ 5,935,829 $ 4,560,000
CCC+ B3 12,000,000 Thermadyne Manufacturing, 9.875% due
6/01/2008 11,905,680 10,620,000
-------------- --------------
17,841,509 15,180,000
Industrials-- CCC B3 3,100,000 American Skiing Co., 12% due 7/15/2006 3,235,625 2,371,500
0.8% B B1 16,000,000 Energis PLC, 9.75% due 6/15/2009 15,939,360 16,280,000
BB+ Ba3 25,000,000 Protection One Alarm Monitoring, 8.125%
due 1/15/2009 24,900,000 23,281,250
-------------- --------------
44,074,985 41,932,750
Media & NR* NR* 45,500,000 Comtel Brasileira Ltd., 10.75% due
Communications-- 9/26/2004 44,682,550 40,608,750
International-- Globo Comunicacoes e Participacoes, Ltd.:
4.0% B+ B2 35,000,000 10.50% due 12/20/2006 35,172,400 25,287,500
B+ B2 10,000,000 10.625% due 12/05/2008 9,992,000 7,125,000
BB Ba2 40,000,000 Grupo Televisa, SA de CV, 11.875%
due 5/15/2006 43,002,188 41,200,000
B+ B2 31,750,000 Impsat Corp., 12.375% due 6/15/2008 30,953,750 26,193,750
B+ B2 40,000,000 Orion Network Systems, Inc., 15.877% due
1/15/2007 (f) 24,074,189 22,000,000
Philippine Long Distance Telephone
Company:
BB+ Ba2 9,600,000 10.625% due 6/02/2004 9,988,000 9,933,197
BB+ Ba2 8,500,000 9.875% due 8/01/2005 8,512,500 8,369,006
BBB- Ba3 35,000,000 Telefonica de Argentina SA, 11.875% due
11/01/2004 33,862,675 35,700,000
-------------- --------------
240,240,252 216,417,203
Metals & B- Caa1 20,000,000 AEI Resources Inc., 11.50% due 12/15/2006 20,000,000 19,650,000
Mining--3.0% BB Ba2 15,000,000 Great Central Mines Ltd., 8.875%
due 4/01/2008 15,000,000 14,325,000
CCC+ B3 40,000,000 Kaiser Aluminum & Chemical Corp., 12.75%
due 2/01/2003 41,263,125 40,400,000
B B2 20,000,000 Metals USA Inc., 8.625% due 2/15/2008 19,900,000 18,700,000
BB- B1 25,000,000 Murrin Murrin Holdings Property,
9.375% due 8/31/2007 24,845,000 22,250,000
B B3 20,000,000 Ormet Corporation, 11% due 8/15/2008 19,996,250 18,900,000
B B2 30,000,000 P & L Coal Holdings Corp., 9.625%
due 5/15/2008 29,914,200 29,925,000
-------------- --------------
170,918,575 164,150,000
Packaging--0.2% B+ Ba3 10,000,000 Vicap SA, 11.375% due 5/15/2007 9,947,000 9,325,000
Paper & Forest CCC+ caa 21,000,000 APP Financial II Mauritius Ltd., 12% (b) 18,425,000 13,387,500
Products--3.5% CCC+ Caa1 40,000,000 APP International Finance, 11.75% due
10/01/2005 39,716,250 30,722,238
B B3 30,000,000 Ainsworth Lumber Company, 12.50% due
7/15/2007++++ 29,402,648 33,675,000
Container Corporation of America:
B- B2 15,420,000 9.75% due 4/01/2003 15,433,400 15,959,700
B- B2 13,000,000 11.25% due 5/01/2004 13,000,000 13,487,500
B Caa1 60,000,000 Doman Industries Limited, 8.75%
due 3/15/2004 57,006,250 37,800,000
CCC+ Caa1 14,500,000 Indah Kiat International Finance,
12.50% due 6/15/2006 14,572,500 11,165,000
CCC+ Caa1 10,000,000 Pindo Deli Financial Mauritius,
10.75% due 10/01/2007 9,969,637 6,975,000
CCC+ Caa1 32,500,000 Tjiwi Kimia Finance Mauritius, 10% due
8/01/2004 30,977,000 23,156,250
-------------- --------------
228,502,685 186,328,188
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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>
Product AmeriServe Food Distributors:
Distribution-- B+ B1 $ 14,000,000 8.875% due 10/15/2006 $ 14,000,000 $ 12,950,000
1.2% B- B3 42,000,000 10.125% due 7/15/2007 42,000,000 35,910,000
CCC+ Caa1 25,000,000 US Office Products Co., 9.75%
due 6/15/2008 24,920,100 16,750,000
-------------- --------------
80,920,100 65,610,000
Publishing & BB- Ba3 20,000,000 Hollinger International Publishing,
Printing--0.9% Inc., 9.25% due 2/01/2006 19,455,312 20,400,000
BB- Ba3 7,250,000 Primedia, Inc., 7.625% due 4/01/2008 7,208,312 6,960,000
BB- B1 20,000,000 World Color Press Inc., 7.75%
due 2/15/2009 19,660,200 18,900,000
-------------- --------------
46,323,824 46,260,000
Real Estate BB- Ba3 30,000,000 Forest City Enterprises Inc., 8.50%
- --0.5% due 3/15/2008 30,213,750 28,650,000
Restaurants-- BB- NR* 27,000,000 FM 1993A Corp., 9.75% due 11/01/2003 26,216,200 27,776,250
0.6% D Ca 15,000,000 Planet Hollywood International, 12% due
4/01/2005 15,000,000 3,225,000
-------------- --------------
41,216,200 31,001,250
Specialty NR* NR* 1,609,000 Cumberland Farms, Inc., 10.50% due
Retailing--0.0% 10/01/2003 1,564,095 1,592,910
Steel--4.7% BB- Ba2 25,000,000 AK Steel Corp., 9.125% due 12/15/2006 25,056,250 25,875,000
NR* B2 93,000,000 CSN Iron SA, 9.125% due 6/01/2007 87,788,750 71,145,000
BB- B1 20,000,000 Hylsa, SA de CV, 9.25% due 9/15/2007 19,872,930 15,950,000
B- Caa2 20,000,000 Renco Steel Holdings, 10.875%
due 2/01/2005 20,045,700 17,900,000
B+ B2 25,000,000 WCI Steel Inc., 10% due 12/01/2004 25,000,000 25,562,500
B B3 25,000,000 WHX Corp., 10.50% due 4/15/2005 25,000,000 23,687,500
Weirton Steel Corp.:
B B2 3,000,000 11.375% due 7/01/2004 3,247,500 2,940,000
B B2 23,000,000 10.75% due 6/01/2005 22,413,750 21,850,000
BB- B2 49,000,000 Wheeling Pittsburgh Corp., 9.25% due
11/15/2007 48,799,465 46,795,000
-------------- --------------
277,224,345 251,705,000
Supermarkets-- Pueblo Xtra International Inc.:
0.4% B- B3 21,075,000 9.50% due 8/01/2003 19,460,250 20,706,187
B- B3 3,000,000 Series C, 9.50% due 8/01/2003 2,786,368 2,782,500
-------------- --------------
22,246,618 23,488,687
Telephony-- B- Caa1 5,500,000 Esprit Telecom Group PLC, 10.875% due
Competitive 6/15/2008 5,385,000 5,747,500
Local Exchange B B2 25,000,000 Intermedia Communications Inc., 8.60% due
Carriers--2.8% 6/01/2008 24,781,875 23,125,000
B B3 25,000,000 Level 3 Communications, 9.125%
due 5/01/2008 24,710,140 24,687,500
B B3 3,000,000 Metronet Communications, 12.042% due
6/15/2008 (f) 1,742,059 2,220,000
B B3 43,000,000 Nextlink Communications Inc., 9% due
3/15/2008 42,913,140 40,635,000
RSL Communications PLC:
B- B2 22,000,000 9.125% due 3/01/2008 22,000,000 20,405,000
B- B2 60,000,000 10.703% due 3/01/2008 (f) 40,140,239 36,000,000
-------------- --------------
161,672,453 152,820,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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>
Textiles--0.9% B B3 $ 25,000,000 Galey & Lord, Inc., 9.125%
due 3/01/2008 $ 24,718,750 $ 16,500,000
B B2 18,750,000 Polymer Group Inc., 8.75% due
3/01/2008 18,750,000 18,093,750
Polysindo International Finance
Company BV:
D Caa3 45,600,000 11.375% due 6/15/2006 44,674,000 11,514,000
D Caa3 14,250,000 9.375% due 7/30/2007 9,930,000 3,598,125
-------------- --------------
98,072,750 49,705,875
Transportation-- BB- NR* 42,000,000 Autopistas del Sol SA, 10.25%
5.0% due 8/01/2009 41,600,000 31,605,000
CCC Caa1 20,000,000 Cathay International Ltd., 13%
due 4/15/2008 20,000,000 7,700,000
BB- Ba3 25,000,000 Eletson Holdings, Inc., 9.25%
due 11/15/2003 24,472,500 23,593,750
GS Superhighway Holdings:
BB Ba3 43,000,000 9.875% due 8/15/2004 37,956,250 22,037,500
BB Ba3 49,000,000 10.25% due 8/15/2007 47,933,550 25,112,500
B+ B1 20,000,000 Gearbulk Holding Ltd., 11.25%
due 12/01/2004 20,518,750 20,400,000
CCC- Caa2 40,000,000 Hvide Marine, Inc., 8.375% due 2/15/2008 39,872,500 18,200,000
B+ B2 45,000,000 TFM, SA de CV, 12.564% due 6/15/2009 (f) 30,315,296 27,000,000
Transportacion Maritima Mexicana, SA de CV:
BB- Ba3 23,000,000 9.25% due 5/15/2003 19,642,750 17,480,000
BB- Ba3 28,800,000 10% due 11/15/2006 28,398,500 21,456,000
B- B2 55,606,000 Transtar Holdings LP, 11.759% due
12/15/2003 (f) 53,059,000 55,327,970
-------------- --------------
363,769,096 269,912,720
Utilities--4.5% NR* NR* 20,000,000 CIA Saneamento Basico, 10% due 7/28/2005 20,000,000 15,150,000
BB- Ba2 10,000,000 Empresa Electricidad del Norte,
10.50% due 6/15/2005 10,000,000 6,550,000
B+ B2 70,000,000 Espirito Santo-Escelsa, 10% due 7/15/2007 69,476,250 53,025,000
BB NR* 37,000,000 Inversora de Electrica, 9% due 9/16/2004 36,895,000 25,900,000
BBB- Ba3 35,000,000 Metrogas SA, 12% due 8/15/2000 35,031,875 35,875,000
NR* NR* 14,984,717 Sunflower Electric Power Corp., 8% due
12/31/2016 9,829,550 9,665,143
BBB- Baa3 41,064,864 TransGas de Occidente SA, 9.79% due
11/01/2010++ 41,138,194 34,512,390
Tucson Electric & Power Co.++:
NR* NR* 34,947,782 10.21% due 1/01/2009 33,168,609 37,885,143
NR* NR* 21,759,590 10.732% due 1/01/2013 20,606,895 24,125,945
-------------- --------------
276,146,373 242,688,621
Waste BB Ba3 25,000,000 Allied Waste North America, 7.625% due
Management-- 1/01/2006 25,000,000 23,406,250
1.0% NR* Ca 23,700,000 Mid-American Waste Systems, Inc.,
12.25% due 2/15/2003 7,189,506 829,500
B+ B2 29,000,000 Safety-Kleen Services, 9.25% due 6/01/2008 29,000,000 29,870,000
-------------- --------------
61,189,506 54,105,750
Wireless B- B2 13,000,000 Cencall Communications Corporation,
Communications-- 10.125% due 1/15/2004 13,000,000 13,195,000
Domestic BBB- A2 4,000,000 Comcast Cellular Holdings, 9.50%
Paging & due 5/01/2007 4,120,000 4,495,000
Cellular--2.9% CCC+ B3 10,000,000 Metrocall Inc., 9.75% due 11/01/2007 10,000,000 7,300,000
B- B2 25,000,000 Nextel Communications, Inc., 9.75% due
8/15/2004 21,293,590 25,375,000
CCC+ B3 40,000,000 Nextel Partners Inc., 14% due
2/01/2009 (f) 21,505,671 23,600,000
NR* NR* 29,000,000 Pagemart Wireless Inc., 11.25% due
2/01/2008 (f) 19,584,589 11,745,000
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<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>
Wireless Paging Network, Inc.:
Communications-- B B2 $ 19,500,000 10.125% due 8/01/2007 $ 12,601,875 $ 14,235,000
Domestic B B2 50,500,000 10% due 10/15/2008 50,256,250 34,845,000
Paging & NR* NR* 3,250,000 Pinnacle Holdings Inc., 10% due
Cellular 3/15/2008 (f) 2,263,067 1,876,875
(concluded) NR* NR* 5,000,000 SBA Communications Corp., 12.308% due
3/01/2008 (f) 3,192,675 2,900,000
B- B3 15,000,000 Western Wireless Corp., 10.50%
due 2/01/2007 15,062,500 15,975,000
-------------- --------------
172,880,217 155,541,875
Wireless B B1 11,000,000 CTI Holdings SA, 11.50% due 4/15/2008 (f) 7,198,222 5,362,500
Communications-- NR* B3 10,000,000 ClearNet Communications, 10.044% due
International 5/01/2009 (f) 6,246,241 5,750,000
Paging & B+ B3 56,472,000 Comunicacion Celular SA, 12.68% due
Cellular--3.3% 3/01/2005 (f) 46,453,513 34,236,150
CCC+ Caa1 23,500,000 Dolphin Telecom PLC, 14% due 5/15/2009 (f) 12,150,218 11,280,000
B- Caa1 46,000,000 McCaw International Ltd., 13.611% due
4/15/2007 (f) 31,011,208 29,440,000
B- Caa1 90,000,000 Millicom International Cellular, 13.39%
due 6/01/2006 (f) 70,141,022 67,050,000
B- Caa1 33,000,000 Nextel International Inc., 12.125% due
4/15/2008 (f) 21,120,205 16,665,000
CCC+ Caa1 18,000,000 Telesystem International Wireless Inc.,
13.151% due 6/30/2007 (f) 12,502,648 9,810,000
-------------- --------------
206,823,277 179,593,650
Total Investments in Bonds--90.9% 5,772,949,960 4,904,705,665
Shares
Held
Preferred Stocks
Cable--Domestic--0.3% 152,018 CSC Holdings Inc. (Series A)++++ 13,443,103 16,607,967
Cable--International--0.4% 21,028 NTL Incorporated (Series B)++++ 21,581,531 23,341,080
Conglomerates--0.3% 3,100 Eagle-Picher Industries (Series B) 17,686,590 16,197,500
Energy--0.0% TCR Holdings (Convertible):
465,596 (Class B) 27,936 27,936
256,078 (Class C) 14,340 14,340
675,114 (Class D) 35,781 35,781
1,396,787 (Class E) 87,998 87,998
-------------- --------------
166,055 166,055
Financial Services--0.6% 1,230,000 California Federal Bank (Series A) 30,815,000 32,287,500
Product Distribution--0.2% 281,010 Nebco Evans Holding Co.++++ 26,804,353 11,170,148
Publishing & Printing--0.8% Primedia, Inc.:
125,000 (Series D) 12,500,000 12,640,625
292,500 (Series H) 29,109,500 27,897,188
-------------- --------------
41,609,500 40,537,813
Telephony--Competitive 13,598 Intermedia Communications Inc. 13,929,899 13,394,030
Local Exchange Carriers--0.2% (Convertible)++++
Utilities--0.1% 3,260 Crown Castle International Corporation++++ 3,284,149 3,430,824
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares
Industries Held Issue Cost Value
Preferred Stocks (continued)
<S> <C> <S> <C> <C>
Wireless Communications-- Nextel Communications, Inc.++++:
Domestic Paging & Cellular--1.0% 24,495 (Series D) $ 27,574,910 $ 26,822,025
17,826 (Series E) 17,803,910 17,870,565
6,650 Rural Cellular Corp. (Series B)++++ 6,551,815 6,733,125
-------------- --------------
51,930,635 51,425,715
Total Investments in
Preferred Stocks--3.9% 221,250,815 208,558,632
Common Stocks
Cable--Domestic--0.0% 2,887 CS Wireless Systems, Inc. 20,336 4,331
Cable--International--0.1% 75,000 United International Holdings,
Inc. (Class A) 1,593,724 5,074,219
Energy--0.2% 914,710 Chi Energy Inc. (Series B) 14,284,292 12,348,585
Entertainment--0.4% 1,184,150 On Command Corporation 51,268,136 20,648,616
Gaming--0.1% 732,105 JCC Holding Company (Class A) 2,928,420 5,673,814
Wireless Communications-- 170,421 Nextel Communications, Inc. (Class A) 2,749,981 8,558,330
Domestic Paging & Cellular--0.2%
Total Investments in
Common Stocks--1.0% 72,844,889 52,307,895
Warrants (c)
Cable--Domestic--0.0% 25,000 People's Choice TV Corp. 140,353 12,625
Cable--International--0.0% 45,000 UIH Australia/Pacific 540,000 90,000
Computer Services-- 7,000 Splitrock Services Inc. 77,000 490,000
Electronics--0.0%
Energy--0.0% Chi Energy Inc.:
74,562 (Series B) 74,562 111,843
48,400 (Series C) 48,400 72,600
-------------- --------------
122,962 184,443
Entertainment--0.0% 385,661 On Command Corporation 3,033,504 2,362,174
Gaming--0.0% 113,386 Trump Castle Funding, Inc. 0 1
Media & Communications-- 15,000 Orion Network Systems, Inc. 174,450 157,500
International--0.0%
Wireless Communications-- 57,040 Page Mart Inc. 236,127 185,380
Domestic Paging & Cellular--0.0% 50,338 Wireless One Inc. 1,063,139 503
-------------- --------------
1,299,266 185,883
Wireless Communications-- 53,472 Comunicacion Celular SA 109,680 16,710
International Paging &
Cellular--0.0%
Total Investments in Warrants--0.0% 5,497,215 3,499,336
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face
Amount Issue Cost Value
<S> <S> <S> <C> <C>
Short-Term Securities
Commercial Paper***--2.3% $ 94,200,000 General Electric Capital Corp.,
5.75% due 7/01/1999 $ 94,200,000 $ 94,200,000
30,000,000 Metropolitan Life Insurance Company,
4.90% due 7/12/1999 29,955,083 29,955,083
Total Investments in
Short-Term Securities--2.3% 124,155,083 124,155,083
Total Investments--98.1% $6,196,697,962 5,293,226,611
==============
Other Assets Less Liabilities--1.9% 100,535,268
--------------
Net Assets--100.0% $5,393,761,879
==============
Net Asset Class A--Based on net assets of $874,174,683 and 126,982,201 shares outstanding $ 6.88
Value: ==============
Class B--Based on net assets of $3,719,293,683 and 540,131,746 shares outstanding $ 6.89
==============
Class C--Based on net assets of $414,756,292 and 60,194,183 shares outstanding $ 6.89
==============
Class D--Based on net assets of $385,537,221 and 55,968,567 shares outstanding $ 6.89
==============
<FN>
(a)Each $1,000 face amount contains one warrant of Australis Media Ltd.
(b)The security is a perpetual bond and has no definite maturity date.
(c)Warrants entitle the Portfolio to purchase a predetermined number
of shares of common stock and are non-income producing. The purchase
price and number of shares are subject to adjustment under certain
conditions until the expiration date.
(d)Floating rate note.
(e)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.
(f)Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Portfolio.
(g)Represents an obligation by Jazz Casino Co. LLC to pay a semi-
annual amount to the Portfolio through 11/15/2009. The payments are
based upon varying interest rates and the amounts, which may be paid-
in-kind, are contingent upon the earnings before income taxes,
depreciation and amortization of Jazz Casino Co. LLC on a fiscal
year basis.
++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 is traded on a discount basis; the interest
rates shown reflect the discount rates paid at the time of purchase
by the Portfolio.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
June 30, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Christopher G. Ayoub, Senior Vice President
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President and Treasurer
Ira P. Shapiro, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
INVESTMENT GRADE
PORTFOLIO &
INTERMEDIATE
TERM PORTFOLIO
Merrill Lynch
Corporate Bond Fund, Inc.
FUND LOGO
Quarterly Report
June 30, 1999
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject
to change.
Merrill Lynch
Corporate Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
Investment Grade Portfolio & Intermediate Term Portfolio
TO OUR SHAREHOLDERS
During the three-month period ended June 30, 1999, the fixed-income
markets remained very volatile as interest rates moved sharply
higher. For example, the yield on the 30-year Treasury bond ranged
from a low of 5.45% to a high of 6.17% during the June quarter.
Investor expectations that the Federal Reserve Board would move to
tighten monetary policy in the face of strong economic growth around
the world led to the rise in Treasury yields. US gross domestic
product gained a stronger-than-expected 4.3%, spurred on by consumer
spending, which jumped 6.7%. Consumers benefited from low
unemployment rates and the wealth effect generated from a booming
stock market. Overseas, Asian countries at the heart of the crises
in 1998 showed the beginnings of recovery.
This global recovery led to fears of a rekindling of inflation.
Commodities, such as copper, gained in price. More importantly, the
price of oil surged, spurred on mainly by an agreement by the OPEC
countries to limit production, but also on expectations of increased
demand by recovering economies. While the reported producer price
index (PPI) for April showed only a 0.1% increase (excluding food
and energy), the core consumer price index (CPI) rose a greater-than-
expected 0.4%. Beyond the gain in interest rates, the market
environment was influenced by a flight from quality. This is in
stark contrast to the flight to quality trades we saw in the third
quarter of last year. Although we expected the Federal Reserve Board
to tighten monetary policy slightly, our inflation outlook does not
point to a series of interest rate increases. The May CPI jumped
0.7%, well above expectations and the largest increase since April
1989. As expected, the Federal Reserve Board raised interest rates
25 basis points (0.25%) at its Federal Open Market Committee meeting
on June 30, 1999.
Portfolio Strategy
Investment Grade Portfolio
Our investment strategy for the Investment Grade Portfolio can best
be characterized as cautiously optimistic. With the trend toward
higher interest rates during the June quarter, we maintained a
slightly lower duration (0.05 year--0.15 year) than the unmanaged
benchmark Merrill Lynch Corporate Master Index for much of the
period. Given the negative investor sentiment, we raised our
expectations for the trading band for the 30-year US Treasury bond
yields to the 5.75%--6.25% range. Once yields reached the middle of
this range, we extended the Portfolio's duration to match that of
the Index by the end of the June quarter. We believed that the
foundation for a slowdown in the economy had already been laid given
the higher prevailing interest rates and the potential negative
impact of recent stock market volatility on consumer spending.
Consistent with this strategy, we continued to seek out higher-
coupon issues. We also remained committed to the bigger, more liquid
corporate bonds. We have kept our Treasury holdings to a minimum and
expect to continue to do so as we focus on enhancing the Portfolio's
income stream. Furthermore, we believe that productivity
enhancements and corporate profitability should be sufficient to
produce tighter long-term yield spreads of corporates relative to
Treasury issues, although spreads have and are likely to continue to
widen into the latter half of 1999.
During the June quarter, we began to add investments in energy-
related issuers, paper producers and chemical companies. We also
added asset-backed securities and commercial mortgage-backed
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
securities. These areas experienced improved fundamentals, yet still
retained very attractive yield advantages relative to US Treasury
issues. Although we intended to bring these areas up to a neutral
benchmark weighting, finding securities proved challenging as a
result of small supply and sporadic new issuance. During the latter
part of the period, we slightly reduced the Portfolio's position in
real estate investment trusts given the strong performance during
early 1999. However, we still have an overweighted position relative
to the benchmark since we believe this sector will continue to
perform well. The Portfolio's performance also benefited from a 5%
overweighting of mortgage-backed securities relative to the
benchmark, the top performing investment-grade sector during the
first half of 1999.
Intermediate Term Portfolio
With the trend toward higher interest rates during the June quarter,
we maintained a slightly lower duration (0.10 year--0.20 year) than
the unmanaged benchmark Merrill Lynch Corporate BBB 5-10 Year Index
for much of the period. Given the negative investor sentiment, we
raised our expectations for the trading band of ten-year US Treasury
note yields to the 5.5%--6.0% range. Once yields reached the middle
of this range, we extended the Portfolio's duration to match that of
the Index by the conclusion of the June quarter. We believed that
the foundation for a slowdown in the economy had already been laid
given the higher prevailing interest rates and the potential
negative impact of recent stock market volatility on consumer
spending.
Consistent with this strategy, we continued to seek out higher-
coupon issues. We also remained committed to the bigger, more liquid
corporate bonds. We have kept our Treasury holdings to a minimum and
expect to continue to do so as we focus on enhancing the Portfolio's
income stream. Furthermore, we believe that productivity
enhancements and corporate profitability should be sufficient to
sustain the overall trend toward tighter yield spreads over the long
term for corporate bonds relative to Treasury issues, although
spreads are likely to continue to widen through the second half of
1999.
During the June quarter, we began to add investments in energy-
related issuers, paper producers and chemical companies. We also
added commercial mortgage-backed securities. These areas experienced
improved fundamentals, yet still retained very attractive yield
advantages relative to US Treasury issues. Although we intended to
bring these areas up to a neutral benchmark weighting, finding
securities proved challenging as a result of small supply and
sporadic new issuance. During the latter part of the period, we
slightly reduced the Portfolio's position in real estate investment
trusts given the strong performance. However, we still have an
overweighted position relative to the benchmark since we believe
this sector will continue to perform well. We expect to continue to
seek out mortgage-backed securities that meet the ten-year final
maturity restrictions outlined in the Fund's prospectus, given our
belief that this sector is likely to continue to have favorable
return attributes.
In Conclusion
We appreciate your ongoing interest 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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Christopher G. Ayoub)
Christopher G. Ayoub
Senior Vice President and Portfolio Manager
August 10, 1999
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account maintenance
fees 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 "Recent Performance
Results" and "Average Annual Total Return" tables assume
reinvestment of all dividends and capital gains distributions at net
asset value on the payable date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each
class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results*
<CAPTION>
Ten Years/ Standardized
12 Month 3 Month Since Inception 30-day Yield
Total Return Total Return Total Return As of 6/30/99
<S> <C> <C> <C> <C>
Investment Grade Portfolio Class A Shares** +1.32% -1.70% +110.27% 6.27%
Investment Grade Portfolio Class B Shares** +0.55 -1.89 + 94.86 5.76
Investment Grade Portfolio Class C Shares** +0.59 -1.82 + 35.93 5.70
Investment Grade Portfolio Class D Shares** +1.16 -1.68 + 39.60 6.02
Intermediate Term Portfolio Class A Shares*** +2.73 -0.84 +110.94 6.04
Intermediate Term Portfolio Class B Shares*** +2.20 -0.97 + 47.39 5.58
Intermediate Term Portfolio Class C Shares*** +2.20 -0.97 + 37.04 5.57
Intermediate Term Portfolio Class D Shares*** +2.63 -0.87 + 39.80 5.94
<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/since inception periods are ten years for
Class A & Class B Shares and from 10/21/94 for Class C & Class D
Shares.
***The Portfolio's ten-year/since inception periods are ten years
for Class A Shares, from 11/13/92 for Class B Shares and from
10/21/94 for Class C & Class D Shares.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
PERFORMANCE DATA (concluded)
Average Annual Total Return--Investment Grade Portfolio
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/99 +1.32% -2.73%
Five Years Ended 6/30/99 +7.03 +6.16
Ten Years Ended 6/30/99 +7.72 +7.28
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 +0.55% -3.26%
Five Years Ended 6/30/99 +6.23 +6.23
Ten Years Ended 6/30/99 +6.90 +6.90
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 6/30/99 +0.59% -0.37%
Inception (10/21/94)
through 6/30/99 +6.76 +6.76
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/99 +1.16% -2.89%
Inception (10/21/94)
through 6/30/99 +7.37 +6.44
[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 6/30/99 +2.73% +1.70%
Five Years Ended 6/30/99 +7.07 +6.86
Ten Years Ended 6/30/99 +7.75 +7.64
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 6/30/99 +2.20% +1.24%
Five Years Ended 6/30/99 +6.52 +6.52
Inception (11/13/92)
through 6/30/99 +6.03 +6.03
[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 6/30/99 +2.20% +1.23%
Inception (10/21/94)
through 6/30/99 +6.95 +6.95
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced
to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Year Ended 6/30/99 +2.63% +1.60%
Inception (10/21/94)
through 6/30/99 +7.40 +7.17
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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 AAA Aaa $ 2,000,000 US Treasury Notes, 5.875% due
Obligations--0.1% 11/30/2001 $ 2,011,875 $ 2,012,500
Aerospace & A+ A2 5,000,000 United Technologies Corp.,
Defense--0.3% 6.50% due 6/01/2009 4,966,900 4,892,800
Asset-Backed Aames Mortgage Trust:
Securities**-- AAA Aaa 15,000,000 6.46% due 5/15/2028 14,995,313 14,714,550
8.4% AAA Aaa 4,000,000 5.912% due 9/15/2028 4,000,000 3,980,480
NR* Aaa 5,000,000 Bear Stearns Commercial Mortgage Securities,
1999-WF2-A2, 7.08% due 6/15/2009 4,999,351 4,998,438
NR* Baa2 2,000,000 Bistro Trust 1998-1000, 6.58% due 3/26/2001 1,999,920 1,946,040
AAA Aaa 10,000,000 Citibank Credit Card Master Trust I, 5.216%
due 12/10/2008 (a) 9,996,100 9,927,400
AAA Aaa 5,000,000 Contimortgage Home Equity Loan Trust, 5.84%
due 5/15/2016 4,998,955 4,965,950
AA+ Aa3 3,700,000 Continental Airlines, 7.056% due 9/15/2009 3,700,000 3,713,431
NR* Aaa 5,000,000 DLJ Commercial Mortgage Corp., 6.46% due
1/10/2009 5,074,219 4,835,500
AAA Aaa 760,000 EQCC Home Equity Loan Trust, 6.229% due
3/15/2013 766,086 758,913
A A3 9,000,000 First Dominion Funding I, 5.71% due
7/10/2013 (a) 8,966,133 8,479,688
AAA Aaa 12,000,000 IMC Home Equity Loan Trust, 6.36% due
8/20/2022 11,997,673 11,934,360
The Money Store Home Equity Trust:
AAA Aaa 11,000,000 6.13% due 12/15/2000 11,000,000 11,003,080
AAA Aaa 7,552,645 6.04% due 8/15/2017 7,565,626 7,552,795
AAA Aaa 8,850,000 6.225% due 9/15/2023 8,848,685 8,780,528
Nationslink Funding Corporation:
AAA Aaa 7,300,000 6.476% due 7/20/2008 7,413,965 7,095,016
AAA Aaa 8,000,000 6.316% due 11/20/2008 8,120,000 7,660,720
NR* Aaa 12,000,000 Saxon Asset Securities Trust, 6.265% due
7/25/2023 12,000,000 11,891,760
-------------- --------------
126,442,026 124,238,649
Banking--10.6% BBB+ A3 12,000,000 BB&T Corporation, 6.375% due
6/30/2025 (a) 12,050,880 11,694,960
A+ Aa2 3,645,000 Continental Bank NA, 7.875% due
2/01/2003 3,868,621 3,800,569
A- A2 11,000,000 First Union Corporation, 6.30% due
4/15/2028 (a) 10,958,420 10,463,926
BBB+ a1 5,500,000 First Union Institution Capital I,
8.04% due 12/01/2026 5,835,280 5,536,410
BBB+ a2 4,750,000 Fleet Capital Trust II, 7.92% due
12/11/2026 4,690,720 4,666,732
BBB+ A3 11,200,000 Great Western Bank, 9.875% due 6/15/2001 12,414,640 11,923,968
BBB+ a2 14,000,000 HSBC Americas Capital Trust, 7.808% due
12/15/2026 13,838,440 13,122,452
A- A3 6,000,000 HSBC Americas Inc., 7% due 11/01/2006 5,949,600 5,899,260
A- A2 2,000,000 Key Bank NA, 7.55% due 9/15/2006 2,170,940 2,060,320
BBB+ A2 5,000,000 KeyCorp, 7.50% due 6/15/2006 5,401,050 5,133,550
BBB a1 16,400,000 KeyCorp Capital I, 6.089% due
7/01/2028 (a) 16,235,016 16,004,760
BBB+ Baa1 13,750,000 MBNA America Bank NA, 5.396% due
6/10/2004 (a) 13,537,837 13,550,625
A- a2 6,000,000 Mellon Capital I, 7.72% due 12/01/2026 6,000,000 5,888,580
A+ A2 3,500,000 Mellon Financial Co., 5.75% due 11/15/2003 3,493,525 3,382,645
Merita Bank Ltd.:
A- A2 6,435,000 6.50% due 1/15/2006 6,243,725 6,205,270
A- A2 4,250,000 6.50% due 4/01/2009 4,248,257 4,026,620
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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>
Banking NationsBank NA:
(concluded) A Aa3 $ 1,300,000 6.50% due 8/15/2003 $ 1,336,075 $ 1,301,976
A+ Aa2 2,000,000 6.125% due 7/15/2004 2,045,760 1,963,560
A Aa3 1,000,000 7.75% due 8/15/2004 1,077,770 1,051,080
A+ Aa2 7,750,000 6.375% due 5/15/2005 7,876,223 7,557,723
A A1 5,000,000 Norwest Corp., 6.625% due 3/15/2003 5,104,650 5,018,600
Providian National Bank:
BBB- Baa3 5,000,000 6.75% due 3/15/2002 4,996,700 4,976,850
BBB- Baa3 12,000,000 6.65% due 2/01/2004 11,983,920 11,600,760
-------------- --------------
161,358,049 156,831,196
Canadian AA+ Aa1 2,000,000 Province of Alberta, 4.875% due
Provinces++-- 10/29/2003 (1) 1,993,080 1,892,220
1.3% AA- Aa3 2,500,000 Province of Manitoba, 5.50% due
10/01/2008 (1) 2,484,050 2,286,200
AA- Aa3 8,200,000 Province of Ontario, 5.50% due
10/01/2008 (1) 8,151,456 7,545,968
Province of Quebec (1):
A+ A2 6,000,000 8.80% due 4/15/2003 6,774,360 6,453,960
A+ A2 1,500,000 7.125% due 2/09/2024 1,562,415 1,460,385
-------------- --------------
20,965,361 19,638,733
Electronic A+ A1 7,050,000 Motorola Inc., 6.50% due 11/15/2028 6,308,481 6,267,662
Components--0.4%
Finance--5.4% Associates Corporation of North America:
AA- Aa3 10,500,000 5.80% due 4/20/2004 10,495,065 10,118,745
AA- Aa3 500,000 7.40% due 5/15/2006 544,845 511,345
AA- Aa3 2,750,000 6.95% due 11/01/2018 2,733,830 2,649,625
A- aa3 5,950,000 CIT Capital Trust I, 7.70% due 2/15/2027 6,259,341 5,604,287
A+ Aa3 6,000,000 CIT Group Inc., 5.50% due 2/15/2004 5,978,040 5,726,040
BBB+ Baa1 6,000,000 ComDisco Inc., 6% due 1/30/2002 5,983,400 5,914,992
Commercial Credit Co.:
A+ Aa3 5,000,000 6.45% due 7/01/2002 5,009,800 5,010,500
A+ Aa3 2,000,000 6.125% due 12/01/2005 2,049,240 1,931,540
A+ Aa3 6,800,000 6.75% due 7/01/2007 6,984,092 6,720,440
Finova Capital Corp.:
A- Baa1 4,500,000 6.45% due 6/01/2000 4,524,435 4,512,735
A- Baa1 7,850,000 6.25% due 11/01/2002 7,819,934 7,776,288
A A2 14,500,000 Household Finance Corp., 6% due 5/01/2004 14,496,810 14,049,093
BBB Baa3 8,680,000 Newcourt Credit Group, 6.875% due
2/16/2005 8,687,680 8,397,023
-------------- --------------
81,566,512 78,922,653
Finance-- Bear Stearns Companies, Inc.:
Other--8.5% A A2 2,000,000 6.50% due 7/05/2000 1,996,360 2,004,500
A A2 2,000,000 6.75% due 5/01/2001 1,993,680 2,010,280
A A2 1,000,000 6.875% due 10/01/2005 1,027,720 990,420
Citigroup Inc.:
AA- Aa2 3,000,000 9.50% due 3/01/2002 3,163,980 3,222,192
AA- Aa2 6,500,000 7.875% due 5/15/2025 6,547,818 6,746,174
BBB- Baa2 6,400,000 Commercial Net Lease Realty, 7.125% due
3/15/2008 6,382,656 5,814,336
A+ Aa3 3,500,000 Dean Witter, Discover & Co., 6.75%
due 8/15/2000 3,486,805 3,526,250
A- A3 5,000,000 Donaldson, Lufkin & Jenrette Inc.,
6.875% due 11/01/2005 4,962,875 4,931,700
A A2 7,500,000 Equitable Life Assurance Society of the US,
7.70% due 12/01/2015 7,448,310 7,750,687
A A2 7,000,000 HSBC Holdings, 7.50% due 7/15/2009 6,968,640 6,968,640
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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>
Finance--Other BBB- Baa3 $ 4,600,000 Hospitality Properties Trust, 7%
(concluded) due 3/01/2008 $ 4,591,720 $ 4,122,888
Lehman Brothers Holdings, Inc.:
A Baa1 4,000,000 6.50% due 10/01/2002 3,996,200 3,946,640
A Baa1 8,500,000 7.125% due 9/15/2003 8,654,380 8,508,330
A Baa1 6,000,000 6.625% due 2/05/2006 5,867,760 5,842,200
A Baa1 3,500,000 7.20% due 8/15/2009 3,576,020 3,390,170
AA Aa2 3,950,000 MBIA, Inc., 7.15% due 7/15/2027 3,940,322 3,773,830
A+ Aa3 8,000,000 Morgan Stanley Dean Witter & Co.,
6.09% due 3/09/2011 (a) 7,998,720 7,962,720
Paine Webber Group Inc.:
BBB+ Baa1 3,250,000 9.25% due 12/15/2001 3,503,533 3,437,525
BBB+ Baa1 7,500,000 7.99% due 6/09/2017 7,500,000 7,270,583
A+ A2 5,300,000 Prudential Insurance Co., 6.375%
due 7/23/2006 5,276,574 5,076,117
Salomon Smith Barney Holdings, Inc.:
A Aa3 10,000,000 7.125% due 10/01/2006 10,402,900 10,014,010
A Aa3 2,850,000 7.375% due 5/15/2007 2,847,464 2,905,632
BBB+ Baa1 1,000,000 Simon Debartolo, 6.75% due 6/15/2005 990,460 961,995
BBB Baa2 6,605,000 Spieker Properties LP, 7.35% due 12/01/2017 6,586,828 6,096,996
BBB Baa3 9,700,000 Storage USA, 7.45% due 7/01/2018 9,688,554 8,552,558
-------------- --------------
129,400,279 125,827,373
Industrial-- Anheuser-Busch Companies Inc.:
Consumer A+ A1 3,000,000 8.75% due 12/01/1999 3,367,590 3,038,730
Goods--4.3% A+ A1 12,990,000 6.50% due 1/01/2028 13,856,953 11,749,065
A A2 10,000,000 Avon Products Inc., 6.25% due
5/01/2018 (a) 9,987,600 9,875,340
BBB- Baa3 2,500,000 Flowers Industries Inc., 7.15% due
4/15/2028 2,486,750 2,213,825
Nabisco Inc.:
BBB Baa2 9,000,000 6% due 2/15/2011 (a) 8,997,750 8,915,940
BBB Baa2 4,000,000 7.55% due 6/15/2015 3,988,860 3,986,760
Phillip Morris Companies, Inc.:
A A2 9,500,000 9% due 1/01/2001 9,698,815 9,864,705
A A2 5,000,000 6.15% due 3/15/2010 (a) 4,997,400 5,019,850
A A2 5,000,000 7.75% due 1/15/2027 5,361,500 5,019,000
BBB- Baa2 4,000,000 RJ Reynolds Tobacco Holdings, 7.75% due
5/15/2006 3,877,800 3,838,604
-------------- --------------
66,621,018 63,521,819
Industrial-- BBB+ Baa1 5,000,000 ANR Pipeline, 9.625% due 11/01/2021 6,492,300 6,105,250
Energy--5.3% BBB+ Baa1 5,000,000 Apache Finance Property Ltd., 7%
due 3/15/2009 4,966,850 4,886,135
A A2 4,500,000 Atlantic Richfield, 5.90% due 4/15/2009 4,484,655 4,212,900
AA+ Aa1 4,075,000 BP America Inc., 9.375% due 11/01/2000 4,488,287 4,250,714
A- A3 9,420,000 Burlington Resources, 7.375% due 3/01/2029 9,395,320 9,122,450
BBB- Baa3 3,000,000 CMS Panhandle Holding Co., 6.50% due
7/15/2009 2,997,690 2,849,316
BBB Baa2 3,500,000 Coastal Corp., 6.375% due 2/01/2009 3,489,640 3,288,824
A- A3 5,000,000 Murphy Oil Corporation, 7.05% due 5/01/2029 4,983,950 4,712,050
Occidental Petroleum Corp.:
BBB Baa3 7,250,000 6.50% due 4/01/2005 7,208,675 6,997,410
BBB Baa3 8,750,000 7.65% due 2/15/2006 8,783,862 8,842,488
BBB+ Baa1 14,600,000 Sonat Inc., 7% due 2/01/2018 14,836,782 13,489,378
A+ A1 5,750,000 Texaco Capital Inc., 8.625% due 11/15/2031 7,583,733 6,746,820
BBB+ Baa1 3,000,000 Vastar Resources Inc., 6.50% due 4/01/2009 3,074,160 2,905,770
-------------- --------------
82,785,904 78,409,505
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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-- BBB+ A3 $13,000,000 Applied Materials Inc., 7.125%
Manufacturing-- due 10/15/2017 $ 12,911,080 $ 11,966,760
13.0% A+ A2 2,800,000 Danaher Corp., 6% due 10/15/2008 2,784,964 2,602,404
BBB- Baa3 4,700,000 Equistar Chemicals LP, 8.75%
due 2/15/2009 4,841,705 4,750,323
First Data Corporation:
A A2 11,500,000 6.75% due 7/15/2005 11,911,930 11,417,200
A A2 10,000,000 6.375% due 12/15/2007 9,974,300 9,727,500
A A1 7,000,000 Ford Motor Company, 8.90% due 1/15/2032 8,650,180 8,193,010
Ford Motor Credit Company:
A A1 5,000,000 8.20% due 2/15/2002 5,328,850 5,215,450
A A1 5,000,000 8% due 6/15/2002 5,286,350 5,207,850
A A1 5,000,000 7.50% due 6/15/2004 5,140,200 5,174,950
A A1 1,000,000 7.75% due 3/15/2005 999,090 1,046,320
A A1 10,000,000 5.147% due 8/27/2006 (a) 9,993,068 9,979,300
BBB- Baa2 4,000,000 Fort James Corp., 6.625% due 9/15/2004 4,085,840 3,995,280
General Electric Capital Corp.:
AAA Aaa 500,000 8.75% due 5/21/2007 611,680 566,910
AAA Aaa 4,305,000 8.50% due 7/24/2008 5,228,853 4,849,238
General Motors Acceptance Corp.:
A A2 4,000,000 6.625% due 9/19/2002 3,915,080 4,000,240
A A2 2,000,000 5.875% due 1/22/2003 2,022,400 1,958,820
A A2 8,170,000 7.125% due 5/01/2003 8,642,634 8,324,250
A A2 10,000,000 General Motors Corporation, 7.70%
due 4/15/2016 10,911,500 10,304,500
BBB- Baa2 9,800,000 Georgia-Pacific Group, 7.25% due
6/01/2028 9,841,198 9,178,680
A- Baa1 3,500,000 Goodrich (BF) Co., 7% due 4/15/2038 3,479,385 3,124,590
A+ A1 5,000,000 International Business Machines Corp.,
6.50% due 1/15/2028 5,156,700 4,623,500
BBB- Baa2 2,000,000 Jones Apparel Group, 7.875% due 6/15/2006 1,993,120 2,006,226
A- Baa1 3,000,000 LaFarge Corp., 6.875% due 7/15/2013 2,992,770 2,764,140
BBB+ Baa1 5,000,000 Lockheed Martin Corp., 6.85% due 5/15/2001 4,995,950 5,051,950
BBB+ Baa1 11,000,000 Loral Corp., 8.375% due 6/15/2024 11,056,040 11,583,660
Martin Marietta Corp.:
BBB+ Baa1 6,500,000 6.50% due 4/15/2003 6,539,845 6,419,010
BBB+ Baa1 4,000,000 7.375% due 4/15/2013 3,846,440 3,904,720
BBB Baa2 6,875,000 Meritor Automotive Inc., 6.80% due
2/15/2009 6,844,269 6,521,969
Raytheon Co.:
BBB Baa1 2,750,000 6.30% due 3/15/2005 2,743,813 2,698,988
BBB Baa1 4,000,000 7% due 11/01/2028 3,998,040 3,776,160
BBB Ba1 14,000,000 Seagate Technology Inc., 7.125% due
3/01/2004 13,975,500 13,285,020
BBB Baa2 7,300,000 Union Carbide Corp., 6.25% due 6/15/2003 7,190,646 7,120,712
-------------- --------------
197,893,420 191,339,630
Industrial-- A A2 8,000,000 Carnival Corp., 7.70% due 7/15/2004 8,076,380 8,348,000
Services--14.6% BBB- Baa3 10,000,000 Circus Circus Enterprises, Inc., 6.70%
due 11/15/2096 9,977,700 9,501,400
Comcast Cable Communications:
BBB Baa3 3,000,000 6.20% due 11/15/2008 2,992,050 2,790,360
BBB Baa3 7,700,000 8.875% due 5/01/2017 8,585,731 8,585,731
A- Baa1 11,000,000 Computer Associates International, Inc.,
6.375% due 4/15/2005 10,941,810 10,418,210
BBB Baa1 5,000,000 Dillard's Inc., 9.125% due 8/01/2011 6,054,000 5,514,400
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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 $13,015,995 Disney Custom Repackaged Asset
Services Vehicle-403, 6.85% due 1/10/2007** $ 13,007,275 $ 12,979,551
(concluded) A- A3 7,400,000 Hertz Corporation, 6.50% due 5/15/2006 7,387,346 7,180,886
BBB- Baa3 5,000,000 J Seagram & Sons, 5.79% due 4/15/2001 4,999,000 4,908,200
AAA Aaa 7,000,000 Johnson & Johnson, 8.72% due 11/01/2024 7,057,420 7,913,710
BBB- Baa3 2,000,000 Kroger Company, 6.34% due 6/01/2001 1,999,780 1,994,860
A A1 8,470,000 May Department Stores Co., 6.70% due
9/15/2028 8,629,862 7,882,436
AAA Aaa 3,000,000 Merck & Co. Inc., 5.95% due 12/01/2028 2,975,100 2,637,720
BBB- Baa3 12,445,000 News America Holdings, Inc., 8.625% due
2/01/2003 13,585,486 13,192,073
BBB- Baa3 6,000,000 News America Inc., 7.25% due 5/18/2018 6,279,960 5,594,376
A A2 5,750,000 Nordstrom, Inc., 6.95% due 3/15/2028 5,824,520 5,401,435
BBB+ Baa2 5,000,000 Oracle Corporation, 6.72% due 2/15/2004 5,000,000 4,949,750
BBB Baa1 5,000,000 Rite Aid Corp., 6.875% due 12/15/2028 5,139,500 4,363,420
BBB- Baa3 12,500,000 Royal Caribbean Cruises Ltd., 6.75% due
3/15/2008 12,421,548 11,871,125
A- A2 8,000,000 Sears Roebuck Acceptance Corp., 6.82% due
10/17/2002 8,016,320 8,106,000
Service Corporation International:
BBB Baa1 7,000,000 6.75% due 6/01/2001 6,978,580 6,973,820
BBB Baa1 8,500,000 7.20% due 6/01/2006 8,263,700 8,317,930
BBB Baa1 7,000,000 6.30% due 3/15/2020 (a) 6,992,300 6,771,310
AA- A2 8,980,000 TCI Communications Inc., 8.75% due
8/01/2015 10,534,079 10,173,711
Time Warner Entertainment Co.:
BBB Baa2 6,000,000 10.15% due 5/01/2012 7,356,180 7,378,680
BBB Baa2 9,900,000 8.375% due 3/15/2023 10,525,871 10,723,383
BBB+ Baa2 5,350,000 USA Waste Services, 7% due 7/15/2028 5,290,455 5,002,999
AA Aa2 14,345,000 Wal-Mart Stores, Inc., 8.50% due 9/15/2024 14,488,240 15,698,738
-------------- --------------
219,380,193 215,174,214
Industrial-- BBB+ Baa2 2,200,000 Burlington North Santa Fe, 6.75%
Transportation-- due 3/15/2029 2,185,964 2,006,378
3.3% BBB Baa2 4,000,000 CSX Corp., 7.90% due 5/01/2017 4,550,200 4,123,800
Delta Airlines:
BBB- Baa3 4,144,000 10.125% due 5/15/2010 5,185,014 4,916,110
BBB- Baa3 6,000,000 9.75% due 5/15/2021 7,495,920 7,100,040
BBB Baa2 9,000,000 Federal Express Corporation, 9.65% due
6/15/2012 10,137,590 10,413,540
Southwest Airlines Co.:
A- A3 10,000,000 9.40% due 7/01/2001 11,326,040 10,544,900
A- A3 2,000,000 8% due 3/01/2005 1,989,220 2,097,840
A- A3 3,000,000 7.875% due 9/01/2007 2,983,950 3,140,910
BBB- Baa3 4,000,000 Union Pacific Corp., 6.625% due 2/01/2008 3,964,880 3,857,040
-------------- --------------
49,818,778 48,200,558
Mortgage-Backed Federal Home Loan Mortgage Corporation:
Securities**-- AAA Aaa 9,679,000 6% due 10/15/2018 9,832,503 9,630,605
0.9% AAA Aaa 2,000,000 6% due 6/15/2023 1,989,375 1,953,740
AAA Aaa 2,000,000 6.35% due 9/15/2023 2,022,734 1,981,240
-------------- --------------
13,844,612 13,565,585
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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>
Utilities-- A- A2 $ 8,700,000 ALLTEL Corporation, 6.75% due 9/15/2005 $ 8,566,020 $ 8,744,022
Communications-- BBB Baa3 4,000,000 AT&T Capital Corp., 7.50% due 11/15/2000 3,996,280 4,029,760
6.5% AA+ Aa3 6,000,000 Ameritech Capital Funding, 6.45% due
1/15/2018 6,300,600 5,584,800
AA Aa2 6,350,000 Bell Telephone Company of Pennsylvania,
7.375% due 7/15/2007 7,090,029 6,574,028
BB Ba2 4,650,000 Frontier Corp., 6% due 10/15/2013 (a) 4,643,676 4,354,446
AA- A2 9,500,000 GTE California, Inc., 8.07% due 4/15/2024 10,152,935 9,689,430
GTE Corp.:
A Baa1 7,500,000 9.375% due 12/01/2000 8,235,170 7,838,700
A Baa1 3,600,000 6.84% due 4/15/2018 3,700,728 3,435,480
MCI WorldCom Inc.:
A- A3 11,000,000 7.75% due 4/01/2007 11,977,665 11,519,750
A- A3 6,000,000 6.95% due 8/15/2028 5,943,900 5,687,700
Southwestern Bell Telecommunications Corp.:
AA Aa3 2,000,000 6.125% due 3/01/2000 2,011,250 2,005,100
AA Aa3 5,000,000 6.375% due 11/15/2007 5,023,800 4,890,450
Sprint Capital Corporation:
BBB+ Baa1 5,000,000 5.70% due 11/15/2003 4,999,150 4,791,850
BBB+ Baa1 8,000,000 6.90% due 5/01/2019 7,976,080 7,407,840
US West Capital Funding Inc.:
A- Baa1 4,000,000 6.375% due 7/15/2008 4,271,560 3,799,880
A- Baa1 5,000,000 6.875% due 7/15/2028 5,333,900 4,569,500
-------------- --------------
100,222,743 94,922,736
Utilities-- AAA Aaa 5,850,000 Cleveland Electric/Toledo Edison,
Electric--5.5% 7.13% due 7/01/2007 6,137,176 5,847,543
BBB Baa3 5,000,000 Commonwealth Edison, Inc., 6.95% due
7/15/2018 4,978,600 4,714,200
BBB+ Baa1 2,000,000 Conectiv Inc., 6.73% due 6/01/2006 2,000,000 1,991,040
A+ A1 9,115,000 Consolidated Edison, Inc., 6.25%
due 2/01/2008 9,115,000 8,818,398
BBB+ Baa3 5,000,000 Consumers Energy, 6.375% due 2/01/2008 4,951,650 4,709,635
A A1 10,000,000 Mississippi Power, 6.05% due 5/01/2003 10,224,800 9,873,300
AA- A1 6,000,000 Pacific Gas and Electric Company, 6.25%
due 8/01/2003 6,111,900 5,920,680
A- A3 3,000,000 Pennsylvania Power & Light Co., 6.125%
due 5/01/2006 (a) 2,998,200 3,001,860
AA- A1 5,000,000 TECO Energy, Inc., 9.27% due 6/12/2000 5,000,000 5,153,400
Texas Utilities Company:
AAA Aaa 6,971,000 6.375% due 10/01/2004 6,995,198 6,928,149
BBB Baa3 6,000,000 5.94% due 10/15/2011 (a) 6,000,000 5,937,660
BBB- Baa1 5,000,000 Texas Utilities Electric Company, 8.175%
due 1/30/2037 5,000,000 4,953,250
Virginia Electric & Power Co.:
A- A3 5,000,000 5.73% due 11/25/2008 5,000,000 4,601,150
A A2 8,500,000 8.625% due 10/01/2024 8,377,160 8,875,360
-------------- --------------
82,889,684 81,325,625
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<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 AmVescap PLC (2):
Corporates++-- BBB A3 $ 3,000,000 6.375% due 5/15/2003 $ 2,994,570 $ 2,953,140
10.1% BBB A3 9,000,000 6.60% due 5/15/2005 8,988,032 8,757,900
A+ A1 6,000,000 Australia & New Zealand Banking
Group Ltd., 7.55% due 9/15/2006 (2) 5,990,880 6,095,460
A A1 3,000,000 Banco Central Hispanoamercano SA (Cayman
Islands), 7.70% due 7/15/2006 (2) 3,189,510 3,063,450
AAA Aaa 13,000,000 Banco Santander-Chile, 6.50% due
11/01/2005 (2) 12,938,770 12,527,268
A- Baa1 5,000,000 Cable & Wireless Communication, 6.75% due
3/06/2008 (3) 5,196,350 4,837,150
BBB Baa2 5,550,000 Canadian National Railway Co., 6.90% due
7/15/2028 (3) 5,526,135 5,154,951
Enersis SA (3):
A- Baa1 2,500,000 6.90% due 12/01/2006 2,493,550 2,261,950
A- Baa1 4,000,000 6.60% due 12/01/2026 3,992,400 3,741,240
Fairfax Financial Holdings Ltd. (2):
BBB+ Baa3 2,000,000 7.375% due 3/15/2006 1,996,860 1,936,746
BBB+ Baa3 300,000 7.375% due 4/15/2018 299,346 270,258
BBB+ Baa3 9,800,000 7.75% due 7/15/2037 9,751,098 8,941,902
Ford Capital BV (2):
A A1 10,000,000 9.875% due 5/15/2002 10,531,200 10,846,400
A A1 3,995,000 9.50% due 6/01/2010 4,430,215 4,628,527
A- A3 8,000,000 Israel Electric Corp. Ltd., 7.75% due
3/01/2009 (3) 7,991,760 7,911,280
BBB+ A3 1,500,000 Koninklijke (Royal) Philips Electronics NV,
7.75% due 4/15/2004 (3) 1,602,615 1,527,990
Korea Development Bank (2):
BBB- Baa3 7,000,000 7.125% due 4/22/2004 6,948,900 6,834,485
BBB- Baa3 8,000,000 7.375% due 9/17/2004 8,003,760 7,769,600
A Aa3 2,000,000 Midland Bank PLC, 7.65% due 5/01/2025 (2) 2,191,680 1,958,580
A A2 6,500,000 Norsk Hydro A/S, 6.70% due 1/15/2018 (3) 6,466,720 5,866,777
BBB Baa3 5,443,000 Petro Geo-Services ASA, 7.125% due
3/30/2028 (3) 5,045,121 4,874,479
BBB A3 2,000,000 Saga Petroleum ASA, 7.25% due 9/23/2027 (3) 1,979,980 1,868,680
A+ Aa3 4,000,000 Sony Corporation, 6.125% due 3/04/2003 (3) 3,991,520 3,972,880
AA Aa2 9,500,000 Swiss Bank Corp. of New York, 7.375% due
6/15/2017 (2) 10,155,440 9,403,670
BBB Baa2 3,000,000 Telecom de Puerto Rico, 6.15% due
5/15/2002 (3) 2,999,310 2,968,851
A- A2 6,000,000 Trans-Canada Pipelines, 7.70% due
6/15/2029 (3) 5,992,320 6,087,906
A- Baa1 10,500,000 Tyco International Group SA, 7% due
6/15/2028 (3) 10,424,295 9,749,985
A A2 2,000,000 WMC Finance (USA) Ltd., 6.75% due
12/01/2006 (2) 2,029,600 1,944,860
-------------- --------------
154,141,937 148,756,365
Yankee BBB+ A3 4,000,000 People's Republic of China, 7.30% due
Sovereign++-- 12/15/2008 (1) 3,994,400 3,890,960
0.3%
Total Investments in Bonds &
Notes--98.8% 1,504,612,172 1,457,738,563
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face
Amount Issue Cost Value
Short-Term Securities Investment Grade Portfolio
<S> <C> <S> <C> <C>
Repurchase $ 1,636,000 Warburg Dillon Read LLC, purchased on
Agreements***--0.1% 6/30/1999 to yield 4.80% to 7/01/1999 $ 1,636,000 $ 1,636,000
Total Investments in Short-Term
Securities--0.1% 1,636,000 1,636,000
Total Investments--98.9% $1,506,248,172 1,459,374,563
==============
Other Assets Less Liabilities--1.1% 15,931,746
--------------
Net Assets--100.0% $1,475,306,309
==============
Net Asset Class A--Based on net assets of $566,092,181 and 51,272,878 shares outstanding $ 11.04
Value: ==============
Class B--Based on net assets of $690,317,097 and 62,523,684 shares outstanding $ 11.04
==============
Class C--Based on net assets of $85,586,352 and 7,748,811 shares outstanding $ 11.05
==============
Class D--Based on net assets of $133,310,679 and 12,067,259 shares outstanding $ 11.05
==============
<FN>
*Not Rated.
**Subject to principal paydowns.
***Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Corresponding industry groups for foreign securities that are
denominated in US dollars:
(1)Government Entity.
(2)Financial Institution.
(3)Industrial.
(a)Floating rate note.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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 AAA Aaa $ 100,000 US Treasury Notes, 5.625% due 5/15/2008 $ 106,219 $ 97,953
Obligations--
0.0%
Asset-Backed NR* Baa2 3,500,000 Bistro Trust 1998-1000, 6.58% due
Securities++-- 3/26/2001 3,499,860 3,405,570
8.0% AAA NR* 2,817,969 DLJ Commercial Mortgage Corp., 6.11% due
12/10/2007 2,827,656 2,749,943
AAA Aaa 2,000,000 First Bank, Corporate Card Master Trust,
6.40% due 2/15/2003 1,997,545 1,995,620
AAA Aaa 9,752,957 NationsLink Funding Corporation, 1999-1-A1,
6.042% due 11/20/2007 9,767,434 9,471,681
AAA Aaa 11,600,000 Premier Auto Trust, 5.82% due 10/08/2003 11,674,766 11,464,976
NR* NR* 10,000,000 Spinnaker I, 5.944% due 5/01/2001 (a) 10,000,000 9,800,000
-------------- --------------
39,767,261 38,887,790
Banking--11.9% A A2 3,500,000 Bank of New York Co., Inc., 7.875% due
11/15/2002 3,873,450 3,652,530
A+ Aa3 5,000,000 Bank One Corp., 5.625% due 2/17/2004 4,980,000 4,782,600
BankAmerica Corp.:
A Aa3 4,000,000 7.50% due 10/15/2002 4,268,880 4,135,160
A+ Aa2 3,000,000 7.125% due 5/12/2005 2,956,500 3,033,210
A- A3 2,000,000 HSBC Americas Inc., 7% due 11/01/2006 2,016,410 1,966,420
A- A2 2,800,000 Key Bank NA, 7.55% due 9/15/2006 3,039,316 2,884,448
A A3 6,000,000 Mellon Financial Co., 6.875% due 3/01/2003 5,483,220 6,047,040
Merita Bank, Ltd.:
A- A2 1,000,000 6.50% due 1/15/2006 969,800 964,300
A- A2 4,500,000 6.50% due 4/01/2009 4,363,545 4,263,480
A+ Aa2 4,500,000 NationsBank Corp., 6.65% due 4/09/2002 4,426,620 4,517,415
Norwest Corp.:
A+ Aa3 2,000,000 6.125% due 10/15/2000 1,996,440 2,005,300
A A1 1,000,000 6.625% due 3/15/2003 1,003,060 1,003,720
BBB- Baa3 5,000,000 Providian National Bank, 6.75% due
3/15/2002 4,996,700 4,976,850
A A2 3,750,000 Republic of New York Corp., 9.70% due
2/01/2009 4,672,460 4,389,525
BBB+ A3 9,000,000 Washington Mutual Inc., 7.25% due
8/15/2005 8,930,520 9,049,140
-------------- --------------
57,976,921 57,671,138
Canadian Province of Ontario (1):
Provinces**-- AA- Aa3 5,000,000 7.75% due 6/04/2002 5,341,550 5,206,900
2.8% AA- Aa3 3,000,000 5.50% due 10/01/2008 2,982,240 2,760,720
A+ A2 5,000,000 Province of Quebec, 8.80% due
4/15/2003 (1) 5,538,670 5,378,300
-------------- --------------
13,862,460 13,345,920
Finance--7.5% American General Finance:
A+ A2 2,200,000 7.45% due 7/01/2002 2,326,940 2,261,006
A+ A2 2,400,000 7.25% due 5/15/2005 2,583,432 2,461,032
AA- Aa3 3,500,000 Associates Corporation of North America,
5.80% due 4/20/2004 3,498,355 3,372,915
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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 CIT Group Inc.:
(concluded) A+ Aa3 $ 5,000,000 5.50% due 2/15/2004 $ 4,981,700 $ 4,771,700
A+ Aa3 1,000,000 6.625% due 6/15/2005 1,003,390 979,580
Commercial Credit Co.:
A+ Aa3 3,000,000 6.45% due 7/01/2002 3,005,880 3,006,300
A+ Aa3 2,080,000 6.75% due 7/01/2007 2,126,675 2,055,664
A- Baa1 2,500,000 Finova Capital Corp., 6.25%
due 11/01/2002 2,490,425 2,476,525
A A2 9,250,000 Household Finance Corp., 6% due
5/01/2004 9,247,965 8,962,353
A A2 6,000,000 WMC Finance (USA) Ltd., 6.75%
due 12/01/2006 6,088,800 5,834,580
-------------- --------------
37,353,562 36,181,655
Finance-- BBB Baa3 2,500,000 AT&T Capital Corp., 7.50% due 11/15/2000 2,497,675 2,518,600
Other--9.4% A A2 1,750,000 Bear Stearns Companies, Inc., 8.75% due
3/15/2004 1,912,260 1,881,023
BBB Baa2 5,000,000 Centerpoint Properties, 6.75% due
4/01/2005 4,978,150 4,774,900
AA- Aa2 2,000,000 Citigroup Inc., 9.50% due 3/01/2002 2,168,400 2,148,128
BBB- Baa2 5,000,000 Commercial Net Lease Realty, 7.125% due
3/15/2008 4,986,450 4,542,450
A- A3 2,000,000 Donaldson, Lufkin & Jenrette Inc., 6% due
12/01/2001 1,997,600 1,981,992
BBB- Baa3 4,250,000 Hospitality Properties Trust, 7% due
3/01/2008 4,242,350 3,809,190
Lehman Brothers Holdings, Inc.:
A Baa1 5,000,000 6.50% due 10/01/2002 4,974,200 4,933,300
A Baa1 5,000,000 6.625% due 2/15/2008 4,947,800 4,752,600
A+ Aa3 1,400,000 Morgan Stanley, Dean Witter, Discover & Co.,
5.625% due 1/20/2004 1,393,630 1,349,376
BBB+ Baa1 2,000,000 Paine Webber Group Inc., 6.45% due
12/01/2003 2,000,000 1,957,150
Salomon Smith Barney Holdings, Inc.:
A Aa3 2,000,000 6.50% due 3/01/2000 2,000,000 2,012,440
A Aa3 2,500,000 6.25% due 1/15/2005 2,494,525 2,434,523
A Aa3 1,400,000 7.125% due 10/01/2006 1,456,406 1,401,961
A Aa3 1,000,000 7.375% due 5/15/2007 999,110 1,019,520
BBB+ Baa1 4,000,000 Simon Debartolo, 6.75% due 6/15/2005 3,961,840 3,847,980
-------------- --------------
47,010,396 45,365,133
Industrial-- A A2 2,000,000 Avon Products Inc., 6.25% due
Consumer 5/01/2018 (a) 1,997,520 1,975,068
Goods--4.4% Nabisco Inc.:
BBB Baa2 3,000,000 6.85% due 6/15/2005 2,994,300 2,953,290
BBB Baa2 6,000,000 6% due 2/15/2011 (a) 5,998,500 5,943,960
Phillip Morris Companies, Inc.:
A A2 3,500,000 9% due 1/01/2001 3,576,195 3,634,365
A A2 4,000,000 7.25% due 1/15/2003 4,196,640 4,076,040
A A2 1,000,000 6.15% due 3/15/2010 (a) 999,480 1,003,970
BBB- Baa2 2,000,000 RJ Reynolds Tobacco Holdings, 7.75% due
5/15/2006 1,938,900 1,919,302
-------------- --------------
21,701,535 21,505,995
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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-- A A2 $ 2,000,000 Atlantic Richfield, 5.90%
Energy--3.2% due 4/15/2009 $ 1,993,180 $ 1,872,400
BBB Baa3 3,000,000 Occidental Petroleum Corp., 6.50% due
4/01/2005 2,982,900 2,895,480
A+ A1 2,000,000 Texaco Capital Inc., 9% due 12/15/1999 2,342,460 2,029,120
BBB Baa2 6,000,000 Ultramar Credit, 8.625% due 7/01/2002 6,521,940 6,244,680
BBB+ Baa1 2,500,000 Vastar Resources Inc., 6.50% due
4/01/2009 2,561,800 2,421,475
-------------- --------------
16,402,280 15,463,155
Industrial-- A A2 3,000,000 AlliedSignal Inc., 6.20% due 2/01/2008 2,995,980 2,842,860
Manufacturing-- BBB+ A3 4,000,000 Applied Materials Inc., 6.65% due
15.2% 9/05/2000 4,000,000 4,016,960
BBB Ba1 3,000,000 Blount Inc., 7% due 6/15/2005 2,968,650 2,709,030
A A3 3,500,000 Corning Inc., 6.30% due 3/01/2009 3,498,985 3,085,110
A+ A2 1,500,000 Danaher Corp., 6% due 10/15/2008 1,491,945 1,394,145
BBB- Baa3 2,000,000 Equistar Chemicals LP, 8.75% due
2/15/2009 2,060,300 2,021,414
Ford Motor Credit Company:
A A1 3,000,000 8.20% due 2/15/2002 3,211,740 3,129,270
A A1 2,700,000 5.147% due 8/27/2006 (a) 2,698,128 2,694,411
A A1 4,375,000 7.20% due 6/15/2007 4,783,100 4,434,588
AAA Aaa 8,500,000 General Electric Capital Corp.,
8.50% due 7/24/2008 10,324,100 9,574,570
General Motors Acceptance Corp.:
A A2 2,000,000 9% due 10/15/2002 2,213,880 2,146,320
A A2 6,000,000 8.50% due 1/01/2003 6,539,280 6,367,200
A A2 5,000,000 6.375% due 5/01/2008 5,132,550 4,796,100
BBB- Baa2 2,000,000 Jones Apparel Group, 7.875% due 6/15/2006 1,993,120 2,006,226
BBB Baa1 5,000,000 Raytheon Co., 6.45% due 8/15/2002 5,173,850 5,010,950
BBB Ba1 4,000,000 Seagate Technology Inc., 7.125% due
3/01/2004 3,993,000 3,795,720
BBB Baa2 3,090,000 Solutia Inc., 6.72% due 10/15/2037 3,123,897 3,023,318
BBB Baa2 4,000,000 Union Carbide Corp., 6.70% due 4/01/2009 4,046,640 3,825,868
A+ A2 4,000,000 United Technologies Corp., 6.50%
due 6/01/2009 3,973,520 3,914,240
A A2 3,000,000 Xerox Credit Corp., 5.50% due 11/15/2003 3,006,870 2,886,651
-------------- --------------
77,229,535 73,674,951
Industrial-- A A2 3,000,000 Bass America, Inc., 6.625% due 3/01/2003 2,825,520 2,994,030
Services--14.9% A A2 6,000,000 Carnival Corp., 7.70% due 7/15/2004 5,952,060 6,261,000
BBB Baa3 4,000,000 Comcast Cable Communications, 8.375%
due 5/01/2007 4,060,680 4,270,548
A- Baa1 4,000,000 Computer Associates International,
6.25% due 4/15/2003 3,992,480 3,867,720
A A2 2,800,000 Computer Sciences Corp., 6.25% due
3/15/2009 2,785,552 2,660,218
A- A3 1,000,000 Dayton Hudson Corp., 6.40% due 2/15/2003 1,030,640 995,350
BBB Baa1 8,500,000 Dillard's, Inc., 6.08% due 8/01/2010 (a) 8,498,810 8,468,805
A A2 4,267,539 Disney Custom Repackaged Asset Vehicle-403,
6.85% due 1/10/2007++ 4,264,680 4,255,590
BBB Baa3 5,000,000 HEALTHSOUTH Corp., 7% due 6/15/2008 4,952,500 4,632,605
A A1 1,275,000 May Department Stores Co., 9.875% due
12/01/2002 1,450,108 1,416,678
BBB- Baa3 4,000,000 News America Holdings, Inc., 8.625% due
2/01/2003 4,286,440 4,240,120
NR* Baa2 5,000,000 Nielsen Media Research, 7.60% due 6/15/2009 4,997,400 4,997,400
Service Corporation International:
BBB Baa1 1,000,000 6.75% due 6/01/2001 996,940 996,260
BBB Baa1 2,000,000 6.30% due 3/15/2020 (a) 1,997,800 1,934,660
AA- A2 3,000,000 TCI Communications Inc., 8.65% due
9/15/2004 3,099,270 3,270,600
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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 $ 5,000,000 Time Warner Entertainment Co., 9.625%
Services due 5/01/2002 $ 5,586,000 $ 5,364,550
(concluded) BBB Baa3 5,000,000 Turner Broadcasting, 7.40% due 2/01/2004 5,108,150 5,145,850
BBB+ Baa2 1,000,000 USA Waste Services Inc., 6.125% due
7/15/2001 (a) 997,950 993,291
BBB Baa2 5,500,000 United News & Media PLC, 7.25% due
7/01/2004 5,452,040 5,452,040
-------------- --------------
72,335,020 72,217,315
Industrial-- Southwest Airlines Co.:
Transportation-- A- A3 6,500,000 9.40% due 7/01/2001 7,564,180 6,854,185
1.8% A- A3 1,000,000 8% due 3/01/2005 994,610 1,048,920
BBB- Baa3 1,000,000 Union Pacific Corp., 6.625% due 2/01/2008 991,220 964,260
-------------- --------------
9,550,010 8,867,365
Utilities-- A A2 5,000,000 360 Communications Co., 7.50% due
Communications-- 3/01/2006 5,170,100 5,185,250
5.1% A- A2 4,000,000 ALLTEL Corporation, 6.75% due 9/15/2005 3,938,400 4,020,240
AA Aa2 2,500,000 Bell Telephone Company of Pennsylvania,
7.375% due 7/15/2007 2,791,350 2,588,200
BB Ba2 3,000,000 Frontier Corp., 6% due 10/15/2013 (a) 2,995,920 2,809,320
A Baa1 1,000,000 GTE Corp., 9.375% due 12/01/2000 1,090,310 1,045,160
AA Aa3 2,200,000 Southwestern Bell Telecommunications
Corp., 6.625% due 4/01/2005 2,108,590 2,216,280
Sprint Capital Corporation:
BBB+ Baa1 500,000 5.70% due 11/15/2003 499,915 479,185
BBB+ Baa1 3,900,000 6.125% due 11/15/2008 3,754,530 3,599,271
A- Baa1 3,000,000 US West Capital Funding Inc., 6.375% due
7/15/2008 3,203,670 2,849,910
-------------- --------------
25,552,785 24,792,816
Utilities-- A A3 500,000 Central Power & Light Co., 6.625% due
Electric--4.6% 7/01/2005 522,905 495,020
AAA Aaa 3,000,000 Cleveland Electric/Toledo Edison,
7.13% due 7/01/2007 3,147,270 2,998,740
AAA Aaa 5,000,000 Commonwealth Edison Inc., 8.25% due
10/01/2006 5,817,400 5,366,120
BBB+ Baa1 1,000,000 Conectiv Inc., 6.73% due 6/01/2006 1,000,000 995,520
A A1 4,000,000 Mississippi Power, 6.05% due 5/01/2003 4,089,920 3,949,320
AA- A1 500,000 Pacific Gas and Electric Company, 6.25%
due 8/01/2003 509,325 493,390
A- A3 1,000,000 Pennsylvania Power & Light Co., 6.125%
due 5/01/2006 (a) 999,400 1,000,620
BBB Baa3 2,000,000 Texas Utilities Electric Company, 5.94%
due 10/15/2011 (a) 2,000,000 1,979,220
BBB- Baa3 5,000,000 Valero Energy Corporation, 7.375% due
3/15/2006 4,884,150 4,860,700
-------------- --------------
22,970,370 22,138,650
Yankee BBB- Baa3 3,000,000 Abitibi-Consolidated Inc., 6.95% due
Corporates**-- 4/01/2008 (3) 2,994,180 2,838,450
8.5% AmVescap PLC (2):
BBB A3 2,000,000 6.375% due 5/15/2003 1,996,380 1,968,760
BBB A3 2,000,000 6.60% due 5/15/2005 1,997,340 1,946,200
A A1 2,000,000 Banco Central Hispanoamercano SA (Cayman
Islands), 7.70% due 7/15/2006 (2) 2,126,340 2,042,300
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
<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 AAA Aaa $ 1,000,000 Banco Santander-Chile, 6.50% due
Corporates 11/01/2005 (2) $ 995,290 $ 963,636
(concluded) A- Baa1 1,500,000 Enersis SA, 6.90% due 12/01/2006 (3) 1,496,130 1,357,170
BBB+ Baa3 3,000,000 Fairfax Financial Holdings Ltd.,
7.375% due 3/15/2006 (2) 2,995,290 2,905,119
A A1 2,000,000 Ford Capital BV, 9.875% due 5/15/2002 (2) 2,300,380 2,169,280
BBB- Ba2 3,000,000 Gruma, SA de CV, 7.625% due 10/15/2007 (3) 2,994,960 2,670,000
AAA Aaa 2,000,000 International Bank for Reconstruction &
Development, 5.625% due 3/17/2003 (2) 1,993,300 1,960,620
A- A3 10,000,000 Israel Electric Corp. Ltd., 7.75% due
3/01/2009 (3) 9,989,700 9,889,100
BBB+ A3 2,650,000 Koninklijke (Royal) Philips Electronics NV,
7.75% due 4/15/2004 (3) 2,831,287 2,699,449
BBB- Baa3 3,000,000 Korea Electric Power Corp., 8% due
7/01/2002 (3) 2,994,990 3,016,800
A- A2 5,000,000 Trans-Canada Pipelines, 6.43% due
3/15/2029 (3) 5,000,000 4,952,200
-------------- --------------
42,705,567 41,379,084
Yankee BBB+ A3 1,500,000 People's Republic of China, 7.30% due
Sovereign**-- 12/15/2008 (1) 1,497,900 1,459,110
0.3%
Total Investments in
Bonds & Notes--97.6% 486,021,821 473,048,030
Short-Term Securities
Repurchase 4,885,000 Warburg Dillon Read LLC, purchased on
Agreements***--1.0% 6/30/1999 to yield 4.80% to 7/01/1999 4,885,000 4,885,000
Total Investments in Short-Term
Securities--1.0% 4,885,000 4,885,000
Total Investments--98.6% $ 490,906,821 477,933,030
==============
Other Assets Less Liabilities--1.4% 6,980,012
--------------
Net Assets--100.0% $ 484,913,042
==============
Net Asset Class A--Based on net assets of $168,924,932 and 15,060,584 shares outstanding $ 11.22
Value: ==============
Class B--Based on net assets of $173,413,441 and 15,459,858 shares outstanding $ 11.22
==============
Class C--Based on net assets of $4,522,960 and 403,226 shares outstanding $ 11.22
==============
Class D--Based on net assets of $138,051,709 and 12,307,076 shares outstanding $ 11.22
==============
<FN>
*Not Rated.
**Corresponding industry groups for foreign securities that are
denominated in US dollars:
(1)Government Entity.
(2)Financial Institution.
(3)Industrial.
***Repurchase Agreements are fully collateralized by US Government &
Agency Obligations.
++Subject to principal paydowns.
(a)Floating rate note.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc.,
Investment Grade Portfolio & Intermediate Term Portfolio
June 30, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Christopher G. Ayoub, Senior Vice President
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President and Treasurer
Ira P. Shapiro, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
