HIGH INCOME
PORTFOLIO
Merrill Lynch
Corporate Bond Fund, Inc.
FUND LOGO
Semi-Annual Report
March 31, 2000
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 High-Yield Market
The six-month period ended March 31, 2000 was dominated by interest
rate tensions. On March 21, 2000, the Federal Reserve Board raised
the Federal Funds rate (the rate at which commercial banks borrow
from the Federal Reserve) from 5.75% to 6.00%. This action--the
fifth quarter point increase since last June--was generally
expected. The Federal Reserve Board has been clear that its intent
is to continue to raise interest rates until economic growth slows
to a pace that it considers noninflationary. Recent reported
increases in inflation can only reinforce this conviction. Most
forecasters anticipate one or more additional moves before the
Federal Reserve Board's objective is achieved. In this environment,
the high-yield market was weak. The flow of funds reported by high-
yield mutual funds remained negative, with a reported outflow for
the six-month period of $6.8 billion. There was also evidence of
diminished interest in the high-yield market by asset allocaters as
well. For example, it was recently reported that the San Francisco
City and County Retirement System will trim its high-yield exposure.
The reasons for the lack of investor interest in the high-yield
market and its lackluster performance seem to relate to the
following factors:
In an environment of rising interest rates, fixed-income securities
are not a compelling investment category, particularly during a
period of excellent equity returns.
The performance of the high-yield asset class has been lackluster
since the summer of 1998 when default by Russia on its local
currency debt ignited a rush to quality. While the market recovered
to an extent, the volatility exhibited during this period was a
turnoff.
The high-yield market grew at a compound annual rate of 18.2% over
the five years ended December 1999. The market is primarily an
institutional over-the-counter market with the liquidity necessary
to facilitate efficient trading provided by Wall Street. More
capital is required to support the larger market and heavier trading
volumes. In 1999, in response to capital losses experienced during
the market crash in the previous year, Wall Street significantly
reduced capital employed in corporate bond trading. This reduced
market ability and raised the level of volatility. Investors have
therefore demanded a higher risk premium.
Portfolio Matters
For the six-month period ended March 31, 2000, the Portfolio's Class
A, Class B, Class C and Class D Shares had total returns of +3.19%,
+2.80%, +2.62% and +3.07%, respectively. (Results shown do not
include sales charges and would be lower if sales charges were
included. Complete performance information can be found on pages 5
and 6 of this report to shareholders.) This compared favorably to
the CSFB Global High Yield Index (an unmanaged benchmark that
broadly reflects the market as a whole), which had a total return of
+0.77% for the same period. Reasons for the Portfolio's
outperformance included our overweighted position in corporate
emerging market issues, a modestly shorter average maturity and
somewhat better issue selection than the benchmark. In the weaker
sectors, the Portfolio sidestepped some of the worst perfomers that
dragged down results for the Index. We avoided supermarkets, as well
as food and beverage credits that succumbed to competitive pressures
in recent months.
At March 31, 2000, cash equivalents constituted 1.1% of the
Portfolio's net assets. The Portfolio was broadly diversified by
company and industry. Communications and media remained our largest
broad industry category, equaling 27.4% of the Portfolio. Foreign
bonds amounted to 30% of the Portfolio, with emerging markets
holdings (primarily Latin American corporate bonds) accounting for
18.1%. (See page 4 of this report to shareholders for a list of the
Portfolio's Five Largest Industries and Top Five Foreign Countries
in the Portfolio.) At March 31, 2000, the average maturity of the
portfolio was 6.8 years.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
Investment Outlook and Strategy
Despite the market's poor performance, the fundamentals are
generally attractive and valuation is compelling. Credit quality is
generally improving. Large sectors of the high-yield market are
exhibiting excellent earnings momentum. Oil and gas producers, paper
and forest products, steel, non-ferrous metals, transportation and
chemicals are experiencing cyclical earnings recoveries. By March
31, 2000, these sectors comprised 19.9% of the CSFB Global High
Yield Index and 28.9% of the Portfolio. Cable, communications and
broadcasting continue to experience excellent fundamentals and
constituted 36.4% of the benchmark and the Portfolio. Default rates
(a lagging indicator) peaked last fall and have been declining.
Moody's Investors Service, Inc.'s trailing 12-month default rates
(as a percentage of issuers) was 5.64% through March 31, 2000,
compared with a 6.06% rate at the October 1999 peak. We believe the
trend will continue down. Finally, the current yield on the
benchmark CSFB Global High Yield Index was 11.4% at March 31, 2000.
At an average price of $83.3 per $100 of par value, the yield to
maturity was 12.9%. These are the highest levels since 1992. The
yield spread relative to Treasury securities of comparable maturity
was 6.75%, almost 2% higher than the average over the last eight
years.
With attractive valuation dominating our strategic view, we are
structuring the Portfolio in an effort to enhance returns in a
better environment. An improved market is probably not near as the
return of investor interest in the high-yield asset class would seem
to require a more positive interest rate outlook and perhaps also
some measure of investor disenchantment with equities.
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
May 8, 2000
To reduce shareholders' expenses, Merrill Lynch Corporate Bond Fund,
Inc.--High Income Portfolio will no longer be printing and mailing
quarterly reports to shareholders. We will continue to provide you
with reports on a semi-annual and annual basis.
Effective May 15, 2000, each class of shares of High Income
Portfolio is being offered to the public for purchase or exchange.
Also effective May 31, 2000, High Income Portfolio may invest up to
30% of its assets in fixed-income securities of issuers outside the
United States.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
PORTFOLIO INFORMATION
<CAPTION>
As of March 31, 2000
Percent of
Ten Largest Corporate Holdings Net Assets
<S> <S> <C>
Nextel Communications, Inc. Nextel is the largest specialized mobile radio (SMR) and enhanced specialized 3.1%
and Affiliates mobile radio (ESMR) provider in the United States, with licenses covering 98%
of the American population. While Nextel's SMR system is virtually nationwide,
the company is still building out a national ESMR system. Through its 100%-owned
subsidiary, Nextel International Inc., Nextel is also building networks in
Latin America and Asia.
Millicom International Millicom International Cellular develops and operates cellular telephone 1.7
Cellular systems worldwide. The company has interest in 33 cellular systems in 20
countries, primarily in emerging markets.
GS Superhighway The company is an indirect holding company that owns a 50% stake in Guangzhou- 1.7
Holdings Shenzhen-Zhuhai East Superhighway Company Limited (GSZ East), Ltd., a joint-
venture company with the Guanghong Provincial Bureau of Communications. Open
to traffic and collecting tolls since 1994, GSZ East is a 122.8-km, dual three
lane expressway that serves as the principal highway transportation route
linking the highly populous region of southern Guangdong Province and Hong King
with the rest of Guangdong Province and the other southern provinces in the
People's Republic of China.
UnitedGlobalCom Inc. UnitedGlobalCom (formerly known as United International Holdings) is a global 1.6
broadband communications provider of video, voice and data services with
operations in various countries around the world. The company serves video
subscribers, telephony access lines, and high-speed broadband accounts.
United Global Communications also provides television programming services
to subscribers worldwide.
Columbia/HCA Columbia/HCA Healthcare Corp. is the nation's largest investor-owned hospital 1.6
Healthcare Corp. management company. The company currently operates 205 general, acute care
hospitals and 81 outpatient surgery centers in 24 states, London and Geneva.
Columbia's US facilities are primarily located in urban areas.
USAir Inc. USAir Inc., the primary operating subsidiary of US Airways Group, Inc., is 1.5
the sixth-largest domestic air carrier, as ranked by revenue passenger miles
flown. The company dominates East Coast airports from New England to Florida
with its fleet of 383 jets, and provides regularly scheduled service at
107 airports, including airports in Canada, Mexico, France, Germany, Italy,
Spain, the United Kingdom and the Caribbean. Its principal hubs are located at
major airports in Charlotte, Philadelphia and Pittsburgh. The company's more
than 2,000 daily flights transported 56 million passengers in 1999. Our
investment includes a sizable amount of equipment trust certificates secured
by modern, saleable aircraft.
Transtar Holdings LP The company owns a 51% voting and 54% economic interest in Transtar Inc. 1.5
(Transtar), a transportation holding company composed of two business groups:
the railroad group and the marine group. Transtar provides the sole rail
access to, as well as the primary water transport for, nearly all the steel
making plants of USX Corporation (USX). The company's transportation groups
service USX and other domestic steel producers by delivering raw materials,
such as iron ore pellets, limestone, coal and coke, to steel-producing
facilities, by moving materials within certain steel plants and by trans-
porting semi-finished and finished products from such facilities. Transtar
also hauls coal and other freight for numerous other customers.
CSN Iron SA CSN (Companhia Siderurgica Nacional) is the largest steel producer in Latin 1.4
America. It manufactures and distributes hot-rolled, cold-rolled and galvanized
steel products and tin mill products. CSN distributes primarily to customers
in the automobile, auto-parts, civil construction, tubes and pipes and
electrical equipment industries. The company markets its products mainly in
Latin America, North America, Europe and Asia.
Fresenius Medical Care Fresenius Medical Care is the world's largest vertically integrated provider 1.4
of dialysis products and services to patients suffering from chronic kidney
failure. Fresenius Medical Care is a 50.3% subsidiary of Fresenius AG and
is based in Germany.
Espirito Santo-Escelsa The company generates, transmits and distributes electric power throughout 1.3
the Brazilian state of Espirito Santo. The company's major customers are
industrial and residential consumers. Through its subsidiary Magistra
Participacoes SA, Escelsa has an interest in the electric utility Enersul and
the cable company TV a Cabo Vitoria SA.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
PORTFOLIO INFORMATION (concluded)
As of March 31, 2000
Quality Profile* Percent of
S&P Rating/Moody's Rating Market Value
BBB/Baa 4.3%
BB/Ba 29.4
B/B 54.8
CCC/Caa 6.0
NR(Not Rated) 5.5
*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
Transportation 7.7%
Health Services 7.4
Energy 7.3
Steel 5.9
Wireless Communications--International 4.9
Geographic Profile Percent of
Top Five Foreign Countries* Net Assets
Brazil 5.0%
Mexico 4.0
Argentina 3.8
Indonesia 2.8
Canada 2.8
*All holdings are denominated in US dollars.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
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/
6 Month 12 Month Since Inception Standardized
As of March 31, 2000 Total Return Total Return Total Return 30-Day Yield
<S> <C> <C> <C> <C>
High Income Portfolio Class A Shares* +3.19% +2.40% +182.44% 11.87%
High Income Portfolio Class B Shares* +2.80 +1.62 +161.92 11.57
High Income Portfolio Class C Shares* +2.62 +1.42 +43.32 11.52
High Income Portfolio Class D Shares* +3.07 +2.14 +47.78 11.62
Merrill Lynch High Yield US Corporates, Cash Pay Index** -0.74 -1.33 +179.49/+56.20 --
CS First Boston Global High Yield Index** +0.77 +0.30 +189.27/+52.24 --
Ten-Year US Treasury Securities*** +2.75 -1.71 +112.08/+49.41 --
*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
March 31, 2000
PERFORMANCE DATA (concluded)
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/00 + 2.40% - 1.70%
Five Years Ended 3/31/00 + 7.46 + 6.59
Ten Years Ended 3/31/00 +10.94 +10.49
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/00 + 1.62% - 2.06%
Five Years Ended 3/31/00 + 6.65 + 6.65
Ten Years Ended 3/31/00 +10.11 +10.11
*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 3/31/00 +1.42% +0.50%
Five Years Ended 3/31/00 +6.56 +6.56
Inception (10/21/94)
through 3/31/00 +6.83 +6.83
*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 3/31/00 +2.14% -1.94%
Five Years Ended 3/31/00 +7.17 +6.30
Inception (10/21/94)
through 3/31/00 +7.44 +6.63
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds
<S> <C> <C> <C> <S> <C>
Aerospace--1.1% B- B3 $ 20,000,000 Fairchild Corporation, 10.75% due 4/15/2009 $ 10,100,000
B B2 15,000,000 Hexcel Corporation, 9.75% due 1/15/2009 12,825,000
B+ B1 25,000,000 Kitty Hawk, Inc., 9.95% due 11/15/2004 22,125,000
--------------
45,050,000
Airlines--1.5% Piedmont Aviation, Inc.:
NR* Ba3 1,985,000 Series E, 10.30% due 3/28/2007 2,017,614
NR* Ba3 1,950,000 Series F, 10.35% due 3/28/2011 1,995,844
BB- Ba3 1,500,000 Series H, 10% due 11/08/2012 1,500,585
NR* Ba3 1,304,000 Series J, 10.05% due 5/13/2005 1,291,586
BB- Ba3 1,116,000 Series J, 10.10% due 5/13/2007 1,123,215
BB- Ba3 3,767,000 Series J, 10.10% due 5/13/2009 3,790,204
BB- Ba3 2,710,000 Series J, 10.15% due 5/13/2011 2,737,804
NR* Ba3 2,226,000 Series K, 10% due 5/13/2004 2,197,563
NR* Ba3 2,666,000 Series K, 10.10% due 5/13/2008 2,681,209
NR* Ba3 2,550,000 Series K, 10.15% due 5/13/2010 2,574,760
USAir Inc.:
CCC+ B3 5,000,000 9.625% due 2/01/2001 4,950,750
NR* Ba3 1,092,000 Series 88F, 10.70% due 1/01/2003 1,098,383
NR* Ba3 1,092,000 Series 88G, 10.70% due 1/01/2003 1,098,383
NR* Ba3 1,092,000 Series 88H, 10.70% due 1/01/2003 1,098,383
NR* Ba3 1,092,000 Series 88I, 10.70% due 1/01/2003 1,098,383
BB- Ba3 3,637,834 Series 89A1, 9.33% due 1/01/2006+++ 3,787,477
BB- Ba3 25,000,000 Series 93A3, 10.375% due 3/01/2013 21,375,000
BB- Ba3 1,432,000 Series A, 10.70% due 1/15/2007 1,461,270
BB- Ba3 1,815,000 Series C, 10.70% due 1/15/2007 1,852,099
BB- Ba3 1,107,000 Series E, 10.70% due 1/15/2007 1,129,627
--------------
60,860,139
Automotive-- Venture Holdings Trust:
0.8% B B2 25,000,000 11% due 6/01/2007 22,500,000
B- B3 10,000,000 12% due 6/01/2009 8,200,000
--------------
30,700,000
Broadcasting-- NR* NR* 4,686,000 Acme Intermediate Holdings/Finance, 0/12% due
Radio & 9/30/2005 (e) 3,209,910
Television-- B- B3 3,000,000 Acme Television/Finance, 10.976% due 9/30/2004 (e) 2,685,000
1.7% B- B3 15,000,000 LIN Holdings Corp., 10.299% due 3/01/2008 (e) 9,262,500
B- B2 22,000,000 LIN Television Corporation, 8.375% due 3/01/2008 19,140,000
Sinclair Broadcasting Group Inc.:
B B2 20,000,000 10% due 9/30/2005 19,400,000
B B2 15,000,000 8.75% due 12/15/2007 12,975,000
--------------
66,672,410
Cable-- B+ B1 10,000,000 Adelphia Communications, 7.875% due 5/01/2009 8,550,000
Domestic-- BB- Ba3 8,750,000 CSC Holdings Inc., 9.875% due 5/15/2006 8,968,750
3.1% Century Communications Corporation:
BB- B1 30,000,000 9.75% due 2/15/2002 30,150,000
BB- B1 20,000,000 9.50% due 3/01/2005 19,400,000
B+ B2 15,000,000 Charter Communications Holdings LLC, 8.625% due
4/01/2009 13,312,500
B+ B1 40,000,000 Olympus Communications LP/Capital Corp., 10.625% due
11/15/2006 40,850,000
--------------
121,231,250
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds (continued)
<S> <C> <C> <C> <S> <C>
Cable-- ++Australis Media Ltd.:
International-- NR* NR* $ 1,077,816 14.398% due 11/01/2002 (e) $ 619,744
4.2% D NR* 79,117,000 1.75%/15.75% due 5/15/2003 (a)(d) 1,977,925
D NR* 1,353,490 1.75%/15.75% due 5/15/2003 (d) 20,302
CCC+ Caa1 10,000,000 Cable Satisfaction International, 12.75% due 3/01/2010 9,500,000
Cablevision SA:
BB B1 20,000,000 13.75% due 4/30/2007 (i)++++ 19,773,800
BB B1 15,000,000 13.75% due 5/01/2009 15,037,500
B- B3 22,000,000 Diamond Cable Communications PLC, 10.882% due
2/15/2007 (e) 16,940,000
D Caa3 33,500,000 ++Supercanal Holdings SA, 11.50% due 5/15/2005 (i) 18,676,250
B- B3 93,000,000 UnitedGlobalCom Inc., 10.75% due 2/15/2008 (c)(e) 64,635,000
B B2 35,000,000 United Pan-Europe Communications, 13.75% due
2/01/2010 (e)(i) 17,675,000
--------------
164,855,521
Capital Goods-- International Wire Group, Inc.:
1.2% B- B3 15,000,000 11.75% due 6/01/2005 15,225,000
B- B3 15,000,000 Series B, 11.75% due 6/01/2005 15,225,000
B- B3 25,250,000 Trench Electric & Trench Inc., 10.25% due 12/15/2007 17,170,000
--------------
47,620,000
Chemicals-- ISP Holdings Inc.:
1.2% BB- Ba3 19,502,000 9.75% due 2/15/2002 18,575,655
BB- Ba3 10,000,000 9% due 10/15/2003 9,000,000
BB Ba3 20,000,000 Lyondell Chemical Company, 9.625% due 5/01/2007 19,100,000
--------------
46,675,655
Child Care-- B- B3 20,000,000 Kindercare Learning Centers, Inc., 9.50% due 2/15/2009 18,100,000
0.5%
Computer B B2 34,000,000 Advanced Micro Devices, Inc., 11% due 8/01/2003 33,830,000
Services-- CCC Caa1 35,500,000 Dictaphone Corp., 11.75% due 8/01/2005 35,322,500
Electronics-- PSINet, Inc.:
3.7% B- B3 15,000,000 10% due 2/15/2005 14,175,000
B- B3 25,000,000 10.50% due 12/01/2006 (i) 24,000,000
NR* NR* 13,000,000 Splitrock Services Inc., 11.75% due 7/15/2008 13,780,000
B B2 30,000,000 Zilog Inc., 9.50% due 3/01/2005 26,850,000
--------------
147,957,500
Conglomerates-- BB Ba3 10,000,000 Dine, SA de CV, 8.75% due 10/15/2007 9,175,000
0.8% B- B3 25,000,000 Eagle-Picher Industries, 9.375% due 3/01/2008 21,375,000
--------------
30,550,000
Consumer B- B3 12,000,000 Albecca Inc., 10.75% due 8/15/2008 9,540,000
Products--0.6% B B3 20,000,000 Corning Consumer Products, 9.625% due 5/01/2008 13,100,000
--------------
22,640,000
Consumer CCC+ Caa2 8,000,000 AP Holdings Inc., 11.164% due 3/15/2008 (e) 1,640,000
Services--0.2% CCC+ Caa1 15,000,000 Apcoa Inc., 9.25% due 3/15/2008 8,343,750
--------------
9,983,750
Convertible B- Caa1 6,375,000 Quantum Health Resources, Inc., 4.75% due 10/01/2000 5,912,813
Bonds**--0.1%
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds (continued)
<S> <C> <C> <C> <S> <C>
Energy--6.7% Benton Oil & Gas Co.:
B B3 $ 5,000,000 11.625% due 5/01/2003 $ 3,387,500
B B3 20,000,000 9.375% due 11/01/2007 12,350,000
B B3 20,000,000 Chesapeake Energy Corp., 9.625% due 5/01/2005 18,650,000
B B2 15,000,000 Clark R & M, Inc., 8.875% due 11/15/2007 9,075,000
B B3 25,000,000 Clark USA Inc., 10.875% due 12/01/2005 12,625,000
B- Caa1 25,000,000 Energy Corp. of America, 9.50% due 5/15/2007 16,875,000
BB- Ba3 25,000,000 Ocean Energy Inc., 8.375% due 7/01/2008 23,375,000
CCC B3 30,000,000 Ocean Rig Norway AS, 10.25% due 6/01/2008 25,050,000
B+ B1 35,000,000 Parker Drilling Co., 9.75% due 11/15/2006 33,337,500
BB- Ba3 25,000,000 RBF Finance Company, 11% due 3/15/2006 26,250,000
CCC- Caa2 15,000,000 Southwest Royalties Inc., 10.50% due 10/15/2004 8,925,000
BB- B1 30,000,000 Tesoro Petroleum Corp., 9% due 7/01/2008 27,900,000
NR* C 10,000,000 ++TransAmerican Energy Corp., 13% due 6/15/2002 1,000,000
NR* NR* 36,000,000 TransAmerican Refining Corporation, 13% due
12/15/2002 (g) 36,180,000
B- B3 16,000,000 United Refining Co., 10.75% due 6/15/2007 9,680,000
--------------
264,660,000
Entertainment-- CCC+ Caa1 27,495,000 AMF Bowling Worldwide Inc., 12.581% due 3/15/2006 (e) 8,111,025
0.7% B- Caa2 24,000,000 Regal Cinemas Inc., 9.50% due 6/01/2008 10,200,000
B B1 10,000,000 Vail Resorts Inc., 8.75% due 5/15/2009 9,100,000
--------------
27,411,025
Financial CCC- Caa3 20,000,000 Amresco Inc., 9.875% due 3/15/2005 14,900,000
Services--0.7% D caa 20,000,000 SIG Capital Trust I, 9.50% due 8/15/2027 (i) 4,550,000
B NR* 17,000,000 Veritas Capital Trust, 10% due 1/01/2028 10,242,500
--------------
29,692,500
Food & Beverage-- Chiquita Brands International Inc.:
1.1% B B1 25,000,000 9.125% due 3/01/2004 21,437,500
B B1 20,000,000 10.25% due 11/01/2006 15,700,000
CCC Caa1 20,000,000 DGS International Finance Company BV, 10% due
6/01/2007 (i) 6,850,000
--------------
43,987,500
Gaming--4.0% NR* NR* 3,600 Capital Gaming International, Inc., 12% due 5/28/2001 1,260
D Caa1 42,126,000 ++GB Property Funding Corp., 10.875% due 1/15/2004 29,698,830
Jazz Casino Co. LLC:
NR* NR* 43,482,846 5.987% due 11/15/2009 (l)++++ 22,393,666
NR* NR* 2,524,830 Contingent Notes, due 11/15/2009 (f) 0
BB+ Ba2 20,000,000 Park Place Entertainment, 7.875% due 12/15/2005 18,500,000
Trump Atlantic City Associates/Funding Inc.:
B- B3 35,100,000 11.25% due 5/01/2006 23,604,750
B- B3 32,900,000 11.25% due 5/01/2006 22,125,250
Venetian Casino/LV Sands:
B- Caa1 30,000,000 12.25% due 11/15/2004 28,425,000
CCC+ Caa3 17,500,000 14.25% due 11/15/2005 13,212,500
--------------
157,961,256
Health Services B- B3 8,800,000 ALARIS Medical Systems, Inc., 9.75% due 12/01/2006 7,348,000
- --7.4% B+ B1 40,000,000 Beverly Enterprises Inc., 9% due 2/15/2006 34,050,000
Columbia/HCA Healthcare Corp.:
BB+ Ba2 1,000,000 6.91% due 6/15/2005 907,500
BB+ Ba2 8,460,000 8.85% due 1/01/2007 8,269,650
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds (continued)
<S> <C> <C> <C> <S> <C>
Health Services Columbia/HCA Healthcare Corp. (concluded):
(concluded) BB+ Ba2 $ 10,000,000 7.25% due 5/20/2008 $ 8,925,000
NR* Ba2 14,150,000 8.70% due 2/10/2010 13,584,000
BB+ Ba2 17,640,000 9% due 12/15/2014 17,022,600
BB+ Ba2 2,500,000 7.50% due 12/15/2023 2,037,500
BB+ Ba2 15,000,000 8.36% due 4/15/2024 13,612,500
CCC+ B3 39,491,000 Extendicare Health Services, 9.35% due 12/15/2007 20,732,775
B+ ba3 20,000,000 Fresenius Medical Capital Trust I, 9% due 12/01/2006 19,050,000
B+ ba3 40,000,000 Fresenius Medical Capital Trust II, 7.875% due 2/01/2008 35,300,000
CCC+ B3 27,225,000 Kinetic Concepts, Inc., 9.625% due 11/01/2007 19,738,125
B- Caa1 50,000,000 Magellan Health Services, 9% due 2/15/2008 34,750,000
++Mariner Post--Acute Network:
D C 49,000,000 9.50% due 11/01/2007 1,225,000
D C 12,750,000 10.50% due 11/01/2007 159,375
CC Caa3 8,000,000 Mediq Inc./PRN Life Support, 11% due 6/01/2008 840,000
B+ B3 15,000,000 PharMerica, Inc., 8.375% due 4/01/2008 8,025,000
Tenet Healthcare Corp.:
BB- Ba3 22,000,000 8.625% due 1/15/2007 20,900,000
BB- Ba3 30,000,000 8.125% due 12/01/2008 27,525,000
--------------
294,002,025
Home Builders-- US Home Corp.:
0.8% BB- B1 22,000,000 8.88% due 8/15/2007 21,725,000
BB- B1 10,000,000 8.875% due 2/15/2009 9,850,000
--------------
31,575,000
Hotels--1.3% HMH Properties, Inc.:
BB Ba2 40,000,000 7.875% due 8/01/2008 33,900,000
BB Ba2 9,000,000 8.45% due 12/01/2008 7,863,750
Signature Resorts, Inc.:
B Caa1 10,000,000 9.25% due 5/15/2006 6,050,000
CCC+ Caa2 5,000,000 9.75% due 10/01/2007 2,025,000
--------------
49,838,750
Independent The AES Corporation:
Power B+ Ba3 25,000,000 10.25% due 7/15/2006 24,375,000
Producers--2.5% B+ Ba3 15,000,000 8.375% due 8/15/2007 13,125,000
BB+ Ba2 30,000,000 CE Casecnan Water & Energy Co., 11.45% due 11/15/2005 29,284,020
BB Ba1 10,000,000 ESI Tractebel Acquisition Corp., 7.99% due 12/30/2011 8,605,810
BB+ Ba1 25,000,000 Monterrey Power, SA de CV, 9.625% due 11/15/2009 (i) 23,500,000
--------------
98,889,830
Industrial CCC+ Caa1 9,500,000 Thermadyne Holdings Corp., 12.426% due 6/01/2008 (e) 4,037,500
Services--0.3% CCC+ B3 12,000,000 Thermadyne Manufacturing, 9.875% due 6/01/2008 9,660,000
--------------
13,697,500
Industrials--0.9% CCC Caa1 3,100,000 American Skiing Co., 12% due 7/15/2006 2,642,750
B+ B1 16,000,000 Energis PLC, 9.75% due 6/15/2009 15,920,000
B- B2 30,000,000 Protection One Alarm Monitoring, 8.125% due 1/15/2009 (i) 17,550,000
--------------
36,112,750
Internet BB- B2 5,000,000 Williams Communication Group Inc., 10.875% due 10/01/2009 4,962,500
Transport--0.1%
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds (continued)
<S> <C> <C> <C> <S> <C>
Media & NR* NR* $ 30,500,000 Comtel Brasileira Ltd., 10.75% due 9/26/2004 (i) $ 29,661,250
Communications-- Globo Comunicac'es e Participacoes, Ltd. (i):
International-- B+ B2 35,000,000 10.50% due 12/20/2006 31,237,500
3.8% B+ B2 10,000,000 10.625% due 12/05/2008 8,650,000
B B3 35,000,000 Impsat Corp., 12.375% due 6/15/2008 30,712,500
B+ B2 40,000,000 Orion Network Systems, Inc., 15.877% due 1/15/2007 (e) 21,000,000
Telefonica de Argentina:
BBB- B1 20,000,000 11.875% due 11/01/2004 21,500,000
BBB- B1 10,000,000 9.125% due 5/07/2008 (i) 9,725,000
--------------
152,486,250
Metals & CC Ca 20,000,000 AEI Resources Inc., 11.50% due 12/15/2006 (i) 1,100,000
Mining--3.3% BB Ba2 15,000,000 Great Central Mines Ltd., 8.875% due 4/01/2008 13,500,000
CCC+ B3 35,000,000 Kaiser Aluminum & Chemical Corp., 12.75% due 2/01/2003 32,550,000
B B2 20,000,000 Metals USA Inc., 8.625% due 2/15/2008 18,100,000
BB- B1 25,000,000 Murrin Murrin Holdings Property, 9.375% due 8/31/2007 21,125,000
B B3 20,000,000 Ormet Corporation, 11% due 8/15/2008 (i) 18,300,000
B B2 30,000,000 P & L Coal Holdings Corp., 9.625% due 5/15/2008 26,775,000
--------------
131,450,000
Packaging--0.8% B+ Ba3 30,000,000 Vicap SA, 11.375% due 5/15/2007 29,812,500
Paper & Forest CCC+ caa 21,000,000 APP Financial II Mauritius Ltd., 12% (g)(h) 12,652,500
Products--4.2% CCC+ B3 40,000,000 APP International Finance, 11.75% due 10/01/2005 34,400,000
B B2 25,000,000 Ainsworth Lumber Company, 12.50% due 7/15/2007++++ 26,500,000
B Caa1 60,000,000 Doman Industries Limited, 8.75% due 3/15/2004 49,500,000
CCC+ B3 14,500,000 Indah Kiat International Finance, 12.50% due 6/15/2006 11,455,000
CCC+ B3 10,000,000 Pindo Deli Financial Mauritius, 10.75% due 10/01/2007 7,175,000
CCC+ B3 32,500,000 Tjiwi Kimia Finance Mauritius, 10% due 8/01/2004 24,293,750
--------------
165,976,250
Product D Caa3 10,000,000 Ameriserve Food Distributors, 8.875% due 10/15/2006 1,250,000
Distribution-- CCC- Ca 25,000,000 US Office Products Co., 9.75% due 6/15/2008 9,125,000
0.3% --------------
10,375,000
Publishing & BB- Ba3 7,250,000 Primedia, Inc., 7.625% due 4/01/2008 6,561,250
Printing--0.5% BBB- Baa3 15,000,000 World Color Press Inc., 7.75% due 2/15/2009 14,381,685
--------------
20,942,935
Real Estate-- BB- Ba3 30,000,000 Forest City Enterprises Inc., 8.50% due 3/15/2008 27,750,000
0.7%
Restaurants-- BB NR* 27,000,000 FM 1993A Corp., 9.75% due 11/01/2003 27,067,500
0.7%
Steel--5.9% BB Ba2 25,000,000 AK Steel Corp., 9.125% due 12/15/2006 24,500,000
NR* B2 65,000,000 CSN Iron SA, 9.125% due 6/01/2007 (i) 54,437,500
BB- B1 20,000,000 Hylsa, SA de CV, 9.25% due 9/15/2007 (i) 18,250,000
B- Caa2 20,000,000 Renco Steel Holdings, 10.875% due 2/01/2005 18,700,000
B Caa1 20,000,000 Republic Technology, 13.75% due 7/15/2009 (b)(i) 4,500,000
B+ B2 25,000,000 WCI Steel Inc., 10% due 12/01/2004 24,500,000
B- B3 25,000,000 WHX Corp., 10.50% due 4/15/2005 23,187,500
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds (continued)
<S> <C> <C> <C> <S> <C>
Steel Weirton Steel Corp.:
(concluded) B B2 $ 3,000,000 11.375% due 7/01/2004 $ 3,075,000
B B2 23,000,000 10.75% due 6/01/2005 23,287,500
B+ B2 43,000,000 Wheeling Pittsburgh Corp., 9.25% due 11/15/2007 39,345,000
--------------
233,782,500
Supermarkets-- Pueblo Xtra International Inc.:
0.3% CCC+ B3 21,075,000 9.50% due 8/01/2003 11,064,375
CCC+ B3 3,000,000 Series C, 9.50% due 8/01/2003 1,515,000
--------------
12,579,375
Telephony--2.7% B- B3 9,500,000 Esprit Telecom Group PLC, 10.875% due 6/15/2008 8,502,500
B- B3 4,500,000 ICG Holdings Inc., 13.149% due 5/01/2006 (e) 3,690,000
B B2 20,000,000 Intermedia Communications Inc., 8.60% due 6/01/2008 17,700,000
B B3 15,000,000 Level 3 Communications Inc., 9.125% due 5/01/2008 13,012,500
B B2 40,000,000 Nextlink Communications Inc., 9% due 3/15/2008 36,000,000
RSL Communications PLC:
B- B2 10,000,000 9.125% due 3/01/2008 8,050,000
B- B2 38,000,000 11.038% due 3/01/2008 (e) 20,330,000
--------------
107,285,000
Textiles--0.6% B Ca 25,000,000 Galey & Lord, Inc., 9.125% due 3/01/2008 9,125,000
++Polysindo International Finance Company BV:
D Ca 7,500,000 8.719% (k) 1,593,750
D Ca 45,600,000 11.375% due 6/15/2006 9,690,000
D Ca 14,250,000 9.375% due 7/30/2007 3,028,125
--------------
23,436,875
Transportation-- BB- NR* 45,000,000 Autopistas del Sol SA, 10.25% due 8/01/2009 (i) 37,462,500
7.3% CCC Caa1 20,000,000 Cathay International Ltd., 13.50% due 4/15/2008 (i) 8,900,000
BB- Ba3 25,000,000 Eletson Holdings, Inc., 9.25% due 11/15/2003 22,625,000
GS Superhighway Holdings:
BB- B1 43,000,000 9.875% due 8/15/2004 31,497,500
BB- B1 49,000,000 10.25% due 8/15/2007 34,422,500
B+ B1 20,000,000 Gearbulk Holding Ltd., 11.25% due 12/01/2004 20,550,000
B+ B2 45,000,000 TFM, SA de CV, 12.564% due 6/15/2009 (e) 31,612,500
Transportacion Maritima Mexicana, SA de CV:
BB- Ba3 23,000,000 9.25% due 5/15/2003 20,010,000
BB- Ba3 28,800,000 10% due 11/15/2006 24,840,000
B- B2 55,606,000 Transtar Holdings LP, 13.375% due 12/15/2003 57,413,195
--------------
289,333,195
Utilities--4.5% BB Ba3 15,000,000 Azurix Corporation, 10.75% due 2/15/2010 (i) 15,000,000
NR* NR* 20,000,000 CIA Saneamento Basico, 10% due 7/28/2005 (i) 18,250,000
B B1 10,000,000 Empresa Electricidad del Norte, 10.50% due 6/15/2005 (i) 4,325,000
B+ B2 60,000,000 Espirito Santo-Escelsa, 10% due 7/15/2007 49,950,000
B+ NR* 37,000,000 Inversora de Electrica, 9% due 9/16/2004 (i) 21,922,500
NR* NR* 14,571,089 Sunflower Electric Power Corp., 8% due 12/31/2016 9,544,063
BB+ Ba2 40,924,800 TransGas de Occidente SA, 9.79% due 11/01/2010 (i)+++ 35,604,576
NR* NR* 21,759,590 Tucson Electric & Power Co., 10.732% due 1/01/2013 (g)+++ 22,885,648
--------------
177,481,787
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Bonds (concluded)
<S> <C> <C> <C> <S> <C>
Waste BB- Ba3 $ 25,000,000 Allied Waste North America, 7.625% due 1/01/2006 $ 20,625,000
Management-- NR* Ca 23,700,000 ++Mid-American Waste Systems, Inc., 12.25% due 2/15/2003 829,500
0.6% CCC Ca 18,500,000 Safety-Kleen Services, 9.25% due 6/01/2008 2,497,500
--------------
23,952,000
Wireless CCC Caa1 10,000,000 Airgate PCS Inc., 12.697% due 10/01/2009 (e) 5,500,000
Communications-- CCC+ B3 10,000,000 Metrocall Inc., 9.75% due 11/01/2007 8,350,000
Domestic--2.9% CCC+ B3 40,000,000 Nextel Partners Inc., 14% due 2/01/2009 (e) 25,600,000
NR* NR* 35,000,000 Pagemart Wireless Inc., 13.086% due 2/01/2008 (e) 18,725,000
C Caa3 45,000,000 Paging Network, Inc., 10% due 10/15/2008 31,275,000
B B3 3,250,000 Pinnacle Holdings Inc., 10% due 3/15/2008 (e) 2,088,125
NR* NR* 5,000,000 SBA Communications Corp., 12.308% due 3/01/2008 (e) 3,250,000
B- B3 17,500,000 Spectrasite Holdings Inc., 12.875% due 3/15/2010 (e)(i) 8,618,750
B- B2 22,000,000 VoiceStream Wireless Company/VoiceStream Wireless
Holding Company, 11.875% due 11/15/2009 (e)(i) 13,200,000
--------------
116,606,875
Wireless B B1 11,000,000 CTI Holdings SA, 11.50% due 4/15/2008 (e) 7,067,500
Communications-- NR* B3 10,000,000 ClearNet Communications, 10.044% due 5/01/2009 (e) 5,675,000
International-- B B3 56,472,000 Comunicacion Celular SA, 12.68% due 3/01/2005 (e)(i) 37,412,700
4.9% CCC+ Caa1 25,000,000 Dolphin Telecom PLC, 14.147% due 5/15/2004 (e) 9,375,000
B- Caa1 46,000,000 McCaw International Ltd., 13.611% due 4/15/2007 (e) 33,350,000
B- Caa1 80,000,000 Millicom International Cellular, 13.413% due 6/01/2006 (e) 68,400,000
B- Caa1 33,000,000 Nextel International Inc., 12.125% due 4/15/2008 (e) 20,295,000
CCC+ Caa1 18,000,000 Telesystem International Wireless Inc., 13.151% due
6/30/2007 (e) 11,610,000
--------------
193,185,200
Total Investments in Bonds
(Cost--$4,448,872,206)--91.2% 3,615,102,916
Shares
Held
Preferred Stocks
Cable--International--0.6% 23,144 NTL Incorporated (Series B)++++ 23,838,320
Conglomerates--0.2% 3,100 Eagle-Picher Industries (Series B) 8,912,500
Energy--0.3% 10,705 R&B Falcon Corporation 11,909,313
TCR Holdings (Convertible) (g):
465,596 (Class B) 4,656
256,078 (Class C) 2,561
675,114 (Class D) 6,751
1,396,787 (Class E) 13,968
--------------
11,937,249
Financial Services--0.7% 1,230,000 California Federal Bank (Series A) 26,906,250
Product Distribution--0.0% 297,038 Nebco Evans Holding Co.++++ 111,389
Publishing & Printing--0.9% Primedia, Inc.:
125,000 (Series D) 11,718,750
292,500 (Series H) 25,228,125
--------------
36,946,875
Telephony--0.4% 15,020 Intermedia Communications Inc. (Convertible)++++ 14,419,200
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
Shares
Industries Held Issue Value
Preferred Stocks (concluded)
<S> <C> <S> <C>
Utilities--0.1% 3,580 Crown Castle International Corporation++++ $ 3,553,150
Wireless Communications-- 46,316 Nextel Communications, Inc. (Series E)++++ 44,347,570
Domestic--1.3% 7,234 Rural Cellular Corp. (Series B)++++ 6,890,385
--------------
51,237,955
Total Investments in Preferred Stocks
(Cost--$223,379,728)--4.5% 177,862,888
Common Stocks
Cable--Domestic--0.0% 2,887 ++CS Wireless Systems, Inc. 4,331
Energy--0.3% 914,710 ++Chi Energy Inc. (Series B) 10,519,165
Entertainment--0.5% 1,184,150 ++On Command Corporation 17,836,259
Gaming--0.0% 985 ++Capital Gaming International, Inc. 10
732,105 ++JCC Holding Company (Class A) 1,189,671
--------------
1,189,681
Transportation--0.4% 1,306,668 ++HMI 16,578,350
Total Investments in Common Stocks
(Cost--$109,066,120)--1.2% 46,127,786
Warrants (j)
Cable--Domestic--0.0% 25,000 People's Choice TV Corp. 3,250
Cable--International--0.0% 45,000 UIH Australia/Pacific 1,355,625
Computer Services-- 7,000 Splitrock Services Inc. 1,680,000
Electronics--0.0%
Energy--0.0% Chi Energy Inc.:
74,562 (Series B) 111,843
48,400 (Series C) 72,600
--------------
184,443
Entertainment--0.1% 385,661 On Command Corporation 2,193,447
Gaming--0.0% 113,386 Trump Castle Funding, Inc. 1
Media & Communications-- 15,000 Loral Space & Communications 108,750
International--0.0%
Wireless Communications-- 57,040 Page Mart Inc. 470,580
Domestic--0.0% 50,338 Wireless One Inc. 503
--------------
471,083
Wireless Communications-- 53,472 Comunicacion Celular SA (i) 668,400
International--0.0%
Total Investments in Warrants
(Cost--$5,497,215)--0.1% 6,664,999
Total Long-Term Investments
(Cost--$4,786,815,269)--97.0% 3,845,758,589
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
S&P Moody's Face
Industries Rating Rating Amount Issue Value
Short-Term Securities
<S> <C> <S> <C>
Commercial Paper***--1.1% $42,909,000 General Electric Capital Corp., 6.25% due 4/03/2000 $ 42,909,000
Total Investments in Short-Term Securities
(Cost--$42,909,000)--1.1% 42,909,000
Total Investments (Cost--$4,829,724,269)--98.1% 3,888,667,589
Other Assets Less Liabilities--1.9% 74,707,459
--------------
Net Assets--100.0% $3,963,375,048
==============
(a)Each $1,000 face amount contains one warrant of Australis Media
Ltd.
(b)Each $1,000 face amount contains one warrant of Republic
Technology.
(c)Each $1,000 face amount contains one warrant of United
International Holdings, Inc.
(d)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.
(e)Represents a zero coupon or step bond; the interest rate shown is
the effective yield at the time of purchase by the Portfolio.
(f)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.
(g)Restricted securities as to resale. The value of the Portfolio's
investment in restricted securities was approximately $71,746,000,
representing 1.8% of net assets.
Acquisition
Issue Date(s) Cost Value
APP Financial II Mauritius Ltd., 12% 4/24/1998--
5/01/1998 $ 18,425,000 $ 12,652,500
TCR Holdings (Convertible Preferred):
(Class B) 12/10/1998 27,936 4,656
(Class C) 12/10/1998 14,340 2,561
(Class D) 12/10/1998 35,781 6,751
(Class E) 12/10/1998 87,998 13,968
TransAmerican Refining Corporation,
13% due 12/15/2002 12/09/1997 35,640,000 36,180,000
Tucson Electric & Power Co.,
10.732% due 1/01/2013 7/16/1993--
10/06/1998 20,606,895 22,885,648
Total $ 74,837,950 $ 71,746,084
============= ============
(h)The security is a perpetual bond and has no definite maturity
date.
(i)The security may be offered and sold to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
(j)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.
(k)Maturity of this security is pending as a result of bankruptcy
proceedings.
(l)Floating rate note.
*Not Rated.
**Industry classifications for convertible bonds are: (1) Health
Services.
***Commercial Paper is traded on a discount basis; the interest rate
shown reflects the discount rate paid at the time of purchase by the
Portfolio.
++Non-income producing security.
++++Represents a pay-in-kind security which may pay
interest/dividends in additional face/shares.
+++Asset-Backed Obligations are subject to principal paydowns as a
result of prepayments or refinancings of the underlying instruments.
As a result, the average life may be substantially less than the
original maturity.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of March 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$4,829,724,269) $3,888,667,589
Cash 705,711
Receivables:
Interest $ 98,722,088
Securities sold 28,318,823
Dividends 1,422,532
Capital shares sold 1,165,862
Paydowns 106,508 129,735,813
--------------
Prepaid registration fees and other assets 412,693
--------------
Total assets 4,019,521,806
--------------
Liabilities: Payables:
Securities purchased 20,565,628
Capital shares redeemed 18,109,701
Dividends to shareholders 12,706,093
Distributor 2,147,300
Investment adviser 1,294,038 54,822,760
--------------
Accrued expenses and other liabilities 1,323,998
--------------
Total liabilities 56,146,758
--------------
Net Assets: Net assets $3,963,375,048
==============
Net Assets Class A Common Stock, $.10 par value, 500,000,000 shares
Consist of: authorized $ 11,108,679
Class B Common Stock, $.10 par value, 1,500,000,000 shares
authorized 41,147,690
Class C Common Stock, $.10 par value, 200,000,000 shares
authorized 4,349,019
Class D Common Stock, $.10 par value, 500,000,000 shares
authorized 4,947,220
Paid-in capital in excess of par 5,228,423,649
Accumulated realized capital losses on investments--net (259,352,649)
Accumulated distributions in excess of realized capital gains on
investments--net (126,191,880)
Unrealized depreciation on investments--net (941,056,680)
--------------
Net assets $3,963,375,048
==============
Net Asset Class A--Based on $715,100,741 and 111,086,786 shares
Value: outstanding $ 6.44
==============
Class B--Based on $2,649,413,761 and 411,476,902 shares
outstanding $ 6.44
==============
Class C--Based on $280,208,020 and 43,490,187 shares
outstanding $ 6.44
==============
Class D--Based on $318,652,526 and 49,472,195 shares
outstanding $ 6.44
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended March 31, 2000
<S> <S> <C> <C>
Investment Interest and discount earned $ 241,335,364
Income: Dividends 10,514,124
Other 2,598,718
--------------
Total income 254,448,206
--------------
Expenses: Account maintenance and distribution fees--Class B $ 11,373,853
Investment advisory fees 9,243,621
Transfer agent fees--Class B 1,674,840
Account maintenance and distribution fees--Class C 1,318,753
Account maintenance fees--Class D 431,112
Transfer agent fees--Class A 372,395
Accounting services 239,751
Transfer agent fees--Class C 188,248
Transfer agent fees--Class D 165,097
Printing and shareholder reports 92,243
Custodian fees 86,793
Registration fees 62,297
Professional fees 40,441
Directors' fees and expenses 13,938
Pricing fees 12,520
Other 48,922
--------------
Total expenses 25,364,824
--------------
Investment income--net 229,083,382
--------------
Realized & Realized loss on investments--net (259,352,649)
Unrealized Change in unrealized depreciation on investments--net 165,362,754
Gain (Loss) on --------------
Investments--Net: Net Increase in Net Assets Resulting from Operations $ 135,093,487
==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 229,083,382 $ 560,286,172
Realized loss on investments--net (259,352,649) (120,681,720)
Change in unrealized depreciation on investments--net 165,362,754 (112,214,466)
-------------- --------------
Net increase in net assets resulting from operations 135,093,487 327,389,986
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (42,046,636) (92,923,653)
Shareholders: Class B (152,350,456) (382,415,655)
Class C (16,468,971) (44,201,661)
Class D (18,217,319) (40,745,203)
Realized gain on investments--net:
Class A -- (670,291)
Class B -- (3,070,864)
Class C -- (367,912)
Class D -- (299,510)
In excess of realized gain on investments--net:
Class A -- (18,923,916)
Class B -- (86,697,810)
Class C -- (10,387,035)
Class D -- (8,455,881)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (229,083,382) (689,159,391)
-------------- --------------
Capital Share Net decrease in net assets derived from capital share
Transactions: transactions (761,866,534) (1,191,917,429)
-------------- --------------
Net Assets: Total decrease in net assets (855,856,429) (1,553,686,834)
Beginning of period 4,819,231,477 6,372,918,311
-------------- --------------
End of period $3,963,375,048 $4,819,231,477
============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights
<CAPTION>
Class A
For the
Six Months
The following per share data and ratios have been derived Ended
from information provided in the financial statements. March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997++ 1996++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 6.59 $ 7.05 $ 8.29 $ 7.93 $ 7.80
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .36 .72 .75 .74 .75
Realized and unrealized gain (loss) on
investments--net (.15) (.31) (1.19) .36 .14
---------- ---------- ---------- ---------- ----------
Total from investment operations .21 .41 (.44) 1.10 .89
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.36) (.72) (.75) (.74) (.76)
In excess of investment income--net -- -- -- -- --+++++
Realized gain on investments--net -- (.01) (.05) -- --
In excess of realized gain on
investments--net -- (.14) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.36) (.87) (.80) (.74) (.76)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 6.44 $ 6.59 $ 7.05 $ 8.29 $ 7.93
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 3.19%+++ 5.90% (5.98%) 14.58% 11.95%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .53%* .51% .49% .51% .51%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 10.78%* 10.40% 9.40% 9.23% 9.57%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 715,101 $ 807,942 $ 922,820 $1,044,799 $ 947,479
========== ========== ========== ========== ==========
Portfolio turnover 7.86% 19.74% 41.97% 38.58% 32.44%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class B
For the
Six Months
The following per share data and ratios have been derived Ended
from information provided in the financial statements. March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997++ 1996++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 6.59 $ 7.05 $ 8.30 $ 7.93 $ 7.80
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .33 .67 .69 .68 .69
Realized and unrealized gain (loss) on
investments--net (.15) (.31) (1.20) .37 .15
---------- ---------- ---------- ---------- ----------
Total from investment operations .18 .36 (.51) 1.05 .84
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.33) (.67) (.69) (.68) (.71)
In excess of investment income--net -- -- -- -- --+++++
Realized gain on investments--net -- (.01) (.05) -- --
In excess of realized gain on
investments--net -- (.14) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.33) (.82) (.74) (.68) (.71)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 6.44 $ 6.59 $ 7.05 $ 8.30 $ 7.93
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 2.80%+++ 5.10% (6.80%) 13.86% 11.11%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.30%* 1.28% 1.25% 1.27% 1.28%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 10.02%* 9.66% 8.63% 8.46% 8.80%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $2,649,414 $3,290,248 $4,469,452 $5,495,488 $4,250,539
========== ========== ========== ========== ==========
Portfolio turnover 7.86% 19.74% 41.97% 38.58% 32.44%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<CAPTION>
Class C
For the
Six Months
The following per share data and ratios have been derived Ended
from information provided in the financial statements. March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997++ 1996++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 6.60 $ 7.06 $ 8.30 $ 7.94 $ 7.81
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .33 .66 .69 .68 .68
Realized and unrealized gain (loss) on
investments--net (.16) (.31) (1.19) .36 .15
---------- ---------- ---------- ---------- ----------
Total from investment operations .17 .35 (.50) 1.04 .83
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.33) (.66) (.69) (.68) (.70)
In excess of investment income--net -- -- -- -- --+++++
Realized gain on investments--net -- (.01) (.05) -- --
In excess of realized gain on
investments--net -- (.14) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.33) (.81) (.74) (.68) (.70)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 6.44 $ 6.60 $ 7.06 $ 8.30 $ 7.94
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 2.62%+++ 5.06% (6.72%) 13.66% 11.05%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses 1.35%* 1.33% 1.31% 1.32% 1.33%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 9.96%* 9.62% 8.58% 8.39% 8.73%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 280,208 $ 361,606 $ 550,482 $ 638,626 $ 362,518
========== ========== ========== ========== ==========
Portfolio turnover 7.86% 19.74% 41.97% 38.58% 32.44%
========== ========== ========== ========== ==========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
Class D
For the
Six Months
The following per share data and ratios have been derived Ended
from information provided in the financial statements. March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997++ 1996++
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 6.59 $ 7.05 $ 8.30 $ 7.94 $ 7.80
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .35 .70 .73 .72 .72
Realized and unrealized gain (loss) on
investments--net (.15) (.31) (1.20) .36 .16
---------- ---------- ---------- ---------- ----------
Total from investment operations .20 .39 (.47) 1.08 .88
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.35) (.70) (.73) (.72) (.74)
In excess of investment income--net -- -- -- -- --+++++
Realized gain on investments--net -- (.01) (.05) -- --
In excess of realized gain on
investments--net -- (.14) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.35) (.85) (.78) (.72) (.74)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 6.44 $ 6.59 $ 7.05 $ 8.30 $ 7.94
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share 3.07%+++ 5.64% (6.32%) 14.29% 11.82%
Return:** ========== ========== ========== ========== ==========
Ratios to Average Expenses .78%* .76% .74% .76% .76%
Net Assets: ========== ========== ========== ========== ==========
Investment income--net 10.54%* 10.15% 9.14% 8.95% 9.30%
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in
Data: thousands) $ 318,652 $ 359,435 $ 430,164 $ 496,836 $ 267,687
========== ========== ========== ========== ==========
Portfolio turnover 7.86% 19.74% 41.97% 38.58% 32.44%
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
High Income Portfolio (the "Portfolio") is one of three portfolios
in Merrill Lynch Corporate Bond Fund, Inc. (the "Fund") which is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Portfolio's
financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. These
unaudited financial statements reflect all adjustments, which are,
in the opinion of management, necessary to a fair statement of the
results for the interim period presented. All such adjustments are
of a normal recurring nature. The Portfolio has offered four classes
of shares under the Merrill Lynch Select PricingSM System. On March
31, 2000, the Fund's Board of Directors approved a proposal to
resume offering the Portfolio's shares to new investors. Since March
24, 1998, shares of the Portfolio have no longer been available for
purchase (or exchange), except under the following circumstances:
shareholders of the Portfolio may continue to elect to have
dividends and distributions paid on shares of the Portfolio
reinvested in additional shares of the Portfolio; certain
participants in employer-sponsored retirement or savings plans,
including eligible 401(k) plans, will continue to be permitted to
purchase shares of the Portfolio through such plans; and shares of
the Portfolio will continue to be available for purchase by
participants in certain fee-based programs, such as the Mutual Fund
Advisor program administered by Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"), a subsidiary of Merrill Lynch & Co.
("ML & Co."). In addition, shares of the Portfolio will continue to
be available for purchase in single transactions over $1,000,000.
Shares of Class A and Class D are sold with a front-end sales
charge. Shares of Class B and Class C may be subject to a contingent
deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and
conditions, except that Class B, Class C and Class D Shares bear
certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance
and distribution expenditures. The following is a summary of
significant accounting policies followed by the Portfolio.
(a) Valuation of investments--Portfolio securities that are traded
on stock exchanges are valued at the last sale price as of the close
of business on the day the securities are being valued, or lacking
any sales, at the mean between closing bid and asked prices.
Securities traded in the over-the-counter market are valued at the
mean of the most recent bid and ask prices as obtained from one or
more dealers that make markets in the securities. Portfolio
securities that are traded both in the over-the-counter market and
on a stock exchange are valued according to the broadest and most
representative market, and it is expected that for debt securities
this ordinarily will be the over-the-counter market. Short-term
securities are valued at amortized cost, which approximates market
value.
Options written or purchased are valued at the last sale price in
the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price
(options written) or the last bid price (options purchased).
Financial futures contracts and options thereon, which are traded on
exchanges, are valued at their closing price at the close of such
exchanges. Securities and assets for which market quotations are not
readily available are valued at fair value as determined in good
faith by or under the direction of the Board of Directors of the
Fund, including valuations furnished by a pricing service retained
by the Fund which may use a matrix system for valuations.
(b) Derivative financial instruments--The Portfolio may engage in
various portfolio investment strategies to increase or decrease the
level of risk to which the Portfolio is exposed more quickly and
efficiently than transactions in other types of instruments. Losses
may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Portfolio may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the
Portfolio deposits and maintains as collateral such initial margin
as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Portfolio agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation
in value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Portfolio as unrealized
gains or losses. When the contract is closed, the Portfolio records
a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
* Options--The Portfolio is authorized to purchase and write call
and put options. When the Portfolio writes an option, an amount
equal to the premium received by the Portfolio is reflected as an
asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Portfolio enters into a closing transaction), the
Portfolio realizes a gain or loss on the option to the extent of the
premiums received or paid (or loss or gain to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Portfolio's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Dividend income is recorded on the ex-
dividend dates. Interest income (including amortization of discount)
is recognized on the accrual basis. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for post-October losses.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co., which is the limited partner. The Fund has
also entered into a Distribution Agreement and Distribution Plans
with Merrill Lynch Funds Distributor ("MLFD" or the "Distributor"),
a division of Princeton Funds Distributor, Inc. ("PFD"), which is a
wholly-owned subsidiary of Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's Portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee with respect to the Portfolio
based upon the aggregate average daily value of the Fund's net
assets at the following annual rates: .55% of the Fund's average
daily net assets not exceeding $250 million; .50% of average daily
net assets in excess of $250 million but not exceeding $500 million;
.45% of average daily net assets in excess of $500 million but not
exceeding $750 million; and .40% of average daily net assets in
excess of $750 million. For the six months ended March 31, 2000, the
aggregate average daily net assets of the Fund, including the Fund's
Investment Grade Portfolio and Intermediate Term Portfolio, was
approximately $6,180,283,000.
Pursuant to the Distribution Plans adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor ongoing account maintenance and distribution
fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares of the
Portfolio as follows:
Account Distribution
Maintenance Fee Fee
Class B .25% .50%
Class C .25% .55%
Class D .25% --
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
Pursuant to a sub-agreement with the Distributor, MLPF&S, a
subsidiary of ML & Co., also provides account maintenance and
distribution services to the Fund. The ongoing account maintenance
fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders.
The ongoing distribution fee compensates the Distributor and MLPF&S
for providing shareholder and distribution-related services to Class
B and Class C shareholders.
For the six months ended March 31, 2000, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer
concessions on sales of the Portfolio's Class A and Class D Shares
as follows:
MLFD MLPF&S
Class A $3,441 $31,319
Class D $4,554 $33,998
For the six months ended March 31, 2000, MLPF&S received contingent
deferred sales charges of $3,392,902 and $9,017 relating to
transactions in Class B and Class C Shares of the Portfolio,
respectively, and front-end sales charge waivers of $825 relating to
transactions in Class D Shares.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
During the six months ended March 31, 2000, the Portfolio paid
Merrill Lynch Security Pricing Service, an affiliate of MLPF&S, $942
for security price quotations to compute the net asset value of the
Portfolio.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended March 31, 2000 were $337,535,114 and
$1,040,302,495, respectively.
Net realized losses for the six months ended March 31, 2000 and net
unrealized losses as of March 31, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (259,352,649) $ (941,056,680)
-------------- --------------
Total $ (259,352,649) $ (941,056,680)
============== ==============
As of March 31, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $941,056,680, of which $36,554,392 related
to appreciated securities and $977,611,072 related to depreciated
securities. The aggregate cost of investments at March 31, 2000 for
Federal income tax purposes was $4,829,724,269.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $761,866,534 and $1,191,917,429 for the six months ended March
31, 2000 and for the year ended September 30, 1999, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the
Six Months Ended Dollar
March 31, 2000 Shares Amount
Shares sold 11,826,744 $ 77,944,134
Shares issued to share-
holders in reinvestment of
dividends 2,261,862 14,898,062
------------- --------------
Total issued 14,088,606 92,842,196
Shares redeemed (25,609,327) (168,718,336)
------------- --------------
Net decrease (11,520,721) $ (75,876,140)
============= ==============
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
Class A Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
Shares sold 37,334,447 $ 261,220,060
Shares issued to shareholders
in reinvestment of dividends
and distributions 6,117,372 42,353,924
------------- --------------
Total issued 43,451,819 303,573,984
Shares redeemed (51,766,039) (360,396,170)
------------- --------------
Net decrease (8,314,220) $ (56,822,186)
============= ==============
Class B Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
Shares sold 10,801,231 $ 71,222,086
Shares issued to shareholders
in reinvestment of dividends 9,375,983 61,758,418
------------- --------------
Total issued 20,177,214 132,980,504
Automatic conversion of
shares (2,715,871) (17,921,528)
Shares redeemed (105,170,804) (692,988,584)
------------- --------------
Net decrease (87,709,461) $ (577,929,608)
============= ==============
Class B Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
Shares sold 35,328,168 $ 246,251,760
Shares issued to shareholders
in reinvestment of dividends
and distributions 30,984,036 214,651,143
------------- --------------
Total issued 66,312,204 460,902,903
Automatic conversion of
shares (4,819,675) (33,308,103)
Shares redeemed (196,217,737) (1,357,326,809)
------------- --------------
Net decrease (134,725,208) $ (929,732,009)
============= ==============
Class C Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
Shares sold 1,450,222 $ 9,582,625
Shares issued to shareholders
in reinvestment of dividends 1,253,271 8,260,010
------------- --------------
Total issued 2,703,493 17,842,635
Shares redeemed (14,039,294) (92,596,633)
------------- --------------
Net decrease (11,335,801) $ (74,753,998)
============= ==============
Class C Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
Shares sold 4,456,378 $ 31,228,663
Shares issued to shareholders
in reinvestment of dividends
and distributions 4,393,975 30,452,417
------------- --------------
Total issued 8,850,353 61,681,080
Shares redeemed (32,048,468) (222,320,613)
------------- --------------
Net decrease (23,198,115) $ (160,639,533)
============= ==============
Class D Shares for the Six Months Dollar
Ended March 31, 2000 Shares Amount
Shares sold 3,016,876 $ 19,855,073
Automatic conversion of
shares 2,715,790 17,921,528
Shares issued to shareholders
in reinvestment of dividends 1,356,107 8,934,704
------------- --------------
Total issued 7,088,773 46,711,305
Shares redeemed (12,128,651) (80,018,093)
------------- --------------
Net decrease (5,039,878) $ (33,306,788)
============= ==============
Class D Shares for the Year Dollar
Ended September 30, 1999 Shares Amount
Shares sold 7,998,021 $ 55,581,473
Automatic conversion of
shares 4,815,996 33,308,103
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,676,672 25,476,676
------------- --------------
Total issued 16,490,689 114,366,252
Shares redeemed (22,965,985) (159,089,953)
------------- --------------
Net decrease (6,475,296) $ (44,723,701)
============= ==============
5. Capital Loss Carryforward:
At September 30, 1999, the Portfolio had a net capital loss
carryforward of approximately $74,969,000, all of which expires in
2007. This amount will be available to offset like amounts of any
future taxable gains.
Merrill Lynch Corporate Bond Fund, Inc., High Income Portfolio
March 31, 2000
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
