MERRILL LYNCH CORPORATE HIGH YIELD FUND II INC, DEF 14A, 1995-11-16

MERRILL LYNCH CORPORATE HIGH YIELD FUND II INC
DEF 14A, 1995-11-16

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 16, 1995

SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/X/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

CORPORATE HIGH YIELD FUND II, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

CORPORATE HIGH YIELD FUND II, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(t)(1), or 14a-6(J)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

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

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------
(3) Filing party:

- --------------------------------------------------------------------------------
(4) Date filed:

- --------------------------------------------------------------------------------
Notes:
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2

CORPORATE HIGH YIELD FUND II, INC.

P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 15, 1995
------------------------

TO THE STOCKHOLDERS OF CORPORATE HIGH YIELD FUND II, INC.:

Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Corporate High Yield Fund II, Inc. (the "Fund") will be held at
the offices of Merrill Lynch Asset Management, L.P. ("MLAM"), 800 Scudders Mill
Road, Plainsboro, New Jersey 08536, on Friday, December 15, 1995 at 9:15 A.M.
for the following purposes:

(1) To elect a Board of Directors to serve for the ensuing year;

(2) To consider and act upon a proposal to ratify the selection of
Deloitte & Touche LLP to serve as independent auditors of the Fund for its
current fiscal year; and

(3) To transact such other business as may properly come before the
Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on November 8, 1995
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting or any adjournment thereof.

A complete list of the stockholders of the Fund entitled to vote at the
Meeting will be available and open to the examination of any stockholder of the
Fund for any purpose germane to the Meeting during ordinary business hours from
and after December 1, 1995, at the office of the Fund, 800 Scudders Mill Road,
Plainsboro, New Jersey. You are cordially invited to attend the Meeting.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THIS PURPOSE. The enclosed proxy is being solicited on
behalf of the Board of Directors of the Fund.

By Order of the Board of Directors

MICHAEL J. HENNEWINKEL
Secretary
Plainsboro, New Jersey
Dated: November 16, 1995
<PAGE> 3

PROXY STATEMENT
------------------------

CORPORATE HIGH YIELD FUND II, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
------------------------

ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 15, 1995

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Corporate High Yield Fund II,
Inc., a Maryland corporation (the "Fund"), to be voted at the Annual Meeting of
Stockholders of the Fund (the "Meeting"), to be held at the offices of Merrill
Lynch Asset Management, L.P. ("MLAM"), 800 Scudders Mill Road, Plainsboro, New
Jersey 08536, on Friday, December 15, 1995 at 9:15 A.M. The approximate mailing
date of this Proxy Statement is November 22, 1995.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted for the election of the Board of Directors to serve for the
ensuing year, and for the ratification of the selection of independent auditors
to serve for the Fund's current fiscal year. Any proxy may be revoked at any
time prior to the exercise thereof by giving written notice to the Secretary of
the Fund.

The Board of Directors has fixed the close of business on November 8, 1995
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting and at any adjournment thereof. Stockholders on the
record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of November 8, 1995, the Fund had
outstanding 8,522,896 shares of common stock, par value $.10 per share ("Common
Stock"). To the knowledge of the Fund, as of November 8, 1995, no person was the
beneficial owner of more than five percent of the outstanding shares of Common
Stock.

Approval of Items 1 and 2 will require the affirmative vote of a majority
of votes cast by the Fund's shareholders, voting in person or by proxy, at a
meeting in which a quorum is duly constituted. The Board of Directors of the
Fund knows of no business other than that mentioned in Items 1 and 2 of the
Notice of Meeting which will be presented for consideration at the Meeting. If
any other matter is properly presented, it is the intention of the persons named
in the enclosed proxy to vote in accordance with their best judgment.
<PAGE> 4

ITEM 1. ELECTION OF DIRECTORS

At the meeting, the Board of Directors will be elected to serve until the
next Annual Meeting of Stockholders and until their successors are elected and
qualified. It is intended that all properly executed proxies will be voted
(unless such authority has been withheld in the proxy) in favor of the five (5)
persons designated as directors to be elected by holders of Common Stock. The
Board of Directors of the Fund knows of no reason why any of these nominees will
be unable to serve, but in the event of any such unavailability, the proxies
received will be voted for such substitute nominee or nominees as the Board of
Directors may recommend.

Certain information concerning the nominees is set forth as follows:

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OF THE FUND
PRINCIPAL OCCUPATIONS BENEFICIALLY
DURING PAST FIVE YEARS DIRECTOR OWNED AT
NAME AND ADDRESS OF NOMINEE AND PUBLIC DIRECTORSHIPS(1) AGE SINCE NOVEMBER 8, 1995
- --------------------------------- ------------------------------------ ----- --------- -----------------
<S> <C> <C> <C> <C>
Joe Grills(1)(2)................. Member of the Committee of 60 1994 0
183 Soundview Lane Investment of Employee Benefit
New Canaan, Connecticut 06840 Assets of the Financial Executives
Institute ("CIEBA") since 1986,
member of CIEBA's Executive
Committee since 1988 and its
Chairman from 1991 to 1992;
Assistant Treasurer of
International Business Machines
Incorporated ("IBM") and Chief
Investment Officer of IBM
Retirement Funds from 1986 until
1993; Member of the Investment
Advisory Committee of the State of
New York Common Retirement Fund;
Director, Duke Management Company;
Director, LaSalle Street Fund.
Walter Mintz(1)(2)............... Special Limited Partner of 66 1993 0
1114 Avenue of the Americas Cumberland Associates (investment
New York, New York 10036 partnership) since 1982.
Melvin R. Seiden(1)(2)........... President of Silbanc Properties, 65 1993 0
780 Third Avenue Ltd. (real estate, investment and
Suite 2502 consulting) since 1987; Chairman
New York, New York 10017 and President of Seiden & de
Cuevas, Inc. (private investment
firm) from 1964 to 1987.
Stephen B. Swensrud(1)(2)........ Principal of Fernwood Associates 62 1993 0
24 Federal Street (financial consultants).
Boston, Massachusetts 02110
</TABLE>

2
<PAGE> 5

- ---------------
(1) Each of the nominees is a director, trustee or member of an advisory board
of certain other investment companies for which FAM or MLAM acts as
investment adviser.

(2) Member of Audit Committee of the Board of Directors.

(3) Interested person, as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Fund.

Committees and Board of Directors' Meetings. The Board of Directors has a
standing Audit Committee, which consists of the Directors who are not
"interested persons" of the Fund within the meaning of the Investment Company
Act. The principal purpose of the Audit Committee is to review the scope of the
annual audit conducted by the Fund's independent auditors and the evaluation by
such auditors of the accounting procedures followed by the Fund. The
non-interested Directors have retained independent legal counsel to assist them
in connection with these duties. The Board of Directors does not have a
nominating committee.

During the fiscal year ended August 31, 1995, the Board of Directors held
four meetings and the Audit Committee held four meetings. Each of the Directors
then in office attended at least 75% of the total number of meetings of the
Board of Directors. Each member of the Audit Committee then in office attended
at least 75% of the total number of meetings of the Audit Committee held during
such period.

Compliance with Section 16(a) of the Securities Exchange Act of
1934. Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Fund's officers, directors and persons who own
more than ten percent of a registered class of the Fund's equity securities, to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and greater than ten percent stockholders are required by
SEC regulations to furnish the Fund with copies of all Forms 3, 4 and 5 they
file.

3
<PAGE> 6

Based solely on the Fund's review of the copies of such forms, and
amendments thereto, furnished to it during or with respect to its most recent
fiscal year, and written representations from certain reporting persons that
they were not required to file Form 5 with respect to the most recent fiscal
year, the Fund believes that all of its officers, directors, greater than ten
percent beneficial owners and other persons subject to Section 16 of the
Exchange Act because of the requirements of Section 30 of the Investment Company
Act, i.e., any advisory board member, investment adviser or affiliated person of
the Fund's investment adviser, have complied with all filing requirements
applicable to them with respect to transactions during the Fund's most recent
fiscal year.

Interested Persons. The Fund considers Mr. Zeikel to be an "interested
person" of the Fund within the meaning of Section 2(a)(19) of the Investment
Company Act as a result of the position he holds with FAM and its affiliates.
Mr. Zeikel is the President of the Fund and the President of FAM and MLAM.

Compensation of Directors. FAM, the investment adviser, pays all
compensation of all officers of the Fund and all Directors of the Fund who are
affiliated with ML&Co. or its subsidiaries. The Fund pays each Director not
affiliated with the investment adviser a fee of $5,000 per year plus $250 per
regular meeting attended, together with such Director's actual out-of-pocket
expenses relating to attendance at meetings. The Fund also pays each member of
its Audit Committee a fee of $1,000 per year plus $500 per meeting attended,
together with such Director's out-of-pocket expenses relating to attendance at
such meetings. These fees and expenses aggregated $45,298 for the fiscal year
ended August 31, 1995.

The following table sets forth for the fiscal year ended August 31, 1995
compensation paid by the Fund to the non-affiliated Directors and, for the
calendar year ended December 31, 1995, the aggregate compensation paid by all
investment companies advised by FAM and its affiliate, MLAM ("FAM/MLAM Advised
Funds"), to the non-affiliated Directors.

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
PENSION OR FROM FUND AND
RETIREMENT BENEFITS FAM/MLAM ADVISED
NAME OF COMPENSATION ACCRUED AS PART FUNDS PAID TO
DIRECTOR FROM FUND OF FUND EXPENSES DIRECTORS
- ------------------------------------- ------------ -------------------- ----------------
<S> <C> <C> <C>
Joe Grills(1)........................ $9,000 None $190,383
Walter Mintz(1)...................... $9,000 None $157,325
Melvin R. Seiden(1).................. $9,000 None $157,325
Stephen B. Swensrud(1)............... $9,000 None $165,325
Harry Woolf(1)(2).................... $9,000 None $157,325
</TABLE>

- ---------------
(1) In addition to the Fund, the Directors serve on the boards of other FAM/MLAM
Advised Funds as follows: Mr. Grills (36 funds and portfolios); Mr. Mintz
(36 funds and portfolios); Mr. Seiden (36 funds and portfolios); Mr.
Swensrud (46 funds and portfolios); and Mr. Woolf (36 funds and portfolios).

(2) Mr. Woolf is retiring from the Board of Directors pursuant to the Fund's
retirement policy and is not a nominee for election to the Board of
Directors.

4
<PAGE> 7

Officers of the Fund. The Board of Directors has elected eight officers of
the Fund. The following sets forth information concerning each of these
officers:

<TABLE>
<CAPTION>
OFFICER
NAME AND PRINCIPAL OCCUPATION OFFICE AGE SINCE
-------------------------------------------------- ------------------------- --- -------
<S> <C> <C> <C>
Arthur Zeikel..................................... President 63 1993
President of FAM (which term as used herein
includes its corporate predecessors) since
1977; President of MLAM (which term as used
herein includes its corporate predecessors)
since 1977; President and Director of
Princeton Services since 1993; Executive Vice
President of ML&Co. since 1990; Executive
Vice President of Merrill Lynch since 1990
and Senior Vice President thereof from 1985
to 1990; Director of MLFD.
Terry K. Glenn.................................... Executive Vice President 55 1993
Executive Vice President of FAM and MLAM since
1983; Executive Vice President and Director
of Princeton Services since 1993; President
of MLFD since 1986 and Director thereof since
1991; President of Princeton Administrators,
L.P. since 1988.
N. John Hewitt.................................... Senior Vice President 60 1993
Senior Vice President of FAM and MLAM since
1980.
Vincent T. Lathbury, III.......................... Vice President 55 1993
Vice President of MLAM since 1982; Portfolio
Manager of FAM and MLAM since 1982.
Elizabeth Phillips................................ Vice President 45 1993
Vice President of MLAM since 1990; Vice
President, Debt Rating Department, Standard &
Poor's Corporation from 1985 to 1990.
Donald C. Burke................................... Vice President 35 1993
Vice President and Director of Taxation of MLAM
since 1990; Employee of Deloitte & Touche LLP
from 1982 to 1990.
</TABLE>

5
<PAGE> 8

<TABLE>
<CAPTION>
OFFICER
NAME AND PRINCIPAL OCCUPATION OFFICE AGE SINCE
-------------------------------------------------- ------------------------- --- -------
<S> <C> <C> <C>
Gerald M. Richard................................. Treasurer 46 1993
Senior Vice President and Treasurer of FAM and
MLAM since 1984; Senior Vice President and
Treasurer of Princeton Services since 1993;
Treasurer of MLFD since 1984 and Vice
President of MLFD since 1981.
Michael J. Hennewinkel............................ Secretary 43 1993
Vice President of MLAM since 1985 and attorney
associated with FAM and MLAM since 1982.
</TABLE>

Stock Ownership. At November 8, 1995, the Directors and officers of the
Fund as a group (13 persons) owned an aggregate of less than 1/4 of 1% of the
Common Stock of the Fund outstanding at such date. At such date, Mr. Zeikel, a
Director of the Fund, and the officers of the Fund owned an aggregate of less
than 1% of the outstanding shares of common stock of ML&Co.

ITEM 2. SELECTION OF INDEPENDENT AUDITORS

The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected the firm of Deloitte &
Touche LLP ("D&T") to examine the financial statements of the Fund for the
current fiscal year. The Fund knows of no direct or indirect financial interest
of D&T in the Fund. Such appointment is subject to ratification or rejection by
the stockholders of the Fund. Unless a contrary specification is made, the
accompanying proxy will be voted in favor of ratifying the selection of such
auditors.

D&T also acts as independent auditors for several other investment
companies for which FAM acts as investment adviser. The fees received by D&T
from these other entities are substantially greater, in the aggregate, than the
total fees received by it from the Fund. The Board of Directors of the Fund
considered the fact that D&T has been retained as the independent auditors for
the other entities described above in its evaluation of the independence of D&T
with respect to the Fund.

Representatives of D&T are expected to be present at the Meeting and will
have the opportunity to make a statement if they so desire and to respond to
questions from stockholders.

ADDITIONAL INFORMATION

The expenses of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Fund. The
Fund will reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. The Fund may also hire proxy solicitors at the expense of the Fund.

In order to obtain the necessary quorum at the Meeting (i.e., a majority of
the shares of the Fund entitled to vote at the Meeting, present in person or by
proxy), supplementary solicitation may be made by mail, telephone, telegraph or
personal interview by officers of the Fund. It is anticipated that the cost of
such supplementary solicitation, if any, will be nominal.

6
<PAGE> 9

Broker-dealer firms, including Merrill Lynch, holding Fund shares in
"street name" for the benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their shares on each
Item before the Meeting. The Fund understands that, under the rules of the New
York Stock Exchange, such broker-dealer firms may, without instructions from
their customers and clients, grant authority to the proxies designated to vote
on the election of Directors (Item 1) and ratification of the selection of
independent auditors (Item 2) if no instructions have been received prior to the
date specified in the broker-dealer firm's request for voting instructions.
Accordingly, the Fund will include shares held of record by broker-dealers as to
which such authority has been granted in its tabulation of the total number of
votes present for purposes of determining whether the necessary quorum of
stockholders exists. Proxies which are returned but which are marked "abstain"
or on which a broker-dealer has declined to vote on any proposal ("broker
non-votes") will be counted as present for the purposes of a quorum. Merrill
Lynch has advised that it intends to exercise discretion over shares held in its
name for which no instructions are received by voting such shares in the same
proportion as it has voted shares for which it has received instructions.
Abstentions and broker non-votes will not be counted as votes cast. Abstentions
and broker non-votes, therefore, will have no effect on the vote on Item 1 or
Item 2.

ADDRESS OF INVESTMENT ADVISER

The principal office of FAM is located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536.

ANNUAL REPORT DELIVERY

The Fund will furnish, without charge, a copy of its annual report for the
fiscal year ended August 31, 1995 to any stockholder upon request. Such requests
should be directed to Corporate High Yield Fund II, Inc., P.O. Box 9011,
Princeton, New Jersey 08543-9011, Attention: Michael J. Hennewinkel, Secretary
or to 1-800-456-4587 ext. 123.

STOCKHOLDER PROPOSALS

If a stockholder intends to present a proposal at the next Annual Meeting
of Stockholders of the Fund, which is anticipated to be held in December 1996,
and desires to have the proposal included in the Fund's proxy statement and form
of proxy for that meeting, the stockholder must deliver the proposal to the
offices of the Fund by July 19, 1996.

By Order of the Board of Directors

MICHAEL J. HENNEWINKEL
Secretary

Dated: November 16, 1995

7
<PAGE> 10

CORPORATE HIGH YIELD FUND II, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn and
Ira P. Shapiro as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
hereof, all the Common Stock of Corporate High Yield Fund II, Inc. (the
"Fund") held of record by the undersigned on November 8, 1995, at the annual
meeting of stockholders of the Fund to be held on December 15, 1995 or any
adjournment thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.

(Continued and to be signed on the reverse side)

<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY to vote for
(except as marked to the contrary all nominees listed below / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO below) / /
VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE
LIST BELOW.)
JOE GRILLS, WALTER MINTZ, MELVIN R.
SEIDEN, STEPHEN B. SWENSRUD, ARTHUR
ZEIKEL

2. Proposal to ratify the
selection of Deloitte &
Touche LLP as the independent
auditors of the Fund to serve
for the current fiscal year. FOR / / AGAINST / / ABSTAIN / /

3. In the discretion of such
proxies, upon such other
business as may properly come
before the meeting or any
adjournment thereof.
</TABLE>

Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney or as
executor, administrator, trustee or guardian,
please give full title as such. If a corporation,
please sign in full corporate name by president
or other authorized officer. If a partnership,
please sign in partnership name by authorized
persons.

Dated: , 1995
---------------------

X
---------------------------------
Signature

X
---------------------------------
Signature, if held jointly

PLEASE MARK BOXES /FILL IN COMPLETELY/ OR /X/ IN BLUE OR BLACK INK. SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.