AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1994

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
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Corporate High Yield Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

Corporate High Yield Fund, 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(i)(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 registration 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:

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

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

1 Set forth the amount on which the filing fee is calculated and state how it
was determined.

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

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

NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 9, 1994

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

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

Notice is hereby given that the 1994 Annual Meeting of Stockholders (the
"Meeting") of Corporate High Yield Fund, 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, September 9, 1994 at 10:45 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 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 July 15, 1994 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 August 19, 1994, 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: July 28, 1994

PROXY STATEMENT
------------------------
CORPORATE HIGH YIELD FUND, INC.
BOX 9011
PRINCETON, NEW JERSEY 08543-9011
------------------------
1994 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 9, 1994
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, Inc.,
a Maryland corporation (the "Fund"), to be voted at the 1994 Annual Meeting of
Stockholders of the Fund (the "Meeting"), to be held at the offices of Merrill
Lynch Asset Management ("MLAM"), 800 Scudders Mill Road, Plainsboro, New Jersey
08536, on Monday, September 9, 1994 at 10:45 A.M. The approximate mailing date
of this Proxy Statement is July 29, 1994.

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 July 15, 1994 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 July 15, 1994, the Fund had outstanding
20,740,281 shares of common stock, par value $.10 per share ("Common Stock"). To
the knowledge of the Fund, as of July 15, 1994, no person is the beneficial
owner of more than five percent of the outstanding shares of Common Stock.

Approval of Items 1 and 2 below will require the affirmative vote of the
holders of a majority of the Common Stock. 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.

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 six (6)
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:

SHARES OF
COMMON STOCK
OF THE FUND
PRINCIPAL OCCUPATIONS BENEFICIALLY
DURING PAST FIVE YEARS DIRECTOR OWNED AT JULY
NAME AND ADDRESS OF NOMINEE AGE AND PUBLIC DIRECTORSHIPS(1) SINCE 15, 1994
- ------------------------------------ ----------- ------------------------------------------ ----------- --------------

Joe Grills*(1)(2)................... 59 Member of the Committee of Investment of 1994 -0-
183 Soundview Lane Employee Benefit Assets of the Financial
New Canaan, Connecticut Executives Institute ("CIEBA") since
06840 1986, member of CIEBA's Executive Com-
mittee since 1988 and its Chairman from
1991 to 1992; Assistant Treasurer of
International Business Machines Incorpo-
rated ("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
and Winthrop Financial Associates (real
estate management).

Walter Mintz(1)(2).................. 65 Special Limited Partner of Cumberland 1993 -0-
1114 Avenue of the Americas Associates (investment partnership)
New York, New York 10036 since 1982.

Melvin R. Seiden(1)(2).............. 63 President of Silbanc Properties, Ltd. 1993 -0-
780 Third Avenue (real estate, investment and con-
Suite 2502 sulting) since 1987; Chairman and
New York, New York 10017 President of Seiden & de Cuevas, Inc.
(private investment firm) from 1964 to
1987.

Stephen B. Swensrud(1)(2)........... 61 Principal of Fernwood Associates 1993 -0-
24 Federal Street (financial consultants); Director,
Boston, Massachusetts 02110 Hitchiner Manufacturing Company.

Harry Woolf(1)(2)................... 70 Member of the editorial board of 1993 -0-
The Institute for Interdisciplinary Science Reviews;
Advanced Study Director, Alex. Brown Mutual Funds,
Olden Lane Advanced Technology Laboratories,
Princeton, New Jersey 08540 Family Health International and Spacelabs
Medical (medical equipment manufacturing
and marketing).

Arthur Zeikel(1)(3)................. 62 President and Chief Investment Officer of 1993 -0-
P.O. Box 9011 Fund Asset Management, L.P. ("FAM") or
Princeton, New Jersey its predecessor since 1977; President of
08543-9011 MLAM or its predecessor since 1977 and
Chief Investment Officer since 1976;
President and Director of Princeton
Services, Inc. ("Princeton Services")
since 1993; Executive Vice President of
Merrill Lynch & Co., Inc. ("ML&Co.")
since 1990; Executive Vice President of
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") since
1990; Senior Vice President of Merrill
Lynch from 1986 to 1990; Director of
Merrill Lynch Funds Distributor, Inc.
("MLFD").

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

(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. See "Merrill Lynch Investment Company Directorships"
below.

(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.

* Joe Grills was unanimously elected by the Fund's Board of Directors to serve
as a Director at a regularly scheduled meeting of the Board held on January
19, 1994.

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 period June 25, 1993 (commencement of operations) to May 31,
1994, the Board of Directors held five 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.

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 $21,257 for the period June
25, 1993 (commencement of operations) to May 31, 1994.

Merrill Lynch Investment Company Directorships. FAM and its affiliate,
MLAM, act as the investment adviser for more than 100 registered investment
companies. Mr. Zeikel is a trustee or director of each of these companies except
for Merrill Lynch Series Fund, Inc., Merrill Lynch Funds for Institutions Series
and Merrill Lynch Institutional Intermediate Fund. Messrs. Grills, Mintz,
Seiden, Swensrud and Woolf are trustees or directors of Apex Municipal Fund,
Inc., Corporate High Yield Fund, Inc., Corporate High Yield Fund II, Inc.,
Merrill Lynch Federal Securities Trust, Merrill Lynch Phoenix Fund, Inc.,
Merrill Lynch Retirement Series Trust, Merrill Lynch Variable Series Funds,
Inc., Financial Institutions Series Trust, Merrill Lynch Adjustable Rate
Securities Fund, Inc., MuniAssets Fund, Inc., MuniBond Income Fund, Inc.,
MuniInsured Fund, Inc., MuniYield Insured Fund, Inc.,
4

Income Opportunities Fund 1999, Inc., Income Opportunities Fund 2000, Inc. and
Merrill Lynch Fundamental Growth Fund, Inc. Mr. Swensrud is also a director of
Merrill Lynch Series Fund, Inc.

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:

OFFICER
NAME AND PRINCIPAL OCCUPATION OFFICE AGE SINCE
- ---------------------------------------------------------------- ----------------- ----------- -----------

Arthur Zeikel................................................... President 62 1993
President and Chief Investment Officer of FAM or its predecessor
since 1977; President of MLAM or its predecessor since 1977
and Chief Investment Officer since 1976; President and
Director of Princeton Services since 1993; Executive Vice
President of ML&Co. since 1990; Executive Vice President of
Merrill Lynch since 1990; Senior Vice President from 1985 to
1990; Director of MLFD.

Terry K. Glenn.................................................. Executive Vice 53 1993
Executive Vice President of FAM and MLAM or their predecessors President
since 1983; ExecutiveVice President and Director of Princeton
Services since 1993; President of MLFD since 1986 and
Director since 1991; President of Princeton Administrators,
L.P. since 1988.

N. John Hewitt.................................................. Senior Vice 59 1993
Senior Vice President of FAM and MLAM or their predecessors President
since 1980.

Vincent T. Lathbury, III........................................ Vice President 53 1993
Vice President of MLAM or its predecessor since 1982; Portfolio
Manager of FAM and MLAM or their predecessors since 1982.

Elizabeth Phillips.............................................. Vice President 44 1993
Vice President of MLAM or its predecessor since 1990; Vice
President, Debt Rating Department, Standard & Poor's
Corporation from 1985 to 1990.

Donald C. Burke................................................. Vice President 34 1993
Vice President and Director of Taxation of MLAM or its
predecessor since 1990; Employee of Deloitte & Touche from
1982 to 1990.

Gerald M. Richard............................................... Treasurer 45 1993
Senior Vice President and Treasurer of FAM and MLAM or their
predecessors since 1984; Senior Vice President and Treasurer
of Princeton Services since 1993; Treasurer of MLFD since
1984 and Vice President since 1981.

Michael J. Hennewinkel.......................................... Secretary 42 1993
Vice President of MLAM or its predecessor since 1985 and
attorney associated with FAM and MLAM or their predecessors
since 1982.

Stock Ownership. At July 15, 1994, 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.

All of the Directors of the Fund timely filed the reports required under
the Securities Exchange Act of 1934, as amended, relating to transactions in the
Fund's shares.

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 ("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.

INVESTMENT ADVISORY AGREEMENT

FAM acts as the investment adviser for the Fund and provides the Fund with
management services pursuant to an investment advisory agreement dated June 14,
1993 (the "Investment Advisory Agreement"). On June 14, 1993, the Board of
Directors of the Fund approved the Investment Advisory Agreement for a period
ending May 31, 1995. On June 18, 1993, FAM, as sole shareholder of the Fund,
approved the Investment Advisory Agreement. On that date, Arthur Zeikel, a
Director of the Fund, owned securities of ML & Co.

INFORMATION CONCERNING FAM

Effective January 1, 1994, FAM was reorganized as a Delaware limited
partnership. FAM (the general partner of which is Princeton Services, a
wholly-owned subsidiary of ML&Co.) is owned and controlled by ML&Co. and is
located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. ML&Co. is
located at 250 Vesey Street, New York, New York 10281. The reorganization did
not result in a change of management of FAM, in any of its personnel, or in an
adverse change in its financial condition. Prior to the reorganization, FAM,
which was known as Fund Asset Management, Inc. ("FAMI"), was a Delaware
corporation which had been incorporated in 1976. Prior to reorganization, FAMI
was a wholly-owned subsidiary of MLAM, a Delaware corporation, which was also
reorganized as a Delaware limited partnership effective January 1, 1994. MLAM
was a wholly-owned subsidiary of
6

ML&Co. prior to its reorganization, and continues to be owned and controlled by
ML&Co. after its reorganization. MLAM is also located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536. MLAM or FAM acts as the investment adviser to more
than 100 other registered investment companies. In addition, MLAM offers
portfolio management and portfolio analysis services to individuals and
institutions. FAMI's audited balance sheet for its most recent fiscal year is
appended to this Proxy Statement as Exhibit A.

Securities held by the Fund may also be held by or be appropriate
investments for other funds or clients (collectively referred to as "clients")
for which MLAM or FAM acts as an adviser. Because of different investment
objectives or other factors, a particular security may be bought for one or more
clients when one or more clients are selling the security. If purchases or sales
of securities for the Fund or other clients arise for consideration at or about
the same time, transactions in such securities will be made, insofar as
feasible, for the respective clients in a manner deemed equitable to all by MLAM
or FAM. To the extent that transactions on behalf of more than one client of
MLAM or FAM during the same period may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.

The following table sets forth the name, title and principal occupation of
the principal executive officer of FAM and the directors of Princeton Services,
the general partner of FAM.

NAME* TITLE PRINCIPAL OCCUPATION
- ------------------------ ------------------------------------- -------------------------------------

Arthur Zeikel........... President and Chief Investment President and Chief Investment
Officer of FAM and Director of Officer of MLAM and FAM; and
Princeton Services Executive Vice President of ML&Co.

Terry K. Glenn......... Executing Vice President of FAM and Executive Vice President of MLAM and
Director of Princeton Services FAM; Executive Vice President of
Princeton Services

Philip L. Kirstein...... Senior Vice President and General Senior Vice President and General
Counsel of FAM and Director of Counsel of MLAM and FAM
Princeton Services

- ---------------
* Mr. Zeikel is presently a Director of the Fund. The address of Messrs. Zeikel,
Glenn and Kirstein is Box 9011, Princeton, New Jersey 08543-9011, which is
also the address of FAM and MLAM.

TERMS OF INVESTMENT ADVISORY AGREEMENT

The Investment Advisory Agreement provides that, subject to the direction
of the Board of Directors of the Fund, FAM is responsible for the actual
management of the Fund's portfolio and for the review of the Fund's holdings in
light of its own research analysis and analyses from other relevant sources. The
responsibility for making decisions to buy, sell or hold a particular security
rests with FAM, subject to review by the Board of Directors. FAM provides the
portfolio managers for the Fund, who consider analyses from various sources
(including brokerage firms with which the Fund does business), make the
necessary investment decisions and place transactions accordingly. FAM also is
obligated to perform certain administrative and management services for the Fund
and is obligated to provide all the office space, facilities, equipment and
personnel necessary to perform its duties under the Investment Advisory
Agreement.

Investment Advisory Fee. The Investment Advisory Agreement provides that as
compensation for its services to the Fund, FAM receives from the Fund at the end
of each month a fee at an annual rate of 0.50% of the Fund's average weekly net
assets plus the proceeds of any outstanding borrowings used for leverage. For
purposes of this calculation, average weekly net assets are determined at the
end of each month on the basis of the average net assets of the Fund for each
week during the month. The assets for each weekly period are determined by
averaging the net assets at the last business day of a week with the net assets
at the last business day of the prior week. For the period June 25, 1993
(commencement of operations) to May 31, 1994, the investment advisory fee
payable by the Fund to FAM aggregated $1,713,004 (based on average net assets of
approximately $367.5 million). At June 30, 1994, the Fund had net assets of
$271.8 million. At this asset level the Fund's annual investment advisory fee
would aggregate approximately $1.4 million.

Payment of Expenses. The Investment Advisory Agreement obligates FAM to
provide investment advisory services and to pay all compensation of and furnish
office space for officers and employees of the Fund connected with the
investment and economic research, trading and investment management of the Fund,
as well as the fees of all Directors of the Fund who are affiliated persons of
FAM or any of its affiliates. The Fund pays all other expenses incurred in the
operation of the Fund, including, among other things, expenses for legal and
auditing services, taxes, costs of printing proxies, listing fees, stock
certificates and shareholder reports, charges of the custodian and transfer
agent, dividend disbursing agent and registrar fees and expenses with respect to
the issuance of preferred stock, Securities and Exchange Commission fees, fees
and expenses of unaffiliated Directors, accounting and pricing costs, insurance,
interest, brokerage costs, litigation and other extraordinary or non-recurring
expenses, mailing and other expenses properly payable by the Fund. Accounting
services are provided to the Fund by FAM, and the Fund reimburses FAM for its
costs in connection with such services. For the period June 25, 1993
(commencement of operations) to May 31, 1994, the Fund reimbursed $82,506 to FAM
for such accounting services.

Duration and Termination. The Investment Advisory Agreement will continue
in effect from year to year if approved annually (a) by the Board of Directors
of the Fund or by a majority of the outstanding shares of capital stock of the
Fund and (b) by a majority of the Directors who are not parties to such
agreement or interested persons (as defined in the Investment Company Act) of
any such party. Such agreement is not assignable and may be terminated without
penalty on 60 days' written notice at the option of either party thereto or by
the vote of the stockholders of the Fund.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Directors of the Fund, FAM
is primarily responsible for the execution of the Fund's portfolio transactions.
In executing such transactions, FAM seeks to obtain the best results for the
Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), size of order, difficulty of execution
and operational facilities of the firm involved and the firm's risk in
positioning a block of securities. While FAM generally seeks reasonably
competitive commission rates, the Fund does not necessarily pay the lowest
commission or spread available.

The Fund has no obligation to deal with any broker or dealer in the
execution of transactions in portfolio securities. Subject to obtaining the best
price and execution, brokers who provided supplemental investment research so to
FAM, including Merrill Lynch, may receive orders for transactions by the Fund.
Information so received will be in addition to and not in lieu of the services
required to be performed by FAM under the Investment Advisory Agreement and the
expenses of FAM will not necessarily be reduced as a result of the receipt of
such supplemental information. It is possible that certain of the supplemental
investment research so received will benefit primarily one or more other
investment companies or other accounts for which investment discretion is
exercised. Conversely, the Fund may be the primary beneficiary of the research
or services received as a result of portfolio transactions effected for such
other accounts or investment companies.

The securities in which the Fund will invest are traded in the
over-the-counter markets, and the Fund intends to deal directly with dealers who
make markets in the securities involved, except in those circumstances where
better prices and execution are available elsewhere. Under the Investment
Company Act, except as permitted by exemptive order, persons affiliated with the
Fund are prohibited from dealing with the Fund as principal in the purchase and
sale of securities. Since transactions in the over-the-counter market usually
involve transactions with dealers acting as principal for their own account, the
Fund will not deal with affiliated persons, including Merrill Lynch and its
affiliates, in connection with such transactions. However, an affiliated person
of the Fund may serve as its broker in over-the-counter transactions conducted
on an agency basis. For the period June 25, 1993 (commencement of operations) to
May 31, 1994, the Fund paid no brokerage commissions.

The Board of Directors has considered the possibility of recapturing for
the benefit of the Fund brokerage commissions, dealer spreads and other expenses
of possible portfolio transactions, such as underwriting commissions, by
conducting portfolio transactions through affiliated entities, including Merrill
Lynch. For example, brokerage commissions received by Merrill Lynch could be
offset against the investment advisory fee paid by the Fund to FAM. After
considering all factors deemed relevant, the Directors made a determination not
to seek such recapture. The Directors will reconsider this matter from time to
time.

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.

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
9

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. 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. 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. The Fund
also will count towards a quorum those shares as to which proxies are returned
by record stockholders but which are marked "abstain" on any Item. A failure by
a broker-dealer who returns a proxy to vote for his or her clients on an Item or
an abstention will have no effect with respect to the vote on Item 1 or Item 2.

STOCKHOLDER PROPOSALS

If a stockholder intends to present a proposal at the 1995 Annual Meeting
of Stockholders of the Fund, which is anticipated to be held in September 1995,
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 March 30, 1995.

By Order of the Board of
Directors

MICHAEL J. HENNEWINKEL
Secretary

Dated: July 28, 1994

EXHIBIT A

INDEPENDENT AUDITORS' REPORT

FUND ASSET MANAGEMENT, INC.:

We have audited the accompanying consolidated balance sheet of Fund Asset
Management, Inc. and subsidiary (the "Company") as of December 31, 1993. This
balance sheet is the responsibility of the Company's management. Our
responsibility is to express an opinion on the balance sheet based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, such consolidated balance sheet presents fairly, in all material
respects, the financial position of the Company at December 31, 1993 in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE
Parsippany, New Jersey
February 28, 1994

A-1

FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET

DECEMBER 31,
1993
-----------------

ASSETS
Cash........................................................................................... $ 996,680
Receivable from affiliated companies:
Lease transactions........................................................................... 24,501,523
Sale of leased investment.................................................................... 48,312,532
Fund management fees receivable................................................................ 28,927,938
Investments in leases:
Leveraged leases............................................................................. 57,431,668
Sales-type lease............................................................................. 3,362,521
Investments in affiliated investment companies--(market: $19,731,088).......................... 18,181,262
Investment in affiliated limited partnership................................................... 31,109,264
-----------------
TOTAL ASSETS................................................................................... $ 212,823,388
-----------------
-----------------
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Payable to Merrill Lynch & Co., Inc. and affiliates............................................ $ 21,554,955
Deferred income taxes:
Arising from leveraged leases................................................................ 52,938,886
Arising from sales-type lease................................................................ 1,351,622
Other........................................................................................ 15,838,124
Other.......................................................................................... 8,501
-----------------
Total liabilities.............................................................................. 91,692,088
-----------------
STOCKHOLDER'S EQUITY:
Common stock, par value $1.00 per share--authorized 25,000 shares;
outstanding 1,000 shares..................................................................... 1,000
Additional paid-in capital..................................................................... 686,215,876
Retained earnings.............................................................................. 119,029,472
Proceeds receivable from Merrill Lynch & Co., Inc. from sale of subsidiaries................... (684,115,048)
-----------------
Total stockholder's equity..................................................................... 121,131,300
-----------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY..................................................... $ 212,823,388
-----------------
-----------------

See notes to consolidated balance sheet.

A-2

FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993

ORGANIZATION

Fund Asset Management, Inc. and subsidiary (the "Company"), a wholly-owned
subsidiary of Merrill Lynch Investment Management, Inc. (the "Parent"), or
"MLIM" which is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc.
("ML&Co."), serves as an investment adviser to various registered open-end
investment companies. The Company is also a lessor participant in certain
leveraged and sales-type lease agreements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Income Taxes--The results of the operations of the Company are included in
the consolidated Federal and combined state and local income tax returns filed
by ML&Co. It is the policy of ML&Co. to allocate the tax associated with such
operating results to each respective subsidiary in a manner which approximates
the separate company method. In 1992, ML&Co. adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") which
requires an asset and liability method in recording income taxes on all
transactions that have been recognized in the financial statements. SFAS 109
provides that deferred taxes be adjusted to reflect tax rates at which future
tax liabilities or assets are expected to be settled or realized.

TRANSACTIONS WITH AFFILIATES

The Company serves as an investment adviser for certain affiliated
investment companies. The Company maintains investments in certain of these
investment companies. Such investments are carried at the lower of cost or
market value. Market value is determined based upon quoted market prices.

The Company has an arrangement with Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S") an affiliate which provides that the Company, which
receives revenue as investment adviser to certain investment companies (the
"Funds"), reimburse MLPF&S for certain costs incurred in processing transactions
involving shares of the Funds.

ML&Co. is the holder of the Company's excess cash, which is available on
demand to meet current liabilities. ML&Co. credits the Company for interest, at
a floating rate approximating ML&Co.'s average borrowing rate, based on the
Company's average daily balances due to/from ML&Co.

A-3

FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED)
DECEMBER 31, 1993

TRANSACTIONS WITH AFFILIATES--(CONTINUED)
The "Receivable from affiliated companies" arising from lease transactions
is summarized as follows:

Monies advanced to fund lease transactions............................. $ (103,476,954)
Tax benefits allocated to the Company by ML&Co......................... 88,699,254
Other.................................................................. 39,279,223
-----------------
Total.................................................................. $ 24,501,523
-----------------
-----------------

The Company has a 49 percent limited partnership interest in ML Plainsboro
Limited Partnership ("MLP") whose general partner is an affiliate. Profits and
losses are allocated to the Company based on its percentage interest.

During 1992, the Company sold its investment in Merrill Lynch Interfunding,
Inc. and Merlease Leasing Corp. to an affiliate at book value, resulting in a
receivable from ML&Co. This receivable is reflected as a reduction to
stockholder's equity.

INVESTMENTS IN LEASES

The Company is a lessor participant in leveraged leases.

Pertinent information relating to the Company's investments in leveraged
leases is summarized as follows:

ESTIMATED
LENGTH OF RESIDUAL VALUE
LEASE EQUITY OF LEASED
TYPE OF PROPERTY (YEARS) INVESTMENT PROPERTY
- -------------------------------------------------- ----------- ----------- -----------------

Generating plant.................................. 24-25 34.06% 15.0%

Financing beyond the Company's equity interest in the purchase price of the
properties was furnished by outside parties in the form of long-term debt that
provides for no recourse against the Company and is secured by a first lien on
the properties and related rentals. At the end of the respective lease terms,
ownership of the properties remains with the Company.

A-4

FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET--(CONTINUED)
DECEMBER 31, 1993

INVESTMENTS IN LEASES--(CONTINUED)
The Company's net investment in leveraged leases is summarized as follows:

Rentals receivable (net of principal and interest on nonrecourse debt)... $ 66,075,030
Estimated residual values of leased assets............................... 18,964,143
Less:
Unearned and deferred income........................................... (26,617,505)
Allowance for uncollectibles........................................... (990,000)
---------------
Investment in leveraged leases........................................... $ 57,431,668
Less deferred taxes arising from leveraged leases........................ (52,938,886)
---------------
Net investment in leveraged leases....................................... $ 4,492,782
---------------
---------------

During 1993, the Company sold its equity interest in the chemical tanker
previously accounted for as a leveraged lease. The sale resulted in an after-tax
gain of $112,000.

The Company's investment in the sales-type leases consisted of the
following elements at December 31, 1993:

Minimum lease payments receivable.......................................... $ 3,672,000
Less:
Unearned income.......................................................... (59,479)
Allowance for uncollectibles............................................. (250,000)
-------------
Investment in sales type financing leases.................................. $ 3,362,521
-------------
-------------

At December 31, 1993 minimum lease payments receivable are $3,672,000 for
1994.

For Federal income tax purposes, the Company receives the investment tax
credit and has the benefit of tax deductions for (i) depreciation on the entire
amount of leased assets and (ii) interest on the outstanding long-term debt. For
state and local tax purposes, the Company also receives the benefits of tax
deductions from (i) and (ii) above. Since, during the early years of the leases,
those deductions exceed the Company's lease rental income, substantial excess
deductions are available to be applied against the Company's other income and
the consolidated income of ML&Co. In the later years of these leases, rental
income will exceed the related deductions and taxes will be payable (to the
extent that net deductions arising from additional leveraged lease transactions
do not offset such net lease income). Deferred taxes have been provided to
reflect these temporary differences.

A-5

FUND ASSET MANAGEMENT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET--(CONCLUDED)
DECEMBER 31, 1993

INCOME TAXES

As part of the consolidated group, the Company transfers its current
Federal and state tax liabilities to MLIM. No such amounts were due to MLIM at
December 31, 1993.

PENSION PLAN

The Company participates in the ML&Co. Comprehensive Retirement Program
(the "Program") consisting of the Retirement Accumulation Plan ("RAP") and the
Employee Stock Ownership Plan (the "ESOP"). Under the Program, cash
contributions made by the Company and the ML&Co. stock held by the ESOP will be
allocated quarterly to participants' accounts. Allocations will be based on
years of service, age and eligible compensation. Actuarial data regarding the
Company's Plan participants is not separately available.

NAME CHANGE

Effective December 28, 1991, the Company's Parent, through an amendment of
its certificate of incorporation, changed its name to Merrill Lynch Investment
Management, Inc. ("MLIM"). MLIM does business under the name "Merrill Lynch
Asset Management".

SUBSEQUENT EVENT

Effective January 1, 1994, Fund Asset Management, Inc. contributed certain
net investment advisory assets to Fund Asset Management, L.P., a newly formed
Delaware limited partnership, in exchange for a 99% limited partnership
interest. The general partner, Princeton Services, Inc. (a wholly-owned
subsidiary of Merrill Lynch & Co., Inc.) contributed 1% of the value of the net
investment advisory assets in exchange for its 1% general partnership interest.
The partnership's profits and losses are to be allocated in proportion to the
capital contributions of the partners.

A-6

CORPORATE HIGH YIELD FUND, 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 Mark B. Goldfus 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 of the
shares of Common Stock of Corporate High Yield Fund, Inc. (the
"Fund") held of record by the undersigned on July 15, 1994, at
the annual meeting of stockholders of the Fund to be held on
September 9, 1994 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)

1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY
listed below (except to vote for all
(INSTRUCTION: To withhold as marked to the nominees listed
authority to vote for any contrary below) below
individual nominee, strike
a line through the
nominee's name in the list
below.)

Joe Grills, Walter Mintz,
Melvin R. Seiden, Stephen
B. Swensrud, Harry Woolf,
Arthur Zeikel

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

3. In the direction of such
proxies, upon such other
business as may properly
come before the meeting
or any adjournment
thereof.

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
person.

Dated: _____________________, 1994

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.

_________________________________________________________________

BY SIGNING AND PROMPTLY RETURNING THE ENCLOSED PROXY
YOU MAY SAVE YOUR FUND THE EXPENSE OF ADDITIONAL
SOLICITATION COSTS.

_________________________________________________________________

THE ENCLOSED PROXY CARD HAS BEEN FORWARDED TO YOU
BECAUSE YOU WERE A SHAREHOLDER ON THE RECORD DATE.

IT IS IMPORTANT THAT YOU VOTE AND SIGN THIS PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.

_________________________________________________________________