NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Phoenix Fund, Inc. (the "Fund") is regis- tered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund offers both Class A and Class B Shares.
Class A Shares are sold with a front-end sales charge. Class B Shares may be subject to a contingent deferred
sales charge. Both classes of shares have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that Class B Shares bear certain expenses related to the distribution of such shares
and have exclusive voting rights with respect to matters relating to such distribution expenditures. The following is
a summary of significant accounting poli- cies followed by the Fund.
(a) Valuation of investments--Portfolio securities which 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 most
recent bid prices as obtained from one or more dealers that make markets in the securities. Portfolio securities
which are traded both in the over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market. Securities and assets for which market quotations are not readily
available are valued at fair value as deter- mined in good faith by or under the direction of the Board of Directors
of the Fund. Any foreign securities held by the Fund will be valued as described above, as of the close of trading
in the primary market where such securities are traded which next precedes the time the net asset value of the
Fund is determined. Short- term securities are valued at amortized cost which approximates market.
(b) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code
applicable to regu