<PAGE>
As filed with the Securities and Exchange Commission on August 27, 1999
Registration Nos. 2-90949
811-4014
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No.18
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No.19
MERIDIAN FUND, INC.(R)
(Exact name of Registrant as Specified in Charter)
60 E. Sir Francis Drake Blvd.
Wood Island, Suite 306
Larkspur, CA 94939
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (415) 461-6237
Richard F. Aster, Jr.
Wood Island, Suite 306
60 E. Sir Francis Drake Blvd.
Larkspur, CA 94939
(Name and Address of Agent for Service)
----------------------
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to Rule 485(b)
_____ on____________ pursuant to Rule 485(b)
__X_ 60 days after filing pursuant to Rule 485(a)(1)
_____ 75 days after filing pursuant to Rule 485(a)(2)
_____ on ___________ pursuant to Rule 485 (a)
-----------------
<PAGE>
MERIDIAN FUND, INC.(R)
CONTENTS OF REGISTRATION STATEMENT
This registration statement contains the following documents:
Facing Sheet
Contents of Registration Statement
Part A - Prospectus for
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
Part B - Statement of Additional Information for
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
Part C - Other Information
Signature Page
Exhibits
<PAGE>
-----------------------------------------------------------------
PART A
PROSPECTUS
MERIDIAN FUND, INC.(R)
------------------
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
-----------------------------------------------------------------
<PAGE>
-----------------------------------------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
MERIDIAN FUND, INC.(R)
------------------
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
-----------------------------------------------------------------
<PAGE>
-----------------------------------------------------------------
PART C
OTHER INFORMATION
-----------------------------------------------------------------
<PAGE>
MERIDIAN FUND, INC.(R)
-------------------------------
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
-------------------------------
PROSPECTUS
October 28, 1999
THIS PROSPECTUS CONTAINS ESSENTIAL INFORMATION FOR ANYONE CONSIDERING AN
INVESTMENT IN THESE FUNDS. PLEASE READ THIS DOCUMENT CAREFULLY AND RETAIN IT FOR
FUTURE REFERENCE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------
Aster Capital Management, Inc.
Investment Adviser
------------------------------
<PAGE>
MERIDIAN FUND, INC.(R)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RISK/RETURN SUMMARY AND FUND EXPENSES..................................................... 1
MERIDIAN FUND.......................................................................... 1
MERIDIAN VALUE FUND(R)................................................................. 4
FURTHER INFORMATION ABOUT INVESTMENT OBJECTIVES, POLICIES AND RISKS....................... 8
GENERAL................................................................................ 8
GROWTH INVESTING....................................................................... 8
VALUE INVESTING........................................................................ 8
PORTFOLIO TURNOVER..................................................................... 8
RISKS OF INVESTING IN SMALLER, NEWER COMPANIES......................................... 8
HIGH YIELD BONDS....................................................................... 9
FOREIGN SECURITIES..................................................................... 9
DEFENSIVE INVESTMENTS.................................................................. 9
YEAR 2000.............................................................................. 9
ORGANIZATION AND MANAGEMENT............................................................... 10
THE INVESTMENT ADVISER................................................................. 10
PORTFOLIO MANAGERS..................................................................... 10
MANAGEMENT FEES AND OTHER EXPENSES..................................................... 10
THE TRANSFER, REDEMPTION AND DIVIDEND DISBURSING AGENT................................. 10
CUSTODIAN.............................................................................. 10
SHAREHOLDER INFORMATION................................................................... 11
HOW TO PURCHASE SHARES................................................................. 11
HOW TO REDEEM AND TRANSFER SHARES...................................................... 12
DIVIDENDS AND TAX STATUS............................................................... 14
THE FUNDS' PERFORMANCE.................................................................... 16
FINANCIAL HIGHLIGHTS...................................................................... 18
MERIDIAN FUND.......................................................................... 18
MERIDIAN VALUE FUND(R)................................................................. 19
APPENDIX.................................................................................. 20
DESCRIPTION OF BOND RATINGS............................................................ 20
</TABLE>
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
MERIDIAN FUND
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
Objective: The MERIDIAN FUND seeks long-term growth of
capital.
Principal Investment Strategies: The Fund invests primarily in a diversified
portfolio of publicly traded common stocks
of U.S. companies. The Fund emphasizes
companies that are relatively small in terms
of total assets, revenues and earnings and
that the Investment Adviser believes may
have prospects for above average growth in
revenues and earnings. These companies
generally have market capitalizations
between $100 million and $1.5 billion at the
time of purchase.
The Fund may also invest in equity-related
securities (such as convertible debt
securities and warrants), bonds rated A or
better, and securities of foreign companies
(denominated in U.S. dollars or foreign
currencies), including emerging market
companies. However, the Fund currently does
not intend to invest more than 10% of its
total assets, calculated at the time of
purchase, in securities of foreign
companies.
The Fund generally sells investments when
the Investment Adviser concludes that better
investment opportunities exist in other
securities, the security is fully valued, or
the issuer's circumstances or the political
or economic outlook have changed.
Principal Investment Risks: Because the values of the Fund's investments
will change with market conditions, so will
the value of your investment in the Fund.
You could lose money on your investment in
the Fund or the Fund could underperform
other investments.
The values of the Fund's stock investments
will fluctuate in response to the activities
of individual companies and general stock
market conditions. The stock prices of
smaller and newer companies tend to
fluctuate more than those of larger, more
established companies. The values of the
Fund's bonds and convertible securities are
affected by movements in interest rates; if
rates rise, the values may fall.
The values of the Fund's investments in
foreign securities also depend on changing
currency values, different political and
economic environments and other overall
economic conditions in the countries where
the Fund invests. Emerging market securities
involve greater risk and more volatility
than those of companies in more developed
markets.
1
<PAGE>
PERFORMANCE
The charts on this page show how the Fund has performed and provide
some indication of the risks of investing in the Fund by showing how the
performance of the Fund's shares has varied from year to year. The bar chart
shows changes in the year-to-year performance of the Fund. The table below it
compares the performance of the Fund over time to the S&P 500(R), a widely
recognized index of U.S. common stocks, and the Russell 2000 Index, a broad
based index of 2000 mid and small capitalization stocks.
Both charts assume reinvestment of dividends and distributions. Of
course, past performance does not indicate how the Fund will perform in the
future.
[BAR GRAPH]
Year-by-Year Total Returns as of 12/31*
<TABLE>
<CAPTION>
Total
Year Return
---- ------
<S> <C> <C>
1989 19.57%
1990 4.82%
1991 58.82%
1992 15.51%
1993 13.05%
1994 0.56%
1995 22.43%
1996 11.19%
1997 19.23%
1998 3.09%
</TABLE>
During the period covered by this total return chart, the Fund's highest
quarterly return was 20.76% (for the quarter ended March 31, 1991); and the
lowest quarterly return was -21.53% (for the quarter ended September 30, 1998).
<TABLE>
<CAPTION>
Average Annual Total Returns
(For the periods ending December 31, 1998)*
----------------------------------------------------------------
Past Past 5 Past 10 Since Inception
Year Years Years (August 1, 1984)
-------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
MERIDIAN FUND 3.09% 10.97% 15.73% 14.42%
-------------- -------------- --------------- ------------------
S&P 500(R) Index 28.62% 24.05% 19.23% 19.23%
-------------- -------------- --------------- ------------------
Russell 2000 Index (2.55)% 11.87% 12.93% 12.88%
-----------------------------------------------------------------------------------------------
</TABLE>
* For the period January 1, 1999 through June 30, 1999
the aggregate (non-annualized) total return of the
Fund was 8.20% versus 12.3% for the S&P 500(R) Index,
and 8.5% for the Russell 2000 Index.
2
<PAGE>
FEES AND EXPENSES
As an investor in the Fund, you will pay the following expenses. The
Fund has no sales, redemption, exchange or account fees, although some
institutions may charge you a fee for shares you buy through them. Annual Fund
operating expenses are paid out of Fund assets, and are reflected in the share
price. This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(FEES PAID FROM YOUR INVESTMENT)
<S> <C>
Maximum Sales Load Imposed on Purchases NONE
- ------------------------------------------------------------------------------------- ---------------------
Maximum Sales Load Imposed on Reinvested Dividends NONE
- ------------------------------------------------------------------------------------- ---------------------
Deferred Sales Load NONE
- ------------------------------------------------------------------------------------- ---------------------
Redemption Fees NONE
- ------------------------------------------------------------------------------------- ---------------------
Exchange Fee NONE
- ------------------------------------------------------------------------------------- ---------------------
ANNUAL FUND OPERATING EXPENSES
(FEES PAID FROM FUND ASSETS)
Management fees 0.81%
Rule 12b-1 expenses NONE
- ------------------------------------------------------------------------------------- ---------------------
Other expenses 0.20%
- ------------------------------------------------------------------------------------- ---------------------
Total annual Fund operating expenses 1.01%
- ------------------------------------------------------------------------------------- ---------------------
</TABLE>
EXAMPLE
Use this table to compare fees and expenses of the Fund with those of
other funds. It illustrates the amount of fees and expenses you would pay
assuming the following:
- $10,000 initial investment in the Fund
- 5% annual return
- redemption at the end of each period
- no changes in the Fund's operating expenses
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
1 3 5 10
<S> <C> <C> <C> <C>
Year Years Years Years
$104 $323 $560 $1,241
----------------------------------------------------------------------------
</TABLE>
3
<PAGE>
MERIDIAN VALUE FUND(R)
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
Objective: The MERIDIAN VALUE FUND(R) seeks long-term
growth of capital.
Principal Investment Strategies: The Fund invests primarily in a diversified
portfolio of publicly traded common stocks
of U.S. companies.
The Fund emphasizes stocks which the
Investment Adviser believes are undervalued
in relation to the issuer's long-term
earning power or asset value, or the stock
market in general. It generally sells
investments when the Investment Adviser
concludes that they are fully valued. The
Fund's investments may include companies
that are relatively small in terms of total
assets, revenues and earnings, with market
capitalizations of between $100 million and
$1.5 billion at the time of purchase.
The Fund intends to invest at least 65% of
its total assets in common stocks and
equity-related securities (such as
convertible debt securities and warrants).
The Fund may invest up to 35% of its total
assets in fixed income securities, with
emphasis on higher yielding, higher risk,
lower rated or unrated corporate bonds,
commonly referred to as "junk bonds." These
are bonds that are rated Ba or below by
Moody's Investors Service, Inc. ("Moody's")
or BB or below by Standard & Poor's ("S&P"),
or unrated but of comparable quality as
determined by the Investment Adviser. The
Fund may invest up to 10% of its total
assets in securities rated below Ca by
Moody's or C by S&P, or, unrated but of
comparable quality.
The Fund may purchase high-yield bonds that
the Investment Adviser believes will
increase in value due to improvements in
their credit quality or ratings, anticipated
declines in interest rates or improved
business conditions for the issuer.
The Fund may also invest in securities of
foreign companies (denominated in U.S.
dollars or foreign currencies) including
emerging market companies. However, the Fund
currently does not intend to invest more
than 10% of its total assets, calculated at
the time of purchase, in securities of
foreign companies.
Principal Investment Risks: Because the values of the Fund's investments
will change with market conditions, so will
the value of your investment in the Fund.
You could lose money on your investment in
the Fund or the Fund could underperform
other investments.
The values of the Fund's stock investments
will fluctuate in response to the activities
of individual companies and general stock
market and economic conditions. The stock
prices of smaller and newer companies tend
to fluctuate more than those of larger, more
established companies.
The values of the Fund's bonds fluctuate in
response to movements in interest rates. If
rates rise, the values of bonds generally
fall; if rates fall, the values generally
rise. The longer the average maturity of the
Fund's
4
<PAGE>
bond portfolio, the greater the change in
value. The values of the Fund's convertible
securities are also affected by interest
rates. The values of any of the Fund's bond
investments may also decline in response to
events affecting the issuer or its credit
rating. The lower rated debt securities in
which the Fund invests are speculative and
are subject to greater volatility and risk
of loss than investment grade securities,
particularly in deteriorating economic
conditions.
The values of the Fund's investments in
foreign securities also depend on changing
currency values, different political and
economic environments and other overall
economic conditions in the countries where
the Fund invests. Emerging market securities
involve greater risk and more volatility
than those of companies in more developed
markets.
5
<PAGE>
PERFORMANCE
The charts on this page show how the Fund has performed and provide
some indication of the risks of investing in the Fund by showing how the
performance of the Fund's shares has varied from year to year. The bar chart
shows changes in the year-to-year performance of the Fund. The table below it
compares the performance of the Fund over time to the S&P 500(R), a widely
recognized index of U.S. common stocks.
Both charts assume reinvestment of dividends and distributions. Of
course, past performance does not indicate how the Fund will perform in the
future.
[BAR GRAPH]
Year-by-Year Total Returns as of 12/31*
<TABLE>
<CAPTION>
Total
Year Return
---- ------
<S> <C> <C>
1995 23.80%
1996 32.34%
1997 21.37%
1998 18.94%
</TABLE>
During the period covered by this total return chart, the Fund's highest
quarterly return was 21.71% (for the quarter ended June 30, 1997); and the
lowest quarterly return was -22.64% (for the quarter ended September 30, 1998).
<TABLE>
<CAPTION>
Average Annual Total Returns
(For the periods ending December 31, 1998)*
--------------------------------
Past Since Inception
Year February 10, 1994
--------------------------------
<S> <C> <C>
MERIDIAN VALUE FUND(R) 18.94% 18.32%
--------------------------------
S&P 500(R) Index 28.61% 24.24%
--------------------------------
</TABLE>
* For the period January 1, 1999 through June 30, 1999, the
aggregate (non-annualized) total return of the Fund was 21.7%
versus 12.3% for the S&P 500(R) Index.
6
<PAGE>
FEES AND EXPENSES
As an investor in the Fund, you will pay the following expenses. The
Fund has no sales, redemption, exchange or account fees, although some
institutions may charge you a fee for shares you buy through them. Annual Fund
operating expenses are paid out of Fund assets, and are reflected in the share
price. This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(FEES PAID FROM YOUR INVESTMENT)
<S> <C>
Maximum Sales Load Imposed on Purchases NONE
- ------------------------------------------------------------------------------------- ---------------------
Maximum Sales Load Imposed on Reinvested Dividends NONE
- ------------------------------------------------------------------------------------- ---------------------
Deferred Sales Load NONE
- ------------------------------------------------------------------------------------- ---------------------
Redemption Fees NONE
- ------------------------------------------------------------------------------------- ---------------------
Exchange Fee NONE
- ------------------------------------------------------------------------------------- ---------------------
ANNUAL FUND OPERATING EXPENSES
(FEES PAID FROM FUND ASSETS)
Management fees 1.00%
- ------------------------------------------------------------------------------------- ---------------------
Rule 12b-1 expenses NONE
- ------------------------------------------------------------------------------------- ---------------------
Other expenses 0.63%
- ------------------------------------------------------------------------------------- ---------------------
Total annual Fund operating expenses 1.63%
- ------------------------------------------------------------------------------------- ---------------------
</TABLE>
EXAMPLE
Use this table to compare fees and expenses of the Fund with those of
other funds. It illustrates the amount of fees and expenses you would pay
assuming the following:
- $10,000 initial investment in the Fund
- 5% annual return
- redemption at the end of each period
- no changes in the Fund's operating expenses
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
1 3 5 10
Year Years Years Years
<S> <C> <C> <C> <C>
$167 $518 $893 $1,945
---------------------------------------------------------------------------
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
FURTHER INFORMATION ABOUT
INVESTMENT OBJECTIVES, POLICIES AND RISKS
- --------------------------------------------------------------------------------
GENERAL
In selecting investments, the Investment Adviser considers the economic outlook
and political conditions as well as issuer-specific criteria. In addition to the
factors described below, those criteria include the issuer's growth relative to
its price-earnings ratio, its financial strength and management practices and
abilities, other valuation criteria, and the value of the individual securities
relative to other investment alternatives.
The application of each Fund's investment policies depends on the Investment
Adviser's judgment. The proportions of a Fund's assets invested in equity or
debt securities or cash, particular industries, and specific issues will shift
from time to time in accordance with the Investment Adviser's judgment.
Each Fund's investment objective and its investment policies other than those
listed as "fundamental" in the Statement of Additional Information (SAI) may be
changed by the Board of Directors without stockholder approval. Any such changes
may result in a Fund having investment objectives or policies different from
those which you considered appropriate at the time you invested in the Fund.
In addition, each Fund may use certain types of investments and investing
techniques that are described in more detail in the Statement of Additional
Information.
GROWTH INVESTING
The companies in which the MERIDIAN FUND invests may have prospects for
above-average growth in earnings and revenues because of many factors, including
high sales growth, high unit growth, industry growth, high or improving returns
on assets and equity and a strong balance sheet. The Fund may also invest in
companies not meeting these criteria if the Investment Adviser believes they
represent favorable investment opportunities for the Fund.
VALUE INVESTING
Securities in which the MERIDIAN VALUE FUND(R) invests may be undervalued
because of many factors, including market decline, poor economic conditions,
tax-loss selling or actual or anticipated unfavorable developments affecting the
issuer of the security. Any or all of these factors may provide buying
opportunities at attractive prices compared to historical or current market
price-earnings ratios, book value, underlying asset value, or the long-term
earning prospects of the company. If, in the Investment Adviser's opinion, a
stock has reached a fully valued position, it generally will be, but need not
be, sold and replaced by securities which are deemed to be undervalued in the
marketplace.
The Meridian Value Fund's policy of investing in securities that may be
temporarily out of favor differs from the investment approach followed by many
other mutual funds with a similar investment objective, including the MERIDIAN
FUND. Many such mutual funds typically do not invest in securities that have
declined sharply in price, are not widely followed, or are issued by companies
that have reported poor earnings or have suffered a downturn in business. The
Investment Adviser believes, however, that the securities of companies that may
be temporarily out of favor due to earnings declines or other adverse
developments may offer good investment opportunities for the Fund.
PORTFOLIO TURNOVER
Short-term trading is not intended to be the primary means by which either Fund
achieves its long-term investment objective. Each Fund, however, does expect to
engage in a substantial number of portfolio transactions. Each Fund's annual
portfolio turnover rate may exceed 100%, but is not expected to exceed 200%.
These portfolio turnover rates and the resultant commission expenses are higher
on a relative basis than those of most other mutual funds. See "Financial
Highlights" for the Funds' past portfolio turnover rates. Frequent trading can
result in larger distributions of capital gains to shareholders. Short-term
capital gains are taxable at higher rates than long-term capital gains. A higher
portfolio turnover rate will increase aggregate brokerage commission expenses
which must be borne directly by a Fund and ultimately by that Fund's
stockholders.
RISKS OF INVESTING IN SMALLER, NEWER COMPANIES
Each Fund's portfolio may include securities of smaller companies and
less-seasoned companies which have limited operating histories and may not yet
be profitable. Investments in these companies offer opportunities for capital
gains, but involve significant risks, including limited product lines, markets
or financial resources, dependence on a key group of managers, the absence of a
ready market for the securities (or securities which trade less frequently or in
a limited volume, or only in the over-the-counter market or on a regional stock
exchange), volatility of the stock price, and in the case of unseasoned
8
<PAGE>
companies, the untested long-term viability of the firms' operations. A Fund
will not invest in a company having an operating history of less than three
years if immediately after and as a result of that investment the value of the
Fund's holdings of such securities exceeds 25% of the value of the Fund's total
assets.
HIGH YIELD BONDS
The MERIDIAN FUND will only purchase bonds rated A or better (or, if unrated,
are considered by the Investment Adviser to be of equivalent credit rating). The
MERIDIAN VALUE FUND(R) may purchase high-yield, high-risk bonds (bonds rated
less than Baa or BBB), which typically are subject to greater market
fluctuations and to greater risk of loss of income and principal due to default
by the issuer than are higher-rated bonds. Their values tend to reflect
short-term corporate, economic and market developments and investor perceptions
of the issuer's credit quality to a greater extent than lower yielding,
higher-rated bonds. In addition, it may be more difficult to dispose of, or to
determine the value of, high-yield, high-risk bonds. Bonds rated less than Baa
or BBB are considered speculative. Bonds rated Ca or CC are described by the
ratings agencies as "speculative in a high degree; often in default or having
other marked shortcomings." See the Appendix for a complete description of the
bond ratings.
FOREIGN SECURITIES
A Fund may invest in the securities of non-U.S. companies. These companies are
not subject to uniform accounting, auditing and financial reporting standards
and practices, or regulatory requirements comparable to those applicable to U.S.
companies. There also may be less public information available about non-U.S.
companies. Additionally, specific local political and economic factors must be
evaluated in making these investments, including trade balances and imbalances,
and related economic policies; expropriation or confiscatory taxation;
limitations on the removal of funds or other assets; political or social
instability; the diverse structure and liquidity of the various securities
markets; and nationalization policies of governments around the world. However,
investing outside the U.S. can also reduce certain of these risks due to greater
diversification opportunities. Securities of non-U.S. issuers may be denominated
in currencies other than the U.S. dollar. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in dollars.
The value of currencies may fluctuate in a manner unrelated to the investment
performance of the securities denominated in those currencies.
DEFENSIVE INVESTMENTS
When the Investment Adviser concludes, on the basis of its analyses of the
economy, political conditions, or its own valuation guidelines and standards,
that general market conditions warrant the reduction of some or all of a Fund's
equity securities holdings, a Fund may adopt a temporary defensive posture to
preserve capital and, if possible, to achieve positive returns in defensive type
investments. During such periods a Fund may hold a portion or all of its assets
in corporate debt obligations, preferred stocks, cash or money market
instruments. A Fund may not achieve its investment objective while it is
investing defensively.
YEAR 2000
Until recently, most computer systems have used two digits to identify the year.
Without modifications to adapt to the change from "99" to "00" at the turn of
the century, those systems may not be able to perform necessary functions. The
Funds' principal service providers have advised the Funds that they have been
actively working on implementing necessary changes to their systems, and that
they expect that their systems will be adapted in time, although there can be no
assurance of success. If their computer systems are not ready in time, there
could be a negative effect on Fund operations. The year 2000 issue affects
virtually all organizations and could adversely affect the Funds' investments.
EURO INTRODUCTION
On January 1, 1999, the European Union introduced a single European currency,
the Euro. The Investment Adviser and other key service providers have taken
steps to address Euro-related issues and their impact on the Funds' operations.
The Funds have not experienced any adverse operational effects from the Euro
conversion nor has it caused any apparent market disruptions. The Funds and the
Investment Adviser will continue to monitor the effects of the conversion on the
markets and issues in which the Funds invest.
9
<PAGE>
- --------------------------------------------------------------------------------
ORGANIZATION AND MANAGEMENT
- --------------------------------------------------------------------------------
MERIDIAN FUND, INC.
Meridian Fund, Inc.(R) ("Meridian") is a no-load, open-end, diversified
management investment company consisting of two separate portfolios, the
MERIDIAN FUND and the MERIDIAN VALUE FUND(R).
THE INVESTMENT ADVISER
Meridian has retained as investment adviser Aster Capital Management, Inc. (the
"Investment Adviser"), 60 E. Sir Francis Drake Blvd., Wood Island, Suite 306,
Larkspur, California 94939. The Investment Adviser manages the investment of the
Funds' portfolios, provides administrative services and manages Meridian's other
business affairs. These services are subject to general oversight by Meridian's
Board of Directors.
The Investment Adviser is a professional investment management organization
founded in 1985. Richard F. Aster, Jr. owns 94% of the Investment Adviser, and
is President and a Director of Meridian and of the Investment Adviser.
PORTFOLIO MANAGERS
Richard F. Aster, Jr. has been primarily responsible for the day-to-day
management of the MERIDIAN FUND since inception. Mr. Aster has been President of
Aster Investment Management, Inc. for over fifteen years. Aster Investment
Management, Inc. is an investment adviser for individuals and institutions. Mr.
Aster and (since 1995) Kevin C. O'Boyle are co-managers of the MERIDIAN VALUE
FUND(R).
Mr. O'Boyle has been employed by the Investment Adviser since September 1994 as
Vice President of Research. Mr. O'Boyle earned his Master of Business
Administration degree from the Stanford University Graduate School of Business
in 1993.
MANAGEMENT FEES AND OTHER EXPENSES
Management Fees. MERIDIAN FUND pays the Investment Adviser an annual fee of 1%
of the first $50 million of the Fund's average daily net assets and 0.75% of the
Fund's average daily net assets in excess of $50 million. MERIDIAN VALUE FUND(R)
pays the Investment Adviser an annual fee of 1% of the Fund's average daily net
assets. The management fees are computed daily and paid monthly.
Expenses. Each Fund will pay all of its own expenses. Expenses which relate to
both Funds (such as, for example, the fees and expenses paid to the Meridian
Directors) will be allocated between Funds by the Investment Adviser in a
reasonable manner.
The Investment Adviser has contractually agreed until at least October 31, 2000
to reimburse each Fund in the amount, if any, by which the aggregate operating
expenses of the Fund in any fiscal year exceed 2.5% of the first $30 million of
the Fund's average net assets, 2.0% of the next $70 million of the average net
assets, and l.5% of the remaining average net assets. Any reimbursement will be
on a monthly basis, subject to year-end adjustment. Interest expense, taxes and
capital items such as brokerage fees and commissions are not included as
expenses for these purposes.
THE TRANSFER, REDEMPTION AND DIVIDEND DISBURSING AGENT
First Data Investor Services Group, Inc., a wholly owned subsidiary of First
Data Corporation ("First Data"), serves as Transfer, Redemption and Dividend
Disbursing Agent to each Fund. Its address is 3200 Horizon Drive, P.O. Box
61503, King of Prussia, Pennsylvania 19406.
CUSTODIAN
Bank of New York, 48 Wall Street, New York, NY 10286, serves as Custodian of all
securities and funds owned by the Funds.
10
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
INITIAL PURCHASE
Minimum Initial Investment. You must invest at least $1,000 to open a
stockholder account.
Application. You may purchase shares from a Fund by sending a signed, completed
application form and a check or money order, payable in U.S. dollars, to:
MERIDIAN FUND, INC.(R)
c/o First Data Investor Services Group, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
Meridian does not accept purchases by third party checks, credit cards or cash.
The Funds reserve the right to suspend or modify the continuous offering of
their shares.
Application Forms and Questions. Call Meridian at 1-800-446-6662.
Payments by Wire. If you want to pay for your initial shares by wiring funds,
call First Data at 1-800-446-6662 directly to have an account number assigned
and make arrangements for the timely submission of the application form. See
"Purchases By Wire" for further instructions.
Share Certificates. You may obtain share certificates, for full shares only, by
written request to the Transfer Agent.
Purchases through Third Parties. Meridian does not have dealer agreements and
assumes no liability for the failure of a dealer to transmit your order promptly
or accurately to either Fund.
TAX-DEFERRED PLANS
You may be entitled to invest in the Funds through a tax-deferred account under
a prototype trust approved by the IRS (a "Plan Account"), such as an Individual
Retirement Account ("IRA"), Simplified Employee Pension Plan ("SEP-IRA"),
Savings Incentive Match Plan for Employees ("SIMPLE Plan"), Roth IRA, or
Education IRA. There is no service charge for the purchase of Fund shares
through a Plan Account but there is an annual maintenance fee of $12 per Plan
Account. Semper Trust Company serves as custodian for Plan Accounts offered by
Meridian. For more information about Plan Accounts along with the necessary
materials to establish a Plan Account, call 1-800-446-6662 or write to Meridian
Fund, Inc.(R), c/o First Data Investor Services Group, Inc., 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19406-0903. You should consult your own tax
advisors regarding the tax consequences to you of establishing or purchasing
Fund shares through a Plan Account.
ADDITIONAL PURCHASES
Once you have opened an account, you may buy additional shares at any time by
sending the stub from your last statement together with a check or money order
for at least $50, payable in U.S. dollars, to:
Meridian Fund, Inc.(R)
c/o First Data Investor Services Group, Inc.
Post Office Box 412797
Kansas City, MO 64141-2797.
Share purchase confirmations will include a form for sending additional funds.
You must include your account number.
Automatic Deductions. If you wish to have automatic deductions from a checking
account, call Meridian at 1-800-446-6662 for forms.
PURCHASES BY WIRE
You may wire funds to Meridian. You should make arrangements so that your funds
arrive at the same time as your instructions for the purchase of shares.
Transfer funds by wire via the Federal Reserve Wire System as follows: United
Missouri Bank KC N.A., ABA #10-10-00695, for First Data Investor Services Group,
Inc., A/C #98-7037-0719, FBO MERIDIAN FUND (or MERIDIAN VALUE FUND(R)), Account
of (name(s) as registered), Shareholder A/C #(account number). United Missouri
Bank and Meridian are not liable for any loss incurred by delay in receiving
money submitted by wire transfer.
PURCHASES BY TELEPHONE
Meridian may, from time to time, accept telephone purchase orders from
broker-dealers and institutions previously approved by Meridian. Meridian does
not have a sales or service charge but those broker-dealers may charge you for
their services.
PRICE OF SHARES
Each Fund sells its shares at the next net asset value per share of the Fund
determined after the Transfer Agent has received properly identified purchase
funds. Net asset
11
<PAGE>
value per share is computed as of the close of business (currently 4:00 p.m.,
New York time) each day the New York Stock Exchange is open for trading.
Net asset value is determined by totaling the value of all portfolio securities,
cash, other assets, including accrued interest and dividends, held by a Fund,
and subtracting from that total all liabilities, including accrued expenses. The
total net asset value is divided by the total number of shares outstanding to
determine the net asset value of each share. Securities in the Fund's portfolio
are valued primarily on market quotes, or, if quotes are not available, by a
method that the Board of Directors of Meridian believes would reflect accurately
the securities' fair value. International markets may be open on days when U.S.
markets are closed. The value of foreign securities owned by a Fund could change
on days when Fund shares may not be bought or sold. Short-term securities with
original or remaining maturities more than 60 days are valued at the mean of
their quoted bid and asked prices. Short term securities with 60 days or less to
maturity are amortized to maturity based on their cost to the Fund if acquired
within 60 days of maturity or, if already held by the Fund on the 60th day,
based on the value determined on the 61st day.
Meridian's Transfer Agent will be closed on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
EXCHANGES BETWEEN FUNDS
You may exchange shares from one Fund to the other Fund, subject to the minimum
investment requirements of the Fund purchased. To exchange shares, write
Meridian's Transfer Agent (see "Redemption and Transfer of Shares") or -- if you
have submitted a signed Account Application which indicates that you have not
declined the option -- telephone 1-800-446-6662 toll-free. By using the
telephone exchange option, you agree to indemnify and hold harmless Meridian,
the Transfer Agent, the Investment Adviser and each of their respective
directors, officers, employees and agents from any losses, expenses, costs or
liability (including attorney fees) which may be incurred in connection with the
exercise of this privilege. If a Fund, the Transfer Agent or the Investment
Adviser, as the case may be, does not employ reasonable procedures to confirm
that the instructions received from any person with appropriate account
information are genuine, the Fund or one of those other parties may be liable
for losses due to unauthorized or fraudulent instructions. Exchange redemptions
and purchases are processed simultaneously at the share prices next determined
after the exchange order is received. (See "How to Purchase Shares -- Price of
Shares.")
EXCHANGE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND
PURCHASES.
EXCHANGE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE FUND TO BE PURCHASED
MAY BE LEGALLY OFFERED AND MAY BE TERMINATED OR MODIFIED AT ANY TIME UPON 60
DAYS' WRITTEN NOTICE.
HOW TO REDEEM AND TRANSFER SHARES
BY MAIL
You may redeem shares of a Fund by mail by writing directly to Meridian's
Transfer Agent, First Data Investor Services Group, Inc., 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19406-0903. If you send a redemption request
to Meridian directly, rather than to its Transfer Agent, Meridian will forward
your request to the Transfer Agent, but the effective date of redemption may be
delayed until the request is received by the Transfer Agent.
You must sign the redemption request exactly as your name appears on the
registration form and must include the account number. If more than one person
owns the shares, all owners must sign the redemption request exactly as their
names appear on the registration.
You must deliver stock certificates for any shares to be redeemed together with
the signed redemption request.
Signature guarantees, when required as described below, and any additional
documents required by Meridian for shares owned by corporations, executors,
administrators, trustees or guardians, also must accompany the redemption
request.
A request for redemption will not be processed until all of the necessary
documentation has been received in proper form by the Transfer Agent. If you
have questions about what documents are required, call First Data at
1-800-446-6662.
BY TELEPHONE OR TELEGRAM
You may redeem shares of a Fund by telephone by calling First Data at
1-800-446-6662 during normal business hours. You also may send a telegram or an
overseas cable to First Data Investor Services Group, Inc., 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19406-0903, for the account of the Fund.
You may elect at any time to use the telephone or telegram redemption service.
You may make that election on the initial application form or on other forms
prescribed by the Fund. An executed authorization form
12
<PAGE>
must be on file with the Transfer Agent before you may use the service. Share
certificates for the shares being redeemed must be held by the Transfer Agent. A
corporation (or partnership) also must submit a corporate resolution (or
certificate of partnership) indicating the names, titles and the required number
of signatures authorized to act on its behalf. The authorization form must be
signed by a duly authorized officer(s) and the corporation seal affixed.
By signing a Telephone Redemption Authorization form or otherwise using
telephone redemption privileges, you have agreed that the Funds will not be
liable for following instructions communicated by telephone that they reasonably
believe to be genuine. The Funds provide written confirmation of transactions
initiated by telephone to confirm that telephone transactions are genuine. As a
result of this policy, you may bear the risk of any financial loss in the event
of such a transaction; provided, however, that if a Fund or the Transfer Agent
fails to employ this and other established procedures, the Fund or the Transfer
Agent may be liable.
When using the telephone or telegram redemption service, you must give the full
registration name, address, number of shares or dollar amount to be redeemed,
Fund account number and name of the Fund in order for the redemption request to
be processed.
First Data and Meridian reserve the right to refuse any telephone or telegram
instructions and may discontinue these redemption options upon 30 days written
notice.
At times of peak activity it may be difficult to place requests by phone. During
these times, consider sending your request in writing.
REDEMPTION BY WIRE
You can request transmittal of redemption proceeds directly to your
predesignated account at a domestic bank if the proceeds are at least $5,000.
Proceeds of less than $5,000 will be mailed to your registered address of
record. The Fund will pay wire charges and other costs. Any changes or
exceptions to the original election must be made in writing, with signature
guaranteed, and will be effective upon receipt by the Transfer Agent.
REDEMPTION PRICE AND CONDITIONS
All shares of the Funds may be redeemed at the next net asset value per share of
the Fund determined after receipt of a redemption request, if in good order, by
the Transfer Agent. (See "How to Purchase Shares -- Price of Shares.") Because
the net asset value of a Fund's shares will fluctuate as a result of changes in
the market value of the securities it owns, the amount you receive upon
redemption may be more or less than the amount you paid for the shares. Payment
for shares redeemed in writing, by telephone or by telegram, if in good order,
will be made promptly after receipt, but not later than seven business days
after the valuation date. Requests for redemption which are subject to any
special conditions or which specify an effective date other than as provided in
this Prospectus cannot be accepted. In accordance with the rules of the
Securities and Exchange Commission (SEC), we reserve the right to suspend
redemptions under extraordinary circumstances.
Investment dealers handling redemption transactions may charge you for the
service. You will not be charged if you redeem shares directly through the
Transfer Agent.
Requests for redemptions will not be honored until checks (including certified
checks or cashier's checks) received for the shares purchased have cleared,
which can take as long as fifteen days. If you have questions about the proper
form for redemption, call the Transfer Agent at 1-800-446-6662.
MANDATORY REDEMPTION
If your account in a Fund falls below $750 for any reason other than market
fluctuations, we will ask you to add to your account. If your account balance is
not brought up to the minimum or you do not send us other instructions, we will
redeem your shares and send you the proceeds.
SIGNATURE GUARANTEE
To prevent fraudulent redemptions Meridian requires that the signature of each
stockholder be guaranteed for all redemptions greater that $25,000 or those
directed to an address or individual other than the holder of record.
Signatures must be guaranteed by a representative of an eligible guarantor
institution. Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. A broker-dealer
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee program.
The signature guarantees must appear, together with the signatures of the
registered owners on one of the following: (1) a written request for redemption,
which identifies clearly the exact names in which the account is registered, the
account number and the number of shares or the dollar amount to be redeemed, (2)
a separate instrument of assignment which should specify the total
13
<PAGE>
number of shares to be redeemed (this "stock power" may be obtained from
Meridian or First Data, or from most banks and stockbrokers), or (3) all stock
certificates tendered for redemption, or on the letter of stock power if shares
are held by the Transfer Agent.
SHARE TRANSFERS
You may transfer shares of a Fund by delivering to First Data: (1) a letter of
instructions, signed exactly as the shares are registered by each registered
owner, which identifies clearly the exact names in which the account presently
is registered, the account number, the number of shares to be transferred, and
the names, address and social security or tax identification number of the
account to which the shares are to be transferred, (2) stock certificates, if
any, which are the subject of the transfer, and (3) an instrument of assignment
("stock power"), which should specify the total number of shares to be
transferred and on which the signatures of the registered owners have been
guaranteed. (See "Signature Guarantee.") Additional documents are required for
transfers by corporations, executors, administrators, trustees and guardians. If
you have questions about the documents required, call First Data
(1-800-446-6662). If the transfer establishes a new account, you must also
submit a new application. Meridian is not bound to record any transfer on the
stock transfer books maintained by First Data until First Data has received all
required documents.
KEEPING YOU INFORMED
After you invest, during the year we will send you the following communications:
- - confirmation statements
- - account statements, mailed after the close of each calendar quarter
- - annual and semiannual reports, mailed approximately 60 days after June 30 and
December 31
- - 1099 tax form, sent by January 31
- - annual updated prospectus, mailed to existing stockholders in the Fall.
DIVIDENDS AND TAX STATUS
DIVIDENDS AND DISTRIBUTIONS
Meridian declares and pays annually to the stockholders of each Fund dividends
from net investment income. The amount depends on earnings, the financial
condition of the Fund and other factors. We will distribute any net realized
capital gains to shareholders annually after the end of the fiscal year. A Fund
may make an additional dividend or capital gain distribution near the end of the
calendar year.
We will automatically reinvest dividends and capital gain distributions in
shares, at net asset value (without sales charge), unless you otherwise instruct
the Transfer Agent in writing.
The value of shares will be reduced by the amount of dividends and
distributions. If you purchase shares shortly before the record date for a
dividend or the distribution of capital gains, you will pay the full price for
the shares and receive some portion of the price back as a taxable dividend or
distribution.
UNDELIVERABLE REDEMPTION CHECKS
If you choose to receive distributions in cash and distribution checks are
returned and marked as "undeliverable" or remain uncashed for six months, your
account will be changed automatically so that all future distributions are
reinvested in your account. Checks that remain uncashed for six months will be
cancelled and the money reinvested in the Fund. No interest is paid during the
time the check is outstanding.
FEDERAL TAXES
Dividends are taxable as ordinary income. Taxes on capital gains distributed by
the Funds vary with the length of time the Fund has held the security - not how
long you have been invested in the Fund.
Dividends generally are taxable in the year in which they are paid, even if they
appear on your account statement the following year. Dividends and distributions
are treated the same for federal income tax purposes whether you receive them in
cash or in additional shares.
You will be notified in January each year about the federal tax status of
distributions made by the Funds. Depending on your residence for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes.
An exchange of shares is considered a sale, and any related gains may be subject
to federal and state taxes.
Foreign shareholders may be subject to special withholding requirements. A
penalty is charged on certain pre-retirement distributions from retirement
accounts. Consult your tax adviser about the federal, state and local tax
consequences in your particular circumstances.
The Funds may incur foreign income taxes in connection with some of their
foreign investments. Certain of these taxes may be credited to shareholders.
14
<PAGE>
A Fund must withhold 31% of your taxable dividends, capital gains distributions
and redemptions if you have not provided the Fund your taxpayer identification
number in compliance with IRS rules. To avoid this, make sure you provide your
correct tax identification number (social security number for most investors) on
your account application.
Further federal income tax information is contained in the SAI. You should
consult your individual tax advisors with respect to your particular tax
situations as well as the state, foreign, and local tax consequences of
investments in shares of the Funds.
15
<PAGE>
THE FUNDS' PERFORMANCE
MERIDIAN FUND
AS COMPARED TO S &P 500 AND RUSSELL 2000 INDEXES
Value of $10,000 invested in Meridian Fund, the S&P 500(R) & the Russell 2000
[GRAPH]
<TABLE>
<CAPTION>
S&P 500(R Value of Russell 2000 Value of
Index $10,000 Index $10,000
Including Invested Value of Including Invested
Date Dividends S&P 500(R) Meridian Fund Meridian Fund Dividends Russell
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6/30/89 768.37 $10,000 $18,948 $10,000 547.40 $10,000
6/30/90 897.00 $11,674 $22,683 $11,971 563.61 $10,296
6/30/91 961.82 $12,518 $23,959 $12,645 571.08 $10,433
6/30/92 1091.24 $14,202 $28,990 $15,300 654.11 $11,949
6/30/93 1240.02 $16,138 $37,542 $19,813 824.24 $15,057
6/30/94 1258.06 $16,373 $38,850 $20,503 860.02 $15,711
6/30/95 1585.90 $20,640 $45,237 $23,874 1032.98 $18,871
6/30/96 1997.90 $26,002 $54,918 $28,983 1279.74 $23,379
6/30/97 2691.09 $35,023 $62,561 $33,071 1488.68 $27,195
6/30/98 3502.11 $45,578 $73,146 $38,603 1734.42 $31,685
6/30/99 4297.79 $55,934 $75,377 $39,781 1760.44 $32,160
</TABLE>
<TABLE>
<CAPTION>
-------------------------------
Meridian Fund
Average Annual Total Return
<S> <C>
One Year 3.05%
Five Years 14.18%
Ten Years 14.81%
-------------------------------
</TABLE>
Past performance is not predictive of future performance.
MANAGEMENT'S DISCUSSION OF MERIDIAN FUND PERFORMANCE
The Meridian Fund's investment performance of 3.05% during the fiscal year ended
June 30, 1999, reflected the lackluster performance of small and medium sized
growth stocks. For example, the Russell 2000 index was up 0.06% during this same
period. The Fund's best performing areas included cellular communications,
energy, hotels and lodging, industrial products and services, insurance, leisure
and amusement, restaurants, retail, and telecommunications. The worst performing
groups were banking and finance, consumer products and services, correctional
and detention facilities, health services, real estate, technology, and
transportation. Of a total of 82 investments, 46 advanced and 36 declined.
NEW BENCHMARK INDEX
The S&P 500(R) index is a market capitalization weighted index of 500 large
capitalization securities. The Adviser has determined that a more appropriate
benchmark for the Meridian Fund is the Russell 2000 index because the Meridian
Fund invests primarily in mid and small capitalization securities and that the
weighting given the largest capitalization securities within the S&P 500(R) has
increased dramatically over the past several years. The Russell 2000 is a broad
based index of 2000 mid and small capitalization securities. The returns of both
benchmark indices have been presented for comparison.
16
<PAGE>
MERIDIAN VALUE FUND(R)
Value of $10,000 invested in Meridian Value Fund(R) & the S&P 500(R)
[GRAPH]
<TABLE>
<CAPTION>
S&P 500(R) Value of Value of
Index $10,000 $10,000
Including Invested Value of Russell Invested
Date Dividends S&P 500(R) Meridian Value Fund(R) 2000 Russell
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2/10/94 1313.36 $10,000 $10,000 $10,000
6/30/94 1258.06 $9,579 $9,870 $ 9,870 240.29
6/30/95 1585.90 $12,075 $10,270 $10,270 283.63
6/30/96 1997.90 $15,212 $15,320 $15,320 346.62
6/30/97 2691.09 $20,490 $18,468 $18,468 396.37
6/30/98 3502.11 $26,665 $23,279 $23,279 457.39
6/30/99 4297.79 $32,724 $27,683 $27,683 457.68
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------
Meridian Value Fund(R)
Average Annual Total Return
<S> <C>
One Year 18.92%
Since Inception 20.83%
--------------------------------------
</TABLE>
Past performance is not predictive of future performance.
MANAGEMENT'S DISCUSSION OF MERIDIAN VALUE FUND(R) PERFORMANCE
The Meridian Value Fund's(R) average return from inception to June 30, 1999 was
20.8% compared to 24.6% for the S&P 500(R) with dividends. The Fund did not
approach full investment status until June 30, 1995, with cash comprising an
average of approximately 45-50% of the Fund's total portfolio from inception
until June 30, 1995. For the four year period June 30, 1995 through June 30,
1999, the Meridian Value Fund's(R) average annual total return was 28.1%
compared to 28.3% for the S&P 500(R) with dividends. The Meridian Value
Fund's(R) investment performance of 18.92% during the fiscal year ended June 30,
1999, resulted primarily from investments in the technology,
telecommunications/cable equipment, retail, healthcare, and consumer product
sectors. The worst performing investments were in the apparel/shoe and
industrial services sectors.
17
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial history. Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Funds' financial statements, is included in the Funds' annual reports, which
are available upon request and incorporated by reference in the SAI.
MERIDIAN FUND
Selected data for each share of capital stock outstanding throughout
each period.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
FOR THE FISCAL YEARS ENDED JUNE 30,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
-- Beginning
of period ...... $ 33.26 $ 33.20 $ 32.21 $ 27.29 $ 24.27 $ 23.87 $ 18.97 $ 17.24 $ 17.71 $ 15.93
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Income from
Investment
Operations
Net Investment
Income
(loss) ......... 0.16 0.27 0.40 0.30 0.27 0.09 (0.01) 0.07 0.20 0.06
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Net Gains (Losses)
on Securities
(both realized
and unrealized) . (0.50) 4.92 3.71 5.47 3.63 0.76 5.51 3.45 0.49 2.84
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Total From
Investment
Operations ...... (0.34) 5.19 4.11 5.77 3.90 0.85 5.50 3.52 0.69 2.90
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Less Dividends and
Distributions
Dividends from net
investment income (0.14) (0.32) (0.36) (0.31) (0.18) (0.02) (0.04) (0.09) (0.12) (0.48)
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Distributions from
net realized
capital gains ... (6.50) (4.81) (2.76) (.54) (.70) (.43) (.56) (1.70) (1.04) (1.04)
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Total Dividends
and Distributions (6.64) (5.13) (3.12) (0.85) (0.88) (0.45) (0.60) (1.70) (1.04) (0.64)
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value -
End of Period ... $ 26.28 $ 33.26 $ 33.20 $ 32.21 $ 27.29 $ 24.27 $ 23.87 $ 18.97 $ 17.24 $ 17.71
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Total Return ...... 3.05% 16.92% 13.92% 21.40% 16.44% 3.48% 29.50% 21.00% 5.62% 19.71%
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Ratios/Supplemental
Data
Net Assets, End of
Period (in
thousands) ...... $185,683 $296,803 $353,029 $384,087 $328,153 $199,191 $78,581 $18,363 $12,350 $11,058
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Ratio of Expenses
to Average Net \
Assets .......... 1.01% 0.95% 0.96% 0.96% 1.06% 1.22% 1.47% 1.75% 1.68% 2.08%
-------- -------- -------- -------- -------- -------- ------- ------- ------- -------
Ratio of Net
Investment
Income (Loss) to
Average Net
Assets.......... 0.49% 0.76% 1.23% 0.99% 1.18% 0.38% (.01%) 0.24% 0.98% 0.14%
-------- -------- -------- -------- -------- -------- ------- ------- ------- --------
Portfolio Turnover
Rate ............ 51% 38% 37% 34% 29% 43% 61% 61% 85% 66%
-------- -------- -------- -------- -------- -------- ------- ------- ------- --------
</TABLE>
18
<PAGE>
MERIDIAN VALUE FUND(R)
Selected data for each share of capital stock outstanding throughout
each period.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FISCAL YEARS ENDED JUNE 30,
- ------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994(+)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value
-- Beginning of period .. $ 19.30 $ 17.40 $ 15.32 $ 10.27 $ 9.87 $ 10.00
------------ ------------ ------------ ------------ ------------ ------------
Income from Investment
Operations................
------------ ------------ ------------ ------------ ------------ ------------
Net Investment Income
(loss) .................. (0.10) (0.19) (0.26) (0.10) (0.04) 0.00
------------ ------------ ------------ ------------ ------------ ------------
Net Gains (Losses) on
Securities (both realized
and unrealized) .......... 3.56 4.32 3.20 5.15 0.44 (0.13)
------------ ------------ ------------ ------------ ------------ ------------
Total From Investment
Operations ............... 3.46 4.13 2.94 5.05 0.40 (0.13)
------------ ------------ ------------ ------------ ------------ ------------
Less Dividends and
Distributions.............
------------ ------------ ------------ ------------ ------------ ------------
Distributions from Net
Realized Capital Gains ... (0.47) (2.23) (0.86) 0.00 0.00 0.00
------------ ------------ ------------ ------------ ------------ ------------
Total Dividends and
Distributions ............ (0.47) (2.23) (0.86) 0.00 0.00 0.00
------------ ------------ ------------ ------------ ------------ ------------
Net Asset Value - End of
Period ................... $ 22.29 $ 19.30 $ 17.40 $ 15.32 $ 10.27 $ 9.87
------------ ------------ ------------ ------------ ------------ ------------
Total Return ............... 18.92% 26.05% 20.55%+ 49.17% 4.05%+ (1.30)+
------------ ------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data
Net Assets, End of Period .. $ 24,912,455 $ 12,196,379 $ 7,340,110 $ 3,471,507 $ 715,021 $ 391,538
------------ ------------ ------------ ------------ ------------ ------------
Ratio of Expenses to Average
Net Assets ............... 1.63% 2.16% 2.51%* 2.55%* 2.78%* 1.28%*
------------ ------------ ------------ ------------ ------------ ------------
Ratio of Net Investment Loss
to Average Net Assets .... (0.65%) (1.35%) (1.96%)* (1.36%)* (0.58%)* (0.07%)*
------------ ------------ ------------ ------------ ------------ ------------
Portfolio Turnover Rate .... 124% 133% 144% 125% 77% 194%
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
(+) From commencement of operations on February 10, 1994.
+ The total returns would have been lower had certain expenses not been
reduced during the periods shown.
* Not representative of expenses incurred by the Fund as the Adviser waived
its fee and/or paid certain expenses of the Fund. Had these fees and
expenses not been reduced and absorbed, the ratio of expenses to average
net assets would have been 2.80%, 6.47%, 14.64% and 11.22%, and the ratio
of net investment income to average net assets would have been a loss of
2.25%, 5.28%, 12.44% and 10.02%, for the periods ended June 30, 1997
through June 30, 1994, respectively
19
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities
issued by various entities from "Aaa" to "C," according to quality as described
below:
"AAA -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues."
"AA -- High quality by all standards. They are rated lower than the
best bond because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make the long-term risks appear
somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many
favorable investment attributes. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well
assured. The protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment;
assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be
present elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other
marked shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely
poor prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of
various entities in categories ranging from "AAA" to "D" according to quality as
described below:
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree."
"A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions, than debt in higher rate categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal than for debt in higher
rated categories."
20
<PAGE>
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal
is in arrears."
21
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For more information about MERIDIAN FUND, INC.(R) the following documents are
available free upon request:
ANNUAL/SEMIANNUAL REPORTS:
The Funds' annual and semiannual reports to shareholders contain detailed
information about the Funds' portfolios.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Funds, including operations
and investment strategies. It is incorporated by reference and is legally
considered a part of this Prospectus.
You can get free copies of the reports and the SAI, or request other information
and discuss your questions about the Funds, by contacting us at:
MERIDIAN FUND, INC.(R)
C/O FIRST DATA INVESTORS SERVICES GROUP, INC.
3200 HORIZON DRIVE
P.O. BOX 61503
KING OF PRUSSIA, PA 19406-0903
800- 446-6662
You can also review the Fund's reports and SAI at the Public Reference Room of
the Securities and Exchange Commission. In addition, you can get text-only
copies:
- For a fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009 or calling
1-800-SEC-0330
- Free from the Commission's Website at http://www.sec.gov.
Investment Company Act file No. 811- 4014
22
<PAGE>
MERIDIAN FUND, INC.(R)
STATEMENT OF ADDITIONAL INFORMATION
October 28, 1999
This Statement of Additional Information is not a prospectus, and it
should be read in conjunction with the Prospectus dated October 28, 1999, as
supplemented from time to time, which includes Meridian Fund and Meridian Value
Fund(R). Copies of the Prospectus may be obtained at no charge by writing to
Meridian Fund, Inc.(R) c/o First Data Investors Services Group, Inc., 3200
Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903, or by calling
(800) 446-6662. In this Statement of Additional Information the Meridian Fund
and Meridian Value Fund(R) may be referred to collectively as the "Funds" or
individually as a "Fund." Aster Capital Management, Inc. (the "Investment
Adviser") is the investment adviser to the Funds. Each Fund is a separate,
diversified series of Meridian Fund, Inc.(R) ("Meridian"). Incorporated by
reference herein are the financial statements of the Funds contained in the
Funds' Annual Report to stockholders for the fiscal year ended June 30, 1999,
including the Auditors' Report dated July 26, 1999. Copies of the Funds' Annual
and Semiannual Reports to stockholders are available, upon request, by calling
(800) 446-6662 or by writing to Meridian Fund, Inc.(R), c/o First Data Investors
Services Group, Inc. 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA
19406-0903.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTMENT OBJECTIVES, POLICIES AND PORTFOLIO TECHNIQUES............. 1
INVESTMENT RESTRICTIONS.............................................. 5
DIRECTORS AND OFFICERS............................................... 7
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.................. 8
INVESTMENT MANAGEMENT................................................ 9
EXECUTION OF PORTFOLIO TRANSACTIONS.................................. 10
PURCHASE, REDEMPTION AND PRICING OF SHARES........................... 12
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES........................... 13
INVESTMENT RESULTS................................................... 15
FURTHER INFORMATION ABOUT MERIDIAN................................... 16
ADDITIONAL INFORMATION............................................... 17
FINANCIAL STATEMENTS................................................. 17
</TABLE>
<PAGE>
MERIDIAN FUND, INC.(R)
Meridian was incorporated in Maryland as an open-end management
investment company on March 5, 1984. The authorized capital stock of Meridian
consists of 50,000,000 shares of Common Stock (par value $.01 per share), with
25,000,000 shares presently allocated to each of two series. Each of the Funds
corresponds to a distinct series of Meridian's Common Stock with a separate and
distinct diversified investment portfolio. Each of the Funds' shares has equal
dividend, distribution, redemption, liquidation and noncumulative voting rights.
In the future, from time to time, Meridian's Board of Directors (the "Board of
Directors") may, in its discretion, increase the amount of authorized shares
and/or establish additional funds and issue shares of additional series of
Meridian's Common Stock.
INVESTMENT OBJECTIVES, POLICIES AND PORTFOLIO TECHNIQUES
The Prospectus presents each Fund's investment objectives, policies and
techniques. The following discussion provides additional information on those
policies and identifies certain policies not discussed in the Prospectus.
SECURITY LOANS - Consistent with applicable regulatory requirements,
each Fund may lend its portfolio securities to brokers, dealers and other
financial institutions. These loans will be callable at any time on reasonable
notice by the Fund and must be secured fully at all times by cash or cash
equivalents. Such loans allow the Fund to receive income on the loaned
securities while earning interest on the collateral. This collateral will be
invested in short-term obligations. A Fund will not lend portfolio securities
which, when valued at the time of the loan, have a value in excess of 10% of the
Fund's total assets. The Fund will seek to negotiate loan terms requiring that
the value of the collateral always be maintained at some level relative to the
value of the loaned securities. When a security loan is made, the collateral and
loaned securities will be valued each business day, and the borrower may be
required to increase the amount of collateral if the market value of the loaned
securities increases. A loan may be terminated by the borrower or by the Fund at
any time on reasonable notice. The borrower, on termination of the loan, is
required to return the securities to the Fund. Any gain or loss in the market
price during the period of the loan would accrue to the Fund. If the borrower
fails to deliver the loaned securities within four days after receipt of notice,
the Fund could use the collateral to replace the securities while holding the
borrower liable for any excess of replacement cost over collateral. When loaned
securities grant voting or consent rights, which pass to the borrower, the Fund
will call the securities to exercise such rights if the matters involved would
have a material effect on the Fund's investment in the securities.
As with any extensions of credit, there are risks of delay in recovery
and, in some cases, even loss of rights in the collateral should the borrower of
the securities fail financially. However, these loans of portfolio securities
will be made only to firms deemed by the Investment Adviser to be creditworthy
and when the income which can be earned from such loans justifies the attendant
risks. The Fund will pay reasonable finder's, administrative and custodial fees
in connection with a loan of its securities.
CASH-EQUIVALENT INSTRUMENTS - Other than as described under "Investment
Restrictions" below, the Funds are not restricted with regard to the types of
cash-equivalent investments they may make. When the Investment Adviser believes
that such investments are an appropriate part of a Fund's overall investment
strategy, the Fund may hold or invest a portion of its assets in any of the
following, denominated in U.S. dollars, foreign currencies, or multinational
currencies: cash; short-term U.S. or foreign government securities; commercial
paper rated at least A-2 by Standard & Poor's Corporation ("Standard & Poor's")
or P-2 by Moody's Investors Service, Inc. ("Moody's"), certificates of deposit
or other deposits of banks deemed creditworthy by the Investment Adviser
pursuant to standards adopted by the Board of Directors; time deposits and
bankers' acceptances (but the Funds may not enter into repurchase agreements
related to any of the foregoing). A certificate of deposit is a short-term
obligation of a commercial bank. A bankers' acceptance is a time draft drawn on
a commercial bank by a borrower, usually in connection with international
commercial transactions.
1
<PAGE>
NON-U.S. SECURITIES - Investing in foreign companies involves certain
considerations, including those set forth in the Prospectus and below, which are
not typically associated with investing in United States companies. There may be
less government supervision and regulation of foreign stock exchanges, brokers
and listed companies than exists in the United States.
The Funds could incur additional costs in connection with their
investment activities outside the U.S. The maintenance of assets in certain
jurisdictions may result in increased custodian costs as well as administrative
difficulties (for example, delays in clearing and settling portfolio
transactions or in receiving payment of dividends). Dividends or interest paid
by non-U.S. issuers may be subject to withholding and other foreign taxes which
may decrease the net return on such investments as compared to dividends or
interest paid to a Fund by United States issuers. A Fund will incur costs in
connection with foreign exchange transactions necessary for the purchase and
sale of non-U.S. securities and the receipt of dividends and interest.
The Funds will not hold currencies other than U.S. dollars or invest in
securities not denominated in U.S. dollars if such currencies are not fully
exchangeable into U.S. dollars without legal restriction at the time of
investment. The Funds may purchase securities that are issued by an issuer of
one nation but denominated in the currency of another nation (or a multinational
currency unit).
The Funds may hold foreign equity securities in the form of American
Depository Receipts or Shares ("ADRs"), European Depository Receipts ("EDRs"),
Continental Depository Receipts ("CDRs") or securities convertible into foreign
equity securities. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a United States bank or trust company evidencing
ownership of the underlying securities. Generally, ADRs, in registered form, are
designed for use on the U.S. securities markets.
DEBT SECURITIES - There are a number of risks generally associated with
investments in debt securities, including convertible securities. Yields on
short, intermediate and long term securities generally depend on a variety of
factors including the general condition of the money and bond markets, the size
of a particular offering, the maturity of the obligation, and the rating of the
issue. Debt securities with longer maturities tend to produce higher yields and
are generally subject to greater potential capital appreciation and depreciation
than obligations with shorter maturities and lower yields.
The Prospectus describes the permissible range of credit ratings for
the securities in which each Fund is permitted to invest. Appendix A of the
Prospectus describes the ratings. Credit ratings evaluate the safety of
principal and interest payment of securities, not their market value. The rating
of an issuer is also heavily weighted by past developments and does not
necessarily reflect probable future conditions. There is frequently a lag
between the time a rating is assigned and the time it is updated.
After its purchase by one of the Funds, a security may be assigned a
lower rating or cease to be rated. This would not require the Fund to sell the
security, but the Investment Adviser will consider such an event in determining
whether the Fund should continue to hold the security in the portfolio.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS (Meridian
Value Fund(R) only)
Sensitivity to Interest Rate and Economic Change - High-yield,
high-risk bonds are very sensitive to adverse economic changes and corporate
developments. During an economic downturn or substantial period of rising
interests rates, highly leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaults on its obligations to pay interest
or principal or enters into bankruptcy proceedings, the Fund may incur losses or
expenses in seeking recovery of amounts owed to it. In addition, periods of
economic uncertainty and changes can be expected to result in increased
volatility of market prices and yields of high-yield, high-risk bonds and the
Fund's net asset value.
2
<PAGE>
Payment Expectations - High-yield, high-risk bonds may contain
redemption or call provisions. If an issuer exercises these provisions in a
declining interest rate market, the Fund may have to replace the security with a
lower yielding security, resulting in a decreased current return for investors.
Conversely, a high-yield, high-risk bond's value will decrease in a rising
interest rate market, as will the value of the Fund's assets. If the Fund
experiences unexpected net redemptions, this may force it to sell high-yield,
high-risk bonds without regard to their investment merits, thereby decreasing
the asset base upon which expenses can be spread and possibly reducing the
Fund's rate of return.
Liquidity and Valuation - There may be little trading in the
secondary market for particular bonds, which may affect adversely the Fund's
ability to value accurately or dispose of those bonds. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
Legislation or Regulation - Future legislation or regulation
may limit the issuance of high-yield, high-risk bonds, which could have a
negative effect on the market for high-yield, high-risk bonds.
VARIABLE, FLOATING RATE AND SYNTHETIC OBLIGATIONS - Each Fund may
invest in fixed income securities with interest rates which fluctuate based upon
changes in market rates. Variable and floating rate obligations bear coupon
rates that are adjusted at designated intervals, based on the then current
market rates of interest on which the coupon rates are based. Variable and
floating rate obligations permit a Fund to "lock in" the current interest rate
for only the period until the next scheduled rate adjustment, but the rate
adjustment feature tends to limit the extent to which the market value of the
obligation will fluctuate. Each Fund may also invest in "synthetic" securities
whose value depends on the level of currencies, commodities, securities,
securities indexes, or other financial indicators or statistics. For example,
these could include fixed-income securities whose value or interest rate is
determined by reference to the value of a foreign currency relative to the U.S.
dollar, or to the value of different foreign currencies relative to each other.
The value or interest rate of these securities may increase or decrease as the
value of the underlying instrument changes.
CONVERTIBLE SECURITIES AND WARRANTS - Each Fund may invest in
convertible securities and warrants. The value of a convertible security is a
function of its "investment value" (determined by its yield in comparison with
the yields of other securities of comparable maturity and quality that do not
have conversion privilege) and its "conversion value" (the security's worth, at
market value, if converted into the underlying common stock). The credit
standing of the issuer and other factors may also affect the investment value of
a convertible security. The conversion value of a convertible security is
determined by the market price of the underlying common stock. If the conversion
value is low relative to the investment value, the price of the convertible
security is governed principally by its investment value. To the extent the
market price of the underlying common stock approaches or exceeds the conversion
price, the price of the convertible security will be increasingly influenced by
its conversion value.
A warrant gives the holder a right to purchase at any time during a
specified period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt, securities or preferred stock, warrants do not
pay a fixed dividend. Investments in warrants involve certain risks, including
the possible lack of a liquid market for resale of the warrants, potential price
fluctuations as a result of speculation or other factors, and failure of the
price of the underlying security to reach or have reasonable prospects of
reaching a level at which the warrant can be prudently exercised (in which event
the warrant may expire without being exercised) resulting in a loss of the
Fund's investment.
TEMPORARY DEFENSIVE INVESTMENTS - When a Fund adopts a temporary
defensive posture, as described in the Prospectus, a portion or all of the
Fund's investments during that period may be held in corporate debt obligations,
preferred stocks, cash or money market instruments, including, but not limited
to, obligations issued or guaranteed as to principal or interest by the United
States government, its agencies or instrumentalities, certificates of deposit,
bankers' acceptances and other obligations of domestic banks, and short-term
commercial paper of U.S. corporations. Investment income may increase during
that period.
3
<PAGE>
Preferred stock, unlike common stock, offers a stated dividend rate
payable from a corporation's earnings. Such preferred stock dividends may be
cumulative or non-cumulative, participating, or auction rate. If interest rates
rise, the fixed dividend on preferred stocks may be less attractive, causing the
price of preferred stocks to decline. Preferred stock may have mandatory sinking
fund provisions, as well as call/redemption provisions prior to maturity, a
negative feature when interest rates decline. Dividends on some preferred stock
may be "cumulative," requiring all or a portion of prior unpaid dividends to be
paid prior to payment of dividends on the issuer's common stock. Preferred stock
also generally has a preference over common stock on the distribution of a
corporation's assets in the event of liquidation of the corporation, and may be
"participating," which means that it may be entitled to a dividend exceeding the
stated dividend in certain cases. The rights of the holders of preferred stock
on the distribution of a corporation's assets in the event of a liquidation are
generally subordinate to the rights associated with a corporation's debt
securities.
INVESTMENT IN ILLIQUID SECURITIES - Each Fund may invest up to 10% of
the value of its net assets in illiquid securities. Securities may be considered
illiquid if a Fund cannot reasonably expect to receive approximately the amount
at which the Fund values those securities within seven days. The Investment
Adviser has the authority to determine whether certain securities held by a Fund
are liquid or illiquid pursuant to standards adopted by the Board of Directors.
The Investment Adviser takes into account a number of factors in
reaching liquidity decisions, including, but not limited to: the listing of the
security on an exchange or national market system; the frequency of trading in
the security; the number of dealers who publish quotes for the security; the
number of dealers who serve as market makers for the security; the apparent
number of other potential purchasers; and the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited, and the mechanics of transfer).
The Fund's investments in illiquid securities may include securities
that are not registered for resale under the Securities Act of 1933 (the
"Securities Act"), and therefore are subject to restrictions on resale. When a
Fund purchases unregistered securities, it may, in appropriate circumstances,
obtain the right to register those securities at the expense of the issuer. In
such cases there may be a lapse of time between the Fund's decision to sell the
security and the registration of the security permitting sale. During that time
the price of the security will be subject to market fluctuations.
The fact that there are contractual or legal restrictions on resale of
certain securities to the general public or to certain institutions may not be
indicative of the liquidity of those investments. If the securities are subject
to purchase by institutional buyers in accordance with Rule 144A under the
Securities Act, the Investment Adviser may determine in particular cases,
pursuant to standards adopted by the Board of Directors, that the securities are
not illiquid securities notwithstanding the legal or contractual restrictions on
their resale. Investing in Rule 144A securities could have the effect of
increasing a Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing those securities.
PORTFOLIO TURNOVER - Neither Fund intends to engage in short-term
trading of portfolio securities as a means of achieving its investment objective
of seeking long-term growth of capital. However, either Fund may sell portfolio
securities regardless of the length of time they have been held whenever the
sale, in the Investment Adviser's opinion, will strengthen the Fund's position
and contribute to its investment objective. Changes in a Fund's portfolio will
be made whenever the Investment Adviser believes they are advisable (e.g. as a
result of securities having reached a price objective, or by reason of
developments not foreseen at the time of the investment decision such as changes
in the economics of an industry or a particular company). These investment
changes will be made usually without reference to the length of time a security
has been held and, therefore, there may be a significant number of short-term
transactions.
Each Fund, as a result of the investment policies described above,
expects to engage in a substantial number of portfolio transactions. Each Fund's
annual portfolio turnover rate may exceed 100%, but is not expected to exceed
200%. A 100% turnover rate would occur, for example, if the lesser of the value
of purchases or sales of portfolio securities for a year (excluding all
securities whose maturities at acquisition were one year or less) were equal to
100% of the average monthly value of the securities held
4
<PAGE>
by the Fund during that year. A higher portfolio turnover rate will increase
aggregate brokerage commission expenses, which must be borne directly by the
Fund and ultimately by the Fund's stockholders. (See "Execution of Portfolio
Transactions.")
ADDITIONAL CONSIDERATIONS - Investments by a Fund in equity securities
are subject to stock market risks. The U.S. stock market tends to be cyclical,
with periods when stocks generally rise and periods when stock prices generally
decline. As of the date of the Prospectus, the stock market, as measured by the
S&P 500 Index and other commonly used indices, was trading at close to record
levels. There can be no guarantee that those levels will continue.
INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment policies and
investment restrictions in addition to the policies and restrictions discussed
in the Prospectus. These policies and restrictions cannot be changed as to a
Fund without approval by the holders of a majority of the outstanding voting
securities of the Fund. The "vote of a majority of the outstanding voting
securities" of the Fund, as defined in Section 2(a)(42) of the Investment
Company Act of 1940, as amended (the "1940 Act"), means the vote (i) of 67% or
more of the voting securities of the Fund present or represented at any meeting,
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy, or (ii) of more than 50% of the outstanding
voting securities of the Fund, whichever is less. The only voting security of
each Fund is its Common Stock. These restrictions provide that a Fund may not:
(1) invest more than 25% of the value of its assets in the securities
of a single issuer, nor may the remaining 75% of the assets contain any
investments in any other single issuer, which, immediately after such purchase,
exceed 5% of the value of the assets (except for obligations issued or
guaranteed by the United States Government, its agencies and instrumentalities);
(2) purchase the securities of companies in a particular industry if
thereafter more than 25% (for Meridian Value Fund(R), 25% or more) of the value
of the Fund's total assets would consist of securities issued by companies in
that industry. This restriction does not apply to obligations issued and
guaranteed by the United States Government, its agencies or instrumentalities;
(3) acquire more than 10% of the outstanding voting securities, or 10%
of all of the securities, of any one issuer; or
(4) purchase the securities of any other investment company, except by
purchase in the open market where, to the best information of the Fund, no
commission or profit to a sponsor or dealer (other than the customary broker's
commission) results from such purchase and after such purchase not more than 5%
of the value of the Fund's total assets would consist of such securities, or
except when such purchase is part of a merger, consolidation, acquisition of
assets, or other reorganization approved by the Fund's stockholders.
(5) invest in companies for the purpose of exercising control or
management;
(6) purchase or sell real estate; provided that the Fund may invest in
readily marketable securities secured by real estate or interest therein or
issued by companies which invest in real estate or interests therein (including
real estate investment trusts);
(7) purchase or sell commodities or commodities contracts, or interests
in oil, gas, or other mineral exploration or development programs;
(8) make loans of its funds or assets to any other person, which shall
not be considered as including: (i) the purchase of debt securities, including
the purchase of bank obligations such as certificates
5
<PAGE>
of deposit and bankers' acceptances, and (ii) lending portfolio securities with
a value not in excess of 10% of total assets at the time of the loan. The Fund
will not enter into repurchase agreements;
(9) make short sales of securities;
(10) purchase securities on margin, but it may obtain such short-term
credit from banks as may be necessary for the clearance of purchases and sales
of securities;
(11) underwrite the securities of other issuers except to the extent
that, in connection with the disposition of portfolio securities, the Fund may
be deemed an underwriter under Federal or State securities laws;
(12) invest in the securities of any issuer which shall have a record
of less than three years of continuous operation (including the operation of any
predecessor) if immediately after and as a result of such investment the value
of the Fund's holdings of such securities exceeds 25% of the value of the Fund's
total assets. This restriction does not apply to any obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities;
(13) borrow for investment purposes or issue senior securities. The
Fund, however, may borrow from banks an amount not to exceed 5% of the Fund's
total assets, determined immediately after the time of the borrowing, as a
temporary measure for extraordinary or emergency purposes;
(14) participate on a joint or a joint-and-several basis in any trading
account in securities (The aggregation of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of the
Investment Adviser to save brokerage costs or average prices among them is not
deemed to result in a securities trading account.);
(15) knowingly purchase from or sell portfolio securities to its
officers, directors, or other "interested persons" (as defined in the 1940 Act)
of the Fund, other than otherwise unaffiliated broker-dealers;
(16) purchase or retain the securities of an issuer if, to the Fund's
knowledge, one or more of the directors, officers or employees of the Fund or
the Investment Adviser individually own beneficially more than 1/2 of l% of the
securities of such issuer and together own beneficially more than 5% of such
securities;
(17) purchase or write put or call options; or
(18) invest more than 10% of its net assets in securities and other
assets for which there is no ready market.
For investment restriction (2) with respect to Meridian Fund, a
nonfundamental policy provides that the Fund will not purchase securities in any
one industry equaling 25% or more of the Fund's total net assets.
Each Fund also is subject to other restrictions under the 1940 Act;
however, the registration of Meridian under the 1940 Act does not involve any
supervision by any Federal or other agency of the Fund's management or
investment practices or policies, other than incident to occasional or periodic
compliance examinations conducted by the SEC staff.
DETERMINATION OF PORTFOLIO PERCENTAGE RESTRICTIONS - If a percentage
restriction on investment or utilization of assets set forth under "Investment
Restrictions" and other fundamental restrictions is adhered to at the time an
investment is made, a later change in percentage resulting from changing market
values or a similar type of event will not be considered a violation of a Fund's
fundamental restrictions (except with respect to the limitation on borrowing).
6
<PAGE>
DIRECTORS AND OFFICERS
The names and addresses of the directors and officers of Meridian and
their principal occupations, certain other affiliations during the past five
years and age are given below.
<TABLE>
<S> <C> <C>
*+ Richard F. Aster, Jr. Chairman of the Board and Aug. 1985 - Present: Aster Capital
60 East Sir Francis Drake President Management, Inc., Pres.; March 1977
Boulevard, Suite 306 - Present: Aster Investment
Larkspur, CA 94939 Management Co., Inc., Pres.
Age: 59
* Michael S. Erickson Director May 1987 - Present: Private
** 1 Baja Court Investor; May 1993 - Sept. 1994:
Corte Madera, CA Aster Investment Management, Inc.,
94925-1801 Analyst; Sept. 1989 - Oct. 1992:
Age: 47 Romic Partners, Inc., President.
** James Bernard Glavin Director Sept. 1994 - Present: The Immune
5935 Darwin Court Response Corp., Chairman of the
Carlsbad, CA 92008-7302 Board; Apr. 1987 - Sept. 1994: The
Age: 64 Immune Response Corp., CEO.
+ Michael Stolper Director Sept. 1975 - Present: Stolper &
One America Plaza Company Inc., Pres., investment
600 West Broadway adviser and broker-dealer.
Suite 1010
San Diego, CA 92101-3355
Age: 54
** Herbert Charles Kay Director Private Investor.
3906 Strand Avenue
Manhattan Beach, CA 90266
Age: 62
Gregg B. Keeling Principal Accounting April 1999 - Present: Aster
60 E. Sir Francis Drake Officer, Principal Capital Management, Inc., Vice
Boulevard, Suite 306 Financial Officer, Pres. of Operations; April 1999 -
Larkspur, CA 94939 Treasurer and Secretary Present: Aster Investment
Age: 44 Management Co., Inc., Vice Pres. of
Operations; Sept. 1998 - March
1999: IPEO, Inc., CFO; Aug. 1994 -
Aug. 1998: Deloitte & Touche, LLP,
Certified Public Accountant.
</TABLE>
* Member, Executive Committee
** Member, Audit Committee
+ Director who is an "interested person," as defined in Section 2(a)(19)
of the 1940 Act.
- ----------
Mr. Stolper is a director of BDI Investment Company, a registered
investment company that invests primarily in tax exempt securities, and of Janus
Capital, a registered investment adviser that manages mutual funds. Mr. Stolper
owns 6% of Aster Capital Management, Inc., Meridian's Investment Adviser.
7
<PAGE>
Meridian pays no salaries or other compensation to its directors or
officers other than fees to directors who are unaffiliated with the Investment
Adviser. Each such unaffiliated director is paid a director's fee of $1,000 per
year, plus a $1,000 investment in one of the Funds, and expenses, for each Board
of Directors' meeting attended.
The total compensation paid by Meridian to each Director during the
fiscal year ended June 30, 1999 is set forth below:
<TABLE>
<CAPTION>
Total Compensation
Name of Director From Meridian
---------------- -------------
<S> <C>
Richard F. Aster, Jr. $ ___________
Michael S. Erickson $ ___________
James Bernard Glavin $ ___________
Michael Stolper $ ___________
Herbert Charles Kay $ ___________
</TABLE>
For information as to the ownership of shares by officers and Directors
of Meridian, see below under "Control Persons and Principal Holders of
Securities."
All officers of Meridian are employees of the Investment Adviser.
Meetings of the Board of Directors are held after each Annual or Special
Shareholders Meeting and from time to time as the Board deems necessary. The
Executive Committee will meet, as required, when the full Board does not meet,
for the purpose of reviewing a Fund's investment portfolio. The Executive
Committee has the authority to exercise all of the powers of the Board of
Directors at any time when the Board is not in session, except the power to
declare dividends or distributions, to authorize the issuance of securities, to
amend Meridian's Bylaws, to recommend to stockholders of a Fund any action
requiring their approval, or as otherwise required by the 1940 Act. The Audit
Committee will meet from time to time with Meridian's independent accountants to
exchange views and information and to assist the full Board in fulfilling its
responsibilities relating to corporate accounting and reporting practices.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Beneficial ownership in the Funds by the Directors and officers as of
September 30, 1999, was as follows:
<TABLE>
<CAPTION>
Meridian Fund Meridian Value Fund
Name Shares (%) Shares (%)
---- ------ --- ------ ---
<S> <C> <C> <C> <C>
Richard Aster........ ____ ____ ____ ____
James B. Glavin...... ____ ____ ____ ____
Michael Stolper...... ____ ____ ____ ____
Gregg B. Keeling..... ____ ____ ____ ____
Herbert C. Kay....... ____ ____ ____ ____
Michael S. Erickson.. ____ ____ ____ ____
</TABLE>
As of September 30, 1999 the following persons were known to own,
beneficially or of record, five percent or more of Meridian Fund's outstanding
shares:
8
<PAGE>
As of September 30, 1999 the following persons were known to own,
beneficially or of record, five percent or more of Meridian Value Fund's(R)
outstanding shares:
INVESTMENT MANAGEMENT
Meridian has retained as investment adviser for each Fund, Aster
Capital Management, Inc. ("Aster" or the "Investment Adviser"), 60 E. Sir
Francis Drake Blvd., Wood Island, Suite 306, Larkspur, California 94939. The
Investment Adviser is a registered investment adviser initially incorporated in
1985 and organized as a Subchapter S corporation. Richard F. Aster, Jr. owns 94%
of the Investment Adviser and as a result may be deemed to be "in control" of
the Investment Adviser. Mr. Aster is President and a Director of Meridian and of
the Investment Adviser.
INVESTMENT MANAGEMENT AGREEMENT - The Investment Management Agreement,
Power of Attorney and Service Agreement (the "Management Agreement") with the
Investment Adviser, dated January 1, 1986, as amended to date, provides that the
Investment Adviser will advise each Fund with respect to its investments and
will determine the securities purchased or sold by the Funds.
Under the Management Agreement, the Investment Adviser, in addition to
providing investment advisory services, furnishes the services and pays the
compensation and travel expenses of persons to perform the executive,
administrative, clerical, and bookkeeping functions of Meridian, and provides
suitable office space, necessary small office equipment and utilities, and
general purpose accounting forms, supplies and postage used at the offices of
the Funds. The costs of sales and advertising materials are borne by the
Investment Adviser. The Funds will pay all expenses not assumed by the
Investment Adviser. Each Fund's expenses include: custodian, stock transfer, and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, proxy statements and notices to stockholders; cost of the
printing and distributing of prospectuses of the Fund and supplements thereto to
the Fund's stockholders; taxes; expenses of the issuance and redemption of
shares of the Fund (including stock certificates, registration and qualification
fees and expenses); legal and auditing expenses; compensation, fees, and
expenses paid to Meridian Directors unaffiliated with the Investment Adviser;
association dues; and costs of stationery and forms prepared exclusively for the
Fund. Expenses which relate to both Funds (such as, for example, the fees and
expenses paid to the Board of Directors) are allocated between Funds by the
Investment Adviser in a reasonable manner.
The Management Agreement has been approved by the Board of Directors to
remain in effect until October 31, 2000, and will continue in effect from year
to year thereafter if that continuance is approved as to a particular Fund at
least annually by (i) either the Board of Directors or the vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the Fund,
and (ii) the vote of a majority of the directors of Meridian who are not parties
to the Management Agreement or interested persons (as that term is defined in
the 1940 Act) of any such party to the Management Agreement, cast in person at a
meeting called for the purpose of voting on such approval. The stockholders
initially approved the Management Agreement on October 25, 1985. The Board of
Directors, including a majority of the non-interested members, initially
approved the Management Agreement on September 30, 1985.
The Management Agreement is nonassignable and will terminate
automatically upon assignment. Either party may terminate the Management
Agreement at any time without penalty on 60 days' written notice. Amendments to
the Management Agreement require the approval of a majority (as defined in the
1940 Act) of the outstanding voting securities of the Fund. The Investment
Adviser shall not be liable under the Management Agreement to Meridian or to
stockholders of a Fund for any error of judgment, act or omission not involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations and duties under the Management Agreement.
9
<PAGE>
As compensation for the services the Investment Adviser provides the
Funds under the Management Agreement, each Fund pays management fees at an
annualized rate of its average daily assets, as described in the Prospectus. For
the fiscal years ended June 30, 1999, 1998 and 1997 the amounts of the advisory
fees earned by the Investment Adviser:
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year
ended June 30, 1999 ended June 30, 1998 ended June 30, 1997
Contractual Contractual Contractual
Advisory Fees Advisory Fees Advisory Fees
------------- ------------- -------------
<S> <C> <C> <C>
Meridian Fund $2,769,180.29 $2,679,074 $2,897,147
Meridian Value
Fund(R) $ 176,136.80 $ 90,889 $ 55,055
</TABLE>
The Investment Adviser has agreed in the Management Agreement to limit
each Fund's expenses as described in the Prospectus. For the fiscal years ended
June 30, 1999, 1998 and 1997, no reductions in fees or reimbursement of expenses
were required by the terms of that agreement.
Aster and its affiliated companies have adopted a personal investing
policy consistent with Investment Company Institute guidelines. This policy
includes: a ban on acquisitions of securities pursuant to an initial public
offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual rectification of compliance with code of ethics; disclosure
of personal holdings by certain investment personnel prior to recommendation for
purchase for the fund; blackout periods on personal investing for certain
investment personnel; ban on short-term trading profits for investment
personnel; limitations on service as a director of publicly traded companies;
and disclosure of personal securities transactions.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for a Fund's portfolio securities transactions are placed by the
Investment Adviser. The objective of each Fund is to obtain the best available
prices in its portfolio transactions taking into account a broker's services,
costs and promptness of executions. There is no agreement or commitment to place
orders with any broker-dealer and the Investment Adviser expects that a number
of broker-dealers will be used in various transactions. The Investment Adviser
evaluates a wide range of criteria in seeking the most favorable price and
market for the execution of transactions, including the broker's commission
rate, execution capability, positioning and distribution capabilities,
back-office efficiency, ability to handle difficult trades, financial stability,
and prior performance in serving the Investment Adviser and its clients.
Purchases and sales in typical transactions executed in the over-the-counter
market generally will be transacted directly with principal market-makers except
in those circumstances where, in the opinion of the Investment Adviser, better
prices and executions are available elsewhere.
When circumstances relating to a proposed transaction indicate that a
particular broker-dealer is in a position to obtain the best execution, the
order is placed with that broker-dealer. This may or may not be a broker-dealer
which has provided research, statistical or other related services to the
Investment Adviser or its affiliate, Aster Investment Management Co., Inc., or
has sold shares of the Fund or other funds served by the Investment Adviser.
Subject to the requirement of seeking the best available prices and executions,
the Investment Adviser may give preferences, in circumstances in which two or
more broker-dealers are in a position to offer comparable prices and execution,
to broker-dealers which have provided research, statistical, and other related
services to the Investment Adviser for the benefit of the Fund and/or of other
accounts served by the Investment Adviser or Aster Investment Management Co.,
Inc. if, in its judgment, the Fund will obtain prices and executions comparable
with those available from other qualified firms. Substantially all of the total
brokerage commissions paid by the Meridian Fund during the period July 1, 1997
through June 30, 1999, were paid to brokers so selected.
10
<PAGE>
The Board of Directors has adopted a policy which permits the
Investment Adviser, subject to the objective of obtaining the best execution, to
consider a broker-dealer's sale of Fund shares as a factor in selecting from
among broker-dealers qualified to offer comparable prices and execution of
portfolio transactions. This policy does not imply a commitment by a Fund to
execute portfolio transactions through all broker-dealers who sell shares of the
Fund. Meridian has executed transactions, subject to obtaining the best
execution, with broker-dealers who have marketed Fund shares. The Board of
Directors will monitor executions of portfolio transactions periodically to
assure itself that the best execution objective continues to be paramount in the
selection of executing broker-dealers.
Meridian does not consider that it has an obligation to obtain the
lowest available commission rate to the exclusion of price, service and
qualitative considerations. Nevertheless, the personnel of the Investment
Adviser are authorized to negotiate payment only for brokerage services rendered
and not for research, statistical, or other services. Meridian does not
authorize the payment of commissions to brokers, in recognition of their having
provided research, statistical or other related services, or of their having
sold Fund shares, in excess of commissions other qualified brokers would have
charged for handling comparable transactions.
The Investment Adviser may perform investment management services for
various clients. There may be occasions in which portfolio transactions for a
Fund may be executed as part of concurrent authorizations to purchase or sell
the same security for other of the accounts served by the Investment Adviser or
Aster Investment Management Co., Inc. Although such concurrent authorizations
potentially could be either advantageous or disadvantageous to the Fund, they
will be effected only when the Investment Adviser believes that to do so will be
in the best interest of its clients, including the Funds. When such concurrent
authorizations occur, the objective will be to allocate the executions in a
manner which is deemed equitable to the accounts involved, including the Funds.
A Fund, in some instances, may deal in securities which are not listed
on a national securities exchange but are traded in the over-the-counter market.
Where transactions are executed in the over-the-counter market, a Fund will seek
to deal with the primary market-makers; but, when necessary in order to obtain
the best price and execution, it will utilize the services of others.
Each Fund in all cases will attempt to negotiate the best market price and
execution.
The foreign and domestic debt securities and money market instruments
in which the Funds may invest are generally traded in the OTC markets.
Fixed-income securities are generally traded on a "net" basis with a dealer
acting as principal for its own account without a stated commission, although
the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are usually purchased at a fixed price which
includes an amount of compensation to the underwriter, generally referred to as
the underwriter's concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no commissions or discounts are
paid.
Each Fund contemplates purchasing most foreign equity securities in OTC
markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
foreign stock transactions generally are higher than negotiated commissions on
United States transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
A Fund may hold foreign equity securities in the form of American
Depository Receipts or Shares (ADRs), European Depository Receipts (EDRs),
Continental Depository Receipts (CDRs) or securities convertible into foreign
equity securities. ADRs, EDRs and CDRs may be listed on stock exchanges, or
traded in the OTC markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates.
For the fiscal years ended June 30, 1997, 1998 and 1999 the Funds paid
total brokerage commissions as follows:
11
<PAGE>
<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
Meridian Fund $331,721 $427,887 $351,073
Meridian Value Fund(R) $95,529 $54,154 $57,394
</TABLE>
PURCHASE, REDEMPTION AND PRICING OF SHARES
The Prospectus provides general information concerning the purchase and
redemption of each Fund's shares. The following discussion explains further some
of that information and discloses certain policies not presented in the
Prospectus.
PRICE OF SHARES - Each Fund calculates the net asset value per share in
the following manner:
1. Securities listed or traded on the New York Stock Exchange ("NYSE")
are valued at the last sale price or, if no sale, at the last-reported bid
price. Non-convertible bonds and debentures, and other long-term debt securities
normally are valued at prices obtained for the day of valuation from a major
dealer in bonds. However, when such prices are unavailable or in circumstances
where the Investment Adviser deems it appropriate to do so, another bond pricing
service or an over-the-counter or exchange quotation may be used. United States
Treasury Bills, and other obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities, certificates of deposit issued by
banks, corporate short-term notes and other short-term investments with original
or remaining maturities in excess of 60 days normally are valued at the mean of
representative quoted bid and asked prices or, if such prices are not available,
quoted bid and asked prices for securities of comparable maturity, quality and
type. Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the Fund if acquired within 60 days of maturity
or, if already held by the Fund on the 60th day, based on the value determined
on the 61st day unless the Board determines that this does not represent the
securities' fair value. Other securities are valued on the basis of last sale or
bid prices in what is, in the opinion of the Investment Adviser, the broadest
and most representative market which may be either a securities exchange or the
over-the-counter market. Where quotations are not readily available, securities
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors. The fair value of all other assets is added to the
value of securities to derive the Fund's total assets.
2. The NYSE and Meridian's Transfer Agent will be closed, and the Funds
will not compute their respective net asset values, on the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Also, neither Fund is required to compute its net asset value on
any day on which no order to purchase or redeem its shares is received.
3. The liabilities of the Fund, including proper accruals of taxes and
other expense items, are deducted from the Fund's total assets to derive the
Fund's net asset value.
4. The net asset value is divided by the total number of shares
outstanding, and the result, rounded to the nearest cent, is the net asset value
per share.
REJECTION OF ORDERS - Any purchase order may be rejected by Meridian.
THE OPEN ACCOUNT - When you make an initial investment in a Fund, a
stockholder account is opened in accordance with your registration instructions.
Each time there is a transaction in your account, such as an additional
investment or the reinvestment of a dividend or distribution, you will receive
from the Transfer Agent a confirmation statement showing the current transaction
in your account along with a summary of the status of the account as of the
transaction date.
12
<PAGE>
SHARE CERTIFICATES - Share certificates are issued only for full
shares, and only upon your specific request to the Transfer Agent. You may
request issuance of certificates representing all or any part of the full shares
in your account. Meridian will not charge you for the issuance of certificates.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may
indicate at any time a choice of certain elections with respect to income
dividends and capital gain distributions. You may elect to have both income
dividends and capital gain distributions declared on your shares of a Fund
reinvested automatically in additional shares of the Fund at the closing net
asset value per share on the reinvestment date determined by the Board of
Directors. You also may elect to receive income dividends in cash while
accepting capital gain distributions in additional shares of the Fund.
Alternatively, you may elect to receive both income dividend and capital-gain
distributions in cash. If you make no election, all dividend and capital-gain
distributions will be applied automatically to the purchase of shares of the
Fund at net asset value per share. You may change these elections at any time by
written notification to the Fund's Transfer Agent, but, to be effective as to a
particular distribution, the change must be received by the Transfer Agent
sufficiently in advance of the reinvestment date (approximately 10 business
days) to permit the change to be entered in your record. The Federal income tax
status of income dividends and capital gain distributions is the same whether
taken in cash or reinvested in shares of a Fund.
Dividend and capital-gain distributions on all shares in your account
are reinvested in full and fractional shares at the net asset value per share
unless you instruct the Fund to do otherwise.
SUSPENSION OF REDEMPTION - The redemption price of redeemed shares of a
Fund will be paid on or before the seventh day following proper tender, except a
postponement may be permissible under the 1940 Act when (a) the New York Stock
Exchange is closed (other than for weekends and holidays) or trading on the NYSE
is restricted, (b) an emergency exists making disposal of portfolio securities
or the valuation of net assets of the Fund not reasonably practicable, or (c)
the SEC has by order permitted suspension of redemptions for the protection of
the Fund's stockholders. The Commission, by rules and regulations, determines
the conditions under which trading of securities are restricted and the
conditions under which an emergency exists. Investment dealers handling
redemption transactions may make a service charge. There is no charge as
described in the foregoing paragraphs for redemption of shares tendered directly
to the Transfer Agent.
MANDATORY REDEMPTION - The Board of Directors has established a policy,
which is subject to change, to require redemption of accounts of a Fund that
drop as a result of redemptions to a value of less than $750 (determined, for
this purpose only, as the greater of the stockholder's cost or the current net
asset value of the shares, including any shares acquired through the
reinvestment of income dividends and capital gains distributions). Prior notice
of at least 60 days will be given to a stockholder before the involuntary
redemption provision is made effective with respect to the stockholder's
account. The stockholder will have no less than 30 days from the date of such
notice within which to bring the account up to the minimum determined as set
forth above.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
Each Fund intends to separately meet all the requirements of, and has
elected the tax status of, a "regulated investment company" under the provisions
of the Internal Revenue Code of 1986, as amended (the "Code"). In general, if
the Fund distributes within specified times at least 90% of its net investment
income and net short-term capital gains, it will be taxed only on that portion
of its net investment income and net capital gain, if any, which it retains.
To qualify, the Fund must (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of stock or securities or currencies; and (b)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the market value of the Fund's assets is represented by cash, U.S.
Government securities and other securities, limited, in respect of any one
issuer, to an amount not greater than 5% of the Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested
13
<PAGE>
in the securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are engaged in the same or similar
trades or businesses.
A 4% nondeductible excise tax will be imposed on each Fund (other than
to the extent of its tax-exempt interest income, if any) to the extent it does
not meet certain minimum distribution requirements by the end of each calendar
year.
Each Fund intends to actually or be deemed to distribute substantially
all of its net investment income and net capital gain by the end of each
calendar year and, thus, expects not to be subject to the excise tax.
Except as provided herein, gains and losses on the sale of portfolio
securities by a Fund will generally be capital gains and losses. Such gains and
losses will ordinarily be long-term capital gains and losses if the securities
have been held by the Fund for more than one year at the time of disposition of
the securities. Gains recognized on the disposition of a debt obligation
purchased by a Fund at a market discount (generally at a price less than its
principal amount) will be treated as ordinary income to the extent of the
portion of market discount which accrued, but was not previously recognized
pursuant to an available election, during the term the Fund held the debt
obligation.
If a Fund purchases shares in a "passive foreign investment company"
("PFIC"), the Fund may be subject to federal income tax and an interest charge
imposed by the IRS upon certain distributions from the PFIC or the Fund's
disposition of its PFIC shares. If the Fund invests in a PFIC, the Fund intends
to make an available election to mark-to-market its interest in PFIC shares.
Under the election, the Fund will be treated as recognizing at the end of each
taxable year the difference, if any, between the fair market value of its
interest in the PFIC shares and its basis in such shares. In some circumstances,
the recognition of loss may be suspended. The Fund will adjust its basis in the
PFIC shares by the amount of income (or loss) recognized. Although such income
(or loss) will be taxable to the Fund as ordinary income (or loss)
notwithstanding any distributions by the PFIC, under the election the Fund will
not be subject to federal income tax or the interest charge with respect to
certain distributions from or dispositions of its share of the PFIC.
Any loss realized on a redemption or exchange of shares of a Fund will
be disallowed to the extent shares are reacquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of. In
addition, if a stockholder receives a designated capital gain distribution with
respect to any Fund share and such Fund share is held for six months or less,
then (unless otherwise disallowed) any loss on the sale or exchange of that Fund
share will be treated as a long-term capital loss to the extent of the
designated capital gain distribution.
Under the Code, dividend distributions by a Fund to a nonresident alien
individual, foreign trust (i.e., a trust over the administration of which a U.S.
court is not able to exercise primary supervision and the substantial decisions
of which one or more U.S. persons do not have authority to control), foreign
estate (i.e., the income of which is not subject to U.S. tax regardless of
source), foreign corporation or foreign partnership (together, a "foreign
stockholder") investing in the Fund will be subject to federal withholding tax
(at a rate of 30% or, if an income tax treaty applies, at the lower treaty rate,
if any). Such tax withheld is generally not refundable. Withholding will not
apply if a dividend paid by the Fund to a foreign stockholder is "effectively
connected" with a U.S. trade or business (or, if an income tax treaty applies,
is attributable to a U.S. permanent establishment) of the foreign stockholder,
in which case the reporting and withholding requirements applicable to U.S.
persons will apply. Capital gain distributions are generally not subject to tax
withholding applicable to foreign stockholders.
The Funds may be required to pay withholding and other taxes imposed by
foreign countries on income attributable to such foreign countries which would
reduce the Fund's investment income. Tax conventions between certain countries
and the United States may reduce or eliminate such taxes. If more than 50% of
the total assets of a Fund consists of securities of foreign issuers, the Fund
will be eligible to elect to "pass through" foreign tax credits to stockholders.
14
<PAGE>
However, each Fund does not expect to qualify for this election. As of
the printing of this SAI, the maximum individual tax rate applicable to ordinary
income is 39.6% (marginal tax rates may be higher for some individuals to reduce
or eliminate the benefit of exemptions and deductions); the maximum individual
tax rate applicable to net capital gains is 20% and the maximum corporate
marginal tax rate applicable to ordinary income and capital gain is 35%
(however, to eliminate the benefit of lower marginal corporate income tax rates,
corporations which have taxable income in excess of $100,000 for a taxable year
will be required to pay an additional amount of income tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of income tax of up to
$100,000).
Distributions which are designated by a Fund as capital gain
distributions will be taxed to stockholders as long-term term capital gain (to
the extent such distributions do exceed the Fund's actual net capital gains for
the taxable year), regardless of how long a stockholder has held Fund shares.
Such distributions will be designated as capital gain distributions in a written
notice mailed by the Fund to the stockholders not later than 60 days after the
close of the Fund's taxable year.
Corporate stockholders of a Fund may be eligible for the
dividends-received deduction on the dividend distributions paid by the Fund to
the extent that the Fund's income is derived from dividends (which, if received
directly, would qualify for such deduction) received from domestic corporations.
In order to qualify for the dividends-received deduction, a corporate
stockholder must hold the Fund shares paying the dividends upon which the
deduction is claimed for at least 46 days during a 90 day period that begins 45
days prior to the date upon which the stockholder became entitled to the
distribution, and the Fund must have held the shares of corporate stock giving
rise to the dividend for at least 46 days during a 90 day period that begins 45
days prior to the date upon which the Fund became entitled to the dividend.
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the backup withholding,
U.S. income tax withholding and information reporting rules applicable to
foreign shareholders. The effective date of the New Regulations has been
extended to apply to payments made after December 31, 2000, subject to certain
transition rules. Among other things, the New Regulations will permit the Funds
to estimate the portion of their distributions qualifying as capital gain
distributions for purposes of determining the portion of such distributions paid
to foreign stockholders which will be subject to federal income tax withholding.
The foregoing is limited to a summary of certain federal tax matters.
It should not be viewed as a comprehensive discussion of the items referred to
nor as covering all provisions of the Code relevant to investors. Dividends and
distributions may also be subject to state or local taxes. You should consult
your own tax adviser for additional details and the possible effect of the Code
on your particular tax status.
INVESTMENT RESULTS
Average annual total return ("T") of a Fund is calculated as follows:
an initial hypothetical investment of $1,000 ("P") is divided by the net asset
value of shares of the Fund as of the first day of the period in order to
determine the initial number of shares purchased. Subsequent dividend and
capital gain distributions by a Fund are paid at net asset value on the payment
date determined by the Board of Directors. The sum of the initial shares
purchased and shares acquired through distributions is multiplied by the net
asset value per share of the Fund as of the end of the period ("n") to determine
ending redeemable value ("ERV"). The ending value divided by the initial
investment converted to a percentage equals total return. The formula thus used,
as required by the SEC, is:
P(1+T)(n) = ERV
The resulting percentage indicates the positive or negative investment
results that an investor would have experienced from reinvested dividend and
capital gain distributions and changes in share price during the period.
15
<PAGE>
The following assumptions will be reflected in computations of average
annual total return: (1) all share sales at net asset value, without a sales
load deduction from the $1000 initial investment; (2) reinvestment of dividends
and capital gains distributions at net asset value on the reinvestment date
determined by the Board; and (3) a complete redemption at the end of any period
illustrated. Total annual average return may be calculated for one year, five
years, ten years and for other periods, and will be updated on a quarterly
basis.
The calculation of nonstandardized total returns for a Fund differs
from the calculation of standardized average annual total returns only in that
nonstandardized total returns relate to nonstandardized periods, and in that
they represent aggregate (rather than average) total return.
Investment results of each Fund will vary from time to time depending
upon market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund and should not be considered representative of what an
investment in the company may earn in any future period.
The Funds may in advertising refer to results compiled by organizations
such as Lipper Analytical Services, Morningstar, Inc. and Wiesenberger
Investment Companies Services. Additionally, the Funds may, from time to time,
refer to results published in various newspapers or periodicals, including
Barrons, Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance
Magazine, Money, U.S. News and World Report and The Wall Street Journal.
A Fund may from time to time compare its investment results with, e.g.,
the following
(1) The Standard & Poor's 500 Composite Stock Price Index, which is a
capitalization-weighted index of 500 stocks that attempts to measure performance
of the broad domestic economy through changes in the aggregate market value of
500 stocks representing major industries.
(2) The Russell 2000 Index, which is composed of the 2,000 smallest
securities in the Russell 3000 Index, which is composed of the 3,000 largest
U.S. companies based on market capitalization and represents approximately 98%
of the investable U.S. equity market.
(3) 3-months weekly average yield of 90-day U.S. Treasury Bills, as
reported by the Federal Reserve Bank of St. Louis.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g. food,
clothing, shelter, fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
FURTHER INFORMATION ABOUT MERIDIAN
DESCRIPTION OF COMMON STOCK - There are no conversion or preemptive
rights in connection with any shares of the Funds. All shares of each Fund when
duly issued will be paid in full and non-assessable. The rights of the holders
of shares of Common Stock of a Fund may not be modified except by vote of the
majority of the outstanding voting securities of that Fund. Certificates are not
issued unless requested and are never issued for fractional shares. Fractional
shares are liquidated at net asset value per share at the time a stockholder
account is closed.
Shares have non-cumulative voting rights, which means that the holders
of more than 50% of the shares of the Funds (in the aggregate) voting for the
election of directors can elect 100% of the directors if they wish to do so. In
such event the holders of the remaining less than 50% of the shares voting for
the election of directors will not be able to elect any person or persons to the
Board of Directors.
16
<PAGE>
ADDITIONAL INFORMATION
STOCKHOLDER REPORTS - The fiscal year of each Fund ends on June 30 of
each year. Each Fund will issue to its stockholders semi-annual and annual
reports; each annual report will contain a schedule of the Fund's portfolio
securities and audited annual financial statements. Stockholders, in addition,
will receive unaudited quarterly statements of the status of the Fund. The
Federal income tax status of stockholders' distributions also will be reported
to stockholders after the end of each calendar year.
LEGAL OPINIONS - The validity of the shares offered by this Prospectus
has been passed upon by Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W.,
Suite 5500, Washington D.C. 20006. Morrison & Foerster acts as counsel to
Meridian and to the Investment Adviser in various matters.
INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 555 California
Street, San Francisco, California 94104, have been appointed as independent
accountants for Meridian. The financial statements of the Funds as of June 30,
1999 included in the Statement of Additional Information have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
CUSTODIAN AND TRANSFER AGENT - First Data Investor Services Group, Inc.
("First Data"), with offices at 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, Pennsylvania 19406 serves as the coordinator for custody services
provided by the custodian and as transfer agent for the Funds under a Custody
Administration and Agency Agreement. The Bank of New York, 48 Wall Street, New
York, New York 10286, serves as the Funds' custodian under a separate Custody
Agreement.
SHAREHOLDER AND ACCOUNTING SERVICES - First Data also provides the
Funds with shareholder services under a Shareholder Services Agreement and
accounting services under an Accounting Services Agreement.
REGISTRATION STATEMENT - The Prospectus and this SAI, together, do not
contain all of the information set forth in the Fund's registration statement
and related forms filed with the Securities and Exchange Commission. Certain
information is omitted in accordance with rules and regulations of the
Commission. The registration statement and related forms may be inspected at the
Public Reference Room of the Commission at Room 1024, 450 5th Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and copies thereof may be obtained from
the Commission at prescribed rates. It is also available on the SEC's Internet
Web site at http://www.sec.gov. Statements contained in the Prospectus or this
SAI as to the contents of any contract or other document referred to herein or
in the Prospectus are not necessarily complete, and, in each instance, reference
is made to the copy of such contract or other document filed as an exhibit to
Meridian's registration statement, each such statement being qualified in all
respects by such reference.
FINANCIAL STATEMENTS
Audited financial statements and the accompanying Auditors' Report for
the fiscal year ended June 30, 1999 for the Meridian Fund and Meridian Value
Fund(R), as contained in the Annual Report to Shareholders for the fiscal year
ended June 30, 1999, are incorporated herein by reference to that report.
17
<PAGE>
MERIDIAN FUND, INC.(R)
-------------
FORM N-1A
-------------
PART C
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Item 23. Exhibits
(a) Articles of Incorporation (previously filed).
(b) By-Laws (previously filed).
(c) Instruments Defining Rights of Security Holders (not
applicable).
(d) Form of Investment Management Agreement (previously
filed).
(e) Underwriting Contracts (not applicable).
(f) Bonus or Profit Sharing Contracts (not applicable).
(g)(1) Form of Custodian Agreement and Depository Contract,
as amended (previously filed).
(h)(1) Form of Custody Administration and Agency Agreement
(previously filed).
(h)(2) Form of Shareholder Services Agreement (previously
filed).
(h)(3) Form of Accounting Services Agreement (previously
filed).
(i) Legal Opinion (filed as an Exhibit to Amendment 17 to
registrant's Form N-1A Registration Statement on
October 28, 1998 and incorporated herein by
reference).
(j) Consent of Independent Public Accountants.
(k) Financial Statements omitted from Item 22 (not
applicable).
(l) Form of Investment Representation Agreement
(previously filed).
(m) Rule 12b-1 Plan (not applicable).
(n) Rule 18f-3 Plan (not applicable).
Item 24:
Persons Controlled by or Under Common Control with Registrant: None
Item 25: Indemnification
C-1
<PAGE>
Subsection (B) of Section 2-418 of the General Corporation Law of
Maryland empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director of that corporation or a director, officer,
employee or agent of another corporation or enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and (I) in the case of conduct in the
director's official capacity with the corporation, in a manner he reasonably
believed to be in the best interests of the corporation, and, (ii) in all other
cases, in a manner not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Subsection (B) of Section 2-418 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect to any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation.
Section 2-418 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in Subsection (B), he shall be indemnified against
reasonable expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith that the scope of indemnification extends to
directors, officers, employees or agents of a constituent corporation absorbed
in a consolidation or merger and persons serving in that capacity at the request
of the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in any
such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 2-418.
Article V of the Bylaws of the Fund contains indemnification provisions
meant to conform to the above statute and to the provisions of Section 17 of the
Investment Company Act of 1940, as amended, and to Investment Company Act
Release No. 11330 (September 4, 1980). These Bylaws provide "reasonable and fair
means" to determine whether indemnification shall be made which include: (1)
reference to a final decision on the merits by a court or other body that
liability did not occur by reason of disabling conduct, or (2) in the absence of
such a decision, a reasonable, factually based decision to the same effect by
(a) a vote of a majority of a quorum of directors who are neither "interested
persons" of the company (as defined in Section 2(a)(19) of the Investment
Company Act) nor parties to the proceeding, or (b) an independent legal counsel
in a written opinion.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Fund pursuant to the Fund's Articles of Incorporation and Bylaws, or
otherwise, the Fund has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in said Act, and is, therefore unenforceable. The Fund, unless in the opinion of
its counsel the matter has been settled by controlling precedent, will submit to
a court of appropriate jurisdiction the question whether indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue in the event that a claim for indemnification
against such liabilities (other than the payment by the Fund of expenses
incurred or paid by a director, officer or controlling person of the Fund, in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered.
Item 26: Business and Other Connections of Investment Adviser
See the material following the caption "Investment Management"
appearing as a portion of Part A and Part B hereof.
C-2
<PAGE>
Item 27: Principal Underwriter
(a) None
(b) None
(c) None
Item 28: Location of Accounts and Records
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held in
the offices of the Funds and their investment adviser located at 60 E. Sir
Francis Drake Boulevard, Wood Island, Suite 306, Larkspur, California. Records
covering shareholder accounts and portfolio transactions are maintained and kept
also by the Fund's transfer agent, First Data Investor Services Group, Inc.,
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903, and
custodian, Bank of New York, 48 Wall Street, New York, NY 10286.
Item 29: Management Services
None
Item 32: Undertakings
Previously filed
C-3
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this registration statement pursuant to rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Larkspur and State of California on
the ____ day of __________, 1999.
MERIDIAN FUND, INC.(R) (Registrant)
/s/ RICHARD F. ASTER, JR.
Richard F. Aster, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
*Richard F. Aster, Jr. Director and Principal __________, 1999
Richard F. Aster, Jr. Executive Officer
*Michael S. Erickson Director __________, 1999
Michael S. Erickson
*James B. Glavin Director __________, 1999
James B. Glavin
*Herbert C. Kay Director __________, 1999
Herbert C. Kay
*Michael Stolper Director __________, 1999
Michael Stolper
*Gregg B. Keeling Principal Financial Officer, __________, 1999
Gregg B. Keeling Principal Accounting Officer,
Treasurer and Secretary
*By: /s/ RICHARD F. ASTER, JR.
Richard F. Aster, Jr.,
Attorney-in-Fact
C-4
<PAGE>
EXHIBIT INDEX
MERIDIAN FUND, INC.(R)
AMENDMENT NO. ___ TO
FORM N-1A REGISTRATION STATEMENT
FILE NO. 811-4014
Exhibit No. Title of Exhibit
- ----------- ----------------
(j) Consent of Independent Public Accountants
C-5
