<PAGE> 1
As filed with the Securities and Exchange Commission on November 1, 2000
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.19
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No.20
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)
__X__ on November 1, 2000 pursuant to Rule 485(b)
_____ 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> 2
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> 3
-----------------------------------------------------------------
PART A
PROSPECTUS
MERIDIAN FUND, INC.(R)
------------------
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
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<PAGE> 4
[MERIDIAN FUND LOGO]
MERIDIAN FUND, INC.(R)
------------------------------------
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
------------------------------------
PROSPECTUS
November 1, 2000
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 Investment Management, Co., Inc.
Investment Adviser
------------------------------------
<PAGE> 5
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).................................... 5
FURTHER INFORMATION ABOUT INVESTMENT OBJECTIVES, PRINCIPAL
INVESTMENT STRATEGIES AND RISKS........................... 9
General................................................... 9
Growth Investing.......................................... 9
Value Investing........................................... 9
Portfolio Turnover........................................ 10
Risks of Investing in Smaller, Newer Companies............ 10
High Yield Bonds.......................................... 10
Foreign Securities........................................ 10
Defensive Investments..................................... 11
ORGANIZATION AND MANAGEMENT................................. 12
The Investment Adviser.................................... 12
Portfolio Managers........................................ 12
Management Fees and Other Expenses........................ 12
The Transfer, Redemption and Disbursing Agent............. 13
Custodian................................................. 13
SHAREHOLDER INFORMATION..................................... 14
How to Purchase Shares.................................... 14
How to Redeem and Transfer Shares......................... 16
Distributions and Tax Status.............................. 18
FINANCIAL HIGHLIGHTS........................................ 20
MERIDIAN FUND............................................. 20
MERIDIAN VALUE FUND(R).................................... 21
HOW TO OBTAIN ADDITIONAL INFORMATION........................ Back Cover
</TABLE>
<PAGE> 6
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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
1
<PAGE> 7
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.
PERFORMANCE
The chart on this page shows how the Fund has performed and provides 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 Russell 2000 Index, a broad based index
of 2000 mid and small capitalization stocks.
Both chart and table assume reinvestment of distributions. Of course, past
performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31*
[BAR GRAPH]
<TABLE>
<S> <C>
1990 4.62
1991 56.82
1992 15.51
1993 13.05
1994 0.55
1995 22.43
1996 11.19
1997 19.23
1998 3.09
1999 13.33
</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 -18.79% (for the quarter ended September 30, 1998).
2
<PAGE> 8
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDING DECEMBER 31, 1999)*
<TABLE>
<CAPTION>
-------------------------------------------------
PAST PAST 5 PAST 10 SINCE INCEPTION
YEAR YEARS YEARS (AUGUST 1, 1984)
-------------------------------------------------
<S> <C> <C> <C> <C>
MERIDIAN FUND 13.33% 13.65% 15.11% 14.35%
-------------------------------------------------
Russell 2000 Index 21.27% 16.69% 13.40% 13.40%
-------------------------------------------------------------------------------------------
</TABLE>
* For the period January 1, 2000 through June 30, 2000 the aggregate
(non-annualized) total return of the Fund was 15.94% versus 3.04% for the
Russell 2000 Index.
3
<PAGE> 9
FEES AND 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. This table
describes the fees and expenses that you may pay if you buy and hold shares of
the Fund.
<TABLE>
<S> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Load Imposed on Purchases NONE
------------------------------------------------------------------
Maximum Sales Load Imposed on Reinvested Dividends and
Distributions NONE
------------------------------------------------------------------
Deferred Sales Load NONE
------------------------------------------------------------------
Redemption Fees NONE
------------------------------------------------------------------
Exchange Fee NONE
------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(FEES PAID FROM FUND ASSETS)
Management fees 0.83%
Rule 12b-1 expenses NONE
------------------------------------------------------------------
Other expenses 0.26%
------------------------------------------------------------------
Total annual Fund operating expenses 1.09%
------------------------------------------------------------------
</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> <C>
$112 $348 $604 $1,334
-------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 10
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 are not
limited to companies of any particular size.
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.
5
<PAGE> 11
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 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
through default 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.
6
<PAGE> 12
PERFORMANCE
The chart on this page shows how the Fund has performed and provides 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 chart and table assume reinvestment of distributions. Of course, past
performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31*
[BAR GRAPH]
<TABLE>
<S> <C>
1995 23.80
1996 32.34
1997 21.37
1998 18.94
1999 38.28
</TABLE>
During the period covered by this total return chart, the Fund's highest
quarterly return was 25.01% (for the quarter ended June 30, 1999); and the
lowest quarterly return was -17.46% (for the quarter ended September 30, 1998).
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDING DECEMBER 31, 1999)*
<TABLE>
<CAPTION>
-------------------------------------
PAST PAST 5 SINCE INCEPTION
YEAR YEARS FEBRUARY 10, 1994
-------------------------------------
<S> <C> <C> <C>
MERIDIAN VALUE FUND(R) 38.28% 26.74% 21.50%
-------------------------------------
S&P 500(R) Index 21.04% 28.55% 23.69%
-------------------------------------------------------------------------------------------
</TABLE>
* For the period January 1, 2000 through June 30, 2000, the aggregate
(non-annualized) total return of the Fund was 14.06% versus -0.47% for the
S&P 500(R) Index.
7
<PAGE> 13
FEES AND 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. This table
describes the fees and expenses that you may pay if you buy and hold shares of
the Fund.
<TABLE>
<S> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Load Imposed on Purchases NONE
---------------------------------------------------------------------
Maximum Sales Load Imposed on Reinvested Dividends and
Distributions 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 0.41%
---------------------------------------------------------------------
Total annual Fund operating expenses 1.41%
---------------------------------------------------------------------
</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> <C>
$145 $449 $776 $1,700
-------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 14
--------------------------------------------------------------------------------
FURTHER INFORMATION ABOUT INVESTMENT OBJECTIVES,
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
--------------------------------------------------------------------------------
GENERAL
In selecting investments to achieve the objective of long-term growth of
capital, 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
9
<PAGE> 15
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, may engage in
active and frequent trading of portfolio securities to achieve its principal
investment strategies. 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 large 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
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 to the Statement of Additional
Information 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.
10
<PAGE> 16
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.
11
<PAGE> 17
--------------------------------------------------------------------------------
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 Investment Management, Co.,
Inc. (the "Investment Adviser"), 60 E. Sir Francis Drake Blvd., Wood Island,
Suite 306, Larkspur, California 94939. The Investment Adviser is an investment
adviser for individuals and institutions. 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 1977. Richard F. Aster, Jr. owns substantially all of the Investment
Adviser, and is President and a Director of Meridian and of the Investment
Adviser. Aster Investment Management Co., Inc. is the successor by merger to the
Funds' former adviser -- Aster Capital Management, Inc. Richard F. Aster, Jr.
also owned substantially all of Aster Capital Management, Inc., which served as
the Funds' investment adviser until the end of October 2000, when it was merged
into the Investment Adviser. This merger did not affect the fees or terms of the
advisory engagement, and did not involve a change in actual control or
management of the 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, Co., Inc. for over twenty years. 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, 2001
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
12
<PAGE> 18
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 DISBURSING AGENT
PFPC, Inc. serves as Transfer, Redemption and Disbursing Agent to each Fund. Its
address is 211 South Gulph Road, P.O. Box 61767, 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.
13
<PAGE> 19
--------------------------------------------------------------------------------
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 PFPC, Inc.
211 South Gulph Road
P.O. Box 61767
King of Prussia, PA 19406
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 Shareholder Services at 1-800-446-6662.
Payments by Wire. If you want to pay for your initial shares by wiring funds,
call Shareholder Services 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.
Purchases through Third Parties. Third party dealers may have different
investment limits, fees and policies for buying and selling shares than are
described in this prospectus. In addition, Meridian assumes no liability for the
failure of third party dealers 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"), a Simplified Employee Pension Plan ("SEP-IRA"), or a
Roth 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 PFPC, Inc., 211 South Gulph Road, P.O. Box 61767, King of Prussia,
PA 19406. 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 PFPC, Inc.
211 South Gulph Road
P.O. Box 61767
King of Prussia, PA 19406.
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 Shareholder Services at 1-800-446-6662 for forms.
14
<PAGE> 20
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. Call
Shareholder Services at 1-800-446-6662. Transfer funds by wire via the Federal
Reserve Wire System as follows: Boston Safe Deposit and Trust, ABA #011001234,
for MERIDIAN FUND (or MERIDIAN VALUE FUNDS(R), A/C #003573, FBO Account of
(name(s) as registered), Shareholder A/C #(account number). Boston Safe Deposit
and Trust 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 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. The Fund and its
Transfer Agent employ reasonable procedures including providing written
confirmations to confirm that the instructions received from any person with
appropriate account information are genuine. If the Fund or its Transfer Agent
fail to employ such procedures, they may be liable for losses due to
unauthorized or fraudulent instructions. Exchange redemptions and purchases are
processed simultaneously at the share prices next deter-
15
<PAGE> 21
mined after the exchange order is received. (See "How to Purchase Shares
-- Price of Shares.")
EXCHANGES 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, PFPC, Inc., 211 South Gulph Road, P.O. Box 61767, King of
Prussia, PA 19406. 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 Shareholder Services at
1-800-446-6662.
BY TELEPHONE OR TELEGRAM
Unless you have declined the option in your account application, you may redeem
shares of a Fund by telephone by calling Shareholder Services at 1-800-446-6662
during normal business hours. You also may send a telegram or an overseas cable
to PFPC, Inc., 211 South Gulph Road, P.O. Box 61767, 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 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.
The Funds provide written confirmation of transactions initiated by telephone to
confirm that telephone transactions are genuine. If a Fund or the Transfer Agent
fails to employ this and other reasonable 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.
16
<PAGE> 22
PFPC 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 by mail, telephone,
telegraph or wire as described above, by the Transfer Agent. 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. (See "How to
Purchase Shares -- Price of 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.
Requests for redemptions will be honored but payment will be withheld until
checks (including certified checks or cashier's checks) received for the shares
purchased have cleared, which can take as long as fifteen days from date of
purchase. If you have questions about the proper form for redemption, call
Shareholder Services 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. You will be given at least 60 days
notice to bring the account up to the minimum level before involuntary
redemption.
SIGNATURE GUARANTEE
To prevent fraudulent redemptions Meridian requires that the signature of each
stockholder be guaranteed for all redemptions greater than $25,000 or those
directed to an address or individual other than the holder of record.
Signatures must be guaranteed through a "medallion" program. A "medallion"
signature guarantee may be obtained from a domestic bank or trust company,
broker, dealer, clearing agency, savings association, or other financial
institution which is participating in a medallion program recognized by the
Securities Transfer Association. The three recognized medallion programs are
Securities Transfer Agents Medallion Pro-
17
<PAGE> 23
gram (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock
Exchange, Inc. Medallion Signature Program (NYSE MSP). Signature guarantees from
financial institutions which are not participating in one of these programs will
not be accepted.
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 number of
shares to be redeemed (this "stock power" may be obtained from Meridian or PFPC,
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 PFPC: (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 Shareholder Services
(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 PFPC until PFPC 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.
DISTRIBUTIONS AND TAX STATUS
DISTRIBUTIONS
Meridian declares and pays annually to the stockholders of each Fund
distributions 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 distribution of net investment income or
capital gain near or following the end of the calendar year.
We will automatically reinvest all distributions in shares, at net asset value
(without sales charge), unless you otherwise instruct the Transfer Agent in
writing.
The net asset value of shares will be reduced by the amount of your
distributions. If you purchase shares shortly before the record date for a
distribution you will pay the full price for the shares and receive some portion
of the price back as a taxable distribution. The Funds have built up, or have
the potential to build up, high
18
<PAGE> 24
levels of unrealized appreciation, which may result in future taxable
distributions.
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 INCOME TAXES
This discussion regarding federal income taxes is based on laws that were in
effect as of the date of this Prospectus. The discussion summarizes only some of
the important income tax considerations that affect the Funds and you as a
shareholder. It is not intended as a substitute for careful tax planning. You
should consult your tax adviser about your specific tax situation, including the
federal, state, local and foreign tax consequences to you of an investment in a
Fund. Federal income tax considerations are discussed further in the SAI.
Distributions to you of net investment income, net short-term capital gain and
certain other items of a Fund are taxable as ordinary income. Distributions of a
Fund's net long-term capital gain will be taxable to you as a net capital gain,
regardless of how long you have held your Fund shares.
In general, distributions are taxable to you when paid, whether you take the
distributions in cash or automatically reinvest them in additional Fund shares.
However, distributions declared in October, November and December of one year
and paid in January of the following year will be taxable to you as if they were
paid on December 31 of the first year.
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.
Redemptions (including redemptions in-kind) and exchanges of Fund shares will
ordinarily result in a taxable capital gain or loss, depending on the amount you
receive for your shares (or are deemed to have received in the case of
exchanges) and the amount you paid (or are deemed to have paid) for them.
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.
Foreign shareholders may be subject to special withholding requirements.
A Fund must withhold 31% of your distributions and redemption proceeds if you
have not provided the Fund your taxpayer identification number in compliance
with IRS rules and certified that you are not subject to back-up withholding. To
avoid this, make sure you provide your correct tax identification number (social
security number for most investors) and appropriate certification on your
account application. If you do not provide us with a correct taxpayer
identification number, you may also be subject to IRS penalties.
19
<PAGE> 25
--------------------------------------------------------------------------------
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,
-----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value -- Beginning of
period $ 26.28 $ 33.26 $ 33.20 $ 32.21 $ 27.29 $ 24.27
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Income from Investment Operations
-----------------------------------------------------------------------------------------------------
Net Investment Income (loss) 0.11 0.16 0.27 0.40 0.30 0.27
-----------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities
(both realized and unrealized) 4.99 (0.50) 4.92 3.71 5.47 3.63
-----------------------------------------------------------------------------------------------------
Total From Investment Operations 5.10 (0.34) 5.19 4.11 5.77 3.90
-----------------------------------------------------------------------------------------------------
Less Distributions
-----------------------------------------------------------------------------------------------------
Distributions from net investment
income (0.15) (0.14) (0.32) (0.36) (0.31) (0.18)
-----------------------------------------------------------------------------------------------------
Distributions from net realized
capital gains (1.78) (6.50) (4.81) (2.76) (.54) (.70)
-----------------------------------------------------------------------------------------------------
Total Distributions (1.93) (6.64) (5.13) (3.12) (0.85) (0.88)
-----------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 29.45 $ 26.28 $ 33.26 $ 33.20 $ 32.21 $ 27.29
-----------------------------------------------------------------------------------------------------
Total Return 21.45% 3.05% 16.92% 13.92% 21.40% 16.44%
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------------
Net Assets, End of Period (in
thousands) $140,990 $185,683 $296,803 $353,029 $384,087 $328,153
-----------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets 1.09% 1.01% 0.95% 0.96% 0.96% 1.06%
-----------------------------------------------------------------------------------------------------
Radio of Net Investment Income
(Loss) to Average Net Assets 0.31% 0.49% 0.76% 1.23% 0.99% 1.18%
-----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 28% 51% 38% 37% 34% 29%
-----------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------ -----------------------------------------
FOR THE FISCAL YEARS ENDED JUNE 30,
------------------------------------ -----------------------------------------
1994 1993 1992 1991
------------------------------------ -----------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value -- Beginning of
period $ 23.87 $ 18.97 $ 17.24 $ 17.71
-----------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Income from Investment Operations
---------------------------------------------------------------------------------------------
Net Investment Income (loss) 0.09 (0.01) 0.07 0.20
--------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities
(both realized and unrealized) 0.76 5.51 3.45 0.49
-----------------------------------------------------------------------------------------------------
Total From Investment Operations 0.85 5.50 3.52 0.69
-----------------------------------------------------------------------------------------------------
Less Distributions
-----------------------------------------------------------------------------------------------------
Distributions from net investment
income (0.02) (0.04) (0.09) (0.12)
-----------------------------------------------------------------------------------------------------
Distributions from net realized
capital gains (.43) (.56) (1.70) (1.04)
-----------------------------------------------------------------------------------------------------
Total Distributions (0.45) (0.60) (1.79) (1.16)
-----------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 24.27 $ 23.87 $ 18.97 $ 17.24
-----------------------------------------------------------------------------------------------------
Total Return 3.48% 29.50% 21.00% 5.62%
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------------
Net Assets, End of Period (in
thousands) $199,191 $78,581 $18,363 $12,350
-----------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets 1.22% 1.47% 1.75% 1.68%
-----------------------------------------------------------------------------------------------------
Radio of Net Investment Income
(Loss) to Average Net Assets 0.38% (.01%) 0.24% 0.98%
-----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 61% 61% 85%
-----------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 26
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,
---------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value -- Beginning of
period $ 22.29 $ 19.30 $ 17.40 $ 15.32 $ 10.27 $ 9.87
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (loss) 0.05 (0.10) (0.19) (0.26) (0.10) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities
(both realized and unrealized) 5.91 3.56 4.32 3.20 5.15 0.44
---------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 5.96 3.46 4.13 2.94 5.05 0.40
---------------------------------------------------------------------------------------------------------------------------------
Less Distributions
---------------------------------------------------------------------------------------------------------------------------------
Distributions from Net Realized
Capital Gains (2.37) (0.47) (2.23) (0.86) 0.00 0.00
---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (2.37) (0.47) (2.23) (0.86) 0.00 0.00
---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 25.88 $ 22.29 $ 19.30 $ 17.40 $ 15.32 $ 10.27
---------------------------------------------------------------------------------------------------------------------------------
Total Return 29.63% 18.92% 26.05% 20.55%+ 49.17%+ 4.05%+
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period $87,930,296 $24,912,455 $12,196,379 $7,340,110 $3,471,507 $715,021
---------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets 1.41% 1.63% 2.16% 2.51%* 2.55%* 2.78%*
---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.39% (0.65%) (1.35%) (1.96%)* (1.36%)* (0.58%)*
---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 86% 124% 133% 144% 125% 77%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ 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% and 14.64%, and the ratio of net
investment income to average net assets would have been a loss of 2.25%,
5.28% and 12.44% for the periods ended June 30, 1997 through June 30, 1995,
respectively.
21
<PAGE> 27
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 28
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, request other information or
make shareholder inquiries, by contacting us at:
MERIDIAN FUND, INC.(R)
c/o PFPC, INC.
211 SOUTH GULPH ROAD
P.O. BOX 61767
KING OF PRUSSIA, PA 19406
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
<PAGE> 29
-----------------------------------------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
MERIDIAN FUND, INC.(R)
------------------
MERIDIAN FUND
MERIDIAN VALUE FUND(R)
-----------------------------------------------------------------
<PAGE> 30
MERIDIAN FUND, INC.(R)
STATEMENT OF ADDITIONAL INFORMATION
November 1, 2000
This Statement of Additional Information is not a prospectus, and it should
be read in conjunction with the Prospectus dated November 1, 2000, 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 PFPC, Inc., 211 South Gulph Road, P.O. Box 61767,
King of Prussia, PA 19406, 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
Investment Management Co., 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, 2000, including the Auditors' Report dated
August 4, 2000. 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 PFPC, Inc. 211 South Gulph Road, P.O. Box
61767, King of Prussia, PA 19406.
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
FEDERAL INCOME TAXES.......................................... 13
INVESTMENT RESULTS............................................ 15
FURTHER INFORMATION ABOUT MERIDIAN............................ 16
ADDITIONAL INFORMATION........................................ 17
FINANCIAL STATEMENTS.......................................... 17
APPENDIX - DESCRIPTION OF BOND RATING......................... 18
</TABLE>
<PAGE> 31
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> 32
NON-U.S. SECURITIES - Investing in foreign companies involves certain risk
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. The Appendix to this SAI describes the
ratings. Credit ratings evaluate the perceived 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 by Moody's, Standard & Poor's or any other rating
organization. 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.
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.
2
<PAGE> 33
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.
PREFERRED STOCK - 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.
3
<PAGE> 34
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 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 and may result in larger distributions of capital gains. (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.
4
<PAGE> 35
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;
(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 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;
5
<PAGE> 36
(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.
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> 37
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> <C>
*+ Richard F. Aster, Jr. Chairman of the Board and Aug. 1985 - October 2000: Aster Capital
60 East Sir Francis Drake President Management, Inc., Pres.; March 1977
Boulevard, Suite 306 - Present: Aster Investment Management
Larkspur, CA 94939 Co., Inc., President.
Age: 60
* Michael S. Erickson Director May 1987 - Present: Private Investor
** 1 Baja Court Jan 1999-Present: Chairman & CFO,AeroAstro;
Corte Madera, CA 1992-Present: Board member, Argus Software
94925-1801
Age: 48
** James Bernard Glavin Director Sept. 1994 - Present: The Immune
5935 Darwin Court Response Corp. (Pharmaceutical), Chairman
Carlsbad, CA 92008-7302 of the Board;
Age: 65
+ Michael Stolper Director Sept. 1975 - Present: Stolper &
One America Plaza Company Inc., investment adviser
600 West Broadway and broker-dealer, Pres.
Suite 1010
San Diego, CA 92101-3355
Age: 55
** Herbert Charles Kay Director Private Investor.
3906 Strand Avenue
Manhattan Beach, CA 90266
Age: 63
Gregg B. Keeling Principal Accounting April 1999 - October 2000: Aster
60 E. Sir Francis Drake Officer, Principal Capital Management, Inc., Vice Pres.
Boulevard, Suite 306 Financial Officer, of Operations; April 1999 - Present:
Larkspur, CA 94939 Treasurer and Secretary Aster Investment Management Co., Inc.,
Age: 45 Vice Pres. of Operations; Sept. 1998 -
March 1999: IPEO, Inc., Professional
Employer Organization, CFO;
Aug. 1994 - Aug. 1998: Accountant,
Deloitte & Touche, LLP, Certified
Public Accountants.
</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 is a
minority shareholder of Aster Investment Management Co., Inc., Meridian's
Investment Adviser.
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.
7
<PAGE> 38
The total compensation paid by Meridian to each Director during the fiscal year
ended June 30, 2000 is set forth below:
<TABLE>
<CAPTION>
Total Compensation
Name of Director From Meridian
---------------- -------------
<S> <C>
Richard F. Aster, Jr. $ 0
Michael S. Erickson $ 2,000
James Bernard Glavin $ 2,000
Michael Stolper $ 0
Herbert Charles Kay $ 2,106
</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, 2000, was as follows:
<TABLE>
<CAPTION>
Meridian Fund Meridian Value Fund
Name Shares (%) Shares (%)
---- ------ --- ------ ---
<S> <C> <C> <C> <C>
Richard Aster...... 351,370 6.77% 249,218 4.72%
James B. Glavin.... 140,276 2.70% 956 0.02%
Michael Stolper.... 56,083 1.08% 9,599 0.18%
Gregg B. Keeling... 0 0.00% 436 0.01%
Herbert C. Kay..... 2,739 0.05% 0 0.00%
Michael S. Erickson 0 0.00% 467 0.01%
</TABLE>
As of September 30, 2000 the following persons were known to own,
beneficially or of record, five percent or more of Meridian Fund's outstanding
shares:
<TABLE>
<CAPTION>
Name and Address Percentage Ownership Capacity
----------------------- -------------------- --------
<S> <C> <C>
Charles Schwab 20.43% Record
Reinvest Account
Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
As of September 30, 2000 the following persons were known to own,
beneficially or of record, five percent or more of Meridian Value Fund's(R)
outstanding shares:
<TABLE>
<CAPTION>
Name and Address Percentage Ownership Capacity
------------------------------------------ -------------------- --------
<S> <C> <C>
Charles Schwab 40.20% Record
Reinvest Account
Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94014
DLJ Pershing Division 14.16% Record
Mutual Funds Trading
PO Box 2052
Jersey City, NJ 07303-2052
</TABLE>
8
<PAGE> 39
<TABLE>
<S> <C> <C>
National Investors Service Corp. 8.33% Record
For The Exclusive Benefit Of Our Customers
55 Water St. Floor 32
New York, NY 10041-3299
National Financial Services Corp. 7.52% Record
For Exclusive Benefit Of Our Customers
Church Street Station
PO Box 3908
New York, NY 10008-3908
</TABLE>
INVESTMENT MANAGEMENT
Meridian has retained as investment adviser for each Fund, Aster Investment
Management Co., Inc. ("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 1977 and organized as a
Subchapter S corporation. Richard F. Aster, Jr. owns approximately 96% 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. Richard F. Aster, Jr. also owned substantially all of Aster
Capital Management, Inc., which served as the Funds' investment adviser until
the end of October 2000, when it was merged into the Investment Adviser. This
merger did not affect the fees or terms of the advisory engagement, and did not
involve a change in actual control or management of the adviser.
INVESTMENT MANAGEMENT AGREEMENT - The Investment Management Agreement, Power
of Attorney and Service Agreement (the "Management Agreement") with the
Investment Adviser, dated November 1, 2000, 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 continues in effect from year to year 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.
9
<PAGE> 40
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, mistake of law, or for any loss arising out of its
obligations to Meridian not involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties under the
Management Agreement.
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, 2000, 1999 and 1998 the amounts of the advisory fees earned
by Aster Capital Management, Inc. which has been merged into the Investment
Adviser were:
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year
ended June 30, 2000 ended June 30, 1999 ended June 30, 1998
Contractual Contractual Contractual
Advisory Fees Advisory Fees Advisory Fees
------------- ------------- -------------
<S> <C> <C> <C>
Meridian Fund $1,244,938 $1,769,180 $2,679,074
Meridian Value
Fund(R) $ 434,329 $ 176,137 $ 90,889
</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, 2000, 1999 and 1998, no reductions in fees or reimbursement of expenses were
required by the terms of that agreement.
The Fund and its Investment Adviser have adopted a personal investing
policy("code of ethics", or "code") consistent with rules and regulations under
the 1940 Act and the Investment Company Institute guidelines. This code
includes: a ban on acquisitions of securities pursuant to an initial public
offering; restrictions on acquisitions of private placement securities;
pre-clearance and transaction reporting requirements; review of duplicate
confirmation statements; annual certification 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. The code of
ethics is on file with the Securities and Exchange Commission as an exhibit to
the fund's registration statement.
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. 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
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, 1998
through June 30, 2000, were paid to brokers so selected.
10
<PAGE> 41
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.
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, 1998, 1999 and 2000 the Funds paid total
brokerage commissions as follows:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30,
1998 1999 2000
<S> <C> <C> <C>
Meridian Fund $427,887 $351,073 $293,775
Meridian Value Fund(R) $ 54,154 $ 95,529 $234,700
</TABLE>
11
<PAGE> 42
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.
AUTHORIZED BROKER TRANSACTIONS - The Fund has authorized certain third
parties to receive on its behalf purchase and redemption orders. Such persons
are authorized to designate other intermediaries to receive purchase and
redemption orders on the Fund's behalf. The Fund will be deemed to have received
a purchase or redemption order when an authorized person or, if applicable, that
person's authorized designee, receives the order. Customer orders will be priced
at the Fund's Net Asset Value next computed after receipt of a customer's order
by an authorized person or their authorized designee.
12
<PAGE> 43
AUTOMATIC REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may indicate at
any time a choice of certain elections with respect to income dividends and
distributions. You may elect to have both income dividends and 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 dividends and distributions is the same whether taken in
cash or reinvested in shares of a Fund.
Dividend and 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 within which to bring the
account up to the minimum determined as set forth above before the involuntary
redemption provision is made effective with respect to the stockholder's
account.
FEDERAL INCOME TAXES
GENERAL - 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, net short-term capital gains and certain other distributions
by the Fund, 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 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.
EXCISE TAX - 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.
13
<PAGE> 44
TAXATION OF FUND INVESTMENTS - Except as otherwise provided herein, gains
and losses realized by a Fund on the sale of portfolio securities generally will
be capital gains and losses. Such gains and losses ordinarily will 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 enters into a "constructive sale" of any appreciated position in
stock, a partnership interest, or certain debt instruments, the Fund must
recognize gain (but not loss) with respect to that position. For this purpose, a
constructive sale occurs when the Fund enters into one of the following
transactions with respect to the same or substantially identical property: (i) a
short sale; (ii) an offsetting notional principal contract; (iii) a futures or
forward contract; or (iv) other transactions identified in future Treasury
Regulations.
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 if it makes
the election.
FOREIGN TAXES - 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. However, each Fund does not expect to qualify for this election.
CAPITAL GAIN DISTRIBUTION - 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.
DISPOSITION OF FUND SHARES - A disposition of Fund shares pursuant to
redemption (including a redemption in-kind) or exchanges ordinarily will result
in a taxable capital gain or loss, depending on the amount received for the
shares (or deemed to be received in the case of an exchange) and the cost of the
shares.
If a stockholder exchanges or otherwise disposes of Fund shares within 90
days of having acquired such shares and if, as a result of having acquired those
shares, the stockholder subsequently pays a reduced sales charge on a new
purchase of shares of the Fund or a different regulated investment company, the
sales charge previously incurred acquiring the Fund's shares shall not be taken
into account (to the extent such previous sales charges do not exceed the
reduction in sales charges on the new purchase) for the purpose of determining
the amount of gain or loss on the disposition, but will be treated as having
been incurred in the acquisition of such other shares. Also, any loss realized
on a redemption or exchange of shares of the Fund will be disallowed to the
extent that substantially identical shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after the shares are disposed of.
If a stockholder receives a designated capital gain distribution (to be
treated by the stockholder as long-term capital gain) 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 long-term capital loss to the extent of the designated capital gain
distribution. This loss disallowance rule does not apply to losses realized
under a periodic redemption plan.
14
<PAGE> 45
FEDERAL INCOME TAX RATE - 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% (marginal tax rates may be higher for
some corporations to reduce or eliminate the benefit of lower marginal income
tax rates). Obviously, the amount of tax payable by any taxpayer will be
affected by a combination of tax laws covering, for example, deductions,
credits, deferrals, exemptions, sources of income and other matters.
FOREIGN STOCKHOLDERS - Under the Code, distributions of net investment
income, net short-term gain and certain other items by a Fund to a nonresident
alien individual, foreign trust (i.e. trust which an U.S. court is not able to
exercise primary supervision over administration of that trust and one or more
U.S. persons do not have authority to control substantial decisions of that
trust), foreign estate (i.e., the income of which is not subject to U.S. tax
regardless of source), foreign corporation, or foreign partnership (a "foreign
stockholder") will be subject to federal withholding tax (at a rate of 30% or,
in an income tax treaty applies, at the lower treaty rate, if any). Such tax
withheld generally is not refundable. Withholding will not apply if a
distribution paid by a 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. Disposition of Fund shares and distributions of net capital gain are
generally not subject to tax withholding applicable to foreign stockholders.
CORPORATE STOCKHOLDERS - 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 distributions are 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 distribution 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.
NEW REGULATIONS - 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 stockholders. The New Regulations will generally be
effective for payments made after December 31, 2000, subject to certain
transition rules. Among other things, the New Regulations will permit a Fund 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 U.S. income tax withholding.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
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
Total return calculations are computed by determining the average annual
compounded rates of return over certain periods of time that would equate the
initial amount invested to the ending redeemable value, according to the
following formula, as required by the SEC:
P(1+T)(to the nth power) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of such period.
15
<PAGE> 46
The following assumptions are 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. Average annual total return may be calculated for one year, five
years, ten years and for other periods.
Average Annual Total Return
<TABLE>
<CAPTION>
ten years
or since
one year five years inception
ending ending ending
6/30/00 6/30/00 6/30/00
-------- ---------- ----------
<S> <C> <C> <C>
Meridian Fund 21.45% 15.14% 14.97%
Meridian Value Fund 29.63% 28.43% 22.16%
</TABLE>
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> 47
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, 333 Market Street, San
Francisco, California 94105, have been appointed as independent accountants for
Meridian. The financial statements of the Funds as of June 30, 2000 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 - PFPC, Inc. ("PFPC"), with offices at 3200
Horizon Drive, P.O. Box 61503, King of Prussia, Pennsylvania 19406 and 211 South
Gulph Road, P.O. Box 61767, King of Prussia, PA 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 - PFPC 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 Independent Accountant's
Report for the fiscal year ended June 30, 2000 for the Meridian Fund and
Meridian Value Fund(R), as contained in the Annual Report to Shareholders for
the fiscal year ended June 30, 2000, are incorporated herein by reference to
that report.
17
<PAGE> 48
--------------------------------------------------------------------------------
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."
18
<PAGE> 49
"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."
"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."
19
<PAGE> 50
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PART C
OTHER INFORMATION
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<PAGE> 51
MERIDIAN FUND, INC.(R)
-------------
FORM N-1A
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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) Investment Management Agreement.
(e) Underwriting Contracts (not applicable).
(f) Bonus or Profit Sharing Contracts (not applicable).
(g)(1) Custodian Agreement and Depository Contract, as
amended (previously filed).
(h)(1) Custody Administration and Agency Agreement
(previously filed).
(h)(2) Shareholder Services Agreement (previously
filed).
(h)(3) Accounting Services Agreement (previously filed).
(i) Legal Opinion (filed as an Exhibit to Amendment 19 and 20
to registrant's Form N-1A Registration Statement on
November 1, 2000 and incorporated herein by reference).
(j) Consent of Independent Public Accountants.
(k) Financial Statements omitted from Item 22 (not
applicable).
(l) Investment Representation Agreement (previously
filed).
(m) Rule 12b-1 Plan (not applicable).
(n) Rule 18f-3 Plan (not applicable).
(p) Code of Ethics.
Item 24:
Persons Controlled by or Under Common Control with Registrant: None
Item 25: Indemnification
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<PAGE> 52
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> 53
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, 94939.
Records covering shareholder accounts and portfolio transactions are maintained
and kept also by the Fund's transfer agent, PFPC, Inc., 3200 Horizon Drive, P.O.
Box 61503, King of Prussia, PA 19406-0903 and 211 South Gulph Road, P.O. Box
61767, King of Prussia, PA 19406, 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
<PAGE> 54
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 1st day of November, 2000.
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.
<TABLE>
<S> <C> <C>
*Richard F. Aster, Jr. Director and Principal November 1, 2000
Richard F. Aster, Jr. Executive Officer
*Michael S. Erickson Director November 1, 2000
Michael S. Erickson
*James B. Glavin Director November 1, 2000
James B. Glavin
*Herbert C. Kay Director November 1, 2000
Herbert C. Kay
*Michael Stolper Director November 1, 2000
Michael Stolper
*Gregg B. Keeling Principal Financial Officer, November 1, 2000
Gregg B. Keeling Principal Accounting Officer,
Treasurer and Secretary
</TABLE>
*By: /s/ RICHARD F. ASTER, JR.
Richard F. Aster, Jr.,
Attorney-in-Fact
C-4
<PAGE> 55
EXHIBIT INDEX
MERIDIAN FUND, INC.(R)
AMENDMENT NO. 19 TO
FORM N-1A REGISTRATION STATEMENT
FILE NO. 811-4014
<TABLE>
<CAPTION>
Exhibit No. Title of Exhibit
----------- ----------------
<S> <C>
99(d) Investment Management Agreement
99(i) Legal Opinion
99(j) Consent of Independent Public Accountants
99(p) Code of Ethics
</TABLE>
C-5
