-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I+sMx2TGDELAdYHt1UwoLOZ237/R79jfe8Fd7nAkRxgu4hcdEiEd/mF9pilwv0VU Jg9zPooDD9Ej3Ztrs/vViA== 0000950134-04-013324.txt : 20040908 0000950134-04-013324.hdr.sgml : 20040908 20040908160850 ACCESSION NUMBER: 0000950134-04-013324 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040908 DATE AS OF CHANGE: 20040908 EFFECTIVENESS DATE: 20040908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERIDIAN FUND INC CENTRAL INDEX KEY: 0000745467 IRS NUMBER: 680024203 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04014 FILM NUMBER: 041020856 BUSINESS ADDRESS: STREET 1: 60 E SIR FRANCIS DRAKE BLVD STREET 2: SUITE 306 CITY: LARKSPUR STATE: CA ZIP: 94939 BUSINESS PHONE: 4154616237 MAIL ADDRESS: STREET 1: 60 E SIR FRANCIS DRAKE BLVD STREET 2: SUITE 306 CITY: LARKSPUR STATE: CA ZIP: 94939 FORMER COMPANY: FORMER CONFORMED NAME: MERIDIAN FUND INC/NEW DATE OF NAME CHANGE: 19920703 N-CSR 1 f01325nvcsr.txt FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04014 --------- Meridian Fund, Inc.(R) ---------------------------------------------------------------- (Exact name of registrant as specified in charter) 60 E. Sir Francis Drake Boulevard. Wood Island, Suite 306 Larkspur, CA 94939 ---------------------------------------------------------------- (Address of principal executive offices) (Zip code) Richard F. Aster, Jr. 60 E. Sir Francis Drake Boulevard Wood Island, Suite 306 Larkspur, CA 94939 ---------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 415-461-6237 ------------ Date of fiscal year end: June 30, 2004 ------------- Date of reporting period: June 30, 2004 ------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. MERIDIAN FUND, INC. July 6, 2004 To Our Shareholders: Stocks experienced modest gains during the second quarter. Strong earnings growth was partially offset by investor concerns over rising interest rates and energy costs. The S&P 500 advanced 1.3%, the NASDAQ 2.7% and the Russell 2000 0.2%. Calendar year to date, the S&P 500 is up 2.6%, the NASDAQ 2.2% and the Russell 2000 6.2%, as small cap stocks continue to outperform their larger counterparts. The strongest performing sectors included coal, tires and aerospace. Agriculture, precious metals and home construction represented three of the weaker performing groups. The yield on the ten-year treasury bond increased during the quarter to 4.59%, up from 3.85%, reflecting a pick up in business activity. The economy continues to perform well. GDP grew at a robust 3.9% in the first quarter. Housing starts and retail sales continue to be strong. The high price of energy, however, could moderate consumer spending. Manufacturing and capital spending are improving, non-residential construction has bottomed out and job growth has improved substantially during the past several months, leading to an improved level of consumer confidence. Interest rates remain low and the level of inflation is modest. Recent company surveys indicate that the increased cost and risk of doing business under Sarbanes Oxley and other new regulations could slow investment and future growth. This will be a gradual development, but worth watching. We welcome those new shareholders who recently joined the Meridian Funds and appreciate the continued confidence of our existing shareholders. /s/ Richard F. Aster, Jr. Richard F. Aster, Jr. MERIDIAN GROWTH FUND(R) The Meridian Growth Fund's net asset value per share at June 30, 2004 was $35.38. This represents an increase of 7.1% for the calendar year to date. The Fund's total return and average annual compound rate of return since inception, August 1, 1984, were 1,412.4% and 14.6%, respectively. The Fund's assets at the close of the quarter were invested 5.7% in cash and cash equivalents and 94.3% in stocks. At the close of the quarter, total net assets were $1,273,302,047 and there were 61,681 shareholders. Our market outlook remains unchanged. We are positive on the market and believe that stock selection is the most important factor in determining investment returns at this time. We continue to focus our research effort on small and medium-sized growth stocks. We are looking for companies that have an important market share in a growing market. Companies need to have a return on equity sufficient to finance their growth and be well managed. Valuation is important in our process. Our portfolio is balanced with approximately fifty positions. Our largest areas of concentration include technology, retail, health care and industrial services. During the quarter, we established initial positions in Matthews International, Edwards Lifesciences and Host Marriott Corp. We sold our shares in Bed Bath and Beyond, A.G. Edwards and The Men's Wearhouse. One of our holdings is Andrew Corp., a supplier of products to the communications industry, primarily to the growing wireless transmission sector. Products include power amplifiers, microwave antennas and base station subsystems. Customers are cellular operators, governments and original equipment manufacturers. International revenues, at 50% of total, are the fastest growing part of the company's business, especially in underdeveloped countries. Andrew appears to have an experienced management team, a low cost structure, a strong balance sheet and emerged from the tech downturn with a leading market position in all of its product categories. We believe the shares are attractively valued, especially based on the company's earnings potential during the next several years. MERIDIAN VALUE FUND(R) The Meridian Value Fund's net asset value per share at June 30, 2004 was $40.35. This represents an increase of 6.6% for the calendar year to date. The Fund's total return and average compounded annual rate of return since June 30, 1995, were 484.1% and 21.7%, respectively. The comparable period returns for the S&P 500 with dividends were 142.6% and 10.3%, respectively. The Fund's assets at the close of the quarter were invested 5.2% in cash and cash equivalents and 94.8% in stocks. At the close of the quarter, total net assets were $2,226,589,761 and there were 106,453 shareholders. There have been no major changes in our portfolio or our strategy. We continue to seek out-of-favor companies that have defensible positions in their industries, strong or improving balance sheets, reasonable valuations and good prospects for earnings growth. We believe that over the long term this strategy will continue to outperform. Consumer products, technology and industrial products represent our largest areas of concentration and we continue to invest in companies of all market capitalizations. New positions during the quarter include Allied Waste Industries, BJ's Wholesale Club, Comcast, Conseco, El Paso, Greater Bay Bancorp, MGIC Investment, Northrup Grumman, Sony, Smurfit-Stone Container, Tidewater, Tele Norte Leste Participacoes SA and Washington Mutual. We sold our shares in Bristol-Meyers Squibb, Rockwell Collins, EchoStar Communica- 2 tions, Davita, Millenium Chemicals, Raytheon, SAFECO, Serono S.A., Valero Energy, Waters and Zale. We recently increased our position in Leggett & Platt. The company is a leader in designing, engineering and manufacturing a wide variety of products and components for the residential furniture, office furniture, automotive, retail display, industrial wire and aluminum die casting industries. Difficult economic conditions hurt business across the company's end markets in recent years causing earnings to decline from a high of $1.45 in 1999 to $1.05 in 2003. During this period the stock declined from a high of $28.00 to a low of $18.25. In response to the downturn, the company cut costs, rationalized capacity, improved offshore manufacturing and invested in and acquired new businesses. We believe these actions improved the company's competitive position and that it is poised to perform well in the current, improved economy. We believe the company is attractively valued at about 13 times potential 3-5 year earnings of $2.00 combined with a 2.25%+ dividend yield. 3 MERIDIAN GROWTH FUND SCHEDULE OF INVESTMENTS JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value --------- -------------- COMMON STOCK - 94.3% APPAREL - 3.0% Fossil, Inc. ........... 735,482 $ 20,041,885 Polo Ralph Lauren Corp.*................ 533,925 18,393,716 -------------- 38,435,601 BANKING/FINANCE - 4.2% Silicon Valley Bancshares............ 852,800 33,813,520 UCBH Holdings, Inc.*.... 485,808 19,199,132 -------------- 53,012,652 BROKERAGE & MONEY MANAGEMENT - 2.2% T. Rowe Price Group, Inc.*................. 559,173 28,182,319 CELLULAR COMMUNICATIONS - 2.3% American Tower Corp. Class A............... 1,948,900 29,623,280 CONSTRUCTION - 2.2% Granite Construction, Inc.*................. 1,502,035 27,382,098 CONSUMER DURABLES - 0.9% Matthews International Corp.*................ 365,200 12,029,688 CONSUMER SERVICES - 3.6% Life Time Fitness, Inc. ................. 1,000 21,000 Regis Corp.*............ 610,300 27,213,277 Salesforce.com, Inc. ... 1,000 16,070 Weight Watchers International, Inc. ................. 466,510 18,259,201 -------------- 45,509,548 EDUCATION - 2.1% DeVry, Inc. ............ 983,600 26,970,312 FURNITURE/FIXTURES - 2.5% Herman Miller, Inc.*.... 1,086,185 31,434,194
Shares Value --------- -------------- HEALTHCARE PRODUCTS - 2.4% Edwards Lifesciences Corp. ................ 354,985 $ 12,371,227 Steris Corp. ........... 816,010 18,409,186 -------------- 30,780,413 HEALTHCARE SERVICES - 10.1% DaVita, Inc. ........... 988,972 30,490,007 Laboratory Corporation of America Holdings... 725,200 28,790,440 LifePoint Hospitals, Inc. ................. 512,503 19,075,362 Province Healthcare Co. .................. 1,149,800 19,719,070 Renal Care Group, Inc. ................. 922,550 30,564,081 -------------- 128,638,960 INDUSTRIAL PRODUCTS - 3.7% Dionex Corp. ........... 358,830 19,796,651 Tektronix, Inc.*........ 787,800 26,800,956 -------------- 46,597,607 INDUSTRIAL SERVICES - 7.1% EGL, Inc. .............. 999,278 26,580,795 Expeditors International of Washington, Inc.*................. 144,200 7,124,922 Republic Services, Inc.*................. 968,300 28,022,602 United Rentals, Inc. ... 1,615,600 28,903,084 -------------- 90,631,403 INSURANCE - 2.1% Mercury General Corp.*................ 549,500 27,282,675 REAL ESTATE - 1.0% Host Marriott Corp. .... 1,037,150 12,819,174 RESTAURANTS - 5.3% Applebee's International, Inc.*................. 1,137,335 26,181,452 CBRL Group, Inc.*....... 463,088 14,286,265 Ruby Tuesday, Inc.*..... 967,300 26,552,385 -------------- 67,020,102
The accompanying notes are an integral part of the financial statements 4 MERIDIAN GROWTH FUND SCHEDULE OF INVESTMENTS (CONTINUED) JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value --------- -------------- COMMON STOCK (continued) RETAIL - 11.5% Claire's Stores, Inc.*................. 1,260,600 $ 27,355,020 Cost Plus, Inc. ........ 842,624 27,343,149 Dollar Tree Stores, Inc. ................. 918,600 25,197,198 Ethan Allen Interiors, Inc.*................. 767,500 27,560,925 Ross Stores, Inc.*...... 976,300 26,125,788 Tuesday Morning Corp. .. 429,992 12,469,768 -------------- 146,051,848 TECHNOLOGY - 21.6% Advent Software, Inc. ................. 1,056,838 19,097,063 American Power Conversion Corp. ..... 1,488,073 29,240,634 Autodesk, Inc.*......... 692,200 29,633,082 FileNET Corp. .......... 718,800 22,692,516 Getty Images, Inc. ..... 440,000 26,400,000 KEMET Corp. ............ 2,187,600 26,732,472 Molex, Inc. Class A*.... 949,475 25,901,678 Symbol Technologies, Inc.*................. 1,908,900 28,137,186 Synopsys, Inc. ......... 845,200 24,029,036 Vishay Intertechnology, Inc. ................. 1,540,400 28,620,632 Zebra Technologies Corp. Class A............... 163,650 14,237,550 -------------- 274,721,849
Shares Value --------- -------------- TELECOMMUNICATIONS EQUIPMENT - 6.5% Andrew Corp. ........... 1,617,625 $ 32,368,676 Plantronics, Inc. ...... 720,900 30,349,890 Tellabs, Inc. .......... 2,311,410 20,201,723 -------------- 82,920,289 TOTAL COMMON STOCK - 94.3% (Identified cost $991,333,907)..... 1,200,044,012 -------------- U.S. GOVERNMENT OBLIGATIONS - 0.7% (Identified cost $9,010,924) U.S. Treasury Bill @1.055% due 08/05/04 (Face Value $9,020,000)... 9,010,907 -------------- TOTAL INVESTMENTS - 95.0% (Identified cost $1,000,344,831)..... 1,209,054,919 CASH AND OTHER ASSETS LESS LIABILITIES - 5.0%................... 64,247,128 -------------- NET ASSETS - 100%...................... $1,273,302,047 ==============
* income producing The accompanying notes are an integral part of the financial statements 5 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value --------- -------------- COMMON STOCK - 94.8% AEROSPACE/DEFENSE - 2.3% Empresa Brasileira de Aeronautica S.A. ADR*.................. 1,073,900 $ 30,702,801 Northrop Grumman Corp.*................ 398,800 21,415,560 -------------- 52,118,361 AGRICULTURE - 1.1% Agrium, Inc.*........... 1,691,600 24,612,780 BANKING/FINANCE - 3.9% Annaly Mortgage Management, Inc.*..... 1,321,700 22,416,032 Greater Bay Bancorp*.... 772,385 22,321,927 SunTrust Banks, Inc.*... 347,000 22,551,530 Washington Mutual, Inc.*................. 511,500 19,764,360 -------------- 87,053,849 BASIC MATERIALS - 0.8% Newmont Mining Corp.*... 473,500 18,352,860 CONSUMER PRODUCTS - 14.5% Activision, Inc. ....... 2,004,061 31,864,570 American Greetings Corp. Class A............... 1,296,200 30,045,916 Avery Dennison Corp.*... 334,000 21,379,340 Del Monte Foods Co. .... 3,045,400 30,941,264 Eastman Kodak Co.*...... 1,214,200 32,759,116 Fomento Economico Mexicano S.A. de C.V. ADR*.................. 621,100 28,471,224 Kimberly-Clark Corp.*... 650,100 42,828,588 Leggett & Platt, Inc.*................. 1,479,700 39,522,787 Newell Rubbermaid, Inc.*................. 1,399,200 32,881,200 Scholastic Corp. ....... 378,700 11,342,065 Sony Corp. ADR*......... 567,400 21,589,570 -------------- 323,625,640 CONSUMER DURABLES - 1.9% General Motors Corp.*... 425,000 19,800,750 Whirlpool Corp.*........ 325,000 22,295,000 -------------- 42,095,750
Shares Value --------- -------------- CONSUMER SERVICES - 2.0% ServiceMaster Co.*...... 3,606,200 $ 44,428,384 ENERGY - 4.6% Arch Coal, Inc.*........ 1,133,300 41,467,447 El Paso Corp.*.......... 250,000 1,970,000 National-Oilwell, Inc. ................. 1,374,100 43,270,409 Tidewater, Inc.*........ 568,400 16,938,320 -------------- 103,646,176 FURNITURE & FIXTURES - 1.5% Furniture Brands International, Inc.*................. 1,298,300 32,522,415 HEALTHCARE PRODUCTS - 1.0% Haemonetics Corp. ...... 791,000 23,453,150 HEALTHCARE SERVICES - 2.6% HCA, Inc.*.............. 815,000 33,895,850 Omnicare, Inc.*......... 285,100 12,205,131 PAREXEL International Corp. ................ 615,500 12,186,900 WellCare Group, Inc. ... 2,000 34,000 -------------- 58,321,881 INDUSTRIAL PRODUCTS - 10.0% ArvinMeritor, Inc.*..... 1,474,300 28,852,051 Crane Co.*.............. 640,600 20,108,434 Cummins, Inc.*.......... 502,900 31,431,250 Eastman Chemical Co.*... 485,800 22,458,534 Manitowoc Co., Inc.*.... 864,000 29,246,400 Mettler-Toledo International, Inc. ................. 883,300 43,405,362 Packaging Corp. of America*.............. 894,700 21,383,330 Smurfit-Stone Container Corp. ................ 1,306,300 26,060,685 -------------- 222,946,046 INDUSTRIAL SERVICES - 6.4% ADVO, Inc.*............. 620,850 20,438,382 Allied Waste Industries, Inc. ................. 2,540,100 33,478,518
The accompanying notes are an integral part of the financial statements 6 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS (CONTINUED) JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value --------- -------------- COMMON STOCK (continued) Lamar Advertising Co. Class A............... 1,007,300 $ 43,666,455 Waste Management, Inc.*................. 1,451,600 44,491,540 -------------- 142,074,895 INFORMATION TECHNOLOGY SERVICES - 1.8% Automatic Data Processing, Inc.*..... 516,600 21,635,208 BearingPoint, Inc. ..... 2,079,900 18,448,713 -------------- 40,083,921 INSURANCE - 3.1% Conseco, Inc. .......... 1,131,200 22,510,880 MGIC Investment Corp.*.. 313,800 23,804,868 Nationwide Financial Services, Inc. Class A*.................... 603,100 22,682,591 -------------- 68,998,339 LEISURE & AMUSEMENT - 2.8% Boyd Gaming Corp.*...... 998,600 26,532,802 Royal Caribbean Cruises Ltd.*................. 807,000 35,031,870 -------------- 61,564,672 MEDIA - 2.3% Hearst-Argyle Television, Inc.*..... 693,800 17,886,164 Time Warner, Inc. ...... 1,860,000 32,698,800 -------------- 50,584,964 PAPER/FOREST PRODUCTS - 1.3% Aracruz Celulose S.A. ADR*.................. 890,800 29,093,528 PHARMACEUTICALS - 1.5% AstraZeneca Plc ADR*.... 713,000 32,541,320 REAL ESTATE - 2.8% Healthcare Realty Trust, Inc.*................. 508,900 19,073,572 Host Marriott Corp. .... 3,418,700 42,255,132 -------------- 61,328,704
Shares Value --------- -------------- RESTAURANTS - 1.0% McDonald's Corp.*....... 868,000 $ 22,568,000 RETAIL - 5.1% American Eagle Outfitters, Inc. ..... 778,850 22,516,554 BJ's Wholesale Club, Inc. ................. 880,200 22,005,000 Cabela's, Inc. Class A..................... 5,000 134,750 Office Depot, Inc. ..... 1,257,700 22,525,407 Talbots, Inc.*.......... 616,500 24,135,975 Too, Inc. .............. 1,276,000 21,309,200 -------------- 112,626,886 TECHNOLOGY - 14.0% AVX Corp.*.............. 763,600 11,034,020 Cadence Design System, Inc. ................. 764,000 11,177,320 Celestica, Inc. ........ 1,299,600 25,927,020 Coherent, Inc. ......... 958,750 28,618,687 Credence Systems Corp. ................ 2,121,764 29,280,343 Electronics for Imaging, Inc. ................. 998,600 28,220,436 Hyperion Solutions Corp. ................ 736,700 32,208,524 Koninklijke (Royal) Philips Electronics N.V. NY Shares*....... 682,000 18,550,400 McAfee, Inc. ........... 2,000,000 36,260,000 Storage Technology Corp. ................ 776,500 22,518,500 Symbol Technologies, Inc.*................. 1,407,000 20,739,180 Synopsys, Inc. ......... 1,174,900 33,402,407 VeriSign, Inc. ......... 715,236 14,233,196 -------------- 312,170,033 TELECOMMUNICATIONS EQUIPMENT - 1.6% Tellabs, Inc. .......... 4,103,600 35,865,464
The accompanying notes are an integral part of the financial statements 7 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS (CONTINUED) JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value --------- -------------- COMMON STOCK (continued) TELECOMMUNICATIONS SERVICES - 3.0% Citizens Communications Co. .................. 2,015,500 $ 24,387,550 Comcast Corp. Special Class A............... 775,000 21,397,750 Tele Norte Leste Participacoes S.A. ADR*.................. 1,636,100 20,827,553 -------------- 66,612,853 TRANSPORTATION - 1.9% Burlington Northern Santa Fe Corp.*....... 634,900 22,265,943 SkyWest, Inc.*.......... 1,139,079 19,831,365 -------------- 42,097,308 TOTAL COMMON STOCK - 94.8% (Identified cost $1,825,758,293)....... 2,111,388,179 -------------- TOTAL INVESTMENTS - 94.8% (Identified cost $1,825,758,293)..... 2,111,388,179 CASH AND OTHER ASSETS LESS LIABILITIES - 5.2%................... 115,201,582 -------------- NET ASSETS - 100%...................... $2,226,589,761 ==============
* income producing ADR - American Depository Receipt The accompanying notes are an integral part of the financial statements 8 MERIDIAN FUND, INC. STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Growth Fund Value Fund -------------- -------------- ASSETS Investments (Cost $1,000,344,831 and $1,825,758,293)... $1,209,054,919 $2,111,388,179 Cash and cash equivalents.............................. 63,246,384 119,117,749 Receivable for: Capital shares...................................... 6,738,372 3,447,201 Dividends........................................... 528,405 2,510,322 Interest............................................ 21,103 31,207 Securities sold..................................... 1,464,673 9,733,974 Prepaid expenses....................................... 1,947 5,488 -------------- -------------- TOTAL ASSETS........................................ 1,281,055,803 2,246,234,120 -------------- -------------- LIABILITIES Payable for: Capital shares...................................... 1,916,962 572,068 Securities purchased................................ 4,851,603 16,837,793 Accrued expenses: Investment advisory fees............................ 830,042 1,946,557 Other payables and accrued expenses................. 155,149 287,941 -------------- -------------- TOTAL LIABILITIES................................... 7,753,756 19,644,359 -------------- -------------- NET ASSETS............................................... $1,273,302,047 $2,226,589,761 ============== ============== Capital shares issued and outstanding, par value $0.01 (500,000,000 and 500,000,000 shares authorized)........ 35,988,186 55,176,219 ============== ============== Net asset value per share (offering and redemption price)................................................. $35.38 $40.35 ============== ============== Net Assets consist of: Paid in capital........................................ $1,040,996,278 $1,693,621,832 Accumulated net realized gain.......................... 23,595,681 247,241,080 Net unrealized appreciation on investments and foreign currency translations............................... 208,710,088 285,629,886 Accumulated undistributed net investment income........ -- 96,963 -------------- -------------- $1,273,302,047 $2,226,589,761 ============== ==============
The accompanying notes are an integral part of the financial statements 9 MERIDIAN FUND, INC. STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Growth Fund Value Fund ------------ ------------ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $0 and $185,227, respectively)................................ $ 4,961,804 $ 19,587,916 Interest.................................................. 436,452 961,098 Other income.............................................. 7,693 -- ------------ ------------ Total Investment Income.............................. 5,405,949 20,549,014 ------------ ------------ EXPENSES Investment advisory fees.................................. 6,145,515 18,629,479 Transfer agent fees....................................... 292,669 567,102 Custodian fees............................................ 210,175 466,020 Reports to shareholders................................... 109,903 270,528 Pricing fees.............................................. 109,877 229,777 Registration and filing fees.............................. 127,063 92,683 Professional fees......................................... 48,559 43,559 Miscellaneous expenses.................................... 7,001 15,860 Directors' fees and expenses.............................. 3,518 8,738 ------------ ------------ Total expenses....................................... 7,054,280 20,323,746 ------------ ------------ Net investment income (loss).............................. (1,648,331) 225,268 ------------ ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments.......................... 40,400,086 360,394,828 Net change in unrealized appreciation on investments and foreign currency translations.......................... 151,831,707 70,984,391 ------------ ------------ Net gain on investments................................... 192,231,793 431,379,219 ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $190,583,462 $431,604,487 ============ ============
The accompanying notes are an integral part of the financial statements 10 MERIDIAN FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Growth Fund Value Fund ------------------------------ ------------------------------- Year Ended Year Ended Year Ended Year Ended June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003 -------------- ------------- -------------- -------------- OPERATIONS Net investment income (loss)... $ (1,648,331) $ (1,536,056) $ 225,268 $ (1,457,716) Net realized gain (loss) on investments.................. 40,400,086 4,243,657 360,394,828 (74,623,894) Net increase in unrealized appreciation of investments.................. 151,831,707 10,490,266 70,984,391 138,434,441 -------------- ------------ -------------- -------------- Net increase in net assets from operations........... 190,583,462 13,197,867 431,604,487 62,352,831 -------------- ------------ -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS Distributions from ordinary income....................... -- (699,754) -- -- Distributions from net realized capital gain................. (19,395,152) (7,469,451) -- -- -------------- ------------ -------------- -------------- Net distributions............ (19,395,152) (8,169,205) -- -- -------------- ------------ -------------- -------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales of shares....................... 778,885,562 209,292,815 696,646,284 511,600,637 Reinvestment of distribution... 17,050,957 7,510,696 -- -- Less: redemptions.............. (142,215,841) (84,098,027) (358,213,242) (414,608,084) -------------- ------------ -------------- -------------- Increase resulting from capital share transactions.............. 653,720,678 132,705,484 338,433,042 96,992,553 -------------- ------------ -------------- -------------- Total increase in net assets... 824,908,988 137,734,146 770,037,529 159,345,384 NET ASSETS Beginning of year.............. 448,393,059 310,658,913 1,456,552,232 1,297,206,848 -------------- ------------ -------------- -------------- End of year.................... $1,273,302,047 $448,393,059 $2,226,589,761 $1,456,552,232 ============== ============ ============== ==============
The accompanying notes are an integral part of the financial statements 11 MERIDIAN GROWTH FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
For the fiscal year ended June 30, ----------------------------------------------------------------- 2004 2003 2002 2001 2000 1999 ---------- -------- -------- -------- -------- -------- Net Asset Value - Beginning of period.... $27.24 $28.10 $31.30 $29.45 $26.28 $33.26 ---------- -------- -------- -------- -------- -------- Income from Investment Operations - -------------------------------- Net Investment Income (Loss)*............ (0.04) (0.08) (0.12) 2.26 0.11 0.16 Net Gains (Losses) on Securities (both realized and unrealized)................ 9.10 (0.11) (0.24) 3.89 4.99 (0.50) ---------- -------- -------- -------- -------- -------- Total From Investment Operations......... 9.06 (0.19) (0.36) 6.15 5.10 (0.34) ---------- -------- -------- -------- -------- -------- Less Distributions - ------------------ Distributions from Net Investment Income.................................. 0.00 (0.06) 0.00 (2.44) (0.15) (0.14) Distribution from Net Realized Capital Gains................................... (0.92) (0.61) (2.84) (1.86) (1.78) (6.50) ---------- -------- -------- -------- -------- -------- Total Distributions...................... (0.92) (0.67) (2.84) (4.30) (1.93) (6.64) ---------- -------- -------- -------- -------- -------- Net Asset Value - End of Period.......... $35.38 $27.24 $28.10 $31.30 $29.45 $26.28 ========== ======== ======== ======== ======== ======== Total Return............................. 33.65% (0.20%) 0.42% 23.34% 21.45% 3.05% ========== ======== ======== ======== ======== ======== Ratios/Supplemental Data - ------------------------ Net Assets, End of Period (000's)........ $1,273,302 $448,393 $310,659 $182,117 $140,990 $185,683 Ratio of Expenses to Average Net Assets.................................. 0.88% 0.95% 1.02% 1.04% 1.09% 1.01% Ratio of Net Investment Income (Loss) to Average Net Assets...................... (0.21%) (0.47%) (0.62%) (0.26%) 0.31% 0.49% Portfolio Turnover Rate.................. 19% 27% 26% 43% 28% 51% For the fiscal year ended June 30, ----------------------------------------- 1998 1997 1996 1995 -------- -------- -------- -------- Net Asset Value - Beginning of period.... $33.20 $32.21 $27.29 $24.27 -------- -------- -------- -------- Income from Investment Operations - -------------------------------- Net Investment Income (Loss)*............ 0.27 0.40 0.30 0.27 Net Gains (Losses) on Securities (both realized and unrealized)................ 4.92 3.71 5.47 3.63 -------- -------- -------- -------- Total From Investment Operations......... 5.19 4.11 5.77 3.90 -------- -------- -------- -------- Less Distributions - ------------------ Distributions from Net Investment Income.................................. (0.32) (0.36) (0.31) (0.18) Distribution from Net Realized Capital Gains................................... (4.81) (2.76) (0.54) (0.70) -------- -------- -------- -------- Total Distributions...................... (5.13) (3.12) (0.85) (0.88) -------- -------- -------- -------- Net Asset Value - End of Period.......... $33.26 $33.20 $32.21 $27.29 ======== ======== ======== ======== Total Return............................. 16.92% 13.92% 21.40% 16.44% ======== ======== ======== ======== Ratios/Supplemental Data - ------------------------ Net Assets, End of Period (000's)........ $296,803 $353,029 $384,087 $328,153 Ratio of Expenses to Average Net Assets.................................. 0.95% 0.96% 0.96% 1.06% Ratio of Net Investment Income (Loss) to Average Net Assets...................... 0.76% 1.23% 0.99% 1.18% Portfolio Turnover Rate.................. 38% 37% 34% 29%
* Net Investment Income (Loss) per share has been computed before adjustments for book/tax differences. The accompanying notes are an integral part of the financial statements 12 MERIDIAN VALUE FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
For the fiscal year ended June 30, ------------------------------------------------------------------- 2004 2003 2002 2001 2000 1999 ---------- ---------- ---------- -------- ------- ------- Net Asset Value - Beginning of Period............................ $31.65 $30.34 $30.98 $25.88 $22.29 $19.30 ---------- ---------- ---------- -------- ------- ------- Income from Investment Operations - -------------------------------- Net Investment Income (Loss)**..... 0.00 (0.03) (0.05) 1.12 0.05 (0.10) Net Gains (Losses) on Securities (both realized and unrealized).... 8.70 1.34 (0.51) 5.75 5.91 3.56 ---------- ---------- ---------- -------- ------- ------- Total From Investment Operations... 8.70 1.31 (0.56) 6.87 5.96 3.46 ---------- ---------- ---------- -------- ------- ------- Less Distributions - ------------------ Distribution from Net Investment Income............................ 0.00 0.00 (0.04) (1.09) 0.00 0.00 Distribution from Net Realized Capital Gains..................... 0.00 0.00 (0.04) (0.68) (2.37) (0.47) ---------- ---------- ---------- -------- ------- ------- Total Distributions................ 0.00 0.00 (0.08) (1.77) (2.37) (0.47) Net Asset Value - End of Period.... $40.35 $31.65 $30.34 $30.98 $25.88 $22.29 ========== ========== ========== ======== ======= ======= Total Return....................... 27.49% 4.32% (1.78%) 27.95% 29.63% 18.92% ========== ========== ========== ======== ======= ======= Ratios/Supplemental Data - ------------------------ Net Assets, End of Period (000's)........................... $2,226,590 $1,456,552 $1,297,207 $768,559 $87,930 $24,912 Ratio of Expenses to Average Net Assets............................ 1.09% 1.11% 1.12% 1.10% 1.41% 1.63% Ratio of Net Investment Income (Loss) to Average Net Assets...... 0.01% (0.12%) (0.22%) 0.60% 0.39% (0.65%) Portfolio Turnover Rate............ 81% 60% 54% 76% 86% 124% For the fiscal year ended June 30, ------------------------------------ 1998 1997 1996 1995 ------- ------- ------- ------ Net Asset Value - Beginning of Period............................ $17.40 $15.32 $10.27 $9.87 ------- ------- ------- ------ Income from Investment Operations - -------------------------------- Net Investment Income (Loss)**..... (0.19) (0.26) (0.10) (0.04) Net Gains (Losses) on Securities (both realized and unrealized).... 4.32 3.20 5.15 0.44 ------- ------- ------- ------ Total From Investment Operations... 4.13 2.94 5.05 0.40 ------- ------- ------- ------ Less Distributions - ------------------ Distribution from Net Investment Income............................ 0.00 0.00 0.00 0.00 Distribution from Net Realized Capital Gains..................... (2.23) (0.86) 0.00 0.00 ------- ------- ------- ------ Total Distributions................ (2.23) (0.86) 0.00 0.00 Net Asset Value - End of Period.... $19.30 $17.40 $15.32 $10.27 ======= ======= ======= ====== Total Return....................... 26.05% 20.55%+ 49.17%+ 4.05%+ ======= ======= ======= ====== Ratios/Supplemental Data - ------------------------ Net Assets, End of Period (000's)........................... $12,196 $7,340 $3,472 $715 Ratio of Expenses to Average Net Assets............................ 2.16% 2.51%* 2.55%* 2.78%* Ratio of Net Investment Income (Loss) to Average Net Assets...... (1.35%) (1.96%)* (1.36%)* (0.58%)* Portfolio Turnover Rate............ 133% 144% 125% 77%
+ 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. As indicated in Note 2, the Investment Advisor has agreed to reduce a portion of its fee and absorb 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. ** Net Investment Income (Loss) per share has been computed before adjustments for book/tax differences. The accompanying notes are an integral part of the financial statements 13 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: Meridian Fund, Inc., (the "Company"), is comprised of the Meridian Growth Fund (the "Growth Fund") and the Meridian Value Fund (the "Value Fund"). The Growth Fund and the Value Fund (each a "Fund" and collectively, the "Funds") are registered under the Investment Company Act of 1940, as no-load, diversified, open-end management investment companies. The Growth Fund began operations and was registered on August 1, 1984. The Value Fund began operations on February 10, 1994 and was registered on February 7, 1994. The primary investment objective of the Growth Fund is to seek long-term growth of capital. Originally named Meridian Fund, the name was changed effective April 20, 2001 to Meridian Growth Fund, to more closely reflect the investment style. There was no change in how the Fund is managed. The primary investment objective of the Value Fund is to seek long-term growth of capital. The following is a summary of significant accounting policies for both Funds: a. INVESTMENT VALUATIONS: Marketable securities are valued at the closing price or last sales price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the last reported bid price. b. FEDERAL INCOME TAXES: It is the Funds' policy to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") applicable to regulated investment companies and to distribute all of its taxable income to its shareholders; therefore, no federal income tax provision is required. c. SECURITY TRANSACTIONS: Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses on security transactions are determined on the basis of specific identification for both financial statement and federal income tax purposes. Dividend income is recorded on the ex-dividend date. Interest income is accrued daily. d. CASH AND CASH EQUIVALENTS: All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Available funds are automatically swept into a Cash Reserve account, which preserves capital with a consistently competitive rate of return. Interest accrues daily and is credited by the third business day of the following month. e. EXPENSES: Expenses arising in connection with the Fund are charged directly to the Fund. Expenses common to the Funds are generally allocated to each Fund in proportion to their relative net assets. f. USE OF ESTIMATES: The preparation of financial statements in accordance with accounting principals generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements. Actual amounts could differ from those estimates. g. DISTRIBUTIONS TO SHAREHOLDERS: The Funds record distributions to shareholders on the ex-date. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To 14 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Distributions which exceed net investment income and net realized capital gains are reported as distributions in excess of net investment income or distributions in excess of net realized capital gains for financial reporting purposes but not for tax purposes. To the extent they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. Permanent book-tax differences, if any, are not included in ending undistributed net investment income (loss) for the purposes of calculating net investment income (loss) per share in the Financial Highlights. h. GUARANTEES AND INDEMNIFICATION: Under the Funds' organizational documents, its Officers and Directors are indemnified against certain liability arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. 2. RELATED PARTIES: The Funds have entered into a management agreement with Aster Investment Management Company, Inc. (the "Investment Adviser"). Certain Officers and/or Directors of the Funds are also Officers and/or Directors of the Investment Adviser. Beneficial ownership in the Funds by Richard F. Aster, Jr., President, as of June 30, 2004 were as follows: Growth Fund............................... 1.2% Value Fund................................ 0.5%
The Investment Adviser receives from the Growth Fund, as compensation for its services, an annual fee of 1% of the first $50,000,000 of the Growth Fund's net assets and 0.75% of the Growth Fund's net assets in excess of $50,000,000. The fee is paid monthly and calculated based on that month's daily average net assets. The Investment Adviser receives from the Value Fund, as compensation for its services, an annual fee of 1% of the Value Fund's net assets. The fee is paid monthly and calculated based on that month's daily average net assets. The Investment Adviser has agreed to limit the expenses of both Funds to 2.50% with respect to this limit, the Investment Adviser did not reimburse either fund during 2004. 15 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3. CAPITAL SHARES TRANSACTIONS: The Growth Fund and Value Fund have authorized 500,000,000 and 500,000,000 common shares at a par value of $.01 per share, respectively. Transactions in capital shares for the year ended June 30, 2003 and the year ended June 30, 2004 were as follows:
Growth Fund Value Fund ------------------------ ------------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ----------- Shares sold..................... 23,312,706 8,611,562 18,921,842 18,083,824 Shares issued on reinvestment of distributions................. 533,742 333,958 -- -- ---------- ---------- ---------- ----------- 23,846,448 8,945,520 18,921,842 18,083,824 Shares redeemed................. (4,317,352) (3,541,670) (9,759,558) (14,832,550) ---------- ---------- ---------- ----------- Net increase.................... 19,529,096 5,403,850 9,162,284 3,251,274 ========== ========== ========== ===========
4. COMPENSATION OF DIRECTORS AND OFFICERS: Directors and Officers of the Funds who are Directors and/or Officers of the Investment Adviser receive no compensation from the Funds. Directors of the Funds who are not interested persons as defined in the Investment Company Act of 1940 receive compensation in the amount of $3,000 per annum and a $2,000 purchase of Meridian Growth Fund or Meridian Value Fund shares, plus expenses and a $1,000 purchase in one of the funds for each additional Board of Directors meeting attended other than the annual meeting. 5. COST OF INVESTMENTS: The cost of investments purchased and the proceeds from sales of investments, excluding short-term obligations, for the year ended June 30, 2004, were as follows:
Purchases Proceeds from Sales -------------- ------------------- Growth Fund.......................................... $ 742,796,640 $ 145,253,426 Value Fund........................................... 1,745,800,943 1,389,577,441
The cost of purchases and redemptions at maturity of U.S. Government securities were as follows:
Purchases Redeemed at Maturity ------------ -------------------- Growth Fund.......................................... $ 79,841,612 $ 90,000,000 Value Fund........................................... 172,222,155 245,600,000
6. DISTRIBUTION INFORMATION: Income and long-term capital gains distributions are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles accepted in the United States. The tax character of distributions made during the fiscal years ended June 30, 2003 and June 30, 2004 were as follows:
2003 TAXABLE DISTRIBUTIONS Net Ordinary Long-Term Total Fund Income Capital Gains Distributions ---- -------- ------------- ------------- Growth Fund............................................. $699,328 $ 7,469,877 $ 8,169,205 Value Fund.............................................. -- -- --
16 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2004 TAXABLE DISTRIBUTIONS
Net Ordinary Long-Term Total Fund Income Capital Gains Distributions ---- -------- ------------- ------------- Growth Fund............................................. $ -- $19,395,152 $19,395,152 Value Fund.............................................. -- -- --
7. FEDERAL INCOME TAXES: Permanent differences, incurred during the year ended June 30, 2004, resulting from differences in book and tax accounting have been reclassified at year end to undistributed net investment income, accumulated realized gain/(loss) and paid-in capital were as follows:
Increase/Decrease Increase/Decrease Undistributed Net Accumulated Realized Fund Investment Income Gain/(Loss) ---- ----------------- -------------------- Growth Fund.............................................. $1,648,331 $(1,648,331) Value Fund............................................... (128,305) 128,305
The aggregate cost of investments for federal income tax purposes were as follows:
Aggregate Gross Aggregate Gross Unrealized Unrealized Net Unrealized Aggregate Cost Appreciation Depreciation Appreciation -------------- --------------- --------------- -------------- Growth Fund........................ $1,000,480,264 $225,375,450 $(16,800,795) $208,574,655 Value Fund......................... 1,828,534,939 307,606,208 (24,752,968) 282,853,240
COMPONENTS OF ACCUMULATED EARNINGS (LOSSES) ON A TAX BASIS
Growth Fund Value Fund ------------ ------------ Undistributed ordinary income............................... $ 10,056,382 $ 96,963 Undistributed long-term capital gains....................... 13,674,732 250,017,726 Unrealized appreciation..................................... 208,574,655 282,853,240 ------------ ------------ Total Accumulated Earnings.............................. $232,305,769 $532,967,929 ============ ============
Post-October losses represent losses realized on investment transactions from November 1, 2003 through June 30, 2004 that, in accordance with Federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year. As of June 30, 2004, there were no Post-October losses in the current year for either fund. The Value Fund utilized $104,603,182 of the 2003 capital loss carryover to offset current year capital gains. There was no capital loss carryover in the Growth Fund. 8. PROXY VOTING POLICIES AND PROCEDURES: A statement that information regarding how the fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30, 2004 is available (i) without charge, upon request, by calling (800) 446-6662; or on our website at http://www.meridianfund.com; and (ii) on the Securities and Exchange Commission ("SEC") website at http://www.sec.gov. 17 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of Meridian Fund, Inc. In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Meridian Growth Fund and Meridian Value Fund (hereafter referred to as the "Funds") at June 30, 2004, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the ten years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP San Francisco, California August 20, 2004 18 INFORMATION ABOUT THE DIRECTORS AND OFFICERS OF MERIDIAN FUND, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The individuals listed below serve as directors or officers of Meridian Fund, Inc. ( the "Meridian Funds"). Each director of the Meridian Funds serves until a successor is elected and qualified or until resignation. Each officer of the Meridian Funds is elected annually by the Board of Directors. The address of all officers and directors is 60 East Sir Francis Drake Blvd., Suite 306, Larkspur, CA 94939. The Meridian Funds' Statement of Additional Information (SAI) includes more information about the Directors. To request a free copy, call Meridian at 1-800-446-6662. INTERESTED DIRECTORS * - -------------------------------------------------------------------------------- Richard F. Aster, Jr. (64) Positions(s) Held with Fund: President, Chairman of the Board, Portfolio Manager Length of Service (Beginning Date): May 3, 1985 Principal Occupation(s) During Past 5 Years: President, Aster Investment Management, Inc.; President, Aster Capital Management, Inc. Number of Portfolios Overseen: 2 Other Directorships: N/A Michael Stolper (59) Positions(s) Held with Fund: Director Length of Service (Beginning Date): May 3, 1985 Principal Occupation(s) During Past 5 Years: Investment Adviser and Broker - Dealer, Stolper & Company, Inc. Number of Portfolios Overseen: 2 Other Directorships: Kane-Miller Publishing - -------------------------------------------------------------------------------- * Aster Investment Management, Inc. is investment adviser to the Meridian Funds. Mr. Stolper is a minority owner of Aster Investment Management, Inc. 19 INFORMATION ABOUT THE DIRECTORS AND OFFICERS OF MERIDIAN FUND, INC. (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- Michael S. Erickson (52) Positions(s) Held with Fund: Director Length of Service (Beginning Date): May 3, 1985 Principal Occupation(s) During Past 5 Years: Private Investor Number of Portfolios Overseen: 2 Other Directorships: AeroAstro, Decimal, Inc. James Bernard Glavin (69) Positions(s) Held with Fund: Director Length of Service (Beginning Date): May 3, 1985 Principal Occupation(s) During Past 5 Years: Chairman of the Board, The Immune Response Corp. Number of Portfolios Overseen: 2 Other Directorships: N/A Herbert Charles Kay (67) Positions(s) Held with Fund: Director Length of Service (Beginning Date): May 3, 1985 Principal Occupation(s) During Past 5 Years: Private Investor Number of Portfolios Overseen: 2 Other Directorships: N/A - -------------------------------------------------------------------------------- OFFICERS - -------------------------------------------------------------------------------- Gregg B. Keeling, CPA (49) Positions(s) Held with Fund: Treasurer, Secretary, Principal Financial and Accounting Officer Length of Service: (Beginning Date) April 1999 Principal Occupation(s) During Past 5 Years: Aster Investment Management, Inc., Vice President of Operations; Aster Capital Management, Inc., Vice President of Operations 20 MANAGEMENT'S DISCUSSION OF MERIDIAN GROWTH FUND(R) PERFORMANCE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Meridian Growth Fund's investment performance produced a gain of 33.65% during the fiscal year ended June 30, 2004. This reflected the strength in the financial, healthcare services, industrial products and services, retail, technology and telecommunications equipment sectors, as well as selective stocks that may be the only issue we own in a particular sector. Our positive performance was offset primarily by weakness in the restaurant and healthcare products sectors, as well as selective stocks that may be the only issue we own in a particular sector. These market conditions materially affected the Fund's performance. The Russell 2000 Index gained 33.37% during the period while the S&P 500 gained 19.11%. The Fund's investments include companies that are relatively small in terms of total assets, revenues and earnings, that the Investment Adviser believes may have prospects for above average growth in revenue and earnings. Of a total of 61 investments, 46 advanced and 15 declined. VALUE OF $10,000 INVESTED IN THE MERIDIAN GROWTH FUND, THE S&P 500 AND THE RUSSELL 2000 [PERFORMANCE LINE GRAPH]
MERIDIAN GROWTH FUND S&P 500 RUSSELL 2000 -------------------- ------- ------------ 6/30/94 10000 10000 10000 6/30/95 11644 12596 12011 6/30/96 14136 15868 14880 6/30/97 16104 21375 17310 6/30/98 18828 27817 20168 6/30/99 19402 34148 20471 6/30/00 23564 36624 23402 6/30/01 29064 31196 23536 6/30/02 29186 25587 21512 6/30/03 29128 25651 21159 6/30/04 38930 30553 28220
MERIDIAN GROWTH FUND AVERAGE ANNUAL TOTAL RETURN One Year 33.65% Five Years 14.94% Since Inception 14.56%
Past performance is not predictive of future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Net asset value, investment return and principal value will fluctuate, so shares, when redeemed, may be worth more or less than their original cost. 21 MANAGEMENT'S DISCUSSION OF MERIDIAN VALUE FUND(R) PERFORMANCE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- During the fiscal year ended June 30, 2004, the Meridian Value Fund gained 27.49% compared to a gain of 19.11% for the S&P 500 with reinvested dividends, a gain of 33.37% for the Russell 2000, and a gain of 26.19% for the NASDAQ. During the fiscal year ended June 30, 2004, the Fund's strongest performing investments were in the basic materials, leisure, healthcare, and agriculture sectors. The worst performing investments were in the telecommunications services and consumer durables sectors. The Meridian Value Fund's strategy is to invest in stocks, across a range of market capitalizations, that the Investment Adviser believes are undervalued in relation to the issuer's long-term earnings power, asset value and/or stock market in general. Investments include both smaller company equities and mid-to-large capitalization stocks. Based on following this strategy, the Fund's average compounded annual return for the nine-year period from June 30, 1995 to June 30, 2004 was 21.66% compared to 10.34% for the S&P 500 with reinvested dividends. The Fund did not approach full investment status until June 30, 1995, with cash comprising approximately 45-50% of the Fund's total portfolio from inception until June 30, 1995. The Meridian Value Fund's average compounded annual return from inception to June 30, 2004 was 18.83% compared to 10.98% for the S&P 500 with reinvested dividends. VALUE OF $10,000 INVESTED IN THE MERIDIAN VALUE FUND AND THE S&P 500 [PERFORMANCE LINE GRAPH]
MERIDIAN VALUE FUND S&P 500 ------------------- ------- 6/30/94 10000 10000 6/30/95 10405 12596 6/30/96 15521 15868 6/30/97 18711 21375 6/30/98 23585 27817 6/30/99 28047 34148 6/30/00 36358 36624 6/30/01 46523 31196 6/30/02 45695 25587 6/30/03 47669 25651 6/30/04 60773 30553
MERIDIAN VALUE FUND AVERAGE ANNUAL TOTAL RETURN One Year 27.49% Five Years 16.73% Since Inception 19.78%
Past performance is not predictive of future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Net asset value, investment return and principal value will fluctuate, so shares, when redeemed, may be worth more or less than their original cost. 22 2004 TAX NOTICE TO SHAREHOLDERS (UNAUDITED) The information set forth below is for the Fund's fiscal year as required by Federal laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of a fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2005. Please consult your tax advisor for proper treatment of this information. Pursuant to Internal Revenue Code Section 852(b)(3), the amounts of long-term capital gains designated for the fiscal year ended June 30, 2004 were as follows: Growth Fund................................................. $19,395,152 Value Fund.................................................. $ --
23 MERIDIAN FUND, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This report is submitted for the information of shareholders of Meridian Fund, Inc. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. --------------------------------------------------------- Officers and Directors RICHARD F. ASTER, JR. President and Director MICHAEL S. ERICKSON HERBERT C. KAY JAMES B. GLAVIN MICHAEL STOLPER Directors GREGG B. KEELING Treasurer and Secretary Custodian PFPC TRUST COMPANY Philadelphia, Pennsylvania Transfer Agent and Disbursing Agent PFPC, INC. King of Prussia, Pennsylvania (800) 446-6662 Counsel MORRISON & FOERSTER LLP Washington, D.C. Auditors PRICEWATERHOUSECOOPERS LLP San Francisco, California MERIDIAN GROWTH FUND(R) MERIDIAN VALUE FUND(R) ANNUAL REPORT [MERIDIAN FUND LOGO] 60 E. Sir Francis Drake Blvd. Wood Island, Suite 306 Larkspur, CA 94939 www.meridianfund.com Telephone (800) 446-6662 JUNE 30, 2004 ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. (d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. As of the end of the period covered by the report, the registrant's board of directors has determined that James Glavin is qualified to serve as an audit committee financial expert serving on its audit committee and that he is "independent," as defined by Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $85,540 ($49,140 in 2004 and $36,400 in 2003). Audit-Related Fees (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $ 0.00. ($0.00 in 2004 and $0.00 in 2003). Tax Fees (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $16,600 ($8,400 in 2004 and $8,200 in 2003). Tax fees represent tax excise distributions and compliance services provided in connection with the review of the Registrant's tax returns. All Other Fees (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $ 0.00. ($0.00 in 2004 and $0.00 in 2003). (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. PRE-APPROVAL OF AUDIT AND PERMITTED NON-AUDIT SERVICES PROVIDED TO THE COMPANY 1. Pre-Approval Requirements. The Committee shall pre-approve all auditing services and permissible non-audit services (e.g., tax services) to be provided to the Company by the Auditor, including the fees therefore. The Committee may delegate to one or more of its members the authority to grant pre-approvals. In connection with such delegation, the Committee shall establish pre-approval policies and procedures, including the requirement that the decisions of any member to whom authority is delegated under this section shall be presented to the full Committee at each of its scheduled meetings. 2. De Minimis Exception to Pre-Approval: Pre-approval for a permitted non-audit service shall not be required if: a. the aggregate amount of all such non-audit services is not more than 5% of the total revenues paid by the Company to the Auditor in the fiscal year in which the non-audit services are provided; b. such services were not recognized by the Company at the time of the engagement to be non-audit services; and c. such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee. Additionally, the Committee shall pre-approve the Auditor's engagements for non-audit services with the Adviser and any affiliate of the Adviser that provides ongoing services to the Company in accordance with the foregoing, if the engagement relates directly to the operations and financial reporting of the Company, unless the aggregate amount of all services provided constitutes no more than 5% of the total amount of revenues paid to the Auditor by the Company, the Adviser and any affiliate of the Adviser that provides ongoing services to the Company during the fiscal year in which the services are provided that would have to be pre-approved by the Committee pursuant to this paragraph (without regard to this exception). PROHIBITED SERVICES The Committee shall confirm with the Auditor engaged to perform the audit of the Company that the Auditor is not performing contemporaneously any of the following non-audit services for the Company, the Adviser, or any affiliates of the Company or Adviser: 1. bookkeeping or other services related to the accounting records or financial statements of the Company; 2. financial information systems design and implementation; 3. appraisal or valuation services, fairness opinions, or contribution-in-kind reports; 4. actuarial services; 5. internal audit outsourcing services; 6. Management functions or human resources; 7. broker or dealer, investment adviser, or investment banking services; 8. legal services and expert services unrelated to the audit; and 9. any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible. The Auditor is responsible for informing the Committee of whether it believes that a particular service is permissible or prohibited pursuant to applicable regulations and standards. (e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: (b) N/A (c) 100.00% (d) N/A (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was zero percent (0%). (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $($0.00 in 2004 and $0.00 in 2003). (h) The registrant's audit committee of the board of directors HAS considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS Not yet applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Meridian Fund, Inc.(R) ------------------------------------------------------------ By (Signature and Title)* /s/ Richard F. Aster, Jr. ----------------------------------------------- Richard F. Aster, Jr., Director & Principal Executive Officer (principal executive officer) Date September 7, 2004 ---------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Richard F. Aster, Jr. ------------------------------------------------------- Richard F. Aster, Jr., Director & Principal Executive Officer (principal executive officer) Date September 7, 2004 -------------------------------------------------------------------- By (Signature and Title)* /s/ Gregg B. Keeling ------------------------------------------------------- Gregg B. Keeling, Principal Financial Officer, Principal Accounting Officer, Treasurer & Secretary (principal financial officer) Date September 7, 2004 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 f01325exv99wcodeeth.txt CODE OF ETHICS EXHIBIT (a)(1) 9/10/03 MERIDIAN FUND, INC. SUPPLEMENTAL CODE OF ETHICS FOR PRINCIPAL OFFICERS AND SENIOR FINANCIAL OFFICERS The Board of Directors (the "Board") of Meridian Fund, Inc. (the "Company") has adopted this Supplemental Code of Ethics (the "Code") for the Company's Principal Officers and Senior Financial Officers (the "Officers") to guide and remind the Officers of their responsibilities to the Company, other Officers, shareholders of the Company, and governmental authorities. Officers are expected to act in accordance with the guidance and standards set forth in this Code. For the purposes of this Code, the Company's Principal Officers and Senior Financial Officers shall include: the Principal Executive Officer; the Principal Financial Officer; the Principal Accounting Officer; the Controller; and any persons performing similar functions on behalf of the Company, regardless of whether such persons are employed by the Company or a third party. This Code is intended to serve as the code of ethics described in Section 406 of The Sarbanes-Oxley Act of 2002 and Form N-CSR. To the extent that an Officer is subject to the Company's code of ethics adopted pursuant to Rule 17j-1 of the Investment Company Act of 1940, as amended (the "Rule 17j-1 Code"), this Code is intended to supplement and be interpreted in the context of the Rule 17j-1 Code. This Code also should be interpreted in the context of all applicable laws, regulations, the Company's Articles of Incorporation and Bylaws, as amended, and all other governance and disclosure policies and documents adopted by the Board. All Officers must become familiar and fully comply with this Code. Because this Code cannot and does not cover every applicable law or provide answers to all questions that might arise, all Officers are expected to use common sense about what is right and wrong, including a sense of when it is proper to seek guidance from others on the appropriate course of conduct. The purpose of this Code is to set standards for the Officers that are reasonably designed to deter wrongdoing and are necessary to promote: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the "SEC") and in any other public communications by the Company; - compliance with applicable governmental laws, rules and regulations; - the prompt internal reporting of violations of the Code to the appropriate persons as set forth in the Code; and - accountability for adherence to the Code. 1. HONEST AND ETHICAL CONDUCT A. HONESTY, DILIGENCE AND PROFESSIONAL RESPONSIBILITY Officers are expected to observe both the form and the spirit of the ethical principles contained in this Code. Officers must perform their duties and responsibilities for the Company: - with honesty, diligence, and a commitment to professional and ethical responsibility; - carefully, thoroughly and in a timely manner; and - in conformity with applicable professional and technical standards. Officers who are certified public accountants are expected carry out their duties and responsibilities in a manner consistent with the principles governing the accounting profession, including any guidelines or principles issued by the Public Company Accounting Oversight Board or the American Institute of Certified Public Accountants from time to time. B. OBJECTIVITY / AVOIDANCE OF UNDISCLOSED CONFLICTS OF INTEREST Officers are expected to maintain objectivity and avoid undisclosed conflicts of interest. In the performance of their duties and responsibilities for the Company, Officers must not subordinate their judgment to personal gain and advantage, or be unduly influenced by their own interests or by the interests of others. Officers must avoid participation in any activity or relationship that constitutes a conflict of interest unless that conflict has been completely disclosed to affected parties. Further, Officers should avoid participation in any activity or relationship that could create the appearance of a conflict of interest. A conflict of interest would generally arise if an Officer directly or indirectly participated in any investment, interest, association, activity or relationship that may impair or appear to impair the Officer's objectivity. Any Officer who may be involved in a situation or activity that might be a conflict of interest or give the appearance of a conflict of interest should consider reporting such situation or activity using the reporting procedures set forth in Section 4 of this Code. The Audit Committee will not be responsible for monitoring or enforcing this conflict of interest policy, but rather each Officer is responsible for self-compliance with this conflict of interest policy. C. PREPARATION OF FINANCIAL STATEMENTS Officers must not knowingly make any misrepresentations regarding the Company's financial statements or any facts in the preparation of the Company's financial statements, and must 2 comply with all applicable laws, standards, principles, guidelines, rules and regulations in the preparation of the Company's financial statements. This section is intended to prohibit: - making, or permitting or directing another to make, materially false or misleading entries in the Company's financial statements or records; - failing to correct the Company's financial statements or records that are materially false or misleading when he or she has the authority to record an entry; and - signing, or permitting or directing another to sign, a document containing materially false or misleading financial information. Officers must be scrupulous in their application of generally accepted accounting principles. No Officer may (i) express an opinion or state affirmatively that the financial statements or other financial data of the Company are presented in conformity with generally accepted accounting principles, or (ii) state that he or she is not aware of any material modifications that should be made to such statements or data in order for them to be in conformity with generally accepted accounting principles, if such statements or data contain any departure from generally accepted accounting principles then in effect in the United States. Officers must follow the laws, standards, principles, guidelines, rules and regulations established by all applicable governmental bodies, commissions or other regulatory agencies in the preparation of financial statements, records and related information. If an Officer prepares financial statements, records or related information for purposes of reporting to such bodies, commissions or regulatory agencies, the Officer must follow the requirements of such organizations in addition to generally accepted accounting principles. If an Officer and his or her supervisor have a disagreement or dispute relating to the preparation of financial statements or the recording of transactions, the Officer should take the following steps to ensure that the situation does not constitute an impermissible subordination of judgment: - The Officer should consider whether (i) the entry or the failure to record a transaction in the records, or (ii) the financial statement presentation or the nature or omission of disclosure in the financial statements, as proposed by the supervisor, represents the use of an acceptable alternative and does not materially misrepresent the facts or result in an omission of a material fact. If, after appropriate research or consultation, the Officer concludes that the matter has authoritative support and/or does not result in a material misrepresentation, the Officer need do nothing further. - If the Officer concludes that the financial statements or records could be materially misstated as a result of the supervisor's determination, the Officer should follow the reporting procedures set forth in Section 4 of this Code. 3 D. OBLIGATIONS TO THE INDEPENDENT AUDITOR OF THE COMPANY In dealing with the Company's independent auditor, Officers must be candid and not knowingly misrepresent facts or knowingly fail to disclose material facts, and must respond to specific inquiries and requests by the Company's independent auditor. Officers must not take any action, or direct any person to take any action, to fraudulently influence, coerce, manipulate or mislead the Company's independent auditor in the performance of an audit of the Company's financial statements for the purpose of rendering such financial statements materially misleading. 2. FULL, FAIR, ACCURATE, TIMELY AND UNDERSTANDABLE DISCLOSURE It is the Company's policy to provide full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the SEC and in any other public communications by the Company. The Company has designed and implemented Disclosure Controls and Procedures to carry out this policy. Officers are expected to use their best efforts to promote, facilitate, and prepare full, fair, accurate, timely, and understandable disclosure in all reports and documents that the Company files with, or submits to, the SEC and in any other public communications by the Company. Officers must review the Company's Disclosure Controls and Procedures to ensure they are aware of and carry out their duties and responsibilities in accordance with the Disclosure Controls and Procedures and the public reporting obligations of the Company. Officers are responsible for monitoring the integrity and effectiveness of the Company's Disclosure Controls and Procedures. 3. COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS Officers are expected to know, respect and comply with all laws, rules and regulations applicable to the conduct of the Company's business. If an Officer is in doubt about the legality or propriety of an action, business practice or policy, the Officer should seek advice from the Officer's supervisor or the Company's legal counsel. In the performance of their work, Officers must not knowingly be a party to any illegal activity or engage in acts that are discreditable to the Company. Officers are expected to promote the Company's compliance with applicable laws, rules and regulations. To promote such compliance, Officers may establish and maintain mechanisms to educate employees carrying out the finance and compliance functions of the Company about any applicable laws, rules or regulations that affect the operation of the finance and compliance functions and the Company generally. 4 4. REPORTING OF ILLEGAL OR UNETHICAL BEHAVIOR Officers should promptly report any conduct or actions by an Officer that do not comply with the law or with this Code. Officers and the Company shall adhere to the following reporting procedures: - Any Officer who questions whether a situation, activity or practice is acceptable must immediately report such practice to the Principal Executive Officer of the Company (or to an Officer who is the functional equivalent of this position) or to the Company's legal counsel. The person receiving the report shall consider the matter and respond to the Officer within a reasonable amount of time. - If the Officer is not satisfied with the response of the Principal Executive Officer or counsel, the Officer must report the matter to the Chairman of the Audit Committee. If the Chairman is unavailable, the Officer may report the matter to any other member of the Audit Committee. The person receiving the report shall consider the matter, refer it to the full Audit Committee if he or she deems appropriate, and respond to the Officer within a reasonable amount of time. - If, after receiving a response, the Officer concludes that appropriate action was not taken, he or she should consider any responsibility that may exist to communicate to third parties, such as regulatory authorities or the Company's independent auditor. In this matter, the Officer may wish to consult with his or her own legal counsel. - The Audit Committee and the Company will not be responsible for monitoring or enforcing this reporting of violations policy, but rather each Officer is responsible for self-compliance with this reporting of violations policy. - To the extent possible and as allowed by law, reports will be treated as confidential. - If the Audit Committee determines that an Officer violated this Code, failed to report a known or suspected violation of this Code, or provided intentionally false or malicious information in connection with an alleged violation of this Code, the Company may take disciplinary action against any such Officer to the extent the Audit Committee deems appropriate. No Officer will be disciplined for reporting a concern in good faith. - The Company and the Audit Committee may report violations of the law to the appropriate authorities. 5 5. ACCOUNTABILITY AND APPLICABILITY All Officers will be held accountable for adherence to this Code. On an annual basis, within 30 days of the beginning of each calendar year, each Officer shall certify in writing his or her receipt, familiarity and commitment to compliance with this Code, by signing the Acknowledgment Form (Appendix A to this Code). This Code is applicable to all Officers, regardless of whether such persons are employed by the Company or a third party. If an Officer is aware of a person ("Potential Officer") who may be considered an Officer as defined by this Code, the Officer should inform legal counsel to the Company of such Potential Officer so that a determination can be made regarding whether such Potential Officer has completed or should complete an Acknowledgment Form. However, the absence of such a determination will not be deemed to relieve any person of his or her duties under this Code. 6. DISCLOSURE OF THIS CODE This Code shall be disclosed by at least one of the following methods in the manner prescribed by the SEC, unless otherwise required by law: - by filing a copy of the Code with the SEC; - by posting the text of the Code on the Company's website; or - by providing, without charge, a copy of the Code to any person upon request. 7. WAIVERS Any waiver of this Code, including an implicit waiver, that has been granted to an Officer, may be made only by the Board or a committee of the Board to which such responsibility has been delegated, and must be disclosed by the Company in the manner prescribed by law and as set forth above in Section 6 (Disclosure of this Code). 8. AMENDMENTS This Code may be amended by the affirmative vote of a majority of the Board. Any amendment of this Code, must be disclosed by the Company in the manner prescribed by law and as set forth above in Section 6 (Disclosure of this Code), unless such amendment is deemed to be technical, administrative, or otherwise non-substantive. Any amendments to this Code will be provided to the Officers. Approved by the Board of Directors on September 10, 2003. 6 9/10/03 APPENDIX A MERIDIAN FUND, INC. CERTIFICATION AND ACKNOWLEDGMENT OF RECEIPT OF SUPPLEMENTAL CODE OF ETHICS FOR PRINCIPAL OFFICERS AND SENIOR FINANCIAL OFFICERS I acknowledge and certify that I have received a copy of the Meridian Fund, Inc. Supplemental Code of Ethics for Principal Officers and Senior Financial Officers (the "Code"). I understand and agree that it is my responsibility to read and familiarize myself with the policies and procedures contained in the Code and to abide by those policies and procedures. I acknowledge my commitment to comply with the Code. - ----------------------------------- -------------------------------- Officer Name (Please Print) Officer Signature -------------------------------- Date EX-99.CERT 3 f01325exv99wcert.txt SECTION 302 CERTIFICATION EXHIBIT (a)(2) CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Richard F. Aster, Jr., certify that: 1. I have reviewed this report on Form N-CSR of Meridian Fund, Inc.(R); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 7, 2004 /s/ Richard F. Aster, Jr. --------------------- ------------------------------------------- Richard F. Aster, Jr., Director & Principal Executive Officer (principal executive officer) CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Gregg B. Keeling, certify that: 1. I have reviewed this report on Form N-CSR of Meridian Fund, Inc.(R); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 7, 2004 /s/ Gregg B. Keeling --------------------- ------------------------------------------- Gregg B. Keeling, Principal Financial Officer, Principal Accounting Officer, Treasurer & Secretary (principal financial officer) EX-99.906CERT 4 f01325exv99w906cert.txt SECTION 906 CERTIFICATION EXHIBIT (b) CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Meridian Fund, Inc. (the "Registrant"), hereby certifies, to the best of his knowledge, that the Registrant's report on Form N-CSR for the period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 7, 2004 /s/ Richard F. Aster, Jr. --------------------- ------------------------------------------- Richard F. Aster, Jr., Director & Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Meridian Fund, Inc. (the "Registrant"), hereby certifies, to the best of his knowledge, that the Registrant's report on Form N-CSR for the period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 7, 2004 /s/ Gregg B. Keeling --------------------- ------------------------------------------- Gregg B. Keeling, Principal Financial Officer, Principal Accounting Officer, Treasurer & Secretary -----END PRIVACY-ENHANCED MESSAGE-----