-----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, RFNySP3KqvYcOXvQcnTPBx8//FohtgSrAiot/PnsNTLNK/MVvwRNM+5a7L1lQUTt vpVnpTk89mjtv1i0itiApg== 0000950134-07-004670.txt : 20070302 0000950134-07-004670.hdr.sgml : 20070302 20070302140402 ACCESSION NUMBER: 0000950134-07-004670 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070302 DATE AS OF CHANGE: 20070302 EFFECTIVENESS DATE: 20070302 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-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04014 FILM NUMBER: 07666975 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 0000745467 S000001461 MERIDIAN EQUITY INCOME FUND C000003881 MERIDIAN EQUITY INCOME FUND MEIFX 0000745467 S000001462 MERIDIAN GROWTH FUND C000003882 MERIDIAN GROWTH FUND MERDX 0000745467 S000001463 MERIDIAN VALUE FUND C000003883 MERIDIAN VALUE FUND MVALX N-CSRS 1 f26878nvcsrs.txt FORM N-CSRS 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 Suite 306 Larkspur, CA 94939 ------------------------------------------------------ (Address of principal executive offices) (Zip code) Gregg B. Keeling 60 E. Sir Francis Drake Boulevard Suite 306 Larkspur, CA 94939 ------------------------------------------------------ (Name and address of agent for service) registrant's telephone number, including area code: 415-461-8770 Date of fiscal year end: June 30 Date of reporting period: December 31, 2006 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, 100 F Street, NE, Washington, DC 20549. 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. January 3, 2007 To Our Shareholders: Moderate inflation, stable interest rates and strong corporate profit growth resulted in broad based stock gains in 2006. The S&P 500 index advanced 13.6%, the NASDAQ 9.5% and the Russell 2000, representing smaller companies, did even better with a 17.0% increase. Telecom, energy and utilities were among the best performing sectors. The worst performing groups included healthcare, technology and consumer goods. Interest rates increased somewhat. The yield on the ten-year government bond advanced to 4.71% from 4.39% at the beginning of 2006. Economic growth moderated from an annualized rate in excess of 5% in the first quarter of 2006 to 2% in the third quarter. Home building and related industries is the primary weak spot, while auto sales are soft and industrial production has slowed. Consumer confidence, however, has recently improved and consumer spending is showing continued growth due to stable oil prices, job growth, wage increases and a rising stock market. Our outlook for 2007 is for GDP growth of 2.5%, modestly higher long-term interest rates, stable short-term rates, inflation in the area of 2.0% and corporate profit growth in the mid single- digit range. There are two risks to our outlook. First, a significant decline in housing prices causing trouble in the mortgage market. Second, an international crisis that restricts the supply of energy, pushing up substantially the price of oil and related products. We welcome those new shareholders who joined the Meridian Funds during the quarter and appreciate the continued confidence of our existing shareholders. We wish you a happy, healthy and prosperous New Year. - -s- Richard F. Aster, Jr. Richard F. Aster, Jr. MERIDIAN EQUITY INCOME FUND(R) (MEIFX) The Meridian Equity Income Fund's net asset value per share at December 31, 2006 was $12.24. This represents an increase of 19.6% for the calendar year. The Fund's total return and average annual compound rate of return since inception, January 31, 2005, were 26.7% and 13.2%, respectively. On December 15, 2006, the Equity Income Fund paid a long-term capital gain distribution of $0.04 per share, a short-term capital gain distribution of $0.07 per share and an income dividend of $0.17 per share. The Fund's assets at the close of the quarter were invested 9.8% in cash and 90.2% in stocks. Total net assets were $36,254,620 and there were 570 shareholders. The Meridian Equity Income Fund continues to focus on companies with above average yields and strong financial returns that, in our opinion, have the ability to grow dividends. The portfolio is diversified with 36 positions representing 25 different industry groups. At the end of the fourth quarter, the portfolio's average holding had a 5-year-average return on equity of 19.2% and an average dividend yield of 2.7%; both measures substantially higher than the average S&P 500 stock. The average position had a market capitalization of $23.7 billion, a debt ratio of 31.6% and earnings per share that are expected to grow 11.7% during the next several years. We believe these financial characteristics will lead to positive returns for the fund. During the quarter we purchased shares of Carnival Corp., Federated Investors, 3M, Rohm & Haas and Stanley Works. We sold our shares in Briggs & Stratton, Equity Residential, Eli Lilly, Mellon Financial and Newell Rubbermaid. RPM International, a current holding, manufactures, markets and sells specialty paints, protective coatings, sealants, adhesives and roofing systems for the consumer and industrial markets. Products are sold in 151 countries and territories. RPM has a good long-term track record in growing earnings and dividends, and has solid financial characteristics. The company is expected to grow earnings at 12% during the next 5 years and has a return on equity of 17%. The shares are attractively valued, selling at 13.5 times estimated earnings and yielding over 3%. MERIDIAN GROWTH FUND(R) (MERDX) The Meridian Growth Fund's net asset value per share at December 31, 2006 was $39.24. This represents an increase of 15.8% for the calendar year. The Fund's total return and average annual compound rate of return since inception, August 1, 1984, were 1,777.9% and 14.0%, respectively. On December 15, 2006, the Growth Fund paid a long-term capital gain distribution of $2.79 per share, a short-term capital gain distribution of $0.33 per share and an income dividend of $0.01 per share. The Fund's assets at the close of the quarter were invested 4.7% in cash and cash equivalents and 95.3% in stocks. Total net assets were $1,867,776,872 and there were 74,669 shareholders. 2 The stock market is reasonably valued and we believe earnings growth will be in the 5% to 7% range in 2007. This means stock selection will become more important in achieving above average results as the business cycle becomes mature. Our portfolio turn-over is less than 30%, which means we own stocks, on average, in excess of three years. Our strategy is to research and own, at a reasonable price, growth stocks that can do well for an extended period of time. We continue to focus on small and medium-sized companies that address a market that is conducive to growth and that have an important market share. A high return on capital and capable management are also critical to our investment strategy. We believe this criterion, along with a concern for valuation, is a sound, long-term approach to investing. During the quarter we purchased shares of Apria Healthcare Group, Annaly Capital Management, United Stationers and Winnebago Industries. We sold our shares in American Power Conversion, Getty Images, Host Hotels & Resorts and Mercury Interactive. Cerner Corp, a recent purchase, is the largest supplier of healthcare information technology (HCIT) for physician offices, hospitals, clinics, labs and pharmacies. The company offers the broadest solution set in the industry resulting in 30% market share. The HCIT market is forecasted to grow 8% over the next several years. The healthcare industry is compelled to continue investing in information technology systems to improve efficacy and efficiency. Approximately 25% of hospitals currently have a fully implemented electronic medical record (EMR) system, indicating how under penetrated the market is. Cerner is well positioned to benefit from this trend and, in our opinion, will grow profits at double-digit rates over the next several years. The stock sells at a reasonable valuation given its earnings growth potential, experienced management team and positive long-term investment outlook. MERIDIAN VALUE FUND(R) (MVALX) The Wall Street Journal ranked the Meridian Value Fund the eighteenth best performing stock fund for the ten-year period ending December 31, 2006. This is out of a universe of approximately 2,000 funds. The Meridian Value Fund has outperformed the S&P 500 index seven of the past eight years. The Meridian Value Fund's net asset value per share at December 31, 2006 was $35.60. This represents an increase of 18.7% for the calendar year. The Fund's total return and average compounded annual rate of return since June 30, 1995, were 669.9% and 19.4%, respectively. The comparable period returns for the S&P 500 with dividends were 215.9% and 10.5%, respectively. On December 15, 2006, the Value Fund paid a long-term capital gain distribution of $5.09 per share and an income dividend of $0.41 per share. The Fund's assets at the close of the quarter were invested 5.2% in cash and cash equivalents and 94.8% in stocks. Total net assets were $1,752,686,124 and there were 77,479 shareholders. Our investment strategy is unchanged. We continue to seek out-of-favor companies that have defensible positions in their industries, strong or improving balance sheets, reasonable valuations 3 and good prospects for earnings growth. We believe that over the long-term this strategy will continue to outperform. In our opinion the portfolio is well positioned, reasonably valued and diversified. We hold 64 positions, representing 26 industry groups. We continue to invest in companies of all market capitalizations and our largest areas of concentration are technology, real estate and financials. We currently monitor, but don't yet own, a number of solid companies that sell at reasonable valuations. The outlook for our approach, in our view, is favorable at this time. During the quarter we purchased shares of ABM Industries, Apria Healthcare Group, Avon Products, Blount International, Cincinnati Financial, Helen of Troy, Mine Safety Appliances, Stewart Information Services, Tuesday Morning and Unisys. We sold our shares in The DIRECTV Group, Equity Residential, General Electric, Hot Topic, Intersil, Jean Coutu Group, Manitowoc, Pearson and Symbol Technologies. We recently invested in ABM Industries, a leader in the fragmented janitorial services industry with related services such as parking, security, engineering and lighting. ABM suffered earnings declines due to fewer high margin lighting projects, some cost escalation on fixed price contracts and the underperformance of its SSA security acquisition. The lighting division is now rebounding with new business tied to energy tax credits and efforts to fix the security division are yielding results. With the majority of revenues tied to the office market, ABM should benefit from higher occupancy rates as white collar employment continues to strengthen. We believe that earnings should grow to more than $1.50 per share in 2 to 3 years, up from $0.94 in 2006. ABM is reasonably valued at less than 16.5 times normalized earnings, has a strong balance sheet with $2.70 per share in net cash and pays an attractive 2% dividend yield. MISCELLANEOUS The most cost effective method to purchase Meridian Fund shares is directly through our transfer agent PFPC, instead of through third party platforms offered by brokers that charge transaction fees. This is especially true for long-term investors that make multiple purchases. The Meridian Funds are no-load and there are no commissions charged when purchased directly through our transfer agent, PFPC. We have added a new E-mail Alerts feature to our website at www.meridianfund.com. When you sign up for E-mail Alerts you will receive notification of news items, shareholder reports, SEC filings, and other information regarding the Meridian Funds. 4 MERIDIAN EQUITY INCOME FUND SUMMARY OF PORTFOLIO HOLDINGS DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY CATEGORY (% OF TOTAL NET ASSETS) Industrial Services......................................... 7.7% $ 2,779,028 Brokerage & Money Management................................ 5.1 1,852,644 Industrial Products......................................... 5.1 1,835,048 Electrical Equipment........................................ 5.0 1,823,869 Insurance................................................... 5.0 1,823,618 Diversified Operations...................................... 5.0 1,816,765 Paper/Forest Products....................................... 5.0 1,805,146 Banking..................................................... 5.0 1,802,078 Basic Materials............................................. 4.9 1,794,768 Retail...................................................... 4.8 1,728,652 Telecommunications Services................................. 2.6 938,667 Leisure & Amusement......................................... 2.6 929,498 Furniture & Fixtures........................................ 2.5 927,320 Chemicals................................................... 2.5 925,427 Oil & Gas................................................... 2.5 916,551 Consumer Products........................................... 2.5 913,306 Apparel..................................................... 2.5 906,163 Restaurants................................................. 2.5 905,123 Insurance Brokers........................................... 2.5 904,395 Healthcare Products......................................... 2.5 903,484 Office Supplies............................................. 2.5 901,771 Toys........................................................ 2.5 901,641 Business Services........................................... 2.5 898,273 Business Products........................................... 2.5 894,720 Auto Components............................................. 2.4 885,807 Cash & Other Assets, Less Liabilities....................... 9.8 3,540,858 ----- ----------- 100.0% $36,254,620 ===== ===========
The accompanying notes are an integral part of the financial statements 5 MERIDIAN GROWTH FUND SUMMARY OF PORTFOLIO HOLDINGS DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY CATEGORY (% OF TOTAL NET ASSETS) Retail...................................................... 11.8% $ 219,754,801 Healthcare Services......................................... 8.7 161,821,801 Industrial Services......................................... 7.4 137,763,297 Healthcare Products......................................... 7.0 131,156,130 Banking..................................................... 5.5 102,973,931 Brokerage & Money Management................................ 4.5 83,943,252 Tech-Software............................................... 4.4 83,048,327 Industrial Products......................................... 4.4 82,542,842 Consumer Services........................................... 4.2 79,526,419 Leisure & Amusement......................................... 4.1 76,569,389 Restaurants................................................. 3.7 68,868,059 Cellular Communications..................................... 3.1 57,500,672 Insurance Brokers........................................... 2.7 50,945,150 Business Products........................................... 2.7 50,249,945 Insurance................................................... 2.4 45,858,015 Chemicals................................................... 2.4 45,197,813 Business Services........................................... 2.3 43,185,790 Apparel..................................................... 2.3 42,830,693 Aerospace/Defense........................................... 2.3 42,587,712 Hotels & Lodging............................................ 2.1 39,908,080 Construction................................................ 1.8 33,743,837 Tech-Hardware............................................... 1.7 31,118,305 U.S. Government Obligations................................. 1.6 29,864,732 Wholesale................................................... 1.6 29,760,673 Transportation.............................................. 1.2 21,633,298 Technology.................................................. 1.0 18,418,035 Cash & Other Assets, Less Liabilities....................... 3.1 57,005,874 ----- -------------- 100.0% $1,867,776,872 ===== ==============
The accompanying notes are an integral part of the financial statements 6 MERIDIAN VALUE FUND SUMMARY OF PORTFOLIO HOLDINGS DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY CATEGORY (% OF TOTAL NET ASSETS) Consumer Products........................................... 8.4% $ 146,451,884 Industrial Services......................................... 8.1 141,519,051 Banking..................................................... 7.6 134,006,929 Retail...................................................... 7.3 127,435,452 Technology.................................................. 6.2 107,887,728 Healthcare Products......................................... 5.1 89,912,083 Industrial Products......................................... 5.1 88,713,936 Consumer Products/Food & Beverage........................... 4.6 81,425,996 Insurance................................................... 4.3 74,915,150 Energy...................................................... 3.9 68,759,512 Utilities................................................... 3.9 68,538,784 Real Estate................................................. 3.5 60,614,868 Pharmaceuticals............................................. 3.3 58,374,132 Insurance Brokers........................................... 2.6 45,745,920 Telecommunications Services................................. 2.3 39,402,720 Telecommunications Equipment................................ 2.1 37,628,576 Apparel..................................................... 2.1 37,605,938 Business Products........................................... 2.1 37,252,040 Information Technology Services............................. 2.1 37,108,828 Agriculture................................................. 2.0 35,044,083 Aerospace/Defense........................................... 1.9 33,936,120 Oil & Gas................................................... 1.8 31,981,048 U.S. Government Obligations................................. 1.7 29,864,731 Healthcare Services......................................... 1.5 26,433,400 Brokerage & Money Management................................ 1.4 24,304,710 Basic Materials............................................. 1.2 21,149,230 Restaurants................................................. 0.4 6,165,768 Cash & Other Assets, Less Liabilities....................... 3.5 60,507,507 ----- -------------- 100.0% $1,752,686,124 ===== ==============
The accompanying notes are an integral part of the financial statements 7 MERIDIAN FUND, INC. DISCLOSURE OF FUND EXPENSES FOR THE SIX MONTH PERIOD JULY 1, 2006 TO DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We believe it is important for you to understand the impact of fees and expenses on your investment. All mutual funds have operating expenses. As a shareholder of the Fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a Fund's gross income, directly reduce the investment return of the portfolio. A Fund's expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period and assume reinvestment of all dividends and distributions.
Beginning Ending Expenses Account Value Account Value Expense Paid During 07/01/06 12/31/06 Ratio(1) Period(2) ------------- ------------- -------- ----------- ACTUAL FUND RETURN (See explanation below) Meridian Equity Income Fund............. $1,000.00 $1,132.80 1.25%(4) $6.72 Meridian Growth Fund.................... $1,000.00 $1,098.90 0.85% $4.50 Meridian Value Fund..................... $1,000.00 $1,137.10 1.10% $5.93 HYPOTHETICAL 5% RETURN(3) (See explanation below) Meridian Equity Income Fund............. $1,000.00 $1,018.90 1.25%(4) $6.36 Meridian Growth Fund.................... $1,000.00 $1,020.92 0.85% $4.33 Meridian Value Fund..................... $1,000.00 $1,019.66 1.10% $5.60
(1) Annualized, based on the Fund's most recent fiscal half-year expenses. (2) Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. (3) Before expenses. (4) See note 2 to Financial Statements. 8 MERIDIAN FUND, INC. DISCLOSURE OF FUND EXPENSES (CONTINUED) FOR THE SIX MONTH PERIOD JULY 1, 2006 TO DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The table above illustrates your Fund's costs in two ways: ACTUAL FUND RETURN: This section helps you to estimate the actual expenses that you paid over the period. The "Ending Account Value" shown is derived from the Fund's ACTUAL return, the third column shows the period's annualized expense ratio, and the last column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund at the beginning of the period. You may use the information here, together with your account value, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period." HYPOTHETICAL 5% RETURN: This section is intended to help you compare your Fund's costs with those of other mutual funds. It assumes that the Fund had a return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is NOT the Fund's actual return, the results do not apply to your investment. You can assess your Fund's costs by comparing this 5% Return hypothetical example with the 5% Return hypothetical examples that appear in shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as short-term redemption and exchange fees or sales and service charges you may pay third party broker/dealers. Had these transactional costs been included, your costs would have been higher. Therefore, the hypothetical section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. 9 MERIDIAN EQUITY INCOME FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Shares (Note 1) --------------- --------------- COMMON STOCKS - 90.2% APPAREL - 2.5% VF Corp. .......................... 11,040 $ 906,163 AUTO COMPONENTS - 2.4% Autoliv, Inc. (Sweden)............. 14,690 885,807 BANKING - 5.0% Comerica, Inc...................... 15,350 900,738 Regions Financial Corp............. 24,100 901,340 ----------- 1,802,078 BASIC MATERIALS - 4.9% PPG Industries, Inc................ 13,840 888,666 Rohm & Haas Co..................... 17,725 906,102 ----------- 1,794,768 BROKERAGE & MONEY MANAGEMENT - 5.1% Federated Investors, Inc. Class B.. 26,800 905,304 Waddell & Reed Financial, Inc. Class A.......................... 34,625 947,340 ----------- 1,852,644 BUSINESS PRODUCTS - 2.5% Diebold, Inc....................... 19,200 894,720 BUSINESS SERVICES - 2.5% R. R. Donnelley & Sons Co.......... 25,275 898,273 CHEMICALS - 2.5% RPM International, Inc............. 44,300 925,427 CONSUMER PRODUCTS - 2.5% Reynolds American, Inc. ........... 13,950 913,306 DIVERSIFIED OPERATIONS - 5.0% 3M Co.............................. 11,615 905,157 E.I. du Pont de Nemours & Co....... 18,715 911,608 ----------- 1,816,765 ELECTRICAL EQUIPMENT - 5.0% Emerson Electric Co................ 20,500 903,845 Hubbell, Inc. Class B.............. 20,350 920,024 ----------- 1,823,869 FURNITURE & FIXTURES - 2.5% Leggett & Platt, Inc............... 38,800 927,320 HEALTHCARE PRODUCTS - 2.5% Johnson & Johnson.................. 13,685 903,484 INDUSTRIAL PRODUCTS - 5.1% Bemis Co........................... 26,550 902,169 Stanley Works (The)................ 18,550 932,879 ----------- 1,835,048 INDUSTRIAL SERVICES - 7.7% ABM Industries, Inc................ 42,160 957,454 Genuine Parts Co................... 19,160 908,759 Waste Management, Inc.............. 24,825 912,815 ----------- 2,779,028 INSURANCE - 5.0% Lincoln National Corp.............. 13,825 917,980 Mercury General Corp............... 17,175 905,638 ----------- 1,823,618 INSURANCE BROKERS - 2.5% Willis Group Holdings, Ltd. (United Kingdom)......................... 22,775 904,395 LEISURE & AMUSEMENT - 2.6% Carnival Corp...................... 18,950 929,498 OFFICE SUPPLIES - 2.5% Avery Dennison Corp. .............. 13,275 901,771 OIL & GAS - 2.5% Chevron Corp....................... 12,465 916,551 PAPER/FOREST PRODUCTS - 5.0% Kimberly-Clark Corp................ 13,235 899,318 Sonoco Products Co................. 23,800 905,828 ----------- 1,805,146
The accompanying notes are an integral part of the financial statements. 10 MERIDIAN EQUITY INCOME FUND SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Shares (Note 1) --------------- --------------- COMMON STOCKS (continued) RESTAURANTS - 2.5% IHOP Corp.......................... 17,175 $ 905,123 RETAIL - 4.8% Cato Corp. (The) Class A........... 36,800 843,088 Limited Brands, Inc................ 30,600 885,564 ----------- 1,728,652 TELECOMMUNICATIONS SERVICES - 2.6% BellSouth Corp..................... 19,925 938,667 TOYS - 2.5% Mattel, Inc........................ 39,790 901,641 TOTAL INVESTMENTS - 90.2% (Cost $28,817,435)................. 32,713,762 CASH AND OTHER ASSETS, LESS LIABILITIES - 9.8%.................... 3,540,858 ----------- NET ASSETS - 100.0%..................... $36,254,620 ===========
The accompanying notes are an integral part of the financial statements. 11 MERIDIAN GROWTH FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Shares (Note 1) --------------- --------------- COMMON STOCKS - 95.3% AEROSPACE/DEFENSE - 2.3% BE Aerospace, Inc.*................ 1,658,400 $ 42,587,712 APPAREL - 2.3% Carter's, Inc.*.................... 1,679,635 42,830,693 BANKING - 5.5% Annaly Capital Management, Inc. REIT............................. 1,607,400 22,358,934 SVB Financial Group*............... 797,400 37,174,788 UCBH Holdings, Inc. ............... 2,473,816 43,440,209 -------------- 102,973,931 BROKERAGE & MONEY MANAGEMENT - 4.5% Affiliated Managers Group, Inc.*... 410,045 43,108,031 T. Rowe Price Group, Inc. ......... 932,950 40,835,221 -------------- 83,943,252 BUSINESS PRODUCTS - 2.7% Diebold, Inc. ..................... 1,078,325 50,249,945 BUSINESS SERVICES - 2.3% CSG Systems International, Inc.*... 1,615,630 43,185,790 CELLULAR COMMUNICATIONS - 3.1% American Tower Corp. Class A*...... 1,542,400 57,500,672 CHEMICALS - 2.4% RPM International, Inc. ........... 2,163,610 45,197,813 CONSTRUCTION - 1.8% Granite Construction, Inc. ........ 670,585 33,743,837 CONSUMER SERVICES - 4.2% Regis Corp. ....................... 1,057,000 41,793,780 Rollins, Inc. ..................... 1,706,587 37,732,639 -------------- 79,526,419 HEALTHCARE PRODUCTS - 7.0% C. R. Bard, Inc. .................. 516,975 42,893,416 DENTSPLY International, Inc. ...... 1,526,000 45,551,100 Edwards Lifesciences Corp.*........ 907,985 42,711,614 -------------- 131,156,130 HEALTHCARE SERVICES - 8.7% Apria Healthcare Group, Inc.*...... 1,070,600 28,531,490 Cerner Corp.*...................... 935,230 42,552,965 DaVita, Inc.*...................... 839,100 47,728,008 Laboratory Corp. of America Holdings*........................ 585,400 43,009,338 -------------- 161,821,801 HOTELS & LODGING - 2.1% Las Vegas Sands Corp.*............. 446,000 39,908,080 INDUSTRIAL PRODUCTS - 4.4% Airgas, Inc. ...................... 1,009,675 40,912,031 Dionex Corp.*...................... 734,100 41,630,811 -------------- 82,542,842 INDUSTRIAL SERVICES - 7.4% Allied Waste Industries, Inc.*..... 2,983,025 36,661,377 EGL, Inc.*......................... 863,318 25,709,610 Republic Services, Inc. ........... 961,300 39,096,071 United Rentals, Inc.*.............. 1,427,300 36,296,239 -------------- 137,763,297 INSURANCE - 2.4% Mercury General Corp. ............. 869,676 45,858,015 INSURANCE BROKERS - 2.7% Willis Group Holdings, Ltd. (United Kingdom)......................... 1,282,930 50,945,150 LEISURE & AMUSEMENT - 4.1% Royal Caribbean Cruises, Ltd. ..... 1,149,965 47,585,552 Winnebago Industries............... 880,700 28,983,837 -------------- 76,569,389
The accompanying notes are an integral part of the financial statements. 12 MERIDIAN GROWTH FUND SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Shares (Note 1) --------------- --------------- COMMON STOCKS (continued) RESTAURANTS - 3.7% CBRL Group, Inc. .................. 976,688 $ 43,716,555 Ruby Tuesday, Inc. ................ 916,600 25,151,504 -------------- 68,868,059 RETAIL - 11.8% Bed Bath & Beyond, Inc.*........... 1,078,900 41,106,090 Claire's Stores, Inc. ............. 1,020,340 33,814,068 Foot Locker, Inc. ................. 1,612,825 35,369,252 PetSmart, Inc. .................... 1,341,000 38,701,260 Ross Stores, Inc. ................. 1,323,200 38,769,760 Zale Corp.*........................ 1,134,150 31,994,371 -------------- 219,754,801 TECHNOLOGY - 1.0% Zebra Technologies Corp. Class A*.. 529,406 18,418,035 TECH-HARDWARE - 1.7% Vishay Intertechnology, Inc.*...... 2,298,250 31,118,305 TECH-SOFTWARE - 4.4% Advent Software, Inc.*............. 1,066,438 37,634,597 Cognos. Inc. (Canada)*............. 1,069,565 45,413,730 -------------- 83,048,327 TRANSPORTATION - 1.2% AirTran Holdings, Inc.*............ 1,842,700 21,633,298 WHOLESALE - 1.6% United Stationers, Inc.*........... 637,410 29,760,673 TOTAL COMMON STOCKS - 95.3% (Cost $1,421,630,861)............................... 1,780,906,266 -------------- U.S. GOVERNMENT OBLIGATIONS - 1.6% U.S. Treasury Bill @ 5.037%** due 01/11/07 (Face Value $15,000,000)............................ 14,979,542 U.S. Treasury Bill @ 5.019%** due 03/01/07 (Face Value $15,000,000)............................ 14,885,190 -------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $29,859,329).................................. 29,864,732 -------------- TOTAL INVESTMENTS - 96.9% (Cost $1,451,490,190)............................... 1,810,770,998 CASH AND OTHER ASSETS, LESS LIABILITIES - 3.1%........... 57,005,874 -------------- NET ASSETS - 100.0%...................................... $1,867,776,872 ==============
REIT - Real Estate Investment Trust * Non-income producing securities ** Annualized yield at date of purchase The accompanying notes are an integral part of the financial statements. 13 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Shares (Note 1) --------------- --------------- COMMON STOCKS - 94.8% AEROSPACE/DEFENSE - 1.9% BE Aerospace, Inc.*................ 1,321,500 $ 33,936,120 AGRICULTURE - 2.0% Bunge, Ltd. ....................... 483,300 35,044,083 APPAREL - 2.1% Liz Claiborne, Inc. ............... 865,300 37,605,938 BANKING - 7.6% AMVESCAP PLC ADR (United Kingdom).. 926,900 22,848,085 Annaly Capital Management, Inc. REIT............................. 2,149,200 29,895,372 JPMorgan Chase & Co. .............. 920,000 44,436,000 Regions Financial Corp. ........... 912,000 34,108,800 Stewart Information Services Corp. ........................... 62,700 2,718,672 -------------- 134,006,929 BASIC MATERIALS - 1.2% Barrick Gold Corp. (Canada)........ 688,900 21,149,230 BROKERAGE & MONEY MANAGEMENT - 1.4% Federated Investors, Inc. Class B.. 719,500 24,304,710 BUSINESS PRODUCTS - 2.1% Diebold, Inc. ..................... 799,400 37,252,040 CONSUMER PRODUCTS - 8.4% Avon Products, Inc. ............... 650,200 21,482,608 Blount International, Inc.*........ 443,300 5,966,818 Helen of Troy, Ltd.* (Bermuda)..... 76,700 1,860,742 Newell Rubbermaid, Inc. ........... 1,242,800 35,979,060 Pactiv Corp.*...................... 1,409,800 50,315,762 Universal Corp. ................... 629,400 30,846,894 -------------- 146,451,884 CONSUMER PRODUCTS/FOOD & BEVERAGE - 4.6% Anheuser-Busch Cos., Inc. ......... 794,600 39,094,320 International Flavors & Fragrances, Inc. ............................ 861,100 42,331,676 -------------- 81,425,996 ENERGY - 3.9% El Paso Corp. ..................... 1,174,300 17,943,304 GlobalSanteFe Corp. ............... 286,400 16,834,592 Hanover Compressor Co.*............ 1,046,000 19,758,940 Tidewater, Inc. ................... 294,100 14,222,676 -------------- 68,759,512 HEALTHCARE PRODUCTS - 5.1% Baxter International, Inc. ........ 952,300 44,177,197 Beckman Coulter, Inc. ............. 583,500 34,893,300 Thoratec Corp.*.................... 616,700 10,841,586 -------------- 89,912,083 HEALTHCARE SERVICES - 1.5% AmerisourceBergen Corp. ........... 118,000 5,305,280 Apria Healthcare Group, Inc.*...... 792,800 21,128,120 -------------- 26,433,400 INDUSTRIAL PRODUCTS - 5.1% Cabot Corp. ....................... 457,900 19,950,703 Dionex Corp.*...................... 326,587 18,520,749 Mine Safety Appliances Co. ........ 10,600 388,490 Sealed Air Corp. .................. 540,100 35,063,292 Spartech Corp. .................... 564,100 14,790,702 -------------- 88,713,936 INDUSTRIAL SERVICES - 8.1% ABM Industries, Inc. .............. 420,400 9,547,284 Allied Waste Industries, Inc.*..... 3,716,200 45,672,098 Sysco Corp. ....................... 1,055,200 38,789,152 Waste Management, Inc. ............ 1,292,100 47,510,517 -------------- 141,519,051 INFORMATION TECHNOLOGY SERVICES - 2.1% BearingPoint, Inc.*................ 2,448,400 19,268,908 Unisys Corp.*...................... 2,275,500 17,839,920 -------------- 37,108,828 INSURANCE - 4.3% Cincinnati Financial Corp. ........ 378,600 17,154,366 Everest Re Group, Ltd. (Barbados).. 270,000 26,489,700 XL Capital, Ltd. Class A (Bermuda)........................ 434,200 31,271,084 -------------- 74,915,150
The accompanying notes are an integral part of the financial statements. 14 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Shares (Note 1) --------------- --------------- COMMON STOCKS (continued) INSURANCE BROKERS - 2.6% Willis Group Holdings, Ltd. (United Kingdom)......................... 1,152,000 $ 45,745,920 OIL & GAS - 1.8% Kinder Morgan Management, LLC*..... 700,111 31,981,048 PHARMACEUTICALS - 3.3% MedImmune, Inc.*................... 885,200 28,653,924 Schering-Plough Corp. ............. 1,257,200 29,720,208 -------------- 58,374,132 REAL ESTATE - 3.5% Apartment Investment & Management Co. Class A REIT................. 602,700 33,763,254 Healthcare Realty Trust, Inc. REIT............................. 679,100 26,851,614 -------------- 60,614,868 RESTAURANTS - 0.4% Ruby Tuesday, Inc. ................ 224,700 6,165,768 RETAIL - 7.3% Rent-A-Center, Inc.*............... 980,900 28,946,359 Ross Stores, Inc. ................. 1,073,900 31,465,270 Safeway, Inc. ..................... 1,486,300 51,366,528 Tuesday Morning Corp. ............. 1,006,900 15,657,295 -------------- 127,435,452 TECHNOLOGY - 6.2% Analog Devices, Inc. .............. 550,000 18,078,500 Entegris, Inc.*.................... 2,448,700 26,494,934 Tektronix, Inc. ................... 297,900 8,689,743 Western Digital Corp.*............. 927,300 18,972,558 Xilinx, Inc. ...................... 540,300 12,864,543 Zebra Technologies Corp. Class A*.. 655,000 22,787,450 -------------- 107,887,728 TELECOMMUNICATIONS EQUIPMENT - 2.1% Nokia Oyj ADR (Finland)............ 1,851,800 37,628,576 TELECOMMUNICATIONS SERVICES - 2.3% Alltel Corp. ...................... 651,500 39,402,720 UTILITIES - 3.9% Dynegy, Inc. Class A*.............. 3,235,300 23,423,572 Hawaiian Electric Industries, Inc. ............................ 611,275 16,596,116 TECO Energy, Inc. ................. 1,655,200 28,519,096 -------------- 68,538,784 TOTAL COMMON STOCKS - 94.8% (Cost $1,406,575,080).................................. 1,662,313,886 -------------- U.S. GOVERNMENT OBLIGATIONS - 1.7% U.S. Treasury Bill @ 5.037%** due 01/11/07 (Face Value $15,000,000)............................ 14,979,541 U.S. Treasury Bill @ 5.019%** due 03/01/07 (Face Value $15,000,000)............................ 14,885,190 -------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $29,859,329).................................. 29,864,731 -------------- TOTAL INVESTMENTS - 96.5% (Cost $1,436,434,409)............................... 1,692,178,617 CASH AND OTHER ASSETS, LESS LIABILITIES - 3.5%........... 60,507,507 -------------- NET ASSETS - 100.0%...................................... $1,752,686,124 ==============
ADR - American Depository Receipt REIT - Real Estate Investment Trust * Non-income producing securities ** Annualized yield at date of purchase The accompanying notes are an integral part of the financial statements. 15 MERIDIAN FUND, INC. STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Equity Income Fund Growth Fund Value Fund ----------- -------------- -------------- ASSETS Investments (Cost $28,817,435, $1,451,490,190 and $1,436,434,409, respectively)..................... $32,713,762 $1,810,770,998 $1,692,178,617 Cash................................. 1,442,594 55,150,381 53,437,189 Receivable for: Capital shares purchased.......... 2,077,750 1,326,105 439,543 Dividends......................... 62,311 1,253,627 2,685,207 Interest.......................... 6,442 220,974 186,942 Securities sold................... 916,074 5,436,791 14,039,593 Prepaid expenses..................... 5,331 20,935 19,789 ----------- -------------- -------------- TOTAL ASSETS...................... 37,224,264 1,874,179,811 1,762,986,880 ----------- -------------- -------------- LIABILITIES Payable for: Capital shares sold............... -- 659,825 1,104,638 Securities purchased.............. 909,721 4,173,770 7,170,412 Accrued expenses: Investment advisory fees.......... 26,297 1,204,877 1,492,681 Directors fees.................... -- 6,714 13,947 Other payables and accrued expenses........................ 33,626 357,753 519,078 ----------- -------------- -------------- TOTAL LIABILITIES................. 969,644 6,402,939 10,300,756 ----------- -------------- -------------- NET ASSETS............................. $36,254,620 $1,867,776,872 $1,752,686,124 =========== ============== ============== Capital shares issued and outstanding, par value $0.01 (500,000,000, 500,000,000 and 500,000,000 shares authorized, respectively)............ 2,963,047 47,596,262 49,228,939 =========== ============== ============== Net asset value per share (offering and redemption price).................... $12.24 $39.24 $35.60 =========== ============== ============== Net Assets consist of: Paid in capital...................... 32,014,459 1,463,418,630 1,454,809,287 Accumulated net realized gain........ 312,160 44,641,459 53,504,307 Net unrealized appreciation on investments....................... 3,896,327 359,280,808 255,744,208 Accumulated undistributed net investment income (loss).......... 31,674 435,975 (11,371,678) ----------- -------------- -------------- $36,254,620 $1,867,776,872 $1,752,686,124 =========== ============== ==============
The accompanying notes are an integral part of the financial statements. 16 MERIDIAN FUND, INC. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Equity Income Fund Growth Fund Value Fund ----------- ------------ ------------ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $0, $0 and $18,040, respectively)....................... $ 408,191 $ 6,278,278 $ 13,857,274 Interest............................... 30,699 2,193,568 2,096,805 ---------- ------------ ------------ Total investment income........... 438,890 8,471,846 15,954,079 ---------- ------------ ------------ EXPENSES Investment advisory fees............... 135,922 6,764,076 8,587,004 Transfer agent fees.................... 14,168 287,776 317,584 Reports to shareholders................ -- 151,984 184,184 Custodian fees......................... 4,277 190,185 195,378 Pricing fees........................... 15,824 105,248 115,368 Professional fees...................... 14,720 18,400 27,600 Registration and filing fees........... 6,949 18,252 19,338 Miscellaneous expenses................. 1,907 13,448 15,033 Directors' fees and expenses........... 552 5,888 5,888 ---------- ------------ ------------ Total expenses.................... 194,319 7,555,257 9,467,377 Expenses waived and reimbursed by Advisor (Note 2).................... (11,202) -- -- ---------- ------------ ------------ Net expenses...................... 183,117 7,555,257 9,467,377 ---------- ------------ ------------ Net investment income.................. 255,773 916,589 6,486,702 ---------- ------------ ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments....... 678,273 120,821,338 126,753,521 Net change in unrealized appreciation on investments...................... 2,647,804 45,468,684 86,454,499 ---------- ------------ ------------ Net gain on investments................ 3,326,077 166,290,022 213,208,020 ---------- ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $3,581,850 $167,206,611 $219,694,722 ========== ============ ============
The accompanying notes are an integral part of the financial statements. 17 MERIDIAN FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Equity Income Fund Growth Fund --------------------------------- ---------------------------------- Six Months Ended Six Months Ended December 31, 2006 Year Ended December 31, 2006 Year Ended (Unaudited) June 30, 2006 (Unaudited) June 30, 2006 ----------------- ------------- ----------------- -------------- OPERATIONS Net investment income (loss)..................... $ 255,773 $ 314,806 $ 916,589 $ (502,511) Net realized gain on investments................ 678,273 1,824 120,821,338 69,915,840 Net increase in unrealized appreciation of investments................ 2,647,804 1,235,646 45,468,684 86,155,525 ----------- ----------- -------------- -------------- Net increase in net assets from operations......... 3,581,850 1,552,276 167,206,611 155,568,854 ----------- ----------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS Distributions from ordinary income..................... (437,139) (152,533) (480,614) -- Distributions from net realized capital gains..... (298,676) (12,482) (138,884,292) (35,405,369) ----------- ----------- -------------- -------------- Net distributions.......... (735,815) (165,015) (139,364,906) (35,405,369) ----------- ----------- -------------- -------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales of shares..................... 7,556,897 16,180,179 161,742,862 353,645,898 Reinvestment of distributions.............. 677,132 137,665 117,741,740 29,835,577 Redemption fees.............. 195 681 8,270 22,490 Less: redemptions of shares.. (276,341) (666,928) (128,932,023) (507,856,910) ----------- ----------- -------------- -------------- Increase (decrease) resulting from capital share transactions...... 7,957,883 15,651,597 150,560,849 (124,352,945) ----------- ----------- -------------- -------------- Total increase (decrease) in net assets................. 10,803,918 17,038,858 178,402,554 (4,189,460) ----------- ----------- -------------- -------------- NET ASSETS Beginning of period.......... 25,450,702 8,411,844 1,689,374,318 1,693,563,778 ----------- ----------- -------------- -------------- End of period................ $36,254,620 $25,450,702 $1,867,776,872 $1,689,374,318 =========== =========== ============== ============== Undistributed Net Investment Income at end of period.... $ 31,674 $ 213,040 $ 435,975 $ -- =========== =========== ============== ==============
The accompanying notes are an integral part of the financial statements. 18 MERIDIAN FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value Fund ---------------------------------- Six Months Ended December 31, 2006 Year Ended (Unaudited) June 30, 2006 ----------------- -------------- OPERATIONS Net investment income........................... $ 6,486,702 $ 9,730,158 Net realized gain on investments................ 126,753,521 173,580,142 Net increase (decrease) in unrealized appreciation of investments................... 86,454,499 (37,832,024) -------------- -------------- Net increase in net assets from operations.... 219,694,722 145,478,276 -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS Distributions from ordinary income.............. (17,858,380) (16,078,058) Distributions from net realized capital gains... (223,659,312) (216,870,523) -------------- -------------- Net distributions............................. (241,517,692) (232,948,581) -------------- -------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales of shares................... 79,448,386 200,186,023 Reinvestment of distributions................... 205,961,738 195,949,460 Redemption fees................................. 7,142 45,193 Less: redemptions of shares..................... (197,782,227) (893,314,233) -------------- -------------- Increase (decrease) resulting from capital share transactions......................... 87,635,039 (497,133,557) -------------- -------------- Total increase (decrease) in net assets......... 65,812,069 (584,603,862) -------------- -------------- NET ASSETS Beginning of period............................. 1,686,874,055 2,271,477,917 -------------- -------------- End of period................................... $1,752,686,124 $1,686,874,055 ============== ============== Undistributed Net Investment Income at end of period........................................ $ -- $ -- ============== ==============
The accompanying notes are an integral part of the financial statements. 19 MERIDIAN EQUITY INCOME FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
For the Six For the fiscal Months Ended For the period from December 31, Year Ended January 31, 2005 2006 June 30, through June 30, (Unaudited) 2006 2005+ ------------ ---------- ---------------- Net Asset Value -- Beginning of Period............ $ 11.05 $ 10.10 $ 10.00 ------- ------- ------- Income from Investment Operations - -------------------------------- Net Investment Income*............................ 0.08 0.15 0.06 Net Gains on Investments (both realized and unrealized)..................................... 1.39 0.93 0.04 ------- ------- ------- Total From Investment Operations.................. 1.47 1.08 0.10 ------- ------- ------- Less Distributions - ------------------ Distributions from Net Investment Income.......... (0.17) (0.12) 0.00 Distributions from Net Realized Capital Gains..... (0.11) (0.01) 0.00 ------- ------- ------- Total Distributions............................... (0.28) (0.13) 0.00 ------- ------- ------- Net Asset Value -- End of Period.................. $ 12.24 $ 11.05 $ 10.10 ======= ======= ======= Total Return...................................... 13.28%(1) 10.75% 1.00%(1) ======= ======= ======= Ratios/Supplemental Data - ----------------------- Net Assets, End of Period (000's)................. $36,255 $25,451 $ 8,412 Ratio of Expenses to Average Net Assets Before expense reimbursement.................... 1.33%(2) 1.67% 3.96%(2) After expense reimbursement(3).................. 1.25%(2) 1.25% 1.25%(2) Ratio of Net Investment Income (Loss) to Average Net Assets Before expense reimbursement.................... 1.68%(2) 1.38% (0.60%)(2) After expense reimbursement..................... 1.76%(2) 1.80% 2.11%(2) Portfolio Turnover Rate........................... 26%(1) 60% 25%
* Net Investment Income per share has been computed before adjustments for book/tax differences. + The Fund commenced investment operations on January 31, 2005. (1) Not Annualized. (2) Annualized. (3) See note 2 to Financial Statements. The accompanying notes are an integral part of the financial statements. 20 MERIDIAN GROWTH FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
For the Six Months Ended December 31, For the Fiscal Year Ended June 30, 2006 ---------------------------------------------------------------- (Unaudited) 2006 2005 2004 2003 2002 2001 ------------ ---------- ---------- ---------- -------- -------- -------- Net Asset Value - Beginning of Period............. $ 38.54 $ 35.77 $ 35.38 $ 27.24 $ 28.10 $ 31.30 $ 29.45 ---------- ---------- ---------- ---------- -------- -------- -------- Income from Investment Operations - --------------------------------- Net Investment Income (Loss)*..................... 0.02 (0.01) (0.07) (0.04) (0.08) (0.12) 2.26 Net Gains (Losses) on Investments (both realized and unrealized)................................. 3.81 3.58 1.02 9.10 (0.11) (0.24) 3.89 ---------- ---------- ---------- ---------- -------- -------- -------- Total From Investment Operations.................. 3.83 3.57 0.95 9.06 (0.19) (0.36) 6.15 ---------- ---------- ---------- ---------- -------- -------- -------- Less Distributions - ------------------ Distributions from Net Investment Income.......... (0.01) 0.00 0.00 0.00 (0.06) 0.00 (2.44) Distributions from Net Realized Capital Gains..... (3.12) (0.80) (0.56) (0.92) (0.61) (2.84) (1.86) ---------- ---------- ---------- ---------- -------- -------- -------- Total Distributions............................... (3.13) (0.80) (0.56) (0.92) (0.67) (2.84) (4.30) ---------- ---------- ---------- ---------- -------- -------- -------- Net Asset Value - End of Period................... $ 39.24 $ 38.54 $ 35.77 $ 35.38 $ 27.24 $ 28.10 $ 31.30 ========== ========== ========== ========== ======== ======== ======== Total Return...................................... 9.89%(1) 10.08% 2.65% 33.65% (0.20%) 0.42% 23.34% ========== ========== ========== ========== ======== ======== ======== Ratios/Supplemental Data - ----------------------- Net Assets, End of Period (000's)................. $1,867,777 $1,689,374 $1,693,564 $1,273,302 $448,393 $310,659 $182,117 Ratio of Expenses to Average Net Assets........... 0.85%(2) 0.85% 0.86% 0.88% 0.95% 1.02% 1.04% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... 0.10%(2) (0.03%) (0.21%) (0.21%) (0.47%) (0.62%) (0.26%) Portfolio Turnover Rate........................... 19%(1) 29% 32% 19% 27% 26% 43% For the Fiscal Year Ended June 30, -------------------------------------- 2000 1999 1998 1997 -------- -------- -------- -------- Net Asset Value - Beginning of Period............. $ 26.28 $ 33.26 $ 33.20 $ 32.21 -------- -------- -------- -------- Income from Investment Operations - --------------------------------- Net Investment Income (Loss)*..................... 0.11 0.16 0.27 0.40 Net Gains (Losses) on Investments (both realized and unrealized)................................. 4.99 (0.50) 4.92 3.71 -------- -------- -------- -------- Total From Investment Operations.................. 5.10 (0.34) 5.19 4.11 -------- -------- -------- -------- Less Distributions - ------------------ Distributions from Net Investment Income.......... (0.15) (0.14) (0.32) (0.36) Distributions from Net Realized Capital Gains..... (1.78) (6.50) (4.81) (2.76) -------- -------- -------- -------- Total Distributions............................... (1.93) (6.64) (5.13) (3.12) -------- -------- -------- -------- Net Asset Value - End of Period................... $ 29.45 $ 26.28 $ 33.26 $ 33.20 ======== ======== ======== ======== Total Return...................................... 21.45% 3.05% 16.92% 13.92% ======== ======== ======== ======== Ratios/Supplemental Data - ----------------------- Net Assets, End of Period (000's)................. $140,990 $185,683 $296,803 $353,029 Ratio of Expenses to Average Net Assets........... 1.09% 1.01% 0.95% 0.96% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... 0.31% 0.49% 0.76% 1.23% Portfolio Turnover Rate........................... 28% 51% 38% 37%
* Net Investment Income (Loss) per share has been computed before adjustments for book/tax differences. (1) Not Annualized. (2) Annualized. The accompanying notes are an integral part of the financial statements. 21 MERIDIAN VALUE FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
For the Six Months Ended December 31, For the fiscal year ended June 30, 2006 ---------------------------------------------------------- (Unaudited) 2006 2005 2004 2003 2002 ------------ ---------- ---------- ---------- ---------- ---------- Net Asset Value - Beginning of Period............. $ 36.14 $ 38.11 $ 40.35 $ 31.65 $ 30.34 $ 30.98 ---------- ---------- ---------- ---------- ---------- ---------- Income from Investment Operations - --------------------------------- Net Investment Income (Loss)**.................... 0.17 0.18 0.19 0.00 (0.03) (0.05) Net Gains (Losses) on Investments (both realized and unrealized)................................. 4.79 2.45 2.96 8.70 1.34 (0.51) ---------- ---------- ---------- ---------- ---------- ---------- Total From Investment Operations.................. 4.96 2.63 3.15 8.70 1.31 (0.56) ---------- ---------- ---------- ---------- ---------- ---------- Less Distributions - ------------------ Distributions from Net Investment Income.......... (0.41) (0.32) (0.28) 0.00 0.00 (0.04) Distributions from Net Realized Capital Gains..... (5.09) (4.28) (5.11) 0.00 0.00 (0.04) ---------- ---------- ---------- ---------- ---------- ---------- Total Distributions............................... (5.50) (4.60) (5.39) 0.00 0.00 (0.08) ---------- ---------- ---------- ---------- ---------- ---------- Net Asset Value - End of Period................... $ 35.60 $ 36.14 $ 38.11 $ 40.35 $ 31.65 $ 30.34 ========== ========== ========== ========== ========== ========== Total Return...................................... 13.71%(1) 7.35% 8.00% 27.49% 4.32% (1.78%) ========== ========== ========== ========== ========== ========== Ratios/Supplemental Data - ----------------------- Net Assets, End of Period (000's)................. $1,752,686 $1,686,874 $2,271,478 $2,226,590 $1,456,552 $1,297,207 Ratio of Expenses to Average Net Assets........... 1.10%(2) 1.09% 1.08% 1.09% 1.11% 1.12% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... 0.76%(2) 0.49% 0.48% 0.01% (0.12%) (0.22%) Portfolio Turnover Rate........................... 34%(1) 58% 59% 81% 60% 54% For the fiscal year ended June 30, -------------------------------------------- 2001 2000 1999 1998 1997 -------- ------- ------- ------- ------- Net Asset Value - Beginning of Period............. $ 25.88 $ 22.29 $ 19.30 $ 17.40 $ 15.32 -------- ------- ------- ------- ------- Income from Investment Operations - --------------------------------- Net Investment Income (Loss)**.................... 1.12 0.05 (0.10) (0.19) (0.26) Net Gains (Losses) on Investments (both realized and unrealized)................................. 5.75 5.91 3.56 4.32 3.20 -------- ------- ------- ------- ------- Total From Investment Operations.................. 6.87 5.96 3.46 4.13 2.94 -------- ------- ------- ------- ------- Less Distributions - ------------------ Distributions from Net Investment Income.......... (1.09) 0.00 0.00 0.00 0.00 Distributions from Net Realized Capital Gains..... (0.68) (2.37) (0.47) (2.23) (0.86) -------- ------- ------- ------- ------- Total Distributions............................... (1.77) (2.37) (0.47) (2.23) (0.86) -------- ------- ------- ------- ------- Net Asset Value - End of Period................... $ 30.98 $ 25.88 $ 22.29 $ 19.30 $ 17.40 ======== ======= ======= ======= ======= Total Return...................................... 27.95% 29.63% 18.92% 26.05% 20.55%+ ======== ======= ======= ======= ======= Ratios/Supplemental Data - ----------------------- Net Assets, End of Period (000's)................. $768,559 $87,930 $24,912 $12,196 $ 7,340 Ratio of Expenses to Average Net Assets........... 1.10% 1.41% 1.63% 2.16% 2.51%* Ratio of Net Investment Income (Loss) to Average Net Assets...................................... 0.60% 0.39% (0.65%) (1.35%) (1.96%)* Portfolio Turnover Rate........................... 76% 86% 124% 133% 144%
+ 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 Adviser may 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% and the ratio of net investment income to average net assets would have been a loss of 2.25% for the period ended June 30, 1997. ** Net Investment Income (Loss) per share has been computed before adjustments for book/tax differences. (1) Not Annualized. (2) Annualized. The accompanying notes are an integral part of the financial statements. 22 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: Meridian Fund, Inc., (the "Meridian Funds"), is comprised of the Meridian Equity Income Fund (the "Equity Income Fund"), the Meridian Growth Fund (the "Growth Fund") and the Meridian Value Fund (the "Value Fund"). The Equity Income 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 Equity Income Fund began operations and was registered on January 31, 2005. 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 Equity Income Fund is to seek long- term growth of capital along with income as a component of total return. 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 all of the 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. Securities and other assets for which reliable market quotations are not readily available or for which a significant event has occurred since the time of the most recent market quotation, will be valued at their fair value as determined by the Adviser under the guidelines established by, and under the general supervision and responsibility of, the Funds' Board of Directors. Short-term debt securities with original or remaining maturities in excess of 60 days are valued at the mean of their quoted bid and asked prices. Short-term debt securities with 60 days or less to maturity are amortized to maturity based on their cost. 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 their taxable income to their 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. 23 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 a Fund are charged directly to that 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 and revenue and expenses 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-dividend 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 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. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax basis balances have not been determined as of December 31, 2006. 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. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year end. 24 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. i. NEW ACCOUNTING PRONOUNCEMENTS: In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109" (the "Interpretation"). The Interpretation establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Interpretation is to be implemented no later than June 29, 2007, and is to be applied to all open tax years as of the date of effectiveness. Management has recently begun to evaluate the application of the Interpretation to the Funds, and is not in a position at this time to estimate the significance of its impact, if any, on the Funds' financial statements. In addition, in September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements" (the "Statement"). This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. The Funds have recently begun to evaluate the application of the Fair Value Measurements to the Funds. However, as of December 31, 2006, the Funds do not believe the adoption of SFAS No. 157 will impact the amounts reported in the financial statements. 25 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 December 31, 2006 were as follows: Equity Income Fund..................... 39.49% Growth Fund............................ 1.04% Value Fund............................. 1.02%
The Investment Adviser receives from the Equity Income Fund, as compensation for its services, an annual fee of 1% of the first $10,000,000 of the Equity Income Fund's net assets, 0.90% of the next $20,000,000 of the Equity Income Fund's net assets, 0.80% of the next $20,000,000 of the Equity Income Fund's net assets and 0.70% of the Equity Income 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 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 contractually agreed to waive its fee and reimburse expenses, at least until November 1, 2007, to the extent that total annual operating expenses for the Equity Income Fund exceeds 1.25%. The Investment Adviser has voluntarily agreed to limit the operating expenses of the Growth and Value Funds to 2.50%. With respect to these limits, the Investment Adviser reimbursed the Equity Income Fund $11,203, but did not reimburse the Growth and Value Funds, during the six months ended December 31, 2006. Subject to the approval of the Board of Directors of the Fund, the Fund will repay the Investment Adviser the amount of its reimbursement for the Equity Income Fund for up to three years following the reimbursement to the extent the Equity Income Fund's expenses drop below 1.25%, after giving effect to repayment by the Fund. Either the Fund or the Investment Adviser can modify or terminate this arrangement at any time. 26 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3. CAPITAL SHARES TRANSACTIONS: Transactions in capital shares for the six months ended December 31, 2006 and the year ended June 30, 2006 were as follows:
Equity Income Fund ------------------------------ December 31, June 30, 2006 2006 ------------ --------- Shares sold....................................... 627,147 1,518,742 Shares reinvested on reinvestment of distributions................................... 55,411 12,963 ------- --------- 682,558 1,531,705 Shares redeemed................................... (23,419) (61,043) ------- --------- Net increase...................................... 659,139 1,470,662 ------- ---------
Growth Fund ------------------------------- December 31, June 30, 2006 2006 ------------ ----------- Shares sold...................................... 4,038,324 9,349,992 Shares reinvested on reinvestment of distributions.................................. 2,980,047 805,510 ---------- ----------- 7,018,371 10,155,502 Shares redeemed.................................. (3,254,115) (13,664,615) ---------- ----------- Net increase (decrease).......................... 3,764,256 (3,509,113) ---------- -----------
Value Fund ------------------------------- December 31, June 30, 2006 2006 ------------ ----------- Shares sold...................................... 2,130,700 5,344,976 Shares reinvested on reinvestment of distributions.................................. 5,777,328 5,630,731 ---------- ----------- 7,908,028 10,975,707 Shares redeemed.................................. (5,352,178) (23,900,160) ---------- ----------- Net increase (decrease).......................... 2,555,850 (12,924,453) ---------- -----------
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 in one of the Funds, plus reimbursed expenses and a $1,000 purchase in one of the Funds for each additional Board of Directors meeting attended other than the annual meeting. 27 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. COST OF INVESTMENTS: The cost of investments purchased and the proceeds from sales of investments, excluding short-term obligations, for the six months ended December 31, 2006, were as follows:
Purchases Proceeds from Sales ------------ ------------------- Equity Income Fund............................ $ 12,118,540 $ 7,097,395 Growth Fund................................... 326,450,885 314,588,016 Value Fund.................................... 547,217,117 696,183,360
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, 2006 and June 30, 2005 were as follows: 2006 TAXABLE DISTRIBUTIONS
Net Ordinary Long-Term Total Fund Income Capital Gains Distributions ---- ----------- ------------- ------------- Equity Income Fund....................... $ 165,015 $ -- $ 165,015 Growth Fund.............................. -- 35,405,369 35,405,369 Value Fund............................... 26,262,428 206,686,153 232,948,581
2005 TAXABLE DISTRIBUTIONS
Net Ordinary Long-Term Total Fund Income Capital Gains Distributions ---- ----------- ------------- ------------- Equity Income Fund....................... $ -- $ -- $ -- Growth Fund.............................. 10,056,382 13,674,732 23,731,114 Value Fund............................... 15,996,704 288,644,525 304,641,229
7. FEDERAL INCOME TAXES: The aggregate cost of investments, which are book figures that approximate federal income tax basis, were as follows:
Aggregate Aggregate Gross Gross Unrealized Unrealized Net Unrealized Aggregate Cost Appreciation Depreciation Appreciation -------------- ------------ ------------ -------------- Equity Income Fund............ $ 28,817,435 $ 3,997,561 $ (101,234) $ 3,896,327 Growth Fund................... 1,451,490,190 369,055,170 (9,774,362) 359,280,808 Value Fund.................... 1,436,434,409 261,652,409 (5,908,201) 255,744,208
Post-October losses represent losses realized on investment transactions from November 1, 2005 through June 30, 2006 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, 2006, the Equity Income Fund had Post-October loss deferrals of $6,670. 28 MERIDIAN FUND, INC. ADDITIONAL INFORMATION FOR THE SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. PROXY VOTING RECORD AND PROXY VOTING POLICIES AND PROCEDURES: A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities along with information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30, 2006 is available (i) without charge, upon request, by calling (800) 446-6662; (ii) on our website at http://www.meridianfund.com; and (iii) on the Securities and Exchange Commission ("SEC") website at http://www.sec.gov. 2. INFORMATION ON FORM N-Q: Each Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q within sixty days after the end of the period. The Meridian Fund, Inc. Form N-Q is available on the SEC's website at http://www.sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-732-0330. 29 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 RALPH CECHETTINI MICHAEL S. ERICKSON HERBERT C. KAY JAMES B. GLAVIN MICHAEL STOLPER Directors GREGG B. KEELING Chief Financial Officer Treasurer and Secretary Chief Compliance Officer 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 EQUITY INCOME FUND(R) MERIDIAN GROWTH FUND(R) MERIDIAN VALUE FUND(R) SEMI-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 DECEMBER 31, 2006 ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. 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 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item. ITEM 11. 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable. (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(b) 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., President & CEO (principal executive officer) Date 2/26/07 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., President & CEO (principal executive officer) Date 2/26/07 By (Signature and Title)* /s/ Gregg B. Keeling -------------------------------- Gregg B. Keeling, CFO & Treasurer (principal financial officer) Date 2/26/07 * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 f26878exv99wcert.txt EXHIBIT 99.CERT 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (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 second fiscal quarter of the period covered by this 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: 2/26/07 /s/ Richard F. Aster, Jr. --------------------------------- Richard F. Aster, Jr., President & CEO (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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (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 second fiscal quarter of the period covered by this 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: 2/26/07 /s/ Gregg B. Keeling --------------------------- Gregg B. Keeling, CFO & Treasurer (principal financial officer) EX-99.906CERT 3 f26878exv99w906cert.txt EXHIBIT 99.906CERT CERTIFICATION PURSUANT TO RULE 30A-2(b) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, Richard F. Aster, Jr., President & CEO of Meridian Fund, Inc.(R) (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: 2/26/07 /s/ Richard F. Aster, Jr. -------------------------------- Richard F. Aster, Jr., President & CEO (principal executive officer) I, Gregg B. Keeling, CFO & Treasurer of Meridian Fund, Inc.(R) (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: 2/26/07 /s/ Gregg B. Keeling ------------------------------------- Gregg B. Keeling, CFO & Treasurer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----