N-CSRS 1 f37496nvcsrs.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, 2007 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 2, 2008 To Our Shareholders: Stocks declined in the final quarter of 2007, reflecting increased concerns by investors that the economy will fall into recession during 2008. During the final quarter, the S&P 500 declined 3.8%, the NASDAQ fell 1.8% and the Russell 2000 dropped 4.9%. In general, the stock market was higher for the year overall, however, with the S&P 500 gaining 3.5% while the NASDAQ advanced 9.8%. Small stocks did not fare as well. The Russell 2000 declined 2.7% during the year. The best performing sectors included basic material, oil and gas, and technology stocks. Restaurant, retail, financials and building related stocks were among the worst performing sectors. The yield on the ten-year government bond declined from 4.71% to 4.03% during the year, as quality and safety became more important to investors. The economy grew at a robust 4.9% during the third quarter. Exports improved, helped by the weaker dollar, and consumer spending, manufacturing and job growth held up during the month of November. Job growth slowed in December. The fourth quarter, in our opinion, likely will show positive GDP growth, but at a reduced pace. The housing and sub-prime mortgage markets continue to deteriorate, restricting banks and other credit providers' ability to finance economic growth. Consumer spending is especially vulnerable at this point and higher oil prices don't help. The Federal Reserve Board, realizing the problem, has recently lowered the federal funds rate three times and is providing significant liquidity to the financial markets. We believe the economy will face challenges in 2008, especially during the first half. Our outlook is for flat to slow growth during the first two quarters and then a gradual pickup during the second half of the year. We expect the interest rate on the ten-year government bond to increase modestly and the inflation rate to be in the area of 2.5%. Long-term investment results, history clearly shows, are improved by buying good companies or mutual funds or adding to existing positions during difficult stock market environments. 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, 2007 was $11.42. This represents a decrease of 0.5% for the calendar year. The Fund's total return and average annual compound rate of return since inception, January 31, 2005, were 26.1% and 8.3%, respectively. On December 18, 2007, the Fund paid a long-term capital gain distribution of $0.38 per share, a short-term capital gain distribution of $0.16 per share and an income dividend of $0.22 per share. The Fund's assets at the close of the quarter were invested 5.1% in cash and 94.9% in stocks. Total net assets were $40,232,506 and there were 579 shareholders. Our basic strategy remains unchanged. The Fund continues to seek to invest in companies with above average yields and strong financial returns that, in our opinion, have the ability to grow dividends. We have increased the number of stocks in the portfolio from 36 to 50 during the quarter ended December 2007. This increased diversity in the Fund's holdings, in our opinion, will reduce risk without sacrificing the strong financial characteristics of our companies or the performance prospects for the portfolio. The Fund, as stated above, is diversified with 50 positions representing 43 different industry groups. At the end of the quarter ended December 2007, the portfolio's average holding had a 5- year-average return on equity of 19.0% and an average dividend yield of 3.5%; both measures are substantially higher than the average S&P 500 stock. The average position had a market capitalization of $37.5 billion, a debt ratio of 36.9% and earnings per share that are expected to grow 9.9% during the next several years. We believe these financial characteristics will lead to positive long-term returns for the Fund. During the quarter we purchased shares of Automatic Data Processing, AGL Resources, Anheuser-Busch Cos, CBS Corp. - Class B, Harley-Davidson, International Paper Company, Kraft Foods, Mid-America Apartment Communities, McDonald's Corporation, Norfolk Southern Corp., Newell Rubbermaid, Pfizer, Regions Financial Corp., Sysco Corp., Vulcan Materials Co. and Whirlpool Corp. We sold our positions in Bemis Company and Waddell & Reed Financial. Mattel is the leader in the manufacture and marketing of toys and family products worldwide. The product line consists of various brands including Barbie, Hot Wheels and Matchbox, as well as the well-known Fisher-Price brands. This past year was difficult for the toy industry with modest gains in consumer spending and continuous bad press related to lead-based toys manufactured in China. In spite of these developments, Mattel posted flat earnings and is expected to resume growth during 2008. The shares yield 3.6% and sell at 12.5 times earnings. The company has a return on equity of 22.8%, modest debt and earnings are expected to grow approximately 10.0% in the future. MERIDIAN GROWTH FUND(R) (MERDX) The Meridian Growth Fund's net asset value per share at December 31, 2007 was $37.72. This represents an increase of 5.4% for the calendar year to date. The Fund's total return and average annual compound rate of return since inception, August 1, 1984, were 1,879.3% and 13.6%, respectively. 2 On December 18, 2007, the Fund paid a long-term capital gain distribution of $3.17 per share, a short-term capital gain distribution of $0.41 per share and an income dividend of $0.06 per share. The Fund's assets at the close of the quarter were invested 4.9% in cash and cash equivalents and 95.1% in stocks. Total net assets were $1,869,617,996 and there were 70,521 shareholders. Economic uncertainty, in our opinion, will restrain stock prices in the near future. Valuations are reasonable, interest rates are attractive and stock returns, we believe, will improve as we work through the economic issues referred to above. The shares of financial, consumer and building related companies have discounted much of the trouble and are attractively valued, particularly by historical measures. The fundamentals remain difficult, however. Our portfolio consists of small-and medium-sized growth stocks that we believe, on balance, are positioned to grow earnings faster than the economy in general over the next several years and are reasonably valued. Our largest areas of concentration are health care, financials and technology. During the quarter we purchased shares of Millipore Corp., Pall Corp. and Teradata Corp. We sold our positions in AirTran Holdings, ACI Worldwide, Apria Healthcare, Cognos, CSGS Systems International and United stationers. Rollins, a current holding, is a leading pest and termite control company serving over 1.7 million commercial and residential customers. Pest control is a $7 billion recession-resistant industry growing in the low single digit range. Rollins is the commercial market leader in North America with a 20% market share. The company is growing faster than its peer group with its emphasis on commercial customers, improving retention rates, disciplined acquisitions and its proprietary routing/scheduling system. Rollins has an experienced management team and should be able to continue to grow earnings at a double-digit rate while maintaining a strong balance sheet. The stock sells at a reasonable valuation given its market share position, earnings growth potential and seasoned management team. MERIDIAN VALUE FUND(R) (MVALX) The Meridian Value Fund's net asset value per share at December 31, 2007 was $31.92. This represents an increase of 7.8% for the calendar year to date. The Fund's total return and average compounded annual rate of return since June 30, 1995, were 729.7% and 18.4%, respectively. The comparable period returns for the S&P 500 with dividends were 252.1% and 10.6%, respectively. On December 18, 2007, the Fund paid a long-term capital gain distribution of $4.92 per share, a short-term capital gain distribution of $1.12 per share and an income dividend of $0.35 per share. The Fund's assets at the close of the quarter were invested 5.0% in cash and cash equivalents and 95.0% in stocks. Total net assets were $1,591,827,174 and there were 68,072 shareholders. Our investment strategy remains unchanged. We continue to seek out-of-favor companies that we believe have defensible positions in their industries, strong or improving balance sheets, reasonable valuations and good prospects for earnings growth. It is our position that over the 3 long term this strategy will produce returns that outperform the Fund's benchmark. In our opinion the portfolio is well positioned, reasonably valued and diversified. We hold 58 positions, representing 26 industry groups. We continue to invest in companies of all market capitalizations and our largest areas of concentration are healthcare products, technology and industrial products. The outlook for our approach, in our view, is favorable at this time. During the quarter we purchased shares of Arbitron, Gol Linhas Aereas Inteligentes S.A., Marvel Entertainment and Verizon Communications. We sold our positions in Apria Healthcare Group, Blount International, Diebold, Edge Petroleum and Friedman, Billings, Ramsey Group. Also during the quarter, GlobalSantaFe Corp. was acquired by Transocean Inc, and is currently held in the portfolio. We recently invested in Secure Computing, a leader in the enterprise gateway security market. The company suffered earnings declines due to a dilutive yet strategically important acquisition. With the acquisition now fully integrated, earnings are growing again. Corporations continue to place a premium on internet security to combat viruses, spam and other threats and Secure offers a wide product range with leading technology to address these problems. We believe that revenues have the potential to grow at a double digit rate for the next two years with earnings growing at over 40% per year. The balance sheet is generally strong and should be debt-free by 2010 as the company uses strong free cash flow to pay down acquisition debt. We believe earnings could exceed $0.85 in 3 to 5 years. Current valuation is attractive at 10 times this normalized number and 13 times 2009 earnings estimates of $0.66. MISCELLANEOUS The Meridian Funds are no-load and there are no transaction fees or commissions charged when purchased directly through our transfer agent, PFPC. This can be a very cost-effective method to purchase shares of the Meridian Funds for shareholders who do not need the services of a broker-dealer and for long-term investors that make multiple purchases. 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. THE INFORMATION PROVIDED IN THIS REPORT SHOULD NOT BE CONSIDERED INVESTMENT ADVICE OR A RECOMMENDATION TO PURCHASE OR SELL ANY PARTICULAR SECURITY. THERE IS NO ASSURANCE THAT ANY SECURITIES DISCUSSED HEREIN WILL REMAIN IN A PARTICULAR FUND'S PORTFOLIO AT THE TIME YOU RECEIVE THIS REPORT OR THAT SECURITIES SOLD HAVE NOT BEEN REPURCHASED. SECURITIES DISCUSSED ARE PRESENTED AS ILLUSTRATIONS OF COMPANIES THAT FIT A PARTICULAR FUND'S INVESTMENT STRATEGY AND DO NOT REPRESENT A FUND'S ENTIRE PORTFOLIO AND IN THE AGGREGATE MAY REPRESENT ONLY A SMALL PERCENTAGE OF A FUND'S PORTFOLIO HOLDINGS. IT SHOULD NOT BE ASSUMED THAT ANY OF THE SECURITIES TRANSACTIONS OR HOLDINGS DISCUSSED WERE OR WILL PROVE TO BE PROFITABLE, OR THAT INVESTMENT DECISIONS FUND MANAGEMENT MAKES IN THE FUTURE WILL BE PROFITABLE OR WILL EQUAL THE INVESTMENT PERFORMANCE OF THE SECURITIES DISCUSSED HEREIN. MANAGEMENT'S VIEWS PRESENTED HEREIN AND ANY DISCUSSION OF A PARTICULAR FUND'S PORTFOLIO HOLDINGS OR PERFORMANCE ARE AS OF DECEMBER 31, 2007 AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. 4 MERIDIAN EQUITY INCOME FUND SUMMARY OF PORTFOLIO HOLDINGS DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY CATEGORY (% OF TOTAL NET ASSETS) Oil & Gas-Integrated........................................ 3.9% $ 1,563,606 Chemicals-Specialty......................................... 3.9 1,549,542 Household Appliances........................................ 3.8 1,547,208 Chemicals-Diversified....................................... 3.8 1,523,090 Industrial Conglomerates.................................... 3.8 1,510,707 Electrical Components & Equipment........................... 3.7 1,484,325 Pharmaceuticals............................................. 3.7 1,483,702 Motorcycle Manufacturers.................................... 2.1 831,438 Tobacco..................................................... 2.0 824,830 Leisure Products............................................ 2.0 820,624 REITs-Residential........................................... 2.0 812,250 Air Freight & Logistics..................................... 2.0 810,805 Office Services & Supplies.................................. 2.0 805,337 Semiconductors.............................................. 2.0 803,133 Hotel Resorts & Cruise Lines................................ 2.0 802,600 Media-Broadcasting & Cable TV............................... 2.0 801,150 Banking-Diversified Banks................................... 2.0 798,558 Apparel Retail.............................................. 2.0 794,587 Utilities-Multi............................................. 2.0 794,204 Brewers..................................................... 2.0 790,334 Banking..................................................... 1.9 778,085 Telecommunication Services-Integrated....................... 1.9 776,341 Housewares Specialties...................................... 1.9 773,812 Auto Parts & Equipment...................................... 1.9 773,783 Paper & Packaging........................................... 1.9 767,980 Asset Management & Custody Banks............................ 1.9 767,840 Insurance-Life & Health..................................... 1.9 767,631 Environmental Facilities & Services......................... 1.9 767,418 Construction Materials...................................... 1.9 767,173 Household Products.......................................... 1.9 766,207 Paper & Forest Products..................................... 1.9 751,216 Railroads................................................... 1.9 746,512
5 MERIDIAN EQUITY INCOME FUND SUMMARY OF PORTFOLIO HOLDINGS (CONTINUED) DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Commercial Printing......................................... 1.8 744,044 Data Processing & Outsourced Services....................... 1.8 743,651 Restaurants................................................. 1.8 736,375 Food & Meats-Packaged....................................... 1.8 730,912 Insurance-Property & Casualty............................... 1.8 729,467 Insurance Brokers........................................... 1.8 726,176 Distributors................................................ 1.8 716,955 Food Distributors........................................... 1.8 708,467 Apparel Accessories & Luxury Goods.......................... 1.8 707,198 Computer Hardware........................................... 1.7 686,101 Household-Home Furnishings.................................. 1.5 607,348 Cash & Other Assets, Less Liabilities....................... 5.1 2,039,784 ----- ----------- 100.0% $40,232,506 ===== ===========
The accompanying notes are an integral part of the financial statements 6 MERIDIAN GROWTH FUND SUMMARY OF PORTFOLIO HOLDINGS DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY CATEGORY (% OF TOTAL NET ASSETS) Tech-Software............................................... 9.8% $ 182,863,727 Healthcare Products......................................... 9.5 177,433,221 Technology.................................................. 7.2 134,192,494 Banking..................................................... 6.7 125,617,775 Healthcare Services......................................... 6.3 117,737,449 Retail...................................................... 5.5 102,706,305 Industrial Products......................................... 5.3 99,707,474 Brokerage & Money Management................................ 5.1 94,873,598 Insurance Brokers........................................... 4.8 90,277,090 Leisure & Amusement......................................... 3.5 66,478,903 U.S. Government Obligations................................. 3.5 64,792,322 Aerospace/Defense........................................... 3.1 57,417,660 Cellular Communications..................................... 2.9 54,570,600 Business Services........................................... 2.8 51,772,108 Healthcare Information Services............................. 2.6 49,323,492 Consumer Services........................................... 2.6 48,222,336 Insurance-Property & Casualty............................... 2.5 47,906,063 Energy...................................................... 2.5 46,958,940 Restaurants................................................. 2.4 45,125,405 Chemicals-Specialty......................................... 2.4 44,503,893 Industrial Services......................................... 2.0 37,092,494 Construction................................................ 2.0 36,798,135 Computer Hardware........................................... 1.8 34,292,759 Hotels & Lodging............................................ 1.8 33,130,575 Cash & Other Assets, Less Liabilities....................... 1.4 25,823,178 ----- -------------- 100.0% $1,869,617,996 ===== ==============
The accompanying notes are an integral part of the financial statements 7 MERIDIAN VALUE FUND SUMMARY OF PORTFOLIO HOLDINGS DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PORTFOLIO HOLDINGS BY CATEGORY (% OF TOTAL NET ASSETS) Healthcare Products......................................... 11.7% $ 186,209,904 Industrial Products......................................... 10.3 163,320,511 Consumer Products........................................... 8.7 138,065,495 Technology.................................................. 7.4 117,693,180 Energy...................................................... 7.3 116,037,245 Utilities................................................... 6.2 98,637,690 U.S. Government Obligations................................. 4.0 64,694,860 Banking..................................................... 4.0 63,892,645 Pharmaceuticals............................................. 3.8 60,976,180 Media....................................................... 3.6 56,881,452 Apparel..................................................... 3.4 54,269,116 Semiconductors.............................................. 2.9 46,868,280 Brewers..................................................... 2.9 45,645,714 Aerospace/Defense........................................... 2.6 40,563,720 Chemicals-Specialty......................................... 2.2 35,510,314 Information Technology Services............................. 2.0 32,628,376 Leisure & Amusement......................................... 2.0 30,996,873 Business Services........................................... 1.9 30,076,795 Agriculture................................................. 1.9 30,007,286 Telecommunications Services................................. 1.8 28,149,467 Telecommunications Equipment................................ 1.7 26,638,821 Insurance Brokers........................................... 1.6 25,967,683 Education................................................... 1.6 25,873,540 Oil & Gas-Integrated........................................ 1.0 16,587,639 Asset Management & Custody Banks............................ 0.9 13,726,860 Tech-Software............................................... 0.7 11,269,773 Industrial Services......................................... 0.5 8,571,956 Transportation-Airlines..................................... 0.4 6,703,882 Cash & Other Assets, Less Liabilities....................... 1.0 15,361,917 ----- -------------- 100.0% $1,591,827,174 ===== ==============
The accompanying notes are an integral part of the financial statements 8 MERIDIAN FUND, INC. DISCLOSURE OF FUND EXPENSES FOR THE SIX MONTH PERIOD JULY 1, 2007 TO DECEMBER 31, 2007 (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 07/01/07 12/31/07 RATIO(1) PERIOD(2) ------------- ------------- -------- ----------- ACTUAL FUND RETURN (See explanation below) Meridian Equity Income Fund............. $1,000.00 $ 926.80 1.25%(4) $6.05 Meridian Growth Fund.................... $1,000.00 $ 967.70 0.83% $4.11 Meridian Value Fund..................... $1,000.00 $ 989.00 1.08% $5.40 HYPOTHETICAL 5% RETURN(3) (See explanation below) Meridian Equity Income Fund............. $1,000.00 $1,018.85 1.25%(4) $6.34 Meridian Growth Fund.................... $1,000.00 $1,020.96 0.83% $4.22 Meridian Value Fund..................... $1,000.00 $1,019.71 1.08% $5.48
(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 366. (3) Before expenses. (4) See note 2 to Financial Statements. 9 MERIDIAN FUND, INC. DISCLOSURE OF FUND EXPENSES (CONTINUED) FOR THE SIX MONTH PERIOD JULY 1, 2007 TO DECEMBER 31, 2007 (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. 10 MERIDIAN EQUITY INCOME FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Shares Value --------------- --------------- COMMON STOCKS - 94.9% AIR FREIGHT & LOGISTICS - 2.0% United Parcel Service, Inc. Class B................................ 11,465 $ 810,805 APPAREL ACCESSORIES & LUXURY GOODS - 1.8% VF Corp. .......................... 10,300 707,198 APPAREL RETAIL - 2.0% Limited Brands, Inc. .............. 41,975 794,587 ASSET MANAGEMENT & CUSTODY BANKS - 1.9% Federated Investors, Inc. Class B.. 18,655 767,840 AUTO PARTS & EQUIPMENT - 1.9% Autoliv, Inc. (Sweden)............. 14,680 773,783 BANKING - 1.9% Regions Financial Corp. ........... 32,900 778,085 BANKING-DIVERSIFIED BANKS - 2.0% Comerica, Inc. .................... 18,345 798,558 BREWERS - 2.0% Anheuser-Busch Cos., Inc. ......... 15,100 790,334 CHEMICALS-DIVERSIFIED - 3.8% E.I. du Pont de Nemours & Co. ..... 16,880 744,239 PPG Industries, Inc. .............. 11,090 778,851 ------------- 1,523,090 CHEMICALS-SPECIALTY - 3.9% RPM International, Inc. ........... 38,425 780,027 Rohm & Haas Co. ................... 14,500 769,515 ------------- 1,549,542 COMMERCIAL PRINTING - 1.8% R. R. Donnelley & Sons Co. ........ 19,715 744,044 COMPUTER HARDWARE - 1.7% Diebold, Inc. ..................... 23,675 686,101 CONSTRUCTION MATERIALS - 1.9% Vulcan Materials Co. .............. 9,700 767,173 Shares Value --------------- --------------- DATA PROCESSING & OUTSOURCED SERVICES - 1.8% Automatic Data Processing, Inc. ... 16,700 743,651 DISTRIBUTORS - 1.8% Genuine Parts Co. ................. 15,485 716,955 ELECTRICAL COMPONENTS & EQUIPMENT - 3.7% Emerson Electric Co. .............. 13,675 774,825 Hubbell, Inc. Class B.............. 13,750 709,500 ------------- 1,484,325 ENVIRONMENTAL FACILITIES & SERVICES - 1.9% Waste Management, Inc. ............ 23,490 767,418 FOOD DISTRIBUTORS - 1.8% SYSCO Corp. ....................... 22,700 708,467 FOOD & MEATS-PACKAGED - 1.8% Kraft Foods, Inc. Class A.......... 22,400 730,912 HOTEL RESORTS & CRUISE LINES - 2.0% Carnival Corp. .................... 18,040 802,600 HOUSEHOLD APPLIANCES - 3.8% Stanley Works (The)................ 15,750 763,560 Whirlpool Corp. ................... 9,600 783,648 ------------- 1,547,208 HOUSEHOLD-HOME FURNISHINGS - 1.5% Leggett & Platt, Inc. ............. 34,825 607,348 HOUSEHOLD PRODUCTS - 1.9% Kimberly-Clark Corp. .............. 11,050 766,207 HOUSEWARES SPECIALTIES - 1.9% Newell Rubbermaid, Inc. ........... 29,900 773,812 INDUSTRIAL CONGLOMERATES - 3.8% 3M Co. ............................ 9,040 762,253 Eaton Corp. ....................... 7,720 748,454 ------------- 1,510,707 INSURANCE BROKERS - 1.8% Willis Group Holdings, Ltd. (United Kingdom)......................... 19,125 726,176 INSURANCE-LIFE & HEALTH - 1.9% Lincoln National Corp. ............ 13,185 767,631
The accompanying notes are an integral part of the financial statements. 11 MERIDIAN EQUITY INCOME FUND SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Shares Value --------------- --------------- COMMON STOCKS (continued) INSURANCE-PROPERTY & CASUALTY - 1.8% Mercury General Corp. ............. 14,645 $ 729,467 LEISURE PRODUCTS - 2.0% Mattel, Inc. ...................... 43,100 820,624 MEDIA-BROADCASTING & CABLE TV - 2.0% CBS Corp. - Class B................ 29,400 801,150 MOTORCYCLE MANUFACTURERS - 2.1% Harley-Davidson, Inc. ............. 17,800 831,438 OFFICE SERVICES & SUPPLIES - 2.0% Avery Dennison Corp. .............. 15,155 805,337 OIL & GAS-INTEGRATED - 3.9% BP plc ADR (United Kingdom)........ 10,400 760,968 Chevron Corp. ..................... 8,600 802,638 ------------- 1,563,606 PAPER & FOREST PRODUCTS - 1.9% International Paper Co. ........... 23,200 751,216 PAPER & PACKAGING - 1.9% Sonoco Products Co. ............... 23,500 767,980 PHARMACEUTICALS - 3.7% Johnson & Johnson.................. 11,135 742,704 Pfizer, Inc. ...................... 32,600 740,998 ------------- 1,483,702 RAILROADS - 1.9% Norfolk Southern Corp. ............ 14,800 746,512 REITs-RESIDENTIAL - 2.0% Mid-America Apartment Communities, Inc. REIT........................ 19,000 812,250 RESTAURANTS - 1.8% McDonald's Corp. .................. 12,500 736,375 SEMICONDUCTORS - 2.0% Intel Corp. ....................... 30,125 803,133 TELECOMMUNICATION SERVICES-INTEGRATED - 1.9% AT&T, Inc. ........................ 18,680 776,341 TOBACCO - 2.0% Reynolds American, Inc. ........... 12,505 824,830 UTILITIES-MULTI - 2.0% AGL Resources, Inc. ............... 21,100 794,204 TOTAL INVESTMENTS - 94.9% (Cost $37,969,392)................. 38,192,722 CASH AND OTHER ASSETS, LESS LIABILITIES - 5.1%................................ 2,039,784 ------------- NET ASSETS - 100.0%..................... $40,232,506 =============
-------- ADR - American Depository Receipt REIT - Real Estate Investment Trust The accompanying notes are an integral part of the financial statements. 12 MERIDIAN GROWTH FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Shares Value ------------------ ------------------ COMMON STOCKS - 95.1% AEROSPACE/DEFENSE - 3.1% BE Aerospace, Inc.*................ 1,085,400 $ 57,417,660 BANKING - 6.7% Annaly Capital Management, Inc. REIT............................. 2,487,000 45,213,660 SVB Financial Group*............... 872,200 43,958,880 UCBH Holdings, Inc. ............... 2,573,816 36,445,235 ---------------- 125,617,775 BROKERAGE & MONEY MANAGEMENT - 5.1% Affiliated Managers Group, Inc.*... 374,900 44,035,754 T. Rowe Price Group, Inc. ......... 835,050 50,837,844 ---------------- 94,873,598 BUSINESS SERVICES - 2.8% Global Payments, Inc. ............. 1,112,900 51,772,108 CELLULAR COMMUNICATIONS - 2.9% American Tower Corp. Class A*...... 1,281,000 54,570,600 CHEMICALS-SPECIALTY - 2.4% RPM International, Inc. ........... 2,192,310 44,503,893 COMPUTER HARDWARE - 1.8% Diebold, Inc. ..................... 1,183,325 34,292,759 CONSTRUCTION - 2.0% Granite Construction, Inc. ........ 1,017,085 36,798,135 CONSUMER SERVICES - 2.6% Rollins, Inc. ..................... 2,511,580 48,222,336 ENERGY - 2.5% FMC Technologies, Inc.*............ 828,200 46,958,940 HEALTHCARE INFORMATION SERVICES - 2.6% Cerner Corp.*...................... 874,530 49,323,492 HEALTHCARE PRODUCTS - 9.5% C. R. Bard, Inc. .................. 694,275 65,817,270 DENTSPLY International, Inc. ...... 1,447,200 65,152,944 Edwards Lifesciences Corp.*........ 1,010,285 46,463,007 ---------------- 177,433,221 Shares Value ------------------ ------------------ HEALTHCARE SERVICES - 6.3% DaVita, Inc.*...................... 737,700 41,569,395 Laboratory Corp. of America Holdings*........................ 514,800 38,882,844 Millipore Corp.*................... 509,500 37,285,210 ---------------- 117,737,449 HOTELS & LODGING - 1.8% Las Vegas Sands Corp.*............. 321,500 33,130,575 INDUSTRIAL PRODUCTS - 5.3% Airgas, Inc. ...................... 476,967 24,854,750 Dionex Corp.*...................... 627,800 52,019,508 Pall Corp. ........................ 566,300 22,833,216 ---------------- 99,707,474 INDUSTRIAL SERVICES - 2.0% Allied Waste Industries, Inc.*..... 3,365,925 37,092,494 INSURANCE BROKERS - 4.8% Brown & Brown, Inc. ............... 1,860,950 43,732,325 Willis Group Holdings, Ltd. (United Kingdom)......................... 1,225,830 46,544,765 ---------------- 90,277,090 INSURANCE-PROPERTY & CASUALTY - 2.5% Mercury General Corp. ............. 961,776 47,906,063 LEISURE & AMUSEMENT - 3.5% Royal Caribbean Cruises, Ltd. ..... 1,191,835 50,581,477 Winnebago Industries, Inc. ........ 756,300 15,897,426 ---------------- 66,478,903 RESTAURANTS - 2.4% CBRL Group, Inc. .................. 525,188 17,010,839 Darden Restaurants, Inc. .......... 1,014,600 28,114,566 ---------------- 45,125,405 RETAIL - 5.5% Bed Bath & Beyond, Inc.*........... 652,000 19,162,280 PetSmart, Inc. .................... 1,750,200 41,182,206 Ross Stores, Inc. ................. 1,656,700 42,361,819 ---------------- 102,706,305
The accompanying notes are an integral part of the financial statements. 13 MERIDIAN GROWTH FUND SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Shares Value ------------------ ------------------ COMMON STOCKS (continued) TECHNOLOGY - 7.2% International Rectifier Corp.*..... 1,397,900 $ 47,486,663 Network Appliance, Inc.*........... 1,743,500 43,517,760 Zebra Technologies Corp. Class A*.. 1,244,613 43,188,071 ---------------- 134,192,494 TECH-SOFTWARE - 9.8% Advent Software, Inc.*............. 1,015,538 54,940,606 BEA Systems, Inc.*................. 2,858,300 45,103,974 MICROS Systems, Inc.*.............. 565,700 39,689,512 Teradata Corp.*.................... 1,573,500 43,129,635 ---------------- 182,863,727 TOTAL COMMON STOCKS - 95.1% (Cost $1,465,624,536).............. 1,779,002,496 ---------------- U.S. GOVERNMENT OBLIGATIONS - 3.5% U.S. Treasury Bill @ 4.056%** due 01/10/08 (Face Value $30,000,000).............................. 29,970,375 U.S. Treasury Bill @ 3.276%** due 02/07/08 (Face Value $20,000,000).............................. 19,934,222 U.S. Treasury Bill @ 3.124%** due 03/27/08 (Face Value $15,000,000).............................. 14,887,725 ---------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $64,795,306)................. 64,792,322 ---------------- TOTAL INVESTMENTS - 98.6% (Cost $1,530,419,842).............. 1,843,794,818 CASH AND OTHER ASSETS, LESS LIABILITIES - 1.4%............. 25,823,178 ---------------- NET ASSETS - 100.0%........................................ $1,869,617,996 ================
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. 14 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Shares Value --------------- --------------- COMMON STOCKS - 95.0% AEROSPACE/DEFENSE - 2.6% BE Aerospace, Inc.*................ 766,800 $ 40,563,720 AGRICULTURE - 1.9% Bunge, Ltd. ....................... 176,600 20,558,006 UAP Holding Corp. ................. 244,800 9,449,280 -------------- 30,007,286 APPAREL - 3.4% Hanesbrands, Inc.*................. 634,800 17,247,516 Liz Claiborne, Inc. ............... 742,000 15,099,700 Quiksilver, Inc.*.................. 2,555,000 21,921,900 -------------- 54,269,116 ASSET MANAGEMENT & CUSTODY BANKS - 0.9% Federated Investors, Inc. Class B.. 333,500 13,726,860 BANKING - 4.0% Annaly Capital Management, Inc. REIT............................. 2,336,500 42,477,570 Regions Financial Corp. ........... 905,500 21,415,075 -------------- 63,892,645 BREWERS - 2.9% Anheuser-Busch Cos., Inc. ......... 872,100 45,645,714 BUSINESS SERVICES - 1.9% Hewitt Associates, Inc. Class A*... 785,500 30,076,795 CHEMICALS-SPECIALTY - 2.2% International Flavors & Fragrances, Inc. ............................ 737,800 35,510,314 CONSUMER PRODUCTS - 8.7% Avon Products, Inc. ............... 1,289,200 50,962,076 Briggs & Stratton Corp. ........... 838,100 18,991,346 Electronic Arts, Inc.*............. 572,000 33,410,520 Pactiv Corp.*...................... 1,303,100 34,701,553 -------------- 138,065,495 EDUCATION - 1.6% Corinthian Colleges, Inc.*......... 1,680,100 25,873,540 ENERGY - 7.3% Exterran Holdings, Inc.*........... 283,650 23,202,570 International Coal Group, Inc.*.... 4,975,300 26,667,608 Kinder Morgan Management, LLC*..... 822,612 43,549,081 Transocean, Inc.*.................. 158,002 22,617,986 -------------- 116,037,245 HEALTHCARE PRODUCTS - 11.7% Abbott Laboratories................ 575,200 32,297,480 American Medical Systems Holdings, Inc.*............................ 1,661,400 24,023,844 Baxter International, Inc. ........ 719,600 41,772,780 Beckman Coulter, Inc. ............. 684,100 49,802,480 Cooper Cos., Inc. (The)............ 190,100 7,223,800 STERIS Corp. ...................... 1,078,000 31,089,520 -------------- 186,209,904 INDUSTRIAL PRODUCTS - 10.3% Albany International Corp. Class A................................ 842,900 31,271,590 Cabot Corp. ....................... 714,600 23,824,764 Chemtura Corp. .................... 3,236,000 25,240,800 Mine Safety Appliances Co. ........ 453,350 23,515,265 Schnitzer Steel Industries, Inc. Class A.......................... 349,000 24,126,370 Sealed Air Corp. .................. 1,527,300 35,341,722 -------------- 163,320,511 INDUSTRIAL SERVICES - 0.5% ABM Industries, Inc. .............. 420,400 8,571,956 INFORMATION TECHNOLOGY SERVICES - 2.0% CACI International, Inc. Class A*.. 728,800 32,628,376 INSURANCE BROKERS - 1.6% Willis Group Holdings, Ltd. (United Kingdom)......................... 683,900 25,967,683 LEISURE & AMUSEMENT - 2.0% Polaris Industries, Inc. .......... 364,300 17,402,611 Shuffle Master, Inc.*.............. 1,133,800 13,594,262 -------------- 30,996,873 MEDIA - 3.6% Arbitron, Inc. .................... 322,400 13,402,168 Grupo Televisa SA ADR (Mexico)..... 732,000 17,399,640
The accompanying notes are an integral part of the financial statements. 15 MERIDIAN VALUE FUND SCHEDULE OF INVESTMENTS (CONTINUED) DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Shares Value --------------- --------------- COMMON STOCKS (continued) Marvel Entertainment, Inc.*........ 976,400 $ 26,079,644 -------------- 56,881,452 OIL & GAS-INTEGRATED - 1.0% BP plc ADR (United Kingdom)........ 226,700 16,587,639 PHARMACEUTICALS - 3.8% Charles River Laboratories International, Inc.*............. 577,900 38,025,820 Schering-Plough Corp. ............. 861,500 22,950,360 -------------- 60,976,180 SEMICONDUCTORS - 2.9% Intel Corp. ....................... 1,758,000 46,868,280 TECHNOLOGY - 7.4% Avid Technology, Inc.*............. 740,300 20,980,102 Entegris, Inc.*.................... 2,215,900 19,123,217 Intermec, Inc.*.................... 1,167,200 23,705,832 Western Digital Corp.*............. 1,025,900 30,992,439 Zebra Technologies Corp. Class A*.. 659,700 22,891,590 -------------- 117,693,180 TECH-SOFTWARE - 0.7% Cognos, Inc.* (Canada)............. 52,900 3,045,453 Secure Computing Corp.*............ 856,700 8,224,320 -------------- 11,269,773 TELECOMMUNICATIONS EQUIPMENT - 1.7% Nokia Oyj ADR (Finland)............ 693,900 26,638,821 TELECOMMUNICATIONS SERVICES - 1.8% Verizon Communications, Inc. ...... 644,300 28,149,467 TRANSPORTATION-AIRLINES - 0.4% GOL Linhas Aereas Inteligentes SA ADR (Brazil)..................... 270,100 6,703,882 UTILITIES - 6.2% Dynegy, Inc. Class A*.............. 4,438,300 31,689,462 Hawaiian Electric Industries, Inc. ............................ 1,285,875 29,279,374 Progress Energy, Inc. ............. 777,800 37,668,854 -------------- 98,637,690 TOTAL COMMON STOCKS - 95.0% (Cost $1,389,592,551).................................. 1,511,770,397 -------------- U.S. GOVERNMENT OBLIGATIONS - 4.0% U.S. Treasury Bill @ 4.056%** due 01/10/08 (Face Value $15,000,000)............................ 14,985,188 U.S. Treasury Bill @ 3.276%** due 02/07/08 (Face Value $20,000,000)............................ 19,934,222 U.S. Treasury Bill @ 3.124%** due 03/27/08 (Face Value $30,000,000)............................ 29,775,450 -------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $64,700,798).................................. 64,694,860 -------------- TOTAL INVESTMENTS - 99.0% (Cost $1,454,293,349)............................... 1,576,465,257 CASH AND OTHER ASSETS, LESS LIABILITIES - 1.0%........... 15,361,917 -------------- NET ASSETS - 100.0%...................................... $1,591,827,174 ==============
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. 16 MERIDIAN FUND, INC. STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Equity Income Fund Growth Fund Value Fund ----------- -------------- -------------- ASSETS Investments (Cost $37,969,392, $1,530,419,842 and $1,454,293,349, respectively)..................... $38,192,722 $1,843,794,818 $1,576,465,257 Cash................................. 1,811,796 17,791,182 18,283,462 Receivable for: Capital shares purchased.......... 400 814,756 993,322 Securities sold................... 998,562 15,076,317 14,959,971 Dividends......................... 67,610 2,023,721 1,952,370 Interest.......................... 4,987 101,836 119,010 Prepaid expenses..................... 3,121 18,718 16,080 ----------- -------------- -------------- TOTAL ASSETS...................... 41,079,198 1,879,621,348 1,612,789,472 ----------- -------------- -------------- LIABILITIES Payable for: Capital shares sold............... -- 2,332,074 2,484,101 Distributions..................... -- -- 745 Securities purchased.............. 776,341 6,239,116 16,919,906 Accrued expenses: Investment advisory fees.......... 44,972 1,235,675 1,387,222 Pricing fees...................... 6,425 37,965 37,331 Directors' fees................... -- 5,381 14,325 Other payables and accrued expenses........................ 18,954 153,141 118,668 ----------- -------------- -------------- TOTAL LIABILITIES................. 846,692 10,003,352 20,962,298 ----------- -------------- -------------- NET ASSETS............................. $40,232,506 $1,869,617,996 $1,591,827,174 =========== ============== ============== Capital shares issued and outstanding, par value $0.01 (500,000,000, 500,000,000 and 500,000,000 shares authorized, respectively)............ 3,523,512 49,569,084 49,866,379 =========== ============== ============== Net asset value per share (offering and redemption price).................... $11.42 $37.72 $31.92 =========== ============== ============== Net Assets consist of: Paid in capital...................... 38,886,616 1,529,933,928 1,434,172,682 Accumulated net realized gain........ 1,122,430 26,148,152 47,021,356 Net unrealized appreciation on investments....................... 223,330 313,374,976 122,171,908 Accumulated undistributed net investment income (loss).......... 130 160,940 (11,538,772) ----------- -------------- -------------- $40,232,506 $1,869,617,996 $1,591,827,174 =========== ============== ==============
The accompanying notes are an integral part of the financial statements. 17 MERIDIAN FUND, INC. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Equity Income Fund Growth Fund Value Fund ----------- ------------- ------------- INVESTMENT INCOME Dividends............................ $ 622,260 $ 7,522,426 $ 10,816,853 Interest............................. 40,311 2,058,983 1,890,633 ----------- ------------- ------------- Total investment income......... 662,571 9,581,409 12,707,486 ----------- ------------- ------------- EXPENSES Investment advisory fees............. 188,630 7,617,475 8,620,266 Custodian fees....................... 5,043 171,451 162,509 Directors' fees and expenses......... 552 5,888 5,888 Pricing fees......................... 19,780 123,280 114,448 Professional fees.................... 14,720 53,176 35,144 Registration and filing fees......... 10,585 13,991 14,801 Reports to shareholders.............. 1,196 90,436 73,784 Transfer agent fees.................. 16,284 306,084 294,216 Miscellaneous expenses............... 1,591 13,948 12,728 ----------- ------------- ------------- Total expenses.................. 258,381 8,395,729 9,333,784 Recoupment of past waived fees (Note 2)................................ 6,281 -- -- ----------- ------------- ------------- Net expenses.................... 264,662 8,395,729 9,333,784 ----------- ------------- ------------- Net investment income................ 397,909 1,185,680 3,373,702 ----------- ------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments..... 2,106,459 61,293,886 114,803,171 Net change in unrealized appreciation/depreciation on investments....................... (5,771,043) (127,204,865) (139,165,672) ----------- ------------- ------------- Net loss on investments.............. (3,664,584) (65,910,979) (24,362,501) ----------- ------------- ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $(3,266,675) $ (64,725,299) $ (20,988,799) =========== ============= =============
The accompanying notes are an integral part of the financial statements. 18 MERIDIAN FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Equity Income Fund Growth Fund --------------------------------- ---------------------------------- Six Months Ended Six Months Ended December 31, 2007 Year Ended December 31, 2007 Year Ended (Unaudited) June 30, 2007 (Unaudited) June 30, 2007 ----------------- ------------- ----------------- -------------- OPERATIONS Net investment income........ $ 397,909 $ 565,035 $ 1,185,680 $ 1,991,252 Net realized gain on investments................ 2,106,459 1,156,674 61,293,886 206,433,053 Net change in unrealized appreciation/depreciation on investments............. (5,771,043) 4,745,850 (127,204,865) 126,767,717 ----------- ----------- -------------- -------------- Net increase (decrease) in net assets from operations.............. (3,266,675) 6,467,559 (64,725,299) 335,192,022 ----------- ----------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS Distributions from ordinary income..................... (736,171) (437,139) (2,535,381) (480,611) Distributions from net realized capital gains..... (1,774,107) (298,676) (165,398,882) (138,884,318) ----------- ----------- -------------- -------------- Net distributions.......... (2,510,278) (735,815) (167,934,263) (139,364,929) ----------- ----------- -------------- -------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales of shares..................... 2,467,706 12,291,605 126,505,524 360,777,435 Reinvestment of distributions.............. 2,484,529 677,132 141,088,644 117,740,707 Redemption fees.............. 234 392 9,612 19,004 Less: redemptions of shares.. (2,131,124) (963,461) (232,076,138) (296,988,641) ----------- ----------- -------------- -------------- Increase resulting from capital share transactions............ 2,821,345 12,005,668 35,527,642 181,548,505 ----------- ----------- -------------- -------------- Total increase (decrease) in net assets................. (2,955,608) 17,737,412 (197,131,920) 377,375,598 ----------- ----------- -------------- -------------- NET ASSETS Beginning of period.......... 43,188,114 25,450,702 2,066,749,916 1,689,374,318 ----------- ----------- -------------- -------------- End of period................ $40,232,506 $43,188,114 $1,869,617,996 $2,066,749,916 =========== =========== ============== ============== Undistributed Net Investment Income at end of period.... $ 130 $ 338,392 $ 160,940 $ 1,510,641 =========== =========== ============== ==============
The accompanying notes are an integral part of the financial statements. 19 MERIDIAN FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Value Fund ---------------------------------- Six Months Ended December 31, 2007 Year Ended (Unaudited) June 30, 2007 ----------------- -------------- OPERATIONS Net investment income........................... $ 3,373,702 $ 10,373,965 Net realized gain on investments................ 114,803,171 272,172,155 Net change in unrealized appreciation/depreciation on investments...... (139,165,672) 92,047,871 -------------- -------------- Net increase (decrease) in net assets from operations................................. (20,988,799) 374,593,991 -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS Distributions from ordinary income.............. (14,912,462) (17,859,640) Distributions from net realized capital gains... (259,219,136) (223,659,270) -------------- -------------- Net distributions............................. (274,131,598) (241,518,910) -------------- -------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales of shares................... 68,744,009 173,402,041 Reinvestment of distributions................... 236,000,379 205,961,289 Redemption fees................................. 47,456 30,190 Less: redemptions of shares..................... (237,284,498) (379,902,431) -------------- -------------- Increase (decrease) resulting from capital share transactions......................... 67,507,346 (508,911) -------------- -------------- Total increase (decrease) in net assets......... (227,613,051) 132,566,170 -------------- -------------- NET ASSETS Beginning of period............................. 1,819,440,225 1,686,874,055 -------------- -------------- End of period................................... $1,591,827,174 $1,819,440,225 ============== ============== Undistributed Net Investment Income at end of period........................................ $ -- $ -- ============== ==============
The accompanying notes are an integral part of the financial statements. 20 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 For the period from December 31, Year Ended Year Ended January 31, 2005 2007 June 30, June 30, through June 30, (Unaudited) 2007 2006 2005+ ------------ ---------- ---------- ---------------- Net Asset Value - Beginning of Period...... $ 13.14 $ 11.05 $ 10.10 $ 10.00 ------- ------- ------- ------- Income from Investment Operations -------------------------------- Net Investment Income*..................... 0.12 0.18 0.15 0.06 Net Gains (Losses) on Investments (both realized and unrealized)................. (1.08) 2.19 0.93 0.04 ------- ------- ------- ------- Total From Investment Operations........... (0.96) 2.37 1.08 0.10 ------- ------- ------- ------- Less Distributions -------------------------------- Distributions from Net Investment Income... (0.22) (0.17) (0.12) 0.00 Distributions from Net Realized Capital Gains.................................... (0.54) (0.11) (0.01) 0.00 ------- ------- ------- ------- Total Distributions........................ (0.76) (0.28) (0.13) 0.00 ------- ------- ------- ------- Net Asset Value - End of Period............ $ 11.42 $ 13.14 $ 11.05 $ 10.10 ======= ======= ======= ======= Total Return............................... (7.32%)(1) 21.61% 10.75% 1.00%(1) ======= ======= ======= ======= Ratios/Supplemental Data -------------------------------- Net Assets, End of Period (000's).......... $40,233 $43,188 $25,451 $ 8,412 Ratio of Expenses to Average Net Assets Before expense reimbursement/recoupment.. 1.23%(2) 1.29% 1.67% 3.96%(2) After expense reimbursement/recoupment(3)........... 1.25%(2) 1.25% 1.25% 1.25%(2) Ratio of Net Investment Income (Loss) to Average Net Assets Before expense reimbursement/recoupment.. 1.92%(2) 1.60% 1.38% (0.60%)(2) After expense reimbursement/recoupment... 1.90%(2) 1.64% 1.80% 2.11%(2) Portfolio Turnover Rate.................... 35%(1) 37% 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. 21 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, 2007 -------------------------------------------------------- (Unaudited) 2007 2006 2005 2004 2003 ------------ ---------- ---------- ---------- ---------- -------- Net Asset Value - Beginning of Period............. $ 42.74 $ 38.54 $ 35.77 $ 35.38 $ 27.24 $ 28.10 ---------- ---------- ---------- ---------- ---------- -------- Income from Investment Operations --------------------------------- Net Investment Income (Loss)*..................... 0.03 0.04 (0.01) (0.07) (0.04) (0.08) Net Gains (Losses) on Investments (both realized and unrealized)................................. (1.41) 7.29 3.58 1.02 9.10 (0.11) ---------- ---------- ---------- ---------- ---------- -------- Total From Investment Operations.................. (1.38) 7.33 3.57 0.95 9.06 (0.19) ---------- ---------- ---------- ---------- ---------- -------- Less Distributions --------------------------------- Distributions from Net Investment Income.......... (0.06) (0.01) 0.00 0.00 0.00 (0.06) Distributions from Net Realized Capital Gains..... (3.58) (3.12) (0.80) (0.56) (0.92) (0.61) ---------- ---------- ---------- ---------- ---------- -------- Total Distributions............................... (3.64) (3.13) (0.80) (0.56) (0.92) (0.67) ---------- ---------- ---------- ---------- ---------- -------- Net Asset Value - End of Period................... $ 37.72 $ 42.74 $ 38.54 $ 35.77 $ 35.38 $ 27.24 ========== ========== ========== ========== ========== ======== Total Return...................................... (3.23%)(1) 19.69% 10.08% 2.65% 33.65% (0.20%) ========== ========== ========== ========== ========== ======== Ratios/Supplemental Data --------------------------------- Net Assets, End of Period (000's)................. $1,869,618 $2,066,750 $1,689,374 $1,693,564 $1,273,302 $448,393 Ratio of Expenses to Average Net Assets........... 0.83%(2) 0.84% 0.85% 0.86% 0.88% 0.95% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... 0.12%(2) 0.11% (0.03%) (0.21%) (0.21%) (0.47%) Portfolio Turnover Rate........................... 18%(1) 40% 29% 32% 19% 27% For the Fiscal Year Ended June 30, ------------------------------------------------ 2002 2001 2000 1999 1998 -------- -------- -------- -------- -------- Net Asset Value - Beginning of Period............. $ 31.30 $ 29.45 $ 26.28 $ 33.26 $ 33.20 -------- -------- -------- -------- -------- Income from Investment Operations --------------------------------- Net Investment Income (Loss)*..................... (0.12) 2.26 0.11 0.16 0.27 Net Gains (Losses) on Investments (both realized and unrealized)................................. (0.24) 3.89 4.99 (0.50) 4.92 -------- -------- -------- -------- -------- Total From Investment Operations.................. (0.36) 6.15 5.10 (0.34) 5.19 -------- -------- -------- -------- -------- Less Distributions --------------------------------- Distributions from Net Investment Income.......... 0.00 (2.44) (0.15) (0.14) (0.32) Distributions from Net Realized Capital Gains..... (2.84) (1.86) (1.78) (6.50) (4.81) -------- -------- -------- -------- -------- Total Distributions............................... (2.84) (4.30) (1.93) (6.64) (5.13) -------- -------- -------- -------- -------- Net Asset Value - End of Period................... $ 28.10 $ 31.30 $ 29.45 $ 26.28 $ 33.26 ======== ======== ======== ======== ======== Total Return...................................... 0.42% 23.34% 21.45% 3.05% 16.92% ======== ======== ======== ======== ======== Ratios/Supplemental Data --------------------------------- Net Assets, End of Period (000's)................. $310,659 $182,117 $140,990 $185,683 $296,803 Ratio of Expenses to Average Net Assets........... 1.02% 1.04% 1.09% 1.01% 0.95% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... (0.62%) (0.26%) 0.31% 0.49% 0.76% Portfolio Turnover Rate........................... 26% 43% 28% 51% 38%
* 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 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, 2007 ---------------------------------------------------------- (Unaudited) 2007 2006 2005 2004 2003 ------------ ---------- ---------- ---------- ---------- ---------- Net Asset Value - Beginning of Period............. $ 38.79 $ 36.14 $ 38.11 $ 40.35 $ 31.65 $ 30.34 ---------- ---------- ---------- ---------- ---------- ---------- Income from Investment Operations --------------------------------- Net Investment Income (Loss)*..................... 0.12 0.41 0.18 0.19 0.00 (0.03) Net Gains (Losses) on Investments (both realized and unrealized)................................. (0.60) 7.74 2.45 2.96 8.70 1.34 ---------- ---------- ---------- ---------- ---------- ---------- Total From Investment Operations.................. (0.48) 8.15 2.63 3.15 8.70 1.31 ---------- ---------- ---------- ---------- ---------- ---------- Less Distributions --------------------------------- Distributions from Net Investment Income.......... (0.35) (0.41) (0.32) (0.28) 0.00 0.00 Distributions from Net Realized Capital Gains..... (6.04) (5.09) (4.28) (5.11) 0.00 0.00 ---------- ---------- ---------- ---------- ---------- ---------- Total Distributions............................... (6.39) (5.50) (4.60) (5.39) 0.00 0.00 ---------- ---------- ---------- ---------- ---------- ---------- Net Asset Value - End of Period................... $ 31.92 $ 38.79 $ 36.14 $ 38.11 $ 40.35 $ 31.65 ========== ========== ========== ========== ========== ========== Total Return...................................... (1.10%)(1) 23.90% 7.35% 8.00% 27.49% 4.32% ========== ========== ========== ========== ========== ========== Ratios/Supplemental Data --------------------------------- Net Assets, End of Period (000's)................. $1,591,827 $1,819,440 $1,686,874 $2,271,478 $2,226,590 $1,456,552 Ratio of Expenses to Average Net Assets........... 1.08%(2) 1.08% 1.09% 1.08% 1.09% 1.11% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... 0.39%(2) 0.59% 0.49% 0.48% 0.01% (0.12%) Portfolio Turnover Rate........................... 29%(1) 75% 58% 59% 81% 60% For the Fiscal Year Ended June 30, ----------------------------------------------- 2002 2001 2000 1999 1998 ---------- -------- ------- ------- ------- Net Asset Value - Beginning of Period............. $ 30.98 $ 25.88 $ 22.29 $ 19.30 $ 17.40 ---------- -------- ------- ------- ------- Income from Investment Operations --------------------------------- Net Investment Income (Loss)*..................... (0.05) 1.12 0.05 (0.10) (0.19) Net Gains (Losses) on Investments (both realized and unrealized)................................. (0.51) 5.75 5.91 3.56 4.32 ---------- -------- ------- ------- ------- Total From Investment Operations.................. (0.56) 6.87 5.96 3.46 4.13 ---------- -------- ------- ------- ------- Less Distributions --------------------------------- Distributions from Net Investment Income.......... (0.04) (1.09) 0.00 0.00 0.00 Distributions from Net Realized Capital Gains..... (0.04) (0.68) (2.37) (0.47) (2.23) ---------- -------- ------- ------- ------- Total Distributions............................... (0.08) (1.77) (2.37) (0.47) (2.23) ---------- -------- ------- ------- ------- Net Asset Value - End of Period................... $ 30.34 $ 30.98 $ 25.88 $ 22.29 $ 19.30 ========== ======== ======= ======= ======= Total Return...................................... (1.78%) 27.95% 29.63% 18.92% 26.05% ========== ======== ======= ======= ======= Ratios/Supplemental Data --------------------------------- Net Assets, End of Period (000's)................. $1,297,207 $768,559 $87,930 $24,912 $12,196 Ratio of Expenses to Average Net Assets........... 1.12% 1.10% 1.41% 1.63% 2.16% Ratio of Net Investment Income (Loss) to Average Net Assets...................................... (0.22%) 0.60% 0.39% (0.65%) (1.35%) Portfolio Turnover Rate........................... 54% 76% 86% 124% 133%
* 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. 23 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (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, 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. 24 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (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. Distributions which exceed net investment income and net realized capital gains are reported as distributions in excess of net investment income or distributions in excess of net realized capital gains for financial reporting purposes but not for tax purposes. To the extent they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. Permanent book-tax differences, if any, are not included in ending undistributed net investment income (loss) for the purposes of calculating net investment income (loss) per share in the Financial Highlights. h. GUARANTEES AND INDEMNIFICATION: Under the Funds' organizational documents, its Officers and Directors are indemnified against certain liability arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. 25 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- i. ACCOUNTING PRONOUNCEMENTS: In July 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax return to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more- likely-than-not threshold would be recorded as a tax benefit or expense in the year of determination. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Management has evaluated the application of FIN 48 to the Funds, and has determined there is no impact to the Funds' financial statements. In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS No. 157"). 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 SFAS No. 157 relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management is currently evaluating the application of SFAS No. 157 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. 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, 2007 were as follows: Equity Income Fund..................... 44.11% Growth Fund............................ 1.02% Value Fund............................. 1.29%
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. 26 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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 January 31, 2008, 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 did not reimburse the Funds, during the six months ended December 31, 2007. The Equity Income Fund will carry forward, for a period not to exceed three years from the date on which a waiver or reimbursement is made by the Investment Adviser, and expenses in excess of the expense limitation, and repay the Investment Adviser such amounts; provided the Fund is able to effect such reimbursement and maintain the expense limitation. At December 31, 2007, the balance of recoupable expenses along with the year of expiration for the Equity Income Fund is:
AMOUNT EXPIRATION ------ ---------- $58,995.............................. 2008 74,072.............................. 2009 12,964.............................. 2010
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. 27 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 3. CAPITAL SHARES TRANSACTIONS: Transactions in capital shares for the six months ended December 31, 2007 and the year ended June 30, 2007 were as follows:
Equity Income Fund ------------------------------ December 31, June 30, 2007 2007 ------------ --------- Increase in Fund shares: Shares sold....................................... 191,554 1,004,352 Shares issued from reinvestment of distributions.. 217,941 55,411 -------- --------- 409,495 1,059,763 Shares redeemed................................... (171,810) (77,844) -------- --------- Net increase...................................... 237,685 981,919 -------- ---------
Growth Fund ------------------------------- December 31, June 30, 2007 2007 ------------ ---------- Increase in Fund shares: Shares sold...................................... 3,058,708 8,819,099 Shares issued from reinvestment of distributions.................................. 3,743,431 2,980,023 ---------- ---------- 6,802,139 11,799,122 Shares redeemed.................................. (5,586,349) (7,277,834) ---------- ---------- Net increase..................................... 1,215,790 4,521,288 ---------- ----------
Value Fund -------------------------------- December 31, June 30, 2007 2007 ------------ ----------- Increase in Fund shares: Shares sold..................................... 1,932,814 4,662,351 Shares issued from reinvestment of distributions................................. 7,458,890 5,777,315 ---------- ----------- 9,391,704 10,439,666 Shares redeemed................................. (6,427,975) (10,210,105) ---------- ----------- Net increase.................................... 2,963,729 229,561 ---------- -----------
4. COMPENSATION OF DIRECTORS AND OFFICERS: Directors and Officers of the Funds who are Directors and/or Officers of the Investment Adviser receive no compensation from the Funds. Directors of the Funds who are not interested persons, as defined in the Investment Company Act of 1940, receive compensation in the amount of $3,000 per annum and a $2,000 purchase of Equity Income Fund, Growth Fund or Value Fund shares, plus expenses and a $1,000 purchase in one of the Funds for each additional Board of Directors meeting attended other than the annual meeting. 28 MERIDIAN FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (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, 2007, were as follows:
Purchases Proceeds from Sales ------------ ------------------- Equity Income Fund............................ $ 15,621,793 $ 13,984,058 Growth Fund................................... 352,086,494 473,797,550 Value Fund.................................... 473,272,779 651,122,928
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 in the United States. The tax character of distributions made during the fiscal year ended June 30, 2007 is as follows: 2007 TAXABLE DISTRIBUTIONS
Net Ordinary Long-Term Total Fund Income Capital Gains Distributions ---- ----------- ------------- ------------- Equity Income Fund....................... $ 618,838 $ 116,977 $ 735,815 Growth Fund.............................. 15,241,733 124,123,196 139,364,929 Value Fund............................... 17,859,640 223,659,270 241,518,910
7. FEDERAL INCOME TAXES: The aggregate cost of investments, unrealized appreciation and depreciation 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........... $ 35,283,720 $ 6,081,755 $ (149,125) $ 5,932,630 Growth Fund.................. 1,570,800,206 451,540,908 (10,961,067) 440,579,841 Value Fund................... 1,505,223,623 278,735,279 (18,346,143) 260,389,136
Post-October losses represent losses realized on investment transactions from November 1, 2006 through June 30, 2007 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, 2007, the Value Fund had Post-October currency loss deferrals of $12. 29 MERIDIAN FUND, INC. ADDITIONAL INFORMATION FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (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, 2007 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: The Funds file their 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 Funds 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. 30 (THIS PAGE INTENTIONALLY LEFT BLANK) MERIDIAN FUND, INC. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- THIS REPORT IS SUBMITTED FOR THE INFORMATION OF SHAREHOLDERS OF MERIDIAN FUND, INC. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. --------------------------------- Officers and Directors RICHARD F. ASTER, JR. President and Director MICHAEL S. ERICKSON HERBERT C. KAY JAMES B. GLAVIN RONALD ROTTER 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, 2007 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 2/27/08 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 2/27/08 ---------------------------------------------------------------------------- By (Signature and Title)* /s/ Gregg B. Keeling ----------------------------------------------------- Gregg B. Keeling, CFO & Treasurer (principal financial officer) Date 2/27/08 * Print the name and title of each signing officer under his or her signature.