UNITED STATES
                                        SECURITIES AND EXCHANGE COMMISSION

                                              Washington, D.C. 20549


                                                     FORM 10-K

     (Mark One)
     { X }  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
               EXCHANGE ACT OF 1934 (FEE REQUIRED)

                                   For the fiscal year ended December 31, 1998

                                                        OR

     {   }  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                                        For the transition period from to

                                         Commission file number 000-17596


         Meridian Healthcare Growth and Income Fund Limited Partnership
             (Exact Name of Registrant as Specified in its Charter)


          Delaware                                           52-1549486
   (State or Other Jurisdiction of                         (I.R.S. Employer
   Incorporation or Organization)                        Identification Number)

  225 East Redwood Street, Baltimore, Maryland                  21202
   (Address of Principal Executive Offices)                   (Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

            Title of each class       Name of each exchange on which registered

                         None


Securities registered pursuant to section 12(g) of the Act:

                 Assignee Units of Limited Partnership Interests
                                (Title of class)


  Indicate  by check  mark  whether  the  registrant  (1) has filed all  reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
                          Yes     X                      No

  As of December  31,  1998,  there were  1,538,800  Units of  Assignee  Limited
Partnership Interests held by non-affiliates of the Registrant. Because there is
not an established  public trading  market for the Units,  the aggregate  market
value  of  the  Units  held  by  non-affiliates  of  the  Registrant  cannot  be
calculated.

                                        Documents Incorporated by Reference

  The Annual Report for 1998 is incorporated by reference.


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP



                                                       INDEX

<TABLE>
<CAPTION>
                                                                                    Page (s)

<S>                                                                                     <C>
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS                                3

Part I.

         Item 1.    Business                                                           4-5
         Item 2.    Properties                                                         5-7
         Item 3.    Legal Proceedings                                                    7
         Item 4.    Submission of Matters to a Vote of Security Holders                  7


Part II.

         Item 5.    Market for Registrant's Common Equity and Related
                           Stockholder Matters                                         7-8
         Item 6.    Selected Financial Data                                              8
         Item 7.    Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                        9-13
         Item 8.    Financial Statements and Supplementary Data                         13
         Item 9.    Changes in and Disagreements with Accountants on
                           Accounting and Financial Disclosure                          13


Part III.

         Item 10.   Directors and Executive Officers of Registrant                   14-16
         Item 11.   Executive Compensation                                              16
         Item 12.   Security Ownership of Certain Beneficial Owners
                           and Management                                               16
         Item 13.   Certain Relationships and Related Transactions                      16


Part IV.

         Item 14.   Exhibits, Financial Statement Schedules and
                           Reports on Form 8-K                                       17-19

                           Signatures                                                20-21


</TABLE>


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP



            Cautionary Statement Regarding Forward Looking Statements


Certain   statements   contained  herein,   including   certain   statements  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"   concerning  the  Fund's   business   outlook  or  future  economic
performances,  anticipated profitability,  revenues, expenses or other financial
items  together  with  other  statements  that  are  not  historical  facts  are
"forward-looking   statements"  as  that  term  is  defined  under  the  Federal
Securities Law. Forward-looking  statements are necessarily estimates reflecting
the best  judgement  of the party  making  such  statements  based upon  correct
information and involve a number of risks, uncertainties and other factors which
could  cause  actual  results to differ  materially  from  those  stated in such
statements.  Risks, uncertainties and factors which could affect the accuracy of
such forward looking  statements are identified in the Fund's Prospectus and the
Fund's Registration Statement filed by the Fund with the Securities and Exchange
Commission,  and forward looking statements  contained herein or in other public
statements of the Fund should be considered in light of those factors. There can
be no  assurance  that  factors  will not affect the  accuracy  of such  forward
looking statements.

                                                      -3-


<PAGE>
         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


                                     PART I

Item 1.  Business

         Meridian  Healthcare  Growth and Income Fund Limited  Partnership  (the
"Fund")  was  organized  under the laws of the State of  Delaware on December 8,
1987. The Fund will continue until December 31, 2037,  unless sooner  terminated
under  the  provisions  of the  Partnership  Agreement.  The Fund was  formed to
acquire   98.99%  of  the  limited   partnership   interests  in  seven  limited
partnerships,  each of which owns and  operates  a single  nursing  center  (the
"Facilities").

         The Fund's  objectives  are to (i) preserve  Investors'  capital;  (ii)
obtain capital  appreciation  through  increases in the value of the Facilities;
and  (iii)  provide  quarterly  cash  distributions  to  Investors  from  income
generated by the Facilities'  operating income, the income taxation of a portion
of which is anticipated to be deferred.

         The General Partners of the Fund are Brown Healthcare, Inc., a Maryland
corporation  (the  "Administrative  General  Partner")  and Meridian  Healthcare
Investments, Inc., a Maryland corporation (the "Development General Partner").

         A maximum of 1,540,000 assignee units of limited partnership  interests
("Units")  were  registered  under the  Securities  and Exchange Act of 1933, as
amended.  During 1988 all 1,540,000 Units were sold, and the Fund's net proceeds
available for investment  aggregated  $31,878,000 (gross proceeds of $38,500,000
less public offering expenses and acquisition fees of $6,622,000).  The Assignor
Limited Partner also acquired 40 units of limited partnership interests in 1988.

         The Fund acquired 98.99% limited partnership  interests (the "Operating
Partnership  Interests")  in the operating  limited  partnerships  which own and
operate seven nursing center  facilities.  The  Facilities  include four nursing
centers  located in Maryland;  two nursing centers located in North Carolina and
one  facility  in New  Jersey.  Each  operating  partnership  owns  the real and
personal property of its nursing center facility. (See Note 1, "Organization and
Operations", in Item 8, Financial Statements and Supplementary Data, and Item 2.
Properties, herein.)

         The Fund acquired the  Operating  Partnership  Interests  with offering
proceeds and certain indebtedness.

         The nursing centers owned by the operating  partnerships are managed by
and  purchase  drugs,  medical  supplies and agency  nursing and  rehabilitation
services  from  affiliates  of the  Development  General  Partner.  (See Note 3,
"Related Party  Transactions" in Item 8. Financial  Statements and Supplementary
Data, herein.)

     On November 30, 1993, Genesis Health Ventures,  Inc.  ("Genesis")  acquired
substantially all of the assets of Meridian Inc., Meridian Healthcare,  Inc. and
their affiliated entities, including all of the stock of the Development General
Partner. See Item 10. Directors and Executive Officers of Registrant, herein.

         The Fund's sole business is its  investment in  partnerships  which own
and  operate  nursing  centers  that  are  healthcare   facilities  licensed  by
individual states to provide long-term healthcare within guidelines  established
by the  appropriate  state  health  agencies  and as directed by each  patient's
physician.  Healthcare  and related  services  from private pay and Medicaid and
Medicare patients accounted for approximately 99% of revenues during each of the
years in the three-year period ended December 31, 1998.

         Healthcare   facilities,   including   those  owned  by  the  operating
partnerships,  are subject to extensive federal,  state and in some cases, local
regulatory  licensing  and  inspection  requirements.  In  addition,  government
revenue sources,  particularly  Medicaid and Medicare  programs,  are subject to
statutory and regulatory changes due to administrative rulings,  interpretations
of policy and determination by fiscal intermediaries,  and to government funding
restrictions, all of which may materially affect the rate of program payments to
nursing facilities.

                                                      -4-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


Item 1.  Business (continued)

         The nursing center Facilities face competition with similar  facilities
in their general  locations as well as the  development of other nursing centers
that  are  able to  obtain  Certificates  of  Need  and to  meet  certain  other
requirements.


Item 2.  Properties

         The Fund owns Operating Partnership Interests in operating partnerships
that  own  four  nursing  facilities  in the  State  of  Maryland,  two  nursing
facilities  in the State of North  Carolina,  and one  nursing  facility  in New
Jersey.
The Facilities are described below:



                                               Property & Equipment      Patient
                                               (before depreciation)    Revenues
                                               at December 31, 1998        1998
   Name, Location and Description                        (Dollars in thousands)

Facility 1.   Hamilton                                 $ 4,611           $ 4,872
6040 Harford Road
Baltimore City,
Maryland

A 104-bed nursing facility located on 1.06 acres, constructed in 1972 consisting
of a "T" shaped  two-story plus partial basement  masonry  structure  containing
22,082 square feet. The facility contains 104  comprehensive  care beds of which
14 are Medicare-certified. There are two private rooms, 15 semi-private rooms, 4
three-person rooms and 15 four-person rooms.



Facility 2.  Randallstown                               10,682            10,138
9109 Liberty Road
Randallstown,
Maryland

A 250-bed nursing facility located on 2.83 acres, constructed in 1971 consisting
of a  rectangularly-shaped  two-story plus partial  basement  masonry  structure
containing  a  total  of  72,780   square  feet.   The  facility   contains  246
comprehensive care beds of which 38 are  Medicare-certified and four domiciliary
care beds. There are 111 semi-private rooms and 28 private rooms.




Facility 3.   Caton Manor                                7,520             8,382
3330 Wilkens Avenue
Baltimore City,
Maryland

A 184-bed nursing facility located on 0.92 acres, constructed in 1972 consisting
of an "L" shaped four-story plus basement masonry  structure  containing a total
of 48,660 square feet. All 184 beds are comprehensive  care beds of which 20 are
Medicare-certified. All rooms are semi-private.


                                                      -5-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


Item 2.  Properties (continued)
                                           Property &Equipment           Patient
                                          (before depreciation)         Revenues
                                          at December 31, 1998            1998
                                                      (Dollars in Thousands)
  Name, Location and Description

Facility 4.  Frederick                            7,172                    8,345
(Collegeview)
400 North Avenue
Frederick,
Maryland

A 166-bed nursing facility located on 1.13 acres, originally constructed in 1966
consisting of a two-story plus partial  basement masonry  structure,  the second
floor added in 1968,  containing  a total of 52,661  square  feet.  The facility
contains 156 comprehensive care beds of which 28 are Medicare- certified.  There
are 10 domiciliary care beds and two non-licensed  residential  apartments which
are leased to persons who do not require nursing care.


Facility 5.  Mooresville                          5,884                    6,918
550 Glenwood Road
Mooresville,
North Carolina

A 160-bed nursing facility located on 11.38 acres,  originally  constructed with
100 beds in 1988  with a  60-bed  addition  completed  in 1992  consisting  of a
one-story slab on grade  building  containing a total of 47,657 square feet. The
facility contains 130 beds for skilled care and intermediate care residents,  of
which 14 are Medicare certified. There are 30 beds in the Home for the Aged (HA)
wing. There are 8 private rooms and 76 semi-private rooms.



Facility  6.  Salisbury                           5,709                    7,430
710 Julian Road
Salisbury,
North Carolina

A 180-bed nursing  facility located on 6.02 acres,  originally  constructed with
120 beds in 1988  with a  60-bed  addition  completed  in 1991  consisting  of a
one-story slab on grade  building  containing a total of 50,500 square feet. The
facility contains 160 beds for skilled care and intermediate care residents,  of
which 28 are Medicare certified. There are 20 beds in the Home for the Aged (HA)
wing. There are 16 private rooms and 82 semi-private rooms.


                                                      -6-


<PAGE>
         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

Item 2.  Properties (continued)
                                              Property & Equipment       Patient
                                              (before depreciation)     Revenues
                                              at December 31, 1998        1998
                                                      (Dollars in thousands)
 Name, Location and Description

Facility 7.  Woodlands                                 8,201               7,677
1400 Woodland Avenue
Plainfield,
New Jersey

A 140-bed nursing facility located on
6.52 acres, constructed in 1989
consisting of a two-story slab on grade
building containing a total of 54,000
square feet.  The facility contains 120
comprehensive nursing home beds, of
which 27 are Medicare certified, and 20
residential care beds.  There are 12
private rooms, 46 semi-private rooms
and 9 four-bed rooms.  The facility also
provides space for a child day-care
program.
                                                       -------           -------
                                                       $49,779           $53,762


Item 3.  Legal Proceedings

             The Fund is a party to litigation arising in the ordinary course of
business. The Fund does not believe the results of such litigation,  even if the
outcome is unfavorable to the Fund,  would have a material adverse effect on its
consolidated financial position or results of operations.


Item 4.  Submission of Matters to a Vote of Security Holders

             There were no matters  submitted to the security holders for a vote
during the last quarter of the fiscal year covered by this report.


                                                      PART II

Item 5.  Market for Registrant's Common Equity and Related
      Stockholder Matters

             An  established  public trading market for the Units does not exist
and the Fund does not anticipate that a public market will develop.  Transfer of
Units by an investor and purchase of Units by the Fund may be accommodated under
certain  terms  and  conditions.   The  Partnership  Agreement  imposes  certain
limitations  on the  transfer  of Units and may  restrict,  delay or  prohibit a
transfer primarily if:

         o   the  transfer  of Units  would  result  in 50% or more of all Units
             having  been  transferred  by  assignment  or  otherwise  within  a
             12-month period;

         o   such a  transfer  would  be a  violation  of any  federal  or state
             securities laws that may cause the Fund to be classified other than
             as a partnership for federal income tax purposes;

         o   such  transfers  would  cause the Fund to be treated as a "publicly
             traded  partnership" under Sections 7704 and 469(k) of the Internal
             Revenue Code; and
         o   the  transfer of Units would cause a technical  termination  of the
             Partnership within meaning of Section  708(b)(1)(A) of the Internal
             Revenue Code.

                                                      -7-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


Item 5.  Market for  Registrant's  Common  Equity and  Related  Stockholder
                    Matters (continued)

         As of  December  31,  1998,  there were  1,745  holders of Units of the
registrant,  owning an aggregate of 1,540,040 Units,  including 40 Units held by
the  Assignor  Limited  Partner.  The Fund  made  four  quarterly  distributions
totaling approximately  $3,306,000 in each of the years in the three-year period
ended December 31, 1998. See Note 5,  "Distributions  to Partners and Allocation
of Net Income", in Item 8. Financial Statements and Supplementary Data, herein.


Item 6.  Selected Financial Data
<TABLE>
<CAPTION>
                                                                 Years Ended December 31,
                                               1998           1997        1996         1995          1994
                                                      (Dollars in thousands - except per Unit amounts)
Statement of Earnings Data

<S>                                           <C>            <C>         <C>          <C>          <C>
Net revenue                                   $54,108        $49,568     $47,885      $45,398      $42,852
Operating earnings before capital costs**       9,594          6,286       5,735        5,937        6,834
Net earnings                                    5,768          2,268       1,722        1,891        2,903

Net earnings per assignee Unit-basic        $    3.71      $    1.46   $    1.12    $    1.23    $    1.88


Operating Data

Payor mix (as a percent of revenue):
     Medicaid and Medicare                        80%            77%         77%          75%          75%
     Private                                      20%            23%         23%          25%          25%

Occupancy percentage                            91.7%          93.2%       94.3%        94.8%        94.4%

Patient Days Available                        429,000        429,000     431,000      430,000      433,000


Balance Sheet Data

Total assets                                  $50,305        $49,707     $52,255      $51,107      $52,494
Property and equipment, net of
     accumulated depreciation                  33,653         34,839      35,680       36,625       37,714
Long-term debt, including loan
     payable to Development General
     Partner, less current portion             23,702         24,363      25,955       25,528       25,797
Partners' capital                              18,813         16,351      17,389       18,973       20,388

Cash distributions paid per Unit:
     from operations                            $2.12       $   2.12    $   2.12     $   1.88     $   2.12
     from return of capital                      -              -           -             .24         -
</TABLE>

     **Capital costs include depreciation, amortization and interest expense.




                                                      -8-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

Item 7. Management's Discussion and Analysis of Financial Condition
             and Results of Operations

Liquidity and Capital Resources

     The Fund has sufficient  liquid assets and other available credit resources
to  satisfy  its  operating   expenditures   and  anticipated   routine  capital
improvements at each of the seven nursing home facilities.

     Effective  February  28,  1998,  the Fund  refinanced  all of the  existing
indebtedness.  Under  the  terms of the  refinancing,  the  mortgages  mature on
February 28, 2000 and bear interest at LIBOR plus 1.55%.  The  refinancing  also
extended the line of credit  commitment  until February 28, 2000. The Fund has a
$4,000,000  line of credit which is designated for working  capital needs and is
primarily secured by the accounts  receivable of the Fund. At December 31, 1998,
there were no outstanding borrowings under this line of credit.

     Between  1988 and 1989 the  Development  General  Partner  loaned  the Fund
$597,000 to support operating deficits  generated by the Mooresville,  Salisbury
and Woodlands nursing centers during each center's first two years of operation.
Loans outstanding under this  arrangement,  including  interest at 9% per annum,
were $1,086,000 at December 31, 1998. The Fund is obligated to repay these loans
when certain specified financial criteria are met, the most significant of which
is the payment of a preferred return to the assignee limited partners as defined
in the Fund's partnership agreement.

     Due  primarily  to the  favorable  resolution  of a  longstanding  Maryland
Medicaid  reimbursement  issue  (as  discussed  in  the  Results  of  Operations
section),  Fund  revenues  and  profitability  increased  markedly  in 1998 when
compared to prior years. Since the Fund's distribution level remained unchanged,
reserves  increased  by  approximately  $3.3  million at December  31, 1998 when
compared to December 31, 1997.

     On December 15, 1998 the Fund signed a letter of intent with Genesis Health
Ventures, Inc. ("Genesis"), an affiliate of the Development General Partner, for
the purchase by Genesis of all the limited and general partnership  interests of
the operating  partnerships (the "Proposed Sale") for approximately $70 million.
The Fund agreed to operate the facilities in the ordinary course of business and
agreed not to make  distributions  to the  partners  through the closing date or
upon  termination of the Proposed Sale. On March 30, 1999,  Genesis informed the
Fund that it terminated the letter of intent. In light of the termination of the
Proposed  Sale,  the Fund  expects  to make its  deferred  fourth  quarter  1998
distribution   (normally   made  in  February)   and  to  resume  its  quarterly
distribution policy.

     The major  challenge  to the Fund in the  foreseeable  future is to control
operating  expenses  while  maximizing  revenues  through  strategic  admissions
policies.


Results of Operations
                                      December 31, 1998 vs. December 31, 1997

     Patient revenues for the Fund's seven operating  partnerships  increased by
approximately  $4,540,000  (or 9.2%) for the year  ended  December  31,  1998 as
compared to the year ended December 31, 1997. This was primarily the result of a
favorable outcome to a long standing Maryland Medicaid  reimbursement issue. The
resolution of this issue provided increased  revenues of approximately  $800,000
for current year patient  services and  approximately  $2,100,000 for prior year
patient  services.  A favorable  Medicaid cost report settlement in the state of
North Carolina added  approximately  $350,000 to revenue.  A favorable  Medicare
settlement  for the three  prior  years  resulted  in an increase in revenues of
approximately $700,000.

     Census  declines  of  approximately  6,500 days,  primarily  in private and
Medicare days,  were only partially  offset by increases in insurance  days. The
decline  in  census  days  resulted  in a  revenue  reduction  of  approximately
$1,300,000. Year to year price increases (exclusive of the Medicaid and Medicare
items discussed above) of approximately  2.3% for Medicaid and 6.0% for Medicare
increased revenue by approximately  $1,600,000.  Year to year price increases in
non-skilled and intermediate care units increased revenue by $260,000.


                                                      -9-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

Item 7. Management's Discussion and Analysis of Financial Condition
             and Results of Operations (continued)

Results of Operations (continued)

     Profitability for the Fund increased approximately  $3,500,000 (or 150%) to
$5,768,000 in 1998 as compared to $2,268,000  in 1997.  Operating  expenses as a
percentage of revenue declined to approximately 74% in 1998 versus approximately
80% in 1997 primarily due to favorable outcome of reimbursement issues described
above. Operating expenses increased approximately $719,000 (or 1.8%) during 1998
versus 1997. Cost efficiencies due to a decline in census of 1.6% were offset by
inflationary wages increases and increases in therapy,  drug, and medical supply
expenses.   Management  and  general  and   administrative   expenses  increased
approximately   $519,000  principally  due  to  increased  management  fees  and
inflationary changes to general and administrative expenses.

     Interest  expense  decreased  approximately  $176,000  (or 8.7%) in 1998 as
compared to 1997.  This decrease was primarily due to the  refinancing  at lower
interest rates of its mortgages effective February 28, 1998.

                     December 31, 1997 vs. December 31, 1996

     Patient revenues for the Fund's seven operating  partnerships  increased by
approximately  $1,712,000  (or 3.6%) for the year  ended  December  31,  1997 as
compared  to the year  ended  December  31,  1996.  The  increase  is  primarily
attributable  to increased  room rates which  resulted  from an  effective  rate
increase  of 6%  (or  $1,767,000),  of  which  $1,466,000  relates  to  Medicaid
residents.  Effective  July 1,  1997,  the  four  Maryland  facilities  received
Medicaid  increases of 5%- 6% as compared to approximately 2.5% on July 1, 1996.
Also contributing to the Medicaid increase was a shift to higher acuity Medicaid
residents  at the  facilities.  The  remaining  rate  increase of  approximately
$296,000 was  generated  equally by Medicare and private  payor  classes.  Among
Medicare  patients,  there has been a shift to a higher acuity  resident,  while
there has been a shift in the census mix of private  payors to  facilities  with
higher base  private  rates.  Additionally,  ancillary  usage  increased in 1997
versus 1996.  Partially  offsetting these favorable  variances was a decrease of
approximately $252,000 in prior year third party cost report settlements.

     Profitability  for the Fund  increased  approximately  $546,000 (or 32%) to
$2,268,000 in 1997 as compared to $1,722,000  in 1996.  Operating  expenses as a
percentage of revenues remained  consistent at 80% of revenue.  Salaries,  wages
and benefits  increased  approximately  $462,000 (or 2%) during 1997 versus 1996
due to  inflationary  wage  increases.  As a result of the shortage in certified
nursing  assistants  in the State of Maryland,  nursing  agency usage  increased
approximately $109,000 in 1997 as compared to the prior year.

     Another factor  contributing to the operating  expense  increase was higher
ancillary utilization in 1997 as compared to the prior year. This increase was a
result of the higher  acuity  residents in the  facilities  as well as increased
utilization  by the Medicaid  population.  On a per patient day basis,  Medicaid
ancillary utilization was $1.98 higher in 1997 than in 1996.

     Interest  expense  decreased  $113,000 in 1997 as  compared  to 1996.  This
decrease was primarily due to line of credit borrowings that were repaid in full
in April, 1997.


Legislative and Regulatory Issues

     Legislative and regulatory action has resulted in continuing changes in the
Medicare and Medicaid reimbursement  programs. The changes have limited, and are
expected to continue to limit, payment increases under these programs. Also, the
timing of payments  made under the Medicare and Medicaid  programs is subject to
regulatory action and governmental budgetary  constraints;  in recent years, the
time period between  submission of claims and payment has increased.  Within the
statutory framework of the Medicare and Medicaid programs, there are substantial
areas subject to administrative  rulings and  interpretations  which may further
affect  payments  made under  those  programs.  Further,  the  federal and state
governments may reduce the funds available under those

                                      -10-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

Item 7. Management's Discussion and Analysis of Financial Condition
             and Results of Operations (continued)

Legislative and Regulatory Issues (continued)

programs in the future or require more stringent utilization and quality reviews
of  eldercare  centers  or other  providers.  There  can be no  assurances  that
adjustments  from Medicare or Medicaid  audits will not have a material  adverse
effect on the Fund.

     Pursuant to the Balanced Budget Act commencing with cost reporting  periods
beginning on July 1, 1998, Prospective Payment System ("PPS") began to be phased
in for skilled  nursing  facilities  at a per diem rate for all  covered  Part A
skilled nursing facility services as well as many services for which payment may
be made under Part B when a beneficiary  who is a resident of a skilled  nursing
facility  receives  covered skilled nursing  facility care. The consolidated per
diem rate is adjusted  based upon the Resource  Utilization  Group  ("RUG").  In
addition  to covering  skilled  nursing  facility  services,  this  consolidated
payment  will  also  cover  rehabilitation  and   non-rehabilitation   ancillary
services. Physician services, certain nurse practitioner and physician assistant
services,  among  others,  are not included in the per diem rate.  For the first
three cost  reporting  periods  beginning on or after July 1, 1998, the per diem
rate will be based on a blend of a facility specific rate and a federal per diem
rate. In subsequent  periods,  and for facilities  first receiving  payments for
Medicare services on or after October 1, 1995, the federal per diem rate will be
used without any facility specific blending.

     The  Balanced  Budget Act also  required  consolidated  billing for skilled
nursing facilities.  Under the Balanced Budget Act, the skilled nursing facility
must submit all Medicare  claims for Part A and Part B services  received by its
residents  with the exception of  physician,  nursing,  physician  assistant and
certain  related  services,  even if such  services  were  provided  by  outside
suppliers.  Medicare will pay the skilled  nursing  facilities  directly for all
services on the consolidated bill and outside suppliers of services to residents
of the skilled nursing  facilities must collect payment from the skilled nursing
facility.  Although consolidated billing was scheduled to begin July 1, 1998 for
all services,  it has been delayed until further notice for  beneficiaries  in a
Medicare Part A stay in a skilled nursing facility not yet using PPS and for the
Medicare  Part B stay.  There can be no assurance  that the Fund will be able to
provide skilled nursing services at a cost below the established Medicare level.

     Effective  April 10,  1998,  regulations  were  adopted by the Health  Care
Financing  Administration,  which revises the  methodology  for  determining the
reasonable  cost for contract  therapy  services,  including  physical  therapy,
respiratory therapy,  occupational therapy and speech language pathology.  Under
the  regulations,  the reasonable  costs for the contract  therapy  services are
limited to geographically-adjusted  salary equivalency guidelines.  However, the
revised salary  equivalency  guidelines will no longer apply when the PPS system
applicable to the particular setting for contract therapy services (e.g. skilled
nursing facilities, home health agencies, etc.) goes into effect.

     The Balanced Budget Act also repealed the Boren  Amendment  federal payment
standard for Medicaid payments to Medicaid nursing facilities  effective October
1, 1997. The Boren Amendment  required  Medicaid payments to certain health care
providers  to be  reasonable  and  adequate  in  order  to  cover  the  costs of
efficiently and economically  operated health care  facilities.  States must now
use a public notice and comment  period in order to determine  rates and provide
interested parties a reasonable opportunity to comment on proposed rates and the
justification for and the methodology used in calculating such rates.  There can
be no assurance  that budget  constraints or other factors will not cause states
to reduce Medicaid  reimbursement  to nursing  facilities and pharmacies or that
payments to nursing  facilities and  pharmacies  will be made on a timely basis.
The law also grants greater  flexibility to states to establish Medicaid managed
care projects without the need to obtain a federal waiver. Although these waiver
projects generally exempt  institutional care,  including nursing facilities and
institutional  pharmacy services, no assurances can be given that these projects
ultimately  will  not  change  the  reimbursement  system  for  long-term  care,
including  pharmacy services from  fee-for-service to managed care negotiated or
capitated rates.  The Fund  anticipates that federal and state  governments will
continue  to review and assess  alternative  health  care  delivery  systems and
payment methodologies.



                                      -11-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

Item 7. Management's Discussion and Analysis of Financial Condition
             and Results of Operations (continued)

Legislative and Regulatory Issues (continued)

     In July 1998, the Clinton Administration issued a new initiative to promote
the  quality of care in nursing  homes.  This  initiative  includes,  but is not
limited  to (I)  increased  enforcement  of  nursing  home  safety  and  quality
regulations;  (ii) increased  federal  oversight of state inspections of nursing
homes;  (iii)  prosecution  of egregious  violations  of  regulations  governing
nursing  homes;  (iv) the  publication  of nursing  home  survey  results on the
Internet;  and (v)  continuation  of the  development  of the  Minimum  Data Set
("MDS"), a national automated clinical data system.  Accordingly,  with this new
initiative it may become more  difficult  for  eldercare  facilities to maintain
licensing  and  certification.  The  Fund  may  experience  increased  costs  in
connection with maintaining its licenses and certifications as well as increased
enforcement actions. In addition,  beginning January 1, 1999, outpatient therapy
services  furnished  by a skilled  nursing  facility  to a resident  not under a
covered Part A stay or to  nonresidents  who receive  outpatient  rehabilitation
services will be paid according to the Medicare Physician Fee Schedule.

Year 2000 Compliance

     The  Development  General  Partner  ("DGP")  has  implemented  a process to
address its Year 2000 compliance  issues.  The process includes (I) an inventory
and assessment of the  compliance of the essential  systems and equipment of the
Fund and of the Year 2000 mission critical suppliers, customers, and other third
parties, (ii) the remediation of non-compliant systems and equipment and testing
and (iii)  contingency  planning.  The DGP is in the process of  conducting  its
inventory,  assessment and  remediation  of its  information  technology  ("IT")
systems,  equipment and non-IT systems and equipment  (embedded  technology) and
has completed  approximately  70% of its internal  inventory and  assessment and
approximately 30% of the systems and equipment of critical suppliers,  customers
and other third parties.

     With respect to the Year 2000  compliance of critical  third  parties,  the
Fund derives a substantial portion of its revenue from the Medicare and Medicaid
programs. Congress' General Accounting Office ("GAO") recently concluded that it
is highly unlikely that all Medicare systems will be compliant on time to ensure
the delivery of uninterrupted  benefits and services in the year 2000. While the
Fund does not receive payments directly from Medicare,  but from intermediaries,
the GAO statement is interpreted to apply as well to these  intermediaries.  The
DGP  intends  to  actively  confirm  the Year  2000  readiness  status  for each
intermediary and to work cooperatively to ensure appropriate continuing payments
for services rendered to all government insured patients.

     The DGP is  remediating  its critical IT and non-IT  systems and equipment.
The DGP has also begun contingency  planning in the event that essential systems
and  equipment  fail to be Year 2000  compliant.  The DGP is planning to be Year
2000  compliant for all of its essential  systems and equipment by September 30,
1999,  although  there can be no assurance that it will achieve its objective by
such date or by January 1, 2000, or that such potential  non-compliance will not
have a material  adverse effect on the Fund's business,  financial  condition or
results from operations.  In addition, there can be no assurance that all of the
Fund's critical suppliers and other third parties will be Year 2000 compliant by
January 1, 2000, or that such potential  non-compliance will not have a material
adverse  effect on the  Fund's  business,  financial  condition  or  results  of
operations.

     The DGP currently  estimates that its aggregate  costs directly  related to
Year  2000  compliance  efforts  will  be  approximately  $1,000,000,  of  which
approximately $500,000 has been spent through September 30, 1998. The DGP's Year
2000 efforts are ongoing and its overall plan and cost estimations will continue
to evolve, as new information becomes available. The Fund's analysis of its Year
2000 issues is based on information from third party suppliers;  there can be no
assurance that such information is accurate or complete.

     The failure of the DGP or third parties to be fully Year 2000 compliant for
essential systems and equipment by January 1, 2000 could result in interruptions
of normal business work  operations.  The Fund's potential risks include (I) the
inability to deliver  patient care  related  services in the Fund's  facilities,
(ii) the delayed receipt of reimbursement from the Federal or State governments,
private payors or intermediaries, (iii) the failure of security

                                      -12-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


Item 7. Management's Discussion and Analysis of Financial Condition
             and Results of Operations (continued)

Year 2000 Compliance (continued)

systems,  elevators,  heating systems or other operational systems and equipment
of the Fund's  facilities and (iv) the inability to receive  critical  equipment
and supplies  from vendors.  Each of these events could have a material  adverse
affect on the Fund's business, results of operations and financial condition.

     Contingency  plans for the DGP's Year  2000-related  issues  continue to be
developed  and  include,  but are not limited to,  identification  of  alternate
suppliers,  alternate  technologies  and alternate  manual  systems.  The DGP is
planning to have contingency plans completed for essential systems and equipment
by June 30,  1999;  however,  there can be no  assurance  that it will meet this
objective by such date or by January 1, 2000.

     The Year 2000  disclosure  set forth  above is  intended to be a "Year 2000
Statement"  as such term is defined in the Year 2000  Information  and Readiness
Disclosure Act of 1998 (the "Year 2000 Act") and, to the extent such  disclosure
relates to Year 2000  processing of the Fund or to products or services  offered
by the Fund,  is also  intended  to be "Year  2000  Disclosure"  as such term is
defined in the Year 2000 Act.

New Accounting Pronouncements

     In June 1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards No. 130,  Reporting  Comprehensive
Income  ("Statement  130").  Statement  130  requires  that all  items  that are
required  to  be  recognized  under   accounting   standards  as  components  of
comprehensive income be reported in a financial statement that is displayed with
the  same  prominence  as  other  financial  statements.  The  adoption  of this
accounting standard in fiscal 1998 had no impact on the Fund.

     In June 1998, the FASB issued Statement of Financial  Accounting  Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities.  In April
1998, the Accounting  Standards Executive Committee issued Statement of Position
98-5, Reporting on the Costs of Start-up  Activities.  The Fund does not believe
either of these statements have an impact on the 1998 financial statements.


Item 8.  Financial Statements and Supplementary Data

Index to Financial Statements:
                                                                    Page(s)
                                                                 Annual Report

     Independent Auditors' Report                                         3
     Consolidated Balance Sheets                                          4
     Consolidated Statements of Earnings                                  5
     Consolidated Statements of Partners' Capital (Deficit)               6
     Consolidated Statements of Cash Flows                                7
     Notes to Consolidated Financial Statements                        8-13



Item 9.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure

None.



                                      -13-
<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                                    PART III


Item 10.  Directors and Executive Officers of Registrant

     The General Partners of the Fund are Meridian Healthcare Investments, Inc.,
the Development General Partner, and Brown Healthcare,  Inc., the Administrative
General Partner.  The Fund's principal executive offices are located at 225 East
Redwood  Street,  Baltimore,  Maryland 21202.  The General  Partners had primary
responsibility  for the  selection  and  negotiation  of  terms  concerning  the
acquisition of the Operating Partnership Interests,  selecting a manager for the
interim  investments and the structure of the Offering and the Fund. The General
Partners have primary responsibility for overseeing the performance of those who
contract  with  the  Fund  as well  as  making  decisions  with  respect  to the
financing,  sale and  liquidation  of the Fund's or the operating  partnerships'
assets.   The  General   Partners  are   responsible  for  all  reports  to  and
communications  with investors and others,  all distributions and allocations to
investors,  the  administration  of the Fund's business and all filings with the
Securities  and  Exchange  Commission  and  other  Federal  or State  regulatory
authorities.  The  Fund's  Partnership  Agreement  provides  certain  rights for
investors, which are incorporated herein by reference.

The Development General Partner

     Meridian Healthcare Investments,  Inc., the Development General Partner, is
a Maryland corporation. On November 30, 1993, Genesis acquired substantially all
the assets of Meridian,  Inc., Meridian Healthcare (" MHC") and their affiliated
entities,  including all the stock of the Fund's Development General Partner. As
part of the  acquisition,  MHC, the manager of the Fund's seven nursing centers,
continues to operate the  facilities  pursuant to management  agreements.  Since
completion  of the  Meridian  transaction,  Genesis  operates  primarily in five
regional markets in which over 11,100,000 people over the age of 65 reside.  The
networks  include 326 eldercare  centers with  approximately  42,200 beds;  nine
primary  care  physician   clinics;   approximately  85  physicians,   physician
assistants  and nurse  practitioners;  11 medical  supply  distribution  centers
serving  over 1,000  eldercare  centers  with over 80,000  beds;  an  integrated
NeighborCareSM pharmacy operation with over $900,000,000 in annualized revenues,
including  79  long-term   care   pharmacies   serving   approximately   263,000
institutional  beds; 34 community-based  pharmacies;  infusion therapy services;
and  certified  rehabilitation  agencies  providing  services  through  over 600
contracts.  The Company also provides  diagnostic  and  hospitality  services in
selected  markets  and  operates a group  purchasing  organization.  Genesis has
concentrated  its  eldercare  networks  in five  geographic  regions in order to
achieve operating efficiencies, economies of scale and significant market share.
The five  geographic  markets that Genesis  principally  serves are: New England
Region    (Massachusetts/Connecticut/New     Hampshire/Vermont/Rhode    Island);
Midatlantic  Region (Greater  Philadelphia/Delaware  Valley);  Chesapeake Region
(Southern  Delaware/Eastern  Shore  of  Maryland/Baltimore,  Maryland/Washington
D.C./Virginia);  Southern Region (Central  Florida);  and Allegheny Region (West
Virginia/Western  Pennsylvania/Eastern  Ohio/Illinois/Wisconsin).   The  Company
believes that it is the largest  operator of eldercare center beds in the states
of New  Hampshire  Massachusetts,  New Jersey,  Pennsylvania,  Maryland and West
Virginia.

     The following  individuals  are the  directors  and  principal  officers of
Meridian Healthcare Investments, Inc.:

     Michael R. Walker,  age 50, is President and a Director of the  Development
General  Partner and is a  co-founder  of Genesis and has served as Chairman and
Chief  Executive  Officer of Genesis since its  inception in 1985. In 1998,  Mr.
Walker  became  the  Chairman  of the  Board  of  Trustees  of  ElderTrustsm,  a
healthcare  related real estate investment trust. In 1981, Mr. Walker co-founded
Health  Group  Care  Centers  ("HGCC").  At HGCC,  he served as Chief  Financial
Officer and, later, as President and Chief Operating Officer.  Prior to its sale
in 1985, HGCC operated nursing homes with 4,500 nursing beds in 12 states.  From
1978 to 1981,  Mr. Walker was the Vice President and Treasurer of AID Healthcare
Centers,  Inc.  ("AID").  AID, which owned and operated 20 nursing centers,  was
co-founded  in 1977 by Mr.  Walker as the  nursing  home  division  of  Hospital
Affiliates  International  ("HAI").  Mr.  Walker  holds  a  Master  of  Business
Administration  degree from Temple University and a Bachelor of Arts in Business
Administration  from  Franklin and Marshall  College.  Mr.  Walker serves on the
Board of Directors of Renal Treatment Centers, Inc. and the Board of Trustees of
Universal Health Realty and Income Trust.

                                      -14-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

Item 10.  Directors and Executive Officers of Registrant (continued)

The Development General Partner (continued)

     Richard R. Howard, age 50, is a Director of the Development General Partner
and has  served as a  Director  of  Genesis  since  its  inception  in 1985,  as
President  from June 1986 to November 1998 and as Vice Chairman  since  November
1998.  From June,  1986 through March,  1998, Mr. Howard served as President and
Chief Operating Officer of Genesis. He joined Genesis in September, 1985 as Vice
President of  Development.  Mr. Howard's  background in healthcare  includes two
years as the Chief  Financial  Officer of HGCC.  Mr.  Howard's  experience  also
includes over ten years with Fidelity Bank,  Philadelphia,  Pennsylvania and one
year with Equibank,  Pittsburgh,  Pennsylvania.  Mr. Howard is a graduate of the
Wharton  School,  University  of  Pennsylvania,  where he received a Bachelor of
Science degree in Economics in 1971.

     George V.  Hager,  Jr.,  age 43, is Vice  President  and  Treasurer  of the
Development  General  Partner and is Senior Vice  President and Chief  Financial
Officer of Genesis.  Mr. Hager was  previously  partner in charge of the health-
care  practice  for KPMG LLP in the  Philadelphia  office.  Mr.  Hager began his
career  at KPMG LLP in 1979  and has over  fifteen  years of  experience  in the
healthcare  industry.  Mr. Hager received a Bachelor of Arts degree in Economics
from Dickinson  College in 1978 and a Master of Business  Administration  degree
from Rutgers Graduate School of Management.  He is a certified public accountant
and a member of the AICPA and PICPA.

Administrative General Partner

     Brown Healthcare,  Inc., the Administrative  General Partner, is a Maryland
corporation,  and is wholly-owned by Alex. Brown Realty, Inc. The Administrative
General  Partner is  responsible  for  administering  the  business of the Fund,
including providing clerical services,  communications,  services and reports to
investors,   and  making  all  reports  and  filings  to  securities  regulatory
authorities.

     The following  individuals are the directors and principal  officers of the
Administrative General Partner:

     John  M.  Prugh,  age  50,  has  been  a  Director  and  President  of  the
Administrative  General Partner since 1988, and of Alex. Brown Realty,  Inc. and
Armata Financial Corp.  since 1984. Mr. Prugh graduated from Gettysburg  College
in 1970,  and was  designated a Certified  Property  Manager by the Institute of
Real Estate  Management in 1979. He has worked in property  management for H. G.
Smithy Co., in Washington, D.C., and Dreyfuss Bros., Inc. in Bethesda, Maryland.
Since 1977, Mr. Prugh has been involved in managing,  administering,  developing
and selling real estate  investment  projects  sponsored by Alex.  Brown Realty,
Inc. and its subsidiaries.

     Peter E.  Bancroft,  age 46, has been a Director and Vice  President of the
Administrative  General  Partner since 1988 and a Senior Vice President of Alex.
Brown Realty, Inc. and Armata Financial Corp. since 1983. Mr. Bancroft graduated
from Amherst College in 1974, attended the University of Edinburgh, and received
a J.D.  degree from the University of Virginia  School of Law in 1979.  Prior to
joining Alex. Brown Realty, Inc. in 1983, Mr. Bancroft held legal positions with
Venable, Baetjer and Howard and T. Rowe Price Associates, Inc.

     Terry F. Hall, age 52, has been the Secretary of the Administrative General
Partner and a Vice  President and  Secretary  of, and Legal  Counsel for,  Alex.
Brown  Realty,  Inc.  since 1989.  Mr. Hall  graduated  from the  University  of
Nebraska-Lincoln  in 1968,  and received a J.D.  degree from the  University  of
Pennsylvania Law School in 1973.  Prior to joining Alex.  Brown Realty,  Inc. in
1986, Mr. Hall was a Partner at the law firm of Venable, Baetjer and Howard from
1981 to 1986 and an associate at the same firm from 1973 to 1981.

     Timothy M. Gisriel,  age 42, has been the  Treasurer of the  Administrative
General Partner and of Alex. Brown Realty, Inc. and Armata Financial Corp. since
1990. He was Controller of Alex.  Brown Realty,  Inc. and Armata Financial Corp.
from 1984 through 1990.  Mr.  Gisriel  graduated from Loyola College in 1978 and
received  his  Masters  of  Business  Administration  degree  from the Robert G.
Merrick  School of Business,  University of Baltimore in 1993.  Prior to joining
Alex.  Brown Realty,  Inc. in 1984, Mr.  Gisriel was an audit  supervisor in the
Baltimore  office of  Coopers  &  Lybrand.  He is a  Maryland  Certified  Public
Accountant.
                                      -15-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


Item 10.  Directors and Executive Officers of Registrant (continued)

     There is no family  relationship  among the officers  and  directors of the
General Partner.


Item 11.  Executive Compensation

     The  officers  and  directors  of the  Administrative  General  Partner and
Development General Partner received no compensation from the Fund.

     The General Partners are entitled to receive a share of cash  distributions
and a share of  profits  and losses as  described  in the  Agreement  of Limited
Partnership.  (See Note 5,  "Distributions  to Partners  and  Allocation  of Net
Income" in Item 8. Financial Statements, herein.)

     For a discussion of compensation and fees to which the General Partners are
entitled, see Item 13. Certain Relationships and Related Transactions, herein.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

     No  person  is known to the Fund to own  beneficially  more  than 5% of the
outstanding Units of the Fund.

     The  General  Partners  each  have a .5%  interest  in the Fund as  General
Partners, but do not hold any Units.

     The Assignor  Limited  Partner,  Brown  Healthcare  Holding Co.,  Inc.,  an
affiliate of the Administrative  General Partner, owns for its benefit 40 Units.
The Units held by the Assignor  Limited Partner have all rights  attributable to
such Units under the Limited  Partnership  Agreement except that these Units are
non-voting.

     On  December  15,  1998  the  Fund  signed  a  letter  of  intent  with the
Development  General  Partner for the  proposed  sale of the limited and general
partnership interests of the Fund's operating partnerships, which if consummated
would have resulted in a change of control of the registrant.  On March 30, 1999
Genesis informed the Fund that it terminated the letter of intent.


Item 13.  Certain Relationships and Related Transactions

     The General  Partners and their affiliates have and are permitted to engage
in  transactions  with the Fund. For a  summarization  of fees paid during 1998,
1997 and 1996,  and to be paid to the General  Partners and their  affiliates at
December 31, 1998, see Note 3, "Related Party Transactions" in Item 8. Financial
Statements, herein.


                                      -16-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                                     PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a) 1.  Financial Statements:  see Index to Financial Statements and
             Supplementary Data in Item 8 on Page 13.

         2.  Financial  Statement   Schedules:   Schedule  II  -  Valuation  and
             Qualifying Accounts for the years ended December 31, 1998, 1997 and
             1996.  All  other  schedules  are  omitted  because  they  are  not
             applicable  or the required  information  is shown in the financial
             statements or notes thereto.

         3.  Exhibits:

             (3,    4) Limited  Partnership  Agreement  on pages 1 through 41 of
                    Exhibit  A  to  the  Fund's   Prospectus,   and  the  Fund's
                    Registration  Statement  on Form  S-1  (File  No.  33-19277)
                    included herein by reference.

             (13)   Annual Report for 1998.

     (b) Reports on Form 8-K:   None.

                                                      -17-

<PAGE>
Meridian Healthcare Growth and Income Fund Limited Partnership
Independent Auditors' Report

To the Partners of Meridian Healthcare Growth and Income
Fund Limited Partnership

Under date of February 5, 1999, we reported on the  consolidated  balance sheets
of Meridian Healthcare Growth and Income Fund Limited Partnership as of December
31,  1998  and  1997,  and the  related  consolidated  statements  of  earnings,
partners'  capital  (deficit)  and  cash  flows  for  each of the  years  in the
three-year  period ended December 31, 1998, as contained in the annual report on
Form 10K for the year 1998. In connection with our audits of the  aforementioned
consolidated  financial  statements,  we also  audited the related  consolidated
financial  statement  schedule  in the Form  10K.  This  consolidated  financial
statement  schedule  is  the  responsibility  of  the  Fund's  management.   Our
responsibility is to express an opinion on this consolidated financial statement
schedule based on our audits. In our opinion, such schedule,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
presents fairly, in all material respects, the information set forth therein.

                                                        /s/   KPMG LLP

Philadelphia, Pennsylvania
February 5, 1999


                                                       -18-
<PAGE>
Meridian Healthcare Growth and Income Fund Limited Partnership
          Valuation and Qualifying Accounts
     Years Ended December 31, 1998, 1997 and 1996
                (Dollars in Thousands)

                     Schedule II
<TABLE>
<CAPTION>

                                                      Balance at Beginning  Charged to                Balance at End
                     Description                            of Period       Operations  Deductions(1)   of Period

<S>                                                                    <C>          <C>          <C>            <C>
Year Ended December 31, 1998                                           $513         252          (286)          $479
Allowance for Doubtful Accounts

Year Ended December 31, 1997                                           $551         351          (389)          $513
Allowance for Doubtful Accounts

Year Ended December 31, 1996                                           $440         376          (265)          $551
Allowance for Doubtful Accounts

(1) - Represents amounts written off as uncollectible.
</TABLE>

                          -19-

<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP



                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                     MERIDIAN HEALTHCARE GROWTH AND INCOME
                                             FUND LIMITED PARTNERSHIP


DATE:   3/29/99                      BY:   /s/  John M. Prugh
                                         John M. Prugh
                                         President and Director
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner



Pursuant to the requirements of the Securities  Exchange Act of 1934 as amended,
this report has been signed by the following in the  capacities and on the dates
indicated.




DATE:    3/29/99                     By:    /s/  John M. Prugh
                                         John M. Prugh
                                         President and Director
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner


DATE:    3/22/99                     By:   /s/  Peter E. Bancroft
                                         Peter E. Bancroft
                                         Vice President and Director
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner


DATE:    3/22/99                     By:   /s/  Terry F. Hall
                                         Terry F. Hall
                                         Secretary
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner


DATE:    3/18/99                     By:  /s/  Timothy M. Gisriel
                                         Timothy M. Gisriel
                                         Treasurer
                                         Brown-Healthcare, Inc.
                                         Administrative General Partner




                                      -20-


<PAGE>

         MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP


                             SIGNATURES (continued)




DATE:  3/25/99                      BY:   /s/  Michael R. Walker
                                         Michael R. Walker
                                         President and Director
                                         Meridian Healthcare Investments, Inc.
                                         Development General Partner



DATE:  3/25/99                      BY:   /s/  Richard R. Howard
                                         Richard R. Howard
                                         Director
                                         Meridian Healthcare Investments, Inc.
                                         Development General Partner




DATE:  3/26/99                      BY:   /s/  George V. Hager, Jr.
                                         George V. Hager, Jr.
                                         Vice President and Treasurer
                                         Meridian Healthcare Investments, Inc.
                                         Development General Partner


                                      -21-