MERIDIAN VALUE FUND
                                                 July 24, 1997
 
To Our Shareholders:
 
The Meridian Value Fund's net asset value per share at June 30 1997, was $17.40.
This represents a total return of 20.6% for the fiscal year ended June 30, 1997
and 17.2% for the calendar year to date. The Fund's total return and average
annual compounded rate of return for the two years ended June 30, 1997, were
79.8% and 34.1%, respectively. Prior to June 30, 1995, the Fund's cash position
was approximately 50%, as it was in the start-up process of becoming fully
invested. The total return and average annual compounded rate of return for the
S.&P 500, with dividends reinvested, for the two years ended June 30, 1997, were
69.6% and 30.2%, respectively. The Fund's net assets at the close of the quarter
were invested 1.6% in cash and other assets less liabilities and 98.4% in
stocks. Total net assets were $7,340,110 and there were 198 shareholders.
 
Stocks posted a major gain during the quarter ending June 30, reflecting
favorable economic conditions. The S&P 500 with dividends reinvested, gained
17.4 percent; the NASDAQ 18.0 percent and the Russell 2000 15.7 percent. Large
capitalization companies continue to outperform their smaller counterparts. Year
to date the S&P 500 with dividends reinvested is ahead 20.6 percent, the NASDAQ
11.7 percent and the Russell 2000 9.3 percent. This is the tenth consecutive
quarterly advance for the S&P 500. The last decline took place during the fourth
quarter of 1994 and was less than one percent. The Dow Jones Bond Index advanced
modestly as interest rates declined. The five-year government bond yield dropped
from 6.8 percent to 6.4 percent during the quarter.
 
It is hard to imagine a more favorable economic backdrop for stocks. Economic
growth moderated to approximately two percent during the second quarter while
interest rates declined and inflation slowed to an annual rate of about two
percent. The economic cycle is in its seventh year, but consumer confidence
remains high, unemployment is low, corporate profits are growing, stock prices
are at record levels and leading economic indicators portend more growth ahead.
Labor markets are tight, but otherwise, there are no major storm clouds on the
economic horizon. Things can change quickly, but we expect continued growth
through the first half of 1998.
 
We believe that stock prices reflect the favorable economic conditions described
above. The price earnings ratio, price to book and dividend yield for the S&P
500, the primary measures of valuation, are all near or at the high end of their
historical range. The stock prices of such excellent companies as Microsoft,
Coca Cola, General Electric, Gillette, etc., in our opinion, more than
adequately reflect their respective growth prospects. The valuations on small
companies are relatively better if we compare their expected growth rates to
those of the large S&P 500 type of company. However, they are not cheap by
historical measures. We continue to research companies with improving prospects
and reasonable valuations, and will strive to remain fully invested.

<PAGE>
 
During the quarter we purchased shares in Cooker Restaurants, Coventry
Corporation, General Instruments, IMCO Recycling, InFocus Systems, Information
Resources, Marisa Christina, Mazel Stores, Mylan Laboratories, Network Equipment
Technologies, Optical Coating Labs, Sunrise Medical, Telxon, Valley National
Gases, VLSI Technology, and Wonderware. We also increased our position in
EZCorp. We sold our positions in Aldila, Apache, Ashworth, Broadway & Seymour,
Burlington Coat Factory, Cornerstone Imaging, General Housewares, Griffon,
Insituform Technologies, Paragon Trade Brands, Value City Department Stores, and
Vintage Petroleum. Additionally, Seda Specialty Packaging was acquired,
resulting in a substantial profit.
 
Valley National Gases (VNG) recently conducted a public offering. The company is
a super-regional packager and distributor of industrial and specialty gases,
welding equipment and supplies, and propane in the Mid-Atlantic and midwestern
regions of the U.S. The domestic packaged gas distribution market is large, less
cyclical than average, mature and consolidating; with low capital expenditure
requirements and relatively price-insensitive customers. The favorable economics
of the business could enable VNG to internally finance 15-20% annual revenue
growth for the foreseeable future, mainly through acquisitions. Operational
efficiencies derived from economies of scale could result in even higher annual
earnings growth. Moreover, VNG itself represents an attractive acquisition
candidate. The stock currently trades at less than 13X projected FY'98 after-tax
free cash flow, a relatively inexpensive valuation in this environment.
 
We welcome those new shareholders who joined the Meridian Value Fund during the
quarter and appreciate the continued confidence of our existing shareholders.
 
                                       Sincerely,

                                       /s/ Richard F. Aster, Jr.
                                       Richard F. Aster, Jr.
 
                                       /s/ Kevin O'Boyle
                                       Kevin O'Boyle
 
                                        2

<PAGE>
 
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
================================================================================
 
<TABLE>
<CAPTION>
                                                                    Shares       Value
                                                                    ------     ----------
     <S>                                                            <C>        <C>
     COMMON STOCK - 98.4%
       AGRICULTURE - 2.0%
          IMC Global, Inc..*......................................   4,200       $147,000
       APPAREL/SHOE - 10.6%
          Fossil, Inc.. ..........................................  11,600        205,900
          Marisa Christina, Incorporated..........................  19,200        180,000
          Maxwell Shoe Company, Inc. - Class A....................  17,700        216,825
          Norton McNaughton, Inc. ................................  36,000        175,500
       CONSUMER FINANCE - 10.2%
          EZCORP, Inc. ...........................................  56,700        567,000
          Fingerhut Companies, Inc. ..............................  10,400        181,350
       CONSUMER PRODUCTS - 4.8%
          Perrigo Company.........................................  15,100        188,750
          The Scotts Company......................................   5,700        165,300
       HEALTH SERVICES - 16.4%
          Coventry Corporation....................................  12,400        187,550
          Marquette Medical Systems, Inc. - Class A...............   7,200        158,400
          Mylan Laboratories Inc.*................................  11,000        162,250
          NovaCare, Inc. .........................................  11,400        158,175
          Staff Builders, Inc. - Class A..........................  68,900        159,331
          Sullivan Dental Products, Inc.*.........................  10,700        195,275
          Sunrise Medical Inc. ...................................  12,300        186,037
       INDUSTRIAL PRODUCTS - 14.7%
          IMCO Recycling Inc. ....................................  10,100        190,637
          In Focus Systems, Inc. .................................   7,400        189,625
          Optical Coating Laboratory, Inc. .......................  16,100        217,350
          Sensormatic Electronics Corporation*....................   9,300        119,737
          Telxon Corporation......................................   9,400        169,200
          Valley National Gases Incorporated......................  18,100        190,050
</TABLE>
 
    The accompanying notes are an integral part of the financial statements.
 
                                        3

<PAGE>
 
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1997
================================================================================
 
<TABLE>
<CAPTION>
                                                                    Shares       Value
                                                                    ------     ----------
 
     COMMON STOCK (continued)
     <S>                                                            <C>        <C>
       INDUSTRIAL SERVICES - 2.1%
          Information Resources, Inc. ............................  10,700       $151,138
       RESTAURANTS - 2.2%
          Cooker Restaurant Corporation...........................  15,100        161,381
       RETAIL - 16.6%
          Fabri-Centers of America, Inc. - Class B................  27,500        642,813
          Mazel Stores, Inc. .....................................  11,600        203,000
          Shoe Carnival, Inc. ....................................  18,400        184,000
          Toys "R" Us, Inc. ......................................   5,300        185,500
       TECHNOLOGY - 11.6%
          MicroAge, Inc. .........................................   8,300        152,513
          Quantum Corporation*....................................   8,800        179,300
          Systems & Computer Technology Corporation...............   6,300        168,525
          VLSI Technology, Inc. ..................................   7,600        179,550
          Wonderware Corporation..................................  12,100        170,913
       TELECOMMUNICATIONS/CABLE EQUIPMENT - 7.2%
          General Instrument Corporation..........................   6,500        162,500
          Network Equipment Technologies, Inc. ...................  11,000        198,000
          Scientific-Atlanta, Inc.*...............................   7,800        170,625
                                                                                ---------
       TOTAL COMMON STOCK
       (Identified cost $5,941,854).......................................      7,221,000
                                                                                ---------
     CASH AND OTHER ASSETS LESS LIABILITIES - 1.6%........................        119,110
                                                                                ---------
     NET ASSETS - 100%....................................................     $7,340,110
                                                                                =========
     Shares of capital stock outstanding..................................        421,841
                                                                                =========
     Net asset value per share............................................         $17.40
                                                                                =========
</TABLE>
 
      * income producing
 
    The accompanying notes are an integral part of the financial statements.
 
                                        4

<PAGE>
 
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
================================================================================
 
<TABLE>
     <S>                                                                       <C>
     ASSETS
       Investments (Cost $5,941,854)........................................   $7,221,000
       Cash and cash equivalents............................................      252,940
       Receivables for:
          Securities sold...................................................       61,140
          Sales of capital stock............................................            0
          Dividends.........................................................          566
          Reimbursement from Investment Advisor.............................          360
          Interest..........................................................        1,126
       Prepaid expenses.....................................................          132
                                                                               ----------
          TOTAL ASSETS......................................................    7,537,264
                                                                               ----------
 
     LIABILITIES
       Payables For:
          Securities purchased..............................................      174,681
          Capital stock repurchased.........................................        1,920
          Accrued expenses..................................................       20,553
                                                                               ----------
          TOTAL LIABILITIES.................................................      197,154
                                                                               ----------
     NET ASSETS.............................................................   $7,340,110
                                                                               ==========
     Shares of capital stock outstanding, par value $.01 (25,000,000 shares
       authorized)..........................................................      421,841
                                                                               ==========
     Net asset value per share (offering and redemption price)..............       $17.40
                                                                               ==========
     Net assets consist of:
       Paid in capital......................................................   $5,638,580
       Accumulated net realized gain........................................      422,384
       Net unrealized appreciation on investments...........................    1,279,146
                                                                               ----------
                                                                               $7,340,110
                                                                               ==========
</TABLE>
 
    The accompanying notes are an integral part of the financial statements.
 
                                        5

<PAGE>
 
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
================================================================================
 
<TABLE>
     <S>                                                           <C>          <C>
     INVESTMENT INCOME
       Dividends................................................    $16,020
       Interest.................................................     14,434
                                                                   --------
            Total investment income.............................                   $30,454
     EXPENSES
       Investment advisory fees.................................     55,055
       Transfer agent fees......................................     26,390
       Pricing fees.............................................     24,090
       Registration and filing fees.............................     14,730
       Professional fees........................................     11,433
       Custodian fees...........................................      9,830
       Reports to shareholders..................................      8,815
       Directors' fees and expenses.............................      2,004
       Miscellaneous expenses...................................      1,984
                                                                   --------
            Total expenses......................................    154,331
            Less: Reimbursement by Investment Advisor...........    (15,883)
                                                                   --------
                 Net expenses...................................                   138,448
                                                                                  --------
       Net investment loss......................................                  (107,994)
     NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
       Net realized gain on investments.........................    508,543
       Net increase in unrealized appreciation on investments...    805,771
                                                                   --------
       Net realized and unrealized gains on investments.........                 1,314,314
                                                                                  --------
     NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                       $1,206,320
                                                                                  ========
</TABLE>
 
    The accompanying notes are an integral part of the financial statements.
 
                                        6

<PAGE>
 
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
 
<TABLE>
<CAPTION>
                                                                   Year Ended       Year Ended
                                                                 June 30, 1997    June 30, 1996
                                                                 --------------   --------------
     <S>                                                         <C>              <C>
     OPERATIONS
     Net investment loss......................................      ($107,994)        ($22,062)
     Net realized gain on investments.........................        508,543          295,152
     Net increase in unrealized appreciation of investments...        805,771          421,643
                                                                   ----------        ---------
       Net increase from operations...........................      1,206,320          694,733
                                                                   ----------        ---------
     DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
     Dividends from net investment income.....................              0                0
     Distributions from net realized capital gains............       (249,400)               0
                                                                   ----------        ---------
       Total distributions....................................       (249,400)               0
                                                                   ----------        ---------
     CAPITAL SHARE TRANSACTIONS
     Proceeds from sale of stock..............................      3,893,443        2,262,308
     Reinvestment of distributions............................        244,328                0
     Less: redemptions........................................     (1,226,088)        (200,555)
                                                                   ----------        ---------
       Increase resulting from capital share transactions.....      2,911,683        2,061,753
                                                                   ----------        ---------
     Total increase in net assets.............................      3,868,603        2,756,486
     NET ASSETS
     Beginning of year........................................      3,471,507          715,021
                                                                   ----------        ---------
     End of year..............................................     $7,340,110       $3,471,507
                                                                   ==========        =========
</TABLE>

    The accompanying notes are an integral part of the financial statements.
 
                                        7

<PAGE>
 
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
================================================================================
 
<TABLE>
<CAPTION>
                                                                For the fiscal year ended June 30,
                                                        ---------------------------------------------------
                                                           1997           1996          1995         1994
                                                        ----------     ----------     --------     --------
<S>                                                     <C>            <C>            <C>          <C>
Net Asset Value - Beginning of year..................       $15.32         $10.27        $9.87       $10.00
                                                        ----------     ----------     --------     --------
Income from Investment Operations
-----------------------------------
Net Investment (Loss) Income.........................        (0.26)         (0.10)       (0.04)        0.00
Net Gains or Losses on Securities (both realized and
  unrealized)........................................         3.20           5.15         0.44        (0.13)
                                                        ----------     ----------     --------     --------
Total From Investment Operations.....................         2.94           5.05         0.40        (0.13)
                                                        ----------     ----------     --------     --------
Less Dividends and Distributions
-------------------------------
Dividends from net investment income.................         0.00           0.00         0.00         0.00
Distribution from net realized capital gains.........        (0.86)          0.00         0.00         0.00
                                                        ----------     ----------     --------     --------
Total Dividends and Distributions....................        (0.86)          0.00         0.00         0.00
                                                        ----------     ----------     --------     --------
Net Asset Value - End of Period......................       $17.40         $15.32       $10.27        $9.87
                                                        ==========     ==========     ========     ========
Total Return.........................................       20.55%+        49.17%+       4.05%+      (1.30%)+
                                                        ==========     ==========     ========     ========
Ratios/Supplemental Data
-------------------------
Net Assets, End of Period............................   $7,340,110     $3,471,507     $715,021     $391,538
Ratio of Expenses to Average Net Assets..............        2.51%*         2.55%*       2.78%*       1.28%*
Ratio of Net Investment Loss to Average Net Assets...       (1.96%)*       (1.36%)*      (.58%)*      (.07%)*
Portfolio Turnover Rate..............................         144%           125%          77%         194%
Average Commission Paid Per Share....................    $0.0572**      $0.0559**           --           --
(+)   From commencement of operations on February 10, 1994.
+     The total returns would have been lower had certain expenses not been reduced during the periods
      shown.
*     Not representative of expenses incurred by the Fund as the Adviser waived its fee and/or paid
      certain expenses of the Fund. As indicated in Note 3, the Investment Manager reduced a portion of
      its fee and absorbed certain expenses of the Fund. Had these fees and expenses not been reduced
      and absorbed, the ratio of expenses to average net assets would have been 2.80%, 6.47%, 14.64% and
      11.22%, and the ratio of net investment income to average net assets would have been a loss of
      2.25%, 5.28%, 12.44% and 10.02%, respectively.
**    A fund is required to disclose its average commission rate per share for security trades on which
      commission is charged. This amount may vary from fund to fund and period to period depending on
      the mix of trades executed in various markets where trading practices and commission rate
      structures may differ. This rate generally does not reflect markups, markdowns, or spreads on
      shares traded on a principle basis, if any. This disclosure is required by the SEC and was
      effective beginning in 1996.
</TABLE>
 
    The accompanying notes are an integral part of the financial statements.
 
                                        8

<PAGE>
 
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1997
================================================================================
 
1.  SIGNIFICANT ACCOUNTING POLICIES: Meridian Value Fund (the "Fund") a series
    of Meridian Fund, Inc., (the "Company"), began operations on February 10,
    1994. The Fund was registered on February 7, 1994, under the Investment
    Company Act of 1940, as amended, as a no-load, diversified, open-end
    management investment company. The primary investment objective of the fund
    is to seek long-term growth of capital. In addition to the Meridian Value
    Fund, the Company also offers the Meridian Fund. The following is a summary
    of significant accounting policies:
 
   a.  INVESTMENT VALUATIONS: Marketable securities are valued at the last sales
       price on the principal exchange or market on which they traded; or, if
       there were no sales that day, at the last reported bid price. Short-term
       investments that will mature in 60 days or less are stated at amortized
       costs, which approximates market value.
 
   b.  FEDERAL INCOME TAXES: It is the Fund's policy to comply with the
       requirements of the Internal Revenue Code applicable to regulated
       investment companies and to distribute all of its taxable income to its
       shareholders; therefore, no federal income tax provision is required. The
       aggregate cost of investments for federal income tax purposes is
       $5,941,854 the aggregate gross unrealized appreciation is $1,473,611 and
       the aggregate gross unrealized depreciation is $194,465 resulting in net
       unrealized appreciation of $1,279,146.
 
   c.  SECURITY TRANSACTIONS: Security transactions are accounted for on the
       date the securities are purchased or sold (trade date). Realized gains
       and losses on security transactions are determined on the basis of
       specific identification for both financial statement and federal income
       tax purposes. Dividend income is recorded on the ex-dividend date.
       Interest income is accrued daily.
 
   d.  CASH AND CASH EQUIVALENTS: All highly liquid investments with an original
       maturity of three months or less are considered to be cash equivalents.
 
   e.  EXPENSES: Expenses arising in connection with the Fund are charged
       directly to the Fund. Expenses common to both series of Meridian Fund,
       Inc. are allocated to each series in proportion to their relative net
       assets.
 
   f.  USE OF ESTIMATES: The preparation of financial statements requires
       management to make estimates and assumptions that affect the reported
       amount of assets and liabilities at the date of the financial statements.
       Actual amounts could differ from the estimates.
 
   g.  DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund records dividends
       and distributions to its shareholders on the ex-date. The amount of
       dividends and 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. The "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. Dividends and distributions which exceed net
       investment income and net realized capital gains are reported as
       dividends 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.
 
                                        9

<PAGE>
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 1997
================================================================================
 
2.  RELATED PARTIES AND ADVISORY FEE AND EXPENSE LIMITATION: The Fund has
    entered into a management agreement (the Investment Advisory Fee) with Aster
    Capital Management, Inc. ("Aster Capital") for the 12 month period beginning
    November 1, 1996 through October 31, 1997. Certain Officers and/or Directors
    of the Fund are also Officers and/or Directors of Aster Capital. Beneficial
    ownership in the Fund by Richard F. Aster, Jr., President, as of June 30,
    1997, was 19.38%.
 
    The Investment Adviser receives from the Fund as compensation for its
    services an annual fee of 1% of the Fund's net assets. The fee is paid
    monthly and calculated based on that month's average net assets. The
    Investment Adviser has agreed to reimburse the Fund for any fiscal year's
    expenses, including advisory fees, which exceed the most stringent limits
    prescribed by any state in which the Fund's shares are offered for sale.
    During the fiscal year the federal government pre-empted the state's right
    to impose expense limitations as a result of the National Securities Markets
    Improvement Act of 1996. However, the Fund continues to use the most
    stringent expense limitation of 2 1/2% and will do so in the future as the
    Adviser has agreed to continue this practice. Reimbursements were $15,883
    and advisory fee payable was $5,973 for the year ended June 30, 1997.
 
3.  CAPITAL STOCK TRANSACTIONS: The Fund has authorized 25,000,000 shares of
    common stock at a par value of $.01 per share. Transactions in capital stock
    for the year ended June 30, 1997 and June 30, 1996, were as follows:
 
<TABLE>
<CAPTION>
                                                                   1997        1996
                                                                  -------     -------
      <S>                                                         <C>         <C>
      Shares sold                                                 262,204     173,212
      Shares issued on reinvestment of distributions               17,540           0
                                                                  -------      ------
                                                                  279,744     173,212
      Shares redeemed                                             (84,575)    (16,140)
                                                                  -------      ------
      Net increase                                                195,169     157,072
                                                                  =======      ======
</TABLE>
 
4.  COMPENSATION OF DIRECTORS AND OFFICERS: Directors and officers of the
    Company who are directors and/or officers of Aster Capital Management, Inc.
    receive no compensation from the Fund. Directors of the Company who are not
    interested persons as defined in the Investment Company Act of 1940 receive
    compensation in the amount of $1,000 per annum and a $1,000 purchase of
    Meridian Fund or Meridian Value Fund stock, plus expenses for each Board of
    Directors meeting attended. The aggregate compensation due the unaffiliated
    Directors of the Fund as of June 30, 1997 was $1,000.
 
5.  COST OF INVESTMENTS: The cost of investments purchased and the proceeds from
    sales of investments, excluding short-term obligations, for the year ended
    June 30, 1997 were $10,126,988 and $7,494,002 respectively.
 
                                       10

<PAGE>
 
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
 
To the Board of Directors and Shareholders
of Meridian Value Fund
 
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Meridian Value Fund (one of the
portfolios constituting Meridian Fund, Inc., hereafter referred to as the
"Fund") at June 30, 1997, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the three years then ended, and for the
period February 10, 1994 (commencement of operations) through June 30, 1994 in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as the "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
 
PRICE WATERHOUSE LLP
San Francisco, California
July 25, 1997
 
                                       11

<PAGE>
 
                                                  MERIDIAN VALUE FUND
================================================================================
 
                          This report is submitted for
                       the information of shareholders of
                         Meridian Fund, Inc. It is not
                         authorized for distribution to
                          prospective investors unless
                         preceded or accompanied by an
                             effective prospectus.
 
       -----------------------------------------------------------------
                             Officers and Directors
 
                             RICHARD F. ASTER, JR.
                             President and Director
 
                              MICHAEL S. ERICKSON
 
                                 HERBERT C. KAY
 
                                JAMES B. GLAVIN
 
                                MICHAEL STOLPER
                                   Directors
 
                                PAUL A. ROBINSON
                            Treasurer and Secretary
                                   Custodian
                                BANK OF NEW YORK
                               New York, New York
                      Transfer Agent and Disbursing Agent
                               FPS SERVICES, INC.
                         King of Prussia, Pennsylvania
                                 (800) 446-6662
                                    Counsel
                              MORRISON & FOERSTER
                           San Francisco, California
                                    Auditors
                                PRICE WATERHOUSE
                           San Francisco, California
 
                                 ANNUAL REPORT

                       [MERIDIAN FUND INCORPORATED(R) LOGO]
 
                         60 E. Sir Francis Drake Blvd.
                             Wood Island, Suite 306
                               Larkspur, CA 94939
                                 (415) 461-6237
 
                            Telephone (800) 446-6662
 
                                 JUNE 30, 1997

<PAGE>