MERIDIAN FUND
                                                 July 24, 1997
 
To Our Shareholders:
 
The Meridian Fund's net asset value per share at June 30, 1997 was $33.20. This
represents a total return of 13.9% for the fiscal year ended June 30, 1997 and
10.4% for the calendar year to date. The Fund's total return and average
compound rate of return since inception, August 1, 1984, were 525.6% and 15.3%,
respectively. The Fund's ten year total return and ten year average compound
rate of return were 273.8% and 14.1%, respectively. The Fund's net assets at the
close of the quarter were invested 21.6% in cash and other assets less
liabilities and 78.4% in stocks. Total net assets were $353,028,973 and there
were 11,904 shareholders.
 
Stocks posted a major gain during the quarter ending June 30, reflecting
favorable economic conditions. The S&P 500 gained 16.9 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 is
ahead 19.5 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,

<PAGE>
 
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. This makes it difficult for
us to achieve our goal of being fully invested in smaller and medium-sized
growth stocks at this time. Our cash and cash equivalents position remains at
approximately twenty-one percent of net assets.
 
We purchased shares in Showbiz Pizza Time, CarMax Group and added to our
position in Cracker Barrel Old Country Stores during the quarter. We sold our
position in British Sky Broadcasting while VeriFone, Vivra and Belden & Blake
were acquired by other companies at a substantial profit.
 
We purchased shares of Black Box Corporation earlier this year. Black Box is a
leading direct marketer of networking equipment in the U.S. and internationally.
The networking industry is large and will experience significant growth for many
years to come, especially internationally. The company offers over seven
thousand items through its catalog, published biannually. Many of the products
are sold under the Black Box label. Management backs its product line with an
excellent technical service and support team. This formula has led to consistent
growth and has resulted in excellent financial characteristics. Fifty percent of
the company's business comes from abroad and is growing rapidly. The shares sell
at approximately eighteen times estimated earnings. We believe that this
well-managed company represents a low-risk way to invest in the rapidly growing
and changing networking industry.
 
We welcome those new shareholders who joined the Meridian Fund during the
quarter and appreciate the continued confidence of our existing shareholders.
 
                                       Sincerely,
                                       /s/ Richard F. Aster, Jr.
                                       Richard F. Aster, Jr.
 
                                        2

<PAGE>
 
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
================================================================================
 
<TABLE>
<CAPTION>
                                                                 Shares         Value
                                                                 -------     ------------
     <S>                                                         <C>         <C>
     COMMON STOCK - 78.4%
       BANKING AND FINANCE - 2.1%
          Pacific Century Financial Corp.*.....................  160,000       $7,400,000
       CELLULAR COMMUNICATIONS - 4.6%
          AirTouch Communications, Inc. .......................  358,000        9,800,250
          Vanguard Cellular Systems, Inc. - Class A............  470,000        6,403,750
       CONSUMER PRODUCTS - 3.6%
          Circuit City Stores, Inc. - CarMax Group.............  242,000        3,463,625
          Nu Skin Asia Pacific, Inc. ..........................  265,000        7,022,500
          The York Group, Inc.*................................  114,700        2,150,625
       CONSUMER SERVICES - 7.3%
          Service Corp. International*.........................  315,000       10,355,625
          Sotheby's Holdings, Inc. - Class A*..................  430,000        7,256,250
          Stewart Enterprises, Inc. - Class A*.................  190,000        7,980,000
       ENERGY - 4.1%
          Lomak Petroleum, Inc.*...............................  367,100        6,538,969
          Marine Drilling Companies, Inc. .....................  395,000        7,751,875
       HEALTH SERVICES - 9.7%
          American HomePatient, Inc. ..........................  152,400        3,810,000
          Beverly Enterprises, Inc. ...........................  475,500        7,726,875
          Health Management Associates, Inc. - Class A.........  380,000       10,830,000
          Quorum Health Group, Inc. ...........................  330,000       11,797,500
       INDUSTRIAL SERVICES - 5.8%
          Expeditors International of Washington, Inc.*........  150,900        4,281,788
          Paychex, Inc.*.......................................  228,750        8,692,500
          United Waste Systems, Inc. ..........................  187,000        7,667,000
       REAL ESTATE INVESTMENT TRUSTS - 12.1%
          Arden Realty Group, Inc.*............................  350,000        9,100,000
          Equity Residential Properties Trust*.................  155,000        7,362,500
          Kilroy Realty Corporation*...........................  267,000        6,741,750
          Oasis Residential, Inc.*.............................  270,000        6,345,000
          Spieker Properties, Inc.*............................  180,000        6,333,750
          The Town and Country Trust*..........................  455,000        6,995,625
</TABLE>
 
    The accompanying notes are an integral part of the financial statements
 
                                        3

<PAGE>
 
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
================================================================================
 
<TABLE>
<CAPTION>
                                                                 Shares         Value
                                                                 -------     ------------
     <S>                                                         <C>         <C>
       RESTAURANTS - 3.9%
          Cracker Barrel Old Country Store, Inc.*..............  253,600       $6,720,400
          Showbiz Pizza Time, Inc. ............................  270,000        7,121,250
       RETAIL - 17.1%
          Bed, Bath and Beyond, Inc. ..........................  275,000        8,353,125
          Family Dollar Stores, Inc.*..........................  295,000        8,038,750
          Heilig-Meyers Company*...............................  354,600        6,959,025
          Kohl's Corporation...................................  225,000       11,910,938
          Mac Frugals Bargains * Closeouts Inc. ...............  340,200        9,270,450
          Mazel Stores, Inc. ..................................   82,000        1,435,000
          The Gymboree Corporation.............................  255,000        6,120,000
          Value City Department Stores, Inc. ..................  400,000        3,250,000
          Williams-Sonoma, Inc. ...............................  120,000        5,130,000
       TECHNOLOGY - 8.1%
          Black Box Corporation................................  124,100        4,995,025
          Molex Inc. - Class A*................................  243,750        8,500,781
          National Data Corp.*.................................  185,000        8,012,812
          Xilinx, Inc. ........................................  145,000        7,114,062
                                                                              -----------
       TOTAL COMMON STOCK
       (Identified cost $207,191,201)..........................               276,739,375
                                                                              -----------
     U.S. GOVERNMENT OBLIGATIONS (Identified cost $64,981,861) - 18.4%
       U.S. Treasury Bills @ 5.217% due 07/03/97 (par value
          $65,000,000)..................................................       64,981,861
                                                                              -----------
       TOTAL INVESTMENTS
       (Identified Cost $272,173,062) - 96.8%...........................      341,721,236
                                                                              -----------
     CASH AND OTHER ASSETS LESS LIABILITIES - 3.2%......................       11,307,737
                                                                              -----------
     NET ASSETS - 100%..................................................     $353,028,973
                                                                              ===========
     Shares of capital stock outstanding................................       10,634,038
                                                                              ===========
     Net asset value per share..........................................           $33.20
                                                                              ===========
</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 $272,173,062)....................................   $341,721,236
       Cash and cash equivalents..........................................      9,348,728
       Receivables for:
          Securities sold.................................................      2,741,090
          Dividends.......................................................        323,994
          Interest........................................................         95,717
          Sales of capital stock..........................................         28,036
       Prepaid expenses...................................................          3,970
                                                                             ------------
          TOTAL ASSETS....................................................    354,262,771
                                                                             ------------
 
     LIABILITIES
       Payables for:
          Securities purchased............................................        533,026
          Capital stock repurchased.......................................        384,655
       Accrued expenses...................................................        316,117
                                                                             ------------
          TOTAL LIABILITIES...............................................      1,233,798
                                                                             ------------
     NET ASSETS...........................................................   $353,028,973
                                                                             ============
     Shares of capital stock outstanding, par value $.01 (25,000,000
       shares authorized).................................................     10,634,038
                                                                             ============
     Net asset value per share (offering and redemption price)............         $33.20
                                                                             ============
     Net assets consist of:
       Paid in capital....................................................   $244,552,579
       Accumulated net realized gain......................................     37,025,804
       Net unrealized appreciation on investments.........................     69,548,174
       Undistributed net investment income................................      1,902,416
                                                                             ------------
                                                                             $353,028,973
                                                                             ============
</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............................................    $3,492,892
       Interest.............................................     4,591,814
                                                               -----------
            Total investment income.........................                    $8,084,706
                                                                               -----------
     EXPENSES
       Investment advisory fees.............................     2,897,147
       Transfer agent fees..................................       296,325
       Pricing fees.........................................        72,624
       Reports to shareholders..............................        69,758
       Custodian fees.......................................        63,875
       Registration and filing fees.........................        60,966
       Miscellaneous expenses...............................        36,234
       Professional fees....................................        27,690
       Directors' fees and expenses.........................         6,858
                                                               -----------
            Total expenses..................................                     3,531,477
                                                                               -----------
            Net investment income...........................                     4,553,229
                                                                               -----------
     NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
       Net realized gain on investments.....................    45,845,696
       Proceeds from Litigation.............................        29,948
       Net decrease in unrealized appreciation on
          investments.......................................    (3,443,339)
                                                               -----------
       Net realized and unrealized gains on investments.....                    42,432,305
                                                                               -----------
     NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                      $46,985,534
                                                                               ===========
</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 income.................................      $4,553,229     $3,658,897
     Net realized gain on investments......................      45,875,644     36,920,382
     Net (decrease) increase in unrealized appreciation of
       investments.........................................      (3,443,339)     9,588,487
                                                              -------------   ------------
       Net increase from operations........................      46,985,534     70,167,766
     DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
     Dividends from net investment income..................      (4,397,755)    (3,746,716)
     Distributions from net realized capital gains.........     (33,151,636)    (6,610,825)
                                                              -------------   ------------
       Total distributions.................................     (37,549,391)   (10,357,541)
                                                              -------------   ------------
     CAPITAL SHARE TRANSACTIONS
     Proceeds from sale of stock...........................      52,295,893     82,130,543
     Reinvestment of distributions.........................      35,325,932      9,581,641
     Less: redemptions.....................................    (128,116,015)   (95,588,642)
                                                              -------------   ------------
       Decrease resulting from capital share
          transactions.....................................     (40,494,190)    (3,876,458)
                                                              -------------   ------------
     Total (decrease) increase in net assets...............     (31,058,047)    55,933,767
     NET ASSETS
     Beginning of year.....................................     384,087,020    328,153,253
                                                              -------------   ------------
     End of year (includes undistributed net investment
       income of $1,902,416 and $1,746,942, respectively)..    $353,028,973   $384,087,020
                                                              =============   ============
</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      1993      1992      1991      1990      1989      1988
                            --------   --------   --------   --------   -------   -------   -------   -------   -------   -------
    <S>                     <C>        <C>        <C>        <C>        <C>       <C>       <C>       <C>       <C>       <C>
    Net Asset
     Value -- Beginning of
     year.................    $32.21     $27.29     $24.27     $23.87    $18.97    $17.24    $17.71    $15.93    $13.65    $15.29
                            --------   --------   --------    -------   -------   -------   -------   -------   -------   -------
    Income from Investment
    Operations
    ----------------------
    Net Investment Income
     (loss)...............       .40        .30        .27        .09      (.01)      .07       .20       .06       .41      (.11)
    Net Gains (Losses) on
     Securities (both
     realized and
     unrealized)..........      3.71       5.47       3.63        .76      5.51      3.45       .49      2.84      1.87      (.29)
                            --------   --------   --------    -------   -------   -------   -------   -------   -------   -------
    Total From Investment
     Operations...........      4.11       5.77       3.90        .85      5.50      3.52       .69      2.90      2.28      (.40)
                            --------   --------   --------    -------   -------   -------   -------   -------   -------   -------
    Less Dividends and
     Distributions
    ----------------------
    Dividends from net
     investment income....     (0.36)      (.31)      (.18)      (.02)     (.04)     (.09)     (.12)     (.48)      .00      (.02)
    Distributions from net
     realized capital
     gains................     (2.76)      (.54)      (.70)      (.43)     (.56)    (1.70)    (1.04)     (.64)      .00     (1.22)
                            --------   --------   --------    -------   -------   -------   -------   -------   -------   -------
    Total Dividends and
     Distributions........     (3.12)      (.85)      (.88)      (.45)     (.60)    (1.79)    (1.16)    (1.12)      .00     (1.24)
                            --------   --------   --------    -------   -------   -------   -------   -------   -------   -------
    Net Asset Value -- End
     of Period............    $33.20     $32.21     $27.29     $24.27    $23.87    $18.97    $17.24    $17.71    $15.93    $13.65
                            ========   ========   ========    =======   =======   =======   =======   =======   =======   =======
    Total Return..........    13.92%     21.40%     16.44%      3.48%    29.50%    21.00%     5.62%    19.71%   16.70% *   (2.99%)*
                            ========   ========   ========    =======   =======   =======   =======   =======   =======   =======
    Ratios/Supplemental
     Data
    -------------------
    Net Assets, End of
     Period (in
     thousands)...........  $353,029   $384,087   $328,153   $199,191   $78,581   $18,363   $12,350   $11,058    $9,598   $10,706
    Ratio of Expenses to
     Average Net Assets...     0.96%      0.96%      1.06%      1.22%     1.47%     1.75%     1.68%     2.08%     2.01%+    1.85%+
    Ratio of Net
     Investment Income
     (Loss) to Average Net
     Assets...............     1.23%      0.99%      1.18%       .38%     (.01%)     .24%      .98%      .14%     2.83%+    (.59%)+
    Portfolio Turnover
     Rate.................       37%        34%        29%        43%       61%       61%       85%       66%       62%       58%
    Average Commission
     Paid per Share.......   $0.0595(+)  $0.0588(+)       --       --        --        --        --        --        --        --
*     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. If the Fund had paid all of its expenses and there had been no reimbursement by
      the Adviser, the ratio of expenses to average net assets for the year ended June 30, 1988 and 1989 would
      have been 1.86% and 2.19%, respectively, and the ratio of net investment income (loss) to average net
      assets would have been (.60%) and 2.63%, 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 Fund (the "Fund") a series of
    Meridian Fund, Inc. (the "Company"), began operations on August 1, 1984. The
    Fund was registered on August 1, 1984, 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 Fund, the Company also offers
    the Meridian Value 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 are 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 cost, 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
       $272,173,062, the aggregate gross unrealized appreciation is $75,233,526
       and the aggregate gross unrealized depreciation is $5,685,352 resulting
       in net unrealized appreciation of $69,548,174.
 
   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 and accretion income are 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.
       Funds are automatically swept into a Cash Reserve account which preserves
       capital with a consistently competitive rate of return. Earnings are
       indexed to the Federal Reserve "Fed Funds Rate". Interest accrues daily
       and is credited by the third business day of the following month.
 
   e.  EXPENSES: Expenses arising in connection with the Fund are charged
       directly to the Fund. Expenses common to 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. These "book/tax" differences are either considered temporary
       or permanent in nature. To the extent these differences are permanent in
       nature, such amounts are reclassified within the capital accounts based
       on their federal tax-basis treatment; temporary differences do not
       require reclassification. 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
 
                                        9

<PAGE>
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 1997
================================================================================
 
   g.  (continued) 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.
 
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.
 
    The Investment Adviser receives from the Fund as compensation for its
    services an annual fee of 1% of the first $50,000,000 of the Fund's net
    assets and 0.75% of the Fund's net assets in excess of $50,000,000. The fee
    is paid monthly and calculated based on that month's average net assets.
 
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 period ended June 30, 1997 and June 30, 1996, were as follows:
 
<TABLE>
<CAPTION>
                                                                1997           1996
                                                             ----------     ----------
      <S>                                                    <C>            <C>
      Shares sold                                             1,670,786      2,717,761
      Shares issued on reinvestment of distributions          1,166,006        322,055
                                                             ----------     ----------
                                                              2,836,792      3,039,816
      Shares redeemed                                        (4,126,984)    (3,138,480)
                                                             ----------     ----------
      Net decrease                                           (1,290,192)       (98,664)
                                                             ==========     ==========
</TABLE>
 
4.  COMPENSATION OF DIRECTORS AND OFFICERS: Directors and officers of the Fund
    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 $2,000.
 
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 $102,167,928 and $160,466,821, respectively. The cost of
    short-term obligations purchased and the proceeds from sales of short-term
    obligations, for the year ended June 30, 1997 were $326,044,734 and
    $349,935,383, respectively.
 
                                       10

<PAGE>
 
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
 
To the Board of Directors and Shareholders
of Meridian 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 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 ten years in the period then ended,
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 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 LOGO]
 
                         60 E. Sir Francis Drake Blvd.
                             Wood Island, Suite 306
                               Larkspur, CA 94939
                                 (415) 461-6237
 
                            Telephone (800) 446-6662
 
                                  JUNE 30, 1997

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