Overview

Meridian Contrarian Fund

Objective:

  • Long-term growth of capital

A mutual fund that seeks:

  • Out-of-favor companies that may have depressed valuations and visible catalysts for sustainable improvement*
  • Prioritize downside risk before potential return
  • Maintain long-term investment horizon

* There is no guarantee that the perceived intrinsic value will be achieved.

Fundamental Research

Meridian Contrarian portfolio managers conduct in-depth, fundamental research to uncover out-of-favor companies that have depressed valuations and visible catalysts for sustainable improvement in business fundamentals.

Ticker Symbols

A Shares: MFCAX
C Shares: MFCCX
Investor Shares: MFCIX
Legacy Shares: MVALX

Screen for Earnings Decline

  • Screen for companies that have reported multiple year-over-year earnings declines; typically, at least three quarters in a row
  • Eliminate micro-cap companies with less than $250 million market cap

Assess Quality of Business

  • Industry strength
  • Durable competitive advantage
  • Sustainable future earnings growth
  • Improving return on invested capital and free cash flow

Identify Reasons for Decline

  • Company specific
    • Costly investment cycle
    • Missed product cycle
    • Poor acquisition
  • Industry-specific downturn
  • General economic weakness

Determine if Earnings Rebound

  • Coherent turnaround plan
  • Fixed product/service responsible for problems
  • Strong new or existing management
  • Industry conducive to growth
  • Expectations properly reset

Analyze Appropriate Valuation

  • Evaluate price to normalized earnings upon return to growth
  • Upside scenario if investment thesis materializes
  • Downside scenario if problems persist

Principal Investment Strategies

The Fund seeks long-term growth of capital by investing primarily in a diversified portfolio of publicly traded common stocks of U.S. companies. Under normal circumstances, the Fund emphasizes stocks which the Investment Adviser believes are undervalued in relation to an issuer’s long-term earnings power or asset value, or the stock market in general. Securities in which the Fund invests may be undervalued because of many factors, including market decline, poor economic conditions, tax-loss selling or actual or anticipated unfavorable developments affecting the issuer of the security. The Fund may invest in securities of companies with any capitalization across a broad range of industries. The Fund intends to invest at least 65% of its total assets in common stocks and equity-related securities (such as convertible debt securities and warrants). The Fund may invest up to 35% of its total assets in debt or fixed income securities, including higher yield, higher risk, lower rated or unrated corporate bonds commonly referred to as “junk bonds.” These are bonds that are rated Ba or below by Moody’s or BB or below by S&P. The Fund may invest up to 10% of its total assets in securities rated Ca or below by Moody’s or C or below by S&P, or unrated but considered by the Investment Adviser to be of comparable quality. The Fund may also invest up to 25% of its total assets, calculated at the time of purchase, in securities of foreign companies, including emerging market companies. If, in the Invest- ment Adviser’s opinion, a stock has reached a fully valued position, it generally will be, but need not be, sold and replaced by securities which are deemed to be undervalued in the marketplace. The Fund generally sells investments when (i) the Investment Adviser concludes that the company’s fundamentals are not meeting expectations; (ii) better investment opportunities exist; and/or (iii) the company’s business has improved and this, in the Investment Adviser’s opinion, is reflected in the share price.

Principal Investment Risks

There are risks involved with any investment. The principal risks associated with an investment in this Fund are set forth below. Please see the section “Further Information About Principal Risks” in this Prospectus for a detailed discussion of these risks and other factors you should carefully consider before deciding to invest in the Fund.

General Risk — You could lose money on your investment in the Fund or the Fund could underperform other investments.

Investment Style Risk — Although the Fund makes every effort to achieve its investment objective of long-term growth of capital, it cannot guarantee that the Investment Adviser’s investment strategies or securities selection method will achieve that objective.

Equity Securities Risk — Equity securities holders are entitled to the income and increase in the value of the assets and business of an issuer after debt obligations and obligations to debt securities holders are satisfied. Equity securities fluctuate in price in response to many factors including historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investors perceptions and market liquidity.

Market Risk — The value of the Fund’s investments will fluctuate in response to the activities of individual companies and general stock market and economic conditions and the value of your investment in the Fund may be more or less than your purchase price.

Value Investing Risk — There is a risk that the Fund’s emphasis on investing in value-oriented companies may underperform during times when value investing is out of favor.

Small Company Risk — Generally, the smaller the capitalization of a company, the greater the risk associated with an investment in the company. The stock prices of smaller and newer companies tend to fluctuate more than those of larger, more established companies and have smaller market for their shares than do large capitalization companies.

Foreign Company Risk— Investments in foreign securities may be subject to more risks than those associated with U.S. investments, including currency fluctuations, political and economic instability and differences in accounting, auditing and financial reporting standards. Emerging market securities involve greater risk and more volatility than those of companies in more developed markets. Significant levels of foreign taxes are also a risk related to foreign investments.

High Yield Bond Risk — Debt securities that are rated below investment grade (commonly referred to as “junk bonds”) involve a greater risk of default or price declines than investment grade securities. The market for high-yield, lower rated securities may be thinner and less active, causing market price volatility and limited liquidity in the secondary market. This may limit the ability of a Fund to sell these securities at their fair market values either to meet redemption requests, or in response to changes in the economy or the financial markets.

Debt Securities Risk — Debt securities are subject to credit risk, interest rate risk and liquidity risk. Credit risk is the risk that the entity that issued a debt security may become unable to make payments of principal and interest when due and includes the risk of default. Interest rate risk is the risk of losses due to changes in interest rates. Liquidity risk is the risk that the Fund may not be able to sell portfolio securities, including medium- and lower-grade securities, because there are too few buyers for them.