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SEQUOIA FUND, INC.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
With Income Dividends Reinvested and Capital Gains
Distributions Accepted in Shares

The table below covers the period from July 15, 1970 (the date Fund shares were first offered to the public) to December 31, 2002. This period was one of widely fluctuating common stock prices. The results shown should not be considered as a representation of the dividend income or capital gain or loss which may be realized from an investment made in the Fund today.

PERIOD ENDED: Value of
Initial
$10,000
Investment
Value of
Cumulative
Capital Gains
Distributions
Value of
Cumulative
Reinvested
Dividends
Total
Value of
Shares





July 15, 1970 $10,000 $— $— $10,000
May 31, 1971 11,750 184 11,934
May 31, 1972 12,350 706 451 13,507
May 31, 1973 9,540 1,118 584 11,242
May 31, 1974 7,530 1,696 787 10,013
May 31, 1975 9,490 2,137 1,698 13,325
May 31, 1976 12,030 2,709 2,654 17,393
May 31, 1977 15,400 3,468 3,958 22,826
Dec. 31, 1977 18,420 4,617 5,020 28,057
Dec. 31, 1978 22,270 5,872 6,629 34,771
Dec. 31, 1979 24,300 6,481 8,180 38,961
Dec. 31, 1980 25,040 8,848 10,006 43,894
Dec. 31, 1981 27,170 13,140 13,019 53,329
Dec. 31, 1982 31,960 18,450 19,510 69,920
Dec. 31, 1983 37,110 24,919 26,986 89,015
Dec. 31, 1984 39,260 33,627 32,594 105,481
Dec. 31, 1985 44,010 49,611 41,354 134,975
Dec. 31, 1986 39,290 71,954 41,783 153,027
Dec. 31, 1987 38,430 76,911 49,020 164,361
Dec. 31, 1988 38,810 87,760 55,946 182,516
Dec. 31, 1989 46,860 112,979 73,614 233,453
Dec. 31, 1990 41,940 110,013 72,633 224,586
Dec. 31, 1991 53,310 160,835 100,281 314,426
Dec. 31, 1992 56,660 174,775 112,428 343,863
Dec. 31, 1993 54,840 213,397 112,682 380,919
Dec. 31, 1994 55,590 220,943 117,100 393,633
Dec. 31, 1995 78,130 311,266 167,129 556,525
Dec. 31, 1996 88,440 397,099 191,967 677,506
Dec. 31, 1997 125,630 570,917 273,653 970,200
Dec. 31, 1998 160,700 798,314 353,183 1,312,197
Dec. 31, 1999 127,270 680,866 286,989 1,095,125
Dec. 31, 2000 122,090 903,255 289,505 1,314,850
Dec. 31, 2001 130,240 1,002,955 319,980 1,453,175
Dec. 31, 2002 126,630 976,920 311,226 1,414,776

The total amount of capital gains distributions accepted in shares was $613,437, the total amount of dividends reinvested was $116,740.

No adjustment has been made for any taxes payable by shareholders on capital gain distributions, dividends reinvested in shares or sale of fund shares.

To the Shareholders of
Sequoia Fund, Inc.

Dear Shareholder:

Sequoia Fund's results for the fourth quarter of 2002 are shown below with comparable results for the leading market indexes:

To December 31, 2002 Sequoia
Fund
Dow Jones
Industrials
Standard &
Poor's 500



Fourth Quarter 1.74% 10.38% 8.44%
1 Year -2.64% -15.10% -22.10%
5 Years (Annualized) 7.83% 2.83% -0.59%
10 Years (Annualized) 15.19% 12.02% 9.34%

The S&P 500 Index is an unmanaged, capitalization-weighted index of the common stocks of 500 major US corporations. The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 actively traded blue chip stocks. The performance data quoted represents past performance and assumes reinvestment of dividends. The investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.


As we noted in our recent third quarter 2002 report, the Sequoia Fund had a slightly negative return for the year but did considerably better than the stock market in general. We also noted that we were confident that the intrinsic value of our underlying holdings increased as a result of an increase in economic earning power.

While it is early in the year to make predictions, we believe that the outlook for 2003 also bodes well for the aggregate value of our investments in terms of increasing intrinsic value. However, in the space of a single year, it is totally unpredictable as to how the market will value those earnings. We believe our holdings are currently selling at something of a discount to an amply priced stock market and because of their future prospects in our opinion, they deserve a premium.

This letter is being written February 3rd and you may not actually receive it because of production time and the speed of the U.S. mail until later in the month. The immediate future is perhaps as unpredictable as at any time in which we have written a shareholder letter in the past. It is clear that the reported earnings of American businesses are going through a difficult period for two reasons, a slowing economy adjusting to past overexpansion in many areas and the fact that reported earnings in the past were, in the aggregate, overstated. They remain so but by a lesser degree. Further, no one can predict the near term effects of military conflict and its aftermath. However, a review of the past century, which certainly contained many virtually cataclysmic events, showed that our country's economy weathered many disruptions and we strongly believe that will be true in the future.

During 2002, we had very few changes in our holdings. Volatility however, did provide us with the chance to acquire a position in Mohawk Industries at a price which we believed to offer good value. Mohawk is a very well managed manufacturer of carpet and flooring products and has an excellent distribution system through thousands of small flooring dealers. Because of its distribution expertise and quality of its product, it has a significant share of market. The business has a strong franchise and the kind of cash generating characteristics we admire.

We continue to increase the depth and quality of our research staff. Furthermore, we feel no pressure to make commitments unless both the price and quality of the investment dictate it. During a period such as this, patience and constant investigation are required and we are confident that we will see continued growth of our present companies as well as new opportunities, which will hopefully provide a decent return on your investment in Sequoia.

Sincerely,

   
David M. Poppe
Executive Vice President
Richard T. Cunniff
Vice Chairman
   
Robert D. Goldfarb
President
William J. Ruane
Chairman
February 3, 2003

 

THE ANNUAL MEETING OF STOCKHOLDERS OF
SEQUOIA FUND, INC. WILL BE HELD AT 10:00 A.M.,
NEW YORK CITY TIME, ON MAY 9, 2003 AT THE NEW
YORK ATHLETIC CLUB, 180 CENTRAL PARK SOUTH,
NEW YORK, NEW YORK 10019.

 

SEQUOIA FUND, INC.
Schedule of Investments
December 31, 2002

COMMON STOCKS (82.34%)
Shares Value
(Note 1)


BANK HOLDING COMPANIES (12.62%)
8,310,093 Fifth Third Bancorp $486,555,945
222,100 Mercantile Bankshares Corporation 8,570,839

495,126,784

BUILDING MATERIALS (3.25%)
3,408,200 Fastenal Company† 127,432,598

DIVERSIFIED COMPANIES (34.79%)
18,757 Berkshire Hathaway Inc. Class A* 1,364,571,750

FREIGHT TRANSPORTATION (2.03%)
2,440,400 Expeditors International of Washington, Inc. 79,679,060

HOME FURNISHINGS (2.02%)
2,303,100 Ethan Allen Interiors, Inc.† 79,157,547

INSURANCE (8.80%)
6,956,400 Progressive Corporation — Ohio 345,246,132

LAUNDRY SERVICES (0.46%)
395,400 Cintas Corporation 18,089,550

MANUFACTURING (1.77%)
2,012,900 Dover Corporation 58,696,164
229,400 Harley Davidson, Inc. 10,598,280

69,294,444

TEXTILE — CARPETS (6.23%)
4,289,700 Mohawk Industries Inc.†* 244,298,415

PROCESS CONTROL INSTRUMENTS (0.42%)
251,600 Danaher Corporation 16,530,120

RETAILING (8.47%)
52,100 Costco Wholesale Corporation* 1,461,926
1,526,500 Tiffany & Company 36,498,615
15,062,000 TJX Companies, Inc. 294,010,240

331,970,781

Miscellaneous Securities (1.48%) 58,216,536

TOTAL COMMON STOCKS (COST $1,069,125,872) $3,229,613,717

Principal
Amount

U.S. GOVERNMENT OBLIGATIONS (17.66%)
$693,000,000 U.S. Treasury Bills due 01/02/03 through 02/06/03 $692,603,371

TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $692,603,371) 692,603,371

TOTAL INVESTMENTS (100%)††
(Cost $1,761,729,243) $3,922,217,088



†† The cost for federal income tax purposes is identical.
* Non-income producing.
Refer to Note 7.

The accompanying notes form an integral part of these Financial Statements

SEQUOIA FUND, INC.
Statement of Assets and Liabilities
December 31, 2002

ASSETS:
     Investments in securities, at value (cost $1,761,729,243) (Note 1) $3,922,217,088
     Cash on deposit with custodian 1,758,913
     Receivable for capital stock sold 402,063
     Dividends receivable 2,227,974
     Other assets 42,110

          Total assets 3,926,648,148

LIABILITIES:
     Payable for capital stock repurchased 1,112,724
     Payable for investments securities purchased unsettled 17,062,734
     Accrued investment advisory fee 3,211,585
     Accrued other expenses 125,125

          Total liabilities 21,512,168

Net assets applicable to 30,837,870 shares of capital stock outstanding (Note 4) $3,905,135,980


Net asset value, offering price and redemption price per share $126.63


The accompanying notes form an integral part of these Financial Statements.

SEQUOIA FUND, INC.
Statement of Operations
Year Ended December 31, 2002

INVESTMENT INCOME:
     Income:
          Dividends:
               Unaffiliated companies $14,166,985
               Affiliated companies (Note 7) 679,100
          Interest 14,186,946
          Other Income 14,166

                    Total income 29,047,197

     Expenses:
          Investment advisory fee (Note 2) 41,617,894
          Legal and auditing fees 96,252
          Stockholder servicing agent fees 393,278
          Custodian fees 80,000
          Directors fees and expenses (Note 6) 181,377
          Other 192,099

                    Total expenses 42,560,900
     Less expenses reimbursed by Investment Adviser (Note 2) 793,000

                    Net expenses 41,767,900

                    Net investment (loss) (12,720,703)

REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
     Realized gain on investments:
          Unaffiliated companies 131,001,874
          Affiliated companies (Note 7) 6,516,573

                    Net realized gain on investments $137,518,447
     Net decrease in unrealized appreciation on:
          Investments (237,620,489)

                    Net realized and unrealized (loss) on investments (100,102,042)

Decrease in net assets from operations $112,822,745)


The accompanying notes form an integral part of these Financial Statements.

SEQUOIA FUND, INC.
Statements of Changes in Net Assets

Year Ended December 31,

2002 2001


INCREASE (DECREASE) IN NET ASSETS:
     From operations:
          Net investment (loss) income $(12,720,703) $31,269,566
          Net realized gains 137,518,447 49,850,028
          Net (decrease)/increase in unrealized appreciation (237,620,489) 323,645,180


               Net (decrease)/increase in net assets from operations (112,822,745) 404,764,774
     Distributions to shareholders from:
          Net investment income (352,691) (30,954,184)
          Net realized gains (4,996,914) (108,695,093)
          Capital share transactions (Note 4) (206,821,129) 21,135,078


               Total (decrease)/increase (324,993,479) 286,250,575
NET ASSETS:
     Beginning of year 4,230,129,459 3,943,878,884


     End of year $3,905,135,980 $4,230,129,459




NET ASSETS CONSIST OF:
     Capital (par value and paid in surplus) $1,727,724,465 $1,834,354,645
     Undistributed net investment income 0 354,842
     Undistributed net realized gains/(losses) (Note 3) 16,923,670 (2,688,362)
     Unrealized appreciation 2,160,487,845 2,398,108,334


               Total Net Assets $3,905,135,980 $4,230,129,459




The accompanying notes form an integral part of these Financial Statements.

SEQUOIA FUND, INC.
Notes To Financial Statements

NOTE 1—SIGNIFICANT ACCOUNTING POLICIES:

Sequoia Fund, Inc. is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management company. The investment objective of the Fund is growth of capital from investments primarily in common stocks and securities convertible into or exchangeable for common stock. The following is a summary of significant accounting policies, consistently followed by the Fund in the preparation of its financial statements.

A. Valuation of investments: Investments are carried at market value or at fair value as determined by the Board of Directors. Securities traded on a national securities exchange are valued at the last reported sales price on the principal exchange on which the security is listed on the last business day of the period; securities traded in the over-the-counter market are valued at the last reported sales price on the NASDAQ National Market System on the last business day of the period; listed securities and securities traded in the over-the-counter market for which no sale was reported on that date are valued at the mean between the last reported bid and asked prices; U.S. Treasury Bills with remaining maturities of 60 days or less are valued at their amortized cost. U.S. Treasury Bills that when purchased have a remaining maturity in excess of sixty days are stated at their discounted value based upon the mean between the bid and asked discount rates until the sixtieth day prior to maturity, at which point they are valued at amortized cost.
B. Accounting for investments: Investment transactions are accounted for on the trade date and dividend income is recorded on the ex-dividend date. The net realized gain or loss on security transactions is determined for accounting and tax purposes on the specific identification basis.
C. 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 stockholders. Therefore, no federal income tax provision is required.
D. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
E. General: Dividends and distributions are recorded by the Fund on the ex-dividend date. Interest income is accrued as earned.

NOTE 2—INVESTMENT ADVISORY CONTRACTS AND PAYMENTS TO INTERESTED PERSONS:

The Fund retains Ruane, Cunniff & Co., Inc. as its investment adviser. Ruane, Cunniff & Co., Inc. (Investment Adviser) provides the Fund with investment advice, administrative services and facilities.

Under the terms of the Advisory Agreement, the Investment Adviser receives a management fee equal to 1% per annum of the Fund's average daily net asset values. This percentage will not increase or decrease in relation to increases or decreases in the net asset value of the Fund. Under the Advisory Agreement, the Investment Adviser is obligated to reimburse the Fund for the amount, if any, by which the operating expenses of the Fund (including the management fee) in any year exceed the sum of 1-1/2% of the average daily net asset values of the Fund during such year up to a maximum of $30,000,000, plus 1% of the average daily net asset values in excess of $30,000,000. The expenses incurred by the Fund exceeded the percentage limitation during the year ended December 31, 2002 and the Investment Adviser reimbursed the Fund $793,000.

For the year ended December 31, 2002, there were no amounts accrued to interested persons, including officers and directors, other than advisory fees of $41,617,894 and brokerage commissions of $447,773 to Ruane, Cunniff & Co., Inc. Certain officers of the Fund are also officers of the Investment Adviser and the Fund's distributor. Ruane, Cunniff & Co., Inc., the Fund's distributor, received no compensation from the Fund on the sale of the Fund's capital shares during the year ended December 31, 2002.

NOTE 3—PORTFOLIO TRANSACTIONS:

The aggregate cost of purchases and the proceeds from the sales of securities, excluding U.S. government obligations, for the year ended December 31, 2002 were $263,367,361 and $295,773,207, respectively. Included in proceeds of sales is $160,908,489 representing the value of securities disposed of in payment of redemptions in kind, resulting in realized gains of $112,911,652. As a result of the redemptions in kind, net realized gains differ for financial statement and tax purposes. These realized gains have been reclassified from undistributed realized gains to paid in surplus in the accompanying financial statements.

At December 31, 2002 the aggregate gross unrealized appreciation and depreciation of securities were $2,169,528,239 and $9,040,394, respectively.

NOTE 4—CAPITAL STOCK:

At December 31, 2002 there were 100,000,000 shares of $.10 par value capital stock authorized. Transactions in capital stock were as follows:

2002 2001


Shares Amount Shares Amount




Shares sold 1,287,555 $166,163,172 1,129,012 $137,722,810
Shares issued to stockholders on reinvestment of:
     Net investment income 10,323 1,368,620 177,192 21,920,774
     Net realized gain on investments 25,829 3,239,739 792,019 95,716,809




1,323,707 170,771,531 2,098,223 255,360,393
Shares repurchased 2,964,295 377,592,660 1,923,077 234,225,315




Net (decrease)/increase (1,640,588) $(206,821,129) 175,146 $21,135,078








NOTE 5—DISTRIBUTIONS TO SHAREHOLDERS:

The tax character of distributions paid during 2001 and 2002 was as follows:

2002 2001


Distributions paid from:
Ordinary income $848,250 $44,425,425
Long-term capital gains 4,501,355 95,223,852


          Total distributions $5,349,605 $139,649,277




As of December 31, 2002, the components of distributable earnings on a tax basis were as follows:

Undistributed long-term gain $16,923,670
Unrealized appreciation 2,160,487,845

$2,177,411,515


NOTE 6—DIRECTORS FEES AND EXPENSES:

Directors who are not deemed "interested persons" receive fees of $6,000 per quarter and $2,500 for each meeting attended, and are reimbursed for travel and other out-of-pocket disbursements incurred in connection with attending directors meetings. The total of such fees and expenses paid by the Fund to these directors for the year ended December 31, 2002 was $181,377.

NOTE 7—AFFILIATED COMPANIES:

Investment in portfolio companies 5% or more of whose outstanding voting securities are held by the Fund are defined in the Investment Company Act of 1940 as "affiliated companies." The total value and cost of investments in affiliates at December 31, 2002 aggregated $323,455,962 and $254,424,815, respectively. The summary of transactions for each affiliate during the period of their affiliation for the year ended December 31, 2002 is provided below:

Affiliate

Purchases Sales Realized
Gain
Dividend
Income


Shares Cost Shares Cost







Ethan Allen Interiors, Inc. 110,900 $2,667,729 $664,816 $482,800
Fastenal Company 517,800 $14,551,031 4,165,180 196,300
Mohawk Industries Inc. 4,496,400 $204,597,204 206,700 $9,016,349 1,686,577


$6,516,573 $679,100




NOTE 8—FINANCIAL HIGHLIGHTS:

Year Ended December 31,

2002 2001 2000 1999 1998





Per Share Operating Performance (for a share outstanding throughout each year)
Net asset value, beginning of year $130.24 $122.09 $127.27 $160.70 $125.63





Income from investment operations:
Net investment (loss)/income (0.41) 0.97 1.66 0.84 0.39
Net realized and unrealized gains (losses) on investments (3.03) 11.52 23.33 (26.83) 43.07





     Total from investment operations (3.44) 12.49 24.99 (25.99) 43.46





Less distributions:
Dividends from net investment income (0.01) (0.97) (1.66) (0.85) (0.37)
Distributions from net realized gains (0.16) (3.37) (28.51) (6.59) (8.02)





     Total distributions (0.17) (4.34) (30.17) (7.44) (8.39)





Net asset value, end of year $126.63 $130.24 $122.09 $127.27 $160.70










Total Return -2.6% 10.5% 20.1% -16.5% 35.3%
Ratios/Supplemental data
Net assets, end of year (in millions) $3,905.1 $4,230.1 $3,943.9 $3,896.9 $5,001.9
Ratio to average net assets:
     Expenses 1.0% 1.0% 1.0% 1.0% 1.0%
     Net investment income -0.3% 0.8% 1.2% 0.6% 0.3%
Portfolio turnover rate 8% 7% 36% 12% 21%

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Sequoia Fund, Inc.

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 Sequoia Fund, Inc. (the "Fund") at December 31, 2002, the results of its operations for the year then ended, and 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 four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "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 auditing standards generally accepted in the United States of America, 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 December 31, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for the year in the period ended December 31, 1998 were audited by other independent accountants whose report dated January 15, 1999 expressed an unqualified opinion on those statements.

PricewaterhouseCoopers LLP
New York, New York
January 22, 2003

Information about Sequoia Fund Officers and Directors:

The SAI includes additional information about Fund directors and is available, without charge, upon request. You may call toll-free 1-800-686-6884 to request the SAI.

Name, Age, and Address

Position Held
with Fund
Term of Office and
Length of Time
Served
Principal
Occupation during
Past 5 Years
Other
Directorships
Held by
Director





William J. Ruane, 77
767 Fifth Avenue
New York, NY 10153
Chairman of the
Board & Director
Term — 1 Year &
Length of Time
served — 32 Years
Chairman of the
Board & Director of
Ruane, Cunniff &
Co., Inc.
None
     
Richard T. Cunniff, 79
767 Fifth Avenue
New York, NY 10153
Vice Chairman &
Director
Term — 1 Year &
Length of Time
served — 32 Years
Vice Chairman &
Director of Ruane,
Cunniff & Co., Inc.
Sturm,
Ruger &
Company, Inc.
     
Robert D. Goldfarb, 58
767 Fifth Avenue
New York, NY 10153
President & Director Term — 1 Year &
Length of Time
served — 24 Years
President & Director
of Ruane, Cunniff &
Co., Inc.
None
     
David M. Poppe, 38
767 Fifth Avenue
New York, NY 10153
Executive Vice
President & Director
Term — 1 Year &
Length of Time
served — effective
01/01/03
Research Analyst of
Ruane, Cunniff &
Co., Inc.; Business
reporter Miami
Herald
None
     
Joseph Quinones, Jr., 57
767 Fifth Avenue
New York, NY 10153
Vice President,
Secretary &
Treasurer
Term — 1 Year &
Length of Time
served — 7 Years
Vice President,
Secretary &
Treasurer of Ruane,
Cunniff & Co., Inc.
None
     
Francis P. Matthews, 80
767 Fifth Avenue
New York, NY 10153
Director Term — 1 Year &
Length of Time
served — 30 Years
Retired None
     
C. William Neuhauser, 76
767 Fifth Avenue
New York, NY 10153
Director Term — 1 Year &
Length of Time
served — 28 Years
Retired None
     
Robert L. Swiggett, 80
767 Fifth Avenue
New York, NY 10153
Director Term — 1 Year &
Length of Time
served — 32 Years
Retired None
     
Roger Lowenstein, 48
767 Fifth Avenue
New York, NY 10153
Director Term — 1 Year &
Length of Time
served — 4 Years
Writer major
Financial and News
Publications
None
     
Vinod Ahooja, 51
767 Fifth Avenue
New York, NY 10153
Director Term — 1 Year &
Length of Time
served — 2 Years
Retired None

SEQUOIA FUND, INC.
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798
Website: www.sequoiafund.com

DIRECTORS

William J. Ruane
Richard T. Cunniff
Robert D. Goldfarb
David Poppe
Vinod Ahooja
Roger Lowenstein
Francis P. Matthews
C. William Neuhauser
Robert L. Swiggett

OFFICERS

William J. Ruane Chairman of the Board
Richard T. Cunniff Vice Chairman
Robert D. Goldfarb President
David M. Poppe Executive Vice President
Joseph Quinones, Jr. Vice President, Secretary & Treasurer

INVESTMENT ADVISER & DISTRIBUTOR

Ruane, Cunniff & Co., Inc.
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798

CUSTODIAN

The Bank of New York
MF Custody Administration Department
100 Church Street, 10th Floor
New York, New York 10286

REGISTRAR AND SHAREHOLDER SERVICING AGENT

DST Systems, Inc.
P.O. Box 219477
Kansas City, Missouri 64121

LEGAL COUNSEL

Seward & Kissel
One Battery Park Plaza
New York, New York 10004

This report has been prepared for the information of shareholders of Sequoia Fund, Inc.