Sequoia Fund, Inc. 767 Fifth Avenue, Suite 4701
New York, NY 10153
(800) 686-6884

QUARTERLY REPORT
For the Period Ended March 31, 2010

To the Shareholders of Sequoia Fund, Inc.:

As of this writing, the Sequoia Fund is up 5.08% year-to-date versus a decline of 1.71% for the S&P 500.

We recently held our annual investor day for Sequoia shareholders and other clients of Ruane, Cunniff & Goldfarb. The following comments were made by Bob Goldfarb at that meeting. A transcript of the question-and-answer portion of the meeting will be mailed to you with the second quarter report in August.

During the first quarter, we significantly reduced the size of our holding in Berkshire Hathaway. This sale of shares was atypical for us in that we knowingly sold a stock at a discount to its intrinsic value. The only times we have done this before were when we were fully invested and wanted to raise funds to buy another stock which we thought was selling at a greater discount. This was not the case here because prior to the Berkshire sale we had ample liquidity.

We reduced the size of the Berkshire position for two reasons. The principal one was the size of the position as a percentage of the portfolio. The second was the law of large numbers. Historically we always had a policy of owning up to 15% of the portfolio in a single stock if we felt that it was a compelling value. We made an exception for Berkshire for two reasons. First, Berkshire's broad diversification made it less subject to the risk inherent in a single business. Second was our strong belief in Warren Buffett's genius. However when that genius says that the future growth rate of his company's book value will be substantially less than its historic rate it behooves one to take heed.

The timing of the sale was driven by our belief that while Berkshire was still selling at a discount to its business value the run-up in the price of its shares in conjunction with their entry into the S&P 500 made that discount considerably less than it had been for some time.

After the sale Berkshire remains by far our largest holding. In other past situations in which we sold part of a holding Bill Ruane would say, "Let's sell it and hope that it goes up." Our expectation is that over time Berkshire's share price will increase further as its underlying value grows. We continue to have a large stake in that outcome.


We have enhanced the online services available to our shareholders through our website, www. sequoiafund.com. Now shareholders may check their account information online as well as purchase or redeem shares of the Fund. In addition, the following types of accounts may be opened through the website: individual, joint, TOD, and UGMA/UTMA accounts and Traditional and Roth IRAs. You may establish online transaction privileges by enrolling on the website. You automatically have the ability to establish these privileges, but you will be required to enter into a user's agreement through the website to enroll for the privileges. Transactions through the website are subject to the same investment minimums as other transaction methods. Please review the Fund's prospectus for more information about the online services as well as the limitations and risks relating to such services.

Based on activity to the date of this letter, the capital gains distribution will be approximately $0.83 per share and will be distributed in December. We will do our best to keep you informed of any material changes due to sales activity through October 31, 2010. IRS regulations dictate that capital gain distributions are determined by transactions from November 1 of one year to October 31 of the following year.

Sincerely,

Richard T. Cunniff
Vice Chairman
Robert D. Goldfarb
President
David M. Poppe
Executive Vice President

May 24, 2010

FUND PERFORMANCE

Sequoia Fund's results for the first quarter of 2010 are shown below with comparable results for the leading market indexes:

To March 31, 2010
Sequoia
Fund
Standard &
Poor's 500


3 Months 8.00% 5.39%
1 Year 35.99% 49.77%
5 Years (Annualized) 3.06% 1.92%
10 Years (Annualized) 6.18% -0.65%

The performance shown above represents past performance and does not guarantee future results. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of Fund shares. Current performance may be lower or higher than the performance information shown.

The S&P 500 Index is an unmanaged, capitalization-weighted index of the common stocks of 500 major US corporations. 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. Year to date performance as of the most recent month end can be obtained by calling DST Systems, Inc. at (800) 686-6884.


FEES AND EXPENSES OF THE FUND
(UNAUDITED)

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Fees (fees paid directly from your investment)

The Fund does not impose any sales charges, exchange fees or redemption fees.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)

Annual Fund Operating Expenses

Management Fees 1.00%
Other Expenses 0.05%
Total Annual Fund Operating Expenses* 1.05%

* Does not reflect Ruane, Cunniff & Goldfarb Inc.'s ("Ruane, Cunniff & Goldfarb") contractual reimbursement of a portion of the Fund's operating expenses. This reimbursement is a provision of Ruane, Cunniff & Goldfarb's investment advisory agreement with the Fund and the reimbursement will be in effect only so long as that investment advisory agreement is in effect. For the year ended December 31, 2009, the Fund's annual operating expenses net of such reimbursement was 1.01%.

SEQUOIA FUND, INC.

SCHEDULE OF INVESTMENTS

MARCH 31, 2010 (UNAUDITED)

COMMON STOCKS (74.74%)

Shares
 
 
Value (a)


 

ADVERTISING (1.18%)

 

 

933,743

Omnicom Group Inc.

 

$36,238,566


 

AEROSPACE/DEFENSE (7.53%)

 

 

947,406

Precision Castparts Corp.

 

120,045,814

12,376,114

Rolls-Royce Group plc (United Kingdom)

 

111,842,942


     

231,888,756


 

AUTO PARTS (4.40%)

 

 

1,549,400

Advance Auto Parts, Inc.

 

64,950,848

1,694,139

O'Reilly Automotive Inc. (b)

 

70,662,538


     

135,613,386


 

AUTOMOTIVE MANUFACTURING (2.29%)

 

 

1,154,660

Porsche Automobil Holding SE (Germany) (c)

 

70,480,446


 

BUILDING MATERIALS (2.49%)

 

 

916,899

Martin Marietta Materials Inc.

 

76,606,911


 

CONSTRUCTION EQUIPMENT (1.06%)

 

 

1,520,736

Ritchie Bros. Auctioneers Incorporated

 

32,741,446


  CRUDE OIL & GAS PRODUCTION (0.22%)    

89,754

Canadian Natural Resources Limited  

6,645,386


  DIVERSIFIED COMPANIES (15.04%)    

3,803

Berkshire Hathaway Inc. Class A (b)  

463,205,400

600

Berkshire Hathaway Inc. Class B (b)  

48,762


     

463,254,162


  DIVERSIFIED MANUFACTURING (0.99%)    

382,832

Danaher Corporation  

30,592,105


 

FLOORING PRODUCTS (4.69%)

 

 

2,657,723

Mohawk Industries Inc. (b)

 

144,526,977


 

FREIGHT TRANSPORTATION (0.34%)

 

 

281,300

Expeditors International Inc.

 

10,385,596


 

HEALTHCARE (1.07%)

 

 

418,000

Becton, Dickinson and Company

 

32,909,140


 

INDUSTRIAL & CONSTRUCTION SUPPLIES (5.41%)

 

 

3,475,384

Fastenal Company

 

166,783,678


 

INDUSTRIAL GASES (0.97%)

 

 

359,017

Praxair, Inc.

 

29,798,411


 

INFORMATION PROCESSING (2.46%)

 

 

298,457

MasterCard Inc.

 

75,808,078


 

INSURANCE BROKERS (0.65%)

 

 

1,124,830

Brown & Brown Inc.

 

20,156,954


 

LABORATORY SUPPLIES (0.07%)

 

 

19,247

Mettler-Toledo International Inc. (b)

 

2,101,772


 

PRINTING (0.87%)

 

 

1,912,072

De La Rue plc (United Kingdom)

 

26,885,644


 

PROPERTY AND CASUALTY INSURANCE (0.53%)

 

 

605,000

W. R. Berkley Corporation

 

15,784,450

21,000

Verisk Analytics, Inc. (b)

 

592,200


     

16,376,650


 

RETAILING (13.47%)

 

 

39,666

Costco Wholesale Corporation

 

2,368,457

1,368,875

Target Corporation

 

72,002,825

4,934,190

TJX Companies, Inc.

 

209,801,759

2,112,783

Walgreen Company

 

78,363,122

949,032

Wal-Mart Stores, Inc.

 

52,766,180


 

 

 

415,302,343


 

TRUCK MANUFACTURING (0.84%)

 

 

598,026

PACCAR Inc.

 

25,918,447


 

VETERINARY DIAGNOSTICS (6.79%)

 

 

3,636,178

Idexx Laboratories Inc. (b)

 

209,262,044


 

Miscellaneous Securities (1.38%) (d)

 

42,440,421


 

 

 

 

 

TOTAL COMMON STOCKS (COST $1,307,926,013)

 

$2,302,717,319


Principal
Amount

 

 

Value (a)



U.S. GOVERNMENT OBLIGATIONS (31.22%)

 

 

$962,001,000

U.S. Treasury Bills, 0.03% - 0.12% due 4/1/2010 through 5/20/2010

 

$961,949,536


 

TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $961,949,536)

 

$961,949,536


 

TOTAL INVESTMENTS (105.96%) (COST $2,269,875,549)++

 

$3,264,666,855


 

 

 

 

SUMMARY

 

 

 

Common Stocks

74.74%

$2,302,717,319

U.S. Government Obligations

31.22%

961,949,536

Net Cash & Receivables

(5.96)%

(183,720,070)


Net Assets

 

$3,080,946,785


 

 

 

 

Number of Shares Outstanding

 

25,958,588


 

 

 

 

Net Asset Value Per Share

 

$118.69


++ The cost for federal income tax purposes is identical. At March 31, 2010 the aggregate gross tax basis unrealized appreciation and depreciation of securities were $1,084,353,805 and $89,562,499, respectively.

(a)

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 in accordance with NASDAQ Official Closing Price on the last business day of the period; securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean between the last reported bid and asked prices.

  Securities traded on a foreign exchange are valued at the last reported sales price on the principal exchange on which the security is primarily traded. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the close of the NYSE on that day.
  U.S. Treasury Bills with remaining maturities of sixty 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.
  When reliable market quotations are insufficient or not readily available at time of valuation or when the Investment Adviser determines that the prices or values available do not represent the fair value of a security, such security is valued as determined in good faith by the Investment Adviser, in conformity with guidelines adopted by and subject to review by the Board of Directors.
  Purchases and sales of foreign portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities are acquired or sold.
(b) Non-income producing.
(c) The Fund is invested in preference shares of Porsche Automobil Holding SE which possess the same economic interest as Porsche common stock but have no voting rights.
(d) "Miscellaneous Securities" include holdings in their initial period of acquisition that have not previously been publicly disclosed.

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:

Level 1 quoted prices in active markets for identical securities

Level 2 other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3 significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used to value the Fund's investments as of March 31, 2010:

Valuation Inputs  

Common
Stocks

 
U.S. Government
Obligations
 
Total

 
 
 

Level 1 – Quoted Prices

  $2,302,717,319    

$2,302,717,319

Level 2 – Other Significant Observable Inputs *

    $961,949,536  

961,949,536

   
 
 

Total

  $2,302,717,319   $961,949,536  

$3,264,666,855

   
 
 

* Represents U.S. Treasury Bills with remaining maturities of 60 days or less which are valued at their amortized cost.

Other information

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SEC's web site at http://www.sec.gov. The Fund's Form N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, DC. For information regarding the operation of the SEC's Public Reference Room, call 1-800-SEC-0330. For a complete list of the Fund's portfolio holdings, view the most recent quarterly, semiannual or annual report on Sequoia Fund's web site at http://www.sequoiafund.com/fund_reports.htm.

You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Visit Sequoia Fund's web site at www.sequoiafund.com and use the "Shareholder Information" link to obtain all proxy information. This information may also be obtained from the Securities and Exchange Commission's web site at www.sec.gov or by calling DST Systems, Inc. at (800) 686-6884.

SEQUOIA FUND, INC.
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798
(800) 686-6884
Website : www.sequoiafund.com

DIRECTORS

Richard T. Cunniff
Robert D. Goldfarb
David M. Poppe
Vinod Ahooja, Chairman of the Board
Roger Lowenstein
C. William Neuhauser
Sharon Osberg
Robert L. Swiggett

OFFICERS

Richard T. Cunniff Vice Chairman
Robert D. Goldfarb President
David M. Poppe Executive Vice President
Joseph Quinones, Jr. Vice President, Secretary, Treasurer & Chief Compliance Officer
Michael Valenti Assistant Secretary

INVESTMENT ADVISER

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

DISTRIBUTOR

Ruane, Cunniff & Goldfarb LLC
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798

CUSTODIAN

The Bank of New York
MF Custody Administration Department
One Wall Street, 25th 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 LLP
One Battery Park Plaza
New York, New York 10004