LOGO

Sequoia Fund, Inc.

Table of Contents

 

     Page  

Illustration of An Assumed Investment of $10,000

     3      

Annual Fund Operating Expenses

     4      

Shareholder Letter

     5      

Sector Breakdown

     6      

Fund’s Largest Holdings

     6      

Fees And Expenses of The Fund

     7      

Schedule of Investments

     8      

Statement of Assets and Liabilities

     12      

Statement of Operations

     13      

Statements of Changes in Net Assets

     14      

Financial Highlights

     15      

Notes to Financial Statements

     16      

Change in Independent Registered Public Accounting Firm

     20      

Other Information

     20      

Sequoia Fund, Inc.

Illustration of An Assumed Investment of $10,000

(Unaudited)

The table below covers the period from July 15, 1970 (the date Sequoia Fund, Inc. (the “Fund”) shares were first offered to the public) to June 30, 2015. This period was one of widely fluctuating common stock prices. The results shown, which assume reinvestment of distributions, represent past performance and do 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 shown. 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.

 

Period Ended   

   Total Value
of Shares
 

July 15, 1970

   $ 10,000   

May 31, 1971

     11,934   

May 31, 1972

     13,507   

May 31, 1973

     11,242   

May 31, 1974

     10,013   

May 31, 1975

     13,325   

May 31, 1976

     17,393   

May 31, 1977

     22,826   

Dec. 31, 1977

     28,057   

Dec. 31, 1978

     34,771   

Dec. 31, 1979

     38,961   

Dec. 31, 1980

     43,894   

Dec. 31, 1981

     53,329   

Dec. 31, 1982

     69,920   

Dec. 31, 1983

     89,015   

Dec. 31, 1984

     105,481   

Dec. 31, 1985

     134,975   

Dec. 31, 1986

     153,027   

Dec. 31, 1987

     164,361   

Dec. 31, 1988

     182,516   

Dec. 31, 1989

     233,453   

Dec. 31, 1990

     224,586   

Dec. 31, 1991

     314,426   

Dec. 31, 1992

        343,863   

Period Ended   

   Total Value
of Shares
 

Dec. 31, 1993

   $ 380,919   

Dec. 31, 1994

     393,633   

Dec. 31, 1995

     556,525   

Dec. 31, 1996

     677,506   

Dec. 31, 1997

     970,200   

Dec. 31, 1998

     1,312,197   

Dec. 31, 1999

     1,095,125   

Dec. 31, 2000

     1,314,850   

Dec. 31, 2001

     1,453,175   

Dec. 31, 2002

     1,414,776   

Dec. 31, 2003

     1,656,923   

Dec. 31, 2004

     1,734,116   

Dec. 31, 2005

     1,869,038   

Dec. 31, 2006

     2,024,960   

Dec. 31, 2007

     2,195,146   

Dec. 31, 2008

     1,601,905   

Dec. 31, 2009

     1,848,293   

Dec. 31, 2010

     2,208,627   

Dec. 31, 2011

     2,499,935   

Dec. 31, 2012

     2,891,849   

Dec. 31, 2013

     3,891,835   

Dec. 31, 2014

     4,185,695   

June 30, 2015

     4,595,680   
  
 

 

 

Please consider the investment objectives, risks and charges and expenses of the Fund carefully before investing. The Fund’s prospectus contains this and other information about the Fund. You may obtain year to date performance as of the most recent month end, and a copy of the prospectus by calling 1-800-686-6884, or on the Fund’s website at www.sequoiafund.com. Please read the prospectus carefully before investing.

 

Shares of the Fund are offered through the Fund’s distributor, Ruane, Cunniff & Goldfarb LLC. Ruane, Cunniff & Goldfarb LLC is an affiliate of Ruane, Cunniff & Goldfarb Inc. and is a member of FINRA. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

 

 

3

Sequoia Fund, Inc.

Annual Fund Operating Expenses

(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)

 

   

Management Fees

    1.00%     
Other Expenses  

0.03%

   
Total Annual Fund Operating Expenses*  

1.03%

   

*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. The expense ratio presented is from the Prospectus dated May 1, 2015. For the year ended December 31, 2014, the Fund’s annual operating expenses and investment advisory fee, net of such reimbursement, were 1.00% and 0.97%, respectively.

 

4

Sequoia Fund, Inc.

To the Shareholders of

Sequoia Fund, Inc.

Dear Shareholder:

Sequoia Fund’s results for the second quarter of 2015 appear below with comparable results for the S&P 500 Index:

 

To June 30, 2015

  

Sequoia Fund

       

S&P 500 Index*

    

3 Months

   1.96%       0.28%   

6 Months

   9.78%       1.23%   

1 Year

   17.04%       7.42%   

5 Years (Annualized)

   19.04%       17.34%   

10 Years (Annualized)

   10.30%       7.89%   

The numbers shown above represent past performance and do 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. Future performance may be lower or higher than the performance information shown. The performance data quoted represents past performance and assumes reinvestment of distributions.

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.

*The S&P 500 Index is an unmanaged capitalization-weighted index of the common stocks of 500 major US corporations.

 

•   •   •   •   •    •   •   •   •   •   •   •   •   •   •    •   •   •   •   •   •   •   •   •   •    •   •   •   •   •   •   •   •   •   •    •   •   •   •   •   •   

 

•   •

As of this writing, the Sequoia Fund is up 16.27% year-to-date versus up 2.34% for the S&P 500 Index.

Based on activity to the date of this letter, the capital gains distribution will be approximately $7.59 per share and would be distributed in November. We will do our best to keep you informed of any material changes due to sales activity through October 31, 2015. IRS regulations dictate that capital gain distributions are determined by transactions from November 1 of one year to October 31 of the following year.

We are providing you with a copy of the transcript of the Ruane, Cunniff & Goldfarb Inc. Sequoia Fund, Inc. “Annual Investor Day 2015” meeting that was held on May 15th.

Sincerely,

 

LOGO              LOGO         
Robert D. Goldfarb     David M. Poppe
President     Executive Vice President

August 19, 2015

 

5

Sequoia Fund, Inc.

Sector Breakdown

(Unaudited)

 

As of June 30, 2015

   %of
      net assets      

Healthcare

     30.0%

U.S. Government Obligations

     15.3%

Diversified Companies

     10.6%

Retailing

       6.7%

Aerospace/Defense

       4.6%

Auto Parts

       4.3%

Industrial & Construction Supplies

       4.2%

Information Processing

       3.2%

Flooring Products

       2.5%

Veterinary Diagnostics

       2.3%

Internet Software & Services

       2.0%

Dental Equipment

       1.4%

Precision Instruments

       1.2%

Application Software

       1.2%

Investment Banking & Brokerage

       1.0%
Other   

    9.5%

    

100.0%

Fund’s Largest Holdings

(Unaudited)

The table below shows the Fund’s positions that constituted at least 3% of the Fund’s net assets as of June 30, 2015:

 

     % of net assets

Position

  

 

     6/30/2015     

  

 

     12/31/2014     

Valeant Pharmaceuticals

   28.7%    20.0%

Berkshire Hathaway

   10.6%    12.9%

TJX

     5.0%      8.3%

O’Reilly Automotive

     4.3%      3.9%

Fastenal Company

     4.2%      5.1%
MasterCard   

  3.2%

  

  3.2%

    

56.0%

  

53.4%

 

6

Sequoia Fund, Inc.

Fees And Expenses of The Fund

(Unaudited)

Shareholder Expense Example

 

As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2015 to June 30, 2015).

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The

hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and will not help you determine the relative total costs of owning different funds.

 

     Beginning
Account
Value
January 1,
2015
   Ending
Account
Value
June 30,
2015
   Expenses
Paid During
Period*
January 1, 2015
to June 30,
2015

Actual

   $1,000    $1,097.80    $5.20

Hypothetical (5% return per year before expenses)

   $1,000    $1,019.84    $5.01

* Expenses are equal to the Fund’s annualized expense ratio of 1.00%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

 

 

7

Sequoia Fund, Inc.

Schedule of Investments

June 30, 2015

(Unaudited)

(Percentages are of the Fund’s Net Assets)

Common Stocks (84.5%)

 

            Shares             

       Value
               (Note 1)              
 

Advertising (0.7%)

    
929,021    

Omnicom Group Inc.

     $    64,557,669  
      

 

 

 
 

Aerospace/Defense (4.6%)

    
1,200,000    

Precision Castparts Corp.

          239,844,000  
11,652,000    

Rolls-Royce Holdings plc (United Kingdom)

       159,280,372  
      

 

 

 
         399,124,372  
      

 

 

 
 

Apparel, Accessories & Luxury Goods (0.8%)

    
872,753    

Compagnie Financiere Richemont SA (Switzerland)

       70,990,818  
      

 

 

 
 

Application Software (1.2%)

    
257,100    

Constellation Software, Inc. (Canada)

       102,070,141  
      

 

 

 
 

Auto Parts (4.3%)

    
1,650,465    

O’Reilly Automotive, Inc. (a)

       372,972,081  
      

 

 

 
 

Construction & Engineering (0.7%)

    
1,455,996    

Jacobs Engineering Group Inc. (a)

       59,142,558  
      

 

 

 
 

Crude Oil & Gas Production (0.1%)

    
178,601    

Canadian Natural Resources Limited (Canada)

       4,850,803  
      

 

 

 
 

Dental Equipment (1.4%)

    
1,250,644    

Sirona Dental Systems, Inc. (a)

       125,589,671  
      

 

 

 
 

Diversified Companies (10.6%)

    
2,838    

Berkshire Hathaway, Inc.-Class A (a)

       581,364,300  
2,510,104    

Berkshire Hathaway, Inc.-Class B (a)

       341,650,255  
      

 

 

 
         923,014,555  
      

 

 

 
 

Diversified Manufacturing (0.8%)

    
761,792    

Danaher Corporation

       65,201,777  
      

 

 

 
 

Electrical & Mechanical Systems (0.4%)

    
771,799    

EMCOR Group, Inc.

       36,868,838  
      

 

 

 
 

Electronic Manufacturing Services (0.3%)

    
1,270,244    

Trimble Navigation Limited (a)

       29,799,924  
      

 

 

 
 

Flooring Products (2.5%)

    
1,140,877    

Mohawk Industries, Inc. (a)

       217,793,419  
      

 

 

 
 

Freight Transportation (0.0%)

    
62,653    

Expeditors International, Inc.

       2,888,617  
      

 

 

 

 

 

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

 

8

Sequoia Fund, Inc.

Schedule of Investments (Continued)

June 30, 2015

(Unaudited)

 

            Shares             

       Value
               (Note 1)              
 

Healthcare (30.0%)

    
459,640    

Perrigo Company plc (Ireland)

     $       84,955,261  
11,281,224    

Valeant Pharmaceuticals International, Inc. (Canada) (a)

       2,506,123,912  
430,615    

West Pharmaceutical Services, Inc.

       25,010,119  
19,932    

Zoetis, Inc.

       961,121  
      

 

 

 
         2,617,050,413  
      

 

 

 
 

Industrial & Construction Supplies (4.2%)

    
8,712,162    

Fastenal Company

       367,478,993  
      

 

 

 
 

Industrial Gases (0.9%)

    
685,180    

Praxair, Inc.

       81,913,269  
      

 

 

 
 

Industrial Machinery (0.7%)

    
3,500,367    

IMI plc (United Kingdom)

       61,874,063  
      

 

 

 
 

Information Processing (3.2%)

    
2,974,345    

MasterCard, Inc.-Class A

       278,041,771  
      

 

 

 
 

Insurance Brokers (0.4%)

    
1,119,143    

Brown & Brown, Inc.

       36,775,039  
      

 

 

 
 

Internet Software & Services (2.0%)

    
161,452    

Google, Inc.-Class A (a)

       87,190,538  
161,895    

Google, Inc.-Class C (a)

       84,267,967  
      

 

 

 
         171,458,505  
      

 

 

 
 

Investment Banking & Brokerage (1.0%)

    
432,800    

The Goldman Sachs Group, Incorporated

       90,364,312  
      

 

 

 
 

IT Consulting & Other Services (0.9%)

    
464,967    

International Business Machines Corp.

       75,631,532  
      

 

 

 
 

Precision Instruments (1.2%)

    
837,443    

Waters Corp. (a)

       107,510,932  
      

 

 

 
 

Property and Casualty Insurance (0.7%)

    
31,041    

Admiral Group plc (United Kingdom)

       676,480  
4,325,670    

Hiscox Ltd. (Bermuda)

       57,024,026  
20,894    

Verisk Analytics, Inc.-Class A (a)

       1,520,247  
      

 

 

 
         59,220,753  
      

 

 

 
 

Retailing (6.7%)

    
39,465    

Costco Wholesale Corp.

       5,330,143  
848,687    

Tiffany & Co.

       77,909,467  
6,594,400    

TJX Companies, Inc.

       436,351,448  
890,120    

Wal-Mart Stores, Inc.

       63,136,212  
      

 

 

 
         582,727,270  
      

 

 

 

 

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

 

9

Sequoia Fund, Inc.

Schedule of Investments (Continued)

June 30, 2015

(Unaudited)

 

            Shares             

       Value
               (Note 1)              
 

Specialty Chemicals (0.8%)

    
1,527,051    

Croda International plc (United Kingdom)

     $  66,030,488  
      

 

 

 
 

Specialty Retailers (0.7%)

    
1,285,581    

Cabela’s, Inc. (a)

       64,253,338  
      

 

 

 
 

Veterinary Diagnostics (2.3%)

    
3,140,822    

Idexx Laboratories, Inc. (a)

       201,452,323  
      

 

 

 
 

Miscellaneous Securities (0.4%)(b)

       37,369,224  
      

 

 

 
 

Total Common Stocks (Cost $2,185,428,192)

       7,374,017,468  
      

 

 

 

Principal
Amount

        

Corporate Bond (0.1%)

    
 

Miscellaneous Securities (b)

       3,042,079  
      

 

 

 
 

Total Corporate Bond

    
 

(Cost $3,026,522)

       3,042,079  
      

 

 

 

U.S. Government Obligations (15.3%)

    
$1,339,000,000    

U.S. Treasury Bills, 0.000% - 0.015%
due 7/2/2015 through 8/20/2015

       1,338,999,820  
      

 

 

 
 

Total U.S. Government Obligations

(Cost $1,338,999,820)

       1,338,999,820  
      

 

 

 
 

Total Investments (99.9%)

(Cost $3,527,454,534) (c)

       8,716,059,367  
 

Other Assets Less Liabilities (0.1%)

       10,786,315  
      

 

 

 
 

Net Assets (100.0%)

     $ 8,726,845,682  
      

 

 

 

 

 (a) Non-income producing security.

 

 (b) “Miscellaneous Securities” include holdings that are not restricted, have been held for not more than one year prior to June 30, 2015, and have not previously been publicly disclosed.

 

 (c) The cost for federal income tax purposes is identical.

 

 

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

 

10

Sequoia Fund, Inc.

Schedule of Investments (Continued)

June 30, 2015

(Unaudited)

 

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three 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. During the six months ended June 30, 2015, there were no transfers into or out of Level 1 or 2 measurements in the fair value hierarchy. There were no level 3 securities held in the Fund during the six months ended June 30, 2015.

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of June 30, 2015:

 

    

 Common Stocks 

   Corporate Bond   

U.S.
     Government     
       Obligations      

  

           Total            

Level 1 - Quoted Prices

     $ 7,374,017,468        $ —                $ —                  $ 7,374,017,468  

Level 2 - Other Significant

                   

Observable Inputs

                3,042,079          1,338,999,820          1,342,041,899  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total

     $ 7,374,017,468        $ 3,042,079        $ 1,338,999,820        $ 8,716,059,367  
    

 

 

      

 

 

      

 

 

      

 

 

 

 

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

 

11

Sequoia Fund, Inc.

Statement of Assets and Liabilities

June 30, 2015

(Unaudited)

 

Assets

  

Investments in securities, at value (cost $3,527,454,534) (Note 1)

   $ 8,716,059,367   

Cash on deposit

     244,298,786   

Receivable for capital stock sold

     1,759,171   

Dividends and interest receivable

     4,008,664   

Other assets

     121,751   
  

 

 

 

 

Total assets

     8,966,247,739   
  

 

 

 

 

Liabilities

  

Payable for investments purchased

     230,033,818   

Payable for capital stock repurchased

     1,951,460   

Accrued investment advisory fee

     7,198,103   

Accrued other expenses

     218,676   
  

 

 

 

 

Total liabilities

     239,402,057   
  

 

 

 

 

Net Assets

   $ 8,726,845,682   
  

 

 

 

 

Net Assets Consist of

  

Capital (par value and paid in surplus) $.10 par value capital stock,
100,000,000 shares authorized, 34,150,673 shares outstanding

   $ 3,278,809,744   

Accumulated net realized gains on investments (Note 4)

     259,348,502   

Unrealized appreciation on investments and foreign currency transactions

     5,188,687,436   
  

 

 

 

 

Net Assets

   $ 8,726,845,682   
  

 

 

 

Net asset value per share

   $ 255.54   
  

 

 

 

 

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

 

12

Sequoia Fund, Inc.

Statement of Operations

Six Months Ended June 30, 2015

(Unaudited)

 

Investment Income

  

Income

  

Dividends, net of $239,971 foreign tax withheld

   $ 26,090,560   

Interest

     130,721   
  

 

 

 

 

Total investment income

     26,221,281   
  

 

 

 

 

Expenses

  

Investment advisory fee (Note 2)

     42,714,886   

Transfer agent fees

     446,129   

Independent Directors fees and expenses

     185,409   

Professional fees

     136,728   

Custodian fees

     61,988   

Other

     209,421   
  

 

 

 

 

Total expenses

     43,754,561   

Less expenses reimbursed by Investment Adviser (Note 2)

     965,291   
  

 

 

 

 

Net expenses

     42,789,270   
  

 

 

 

 

Net investment loss

     (16,567,989
  

 

 

 

 

Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions

  

Realized gain (loss) on

  

Investments (Note 3)

     292,061,994   

Foreign currency transactions

     (19,253
  

 

 

 

 

Net realized gain on investments and foreign currency transactions

     292,042,741   

Net increase in unrealized appreciation on investments and foreign currency translations

     511,856,988   
  

 

 

 

 

Net realized and unrealized gain on investments and foreign currency transactions and translations

     803,899,729   
  

 

 

 

 

Net increase in net assets from operations

   $ 787,331,740   
  

 

 

 

 

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

 

13

Sequoia Fund, Inc.

Statements of Changes in Net Assets

 

     Six Months
Ended 6/30/15
(Unaudited)
    Year Ended
12/31/14
 

Increase (Decrease) in Net Assets

    

From operations

    

Net investment loss

   $ (16,567,989   $ (21,057,325

Net realized gain on investments and foreign currency transactions

     292,042,741        280,164,091   

Net increase in unrealized appreciation on investments and foreign currency translations

     511,856,988        309,150,144   
  

 

 

   

 

 

 

 

Net increase in net assets from operations

     787,331,740        568,256,910   
  

 

 

   

 

 

 

 

Distributions to shareholders from

    

Net realized gains

     (85,847,543     (160,411,851
  

 

 

   

 

 

 

 

Capital share transactions

    

Shares sold

     191,545,809        407,033,294   

Shares issued to shareholders on reinvestment of net realized gain distributions

     75,974,588        142,551,694   

Shares repurchased

     (310,189,627     (928,561,658
  

 

 

   

 

 

 

 

Net decrease from capital share transactions

     (42,669,230     (378,976,670
  

 

 

   

 

 

 

 

Total increase in net assets

     658,814,967        28,868,389   

 

Net Assets

    

Beginning of period

     8,068,030,715        8,039,162,326   
  

 

 

   

 

 

 

 

End of period (including accumulated net investment loss of $0 and $0, respectively)

   $ 8,726,845,682      $ 8,068,030,715   
  

 

 

   

 

 

 

Share transactions

    

Shares sold

     762,520        1,811,779   

Shares issued to shareholders on reinvestment of net realized gain distributions

     291,280        632,137   

Shares repurchased

     (1,234,853     (4,175,480
  

 

 

   

 

 

 

 

Net decrease from capital share transactions

     (181,053     (1,731,564
  

 

 

   

 

 

 

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

 

14

Sequoia Fund, Inc.

Financial Highlights

 

     Six Months
Ended
June 30, 2015
    Year Ended December 31,  
     (Unaudited)     2014     2013     2012     2011     2010  

Per Share Operating Performance (for a share outstanding throughout the period)

                       

Net asset value, beginning of period

              $ 235.00      $ 222.92      $ 168.31      $ 145.50      $ 129.29      $ 109.90   
             

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from investment operations

                       

Net investment (loss)

                (0.49     (0.61     (0.72     (0.41     (0.42     (0.00 )(a) 

Net realized and unrealized gains on investments

                23.56        17.23        58.73        23.22        17.45        21.35   
             

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net asset value from operations

                23.07        16.62        58.01        22.81        17.03        21.35   
             

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less distributions

                       

Distributions from net realized gains

                (2.53     (4.54     (3.40            (0.82     (1.65

Return of capital

                                                   (0.31
             

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

                (2.53     (4.54     (3.40            (0.82     (1.96
             

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

              $ 255.54      $ 235.00      $ 222.92      $ 168.31      $ 145.50      $ 129.29   
             

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return

                9.78 % (b)      7.56     34.58     15.68     13.19     19.50

Ratios/Supplementary data

                       

Net assets, end of period (in millions)

              $ 8,726.8      $ 8,068.0      $ 8,039.2      $ 5,836.6      $ 4,914.0      $ 3,487.7   

Ratio of expenses to average net assets

                       

Before expense reimbursement

                1.02 % (c)      1.03     1.02     1.03     1.03     1.04

After expense reimbursement

                1.00 % (c)      1.00     1.00     1.00     1.00     1.00

Ratio of net investment (loss) to average net assets

                (0.39 )% (c)      (0.26 )%      (0.37 )%      (0.26 )%      (0.34 )%      (0.00 )%(d) 

Portfolio turnover rate

                1 % (b)      8     2     5     3     23

 

 

 (a) Represents less than ($0.005) per share.

 (b) Not annualized.

 (c) Annualized.

 (d) Represents less than (0.005)%.

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

 

15

Sequoia Fund, Inc.

Notes to Financial Statements (Unaudited)

Note 1— Significant Accounting Policies

Sequoia Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The investment objective of the Fund is long-term growth of capital. 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 under the supervision of the Fund’s 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; securities traded in the NASDAQ Stock Market (“NASDAQ”) are valued in accordance with the NASDAQ Official Closing Price. Securities for which there is no sale or Official Closing Price are valued at the mean between the last reported bid and asked prices.

Securities traded on a foreign exchange are valued at the Official Closing Price on the last business day of the period 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 New York Stock Exchange on the date of valuation.

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.

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.

Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of foreign securities are translated into U.S. dollars at the rates of exchange prevailing when such securities are acquired or sold. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

 

B.

Accounting for investments: Investment transactions are accounted for on the trade date and dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. Premiums and discounts on fixed

 

16

Sequoia Fund, Inc.

Notes to Financial Statements (Unaudited) (Continued)

 

 

 

income securities are amortized over the life of the respective security. 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: The Fund complies with the requirements of the Internal Revenue Code applicable to regulated investment companies and distributes 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 of America 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.

Note 2— Investment Advisory Contract and Payments to Interested Persons

Ruane, Cunniff & Goldfarb Inc. (the “Investment Adviser”) provides the Fund with investment advice and administrative services.

Under the terms of the Advisory Agreement, the Investment Adviser receives an investment advisory fee equal to 1% per annum of the Fund’s average daily net asset value. 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 contractually obligated to reimburse the Fund for the amount, if any, by which the operating expenses of the Fund (including the investment advisory fee) in any year exceed the sum of 1 1/2% of the average daily net asset value of the Fund for such year up to a maximum of $30,000,000 of net assets, plus 1% of the average daily net asset value in excess of $30,000,000. The expenses incurred by the Fund exceeded the limitation for the six months ended June 30, 2015 and the Investment Adviser reimbursed the Fund $965,291. Such reimbursement is not subject to recoupment by the Investment Adviser.

For the six months ended June 30, 2015, advisory fees of $42,714,886 were earned by the Investment Adviser and brokerage commissions of $181,661, and foreign security transaction fees of $46,961 were earned by Ruane, Cunniff & Goldfarb LLC, the Fund’s distributor and a wholly-owned subsidiary of the Investment Adviser. Certain officers of the Fund are also officers of the Investment Adviser and the Fund’s distributor. Ruane, Cunniff & Goldfarb LLC received no compensation from the Fund on the sale of the Fund’s capital shares for the period ended June 30, 2015. There were no other amounts accrued or paid to interested persons, including officers and directors.

 

17

Sequoia Fund, Inc.

Notes to Financial Statements (Unaudited) (Continued)

 

 

Note 3— Portfolio Transactions

The aggregate cost of purchases and the proceeds from the sales of securities, excluding U.S. government obligations, for the six months ended June 30, 2015 were $91,420,673 and $533,986,305, respectively. Included in proceeds of sales is $34,533,589 representing the value of securities disposed of in payment of redemptions in-kind, resulting in realized gains of $32,711,087.

At June 30, 2015 the aggregate gross tax basis unrealized appreciation and depreciation of securities were $5,224,587,286 and $35,982,453, respectively.

Note 4— Federal Income Transactions

Distributions to shareholders are determined in accordance with Federal income tax regulations and may differ from those determined for financial statement purposes. To the extent these differences are permanent such amounts are reclassified within the capital accounts. During the six months ended June 30, 2015 permanent differences primarily due to realized gains on redemptions in-kind not recognized for tax purposes, net operating loss and different book and tax treatment of net realized gains on foreign currency transactions resulted in a net decrease in accumulated net realized gains of $32,691,834 with a corresponding increase in capital of $16,123,845, and a decrease to accumulated net investment loss of $16,567,989. These reclassifications had no effect on net assets.

The tax character of distributions paid for the six months ended June 30, 2015 and 2014 was as follows:

 

               2015               

          2014           

Distributions paid from

           

Long-term capital gains

     $ 85,847,543          $ 160,411,851  
    

 

 

        

 

 

 

As of June 30, 2015 and December 31, 2014 the components of distributable earnings on a tax basis were as follows:

 

    

         2015           

    

         2014           

 

Undistributed long-term gains

   $ 259,348,502       $ 85,845,138   

Unrealized appreciation

     5,188,687,436         4,676,830,448   
  

 

 

    

 

 

 
   $ 5,448,035,938       $ 4,762,675,586   
  

 

 

    

 

 

 

The Fund recognizes the tax benefits or expenses of uncertain tax positions only when the positions are “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the Fund’s tax positions taken on federal income tax returns for all open years (tax years ended December 31, 2011 through December 31, 2014) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.

 

18

Sequoia Fund, Inc.

Notes to Financial Statements (Unaudited) (Continued)

 

 

Note 5— Interim Financial Statements

The interim financial statements have not been examined by the Fund’s independent registered public accounting firm and accordingly they do not express an opinion thereon.

Note 6— Indemnification

The Fund’s officers, directors and agents are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss thereunder to be remote.

Note 7— Subsequent Events

Accounting principles generally accepted in the United States of America require the Fund to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Fund is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.

 

19

Sequoia Fund, Inc.

Change in Independent Registered Accounting Firm

(Unaudited)

BBD, LLP (“BBD”) was previously the Fund’s independent registered public accounting firm. On June 23, 2015, BBD’s appointment as independent registered public accounting firm was terminated, and on July 30, 2015, KPMG, LLP (“KPMG”) was engaged as independent registered public accounting firm of the Fund for the fiscal year ending December 31, 2015. The decision to change independent registered public accounting firms was approved by the Fund’s audit committee and Board of Directors.

BBD’s reports on the Fund’s financial statements for the Fund’s two most recently completed fiscal years ended December 31, 2014 and December 31, 2013 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the Fund’s two most recently completed fiscal years ended December 31, 2014 and December 31, 2013 and through June 23, 2015, there were no disagreements between the Fund and BBD on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BBD, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. During the two years ended December 31, 2014 and 2013 and through June 23, 2015, there were no “reportable events” within the meaning of Item 304, paragraph (a)(1)(v), of Regulation S-K under the Securities Exchange Act of 1934.

Other Information

(Unaudited)

The Fund may be offered only to persons in the United States and by way of a prospectus. This should not be considered a solicitation or offering of any product or service to investors residing outside of the United States.

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 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.

 

20

 

 

[THIS PAGE INTENTIONALLY LEFT BLANK.]

 

 

 

 

 

 

[THIS PAGE INTENTIONALLY LEFT BLANK.]

 

 

 

 

 

 

[THIS PAGE INTENTIONALLY LEFT BLANK.]

 

 

 

 

Sequoia Fund, Inc.

9 West 57th Street, Suite 5000

New York, New York 10019-2701

(800) 686-6884

Website: www.sequoiafund.com

Interested Directors

        Robert D. Goldfarb

        David M. Poppe

Independent Directors

        Roger Lowenstein, Chairperson of the Board

        Vinod Ahooja

        Edward Lazarus

        Sharon Osberg

        Robert L. Swiggett

Officers

        Robert D. Goldfarb             President
        David M. Poppe       Executive Vice President
        Todd G. Ruoff       Executive Vice President & Secretary
        Paul J. Greenberg       Treasurer
        Michael Sloyer       General Counsel & Chief Compliance Officer
        Michael Valenti       Assistant Secretary

 

Investment Adviser    Registrar and Transfer Agent
        Ruane, Cunniff & Goldfarb Inc.            DST Systems, Inc.
        9 West 57th Street, Suite 5000            P.O. Box 219477
        New York, New York 10019-2701            Kansas City, Missouri 64121
Distributor    Accounting Agent
        Ruane, Cunniff & Goldfarb LLC            BNY Mellon Investment
        9 West 57th Street, Suite 5000            Services (US.) Inc.
        New York, New York 10019-2701            4400 Computer Drive
           Westborough, MA 01581
Custodian   
        The Bank of New York Mellon    Legal Counsel
        MF Custody Administration Department            Seward & Kissel LLP
        One Wall Street, 25th Floor            One Battery Park Plaza
        New York, New York 10286            New York, New York 10004