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

QUARTERLY REPORT
For the Period Ended September 30, 2003

Dear Shareholder:

Sequoia Fund's results for the third quarter of 2003 are shown below with comparable results for the leading market indexes:

September 30, 2003 Sequoia
Fund
Dow Jones
Industrials
Standard &
Poor's 500



3 months 2.57% 3.91% 2.65%
9 months 6.10% 13.29% 14.72%
1 Year 7.95% 25.05% 24.40%
5 Years (Annualized) 6.60% 5.33% 1.00%
10 Years (Annualized) 14.63% 12.35% 10.05%
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.


We are pleased with the absolute results of Sequoia Fund, which has appreciated 15.9% for the year to date, versus 22.8% for the Dow Jones and 22.3% for the S&P 500.

As for relative performance, we have lagged the major averages for two reasons. First, Sequoia's 17% cash position at the beginning of the year produced virtually no return in a period of extremely low interest rates and exerted a material drag on our aggregate performance. As evidence of this fact, we note that the 83% of the Fund invested in equities during the year has appreciated by 19%. Second, economically sensitive stocks (including technology stocks) have generally fueled the market's advance this year, and issues of this variety account for a relatively small percentage of our invested assets.

We have no aversion whatsoever to economically cyclical stocks per se. In fact, we own a few of them (as well as stocks of companies that are subject to other cycles). Having said that, many economically sensitive companies tend to have characteristics that we dislike. They often produce undifferentiated commodity-type products and consume large amounts of capital, a combination that leads to lower returns on invested capital and less free cash flow than we typically prefer. They also often come with the potentially heavy baggage of large pension and health care liabilities. As a result, economically sensitive stocks have historically been under-represented in our portfolio.

With respect to technology, we think it makes sense to repeat an observation we have made in the past. While we marvel at the breadth and speed of technological progress, we note that it typically causes businesses and industries to undergo rapid and unpredictable change. The prospect of such change makes it difficult for us to estimate and value the streams of future free cash flow that determine a company's intrinsic worth. Furthermore, high technology is usually accompanied by high levels of options issuance. While many investors continue to ignore options issuance, we consider it a very real corporate expense.

Turning to our portfolio, we are pleased with the progress of the companies that we own. They are all experiencing increased earnings, with the prospect of further gains in 2004. As for our lack of activity this year, it reflects both a level of comfort with our present holdings and an inability to find companies that meet our qualitative criteria and offer attractive valuations. The stock market, in our opinion, is not cheap. The shares of our portfolio companies are not cheap either, though we feel that their long term prospects warrant holding them at current prices (with possibly one or two small exceptions).

We strongly encourage you to read an article that appeared in the November 10, 2003, issue of Fortune (available at www.Fortune.com) in which Warren Buffett expounds on his belief that "our trade deficit has greatly worsened, to the point that our country's ‘net worth'…is now being transferred abroad at an alarming rate." Mr. Buffett argues that "a perpetuation of this transfer will lead to major trouble." Although we share Mr. Buffett's pessimism with regard to this and other important macroeconomic issues, we note that on a microeconomic level, we are basically optimists offering you our best wishes for a happy new year and a prosperous future. As always, we will do our best to help with regard to the latter.

Sincerely,

Richard T. Cunniff
Vice Chairman
Robert D. Goldfarb
President
David M. Poppe
Executive Vice President
William J. Ruane
Chairman
December 11, 2003

SEQUOIA FUND, INC.

STATEMENT OF INVESTMENTS

SEPTEMBER 30, 2003 (UNAUDITED)

COMMON STOCKS (82.96%)

Shares Value (a)


BANK HOLDING COMPANIES (11.28%)
7,489,993 Fifth Third Bancorp $415,469,912
155,200 Mercantile Bankshares Corporation 6,208,000

421,677,912

BUILDING MATERIALS (3.11%)
3,071,900 Fastenal Company 116,117,820

DIVERSIFIED COMPANIES (33.91%)
16,896 Berkshire Hathaway Inc. Class A (c) 1,267,200,000
300 Berkshire Hathaway Inc. Class B (c) 748,800

1,267,948,800

FREIGHT TRANSPORTATION (2.02%)
2,199,600 Expeditors International Inc. 75,688,236

HOME FURNISHINGS (2.00%)
2,075,800 Ethan Allen Interiors, Inc. (b) 74,728,800

INSURANCE (11.59%)
6,270,000 Progressive Corporation 433,319,700

MANUFACTURING (0.27%)
206,800 Harley Davidson, Inc. 9,967,760

TEXTILE - CARPETS (7.37%)
3,866,400 Mohawk Industries Inc. (b) 275,751,648

PROCESS CONTROL INSTRUMENTS (0.45%)
226,800 Danaher Corporation 16,751,448

RETAILING (9.88%)
47,000 Costco Wholesale Corporation (c) 1,460,760
1,375,900 Tiffany & Company 51,362,347
13,475,700 TJX Companies, Inc. 261,698,094
1,797,600 Walgreen Company 55,078,464

369,599,665

Miscellaneous Securities (1.08%) 40,649,841

TOTAL COMMON STOCKS $3,102,201,630


Principal
Amount

U.S. GOVERNMENT OBLIGATIONS (17.19%)
$643,000,000 U.S. Treasury Bills due 10/02/03 through 11/06/03 $642,631,168

TOTAL U.S. GOVERNMENT OBLIGATIONS $642,631,168


SUMMARY
Common Stocks 82.96% $3,102,201,630
U.S. Government Obligations 17.19% 642,631,168
Net Liabilities (0.15%) (5,722,310)

Net Assets $3,739,110,488


Number of Shares Outstanding 27,962,484


Net Asset Value Per Share $133.72


  

(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; 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.
(b) 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."
(c) Non-income producing.

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 M. 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.