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

QUARTERLY REPORT
For the Period Ended September 30, 2005

To the Shareholders of Sequoia Fund, Inc.:

Dear Shareholder:

Sequoia Fund's results for the third quarter of 2005 are shown below with comparable results for the leading market indexes:

September 30, 2005 Sequoia
Fund
Dow Jones
Industrials
Standard &
Poor's 500



3 months -0.59% 3.49% 3.61%
9 months -1.14% -0.32% 2.77%
1 Year 2.64% 7.50% 12.25%
5 Years (Annualized) 7.19% 1.98% -1.49%
10 Years (Annualized) 12.81% 10.39% 9.49%

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.



Ruane, Cunniff & Goldfarb mourns the passing of our beloved founder, William J. Ruane, a great money manager, a greater friend and the softest touch Wall Street has known.

With his partner Richard T. Cunniff, Bill started his firm in 1969 and launched the Sequoia Fund in 1970. He compiled one of the finest track records of any mutual fund manager in the country and built a firm in which intellectual rigor and decency were prized in equal measure. We are honored to be part of that.

Bill was an unusual capitalist, as he cared deeply about building up the funds entrusted to him by his clients, but very little about compounding his own. Bill looked for perfection in businesses and could wait patiently, sometimes for years, until he found the right stocks at the right prices. But if he had a cool eye for the market, he kept a warm heart for people. He wanted to improve the world around him and, in his energetic way, launched a number of entrepreneurial philanthropies. He cared deeply about education and mental health issues and took personal interest in the people he helped, especially children. He derived satisfaction from reading annual reports, but took true delight reading the improving report cards of youngsters he'd sent to school on scholarships. He could bend your ear on the subject of the capacity of disadvantaged children to learn. Then he'd smile and buy you a beer. He took his work seriously, but not himself.

Yeats wrote of the choice between perfection of the work or of the life. Bill was the rare man who never had to make that choice. He was exuberant, an optimist, and happy in the way that only a truly good man can be. He built a firm that was more like a second family, which grew over the years with new members astonished at their good fortune to have arrived in such a comfortable home. He respected every employee, rewarded hard work handsomely and endeavored always to strengthen the fabric of the firm.

He was without guile, with no trace of meanness in him. He insisted there be nothing mean in the way the firm did business. The slogan "First Class Business in a First Class Way" may be borrowed, but Bill proved that possession is nine-tenths of the law. He leaves us a precious legacy, which we treasure: a commitment to do right by clients, by employees, and by our own best selves.

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

October 10, 2005

SEQUOIA FUND, INC.

STATEMENT OF INVESTMENTS

SEPTEMBER 30, 2005 (UNAUDITED)

 

COMMON STOCKS (90.91%)

Shares
 
 
Value (a)

     
   
AUTO & HOME SUPPLY STORES (1.41%)
   
1,743,823  
O'Reilly Automotive Inc. (c)
  $49,140,932
   
 
   
CASUALTY INSURANCE (16.32%)
   
5,447,045  
Progressive Corporation
  570,686,905
   
 
   
COMPUTER PROGRAMMING (1.96%)
   
2,142,440  
GTECH Holdings Corp.
  68,686,626
   
 
   
CHEMICAL DIAGNOSTIC SUBSTANCES (3.00%)
   
1,568,432  
Idexx Laboratories Inc. (c)
  104,896,732
   
 
   
DIVERSIFIED COMPANIES (34.44%)
   
14,686   Berkshire Hathaway Inc. Class A (c)   1,204,252,000
31   Berkshire Hathaway Inc. Class B (c)   84,661
   
 
   
  1,204,336,661
       
   
ELECTRONIC COMPUTER MANUFACTURING (2.10%)
   
2,716,518  
International Game Technology
  73,345,986
   
 
   
FREIGHT TRANSPORTATION (3.01%)
   
1,852,410  
Expeditors International Inc.
  105,179,840
   
 
   
INDUSTRIAL & CONSTRUCTION SUPPLIES (3.69%)
   
2,114,430  
Fastenal Company
  129,170,529
   
 
   
INSURANCE AGENTS & BROKERS (2.11%)
   
1,481,714  
Brown & Brown Inc.
  73,626,369
   
 
   
MOTORCYCLE MANUFACTURING (0.41%)
   
293,763  
Harley Davidson, Inc.
  14,229,880
   
 
   
MEDICAL & HOSPITAL EQUIPMENT (0.14%)
   
123,193  
Patterson Companies Inc. (c)
  4,931,416
   
 
   
PROCESS CONTROL INSTRUMENTS (0.61%)
   
394,060  
Danaher Corporation
  21,212,250
   
 
   
RETAILING (14.00%)
   
40,830  
Costco Wholesale Corporation
  1,759,365
1,195,313  
Tiffany & Company
  47,537,598
11,706,972  
TJX Companies, Inc.
  239,758,786
2,174,746  
Walgreen Company
  94,492,714
2,420,249  
Wal-Mart Stores, Inc.
  106,055,311
       
   
  489,603,774
   
 
   
TEXTILE - CARPETS (7.71%)
   
3,358,921   Mohawk Industries Inc. (b)(c)   269,553,410
       
    TOTAL COMMON STOCKS   $3,178,601,310
       
PREFERRED STOCKS (2.14%)
   
    AUTOMOTIVE MANUFACTURING (2.14%)    
97,495   Porsche AG Preferred (Germany)   $74,971,705
       
    TOTAL PREFERRED STOCKS   $74,971,705
       
Principal
Amount
       

       
U.S. GOVERNMENT OBLIGATIONS (6.90%)
   
$242,000,000   U.S. Treasury Bill due 10/20/05 through 11/25/05   $241,445,371
       
    TOTAL U.S. GOVERNMENT OBLIGATIONS   $241,445,371
       

SUMMARY
Common Stocks
90.91%
$3,178,601,310
Preferred Stocks
2.14%
74,971,705
U.S. Government Obligations
6.90%
241,445,371
Net Cash & Receivables
0.05%
1,614,625
   
Net Assets
$3,496,633,011
   
Number of Shares Outstanding
23,445,721
   
Net Asset Value Per Share
$149.14
 


(a) Securities traded on a national securities exchange or on a foreign 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.
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. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued.
(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.

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.

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

DIRECTORS
  Richard T. Cunniff
Robert D. Goldfarb
David M. Poppe
Vinod Ahooja
Roger Lowenstein
Francis P. Matthews
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
     
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
1 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
One Battery Park Plaza
New York, New York 10004

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