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

QUARTERLY REPORT
For the Period Ended September 30, 2006

To the Shareholders of Sequoia Fund, Inc.:

Dear Shareholder:

Sequoia Fund's results for the third quarter of 2006 are shown below with comparable results for the leading market indexes:

 September 30, 2006 Sequoia
Fund
Dow Jones
Industrials
Standard &
Poor's 500



3 months 3.97% 5.35% 5.67%
9 months 4.77% 10.86% 8.53%
1 Year 14.22% 13.14% 10.79%
5 Years (Annualized) 7.85% 8.07% 6.97%
10 Years (Annualized) 12.00% 9.19% 8.58%
The performance shown above represents past performance and does not guarantee future results. 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 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. Year to date performance as of the most recent month end can be obtained by calling DST Systems, Inc. at (800) 686-6884.

 

Sequoia's capital gains distribution will be approximately $16 per share. The record date for the distribution will be December 8th and the payment date will be December 11th.

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

November 7, 2006

SEQUOIA FUND, INC.

STATEMENT OF INVESTMENTS

SEPTEMBER 30, 2006 (UNAUDITED)

Shares      

Value (a)


     
   

AUTO PARTS (1.58%)

1,699,801   O'Reilly Automotive Inc. (b)  

$56,450,391

   
 
   

AUTOMOTIVE MANUFACTURING (2.75%)

95,034   Porsche AG (Germany) (c)  

98,439,543

   
 
   

CASUALTY INSURANCE (14.58%)

21,238,148   Progressive Corporation  

521,184,152

   
 
    DIVERSIFIED COMPANIES (27.32%)  

 

10,191   Berkshire Hathaway Inc. Class A (b)  

976,297,800

   
 
139   Berkshire Hathaway Inc. Class B (b)  

441,186

   
 

 

 

976,738,986

   
 
   

EDUCATION (1.01%)

730,400   Apollo Group, Inc. (b)  

35,964,896

   
 
   

FINANCE (0.74%)

376,400   MasterCard Inc.  

26,479,740

   
 
   

FREIGHT TRANSPORTATION (3.74%)

2,997,808   Expeditors International Inc.  

133,642,281

   
 
   

INDUSTRIAL & CONSTRUCTION SUPPLIES (4.37%)

4,053,871   Fastenal Company  

156,357,804

   
 
   

INSURANCE BROKERS (2.47%)

2,888,617   Brown & Brown Inc.  

88,276,136

   
 
   

MEDICAL EQUIPMENT (0.11%)

120,083   Patterson Companies Inc. (b)  

4,035,990

   
 
   

PROCESS CONTROL INSTRUMENTS (0.74%)

384,112   Danaher Corporation  

26,376,971

   
 
   

RETAILING (23.21%)

5,000,000   Bed Bath & Beyond Inc. (b)  

191,300,000

39,799   Costco Wholesale Corporation  

1,977,214

1,840,500   Lowe's Companies, Inc.  

51,644,430

2,212,866   Target Corporation  

122,260,847

1,145,642   Tiffany & Company  

38,035,314

7,629,619   TJX Companies, Inc.  

213,858,221

2,119,845   Walgreen Company  

94,099,920

2,359,150   Wal-Mart Stores, Inc.  

116,353,278

   
 
       

829,529,224

   
 
   

TEXTILE - CARPETS (6.82%)

3,274,126   Mohawk Industries Inc. (b)  

243,758,680

   
 
   

VETERINARY DIAGNOSTICS (3.90%)

1,528,838   Idexx Laboratories Inc. (b)  

139,338,295

   
 
    TOTAL COMMON STOCKS  

$3,336,573,089

   
 
Principal
Amount
       

       
U.S. GOVERNMENT OBLIGATIONS (6.73%)    
$242,000,000  

U.S. Treasury Bills due 11/02/06 through 11/16/06

  240,739,202
       
    TOTAL U.S. GOVERNMENT OBLIGATIONS   $240,739,202
       

SUMMARY  
Common Stocks 93.34%  $3,336,573,089
U.S. Government Obligations 6.73%  240,739,202
Net Cash & Receivables (0.07)%  (2,596,468)
   
Net Assets   $3,574,715,823
   
Number of Shares Outstanding   21,955,673
   
Net Asset Value Per Share   $162.82
   
     

(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) Non-income producing.  
(c) The Fund is invested in preference shares of Porsche AG which possess the same economic interest as Porsche common stock but have no voting rights.  

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, Chairman of the Board
     
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.