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

QUARTERLY REPORT
For the Period Ended September 30, 2010

To the Shareholders of Sequoia Fund, Inc.:

As of this writing, the Sequoia Fund is up 15.45% year-to-date versus an increase of 9.53% for the S&P 500.

On November 15, we paid a capital gains distribution of $1.65 per share and an ordinary dividend of $0.25 per share to shareholders of record on November 12.

We are enclosing a copy of an article regarding the Fund from the October 2010 issue of Morningstar FundInvestor. This article is based on the holdings of Sequoia Fund as of June 30, 2010. Consequently, it does not discuss stocks we have bought and/or sold in the subsequent months.

We hope you will find these materials informative.

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

November 22, 2010


DISCLAIMER: 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 http://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.

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.

FUND PERFORMANCE

Sequoia Fund's results for the third quarter of 2010 are shown below with comparable results for the S&P 500 Index:

To September 30, 2010
Sequoia
Fund
Standard &
Poor's 500


3 Months

8.22%

11.29%

9 Months

12.57%

3.89%

1 Year

13.27%

10.16%

5 Years (Annualized)

3.95%

0.64%

10 Years (Annualized)

5.55%

-0.43%


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

SEPTEMBER 30, 2010 (UNAUDITED)

COMMON STOCKS (77.90%)

Shares

 

 

Value (a)


   

 

ADVERTISING (1.14%)

 

 

933,743

Omnicom Group Inc.

 

$36,864,173

     

 

AEROSPACE/DEFENSE (8.56%)

 

 

947,406

Precision Castparts Corp.

 

120,652,154

23,161,200

Qinetiq Group plc (United Kingdom)

 

39,211,911

12,376,114

Rolls-Royce Group plc (United Kingdom)

 

117,325,561

     

 

 

 

277,189,626

     

 

AUTO PARTS (5.59%)

 

 

1,549,400

Advance Auto Parts, Inc.

 

90,918,792

1,694,139

O'Reilly Automotive Inc. (b)

 

90,128,195

     

 

 

 

181,046,987

     

 

CONSTRUCTION EQUIPMENT (0.98%)

 

 

1,520,736

Ritchie Bros. Auctioneers Incorporated

 

31,585,687

     

 

CRUDE OIL & GAS PRODUCTION (0.19%)

 

 

179,508

Canadian Natural Resources Limited

 

6,210,977

     

 

DIVERSIFIED COMPANIES (11.83%)

 

 

3,070

Berkshire Hathaway Inc. Class A (b)

 

382,215,000

10,500

Berkshire Hathaway Inc. Class B (b)

 

868,140

     

 

 

 

383,083,140

     

 

DIVERSIFIED MANUFACTURING (0.96%)

 

 

765,664

Danaher Corporation

 

31,093,615

     

 

ELECTRONIC MANUFACTURING SERVICES (0.08%)

 

 

77,500

Trimble Navigation Limited (b)

 

2,715,600

     

 

FLOORING PRODUCTS (4.37%)

 

 

2,657,723

Mohawk Industries Inc. (b)

 

141,656,636

     

 

FREIGHT TRANSPORTATION (0.40%)

 

 

281,300

Expeditors International Inc.

 

13,004,499

     

 

HEALTHCARE (9.97%)

 

 

418,000

Becton, Dickinson and Company

 

30,973,800

529,800

Perrigo Company

 

34,023,756

10,286,110

Valeant Pharmaceuticals International Inc.

 

257,667,059

     

 

322,664,615

     

 

INDUSTRIAL & CONSTRUCTION SUPPLIES (5.71%)

 

 

3,475,384

Fastenal Company

 

184,855,675

     

 

INDUSTRIAL GASES (1.00%)

 

 

359,017

Praxair, Inc.

 

32,404,874

     

 

INFORMATION PROCESSING (2.06%)

 

 

298,457

MasterCard Inc.

 

66,854,368

     

 

INSURANCE BROKERS (0.70%)

 

 

1,124,830

Brown & Brown Inc.

 

22,710,318

     

 

INTERNET SOFTWARE & SERVICES (2.12%)

 

 

130,571

Google Inc. (b)

 

68,652,926

     

 

INVESTMENT BANKING & BROKERAGE (1.94%)

 

 

435,000

The Goldman Sachs Group Incorporated

 

62,892,300

     

 

IT CONSULTING & OTHER SERVICES (1.98%)

 

 

477,000

International Business Machines Corp.

 

63,984,780

     

 

LABORATORY SUPPLIES (0.07%)

 

 

19,247

Mettler-Toledo International Inc. (b)

 

2,395,097

     

 

PROPERTY AND CASUALTY INSURANCE (0.02%)

 

 

21,000

Verisk Analytics, Inc. (b)

 

588,210

     

 

RETAILING (10.71%)

 

 

39,666

Costco Wholesale Corporation

 

2,558,060

1,368,875

Target Corporation

 

73,152,680

4,934,190

TJX Companies, Inc.

 

220,212,900

949,032

Wal-Mart Stores, Inc.

 

50,792,193

     

 

 

 

346,715,833

     

 

VETERINARY DIAGNOSTICS (6.54%)

 

 

3,434,078

Idexx Laboratories Inc. (b)

 

211,951,294

     

 

Miscellaneous Securities (0.98%) (c)

 

31,674,855

     

 

TOTAL COMMON STOCKS (COST $1,393,675,756)

 

$2,522,796,085

     
U.S. GOVERNMENT OBLIGATIONS (20.28%)    

Principal
Amount

 

 

 


     

$657,000,000

U.S. Treasury Bills, 0.13% - 0.20% due 11/12/2010 through 11/26/2010

 

$656,906,465

     

 

TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $656,906,465)

 

$656,906,465

     

 

TOTAL INVESTMENTS (98.18%) (COST $2,050,582,221) ++

 

$3,179,702,550

     
SUMMARY
   
Common Stocks
77.90%
$2,522,796,085
U.S. Government Obligations
20.28%
656,906,465
Net Cash & Receivables
1.82%
58,896,880
 
Net Assets
 
$3,238,599,430
 
Number of Shares Outstanding
 
26,179,934
 
Net Asset Value Per Share
 
$123.71
 

++

The cost for federal income tax purposes is identical. At September 30, 2010, the aggregate gross tax basis unrealized appreciation and depreciation of securities were $1,147,276,272 and $18,155,943, 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 New York Stock Exchange 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)

"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. During the period ended September 30, 2010, there were no significant transfers into and out of Level 1 and 2 measurements in the fair value hierarchy.

The following is a summary of the inputs used to value the Fund's investments as of September 30, 2010:

Valuation Inputs

 
Common
Stocks
U.S. Government
Obligations
Total




Level 1 - Quoted Prices

$2,522,796,085

-

$2,522,796,085

Level 2 - Other Significant Observable Inputs *

-

$656,906,465

656,906,465

Total


 

$2,522,796,085

$656,906,465

$3,179,702,550




*

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