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

QUARTERLY REPORT
For the Period Ended September 30, 2011

To the Shareholders of Sequoia Fund, Inc.:

As of this writing, the Sequoia Fund is up 8.72% year-to-date versus a decrease of 1.55% for the S&P 500 Index.

On November 14, we paid a capital gains distribution of $0.82389 per share to shareholders of record on November 11.

Sincerely,

   
[GRAPHIC MISSING]   [GRAPHIC MISSING]   [GRAPHIC MISSING]
Richard T. Cunniff
Vice Chairman
  Robert D. Goldfarb
President
  David M. Poppe
Executive Vice President

November 21, 2011


 
 

FUND PERFORMANCE

Sequoia Fund's results for the third quarter of 2011 are shown below with comparable results for the S&P 500 Index:

   
To September 30, 2011     Sequoia
Fund
      Standard &
Poor's 500
 
3 Months     -9.92 %      -13.87 % 
9 Months     0.54 %      -8.68 % 
1 Year     6.73 %      1.14 % 
5 Years (Annualized)     2.55 %      -1.18 % 
10 Years (Annualized)     5.17 %      2.82 % 

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     0.04 % 
Total Annual Fund Operating Expenses*     1.04 % 
* 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, 2010, the Fund’s annual operating expenses net of such reimbursement was 1.00%.


 
 

 

SEQUOIA FUND, INC.

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2011 (UNAUDITED)

COMMON STOCKS (77.57%)

   
Shares     Value (a)
       ADVERTISING (0.84%)           
933,743     Omnicom Group Inc.     $ 34,399,092  
       AEROSPACE/DEFENSE (7.40%)           
947,406     Precision Castparts Corp.       147,283,737  
23,161,200     Qinetiq Group plc (United Kingdom)       42,130,223  
12,376,114     Rolls-Royce Group plc (United Kingdom)       114,813,210  
             304,227,170  
       AUTO PARTS (6.21%)           
2,500,000     Advance Auto Parts, Inc.       145,250,000  
1,656,139     O’Reilly Automotive Inc. (b)       110,348,542  
             255,598,542  
       CONSTRUCTION EQUIPMENT (0.75%)           
1,520,736     Ritchie Bros. Auctioneers Incorporated       30,703,660  
       CRUDE OIL & GAS PRODUCTION (0.13%)           
179,508     Canadian Natural Resources Limited       5,254,199  
       DIVERSIFIED COMPANIES (10.54%)           
3,284     Berkshire Hathaway Inc. Class A (b)       350,731,200  
1,168,533     Berkshire Hathaway Inc. Class B (b)       83,012,584  
             433,743,784  
       DIVERSIFIED MANUFACTURING (0.78%)           
765,664     Danaher Corporation       32,111,948  
       ELECTRONIC MANUFACTURING SERVICES (0.39%)           
473,324     Trimble Navigation Limited (b)       15,880,020  
       FLOORING PRODUCTS (2.77%)           
2,656,923     Mohawk Industries Inc. (b)       114,008,566  
       FREIGHT TRANSPORTATION (0.25%)           
256,500     Expeditors International Inc.       10,401,075  
       GLASS TECHNOLOGY (0.91%)           
3,016,800     Corning Inc.       37,287,648  
       HEALTHCARE (12.21%)           
418,000     Becton, Dickinson and Company       30,647,760  
529,800     Perrigo Company       51,448,878  
11,320,000     Valeant Pharmaceuticals International Inc.       420,198,400  
             502,295,038  
       INDUSTRIAL & CONSTRUCTION SUPPLIES (5.62%)           
6,950,768     Fastenal Company       231,321,559  
       INDUSTRIAL GASES (1.04%)           
456,692     Praxair, Inc.       42,691,568  
       INFORMATION PROCESSING (2.30%)           
298,457     MasterCard Inc.       94,658,622  
       INSURANCE BROKERS (0.49%)           
1,124,830     Brown & Brown Inc.       20,021,974  


 
 

   
Shares     Value (a)
       INTERNET SOFTWARE & SERVICES (2.03%)           
162,271     Google Inc. (b)       83,468,957  
       INVESTMENT BANKING & BROKERAGE (1.00%)           
435,000     The Goldman Sachs Group Incorporated       41,129,250  
       IT CONSULTING & OTHER SERVICES (2.03%)           
477,000     International Business Machines Corp.       83,489,310  
       LABORATORY SUPPLIES (0.07%)           
19,247     Mettler-Toledo International Inc. (b)       2,693,810  
       PROPERTY AND CASUALTY INSURANCE (0.89%)           
6,237,236     Hiscox Ltd. (United Kingdom)       35,876,581  
21,000     Verisk Analytics, Inc. (b)       730,170  
             36,606,751  
       RENEWABLE ENERGY (0.67%)           
343,000     First Solar, Inc. (b)       21,681,030  
110,891     SMA Solar Technology AG (Germany)       5,850,166  
             27,531,196  
       RETAILING (9.95%)           
39,666     Costco Wholesale Corporation       3,257,372  
1,471,375     Target Corporation       72,156,230  
5,134,190     TJX Companies, Inc.       284,793,519  
949,032     Wal-Mart Stores, Inc.       49,254,761  
             409,461,882  
       VETERINARY DIAGNOSTICS (3.69%)           
2,201,848     Idexx Laboratories Inc. (b)       151,861,457  
       Miscellaneous Securities (4.61%) (c)       189,859,901  
       TOTAL COMMON STOCKS (Cost $1,942,810,514)     $ 3,190,706,979  

U.S. GOVERNMENT OBLIGATIONS (22.49%)

   
Principal Amount     Value (a)
$925,000,000
 
    U.S. Treasury Bills, 0.005% – 0.010%
  due 11/3/2011 through 12/29/2011
    $ 924,976,381  
       TOTAL U.S. GOVERNMENT OBLIGATIONS
  (COST $924,987,683)
    $ 924,976,381  
       TOTAL INVESTMENTS (100.06%)
  (COST $ 2,867,798,197) ++
    $ 4,115,683,360  

SUMMARY

   
Common Stocks     77.57 %    $ 3,190,706,979  
U.S. Government Obligations     22.49 %      924,976,381  
Net Cash & Receivables     (0.06 %)      (2,339,050 ) 
Net Assets   $ 4,113,344,310  
Number of Shares Outstanding     31,643,519  
Net Asset Value Per Share   $ 129.99  


 
 

++ The cost for federal income tax purposes is identical. At September 30, 2011 the aggregate gross tax basis unrealized appreciation and depreciation of securities were $1,366,525,375 and $118,640,212, 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, 2011, 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, 2011:

     
Valuation Inputs   Common Stocks   U.S. Government Obligations   Total

Level 1 – 

Quoted Prices

  $ 3,190,706,979     $ 584,978,940     $ 3,775,685,919  

Level 2 – 

Other Significant Observable Inputs*

          339,997,441       339,997,441  
Total   $ 3,190,706,979     $ 924,976,381     $ 4,115,683,360  
* Represents U.S. Treasury Bills with remaining maturities of 60 days or less which are valued at their amortized cost.


 
 

Other information

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.

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
Roger Lowenstein, Chairman of the Board
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