<PAGE>
Registration No. 2-35566
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No._______________________ / /
Post-Effective Amendment No. 41 /x /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / /
Amendment No. 19 /x /
Sequoia Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
767 Fifth Avenue, New York, New York 10153
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 832-
5280
Richard T. Cunniff
c/o Ruane, Cunniff & Co., Inc.
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
(check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/X / on May 1, 1996 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of Rule 485.
Registrant has registered an indefinite number of its shares of
Common Stock pursuant to Rule 24f-2 under the Investment Company
<PAGE>
Act of 1940. Registrant's Rule 24f-2 notice for its fiscal year
ended December 31, 1995 was filed on February 17, 1996.
<PAGE>
Cross Reference Sheet
(as required by Rule 404(c)
Form N-1A
Item No. Location in Prospectus - Caption
_________ ________________________________
Part A
______
Item 1. Cover Page Cover Page
Item 2. Synopsis Not Applicable
Item 3. Condensed Selected Financial Information
Financial
Information
Item 4. General Description of the Fund
Description of
Registrant
Item 5. Management of Management of the Fund
the Fund
Item 5A. Management Management Discussion and Analysis
Discussion
and Analysis
Item 6. Capital Stock Income Dividends and Capital Gains
and other Distributions; Federal Income Tax
Securities Status; Description of Common Stock
Item 7. Purchase of How to Purchase Shares
Securities
Being Offered
Item 8. Redemption or Redemption of Shares
Repurchase
Item 9. Pending Legal Not Applicable
Proceedings
3
<PAGE>
Part B Location in Statement of
______ Additional Information (Caption)
________________________________
Item 10. Cover Page Cover Page
Item 11. Table of Cover Page
Contents
Item 12. General Infor- Investment Adviser and Investment
mation and Advisory Contract
History
Item 13. Investment Investment Policies
Objectives and
Policies
Item 14. Management of Management; Investment Adviser and
the Fund Investment Advisory Contract
Item 15. Control Person Management
and Principal
Holders of
Securities
Item 16. Investment Management; Investment Adviser and
Advisory and Investment Advisory Contract
Other Services
Item 17. Brokerage Allocation of Portfolio Brokerage
Item 18. Capital Stock Net Asset Value; Common Stock
and Other
Securities
Item 19. Purchase, Net Asset Value
Redemption and
Pricing of
Securities
Being Offered
Item 20. Tax Status Not Applicable
Item 21. Underwriters Not Applicable
Item 22. Calculation Not Applicable
of Yield
Quotations
4
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of Money
Market Funds
Item 23. Financial Independent Certified Public
Statements Accountant's Report;
Financial Statements
5
<PAGE>
PROSPECTUS
May 1, 1996
SEQUOIA FUND, INC.
767 Fifth Avenue
New York, N.Y. 10153
(212) 832-5280
Sequoia Fund, Inc. (the "Fund") is a no-load, non-
diversified, open-end investment company seeking growth of
capital. There can be no assurance that the Fund will accomplish
its objective.
Ordinarily the Fund's portfolio will be invested
primarily in common stocks and securities convertible into or
exchangeable for common stocks. The Fund may invest to limited
extents in foreign securities, restricted securities and special
situations.
This Prospectus sets forth concisely the information a
prospective investor should know before investing in the Fund. A
Statement of Additional Information dated May 1, 1996, containing
additional and more detailed information about the Fund (the
"Statement of Additional Information"), has been filed with the
Securities and Exchange Commission and is hereby incorporated by
reference into this Prospectus. It is available without charge
and can be obtained by writing or calling the Fund at the address
and telephone number listed on this page.
________________________________
Investors are advised to read and retain
this Prospectus for future reference.
________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
No person has been authorized to give any information or to make
any representations other than those contained in this
Prospectus, and information or representations not herein
contained, if given or made, must not be relied upon as having
been authorized by the Fund. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy in any
jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
_____________________
TABLE OF CONTENTS
PAGE
Expense Information 3
Selected Financial Information 3
Management Discussion and Analysis 4
Description of the Fund 5
Management of the Fund 6
How to Purchase Shares 7
Retirement Plans 8
Stockholders' Open Accounts 8
Redemption of Shares 8
Income Dividends and Capital Gains Dis-
tributions; Federal Income Tax Status 9
Periodic Cash Withdrawal Plan 10
Portfolio Transactions 11
Description of Common Stock 11
2
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SEQUOIA FUND, INC.
EXPENSE INFORMATION
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee (after expense
reimbursement) .97%
Other Expenses .04%
Total Fund Operating Expenses 1.01%
Example
_______
1 year 3 years 5 years 10 years
______ _______ _______ ________
You would pay the
following expenses on a
$1,000 investment,
assuming 5% annual return: $10 $32 $56 $124
The purpose of the foregoing table is to assist the
investor in understanding the various costs that an investor in
the Fund will bear directly or indirectly. The "Management Fee"
is shown after reimbursement to the Fund of certain expenses by
the Investment Adviser. The management fee of the Fund before
reimbursement of such expenses by the Investment Adviser would
equal 1% of average net assets. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
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SELECTED FINANCIAL INFORMATION
The following selected financial information, with
respect to each of the ten years ended December 31, 1995, has
been audited by McGladrey & Pullen, LLP, Independent Certified
Public Accountants, whose opinion thereon appears in the
Statement of Additional Information which is incorporated in this
Prospectus by reference. It should be read in conjunction with
the financial statements and related notes appearing therewith.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance (for a
share outstanding
throughout the year)
Net asset value,
beginning of year $55.59 $54.84 $56.66 $53.31 $41.94 $46.86 $38.81 $38.43 $39.29 $44.01
Income from investment
operations:
Net investment income 0.31 0.42 0.64 0.93 1.35 1.39 1.28 1.40 1.40 1.58
Net realized and
unrealized gains
(losses) on investments 22.62 1.41 5.39 3.98 14.96 (3.15) 9.48 2.60 1.54 3.85
_____ ____ ____ ____ _____ ______ ____ ____ ____ ____
Total from investment
operations 22.93 1.83 6.03 4.91 16.31 (1.76) 10.76 4.00 2.94 5.43
_____ ____ ____ ____ _____ ______ _____ ____ ____ ____
Less distributions:
Dividends from net
investment income (0.31) (0.42) (0.65) (0.93) (1.36) (1.38) (1.28) (1.39) (2.21) (1.61)
Distributions from
net realized gains (0.08) (0.66) (7.20) (0.63) (3.58) (1.78) (1.43) (2.23) (1.59) (8.54)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Total Distributions (0.39) (1.08) (7.85) (1.56) (4.94) (3.16) (2.71) (3.62) (3.80) (10.15)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value,
end of year $78.13 $55.59 $54.84 $56.66 $53.31 $41.94 $46.86 $38.81 $38.43 $39.29
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return 41.4% 3.3% 10.8% 9.4% 40.0% -3.8% 28.0% 11.0% 7.4% 13.4%
4
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Ratios/Supplemental data
Net assets, end of
year (in millions) $2,185.5 $1,548.3 $1,512.1 $1,389.3 $1,251.4 $870.2 $924.4 $714.2 $720.6 $696.7
Ratio to average
net assets:
Expenses 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Net investment income 0.5% 0.8% 1.1% 1.8% 2.8% 3.1% 2.8% 3.6% 3.3% 3.9%
Portfolio turnover rate 15% 32% 24% 28% 36% 29% 44% 39% 43% 40%
</TABLE>
5
<PAGE>
Management Discussion and Analysis
During 1995, the Fund gained 41.4% compared to a total
return on the Standard & Poor's 500 Index of 37.6%. The
investment philosophy of the Fund is to make concentrated
investments in a limited number of companies whose long-term
economic prospects, relative to the acquisition price of their
stocks, are deemed to be attractive. As a result of this
portfolio concentration, the performance of the Fund over time
should correlate more closely with the specific financial
performance of its limited number of portfolio companies than
with price movements in the stock market in general. At year end
1995, total equity investments comprised approximately 97% of net
assets, including a particularly heavy portfolio concentration in
selected financial companies. While the stock prices of the
Fund's financial portfolio holdings had been weak in general
during 1994, they were strong in 1995 as prevailing long-term
interest rates declined sharply and the companies continued to
report strong operating results as well. In addition, the stock
of Berkshire Hathaway Inc., the Fund's largest equity investment
which comprised 31% of total net assets at year end, was up 57%
in 1995 and had an important positive effect on Fund performance
for the year. The Fund's shareholders should be aware that
because of the significant concentration of the Fund in Berkshire
Hathaway, short term price movements in its common stock - which
may be disproportionate to the company's underlying economic
progress - will have an important effect on the periodic results
of the Fund. The 1995 performance of the Fund's other major
holdings was as follows: Federal Home Loan Mortgage Corporation
+65%; Progressive Corporation +40%; Fifth Third Bancorp +53%;
Johnson & Johnson +56%; Hasbro, Inc. +6%; and First Bank Systems,
Inc. +49%. Including the Berkshire Hathaway position, these
seven holdings represented almost 80% of the Fund's total equity
investments at year end 1995.
6
<PAGE>
SEQUOIA FUND
GRAPHIC - A line chart illustrates the performance of an assumed
investment of $10,000 in the Sequoia Fund and the S&P 500 index
beginning on 7/15/70 as follows:
Sequoia
Date Fund S&P 500
____ _______ _______
12/31/70 11,210 12,060
12/31/71 12,723 13,785
12/31/72 13,194 16,390
12/31/73 10,030 13,964
12/31/74 8,457 10,278
12/31/75 13,576 14,101
12/31/76 23,393 17,429
12/31/77 28,057 16,139
12/31/78 34,771 17,172
12/31/79 38,961 20,297
12/31/80 43,894 26,853
12/31/81 53,329 25,510
12/31/82 69,920 30,970
12/31/83 89,015 37,907
12/31/84 105,481 40,219
12/31/85 134,975 52,929
12/31/86 153,027 62,773
12/31/87 164,361 65,975
12/31/88 182,516 76,729
12/31/89 233,453 101,052
12/31/90 224,586 97,919
12/31/91 314,426 127,784
12/31/92 343,863 137,496
12/31/93 380,919 151,383
12/31/94 393,633 153,351
12/31/95 556,525 211,011
Legend in graph states that Past Performance is not Predicitive
of Future Performance
A box in the graph states the Annual Total Returns as of 12/31/95
as follows:
7
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
Since
Inception
1 year 5 years 10 years 7/15/70
______ _______ ________ _________
SEQUOIA FUND 41.4% 19.9% 15.2% 17.1%
S&P 500 37.6% 16.6% 14.8% 12.7%
8
<PAGE>
DESCRIPTION OF THE FUND
Introduction
Sequoia Fund, Inc. (the "Fund") is a no-load, non-
diversified, open-end investment company originally incorporated
in Delaware on November 25, 1969. Effective May 1, 1980, the
Fund reincorporated as a Maryland corporation pursuant to a
statutory merger. The office of the Fund is located at 767 Fifth
Avenue, New York, New York 10153.
The Fund has indefinitely discontinued the sale of its
shares to new investors (see "How to Purchase Shares," page 12);
accordingly, only existing stockholders of the Fund may purchase
its shares.
Investment Objective
The investment objective of the Fund is growth of
capital; such objective is a fundamental policy of the Fund and
cannot be changed without stockholder approval. In seeking to
meet this objective the Fund emphasizes the purchase of common
stocks which it feels are undervalued with the hope that growth
of capital will result. A guiding principle is the consideration
of common stocks as units of ownership of a business and the
purchase of them when the price appears low in relation to the
value of the total enterprise. No weight is given to technical
stock market studies nor are such techniques as borrowing,
hedging or short sales used. Extensive study is made of the
balance sheet and earning power factors to appraise the
fundamental worth of each investment. Dividend income and
interest are not prime considerations in the purchase of
securities but are considered in relation to the total expected
return on the investment. There can of course be no assurance
that the foregoing investment objective will be met.
Fundamental Investment Policies
The Fund has adopted and is currently following the
fundamental investment policies set forth below which may not be
changed without the approval of the lesser of (i) 67% or more of
the voting securities present at a meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Fund.
9
<PAGE>
(a) Concentration of Investments
While the Fund does not intend to concentrate its
investments in any one industry, it has reserved the right to
invest up to 25% of the value of its net assets (at the time of
purchase and after giving effect thereto) in the securities of
companies principally engaged in a particular industry.
(b) Foreign Securities
Investments may be made in both domestic and foreign
companies. While the Fund has no present intention to invest any
significant portion of its assets in foreign securities, it
reserves the right to invest not more than 15% of the value of
its net assets (at the time of purchase and after giving effect
thereto) in the securities of foreign issuers and obligors.
(c) Restricted or Not Readily Marketable Securities
The Fund may invest in securities acquired in a
privately negotiated transaction from the issuer or a holder of
the issuer's securities and which may not be distributed publicly
without registration under the Securities Act of 1933. Such
restricted securities may not thereafter ordinarily be sold by
the Fund except in another private placement or under an
effective registration statement filed pursuant to the Securities
Act of 1933. The Fund will not invest in any restricted
securities which will cause the then aggregate value of all of
such restricted securities, as valued on the books of the Fund,
to exceed 10% of the value of the Fund's net assets (at the time
of such investment and after giving effect thereto). Restricted
securities are valued in such manner as the Board of Directors in
good faith deems appropriate to reflect their fair value. As of
December 31, 1995 no such securities were held by the Fund.
(d) Special Situations
The Fund intends to invest in special situations from
time to time. A special situation arises when, in the opinion of
the Fund's management, the securities of a particular company
will, within a reasonably estimable period of time, be accorded
market recognition at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company
and regardless of general business conditions or movements of the
market as a whole. Developments creating special situations
might include, among others, the following: liquidations,
reorganizations, recapitalizations or mergers; material
litigation; technological breakthroughs; and new management or
10
<PAGE>
management policies. Although large and well-known companies may
be involved, special situations often involve much greater risk
than is inherent in ordinary investment securities. The Fund
will not, however, purchase securities of any company with a
record of less than three years' continuous operation (including
that of predecessors) if such purchase would cause the Fund's
investments in all such companies to exceed 25% of the value of
the Fund's total assets.
Any such purchases will of course be subject to the
restrictions applicable to the concentration of investments. See
"Concentration of Investments" above.
(e) Other Investment Policies
The Fund currently follows, and proposes to continue to
follow, certain other investment policies set forth below which,
however, are not matters of fundamental policy and may be changed
from time to time in the discretion of the management of the
Fund.
Ordinarily the Fund's portfolio will be invested
primarily in common stocks and securities convertible into or
exchangeable for common stocks. When management believes that
investments in securities other than common stock offer
opportunity for capital growth or that prevailing conditions
warrant the taking of a more defensive or conservative investment
position, the Fund may invest a portion or all of its assets in
preferred stock, debt securities and United States Government,
state, and municipal and governmental agency and instrumentality
obligations, or funds may be retained in cash.
(f) Investment Restrictions
The Fund has adopted the following additional
restrictions as matters of fundamental investment policy, which
may not be changed without a stockholder vote. The Fund may not:
1. Underwrite the securities of other issuers, except
the Fund may, as indicated above (see "Restricted or Not
Readily Marketable Securities," page 5), acquire restricted
securities under circumstances where, if such securities are
sold, the Fund might be deemed to be an underwriter for
purposes of the Securities Act of 1933.
2. Purchase or sell real estate or interests in real
estate, but the Fund may purchase marketable securities of
companies holding real estate or interests in real estate.
11
<PAGE>
3. Purchase or sell commodities or commodity
contracts.
4. Make loans to other persons except by the purchase
of a portion of an issue of publicly distributed bonds,
debentures or other debt securities, except that the Fund
may purchase privately sold bonds, debentures or other debt
securities immediately convertible into equity securities
subject to the restrictions applicable to the purchase of
not readily marketable securities. See "Restricted or Not
Readily Marketable Securities," page 5.
5. Borrow money except for temporary or emergency
purposes and then only from banks and in an aggregate amount
not exceeding 5% of the value of the Fund's total assets at
the time any borrowing is made, provided that the term
"borrow" shall not include the short-term credits referred
to in paragraph 6 below.
6. Purchase securities on margin, but it may obtain
such short-term credits as may be necessary for the
clearance of purchases and sales of securities.
7. Make short sales of securities.
8. Purchase or sell puts and calls on securities.
9. Participate on a joint or joint and several basis
in any securities trading account.
10. Purchase the securities of any other investment
company except (1) in the open market where to the best
information of the Fund no commission, profit or sales
charge to a sponsor or dealer (other than the customary
broker's commission) results from such purchase, or (2) if
such purchase is part of a merger, consolidation or
acquisition of assets.
11. Invest in companies for the purpose of exercising
management or control.
12. Invest more than 25% of the value of its net assets
(at the time of purchase and after giving effect thereto) in
the securities of any one issuer.
12
<PAGE>
MANAGEMENT OF THE FUND
General
The business and affairs of the Fund are managed under
the direction of the Fund's Board of Directors. The Fund retains
as its investment adviser Ruane, Cunniff & Co., Inc., a Delaware
corporation organized on April 14, 1969 with its principal office
at 767 Fifth Avenue, New York, New York 10153 (the "Investment
Adviser"). The Investment Adviser is a registered investment
adviser and a registered broker-dealer and member corporation of
the New York Stock Exchange, Inc. The Investment Adviser has
also been and may in the future be the Fund's regular broker.
William J. Ruane, Richard T. Cunniff and Robert D. Goldfarb who
are officers and directors of the Fund and the Investment
Adviser, Carol L. Cunniff who is an officer of the Fund and an
officer and director of the Investment Adviser, and Joseph
Quinones, Jr. who is an officer of the Fund and an officer of the
Investment Adviser, may be deemed "controlling persons" of the
Investment Adviser. The employees of the Investment Adviser
principally responsible for the Fund's investment program are
Messrs. Ruane, Cunniff and Goldfarb, who have each been
associated with the Investment Adviser for the previous five
years.
Investment Advisory Contract
The Investment Advisory Contract (the "Contract")
between the Fund and Ruane, Cunniff & Co., Inc. became effective
on July 1, 1993, and was most recently approved by the Fund's
Board of Directors, including the disinterested directors, on
December 11, 1995, and by the stockholders of the Fund at the
annual meeting of stockholders held on April 16, 1996. The
previous investment advisory contract between the Corporation and
the Investment Adviser dated May 1, 1974 was automatically
terminated as of July 1, 1993 pursuant to the provisions of the
Investment Company Act of 1940 as a result of the issuance of
additional common stock of the Investment Adviser to Mr. Robert
Goldfarb.
Under the Contract, the Investment Adviser furnishes
advice and recommendations with respect to the Fund's portfolio
of securities and investments and provides persons satisfactory
to the Fund's Board of Directors to act as officers and employees
of the Fund. Such officers and employees, as well as certain
directors of the Fund, may be directors, officers or employees of
the Investment Adviser or its affiliates. For the fiscal year
ended December 31, 1995, the total expenses before the expense
13
<PAGE>
reimbursement, including the management fee, for the Fund
constituted 1.04% of the average daily net assets of the Fund.
For the fiscal year ended December 31, 1995, the
Investment Adviser received from the Fund a net management fee
equal to .97% of the Fund's average daily net assets.
Distributor
The Investment Adviser also serves, without compen-
sation, as the Fund's distributor and as such is authorized to
solicit orders from the public to purchase shares of the Fund's
common stock. The distributor acts in this capacity merely as
the Fund's agent, and all subscriptions must be accepted by the
Fund as principal.
HOW TO PURCHASE SHARES
Shares of the Fund are offered at net asset value, on a
continuous basis, without any sales or other charge, by the
distributor. The net asset value of each share of the Fund's
Common Stock is determined once each Fund Business Day as of the
close of the New York Stock Exchange, Inc. by the value of the
securities and other assets owned by the Fund less its
liabilities, computed in accordance with the Articles of
Incorporation and By-Laws of the Fund. Fund Business Day for
this purpose means weekdays (Monday through Friday) except
customary national business holidays and Good Friday. The net
asset value of a share is the quotient obtained by dividing the
net assets of the Fund (i.e., the value of the assets of the Fund
less its liabilities, including expenses payable or accrued but
excluding capital stock and surplus) by the total number of
shares of Common Stock outstanding.
The Fund has discontinued indefinitely the sale of its
shares to new investors, including investments by IRA and Keogh
plans. The Fund will continue to accept additional investments
from existing stockholders, and will continue to reinvest
dividends and capital gains distributions with respect to the
accounts of existing stockholders who have elected those options.
See "Income Dividends and Capital Gains Distributions; Federal
Income Tax Status", page 9. The decision to discontinue sales to
new investors reflects management's belief that unrestrained
growth in the Fund's net assets might impair investment
flexibility and would not be in the best interests of existing
stockholders. The Fund may recommence at any time the sale of
shares of the Fund to new investors if in the Board of Directors'
14
<PAGE>
opinion doing so would be in the best interests of the Fund and
its stockholders.
Each additional investment by a stockholder must be at
least $50, except that such minimum has been waived for
investments by IRA and Keogh plans. Such additional
subscriptions should be forwarded directly to the Fund's Transfer
Agent and Dividend Disbursing Agent, DST Systems, Inc., Post
Office Box 419529, Kansas City, Missouri 64141. Subscriptions
are accepted for fractional shares. The Fund will not accept
third-party checks (i.e., any checks which are not made payable
to the order of the Fund, transfer agent or a retirement account
custodian).
Stockholders may make fixed, periodic investments into
the Fund by means of automatic money transfers from their bank
checking accounts. To establish automatic money transfers,
stockholders may contact the Fund.
Purchases of the Fund's shares may be effected through
broker-dealers other than the Investment Adviser. Such broker-
dealers may charge investors a service fee, none of which is
received by the distributor or by the Fund.
Orders for shares received by the Fund, by the
distributor or by DST Systems, Inc. prior to the close of
business on the New York Stock Exchange, Inc. on each day during
such periods that the Exchange is open for trading are priced at
net asset value per share computed as of the close of the
Exchange on that day. Orders received after the close of the New
York Stock Exchange, Inc. or on a day it is not open for trading
are priced at the close of such Exchange on the next succeeding
day on which it is open for trading. The Fund reserves the right
to reject any subscription in its sole discretion (including
additional investments by existing stockholders), but in practice
generally accepts subscriptions where sales are permissible under
the applicable State law.
The Fund may in its discretion occasionally accept oral
subscriptions or redemptions from persons known to the Fund's
management. The distributor has agreed to reimburse the Fund for
any loss due to a person's failure to honor an accepted oral
subscription or redemption request.
15
<PAGE>
RETIREMENT PLANS
Individual Retirement Accounts
A form of individual retirement account ("IRA") is
available from the Fund for investment in shares of the Fund.
This form may be used for regular contributions described below
as well as for qualified rollover contributions of distributions
received from certain employer-sponsored pension and profit-
sharing plans and from other IRAs. Under the form, all assets in
the IRA are automatically invested in Fund shares, including all
dividends and capital gain distributions paid on Fund shares held
in the IRA. Investors Fiduciary Trust Company of Kansas City,
Missouri acts as custodian of an IRA established pursuant to the
form for an annual fee which is currently fixed at $12.00.
Individuals generally may make regular IRA contributions
of up to $2,000 annually. The deductibility for Federal income
tax purposes of such contributions may be reduced if the
individual or, in the case of a married individual, either the
individual or the individual's spouse is an active participant in
an employer-sponsored retirement plan. In the case of an active
participant, the deduction will not be available for individuals
with adjusted gross income above $35,000, married couples filing
a joint return with adjusted gross income above $50,000 and
married couples filing separately if the spouse has adjusted
gross income above $10,000. Below these income levels, some or
all of the contributions may be deductible. In addition, an
individual with a non-working spouse may establish a separate IRA
for the spouse and annually contribute a total of up to $2,250 to
the two IRAs, provided that no more than $2,000 may be
contributed to the IRA of either spouse. No regular contribution
may be made to an IRA for any year if by the end of such year the
IRA owner has attained the age 70-1/2.
Keogh Plans
A self-employed individual may purchase Fund shares
through a properly drafted self-employment retirement plan (often
referred to as a Keogh or HR-10 plan) covering himself and his
eligible employees. Generally, the annual amount which a self-
employed individual may deduct for contributions to his own
account under such a plan may be up to 25% of his or her net
earnings from self-employment (depending on the particular type
of plan or plans involved), up to a maximum contribution of
$30,000. The Fund does not have a form of Keogh plan available
for adoption.
16
<PAGE>
Minimums and Information
The minimum investment requirements for the purchase of
Fund shares have been waived for purchases by IRAs and Keogh
plans. An investor should contact the Fund for further
information concerning IRA and Keogh plan investments. Regarding
IRAs, a required disclosure statement describing relevant tax and
other information will be provided with the appropriate forms and
instructions, all of which should be read carefully. The
investor's tax adviser should be consulted as well.
STOCKHOLDERS' OPEN ACCOUNTS
When an investor purchases shares of the Fund, a
Stockholder's Open Account is automatically opened for him on the
books of the Fund by DST Systems, Inc., and no certificates for
shares are issued except on request. After such initial purchase
of shares, any additional shares purchased by such stockholder
will likewise be held in his Stockholder's Open Account.
A continuing permanent record of each Stockholder's Open
Account is maintained, and whenever there is a transaction in the
account, the stockholder receives a written statement of the
transaction including information concerning the status of the
account. These statements provide an annual record of the
stockholder's investments in shares of the Fund.
Instead of carrying his shares in a Stockholder's Open
Account, a stockholder may, upon written request to the Fund,
receive certificates for his shares. (The cost of furnishing
certificates is borne by the Fund.)
REDEMPTION OF SHARES
Subject to the limitations described below, on any
stockholder's request in accordance with the procedures set forth
below the Fund will redeem all or any portion of such
stockholder's shares of the Fund, at a redemption price equal to
the net asset value per share next computed following the receipt
of his redemption request in proper form. See Statement of
Additional Information, "Net Asset Value". There is no
redemption charge.
A stockholder may send a written request for redemption
of his shares to the Fund's Transfer Agent, DST Systems, Inc.,
Post Office Box 419477, Kansas City, Missouri 64141, accompanied
by the outstanding certificates, if any, representing such shares
together with a standard form of stock power signed by the
17
<PAGE>
registered owner or owners of such shares. If such shares are
represented by a Stockholder's Open Account, such written request
shall include a signature guaranteed by a national or state bank
or by a member firm of a national stock exchange. If such shares
are represented by stock certificates, the signature on the stock
power must be guaranteed as above.
The Fund will also, for the principal purpose of
determining the net asset value per share at which the redemption
price shall be computed, give effect to a stockholder's telephone
or other oral request to the Fund for the redemption of his
shares, subject to the Fund's right to request verification of
the identity of the party requesting the redemption prior to
giving effect to the redemption request. Promptly following his
oral redemption request to the Fund, a stockholder should forward
to the Fund's Transfer Agent all the appropriate supporting
documentation as set forth in the immediately preceding
paragraph. Although the amount of payment for such redeemed
shares will be determined at the net asset value per share next
computed following the stockholder's oral redemption request,
such payment will not be made until the Transfer Agent has
received all required documentation.
A stockholder's oral redemption request is (upon
satisfactory verification if requested by the Fund) effective to
divest him of the redeemed shares for all purposes except the
Fund's forwarding of payment therefor, and the amount of such
payment will be held by the Fund for such stockholder's account,
without interest, until the Transfer Agent has received proper
documentation as to the redemption.
The redemption price of shares may be more or less than
the investor's cost, depending upon the net asset value of the
Fund's shares as next computed following receipt of the
investor's redemption request in proper form.
Payment of the redemption price may be made either in
cash or in portfolio securities (selected in the discretion of
the Board of Directors of the Fund and taken at their value used
in determining the redemption price), or partly in cash and
partly in portfolio securities. However, payments will be made
wholly in cash unless the Board of Directors believes that
economic conditions exist which would make such a practice
detrimental to the best interests of the Fund. If payment for
shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the
securities to cash. The Fund has filed a formal election with
the Securities and Exchange Commission pursuant to which the Fund
18
<PAGE>
will only effect a redemption in portfolio securities where the
particular stockholder of record is redeeming more than $250,000
or 1% of the Fund's total net assets, whichever is less, during
any 90-day period. In the opinion of the Fund's management,
however, the amount of a redemption request would have to be
significantly greater than $250,000 or 1% of total net assets
before a redemption wholly or partly in portfolio securities was
made.
INCOME DIVIDENDS AND CAPITAL
GAINS DISTRIBUTIONS; FEDERAL
INCOME TAX STATUS
Until the Board of Directors otherwise determines, each
dividend and capital gain distribution, if any, declared by the
Fund on its outstanding shares will, at the election of each
stockholder, be paid in cash or in additional whole or fractional
shares of Common Stock of the Fund having an aggregate net asset
value as of the payment date of such dividend or distribution
equal to the cash amount of such dividend or distribution.
Election to receive dividends and distributions in cash or shares
is made at the time shares are subscribed for. A stockholder may
change such election at any time prior to the record date for a
particular dividend or distribution by written request to the
Fund's Dividend Disbursing Agent, DST Systems, Inc., Post Office
Box 419477, Kansas City, Missouri 64141. The value of whole and
fractional shares shall be computed in accordance with the
provisions of "Net Asset Value" described in the Statement of
Additional Information.
There is no sales or other charge in connection with the
reinvestment of dividends and capital gains distributions.
The Fund is a "non-diversified" investment company,
which means the Fund is not limited (subject to the Investment
Restrictions, page 6) in the proportion of its assets that may be
invested in the securities of a single issuer. However, for the
fiscal year ended December 31, 1995 the Fund has qualified, and
for each fiscal year thereafter, the Fund intends to conduct its
operations so as to qualify as a "regulated investment company"
for purposes of the Internal Revenue Code of 1986, as amended,
which will relieve the Fund of any liability for Federal income
tax on that part of its net ordinary taxable income and net
realized long-term capital gain which it distributes to
stockholders. Such qualification does not involve supervision of
management or investment practices or policies by any government
agency. To so qualify, among other requirements, the Fund will
limit its investments so that, at the close of each quarter of
19
<PAGE>
the taxable year, (i) not more than 25 percent of the market
value of the Fund's total assets will be invested in the
securities of a single issuer ("the 25% test"), and (ii) with
respect to 50 percent of the market value of its total assets,
not more than five percent of the market value of its total
assets will be invested in the securities of a single issuer and
the Fund will not own more than 10 percent of the outstanding
voting securities of a single issuer ("the 50% test"). The
Fund's investments in U.S. Government securities are not subject
to these limitations. The Fund will not lose its status as a
regulated investment company if the Fund fails to meet the 25%
test or the 50% test at the close of a particular quarter due to
fluctuations in the market values of its securities. Investors
should consult their own counsel for a complete understanding of
the requirements the Fund must meet to qualify as a regulated
investment company. The following discussion relates solely to
the Federal income tax treatment of dividends and distributions
by the Fund and assumes the Fund qualifies as a regulated
investment company. Investors should consult their own counsel
for further details and for the application of state and local
tax laws to his or her particular situation.
Distributions of net ordinary taxable income (including
any realized short-term capital gain) by the Fund to its
stockholders are taxable to the recipient stockholders as
ordinary income and, to the extent determined each year, are
eligible, in the case of corporate stockholders, for the 70
percent dividends-received deduction, subject to reduction of the
amount eligible for deduction if the aggregate qualifying
dividends received by the Fund from domestic corporations in any
year are less than 100% of its gross income (excluding long-term
capital gains from securities transactions). Under provisions of
the current tax law, a corporation's dividends-received deduction
will be disallowed, however, unless the corporation holds shares
in the Fund at least 46 days. Furthermore, the dividends-
received deduction will be disallowed to the extent a
corporation's investment in shares of the Fund is financed with
indebtedness. In view of the Fund's investment policies,
dividends from domestic corporations may be a large part of the
Fund's ordinary taxable income and, accordingly, a large part of
such distributions by the Fund may be eligible for the dividends-
received deduction; however, this is largely dependent on the
Fund's investment policy for a particular year and therefore
cannot be predicted with certainty. For the year ended
December 31, 1995, 75.8% of the net ordinary taxable income
distributed by the Fund was eligible for such deduction by
corporate stockholders.
20
<PAGE>
Distributions of capital gain (i.e., the excess of the
net long-term capital gain over the net short-term capital loss)
by the Fund to its stockholders are taxable to the recipient
stockholders as long-term capital gain, irrespective of the
length of time a stockholder may have held his stock. Capital
gain distributions are not eligible for the dividends-received
deduction referred to above. (As of December 31, 1995 the net
unrealized appreciation in the Fund's portfolio was approximately
51.9% of the Fund's net asset value.) Reports containing
appropriate Federal income tax information (relating to the tax
status of dividends and capital gain distributions by the Fund)
will be furnished to each stockholder not later than 30 days
following the close of each calendar year.
Any dividend or distribution received by an investor on
shares of the Fund shortly after the purchase of such shares by
him will have the effect of reducing the net asset value of such
shares by the amount of such dividend or distribution.
Furthermore, such dividend or distribution, although in effect a
return of capital, is subject to applicable taxes to the extent
that the investment is subject to such taxes. If a stockholder
held shares for six months or less and during that period
received a distribution taxable to such stockholder as long-term
capital gain, any loss realized on the sale of such shares during
such six-month period would be a long-term capital loss to the
extent of such distribution.
The above discussion concerning the taxation of
dividends and distributions received by stockholders is
applicable whether a stockholder receives such payment in cash or
reinvests such amount in additional shares of the Fund. Thus,
dividends and distributions which are taxable as ordinary income
or long-term capital gain are so taxable whether received in cash
or reinvested in additional shares of the Fund.
PERIODIC CASH WITHDRAWAL PLAN
A stockholder owning or purchasing shares of the Fund
valued at $10,000 or more at the current net asset value may
elect a Withdrawal Plan under which he will receive monthly or
quarterly payments from a Withdrawal Plan Account in fixed
amounts designated by him. A Withdrawal Plan Account will
consist of shares of the Fund deposited by such stockholder. Any
cash dividends and capital gains distributions on shares held in
a Withdrawal Plan Account are automatically reinvested.
Sufficient shares will be redeemed at net asset value to provide
the cash necessary for each withdrawal payment. Redemptions for
the purpose of withdrawals are made on or about the 25th day of
21
<PAGE>
the month at the net asset value then in effect, and checks are
mailed promptly thereafter. Such payment may also be made to any
person designated by the stockholder, but if shares are
registered in the name of a trustee or other fiduciary, payment
will be made only to such fiduciary. As withdrawal payments may
include a return of principal they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
Continued withdrawals in excess of income will reduce and
possibly exhaust invested principal, especially in the event of a
market decline. The cost of the Withdrawal Plan will be borne by
the Investment Adviser.
Since the Withdrawal Plan may involve invasion of
capital, a stockholder should consider carefully with his own
financial advisers whether the Withdrawal Plan and the specified
amounts to be withdrawn are appropriate in his circumstances.
The Fund makes no recommendations or representations in this
regard.
PORTFOLIO TRANSACTIONS
The Investment Adviser furnishes advice and recom-
mendations with respect to the Fund's portfolio decisions and,
subject to the instructions of the Board of Directors of the
Fund, determines the broker to be used in each specific
transaction. The Investment Adviser attempts to obtain from
brokers the lowest possible commission consistent with best price
and execution. In doing so, the Investment Adviser takes into
account a number of considerations including, among other
factors, the overall net economic result to the Fund (involving
both price paid or received and any commissions and other costs
paid), the efficiency with which the specific transaction is
effected, the ability to effect the transaction at all where a
large block is involved, the known practices of brokers and their
availability to execute possibly difficult transactions in the
future and the financial strength and stability of the broker.
Because of such factors, most of which are judgmental, a broker-
dealer effecting a transaction may be paid a commission higher
than that charged by another broker-dealer. Subject to these
considerations, the Investment Adviser, an affiliated
corporation, is the Fund's regular broker and is the normal
channel through which securities transactions (other than on a
principal basis) are effected. Pursuant to Section 11(a) of the
Securities Exchange Act of 1934, the Investment Adviser is
restricted as to the nature and extent of the brokerage services
it may perform for the Fund. In accordance with rules adopted by
the Securities and Exchange Commission (the "SEC") under Section
11(a), the Investment Adviser may effect, on a national
22
<PAGE>
securities exchange, transactions in portfolio securities of the
Fund, that is, to cause such transactions to be transmitted,
executed, cleared and settled and to arrange for unaffiliated
brokers to execute such transactions. The Board of Directors of
the Fund, in accordance with the SEC rules, has authorized the
Fund to enter into a written contract with the Investment Adviser
pursuant to which the Investment Adviser may continue to receive
compensation for effecting, in compliance with the SEC rules,
such transactions. Certain affiliated persons of the Investment
Adviser are interested persons of the Fund.
Neither the Investment Adviser nor any affiliated person
thereof either participates in commissions paid by the Fund to
other brokers or dealers or receives any reciprocal business,
directly or indirectly, as a result of such commissions.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund consists solely
of 40,000,000 shares of Common Stock having a par value of $.10
per share. Each of the Fund's shares has equal dividend,
distribution, liquidation and voting rights. Holders of the
Fund's shares have no conversion or preemptive rights. All
shares of the Fund when duly issued will be fully paid and non-
assessable. The rights of the holders of shares of Common Stock
may not be modified except by vote of the holders of a majority
of the outstanding shares. Shares of the Fund are transferable
only with the consent of the Fund.
All stockholder inquiries may be directed to the Fund at
the telephone number or address listed on the cover of this
Prospectus.
23
<PAGE>
SEQUOIA FUND, INC. SEQUOIA FUND, INC.
767 Fifth Avenue
New York, New York 10153
Investment Adviser
& Distributor
__________________
Ruane, Cunniff & Co., Inc.
767 Fifth Avenue
New York, New York 10153
Custodian
_________
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
Transfer Agent and
Dividend Disbursing Agent
_________________________
DST Systems, Inc.
Post Office Box 419477
Kansas City, Missouri 64141
Legal Counsel
_____________
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
Independent Accountants
_______________________
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017
<PAGE>
PROSPECTUS
May 1, 1996
<PAGE>
SEQUOIA FUND, INC.
767 Fifth Avenue
New York, New York 10153
(Telephone 212-832-5280)
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
_____________________
Sequoia Fund, Inc. (the "Fund") is a no-load, non-
diversified, open-end investment company seeking growth of
capital. Ordinarily the Fund's portfolio will be primarily
invested in common stocks and securities convertible into or
exchangeable for common stocks. The Fund may invest to limited
extents in foreign securities, restricted securities and special
situations.
_____________________
This Statement of Additional Information is not a
prospectus and is only authorized for distribution when preceded
or accompanied by the Fund's Prospectus dated May 1, 1996 (the
"Prospectus"). This Statement of Additional Information contains
additional and more detailed information than that set forth in
the Prospectus and should be read in conjunction with the
Prospectus, additional copies of which may be obtained without
charge by writing or telephoning the Fund at the address and
telephone number set forth above.
_____________________
Table of Contents
Investment Policies 2 Redemption of Shares 11
Management 4 Common Stock 12
Investment Adviser and Custodian, Counsel and
Investment Advisory Independent Accountants 13
Contract 6 Independent Accountant's
Allocation of Portfolio Report 14
Brokerage 9
Net Asset Value 10
<PAGE>
INVESTMENT POLICIES
(a) Foreign Securities
Investors should recognize that investments in foreign
companies involve certain considerations which are not typically
associated with investing in domestic companies. An investment
may be affected by changes in currency rates and in exchange
control regulations. There may be less publicly available
information about a foreign company than about a domestic
company. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic companies. Foreign stock markets
have substantially less volume than the New York Stock Exchange,
Inc. and securities of some foreign companies may be less liquid
and more volatile than securities of comparable domestic
companies. There is generally less government regulation of
stock exchanges, brokers and listed companies than in the United
States. In addition, with respect to certain foreign countries
there is a possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments which
could affect investments in those countries. Individual foreign
economies may differ favorably or unfavorably from the United
States' economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. As of December 31,
1995, no foreign securities were held by the Fund.
(b) Restricted or Not Readily Marketable Securities
The purchase price and subsequent valuations of
restricted securities normally reflect a discount from the price
at which such securities trade when they are not restricted,
since the restriction makes them less liquid. The amount of the
discount from the prevailing market price is expected to vary
depending upon the type of security, the character of the issuer,
the party who will bear the expenses of registering the
restricted securities and prevailing supply and demand
conditions.
The Fund may not make loans or invest in any restricted
securities or other illiquid assets which will cause the then
aggregate value of all such restricted securities and other
illiquid assets to exceed 10% of the value of the Fund's net
assets (at the time of such investment and after giving effect
thereto). As of December 31, 1995 no such securities were held
by the Fund.
2
<PAGE>
If pursuant to the foregoing policy the Fund were to
assume substantial positions in particular securities with a
limited trading market, the activities of the Fund could have an
adverse effect on the liquidity and marketability of such
securities, and the Fund may not be able to dispose of its
holdings in these securities at reasonable price levels. There
are other investment companies and other investment media engaged
in operations similar to those of the Fund, and, to the extent
that these organizations trade in the same securities, the Fund
may be forced to dispose of its holdings at prices lower than
otherwise would be obtained.
(c) Other Investment Policies
The Fund will not seek to realize profits by antic-
ipating short-term market movements and intends to purchase
securities for growth of capital, in particular long-term capital
appreciation. In any event, under ordinary circumstances,
securities will be held for sufficient periods to qualify for
long-term capital gain treatment for tax purposes. While the
rate of portfolio turnover will not be a limiting factor when
management deems changes appropriate, it is anticipated that
given the Fund's investment objectives, its annual portfolio
turnover generally should not exceed 75%. (Portfolio turnover is
calculated by dividing the lesser of the Fund's purchases and
sales of portfolio securities during the period in question by
the monthly average of the value of the Fund's portfolio
securities during that period. Excluded from consideration in
the calculation are U.S. Government securities and all other
securities with maturities of one year or less when purchased by
the Fund.)
While the Fund is a non-diversified investment company
and therefore is not subject to any statutory diversification
requirements, it will be required to meet certain diversification
tests each year in order to qualify as a regulated investment
company under the Internal Revenue Code, as it intends to do.
See "Income Dividends and Capital Gains Distributions; Federal
Income Tax Status," page 9 of the Prospectus. The Fund will not
acquire more than 25% of any class of the securities of any
issuer. The Fund reserves the right, without stockholder action,
to diversify its investments to any extent it deems advisable or
to become a diversified company, but once the Fund becomes a
diversified company, it could not thereafter change its status to
that of a non-diversified company without the approval of its
stockholders.
3
<PAGE>
In connection with the qualification or registration of
the Fund's shares for sale under the State securities laws of
certain States, the Fund has agreed, in addition to the
investment restrictions set forth in the Prospectus, that it will
not (i) purchase material amounts of restricted securities,
(ii) invest more than 5% of the value of its total assets in
securities of unseasoned issuers (including their predecessors)
which have been in operation for less than three years, and
equity securities of issuers which are not readily marketable,
(iii) invest any part of its assets in interests in oil, gas or
other mineral or exploration or development programs (excluding
readily marketable securities), (iv) purchase or retain any
securities of another issuer of which those persons affiliated
with the Fund or the Investment Adviser owning, individually,
more than one-half of one percent of said issuer's outstanding
stock (or securities convertible into stock) own, in the
aggregate, more than five percent of said issuer's outstanding
stock (or securities convertible into stock), (v) invest any part
of its total assets in interests in oil, gas, or other mineral
exploration or development programs and (vi) invest in warrants
(other than warrants acquired by the Fund as a part of a unit or
attached to securities at the time of purchase), if as a result
such warrants valued at the lower of cost or market, would exceed
5% of the value of the Fund's assets as the time of purchase
provided that not more than 2% of the Fund's net assets at the
time of purchase may be invested in warrants not listed on the
New York Stock Exchange or the American Stock Exchange. The Fund
may from time to time agree to additional investment restrictions
for purposes of compliance with the securities laws of those
States where the Fund intends to sell or offer for sale its
shares. Any such additional restrictions that would have a
material bearing on the Fund's operations will be reflected in
supplements to this Statement of Additional Information or
related Prospectus.
MANAGEMENT
The directors and officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise specified, the address of each of the
following persons is 767 Fifth Avenue, New York, New York 10153.
William J. Ruane,* Chairman of the Board and Director,
is and has been Chairman of the Board and Director of Ruane,
____________________
* Such persons are "interested persons" of the Fund within the
meaning of Section 2(a)(19)(A) of the Investment Company Act
of 1940.
4
<PAGE>
Cunniff & Co., Inc. (member firm of the New York Stock Exchange,
Inc. and the Fund's investment adviser and distributor) for more
than five years. Mr. Ruane is also a Director of The Washington
Post Company and GEICO Corporation.
Richard T. Cunniff,** President and Director, is and has
been President and Director of Ruane, Cunniff & Co., Inc. for
more than five years. Mr. Cunniff is also a Director of Sturm,
Ruger & Company, Inc.
Robert D. Goldfarb,** Vice President and Director, is an
Executive Vice President of Ruane, Cunniff & Co., Inc. with which
he has been associated for more than five years.
John M. Harding, Director, is currently retired. From
1975 to 1989, Mr. Harding was Associate Professor of Business at
Albers School of Business, Seattle University. His address is
2159 38th Avenue East, Seattle, Washington 98112.
Francis P. Matthews, Director, is currently retired.
From 1986 to 1990 Mr. Matthews was of counsel to Matthews &
Cannon (law firm), Omaha, Nebraska. His address is 220 Trails
End Road, Elkhorn, Nebraska 68022.
C. William Neuhauser, Director, is currently retired.
From January 1979 to November 1981, Mr. Neuhauser was Executive
Secretary of National Maritime Council (association of U.S. flag
ocean carriers, maritime unions and shipyards). His address is
Sumac Lane, Gloucester, Massachusetts 01930.
Robert L. Swiggett, Director, is currently retired.
Mr. Swiggett was Chairman of the Board of Directors of Kollmorgen
Corporation (electro-optical instruments and direct-drive motor
and control devices and systems), Hartford, Connecticut from 1983
to 1990. His address is 8 Birchwood Farm Lane, P.O. Box 1070,
New London, New Hampshire 03257.
Carol L. Cunniff,** Vice President, is an Executive Vice
President and Director of Ruane, Cunniff & Co., Inc. with which
she has been associated for more than five years.
Joseph Quinones, Jr.,** Vice President, Secretary and
Treasurer, is a Vice President, Secretary and Treasurer of Ruane,
Cunniff & Co., Inc. Previously, Mr. Quinones had been a vice
____________________
** Such persons are "interested persons" of the Fund within the
meaning of Section 2(a)(19)(A) of the Investment Company Act
of 1940.
5
<PAGE>
president of Weiss Peck & Greer (a money management firm), the
chief financial officer of Woodward & Associates (a money
management firm) and a vice president of Lazard Freres Asset
Management.
On February 16, 1996, the directors and officers of the
Fund collectively owned approximately 1.13%, or, including shares
owned by their respective relatives and affiliates, approximately
2.46%, of the total number of the outstanding shares of the
Fund's Common Stock. Each of the directors and officers
disclaims beneficial ownership of the shares owned by such
relatives and affiliates.
The Fund does not pay any fees to, or reimburse expenses
of, its Directors who are considered "interested persons" of the
Fund. The aggregate compensation for the fiscal year ended
December 31, 1995, paid by the Fund to each of the Directors is
set forth below. Ruane, Cunniff & Co., Inc. does not provide
investment advisory services to any investment companies
registered under the Investment Company Act of 1940, as amended,
other than the Fund.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Accrued Estimated Annual
Compensation As Part of Benefits Upon Total Compensation
Name of Director from Fund Fund Expenses Retirement From Fund
________________ ____________ ________________ ________________ __________________
<S> <C> <C> <C> <C>
William J. Ruane $0 $-0- $-0- $0
Richard T. Cunniff $0 -0- -0- $0
Robert D. Goldfarb $0 -0- -0- $0
John M. Harding $30,000 -0- -0- $30,000
Francis P. Matthews $30,000 -0- -0- $30,000
C. William Neuhauser $30,000 -0- -0- $30,000
Robert L. Swiggett $30,000 -0- -0- $30,000
</TABLE>
6
<PAGE>
INVESTMENT ADVISER AND
INVESTMENT ADVISORY CONTRACT
The terms of the Investment Advisory Contract (the
"Contract") provide that it is to remain in force until
December 31, 1993 and thereafter for successive twelve-month
periods computed from each January 1, provided that such
continuance is specifically approved annually by vote of a
majority of the Fund's outstanding voting securities or by the
Fund's Board of Directors; and by a majority of the Fund's Board
of Directors who are not parties to the Contract or interested
persons of any such party, by vote cast in person at a meeting
called for the purpose of voting on such approval. Continuance
of the Contract through December 31, 1996 was so approved at a
meeting of the Board of Directors on December 11, 1995 at which
meeting the Board of Directors also approved the submission to
stockholders of the Fund of the renewal of the Investment
Advisory Contract for the period commencing January 1, 1996,
pursuant to the provisions of the Investment Company Act of 1940
and the terms of the Investment Advisory Contract described
above.
Under the Contract the Investment Adviser furnishes
advice and recommendations with respect to the Fund's portfolio
of securities and investments and provides persons satisfactory
to the Fund's Board of Directors to act as officers and employees
of the Fund. Such officers and employees, as well as certain
directors of the Fund, may be directors, officers or employees of
the Investment Adviser or its affiliates.
In addition, the Investment Adviser is responsible for
the following expenses incurred by the Fund: (i) the
compensation of any of the Fund's directors, officers and
employees who are interested persons of the Investment Adviser or
its affiliates (other than by reason of being directors, officers
or employees of the Fund), (ii) fees and expenses of registering
the Fund's shares under the appropriate federal securities laws
and of qualifying its shares under applicable State Blue Sky
laws, including expenses attendant upon renewing and increasing
such registrations and qualifications, and (iii) expenses of
printing and distributing the Fund's prospectuses and sales and
advertising materials. The Fund is responsible and has assumed
the obligation for payment of all of its other expenses including
(a) brokerage and commission expenses, (b) Federal, State or
local taxes, including issue and transfer taxes, incurred by or
levied on the Fund, (c) interest charges on borrowings,
(d) compensation of any of the Fund's directors, officers or
employees who are not interested persons of the Investment
7
<PAGE>
Adviser or its affiliates (other than by reason of being
directors, officers or employees of the Fund), (e) charges and
expenses of the Fund's custodian, transfer agent and registrar,
(f) costs of proxy solicitations, (g) legal and auditing
expenses, and (h) payment of all investment advisory fees
(including the fee payable to the Investment Adviser under the
Contract).
For the services provided by the Investment Adviser
under the Contract, the Investment Adviser receives from the Fund
a management fee equal to 1% per annum of the Fund's average
daily net asset values. Such fee is in excess of the management
fees paid by most similar registered investment companies. The
management fee is accrued daily in computing the net asset value
of a share for the purpose of determining the offering and
redemption price per share, and is paid to the Investment Adviser
at the end of each month.
However, the Investment Adviser will reimburse the Fund
for the amount, if any, by which the operating expenses of the
Fund in any year, including the management fee, exceed 1-1/2% of
the average daily net asset values of the Fund during such year
up to a maximum of $30,000,000, plus 1% of the average daily net
asset values in excess of $30,000,000. Operating expenses for
the purposes of the Contract do not include the expenses listed
in clauses (a), (b) and (c) above. Computation of this
limitation is made monthly during the Fund's fiscal year, on the
basis of the average daily net asset values and operating
expenses to that point during such year, and the amount of the
excess, if any, over the prorated amount of the expense
limitation is paid by the Investment Adviser to the Fund (or,
where such amount of the excess is less than the monthly payment
by the Fund to the Investment Adviser of the management fee, is
deducted from such monthly payment of the management fee), after
taking into account, however, any previous monthly payments under
the operating expense limitation during such fiscal year. During
the fiscal year ended December 31, 1995, the Fund incurred
operating expenses of $19,213,300 of which the Investment Adviser
reimbursed the Fund $505,000 pursuant to the expense limitation
described above. During the fiscal year ended December 31, 1994,
the Fund incurred operating expenses of $16,241,698 of which the
Investment Adviser reimbursed the Fund $466,000 pursuant to the
expense limitation described above. The amount of operating
expenses incurred by the Fund during the fiscal year ended
December 31, 1993 was $15,357,612 of which the Investment Adviser
reimbursed the Fund $400,000.
8
<PAGE>
The Contract is terminable on 60 days' written notice by
vote of a majority of the Fund's outstanding shares or by vote of
majority of the Fund's entire Board of Directors, or by the
Investment Adviser on 60 days' written notice and automatically
terminates in the event of its assignment. The Contract provides
that in the absence of willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser, or of reckless
disregard of its obligations thereunder, the Investment Adviser
is not liable for any action or failure to act in accordance with
its duties thereunder.
The Investment Adviser may act as an investment adviser
to other persons, firms or corporations (including investment
companies), and has numerous advisory clients besides the Fund,
none of which, however, is a registered investment company.
Management Fee
The following chart sets forth, for each of the last
three years, (i) the management fee which was received by the
Investment Adviser, (ii) the portion, if any, of such fee
reimbursed to the Fund pursuant to the expense limitation
described above and (iii) the net amount received by the
Investment Adviser from the Fund.
Management Amount Net Amount
Year Ended Fee Reimbursed Received
__________ __________ __________ __________
December 31, 1993 $14,807,836 $400,000 $14,407,836
December 31, 1994 $15,625,746 $466,000 $15,159,746
December 31, 1995 $18,558,564 $505,000 $18,053,564
_________________________________________________________________
ALLOCATION OF PORTFOLIO BROKERAGE
The Fund and the Investment Adviser generally do not
direct the Fund's portfolio transactions to persons or firms
because of research services provided by such person or firm.
While neither the Fund nor the Investment Adviser has a present
intention of doing so, the Investment Adviser may execute
transactions in the Fund's portfolio securities through persons
or firms which supply investment information to the Fund or the
Investment Adviser, but only when consistent with the Fund's
policy to seek the most favorable markets, prices and executions
in its securities transactions.
9
<PAGE>
The Fund may deal in some instances in securities which
are not listed on a national securities exchange but are traded
in the over-the-counter market or the third market. It may also
execute transactions in listed securities through the third
market. Where transactions are executed in the over-the-counter
market or the third market, the Investment Adviser seeks to deal
with primary market makers and to execute transactions on the
Fund's own behalf, except in those circumstances where, in the
opinion of management, better prices and executions may be
available elsewhere. The Fund does not allocate brokerage
business in return for sales of the Fund's shares.
The following chart sets forth figures pertaining to the
Fund's brokerage during the last three years:
Brokerage
Commissions
Total Paid to
Brokerage Ruane,
Year Commissions Cunniff
Ended Paid & Co., Inc.
_____ ___________ ___________
December 31, 1993 $493,586 $270,763
December 31, 1994 $720,588 $478,085
December 31, 1995 $385,518 $187,900
_________________________________________________________
During the year ended December 31, 1995, the brokerage
commissions paid to the Investment Adviser represented
approximately 49% of the total brokerage commissions paid by the
Fund during such year and were paid on account of transactions
having an aggregate dollar value equal to approximately 56% of
the aggregate dollar value of all portfolio transactions of the
Fund during such year for which commissions were paid.
NET ASSET VALUE
The net asset value of each share of the Fund's Common
Stock on which the subscription and redemption prices are based
is determined once each Fund Business Day as of the close of the
New York Stock Exchange, Inc. by the value of the securities and
other assets owned by the Fund less its liabilities, computed in
accordance with the Articles of Incorporation and By-Laws of the
Fund. Fund Business Day for this purpose means any weekday
exclusive of New Year's Day, Washington's Birthday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
10
<PAGE>
Good Friday. The net asset value of a share is the quotient
obtained by dividing the net assets of the Fund (i.e., the value
of the assets of the Fund less its liabilities, including
expenses payable or accrued but excluding capital stock and
surplus) by the total number of shares of Common Stock
outstanding. For purposes of this computation, readily marketable
portfolio securities listed on the New York Stock Exchange, Inc.
are valued at the last sales price on such Exchange on the
business day as of which such value is being determined. If
there has been no sale on such Exchange on such day, the security
is valued at the mean of the closing bid and asked prices on such
day. If no bid and asked prices are quoted on such Exchange on
such day, then the security is valued by such method as the Board
of Directors of the Fund shall determine in good faith to reflect
its fair market value. Readily marketable securities not listed
on the New York Stock Exchange, Inc. but listed on other national
securities exchanges are valued in like manner. Securities which
are listed on the NASDAQ National Market System shall be valued
at the last sale price prior to the time of the determination of
value; or if no sales are reported on that date at the mean of
the current bid and asked price. Treasury Bills with remaining
maturities of 60 days or less are valued at their amortized cost.
Under the amortized cost method of valuation, an instrument is
valued at cost and the interest payable at maturity upon the
instrument is accrued as income, on a daily basis, over the
remaining life of the instrument. A Treasury Bill that when
purchased had a remaining maturity in excess of sixty days is
valued on the basis of market quotations and estimates as
described above until the sixtieth day prior to maturity, at
which point it is valued at amortized cost. In that event, the
"cost" of the security is deemed to be the security's stated
market value on the sixty-first day prior to maturity. All other
assets of the Fund, including restricted and not readily
marketable securities, are valued in such manner as the Board of
Directors of the Fund in good faith deems appropriate to reflect
their fair value.
The net asset value for each share of Common Stock on
which the subscription and redemption prices are based is
determined as of the close of business on the New York Stock
Exchange, Inc. next following the receipt by the Fund of the
subscription or request for redemption.
REDEMPTION OF SHARES
The right of redemption may not be suspended or (other
than by reason of a stockholder's delay in furnishing the
required documentation following an oral redemption request) the
11
<PAGE>
date of payment upon redemption postponed for more than seven
days after a stockholder's redemption request in accordance with
the procedures set forth in the Prospectus, except for any period
during which the New York Stock Exchange, Inc. is closed (other
than customary week-end and holiday closings) or during which the
Securities and Exchange Commission determines that trading
thereon is restricted, or for any period during which an
emergency (as determined by the Securities and Exchange
Commission) exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or as a
result of which it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or for such
other period as the Securities and Exchange Commission may by
order permit for the protection of security holders of the Fund.
COMMON STOCK
The Articles of Incorporation of the Fund give the Fund
the right to purchase for cash the shares of Common Stock
evidenced by any stock certificate presented for transfer at a
purchase price equal to the aggregate net asset value per share
determined as of the next close of business of the New York Stock
Exchange, Inc. after such certificate is presented for transfer,
computed as in the case of a redemption of shares.
The Fund's shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the
directors if they choose to do so, and in such event the holders
of the remaining less than 50% of the shares voting for such
election of directors will not be able to elect any person or
persons to the Board of Directors.
As of February 16, 1996, Trustees of Grinnell College
(Grinnell, Iowa 50112) beneficially owned 3,578,578 shares of the
Fund on such date (representing 12.73% of the outstanding Common
Stock of the Fund). Boston Safe Deposit Company as Trustee for
the Capital Cities/ABC, Inc. Employees Profit Sharing Plan Trust,
Employees Master Retirement Plan Trust and the Capital Cities
Communication Publishing Pension Plan (1 Boston Place, Boston,
Massachusetts 02106) and Fidelity Management Trust Company as
Trustee for the Capital Cities/ABC, Inc. Employees Profit Sharing
Plan Trust (82 Devonshire Street, Boston, MA 02109) together
beneficially owned 2,389,449 shares of the Fund (representing
8.50% of the outstanding Common Stock of the Fund). Bankers
Trust Company as Trustee for FMC Corporation Master Retirement
Trust (280 Park Avenue, New York, New York 10022) beneficially
owned 2,043,924 shares of the Fund (representing 7.27% of the
12
<PAGE>
outstanding Common Stock of the Fund.) State Street Bank and
Trust Company as Trustee for Supermarkets General Corp. Master
Retirement Plan Trust and Profit Sharing Plan Trust (225 Franklin
Street, Boston, Massachusetts 02110) owned 1,457,740 shares of
the Fund on such date (representing 5.18% of the outstanding
Common Stock of the Fund). No other person beneficially owned
five percent or more of the Fund's Common Stock on such date.
CUSTODIAN, COUNSEL AND INDEPENDENT ACCOUNTANTS
Morgan Guaranty Trust Company of New York, 23 Wall
Street, New York, New York 10015, acts as custodian for the
Fund's securities portfolio and cash. Subject to the supervision
of the Board of Directors, Morgan Guaranty Trust Company of New
York may enter into sub-custodial agreements for the holding of
the Fund's foreign securities.
Legal matters in connection with the issuance of the
shares of Common Stock offered hereby are passed upon by Messrs.
Seward & Kissel, One Battery Park Plaza, New York, New York
10004.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New
York 10017 has been appointed independent accountants for the
Fund.
13
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Sequoia Fund, Inc.
We have audited the accompanying statement of assets and
liabilities, including the statement of investments, of Sequoia
Fund, Inc. as of December 31, 1995, and the related statements of
operations for the year then ended, changes in net assets for
each of the two years in the period then ended, and the selected
financial information for each of the ten years in the period
then ended. These financial statements and selected financial
information are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and selected financial information based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements and selected financial
information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by
correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
14
<PAGE>
In our opinion, the financial statements and selected
financial information referred to above present fairly, in all
material respects, the financial position of the Sequoia Fund,
Inc. as of December 31, 1995, the results of its operations, the
changes in its net assets and the selected financial information
for the periods indicated, in conformity with generally accepted
accounting principles.
/S/ McGladrey & Pullen, LLP
New York, New York
January 19, 1996
15
<PAGE>
SEQUOIA FUND, INC.
Statement of Investments
December 31,1995
COMMON STOCKS (96.87%)
Value
Shares Cost (Note 1)
______ ____ ________
BANK HOLDING COMPANIES (15.58%)
1,566,300 Bancorp Hawaii, Inc. $ 47,017,231 $ 56,191,012
1,840,700 Fifth Third Bancorp 92,765,943 134,141,013
2,100,000 First Bank Systems, Inc. 80,610,090 104,212,500
678,400 First Virginia Banks, Inc. 25,395,921 28,323,200
225,000 Mercantile Bankshares Corporation 3,475,625 6,229,800
160,000 Regions Financial Corporation 5,348,750 6,890,080
161,301 Valley National Bancorp. 3,973,675 4,032,525
258,587,235 340,020,130
BROADCASTING (3.96%)
700,000 Capital Cities/ABC, Inc. 13,847,728 86,362,500
CONSUMER PRODUCTS (.21%)
169,600 Sturm, Ruger & Company, Inc. 361,700 4,642,800
FINANCIAL SERVICES (30.94%)
21,034 Berkshire Hathaway Inc.* 165,788,581 675,191,400
INSURANCE (9.86%)
4,400,000 Progressive Corporation-Ohio+ 150,092,362 215,050,000
PERSONAL CREDIT (3.69%)
1,362,000 Household International Inc. 53,180,142 80,528,250
PHARMACEUTICALS (5.42%)
1,380,000 Johnson & Johnson 55,292,183 118,162,500
SECURITIES BROKER-DEALER (4.92%)
876,000 Dean Witter Discover & Co. 44,585,625 41,172,000
1,863,400 Salomon, Inc. 44,313,350 66,150,700
88,898,975 107,322,700
SERVICES (13.59%)
3,550,000 Federal Home Loan Mortgage
Corporation 58,732,552 296,425,000
TOYS (5.06%)
3,562,600 Hasbro, Inc. 61,708,013 110,440,600
Miscellaneous Securities (3.64%) 74,114,707 79,445,625
TOTAL COMMON STOCKS $980,604,178 $2,113,591,505
16
<PAGE>
SEQUOIA FUND, INC.
Statement of Investments
December 31,1995
(continued)
Principal Value
Amount Cost (Note 1)
_________ ____ ________
U.S. GOVERNMENT OBLIGATIONS (3.13%)
$ 5,700,000 U.S. Treasury Bills due 1/25/96
through 2/8/96 $ 5,670,467 $ 5,670,467
62,000,000 U.S. Treasury Notes, 5-7/8% due
7/31/97 61,866,594 62,687,813
TOTAL U.S. GOVERNMENT OBLIGATIONS 67,537,061 68,358,280
TOTAL INVESTMENTS (100%)++ $1,048,141,239 $2,181,949,785
============== ==============
* Non-incoming producing.
+ Refer to Note 7.
++ The cost for federal income tax purposes is identical.
17
<PAGE>
SEQUOIA FUND, INC.
Statement of Investments
December 31,1995
ASSETS:
Investments in securities, at value
(cost $1,048,141,239) (Note 1) $2,181,949,785
Cash on deposit with custodian 1,251,545
Receivable for capital stock sold 531,174
Dividends and interest receivable 3,783,690
Other assets 35,897
Total assets 2,187,552,091
LIABILITIES:
Payable for capital stock repurchased 214,216
Accrued expenses 1,815,167
Total liabilities 2,029,383
Net assets applicable to 27,971,867 shares
of capital stock outstanding (Note 4) $2,185,522,708
===============
Net asset value, offering price and redemption
price per share $78.13
======
See Notes to Financial Statements
18
<PAGE>
SEQUOIA FUND, INC.
Statement of Operations
Year Ended December 31,1995
INVESTMENT INCOME:
Income:
Dividends:
Unaffiliated companies $19,826,702
Affiliated companies (Note 7) 968,000
Interest 6,652,763
Total income 27,447,465
Expenses:
Investment advisory fee (Note 2) 18,558,564
Legal and auditing fees 116,193
Stockholder servicing agent fees 173,621
Custodian fees 154,841
Directors fees and expenses (Note 5) 131,862
Other 78,219
Total expenses 19,213,300
Less expenses reimbursed by Investment
Adviser (Note 2) 505,000
Net expenses 18,708,300
Net investment income 8,739,165
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized (loss) on investments:
Net realized (loss) on investments (13,914,683)
Net increase in unrealized appreciation on:
Investments 646,622,517
Net increase in unrealized
appreciation on investments 646,622,517
Net realized and unrealized
gain on investments 632,707,834
Increase in net assets from operations $641,446,999
============
See Notes to Financial Statements.
19
<PAGE>
SEQUOIA FUND, INC.
Statements of Changes in Net Assets
Year Ended December 31,
_______________________
1995 1994
____ ____
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 8,739,165 $11,706,671
Net realized gain (loss) (13,914,683) 16,935,599
Net increase in unrealized appreciation 646,622,517 21,649,730
Net increase in net assets from
operations 641,446,999 50,292,000
Distributions to shareholders from:
Net investment income (8,810,242) (11,726,849)
Net realized gain on investments (2,200,955) (18,163,489)
Capital share transactions (Note 4) 6,775,846 15,829,828
Total increase 637,211,648 36,231,490
NET ASSETS:
Beginning of year 1,548,311,060 1,512,079,570
End of year $2,185,522,708 $1,548,311,060
============== =============
NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) $1,065,623,392 $1,058,847,546
Undistributed net investment income 5,453 76,530
Undistributed net realized gains (losses) (13,914,683) 2,200,955
Unrealized appreciation 1,133,808,546 487,186,029
$2,185,522,708 $1,548,311,060
See Notes to Financial Statements.
SEQUOIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Sequoia Fund Inc. is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end
management company. The investment objective of the Fund is
growth of capital from investments primarily in common stocks and
securities convertible into or exchangeable for common stock.
The following is a summary of significant accounting policies,
20
<PAGE>
consistently followed by the Fund in the preparation of its
financial statements.
A. Valuation of investments: Investments are carried
at market value or at fair value as determined by
the Board of Directors. 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 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 60 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. Accounting for investments: Investment transactions
are accounted for on the trade date and dividend
income is recorded on the tax-dividend date. The
net realized gain or loss on security transactions
is determined for accounting and tax purposes on
the specific identification basis.
C. Federal income taxes: It is the Fund's policy to
comply with the requirements of the Internal
Revenue Code applicable to regulated investment
companies and to distribute all of its taxable
income to its stockholders. Therefore, no federal
income tax provision is required.
D. Use of Estimates: The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported amounts
of increases and decreases in net assets from
operations during the reporting period. Actual
results could differ from those estimates.
21
<PAGE>
E. General: Dividends and distributions are recorded
by the Fund on the ex-dividend date. Interest
income is accrued as earned.
NOTE 2-INVESTMENT ADVISORY CONTRACTS AND PAYMENTS
TO INTERESTED PERSONS:
The Fund retains Ruane, Cunniff & Co., Inc., as its
investment adviser. Ruane, Cunniff & Co., Inc. (Investment
Adviser) provides the Fund with investment advice, administrative
services and facilities.
Under the terms of the Advisory Agreement, the
Investment Adviser receives a management fee equal to 1% per
annum of the Fund's average daily net asset values. This
percentage will not increase or decrease in relation to increases
or decreases in the net asset value of the Fund. Under the
Advisory Agreement, the Investment Adviser is obligated to
reimburse the Fund for the amount, if any, by which the operating
expenses of the Fund (including the management fee) in any year
exceed the sum of 1-1/2% of the average daily net asset values of
the Fund during such year up to a maximum of $30,000,000, plus 1%
of the average daily net asset values in excess of $30,000,000.
The expenses incurred by the Fund exceeded the percentage
limitation during the year ended December 31, 1995 and the
Investment Adviser reimbursed the Fund $505,000.
For the year ended December 31, 1995, there were no
amounts accrued to interested persons, including officers and
directors, other than advisory fees of $18,558,564 and brokerage
commissions of $187,900 to Ruane, Cunniff Co., Inc. Certain
officers of the Fund are also officers of the Investment Adviser
and the Fund's distributor. Ruane, Cunniff & Co., Inc., the
Fund's distributor, received no compensation from the Fund on the
sale of the Fund's capital shares during the year ended
December 31, 1995.
NOTE 3-PORTFOLIO TRANSACTIONS:
The aggregate cost of purchases and the proceeds from
the sales of securities, excluding U.S. government obligations,
for the year ended December 31, 1995 were $174,031,719 and
$76,740,515, respectively.
At December 31, 1995 the aggregate gross unrealized
appreciation and depreciation of securities were $1,137,222,171
and $3,413,625, respectively.
22
<PAGE>
NOTE 4-CAPITAL STOCK:
At December 31, 1995 there were 40,000,000 shares of
$.10 par value capital stock authorized. Transactions in capital
stock were as follows:
1995 1994
____ ____
Shares Amount Shares Amount
______ ______ ______ ______
Shares sold 1,446,747 $94,340,709 1,861,116 $104,556,895
Shares issued to stockholders
on reinvestment of:
Net investment income 93,996 6,408,962 150,318 8,454,779
Net realized gain on
investments 34,096 2,045,382 301,397 16,766,833
_________ ___________ _________ ___________
1,574,839 102,795,053 2,312,831 129,778,507
Shares repurchased 1,453,448 96,019,207 2,032,472 113,948,679
_________ ___________ _________ ___________
Net increase 121,391 $ 6,775,846 280,359 $15,829,828
======= =========== ======= ===========
NOTE 5-DIRECTORS FEES AND EXPENSES:
Directors who are not deemed "interested persons"
receive fees of $6,000 per quarter and $1,500 for each meeting
attended, and are reimbursed for travel and other out-of-pocket
disbursements incurred in connection with attending directors
meetings. The total of such fees and expenses paid by the Fund
to these directors for the year ended December 31, 1995 was
$131,862.
NOTE 6-CAPITAL LOSS CARRYFORWARD:
At December 31, 1995 the Fund had tax basis capital
losses of $13,914,683 which may be carried forward to offset
future capital gains. Such losses expire December 31, 2003.
NOTE 7-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. The
total value and cost of investments in affiliates at December 31,
1995 aggregated $215,050,000 and $150,092,362, respectively. The
summary of transactions for each affiliate during the period of
23
<PAGE>
their affiliation for the year ended December 31, 1995 is
provided below:
Purchases Sales
_________ _____
Realized Dividend
Affiliate Shares Cost Shares Cost Gain Income
_________ ______ ____ ______ ____ ________ ________
Progressive Corp-Ohio -- -- -- -- -- $968,000
========
NOTE 8-SELECTED FINANCIAL INFORMATION:
Year Ended December 31,
_______________________
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
Per Share Operating Performance
(for a share outstanding
throughout the year)
Net asset value, beginning of
year $55.59 $54.84 $56.66 $53.31 $41.94
Income from investment
operations:
Net investment income 0.31 0.42 0.64 0.93 1.35
Net realized and unrealized
gains on investments 22.62 1.41 5.39 3.98 14.96
Total from investment
operations 22.93 1.83 6.03 4.91 16.31
Less distributions:
Dividends from net investment
income (0.31) (0. 42) (0.65) (0.93) (1.36)
Distributions from net realized
gains (0.08) (0.66) (7.20) (0.63) (3.58)
Total distributions (0.39) (1.08) (7.85) (1.56) (4.94)
Net asset value, end of year $78.13 $55.59 $54.84 $56.66 $53.31
======= ====== ====== ====== ======
Total Return 41.4% 3.3% 10.8% 9.4% 40.0%
Ratios/Supplemental data
Net assets, end of year
(in millions) $2,185.5 $1,548.3 $1,512.1 $1,389.3 $1,251.4
Ratio to average net assets:
Expenses 1.0% 1.0% 1.0% 1.0% 1.0%
Net investment income 0.5% 0.8% 1.1% 1.8% 2.8%
Portfolio turnover rate 15% 32% 24% 28% 36%
24
<PAGE>
SEQUOIA FUND, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Selected Financial Information
Included in the Prospectus: Selected
Financial Information
Included in the Statement of Additional
Information: Independent Auditor's Report;
Statement of Investments at December 31,
1995; Statement of Assets and Liabilities at
December 31, 1995; Statement of Operations
for Year Ended December 31, 1995; Statement
of Changes in Net Assets for two years ended
December 31, 1995; Notes to Financial
Statements
(b) Exhibits. Registrant incorporates herein by
reference the exhibits filed as part of
Registrant's Registration Statement under the
Investment Company Act of 1940. The following
Exhibit is filed as part of this Post-Effective
Amendment to Registrant's Registration Statement:
(11) Report and Consent of McGladrey & Pullen,
LLP
Item 25. Persons Controlled by or Under Common
Control with Registrant.
No such persons.
Item 26. Number of Holders of Securities.
The following information is furnished as of
February 16, 1996.
(2)
(1) Number of
Title of Class Record Holders
______________ ______________
Common Stock, par
value $.10 per share 8,571
C-1
<PAGE>
Item 27. Indemnification.
The Registrant incorporates herein by reference
the response to "Item 19. Indemnification of
Directors and Officers" of Registrant's Form N-8B-1
Registration Statement under the Investment Company
Act of 1940 (File No. 811-1976) and its response to
Item 27 of Post-Effective Amendment No. 30 to this
Registration Statement.
Item 28. Business and Other Connections
of Investment Adviser.
Ruane, Cunniff & Co., Inc., the Registrant's
investment adviser and the distributor of the
Registrant's shares, is a registered broker-dealer and
member corporation of the New York Stock Exchange,
Inc. Its investment advisory clients besides the
Registrant include pension and profit-sharing trusts,
corporations and individuals.
Item 29. Principal Underwriters.
(a) No such investment company.
(b) The following are the directors and officers
of Ruane, Cunniff & Co., Inc. The principal
business address of each of these persons is
767 Fifth Avenue, New York, New York 10153.
(1) (2) (3)
Positions and
Positions and Offices Offices with
Name with Underwriters Registrant
____ _____________________ _____________
William J. Ruane Chairman of the Chairman of the
Board of Directors Board of Directors
and Director and Director
Richard T. Cunniff President and President and
Director Director
Robert D. Goldfarb Executive Vice President
Vice President and Director
and Director
Carol L. Cunniff Executive Vice President
C-2
<PAGE>
Vice President
and Director
Joseph Quinones, Jr. Vice President, Vice President,
Secretary and Secretary and
Treasurer Treasurer
(c) Not applicable.
Item 30. Location of Accounts and Records.
Accounts, books and other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are maintained in the physical
possession of (i) the Registrant, (ii) Morgan Guaranty
Trust Company of New York, 23 Wall Street, New York,
New York 10015, the Registrant's custodian, or (iii)
DST Systems, Inc., 21 West 10th Street, Kansas City,
Missouri 64105, the Registrant's transfer agent and
dividend disbursing agent.
Item 31. Management Services.
No such management-related service contracts.
Item 32. Undertakings.
Not applicable.
C-3
69900020.AM7
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant
certifies that it meets all of the requirements for effectiveness
of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 17th day of April, 1996.
SEQUOIA FUND, INC.
By /s/ Richard T. Cunniff
______________________
President
Pursuant to the requirements of the Securities Act of
1933, this Amendment to the Registrant's Registration Statement
has been signed below by the following persons in the capacities
and on the dates indicated.
Signature Capacity Date
_________ ________ ______
(1) Principal Executive
Officer
/s/ Richard T. Cunniff President and 4/17/96
________________________ Director
Richard T. Cunniff
(2) Principal Financial and
Accounting Officer
/s/ Joseph Quinones, Jr. Treasurer 4/17/96
________________________
Joseph Quinones, Jr.
(3) All of the Directors
/s/ William J. Ruane 4/17/96
________________________
William J. Ruane
/s/ Richard T. Cunniff 4/17/96
________________________
Richard T. Cunniff
SIGNATURES
/s/ Robert D. Goldfarb 4/17/96
________________________
Robert D. Goldfarb
John M. Harding
Francis P. Matthews
C. William Neuhauser
Robert L. Swiggett
By /s/ Richard T. Cunniff 4/17/96
______________________
Richard T. Cunniff
Attorney-in-Fact
69900020.AM7
SIGNATURES
INDEX TO EXHIBITS
(11) Consent of McGladrey & Pullen, LLP
(27) Financial Data Schedule
69900020.AM7
<PAGE>
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
Exhibit 11
We hereby consent to the use of our report dated
January 19, 1996 on the financial statements of Sequoia Fund,
Inc. referred to therein in Post-Effective Amendment No. 41 to
the Registration Statement on Form N-1A, File No. 2-35566, as
filed with the Securities and Exchange Commission.
We also consent to the reference to our firm in the
Prospectus under the caption "Selected Financial Information" and
in the Statement of Additional Information under the caption
"Custodian, Counsel and Independent Accountants."
/S/ McGladrey & Pullen, LLP
_______________________________
McGladrey & Pullen, LLP
New York, New York
April 11, 1996
69900020.AM9
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains financial
information extracted from the
financial statements and
supporting schedules as of the
end of the most current period
and is qualified in its entirety
by reference to such financial
statements.
</LEGEND>
<CIK> 0000089043
<NAME> SEQUOIA FUND INC
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,048,141,239
<INVESTMENTS-AT-VALUE> 2,181,949,785
<RECEIVABLES> 4,314,864
<ASSETS-OTHER> 35,897
<OTHER-ITEMS-ASSETS> 1,251,545
<TOTAL-ASSETS> 2,187,552,091
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,029,383
<TOTAL-LIABILITIES> 2,029,383
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,065,623,392
<SHARES-COMMON-STOCK> 27,971,867
<SHARES-COMMON-PRIOR> 27,850,476
<ACCUMULATED-NII-CURRENT> 5,453
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (13,914,683)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,133,808,546
<NET-ASSETS> 2,185,522,708
<DIVIDEND-INCOME> 20,794,702
<INTEREST-INCOME> 6,652,763
<OTHER-INCOME> 0
<EXPENSES-NET> (18,708,300)
<NET-INVESTMENT-INCOME> 8,739,165
<REALIZED-GAINS-CURRENT> (13,914,683)
<APPREC-INCREASE-CURRENT> 646,622,517
<NET-CHANGE-FROM-OPS> 641,446,999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,810,242)
<DISTRIBUTIONS-OF-GAINS> (2,200,955)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,446,747
<NUMBER-OF-SHARES-REDEEMED> (1,453,448)
<SHARES-REINVESTED> 128,092
<NET-CHANGE-IN-ASSETS> 637,211,648
<ACCUMULATED-NII-PRIOR> 76,530
<ACCUMULATED-GAINS-PRIOR> 2,200,955
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 18,558,564
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,213,300
<AVERAGE-NET-ASSETS> 1,855,856,361
<PER-SHARE-NAV-BEGIN> 55.59
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 22.62
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (0.08)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 78.13
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
