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As filed with the Securities and Exchange
Commission on February 26, 1999
File No. 2-35566
811-1976
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. 44 /x /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 22 /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: (800) 686-6884
Robert D. Goldfarb
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)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ X/ on May 2, 1999 pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
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If appropriate, check the following box:
/ / This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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Sequoia Fund, Inc.
Prospectus
May 2, 1999
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
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TABLE OF CONTENTS
PAGE
RISK/RETURN SUMMARY
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies
Risk Considerations for the Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
MANAGEMENT OF THE FUNDS
PURCHASE AND SALE OF SHARES
How The Funds Value Their Shares
How To Buy Shares
How To Redeem Shares
DIVIDENDS, DISTRIBUTIONS AND TAXES
FINANCIAL HIGHLIGHTS
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RISK/RETURN SUMMARY
The following is a summary of certain key information about the
Fund. You will find additional information about the Fund,
including a description of the principal risks of an investment
in the Fund, after this summary.
Objective: The Fund's investment objective is long-term growth
of capital.
Principal Investment Strategy: The Fund invests primarily in
common stocks. The Fund invests in the securities of a limited
number of companies that it believes have attractive long-term
economic prospects relative to their market price. While the Fund
normally invests in U.S. companies, it also may make limited
investments in foreign securities. The Fund usually invests cash
reserves in U. S. Government securities.
Principal Risks: The principal risks of investing in the Fund
are:
- - Market Risk. This is the risk that the value of the Fund's
investments will fluctuate as the stock markets fluctuate and
that prices overall will decline, perhaps severely, over
short or longer-term periods.
- - Focused Portfolio Risk. The Fund is "non-diversified"
meaning that it invests its assets in a smaller number of
companies than many other funds. As a result, your
investment has the risk that changes in the value of a single
security may have a significant effect, either negative or
positive, on the Fund's net asset value.
Bar Chart and Performance Information
The bar chart and the table shown below provide an indication of
the historical risk of an investment in the Fund. The Bar chart
shows changes in the Fund's performance from year to year over a
10-year period and the table shows how the Fund's average annual
returns for 1, 5, and 10 years and over the life of the Fund
compare to a broad-based securities market index. A Fund's past
performance, of course, does not necessarily indicate how it will
perform in the future. You may lose money by investing in the
Fund.
Bar Chart
[Insert Chart]
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During the period shown in the bar chart, the highest return for
a quarter was ____% (quarter ending ________) and the lowest
return for a quarter was ____% (quarter ending _________).
Performance Table
[Insert Table]
Fees and Expenses of the Fund
Shareholder Transaction Expenses (fees paid directly from your
investment)
The Fund does not impose any sales charges, exchange fees or
redemption fees.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets) and Example
Operating Expenses
Management Fees
Other Expenses
Total Fund Operating Expenses
Expense reimbursement*
Net expenses
* Reflects Ruane Cunniff's contractual reimbursement of a
portion of the Fund's operating expenses.
The Example is to help you compare the cost of investing in the
Fund with the cost of investing in other funds. It assumes that
you invest $10,000 in the Fund for the periods indicated and then
redeem all your shares at the end of those periods. It also
assumes that your investment has a 5% return each year and that
the Fund's operating expenses stay the same. Your actual costs
may be higher or lower.
1 year 3 years 5 years 10 years
$ $ $ $
DESCRIPTION OF THE FUND
Investment Objectives and Policies
This section of the Prospectus provides a more complete
description of the Fund's investment objectives and principal
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strategies and risks. There can, of course, be no assurance that
the Fund will achieve its investment objectives.
Primary Strategies
The Funds' investment objective is long-term growth of capital.
In pursuing this objective the Fund focuses principally on common
stocks that it believes are undervalued at the time of purchase
and have the potential for growth. 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. The balance sheet and
earnings history and prospects of each investment are extensively
studied to appraise fundamental value.
While the Fund normally invests in U.S. companies, it also may
invest in foreign securities. The Fund is not required to be
fully invested in common stocks.
Risk Considerations for the Fund
Market Risk - The value of the Fund's investments may change, and
possibly decrease, perhaps severely, in response to fluctuations
in the stock markets generally.
Focused Portfolio Risk - The Fund is non-diversified and invests
in the securities of a limited number of issuers. As a result,
changes in the market value of a single issuer could cause
greater fluctuations in the value of the Fund's shares than would
occur in a more diversified fund.
Other Investment Information - Ordinarily, the Fund's portfolio
will be invested primarily in common stocks. However, the Fund
is not required to be fully invested in common stocks and, in
fact, usually maintains certain cash reserves. Depending upon
market conditions, cash reserves may be a significant percentage
of the Fund's net assets. The Fund usually invests its cash
reserves principally in U.S. Government securities.
Portfolio Turnover Rate - The portfolio turnover rate for the
Fund is included in the Financial Highlights section. Normally,
the Fund purchases and holds securities for sufficient periods to
realize long-term capital appreciation and to qualify for long-
term capital gain tax treatment. This means that the Fund's
portfolio turnover rate is usually lower than many other funds.
Portfolio turnover, however will not be a limiting factor when
management deems changes appropriate and the Fund's portfolio
turnover in such cases may exceed 100%. A higher rate of
portfolio turnover increases brokerage and other expenses and may
affect the Fund's returns. A higher portfolio turnover rate also
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may result in the realization of net short-term capital gains,
which, when distributed, are taxable to the Fund's shareholders.
Year 2000 - Information technology experts are concerned about
computer systems' ability to process date-related information on
and after January 1, 2000. This situation commonly known as the
"Year 2000" issue could have an adverse effect on the Fund. The
Fund and Ruane Cunniff are addressing the Year 2000 issue for
their systems. The Fund has been informed by its other service
providers that they are taking similar measures. The Year 2000
problem, if not corrected, may adversely affect services provided
to the Fund or may affect companies in which the Fund may invest
and, therefore, may lower the value of your shares.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
During 1998, the Fund gained _____% compared to a total
return on the Standard & Poor's 500 Index of ____%. The Fund's
investment philosophy 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 1998, total equity investments comprised
approximately __% of net assets, including a particularly heavy
portfolio concentration in selected financial services companies.
The price performance of these financial services companies in
the aggregate was principally responsible for the Fund's strong
results relative to the S&P 500 Index. Sequoia shareholders
should also be aware that the Fund has a significant portfolio
concentration in the stock of a single issuer, Berkshire Hathaway
Inc. (over __% of net assets at year end 1998). As a result,
short term price movements in Berkshire's common stock - which
may be disproportionate to the company's underlying economic
progress - will have a particularly important effect on the
periodic results of Sequoia. Berkshire Hathaway's stock price
increased __% in 1998. The 1998 price performance of other major
holdings was as follows: [Federal Home Loan Mortgage Corporation
+__%; Progressive Corporation + __%; Fifth Third Bancorp + __%;
U.S. Bancorp + __%; and Johnson & Johnson + __%]. Including the
Berkshire Hathaway position, these [six] holdings represented
almost __% of the Fund's total equity investments at year end
1998.
[PERFORMANCE LINE GRAPH]
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MANAGEMENT OF THE FUND
Investment Adviser
The Fund's investment adviser is Ruane, Cunniff & Co., Inc., 767
Fifth Avenue, New York, New York 10153. Ruane Cunniff is a
registered investment adviser and a registered broker-dealer and
member corporation of the New York Stock Exchange, Inc.
Ruane Cunniff furnishes investment advisory services for the
Fund. For these services, the Fund paid Ruane Cunniff 1% of the
Fund's average daily net assets for the fiscal year ended
December 31, 1998. This payment amounted to __% of the Fund's
average daily net assets for the fiscal year ended December 31,
1998, after subtracting certain Fund operating expenses that
Ruane Cunniff reimbursed to the Fund.
Portfolio Manager
The following individuals serve as portfolio managers for the
Fund and are primarily responsible for the day-to-day management
of the Fund's portfolio:
- - William J. Ruane, Chairman. Mr. Ruane has been the Chairman
of the Board of Directors and a Director of Ruane Cunniff for
more than __ years.
- - Richard T. Cunniff, Vice Chairman. Mr. Cunniff is a Director
of Ruane Cunniff and, prior to 1998, was President of Ruane
Cunniff for more than __ years.
- - Robert D. Goldfarb, President. Mr. Goldfarb is President and
CEO of Ruane Cunniff with which he has been associated for
more than __ years.
PURCHASE AND SALE OF SHARES
How the Fund Values Its Shares
The Fund calculates its net asset value or NAV at the close of
the New York Stock Exchange, Inc. (normally 4:00 p.m. New York
time) each day the Exchange is open for business. To calculate
NAV, the Fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the
number of shares outstanding. The Fund values its assets at
their current market value determined on the basis of market
quotations, or if such quotations are not readily available, such
other methods as the Fund's directors believe accurately reflect
fair market value.
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Your order for purchase of shares is priced at the next NAV per
share calculated after your order is received by the Fund. The
Fund reserves the right to reject any order to purchase shares
(including additional investments by existing stockholders).
How to Buy Shares
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 for the accounts of existing stockholders who
have elected those options. 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 to new investors, if in the Board of Directors' opinion,
doing so would be in the best interests of the Fund and its
stockholders.
Additional Investments
- - Minimum Amounts (except if waived for IRA and Keogh
accounts): $50.00
- - Forward orders to:
DST Systems, Inc.
Post Office Box 419477
Kansas City, Missouri 64141
- - Orders 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, DST or a
retirement account custodian).
- - You may make fixed, periodic investments into the Fund by
means of automatic money transfers from your bank checking
accounts. To establish automatic money transfers, you may
contact the Fund.
Individual Retirement Accounts
You also may purchase shares for an individual retirement
account, or IRA, including a Roth IRA. IRA investments are
available for regular contributions as well as for qualified
rollover contributions of distributions received from certain
employer-sponsored pension and profit-sharing plans and from
other IRAs. All assets in the IRA are automatically invested in
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Fund shares, including all dividends and capital gain
distributions paid on Fund shares held in the IRA. There is an
annual fee of $12.00 for an IRA account.
Keogh Plans
If you are self-employed, you may purchase Fund shares through a
self-employment retirement plan (often referred to as a Keogh or
HR-10 plan) covering yourself and your eligible employees.
How to Redeem Shares
You may redeem your shares (i.e., sell your shares to the Fund)
on any day the Exchange is open. Your redemption price is the
next NAV per share calculated after your order is received by the
Fund. There is no redemption charge.
By Mail
- - You may send a written request for redemption to:
DST Systems, Inc.
Post Office Box 419477
Kansas City, Missouri 64141
- - If you chose to have your shares issued in certificate form,
your request must be accompanied by the outstanding
certificates representing such shares together with a
standard form of stock power signed by the registered owner
or owners of such shares.
- - If your shares are represented by a Stockholder's Open
Account, your redemption request must include a signature
guaranteed by a national or state bank or by a member firm of
a national stock exchange.
- - If your shares are represented by stock certificates, the
signature on the stock power must be guaranteed as above. An
acknowledgment by a notary public is not acceptable.
By Telephone
You may make an oral redemption request of $25,000 or less, which
does not require a signature guarantee unless your address has
changed within the 60 days prior to the request. All other
redemption requests must have signature guarantees. Certain
shareholders, such as corporations, trusts and estates, may be
required to submit additional documents.
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Payment
- - The Fund, at the discretion of the Board of Directors, may
pay the redemption price to you in cash or in portfolio
securities, or partly in cash and partly in portfolio
securities.
- - If the Fund pays your redemption wholly or partly in
portfolio securities, you may incur brokerage costs in
converting the securities to cash.
- - The Fund's management believes that it would be highly likely
that a redemption (or series of redemptions) in the amount of
$5 million or greater will be paid in portfolio securities
instead of cash.
Automatic Withdrawal Plan
- - You may elect a Withdrawal Plan, at no cost, if you own or
purchase shares of the Fund valued at $10,000 or more.
- - Under the Plan, you may designate fixed payment amounts that
you will receive monthly or quarterly from a Withdrawal Plan
Account consisting of shares of the Fund that you deposit.
- - Any cash dividends and capital gains distributions on shares
held in a Withdrawal Plan Account are automatically
reinvested.
- - Sufficient shares will be redeemed at NAV to provide the cash
necessary for each withdrawal payment.
- - Redemptions for the purpose of withdrawals are made on or
about the 15th day of the month at that day's NAV, and checks
are mailed promptly thereafter.
- - If shares are registered in the name of a trustee or other
fiduciary, payment will be made only to the 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. Consult your
own financial advisers about whether the Withdrawal Plan is
appropriate for you.
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DIVIDENDS, DISTRIBUTIONS, AND TAXES
Dividends and capital gains distributions, 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 the Fund. If paid in additional shares, the shares
will have an aggregate NAV equal to the cash amount of the
dividend or distribution. You may elect to receive dividends and
distributions in cash or in shares at the time you order shares.
You may change your 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.
There is no sales or other charge in connection with the
reinvestment of dividends and capital gains distributions.
For federal income tax purposes, distributions of net income
(including any short-term capital gains) by the Fund are taxable
to you as ordinary income. Distributions of long-term capital
gains are taxable to you as long-term capital gains. The Fund's
distributions also may be subject to state and local taxes.
The Fund holds portfolio securities longer than most other funds
typically hold securities. As a result, unrealized capital gains
represent a significant portion of the value of your investment
in the Fund. As of December 31, 1998 the net unrealized
appreciation of the Fund's portfolio was approximately __% of the
Fund's net asset value. If the Fund sells appreciated securities
and distributes the profit, the distributed appreciation may be
taxable to you as capital gains. You should carefully consider
the tax effect of the Fund's substantial unrealized capital gains
when purchasing shares of the Fund.
Dividends and distributions are taxable to you whether you
receive the amount in cash or reinvest the amount in additional
shares of the Fund. In addition, the redemption of Fund shares
is a taxable transaction for federal income tax purposes. If you
buy shares just before the Fund deducts a distribution from its
NAV, you will pay the full price for the shares and then receive
a portion of the price back as a taxable distribution.
Each year shortly after December 31, the Fund will send you tax
information stating the amount and type of all its distributions
for the year. You should consult your tax adviser about the
federal, state and local tax consequences of an investment in the
Fund in your particular situation.
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FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand
the Fund's financial performance for the past 5 years. Certain
information reflects financial results for a single share of the
Fund. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This
information has been audited by McGladrey & Pullen, LLP, the
independent accountants for the Fund, whose report, along with
the Fund's financial statements, is included in the SAI, which is
available upon request.
For more information about the Fund, the following documents are
available upon request:
Annual/Semi-Annual Reports to Stockholders
The Fund's annual and semi-annual reports to stockholders contain
additional information on the Fund's investments.
Statement of Additional Information (SAI)
The Fund has an SAI, which contains more detailed information
about the Fund, including its operations and investment policies.
The Fund's SAI is incorporated by reference into (and is legally
part of) this Prospectus.
You may request a free copy of the current annual/semi-annual
report or the SAI, by contacting your broker or other financial
intermediary, or by contacting the Fund:
By mail: Sequoia Fund, Inc.
767 Fifth Avenue
New York, N.Y. 10153
By phone: (800) 686-6884
Or you may view or obtain these documents from the SEC:
In person: At the SEC's Public Reference Room in
Washington, D.C.
By phone: (800) SEC-0330
By mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(Duplicating fee required)
On the Internet: www.sec.gov
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SEQUOIA FUND, INC.
767 Fifth Avenue
New York, New York 10153
(Telephone 800-686-6884)
STATEMENT OF ADDITIONAL INFORMATION
May 2, 1999
_____________________
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 2, 1999 (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 1 Redemption of Shares 12
Management 5 Common Stock 13
Investment Adviser and 8 Custodian, Counsel and 13
Investment Advisory Independent Accountants
Contract Independent Accountant's
Allocation of Portfolio 10 Report 15
Brokerage
Net Asset Value 11
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INVESTMENT POLICIES
(a) 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.
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,
1998, no foreign securities were held by the Fund.
(b) 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
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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.
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, 1998 no such securities were held
by the Fund.
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
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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 "Dividends, Distributions, and Taxes," page __ 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.
The Fund has adopted certain investment restrictions as
a matter 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 2), 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.
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 2.)
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.
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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.
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 above, 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
5
<PAGE>
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* ,73, Chairman of the Board and
Director, is and has been Chairman of the Board and Director of
Ruane, 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.
Richard T. Cunniff** , 76, Vice Chairman and Director,
is and has been a Director, and prior to 1998 was also President,
of Ruane, Cunniff & Co., Inc. for more than five years.
Mr. Cunniff is also a Director of Sturm, Ruger & Company, Inc.
He is the father of Carol L. Cunniff, Executive Vice President
and Director of the Fund.
Robert D. Goldfarb** , 54, President and Director, is a
President of Ruane, Cunniff & Co., Inc. with which he has been
associated for more than five years.
Carol L. Cunniff**, 48, Executive Vice President and
Director, is an Executive Vice President and Director of Ruane,
Cunniff & Co., Inc. with which she has been associated for more
than five years. She is the daughter of Richard T. Cunniff, Vice
Chairman and Director of the Fund.
____________________
* Such persons are "interested persons" of the Fund within the
meaning of Section 2(a)(19)(A) of the Investment Company Act
of 1940.
** Such persons are "interested persons" of the Fund within the
meaning of Section 2(a)(19)(A) of the Investment Company Act
of 1940.
6
<PAGE>
John M. Harding, 77, 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.
Roger Lowenstein, 45, Director, is a writer who
regularly contributes to major financial and news publications.
From 1979 to 1991, Mr. Lowenstein was a writer for the Wall
Street Journal. His address is ________________________________.
Francis P. Matthews, 77, 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, 73, 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, 77, 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.
Joseph Quinones, Jr.**, 53, Vice President, Secretary
and Treasurer, is a Vice President, Secretary and Treasurer of
Ruane, Cunniff & Co., Inc. Previously, Mr. Quinones had been a
vice president of Weiss Peck & Greer (a money management firm),
the chief financial officer of Woodward & Associates (a money
management firm).
On February 12, 1999, the directors and officers of the
Fund collectively owned approximately 0.76%, or, including shares
owned by their respective relatives and affiliates, approximately
2.33%, 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, 1998 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.
7
<PAGE>
<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
Carol L. Cunniff $0 -0- -0- $0
Robert D. Goldfarb $0 -0- -0- $0
John M. Harding $34,000 -0- -0- $34,000
Roger Lowenstein $7,166 -0- -0- $7,166
Francis P. Matthews $34,000 -0- -0- $34,000
C. William Neuhauser $34,000 -0- -0- $34,000
Robert L. Swiggett $34,000 -0- -0- $34,000
</TABLE>
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, 1999 was so approved at a
meeting of the Board of Directors on December 7, 1998 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, 1999,
pursuant to the provisions of the Investment Company Act of 1940
8
<PAGE>
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
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
9
<PAGE>
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, 1998, the Fund incurred
operating expenses of $44,036,642 of which the Investment Adviser
reimbursed the Fund $721,000 pursuant to the expense limitation
described above. The amount of operating expenses incurred by
the Fund during the fiscal year ended December 31, 1997 was
$31,679,100 of which the Investment Adviser reimbursed the Fund
$514,000. During the fiscal year ended December 31, 1996, the
Fund incurred operating expenses of $24,720,270 of which the
Investment Adviser reimbursed the Fund $544,000 pursuant to the
expense limitation described above. The amount of operating
expenses incurred by the Fund during the fiscal year ended
December 31, 1995 was $19,213,300 of which the Investment Adviser
reimbursed the Fund $505,000.
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.
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.
10
<PAGE>
The Investment Adviser also serves, without
compensation, 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.
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, 1996 $24,026,121 $544,000 $23,482,121
December 31, 1997 $31,015,090 $514,000 $30,501,090
December 31, 1998 $44,036,642 $721,000 $43,315,642
_________________________________________________________________
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.
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.
11
<PAGE>
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, 1996 $767,867 $309,715
December 31, 1997 $300,573 $180,425
December 31, 1998 $673,384 $362,856
_________________________________________________________
During the year ended December 31, 1998, the brokerage
commissions paid to the Investment Adviser represented
approximately 54% 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 70% of
the aggregate dollar value of all portfolio transactions of the
Fund during such year for which commissions were paid.
INDIVIDUAL RETIREMENT ACCOUNTS
Individuals generally may make regular contributions to
a traditional IRA of up to $2,000 annually The deductibility for
Federal income tax purposes of such contributions may be reduced
if the individual is an active participant in an
employer-sponsored retirement plan. For 1999, if an individual
is an active participant, the deduction will not be available if.
(i) the individual has adjusted gross income above $41,000, (ii)
the individual files a joint return with his or her spouse and
they have adjusted gross income above $61,000, or (iii) the
individual is married, files separately and has adjusted gross
income above $10,000. Further, in the case of a married
individual who is not an active participant but whose spouse is
an active participant, the deduction will not be available if the
couple files a joint return and has adjusted gross income above
$160,000 (or, if such individual files separately and 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
$4,000 to the two IRAs, provided that no more than $2,000 may be
contributed to the IRA of either spouse. As noted above, the
deductibility of contributions may be reduced if either spouse is
an active participant in an employer-sponsored retirement plan.
12
<PAGE>
No regular contribution may be made to a traditional IRA for any
year if by the end of such year the IRA owner has attained the
age 70 1/2.
Roth IRAs
Eligible individuals also may elect to make
contributions to a Roth IRA of up to $2,000 annually
Contributions to a Roth IRA are not deductible for Federal income
tax purposes. Investment earnings accumulate in a Roth IRA
tax-free, and if certain criteria are met, distributions from the
account will not be taxed. Contributions may not be made to a
Roth IRA by an individual with adjusted gross income above
$110,000, a married couple filing a joint return with adjusted
gross income above $160,000, or a married individual filing
separately with adjusted gross income above $10,000. Below these
income levels, a taxpayer may make contributions to a Roth IRA,
although the allowable contribution may be less than $2,000. The
total amount contributed by an individual to all IRAs (both
traditional and Roth) in a year may not exceed $2,000.
Contributions to a Roth IRA may be made even if the IRA owner has
attained the age 70 1/2.
Keogh Plans
Generally, the annual amount which a self-employed
individual may deduct for contributions to his own account under
a self-employment retirement plan (often referred to as a Keogh
or HR-10 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.
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, Martin Luther King, Jr. Day,
President's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day 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
13
<PAGE>
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 certain oral redemption
requests) the 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
14
<PAGE>
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.
TAX CONSIDERATIONS
The Fund is a "non-diversified" investment company,
which means the Fund is not limited (subject to the Investment
Restrictions, page _) 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, 1998 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
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
15
<PAGE>
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 during the 90-day period beginning
45 days before the date on which the corporation becomes entitled
to receive the dividend. 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, 1998, __% of the net ordinary taxable income
distributed by the Fund was eligible for such deduction by
corporate stockholders.
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 12, 1999, Trustees of Grinnell College
(Grinnell, Iowa 50112) beneficially owned 4,071,186 shares of the
Fund on such date (representing 13.04% 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) and Fidelity Management Trust Company as Trustee
for the FMC Corporation Plans (82 Devonshire Street, Boston,
Massachusetts 02109) together owned 2,084,799 shares of the Fund
16
<PAGE>
(representing 6.68% of the outstanding common stock of the Fund).
Bankers Trust Company as Trustee for the Walt Disney Company
Employees Master Retirement Plan (280 Park Avenue, New York, New
York 10022) and Fidelity Management Trust Company as Trustee for
the Capital Cities/ABC, Inc. Employees Profit Sharing Plan Trust
(subsidiary of the Walt Disney Company) (62 Devonshire Street,
Boston, MA 02109) together beneficially owned 1,821,710 shares of
the Fund (representing 5.83% 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
The Bank of New York, 90 Washington Street, New York,
New York 10286, acts as custodian for the Fund's securities
portfolio and cash. Subject to the supervision of the Board of
Directors, The Bank 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 LLP, 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.
17
<PAGE>
SEQUOIA FUND, INC.
PART C - OTHER INFORMATION
Item 23. Exhibits
Registrant incorporates herein by reference the exhibits, other
than those filed herewith, that have previously been filed as
part of Registrant's Registration Statement under the Investment
Company Act of 1940. The following Exhibits are filed as part of
this Post-Effective Amendment to Registrant's Registration
Statement:
(a) (1) Articles of Incorporation
(2) Articles of Amendment
(3) Articles of Amendment
(4) Articles of Amendment
(5) Articles of Amendment
(b) By-Laws
(d) Advisory Agreement between the Registrant and
Ruane, Cunniff & Co., Inc.
(e) Distribution Agreement between the Registrant and
Ruane, Cunniff & Stires, Inc.
(g) Custody Agreement between the Registrant and The
Bank of New York
(h) Services Agreement between the Registrant and DST
Systems, Inc.
(j) Consent of McGladrey & Pullen, LLP - Filed
herewith.
(n) Financial Data Schedule - Filed herewith.
Other Exhibits: Powers of Attorney of Messrs. Harding,
Lowenstein, Matthews, Neuhauser and Swiggett - Filed herewith.
Item 24. Persons Controlled by or Under Common
Control with Registrant.
No such persons.
C-1
<PAGE>
Item 25. 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 26. 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 27. 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 Vice Chairman and Vice Chairman and
Director Director
Robert D. Goldfarb President and President
Director and Director
Carol L. Cunniff Executive Executive Vice
Vice President President and
C-2
<PAGE>
and Director Director
Joseph Quinones, Jr. Vice President, Vice President,
Secretary and Secretary and
Treasurer Treasurer
(c) Not applicable.
Item 28. 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) The Bank of New
York, 90 Washington Street, New York, New York 10286,
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 29. Management Services.
No such management-related service contracts.
Item 30. Undertakings.
Not applicable.
C-3
69900020.AZ2
<PAGE>
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant 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 26th day of February, 1999.
SEQUOIA FUND, INC.
By /s/ Robert D. Goldfarb
______________________
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/ Robert D. Goldfarb President and 2/26/99
________________________ Director
Robert D. Goldfarb
(2) Principal Financial and
Accounting Officer
/s/ Joseph Quinones, Jr. Treasurer 2/26/99
________________________
Joseph Quinones, Jr.
(3) All of the Directors
/s/ William J. Ruane 2/26/99
________________________
William J. Ruane
/s/ Richard T. Cunniff 2/26/99
________________________
Richard T. Cunniff
/s/ Carol L. Cunniff 2/26/99
________________________
Carol L. Cunniff
<PAGE>
/s/ Robert D. Goldfarb 2/26/99
________________________
Robert D. Goldfarb
John M. Harding
Roger Lowenstein
Francis P. Matthews
C. William Neuhauser
Robert L. Swiggett
By /s/ Robert D. Goldfarb 2/26/99
______________________
Robert D. Goldfarb
Attorney-in-Fact
69900020.AZ2
<PAGE>
INDEX TO EXHIBITS
(a)(1) Articles of Incorporation - Incorporated by
reference.
(a)(2) Articles of Amendment - Incorporated by reference.
(a)(3) Articles of Amendment - Incorporated by reference.
(a)(4) Articles of Amendment - Incorporated by reference.
(a)(5) Articles of Amendment - Incorporated by reference.
(b) By-Laws - Incorporated by reference.
(d) Advisory Agreement - Incorporated by reference.
(e) Distribution Agreement - Incorporated by reference.
(g) Custody Agreement - Incorporated by reference.
(h) Services Agreement - Incorporated by reference.
(j) Consent of McGladrey & Pullen, LLP
(n) Financial Data Schedule
Other Exhibits: Powers of Attorney of Messrs.
Harding, Lowenstein, Matthews, Neuhauser and Swiggett
69900020.AZ2
