-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TZ2yoP+kBRh89/qEp/wP1SiqcTdnwuyh4dies29G8M95PRdQwcap/8jgw30b3kkO 193jCFGfxz8A+uHifArkRA== 0000919574-99-000423.txt : 19990223 0000919574-99-000423.hdr.sgml : 19990223 ACCESSION NUMBER: 0000919574-99-000423 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEQUOIA FUND INC CENTRAL INDEX KEY: 0000089043 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132663968 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01976 FILM NUMBER: 99547081 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVE STREET 2: SUITE 4701 CITY: NEW YORK STATE: NY ZIP: 10153-4798 BUSINESS PHONE: 2128325280 MAIL ADDRESS: STREET 1: 767 FIFTH AVE STREET 2: SUITE 4701 CITY: NEW YORK STATE: NY ZIP: 10153-4798 FORMER COMPANY: FORMER CONFORMED NAME: CIMARRON FUND INC DATE OF NAME CHANGE: 19700625 N-30D 1 SEQUOIA FUND, INC. ANNUAL REPORT December 31, 1998 To the Shareholders of Sequoia Fund, Inc. Dear Shareholder: Sequoia Fund's results for the fourth quarter and full year 1998 are shown below with comparable results for the leading market indexes: Sequoia Dow Jones Standard & Fund Industrials Poor's 500 ------- ----------- ---------- Fourth Quarter 20.3% 17.6% 21.3% Year 35.3% 18.1% 28.6% 1998, while volatile, proved to be another strong year for Sequoia Fund. Sequoia's performance exceeded both our own expectations at the beginning of the year and the growth in intrinsic value of the companies we own. Sequoia has had a remarkable and gratifying four-year run, with a compound annual return of 35% since 1994. Once again, we feel compelled to caution you that this rate of return is not sustainable. In fact, in 1999 to date Sequoia is down by 5% while the S&P 500 is up about 2% for the young year. In our year-end 1997 letter, we said that the high rates of return on both the S&P 500 Index and the Sequoia Fund in 1997 were attributable to "strong economic growth, high levels of corporate profitability and lower interest rates, but the forces of psychological momentum provided by profoundly optimistic buyers were also important fuel." In 1998, while aggregate corporate profit growth slowed dramatically, declining interest rates again provided a boost to equity values, which were further turbo-charged as the ranks of enthusiastic stock buyers continued to grow. While optimistic equity market valuations are visible in many sectors, nowhere has this speculative froth reached more absurd levels than in the case of the much discussed Internet-related stocks. As an editorialist in The Economist recently noted, "Whereas investors on Wall Street are merely exuberant, the casino capitalists who spend seven or eight hours a day at their PCs trading Internet shares appear to be stark, staring mad." Chairman Greenspan has suggested that the activity of Internet stock traders may best be compared to the purchase of lottery tickets. These investors are willing to overpay wildly against staggering odds in the hopes that they will hit the jackpot and find the next Microsoft or Intel. Incidentally, Microsoft and Intel are hardly fledgling start-ups. They began their corporate lives 24 and 31 years ago, respectively. During 1998, we sold some Sequoia portfolio positions primarily on the basis of valuation, including our long-time holdings in Walt Disney and Johnson & Johnson. With these sales, we entered 1999 with just over 20% of the Fund's assets in cash. As always, we remain humbly agnostic on the likely future course of the market, but would rather hold cash than invest in equities with valuations we believe are over-enthusiastic relative to underlying fundamentals. As of this writing, the Sequoia Fund is underperforming the S&P 500 in 1999 principally due to declines in the market values of Progressive Corporation and Freddie Mac from their December 1998 levels. In a market characterized by high volatility, Progressive stock provided investors with a particularly wild ride in 1998 and year to date 1999. The company has historically not provided quarterly earnings guidance to "the Street" and does not manage its business for smooth quarter to quarter earnings progression but rather for long-term growth, a practice we applaud. The resulting earnings "surprises", both on the up and the down sides, contribute to the volatility of Progressive's stock price. In addition, in the second and fourth quarters of 1998, the sharp slowing in Progressive's premium growth rates raised investor concerns that the intensifying competition in the auto insurance industry may depress Progressive's growth and margins. Competition is clearly intensifying in the industry after a long string of years of unexpectedly benign cost trends and resulting fat margins. We believe this is a predictable, if perhaps less pleasant, stage of the insurance cycle. While it wouldn't surprise us if Progressive's earnings growth is sluggish for the next couple of years relative to its own aggressive goals, we still have confidence in this unusual company's longer term prospects. While Freddie Mac posted outstanding results in 1998, its market value has declined by about 10% in 1999. The recent backup in interest rates has raised concerns that mortgage originations will fall in 1999 from record 1998 levels. However, mortgage spreads remain very attractive and Freddie Mac's earnings are expected to show continued solid growth in 1999. Savvy observers of our portfolio will note a decidedly Midwestern flavor to our current holdings. The term Midwestern values has always had a ring of soundness to us. We are thankful for the great returns we have achieved from our East Coast representatives Freddie Mac and Johnson & Johnson. We also made spectacular returns on formerly New York-based Capital Cities/ABC which went west to Hollywood to make more in the combination with 2 Walt Disney. However, Cincinnati (Fifth Third), Cleveland (Progressive), Milwaukee (Harley Davidson) and Omaha (Berkshire Hathaway) are producing very attractive Midwestern financial values and they comprise over one-half of your portfolio. We continue to avoid investments in technology companies because the business is outside our circle of competence. However, we are mindful of the growing impact of technology on the businesses in which we do invest. As the Internet and other technological developments arm consumers with better, faster and cheaper information, customer loyalty is becoming more difficult to sustain. Those companies that aren't delivering demonstrable value to customers will be increasingly at risk of losing them. In the words of Warren Buffett, "It's only when the tide goes out that you learn who's been swimming naked." We can't predict when the tide will go out. However, the outstanding companies you own in Sequoia have built sustainable competitive advantages that give us confidence that when the tide does go out, Sequoia's portfolio companies will be decently clothed. Sincerely, February 11, 1999 3 SEQUOIA FUND, INC. ILLUSTRATION OF AN ASSUMED INVESTMENT OF $ 10,000 With Income Dividends Reinvested and Capital Gains Distributions Accepted in Shares The table below covers the period from July 15, 1970 (the date Fund shares were first offered to the public) to December 31, 1998. This period was one of widely fluctuating common stock prices. The results shown should not be considered as a representation of the dividend income or capital gain or loss which may be realized from an investment made in the Fund today. Value of Value of Value of Total Initial Cumulative Cumulative Value $10,000 Capital Reinvested of PERIOD ENDED: Investment Distributions Dividends Shares - ------------ ---------- ------------- ---------- ------ July 15, 1970 $ 10,000 $0 $0 $10,000 May 31, 1971 11,750 0 184 11,934 May 31, 1972 12,350 706 451 13,507 May 31, 1973 9,540 1,118 584 11,242 May 31, 1974 7,530 1,696 787 10,013 May 31, 1975 9,490 2,137 1,698 13,325 May 31, 1976 12,030 2,709 2,654 17,393 May 31, 1977 15,400 3,468 3,958 22,826 Dec. 31, 1977 18,420 4,617 5,020 28,057 Dec. 31, 1978 22,270 5,872 6,629 34,771 Dec. 31, 1979 24,300 6,481 8,180 38,961 Dec. 31, 1980 25,040 8,848 10,006 43,894 Dec. 31, 1981 27,170 13,140 13,019 53,329 Dec. 31, 1982 31,960 18,450 19,510 69,920 Dec. 31, 1983 37,110 24,919 26,986 89,015 Dec. 31, 1984 39,260 33,627 32,594 105,481 Dec. 31, 1985 44,010 49,611 41,354 134,975 Dec. 31, 1986 39,290 71,954 41,783 153,027 Dec. 31, 1987 38,430 76,911 49,020 164,361 Dec. 31, 1988 38,810 87,760 55,946 182,516 Dec. 31, 1989 46,860 112,979 73,614 233,453 Dec. 31, 1990 41,940 110,013 72,633 224,586 Dec. 31, 1991 53,310 160,835 100,281 314,426 Dec. 31, 1992 56,660 174,775 112,428 343,863 Dec. 31, 1993 54,840 213,397 112,682 380,919 Dec. 31, 1994 55,590 220,943 117,100 393,633 Dec. 31, 1995 78,130 311,266 167,129 556,525 Dec. 31, 1996 88,440 397,099 191,967 677,506 Dec. 31, 1997 125,630 570,917 273,653 970,200 Dec. 31, 1998 160,700 798,314 353,183 1,312,197 4 The total amount capital gains distributions accepted in shares was $274,724, the total amount of dividends reinvested was $84,492. No adjustment has been made for any taxes payable by shareholders on capital gain distributions and dividends reinvested in shares. 5 SEQUOIA FUND, INC. Statement of Investments December 31, 1998 COMMON STOCKS (79.66%) Value Shares Cost (Note 1) - ------ ---- -------- BANK HOLDING COMPANIES (12.53%) 6,145,462 Fifth Third Bancorp $ 91,846,680 $ 438,248,259 333,800 Mercantile Bankshares Corporation 3,439,242 12,851,300 1,181,800 National Commerce Bancorp 7,329,000 22,232,613 4,272,300 U. S. Bancorp 53,895,274 151,666,650 -------------- -------------- 156,510,196 624,998,822 -------------- -------------- CONSUMER PRODUCTS (.08%) 335,500 Sturm, Ruger & Company, Inc. 359,850 4,005,031 -------------- -------------- DIVERSIFIED COMPANIES (29.19%) 20,807 Berkshire Hathaway Inc. Class A* 164,569,540 1,456,490,000 -------------- -------------- INSURANCE (14.77%) 4,352,500 Progressive Corporation-Ohio+ 148,581,862 737,204,688 -------------- -------------- MANUFACTURING - MOTORCYCLES (4.68%) 4,927,400 Harley Davidson, Inc. 66,047,062 233,435,575 -------------- -------------- PERSONAL CREDIT (1.45%) 1,820,300 Household International Inc. 22,866,842 72,129,387 -------------- -------------- SERVICES (16.83%) 13,029,100 Freddie Mac 53,842,460 839,562,631 -------------- -------------- Miscellaneous Securities (0.13%) 7,965,049 6,672,688 -------------- -------------- TOTAL COMMON STOCKS $ 620,742,861 $3,974,498,822 -------------- -------------- 6 SEQUOIA FUND, INC. Statement of Investments December 31, 1998 (continued) Value Shares Cost (Note 1) - ------ ---- -------- U.S. GOVERNMENT OBLIGATIONS(20.34%) $ 44,500,000 U.S. Treasury Bills due 2/4/99 through 2/18/99 $ 44,290,916 $ 44,290,916 316,000,000 U.S. Treasury Notes, 5 7/8% due 8/31/99 316,499,740 318,567,500 271,000,000 U.S. Treasury Notes, 5 5/8% due 12/31/99 271,771,235 273,794,688 259,000,000 U.S. Treasury Notes, 5 5/8% due 4/30/2000 261,278,140 262,197,031 115,000,000 U.S. Treasury Notes, 5 3/8% due 7/31/2000 116,261,639 116,347,656 -------------- -------------- TOTAL U.S. GOVERNMENT OBLIGATIONS 1,010,101,670 1,015,197,791 -------------- -------------- TOTAL INVESTMENTS (100%)++ $1,630,844,531 $4,989,696,613 ============== ============== ++ The cost for federal income tax purposes is identical. * Non-income producing. + Refer to Note 6. 7 SEQUOIA FUND, INC. Statement of Assets and Liabilities December 31, 1998 ASSETS: Investments in securities, at value (cost $1,630,844,531) (Note 1) $4,989,696,613 Cash on deposit with custodian 2,007,749 Receivable for capital stock sold 2,723,706 Dividends and interest receivable 13,040,768 Other assets 46,985 -------------- Total assets 5,007,515,821 ============== LIABILITIES: Payable for capital stock repurchased 1,373,560 Accrued expenses 4,250,825 -------------- Total liabilities 5,624,385 -------------- Net assets applicable to 31,125,890 shares of capital stock outstanding (Note 4) $5,001,891,436 ============== Net asset value, offering price and redemption price per share $160.70 ======= See Notes to Financial Statements. 8 SEQUOIA FUND, INC. Statement of Operations Year Ended December 31, 1998 INVESTMENT INCOME: Income: Dividends: Unaffiliated companies $ 21,089,059 Affiliated companies (Note 6) 1,667,490 Interest 33,166,783 -------------- Total income 55,923,332 -------------- Expenses: Investment advisory fee (Note 2) 44,036,642 Legal and auditing fees 92,994 Stockholder servicing agent fees 363,448 Custodian fees 81,667 Directors fees and expenses (Note 5) 158,587 Other 174,262 -------------- Total expenses 44,907,600 Less expenses reimbursed by Investment Adviser (Note 2) 721,000 -------------- Net expenses 44,186,600 -------------- Net investment income 11,736,732 -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Realized gain on investments: Unaffiliated companies 415,002,340 Affiliated companies (Note 6) 16,379,603 -------------- Net realized gain on investments 431,381,943 Net increase in unrealized appreciation on: Investments 859,089,190 Net realized and unrealized gain on investments 1,290,471,133 -------------- Increase in net assets from operations $1,302,207,865 ============== See Notes to Financial Statements. 9 SEQUOIA FUND, INC. Statements of Changes in Net Assets Year Ended December 31, ----------------------------- 1998 1997 --------------- ------------- INCREASE (DECREASE) IN NET ASSETS: From operations: Net investment income $ 11,736,732 $ 2,366,846 Net realized gains 431,381,943 26,323,106 Net increase in unrealized appreciation 859,089,190 1,081,383,714 -------------- -------------- Net increase in net assets from operations 1,302,207,865 1,110,073,666 Distributions to shareholders from: Net investment income (10,988,302) (2,474,076) Net realized gains (238,181,010) ( 26,264,675) Capital share transactions (Note 4) 276,288,024 10,231,447 -------------- -------------- Total increase 1,329,326,577 1,091,566,362 NET ASSETS: Beginning of year 3,672,564,859 2,580,998,497 -------------- -------------- End of year $5,001,891,436 $3,672,564,859 ============== ============== NET ASSETS CONSIST OF: Capital (par value and paid in surplus) $1,483,849,808 $1,172,455,159 Undistributed net investment income 748,430 0 Undistributed net realized gains 158,441,116 346,808 Unrealized appreciation 3,358,852,082 2,499,762,892 -------------- -------------- Total Net Assets $5,001,891,436 $3,672,564,859 ============== ============== See Notes to Financial Statements. 10 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, 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 ex-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 11 the reporting period. Actual results could differ from those estimates. E. General: Dividends and distributions are recorded by the Fund on the ex-dividend date. Interest income is accrued as earned. 12 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, 1998 and the Investment Adviser reimbursed the Fund $721,000. For the year ended December 31, 1998, there were no amounts accrued to interested persons, including officers and directors, other than advisory fees of $44,036,642 and brokerage commissions of $362,856 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, 1998. 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, 1998 were $30,733,847 and $866,479,651,respectively. Included in proceeds of sales is $41,930,713 representing the value of securities disposed of in payment of redemptions in-kind resulting in realized gains of $35,106,625. As a result of the redemptions in-kind net realized gains differ for financial statement and tax purposes. These realized gains have been reclassified from undistributed realized gains to paid in surplus in the accompanying financial statements. At December 31, 1998 the aggregate gross unrealized appreciation and depreciation of securities were $3,360,144,444 and $1,292,362, respectively. 13 NOTE 4--CAPITAL STOCK: At December 31, 1998 there were 100,000,000 shares of $.10 par value capital stock authorized. Transactions in capital stock were as follows: 1998 1997 ---- ---- Shares Amount Shares Amount Shares sold 2,164,908 $ 319,175,918 1,872,099 $ 199,979,993 Shares issued to stockholders on reinvestment of: Net investment income 54,399 7,959,038 21,191 2,331,456 Net realized gain on investments 1,470,593 215,201,334 188,981 23,446,469 ---------- ------------- ---------- ------------- 3,689,900 542,336,290 2,082,271 225,757,918 Shares repurchased 1,796,644 266,048,266 2,034,693 215,526,471 ---------- ------------- ---------- ------------- Net Increase 1,893,256 $ 276,288,024 47,578 $ 10,231,447 ========== ============= ========== ============= NOTE 5--DIRECTORS FEES AND EXPENSES: Directors who are not deemed "interested persons" receive fees of $6,000 per quarter and $2,500 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, 1998 was $158,587. 14 NOTE 6--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, 1998 aggregated $737,204,688 and $148,581,862, respectively. The summary of transactions for each affiliate during the period of their affiliation for the year ended December 31, 1998 is provided below: Purchases Sales ---------------------------- Realized Dividend Affiliate Shares Cost Shares Cost Gain Income - --------- ------ ---- ------ ---- -------- -------- Progressive Corp - Ohio -- -- 47,500 $ 1,510,500 $ 5,165,813 $1,095,192 Wallace Computer Services, Inc. -- -- 3,191,600 98,833,184 11,213,790 572,298 ----------- ---------- $16,379,603 $1,667,490 =========== ========== 15 NOTE 7--SELECTED FINANCIAL INFORMATION: Year Ended December 31, ----------------------- 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Per Share Operating Performance (for a share outstanding throughout the year) Net asset value, beginning of year $125.63 $ 88.44 $ 78.13 $ 55.59 $54.84 ------- ------- ------- ------- ------- Income from investment operations: Net investment income 0.39 0.38 0.38 0.31 0.42 Net realized and unrealized gains on investments 43.07 38.10 16.41 22.62 1.41 ------- ------- ------- ------- ------- Total from investment operations 43.46 38.18 16.79 22.93 1.83 ------- ------- ------- ------- ------- Less distributions: Dividends from net investment income (0.37) (0.08) (0.38) (0.31) (0.42) Distributions from net realized gains (8.02) (0.91) (6.10) (0.08) (0.66) ------- ------- ------- ------- ------- Total distributions (8.39) (0.99) (6.48) (0.39) (1.08) ------- ------- ------- ------- ------- Net asset value, end of year $160.70 $125.63 $ 88.44 $ 78.13 $ 55.59 ======= ======= ======= ======= ======= Total Return 35.3% 43.2% 21.7% 41.4% 3.3% Ratios/Supplemental data Net assets, end of year (in millions) $5,001.9 $3,672.6 $2,581.0 $2,185.5 $1,548.3 Ratio to average net assets: Expenses 1.0% 1.0% 1.0% 1.0% 1.0% Net investment income 0.3% 0.1% 0.4% 0.5% 0.8% Portfolio turnover rate 21% 8% 23% 15% 32% 16 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, 1998, 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 five years in the period then ended. These financial statements and the selected financial information are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the 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 the 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, 1998, 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. In our opinion, the financial statements and the selected financial information referred to above present fairly, in all material respects, the financial position of the Sequoia Fund, Inc. as of December 31, 1998, 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. New York, New York January 15, 1999 17 SEQUOIA FUND, INC. 767 Fifth Avenue, Suite 4701 New York, New York 10153-4798 DIRECTORS William J. Ruane Richard T. Cunniff Robert D. Goldfarb Carol L. Cunniff John M. Harding Francis P. Matthews C. William Neuhauser Robert L. Swiggett Roger Lowenstein OFFICERS William J. Ruane - Chairman of the Board Richard T. Cunniff - Vice Chairman Robert D. Goldfarb - President Carol L. Cunniff - Executive Vice President Joseph Quinones, Jr. - Vice President, Secretary & Treasurer INVESTMENT ADVISER & DISTRIBUTOR Ruane, Cunniff & Co., Inc. 767 Fifth Avenue, Suite 4701 New York, New York 10153-4798 CUSTODIAN The Bank of New York 90 Washington Street New York, New York 10286 REGISTRAR AND SHAREHOLDER SERVICING AGENT DST Systems, Inc. P.O. Box 419477 Kansas City, Missouri 64141 LEGAL COUNSEL Seward & Kissel One Battery Park Plaza New York, New York 10004 This report has been prepared for the information of shareholders of Sequoia Fund, Inc. 18 67700020.BA2 -----END PRIVACY-ENHANCED MESSAGE-----