-----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, BHdEcqaKMjvYgHVS5Ds/brOS90dsMqGE29GKmB0qQaehjWnOw0AOwFykPaZKhy8u mfsfnjFxmWGXOFUxcS/gOQ== 0000089043-09-000007.txt : 20090901 0000089043-09-000007.hdr.sgml : 20090901 20090901101120 ACCESSION NUMBER: 0000089043-09-000007 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090901 DATE AS OF CHANGE: 20090901 EFFECTIVENESS DATE: 20090901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEQUOIA FUND INC CENTRAL INDEX KEY: 0000089043 IRS NUMBER: 132663968 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-01976 FILM NUMBER: 091047498 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 0000089043 S000012155 SEQUOIA FUND INC C000033159 SEQUOIA FUND INC SEQUX N-CSRS 1 ncsrs.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-01976 Sequoia Fund, Inc. (Exact name of registrant as specified in charter) 767 Fifth Avenue, Suite 4701, New York, NY 10153-4798 (Address of principal executive offices) (Zip code) Robert D. Goldfarb Ruane, Cunniff & Goldfarb Inc. 767 Fifth Avenue Suite 4701 New York, New York 10153-4798 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 832-5280 Date of fiscal year end: December 31 Date of reporting period: June 30, 2009 ITEM 1. REPORTS TO STOCKHOLDERS. SEQUOIA FUND, INC. SEMI-ANNUAL REPORT (UNAUDITED) JUNE 30, 2009 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 June 30, 2009. 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 INITIAL CUMULATIVE CUMULATIVE TOTAL $10,000 CAPITAL GAINS REINVESTED VALUE OF PERIOD ENDED INVESTMENT DISTRIBUTIONS DIVIDENDS SHARES - ------------- ---------- ------------- ---------- ---------- July 15, 1970 $ 10,000 $ -- $ -- $ 10,000 May 31, 1971 11,750 -- 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 Dec. 31, 1999 127,270 680,866 286,989 1,095,125 Dec. 31, 2000 122,090 903,255 289,505 1,314,850 Dec. 31, 2001 130,240 1,002,955 319,980 1,453,175 Dec. 31, 2002 126,630 976,920 311,226 1,414,776 Dec. 31, 2003 147,610 1,146,523 362,790 1,656,923 Dec. 31, 2004 154,270 1,200,687 379,159 1,734,116 Dec. 31, 2005 155,450 1,331,529 382,059 1,869,038 Dec. 31, 2006 152,750 1,496,788 375,422 2,024,960 Dec. 31, 2007 139,120 1,713,258 342,768 2,195,146 Dec. 31, 2008 95,270 1,265,238 241,397 1,601,905 June 30, 2009 97,330 1,292,596 246,739 1,636,665 The total amount of capital gains distributions accepted in shares was $1,413,907, the total amount of dividends reinvested was $124,531. No adjustment has been made for any taxes payable by shareholders on capital gain distributions and dividends reinvested in shares. TO THE SHAREHOLDERS OF SEQUOIA FUND, INC. Dear Shareholder: Sequoia Fund's results for the second quarter of 2009 are shown below with comparable results for the leading market indexes: SEQUOIA DOW JONES STANDARD & TO JUNE 30, 2009 FUND INDUSTRIALS POOR'S 500 ------- ----------- ---------- 3 Months 11.50% 11.96% 15.93% 6 Months 2.17% -2.01% 3.16% 1 Year -17.12% -23.00% -26.21% 5 Years (Annualized) -0.87% -1.68% -2.24% 10 Years (Annualized) 2.63% -0.41% -2.22% The performance shown above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. THE S&P 500 INDEX IS AN UNMANAGED, CAPITALIZATION-WEIGHTED INDEX OF THE COMMON STOCKS OF 500 MAJOR US CORPORATIONS. THE DOW JONES INDUSTRIAL AVERAGE IS AN UNMANAGED, PRICE-WEIGHTED INDEX OF 30 ACTIVELY TRADED BLUE CHIP STOCKS. THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND ASSUMES REINVESTMENT OF DIVIDENDS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. YEAR TO DATE PERFORMANCE AS OF THE MOST RECENT MONTH END CAN BE OBTAINED BY CALLING DST SYSTEMS, INC. AT (800) 686-6884. ---------- We are providing you with a copy of the transcript of the Ruane, Cunniff & Goldfarb Inc./Sequoia Fund, Inc. "Annual Investor Day 2009" meeting which was held on May 15th. As a result of net realized capital losses through the date of this letter, it is possible that we may not have a capital gains distribution during the year ended December 31, 2009. We will do our best to keep you informed of any material changes due to sales activity through October 31, 2009. IRS regulations dictate that capital gain distributions are determined by transactions from November 1 of one year to October 31 of the following year. There may be a modest income distribution in the fourth quarter. Sincerely, /s/ Richard T. Cunniff - ---------------------------------------- Richard T. Cunniff Vice Chairman /s/ Robert D. Goldfarb - ---------------------------------------- Robert D. Goldfarb President /s/ David M. Poppe - ---------------------------------------- David M. Poppe Executive Vice President August 20, 2009 FEES AND EXPENSES OF THE FUND (UNAUDITED) This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (fees paid directly from your investment) The Fund does not impose any sales charges, exchange fees or redemption fees. ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets) ANNUAL FUND OPERATING EXPENSES Management Fees 1.00% Other Expenses 0.04% ---- Total Annual Fund Operating Expenses 1.04% Expense Reimbursement* 0.04% ---- Net Expenses 1.00% ==== * REFLECTS RUANE, CUNNIFF & GOLDFARB INC.'S ("RUANE, CUNNIFF & GOLDFARB") CONTRACTUAL REIMBURSEMENT OF A PORTION OF THE FUND'S OPERATING EXPENSES. THIS REIMBURSEMENT IS A PROVISION OF RUANE, CUNNIFF & GOLDFARB'S INVESTMENT ADVISORY AGREEMENT WITH THE FUND AND THE REIMBURSEMENT WILL BE IN EFFECT ONLY SO LONG AS THAT INVESTMENT ADVISORY AGREEMENT IS IN EFFECT. ---------- SHAREHOLDER EXPENSE EXAMPLE As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2009 to June 30, 2009). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and will not help you determine the relative total costs of owning different funds. EXPENSES PAID DURING BEGINNING ENDING PERIOD* ACCOUNT ACCOUNT JANUARY 1, VALUE VALUE 2009 TO JANUARY 1, JUNE 30, JUNE 30, 2009 2009 2009 ---------- --------- ----------- Actual $1,000 $1,021.70 $5.01 Hypothetical (5% return per year less expenses) $1,000 $1,019.84 $5.01 * EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO OF 1.00%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 181/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). SECTOR BREAKDOWN (UNAUDITED) PERCENT OF AS OF JUNE 30, 2009 NET ASSETS - ---------------------------------- ---------- Diversified Companies 20.76 U.S. Government Obligations 20.24 Retailing 12.59 Veterinary Diagnostics 6.63 Building Materials 6.16 Automotive Manufacturing 4.58 Industrial & Construction Supplies 4.55 Flooring Products 3.74 Aerospace/Defense 2.90 Miscellaneous Securities 2.79 Freight Transportation 2.63 Auto Parts 2.55 Construction Equipment 2.36 Other 7.52 ------ 100.00 ====== The table below shows the changes of the Fund's major positions for the period ended June 30, 2009: % OF ASSETS % OF ASSETS POSITION 6/30/2009 12/31/2008 - ------------------------- ----------- ----------- Berkshire Hathaway 20.8% 22.8% Idexx Laboratories 6.6% 5.3% TJX Companies Inc. 6.1% 4.1% Martin Marietta Materials 5.4% 6.9% Porsche 4.6% 5.3% Fastenal Company 4.5% 5.7% Mohawk Industries 3.7% 5.7% ---- ---- 51.7% 55.8% ==== ==== SEQUOIA FUND, INC. SCHEDULE OF INVESTMENTS JUNE 30, 2009 (UNAUDITED) COMMON STOCKS (79.58%)
VALUE SHARES (NOTE 1) - ------------ -------------- ADVERTISING (1.16%) 936,300 Omnicom Group Inc. $ 29,568,354 -------------- AEROSPACE/DEFENSE (2.90%) 12,410,000 Rolls-Royce Group plc (United Kingdom) 73,814,680 -------------- AUTO PARTS (2.55%) 1,698,778 O'Reilly Automotive Inc. * 64,689,466 -------------- AUTOMOTIVE MANUFACTURING (4.58%) 1,734,393 Porsche Automobil Holding SE (Germany) (a) 116,306,660 -------------- BUILDING MATERIALS (6.16%) 1,754,749 Martin Marietta Materials Inc. 138,414,601 419,772 Vulcan Materials Company 18,092,173 -------------- 156,506,774 -------------- CONSTRUCTION EQUIPMENT (2.36%) 730,000 Caterpillar Inc. 24,119,200 1,524,900 Ritchie Bros. Auctioneers Incorporated 35,758,905 -------------- 59,878,105 -------------- CRUDE OIL & GAS PRODUCTION (0.19%) 90,000 Canadian Natural Resources Limited 4,724,100 -------------- DIVERSIFIED COMPANIES (20.76%) 5,799 Berkshire Hathaway Inc. Class A * 521,910,000 2,011 Berkshire Hathaway Inc. Class B * 5,823,253 -------------- 527,733,253 -------------- DIVERSIFIED MANUFACTURING (0.93%) 383,880 Danaher Corporation 23,700,751 -------------- FLOORING PRODUCTS (3.74%) 2,665,000 Mohawk Industries Inc. * 95,087,200 -------------- FREIGHT TRANSPORTATION (2.63%) 2,007,294 Expeditors International Inc. 66,923,182 -------------- INDUSTRIAL & CONSTRUCTION SUPPLIES (4.55%) 3,484,900 Fastenal Company 115,594,133 -------------- INFORMATION PROCESSING (1.97%) 299,274 MasterCard Inc. 50,071,533 --------------
VALUE SHARES (NOTE 1) - ------------ -------------- INSURANCE BROKERS (0.88%) 1,127,910 Brown & Brown Inc. $ 22,479,246 -------------- PRINTING (1.13%) 1,917,307 De La Rue plc (United Kingdom) 28,742,349 -------------- RETAILING (12.59%) 39,775 Costco Wholesale Corporation 1,817,718 1,372,623 Target Corporation 54,177,430 4,947,700 TJX Companies, Inc. 155,654,642 2,118,568 Walgreen Company 62,285,899 951,630 Wal-Mart Stores, Inc. 46,096,957 -------------- 320,032,646 -------------- TRUCK MANUFACTURING (1.08%) 840,572 PACCAR Inc. 27,326,996 -------------- VETERINARY DIAGNOSTICS (6.63%) 3,646,134 Idexx Laboratories Inc. +* 168,451,391 -------------- Miscellaneous Securities (2.79%) (b) 70,867,495 -------------- TOTAL COMMON STOCKS (Cost $1,442,724,252) $2,022,498,314 -------------- PRINCIPAL AMOUNT - ------------ U.S. GOVERNMENT OBLIGATIONS (20.24%) $514,500,000 U.S. Treasury Bills due 7/2/2009 through 8/20/2009 514,477,148 -------------- TOTAL U.S. GOVERNMENT OBLIGATIONS (Cost $514,477,148) 514,477,148 -------------- TOTAL INVESTMENTS (99.82%) ++ (Cost $1,957,201,400) 2,536,975,462 OTHER ASSETS LESS LIABILITIES (0.18%) 4,537,334 -------------- NET ASSETS (100.00%) $2,541,512,796 ==============
- ---------- + Refer to Note 8. ++ The cost for federal income tax purposes is identical. * Non-income producing. (a) The Fund is invested in preference shares of Porsche Automobil Holding SE which possess the same economic interest as Porsche common stock but have no voting rights. (b) "Miscellaneous Securities" include holdings in their initial period of acquisition that have not previously been publicly disclosed. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below: Level 1 - quoted prices in active markets for identical securities Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the Fund's investments as of June 30, 2009: INVESTMENTS IN VALUATION INPUTS SECURITIES - ----------------------------------------------- -------------- Level 1 - Quoted Prices $2,022,498,314 Level 2 - Other Significant Observable Inputs * 514,477,148 -------------- Total $2,536,975,462 ============== * REPRESENTS U.S. TREASURY BILLS WITH REMAINING MATURITIES OF 60 DAYS OR LESS WHICH ARE VALUED AT THEIR AMORTIZED COST. The accompanying notes are an integral part of these Financial Statements. SEQUOIA FUND, INC. STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2009 (UNAUDITED) ASSETS Investments in securities, at value (Note 1) Unaffiliated companies (cost $1,865,831,878) $2,368,524,071 Affiliated companies (cost $91,369,522) (Note 8) 168,451,391 -------------- Total investment in securities (cost $1,957,201,400) 2,536,975,462 Cash on deposit with custodian 2,800,653 Receivable for capital stock sold 2,850,416 Dividends receivable 1,911,242 Other assets 28,672 -------------- Total assets 2,544,566,445 -------------- LIABILITIES Payable for capital stock repurchased 725,341 Accrued investment advisory fee 2,116,495 Accrued other expenses 211,813 -------------- Total liabilities 3,053,649 -------------- Net assets applicable to 26,113,652 shares of capital stock outstanding (Note 4) $2,541,512,796 ============== Net asset value, offering price and redemption price per share $ 97.33 ============== NET ASSETS CONSIST OF Capital (par value and paid in surplus) $.10 par value stock, 100,000,000 shares authorized $2,012,994,472 Undistributed net investment income (Note 5) 3,362,311 Accumulated net realized losses on investments (Note 5) (54,618,049) Unrealized appreciation 579,774,062 -------------- Total net assets $2,541,512,796 ==============
The accompanying notes are an integral part of these Financial Statements. STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2009 (UNAUDITED) INVESTMENT INCOME Income Dividends, net of $1,659,278 foreign tax withheld $14,699,702 Interest 398,932 ----------- Total income 15,098,634 ----------- Expenses Investment advisory fee (Note 2) 11,658,958 Legal and auditing fees 115,084 Stockholder servicing agent fees 259,999 Custodian fees 40,000 Directors fees and expenses (Note 6) 118,314 Other 92,645 ----------- Total expenses 12,285,000 Less expenses reimbursed by Investment Adviser (Note 2) 552,000 ----------- Net expenses 11,733,000 ----------- Net investment income 3,365,634 ----------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Realized gain/(loss) on Investments 5,773,456 Foreign currency transactions 221,268 ----------- Net realized gain on investments and foreign currencies 5,994,724 ----------- Net increase in unrealized appreciation on Investments Unaffiliated companies 978,605 Affiliated companies (Note 8) 36,898,876 ----------- Net increase in unrealized appreciation on investments 37,877,481 ----------- Net realized and unrealized gain on investments and foreign currencies 43,872,205 ----------- Net increase in net assets from operations $47,237,839 ===========
The accompanying notes are an integral part of these Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED 6/30/09 YEAR ENDED (UNAUDITED) 12/31/08 -------------- --------------- INCREASE/(DECREASE) IN NET ASSETS From operations Net investment income $ 3,365,634 $ 10,236,582 Net realized gain on investments and foreign currencies 5,994,724 239,644,000 Net increase (decrease) in unrealized appreciation on investments 37,877,481 (1,186,236,559) -------------- --------------- Net increase (decrease) in net assets from operations 47,237,839 (936,355,977) Distributions to shareholders from Net investment income (184,248) (10,628,918) Net realized gains (4,440) (168,718,205) Capital share transactions (Note 4) 8,271,047 88,409,150 -------------- --------------- Total increase (decrease) 55,320,198 (1,027,293,950) NET ASSETS Beginning of period 2,486,192,598 3,513,486,548 -------------- --------------- End of period (including undistributed net investment income of $3,362,311 and $180,925, respectively) $2,541,512,796 $ 2,486,192,598 ============== ===============
The accompanying notes are an integral part of these Financial Statements. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES Sequoia Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment 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 under the supervision of 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 are valued in accordance with NASDAQ Official Closing Price on the last business day of the period; securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean between the last reported bid and asked prices. Securities traded on a foreign exchange are valued at the last reported sales price on the principal exchange on which the security is primarily traded. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the close of the New York Stock Exchange on that day. U.S. Treasury Bills with remaining maturities of 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. When reliable market quotations are insufficient or not readily available at time of valuation or when the Investment Adviser determines that the prices or values available do not represent the fair value of a security, such security is valued as determined in good faith by the Investment Adviser, in conformity with guidelines adopted by and subject to review by the Board of Directors. FOREIGN CURRENCIES: Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of foreign portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities are acquired or sold. Income and expenses are translated into U.S. dollars at the rates of exchange prevailing when accrued. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from the sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. B. ACCOUNTING FOR INVESTMENTS: Investment transactions are accounted for on the trade date and dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. Premiums and discounts on fixed income securities are amortized over the life of the respective security. 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. E. GENERAL: Dividends and distributions are recorded by the Fund on the ex-dividend date. F. INDEMNIFICATION: The Fund's officers, directors and agents are indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss thereunder to be remote. NOTE 2--INVESTMENT ADVISORY CONTRACTS AND PAYMENTS TO INTERESTED PERSONS The Fund retains Ruane, Cunniff & Goldfarb Inc. as its investment adviser. Ruane, Cunniff & Goldfarb Inc. (the "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 investment advisory 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 six months ended June 30, 2009 and the Investment Adviser reimbursed the Fund $552,000. Such reimbursement is not subject to recoupment by the Investment Adviser. For the six months ended June 30, 2009, there were no amounts accrued or paid to interested persons, including officers and directors, other than advisory fees of $11,658,958 to Ruane, Cunniff & Goldfarb Inc. and brokerage commissions of $265,431 to Ruane, Cunniff & Goldfarb LLC, the Fund's distributor. Certain officers of the Fund are also officers of the Investment Adviser and the Fund's distributor. Ruane, Cunniff & Goldfarb LLC received no compensation from the Fund on the sale of the Fund's capital shares during the six months ended June 30, 2009. NOTE 3--PORTFOLIO TRANSACTIONS The aggregate cost of purchases and the proceeds from the sales of securities, excluding U.S. government obligations, for the six months ended June 30, 2009 were $146,800,792 and $211,220,253, respectively. Included in proceeds of sales is $55,160,636 representing the value of securities disposed of in payment of redemptions in-kind, resulting in realized gains of $41,986,090. At June 30, 2009 the aggregate gross tax basis unrealized appreciation and depreciation of securities were $838,541,357 and $258,767,295, respectively. NOTE 4--CAPITAL STOCK At June 30, 2009 there were 100,000,000 shares of $.10 par value capital stock authorized. Transactions in capital stock for the six months ended June 30, 2009 and the year ended December 31, 2008 were as follows:
2009 2008 ------------------------ ------------------------ SHARES AMOUNT SHARES AMOUNT --------- ------------ --------- ------------ Shares sold 1,872,646 $174,421,048 2,890,902 $341,191,851 Shares issued to stockholders on reinvestment of Net investment income 1,473 144,858 81,004 7,832,313 Net realized gains on Investments 35 3,490 1,157,417 128,898,150 --------- ------------ --------- ------------ 1,874,154 174,569,396 4,129,323 477,922,314 Shares repurchased 1,857,707 166,298,349 3,287,506 389,513,164 --------- ------------ --------- ------------ Net increase 16,447 $ 8,271,047 841,817 $ 88,409,150 ========= ============ ========= ============
NOTE 5--FEDERAL INCOME TAXES Distributions to shareholders are determined in accordance with federal tax regulations and may differ from those determined for financial statement purposes. To the extent these differences are permanent such amounts are reclassified within the capital accounts based on federal tax regulations. During the six months ended June 30, 2009 permanent differences primarily due to realized gains on redemptions in kind not recognized for tax purposes resulted in a net increase in accumulated net realized losses of $41,986,091 with a corresponding increase in paid in surplus. These reclassifications had no effect on net assets. The tax character of distributions paid during the six months ended June 30, 2009 and the year ended December 31, 2008 was as follows: 2009 2008 -------- ------------ Distributions paid from Ordinary income $184,248 $ 10,628,918 Long-term capital gains 4,440 168,718,205 -------- ------------ Total distributions $188,688 $179,347,123 ======== ============ As of June 30, 2009, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income $ 3,362,311 Accumulated net realized losses (54,618,049) Unrealized appreciation 579,774,062 ------------ $528,518,324 ============ In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB Statement No. 109" (the "Interpretation"). The Interpretation establishes a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns and requires certain expanded tax disclosures. Management has applied the Interpretation to the Fund during the period ended June 30, 2009. As a result of the application of the Interpretation, there was no material impact on the financial statements. The Fund's Federal tax returns filed in the three-year period ended December 31, 2008 remain subject to examination by the IRS. NOTE 6--DIRECTORS FEES AND EXPENSES Directors who are not deemed "interested persons" receive fees of $10,000 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 six months ended June 30, 2009 was $118,314. NOTE 7--INTERIM FINANCIAL STATEMENTS The interim financial statements have not been examined by the Fund's independent registered public accounting firm and accordingly they do not express an opinion thereon. NOTE 8--AFFILIATED COMPANIES 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 the Fund's investment in an affiliated company at June 30 2009 aggregated $168,451,391 and $91,369,522, respectively. There were no transactions for the affiliated company during the period of its affiliation for the six months ended June 30, 2009. NOTE 9--FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, 2009 ---------------------------------------------------- (UNAUDITED) 2008 2007 2006 2005 2004 ------------- -------- -------- -------- -------- -------- Per Share Operating Performance (for a share outstanding throughout the period) Net asset value, beginning of period $ 95.27 $ 139.12 $ 152.75 $ 155.45 $ 154.27 $ 147.61 -------- -------- -------- -------- -------- -------- Income from investment operations Net investment income (loss) 0.13 0.40 0.46 (0.70) (0.75) (0.58) Net realized and unrealized gains (losses) on investments 1.94 (37.11) 13.48 13.60 12.57 7.45 -------- -------- -------- -------- -------- -------- Total from investment operations 2.07 (36.71) 13.94 12.90 11.82 6.87 -------- -------- -------- -------- -------- -------- Less distributions Dividends from net investment income (0.01) (0.42) (0.45) (0.00) (0.00) (0.00) Distributions from net realized gains (0.00)(a) (6.72) (27.12) (15.60) (10.64) (0.21) -------- -------- -------- -------- -------- -------- Total distributions (0.01) (7.14) (27.57) (15.60) (10.64) (0.21) -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 97.33 $ 95.27 $ 139.12 $ 152.75 $ 155.45 $ 154.27 ======== ======== ======== ======== ======== ======== Total Return 2.17%+ -27.03% 8.40% 8.34% 7.78% 4.66% Ratios/Supplemental data Net assets, end of period (in millions) $2,541.5 $2,486.2 $3,513.5 $3,599.8 $3,573.3 $3,772.4 Ratio of expenses to average net assets Before expense reimbursement 1.05%++ 1.04% 1.03% 1.03% 1.03% 1.02% After expense reimbursement 1.00%++ 1.00% 1.00% 1.00% 1.00% 1.00% Ratio of net investment income (loss) to average net assets 0.3%++ 0.3% 0.3% -0.5% -0.5% -0.4% Portfolio turnover rate 8%+ 12% 13% 14% 8% 6%
- ---------- + Not annualized ++ Annualized (a) Represents less than $0.01 per share. OTHER INFORMATION (UNAUDITED) The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SEC's web site at http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, DC. For information regarding the operation of the SEC's Public Reference Room, call 1-800-SEC-0330. For a complete list of the Fund's portfolio holdings, view the most recent quarterly, semiannual or annual report on Sequoia Fund's web site at http://www.sequoiafund.com/fund_reports.htm. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Visit Sequoia Fund's web site at www.sequoiafund.com and use the "Shareholder Information" link to obtain all proxy information. This information may also be obtained from the Securities and Exchange Commission's web site at www.sec.gov or by calling DST Systems, Inc. at (800) 686-6884. This page was intentionally left blank. SEQUOIA FUND, INC. 767 FIFTH AVENUE, SUITE 4701 NEW YORK, NEW YORK 10153-4798 (800) 686-6884 WEBSITE: www.sequoiafund.com DIRECTORS Richard T. Cunniff Robert D. Goldfarb David M. Poppe Vinod Ahooja, Chairman of the Board Roger Lowenstein C. William Neuhauser Sharon Osberg Robert L. Swiggett OFFICERS Richard T. Cunniff -- VICE CHAIRMAN Robert D. Goldfarb -- PRESIDENT David M. Poppe -- EXECUTIVE VICE PRESIDENT Joseph Quinones, Jr. -- VICE PRESIDENT, SECRETARY, TREASURER & CHIEF COMPLIANCE OFFICER Michael Valenti -- ASSISTANT SECRETARY INVESTMENT ADVISER Ruane, Cunniff & Goldfarb Inc. 767 Fifth Avenue, Suite 4701 New York, New York 10153-4798 DISTRIBUTOR Ruane, Cunniff & Goldfarb LLC 767 Fifth Avenue, Suite 4701 New York, New York 10153-4798 CUSTODIAN The Bank of New York MF Custody Administration Department One Wall Street, 25th Floor New York, New York 10286 REGISTRAR AND SHAREHOLDER SERVICING AGENT DST Systems, Inc. P.O. Box 219477 Kansas City, Missouri 64121 LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, New York 10004 This report has been prepared for the information of shareholders of Sequoia Fund, Inc. ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. INVESTMENTS (a) The Schedule of Investments is Included in Item 1, Reports to Stockholders. (b) Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that as of a date within 90 days of the filing of this report there were no significant deficiencies in the design or operation of the disclosure controls and procedures of the registrant which would have adversely affected the ability of the registrant to record, process, summarize and report the subject matter contained in this report. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 12. EXHIBITS. (a)(1) Not applicable. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (a)(3) Not applicable. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SEQUOIA FUND, INC. By: /s/ Robert D. Goldfarb ------------------------------ Robert D. Goldfarb President and Principal Executive Officer Date: September 1, 2009 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Robert D. Goldfarb ------------------------------ Robert D. Goldfarb President and Principal Executive Officer Date: September 1, 2009 By: /s/ Joseph Quinones, Jr. --------------------------- Joseph Quinones, Jr. Vice President, Secretary, Treasurer Date: September 1, 2009 EX-99.906 CERT 2 ex99906cert.txt Exhibit 12(b) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of Sequoia Fund, Inc. (the "Registrant"), hereby certifies that, to the best of such officer's knowledge, the Registrant's report on Form N-CSRS for the period ended June 30, 2009 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of, and for, the periods presented in the Report. Date: September 1, 2009 By: /s/ Robert D. Goldfarb - ----------------------------------------- President and Principal Executive Officer By: /s/ Joseph Quinones, Jr. - ----------------------------------------- Vice President, Secretary and Treasurer This certification is furnished as an exhibit solely pursuant to Item 12(b) of Form N-CSRS and is not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates this certification by reference. EX-99.CERT 3 ex99cert.txt Exhibit 12(a)(2) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Robert D. Goldfarb, President and Principal Executive Officer of Sequoia Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSRS of Sequoia Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal controls over financial reporting (as defined in Rule 30a-3(d) of the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 1, 2009 /s/ Robert D. Goldfarb ---------------------- Robert D. Goldfarb President and Principal Executive Officer Exhibit 12(a)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Joseph Quinones, Jr., Vice President, Secretary & Treasurer of Sequoia Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSRS of Sequoia Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 1, 2009 /s/ Joseph Quinones ------------------- Vice President, Secretary & Treasurer -----END PRIVACY-ENHANCED MESSAGE-----