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Sequoia Fund Inc – ‘N-30D’ for 12/31/96

As of: Friday, 2/28/97 · For: 12/31/96 · Accession #: 919574-97-245 · File #: 811-01976

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/28/97  Sequoia Fund Inc                  N-30D      12/31/96    1:28K                                    Seward & Kissel LLP

Annual or Semi-Annual Report Mailed to Shareholders — Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                22     52K 
                          Shareholders                                           

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SEQUOIA FUND, INC.                                                              
ANNUAL REPORT                                                                   
December 31, 1996                                                               

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LETTER FROM THE CHAIRMAN                                                        

Dear Shareholder:                                                               

Sequoia Fund's results for the fourth quarter and full year             
1996 are shown below with comparable results for the leading                    
market indexes:                                                                 

            Sequoia   Dow Jones     Standard &
1996                         Fund      Industrials   Poor's 500                 

Fourth Quarter                +7.4%     +10.2%         +8.3%                    
Year                          21.7       28.8          23.0                     

As shown above, 1996 was yet another surprisingly strong            
year for U.S. stock markets and for Sequoia Fund also.  You will                
recall that 1995 results were even more dazzling, with the Fund                 
and the S&P 500 up 41% and 38%, respectively.  In fact, as I                    
write this letter, Sequoia is up an additional 10% year to date                 
1997 compared to a gain of about 9% for the S&P 500.                            

As your longtime Chairman, I think this might be an                     
appropriate time to step back and reflect on what our goals were                
when we started the firm which manages Sequoia and measure the                  
degree to which we have achieved those goals.                                   

In a memo written in 1969, we stated that we wanted to do               
only one thing -- strive for excellence in money management by                  
having the principals concentrate on security analysis and use                  
the results of their own research, as opposed to using outside                  
research, to manage portfolios themselves rather than separate                  
the task between the "research department" and the "portfolio                   
managers".  Rick Cunniff and I had been doing research and                      
investing in this fashion for over fifteen years at that time.                  

This approach is still unusual on Wall Street, some 28              
years later.  Typically, people start out their careers in an                   
"analyst" function but aspire to get promoted to the more                       
prestigious "portfolio manager" designation which is considered                 
to be a distinct and higher function.  To the contrary, we have                 
always believed that if you are truly a long term investor, the                 
analyst function is paramount and portfolio management follows                  
naturally.  While we don't go in much for titles at our firm, if                
we did, my business card would read "Bill Ruane, Research                       
Analyst".                                                                       

Rick and I are designated in most publications as the                   
specific managers of Sequoia.  However, many people are aware                   
that Bob Goldfarb joined us in 1971, the year after Sequoia was                 
born, and that his name deserves equal billing.  From day one,                  
Bob's creativity, financial capability and judgment have made him               

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a key person at Ruane, Cunniff & Co., Inc., and therefore at                    
Sequoia.  Bob has been a major shareholder of the management                    
company for some time.  He helped pave the way to any success we                
may have had in the past and at the present age of 52 will                      
provide the leadership in research excellence which we strive to                
achieve for many years to come.                                                 

Fourteen years ago, our firm's research ability was further             
enhanced in a major way by the arrival of Carley Cunniff at our                 
firm.  Carley, who just happens to be the daughter of Rick                      
Cunniff, had come to my attention a number of years earlier prior               
to her graduation from Harvard Business School when the head of a               
major Wall Street investment bank called me to see if I could                   
influence her to accept a job at his firm instead of at a                       
competitor's.  After a number of years in investment banking                    
where she became expert at tearing apart balance sheets and                     
income statements, Carley decided the search for undervalued                    
stocks was more interesting than mergers and acquisitions.  She                 
joined us in what was one of our finest acquisitions.  Carley is                
deeply involved in selecting and analyzing the companies we have                
under consideration and in monitoring the progress of the                       
companies we own.                                                               

I have designated Bob Goldfarb in my will as the trustee and            
money manager for essentially all of the personal finances of my                
wife and family in total confidence that he will provide both                   
outstanding prudence and sound growth of capital for them.  The                 
common stock portion of my family's investment accounts is almost               
entirely invested in Sequoia.  Further, I have also named Carley                
as successor trustee to Bob.  I do not believe the future of the                
firm and the security of my family could be in finer hands.                     

Twelve years ago, Greg Alexander joined us out of Yale where,           
despite his economics degree, it appears he spent most of his                   
time reading annual reports.  He is highly creative and still                   
spends at least eight hours a day consuming annual reports.  I                  
don't know anyone who processes more ideas with greater                         
analytical depth and he is excellent at cutting through to the                  
heart of an issue.  He is a master of chewing through immense                   
detail to reach original insights and judgments about our                       
portfolio companies.                                                            

Another major addition to our firm came three years ago in              
the person of Jon Brandt.  Jon combines warm humor and a low-key,               
pleasant personality with a computer-like mind.  Jon reviews the                
earnings reports of our companies with x-ray scrutiny and in very               
short order focuses in on the economic reality behind the                       
accounting numbers, with insights that a typical analyst may or                 
may not attain in a week of study.  He has had a major impact on                
the selection and composition of our portfolio holdings from the                
day he arrived.                                                                 

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Rounding out our research team are four highly discerning               
analysts, Kirk Hosfelt, Andy Kneeter, Paul Lountzis and Tania                   
Pouschine, who work hand in hand with us with a primary focus on                
developing an in-depth qualitative understanding of the products,               
organizations and managements of our portfolio companies. Tania                 
is particularly astute in the thoughtful appraisal of company                   
managements and Kirk excels in getting at the nuts and bolts of                 
how a business really works.  Andy and Paul do an outstanding job               
concentrating on developing extensive business information                      
sources to shed light on key business issues.                                   

If you were to ask any company in which we have invested,         
they would point out that over any year's time they have met with               
searching questions from just about every one of the ten of us.                 
When we have the seed of a good idea, we all work on it and try                 
to cover the facts like "the dew covers Dixie".  We believe that                
truth is in the details and this intensive research on stock                    
ideas is of immense importance in avoiding big mistakes and                     
developing the positive convictions required to own and hold                    
concentrated investment positions.                                              

The product of this ongoing research effort is our current          
portfolio which we regard as among the finest group of companies                
we have ever owned.  This qualitative assessment is supported                   
quantitatively by the underlying statistics for the aggregate                   
portfolio, including a return on equity in excess of 20% with an                
ability to reinvest significant retained earnings at attractive                 
rates of growth.  This latter factor has tremendous value in a                  
time of 6 1/2% money.                                                           

Our enthusiasm for the portfolio is tempered only by its          
current level of valuation.  Two years ago, we were equally                     
enthusiastic about the companies and their stocks.  In the                      
ensuing period, the companies performed exceptionally well while                
their stocks performed even better.  As economist Herbert Stein                 
observed, if something cannot go on forever it will not.  It                    
would not surprise us, therefore, if these businesses performed                 
better than their stocks over the next several years.                           

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I am proud of the depth and intensity of our research effort.           
It is the cornerstone of the careful management of your money.                  
We've come a long way since Rick and I declared all signals go in               
starting our firm.  Finally, and thankfully, the two of us need                 
not be in shape for a decathlon to do careful research, and as                  
long as our health remains as good as it is we will continue to                 
do our best to contribute to the team.                                          

          Sincerely,

                William J. Ruane

February 18, 1997                                                               

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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,                   
1996.  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     Reinvested   Value 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                

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The total amount capital gains distributions accepted in shares                 
was $206,031, the total amount of dividends reinvested was                      
$80,792.                                                                        

No adjustment has been made for any taxes payable by shareholders               
on capital gain distributions and dividends reinvested in shares.               

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SEQUOIA FUND, INC.                
Statement of Investments                
December 31, 1996               

COMMON STOCKS (91.85%)                                                          

                                     Value
Shares                                   Cost           (Note 1)                
------                                   ----           --------                

BANK HOLDING COMPANIES (18.42%)                           
2,761,050  Fifth Third Bancorp       $ 92,765,943  $ 173,428,453                
2,100,000  First Bank Systems, Inc.    80,610,090    143,325,000                
225,000  Mercantile Bankshares                                              
Corporation                3,475,625      7,200,000   
298,700  National Commerce Bancorp    7,406,981     11,425,275              
160,000  Regions Financial Corporation5,348,750      8,270,000              
479,900  Wells Fargo & Company      119,285,679    129,453,025              
                     ------------   ------------
                      308,893,068    473,101,753
                     ------------   ------------

CONSUMER PRODUCTS (.26%)                                  
339,200  Sturm, Ruger & Company, Inc.   361,700      6,572,000              
                      -----------   ------------
FINANCIAL SERVICES (27.93%)                               
21,034  Berkshire Hathaway Inc.*   165,788,581    717,259,400             
                     ------------   ------------
INSURANCE (11.54%)                                        
4,400,000  Progressive Corporation-                                             
Ohio+                     150,092,362     296,450,000     
                     ------------   ------------
MANUFACTURING - MOTORCYCLES (4.56%)                       
2,490,600  Harley Davidson, Inc.      66,707,726     117,058,200                
                     ------------   ------------
MOTION PICTURES & VIDEO                                   
PRODUCTION (4.23%)                                    
1,560,924  The Walt Disney Company    63,866,333     108,679,334                
                     ------------   ------------
PERSONAL CREDIT (2.20%)                                   
613,400  Household International Inc.23,103,672     56,586,150              
                     ------------   ------------
PHARMACEUTICALS (5.35%)                                   
2,760,000  Johnson & Johnson           55,292,183    137,310,000                
                     ------------   ------------

SERVICES (15.22%)                                         
3,550,000  Federal Home Loan Mortgage                                           

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Corporation               58,732,552    390,943,750   
                     ------------  -------------

Miscellaneous Securities                                  
(2.14%)                   48,739,496     54,924,000   
                     ------------   ------------

TOTAL COMMON STOCKS      $ 941,577,673 $2,358,884,587     
                     ------------  -------------

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SEQUOIA FUND, INC.                
Statement of Investments                
December 31, 1996               
(continued)               

Principal                                             Value                     
Amount                                  Cost          (Note 1)                  
---------                               ----          -------                   

U.S. GOVERNMENT OBLIGATIONS(8.15%)                                              
$  4,700,000 U.S. Treasury Bills due                                            
1/23/97                 $ 4,685,639     $ 4,685,639   
54,000,000 U.S. Treasury Notes,                                             
5-7/8% due 7/31/97       54,085,309      54,151,875   
150,000,000 U.S. Treasury Notes,                                              
6% due 5/31/98          149,533,364     150,539,062   
                     -----------     -----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 208,304,312      209,376,576              
                     -----------     -----------
TOTAL INVESTMENTS (100%)++      $1,149,881,985  $2,568,261,163              
                  ==============  ==============

++ The cost for federal income tax purposes is identical.                       
*  Non-income producing.                                                        
+  Refer to Note 7.                                                             

SEQUOIA FUND, INC.                
Statement of Assets and Liabilities               
December 31, 1996               

ASSETS:                                                                         

Investments in securities, at value                                             
(cost $1,149,881,985) (Note 1)             $2,568,261,163                   

Cash on deposit with custodian                    2,608,151                     

Receivable for capital stock sold                 9,728,786                     

Dividends and interest receivable                 3,247,129                     

Other assets                                         42,187                     
                        --------------
Total assets                             2,583,887,416                
                        ==============

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LIABILITIES:                                                                    

Payable for capital stock repurchased               705,156                     

Accrued expenses                                  2,183,763                     
                         -------------
Total liabilities                            2,888,919                
                         -------------

Net assets applicable to 29,185,056                                             
shares of capital stock outstanding                                             
(Note 4)                                     $2,580,998,497                     
                        ==============

Net asset value, offering price and                                             
redemption price per share                           $88.44                     
                                ======

See Notes to Financial Statements.                

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SEQUOIA FUND, INC.                
Statement of Operations               
Year Ended December 31, 1996                

INVESTMENT INCOME:                                                              
Income:                                                                 
Dividends:                                                        
Unaffiliated companies               $ 20,129,355           
Affiliated companies (Note 7)           1,012,000           
Interest                                  13,524,192              
                          ------------
Total income                           34,665,547           
                          ------------

Expenses:                                                               
Investment advisory fee (Note 2)          24,026,121              
Legal and auditing fees                      100,159              
Stockholder servicing agent fees             200,280              
Custodian fees                               130,343              
Directors fees and expenses (Note 5)         148,989              
Other                                        114,378              
                          ------------
Total expenses                         24,720,270           
Less expenses reimbursed by                                       
Investment Adviser (Note 2)                544,000            
                          ------------
Net expenses                           24,176,270           
                          ------------
Net investment income                10,489,277         
                          ------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:                                    
Realized gain on investments in:                                        
Unaffiliated companies                   181,100,219              

Net increase in unrealized appreciation on:                             
Investments                              284,570,632              
                          ------------
Net realized and unrealized                                 
gain on investments                 465,670,851         
                          ------------
Increase in net assets from operations         $476,160,128                     
                          ============

See Notes to Financial Statements.                

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SEQUOIA FUND, INC.                

Statements of Changes in Net Assets               

           Year Ended December 31,
             -----------------------------
             1996                     1995
             ----                     ----

INCREASE (DECREASE) IN NET ASSETS:                                              
From operations:                                                        
Net investment income   $   10,489,277    $     8,739,165         
Net realized gain (loss)   181,100,219       (13,914,683)         
Net increase in unrealized                                        
appreciation             284,570,632        646,622,517       
               --------------     --------------
Net increase in net                                               
assets from operations   476,160,128        641,446,999       

Distributions to shareholders from:                                             
Net investment income     (10,387,500)        (8,810,242)         
Net realized gain on                                              
investments            (166,897,159)        (2,200,955)       
Capital share transactions                                              
(Note 4)                     96,600,320          6,775,846          
               --------------     --------------
Total increase          395,475,789        637,211,648      

NET ASSETS:                                                                     
Beginning of year           2,185,522,708      1,548,311,060            
               --------------     --------------
End of year                $2,580,998,497     $2,185,522,708            
               ==============     ==============

NET ASSETS CONSIST OF:                                                          
Capital (par value and                                                  
paid in surplus)         $1,162,223,712     $1,065,623,392          
Undistributed net                                                       
investment income               107,230              5,453          
Undistributed net                                                       
realized gains (losses)         288,377       (13,914,683)          

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Unrealized appreciation 1,418,379,178       1,133,808,546         
               --------------     --------------
               $2,580,998,497     $2,185,522,708
               ==============     ==============

See Notes to Financial Statements.                

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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            
the reporting period.  Actual results could differ from those           
estimates.                                                              

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E.  General: Dividends and distributions are recorded by the Fund               
on the ex-dividend date.  Interest income is accrued as                 
earned.                                                                 

NOTE 2--INVESTMENT ADVISORY CONTRACTS AND PAYMENTS TO INTERESTED                
PERSONS:                                                                        

The Fund retains Ruane, Cunniff & Co., Inc., as its                     
investment adviser.  Ruane, Cunniff & Co., Inc. (Investment                     
Adviser) provides the Fund with investment advice, administrative               
services and facilities.                                                        

Under the terms of the Advisory Agreement, the Investment               
Adviser receives a management fee equal to 1% per annum of the                  
Fund's average daily net asset values. This percentage will not                 
increase or decrease in relation to increases or decreases in the               
net asset value of the Fund.  Under the Advisory Agreement, the                 
Investment Adviser is obligated to reimburse the Fund for the                   
amount, if any, by which the operating expenses of the Fund                     
(including the management fee) in any year exceed the sum of 1-                 
1/2% of the average daily net asset values of the Fund during                   
such year up to a maximum of $30,000,000, plus 1% of the average                
daily net asset values in excess of $30,000,000.  The expenses                  
incurred by the Fund exceeded the percentage limitation during                  
the year ended December 31, 1996 and the Investment Adviser                     
reimbursed the Fund $544,000.                                                   

For the year ended December 31, 1996, there were no amounts             
accrued to interested persons, including officers and directors,                
other than advisory fees of $24,026,121 and brokerage commissions               
of $309,715 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,                 
1996.                                                                           

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, 1996 were $261,113,062 and                          
$480,807,359, respectively.                                                     

At December 31, 1996 the aggregate gross unrealized                     
appreciation of securities was $1,418,379,178.                                  
NOTE 4--CAPITAL STOCK:                                                          

At December 31, 1996 there were 40,000,000 shares of $.10 par           
value capital stock authorized.  Transactions in capital stock                  
were as follows:                                                                

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                1996                          1995
                 -------------------           -------------------
              Shares         Amount          Shares         Amount
              ------         ------          ------         ------

Shares sold         1,605,188    $ 136,443,268     1,446,747     $ 94,340,709   

Shares issued to                                                                
stockholders on                                                                 
reinvestment of:                                                                
Net investment                                                            
  income            88,467        7,512,710        93,996        6,408,962
Net realized                                                              
gain on                                                               
   investments   1,739,720      149,633,365        34,096        2,045,382
                ----------      -----------    ----------     ---------- -

                 3,433,375      293,589,343     1,574,839      102,795,053

Shares repurchased  2,220,186      196,989,023     1,453,448       96,019,207   
                ----------      -----------    ----------     ---------- -

Net Increase        1,213,189    $  96,600,320       121,391     $  6,775,846   
                ==========      ===========   ==========       ===========

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, 1996 was                        
$148,989.                                                                       

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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, 1996 aggregated $296,450,000 and $150,092,362, respectively.                
The summary of transactions for each affiliate during the period                
of their affiliation for the year ended December 31, 1996 is                    
provided below:                                                                 

Purchases       Sales                     
 -----------   -----------  Realized  Dividend

Affiliate    Shares  Cost  Shares  Cost    Gain    Income               
--------     ------  ----- ------  ----    -----   ------               

Progressive                                                                     
Corp. - Ohio   --      --    --      --      --      $1,012,000             
                                        ==========

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NOTE 7--SELECTED FINANCIAL INFORMATION:                                         

                     Year Ended December 31,
                    ------------------------------------
                     1996      1995     1994      1993      1992
                      -----     -----    -----     -----     -----

Per Share Operating Performance (for a                                          
share outstanding throughout the year)                                          

Net asset value, beginning                                                      
of year                     $78.13     $55.59    $54.84    $56.66   $53.31      
                      ------     ------    ------    ------   ------

Income from investment                                                          
operations:                                                                     
Net investment income       0.38       0.31      0.42      0.64     0.93    

Net realized and unrealized                                                 
gains on investments       16.41      22.62      1.41      5.39     3.98    
                       -----     ------    ------    ------   ------

Total from investment                                                 
operations              16.79      22.93      1.83      6.03     4.91 
                       -----     ------    ------    ------   ------

Less distributions:                                                             
Dividends from net                                                          
investment                                                                  
income                    (0.38)     (0.31)    (0.42)    (0.65)   (0.93)    

Distributions from net                                                      
realized gains            (6.10)     (0.08)    (0.66)    (7.20)   (0.63)    
                      ------     ------    ------    ------   ------
Total distributions         (6.48)     (0.39)    (1.08)    (7.85)   (1.56)      
                      ------     ------    ------    ------   ------
Net asset value, end                                                            
of year                   $88.44     $78.13   $55.59     $54.84   $56.66    
                      ======     ======   =======    ======    =====

Total Return                 21.7%      41.4%      3.3%     10.8%     9.4%      

Average commission                                                              
rate paid                $.0550+                                            

19                

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Ratios/Supplemental data                                                        
Net assets, end of year                                                         
(in millions)           $2,581.0   $2,185.5  $1,548.3 $1,512.1  $1,389.3    
Ratio to average net assets:                                                    
Expenses                  1.0%       1.0%      1.0%      1.0%     1.0%  
Net investment income     0.4%       0.5%      0.8%      1.1%     1.8%  
Portfolio turnover rate        23%        15%       32%       24%      28%      

+ Required by regulations issued in 1995                                        

20                

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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, 1996, 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, 1996, 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, 1996, 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 18, 1997                                                                

21                

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SEQUOIA                                                                         
FUND, INC.                                                                      

767 Fifth Avenue, Suite 4701                                                    
New York, New York 10153-4798                                                   

DIRECTORS                                                                       
William J. Ruane                                                        
Richard T. Cunniff                                                      
Robert D. Goldfarb                                                      
John M. Harding                                                         
Francis P. Matthews                                                     
C. William Neuhauser                                                    
Robert L. Swiggett                                                      

OFFICERS                                                                        
William J. Ruane         - Chairman of the Board                        
Richard T. Cunniff       - President                                    
Robert D. Goldfarb       - Vice President                               
Carol L. Cunniff         - 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 and is not authorized for distribution to                       
prospective investors unless preceded or accompanied by an                      
effective prospectus that includes information regarding the                    
Fund's objectives, policies, management, records and other                      
information.                                                                    

22                
69900020.AP5

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘N-30D’ Filing	Date	First	Last	Other Filings

Filed on:	2/28/97			NSAR-B
	2/18/97	5
	1/18/97	21
For Period End:	12/31/96	1	21	24F-2NT, NSAR-B
				List all Filings

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Filing Submission 0000919574-97-000245 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Sequoia Fund Inc – ‘N-30D’ for 12/31/96

As of: Friday, 2/28/97 · For: 12/31/96 · Accession #: 919574-97-245 · File #: 811-01976

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Annual or Semi-Annual Report Mailed to Shareholders — Rule 30d-1Filing Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual or Semi-Annual Report Mailed to Shareholders — Rule 30d-1
Filing Table of Contents