QUARTERLY REPORT
For the Period Ended September 30, 2003

Dear Shareholder:

Sequoia Fund's results for the third quarter of 2003 are shown below with comparable results for the leading market indexes:

We are pleased with the absolute results of Sequoia Fund, which has appreciated 15.9% for the year to date, versus 22.8% for the Dow Jones and 22.3% for the S&P 500.

As for relative performance, we have lagged the major averages for two reasons. First, Sequoia's 17% cash position at the beginning of the year produced virtually no return in a period of extremely low interest rates and exerted a material drag on our aggregate performance. As evidence of this fact, we note that the 83% of the Fund invested in equities during the year has appreciated by 19%. Second, economically sensitive stocks (including technology stocks) have generally fueled the market's advance this year, and issues of this variety account for a relatively small percentage of our invested assets.

We have no aversion whatsoever to economically cyclical stocks per se. In fact, we own a few of them (as well as stocks of companies that are subject to other cycles). Having said that, many economically sensitive companies tend to have characteristics that we dislike. They often produce undifferentiated commodity-type products and consume large amounts of capital, a combination that leads to lower returns on invested capital and less free cash flow than we typically prefer. They also often come with the potentially heavy baggage of large pension and health care liabilities. As a result, economically sensitive stocks have historically been under-represented in our portfolio.

With respect to technology, we think it makes sense to repeat an observation we have made in the past. While we marvel at the breadth and speed of technological progress, we note that it typically causes businesses and industries to undergo rapid and unpredictable change. The prospect of such change makes it difficult for us to estimate and value the streams of future free cash flow that determine a company's intrinsic worth. Furthermore, high technology is usually accompanied by high levels of options issuance. While many investors continue to ignore options issuance, we consider it a very real corporate expense.

Turning to our portfolio, we are pleased with the progress of the companies that we own. They are all experiencing increased earnings, with the prospect of further gains in 2004. As for our lack of activity this year, it reflects both a level of comfort with our present holdings and an inability to find companies that meet our qualitative criteria and offer attractive valuations. The stock market, in our opinion, is not cheap. The shares of our portfolio companies are not cheap either, though we feel that their long term prospects warrant holding them at current prices (with possibly one or two small exceptions).

We strongly encourage you to read an article that appeared in the November 10, 2003, issue of Fortune (available at www.Fortune.com) in which Warren Buffett expounds on his belief that "our trade deficit has greatly worsened, to the point that our country's ‘net worth'…is now being transferred abroad at an alarming rate." Mr. Buffett argues that "a perpetuation of this transfer will lead to major trouble." Although we share Mr. Buffett's pessimism with regard to this and other important macroeconomic issues, we note that on a microeconomic level, we are basically optimists offering you our best wishes for a happy new year and a prosperous future. As always, we will do our best to help with regard to the latter.

Sincerely,

SEQUOIA FUND, INC.

STATEMENT OF INVESTMENTS

SEPTEMBER 30, 2003 (UNAUDITED)

COMMON STOCKS (82.96%)

SEQUOIA FUND, INC.
 767 Fifth Avenue, Suite 4701
 New York, New York 10153-4798
 Website : www.sequoiafund.com

DIRECTORS

William J. Ruane
Richard T. Cunniff
Robert D. Goldfarb
David M. Poppe
Vinod Ahooja
Roger Lowenstein
Francis P. Matthews
C. William Neuhauser
Robert L. Swiggett

OFFICERS

INVESTMENT ADVISER & DISTRIBUTOR

Ruane, Cunniff & Co., Inc.
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798

CUSTODIAN

The Bank of New York
MF Custody Administration Department
100 Church Street, 10th 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
One Battery Park Plaza
New York, New York 10004

This report has been prepared for the information of shareholders of Sequoia Fund, Inc.