UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form N-CSR
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: December 31, 2005
<Page>]
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT
DECEMBER 31, 2005
<Page>
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, 2005. 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.
<Table>
<Caption>
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
</Table>
The total amount of capital gains distributions accepted in shares was $744,103,
the total amount of dividends reinvested was $116,740.
No adjustment has been made for any taxes payable by shareholders on capital
gain distributions, dividends reinvested in shares or sale of Fund shares.
<Page>
<Table>
<Caption>
Date Seq S&P
- ---------- ------- -------
12/31/1995 $10,000 $10,000
12/31/1996 12,174 12,299
12/31/1997 17,433 16,399
12/31/1998 23,578 21,084
12/31/1999 19,678 25,521
12/31/2000 23,626 23,198
12/31/2001 26,111 20,440
12/31/2002 25,422 15,923
12/31/2003 29,774 20,489
12/31/2004 31,162 22,719
12/31/2005 33,586 23,834
</Table>
COMPARISON OF A CHANGE IN VALUE OF A $10,000 INVESTMENT IN SEQUOIA FUND AND THE
S&P 500 INDEX*
* The S&P 500 Index is an unmanaged, capitalization-weighted index of the common
stocks of 500 major US corporations. The information presented for the Fund
assumes reinvestment of dividends and capital gains distributions and does not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. Past performance is not
indicative of future results.
TO THE SHAREHOLDERS OF SEQUOIA FUND, INC.
Dear Shareholder:
Sequoia Fund's results for the quarter and year ended December 31, 2005
appear below along with comparable results for the market indexes:
To December 31, 2005
<Table>
<Caption>
SEQUOIA DOW JONES STANDARD &
FUND INDUSTRIALS POOR'S 500
------- ----------- ----------
Fourth Quarter 9.02% 2.06% 2.09%
1 Year 7.78% 1.72% 4.91%
5 Years (Annualized) 7.29% 2.01% 0.54%
10 Years (Annualized) 12.88% 9.76% 9.07%
</Table>
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.
Sincerely,
/s/ Richard T. Cunniff /s/ Robert D. Goldfarb /s/ David M. Poppe
Richard T. Cunniff Robert D. Goldfarb David M. Poppe
Vice Chairman President Executive Vice President
February 23, 2006
THE RUANE, CUNNIFF & GOLDFARB INC./SEQUOIA FUND, INC. ANNUAL INVESTOR
DAY WILL BE HELD AT 10A.M., NEW YORK CITY TIME, ON FRIDAY, MAY 19, 2006 AT
THE ST. REGIS HOTEL, 20TH FLOOR, TWO EAST 55TH STREET, NEW YORK, NEW YORK 10022.
<Page>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The total return for Sequoia Fund was 7.78% for 2005, including the
reinvestment of dividends. This compares to the 4.91% return of the S&P 500. As
it has been for many years, our investment philosophy is to make concentrated
commitments of capital in a limited number of companies that have superior
long-term economic prospects and that sell at what we believe are attractive
prices. Because Sequoia is deliberately not representative of the overall
market, in any given year the performance of the Fund will often vary
significantly from that of the commonly cited indexes.
The table below shows the stock price performance of the Fund's major
positions for 2005:
<Table>
<Caption>
% OF ASSETS PRICE % OF ASSETS
POSITION 12/31/04 CHANGE 12/31/05
- -------- ----------- ------ -----------
Berkshire Hathaway 35.2% 0.8% 33.8%
Progressive Corp. 12.6% 37.6% 17.4%
Mohawk Industries 8.4% -4.7% 8.0%
TJX 8.0% -7.6% 7.4%
Fastenal 3.6% 27.3% 4.4%
Expeditors International 2.8% 20.8% 3.4%
----------- -----------
Top six positions 70.6% 74.4%
=========== ===========
</Table>
We're less concerned with the annual movement in share prices than we are
with the earnings progress exhibited by our holdings. If earnings grow, the
stock price eventually follows.
As of this writing Berkshire Hathaway had not yet reported fourth quarter
and full year 2005 earnings. However, Berkshire's earnings were likely down from
2004, due to an estimated $3.4 billion of large insurance losses stemming from
the three major hurricanes that hit US landfall during the year. Even after this
year's losses, we believe that underwriting profits at Berkshire's supercat
operations will still most likely average out to about 25% of premiums over the
cycle since 1990.
For most of the rest of Berkshire's operations, 2005 was a relatively
strong year. GEICO's combined ratio was likely below 90, even after hurricane
losses. And premiums and policies in force were likely up more than 12%, several
times the industry growth. Through nine months, organic earnings of Berkshire
Hathaway's wholly owned non-insurance businesses grew at high single digit
rates, good performance for these operations. The building products unit turned
in particularly strong results, thanks to the residential housing boom and a
recovery in commercial construction. Other strong contributors to earnings
growth included Clayton Homes and the leasing operations.
Berkshire deployed over $7 billion in acquisitions of whole companies and
purchases of publicly traded stocks in 2005. It completed deals to buy a
recreational vehicle manufacturer, a professional liability insurer, and a nylon
carpet fiber operation for an estimated combined $1.9 billion. Through nine
months, Berkshire purchased a net $5.2 billion worth of common stocks, with new
stakes in Anheuser-Busch and Wal-Mart and additions to its Procter and Gamble
and Wells Fargo positions accounting for the lion's share of the growth. In
addition, Berkshire's 81%-owned subsidiary, Midamerican, negotiated an agreement
to spend about $5 billion to purchase the equity of a large utility company
operating in several Western states. That deal is scheduled to close by the end
of March, 2006.
Berkshire still had over $41 billion in cash on its balance sheet as of
last September, up $1 billion from year end. However, increasing short term
interest rates through 2005 gave Berkshire's investment income a natural lift
last year and will do so again in 2006.
Progressive managed well through market conditions that were tougher than
those of the year before. The auto insurance industry entered a down cycle in
2005, and competition increased during the year, which put downward pressure on
prices. Growth in written premiums at Progressive slowed and its profit margins
narrowed. Profitability was also affected by the Gulf storms, which hit states
where Progressive has disproportionately high market shares. When 2005 closed,
Progressive's combined ratio had increased three percentage points. Even with
that jump, however, the insurer finished the year with a still excellent
combined ratio of 88. And while the company's net income fell 15%, share
repurchases provided an updraft. Earnings per share slipped only 9%, resulting
in far and away the second-best year in the company's history.
Earnings growth at Mohawk Industries, the country's largest flooring
business, suffered from continual increases in raw material costs during the
year. Not only did oil prices climb throughout the year, disruptions caused by
the Gulf storms further restricted the supply of Mohawk's raw materials.
Inevitably, the company's profit margins contracted. Management moved quickly to
raise prices to recover its increased costs, but it takes several months for
price increases to show up on the bottom line. Last fall, Mohawk closed on its
largest acquisition to date when it purchased Unilin, a privately-owned
manufacturer of laminate flooring,
<Page>
for about $2.6 billion. While the market for broadloom carpet grows slowly, the
demand for laminate flooring has been increasing at double-digit rates in the
US. Unilin, which has both proprietary technology and an excellent brand name,
positions Mohawk well to capture a large share of this growing market. We expect
the acquisition to be accretive to Mohawk's earnings in 2006.
TJX struggled early in 2005, but regained its footing as the year wore on.
Last fall, the founder and chairman of TJX, Ben Cammarata, returned as interim
CEO. He quickly closed a failing Internet retail venture and vowed to slow the
pace of expansion at other new store concepts. The company refocused its efforts
on its best businesses, its core off-price apparel retailing formats. Holiday
sales were strong. and the company finished the year on a vigorous note.
Earnings per share were up 24%.
Revenue and profits at the fifth and sixth largest positions in the Fund
grew at excellent rates in 2005. Sales at Fastenal rose by 23%, better than
three times the rate of growth of its largest competitor, and earnings per share
jumped 27%. Credit the hard-work ethic and frugal spirit of this unusual company
for that performance as much as a strengthening industrial economy. Expeditors
International, now the sixth-largest position in the Fund due in significant
part to its high rate of growth, generated a 17% rise in net revenue. Earnings
per share leaped 39%. This performance reflects both the company's unusually
strong competitive culture and its well-established presence in the trade lanes
between the Far East and the US, where growth was unusually strong.
During the year, the Fund sold its investments in Ethan Allen, Harley
Davidson, Mercantile Bankshares, Petsmart, and the remainder of its position in
Fifth Third Bancorp. We initiated positions in International Game Technology and
Porsche AG.
At the end of the year, Sequoia was 95.2% invested in stocks, compared to
90.8% a year earlier. In both years, the remainder of Sequoia's assets was held
in cash and cash equivalents.
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 (July 1, 2005 to December 31, 2005).
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.
<Table>
<Caption>
EXPENSES
ENDING PAID DURING
BEGINNING ACCOUNT PERIOD*
ACCOUNT VALUE JULY 1, 2005
VALUE DECEMBER 31, TO DECEMBER 31,
JULY 1, 2005 2005 2005
------------ ------------ ---------------
Actual $ 1,000 $ 1,083.90 $ 5.25
Hypothetical
(5 % return per year before
expenses) $ 1,000 $ 1,020.16 $ 5.09
</Table>
* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO OF 1.00%, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/365 (TO REFLECT
THE ONE-HALF YEAR PERIOD).
<Page>
SEQUOIA FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2005
COMMON STOCKS (93.23%)
<Table>
<Caption>
VALUE
SHARES (NOTE 1)
------ ---------------
AUTO & HOME SUPPLY STORES (1.52%)
1,699,998 O'Reilly Automotive Inc.* $ 54,416,936
---------------
CASUALTY INSURANCE (17.35%)
5,310,152 Progressive Corporation-- Ohio 620,119,551
---------------
CHEMICAL DIAGNOSTIC SUBSTANCES (3.08%)
1,529,015 IDEXX Laboratories Inc* 110,058,500
---------------
COMPUTER PROGRAMMING SERVICES (1.85%)
2,088,597 GTECH Holdings Corporation 66,292,069
---------------
DIVERSIFIED COMPANIES (33.79%)
13,625 Berkshire Hathaway Inc. Class A* 1,207,447,500
163 Berkshire Hathaway Inc. Class B* 478,486
---------------
1,207,925,986
---------------
ELECTRONIC COMPUTER MANUFACTURING (2.28%)
2,648,247 International Game Technology 81,513,043
---------------
FREIGHT TRANSPORTATION (3.36%)
1,776,610 Expeditors International of Washington, Inc. 119,938,941
---------------
INDUSTRIAL & CONSTRUCTION SUPPLIES (4.44%)
4,054,341 Fastenal Company 158,889,624
---------------
INSURANCE AGENTS & BROKERS (2.47%)
2,888,952 Brown & Brown Inc. 88,228,594
---------------
MEDICAL & HOSPITAL EQUIPMENT (0.11%)
120,097 Patterson Companies Inc.* 4,011,240
---------------
PROCESS CONTROL INSTRUMENTS (0.60%)
384,157 Danaher Corporation 21,428,277
---------------
RETAILING (14.41%)
39,804 Costco Wholesale Corporation 1,969,104
1,145,775 Tiffany & Company 43,871,725
11,412,756 TJX Companies, Inc. 265,118,322
2,359,424 Wal-Mart Stores Inc 110,421,043
2,120,091 Walgreen Company 93,835,228
---------------
515,215,422
---------------
</Table>
<Page>
<Table>
<Caption>
VALUE
SHARES (NOTE 1)
------ ---------------
TEXTILE - CARPETS (7.97%)
3,274,506 Mohawk Industries Inc.+* $ 284,816,531
---------------
TOTAL COMMON STOCK (COST $1,077,216,753) $ 3,332,854,714
---------------
PREFERRED STOCKS (1.91%)
AUTOMOTIVE MANUFACTURING (1.91%)
95,045 Porsche AG -- Preferred (Germany) 68,292,779
---------------
TOTAL PREFERRED STOCKS (COST $67,942,737) $ 68,292,779
---------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT OBLIGATIONS (4.86%)
$ 174,200,000 U.S. Treasury Bills due 2/6/2006 173,632,253
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $173,632,253) 173,632,253
---------------
TOTAL INVESTMENTS (100%)++
(Cost $1,318,791,7 $ 3,574,779,746
===============
</Table>
- ----------
++ The cost for federal income tax purposes is identical.
* Non-income producing.
+ Refer to Note 7.
The accompanying notes form an integral part of these Financial Statements.
<Page>
SEQUOIA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005
<Table>
ASSETS:
Investments in securities, at value (cost $1,318,791,743) (Note 1) $ 3,574,779,746
Cash on deposit with custodian 347,492
Receivable for capital stock sold 757,941
Dividends receivable 959,188
Other assets 34,005
---------------
Total assets 3,576,878,372
---------------
LIABILITIES:
Payable for capital stock repurchased 391,206
Accrued investment advisory fee 3,013,834
Accrued other expenses 161,993
---------------
Total liabilities 3,567,033
---------------
Net assets applicable to 22,986,340 shares of capital stock outstanding (Note 4) $ 3,573,311,339
===============
Net asset value, offering price and redemption price per share $ 155.45
===============
</Table>
The accompanying notes form an integral part of these Financial Statements.
<Page>
SEQUOIA FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2005
<Table>
INVESTMENT INCOME:
Income:
Dividends:
Unaffiliated companies, net of $32,209 of foreign tax withheld $ 9,822,939
Affiliated companies (Note 7) 802,615
Interest 8,703,394
Other income 40,170
---------------
Total income 19,369,118
---------------
Expenses:
Investment advisory fee (Note 2) 36,448,117
Legal and auditing fees 125,717
Stockholder servicing agent fees 462,745
Custodian fees 80,000
Directors fees and expenses (Note 6) 244,950
Other 148,571
---------------
Total expenses 37,510,100
Less expenses reimbursed by Investment Adviser (Note 2) 912,000
---------------
Net expenses 36,598,100
---------------
Net investment (loss) (17,228,982)
---------------
REALIZED AND UNREALIZED GAIN / (LOSS) ON INVESTMENTS:
Realized gain on investments:
Unaffiliated companies 357,662,429
Affiliated companies (Note 7) 21,234,848
Foreign currency transactions 1,486
---------------
Net realized gain on investments and foreign currencies $ 378,898,763
Net (decrease) in unrealized appreciation on investments (89,974,201)
---------------
Net realized and unrealized gain on investments and foreign currencies 288,924,562
---------------
Increase in net assets from operations $ 271,695,580
===============
</Table>
The accompanying notes form an integral part of these Financial Statements.
<Page>
SEQUOIA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------------
2005 2004
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment (loss) $ (17,228,982) $ (14,191,740)
Net realized gain on investments and foreign currencies 378,898,763 296,769,132
Net increase / (decrease) in unrealized appreciation (89,974,201) (106,708,915)
--------------- ---------------
Net increase / (decrease) in net assets from operations 271,695,580 175,868,477
Distributions to shareholders from:
Net investment income -- --
Net realized gains (245,091,727) (5,637,360)
Capital share transactions (Note 4) (225,675,415) (371,435,383)
--------------- ---------------
Total increase / (decrease) (199,071,562) (201,204,266)
NET ASSETS:
Beginning of year 3,772,382,901 3,973,587,167
--------------- ---------------
End of year $ 3,573,311,339 $ 3,772,382,901
=============== ===============
NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) $ 1,316,344,778 $ 1,347,326,752
Undistributed net realized gains (Note 5) 978,558 79,093,945
Unrealized appreciation 2,255,988,003 2,345,962,204
--------------- ---------------
Total Net Assets $ 3,573,311,339 $ 3,772,382,901
=============== ===============
</Table>
The accompanying notes form an integral part of these Financial Statements.
<Page>
SEQUOIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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 by the Board of Directors. Securities traded on a
national securities exchange or on a foreign 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; listed securities and
securities traded in the over-the-counter market 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.
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 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
<Page>
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 to shareholders are recorded by the
Fund on the ex-dividend date.
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 year ended
December 31, 2005 and the Investment Adviser reimbursed the Fund $912,000. Such
reimbursement is not subject to recoupment by the Investment Adviser.
For the year ended December 31, 2005, there were no amounts accrued or paid
to interested persons, including officers and directors, other than advisory
fees of $36,448,117 to Ruane, Cunniff & Goldfarb Inc. and brokerage commissions
of $338,214 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 year ended December 31,
2005.
In October 2005, the Advisory Agreement was terminated as a result of its
assignment due to the death of a control person of the Investment Adviser, under
the provisions of the Advisory Agreement and as required by the 1940 Act. The
Fund's Board of Directors approved an interim advisory contract between the Fund
and the Investment Adviser with substantially identical terms of the Advisory
Agreement. On December 12, 2005, the Board of Directors approved a new
investment advisory contract between the Fund and the Investment Adviser
effective March 1, 2006, subject to stockholder approval, with substantially
identical terms of the Advisory Agreement.
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, 2005 were $268,212,483 and $570,660,120, respectively. Included in proceeds
of sales is $296,818,473 representing the value of securities distributed as
in-kind payment of redemptions, resulting in realized gains of $211,919,666.
At December 31, 2005 the aggregate gross unrealized appreciation and
depreciation of securities for federal income tax purposes were $2,257,949,727
and $1,961,724, respectively.
<Page>
NOTE 4--CAPITAL STOCK:
At December 31, 2005 there were 100,000,000 shares of $.10 par value
capital stock authorized. Transactions in capital stock were as follows:
<Table>
<Caption>
2005 2004
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
Shares sold 676,222 $ 103,672,116 937,018 $ 142,174,969
Shares issued to stockholders on reinvestment of:
Net investment income -- -- -- --
Net realized gain on investments 1,281,840 198,753,650 31,351 4,737,104
-------------- -------------- -------------- --------------
1,958,062 302,425,766 968,369 146,912,073
Shares repurchased 3,424,141 528,101,181 3,435,889 518,347,456
-------------- -------------- -------------- --------------
Net (decrease) (1,466,079) $ (225,675,415) (2,467,520) $ (371,435,383)
============== ============== ============== ==============
</Table>
NOTE 5--DISTRIBUTIONS TO SHAREHOLDERS:
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 year ended December 31, 2005 permanent differences primarily due to a
net investment loss not deductible for tax purposes and realized gains on
redemptions in kind not recognized for tax purposes resulted in a net decrease
in net accumulated investment loss of $17,228,982 and undistributed net realized
gains of $211,922,423 with a corresponding increase in paid in surplus of
$194,693,441. These reclassifications had no effect on net assets.
The tax character of distributions paid during 2004 and 2005 was as
follows:
<Table>
<Caption>
2005 2004
--------------- ---------------
Distributions paid from:
Ordinary income $ -- $ --
Long-term capital gains 245,091,727 5,637,360
--------------- ---------------
Total distribution $ 245,091,727 $ 5,637,360
=============== ===============
</Table>
As of December 31, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed long-term gain $ 978,558
Unrealized appreciation 2,255,988,003
---------------
$ 2,256,966,561
===============
</Table>
NOTE 6--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, 2005 was $244,950.
<Page>
NOTE 7--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." As of December 31, 2004, the Fund held two investments
which were affiliated companies as defined above. The summary of transactions
for each affiliate during the year ended December 31, 2005 is provided below:
<Table>
<Caption>
PURCHASES SALES
--------------------------- --------------------------- REALIZED DIVIDEND
AFFILIATE SHARES COST SHARES COST GAIN INCOME
- --------- ------------ ------------ ------------ ------------ ------------ ------------
Ethan Allen Interiors, Inc. -- -- 1,855,059 $ 48,080,846 $ 13,836,830 $ 802,615
Mohawk Industries Inc. -- -- 180,741 $ 8,122,356 7,398,018 --
------------ ------------
$ 21,234,848 $ 802,615
============ ============
</Table>
As of December 31, 2005, the Fund had no investments in companies that
would be deemed to be affiliated companies.
NOTE 8--FINANCIAL HIGHLIGHTS:
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Per Share Operating Performance (for a share
outstanding throughout each year)
Net asset value, beginning of year $ 154.27 $ 147.61 $ 126.63 $ 130.24 $ 122.09
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment (loss)/income (0.75) (0.58) (0.62) (0.41) 0.97
Net realized and unrealized
gains (losses) on investments 12.57 7.45 22.21 (3.03) 11.52
---------- ---------- ---------- ---------- ----------
Total from investment operations 11.82 6.87 21.59 (3.44) 12.49
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.00) (0.00) (0.00) (0.01) (0.97)
Distributions from net realized gains (10.64) (0.21) (0.61) (0.16) (3.37)
---------- ---------- ---------- ---------- ----------
Total distributions (10.64) (0.21) (0.61) (0.17) (4.34)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 155.45 $ 154.27 $ 147.61 $ 126.63 $ 130.24
========== ========== ========== ========== ==========
Total Return 7.78% 4.66% 17.12% -2.64% 10.52%
Ratios/Supplemental data
Net assets, end of year (in millions) $ 3,573.3 $ 3,772.4 $ 3,973.6 $ 3,905.1 $ 4,230.1
Ratio to average net assets:
Expenses 1.0% 1.0% 1.0% 1.0% 1.0%
Net investment income (loss) -0.5% -0.4% -0.5% -0.3% 0.8%
Portfolio turnover rate 8% 6% 3% 8% 7%
</Table>
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Sequoia Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Sequoia Fund, Inc. (the "Fund") at
December 31, 2005, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2005 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 17, 2006
<Page>
INFORMATION ABOUT SEQUOIA FUND OFFICERS AND DIRECTORS:
The SAI includes additional information about Fund directors and is
available, without charge, upon request. You may call toll-free 1-800-686-6884
to request the SAI.
<Table>
<Caption>
OTHER
TERM OF OFFICE AND PRINCIPAL DIRECTORSHIPS
POSITION HELD LENGTH OF TIME OCCUPATION DURING HELD BY
NAME, AGE, AND ADDRESS WITH FUND SERVED PAST 5 YEARS DIRECTOR
- ---------------------- --------- ------ ------------ --------
Richard T. Cunniff, 82 Vice Chairman & Term -- 1 Year & Vice Chairman & Sturm,
767 Fifth Avenue Director Length of Time Director of Ruane, Ruger &
New York, NY 10153 served -- 35 Years Cunniff & Goldfarb Company, Inc.
Inc.
Robert D. Goldfarb, 61 President & Director Term -- 1 Year & Chairman & None
767 Fifth Avenue Length of Time Director of Ruane,
New York, NY 10153 served -- 27 Years Cunniff & Goldfarb
Inc.
David M. Poppe, 41 Executive Vice Term -- 1 Year & President & Director None
767 Fifth Avenue President & Director Length of Time of Ruane, Cunniff &
New York, NY 10153 served -- 3 Years Goldfarb Inc.
Joseph Quinones, Jr., 60 Vice President, Term -- 1 Year & Vice President, None
767 Fifth Avenue Secretary, Length of Time Secretary,
New York, NY 10153 Treasurer & Chief served -- 10 Years Treasurer & Chief
Compliance Officer Compliance Officer
of Ruane, Cunniff &
Goldfarb Inc.
Francis P. Matthews, 83 Director Term -- 1 Year & Retired None
767 Fifth Avenue Length of Time
New York, NY 10153 served -- 33 Years
C. William Neuhauser, 79 Director Term -- 1 Year & Retired None
767 Fifth Avenue Length of Time
New York, NY 10153 served -- 31 Years
Robert L. Swiggett, 83 Director Term -- 1 Year & Retired None
767 Fifth Avenue Length of Time
New York, NY 10153 served -- 35 Years
Sharon Osberg, 56 Director Term -- 1 Year & Consultant Internet None
767 Fifth Avenue Length of Time Mobile Technology
New York, NY 10153 served -- 2 Years
Roger Lowenstein, 51 Director Term -- 1 Year & Writer major None
767 Fifth Avenue Length of Time Financial and News
New York, NY 10153 served -- 7 Years Publications
Vinod Ahooja, 54 Director Term -- 1 Year & Retired None
767 Fifth Avenue Length of Time
New York, NY 10153 served -- 5 Years
</Table>
<Page>
APPROVAL OF ADVISORY CONTRACT
The previous advisory contract between Sequoia Fund, Inc. (the
"Corporation") and Ruane, Cunniff & Goldfarb Inc. (Adviser) terminated in early
October 2005 as a result of its assignment due to the death of Mr. William J.
Ruane, a control person of the Adviser. On October 14, 2005, the Board of
Directors of the Corporation, including a majority of the independent directors,
considered and approved an interim advisory contract between the Corporation and
the Adviser at a special meeting convened for that purpose.
At a meeting held on December 12, 2005, the Board of Directors of the
Corporation, including a majority of the independent directors, evaluated and
approved a new advisory contract between the Corporation and the Adviser that
would replace the interim advisory contract. In order for this new contract to
take effect, stockholders of the Corporation must approve the contract. A
stockholders' meeting is scheduled for February 24, 2006. A proxy statement
describing the reason for the stockholders' meeting and soliciting proxies for
the meeting was sent to stockholders on or about December 22, 2005.
BOARD CONSIDERATIONS IN APPROVING THE ADVISORY CONTRACT
In approving the advisory contract, the directors considered all
information they deemed reasonably necessary to evaluate the terms of the
contract. The directors focused on the nature and quality of the services
provided by the Adviser and the reasonableness of the fees charged for those
services.
The directors' evaluation of the quality of the Adviser's services took
into account written analyses of the profitability of the Corporation and the
Corporation's performance under the Adviser's management. The directors noted
that the Corporation over short-term periods, specifically the 3-month, 9-month
and 1-year periods ended September 30, 2005, underperformed as compared to the
Standard & Poor's Composite 500(R) Index (the "S&P Index") and the Dow Jones
Industrial Average ("DJIA"). The directors noted, however, that the Corporation
performed well over longer periods of time as compared to the S&P Index and
DJIA.
The directors also reviewed the Corporation's performance in light of
reports provided periodically by the Adviser in meetings with the Corporation's
audit committee. And, the directors considered the Corporation's performance in
light of the Adviser's compliance with investment policies and legal and
regulatory requirements.
The directors examined the fees to be paid to the Adviser under the
contract and the Corporation's overall expense ratios. They noted that under the
contract the Adviser would reimburse the Corporation for the amount, if any, by
which the operating expenses of the Corporation exceeds the sum of 1-1/2% of the
average daily net assets up to $30,000,000 plus 1.00% of the average daily net
assets in excess of $30,000,000. They also took into consideration the fact that
the Corporation is closed to new investors. The directors determined that the
fees were reasonable in light of the services provided by the Adviser and the
fees charged by other advisers to similar funds offering similar services.
The directors considered that Mr. Robert D. Goldfarb and Mr. David M. Poppe
would co-manage the Corporation. The directors further considered the Adviser's
representation that it had no current plans to change the manner in which it
managed the Corporation and the Adviser's assurances that it would continue to
(i) have the expertise and resources necessary to provide the advisory and
administrative services required by the Corporation and (ii) implement and
refine its internal control and compliance program for the Corporation.
The directors considered other benefits to the Adviser as a result of its
relationship with the Corporation. The directors noted that Ruane, Cunniff &
Goldfarb LLC, a wholly-owned subsidiary of the Adviser, serves as the
<Page>
Corporation's principal underwriter. The directors also reviewed the aggregate
commissions paid to Ruane, Cunniff & Goldfarb LLC for executing securities
transactions for the Corporation.
In evaluating the aforementioned considerations, the directors did not
identify any single factor as all-important or controlling in their evaluation
of the contract. The directors, including the independent directors, concluded
that the terms of the contract were fair and reasonable and that the Adviser's
fees are reasonable in light of the services provided to the Corporation and the
benefits received by the Adviser. Based upon such conclusions, the directors,
including a majority of the independent directors, approved the contract and
recommended that it be presented to stockholders for their approval at the
meeting of stockholders to be held on February 24, 2006.
OTHER INFORMATION
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 Form 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.
<Page>
SEQUOIA FUND, INC.
767 FIFTH AVENUE, SUITE 4701
NEW YORK, NEW YORK 10153-4798
WEBSITE: www.sequoiafund.com
DIRECTORS
Richard T. Cunniff
Robert D. Goldfarb
David M. Poppe
Vinod Ahooja
Roger Lowenstein
Francis P. Matthews
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
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
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.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of this code of
ethics is filed as an exhibit to this Form N-CSR. During the period covered by
this report, no substantive amendments were approved or waivers were granted to
the code of ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that the registrant does not
have an audit committee financial expert serving on its audit committee. The
registrant's Board of Directors has determined that, based on the background and
extensive experience of each of the members of the audit committee in the
financial services industry, a designated audit committee financial expert is
unnecessary. The members of the audit committee are well-known and respected
members of the investment management industry and the registrant is satisfied
that their collective knowledge and experience is sufficient for them to perform
their duties as audit committee members.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal year
for professional services rendered by the registrant's independent auditor were
as follows:
December 31, 2005 December 31, 2004
----------------- -----------------
Audit Fees $45,000 $39,000
Audit-Related Fees n/a n/a
Tax Fees $4,500 $4,000
Other Fees n/a n/a
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the auditor in connection
with statutory and regulatory filings. Tax fees include amounts related to tax
compliance and tax advice.
(e)(1) The registrant's audit committee has the responsibility to pre-approve
all audit and non-audit services provided to the registrant by its independent
auditor in advance at regularly scheduled audit committee meetings. The
registrant's audit committee also has the responsibility to pre-approve all
non-audit services provided by the registrant's independent auditor to the
registrant's investment adviser and any entity controlling, controlled by, or
under common control with the investment adviser that provides ongoing services
to the registrant, if the engagement relates directly to the operations and
financial reporting of the registrant, in advance at regularly scheduled audit
committee meetings.
(e)(2) No services included in (b)-(d) were approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's independent auditor for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $75,000 and $54,120, respectively.
(h) The registrant's audit committee has considered the provision of non-audit
services that were rendered to its investment adviser and any entity
controlling, controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant and that were not pre-approved
and determined that those services are compatible with maintaining the
independent auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS - INCLUDED IN ITEM 1, REPORTS TO STOCKHOLDERS
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) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(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.
(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: February 28, 2006
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: February 28, 2006
By: /s/ Joseph Quinones, Jr.
---------------------------
Joseph Quinones, Jr.
Vice President, Secretary, Treasurer
Date: February 28, 2006