A federal appeals court in Manhattan upheld the dismissal Monday of a proposed class-action lawsuit accusing Sequoia Fund Inc. of breaching a contractual provision, which supposedly barred the Maryland-based mutual fund from concentrating more than 25% of its assets in any one industry.

A three-judge panel of the U.S. Court of Appeals for the Second Circuit held that Sequoia’s investment policy allowed for “passive” changes in value that propelled the fund’s position in the health care industry to exceed the threshold following its initial investment.