SHAREHOLDER REPORT
NICHOLAS FUND, INC.
700 North
Water Street
Milwaukee,
Wisconsin 53202
December 31, 1995
<PAGE>
NICHOLAS FUND, INC.
February 20, 1996
Report to Fellow Shareholders:
It is a pleasure to report that Nicholas Fund had a good calendar
year in 1995. Total return to shareholders was 35.40% with distributions
reinvested. In the last ten years Nicholas Fund has performed better in only
one other year. While this result was below the performance of the S&P 500
(large companies), it exceeded the Russell 2000 results (small and mid-size
companies). Nicholas Fund tends to own stocks in both categories. Outstanding
upward moves in banks, finance and health care equities were greatly
responsible for the year's return. As is our custom, we are fully invested
with 4.0% in cash.
There appears to be some indications that the economy is beginning to
weaken. Cyclical company earnings seemed to have peaked. On the other hand,
the meaningful decline in long-term interest rates augurs well for common stock
ownership. However, after a year like 1995, expectations for stock returns in
the new year may need to be reduced. It is wise to remember that the stock
market has not had a 10% correction in over five years. Long-term performance
of the Fund is shown below for the time periods ended December 31, 1995:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
_______________________________
1 YEAR 5 YEARS 10 YEARS 15 YEARS
_____ ______ _______ _______
<S> <C> <C> <C> <C>
Nicholas Fund (Distributions Reinvested) +35.40% +17.37% +13.20% +15.77%
Standard & Poor's 500 (Income Reinvested) +37.50% +16.59% +14.78% +14.72%
NASDAQ OTC Composite (Excludes Income) +39.91% +22.99% +12.47% +11.62%
Russell 2000 (Income Reinvested) +28.44% +20.99% +11.32% +12.49%
Consumer Price Index +2.6% +2.8% +3.5% +3.9%
Ending value of $10,000 invested in
Nicholas Fund (Distributions Reinvested) $13,540 $22,276 $34,537 $89,980
</TABLE>
*Total returns are historical and include change in share price and
reinvestment of dividend and capital gain distributions. Past performance is
no guarantee of future results. Principal value and return will fluctuate so
an investment, when redeemed, may be worth more or less than original cost.
Management hopes to build on the solid foundation of the past year via
intense research, competent stock selection, larger positions in favored stocks
and patience. Please keep in mind that Nicholas Company is constantly
attempting to achieve reasonable returns in a low risk, conservative manner.
Thank you for being part of the Nicholas Fund.
Sincerely,
/s/ Albert O. Nicholas
Albert O. Nicholas
President
<PAGE>
PORTFOLIO COMPANY STATISTICS
DECEMBER 31, 1995 (UNAUDITED)
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<TABLE>
<CAPTION>
PRICE TO PRICE TO
LATEST LATEST FIVE YEAR MARKET BOOK LATEST BOOK DEBT
12 MONTH 12 MONTH COMPOUNDED RETURN PRICE VALUE 12 MONTH VALUE AS A DIVI-
SALES (1) EARNINGS PER EARNINGS ON PER PER EARNINGS PER % OF DEND
NAME AND PRINCIPAL BUSINESS OF COMPANY (MILLIONS) SHARE (1) GROWTH EQUITY SHARE SHARE PER SHARE SHARE CAPITAL YIELD
______________________________________ ________ _________ ______ ______ ______ ______ _______ _______ _____ _____
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Abbott Laboratories -
Diversified medical care products $ 9,897 $ 2.06 14.27% 39.30% $ 41.750 $ 5.04 20.3 8.3 14% 2.4%
AMBAC Inc. -
Municipal bond insurance company 269 4.32 NA 14.00% 46.875 31.14 10.9 1.5 18% 1.4%
Amgen, Inc. -
Research/development of biological
products 1,869 1.81 74.79% 32.70% 59.375 4.82 32.8 12.3 13% None
Berkshire Hathaway, Inc. -
Insurance, publishing and candy 4,948 623.63 7.76% 4.40% 32100.000 9160.00 51.5 3.5 6% None
Cardinal Health, Inc. -
Wholesale distributor drugs 8,020 2.10 38.81% 17.53% 54.750 12.98 26.1 4.2 29% 0.3%
Cincinnati Financial Corporation -
Insurance holding company 1,513 4.10 11.49% 9.50% 65.250 38.83 15.9 1.7 4% 2.4%
Circuit City Stores, Inc. -
Retailer: video equipment, appliances 6,686 1.85 17.75% 17.70% 27.625 9.29 14.9 3.0 17% 0.3%
Coca Cola Company (The) -
Major soft drink/juice company 17,702 2.29 18.15% 58.40% 74.250 4.02 32.4 18.5 38% 1.4%
Columbia/HCA Healthcare Corporation -
Operates medical/surgical hospitals 17,034 2.74 NA 13.40% 50.750 14.60 18.5 3.5 48% 0.3%
Federal Home Loan Mortgage Corporation -
US Government mortgage lending corp 6,989 5.22 15.92% 23.20% 83.500 28.52 16.0 2.9 95% 1.9%
Federal National Mortgage Association -
Provides residential mortgage funds 18,573 8.35 20.27% 25.30% 124.125 32.28 14.9 3.8 96% 3.4%
Fifth Third Bancorp -
Commercial banking in Cincinnati, OH 1,178 4.21 15.36% 17.90% 73.250 23.55 17.4 3.1 65% 2.2%
Foremost Corp of America -
Mobile home and RV insurance 464 4.25 NM 15.90% 50.750 19.88 11.9 2.6 34% 3.4%
Gillette Company (The) -
Personal care products and pens 6,606 1.78 18.39% 34.60% 52.125 4.28 29.3 12.2 30% 1.6%
Grainger (W.W.), Inc. -
Natl distributor industrial/commercial
products 3,239 3.71 10.08% 18.00% 66.250 21.07 17.9 3.1 6% 1.6%
Heilig-Meyers Company -
Retail furniture stores 1,318 1.07 21.31% 14.30% 18.375 10.20 17.2 1.8 42% 1.3%
Home Depot, Inc. (The) -
Home improvement stores 14,796 1.47 32.77% 16.80% 47.875 9.29 32.6 5.2 2% 0.4%
Hughes Electronics Corporation -
High technology electronics 14,099 2.67 5.44% 12.10% 49.125 12.46 18.6 3.9 6% 2.1%
International Dairy Queen, Inc.-Class A -
Limited menu stores: franchising 365 1.41 9.39% 23.90% 22.750 5.41 16.1 4.2 27% None
Magellan Health Services Inc. -
Operates hospitals 1,152 2.17 NA NM 24.000 3.17 11.1 7.6 86% None
Marshall & Ilsley Corporation -
Commercial banking in WI and AZ 1,179 1.92 14.00% 17.00% 26.000 11.58 13.5 2.2 62% 3.1%
</TABLE>
<PAGE>
PORTFOLIO COMPANY STATISTICS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
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<TABLE>
<CAPTION>
PRICE TO PRICE TO
LATEST LATEST FIVE YEAR MARKET BOOK LATEST BOOK DEBT
12 MONTH 12 MONTH COMPOUNDED RETURN PRICE VALUE 12 MONTH VALUE AS A DIVI-
SALES (1) EARNINGS PER EARNINGS ON PER PER EARNINGS PER % OF DEND
NAME AND PRINCIPAL BUSINESS OF COMPANY (MILLIONS) SHARE (1) GROWTH EQUITY SHARE SHARE PER SHARE SHARE CAPITAL YIELD
______________________________________ ________ _________ ______ ______ ______ ______ _______ _______ _____ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mercury General Corporation -
Automobile insurer in California $ 577 $ 3.21 16.58% 16.00% $ 47.750 $ 18.78 14.9 2.5 5% 2.5%
MGIC Investment Corporation -
Provides private mortgage insurance 502 3.28 39.02% 20.70% 54.250 17.32 16.5 3.1 4% 0.6%
Pfizer Inc -
Health care and consumer products 9,809 2.40 9.29% 33.60% 63.000 8.30 26.2 7.6 12% 2.4%
Protective Life Corporation -
Holding: life, group, accident and
health 848 2.72 26.61% 18.60% 31.250 15.22 11.5 2.1 20% 2.3%
Schering-Plough Corporation -
Pharmaceuticals/consumer products 5,094 2.74 18.19% 58.40% 54.750 4.39 20.0 12.5 8% 2.6%
Stryker Corporation -
Specialty medical devices 853 1.71 29.62% 23.10% 52.500 5.97 30.7 8.8 11% 0.2%
SunAmerica, Inc. -
Life insurance/ financial services 1,067 2.84 33.10% 15.50% 47.500 14.44 16.7 3.3 33% 1.2%
Thermo Electron Corporation -
Industrial products 1,905 1.47 17.11% 10.40% 52.000 12.32 35.4 4.2 42% None
Torchmark Corporation -
Insurance, financial services 1,954 3.89 45.38% 20.00% 45.250 19.37 11.6 2.3 45% 2.6%
Travelers, Inc. -
Diversified financial services 17,943 4.57 21.80% 16.80% 62.875 24.09 13.8 2.6 82% 1.9%
Tyco International LTD. -
Fire protection systems 4,697 1.50 4.44% 13.10% 35.625 10.82 23.8 3.3 29% 0.9%
Unifi, Inc. -
Texturizing polyester yarns 1,583 1.80 18.00% 19.20% 22.125 8.99 12.3 2.5 25% 1.6%
U.S. Healthcare, Inc. -
Health maintenance programs 3,404 2.44 68.15% 43.19% 46.500 6.03 19.1 7.7 0% 3.4%
Valspar Corporation (The) -
Manufacturer: paints & coatings 790 2.15 12.00% 27.00% 44.625 7.75 20.8 5.8 5% 1.2%
Vencor, Inc. -
Acute/long-term care hospitals 605 1.39 157.40% 16.60% 32.500 9.07 23.4 3.6 46% None
Vivra Incorporated -
Dialysis and home health care 344 1.09 26.94% 14.40% 25.125 6.87 23.1 3.7 4% None
Walt Disney Company, (The) -
Amusement parks: films and tv 12,112 2.60 11.63% 21.10% 59.000 10.39 22.7 5.7 20% 0.7%
Watts Industries, Inc. - Class A -
Markets water and steam valves 680 1.57 7.66% 11.50% 23.250 12.67 14.8 1.8 24% 1.1%
Wells Fargo & Company -
Commercial banking in CA 4,939 18.09 6.05% 21.67% 216.000 68.27 11.9 3.2 61% 2.9%
_______ _______ _____ _____ _____ _____
AVERAGE .......... 24.92% 21.71% 20.2x 4.9x 30% 1.4%
_______ _______ _____ _____ _____ _____
_______ _______ _____ _____ _____ _____
</TABLE>
Note - This list contains the top 40 portfolio issues exceeding $35,888,000 in
market value.
(1) Source: Corporate Reports. NA - Not available. NM - Not meaningful.
<PAGE>
AUTOMATIC INVESTMENT PLAN - AN UPDATE
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The Nicholas Family of Funds' AUTOMATIC INVESTMENT PLAN provides a
simple method to dollar cost average into the fund(s) of your
choice.
Dollar cost averaging involves making equal systematic investments
over an extended time period. A fixed dollar investment will
purchase more shares when the market is low and fewer shares when
the market is high. The automatic investment plan is an excellent
way for you to become a disciplined investor.
The following table illustrates what dollar cost averaging can
achieve. Please note that past performance is no guarantee of
future results. Nicholas Company recommends dollar cost averaging
as a practical investment method. It should be consistently
applied for long periods (5-10 years or more) so that investments
are made through several market cycles. The table will be updated
and appear in future financial reports issued by the Nicholas
Family of Funds.
<TABLE>
<CAPTION>
Nicholas Fund
____________________
<S> <C> <C>
$1,000 initial investment on 7-14-69 12-31-85
$100 invested on the last day of each month following the
date of the initial investment (in years) 26.5 10
Total cash invested $ 32,800 $13,000
Total capital gains reinvested $101,586 $ 4,744
Total dividends reinvested $ 55,614 $ 1,966
Total full shares owned 12/31/95 6,838 464
Total market value on 12/31/95 $410,512 $27,865
</TABLE>
The results above assume purchase on the last day of the month for
the respective periods. The Nicholas Automatic Investment Plan
actually invests on the 20th of each month (or on the alternate
date specified by the investor). Total market value includes
reinvestment of all distributions.
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CAN YOU AFFORD NOT TO INVEST IN AN IRA?
The maximum yearly IRA contribution is the lesser of $2,000 or 100% of
your compensation. Every year that you contribute this amount you may also
deduct it from your Federal income taxes, unless you (or your spouse) are an
eligible participant in an employer-sponsored retirement plan and your adjusted
gross income exceeds certain limits as defined by the Internal Revenue Code.
This deduction can lead to substantial savings, especially when you look at the
relationship between higher tax brackets and the net cost of investing. The
table below illustrates a schedule of tax brackets, resulting tax savings, and
the net cost of investing $2,000 in an IRA, assuming full deductibility of your
contributions.
<TABLE>
TABLE I
<CAPTION>
FEDERAL TAX FEDERAL TAX NET COST OF INVESTING
BRACKETS SAVINGS $2,000 IN AN IRA
___________ ___________ ______________________
<C> <C> <C>
15% $300 $1,700
28% 560 1,440
31% 620 1,380
36% 720 1,280
39.6% 792 1,208
</TABLE>
Even if you are an eligible participant in an employer-sponsored
retirement plan, you may still make a non-deductible IRA contribution (subject
to the $2,000/100% of compensation limit). Another tax advantage to investing
in an IRA is that any amounts received from dividends, interest, etc.,
accumulate tax deferred, whether or not your contribution is fully deductible.
Taxes will have to be paid when you receive distributions.
Finally, Table II shows the various amounts accumulated in an IRA under
different annual rates of return, based on a $2,000 annual year end
contribution. These figures are purely hypothetical since investment returns
are rarely constant year to year. Yet, one can get a good idea that investing
in an IRA plan provides a good nest egg for retirement.
<TABLE>
<CAPTION>
TABLE II
Amounts accumulated in an IRA
ANNUAL RATES OF RETURN
____________________________________________________
<S> <C> <C> <C> <C>
After 8% 10% 12% 15%
_____ _______ _______ ________ ________
10 Years $ 28,973 $ 31,874 $ 35,096 $ 40,606
20 Years 91,524 114,550 144,104 204,880
30 Years 226,566 328,980 482,660 869,480
40 Years 518,113 885,180 1,534,180 3,558,000
</TABLE>
<PAGE>
HISTORICAL RECORD (UNAUDITED)
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<TABLE>
<CAPTION>
(Adjusted for Two-for-One Stock Split June 15, 1979)
DOLLAR GROWTH OF
NET DIVIDEND CAPITAL GAIN WEIGHTED AN INITIAL
ASSET VALUE DISTRIBUTIONS DISTRIBUTIONS PRICE/EARNINGS $10,000
PER SHARE PER SHARE PER SHARE RATIO** INVESTMENT***
___________ ___________ ___________ ____________ __________
<S> <C> <C> <C> <C> <C>
July, 14, 1969* $ 6.59 $ - $ - - $ 10,000
March 31, 1986 35.26 0.575 0.610 15.8 times 87,699
March 31, 1987 39.94 0.882 0.187 16.3 102,386
March 31, 1988 32.15 1.840 4.034 14.1 98,557
March 31, 1989 35.27 1.025 0.451 13.2 113,155
March 31, 1990 37.72 0.924 1.054 14.9 127,360
March 31, 1991 42.99 0.790 0.225 16.9 149,179
March 31, 1992 49.68 0.679 0.824 19.4 178,015
March 31, 1993 52.91 0.679 2.042 18.5 200,098
March 31, 1994 51.10 0.8175 1.047 16.7 200,182
March 31, 1995 52.22 0.707 3.317 17.2 221,970
June 30, 1995 53.74 0.220 (a) 1.161 (a) 17.8 234,475
September 30, 1995 58.66 - - 18.9 255,942
December 31, 1995 60.03 0.3450 (b) 2.9335 (b) 19.9 276,429
</TABLE>
<TABLE>
<S> <S>
* Date of Initial Public Offering (a) Paid May 17, 1995 to shareholders of record May 12, 1995.
** Based on latest 12 months accomplished earnings
*** Assuming reinvestment of all distributions (b) Paid December 31, 1995 to shareholders of record December 22, 1995.
</TABLE>
Range in quarter end price/earnings ratios since
December 31, 1974
Highs Low
_____ ____
3/31/92 19.4 3/31/82 8.3
12/31/95 19.9
<PAGE>
Officers and Directors
ALBERT O. NICHOLAS
President and Director
ROBERT H. BOCK
Director
MELVIN L. SCHULTZ
Director
RICHARD SEAMAN
Director
DAVID L. JOHNSON
Executive Vice President
THOMAS J. SAEGER
Executive Vice President and Secretary
DAVID O. NICHOLAS
Senior Vice President
LYNN S. NICHOLAS
Senior Vice President
CANDACE L. LESAK
Vice President
JEFFREY T. MAY
Vice President
CHERYL L. KING
Treasurer
CHRISTINA M. MOURADIAN
Assistant Treasurer
Custodian and Transfer Agent
FIRSTAR TRUST COMPANY
Milwaukee
(414) 276-0535
Counsel
DAVIS & KUELTHAU, S.C.
Milwaukee
Auditors
ARTHUR ANDERSEN LLP
Milwaukee
This report is submitted for the information of shareholders of
the Fund. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective
prospectus.
