May 29, 1997
Report to Shareholders:
Nicholas Fund, Inc. completed its fiscal year ended March 31, 1997 with a
+14.68% total return with distributions reinvested. In comparison, the
Standard & Poor's 500 increased 19.83% and the Russell 2000 was up 5.11% for
the same period. The Fund produced a +1.77% total return for the quarter ended
March 31, 1997. This result compared to +2.68% and -5.17% for the Standard
& Poor's 500 and Russell 2000, respectively. The Fund's cash position was 2.60%
at fiscal year-end.
As our investment strategy stresses patience, we would like to emphasize
long-term results. Shown below are results for various time periods ended
March 31, 1997.
<TABLE>
<CAPTION)
Average Annual Total Return*
----------------------------- July 14, 1969**
5 years 10 years 15 years 27.7 years
Nicholas Fund, Inc. ------- -------- -------- ----------
<S> <C> <C> <C>
(Distributions Reinvested)..... +13.61% +12.65% +17.15% +13.53%
Russell 2000 Index
(Income Reinvested)............... +12.78% + 9.40% +13.83% N/A
Standard & Poor's 500 Index
(Income Reinvested) ........... +16.42% +13.38% +17.60% +11.88%
Consumer Price Index ............. + 2.81% + 3.60% + 3.55% + 5.46%
Ending value of $10,000
invested in Nicholas Fund
(Distributions Reinvested) .... $18,930 $32,912 $107,445 $336,973
</TABLE>
*Total returns are historical and include change in share price and
reinvestment of dividends 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.
**Date of initial public offering. Starting time period for
Standard & Poor's 500 and the Consumer Price Index is June 30, 1969.
Shareholders should be aware of the nature of today's stock market. Large
market capitalization stocks have performed substantially better than small
market capitalization stocks which is evident by examining the recent results
of Standard & Poors 500 Index versus the Russell 2000 Index. A few large
company equities are greatly responsible for the gains that we see
in the major market averages. Further, any adverse development in a company's
fundamentals can result in a disastrous, inordinate decline in its share price.
There have been many of these situations in recent months which indicates that
the market has become less bullish in its overall posture. We are attempting to
take advantage of these conditions in the marketplace in our stock selection
process.
Management would like to thank all shareholders for the confidence they
have placed in the long-term investment philosophy of the Fund. We appreciate
your patience and support.
Sincerely,
/S/ Albert O. Nicholas
----------------------
Albert O. Nicholas
President
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
- --------------------------------------------------------------------
<TABLE>
Year ended March 31,
--------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $63.81 $52.22 $51.10 $52.91 $49.68 $42.99 $37.72 $35.27 $32.15 $39.94
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .40 .57 .69 .74 .75 .70 .80 .96 .97 1.07
Net gains or (losses) on securities
(realized and unrealized) 8.64 15.68 4.46 (.68) 5.20 7.49 5.48 3.46 3.63 (2.99)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 9.04 16.25 5.15 .06 5.95 8.19 6.28 4.42 4.60 (1.92)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.42) (.57) (.71) (.82) (.68) (.68) (.79) (.92) (1.03) (1.84)
Distributions (from capital gains) (5.32) (4.09) (3.32) (1.05) (2.04) (.82) (.22) (1.05) (.45) (4.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (5.74) (4.66) (4.03) (1.87) (2.72) (1.50) (1.01) (1.97) (1.48) (5.87)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $67.11 $63.81 $52.22 $51.10 $52.91 $49.68 $42.99 $37.72 $35.27 $32.15
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN 14.68% 32.38% 10.88% 0.04% 12.41% 19.33% 17.13% 12.55% 14.81% (3.74%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions) $3.989.5 $3,655.3 $3,004.4 $2,941.2 $3,013.4 $2,234.1 $1,642.8 $1,389.5 $1,172.3 $1,117.8
Ratio of expenses to average net assets .72% .74% .77% .78% .76% .78% .81% .82% .86% .86%
Ratio of net investment income
to average net assets .61% .87% 1.34% 1.40% 1.53% 1.60% 2.17% 2.56% 2.84% 3.04%
Portfolio turnover rate 15.18% 25.70% 29.82% 33.39% 10.20% 14.58% 21.85% 21.31% 24.03% 31.63%
Average commission rate paid by the
Fund on portfolio investment
transactions* $0.0473 $0.0492 -- -- -- -- -- -- -- --
*Disclosure of this rate is required by the Securities and
Exchange Commission on a prospective basis beginning with the Fund's
1996 fiscal year end.
The accompanying notes to financial statements are an integral
part of these statements.
</TABLE>
TOP TEN PORTFOLIO HOLDINGS
March 31, 1997 (Unaudited)
- ------------------------------------------------------------------------
PERCENTAGE OF NET
NAME ASSETS
- ---------------- -----------------
Federal Home Loan Mortgage Corporation................... 4.11%
Fannie Mae............................................... 4.07%
Mercury General Corporation.............................. 3.86%
General Motors Corporation -- Class H.................... 3.13%
Tyco International Ltd................................... 2.64%
Travelers Group, Inc. ................................... 2.60%
Wells Fargo & Company.................................... 2.49%
Berkshire Hathaway, Inc. ................................ 2.36%
Circuit City Stores, Inc. ............................... 2.34%
Fifth Third Bancorp...................................... 2.13%
Total of top ten holdings as a percent of net assets..... 29.73%
SCHEDULE OF INVESTMENTS
March 31, 1997
- ------------------------------------------------------------------------
Shares or Quoted
Principal Market
Amount Value
- ---------- ------------
(Note 1 (a))
COMMON STOCKS - 96.64%
AGRICULTURE - 1.05%
1,100,000 Monsanto Company $ 42,075,000
--------------
BANKS AND FINANCE - 21.31%
272,000 Edwards (A.G.), Inc. 8,364,000
4,500,000 Fannie Mae 162,562,500
6,021,200 Federal Home Loan Mortgage Corporation 164,077,700
1,097,250 Fifth Third Bancorp 85,036,875
336,900 First Bank System, Inc. 24,593,700
891,400 Firstar Corporation 24,513,500
2,084,000 Marshall & Ilsley Corporation 76,066,000
1,000,000 Norwest Corporation 46,250,000
645,000 Security Capital Corporation (WI) + 55,470,000
2,168,000 Travelers Group Inc. 103,793,000
350,000 Wells Fargo & Company 99,443,750
--------------
850,171,025
--------------
BUSINESS SERVICES - 3.48%
686,000 Cintas Corporation 36,186,500
560,000 Electronic Data Systems Corp. 22,610,000
1,075,000 Micro Warehouse, Inc. * 14,109,375
1,985,200 Wallace Computer Services, Inc. 65,759,750
--------------
138,665,625
--------------
CONSUMER PRODUCTS & SERVICES - 9.68%
200,000 American Express Company 11,975,000
1,674,687 Clayton Homes, Inc. 21,352,259
1,668,300 Cooper Tire & Rubber Company 30,863,550
789,200 CSS Industries, Inc. * + 23,577,350
500,000 Eastman Kodak Company 37,937,500
750,000 Gillette Company (The) 54,468,750
150,000 Kimberly-Clark Corporation 14,906,250
755,000 Leggett & Platt, Incorporated 24,537,500
550,000 Nike, Inc. - Class B 34,100,000
700,000 Pittston Brink's Group 18,025,000
1,692,600 Valspar Corporation (The) 48,662,250
898,400 Walt Disney Company (The) 65,583,200
--------------
385,988,609
--------------
FOOD AND BEVERAGE - 4.16%
1,000,000 Coca-Cola Company (The) 55,875,000
1,683,000 International Dairy Queen, Inc.-Class A * + 37,026,000
720,000 International Dairy Queen, Inc.-Class B * + 15,750,000
1,210,500 McDonald's Corporation 57,196,125
--------------
165,847,125
--------------
HEALTH CARE PRODUCTS - 8.21%
1,090,000 Abbott Laboratories 61,176,250
468,000 American Home Products Corporation 28,080,000
820,000 Amgen Inc. * 45,817,500
1,411,800 Elan Corporation PLC * 48,177,675
877,800 Forest Laboratories, Inc. * 33,027,225
200,000 Medtronic, Inc. 12,450,000
700,000 Pfizer Inc 58,887,500
1,600,000 Stryker Corporation 39,800,000
--------------
327,416,150
--------------
HEALTH CARE SERVICES - 10.11%
2,450,000 Apria Healthcare Group, Inc. * 44,406,250
853,150 Cardinal Health, Inc. 46,390,031
422,900 Health Care and Retirement Corporation * 12,158,375
1,193,750 Health Management Associates, Inc. -Class A * 28,351,563
2,570,000 Magellan Health Services Inc. * + 63,286,250
1,940,100 MedPartners/Mullikin, Inc. * 41,227,125
100,000 Patterson Dental Company * 3,400,000
1,833,000 Quorum Health Group, Inc. * 56,593,875
1,802,905 Vencor,Inc. * 68,285,027
1,450,000 VIVRA Incorporated * 39,150,000
--------------
403,248,496
--------------
INDUSTRIAL PRODUCTS AND SERVICES - 5.71%
700,000 Airgas, Inc. * 11,812,500
403,000 Lockheed Martin Corporation 33,852,000
900,000 Marshall Industries * + 28,350,000
1,063,825 Thermo Electron Corporation * 32,845,597
1,915,000 Tyco International Ltd. 105,325,000
850,000 Wausau Paper Mills Company 15,566,050
--------------
227,751,147
--------------
INSURANCE - 9.80%
888,777 Foremost Corporation of America + 51,549,066
2,522,800 Mercury General Corporation + 153,890,800
794,800 Mutual Risk Management Ltd. 28,811,500
255,000 Progressive Corporation (The) 16,288,125
1,368,500 Protective Life Corporation 57,477,000
2,200,000 SunAmerica, Inc. 82,775,000
--------------
390,791,491
--------------
INVESTMENT MANAGEMENT - 0.79%
619,950 Franklin Resources, Inc. 31,617,450
--------------
MEDIA, COMMUNICATIONS AND ENTERTAINMENT - 4.02%
2,300,000 General Motors Corporation - Class H 124,775,000
1,257,100 Loral Space & Communications Ltd. * 17,756,538
415,466 Pulitzer Publishing Company 17,968,904
--------------
160,500,442
--------------
REAL ESTATE - 0.55%
100,000 Crescent Real Estate Equities, Inc. 2,675,000
519,800 National Health Investors, Inc. 19,297,575
--------------
21,972,575
--------------
RETAIL TRADE - 9.23%
1,700,000 AutoZone, Inc. * 38,250,000
2,800,000 Circuit City Stores, Inc. - Circuit City Group 93,450,000
206,500 Circuit City Stores, Inc. - CarMax Group * 3,097,500
1,755,000 Consolidated Stores Corporation * 61,863,750
3,150,000 Heilig-Meyers Company + 50,006,250
800,000 Home Depot, Inc. (The) 42,800,000
1,262,000 Kohl's Corporation * 53,477,250
600,000 Walgreen Co. 25,125,000
--------------
368,069,750
--------------
TECHNOLOGY - 4.96%
750,000 Hewlett-Packard Company 39,937,500
400,000 Intel Corporation 55,650,000
900,000 Motorola, Inc. 54,337,500
650,000 Texas Instruments Incorporated 48,668,750
--------------
198,593,750
--------------
TRANSPORTATION - 0.60%
1,259,589 Heartland Express, Inc. * 23,932,191
--------------
MISCELLANEOUS - 2.98%
2,600 Berkshire Hathaway Inc.* 94,120,000
900,000 Leucadia National Corporation 24,750,000
--------------
118,870,000
--------------
TOTAL COMMON STOCKS
(cost $2,148,539,078) 3,855,510,826
--------------
CONVERTIBLE BONDS - 0.76%
10,290,000 National Healthcare L.P.
6.00%, due July 1, 2000 30,394,088
--------------
(cost $19,756,800)
SHORT-TERM INVESTMENTS - 2.62%
Commercial Paper - 2.39%
$ 3,941,000 Lockheed Martin Corporation
5.40%, due April 2, 1997 3,940,409
3,000,000 North American Mortgage Company
5.44%, due April 3, 1997 2,999,093
7,000,000 A.O. Smith Corporation
5.50%, due April 4, 1997 6,996,792
4,000,000 Mosinee Paper Corporation
5.50%, due April 7, 1997 3,996,333
7,500,000 Houston Industries Incorporated
5.50%, due April 8, 1997 7,491,979
6,585,000 Fiserv, Inc.
5.50%, due April 10, 1997 6,575,946
10,000,000 Tyson Foods, Inc.
5.60%, due April 11, 1997 9,984,445
5,490,000 Fiserv, Inc.
5.50%, due April 14, 1997 5,479,096
10,000,000 American Bankers Insurance Group, Inc.
5.45%, due April 15, 1997 9,978,806
3,000,000 Fiserv, Inc.
5.50%, due April 16, 1997 2,993,125
2,300,000 Fiserv, Inc.
5.75%, due April 16, 1997 2,294,490
4,000,000 Cox Communications, Inc.
5.50%, due April 17, 1997 3,990,222
6,500,000 Hughes Electronics Corporation
5.57%, due April 21, 1997 6,479,886
5,000,000 American Bankers Insurance Group, Inc.
5.45%, due April 22, 1997 4,984,104
7,000,000 Kerr-McGee Credit Corporation
5.67%, due April 23, 1997 6,975,745
5,000,000 Cox Enterprises, Inc.
5.57%, due April 24, 1997 4,982,207
5,000,000 Manpower, Inc.
5.75%, due April 25, 1997 4,980,833
-------------
95,123,511
-------------
Variable Rate Demand Notes - 0.23%
6,054,884 Johnson Controls, Inc.
5.31%, due April 1, 1997 6,054,884
1,800,335 Sara Lee Corporation
5.27%, due April 1, 1997 1,800,335
1,514,880 Warner-Lambert Company
5.26%, due April 1, 1997 1,514,880
-------------
9,370,099
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $104,169,698) 104,493,610
-------------
TOTAL INVESTMENTS 3,990,398,524
-------------
LIABILITIES, NET OF CASH
AND RECEIVABLES - (0.02%) (909,824)
-------------
TOTAL NET ASSETS (Basis of
percentages disclosed above) $3,989,488,700
--------------
--------------
+This company is affiliated with the Fund; that is, the Fund holds 5% or
more of its outstanding voting securities. Such companies are defined
in Section 2(a)(3), of the Investment Company Act of 1940. (Note 5)
*Nondividend paying security.
The accompanying notes to financial statements are an integral
part of this schedule.
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
- -------------------------------------------------------------------------
<TABLE>
ASSETS:
<S>
Investments in securities at market value (Note 1 (a)) -- <C>
Nonaffiliated issuers (cost $2,033,587,674)-see accompanying schedule of investments $3,511,492,808
Affiliated issuers (cost $238,877,902)-see accompanying schedule of investments (Note 5) 478,905,716
--------------
Total investments................................................................ 3,990,398,524
--------------
Cash................................................................................... 200,385
Dividends and interest receivables..................................................... 2,199,095
--------------
Total assets.................................................................. 3,992,798,004
--------------
LIABILITIES:
Payables --
Investment securities purchased..................................................... 573,750
Management fee (Note 2)............................................................. 2,176,779
Other payables and accrued expenses................................................. 558,775
--------------
Total liabilities............................................................. 3,309,304
--------------
Total net assets ............................................................. $3,989,488,700
--------------
--------------
NET ASSETS CONSIST OF:
Fund shares issued and outstanding..................................................... $2,203,817,031
Net unrealized appreciation on investments (Note 3) ................................... 1,717,609,036
Accumulated undistributed net realized gains on investments............................ 63,034,235
Accumulated undistributed net investment income........................................ 5,028,397
--------------
$3,989,488,700
--------------
--------------
NET ASSET VALUE PER SHARE ($.50 par value, 200,000,000 shares authorized)
offering price and redemption price ($3,989,488,700 ./. 59,443,426 shares
outstanding)........................................................................... $67.11
------
------
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
<TABLE>
STATEMENT OF OPERATIONS
For the Year Ended March 31, 1997
- ---------------------------------------------------------------------
<S> <C>
INCOME:
Dividends (Note 1 (d)) --
Nonaffiliated issuers.................................................... $ 35,342,490
Affiliated issuers (Note 5) ............................................ 4,811,328
Interest................................................................... 10,416,774
Other...................................................................... 691,785
-------------
51,262,377
-------------
EXPENSES:
Management fee (Note 2) ................................................... 25,060,663
Transfer agent fees........................................................ 1,982,216
Postage and mailing fees................................................... 257,574
Custodian fees............................................................. 204,114
Printing................................................................... 118,175
Registration fees.......................................................... 114,399
Telephone.................................................................. 49,876
Legal fees................................................................. 38,280
Audit and tax consulting fees.............................................. 22,000
Directors' fees............................................................ 15,186
Insurance ................................................................. 15,056
Other operating expenses................................................... 3,424
-------------
27,880,963
-------------
Net investment income.................................................... 23,381,414
-------------
NET REALIZED GAINS ON INVESTMENTS (Note 1 (b)):
Nonaffiliated issuers...................................................... 220,089,513
Affiliated issuers (Note 5)................................................ 1,250,023
-------------
221,339,536
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS ........................ 282,923,851
-------------
Net gains on investments................................................... 504,263,387
-------------
Net increase in net assets resulting from operations....................... $527,644,801
-------------
-------------
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended March 31, 1997 and 1996
- ---------------------------------------------------------------------
<TABLE>
1997 1996
------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................. $ 23,381,414 $ 28,786,310
Net realized gains on investments (Note 1 (b)).................... 221,339,536 310,441,936
Net increase in unrealized appreciation on investments............ 282,923,851 585,991,652
------------- --------------
Net increase in net assets resulting from operations..... 527,644,801 925,219,898
------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 1 (d)):
Distributions from net investment income
($0.4179 and $0.5650 per share, respectively).................... (24,092,988) (31,690,147)
Distributions from net realized gains on investment transactions
($5.3166 and $4.0945 per share, respectively)................... (305,905,425) (228,973,671)
-------------- --------------
Total distributions...................................... (329,998,413) (260,663,818)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (3,206,018 and 3,493,644
shares, respectively)........................................... 193,274,295 204,221,865
Net asset value of shares issued in distributions from net
investment income and net realized gains (4,795,847 and
4,323,439 shares, respectively)................................. 310,941,521 245,904,717
Cost of shares redeemed (5,842,762 and 8,069,427 shares,
respectively)................................................... (367,673,135) (463,785,946)
------------- --------------
Increase (decrease) in net assets derived from capital
share transactions .................................... 136,542,681 (13,659,364)
------------- --------------
Total increase in net assets............................. 334,189,069 650,896,716
------------- --------------
NET ASSETS, at the beginning of the year (including undistributed net
investment income of $5,739,971 and $8,643,808, respectively)....... 3,655,299,631 3,004,402,915
-------------- --------------
NET ASSETS, at the end of the year (including undistributed net
investment income of $5,028,397 and $5,739,971, respectively)....... $3,989,488,700 $3,655,299,631
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
- --------------------------------------------------------------------
(1) Summary of Significant Accounting Policies --
Nicholas Fund, Inc. (the "Fund") is an open-end, diversified management
company registered under the Investment Company Act of 1940, as amended.
The primary objective of the Fund is capital appreciation in which income
is a secondary consideration. To achieve its objective, the Fund invests
in a diversified list of common stocks having growth potential.
The following is a summary of the significant accounting policies of the
Fund.
(a) Each security, excluding short-term investments, is valued at the
last sale price reported by the principal security exchange on which
the issue is traded, or if no sale is reported, the latest bid
price. Variable rate demand notes are valued at cost which
approximates market value. U.S. Treasury Bills and commercial paper
are stated at market value with the resultant difference between
market value and original purchase price being recorded as interest
income. Investment transactions are recorded no later than the first
business day after the trade date. Cost amounts, as reported on the
statement of assets and liabilities, are the same for Federal income
tax purposes.
(b) Net realized gains and losses on common stocks and bonds were
computed on the basis of specific certificates.
(c) Provision has not been made for Federal income taxes or excise taxes
since the Fund has elected to be taxed as a "regulated investment
company" and intends to distribute substantially all taxable income
to its shareholders and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies.
(d) Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Non-cash dividends, if any, are recorded at
fair market value on date of distribution.
(e) 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
revenues and expenses during the reporting period. Actual results
could differ from the estimates.
(2) Investment Adviser and Management Agreement --
The Fund has an agreement with Nicholas Company, Inc. (with whom certain
officers and directors of the Fund are affiliated) to serve as investment
adviser and manager. Under the terms of the agreement, a monthly fee is
paid to the investment adviser based on 1/16th of 1% (.75 of 1% on an
annual basis) of the average net asset value up to and including $50
million and 2/37th of 1% (.65 of 1% on an annual basis) of the average
net asset value in excess of $50 million. Also, the investment adviser
may be reimbursed for clerical and administrative services rendered by
its personnel. This advisory agreement is subject to an annual review
by the Directors of the Fund.
(3) Net Unrealized Appreciation --
Aggregate gross unrealized appreciation (depreciation) as of March 31,
1997, based on investment cost for Federal tax purposes is as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation on investments.................... $1,759,198,297
Aggregate gross unrealized depreciation on investments.................... (41,589,261)
Net unrealized appreciation ......................................... $1,717,609,036
</TABLE>
(4) Investment Transactions --
For the year ended March 31, 1997, the cost of purchases and the proceeds
from sales of investment securities, other than short-term obligations,
aggregated $557,371,878 and $731,000,023, respectively.
NOTES TO FINANCIAL STATEMENTS (Continued)
March 31, 1997
- -------------------------------------------------------------------------
(5) Transactions with Affiliates --
Following is an analysis of fiscal 1997 transactions with "affiliated
companies" as defined by the Investment Company Act of 1940:
<TABLE>
<CAPTION>
Amount of
Capital
Amount of Gain (Loss)
Dividends Realized
Share Activity Credited on Sale
-------------------------------------------- to Income of Shares
Balance Balance in Fiscal in Fiscal
Security Name 3/31/96 Purchases Sales 3/31/97 1997 1997
------------- -------- --------- ----- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CSS Industries, Inc. 601,700 187,500 -- 789,200 $ -- $ --
Foremost Corporation of America 888,777 -- -- 888,777 959,879 --
Heilig-Meyers Company 3,000,000 150,000 -- 3,150,000 861,000 --
International Dairy Queen, Inc.
Class A 1,683,000 -- -- 1,683,000 -- --
Class B 720,000 -- -- 720,000 -- --
Magellan Health Services, Inc. 2,155,900 414,100 -- 2,570,000 -- --
Marshall Industries 550,000 350,000 -- 900,000 -- --
Mercury General Corporation 2,430,000 92,800 -- 2,522,800 1,337,084 --
Monro Muffler Brake, Inc. (a)(b) 483,367 -- 483,367 -- -- 525,524
Protective Life Corporation (a) 1,518,500 -- 150,000 1,368,500 1,066,320 4,494,609
Security Capital Corporation 645,000 -- -- 645,000 532,125 --
Stant Corporation (a) 1,373,000 -- 1,373,000 -- 54,920 (3,770,110)
$4,811,328 $ 1,250,023
---------- -----------
---------- -----------
(a) As of March 31, 1997, the Fund is no longer affiliated with this company.
(b) The share activity has been adjusted to reflect a stock split/dividend.
</TABLE>
HISTORICAL RECORD (Unaudited)
<TABLE>
(Adjusted for Two-for-One Stock Split June 15, 1979)
Net Investment
Net Income Capital Gain Dollar Weighted Growth of An
Asset Value Distributions Distributions Price/Earnings Initial $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, 1985............... 29.24 0.6420 1.5760 13.2 times 69,858
March 31, 1986............... 35.26 0.5750 0.6100 15.8 87,699
March 31, 1987............... 39.94 0.8820 0.1870 16.3 102,386
March 31, 1988............... 32.15 1.8400 4.0340 14.1 98,557
March 31, 1989............... 35.27 1.0250 0.4510 13.2 113,155
March 31, 1990............... 37.72 0.9240 1.0540 14.9 127,360
March 31, 1991............... 42.99 0.7900 0.2250 16.9 149,179
March 31, 1992............... 49.68 0.6790 0.8240 19.4 178,015
March 31, 1993............... 52.91 0.6790 2.0420 18.5 200,098
March 31, 1994............... 51.10 0.8175 1.0470 16.7 200,182
March 31, 1995............... 52.22 0.7070 3.3170 17.2 221,970
March 31, 1996............... 63.81 0.5650 4.0945 21.0 293,836
March 31, 1997............... 67.11 0.4179(a) 5.3166(a) 21.7 336,973
*Date of Initial Public Offering (a) Paid $ 0.14590 in net investment income and $ 2.5930
**Based on latest 12 months accomplished earnings in capital gains on May 22, 1996 to shareholders
***Assuming reinvestment of all distributions of record May 16, 1996.
Range in quarter end price/earnings ratios since (b) Paid $ 0.2589 in net investment income and $ 2.7236
December 31, 1974 in capital gains on December 31, 1996 to shareholders
Highs Low of record December 26, 1996.
----- ---
12/31/96 22.3 3/31/82 8.3
</TABLE>
REPORT OF INDEPENDANT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------------------
To the Shareholders and Board of Directors of Nicholas Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities of NICHOLAS FUND, INC. (a Maryland corporation),
including the schedule of investments, as of March 31, 1997, and the
related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights 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 financial highlights 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 March
31, 1997, by correspondence with the custodian and brokers. As to
securities purchased but not received, we requested confirmation from
brokers and, when replies were not received, we carried out other
alternative auditing procedures. 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 financial highlights
referred to above present fairly, in all material respects, the
financial position of Nicholas Fund, Inc. as of March 31, 1997, 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 the periods presented in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 25, 1997.
AUTOMATIC INVESTMENT PLAN - AN UPDATE (UNAUDITED)
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.
Nicholas Fund
____________________
$1,000 initial investment on 7-14-69 3-31-87
$100 invested on the last day of each month
following the date of the initial
investment (in years) 27.7 10
Total cash invested $ 34,300 $13,000
Total capital gains reinvested $137,764 $ 5,628
Total dividends reinvested $ 59,608 $ 1,602
Total full shares owned 3/31/97 7,481 434
Total market value on 3/31/97 $502,051 $29,098
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.
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
JEFFREY T. MAY
Senior Vice President & Treasurer
CANDACE L. LESAK
Vice President
TRACY C. EBERLEIN
Assistant Vice President
CHRISTINA M. MOURADIAN
Assistant Treasurer
Investment Advisor
NICHOLAS COMPANY, INC.
Milwaukee
414-272-6133 or 800-227-5987
Custodian and Transfer Agent
FIRSTAR TRUST COMPANY
Milwaukee
414-276-0535 or 800-544-6547
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.
ANNUAL REPORT
NICHOLAS FUND, INC.
700 North
Water Street
Milwaukee,
Wisconsin 53202
March 31, 1996
