{Letterhead}
NICHOLAS FUND, INC.
February 2, 1998
Report to Fellow Shareholders:
This past calendar year was an excellent year for Nicholas Fund. Total
return to shareholders was 37.01% with distributions reinvested. This compares
with 33.35% for the S&P 500 and 22.36% for the Russell 2000, two indexes we
feel most closely reflect the type of stocks owned by Nicholas Fund. Bank,
finance, insurance and health care equities were our best performers. As is our
custom, we are fully invested with 2.9% in cash.
Low inflation and declining interest rates have provided a friendly
environment for common stock investment. Investor confidence is still at high
levels. At this point, the economy, while operating at a high level, seems to
be leveling off. Corporate earnings are starting to show signs of weariness.
Equity valuations are "full" in our view, making us more cautious as the new
year begins. Specifically, on average, stocks are selling at well over 20 times
1998 estimated earnings with yields around 1.6%. These are extremely high
valuation figures. Nicholas Fund has had three wonderful years in a row;
+35.40% in 1995, +19.78% in 1996 and +37.01% in 1997. It doesn't seem
reasonable or logical to expect that prospects for 1998 can match the
"above-trend" results of the last three years. In the long run, stock prices
will not continually outstrip earnings gains.
Long-term performance of the Fund is shown below for time periods ended
December 31, 1997.
<TABLE>
<CAPTION>
Average Annual Total Return*
________________________________________________________
July 14, 1969**
1 year 5 years 10 years 15 years 28.5 years
______ _______ ________ ________ __________
<S> <C> <C> <C> <C> <C>
Nicholas Fund (Distributions Reinvested) +37.01% +17.98% +17.73% +16.62% +14.34%
Standard & Poor's 500 (Dividends Reinvested) +33.35% +20.25% +18.04% +17.51% +12.57%
Russell 2000 (Dividends Reinvested) +22.36% +16.41% +15.76% +13.33% N/A
Consumer Price Index +1.70% +2.60% +3.42% +3.42% +5.36%
Ending Value of $10,000 invested in
Nicholas Fund (Distributions Reinvested) $13,701 $22,862 $51,135 $100,307 $453,653
* 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.
** Date of initial public offering. Starting time period for Standard
& Poor's 500 and the Consumer Price Index was June 30, 1969.
</TABLE>
Management hopes to build on the solid foundation of the past few years
via intense research, competent stock selection, larger positions in favored
stocks and patience. Please keep in mind that Nicholas Company is consistantly
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 /S/ David O. Nicholas
---------------------- ---------------------
Albert O. Nicholas David O. Nicholas
Co-Portfolio Manager Co-Portfolio Manager
700 North Water Street - Milwaukee, Wisconsin - 53202-4276
800-227-5987 - 414-272-6133
Nicholas Fund, Inc.
December 31, 1997
NET ASSETS: $5,257.1 Million
NUMBER OF HOLDINGS: 83
INCEPTION DATE: 7/14/69
TICKER SYMBOL: NICSX
P/E: 27.0 (latest 12 months)
MEDIAN MARKET
CAPITALIZATION ($Mil): 7,655
TURNOVER RATE: 16.65%
EXPENSE RATIO: 0.72%
Top Ten Holdings
December 31, 1997
Percentage
Name of Net Assets
_____ _____________
Mercury General
Corporation 5.30%
Fannie Mae 4.88%
Freddie Mac 4.80%
Marshall & Ilsley
Corporation 3.95%
Travelers Group, Inc. 3.33%
SunAmerica, Inc. 2.68%
Berkshire Hathaway,
Inc. 2.28%
Fifth Third Bancorp 2.25%
Wallace Computer
Services Inc. 2.10%
General Motors
Corporation -
Class H 2.06%
______
33.63%
______
______
Equity Sector Weightings
December 31, 1997
Staples 2.0%
Durables 2.6%
Technology 4.7%
Services 8.7%
Retail 11.4%
Cyclicals 13.3%
Health 15.8%
Financials 41.5%
Historical Record (Unaudited)
<TABLE>
<CAPTION>
Dollar
Net Weighted Growth of an
Asset Value Distributions Price/Earnings Initial $10,000
Per Share Per Share Ratio** Investment***
__________ ___________ ____________ _____________
<S> <C> <C> <C> <C>
July 14, 1969* $ 6.59 $ 10,000
March 31, 1987 39.94 $1.0690 16.3 102,386
March 31, 1988 32.15 5.8740 14.1 98,557
March 31, 1989 35.27 1.4760 13.2 113,155
March 31, 1990 37.72 1.9780 14.9 127,360
March 31, 1991 42.99 1.0150 16.9 149,179
March 31, 1992 49.68 1.5030 19.4 178,015
March 31, 1993 52.91 2.7210 18.5 200,098
March 31, 1994 51.10 1.8645 16.7 200,182
March 31, 1995 52.22 4.0240 17.2 221,970
March 31, 1996 63.81 4.6595 21.0 293,836
March 31, 1997 67.11 5.7345 21.7 336,973
December 31, 1997 83.80 6.1618 (a) 27.0 453,653
* Date of Initial Public Offering (a) Paid May 21, 1997 to
** Based on latest 12 months accomplished earnings shareholders of
*** Assuming reinvestment of all distributions record May 15, 1997
Range in quarter end price/earnings and December 31, 1997
ratios since December 31, 1974 to shareholders of record
December 26, 1997.
High Low
______________ ____________
12/31/97 27.0 3/31/82 8.3
</TABLE>
