Nicholas Fund
May 28, 1999
Report to Shareholders:
The story is the same whether you use our March 31,
1999 fiscal year performance or the 1999 first calendar
quarter numbers: Nicholas Fund results rest between the
performance of the Standard &Poor's 500 and the Russell
2000. For instance, in the first calendar quarter of 1999,
Nicholas Fund's total return was (0.72)%. In comparison,
the Standard & Poor's 500, a large-company index, increased
4.98%, and the Russell 2000, a small-company index, declined
5.42%.
Returns for Nicholas Fund and selected indices are
provided in the chart below for the periods ended March 31,
1999.
<TABLE>
<CAPTION>
Average Annual Total Return*
----------------------------
July 14, 1969**
1 year 5 years 10 years 15 Years 29.7 years
------ ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Nicholas Fund
(Distributions Reinvested) 0.13% 20.54% 16.24% 16.26% 14.14%
Standard & Poor's 500 Index
(Dividends Reinvested) 18.47% 26.23% 18.96% 18.47% 13.15%
Russell 2000 Index
(Dividends Reinvested) (16.26)% 11.22% 11.46% 11.32% N/A
Consumer Price Index 1.79% 2.31% 3.04% 3.20% 5.19%
Ending value of $10,000
invested in Nicholas Fund
(Distributions Reinvested) $10,013 $25,449 $45,022 $95,832 $509,446
</TABLE>
While we have no prescience regarding tomorrow's stock
trends, management has detected a noticeable change in
relative stock movements. Small-company stocks have begun
to outperform the bigger names in recent weeks. There are
cogent reasons to believe this scenario might last, the most
important being that smaller companies are "cheaper" by most
standards of valuation. This development would be a welcome
harbinger of better investment results for Nicholas Fund
shareholders in the period ahead.
In closing, Nicholas Company is pleased to announce
that Nicholas Fund has been named to "The Money 100" for
1999 by Money magazine in its June 1999 issue. This is the
second annual listing compiled by Money of its top 100
funds.
Again, we want to thank shareholders for your
commitment and support. Our conviction is that patience is
the cornerstone of investment success.
Sincerely,
/S/ Albert O. Nicholas
-------------------
Albert O. Nicholas
Co-Portfolio Manager
/S/ David O. Nicholas
-------------------
David O. Nicholas
Co-Portfolio Manager
*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.
**Date of initial public offering. Starting time period for
Standard & Poor's 500 and the Consumer Price Index was June 30, 1969.
Financial Highlights
(For a share outstanding throughout each period)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $93.98 $67.11 $63.81 $52.22 $51.10 $52.91 $49.68 $42.99 $37.72 $35.27
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .51 .36 .40 .57 .69 .74 .75 .70 .80 .96
Net gains (losses) on securities
(realized and unrealized) (.43) 32.67 8.64 15.68 4.46 (.68) 5.20 7.49 5.48 3.46
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations .08 33.03 9.04 16.25 5.15 .06 5.95 8.19 6.28 4.42
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.59) (.36) (.42) (.57) (.71) (.82) (.68) (.68) (.79) (.92)
Distributions (from capital gains) (8.27) (5.80) (5.32) (4.09) (3.32) (1.05) (2.04) (.82) (.22) (1.05)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (8.86) (6.16) (5.74) (4.66) (4.03) (1.87) (2.72) (1.50) (1.01) (1.97)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $85.20 $93.98 $67.11 $63.81 $52.22 $51.10 $52.91 $49.68 $42.99 $37.72
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN .13% 50.98% 14.68% 32.38% 10.88% 0.04% 12.41% 19.33% 17.13% 12.55%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $5,619.4 $5,907.2 $3,989.5 $3,655.3 $3,004.4 $2,941.2 $3,013.4 $2,234.1 $1,642.8 $1,389.5
Ratio of expenses to average net assets .71% .71% .72% .74% .77% .78% .76% .78% .81% .82%
Ratio of net investment income
to average net assets .58% .44% .61% .87% 1.34% 1.40% 1.53% 1.60% 2.17% 2.56%
Portfolio turnover rate 25.04% 17.01% 15.18% 25.70% 29.82% 33.39% 10.20% 14.58% 21.85% 21.31%
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
Top Ten Portfolio Holdings
March 31, 1999 (Unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage
Name of Net Assets
---- -------------
<S> <C>
Berkshire Hathaway Inc. - Class A........................ 5.03%
Freddie Mac.............................................. 4.24%
Fannie Mae............................................... 4.19%
American International Group, Inc........................ 3.76%
Citigroup Inc............................................ 3.70%
Marshall & Ilsley Corporation............................ 3.30%
General Motors Corporation - Class H..................... 3.13%
Mercury General Corporation.............................. 2.75%
Fifth Third Bancorp...................................... 2.54%
American Home Products Corporation....................... 2.31%
Total of top ten portfolio holdings...................... 34.95%
------
------
</TABLE>
Schedule of Investments
March 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares or Quoted
Principal Market
Amount Value
- ---------- ------
(Note 1 (a))
<S> <C> <C>
COMMON STOCKS - 93.70%
Agriculture - 1.47%
1,800,000 Monsanto Company $ 82,687,500
----------------
Banks and Finance - 21.95%
3,252,000 Citigroup Inc. 207,721,500
408,000 Edwards (A.G.), Inc. 13,336,500
3,400,000 Fannie Mae 235,450,000
2,168,812 Fifth Third Bancorp 143,006,041
981,464 Firstar Corporation 87,841,028
4,171,200 Freddie Mac 238,279,800
3,341,363 Marshall & Ilsley Corporation 185,236,811
800,000 Merrill Lynch & Co., Inc. 70,750,000
1,110,700 U.S. Bancorp 37,833,219
400,000 Wells Fargo & Company 14,025,000
----------------
1,233,479,899
----------------
Business Services - 2.76%
1,372,000 Cintas Corporation 89,694,500
1,730,000 Convergys Corporation* 29,626,250
2,396,000 Interim Services, Inc. * + 35,940,000
----------------
155,260,750
----------------
Consumer Products and Services - 3.60%
500,000 American Express Company 58,750,000
294,500 Harley-Davidson, Inc. 16,933,750
1,510,000 Leggett & Platt, Incorporated 30,200,000
2,121,800 ServiceMaster Company (The) 43,099,063
1,692,600 Valspar Corporation (The) 53,422,687
----------------
202,405,500
----------------
Energy - 1.99%
400,000 Atlantic Richfield Company 29,200,000
500,000 Burlington Resources Inc. 19,968,750
300,000 Chevron Corporation 26,531,250
410,000 Mobil Corporation 36,080,000
----------------
111,780,000
----------------
Food and Beverage - 1.29%
1,600,000 McDonald's Corporation 72,500,000
----------------
Health Care Products - 11.10%
1,700,000 Abbott Laboratories 79,581,250
1,986,000 American Home
Products Corporation 129,586,500
986,000 Boston Scientific Corporation* 39,994,625
746,800 Elan Corporation PLC * 52,089,300
100,000 Eli Lilly and Company 8,487,500
962,398 Medtronic, Inc. 69,052,057
400,000 Pfizer Inc. 55,500,000
1,700,000 Stryker Corporation 85,743,750
2,463,500 St. Jude Medical, Inc. * 60,047,812
989,927 Watson Pharmaceuticals, Inc. * 43,680,529
----------------
623,763,323
----------------
Health Care Services - 4.24%
1,065,725 Cardinal Health, Inc. 70,337,850
2,002,400 HCR Manor Care, Inc. * 45,679,750
4,557,637 Health Management
Associates, Inc. - Class A* 55,546,201
1,099,452 National HealthCare Corporation * + 8,933,047
1,680,000 PSS World Medical, Inc. * 14,805,000
4,292,000 Quorum Health Group, Inc. * + 42,920,000
----------------
238,221,848
----------------
Industrial Products and Services - 5.59%
1,594,500 Fastenal Company 55,907,156
2,537,400 General Cable Corporation + 26,801,288
3,757,500 Republic Services, Inc.* 60,824,531
3,297,400 Sybron International Corporation * 82,435,000
3,771,325 Thermo Electron Corporation * 51,148,595
900,000 Vulcan Materials Company 37,181,250
----------------
314,297,820
----------------
Insurance - 17.27%
1,751,250 American International Group, Inc. 211,244,531
3,959 Berkshire Hathaway Inc. -
Class A * 282,672,600
38 Berkshire Hathaway Inc. -
Class B * 89,338
2,741,131 Foremost Corporation of America + 55,165,262
4,435,600 Mercury General Corporation + 154,691,550
1,639,600 Mutual Risk Management Ltd. 62,714,700
700,000 Progressive Corporation (The) 100,450,000
2,737,000 Protective Life Corporation 103,663,875
----------------
970,691,856
----------------
Investment Management - 0.72%
1,439,900 Franklin Resources, Inc. 40,497,187
----------------
Media, Communications and
Entertainment - 10.95%
2,490,000 ADC Telecommunications, Inc. * 118,741,875
1,730,000 Cincinnati Bell Inc. 38,816,875
571,600 Clear Channel Communications, Inc.* 38,332,925
771,819 Hearst-Argyle Television, Inc.* 19,006,043
3,482,000 General Motors Corporation -
Class H* 175,623,375
2,194,900 Loral Space &
Communications Ltd. * 31,688,869
470,866 Pulitzer Inc. 19,040,644
1,269,441 Qwest Communications
International, Inc.* 91,518,826
1,485,000 USA Networks, Inc. * 53,181,562
950,000 Walt Disney Company (The) 29,568,750
----------------
615,519,744
----------------
Real Estate - 2.68%
1,500,000 Crescent Real Estate Equities, Inc. 32,250,000
1,385,300 National Health Investors, Inc. + 29,783,950
2,930,287 Prison Realty Corporation 51,096,880
1,200,000 Reckson Associates Realty Corp. 24,675,000
2,127,905 Ventas, Inc. 12,767,430
----------------
150,573,260
----------------
Retail Trade - 6.21%
1,850,000 AutoZone, Inc. * 56,193,750
2,554,100 Consolidated Stores Corporation * 77,421,156
1,143,200 Home Depot, Inc. (The) 71,164,200
1,074,000 Kohl's Corporation * 76,119,750
2,400,000 Walgreen Co. 67,800,000
----------------
348,698,856
----------------
Technology - 1.11%
850,000 Motorola, Inc. 62,262,500
----------------
Transportation - 0.77%
2,837,589 Heartland Express, Inc. * + 43,095,883
----------------
TOTAL COMMON STOCK
(cost $2,708,872,244) 5,265,735,926
----------------
SHORT-TERM INVESTMENTS - 6.32%
Commercial Paper - 5.97%
$ 9,500,000 ConAgra, Inc.
4.98%, due April 1, 1999 9,500,000
15,000,000 MCI WorldCom, Inc.
4.96%, due April 5, 1999 14,991,733
10,000,000 Lockheed Martin Corporation
4.96%, due April 6, 1999 9,993,111
12,000,000 MCI WorldCom, Inc.
4.96%, due April 6, 1999 11,991,733
8,000,000 ConAgra, Inc.
4.97%, due April 7, 1999 7,993,373
8,855,000 Cox Enterprises, Inc.
5.00%, due April 7, 1999 8,847,621
10,000,000 Tyco International Group, S.A.
5.00%, due April 7, 1999 9,991,667
8,000,000 Houston Industries Incorporated
4.98%, due April 8, 1999 7,992,253
6,000,000 Banta Corporation
5.00%, due April 12, 1999 5,990,833
3,000,000 Lockheed Martin Corporation
4.98%, due April 12, 1999 2,995,435
6,500,000 Sprint Capital Corporation
5.05%, due April 12, 1999 6,489,970
11,000,000 Tyco International Group, S.A.
5.15%, due April 12, 1999 10,982,690
6,650,000 Applied Power Inc.
5.05%, due April 14, 1999 6,637,873
5,000,000 Quad/Graphics, Inc.
5.05%, due April 16, 1999 4,989,479
8,000,000 Sprint Capital Corporation
5.03%, due April 16, 1999 7,983,233
19,834,000 Tyco International Group, S.A.
5.03%, due April 20, 1999 19,781,346
3,000,000 Briggs & Stratton Corporation
5.05%, due April 21, 1999 2,991,583
3,000,000 Manpower Inc.
5.05%, due April 21, 1999 2,991,583
22,000,000 Tyson Foods, Inc.
4.95%, due April 23, 1999 21,933,450
5,035,000 Fiserv, Inc.
5.05%, due April 27, 1999 5,016,636
4,871,000 Lockheed Martin Corporation
4.97%, due April 27, 1999 4,853,516
3,500,000 Tyson Foods, Inc.
5.00%, due April 27, 1999 3,487,361
14,000,000 MCI WorldCom, Inc.
4.98%, due April 28, 1999 13,947,710
11,750,000 Cox Enterprises, Inc.
5.00%, due April 29, 1999 11,704,306
9,500,000 MCI WorldCom, Inc.
4.96%, due April 29, 1999 9,463,351
14,500,000 MCI WorldCom, Inc.
4.99%, due May 3, 1999 14,435,685
3,850,000 Fiserv, Inc.
5.05%, due May 4, 1999 3,832,178
14,000,000 Houston Industries Incorporated
5.00%, due May 4, 1999 13,935,833
12,000,000 Cox Enterprises, Inc.
5.02%, due May 6, 1999 11,941,434
10,067,000 Cox Enterprises, Inc.
5.02%, due May 6, 1999 10,017,868
15,000,000 Sprint Capital Corporation
5.03%, due May 7, 1999 14,924,550
6,000,000 Fiserv, Inc.
5.05%, due May 11, 1999 5,966,334
8,000,000 Quad/Graphics, Inc.
5.05%, due May 11, 1999 7,955,111
20,000,000 Marriott International, Inc.
4.98%, due May 14, 1999 19,881,034
5,250,000 MCI WorldCom, Inc.
5.02%, due May 18, 1999 5,215,592
4,000,000 Manpower Inc.
5.05%, due May 20, 1999 3,972,506
--------------
335,619,971
--------------
Variable Rate Demand Notes - 0.35%
7,846,187 General Mills, Inc.
4.54%, due April 1, 1999 7,846,187
2,694,431 Pitney Bowes Credit Corporation
4.54%, due April 1, 1999 2,694,431
5,952,679 Warner-Lambert Company
4.55%, due April 1, 1999 5,952,679
3,114,733 Wisconsin Electric Power Company
4.55%, due April 1, 1999 3,114,733
--------------
19,608,030
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $353,885,308) 355,228,001
--------------
TOTAL INVESTMENTS
(cost $3,062,757,552) 5,620,963,927
--------------
LIABILITIES, NET OF CASH
AND RECEIVABLES - (0.02%) (1,583,730)
--------------
TOTAL NET ASSETS
(Basis of percentages
disclosed above) $5,619,380,197
--------------
--------------
</TABLE>
+This company is affiliated with the Fund as defined in Section
2(a)(3), of the Investment Company Act of 1940, in that the Fund
holds 5% or more of its outstanding voting securities. (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, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in securities at market value (Note 1 (a)) --
Nonaffiliated issuers (cost $2,698,733,874)-see
accompanying schedule of investments............... $5,223,632,947
Affiliated issuers (cost $364,023,678)-see
accompanying schedule of investments (Note 5)...... 397,330,980
--------------
Total investments............................ 5,620,963,927
--------------
Receivables --
Dividends and interest.............................. 2,401,520
Investment securities sold.......................... 1,866,330
--------------
Total receivables............................ 4,267,850
--------------
Total assets................................. 5,625,231,777
--------------
LIABILITIES:
Payables --
Investment securities purchased..................... 2,253,989
Management fee (Note 2)............................. 3,153,907
Other payables and accrued expenses................. 443,684
--------------
Total liabilities............................ 5,851,580
--------------
Total net assets ............................ $5,619,380,197
--------------
--------------
NET ASSETS CONSIST OF:
Fund shares issued and outstanding..................... $2,753,359,416
Net unrealized appreciation on investments (Note 3).... 2,556,863,682
Accumulated undistributed net realized gains on
investments........................................... 308,912,359
Accumulated undistributed net investment income........ 244,740
--------------
$5,619,380,197
--------------
--------------
NET ASSET VALUE PER SHARE ($.50 par value, 200,000,000
shares authorized), offering price and redemption price
($5,619,380,197./.65,952,516 shares outstanding).... $85.20
------
------
</TABLE>
The accompanying notes to financial statements are an
integral part of this statement.
Statement of Operations
For the year ended March 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INCOME:
Dividends --
Nonaffiliated issuers......................... $ 39,885,273
Affiliated issuers (Note 5) ................. 9,091,198
Interest........................................ 23,004,727
--------------
71,981,198
--------------
EXPENSES:
Management fee (Note 2) ........................ 36,413,678
Transfer agent fees............................. 2,197,504
Postage and mailing fees........................ 287,836
Custodian fees.................................. 282,680
Registration fees............................... 153,362
Printing fees................................... 133,865
Telephone fees.................................. 79,009
Legal fees...................................... 27,863
Audit and tax consulting fees................... 22,900
Insurance fees.................................. 18,018
Directors' fees................................. 15,186
Other operating expenses........................ 5,284
--------------
39,637,185
--------------
Net investment income..................... 32,344,013
--------------
NET REALIZED GAINS ON INVESTMENTS:
Nonaffiliated issuers..................... 659,641,356
Affiliated issuers (Note 5)............... 17,854,841
--------------
677,496,197
--------------
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (713,780,961)
--------------
Net loss on investments................... (36,284,764)
--------------
Net decrease in net assets resulting
from operations.......................... $ (3,940,751)
--------------
--------------
</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, 1999 and 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.............................................. $ 32,344,013 $ 21,616,712
Net realized gains on investments.................................. 677,496,197 436,911,653
Net increase (decrease) in unrealized appreciation on investments.. (713,780,961) 1,553,035,607
-------------- ---------------
Net increase (decrease) in net assets resulting
from operations.......................................... (3,940,751) 2,011,563,972
-------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.5880 and $0.3616 per share, respectively).................... (37,283,083) (21,461,299)
Distributions from net realized gains on investment transactions
($8.2716 and $5.8002 per share, respectively)..................... (524,154,834) (344,374,893)
-------------- ---------------
Total distributions........................................ (561,437,917) (365,836,192)
-------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (4,909,542 and 3,910,077
shares, respectively)............................................ 427,202,000 316,714,028
Net asset value of shares issued in distributions to shareholders
(6,048,038 and 4,286,977 shares, respectively)................... 523,117,516 342,434,753
Cost of shares redeemed (7,861,685 and 4,783,859 shares,
respectively).................................................... (672,764,933) (387,160,979)
-------------- ---------------
Increase in net assets derived from capital
share transactions ..................................... 277,554,583 271,987,802
-------------- ---------------
Total increase (decrease) in net assets................... (287,824,085) 1,917,715,582
-------------- ---------------
NET ASSETS, at the beginning of the period (including undistributed net
investment income of $5,183,810 and $5,028,397, respectively)........ 5,907,204,282 3,989,488,700
-------------- ---------------
NET ASSETS, at the end of the period (including undistributed net
investment income of $244,740 and $5,183,810, respectively).......... $5,619,380,197 $5,907,204,282
-------------- --------------
-------------- --------------
The accompanying notes to financial statements
are an integral part of these statements.
</TABLE>
Notes to Financial Statements
March 31, 1999
- -----------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies --
Nicholas Fund, Inc. (the "Fund") is an open-end, diversified management
investment 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 equity security 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 last bid price. Most debt securities,
excluding short-term investments, are valued at current evaluated
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 generally recorded no later
than the first business day after the trade date. Cost amounts, as
reported on the schedule of investments and 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 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 .75 of 1% on an annual basis of
the average net asset value up to and including $50 million .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,
1999, based on investment cost for federal tax purposes is as follows:
Aggregate gross unrealized
appreciation on investments.................... $2,878,582,128
Aggregate gross unrealized
depreciation on investments.................... (321,718,446)
--------------
Net unrealized appreciation ................. $2,556,863,682
--------------
--------------
(4) Investment Transactions --
For the year ended March 31, 1999, the cost of purchases and the proceeds
from sales of investment securities, other than short-term obligations,
aggregated $1,297,395,592 and $1,597,617,758 respectively.
Notes to Financial Statements (Continued)
March 31, 1999
- -------------------------------------------------------------------------------
(5) Transactions with Affiliates --
Following is an analysis of fiscal 1999 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 3/31/98 Purchases Sales 3/31/99 1999 1999
------------- -------- --------- ----- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
CSS Industries, Inc. (a) 852,000 -- 852,000 -- $ -- $ 5,053,367
Foremost Corporation of America 2,641,331 99,800 -- 2,741,131 985,025 --
General Cable Corporation (b) 2,302,200 235,200 -- 2,537,400 456,225 --
Heartland Express, Inc. 1,272,089 1,565,500 -- 2,837,589 -- --
Interim Services, Inc. 370,000 2,026,000 -- 2,396,000 -- --
Mercury General Corporation 5,045,600 200,000 810,000 4,435,600 3,209,892 44,947,705
National HealthCare Corporation 798,552 300,900 -- 1,099,452 -- --
National Health Investors, Inc. 690,300 695,000 -- 1,385,300 3,323,636 --
National Health Realty, Inc. (a) 666,828 -- 666,828 -- 443,441 1,032,671
Quorum Health Group, Inc. 3,030,000 1,262,000 -- 4,292,000 -- --
Wallace Computer Services, Inc. (a) 3,200,000 -- 3,200,000 -- 672,979 (33,178,902)
---------- ----------
$9,091,198 $17,854,841
---------- -----------
---------- -----------
</TABLE>
(a) As of March 31, 1999, the Fund is no longer affiliated with this company.
(b) The share activity has been adjusted to reflect a stock split/dividend.
Report of Independent Public Accountants
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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, 1999, 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 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, 1999, 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, 1999, 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 22, 1999.
Historical Record (Unaudited)
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<TABLE>
<CAPTION>
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 16.3 102,387
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 16.9 149,180
March 31, 1992 .............. 49.68 0.6790 0.8240 19.4 178,011
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 5.3166 21.7 336,973
March 31, 1998 .............. 93.98 0.3616 5.8002 30.0 508,762
March 31, 1999 .............. 85.20 0.5880(a) 8.2716(a) 31.7 509,446
*Date of Initial Public Offering. (a) Paid $0.1340 in net investment income and
**Based on latest 12 months accomplished earnings. $2.4716 in capital gains on May 20, 1998 to
***Assuming reinvestment of all distributions. shareholders of record May 14, 1998.
Range in quarter end price/earnings ratios since Paid $0.4540 in net investment income and
December 31, 1974 $5.8000 in capital gains on December 31, 1998
High Low to shareholders of record December 28, 1998.
---- ---
March 31, 1999 31.7 March 31, 1982 8.3
</TABLE>
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.
<TABLE>
Nicholas Fund
______________________________
<S> <C> <C>
$1,000 initial investment on 7-14-69* 3-31-89
Number of years of investing $100 per month on the last
day of each month following the date of initial investment 29.7 10
Total cash invested $ 36,700 $13,000
Total dividends and capital gains reinvested $317,233 $ 9,744
Total full shares owned 3/31/99 8,940 400
Total market value on 3/31/99 $761,720 $34,107
</TABLE>
The results above assume purchase on the last day of the month. 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.
* Date of Initial Public Offering.
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 and Treasurer
MARK J. GIESE
Vice President
CANDACE L. LESAK
Vice President
TRACY C. EBERLEIN
Assistant Vice President
Investment Adviser
NICHOLAS COMPANY, INC.
Milwaukee, Wisconsin
414-272-6133 or 800-227-5987
Transfer Agent
FIRSTAR MUTUAL FUND SERVICES, LLC
Milwaukee, Wisconsin
414-276-0535 or 800-544-6547
Custodian
FIRSTAR BANK MILWAUKEE, N.A.
Milwaukee, Wisconsin
Auditors
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
Counsel
DAVIS & KUELTHAU, S.C.
Milwaukee, Wisconsin
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.
