May 15, 2000
Report to Fellow Shareholders:
Nicholas Fund survived a turbulent first calendar quarter ended
March 31 with our seat belt securely fastened. The Fund's total
return was 4.20%. In comparison, the S & P 500 gained 2.29%. Other
large company stock market indices were down in the quarter such as
the Dow Jones Industrial Average which was down 4.68%.
Returns for Nicholas Fund and selected indices are provided in
the chart below for the periods ended March 31, 2000.
Average Annual Total Returns
----------------------------
[CAPTION]
<TABLE>
July 14,'69**
3 1 5 10 15 30.7
Months Year Year Years Years Years
------ ----- ------ ------ ------- --------
<C> <C> <C> <C> <C> <C> <C>
Nicholas Fund, Inc. 4.20% 6.75% 19.63% 15.62% 14.66% 13.90%
(Distributions Reinvested)
Standard & Poor's 500 Index 2.29% 17.94% 26.75% 18.83% 18.40% 13.30%
(Dividends Reinvested)
Consumer Price Index 1.42% 3.69% 2.50% 2.90% 3.20% 5.14%
Ending value of $10,000 invested
in Nicholas Fund, Inc. $10,420 $10,675 $24,499 $42,699 $77,846 $543,813
(Distributions Reinvested)
As stated in recent letters to shareholders, we have increased
our participation in technology. This rapidly growing sector of our
economy now represents 27% of our assets, up from 17% at December
31, 1999. To provide for this shift, we reduced our positions in
the financial and insurance areas. The decision to reallocate assets
was difficult because many of our financial holdings were very
profitable over the long-term.
Management wants to emphasize that our investment philosophy
and program has not changed during this process. We continued to
look for growth companies at reasonable prices, always mindful of
downside risk. We have bought leading technology companies that are
reporting strong earnings growth. We have spread the risk by
diversifying broadly in different parts of the industry, such as
telecommunication equipment, networking equipment, and hardware and
software for the internet infrastructure buildout.
We must reiterate what we have been saying over the last year.
The stock market is bifurcated. New economy stocks are high, the
rest (old economy) are low. But, when and if the high priced tech
stocks correct, can we be confident that the cheaper stocks will
hold? Or will all boats, large and small, sink regardless of
intrinsic value. These are uncertain times.
Management feels more secure than previously with the current
mix of new and old economy stocks. We continue to believe patient
long-term investing comes down to stock picking, day by day, week by
week, month by month. Our pledge and commitment is to assiduously
strive for excellence in each selection.
Sincerely,
/s/ /s/
Albert O. Nicholas David O. Nicholas
Co-Portfolio Manager Co-Portfolio Manager
Note: The next Nicholas Fund distribution will be paid June 19, 2000 to
shareholders of record June 16, 2000.
*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)
- ------------------------------------------------------------------------------
<CAPTION>
</TABLE>
<TABLE>
Year ended March 31,
----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, BEGINNING OF PERIOD $85.20 $93.98 $67.11 $63.81 $52.22 $51.10 $52.91 $49.68 $42.99 $37.72
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .39 .51 .36 .40 .57 .69 .74 .75 .70 .80
Net gains (losses) on securities
(realized and unrealized) 5.22 (.43) 32.67 8.64 15.68 4.46 (.68) 5.20 7.49 5.48
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 5.61 .08 33.03 9.04 16.25 5.15 .06 5.95 8.19 6.28
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income (.31) (.59) (.36) (.42) (.57) (.71) (.82) (.68) (.68) (.79)
From capital gains (5.94) (8.27) (5.80) (5.32) (4.09) (3.32) (1.05) (2.04) (.82) (.22)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (6.25) (8.86) (6.16) (5.74) (4.66) (4.03) (1.87) (2.72) (1.50) (1.01)
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $84.56 $85.20 $93.98 $67.11 $63.81 $52.22 $51.10 $52.91 $49.68 $42.99
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN 6.75% .13% 50.98% 14.68% 32.38% 10.88% 0.04% 12.41% 19.33% 17.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $4,900.9 $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
Ratio of expenses to average net assets .73% .71% .71% .72% .74% .77% .78% .76% .78% .81%
Ratio of net investment income
to average net assets .46% .58% .44% .61% .87% 1.34% 1.40% 1.53% 1.60% 2.17%
Portfolio turnover rate 39.72% 25.04% 17.01% 15.18% 25.70% 29.82% 33.39% 10.20% 14.58% 21.85%
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
Top Ten Portfolio Holdings
March 31, 2000 (unaudited)
- -------------------------------------------------------------------------------
[CAPTION]
<TABLE>
Percentage
Name of Net Assets
---- -------------
<C> <C>
General Motors Corporation - Class H .................... 3.07%
Marshall & Ilsley Corporation ........................... 2.83%
ADC Telecommunications, Inc. ............................ 2.63%
CVS Corporation ......................................... 2.59%
Mercury General Corporation ............................. 2.55%
Cintas Corporation ...................................... 2.50%
Motorola, Inc. .......................................... 2.47%
Berkshire Hathaway Inc. - Class A ....................... 2.29%
Intel Corporation ....................................... 2.18%
Sybron International Corporation ........................ 2.15%
------
Total of top ten portfolio holdings ..................... 25.26%
------
------
</TABLE>
Schedule of Investments
March 31, 2000
- -------------------------------------------------------------------------------
Shares or Quoted
Principal Market
Amount Value
---------- ------------
(Note 1 (a))
COMMON STOCKS - 95.44%
Basic Materials - 0.40%
375,100 Monsanto Company $ 19,317,650
----------------
Capital Goods - 0.62%
1,501,825 Thermo Electron Corporation * 30,599,684
----------------
Communication Services - 5.42%
500,000 GTE Corporation 35,500,000
1,600,000 Global TeleSystems Group, Inc. * 32,800,000
150,000 QUALCOMM Incorporated * 22,396,875
1,908,882 Qwest Communications
International Inc. * 92,580,777
300,000 Sprint Corp (PCS Group) * 19,593,750
1,000,000 Sprint Corporation 63,000,000
----------------
265,871,402
----------------
Consumer Cyclicals-Products - 4.38%
762,000 Harley-Davidson, Inc. 60,483,750
1,692,600 Valspar Corporation (The) 64,847,738
1,950,000 Vulcan Materials Company 89,334,375
----------------
214,665,863
----------------
Consumer Cyclicals-Retail - 4.10%
1,594,500 Fastenal Company 76,336,687
664,800 Home Depot, Inc. (The) 42,879,600
798,700 Kohl's Corporation * 81,866,750
----------------
201,083,037
----------------
Consumer Cyclicals-Services - 4.02%
3,126,750 Cintas Corporation 122,529,516
6,600,000 ServiceMaster Company (The) 74,250,000
----------------
196,779,516
----------------
Consumer Staples-
Drug, Retail, Food & Beverage - 5.01%
3,385,000 CVS Corporation 127,149,062
1,500,000 McDonald's Corporation 56,343,750
2,400,000 Walgreen Co. 61,800,000
----------------
245,292,812
----------------
Consumer Staples-
Media & Entertainment - 7.16%
905,000 CBS Corporation * 51,245,625
1,118,600 Clear Channel Communications, Inc. * 77,253,313
625,000 Time Warner Inc. 62,500,000
3,230,000 USA Networks, Inc. * 72,876,875
2,100,000 Walt Disney Company (The) 86,887,500
----------------
350,763,313
----------------
Financial- Banks &
Diversified Financials - 8.62%
1,753,000 Citigroup Inc. 103,974,812
1,068,812 Fifth Third Bancorp 67,335,156
744,392 Firstar Corporation 17,074,492
2,165,200 Freddie Mac 95,674,775
2,399,063 Marshall & Ilsley Corporation 138,545,888
----------------
422,605,123
----------------
Financial-Brokerage &
Investment Management - 4.93%
1,959 Berkshire Hathaway Inc.
- Class A* 112,054,800
700,000 Merrill Lynch & Co., Inc. 73,500,000
688,000 Morgan Stanley Dean Witter & Co. 56,115,000
----------------
241,669,800
----------------
Financial-Insurance - 4.32%
4,237,400 Mercury General Corporation + 125,003,300
2,737,000 Protective Life Corporation 86,899,750
----------------
211,903,050
----------------
Financial-Real Estate - 0.35%
760,625 HomeFed Corporation* 486,800
1,385,300 National Health Investors, Inc.+ 16,537,019
----------------
17,023,819
----------------
Health Care-Products - 15.55%
1,850,000 Abbott Laboratories 65,096,875
1,286,000 American Home
Products Corporation 68,961,750
2,400,000 Boston Scientific Corporation * 51,150,000
2,120,000 Elan Corporation, plc * 100,700,000
875,000 Eli Lilly and Company 55,125,000
1,151,000 Guidant Corporation * 67,693,188
1,023,796 Medtronic, Inc. 52,661,507
1,200,000 Pfizer Inc. 43,875,000
1,253,000 Stryker Corporation 87,396,750
3,627,400 Sybron International
Corporation * 105,194,600
1,614,927 Watson Pharmaceuticals, Inc. * 64,092,415
----------------
761,947,085
----------------
Health Care-Services - 3.76%
1,770,725 Cardinal Health, Inc. 81,232,009
5,766,737 Health Management
Associates, Inc.-Class A * 82,176,002
1,115,000 Manor Care, Inc. * 15,052,500
1,099,452 National HealthCare
Corporation * + 5,772,123
----------------
184,232,634
----------------
Technology-
Communication Equipment - 8.52%
2,391,000 ADC Telecommunications, Inc. * 128,815,125
300,000 Lucent Technologies Inc. 18,225,000
850,000 Motorola, Inc. 121,018,750
160,000 Nokia OYJ 34,760,000
400,000 Nortel Networks Corporation 50,400,000
1,020,000 Tellabs, Inc. * 64,244,088
----------------
417,462,963
----------------
Technology-Hardware - 9.03%
600,000 Cisco Systems, Inc. * 46,387,500
1,800,000 Compaq Computer Corporation 47,925,000
200,000 EMC Corporation * 25,000,000
450,000 Gateway, Inc. * 23,850,000
425,000 Hewlett-Packard Company 56,339,062
450,000 International Business
Machines Corporation 53,100,000
810,500 Intel Corporation 106,935,344
545,000 Sun Microsystems, Inc. * 51,068,190
200,000 Texas Instruments Incorporated 32,000,000
----------------
442,605,096
----------------
Technology-Services - 5.68%
600,000 Automatic Data Processing, Inc. 28,950,000
425,000 Computer Sciences Corporation * 33,628,125
700,000 Electronic Data Systems
Corporation 44,931,250
1,208,400 General Motors Corporation
- Class H * 150,445,800
2,007,100 Loral Space & Communications Ltd. * 20,447,331
----------------
278,402,506
----------------
Technology-Software - 3.57%
265,000 Citrix Systems, Inc. * 17,556,250
775,000 Microsoft Corporation * 82,343,750
300,000 Oracle Corporation * 23,418,750
270,000 Rational Software Corporation * 20,655,000
237,500 VERITAS Software Corporation * 31,112,500
----------------
175,086,250
----------------
TOTAL COMMON STOCK
(cost $2,778,160,337) 4,677,311,603
----------------
SHORT-TERM INVESTMENTS - 4.57%
Commercial Paper - 4.11%
10,000,000 Fiserv, Inc.
6.20%, due April 3, 2000 10,000,000
8,000,000 Quad/Graphics, Inc.
6.10%, due April 3, 2000 8,000,000
15,000,000 WICOR Industries, Inc.
6.10%, due April 4, 2000 14,997,458
27,500,000 Consolidated Paper, Inc.
6.20%, due April 5, 2000 27,490,528
10,000,000 A.O. Smith Corporation
6.35%, due April 6, 2000 9,994,708
10,000,000 Banta Corporation
6.35%, due April 6, 2000 9,994,708
21,000,000 Consolidated Paper, Inc.
6.35%, due April 7, 2000 20,985,183
10,000,000 WICOR Industries, Inc.
6.35%, due April 7, 2000 9,992,946
13,000,000 Banta Corporation
6.35%, due April 10, 2000 12,983,949
10,000,000 Firstar Corporation
6.18%, due April 10, 2000 9,987,983
4,000,000 Briggs & Stratton Corporation
6.30%, due April 11, 2000 3,994,400
10,000,000 Fiserv, Inc.
6.30%, due April 11, 2000 9,986,000
9,000,000 Banta Corporation
6.30%, due April 12, 2000 8,985,825
10,000,000 Firstar Corporation
6.18%, due April 12, 2000 9,984,550
10,000,000 Fiserv, Inc.
6.35%, due April 13, 2000 9,982,361
$ 9,600,000 A.O. Smith Corporation
6.35%, due April 14, 2000 9,581,373
9,250,000 Quad/Graphics, Inc.
6.35%, due April 14, 2000 9,232,053
5,500,000 Banta Corporation
6.35%, due April 17, 2000 5,486,418
-----------
201,660,443
-----------
Variable Rate Demand Note - 0.46%
$22,362,452 Firstar Bank U.S.A., N.A.
5.80%, due April 3, 2000 22,362,452
---------------
TOTAL SHORT-TERM INVESTMENTS
(cost $223,805,178) 224,022,895
---------------
TOTAL INVESTMENTS
(cost $3,001,965,515) - 100.01% 4,901,334,498
---------------
OTHER LIABILITIES,
NET OF ASSETS - (0.01%) (428,303)
---------------
TOTAL NET ASSETS
(Basis of percentages
disclosed above) - 100% $4,900,906,195
--------------
--------------
+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, 2000
- -------------------------------------------------------------------------------
ASSETS:
Investments in securities at market value (Note 1 (a)) --
Nonaffiliated issuers (cost $2,916,601,369)-see
accompanying schedule of investments............... $4,754,022,056
Affiliated issuers (cost $85,364,146)-see
accompanying schedule of investments (Note 5)...... 147,312,442
--------------
Total investments............................ 4,901,334,498
--------------
Receivables --
Dividends and interest.............................. 1,986,855
Investment securities sold.......................... 25,755,201
--------------
Total receivables............................ 27,742,056
--------------
Other.................................................. 1,081,205
--------------
Total assets................................. 4,930,157,759
--------------
LIABILITIES:
Payables --
Investment securities purchased..................... 25,244,933
Management fee (Note 2)............................. 2,784,251
Other payables and accrued expenses................. 1,222,380
--------------
Total liabilities............................ 29,251,564
--------------
Total net assets ............................ $4,900,906,195
--------------
--------------
NET ASSETS CONSIST OF:
Fund shares issued and outstanding..................... $2,128,447,613
Net unrealized appreciation on investments (Note 3).... 1,899,151,266
Accumulated undistributed net realized gains on
investments........................................... 868,297,379
Accumulated undistributed net investment income........ 5,009,937
--------------
$4,900,906,195
--------------
--------------
NET ASSET VALUE PER SHARE ($.50 par value, 200,000,000
shares authorized), offering price and redemption price
($4,900,906,195 ./. 57,959,184 shares outstanding).. $84.56
------
------
The accompanying notes to financial statements are an
integral part of this statement.
Statement of Operations
For the year ended March 31, 2000
- ----------------------------------------------------------------------------
INCOME:
Dividends --
Nonaffiliated issuers......................... $ 33,243,928
Affiliated issuers (Note 5)................... 8,985,743
Interest........................................ 19,907,153
--------------
62,136,824
--------------
EXPENSES:
Management fee (Note 2)......................... 34,445,024
Transfer agent fees............................. 2,560,472
Postage and mailing............................. 372,192
Custodian fees.................................. 260,462
Printing........................................ 138,529
Registration fees............................... 109,515
Telephone....................................... 49,152
Legal fees...................................... 37,402
Pricing and accounting fees..................... 25,873
Audit and tax consulting fees................... 21,400
Directors' fees................................. 15,186
Insurance....................................... 11,921
Other operating expenses........................ 1,197
--------------
38,048,325
--------------
Net investment income..................... 24,088,499
--------------
NET REALIZED GAINS ON INVESTMENTS:
Nonaffiliated issuers..................... 986,717,132
Affiliated issuers (Note 5)............... (43,070,528)
--------------
943,646,604
--------------
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (657,712,416)
--------------
Net realized & unrealized gain on investments 285,934,188
--------------
Net increase in net assets resulting
from operations.......................... $ 310,022,687
--------------
--------------
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, 2000 and 1999
- ------------------------------------------------------------------------------
[CAPTION]
<TABLE>
2000 1999
-------------- ---------------
<C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.............................................. $ 24,088,499 $ 32,344,013
Net realized gains on investments.................................. 943,646,604 677,496,167
Net decrease in unrealized appreciation on investments............. (657,712,416) (713,780,961)
-------------- ---------------
Net increase (decrease) in net assets resulting
from operations.......................................... 310,022,687 (3,940,751)
-------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.3114 and $0.5880 per share, respectively).................... (19,670,553) (37,283,083)
Distributions from net realized gains on investment transactions
($5.9433 and $8.2716 per share, respectively)..................... (384,359,917) (524,154,834)
-------------- ---------------
Total distributions........................................ (404,030,470) (561,437,917)
-------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued
(3,201,699 and 4,909,542 shares, respectively).................... 260,402,347 427,202,000
Reinvestment of distributions
(4,460,866 and 6,048,038 shares, respectively).................... 374,800,666 523,117,516
Cost of shares redeemed
(15,655,897 and 7,861,685 shares, respectively)................... (1,259,669,228) (672,764,933)
-------------- ---------------
Increase (decrease) in net assets derived from capital
share transactions ..................................... (624,466,219) 277,554,583
-------------- ---------------
Total decrease in net assets. .................. (718,474,002) (287,824,085)
-------------- ---------------
NET ASSETS:
Beginning of period (including undistributed
net investment income of $244,740 and $5,183,810, respectively)... 5,619,380,197 5,907,204,282
End of period (including undistributed net
investment income of $5,009,937 and $244,740, respectively)....... $4,900,906,195 $5,619,380,197
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
Notes to Financial Statements
March 31, 2000
- -----------------------------------------------------------------------------
(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 identification.
(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) The amount of dividends and distributions from net investment income
and net realized capital gains are determined in accordance with
federal income tax regulations, which may differ from generally
accepted accounting principles. To the extent these book and tax
differences are permanent in nature, such amounts are reclassified
among fund shares issued and outstanding, accumulated undistributed
net realized gains on investments and accumulated undistributed net
investment income. Accordingly, at March 31, 2000,
reclassifications were recorded to increase accumulated
undistributed net investment income by $347,251, increase
accumulated undistributed net realized gains on investments by
$98,333 and decrease fund shares issued and outstanding by $445,584.
The Fund hereby designates approximately $943,646,600 as long-term
capital gain for the purposes of the dividends paid deduction.
(e) 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.
(f) 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 and .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,
2000, based on investment cost for federal tax purposes is as follows:
<TABLE>
<C> <C>
Aggregate gross unrealized appreciation on investments.................... $2,056,582,315
Aggregate gross unrealized depreciation on investments.................... (157,431,049)
--------------
Net unrealized appreciation ......................................... $1,899,151,266
--------------
--------------
</TABLE>
(4) Investment Transactions --
For the year ended March 31, 2000, the cost of purchases and the proceeds
from sales of investment securities, other than short-term obligations,
aggregated $1,942,734,410 and $2,815,369,888 respectively.
Notes to Financial Statements (Continued)
March 31, 2000
- ------------------------------------------------------------------------------
(5) Transactions with Affiliates --
Following is an analysis of fiscal 2000 transactions with "affiliated
companies" as defined by the Investment Company Act of 1940:
[CAPTION]
<TABLE>
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 3/31/99 Purchases Sales 3/31/00 2000 2000
------------- -------- --------- ----- ------- --------- ----------
<C> <C> <C> <C> <C> <C> <C>
Foremost Corporation of America (a)(b) 2,741,131 -- 2,741,131 -- 986,807 44,957,977
General Cable Corporation (a) 2,537,400 -- 2,537,400 -- 241,240 (21,181,349)
Heartland Express, Inc. (a) 2,837,589 50,000 2,887,589 -- -- (9,949,398)
Interim Services, Inc. (a) 2,396,000 -- 2,396,000 -- -- (19,739,860)
Mercury General Corporation 4,435,600 61,800 260,000 4,237,400 3,795,738 (2,995,957)
National HealthCare Corporation 1,099,452 -- -- 1,099,452 -- --
National Health Investors, Inc. 1,385,300 -- -- 1,385,300 3,961,958 --
Quorum Health Group, Inc. (a) 4,292,000 -- 4,292,000 -- -- (34,161,941)
---------- -----------
$8,985,743 $(43,070,528)
---------- -----------
---------- -----------
</TABLE>
(a) As of March 31, 2000, the Fund is no longer affiliated with this company.
(b) Foremost Corporation of America was acquired by an affiliate of the
insurance exchanges of the Farmers Insurance Group of Companies on
March 8, 2000.
Report of Independent 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, 2000, 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 auditing standards
generally accepted in the United States. 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, 2000, 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, 2000, 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 accounting principals generally accepted in the United States.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 24, 2000.
Historical Record (Unaudited)
- -------------------------------------------------------------------------------
[CAPTION]
<TABLE>
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***
----------- ------------- ------------- ---------------- ---------------
<C> <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 8.2716 31.7 509,446
March 31, 2000 .............. 84.56 0.3114(a) 5.9433(a) 37.3 543,813
</TABLE>
<TABLE>
<C> <C>
*Date of Initial Public Offering. (a) Paid $0.0520 in net investment income and
**Based on latest 12 months accomplished earnings. $4.7433 in capital gains on May 20, 1999 to
***Assuming reinvestment of all distributions. shareholders of record May 19, 1999.
Range in quarter end price/earnings ratios since Paid $0.2594 in net investment income and
December 31, 1974 $1.2000 in capital gains on December 22, 1999
High Low to shareholders of record December 21, 1999.
-------------------- -------------------
March 31, 2000 37.3 March 31, 1982 8.3
AUTOMATIC INVESTMENT PLAN - AN UPDATE (unaudited)
- -------------------------------------------------
The Nicholas Family of Fund's 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 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.
<CAPTION>
</TABLE>
<TABLE>
Nicholas Fund
-------------------
<C> <C> <C>
$1,000 initial investment on............................................................ 7/14/69* 3/31/90
Number of years investing $100 each month following the date of initial investment...... 30.7 10
Total cash invested..................................................................... $37,900 $13,000
Total dividends and capital gains distributions reinvested.............................. $362,561 $10,039
Total full shares owned 3/31/00......................................................... 9,631 378
Total market value on 3/31/00........................................................... $814,382 $31,983
</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 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 INSTITUTIONAL CUSTODY SERVICES
Cincinnati, Ohio
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.
